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 March 31, ~~2023~~

2024


☐			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

☒

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: ~~28,485,213~~35,493,844 common shares, without par value, at April ~~28, 2023.~~30, 2024.

Table of ofCo ~~Contents~~n tents


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 INCOME (LOSS) (Unaudited)			5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)			6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)			7
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			8
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			39


EXECUTIVE SUMMARY			42
RESULTS OF OPERATIONS			4445
FINANCIAL CONDITION			5758
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			6869
ITEM 4. CONTROLS AND PROCEDURES			69
PART II – OTHER INFORMATION			6970
ITEM 1. LEGAL PROCEEDINGS			6970
ITEM 1A. RISK FACTORS			6970
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			70
ITEM 3. DEFAULTS UPON SENIOR SECURITIES			70
ITEM 4. MINE SAFETY DISCLOSURES			7071
ITEM 5. OTHER INFORMATION			7071
ITEM 6. EXHIBITS			7172
SIGNATURES			74

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PEOPLES BANCORP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


		March 31, 2023		December 31, 2022			March 31, 2024	December 31, 2023

(Dollars in thousands)	(Dollars in thousands)	(Unaudited)
(Dollars in thousands)
(Dollars in thousands)
Assets
Assets
Assets	Assets
Cash and cash equivalents:	Cash and cash equivalents:
Cash and balances due from banks	Cash and balances due from banks	$	97,101	$	94,679
Cash and balances due from banks
Cash and balances due from banks
Interest-bearing deposits in other banks	Interest-bearing deposits in other banks	60,053		59,343
Total cash and cash equivalents	Total cash and cash equivalents	157,154		154,022
Available-for-sale investment securities, at fair value (amortized cost of $1,196,521 at March 31, 2023 and $1,300,719 at December 31, 2022) (a)		1,049,497		1,131,399
Held-to-maturity investment securities, at amortized cost (fair value of $624,436 at March 31, 2023 and $478,509 at December 31, 2022) (a)		694,072		560,212
Available-for-sale investment securities, at fair value (amortized cost of $1,262,319 at March 31, 2024 and $1,184,288 at December 31, 2023) (a)
Held-to-maturity investment securities, at amortized cost (fair value of $602,112 at March 31, 2024 and $612,022 at December 31, 2023) (a)
Other investment securities	Other investment securities	52,763		51,609
Total investment securities (a)	Total investment securities (a)	1,796,332		1,743,220
Loans and leases, net of deferred fees and costs (b)	Loans and leases, net of deferred fees and costs (b)	4,759,718		4,707,150
Allowance for credit losses	Allowance for credit losses	(53,303)		(53,162)
Net loans and leases (c)	Net loans and leases (c)	4,706,415		4,653,988
Loans held for sale	Loans held for sale	2,527		2,140
Bank premises and equipment, net of accumulated depreciation	Bank premises and equipment, net of accumulated depreciation	86,567		82,934
Bank owned life insurance	Bank owned life insurance	105,999		105,292
Goodwill	Goodwill	292,597		292,397
Other intangible assets	Other intangible assets	31,965		33,932
Other assets	Other assets	131,964		139,379
Total assets	Total assets	$	7,311,520	$	7,207,304
Liabilities	Liabilities					Liabilities
Deposits:	Deposits:
Non-interest-bearing	Non-interest-bearing	$	1,555,064	$	1,589,402
Non-interest-bearing
Non-interest-bearing
Interest-bearing	Interest-bearing	4,233,463		4,127,539
Total deposits	Total deposits	5,788,527		5,716,941
Short-term borrowings	Short-term borrowings	490,670		500,138
Long-term borrowings	Long-term borrowings	95,629		101,093

Accrued expenses and other liabilities	Accrued expenses and other liabilities	117,151		103,804
Accrued expenses and other liabilities
Accrued expenses and other liabilities
Total liabilities	Total liabilities	6,491,977		6,421,976
Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Preferred shares, no par value, 50,000 shares authorized, no shares issued at March 31, 2023 and at December 31, 2022		—		—
Common shares, no par value, 50,000,000 shares authorized, 29,868,456 shares issued at March 31, 2023 and 29,857,920 shares issued at December 31, 2022, including at each date shares held in treasury		684,367		686,450
Preferred shares, no par value, 50,000 shares authorized, no shares issued at March 31, 2024 or at December 31, 2023
Common shares, no par value, 50,000,000 shares authorized, 36,747,787 shares issued at March 31, 2024 and 36,736,041 shares issued at December 31, 2023, including at each date shares held in treasury
Retained earnings	Retained earnings	281,771		265,936
Accumulated other comprehensive loss, net of deferred income taxes	Accumulated other comprehensive loss, net of deferred income taxes	(110,979)		(127,136)
Treasury stock, at cost, 1,457,611 shares at March 31, 2023 and 1,643,461 shares at December 31, 2022		(35,616)		(39,922)
Treasury stock, at cost, 1,355,337 shares at March 31, 2024 and 1,511,348 shares at December 31, 2023
Total stockholders’ equity	Total stockholders’ equity	819,543		785,328
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	7,311,520	$	7,207,304

(a) Available-for-sale investment securities and held-to-maturity investment securities are presented net of allowance for credit losses of $0 and ~~$241,~~$238, respectively, at March 31, ~~2023~~2024, and $0 and $238, respectively, at December 31, ~~2022.~~2023.

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

See Notes to the Unaudited Condensed Consolidated Financial Statements

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PEOPLES BANCORP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


		Three Months Ended
		March 31,
						Three Months Ended
						Three Months Ended
						Three Months Ended
					March 31,					March 31,
(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	2023		2022			(Dollars in thousands, except per share data)	2024	2023
Interest income:	Interest income:
Interest and fees on loans and leases
Interest and fees on loans and leases
Interest and fees on loans and leases	Interest and fees on loans and leases	$	71,762	$	50,200
Interest and dividends on taxable investment securities	Interest and dividends on taxable investment securities	11,003		6,050
Interest on tax-exempt investment securities	Interest on tax-exempt investment securities	996		1,015
Other interest income	Other interest income	388		160
Total interest income	Total interest income	84,149		57,425
Interest expense:	Interest expense:
Interest on deposits	Interest on deposits	5,661		2,053
Interest on deposits
Interest on deposits
Interest on short-term borrowings	Interest on short-term borrowings	4,457		338
Interest on long-term borrowings	Interest on long-term borrowings	1,153		724

Total interest expense	Total interest expense	11,271		3,115
Total interest expense
Total interest expense
Net interest income	Net interest income	72,878		54,310
Provision for (recovery of) credit losses		1,853		(6,807)
Net interest income after provision for (recovery of) credit losses		71,025		61,117
Provision for credit losses
Net interest income after provision for credit losses

Non-interest income:	Non-interest income:

Non-interest income:

Non-interest income:
Insurance income
Insurance income
Insurance income
Electronic banking income	Electronic banking income	5,443		5,253
Insurance income		5,425		4,731
Trust and investment income	Trust and investment income	4,084		4,276
Deposit account service charges	Deposit account service charges	3,523		3,426
Bank owned life insurance income
Lease income	Lease income	1,077		775
Bank owned life insurance income		707		431
Mortgage banking income	Mortgage banking income	314		436
Net loss on investment securities
Net loss on asset disposals and other transactions	Net loss on asset disposals and other transactions	(246)		(127)
Net (loss) gain on investment securities		(1,935)		130
Other non-interest income	Other non-interest income	668		719
Total non-interest income	Total non-interest income	19,060		20,050
Non-interest expense:	Non-interest expense:
Salaries and employee benefit costs
Salaries and employee benefit costs
Salaries and employee benefit costs	Salaries and employee benefit costs	32,028		27,729
Net occupancy and equipment expense	Net occupancy and equipment expense	4,955		5,088
Data processing and software expense	Data processing and software expense	4,562		2,916
Professional fees	Professional fees	2,881		3,672
Amortization of other intangible assets	Amortization of other intangible assets	1,871		1,708
Electronic banking expense	Electronic banking expense	1,491		2,759
Federal Deposit Insurance Corporation ("FDIC") insurance expense
Other loan expenses
Marketing expense
Franchise tax expense	Franchise tax expense	1,034		764
Marketing expense		930		995
FDIC insurance expense		801		1,194
Other loan expenses		739		832
Communication expense	Communication expense	613		625
Other non-interest expense	Other non-interest expense	4,574		3,347
Total non-interest expense	Total non-interest expense	56,479		51,629
Income before income taxes	Income before income taxes	33,606		29,538
Income tax expense	Income tax expense	7,046		5,961
Net income	Net income	$	26,560	$	23,577

Earnings per common share - basic	Earnings per common share - basic	$	0.95	$	0.84

Earnings per common share - basic

Earnings per common share - basic
Earnings per common share - diluted	Earnings per common share - diluted	$	0.94	$	0.84
Weighted-average number of common shares outstanding - basic	Weighted-average number of common shares outstanding - basic	27,891,760		28,006,165
Weighted-average number of common shares outstanding - diluted	Weighted-average number of common shares outstanding - diluted	28,021,879		28,129,131
Cash dividends declared	Cash dividends declared	$	10,725	$	10,176
Cash dividends declared per common share	Cash dividends declared per common share	$	0.38	$	0.36

See Notes to the Unaudited Condensed Consolidated Financial Statements

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PEOPLES BANCORP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~ (Unaudited)

Three Months Ended
March 31,
(Dollars in thousands) 2023 2022
Net income $ 26,560 $ 23,577
Other comprehensive income (loss):
Available-for-sale investment securities:
Gross unrealized holding gain (loss) arising during the period 20,362 (71,637)
Related tax (expense) benefit (4,647) 16,448
Reclassification adjustment for net loss (gain) included in net income 1,935 (130)
Related tax (expense) benefit (452) 30
Net effect on other comprehensive income (loss) 17,198 (55,289)
Defined benefit plan:
Net loss arising during the period — (14)
Related tax benefit — 3
Amortization of unrecognized loss and service cost on benefit plans 2 21
Related tax benefit — (5)
Net effect on other comprehensive income (loss) 2 5
Cash flow hedges:
Net (loss) gain arising during the period (1,356) 5,456
Related tax benefit (expense) 313 (1,220)
Net effect on other comprehensive income (loss) (1,043) 4,236
Total other comprehensive gain (loss), net of tax 16,157 (51,048)
Total comprehensive income (loss) $ 42,717 $ (27,471)


	Three Months Ended
	March 31,
(Dollars in thousands)	2024		2023
Net income	$	29,584	$	26,560
Other comprehensive (loss) income:
Available-for-sale investment securities:
Gross unrealized holding (loss) gain arising during the period	(9,887)		20,362
Related tax benefit (expense)	2,340		(4,647)
Reclassification adjustment for net loss included in net income	1		1,935
Related tax expense	—		(452)


Net effect on other comprehensive (loss) income	(7,546)		17,198
Defined benefit plan:


Amortization of unrecognized loss and service cost on benefit plans	—		2



Net effect on other comprehensive (loss) income	—		2
Cash flow hedges:
Net gain (loss) arising during the period	256		(1,356)
Related tax (expense) benefit	(60)		313
Net effect on other comprehensive (loss) income	196		(1,043)
Total other comprehensive (loss) income, net of tax	(7,350)		16,157
Total comprehensive income	$	22,234	$	42,717

See Notes to the Unaudited Condensed Consolidated Financial Statements

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PEOPLES BANCORP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)


							Accumulated Other Comprehensive Loss
									Accumulated Other Comprehensive Loss
											Accumulated Other Comprehensive Loss						Total Stockholders' Equity
		Common Shares												Common Shares	Retained Earnings	Treasury Stock
(Dollars in thousands)
Balance, December 31, 2023
Balance, December 31, 2023
Balance, December 31, 2023

Net income
Net income
Net income
Other comprehensive loss, net of tax

								Accumulated Other Comprehensive Loss					Total Stockholders' Equity
			Common Shares		Retained Earnings		Treasury Stock
(Dollars in thousands)
Balance, December 31, 2022			$	686,450	$	265,936	$	(127,136)	$	(39,922)	$	785,328
Cash dividends declared

Net income			—		26,560		—		—		26,560
Other comprehensive gain, net of tax			—		—		16,157		—		16,157

Cash dividends declared

Cash dividends declared	Cash dividends declared		—		(10,725)		—		—		(10,725)

Reissuance of treasury stock for common share awards	Reissuance of treasury stock for common share awards		(4,685)		—		—		4,685		—
Reissuance of treasury stock for common share awards
Reissuance of treasury stock for common share awards

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		—		—		—		(920)		(920)

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
Common shares repurchased under share repurchase program
Common shares issued under dividend reinvestment plan	Common shares issued under dividend reinvestment plan		402		—		—		—		402
Common shares issued under compensation plan for Boards of Directors	Common shares issued under compensation plan for Boards of Directors		8		—		—		128		136

Common shares issued under employee stock purchase plan
Common shares issued under employee stock purchase plan
Common shares issued under employee stock purchase plan	Common shares issued under employee stock purchase plan		42		—		—		413		455
Stock-based compensation	Stock-based compensation		2,150		—		—		—		2,150

Balance, March 31, 2023			$	684,367	$	281,771	$	(110,979)	$	(35,616)	$	819,543
Balance, March 31, 2024

Balance, March 31, 2024

Balance, March 31, 2024


							Accumulated Other Comprehensive Loss				Total Stockholders' Equity
			Common Shares		Retained Earnings				Treasury Stock
															Accumulated Other Comprehensive Loss
							Accumulated Other Comprehensive Loss
									Accumulated Other Comprehensive Loss									Total Stockholders' Equity
		Common Shares														Common Shares	Retained Earnings		Treasury Stock
(Dollars in thousands)	(Dollars in thousands)			Common Shares		Retained Earnings					Accumulated Other Comprehensive Loss		Treasury Stock	Total Stockholders' Equity
Balance, December 31, 2021
Balance, December 31, 2022
Balance, December 31, 2022
Balance, December 31, 2022

Net income	Net income		—		23,577		—		—		23,577
Other comprehensive loss, net of tax			—		—		(51,048)		—		(51,048)
Net income
Net income
Other comprehensive income, net of tax

Cash dividends declared	Cash dividends declared		—		(10,176)		—		—		(10,176)

Cash dividends declared

Cash dividends declared

Reissuance of treasury stock for common share awards
Reissuance of treasury stock for common share awards
Reissuance of treasury stock for common share awards	Reissuance of treasury stock for common share awards		(3,998)		—		—		3,998		—

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		—		—		—		(1,230)		(1,230)

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

Common shares issued under dividend reinvestment plan
Common shares issued under dividend reinvestment plan
Common shares issued under dividend reinvestment plan	Common shares issued under dividend reinvestment plan		305		—		—		—		305
Common shares issued under compensation plan for Boards of Directors	Common shares issued under compensation plan for Boards of Directors		31		—		—		93		124

Common shares issued under employee stock purchase plan
Common shares issued under employee stock purchase plan
Common shares issued under employee stock purchase plan	Common shares issued under employee stock purchase plan		46		—		—		140		186
Stock-based compensation	Stock-based compensation		1,577		—		—		—		1,577

Balance, March 31, 2022			$	684,243	$	220,477	$	(62,667)	$	(33,713)	$	808,340
Balance, March 31, 2023

Balance, March 31, 2023

Balance, March 31, 2023

See Notes to the Unaudited Condensed Consolidated Financial Statements

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PEOPLES BANCORP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Three Months Ended

March 31,

Three Months Ended

March 31,

(Dollars in thousands)

2023

2022

(Dollars in thousands)

2024

2023

Net cash provided by operating activities

47,997

15,710

Investing activities:

Available-for-sale investment securities:

Purchases

(22,873)

(165,305)

Proceeds from sales

95,362

4,218

Proceeds from principal payments, calls and prepayments

27,922

60,520

Held-to-maturity investment securities:

Purchases

(167,169)

(15,463)

Purchases

Proceeds from principal payments

33,324

4,512

Other investment securities:

Purchases

(4,792)

(8,208)

Purchases

Proceeds from sales

3,746

237

Net (increase) decrease in loans held for investment

(52,386)

75,740

Net increase in loans held for investment

Net expenditures for premises and equipment

(2,757)

(2,053)

Proceeds from sales of other real estate owned

107

124

Business acquisitions, net of cash received

Proceeds from bank owned life insurance contracts

Business acquisitions, net of cash received

(200)

(80,532)

Investment in limited partnership and tax credit funds

(267)

(1,151)

Net cash used in investing activities

(89,983)

(127,361)

Financing activities:

Net (decrease) increase in non-interest-bearing deposits

(34,338)

25,246

Net decrease in non-interest-bearing deposits

Net increase in interest-bearing deposits

105,991

115,255

Net decrease in short-term borrowings

(9,468)

(27,252)

Proceeds from long-term borrowings

2,899

—

Payments on long-term borrowings

(8,450)

(260)

Cash dividends paid

(10,993)

(10,438)

Cash dividends paid

Purchase of treasury stock under share repurchase program

Purchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors to be held as treasury stock

(920)

(1,230)

Proceeds from issuance of common shares

397

282

Net cash provided by financing activities

45,118

101,603

Net increase (decrease) in cash and cash equivalents

3,132

(10,048)

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

154,022

415,727

Cash and cash equivalents at end of period

157,154

405,679

Supplemental cash flow information:

Interest paid

9,675

2,656

Income taxes paid

105

—

Supplemental noncash disclosures:

Transfers from total loans to other real estate owned

—

Transfers from total loans to other real estate owned

Noncash recognition of new leases

336

726

See Notes to the Unaudited Condensed Consolidated Financial Statements

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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, ~~2022~~2023 ("Peoples' ~~2022~~2023 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’ ~~2022~~2023 Form 10-K, as updated by the information contained in this Quarterly Report on Form 10-Q for the quarterly period ended March 31, ~~2023~~2024 (this "Form 10-Q"). Management has evaluated all significant events and transactions that occurred after March 31, ~~2023~~2024 for potential recognition or disclosure in these ~~unaudited condensed consolidated financial statements.~~Unaudited Condensed Consolidated Financial Statements. In the opinion of management, these ~~unaudited condensed consolidated financial statements~~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, ~~2022,~~2023, contained herein, has been derived from the audited Consolidated Balance Sheet included in Peoples’ ~~2022~~2023 Form 10-K.

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~~Refer 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’ ~~2022~~2023 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 ("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 2021-01. This update was effective as of March 12, 2020 through December 31, 2022. The FASB further updated the guidance with ASU 2022-06, which deferred the sunset date of ASC Topic 848, Reference Rate Reform (Topic 848) from December 31, 2022 to December 31, 2024. ASU 2020-04 was early adopted by Peoples as of September 30, 2021, and did not have a significant impact on Peoples' Consolidated Financial Statements, but is expected to reduce the accounting burden of assessing contracts impacted by reference rate reform. Peoples established a working group, consisting of key stakeholders from throughout the company, to monitor developments relating to LIBOR changes and to guide the transition. This team has worked to successfully ensure that technology systems are prepared for the transition, loan documents that reference LIBOR-based rates have been appropriately amended to reference other methods of interest rate determinations and internal and external stakeholders have been apprised of the transition. Based on the transition progress to date, Peoples ceased originating LIBOR-based products and began originating SOFR-indexed products. Peoples will continue to transition all remaining LIBOR-based products to SOFR-indexed products. Peoples will also continue to evaluate the transition process and align its trajectory with regulatory guidelines regarding the cessation of LIBOR as well as monitor new developments for transitioning to alternative reference rates, if necessary and as needed.

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 Accounting Standards Codification ("ASC") 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. For entities that have 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.

Effective January 1, 2023, Peoples adopted the amendments within ASU 2022-02, using the prospective transition method. The adoption of this guidance did not have a material impact on Peoples' consolidated financial statements.

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Pursuant to the guidance in ASU 2022-02, when a loan is restructured, Peoples continues to measure the allowance for credit losses on the loan using a discounted cash flow approach that utilizes a prepayment-adjusted discount rate based on the loan’s restructured terms. Under the TDR accounting model, Peoples modeled a 12-month extension of the contractual terms for TDRs that were to mature within the next 12 months. As Peoples has elected a prospective transition, the extension on a loan that was previously restructured and accounted for as a TDR will continue to be measured as it had been historically in Peoples' allowance for credit losses until the loan is paid off, sold, liquidated, or subsequently restructured. Refer to "Note 4 Loans and Leases" for additional information.

Note 2 Fair Value of Assets and Liabilities

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' ~~2022~~2023 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.

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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
			March 31, 2023						December 31, 2022
															Recurring Fair Value Measurements at Reporting Date
		March 31, 2024														March 31, 2024	December 31, 2023
(Dollars in thousands)	(Dollars in thousands)		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3

Assets:

Assets:

Assets:	Assets:
Available-for-sale investment securities:	Available-for-sale investment securities:
Available-for-sale investment securities:
Available-for-sale investment securities:
Obligations of:
Obligations of:
Obligations of:	Obligations of:
U.S. Treasury and government agencies	U.S. Treasury and government agencies		$	58,438	$	—	$	—	$	152,422	$	—	$	—
U.S. Treasury and government agencies
U.S. Treasury and government agencies
U.S. government sponsored agencies
U.S. government sponsored agencies
U.S. government sponsored agencies	U.S. government sponsored agencies		—		98,311		—		—		88,115		—
States and political subdivisions	States and political subdivisions		—		224,996		—		—		225,882		—
States and political subdivisions
States and political subdivisions
Residential mortgage-backed securities
Residential mortgage-backed securities
Residential mortgage-backed securities	Residential mortgage-backed securities		—		605,270		—		—		604,653		—
Commercial mortgage-backed securities	Commercial mortgage-backed securities		—		52,153		—		—		50,049		—
Commercial mortgage-backed securities
Commercial mortgage-backed securities
Bank-issued trust preferred securities
Bank-issued trust preferred securities
Bank-issued trust preferred securities	Bank-issued trust preferred securities		—		10,329		—		—		10,278		—

Total available-for-sale securities	Total available-for-sale securities		$	58,438	$	991,059	$	—	$	152,422	$	978,977	$	—

Total available-for-sale securities

Total available-for-sale securities
Equity investment securities (a)
Equity investment securities (a)
Equity investment securities (a)	Equity investment securities (a)		168		199		—		147		199		—
Derivative assets (b)	Derivative assets (b)		—		27,339		—		—		34,123		—
Derivative assets (b)
Derivative assets (b)
Liabilities:
Liabilities:
Liabilities:	Liabilities:
Derivative liabilities (c)	Derivative liabilities (c)		$	—	$	23,100	$	—	$	—	$	28,529	$	—
Derivative liabilities (c)
Derivative liabilities (c)

(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 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, ~~LIBOR~~secured overnight funding rate ("SOFR") (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 or broker 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.

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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 Derivative Liabilities: Derivative assets and derivative 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 input parameters (Level 2).

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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 at March 31, ~~2023~~2024 and December 31, ~~2022.~~2023.


			Non-Recurring Fair Value Measurements at Reporting Date
			March 31, 2023						December 31, 2022
															Non-Recurring Fair Value Measurements at Reporting Date
		March 31, 2024															March 31, 2024			December 31, 2023
(Dollars in thousands)	(Dollars in thousands)		Level 2		Level 3				Level 2		Level 3		(Dollars in thousands)		Level 2	Level 3		Level 2	Level 3
							Level 2	Level 3

Assets:	Assets:
Assets:
Assets:
Collateral dependent loans
Collateral dependent loans
Collateral dependent loans	Collateral dependent loans		$	—	$	8,860					$	—	$	10,354
Loans held for sale (a)	Loans held for sale (a)		$	1,251	$	—			$	1,254	$	—
Other real estate owned	Other real estate owned		$	—	$	—			$	—	$	55

(a) Loans held for sale are presented gross of a valuation allowance of ~~$99~~$138 and ~~$105~~$163 at March 31, ~~2023~~2024 and at December 31, ~~2022,~~2023, respectively.

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, which Peoples then 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 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"):, 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, but is based on recent real estate 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. 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).

~~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.

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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	March 31, 2023				December 31, 2022				(Dollars in thousands)					Fair Value Hierarchy Level	March 31, 2024		December 31, 2023
			Carrying Amount		Fair Value		Carrying Amount		Fair Value								Carrying Amount	Fair Value	Carrying Amount	Fair Value

Assets:	Assets:
Assets:
Assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	1	$	157,154	$	157,154						$	154,022	$	154,022

Held-to-maturity investment securities:	Held-to-maturity investment securities:

Held-to-maturity investment securities:

Held-to-maturity investment securities:
Obligations of:	Obligations of:
Obligations of:
Obligations of:
U.S. government sponsored agencies
U.S. government sponsored agencies
U.S. government sponsored agencies	U.S. government sponsored agencies	2	194,184		186,446		132,366		123,020
States and political subdivisions (a)	States and political subdivisions (a)	2	145,085		114,192		145,263		108,776
Residential mortgage-backed securities	Residential mortgage-backed securities	2	245,294		230,377		176,215		157,998
Commercial mortgage-backed securities	Commercial mortgage-backed securities	2	105,002		89,919		101,861		85,354
Commercial mortgage-backed securities		3	4,748		3,502		4,748		3,361

Total held-to-maturity securities
Total held-to-maturity securities
Total held-to-maturity securities	Total held-to-maturity securities		694,313		624,436		560,453		478,509

Other investment securities:	Other investment securities:

Other investment securities:

Other investment securities:
Other investment securities at cost:
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	27,381		27,381		26,605		26,605
Federal Home Loan Bank ("FHLB") stock
Federal Home Loan Bank ("FHLB") stock
Federal Reserve Bank ("FRB") stock	Federal Reserve Bank ("FRB") stock	N/A	21,231		21,231		21,231		21,231
Banker's Bank of Kentucky ("BBKY") stock		N/A	355		355		355		355

Total other investment securities at cost
Total other investment securities at cost
Total other investment securities at cost	Total other investment securities at cost		48,967		48,967		48,191		48,191
Other investment securities at fair value:	Other investment securities at fair value:
Nonqualified deferred compensation (b)
Nonqualified deferred compensation (b)
Nonqualified deferred compensation (b)	Nonqualified deferred compensation (b)	1	2,405		2,405		2,048		2,048
Other investment securities (c)	Other investment securities (c)	2	1,024		1,024		1,024		1,024
Total other investment securities	Total other investment securities		52,396		52,396		51,263		51,263

Loans and leases, net of deferred fees and costs (d)	Loans and leases, net of deferred fees and costs (d)	3	4,759,718		4,522,720		4,707,150		4,516,695
Loans and leases, net of deferred fees and costs (d)
Loans and leases, net of deferred fees and costs (d)
Bank owned life insurance	Bank owned life insurance	2	105,999		105,999		105,292		105,292
Liabilities:	Liabilities:
Deposits	Deposits	2	$	5,788,527	$	4,924,296	$	5,716,941	$	4,682,491
Deposits
Deposits
Short-term borrowings	Short-term borrowings	2	490,670		496,786		500,138		504,584
Long-term borrowings	Long-term borrowings	2	95,629		96,822		101,093		101,992

(a) Held-to-maturity investment securities are presented gross of an allowance for credit losses of ~~$241~~$238 at both March 31, ~~2023~~2024 and December 31, ~~2022.~~2023.

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

(c) "Other investment securities", as reported on the Unaudited Consolidated Balance Sheets, also included equity investment securities at March 31, ~~2023~~2024

and at December 31, ~~2022,~~2023, 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 ~~$53.3~~$64.8 million and ~~$53.2~~$62.0 million at March 31, ~~2023~~2024 and at December 31, ~~2022,~~2023, respectively.

For certain financial assets and liabilities, carrying value approximates fair value due to the nature of the financial instrument. These financial instruments include cash and cash equivalents 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 and cash equivalents balances are 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, relevant yield curves, credit spreads and prices from market makers and live trading systems (Level 2). When observable market data is absent, the independent pricing service estimates prices based on underlying cash flow characteristics and discount rates and compares them to similar securities (Level 3). Management reviews the valuation

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methodology and quality controls utilized by the pricing services in management's overall assessment

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

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 financial liabilities include the following: customer relationships, the deposit base, and other information required to compute Peoples’ aggregate fair value, which are not included in the above information. Accordingly, the fair values described above are not intended to represent the aggregate fair value of Peoples.

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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
March 31, 2023
March 31, 2024										March 31, 2024
Obligations of:	Obligations of:									Obligations of:
U.S. Treasury and government agencies	U.S. Treasury and government agencies	$	61,584	$	—	$	(3,146)	$	58,438
U.S. government sponsored agencies	U.S. government sponsored agencies	109,927		22		(11,638)		98,311
States and political subdivisions	States and political subdivisions	254,523		32		(29,559)		224,996
Residential mortgage-backed securities	Residential mortgage-backed securities	697,452		1,070		(93,252)		605,270
Commercial mortgage-backed securities	Commercial mortgage-backed securities	62,256		—		(10,103)		52,153
Bank-issued trust preferred securities	Bank-issued trust preferred securities	10,779		40		(490)		10,329

Total available-for-sale securities	Total available-for-sale securities	$	1,196,521	$	1,164	$	(148,188)	$	1,049,497
December 31, 2022
Total available-for-sale securities
Total available-for-sale securities
December 31, 2023										December 31, 2023
Obligations of:	Obligations of:									Obligations of:
U.S. Treasury and government agencies	U.S. Treasury and government agencies	$	158,473	$	—	$	(6,051)	$	152,422
U.S. government sponsored agencies	U.S. government sponsored agencies	101,753		18		(13,656)		88,115
States and political subdivisions	States and political subdivisions	261,612		12		(35,742)		225,882
Residential mortgage-backed securities	Residential mortgage-backed securities	707,025		1,017		(103,389)		604,653
Commercial mortgage-backed securities	Commercial mortgage-backed securities	61,091		—		(11,042)		50,049
Bank-issued trust preferred securities	Bank-issued trust preferred securities	10,765		57		(544)		10,278

Total available-for-sale securities	Total available-for-sale securities	$	1,300,719	$	1,104	$	(170,424)	$	1,131,399
Total available-for-sale securities
Total available-for-sale securities

The gross gains and losses realized by Peoples from sales of available-for-sale securities for the periods ended March 31 were as follows:


		Three Months Ended
		March 31,
						Three Months Ended
						Three Months Ended
						Three Months Ended
					March 31,					March 31,
(Dollars in thousands)	(Dollars in thousands)	2023		2022			(Dollars in thousands)	2024	2023
Gross gains realized	Gross gains realized	$	78	$	146
Gross losses realized	Gross losses realized	(2,013)		(16)
Net (loss) gain realized	Net (loss) gain realized	$	(1,935)	$	130

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.

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


		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
March 31, 2023
March 31, 2024																March 31, 2024
Obligations of:	Obligations of:
U.S. Treasury and government agencies
U.S. Treasury and government agencies
U.S. Treasury and government agencies	U.S. Treasury and government agencies	$	—	$	—	—	$	58,438	$	3,146	18	$	58,438	$	3,146
U.S. government sponsored agencies	U.S. government sponsored agencies	24,093		222		18	71,220		11,416		14	95,313		11,638
States and political subdivisions	States and political subdivisions	52,634		355		96	161,939		29,204		117	214,573		29,559
Residential mortgage-backed securities	Residential mortgage-backed securities	22,648		486		32	572,090		92,766		212	594,738		93,252
Commercial mortgage-backed securities	Commercial mortgage-backed securities	1,627		8		1	50,526		10,095		23	52,153		10,103
Bank-issued trust preferred securities	Bank-issued trust preferred securities	478		22		1	7,533		468		4	8,011		490

Total	Total	$	101,480	$	1,093	148	$	921,746	$	147,095	388	$	1,023,226	$	148,188
December 31, 2022
Total
Total
December 31, 2023																December 31, 2023
Obligations of:	Obligations of:
U.S. Treasury and government agencies
U.S. Treasury and government agencies
U.S. Treasury and government agencies	U.S. Treasury and government agencies	$	112,730	$	2,772	13	$	39,692	$	3,279	11	$	152,422	$	6,051
U.S. government sponsored agencies	U.S. government sponsored agencies	15,166		249		17	66,706		13,407		18	81,872		13,656
States and political subdivisions	States and political subdivisions	60,324		714		114	156,900		35,028		117	217,224		35,742
Residential mortgage-backed securities	Residential mortgage-backed securities	104,959		8,087		105	488,452		95,302		139	593,411		103,389
Commercial mortgage-backed securities	Commercial mortgage-backed securities	1,874		129		2	48,175		10,913		21	50,049		11,042
Bank-issued trust preferred securities	Bank-issued trust preferred securities	4,400		100		3	3,556		444		2	7,956		544

Total	Total	$	299,453	$	12,051	254	$	803,481	$	158,373	308	$	1,102,934	$	170,424
Total
Total

Management evaluates available-for-sale investment securities for an allowance for credit losses on a quarterly basis. At March 31, ~~2023,~~2024, management concluded that no individual securities at an unrealized loss position required an allowance for credit losses. At March 31, ~~2023,~~2024, 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 March 31, ~~2023~~2024 and December 31, ~~2022~~2023 were largely attributable to changes in market interest rates and spreads since the securities were purchased, and were not 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 ~~$6.7~~$9.8 million at March 31, ~~2023~~2024 and ~~$7.8~~$8.8 million at December 31, ~~2022.~~

At March 31, 2023, 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 four positions, consisted of privately issued mortgage-backed securities with all of the underlying mortgages originated prior to 2004. Of the four positions, three positions had a fair value of less than 90% of their book values. Management analyzed the underlying credit quality of these mortgage-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. Obligations of the U.S. treasury and government agencies, obligations of U.S. government sponsored agencies, and obligations of states and political subdivisions were issued by the U.S. Treasury Department or Federal government-sponsored entities. The decline in fair values was attributable to changes in interest rates and not credit quality. Therefore, management does not consider these to be impaired securities.2023.

