What changed in this filing

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Item 9A. Controls and Procedures

2022-03-15 compared with 2021-03-01 · 825 added, 645 removed, 1931 unchanged (43% of the section changed)

1 unchanged sentence

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 Exchange Act) as of December 31, 2020.

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 Form 10-K and other reports Peoples files or submits under the Exchange Act would be accumulated and communicated to Peoples’ management, including its President and Chief Executive Officer and its Executive Vice President, Chief Financial Officer and Treasurer, as appropriate to allow timely decisions regarding required disclosure;

(b) information required to be disclosed by Peoples in this Form 10-K 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;

Peoples’ management, with the participation and supervision 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 Exchange Act) as of December 31, 2021.

Based upon that evaluation, Peoples’ President and Chief Executive Officer and Peoples’ Executive Vice President, Chief Financial Officer and Treasurer have concluded that our disclosure controls and procedures were not effective as of December 31, 2021 because of a material weakness in internal controls over financial reporting described in Management’s Annual Report on Internal Control Over Financial Reporting below.

Management's Annual Report on Internal Control Over Financial Reporting

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Attestation Report of Independent Registered Public Accounting Firm

The “Report of Independent Registered Public Accounting Firm on Effectiveness of Internal Control Over Financial Reporting” required by Item 308(b) of SEC Regulation S-K is included on page 85 of this Form 10-K.

The “Report of Independent Registered Public Accounting Firm” required by Item 308(b) of SEC Regulation S-K is included on page 81 of this Form 10-K.

Ernst & Young LLP (U.S.

PCAOB Auditor Firm I.D.:

42 ), the independent registered public accounting firm that audited Peoples' consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2021.

The report, which expresses the opinion that management has not maintained effective internal control over financial reporting as of December 31, 2021, is included in the "Report of Independent Registered Public Accounting Firm"

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 the fiscal quarter ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect, Peoples’ internal control over financial reporting.

Except for the material weakness identified, 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 the fiscal quarter ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, Peoples’ internal control over financial reporting.

However, as disclosed in the “Report of Management’s Assessment of Internal Control Over Financial Reporting”, Peoples’ management is in the process of implementing certain changes to Peoples’ internal controls to remediate the material weakness disclosed in the “Report of Management’s Assessment of Internal Control Over Financial Reporting.”

ITEM 9B OTHER INFORMATION

ITEM 9C DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not Applicable.

Report of Management's Assessment of Internal Control Over Financial Reporting

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Peoples' internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation, integrity, and fair presentation of Peoples' Consolidated Financial Statements for external purposes in accordance with United States generally accepted accounting principles.

With the supervision and participation of its President and Chief Executive Officer and its Executive Vice President, Chief Financial Officer and Treasurer, management evaluated the effectiveness of Peoples' internal control over financial reporting as of December 31, 2020, using the Internal Control-Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).

With the supervision and participation of Peoples' President and Chief Executive Officer and its Peoples' Executive Vice President, Chief Financial Officer and Treasurer, Peoples' management evaluated the effectiveness of Peoples' internal control over financial reporting as of December 31, 2021, using the Internal Control-Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).

No matter how well designed, internal control over financial reporting may not prevent or detect all misstatements.

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Effective internal control over financial reporting can provide only a reasonable assurance with respect to financial statement preparation and financial reporting.

Management assessed the effectiveness of Peoples' internal control over financial reporting as of December 31, 2020, and, based on this assessment, has concluded Peoples' internal control over financial reporting was effective at a reasonable assurance level as of that date.

Control deficiencies were identified by Peoples’ management related to the accounting for loans acquired in the September 17, 2021 merger with Premier, specifically the designation of those acquired loans as either purchased credit deteriorated ("PCD") or non-PCD, the designation of PCD loans as either pooled or individually assessed, and the estimation and calculation of expected credit losses on individually assessed loans.

Based upon an internal review by Peoples’ management, with the participation of Peoples’ President and Chief Executive Officer and Peoples’ Executive Vice President, Chief Financial Officer and Treasurer, it was determined that the deficiencies in the design of controls supporting acquired purchased credit deteriorated loan accounting and the related allowance for credit losses aggregated to a material weakness in internal control over financial reporting.

A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of Peoples’ annual or interim financial statements will not be prevented or detected on a timely basis.

To address the financial disclosure impact by the identified control deficiencies, Peoples recorded a reduction in "Goodwill" of $6.1 million, a decrease in "Other Assets" of $1.7 million, a decrease in the “Allowance for credit losses” of $3.7 million, an increase in “Loans and leases, net of deferred fees and costs” of $2.2 million, and a decrease in “Accrued expenses and other liabilities” of $0.4 million as of December 31, 2021, with an offsetting reduction in net income for the 2021 fiscal year of approximately $1.5 million.

The impact of the material weakness (and related control deficiencies) on Peoples’ consolidated financial statements for the interim periods ended September 30, 2021 and December 31, 2021 are not considered material.

Materiality was evaluated both quantitatively and qualitatively in accordance with the guidance provided by Staff Accounting Bulletin No.

99 – Materiality.

As such, the material weakness (and related control deficiencies) did not result in a material misstatement in Peoples’ previously filed condensed consolidated financial statements for the periods ended September 30, 2021, and such financial statements can still be relied upon.

To remediate the material weakness, Peoples’ management is in the process of implementing certain changes to Peoples’ internal controls, and will implement additional internal controls during 2022 in order to remediate the control deficiencies that led to the material weakness.

Specifically, Peoples’ management plans to enhance documentation and review of the criteria used to support the aforementioned designations relating to PCD accounting, and engage independent third-party advisors to assess the reasonableness of the allowance for credit losses assigned to individually assessed PCD loans.

Peoples’ management believes these remediation measures will strengthen Peoples’ internal control over financial reporting and remediate the material weakness (and related control deficiencies) identified.

Peoples' management assessed the effectiveness of Peoples' internal control over financial reporting as of December 31, 2021, and, based on this assessment, has concluded Peoples' internal control over financial reporting was not effective at a reasonable assurance level as of that date due to the material weakness in internal control over financial reporting noted above.

Peoples' independent registered public accounting firm, Ernst & Young LLP has audited the Consolidated Financial Statements included in this Annual Report on Form 10-K and has issued an audit report on Peoples' internal control over financial reporting.

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March 15, 2022

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Peoples Bancorp Inc.

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and subsidiaries’ internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Peoples Bancorp Inc.

and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and our report dated March 1, 2021 expressed an unqualified opinion thereon.

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Peoples Bancorp Inc.

and subsidiaries (the Company) has not maintained effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

Management has identified a material weakness in controls related to the Company’s accounting for purchased credit deteriorated loans.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2021 consolidated financial statements, and this report does not affect our report dated March 15, 2022, which expressed an unqualified opinion thereon.

