UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission File Number: 000-16772

PEOPLES BANCORP INC.

(Exact name of Registrant as specified in its charter)

Ohio

31-0987416

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

138 Putnam Street,

P.O. Box 738,

Marietta,

Ohio

45750

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code:

(740)

373-3155

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, without par value

PEBO

The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	☒
Non-accelerated filer	o	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~28,272,537~~28,297,358 common shares, without par value, at ~~November~~August 4, ~~2021.~~2022.

Table of Contents


Table of Contents

PART I – FINANCIAL INFORMATION			3
ITEM 1. FINANCIAL STATEMENTS			3
CONSOLIDATED BALANCE SHEETS (Unaudited)			3
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)			4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)			5
CONSOLIDATED ~~STATEMENT~~S STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)			6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)			8
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			4348
~~SELECTED FINANCIAL DATA~~			43

EXECUTIVE SUMMARY			4952
RESULTS OF OPERATIONS			5153
FINANCIAL CONDITION			6668
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			80
ITEM 4. CONTROLS AND PROCEDURES			8081
PART II – OTHER INFORMATION			8081
ITEM 1. LEGAL PROCEEDINGS			8081
ITEM 1A. RISK FACTORS			8081
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			8182
ITEM 3. DEFAULTS UPON SENIOR SECURITIES			8182
ITEM 4. MINE SAFETY DISCLOSURES			8182
ITEM 5. OTHER INFORMATION			8182
ITEM 6. EXHIBITS			8283
SIGNATURES			85

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PEOPLES BANCORP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


		September 30, 2021			December 31, 2020			June 30, 2022			December 31, 2021

(Dollars in thousands)	(Dollars in thousands)			(Unaudited)				(Dollars in thousands)		(Unaudited)
Assets	Assets						Assets
Cash and cash equivalents:	Cash and cash equivalents:						Cash and cash equivalents:
Cash and balances due from banks	Cash and balances due from banks	$	129,842		$	60,902	Cash and balances due from banks	$	92,207		$	74,354
Interest-bearing deposits in other banks	Interest-bearing deposits in other banks	369,840			91,198		Interest-bearing deposits in other banks	306,178			341,373
Total cash and cash equivalents	Total cash and cash equivalents	499,682			152,100		Total cash and cash equivalents	398,385			415,727
Available-for-sale investment securities, at fair value (amortized cost of $1,294,654 at September 30, 2021 and $734,544 at December 31, 2020) (a)		1,297,090			753,013
Held-to-maturity investment securities, at amortized cost (fair value of $240,000 at September 30, 2021 and $68,082 at December 31, 2020) (a)		243,100			66,458
Available-for-sale investment securities, at fair value (amortized cost of $1,389,621 at June 30, 2022 and $1,283,146 at December 31, 2021) (a)							Available-for-sale investment securities, at fair value (amortized cost of $1,389,621 at June 30, 2022 and $1,283,146 at December 31, 2021) (a)	1,267,598			1,275,493
Held-to-maturity investment securities, at amortized cost (fair value of $341,088 at June 30, 2022 and $369,955 at December 31, 2021) (a)							Held-to-maturity investment securities, at amortized cost (fair value of $341,088 at June 30, 2022 and $369,955 at December 31, 2021) (a)	400,720			374,129
Other investment securities	Other investment securities	34,486			37,560		Other investment securities	41,655			33,987
Total investment securities (a)	Total investment securities (a)	1,574,676			857,031		Total investment securities (a)	1,709,973			1,683,609
Loans and leases, net of deferred fees and costs (b)	Loans and leases, net of deferred fees and costs (b)	4,491,028			3,402,940		Loans and leases, net of deferred fees and costs (b)	4,575,905			4,481,600
Allowance for credit losses	Allowance for credit losses	(77,382)			(50,359)		Allowance for credit losses	(52,346)			(63,967)
Net loans		4,413,646			3,352,581
Net loans and leases (c)							Net loans and leases (c)	4,523,559			4,417,633
Loans held for sale	Loans held for sale	2,699			4,659		Loans held for sale	2,128			3,791
Bank premises and equipment, net of accumulated depreciation	Bank premises and equipment, net of accumulated depreciation	91,210			60,094		Bank premises and equipment, net of accumulated depreciation	86,523			89,260
Bank owned life insurance	Bank owned life insurance	72,920			71,591		Bank owned life insurance	104,339			73,358
Goodwill	Goodwill	267,015			171,260		Goodwill	289,976			264,193
Other intangible assets	Other intangible assets	28,400			13,337		Other intangible assets	38,156			26,816
Other assets	Other assets	109,504			78,111		Other assets	125,253			89,134
Total assets	Total assets	$	7,059,752		$	4,760,764	Total assets	$	7,278,292		$	7,063,521
Liabilities	Liabilities						Liabilities
Deposits:	Deposits:						Deposits:
Non-interest-bearing	Non-interest-bearing	$	1,559,993		$	997,323	Non-interest-bearing	$	1,661,865		$	1,641,422
Interest-bearing	Interest-bearing	4,272,027			2,913,136		Interest-bearing	4,267,360			4,221,130
Total deposits	Total deposits	5,832,020			3,910,459		Total deposits	5,929,225			5,862,552
Short-term borrowings	Short-term borrowings	184,693			73,261		Short-term borrowings	326,442			166,482
Long-term borrowings	Long-term borrowings	99,411			110,568		Long-term borrowings	123,687			99,475

Accrued expenses and other liabilities	Accrued expenses and other liabilities	111,746			90,803		Accrued expenses and other liabilities	112,114			89,987
Total liabilities	Total liabilities	6,227,870			4,185,091		Total liabilities	6,491,468			6,218,496
Stockholders’ equity	Stockholders’ equity						Stockholders’ equity
Preferred shares, no par value, 50,000 shares authorized, no shares issued at September 30, 2021 and at December 31, 2020		—			—
Common stock, no par value, 50,000,000 shares authorized, 29,806,435 shares issued at September 30, 2021 and 21,193,402 shares issued at December 31, 2020, including at each date shares held in treasury		685,428			422,536
Preferred shares, no par value, 50,000 shares authorized, no shares issued at June 30, 2022 and at December 31, 2021							Preferred shares, no par value, 50,000 shares authorized, no shares issued at June 30, 2022 and at December 31, 2021	—			—
Common stock, no par value, 50,000,000 shares authorized, 29,836,491 shares issued at June 30, 2022 and 29,814,401 shares issued at December 31, 2021, including at each date shares held in treasury							Common stock, no par value, 50,000,000 shares authorized, 29,836,491 shares issued at June 30, 2022 and 29,814,401 shares issued at December 31, 2021, including at each date shares held in treasury	684,416			686,282
Retained earnings	Retained earnings	189,508			190,691		Retained earnings	234,608			207,076
Accumulated other comprehensive (loss) income, net of deferred income taxes		(5,888)			1,336
Treasury stock, at cost, 1,599,593 shares at September 30, 2021 and 1,686,046 shares at December 31, 2020		(37,166)			(38,890)
Accumulated other comprehensive loss, net of deferred income taxes							Accumulated other comprehensive loss, net of deferred income taxes	(93,359)			(11,619)
Treasury stock, at cost, 1,610,525 shares at June 30, 2022 and 1,577,359 shares at December 31, 2021							Treasury stock, at cost, 1,610,525 shares at June 30, 2022 and 1,577,359 shares at December 31, 2021	(38,841)			(36,714)
Total stockholders’ equity	Total stockholders’ equity	831,882			575,673		Total stockholders’ equity	786,824			845,025
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	7,059,752		$	4,760,764	Total liabilities and stockholders’ equity	$	7,278,292		$	7,063,521

(a) Available-for-sale investment securities and held-to-maturity investment securities are presented net of allowance for credit losses of $0 and ~~$236,~~$286, respectively, at ~~September~~June 30, ~~2021~~2022 and $0 and ~~$60,~~$286, respectively, at December 31, ~~2020.~~2021.

(b) Also referred to throughout this ~~document~~Quarterly Report on Form 10-Q as "total loans" and "loans held for investment."

See Notes to the Unaudited Condensed Consolidated Financial Statements

Table of Contents

PEOPLES BANCORP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	2021		2020		2021		2020		(Dollars in thousands, except per share data)	2022		2021		2022		2021
Interest income:	Interest income:									Interest income:
Interest and fees on loans and leases	Interest and fees on loans and leases	$	40,748	$	35,580	$	115,196	$	104,651	Interest and fees on loans and leases	$	56,764	$	38,711	$	106,964	$	74,448
Interest and dividends on taxable investment securities	Interest and dividends on taxable investment securities	3,755		2,786		9,497		12,310		Interest and dividends on taxable investment securities	6,967		3,168		13,017		5,742
Interest on tax-exempt investment securities	Interest on tax-exempt investment securities	882		614		2,358		1,903		Interest on tax-exempt investment securities	1,026		865		2,041		1,476
Other interest income	Other interest income	82		33		175		317		Other interest income	299		53		459		93
Total interest income	Total interest income	45,467		39,013		127,226		119,181		Total interest income	65,056		42,797		122,481		81,759
Interest expense:	Interest expense:									Interest expense:
Interest on deposits	Interest on deposits	2,399		2,669		7,793		10,582		Interest on deposits	2,014		2,577		4,067		5,394
Interest on short-term borrowings	Interest on short-term borrowings	91		742		283		2,355		Interest on short-term borrowings	261		92		599		192
Interest on long-term borrowings	Interest on long-term borrowings	399		483		1,334		1,629		Interest on long-term borrowings	1,313		468		2,037		935

Total interest expense	Total interest expense	2,889		3,894		9,410		14,566		Total interest expense	3,588		3,137		6,703		6,521
Net interest income	Net interest income	42,578		35,119		117,816		104,615		Net interest income	61,468		39,660		115,778		75,238
Provision for credit losses		8,994		4,728		7,333		33,531
Net interest income after provision for credit losses		33,584		30,391		110,483		71,084
(Recovery of) provision for credit losses										(Recovery of) provision for credit losses	(780)		3,088		(7,587)		(1,661)
Net interest income after (recovery of) provision for credit losses										Net interest income after (recovery of) provision for credit losses	62,248		36,572		123,365		76,899

Non-interest income:	Non-interest income:									Non-interest income:
Electronic banking income	Electronic banking income	4,326		3,765		12,655		10,568		Electronic banking income	5,419		4,418		10,672		8,329
Insurance income										Insurance income	3,646		3,335		8,377		8,556
Trust and investment income	Trust and investment income	4,158		3,435		12,223		10,013		Trust and investment income	4,246		4,220		8,522		8,065
Insurance income		3,367		3,608		11,923		10,929
Deposit account service charges	Deposit account service charges	2,549		2,266		6,578		6,995		Deposit account service charges	3,558		2,044		6,984		4,029
Mortgage banking income	Mortgage banking income	766		2,658		2,726		4,346		Mortgage banking income	352		820		788		1,960
Bank owned life insurance income	Bank owned life insurance income	437		462		1,329		1,514		Bank owned life insurance income	797		446		1,228		892
Commercial loan swap fees	Commercial loan swap fees	73		68		194		1,267		Commercial loan swap fees	270		61		438		121
Net loss on asset disposals and other transactions	Net loss on asset disposals and other transactions	(308)		(28)		(459)		(237)		Net loss on asset disposals and other transactions	(152)		(124)		(279)		(151)
Net (loss) gain on investment securities	Net (loss) gain on investment securities	(166)		2		(704)		383		Net (loss) gain on investment securities	(44)		(202)		86		(538)
Other non-interest income	Other non-interest income	1,144		534		2,605		1,393		Other non-interest income	1,294		803		2,620		1,461
Total non-interest income	Total non-interest income	16,346		16,770		49,070		47,171		Total non-interest income	19,386		15,821		39,436		32,724
Non-interest expense:	Non-interest expense:									Non-interest expense:
Salaries and employee benefit costs	Salaries and employee benefit costs	25,589		19,410		68,276		57,313		Salaries and employee benefit costs	27,585		21,928		55,314		42,687
Net occupancy and equipment expense										Net occupancy and equipment expense	4,768		3,289		9,856		6,616
Professional fees	Professional fees	6,426		1,720		13,459		5,247		Professional fees	2,280		3,565		5,952		7,033
Net occupancy and equipment expense		3,551		3,383		10,167		9,688
Data processing and software expense	Data processing and software expense	2,529		1,838		7,394		5,344		Data processing and software expense	3,033		2,411		5,949		4,865
Electronic banking expense	Electronic banking expense	2,037		2,095		6,006		5,839		Electronic banking expense	2,727		2,075		5,486		3,969
Amortization of other intangible assets	Amortization of other intangible assets	1,279		857		3,267		2,314		Amortization of other intangible assets	2,034		1,368		3,742		1,988
FDIC insurance premiums										FDIC insurance premiums	1,018		326		2,212		789
Marketing expense	Marketing expense	1,223		456		2,810		1,561		Marketing expense	860		676		1,855		1,587
Other loan expenses										Other loan expenses	445		494		1,277		956
Franchise tax expense	Franchise tax expense	810		882		2,487		2,645		Franchise tax expense	1,102		822		1,866		1,677
FDIC insurance premium		807		570		1,596		717
Other loan expenses		487		342		1,443		1,255
Communication expense	Communication expense	411		283		1,079		857		Communication expense	649		386		1,274		668
Other non-interest expense	Other non-interest expense	12,711		2,479		17,762		7,665		Other non-interest expense	3,398		2,559		6,745		5,051
Total non-interest expense	Total non-interest expense	57,860		34,315		135,746		100,445		Total non-interest expense	49,899		39,899		101,528		77,886
(Loss) income before income taxes		(7,930)		12,846		23,807		17,810
Income tax (benefit) expense		(2,172)		2,636		3,999		3,616
Net (loss) income		$	(5,758)	$	10,210	$	19,808	$	14,194
Income before income taxes										Income before income taxes	31,735		12,494		61,273		31,737
Income tax expense										Income tax expense	6,847		2,391		12,808		6,171
Net income										Net income	$	24,888	$	10,103	$	48,465	$	25,566

(Loss) earnings per common share - basic		$	(0.28)	$	0.52	$	0.99	$	0.70
(Loss) earnings per common share - diluted		$	(0.28)	$	0.51	$	0.99	$	0.70
Earnings per common share - basic										Earnings per common share - basic	$	0.89	$	0.52	$	1.73	$	1.32
Earnings per common share - diluted										Earnings per common share - diluted	$	0.88	$	0.51	$	1.72	$	1.31
Weighted-average number of common shares outstanding - basic	Weighted-average number of common shares outstanding - basic	20,640,519		19,504,503		19,751,853		19,862,409		Weighted-average number of common shares outstanding - basic	27,919,133		19,317,454		27,962,405		19,300,156
Weighted-average number of common shares outstanding - diluted	Weighted-average number of common shares outstanding - diluted	20,789,271		19,637,689		19,890,672		19,998,353		Weighted-average number of common shares outstanding - diluted	28,061,736		19,461,934		28,041,145		19,448,544
Cash dividends declared	Cash dividends declared	$	7,093	$	6,770	$	20,991	$	20,622	Cash dividends declared	$	10,757	$	7,065	$	20,933	$	13,898
Cash dividends declared per common share	Cash dividends declared per common share	$	0.36	$	0.34	$	1.07	$	1.02	Cash dividends declared per common share	$	0.38	$	0.36	$	0.74	$	0.71

See Notes to the Unaudited Condensed Consolidated Financial Statements

Table of Contents

PEOPLES BANCORP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		2021		2020		(Dollars in thousands)	2022		2021		2022		2021
Net (loss) income		$	(5,758)	$	10,210	$	19,808	$	14,194
Net income										Net income	$	24,888	$	10,103	$	48,465	$	25,566
Other comprehensive (loss) income:	Other comprehensive (loss) income:									Other comprehensive (loss) income:
Available-for-sale investment securities:	Available-for-sale investment securities:									Available-for-sale investment securities:
Gross unrealized holding (loss) gain arising during the period	Gross unrealized holding (loss) gain arising during the period	(7,685)		(2,974)		(16,738)		15,480		Gross unrealized holding (loss) gain arising during the period	(42,648)		3,525		(114,284)		(9,053)
Related tax benefit (expense)	Related tax benefit (expense)	1,592		624		3,493		(3,251)		Related tax benefit (expense)	10,238		(741)		26,686		1,901
Reclassification adjustment for net loss (gain) included in net (loss) income		166		(2)		704		(383)
Related tax (benefit) expense		(44)		—		(157)		80
Reclassification adjustment for net gain (loss) included in net income										Reclassification adjustment for net gain (loss) included in net income	44		202		(86)		538
Related tax (expense) benefit										Related tax (expense) benefit	(10)		(42)		20		(113)

Net effect on other comprehensive (loss) income	Net effect on other comprehensive (loss) income	(5,971)		(2,352)		(12,698)		11,926		Net effect on other comprehensive (loss) income	(32,376)		2,944		(87,664)		(6,727)
Defined benefit plan:	Defined benefit plan:									Defined benefit plan:
Net gain (loss) arising during the period		1,818		(533)		1,826		(1,054)
Related tax (expense) benefit		(407)		113		(408)		222
Net gain arising during the period										Net gain arising during the period	75		3		61		8
Related tax expense										Related tax expense	(17)		—		(14)		(1)
Amortization of unrecognized gain and service cost on benefit plans	Amortization of unrecognized gain and service cost on benefit plans	20		33		81		97		Amortization of unrecognized gain and service cost on benefit plans	17		31		38		61
Related tax expense	Related tax expense	(5)		(7)		(18)		(21)		Related tax expense	(4)		(6)		(9)		(13)
Recognition of gain due to settlement and curtailment		143		531		143		1,050
Related tax expense		(32)		(112)		(32)		(221)

Net effect on other comprehensive income	Net effect on other comprehensive income	1,537		25		1,592		73		Net effect on other comprehensive income	71		28		76		55
Cash flow hedges:	Cash flow hedges:									Cash flow hedges:
Net gain (loss) arising during the period	Net gain (loss) arising during the period	858		803		4,800		(9,661)		Net gain (loss) arising during the period	2,104		(294)		7,560		3,942
Related tax (expense) benefit	Related tax (expense) benefit	(90)		(168)		(918)		2,029		Related tax (expense) benefit	(492)		62		(1,712)		(828)
Net effect on other comprehensive income (loss)	Net effect on other comprehensive income (loss)	768		635		3,882		(7,632)		Net effect on other comprehensive income (loss)	1,612		(232)		5,848		3,114
Total other comprehensive (loss) income, net of tax	Total other comprehensive (loss) income, net of tax	(3,666)		(1,692)		(7,224)		4,367		Total other comprehensive (loss) income, net of tax	(30,693)		2,740		(81,740)		(3,558)
Total comprehensive (loss) income	Total comprehensive (loss) income	$	(9,424)	$	8,518	$	12,584	$	18,561	Total comprehensive (loss) income	$	(5,805)	$	12,843	$	(33,275)	$	22,008

See Notes to the Unaudited Condensed Consolidated Financial Statements

Table of Contents

PEOPLES BANCORP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)


						Accumulated Other Comprehensive Loss				Total Stockholders' Equity							Accumulated Other Comprehensive Loss				Total Stockholders' Equity
		Common Shares		Retained Earnings				Treasury Stock					Common Shares		Retained Earnings				Treasury Stock
(Dollars in thousands)	(Dollars in thousands)											(Dollars in thousands)
Balance, June 30, 2021		$	422,652	$	202,359	$	(2,222)	$	(37,284)	$	585,505
Balance, March 31, 2022												Balance, March 31, 2022	$	684,243	$	220,477	$	(62,666)	$	(33,713)	$	808,341

Net loss		—		(5,758)		—		—		(5,758)
Net income												Net income	—		24,888		—		—		24,888
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—		—		(3,666)		—		(3,666)		Other comprehensive loss, net of tax	—		—		(30,693)		—		(30,693)

Cash dividends declared	Cash dividends declared	—		(7,093)				—		(7,093)		Cash dividends declared	—		(10,757)				—		(10,757)

Reissuance of treasury stock for common share awards	Reissuance of treasury stock for common share awards	(51)		—		—		51		—		Reissuance of treasury stock for common share awards	(727)		—		—		727		—

Reissuance of treasury stock for deferred compensation plan for Boards of Directors												Reissuance of treasury stock for deferred compensation plan for Boards of Directors	—		—		—		78		78
Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors	Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors	—		—		—		(78)		(78)		Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors	—		—		—		(206)		(206)

Common shares repurchased under share repurchase program then in effect												Common shares repurchased under share repurchase program then in effect	—		—		—		(5,987)		(5,987)
Common shares issued under dividend reinvestment plan	Common shares issued under dividend reinvestment plan	277		—		—		—		277		Common shares issued under dividend reinvestment plan	296		—		—		—		296
Common shares issued under compensation plan for Boards of Directors	Common shares issued under compensation plan for Boards of Directors	16		—		—		44		60		Common shares issued under compensation plan for Boards of Directors	13		—		—		115		128

Common shares issued under employee stock purchase plan	Common shares issued under employee stock purchase plan	37		—		—		101		138		Common shares issued under employee stock purchase plan	15		—		—		145		160
Stock-based compensation	Stock-based compensation	598		—		—		—		598		Stock-based compensation	576		—		—		—		576

Issuance of common shares related to merger with Premier Financial Bancorp, Inc.		261,899		—		—		—		261,899

Balance, September 30, 2021		$	685,428	$	189,508	$	(5,888)	$	(37,166)	$	831,882

Balance, June 30, 2022												Balance, June 30, 2022	$	684,416	$	234,608	$	(93,359)	$	(38,841)	$	786,824


						Accumulated Other Comprehensive Income (Loss)				Total Stockholders' Equity							Accumulated Other Comprehensive Loss				Total Stockholders' Equity
		Common Shares		Retained Earnings				Treasury Stock					Common Shares		Retained Earnings				Treasury Stock
(Dollars in thousands)	(Dollars in thousands)											(Dollars in thousands)
Balance, December 31, 2020		$	422,536	$	190,691	$	1,336	$	(38,890)	$	575,673
Balance, December 31, 2021												Balance, December 31, 2021	$	686,282	$	207,076	$	(11,619)	$	(36,714)	$	845,025

Net income	Net income	—		19,808		—		—		19,808		Net income	—		48,465		—		—		48,465
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—		—		(7,224)		—		(7,224)		Other comprehensive loss, net of tax	—		—		(81,740)		—		(81,740)

Cash dividends declared	Cash dividends declared	—		(20,991)		—		—		(20,991)		Cash dividends declared	—		(20,933)		—		—		(20,933)

Reissuance of treasury stock for common share awards	Reissuance of treasury stock for common share awards	(2,223)		—		—		2,223		—		Reissuance of treasury stock for common share awards	(4,725)		—		—		4,725		—

Reissuance of treasury stock for deferred compensation plan for Boards of Directors	Reissuance of treasury stock for deferred compensation plan for Boards of Directors	—		—		—		74		74		Reissuance of treasury stock for deferred compensation plan for Boards of Directors	—		—		—		78		78
Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors	Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors	—		—		—		(1,076)		(1,076)		Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors	—		—		—		(1,436)		(1,436)

Common shares repurchased under share repurchase program then in effect												Common shares repurchased under share repurchase program then in effect	—		—		—		(5,987)		(5,987)
Common shares issued under dividend reinvestment plan	Common shares issued under dividend reinvestment plan	655		—		—		—		655		Common shares issued under dividend reinvestment plan	601		—		—		—		601
Common shares issued under compensation plan for Boards of Directors	Common shares issued under compensation plan for Boards of Directors	81		—		—		228		309		Common shares issued under compensation plan for Boards of Directors	44		—		—		208		252

Common shares issued under employee stock purchase plan	Common shares issued under employee stock purchase plan	98		—		—		275		373		Common shares issued under employee stock purchase plan	61		—		—		285		346
Stock-based compensation	Stock-based compensation	2,382		—		—		—		2,382		Stock-based compensation	2,153		—		—		—		2,153

Issuance of common shares related to merger with Premier Financial Bancorp, Inc.		261,899		—		—		—		261,899

Balance, September 30, 2021		$	685,428	$	189,508	$	(5,888)	$	(37,166)	$	831,882

Balance, June 30, 2022												Balance, June 30, 2022	$	684,416	$	234,608	$	(93,359)	$	(38,841)	$	786,824

Table of Contents


						Accumulated Other Comprehensive Income (Loss)				Total Stockholders' Equity							Accumulated Other Comprehensive (Loss) Income				Total Stockholders' Equity
		Common Shares		Retained Earnings				Treasury Stock					Common Shares		Retained Earnings				Treasury Stock
(Dollars in thousands)	(Dollars in thousands)											(Dollars in thousands)
Balance, June 30, 2020		$	421,236	$	173,572	$	4,634	$	(30,265)	$	569,177
Balance, March 31, 2021												Balance, March 31, 2021	$	422,370	$	199,321	$	(4,962)	$	(37,836)	$	578,893

Net income	Net income	—		10,210		—		—		10,210		Net income	—		10,103		—		—		10,103
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		—		(1,692)		—		(1,692)		Other comprehensive income, net of tax	—		—		2,740		—		2,740

Cash dividends declared	Cash dividends declared	—		(6,770)		—		—		(6,770)		Cash dividends declared	—		(7,065)		—		—		(7,065)

Reissuance of treasury stock for common share awards	Reissuance of treasury stock for common share awards	(321)		—		—		321		—		Reissuance of treasury stock for common share awards	(432)		—		—		432		—

Reissuance of treasury stock for deferred compensation plan for Boards of Directors												Reissuance of treasury stock for deferred compensation plan for Boards of Directors	—		—		—		72		72
Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors												Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors	—		—		—		(87)		(87)

Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors		—		—		—		(66)		(66)
Common shares repurchased under share repurchase program then in effect		—		—		—		(5,000)		(5,000)
Common shares issued under dividend reinvestment plan	Common shares issued under dividend reinvestment plan	220		—		—		—		220		Common shares issued under dividend reinvestment plan	90		—		—		—		90
Common shares issued under compensation plan for Boards of Directors	Common shares issued under compensation plan for Boards of Directors	(11)		—		—		63		52		Common shares issued under compensation plan for Boards of Directors	12		—		—		43		55

Common shares issued under employee stock purchase plan	Common shares issued under employee stock purchase plan	(23)		—		—		134		111		Common shares issued under employee stock purchase plan	26		—		—		92		118
Stock-based compensation	Stock-based compensation	614		—		—		—		614		Stock-based compensation	586		—		—		—		586

Balance, September 30, 2020		$	421,715	$	177,012	$	2,942	$	(34,813)	$	566,856
Balance, June 30, 2021												Balance, June 30, 2021	$	422,652	$	202,359	$	(2,222)	$	(37,284)	$	585,505


						Accumulated Other Comprehensive (Loss) Income				Total Stockholders' Equity							Accumulated Other Comprehensive Income (Loss)				Total Stockholders' Equity
		Common Shares		Retained Earnings				Treasury Stock					Common Shares		Retained Earnings				Treasury Stock
(Dollars in thousands)	(Dollars in thousands)											(Dollars in thousands)
Balance, December 31, 2019		$	420,876	$	187,149	$	(1,425)	$	(12,207)	$	594,393
Balance, December 31, 2020												Balance, December 31, 2020	$	422,536	$	190,691	$	1,336	$	(38,890)	$	575,673

Net income	Net income	—		14,194		—		—		14,194		Net income	—		25,566		—		—		25,566
Other comprehensive income, net of tax		—		—		4,367		—		4,367
Other comprehensive loss, net of tax												Other comprehensive loss, net of tax	—		—		(3,558)		—		(3,558)

Cash dividends declared	Cash dividends declared	—		(20,622)		—		—		(20,622)		Cash dividends declared	—		(13,898)		—		—		(13,898)

Reissuance of treasury stock for common share awards	Reissuance of treasury stock for common share awards	(2,583)		—		—		2,583		—		Reissuance of treasury stock for common share awards	(2,172)		—		—		2,172		—

Reissuance of treasury stock for deferred compensation plan for Boards of Directors	Reissuance of treasury stock for deferred compensation plan for Boards of Directors	—		—		—		59		59		Reissuance of treasury stock for deferred compensation plan for Boards of Directors	—		—		—		74		74
Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors	Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors	—		—		—		(1,052)		(1,052)		Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors	—		—		—		(998)		(998)
Common shares repurchased under share repurchase program then in effect		—		—		—		(25,000)		(25,000)

Common shares issued under dividend reinvestment plan	Common shares issued under dividend reinvestment plan	463		—		—		—		463		Common shares issued under dividend reinvestment plan	378		—		—		—		378
Common shares issued under compensation plan for Boards of Directors	Common shares issued under compensation plan for Boards of Directors	9		—		—		316		325		Common shares issued under compensation plan for Boards of Directors	65		—		—		184		249
Common shares issued under performance unit awards, net of tax		41		—		—		138		179

Common shares issued under employee stock purchase plan	Common shares issued under employee stock purchase plan	(40)		—		—		350		310		Common shares issued under employee stock purchase plan	61		—		—		174		235
Stock-based compensation	Stock-based compensation	2,949		—		—		—		2,949		Stock-based compensation	1,784		—		—		—		1,784
Impact of adoption of new accounting standard, net of taxes (a)		—		(3,709)		—		—		(3,709)

Balance, September 30, 2020		$	421,715	$	177,012	$	2,942	$	(34,813)	$	566,856

Balance, June 30, 2021												Balance, June 30, 2021	$	422,652	$	202,359	$	(2,222)	$	(37,284)	$	585,505

~~(a)On January 1, 2020, Peoples adopted ASU 2016-13, which resulted in a reduction to retained earnings of $3.7 million, net of statutory federal corporate income tax.~~

See Notes to the Unaudited Condensed Consolidated Financial Statements

Table of Contents

PEOPLES BANCORP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


		Nine Months Ended					Six Months Ended
		September 30,					June 30,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		(Dollars in thousands)	2022		2021
Net cash provided by operating activities	Net cash provided by operating activities	$	66,722	$	55,992	Net cash provided by operating activities	$	62,708	$	38,675
Investing activities:	Investing activities:					Investing activities:
Available-for-sale investment securities:	Available-for-sale investment securities:					Available-for-sale investment securities:
Purchases	Purchases	(715,263)		(171,251)		Purchases	(233,126)		(317,502)
Proceeds from sales	Proceeds from sales	480,127		11,582		Proceeds from sales	8,732		58,483
Proceeds from principal payments, calls and prepayments	Proceeds from principal payments, calls and prepayments	227,574		248,021		Proceeds from principal payments, calls and prepayments	112,795		146,148
Held-to-maturity investment securities:	Held-to-maturity investment securities:					Held-to-maturity investment securities:
Purchases	Purchases	(181,331)		(8,404)		Purchases	(38,622)		(116,941)
Proceeds from principal payments	Proceeds from principal payments	3,774		3,834		Proceeds from principal payments	11,109		2,586
Other investment securities:	Other investment securities:					Other investment securities:
Purchases	Purchases	(1,221)		(5,901)		Purchases	(11,013)		(541)
Proceeds from sales	Proceeds from sales	8,552		7,937		Proceeds from sales	3,101		5,696

Net decrease (increase) in loans held for investment		156,598		(505,161)
Net decrease in loans held for investment						Net decrease in loans held for investment	70,872		116,441
Net expenditures for premises and equipment	Net expenditures for premises and equipment	(5,893)		(3,702)		Net expenditures for premises and equipment	(3,462)		(2,850)
Proceeds from sales of other real estate owned	Proceeds from sales of other real estate owned	153		96		Proceeds from sales of other real estate owned	307		113

Purchase of bank owned life insurance						Purchase of bank owned life insurance	(30,000)		—
Proceeds from bank owned life insurance contracts	Proceeds from bank owned life insurance contracts	—		109		Proceeds from bank owned life insurance contracts	248		—
Business acquisitions, net of cash received	Business acquisitions, net of cash received	136,119		(94,856)		Business acquisitions, net of cash received	(85,793)		(116,644)
Investment in limited partnership and tax credit funds	Investment in limited partnership and tax credit funds	(2,900)		(13)		Investment in limited partnership and tax credit funds	(1,151)		(4,996)
Net cash provided by (used in) investing activities		106,289		(517,709)
Net cash used in investing activities						Net cash used in investing activities	(196,003)		(230,007)
Financing activities:	Financing activities:					Financing activities:
Net increase in non-interest-bearing deposits	Net increase in non-interest-bearing deposits	69,557		311,704		Net increase in non-interest-bearing deposits	20,443		183,722
Net increase in interest-bearing deposits	Net increase in interest-bearing deposits	95,881		348,779		Net increase in interest-bearing deposits	46,485		138,442
Net increase (decrease) in short-term borrowings	Net increase (decrease) in short-term borrowings	32,625		(154,914)		Net increase (decrease) in short-term borrowings	154,915		(21,765)
Proceeds from long-term borrowings	Proceeds from long-term borrowings	—		50,000		Proceeds from long-term borrowings	11,255		—
Payments on long-term borrowings	Payments on long-term borrowings	(2,156)		(1,857)		Payments on long-term borrowings	(89,217)		(563)

Cash dividends paid	Cash dividends paid	(20,915)		(20,147)		Cash dividends paid	(21,081)		(13,898)
Purchase of treasury stock under share repurchase program	Purchase of treasury stock under share repurchase program	—		(25,000)		Purchase of treasury stock under share repurchase program	(5,987)		—
Purchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors to be held as treasury stock	Purchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors to be held as treasury stock	(1,076)		(1,052)		Purchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors to be held as treasury stock	(1,436)		(998)
Proceeds from issuance of common shares	Proceeds from issuance of common shares	655		262		Proceeds from issuance of common shares	576		365

Net cash provided by financing activities	Net cash provided by financing activities	174,571		507,775		Net cash provided by financing activities	115,953		285,305
Net increase in cash and cash equivalents		347,582		46,058
Net (decrease) increase in cash and cash equivalents						Net (decrease) increase in cash and cash equivalents	(17,342)		93,973
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	152,100		115,193		Cash and cash equivalents at beginning of period	415,727		152,100
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	499,682	$	161,251	Cash and cash equivalents at end of period	$	398,385	$	246,073

Supplemental cash flow information:	Supplemental cash flow information:					Supplemental cash flow information:
Interest paid	Interest paid	$	10,262	$	15,179	Interest paid	$	6,585	$	7,374
Income taxes paid	Income taxes paid	6,450		7,500		Income taxes paid	1,797		5,250

Supplemental noncash disclosures:	Supplemental noncash disclosures:					Supplemental noncash disclosures:
Transfers from loans to other real estate owned		210		163
Transfers from total loans to other real estate owned						Transfers from total loans to other real estate owned	55		210
Lease right-of-use assets obtained in exchange for lessee operating lease liabilities	Lease right-of-use assets obtained in exchange for lessee operating lease liabilities	101		38		Lease right-of-use assets obtained in exchange for lessee operating lease liabilities	27		79

See Notes to the Unaudited Condensed Consolidated Financial Statements

Table of Contents

PEOPLES BANCORP INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Summary of Significant Accounting Policies

Basis of Presentation: The accompanying Unaudited Condensed Consolidated Financial Statements of Peoples Bancorp Inc. and its subsidiaries ("Peoples" refers to Peoples Bancorp Inc. and its consolidated subsidiaries collectively, except where the context indicates the reference relates solely to Peoples Bancorp Inc.) have been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP") for interim financial information and the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not contain all of the information and footnotes required by US GAAP for annual financial statements and should be read in conjunction with Peoples’ Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 ("Peoples' ~~2020~~2021 Form 10-K").

The accounting and reporting policies followed in the presentation of the accompanying Unaudited Condensed Consolidated Financial Statements are consistent with those described in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples’ ~~2020~~2021 Form 10-K, as updated by the information contained in this ~~quarterly report~~Quarterly Report on Form 10-Q for the quarterly period ended ~~September~~June 30, ~~2021~~2022 (this "Form 10-Q"). Management has evaluated all significant events and transactions that occurred after ~~September~~June 30, ~~2021~~2022 for potential recognition or disclosure in these unaudited condensed consolidated financial statements. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated. Such adjustments are normal and recurring in nature. Intercompany accounts and transactions have been eliminated. The Consolidated Balance Sheet at December 31, ~~2020,~~2021, contained herein, has been derived from the audited Consolidated Balance Sheet included in Peoples’ ~~2020~~2021 Form 10-K.

Leases originated by Peoples, that Peoples has the positive intent and ability to hold for the foreseeable future or to maturity or payoff, are reported at the net investment of the lease, net of initial direct costs, charge-offs and an allowance for credit losses. Peoples considers a lease to be past due if any required principal or interest payments have not been received as of the date such payments were required to be made under the terms of the lease agreement. Upon detection of the reduced ability of a lessee to meet cash flow obligations, the lease is typically charged down to the net realizable value, with the residual balance placed on nonaccrual status. Leases deemed to be uncollectable are charged against the allowance for credit losses, while recoveries of previously charged off amounts are credited to the allowance for credit losses.

Leases acquired by Peoples in a business combination that have evidence of more than insignificant credit deterioration, which includes leases that Peoples believes it is probable that Peoples will be unable to collect all contractually required payments, are considered "purchased credit deteriorated" leases. These leases are recorded at the purchase price, and an allowance for credit losses is determined using the same methodology as for other leases. The initial allowance for credit losses determined on a collective basis is allocated to individual leases. The total of the purchase price and the allowance for credit losses is the initial amortized cost basis of these leases. The variance between the initial amortized cost basis and the fair value of a lease is considered an interest premium or discount, which is amortized or accreted into interest income on a level yield method over the life of the lease.

Leases acquired by Peoples in a business combination that are not considered purchased credit deteriorated are recorded at the fair value and the difference between the acquisition date fair value and the contractual amounts due at the acquisition date represents the discount or premium to the leases' cost basis and is accreted or amortized to interest income over the leases' remaining life using the level yield method.

The preparation of the condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Results of operations for interim periods are not necessarily indicative of the results to be expected for the full year, due in part to seasonal variations and unusual or infrequently occurring items.

New Accounting Pronouncements: From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies that are adopted by Peoples as of the required effective dates. The following paragraphs related to new pronouncements should be read in conjunction with "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples’ ~~2020~~2021 Form 10-K. Unless otherwise discussed, management believes the impact of any recently issued standards, including those issued but not yet effective, will not have a material impact on Peoples' financial statements taken as a whole.

Accounting Standards ~~Update~~Updated ("ASU") 2021-05 - Leases (Topic 842): Lessors - Certain Leases with Variable Lease Payments. This ASU addresses stakeholders' concerns by amending the lease classification requirements for lessors to align them with practice under Topic 840. This ASU is effective for fiscal years beginning after December 15, 2021, for all entities. Peoples early adopted this ASU as of September 30, 2021. The adoption of this ASU did not have an impact on Peoples' consolidated financial statements.

ASU 2020-04 - Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This guidance was further updated by ASU ~~allows relief where the benchmark interest rate~~2021-01. This update is ~~changed on a loan, lease or hedging relationship between~~effective as of March 12, 2020

~~Table of Contents~~

~~and~~ through December 31, 2022. This ASU was early adopted as of September 30, 2021, and isdoes not ~~expected to~~ have a significant impact on Peoples' ~~consolidated financial statements,~~Consolidated Financial Statements, but is expected to reduce the accounting burden of assessing contracts impacted by reference rate reform.

ASU ~~2019-12~~2022-01 - ~~Income Taxes~~Fair Value Hedging - Portfolio Layer Method - Derivatives and Hedging (Topic ~~740): Simplifying~~815). This ASU clarifies the ~~Accounting~~guidance in ASC 815 on fair value hedge accounting of interest rate risk for ~~Income Taxes. The~~portfolios of financial assets. This ASU expands and clarifies the current guidance on accounting for fair value hedge basis adjustments under the portfolio layer method for both single-layer and multiple-layer hedges. For entities that have already adopted ASU 2017-12, as Peoples has, the amendments in ~~this~~ ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending existing guidance. These amendments2022-01 are effective for fiscal years beginning after December 15, ~~2020, and~~2022, including interim periods within those fiscal years. ~~Peoples adopted~~The amendments in this ASU asmay also be early adopted, including adoption in any interim period. Peoples is currently evaluating the impact of ~~January 1, 2021. The adoption of~~the amendments in this ASU ~~did not~~on Peoples' consolidated financial statements.

ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings ("TDRs") and Vintage Disclosures. This ASU eliminates the accounting guidance on troubled debt restructurings (TDRs) for creditors and amends the guidance on disclosures to include current-period gross write-offs by year of origination. This ASU also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. For entities that have ~~a material effect~~already adopted ASU 2016-13, as Peoples has, the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments in this ASU may also be early adopted, including adoption in any interim period. Peoples is currently evaluating the impact of the amendments in this ASU on Peoples' consolidated financial statements.

Note 2 Fair Value of Assets and Liabilities

Table of Contents

Fair value represents the amount expected to be received to sell an asset or paid to transfer a liability in its principal or most advantageous market in an orderly transaction between market participants at the measurement date. In accordance with fair value accounting guidance, Peoples measures, records and reports various types of assets and liabilities at fair value on either a recurring or a non-recurring basis in the Unaudited Condensed Consolidated Financial Statements. Those assets and liabilities are presented below in the sections entitled “Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis” and “Assets and Liabilities Required to be Measured and Reported at Fair Value on a Non-Recurring Basis.”

Depending on the nature of the asset or the liability, Peoples uses various valuation methodologies and assumptions to estimate fair value. The measurement of fair value under US GAAP uses a hierarchy, which is described in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' ~~2020~~2021 Form 10-K.

Assets and liabilities are assigned to a level within the fair value hierarchy based on the lowest level of significant input used to measure fair value. Assets and liabilities may change levels within the fair value hierarchy due to market conditions or other circumstances. Those transfers are recognized on the date of the event that prompted the transfer. There were no transfers of assets or liabilities required to be measured at fair value on a recurring basis between levels of the fair value hierarchy during the periods presented.

Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis

The following table provides the fair value for assets and liabilities required to be measured and reported at fair value on a recurring basis on the Unaudited Consolidated Balance Sheets by level in the fair value hierarchy.


		Recurring Fair Value Measurements at Reporting Date													Recurring Fair Value Measurements at Reporting Date
		September 30, 2021						December 31, 2020							June 30, 2022						December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		(Dollars in thousands)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3

Assets:	Assets:																	Assets:
Available-for-sale investment securities:	Available-for-sale investment securities:													Available-for-sale investment securities:
Obligations of:	Obligations of:													Obligations of:

U.S. Treasury and government agencies														U.S. Treasury and government agencies	$	175,255	$	—	$	—	$	35,604	$	—	$	—
U.S. government sponsored agencies	U.S. government sponsored agencies	$	—	$	78,481	$	—	$	—	$	5,363	$	—	U.S. government sponsored agencies	—		82,465		—		—		81,739		—
States and political subdivisions	States and political subdivisions	—		252,919		—		—		114,919		—		States and political subdivisions	—		249,402		—		—		259,319		—
Residential mortgage-backed securities	Residential mortgage-backed securities	—		898,459		—		—		623,218		—		Residential mortgage-backed securities	—		691,735		—		—		828,517		—
Commercial mortgage-backed securities	Commercial mortgage-backed securities	—		62,552		—		—		4,783		—		Commercial mortgage-backed securities	—		58,301		—		—		63,519		—
Bank-issued trust preferred securities	Bank-issued trust preferred securities	—		4,679		—		—		4,730		—		Bank-issued trust preferred securities	—		10,440		—		—		6,795		—

Total available-for-sale securities	Total available-for-sale securities	—		1,297,090		—		—		753,013		—		Total available-for-sale securities	$	175,255	$	1,092,343	$	—	$	35,604	$	1,239,889	$	—
Equity investment securities (a)	Equity investment securities (a)	145		245		—		107		192		—		Equity investment securities (a)	135		192		—		160		184		—
Derivative assets (b)	Derivative assets (b)	—		15,653		—		—		27,332		—		Derivative assets (b)	—		20,145		—		—		12,163		—
Liabilities:	Liabilities:													Liabilities:
Derivative liabilities (c)	Derivative liabilities (c)	$	—	$	22,904	$	—	$	—	$	39,395	$	—	Derivative liabilities (c)	$	—	$	17,602	$	—	$	—	$	17,183	$	—

(a) Included in "Other investment securities" on the Unaudited Consolidated Balance Sheets. For additional information, see "Note 3 Investment Securities" of the Notes to the Unaudited Condensed Consolidated Financial Statements.

(b) Included in "Other assets" on the Unaudited Consolidated Balance Sheets. For additional information, see "Note 10 Derivative Financial Instruments" of the Notes to the Unaudited Condensed Consolidated Financial Statements.

(c) Included in "Accrued expenses and other liabilities" on the Unaudited Consolidated Balance Sheets. For additional information, see "Note 10 Derivative Financial Instruments" of the Notes to the Unaudited Condensed Consolidated Financial Statements.

Available-for-Sale Investment Securities: The fair values ~~reported~~used by Peoples are obtained from an independent pricing service and represent either quoted market prices for the identical securities (Level 1) or fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, ~~London Interbank Offered Rate ("LIBOR")~~LIBOR (or other relevant) yield curves, credit spreads and prices from market makers and live trading systems (Level 2). Management reviews the valuation methodology and quality controls utilized by the pricing services in management's overall assessment of the reasonableness of the fair values provided, and challenges prices when management believes a material discrepancy in pricing exists.

~~Table of Contents~~

Equity Investment Securities: The fair values of Peoples' equity investment securities are obtained from quoted prices in active exchange markets for identical assets or liabilities (Level 1) or quoted prices in less active markets (Level 2).

Derivative Assets and Liabilities: Derivative assets and liabilities are recognized on the Unaudited Consolidated Balance Sheets at their fair value within "Other assets", and "Accrued expenses and other liabilities", respectively. The fair value for derivative financial instruments is determined based on market prices, broker-dealer quotations on similar products, or other related ~~market~~ input parameters (Level 2).

Table of Contents

Assets and Liabilities Required to be Measured and Reported at Fair Value on a Non-Recurring Basis

The following table provides the fair value for each class of assets and liabilities required to be measured and reported at fair value on a non-recurring basis on the Unaudited Consolidated Balance Sheets by level in the fair value hierarchy ~~during the nine months ended September~~at June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.


		Non-Recurring Fair Value Measurements at Reporting Date													Non-Recurring Fair Value Measurements at Reporting Date
		September 30, 2021						December 31, 2020							June 30, 2022						December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		(Dollars in thousands)	Level 2		Level 3				Level 2		Level 3
																			Level 2	Level 3
Assets:	Assets:													Assets:
Loans held for sale		$	—	$	2,751	$	—	$	—	$	4,733	$	—
Collateral dependent loans														Collateral dependent loans	$	—	$	1,021							$	—	$	430
Loans held for sale (a)														Loans held for sale (a)	$	749	$	—			$	418	$	—
Other real estate owned ("OREO")	Other real estate owned ("OREO")	$	—	$	—	$	11,268	$	—	$	—	$	134	Other real estate owned ("OREO")	$	—	$	—			$	—	$	87
Servicing rights (a)(b)		$	—	$	—	$	2,294	$	—	$	—	$	2,591
Servicing rights (b)(c)														Servicing rights (b)(c)	$	—	$	24			$	—	$	22

(a) Loans held for sale are presented gross of a valuation allowance of $52 and $0 as of June 30, 2022 and December 31, 2021, respectively.

(b) Included in "Other intangible assets" on the Unaudited Consolidated Balance Sheets. Servicing rights are carried at the lower of cost or market value.

~~(b)~~(c) Peoples established a valuation allowance on servicing rights of ~~$16~~$6 at ~~September~~June 30, ~~2021~~2022 and ~~$161~~$12 at December 31, ~~2020, as the~~2021. The fair value of the servicing rights on 10-year fixed rate loans was less than the carrying value.

Collateral Dependent Loans:Loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty are considered collateral dependent. Peoples utilizes outside third-party appraisal services to value the underlying collateral, for which Peoples uses to report the loans at their fair value (Level 3).

Loans Held for Sale: Loans originated and intended to be sold in the secondary market, generally ~~1-4~~one-to-four family residential loans, are carried, in aggregate, at the lower of cost or estimated fair value. Peoples uses a valuation model using quoted market prices of similar instruments in arriving at the fair value (Level 2).

Other Real Estate Owned: OREO, included in "Other assets" on the Unaudited Consolidated Balance Sheets, is comprised primarily of commercial and residential real estate properties acquired by Peoples in satisfaction of a loan. OREO obtained in satisfaction of a loan is recorded at the lower of cost or estimated fair value, less estimated costs to sell the property. The carrying value of OREO is not re-measured to fair value on a recurring ~~basis. Peoples assesses the carrying value of OREO quarterly for impairment considering market activity and~~basis, but is based on recent real estate ~~appraisals.~~appraisals and is updated at least annually. These appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales approach and the income ~~approach~~approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available (Level 3). ~~The increase in OREO for the nine months ended September 30, 2021 was due to the OREO acquired in the Premier Financial Bancorp Inc. ("Premier") acquisition.~~

Servicing Rights: Servicing rights are included in "Other intangible assets" on the Unaudited Consolidated Balance Sheets. The fair value of servicing rights is determined by using a discounted cash flow model, which estimates the present value of the future net cash flows of the servicing portfolio based on various factors, such as servicing costs, expected prepayment speeds and discount rates (Level 3). The carrying value of servicing rights is not re-measured to fair value on a recurring basis. Peoples assesses the carrying value of servicing rights quarterly for impairment.

Table of Contents

Financial Instruments Not Required to be Measured or Reported at Fair Value

The following table provides the carrying amount for each class of assets and liabilities and the fair value for certain financial instruments that are not required to be measured or reported at fair value on the Unaudited Consolidated Balance Sheets.


		Fair Value Measurements of Other Financial Instruments										Fair Value Measurements of Other Financial Instruments
(Dollars in thousands)	(Dollars in thousands)	Fair Value Hierarchy Level	September 30, 2021				December 31, 2020				(Dollars in thousands)	Fair Value Hierarchy Level	June 30, 2022				December 31, 2021
			Carrying Amount		Fair Value		Carrying Amount		Fair Value				Carrying Amount		Fair Value		Carrying Amount		Fair Value

Assets:	Assets:													Assets:
Cash and cash equivalents	Cash and cash equivalents	1	$	499,682	$	499,682	$	152,100	$	152,100	Cash and cash equivalents	1	$	398,385	$	398,385	$	415,727	$	415,727

Held-to-maturity investment securities:	Held-to-maturity investment securities:										Held-to-maturity investment securities:
Obligations of:	Obligations of:										Obligations of:
U.S. government sponsored agencies	U.S. government sponsored agencies	2	29,995		29,147		—		—		U.S. government sponsored agencies	2	50,990		44,438		36,431		35,513
States and political subdivisions(a)	States and political subdivisions(a)	2	124,181		122,435		35,139		35,484		States and political subdivisions(a)	2	151,320		122,078		151,688		150,138
Residential mortgage-backed securities	Residential mortgage-backed securities	2	41,035		41,501		25,890		26,742		Residential mortgage-backed securities	2	112,095		99,970		110,708		110,159
Commercial mortgage-backed securities	Commercial mortgage-backed securities	2	47,889		46,917		5,429		5,856		Commercial mortgage-backed securities	2	86,601		74,602		75,588		74,145
Total held-to-maturity securities	Total held-to-maturity securities		243,100		240,000		66,458		68,082		Total held-to-maturity securities		401,006		341,088		374,415		369,955

Other investment securities:	Other investment securities:										Other investment securities:
Other investment securities at cost:	Other investment securities at cost:										Other investment securities at cost:
Federal Home Loan Bank ("FHLB") stock	Federal Home Loan Bank ("FHLB") stock	n/a	17,918		17,918		21,718		21,718		Federal Home Loan Bank ("FHLB") stock	N/A	17,308		17,308		17,308		17,308
Federal Reserve Bank ("FRB") stock	Federal Reserve Bank ("FRB") stock	n/a	13,311		13,311		13,311		13,311		Federal Reserve Bank ("FRB") stock	N/A	21,226		21,226		13,311		13,311
Total other investment securities at cost	Total other investment securities at cost		31,229		31,229		35,029		35,029		Total other investment securities at cost		38,534		38,534		30,619		30,619
Other investment securities at fair value:	Other investment securities at fair value:										Other investment securities at fair value:
Nonqualified deferred compensation ~~(a)~~(b)	Nonqualified deferred compensation ~~(a)~~(b)	2	2,083		2,083		1,867		1,867		Nonqualified deferred compensation ~~(a)~~(b)	1	2,016		2,016		2,240		2,240
Other investment securities ~~(b)~~(c)	Other investment securities ~~(b)~~(c)	2	784		784		365		365		Other investment securities ~~(b)~~(c)	2	779		779		784		784
Total other investment securities at fair value			2,867		2,867		2,232		2,232
Total other investment securities (b)			34,096		34,096		37,261		37,261
Total other investment securities											Total other investment securities		41,329		41,329		33,643		33,643

Loans and leases, net of deferred fees and costs(d)	Loans and leases, net of deferred fees and costs(d)	3	4,491,028		4,595,800		3,402,940		3,458,732		Loans and leases, net of deferred fees and costs(d)	3	4,575,905		4,350,080		4,481,600		4,510,605
Bank owned life insurance	Bank owned life insurance	3	72,920		72,920		71,591		71,591		Bank owned life insurance	2	104,339		104,339		73,358		73,358
Liabilities:	Liabilities:										Liabilities:
Deposits	Deposits	2	$	5,832,020	$	5,546,935	$	3,910,459	$	3,773,602	Deposits	2	$	5,929,225	$	5,039,094	$	5,862,552	$	5,546,552
Short-term borrowings	Short-term borrowings	2	184,693		186,028		73,261		74,170		Short-term borrowings	2	326,442		329,191		166,482		164,990
Long-term borrowings	Long-term borrowings	2	99,411		106,497		110,568		117,364		Long-term borrowings	2	123,687		124,728		99,475		101,664

(a) Held-to-maturity investment securities are presented gross of an allowance for credit losses of $286 as of June 30, 2022 and December 31, 2021.

(b) Nonqualified deferred compensation includes mutual funds as part of the investment.

~~(b)~~(c) "Other investment securities", as reported on the Unaudited Consolidated Balance Sheets, also included equity investment securities at ~~September~~June 30, ~~2021~~2022

and at December 31, ~~2020,~~2021, which are reported in the Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis

table above and not included in this table.

(d) Loans and leases, net of deferred fees and costs, are presented gross of an allowance for credit losses of $52.3 million and $64.0 million as of June 30, 2022 and December 31, 2021, respectively.

For certain financial assets and liabilities, carrying value approximates fair value due to the nature of the financial ~~instruments.~~instrument. These financial instruments include cash and cash equivalents, ~~demand and other non-maturity deposits,~~ and overnight borrowings. Peoples used the following methods and assumptions in estimating the fair value of the following financial instruments:

Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, balances due from other banks, interest-bearing deposits in other banks, federal funds sold and other short-term investments with original maturities of ninety days or less. The carrying amount for cash on hand and balances due from banks is a reasonable estimate of fair value (Level 1).

Held-to-Maturity Investment Securities: The fair values used by Peoples are obtained from an independent pricing service and represent fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, ~~LIBOR~~relevant yield curves, credit spreads and prices from market makers and live trading systems (Level 2). Management reviews the valuation methodology and quality controls utilized by the pricing ~~service~~services in management's overall assessment of the reasonableness of the fair values provided, and challenges prices when management believes a material discrepancy in pricing exists.

~~Other Investment Securities:~~ ~~Other investment securities are measured at their respective redemption values due to restrictions placed on their transferability (Level 2).~~

Table of Contents

Other Investment Securities: Other investment securities at cost are not recorded at fair value as they are not marketable securities. Other investment securities at fair value are valued using quoted prices in an active market (Level 1) or quoted prices in less active markets (Level 2).

Loans and Leases, Net of Deferred Fees and Costs: The fair value of portfolio loans and leases assumes sale of the underlying notes to a third-party financial investor. Accordingly, this value is not necessarily the value to Peoples if the notes were ~~held to maturity.~~held-to-maturity. Peoples considered interest rate, credit and market factors in estimating the fair value of loans and leases (Level 3). Fair values for loans and leases are estimated using a discounted cash flow methodology. The discount rates take into account interest rates currently being offered to customers for loans and leases with similar terms, the credit risk associated with the loans and leases and other market factors, including liquidity.

Bank Owned Life Insurance: Peoples' bank owned life insurance policies are recorded at their cash surrender value (Level 3)2). Peoples recognizes tax-exempt income from the periodic increases in the cash surrender value of these policies and from death benefits.

Deposits: The fair value of ~~fixed maturity~~fixed-maturity certificates of deposit ("CDs") is estimated using a discounted cash flow calculation based on current rates offered for deposits of similar remaining maturities (Level 2). Demand and other non-fixed-maturity deposits are estimated using a discounted cash flow calculation based on maturity, attrition and re-pricing assumptions.

