PEOPLES BANCORP INC. ANNOUNCES SECOND QUARTER 2024 RESULTS

Three Months Ended

Six Months Ended

June 30

March 31

June 30

June 30

2024

2024

2023

2024

2023

(Dollars in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Non-interest expense:

Salaries and employee benefit costs

$           36,564

$           38,893

$            38,025

$         75,457

$         70,053

Data processing and software expense

6,743

5,769

4,728

12,512

9,290

Net occupancy and equipment expense

6,142

6,283

5,380

12,425

10,335

Professional fees

2,935

2,967

7,438

5,902

10,319

Amortization of other intangible assets

2,787

2,788

2,800

5,575

4,671

Electronic banking expense

1,941

1,781

1,832

3,722

3,323

Marketing expense

681

1,056

1,357

1,737

2,287

FDIC insurance premiums

1,251

1,186

1,464

2,437

2,265

Franchise tax expense

760

881

872

1,641

1,906

Communication expense

736

799

724

1,535

1,337

Other loan expenses

1,036

1,076

538

2,112

1,277

Other non-interest expense

7,182

4,986

5,465

12,168

10,039

  Total non-interest expense

68,758

68,465

70,623

137,223

127,102

Acquisition-related non-interest expense:

Salaries and employee benefit costs

—

16

5,125

16

5,146

Data processing and software expense

—

(18)

1

(18)

1

Net occupancy and equipment expense

—

—

20

—

29

Professional fees

—

(38)

4,812

(38)

5,103

Electronic banking expense

—

(100)

115

(100)

115

Marketing expense

—

10

13

10

23

Other loan expenses

—

—

1

—

1

Other non-interest expense

—

46

622

46

842

  Total acquisition-related non-interest expense

—

(84)

10,709

(84)

11,260

Non-interest expense excluding acquisition-related expense:

Salaries and employee benefit costs

36,564

38,877

32,900

75,441

64,907

Data processing and software expense

6,743

5,787

4,727

12,530

9,289

Net occupancy and equipment expense

6,142

6,283

5,360

12,425

10,306

Professional fees

2,935

3,005

2,626

5,940

5,216

Amortization of other intangible assets

2,787

2,788

2,800

5,575

4,671

Electronic banking expense

1,941

1,881

1,717

3,822

3,208

Marketing expense

681

1,046

1,344

1,727

2,264

FDIC insurance premiums

1,251

1,186

1,464

2,437

2,265

Franchise tax expense

760

881

872

1,641

1,906

Communication expense

736

799

724

1,535

1,337

Other loan expenses

1,036

1,076

537

2,112

1,276

Other non-interest expense

7,182

4,940

4,843

12,122

9,197

Total non-interest expense excluding acquisition-related expense

$           68,758

$           68,549

$            59,914

$       137,307

$       115,842

(1)

the effects of 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;

(2)

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

(3)

the success, impact, and timing of the implementation of Peoples’ business strategies and Peoples’ ability to manage strategic initiatives, including the interest rate policies of the Federal Reserve Board, the completion and successful integration of acquisitions, and the expansion of commercial and consumer lending activities;

(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;

(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, the Federal Reserve Board and the Consumer Financial Protection Bureau, which may subject Peoples, its subsidiaries, or acquired companies to a variety of new and more stringent legal and regulatory requirements;

(6)

the effects of easing restrictions on participants in the financial services industry;

(7)

current and future local, regional, national and international economic conditions (including the impact of persistent inflation, supply chain issues or labor shortages, 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 federal 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;

(8)

Peoples may issue equity securities in connection with future acquisitions, which could cause ownership and economic dilution to Peoples’ current shareholders;

(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;

(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;

(11)

future credit quality and performance, including expectations regarding future credit losses and the allowance for credit losses;

(12)

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

(13)

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

(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;

(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;

(16)

Peoples’ ability to receive dividends from Peoples’ subsidiaries;

(17)

Peoples’ ability to maintain required capital levels and adequate sources of funding and liquidity;

(18)

the impact of larger or similar-sized financial institutions encountering problems, such as the failure in 2024 of Republic First Bank, and closures in 2023 of Silicon Valley Bank in California, Signature Bank in New York and First Republic Bank in California, which may adversely affect the banking industry and/or Peoples’ business generation and retention, funding and liquidity, including Peoples’ continued ability to grow deposits or maintain adequate deposit levels, and may further result in potential increased regulatory requirements, increased reputational risk and potential impacts to macroeconomic conditions;

(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;

(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;

(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;

(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;

(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;

(25)

the impact on Peoples’ businesses, personnel, facilities or systems of losses related to acts of fraud, theft, misappropriation or violence;

(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 (including Russia’s war in Ukraine and the ongoing conflicts in the Middle East);

(27)

the potential deterioration of the U.S. economy due to financial, political or other shocks;

(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;

(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;

(30)

risks and uncertainties associated with Peoples’ entry into new geographic markets and risks resulting from Peoples’ inexperience in these new geographic markets;

(31)

Peoples’ ability to integrate the Limestone Merger, which may be unsuccessful, or may be more difficult, time-consuming or costly than expected;

(32)

the risk that expected revenue synergies and cost savings from the Limestone Merger may not be fully realized or realized within the expected time frame;

(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; 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’ Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Peoples encourages readers of this news release to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance. Peoples undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this news release 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.