Basis for Opinion

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March 15, 2022

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Peoples Bancorp Inc.

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (U.S.) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2021 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 15, 2022 expressed an adverse opinion thereon.

Adoption of New Accounting Standard

As discussed in Note 1 to the consolidated financial statements, the Company changed its method for accounting for the allowance for credit losses in 2020, due to the adoption of ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Statements.

See below for discussion of our related critical audit matt er.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting for the Allowance for Credit Losses

Description of the Matter

As discussed above and in Note 1 of the financial statements, on January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13 Financial Instruments - Credit Losses (ASC 326):

Measurement of Credit Losses on Financial Instruments (CECL).

Upon adoption, a one-time cumulative effect adjustment was recorded which reduced retained earnings by $3.7 million, net of statutory corporate federal income taxes.

The Company’s loan portfolio totaled $3.4 billion as of December 31, 2020, and the associated allowance for credit losses (ACL) was $50.4 million.

As discussed in Note 1 and 4 of the financial statements, management estimates the ACL based on information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount.

As discussed in Note 1 and Note 4 of the financial statements, management estimates the allowance for credit losses (ACL) based on information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount.

The ACL is made up of both a quantitative modeled component as well as a qualitative component.

The methodology for determining the quantitative component includes (1) a pooled component for loans that exhibit similar risk characteristics and (2) a specific component for those loans that do not exhibit similar risk characteristics.

For loans exhibiting similar risk characteristics, Peoples uses a loss driver method, which analyzes one or more economic variables to the change in default rate using a regression analysis, and a discounted cash flow methodology in determining an ACL for each segment.

For loans exhibiting similar risk characteristics, the Company uses a loss driver method, which analyzes one or more economic variables to the change in default rate using a regression analysis, and a discounted cash flow methodology in determining an ACL for each segment.

Management applies judgment in determining the extent of qualitative factors used in the qualitative component to adjust the loss rates for loan segments to reflect the impact these factors may have on expected losses in the loan portfolio.

These include economic conditions, collateral, concentrations, troubled assets, Peoples' loss trends, peer loss trends, delinquency trends, portfolio composition and loan growth, underwriting, and certain other risks.

The Company’s loan and lease portfolio totaled $4.48 billion as of December 31, 2021, and the associated ACL was $64.0 million.

Auditing management’s estimate of the ACL involves a high degree of subjectivity due to the judgment and estimates required in evaluating management’s determination of the qualitative factors applied to the ACL.

Management’s identification and measurement of the qualitative factors is highly judgmental and could have a significant effect on the ACL.

Management’s identification and measurement of qualitative factors specific to economic conditions and collateral is highly judgmental and could have a significant effect on the ACL.

How We Addressed the Matter in Our Audit

We obtained an understanding of the Company’s processes for establishing the ACL at transition on January 1, 2020 and through the year ended December 31, 2020, including the qualitative factor adjustments made to the loss rates for each segment.

We obtained an understanding of the Company’s processes for establishing the ACL through the year ended December 31, 2021, including the qualitative factor adjustments made to the loss rates for each segment.

We evaluated the design and tested the operating effectiveness of controls over the Company’s ACL processes, which included, among others, management’s review and approval controls designed to assess the need and level of qualitative factors and the completeness and accuracy of the data utilized to support management’s assessment.

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We evaluated the data by independently obtaining and comparing it to other third party macro-economic data.

With the support of an internal specialist, we assessed the completeness of the qualitative factors utilized in the calculation of the ACL.

We also compared the total ACL to the Company’s historical losses through recent credit cycles as a way to evaluate that the total ACL inclusive of the qualitative factors is appropriately reflecting losses expected in the portfolio and analyzed the change in the ACL relative to the change in the current economic environment.

We also compared the total ACL, inclusive of the qualitative factors, to the Company’s historical losses considering changes in the current economic environment to evaluate whether the ACL appropriately reflects losses expected in the portfolio.

Additionally, we evaluated whether the overall ACL, inclusive of the qualitative factors, appropriately reflected losses expected in the loan portfolio by comparing to peer bank data.

Accounting for Business Combinations

Description of the Matter

As discussed in Note 20 to the consolidated financial statements, the Company acquired Premier Financial Bancorp, Inc.

(Premier) on September 17, 2021 (Day 1) for total consideration of $261.9 million, consisting of 8.6 million common shares of Peoples Bancorp Inc.

The Company acquired $1.16 billion of loans, net of fair value adjustments, a portion of which were classified as purchased credit deteriorated (PCD) loans.

Management concluded that a portion of the PCD loans do not share similar risk characteristics with other PCD loans and identified these for individual analysis.

The Day 1 ACL for the individually analyzed PCD loans involved significant management judgment.

Auditing the Company's accounting for its acquisition of Premier was complex due to the estimation uncertainty in determining the Day 1 ACL for individually analyzed PCD loans, primarily due to the sensitivity of the ACL measurement to the significant underlying assumptions.

How We Addressed the Matter in Our Audit

To test the Day 1 ACL for the individually analyzed PCD loans, our audit procedures included, among others, evaluating the Company's selection of the valuation methodology, evaluating the significant assumptions used by the Company, and evaluating the completeness and accuracy of the underlying data supporting the analysis and significant assumptions.

We involved our specialists to assist with our evaluation of the methodology used by the Company and certain significant assumptions used in the Day 1 ACL.

/s/ Ernst & Young LLP

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1,275,493 753,013

Held-to-maturity investment securities, at amortized cost (fair value of $ 68,082 at December 31, 2020 and $ 32,541 at December 31, 2019) (a)(b)

Held-to-maturity investment securities, at amortized cost (fair value of $ 369,955 at December 31, 2021 and $ 68,082 at December 31, 2020) (a)

374,129 66,458

Other investment securities 33,987 37,560

Total investment securities (a)(b) 857,031 1,010,578

Loans, net of deferred fees and costs (b)(c) 3,402,940 2,873,525

Allowance for credit losses (b) ( 50,359 ) ( 21,556 )

Net loans (b) 3,352,581 2,851,969

Total investment securities (a) 1,683,609 857,031

Loans and leases, net of deferred fees and costs (b) 4,481,600 3,402,940

Allowance for credit losses ( 63,967 ) ( 50,359 )

Net loans 4,417,633 3,352,581

Loans held for sale 3,791 4,659

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Long-term borrowings 99,475 110,568

Accrued expenses and other liabilities (b) 90,803 68,260

Accrued expenses and other liabilities 89,987 90,803

Total liabilities 6,218,496 4,185,091

Stockholders’ Equity

Preferred stock, no par value, 50,000 shares authorized no shares issued at December 31, 2020 and December 31, 2019

Preferred stock, no par value, 50,000 shares authorized and no shares issued at December 31, 2021 and December 31, 2020

Common stock, no par value, 50,000,000 shares authorized, 29,814,401 shares issued at December 31, 2021 and 21,193,402 shares issued at December 31, 2020, including shares held in treasury

686,282 422,536

Retained earnings (b) 190,691 187,149

Accumulated other comprehensive income (loss), net of deferred income taxes 1,336 ( 1,425 )

Retained earnings 207,076 190,691

Accumulated other comprehensive (loss) income, net of deferred income taxes ( 11,619 ) 1,336

Treasury stock, at cost, 1,577,359 shares at December 31, 2021 and 1,686,046 shares at December 31, 2020

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Total liabilities and stockholders’ equity $ 7,063,521 $ 4,760,764

(a) Available-for-sale investment securities and held-to-maturity investment securities are presented net of allowance for credit losses of $ 0 and $ 60,000 , respectively, as of December 31, 2020.