Short-term Borrowings: The fair value of short-term borrowings is estimated using a discounted cash flow analysis based on rates currently available to Peoples for borrowings with similar terms (Level 2).

Long-term Borrowings: The fair value of long-term borrowings is estimated using a discounted cash flow analysis based on rates currently available to Peoples for borrowings with similar terms (Level 2).

Certain financial assets and financial liabilities that are not required to be measured or reported at fair value can be subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These financial assets and liabilities include the following: customer relationships, the deposit base, and other information required to compute Peoples’ aggregate fair value, ~~that~~which are not included in the above information. Accordingly, the above fair values are not intended to represent the aggregate fair value of Peoples.

Note 3 Investment Securities

Available-for-sale

The following table summarizes Peoples' available-for-sale investment securities:


(Dollars in thousands)	(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2021
June 30, 2022										June 30, 2022
Obligations of:	Obligations of:									Obligations of:

U.S. Treasury and government agencies										U.S. Treasury and government agencies	$	179,095	$	—	$	(3,840)	$	175,255
U.S. government sponsored agencies	U.S. government sponsored agencies	$	78,916	$	102	$	(537)	$	78,481	U.S. government sponsored agencies	92,245		4		(9,784)		82,465
States and political subdivisions	States and political subdivisions	252,706		3,220		(3,007)		252,919		States and political subdivisions	278,567		250		(29,415)		249,402
Residential mortgage-backed securities	Residential mortgage-backed securities	894,848		10,453		(6,842)		898,459		Residential mortgage-backed securities	762,511		1,678		(72,454)		691,735
Commercial mortgage-backed securities	Commercial mortgage-backed securities	63,568		85		(1,101)		62,552		Commercial mortgage-backed securities	66,465		5		(8,169)		58,301
Bank-issued trust preferred securities	Bank-issued trust preferred securities	4,616		233		(170)		4,679		Bank-issued trust preferred securities	10,738		63		(361)		10,440

Total available-for-sale securities	Total available-for-sale securities	$	1,294,654	$	14,093	$	(11,657)	$	1,297,090	Total available-for-sale securities	$	1,389,621	$	2,000	$	(124,023)	$	1,267,598
December 31, 2020
December 31, 2021										December 31, 2021
Obligations of:	Obligations of:									Obligations of:

U.S. Treasury and government agencies										U.S. Treasury and government agencies	$	35,609	$	12	$	(17)	$	35,604
U.S. government sponsored agencies	U.S. government sponsored agencies	$	4,960	$	403	$	—	$	5,363	U.S. government sponsored agencies	83,019		58		(1,338)		81,739
States and political subdivisions	States and political subdivisions	110,401		4,642		(124)		114,919		States and political subdivisions	259,508		3,187		(3,376)		259,319
Residential mortgage-backed securities	Residential mortgage-backed securities	609,865		15,377		(2,024)		623,218		Residential mortgage-backed securities	833,328		6,565		(11,376)		828,517
Commercial mortgage-backed securities	Commercial mortgage-backed securities	4,622		161		—		4,783		Commercial mortgage-backed securities	64,971		42		(1,494)		63,519
Bank-issued trust preferred securities	Bank-issued trust preferred securities	4,696		192		(158)		4,730		Bank-issued trust preferred securities	6,711		215		(131)		6,795

Total available-for-sale securities	Total available-for-sale securities	$	734,544	$	20,775	$	(2,306)	$	753,013	Total available-for-sale securities	$	1,283,146	$	10,079	$	(17,732)	$	1,275,493

Table of Contents

The gross gains and losses realized by Peoples from sales of available-for-sale securities for the periods ended ~~September~~June 30 were as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		2021		2020		(Dollars in thousands)	2022		2021		2022		2021
Gross gains realized	Gross gains realized	$	150	$	2	$	786	$	386	Gross gains realized	$	14	$	297	$	160	$	636
Gross losses realized	Gross losses realized	(316)		—		(1,490)		(3)		Gross losses realized	(58)		(499)		(74)		(1,174)
Net (loss) gain realized	Net (loss) gain realized	$	(166)	$	2	$	(704)	$	383	Net (loss) gain realized	$	(44)	$	(202)	$	86	$	(538)

The cost of investment securities sold, and any resulting gain or loss, were based on the specific identification method and recognized as of the trade date.

The following table presents a summary of available-for-sale investment securities that had been in a continuous unrealized loss ~~loss~~ position:

Less than 12 Months 12 Months or More Total
(Dollars in thousands)
Fair
Value
Unrealized Loss No. of Securities
Fair
Value
Unrealized Loss No. of Securities
Fair
Value
Unrealized Loss
September 30, 2021
Obligations of:
U.S. government sponsored agencies $ 49,570 $ 537 $ 7 $ — $ — $ — $ 49,570 $ 537
States and political subdivisions 128,402 3,007 76 — — — 128,402 3,007
Residential mortgage-backed securities 466,518 6,079 72 36,160 763 16 502,678 6,842
Commercial mortgage-backed securities 48,974 1,101 17 — — — 48,974 1,101
Bank-issued trust preferred securities — — — 1,830 170 2 1,830 170
Total $ 693,464 $ 10,724 172 $ 37,990 $ 933 18 $ 731,454 $ 11,657
December 31, 2020
Obligations of:
States and political subdivisions $ 17,651 $ 124 5 $ — $ — — $ 17,651 $ 124
Residential mortgage-backed securities 156,659 1,795 45 9,892 229 13 166,551 2,024
Bank-issued trust preferred securities 494 6 1 1,848 152 2 2,342 158
Total $ 174,804 $ 1,925 51 $ 11,740 $ 381 15 $ 186,544 $ 2,306


	Less than 12 Months					12 Months or More					Total
(Dollars in thousands)	Fair Value		Unrealized Loss		No. of Securities	Fair Value		Unrealized Loss		No. of Securities	Fair Value		Unrealized Loss
June 30, 2022
Obligations of:
U.S. Treasury and government agencies	$	175,255	$	3,840	31	$	—	$	—	—	$	175,255	$	3,840
U.S. government sponsored agencies	69,803		8,146		19	6,658		1,638		2	76,461		9,784
States and political subdivisions	143,145		18,282		141	47,152		11,133		21	190,297		29,415
Residential mortgage-backed securities	575,723		57,557		207	91,863		14,897		24	667,586		72,454
Commercial mortgage-backed securities	40,586		5,112		18	16,608		3,057		6	57,194		8,169
Bank-issued trust preferred securities	7,221		280		4	919		81		1	8,140		361

Total	$	1,011,733	$	93,217	420	$	163,200	$	30,806	54	$	1,174,933	$	124,023
December 31, 2021
Obligations of:
U.S. Treasury and government agencies	$	16,914	$	17	6	$	—	$	—	—	$	16,914	$	17
U.S. government sponsored agencies	72,406		1,192		13	4,854		146		1	77,260		1,338
States and political subdivisions	101,397		2,075		71	30,853		1,301		11	132,250		3,376
Residential mortgage-backed securities	573,139		9,051		113	51,103		2,325		14	624,242		11,376
Commercial mortgage-backed securities	60,134		1,494		21	—		—		—	60,134		1,494
Bank-issued trust preferred securities	2,991		9		1	878		122		1	3,869		131

Total	$	826,981	$	13,838	225	$	87,688	$	3,894	27	$	914,669	$	17,732

Management evaluates available-for-sale investment securities for an allowance for credit losses on a quarterly basis. At ~~September~~June 30, ~~2021,~~2022, management concluded that no individual securities at an unrealized loss position required an allowance for credit losses. At ~~September~~June 30, ~~2021,~~2022, Peoples did not have the intent to sell, nor was it more likely than not that Peoples would be required to sell, any of the securities with an unrealized loss prior to recovery. Further, the unrealized losses at both ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 were largely attributable to changes in market interest rates and spreads since the securities were purchased, and were not ~~credit related~~credit-related losses. Accrued interest receivable is not included in investment securities balances, and is presented in the “Other assets” line of the Unaudited Consolidated Balance Sheets, with no recorded allowance for credit losses. Interest receivable on investment securities was ~~$5.7~~$6.3 million at ~~September~~June 30, ~~2021~~2022 and ~~$2.7~~$5.5 million at December 31, ~~2020.~~2021.

At ~~September~~June 30, ~~2021,~~2022, approximately 99% of the mortgage-backed securities with a market value that had been at an unrealized loss position for twelve months or more were issued by U.S. government sponsored agencies. The remaining 1%, or 23 positions, consisted of privately issued mortgage-backed securities with all of the underlying mortgages originated prior to 2004. ~~Neither of the 2~~All 3 positions had a fair value of less than 90% of its book value. Management analyzed the underlying credit quality of these ~~mortgage-backed~~mortgage-

Table of Contents

backed securities and concluded the unrealized losses were primarily attributable to the floating rate nature of these investments and the low remaining number of loans underlying these securities.

The unrealized ~~losses~~loss with respect to the 21 bank-issued trust preferred securities that had been in an unrealized loss position for twelve months or more at ~~September~~June 30, ~~2021 were~~2022 was attributable to the subordinated nature of the debt.

~~Table of Contents~~

The table below presents the amortized cost, fair value and total weighted-average yield of available-for-sale securities by contractual maturity at ~~September~~June 30, ~~2021.~~2022. The weighted-average yields are based on the amortized cost. In some cases, the issuers may have the right to call or prepay obligations without call or prepayment penalties prior to the contractual maturity date.


(Dollars in thousands)	(Dollars in thousands)	Within 1 Year			1 to 5 Years			5 to 10 Years			Over 10 Years			Total			(Dollars in thousands)	Within 1 Year			1 to 5 Years			5 to 10 Years			Over 10 Years			Total
Amortized cost	Amortized cost																Amortized cost
Obligations of:	Obligations of:																Obligations of:

U.S. Treasury and government agencies																	U.S. Treasury and government agencies	$	10,071		$	169,024		$	—		$	—		$	179,095
U.S. government sponsored agencies	U.S. government sponsored agencies	$	—		$	1,996		$	66,436		$	10,484		$	78,916		U.S. government sponsored agencies	2,807			29,294			51,848			8,296			92,245
States and political subdivisions	States and political subdivisions	7,314			28,647			67,074			149,671			252,706			States and political subdivisions	19,729			55,670			69,708			133,460			278,567
Residential mortgage-backed securities	Residential mortgage-backed securities	7			981			56,615			837,245			894,848			Residential mortgage-backed securities	30			2,033			62,316			698,132			762,511
Commercial mortgage-backed securities	Commercial mortgage-backed securities	1,887			—			34,169			27,512			63,568			Commercial mortgage-backed securities	5,531			909			34,741			25,284			66,465
Bank-issued trust preferred securities	Bank-issued trust preferred securities	—			—			4,616			—			4,616			Bank-issued trust preferred securities	—			4,238			6,500			—			10,738

Total available-for-sale securities	Total available-for-sale securities	$	9,208		$	31,624		$	228,910		$	1,024,912		$	1,294,654		Total available-for-sale securities	$	38,168		$	261,168		$	225,113		$	865,172		$	1,389,621
Fair value	Fair value																Fair value
Obligations of:	Obligations of:																Obligations of:

U.S. Treasury and government agencies																	U.S. Treasury and government agencies	$	9,972		$	165,283		$	—		$	—		$	175,255
U.S. government sponsored agencies	U.S. government sponsored agencies	$	—		$	2,069		$	66,161		$	10,251		$	78,481		U.S. government sponsored agencies	2,802			27,614			45,391			6,658			82,465
States and political subdivisions	States and political subdivisions	7,375			29,538			68,100			147,906			252,919			States and political subdivisions	19,757			54,919			63,328			111,398			249,402
Residential mortgage-backed securities	Residential mortgage-backed securities	7			1,006			56,712			840,734			898,459			Residential mortgage-backed securities	30			1,999			58,905			630,801			691,735
Commercial mortgage-backed securities	Commercial mortgage-backed securities	1,907			—			33,763			26,882			62,552			Commercial mortgage-backed securities	5,529			876			30,501			21,395			58,301
Bank-issued trust preferred securities	Bank-issued trust preferred securities	—			—			4,679			—			4,679			Bank-issued trust preferred securities	—			4,294			6,146			—			10,440

Total available-for-sale securities	Total available-for-sale securities	$	9,289		$	32,613		$	229,415		$	1,025,773		$	1,297,090		Total available-for-sale securities	$	38,090		$	254,985		$	204,271		$	770,252		$	1,267,598
Total weighted-average yield	Total weighted-average yield	2.07		%	2.56		%	1.19		%	1.58		%	1.54		%	Total weighted-average yield	3.70		%	2.18		%	1.60		%	1.96		%	1.99		%

Held-to-maturity

The following table summarizes Peoples’ held-to-maturity investment securities:


(Dollars in thousands)	(Dollars in thousands)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		(Dollars in thousands)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2021
June 30, 2022												June 30, 2022
Obligations of:	Obligations of:											Obligations of:
U.S. government sponsored agencies	U.S. government sponsored agencies	$	29,995	$	—	$	85	$	(933)	$	29,147	U.S. government sponsored agencies	$	50,990	$	—	$	12	$	(6,564)	$	44,438
States and political subdivisions	States and political subdivisions	124,417		(236)		675		(2,421)		122,435		States and political subdivisions	151,320		(286)		153		(29,109)		122,078
Residential mortgage-backed securities	Residential mortgage-backed securities	41,035		—		661		(195)		41,501		Residential mortgage-backed securities	112,095		—		—		(12,125)		99,970
Commercial mortgage-backed securities	Commercial mortgage-backed securities	47,889		—		236		(1,208)		46,917		Commercial mortgage-backed securities	86,601		—		—		(11,999)		74,602
Total held-to-maturity securities	Total held-to-maturity securities	$	243,336	$	(236)	$	1,657	$	(4,757)	$	240,000	Total held-to-maturity securities	$	401,006	$	(286)	$	165	$	(59,797)	$	341,088
December 31, 2020
December 31, 2021												December 31, 2021
Obligations of:	Obligations of:											Obligations of:
U.S. government sponsored agencies												U.S. government sponsored agencies	$	36,431	$	—	$	86	$	(1,004)	$	35,513
States and political subdivisions	States and political subdivisions	$	35,199	$	(60)	$	510	$	(165)	$	35,484	States and political subdivisions	151,688		(286)		1,006		(2,270)		150,138
Residential mortgage-backed securities	Residential mortgage-backed securities	25,890		—		852		—		26,742		Residential mortgage-backed securities	110,708		—		370		(919)		110,159
Commercial mortgage-backed securities	Commercial mortgage-backed securities	5,429		—		427		—		5,856		Commercial mortgage-backed securities	75,588		—		182		(1,625)		74,145
Total held-to-maturity securities	Total held-to-maturity securities	$	66,518	$	(60)	$	1,789	$	(165)	$	68,082	Total held-to-maturity securities	$	374,415	$	(286)	$	1,644	$	(5,818)	$	369,955

There were no ~~gross gains or gross losses realized by Peoples from~~ sales of held-to-maturity securities for ~~any~~either of the ~~three and nine~~six months ended ~~September~~June 30, ~~2021 and 2020.~~2022 or 2021.

Management evaluates held-to-maturity investment securities for an allowance for credit losses on a quarterly basis. The majority of Peoples' held-to-maturity investment securities are obligations of states and political subdivisions with the remaining securities issued by U.S. government sponsored agencies. Peoples analyzed these securities using cumulative default rate averages for investment grade municipal securities. ~~Since December 31, 2020, Peoples has purchased securities and designated them as held-to maturity and, as a result, at September 30, 2021,~~ Peoples recorded ~~$236,000~~$286,000 of allowance for credit losses for held-to-maturity securities ~~compared to $60,000~~ at each of June 30, 2022, and December 31, ~~2020.~~

2021.

Table of Contents

The following table presents a summary of held-to-maturity investment securities that had been in a continuous unrealized loss position:


		Less than 12 Months					12 Months or More					Total					Less than 12 Months					12 Months or More					Total
(Dollars in thousands)	(Dollars in thousands)	Fair Value		Unrealized Loss		No. of Securities	Fair Value		Unrealized Loss		No. of Securities	Fair Value		Unrealized Loss		(Dollars in thousands)	Fair Value		Unrealized Loss		No. of Securities	Fair Value		Unrealized Loss		No. of Securities	Fair Value		Unrealized Loss
September 30, 2021
June 30, 2022																June 30, 2022
Obligations of:	Obligations of:															Obligations of:
U.S. government sponsored agencies	U.S. government sponsored agencies	$	25,587	$	933	5	—		—		—	$	25,587	$	933	U.S. government sponsored agencies	$	10,845	$	1,300	4	20,958		5,264		5	$	31,803	$	6,564
States and political subdivisions	States and political subdivisions	89,532		2,421		37	—		—		—	89,532		2,421		States and political subdivisions	87,008		20,941		58	26,097		8,168		9	113,105		29,109
Residential mortgage-backed securities	Residential mortgage-backed securities	17,426		195		2	—		—		—	17,426		195		Residential mortgage-backed securities	99,944		12,125		26	—		—		—	99,944		12,125
Commercial mortgage-backed securities	Commercial mortgage-backed securities	39,641		1,208		11	—		—		—	39,641		1,208		Commercial mortgage-backed securities	69,102		10,015		30	6,407��		1,984		1	75,509		11,999
Total	Total	$	172,186	$	4,757	55	$	—	$	—	—	$	172,186	$	4,757	Total	$	266,899	$	44,381	118	$	53,462	$	15,416	15	$	320,361	$	59,797
December 31, 2020
December 31, 2021																December 31, 2021
Obligations of:	Obligations of:															Obligations of:
U.S. government sponsored agencies																U.S. government sponsored agencies	$	17,328	$	504	6	14,635		500		2	$	31,963	$	1,004
States and political subdivisions	States and political subdivisions	$	18,662	$	165	5	$	—	$	—	—	$	18,662	$	165	States and political subdivisions	61,954		1,041		34	27,328		1,229		6	89,282		2,270

Residential mortgage-backed securities																Residential mortgage-backed securities	88,937		919		17	—		—		—	88,937		919
Commercial mortgage-backed securities																Commercial mortgage-backed securities	67,338		1,625		21	—		—		—	67,338		1,625
Total	Total	$	18,662	$	165	5	$	—	$	—	—	$	18,662	$	165	Total	$	235,557	$	4,089	78	$	41,963	$	1,729	8	$	277,520	$	5,818

The table below presents the amortized cost, fair value and total weighted-average yield of held-to-maturity securities by contractual maturity at ~~September~~June 30, ~~2021.~~2022. The weighted-average yields are based on the amortized cost and are computed on a fully taxable-equivalent basis using a blended federal and state corporate income tax rate of 23.3% and 22.3%. for the periods ending June 30, 2022 and December 31, 2021, respectively. In some cases, the issuers may have the right to call or prepay obligations without call or prepayment penalties prior to the contractual maturity date.


(Dollars in thousands)	(Dollars in thousands)	Within 1 Year			1 to 5 Years			5 to 10 Years			Over 10 Years			Total			(Dollars in thousands)	Within 1 Year			1 to 5 Years			5 to 10 Years			Over 10 Years			Total
Amortized cost	Amortized cost																Amortized cost
Obligations of:	Obligations of:																Obligations of:
U.S. government sponsored agencies	U.S. government sponsored agencies	$	—		$	—		$	—		$	29,995		$	29,995		U.S. government sponsored agencies	$	—		$	19,151		$	2,174		$	29,665		$	50,990
States and political subdivisions	States and political subdivisions	—			989			2,511			120,917			124,417			States and political subdivisions	—			5,207			9,241			136,872			151,320
Residential mortgage-backed securities	Residential mortgage-backed securities	—			1,939			—			39,096			41,035			Residential mortgage-backed securities	—			1,308			—			110,787			112,095
Commercial mortgage-backed securities	Commercial mortgage-backed securities	355			—			8,655			38,879			47,889			Commercial mortgage-backed securities	336			12,966			21,399			51,900			86,601
Total held-to-maturity securities	Total held-to-maturity securities	$	355		$	2,928		$	11,166		$	228,887		$	243,336		Total held-to-maturity securities	$	336		$	38,632		$	32,814		$	329,224		$	401,006
Fair value	Fair value																Fair value
Obligations of:	Obligations of:																Obligations of:
U.S. government sponsored agencies	U.S. government sponsored agencies	$	—		$	—		$	—		$	29,147		$	29,147		U.S. government sponsored agencies	$	—		$	18,707		$	1,918		$	23,813		$	44,438
States and political subdivisions	States and political subdivisions	—			1,132			2,794			118,509			122,435			States and political subdivisions	—			4,943			8,067			109,068			122,078
Residential mortgage-backed securities	Residential mortgage-backed securities	—			2,015			—			39,486			41,501			Residential mortgage-backed securities	—			1,302			—			98,668			99,970
Commercial mortgage-backed securities	Commercial mortgage-backed securities	358			—			8,844			37,715			46,917			Commercial mortgage-backed securities	335			12,893			19,065			42,309			74,602
Total held-to-maturity securities	Total held-to-maturity securities	$	358		$	3,147		$	11,638		$	224,857		$	240,000		Total held-to-maturity securities	$	335		$	37,845		$	29,050		$	273,858		$	341,088
Total weighted-average yield	Total weighted-average yield	2.25		%	2.29		%	2.37		%	2.05		%	2.07		%	Total weighted-average yield	1.46		%	2.11		%	1.65		%	1.85		%	1.85		%

Other Investment Securities

Peoples' other investment securities on the Unaudited Consolidated Balance Sheets consist largely of shares of FHLB stock and FRB stock.

~~The following table summarizes the carrying value of Peoples' other investment securities:~~

(Dollars in thousands) September 30, 2021 December 31, 2020
FHLB stock $ 17,918 $ 21,718
FRB stock 13,311 13,311
Nonqualified deferred compensation 2,083 1,867
Equity investment securities 390 299
Other investment securities 784 365
Total other investment securities $ 34,486 $ 37,560

Table of Contents

The following table summarizes the carrying value of Peoples' other investment securities:


(Dollars in thousands)	June 30, 2022		December 31, 2021
FHLB stock	$	17,308	$	17,308
FRB stock	21,226		13,311
Nonqualified deferred compensation	2,016		2,240
Equity investment securities	326		344
Other investment securities	779		784
Total other investment securities	$	41,655	$	33,987

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, Peoples ~~redeemed $7.5~~purchased $7.9 million of ~~FHLB~~FRB stock as requested by the ~~FHLB.~~ FRB as a result of the Premier Financial Bancorp, Inc. ("Premier") acquisition on September 17, 2021.

During the three months ended ~~September~~June 30, ~~2021, Peoples acquired $3.7 million in FHLB stock in the Merger with Premier.~~

~~During the three~~2022 and ~~nine months ended September 30,~~ 2021,, Peoples recorded the change in the fair value of equity investment securities held during the period, in "Other non-interest income", resulting in an unrealized loss of $11,000 and an unrealized gain of $18,000. For the six months ended June 30, 2022 and 2021, Peoples recognized a loss of $18,000 and ~~$91,000, respectively. During the three and nine months ended September 30, 2020, Peoples recorded~~a gain of $73,000, respectively, for the change in ~~the~~ fair value of equity ~~investment~~ securities ~~held during the period,~~ in "Other non-interest income"~~, resulting in an unrealized gain of $1,000 and an unrealized loss of $15,000, respectively.~~.

At ~~September~~June 30, ~~2021,~~2022, Peoples' investment in equity investment securities was comprised largely of common stocks issued by various unrelated bank holding companies. There were no equity investment securities of a single issuer that exceeded 10% of Peoples' stockholders' equity.

Pledged Securities

Peoples has pledged available-for-sale investment securities and held-to-maturity investment securities to secure public and trust department deposits, and repurchase agreements in accordance with federal and state requirements. Peoples has also pledged available-for-sale investment securities to secure additional borrowing capacity at the FHLB and the FRB as well as to derivative counterparties as collateral on unrealized interest rate swaps.

The following table summarizes the carrying value of Peoples' pledged securities:


		Carrying Amount						Carrying Amount
(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		December 31, 2020	(Dollars in thousands)			June 30, 2022			December 31, 2021

Securing public and trust department deposits, and repurchase agreements:	Securing public and trust department deposits, and repurchase agreements:						Securing public and trust department deposits, and repurchase agreements:
Available-for-sale	Available-for-sale	$	851,966		$	547,244	Available-for-sale		$	1,002,333		$	795,496
Held-to-maturity	Held-to-maturity	143,467		28,287	Held-to-maturity			297,880			160,643
Securing collateral for cash flow hedge swaps:	Securing collateral for cash flow hedge swaps:				Securing collateral for cash flow hedge swaps:
Available-for-sale	Available-for-sale	36,314		—	Available-for-sale			—			18,208
Held-to-maturity					Held-to-maturity			—			9,936
Securing additional borrowing capacity at the FHLB and the FRB:	Securing additional borrowing capacity at the FHLB and the FRB:				Securing additional borrowing capacity at the FHLB and the FRB:
Available-for-sale	Available-for-sale	7,036		2,175	Available-for-sale			4,818			6,504
Held-to-maturity	Held-to-maturity	556		—	Held-to-maturity			1,828			549

Table of Contents

Note 4 Loans and Leases

Peoples' loan portfolio consists of various types of loans and leases originated primarily as a result of lending opportunities within Peoples' footprint. Peoples also originates insurance premium finance loans and leases nationwide through its Peoples Premium Finance and North Star Leasing divisions, and Vantage Financial, LLC ("Vantage") subsidiary, respectively. Loans and leases throughout this document are referred to as "total loans" and "loans held for investment".

The major classifications of loan balances (in each case, net of deferred fees and costs) excluding loans held for sale, were as follows:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		December 31, 2020		(Dollars in thousands)	June 30, 2022		December 31, 2021
Construction	Construction	$	174,784	$	106,792	Construction	$	202,588	$	210,232
Commercial real estate, other	Commercial real estate, other	1,629,116		929,853		Commercial real estate, other	1,460,023		1,550,081
Commercial and industrial	Commercial and industrial	858,538		973,645		Commercial and industrial	858,452		891,392
Premium finance	Premium finance	134,755		114,758		Premium finance	152,237		136,136
Leases	Leases	111,446		—		Leases	314,522		122,508
Residential real estate	Residential real estate	768,134		574,007		Residential real estate	743,005		771,718
Home equity lines of credit	Home equity lines of credit	161,370		120,913		Home equity lines of credit	169,335		163,593
Consumer, indirect	Consumer, indirect	543,256		503,527		Consumer, indirect	563,088		530,532
Consumer, direct	Consumer, direct	108,702		79,094		Consumer, direct	111,804		104,652
Deposit account overdrafts	Deposit account overdrafts	927		351		Deposit account overdrafts	851		756
Total loans, at amortized cost	Total loans, at amortized cost	$	4,491,028	$	3,402,940	Total loans, at amortized cost	$	4,575,905	$	4,481,600

On ~~September 17, 2021,~~March 7, 2022, Peoples completed the ~~merger with Premier effective after the close of the business day. Peoples acquired $1.1 billion in loans, of which $285.3 million were considered purchased credit deteriorated loans. See "Note 13~~

~~Table of Contents~~

Acquisitions" for more detail on the merger with Premier. Effective after the close of business on March 31, 2021, Peoples acquired $83.3 million in leases from NS Leasing, LLC (" NSL"), of which $5.2 million were considered purchase~~d credit deteriorated leases. Refer to "Note 13 Acquisitions" for more detail on the~~ acquisition of ~~leases from NSL.~~Vantage, which included $157.5 million of leases. During the first six months of 2022, Peoples experienced elevated levels of payoffs and amortization of previously-acquired loans, which partially offset organic loan growth.

Peoples ~~began participating as~~is a Small Business Administration ("SBA") Paycheck Protection Program ("PPP") ~~lender during the second quarter of 2020. Peoples originated PPP loans of $159.2 million during the first nine months of 2021 and $488.9 million of PPP loans during the full year of 2020.~~lender. At ~~September~~June 30, ~~2021,~~2022, the PPP loans ~~(including $28.2 million acquired from Premier)~~ had an amortized cost of ~~$135.8~~$15.2 million, and were included in the commercial and industrial loan ~~balance.~~balances. As of ~~September~~June 30, ~~2021,~~2022, deferred loan origination fees, net of deferred origination costs, totaled ~~$4.0 million.~~$0.4 million for PPP loans. During the ~~third~~second quarter of ~~2021,~~2022, Peoples recorded amortization of net deferred loan origination fees of ~~$3.8~~$0.6 million on PPP loans compared to ~~$1.9~~$3.4 million for the ~~third~~second quarter of ~~2020. Peoples recorded accretion of net deferred loan origination fees of $11.2 million and $3.8 million, for the nine months ended September 30, 2021 and 2020, respectively.~~2021. The remaining net deferred loan origination fees will be amortized over the life of the respective loans, or until forgiven by the SBA, and will be recognized in "Net interest income".

Accrued interest receivable is not included within the loan balances, but is presented in the “Other assets” line of the Unaudited Consolidated Balance Sheets, with no recorded allowance for credit losses. Total interest receivable on loans was ~~$12.4~~$12.0 million at ~~September~~both June 30, ~~2021~~2022 and ~~$10.9 million at~~ December 31, ~~2020.~~2021.

Table of Contents

Nonaccrual and Past Due Loans

A loan is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan agreement. A loan may be placed on nonaccrual status regardless of whether or not such loan is considered past due.

The amortized cost of loans on nonaccrual status and of loans delinquent for 90 days or more and accruing ~~were~~was as follows:


		September 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Nonaccrual (a)		Accruing Loans 90+ Days Past Due		Nonaccrual (a)		Accruing Loans 90+ Days Past Due		(Dollars in thousands)	Nonaccrual (a)		Accruing Loans 90+ Days Past Due		Nonaccrual (a)		Accruing Loans 90+ Days Past Due
Construction	Construction	$	—	$	—	$	4	$	—	Construction	$	5	$	—	$	6	$	90
Commercial real estate, other	Commercial real estate, other	17,301		1,912		9,111		—		Commercial real estate, other	14,253		330		17,067		689
Commercial and industrial	Commercial and industrial	5,356		98		6,192		50		Commercial and industrial	1,849		89		3,572		1,139
Premium finance	Premium finance	—		368		—		204		Premium finance	—		304		—		865
Leases	Leases	1,411		1,736		—		—		Leases	1,573		5,722		1,581		—
Residential real estate	Residential real estate	9,735		1,156		8,375		1,975		Residential real estate	9,194		1,687		9,647		805
Home equity lines of credit	Home equity lines of credit	976		61		867		82		Home equity lines of credit	890		89		1,039		50
Consumer, indirect	Consumer, indirect	1,069		—		1,073		39		Consumer, indirect	1,558		15		1,574		—
Consumer, direct	Consumer, direct	186		32		171		17		Consumer, direct	166		—		279		85
Total loans, at amortized cost	Total loans, at amortized cost	$	36,034	$	5,363	$	25,793	$	2,367	Total loans, at amortized cost	$	29,488	$	8,236	$	34,765	$	3,723

(a) There were ~~$0.6~~$2.3 million of nonaccrual loans for which there was no allowance for credit losses at ~~September~~June 30, ~~2021~~2022 and ~~$1.3~~$2.6 million at December 31, ~~2020.~~2021.

During the first ~~nine~~six months of ~~2021,~~2022, nonaccrual loans ~~increased~~declined compared to December 31, ~~2020,~~2021, which was primarily due to the ~~non-accrual~~payoff of 1 commercial relationship, coupled with other smaller reductions. The increase in accruing loans ~~acquired from Premier, which added $13.0 million in nonaccrual loans at~~90+ days past due, compared to December 31, 2021, was the ~~end~~result of the ~~third quarter~~additional leases acquired in the Vantage acquisition, the majority of ~~2021.~~which related to in-process renewals. As of ~~September~~June 30, ~~2021,~~2022, the short-term modifications, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment for current borrowers Peoples had made were insignificant. Under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), borrowers ~~that~~ are considered current ~~are those that~~if they are less than 30 days past due on their contractual payments at the time a modification program is implemented. As such, these modifications made in accordance with the CARES Act were not included in Peoples' nonaccrual or accruing loans 90+ days past due at ~~September~~June 30, ~~2021. During the third quarter of 2021, accruing loans 90+ days past due increased primarily due to the loans acquired from Premier.~~2022.

The amount of interest income recognized on loans past due 90 days or more during the ~~three and nine~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$0.2 million and $0.9 million, respectively.~~

~~Table of Contents~~

$0.7 million.

The following table presents the aging of the amortized cost of past due loans:


		Loans Past Due								Current Loans		Total Loans			Loans Past Due								Current Loans		Total Loans
(Dollars in thousands)	(Dollars in thousands)	30 - 59 days		60 - 89 days		90 + Days		Total						(Dollars in thousands)	30 - 59 days		60 - 89 days		90 + Days		Total
September 30, 2021
June 30, 2022														June 30, 2022
Construction	Construction	$	146	$	16	$	—	$	162	$	174,622	$	174,784	Construction	$	5	$	—	$	—	$	5	$	202,583	$	202,588
Commercial real estate, other	Commercial real estate, other	4,513		2,349		14,116		20,978		1,608,138		1,629,116		Commercial real estate, other	2,294		4,133		10,804		17,231		1,442,792		1,460,023
Commercial and industrial	Commercial and industrial	924		566		5,324		6,814		851,724		858,538		Commercial and industrial	2,385		200		1,938		4,523		853,929		858,452
Premium finance	Premium finance	440		281		368		1,089		133,666		134,755		Premium finance	444		190		304		938		151,299		152,237
Leases	Leases	393		194		1,736		2,323		109,123		111,446		Leases	789		7,665		3,936		12,390		302,132		314,522
Residential real estate	Residential real estate	4,138		2,649		5,353		12,140		755,994		768,134		Residential real estate	4,465		2,091		5,516		12,072		730,933		743,005
Home equity lines of credit	Home equity lines of credit	487		166		758		1,411		159,959		161,370		Home equity lines of credit	927		290		554		1,771		167,564		169,335
Consumer, indirect	Consumer, indirect	2,977		477		346		3,800		539,456		543,256		Consumer, indirect	3,859		776		495		5,130		557,958		563,088
Consumer, direct	Consumer, direct	134		224		101		459		108,243		108,702		Consumer, direct	357		48		34		439		111,365		111,804
Deposit account overdrafts	Deposit account overdrafts	—		—		—		—		927		927		Deposit account overdrafts	—		—		—		—		851		851
Total loans, at amortized cost	Total loans, at amortized cost	$	14,152	$	6,922	$	28,102	$	49,176	$	4,441,852	$	4,491,028	Total loans, at amortized cost	$	15,525	$	15,393	$	23,581	$	54,499	$	4,521,406	$	4,575,905
December 31, 2020
Construction		$	—	$	344	$	4	$	348	$	106,444	$	106,792
Commercial real estate, other		1,943		283		8,643		10,869		918,984		929,853
Commercial and industrial		567		552		4,535		5,654		967,991		973,645
Premium finance		928		1,073		204		2,205		112,553		114,758
Residential real estate		6,739		2,688		5,512		14,939		559,068		574,007
Home equity lines of credit		309		58		780		1,147		119,766		120,913
Consumer, indirect		4,362		733		348		5,443		498,084		503,527
Consumer, direct		424		43		123		590		78,504		79,094
Deposit account overdrafts		—		—		—		—		351		351
Total loans, at amortized cost		$	15,272	$	5,774	$	20,149	$	41,195	$	3,361,745	$	3,402,940

Table of Contents


	Loans Past Due								Current Loans		Total Loans
(Dollars in thousands)	30 - 59 days		60 - 89 days		90 + Days		Total
December 31, 2021
Construction	$	658	$	—	$	90	$	748	$	209,484	$	210,232
Commercial real estate, other	2,891		1,600		12,561		17,052		1,533,029		1,550,081
Commercial and industrial	1,132		1,278		3,595		6,005		885,387		891,392
Premium finance	751		266		865		1,882		134,254		136,136
Leases	426		247		1,581		2,254		120,254		122,508
Residential real estate	8,276		2,241		5,188		15,705		756,013		771,718
Home equity lines of credit	1,137		619		625		2,381		161,212		163,593
Consumer, indirect	4,220		895		615		5,730		524,802		530,532
Consumer, direct	457		135		200		792		103,860		104,652
Deposit account overdrafts	—		—		—		—		756		756
Total loans, at amortized cost	$	19,948	$	7,281	$	25,320	$	52,549	$	4,429,051	$	4,481,600

Delinquency trends remained stable, as ~~98.9%~~98.8% of Peoples' loan portfolio was considered “current” at ~~September~~June 30, ~~2021,~~2022, compared to 98.8% at December 31, ~~2020.~~2021.

Pledged Loans

Peoples has pledged certain loans secured by one-to-four family and multifamily residential mortgages, home equity lines of credit and commercial real estate loans under a blanket collateral agreement to secure borrowings from the FHLB. Peoples also has pledged eligible commercial and industrial loans to secure borrowings with the FRB. Loans pledged are summarized as follows:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		December 31, 2020		(Dollars in thousands)	June 30, 2022		December 31, 2021
Loans pledged to FHLB	Loans pledged to FHLB	$	752,382	$	740,584	Loans pledged to FHLB	$	797,689	$	769,863
Loans pledged to FRB	Loans pledged to FRB	135,504		107,340		Loans pledged to FRB	354,119		294,728

Credit Quality Indicators

As discussed in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' ~~2020~~2021 Form 10-K, Peoples categorizes the majority of its loans into risk categories based upon an established risk grading matrix using a scale of 1 to 8. Loan grades are assigned at the time a new loan or lending commitment is extended by Peoples and may be changed at any time when circumstances warrant. Loans to borrowers with an aggregate unpaid principal balance in excess of $1.0 million are reviewed at least on an annual basis for possible credit deterioration. Loan relationships whose aggregate credit exposure to Peoples is equal to or less than $1.0 million are reviewed on an event driven basis. Triggers for review include knowledge of adverse events affecting the borrower's business, receipt of financial statements indicating deteriorating credit quality or other similar events. Adversely classified loans are reviewed on a quarterly basis. A description of the general characteristics of the risk grades used by Peoples, including loans and leases acquired from Vantage and Premier, is as follows:

“Pass” (grades 1 through 4): Loans in this risk category involve borrowers of acceptable-to-strong credit quality and risk who have the apparent ability to satisfy their loan obligations. Loans in this risk grade would possess sufficient mitigating factors, such as adequate collateral or strong guarantors possessing the capacity to repay the loan if required, for any weakness that may exist.

~~Table of Contents~~

“Special Mention” (grade 5): Loans in this risk grade are the equivalent of the regulatory definition of “Other Assets Especially Mentioned.” Loans in this risk category possess some credit deficiency or potential weakness, which requires a high level of management attention. Potential weaknesses include declining trends in operating earnings and cash flows and/or reliance on a secondary source of repayment. If left uncorrected, these potential weaknesses may result in noticeable deterioration of the repayment prospects for the loan or in Peoples' credit position.

“Substandard” (grade 6): Loans in this risk grade are inadequately protected by the borrower's current financial condition and payment capability or the collateral pledged, if any. Loans so classified have one or more well-defined weaknesses that jeopardize the orderly repayment of the loans. They are characterized by the distinct possibility that Peoples will sustain some loss if the weaknesses are not corrected.

“Doubtful” (grade 7): Loans in this risk grade have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or orderly repayment in full, on the basis of current existing facts, conditions and values, highly questionable and improbable. Possibility of loss is extremely high, but because of certain

Table of Contents

important and reasonably specific factors that may work to the advantage and strengthening of the exposure, classification of each of these loans as an estimated loss is deferred until its more exact status may be determined.

“Loss” (grade 8): Loans in this risk grade are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean a loan has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan, even though partial recovery may be obtained in the future. Charge-offs against the allowance for credit losses are taken during the period in which the loan becomes uncollectible. Consequently, Peoples typically does not maintain a recorded investment in loans within this category.

Consumer loans and other smaller-balance loans are evaluated and categorized as “substandard,” or “loss” consistent with the regulatory definitions and requirements of these classes. Leases are categorized as "special mention", "substandard", or "loss" based upon delinquency status and the prospect of collecting the remaining net investment balance owed under the lease. All other loans not evaluated individually, nor meeting the regulatory conditions to be categorized as described above, would be considered as “pass" for disclosure purposes.

The following table summarizes the risk category of loans within Peoples' loan portfolio, including acquired loans, based upon the most recent analysis performed at ~~September~~June 30, ~~2021:~~2022:

Term Loans at Amortized Cost by Origination Year Revolving Loans Converted to Term
(Dollars in thousands) 2021 2020 2019 2018 2017 Prior Revolving Loans
Total
Loans
Construction

  Pass $ 57,422 $ 73,789 $ 16,624 $ 3,289 $ 1,286 $ 2,829 $ 1,755 $ 4,170 $ 156,994
  Special mention 290 — 7,185 1,092 3,805 138 — — 12,510
  Substandard — — 957 79 159 4,085 — — 5,280
     Total 57,712 73,789 24,766 4,460 5,250 7,052 1,755 4,170 174,784
Commercial real estate, other

  Pass 195,110 266,264 240,617 153,836 160,057 427,073 23,815 12,128 1,466,772
  Special mention 159 10,353 8,398 7,077 8,798 33,558 — 51 68,343
  Substandard — 1,679 6,644 2,299 5,668 76,655 371 41 93,316
  Doubtful — — — — — 669 — — 669
  Loss — — — — — 16 — — 16
     Total 195,269 278,296 255,659 163,212 174,523 537,971 24,186 12,220 1,629,116
Commercial and industrial
  Pass 241,877 135,119 90,671 67,107 30,843 102,471 154,178 14,440 822,266
  Special mention 82 1,281 2,327 3,622 164 991 2,702 10 11,169

~~Table of Contents~~

Term Loans at Amortized Cost by Origination Year Revolving Loans Converted to Term
(Dollars in thousands) 2021 2020 2019 2018 2017 Prior Revolving Loans
Total
Loans
  Substandard 94 2,858 2,739 875 6,921 3,853 5,690 608 23,030
  Doubtful — — — — — 1,808 265 187 2,073
     Total 242,053 139,258 95,737 71,604 37,928 109,123 162,835 15,245 858,538
Premium finance
  Pass 131,142 3,613 — — — — — — 134,755
     Total 131,142 3,613 — — — — — — 134,755
Leases
  Pass 56,901 30,875 16,750 4,473 491 26 — — 109,516
  Special mention 99 10 68 17 — — — — 194
  Substandard 123 502 531 572 8 — — — 1,736
     Total 57,123 31,387 17,349 5,062 499 26 — — 111,446
Residential real estate
  Pass 115,657 75,578 55,305 35,693 46,720 422,673 — — 751,626
  Substandard — — — — — 16,079 — — 16,079
   Loss — — — — — 429 — — 429
     Total 115,657 75,578 55,305 35,693 46,720 439,181 — — 768,134
Home equity lines of credit
  Pass 25,901 23,840 19,084 17,112 15,625 57,574 2,234 3,164 161,370
     Total 25,901 23,840 19,084 17,112 15,625 57,574 2,234 3,164 161,370
Consumer, indirect
  Pass 195,954 183,489 72,009 53,063 26,499 12,242 — — 543,256
     Total 195,954 183,489 72,009 53,063 26,499 12,242 — — 543,256
Consumer, direct
  Pass 42,124 30,880 15,541 9,863 3,861 6,433 — — 108,702
     Total 42,124 30,880 15,541 9,863 3,861 6,433 — — 108,702
Deposit account overdrafts 927 — — — — — — — 927
Total loans, at amortized cost $ 1,063,862 $ 840,130 $ 555,450 $ 360,069 $ 310,905 $ 1,169,602 $ 191,010 $ 34,799 $ 4,491,028

~~The following table summarizes the risk category of Peoples' loan portfolio, including acquired loans, based upon the most recent analysis performed at December 31, 2020:~~


																				Term Loans at Amortized Cost by Origination Year														Revolving Loans Converted to Term
(Dollars in thousands)	(Dollars in thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans			(Dollars in thousands)	2022		2021		2020		2019		2018		Prior				Revolving Loans Converted to Term		Total Loans
Construction	Construction																				Construction
Pass	Pass	$	27,670	$	56,361	$	554	$	15,089	$	824	$	1,194	$	3,199	$	2,003	$	104,891		Pass	$	25,664	$	115,352	$	39,773	$	17,453	$	432	$	397	$	1,805	$	9,668	$	200,876
Special mention	Special mention	—		—		496		—		—		143		—		—		639			Special mention	—		289		—		—		—		133		—		—		422
Substandard	Substandard	—		—		—		186		—		1,076		—		—		1,262			Substandard	—		—		—		—		72		1,218		—		—		1,290

Total	Total	27,670		56,361		1,050		15,275		824		2,413		3,199		2,003		106,792			Total	25,664		115,641		39,773		17,453		504		1,748		1,805		9,668		202,588
Commercial real estate, other	Commercial real estate, other																				Commercial real estate, other
Pass	Pass	116,441		125,373		99,522		94,465		99,668		215,385		109,160		9,748		860,014			Pass	96,447		224,101		251,620		215,276		116,977		424,176		21,434		10,296		1,350,031
Special mention	Special mention	297		5,806		999		5,296		5,125		12,932		3,967		60		34,422			Special mention	—		201		3,211		7,214		3,755		27,180		87		45		41,648
Substandard	Substandard	—		1,191		677		1,709		1,663		27,066		3,033		110		35,339			Substandard	—		680		1,683		1,834		758		62,844		359		33		68,158
Doubtful	Doubtful	—		—		—		—		—		78		—		—		78			Doubtful	—		—		—		—		—		170		—		—		170
Loss																					Loss	—		—		—		—		—		16		—		—		16
Total																					Total	96,447		224,982		256,514		224,324		121,490		514,386		21,880		10,374		1,460,023
Commercial and industrial																					Commercial and industrial
Pass																					Pass	62,032		199,826		92,972		82,546		47,802		113,990		208,432		14,528		807,600
Special mention																					Special mention	—		110		12,090		1,231		257		5,098		3,953		7		22,739
Substandard																					Substandard	46		413		1,765		3,123		2,996		8,802		10,751		143		27,896
Doubtful																					Doubtful	—		—		—		—		—		217		—		100		217

Total	Total	116,738		132,370		101,198		101,470		106,456		255,461		116,160		9,918		929,853			Total	62,078		200,349		106,827		86,900		51,055		128,107		223,136		14,778		858,452
Premium finance																					Premium finance
Pass																					Pass	125,587		26,650		—		—		—		—		—		—		152,237

Total																					Total	125,587		26,650		—		—		—		—		—		—		152,237
Leases																					Leases
Pass																					Pass	110,206		109,865		50,679		26,496		5,945		2,034		—		—		305,225
Special mention																					Special mention	918		4,326		46		67		72		—		—		—		5,429
Substandard																					Substandard	127		1,529		460		471		1,281		—		—		—		3,868
Total																					Total	111,251		115,720		51,185		27,034		7,298		2,034		—		—		314,522

Table of Contents


																				Term Loans at Amortized Cost by Origination Year														Revolving Loans Converted to Term
(Dollars in thousands)	(Dollars in thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans			(Dollars in thousands)	2022		2021		2020		2019		2018		Prior				Revolving Loans Converted to Term		Total Loans
Commercial and industrial
Pass		409,237		97,362		67,284		38,450		45,026		77,009		199,597		30,680		933,965
Special mention		1,034		366		2,018		287		1,453		1,452		12,429		526		19,039
Substandard		2,226		3,569		2,873		2,167		318		4,163		3,436		1,083		18,752
Doubtful		—		—		—		—		1,698		191		—		187		1,889

Total		412,497		101,297		72,175		40,904		48,495		82,815		215,462		32,476		973,645
Premium finance
Pass		114,758		—		—		—		—		—		—		—		114,758
Total		114,758		—		—		—		—		—		—		—		114,758
Residential real estate	Residential real estate																				Residential real estate
Pass	Pass	47,147		40,223		24,235		29,142		43,105		309,795		65,168		305		558,815			Pass	47,234		141,838		64,003		46,524		31,153		396,348		—				—		727,100

Substandard	Substandard	—		—		—		—		—		15,048		—		—		15,048			Substandard	—		—		—		—		—		15,698		—		—		15,698

Loss	Loss	—		—		—		—		—		144		—		—		144			Loss	—		—		—		—		—		207		—		—		207
Total	Total	47,147		40,223		24,235		29,142		43,105		324,987		65,168		305		574,007			Total	47,234		141,838		64,003		46,524		31,153		412,253		—		—		743,005
Home equity lines of credit	Home equity lines of credit																				Home equity lines of credit
Pass	Pass	16,469		13,513		12,548		12,382		11,869		40,626		13,506		4,091		120,913			Pass	18,117		37,484		21,488		16,056		14,615		60,756		419		4,443		168,935

Substandard																					Substandard	—		—		—		—		—		400		—		—		400

Total	Total	16,469		13,513		12,548		12,382		11,869		40,626		13,506		4,091		120,913			Total	18,117		37,484		21,488		16,056		14,615		61,156		419		4,443		169,335
Consumer, indirect	Consumer, indirect																				Consumer, indirect
Pass	Pass	210,014		92,696		71,807		39,608		17,156		11,563		60,683		—		503,527			Pass	149,613		185,660		128,044		47,675		32,493		19,603		—		—		563,088

Total	Total	210,014		92,696		71,807		39,608		17,156		11,563		60,683		—		503,527			Total	149,613		185,660		128,044		47,675		32,493		19,603		—		—		563,088
Consumer, direct	Consumer, direct																				Consumer, direct
Pass	Pass	31,689		15,923		11,085		4,531		2,529		4,193		9,144		—		79,094			Pass	33,346		37,122		20,084		9,154		5,692		6,406		—		—		111,804

Total	Total	31,689		15,923		11,085		4,531		2,529		4,193		9,144		—		79,094			Total	33,346		37,122		20,084		9,154		5,692		6,406		—		—		111,804
Deposit account overdrafts	Deposit account overdrafts	351		—		—		—		—		—		—		—		351			Deposit account overdrafts	851		—		—		—		—		—		—		—		851
Total loans, at amortized cost	Total loans, at amortized cost	$	977,333	$	452,383	$	294,098	$	243,312	$	230,434	$	722,058	$	483,322	$	48,793	$	3,402,940		Total loans, at amortized cost	$	670,188	$	1,085,446	$	687,918	$	475,120	$	264,300	$	1,145,693	$	247,240	$	39,263	$	4,575,905

The following table summarizes the risk category of loans within Peoples' loan portfolio, including acquired loans, based upon the then most recent analysis performed at December 31, 2021:



	Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Construction
Pass	$	85,276	$	78,026	$	29,514	$	3,498	$	1,233	$	2,982	$	2,411	$	6,948	$	202,940
Special mention	290		—		—		735		3,850		137		—		—		5,012
Substandard	—		—		947		77		153		1,103		—		—		2,280


Total	85,566		78,026		30,461		4,310		5,236		4,222		2,411		6,948		210,232
Commercial real estate, other
Pass	253,259		259,113		217,938		143,094		143,975		392,212		21,320		11,940		1,430,911
Special mention	157		2,716		7,875		3,839		6,292		31,626		—		49		52,505
Substandard	—		1,675		824		691		3,124		59,415		371		37		66,100
Doubtful	—		—		—		—		—		542		—		—		542
Loss	—		—		—		—		—		23		—		—		23
Total	253,416		263,504		226,637		147,624		153,391		483,818		21,691		12,026		1,550,081
Commercial and industrial
Pass	299,117		105,646		84,144		56,361		22,182		100,030		174,848		15,888		842,328
Special mention	82		11,745		2,559		2,179		132		5,445		7,563		9		29,705
Substandard	465		2,059		2,691		812		4,995		3,342		3,085		367		17,449
Doubtful	—		—		—		—		—		1,648		262		100		1,910

Total	299,664		119,450		89,394		59,352		27,309		110,465		185,758		16,364		891,392

Table of Contents



	Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Premium finance
Pass	135,896		240		—		—		—		—		—		—		136,136
Total	135,896		240		—		—		—		—		—		—		136,136
Leases
Pass	78,048		25,954		13,368		2,972		337		—		—		—		120,679
Special mention	34		29		22		159		4		—		—		—		248
Substandard	196		438		462		479		6		—		—		—		1,581
Total	78,278		26,421		13,852		3,610		347		—		—		—		122,508
Residential real estate
Pass	141,845		74,169		53,434		33,690		44,377		407,541		—		—		755,056

Substandard	—		—		—		—		—		16,302		—		—		16,302

Loss	—		—		—		—		—		360		—		—		360
Total	141,845		74,169		53,434		33,690		44,377		424,203		—		—		771,718
Home equity lines of credit
Pass	35,898		23,276		18,035		16,124		14,991		53,302		1,967		3,287		163,593




Total	35,898		23,276		18,035		16,124		14,991		53,302		1,967		3,287		163,593
Consumer, indirect
Pass	226,287		163,830		63,353		45,672		21,754		9,636		—		—��		530,532




Total	226,287		163,830		63,353		45,672		21,754		9,636		—		—		530,532
Consumer, direct
Pass	47,308		26,792		13,293		8,411		3,218		5,630		—		—		104,652




Total	47,308		26,792		13,293		8,411		3,218		5,630		—		—		104,652
Deposit account overdrafts	756		—		—		—		—		—		—		—		756
Total loans, at amortized cost	$	1,304,914	$	775,708	$	508,459	$	318,793	$	270,623	$	1,091,276	$	211,827	$	38,625	$	4,481,600

Table of Contents

Collateral Dependent Loans

Peoples has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following provides more detail about the types of collateral that secure collateral dependent loans:

• Construction loans are typically secured by owner occupied commercial real estate or non-owner occupied investment real estate. Typically, owner occupied construction loans are secured by office buildings, warehouses, manufacturing facilities, and other commercial and industrial properties that are in process of construction. Non-owner occupied commercial construction loans are generally secured by office buildings and complexes, multi-family complexes, land under development, and other commercial and industrial real estate in process of construction.

•Commercial real estate loans can be secured by either owner occupied commercial real estate or non-owner occupied investment commercial real estate. Typically, owner occupied commercial real estate loans are secured by office buildings, warehouses, manufacturing facilities and other commercial and industrial properties occupied by operating companies. Non-owner occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development, industrial properties, as well as other commercial or industrial real estate.

•Commercial and industrial loans are ~~general~~generally secured by equipment, inventory, accounts receivable, and other commercial property.

•Residential real estate loans are typically secured by first mortgages, and in some cases could be secured by a second mortgage.

•Home equity lines of credit are generally secured by second mortgages on residential real estate property.

~~Table of Contents~~

•Consumer loans are generally secured by automobiles, motorcycles, recreational vehicles and other personal property. Some consumer loans are unsecured and have no underlying collateral.

•Leases are secured by commercial equipment and other essential business assets.

•Premium finance loans are secured by the unearned portion of the insurance premium being financed.

The following table details Peoples' amortized cost of collateral dependent loans:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		December 31, 2020	(Dollars in thousands)		June 30, 2022		December 31, 2021

Construction	Construction	$	4,276		$	—		Construction	$	342	$	1,291
Commercial real estate, other	Commercial real estate, other	35,820			8,467			Commercial real estate, other	11,196		37,220
Commercial and industrial	Commercial and industrial	11,446			6,333			Commercial and industrial	2,310		8,340
Residential real estate	Residential real estate	1,321			1,670			Residential real estate	1,946		2,877
Home equity lines of credit	Home equity lines of credit	393			403			Home equity lines of credit	385		391

Total collateral dependent loans	Total collateral dependent loans	$	53,256		$	16,873		Total collateral dependent loans	$	16,179	$	50,119

The ~~increase~~decrease in collateral dependent loans at ~~September~~June 30, ~~2021,~~2022, compared to December 31, ~~2020,~~2021, was primarily due to ~~$39.1 million in~~3 large commercial relationships that were no longer considered collateral dependent ~~loans acquired from Premier.~~at June 30, 2022.