PER COMMON SHARE DATA AND SELECTED RATIOS (Unaudited)

At or For the Three Months Ended

At or For the Six Months Ended

June 30,

March 31,

June 30,

June 30,

2024

2024

2023

2024

2023

PER COMMON SHARE:

Earnings per common share:

   Basic

$       0.83

$       0.85

$       0.64

$       1.67

$        1.57

   Diluted

0.82

0.84

0.64

1.66

1.56

Cash dividends declared per common share

0.40

0.39

0.39

0.79

0.77

Book value per common share (a)

30.36

29.93

28.24

30.36

28.24

Tangible book value per common share (a)(b)

18.91

18.39

16.56

18.91

16.56

Closing price of common shares at end of period

$     30.00

$     29.61

$     26.55

$     30.00

$      26.55

SELECTED RATIOS:

Return on average stockholders’ equity (c)

10.99 %

11.30 %

8.89 %

11.15 %

10.96 %

Return on average tangible equity (c)(d)

19.21 %

19.91 %

16.56 %

19.55 %

19.90 %

Return on average assets (c)

1.27 %

1.32 %

1.01 %

1.29 %

1.23 %

Return on average assets adjusted for non-core items (c)(e)

1.30 %

1.33 %

1.47 %

1.31 %

1.53 %

Efficiency ratio (f)(i)

59.19 %

58.06 %

62.75 %

58.62 %

60.44 %

Efficiency ratio adjusted for non-core items (g)(i)

59.19 %

58.14 %

53.35 %

58.66 %

55.15 %

Pre-provision net revenue to total average assets (c)(h)

1.85 %

1.97 %

1.78 %

1.91 %

1.93 %

Net interest margin (c)(i)

4.18 %

4.26 %

4.54 %

4.22 %

4.54 %

Dividend payout ratio (j)

48.94 %

46.46 %

63.62 %

47.69 %

50.67 %

(a)

Data presented as of the end of the period indicated.

(b)

Tangible book value per common share represents a non-US GAAP financial measure since it excludes the balance sheet impact of goodwill and other intangible assets acquired through acquisitions on stockholders’ equity.  Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of “Non-US GAAP Financial Measures (Unaudited).”

(c)

Ratios are presented on an annualized basis.

(d)

Return on average tangible equity represents a non-US GAAP financial measure since it excludes the after-tax impact of amortization of other intangible assets from net income and it excludes the balance sheet impact of average goodwill and other intangible assets acquired through acquisitions on average stockholders’ equity. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of “Non-US GAAP Financial Measures (Unaudited).”

(e)

Return on average assets adjusted for non-core items represents a non-US GAAP financial measure since it excludes the after-tax impact of all gains and losses, acquisition-related expenses, and COVID-19 employee retention credit. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of “Non-US GAAP Financial Measures (Unaudited).”

(f)

The efficiency ratio is defined as total non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income (excluding all gains and losses). This ratio represents a non-US GAAP financial measure since it excludes amortization of other intangible assets, and all gains and losses included in earnings, and uses fully tax-equivalent net interest income. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of “Non-US GAAP Financial Measures (Unaudited).”

(g)

The efficiency ratio adjusted for non-core items is defined as core non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income (excluding all gains and losses). This ratio represents a non-US GAAP financial measure since it excludes the impact of acquisition-related expenses, COVID-19 employee retention credit, and all gains and losses included in earnings, and uses fully tax-equivalent net interest income. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of “Non-US GAAP Financial Measures (Unaudited).”

(h)

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

(i)

Interest income and yields are presented on a fully tax-equivalent basis, using a 21% statutory federal corporate income tax rate.

(j)

This ratio is calculated based on dividends declared during the period divided by net income for the period.

CONSOLIDATED STATEMENTS OF INCOME 

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

2024

2024

2023

2024

2023

(Dollars in thousands, except per share data)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Total interest income

$            130,770

$             127,593

$            106,417

$        258,363

$         190,566

Total interest expense

44,157

40,953

21,564

85,110

32,835

Net interest income

86,613

86,640

84,853

173,253

157,731

Provision for credit losses

5,683

6,102

7,983

11,785

9,836

Net interest income after provision for credit losses

80,930

80,538

76,870

161,468

147,895

Non-interest income:

Electronic banking income

6,470

6,046

6,466

12,516

11,909

Trust and investment income

4,999

4,599

4,414

9,598

8,498

Deposit account service charges

4,339

4,223

4,153

8,562

7,676

Insurance income

4,109

6,498

4,004

10,607

9,429

Lease income

1,116

1,236

1,719

2,352

2,796

Bank owned life insurance income

1,037

1,500

842

2,537

1,549

Mortgage banking income

243

321

189

564

503

Net loss on investment securities

(353)

(1)

(166)

(354)

(2,101)

Net loss on asset disposals and other transactions

(428)

(341)

(1,665)

(769)

(1,911)

Other non-interest income

2,172

1,698

1,059

3,870

1,727

  Total non-interest income

23,704

25,779

21,015

49,483

40,075

Non-interest expense:

Salaries and employee benefit costs

36,564

38,893

38,025

75,457

70,053

Data processing and software expense

6,743

5,769

4,728

12,512

9,290

Net occupancy and equipment expense

6,142

6,283

5,380

12,425

10,335

Professional fees

2,935

2,967

7,438

5,902

10,319

Amortization of other intangible assets

2,787

2,788

2,800

5,575

4,671

Electronic banking expense

1,941

1,781

1,832

3,722

3,323

FDIC insurance expense

1,251

1,186

1,464

2,437

2,265

Other loan expenses

1,036

1,076

538

2,112

1,277

Franchise tax expense

760

881

872

1,641

1,906

Communication expense

736

799

724

1,535

1,337

Marketing expense

681

1,056

1,357

1,737

2,287

Other non-interest expense

7,182

4,986

5,465

12,168

10,039

  Total non-interest expense

68,758

68,465

70,623

137,223

127,102

  Income before income taxes

35,876

37,852

27,262

73,728

60,868

Income tax expense

6,869

8,268

6,166

15,137

13,212

    Net income

$              29,007

$               29,584

$              21,096

$          58,591

$           47,656

CONSOLIDATED STATEMENTS OF INCOME (Cont.)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

2024

2024

2023

2024

2023

(Dollars in thousands, except per share data)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

PER COMMON SHARE DATA:

Net income available to common shareholders

$              29,007

$               29,584

$              21,096

$          58,591

$           47,656

Less: Dividends paid on unvested common shares

218

143

144

361

246

Less: Undistributed loss allocated to unvested common shares

55

64

13

119

45

Net earnings allocated to common shareholders

$              28,734

$               29,377

$              20,939

$          58,111

$           47,365

Weighted-average common shares outstanding

34,764,489

34,740,349

32,526,962

34,752,419

30,222,165

Effect of potentially dilutive common shares

353,159

311,461

123,014

319,131

92,339

Total weighted-average diluted common shares outstanding

35,117,648

35,051,810

32,649,976

35,071,550

30,314,504

Earnings per common share – basic

$                  0.83

$                   0.85

$                  0.64

$              1.67

$               1.57

Earnings per common share – diluted

$                  0.82

$                   0.84

$                  0.64

$              1.66

$               1.56

Cash dividends declared per common share

$                  0.40

$                   0.39

$                  0.39

$              0.79

$               0.77

Weighted-average common shares outstanding – basic

34,764,489

34,740,349

32,526,962

34,752,419

30,222,165

Weighted-average common shares outstanding – diluted

35,117,648

35,051,810

32,649,976

35,071,550

30,314,504

Common shares outstanding at the end of period

35,498,977

35,486,234

35,374,916

35,498,977

35,374,916

CONSOLIDATED BALANCE SHEETS

June 30,

December 31,

2024

2023

(Dollars in thousands)

(Unaudited)

Assets

Cash and cash equivalents:

  Cash and due from banks

$            119,981

$            111,680

  Interest-bearing deposits in other banks

115,890

315,042

    Total cash and cash equivalents

235,871

426,722

Available-for-sale investment securities, at fair value (amortized cost of

 $1,266,060 at June 30, 2024 and $1,184,288 at December 31, 2023) (a)

1,119,139

1,048,322

Held-to-maturity investment securities, at amortized cost (fair value of

  $622,593 at June 30, 2024 and $612,022 at December 31, 2023) (a)

701,984

683,657

Other investment securities, at cost

62,742

63,421

    Total investment securities (a)

1,883,865

1,795,400

Loans and leases, net of deferred fees and costs (b)

6,325,371

6,159,196

Allowance for credit losses

(66,247)

(62,011)

    Net loans and leases

6,259,124

6,097,185

Loans held for sale

3,832

1,866

Bank premises and equipment, net of accumulated depreciation

106,589

103,856

Bank owned life insurance

142,605

140,554

Goodwill

362,169

362,169

Other intangible assets

44,248

50,003

Other assets

188,158

179,627

    Total assets

$         9,226,461

$         9,157,382

Liabilities

Deposits:

Non-interest-bearing

$         1,472,697

$         1,567,649

Interest-bearing

5,825,077

5,584,648

    Total deposits

7,297,774

7,152,297

Short-term borrowings

482,733

601,121

Long-term borrowings

234,257

216,241

Accrued expenses and other liabilities

133,864

134,189

    Total liabilities

$         8,148,628

$         8,103,848

Stockholders’ Equity

Preferred shares, no par value, 50,000 shares authorized, no shares issued at June 30, 2024 or
at December 31, 2023

—

—

Common shares, no par value, 50,000,000 shares authorized, 36,760,516 shares issued at
June 30, 2024 and 36,736,041 shares issued at December 31, 2023, including shares in treasury

863,975

865,227

Retained earnings

357,886

327,237

Accumulated other comprehensive loss, net of deferred income taxes

(110,193)

(101,590)

Treasury stock, at cost, 1,347,476 common shares at June 30, 2024 and 1,511,348 common
shares at December 31, 2023

(33,835)

(37,340)

    Total stockholders’ equity

1,077,833

1,053,534

    Total liabilities and stockholders’ equity

$         9,226,461

$         9,157,382

(a)

Available-for-sale investment securities and held-to-maturity investment securities are presented net of allowance for credit losses of $0 and $238, respectively, as of June 30, 2024 and $0 and $238, respectively, as of December 31, 2023.