The unrealized loss with respect to the ~~four~~three bank-issued trust preferred securities that had been in an unrealized loss position for twelve months or more at March 31, ~~2023~~2024 was attributable to the subordinated nature of the ~~debt.~~trust preferred securities.

Table of ofCo ~~Contents~~n tents

The table below presents the amortized cost, fair value and total weighted-average yield of available-for-sale securities by contractual maturity at March 31, ~~2023.~~2024. 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	$	12,495		$	49,089		$	—		$	—		$	61,584
U.S. government sponsored agencies	U.S. government sponsored agencies	9,309			47,321			45,042			8,255			109,927
States and political subdivisions	States and political subdivisions	25,699			47,241			67,302			114,281			254,523
Residential mortgage-backed securities	Residential mortgage-backed securities	1			1,415			56,175			639,861			697,452
Commercial mortgage-backed securities	Commercial mortgage-backed securities	1,635			7,463			29,862			23,296			62,256
Bank-issued trust preferred securities	Bank-issued trust preferred securities	—			6,279			4,500			—			10,779

Total available-for-sale securities	Total available-for-sale securities	$	49,139		$	158,808		$	202,881		$	785,693		$	1,196,521
Total available-for-sale securities
Total available-for-sale securities
Fair value	Fair value																Fair value
Obligations of:	Obligations of:																Obligations of:
U.S. Treasury and government agencies	U.S. Treasury and government agencies	$	12,195		$	46,243		$	—		$	—		$	58,438
U.S. government sponsored agencies	U.S. government sponsored agencies	9,154			44,088			38,785			6,284			98,311
States and political subdivisions	States and political subdivisions	25,637			45,497			57,761			96,101			224,996
Residential mortgage-backed securities	Residential mortgage-backed securities	1			1,358			51,295			552,616			605,270
Commercial mortgage-backed securities	Commercial mortgage-backed securities	1,627			6,771			24,990			18,765			52,153
Bank-issued trust preferred securities	Bank-issued trust preferred securities	—			6,284			4,045			—			10,329

Total available-for-sale securities	Total available-for-sale securities	$	48,614		$	150,241		$	176,876		$	673,766		$	1,049,497
Total available-for-sale securities
Total available-for-sale securities
Total weighted-average yield	Total weighted-average yield	2.58		%	2.27		%	1.69		%	1.89		%	1.93		%	Total weighted-average yield	3.59	%	2.31	%	2.77	%	2.73	%	2.70	%

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
March 31, 2023
March 31, 2024												March 31, 2024
Obligations of:	Obligations of:											Obligations of:
U.S. government sponsored agencies	U.S. government sponsored agencies	$	194,184	$	—	$	385	$	(8,123)	$	186,446
States and political subdivisions	States and political subdivisions	145,085		(241)		199		(30,851)		114,192
Residential mortgage-backed securities	Residential mortgage-backed securities	245,294		—		1,321		(16,345)		230,377
Commercial mortgage-backed securities	Commercial mortgage-backed securities	109,750		—		49		(16,378)		93,421
Total held-to-maturity securities		$	694,313	$	(241)	$	1,954	$	(71,697)	$	624,436
December 31, 2022
Total held-to-maturity investment securities
December 31, 2023												December 31, 2023
Obligations of:	Obligations of:											Obligations of:
U.S. government sponsored agencies	U.S. government sponsored agencies	$	132,366	$	—	$	130	$	(9,476)	$	123,020
States and political subdivisions	States and political subdivisions	145,263		(241)		162		(36,408)		108,776
Residential mortgage-backed securities	Residential mortgage-backed securities	176,215		—		244		(18,461)		157,998
Commercial mortgage-backed securities	Commercial mortgage-backed securities	106,609		—		—		(17,894)		88,715
Total held-to-maturity securities		$	560,453	$	(241)	$	536	$	(82,239)	$	478,509
Total held-to-maturity investment securities

There were no sales of held-to-maturity investment securities ~~for~~during either of the three months ended March 31, ~~2023~~2024 or ~~2022.~~2023.

Management evaluates held-to-maturity investment securities for an allowance for credit losses on a quarterly basis. Peoples has determined that the loss given default for U.S. government sponsored ~~enterprise~~agencies investment securities is zero, due to the fact that it is unlikely the ultimate guarantor (the U.S. government) would not perform on its implicit guarantee in the event of default. The remaining securities are included in the calculation of the allowance for credit losses for held-to-maturity investment securities. Peoples ~~recorded $241,000~~reported $0.2 million of allowance for credit losses for held-to-maturity securities at both March 31, ~~2023,~~2024, and December 31, ~~2022.~~2023.

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

Table of ofCo ~~Contents~~n tents


		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
March 31, 2023
March 31, 2024																March 31, 2024
Obligations of:	Obligations of:
U.S. government sponsored agencies
U.S. government sponsored agencies
U.S. government sponsored agencies	U.S. government sponsored agencies	$	81,988	$	413	14	30,303		7,710		9	$	112,291	$	8,123
States and political subdivisions	States and political subdivisions	—		—		—	110,831		30,851		67	110,831		30,851
Residential mortgage-backed securities	Residential mortgage-backed securities	67,554		884		20	87,045		15,461		23	154,599		16,345
Commercial mortgage-backed securities	Commercial mortgage-backed securities	22,008		462		5	65,621		15,916		31	87,629		16,378
Total	Total	$	171,550	$	1,759	39	$	293,800	$	69,938	130	$	465,350	$	71,697
December 31, 2022
December 31, 2023																December 31, 2023
Obligations of:	Obligations of:
U.S. government sponsored agencies
U.S. government sponsored agencies
U.S. government sponsored agencies	U.S. government sponsored agencies	$	59,905	$	651	17	29,306		8,825		9	$	89,211	$	9,476
States and political subdivisions	States and political subdivisions	3,590		1,072		3	101,863		35,336		64	105,453		36,408
Residential mortgage-backed securities	Residential mortgage-backed securities	71,582		2,904		21	72,862		15,557		18	144,444		18,461
Commercial mortgage-backed securities	Commercial mortgage-backed securities	26,869		650		8	61,846		17,244		29	88,715		17,894
Total	Total	$	161,946	$	5,277	49	$	265,877	$	76,962	120	$	427,823	$	82,239

The table below presents the amortized cost, fair value and total weighted-average yield of held-to-maturity investment securities by contractual maturity at March 31, ~~2023.~~2024. 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 23.3% for the three months ended~~23.2% at March 31, ~~2023 and December 31, 2022, respectively.~~2024. 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	2,126			$	24,178		$	71,008		$	96,872		$	194,184
States and political subdivisions	States and political subdivisions	—			5,214			9,402			130,469			145,085
Residential mortgage-backed securities	Residential mortgage-backed securities	—			890			—			244,404			245,294
Commercial mortgage-backed securities	Commercial mortgage-backed securities	5,004			6,129			34,744			63,873			109,750
Total held-to-maturity securities		$	7,130		$	36,411		$	115,154		$	535,618		$	694,313
Total held-to-maturity investment securities
Fair value	Fair value																Fair value
Obligations of:	Obligations of:																Obligations of:
U.S. government sponsored agencies	U.S. government sponsored agencies	2,102			$	23,398		$	70,844		$	90,102		$	186,446
States and political subdivisions	States and political subdivisions	—			4,944			8,165			101,083			114,192
Residential mortgage-backed securities	Residential mortgage-backed securities	—			866			—			229,511			230,377
Commercial mortgage-backed securities	Commercial mortgage-backed securities	4,899			5,471			30,996			52,055			93,421
Total held-to-maturity securities		$	7,001		$	34,679		$	110,005		$	472,751		$	624,436
Total held-to-maturity investment securities
Total weighted-average yield	Total weighted-average yield	2.01		%	2.01		%	4.29		%	3.45		%	3.50		%	Total weighted-average yield	3.85	%	2.51	%	4.00	%	3.51	%	3.57	%

Other Investment Securities

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

Table of ofCo ~~Contents~~n tents

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


(Dollars in thousands)	(Dollars in thousands)	March 31, 2023		December 31, 2022		(Dollars in thousands)	March 31, 2024	December 31, 2023
FHLB stock	FHLB stock	$	27,381	$	26,605
FRB stock	FRB stock	21,231		21,231
Nonqualified deferred compensation	Nonqualified deferred compensation	2,405		2,048
Equity investment securities	Equity investment securities	367		346
Other investment securities	Other investment securities	1,379		1,379
Total other investment securities	Total other investment securities	$	52,763	$	51,609

During the three months ended March 31, ~~2023,~~2024, Peoples redeemed ~~$3.7~~$8.0 million of FHLB stock in order to be in compliance with the requirements of the FHLB. Peoples purchased ~~$4.5~~$6.5 million of additional FHLB stock during the three months ended March 31, ~~2023,~~2024, as a result of the FHLB's capital requirements on FHLB ~~advances during the first quarter.~~advances.

~~During~~For the three months ended March 31, 2024 and 2023, ~~and 2022,~~ Peoples ~~recognized a gain of $21,000 and a loss of $7,000, respectively, for~~recorded the change in the fair value of equity investment securities held during the period, in "Other non-interest income"., resulting in an unrealized gains of $47,000 and $21,000, respectively.

At March 31, ~~2023,~~2024, 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.~~equity at March 31, 2024.

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.~~FRB.

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

Carrying Amount

(Dollars in thousands)

March 31, 2023

December 31, 2022

(Dollars in thousands)

March 31, 2024

December 31, 2023

Securing public and trust department deposits, and repurchase agreements:

Available-for-sale

704,074

779,244

Held-to-maturity

372,372

312,921

Securing additional borrowing capacity at the FHLB and the FRB:

Available-for-sale

3,949

3,972

Held-to-maturity

145,867

128,870

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 nationwide through its Peoples Premium Finance division, and originates leases nationwide through its North Star Leasing ("NSL") division and its Vantage Financial, LLC ("Vantage") subsidiary. ~~Throughout this Form 10-Q, loans and leases are referred to as "total loans" and "loans held for investment".~~

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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)	March 31, 2023		December 31, 2022		(Dollars in thousands)	March 31, 2024	December 31, 2023
Construction	Construction	$	232,296	$	246,941
Commercial real estate, other	Commercial real estate, other	1,481,062		1,423,518
Commercial and industrial	Commercial and industrial	891,139		892,634
Premium finance	Premium finance	158,263		159,197
Leases	Leases	354,641		345,131
Residential real estate	Residential real estate	712,602		723,360
Home equity lines of credit	Home equity lines of credit	174,383		177,858
Consumer, indirect	Consumer, indirect	647,177		629,426
Consumer, direct	Consumer, direct	107,406		108,363
Deposit account overdrafts	Deposit account overdrafts	749		722
Total loans, at amortized cost	Total loans, at amortized cost	$	4,759,718	$	4,707,150

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 ~~$15.4~~$24.3 million at March 31, ~~2023~~2024 and $24.5 million at December 31, ~~2022.~~2023.

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 was as follows:


		March 31, 2023				December 31, 2022
	March 31, 2024												March 31, 2024			December 31, 2023
(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	$	1	$	—	$	12	$	—
Commercial real estate, other	Commercial real estate, other	11,345		150		12,121		167
Commercial and industrial	Commercial and industrial	3,064		228		3,462		130
Premium finance	Premium finance	—		764		—		504
Leases	Leases	3,884		2,491		3,178		3,041
Residential real estate	Residential real estate	8,641		238		9,496		917
Home equity lines of credit	Home equity lines of credit	793		127		820		58
Consumer, indirect	Consumer, indirect	2,147		13		2,176		—
Consumer, direct	Consumer, direct	105		3		208		25
Total loans, at amortized cost	Total loans, at amortized cost	$	29,980	$	4,014	$	31,473	$	4,842

(a) There were ~~$3.4~~$3.8 million of nonaccrual loans for which there was no allowance for credit losses at March 31, ~~2023~~2024 and ~~$1.4~~$1.2 million of nonaccrual loans for which there was no allowance for credit losses at December 31, ~~2022.~~2023.

During the first three months of ~~2023,~~2024, nonaccrual loans ~~declined~~increased compared to at December 31, ~~2022,~~2023, which was primarily due to ~~$0.9~~one large commercial and industrial loan of approximately $1.9 million ~~of residential real estate being loans~~that went on nonaccrual status asduring the first quarter of ~~December 31, 2022 that were accruing as of March 31, 2023.~~2024. Further, two leases went on nonaccrual status during the quarter which increased the amount reported by $1.4 million. The ~~decrease~~increase in accruing loans 90+ days past due at March 31, ~~2023~~2024 when compared to at December 31, ~~2022,~~2023, was primarily due to ~~reductions~~an increase in premium finance loans of ~~$0.7~~approximately $0.9 million which was partially offset by a decrease in commercial and ~~$0.6 million in residential real estate loans and leases, respectively.~~industrial loans.

The amount of interest income recognized on accruing loans 90+ days past due ~~90 days or more and accruing~~ during the three months ended March 31, ~~2023~~2024 was $0.5 million.

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

~~Loans Past Due~~

~~Current~~

~~Loans~~

~~Total~~

~~Loans~~

~~(Dollars in thousands)~~

~~30 - 59 days~~

~~60 - 89 days~~

~~90 + Days~~

~~Total~~

~~March 31, 2023~~

Table of ofCo ~~Contents~~n tents


		Loans Past Due								Current Loans		Total Loans
	Loans Past Due																	Loans Past Due				Current Loans	Total Loans
(Dollars in thousands)	(Dollars in thousands)	30 - 59 days		60 - 89 days		90 + Days		Total						Current Loans	Total Loans	(Dollars in thousands)	30 - 59 days		60 - 89 days	90 + Days	Total
March 31, 2024
Construction
Construction
Construction	Construction	$	—	$	—	$	1	$	1	$	232,295	$	232,296
Commercial real estate, other	Commercial real estate, other	2,382		36		10,475		12,893		1,468,169		1,481,062
Commercial and industrial	Commercial and industrial	641		863		2,928		4,432		886,707		891,139
Premium finance	Premium finance	886		307		764		1,957		156,306		158,263
Leases	Leases	7,054		2,908		6,310		16,272		338,369		354,641
Residential real estate	Residential real estate	7,921		1,240		4,521		13,682		698,920		712,602
Home equity lines of credit	Home equity lines of credit	520		351		594		1,465		172,918		174,383
Consumer, indirect	Consumer, indirect	3,541		769		811		5,121		642,056		647,177
Consumer, direct	Consumer, direct	402		8		44		454		106,952		107,406
Deposit account overdrafts	Deposit account overdrafts	—		—		—		—		749		749
Total loans, at amortized cost	Total loans, at amortized cost	$	23,347	$	6,482	$	26,448	$	56,277	$	4,703,441	$	4,759,718
December 31, 2022
December 31, 2023
Construction
Construction
Construction	Construction	$	196	$	161	$	9	$	366	$	246,575	$	246,941
Commercial real estate, other	Commercial real estate, other	2,279		1,051		10,370		13,700		1,409,818		1,423,518
Commercial and industrial	Commercial and industrial	2,522		289		3,449		6,260		886,374		892,634
Premium finance	Premium finance	646		816		504		1,966		157,231		159,197
Leases	Leases	6,074		1,921		6,218		14,213		330,918		345,131
Residential real estate	Residential real estate	10,113		2,128		5,519		17,760		705,600		723,360
Home equity lines of credit	Home equity lines of credit	987		149		552		1,688		176,170		177,858
Consumer, indirect	Consumer, indirect	5,866		1,048		921		7,835		621,591		629,426
Consumer, direct	Consumer, direct	703		70		108		881		107,482		108,363
Deposit account overdrafts	Deposit account overdrafts	—		—		—		—		722		722
Total loans, at amortized cost	Total loans, at amortized cost	$	29,386	$	7,633	$	27,650	$	64,669	$	4,642,481	$	4,707,150

Delinquency trends ~~remained stable,~~improved slightly, as ~~98.8%~~98.7% of Peoples' loan portfolio was considered “current” at March 31, ~~2023,~~2024, compared to 98.6% at December 31, ~~2022.~~2023.

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)

March 31, 2023

December 31, 2022

(Dollars in thousands)

March 31, 2024

December 31, 2023

Loans pledged to FHLB

918,075

783,843

Loans pledged to FRB

332,521

339,005

Credit Quality Indicators

As discussed in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' ~~2022~~2023 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. Commercial 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. Commercial leases, as well as loan relationships whose aggregate credit exposure to Peoples is equal to or less than $1.0 million, are reviewed ~~at least~~ 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, 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~~category 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 ofCo ~~Contents~~n tents

“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 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," "doubtful" or "loss" based upon the regulatory definition of these classes and consistent with regulatory requirements. 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 being "not rated."

The following table summarizes the risk category of loans within Peoples' loan portfolio, including acquired loans, based upon the most recent analysis performed at March 31, ~~2023:~~2024:


		Term Loans at Amortized Cost by Origination Year														Revolving Loans Converted to Term
		Term Loans at Amortized Cost by Origination Year
		Term Loans at Amortized Cost by Origination Year
		Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)	(Dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans				Revolving Loans Converted to Term		Total Loans	2024	2023	2022	2021	2020	Prior	Revolving Loans	Total Loans
Construction	Construction
Pass
Pass
Pass	Pass	$	4,420	$	101,719	$	87,280	$	23,208	$	3,241	$	9,692	$	—	$	—	$	229,560
Special mention	Special mention	968		1,600		—		—		—		128		—		—		2,696
Substandard	Substandard	—		—		—		—		—		40		—		—		40

Total	Total	5,388		103,319		87,280		23,208		3,241		9,860		—		—		232,296

Total

Total
Current period gross charge-offs	Current period gross charge-offs	—		—		9		—		—		—						9
Commercial real estate, other	Commercial real estate, other
Pass
Pass
Pass	Pass	76,569		173,133		219,202		223,034		214,534		458,817		25,537		—		1,390,826
Special mention	Special mention	—		—		184		1,200		5,128		17,998		50		—		24,560
Substandard	Substandard	—		—		10,027		2,523		1,580		51,290		216		—		65,636
Doubtful	Doubtful	—		—		—		—		—		40		—		—		40

Total	Total	76,569		173,133		229,413		226,757		221,242		528,145		25,803		—		1,481,062
Total
Total
Current period gross charge-offs	Current period gross charge-offs	—		—		—		—		—		33						33
Commercial and industrial	Commercial and industrial
Pass
Pass
Pass	Pass	31,958		157,317		135,973		60,760		70,506		124,255		208,303		—		789,072
Special mention	Special mention	—		8,794		14,375		20,441		2,021		7,579		25,116		—		78,326
Substandard	Substandard	4		317		10,065		3,217		2,154		3,038		4,744		—		23,539
Doubtful	Doubtful	—		—		—		—		—		202		—		—		202

Total	Total	31,962		166,428		160,413		84,418		74,681		135,074		238,163		—		891,139
Total
Total

Table of ofCo ~~Contents~~n tents


		Term Loans at Amortized Cost by Origination Year
		Term Loans at Amortized Cost by Origination Year
		Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)											2024	2023	2022	2021	2020	Prior	Revolving Loans	Total Loans
Current period gross charge-offs
Premium Finance
Pass
Pass
Pass

		Term Loans at Amortized Cost by Origination Year							Revolving Loans Converted to Term
(Dollars in thousands)		2023	2022	2021	2020	2019	Prior	Revolving Loans		Total Loans
Current period gross charge-offs		—	—	—	—	—	1			1
Premium finance
Pass		79,103	79,160	—	—	—	—	—	—	158,263

Total

Total

Total	Total	79,103	79,160	—	—	—	—	—	—	158,263
Current period gross charge-offs	Current period gross charge-offs	23	—	—	—	—	—			23
Leases	Leases
Pass	Pass	68,756	151,048	79,901	29,306	13,233	3,398	—	—	345,642
Pass
Pass
Special mention	Special mention	16	1,212	2,087	371	7	21	—	—	3,714
Substandard	Substandard	127	1,691	2,091	512	410	454	—	—	5,285
Total	Total	68,899	153,951	84,079	30,189	13,650	3,873	—	—	354,641
Current period gross charge-offs	Current period gross charge-offs	—	108	189	100	58	14			469
Residential real estate	Residential real estate
Pass	Pass	10,786	77,494	136,027	57,950	42,022	377,777	—	—	702,056
Pass
Pass

Substandard	Substandard	—	—	280	146	560	9,488	—	—	10,474
Substandard
Substandard

Loss
Loss
Loss	Loss	—	—	—	—	—	72	—	—	72
Total	Total	10,786	77,494	136,307	58,096	42,582	387,337	—	—	712,602
Current period gross charge-offs	Current period gross charge-offs	—	—	—	—	—	41			41
Home equity lines of credit	Home equity lines of credit
Pass	Pass	4,830	43,159	34,111	18,852	13,774	58,278	114	635	173,118
Pass
Pass

Substandard	Substandard	—	—	72	21	63	1,105	—	—	1,261

Substandard
Substandard
Loss	Loss	—	—	—	—	—	4	—	—	4
Total	Total	4,830	43,159	34,183	18,873	13,837	59,387	114	635	174,383
Current period gross charge-offs	Current period gross charge-offs	—	—	—	—	—	19			19
Consumer, indirect	Consumer, indirect
Pass	Pass	67,265	293,761	135,301	88,220	31,003	28,840	—	—	644,390
Pass
Pass

Substandard	Substandard	—	566	849	590	315	423	—	—	2,743
Substandard
Substandard

Loss
Loss
Loss	Loss	—	33	10	1	—	—	—	—	44
Total	Total	67,265	294,360	136,160	88,811	31,318	29,263	—	—	647,177
Current period gross charge-offs	Current period gross charge-offs	18	471	279	90	21	50			929
Consumer, direct	Consumer, direct
Pass	Pass	11,420	46,431	24,731	12,561	5,345	6,566	—	—	107,054
Pass
Pass

Substandard
Substandard
Substandard

Table of ofCo ~~Contents~~n tents


		Term Loans at Amortized Cost by Origination Year													Revolving Loans Converted to Term
		Term Loans at Amortized Cost by Origination Year
		Term Loans at Amortized Cost by Origination Year
		Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)	(Dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Substandard		—		12		35		91		32		167		—	337

(Dollars in thousands)
(Dollars in thousands)																			2024	2023	2022	2021	2020	Prior	Revolving Loans	Total Loans
Loss	Loss	—		—		—		—		—		15		—	—	15
Total	Total	11,420		46,443		24,766		12,652		5,377		6,748		—	—	107,406
Current period gross charge-offs	Current period gross charge-offs	—		40		12		34		10		8				104
Deposit account overdrafts	Deposit account overdrafts	749		—		—		—		—		—		—	—	749
Current period gross charge-offs	Current period gross charge-offs	227		—		—		—		—		—				227
Total loans, at amortized cost	Total loans, at amortized cost	356,971		1,137,447		892,601		543,004		405,928		1,159,687		264,080	635	4,759,718
Total current period gross charge-offs	Total current period gross charge-offs	$	268	$	619	$	489	$	224	$	89	$	166			$	1,855

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, ~~2022:~~2023:


		Term Loans at Amortized Cost by Origination Year
		Term Loans at Amortized Cost by Origination Year
		Term Loans at Amortized Cost by Origination Year
		Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)	(Dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans		2023	2022	2021	2020	2019	Prior	Revolving Loans	Revolving Loans Converted to Term	Total Loans
Construction	Construction
Pass
Pass
Pass	Pass	$	82,143	$	110,719	$	27,893	$	20,223	$	656	$	4,061	$	44	$	81	$	245,739
Special mention	Special mention	—		—		—		—		—		818		—		—		818
Substandard	Substandard	—		2		—		—		—		382		—		—		384

Total	Total	82,143		110,721		27,893		20,223		656		5,261		44		81		246,941

Total

Total
Current period gross charge-offs
Commercial real estate, other	Commercial real estate, other
Pass
Pass
Pass	Pass	165,282		224,727		227,799		202,877		110,564		369,578		27,300		5,217		1,328,127
Special mention	Special mention	—		189		1,099		5,519		3,111		29,334		105		—		39,357
Substandard	Substandard	—		8,327		2,591		1,366		1,296		42,172		216		190		55,968
Doubtful	Doubtful	—		—		—		—		—		66		—		—		66

Total	Total	165,282		233,243		231,489		209,762		114,971		441,150		27,621		5,407		1,423,518
Total
Total
Current period gross charge-offs
Commercial and industrial	Commercial and industrial
Pass
Pass
Pass	Pass	167,937		142,615		72,573		71,497		40,229		91,853		215,116		3,722		801,820
Special mention	Special mention	10,248		14,981		11,923		2,711		236		4,877		16,235		—		61,211
Substandard	Substandard	84		9,801		3,417		2,410		1,459		3,620		8,603		611		29,394
Doubtful	Doubtful	—		—		—		—		—		209		—		—		209

Total	Total	178,269		167,397		87,913		76,618		41,924		100,559		239,954		4,333		892,634
Total
Total
Current period gross charge-offs
Premium finance	Premium finance
Pass	Pass	158,778		419		—		—		—		—		—		—		159,197
Pass
Pass
Total	Total	158,778		419		—		—		—		—		—		—		159,197
Current period gross charge-offs
Leases	Leases
Pass		191,148		90,738		34,627		15,951		3,269		1,119		—		—		336,852
Special mention		1,741		2,477		140		22		24		—		—		—		4,404
Substandard		546		1,840		571		464		454		—		—		—		3,875
Total		193,435		95,055		35,338		16,437		3,747		1,119		—		—		345,131
Residential real estate

Table of ofCo ~~Contents~~n tents


		Term Loans at Amortized Cost by Origination Year
		Term Loans at Amortized Cost by Origination Year
		Term Loans at Amortized Cost by Origination Year
		Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)	(Dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
(Dollars in thousands)
(Dollars in thousands)																				2023	2022	2021	2020	2019	Prior	Revolving Loans	Revolving Loans Converted to Term	Total Loans
Pass
Special mention
Substandard
Total
Current period gross charge-offs
Residential real estate
Pass
Pass
Pass	Pass	78,313		138,860		58,869		42,840		28,174		364,635		—		—		711,691

Substandard	Substandard	—		—		137		569		563		10,302		—		—		11,571
Substandard
Substandard

Loss	Loss	—		—		—		—		—		98		—		—		98
Loss
Loss
Total	Total	78,313		138,860		59,006		43,409		28,737		375,035		—		—		723,360
Current period gross charge-offs
Home equity lines of credit	Home equity lines of credit
Pass
Pass
Pass	Pass	41,781		35,768		19,863		14,820		13,800		50,291		334		2,096		176,657

Substandard	Substandard	—		60		—		53		126		958		—		—		1,197
Substandard
Substandard

Loss	Loss	—		—		—		—		—		4		—		—		4
Loss
Loss
Total	Total	41,781		35,828		19,863		14,873		13,926		51,253		334		2,096		177,858
Current period gross charge-offs
Consumer, indirect	Consumer, indirect
Pass
Pass
Pass	Pass	305,814		149,445		100,027		35,988		22,789		12,741		—		—		626,804

Substandard	Substandard	384		811		659		266		304		193		—		—		2,617

Loss		—		5		—		—		—		—		—		—		5
Total		306,198		150,261		100,686		36,254		23,093		12,934		—		—		629,426
Consumer, direct
Pass		50,889		28,351		14,558		6,333		3,725		3,975		—		—		107,831
Special mention		—		—		—		—		—		—		—		—		—
Substandard
Substandard	Substandard	97		63		138		46		21		150		—		—		515

Loss	Loss	—		—		—		—		—		17		—		—		17
Loss
Loss
Total	Total	50,986		28,414		14,696		6,379		3,746		4,142		—		—		108,363
Current period gross charge-offs
Consumer, direct
Pass
Pass
Pass

Substandard
Substandard
Substandard

Loss
Loss
Loss
Total
Current period gross charge-offs
Deposit account overdrafts	Deposit account overdrafts	722		—		—		—		—		—		—		—		722
Current period gross charge-offs
Total loans, at amortized cost	Total loans, at amortized cost	$	1,255,907	$	960,198	$	576,884	$	423,955	$	230,800	$	991,453	$	267,953	$	11,917	$	4,707,150
Current period gross charge-offs

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,

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and other commercial and industrial properties that are in process of construction. Non-owner occupied commercial construction loans are generally secured by ~~office~~multi-family complexes, warehouse buildings, ~~and complexes, multi-family complexes,~~industrial buildings, 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 multifamily complexes, retail facilities, office buildings and complexes, ~~retail facilities, multifamily complexes,~~warehouses, industrial buildings, land under development, ~~industrial properties,~~ as well as other commercial ~~or industrial~~ real estate.

•Commercial and industrial loans are 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.~~mortgage, on residential real estate property.

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

•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.

~~Table~~ of ~~Contents~~

•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)

March 31, 2023

December 31, 2022

March 31, 2024

December 31, 2023

Commercial real estate, other

7,862

8,362

Commercial and industrial

470

1,456

Commercial real estate, other

Leases

Residential real estate

528

536

Total collateral dependent loans

8,860

10,354

Total collateral dependent loans

The ~~decrease~~ increase in collateral dependent loans at March 31, ~~2023,~~2024, compared to December 31, ~~2022,~~2023, was primarily due to ~~two large relationships that were paid in full~~the addition of a commercial real estate loan and a lease as collateral dependent loans during the three months ended March 31, ~~2023.~~2024.

Modifications for Borrowers Experiencing Financial Difficulty ~~Subsequent to the Adoption of ASU 2022-02~~

As part of Peoples' loss mitigation activities, Peoples may agree to modify the contractual terms of a loan to a borrower experiencing financial difficulty. The most common modifications to the contractual terms of a loan to a borrower experiencing financial difficulty include an extension of the maturity date, a reduction in the interest rate for the remaining life of the loan, a temporary period of interest-only payments, and a reduction in the contractual payment amount for either a short period or the remaining term of the loan.

In addition to loan modifications, Peoples also provides other loss mitigation options, such as forbearance and repayment plans, to assist borrowers who experience financial difficulties. In assessing whether or not a borrower is experiencing financial difficulty, Peoples considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (1) the borrower is currently in payment default on any of the borrower's debt; (2) a payment default is probable in the foreseeable future without the modification; (3) the borrower has declared or is in the process of declaring bankruptcy; and (4) the borrower's projected cash flow is insufficient to satisfy contractual payments due under the original terms of the loan without a modification.

The following ~~table displays~~tables display the amortized cost of loans that were restructured during the three months ended March 31, 2024 and March 31, 2023, presented by loan classification.

For the Three Months Ended March 31, 2023
Payment Delay (Only)
(Dollars in thousands) Forbearance Plan Payment Deferral Term Extension Forbearance Plan and Term Extension Total
Percentage of Total by Loan Category(a)(b)
Construction $ — $ 1,600 $ — $ — $ 1,600 0.69 %
Commercial real estate 200 — — — 200 0.01 %
Commercial and industrial — — 9 335 344 0.04 %
Residential real estate — — 221 — 221 0.03 %
Consumer, indirect — — 28 — 28 — %
Total $ 200 $ 1,600 $ 258 $ 335 $ 2,393 0.05 %

~~(a)~~ ~~Based on the amortized cost basis as of period end, divided by the period end amortized cost basis of the corresponding class of financing receivable.~~

~~(b)~~ ~~Each with "--%" not meaningful.~~

Table of ofCo ~~Contents~~n tents


	Payment Delay (Only)
(Dollars in thousands)	Forbearance Plan		Payment Deferral		Term Extension		Forbearance Plan and Term Extension		Total		Percentage of Total by Loan Category(a)(b)


During the Three Months Ended March 31, 2024
Commercial real estate	—		—		$	565	$	—	$	565	0.03	%
Commercial and industrial	—		—		10,203		—		10,203		0.84	%
Leasing	—		25		—		—		25		0.01	%
Residential real estate	—		—		76		—		76		0.01	%




Total	$	—	$	25	$	10,844	$	—	$	10,869	0.18	%


During the Three Months Ended March 31, 2023
Construction	$	—	$	1,600	$	—	$	—	$	1,600	0.69	%
Commercial real estate	200		—		—		—		200		0.01	%
Commercial and industrial	—		—		9		335		344		0.04	%

Residential real estate	—		—		221		—		221		0.03	%

Consumer, indirect	—		—		28		—		28		—	%


Total	$	200	$	1,600	$	258	$	335	$	2,393	0.05	%
(a) Based on the amortized cost basis as of period end, divided by the period end amortized cost basis of the corresponding class of financing receivable. (b) The table presented above excludes loans that were paid off or otherwise no longer included in the loan portfolio of period end.