(b) On January 1, 2020, Peoples adopted ASU 2016-13 and adopted the current expected credit loss ("CECL") model, which resulted in the establishment of a $ 7,000 allowance for credit losses for held-to-maturity investment securities;

an increase in loan balances of $ 2.6 million to establish the allowance for credit losses for purchased credit deteriorated loans;

an increase to the allowance for credit losses (which was the "allowance for loan losses" prior to January 1, 2020) of $ 5.8 million;

the addition of a $ 1.5 million unfunded commitment liability included in accrued expenses and other liabilities;

and a reduction to retained earnings of $ 3.7 million, net of statutory federal corporate income tax.

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

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

See Notes to the Consolidated Financial Statements

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Electronic banking income 18,010 14,246 13,680

Insurance income 14,042 14,802 14,812

Trust and investment income 16,456 13,662 13,159

Insurance income 15,252 14,042 14,802

Deposit account service charges 10,143 9,418 11,700

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Bank owned life insurance income 1,767 1,977 2,430

Net gain (loss) on asset disposals and other transactions 493 ( 290 ) ( 782 )

Commercial loan swap fees 543 1,741 2,228

Net loss on asset disposals and other transactions ( 290 ) ( 782 ) ( 334 )

Net (loss) gain on investment securities ( 862 ) ( 368 ) 164

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Net occupancy and equipment expense 14,918 12,808 12,431

Electronic banking expense 7,777 7,186 6,057

Data processing and software expense 7,441 6,332 5,419

Professional fees 15,783 6,912 7,095

Franchise tax expense 3,506 3,071 2,771

Data processing and software expense 10,542 7,441 6,332

Electronic banking expense 8,885 7,777 7,186

Amortization of other intangible assets 4,775 3,223 3,359

Marketing expense 3,658 2,101 2,291

Franchise tax expense 3,357 3,506 3,071

Other loan expenses 2,001 1,584 1,956

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(a) On January 1, 2020, Peoples adopted ASU 2016-13 and adopted the CECL model.

Prior to the adoption of the CECL model, the provision for credit losses was the "provision for loan losses." The provision for credit losses includes changes related to the allowance for credit losses on loans (which includes purchased credit deteriorated loans), held-to-maturity investment securities, and the unfunded commitment liability.

(b) As of January 1, 2018, Peoples adopted ASU 2016-01, resulting in realized and unrealized gains on equity investment securities recorded in other non-interest income of $ 660,000 , $ 831,000 , and $ 207,000 for the years ended December 31, 2020, December 31, 2019 , and December 31, 2018, respectively.

Prior to the adoption of the CECL model, the provision for credit losses was the

"provision for loan losses." The provision for credit losses includes changes related to the allowance for credit losses on loans, held-to-maturity investment securities, and the unfunded commitment liability.

(b) Includes realized and unrealized gains on equity investment securities recorded in other non-interest income of $ 111 , $ 660 , and $ 831 for the years ended December 31, 2021, December 31, 2020 , and December 31, 2019, respectively.

See Notes to the Consolidated Financial Statements

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Net income $ 47,555 $ 34,767 $ 53,695

Other comprehensive income (loss):

Other comprehensive (loss) income:

Available-for-sale investment securities:

Gross unrealized holding gain (loss) arising in the period 11,394 19,635 ( 3,910 )

Related tax (expense) benefit ( 2,393 ) ( 4,123 ) 821

Gross unrealized holding (loss) gain arising in the period ( 26,985 ) 11,394 19,635

Related benefit (expense) 5,777 ( 2,393 ) ( 4,123 )

Reclassification adjustment for net loss (gain) included in net income 862 368 ( 164 )

Related tax (benefit) expense ( 192 ) ( 77 ) 34

Amounts reclassified out of accumulated other comprehensive loss per ASU 2016-01 (a) — — ( 5,020 )

Net effect on other comprehensive income (loss) 9,292 15,382 ( 7,994 )

Net effect on other comprehensive (loss) income ( 20,538 ) 9,292 15,382

Defined benefit plans:

Net (loss) gain arising during the period ( 1,072 ) ( 385 ) 325

Related tax benefit (expense) 225 81 ( 69 )

Net gain (loss) arising during the period 2,318 ( 1,072 ) ( 385 )

Related tax (expense) benefit ( 518 ) 225 81

Amortization of unrecognized gain on service benefit plans 103 127 72

Related tax expense ( 23 ) ( 27 ) ( 15 )

Recognition of gain due to settlement and curtailment 1,054 — 267

Reclassification from accumulated other comprehensive income or loss ("AOCI") 143 1,054 —

Related tax expense ( 32 ) ( 221 ) —

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Cash flow hedges:

Net loss arising during the period ( 8,376 ) ( 4,591 ) ( 341 )

Related tax benefit 1,759 964 72

Net effect on other comprehensive loss ( 6,617 ) ( 3,627 ) ( 269 )

Total other comprehensive income (loss), net of tax 2,761 11,508 ( 7,718 )

Net income (loss) arising during the period 6,999 ( 8,376 ) ( 4,591 )

Related tax (expense) benefit ( 1,407 ) 1,759 964

Net effect on other comprehensive income (loss) 5,592 ( 6,617 ) ( 3,627 )

Total other comprehensive (loss) income, net of tax ( 12,955 ) 2,761 11,508

Total comprehensive income $ 34,600 $ 37,528 $ 65,203

(a) As of January 1, 2018, Peoples adopted ASU 2016-01, which resulted in the reclassification of $ 5.0 million in net unrealized gains on equity investment securities from accumulated other comprehensive loss to retained earnings.

See Notes to the Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity

Common Stock Retained Earnings Accumulated Other Comprehensive (Loss) Income Treasury Stock Total Stockholders' Equity

(Dollars in thousands)

1 unchanged sentence

Net income — 53,695 — — 53,695

Other comprehensive loss, net of tax (a)

Other comprehensive income, net of tax

— — 11,508 — 11,508

1 unchanged sentence

— ( 26,892 ) — — ( 26,892 )

Exercise of stock appreciation rights

( 2 ) — — 2 —

Reissuance of treasury stock for common share awards

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Common shares repurchased under share repurchase program

— — — ( 805 ) ( 805 )

Common shares issued under dividend reinvestment plan

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112 — — 311 423

Issuance of common shares related to merger with ASB Financial Corp.