(b)

Also referred to throughout this document as “total loans” and “loans held for investment.”

SELECTED FINANCIAL INFORMATION (Unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

(Dollars in thousands)

2024

2024

2023

2023

2023

Loan Portfolio

Construction

$         340,601

$           314,687

$         364,019

$         374,016

$         418,741

Commercial real estate, other

2,195,979

2,243,780

2,196,957

2,189,984

2,071,514

Commercial and industrial

1,258,063

1,214,615

1,184,986

1,128,809

1,160,310

Premium finance

293,349

238,962

203,177

189,251

162,357

Leases

430,651

422,694

414,060

402,635

377,791

Residential real estate

789,344

781,888

791,095

791,965

791,442

Home equity lines of credit

227,608

221,079

208,675

203,940

199,221

Consumer, indirect

675,054

650,228

666,472

668,371

654,371

Consumer, direct

113,655

113,588

128,769

134,562

138,019

Deposit account overdrafts

1,067

1,306

986

857

830

    Total loans and leases

$      6,325,371

$        6,202,827

$      6,159,196

$      6,084,390

$      5,974,596

Total acquired loans and leases (a)

$      1,686,784

$        1,757,169

$      1,825,129

$      1,925,554

$      2,032,505

    Total originated loans and leases

$      4,638,587

$        4,445,658

$      4,334,067

$      4,158,836

$      3,942,091

Deposit Balances

Non-interest-bearing deposits (b)

$      1,472,697

$        1,468,363

$      1,567,649

$      1,569,095

$      1,682,634

Interest-bearing deposits:

  Interest-bearing demand accounts (b)

1,083,512

1,107,712

1,144,357

1,181,079

1,225,646

  Retail certificates of deposit

1,812,874

1,680,413

1,443,417

1,198,733

950,783

  Money market deposit accounts

869,159

859,961

775,488

730,902

718,633

  Governmental deposit accounts

766,337

825,170

726,713

761,625

705,596

  Savings accounts

880,542

901,493

919,244

987,170

1,116,622

  Brokered deposits

412,653

483,444

575,429

608,914

559,955

    Total interest-bearing deposits

$      5,825,077

$        5,858,193

$      5,584,648

$      5,468,423

$      5,277,235

    Total deposits

$      7,297,774

$        7,326,556

$      7,152,297

$      7,037,518

$      6,959,869

Total demand deposits (b)

$      2,556,209

$        2,576,075

$      2,712,006

$      2,750,174

$      2,908,280

Asset Quality

Nonperforming assets (NPAs):

  Loans 90+ days past due and accruing

$            7,592

$               7,662

$             6,716

$             9,117

$             5,924

  Nonaccrual loans

33,669

31,361

25,477

26,187

28,796

    Total nonperforming loans (NPLs) (f)

41,261

39,023

32,193

35,304

34,720

  Other real estate owned (OREO)

7,409

7,238

7,174

7,174

7,166

Total NPAs

$          48,670

$             46,261

$           39,367

$           42,478

$           41,886

Criticized loans (c)

$         239,943

$           256,565

$         235,239

$         213,156

$         219,885

Classified loans (d)

120,180

147,518

120,027

124,836

110,972

Allowance for credit losses as a percent of NPLs (f)

160.56 %

166.11 %

194.38 %

178.23 %

176.30 %

NPLs as a percent of total loans (f)

0.65 %

0.63 %

0.52 %

0.58 %

0.58 %

NPAs as a percent of total assets (f)

0.53 %

0.50 %

0.43 %

0.48 %

0.48 %

NPAs as a percent of total loans and OREO (f)

0.77 %

0.74 %

0.64 %

0.70 %

0.70 %

Criticized loans as a percent of total loans (c)

3.79 %

4.14 %

3.82 %

3.50 %

3.68 %

Classified loans as a percent of total loans (d)

1.90 %

2.38 %

1.95 %

2.05 %

1.86 %

Allowance for credit losses as a percent of total loans

1.05 %

1.05 %

1.01 %

1.03 %

1.02 %

Total demand deposits as a percent of total deposits (b)

35.03 %

35.16 %

37.92 %

39.08 %

41.79 %

Capital Information (e)(g)(i)

Common equity tier 1 capital ratio (h)

11.76 %

11.69 %

11.75 %

11.57 %

11.36 %

Tier 1 risk-based capital ratio

12.55 %

12.50 %

12.58 %

12.31 %

12.10 %

Total risk-based capital ratio (tier 1 and tier 2)

13.47 %

13.40 %

13.38 %

13.14 %

12.92 %

Leverage ratio

9.65 %

9.43 %

9.57 %

9.34 %

9.64 %

Common equity tier 1 capital

$         799,710

$           780,017

$         766,691

$         752,728

$         728,892

Tier 1 capital

854,050

834,089

820,495

801,010

776,753

Total capital (tier 1 and tier 2)

916,073

894,662

873,225

855,054

828,910

Total risk-weighted assets

$      6,802,528

$        6,674,114

$      6,524,577

$      6,505,779

$      6,417,511

Total stockholders’ equity to total assets

11.68 %

11.46 %

11.50 %

11.11 %

11.37 %

Tangible equity to tangible assets (j)

7.61 %

7.37 %

7.33 %

6.85 %

7.00 %

(a)

Includes all loans and leases acquired and purchased in 2012 and thereafter.