Table of Contents

Troubled Debt Restructurings

The following tables summarize the loans that were modified as ~~troubled debt restructurings ("TDRs")~~TDRs during the three and ~~nine~~six months ended ~~September~~June 30:


			Three Months Ended								Three Months Ended
			Recorded Investment (a)								Recorded Investment (a)
(Dollars in thousands)	(Dollars in thousands)	Number of Contracts	Pre-Modification		Post-Modification		Remaining Recorded Investment		(Dollars in thousands)	Number of Contracts	Pre-Modification		Post-Modification		Remaining Recorded Investment
September 30, 2021
Construction		1	$	6	$	6	$	6
June 30, 2022									June 30, 2022

Commercial real estate, other	Commercial real estate, other	2	14		14		14		Commercial real estate, other	2	$	184	$	184	$	184
Commercial and industrial	Commercial and industrial	3	327		327		327		Commercial and industrial	5	1,422		1,426		1,031

Residential real estate									Residential real estate	11	438		463		457
Home equity lines of credit									Home equity lines of credit	2	110		110		110
Consumer, indirect									Consumer, indirect	7	108		108		108
Consumer, direct									Consumer, direct	1	31		31		31
Consumer									Consumer	8	139		139		139
Total									Total	28	$	2,293	$	2,322	$	1,921

June 30, 2021									June 30, 2021

Commercial real estate, other									Commercial real estate, other	1	$	23	$	23	$	23

Leases	Leases	2	182		184		178		Leases	4	225		233		233
Residential real estate	Residential real estate	46	1,952		1,956		1,955		Residential real estate	5	245		245		245
Home equity lines of credit	Home equity lines of credit	5	55		55		55		Home equity lines of credit	4	260		260		258
Consumer, indirect	Consumer, indirect	9	95		95		95		Consumer, indirect	6	62		62		62
Consumer, direct	Consumer, direct	3	9		9		9		Consumer, direct	5	38		38		38
Consumer	Consumer	12	104		104		104		Consumer	11	100		100		100
Total	Total	71	$	2,640	$	2,646	$	2,639	Total	25	$	853	$	861	$	859

September 30, 2020
Commercial real estate, other		3	$	2,214	$	2,214	$	1,112
Commercial and industrial		4	3,657		3,657		3,658
Residential real estate		10	608		608		608
Home equity lines of credit		3	68		68		68
Consumer, indirect		11	126		126		126
Consumer, direct		2	16		16		16
Consumer		13	142		142		142
Total		33	$	6,689	$	6,689	$	5,588
(a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.	(a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.								(a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

2325

Table of Contents


			Nine Months Ended								Six Months Ended
			Recorded Investment (a)								Recorded Investment (a)
(Dollars in thousands)	(Dollars in thousands)	Number of Contracts	Pre-Modification		Post-Modification		Remaining Recorded Investment		(Dollars in thousands)	Number of Contracts	Pre-Modification		Post-Modification		Remaining Recorded Investment
September 30, 2021
June 30, 2022									June 30, 2022

Commercial real estate, other									Commercial real estate, other	3	$	287	$	287	$	284
Commercial and industrial									Commercial and industrial	5	1,422		1,427		1,031

Residential real estate									Residential real estate	26	1,333		1,378		1,367
Home equity lines of credit									Home equity lines of credit	4	178		178		177
Consumer, indirect									Consumer, indirect	16	210		210		210
Consumer, direct									Consumer, direct	3	44		44		44
Consumer									Consumer	19	254		254		254
Total									Total	57	$	3,474	$	3,524	$	3,113

June 30, 2021									June 30, 2021
Construction	Construction	2	$	350	$	350	$	350	Construction	1	$	344	$	344	344
Commercial real estate, other	Commercial real estate, other	3	37		37		37		Commercial real estate, other	1	23		23		$	23
Commercial and industrial		3	327		327		327

Leases	Leases	5	340		348		334		Leases	4	225		233		233
Residential real estate	Residential real estate	54	2,367		2,376		2,366		Residential real estate	8	415		419		416
Home equity lines of credit	Home equity lines of credit	9	315		315		307		Home equity lines of credit	4	260		260		258
Consumer, indirect	Consumer, indirect	16	200		200		192		Consumer, indirect	10	140		140		135
Consumer, direct	Consumer, direct	8	48		48		45		Consumer, direct	7	50		50		50
Consumer	Consumer	24	248		248		237		Consumer	17	190		190		185
Total	Total	100	$	3,984	$	4,001	$	3,958	Total	35	$	1,457	$	1,469	$	1,459

September 30, 2020

Commercial real estate, other		5	$	2,533	$	2,533	$	1,430
Commercial and industrial		5	3,803		3,803		3,804
Residential real estate		16	1,237		1,267		1,261
Home equity lines of credit		7	123		123		121
Consumer, indirect		23	235		235		216
Consumer, direct		5	68		68		63
Consumer		28	303		303		279
Total		61	$	7,999	$	8,029	$	6,895
(a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.	(a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.								(a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

On March 22, 2020, federal and state government banking regulators issued a joint statement, with which the FASB concurred as to the approach, regarding accounting for loan modifications for borrowers affected by COVID-19. In this guidance, short-term modifications, made on a good faith basis in response to COVID-19, to borrowers who were current prior to any relief, are not considered TDRs. This includes short-term modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment which are insignificant. Under the guidance, the borrowers that are considered to be current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. In addition, modification or deferral programs mandated by the U.S. federal government or any state government related to COVID-19 are not in the scope of accounting for TDRs, as defined in ASC 310-40.

~~The following table presents those~~Peoples had 2 loans totaling $16,000 that were modified ~~into a TDR~~as TDRs during the ~~year~~past twelve months that subsequently defaulted (i.e., 90 days or more past due following a ~~modification)~~modification during the ~~nine-month periods ended September 30:~~year).

September 30, 2021 September 30, 2020
(Dollars in thousands) Number of Contracts Recorded Investment (a) Impact on the Allowance for Credit Losses Number of Contracts Recorded Investment (a) Impact on the Allowance for Credit Losses
Commercial real estate, other — $ — — 1 $ 54 —
Residential real estate 3 113 — — — —
Total 3 $ 113 $ — 1 $ 54 $ —
(a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Peoples had no commitments to lend additional funds to borrowers whose loan terms have been modified in a TDR.

2426

Table of Contents

Allowance for Credit Losses

Changes in the allowance for credit losses for the three and six months ended ~~September~~June 30, ~~2021~~2022 and ~~September~~June 30, ~~2020~~2021 are summarized below:


(Dollars in thousands)	(Dollars in thousands)	Beginning Balance, June 30, 2021		Initial Allowance for Acquired Purchased Credit Deteriorated Assets		Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets		(Recovery of) Provision for Credit Losses (a)		Charge-offs		Recoveries		Ending Balance, September 30, 2021		(Dollars in thousands)	Beginning Balance, March 31, 2022		Initial Allowance for Acquired Purchased Credit Deteriorated Assets (a)		Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets		(Recovery of) Provision for Credit Losses (b)		Charge-offs		Recoveries		Ending Balance, June 30, 2022
Construction	Construction	$	914	$	2,127	$	638	$	(243)	$	—	$	—	$	3,436	Construction	$	2,731	$	—	$	—	$	(1,200)	$	—	$	—	$	1,531
Commercial real estate, other	Commercial real estate, other	17,233		13,374		5,384		(179)		—		4		35,816		Commercial real estate, other	21,055		(234)		—		(2,267)		(22)		176		18,708
Commercial and industrial	Commercial and industrial	8,686		4,286		1,059		(3)		(654)		4		13,378		Commercial and industrial	10,114		(253)		—		(871)		(420)		2		8,572
Premium finance	Premium finance	998		—		—		146		(7)		—		1,137		Premium finance	345		—		—		(12)		(30)		8		311
Leases	Leases	3,715		—		—		1,101		(431)		120		4,505		Leases	5,875		292		—		1,847		(493)		64		7,585
Residential real estate	Residential real estate	4,837		2,394		2,645		(312)		(44)		48		9,568		Residential real estate	6,495		12		—		(142)		(47)		14		6,332
Home equity lines of credit	Home equity lines of credit	1,504		41		674		148		(180)		37		2,224		Home equity lines of credit	1,894		—		—		(170)		(25)		—		1,699
Consumer, indirect	Consumer, indirect	8,841		—		—		(2,308)		(416)		43		6,160		Consumer, indirect	5,172		—		—		1,428		(449)		83		6,234
Consumer, direct	Consumer, direct	1,161		112		180		(362)		(29)		17		1,079		Consumer, direct	1,036		—		—		334		(60)		11		1,321
Deposit account overdrafts	Deposit account overdrafts	53		—		—		124		(135)		37		79		Deposit account overdrafts	51		—		—		355		(405)		52		53
Total	Total	$	47,942	$	22,334	$	10,580	$	(1,888)	$	(1,896)	$	310	$	77,382	Total	$	54,768	$	(183)	$	—	$	(698)	$	(1,951)	$	410	$	52,346

(a)Includes purchase price adjustments related to acquisitions previously completed but within the 12-month measurement period.

(b)Amount does not include the provision for the allowance for credit losses on unfunded commitments.


(Dollars in thousands)	Beginning Balance, March 31, 2021		Initial Allowance for Acquired Purchased Credit Deteriorated Assets		Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets		Provision for (Recovery of) Credit Losses (a)		Charge-offs		Recoveries		Ending Balance, June 30, 2021
Construction	$	829	$	—	$	—	$	85	$	—	$	—	$	914
Commercial real estate, other	17,834		—		—		(601)		(4)		4		17,233
Commercial and industrial	10,108		—		—		(1,435)		(5)		18		8,686
Premium finance	1,160		—		—		(155)		(7)		—		998
Leases	—		493		3,288		349		(525)		110		3,715
Residential real estate	4,935		—		—		(2)		(136)		40		4,837
Home equity lines of credit	1,494		—		—		14		(4)		—		1,504
Consumer, indirect	7,522		—		—		1,525		(269)		63		8,841
Consumer, direct	970		—		—		211		(31)		11		1,161
Deposit account overdrafts	45		—		—		53		(89)		44		53
Total	$	44,897	$	493	$	3,288	$	44	$	(1,070)	$	290	$	47,942

(a)Amount does not include the provision for the allowance for credit losses on unfunded commitments.

(Dollars in thousands) Beginning Balance, June 30, 2020 Initial Allowance for Acquired Purchased Credit Deteriorated Assets Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets (Recovery of) Provision for Credit Losses (a) Charge-offs Recoveries Ending Balance, September 30, 2020
Construction $ 2,662 $ — $ — $ (148) $ — $ — $ 2,514
Commercial real estate, other 19,148 — — (8) (109) 4 19,035
Commercial and industrial 10,106 — — 3,139 (146) — 13,099
Premium finance — — 990 (2) (2) — 986
Residential real estate 6,380 — — (371) (121) 100 5,988
Home equity lines of credit 1,755 — — 40 — 2 1,797
Consumer, indirect 12,293 — — 785 (370) 64 12,772
Consumer, direct 1,941 — — (78) (15) 13 1,861
Deposit account overdrafts 77 — — 154 (202) 47 76
Total $ 54,362 $ — $ 990 $ 3,511 $ (965) $ 230 $ 58,128

(a)Amount does not include the provision for the allowance for credit losses on unfunded commitments.

2527

Table of Contents

Changes in the allowance for credit losses for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~September~~June 30, ~~2020~~2021 are summarized below:


(Dollars in thousands)	(Dollars in thousands)	Beginning Balance, December 31, 2020		Initial Allowance for Acquired Purchased Credit Deteriorated Assets		Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets		(Recovery of) Provision for Credit Losses (a)		Charge-offs		Recoveries		Ending Balance, September 30, 2021		(Dollars in thousands)	Beginning Balance, December 31, 2021		Initial Allowance for Acquired Purchased Credit Deteriorated Assets (a)		Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets		(Recovery of) Provision for Credit Losses (b)		Charge-offs		Recoveries		Ending Balance, June 30, 2022
Construction	Construction	$	1,887	$	2,127	$	638	$	(1,216)	$	—	$	—	$	3,436	Construction	$	2,999	$	—	$	—	$	(1,468)	$	—	$	—	$	1,531
Commercial real estate, other	Commercial real estate, other	17,536		13,374		5,384		(325)		(161)		8		35,816		Commercial real estate, other	29,147		(451)		—		(9,913)		(300)		225		18,708
Commercial and industrial	Commercial and industrial	12,763		4,286		1,059		(3,800)		(952)		22		13,378		Commercial and industrial	11,063		(418)		—		(1,196)		(883)		6		8,572
Premium finance	Premium finance	1,095		—		—		72		(30)		—		1,137		Premium finance	379		—		—		(32)		(44)		8		311
Leases	Leases	—		493		3,288		1,450		(956)		230		4,505		Leases	4,797		424		—		3,090		(966)		240		7,585
Residential real estate	Residential real estate	6,044		2,394		2,645		(1,305)		(313)		103		9,568		Residential real estate	7,233		(509)		—		(64)		(356)		28		6,332
Home equity lines of credit	Home equity lines of credit	1,860		41		674		(196)		(196)		41		2,224		Home equity lines of credit	2,005		(11)		—		(283)		(41)		29		1,699
Consumer, indirect	Consumer, indirect	8,030		—		—		(891)		(1,190)		211		6,160		Consumer, indirect	5,326		(41)		—		1,614		(834)		169		6,234
Consumer, direct	Consumer, direct	1,081		112		180		(252)		(96)		54		1,079		Consumer, direct	961		—		—		534		(196)		22		1,321
Deposit account overdrafts	Deposit account overdrafts	63		—		—		208		(327)		135		79		Deposit account overdrafts	57		—		—		554		(664)		106		53
Total	Total	$	50,359	$	22,827	$	13,868	$	(6,255)	$	(4,221)	$	804	$	77,382	Total	$	63,967	$	(1,006)	$	—	$	(7,164)	$	(4,284)	$	833	$	52,346

(a)~~Amount does not include~~Includes purchase price adjustments related to acquisitions previously completed but were within the ~~provision for the allowance for credit losses on unfunded commitments.~~

(Dollars in thousands) Beginning Balance,
January 1, 2020 (a) Initial Allowance for Acquired Purchased Credit Deteriorated Assets Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets Provision for (Recovery of) Credit Losses (b) Charge-offs Recoveries Ending Balance, September 30, 2020
Construction $ 600 $ 51 $ — $ 1,863 $ — $ — $ 2,514
Commercial real estate, other 7,193 1,356 — 10,614 (254) 126 19,035
Commercial and industrial 4,960 860 — 6,368 (1,098) 2,009 13,099
Premium finance — — 990 (2) (2) — 986
Residential real estate 3,977 383 — 1,626 (255) 257 5,988
Home equity lines of credit 1,570 2 — 237 (23) 11 1,797
Consumer, indirect 5,389 — — 8,549 (1,427) 261 12,772
Consumer, direct 856 34 — 1,062 (128) 37 1,861
Deposit account overdrafts 94 — — 360 (534) 156 76
Total $ 24,639 $ 2,686 $ 990 $ 30,677 $ (3,721) $ 2,857 $ 58,128

~~(a)Peoples adopted ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326) on January 1, 2020.~~12-month measurement period.

(b)Amount does not include the provision for the allowance for credit losses on unfunded commitments.

~~During~~



(Dollars in thousands)	Beginning Balance, December 31, 2020		Initial Allowance for Acquired Purchased Credit Deteriorated Assets		Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets		(Recovery of) Provision for Credit Losses (a)		Charge-offs		Recoveries		Ending Balance, June 30, 2021
Construction	$	1,887	$	—	$	—	$	(973)	$	—	$	—	$	914
Commercial real estate, other	17,536		—		—		(146)		(161)		4		17,233
Commercial and industrial	12,763		—		—		(3,797)		(298)		18		8,686
Premium finance	1,095		—		—		(74)		(23)		—		998
Leases	—		493		3,288		349		(525)		110		3,715
Residential real estate	6,044		—		—		(993)		(269)		55		4,837
Home equity lines of credit	1,860		—		—		(344)		(16)		4		1,504
Consumer, indirect	8,030		—		—		1,417		(774)		168		8,841
Consumer, direct	1,081		—		—		110		(67)		37		1,161
Deposit account overdrafts	63		—		—		84		(192)		98		53
Total	$	50,359	$	493	$	3,288	$	(4,367)	$	(2,325)	$	494	$	47,942

(a)Amount does not include the ~~third quarter of 2021, Peoples recorded a~~ provision for credit losses of $11.0 million in order to establish an allowance for credit losses for non-purchase credit deteriorated loans of $10.6 million, and a liability for unfunded commitments of $0.4 million, both relating to the acquisition of Premier. Peoples also recorded a $22.3 million increase in the allowance for credit losses ~~during~~on unfunded commitments.s adopted ASU 2016-13 - Financial Instruments

(a)Amount does not include the ~~third quarter of 2021 related to~~provision for the ~~purchase~~allowance for credit ~~deteriorated loans acquired from Premier.~~ losses on unfunded commitments

During the second quarter of ~~2021,~~2022, Peoples recorded ~~provision for~~a recovery of credit losses ~~to establish the allowance~~ for ~~credit losses~~loans of ~~$3.3~~$0.7 million ~~for the acquired non-purchased credit deteriorated leases from NSL along with an increase~~driven by a reduction in allowance for ~~credit~~individually analyzed loans, as well as changes in loss ~~of $0.5 million related to~~drivers used in the ~~purchase credit~~CECL model. Leases designated as purchased

2628

Table of Contents

credit deteriorated ~~leases~~("PCD") acquired from NSL. Lastly, economic assumptions and loss drivers used in the CECL model continued to improve in the current year, partially offsetting the increase in allowance driven by the aforementioned acquired loans and leases. The PPP loans originated during 2021 and 2020 are guaranteed by the SBA, and therefore, had no impact onVantage increased the allowance for credit losses ~~at September 30, 2021~~by $292,000. Net charge-offs for the second quarter of 2022 were $1.5 million, and ~~at December 31, 2020.~~included charge-offs of 3 leases aggregating $0.5 million.

At ~~September~~June 30, ~~2021,~~2022, Peoples had recorded an allowance for unfunded commitments of ~~$2.4~~$2.1 million, ~~an increase~~a decrease compared to $2.2 million at ~~June 30, 2021,~~March 31, 2022 and ~~a decrease compared to $2.9~~$2.5 million at December 31, 2020. The total amount of unfunded commitments had increased compared to June 30, 2021 due to the unfunded commitments associated with the Premier acquisition and decreased compared to December 31, 2020 due to the improved economic forecast conditions.2021. The allowance for unfunded commitments (also referred to as "unfunded commitment liability") is presented in the “Accrued expenses and other liabilities” line of the Unaudited Consolidated Balance Sheets. The change in the allowance for unfunded commitments is also reflected in the ~~"Provision~~"(Recovery of) provision for ~~(recovery of)~~ credit losses" line of the Unaudited Consolidated Statements of Operations.

Note 5 Goodwill and Other Intangible Assets

Goodwill

The following table details changes in the recorded amount of goodwill:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		December 31, 2020		(Dollars in thousands)	June 30, 2022		December 31, 2021
Goodwill, beginning of year	Goodwill, beginning of year	$	171,260	$	165,701	Goodwill, beginning of year	$	264,193	$	171,260
Goodwill recorded from acquisitions	Goodwill recorded from acquisitions	95,755		5,559		Goodwill recorded from acquisitions	25,783		92,933
Goodwill, end of period	Goodwill, end of period	$	267,015	$	171,260	Goodwill, end of period	$	289,976	$	264,193

On March 11, 2022, Peoples Insurance Agency, Inc. entered into an Asset Purchase Agreement with Elite Insurance Agency and consummated the acquisition on April 1, 2022. In the second quarter of 2022, Peoples recorded $2.3 million of preliminary goodwill related to this acquisition. Peoples Bank entered into ~~the~~an Asset Purchase Agreement, dated March ~~24, 2021~~7, 2022 with ~~NSL. The transaction closed after the close of business on March 31, 2021 and Peoples Bank began operating the acquired business as~~Vantage, at which point Vantage became a ~~division~~legal subsidiary of Peoples ~~Bank on April 1, 2021.~~Bank. In the first half of 2022, Peoples preliminarily recorded $24.7 million of goodwill related to this acquisition, which was offset partially by adjustments of $1.2 million to Premier's goodwill balance during the measurement period. On April 1, 2021, Peoples recorded $24.7 million of goodwill related to the acquisition ~~from NSL.~~of NS Leasing, LLC ("NSL"). On May 4, 2021, Peoples Insurance Agency, LLC ("Peoples Insurance") acquired substantially all of the assets and rights of an insurance agency located in Pikeville, Kentucky and certain rights to related customer accounts, which were previously developed and maintained by Justice & Stamper Insurance Agency, Inc. Peoples recorded $46,000 of goodwill from ~~this completed acquisition.~~the acquisition of an insurance agency. On September 17, 2021, Peoples completed the merger with Premier, for which Peoples preliminarily recorded ~~$71.0~~$66.9 million of goodwill. In 2020, Peoples completed its acquisition of Premium Finance, recording $5.5 million in goodwill. Also, in 2020 Peoples Insurance completed an acquisition of a property and casualty-focused independent insurance agency for which $0.1 million of goodwill was recorded. For additional information on these acquisitions, refer to "Note 13 Acquisitions."

Table of Contents

Other Intangible Assets

Other intangible assets were comprised of the following at ~~end of period, September~~June 30, ~~2021~~2022, and ~~end of year,~~at December 31, ~~2020:~~2021:


(Dollars in thousands)	(Dollars in thousands)	Core Deposits		Customer Relationships		Total		(Dollars in thousands)	Core Deposits		Customer Relationships		Total
September 30, 2021
June 30, 2022								June 30, 2022
Gross intangibles	Gross intangibles	$	25,805	$	25,096	$	50,901	Gross intangibles	$	26,466	$	25,173	$	51,639

Intangibles recorded from acquisitions (a)								Intangibles recorded from acquisitions (a)	—		14,067		14,067
Accumulated amortization	Accumulated amortization	(17,813)		(8,256)		(26,069)		Accumulated amortization	(19,879)		(12,178)		(32,057)
Total acquisition-related intangibles	Total acquisition-related intangibles	$	7,992	$	16,840	$	24,832	Total acquisition-related intangibles	$	6,587	$	27,062	$	33,649
Servicing rights	Servicing rights					2,294		Servicing rights					2,016
Indefinite-lived intangibles(b)	Indefinite-lived intangibles(b)					1,274		Indefinite-lived intangibles(b)					2,491
Total other intangibles	Total other intangibles					$	28,400	Total other intangibles					$	38,156

December 31, 2020
December 31, 2021								December 31, 2021
Gross intangibles	Gross intangibles	$	22,233	$	12,495	$	34,728	Gross intangibles	$	22,233	$	12,495	$	34,728

Intangibles recorded from acquisitions (c)								Intangibles recorded from acquisitions (c)	4,233		13,014		17,247
Accumulated amortization	Accumulated amortization	(17,298)		(6,579)		(23,877)		Accumulated amortization	(19,048)		(9,603)		(28,651)
Total acquisition-related intangibles	Total acquisition-related intangibles	$	4,935	$	5,916	$	10,851	Total acquisition-related intangibles	$	7,418	$	15,906	$	23,324
Servicing rights	Servicing rights					2,486		Servicing rights					2,218

Indefinite-lived intangibles (d)								Indefinite-lived intangibles (d)					1,274
Total other intangibles	Total other intangibles					$	13,337	Total other intangibles					$	26,816

(a) Customer relationship intangible assets included $1.2 million of non-compete intangible assets related to the Vantage acquisition and

$0.1 million of non-compete intangible assets related to the Elite insurance agency acquisition.

(b) Included $1.2 million of trade name intangible assets related to the Vantage acquisition and $1.3 million of trade name

intangible assets related to the NSL acquisition.

(c) Customer relationship intangible assets consisted of $0.3 million of non-compete intangible assets related to the NSL acquisition.

(d) Included $1.3 million of trade name intangible assets related to the NSL acquisition.

Other intangible assets preliminarily recorded for the six months ended June 30, 2022 included $10.8 million of customer relationship intangible assets, and $1.2 million of non-compete intangible assets related to the Vantage acquisition. Peoples also recorded $2.0 million of customer relationship intangible assets and $0.1 million of non-compete intangible assets related to the acquisition of Elite Insurance Agency.

Other intangible assets recorded ~~from the above-mentioned acquisitions year-to-date as of September 30,~~in 2021 ~~were $13.0~~included $12.7 million of customer relationship intangible assets related to the NSL ~~and Peoples Insurance acquisitions, and~~acquisition, $4.2 million of core deposit intangible assets related to ~~Premier.~~the Premier merger, and $0.3 million of non-compete intangible assets, and $1.3 million of trade name intangible assets, both related to the NSL acquisition. Refer to "Note 13 Acquisitions" for additional information. ~~Other intangible assets recorded in 2020 included $5.0 million of customer relationship intangible assets from the Premium Finance and Peoples Insurance acquisitions.~~

The following table details estimated aggregate future amortization of other intangible assets at ~~September~~June 30, ~~2021:~~2022:

~~Table of Contents~~


(Dollars in thousands)	(Dollars in thousands)	Core Deposits		Customer Relationships		Total		(Dollars in thousands)	Core Deposits		Customer Relationships		Total
2021		$	574	$	934	$	1,508
2022		1,620		4,014		5,634
Remaining six months of 2022								Remaining six months of 2022	$	788	$	3,234	$	4,022
2023	2023	1,257		3,712		4,969		2023	1,257		6,269		7,526
2024	2024	1,058		2,733		3,791		2024	1,058		5,325		6,383
2025	2025	891		1,941		2,832		2025	891		4,255		5,146
2026								2026	731		3,114		3,845
Thereafter	Thereafter	2,592		3,506		6,098		Thereafter	1,862		4,865		6,727
Total	Total	$	7,992	$	16,840	$	24,832	Total	$	6,587	$	27,062	$	33,649

The weighted average amortization period of other intangible assets is ~~8.1~~9.8 years.

Table of Contents

Servicing Rights

The following is an analysis of activity of servicing rights for the periods ended ~~September 30,2021~~June 30, 2022 and December 31, ~~2020:~~2021:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		December 31, 2020		(Dollars in thousands)	June 30, 2022		December 31, 2021
Balance, beginning of year	Balance, beginning of year	$	2,486	$	2,742	Balance, beginning of year	$	2,218	$	2,486
Amortization	Amortization	(591)		(1,121)		Amortization	(318)		(775)
Servicing rights originated	Servicing rights originated	415		1,026		Servicing rights originated	110		519

Valuation allowance		(16)		(161)
Change in valuation allowance						Change in valuation allowance	6		(12)
Balance, end of period	Balance, end of period	$	2,294	$	2,486	Balance, end of period	$	2,016	$	2,218

Peoples accounts for its servicing rights under the amortization method, recognizing a valuation allowance when amortized cost exceeds fair value. As of ~~September~~June 30, 2022, Peoples recorded a reduction to the valuation allowance of $6,000 related to changes in the fair value of servicing rights. During 2021, Peoples ~~has~~had recorded a valuation allowance of ~~$16,000~~ $12,000 related to the decrease in the fair value of servicing rights. ~~During 2020, Peoples recorded a valuation allowance of $161,000 related to the decrease in the fair value of servicing rights.~~

The following is the breakdown of the discount rates and prepayment speeds of servicing rights for the periods ended ~~September 30,2021~~June 30, 2022 and December 31, ~~2020:~~2021:


		September 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
		Minimum		Maximum		Minimum		Maximum			Minimum		Maximum		Minimum		Maximum
Discount rates	Discount rates	8.3	%	10.8	%	8.3	%	10.8	%	Discount rates	9.8	%	12.3	%	8.3	%	10.8	%
Prepayment speeds	Prepayment speeds	8.4	%	27.2	%	12.8	%	21.1	%	Prepayment speeds	7.8	%	23.2	%	8.9	%	27.1	%

The fair value of servicing rights was ~~$2.3~~$3.3 million and $2.6 million at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

2831

Table of Contents

Note 6 Deposits

Peoples’ deposit balances were comprised of the following:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		December 31, 2020		(Dollars in thousands)	June 30, 2022		December 31, 2021
Retail CDs:	Retail CDs:					Retail CDs:
$100 or more	$100 or more	$	343,324	$	220,532	$100 or more	$	293,783	$	320,574
Less than $100	Less than $100	348,356		225,398		Less than $100	290,476		323,185
Retail CDs	Retail CDs	691,680		445,930		Retail CDs	584,259		643,759
Interest-bearing deposit accounts	Interest-bearing deposit accounts	1,140,639		692,113		Interest-bearing deposit accounts	1,143,010		1,167,460
Savings accounts	Savings accounts	1,016,755		628,190		Savings accounts	1,080,053		1,036,738
Money market deposit accounts	Money market deposit accounts	637,635		591,373		Money market deposit accounts	645,242		651,169
Governmental deposit accounts	Governmental deposit accounts	679,305		385,384		Governmental deposit accounts	728,057		617,259

Brokered deposit accounts (a)	Brokered deposit accounts (a)	106,013		170,146		Brokered deposit accounts (a)	86,739		104,745
Total interest-bearing deposits	Total interest-bearing deposits	4,272,027		2,913,136		Total interest-bearing deposits	4,267,360		4,221,130
Non-interest-bearing deposits	Non-interest-bearing deposits	1,559,993		997,323		Non-interest-bearing deposits	1,661,865		1,641,422
Total deposits	Total deposits	$	5,832,020	$	3,910,459	Total deposits	$	5,929,225	$	5,862,552

(a) ~~At September 30, 2021, brokered~~Brokered deposit accounts ~~included $100.0~~include $85.0 million of brokered demand deposits.

~~At December 31, 2020, brokered deposit accounts included $50.0 millionof 90-day brokered CDs and~~

~~$110.0 million of brokered demand deposits~~

Time deposits that met or exceeded the Federal Deposit Insurance Corporation ("FDIC") limit of $250,000 were ~~$134.3~~$129.8 million and ~~$89.0~~$121.3 million at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. ~~The increase compared to December 31, 2020 was mostly due to the deposits acquired from Premier.~~

The contractual maturities of retail CDs, ~~and~~ brokered CDs and demand deposits for each of the next five years, including the remainder of 2022, and thereafter are as follows:


(Dollars in thousands)	(Dollars in thousands)	Retail		Brokered		Total		(Dollars in thousands)	Retail		Brokered		Total
Remaining three months ending December 31, 2021 (a)		$	142,996	$	101,307	$	244,303
Year ending December 31, 2022		375,448		4,216		379,664
Remaining six months ending December 31, 2022 (a)								Remaining six months ending December 31, 2022 (a)	$	354,213	$	86,245	$	440,458
Year ending December 31, 2023	Year ending December 31, 2023	66,339		490		66,829		Year ending December 31, 2023	110,249		494		110,743
Year ending December 31, 2024	Year ending December 31, 2024	62,021		—		62,021		Year ending December 31, 2024	58,361		—		58,361
Year ending December 31, 2025	Year ending December 31, 2025	22,021		—		22,021		Year ending December 31, 2025	25,332		—		25,332
Year ending December 31, 2026								Year ending December 31, 2026	27,648		—		27,648
Thereafter	Thereafter	22,855		—		22,855		Thereafter	8,456		—		8,456
Total CDs	Total CDs	$	691,680	$	106,013	$	797,693	Total CDs	$	584,259	$	86,739	$	670,998

(a) Brokered deposit accounts include ~~$100.0~~$85.0 million of brokered demand deposits.

At ~~September~~June 30, ~~2021,~~2022, Peoples had 1613 effective interest rate swaps, with an aggregate notional value of ~~$150.0~~$125.0 million, of which ~~$100.0~~$85.0 million were funded by brokered demand and savings deposits. Brokered demand deposits hedged by interest rate swaps are expected to be extended every 90 days through the maturity dates of the swaps. Additional information regarding Peoples' interest rate swaps can be found in "Note 10 Derivative Financial Instruments."

2932

Table of Contents

Note 7 Stockholders’ Equity

The following table details the progression in Peoples’ common shares and treasury stock during the ~~nine~~six months ended ~~September~~June 30, ~~2021:~~2022:


		Common Shares	Treasury Stock		Common Shares	Treasury Stock
Shares at December 31, 2020		21,193,402	1,686,046
Shares at December 31, 2021				Shares at December 31, 2021	29,814,401	1,577,359
Changes related to stock-based compensation awards:	Changes related to stock-based compensation awards:			Changes related to stock-based compensation awards:

Release of restricted common shares	Release of restricted common shares	—	29,135	Release of restricted common shares	—	38,010
Cancellation of restricted common shares	Cancellation of restricted common shares	—	7,168	Cancellation of restricted common shares	—	1,880

Grant of restricted common shares	Grant of restricted common shares	—	(101,926)	Grant of restricted common shares	—	(203,081)
Grant of unrestricted common shares	Grant of unrestricted common shares	—	(5,747)	Grant of unrestricted common shares	—	(700)
Changes related to deferred compensation plan for Boards of Directors:	Changes related to deferred compensation plan for Boards of Directors:			Changes related to deferred compensation plan for Boards of Directors:
Purchase of treasury stock	Purchase of treasury stock	—	5,309	Purchase of treasury stock	—	6,459
Disbursed out of treasury stock	Disbursed out of treasury stock	—	(2,983)	Disbursed out of treasury stock	—	(3,039)

Common shares repurchased under share repurchase program				Common shares repurchased under share repurchase program	—	214,220
Common shares issued under dividend reinvestment plan	Common shares issued under dividend reinvestment plan	23,348	—	Common shares issued under dividend reinvestment plan	22,090	—
Common shares issued under compensation plan for Boards of Directors	Common shares issued under compensation plan for Boards of Directors	—	(5,535)	Common shares issued under compensation plan for Boards of Directors	—	(8,738)

Common shares issued under employee stock purchase plan	Common shares issued under employee stock purchase plan	—	(11,874)	Common shares issued under employee stock purchase plan	—	(11,845)
Issuance of common shares related to the merger with Premier Financial Bancorp, Inc.		8,589,685	—

Shares at September 30, 2021		29,806,435	1,599,593

Shares at June 30, 2022				Shares at June 30, 2022	29,836,491	1,610,525

On January 28, 2021, Peoples' Board of Directors approved a share repurchase program authorizing Peoples to purchase up to an aggregate of $30.0 million of Peoples' outstanding common ~~shares, replacing the February 27, 2020 share repurchase program which had authorized Peoples to purchase up to an aggregate of $40.0 million of Peoples' outstanding common~~ shares. At ~~September~~June 30, ~~2021,~~2022, Peoples had ~~not~~ repurchased ~~any~~214,220 common shares totaling $6.0 million under the share repurchase program authorized on January 28, 2021.

Under Peoples' Amended Articles of Incorporation, Peoples is authorized to issue up to 50,000 preferred shares, in one or more series, having such voting powers, designations, preferences, rights, qualifications, limitations and restrictions as determined by Peoples' Board of Directors. At ~~September~~June 30, ~~2021,~~2022, Peoples had no preferred shares issued or outstanding.

On ~~October~~July 25, ~~2021,~~2022, Peoples' Board of Directors declared a quarterly cash dividend of ~~$0.36~~$0.38 per common share, payable on ~~November~~August 22, ~~2021,~~2022, to shareholders of record on ~~November~~August 8, ~~2021.~~2022. The following table details the cash dividends declared per common share during the ~~four~~three quarters of ~~2021~~2022 and the comparable periods of ~~2020:~~2021:


		2021		2020			2022		2021
First quarter	First quarter	$	0.35	0.34		First quarter	$	0.36	$	0.35
Second quarter	Second quarter	0.36		0.34		Second quarter	0.38		0.36
Third quarter	Third quarter	0.36		0.34		Third quarter	0.38		0.36
Fourth quarter		$	0.36	$	0.35

Total dividends declared	Total dividends declared	$	1.43	$	1.37	Total dividends declared	$	1.12	$	1.07

Accumulated Other Comprehensive (Loss) Income

The following table details the change in the components of Peoples’ accumulated other comprehensive (loss) income for the ~~nine~~six months ended ~~September~~June 30, ~~2021:~~2022:

(Dollars in thousands) Unrealized Gain on Securities Unrecognized Net Pension and Postretirement Costs Unrealized Loss on Cash Flow Hedge Accumulated Other Comprehensive (Loss) Income
Balance, December 31, 2020 $ 14,592 $ (3,872) $ (9,384) $ 1,336
Reclassification adjustments to net income:
Realized gain on sale of securities, net of tax 547 — — 547
Realized loss due to settlement and curtailment, net of tax — 111 — 111
Other comprehensive (loss) income, net of reclassifications and tax (13,245) 1,481 3,882 (7,882)
Balance, September 30, 2021 $ 1,894 $ (2,280) $ (5,502) $ (5,888)


(Dollars in thousands)	Unrealized Loss on Securities		Unrecognized Net Pension and Postretirement Costs (Benefit)		Unrealized (Loss) Gain on Cash Flow Hedge		Accumulated Other Comprehensive (Loss)
Balance, December 31, 2021	$	(5,946)	$	(1,881)	$	(3,792)	$	(11,619)
Reclassification adjustments to net income:
Realized loss on sale of securities, net of tax	(66)		—		—		(66)

Other comprehensive (loss) income, net of reclassifications and tax	(87,598)		76		5,848		(81,674)
Balance, June 30, 2022	$	(93,610)	$	(1,805)	$	2,056	$	(93,359)

Table of Contents

Note 8 Employee Benefit Plans

Peoples sponsors a noncontributory defined benefit pension plan that covers substantially all employees hired before January 1, 2010. The plan provides retirement benefits based on an employee’s years of service and compensation. For employees hired before January 1, 2003, the amount of postretirement benefit is based on the employee’s average monthly compensation over the highest five consecutive years out of the employee’s last ten years with Peoples while an eligible employee. For employees hired on or after January 1, 2003, the amount of postretirement benefit is based on 2% of the employee’s annual compensation during the years 2003 through 2009, plus accrued interest. Effective January 1, 2010, the pension plan was closed to new entrants. Effective March 1, 2011, the accrual of pension plan benefits for all participants was frozen. Peoples recognized this freeze as a curtailment as of December 31, 2010 and March 1, 2011, under the terms of the pension plan. Effective July 1, 2013, a participant in the pension plan who is employed by Peoples may elect to receive or to commence receiving such person's retirement benefits as of the later of such person's normal retirement date or the first day of the month first following the date such person makes an election to receive his or her retirement benefits.

Peoples also provides post-retirement health and life insurance benefits to certain former employees and directors. Only those individuals who retired before January 27, 2012 were eligible for life insurance benefits. As of January 1, 2011, all retirees who desire to participate in the Peoples Bank medical plan do so by electing COBRA, which provides up to 18 months of coverage; retirees over the age of 65 also have the option to pay to participate in a group Medicare supplemental plan. Peoples only pays 100% of the cost of health benefits for those individuals who retired before January 1, 1993. For all others, the retiree is responsible for most, if not all, of the cost of the health benefits. Peoples’ policy is to fund the cost of the benefits as they arise.

The expected long-term rate of return on plan assets, which was determined as of January 1, ~~2021,~~2022, is 7.0%. The following table details the components of the net periodic cost for the plan described above, which is included in salaries and employee benefit costs on the Unaudited Consolidated Statements of Operations:


		Pension Benefits									Pension Benefits
		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		2021		2020		(Dollars in thousands)	2022		2021		2022		2021
Interest cost	Interest cost	$	60	$	80	$	194	$	256	Interest cost	$	66	$	67	$	132	$	134
Expected return on plan assets	Expected return on plan assets	(143)		(187)		(492)		(577)		Expected return on plan assets	(168)		(175)		(336)		(349)
Amortization of net loss	Amortization of net loss	21		35		84		101		Amortization of net loss	20		32		40		63
Settlement of benefit obligation		143		531		143		1,050
Net periodic loss (income)		$	81	$	459	$	(71)	$	830

Net periodic income										Net periodic income	$	(82)	$	(76)	$	(164)	$	(152)

Under US GAAP, Peoples is required to recognize a settlement gain or loss when the aggregate amount of lump-sum distributions to participants equals or exceeds the sum of the service and interest cost components of the net periodic pension cost. The amount of settlement gain or loss recognized is the pro rata amount of the unrealized gain or loss existing immediately prior to the settlement. In general, both the projected benefit obligation and the fair value of plan assets are required to be remeasured in order to determine the settlement gain or loss.

Peoples ~~recorded~~did not record a settlement charge ~~of $143,000 during~~for the ~~three and nine~~six months ended ~~September~~June 30, ~~2021 under the noncontributory defined benefit pension plan. Peoples recorded settlement charges of $531,000 and $1.1 million, respectively, during the three and nine months ended September~~2022 or June 30, ~~2020~~2021 under the noncontributory defined benefit pension plan.

3034

Table of Contents

Note 9 Earnings Per Common Share

The calculations of basic and diluted ~~(loss)~~ earnings per common share were as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
(Dollars in thousands, except per common share data)	(Dollars in thousands, except per common share data)	2021		2020		2021		2020		(Dollars in thousands, except per common share data)	2022		2021		2022		2021
Net (loss) income available to common shareholders		$	(5,758)	$	10,210	$	19,808	$	14,194
Less: Dividends paid on unvested shares		(79)		(96)		(214)		(274)
Add: Undistributed earnings (loss) allocated to unvested shares		21		(2)		2		4
Net (loss) earnings allocated to common shareholders		$	(5,816)	$	10,112	$	19,596	$	13,924
Net income available to common shareholders										Net income available to common shareholders	$	24,888	$	10,103	$	48,465	$	25,566
Less: Dividends paid on unvested common shares										Less: Dividends paid on unvested common shares	(102)		(81)		(150)		(150)
Add: Undistributed loss allocated to unvested common shares										Add: Undistributed loss allocated to unvested common shares	(19)		(5)		(40)		(15)
Net earnings allocated to common shareholders										Net earnings allocated to common shareholders	$	24,767	$	10,017	$	48,275	$	25,401

Weighted-average common shares outstanding	Weighted-average common shares outstanding	20,640,519		19,504,503		19,751,853		19,862,409		Weighted-average common shares outstanding	27,919,133		19,317,454		27,962,405		19,300,156
Effect of potentially dilutive common shares	Effect of potentially dilutive common shares	148,752		133,186		138,819		135,944		Effect of potentially dilutive common shares	142,603		144,480		78,740		148,388
Total weighted-average diluted common shares outstanding	Total weighted-average diluted common shares outstanding	20,789,271		19,637,689		19,890,672		19,998,353		Total weighted-average diluted common shares outstanding	28,061,736		19,461,934		28,041,145		19,448,544

(Loss) earnings per common share:
Earnings per common share:										Earnings per common share:
Basic	Basic	$	(0.28)	$	0.52	$	0.99	$	0.70	Basic	$	0.89	$	0.52	$	1.73	$	1.32
Diluted	Diluted	$	(0.28)	$	0.51	$	0.99	$	0.70	Diluted	$	0.88	$	0.51	$	1.72	$	1.31
Anti-dilutive common shares excluded from calculation:	Anti-dilutive common shares excluded from calculation:									Anti-dilutive common shares excluded from calculation:
Restricted shares		—		69,459		—		67,759
Restricted common shares										Restricted common shares	188,468		—		906		—

Note 10 Derivative Financial Instruments

Peoples utilizes interest rate swap agreements as part of its asset/liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements. The fair value of derivative financial instruments is included in the "Other assets" and the "Accrued expenses and other liabilities" lines in the accompanying Unaudited Consolidated Balance Sheets, while cash activity related to these ~~derivatives~~derivative financial instruments is included in the activity in "Net cash provided by operating activities" in the Unaudited Condensed Consolidated Statements of Cash Flows.

Derivative Financial Instruments and Hedging Activities - Risk Management Objective of Using Derivative Financial Instruments

Peoples is exposed to certain risks arising from both its business operations and economic conditions. Peoples principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. Peoples manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its assets and liabilities. Peoples also manages interest rate risk through the use of derivative financial instruments. Specifically, Peoples enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known or expected cash amounts, the values of which are determined by interest rates. Peoples’ derivative financial instruments are used to manage differences in the amount, timing and duration of Peoples' known or expected cash receipts and its known or expected cash payments principally related to certain variable rate borrowings. Peoples also has interest rate derivative financial instruments that result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in Peoples' assets or liabilities. Peoples manages a matched book with respect to customer-related derivative financial instruments in order to minimize its net risk exposure resulting from such transactions.

Cash Flow Hedges of Interest Rate Risk

Peoples' objectives in using interest rate derivative financial instruments are to add stability to interest income and expense, and to manage its exposure to interest rate movements. To accomplish these objectives, Peoples has entered into interest rate swaps as part of its interest rate risk management strategy. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for Peoples making fixed payments. At ~~September~~June 30, ~~2021,~~2022, Peoples had entered into 1613 interest rate swap contracts with an aggregate notional value of ~~$150.0~~$125.0 million. Peoples will pay a fixed rate of interest for up to ten years while receiving a floating rate component of interest equal to the three-month LIBOR rate. The interest received on the floating rate component is intended to offset the interest paid on rolling three-month brokered CDs and ~~brokered demand deposits,~~90-day FHLB Advances, which will continue to be rolled through the life of the swaps. At ~~September~~June 30, ~~2021,~~2022, the interest rate swaps were designated as cash flow hedges of ~~$100.0~~$85.0 million in brokered demand deposits, which are expected to be extended every 90 days through the maturity dates of the swaps. The remaining ~~$50.0~~$40.0 million of interest rate swaps were designated as cash flow hedges of 90-day FHLB Advances.

3135

Table of Contents

For derivative financial instruments designated as cash flow hedges, the effective and ineffective portions of changes in the fair value of each derivative financial instrument is reported in accumulated other comprehensive (loss) income ("AOCI") (outside of earnings), net of tax, and are reclassified to interest expense as interest payments are made or received on Peoples' variable-rate liabilities. Peoples assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the hedging derivative financial instrument with the changes in cash flows of the designated hedged transaction. The reset dates and the payment dates on the 90-day advances or brokered CDs are matched to the reset dates and payment dates on the receipt of the three-month LIBOR floating portion of the swaps to ensure effectiveness of the cash flow hedge. During the three ~~and nine~~ months ended ~~September~~June 30, 2022, and 2021, Peoples had recorded reclassifications of losses to earnings of ~~$766,000~~$0.4 million and ~~$2.3~~$0.8 million, respectively. ~~During~~For the ~~three and nine~~six months ended ~~September~~June 30, ~~2020,~~2022 and 2021, Peoples ~~had~~recorded reclassifications of losses to earnings of ~~$732,000~~$1.0 million and ~~$1.2~~$1.6 million, respectively. During the next twelve months, Peoples estimates that ~~minimal interest expense~~$1.2 million of AOCI will be ~~reclassified.~~reclassified as a reduction to interest expense.

The following table summarizes information about the interest rate swaps designated as cash flow hedges:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021			December 31, 2020			(Dollars in thousands)	June 30, 2022			December 31, 2021
Notional amount	Notional amount	$	150,000		$	160,000		Notional amount	$	125,000		$	125,000
Weighted average pay rates	Weighted average pay rates	2.13		%	2.18		%	Weighted average pay rates	2.26		%	2.26		%
Weighted average receive rates	Weighted average receive rates	0.76		%	0.38		%	Weighted average receive rates	3.00		%	1.10		%
Weighted average maturity	Weighted average maturity	3.8 years			4.4 years			Weighted average maturity	3.1 years			3.6 years
Pre-tax unrealized losses included in AOCI		$	(7,143)		$	(11,879)
Pre-tax unrealized gains (losses) included in AOCI								Pre-tax unrealized gains (losses) included in AOCI	$	2,680		$	(4,879)

The following table presents net ~~gains or~~(gains) losses recorded in AOCI and in the Unaudited Consolidated Statements of Operations related to the cash flow hedges:


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		2021		2020		(Dollars in thousands)	2022		2021		2022		2021
Amount of (gain) loss recognized in AOCI, pre-tax		$	(858)	$	(803)	$	(4,800)	$	9,661
Amount of (gains) losses recognized in AOCI, pre-tax										Amount of (gains) losses recognized in AOCI, pre-tax	$	(2,104)	$	294	$	(7,560)	$	(3,942)

The following table reflects the cash flow hedges, which are included in the Unaudited Consolidated Balance Sheets at fair value:


		September 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value		(Dollars in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value

Included in "Other assets":										Included in "Other assets":
Interest rate swaps related to debt										Interest rate swaps related to debt	$	115,000	$	2,547	$	—	$	—

Included in "Accrued expenses and other liabilities":	Included in "Accrued expenses and other liabilities":									Included in "Accrued expenses and other liabilities":
Interest rate swaps related to debt	Interest rate swaps related to debt	$	150,000	$	7,252	$	160,000	$	12,063	Interest rate swaps related to debt	$	10,000	$	3	$	125,000	$	5,020

Non-Designated Hedges

Peoples maintains an interest rate protection program for commercial loan customers, which was established in 2010. Under this program, Peoples originates variable rate loans with interest rate swaps, where the customer enters into an interest rate swap with Peoples on terms that match the terms of the loan. By entering into the interest rate swap with the customer, Peoples Bank effectively provides the customer with a fixed rate loan while creating a variable rate asset for Peoples Bank. Peoples Bank offsets its exposure in the swap by entering into an offsetting interest rate swap with an unaffiliated institution. These interest rate swaps do not qualify as designated hedges; therefore, each swap is accounted for as a standalone derivative financial instrument. These interest rate swaps did not have a material impact on Peoples' results of operations or financial condition at or for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and atas of or for the year ended December 31, ~~2020.~~2021.

The following table reflects the non-designated hedges, which are included in the Unaudited Consolidated Balance Sheets at fair value:

3236

Table of Contents

:

September 30,
2021 December 31,
2020
(Dollars in thousands) Notional Amount Fair Value Notional Amount Fair Value
Included in "Other assets":
Interest rate swaps related to commercial loans $ 403,208 $ 15,653 $ 415,044 $ 27,332
Included in "Accrued expenses and other liabilities":
Interest rate swaps related to commercial loans $ 403,208 $ 15,653 $ 415,044 $ 27,332

Table of Contents


	June 30, 2022				December 31, 2021
(Dollars in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in "Other assets":
Interest rate swaps related to commercial loans	$	430,406	$	17,599	$	419,733	$	12,163

Included in "Accrued expenses and other liabilities":
Interest rate swaps related to commercial loans	$	430,406	$	17,599	$	419,733	$	12,163

Pledged Collateral

Peoples pledges or receives collateral for all interest rate swaps. When the fair value of Peoples' interest rate swaps is in a net ~~liability~~liability position, Peoples must pledge collateral, and, when the fair value of Peoples' interest rate swaps is in a net asset position, the respective counterparties must pledge collateral. At ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, Peoples had ~~zero and $41.0 million, respectively, of~~no cash pledged, while the counterparties had ~~no amount~~$10.0 million of cash pledged at ~~either date. Cash~~June 30, 2022 and none pledged ~~was included in "Interest-bearing deposits in other banks" on the Audited Consolidated Balance Sheet as of~~at December 31, ~~2020.~~2021. Peoples had no pledged ~~$36.3~~investment securities and $28.1 million ~~and zero~~ in investment securities at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~

2021, respectively, while the counterparties had pledged $3.2 million at June 30, 2022 and none at December 31, 2021.

Note 11 Stock-Based Compensation

Under the Peoples Bancorp Inc. Third Amended and Restated 2006 Equity Plan (the "2006 Equity Plan"), Peoples may grant, among other awards, nonqualified stock options, incentive stock options, restricted common share awards, stock appreciation rights, performance units and unrestricted common share awards to employees and non-employee directors. The total number of common shares available under the 2006 Equity Plan is 891,340. The maximum number of common shares that can be issued for incentive stock options is 500,000 common shares. Since February 2009, Peoples has granted restricted common shares to employees, and periodically to non-employee directors, subject to the terms and conditions prescribed by the 2006 Equity Plan. Additionally, in ~~2020 and~~ 2021, Peoples granted unrestricted common shares to non-employee directors (in addition to their directors' fees paid in common shares). In general, common shares issued in connection with stock-based awards are issued from treasury shares to the extent available. If no treasury shares are available, common shares are issued from authorized but unissued common shares.

Restricted Common Shares

Under the 2006 Equity Plan, Peoples may award restricted common shares to officers, key employees and non-employee directors. In general, the restrictions on the restricted common shares awarded to employees expire after periods ranging from one to five years. Since 2018, common shares awarded to non-employee directors have vested immediately upon grant with no restrictions. In the first ~~nine~~six months of ~~2021,~~2022, Peoples granted an aggregate of ~~76,819~~154,645 restricted common shares subject to performance-based vesting to officers and key employees with restrictions that will lapse three years after the grant date; provided that in order for the restricted common shares to vest in full, Peoples must have reported positive net income and maintained a well-capitalized status by regulatory standards for each of the three fiscal years preceding the vesting date.

The following table summarizes the changes to Peoples’ restricted common shares for the ~~nine~~six months ended ~~September~~June 30, ~~2021:~~2022:


		Time-Based Vesting			Performance-Based Vesting				Time-Based Vesting			Performance-Based Vesting
		Number of Common Shares	Weighted-Average Grant Date Fair Value		Number of Common Shares	Weighted-Average Grant Date Fair Value			Number of Common Shares	Weighted-Average Grant Date Fair Value		Number of Common Shares	Weighted-Average Grant Date Fair Value
Outstanding at January 1		67,758	$	23.71	250,992	$	33.36
Outstanding at January 1, 2022								Outstanding at January 1, 2022	88,922	$	25.44	247,346	$	32.19
Awarded	Awarded	25,107	32.58		76,819	31.48		Awarded	48,436	31.58		154,645	32.21
Released	Released	(9,127)	35.63		(73,611)	35.43		Released	(8,041)	32.89		(100,091)	32.20
Forfeited	Forfeited	(500)	34.75		(6,668)	32.42		Forfeited	—	—		(1,880)	32.15
Outstanding at September 30		83,238	$	25.01	247,532	$	32.19
Outstanding at June 30, 2022								Outstanding at June 30, 2022	129,317	$	27.28	300,020	$	32.19

For the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, the total intrinsic value for restricted common shares released was ~~$2.6~~$3.5 million compared to ~~$2.0~~$2.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

Stock-Based Compensation

Peoples recognizes stock-based compensation, which is included as a component of Peoples’ salaries and employee benefit costs, for restricted and unrestricted common shares, ~~and performance unit awards,~~ as well as purchases made by participants in the employee stock purchase plan. For restricted common shares, Peoples recognizes stock-based compensation based on the estimated fair value of

~~Table of Contents~~

the awards expected to vest on the grant date. The estimated fair value is then expensed over the vesting period, which is normally three years. For performance unit awards, Peoples recognizes stock-based compensation over the performance period, based on the portion of the

Table of Contents

awards that was expected to vest based on the expected level of achievement of the two performance goals. Peoples also has an employee stock purchase plan whereby employees can purchase Peoples' common shares at a discount of 15%. The following table summarizes the amount of stock-based compensation expense and related tax benefit recognized for each period:


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		2021		2020		(Dollars in thousands)	2022		2021		2022		2021
Employee stock-based compensation expense:	Employee stock-based compensation expense:									Employee stock-based compensation expense:
Stock grant expense	Stock grant expense	$	597	$	615	$	2,381	$	2,950	Stock grant expense	$	576	$	585	$	2,153	$	1,784
Employee stock purchase plan expense	Employee stock purchase plan expense	21		17		$	55	$	47	Employee stock purchase plan expense	24		18		52		34
Performance unit benefit		—		—		$	—	$	(12)

Total employee stock-based compensation expense	Total employee stock-based compensation expense	618		632		$	2,436	$	2,985	Total employee stock-based compensation expense	600		603		$	2,205	$	1,818
Non-employee director stock-based compensation expense	Non-employee director stock-based compensation expense	60		53		$	310	$	288	Non-employee director stock-based compensation expense	127		55		$	251	$	250
Total stock-based compensation expense	Total stock-based compensation expense	678		685		$	2,746	$	3,273	Total stock-based compensation expense	727		658		$	2,456	$	2,068
Recognized tax benefit	Recognized tax benefit	(151)		(144)		(612)		(687)		Recognized tax benefit	(166)		(138)		(560)		(434)
Net stock-based compensation expense	Net stock-based compensation expense	$	527	$	541	$	2,134	$	2,586	Net stock-based compensation expense	$	561	$	520	$	1,896	$	1,634

Restricted common shares were the primary form of stock-based compensation awards granted by Peoples in the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021. The fair value of restricted common share awards on the grant date is the market price of Peoples' common shares on that date. Total unrecognized stock-based compensation expense related to unvested restricted common share awards was ~~$3.0~~$5.3 million at ~~September~~June 30, ~~2021,~~2022, which will be recognized over a weighted-average period of ~~1.9~~2.2 years. On April 1, 2020, an aggregate of 18,952 unrestricted common shares were granted as a one-time special award to employees under the level of Vice President, with a related stock-based compensation expense of $396,000 being recognized.

In addition to the portion of directors' fees paid in common shares, non-employee director stock-based compensation expense included $135,000 during the first nine months of 2021, and $120,000 during the first nine months of 2020, reflecting separate grants of unrestricted common shares aggregating 4,347 and 3,680 common shares, respectively.