Issuance of common shares related to merger with First Prestonsburg Bancshares Inc.

("First Prestonsburg")

32,437 — — — 32,437

Amounts reclassified out of retained earnings, net of tax, per ASU 2014-09 (b) — ( 3,713 ) — — ( 3,713 )

Balance, December 31, 2019 $ 420,876 $ 187,149 $ ( 1,425 ) $ ( 12,207 ) $ 594,393

Net income — 34,767 — — 34,767

Other comprehensive loss, net of tax

Other comprehensive income, net of tax

— — 2,761 — 2,761

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17 — — 360 377

Common shares issued under performance unit awards, net of tax

41 — — 138 179

Stock-based compensation 3,556 — — — 3,556

1 unchanged sentence

( 24 ) — — 440 416

Issuance of common shares related to merger with First Prestonsburg Bancshares Inc.

("First Prestonsburg")

32,437 — — — 32,437

Impact of adoption of new accounting standard, net of taxes (a) — ( 3,709 ) — — ( 3,709 )

Balance, December 31, 2020 $ 422,536 $ 190,691 $ 1,336 $ ( 38,890 ) $ 575,673

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)

Common Stock Retained Earnings Accumulated Other Comprehensive Income Treasury Stock Total Stockholders' Equity

Common Stock Retained Earnings Accumulated Other Comprehensive (Loss) Income Treasury Stock Total Stockholders' Equity

(Dollars in thousands)

Net income $ — $ 47,555 $ — $ — $ 47,555

Other comprehensive income, net of tax

Other comprehensive loss, net of tax

— — ( 12,955 ) — ( 12,955 )

6 unchanged sentences

— — — ( 1,306 ) ( 1,306 )

Common shares repurchased under share repurchase program

— — — ( 29,281 ) ( 29,281 )

Common shares issued under dividend reinvestment plan

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98 — — 276 374

Common shares issued under performance unit awards, net of tax

41 — — 138 179

Common shares issued under employee stock purchase plan

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Stock-based compensation 3,436 — — — 3,436

Impact of adoption of new accounting standard, net of taxes (c) — ( 3,709 ) — — ( 3,709 )

Issuance of common shares related to merger with Premier 261,899 — — — 261,899

Balance, December 31, 2021 $ 686,282 $ 207,076 $ ( 11,619 ) $ ( 36,714 ) $ 845,025

(b) As of January 1, 2018, Peoples adopted ASU 2014-09, which resulted in a reduction to retained earnings of $ 3.7 million, net of statutory federal corporate income taxes, and an

increase in accrued expenses and other liabilities of $ 4.7 million, to reflect uncompleted contracts in the initial application of the guidance.

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

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

See Notes to the Consolidated Financial Statements

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Net gains on sales of loans ( 2,994 ) ( 6,446 ) ( 3,667 )

Deferred income tax (benefit) expense ( 8,101 ) 109 ( 309 )

Deferred income tax expense (benefit) 2,874 ( 8,101 ) 109

Increase in accrued expenses 2,433 799 366

(Increase) decrease in interest receivable ( 865 ) 613 ( 854 )

Decrease (increase) in interest receivable 1,435 ( 865 ) 613

Increase (decrease) in other assets 2,874 1,006 ( 1,227 )

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Proceeds from insurance claim — — 26

Net increase in loans held for investment ( 444,128 ) ( 10,661 ) ( 134,071 )

Net increase (decrease) in loans held for investment 113,467 ( 444,128 ) ( 10,661 )

Net expenditures for premises and equipment ( 6,685 ) ( 4,299 ) ( 2,809 )

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Net increase in interest-bearing deposits 49,774 292,822 72,841

Net (decrease) increase in short-term borrowings ( 263,716 ) ( 76,809 ) 61,883

Net increase (decrease) in short-term borrowings 14,414 ( 263,716 ) ( 76,809 )

Proceeds from long-term borrowings — 50,000 —

26 unchanged sentences

Investment Securities

Loans and Leases

Bank Premises and Equipment

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Stock-Based Compensation

Parent Company Only Financia l Information

Summarized Quarterly Information (Unaudited)

Parent Company Only Financial Information

PEOPLES BANCORP INC.

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Peoples Bancorp Inc.

is a financial holding company that offers a full range of financial services and products, including commercial and retail banking, insurance, brokerage and trust services, through its principal operating subsidiary, Peoples Bank.

Services are provided through 85 financial service locations, including 76 full-service bank branches and 85 automated teller machines in Ohio, Kentucky and West Virginia, as well as Internet-based and mobile banking.

is a financial holding company that offers a full range of financial services and products primarily offered through its 135 financial service offices and ATMs including 119 full-service branches in Ohio, West Virginia, Kentucky, Virginia, Washington, D.C.

and Maryland, as well as through online resources that are web-based and mobile-based.

Peoples' insurance premium financing and equipment leasing services are offered nationwide.

Brokerage services are offered exclusively through an unaffiliated registered broker-dealer located at Peoples Bank's offices.

Indirect consumer lending activities are provided through approved dealerships.

Peoples Bank's credit card and merchant processing services are provided through joint marketing arrangements with third parties.

Note 1 Summary of Significant Accounting Policies

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and 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.) conform to generally accepted accounting principles in the United States of America ("US GAAP") and to general practices within the banking industry.

and its consolidated subsidiaries collectively, except where the context indicates the reference relates solely to Peoples Bancorp Inc.) conform to US GAAP and to general practices within the banking industry.

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 differ from those estimates.

Certain items in prior financial statements have been reclassified to conform to the current presentation, which had no impact on net income, total comprehensive income, net cash provided by operating activities or total stockholders' equity.

The following is a summary of significant accounting policies followed in the preparation of the financial statements:

Business Combinations:

Business combinations are accounted for using the acquisition method of accounting.

Under this accounting method, the acquired company's net assets are recorded at fair value on the date of acquisition, and the results of operations of the acquired company are combined with those of Peoples from the acquisition date forward.

Costs related to the acquisition are expensed as incurred.

The purchase price paid over the fair value of the net assets acquired, including intangible assets with finite lives, is recorded as goodwill.

Consolidation:

Peoples' Consolidated Financial Statements include subsidiaries in which Peoples has a controlling financial interest, principally defined as owning a voting interest of greater than 50 %.

In addition, entities not controlled by voting interest or in which the equity investors do not bear the residual economic risks, but for which Peoples is the primary beneficiary are also consolidated.