(b)

The sum of non-interest-bearing deposits and interest-bearing demand accounts is considered total demand deposits.

(c)

Includes loans categorized as special mention, substandard, or doubtful.

(d)

Includes loans categorized as substandard or doubtful.

(e)

Data presented as of the end of the period indicated.

(f)

Nonperforming loans include loans 90+ days past due and accruing, renegotiated loans and nonaccrual loans. Nonperforming assets include nonperforming loans and OREO.

(g)

June 30, 2024 data based on preliminary analysis and subject to revision.

(h)

Peoples’ capital conservation buffer was 5.66% at June 30, 2024, 5.60% at March 31, 2024, 5.38% at December 31, 2023, 5.14% at September 30, 2023, and 4.92% at June 30, 2023, compared to required capital conservation buffer of 2.50%

(i)

Peoples has adopted the five-year transition to phase in the impact of the adoption of CECL on regulatory capital ratios.

(j)

This ratio represents a non-US GAAP financial measure since it excludes the balance sheet impact of intangible assets acquired through acquisitions on both total stockholders’ equity and total assets. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of “Non-US GAAP Financial Measures (Unaudited).”

PROVISION FOR (RECOVERY OF) CREDIT LOSSES INFORMATION

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

2024

2024

2023

2024

2023

(Dollars in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Provision for credit losses

Provision for credit losses

$           5,397

$              5,834

$            7,751

$      11,231

$       9,424

Provision for checking account overdrafts

286

268

232

554

412

  Total provision for credit losses

$           5,683

$              6,102

$            7,983

$      11,785

$       9,836

Net Charge-Offs

Gross charge-offs

$           4,607

$              3,874

$            2,041

$        8,481

$       3,896

Recoveries

374

554

845

928

1,156

  Net charge-offs

$           4,233

$              3,320

$            1,196

$        7,553

$       2,740

Net Charge-Offs (Recoveries) by Type

Construction

$                —

$                   —

$                 —

$             —

$              9

Commercial real estate, other

80

129

(9)

209

(3)

Commercial and industrial

46

228

(440)

274

(439)

Premium finance

51

46

20

97

34

Leases

2,204

1,058

515

3,262

904

Residential real estate

(4)

(3)

(10)

(7)

2

Home equity lines of credit

9

(7)

55

2

74

Consumer, indirect

1,450

1,390

812

2,840

1,662

Consumer, direct

126

217

43

343

132

Deposit account overdrafts

271

262

210

533

365

  Total net charge-offs

$           4,233

$              3,320

$            1,196

$        7,553

$       2,740

As a percent of average total loans (annualized)

0.27 %

0.22 %

0.09 %

0.24 %

0.11 %

SUPPLEMENTAL INFORMATION (Unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

(Dollars in thousands)

2024

2024

2023

2023

2023

Trust assets under administration and management

$         2,071,832

$          2,061,402

$           2,021,249

$          1,900,488

$         1,931,789

Brokerage assets under administration and
management

1,567,775

1,530,954

1,473,814

1,364,372

1,379,309

Mortgage loans serviced for others

341,298

348,937

356,784

366,996

375,882

Employees (full-time equivalent)

1,489

1,498

1,478

1,482

1,500

CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME (Unaudited)

Three Months Ended

June 30, 2024

March 31, 2024

June 30, 2023

(Dollars in thousands)

Balance

Income/

Expense

Yield/ Cost

Balance

Income/

Expense

Yield/ Cost

Balance

Income/

Expense

Yield/ Cost

Assets

Short-term investments

$    178,094

$        2,502

5.65 %

$    142,381

$    1,922

5.43 %

$      58,245

$       673

4.64 %

Investment securities (a)(b)

1,870,372

16,144

3.45 %

1,832,599

15,234

3.33 %

1,873,944

14,240

3.04 %

Loans (b)(c):

Construction

328,943

6,595

7.93 %

339,448

6,404

7.46 %

358,732

6,491

7.16 %

Commercial real estate, other

2,074,718

36,420

6.94 %

2,076,219

37,242

7.10 %

1,735,466

28,240

6.44 %

Commercial and industrial

1,230,290

23,897

7.68 %

1,203,196

23,515

7.73 %

1,069,529

19,561

7.24 %

Premium finance

260,513

5,746

8.73 %

210,405

4,564

8.58 %

154,557

2,659

6.81 %

Leases

419,764

11,982

11.29 %

409,870

12,067

11.65 %

359,016

10,276

11.32 %

Residential real estate (d)