3439

Table of Contents

Note 12 Revenue

The following table details Peoples' revenue from contracts with customers:


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		2021		2020		(Dollars in thousands)	2022		2021		2022		2021
Insurance income:	Insurance income:									Insurance income:
Commission and fees from sale of insurance policies (a)	Commission and fees from sale of insurance policies (a)	$	3,231	$	3,493	$	9,603	$	9,117	Commission and fees from sale of insurance policies (a)	$	3,544	$	3,195	$	6,587	$	6,371
Fees related to third-party administration services (a)	Fees related to third-party administration services (a)	76		107		276		375		Fees related to third-party administration services (a)	92		106		163		200
Performance-based commissions (b)	Performance-based commissions (b)	60		9		2,044		1,437		Performance-based commissions (b)	10		34		1,356		1,985
Trust and investment income (a)	Trust and investment income (a)	4,158		3,435		12,223		10,013		Trust and investment income (a)	4,246		4,220		8,522		8,065
Electronic banking income:	Electronic banking income:									Electronic banking income:
Interchange income (a)	Interchange income (a)	3,280		3,011		9,930		8,255		Interchange income (a)	4,302		3,603		8,415		6,650
Promotional and usage income (a)	Promotional and usage income (a)	1,046		755		2,725		2,313		Promotional and usage income (a)	1,117		815		2,257		1,679
Deposit account service charges:	Deposit account service charges:									Deposit account service charges:
Ongoing maintenance fees for deposit accounts (a)	Ongoing maintenance fees for deposit accounts (a)	933		848		2,597		2,677		Ongoing maintenance fees for deposit accounts (a)	1,307		853		2,618		1,664
Transactional-based fees (b)		1,616		1,418		3,981		4,318
Transaction-based fees (b)										Transaction-based fees (b)	2,251		1,191		4,366		2,366
Commercial loan swap fees (b)	Commercial loan swap fees (b)	73		68		194		1,267		Commercial loan swap fees (b)	270		61		438		121
Other non-interest income transactional-based fees (b)		207		94		601		624
Other non-interest income transaction-based fees (b)										Other non-interest income transaction-based fees (b)	315		249		572		393
Total revenue from contracts with customers	Total revenue from contracts with customers	$	14,680	$	13,238	$	44,174	$	40,396	Total revenue from contracts with customers	$	17,454	$	14,327	$	35,294	$	29,494
Timing of revenue recognition:	Timing of revenue recognition:									Timing of revenue recognition:
Services transferred over time	Services transferred over time	$	12,724	$	11,649	$	37,354	$	32,750	Services transferred over time	$	14,608	$	12,792	$	28,562	$	24,629
Services transferred at a point in time	Services transferred at a point in time	1,956		1,589		6,820		7,646		Services transferred at a point in time	2,846		1,535		6,732		4,865
Total revenue from contracts with customers	Total revenue from contracts with customers	$	14,680	$	13,238	$	44,174	$	40,396	Total revenue from contracts with customers	$	17,454	$	14,327	$	35,294	$	29,494

(a) Services transferred over time.

(b) Services transferred at a point in time.

Peoples records contract assets for income that has been recognized over a period of time for fulfillment of performance obligations, but has not yet been received related to electronic banking income and certain insurance income. This income typically relates to bonuses for which Peoples is eligible, but will not receive until a certain time in the future. Peoples records contract liabilities for payments received for commission income related to the sale of insurance policies, for which the performance obligations have not yet been fulfilled. The contract liabilities are recognized as income over time, during the period in which the performance obligations are fulfilled, which is over the insurance policy period. Peoples also records contract liabilities for bonuses received related to electronic banking income, for which the performance obligations have not yet been fulfilled. The contract liabilities are recognized as income over time, during the period in which the performance obligations are fulfilled related to electronic banking income.

The following table details the changes in Peoples' contract assets and contract liabilities for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2021:~~2022:


		Contract Assets		Contract Liabilities			Contract Assets		Contract Liabilities
(Dollars in thousands)	(Dollars in thousands)					(Dollars in thousands)
Balance, January 1, 2021		$	1,247	$	5,224
Balance, January 1, 2022						Balance, January 1, 2022	$	743	$	4,811
Additional income receivable	Additional income receivable	144		—		Additional income receivable	149		—
Additional deferred income						Additional deferred income	—		305

Receipt of income previously receivable		(701)		—
Recognition of income previously deferred	Recognition of income previously deferred	—		(488)		Recognition of income previously deferred	—		(63)
Balance, September 30, 2021		$	690	$	4,736
Balance, June 30, 2022						Balance, June 30, 2022	$	892	$	5,053

3540

Table of Contents

Note 13 Acquisitions

Elite Agency, Inc

On April 1, 2022, Peoples Insurance acquired substantially all of the assets and rights of an insurance agency with 5 locations in eastern Kentucky and certain rights to related customer accounts, which were previously developed and maintained by Elite Agency, Inc. ("Elite"), pursuant to an Asset Purchase Agreement between Peoples Insurance and Elite. Total consideration for this transaction was $3.8 million. Peoples recognized preliminary intangibles of $2.1 million, primarily comprised of a customer relationship intangible.

Vantage Financial, LLC

On March 7, 2022, Peoples Bank purchased 100% of the equity of Vantage, a nationwide provider of equipment financing headquartered in Excelsior, Minnesota. Peoples Bank acquired assets comprising Vantage's lease business, including $157.5 million in leases and certain third-party debt in the amount of $107.1 million. Under the terms of the agreement, Peoples Bank paid cash consideration of $54.0 million, and also repaid $28.9 million in recourse debt on behalf of Vantage, for total consideration of $82.9 million. Vantage offers mid-ticket equipment leases, primarily for business essential information technology equipment across a wide-array of industries.

Peoples recorded acquisition-related expenses during the first six months of 2022 of $1.5 million related to the Vantage acquisition, which included $1.1 million in professional fees.

The following table provides the preliminary purchase price calculation as of the date of the acquisition of Vantage, and the assets acquired and liabilities assumed at their estimated fair values, and the amounts are subject to adjustment for up to one year after March 7, 2022. Valuations subject to change include leases, other intangible assets and borrowings.


(Dollars in thousands)	Fair Value







Total purchase price	$	82,893


Net assets at fair value
Assets
Cash and due from banks	$	1,444







Leases	157,941







Allowance for credit losses (on PCD leases)	(424)
Net leases	157,517



Bank premises and equipment	116
Other intangible assets	13,207
Other assets	1,506

Total assets	$	173,790
Liabilities
Borrowings	$	107,089





Accrued expenses and other liabilities	$	8,550
Total liabilities	$	115,639
Net assets	$	58,151
Goodwill	$	24,742

The goodwill recorded in connection with the Vantage acquisition is related to expected synergies to be gained from the combination of Vantage with Peoples' operations. The employees retained from the Vantage acquisition should allow Peoples to continue to grow the lease portfolio, along with Peoples' resources, and should benefit Peoples in future periods. During Peoples' evaluation of intangible assets, it was determined that an assembled workforce intangible asset was not separately recognizable and was included in goodwill.

Table of Contents

The estimated fair values presented in the above table reflect additional information that was obtained during the three months ended June 30, 2022, which resulted in changes to certain fair value estimates made as of the date of acquisition. Adjustments to acquisition date estimated fair values are recorded during the period in which they occur and, as a result, previously recorded results have changed. The below table reflects the changes in the estimated fair value as they impact goodwill at June 30, 2022:


(Dollars in thousands)	Change in fair value
Net assets


Net leases	$	17,303
Bank premises and equipment	(1,810)

Other assets	(97)
Change in total assets	$	15,396
Borrowings	(320)
Accrued expenses and other liabilities	71
Change in total liabilities	$	(249)
Change in net assets	$	15,645
Change in goodwill	$	(15,645)

The following table details the fair value adjustment for acquired purchased credit deteriorated leases as of the acquisition date:



(Dollars in thousands)	Par Value		Allowance for Credit Losses		Non-Credit (Discount) Premium		Fair Value
Purchased credit deteriorated leases



Leases	$	3,501	$	(424)	$	737	$	3,814




Fair value	$	3,501	$	(424)	$	737	$	3,814

Premier Financial Bancorp, Inc.

On September 17, 2021, Peoples completed its merger with Premier. Premier merged into Peoples, and Premier’s wholly-owned subsidiaries, Premier Bank, Inc., and Citizens Deposit Bank and Trust, Inc., which combined ~~operate~~operated 48 branches in Kentucky, Maryland, Ohio, Virginia, West Virginia and Washington, D.C., merged into Peoples’ wholly-owned subsidiary, Peoples Bank. As consideration, Premier shareholders were paid 0.58 common shares of Peoples for each full share of Premier that was owned at the acquisition date, resulting in the issuance of 8,589,685 common shares by Peoples, or $261.9 million. Peoples accounted for this transaction as a business combination under the acquisition method. Peoples completed the merger in an effort to diversify and expand its franchise, and further enhance its size and scale. Peoples believes the growth potential, and attractive market areas will benefit its future financial performance.

Peoples recorded acquisition-related expenses related to the Premier merger which included $9.8 million in other non-interest expense; $4.2 million in professional fees; $3.7 million in salaries and employee benefit costs; $181,000 in marketing expense; and $83,000 in data processing and software expense.during the first six months of 2022 of $427,000.

Peoples recorded the estimate of fair value based on initial valuations available at September 17, ~~2021. Due to the timing~~2021, and has revised fair values of the ~~transaction closing date~~acquired assets and ~~this Form 10-Q, these estimated fair values are considered preliminary~~liabilities in the periods since based on subsequent information obtained where those facts and circumstances existed as of ~~September 30, 2021, and~~the acquisition date. The estimates of fair value are subject to adjustment for up to one year after September 17, 2021. Valuations subject to change include ~~but are not limited to,~~ loans ~~bank premises, customer deposit intangibles (included in other intangible assets), certain deposits, trust preferred securities,~~and deferred tax assets and ~~liabilities, and certain other assets and other~~ liabilities.

Table of Contents

The following table provides the preliminary purchase price calculation as of the date of the ~~Merger~~merger with Premier, and the assets acquired and liabilities assumed at their estimated fair values.


(Dollars in thousands)	(Dollars in thousands)	Unpaid Principal Balance	Fair Value		(Dollars in thousands)	Unpaid Principal Balance	Fair Value

Premier common shares	Premier common shares		14,811,200		Premier common shares		14,811,200
Number of common shares of Peoples issued for each common share of Premier	Number of common shares of Peoples issued for each common share of Premier		0.58		Number of common shares of Peoples issued for each common share of Premier		0.58
Price per Peoples common share, based at closing date	Price per Peoples common share, based at closing date		$	30.49	Price per Peoples common share, based at closing date		$	30.49
Common share consideration	Common share consideration		261,899		Common share consideration		261,899
Cash paid in lieu of fractional common shares	Cash paid in lieu of fractional common shares		25		Cash paid in lieu of fractional common shares		25
Total consideration	Total consideration		$	261,924	Total consideration		$	261,924
Net assets at fair value	Net assets at fair value				Net assets at fair value
Assets	Assets				Assets
Cash and due from banks	Cash and due from banks		$	251,763	Cash and due from banks		$	248,360
Interest-bearing deposits in other banks	Interest-bearing deposits in other banks		1,025		Interest-bearing deposits in other banks		1,025
Total cash and cash equivalents	Total cash and cash equivalents		252,788		Total cash and cash equivalents		249,385
Available-for-sale investment securities	Available-for-sale investment securities		563,294		Available-for-sale investment securities		551,953

Other investment securities	Other investment securities		4,159		Other investment securities		4,159
Total investment securities	Total investment securities		567,453		Total investment securities		556,112

Loans:	Loans:				Loans:
Construction	Construction	97,262	93,819		Construction	97,262	96,025
Commercial real estate, other	Commercial real estate, other	544,950	517,315		Commercial real estate, other	544,950	534,869
Commercial and industrial	Commercial and industrial	132,293	127,880		Commercial and industrial	132,293	131,979

Residential real estate	Residential real estate	332,269	327,508		Residential real estate	332,269	331,544
Home equity lines of credit	Home equity lines of credit	46,969	45,841		Home equity lines of credit	46,969	45,910

Consumer	Consumer	21,083	21,527		Consumer	20,961	21,513
Total loans	Total loans	1,174,826	1,133,890		Total loans	1,174,704	1,161,840

Allowance for credit losses (on PCD loans)					Allowance for credit losses (on PCD loans)		(15,513)
Net loans					Net loans		1,146,327
Bank premises and equipment	Bank premises and equipment		33,835		Bank premises and equipment		30,098
Other intangible assets	Other intangible assets		4,233		Other intangible assets		4,233
OREO	OREO		11,101		OREO		11,081
Other assets	Other assets		19,671		Other assets		26,982
Total assets	Total assets		$	2,022,971	Total assets		$	2,024,218
Liabilities					Liabilities
Deposits:					Deposits:
Non-interest-bearing					Non-interest-bearing		$	733,157
Interest-bearing					Interest-bearing		1,018,387
Total deposits					Total deposits		1,751,544
Short-term borrowings					Short-term borrowings		63,807
Long-term borrowings					Long-term borrowings		6,070
Accrued expenses and other liabilities					Accrued expenses and other liabilities		7,813
Total liabilities					Total liabilities		1,829,234
Net assets					Net assets		194,984
Goodwill					Goodwill		$	66,940

3643

Table of Contents

The estimated fair values presented in the above table reflect additional information that was obtained during the six months ended June 30, 2022, which resulted in changes to certain fair value estimates made as of the date of acquisition. Adjustments to acquisition date estimated fair values are recorded during the period in which they occur and, as a result, previously recorded results have changed. The below table reflects the changes in the estimated fair value as they impact goodwill at June 30, 2022:

(Dollars in thousands)

~~Unpaid Principal Balance~~Change in fair value

~~Fair Value~~

~~Liabilities~~

~~Deposits:~~

~~Non-interest-bearing~~

~~735,236~~

~~Interest-bearing~~

~~1,020,887~~

~~Total deposits~~

~~1,756,123~~

~~Short-term borrowings~~

~~63,807~~

~~Long-term borrowings~~

~~6,070~~

~~Accrued expenses and other liabilities~~

~~6,036~~

~~Total liabilities~~

~~1,832,036~~

Net assets

~~190,935~~

~~Goodwill~~Net loans

~~70,989~~1,580

Other assets

(353)

Change in total assets

1,227

Change in net assets

1,227

Change in goodwill

(1,227)

The recorded goodwill associated with the Premier merger is related to expected synergies and operational efficiencies to be gained from the combination of Premier with Peoples' operations. None of the goodwill associated with the Premier merger is expected to be deductible for tax purposes. The geographic locations of Premier will allow Peoples to continue to grow the loan and deposit portfolios, while also increasing Peoples' ability to penetrate the new markets with wealth management and insurance services, which should benefit Peoples in future periods. Additional information regarding other intangibles recognized in the acquisition can be found in "Note 5 Goodwill and Other Intangible Assets."

~~The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above.~~

~~Cash and Cash Equivalents:~~ Cash and cash equivalents include cash on hand, balances due from other banks, interest-bearing deposits in other banks, federal funds sold and other short-term investments with original maturities of ninety days or less. The carrying amount for cash and due from banks is a reasonable estimate of fair value.

~~Investment Securities:~~ Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair value estimates are based on observable inputs including quoted market prices for similar instruments, quoted market prices that are not in an active market or other inputs that are observable in the market. In the absence of observable inputs, fair value is estimated based on pricing models and/or discounted cash flow methodologies.

~~Loans:~~ Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan, related collateral, classification status, fixed or variable interest rate, term, amortization status and current discount rates. Loans were grouped together according to similar characteristics when applying various valuation techniques. The discount rates used for loans are based on current market rates at the acquisition date for new originations for comparable loans and include adjustments for liquidity. The discount rate does not include a factor for credit losses as that has been included as a reduction to the estimated cash flows.

~~Bank Premises and Equipment:~~ ~~The fair values of premises were based on a market approach, with third-party appraisals and broker opinions of value for land, office and branch space.~~

~~OREO:~~ ~~The fair values of OREO were based on a market approach, with third-party appraisals and broker opinions of value for land and buildings.~~

~~Customer Deposit Intangible:~~ The customer deposit intangible represents the low cost of funding acquired core deposits provide relative to a marginal cost of funds. The fair value was estimated based on a discounted cash flow methodology that gave consideration to expected customer attrition rates, net maintenance cost of the deposit base, alternative cost of funds, and the interest costs associated with customer deposits. The customer deposit intangible is being amortized over 10 years based upon the period over which estimated economic benefits are estimated to be received.

~~Deposits:~~ The fair values used for the demand and savings deposits equal the amount payable on demand at the acquisition date. The fair values for time deposits were estimated using a discounted cash flow calculation that applies interest rates being offered at the acquisition date to the contractual interest rates on such time deposits.

~~Borrowings:~~ Short-term borrowings consist of overnight repurchase agreements and rates, and given their short-term nature book value approximated fair value. The fair values of long-term borrowings are estimated using discounted cash flow analyses, based on incremental borrowing rates at acquisition date for similar types of instruments.

Loans acquired by Peoples in a business combination that have evidence of more than insignificant credit deterioration, which includes loans that Peoples believes it is probable that Peoples will be unable to collect all contractually required payments, are considered "purchased credit deteriorated" loans. Acquired purchased credit deteriorated loans are reported net of the unamortized fair

~~Table of Contents~~

value adjustment. These loans are recorded at the purchase price, and an allowance for credit losses is determined based upon discrete credit marks, along with discounted cash flow models based upon similar pools of loans, using a similar methodology as for other loans. The following table details the fair value adjustment for acquired purchased credit deteriorated loans as of the acquisition date:

(Dollars in thousands) Par Value Allowance for Credit Losses Non-Credit (Discount) Premium Fair Value
Purchased credit deteriorated loans
Construction $ 23,232 $ (2,127) $ (219) $ 20,886
Commercial real estate, other 176,122 (13,374) (8,022) 154,726
Commercial and industrial 26,341 (4,286) 281 22,336
Residential real estate 56,005 (2,394) (2,166) 51,445
Home equity lines of credit 2,014 (41) (68) 1,905
Consumer 1,614 (112) 63 1,565
Fair value $ 285,328 $ (22,334) $ (10,131) $ 252,863

Peoples' operating results for the three-month and nine-month periods ended September 30, 2021 include the operating results of the acquired assets and assumed liabilities of Premier subsequent to the acquisition on September 17, 2021. Due to the conversion of Premier systems during the third quarter of 2021, as well as other streamlining and integration of the operating activities into those of Peoples, historical reporting for the former Premier operations is impracticable and the disclosures of revenue from the assets acquired and income before income taxes is impracticable for the period subsequent to the acquisition. The following table presents unaudited pro forma information as if the acquisition of Premier had occurred on January 1, 2020. The pro forma adjustments include any changes in interest income due to the accretion of discounts, or amortization of premiums, associated with the fair value adjustments to acquired loans, interest-bearing deposits, long-term borrowings, trust preferred securities and customer deposit intangibles that would have resulted had the assets and liabilities been acquired as of January 1, 2020. The pro forma information excludes Peoples' acquisition-related expenses, which primarily included, but were not limited to, salaries and employee benefit costs, severance costs, professional fees, marketing expenses and deconversion costs. Those acquisition-related expenses totaled $16.2 million and $18.1 million for the quarter and year-to-date, respectively. The pro forma information also excludes a provision of credit losses of $11.0 million recorded to establish an allowance for credit losses for non-purchased credit deteriorated loans of $10.6 million, and a liability for unfunded commitments of $0.4 million, both relating to the acquired loans. The pro forma information does not necessarily reflect the results of operations that would have occurred had Peoples acquired Premier on January 1, 2020. Additionally, cost savings and other business synergies related to the acquisition are not reflected in the pro forma amounts.

Unaudited Pro Forma For
Three Months Ended Nine Months Ended
(Dollars in thousands) September 30,
2021 September 30,
2020 September 30,
2021 September 30,
2020
Net interest income $ 59,248 $ 52,646 $ 168,644 $ 156,285
Non-interest income 19,071 18,967 57,061 53,507
Net income 17,492 16,151 56,862 31,529

~~Pikeville, Kentucky Insurance Agency~~

On May 4, 2021, Peoples Insurance acquired substantially all of the assets and rights of an insurance agency located in Pikeville, Kentucky and certain rights to related customer accounts, which were previously developed and maintained by Justice & Stamper Insurance Agency, Inc. Total consideration for this transaction was $325,000. Peoples accounted for this transaction as a business combination under the acquisition method.



(Dollars in thousands)	Par Value		Allowance for Credit Losses		Non-Credit (Discount) Premium		Fair Value
Purchased credit deteriorated loans
Construction	$	20,143	$	(2,005)	$	(214)	$	17,924
Commercial real estate, other	97,193		(9,053)		(2,123)		86,017
Commercial and industrial	9,948		(3,630)		113		6,431

Residential real estate	18,349		(696)		(251)		17,402
Home equity lines of credit	1,291		(55)		(72)		1,164

Consumer	929		(74)		37		892
Fair value	$	147,853	$	(15,513)	$	(2,510)	$	129,830

NS Leasing, LLC

Peoples Bank entered into an Asset Purchase Agreement, dated March 24, 2021 with NS Leasing, LLC, which is headquartered in Burlington, Vermont, and does business as “North Star Leasing”. The transaction closed after the end of business on March 31, 2021 and Peoples Bank began operating the acquired business as a division of Peoples Bank on April 1, 2021. Peoples Bank acquired assets comprising NSL’s equipment finance business and assumed from NSL certain specified liabilities for total cash consideration of $116.5 million, plus a potential earnout payment to NSL of up to $3.1 million. Peoples Bank acquired $83.3 million in leases and satisfied, on behalf of NSL, certain third-party debt in the amount of $69.1 million. NSL underwrites, originates and services equipment leases and equipment financing agreements to businesses throughout the United States. Peoples recorded ~~preliminary~~ goodwill in the amount of $24.7 million and ~~preliminary~~ other intangibles of $14.0 million, which included a customer relationship intangible, a trade-name intangible and non-compete agreements related to this transaction. Peoples also recorded and paid an ~~additional $0.4 million in non-interest expense during the third quarter of 2021 related to an update to the estimated~~ earn-out provision of ~~$2.7 million. As of~~

~~Table of Contents~~

~~September 30, 2021, leases had grown to $111.4~~approximately $3.0 million. Peoples accounted for this transaction as a business combination under the acquisition method.

The recorded goodwill associated with the NSL acquisition is related to expected synergies and operational efficiencies to be gained from the combination of NSL with Peoples' operations. The employees retained from the NSL acquisition should allow Peoples to continue to grow the lease portfolio, along with Peoples' resources, and should benefit Peoples in future periods. During Peoples' evaluation of intangible assets, it was determined that an assembled workforce intangible asset was not separately recognizable and was included in goodwill.

~~The bonus earn-out provision recorded by Peoples related to the NSL acquisition was determined based on a weighting~~

Table of probability of outcomes, at present value. Peoples predominately weighted the outcomes of the factors at around a 100% payout expectation of the base earn-out, which is $2.7 million in total. Adjusting weighting into the bonus expectation in the third quarter resulted in an additional $625,000 of potential payout. Peoples anticipates that NSL will meet the minimums for the base earn-out payment, and will likely meet the targets set at acquisition for a 100% payout of the base earn-out.Contents

The following table provides the ~~preliminary~~ purchase price calculation as of the date of acquisition for NSL and the assets acquired and liabilities assumed at their ~~estimated~~recorded fair values.


(Dollars in thousands)
Total purchase price (a)	$	118,846







Net assets at fair value
Assets
Cash and due from banks	$	216









Net leases	82,833
Bank premises and equipment, net of accumulated depreciation	470
Other intangible assets	14,009
Other assets	1,225
Total assets	$	98,753
Liabilities





Accrued expenses and other liabilities	$	4,627
Total liabilities	$	4,627
Net assets	$	94,126
Goodwill	$	24,720

(a) Includes preliminary contingent consideration related to the bonus earn-out provision of $2.3 million. Peoples recorded an additional ~~$0.4~~$0.7 million in non-interest expense related to an update to the estimated earn-out provision.

The estimated fair values presented in the above table reflect additional information that was obtained during the three months ended September 30, 2021, which resulted in changes to certain fair value estimates made as of the date of acquisition. Adjustments to acquisition date estimated fair values are recorded during the period in which they occur and, as a result, previously recorded results have changed. The below table reflects the changes in the estimated fair value as they impact goodwill at September 30, 2021:


~~(Dollars in thousands)~~	~~Change in fair value~~
~~Net assets~~




~~Other intangible assets~~	$	~~(474)~~
~~Other assets~~	~~(380)~~
~~Accrued expenses and other liabilities~~	~~380~~
~~Change in goodwill~~	$	~~(474)~~

The following table details the fair value adjustment for acquired purchased credit deteriorated leases as of the acquisition date:

~~Table of Contents~~


(Dollars in thousands)	NSL
Purchased credit deteriorated leases
Par value	$	5,248
Allowance for credit losses	(493)
Non-credit premium	85
Fair value	$	4,840

Peoples recorded acquisition-related expenses related to the NSL acquisition during the ~~third quarter of 2021, which included $13,000 in professional fees. For the~~ first ~~nine~~six months of 2021, Peoples recorded acquisition-related expenses related to the NSL acquisition which included $2.1 million in professional fees; $209,000 in other non-interest expense; $3,000 in salaries and employee benefit costs; $3,000 in data processing and software expense; $2,000 in net occupancy and equipment expense; and $2,000 in marketing expense.2022 of $90,000.

Table of Contents

Note 14 Leases

Peoples has elected certain practical expedients, in accordance with Accounting Standards Codification 842 - Leases ("ASC 842"). As a lessor, Peoples has made an accounting policy election to exclude from consideration in the contract, and from variable payments not included in the consideration in the contract, all sales and other similar taxes assessed. Peoples has also made an accounting policy election to account for each separate lease component of a contract and its associated non-lease components as a single lease component for all leases subject to ASC 842.

Lessor Arrangements

Leases originated by Peoples, that Peoples has the positive intent and ability to hold for the foreseeable future or to maturity or payoff, are reported at the net investment of the lease, net of initial direct costs, charge-offs and an allowance for credit losses. Peoples considers leases past due if any required principal or interest payments have not been received as of the date such payments were required to be made under the terms of the lease agreement. Upon detection of the reduced ability of a lessee to meet cash flow obligations, leases are typically charged down to the net realizable value, with the residual balance placed on nonaccrual status. Leases deemed to be uncollectable are charged against the allowance for credit losses, while recoveries of previously charged-off amounts are credited to the allowance for credit losses.

Peoples began originating leases with the acquisition of leases from ~~NSL.~~NSL in the second quarter of 2021, and expanded its lease portfolio with the acquisition of Vantage in the first quarter of 2022. The leases acquired from NSL were determined to be sales-type leases, as the premise for the leases is dollar buy-out, whereby the lessee pays one dollar at maturity of the lease to purchase the equipment. Originated leases continue to be classified as sales-type leases. As a lessor, Peoples originates commercial equipment leases either directly to the customer or indirectly through vendor programs. Equipment leases consist of automotive, construction, healthcare, manufacturing, office, restaurant, and other equipment. These ~~sales-type~~ leases do not typically contain residual value guarantees; however, if a lease contains a residual value guarantee, Peoples reduces its residual asset risk by obtaining a security deposit from the lessee. The leases acquired from Vantage were determined to be either sales-type or direct financing leases based primarily on whether they included a dollar buy-out or a fair market value buy-out, respectively. As a lessor, Peoples originates commercial equipment leases either directly to the customer or indirectly through vendor programs. Equipment leases consist of automotive, construction, health care, manufacturing, office, restaurant, information technology and other equipment. These leases include estimated residual value, which are assessed for impairment as part of the allowance for credit losses. Other non-interest income noted in the table below includes gain on the early termination of leases, syndicated leases, and other fees. Additional information regarding Peoples' ~~sales-type~~ leases can be found in "Note 4 Loans and Leases."

The table below details Peoples' lease income:


		Three Months Ended		Nine Months Ended			Three Months Ended				Six Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		September 30, 2021		(Dollars in thousands)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Interest and fees on leases (a)	Interest and fees on leases (a)	$	4,810	9,025		Interest and fees on leases (a)	$	10,541	$	4,215	$	16,643	$	4,215
Other non-interest income	Other non-interest income	471		716		Other non-interest income	431		245		1,206		245
Total lease income	Total lease income	$	5,281	$	9,741	Total lease income	$	10,972	$	4,460	$	17,849	$	4,460

(a)Included in "Interest and fees on ~~loans"~~loans and leases" on the Unaudited Consolidated Statements of Operations.

For additional information, see "Note 4 Loans and Leases" of the Notes to the Unaudited Condensed

Consolidated Financial Statements.

4046

Table of Contents

The following table summarizes the net ~~investments~~investment in ~~sales-type~~ leases, which ~~are~~is included in "Loans and leases, net of deferred costs" on the Unaudited Consolidated Balance Sheets:


(Dollars in thousands)	~~September~~June 30, ~~2021~~2022
Lease payments receivable, at amortized cost	$	~~139,445~~325,643
Estimated residual values	~~120~~37,171
Initial direct costs	~~802~~2,549
Deferred revenue	~~(28,921)~~(50,841)
~~Total~~Net investment in leases ~~at amortized cost~~	~~111,446~~314,522
Allowance for credit losses - leases	~~(4,505)~~(7,585)
Net investment in ~~sales-type~~ leases, after allowance for credit losses	$	~~106,941~~306,937

The following table summarizes the contractual maturities of leases:


(Dollars in thousands)	Balance
Remaining ~~three~~six months ~~ending December 31, 2021~~	$	~~13,980~~
~~Year~~ ending December 31, 2022	~~46,706~~$	52,258
Year ending December 31, 2023	~~36,524~~73,212
Year ending December 31, 2024	~~24,093~~79,314
Year ending December 31, 2025	~~13,605~~68,007
Year ending December 31, 2026	35,707
Thereafter	~~4,537~~17,145
Lease payments receivable, at amortized cost	$	~~139,445~~325,643

Lessee Arrangements

Peoples leases certain banking facilities and equipment under various agreements with original terms providing for fixed monthly payments over periods generally ranging from two to thirty years. Certain leases may include options to extend or terminate the lease. Only those renewal and termination options which Peoples is reasonably certain of exercising are included in the calculation of the lease liability. Certain leases contain rent escalation clauses calling for rent increases over the term of the lease, which are included in the calculation of the lease liability. At ~~September~~June 30, ~~2021,~~2022, Peoples did not have any leases that met the criteria for finance leases. Right of Use ("ROU") assets represent the right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement or remeasurement date of a lease based on the present value of lease payments over the remaining lease term. Operating lease ROU assets include lease payments made at or before the commencement date and initial indirect costs. Operating lease ROU assets exclude lease incentives. Short-term leases of certain facilities and equipment, with lease terms of 12 months or less, are recognized on a straight-line basis over the lease term and do not have a ROU asset or lease liability.

The table below details Peoples' lease expense, which is included in "Net occupancy and equipment expense" in the Unaudited Consolidated Statements of Operations:


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020		(Dollars in thousands)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Operating lease expense	Operating lease expense	$	358	$	334	1,038		995		Operating lease expense	$	660	$	350	1,263		680
Short-term lease expense	Short-term lease expense	72		71		244		231		Short-term lease expense	179		100		347		172
Total lease expense	Total lease expense	$	430	$	405	$	1,282	$	1,226	Total lease expense	$	839	$	450	$	1,610	$	852

Peoples utilizes an incremental borrowing rate to determine the present value of lease payments for each lease, as the lease agreements do not provide an implicit rate. The estimated incremental borrowing rate reflects a secured rate and is based on the term of the lease and the interest rate environment at the lease commencement or remeasurement date.

4147

Table of Contents

The following table details the ROU assets, the lease liabilities and other information related to Peoples' operating ~~leases:~~leases at the dates shown:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021			December 31, 2020			(Dollars in thousands)	June 30, 2022			December 31, 2021
ROU assets:	ROU assets:							ROU assets:
Other assets	Other assets	$	8,732		$	6,522		Other assets	$	7,501		$	7,911
Lease liabilities:	Lease liabilities:							Lease liabilities:
Accrued expenses and other liabilities	Accrued expenses and other liabilities	$	9,040		$	6,776		Accrued expenses and other liabilities	$	8,226		$	8,674
Other information:	Other information:							Other information:
Weighted-average remaining lease term	Weighted-average remaining lease term	9.5 years			12.4 years			Weighted-average remaining lease term	8.9 years			9.5 years
Weighted-average discount rate	Weighted-average discount rate	2.39		%	3.14		%	Weighted-average discount rate	2.37		%	2.36		%

During the three ~~and nine~~ months ended ~~September~~June 30, 2022 and 2021, Peoples paid cash of ~~$345,000~~$650,000 and ~~$1,005,000,~~$340,000, respectively, for operating leases. ~~During~~For the ~~three and nine~~six months ended ~~September~~June 30, ~~2020,~~2022 and 2021, Peoples paid cash of ~~$320,000~~$1.2 million and ~~$960,000,~~$0.7 million, respectively, for operating leases.

The following table summarizes the maturity of remaining lease liabilities:


(Dollars in thousands)	Balance
Remaining ~~three~~six months ~~ending December 31, 2021~~	$	~~728~~
~~Year~~ ending December 31, 2022	~~2,270~~$	1,483
Year ending December 31, 2023	~~1,612~~2,033
Year ending December 31, 2024	~~954~~1,210
Year ending December 31, 2025	~~765~~750
Year ending December 31, 2026	579
Thereafter	~~4,396~~3,383
Total undiscounted lease payments	$	~~10,725~~9,438
Imputed interest	$	~~(1,685)~~(1,212)
Total lease liabilities	$	~~9,040~~8,226

4248

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis (“MD&A”) represents an overview of the results of operations and financial condition of Peoples for the ~~three and nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~September~~June 30, ~~2020.~~2021. This MD&A should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the Notes thereto.

~~SELECTED FINANCIAL DATA~~

~~The following data should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the MD&A that follows:~~

At or For the Three Months Ended At or For the Nine Months Ended
September 30, September 30,
(Dollars in thousands, expect per share data) 2021 2020 2021 2020
Operating Data (a)
Total interest income $ 45,467 $ 39,013 $ 127,226 $ 119,181
Total interest expense 2,889 3,894 9,410 14,566
Net interest income 42,578 35,119 117,816 104,615
Provision for credit losses 8,994 4,728 7,333 33,531
Net (loss) gain on investment securities (166) 2 (704) 383
Net loss on asset disposals and other transactions (308) (28) (459) (237)
Total non-interest income excluding net gains and losses (b) 16,820 16,796 50,233 47,025
Total non-interest expense 57,860 34,315 135,746 100,445
Net (loss) income (c) (5,758) 10,210 19,808 14,194
Balance Sheet Data (a)
Total investment securities $ 1,574,676 $ 928,560 $ 1,574,676 $ 928,560
Loans and leases, net of deferred fees and costs ("total loans") 4,491,028 3,472,085 4,491,028 3,472,085
Allowance for credit losses 77,382 58,128 77,382 58,128
Goodwill and other intangible assets 295,415 185,397 295,415 185,397
Total assets 7,059,752 4,911,807 7,059,752 4,911,807
Non-interest-bearing deposits 1,559,993 982,912 1,559,993 982,912
Brokered deposits 106,013 260,753 106,013 260,753
Other interest-bearing deposits 4,166,014 2,697,905 4,166,014 2,697,905
Short-term borrowings 184,693 182,063 184,693 182,063
Junior subordinated debentures held by subsidiary trust 12,928 7,571 12,928 7,571
Other long-term borrowings 86,483 103,815 86,483 103,815
Total stockholders' equity 831,882 566,856 831,882 566,856
Tangible assets (d) 6,764,337 4,726,410 6,764,337 4,726,410
Tangible equity (d) 536,467 381,459 536,467 381,459
Per Common Share Data (a)
(Loss) earnings per common share – basic $ (0.28) $ 0.52 $ 0.99 $ 0.70
(Loss) earnings per common share – diluted (0.28) 0.51 0.99 0.70
Cash dividends declared per common share 0.36 0.34 1.07 1.02
Book value per common share (e) 29.43 28.74 29.43 28.74
Tangible book value per common share (d)(e) $ 18.98 $ 19.34 $ 18.98 $ 19.34
Weighted-average number of common shares outstanding – basic 20,640,519 19,504,503 19,751,853 19,862,409
Weighted-average number of common shares outstanding – diluted 20,789,271 19,637,689 19,890,672 19,998,353
Common shares outstanding at end of period (e) 28,265,791 19,721,783 28,265,791 19,721,783
Closing share price at end of period (e) $ 31.61 $ 19.09 $ 31.61 $ 19.09

~~Table of Contents~~

At or For the Three Months Ended At or For the Nine Months Ended
September 30, September 30,
(Dollars in thousands, expect per share data) 2021 2020 2021 2020
Significant Ratios (a)
Return on average stockholders' equity (f) (3.64) % 7.16 % 4.44 % 3.28 %
Return on average tangible equity (f)(g) (4.76) % 11.36 % 7.82 % 5.38 %
Return on average assets (f) (0.42) % 0.83 % 0.51 % 0.40 %
Return on average assets adjusted for non-core items (f)(h) 0.66 % 0.91 % 1.02 % 0.47 %
Average stockholders' equity to average assets 11.47 % 11.56 % 11.48 % 12.29 %
Average total loans to average deposits 77.17 % 87.44 % 79.48 % 86.15 %
Net interest margin (f)(i) 3.50 % 3.14 % 3.41 % 3.27 %
Efficiency ratio (j) 94.70 % 64.12 % 78.38 % 64.37 %
Efficiency ratio adjusted for non-core items (k) 63.93 % 61.81 % 64.32 % 62.44 %
Pre-provision net revenue to total average assets (l) 0.11 % 1.43 % 0.83 % 1.45 %
Dividend payout ratio (m)(n) NM 66.31 % NM 145.29 %
Total loans to deposits (e) 77.05 % 88.04 % 77.05 % 88.04 %
Total investment securities as percentage of total assets (e) 22.30 % 18.90 % 22.30 % 18.90 %
Asset Quality Ratios (a)
Nonperforming loans as a percent of total loans (e)(o) 0.92 % 0.84 % 0.92 % 0.84 %
Nonperforming assets as a percent of total assets (e)(o) 0.75 % 0.60 % 0.75 % 0.60 %
Nonperforming assets as a percent of total loans and OREO (e)(o) 1.17 % 0.85 % 1.17 % 0.85 %
Criticized loans as a percent of total loans (e)(p) 5.23 % 3.55 % 5.23 % 3.55 %
Classified loans as a percent of total loans (e)(q) 3.18 % 2.19 % 3.18 % 2.19 %
Allowance for credit losses as a percent of total loans (e) 1.72 % 1.67 % 1.72 % 1.67 %
Allowance for credit losses as a percent of nonperforming loans (e)(o) 186.93 % 198.72 % 186.93 % 198.72 %
Provision for credit losses as a percent of average total loans 1.01 % 0.55 % 0.28 % 1.40 %
Net charge-offs as a percentage of average total loans 0.18 % 0.08 % 0.13 % 0.04 %
Capital Information (a)(e)
Common equity tier 1 capital ratio (r) 12.30 % 12.83 % 12.30 % 12.83 %
Tier 1 risk-based capital ratio 12.58 % 13.07 % 12.58 % 13.07 %
Total risk-based capital ratio (tier 1 and tier 2) 13.83 % 14.33 % 13.83 % 14.33 %
Tier 1 leverage ratio 11.20 % 8.62 % 11.20 % 8.62 %
Common equity tier 1 capital $ 567,172 $ 398.553 $ 567,172 $ 398.553
Tier 1 capital 580,100 406,124 580,100 406,124
Total capital (tier 1 and tier 2) 637,802 445,101 637,802 445,101
Total risk-weighted assets $ 4,611,321 $ 3,106,817 $ 4,611,321 $ 3,106,817
Total stockholders' equity to total assets 11.78 % 11.54 % 11.78 % 11.54 %
Tangible equity to tangible assets (d) 7.93 % 8.07 % 7.93 % 8.07 %

~~(a)Reflects the impact of the acquisitions of Premium Finance on July 1, 2020, NSL beginning April 1, 2021, and of Premier beginning September 17, 2021.~~

~~(b)~~Total non-interest income excluding net gains and losses, is a Non-US GAAP financial measure since it excludes all gains and/or losses included in earnings. Additional information regarding the calculation of total non-interest income excluding net gains and losses can be found under the caption "Efficiency Ratio (Non-US GAAP)."

~~(c)~~Net loss for the for the third quarter of 2021 included non-core non-interest expense totaling $18.4 million. Net income for the first nine months of 2021 included non-core non-interest expense totaling $23.8 million. Net income for the third quarter of 2020 and for the first nine months of 2020, included non-core non-interest expenses of $1.2 million and $3.0 million, respectively. Additional information regarding the non-core non-interest expense can be found under the caption "Core Non-Interest Expense (Non-US GAAP)."

~~(d)~~These amounts represent Non-US GAAP financial measures since they exclude the balance sheet impact of goodwill and other intangible assets acquired through acquisitions on total stockholders’ equity and total assets. Additional information regarding the calculation of these Non-US GAAP financial measures can be found under the caption “Capital/Stockholders’ Equity.”

~~(e)Data presented as of the end of the period indicated.~~

~~(f)Ratios are presented on an annualized basis.~~

~~(g)~~Return on average tangible equity ratio represents a Non-US GAAP financial measure since it excludes the after-tax impact of amortization of other intangible assets from earnings and it excludes the balance sheet impact of goodwill and other intangible assets acquired through acquisitions on total stockholders’ equity. Additional information regarding the calculation of this Non-US GAAP financial measure can be found under the caption “Return on Average Tangible Equity Ratio (Non-US GAAP).”

~~(h)~~Return on average assets adjusted for non-core items ratio represents a Non-US GAAP financial measure since it excludes the after-tax impact of all gains and losses, acquisition-related expenses, contract negotiation expenses, COVID-19-related expenses, a Peoples Bank Foundation, Inc. contribution, pension settlement

~~Table of Contents~~

charges and severance expenses included in earnings. Additional information regarding the calculation of this Non-US GAAP financial measure can be found under the caption "Return on Average Assets Adjusted for Non-Core Items Ratio (Non-US GAAP)."

~~(i)Information presented on a fully tax-equivalent basis, using a blended federal and state corporate income tax rate of 22.3% for 2021 and a statutory federal rate of 21% for 2020.~~

~~(j)~~The efficiency ratio is defined as total non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income (excluding all gains and losses). This amount represents a Non-US GAAP financial measure since it excludes amortization of other intangible assets, and all gains and losses included in earnings, and uses fully tax-equivalent net interest income. Additional information regarding the calculation of this Non-US GAAP financial measure can be found under the caption “Efficiency Ratio (Non-US GAAP).”

~~(k)~~The efficiency ratio adjusted for non-core items is defined as core non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus core non-interest income excluding all gains and losses. This amount represents a Non-US GAAP financial measure since it excludes the impact of all gains and losses, acquisition-related expenses, contract negotiation expenses, COVID-19-related expenses, a Peoples Bank Foundation, Inc. contribution, pension settlement charges and severance expenses included in earnings, and uses FTE net interest income. Additional information regarding the calculation of this Non-US GAAP financial measure can be found under the caption "Efficiency Ratio (Non-US GAAP).”

~~(l)~~Pre-provision net revenue is defined as net interest income plus total non-interest income (excluding all gains and losses) minus total non-interest expense. This ratio represents a Non-US GAAP financial measure since it excludes the provision for (recovery of) credit losses and all gains and losses included in earnings. This measure is a key metric used by federal bank regulatory agencies in their evaluation of capital adequacy for financial institutions. Additional information regarding the calculation of this Non-US GAAP financial measure can be found under the caption “Pre-Provision Net Revenue (Non-US GAAP).”

~~(m)The dividend payout ratio is calculated based on dividends declared during the period divided by net income, where applicable, for the period.~~

~~(n)NM = not meaningful.~~

~~(o)Nonperforming loans include loans 90+ days past due and accruing, renegotiated loans and nonaccrual loans. Nonperforming assets include nonperforming loans and other real estate owned.~~

~~(p)Includes loans categorized as special mention, substandard and doubtful.~~

~~(q)Includes loans categorized as substandard and doubtful.~~

~~(r)~~Peoples' capital conservation buffer was 5.83% at September 30, 2021 and 6.33% at September 30, 2020, compared to 2.50% for the fully phased-in capital conservation buffer required at January 1, 2019.

~~Forward-Looking Statements~~

Certain statements in this Form 10-Q, which are not historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by the fact they are not historical facts and include words such as "anticipate," "estimate," "may," "feel," "expect," "believe," "plan," "will," "will likely," "would," "should," "could," "project," "goal," "target," "potential," "seek," "intend," "continue," "remain," and similar expressions.

These forward-looking statements reflect management's current expectations based on all information available to management and its knowledge of Peoples' business and operations. Additionally, Peoples' financial condition, results of operations, plans, objectives, future performance and business are subject to risks and uncertainties that may cause actual results to differ materially. These factors include, but are not limited to:

(1)the ever-changing effects of the global COVID-19 pandemic - the duration, extent and severity of which are impossible to predict, including the possibility of further resurgence in the spread of COVID-19 or variants thereof - on economies (local, national and international), supply chains and markets, on the labor market, including the potential for a sustained reduction in labor force participation, and on ~~our~~Peoples' customers, counterparties, employees and third-party service providers, as well as the effects of various responses of governmental and nongovernmental authorities to the COVID-19 pandemic, including public health actions directed toward the containment of the COVID-19 pandemic (such as quarantines, shut downs and other restrictions on travel and commercial, social and other activities), the availability, effectiveness and ~~effectiveness~~acceptance of vaccines, and the implementation of fiscal stimulus packages, which could adversely impact sales volumes, add volatility to the global stock markets, and increase loan delinquencies and defaults;

(2)changes in the interest rate environment due to economic conditions related to the COVID-19 pandemic or other factors and/or the fiscal and monetary policy measures undertaken by the U.S. government and the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") in response to such economic conditions, which may adversely impact market interest rates, the interest rate yield curve, interest margins, loan demand and interest rate sensitivity;

(3)the effects of inflationary pressures and the impact of rising interest rates on borrowers’ liquidity and ability to repay;

(4)the success, impact, and timing of the implementation of Peoples' business strategies and Peoples' ability to manage strategic initiatives, including the completion and successful integration of planned acquisitions, including the recently-completed merger with Premier and the recently-completed ~~acquisition~~acquisitions of NSL and Vantage, and the expansion of commercial and consumer lending activities, in light of the continuing impact of the COVID-19 pandemic on customers' operations and financial condition;

~~(4)~~(5)competitive pressures among financial institutions, or from non-financial institutions, which may increase significantly, including product and pricing pressures, which can in turn impact Peoples' credit spreads, changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and Peoples' ability to attract, develop and retain qualified professionals;

~~(5)~~(6)uncertainty regarding the nature, timing, cost, and effect of legislative or regulatory changes or actions, or deposit insurance premium levels, promulgated and to be promulgated by governmental and regulatory agencies in the State of Ohio, the Federal Deposit Insurance Corporation, the Federal Reserve Board and the Consumer Financial Protection Bureau, which may subject Peoples, its subsidiaries, or one or more acquired companies to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses, including in particular

~~Table of Contents~~

the rules and regulations promulgated and to be promulgated under the CARES Act, and the follow-up legislation enacted as the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of 2021, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the Basel III regulatory capital reform;

~~(6)~~(7)the effects of easing restrictions on participants in the financial services industry;

~~(7)~~(8)local, regional, national and international economic conditions (including the impact of potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations, and changes in the relationship of the U.S. and its global trading partners) and the impact these conditions may have on Peoples, its customers and its counterparties, and Peoples' assessment of the impact, which may be different than anticipated;

~~(8)~~(9)Peoples may issue equity securities in connection with future acquisitions, which could cause ownership and economic dilution to Peoples' current shareholders;

~~(9)~~

Table of Contents

(10)changes in prepayment speeds, loan originations, levels of nonperforming assets, delinquent loans, charge-offs, and customer and other counterparties' performance and creditworthiness generally, which may be less favorable than expected in light of the COVID-19 pandemic and adversely impact the amount of interest income generated;

~~(10)~~(11)Peoples may have more credit risk and higher credit losses to the extent there are loan concentrations by location or industry of borrowers or collateral;

~~(11)~~(12)future credit quality and performance, including expectations regarding future credit losses and the allowance for credit losses;

(13)changes in accounting standards, policies, estimates or procedures may adversely affect Peoples' reported financial condition or results of operations;

~~(12)~~(14)the impact of assumptions, estimates and inputs used within models, which may vary materially from actual outcomes, including under the CECL model;

~~(13)~~(15)the ~~discontinuation~~replacement of the ~~LIBOR and~~London Interbank Offered Rate ("LIBOR") with other reference rates which may result in increased expenses and litigation, and adversely impact the effectiveness of hedging strategies;

~~(14)~~(16)adverse changes in the conditions and trends in the financial markets, including the impacts of the COVID-19 pandemic and the related responses by governmental and nongovernmental authorities to the pandemic, which may adversely affect the fair value of securities within Peoples' investment portfolio, the interest rate sensitivity of Peoples' consolidated balance sheet, and the income generated by Peoples' trust and investment activities;

~~(15)~~(17)the volatility from quarter to quarter of mortgage banking income, whether due to interest rates, demand, the fair value of mortgage loans, or other factors;

~~(16)~~(18)Peoples' ability to receive dividends from its subsidiaries;

~~(17)~~(19)Peoples' ability to maintain required capital levels and adequate sources of funding and liquidity;

~~(18)~~(20)the impact of larger or similar-sized financial institutions encountering problems, which may adversely affect the banking industry and/or Peoples' business generation and retention, funding and liquidity;

~~(19)~~(21)Peoples' ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks, including those of Peoples' third-party vendors and other service providers, which may prove inadequate, and could adversely affect customer confidence in Peoples and/or result in Peoples incurring a financial loss;

~~(20)~~(22)Peoples' ability to anticipate and respond to technological changes, and Peoples' reliance on, and the potential failure of, a number of third-party vendors to perform as expected, including Peoples' primary core banking system provider, which can impact Peoples' ability to respond to customer needs and meet competitive demands;

~~(21)~~(23)operational issues stemming from and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems on which Peoples and its subsidiaries are highly dependent;

~~(22)~~(24)changes in consumer spending, borrowing and saving habits, whether due to changes in retail distribution strategies, consumer preferences and behavior, changes in business and economic conditions (including as a result of the COVID-19 pandemic), legislative or regulatory initiatives (including those in response to the COVID-19 pandemic), or other factors, which may be different than anticipated;

~~(23)~~(25)the adequacy of Peoples' internal controls and risk management program in the event of changes in strategic, reputational, market, economic, operational, cybersecurity, compliance, legal, asset/liability repricing, liquidity, credit and interest rate risks associated with Peoples' business;

~~(24)~~(26)the impact on Peoples' businesses, personnel, facilities, or systems, of losses related to acts of fraud, theft, misappropriation or violence;

~~(25)~~(27)the impact on Peoples' businesses, as well as on the risks described above, of various domestic or international widespread natural or other disasters, pandemics (including COVID-19), cybersecurity attacks, system failures, civil unrest, military or terrorist activities or international conflicts;

~~(26)~~(28)the impact on Peoples' businesses and operating results of any costs associated with obtaining rights in intellectual property claimed by others and adequately protecting Peoples' intellectual property;

~~(27)~~(29)risks and uncertainties associated with Peoples' entry into new geographic markets and risks resulting from Peoples' inexperience in these new geographic markets;

~~(28)~~(30)Peoples' ability to integrate the NSL ~~acquisition~~and Vantage acquisitions, and the merger of Premier into Peoples, which may be unsuccessful, or may be more difficult, time-consuming or costly than expected;

~~Table of Contents~~

~~(29)~~(31)the risk that expected revenue synergies and cost savings from the merger of Peoples and Premier may not be fully realized or realized within the expected time frame;

~~(30)~~(32)changes in laws or regulations imposed by Peoples' regulators impacting Peoples' capital actions, including dividend payments and share repurchases;

(33)the effect of a fall in stock market prices on the asset and wealth management business;

(34)Peoples' continued ability to grow deposits;

~~(31)the impact of future governmental and regulatory actions upon Peoples' participation in and execution of government programs related to the COVID-19 pandemic;~~

~~(32)~~uncertainty regarding the impact of changes to the U.S. presidential administration and Congress on the regulatory landscape, capital markets, elevated government debt, potential changes in tax legislation that may increase tax rates and the response to and management of the COVID-19 pandemic, infrastructure spending and social programs; and,

~~(33)~~(35)other risk factors relating to the banking industry or Peoples as detailed from time to time in Peoples' reports filed with the Securities and Exchange Commission (the "SEC"), including those risk factors included in the disclosures under the heading "ITEM 1A. RISK FACTORS" of Peoples' Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021 and the heading "ITEM 1A. RISK FACTORS" in Part II of Peoples' Quarterly Report on Form 10-

Table of Contents

Q for the quarterly period ended March 31, 2022. Peoples encourages readers of this Form 10-Q to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance. Peoples undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, except as required by applicable legal requirements. Copies of documents filed with the SEC are available free of charge at the SEC's website at http://www.sec.gov and/or from Peoples' website.

All forward-looking statements speak only as of the filing date of this Form 10-Q and are expressly qualified in their entirety by the cautionary statements. Although management believes the expectations in these forward-looking statements are based on reasonable assumptions within the bounds of management’s knowledge of Peoples’ business and operations, it is possible that actual results may differ materially from these projections. Additionally, Peoples undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the filing date of this Form 10-Q or to reflect the occurrence of unanticipated events except as may be required by applicable legal requirements. Copies of documents filed with the SEC are available free of charge at the SEC’s website at www.sec.gov and/or from Peoples' website – www.peoplesbancorp.com under the “Investor Relations” section.

This discussion and analysis should be read in conjunction with the Audited Consolidated Financial Statements, and Notes thereto, contained in Peoples’ ~~2020~~2021 Form 10-K, as well as the Unaudited Condensed Consolidated Financial Statements, Notes to the Unaudited Condensed Consolidated Financial Statements, ratios, statistics and discussions contained elsewhere in this Form 10-Q.

Business Overview

The following discussion and analysis of Peoples’ Unaudited Condensed Consolidated Financial Statements is presented to provide insight into management’s assessment of the financial condition and results of operations.

Peoples is a diversified financial services holding company that makes available a complete line of banking, ~~products, such as deposit accounts, lending products~~trust and ~~trust services.~~investment, insurance, premium financing and equipment leasing solutions through its subsidiaries. Peoples provides services through traditional offices, ATMs, mobile banking and telephone and internet-based banking. Peoples ~~also~~ offers a complete array of insurance products ~~commercial leasing and premium financing solutions, and makes available custom-tailored fiduciary, employee benefit plan and asset management services.~~through Peoples Insurance Agency, LLC. a subsidiary of Peoples Bank. Brokerage services are offered by Peoples exclusively through an unaffiliated registered broker-dealer located at Peoples Bank's offices. Peoples Bank ~~also~~ offers insurance premium finance lending nationwide through its Peoples Premium Finance ~~division and, since April 1, 2021,~~division. Peoples also offers lease financing through its North Star Leasing ~~division.~~division and through Vantage, a subsidiary of Peoples Bank. As of ~~September~~June 30, ~~2021,~~2022, Peoples ~~has 135~~had 136 locations, including ~~119~~117 full-service bank branches in Ohio, West Virginia, Kentucky, Virginia, Washington D.C. and Maryland. Peoples Bank is subject to regulation and examination primarily by the Ohio Division of Financial Institutions (the "ODFI"), the Federal Reserve Bank ("FRB") of Cleveland and the Federal Deposit Insurance Corporation (the "FDIC"). Peoples Bank must also follow the regulations promulgated by the Consumer Financial Protection Bureau (the "CFPB") which regulates consumer financial products and services and certain financial services providers. Peoples Insurance is subject to regulation by the Ohio Department of Insurance and the state insurance regulatory agencies of those states in which Peoples Insurance may do business.

Critical Accounting Policies

The accounting and reporting policies of Peoples conform to US GAAP. The preparation of the financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could materially differ from those estimates. Note 1 of the Notes to the Unaudited Condensed Consolidated Financial Statements describes Peoples' significant account policies. Management has identified the accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are critical to understanding Peoples’ Unaudited Condensed Consolidated Financial Statements, and MD&A at ~~September~~June 30, 2022, which have been disclosed in Peoples' 2021 ~~which are discussed~~Form 10-K and updated in "Note 1 Summary of Significant Accounting Policies" in this Form 10-Q. This Management's Discussion and Analysis should be read in conjunction with the policies disclosed in Peoples’ ~~2020~~2021 Form 10-K.