The Consolidated Financial Statements include the accounts of Peoples and its consolidated subsidiaries, Peoples Bank (along with its wholly-owned subsidiaries) Peoples Investment Company, Peoples Risk Management, Inc.

and NB&T Statutory Trust III, for which Peoples holds all of the common securities.

The Consolidated Financial Statements include the accounts of Peoples and its consolidated subsidiaries, Peoples Bank (along with its wholly-owned subsidiaries), Peoples Investment Company, Peoples Risk Management, Inc., NB&T Statutory Trust III, and FNB Capital Trust One, for which Peoples holds all of the common securities.

All intercompany accounts and transactions have been eliminated.

Fair Value Measurements:

The measurement of fair value under US GAAP uses a hierarchy intended to maximize the use of observable inputs and minimize the use of unobservable inputs.

This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

Quoted prices in active exchange markets for identical assets or liabilities;

also includes certain U.S.

Treasury and other U.S.

government and agency securities actively traded in over-the-counter markets.

Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data;

also includes derivative financial instruments whose value is determined using a pricing model with observable market inputs or can be derived principally from, or corroborated by, observable market data.

This category generally includes certain U.S.

government and agency securities, corporate debt securities, derivative instruments, and residential mortgage loans held for sale.

Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as financial instruments for which the determination of fair value requires significant management judgment or estimation;

also includes observable inputs for single dealer nonbinding quotes not corroborated by observable market data.

This category generally includes certain private equity investments, retained interests from securitizations, and certain collateralized debt obligations.

Operating Segments:

Peoples' business activities are currently confined to one reportable operating segment, which is community banking.

As a community banking entity, Peoples offers its customers a full range of products including a complete line of banking, insurance, investment and trust solutions.

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.

Peoples had $ 41.0 million of restricted funds at December 31, 2020, and $ 20.0 million restricted funds at December 31, 2019, held in interest-bearing deposits in other banks, which were being used as collateral and not available for withdrawal.

Peoples had no restricted funds at December 31, 2021, and $ 41.0 million of restricted funds at December 31, 2020, held in interest-bearing deposits in other banks, which were being used as collateral and not available for withdrawal.

During 2021, Peoples began collateralizing with investment securities in lieu of cash and cash equivalents held in other banks.

Investment Securities:

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Available-for-sale securities are those securities that would be available to be sold in the future in response to Peoples' liquidity needs, changes in market interest rates, and asset-liability management strategies, among other considerations.

Available-for-sale securities are reported at fair value, with unrealized gains and losses reported in total stockholders' equity as a separate component of accumulated other comprehensive income or loss ("AOCI"), net of applicable deferred income taxes.

Available-for-sale securities are reported at fair value, with unrealized gains and losses reported in total stockholders' equity as a separate component of AOCI, net of applicable deferred income taxes.

Certain restricted equity investment securities that do not have readily determinable fair values and for which Peoples does not exercise significant influence, are carried at cost.

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government sponsored enterprise 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

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.

Fair Value Measurements:

The measurement of fair value under US GAAP uses a hierarchy intended to maximize the use of observable inputs and minimize the use of unobservable inputs.

This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

Quoted prices in active exchange markets for identical assets or liabilities;

also includes certain U.S.

Treasury and other U.S.

government and agency securities actively traded in over-the-counter markets.

This category generally includes certain U.S.

government and agency securities, corporate debt securities, derivative instruments, and residential mortgage loans held for sale.

also includes observable inputs for single dealer nonbinding quotes not corroborated by observable market data.

This category generally includes certain private equity investments, retained interests from securitizations, and certain collateralized debt obligations.

Securities Sold Under Agreements to Repurchase ("Repurchase Agreements"):

Peoples enters into Repurchase Agreements with customers and other financial services companies, which are considered financings.

As such, these obligations are recorded as a liability on the Consolidated Balance Sheets and disclosed in "Note 8 Short-Term Borrowings" and "Note 9 Long-Term Borrowings," as appropriate.

Securities pledged as collateral under Repurchase Agreements are included in investment securities on the Consolidated Balance Sheets and are disclosed in "Note 3 Investment Securities." The fair value of the collateral pledged to a third party is continually monitored and additional collateral is pledged or returned, as deemed appropriate.

Loans and leases:

Loans originated that Peoples has the positive intent and ability to hold for the foreseeable future or to maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, purchase premiums and discounts, charge-offs and an allowance for credit losses.

Leases originated by Peoples are reported at the net investment of the lease, net of initial direct costs, charge-offs and an allowance for credit losses.

The foreseeable future is based upon current market conditions and business strategies, as well as balance sheet management and liquidity.

As the conditions change, so may management's view of the foreseeable future.

Net deferred loan origination costs were $ 5.1 million and $ 9.8 million at December 31, 2020 and 2019, respectively.

Peoples considers loans 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.

Upon detection of the reduced ability of a borrower to meet cash flow obligations, consumer and residential real estate loans are typically charged down to the net realizable value, with the residual balance placed on nonaccrual status.

Loans 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.

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

These loans are recorded at the purchase price, and an allowance for credit losses is determined using the same methodology as for other loans.

The initial allowance for credit losses determined on a collective basis is allocated to individual loans.

The total of the purchase price and allowance for credit losses is the initial amortized cost basis of these loans.

Peoples considers loans and leases 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 or lease agreement.

Upon detection of the reduced ability of a borrower or lessee to meet cash flow obligations, consumer and residential real estate loans and leases are typically charged down to the net realizable value, with the residual balance placed on nonaccrual status.

Loans and leases deemed to be uncollectable are charged against the allowance for credit losses, while recoveries of previously charged off amounts are credited to the allowance for credit losses.

Loans and leases acquired in a business combination that have evidence of more than insignificant credit deterioration, which includes loans and leases that Peoples believes it is probable that Peoples will be unable to collect all contractually required payments, are considered "purchased credit deteriorated" loans or leases.

These loans are recorded at the purchase price, and an allowance for credit losses is determined using the same methodology as for other loans or leases.

The initial allowance for credit losses determined on a collective basis is allocated to individual loans or leases.

The total of the purchase price and allowance for credit losses is the net amount expected to be collected for purchased credit deteriorated loans or leases.

The variance between the initial amortized cost basis and the par value of the loan is considered an interest premium or discount, which is amortized or accreted into interest income on a level yield method over the life of the loan.

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

The variance between the initial amortized cost basis and the fair value of a lease is considered an interest premium or discount, which is amortized or accreted into interest income on a level yield method over the life of the lease.

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

At acquisition date, Peoples records provision for credit losses to establish the allowance for credit losses for these acquired loans.

Loans Held for Sale:

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Any reduction in the loan's fair value is reflected as a write-down of the recorded investment resulting in a new cost basis, with a corresponding charge against the allowance for credit losses.

If the fair value of a loan classified as held for sale in subsequent periods is less than its cost basis, the carrying value of the loan is adjusted accordingly, with the corresponding loss recognized in earnings.