925,629

11,460

4.95 %

930,989

11,322

4.86 %

921,012

10,818

4.70 %

Home equity lines of credit

225,362

4,612

8.23 %

216,743

4,297

7.97 %

191,915

3,656

7.64 %

Consumer, indirect

656,405

9,669

5.92 %

656,244

9,281

5.69 %

651,669

7,943

4.89 %

Consumer, direct

119,048

2,095

7.08 %

124,091

2,098

6.80 %

123,899

2,247

7.27 %

Total loans

6,240,672

112,476

7.16 %

6,167,205

110,790

7.13 %

5,565,795

91,891

6.55 %

Allowance for credit losses

(64,745)

(61,236)

(53,427)

Net loans

6,175,927

6,105,969

5,512,368

Total earning assets

8,224,393

131,122

6.34 %

8,080,949

127,946

6.29 %

7,444,557

106,804

5.70 %

Goodwill and other intangible assets

407,864

410,719

387,055

Other assets

548,197

529,983

511,271

Total assets

$ 9,180,454

$ 9,021,651

$ 8,342,883

Liabilities and Equity

Interest-bearing deposits:

Savings accounts

$    892,465

$           222

0.10 %

$    905,713

$       226

0.10 %

$ 1,095,713

$       583

0.21 %

Governmental deposit accounts

795,913

5,594

2.83 %

763,899

5,085

2.68 %

693,725

2,330

1.35 %

Interest-bearing demand accounts

1,095,553

495

0.18 %

1,109,033

452

0.16 %

1,178,614

532

0.18 %

Money market deposit accounts

850,375

5,419

2.56 %

784,759

4,888

2.51 %

679,123

2,006

1.18 %

Retail certificates of deposit

1,743,238

18,423

4.25 %

1,582,426

15,900

4.04 %

825,155

4,209

2.05 %

Brokered deposits (e)

482,310

5,506

4.59 %

568,996

6,753

4.77 %

480,640

4,744

3.96 %

Total interest-bearing deposits

5,859,854

35,659

2.45 %

5,714,826

33,304

2.34 %

4,952,970

14,404

1.17 %

Short-term borrowings (e)

407,273

4,978

4.90 %

388,830

4,184

4.31 %

493,561

5,314

4.32 %

Long-term borrowings

234,961

3,520

5.98 %

230,274

3,466

6.01 %

132,091

1,847

5.56 %

Total borrowed funds

642,234

8,498

5.30 %

619,104

7,650

4.94 %

625,652

7,161

4.58 %

Total interest-bearing liabilities

6,502,088

44,157

2.73 %

6,333,930

40,954

2.60 %

5,578,622

21,565

1.55 %

Non-interest-bearing deposits

1,476,870

1,501,738

1,637,671

Other liabilities

140,042

133,202

175,152

Total liabilities

8,119,000

7,968,870

7,391,445

Stockholders’ equity

1,061,454

1,052,781

951,438

Total liabilities and stockholders’ equity

$ 9,180,454

$ 9,021,651

$ 8,342,883

Net interest income/spread (b)

$      86,965

3.61 %

$  86,992

3.69 %

$  85,239

4.15 %

Net interest margin (b)

4.18 %

4.26 %

4.54 %

CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME (Unaudited) — (Continued)

Six Months Ended

June 30, 2024

June 30, 2023

(Dollars in thousands)

Balance

Income/

Expense

Yield/ Cost

Balance

Income/

Expense

Yield/ Cost

Assets

Short-term investments

$          160,238

$         4,424

5.55 %

$            47,008

$           1,062

4.55 %

Investment securities (a)(b)

1,851,485

31,378

3.39 %

1,831,335

26,547

2.90 %

Loans (b)(c):

Construction

334,196

12,998

7.69 %

300,270

10,454

6.92 %

Commercial real estate, other

2,075,468

73,662

7.02 %

1,538,771

48,034

6.21 %

Commercial and industrial

1,216,743

47,412

7.71 %

975,633

34,165

6.96 %

Premium finance

235,459

10,310

8.66 %

151,244

4,809

6.32 %

Leases

414,817

24,049

11.47 %

350,845

19,919

11.29 %

Residential real estate (d)

928,309

22,782

4.91 %

881,514

20,535

4.66 %

Home equity lines of credit

221,053

8,909

8.10 %

184,337

6,622

7.24 %

Consumer, indirect

656,324

18,950

5.81 %

646,045

15,173

4.74 %

Consumer, direct

121,569

4,194

6.94 %

116,377

3,985

6.91 %

Total loans

6,203,938

223,266

7.14 %

5,145,036

163,696

6.35 %

Allowance for credit losses

(62,990)

(53,052)

Net loans

6,140,948

5,091,984

Total earning assets

8,152,671

259,068

6.32 %

6,970,327

191,305

5.49 %

Goodwill and other intangible assets

409,292

356,470

Other assets

539,089

465,782

Total assets

$       9,101,052

$       7,792,579

Liabilities and Equity

Interest-bearing deposits:

Savings accounts

$          899,089

$            448

0.10 %

$       1,071,174

$              719

0.14 %

Governmental deposit accounts

779,906

10,679

2.75 %

666,683

3,396

1.03 %

Interest-bearing demand accounts

1,102,293

947

0.17 %

1,142,648

712

0.13 %

Money market deposit accounts

817,567

10,307

2.54 %

632,561

2,831

0.90 %

Retail certificates of deposit

1,662,832

34,323

4.15 %

702,809

5,959

1.71 %

Brokered  deposit (e)