The following table summarizes the financial impacts of loan modifications and payment deferrals made to loans during both the three months ended March 31, 2024 and March 31, 2023, presented by loan classification.

For the Three Months Ended March 31, 2023

Weighted-Average Term Extension
(in months)

Average Amount Capitalized as a Result of a Payment Delay(a)

During the Three Months Ended March 31, 2024

Weighted-Average Term Extension
(in months)

Average Amount Capitalized as a Result of a Payment Delay(a)

Commercial real estate

Commercial and industrial

Leasing

Residential real estate

During the Three Months Ended March 31, 2023

Commercial and industrial

—

Commercial and industrial

Residential real estate

210

8,969

Consumer, indirect

—

(a) Represents the average amount of delinquency-related amounts that were capitalized as part of the loan balance. Amounts are in whole dollars.

The following table displays the amortized cost of loans that received a completed modification or payment deferral within the previous 12 months and that had a payment default in the period presented. For purposes of this disclosure, Peoples defines loans that had a payment default as loans that were 90 days or more past due following a modification.

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For the Three Months Ended March 31, 2024
	Payment Delay as a Result of a Payment Deferral (Only)(a)		Total


Commercial and industrial	$	648	$	648








(a) Represents the sum of amortized cost and gross charge-off as of period end. Excludes loans that liquidated either through foreclosure, deed-in-lieu of foreclosure, or a short sale.

As of March 31, 2023, there were no loans that were modified for borrowers experiencing financial difficulty since the adoption of ASU 2022-02 on January 1, 2023, and subsequently defaulted during the ~~period. For purposes of this disclosure, Peoples defines loans that had a payment default as loans that are 90 days or more past due following a modification through the~~ three months ended March 31, 2023.

The following table displays an aging analysis of loans that were modified during the twelve months prior to March 31, 2024, presented by classification and class of financing receivable.


As of March 31, 2024
(Dollars in thousands)	30-59 Days Delinquent		60-89 Days Delinquent		90+ Days Delinquent		Total Delinquent		Current		Total
Construction	$	—	$	—	$	—	$	—	$	70	$	70
Commercial real estate	193		—		—		193		2,443		2,636
Commercial and industrial	—		667		648		1,315		12,752		14,067
Leasing	—		—		—		—		25		25
Residential real estate	76		—		—		76		24		100
Home equity lines of credit	—		—		—		—		207		207



Total loans modified(a)	$	269	$	667	$	648	$	1,584	$	15,521	$	17,105

(a) Represents the amortized cost basis as of period end.

The following table displays an aging analysis of loans that were modified on or after January 1, 2023, the date Peoples adopted ASU 2022-02, through March 31, 2023, presented by classification and class of financing receivable.

															As of March 31, 2023
(Dollars in thousands)	(Dollars in thousands)	30-59 Days Delinquent		60-89 Days Delinquent		90+ Days Delinquent		Total Delinquent		Current		Total			(Dollars in thousands)	30-59 Days Delinquent		60-89 Days Delinquent	90+ Days Delinquent		Total Delinquent		Current		Total
Construction	Construction	$	—	$	—	$	—	$	—	$	1,600	$	1,600
Commercial real estate	Commercial real estate	—		—		—		—		200		200			Commercial real estate	0							200
Commercial and industrial	Commercial and industrial	—		—		—		—		344		344			Commercial and industrial	0							344

Residential real estate	Residential real estate	—		—		—		—		221		221
Residential real estate
Residential real estate																0							221

Consumer, indirect
Consumer, indirect
Consumer, indirect	Consumer, indirect	28		—		—		28		—		28			28		0			28		0		28

Total loans modified(a)	Total loans modified(a)	$	28	$	—	$	—	$	28	$	2,365	$	2,393

Total loans modified(a)

Total loans modified(a)
														(a) Represents the amortized cost basis as of period end.
(a) Represents the amortized cost basis as of period end.
(a) Represents the amortized cost basis as of period end.

~~Troubled Debt Restructurings Disclosures Prior to the Adoption of ASU 2022-02~~

Prior to the adoption of ASU 2022-02, Peoples accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR. See “Note 1 Summary of Significant Accounting Policies” in Peoples' 2022 Form 10-K for more information on our TDR policy and the COVID-19 relief from TDR accounting and disclosure requirements, and “Note 1, Summary of Significant Accounting Policies” in this report for more information on the adoption of ASU 2022-02.

~~Table~~ of ~~Contents~~

~~The following table summarizes the loans that were modified as TDRs during the three months ended March 31, 2022:~~

Three Months Ended
Recorded Investment (a)
(Dollars in thousands) Number of Contracts Pre-Modification Post-Modification Remaining Recorded Investment
March 31, 2022
Construction 1 $ 344 $ 344 $ 343
Commercial real estate, other 1 102 102 102
Commercial and industrial 1 4 4 4
Residential real estate 10 493 502 501
Home equity lines of credit 1 22 22 21
Consumer, indirect 10 106 106 105
Consumer, direct 2 14 14 14
Consumer 12 120 120 119
Total 26 $ 1,085 $ 1,094 $ 1,090
(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.

Allowance for Credit Losses

As discussed in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' ~~2022~~2023 Form 10-K, ~~Peoples'~~Peoples estimates the allowance for credit losses using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. In management's estimation of expected credit losses, Peoples uses a ~~one year~~one-year reasonable and supportable period across all segments. Following the reasonable and supportable period, Peoples reverts the macroeconomic variables to their long run average over a ~~four quarter~~four-quarter reversion period.

Table of ofCo ~~Contents~~n tents

Changes in the allowance for credit losses for the three months ended March 31, ~~2023~~2024 and March 31, ~~2022~~2023 are summarized below:


(Dollars in thousands)	(Dollars in thousands)	Beginning Balance, December 31, 2022		Initial Allowance for Acquired PCD Assets		Provision for (Recovery of) Credit Losses (a)		Charge-offs		Recoveries		Ending Balance, March 31, 2023
(Dollars in thousands)
(Dollars in thousands)
Construction
Construction
Construction	Construction	$	1,250	$	—	$	32	$	(9)	$	—	$	1,273
Commercial real estate, other	Commercial real estate, other	17,710		—		(1,230)		(33)		27		16,474
Commercial real estate, other
Commercial real estate, other
Commercial and industrial
Commercial and industrial
Commercial and industrial	Commercial and industrial	8,229		—		79		(1)		—		8,307
Premium finance	Premium finance	344		—		103		(23)		9		433
Premium finance
Premium finance
Leases
Leases
Leases	Leases	8,495		—		1,003		(469)		80		9,109
Residential real estate	Residential real estate	6,357		—		159		(41)		29		6,504
Residential real estate
Residential real estate
Home equity lines of credit
Home equity lines of credit
Home equity lines of credit	Home equity lines of credit	1,693		—		43		(19)		—		1,717
Consumer, indirect	Consumer, indirect	7,448		—		1,183		(929)		79		7,781
Consumer, indirect
Consumer, indirect
Consumer, direct
Consumer, direct
Consumer, direct	Consumer, direct	1,575		—		133		(104)		15		1,619
Deposit account overdrafts	Deposit account overdrafts	61		—		180		(227)		72		86
Deposit account overdrafts
Deposit account overdrafts
Total	Total	$	53,162	$	—	$	1,685	$	(1,855)	$	311	$	53,303
Total
Total

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

(Dollars in thousands) Beginning Balance,
December 31, 2021 Initial Allowance for Acquired PCD Assets (a) (Recovery of) Provision for Credit Losses (b) Charge-offs Recoveries Ending Balance, March 31, 2022
Construction $ 2,999 $ — $ (268) $ — $ — $ 2,731
Commercial real estate, other 29,147 (217) (7,646) (278) 49 21,055
Commercial and industrial 11,063 (165) (325) (463) 4 10,114
Premium finance 379 — (20) (14) — 345
Leases 4,797 132 1,243 (473) 176 5,875
Residential real estate 7,233 (521) 78 (309) 14 6,495
Home equity lines of credit 2,005 (11) (113) (16) 29 1,894
Consumer, indirect 5,326 (41) 186 (385) 86 5,172
Consumer, direct 961 — 200 (136) 11 1,036
Deposit account overdrafts 57 — 199 (259) 54 51
Total $ 63,967 $ (823) $ (6,466) $ (2,333) $ 423 $ 54,768



(Dollars in thousands)	Beginning Balance, December 31, 2022		Initial Allowance for Acquired PCD Assets (a)		Provision for (Recovery of) Credit Losses (b)		Charge-offs		Recoveries		Ending Balance, March 31, 2023
Construction	$	1,250	$	—	$	32	$	(9)	$	—	$	1,273
Commercial real estate, other	17,710		—		(1,230)		(33)		27		16,474
Commercial and industrial	8,229		—		79		(1)		—		8,307
Premium finance	344		—		103		(23)		9		433
Leases	8,495		—		1,003		(469)		80		9,109
Residential real estate	6,357		—		159		(41)		29		6,504
Home equity lines of credit	1,693		—		43		(19)		—		1,717
Consumer, indirect	7,448		—		1,183		(929)		79		7,781
Consumer, direct	1,575		—		133		(104)		15		1,619
Deposit account overdrafts	61		—		180		(227)		72		86
Total	$	53,162	$	—	$	1,685	$	(1,855)	$	311	$	53,303

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

(b)Amount does not include the provision for the allowance for credit losses on unfunded commitments.~~s adopted ASU 2016-13 - Financial Instruments~~

~~(c)~~

~~(a)Amount does not include~~During the first quarter of 2024, Peoples recorded a total provision for credit losses of $6.1 million, which was driven by (i) a deterioration in macro-economic conditions used within the current expected credit loss ("CECL") model, (ii) an increase of reserves on individually analyzed loans, (iii) and loan growth. The increase in the allowance for credit losses ~~on unfunded commitments~~at March 31, 2024 when compared to prior periods was driven by the establishment of an allowance for credit losses for loans acquired in the Limestone Merger.

Table of Co n tents

During the first quarter of 2023, Peoples recorded a provision for credit losses ~~for loans~~ of $1.7 million, largely attributable to a deterioration of macro-economic conditions, ~~and an increase in charge-off activity,~~ partially offset by a reduction in reserves for

~~Table~~ of ~~Contents~~

individually analyzed loans. Net charge-offs for the first quarter of 2023 were $1.5 million, primarily due to net charge-offs of indirect consumer loans of $0.9 million.

During the first quarter of 2022, Peoples recorded a recovery of credit losses of $6.8 million driven by a continued improvement in economic factors and changes in loss drivers used in the CECL model. Leases designated as purchased-credit deteriorated ("PCD") acquired from Vantage increased the allowance for credit losses by $132,000. Net charge-offs for the first quarter of 2022 were $1.9 million, and included charge-offs of two commercial and industrial loans aggregating $0.7 million.

Peoples had recorded an allowance for unfunded commitments of ~~$2.1~~$1.7 million and $1.8 million as of March 31, ~~2023, an increase compared to $2.0 million at~~2024 and December 31, ~~2022.~~2023, respectively. 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 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)	March 31, 2023		December 31, 2022		(Dollars in thousands)	March 31, 2024	December 31, 2023
Goodwill, beginning of year	Goodwill, beginning of year	$	292,397	$	264,193
Goodwill recorded from acquisitions	Goodwill recorded from acquisitions	200		28,204
Goodwill, end of period	Goodwill, end of period	$	292,597	$	292,397

~~On January 3,~~As of the close of business on April 30, 2023, Peoples ~~acquired a trust and investment business, for which it recognized $200,000 in goodwill.~~

~~On March 7, 2022, Peoples Bank purchased 100% of the equity of Vantage~~completed its merger with Limestone Bancorp, Inc. ("Limestone") pursuant to an ~~Equity Purchase~~ Agreement and Plan of Merger dated ~~February 16,~~October 24, 2022, at which point ~~Vantage became a legal~~Limestone merged with and into Peoples, and immediately thereafter, Limestone Bank, Inc., the subsidiary bank of Limestone, merged with and into Peoples ~~Bank. In 2022,~~Bank (collectively, the “Limestone Merger”).

As of March 31, 2024, Peoples recorded ~~$27.2~~$68.8 million of ~~goodwill related to this acquisition, which was offset partially by an adjustment of $1.3 million to the goodwill balance~~Goodwill related to the ~~merger with Premier Financial Bancorp, Inc. (“Premier” and the "Premier Merger").~~Limestone Merger.

Other Intangible Assets

Other intangible assets were comprised of the following at March 31, ~~2023,~~2024, and at December 31, ~~2022:~~2023:


(Dollars in thousands)	(Dollars in thousands)	Core Deposits		Customer Relationships		Indefinite-Lived Trade Names		Total		(Dollars in thousands)	Core Deposits	Customer Relationships	Indefinite-Lived Trade Names	Total
March 31, 2023
March 31, 2024
Gross intangibles	Gross intangibles	$	26,464	$	39,241	$	2,491	$	68,196

Accumulated amortization		(20,983)		(16,968)		—		(37,951)
Total acquisition-related intangibles		$	5,481	$	22,273	$	2,491	$	30,245
Servicing rights								1,720
Total other intangibles								$	31,965

December 31, 2022
Gross intangibles
Gross intangibles	Gross intangibles	$	26,464	$	25,173	$	1,274	$	52,911
Intangibles recorded from acquisitions	Intangibles recorded from acquisitions	—		14,067		1,217		15,284
Accumulated amortization	Accumulated amortization	(20,667)		(15,412)		—		(36,079)
Total acquisition-related intangibles	Total acquisition-related intangibles	$	5,797	$	23,828	$	2,491	$	32,116
Servicing rights	Servicing rights							1,816
Non-compete agreements
Total other intangibles

December 31, 2023
December 31, 2023
December 31, 2023
Gross intangibles
Gross intangibles
Gross intangibles
Intangibles recorded from acquisitions
Accumulated amortization
Total acquisition-related intangibles
Servicing rights
Non-compete agreements
Total other intangibles	Total other intangibles							$	33,932

As of March 31, 2024, Peoples recorded ~~no other intangible assets for the three months ended March 31, 2023.~~

~~Other intangible assets recorded from the above-mentioned acquisitions in 2022 were $10.8~~$27.7 million of ~~customer relationship intangible assets, $1.2 million of non-compete intangible assets, and $1.2 million of indefinite-lived trade name intangible assets~~core deposit intangibles 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.~~Limestone Merger. Refer to "Note 13 Acquisitions" for additional information.

The following table details estimated aggregate future amortization of other intangible assets at March 31, ~~2023:~~2024:

Table of ofCo ~~Contents~~n tents


(Dollars in thousands)	(Dollars in thousands)	Core Deposits		Customer Relationships		Total		(Dollars in thousands)	Core Deposits	Customer Relationships	Non-Compete Agreements	Total
Remaining nine months of 2023		$	942	$	4,705	$	5,647
2024		1,058		5,325		6,383
Remaining nine months of 2024
2025	2025	891		4,255		5,146
2026	2026	731		3,114		3,845
2027	2027	572		2,289		2,861
2028
Thereafter	Thereafter	1,287		2,585		3,872
Total	Total	$	5,481	$	22,273	$	27,754

The weighted average amortization period of other intangible assets is ~~7.2~~8.5 years.

Note 6 Deposits

Peoples’ deposit balances were comprised of the following:

(Dollars in thousands) March 31, 2023 December 31, 2022
Retail CDs:
$100 or more $ 331,912 $ 263,341
Less than $100 290,179 266,895
Retail CDs 622,091 530,236
Interest-bearing deposit accounts 1,085,169 1,160,182
Savings accounts 1,024,638 1,068,547
Money market deposit accounts 579,106 617,029
Governmental deposit accounts 649,303 625,965
Brokered CDs 273,156 125,580
Total interest-bearing deposits 4,233,463 4,127,539
Non-interest-bearing deposits $ 1,555,064 1,589,402
Total deposits $ 5,788,527 $ 5,716,941


(Dollars in thousands)	March 31, 2024		December 31, 2023
Retail certificates of deposits ("CDs"):
$100 or more	$	956,845	$	815,300
Less than $100	723,569		628,117
Total Retail CDs	1,680,414		1,443,417
Interest-bearing deposit accounts	1,107,711		1,144,357
Savings accounts	901,493		919,244
Money market deposit accounts	859,961		775,488
Governmental deposit accounts	825,170		726,713

Brokered CDs	483,444		575,429
Total interest-bearing deposits	5,858,193		5,584,648
Non-interest-bearing deposits	$	1,468,363	1,567,649
Total deposits	$	7,326,556	$	7,152,297

Uninsured deposits were $2.1 billion ~~$1.7 billion~~ and ~~$1.6~~$2.0 billion at March 31, ~~2023~~2024 and at December 31, ~~2022,~~2023, respectively. Uninsured amounts are estimated based on the portion of the respective customer account balances that ~~met or~~ exceeded the FDIC limit of $250,000. Peoples pledges investment securities against certain governmental deposit accounts, which covered ~~over $698.9~~over $865.6 million ofof the uninsured deposit balances at March 31, ~~2023.~~2024.

Table of ofCo ~~Contents~~n tents

Uninsured time deposits are broken out below by time remaining until maturity.

(Dollars in thousands)

March 31, 2023

December 31, 2022

(Dollars in thousands)

3 months or less

16,476

19,282

Over 3 to 6 months

18,190

14,871

Over 3 to 6 months

Over 6 to 12 months

32,554

14,383

Over 12 months

64,405

52,216

Over 12 months

Total

131,625

100,752

Total

The contractual maturities of CDs for each of the next five years, including the remainder of ~~2023,~~2024, and thereafter are as follows:


(Dollars in thousands)	(Dollars in thousands)	Retail		Brokered		Total		(Dollars in thousands)	Retail	Brokered	Total
Remaining nine months ending December 31, 2023		$	270,212	$	273,156	$	543,368
Year ending December 31, 2024		271,410		—		271,410
Remaining nine months ending December 31, 2024
Year ending December 31, 2025	Year ending December 31, 2025	31,984		—		31,984
Year ending December 31, 2026	Year ending December 31, 2026	19,269		—		19,269
Year ending December 31, 2027	Year ending December 31, 2027	26,482		—		26,482
Year ending December 31, 2028
Thereafter	Thereafter	2,734		—		2,734
Total CDs	Total CDs	$	622,091	$	273,156	$	895,247

At March 31, ~~2023,~~2024, Peoples had ~~thirteen~~11 effective interest rate swaps, with an aggregate notional value of ~~$125.0~~$105.0 million, all of which ~~$125.0 million~~ were funded by brokered CDs. Brokered CDs used to fund 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."

Note 7 Stockholders’ Equity

The following table details the progression in Peoples’ common shares and treasury stock during the three months ended March 31, ~~2023:~~2024:

Common Shares

Treasury
Stock

Shares at December 31, 2022

29,857,920

1,643,461

Common Shares

Treasury
Stock

Shares at December 31, 2023

Changes related to stock-based compensation awards:

Release of restricted common shares

—

25,977

Cancellation of restricted common shares

—

4,557

Grant of restricted common shares

—

(196,713)

Grant of unrestricted common shares

—

(1,300)

Grant of restricted common shares

Changes related to deferred compensation plan for Boards of Directors:

Purchase of treasury stock

—

4,665

Purchase of treasury stock

Disbursed out of treasury stock

—

(730)

Common shares repurchased under share repurchase program

Common shares issued under dividend reinvestment plan

10,536

—

Common shares issued under compensation plan for Boards of Directors

—

(5,272)

Common shares issued under employee stock purchase plan

—

(17,034)

Common shares issued under employee stock purchase plan

Shares at March 31, 2023

29,868,456

1,457,611

Shares at March 31, 2024

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. AtAs of March 31, ~~2023,~~2024, Peoples had repurchased ~~263,183~~471,307 common shares totaling ~~$7.4~~$13.4 million under the share repurchase program. There were no100,905 common shares totaling $3.0 million repurchased during the first three months of ~~2023~~.2024.

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~~designated by Peoples' Board of Directors. At March 31, ~~2023,~~2024, Peoples had no preferred shares issued or outstanding.

On January ~~23, 2023, Peoples' Board of Directors declared a quarterly cash dividend of $0.38 per common share, payable on February 21, 2023, to shareholders of record on February 6, 2023. On April 24, 2023,~~22, 2024, Peoples' Board of Directors declared a quarterly cash dividend of $0.39 per common share, payable on February 20, 2024, to shareholders of record on February 5, 2024. On April 22, 2024, Peoples' Board of Directors declared a quarterly cash dividend of $0.40 per common share, payable on May ~~22, 2023,~~20, 2024, to shareholders of record on May ~~8, 2023.~~6, 2024. The following table details the cash dividends declared per common share during the first two quarters of ~~2023~~2024 and the comparable periods of ~~2022:~~2023:


		2023		2022
	2024					2024	2023
First quarter	First quarter	$	0.38	$	0.36
Second quarter	Second quarter	0.39		0.38

Total dividends declared	Total dividends declared	$	0.77	$	0.74

Total dividends declared

Total dividends declared

Accumulated Other Comprehensive (Loss) Income

The following table details the change in the components of Peoples’ accumulated other comprehensive (loss) income ~~for~~during the three months ended March 31, ~~2023:~~2024:


(Dollars in thousands)	(Dollars in thousands)	Unrealized (Loss) Gain on Securities		Unrecognized Net Pension and Postretirement Costs		Unrealized Gain (Loss) on Cash Flow Hedges		Accumulated Other Comprehensive (Loss) Income
Balance, December 31, 2022		$	(129,896)	$	(1,633)	$	4,393	$	(127,136)
(Dollars in thousands)
(Dollars in thousands)										Unrealized (Loss) Gain on Securities	Unrealized Gain on Cash Flow Hedges	Accumulated Other Comprehensive (Loss) Income
Balance, December 31, 2023
Reclassification adjustments to net income:	Reclassification adjustments to net income:
Realized loss on sale of securities, net of tax	Realized loss on sale of securities, net of tax	1,483		—		—		1,483
Realized loss on sale of securities, net of tax
Realized loss on sale of securities, net of tax

Other comprehensive income (loss), net of reclassifications and tax		15,715		2		(1,043)		14,674
Balance, March 31, 2023		$	(112,698)	$	(1,631)	$	3,350	$	(110,979)
Other comprehensive (loss) income, net of reclassifications and tax
Other comprehensive (loss) income, net of reclassifications and tax
Other comprehensive (loss) income, net of reclassifications and tax
Balance, March 31, 2024

Note 8 Employee Benefit Plans

Peoples ~~sponsors~~sponsored a noncontributory defined benefit pension plan that ~~covers~~covered substantially all employees hired before January 1, 2010. The plan ~~provides~~provided retirement benefits based on an employee’s years of service and compensation. For employees hired before January 1, 2003, the amount of ~~postretirement~~post-retirement benefit iswas 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~~post-retirement benefit iswas based on 2% of the employee’s annual compensation during the years 2003 through 2009, plus accrued interest. ~~Effective January 1, 2010,~~During the third quarter of 2023, Peoples terminated its pension plan ~~was~~by settling the remaining benefit obligation of $7.7 million. The pension plan had been closed to new ~~entrants. Effective March~~entrants since January 1, ~~2011,~~2010. Peoples recorded a settlement charge of $2.4 million in the ~~accrual~~third quarter 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~~2023 in relation to the ~~terms~~termination of the pension plan. ~~Effective July 1, 2013, a participant in~~Peoples does not anticipate further expenses related to 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.termination.

Retirement Savings Plan

Peoples also maintains a retirement savings plan, or 401(k) plan, which covers substantially all employees. The plan provides ~~post-retirement health and life insurance benefits~~participants with the opportunity to ~~certain former employees and directors. Only those individuals who retired before January 27, 2012 were eligible~~save for ~~life insurance benefits.~~retirement on a tax-deferred basis. As of January 1, ~~2011, all retirees who desire to participate in the~~2021, Peoples ~~Bank medical plan do so by electing COBRA, which provides~~matches 100% of participants’ contributions 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%~~6% of the ~~cost~~participants’ compensation. Matching contributions made by Peoples during the first quarter 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.2024 totaled $1.5 million. Matching contributions totaled $5.4 million in 2023 and $4.4 million in 2022.

Table of ofCo ~~Contents~~n tents

The expected long-term rate of return on plan assets, which was determined as of January 1, 2023, is 7.0%. The following table details the components of the net periodic cost for the noncontributory defined benefit pension plan described above, which is included in salaries and employee benefit costs on the Unaudited Consolidated Statements of Operations:

Pension Benefits
Three Months Ended
March 31,
(Dollars in thousands) 2023 2022
Interest cost $ 88 $ 66
Expected return on plan assets (166) (168)
Amortization of net loss 2 20
Settlement of benefit obligation — —
Net periodic loss $ (76) $ (82)

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 did not record a settlement charge during the three months ended March 31, 2023 or March 31, 2022 under the noncontributory defined benefit pension plan.~~

Note 9 Earnings Per Common Share

The calculations of basic and diluted earnings per common share were as follows:


		Three Months Ended
		March 31,
						Three Months Ended
						Three Months Ended
						Three Months Ended
					March 31,					March 31,
(Dollars in thousands, except per common share data)	(Dollars in thousands, except per common share data)	2023		2022			(Dollars in thousands, except per common share data)	2024	2023
Net income available to common shareholders	Net income available to common shareholders	$	26,560	$	23,577
Less: Dividends paid on unvested common shares	Less: Dividends paid on unvested common shares	(102)		(48)
Add: Undistributed loss allocated to unvested common shares		(34)		(21)
Less: Undistributed income allocated to unvested common shares
Net earnings allocated to common shareholders	Net earnings allocated to common shareholders	$	26,424	$	23,508

Weighted-average common shares outstanding
Weighted-average common shares outstanding
Weighted-average common shares outstanding	Weighted-average common shares outstanding	27,891,760		28,006,165
Effect of potentially dilutive common shares	Effect of potentially dilutive common shares	130,119		122,966
Total weighted-average diluted common shares outstanding	Total weighted-average diluted common shares outstanding	28,021,879		28,129,131

Earnings per common share:	Earnings per common share:
Earnings per common share:
Earnings per common share:
Basic
Basic
Basic	Basic	$	0.95	$	0.84
Diluted	Diluted	$	0.94	$	0.84
Anti-dilutive common shares excluded from calculation:	Anti-dilutive common shares excluded from calculation:
Restricted common shares	Restricted common shares	155,018		—
Restricted common shares
Restricted common shares

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 derivative financial instruments is included in the activity in "Net cash provided by operating activities" in the Unaudited Condensed Consolidated Statements of Cash Flows.

~~Table~~ of ~~Contents~~

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 March 31, ~~2023,~~2024, Peoples had entered into ~~thirteen~~11 interest rate swap contracts with an aggregate notional value of ~~$125.0~~$105.0 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.~~term SOFR. The interest received on the floating rate component is intended to offset the interest paid on rolling three-month brokered CDs, which will continue to be rolled through the life of the interest rate swaps. At both March 31, ~~2023~~2024 and at December 31, ~~2022,~~2023, the interest rate swaps were designated as cash flow hedges of ~~$125.0~~$105.0 million, in brokered CDs, which are expected to be extended every 90 days through the maturity dates of the interest rate swaps.

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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 brokered CDs are matched to the reset dates and payment dates on the receipt of the term SOFR rate (or the three-month LIBOR floating portion prior to June 30, 2023) of the swaps to ensure effectiveness of the cash flow hedge. During the three months ended March 31, 2024, and 2023, ~~and 2022,~~ Peoples ~~had~~ recorded ~~reclassifications of gains to earnings of $0.1 million and~~ reclassifications of losses to earnings of ~~$0.6~~$0.9 million and $0.1 million, respectively. During the next twelve months, Peoples estimates that ~~$1.3~~$1.4 million of AOCI will be reclassified as ~~a reduction~~an addition to interest expense.

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

(Dollars in thousands) March 31,
2023 December 31,
2022
Notional amount $ 125,000 $ 125,000
Weighted average pay rates 2.26 % 2.26 %
Weighted average receive rates 4.31 % 4.44 %
Weighted average maturity 2.3 years 2.6 years
Pre-tax changes in fair value included in AOCI $ 4,370 $ 5,727

~~Table~~ of ~~Contents~~


(Dollars in thousands)	March 31, 2024			December 31, 2023
Notional amount	$	105,000		$	105,000
Weighted average pay rates	2.22		%	2.22		%
Weighted average receive rates	5.02		%	4.63		%
Weighted average maturity	1.7 years			2.0 years
Pre-tax changes in fair value included in AOCI	$	3,689		$	3,434

The following table presents changes in fair value recorded in AOCI and in the Consolidated Statements of Operations related to the cash flow ~~hedges for three months ended March 31, 2023, and 2022:~~hedges:


					Three Months Ended
					Three Months Ended
					Three Months Ended
				March 31,					March 31,
(Dollars in thousands)						(Dollars in thousands)	2024	2023
Amount of losses (gains) recorded in AOCI, pre-tax
	Three Months Ended
	March 31,
(Dollars in thousands)	2023		2022
Amount of (losses) gains recorded in AOCI, pre-tax	$	(1,356)	$	5,456

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

March 31,
2023

December 31,
2022

March 31,
2024

December 31,
2023

(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":

Interest rate swaps related to debt

125,000

4,239

125,000

5,594

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 interest rate 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 interest rate 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 months ended March 31, ~~2023~~2024 and ~~as of~~at or for the year ended December 31, ~~2022.~~2023.

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

March 31,
2023

December 31,
2022

March 31,
2024

December 31,
2023

(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":

Interest rate swaps related to commercial loans

381,196

23,100

390,126

28,529

Interest rate swaps related to commercial loans

Included in "Accrued expenses and other liabilities":

Interest rate swaps related to commercial loans

381,196

23,100

390,126

28,529

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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 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 March 31, ~~2023~~2024 and at December 31, ~~2022,~~2023, Peoples had no cash pledged, while counterparties had ~~$16.7~~$15.5 million of cash pledged at March 31, ~~2023~~2024 and ~~$20.9~~$12.8 million of cash pledged at December 31, ~~2022.~~2023. Peoples had no pledged investment securities at March 31, ~~2023~~2024 or at December 31, ~~2022,~~2023, while the counterparties had pledged investment securities in the amounts of ~~$2.4~~$2.1 million at March 31, ~~2023~~2024 and ~~$2.5~~$2.2 million at December 31, ~~2022.~~2023.

Note 11 Stock-Based Compensation

Under the Peoples Bancorp Inc. ~~Third~~Fourth 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.~~1,493,297. The maximum number of common shares that can be issued for incentive stock options is ~~500,000~~750,000 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. 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.

~~Table~~ of ~~Contents~~

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 officers and key 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 three months of ~~2023,~~2024, Peoples granted an aggregate of ~~188,372~~283,712 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 three months ended March 31, ~~2023:~~2024:


	Time-Based Vesting									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
Oustanding at January 1, 2023		138,522	$	27.25	295,875	$	32.20
Oustanding at January 1, 2024
Awarded	Awarded	8,341	28.70		188,372	30.30
Released	Released	(5,316)	31.35		(70,458)	32.91
Forfeited	Forfeited	—	—		(4,557)	31.46
Outstanding at March 31, 2023		141,547	$	27.18	409,232	$	31.21
Outstanding at March 31, 2024

For the three months ended March 31, ~~2023,~~2024, the ~~total~~ intrinsic value for restricted common shares released was ~~$2.3~~$2.2 million compared to ~~$3.3~~$2.3 million for the three months ended March 31, ~~2022.~~2023.