Interest Rate Lock Commitments:

Peoples enters into interest rate lock commitments with borrowers and best efforts commitments with investors on mortgage loans originated for sale into the secondary markets to manage the inherent interest rate and pricing risk associated with selling loans.

An interest rate lock commitment generally terminates once the loan is funded, the lock period expires or the borrower decides not to contract for the loan.

A best efforts commitment generally terminates once the loan is sold, the commitment period expires or the borrower decides not to contract for the loan.

These commitments are considered derivatives, which are generally accounted for by recognizing their estimated fair value on the Consolidated Balance Sheets in either other assets or accrued expenses and other liabilities.

The valuation of such commitments does not consider expected cash flows related to the servicing of the future loan.

Management has determined these derivatives do not have a material effect on Peoples' financial position, results of operations or cash flows.

Allowance for Credit Losses:

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Peoples utilizes the U.S.

unemployment, Ohio unemployment, Ohio Gross Domestic Product, and the Ohio Case Shiller Home Price Indices as economic factors in modeling.

unemployment, Ohio unemployment, and Ohio Gross Domestic Product as economic factors in modeling.

Probabilities of default are used in the loss driver model, and are analyzed on a quarterly basis to assess reasonableness.

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The primary factors considered when assigning a risk grade to a loan include (1) reliability and sustainability of the primary source of repayment, (2) past, present and projected financial condition of the borrower, and (3) current economic and industry conditions.

Other factors that could influence the risk grade assigned include the type and quality of collateral and the strength of

any guarantors.

Other factors that could influence the risk grade assigned include the type and quality of collateral and the strength of any guarantors.

The primary source of repayment for commercial real estate loans and commercial and industrial loans is normally the operating cash flow of the business available to repay debt.

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The evaluation of construction loans includes consideration of the borrower's ability to complete construction within the established budget.

The primary factors considered when classifying residential real estate, home equity lines of credit and consumer loans include the loan's past due status and any declaration of bankruptcy by the borrower(s).

The classification of residential real estate and home equity lines of credit also takes into consideration the current value of the underlying collateral.

The primary factors considered when classifying residential real estate loans, home equity lines of credit and consumer loans include the loan's past due status and any declaration of bankruptcy by the borrower(s).

The classification of residential real estate loans and home equity lines of credit also takes into consideration the current value of the underlying collateral.

Peoples has elected the practical expedient not to measure allowance for credit losses for accrued interest receivables.

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These considerations should also include prudent risk management practices at the financial institution based on the credit risk of the borrower.

Peoples is actively working with its customers to address any further accommodation needs while carefully evaluating the associated credit risk of the borrowers.

Peoples is actively working with its affected customers to address any further accommodation needs while carefully evaluating the associated credit risk of the borrowers.

Nonaccrual Loans:

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Interest received on nonaccrual loans is included in income only if principal recovery is reasonably assured.

Under the Coronavirus Aid, Relief and Economic Security ("CARES") Act, which was subsequently extended under legislation enacted in December 2020, borrowers who were making payments as required and were not considered past due prior to becoming affected by COVID-19 and then receive payment accommodations as a result of the effects of COVID-19 generally would not be reported as past due.

Under the Coronavirus Aid, Relief and Economic Security ("CARES") Act, which was subsequently extended under legislation enacted in December 2020, borrowers who were making payments as required and were not considered past due prior to becoming affected by COVID-19 and then received payment accommodations as a result of the effects of COVID-19 generally would not be reported as past due.

If Peoples agrees to a payment deferral for a borrower under the CARES Act, this may result in no contractual payments being past due, and the loans are not considered past due during the period of the deferral.

Under the guidance, during the time that Peoples maintains these short-term arrangements with borrowers, it should not report the loans as nonaccrual.

guidance, during the time that Peoples maintains these short-term arrangements with borrowers, it should not report the loans as nonaccrual.

Bank Premises and Equipment:

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Depreciation is computed on the straight-line method over the estimated useful lives of the related assets owned.

Major improvements to leased facilities are capitalized and included in bank premises at cost less accumulated depreciation, which is calculated on the straight-line method over the lesser of the remaining term of the leased facility or the estimated economic life of the improvement.

Investments in Affordable Housing Limited Partnerships:

Investments in affordable housing consist of investments in limited partnerships that operate qualified affordable housing projects or that invest in other limited partnerships formed to operate affordable housing projects.

These investments are considered variable interest entities for which Peoples is not the primary beneficiary.

Peoples generally utilizes the effective yield method to account for these investments with the tax credits, net of the amortization of the investment, reflected in the Consolidated Statements of Income as a reduction in income tax expense.

The unamortized amount of the investments is recorded in other assets and totaled $ 13.0 million and $ 13.9 million at December 31, 2020 and 2019, respectively.

Other Real Estate Owned ("OREO"):

OREO, included in other assets on the 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.

Peoples had OREO totaling $ 134,000 at December 31, 2020 and $ 227,000 at December 31, 2019.

Business Combinations:

Business combinations are accounted for using the acquisition method of accounting.

Costs related to the acquisition are expensed as incurred.

The purchase price paid over the fair value of the net assets acquired, including intangible assets with finite lives, is recorded as goodwill.

Major improvements to leased facilities are capitalized and included in bank premises at cost less accumulated depreciation, which is calculated on the straight-line method over the lesser of the remaining term for the leased facility or the estimated economic life of the improvement.

Goodwill and Other Intangible Assets:

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired in the business combination.

Goodwill represents the excess of the cost of an acquisition or business combination over the fair value of the net assets acquired in the business combination.

Goodwill is not amortized but is tested for impairment when indicators of impairment exist, or at least annually on October 1.

Based upon the most recently completed goodwill impairment test, Peoples concluded the recorded value of goodwill was not impaired as of October 1, 2020, based upon the estimated fair value of Peoples' single reporting unit.

Peoples' other intangible assets include customer relationship intangible assets, core deposit intangible assets and servicing rights representing the net present value of future economic benefit to be earned from acquired customer relationships with definite useful lives.

Peoples' other intangible assets include customer relationship intangible assets, core deposit intangible assets, indefinite-lived trade name and servicing rights representing the net present value of future economic benefits to be earned from acquired customer relationships with definite useful lives.

These intangible assets are amortized on an accelerated basis over their estimated lives ranging from 7 to 10 years.

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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.

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.

Amounts reported in AOCI related to derivatives are reclassified to interest income or expense as interest payments are made or received on Peoples' variable-rate assets or liabilities.

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Peoples assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transaction.

Trust Assets Under Administration and Management:

Peoples manages certain assets held in a fiduciary or agency capacity for customers.

These assets under administration and management, other than cash on deposit at Peoples, are not included in the Consolidated Balance Sheets since they are not assets of Peoples.