Summary of Recent Transactions and Events

The following is a summary of recent transactions and events that have impacted or are expected to impact Peoples’ results of operations or financial condition:

◦On April 1, 2022, Peoples Insurance acquired substantially all of the assets and rights of an insurance agency with five locations in eastern Kentucky and certain rights to related customer accounts, which were previously developed and maintained by Elite Agency, Inc. ("Elite"), pursuant to an Asset Purchase Agreement between Peoples Insurance and Elite. Total consideration for this transaction was $3.8 million. Peoples recognized preliminary intangibles of $2.1 million, primarily comprised of a customer relationship intangible.

◦On March 7, 2022, Peoples completed its acquisition of Vantage pursuant to an Asset Purchase Agreement, dated February 16, 2022, in which Peoples Bank purchased 100% of the equity of Vantage. Peoples Bank acquired assets comprising Vantage's lease business, including $157.5 million in leases and certain third-party debt in the amount of $107.1 million. Peoples paid total consideration of $82.9 million. Based in Excelsior, Minnesota, Vantage offers mid-ticket equipment leases primarily for business essential information technology equipment across a wide array of industries. Peoples recorded

Table of Contents

preliminary goodwill in the amount of $24.7 million and preliminary other intangible assets of $13.2 million, which included a customer relationship intangible, a trade-name intangible and non-compete agreements related to this transaction.

◦On September 17, 2021, Peoples completed its merger with Premier, ~~Financial Bancorp, Inc. (“Premier”),~~ in which Peoples acquired, in an all-stock merger, ~~Premier,~~ a bank holding company headquartered in Huntington, West Virginia, and the parent company of Premier Bank, Inc. (“Premier Bank”) and Citizens Deposit Bank and Trust, Inc. (“Citizens”). Under the terms and subject to the conditions of the definitive Agreement and Plan of Merger dated March 26, 2021 ("Merger Agreement"), Premier merged with and into Peoples (the ~~“Merger”~~“Premier Merger”), and Premier Bank and Citizens subsequently merged with and into Peoples’ wholly-owned subsidiary, Peoples Bank, in a transaction valued at $261.9 million. At the close of business on September 17, 2021, the financial services offices of each of Premier Bank and Citizens became branches of

~~Table of Contents~~

Peoples Bank. Peoples acquired ~~$1.1~~$1.2 billion in loans and $1.8 billion in ~~deposits. Peoples preliminarily~~deposits and recorded ~~$71.0~~preliminary goodwill of $66.9 million ~~in goodwill~~ and ~~$4.2 million in~~ other intangible assets of $4.2 million in connection with the ~~Merger.~~Premier Merger as of September 17, 2021.

◦On May 4, 2021, Peoples Insurance ~~Agency, LLC ("Peoples Insurance")~~ acquired substantially all of the assets and rights of an insurance agency located in Pikeville, Kentucky and certain rights to related customer accounts, which were previously developed and maintained by Justice & Stamper Insurance Agency, Inc., pursuant to an Asset Purchase Agreement between Peoples Insurance and Justice & Stamper Insurance Agency, Inc. Total consideration for this transaction was $325,000, with $162,500 paid at closing and the second installment in the amount of $162,500 ~~to be~~was paid on the first anniversary of the closing date, less any adjustments pursuant to adverse claims incurred or sustained by or imposed by Peoples Insurance. Peoples recorded ~~preliminary~~ customer relationship intangible assets of $230,000 and ~~preliminary~~ goodwill of $46,000 related to this transaction.

◦On March 31, 2021, Peoples completed its acquisition of NS Leasing, LLC ("NSL") pursuant to an Asset Purchase Agreement, dated March 24, 2021 in which Peoples Bank acquired the equipment finance and leasing business of NSL. The transaction closed after the end of business on March 31, 2021 and Peoples Bank began operating the acquired business as North Star Leasing, a division of Peoples Bank, on April 1, 2021. Peoples Bank acquired assets comprising NSL's equipment finance business, including $83.3 million in leases and satisfied, on behalf of NSL, certain third-party debt in the amount of $69.1 million. Peoples Bank paid total consideration of $116.6 million, plus ~~a potential~~an earn-out payment to NSL of up to $3.1 million. Based in Burlington, Vermont, the North Star Leasing division underwrites, originates and services equipment leases and equipment financing agreements to businesses throughout the United States. Peoples recorded ~~preliminary~~ goodwill in the amount of $24.7 million and ~~preliminary~~ other intangibles of $14.0 million, which included a customer relationship intangible, a trade-name intangible and non-compete agreements related to this transaction. Peoples recorded an additional $0.4 million in non-interest expense during the third quarter of 2021 related to an update to the estimated earn-out provision of $2.7 million. As of September 30, 2021, equipment leases had grown to $111.4 million.

◦Peoples began originating loans during the second quarter of 2020, and continued to originate loans during the first five months of 2021 under the loan guarantee program created under the CARES Act, called the Paycheck Protection Program ("PPP"). These loans were targeted to provide small businesses with financial support to cover payroll and certain other specified types of expenses for a specified period of time. Loans made under the PPP are fully guaranteed by the Small Business Administration ("SBA"). ~~Additional information can be found later in this discussion under the caption “FINANCIAL CONDITION - COVID-19 Loan Impacts."~~ As of ~~September~~June 30, ~~2021,~~2022, Peoples had ~~$135.8~~$15.2 million aggregate principal amount in PPP loans outstanding (including ~~$28.2~~$5.6 million acquired in the ~~merger with Premier)~~Premier Merger), which were included in commercial and industrial loan balances, compared to ~~$187.6~~$41.9 million (including $15.0 million acquired in the Premier Merger) at ~~June 30, 2021 and $366.9 million at December~~March 31, ~~2020.~~2022. Peoples recognized interest income of ~~$3.1~~$0.6 million for deferred loan fees/~~cost accretion~~costs and ~~$0.4 million~~$79,000 of interest income on PPP loans during the ~~third~~second quarter of ~~2021,~~2022, compared to $1.2 million and $154,000, respectively, for the first quarter of 2022, and $3.4 million and $0.7 million, respectively, for the second quarter of ~~2021 and $1.9 million and $1.2 million, respectively, for the third quarter of 2020.~~2021. During the first ~~nine~~six months of ~~2021,~~2022, Peoples recognized interest income of ~~$11.2~~$1.8 million for deferred loan ~~fees/~~fee/cost accretion and ~~$2.0 million~~$232,000 of interest income on PPP loans, compared to ~~$3.8~~$8.1 million for deferred ~~loan fees/~~loan/ fee costs accretion and ~~$2.1~~$1.6 million of interest income during the first ~~nine~~six months of ~~2020.~~

◦Peoples provided relief solutions to consumer and commercial borrowers, including forbearance and modifications, during the COVID-19 pandemic. Additional information can be found later in this discussion under the caption “FINANCIAL CONDITION - COVID-19 Loan Impacts."

◦On January 29, 2021, Peoples announced that on January 28, 2021, Peoples' Board of Directors authorized a share repurchase program authorizing Peoples to purchase up to an aggregate of $30 million of Peoples' outstanding common shares. This program replaced the share repurchase program authorizing Peoples to purchase up to an aggregate of $40 million of Peoples' outstanding common shares, which Peoples' Board of Directors had authorized on February 27, 2020 and which was terminated on January 28, 2021. There were no common share repurchases during the first nine months of 2021, under the existing share repurchase program. On February 27, 2020, Peoples' Board of Directors approved a share repurchase program authorizing Peoples to purchase up to an aggregate of $40.0 million of Peoples' outstanding common shares. This program had replaced the share repurchase program authorizing Peoples to purchase up to an aggregate of $20.0 million of Peoples' outstanding common shares, which Peoples' Board of Directors had approved on November 3, 2015 and which was terminated on February 27, 2020. During the third quarter of 2020, Peoples repurchased 235,684 of Peoples' common shares through Peoples' then-effective common share repurchase program for a total of $5.0 million. For the first nine months of 2020, Peoples repurchased 1,119,752 in common shares for a total of $25.0 million.

◦During the ~~third~~second quarter of ~~2021,~~2022, Peoples recorded a ~~provision for~~recovery of credit losses of ~~$9.0~~$0.8 million, compared to a ~~provision for~~recovery of credit losses of ~~$3.1~~$6.8 million in the linked quarter and a provision for credit losses of ~~$4.7~~$3.1 million in the third quarter of 2020. During the third quarter of 2021, Peoples recorded a provision for credit losses of $11.0 million in order to establish an allowance for credit losses for non-purchase credit deteriorated loans of $10.6 million, and a liability for unfunded commitments of $0.4 million, both relating to the acquisition of Premier. Peoples also recorded a $22.3 million increase in the allowance for credit losses during the third quarter of 2021 related to the purchase credit deteriorated loans acquired from Premier. The change in the amount of the provision for credit losses compared to the third quarter of 2020 was primarily due to the impact of economic assumptions used in the CECL model and Peoples' own credit portfolio developments related to

~~Table of Contents~~

~~COVID-19, coupled with the day-one allowances for credit losses required in connection with the acquisitions of loans from Premier in the third quarter of 2021.~~

◦~~For the third quarter of 2021, Peoples recorded $181,000 of expenses related to the COVID-19 pandemic, compared to $210,000 for~~ the second quarter of ~~2021 and $148,000~~2021. For the first half of 2022, Peoples recorded a recovery of credit losses of $7.6 million compared to a recovery of credit losses of $1.7 million for 2021. The release of credit losses for the ~~third quarter~~first two quarters of ~~2020. These expenses were primarily related~~2022 was driven by improvements in economic forecasts, coupled with loan payoffs and sales during certain periods. For more information, please refer to ~~providing Peoples' employees meals~~the section titled "RESULTS OF OPERATIONS - (Recovery of) Provision for Credit Losses" found later in ~~support of local businesses and assisting employees with childcare and elder care needs, as well as taking extra precautions in cleaning facilities.~~this discussion.

◦During the ~~third~~second quarter of ~~2021,~~2022, Peoples incurred ~~$16.2~~$0.6 million of acquisition-related expenses, compared to $1.4 million in the first quarter of 2022 and $2.4 million in the second quarter of ~~2021 and $335,000 in~~2021. For the ~~third quarter~~first six months of ~~2020. Acquisition-related~~2022, Peoples incurred $2.0 million of acquisition-related expenses ~~for the nine months ended September 30, 2021 were $20.5 million,~~ compared to ~~$412,000~~$4.3 million for ~~the same period last year.~~2021. The acquisition-related expenses in 2022 were primarily related to the Vantage acquisition, while the 2021 expenses were primarily related to the NSL acquisition and the Premier ~~acquisition. The acquisition-related expenses in 2020 were primarily related to the Triumph Premium Finance acquisition.~~

◦Peoples incurred $0.1 million in pension settlement charges for the third quarter of 2021 compared to $0.5 million for the third quarter of 2020, due to the aggregate amount of lump-sum distributions to participants in Peoples' defined benefit pension plan exceeding the threshold for recognizing such charges during the relevant period. Peoples recorded $0.1 million of pension settlement charges for the nine months ended September 30, 2021 and $1.1 million for the nine months ended September 30, 2020.

◦Effective July 1, 2020, Peoples completed the business combination under which Peoples Bank acquired the operations and assets of Triumph Premium Finance (referred to as "Premium Finance acquisition"), a division of TBK Bank, SSB. Based in Kansas City, Missouri, the division operating as Peoples Premium Finance continues to provide insurance premium financing loans for commercial customers to purchase property and casualty insurance products through its growing network of independent insurance agency partners nationwide. Peoples Bank acquired $84.7 million in loans, at the acquisition date, after fair value adjustments. Peoples also recorded $4.3 million of other intangible assets and $5.5 million of goodwill related to the acquisition. As of September 30, 2021, Peoples premium finance loans had grown to $134.8 million.Merger.

◦In an effort to stimulate an economy that was being adversely impacted by the impacts of the COVID-19 pandemic, the Federal Reserve ~~first~~Board lowered the benchmark Federal Funds Target Rate ~~by 50 basis points on March 3,~~in two separate actions in the first quarter of 2020 ~~then lowered the target rate another 100 basis points at the next FOMC meeting on March 15, 2020. The Federal Funds Target Rate~~to a range ~~was~~of 0% - 0.25% as of March 31, 2020 and maintained this rate ~~as of September 30, 2021.~~until March 16, 2022. The Federal Reserve Board increased the Federal Funds Target Rate range to 0.25% to 0.50% on March 16, 2022, to 0.75% to 1.00% on May 4, 2022, to 1.50% to 1.75% on June 15, 2022, and has stated it anticipates continuing to raise rates throughout 2022.

The impact of these transactions and events, where material, is discussed in the applicable sections of this MD&A.

Table of Contents

EXECUTIVE SUMMARY

Peoples ~~recorded a~~reported net ~~loss~~income of ~~$5.8~~$24.9 million for the ~~third~~second quarter of ~~2021, or $0.28~~2022, representing earnings per diluted common share ~~compared to~~of $0.88. In comparison, Peoples recognized earnings per diluted common share of $0.84 for the first quarter of 2022, and earnings per diluted common share of $0.51 for the second quarter of 2021. Peoples recorded net income of ~~$10.1~~$48.5 million, or ~~$0.51~~$1.72 per diluted common share for the ~~second quarter of 2021, and net income of $10.2~~six months ended 2022, compared to $25.6 million, or ~~$0.51~~$1.31 per diluted common share, for the ~~third quarter of 2020.~~six months ended June 30, 2021. Non-core items, and the related tax effect of each, in net ~~(loss)~~ income primarily included ~~acquisition-related expenses, contract negotiation expenses, COVID-19-related expenses, a contribution to Peoples Bank Foundation, Inc., pension settlement charges, severance expenses,~~acquisition and ~~gains and losses on investment securities, asset disposals and other transactions.~~COVID-related expenses. Non-core items negatively impacted earnings per diluted common share by ~~$0.71~~$0.02 for the ~~third~~second quarter of ~~2021,~~2022, $0.04 for the first quarter of 2022, and $0.10 for the second quarter of ~~2021, and by $0.05 for the third quarter of 2020. Net income in the third quarter of 2021 was largely affected by the acquisition of Premier.~~

For the first nine months of 2021, net income was $19.8 million, or $0.99 per diluted common share, compared to net income of $14.2 million, or $0.70 per diluted common share, for the nine months ended September 30, 2020. The increase in earnings was impacted primarily by the change in provision for credit losses in 2021 as compared to 2020.2021. Non-core items negatively impacted earnings per diluted ~~common~~ share by ~~$0.98~~$0.06 and ~~$0.12~~$0.21 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

Net interest income was ~~$42.6 million for the third quarter of 2021, up 7% compared to $39.7~~$61.5 million for the second quarter of ~~2021, and~~2022, an increase of ~~21%~~$7.2 million, or 13%, compared to ~~$35.1 million for~~ the ~~third quarter of 2020.~~linked quarter. Net interest margin was ~~3.50%~~3.84% for the ~~third~~second quarter of ~~2021,~~2022, compared to 3.41% for the linked quarter. The increase in net interest income and net interest margin reflects the positive impact of accretion income, net of amortization expense, coupled with the recent increases in market interest rates, which expanded loan yields by 44 basis points compared to the linked quarter. Net interest income for the second quarter of 2022 increased $21.8 million, or 55%, compared to the second quarter of 2021. Net interest margin increased 39 basis points compared to 3.45% for the second quarter of ~~2021, and 3.14% for the third quarter of 2020. Compared to the linked quarter and third quarter of 2020,~~2021. The increase in net interest income ~~and margin were improved due~~compared to the ~~growth in leases and premium finance loans, coupled with the partial period impact~~second quarter of ~~the Premier acquisition and lower cost of funds. Net interest income and margin both have been negatively impacted~~2021 was driven by the ~~excess liquidity environment present~~increases in market interest rates and the ~~financial services sector since the beginning~~acquisitions of ~~the COVID-19 pandemic by way of increased low yielding cash reserves. Net interest income~~Premier and ~~net interest margin continue to be impacted by the low interest rate environment caused by COVID-19 that continued throughout the third quarter of 2021.~~Vantage. For the first ~~nine~~six months of ~~2021,~~2022, net interest income increased ~~$13.2~~$40.5 million, or ~~13%~~54%, compared to the first ~~nine~~six months of ~~2020,~~2021, while net interest margin increased 1427 basis points to ~~3.41%~~3.63%. The ~~change~~increase in net interest income was driven by the ~~result~~acquisitions of ~~lower funding costs due to a shift from higher cost overnight FHLB advances to lower cost brokered deposits, as well as a higher volume of loans~~Premier and ~~leases due to the Premier, NSL~~Vantage, core growth, and ~~Premium Finance acquisitions.~~

~~Table of Contents~~

an increase in market interest rates.

Accretion income, net of amortization expense, from acquisitions was ~~$1.0~~$3.9 million for the ~~third~~second quarter of ~~2021,~~2022, $2.7 million for the first quarter of 2022 and $0.8 million for the second quarter of 2021, ~~and $0.5 million for the third quarter of 2020,~~ which added 825 basis points, 717 basis points and 57 basis points, respectively, to net interest margin. The increase in accretion income for the current quarter was a result of the acquisition of Vantage. Accretion income, net of amortization expense, from acquisitions was ~~$2.2~~$6.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to ~~$2.6~~$1.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, which added 621 and 86 basis points, respectively, to net interest margin. The increase in accretion income for the first six months of 2022 compared to 2021 was a result of the acquisitions of NSL, Premier, and Vantage.

~~During~~The recovery of credit losses was $0.8 million for the ~~third~~second quarter of ~~2021, Peoples recorded~~2022, compared to a ~~provision for~~recovery of credit losses of ~~$9.0~~$6.8 million ~~compared to~~for the linked quarter and a provision for credit losses of $3.1 million for the second quarter of ~~2021 and a provision for~~2021. The release of credit losses ~~of $4.7 million for~~in the ~~third~~second quarter of ~~2020.~~2022 was largely attributable to a reduction in reserves for individually analyzed loans coupled with changes in loss drivers. Net charge-offs for the ~~third~~second quarter of ~~2021~~2022 were ~~$1.6~~$1.5 million, or ~~0.18%~~0.14% of average total loans annualized, compared to net charge-offs of $1.9 million, or 0.17% of average total loans annualized, for the linked quarter and net charge-offs of $0.8 million, or 0.09% of average total loans annualized, for the ~~linked~~second quarter of 2021. For additional information on credit trends and ~~net~~the allowance for credit losses, see the "FINANCIAL CONDITION - Allowance for Credit Losses" section below.

The recovery of credit losses during the first six months of 2022 was $7.6 million, compared to a recovery of credit losses of $1.7 million for the first six months of 2021. Net charge-offs for the first six months of ~~$0.7~~2022 were $3.5 million, or ~~0.08%~~0.15% of average total loans annualized, compared to net charge-offs of $1.8 million, or 0.11% annualized, for the ~~third quarter~~first six months of ~~2020. Net charge-offs for the third quarter~~2021. The recovery of 2021 included one commercial and industrial loan aggregating $0.5 million. Net charge-offs for the second quarter of 2021 included $0.4 million in leases. During the third quarter of 2021, Peoples recorded a provision for credit losses of $11.0 million in order to establish an allowance for credit losses for non-purchase credit deteriorated loans of $10.6 million, and a liability for unfunded commitments of $0.4 million, both relating to the acquisition of Premier. Peoples also recorded a $22.3 million increase in the allowance for credit losses during the ~~third quarter~~first half of ~~2021 related to the purchase credit deteriorated loans acquired from Premier. Compared to the third quarter of 2020, the change in the provision for credit losses~~2022 was primarily due to the impact of economic assumptions used in the CECL model, ~~and Peoples' own~~while the recovery of credit ~~portfolio developments related to COVID-19,~~losses during the first half of 2021 was impacted by economic assumptions used in the CECL model, offset by the day-one ~~allowances~~allowance for credit losses required ~~in connection with~~from the ~~acquisitions~~acquisition of ~~Premier in the third quarter of 2021 and~~ NSL in the second quarter of 2021.

~~The provision~~Total non-interest income, excluding net gains and losses, for ~~credit losses during~~ the ~~first nine months~~second quarter of ~~2021 was $7.3~~2022 declined $0.5 million compared to ~~a provision for credit~~the linked quarter. The decrease in non-interest income, excluding net gains and losses, was the result of ~~$33.5~~lower insurance income, which included annual performance-based insurance commissions of $1.3 million ~~for~~that are recognized in the first nine months of 2020. Net charge-offs for the first nine months of 2021 were $3.4 million, or 0.13% of average total loans annualized, compared to net charge-offs of $0.9 million, or 0.04% annualized, for the first nine months of 2020. The change in the provision for credit losses compared to the first nine months of 2020 was primarily due to improved economic factors and updated loss drivers and their impact on assumptions used in the CECL model throughout the first nine months of 2021.

~~For the third~~ quarter of ~~2021, total non-interest~~each year. The decrease was partially offset by an increase of $0.4 million in bank owned life insurance income, ~~increased $0.5~~which includes $248,000 recognized on a one-time death benefit and an additional $30.0 million ~~or 3%, compared~~of new investment in bank owned life insurance policies. Compared to the second quarter of 2021, ~~and decreased $0.4 million, or 3%, from the third quarter of 2020. The rise in~~ non-interest income, ~~compared to the linked quarter was the result of an~~excluding net gains and losses, increased $3.4 million. Deposit account service charges increased $1.5 million and electronic banking income increased $1.0 million. The increase ~~in overdraft fees included~~ in deposit account service charges was primarily attributable to overdraft and NSF fees driven by a larger customer base following the Premier Merger. Electronic banking income increased in the second quarter of ~~$0.5 million and a $0.2 million~~2022 due to an increase in the interchange income ~~recognized on leases related to the early termination of leases and other fees, offset~~earned from customers' debit card usage, driven partially by ~~declines~~customers added in ~~trust and investment income, electronic banking income and mortgage banking income. Net losses of $0.5 million realized during~~ the ~~third quarter of 2021 were driven primarily by losses on the disposal of fixed assets acquired from~~ Premier ~~and the sales of securities during the third quarter of 2021, compared to net losses of $0.3 million for the linked quarter, and net gains of $26,000 for the third quarter of 2020.~~Merger.

For the ~~nine~~first six months ~~ended September 30, 2021,~~of 2022, total non-interest income, excluding gains and losses, increased ~~$1.9~~$6.2 million, or 19%, compared to the ~~nine~~first six months ~~ended September 30, 2020.~~of 2021. The increase was driven by ~~higher trust~~growth of $3.0 million, or 73%, in deposit account service charges and ~~investment income, associated with new accounts and increased market values of assets under administration and management, coupled with higher~~$2.3 million, or 28%, in electronic banking ~~income and $716,000~~income.

Table of ~~non-interest income contributed by the leasing business.~~Contents

Total non-interest expense ~~increased $18.0~~decreased $1.7 million, or ~~45%~~3%, for the ~~third~~three months ended June 30, 2022, compared to the linked quarter. The decrease in total non-interest expense for the second quarter of ~~2021 compared~~2022 was attributable to decreases in professional fees, acquisition-related expenses, net occupancy and equipment expense, and FDIC insurance premiums. Total non-interest expense in the second and first quarter of 2022 also contained non-core expenses, including acquisition-related expenses of $0.6 million and $1.4 million, respectively. Compared to the second quarter of 2021, ~~and $23.5 million, or 69%, compared to the third quarter of 2020. The increase in~~ total non-interest expense ~~for the third quarter of 2021 compared to the linked quarter was~~increased $10.0 million, or 25%, primarily due to the recognition of $16.5 million of acquisition-related expenses due to the closing of the Premier acquisition during the quarter. Total non-interest expense in the third quarter of 2021 also contained other non-core expenses such as a one-time expense related to contract renewal negotiations of Peoples Bank's core banking systems of $1.9 million, and $0.2 million in COVID-19-related expenses. During the second quarter of 2021, non-core expenses included acquisition-related expenses of $2.4 million and $0.2 million in COVID-19-related expenses. For the third quarter of 2020, non-core expenses included $531,000 of pension settlement charges, $335,000 of acquisition-related expenses, $192,000 of severance expenses and $148,000 of COVID-19-related expenses. Compared to the third quarter of 2020, the increase in total non-interest expense was primarily due to an increase in acquisition-related expenses of $16.2 million, an increase in salaries and employee benefit costs of ~~$6.2~~$5.7 million, an increase in net occupancy and equipment expense of $1.5 million, an increase in amortization of intangible assets of ~~$0.4~~$0.7 million, and an increase in FDIC insurance premiums of $0.7 million. ~~The~~Those increases ~~in salaries and employee benefit costs and amortization of intangible assets~~ were primarily the result of the ~~acquisitions~~Premier Merger and the acquisition of ~~Premier and NSL.~~the equipment financing business from Vantage.

For the ~~first nine~~six months ~~of 2021,~~ended June 30, 2022, total non-interest expense increased ~~$35.3~~$23.6 million, or 30%, compared to the ~~same period last year.~~first six months of 2021. The variance was driven ~~primarily~~ by ~~increases~~an increase of ~~$20.5~~$12.6 million ~~in acquisition-related expenses. The remainder of the increase was largely due to a $7.2 million rise~~ in salaries and employee ~~benefit~~benefits costs, ~~which was driven by the added ongoing costs of the recent acquisitions, along with higher sales~~$3.2 million in net occupancy and ~~incentive compensation from increased production, growth~~equipment expense, $1.8 million in medical insurance and 401(k) costs, while data processing and software costs also increased $2.1 million. These changes were partially offset by decreases in pension settlement charges and COVID-19-related expenses. Similar to the quarterly comparisons, the acquisitions of Premier, NSL and Premium Finance increased salaries and employee benefit costs, as well as amortization of intangible assets.

~~Peoples' efficiency ratio, calculated as total non-interest expense less~~ amortization of other intangible assets, ~~divided by fully tax-equivalent ("FTE") net interest income, plus total non-interest income, excluding all gains~~ and ~~losses,~~$1.5 million in electronic banking expense.

The efficiency ratio for the ~~third~~second quarter of ~~2021~~2022 was ~~94.7%~~58.8%, compared to 66.8% for the linked quarter, and 68.6% for the second quarter of ~~2021, and 64.1% for the third quarter of 2020.~~2021. The change in the efficiency ratio compared to the linked quarter was primarily due to the increases in accretion and market interest rates coupled with decreases in professional fees, acquisition-related expenses, ~~mentioned above.~~salaries and employee benefits, net occupancy and equipment expense, and FDIC insurance premiums. The efficiency ratio, ~~when~~ adjusted for non-core items, was ~~63.9%~~58.0% for the ~~third~~second quarter of ~~2021,~~2022, compared to 64.8% for the linked quarter and 64.0% for the second quarter of ~~2021 and 61.8% for the third quarter of 2020.~~2021. The efficiency ratio ~~for the nine months ended September 30, 2021 was 78.4% compared to 64.4% for the nine months ended September 30, 2020. When adjusted for non-core items, the efficiency ratio was 64.3% for~~is typically higher in the first ~~nine months~~quarter of

~~Table of Contents~~

~~2021 compared~~ the year driven by the higher salaries and employee benefit costs, specifically by higher payroll taxes, employer contributions to ~~62.4%~~health savings accounts and stock-based compensation expenses for ~~the first nine months of 2020.~~certain employees. Peoples continues to focus on controlling expenses, while recognizing some necessary costs in order to continue growing the business.

Peoples recorded an income tax ~~benefit~~expense of ~~$2.2~~$6.8 million for the ~~third~~second quarter of ~~2021,~~2022, compared to income tax expense of $6.0 million for the linked quarter and income tax expense of $2.4 million for the linked quarter and $2.6 million for the third quarter of 2020. The income tax benefit for the third quarter of 2021, compared to the income tax expense for the linked quarter, was due to the net loss recognized in the thirdsecond quarter of 2021. The increase in income tax expense for the ~~nine~~second quarter of 2022, compared to income tax expense for the linked quarter, was due to an increase its pre-tax income and increase in the effective tax rates. The increase in income tax expense for the three months ended ~~September~~June 30, ~~2021,~~2022, compared to the ~~nine~~three months ended ~~September~~June 30, ~~2020,~~2021, was ~~due to~~largely driven by higher pre-tax ~~income.~~income and increased effective tax rates.

At ~~September~~June 30, ~~2021,~~2022, total assets were ~~$7.06~~$7.28 billion, compared to $7.06 billion at December 31, 2021 and $5.07 billion at June 30, ~~2021 and $4.76 billion at~~2021. The growth in total assets of 3% compared to December 31, ~~2020. Total assets grew 39%~~2021 was largely attributable to the Vantage acquisition, which added $157.5 million in leases as of the acquisition date. The 44% increase compared to June 30, 2021 was driven primarily by $1.1 billion of loans and ~~was largely attributable to~~$0.6 billion of investment securities added in the Premier ~~acquisition, which added $1.1 billion in loans, $563.3 million in investment securities, and~~Merger as of the ~~recognition of goodwill on the transaction of $71.0 million. The 48% increase compared to December 31, 2020 was also driven by the Premier acquisition,~~merger date, along with ~~the $83.3 million of~~ leases acquired from ~~NSL, subsequent growth in leases~~Vantage of ~~$28.1 million, and organic loan growth of $88.2 million, offset partially by $474.2 million in forgiveness received on PPP loans during the nine months ended September 30, 2021.~~$157.5 million. The allowance for credit losses at ~~September~~June 30, ~~2021 increased~~2022 decreased to ~~$77.4~~$52.4 million, or ~~1.72%~~1.14% of total loans, primarily driven by due to continued improvement in economic factors and changes in loss drivers used in the CECL model, compared to ~~$50.4~~$64.0 million and ~~1.48%~~1.43%, respectively, at December 31, ~~2020. Total assets increased $2.0 billion, or 39%~~2021, and $47.9 million and 1.42%, ~~compared to the linked quarter. The increase was a result of the Premier acquisition.~~respectively, at June 30, 2021.

Total liabilities were ~~$6.23~~$6.49 billion at ~~September~~June 30, ~~2021,~~2022, up from $6.22 billion at December 31, 2021 and $4.48 billion at June 30, ~~2021 and $4.19 billion at December 31, 2020.~~2021. The increase in total liabilities compared to ~~June 30,~~December 31, 2021 was primarily due to ~~deposits acquired~~increases of $110.8 million in governmental deposit accounts and $43.3 million in savings accounts, and $74.6 million of long-term borrowings assumed from ~~Premier of $1.8 billion, as well as retail repurchase agreements of $63.8 million.~~Vantage. Also contributing to the increase compared to December 31, 2020 was higher total deposits associated with customers maintaining higher balances due primarily to economic stimulus payments provided by the government, as well as changes in customer buying habits.

~~At September~~June 30, 2021 ~~total~~were $1.82 billion in deposits acquired in the Premier Merger.

Total stockholders' equity ~~was $831.9~~at June 30, 2022 decreased by $21.5 million compared to March 31, 2022, which reflected an ~~increase~~other comprehensive loss of ~~$256.2~~$30.7 million and dividends paid of $10.8 million, partially offset by net income for the quarter of $24.9 million. Total stockholders' equity at June 30, 2022 decreased by $58.2 million compared to December 31, ~~2020. The increase in total stockholders' equity~~2021, which was ~~driven by common shares issued for the acquisition of Premier and net income for the first nine months of 2021, offset by $21.0 million in dividends paid~~due to ~~shareholders and the change in accumulated other comprehensive income to~~ an ~~accumulated~~ other comprehensive loss of ~~$7.2 million.~~$81.7 million and dividends paid of $20.9 million, partially offset by net income of $48.5 million for the first six months of 2022. The other comprehensive losses were the result of the changes in the market value of available-for-sale investment securities, which were driven by changes in market interest rates.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income, the amount by which interest income exceeds interest expense, remains Peoples' largest source of revenue. The amount of net interest income earned by Peoples each quarter is affected by various factors, including changes in market interest rates due to the Federal Reserve’s monetary policy, the level and degree of pricing competition for loans and deposits in Peoples’ markets, and the amount and composition of Peoples' earning assets and interest-bearing liabilities.

Net interest margin, which is calculated by dividing FTE net interest income by average interest-earning assets, serves as an important measurement of the net revenue stream generated by the volume, mix and pricing of interest-earning assets and interest-bearing liabilities. FTE net interest income is calculated by increasing interest income to convert tax-exempt income earned on

Table of Contents

obligations of states and political subdivisions and tax-exempt loans to the pre-tax equivalent of taxable income using a blended federal and state corporate income tax rate of ~~22.3%~~23.3% for ~~2021~~2022 and using a ~~statutory~~ federal corporate income tax rate of 21% for ~~2020.~~2021.

The following table details the calculation of FTE net interest income:


		Three Months Ended						Nine Months Ended					Three Months Ended						Six Months Ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30,					June 30, 2022		March 31, 2022		June 30, 2021		June 30,
(Dollars in thousands)	(Dollars in thousands)							2021		2020		(Dollars in thousands)							2022		2021
Net interest income	Net interest income	$	42,578	$	39,660	$	35,119	$	117,816	$	104,615	Net interest income	$	61,468	$	54,310	$	39,660	$	115,778	$	75,238
Taxable equivalent adjustment	Taxable equivalent adjustment	351		324		262		970		803		Taxable equivalent adjustment	414		391		324		806		578
Fully tax-equivalent net interest income	Fully tax-equivalent net interest income	$	42,929	$	39,984	$	35,381	$	118,786	$	105,418	Fully tax-equivalent net interest income	$	61,882	$	54,701	$	39,984	$	116,584	$	75,816

~~Table of Contents~~

The following tables detail Peoples’ average balance sheets for the periods presented:

For the Three Months Ended
September 30, 2021 June 30, 2021 September 30, 2020
(Dollars in thousands)
Average Balance Income/ Expense Yield/Cost Average Balance Income/ Expense Yield/Cost Average Balance Income/ Expense Yield/Cost
Short-term investments $ 199,007 $ 82 0.16 % $ 180,730 $ 53 0.12 % $ 97,430 $ 33 0.13 %
Investment securities (a)(b):
Taxable 979,278 3,799 1.55 % 883,948 3,217 1.45 % 851,092 2,832 1.33 %
Nontaxable 173,459 1,136 2.62 % 168,015 1,095 2.61 % 101,403 778 3.07 %
Total investment securities 1,152,737 4,935 1.71 % 1,051,963 4,312 1.64 % 952,495 3,610 1.52 %
Loans (b)(c):
Construction 125,178 1,196 3.74 % 87,075 979 4.45 % 105,488 1,179 4.37 %
Commercial real estate, other 993,259 9,507 3.75 % 916,604 8,829 3.81 % 857,830 8,854 4.04 %
Commercial and industrial 789,555 8,933 4.43 % 887,756 9,241 4.12 % 1,047,105 8,145 3.04 %
Premium finance 122,828 1,542 4.91 % 108,387 1,298 4.74 % 92,533 1,871 7.91 %
Leases 97,068 4,810 19.39 % 86,519 4,215 19.27 % — — — %
Residential real estate (d) 652,184 6,648 4.08 % 607,691 6,429 4.23 % 661,694 7,870 4.76 %
Home equity lines of credit 126,888 1,271 3.97 % 119,354 1,180 3.97 % 125,351 1,278 4.06 %
Consumer, indirect 541,329 5,509 4.04 % 529,180 5,313 4.03 % 477,962 5,103 4.25 %
Consumer, direct 86,935 1,385 6.32 % 80,409 1,272 6.35 % 82,139 1,332 6.45 %
Total loans 3,535,224 40,801 4.55 % 3,422,975 38,756 4.50 % 3,450,102 35,632 4.08 %
Allowance for credit losses (51,610) (46,967) (56,519)
Net loans 3,483,614 40,801 4.61 % 3,376,008 38,756 4.56 % 3,393,583 35,632 4.14 %
Total earning assets 4,835,358 45,818 3.74 % 4,608,701 43,121 3.72 % 4,443,508 39,275 3.49 %
Goodwill and other intangible assets 232,361 222,553 185,816
Other assets 407,428 351,892 277,290
    Total assets
$ 5,475,147 $ 5,183,146 $ 4,906,614
Interest-bearing deposits:
Savings accounts $ 737,771 $ 23 0.01 % $ 680,825 $ 21 0.01 % $ 589,100 $ 34 0.02 %
Governmental deposit accounts 542,855 458 0.33 % 496,906 551 0.44 % 398,653 511 0.51 %
Interest-bearing demand accounts 795,565 74 0.04 % 733,913 66 0.04 % 671,987 66 0.04 %
Money market accounts 533,497 67 0.05 % 564,593 94 0.07 % 589,078 216 0.15 %
Retail certificates of deposit (e) 457,073 951 0.83 % 424,279 980 0.93 % 467,431 1,524 1.30 %
Brokered deposits (e) 155,779 826 2.10 % 167,109 865 2.08 % 258,875 318 0.49 %
Total interest-bearing deposits 3,222,540 2,399 0.30 % 3,067,625 2,577 0.34 % 2,975,124 2,669 0.36 %
Borrowed funds:
Short-term FHLB advances 17,174 78 1.80 % 19,176 81 1.69 % 137,174 732 2.12 %
Repurchase agreements and other 63,226 13 0.08 % 50,852 11 0.09 % 43,184 10 0.09 %
Total short-term borrowings 80,400 91 0.45 % 70,028 92 0.53 % 180,358 742 1.64 %
Long-term FHLB advances 86,561 316 1.45 % 101,161 392 1.55 % 103,906 402 1.54 %
Other borrowings 8,470 83 3.92 % 7,669 76 3.96 % 7,551 81 4.29 %
Total long-term borrowings 95,031 399 1.67 % 108,830 468 1.72 % 111,457 483 1.73 %
  Total borrowed funds 175,431 490 1.11 % 178,858 560 1.26 % 291,815 1,225 1.67 %
      Total interest-bearing liabilities 3,397,971 2,889 0.34 % 3,246,483 3,137 0.39 % 3,266,939 3,894 0.47 %
Non-interest-bearing deposits 1,358,652 1,272,623 970,353
Other liabilities 90,741 82,209 102,267
Total liabilities 4,847,364 4,601,315 4,339,559
Total stockholders’ equity 627,783 581,831 567,055
Total liabilities and stockholders’ equity $ 5,475,147 $ 5,183,146 $ 4,906,614
Interest rate spread (b) $ 42,929 3.40 % $ 39,984 3.33 % $ 35,381 3.02 %
Net interest margin (b) 3.50 % 3.45 % 3.14 %


	For the Three Months Ended
	June 30, 2022						March 31, 2022						June 30, 2021
(Dollars in thousands)	Average Balance		Income/ Expense		Yield/Cost		Average Balance		Income/ Expense		Yield/Cost		Average Balance		Income/ Expense		Yield/Cost
Short-term investments	$	182,456	$	299	0.66	%	$	332,098	$	160	0.20	%	$	180,730	$	53	0.12	%

Investment securities (a)(b):
Taxable	1,515,647		7,014		1.85	%	1,465,998		6,096		1.66	%	883,948		3,217		1.45	%
Nontaxable	193,112		1,344		2.78	%	204,381		1,316		2.58	%	168,015		1,095		2.61	%
Total investment securities	1,708,759		8,358		1.96	%	1,670,379		7,412		1.78	%	1,051,963		4,312		1.64	%
Loans (b)(c):
Construction	209,822		2,216		4.18	%	225,676		2,155		3.82	%	87,075		979		4.45	%
Commercial real estate, other	1,353,201		15,599		4.56	%	1,362,434		14,782		4.34	%	916,604		8,829		3.81	%
Commercial and industrial	864,023		8,715		3.99	%	888,598		8,023		3.61	%	887,756		9,241		4.12	%
Premium finance	143,898		1,778		4.89	%	132,758		1,164		3.51	%	108,387		1,298		4.74	%
Leases	288,360		10,541		14.46	%	162,277		6,102		15.04	%	86,519		4,215		19.27	%
Residential real estate (d)	888,809		9,326		4.20	%	913,730		9,766		4.28	%	607,691		6,429		4.23	%
Home equity lines of credit	167,935		1,748		4.17	%	163,339		1,612		4.00	%	119,354		1,180		3.97	%
Consumer, indirect	541,135		5,243		3.89	%	523,770		5,045		3.91	%	529,180		5,313		4.03	%
Consumer, direct	111,541		1,647		5.92	%	106,298		1,595		6.09	%	80,409		1,272		6.35	%
Total loans	4,568,724		56,813		4.94	%	4,478,880		50,244		4.50	%	3,422,975		38,756		4.50	%
Allowance for credit losses	(54,148)						(61,947)						(46,967)
Net loans	4,514,576		56,813		5.00	%	4,416,933		50,244		4.56	%	3,376,008		38,756		4.56	%
Total earning assets	6,405,791		65,470		4.06	%	6,419,410		57,816		3.61	%	4,608,701		43,121		3.72	%
Goodwill and other intangible assets	329,243						304,124						222,553
Other assets	386,629						344,282						351,892
Total assets	$	7,121,663					$	7,067,816					$	5,183,146

Table of Contents


	For the Three Months Ended
	June 30, 2022						March 31, 2022						June 30, 2021
(Dollars in thousands)	Average Balance		Income/ Expense		Yield/Cost		Average Balance		Income/ Expense		Yield/Cost		Average Balance		Income/ Expense		Yield/Cost
Interest-bearing deposits:
Savings accounts	$	1,076,028	$	45	0.02	%	$	1,050,813	$	34	0.01	%	$	680,825	$	21	0.01	%
Governmental deposit accounts	704,632		471		0.27	%	670,419		447		0.27	%	496,906		551		0.44	%
Interest-bearing demand accounts	1,177,751		115		0.04	%	1,171,266		92		0.03	%	733,913		66		0.04	%
Money market accounts	641,066		104		0.07	%	650,272		97		0.06	%	564,593		94		0.07	%
Retail certificates of deposit	602,225		747		0.50	%	626,978		871		0.56	%	424,279		980		0.93	%
Brokered deposits (e)	87,006		532		2.45	%	91,531		512		2.27	%	167,109		865		2.08	%
Total interest-bearing deposits	4,288,708		2,014		0.19	%	4,261,279		2,053		0.20	%	3,067,625		2,577		0.34	%
Borrowed funds:
Short-term FHLB advances (e)	53,846		237		1.77	%	55,000		313		2.31	%	19,176		81		1.69	%
Repurchase agreements and other	96,589		24		0.10	%	99,346		25		0.10	%	50,852		11		0.09	%
Total short-term borrowings	150,435		261		0.70	%	154,346		338		0.89	%	70,028		92		0.53	%
Long-term FHLB advances	58,498		257		1.76	%	85,653		306		1.45	%	101,161		392		1.55	%

Other borrowings	94,097		1,056		4.44	%	43,445		418		3.85	%	7,669		76		3.96	%
Total long-term borrowings	152,595		1,313		3.44	%	129,098		724		2.26	%	108,830		468		1.72	%
Total borrowed funds	303,030		1,574		2.08	%	283,444		1,062		1.51	%	178,858		560		1.26	%
Total interest-bearing liabilities	4,591,738		3,588		0.31	%	4,544,723		3,115		0.28	%	3,246,483		3,137		0.39	%
Non-interest-bearing deposits	1,648,067						1,606,665						1,272,623
Other liabilities	90,457						81,676						82,209
Total liabilities	6,330,262						6,233,064						4,601,315


Total stockholders’ equity	791,401						834,752						581,831
Total liabilities and stockholders’ equity	$	7,121,663					$	7,067,816					$	5,183,146
Interest rate spread (b)			$	61,882	3.75	%			$	54,701	3.33	%			$	39,984	3.33	%
Net interest margin (b)					3.84	%					3.41	%					3.45	%

5256

Table of Contents


		For the Nine Months Ended													For the Six Months Ended
		September 30, 2021						September 30, 2020							June 30, 2022						June 30, 2021
(Dollars in thousands)	(Dollars in thousands)	Average Balance		Income/ Expense		Yield/Cost		Average Balance		Income/ Expense		Yield/Cost		(Dollars in thousands)	Average Balance		Income/ Expense		Yield/Cost		Average Balance		Income/ Expense		Yield/Cost
Short-term investments	Short-term investments	$	175,755	$	175	0.13	%	$	111,852	$	317	0.38	%	Short-term investments	$	256,864	$	459	0.36	%	$	163,937	$	93	0.11	%

Investment securities (a)(b):	Investment securities (a)(b):													Investment securities (a)(b):
Taxable	Taxable	899,531		9,636		1.43	%	894,008		12,448		1.86	%	Taxable	1,490,960		13,110		1.76	%	858,999		5,834		1.36	%
Nontaxable	Nontaxable	149,636		3,035		2.70	%	103,827		2,409		3.09	%	Nontaxable	198,716		2,661		2.68	%	137,527		1,868		2.72	%
Total investment securities	Total investment securities	1,049,167		12,671		1.61	%	997,835		14,857		1.99	%	Total investment securities	1,689,676		15,771		1.87	%	996,526		7,702		1.55	%
Loans (b)(c):	Loans (b)(c):													Loans (b)(c):
Construction	Construction	108,859		3,169		3.84	%	108,426		3,656		4.43	%	Construction	217,705		4,371		3.99	%	100,565		1,973		3.90	%
Commercial real estate, other	Commercial real estate, other	930,150		26,938		3.82	%	848,202		27,784		4.30	%	Commercial real estate, other	1,357,792		30,381		4.45	%	898,072		17,431		3.86	%
Commercial and industrial	Commercial and industrial	872,421		28,773		4.35	%	892,483		24,411		3.59	%	Commercial and industrial	876,242		16,738		3.80	%	914,542		19,833		4.31	%
Premium finance	Premium finance	112,925		4,137		4.83	%	31,069		1,871		7.91	%	Premium finance	138,359		2,942		4.23	%	107,891		2,595		4.78	%
Leases	Leases	61,551		9,025		19.34	%	—		—		—	%	Leases	225,667		16,643		14.67	%	43,499		4,215		19.27	%
Residential real estate (d)	Residential real estate (d)	624,993		19,749		4.21	%	669,852		24,498		4.88	%	Residential real estate (d)	901,201		19,092		4.24	%	611,172		13,101		4.29	%
Home equity lines of credit	Home equity lines of credit	122,720		3,638		3.96	%	128,540		4,546		4.72	%	Home equity lines of credit	165,649		3,360		4.09	%	120,602		2,367		3.96	%
Consumer, indirect	Consumer, indirect	526,900		16,025		4.07	%	438,784		14,066		4.28	%	Consumer, indirect	532,501		10,288		3.90	%	519,566		10,516		4.08	%
Consumer, direct	Consumer, direct	82,151		3,896		6.34	%	78,904		3,978		6.73	%	Consumer, direct	108,934		3,242		6.00	%	79,718		2,511		6.35	%
Total loans	Total loans	3,442,670		115,350		4.44	%	3,196,260		104,810		4.34	%	Total loans	4,524,050		107,057		4.72	%	3,395,627		74,542		4.38	%
Allowance for credit losses	Allowance for credit losses	(49,483)						(44,323)						Allowance for credit losses	(58,026)						(48,403)
Net loans	Net loans	3,393,187		115,350		4.50	%	3,151,937		104,810		4.40	%	Net loans	4,466,024		107,057		4.78	%	3,347,224		74,542		4.45	%
Total earning assets	Total earning assets	4,618,109		128,196		3.68	%	4,261,624		119,984		3.73	%	Total earning assets	6,412,564		123,287		3.84	%	4,507,687		82,337		3.65	%
Goodwill and other intangible assets	Goodwill and other intangible assets	213,232						180,291						Goodwill and other intangible assets	316,753						203,509
Other assets	Other assets	360,842						264,238						Other assets	364,911						337,164
Total assets	Total assets	$	5,192,183					$	4,706,153					Total assets	$	7,094,228					$	5,048,360
Interest-bearing deposits:	Interest-bearing deposits:													Interest-bearing deposits:
Savings accounts	Savings accounts	$	688,782	$	79	0.02	%	$	558,514	$	140	0.03	%	Savings accounts	$	1,063,490	$	79	0.01	%	$	663,882	$	56	0.02	%
Governmental deposit accounts	Governmental deposit accounts	490,170		1,602		0.44	%	366,139		1,671		0.61	%	Governmental deposit accounts	687,620		919		0.27	%	463,391		1,145		0.50	%
Interest-bearing demand accounts	Interest-bearing demand accounts	743,562		205		0.04	%	652,198		385		0.08	%	Interest-bearing demand accounts	1,174,526		207		0.04	%	717,129		131		0.04	%
Money market accounts	Money market accounts	554,194		294		0.07	%	547,291		1,271		0.31	%	Money market accounts	645,644		201		0.06	%	564,714		226		0.08	%
Retail certificates of deposit ~~(e)~~	Retail certificates of deposit ~~(e)~~	440,454		3,054		0.93	%	479,185		5,453		1.52	%	Retail certificates of deposit ~~(e)~~	614,533		1,617		0.53	%	432,006		2,103		0.98	%
Brokered deposits (e)	Brokered deposits (e)	166,000		2,559		2.06	%	214,516		1,662		1.03	%	Brokered deposits (e)	89,256		1,044		2.36	%	171,194		1,733		2.04	%
Total interest-bearing deposits	Total interest-bearing deposits	3,083,162		7,793		0.34	%	2,817,843		10,582		0.50	%	Total interest-bearing deposits	4,275,069		4,067		0.19	%	3,012,316		5,394		0.36	%
Borrowed funds:	Borrowed funds:													Borrowed funds:
Short-term FHLB advances(e)	Short-term FHLB advances(e)	18,773		246		1.75	%	160,287		2,285		1.90	%	Short-term FHLB advances(e)	54,420		550		2.04	%	19,586		169		1.74	%
Repurchase agreements and other	Repurchase agreements and other	55,100		37		0.09	%	45,613		70		0.26	%	Repurchase agreements and other	97,960		49		0.10	%	50,969		23		0.09	%
Total short-term borrowings	Total short-term borrowings	73,873		283		0.51	%	205,900		2,355		1.54	%	Total short-term borrowings	152,380		599		0.79	%	70,555		192		0.55	%
Long-term FHLB advances	Long-term FHLB advances	96,765		1,099		1.52	%	109,536		1,341		1.64	%	Long-term FHLB advances	72,001		563		1.58	%	101,952		782		1.55	%

Repurchase agreement and other borrowings	Repurchase agreement and other borrowings	7,926		235		3.95	%	9,148		288		5.40	%	Repurchase agreement and other borrowings	68,911		1,474		4.25	%	7,650		153		4.00	%
Total long-term borrowings	Total long-term borrowings	104,691		1,334		1.70	%	118,684		1,629		1.93	%	Total long-term borrowings	140,912		2,037		2.90	%	109,602		935		1.72	%
Total borrowed funds	Total borrowed funds	178,564		1,617		1.21	%	324,584		3,984		1.64	%	Total borrowed funds	293,292		2,636		1.80	%	180,157		1,127		1.26	%
Total interest-bearing liabilities	Total interest-bearing liabilities	3,261,726		9,410		0.39	%	3,142,427		14,566		0.62	%	Total interest-bearing liabilities	4,568,361		6,703		0.29	%	3,192,473		6,521		0.41	%
Non-interest-bearing deposits	Non-interest-bearing deposits	1,248,330						892,301						Non-interest-bearing deposits	1,627,480						1,192,254
Other liabilities	Other liabilities	86,209						92,986						Other liabilities	85,431						83,912
Total liabilities	Total liabilities	4,596,265						4,127,714						Total liabilities	6,281,272						4,468,639

Stockholders’ equity		595,918						578,439
Total stockholders’ equity														Total stockholders’ equity	812,956						579,721
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	5,192,183					$	4,706,153					Total liabilities and stockholders’ equity	$	7,094,228					$	5,048,360
Interest rate spread (b)	Interest rate spread (b)			$	118,786	3.29	%			$	105,418	3.11	%	Interest rate spread (b)			$	116,584	3.55	%			$	75,816	3.24	%
Net interest margin (b)	Net interest margin (b)					3.41	%					3.27	%	Net interest margin (b)					3.63	%					3.36	%

(a)Average balances are based on carrying value.

(b)Interest income and yields are presented on a fully tax-equivalent basis using a blended federal and state corporate income tax rate of ~~22.3%~~23.3% for ~~2021~~2022 and a ~~statutory~~ federal corporate income tax rate of 21% for ~~2020.~~2021.

(c)Average balances include nonaccrual and impaired loans. Interest income includes interest earned and received on nonaccrual loans prior to the loans being placed on nonaccrual status. Loan fees included in interest income were immaterial for all periods presented.

(d)Loans held for sale are included in the average loan balance listed. Related interest income on loans originated for sale prior to the loan being sold is included in loan interest income.

5357

Table of Contents

(e)Interest related to interest rate swap transactions is included, as appropriate to the transaction, in interest expense on short-term FHLB advances and interest expense on brokered deposits for the periods presented in which FHLB advances and brokered deposits were being utilized.

~~Peoples completed the acquisition of~~Peoples' average balances compared to prior periods have been impacted by recent acquisitions, which included: (i) Vantage on March 7, 2022, which added to average lease and borrowed funds balances; (ii) Premier on September 17, 2021, which ~~impacted~~added to average short-term investments, average total ~~loan and deposit balances for the partial period in which the balances were included for the third quarter of 2021. Compared to the third quarter of 2020,~~investment securities, average total loans ~~grew mostly~~and average total deposits; and (iii) NSL on April 1, 2021, which added to average lease balances. Peoples has maintained high cash balances in recent periods due to ~~the leases acquired. Compared to the third quarter of 2020, average total deposit balances grew significantly due to the~~an influx of ~~funds from the PPP loan proceeds, changed customer spending habits and federal stimulus provided to customers.~~

~~In addition, average total loan balances for the first nine months of 2021 were higher than the prior year period due to the lease, Premium Finance and Premier balances acquired,~~deposits, coupled with ~~the~~ PPP loans originated since the start of the pandemic and loan growth. The average total deposit balances compared to 2020 grew considerably due to the influx of funds from the PPP loan proceeds, changed customer spending habits and federal stimulus provided to customers, while the Premier acquired balances had a minimal impact on the period.proceeds.