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, 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 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. 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
March 31,
(Dollars in thousands) 2023 2022
Employee stock-based compensation expense:
Stock grant expense $ 2,150 $ 1,577
Employee stock purchase plan expense 39 28
Total employee stock-based compensation expense 2,189 1,605
Non-employee director stock-based compensation expense 136 124
Total stock-based compensation expense 2,325 1,729
Recognized tax benefit (543) (396)
Net stock-based compensation expense $ 1,782 $ 1,333

Table of Co n tents


	Three Months Ended
	March 31,
(Dollars in thousands)		2024		2023
Employee stock-based compensation expense:
Stock grant expense		$	3,024	$	2,150
Employee stock purchase plan expense		66		39

Total employee stock-based compensation expense		$	3,090	$	2,189
Non-employee director stock-based compensation expense		$	138	$	136
Total stock-based compensation expense		$	3,228	$	2,325
Recognized tax benefit		(752)		(543)
Net stock-based compensation expense		$	2,476	$	1,782

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 ~~$7.0~~$9.4 million at March 31, ~~2023,~~2024, which will be recognized over a weighted-average period of ~~2.2~~2.3 years.

Note 12 Revenue

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

Three Months Ended
March 31,
(Dollars in thousands) 2023 2022
Insurance income:
Commission and fees from sale of insurance policies (a) $ 3,816 $ 3,313
Fees related to third-party administration services (a) 82 72

~~Table~~ of ~~Contents~~

Three Months Ended

March 31,

Three Months Ended

March 31,

(Dollars in thousands)

2023

2022

(Dollars in thousands)

2024

2023

Insurance income:

Commission and fees from sale of insurance policies (a)

Fees related to third-party administration services (a)

Performance-based commissions (b)

1,527

1,346

Trust and investment income:

Fiduciary income (a)

2,457

1,965

Brokerage income (a)

1,627

2,311

Electronic banking income:

Interchange income (a)

4,181

4,113

Interchange income (a)

Promotional and usage income (a)

1,262

1,140

Deposit account service charges:

Ongoing maintenance fees for deposit accounts (a)

1,461

1,311

Transaction-based fees (b)

2,062

2,115

Commercial loan swap fees (b)

—

168

Other non-interest income transaction-based fees (b)

430

257

Total revenue from contracts with customers

18,905

18,111

Timing of revenue recognition:

Services transferred over time

14,886

14,225

Services transferred over time

Services transferred at a point in time

4,019

3,886

Total revenue from contracts with customers

18,905

18,111

(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

Table of Co n tents

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 three-month period ended March 31, ~~2023:~~2024:


		Contract Assets		Contract Liabilities			Contract Assets	Contract Liabilities
(Dollars in thousands)	(Dollars in thousands)					(Dollars in thousands)
Balance, January 1, 2023		$	1,294	$	5,634
Balance, January 1, 2024
Additional income receivable	Additional income receivable	50		—

Additional deferred income
Receipt of income previously receivable
Recognition of income previously deferred	Recognition of income previously deferred	—		(70)
Balance, March 31, 2023		$	1,344	$	5,564
Balance, March 31, 2024

Note 13 Acquisitions

~~Vantage Financial, LLC~~Limestone Bancorp, Inc.

~~On March 7, 2022, Peoples Bank purchased 100%~~As of the ~~equity~~close of ~~Vantage, a nationwide provider of equipment financing headquartered~~business on April 30, 2023, Peoples completed the Limestone Merger. In connection with the Limestone Merger, Limestone Bank, Inc., which operated 20 branches in ~~Excelsior, Minnesota.~~Kentucky, merged into Peoples ~~Bank acquired assets comprising Vantage's lease business, including $154.9 million in leases and certain third-party debt~~Bank. As consideration in the ~~amount~~Limestone Merger, Limestone shareholders were paid 0.90 common shares of ~~$106.9 million. Under~~Peoples for each full share of Limestone that was owned at the ~~terms~~merger date, resulting in the issuance of ~~the agreement,~~6,827,668 common shares by Peoples, ~~Bank paid cash~~or aggregate consideration of ~~$54.0 million, and also repaid $28.9 million in recourse debt on behalf of Vantage,~~$177.9 million. Peoples accounted for ~~total consideration of $82.9 million. Vantage offers mid-ticket equipment leases, primarily for~~this transaction as a business ~~essential information technology equipment across a wide-array of industries.~~

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combination under the acquisition method.

Peoples recorded acquisition-related expenses ~~during~~primarily related to the Limestone Merger, which included $(0.1) million in non-interest expense for the three months ended March 31, ~~2023 and 2022 of $45,000 and $0.8 million, respectively, in professional fees~~2024. Peoples recorded acquisition-related expenses related to the ~~Vantage acquisition.~~Limestone Merger, which included $16.9 million in non-interest expense for the year ended December 31, 2023.

The following table provides the preliminary purchase price calculation as of the date of the ~~acquisition of Vantage,~~Limestone Merger, and the assets acquired and liabilities assumed at their estimated fair values. The estimated fair values below are subject to adjustment for up to one year after April 30, 2023, which include, but are not limited to, loans, including the designation of PCD loans, deferred tax assets and liabilities, long-term borrowings, and certain other assets and other liabilities.

(Dollars in thousands)

Fair Value

Total purchase price

~~82,893~~177,931

~~Net assets~~Assets

Cash and balances due from banks

6,422

Interest-bearing deposits in other banks

87,115

Total cash and cash equivalents

93,537

Available-for-sale investment securities, at fair value

166,944

~~Assets~~Other investment securities

5,716

~~Cash and due from banks~~Total investment securities

$172,660

~~1,444~~

~~Leases~~Loans

~~155,726~~1,077,929

Allowance for credit losses (on ~~purchased credit deteriorated leases)~~PCD loans)

~~(801)~~(2,051)

Net ~~leases~~loans

~~154,925~~1,075,878

Bank premises and equipment, net of accumulated depreciation

~~116~~17,690

Table of Co n tents

(Dollars in thousands)

Fair Value

Bank owned life insurance

31,343

Other intangible assets

~~13,207~~27,722

Other assets

~~1,506~~36,874

Total assets

$1,455,704

~~171,198~~

Liabilities

~~Borrowings~~Deposits:

$Non-interest-bearing

~~106,919~~262,727

Interest-bearing

971,457

Total deposits

1,234,184

Short-term borrowings

60,000

Long-term borrowings

39,453

Accrued expenses and other liabilities

~~8,550~~12,967

Total liabilities

$1,346,604

~~115,469~~

Net assets

$109,100

~~55,729~~

Goodwill

~~27,164~~68,831

The goodwill recorded in connection with the ~~Vantage acquisition~~Limestone Merger is related to expected synergies to be gained from the combination of ~~Vantage~~Limestone with Peoples' operations. The employees retained from the ~~Vantage acquisition~~Limestone Merger and the geographic locations of Limestone should allow Peoples to continue to grow the ~~lease portfolio, along with~~loan and deposit portfolios while also increasing Peoples' ~~resources, and~~ability to penetrate the new markets, which 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. Peoples recorded a core deposit asset in other intangible assets ~~which included a customer relationship intangible, a trade-name intangible and non-compete agreements~~ related to ~~this transaction.~~the Limestone Merger.

There were no changes in the estimated fair value that impacted goodwill for the three months ended March 31, 2024.

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

(Dollars in thousands)

Par Value

Allowance for Credit Losses

Non-Credit Premium

Fair Value

Purchased credit deteriorated leases

(Dollars in thousands)

Par Value

Allowance for Credit Losses

Non-Credit (Discount) Premium

Fair Value

PCD loans

Leases

3,412

(801)

1,120

3,731

Commercial real estate, other

Commercial and industrial

Residential real estate

Home equity lines of credit

Consumer

Fair value

3,412

(801)

1,120

3,731

Note 14 Leases

Peoples has elected certain practical expedients, in accordance with ASC 842 - Leases ("ASC 842"). As a lessor, Peoples has made an accounting policy election to exclude from the 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.

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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 ofin 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~~a lease is typically charged down to the net realizable value, with the residual balance placed on nonaccrual status. Leases

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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 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 beoriginates sales-type leases through its NSL division, as ~~the premise for~~ these leases isare structured as 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.~~ These 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~~Peoples also originates leases ~~acquired from~~through its Vantage ~~were determined to be~~subsidiary, which are classified as 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~~relate to automotive, construction, health care, manufacturing, office, restaurant, information technology and other equipment. ~~These~~Finance leases include an estimated residual value, which is assessed for impairment as part of the allowance for credit losses. ~~Other non-interest~~Lease (loss) income noted in the table below includes ~~gain~~(i) gains on the early termination of leases, ~~syndicated leases,~~(ii) fees received for referrals, (iii) gains and ~~other fees.~~losses recognized on the sales of residual assets and (iv) syndication income. Additional information regarding Peoples' leases can be found in "Note 4 Loans and Leases."

The table below details Peoples' lease income:

Three Months Ended

(Dollars in thousands)

March 31, 2023

March 31, 2022

(Dollars in thousands)

March 31, 2024

March 31, 2023

Interest and fees on leases (a)

9,643

6,102

Lease income

Other non-interest income

1,077

775

Total lease income

10,720

6,877

(a)Included in "Interest and fees on loans and leases" in 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.

The following table summarizes the net investment in leases, which is included in "Loans and leases, net of deferred fees and costs" on the Unaudited Consolidated Balance Sheets:


(Dollars in thousands)	(Dollars in thousands)	March 31, 2023		December 31, 2022		(Dollars in thousands)	March 31, 2024	December 31, 2023
Lease payments receivable, at amortized cost	Lease payments receivable, at amortized cost	$	381,549	$	367,681
Estimated residual values	Estimated residual values	36,078		35,045
Initial direct costs	Initial direct costs	4,623		4,233
Deferred revenue	Deferred revenue	(67,609)		(61,828)
Net investment in leases	Net investment in leases	354,641		345,131
Allowance for credit losses - leases	Allowance for credit losses - leases	(9,109)		(8,495)
Net investment in leases, after allowance for credit losses	Net investment in leases, after allowance for credit losses	$	345,532	$	336,636

The following table summarizes the contractual maturities of leases:


(Dollars in thousands)	Balance
Remaining nine months ending December 31, ~~2023~~2024	$	~~68,772~~103,408
~~Year ending December 31, 2024~~	~~87,814~~
Year ending December 31, 2025	~~98,604~~109,429
Year ending December 31, 2026	~~64,769~~100,493
Year ending December 31, 2027	~~42,481~~82,587
Year ending December 31, 2028	55,038
Thereafter	~~19,109~~23,032
Lease payments receivable, at amortized cost	$	~~381,549~~473,987

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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 March 31, ~~2023,~~2024, 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

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make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at the commencement or the 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 aan 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

(Dollars in thousands)

March 31, 2023

March 31, 2022

(Dollars in thousands)

March 31, 2024

March 31, 2023

Operating lease expense

695

603

Short-term lease expense

168

Total lease expense

790

771

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.

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

(Dollars in thousands)

March 31, 2023

December 31, 2022

(Dollars in thousands)

March 31, 2024

December 31, 2023

ROU assets:

Other assets

7,181

6,825

Other assets

Lease liabilities:

Accrued expenses and other liabilities

7,880

7,551

Other information:

Weighted-average remaining lease term

8.5 years

8.8 years

Weighted-average remaining lease term

9.2 years

9.5 years

Weighted-average discount rate

2.67

2.70

Weighted-average discount rate

3.92

3.34

Additions for ROU assets obtained during the year

During both the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, Peoples paid cash of $0.7 million ~~and $0.6 million, respectively,~~ for operating leases.

The following table summarizes the maturity of remaining lease liabilities:


(Dollars in thousands)	Balance
Remaining nine months ending December 31, ~~2023~~2024	$	~~2,008~~2,280
~~Year ending December 31, 2024~~	~~1,650~~
Year ending December 31, 2025	~~1,088~~2,210
Year ending December 31, 2026	~~905~~1,950
Year ending December 31, 2027	~~747~~1,762
Year ending December 31, 2028	1,338
Thereafter	~~3,007~~5,412
Total undiscounted lease payments	$	~~9,405~~14,952
Imputed interest	$	~~(1,525)~~(2,890)
Total lease liabilities	$	~~7,880~~12,062

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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 at and for the three months ended March 31, ~~2023~~2024 and March 31, ~~2022.~~2023. This MD&A should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the Notes thereto.

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 risks and uncertainties include, but are not limited to:

(1)the ~~magnitude and continued duration~~effects of ~~the recovery from the COVID-19 pandemic and its ongoing impact on the global economy and financial market conditions and Peoples’ businesses, results of operations and financial conditions;~~

~~(2)ongoing increasing~~ interest rate policies, changes in the interest rate environment due to economic conditions and/or the fiscal and monetary policy measures undertaken by the U.S. government and the Federal Reserve Board, including changes in the Federal Funds Target Rate, in response to such economic conditions, which may adversely impact interest rates, the interest rate yield curve, interest margins, loan demand and interest rate sensitivity;

~~(3)~~(2)the effects of inflationary pressures and the impact of rising interest rates on borrowers’ liquidity and ability to repay;

~~(4)~~(3)the success, impact, and timing of the implementation of Peoples' business strategies and Peoples' ability to manage strategic initiatives, including the ongoing increasing interest rate policies of the Federal Reserve Board, the completion and successful integration of planned acquisitions, including the ~~recently-completed acquisition of Vantage and the pending~~ Limestone Merger that closed in April 2023, and the expansion of commercial and consumer lending activities;

~~(5)~~(4)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;

~~(6)~~(5)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,~~FDIC, 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;~~requirements;

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

~~(8)~~(7)current and future local, regional, national and international economic conditions (including the impact of persistent inflation, supply chain issues or labor shortages, ~~ineffective management~~supply-demand imbalances affecting local real estate prices, high unemployment rates in the local or regional economies in which Peoples operates and/or the U.S. economy generally, an increasing federal government budget deficit, the failure of the ~~U.S.~~ federal ~~budget or~~government to raise the federal debt ceiling, 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 U.S. global trading partners) and the impact these conditions may have on Peoples, Peoples' customers and Peoples' counterparties, and Peoples' assessment of the impact, which may be different than anticipated;

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

~~(10)~~(9)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 recent inflationary pressures and continued elevated interest rates, and may adversely impact the amount of interest income generated;

~~(11)~~(10)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;

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

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~~(13)~~(12)changes in accounting standards, policies, estimates or procedures may adversely affect Peoples' reported financial condition or results of operations;

~~(14)~~(13)the impact of assumptions, estimates and inputs used within models, which may vary materially from actual outcomes, including under the CECL model;

~~(15)~~the replacement of the 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;

~~(16)~~(14)adverse changes in the conditions and trends in the financial markets, including recent inflationary pressures, 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;

~~(17)~~(15)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;

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

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

~~(20)~~(18)the impact of larger or similar-sized financial institutions encountering problems, such as the ~~recent~~ closures in 2023 of Silicon Valley Bank in California, ~~and~~ Signature Bank in New York, First Republic Bank in California, and Heartland Tri-State Bank in Kansas, which may adversely affect the banking industry and/or Peoples' business generation and retention, funding and liquidity, including potential increased regulatory requirements, and ~~costs,~~ increased reputational risk and potential impacts to macroeconomic conditions;

~~(21)~~(19)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;

~~(22)~~(20)any misappropriation of the confidential information which Peoples possesses could have an adverse impact on Peoples' business and could result in regulatory actions, litigation and other adverse effects;

(21)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;

~~(23)~~(22)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 Peoples' subsidiaries are highly dependent;

~~(24)~~(23)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, legislative or regulatory initiatives, or other factors, which may be different than anticipated;

~~(25)~~(24)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;

~~(26)~~(25)the impact on Peoples' businesses, personnel, facilities, or systems, of losses related to acts of fraud, theft, misappropriation or violence;

~~(27)~~(26)the impact on Peoples' businesses, as well as on the risks described above, of various domestic or international widespread natural or other disasters, pandemics, cybersecurity attacks, system failures, civil unrest, military or terrorist activities or international ~~conflicts;~~conflicts (including Russia’s war in Ukraine and the ongoing conflicts in the Middle East);

~~(28)~~(27)the potential ~~further~~ deterioration of the U.S. economy due to financial, political or other shocks;

~~(29)~~(28)the potential influence on the U.S. financial markets and economy from the effects of climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs;

~~(30)~~(29)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;

~~(31)~~(30)risks and uncertainties associated with Peoples' entry into new geographic markets and risks resulting from Peoples' inexperience in these new geographic markets;

~~(32)~~(31)Peoples' ability to integrate the ~~pending~~ Limestone Merger, which may be unsuccessful, or may be more difficult, time-consuming or costly than expected;

~~(33)~~(32)the risk that expected revenue synergies and cost savings from the ~~pending~~ Limestone Merger, may not be fully realized or realized within the expected time frame;

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~~(34)~~(33)changes in laws or regulations imposed by Peoples' regulators impacting Peoples' capital actions, including dividend payments and share repurchases;

(34)the vulnerability of Peoples' network and online banking portals, and the systems of parties with whom Peoples contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches;

(35)Peoples' business may be adversely affected by increased political and regulatory scrutiny of corporate environmental, social and governance ("ESG") practices;

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

~~(36)Peoples' continued ability to grow deposits or maintain adequate deposit levels in light of the recent bank failures;~~ and

(37)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' ~~2022~~2023 Form 10-K and under the heading "ITEM 1A. RISK FACTORS" in Part II of this Form 10-Q. 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 any forward-looking statements to reflect events or circumstances after the filing 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 – www.peoplesbancorp.com under the “Investor Relations” section.

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.

This discussion and analysis should be read in conjunction with the Audited Consolidated Financial Statements, and Notes ~~thereto,~~to the Audited Consolidated Financial Statements, contained in Peoples’ ~~2022~~2023 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, trust and investment, insurance, premium financing and equipment leasing solutions through its subsidiaries. Peoples provides services through traditional offices, ~~ATMs,~~automated teller machines ("ATMs"), interactive teller machines ("ITMs"), mobile banking, ~~and~~ telephone and internet-based banking. Peoples offers a complete array of insurance products through Peoples Insurance, 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 offers insurance premium finance lending nationwide through its Peoples Premium Finance division. Peoples also offers lease financing through its North Star Leasing division and through Vantage, a subsidiary of Peoples Bank. As of March 31, ~~2023,~~2024, Peoples had ~~130~~152 locations, including ~~113~~133 full-service bank branches in Ohio, Kentucky, 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 FRB of Cleveland and 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 accounting 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 March 31, ~~2023,~~2024, which have been disclosed in Peoples' ~~2022~~2023 Form 10-K and updated in "Note 1 Summary of Significant Accounting Policies" in this Form 10-Q. This MD&A should be read in conjunction with the policies disclosed in Peoples’ ~~2022~~2023 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 October 25, 2022, Peoples announced the Limestone Merger, a transaction valued at approximately $208.2 million at the time of the announcement. The Limestone Merger closed on April 30, 2023. As of March 31, 2023, Peoples had recognized $1.0 million in acquisition-related expenses associated with this pending transaction.

◦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

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maintained by Elite, pursuant to an Asset Purchase Agreement between Peoples Insurance and Elite. Total consideration for this transaction was $4.4 million. Peoples recognized intangibles of $2.1 million, primarily comprised of a customer relationship intangible.

◦~~On March 7, 2022,~~For the first quarter of 2024, Peoples ~~completed its acquisition~~incurred $(0.1) million of ~~Vantage pursuant~~acquisition-related expenses, compared to ~~an Equity Purchase Agreement, dated February 16, 2022,~~$1.3 million for the fourth quarter of 2023 and $0.6 million for the first quarter of 2023.The acquisition-related expenses in ~~which Peoples Bank purchased 100% of the equity of Vantage. Peoples Bank acquired assets comprising Vantage's lease business, including $154.9 million in leases~~2024 and ~~certain third-party debt in the amount of $106.9 million. Peoples paid total consideration of $82.9 million. Based in Excelsior, Minnesota, Vantage offers mid-ticket equipment leases~~2023 were primarily for business essential information technology equipment across a wide array of industries. Peoples recorded goodwill in the amount of $27.2 million and 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.~~the Limestone Merger.

◦During the first quarter of ~~2023,~~2024, Peoples recorded a provision for credit losses of ~~$1.9~~$6.1 million, compared to a provision for credit losses of ~~$2.3~~$1.3 million in the linked quarter and a ~~recovery of~~provision for credit losses of ~~$6.8~~$1.9 million in the first quarter of ~~2022.~~2023. The provision for credit losses for the first quarter of 2024 was driven by (i) a deterioration in macro-economic conditions used within the CECL model, (ii) an increase of reserves on individually analyzed loans and (iii) loan growth. The provision for credit losses in the linked quarter was largely attributable to higher net charge-offs, offset by an improvement of macro-economic conditions and the release of reserves on individually analyzed loans. The provision for credit losses in the first quarter of 2023 was largely attributable to a deterioration of macro-economic conditions, ~~and an increase in charge-off activity,~~ partially offset by a reduction in reserves for individually analyzed loans. For more information, please refer to the section titled "RESULTS OF OPERATIONS - Provision for ~~(Recovery of)~~ Credit Losses" found later in this discussion.

◦During the ~~first~~third quarter of 2023, Peoples ~~incurred $0.6 million~~terminated its pension plan by settling the remaining benefit obligation of ~~acquisition-related expenses, compared~~$7.7 million. The pension plan had been closed to ~~$0.7~~new entrants since January 1, 2010. Peoples recorded a settlement charge of $2.4 million in the ~~fourth~~third quarter of ~~2022 and $1.4 million~~2023 in relation to the ~~first quarter~~termination of ~~2022. The acquisition-related~~the pension plan. Peoples does not anticipate further expenses ~~in 2023 were primarily~~ related to the termination.

◦On October 25, 2022, Peoples announced the Limestone Merger, ~~while~~a transaction valued at $177.9 million. The Limestone Merger closed as of the ~~acquisition-related expenses~~close of business on April 30, 2023. Peoples acquired Limestone's loan portfolio totaling $1.1 billion, $1.2 billion of deposits, $172.7 million of total investment securities, an aggregate of $99.5 million of short-term and long term borrowings, and $93.5 million of total cash and cash equivalents. Peoples also recorded preliminary goodwill in ~~2022 were primarily related to~~ the ~~Vantage acquisition.~~amount of $68.8 million and other intangible assets of $27.7 million, which consisted of core deposit intangibles.

◦To combat the effects of ongoing inflationary pressures, the Federal Reserve Board increased the Federal Funds Target Rate range to 0.25% to 0.50% beginning on March 16, 2022, and continued to ~~0.75%~~raise rates up to ~~1.00% on May 4, 2022, to 1.50% to 1.75% on June 15, 2022, to 2.25% to 2.50%~~5.50% on July 27, ~~2022,~~2023. The Federal Reserve Board has kept rates unchanged since July 2023 but has signaled that it expects to 3.00% to 3.25% on September 21, 2022, to 3.75% to 4.00% on November 2, 2022, to 4.25% to 4.50% on December 14, 2022, to 4.50% to 4.75% on February 1, 2023, to 4.75% to 5.00% on March 23, 2023, 5.00% to 5.25% on May 3, 2023 and has stated it may continue to raisebegin reducing rates ~~throughout 2023.~~sometime in 2024.

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

EXECUTIVE SUMMARY

Peoples reported net income of ~~$26.6~~$29.6 million for the first quarter of ~~2023,~~2024, representing earnings per diluted common share of ~~$0.94.~~$0.84. In comparison, Peoples reported net income of $33.8 million, representing earnings per diluted common share of ~~$0.95~~$0.96, for the fourth quarter of ~~2022,~~2023, and net income of ~~$0.84~~$26.6 million, representing earnings per diluted common share of $0.94, for the first quarter of ~~2022. Non-core items, and the related tax effect of each, in net income primarily included acquisition-related expenses.~~2023. Non-core items negatively impacted earnings per diluted common share by $0.01 for the first quarter of 2024, $0.08 for the fourth quarter of 2023, and $0.05 for the first quarter of ~~2023, $0.03 for the fourth quarter of 2022, and $0.04 for the first quarter of 2022.~~2023.

Net interest income was ~~$72.9~~$86.6 million for the first quarter of ~~2023, an increase~~2024, a decrease of ~~$2.3~~$1.7 million, or 3%2.0%, compared to the linked quarter. Net interest margin was ~~4.53%~~4.27% for the first quarter of ~~2023,~~2024, compared to 4.44% for the linked quarter. The ~~increases~~decreases in net interest income and net interest margin were primarily driven by ~~50 basis points~~a decrease in accretion income, net of ~~improvement~~amortization, from our acquisitions. The linked quarter was impacted by a true-up of $1.3 million to the preliminary Limestone-related accretion, which added to net interest income. The small remaining decline in ~~loan yields due to recent increases in market~~net interest ~~rates and a shift in the composition of the loan portfolio into higher-yielding leases, and 41 basis points of improvement in investment yields when~~margin, compared to the linked quarter, was mostly due to ~~purchases of investment securities with higher interest rates and sales of lower-yielding investment securities.~~excess cash on-hand during the quarter for liquidity purposes. Net interest income for the first quarter of ~~2023~~2024 increased ~~$18.6~~$13.8 million, or ~~34%~~18.9%, compared to the first quarter of ~~2022.~~2023. Net interest margin ~~increased 112 basis points compared to 3.41%~~ for the first quarter of ~~2022. The increase in net interest income~~2024 decreased 26 basis points compared to 4.53% for the first quarter of ~~2022 was~~2023, driven primarily by ~~increases~~an increase in ~~market~~ interest ~~rates and a full quarter of income from the Vantage acquisition.~~expense on deposits.

Accretion income, net of amortization expense, from acquisitions was $6.6 million for the first quarter of 2024, $9.0 million for the fourth quarter of 2023 and $2.0 million for the first quarter of 2023, ~~$2.2 million for the fourth quarter of 2022 and $2.7 million for the first quarter of 2022,~~ which added 1332 basis points, 1445 basis points and 1713 basis points, respectively, to net interest margin. The ~~decreases~~decrease in accretion income for the first quarter of ~~2023~~2024 when compared to the linked quarter ~~and~~was driven by a fourth quarter 2023 true-up to the preliminary Limestone-related accretion. The increase in accretion income for the current quarter compared to the first quarter of ~~2022 were driven by less loan accretion due to lower pay-offs and less~~2023 was a result of the accretion from the ~~merger with Premier Financial Bancorp, Inc. ("Premier") and the Vantage acquisition.~~

~~Table~~ of ~~Contents~~

Limestone Merger.

The provision for credit losses was ~~$1.9~~$6.1 million for the first quarter of ~~2023,~~2024, compared to a provision for credit losses of ~~$2.3~~$1.3 million for the linked quarter and a ~~recovery of~~provision for credit losses of ~~$6.8~~$1.9 million for the first quarter of ~~2022.~~2023. The ~~provisions~~provision for credit losses infor the first quarter of 2024 was driven by (i) a deterioration in macro-economic conditions used within the CECL model, (ii) an increase of reserves on individually analyzed loans and (iii) loan growth. The provision for credit losses for the fourth quarter of 2023 ~~and the linked quarter were~~was largely attributable to ~~a deterioration~~higher net charge-offs, offset by an improvement of macro-economic conditions and ~~an increase in charge-off activity, partially offset by a reduction in~~the release of reserves ~~for~~on individually analyzed loans. ~~The recovery of credit losses in the first quarter of 2022 was attributable to an improvement in economic factors and loss drivers within the current expected credit loss ("CECL") model.~~ Net charge-offs for the first quarter of ~~2023~~2024 were ~~$1.5~~$3.3 million, or ~~0.13%~~0.22% of average total loans annualized, compared to net charge-offs of ~~$2.1~~$3.5 million, or ~~0.18%~~0.23% of average total loans annualized, for the linked quarter and net charge-offs of ~~$1.9~~$1.5 million, or ~~0.17%~~0.13% of average total loans annualized, for the first quarter of ~~2022.~~2023. For additional information on credit trends and the allowance for credit losses, see the "FINANCIAL CONDITION - Allowance for Credit Losses" section below.

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Net gains and losses include gains and losses on investment securities, asset disposals and other transactions, which are included in total non-interest income on the Consolidated Statements of Operations. The net loss realized during the first quarter of ~~2023~~2024 was ~~$2.2~~$0.3 million, compared to a net loss of ~~$0.5~~$2.2 million for each of the linked quarter and athe first quarter of 2023. The net ~~gain of $3,000~~loss for the first quarter of ~~2022. During the first quarter of 2023, Peoples executed the sale of $96.7~~2024 was due to $0.3 million of ~~its lower yielding available-for-sale securities for a pre-tax~~ net ~~loss of $2.0 million. Proceeds from the sale were used to pay down overnight borrowings. The realized~~ losses ~~recognized due to these transactions are projected to be earned back within the 2023 fiscal year.~~on repossessed assets. The net loss for the linked quarter was primarily due to ~~net losses on repossessed assets and net losses on~~the sales of $36.5 million of lower yielding available-for-sale investment securities for a pre-tax loss of $1.7 million. The net loss for the first quarter of 2023 was primarily due to a pre-tax net loss of $2.0 million on the sale of $96.7 million of its lower yielding available-for-sale securities.

Total non-interest income, excluding net gains and losses, for the first quarter of ~~2023 increased $1.7~~2024 decreased $0.2 million compared to the linked quarter. The ~~increase~~decrease in non-interest income, excluding net gains and losses, was primarily due to decreases of $1.6 million in lease income and $0.8 million in electronic banking income. The decrease in lease income was due to a ~~$1.7~~large lease buyout in the fourth quarter of 2023, while the decrease in electronic banking income was due to a decline in customer activity. Partially offsetting the decreases was a $2.2 million increase in insurance income due to seasonal performance-based commissions being ~~earned~~paid in the first quarter of ~~each~~the year. Compared to the first quarter of ~~2022,~~2023, total non-interest income, excluding net gains and losses, increased ~~$1.2~~$4.9 million, primarily due to (i) a $1.1 million increase in insurance income, (ii) a $1.0 million increase in other non-interest income, (iii) a $0.8 million increase in bank owned life insurance income, (iv) a $0.7 million increase in deposit account service charges, (v) a $0.6 million increase in electronic banking income. Insurance income increased due to higher contingency income, new business, and market increases for premiums. Bank owned life insurance increased due to a $0.5 million death benefit in the first quarter of 2024 and additional income ~~which was~~from policies acquired in the Limestone Merger. The other increases for the first quarter of 2024, when compared to the first quarter of 2023, were primarily due to the additional customers brought in from the Limestone Merger.

Total non-interest expenses for the first three months ended March 31, 2024 were impacted by anticipated annual expenses that occur in the first quarter of each year including annual merit increases, stock-based compensation expenses attributable to ~~an increase~~retirement-eligible employees and health savings account ("HSA") contributions. Total non-interest expense for the prior periods were impacted by the Limestone Merger and acquisition-related non-interest expense.

The table below summarizes the amount of acquisition-related expenses for each line item that is a component of non-interest expense. This information is used by Peoples to provide information useful to investors in ~~property~~understanding Peoples' operating performance and ~~casualty insurance commissions.~~trends.

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	Three Months Ended
	March 31,		December 31,		March 31,
(Dollars in thousands)	2024		2023		2023
Non-interest expense:
Salaries and employee benefit costs	$	38,893	$	37,370	$	32,028
Net occupancy and equipment expense	6,283		5,532		4,955
Professional fees	2,967		3,266		2,881
Data processing and software expense	5,769		6,029		4,562
Amortization of other intangible assets	2,788		3,271		1,871
Electronic banking expense	1,781		1,991		1,491
Marketing expense	1,056		1,463		930
FDIC insurance premiums	1,186		1,260		801
Franchise tax expense	881		862		1,034
Communication expense	799		745		613
Other loan expenses	1,076		726		739
Other non-interest expense	4,986		5,174		4,574
Total non-interest expense	68,465		67,689		56,479
Acquisition-related non-interest expense:
Salaries and employee benefit costs	16		119		21
Net occupancy and equipment expense	—		78		9
Professional fees	(38)		530		291
Data processing and software expense	(18)		560		—

Electronic banking expense	(100)		—		—
Marketing expense	10		20		10



Other loan expenses	—		1		—
Other non-interest expense	46		(32)		220
Total acquisition-related non-interest expense	(84)		1,276		551
Non-interest expense excluding acquisition-related expense:
Salaries and employee benefit costs	38,877		37,251		32,007
Net occupancy and equipment expense	6,283		5,454		4,946
Professional fees	3,005		2,736		2,590
Data processing and software expense	5,787		5,469		4,562
Amortization of other intangible assets	2,788		3,271		1,871
Electronic banking expense	1,881		1,991		1,491
Marketing expense	1,046		1,443		920
FDIC insurance premiums	1,186		1,260		801
Franchise tax expense	881		862		1,034
Communication expense	799		745		613
Other loan expenses	1,076		725		739
Other non-interest expense	4,940		5,206		4,354
Total non-interest expense excluding acquisition-related expense	$	68,549	$	66,413	$	55,928

Total non-interest expense increased ~~$3.1~~$0.8 million, or 6%1%, for the three months ended March 31, ~~2023,~~2024, compared to the linked quarter. ~~The increase in~~Excluding acquisition-related expense, total non-interest expense ~~for the first quarter~~increased $2.1 million, or 3%, primarily due to increases of ~~2023 was attributable to an increase~~$1.6 million in salaries and employee benefit costs. The increase in salaries and employee benefit costs was due to anticipated ~~additional~~annual expenses ~~typically recognized~~that occur in the first quarter of each ~~year. These expenses included~~year including annual merit increases, stock-based compensation expenses attributable to retirement-eligible employees and ~~employer health savings account ("HSA")~~HSA contributions.