Interest Rate Lock Commitments:

An interest rate lock commitment generally terminates once the loan is funded, the lock period expires or the borrower decides not to contract for the loan.

A best efforts commitment generally terminates once the loan is sold, the commitment period expires or the borrower decides not to contract for the loan.

These commitments are considered derivatives, which are generally accounted for by recognizing their estimated fair value on the Consolidated Balance Sheets in either "Other assets" or "Accrued expenses and other liabilities".

The valuation of such commitments considers the servicing release premium, but does not consider other expected cash flows related to the servicing of the future loan.

Management determined these derivatives did not have a material effect on Peoples' financial position, results of operations or cash flows.

Investments in Affordable Housing Limited Partnerships:

These investments are considered variable interest entities for which Peoples is not the primary beneficiary.

unamortized amount of the investments is recorded in other assets and totaled $ 16.6 million and $ 13.0 million at December 31, 2021 and 2020, respectively.

Other Real Estate Owned ("OREO"):

OREO, included in "Other assets" on the 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.

Peoples had OREO totaling $ 9.5 million at December 31, 2021 and $ 134,000 at December 31, 2020.

Securities Sold Under Agreements to Repurchase ("Repurchase Agreements"):

Peoples enters into Repurchase Agreements with customers and other financial services companies, which are considered financings.

As such, these obligations are recorded as a liability on the Consolidated Balance Sheets and disclosed in "Note 9 Short-Term Borrowings" and "Note 10 Long-Term Borrowings," as appropriate.

Interest Income Recognition:

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Peoples’ principal source of revenue is interest income, which is recognized on an accrual basis primarily according to the terms in written contracts, such as loan agreements or securities contracts.

As of January 1, 2018, Peoples adopted ASU 2014-09 – Revenue from Contracts with Customers (Topic 606), and all subsequent updates that modified Accounting Standards Codification ("ASC") 606.

Peoples elected to adopt this new accounting guidance using the modified retrospective approach.

The modified retrospective approach uses a cumulative-effect adjustment to retained earnings to reflect uncompleted contracts in the initial application of the guidance.

As of January 1, 2018, Peoples recorded a cumulative-effect adjustment for uncompleted contracts, which resulted in a reduction to retained earnings and an increase in accrued expenses and other liabilities of $ 3.7 million, which was net of federal income taxes.

The impact during 2018 was an increase in insurance income and a decrease in retained earnings of $ 305,000 as a result of applying ASC 606.

Prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for those respective periods.

Estimates of variable consideration are included in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur, once the uncertainty is resolved.

Peoples' contracts with customers are short-term in nature, and were recognized under the following revenue streams:

Insurance Income:

Insurance income generally consists of commissions and fees from the sale of insurance policies, fees related to third-party administration services and performance-based commissions from insurance companies.

Peoples recognizes commission income from the sale of insurance policies when it acts as an agent between the insurance carrier and policyholder, arranging for the insurance carrier to provide policies to policyholders, and acts on behalf of the insurance carrier by providing customer service to the policyholders during the respective policy periods.

Commission income is recognized over time, using the output method of time elapsed, which corresponds with the underlying insurance policy period, during which Peoples is obligated to perform under contract with the insurance carrier.

Commission income is variable, as it is comprised of a certain percentage of the underlying policy premium.

Peoples estimates the variable consideration based upon the "most likely amount" method, and does not expect or anticipate a significant reversal of revenue in future periods, based upon historical experience.

Payment is due from the insurance carrier for commission income once the insurance policy has been sold.

Peoples has elected to apply a practical expedient related to capitalizable costs, which are the commissions paid to insurance producers, and will expense these commissions paid to insurance producers as incurred, as these costs are related to the commission income and would have been amortized within one year or less if they had been capitalized, the same period over which the commission income was earned.

Fees related to third-party administration services performed are recognized over time, during the period in which services have been provided, and are recognized monthly in the month the services were performed.

Performance-based commissions from insurance companies are recognized at a point in time, when received, and no contingencies remain.

Electronic Banking Income:

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Trust and investment income is variable as it is based on the value of assets under administration and management, and specific transactions.

Peoples estimates the variable consideration based upon the most likely amount method, and does not expect or anticipate a significant reversal of revenue in future periods.

Peoples estimates the variable consideration

based upon the most likely amount method, and does not expect or anticipate a significant reversal of revenue in future periods.

Payment is due from the customer when billed, which is typically a monthly or quarterly billing for services rendered in the most recent period, for which the performance obligation has been satisfied.

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Peoples has also elected to apply a practical expedient related to capitalizable costs, which are the commissions paid to financial advisors, and will expense these commissions paid to financial advisors as incurred, as these costs are related to the trust and investment income and would have been amortized within one year or less if they had been capitalized, the same period over which the income was earned.

Insurance Income:

Commission income is variable, as it is comprised of a certain percentage of the underlying policy premium.

Payment is due from the insurance carrier for commission income once the insurance policy has been sold.

Performance-based commissions from insurance companies are recognized at a point in time, when received, and no contingencies remain.

Deposit Account Service Charges:

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By entering into the interest rate swap with the customer, Peoples Bank effectively provides the customer with a fixed rate loan while creating a variable rate asset for Peoples Bank.

Peoples Bank offsets its

exposure in the swap by entering into an offsetting interest rate swap with an unaffiliated institution.

Peoples Bank offsets its exposure in the swap by entering into an offsetting interest rate swap with an unaffiliated institution.

Commercial loan swap fees are recognized at a point in time, when the transaction has been completed, and there is no recourse or further performance obligation required of Peoples.

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Other non-interest income includes certain revenues that are transactional-based, such as wire transfer fees, money order fees and other ancillary fees or services.

These transactional-based fees are recognized as income at a point in time, at the completion of the relevant transaction.

These transactional-based fees are recognized as income at a

point in time, at the completion of the relevant transaction.

Transactional-based fee income is variable as these fees are directly related to a service request from the customer.

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Payment is due from the customer at the time of completion of the requested transaction.

Stock-Based Compensation:

Stock-based compensation for restricted stock awards is measured at the fair value of these awards on their grant date.

Stock-based compensation is recognized over the restriction period for restricted stock awards.

Only the expense for the portion of the awards expected to vest is recognized.

For service-based awards, stock-based compensation for awards granted to employees who are eligible for retirement is recognized on the date the employee is first eligible to retire.

Advertising Costs:

Advertising costs are expensed as incurred.

Income Taxes:

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Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years.

The Tax Cuts and Jobs Act (the "TCJ Act") was enacted on December 22, 2017, and Peoples' Consolidated Financial Statements fully reflect the impact of the TCJ Act as of December 31, 2018.

As a result of the final impact of the TCJ Act, Peoples recorded a reduction to income tax expense of $ 0.7 million during 2018.