525,653

12,259

4.69 %

353,760

6,447

3.68 %

Total interest-bearing deposits

5,787,340

68,963

2.40 %

4,569,635

20,064

0.89 %

Short-term borrowings (e)

398,052

9,162

4.62 %

482,643

9,772

4.08 %

Long-term borrowings

232,617

6,985

5.99 %

115,375

3,000

5.19 %

Total borrowed funds

630,669

16,147

5.12 %

598,018

12,772

4.30 %

Total interest-bearing liabilities

6,418,009

85,110

2.66 %

5,167,653

32,836

1.28 %

Non-interest-bearing deposits

1,489,304

1,598,985

Other liabilities

136,622

149,075

Total liabilities

8,043,935

6,915,713

Stockholders’ equity

1,057,117

876,866

Total liabilities and stockholders’ equity

$       9,101,052

$       7,792,579

Net interest income/spread (b)

$     173,958

3.66 %

$       158,469

4.21 %

Net interest margin (b)

4.22 %

4.54 %

(a)

Average balances are based on carrying value.

(b)

Interest income and yields are presented on a fully tax-equivalent basis, using a 21% statutory federal corporate income tax rate.

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

NON-US GAAP FINANCIAL MEASURES (Unaudited)

The following non-US GAAP financial measures used by Peoples provide information useful to investors in understanding Peoples’ operating performance and trends, and facilitate comparisons with the performance of Peoples’ peers. The following tables summarize the non-US GAAP financial measures derived from amounts reported in Peoples’ consolidated financial statements:

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

(Dollars in thousands)

2024

2024

2023

2024

2023

Core non-interest expense:

Total non-interest expense

$               68,758

$               68,465

$               70,623

$         137,223

$         127,102

Less: acquisition-related expenses

—

(84)

10,709

(84)

11,260

Add: COVID -19 Employee Retention Credit

—

—

548

—

548

Core non-interest expense

$               68,758

$               68,549

$               60,462

$         137,307

$         116,390

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

(Dollars in thousands)

2024

2024

2023

2024

2023

Efficiency ratio:

Total non-interest expense

$           68,758

$            68,465

$           70,623

$ 137,223

$ 127,102

Less: amortization of other intangible assets

2,787

2,788

2,800

5,575

4,671

Adjusted total non-interest expense

65,971

65,677

67,823

131,648

122,431

Total non-interest income

23,704

25,779

21,015

49,483

40,075

Less: net loss on investment securities

(353)

(1)

(166)

(354)

(2,101)

Less: net loss on asset disposals and other transactions

(428)

(341)

(1,665)

(769)

(1,911)

Total non-interest income, excluding net gains and losses

24,485

26,121

22,846

50,606

44,087

Net interest income

86,613

86,640

84,853

173,253

157,731

Add: fully tax-equivalent adjustment (a)

352

352

386

705

738

Net interest income on a fully tax-equivalent basis

86,965

86,992

85,239

173,958

158,469

Adjusted revenue

$         111,450

$          113,113

$         108,085

$ 224,564

$ 202,556

Efficiency ratio

59.19 %

58.06 %

62.75 %

58.62 %

60.44 %

Efficiency ratio adjusted for non-core items:

Core non-interest expense

$           68,758

$            68,549

$           60,462

$ 137,307

$ 116,390

Less: amortization of other intangible assets

2,787

2,788

2,800

5,575

4,671

Adjusted core non-interest expense

65,971

65,761

57,662

131,732

111,719

Adjusted revenue

$         111,450

$          113,113

$         108,085

$ 224,564

$ 202,556

Efficiency ratio adjusted for non-core items

59.19 %

58.14 %

53.35 %

58.66 %

55.15 %

(a)

Tax effect is calculated using a 21% statutory federal corporate income tax rate.

NON-US GAAP FINANCIAL MEASURES (Unaudited) — (Continued)

At or For the Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

(Dollars in thousands, except per share data)

2024

2024

2023

2023

2023

Tangible equity:

Total stockholders’ equity

$     1,077,833

$     1,062,002

$     1,053,534

$        993,219

$        998,907

Less: goodwill and other intangible assets

406,417

409,285

412,172

408,494

413,172

Tangible equity

$        671,416

$        652,717

$        641,362

$        584,725

$        585,735

Tangible assets:

Total assets

$     9,226,461

$     9,270,774

$     9,157,382

$     8,942,534

$     8,786,635

Less: goodwill and other intangible assets

406,417

409,285

412,172

408,494

413,172

Tangible assets

$     8,820,044

$     8,861,489

$     8,745,210

$     8,534,040

$     8,373,463

Tangible book value per common share:

Tangible equity

$        671,416

$        652,717

$        641,362

$        584,725

$        585,735

Common shares outstanding

35,498,977

35,486,234

35,314,745

35,395,990

35,374,916

Tangible book value per common share

$            18.91

$            18.39

$            18.16

$            16.52

$            16.56

Tangible equity to tangible assets ratio:

Tangible equity

$        671,416

$        652,717

$        641,362

$        584,725

$        585,735

Tangible assets

$     8,820,044

$     8,861,489

$     8,745,210

$     8,534,040

$     8,373,463

Tangible equity to tangible assets

7.61 %

7.37 %

7.33 %

6.85 %

7.00 %

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

(Dollars in thousands)