Compared to the first quarter of ~~2022,~~2023, total non-interest expense increased ~~$4.9~~$12.0 million, or 9%21%. Excluding acquisition-related expenses, non-interest expenses increased $12.6 million, or 23%, primarily due to a increases of $6.9 million in ~~(i)~~ salaries and employee ~~benefit~~

Table of Co n tents

benefits costs ~~(ii)~~due to additional employees added in the Limestone Merger and $1.3 million and $1.2 million in net occupancy and equipment expense and data processing and software expense, ~~and (iii) other non-interest expense. The increases were~~respectively, due to the recent growth, including through acquisitions. ~~Partially offsetting these increases were decreases in electronic banking expense and professional fees.~~

The efficiency ratio for the first quarter of ~~2023~~2024 was ~~57.8%~~58.0%, compared to ~~56.7%~~56.0% for the linked quarter, and ~~66.8%~~57.8% for the first quarter of ~~2022.~~2023. The increase in the efficiency ratio compared to the linked quarter was ~~primarily due to the increases~~largely a result of an increase in ~~non-interest expenses, which were partially offset by higher net~~ interest ~~income due to increases in the market interest rates.~~expense on deposits. The ~~decrease in the~~ efficiency ratio compared to the prior year quarter was ~~primarily due to a decrease in acquisition-related expenses.~~relatively flat. The efficiency ratio, adjusted for non-core items, was ~~57.2%~~58.1% for the first quarter of ~~2023,~~2024, compared to ~~55.9%~~54.8% for the linked quarter and ~~64.8%~~57.19% for the first quarter of 2022. The efficiency ratio is typically higher in the first quarter of the year driven by the aforementioned salaries and employee benefit costs, and specifically by higher payroll taxes, employer HSA contributions and stock-based compensation expenses for certain employees.2023. Peoples continues to focus on controlling expenses, while recognizing ~~some~~ necessary costs in order to continue growing the business.

Peoples recorded income tax expense of $8.3 million with an effective tax rate of 21.8% for the first quarter of 2024, compared to income tax expense of $9.7 million with an effective tax rate of 22.3% for the linked quarter, and income tax expense of $7.0 million with an effective tax rate of 21.0% for the first quarter of ~~2023, compared to income~~2023. Income tax expense ~~of $7.1 million with an effective tax rate of 21.0% for the linked quarter, and income tax expense of $6.0 million with an effective tax rate of 20.2%~~ for the first quarter of ~~2022. The increase in income tax expense for the three months ended March 31, 2023,~~2024 compared to the ~~three months ended March 31, 2022,~~linked quarter decreased due to lower pre-tax income. The increase for the first quarter of 2024 compared to the first quarter of 2023, was driven by higher ~~income before income taxes.~~pre-tax income.

At March 31, ~~2023,~~2024, total assets were ~~$7.31~~$9.27 billion, compared to ~~$7.21~~$9.16 billion at December 31, ~~2022~~2023 and ~~$7.24~~$7.31 billion at March 31, ~~2022. The $104.2 million increase in total~~2023. Total assets at March 31, 2024 increased when compared to at December 31, ~~2022 was~~2023 primarily due to increases in ~~held-to-maturity~~ investment securities and ~~loans~~period-end total loan and leases, net of deferred fees and costs, partially offset by a decrease in available-for-sale investment securities. Management underwent an initiative during the first quarter of 2023 to sell lower yielding available-for-sale investment securities whose proceeds were used to pay down higher cost funding. Separately, the increase in thelease balances. The period-end total loan and lease balances ~~was primarily driven by increases of (i) $57.5~~at March 31, 2024 increased $43.6 million, in other commercial real estate loans, (ii) $17.8 million in indirect consumer loans and (iii) $9.5 million in leases, partially offset by a reductions of $14.6 million in construction loans and $10.8 million in residential real estate loans. The $72.3 million increase in total assetsor 3% annualized, compared to at ~~March~~December 31, 2022 was largely attributable to increases in loans and leases as well as the aforementioned net increase in investment securities, partially offset by decreases in interest-bearing deposits at other banks.2023. The increase in the period-end loan and lease ~~balances when compared to at March 31, 2022~~balance was primarily driven by increases of ~~$122.4~~(i) $46.8 million in other commercial real estate loans, (ii)$35.8 million in premium finance loans, and (iii) $29.6 million in commercial and industrial loans, partially offset by reductions of (a) $49.3 million in construction loans, (b) $16.2 million in indirect consumer loans, and ~~$87.6~~(c) $15.2 million in ~~leases, partially offset~~direct consumer loans. Total assets at March 31, 2024 increased compared to March 31, 2023 due to $1.46 billion of assets, primarily loans, acquired in the Limestone Merger. Excluding the loans acquired in the Limestone Merger, the period-end loan and lease balance at March 31, 2024 increased $499.3 million, or 10%, driven by ~~a reduction~~increases of ~~$43.8~~$198.1 million, $100.6 million, $80.7 million, $68.1 million, $37.3 million, and $23.5 million in ~~residential~~other commercial real estate ~~loans.~~loans, commercial and industrial loans, premium finance loans, leases, construction loans, and home equity lines of credit, respectively.

Total liabilities were $8.21 billion at March 31, 2024, up from $8.10 billion at December 31, 2023 and $6.49 billion at March 31, ~~2023, up from $6.42 billion at December 31, 2022 and $6.43 billion at March 31, 2022.~~2023. The increase in total liabilities when compared to at December 31, ~~2022~~2023 was ~~attributable~~primarily due to an increase of $174.3 million in period-end total deposits, ~~and long-term~~

~~Table~~ partially offset by a decrease of ~~Contents~~

$87.6 million in short-term borrowings. The increase in period-end total deposits when compared to at December 31, ~~2022~~2023 was primarily driven by ~~an increase~~increases of ~~$147.6~~(i) $237.0 million in brokered certificates of deposits, which are primarily used as a source of funding. Excluding the increase in brokered certificates of deposits, total deposits at March 31, 2023 decreased $76.0 million when compared to at December 31, 2022, primarily due to reductions of (i) $75.0retail CDs, (ii) $98.5 million in ~~interest-bearing deposit accounts (ii) $43.9 million in savings accounts,~~governmental deposits and (iii) ~~$37.9~~$84.5 million in money market deposit accounts, ~~and (iv) $34.3~~partially offset by decreases of (a) $99.3 million in non-interest bearing deposit accounts, ~~partially offset by an increase of $91.9~~(b) $41.8 million in ~~retail certificates~~brokered CDs, (c) $36.6 million in interest-bearing demand deposit accounts, and (d) $17.8 million in savings accounts. The increase in governmental deposit accounts was due to the seasonality of ~~deposit.~~the balances, which are typically higher in the first quarter each year. The increase in total liabilities when compared to at March 31, ~~2022~~2023 was primarily due to an$1.35 billion of liabilities, primarily deposits, acquired in the Limestone Merger. Excluding deposits acquired in the Limestone Merger, period-end total deposits at March 31, 2024 increased $784.8 million, or 14%, compared to at March 31, 2023. The increase was primarily driven by increases of $956.9 million in ~~short-term borrowings,~~retail CDs, $210.3 million in brokered CDs, and $191.2 million in money market deposit accounts, partially offset by decreases ~~in total deposits~~of $270.9 million, $191.8 million, and ~~long-term borrowings. Deposits decreased primarily due to reductions~~$158.4 million in non-interest-bearing ~~deposits,~~deposit accounts, savings accounts, and interest-bearing demand deposit accounts, governmental deposit accounts, and money market deposit accounts of $111.6 million, $94.0 million, $85.5 million and $77.2 million, respectively, partially offset by an increase of $185.8 million in brokered certificates of deposits.respectively.

Total stockholders' equity at March 31, ~~2023~~2024 increased by ~~$34.2~~$8.5 million compared to at December 31, ~~2022,~~2023, which ~~reflected~~was primarily due to net income for the first quarter of ~~$26.6 million and a decrease in accumulated other comprehensive loss~~2024 of ~~$16.2~~$29.6 million, partially offset by dividends paid of ~~$10.7 million.~~$13.7 million and a $7.4 million increase in accumulated other comprehensive loss. The change in accumulated other comprehensive loss was primarily the result of the changes in the market value of available-for-sale investment securities during the period. Accumulated unrealized losses related to the available-for-sale investment securities portfolio were ~~$112.7~~$111.8 million and ~~$129.9~~$104.2 million at March 31, ~~2023~~2024 and at December 31, ~~2022,~~2023, respectively. ~~Total~~The increase in total stockholders' equity at March 31, ~~2023 increased by $11.2 million~~2024 when compared to at March 31, ~~2022, which~~2023 was ~~primarily due to~~also impacted by net income of ~~$104.3~~$116.4 million in the last twelve months ~~partially offset by an increase~~and a decrease in accumulated other comprehensive loss of ~~$48.3~~$2.0 million, partially offset by dividends paid of $55.1 million and share repurchases of $6.0 million. The increase in accumulated other comprehensive loss was the result of an increase of $51.5 million in unrealized losses related to the available-for-sale investment securities portfolio from March 31, 2022 to March 31, 2023.

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~~fully tax-equivalent ("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 obligations of states and political subdivisions and tax-exempt loans to the pre-tax equivalent of taxable income

Table of Co n tents

using a blended corporate income tax rate of ~~23.3% for each of the three months ended March 31, 2023 and December 31, 2022, and a 22.9% blended corporate income tax rate~~23.2% for the three months ended March 31, ~~2022.~~2024, and 23.3% for the three months ended December 31, 2023 and March 31, 2023.

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






		Three Months Ended
		March 31, 2023		December 31, 2022		March 31, 2022
(Dollars in thousands)	(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)
Net interest income
Net interest income
Net interest income	Net interest income	$	72,878	$	70,613	$	54,310
Taxable equivalent adjustment	Taxable equivalent adjustment	399		412		391
Fully tax-equivalent net interest income		$	73,277	$	71,025	$	54,701
Taxable equivalent adjustment
Taxable equivalent adjustment
FTE net interest income
FTE net interest income
FTE net interest income

4446

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






		For the Three Months Ended
		March 31, 2023						December 31, 2022						March 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Average Balance		Income/ Expense		Yield/Cost		Average Balance		Income/ Expense		Yield/Cost		Average Balance		Income/ Expense		Yield/Cost
(Dollars in thousands)
(Dollars in thousands)
Short-term investments
Short-term investments
Short-term investments	Short-term investments	$	35,223	$	388	4.47	%	$	44,421	$	404	3.61	%	$	332,098	$	160	0.20	%

Investment securities (a)(b):	Investment securities (a)(b):

Investment securities (a)(b):

Investment securities (a)(b):
Taxable
Taxable
Taxable	Taxable	1,597,688		11,049		2.77	%	1,459,879		8,376		2.29	%	1,465,998		6,096		1.66	%
Nontaxable	Nontaxable	190,566		1,298		2.72	%	192,863		1,365		2.83	%	204,381		1,316		2.58	%
Nontaxable
Nontaxable
Total investment securities
Total investment securities
Total investment securities	Total investment securities	1,788,254		12,347		2.76	%	1,652,742		9,741		2.35	%	1,670,379		7,412		1.78	%
Loans (b)(c):	Loans (b)(c):
Loans (b)(c):
Loans (b)(c):
Construction
Construction
Construction	Construction	239,492		3,963		6.62	%	234,233		3,596		6.01	%	225,676		2,155		3.82	%
Commercial real estate, other	Commercial real estate, other	1,333,062		19,794		5.94	%	1,293,500		18,431		5.58	%	1,362,434		14,782		4.34	%
Commercial real estate, other
Commercial real estate, other
Commercial and industrial
Commercial and industrial
Commercial and industrial	Commercial and industrial	877,391		14,610		6.66	%	885,111		13,455		5.95	%	888,598		8,023		3.61	%
Premium finance	Premium finance	147,895		2,150		5.81	%	161,382		1,898		4.60	%	132,758		1,164		3.51	%
Premium finance
Premium finance
Leases
Leases
Leases	Leases	342,583		9,643		11.26	%	325,113		8,448		10.17	%	162,277		6,102		15.04	%
Residential real estate (d)	Residential real estate (d)	839,822		9,717		4.63	%	853,354		9,321		4.37	%	913,730		9,766		4.28	%
Residential real estate (d)
Residential real estate (d)
Home equity lines of credit
Home equity lines of credit
Home equity lines of credit	Home equity lines of credit	176,327		2,966		6.82	%	177,778		2,723		6.08	%	163,339		1,612		4.00	%
Consumer, indirect	Consumer, indirect	640,359		7,231		4.58	%	612,696		6,834		4.43	%	523,770		5,045		3.91	%
Consumer, indirect
Consumer, indirect
Consumer, direct
Consumer, direct
Consumer, direct	Consumer, direct	108,488		1,739		6.50	%	113,045		1,763		6.19	%	106,298		1,595		6.09	%
Total loans	Total loans	4,705,419		71,813		6.12	%	4,656,212		66,469		5.62	%	4,478,880		50,244		4.50	%
Total loans
Total loans
Allowance for credit losses
Allowance for credit losses
Allowance for credit losses	Allowance for credit losses	(52,669)						(52,253)						(61,947)
Net loans	Net loans	4,652,750		71,813		6.19	%	4,603,959		66,469		5.68	%	4,416,933		50,244		4.56	%
Net loans
Net loans
Total earning assets
Total earning assets
Total earning assets	Total earning assets	6,476,227		84,548		5.23	%	6,301,122		76,614		4.79	%	6,419,410		57,816		3.61	%
Goodwill and other intangible assets	Goodwill and other intangible assets	325,545						327,377						304,124
Goodwill and other intangible assets
Goodwill and other intangible assets
Other assets
Other assets
Other assets	Other assets	420,692						438,694						344,282
Total assets	Total assets	$	7,222,464					$	7,067,193					$	7,067,816
Total assets
Total assets
Interest-bearing deposits:
Interest-bearing deposits:
Interest-bearing deposits:	Interest-bearing deposits:
Savings accounts	Savings accounts	$	1,044,392	$	136	0.05	%	$	1,069,646	$	138	0.05	%	$	1,050,813	$	34	0.01	%
Savings accounts
Savings accounts
Governmental deposit accounts
Governmental deposit accounts
Governmental deposit accounts	Governmental deposit accounts	637,959		1,066		0.68	%	688,815		710		0.41	%	670,419		447		0.27	%
Interest-bearing demand accounts	Interest-bearing demand accounts	1,103,966		180		0.07	%	1,152,709		186		0.06	%	1,171,266		92		0.03	%
Interest-bearing demand accounts
Interest-bearing demand accounts
Money market accounts	Money market accounts	583,574		825		0.57	%	615,460		522		0.34	%	650,272		97		0.06	%
Retail certificates of deposit		576,645		1,750		1.23	%	534,145		717		0.53	%	626,978		871		0.56	%
Brokered deposits (e)		224,325		1,704		3.08	%	87,934		515		2.32	%	91,531		512		2.27	%
Money market accounts
Money market accounts
Retail CDs
Retail CDs
Retail CDs
Brokered CDs (e)
Brokered CDs (e)
Brokered CDs (e)
Total interest-bearing deposits
Total interest-bearing deposits
Total interest-bearing deposits	Total interest-bearing deposits	4,170,861		5,661		0.55	%	4,148,709		2,788		0.27	%	4,261,279		2,053		0.20	%
Borrowed funds:	Borrowed funds:
Borrowed funds:
Borrowed funds:
Short-term FHLB advances (e)
Short-term FHLB advances (e)
Short-term FHLB advances (e)	Short-term FHLB advances (e)	377,578		4,314		4.63	%	181,946		1,570		3.42	%	55,000		313		2.31	%
Repurchase agreements and other	Repurchase agreements and other	93,848		143		0.61	%	96,242		99		0.41	%	99,346		25		0.10	%
Repurchase agreements and other
Repurchase agreements and other
Total short-term borrowings	Total short-term borrowings	471,426		4,457		3.83	%	278,188		1,669		2.38	%	154,346		338		0.89	%
Total short-term borrowings
Total short-term borrowings
Long-term FHLB advances
Long-term FHLB advances
Long-term FHLB advances	Long-term FHLB advances	34,015		204		2.43	%	34,297		210		2.43	%	85,653		306		1.45	%

Long-term notes payable	Long-term notes payable	50,656		653		5.16	%	53,528		661		4.94	%	29,780		298		4.02	%
Trust Preferred		13,806		296		8.58	%	13,771		261		7.42	%	13,665		120		3.51	%

Long-term notes payable

Long-term notes payable
Other long-term borrowings (f)
Other long-term borrowings (f)
Other long-term borrowings (f)
Total long-term borrowings
Total long-term borrowings
Total long-term borrowings	Total long-term borrowings	98,477		1,153		4.69	%	101,596		1,132		4.45	%	129,098		724		2.26	%
Total borrowed funds	Total borrowed funds	569,903		5,610		3.98	%	379,784		2,801		2.93	%	283,444		1,062		1.51	%
Total borrowed funds
Total borrowed funds
Total interest-bearing liabilities
Total interest-bearing liabilities
Total interest-bearing liabilities	Total interest-bearing liabilities	4,740,764		11,271		0.96	%	4,528,493		5,589		0.49	%	4,544,723		3,115		0.28	%
Non-interest-bearing deposits	Non-interest-bearing deposits	1,556,636						1,639,580						1,606,665
Non-interest-bearing deposits
Non-interest-bearing deposits
Other liabilities	Other liabilities	123,599						130,470						81,676
Other liabilities
Other liabilities
Total liabilities
Total liabilities
Total liabilities	Total liabilities	6,420,999						6,298,543						6,233,064

Total stockholders’ equity	Total stockholders’ equity	801,465						768,650						834,752

Total stockholders’ equity

Total stockholders’ equity
Total liabilities and stockholders’ equity
Total liabilities and stockholders’ equity
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	7,222,464					$	7,067,193					$	7,067,816
Interest rate spread (b)	Interest rate spread (b)			$	73,277	4.27	%			$	71,025	4.30	%			$	54,701	3.33	%
Interest rate spread (b)
Interest rate spread (b)
Net interest margin (b)
Net interest margin (b)
Net interest margin (b)	Net interest margin (b)					4.53	%					4.44	%					3.41	%

4547

Table of ofCo ~~Contents~~n tents

(a)Average balances are based on carrying value.

(b)Interest income and yields are presented on ~~a fully tax-equivalent~~an FTE basis, using a ~~23.3% blended corporate income tax rate for each of the three months ended March 31, 2023 and December 31, 2022, and a 22.9%~~23.2% blended corporate income tax rate for the three months ended March 31, ~~2022.~~2024, and 23.3% for the three months ended December 31, 2023 and March 31, 2023.

(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.

(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~~CDs for the periods presented in which FHLB advances and brokered ~~deposits~~CDs were being utilized.

(f)Included in other long-term borrowings are trust preferred securities held for investments and floating rate junior subordinated deferrable interest debentures.

Peoples' average balances compared to prior periods have been impacted by recent acquisitions, including ~~Vantage~~the Limestone Merger as of the close of business on ~~March 7, 2022,~~April 30, 2023, which added to average ~~lease~~loan, deposit and borrowed funds balances. ~~Peoples has begun to reduce~~Peoples' cash balances ~~after previously maintaining high cash balances in recent prior periods~~have increased primarily due to an ~~influx of deposits.~~increase in interest-bearing deposits in other banks, mostly with the FRB. The increases in market interest rates have increased asset yields and deposit outflows (which have increased borrowings).

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


		Three Months Ended March 31, 2024 Compared to
		Three Months Ended March 31, 2023 Compared to

		Three Months Ended March 31, 2024 Compared to

		Three Months Ended March 31, 2024 Compared to
(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)	(Dollars in thousands)	December 31, 2022						March 31, 2022
Increase (decrease) in:	Increase (decrease) in:	Rate		Volume		Total (a)		Rate		Volume		Total (a)
Increase (decrease) in:
Increase (decrease) in:
INTEREST INCOME:	INTEREST INCOME:
INTEREST INCOME:
INTEREST INCOME:
Short-term investments
Short-term investments
Short-term investments	Short-term investments	$	350	$	(366)	$	(16)	$	1,337	$	(1,109)	$	228

Investment Securities (b):	Investment Securities (b):

Investment Securities (b):

Investment Securities (b):
Taxable
Taxable
Taxable	Taxable	1,837		836		2,673		4,363		590		4,953
Nontaxable	Nontaxable	(42)		(25)		(67)		320		(338)		(18)
Nontaxable
Nontaxable
Total investment income
Total investment income
Total investment income	Total investment income	1,795		811		2,606		4,683		252		4,935
Loans (b):	Loans (b):
Loans (b):
Loans (b):
Construction
Construction
Construction	Construction	300		67		367		1,669		139		1,808
Commercial real estate, other	Commercial real estate, other	927		436		1,363		7,144		(2,132)		5,012
Commercial real estate, other
Commercial real estate, other
Commercial and industrial
Commercial and industrial
Commercial and industrial	Commercial and industrial	1,925		(770)		1,155		7,288		(701)		6,587
Premium finance	Premium finance	1,134		(882)		252		840		146		986
Premium finance
Premium finance
Leases
Leases
Leases	Leases	795		400		1,195		(9,374)		12,915		3,541
Residential real estate	Residential real estate	1,245		(849)		396		3,167		(3,216)		(49)
Residential real estate
Residential real estate
Home equity lines of credit
Home equity lines of credit
Home equity lines of credit	Home equity lines of credit	393		(150)		243		1,217		137		1,354
Consumer, indirect	Consumer, indirect	173		224		397		954		1,232		2,186
Consumer, indirect
Consumer, indirect
Consumer, direct
Consumer, direct
Consumer, direct	Consumer, direct	301		(325)		(24)		111		33		144
Total loan income	Total loan income	7,193		(1,849)		5,344		13,016		8,553		21,569
Total loan income
Total loan income
Total interest income
Total interest income
Total interest income	Total interest income	$	9,338	$	(1,404)	$	7,934	$	19,036	$	7,696	$	26,732
INTEREST EXPENSE:	INTEREST EXPENSE:
INTEREST EXPENSE:
INTEREST EXPENSE:
Deposits:
Deposits:
Deposits:	Deposits:
Savings accounts	Savings accounts	$	14	$	(16)	$	(2)	$	104	$	(2)	$	102
Governmental deposit accounts		694		(338)		356		770		(151)		619
Savings accounts
Savings accounts
Interest-bearing demand accounts
Interest-bearing demand accounts
Interest-bearing demand accounts	Interest-bearing demand accounts	24		(30)		(6)		124		(36)		88
Money market accounts	Money market accounts	482		(179)		303		798		(70)		728
Retail certificates of deposit		974		59		1,033		1,355		(476)		879
Brokered deposits		206		983		1,189		236		956		1,192
Money market accounts
Money market accounts
Governmental deposit accounts
Governmental deposit accounts
Governmental deposit accounts
Retail CDs
Retail CDs
Retail CDs
Brokered CDs
Brokered CDs
Brokered CDs
Total deposit cost
Total deposit cost
Total deposit cost	Total deposit cost	2,394		479		2,873		3,387		221		3,608
Borrowed funds:	Borrowed funds:
Borrowed funds:
Borrowed funds:
Short-term borrowings
Short-term borrowings
Short-term borrowings	Short-term borrowings	738		2,050		2,788		715		3,404		4,119
Long-term borrowings	Long-term borrowings	217		(196)		21		1,047		(618)		429
Long-term borrowings
Long-term borrowings
Total borrowed funds cost
Total borrowed funds cost
Total borrowed funds cost	Total borrowed funds cost	955		1,854		2,809		1,762		2,786		4,548
Total interest expense	Total interest expense	3,349		2,333		5,682		5,149		3,007		8,156
Fully tax-equivalent net interest income		$	5,989	$	(3,737)	$	2,252	$	13,887	$	4,689	$	18,576
Total interest expense
Total interest expense
FTE net interest income
FTE net interest income
FTE net interest income

4648

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(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 3%~~decreased $1.7 million, or 2.0%. Net interest margin was 4.27% for the first quarter of 2024, compared to 4.44% for the linked quarter. The decreases in net interest income and net interest margin ~~expanded by 9 basis points. Both increases~~ were primarily ~~driven by 50 basis points of improvement in loan yields~~ due to ~~recent increases~~a decrease in ~~market interest rates and a shift in~~accretion income, net of amortization, from our acquisitions as well as excess cash on hand during the ~~composition~~first quarter of the loan portfolio into higher-yielding leases, which resulted in 41 basis points of improvement in investment yields when compared to the linked quarter due to purchases of investment securities with higher interest rates and sales of lower-yielding investment securities. Borrowing costs increased 105 basis points as a result of increase in short-term borrowings due to utilizing overnight FHLB advances and brokered certificates of deposits in recent quarters.2024 for liquidity purposes.

Net interest income for the first quarter of 2024 grew ~~34%~~18.9% over the prior year quarter and net interest margin ~~increased~~decreased by ~~112~~26 basis points. The increase in net interest income compared to the first quarter of ~~2022~~2023 was driven by increases in market interest rates, ~~and a full quarter of income from~~ the ~~Vantage acquisition. Compared to the prior year quarter, loan yields grew 162 basis points due to the rising interest rate environment and both acquisitive~~Limestone Merger, and organic ~~growth, while borrowing costs increased 247 basis points as a result of increase~~growth. The decrease in ~~short-term borrowings due to the utilization of FHLB overnight advances mentioned above.~~

Peoples recognized interest income on deferred loan fees/costs associated with PPP loans of $1.2 million during the first quarter of 2022 along with $154,000 of interest earned on PPP loans. The interest income recognized on PPP loans added 5 basis points to net interest margin for the first quarter of ~~2022. The deferred loan fees/costs associated with PPP loans and interest earned on PPP loans were minimal for~~2024 compared to the first quarter of 2023, ~~and the linked quarter.~~was driven primarily by an increase in interest expense on deposits.

Accretion income, net of amortization expense, from acquisitions was $6.6 million for the first quarter of 2024, $9.0 million for the linked quarter and $2.0 million for the first quarter of 2023, ~~$2.2 million for the linked quarter and $2.7 million for the first quarter of 2022,~~ which added 1332 basis points, 1445 basis points and 1713 basis points, respectively, to net interest margin. The ~~decreases~~decrease in accretion income for the first quarter of ~~2023~~2024, when compared to the linked quarter ~~and~~was driven by a fourth quarter 2023 true-up to the preliminary Limestone-related accretion. The increase in accretion income for the first quarter of ~~2022 were driven by less loan accretion due~~2024 compared to ~~lower pay-offs and less~~the first quarter of 2023 was a result of accretion from the ~~merger with Premier and the Vantage acquisition.~~Limestone Merger.

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."

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

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






		Three Months Ended
		March 31, 2023			December 31, 2022			March 31, 2022
(Dollars in thousands)	(Dollars in thousands)
Provision for (recovery of) other credit losses		$	1,673		$	2,023		$	(7,006)
(Dollars in thousands)
(Dollars in thousands)
Provision for other credit losses
Provision for other credit losses
Provision for other credit losses
Provision for checking account overdraft credit losses	Provision for checking account overdraft credit losses	180			278			199
Provision for (recovery of) credit losses		$	1,853		$	2,301		$	(6,807)
Provision for checking account overdraft credit losses
Provision for checking account overdraft credit losses
Provision for credit losses
Provision for credit losses
Provision for credit losses
As a percentage of average total loans (a)
As a percentage of average total loans (a)
As a percentage of average total loans (a)	As a percentage of average total loans (a)	0.16		%	0.20		%	(0.62)		%
(a) Presented on an annualized basis.	(a) Presented on an annualized basis.
(a) Presented on an annualized basis.
(a) Presented on an annualized basis.

The provision for ~~(recovery of)~~ credit losses recorded represents the amount needed to maintain the appropriate level of the allowance for credit losses based on management’s quarterly estimates. The ~~provisions~~provision for credit losses for the first quarter of 2024 was driven by (i) a deterioration in macro-economic conditions used within the CECL model, (ii) an increase of reserves on individually analyzed loans and (iii) loan growth. The provision for credit losses for the first quarter of 2023 ~~and the linked quarter were~~was largely attributable to a deterioration of macro-economic conditions and an increase in charge-off activity, partially offset by a reduction in reserves for individually analyzed loans.

During the first quarter of 2022, Peoples recorded a recovery of credit losses of $6.8 million due to an improvement in the economic forecast, along with payoffs of several loans during the quarter, which were partially offset by $0.4 million for the establishment of an allowance for credit losses for the non-purchased credit deteriorated leases from the Vantage acquisition.

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.”

4749

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

Net ~~(loss) gain~~loss includes net losses ~~and net 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 net gains~~ for the periods presented:






		Three Months Ended
		March 31, 2023		December 31, 2022		March 31, 2022
(Dollars in thousands)	(Dollars in thousands)
Net (loss) gain on investment securities		$	(1,935)	$	(168)	$	130
(Dollars in thousands)
(Dollars in thousands)
Net loss on investment securities
Net loss on investment securities
Net loss on investment securities

Net loss on asset disposals and other transactions:

Net loss on asset disposals and other transactions:

Net loss on asset disposals and other transactions:	Net loss on asset disposals and other transactions:
Net loss on other assets	Net loss on other assets	$	(229)	$	(278)	$	(22)
Net loss on other assets
Net loss on other assets
Net loss on OREO
Net loss on OREO
Net loss on OREO	Net loss on OREO	(10)		—		(1)

Net loss on other transactions	Net loss on other transactions	(7)		(23)		(104)

Net loss on other transactions

Net loss on other transactions
Net loss on asset disposals and other transactions	Net loss on asset disposals and other transactions	$	(246)	$	(301)	$	(127)
Net loss on asset disposals and other transactions
Net loss on asset disposals and other transactions

~~The net loss on investment securities in~~During the ~~first~~fourth quarter of 2023, ~~due to a $2.0 million pre-tax net loss on~~Peoples executed the sale of $36.5 million of lower yielding available-for-sale investment securities. Proceeds from the ~~available-for-sale~~sales were used to purchase higher yielding agency investment securities. During the first quarter of 2023, Peoples executed ~~the sale~~sales of $96.7 million of its lower yielding available-for-sale securities which were used to pay down overnight borrowings. The loss on the ~~sale~~sales of the available-for-sale investment securities had a nominal impact on tangible book value as such loss was previously reflected in capital through accumulated other comprehensive loss. ~~The realized losses recognized due to these transactions are projected to be earned back within the 2023 fiscal year.~~

The net loss on asset disposals and other transactions ~~decreased slightly in the first quarter of 2023 when compared to the linked quarter and increased when compared to the prior year quarter. The net loss~~ for the first quarter of ~~2023 was primarily due to net losses on furniture~~2024 and ~~fixture disposals. The net loss for~~ the linked quarter was ~~primarily~~ due to ~~net losses on other assets, which was mainly due to~~$0.3 million of net losses on repossessed assets.

During the first three months of 2022, Peoples sold several investment securities, resulting in a net gain on investment securities, which was offset by a net loss on other transactions primarily driven by an adjustment to the gain on sale of loans recognized in the fourth quarter of 2022, and was driven by changes to the acquisition-date fair value of loans acquired in the merger with Premier that were subsequently sold.

Total Non-Interest Income, Excluding Net Gains and Losses

Total non-interest income, excluding net gains and losses, comprised 23% of Peoples' total revenues (defined as net interest income plus total non-interest income excluding net gains and losses) for the first quarter of ~~2023, compared to 22%~~2024, for the linked quarter, and ~~27%~~the for ~~the prior year quarter. The increase in this ratio compared to the linked quarter was due to an increase in insurance income due to seasonal performance-based commissions being earned in the~~ first quarter of each year. The decline in this ratio compared to the prior year quarter was primarily due to higher net interest income associated with a full quarter of income from the acquisition of Vantage coupled with the increases in the market interest rates.2023.