The following table provides an analysis of the changes in FTE net interest income:

Three Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2021 Compared to
(Dollars in thousands) June 30, 2021 September 30, 2020 September 30, 2020
Increase (decrease) in: Rate Volume
Total (a)
Rate Volume
Total (a)
Rate Volume
Total (a)
INTEREST INCOME:
Short-term investments $ 22 $ 7 $ 29 $ 9 $ 41 $ 50 $ (314) $ 172 $ (142)
Investment Securities (b):
Taxable 224 358 582 506 461 967 (2,939) 127 (2,812)
Nontaxable 4 37 41 (695) 1,053 358 (489) 1,115 626
Total investment income 228 395 623 (189) 1,514 1,325 (3,428) 1,242 (2,186)
Loans (b):

Construction (848) 1,065 217 (746) 763 17 (510) 23 (487)
Commercial real estate, other (883) 1,561 678 (3,242) 3,895 653 (4,252) 3,406 (846)
Commercial and industrial 3,146 (3,454) (308) 10,684 (9,896) 788 5,242 (880) 4,362
Premium finance 52 192 244 (2,749) 2,420 (329) (1,379) 3,645 2,266
Leases 28 567 595 — 4,810 4,810 — 9,025 9,025
Residential real estate (1,179) 1,398 219 (1,110) (112) (1,222) (3,182) (1,567) (4,749)
Home equity lines of credit 3 88 91 (84) 77 (7) (709) (199) (908)
Consumer, indirect 20 176 196 (1,347) 1,753 406 (1,121) 3,080 1,959
Consumer, direct (33) 146 113 (176) 229 53 (320) 238 (82)
Total loan income 306 1,739 2,045 1,230 3,939 5,169 (6,231) 16,771 10,540
Total interest income $ 556 $ 2,141 $ 2,697 $ 1,050 $ 5,494 $ 6,544 $ (9,973) $ 18,185 $ 8,212
INTEREST EXPENSE:
Deposits:
Savings accounts $ — $ 2 $ 2 $ (51) $ 40 $ (11) $ (104) $ 43 $ (61)
Governmental deposit accounts (365) 272 (93) (742) 689 (53) (720) 651 (69)
Interest-bearing demand accounts 2 6 8 (21) 29 8 (257) 77 (180)
Money market accounts (22) (5) (27) (131) (17) (148) (1,002) 48 (954)
Retail certificates of deposit (372) 343 (29) (540) (33) (573) (1,987) (412) (2,399)
Brokered deposits 71 (110) (39) 1,351 (844) 507 1,548 (674) 874
Total deposit cost (686) 508 (178) (134) (136) (270) (2,522) (267) (2,789)
Borrowed funds:
Short-term borrowings 22 (23) (1) (102) (549) (651) (221) (1,851) (2,072)
Long-term borrowings (30) (39) (69) (55) (29) (84) (109) (186) (295)
Total borrowed funds cost (8) (62) (70) (157) (578) (735) (330) (2,037) (2,367)
Total interest expense (694) 446 (248) (291) (714) (1,005) (2,852) (2,304) (5,156)
Fully tax-equivalent net interest income $ 1,250 $ 1,695 $ 2,945 $ 1,341 $ 6,208 $ 7,549 $ (7,121) $ 20,489 $ 13,368

~~Table of Contents~~




	Three Months Ended June 30, 2022 Compared to												Six Months Ended June 30, 2022 Compared to
(Dollars in thousands)	March 31, 2022						June 30, 2021						June 30, 2021
Increase (decrease) in:	Rate		Volume		Total (a)		Rate		Volume		Total (a)		Rate		Volume		Total (a)
INTEREST INCOME:
Short-term investments	$	598	$	(459)	$	139	$	255	$	(9)	$	246	$	277	$	89	$	366

Investment Securities (b):
Taxable	706		212		918		1,052		2,745		3,797		(8,752)		16,028		7,276
Nontaxable	362		(334)		28		77		172		249		(3,065)		3,858		793
Total investment income	1,068		(122)		946		1,129		2,917		4,046		(11,817)		19,886		8,069
Loans (b):
Construction	728		(667)		61		(400)		1,637		1,237		47		2,351		2,398
Commercial real estate, other	1,428		(611)		817		1,978		4,792		6,770		2,977		9,973		12,950
Commercial and industrial	1,953		(1,261)		692		(283)		(243)		(526)		(2,290)		(805)		(3,095)
Premium finance	506		108		614		41		439		480		(747)		1,094		347
Leases	(1,583)		6,022		4,439		(6,910)		13,236		6,326		(3,119)		15,547		12,428
Residential real estate	(177)		(263)		(440)		(364)		3,261		2,897		(455)		6,446		5,991
Home equity lines of credit	82		54		136		65		503		568		82		911		993
Consumer, indirect	(157)		355		198		(627)		557		(70)		(830)		602		(228)
Consumer, direct	(206)		258		52		(525)		900		375		(418)		1,149		731
Total loan income	2,574		3,995		6,569		(7,025)		25,082		18,057		(4,753)		37,268		32,515
Total interest income	$	4,240	$	3,414	$	7,654	$	(5,641)	$	27,990	$	22,349	$	(16,293)	$	57,243	$	40,950
INTEREST EXPENSE:
Deposits:
Savings accounts	$	10	$	1	$	11	$	9	$	15	$	24	$	(18)	$	41	$	23
Governmental deposit accounts	(23)		47		24		(939)		859		(80)		(1,198)		972		(226)
Interest-bearing demand accounts	22		1		23		6		43		49		(13)		89		76
Money market accounts	16		(9)		7		(15)		25		10		(94)		69		(25)
Retail certificates of deposit	(93)		(31)		(124)		(1,853)		1,620		(233)		(2,120)		1,634		(486)
Brokered deposits	140		(120)		20		821		(1,154)		(333)		651		(1,340)		(689)
Total deposit cost	72		(111)		(39)		(1,971)		1,408		(563)		(2,792)		1,465		(1,327)
Borrowed funds:
Short-term borrowings	(70)		(7)		(77)		6		163		169		36		371		407
Long-term borrowings	372		217		589		293		552		845		(413)		1,515		1,102
Total borrowed funds cost	302		210		512		299		715		1,014		(377)		1,886		1,509
Total interest expense	374		99		473		(1,672)		2,123		451		(3,169)		3,351		182
Fully tax-equivalent net interest income	$	3,866	$	3,315	$	7,181	$	(3,969)	$	25,867	$	21,898	$	(13,124)	$	53,892	$	40,768

(a)The change in interest due to both rate and volume has been allocated to rate and volume changes in proportion to the relationship of the dollar amounts of the change in each.

Compared to the linked quarter, net interest income increased 13% and net interest margin expanded by 43 basis points. Both increases were driven higher by accretion income from acquisitions and the recent rise in market interest rates. Loan yields grew by

Table of Contents

44 basis points, of which 34 basis points was attributable to higher accretion income. Deposit costs remained stable, while borrowing costs increased by 57 basis points and was mostly related to the acquired borrowings from the Vantage acquisition.

Net interest income grew 7%55% over the prior year quarter and net interest margin increased 39 basis points. The recent acquisitions have positively impacted net interest income, coupled with organic growth and the increase in market interest rates. During the second quarter of 2022, compared to the ~~linked~~prior year quarter, ~~benefiting from~~loan yields grew 44 basis points due to the ~~Premier~~rising interest rate environment, while deposit costs declined 15 basis points driven by a reduction in higher-interest bearing deposits, and borrowing costs increased 82 basis points as a result of the non-recourse debt assumed in the acquisition ~~growth~~of Vantage.

For the first half of 2022, net interest income and net interest margin grew 54% and 27 basis points, respectively, compared to 2021. During that same time, loan yields increased 34 basis points, which was partially offset by higher borrowing costs. Net interest income has been positively impacted due to the acquisitions in ~~leases and Premium Finance balances, and the overall growth in interest-earning assets, coupled with lower deposit costs.~~recent periods. Net interest income and net interest margin both have been negatively impacted by the excess liquidity environment present in the financial services sector since the beginning of the COVID-19 pandemic by way of increased low yielding cash reserves.

Peoples recognized interest income on deferred loan fees/costs associated with PPP loans of ~~$3.1~~$0.6 million, $1.2 million and $3.4 million during the ~~third~~second and first quarters of 2022 and the second ~~quarters~~quarter of 2021, respectively, along with ~~$0.4 million~~$79,000, $154,000, and ~~$0.7~~$0.8 million of interest earned on PPP loans, during the ~~third~~respective periods. For the first half of 2022, interest income recognized on deferred loan fees/costs related to PPP loans was $1.8 million, and ~~second quarters~~interest earned was $232,000, compared to $8.1 million and $1.6 million, respectively, for the first half of ~~2021, respectively. Net~~2021. The interest ~~margin grew five~~income recognized on PPP loans added 2 basis points, ~~to 3.50% for the third quarter of 2021 compared to 3.45% for the linked quarter. The increase in net interest margin was driven by the PPP income, which benefited net interest margin by 18~~5 basis points ~~for the third quarter of 2021 compared to~~and 15 basis points for the second quarter of 2021, while excess liquidity resulted in inflated cash balances which reduced net interest margin by 13 basis points compared to 12 basis points for the linked quarter.

Compared to the third quarter of 2020, net interest income increased 21%, which was due to the acquired leases, premium finance loans and additional PPP income from the deferred loan fees recognized, as well as controlled funding costs. Net interest margin expanded 36 basis points compared to 3.14% for the third quarter of 2020. The lease portfolio added $4.8 million to net interest income, and 28 basis points to net interest margin for the ~~third~~second and first quarters of 2022 and the second quarter of ~~2021. In late March of 2020, the Federal Reserve lowered the Federal Funds effective target range 150~~2021, respectively, while adding 4 basis points and 21 basis points to ~~0.00% to 0.25%. The majority of Peoples' variable rate loan portfolio is tied to LIBOR or a prime rate, which continued to be lower than historical levels.~~

For the first nine months of 2021, net interest income grew 13%, and was driven by the addition of the lease and premium finance portfolios, along with PPP income, coupled with lower funding costs. Compared to the first nine months of 2020, net interest margin ~~grew by 14 basis points~~for the first half of 2022 and ~~was driven by the 20 basis point addition of the leasing portfolio, while the PPP income contributed 20 basis points during~~ 2021, ~~compared to 6 basis points for 2020.~~respectively.

Accretion income, net of amortization expense, from acquisitions was ~~$1.0~~$3.9 million for the ~~third~~second quarter of ~~2021, $0.8~~2022, $2.7 million for the linked quarter and ~~$0.5~~$0.8 million for the ~~third~~second quarter of ~~2020,~~2021, which added 825 basis points, 717 basis points and 57 basis points, respectively, to net interest margin. For the first ~~nine months~~half of ~~2021,~~2022, accretion income ~~net of amortization expense, from acquisitions~~ totaled ~~$2.2~~$6.7 million and added 621 basis points to net interest margin compared to ~~$2.6~~$1.2 million and 86 basis points for ~~2020.~~the first half of 2021, with the increase from the prior year due to the acquired loans and leases from the Premier Merger and Vantage acquisition, respectively.

Additional information regarding changes in the Unaudited Consolidated Balance Sheets can be found under appropriate captions of the “FINANCIAL CONDITION” section of this MD&A. Additional information regarding Peoples' interest rate risk and the potential impact of interest rate changes on Peoples' results of operations and financial condition can be found later in this MD&A under the caption "FINANCIAL CONDITION - Interest Rate Sensitivity and Liquidity."

(Recovery of) Provision ~~for~~For Credit Losses

The following table details Peoples’ (recovery of) provision for credit losses:


		Three Months Ended									Nine Months Ended							Three Months Ended									Six Months Ended
		September 30, 2021			June 30, 2021			September 30, 2020			September 30,							June 30, 2022			March 31, 2022			June 30, 2021			June 30,
(Dollars in thousands)	(Dollars in thousands)										2021			2020			(Dollars in thousands)										2022			2021
Provision for other credit losses		$	8,870		$	3,035		$	4,574		$	7,125		$	33,171
(Recovery of) provision for other credit losses																	(Recovery of) provision for other credit losses	$	(1,135)		$	(7,006)		$	3,035		$	(8,141)		$	(1,745)
Provision for checking account overdraft credit losses	Provision for checking account overdraft credit losses	124			53			154			208			360			Provision for checking account overdraft credit losses	355			199			53			554			84
Provision for credit losses		$	8,994		$	3,088		$	4,728		$	7,333		$	33,531
(Recovery of) provision for credit losses																	(Recovery of) provision for credit losses	$	(780)		$	(6,807)		$	3,088		$	(7,587)		$	(1,661)
As a percentage of average total loans (a)	As a percentage of average total loans (a)	1.01		%	0.36		%	0.55		%	0.28		%	1.40		%	As a percentage of average total loans (a)	(0.07)		%	(0.62)		%	0.36		%	(0.34)		%	(0.10)		%
(a) Presented on an annualized basis.	(a) Presented on an annualized basis.																(a) Presented on an annualized basis.

The (recovery of) provision for credit losses recorded represents the amount needed to maintain the appropriate level of the allowance for credit losses based on management’s quarterly estimates. ~~During~~For the ~~third~~second quarter of ~~2021, Peoples recorded a provision for~~2022, the recovery of credit losses was driven by the reduction in allowance for individually analyzed loans, as well as changes in loss drivers used in the CECL model.

For the first quarter of ~~$11.0 million~~2022, the recovery of credit losses was related to an improvement in ~~order to establish~~the economic forecast, along with payoffs of several loans during the quarter, which were partially offset by $387,000 for the establishment of an allowance for credit losses for ~~non-purchase~~the non-purchased credit deteriorated ~~loans of $10.6 million, and a liability for unfunded commitments of $0.4 million, both relating to~~leases from the ~~acquisition of Premier. Peoples also recorded a $22.3 million increase in the allowance~~Vantage acquisition.

The provision for credit losses recorded during the ~~third~~second quarter of 2021 ~~related~~was primarily due to ~~the purchase credit deteriorated loans acquired from Premier. Excluding~~ the day-one allowance for credit losses of $3.3 million related to ~~loans~~the leases acquired from ~~Premier,~~NSL. Excluding leases, the ~~release~~reduction of specific reserves on individually evaluated loans positively impacted the allowance for credit losses for the second quarter of 2021.

For the first half of 2022, the recovery of credit losses was mostly due to improvements in the economic forecast and loss drivers, coupled with releases of allowance for credit losses ~~was based~~ on ~~changes in economic factors and loss drivers used in~~individually analyzed loans. For the ~~CECL model. Compared to~~first six months of 2021, the ~~third quarter~~recovery of ~~2020, the change in the provision for~~ credit losses was ~~primarily due~~associated with improved economic forecasts compared to prior periods, which was partially offset by the ~~impact~~establishment of ~~economic assumptions used in~~ the ~~CECL model and Peoples' own credit portfolio developments related to COVID-19, coupled with the day-one~~ allowance for credit losses ~~required in connection with the acquisitions of Premier in the third quarter of 2021 and NSL in the second quarter of 2021.~~

~~Table of Contents~~

~~Compared to the first nine months of 2020, the provision~~ for credit losses declined significantly, as the economic forecasts utilized within the CECL model experienced notable recovery compared to those utilized during 2020, which had been impacted by the onset of the COVID-19 pandemic.acquired leases.

Additional information regarding changes in the allowance for credit losses and loan credit quality can be found later in this MD&A under the caption “FINANCIAL CONDITION - Allowance for Credit Losses.”

Table of Contents

Net (Loss) Gain Included in Total Non-Interest Income

Net (loss) ~~gain include~~ gains includes losses and ~~losses~~gains on investment securities, asset disposals and other transactions, which are recognized in total non-interest income. The following table details Peoples’ net losses and gains for the periods presented:


		Three Months Ended						Nine Months Ended					Three Months Ended						Six Months Ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30,					June 30, 2022		March 31, 2022		June 30, 2021		June 30,
(Dollars in thousands)	(Dollars in thousands)							2021		2020		(Dollars in thousands)							2022		2021
Net (loss) gain on investment securities	Net (loss) gain on investment securities	$	(166)	$	(202)	$	2	$	(704)	$	383	Net (loss) gain on investment securities	$	(44)	$	130	$	(202)	$	86	$	(538)

Net (loss) gain on asset disposals and other transactions:	Net (loss) gain on asset disposals and other transactions:											Net (loss) gain on asset disposals and other transactions:
Net loss on other assets	Net loss on other assets	$	(270)	$	(132)	$	(43)	$	(429)	$	(258)	Net loss on other assets	$	(119)	$	(22)	$	(132)	$	(141)	$	(159)
Net (loss) gain on OREO	Net (loss) gain on OREO	(32)		8		15		(24)		(1)		Net (loss) gain on OREO	(33)		(1)		8		(34)		8

Net (loss) gain on other transactions		(6)		—		—		(6)		22
Net loss on other transactions												Net loss on other transactions	—		(104)		—		(104)		—
Net loss on asset disposals and other transactions	Net loss on asset disposals and other transactions	$	(308)	$	(124)	$	(28)	$	(459)	$	(237)	Net loss on asset disposals and other transactions	$	(152)	$	(127)	$	(124)	$	(279)	$	(151)

~~Net losses for~~Losses on asset disposals and other transactions increased in the ~~third~~second quarter ~~of 2021 were~~relative to the linked and prior year quarters, driven ~~primarily~~ by losses on ~~the disposal of fixed~~repossessed assets, ~~acquired from Premier and~~losses on the sale of investment securities ~~during~~and losses on the ~~third quarter~~sale of ~~2021.~~OREO properties acquired from Premier. During the ~~third quarter~~first three months of ~~2021,~~2022, Peoples sold ~~a portion of its available-for-sale~~several investment securities, ~~and reinvested the proceeds into higher-yielding investments.~~

~~For the first nine months of 2021,~~resulting in a net gain on investment securities. This gain was offset by a net loss on ~~investment securities was recorded due~~other transactions primarily driven by an adjustment to the gain on sale of ~~investment securities~~loans recognized in ~~order~~the fourth quarter of 2021, which was driven by changes to ~~reinvest proceeds into higher-yielding investment securities.~~ the acquisition-date fair value of Premier loans acquired that were subsequently sold.

During the second quarter of 2021, net loss on other assets was due to a market value write-down of $208,000 related to a closed office that was held for ~~sale. The~~sale, which was partially offset by a net gain of $76,000 on repossessed assets. For the first ~~nine~~six months of 2021, ~~included a~~ net loss on ~~other assets related~~investment securities was recorded due to the ~~write-down~~sale of ~~a closed office in the second quarter of 2021 and the disposal of fixed assets acquired from Premier. The first nine months of 2020 included a net gain on~~ investment securities ~~that was recorded~~ in ~~connection with sales of~~order to reinvest proceeds into higher yielding investment securities. ~~For the first nine months of 2020, net loss on other assets was driven by losses on repossessed assets.~~

Total Non-Interest Income, Excluding Net Gains and Losses

Total non-interest income, excluding net gains and losses, ~~accounted for 28%~~comprised 24% of Peoples' total revenues (defined as net interest income plus total non-interest income excluding net gains and losses) for the ~~three months ended September 30, 2021~~second quarter of 2022, compared to ~~29%~~27% for the linked quarter and ~~32%~~29% for the ~~third quarter~~prior year quarter. For the first half of ~~2020.~~2022, total non-interest income, excluding net gains and losses, totaled 26% of total revenues compared to 31% for 2021. The ~~recent~~ decline in this ratio compared to the prior periods was ~~driven by an increase in~~primarily due to higher net interest income ~~due to~~associated with the recent acquisition of ~~leases acquired from NSL.~~Vantage and Premier Merger, coupled with the increase in the market interest rate environment.

For the ~~third~~second quarter of ~~2021,~~2022, electronic banking income comprised the largest portion of Peoples' total non-interest income, excluding net gains and losses. Peoples' electronic banking ("e-banking") services include ATM and debit cards, direct deposit services, internet and mobile banking, and remote deposit capture, and serve as alternative delivery channels to traditional sales offices for providing services to clients. The following table details Peoples' e-banking income:


		Three Months Ended						Nine Months Ended					Three Months Ended						Six Months Ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30,					June 30, 2022		March 31, 2022		June 30, 2021		June 30,
(Dollars in thousands)	(Dollars in thousands)							2021		2020		(Dollars in thousands)							2022		2021

E-banking income	E-banking income	$	4,326	$	4,418	$	3,765	$	12,655	$	10,568	E-banking income	$	5,419	$	5,253	$	4,418	$	10,672	$	8,329

Peoples' e-banking income is derived largely from ATM and debit cards, as other services are mainly provided at no charge to customers. The amount of e-banking income is largely dependent on the timing and volume of customer activity. ~~The decreases in~~E-banking income increased compared to the linked quarter primarily due to increased customer activity. Compared to the prior year quarter and first half of 2021, e-banking income grew 23% and 28%, respectively, from increased customer activity, coupled with the addition of the Premier customers during the third quarter of 2021.

The following table details Peoples' insurance income:


	Three Months Ended						Six Months Ended
	June 30, 2022		March 31, 2022		June 30, 2021		June 30,
(Dollars in thousands)							2022		2021


Property and casualty insurance commissions	$	3,039	$	2,862	$	2,765	$	5,901	$	5,520


Performance-based commissions	10		1,346		35		1,356		1,985
Life and health insurance commissions	506		452		430		956		852
Other fees and charges	92		72		105		164		199
Insurance income	$	3,647	$	4,732	$	3,335	$	8,377	$	8,556

Table of Contents

Insurance income declined compared to ~~each of~~ the linked quarter, and was mostly due to the recognition of $1.3 million of annual performance-based insurance commissions recorded during the first quarter of each year. Compared to the prior year quarter, ~~were driven by~~insurance income grew due to additional customers, while the ~~increased usage of debit cards by customers, resulting from the COVID-19 pandemic. The increased usage has continued through the first nine months of 2021, resulting in higher e-banking income~~decline compared to the ~~same period in 2020.~~first half of 2021 was driven by lower performance-based commissions.

Peoples' fiduciary income and brokerage income continued to be based primarily upon the value of assets under administration and management, with additional income generated from transaction commissions, cross-selling of products and additional retirement

~~Table of Contents~~

plan services business. The following tables detail Peoples’ trust and investment income and related assets under administration and management:


		Three Months Ended						Nine Months Ended					Three Months Ended						Six Months Ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30,					June 30, 2022		March 31, 2022		June 30, 2021		June 30,
(Dollars in thousands)	(Dollars in thousands)							2021		2020		(Dollars in thousands)							2022		2021
Fiduciary income	Fiduciary income	$	1,944	$	2,095	$	1,710	$	5,941	$	5,112	Fiduciary income	$	1,999	$	1,965	$	2,095	$	3,964	$	3,997
Brokerage income	Brokerage income	1,577		1,494		1,165		4,408		3,324		Brokerage income	1,631		1,649		1,494		3,280		2,831
Employee benefit fees	Employee benefit fees	637		631		560		1,874		1,577		Employee benefit fees	616		662		631		1,278		1,237
Trust and investment income	Trust and investment income	$	4,158	$	4,220	$	3,435	$	12,223	$	10,013	Trust and investment income	$	4,246	$	4,276	$	4,220	$	8,522	$	8,065

Fiduciary income and brokerage income ~~are~~were mostly ~~driven by~~flat in the current quarter relative to the linked quarter, with the timing of brokerage fee income mitigating the decrease in assets under management, and fees for tax preparation and estate services mitigating the decrease in trust assets. An improvement in the values of assets under administration and management, ~~which have increased in recent periods as the market values of existing accounts have been positively impacted and grown,~~ coupled with new accounts added, contributed to the growth in trust and investment income compared to ~~prior periods. Employee benefit fees continue to increase compared to prior periods as Peoples focuses on growing~~ the ~~number~~first half of ~~employee benefit plans it manages.~~2021.

The following table details Peoples' assets under administration and management:


		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020			June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021
(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020		(Dollars in thousands)	June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021

Trust	Trust	$	1,937,123	$	1,963,884	$	1,916,892	$	1,885,324	$	1,609,270	Trust	$	1,731,454	$	1,927,828	$	2,009,871	$	1,937,123	$	1,963,884
Brokerage	Brokerage	1,133,668		1,119,247		1,071,126		1,009,521		921,688		Brokerage	1,068,261		1,152,530		1,183,927		1,133,668		1,119,247
Total	Total	$	3,070,791	$	3,083,131	$	2,988,018	$	2,894,845	$	2,530,958	Total	$	2,799,715	$	3,080,358	$	3,193,798	$	3,070,791	$	3,083,131
Quarterly average	Quarterly average	$	3,105,476	$	3,051,027	$	2,927,458	$	2,663.485	$	2,510,978	Quarterly average	$	2,927,405	$	3,106,021	$	3,126,398	$	3,077,554	$	3,051,027

The ~~slight decline~~declines in assets under administration and management at ~~September~~June 30, ~~2021,~~2022, compared to ~~each prior period end, was largely~~the linked quarter and December 31, 2021, were driven by ~~the~~a decrease in market values ~~late in~~during the ~~third quarter~~first half of ~~2021, while the quarterly average increased compared to prior quarters.~~

~~The following table details Peoples' insurance income:~~

Three Months Ended Nine Months Ended
September 30,
2021 June 30,
2021 September 30,
2020 September 30,
(Dollars in thousands) 2021 2020
Property and casualty insurance commissions $ 2,836 $ 2,765 $ 2,528 $ 8,356 $ 7,624
Life and health insurance commissions 396 430 965 1,248 1,494
Performance-based commissions 59 35 8 2,044 1,437
Other fees and charges 76 105 107 275 374
Insurance income $ 3,367 $ 3,335 $ 3,608 $ 11,923 $ 10,929

~~For the third quarter of 2021, insurance income was relatively flat compared~~2022 due to the linked quarter. Compared to the third quarter of 2020, insurance income declined 7%, driven by decreases in life and health insurance commissions, offset partially by an increase in property and casualty insurance commissions. For the first nine months of 2021, insurance income increased $1.0 million, or 9%. This increase was driven by higher property and casualty, and performance-based commissions. Annually Peoples receives performance-based income commissions that are related to how much loss is incurred by underlying policies and the overall performance of the insurance carriers. The insurance income compared to prior periods was positively impacted by the addition of new customers.

~~Table of Contents~~

recent economic downturn.

Deposit account service charges are based on the recovery of costs associated with services provided. The following table details Peoples' deposit account service charges:


		Three Months Ended						Nine Months Ended					Three Months Ended						Six Months Ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30,					June 30, 2022		March 31, 2022		June 30, 2021		June 30,
(Dollars in thousands)	(Dollars in thousands)							2021		2020		(Dollars in thousands)							2022		2021
Overdraft and non-sufficient funds fees	Overdraft and non-sufficient funds fees	$	1,420	$	1,012	$	1,216	$	3,429	$	3,741	Overdraft and non-sufficient funds fees	$	2,019	$	1,902	$	1,012	$	3,921	$	2,009
Account maintenance fees	Account maintenance fees	934		854		848		2,598		2,677		Account maintenance fees	1,306		1,311		854		2,617		1,664
Other fees and charges	Other fees and charges	195		178		202		551		577		Other fees and charges	233		213		178		446		356
Deposit account service charges	Deposit account service charges	$	2,549	$	2,044	$	2,266	$	6,578	$	6,995	Deposit account service charges	$	3,558	$	3,426	$	2,044	$	6,984	$	4,029

The amount of deposit account service charges, particularly fees for overdrafts and non-sufficient funds, is largely dependent on the timing and volume of customer activity. Management periodically evaluates its cost recovery fees to ensure they are reasonable based on operational costs and similar to fees charged in Peoples' markets by competitors. Deposit account service charges ~~for the third quarter of 2021 grew~~increased compared to the linked quarter, prior year quarter and ~~the third quarter~~first half of ~~2020 due largely to an increase in volume of overdraft and non-sufficient fees charged~~2021 due to increased customer ~~activity. Deposit account service charges were negatively impacted during~~activity in recent quarters, compared to the ~~second quarter~~very low levels of early 2021 ~~and the third quarter of 2020, mostly due to~~associated with fiscal stimulus payments and PPP loan proceeds provided to customers, along with changed customer spending habits due to the COVID-19 pandemic. ~~For~~Also contributing to the ~~first nine months of 2021,~~increase compared to the ~~same period~~prior year quarter and first half of ~~2020, deposit account service charges declined and were impacted by~~2021 was the ~~COVID-19 pandemic items already mentioned.~~additional customers associated with the Premier Merger.

Table of Contents

The following table details the other items included within Peoples' total non-interest income:


		Three Months Ended			Nine Months Ended			Three Months Ended			Six Months Ended
		September 30, 2021	June 30, 2021	September 30, 2020	September 30,			June 30, 2022	March 31, 2022	June 30, 2021	June 30,
(Dollars in thousands)	(Dollars in thousands)				2021	2020	(Dollars in thousands)				2022	2021

Mortgage banking income	Mortgage banking income	766	820	2,658	2,726	4,346	Mortgage banking income	352	436	820	788	1,960
Bank owned life insurance income	Bank owned life insurance income	437	446	462	1,329	1,514	Bank owned life insurance income	797	431	446	1,228	892
Commercial loan swap fees	Commercial loan swap fees	73	61	68	194	1,267	Commercial loan swap fees	270	168	61	438	121
Other non-interest income	Other non-interest income	1,144	803	534	2,605	1,393	Other non-interest income	1,294	1,326	803	2,620	1,461

Mortgage banking income is comprised mostly of net gains from the origination and sale of real estate loans in the secondary market, and, to a lesser extent, servicing income for loans sold with servicing retained. As a result, the amount of income recognized by Peoples is largely dependent on customer demand and long-term interest rates for residential real estate loans offered in the secondary market. Mortgage banking income declined ~~during the third quarter of 2021,~~ compared to the linked quarter, ~~and the~~ prior year quarter ~~as refinancing activity slowed~~and first half of 2021 due to the increased interest rate environment in recent quarters and a lower volume of new loan originations due to the lack of inventory of homes for sale. Compared to the first nine months of 2020, mortgage banking income declined 37%, because of lower origination volume caused by a lower inventory of homes for sale and less refinancing activity because of an increase in interest rates above historically low levels experienced as a result of the COVID-19 pandemic.

In the ~~third~~second quarter of ~~2021,~~2022, Peoples ~~recognized a gain of $0.4 million on the sale of $11.0~~sold $4.6 million in loans to the secondary market with servicing retained and ~~$0.2 million on the sale of $10.3~~$6.1 million in loans with servicing ~~released. In~~released, compared to $7.2 million and $7.9 million, respectively, for the first quarter of 2022, and $15.8 million and $7.8 million, respectively, for the second quarter of 2021, Peoples recognized a gain of $0.6 million on the sale of $15.8 million in loans with servicing retained and $185,000 on the sale of $7.8 million in loans with servicing released. In the third quarter of 2020 Peoples recognized a gain of $1.6 million on the sale of $35.2 million in loans sold servicing retained and a gain of $1.0 million on $68.2 million in loans sold servicing released.2021. For the first ~~nine months~~half of 2021, Peoples ~~recognized a gain of $1.8 million on the sale of $44.0~~sold $33.0 million in loans to the secondary market with servicing retained, and ~~a gain of $0.6 million on the sale of $27.7~~$17.4 million in ~~loans with~~ servicing released. For the first nine months of 2020, Peoples recognized a gain of $2.5 million on the sale of $78.6 million in loans sold servicing retained and a gain of $1.8 million on the sale of $124.2 million in loans sold servicing released. The volume of sales has a direct impact on the amount of mortgage banking income.

Bank owned life insurance income ~~was down compared~~for the current quarter included a $248,000 death benefit related to the ~~linked quarter and~~cash surrender value of the ~~third quarter of 2020. For the first nine months of 2021,~~underlying policy. Peoples also invested an additional $30.0 million in bank owned life insurance ~~declined 12%, primarily~~policies during the second quarter of 2022. For the first half of 2022, the increased bank owned life insurance income compared to the first half of 2021, was due to ~~a $109,000 tax-free~~the aforementioned death benefit ~~recognized during the first quarter of 2020.~~proceeds and additional investment.

Commercial loan swap fees are largely dependent on timing, interest rates, and the volume of customer activity. ~~Commercial~~During the second quarter of 2022, commercial loan swap fees ~~were up slightly~~increased as a result of several new commercial loan swaps in the period, driven by the recent increases in interest rates, compared to less activity in the linked and prior year quarter, and first half of 2021.

Other non-interest income was relatively flat compared to the linked ~~quarter and the third quarter of 2020.~~quarter. Compared to the first nine months of 2020, commercial loan swap fees declined due to a lower volume of transactions during 2021 compared to the high volume of transactions entered into during the first nine months of 2020.

~~Other non-interest income increased compared to the linked~~prior year quarter and ~~the third quarter~~first half of ~~2020 and was driven by other fee income of $0.5 million recognized on leases related to the early termination of leases and other fees in the third quarter of 2021~~

~~Table of Contents~~

compared to $0.2 million recognized in the second quarter of 2021. There was no income related to the early termination of leases in the third quarter of 2020, as NSL was not acquired until the second quarter of 2021. For the nine months ended September 30, 2021, other non-interest income ~~was higher~~increased 61% and 79%, respectively, due to fee income recognized with the ~~recognition of $0.6 million related to fees received for the early termination of leases and lease syndications.~~leasing divisions.

Non-Interest Expense

Salaries and employee benefit costs remain Peoples' largest non-interest expense, accounting for over one-half of total non-interest expense. The following table details Peoples' salaries and employee benefit costs:


		Three Months Ended						Nine Months Ended					Three Months Ended						Six Months Ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30,					June 30, 2022		March 31, 2022		June 30, 2021		June 30,
(Dollars in thousands)	(Dollars in thousands)							2021		2020		(Dollars in thousands)							2022		2021
Base salaries and wages	Base salaries and wages	$	17,493	$	13,488	$	13,019	$	43,746	$	38,489	Base salaries and wages	$	18,408	$	17,676	$	13,488	$	36,084	$	26,253
Sales-based and incentive compensation	Sales-based and incentive compensation	4,013		4,593		3,493		12,034		9,320		Sales-based and incentive compensation	4,913		3,636		4,593		8,549		8,021
Employee benefits	Employee benefits	2,619		2,821		1,930		8,338		6,471		Employee benefits	3,321		3,621		2,821		6,942		5,719
Payroll taxes and other employment costs	Payroll taxes and other employment costs	1,635		1,343		1,148		4,471		3,584		Payroll taxes and other employment costs	1,389		2,091		1,343		3,480		2,836
Stock-based compensation	Stock-based compensation	618		604		632		2,437		2,985		Stock-based compensation	600		1,605		604		2,205		1,819
Deferred personnel costs	Deferred personnel costs	(789)		(921)		(812)		(2,750)		(3,536)		Deferred personnel costs	(1,046)		(900)		(921)		(1,946)		(1,961)
Salaries and employee benefit costs	Salaries and employee benefit costs	$	25,589	$	21,928	$	19,410	$	68,276	$	57,313	Salaries and employee benefit costs	$	27,585	$	27,729	$	21,928	$	55,314	$	42,687
Full-time equivalent employees:	Full-time equivalent employees:											Full-time equivalent employees:
Actual at end of period	Actual at end of period	1,181		925		886		1,181		886		Actual at end of period	1,261		1,245		925		1,261		925
Average during the period	Average during the period	990		914		890		942		893		Average during the period	1,255		1,215		914		1,241		907

Base salaries and wages increased ~~30%~~4% compared to the linked quarter and increased ~~34%~~36% compared to the ~~third~~second quarter of ~~2020.~~2021. The ~~increase~~increases for the ~~third~~second quarter of 2021 compared to prior periods was primarily due to the acquisition of Premier, which included $3.4 million in acquisition-related severance expense. For the first nine months of 2021, base salaries and wages increased 14%2022 compared to the ~~first nine months of 2020 as a result of~~linked quarter and the ~~acquisition-related severance expense for Premier and~~prior year quarter were driven by the additional salaries associated with ~~NSL~~the acquisition of Vantage, and ~~a full nine months of Premium Finance.~~the Premier Merger, respectively.

The ~~decrease~~increase in sales-based and incentive compensation for the ~~third~~second quarter of ~~2021~~2022 compared to the linked quarter was primarily due to ~~lower incentive compensation related to insurance and mortgage banking. For the first nine months~~sales incentives earned by Vantage employees.

Table of ~~2021~~Contents

The decrease in employee benefits for second quarter of 2022, compared to the ~~same period~~linked quarter, was primarily due to annual contributions to employee health benefit accounts which occur primary in ~~2020,~~ the ~~increase was driven by the overall company performance relative to measures used in calculating incentive awards and higher sales-based compensation from insurance and trust and investments.~~

first quarter of each year. The increase in employee benefits ~~for first nine months~~compared to the second quarter of 2021 ~~compared to first nine months of 2020,~~ was due to ~~an increase to the employer 401(k) match made during 2021, as well as~~ higher medical costs with the addition of the Premier and ~~NSL~~Vantage employees. During the second quarter of 2021, Peoples increased the matching contribution to participant's 401(k) accounts, retroactive to January 1, 2021. This true-up was completed in the second quarter of 2021 and drove the increase in employee benefits for the third quarter of 2021 compared to the third quarter of 2020.

~~The increase in payroll~~Payroll taxes and other employment costs decreased compared to ~~linked~~the first quarter ~~was~~of 2022, primarily driven by higher payroll taxes recognized in the first quarter of each year. Those costs increased for the first half of the year relative to the prior year period due to the taxes associated with the acquisition-related severance expense recognized in the third quarter of 2021. The increase in payroll taxes and other employment costs for the three and nine months ended September 30, 2021, compared to the same periods in 2020, was primarily related to higher base salaries and wages, coupled with the additional associates ofretained from the Premier Merger, and ~~NSL.~~North Star and Vantage acquisitions.

Stock-based compensation is generally recognized over the vesting period, which generally ranges from immediate vesting to vesting at the end of three years, adjusted for an estimate of the portion of awards that will be forfeited. At the vesting date, an adjustment is made to increase or reverse expense for the amount of actual forfeitures compared to the estimate. Stock grants to retirement eligible grantees are expensed either immediately or over a shorter period than three years. The majority of Peoples' stock-based compensation is attributable to annual equity-based incentive awards to employees, which are awarded in the first quarter of each year and are based upon Peoples achieving certain performance goals during the prior year. Stock-based compensation for the ~~first nine months~~second quarter of ~~2021~~2022 decreased compared to the linked quarter, which included expense related to stock grants to retirement eligible individuals and the annual vesting of prior stock grants. Stock-based compensation for the first ~~nine months~~half of ~~2020~~the year increased 21% compared to the first half of the prior year due to ~~an additional $396,000 of unrestricted grants of common share awards to associates at the level of Assistant Vice President or below granted~~employees added in the ~~second quarter~~acquisition of ~~2020.~~Vantage and the Premier Merger.

Deferred personnel costs represent the portion of current period salaries and employee benefit costs considered to be direct loan origination costs. These costs are capitalized and recognized over the life of the loan as a yield adjustment in interest income. As a result, the amount of deferred personnel costs for each period corresponds directly with the volume of loan originations, coupled with the average deferred costs per loan that are updated annually at the beginning of each year. ~~The decrease in~~Higher deferred personnel costs compared to the linked quarter was primarily due to ~~a reduction~~an increase in loan origination volume. ~~The decrease in deferred personnel costs in the first~~

~~Table of Contents~~

nine months of 2021 compared to first nine months of 2020 was driven by the recognition of $921,000 in deferred personnel costs during the second quarter of 2020 related to the origination of PPP loans.

Peoples' net occupancy and equipment expense was comprised of the following:


		Three Months Ended						Nine Months Ended					Three Months Ended						Six Months Ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30,					June 30, 2022		March 31, 2022		June 30, 2021		June 30,
(Dollars in thousands)	(Dollars in thousands)							2021		2020		(Dollars in thousands)							2022		2021
Depreciation	Depreciation	$	1,365	$	1,398	$	1,507	$	4,134	$	4,519	Depreciation	$	1,770	$	1,823	$	1,398	$	3,593	$	2,769
Repairs and maintenance costs	Repairs and maintenance costs	1,017		903		767		2,863		2,225		Repairs and maintenance costs	1,245		1,378		903		2,625		1,846
Net rent expense	Net rent expense	371		382		340		1,093		960		Net rent expense	756		685		382		1,441		722
Property taxes, utilities and other costs	Property taxes, utilities and other costs	798		606		769		2,077		1,984		Property taxes, utilities and other costs	997		1,202		606		2,197		1,279
Net occupancy and equipment expense	Net occupancy and equipment expense	$	3,551	$	3,289	$	3,383	$	10,167	$	9,688	Net occupancy and equipment expense	$	4,768	$	5,088	$	3,289	$	9,856	$	6,616

Depreciation on capitalized assets ~~has~~ declined ~~during the second and third quarters of 2021,~~ compared to ~~both~~ the ~~third~~linked quarter ~~of 2020, and the first nine months of 2020~~ as a result of certain capitalized assets and improvements reaching the end of their depreciable ~~lives. In addition, Peoples recognized higher building~~lives, coupled with lower repairs and maintenance costs during the first nine months of 2021, compared to 2020 due to various projects including painting, window replacements, drive-thru enhancements and parking lot sealing. Property taxes, utilities and other costs also increased during the nine months ended September 30, 2021,from snow removal expenses compared to the first ~~nine months~~quarter of ~~2020 as a result~~2022. Compared to the second quarter and first half of ~~an increase in other costs, primarily driven by low-cost furniture and fixtures not capitalized, offset by a reduction in utilities and property taxes.~~

~~Net~~2021, net occupancy and equipment expense increased ~~5% compared to~~45% and 49%, respectively, with the ~~first nine months of 2020 mainly due to increased expenses associated with maintaining~~increases driven by the ~~Premium Finance location for a full period, the acquisition~~additional geographic locations from ~~NSL in second quarter of 2021 and the partial period impact of the merger with Premier in the third quarter of 2021.~~recent acquisitions.

The following table details the other items included in total non-interest expense:


		Three Months Ended						Nine Months Ended					Three Months Ended						Six Months Ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30,					June 30, 2022		March 31, 2022		June 30, 2021		June 30,
(Dollars in thousands)	(Dollars in thousands)							2021		2020		(Dollars in thousands)							2022		2021
Professional fees	Professional fees	$	6,426	$	3,565	$	1,720	$	13,459	$	5,247	Professional fees	$	2,280	$	3,672	$	3,565	$	5,952	$	7,033
Data processing and software expense	Data processing and software expense	2,529		2,411		1,838		7,394		5,344		Data processing and software expense	3,033		2,916		2,411		5,949		4,865
E-banking expense	E-banking expense	2,037		2,075		2,095		6,006		5,839		E-banking expense	2,727		2,759		2,075		5,486		3,969
Amortization of other intangible assets	Amortization of other intangible assets	1,279		1,368		857		3,267		2,314		Amortization of other intangible assets	2,034		1,708		1,368		3,742		1,988
FDIC insurance premiums												FDIC insurance premiums	1,018		1,194		326		2,212		789
Marketing expense	Marketing expense	1,223		676		456		2,810		1,561		Marketing expense	860		995		676		1,855		1,587
Other loan expenses												Other loan expenses	445		832		494		1,277		956
Franchise tax expense	Franchise tax expense	810		822		882		2,487		2,645		Franchise tax expense	1,102		764		822		1,866		1,677
FDIC insurance premiums		807		326		570		1,596		717
Other loan expenses		487		494		342		1,443		1,255
Communication expense	Communication expense	411		386		283		1,079		857		Communication expense	649		625		386		1,274		668
Other non-interest expense	Other non-interest expense	12,711		2,559		2,479		17,762		7,665		Other non-interest expense	3,398		3,347		2,559		6,745		5,051

Professional fees ~~increased $2.9~~decreased $1.4 million from the linked quarter and $4.7 million from the third quarter of 2020 primarily due to investment banking fees and other acquisition-related expenses, which were related to the purchase of NSL and the merger with Premier. Professional fees included acquisition-related expenses of $2.4 million for the third quarter of 2021, $1.8 million for the second quarter of 2021 ~~and $319,000~~primarily due to lower acquisition-related expenses. Professional fees for the ~~third quarter~~first half of ~~2020. For~~ the ~~first nine months of 2021, professional fees nearly doubled~~year decreased $1.1 million compared to the first half of the prior year, ~~and included $6.2 million of acquisition-related expenses for 2021, compared to $363,000 for 2020.~~

The change in data processing and software expense compared to prior periods was driven by systems and software upgrades, annual contractual increases and overall growth, which included: the implementation of enhanced functionalities for Peoples' core banking system, including making certain mobile banking tools available to customers; software upgrades; and additional network capacity and security features in the latter part of 2020 and first quarter of 2021.

~~E-banking expense was down slightly compared to the linked quarter, and is directly correlated to e-banking income, with the decrease due to lower costs associated with ATM processing expenses.~~

~~Peoples' amortization of other intangible assets is~~primarily driven by acquisition-related ~~activity. Amortization of other intangible assets for the third quarter of 2021 was down $89,000 compared~~expenses related to the ~~second quarter of 2021 due to adjustments to~~Premier Merger which had been realized in the fair value of intangible assets acquired from NSL, and the related changes to intangible amortization post-acquisition. Amortization of other intangible assets increased $422,000 compared to the third quarter of 2020 as a result of the NSL acquisition effective after the close of business on March 31, 2021.prior year.

6063

Table of Contents

~~Marketing~~Data processing and software expense increased relative to prior year periods, driven by software upgrades and implementation of new systems, coupled with the increased size of Peoples' organization.

E-banking expense increased compared to the second quarter of 2021 ~~due primarily~~and first half of 2021, and is correlated to ~~additional advertising campaigns relating~~e-banking income, which also increased over those same periods.

Amortization of other intangible assets is associated with acquisition-related activity, and grew 19% compared to the ~~addition of Premier locations. Additionally, in giving back~~linked quarter, due to the ~~community, Peoples' contributions increased during~~Vantage acquisition. Compared to the ~~third~~second quarter of 2021, amortization of other intangible assets increased $0.7 million as Peoples merged with Premier, and ~~included a donation~~acquired Vantage on September 17, 2021 and March 7, 2022, respectively. Amortization of other intangible assets grew 88% versus the first half 2021 due to ~~each of Marietta College~~the Premier Merger, and the ~~Ohio Valley Museum~~acquisitions of ~~Discovery.~~North Star and Vantage.

Peoples' FDIC insurance premiums decreased compared to the linked quarter, as Peoples recognized a prior year adjustment in the first quarter relating to its larger assessment base as a result of the liabilities assumed from Premier. FDIC insurance premiums increased compared to the prior year quarter, as Peoples recorded increased premiums after the acquisition of Premier.

Marketing expense declined 14% compared to the linked quarter, and increased 27% versus the prior year quarter. The decrease from the linked quarter was mainly due to a vendor credit related to prior year customer debit card spend. The increase relative to the prior year quarter was driven by higher public relations and media spend associated with the acquisition of Premier, and recent community-based spend in celebration of Peoples' 120th anniversary.

Other loan expenses decreased $0.4 million compared to the linked quarter driven by the timing of the reimbursement of appraisal costs. Compared to the first half of 2021, other loan expenses grew 34% and were mostly related to higher indirect lending volume and increased collection expense driven by the Premier Merger.

Peoples is subject to state franchise taxes, which are based largely on Peoples' equity, in the states where Peoples has a physical presence. Franchise tax expense also includes the Ohio Financial Institution Tax ("FIT"), which is a business privilege tax that is imposed on financial institutions organized for profit and doing business in Ohio. The Ohio FIT is based on the total equity capital in proportion to the taxpayer's gross receipts in Ohio as of the most recent year-end.

~~Peoples' FDIC insurance premiums increased compared to~~ The increase versus the linked quarter ~~due to~~was driven by a ~~decline~~credit received in the ~~leverage ratio which was impacted by the NSL acquisition in the second~~first quarter ~~and decreased compared to December 31, 2020. Compared to the first nine months~~ of 2020, the FDIC insurance premiums grew as a result of credits used by Peoples during the first two quarters of 2020 to offset its FDIC insurance premium. The FDIC insurance credits were related to the level2022 for an overpayment of the ~~Federal Deposit Insurance Fund ("DIF") that had continued~~prior year's franchise taxes.

Communications expense increased 68% compared to ~~be above the target threshold for banks with total consolidated assets of less than $10 billion to recognize credits. Peoples utilized the remaining credits that had been issued to it in~~ the second quarter of ~~2020.~~

~~Other loan expenses decreased slightly~~2021 and 91% compared to the ~~linked quarter~~first half of 2021. The growth relative to those periods was due to lower expenses associated with business loans. Compared to the third quarter of 2020, other loan expenses increased mostly due to higher expenses associated with real estate loans and home equity lines of credit. Other loan expenses for the nine months ended September 30, 2021 increased $188,000 compared to the nine months ended September 30, 2020 due to increased loan origination activity.

~~Compared to the linked quarter, third quarter of 2020, and first nine months of 2020, communications expense grew as a result of~~ upgraded networking to certain branches (including new branches acquired from Premier coupled with the addition of the NSL and ~~Premium Finance~~Vantage locations acquired) and increased costs compared to the prior periods among certain vendors that provide communication services.

Other non-interest expense increased ~~$10.2 million~~33% compared to the ~~third~~prior year quarter and 34% versus the first half of ~~2020, and was~~2021 driven by higher ongoing costs associated with Peoples' recent acquisitions, mostly due to ~~$9.6 million in acquisition-related expenses recognized during the third quarter of 2021.~~increased postage, travel and entertainment, insurance and supplies expense.

Income Tax Expense

Peoples recorded an income tax ~~benefit~~expense of ~~$2.2~~$6.8 million for the ~~third~~second quarter of ~~2021,~~2022, compared to income tax expense of ~~$2.4~~$6.0 million for the linked quarter and income tax expense of ~~$2.6~~$2.4 million for the ~~third~~second quarter of ~~2020.~~2021. The ~~income tax benefit during the third quarter of 2021, and the~~increase in income tax expense ~~recognized during~~for the second quarter of 2022, compared to the linked quarter, ~~and the third quarter~~was due to an increase in Peoples' effective tax rate driven by an expansion of ~~2020 was heavily related to the amount of pre-tax income recognized during each period. Pretax income was impacted by acquisition-related expenses~~its footprint associated with the ~~Premier~~ acquisition ~~during the third quarter~~ of ~~2021. Peoples recorded~~Vantage, and higher pre-tax income. The increase in income tax expense ~~of $4.0 million~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022 compared to ~~$3.6 million for~~ the ~~nine~~six months ended ~~September 30, 2020. Pretax income for the nine months ended September~~June 30, 2021, was largely ~~impacted~~driven by ~~acquisition-related expenses, contract negotiation expenses and other non-core expenses.~~higher pre-tax income.

Additional information regarding income taxes can be found in "Note 1213 Income Taxes" of the Notes to the ~~Condensed~~ Consolidated Financial Statements included in Peoples' ~~2020~~2021 Form 10-K.

Pre-Provision Net Revenue (Non-US GAAP)

Pre-provision net revenue ("PPNR") has become a key financial measure used by state and federal bank regulatory agencies when assessing the capital adequacy of financial institutions. PPNR is defined as net interest income plus total non-interest income, excluding all gains and losses, minus total non-interest expense. As a result, PPNR represents the earnings capacity that can be either retained in order to build capital or used to absorb unexpected losses and preserve existing capital. This ratio represents a Non-US GAAP financial measure since it excludes the provision for (recovery of) credit losses and all gains and losses included in earnings.

6164

Table of Contents

The following table provides a reconciliation of this Non-US GAAP financial measure to the amounts reported in Peoples' Unaudited Condensed Consolidated Financial Statements for the periods presented:


		Three Months Ended									Nine Months Ended							Three Months Ended									Six Months Ended
		September 30, 2021			June 30, 2021			September 30, 2020			September 30,							June 30, 2022			March 31, 2022			June 30, 2021			June 30,
(Dollars in thousands)	(Dollars in thousands)										2021			2020			(Dollars in thousands)										2022			2021
Pre-provision net revenue:	Pre-provision net revenue:																Pre-provision net revenue:
(Loss) income before income taxes		$	(7,930)		$	12,494		$	12,846		$	23,807		$	17,810
Income before income taxes																	Income before income taxes	$	31,735		$	29,538		$	12,494		$	61,273		$	31,737
Add: provision for credit losses	Add: provision for credit losses	8,994			3,088			4,728			7,333			33,531			Add: provision for credit losses	—			—			3,088			—			—

Add: loss on OREO	Add: loss on OREO	32			—			—			32			17			Add: loss on OREO	32			1			—			33			—
Add: loss on investment securities	Add: loss on investment securities	316			499			—			1,490			2			Add: loss on investment securities	44			—			202			44			538
Add: loss on other assets	Add: loss on other assets	363			238			115			687			258			Add: loss on other assets	119			22			132			141			159
Add: loss on other transactions	Add: loss on other transactions	6			—			—			6			—			Add: loss on other transactions	—			104			—			104			—
Less: gain on OREO	Less: gain on OREO	—			8			15			8			16			Less: gain on OREO	—			—			8			—			8

Less: recovery of credit losses																	Less: recovery of credit losses	780			6,807			—			7,587			1,661
Less: gain on investment securities	Less: gain on investment securities	150			297			2			786			385			Less: gain on investment securities	—			130			—			130			—

Less: gain on other assets		93			106			72			258			22

Pre-provision net revenue	Pre-provision net revenue	$	1,538		$	15,908		$	17,600		$	32,303		$	51,195		Pre-provision net revenue	$	31,150		$	22,728		$	15,908		$	53,878		$	30,765

Total average assets	Total average assets	$5,475,147			$5,183,146			$4,906,614			$5,192,183			$	4,706,153		Total average assets	$7,121,663			$7,067,816			$5,183,146			$7,094,228			$5,048,360
Pre-provision net revenue to total average assets (annualized)	Pre-provision net revenue to total average assets (annualized)	0.11		%	1.23		%	1.43		%	0.83		%	1.45		%	Pre-provision net revenue to total average assets (annualized)	1.75		%	1.30		%	1.23		%	1.53		%	1.23		%

Weighted-average common shares outstanding - diluted	Weighted-average common shares outstanding - diluted	20,789,271			19,461,934			19,637,689			19,890,672			19,998,353			Weighted-average common shares outstanding - diluted	28,061,736			28,129,131			19,461,934			28,041,145			19,448,544
Pre-provision net revenue per common share - diluted	Pre-provision net revenue per common share - diluted	$	0.07		$	0.81		$	0.90		$	1.61		$	2.55		Pre-provision net revenue per common share - diluted	$	1.11		$	0.81		$	0.81		$	1.91		$	1.63

The ~~decrease~~increase in PPNR compared to the linked quarter ~~and~~was driven by increased net interest income reflecting the ~~third~~positive impact of recent increase in market interest rates. PPNR grew compared to the second quarter of ~~2020 was~~2021 and first half of 2021, mostly due to the impact of the Premier Merger and the Vantage and NSL acquisitions improving net interest income, the recent increases in market interest rates, and higher ~~non-core acquisition-related expenses recognized during the third quarter of 2021.~~non-interest income.

Core Non-Interest Expense (Non-US GAAP)

Core non-interest expense is a financial measure used to evaluate Peoples' recurring expense stream. This measure is Non-US GAAP since it excludes the impact of all acquisition-related expenses, ~~contract negotiation expenses, pension settlement charges,~~ severance expenses, COVID-19-related expenses and a Peoples Bank Foundation, Inc. contribution.

The following table provides a reconciliation of this Non-US GAAP measure to the amounts reported in Peoples' Unaudited Condensed Consolidated Financial Statements for the periods presented:


		Three Months Ended						Nine Months Ended					Three Months Ended						Six Months Ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30,					June 30, 2022		March 31, 2022		June 30, 2021		June 30,
(Dollars in thousands)	(Dollars in thousands)							2021		2020		(Dollars in thousands)							2022		2021

Core non-interest expense:	Core non-interest expense:											Core non-interest expense:
Total non-interest expense	Total non-interest expense	$	57,860	$	39,899	$	34,315	$	135,746	100,445		Total non-interest expense	$	49,899	$	51,629	$	39,899	$	101,528	$	77,886

Less: acquisition-related expenses	Less: acquisition-related expenses	16,209		2,400		335		20,520		412		Less: acquisition-related expenses	602		1,373		2,400		1,975		4,311
Less: pension settlement charges		143		—		531		143		1,050

Less: severance expenses	Less: severance expenses	—		14		192		63		284		Less: severance expenses	—		—		14		—		63

Less: COVID-19-related expenses	Less: COVID-19-related expenses	181		210		148		683		1,206		Less: COVID-19-related expenses	29		94		210		123		502
Less: Peoples Bank Foundation, Inc. contribution	Less: Peoples Bank Foundation, Inc. contribution	—		—		—		500		—		Less: Peoples Bank Foundation, Inc. contribution	—		—		—		—		500
Less: contract negotiation expenses		1,851		—		—		1,851		—

Core non-interest expense	Core non-interest expense	$	39,476	$	37,275	$	33,109	$	111,986	$	97,493	Core non-interest expense	$	49,268	$	50,162	$	37,275	$	99,430	$	72,510

Efficiency Ratio (Non-US GAAP)

The efficiency ratio is a key financial measure used to monitor performance. The efficiency ratio is calculated as total non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income excluding net gains and losses. This measure is Non-US GAAP since it excludes amortization of other intangible assets and all gains and losses included in earnings, and uses fully tax-equivalent net interest income.