2024

2024

2023

2024

2023

Pre-provision net revenue:

Income before income taxes

$            35,876

$            37,852

$            27,262

$        73,728

$        60,868

Add: provision for credit losses

5,683

6,102

7,983

11,785

9,836

Add: loss on OREO

—

—

1,612

—

1,622

Add: loss on investment securities

353

1

166

354

2,101

Add: loss on other assets

397

309

45

706

274

Add: loss on other transactions

31

32

8

63

15

Pre-provision net revenue

$            42,340

$            44,296

$            37,076

$        86,636

$        74,716

Total average assets

9,180,454

9,021,651

8,342,883

9,101,052

7,792,579

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

1.85 %

1.97 %

1.78 %

1.91 %

1.93 %

Weighted-average common shares outstanding – diluted

35,117,648

35,051,810

32,649,976

35,071,550

30,314,504

Pre-provision net revenue per common share – diluted

$                1.21

$                1.26

$                1.13

$            2.45

$            2.45

NON-US GAAP FINANCIAL MEASURES (Unaudited) — (Continued)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

(Dollars in thousands)

2024

2024

2023

2024

2023

Annualized net income adjusted for non-core items:

Net income

$         29,007

$             29,584

$        21,096

$    58,591

$     47,656

Add: net loss on investment securities

353

1

166

354

2,101

Less: tax effect of net loss on investment securities (a)

74

—

35

74

441

Add: net loss on asset disposals and other transactions

428

341

1,665

769

1,911

Less: tax effect of net loss on asset disposals and other transactions (a)

90

72

349

161

401

Add: acquisition-related expenses

—

(84)

10,709

(84)

11,260

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

—

(18)

2,249

(18)

2,365

Less: COVID -19 Employee Retention Credit

—

—

548

—

548

Add: tax effect of COVID -19 Employee Retention Credit (a)

—

—

115

—

115

Net income adjusted for non-core items

$         29,624

$             29,788

$        30,570

$    59,413

$     59,288

Days in the period

91

91

91

182

181

Days in the year

366

366

365

366

365

Annualized net income

$       116,666

$           118,986

$        84,616

$  117,826

$     96,102

Annualized net income adjusted for non-core items

$       119,147

$           119,807

$      122,616

$  119,479

$   119,559

Return on average assets:

Annualized net income

$       116,666

$           118,986

$        84,616

$  117,826

$     96,102

Total average assets

$    9,180,454

$        9,021,651

$   8,342,883

$  9,101,052

$  7,792,579

Return on average assets

1.27 %

1.32 %

1.01 %

1.29 %

1.23 %

Return on average assets adjusted for non-core items:

Annualized net income adjusted for non-core items

$       119,147

$           119,807

$      122,616

$  119,479

$   119,559

Total average assets

$    9,180,454

$        9,021,651

$   8,342,883

$  9,101,052

$  7,792,579

Return on average assets adjusted for non-core items

1.30 %

1.33 %

1.47 %

1.31 %

1.53 %

(a)

Tax effect is calculated using a 21% statutory federal corporate income tax rate.

NON-US GAAP FINANCIAL MEASURES (Unaudited) — (Continued)

For the Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

(Dollars in thousands)

2024

2024

2023

2024

2023

Annualized net income excluding amortization of other intangible assets:

Net income

$         29,007

$        29,584

$        21,096

$        58,591

$         47,656

Add: amortization of other intangible assets

2,787

2,788

2,800

5,575

4,671

Less: tax effect of amortization of other intangible assets (a)

585

585

588

1,171

981

Net income excluding amortization of other intangible assets

$         31,209

$        31,787

$        23,308

$        62,995

$         51,346

Days in the period

91

91

91

182

181

Days in the year

366

366

365

366

365

Annualized net income

$       116,666

$      118,986

$        84,616

$      117,826

$         96,102

Annualized net income excluding amortization of other intangible assets

$       125,522

$      127,847

$        93,488

$      126,682

$       103,543

Average tangible equity:

Total average stockholders’ equity

$    1,061,454

$   1,052,781

$      951,438

$   1,057,117

$       876,866

Less: average goodwill and other intangible assets

407,864

410,719

387,055

409,292

356,470

Average tangible equity

$       653,590

$      642,062

$      564,383

$      647,825

$       520,396

Return on average stockholders’ equity ratio:

Annualized net income

$       116,666

$      118,986

$        84,616

$      117,826

$         96,102

Average stockholders’ equity

$    1,061,454

$   1,052,781

$      951,438

$   1,057,117

$       876,866

Return on average stockholders’ equity

10.99 %

11.30 %

8.89 %

11.15 %

10.96 %

Return on average tangible equity ratio:

Annualized net income excluding amortization of other intangible assets

$       125,522

$      127,847

$        93,488

$      126,682

$       103,543

Average tangible equity

$       653,590

$      642,062

$      564,383

$      647,825

$       520,396

Return on average tangible equity

19.21 %

19.91 %

16.56 %

19.55 %

19.90 %

(a)

Tax effect is calculated using a 21% statutory federal corporate income tax rate.