For the first quarter of ~~2023, electronic banking~~2024, insurance income comprised the largest portion of Peoples' total non-interest income, excluding net gains and losses. The following table details Peoples' insurance income:


	Three Months Ended
	March 31, 2024		December 31, 2023		March 31, 2023
(Dollars in thousands)


Property and casualty insurance commissions	$	3,585	$	3,655	$	3,252


Performance-based commissions	2,213		32		1,527
Life and health insurance commissions	614		582		564
Other fees and charges	86		68		82
Insurance income	$	6,498	$	4,337	$	5,425

Peoples' insurance income for the first quarter of 2024 increased $2.2 million when compared to linked quarter. This increase in insurance income was due to seasonal performance-based commissions being paid, which are annual in nature and typically occur in the first quarter of each year. Insurance income for the first quarter of 2024 increased $1.1 million when compared to first quarter of 2023, primarily due to new business and market increases for premiums.

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 customers. The following table details Peoples' e-banking income:

Three Months Ended

March 31,
2023

December 31,
2022

March 31,
2022

(Dollars in thousands)

E-banking income

5,443

5,161

5,253

E-banking income

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. E-banking income ~~increased~~decreased for the first quarter of 2024 compared to ~~each of~~ the linked quarter ~~and the prior year quarter~~ primarily ~~due to more~~driven by a decrease in customer activity.

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

Three Months Ended
March 31,
2023 December 31,
2022 March 31,
2022
(Dollars in thousands)
Property and casualty insurance commissions $ 3,252 $ 3,127 $ 2,862
Performance-based commissions 1,527 4 1,346
Life and health insurance commissions 564 511 452
Other fees and charges 82 90 71
Insurance income $ 5,425 $ 3,732 $ 4,731

During the first quarter of 2023, Peoples' insurance income grew 45% when compared to the linked quarter. This increase in insurance income was due to seasonal performance-based commissions being earned, which are annual in nature and typically occur in the first quarter of each year. Compared to the first quarter of 2022, insurance income increased 15% and was driven by higher performance-based property and casualty insurance 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 plan services business. The following table details Peoples’ trust and investment income:






		Three Months Ended
		March 31, 2023		December 31, 2022		March 31, 2022
(Dollars in thousands)	(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)
Fiduciary income
Fiduciary income
Fiduciary income	Fiduciary income	$	1,805	$	1,792	$	1,965
Brokerage income	Brokerage income	1,627		1,485		1,649
Brokerage income
Brokerage income
Employee benefit fees
Employee benefit fees
Employee benefit fees	Employee benefit fees	652		638		662
Trust and investment income	Trust and investment income	$	4,084	$	3,915	$	4,276
Trust and investment income
Trust and investment income

Fiduciary income and brokerage income increased ~~slightly~~ in the ~~current~~first quarter of 2024 relative to the linked quarter due to market volatility. When compared to the first quarter of 2023, fiduciary income and brokerage income increased, which was driven by an increase in fiduciary income due to an increase in assets under administration and management. ~~When compared to the first quarter of 2022, trust and investment income declined due to less fiduciary income, primarily due to market volatility.~~

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


		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
	March 31, 2024													March 31, 2024	December 31, 2023	September 30, 2023	June 30, 2023	March 31, 2023
(Dollars in thousands)			(Dollars in thousands)	March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022	(Dollars in thousands)

Trust
Trust
Trust	Trust	$	1,803,887	$	1,764,639	$	1,682,334	$	1,731,454	$	1,927,828
Brokerage	Brokerage	1,318,300		1,211,868		1,127,831		1,068,261		1,152,530
Total	Total	$	3,122,187	$	2,976,507	$	2,810,165	$	2,799,715	$	3,080,358
Quarterly average	Quarterly average	$	3,076,285	$	2,965,985	$	2,844,181	$	2,927,405	$	3,106,021

The increases in assets under administration and management at March 31, ~~2023,~~2024 compared to at December 31, ~~2022 and March 31, 2022~~2023 were driven by market value ~~fluctuations~~fluctuations. The increases in assets under administration and ~~a $30 million increase~~management at March 31, 2024 when compared to at March 31, 2023 were primarily due to increases in brokerage income, as Peoples added new accounts and the underlying market values of assets ~~due to an acquisition of an independent financial advisor in January of 2023.~~under management grew.

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
		March 31, 2023		December 31, 2022		March 31, 2022
(Dollars in thousands)	(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)
Overdraft and non-sufficient funds fees
Overdraft and non-sufficient funds fees
Overdraft and non-sufficient funds fees	Overdraft and non-sufficient funds fees	$	1,842	$	2,170	$	1,902
Account maintenance fees	Account maintenance fees	1,461		1,352		1,311
Account maintenance fees
Account maintenance fees
Other fees and charges
Other fees and charges
Other fees and charges	Other fees and charges	220		244		213
Deposit account service charges	Deposit account service charges	$	3,523	$	3,766	$	3,426
Deposit account service charges
Deposit account service charges

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 decreased

~~Table~~ of ~~Contents~~

for the ~~current~~first quarter of 2024 compared to the linked quarter due to ~~a decline in overdraft and non-sufficient funds fees.~~seasonality of customer activity. Deposit account service charges increased ~~slightly for~~when comparing the ~~current~~first quarter ~~compared~~of 2024 to the ~~prior year~~first quarter of 2023 due to the Limestone Merger and increased maintenance fee rates.

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

Three Months Ended

March 31,
2023

December 31,
2022

March 31,
2022

(Dollars in thousands)

Other non-interest income

Bank owned life insurance income

Lease income

1,077

1,336

775

Bank owned life insurance income

707

702

431

Lease income

Mortgage banking income

314

281

436

Other non-interest income

668

611

719

Mortgage banking income

Table of Co n tents

The decrease in other non-interest income when comparing the three months ended March 31, 2024 to the linked quarter was primarily due to an excess recovery of a previously charged-off loan. The increase in other non-interest income for the first quarter of 2024 when compared to the first quarter of 2023 was driven by increased operating lease income.

Bank owned life insurance income for the first quarter of 2024 increased compared to the linked quarter primarily due to a $0.5 million death benefit. Bank owned life insurance income for the first quarter of 2024 increased when compared to the first quarter of 2023, due to the additional insurance policies acquired in the Limestone Merger.

Lease income is primarily comprised of (i) gains on the early termination of leases, net of any associated purchase accounting adjustments, (ii) month-to-month lease payments in excess of net investment in the lease, net of any associated purchase accounting adjustment (iii) fees received for referrals, ~~(iii)~~(iv) gains and losses recognized on the sales of residual assets and ~~(iv)~~(v) syndication income. The first quarter of ~~2023~~2024 decrease in lease income when compared to the linked quarter was due to ~~seasonal fluctuations~~a large lease buyout in ~~syndication income, as~~ the fourth quarter of each year typically has a higher volume of originations. The first quarter of 2023 increase in lease income when compared to the first quarter of 2022 was due to a full quarter of income from the Vantage acquisition in 2023 versus only a month of income in 2022.

Bank owned life insurance income for the current quarter was relatively flat compared to the linked quarter and increased when compared to the same 2022 period. The first quarter of 2023 increase in bank owned life insurance income when compared to the first quarter of 2022 was due to an additional $30.0 million of investments in bank owned life insurance policies during the second quarter of 2022.2023.

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 for the ~~current~~first quarter of 2024 was relatively flat when compared to ~~the linked quarter. Mortgage banking income declined for the current year quarter compared to~~each of the prior ~~year quarter due to the increased market interest rate environment in recent quarters and a lower volume of new loan originations.~~periods.

In the first quarter of ~~2023,~~2024, Peoples sold ~~$0.8~~$0.2 million in loans tointo the secondary market with servicing retained and ~~$7.4~~$6.9 million in loans with servicing released, compared to ~~$2.5 million~~$26,000 and ~~$9.5~~$7.9 million, respectively, in the fourth quarter of ~~2022,~~2023, and ~~$7.2~~$0.8 million and ~~$7.9~~$7.4 million, respectively, in the first quarter of ~~2022.~~2023.

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
		March 31, 2023		December 31, 2022		March 31, 2022
(Dollars in thousands)	(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)
Base salaries and wages	Base salaries and wages	$	20,332	$	19,747	$	17,676
Base salaries and wages
Base salaries and wages
Sales-based and incentive compensation
Sales-based and incentive compensation
Sales-based and incentive compensation
Employee benefits	Employee benefits	4,115		3,372		3,621
Sales-based and incentive compensation		3,945		5,284		3,636
Employee benefits
Employee benefits
Payroll taxes and other employment costs
Payroll taxes and other employment costs
Payroll taxes and other employment costs	Payroll taxes and other employment costs	2,370		1,591		2,091
Stock-based compensation	Stock-based compensation	2,189		832		1,605
Stock-based compensation
Stock-based compensation
Deferred personnel costs
Deferred personnel costs
Deferred personnel costs	Deferred personnel costs	(923)		(2,068)		(900)
Salaries and employee benefit costs	Salaries and employee benefit costs	$	32,028	$	28,758	$	27,729
Salaries and employee benefit costs
Salaries and employee benefit costs
Full-time equivalent employees:
Full-time equivalent employees:
Full-time equivalent employees:	Full-time equivalent employees:
Actual at end of period	Actual at end of period	1,286		1,267		1,245
Actual at end of period
Actual at end of period
Average during the period	Average during the period	1,283		1,261		1,215
Average during the period
Average during the period

Base salaries and wages for the ~~current~~first quarter of 2024 increased compared to the linked quarter primarily due to annual merit increases. The current quarter increase compared to the ~~prior year~~first quarter of 2023 was primarily driven by ~~a rise~~the additional employees added in ~~annual merit increases~~the Limestone Merger as well as ~~a full quarter of expenses related to the additional salaries associated with the acquisition of Vantage.~~

~~The increases in employee benefits for the current quarter compared to the linked quarter, was primarily due to~~ annual ~~contributions to employee health savings accounts that occur primarily in the first quarter of each year. The increase in employee~~

~~Table~~ of ~~Contents~~

benefits for the current quarter compared to the first quarter of 2022 was due to higher medical costs reflecting a full quarter of expenses in 2023 for the Vantage employees versus a month of expenses in the first quarter of 2022.merit increases.

The decrease in sales-based and incentive compensation for the ~~current~~first quarter of 2024 compared to the linked quarter was primarily due to $1.3 million of Vantage-related sales-based incentive compensation. Sales-based and incentive compensation increased in the first quarter of 2024 when compared to the prior year quarter due to overall company performance measures used in calculating ~~retail~~ incentive awards.

The decrease in employee benefits for the first quarter of 2024 compared to the linked quarter and the first quarter of 2023 was primarily due to decreased medical costs.

Payroll taxes and other employment costs for the first quarter of 2024 increased compared to the ~~prior~~linked quarter and the first quarter of ~~2022~~2024 and were primarily related to higher base salaries and wages. Also impacting the increase in payroll taxes and other employment costs when compared to the ~~linked quarter were seasonal expenses recognized in the~~ first quarter of ~~each year.~~2023 were the additional employees added in the Limestone Merger.

Stock-based compensation is generally recognized over the vesting period, which generally ranges from immediate vesting to vesting at the end of three years. An adjustment is made at the vesting date to reverse expense relating to forfeitures for performance awards, and at the date of forfeiture to reverse expense for non-vested restricted common share awards. Stock grants to retirement

Table of Co n tents

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, and are generally contingent on employment through the vesting period. Stock-based compensation for the first ~~three months~~quarter of ~~2023~~2024 increased when compared to the fourth quarter of 2023 and the first three months of ~~2022~~2023 due to additional employees, including the ones added in the ~~acquisition of Vantage.~~Limestone 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 deferred~~Deferred personnel costs for the ~~current~~first quarter of 2024 remained relatively flat when compared to both the ~~linked~~fourth quarter ~~was primarily due to a prior period adjustment~~ of ~~costs to originate leases.~~2023 and the first quarter of 2023.

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






		Three Months Ended
		March 31, 2023		December 31, 2022		March 31, 2022
(Dollars in thousands)	(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)
Depreciation
Depreciation
Depreciation	Depreciation	$	1,790	$	1,700	$	1,823
Repairs and maintenance costs	Repairs and maintenance costs	1,261		1,364		1,378
Repairs and maintenance costs
Repairs and maintenance costs
Property taxes, utilities and other costs
Property taxes, utilities and other costs
Property taxes, utilities and other costs	Property taxes, utilities and other costs	1,157		1,014		1,202
Net rent expense	Net rent expense	747		769		685
Net rent expense
Net rent expense
Net occupancy and equipment expense	Net occupancy and equipment expense	$	4,955	$	4,847	$	5,088
Net occupancy and equipment expense
Net occupancy and equipment expense

The first quarter of ~~2023~~2024 net occupancy and equipment expense increased ~~slightly~~ when compared to the linked quarter due to ~~increases in depreciation and property taxes, utilities and other costs, partially offset by reductions in repairs and maintenance costs and net~~a prior period one time benefit to rent expense. ~~When~~The first quarter of 2024 net occupancy and equipment expense increased when compared to the first quarter of ~~2022,~~2023 due to additional net occupancy and equipment expense ~~decreased due to less depreciation, repairs and maintenance costs and property taxes, utilities and other costs due to having less geographic locations as of~~from the ~~first quarter of 2023.~~Limestone Merger.

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






		Three Months Ended
		March 31, 2023		December 31, 2022		March 31, 2022
(Dollars in thousands)	(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)
Data processing and software expense
Data processing and software expense
Data processing and software expense	Data processing and software expense	$	4,562	$	5,013	$	2,916
Professional fees	Professional fees	2,881		3,310		3,672
Professional fees
Professional fees
Amortization of other intangible assets
Amortization of other intangible assets
Amortization of other intangible assets	Amortization of other intangible assets	1,871		1,998		1,708
E-banking expense	E-banking expense	1,491		1,097		2,759
Franchise tax expense		1,034		546		764
Marketing expense		930		737		995
E-banking expense
E-banking expense
FDIC insurance premiums
FDIC insurance premiums
FDIC insurance premiums	FDIC insurance premiums	801		781		1,194
Other loan expenses	Other loan expenses	739		947		832
Other loan expenses
Other loan expenses
Marketing expense
Marketing expense
Marketing expense
Franchise tax expense
Franchise tax expense
Franchise tax expense
Communication expense
Communication expense
Communication expense	Communication expense	613		611		625
Other non-interest expense	Other non-interest expense	4,574		4,721		3,347
Other non-interest expense
Other non-interest expense

Data processing and software expenses for the first quarter 2024 decreased compared to the linked quarter due to $0.6 million of acquisition-related expense ~~increased~~in the linked quarter. The increase for the first quarter 2024 when compared to the first quarter ~~of 2022,~~2023 was driven by software upgrades and implementation of new systems, coupled with the increased size of Peoples' organization.

~~Table~~ of ~~Contents~~

Professional fees ~~decreased~~ for the ~~current~~first quarter ~~compared to the comparative periods due to less acquisition-related expenses being reported when compared to those periods.~~

~~Amortization~~ of ~~other intangible assets for the current quarter~~2024 decreased when compared to the linked quarter due to ~~decreased amortization~~less acquisition-related expenses. Professional fees for the first quarter of 2024 was relatively flat when compared to the first quarter of 2023.

Amortization of other intangible assets ~~recognized as a result~~for the first quarter of ~~recent acquisitions.~~2024 decreased when compared to the linked quarter due to additional expenses attributable to the Limestone Merger during the fourth quarter of 2023. Amortization of other intangible assets for the current quarter increased when compared to the first quarter of ~~2022~~2023 due to amortization of intangible assets recognized in the ~~Vantage acquisition.~~Limestone Merger during the first quarter of 2023.

Peoples' e-banking expense is comprised of costs associated with debit and ATM ~~cards, as well as Internet and mobile~~cards. The decrease in electronic banking ~~costs. E-banking expense increased during the current quarter~~income compared to the linked quarter ~~and is correlated to e-banking income, which also increased from the linked quarter primarily~~was due to ~~more~~a decline in customer activity. E-banking expense ~~decreased~~increased for the first quarter of ~~2023~~2024 when compared to the first quarter of ~~2022~~2023 due to ~~a decline~~additional customers brought in ~~customer activity~~from the Limestone Merger.

Table of Co n tents

Peoples' FDIC insurance premiums for the first quarter of 2024 were relatively flat when compared to ~~last year.~~the linked quarter. FDIC insurance premiums for the first quarter of 2024 increased when compared to the first quarter of 2023 due to organic and acquisitive growth and an increase in rates assessed by the FDIC.

Other loan expenses during the first quarter of 2024 increased when compared to the respective prior comparative periods primarily due to increases in miscellaneous loan and collection expenses.

Marketing expense for the first quarter of 2024 decreased when compared to the linked quarter due to lower advertising expense. Marketing expense for the first quarter of 2024 increased when compared to the first quarter of 2023 due to higher donations.

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. The ~~increase versus the linked quarter was driven by a refund received~~decrease in ~~the linked quarter. The increase from the first quarter of 2022 was driven by recent growth through acquisitions and organic means.~~

~~Marketing~~franchise tax expense ~~increased~~ for the first quarter of ~~2023~~2024 when ~~compared to the linked quarter primarily due to higher media advertising expenses and donations compared to the prior period.~~

~~Peoples' FDIC insurance premiums decreased for the current quarter~~ compared to the first quarter of ~~2022 due to an adjustment~~2023 was driven by a lower apportionment in Ohio.

Other non-interest expense for the first quarter of ~~2022 relating to prior acquisitions.~~

~~Other loan expenses during the first three months of 2023~~2024 decreased when compared to the linked quarter ~~primarily~~ due to ~~lower indirect lending volume and decreased collection~~a decrease in postage expense.

~~Other non-interest expense increased during~~ The increase for the ~~current~~first quarter of 2024 when compared to the first quarter of ~~2022 due to an~~2023 was driven by the increase in ~~acquisition-related expenses related to the Limestone Merger.~~depreciation expense for operating leases.

Income Tax Expense

Peoples recorded income tax expense of $8.3 million with an effective tax rate of 21.8% for the first quarter of 2024, compared to income tax expense of $9.7 million with an effective tax rate of 22.3% for the linked quarter and income tax expense of $7.0 million with an effective tax rate of 21.0% for the first quarter of 2023, compared to income tax expense of $7.1 million with an effective tax rate of 21.0% for the linked quarter and income tax expense of $6.0 million with an effective tax rate of 20.2% for the first quarter of 2022. Income tax expense for the first quarter of 2023, compared to the linked quarter, was relatively flat due to similar income before income taxes.2023. The ~~increase~~decrease in income tax expense ~~for the three months ended March 31, 2023,~~when compared to the ~~three months ended March 31, 2022,~~fourth quarter of 2023 was ~~driven by a higher income before income taxes.~~primarily due to lower pre-tax income.

Additional information regarding income taxes can be found in "Note 13. Income Taxes" of the Notes to the Consolidated Financial Statements included in Peoples' ~~2022~~2023 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.

~~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
		Three Months Ended
		Three Months Ended
		March 31, 2024
					March 31, 2024
		March 31, 2024
(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)
Pre-provision net revenue:
Pre-provision net revenue:
Pre-provision net revenue:
Income before income taxes
Income before income taxes
Income before income taxes
Add: provision for credit losses
Add: provision for credit losses
Add: provision for credit losses

Add: loss on OREO

Add: loss on OREO

Add: loss on OREO
Add: loss on investment securities
Add: loss on investment securities
Add: loss on investment securities
Add: loss on other assets
Add: loss on other assets
Add: loss on other assets
Add: loss on other transactions
Add: loss on other transactions
Add: loss on other transactions

		Three Months Ended
		March 31, 2023			December 31, 2022			March 31, 2022
(Dollars in thousands)
Pre-provision net revenue:
Income before income taxes		$	33,606		$	33,980		$	29,538
Add: provision for credit losses		1,853			2,301			—

Add: loss on OREO		10			—			1
Add: loss on investment securities		1,935			168			—
Add: loss on other assets		229			278			22
Add: loss on other transactions		7			23			104

Less: recovery of credit losses		—			—			6,807
Less: gain on investment securities		—			—			130
Pre-provision net revenue

Pre-provision net revenue

Pre-provision net revenue	Pre-provision net revenue	$	37,640		$	36,750		$	22,728

Total average assets	Total average assets	$7,222,464			$7,067,193			$7,067,816

Total average assets

Total average assets

Pre-provision net revenue to total average assets (annualized)

Pre-provision net revenue to total average assets (annualized)

Pre-provision net revenue to total average assets (annualized)	Pre-provision net revenue to total average assets (annualized)	2.11		%	2.06		%	1.30		%
Weighted-average common shares outstanding - diluted	Weighted-average common shares outstanding - diluted	28,021,879			27,981,656			28,129,131
Weighted-average common shares outstanding - diluted
Weighted-average common shares outstanding - diluted
Pre-provision net revenue per common share - diluted	Pre-provision net revenue per common share - diluted	$	1.34		$	1.31		$	0.81
Pre-provision net revenue per common share - diluted
Pre-provision net revenue per common share - diluted

The ~~increase~~decrease in the PPNR for the first quarter of 2024 compared to the fourth quarter of 2023 was driven by decreased net interest income and lower accretion income. The increase in PPNR for the first quarter of 2024 when compared to the first quarter of ~~2022~~2023 was ~~driven by~~

Table of Co n tents

due to increased net interest income reflecting the positive impact of ~~recent increases in market~~the additional net interest ~~rates as well as a provision for credit losses in~~income from Limestone customers after the ~~first quarter of 2023 compared to the recovery of credit losses in the first quarter of 2022.~~Limestone Merger.

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, pension settlement charges and COVID-19-related~~ expenses.

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

March 31,
2024

(Dollars in thousands)

Core non-interest expense:

Total non-interest expense

Less: acquisition-related expenses

Three Months Ended

March 31,
2023

December 31,
2022

March 31,
2022

(Dollars in thousands)

Core non-interest expense:

Total non-interest expense

56,479

53,366

51,629

Less: acquisition-related expenses

551

702

1,373

Less: pension settlement charges

—

Less: COVID-19-related expenses

—

Core non-interest expense

55,928

52,616

50,162

Core non-interest expense

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~~FTE 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~~FTE net interest income.

~~Table~~ of ~~Contents~~


		Three Months Ended
		March 31, 2023			December 31, 2022			March 31, 2022
											Three Months Ended
		Three Months Ended
		Three Months Ended
		March 31, 2024
					March 31, 2024
		March 31, 2024
(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)	(Dollars in thousands)	March 31, 2023			December 31, 2022			March 31, 2022

Efficiency ratio:	Efficiency ratio:

Efficiency ratio:

Efficiency ratio:
Total non-interest expense
Total non-interest expense
Total non-interest expense	Total non-interest expense	$	56,479		$	53,366		$	51,629
Less: amortization of other intangible assets	Less: amortization of other intangible assets	1,871			1,998			1,708
Less: amortization of other intangible assets
Less: amortization of other intangible assets
Adjusted total non-interest expense
Adjusted total non-interest expense
Adjusted total non-interest expense	Adjusted total non-interest expense	54,608			51,368			49,921

Total non-interest income	Total non-interest income	19,060			19,034			20,050

Less: net (loss) gain on investment securities		(1,935)			(168)			130
Total non-interest income

Total non-interest income

Less: net loss on investment securities

Less: net loss on investment securities

Less: net loss on investment securities
Less: net loss on asset disposals and other transactions	Less: net loss on asset disposals and other transactions	(246)			(302)			(127)
Total non-interest income excluding net gains and losses		21,241			19,504			20,047
Less: net loss on asset disposals and other transactions
Less: net loss on asset disposals and other transactions
Total non-interest income excluding net losses
Total non-interest income excluding net losses
Total non-interest income excluding net losses

Net interest income	Net interest income	72,878			70,613			54,310
Add: fully tax-equivalent adjustment (a)		399			412			391
Net interest income on a fully tax-equivalent basis		73,277			71,025			54,701

Net interest income

Net interest income
Add: FTE adjustment (a)
Add: FTE adjustment (a)
Add: FTE adjustment (a)
Net interest income on an FTE basis
Net interest income on an FTE basis
Net interest income on an FTE basis
Adjusted revenue	Adjusted revenue	$	94,518		$	90,529		$	74,748
Adjusted revenue
Adjusted revenue
Efficiency ratio
Efficiency ratio
Efficiency ratio	Efficiency ratio	57.78		%	56.74		%	66.79		%

Efficiency ratio adjusted for non-core items:	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
Core non-interest expense	Core non-interest expense	$	55,928		$	52,616		$	50,162
Less: amortization of other intangible assets	Less: amortization of other intangible assets	1,871			1,998			1,708
Less: amortization of other intangible assets
Less: amortization of other intangible assets
Adjusted core non-interest expense	Adjusted core non-interest expense	54,057			50,618			48,454
Non-interest income excluding net gains and losses		21,241			19,504			20,047
Net interest income on a fully tax-equivalent basis		73,277			71,025			54,701
Adjusted core non-interest expense
Adjusted core non-interest expense
Non-interest income excluding net losses
Non-interest income excluding net losses
Non-interest income excluding net losses
Net interest income on an FTE basis
Net interest income on an FTE basis
Net interest income on an FTE basis
Adjusted revenue
Adjusted revenue
Adjusted revenue	Adjusted revenue	$	94,518		$	90,529		$	74,748
Efficiency ratio adjusted for non-core items	Efficiency ratio adjusted for non-core items	57.19		%	55.91		%	64.82		%
Efficiency ratio adjusted for non-core items
Efficiency ratio adjusted for non-core items

(a) Tax effect is calculated using a ~~23.3% blended corporate income tax rate for each of the three months ended March 31, 2023 and December 31, 2022, and a 22.9%~~23.2% blended corporate income tax rate for the three months ended March 31, ~~2022.~~2024, and a 23.3% blended corporate income tax rate for the three months ended December 31, 2023 and March 31, 2023.

Table of Co n tents

The efficiency ratio ~~and~~increased compared to the linked quarter mainly as the result of an increase of interest expense on deposits. The efficiency ratio compared to the prior year quarter was relatively flat. The efficiency ratio, adjusted for non-core items, was 58.1% for the first quarter of ~~2023 increased when~~2024, compared to 54.9% for the linked quarter, ~~primarily due to~~and 57.2% for the ~~increases in non-interest expenses due to seasonal~~ first quarter of 2023. Peoples continues to focus on controlling expenses, ~~partially offset by higher net interest income driven by increases~~while recognizing necessary costs in order to continue growing the market interest rates. The improvements in the efficiency ratio and the efficiency ratio adjusted for non-core items compared to the prior year quarter were driven by higher net interest income due to increases in market interest rates over the last twelve months.business.

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 and acquisition-related ~~expenses, pension settlement charges and COVID-19-related expenses.~~

~~Table~~ of ~~Contents~~

expenses..


		Three Months Ended
		March 31, 2023			December 31, 2022			March 31, 2022
											Three Months Ended
		Three Months Ended
		Three Months Ended
		March 31, 2024
					March 31, 2024
		March 31, 2024
(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)	(Dollars in thousands)	March 31, 2023			December 31, 2022			March 31, 2022

Annualized net income adjusted for non-core items:	Annualized net income adjusted for non-core items:

Annualized net income adjusted for non-core items:

Annualized net income adjusted for non-core items:
Net income
Net income
Net income	Net income	$	26,560		$	26,849		$	23,577

Add: net loss on investment securities	Add: net loss on investment securities	1,935			168			—

Add: net loss on investment securities

Add: net loss on investment securities
Less: tax effect of net loss on investment securities (a)	Less: tax effect of net loss on investment securities (a)	406			35			—
Less: net gain on investment securities		—			—			130
Add: tax effect of net gain on investment securities (a)		—			—			27
Less: tax effect of net loss on investment securities (a)
Less: tax effect of net loss on investment securities (a)

Add: net loss on asset disposals and other transactions	Add: net loss on asset disposals and other transactions	246			302			127

Add: net loss on asset disposals and other transactions

Add: net loss on asset disposals and other transactions
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)
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)	52			63			27

Add: acquisition-related expenses	Add: acquisition-related expenses	551			702			1,373
Less: tax effect of acquisition-related expenses (a)		116			147			288
Add: pension settlement charges		—			46			—
Less: tax effect of pension settlement charges (a)		—			10			—

Add: COVID-19-related expenses		—			2			94
Less: tax effect of COVID-19-related expenses (a)		—			—			20

Add: acquisition-related expenses

Add: acquisition-related expenses
Less: tax effect of acquisition-related expenses (a)
Less: tax effect of acquisition-related expenses (a)
Less: tax effect of acquisition-related expenses (a)

Net income adjusted for non-core items (after tax)

Net income adjusted for non-core items (after tax)

Net income adjusted for non-core items (after tax)	Net income adjusted for non-core items (after tax)	$	28,718		27,814			24,733
Days in the period	Days in the period	90			92			90
Days in the period
Days in the period
Days in the year
Days in the year
Days in the year	Days in the year	365			365			365
Annualized net income	Annualized net income	$	107,716		$	106,520		$	95,618
Annualized net income
Annualized net income
Annualized net income adjusted for non-core items (after tax)
Annualized net income adjusted for non-core items (after tax)
Annualized net income adjusted for non-core items (after tax)	Annualized net income adjusted for non-core items (after tax)	$	116,467		$	110,349		$	100,306
Return on average assets:	Return on average assets:
Return on average assets:
Return on average assets:
Annualized net income
Annualized net income
Annualized net income	Annualized net income	$	107,716		$	106,520		$	95,618
Total average assets	Total average assets	7,222,464			7,067,193			7,067,816
Total average assets
Total average assets
Return on average assets
Return on average assets
Return on average assets	Return on average assets	1.49		%	1.51		%	1.35		%
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:
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)
Annualized net income adjusted for non-core items (after tax)	Annualized net income adjusted for non-core items (after tax)	$	116,467		$	110,349		$	100,306
Total average assets	Total average assets	7,222,464			7,067,193			7,067,816
Total average assets
Total average assets
Return on average assets adjusted for non-core items (after tax)	Return on average assets adjusted for non-core items (after tax)	1.61		%	1.56		%	1.42		%
Return on average assets adjusted for non-core items (after tax)
Return on average assets adjusted for non-core items (after tax)

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

The return on average assets adjusted for non-core items for the ~~current~~first quarter of 2024 decreased ~~slightly~~ when compared to the linked quarter, due to a decrease in annualized net income resulting from lower net interest income, partially offset by an increase in average ~~assets.~~assets resulting from the excess cash held on balance sheet as well as increases in non-interest expenses. The ~~increase~~decrease in the return on average assets adjusted for non-core items for the first quarter of ~~2023,~~2024, compared to the first quarter of ~~2022,~~2023, was attributable to ~~higher~~an increase in annualized net income primarily due to an increase in net interest income, ~~and non-interest income, which were driven~~partially offset by the ~~increases~~assets acquired in ~~market interest rates.~~the Limestone Merger and an increase in expenses.