6265

Table of Contents


		Three Months Ended									Nine Months Ended							Three Months Ended									Six Months Ended
		September 30, 2021			June 30, 2021			September 30, 2020			September 30,							June 30, 2022			March 31, 2022			June 30, 2021			June 30,
(Dollars in thousands)	(Dollars in thousands)										2021			2020			(Dollars in thousands)										2022			2021

Efficiency ratio:	Efficiency ratio:																Efficiency ratio:
Total non-interest expense	Total non-interest expense	$	57,860		$	39,899		$	34,315		$	135,746		$	100,445		Total non-interest expense	$	49,899		$	51,629		$	39,899		$	101,528		$	77,886
Less: amortization of other intangible assets	Less: amortization of other intangible assets	1,279			1,368			857			3,267			2,314			Less: amortization of other intangible assets	2,034			1,708			1,368			3,742			1,988
Adjusted total non-interest expense	Adjusted total non-interest expense	$	56,581		$	38,531		$	33,458		$	132,479		$	98,131		Adjusted total non-interest expense	47,865			49,921			38,531			97,786			75,898

Total non-interest income	Total non-interest income	$	16,346		$	15,821		$	16,770		$	49,070		$	47,171		Total non-interest income	19,386			20,050			15,821			39,436			32,724
Less: net gain on investment securities		—			—			2			—			383
Add: net loss on investment securities		(166)			(202)			—			(704)			—
Add: net loss on asset disposals and other transactions		(308)			(124)			(28)			(459)			(237)

Less: net (loss) gain on investment securities																	Less: net (loss) gain on investment securities	(44)			130			(202)			86			(538)
Less: net (loss) on asset disposals and other transactions																	Less: net (loss) on asset disposals and other transactions	(152)			(127)			(124)			(279)			(151)
Total non-interest income excluding net gains and losses	Total non-interest income excluding net gains and losses	$	16,820		$	16,147		$	16,796		$	50,233		$	47,025		Total non-interest income excluding net gains and losses	19,582			20,047			16,147			39,629			33,413

Net interest income	Net interest income	$	42,578		$	39,660		$	35,119		$	117,816		$	104,615		Net interest income	61,468			54,310			39,660			115,778			75,238
Add: fully tax-equivalent adjustment (a)	Add: fully tax-equivalent adjustment (a)	351			324			262			970			803			Add: fully tax-equivalent adjustment (a)	414			391			324			806			578
Net interest income on a fully tax-equivalent basis	Net interest income on a fully tax-equivalent basis	$	42,929		$	39,984		$	35,381		$	118,786		$	105,418		Net interest income on a fully tax-equivalent basis	61,882			54,701			39,984			116,584			75,816

Adjusted revenue	Adjusted revenue	$	59,749		$	56,131		$	52,177		$	169,019		$	152,443		Adjusted revenue	$	81,464		$	74,748		$	56,131		$	156,213		$	109,229

Efficiency ratio	Efficiency ratio	94.70		%	68.64		%	64.12		%	78.38		%	64.37		%	Efficiency ratio	58.76		%	66.79		%	68.64		%	62.60		%	69.49		%

Efficiency ratio adjusted for non-core items:	Efficiency ratio adjusted for non-core items:																Efficiency ratio adjusted for non-core items:
Core non-interest expense	Core non-interest expense	$	39,476		$	37,275		$	33,109		$	111,986		$	97,493		Core non-interest expense	$	49,268		$	50,162		$	37,275		$	99,430		$	72,510
Less: amortization of other intangible assets	Less: amortization of other intangible assets	1,279			1,368			857			3,267			2,314			Less: amortization of other intangible assets	2,034			1,708			1,368			3,742			1,988
Adjusted core non-interest expense	Adjusted core non-interest expense	$	38,197		$	35,907		$	32,252		$	108,719		$	95,179		Adjusted core non-interest expense	47,234			48,454			35,907			95,688			70,522

Core non-interest income excluding net gains and losses		$	16,820		$	16,147		$	16,796		$	50,233		$	47,025
Non-interest income excluding net gains and losses																	Non-interest income excluding net gains and losses	19,582			20,047			16,147			39,629			33,413
Net interest income on a fully tax-equivalent basis	Net interest income on a fully tax-equivalent basis	42,929			39,984			35,381			118,786			105,418			Net interest income on a fully tax-equivalent basis	61,882			54,701			39,984			116,584			75,816
Adjusted revenue	Adjusted revenue	$	59,749		$	56,131		$	52,177		$	169,019		$	152,443		Adjusted revenue	$	81,464		$	74,748		$	56,131		$	156,213		$	109,229

Efficiency ratio adjusted for non-core items	Efficiency ratio adjusted for non-core items	63.93		%	63.97		%	61.81		%	64.32		%	62.44		%	Efficiency ratio adjusted for non-core items	57.98		%	64.82		%	63.97		%	61.25		%	64.56		%

(a) Based on a ~~21% statutory federal corporate income~~ tax ~~rate.~~rate of 23.3% for period ended June 30, 2022, 22.9% for the period ended March 31, 2022, and 21.0% for period ended June 30, 2021.

The efficiency ratio for the ~~third~~second quarter of ~~2021 was 94.7%, compared to 68.6% for the linked quarter, and 64.1% for the third quarter of 2020. The change in the efficiency ratio~~2022 decreased compared to the linked quarter, ~~was primarily~~ due to ~~the~~higher net interest income driven by increases in market interest rates, coupled with decreases in acquisition-related ~~expenses.~~expenses, salaries and employee benefits, and FDIC insurance premiums. The efficiency ratio, adjusted for non-core items, also decreased and the decrease was ~~63.9% for~~attributable to the ~~third~~items previously mentioned. Additionally, compared to the second quarter of 2021 ~~compared to 64.0% for the linked quarter~~ and 61.8% for the third quarter of 2020. Impacting the adjusted ratios were higher salaries and employee benefits due to the Premier and NSL acquisitions along with higher advertising expenses and increased repair and maintenance expenses.

~~For~~ the first ~~nine months~~half of 2021, the efficiency ratio ~~grew~~and adjusted efficiency ratio, both declined due to improvements in net interest income from the recent acquisitions, coupled with higher non-interest income, outpacing increases in total non-interest expense associated with the acquisition-related expenses mentioned above, operating expenses associated with the NSL and Premium Finance acquired divisions, a reduction in deferred loan costs from the PPP loans, and increased sales and incentive-based compensation from higher production.expense.

Return on Average Assets Adjusted for Non-Core Items Ratio (Non-US GAAP)

In addition to return on average assets, management uses return on average assets adjusted for non-core items to monitor performance. The return on average assets adjusted for non-core items ratio represents a Non-US GAAP financial measure since it excludes the after-tax impact of all gains and losses, acquisition-related expenses, ~~contract negotiation expenses, pension settlement charges,~~ severance expenses, COVID-19-related expenses and a Peoples Bank Foundation, Inc. contribution.

6366

Table of Contents


		Three Months Ended									Nine Months Ended							Three Months Ended									Six Months Ended
		September 30, 2021			June 30, 2021			September 30, 2020			September 30,							June 30, 2022			March 31, 2022			June 30, 2021			June 30,
(Dollars in thousands)	(Dollars in thousands)										2021			2020			(Dollars in thousands)										2022			2021

Annualized net (loss) income adjusted for non-core items:
Net (loss) income		$	(5,758)		$	10,103		$	10,210		$	19,808		$	14,194
Annualized net income adjusted for non-core items:																	Annualized net income adjusted for non-core items:
Net income																	Net income	$	24,888		$	23,577		$	10,103		$	48,465		$	25,566

Add: net loss on investment securities	Add: net loss on investment securities	166			202			—			704			—			Add: net loss on investment securities	44			—			202			—			538
Less: tax effect of net loss on investment securities (a)	Less: tax effect of net loss on investment securities (a)	35			42			—			148			—			Less: tax effect of net loss on investment securities (a)	9			—			42			—			113
Less: net gain on investment securities	Less: net gain on investment securities	—			—			2			—			383			Less: net gain on investment securities	—			130			—			86			—
Add: tax effect of net gain on investment securities (a)	Add: tax effect of net gain on investment securities (a)	—			—			—			—			80			Add: tax effect of net gain on investment securities (a)	—			27			—			18			—
Add: net loss on asset disposals and other transactions	Add: net loss on asset disposals and other transactions	308			124			28			459			237			Add: net loss on asset disposals and other transactions	152			127			124			279			151
Less: tax effect of net loss on asset disposals and other transactions (a)	Less: tax effect of net loss on asset disposals and other transactions (a)	65			26			6			96			50			Less: tax effect of net loss on asset disposals and other transactions (a)	32			27			26			59			32

Add: acquisition-related expenses	Add: acquisition-related expenses	16,209			2,400			335			20,520			412			Add: acquisition-related expenses	602			1,373			2,400			1,975			4,311
Less: tax effect of acquisition-related expenses (a)	Less: tax effect of acquisition-related expenses (a)	3,404			504			70			4,309			87			Less: tax effect of acquisition-related expenses (a)	126			288			504			415			905
Add: pension settlement charges		143			—			531			143			1,050
Less: tax effect of pension settlement charges (a)		30			—			112			30			221

Add: severance expenses	Add: severance expenses	—			14			192			63			284			Add: severance expenses	—			—			14			—			63
Less: tax effect of severance expenses (a)	Less: tax effect of severance expenses (a)	—			3			40			13			60			Less: tax effect of severance expenses (a)	—			—			3			—			13
Add: COVID-19-related expenses	Add: COVID-19-related expenses	181			210			148			683			1,206			Add: COVID-19-related expenses	29			94			210			123			502
Less: tax effect of COVID-19-related expenses (a)	Less: tax effect of COVID-19-related expenses (a)	38			44			31			143			253			Less: tax effect of COVID-19-related expenses (a)	6			20			44			26			105
Add: Peoples Bank Foundation, Inc. contribution	Add: Peoples Bank Foundation, Inc. contribution	—			—			—			500			—			Add: Peoples Bank Foundation, Inc. contribution	—			—			—			—			500
Less: tax effect of Peoples Bank Foundation, Inc. contribution (a)	Less: tax effect of Peoples Bank Foundation, Inc. contribution (a)	—			—			—			105			—			Less: tax effect of Peoples Bank Foundation, Inc. contribution (a)	—			—			—			—			105

Add: contract negotiation fees		1,851			—			—			1,851			—
Less: tax effect of contract negotiation fees		389			—			—			389			—

Net income adjusted for non-core items (after tax)	Net income adjusted for non-core items (after tax)	$	9,139		$	12,434		$	11,183		$	39,498		$	16,409		Net income adjusted for non-core items (after tax)	$	25,542		$	24,733		$	12,434		$	50,274		$	30,358
Days in the period	Days in the period	92			91			92			273			274			Days in the period	91			90			91			181			181
Days in the year	Days in the year	365			365			366			365			366			Days in the year	365			365			365			365			365
Annualized net (loss) income		$	(22,844)		$	40,523		$	40,618		$	26,483		$	18,960
Annualized net income																	Annualized net income	$	99,825		$	95,618		$	40,523		$	97,733		$	51,556
Annualized net income adjusted for non-core items (after tax)	Annualized net income adjusted for non-core items (after tax)	$	36,258		$	49,873		$	44,489		$	52,809		$	21,919		Annualized net income adjusted for non-core items (after tax)	$	102,449		$	100,306		$	49,873		$	101,381		$	61,219
Return on average assets:	Return on average assets:																Return on average assets:
Annualized net (loss) income		$	(22,844)		$	40,523		$	40,618		$	26,483		$	18,960
Annualized net income																	Annualized net income	$	99,825		$	95,618		$	40,523		$	97,733		$	51,556
Total average assets	Total average assets	5,475,147			5,183,146			4,906,614			5,192,183			4,706,153			Total average assets	7,121,663			7,067,816			5,183,146			7,094,228			5,048,360
Return on average assets	Return on average assets	(0.42)		%	0.78		%	0.83		%	0.51		%	0.40		%	Return on average assets	1.40		%	1.35		%	0.78		%	1.38		%	1.02		%
Return on average assets adjusted for non-core items:	Return on average assets adjusted for non-core items:																Return on average assets adjusted for non-core items:
Annualized net income adjusted for non-core items (after tax)	Annualized net income adjusted for non-core items (after tax)	$	36,258		$	49,873		$	44,489		$	52,809		$	21,919		Annualized net income adjusted for non-core items (after tax)	$	102,449		$	100,306		$	49,873		$	101,381		$	61,219
Total average assets	Total average assets	5,475,147			5,183,146			4,906,614			5,192,183			4,706,153			Total average assets	7,121,663			7,067,816			5,183,146			7,094,228			5,048,360
Return on average assets adjusted for non-core items	Return on average assets adjusted for non-core items	0.66		%	0.96		%	0.91		%	1.02		%	0.47		%	Return on average assets adjusted for non-core items	1.44		%	1.42		%	0.96		%	1.43		%	1.21		%

(a) Based on a 21% statutory federal corporate income tax rate.

The return on average assets declined during the third quarter of 2021, compared to the linked quarter and the third quarter of 2020. The decrease was driven by the provision for credit losses recognized in the third quarter due to the Premier acquisition and higher total non-interest expense recognized during the third quarter of 2021, which was mostly due to acquisition-related expenses. The return on average assets adjusted for non-core items declinedimproved compared to the linked quarter, due to ~~the~~ higher net interest income driven by increases in market interest rates, coupled with decreases in acquisition-related expenses, salaries and employee benefits, and FDIC insurance premiums.

The increase in return on average assets for the second quarter of 2022, compared to the second quarter of 2021 and the first half of 2022 compared to the first half of 2021, was attributable to higher net interest income and non-interest income, which were driven by the recent acquisitions.

6467

Table of Contents

incentive compensation. The return on average assets and the return on average assets adjusted for non-core items both grew compared to the first nine months of 2020. The increases were mostly due to the previously mentioned higher provision for credit losses recorded during the first nine months of 2020. For additional information related to the changes in the provision for (recovery of) credit losses, refer to the sections in this discussion titled “Provision for (Recovery of) Credit Losses" and "Allowance for Credit Losses.”

Return on Average Tangible Equity Ratio (Non-US GAAP)

The return on average tangible equity ratio is a key financial measure used to monitor performance. This ratio is calculated as annualized net income (less the after-tax impact of amortization of other intangible assets) divided by average tangible equity. This measure is Non-US GAAP since it excludes amortization of other intangible assets from earnings and the impact of goodwill and other intangible assets acquired through acquisitions on total stockholders' equity.


		Three Months Ended									Nine Months Ended							Three Months Ended									Six Months Ended
		September 30, 2021			June 30, 2021			September 30, 2020			September 30,							June 30, 2022			March 31, 2022			June 30, 2021			June 30,
(Dollars in thousands)	(Dollars in thousands)										2021			2020			(Dollars in thousands)										2022			2021
Annualized net income excluding amortization of other intangible assets:	Annualized net income excluding amortization of other intangible assets:																Annualized net income excluding amortization of other intangible assets:
Net (loss) income		$	(5,758)		$	10,103		$	10,210		$	19,808		$	14,194
Net income																	Net income	$	24,888		$	23,577		$	10,103		$	48,465		$	25,566
Add: amortization of other intangible assets	Add: amortization of other intangible assets	1,279			1,368			857			3,267			2,314			Add: amortization of other intangible assets	2,034			1,708			1,368			3,742			1,988
Less: tax effect of amortization of other intangible assets (a)	Less: tax effect of amortization of other intangible assets (a)	269			287			180			686			486			Less: tax effect of amortization of other intangible assets (a)	427			359			287			786			417
Net income excluding amortization of other intangible assets	Net income excluding amortization of other intangible assets	$	(4,748)		$	11,184		$	10,887		$	22,389		$	16,022		Net income excluding amortization of other intangible assets	$	26,495		$	24,926		$	11,184		$	51,421		$	27,137
Days in the period	Days in the period	92			91			92			273			274			Days in the period	91			90			91			181			181
Days in the year	Days in the year	365			365			366			365			366			Days in the year	365			365			365			365			365
Annualized net (loss) income		$	(22,844)		$	40,523		$	40,618		$	26,483		$	18,960
Annualized net (loss) income excluding amortization of other intangible assets		$	(18,837)		$	44,859		$	43,311		$	29,934		$	21,402
Annualized net income																	Annualized net income	$	99,825		$	95,618		$	40,523		$	97,733		$	51,556
Annualized net income excluding amortization of other intangible assets																	Annualized net income excluding amortization of other intangible assets	$	106,271		$	101,089		$	44,859		$	103,694		$	54,724
Average tangible equity:	Average tangible equity:																Average tangible equity:
Total average stockholders' equity	Total average stockholders' equity	$	627,783		$	581,831		$	567,055		$	595,918		$	578,439		Total average stockholders' equity	$	791,401		$	834,752		$	581,831		$	812,956		$	579,721
Less: average goodwill and other intangible assets	Less: average goodwill and other intangible assets	232,361			222,553			185,816			213,232			180,291			Less: average goodwill and other intangible assets	329,243			304,124			222,553			316,753			203,509
Average tangible equity	Average tangible equity	$	395,422		$	359,278		$	381,239		$	382,686		$	398,148		Average tangible equity	$	462,158		$	530,628		$	359,278		$	496,203		$	376,212
Return on average stockholders' equity ratio:	Return on average stockholders' equity ratio:																Return on average stockholders' equity ratio:
Annualized net income	Annualized net income	$	(22,844)		$	40,523		$	40,618		$	26,483		$	18,960		Annualized net income	$	99,825		$	95,618		$	40,523		$	97,733		$	51,556
Average stockholders' equity	Average stockholders' equity	$	627,783		$	581,831		$	567,055		$	595,918		$	578,439		Average stockholders' equity	$	791,401		$	834,752		$	581,831		$	812,956		$	579,721
Return on average stockholders' equity	Return on average stockholders' equity	(3.64)		%	6.96		%	7.16		%	4.44		%	3.28		%	Return on average stockholders' equity	12.61		%	11.45		%	6.96		%	12.02		%	8.89		%
Return on average tangible equity ratio:	Return on average tangible equity ratio:																Return on average tangible equity ratio:
Annualized net income excluding amortization of other intangible assets	Annualized net income excluding amortization of other intangible assets	$	(18,837)		$	44,859		$	43,311		$	29,934		$	21,402		Annualized net income excluding amortization of other intangible assets	$	106,271		$	101,089		$	44,859		$	103,694		$	54,724
Average tangible equity	Average tangible equity	$	395,422		$	359,278		$	381,239		$	382,686		$	398,148		Average tangible equity	$	462,158		$	530,628		$	359,278		$	496,203		$	376,212
Return on average tangible equity	Return on average tangible equity	(4.76)		%	12.49		%	11.36		%	7.82		%	5.38		%	Return on average tangible equity	22.99		%	19.05		%	12.49		%	20.90		%	14.55		%

(a) Based on a 21% statutory federal corporate income tax rate.

The return on average stockholders' equity and average tangible equity ratios were higher in the current quarter and the first half of 2022 relative to all prior periods, due to higher total net interest income driven by the recent increases in market interest rates and loans and leases added in the Premier Merger and acquisitions of Vantage and NSL, coupled with higher non-interest income. At the same time, the average tangible equity was negatively impacted by the ~~provision~~Vantage acquisition, for ~~(recovery of) credit losses during each~~which People did not issue any equity, and recorded additional goodwill and other intangible assets. Additionally, average tangible equity declined compared to the first quarter of ~~the respective periods, as well as non-core items recognized~~2022 due to a higher accumulated other comprehensive loss during the periods. Intangible assets grew at September 30, 2021, compared to June 30, 2021, as Peoples recorded the intangibles and goodwill associated with the Premier acquisition, which increased average tangible equity. Additionally, during the first nine monthssecond quarter of ~~2020, Peoples recorded high amounts of provision for credit losses, which negatively impacted net income,~~2022 as a result of the ~~COVID-19 pandemic.~~impact of the interest rate environment on the available-for-sale investment securities portfolio.

For additional information related to changes in the provision for (recovery of) credit losses, refer to the sections in this discussion titled “Provision for (Recovery of) Credit Losses" and "Allowance for Credit Losses.”

6568

Table of Contents

FINANCIAL CONDITION

Cash and Cash Equivalents

At ~~September~~June 30, ~~2021,~~2022, Peoples' interest-bearing deposits in other banks had ~~increased $278.6~~decreased $35.2 million from December 31, ~~2020.~~2021. Peoples paid $82.9 million in cash for the Vantage acquisition during the first quarter of 2022. The total cash and cash equivalents balance included ~~$321.0~~$297.4 million of excess cash reserves being maintained at the FRB of Cleveland at ~~September~~June 30, ~~2021,~~2022, compared to ~~$25.1~~$318.1 million at December 31, ~~2020. Peoples also acquired $252.8 million in cash and cash equivalents from Premier.~~2021. The amount of excess cash reserves maintained is dependent upon Peoples' daily liquidity position, which is driven primarily by changes in deposit and loan ~~balances, coupled with increased liquidity needs due to the COVID-19 pandemic.~~balances.

Through the first ~~nine~~six months of ~~2021,~~2022, Peoples' total cash and cash equivalents ~~increased $347.6~~decreased $17.3 million as Peoples had net cash ~~provided by~~used in investing activities of ~~$106.3~~$196.0 million, which more than offset cash provided by financing activities of ~~$174.6~~$116.0 million and by operating activities of ~~$66.7~~$62.7 million. Peoples' investing activities reflected ~~a net decrease of $156.6 million in loans and an aggregate of $896.6 million in~~ purchases of available-for-sale ~~and held-to-maturity~~ investment securities ~~which were partially offset by an aggregate~~totaling $233.1 million, cash outflows for business combinations of ~~$711.5~~$85.8 million, net of a decrease in ~~net~~loans held for investment of $70.9 million and proceeds from ~~sales,~~ principal payments, calls and prepayments onof available-for-sale ~~and held-to-maturity~~ investment ~~securities. Financing~~securities of $112.8 million. The cash provided by financing activities ~~included a $165.4 million net increase in deposits and an increase of $32.6 million~~was largely driven by increases in short-term borrowings ~~as well as no purchases~~ of ~~treasury stock under~~$154.9 million, and in interest-bearing deposits of $46.5 million, the ~~share repurchase program and $20.9 million~~latter of ~~cash dividends paid.~~which was driven by higher governmental deposits, which are seasonal in nature.

Further information regarding the management of Peoples' liquidity position can be found later in this discussion under “Interest Rate Sensitivity and Liquidity.”

Investment Securities

The following table provides information regarding Peoples’ investment portfolio:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020		(Dollars in thousands)	Weighted Average Yield		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021
Available-for-sale securities, at fair value:	Available-for-sale securities, at fair value:											Available-for-sale securities, at fair value:
Obligations of:	Obligations of:											Obligations of:

U.S. Treasury and government agencies												U.S. Treasury and government agencies	2.24	%	$	175,255	$	167,406	$	35,604	$	—	$	—
U.S. government sponsored agencies	U.S. government sponsored agencies	$	78,481	$	14,235	$	18,471	$	5,363	$	5,383	U.S. government sponsored agencies	1.48	%	82,465		80,654		81,739		78,481		14,235
States and political subdivisions	States and political subdivisions	252,919		223,853		218,484		114,919		104,126		States and political subdivisions	2.64	%	249,402		231,644		259,319		252,919		223,853
Residential mortgage-backed securities	Residential mortgage-backed securities	898,459		579,152		596,181		623,218		726,992		Residential mortgage-backed securities	1.78	%	691,735		753,353		828,517		898,459		579,152
Commercial mortgage-backed securities	Commercial mortgage-backed securities	62,552		27,631		27,481		4,783		10,568		Commercial mortgage-backed securities	1.65	%	58,301		58,112		63,519		62,552		27,631
Bank-issued trust preferred securities	Bank-issued trust preferred securities	4,679		4,766		4,730		4,730		4,633		Bank-issued trust preferred securities	2.83	%	10,440		10,670		6,795		4,679		4,766

Total fair value	Total fair value	$	1,297,090	$	849,637	$	865,347	$	753,013	$	851,702	Total fair value			$	1,267,598	$	1,301,839	$	1,275,493	$	1,297,090	$	849,637
Total amortized cost	Total amortized cost	$	1,294,654	$	839,682	$	859,120	$	734,544	$	829,899	Total amortized cost			$	1,389,621	$	1,381,259	$	1,283,146	$	1,294,654	$	839,682
Net unrealized gain		$	2,436	$	9,955	$	6,227	$	18,469	$	21,803
Net unrealized (loss) gain												Net unrealized (loss) gain			$	(122,023)	$	(79,420)	$	(7,653)	$	2,436	$	9,955
Held-to-maturity securities, at amortized cost:	Held-to-maturity securities, at amortized cost:											Held-to-maturity securities, at amortized cost:
Obligations of:	Obligations of:											Obligations of:
U.S. government sponsored agencies	U.S. government sponsored agencies	$	29,995	$	30,103	$	30,211	$	—	$	—	U.S. government sponsored agencies	1.99	%	$	50,990	$	38,486	$	36,431	$	29,995	$	30,103
States and political subdivisions (a)	States and political subdivisions (a)	124,181		102,224		92,436		35,139		3,539		States and political subdivisions (a)	2.15	%	151,034		151,217		151,402		124,181		102,224
Residential mortgage-backed securities	Residential mortgage-backed securities	41,035		24,067		24,878		25,890		26,926		Residential mortgage-backed securities	1.55	%	112,095		115,613		110,708		41,035		24,067
Commercial mortgage-backed securities	Commercial mortgage-backed securities	47,889		23,830		18,705		5,429		5,678		Commercial mortgage-backed securities	1.69	%	86,601		79,340		75,588		47,889		23,830
Total amortized cost	Total amortized cost	$	243,100	$	180,224	$	166,230	$	66,458	$	36,143	Total amortized cost			$	400,720	$	384,656	$	374,129	$	243,100	$	180,224
Other investment securities	Other investment securities	$	34,486	$	32,584	$	34,026	$	37,560	$	40,715	Other investment securities			$	41,655	$	41,840	$	33,987	$	34,486	$	32,584
Total investment securities:	Total investment securities:											Total investment securities:
Amortized cost	Amortized cost	$	1,572,240	$	1,052,490	$	1,059,376	$	838,562	$	906,757	Amortized cost			$	1,831,996	$	1,807,755	$	1,691,262	$	1,572,240	$	1,052,490
Carrying value	Carrying value	$	1,574,676	$	1,062,445	$	1,065,603	$	857,031	$	928,560	Carrying value			$	1,709,973	$	1,728,335	$	1,683,609	$	1,574,676	$	1,062,445

(a)Amortized cost is presented net of the allowance for credit losses of $286 at June 30, 2022 and December 31, 2021; $236 at September 30, ~~2021;~~2021 and $201 at June 30, ~~2021; $182 at March 31, 2021; $60 at December 31, 2020~~2021.

For the first quarter of 2022, total investment securities increased compared to the prior quarter, largely due to investments made in U.S. Treasury and ~~$6 at September 30, 2020.~~government agencies' obligations, in an effort to deploy cash, improve investment yields and reduce risk, partially offset by the reduction in market value of available-for-sale securities driven by the recent increases in market interest rates.

Table of Contents

During the third quarter of 2021, Peoples acquired investment securities in the Premier ~~acquisition, investment securities totaling $563.3 million. Peoples sold $400.6 million of available-for-sale investment securities and reinvested $358.7 million of~~Merger, driving the ~~proceeds into higher-yielding investments. The~~ increase compared to December 31, 2020 was driven by the Premier acquisition and an increase in available-for-sale commercial-mortgage backed securities that were purchased during the first nine months of 2021, coupled with purchases of available for sale and held-to-maturity obligations of state and political subdivisions, which were purchased in an effort to reduce the impact of premium amortization on the securities that were sold. At December 31, 2020, the investment security portfolio decreased compared to prior periods, as Peoples had worked to execute the strategy to sell securities that had high premium

~~Table of Contents~~

~~amortization, and reinvest into investment securities; however, not all proceeds from those sales had been reinvested by December 31, 2020.~~June 30, 2021.

Additional information regarding Peoples' investment portfolio can be found in "Note 3 Investment Securities" of the Notes to the Unaudited Condensed Consolidated Financial Statements.

Loans

The following table provides information regarding outstanding loan balances:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			(Dollars in thousands)	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Originated loans:	Originated loans:																Originated loans:
Construction	Construction	$	108,334		$	97,424		$	75,189		$	103,169		$	103,948		Construction	$	144,062		$	171,934		$	137,437		$	108,334		$	97,424
Commercial real estate, other	Commercial real estate, other	838,333			836,613			832,399			780,324			752,480			Commercial real estate, other	899,774			854,721			861,610			838,333			836,613
Commercial real estate	Commercial real estate	946,667			934,037			907,588			883,493			856,428			Commercial real estate	1,043,836			1,026,655			999,047			946,667			934,037
Commercial and industrial	Commercial and industrial	715,169			778,122			935,150			943,024			1,029,613			Commercial and industrial	777,050			791,307			779,064			715,169			778,122
Premium finance	Premium finance	134,755			117,039			109,129			100,571			60,908			Premium finance	152,237			145,813			136,121			134,755			117,039
Leases	Leases	49,464			24,217			—			—			—			Leases	149,894			97,168			69,169			49,464			24,217
Residential real estate	Residential real estate	334,838			324,321			306,440			281,623			284,645			Residential real estate	373,010			364,989			350,595			334,838			324,321
Home equity lines of credit	Home equity lines of credit	98,806			95,376			92,540			93,296			91,701			Home equity lines of credit	115,935			107,414			104,176			98,806			95,376
Consumer, indirect	Consumer, indirect	543,243			537,926			519,749			503,526			491,663			Consumer, indirect	563,088			524,778			530,532			543,243			537,926
Consumer, direct	Consumer, direct	80,746			78,736			75,998			75,591			75,106			Consumer, direct	95,371			87,994			81,330			80,746			78,736
Consumer	Consumer	623,989			616,662			595,747			579,117			566,769			Consumer	658,459			612,772			611,862			623,989			616,662
Deposit account overdrafts	Deposit account overdrafts	927			498			298			351			519			Deposit account overdrafts	851			699			756			927			498
Total originated loans	Total originated loans	$	2,904,615		$	2,890,272		$	2,946,892		$	2,881,475		$	2,890,583		Total originated loans	$	3,271,272		$	3,146,817		$	3,050,790		$	2,904,615		$	2,890,272
Acquired loans (a):	Acquired loans (a):																Acquired loans (a):
Construction	Construction	$	66,450		$	3,175		$	3,510		$	3,623		$	4,103		Construction	$	58,526		$	66,371		$	72,795		$	66,450		$	3,175
Commercial real estate, other	Commercial real estate, other	790,783			111,647			132,850			149,529			160,759			Commercial real estate, other	560,249			602,511			688,471			790,783			111,647
Commercial real estate	Commercial real estate	857,233			114,822			136,360			153,152			164,862			Commercial real estate	618,775			668,882			761,266			857,233			114,822
Commercial and industrial	Commercial and industrial	143,369			27,629			29,611			30,621			34,396			Commercial and industrial	81,402			95,844			112,328			143,369			27,629
Premium finance	Premium finance	—			49			1,461			14,187			43,217			Premium finance	—			—			15			—			49
Leases	Leases	61,982			71,426			—			—			—			Leases	164,628			169,900			53,339			61,982			71,426
Residential real estate	Residential real estate	433,296			242,276			267,260			292,384			304,804			Residential real estate	369,995			391,440			421,123			433,296			242,276
Home equity lines of credit	Home equity lines of credit	62,564			23,025			24,886			27,617			30,234			Home equity lines of credit	53,400			54,874			59,417			62,564			23,025
Consumer, indirect	Consumer, indirect	13			—			—			1			36			Consumer, indirect	—			—			—			13			—
Consumer, direct	Consumer, direct	27,956			2,700			3,206			3,503			3,953			Consumer, direct	16,433			19,396			23,322			27,956			2,700
Consumer	Consumer	27,969			2,700			3,206			3,504			3,989			Consumer	16,433			19,396			23,322			27,969			2,700
Total acquired loans	Total acquired loans	$	1,586,413		$	481,927		$	462,784		$	521,465		$	581,502		Total acquired loans	$	1,304,633		$	1,400,336		$	1,430,810		$	1,586,413		$	481,927
Total loans	Total loans	$	4,491,028		$	3,372,199		$	3,409,676		$	3,402,940		$	3,472,085		Total loans	$	4,575,905		$	4,547,153		$	4,481,600		$	4,491,028		$	3,372,199

Percent of loans to total loans:	Percent of loans to total loans:																Percent of loans to total loans:
Construction	Construction	3.9		%	3.0		%	2.3		%	3.1		%	3.1		%	Construction	4.4		%	5.2		%	4.7		%	3.9		%	3.0		%
Commercial real estate, other	Commercial real estate, other	36.3		%	28.1		%	28.3		%	27.3		%	26.3		%	Commercial real estate, other	32.0		%	32.1		%	34.7		%	36.3		%	28.1		%
Commercial real estate	Commercial real estate	40.2		%	31.1		%	30.6		%	30.4		%	29.4		%	Commercial real estate	36.4		%	37.3		%	39.4		%	40.2		%	31.1		%
Commercial and industrial	Commercial and industrial	19.1		%	23.9		%	28.3		%	28.6		%	30.6		%	Commercial and industrial	18.8		%	19.5		%	19.9		%	19.1		%	23.9		%
Premium finance	Premium finance	3.0		%	3.5		%	3.2		%	3.4		%	3.0		%	Premium finance	3.3		%	3.2		%	3.0		%	3.0		%	3.5		%
Leases	Leases	2.5		%	2.8		%	—		%	—		%	—		%	Leases	6.9		%	5.9		%	2.7		%	2.5		%	2.8		%
Residential real estate	Residential real estate	17.1		%	16.8		%	16.8		%	16.9		%	17.0		%	Residential real estate	16.2		%	16.6		%	17.2		%	17.1		%	16.8		%
Home equity lines of credit	Home equity lines of credit	3.6		%	3.5		%	3.5		%	3.6		%	3.5		%	Home equity lines of credit	3.7		%	3.6		%	3.7		%	3.6		%	3.5		%
Consumer, indirect	Consumer, indirect	12.1		%	16.0		%	15.3		%	14.8		%	14.2		%	Consumer, indirect	12.3		%	11.5		%	11.8		%	12.1		%	16.0		%
Consumer, direct	Consumer, direct	2.4		%	2.4		%	2.3		%	2.3		%	2.3		%	Consumer, direct	2.4		%	2.4		%	2.3		%	2.4		%	2.4		%
Consumer	Consumer	14.5		%	18.4		%	17.6		%	17.1		%	16.5		%	Consumer	14.7		%	13.9		%	14.1		%	14.5		%	18.4		%

Total percentage	Total percentage	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	Total percentage	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%
Residential real estate loans being serviced for others	Residential real estate loans being serviced for others	$	441,085		$	454,399		$	469,788		$	485,972		$	490,170		Residential real estate loans being serviced for others	$	410,007		$	420,024		$	430,597		$	441,085		$	454,399

(a) Includes all loans acquired, and related loan discount recorded as part of acquisition accounting, in 2012 or thereafter. Loans that were acquired and subsequently re-underwritten are reported as originated upon execution of such credit actions (for example, renewals and increases in lines of credit).

6770

Table of Contents

Period-end total loan balances at June 30, 2022 increased $28.8 million compared to March 31, 2022, and were driven by increases of $38.3 million in consumer indirect loans and $47.4 million in leases, $15.5 million of which related to a purchase accounting adjustment on the Vantage portfolio, partially offset by a reduction in construction loans of $35.7 million. The acquired loan decrease was driven by payoffs of commercial real estate and commercial and industrial loans in the Premier Merger.

The increase in loans at September 30, 2021, ~~increased $1.1 billion compared to June 30, 2021. The increase~~ compared to June 30, 2021, was ~~mostly driven by~~primarily due to the Premier Merger, which added $1.1 billion in ~~loans acquired from Premier, coupled with organic growth in premium finance loans of $17.7 million, growth~~loans. The increase in leases of $15.8 million, and organic loan growth of $14.3 million, offset partially by $132.2 million in forgiveness received on PPP loans during the quarter. Excluding the PPP loan balances, Peoples' total originated loans grew by 6% annualized compared to June 30, 2021.

~~The decrease in commercial and industrial loan balances at June 30,~~from December 31, 2021 ~~compared~~ to March ~~31, 2021~~31,2022, was ~~mostly~~ driven by ~~$186.4 million in forgiveness proceeds received on PPP loans during the second quarter. This decrease was partially offset by $95.6 million in~~ leases acquired from ~~NSL, coupled with growth in in commercial real estate and consumer indirect loans.~~Vantage.

The decline in construction loan balances of $28.0 million at March 31, 2021, compared to December 31, 2020, was mainly due to construction projects being completed and construction loans then converting to permanent financing.

Loan Concentration

Peoples categorizes its commercial loans according to standard industry classifications and monitors for concentrations in a single industry or multiple industries that could be impacted by changes in economic conditions in a similar manner. Peoples' commercial lending activities continue to be spread over a diverse range of businesses from all sectors of the economy, with no single industry comprising over 10% of Peoples' total loan portfolio.

Loans secured by commercial real estate, including commercial construction loans, continued to comprise the largest portion of Peoples' loan portfolio. The following tables provide information regarding the largest concentrations of commercial construction loans and commercial real estate loans within the loan portfolio at ~~September~~June 30, ~~2021:~~2022:


(Dollars in thousands)	(Dollars in thousands)	Outstanding Balance		Loan Commitments		Total Exposure		% of Total		(Dollars in thousands)	Outstanding Balance		Loan Commitments		Total Exposure		% of Total

Construction:	Construction:									Construction:
Apartment complexes	Apartment complexes	$	76,292	$	135,048	$	211,340	47.7	%	Apartment complexes	$	64,451	$	95,898	$	160,349	36.5	%
Mixed-use facilities	Mixed-use facilities	14,641		43,992		58,633		13.2	%	Mixed-use facilities	39,333		19,205		58,538		13.3	%
Assisted living facilities and nursing homes	Assisted living facilities and nursing homes	15,804		30,708		46,512		10.5	%	Assisted living facilities and nursing homes	18,106		15,775		33,881		7.7	%
Land only	Land only	25,959		12,968		38,927		8.8	%	Land only	18,106		12,207		30,313		6.9	%
Office buildings and complexes	Office buildings and complexes	3,523		15,969		19,492		4.4	%	Office buildings and complexes	11,711		10,321		22,032		5.0	%
Storage facility		8,966		5,291		14,257		3.2	%

Lodging and lodging related	Lodging and lodging related	7,784		6,091		13,875		3.1	%	Lodging and lodging related	5,170		1,379		6,549		1.5	%
Retail	Retail	5,408		6,470		11,878		2.7	%	Retail	8,654		2,023		10,677		2.4	%
Residential property	Residential property	4,529		4,932		9,461		2.1	%	Residential property	8,699		7,156		15,855		3.6	%
Industrial										Industrial	8,393		7,651		16,044		3.6	%

Day care facilities - owner occupied										Day care facilities - owner occupied	3,960		4,000		7,960		1.8	%

Other (a)	Other (a)	11,878		7,118		18,996		4.3	%	Other (a)	16,005		61,514		77,519		17.7	%
Total construction	Total construction	$	174,784	$	268,587	$	443,371	100.0	%	Total construction	$	202,588	$	237,129	$	439,717	100.0	%

(a) All other outstanding balances are less than 2% of the total loan portfolio.

6871

Table of Contents


(Dollars in thousands)	(Dollars in thousands)	Outstanding Balance		Loan Commitments		Total Exposure		% of Total		(Dollars in thousands)	Outstanding Balance		Loan Commitments		Total Exposure		% of Total
Commercial real estate, other:	Commercial real estate, other:									Commercial real estate, other:
Office buildings and complexes:	Office buildings and complexes:									Office buildings and complexes:
Owner occupied	Owner occupied	$	78,614	$	3,199	$	81,813	4.9	%	Owner occupied	$	75,510	$	3,243	$	78,753	5.2	%
Non-owner occupied	Non-owner occupied	93,863		3,795		97,658		5.8	%	Non-owner occupied	80,295		4,011		84,306		5.6	%
Total office buildings and complexes	Total office buildings and complexes	172,477		6,994		179,471		10.7	%	Total office buildings and complexes	155,805		7,254		163,059		10.8	%
Retail facilities:	Retail facilities:									Retail facilities:
Owner occupied	Owner occupied	55,417		1,752		57,169		3.4	%	Owner occupied	43,491		711		44,202		2.9	%
Non-owner occupied	Non-owner occupied	128,759		471		129,230		7.7	%	Non-owner occupied	128,410		1,226		129,636		8.6	%
Total retail facilities	Total retail facilities	184,176		2,223		186,399		11.1	%	Total retail facilities	171,901		1,937		173,838		11.5	%
Mixed-use facilities:	Mixed-use facilities:									Mixed-use facilities:
Owner occupied	Owner occupied	55,549		1,582		57,131		3.4	%	Owner occupied	51,186		274		51,460		3.4	%
Non-owner occupied	Non-owner occupied	63,214		458		63,672		3.8	%	Non-owner occupied	58,225		775		59,000		3.9	%
Total mixed-use facilities	Total mixed-use facilities	118,763		2,040		120,803		7.2	%	Total mixed-use facilities	109,411		1,049		110,460		7.3	%
Apartment complexes	Apartment complexes	98,159		1,468		99,627		5.9	%	Apartment complexes	109,585		3,825		113,410		7.5	%
Light industrial facilities:	Light industrial facilities:									Light industrial facilities:
Owner occupied	Owner occupied	79,414		1,531		80,945		4.8	%	Owner occupied	96,708		1,610		98,318		6.5	%
Non-owner occupied	Non-owner occupied	34,473		757		35,230		2.1	%	Non-owner occupied	40,963		3,662		44,625		3.0	%
Total light industrial facilities	Total light industrial facilities	113,887		2,288		116,175		6.9	%	Total light industrial facilities	137,671		5,272		142,943		9.5	%
Assisted living facilities and nursing homes	Assisted living facilities and nursing homes	81,539		750		82,289		4.9	%	Assisted living facilities and nursing homes	72,498		250		72,748		4.8	%
Warehouse facilities:	Warehouse facilities:									Warehouse facilities:
Owner occupied	Owner occupied	38,685		1,400		40,085		2.4	%	Owner occupied	35,884		1,471		37,355		2.5	%
Non-owner occupied	Non-owner occupied	38,614		27		38,641		2.3	%	Non-owner occupied	35,681		163		35,844		2.4	%
Total warehouse facilities	Total warehouse facilities	77,299		1,427		78,726		4.7	%	Total warehouse facilities	71,565		1,634		73,199		4.9	%
Lodging and lodging related:	Lodging and lodging related:									Lodging and lodging related:
Owner occupied	Owner occupied	15,131		210		15,341		0.9	%	Owner occupied	13,659		2,553		16,212		1.1	%
Non-owner occupied	Non-owner occupied	119,043		150		119,193		7.1	%	Non-owner occupied	88,329		430		88,759		5.9	%
Total lodging and lodging related	Total lodging and lodging related	134,174		360		134,534		8.0	%	Total lodging and lodging related	101,988		2,983		104,971		7.0	%
Education services:	Education services:									Education services:
Owner occupied	Owner occupied	15,615		98		15,713		0.9	%	Owner occupied	17,887		98		17,985		1.2	%
Non-owner occupied	Non-owner occupied	22,460		4,000		26,460		1.6	%	Non-owner occupied	22,140		4,000		26,140		1.7	%
Total education services	Total education services	38,075		4,098		42,173		2.5	%	Total education services	40,027		4,098		44,125		2.9	%

Healthcare facilities:										Healthcare facilities:
Owner occupied										Owner occupied	24,114		401		24,515		1.6	%
Non-owner occupied										Non-owner occupied	10,842		—		10,842		0.7	%
Total healthcare facilities										Total healthcare facilities	34,956		401		35,357		2.3	%
Restaurant/bar facilities:	Restaurant/bar facilities:									Restaurant/bar facilities:
Owner occupied	Owner occupied	22,361		—		22,361		1.3	%	Owner occupied	23,959		74		24,033		1.6	%
Non-owner occupied	Non-owner occupied	14,644		—		14,644		0.9	%	Non-owner occupied	10,780		298		11,078		0.7	%
Total restaurant/bar facilities	Total restaurant/bar facilities	37,005		—		37,005		2.2	%	Total restaurant/bar facilities	34,739		372		35,111		2.3	%

Agriculture	Agriculture	32,865		1,976		34,841		2.1	%	Agriculture	26,744		1,474		28,218		1.9	%
Other (a)	Other (a)	540,697		26,225		566,922		33.8	%	Other (a)	393,133		18,584		411,717		27.3	%
Total commercial real estate, other	Total commercial real estate, other	$	1,629,116	$	49,849	$	1,678,965	100.0	%	Total commercial real estate, other	$	1,460,023	$	49,133	$	1,509,156	100.0	%

(a) All other outstanding balances are less than 2% of the total loan portfolio.

Peoples' commercial lending activities continue to focus on lending opportunities ~~inside its primary and secondary market areas~~ within Ohio, Kentucky, West Virginia, Virginia, Washington, D.C. and Maryland. In all other states, the aggregate outstanding balances of commercial loans in each state were less than 4% of total loans at ~~either September~~both June 30, ~~2021 or~~2022 and December 31, ~~2020.~~2021. The repayment of premium finance loans are secured by the underlying insurance policy prepaid premium, and therefore, have no geographical impact from a repayment perspective. The repayment of leases ~~are~~is secured by the underlying equipment collateral and not real estate, which mitigates geographic risk.

~~COVID-19 Loan Impacts~~

Small Business Administration Paycheck Protection Program

In March 2020, the CARES Act created the PPP targeted to provide small businesses with support to cover payroll and certain other specified expenses. Loans made under the PPP are fully guaranteed by the SBA. The PPP loans also afford borrowers forgiveness up to the principal amount of the PPP covered loan, plus accrued interest, if the loan proceeds are used to retain workers

Table of Contents

and maintain payroll and/or to make certain mortgage interest, lease and utility payments, and certain other criteria

~~Table of Contents~~

are satisfied. The SBA will reimburse PPP lenders for any amount of a PPP covered loan that is forgiven, and PPP lenders will not be held liable for any representations made by PPP borrowers in connection with their requests for loan forgiveness.

Peoples is a PPP participating lender, and the PPP loans originated ~~(including $28.2 million acquired in the merger with Premier)~~ are included in commercial and industrial loans. Peoples also recorded deferred loan origination fees related to the PPP loans, net of deferred loan origination costs, which will be amortized over the life of the respective loans, or until forgiven by the SBA, and will be recognized in net interest income. The following tables detail Peoples' PPP loans and related income:

(Dollars in millions) September 30,
2021 June 30,
2021 March 31,
2021 December 31,
2020 September 30,
2020
PPP aggregate outstanding principal balances $ 139.8 $ 194.7 $ 349.9 $ 374.8 $ 472.0
PPP net deferred loan origination fees 4.0 7.1 9.3 7.9 11.6


		Three Months Ended						Nine Months Ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30,
(Dollars in millions)	(Dollars in millions)							2021		2020		(Dollars in millions)	June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021
Amortization of net deferred loan origination fees		$	3.1	$	3.4	$	1.9	$	11.2	$	3.8
PPP aggregate outstanding principal balances												PPP aggregate outstanding principal balances	$	15.2	$	42.9	$	89.3	$	139.8	$	194.7
PPP net deferred loan origination fees												PPP net deferred loan origination fees	0.4		1.0		2.2		4.0		7.1
Accretion of net deferred loan origination fees												Accretion of net deferred loan origination fees	0.6		1.2		1.8		3.1		3.4

Allowance for Credit Losses

The amount of the allowance for credit losses at the end of each period represents management's estimate of expected losses from existing loans based upon its quarterly analysis of the loan portfolio. While this process involves allocations being made to specific loans and pools of loans, the entire allowance is available for all losses expected within the loan portfolio.

The following details management's allocation of the allowance for credit losses:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			(Dollars in thousands)	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Commercial real estate	Commercial real estate	$	39,252		$	18,147		$	18,663		$	19,423		$	21,549		Commercial real estate	$	20,239		$	23,786		$	32,146		$	39,252		$	18,147
Commercial and industrial	Commercial and industrial	13,378			8,686			10,108			12,763			13,099			Commercial and industrial	8,572			10,114			11,063			13,378			8,686
Premium finance	Premium finance	1,137			998			1,160			1,095			986			Premium finance	311			345			379			1,137			998
Leases	Leases	4,505			3,715			—			—			—			Leases	7,585			5,875			4,797			4,505			3,715
Total commercial		58,272			31,546			29,931			33,281			35,634

Residential real estate	Residential real estate	9,568			4,837			4,935			6,044			5,988			Residential real estate	6,332			6,495			7,233			9,568			4,837
Home equity lines of credit	Home equity lines of credit	2,224			1,504			1,494			1,860			1,797			Home equity lines of credit	1,699			1,894			2,005			2,224			1,504
Consumer, indirect	Consumer, indirect	6,160			8,841			7,522			8,030			12,772			Consumer, indirect	6,234			5,172			5,326			6,160			8,841
Consumer, direct	Consumer, direct	1,079			1,161			970			1,081			1,861			Consumer, direct	1,321			1,036			961			1,079			1,161
Consumer		7,239			10,002			8,492			9,111			14,633

Deposit account overdrafts	Deposit account overdrafts	79			53			45			63			76			Deposit account overdrafts	53			51			57			79			53
Allowance for credit losses	Allowance for credit losses	$	77,382		$	47,942		$	44,897		$	50,359		$	58,128		Allowance for credit losses	$	52,346		$	54,768		$	63,967		$	77,382		$	47,942
As a percent of total loans	As a percent of total loans	1.72		%	1.42		%	1.32		%	1.48		%	1.67		%	As a percent of total loans	1.14		%	1.20		%	1.43		%	1.72		%	1.42		%

~~During~~The allowance for credit losses declined at June 30, 2022 compared to March 31, 2022, as a result of improved loss drivers and releases related to individually analyzed loans. The reduction in the ~~third quarter of~~allowance for credit losses compared to December 31, 2021 was due to improvements in economic forecasts and loss drivers, along with reductions in loan balances from acquired loans due to payoffs during the quarter. Peoples recorded a$387,000 of provision for credit losses during the first quarter of 2022 to establish the allowance for credit losses for non-purchase credit deteriorated leases acquired from Vantage.

The increase in the allowance for credit losses at September 30, 2021, compared to June 30, 2021, was related to the provision for credit losses recorded in the amount of $11.0 million in order to establish an allowance for credit losses for ~~non-purchase~~non-purchased credit deteriorated loans of $10.6 million, and a liability for unfunded commitments of $0.4 million, both relating to the ~~acquisition of Premier.~~Premier Merger. Peoples also recorded a $22.3 million increase in the allowance for credit losses during the third quarter of 2021 related to the ~~purchase~~purchased credit deteriorated loans acquired from Premier. ~~The increases at September 30, 2021 compared to prior periods are due to the Premier and NSL acquisitions.~~

During the second quarter, Peoples increased its allowance for credit losses due to the establishment of an allowance for credit losses on the leases acquired from NSL. Peoples recorded $3.3 million in provision for credit losses during the second quarter of 2021 in order to establish the allowance for credit losses for the acquired leases and $493,000 to establish the allowance for credit losses on leases identified as purchase credit deteriorated at the acquisition date and added an additional $427,000 in allowance for credit losses on growth in leases during the second quarter of 2021. The decreases in the allowance for credit losses for March 31, 2021 compared to December 31, 2020, and from December 31, 2020 compared to September 30, 2020, were due to developments related to COVID-19 and the resulting positive impact on the economic assumptions used in estimating the allowance for credit losses under the CECL model.

During much of 2020, Peoples increased its allowance for credit losses based on CECL model results, which incorporated economic forecasts that included the impact of COVID-19 on certain economic factors. These forecasts included higher unemployment rates nationally and in Ohio, and lower Ohio Gross Domestic Product, which are the key assumptions within the CECL

~~Table of Contents~~

model, compared to prior periods. During the third quarter of 2020, Peoples also recorded allowance for credit losses associated with the loans acquired from Triumph Premium Finance on July 1, 2020, which had included $84.7 million in loans at the acquisition date.

Additional information regarding Peoples' allowance for credit losses can be found in "Note 1 Summary of Significant Accounting Policies" in Peoples' ~~2020~~2021 Form 10-K and "Note 4 Loans and Leases" of the Notes to the Unaudited Condensed Consolidated Financial Statements.

Table of Contents

The following table summarizes Peoples’ net charge-offs and recoveries:
Three Months Ended
(Dollars in thousands) September 30,
2021 June 30,
2021 March 31,
2021 December 31,
2020 September 30,
2020
Gross charge-offs:
Commercial real estate, other $ — $ 4 $ 157 $ 274 $ 109
Commercial and industrial 654 5 293 465 146
Premium finance 7 7 16 1 2
Leases 431 525 — — —
Residential real estate 44 136 133 98 121
Home equity lines of credit 180 4 12 80 —
Consumer, indirect 416 269 505 498 370
Consumer, direct 29 31 36 59 15
    Consumer 445 300 541 557 385
Deposit account overdrafts 135 89 103 139 202
Total gross charge-offs $ 1,896 $ 1,070 $ 1,255 $ 1,614 $ 965
Recoveries:
Commercial real estate, other $ 4 $ 4 $ — $ 74 $ 4
Commercial and industrial 4 18 — 512 —
Premium finance — — — — —
Leases 120 110 — — —
Residential real estate 48 40 15 45 100
Home equity lines of credit 37 — 4 1 2
Consumer, indirect 43 63 105 41 64
Consumer, direct 17 11 26 12 13
    Consumer 60 74 131 53 77
Deposit account overdrafts 37 44 54 30 47
Total recoveries $ 310 $ 290 $ 204 $ 715 $ 230
Net charge-offs (recoveries):
Commercial real estate, other $ (4) $ — $ 157 $ 200 $ 105
Commercial and industrial 650 (13) 293 (47) 146
Premium finance 7 7 16 1 2
Leases 311 415 — — —
Residential real estate (4) 96 118 53 21
Home equity lines of credit 143 4 8 79 (2)
Consumer, indirect 373 206 400 457 306
Consumer, direct 12 20 10 47 2
    Consumer 385 226 410 504 308
Deposit account overdrafts 98 45 49 109 155
Total net charge-offs $ 1,586 $ 780 $ 1,051 $ 899 $ 735

~~Table of Contents~~


		Three Months Ended											Three Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020		(Dollars in thousands)	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Gross charge-offs:												Gross charge-offs:

Commercial real estate, other												Commercial real estate, other	$	22		$	278		$	226		$	—		$	4

Commercial and industrial												Commercial and industrial	420			463			105			654			5
Premium finance												Premium finance	30			14			15			7			7
Leases												Leases	493			473			478			431			525
Residential real estate												Residential real estate	47			309			72			44			136
Home equity lines of credit												Home equity lines of credit	25			16			1			180			4
Consumer, indirect												Consumer, indirect	449			385			566			416			269
Consumer, direct												Consumer, direct	60			136			56			29			31
Consumer												Consumer	509			521			622			445			300
Deposit account overdrafts												Deposit account overdrafts	405			259			248			135			89
Total gross charge-offs												Total gross charge-offs	$	1,951		$	2,333		$	1,767		$	1,896		$	1,070
Recoveries:												Recoveries:

Commercial real estate, other												Commercial real estate, other	$	176		$	49		$	196		$	4		$	4

Commercial and industrial												Commercial and industrial	2			4			4			4			18
Premium finance												Premium finance	8			—			—			—			—
Leases												Leases	64			176			109			120			110
Residential real estate												Residential real estate	14			14			40			48			40
Home equity lines of credit												Home equity lines of credit	—			29			—			37			—
Consumer, indirect												Consumer, indirect	83			86			42			43			63
Consumer, direct												Consumer, direct	11			11			58			17			11
Consumer												Consumer	94			97			100			60			74
Deposit account overdrafts												Deposit account overdrafts	52			54			42			37			44
Total recoveries												Total recoveries	$	410		$	423		$	491		$	310		$	290
Net charge-offs (recoveries):												Net charge-offs (recoveries):

Commercial real estate, other												Commercial real estate, other	$	(154)		$	229		$	30		$	(4)		$	—

Commercial and industrial												Commercial and industrial	418			459			101			650			(13)
Premium finance												Premium finance	22			14			15			7			7
Leases												Leases	429			297			369			311			415
Residential real estate												Residential real estate	33			295			32			(4)			96
Home equity lines of credit												Home equity lines of credit	25			(13)			1			143			4
Consumer, indirect												Consumer, indirect	366			299			524			373			206
Consumer, direct												Consumer, direct	49			125			(2)			12			20
Consumer												Consumer	415			424			522			385			226
Deposit account overdrafts												Deposit account overdrafts	353			205			206			98			45
Total net charge-offs												Total net charge-offs	$	1,541		$	1,910		$	1,276		$	1,586		$	780
Ratio of net charge-offs to average total loans (annualized):	Ratio of net charge-offs to average total loans (annualized):											Ratio of net charge-offs to average total loans (annualized):

Commercial real estate, other	Commercial real estate, other	—	%	—	%	0.02	%	0.02	%	0.01	%	Commercial real estate, other	(0.01)		%	0.02		%	—		%	—		%	—		%

Commercial and industrial	Commercial and industrial	0.08	%	—	%	0.04	%	(0.01)	%	0.02	%	Commercial and industrial	0.04		%	0.03		%	0.01		%	0.08		%	—		%

Leases	Leases	0.03	%	0.05	%	—	%	—	%	—	%	Leases	0.04		%	0.03		%	0.03		%	0.03		%	0.05		%
Residential real estate	Residential real estate	—	%	0.01	%	0.01	%	0.01	%	—	%	Residential real estate	—		%	0.03		%	—		%	—		%	0.01		%
Home equity lines of credit	Home equity lines of credit	0.02	%	—	%	—	%	—	%	—	%	Home equity lines of credit	—		%	—		%	—		%	0.02		%	—		%
Consumer, indirect	Consumer, indirect	0.04	%	0.02	%	0.05	%	0.05	%	0.03	%	Consumer, indirect	0.03		%	0.03		%	0.05		%	0.04		%	0.02		%
Consumer, direct	Consumer, direct	—	%	—	%	—	%	0.01	%	—	%	Consumer, direct	0.01		%	0.01		%	—		%	—		%	—		%
Consumer	Consumer	0.04	%	0.02	%	0.05	%	0.06	%	0.03	%	Consumer	0.04		%	0.04		%	0.05		%	0.04		%	0.02		%
Deposit account overdrafts	Deposit account overdrafts	0.01	%	0.01	%	0.01	%	0.02	%	0.02	%	Deposit account overdrafts	0.03		%	0.02		%	0.02		%	0.01		%	0.01		%
Total	Total	0.18	%	0.09	%	0.13	%	0.10	%	0.08	%	Total	0.14		%	0.17		%	0.11		%	0.18		%	0.09		%

Each with "--%" not meaningful.