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

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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
		March 31, 2023			December 31, 2022			March 31, 2022
											Three Months Ended
		Three Months Ended
		Three Months Ended
		March 31, 2024
					March 31, 2024
		March 31, 2024
(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)	(Dollars in thousands)	March 31, 2023			December 31, 2022			March 31, 2022
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:
Annualized net income excluding amortization of other intangible assets:
Net income
Net income
Net income	Net income	$	26,560		$	26,849		$	23,577
Add: amortization of other intangible assets	Add: amortization of other intangible assets	1,871			1,998			1,708
Add: amortization of other intangible assets
Add: amortization of other intangible assets
Less: tax effect of amortization of other intangible assets (a)
Less: tax effect of amortization of other intangible assets (a)
Less: tax effect of amortization of other intangible assets (a)	Less: tax effect of amortization of other intangible assets (a)	393			420			359
Net income excluding amortization of other intangible assets	Net income excluding amortization of other intangible assets	$	28,038		$	28,427		$	24,926
Net income excluding amortization of other intangible assets
Net income excluding amortization of other intangible assets
Days in the period
Days in the period
Days in the period	Days in the period	90			92			90
Days in the year	Days in the year	365			365			365
Days in the year
Days in the year
Annualized net income
Annualized net income
Annualized net income	Annualized net income	$	107,716		$	106,520		$	95,618
Annualized net income excluding amortization of other intangible assets	Annualized net income excluding amortization of other intangible assets	$	113,710		$	112,781		$	101,089
Annualized net income excluding amortization of other intangible assets
Annualized net income excluding amortization of other intangible assets
Average tangible equity:
Average tangible equity:
Average tangible equity:	Average tangible equity:
Total average stockholders' equity	Total average stockholders' equity	$	801,465		$	768,650		$	834,752
Total average stockholders' equity
Total average stockholders' equity
Less: average goodwill and other intangible assets
Less: average goodwill and other intangible assets
Less: average goodwill and other intangible assets	Less: average goodwill and other intangible assets	325,545			327,377			304,124
Average tangible equity	Average tangible equity	$	475,920		$	441,273		$	530,628
Average tangible equity
Average tangible equity
Return on total average stockholders' equity ratio:
Return on total average stockholders' equity ratio:
Return on total average stockholders' equity ratio:	Return on total average stockholders' equity ratio:
Annualized net income	Annualized net income	$	107,716		$	106,520		$	95,618
Annualized net income
Annualized net income
Total average stockholders' equity
Total average stockholders' equity
Total average stockholders' equity	Total average stockholders' equity	$	801,465		$	768,650		$	834,752
Return on total average stockholders' equity	Return on total average stockholders' equity	13.44		%	13.86		%	11.45		%
Return on total average stockholders' equity
Return on total average stockholders' equity
Return on average tangible equity ratio:
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	$	113,710		$	112,781		$	101,089
Annualized net income excluding amortization of other intangible assets
Annualized net income excluding amortization of other intangible assets
Average tangible equity
Average tangible equity
Average tangible equity	Average tangible equity	$	475,920		$	441,273		$	530,628
Return on average tangible equity	Return on average tangible equity	23.89		%	25.56		%	19.05		%
Return on average tangible equity
Return on average tangible equity

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

The return on total average stockholders' equity and average tangible equity ratios ~~were lower in the current quarter relative~~decreased when compared to the linked quarter due to ~~issuance of treasury stock for employee stock awards~~a decrease in annualized net income mainly attributable to a decrease in net interest income and an increase in non-interest expense. The decreases in the return on total average stockholders' equity and average tangible equity ratios in the first quarter of 2024 when compared to the same period of 2023 were due to the issuance of 6.8 million common shares as ~~well as decreases~~consideration in ~~accumulated other comprehensive losses on available-for-sale investment securities,~~the Limestone Merger, an increase in acquisition-related expenses, partially offset by an increase in total net interest income driven by the ~~recent~~2023 increases in market interest ~~rates. The return on total average stockholders' equity~~rates and ~~average tangible equity ratios were higher in~~additional net interest income from Limestone following the ~~current quarter when compared to the same 2022 period due to greater accumulated other comprehensive losses on available-for-sale investment securities in 2023, which reduced average tangible equity.~~Limestone Merger.

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FINANCIAL CONDITION

Cash and Cash Equivalents

At March 31, ~~2023,~~2024, Peoples' interest-bearing deposits in other banks had increased ~~$0.7~~$10.9 million from December 31, ~~2022.~~2023. The total cash and cash equivalents balance included ~~$53.7~~$318.5 million of excess cash reserves being maintained at the FRB of Cleveland at March 31, ~~2023,~~2024, compared to ~~$33.1~~$309.8 million at December 31, ~~2022.~~2023. 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.

Through the first three months of ~~2023,~~2024, Peoples' total cash and cash equivalents increased ~~$3.1~~$3.0 million, ~~as Peoples had $48.0~~which reflected cash inflows of $37.0 million of cash provided by operating activities and ~~$45.1~~$89.1 million of cash provided by financing activities, ~~substantially~~mostly offset by ~~$90.0~~cash outflows of $123.1 million of cash used in investing activities. Peoples' cash used in investing activities reflected net cash outflows from held-to-maturity investment securities of $133.8 million and cash outflows from a $52.4 million net increase in loans held for investment, partially offset by net cash inflows from available-for-sale investment securities of $100.4 million. The cash provided by financing activities was largely driven by a ~~$106.0~~$273.6 million net increase in interest-bearing deposits and $26.8 million of proceeds from long-term borrowings, partially offset by ~~net cash outflows of $34.3 million, $11.0 million and $9.5 million from~~ a net decrease in ~~non-interest-bearing~~non-interest bearing deposits of $99.3 million and a net decrease in short-term borrowings of $87.6 million. Peoples' use of cash ~~dividends paid,~~in investing activities reflected a net cash outflow from available-for-sale investment securities of $78.7 million and ~~payments on long-term borrowings, respectively. Peoples paid $82.9~~a $43.3 million net increase in ~~cash~~loans held for ~~the Vantage acquisition during the first quarter of 2022.~~investment.

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)	Weighted Average Yield		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022		(Dollars in thousands)	Weighted Average Yield	March 31, 2024	December 31, 2023	September 30, 2023	June 30, 2023	March 31, 2023
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	1.54	%	$	58,438	$	152,422	$	172,055	$	175,255	$	167,406
U.S. government sponsored agencies	U.S. government sponsored agencies	2.10	%	98,311		88,115		80,915		82,465		80,654
States and political subdivisions	States and political subdivisions	2.19	%	224,996		225,882		230,022		249,402		231,644
Residential mortgage-backed securities	Residential mortgage-backed securities	1.83	%	605,270		604,653		624,061		691,735		753,353
Commercial mortgage-backed securities	Commercial mortgage-backed securities	1.58	%	52,153		50,049		52,504		58,301		58,112
Bank-issued trust preferred securities	Bank-issued trust preferred securities	5.38	%	10,329		10,278		10,287		10,440		10,670

Total fair value	Total fair value			$	1,049,497	$	1,131,399	$	1,169,844	$	1,267,598	$	1,301,839

Total fair value

Total fair value
Total amortized cost	Total amortized cost			$	1,196,521	$	1,300,719	$	1,349,800	$	1,389,621	$	1,381,259
Net unrealized loss	Net unrealized loss			$	(147,024)	$	(169,320)	$	(179,956)	$	(122,023)	$	(79,420)
Held-to-maturity securities, at amortized cost:	Held-to-maturity securities, at amortized cost:
Obligations of:	Obligations of:
Obligations of:
Obligations of:
U.S. government sponsored agencies
U.S. government sponsored agencies
U.S. government sponsored agencies	U.S. government sponsored agencies	4.61	%	$	194,184	$	132,366	$	59,871	$	50,990	$	38,486
States and political subdivisions (a)	States and political subdivisions (a)	2.23	%	144,844		$	145,022	145,252		151,034		151,217
Residential mortgage-backed securities	Residential mortgage-backed securities	3.83	%	245,294		176,215		111,707		112,095		115,613
Commercial mortgage-backed securities	Commercial mortgage-backed securities	2.49	%	109,750		106,609		90,971		86,601		79,340
Total amortized cost	Total amortized cost			$	694,072	$	560,212	$	407,801	$	400,720	$	384,656
Other investment securities	Other investment securities			$	52,763	$	51,609	$	39,039	$	41,655	$	41,840
Total investment securities:	Total investment securities:
Amortized cost	Amortized cost			$	1,943,356	$	1,912,540	$	1,796,640	$	1,831,996	$	1,807,755
Amortized cost
Amortized cost
Carrying value	Carrying value			$	1,796,332	$	1,743,220	$	1,616,684	$	1,709,973	$	1,728,335

(a)Amortized cost is presented net of the allowance for credit losses of $238 at March 31, 2024 and at December 31, 2023, and $241 at March 31, ~~2023, $241 at December 31, 2022 and $286 at March 31, 2022.~~2023.

For the first quarter of ~~2023,~~2024, total investment securities increased compared to the ~~prior~~linked quarter, largely due to ~~investments made in held-to-maturity residential mortgage-backed securities and obligations~~purchases of ~~U.S.~~higher yielding government sponsored ~~agencies, in~~agency securities which were used to collateralize certain government deposits. During the fourth quarter of 2023, Peoples executed the sales of $36.5 million of lower yielding available-for-sale investment securities for an ~~effort~~after-tax loss of $1.3 million. Proceeds from the sales were used to ~~improve~~purchase higher yielding agency investment ~~yields and reduce risk, partially offset by the reduction in available-for-sale~~ securities. During the first quarter of 2023, Peoples executed the ~~sale~~sales of $96.7 million of its lower yielding available-for-sale securities for an after-tax loss of $1.6 million. Proceeds from the ~~sale~~sales were used to pay down overnight borrowings. The realized losses recognized due to ~~these~~the first

Table of Co n tents

quarter of 2023 transactions ~~are projected to be~~were earned back within the 2023 fiscal ~~year.~~

~~Table~~ year, and the realized losses recognized due to the fourth quarter of ~~Contents~~

2023 transactions are expected to be earned back within 14 months of the transaction dates.

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 and Leases

The following table provides information regarding outstanding loan balances:


(Dollars in thousands)	(Dollars in thousands)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			(Dollars in thousands)	March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023
Originated loans:
Originated loans and leases:																	Originated loans and leases:
Construction	Construction	$	222,915		$	212,869		$	175,388		$	144,062		$	171,934
Commercial real estate, other	Commercial real estate, other	995,176			919,531			891,576			899,774			854,721
Commercial real estate	Commercial real estate	1,218,091			1,132,400			1,066,964			1,043,836			1,026,655
Commercial and industrial	Commercial and industrial	840,194			835,178			814,593			777,050			791,307
Premium finance	Premium finance	158,263			159,197			167,682			152,237			145,813
Leases	Leases	251,711			226,438			178,083			149,894			97,168
Residential real estate	Residential real estate	386,964			384,262			381,104			373,010			364,989
Home equity lines of credit	Home equity lines of credit	132,531			132,093			124,524			115,935			107,414
Consumer, indirect	Consumer, indirect	647,177			629,426			592,309			563,088			524,778
Consumer, direct	Consumer, direct	99,299			98,706			99,282			95,371			87,994
Consumer	Consumer	746,476			728,132			691,591			658,459			612,772
Deposit account overdrafts	Deposit account overdrafts	749			722			597			851			699
Total originated loans		$	3,734,979		$	3,598,422		$	3,425,138		$	3,271,272		$	3,146,817
Acquired loans (a):
Total originated loans and leases
Acquired loans and leases (a):
Construction
Construction
Construction	Construction	$	9,381		$	34,072		$	40,233		$	58,526		$	66,371
Commercial real estate, other	Commercial real estate, other	485,886			503,987			531,903			560,249			602,511
Commercial real estate	Commercial real estate	495,267			538,059			572,136			618,775			668,882
Commercial and industrial	Commercial and industrial	50,945			57,456			62,879			81,402			95,844
Premium finance		—			—			—			—			—

Leases
Leases
Leases	Leases	102,930			118,693			134,764			164,628			169,900
Residential real estate	Residential real estate	325,638			339,098			352,257			369,995			391,440
Home equity lines of credit	Home equity lines of credit	41,852			45,765			50,001			53,400			54,874
Consumer, indirect		—			—			—			—			—

Consumer, direct	Consumer, direct	8,107			9,657			14,032			16,433			19,396
Consumer		8,107			9,657			14,032			16,433			19,396
Total acquired loans		$	1,024,739		$	1,108,728		$	1,186,069		$	1,304,633		$	1,400,336
Total loans		$	4,759,718		$	4,707,150		$	4,611,207		$	4,575,905		$	4,547,153
Consumer, direct
Consumer, direct

Total acquired loans and leases
Total acquired loans and leases
Total acquired loans and leases
Total loans and leases

Percent of loans to total loans:
Percent of loans and leases to total loans and leases:

Percent of loans and leases to total loans and leases:

Percent of loans and leases to total loans and leases:
Construction
Construction
Construction	Construction	4.9		%	5.2		%	4.7		%	4.4		%	5.2		%	5.1	%	5.9		%	6.1		%	7.0		%	4.9		%
Commercial real estate, other	Commercial real estate, other	31.1		%	30.2		%	30.9		%	32.0		%	32.1		%	Commercial real estate, other	36.2		%	35.7		%	36.0		%	34.8		%	31.1	%
Commercial real estate	Commercial real estate	36.0		%	35.4		%	35.6		%	36.4		%	37.3		%	Commercial real estate	41.3		%	41.6		%	42.1		%	41.8		%	36.0	%
Commercial and industrial	Commercial and industrial	18.7		%	19.0		%	19.0		%	18.8		%	19.5		%	Commercial and industrial	19.6		%	19.2		%	18.6		%	19.4		%	18.7	%
Premium finance	Premium finance	3.3		%	3.4		%	3.6		%	3.3		%	3.2		%	Premium finance	3.8		%	3.3		%	3.1		%	2.7		%	3.3	%
Leases	Leases	7.4		%	7.3		%	6.8		%	6.9		%	5.9		%	Leases	6.8		%	6.7		%	6.6		%	6.3		%	7.4	%
Residential real estate	Residential real estate	15.0		%	15.4		%	15.9		%	16.2		%	16.6		%	Residential real estate	12.6		%	12.9		%	13.0		%	13.2		%	15.0	%
Home equity lines of credit	Home equity lines of credit	3.7		%	3.8		%	3.8		%	3.7		%	3.6		%	Home equity lines of credit	3.6		%	3.4		%	3.4		%	3.3		%	3.7	%
Consumer, indirect	Consumer, indirect	13.6		%	13.4		%	12.8		%	12.3		%	11.5		%	Consumer, indirect	10.5		%	10.8		%	11.0		%	11.0		%	13.6	%
Consumer, direct	Consumer, direct	2.3		%	2.3		%	2.5		%	2.4		%	2.4		%	Consumer, direct	1.8		%	2.1		%	2.2		%	2.3		%	2.3	%
Consumer	Consumer	15.9		%	15.7		%	15.3		%	14.7		%	13.9		%	Consumer	12.3		%	12.9		%	13.2		%	13.3		%	15.9	%

Total percentage	Total percentage	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%
Total percentage
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	$	384,005		$	392,364		$	400,736		$	410,007		$	420,024

(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).

~~Period-end~~The period-end total loan and lease balances at March 31, ~~2023~~2024 increased ~~$52.6~~$43.6 million, or 4%3% annualized, compared to at December 31, ~~2022.~~2023. The increase in the period-end loan and lease balance at March 31, 2024 compared to December 31, 2023 was primarily driven by increases of (i) $46.8 million in other commercial real estate loans, (ii) $35.8 million in premium finance loans and

Table of Co n tents

(iii) $29.6 million in commercial and industrial loans, partially offset by decreases of (a) $49.3 million in construction loans, (b) $16.2 million in indirect consumer loans and (c) $15.2 million in direct consumer loans. The increase in the period-end loan and lease balances at March 31, 2024 compared to at March 31, 2023 was primarily driven by loans acquired in the Limestone Merger totaling $1.1 billion. Excluding the loans acquired in the Limestone Merger, the period-end loan and lease balance increased $499.3 million, or 10%, driven by increases of ~~(i) $57.5~~$198.1 million, $100.6 million, $80.7 million, $68.1 million, $37.3 million, and $23.5 million in other commercial real estate loans, ~~(ii) $17.8 million in indirect consumer~~commercial and industrial loans, ~~and (iii) $9.5 million in~~premium finance loans, leases, ~~partially offset by a reductions of $14.6 million in~~ construction loans, and ~~$10.8 million in residential real estate loans. The increase~~home equity lines of ~~$212.6 million in the period-end loan~~credit, respectively.

~~Table~~ of ~~Contents~~

and lease balances when compared to March 31, 2022 was primarily driven by increases of $122.4 million in indirect consumer loans and $87.6 million in leases, partially offset by a reduction of $43.8 million in residential real estate loans. The increases in the period-end loan and lease balances when compared to the prior periods was due to growth. The reduction in the period-end residential real estate loans balance when compared to all comparative prior periods was due to a lower inventory of homes for sale.

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 March 31, ~~2023:~~2024:


(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:
Apartment complexes		$	120,995	$	179,179	$	300,174	64.1	%
Mixed-use facilities		19,478		4,787		24,265		5.2	%
Assisted living facilities and nursing homes		16,385		5,226		21,611		4.6	%
Land only		21,690		8,081		29,771		6.4	%
Office buildings and complexes		12,301		4,158		16,459		3.5	%

Industrial		6,734		4,047		10,781		2.3	%

Construction:

Construction:
Apartment complexes										Apartment complexes	$	180,949		$	202,623		$	383,572		59.8		%
Residential property										Residential property	19,607			32,085			51,692			8.1		%
Land development										Land development	36,985			14,583			51,568			8.0		%
Land only										Land only	24,612			7,674			32,286			5.0		%
Assisted living facilities and nursing homes										Assisted living facilities and nursing homes	1,408			19,672			21,080			3.3		%

Lodging and lodging related

Lodging and lodging related

Lodging and lodging related											3,578			16,456			20,034			3.1		%
Industrial										Industrial	10,619			5,287			15,906			2.5		%

Student housing
Student housing
Student housing											10,107			4,893			15,000			2.4		%

Other (a)

Other (a)

Other (a)	Other (a)	34,713		30,391		65,104		13.9	%	26,822		23,223	23,223		50,045	50,045		7.8	7.8	%
Total construction	Total construction	$	232,296	$	235,869	$	468,165	100.0	%	Total construction	$	314,687		$	326,496		$	641,183		100.0	100.0	%

(a) All other total exposures by industry are less than 2% of the Total Exposure.

5960

Table of ofCo ~~Contents~~n tents


(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:
Apartment complexes										Apartment complexes		$	345,711		$	3,495		$	349,206		15.1		%
Retail facilities:
Owner occupied
Owner occupied
Owner occupied												$	56,251		$	1,399		$	57,650		2.5		%
Non-owner occupied										Non-owner occupied		243,285			905			244,190			10.6		%
Total retail facilities										Total retail facilities		$	299,536		$	2,304		$	301,840		13.1		%
Light industrial facilities:										Light industrial facilities:
Owner occupied										Owner occupied		$	144,172		$	2,927		$	147,099		6.4		%
Non-owner occupied										Non-owner occupied		97,301			4,594			101,895			4.4		%
Total light industrial facilities										Total light industrial facilities		$	241,473		$	7,521		$	248,994		10.8		%
Office buildings and complexes:	Office buildings and complexes:									Office buildings and complexes:
Owner occupied	Owner occupied	$	61,296	$	1,943	$	63,239	4.0	%	Owner occupied		$	84,118		$	3,598		$	87,716		3.8	3.8	%
Non-owner occupied	Non-owner occupied	90,954		3,846		94,800		6.1	%	Non-owner occupied		132,981			8,292	8,292		141,273	141,273		6.1	6.1	%
Total office buildings and complexes	Total office buildings and complexes	152,250		5,789		158,039		10.1	%	Total office buildings and complexes		$	217,099		$	11,890		$	228,989		9.9	9.9	%
Retail facilities:
Lodging and lodging related:
Owner occupied
Owner occupied
Owner occupied	Owner occupied	39,551		1,480		41,031		2.6	%	$	30,235		$	—		$	30,235		1.3	1.3	%
Non-owner occupied	Non-owner occupied	144,979		4,008		148,987		9.5	%	Non-owner occupied		124,559			—	—		124,559	124,559		5.4	5.4	%
Total retail facilities		184,530		5,488		190,018		12.1	%
Total lodging and lodging related										Total lodging and lodging related		$	154,794		$	—		$	154,794		6.7		%
Assisted living facilities and nursing homes										Assisted living facilities and nursing homes		$	140,712		$	5,167		$	145,879		6.3		%
Warehouse facilities:
Owner occupied
Owner occupied
Owner occupied												$	41,361		$	592		$	41,953		1.8		%
Non-owner occupied										Non-owner occupied		44,530			128			44,658			1.9		%
Total warehouse facilities										Total warehouse facilities		$	85,891		$	720		$	86,611		3.7		%
Restaurant/bar facilities:
Owner occupied
Owner occupied
Owner occupied												$	40,747		$	20		$	40,767		1.8		%
Non-owner occupied										Non-owner occupied		35,427			—			35,427			1.5		%
Total restaurant/bar facilities										Total restaurant/bar facilities		$	76,174		$	20		$	76,194		3.3		%
Mixed-use facilities:	Mixed-use facilities:
Owner occupied
Owner occupied
Owner occupied	Owner occupied	44,518		550		45,068		2.9	%	$	37,696		$	1,233		$	38,929		1.7	1.7	%
Non-owner occupied	Non-owner occupied	60,932		1,323		62,255		4.0	%	Non-owner occupied		27,130			1,586	1,586		28,716	28,716		1.2	1.2	%
Total mixed-use facilities	Total mixed-use facilities	105,450		1,873		107,323		6.9	%	Total mixed-use facilities		$	64,826		$	2,819		$	67,645		2.9	2.9	%
Apartment complexes		112,419		37,757		150,176		9.6	%
Light industrial facilities:
Education services:
Owner occupied	Owner occupied	92,338		2,726		95,064		6.1	%
Non-owner occupied		47,983		3,055		51,038		3.2	%
Total light industrial facilities		140,321		5,781		146,102		9.3	%
Assisted living facilities and nursing homes		62,701		5,151		67,852		4.3	%
Warehouse facilities:
Owner occupied	Owner occupied	36,307		1,285		37,592		2.3	%
Non-owner occupied		27,590		241		27,831		1.8	%
Total warehouse facilities		63,897		1,526		65,423		4.1	%
Lodging and lodging related:
Owner occupied		28,859		661		29,520		1.9	%
Non-owner occupied		79,821		1		79,822		5.1	%
Total lodging and lodging related		108,680		662		109,342		7.0	%
Education services:
Owner occupied	Owner occupied	18,148		—		18,148		1.2	%	$	16,279		$	—		$	16,279		0.7	0.7	%
Non-owner occupied	Non-owner occupied	31,734		5,523		37,257		2.4	%	Non-owner occupied		29,749			4,000	4,000		33,749	33,749		1.5	1.5	%
Total education services	Total education services	49,882		5,523		55,405		3.6	%	Total education services		$	46,028		$	4,000		$	50,028		2.2	2.2	%
Healthcare facilities:
Owner occupied		21,855		300		22,155		1.4	%
Non-owner occupied		9,518		—		9,518		0.6	%
Total healthcare facilities		31,373		300		31,673		2.0	%
Restaurant/bar facilities:
Owner occupied		28,715		9		28,724		1.8	%
Non-owner occupied		10,464		248		10,712		0.7	%
Total restaurant/bar facilities		39,179		257		39,436		2.5	%
Land only
Owner occupied		6,143		339		6,482		0.4	%
Non-owner occupied		32,257		—		32,257		2.1	%
Total land only		38,400		339		38,739		2.5	%

Other (a)

Other (a)

Other (a)	Other (a)	430,380		15,645		446,025		28.5	%	571,536			31,808	31,808		603,344	603,344		26.0	26.0	%
Total commercial real estate, other	Total commercial real estate, other	$	1,481,062	$	85,752	$	1,566,814	100.0	%	Total commercial real estate, other		$	2,243,780		$	69,744		$	2,313,524		100.0	100.0	%

(a) All other total exposures by industry are less than 2% of the Total Exposure.

Peoples' commercial lending activities continue to focus on lending opportunities within Ohio, Kentucky, West Virginia, Virginia, Washington, D.C. and Maryland. InFor all other states, the aggregate outstanding balances of commercial loans in each state were less than 4%3% of total loans at both March 31, ~~2023~~2024 and December 31, ~~2022.~~2023. The repayment of premium finance loans is secured by the underlying insurance policy prepaid premium, and therefore, has no geographical impact from a repayment perspective. The repayment of leases is secured by the underlying equipment collateral and not real estate, which mitigates geographic risk.

6061

Table of ofCo ~~Contents~~n tents

~~Small Business Administration Paycheck Protection Program ("PPP")~~

In March 2020, the Coronavirus Aid, Relief, and Economic Security ("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 and maintain payroll and/or to make certain mortgage interest, lease and utility payments, and certain other criteria 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 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 table details Peoples' PPP loan balances and related income:

(Dollars in thousands) March 31,
2023 December 31,
2022 September 30,
2022 June 30,
2022 March 31,
2022
PPP aggregate outstanding principal balances $ 2,184 $ 2,458 $ 3,789 $ 15,582 $ 42,871
PPP net deferred loan origination fees 25 27 61 421 995
Accretion of net deferred loan origination fees 2 34 360 574 1,215

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)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			(Dollars in thousands)	March 31, 2024		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023
Construction	Construction	$	1,273		$	1,250		$	1,464		$	1,531		$	2,731
Commercial real estate, other	Commercial real estate, other	16,474			17,710			17,695			18,708			21,055
Commercial and industrial	Commercial and industrial	8,307			8,229			8,611			8,572			10,114
Premium finance	Premium finance	433			344			553			311			345
Leases	Leases	9,109			8,495			7,890			7,585			5,875

Residential real estate	Residential real estate	6,504			6,357			6,464			6,332			6,495
Residential real estate
Residential real estate
Home equity lines of credit	Home equity lines of credit	1,717			1,693			1,644			1,699			1,894
Consumer, indirect	Consumer, indirect	7,781			7,448			6,912			6,234			5,172
Consumer, direct	Consumer, direct	1,619			1,575			1,592			1,321			1,036

Deposit account overdrafts	Deposit account overdrafts	86			61			41			53			51
Deposit account overdrafts
Deposit account overdrafts
Allowance for credit losses	Allowance for credit losses	$	53,303		$	53,162		$	52,866		$	52,346		$	54,768
As a percent of total loans	As a percent of total loans	1.12		%	1.13		%	1.15		%	1.14		%	1.20		%	As a percent of total loans	1.05	%	1.01	%	1.03	%	1.02	%	1.12	%

The ~~reduction~~increase in the allowance for credit losses at March 31, ~~2023~~2024 compared to ~~March~~December 31, ~~2022~~2023 was largely attributable to (i) a deterioration in macro-economic conditions used within the CECL model, (ii) an increase of reserves on individually analyzed loans and (iii) loan growth. The increase in the allowance for credit losses at September 30, 2023 and at June 30, 2023, when compared to the prior periods presented was driven by ~~decreases~~the establishment of an allowance for credit losses for loans acquired in the ~~allowances for individually analyzed loans, offset by loan growth and deterioration in the economic forecast.~~Limestone Merger.

Additional information regarding Peoples' allowance for credit losses can be found in "Note 1 Summary of Significant Accounting Policies" in Peoples' ~~2022~~2023 Form 10-K and "Note 4 Loans and Leases" of the Notes to the Unaudited Condensed Consolidated Financial ~~Statements.~~Statements in this Form 10-Q.

The following table summarizes Peoples’ net charge-offs and recoveries:

Three Months Ended

(Dollars in thousands)

March 31,
2023

December 31,
2022

September 30,
2022

June 30,
2022

March 31,
2022

(Dollars in thousands)

March 31,
2024

December 31,
2023

September 30,
2023

June 30,
2023

March 31,
2023

Gross charge-offs:

Construction

—

Commercial real estate, other

132

278

Commercial and industrial

420

463

Premium finance

Leases

Residential real estate

Home equity lines of credit

Consumer, indirect

Consumer, direct

Consumer

Deposit account overdrafts

Total gross charge-offs

Recoveries:

Commercial real estate, other

Commercial and industrial

Premium finance

Leases

Residential real estate

Home equity lines of credit

Consumer, indirect

Consumer, direct

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		Three Months Ended
	Three Months Ended																											Three Months Ended
(Dollars in thousands)	(Dollars in thousands)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			(Dollars in thousands)	March 31, 2024		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023
Leases		469			888			731			493			473
Residential real estate		41			144			168			47			309
Home equity lines of credit		19			42			5			25			16
Consumer, indirect		929			799			600			449			385
Consumer, direct		104			86			81			60			136
Consumer		1,033			885			681			509			521
Deposit account overdrafts		227			308			274			405			259
Total gross charge-offs		$	1,855		$	2,481		$	1,990		$	1,951		$	2,333
Recoveries:

Commercial real estate, other		$	27		33			$	39		$	176		$	49
Commercial and industrial		—			40			3			2			4
Premium finance		9			4			1			8			—
Leases		80			81			99			64			176
Residential real estate		29			20			36			14			14
Home equity lines of credit		—			16			—			—			29
Consumer, indirect		79			88			71			83			86
Consumer, direct		15			16			9			11			11
Consumer	Consumer	94			104			80			94			97
Deposit account overdrafts	Deposit account overdrafts	72			50			44			52			54
Total recoveries	Total recoveries	$	311		$	348		$	302		$	410		$	423
Net charge-offs (recoveries):	Net charge-offs (recoveries):
Construction
Construction
Construction	Construction	$	9		$	16		$	—		$	—		$	—
Commercial real estate, other	Commercial real estate, other	6			99			18			(154)			229
Commercial and industrial	Commercial and industrial	1			(16)			33			418			459
Premium finance	Premium finance	14			38			37			22			14
Leases	Leases	389			807			632			429			297
Residential real estate	Residential real estate	12			124			132			33			295
Home equity lines of credit	Home equity lines of credit	19			26			5			25			(13)
Consumer, indirect	Consumer, indirect	850			711			529			366			299
Consumer, direct	Consumer, direct	89			70			72			49			125
Consumer	Consumer	939			781			601			415			424
Deposit account overdrafts	Deposit account overdrafts	155			258			230			353			205
Total net charge-offs	Total net charge-offs	$	1,544		$	2,133		$	1,688		$	1,541		$	1,910
Ratio of net charge-offs to average total loans (annualized):
Ratio of net charge-offs (recoveries) to average total loans (annualized):																	Ratio of net charge-offs (recoveries) to average total loans (annualized):
Construction	Construction	—		%	—		%	—		%	—		%	—		%	Construction	—	%	—	%	—	%	—	%	—	%
Commercial real estate, other	Commercial real estate, other	—		%	0.01		%	—		%	(0.01)		%	0.02		%	Commercial real estate, other	0.01	%	(0.03)	%	0.01	%	—	%	—	%
Commercial and industrial	Commercial and industrial	—		%	—		%	—		%	0.04		%	0.03		%	Commercial and industrial	0.02	%	0.03	%	0.01	%	(0.03)	%	—	%
Premium finance	Premium finance	—		%	—		%	—		%	—		%	—		%	Premium finance	—	%	—	%	—	%	—	%	—	%
Leases	Leases	0.04		%	0.07		%	0.06		%	0.04		%	0.03		%	Leases	0.07	%	0.13	%	0.05	%	0.04	%	0.04	%
Residential real estate	Residential real estate	—		%	0.01		%	0.01		%	—		%	0.03		%	Residential real estate	—	%	—	%	—	%	—	%	—	%
Home equity lines of credit	Home equity lines of credit	—		%	—		%	—		%	—		%	—		%	Home equity lines of credit	—	%	—	%	—	%	—	%	—	%
Consumer, indirect	Consumer, indirect	0.07		%	0.06		%	0.05		%	0.03		%	0.03		%	Consumer, indirect	0.09	%	0.07	%	0.05	%	0.06	%	0.07	%
Consumer, direct	Consumer, direct	0.01		%	0.01		%	0.01		%	0.01		%	0.01		%	Consumer, direct	0.01	%	0.01	%	0.01	%	—	%	0.01	%
Consumer	Consumer	0.08		%	0.07		%	0.06		%	0.04		%	0.04		%	Consumer	0.10	%	0.08	%	0.06	%	0.06	%	0.08	%
Deposit account overdrafts	Deposit account overdrafts	0.01		%	0.02		%	0.02		%	0.03		%	0.02		%	Deposit account overdrafts	0.02	%	0.02	%	0.02	%	0.02	%	0.01	%
Total	Total	0.13		%	0.18		%	0.15		%	0.14		%	0.17		%	Total	0.22	%	0.23	%	0.15	%	0.09	%	0.13	%

Each with "--%" not meaningful.

~~Net~~Total net charge-offs during the first quarter of 2024 were $3.3 million, or 0.22% of average total loans on an annualized basis, compared to $3.5 million, or 0.23% of average total loans on an annualized basis, during the fourth quarter of 2023 ~~were~~and $1.5 million, or 0.13% of average total loans on an annualized ~~basis.~~basis, during the first quarter of 2023. The decrease for the ~~current~~first quarter of 2024 when compared to the linked quarter was driven by a decrease in net charge-offs on leases ~~residential real estate~~and commercial and industrial loans ~~and deposit account overdrafts, partially offset by~~during the first quarter of 2024. The increase in net charge-offs during the first quarter of 2024 versus the prior year first quarter was primarily attributable to an increase in charge-offs on (i) leases, (ii) indirect consumer ~~loans. The decrease in net charge-offs during the current quarter versus the prior year quarter was primarily attributable to decreases in net charge-offs in (i)~~loans, (iii) commercial ~~and~~

~~Table~~ of ~~Contents~~

industrial loans, ~~(ii) residential real estate loans,~~ and ~~(iii)~~(iv) other commercial real estate loans, partially offset by an increase in ~~net charge-offs in indirect consumer loans.~~recoveries on leases during the first quarter of 2024.

Table of Co n tents

The following table details Peoples’ nonperforming assets:


(Dollars in thousands)	(Dollars in thousands)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			(Dollars in thousands)	March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023
Loans 90+ days past due and accruing:	Loans 90+ days past due and accruing:																Loans 90+ days past due and accruing:

Commercial real estate, other
Commercial real estate, other
Commercial real estate, other	Commercial real estate, other	150			167			1,472			330			603
Commercial and industrial	Commercial and industrial	228			130			266			89			53
Premium finance	Premium finance	764			504			308			304			613
Leases	Leases	2,491			3,041			4,654			5,722			3,921
Residential real estate	Residential real estate	238			917			1,499			1,687			677
Home equity lines of credit	Home equity lines of credit	127			58			23			89			75
Consumer, indirect	Consumer, indirect	13			—			195			15			17
Consumer, direct	Consumer, direct	3			25			7			—			—
Consumer	Consumer	16			25			202			15			17
Total loans 90+ days past due and accruing	Total loans 90+ days past due and accruing	$	4,014		$	4,842		$	8,424		$	8,236		$	5,959
Nonaccrual loans:	Nonaccrual loans:
Construction
Construction
Construction	Construction	$	1		$	12		$	2		$	5		$	6
Commercial real estate, other	Commercial real estate, other	11,345			12,121			11,916			14,253			14,942
Commercial and industrial	Commercial and industrial	3,064			3,462			2,385			1,849			3,393
Leases	Leases	3,884			3,178			2,094			1,573			1,731
Residential real estate	Residential real estate	8,641			9,496			8,728			9,194			9,135
Home equity lines of credit	Home equity lines of credit	793			820			921			890			937
Consumer, indirect	Consumer, indirect	2,147			2,176			1,627			1,558			1,628
Consumer, direct	Consumer, direct	105			208			158			166			231
Consumer	Consumer	2,252			2,384			1,785			1,724			1,859
Total nonaccrual loans	Total nonaccrual loans	$	29,980		$	31,473		$	27,831		$	29,488		$	32,003

Total nonperforming loans ("NPLs")	Total nonperforming loans ("NPLs")	$	33,994		$	36,315		$	36,255		$	37,724		$	37,962

Total nonperforming loans ("NPLs")

Total nonperforming loans ("NPLs")
OREO:	OREO:
Commercial
Commercial
Commercial	Commercial	$	8,730		$	8,730		$	8,730		$	9,065		$	9,106
Residential	Residential	48			165			110			145			301
Total OREO	Total OREO	$	8,778		$	8,895		$	8,840		$	9,210		$	9,407
Total nonperforming assets ("NPAs")	Total nonperforming assets ("NPAs")	$	42,772		$	45,210		$	45,095		$	46,934		$	47,369
Criticized loans (a)	Criticized loans (a)	$	198,812		$	191,355		$	164,775		$	181,395		$	190,315
Classified loans (b)	Classified loans (b)	93,168			89,604			94,848			115,483			109,530
Asset Quality Ratios (c):	Asset Quality Ratios (c):
Nonaccrual loans as a percent of total loans (d)
Nonaccrual loans as a percent of total loans (d)
Nonaccrual loans as a percent of total loans (d)	Nonaccrual loans as a percent of total loans (d)	0.63		%	0.67		%	0.60		%	0.64		%	0.70		%	0.51	%	0.41		%	0.43		%	0.48		%	0.63		%
NPLs as a percent of total loans (d)	NPLs as a percent of total loans (d)	0.71		%	0.77		%	0.79		%	0.82		%	0.83		%	NPLs as a percent of total loans (d)	0.63		%	0.52		%	0.58		%	0.58		%	0.71	%
NPAs as a percent of total assets (d)	NPAs as a percent of total assets (d)	0.58		%	0.63		%	0.64		%	0.64		%	0.65		%	NPAs as a percent of total assets (d)	0.50		%	0.43		%	0.48		%	0.48		%	0.58	%
NPAs as a percent of total loans and OREO (d)	NPAs as a percent of total loans and OREO (d)	0.90		%	0.96		%	0.98		%	1.02		%	1.04		%	NPAs as a percent of total loans and OREO (d)	0.74		%	0.64		%	0.70		%	0.70		%	0.90	%
Allowance for credit losses as a percent of nonaccrual loans	Allowance for credit losses as a percent of nonaccrual loans	177.80		%	168.91		%	189.95		%	177.52		%	171.13		%	Allowance for credit losses as a percent of nonaccrual loans	206.70		%	245.79		%	240.29		%	212.57		%	177.80	%
Allowance for credit losses as a percent of NPLs (d)	Allowance for credit losses as a percent of NPLs (d)	156.80		%	146.39		%	145.82		%	138.76		%	144.27		%	Allowance for credit losses as a percent of NPLs (d)	166.11		%	194.38		%	178.23		%	176.30		%	156.80	%
Criticized loans as a percent of total loans (a)	Criticized loans as a percent of total loans (a)	4.18		%	4.07		%	3.57		%	3.96		%	4.19		%	Criticized loans as a percent of total loans (a)	4.14		%	3.82		%	3.50		%	3.68		%	4.18	%
Classified loans as a percent of total loans (b)	Classified loans as a percent of total loans (b)	1.96		%	1.90		%	2.06		%	2.52		%	2.41		%	Classified loans as a percent of total loans (b)	2.38		%	1.95		%	2.05		%	1.86		%	1.96	%

(a) Includes loans categorized as special mention, substandard or doubtful.

(b) Includes loans categorized as substandard or doubtful.

~~Table~~ of ~~Contents~~

(d) NPLs include loans 90+ days past due and accruing and nonaccrual loans. ~~NPLs in periods prior to March 31, 2023 also include TDRs.~~ NPAs include nonperforming loans and OREO.

Table of Co n tents

Compared to at December 31, ~~2022,~~2023, Peoples' NPAs ~~decreased~~increased from ~~0.63% to 0.58%~~0.43% of total ~~assets. Loans~~assets to 0.50% at March 31, 2024. Total loans 90+ days past due and accruing ~~decreased~~increased at March 31, 2024 compared to at December 31, ~~2022,~~2023, mostly due to ~~declines~~increases in ~~residential real estate~~nonperforming premium finance loans. Total nonaccrual loans increased at March 31, 2024 compared to at December 31, 2023, mostly due to increases in nonaccrual commercial and industrial loans and ~~leases that were 90+ days past due, partially offset by an increase in premium finance loans that that were 90+ days past due.~~leases. During the first quarter of ~~2023,~~2024, criticized loans increased ~~$7.5~~$21.3 million, while classified loans increased ~~$3.6~~$27.5 million when compared to at December 31, ~~2022.~~2023. The increase in the ~~amount~~amounts of criticized loans compared to at December 31, ~~2022~~2023 was primarily ~~related to~~driven by loan downgrades, ~~of three commercial~~partially offset by loan upgrades and ~~industrial relationships.~~criticized loan pay-offs. The increase in the amount of classified loans compared to ~~the linked quarter~~at December 31, 2023 was primarily driven by ~~the downgrade of one commercial~~loan downgrades, partially offset by loan upgrades and ~~industrial relationship.~~classified loan pay-offs.

Deposits

The following table details Peoples’ deposit balances:


(Dollars in thousands)	(Dollars in thousands)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			(Dollars in thousands)	March 31, 2024		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023
Non-interest-bearing deposits (a)	Non-interest-bearing deposits (a)	$	1,555,064		$	1,589,402		$	1,635,953		$	1,661,865		$	1,666,668
Interest-bearing deposits:	Interest-bearing deposits:
Interest-bearing demand accounts (a)	Interest-bearing demand accounts (a)	1,085,169			1,160,182			1,162,012			1,143,010			1,179,199
Interest-bearing demand accounts (a)
Interest-bearing demand accounts (a)
Savings accounts	Savings accounts	1,024,638			1,068,547			1,077,383			1,080,053			1,065,678
Retail certificates of deposit ("CDs")		622,091			530,236			544,741			584,259			612,936
Retail CDs
Money market deposit accounts	Money market deposit accounts	579,106			617,029			624,708			645,242			656,266
Governmental deposit accounts	Governmental deposit accounts	649,303			625,965			734,734			728,057			734,784
Brokered CDs	Brokered CDs	273,156			125,580			86,089			86,739			87,395
Total interest-bearing deposits	Total interest-bearing deposits	4,233,463			4,127,539			4,229,667			4,267,360			4,336,258
Total deposits	Total deposits	$	5,788,527		$	5,716,941		$	5,865,620		$	5,929,225		$	6,002,926
Demand deposits as a percent of total deposits	Demand deposits as a percent of total deposits	46		%	48		%	48		%	47		%	47		%	Demand deposits as a percent of total deposits	35	%	38	%	39	%	42	%	46	%

(a)The sum of amounts presented is considered total demand deposits.

At March 31, ~~2023,~~2024, period-end total deposits increased ~~$71.6~~$174.3 million, or 1%2%, compared to at December 31, ~~2022.~~2023, primarily driven by increases of (i) $237.0 million in retail CDs, (ii) $98.5 million in governmental deposits, partially offset by decreases of (a) $99.3 million in non-interest-bearing demand deposit accounts, (b) $92.0 million in brokered CDs, (c) $36.6 million in interest-bearing demand deposit accounts, and (d) $17.8 million in savings accounts. The increase ~~when~~in governmental deposit accounts was due to the seasonality of those balances, which are typically higher in the first quarter and third quarter of each year.

At March 31, 2024, period-end total deposits increased $1.5 billion, or 27%, compared to at ~~December~~March 31, ~~2022 was~~2023, primarily driven by ~~an increase of $147.6 million~~deposits acquired in ~~brokered certificates of deposits, which are primarily used as a source of funding.~~the Limestone Merger. Excluding ~~the increase in brokered certificates of deposits,~~Limestone deposit balances, total deposits at March 31, ~~2023 decreased $76.0~~2024 increased $784.8 million, or 1%14%, ~~when~~ compared to at ~~December 31, 2022~~March 31,2023, primarily due to ~~reductions~~increases of ~~(i) $75.0~~$956.9 million in ~~interest-bearing deposit accounts, (ii) $43.9~~retail CDs, $210.3 million in ~~savings accounts, (iii) $37.9~~brokered CDs, and $191.2 million in money market deposit accounts, partially offset by decreases of $270.9 million, $191.8 million, and ~~(iv) $34.3~~$158.4 million in non-interest bearing deposits, savings accounts, and interest-bearing demand deposit accounts, ~~partially offset by an increase of $91.9 million in retail certificates of deposit.~~

Period-end deposit balances decreased $214.4 million, or 4%, compared to at March 31, 2022. Deposits decreased primarily due to reductions in non-interest-bearing deposits, interest-bearing deposit accounts, governmental deposit accounts, and money market deposit accounts of $111.6 million, $94.0 million, $85.5 million and $77.2 million, respectively, partially offset by an increase of $185.8 million in brokered certificates of deposits.respectively.

As part of its funding strategy, Peoples hedges 90-day brokered CDs with interest rate swaps. The interest rate swaps pay a fixed rate of interest while receiving ~~three-month LIBOR,~~a floating rate component of interest tied to term SOFR, which offsets the rate on the brokered CDs. As of March 31, ~~2023,~~2024, Peoples had ~~thirteen~~11 effective interest rate swaps, with an aggregate notional value of ~~$125.0~~$105.0 million, which were designated as cash flow hedges of overnight brokered CDs and are expected to be extended every 90 days through the maturity dates of the interest rate swaps. Peoples continually evaluates the overall balance sheet position given the interest rate environment.

6465

Table of ofCo ~~Contents~~n tents

Borrowed Funds

The following table details Peoples’ short-term borrowings and long-term borrowings:


(Dollars in thousands)	(Dollars in thousands)	March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022		(Dollars in thousands)	March 31, 2024	December 31, 2023	September 30, 2023	June 30, 2023	March 31, 2023
Short-term borrowings:	Short-term borrowings:											Short-term borrowings:
Overnight borrowings		$	390,000	$	400,000	$	(5,000)	$	—	$	—
FHLB 90-day advances		—		—		40,000		40,000		40,000
Current portion of long-term FHLB advances		—		—		—		—		15,000
FHLB Overnight borrowings

Retail repurchase agreements	Retail repurchase agreements	100,670		100,138		98,611		286,442		89,275

Retail repurchase agreements

Retail repurchase agreements
Bank Term Funding Program ("BTFP")

Total short-term borrowings
Total short-term borrowings
Total short-term borrowings	Total short-term borrowings	$	490,670	$	500,138	$	133,611	$	326,442	$	144,275
Long-term borrowings:	Long-term borrowings:
FHLB advances
FHLB advances
FHLB advances	FHLB advances	$	33,941	$	34,158	$	34,662	$	35,348	$	85,564

Vantage non-recourse debt	Vantage non-recourse debt	47,864		53,147		55,781		74,622		102,364
Junior subordinated debt securities		13,824		13,788		13,753		13,717		13,682

Vantage non-recourse debt

Vantage non-recourse debt
Other long-term borrowings
Total long-term borrowings	Total long-term borrowings	$	95,629	$	101,093	$	104,196	$	123,687	$	201,610
Total borrowed funds	Total borrowed funds	$	586,299	$	601,231	$	237,807	$	450,129	$	345,885

~~Borrowed~~Total borrowed funds, ~~in total,~~ which include overnight borrowings, are mainly a function of loan growth and changes in total deposit balances. Other long-term borrowings include trust preferred securities held for investments and floating rate junior subordinated deferrable interest debentures. Total borrowed funds at March 31, 2024 decreased compared to at December 31, ~~2022,~~2023, primarily due to lower overnight borrowings. Total ~~short-term~~long-term borrowings at March 31, ~~2023~~2024 increased when compared to at March 31, ~~2022~~2023 due to ~~outstanding~~an increase in FHLB ~~overnight~~advances and other long-term borrowings ~~of $390.0 million at March 31, 2023, while there were no FHLB overnight~~assumed in the Limestone Merger as well as additional borrowings ~~at March 31, 2022.~~under the BTFP.

Capital/Stockholders’ Equity

At March 31, ~~2023,~~2024, 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 March 31, ~~2023,~~2024, Peoples had a capital conservation buffer of ~~5.35%~~5.60%.

The following table details Peoples' risk-based capital levels and corresponding ratios:


(Dollars in thousands)	(Dollars in thousands)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			(Dollars in thousands)	March 31, 2024		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023
Capital Amounts:	Capital Amounts:																Capital Amounts:
Common Equity Tier 1	Common Equity Tier 1	$	624,292		$	604,566		$	584,880		$	564,708		$	547,215
Tier 1	Tier 1	638,116			618,354			598,633			578,425			560,897
Total (Tier 1 and Tier 2)	Total (Tier 1 and Tier 2)	682,477			662,421			643,189			622,516			607,493
Net risk-weighted assets	Net risk-weighted assets	$	5,110.318		$	5,071,240		$	4,955,627		$	4,857,818		$	4,752,428
Capital Ratios:	Capital Ratios:
Common Equity Tier 1	Common Equity Tier 1	12.22		%	11.92		%	11.80		%	11.62		%	11.51		%
Common Equity Tier 1
Common Equity Tier 1																		11.69	%	11.75	%	11.57	%	11.36	%	12.22	%
Tier 1	Tier 1	12.49		%	12.19		%	12.08		%	11.91		%	11.80		%	Tier 1	12.50	%	12.58	%	12.31	%	12.10	%	12.49	%
Total (Tier 1 and Tier 2)	Total (Tier 1 and Tier 2)	13.35		%	13.06		%	12.98		%	12.81		%	12.78		%	Total (Tier 1 and Tier 2)	13.40	%	13.38	%	13.14	%	12.92	%	13.35	%
Tier 1 leverage ratio	Tier 1 leverage ratio	9.02		%	8.92		%	8.64		%	8.38		%	8.29		%	Tier 1 leverage ratio	9.43	%	9.57	%	9.34	%	9.64	%	9.02	%

Peoples' ~~regulatory~~risk-risk based capital ~~and related ratio levels improved during the first quarter of 2023~~ratios at March 31, 2024 decreased slightly when compared to at December 31, ~~2022 and~~2023, due to lower net income, partially offset by an increase in expenses from the Limestone Merger. Compared to at March 31, ~~2022~~2023, the tier 1 risk-based capital and the total risk-based capital ratios improved due to higher net income, ~~during the first quarter of 2023,~~ partially offset by the impact of the Limestone Merger and dividends paid. The ~~ratios were negatively impacted~~common equity tier 1 risk-based capital ratio at March 31, 2022 by the cash acquisition of Vantage, in connection with which Peoples recorded goodwill and intangible assets. The impact of the Vantage acquisition on Peoples' regularity capital and related ratios levels2024 decreased compared to at March 31, ~~2022, was partially offset by net income exceeding dividends declared during~~2023 due to the ~~period ended March 31, 2022.~~common shares issued in the Limestone Merger.

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,

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financial condition and trends to peers, especially those without a similar level of intangible assets to that of Peoples. Further,

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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.

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)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			(Dollars in thousands)	March 31, 2024		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023
Tangible equity:	Tangible equity:																Tangible equity:
Total stockholders' equity	Total stockholders' equity	$	819,543		$	785,328		$	760,511		$	786,824		$	808,340
Less: goodwill and other intangible assets	Less: goodwill and other intangible assets	324,562			326,329			328,428			328,132			341,865
Tangible equity	Tangible equity	$	494,981		$	458,999		$	432,083		$	458,692		$	466,475

Tangible assets:	Tangible assets:

Tangible assets:

Tangible assets:
Total assets
Total assets
Total assets	Total assets	$	7,311,520		$	7,207,304		$	7,005,854		$	7,278,292		$	7,239,261
Less: goodwill and other intangible assets	Less: goodwill and other intangible assets	324,562			326,329			328,428			328,132			341,865
Tangible assets	Tangible assets	$	6,986,958		$	6,880,975		$	6,677,426		$	6,950,160		$	6,897,396

Tangible book value per common share:	Tangible book value per common share:
Tangible book value per common share:
Tangible book value per common share:
Tangible equity
Tangible equity
Tangible equity	Tangible equity	$	494,981		$	458,999		$	432,083		$	458,692		$	466,475
Common shares outstanding	Common shares outstanding	28,488,158			28,287,837			28,278,078			28,290,115			28,453,175

Tangible book value per common share	Tangible book value per common share	$	17.37		$	16.23		$	15.28		$	16.21		$	16.39
Tangible book value per common share
Tangible book value per common share

Tangible equity to tangible assets ratio:	Tangible equity to tangible assets ratio:
Tangible equity to tangible assets ratio:
Tangible equity to tangible assets ratio:
Tangible equity
Tangible equity
Tangible equity	Tangible equity	$	494,981		$	458,999		$	432,083		$	458,692		$	466,475
Tangible assets	Tangible assets	$	6,986,958		$	6,880,975		$	6,677,426		$	6,950,160		$	6,897,396

Tangible equity to tangible assets
Tangible equity to tangible assets
Tangible equity to tangible assets	Tangible equity to tangible assets	7.08		%	6.67		%	6.47		%	6.60		%	6.76		%	7.37	%	7.33	%	6.85	%	7.00	%	7.08	%

Tangible book value per common share increased to ~~$17.37~~$18.39 at March 31, ~~2023,~~2024 compared to ~~$16.23~~$18.16 at December 31, ~~2022.~~2023. The change in tangible book value per common share was due to tangible equity increasing during the first quarter of ~~2023 as a result of a decrease~~2024 primarily due to net income over the last three months, which was partially offset by an increase in other comprehensive losses recognized on available-for-sale ~~investment securities, which the decrease was driven by sales during the quarter.~~securities. Tangible book value per common share at March 31, 2024 increased compared to at March 31, ~~2022~~2023 primarily due to net income over the last twelve months, which was partially offset by an increase in accumulated other comprehensive ~~loss.~~loss as well as the impact of the common shares issued in the Limestone Merger.

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 financial 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~~impact 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~~IRR, including the review of assumptions used ~~by the ALCO to assess IRR remain largely unchanged from those disclosed~~ in ~~Peoples' 2022 Form 10-K.~~modeling IRR.

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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 Decrease in Economic Value of Equity								Increase (Decrease) in Interest Rate	Estimated Increase (Decrease) in Net Interest Income										Estimated (Decrease) Increase in Economic Value of Equity
(in Basis Points)	(in Basis Points)	March 31, 2023				December 31, 2022				March 31, 2023				December 31, 2022				(in Basis Points)	March 31, 2024					December 31, 2023						March 31, 2024					December 31, 2023
300	300	$	10,891	3.7	%	$	13,000	4.4	%	$	(110,529)	(7.5)	%	$	(82,959)	(5.4)	%	300	$	14,508	4.3	4.3	%		$	15,063	4.6	4.6	%		$	(164,796)	(9.5)	(9.5)		%	$	(157,625)	(9.4)	(9.4)	%
200	200	7,534		2.6	%	8,716		3.0	%	(72,312)		(4.9)	%	(55,809)		(3.6)	%	200	9,732		2.9	2.9	%		10,282		3.1	3.1	%		(112,780)		(6.5)	(6.5)		%	(107,620)		(6.4)	(6.4)	%
100	100	4,161		1.4	%	4,380		1.5	%	(35,824)		(2.4)	%	(28,157)		(1.8)	%	100	4,932		1.5	1.5	%		5,468		1.7	1.7	%		(56,684)		(3.3)	(3.3)		%	(53,585)		(3.2)	(3.2)	%
(100)	(100)	(8,608)		(2.9)	%	(11,404)		(3.9)	%	6,268		0.4	%	(21,124)		(1.4)	%	(100)	(7,892)		(2.3)	(2.3)	%		(7,427)		(2.3)	(2.3)	%		34,400		2.0	2.0		%	31,722		1.9	1.9	%
(200)	(200)	(23,095)		(7.8)	%	(27,659)		(9.4)	%	(35,500)		(2.4)	%	(80,484)		(5.2)	%	(200)	(16,888)		(5.0)	(5.0)	%		(15,446)		(4.7)	(4.7)	%		47,397		2.7	2.7		%	46,537		2.8	2.8	%
(300)	(300)	(38,575)		(13.1)	%	(43,728)		(14.8)	%	(105,742)		(7.1)	%	(152,152)		(9.8)	%	(300)	(20,705)		(6.1)	(6.1)	%		(16,822)		(5.1)	(5.1)	%		47,323		2.7	2.7		%	47,198		2.8	2.8	%

This table uses a standard, parallel shock analysis for assessing the IRR to net interest income and the economic value of equity. A parallel shock assumes all points on the yield curve (one year, two year, three year, etc.) are directionally changed by the same degree. Management regularly assesses the impact of both increasing and decreasing interest rates. The table above shows the impact of upward and downward parallel shocks of 100, 200 and 300 basis points.

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.

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 impact that might occur as a result of the Federal Reserve Board increasing short-term interest rates in the future could be offset by an inverse movement in long-term interest 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 interest 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 March 31, ~~2023,~~2024, consideration of the bear steepener and bear flattener scenarios provide insights which were not captured by parallel shifts.

The bear steepener scenario highlights the risk to net interest income and economic value of equity when short-term interest rates remain constant while long-term interest rates rise. In such a scenario, Peoples' deposit and borrowing costs, which are generally correlated with short-term interest rates, remain constant, while asset yields, which are correlated with long-term interest rates, rise. At March 31, ~~2023,~~2024, the bear steepener scenario produced an increase in net interest income of ~~0.1%~~0.7% and a decline in the economic value of equity of ~~1.4%~~0.7%.

The bear flattener scenario highlights the risk to net interest income and the economic value of equity when short-term rates rise while long-term rates remain constant. In such a scenario, Peoples' variable rate asset yields along with deposit and short-term borrowing costs, which are correlated with short-term rates, increase, while long-term asset yields and long-term borrowing costs, which are more correlated with long-term rates, remain constant. Increased deposit and funding costs would be more than offset by increased variable rate asset yields; resulting in an increased amount of net interest income and a higher net interest margin. At March 31, ~~2023,~~2024, the bear flattener scenario produced ~~no change~~an increase of 3.0% to net interest income and a decline in the economic value of equity of ~~0.8%~~1.0%.

As of March 31, 2023, the yield curve was inverted. A notable non-parallel shift scenario would be a continued increase in short-term interest rates relative to long-term interest rates in which the yield curve would further invert. As of March 31, 2023, this inversion scenario would have resulted in no change to net interest income and a decrease in the economic value of equity of (0.8)%. Peoples was within its policy limitations for this alternative scenario as of March 31, 2023, which set the maximum allowable downside exposure as 5.0% of net interest income and 10.0% of the 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 March 31, ~~2023,~~2024, Peoples had entered into ~~thirteen~~11 interest rate swap contracts with an aggregate notional value of ~~$125.0~~$105.0 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 March 31, ~~2023,~~2024, Peoples' Unaudited Consolidated Balance Sheet was positioned to benefit from rising interest rates in terms of the potential impact on net interest income. The table above illustrates this point as changes to net interest income

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increase in the rising interest 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, 2022 was largely attributable to increased effective duration within the investment securities portfolio.

Liquidity

In addition to IRR management, another major objective of the ALCO is to maintain a sufficient level of liquidity. ~~The~~In light of the bank failures in 2023, Peoples revisited the model assumptions, and determined the methods used by the ALCO to monitor

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and evaluate the adequacy of Peoples Bank's liquidity position remain appropriate and are largely unchanged from those disclosed in Peoples' ~~2022~~2023 Form 10-K.

At March 31, ~~2023,~~2024, Peoples Bank had liquid assets of ~~$318.0~~$565.4 million, which represented ~~3.9%~~5.4% of total assets and unfunded loan commitments. Peoples also had an additional ~~$231.4~~$158.7 million of unpledged investment securities not included in the measurement of liquid assets.

Management believes the current mix of short-term liquidity sources, loan and security portfolio cash flows, and availability of other funding sources will allow Peoples to meet anticipated cash obligations, as well as special needs and off-balance sheet commitments.

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)	(Dollars in thousands)	March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022		(Dollars in thousands)	March 31, 2024	December 31, 2023	September 30, 2023	June 30, 2023	March 31, 2023
Home equity lines of credit	Home equity lines of credit	$	201,692	$	197,995	$	194,685	$	188,803	$	184,616
Unadvanced construction loans	Unadvanced construction loans	241,225		270,229		320,825		237,129		203,719
Other loan commitments	Other loan commitments	717,149		730,015		653,384		566,624		616,696
Loan commitments	Loan commitments	$	1,160,066	$	1,198,239	$	1,168,894	$	992,556	$	1,005,031
Standby letters of credit	Standby letters of credit	$	15,046	$	15,451	$	15,096	$	15,977	$	12,729

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 Form 10-Q, and is incorporated herein by reference.

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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 March 31, ~~2023.~~2024. 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;

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(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’ disclosure controls and procedures were effective as of the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control Over Financial Reporting

There were no 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 March 31, ~~2023,~~2024, that have materially affected, or are reasonably likely to materially affect, Peoples’ internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Peoples or one of its subsidiaries from time to time is engaged in various litigation matters including the defense of claims of improper loan or deposit practices or lending violations. In addition, 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, Peoples' management believes that damages, if any, and other amounts related to pending legal 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~~There have been no other material changes from those risk factors previously disclosed under “ITEM 1A. RISK FACTORS” of Part I of Peoples’ ~~2022~~2023 Form 10-K. These 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. ~~In the first quarter of 2023, we identified the following additional risk factor:~~

~~General Risks~~

•~~The impact of larger or similar-sized financial institutions encountering problems may adversely affect Peoples' business, earnings and financial condition.~~

Peoples is exposed to the risk that when a peer financial institution experiences financial difficulties, there could be an adverse impact on the regional banking industry and the business environment in which Peoples operates. The recent bank failures of Silicon Valley Bank in California, Signature Bank in New York, and First Republic Bank in California during the first and second quarters of 2023 have caused a degree of panic and uncertainty in the investor community and among bank customers generally. While Peoples does not believe that the circumstances of these three banks' failures are indicators of broader issues with the banking system, the failures may reduce customer confidence, affect sources of funding and liquidity, increase regulatory requirements and costs, adversely affect financial markets and/or have a negative reputational ramification for the banking industry, including Peoples. Peoples will continue to monitor the ongoing events concerning these three banks as well as any future potential bank failures and volatility within the banking industry generally, together with any responsive measures taken by the banking regulators to mitigate or manage potential turmoil in the banking industry.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)Not applicable.

(b)Not applicable.

(c)The following table details repurchases by Peoples and purchases by “affiliated purchasers” as defined in Rule 10b-18(a)(3) under the Exchange Act of Peoples’ common shares during the three months ended March 31, ~~2023:~~2024:

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 (3)

Maximum
Number (or Approximate Dollar Value) of Common Shares that May Yet Be Purchased Under the Plans or Programs (3)
January 1 – 31, 2023 2,077 (2) $ 28.38 (2) — $ 22,606,290
February 1 – 28, 2023 24,350 (3) $ 30.27 (3) — $ 22,606,290
March 1 – 31, 2023 2,579 (2)(3) $ 30.43 (2)(3) — $ 22,606,290
Total 29,006 $ 30.15 — $ 22,606,290


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)
January 1 – 31, 2024	63,322	(1)(2)	$	30.28	(2)(3)	61,367	$	17,755,053
February 1 – 29, 2024	64,802	(1)(3)	$	28.67	(2)	39,538	$	16,616,711
March 1 – 31, 2024	1,514	(2)(3)	$	27.97		—	$	16,616,711
Total	129,638		$	29.45		100,905	$	16,616,711

(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 no61,367 and 39,538 common shares repurchased under the share repurchase program during ~~the three months ended March 31, 2023.~~January and February 2024, respectively.

(2)Information reported includes ~~2,077~~1,955 common shares and ~~952~~1,320 common shares purchased in open market transactions during January ~~2023~~2024 and March ~~2023,~~2024, respectively, 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.

(3)Information reported includes ~~24,350~~25,264 common shares and ~~1,627~~194 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 (now known as the Peoples Bancorp Inc. Fourth Amended and Restated 2006 Equity Plan) and vested during February ~~2023~~ and March ~~2023,~~2024, respectively.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

~~None.~~

~~ITEM 4. MINE SAFETY DISCLOSURES~~

~~Not applicable.~~

~~ITEM 5. OTHER INFORMATION~~

None.

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ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(a)None.

(b)Not applicable.

(c) The following details the activity in respect of the adoption, modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” (as each term is defined in Item 408(a) of Regulation S-K) by any director or any officer (as defined in Rule 16a-1(f) under the Exchange Act) of Peoples during the three months ending March 31, 2024:

Trading Arrangement

Action

Date

Rule 10b5-1*

Total Common Shares to be Sold

Expiration Date

David F. Dierker (Director)

Adopt

February 2, 2024

11,000

December 26, 2024

*Intended to satisfy the affirmative defense of Rule 10b5-1(c)

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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.+

Included as Annex A to the preliminary joint proxy statement/prospectus which forms a part of the Registration Statement of Peoples Bancorp Inc. ("Peoples") on Form S-4/A ~~filed~~accepted on May 28, 2021 with a filing date of June 1, 2021 (Registration No. 333-256040)

2.2

Agreement and Plan of Merger, dated as of October 24, 2022, by and between Peoples Bancorp Inc. and Limestone Bancorp, Inc.+

Included as Annex A to the preliminary joint proxy statement/prospectus which forms a part of the Registration Statement of Peoples on Form S-4/A filed on January 6, 2023 (Registration No. 333-268728)

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

+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.

7172

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Exhibit
Number

Description

Exhibit Location

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)

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

10.1

~~Summary of~~Consulting Agreement dated March 20, 2024, among Charles W. Sulerzyski, Peoples Bancorp Inc. ~~Annual Incentive Plan for Executive Officers~~ and ~~other employees of~~ Peoples ~~Bancorp Inc. [Effective beginning with the fiscal year beginning January 1, 2023~~Bank++

Incorporated herein by reference to ~~Exhibit 10.4 to~~ Peoples' ~~Annual~~Current Report on Form ~~10-K for the fiscal year ended December 31, 2022~~8-K dated and filed on March 21, 2024 (File No. 0-16772) ~~("Peoples' 2022 Form 10-K")~~

~~10.2~~

~~Summary of Perquisites for Executive Officers of Peoples Bancorp Inc.~~

~~Incorporated herein by reference to Exhibit 10.5 to Peoples' 2022 Form 10-K~~

~~10.3~~

~~Summary of Base Salaries for Executive Officers of Peoples Bancorp Inc.~~

~~Filed herewith~~

~~10.4~~

~~Summary of Compensation for Directors of Peoples Bancorp Inc.~~

~~Incorporated herein by reference to Exhibit 10.7 to Peoples' 2022 Form 10-K~~

~~10.5~~

~~First Amendment to the Peoples Bancorp Inc. Third Amended and Restated 2006 Equity Plan (adopted and approved by the Board of Directors of Peoples Bancorp Inc. on January 26, 2023)~~

~~Incorporated herein by reference to Exhibit 10.8(b) to Peoples' 2022 Form 10-K~~

31.1

Rule 13a-14(a)/15d-14(a) Certifications [President and Chief Executive Officer]

Filed herewith

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

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