Net charge-offs during the ~~third~~second quarter of ~~2021~~2022 were ~~0.18%~~0.14% of average total loans on an annualized basis. ~~Although,~~Peoples has anticipated an increase in the net charge-offs to average total loans, as recent periods have been below historical levels. Compared to

Table of Contents

the prior quarter, both commercial real estate and residential real estate gross charge-offs ~~in many loan categories declined compared to the linked quarter, the primary factor in the increase of total gross charge-offs was one~~decreased, while commercial and industrial loan charge-off of $500,000 during the quarter. Peoples recognized a $450,000 charge-off on a commercial and industrial loan relationship, while also recording a $508,000 recovery on a previously charged-off commercial and industrial loan relationship during the fourth quarter of 2020. During the second quarter of 2020, Peoples recorded a $750,000 recovery on a commercial loan relationship that had been previously charged-off.real estate experienced higher recoveries.

The following table details Peoples’ nonperforming assets:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020		(Dollars in thousands)	June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021
Loans 90+ days past due and accruing:	Loans 90+ days past due and accruing:											Loans 90+ days past due and accruing:

Construction												Construction	$	—	$	—	$	90	$	—	$	—
Commercial real estate, other	Commercial real estate, other	$	1,912	$	1,361	$	55	$	—	$	80	Commercial real estate, other	330		603		689		1,912		1,361

Commercial and industrial	Commercial and industrial	98		161		—		50		74		Commercial and industrial	89		53		1,139		98		161
Premium finance	Premium finance	368		216		109		205		—		Premium finance	304		613		865		368		216
Leases	Leases	1,736		1,522		—		—		—		Leases	5,722		3,921		—		1,736		1,522
Residential real estate	Residential real estate	1,156		342		662		1,975		2,548		Residential real estate	1,687		677		805		1,156		342
Home equity lines of credit	Home equity lines of credit	61		60		180		82		27		Home equity lines of credit	89		75		50		61		60
Consumer, indirect	Consumer, indirect	—		39		24		39		86		Consumer, indirect	15		17		—		—		39
Consumer, direct	Consumer, direct	32		40		14		17		—		Consumer, direct	—		—		85		32		40
Consumer	Consumer	32		79		38		56		86		Consumer	15		17		85		32		79
Total loans 90+ days past due and accruing	Total loans 90+ days past due and accruing	$	5,363	$	3,741	$	1,044	$	2,368	$	2,815	Total loans 90+ days past due and accruing	$	8,236	$	5,959	$	3,723	$	5,363	$	3,741
Nonaccrual loans:	Nonaccrual loans:											Nonaccrual loans:
Construction	Construction	$	—	$	4	$	4	$	4	$	4	Construction	$	5	$	6	$	6	$	—	$	4
Commercial real estate, other	Commercial real estate, other	17,207		7,965		8,084		8,744		8,762		Commercial real estate, other	11,795		14,745		16,849		17,207		7,965
Commercial real estate		17,207		7,969		8,088		8,748		8,766
Commercial and industrial	Commercial and industrial	4,133		3,938		4,067		4,017		4,067		Commercial and industrial	1,748		2,394		2,505		4,133		3,938
Leases	Leases	1,411		—		—		—		—		Leases	1,573		1,731		1,581		1,411		—
Residential real estate	Residential real estate	8,046		5,811		6,182		6,080		6,027		Residential real estate	7,463		7,459		8,016		8,046		5,811
Home equity lines of credit	Home equity lines of credit	661		572		624		708		754		Home equity lines of credit	567		604		687		661		572
Consumer, indirect	Consumer, indirect	850		704		825		883		801		Consumer, indirect	1,351		1,408		1,302		850		704
Consumer, direct	Consumer, direct	177		100		146		160		148		Consumer, direct	166		231		273		177		100
Consumer	Consumer	1,027		804		971		1,043		949		Consumer	1,517		1,639		1,575		1,027		804
Total nonaccrual loans	Total nonaccrual loans	$	32,485	$	19,094	$	19,932	$	20,596	$	20,563	Total nonaccrual loans	$	24,668	$	28,578	$	31,219	$	32,485	$	19,094
Nonaccrual troubled debt restructurings ("TDRs"):	Nonaccrual troubled debt restructurings ("TDRs"):											Nonaccrual troubled debt restructurings ("TDRs"):

Commercial real estate, other	Commercial real estate, other	$	94	$	99	$	337	367		$	772	Commercial real estate, other	$	2,458	$	197	$	218	$	94	99
Commercial and industrial												Commercial and industrial	101		999		1,067		1,223		1,774
Residential real estate												Residential real estate	1,731		1,676		1,631		1,689		1,784
Home equity lines of credit												Home equity lines of credit	323		333		352		315		129
Consumer, indirect												Consumer, indirect	207		220		272		219		193
Consumer, direct												Consumer, direct	—		—		6		9		6
Consumer												Consumer	207		220		278		228		199
Total nonaccrual TDRs												Total nonaccrual TDRs	$	4,820	$	3,425	$	3,546	$	3,549	$	3,985
Total nonperforming loans ("NPLs")												Total nonperforming loans ("NPLs")	$	37,724	$	37,962	$	38,488	$	41,397	$	26,820
OREO:												OREO:
Commercial												Commercial	$	9,065	$	9,106	$	9,105	$	10,804	$	—
Residential												Residential	145		301		391		464		239
Total OREO												Total OREO	$	9,210	$	9,407	$	9,496	$	11,268	$	239
Total nonperforming assets ("NPAs")												Total nonperforming assets ("NPAs")	$	46,934	$	47,369	$	47,984	$	52,665	$	27,059
Criticized loans (a)												Criticized loans (a)	$	181,395	$	190,315	$	194,016	$	234,845	$	113,802
Classified loans (b)												Classified loans (b)	115,483		109,530		106,547		142,628		69,166

7275

Table of Contents

(Dollars in thousands) September 30,
2021 June 30,
2021 March 31,
2021 December 31,
2020 September 30,
2020
Commercial and industrial 1,223 1,774 2,034 2,175 2,250
Residential real estate 1,689 1,784 2,064 2,295 2,481
Home equity lines of credit 315 129 156 159 165
Consumer, indirect 219 193 206 190 160
Consumer, direct 9 6 15 11 45
Consumer 228 199 221 201 205
Total nonaccrual TDRs $ 3,549 $ 3,985 $ 4,812 $ 5,197 $ 5,873
Total nonperforming loans ("NPLs") $ 41,397 $ 26,820 $ 25,788 $ 28,161 $ 29,251
OREO:
Commercial $ 10,804 $ — $ — $ — $ 145
Residential $ 464 $ 239 $ 134 $ 134 $ 148
Total OREO $ 11,268 $ 239 $ 134 $ 134 $ 293
Total nonperforming assets ("NPAs") $ 52,665 $ 27,059 $ 25,922 $ 28,295 $ 29,544
Criticized loans (a) $ 234,845 $ 113,802 $ 116,424 $ 126,619 $ 123,219
Classified loans (b) 142,628 69,166 76,095 72,518 76,009
Asset Quality Ratios (c):
NPLs as a percent of total loans (d) 0.92 % 0.79 % 0.76 % 0.82 % 0.84 %
NPAs as a percent of total assets (d) 0.75 % 0.53 % 0.50 % 0.59 % 0.60 %
NPAs as a percent of total loans and OREO(d) 1.17 % 0.80 % 0.76 % 0.84 % 0.85 %
Allowance for credit losses as a percent of NPLs (d) 186.93 % 178.75 % 174.10 % 180.14 % 198.72 %
Criticized loans as a percent of total loans (a) 5.23 % 3.37 % 3.41 % 3.72 % 3.55 %
Classified loans as a percent of total loans (b) 3.18 % 2.05 % 2.23 % 2.13 % 2.19 %


(Dollars in thousands)	June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021
Asset Quality Ratios (c):
Nonaccrual loans as a percent of total loans (d)	0.64	%	0.70	%	0.78	%	0.80	%	0.68	%
NPLs as a percent of total loans (d)	0.82	%	0.83	%	0.86	%	0.92	%	0.79	%
NPAs as a percent of total assets (d)	0.64	%	0.65	%	0.68	%	0.75	%	0.53	%
NPAs as a percent of total loans and OREO (d)	1.02	%	1.04	%	1.07	%	1.17	%	0.80	%
Allowance for credit losses as a percent of nonaccrual loans	177.52	%	171.13	%	184.00	%	214.75	%	207.73	%
Allowance for credit losses as a percent of NPLs (d)	138.76	%	144.27	%	166.20	%	186.93	%	178.75	%
Criticized loans as a percent of total loans (a)	3.96	%	4.19	%	4.33	%	5.23	%	3.37	%
Classified loans as a percent of total loans (b)	2.52	%	2.41	%	2.38	%	3.18	%	2.05	%

(a) Includes loans categorized as special mention, substandard or doubtful.

(b) Includes loans categorized as substandard or doubtful.

(d) Nonperforming loans ("NPL") include loans 90+ days past due and accruing, TDRs and nonaccrual loans. Nonperforming assets ("NPA") include nonperforming loans and OREO.

~~Table of Contents~~

~~During~~Compared to March 31, 2022, Peoples' NPAs declined to 0.64%, from 0.65%, with the ~~third quarter of 2021, nonperforming assets increased $25.6 million, or 95%, compared to June 30, 2021. The increase in nonperforming assets compared to the prior quarter was~~reduction primarily attributable to ~~nonperforming~~a reduction in nonaccrual commercial and industrial loans and other real estate owned acquired from Premier. The nonperforming loans as a percent of total loans and nonperforming assets as a percent of total assets ratios both increased compared to June 30, 2021, due to the acquired nonperforming loans. Theoffset by an increase in ~~nonperforming assets of $1.1 million at June 30, 2021, compared to March 31, 2021, was primarily~~past due ~~to acquisition of NSL. Nonperforming assets declined $2.3 million at March 31, 2021, compared to December 31, 2020, and was mostly due to several small relationships in both loans~~leases. Loans 90+ days past due and accruing ~~and nonaccrual loans.~~

~~Criticized~~increased compared to December 31, 2021, mostly due to the Vantage acquisition. During the second quarter of 2022, criticized loans, which are those categorized as special mention, substandard or doubtful, ~~increased $121.0~~declined $8.9 million, or 106%, compared to June 30, 2021 and increased $111.6 million, or 91%, compared to September 30, 2020. The increase in the amount of criticized loans compared to June 30, 2021 was the result of criticized loans acquired from Premier, offset by the pay-off of six commercial and industrial loans with an aggregate principal balance of $12.3 million and several smaller loans. Criticized loans declined $2.6 million at June 30, 2021, which was primarily due to the payoff of several smaller commercial loans.

~~Classified~~while classified loans, which are those categorized as substandard or doubtful, grew $6.0 million.

During the third quarter of 2021, nonperforming assets, criticized and classified loans increased ~~by $73.5 million, or 106%, compared~~due to ~~June 30, 2021, and were up $66.6 million, or 88%, compared to September 30, 2020. The increase was driven by loans acquired from Premier.~~the Premier Merger.

On March 22, 2020, federal and state government banking regulators issued a joint statement, with which the FASB concurred as to the approach, regarding accounting for loan modifications for borrowers affected by COVID-19. In this guidance, short-term modifications, made on a good faith basis in response to COVID-19, to borrowers who were current prior to any relief, are not considered TDRs. This includes short-term modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment which are insignificant. Under the guidance, borrowers that are considered to be current are those that were less than 30 days past due on their contractual payments at the time a modification program is implemented. In addition, modification or deferral programs mandated by the U.S. federal government or any state government related to COVID-19 are not TDRs within the scope of ASC 310-40.

On August 3, 2020, federal and state banking regulators issued a joint statement, encouraging financial institutions to consider prudent accommodation options to mitigate losses for the borrower and financial institution beyond the initial accommodation period. In this guidance, institutions should also provide consumers with available options for repaying missed payments at the end of their accommodation to avoid delinquencies, as well as options for changes to terms to support sustainable and affordable payments for the long term. These considerations should also include prudent risk management practices at the financial institution based on the credit risk of the borrower. Peoples is actively working with its customers to address any further accommodation needs while carefully evaluating the associated credit risk of the borrowers.

7476

Table of Contents

Deposits

The following table details Peoples’ deposit balances:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			(Dollars in thousands)	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Non-interest-bearing deposits (a)	Non-interest-bearing deposits (a)	$	1,559,993		$	1,181,045		$	1,206,034		$	997,323		$	982,912		Non-interest-bearing deposits (a)	$	1,661,865		$	1,666,668		$	1,641,422		$	1,559,993		$	1,181,045
Interest-bearing deposits:	Interest-bearing deposits:																Interest-bearing deposits:
Interest-bearing demand accounts (a)	Interest-bearing demand accounts (a)	1,140,639			732,478			722,470			692,113			666,134			Interest-bearing demand accounts (a)	1,143,010			1,179,199			1,167,460			1,140,639			732,478
Savings accounts	Savings accounts	1,016,755			689,086			676,345			628,190			589,625			Savings accounts	1,080,053			1,065,678			1,036,738			1,016,755			689,086
Retail certificates of deposit ("CDs")	Retail certificates of deposit ("CDs")	691,680			417,466			433,214			445,930			461,216			Retail certificates of deposit ("CDs")	584,259			612,936			643,759			691,680			417,466
Money market deposit accounts	Money market deposit accounts	637,635			547,412			586,099			591,373			581,398			Money market deposit accounts	645,242			656,266			651,169			637,635			547,412
Governmental deposit accounts	Governmental deposit accounts	679,305			498,390			511,937			385,384			409,967			Governmental deposit accounts	728,057			734,784			617,259			679,305			498,390
Brokered deposits	Brokered deposits	106,013			166,746			168,130			170,146			260,753			Brokered deposits	86,739			87,395			104,745			106,013			166,746
Total interest-bearing deposits	Total interest-bearing deposits	4,272,027			3,051,578			3,098,195			2,913,136			2,969,093			Total interest-bearing deposits	4,267,360			4,336,258			4,221,130			4,272,027			3,051,578
Total deposits	Total deposits	$	5,832,020		$	4,232,623		$	4,304,229		$	3,910,459		$	3,952,005		Total deposits	$	5,929,225		$	6,002,926		$	5,862,552		$	5,832,020		$	4,232,623
Demand deposits as a percent of total deposits	Demand deposits as a percent of total deposits	46		%	45		%	45		%	43		%	42		%	Demand deposits as a percent of total deposits	47		%	47		%	48		%	46		%	45		%

(a)The sum of amounts presented is considered total demand deposits.

At ~~September~~June 30, ~~2021,~~2022, period-end deposits decreased $73.7 million, or 1%, compared to March 31, 2022, and increased ~~$1.6~~$1.7 billion, or ~~38%~~40%, compared to June 30, ~~2021,~~2021. The decrease was driven by a decline in interest bearing transaction accounts of $36.2 million, a decrease in retail certificates of deposits of $28.7 million, and ~~increased $1.9 billion, or 48%, compared to September 30, 2020.~~a decrease of $11.0 million in money market deposit accounts. The increase in total deposits at September 30, 2021, compared to June 30, 2021, was driven ~~primarily~~ by ~~$1.8 billion in~~ deposits acquired in the merger with Premier including $392.2 million in non-interest bearing deposits, $652.9 million in interest-bearing demand accounts, $327.0 million in savings accounts, $285.4 million in retail CDs, $155.6 million in money market accounts and $11.1 million in brokered deposits. The decrease in total deposits at June 30, 2021 compared to March 31, 2021 was related to declines in money market deposits, non-interest bearing deposits, and retail CDs. At March 31, 2021, compared to December 31, 2020, Peoples experienced a significant increase in governmental deposit accounts, which was mostly due to seasonal fluctuation within these accounts.

from Premier. Total deposits in ~~all~~ periods presented through March 31, 2022, were higher due to customers maintaining larger balances, as a result of PPP loan proceeds, fiscal stimulus payments and changes in customer spending habits in light of the COVID-19 pandemic. In ~~prior~~ quarterly periods ~~in the table above,~~prior to June 30, 2022, Peoples experienced increases in most low-cost deposit categories.

Peoples reduced its reliance on brokered deposits in each quarterly period, beginning after June 30, ~~2020.~~2021. This decline was largely due to the increase in deposit balances from customers, which allowed Peoples to reduce its position in the higher-cost brokered CDs during each period. As part of its funding strategy, Peoples hedges 90-day brokered deposits with interest rate swaps. The swaps pay a fixed rate of interest while receiving three-month LIBOR, which offsets the rate on the brokered deposits. As of ~~September~~June 30, ~~2021,~~2022, Peoples had 16thirteen effective interest rate swaps, with an aggregate notional value of ~~$150.0~~$125.0 million, of which ~~$100.0~~$85.0 million were designated as cash flow hedges of overnight brokered deposits, which are expected to be extended every 90 days through the maturity dates of the swaps. The remaining ~~$50.0~~$40.0 million of interest rate swaps hedged 90-day FHLB advances, which are also expected to be extended every 90 days through the maturity dates of the swaps. Peoples continually evaluates the overall balance sheet position given the interest rate environment.

Borrowed Funds

The following table details Peoples’ short-term and long-term borrowings:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020		(Dollars in thousands)	June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021
Short-term borrowings:	Short-term borrowings:											Short-term borrowings:

FHLB 90-day advances	FHLB 90-day advances	$	50,000	$	—	$	—	$	—	$	110,000	FHLB 90-day advances	$	40,000	$	40,000	$	40,000	$	50,000	$	—
Current portion of long-term FHLB advances	Current portion of long-term FHLB advances	15,000		15,000		20,000		20,000		25,000		Current portion of long-term FHLB advances	—		15,000		15,000		15,000		15,000
Retail repurchase agreements	Retail repurchase agreements	119,693		51,496		47,868		53,261		47,063		Retail repurchase agreements	286,442		89,275		111,482		119,693		51,496

Total short-term borrowings	Total short-term borrowings	$	184,693	$	66,496	$	67,868	$	73,261	$	182,063	Total short-term borrowings	$	326,442	$	144,275	$	166,482	$	184,693	$	66,496
Long-term borrowings:	Long-term borrowings:											Long-term borrowings:
FHLB advances	FHLB advances	$	86,483	$	87,393	$	102,645	$	102,957	$	103,815	FHLB advances	$	35,348	$	85,564	$	85,825	$	86,483	$	87,393

Vantage non-recourse debt												Vantage non-recourse debt	74,622		102,364		—		—		—
Junior subordinated debt securities	Junior subordinated debt securities	12,928		7,688		7,650		7,611		7,571		Junior subordinated debt securities	13,717		13,682		13,650		12,928		7,688
Total long-term borrowings	Total long-term borrowings	$	99,411	$	95,081	$	110,295	$	110,568	$	111,386	Total long-term borrowings	$	123,687	$	201,610	$	99,475	$	99,411	$	95,081
Total borrowed funds	Total borrowed funds	$	284,104	$	161,577	$	178,163	$	183,829	$	293,449	Total borrowed funds	$	450,129	$	345,885	$	265,957	$	284,104	$	161,577

Borrowed funds, in total, which include overnight borrowings, are mainly a function of loan growth and changes in total deposit balances. ~~Total~~Borrowed funds increased compared to March 31, 2022, driven by a large individual customer deposit, thereby increasing retail repurchase agreements at June 30, 2022. The increase in total borrowed funds ~~increased 76%~~at September 30, 2021, compared to June 30, 2021, was primarily due to the addition of $63.8 million retail repurchase agreements from Premier.

7577

Table of Contents

repurchase agreements from Premier. The decline in borrowed funds at September 30, 2021, compared to September 30, 2020 was mostly due to swap funding being moved to brokered deposits rather than the use of rolling 90-day advances to fund liquidity needs, which was partially offset by the acquired retail repurchase agreements from Premier during the third quarter of 2021.

~~Accrued Expenses and Other Liabilities~~

Accrued expenses and other liabilities increased $23.8 million, or 27%, compared to June 30, 2021 and increased $12.2 million compared to September 30, 2020. The increase compared to the end of the second quarter of 2021 was the result of an increase in interest payable and other liabilities offset by with changes related to the fair value of swap derivatives at September 30, 2021. The increase compared to the end of the third quarter of 2020 was also the result of an increase in accrued interest payable offset by a decrease in the fair value of swap derivatives . Additional information regarding Peoples' interest rate swaps can be found in "Note 10 Derivative Financial Instruments" of the Notes to the Unaudited Condensed Consolidated Financial Statements.

Capital/Stockholders’ Equity

At ~~September~~June 30, ~~2021,~~2022, capital levels for both Peoples and Peoples Bank remained substantially higher than the minimum amounts needed to be considered "well capitalized" institutions under applicable banking regulations. These higher capital levels reflect Peoples' desire to maintain a strong capital position. In order to avoid limitations on dividends, equity repurchases and compensation, Peoples must exceed the three minimum required ratios by at least the capital conservation buffer of 2.50%, which applies to the common equity tier 1 ("CET1") ratio, the tier 1 capital ratio and the total risk-based capital ratio. At ~~September~~June 30, ~~2021,~~2022, Peoples had a capital conservation buffer of ~~5.83%~~4.81%.

The following table details Peoples' risk-based capital levels and corresponding ratios:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			(Dollars in thousands)	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Capital Amounts:	Capital Amounts:																Capital Amounts:
Common Equity Tier 1	Common Equity Tier 1	$	567,172		$	383,502		$	418,089		$	409,400		$	398,553		Common Equity Tier 1	$	564,708		$	547,215		$	577,565		$	567,172		$	383,502
Tier 1	Tier 1	580,100			391,190			425,739			417,011			406,124			Tier 1	578,425			560,897			591,215			580,100			391,190
Total (Tier 1 and Tier 2)	Total (Tier 1 and Tier 2)	637,802			431,424			463,872			456,384			445,101			Total (Tier 1 and Tier 2)	622,516			607,493			648,948			637,802			431,424
Net risk-weighted assets	Net risk-weighted assets	$	4,611,321		$	3,382,736		$	3,365,637		$	3,146,767		$	3,106,817		Net risk-weighted assets	$	4,857,818		$	4,752,428		$	4,614,258		$	4,611,321		$	3,382,736
Capital Ratios:	Capital Ratios:																Capital Ratios:
Common Equity Tier 1	Common Equity Tier 1	12.30		%	11.34		%	12.42		%	13.01		%	12.83		%	Common Equity Tier 1	11.62		%	11.51		%	12.52		%	12.30		%	11.34		%
Tier 1	Tier 1	12.58		%	11.56		%	12.65		%	13.25		%	13.07		%	Tier 1	11.91		%	11.80		%	12.81		%	12.58		%	11.56		%
Total (Tier 1 and Tier 2)	Total (Tier 1 and Tier 2)	13.83		%	12.75		%	13.78		%	14.50		%	14.33		%	Total (Tier 1 and Tier 2)	12.81		%	12.78		%	14.06		%	13.83		%	12.75		%
Tier 1 leverage ratio	Tier 1 leverage ratio	11.20		%	7.87		%	9.00		%	8.97		%	8.62		%	Tier 1 leverage ratio	8.38		%	8.29		%	8.67		%	11.20		%	7.87		%

~~During~~Peoples' regulatory capital and related ratio levels improved during the ~~third~~second quarter of ~~2021, Peoples' reported a~~2022 driven by higher net ~~loss~~interest income. The ratios were negatively impacted in the prior quarter by the cash acquisition of ~~$5.8 million~~Vantage, for which Peoples recorded goodwill and intangible assets for which the impact was partially offset by net income exceeding dividends declared ~~dividends~~during the period. Regulatory capital ratios increased as of ~~$7.1 million. However, regulatory capital levels increased due to the merger with Premier. Net risk-weighted assets grew~~September 30, 2021, compared to June 30, 2021, ~~mostly~~ due to the ~~merger with~~ Premier ~~along with growth in premium finance loans and growth in leases during the quarter. The NSL acquisition negatively impacted the regulatory capital ratios at March 31, 2021, as the purchase price was~~Merger, which included ~~in net risk-weighted assets and there was no capital issued in connection with the NSL acquisition.~~

~~In 2020, Peoples repurchased common shares during each quarter~~an equity issuance of the year, which reduced regulatory capital levels. Peoples also completed the Premium Finance acquisition on July 1, 2020, which impacted regulatory capital levels due to the recognition of goodwill and intangibles associated with the acquisition. Peoples did not repurchase any common shares in the first nine months of 2021.$261.9 million.

In addition to traditional capital measurements, management uses tangible capital measures to evaluate the adequacy of Peoples' stockholders' equity. Such ratios represent Non-US GAAP financial measures since their calculation removes the impact of goodwill and other intangible assets acquired through acquisitions on amounts reported in the Unaudited Consolidated Balance Sheets. Management believes this information is useful to investors since it facilitates the comparison of Peoples' operating performance, financial condition and trends to peers, especially those without a similar level of intangible assets to that of Peoples. Further, intangible assets generally are difficult to convert into cash, especially during a financial crisis, and could decrease substantially in value should there be deterioration in the overall franchise value. As a result, tangible equity represents a conservative measure of the capacity for Peoples to incur losses but remain solvent.

7678

Table of Contents

The following table reconciles the calculation of these Non-US GAAP financial measures to amounts reported in Peoples' Unaudited Condensed Consolidated Financial Statements:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			(Dollars in thousands)	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Tangible equity:	Tangible equity:																Tangible equity:
Total stockholders' equity	Total stockholders' equity	$	831,882		$	585,505		$	578,893		$	575,673		$	566,856		Total stockholders' equity	$	786,824		$	808,340		$	845,025		$	831,882		$	585,505
Less: goodwill and other intangible assets	Less: goodwill and other intangible assets	295,415			221,576			184,007			184,597			185,397			Less: goodwill and other intangible assets	328,132			341,865			291,009			295,415			221,576
Tangible equity	Tangible equity	$	536,467		$	363,929		$	394,886		$	391,076		$	381,459		Tangible equity	$	458,692		$	466,475		$	554,016		$	536,467		$	363,929

Tangible assets:	Tangible assets:																Tangible assets:
Total assets	Total assets	$	7,059,752		$	5,067,634		$	5,143,052		$	4,760,764		$	4,911,807		Total assets	$	7,278,292		$	7,239,261		$	7,063,521		$	7,059,752		$	5,067,634
Less: goodwill and other intangible assets	Less: goodwill and other intangible assets	295,415			221,576			184,007			184,597			185,397			Less: goodwill and other intangible assets	328,132			341,865			291,009			295,415			221,576
Tangible assets	Tangible assets	$	6,764,337		$	4,846,058		$	4,959,045		$	4,576,167		$	4,726,410		Tangible assets	$	6,950,160		$	6,897,396		$	6,772,512		$	6,764,337		$	4,846,058

Tangible book value per common share:	Tangible book value per common share:																Tangible book value per common share:
Tangible equity	Tangible equity	$	536,467		$	363,929		$	394,886		$	391,076		$	381,459		Tangible equity	$	458,692		$	466,475		$	554,016		$	536,467		$	363,929
Common shares outstanding	Common shares outstanding	28,265,791			19,660,877			19,629,633			19,563,979			19,721,783			Common shares outstanding	28,290,115			28,453,175			28,297,771			28,265,791			19,660,877

Tangible book value per common share	Tangible book value per common share	$	18.98		$	18.51		$	20.12		$	19.99		$	19.34		Tangible book value per common share	$	16.21		$	16.39		$	19.58		$	18.98		$	18.51

Tangible equity to tangible assets ratio:	Tangible equity to tangible assets ratio:																Tangible equity to tangible assets ratio:
Tangible equity	Tangible equity	$	536,467		$	363,929		$	394,886		$	391,076		$	381,459		Tangible equity	$	458,692		$	466,475		$	554,016		$	536,467		$	363,929
Tangible assets	Tangible assets	$	6,764,337		$	4,846,058		$	4,959,045		$	4,576,167		$	4,726,410		Tangible assets	$	6,950,160		$	6,897,396		$	6,772,512		$	6,764,337		$	4,846,058

Tangible equity to tangible assets	Tangible equity to tangible assets	7.93		%	7.51		%	7.96		%	8.55		%	8.07		%	Tangible equity to tangible assets	6.60		%	6.76		%	8.18		%	7.93		%	7.51		%

Tangible book value per common share ~~increased~~declined to ~~$18.98 at September 30, 2021, compared to $18.51~~$16.21 at June 30, ~~2021.~~2022, compared to $16.39 at March 31, 2022. The change in tangible book value per common share was due to tangible equity ~~increasing at~~declining as a ~~higher rate than shares outstanding during~~result of other comprehensive losses recognized on available-for-sale investment securities, which were driven by changes in market interest rates. Also contributing to the ~~third quarter of 2021.~~decline compared to December 31, 2021, was a $81.7 million increase in accumulated other comprehensive loss. The increase in tangible book value per common share at December 31, 2020, compared to September 30, 2020, was the result of higher stockholders' equity as net income exceeded dividends declared during the period, as well as a reduction in common shares outstanding as Peoples actively repurchased common shares.

~~The~~ tangible equity to tangible assets ~~ratio increased~~ at September 30, 2021, compared to June 30, 2021. This increase was driven by higher tangible assets related to the merger with Premier which provided for increases in loans, investment securities, cash and cash equivalents, and other assets, coupled with the intangible assets recorded during the third quarter of 2021 associated with the merger with Premier and the NSL acquisition. The decline in the tangible equity to tangible assets ratio at March 31, 2021 compared to December 31, 2020, was largely due to an increase in other assets that was driven by the NSL acquisition, for which the purchase price was paid and recorded on March 31, 2021. The higher tangible equity to tangible assets ratio at December 31, 2020, compared to September 30, 2020, was attributable to ~~higher tangible~~the Premier Merger, and related equity ~~while tangible assets declined due to reductions in investment securities and total loans.~~issued.

Interest Rate Sensitivity and Liquidity

While Peoples is exposed to various business risks, the risks relating to interest rate sensitivity and liquidity are major risks that can materially impact future results of operations and financial condition due to their complexity and dynamic nature. The objective of Peoples' asset-liability management function is to measure and manage these risks in order to optimize net interest income within the constraints of prudent capital adequacy, liquidity and safety. This objective requires Peoples to focus on interest rate risk exposure and adequate liquidity through its management of the mix of assets and liabilities, their related cash flows and the rates earned and paid on those assets and liabilities. Ultimately, the asset-liability management function is intended to guide management in the acquisition and disposition of earning assets and selection of appropriate funding sources.

Interest Rate Risk

Interest rate risk ("IRR") is one of the most significant risks arising in the normal course of business of financial services companies like Peoples. IRR is the potential for economic loss due to future interest rate changes that can impact the earnings stream, as well as market values, of financial assets and liabilities. Peoples' exposure to IRR is due primarily to differences in the maturity or repricing of earning assets and interest-bearing liabilities. In addition, other factors, such as prepayments of loans and investment securities, or early withdrawal of deposits, can affect Peoples' exposure to IRR and increase interest costs or reduce revenue streams.

Peoples has assigned overall management of IRR to its Asset-Liability Committee (the “ALCO”), which has established an IRR management policy that sets minimum requirements and guidelines for monitoring and managing the level of IRR. The methods used by the ALCO to assess IRR remain largely unchanged from those disclosed in Peoples' ~~2020~~2021 Form 10-K.

7779

Table of Contents

The following table shows the estimated changes in net interest income and the economic value of equity based upon a standard, parallel shock analysis with balances held constant (dollars in thousands):


Increase (Decrease) in Interest Rate	Increase (Decrease) in Interest Rate	Estimated Increase (Decrease) in Net Interest Income								Estimated Increase (Decrease) in Economic Value of Equity								Increase (Decrease) in Interest Rate	Estimated Increase (Decrease) in Net Interest Income								Estimated Decrease in Economic Value of Equity
(in Basis Points)	(in Basis Points)	September 30, 2021				December 31, 2020				September 30, 2021				December 31, 2020				(in Basis Points)	June 30, 2022				December 31, 2021				June 30, 2022				December 31, 2021
300	300	$	26,191	12.5	%	$	22,034	17.3	%	$	12,475	1.0	%	$	117,235	15.7	%	300	$	27,881	11.1	%	$	24,903	11.7	%	$	(22,151)	(1.6)	%	$	(24,232)	(2.0)	%
200	200	17,360		8.3	%	15,899		12.5	%	11,544		0.9	%	95,189		12.7	%	200	18,446		7.3	%	16,312		7.7	%	(15,790)		(1.1)	%	(16,541)		(1.3)	%
100	100	8,646		4.1	%	8,981		7.1	%	10,550		0.8	%	60,384		8.1	%	100	9,148		3.6	%	7,899		3.7	%	(9,132)		(0.7)	%	(5,308)		(0.4)	%
(100)	(100)	(9,792)		(4.7)	%	(7,030)		(5.5)	%	(120,471)		(9.6)	%	(116,205)		(15.5)	%	(100)	(16,168)		(6.4)	%	(8,615)		(4.1)	%	(58,315)		(4.2)	%	(91,568)		(7.4)	%

Estimated changes in net interest income and the economic value of equity are partially driven by assumptions regarding the rate at which non-maturity deposits will reprice given a move in short-term interest rates, as well as assumptions regarding prepayment speeds on mortgage-backed securities. These and other modeling assumptions are monitored closely by Peoples on an ongoing basis.

With respect to investment prepayment speeds, the assumptions used are the results of a third-party prepayment model which projects the rate at which the underlying mortgages will prepay. These prepayment speeds affect the amount forecasted for cash flow reinvestment, premium amortization, and discount accretion assumed in interest rate risk modeling results. This prepayment activity is generally the result of refinancing activity and tends to increase as longer term interest rates decline, ~~much like the current environment.~~and decrease as interest rates increase. The assumptions in the interest rate risk model could be incorrect, leading to either a lesser or greater impact on net interest income or asset duration.

While parallel interest rate shock scenarios are useful in assessing the level of IRR inherent in the balance sheet, interest rates typically move in a nonparallel manner with differences in the timing, direction and magnitude of changes in short-term and long-term interest rates. Thus, any benefit that might occur as a result of the Federal Reserve increasing short-term interest rates in the future could be offset by an inverse movement in long-term rates, and vice versa. For this reason, Peoples considers other interest rate scenarios in addition to analyzing the impact of parallel yield curve shifts. These include various flattening and steepening scenarios in which short-term and long-term rates move in different directions with varying magnitude. Peoples believes these scenarios to be more reflective of how interest rates change versus the severe parallel rate shocks described above. Given the shape of market yield curves at ~~September~~June 30, ~~2021,~~2022, consideration of the bear steepener and bull flattener scenarios provides insights which were not captured by parallel shifts. These scenarios were evaluated as the current environment suggests these may be possible outcomes for the trajectory of interest rates.

The bear steepener scenario highlights the risk to net interest income and the economic value of equity when short-term rates remain constant while long-term rates rise. In such a scenario, Peoples' deposit and borrowing costs, which are generally correlated with short-term rates, remain constant, while asset yields, which are correlated with long-term rates, rise. Increased asset yields would not be offset by increases in deposit or funding costs; resulting in an increased amount of net interest income and higher net interest margin. At ~~September~~June 30, ~~2021,~~2022, the bear steepener scenario resulted in an increase in both net interest income and the economic value of equity of ~~0.8%~~0.1% and ~~5.5%~~2.9%, respectively.

The bull flattener scenario highlights the risk to net interest income and the economic value of equity when short-term rates remain constant while long-term rates fall. In such a scenario, Peoples’ deposit and borrowing costs, which are correlated with short-term rates, remain constant while asset yields, which are correlated with long-term rates, fall. Asset yields driven lower by increased investment securities premium amortization would not be offset by reductions in deposit or funding costs; resulting in a decreased amount of net interest income and lower net interest margin. At ~~September~~June 30, ~~2021,~~2022, the bull flattener scenario resulted in ~~a decrease~~small decreases in ~~both~~ net interest income and the economic value of equity of ~~-0.5%~~-0.1% and ~~-0.9%~~-0.1%, respectively. Peoples was within ~~the~~its policy limitations for this alternative scenario as of ~~September~~June 30, ~~2021,~~2022, which ~~sets~~set the maximum allowable downside exposure as 5.0% of net interest income and 10.0% of economic value of equity.

Peoples has entered into interest rate swaps as part of its interest rate risk management strategy. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for Peoples making fixed payments. As of ~~September~~June 30, ~~2021,~~2022, Peoples had entered into ~~sixteen~~thirteen interest rate swap contracts with an aggregate notional value of ~~$150.0~~$125.0 million. Additional information regarding Peoples’ interest rate swaps can be found in “Note 10 Derivative Financial Instruments” of the Notes to the Unaudited Condensed Consolidated Financial Statements.

At ~~September~~June 30, ~~2021,~~2022, Peoples' Unaudited Consolidated Balance Sheet was positioned to benefit from rising interest rates in terms of the potential impact on net interest ~~income and the economic value of equity.~~income. The table above illustrates this point as changes to net interest income increase in the rising rate scenarios. While the heavy concentration of floating rate loans remains the largest contributor to the level of asset sensitivity, the decrease in economic value of equity asset sensitivity, as measured, from December 31, ~~2020~~2021 was largely attributable to increased effective duration in the investment securities portfolio.

7880

Table of Contents

Liquidity

In addition to IRR management, another major objective of the ALCO is to maintain a sufficient level of liquidity. The methods used by the ALCO to monitor and evaluate the adequacy of Peoples Bank's liquidity position remain unchanged from those disclosed in Peoples' ~~2020~~2021 Form 10-K.

At ~~September~~June 30, ~~2021,~~2022, Peoples Bank had liquid assets of ~~$607.8~~$383.4 million, which represented ~~7.7%~~4.7% of total assets and unfunded loan commitments. Peoples also had an additional ~~$246.5~~$248.0 million of unpledged investment securities not included in the measurement of liquid assets.

Management believes the current balance of cash and cash equivalents, anticipated investment portfolio cash flows and the availability of other funding sources, will allow Peoples to meet anticipated cash obligations, as well as special needs and off-balance sheet commitments.

Since March 31, 2020, there has been an increase in deposit balances due to the influx of funds from the government fiscal stimulus, the PPP and other government actions. Peoples anticipates that these deposit balances will decline over time as the funds are used for intended business purposes; however, this deposit outflow should be partially offset as the associated PPP loans are forgiven and loan reimbursement funds are received. At the same time, we have experienced a decrease in the utilization rate for commercial lines of credit. This decrease is related to the receipt of PPP loan proceeds and other increased cash flows to certain companies. Peoples expects the commercial line of credit utilization percentage to revert back to more historical averages as time progresses. The utilization percentage for consumer line of credit products has been relatively steady.

Off-Balance Sheet Activities and Contractual Obligations

In the normal course of business, Peoples is a party to financial instruments with off-balance sheet risk necessary to meet the financing needs of Peoples' customers. These financial instruments include commitments to extend credit and standby letters of credit. The instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Unaudited Consolidated Balance Sheets. The contract amounts of these instruments express the extent of involvement Peoples has in these financial instruments.

Loan Commitments and Standby Letters of Credit

Loan commitments are made to accommodate the financial needs of Peoples' customers. Standby letters of credit are instruments issued by Peoples Bank guaranteeing the beneficiary payment by Peoples Bank in the event of default by Peoples Bank's customer in the performance of an obligation or service. Historically, most loan commitments and standby letters of credit expire unused. Peoples Bank's exposure to credit loss in the event of nonperformance by the counter-party to the financial instrument for loan commitments and standby letters of credit is represented by the contractual amount of those instruments. Peoples Bank uses the same underwriting standards in making commitments and conditional obligations as it does for on-balance sheet instruments. The amount of collateral obtained is based on management's credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property, plant, and equipment, and income-producing commercial properties.

Peoples Bank routinely engages in activities that involve, to varying degrees, elements of risk that are not reflected in whole or in part in the Unaudited Condensed Consolidated Financial Statements. These activities are part of Peoples Bank's normal course of business and include traditional off-balance sheet credit-related financial instruments, interest rate contracts and commitments to make additional capital contributions in low-income housing tax credit investments. Traditional off-balance sheet credit-related financial instruments continue to represent the most significant off-balance sheet exposure.

The following table details the total contractual amount of loan commitments and standby letters of credit:

(Dollars in thousands)
September 30,
2021 June 30,
2021 March 31,
2021 December 31,
2020 September 30,
2020
Home equity lines of credit $ 177,963 $ 134,516 $ 124,027 $ 117,792 $ 113,185
Unadvanced construction loans 271,483 207,403 190,715 141,009 123,338
Other loan commitments 646,374 542,429 555,102 535,250 498,472
Loan commitments $ 1,095,820 $ 884,348 $ 869,844 $ 794,051 $ 734,995
Standby letters of credit $ 12,358 $ 10,252 $ 10,295 $ 14,342 $ 13,177

The increase in loan commitments at September 30, 2021 was primarily the result of the Premier acquisition. Management does not anticipate that Peoples Bank’s current off-balance sheet activities will have a material impact on its future results of operations and financial condition based on historical experience and recent trends.


(Dollars in thousands)	June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021
Home equity lines of credit	$	188,803	$	184,616	$	177,262	$	177,963	$	134,516
Unadvanced construction loans	237,129		203,719		227,135		271,483		207,403
Other loan commitments	566,624		616,696		577,170		646,374		542,429
Loan commitments	$	992,556	$	1,005,031	$	981,567	$	1,095,820	$	884,348
Standby letters of credit	$	15,977	$	12,729	$	12,805	$	12,358	$	10,252

~~Table of Contents~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by this Item 3 is provided under the caption “Interest Rate Sensitivity and Liquidity” under “ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” in this Quarterly Report on Form 10-Q, and is incorporated herein by reference.

Table of Contents

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Peoples' management, with the participation of Peoples' President and Chief Executive Officer and Peoples’ Executive Vice President, Chief Financial Officer and Treasurer, has evaluated the effectiveness of Peoples’ disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of ~~September~~June 30, ~~2021.~~2022. Based upon that evaluation, Peoples’ President and Chief Executive Officer and Peoples’ Executive Vice President, Chief Financial Officer and Treasurer have concluded that:

(a)information required to be disclosed by Peoples in this Quarterly Report on Form 10-Q and other reports Peoples files or submits under the Exchange Act would be accumulated and communicated to Peoples’ management, including its President and Chief Executive Officer and its Executive Vice President, Chief Financial Officer and Treasurer, as appropriate to allow timely decisions regarding required disclosure;

(b)information required to be disclosed by Peoples in this Quarterly Report on Form 10-Q and other reports Peoples files or submits under the Exchange Act would be recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and

(c)~~Peoples’~~as previously disclosed within "ITEM 9A. CONTROLS AND PROCEDURES" of Peoples' 2021 Form 10-K, Peoples did not design effective controls supporting acquired purchased credit deteriorated loan accounting and the related allowance for credit losses aggregated to a material weakness in internal control over financial reporting; and

(d)as part of Peoples' efforts to remediate the material weakness described above, new controls and procedures have been designed and are in process of being implemented. Therefore, Peoples' President and Chief Executive Officer, and its Executive Vice President, Chief Financial Officer and Treasurer concluded that, as of June 30, 2022, Peoples' disclosure controls and procedures were ~~effective~~not effective. Despite the foregoing, Management has concluded the financial statements fairly present in all material respects, Peoples' financial position, results of operations and cash flows as of the ~~end of~~dates, and for the ~~fiscal quarter covered by~~periods presented in this Quarterly Report on Form ~~10-Q.~~10-Q, in conformity with US GAAP.

Changes in Internal Control Over Financial Reporting

~~There were no~~The remediation activities described above, and discussed in further detail in "ITEM 9A. CONTROLS AND PROCEDURES" of Peoples' 2021 Form 10-K and under "ITEM 1A. RISK FACTORS" in Part II of Peoples' Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, are changes in Peoples' internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during Peoples' fiscal quarter ended ~~September~~June 30, ~~2021, that have~~2022. These changes may materially ~~affected,~~affect, or are reasonably likely to materially affect, Peoples’ internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of their respective businesses or operations, Peoples or one of its subsidiaries may be named as a plaintiff, a defendant, or a party to a legal proceeding or any of their respective properties may be subject to various pending and threatened legal proceedings and various actual and potential claims. In view of the inherent difficulty of predicting the outcome of such matters, Peoples cannot state what the eventual outcome of any such matters will be. However, based on management's current knowledge and after consultation with legal counsel, management believes these proceedings will not have a material adverse effect on the consolidated financial position, results of operations or liquidity of Peoples.

ITEM 1A. RISK FACTORS

The disclosure below supplements the risk factors previously disclosed under “ITEM 1A. RISK FACTORS” of Part I of Peoples’ ~~2020~~2021 Form 10-K. Those risk factors are not the only risks Peoples faces. Additional risks and uncertainties not currently known to management or that management currently deems to be immaterial also may materially adversely affect Peoples’ business, financial condition and/or operating results.

~~Changes in the federal, state, or local tax laws may negatively impact our financial performance.~~ On October 28, 2021, President Biden unveiled his revised infrastructure plan, which removed a proposal to implement an increase in the federal corporate income tax rate, but would implement a stock buyback tax as part of a package of tax reforms to help fund the spending proposals in the plan. The revised Biden plan is in the early stages of the legislative process. If adopted as proposed, the stock buyback tax could adversely affect Peoples' determination to repurchase common shares in future periods.

8082

Table of Contents

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table details repurchases by Peoples and purchases by “affiliated purchasers” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended, of Peoples’ common shares during the three months ended ~~September~~June 30, ~~2021:~~2022:

Period
Total Number of Common Shares Purchased
Average Price Paid per Common Share

Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs (1)

Maximum
Number (or Approximate Dollar Value) of Common Shares that May Yet Be Purchased Under the Plans or Programs (1)
July 1 – 31, 2021 —

$ —

— $ 30,000,000
August 1 – 31, 2021 1,363 (2) $ 29.07 (2) — $ 30,000,000
September 1 – 30, 2021 700 (3) $ 31.22 (3) — $ 30,000,000
Total 2,063 $ 29.80 — $ 30,000,000


Period	Total Number of Common Shares Purchased		Average Price Paid per Common Share			Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number (or Approximate Dollar Value) of Common Shares that May Yet Be Purchased Under the Plans or Programs (1)
April 1 – 30, 2022	74,754	(1)	$	28.46	(1)	70,644	$	27,999,870
May 1 – 31, 2022	143,576	(1)(2)(3)	$	27.69	(1)(2)(3)	143,576	$	24,023,642
June 1 – 30, 2022	1,206	(2)(3)	$	27.28	(2)(3)	—	$	24,023,642
Total	219,536		$	27.95		214,220	$	24,023,642

(1)On January 29, 2021, Peoples announced that on January 28, 2021, Peoples' Board of Directors authorized a share repurchase program authorizing Peoples to purchase up to an aggregate of $30 million of Peoples' outstanding common shares. There were no214,220 common shares repurchased under the share repurchase program during the three months ended ~~September~~June 30, ~~2021.~~2022.

(2)Information reported includes an aggregate of ~~1,363~~2,180 common shares and 356 common shares withheld to satisfy income taxes associated with restricted common shares which were granted under the Peoples Bancorp Inc. Third Amended and Restated 2006 Equity Plan and vested during ~~August 2021.~~April 2022 and June 2022.

(3)Information reported includes ~~700~~1,930 common shares and 850 common shares purchased in open market transactions during ~~September 2021~~April 2022 and June 2022, by Peoples Bank under the Rabbi Trust Agreement. The Rabbi Trust Agreement establishes a rabbi trust that holds assets to provide funds for the payment of the benefits under the Peoples Bancorp Inc. Third Amended and Restated Deferred Compensation Plan for Directors of Peoples Bancorp Inc. and Subsidiaries.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None

8183

Table of Contents

ITEM 6. EXHIBITS

Exhibit
Number

Description

Exhibit Location

2.1

Agreement and Plan of Merger, dated as of March 26, 2021, by and between Peoples Bancorp Inc. and Premier Financial Bancorp, Inc.+

~~Incorporated herein by reference to Exhibit 2.1~~Included as Annex A to the ~~Current Report~~preliminary proxy statement/prospectus which forms a part of the Registration Statement of Peoples Bancorp Inc. ("Peoples") on Form ~~8-K dated and~~S-4/A filed on ~~March 31,~~June 1, 2021 ~~(File~~(Registration No. ~~0-16772)~~333-256040)

3.1(a)

Amended Articles of Incorporation of Peoples Bancorp Inc. (as filed with the Ohio Secretary of State on May 3, 1993) P

Incorporated herein by reference to Exhibit 3(a) to Peoples' Registration Statement on Form 8-B filed on July 20, 1993 (File No. 0-16772)

3.1(b)

Certificate of Amendment to the Amended Articles of Incorporation of Peoples Bancorp Inc. (as filed with the Ohio Secretary of State on April 22, 1994)

Incorporated herein by reference to Exhibit 3.1(b) to Peoples' Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 (File No. 0-16772) ("Peoples' September 30, 2017 Form 10-Q")

3.1(c)

Certificate of Amendment to the Amended Articles of Incorporation of Peoples Bancorp Inc. (as filed with the Ohio Secretary of State on April 9, 1996)

Incorporated herein by reference to Exhibit 3.1(c) to Peoples' September 30, 2017 Form 10-Q

3.1(d)

Certificate of Amendment to the Amended Articles of Incorporation of Peoples Bancorp Inc. (as filed with the Ohio Secretary of State on April 23, 2003)

Incorporated herein by reference to Exhibit 3(a) to Peoples’ Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003 (File No. 0-16772) (“Peoples’ March 31, 2003 Form 10-Q”)

3.1(e)

Certificate of Amendment by Shareholders to the Amended Articles of Incorporation of Peoples Bancorp Inc. (as filed with the Ohio Secretary of State on January 22, 2009)

Incorporated herein by reference to Exhibit 3.1 to Peoples’ Current Report on Form 8-K dated and filed on January 23, 2009 (File No. 0-16772)

3.1(f)

Certificate of Amendment by Directors to Articles filed with the Ohio Secretary of State on January 28, 2009, evidencing adoption of amendments by the Board of Directors of Peoples Bancorp Inc. to Article FOURTH of the Amended Articles of Incorporation to establish express terms of Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value, of Peoples Bancorp Inc.

Incorporated herein by reference to Exhibit 3.1 to Peoples’ Current Report on Form 8-K dated and filed on February 2, 2009 (File No. 0-16772)

3.1(g)

Certificate of Amendment by the Shareholders to the Amended Articles of Incorporation of Peoples Bancorp Inc. (as filed with the Ohio Secretary of State on July 28, 2021)

Incorporated herein by reference to Exhibit 3.1(g) to Peoples' Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021 (File No. 0-16772) ("Peoples' June 30, 2021 Form 10-Q")

3.1(h)

Amended Articles of Incorporation of Peoples Bancorp Inc. (representing the Amended Articles of Incorporation in compiled form incorporating all amendments through the date of this Quarterly Report on Form 10-Q) [For purposes of SEC reporting compliance only--not filed with Ohio Secretary of State]

Incorporated herein by reference to Exhibit 3.1(h) to Peoples' June 30, 2021 Form 10-Q

3.2(a)

Code of Regulations of Peoples Bancorp Inc. P

Incorporated herein by reference to Exhibit 3(b) to Peoples’ Registration Statement on Form 8-B filed on July 20, 1993 (File No. 0-16772)

3.2(b)

Certified Resolutions Regarding Adoption of Amendments to Sections 1.03, 1.04, 1.05, 1.06, 1.08, 1.10, 2.03(C), 2.07, 2.08, 2.10 and 6.02 of the Code of Regulations of Peoples Bancorp Inc. by shareholders on April 10, 2003

Incorporated herein by reference to Exhibit 3(c) to Peoples’ March 31, 2003 Form 10-Q

3.2(c)

Certificate regarding adoption of amendments to Sections 3.01, 3.03, 3.04, 3.05, 3.06, 3.07, 3.08 and 3.11 of the Code of Regulations of Peoples Bancorp Inc. by shareholders on April 8, 2004

Incorporated herein by reference to Exhibit 3(a) to Peoples’ Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004 (File No. 0-16772)

+Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of SEC Regulation S-K. A copy of any omitted schedules or exhibits will be furnished supplementally by Peoples Bancorp Inc. to the SEC, or the staff of the SEC, on a confidential basis upon request.

PPeoples Bancorp Inc. filed this exhibit with the SEC in paper form originally and this exhibit has not been filed with the SEC in electronic format.

8284

Table of Contents

Exhibit
Number

Description

Exhibit Location

3.2(d)

Certificate regarding adoption of amendments to Sections 2.06, 2.07, 3.01 and 3.04 of Peoples Bancorp Inc.’s Code of Regulations by the shareholders on April 13, 2006

Incorporated herein by reference to Exhibit 3.1 to Peoples’ Current Report on Form 8-K dated and filed on April 14, 2006 (File No. 0-16772)

3.2(e)

Certificate regarding adoption of an amendment to Section 2.01 of Peoples Bancorp Inc.’s Code of Regulations by the shareholders on April 22, 2010

Incorporated herein by reference to Exhibit 3.2(e) to Peoples’ Quarterly Report on Form 10-Q/A (Amendment No. 1) for the quarterly period ended June 30, 2010 (File No. 0-16772)

3.2(f)

Certificate regarding Adoption of Amendment to Division (D) of Section 2.02 of the Code of Regulations of Peoples Bancorp Inc. by the Shareholders at the Annual Meeting of Shareholders on April 26, 2018

Incorporated herein by reference to Exhibit 3.1 to Peoples' Current Report on Form 8-K dated and filed on June 28, 2018 (File No. 0-16772) ("Peoples' June 28, 2018 Form 8-K")

3.2(g)

Code of Regulations of Peoples Bancorp Inc. (This document represents the Code of Regulations of Peoples Bancorp Inc. in compiled form incorporating all amendments.)

Incorporated herein by reference to Exhibit 3.2 to Peoples' June 28, 2018 Form 8-K

~~4.1(a)~~

Indenture, dated February 26, 2004, between First National Bankshares Corporation, as issuer, and Wilmington Trust Company, as trustee, related to Floating Rate Junior Subordinated Debt Securities due 2034

~~Filed herewith~~

~~4.1(b~~)

~~First Supplemental Indenture, dated January 15, 2016, between Wilmington Trust Company, as trustee, and Premier Financial Bancorp, Inc., as successor to First National Bankshares Corporation~~

~~Filed herewith~~

~~4.1(c)~~

~~Second Supplemental Indenture, dated September 17, 2021, between Wilmington Trust Company, as trustee, and Peoples Bancorp Inc., as successor to Premier Financial Bancorp, Inc.~~

~~Filed herewith~~

~~4.2~~

Amended and Restated Declaration of Trust of FNB Capital Trust One, dated as of February 26, 2004; NOTE: Pursuant to the First Supplemental Indenture, dated January 15, 2016, between Wilmington Trust Company, as trustee, and Premier Financial Bancorp, Inc., Premier Financial Bancorp, Inc. succeeded to and was substituted for First National Bankshares Corporation as "Sponsor" and pursuant to theSecond Supplemental Indenture, dated September 17, 2021, between Wilmington Trust Company, as trustee, and Peoples Bancorp Inc., Peoples Bancorp Inc. succeeded and was substituted for Premier Financial Bancorp, Inc. as "Sponsor"

~~Filed herewith~~

~~4.3~~

Notice of Removal of Administrators and Appointment of Replacements, dated September 17, 2021, delivered to Wilmington Trust Company by the Successor Administrators named therein and Peoples Bancorp Inc.

~~Filed herewith~~

~~4.4~~

Guarantee Agreement, dated February 26, 2004, between First National Bankshares Corporation, as guarantor, and Wilmington Trust Company, as guarantee trustee, related to the Capital Securities (as defined therein); NOTE: Pursuant to the First Supplemental Indenture, dated January 15, 2016, between Wilmington Trust Company, as trustee, and Premier Financial Bancorp, Inc., Premier Financial Bancorp, Inc. succeeded to and was substituted for First National Bankshares Corporation as "Guarantor" and pursuant to theSecond Supplemental Indenture, dated September 17, 2021, between Wilmington Trust Company, as trustee, and Peoples Bancorp Inc., Peoples Bancorp Inc. succeeded and was substituted for Premier Financial Bancorp, Inc. as "Guarantor"

~~Filed herewith~~

31.1

Rule 13a-14(a)/15d-14(a) Certifications [President and Chief Executive Officer]

Filed herewith

~~Table of Contents~~

Exhibit
Number

~~Description~~

~~Exhibit Location~~

31.2

Rule 13a-14(a)/15d-14(a) Certifications [Executive Vice President, Chief Financial Officer and Treasurer]

Filed herewith

Section 1350 Certifications

Furnished herewith

101.INS

Inline XBRL Instance Document ##