At December 31, 2017, Peoples had completed the accounting for the tax effects of enactment of the TCJ Act;

however, in certain cases, Peoples made reasonable estimates of the effects of a reduced statutory federal corporate income tax rate on its existing deferred tax balances.

Peoples also early adopted and retrospectively applied the reclassification of stranded income tax effects from AOCI to retained earnings as of December 31, 2017, as permitted by ASU 2018-02.

A tax position is initially recognized in the financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities.

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The amount of Peoples' uncertain income tax positions and unrecognized benefits are disclosed in "Note 13 Income Taxes."

Advertising Costs:

Advertising costs are expensed as incurred.

Earnings per Share ("EPS"):

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Diluted EPS is computed by dividing net earnings allocated to common shareholders by the weighted-average number of common shares outstanding adjusted to include the effect of potentially dilutive common shares.

Potentially dilutive common shares include incremental common shares issuable upon exercise of outstanding stock appreciation rights and non-vested restricted common shares using the treasury stock method.

Operating Segments:

Peoples' business activities are currently confined to one reporting operating segment, which is community banking.

As a community banking entity, Peoples offers its customers a full range of products including a complete line of banking, insurance, investment and trust solutions.

Stock-Based Compensation:

Stock-based compensation for restricted stock awards is measured at the fair value of these awards on their grant date.

Stock-based compensation is recognized over the restriction period for restricted stock awards.

Only the expense for the portion of the awards expected to vest is recognized.

For service-based awards, stock-based compensation for awards granted to employees who are eligible for retirement is recognized on the date the employee is first eligible to retire.

Potentially dilutive common shares include non-vested restricted common shares using the treasury stock method.

New Accounting Pronouncements:

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Accounting Standards Update ("ASU") 2020-10 - Codification Improvements.

This guidance provides clarification of the Codification or correct unintended application of guidance that are not expected to have a significant effect on current accounting

practice or create significant administrative cost to most entities.

This guidance provides clarification of the Codification or correct unintended application of guidance that are not expected to have a significant effect on current accounting practice or create significant administrative cost to most entities.

This update is effective for annual periods beginning after December 15, 2020 (effective January 1, 2021 for Peoples).

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This update is effective as of March 12, 2020 through December 31, 2022.

Per the guidance, Peoples is continuing to evaluate the impact of ASU 2020-04 on Peoples' consolidated financial statements.

ASU 2017-04 – Intangibles – Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment.

The amendments in this ASU simplify how an entity is required to test goodwill for impairment by eliminating the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge.

This accounting guidance was to be effective for interim and annual reporting periods beginning after December 15, 2019 (effective January 1, 2020 for Peoples).

Peoples early adopted this new accounting guidance as of January 1, 2019, and it was incorporated in the October 1, 2019 annual goodwill and intangible assets impairment analysis, and did not have a material impact on Peoples' consolidated financial statements.

This ASU was early adopted 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.

ASU 2019-12 - Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

This guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

This update is effective for fiscal years beginning after December 15, 2021.

Peoples adopted this guidance as of December 31, 2021, and it did not have a material impact on Peoples' Consolidated Financial Statements.

ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

This accounting guidance replaces the "incurred loss" model for recognizing credit losses with an "expected loss" model, referred to as the Current Expected Credit Loss ("CECL") methodology.

This accounting guidance replaced the "incurred loss" model for recognizing credit losses with an "expected loss" model, referred to as the Current Expected Credit Loss ("CECL") methodology.

Under the CECL methodology, Peoples is required to present certain financial assets carried at amortized cost, such as loans held-for-investment and held-to-maturity investment securities, at the net amount expected to be collected.

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Reporting periods beginning after December 31, 2019 are presented as required by ASU 2016-13, while prior period amounts continue to be reported in accordance with previously applicable US GAAP requirements.

Peoples is using the prospective transition approach for financial assets purchased with credit deterioration that were previously classified as purchased credit impaired assets and accounted for under ASC 310-30.

Peoples used the prospective transition approach for financial assets purchased with credit deterioration that were previously classified as purchased credit impaired assets and accounted for under ASC 310-30.

As of January 1, 2020, Peoples recorded a one-time cumulative-effect adjustment to reduce retained earnings by $ 3.7 million, net of statutory corporate federal income taxes, an increase in allowance for credit losses of $ 5.8 million and an increase in unfunded commitment liability of $ 1.5 million.

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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 in the Consolidated Financial Statements.

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 in the Consolidated Financial Statements.

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 Consolidated Balance Sheets by level in the fair value hierarchy.

At December 31, 2021 and December 31, 2020, there were no assets and liabilities measured on a recurring basis that were considered Level 3 measurements.

Recurring Fair Value Measurements at Reporting Date

December 31, 2021 December 31, 2020

(Dollars in thousands) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

(Dollars in thousands) Level 1 Level 2 Level 1 Level 2

Available-for-sale investment securities:

Obligations of:

Treasury and government agencies

$ 35,604 $ — $ — $ —

government sponsored agencies — 81,739 — 5,363

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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 Consolidated Balance Sheets by level in the fair value hierarchy.

At December 31, 2021 and December 31, 2020, there were no assets and liabilities measured on a non-recurring basis that were considered Level 1 measurements.

Non-Recurring Fair Value Measurements at Reporting Date

December 31, 2021 December 31, 2020

(Dollars in thousands) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Impaired loans (a) $ — $ — $ — $ — $ — $ 29,100

(Dollars in thousands) Level 2 Level 3 Level 2 Level 3

Loans held for sale $ 3,813 $ — $ 4,733 $ —

OREO — 9,496 — 134

Servicing rights (b)(c) — — 2,591 — — 3,881

(a) Impaired loans for 2020 is $0 due to adopting ASU 2016-13 .

(b) Included in other intangible assets on the Consolidated Balance Sheets.

Servicing rights are carried at the lower of cost or market value.

(c) Peoples established a valuation allowance on servicing rights of $ 161,000 during 2020, as the fair value of the servicing rights was less than the carrying value.

Servicing rights (a)(b) — 2,609 — 2,591

(a) Included in "Other intangible assets" on the Consolidated Balance Sheets.

Servicing rights are carried at the lower of cost or estimated fair value.

(b) Peoples established a valuation allowance on servicing rights of $ 12 at December 31, 2021 and $ 161 at December 31, 2020, as the fair value of the servicing rights was less than the carrying value.

Loans Held for Sale:

Loans originated and intended to be sold in the secondary market, generally 1-4 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:

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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.

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 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.

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

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Obligations of:

States and political subdivisions 2 35,139 35,484 4,346 4,791

government sponsored agencies 2 36,431 35,513 — —

States and political subdivisions (a) 2 151,688 150,138 35,199 35,484

Residential mortgage-backed securities 2 110,708 110,159 25,890 26,742

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Other investment securities:

FHLB stock 2 21,718 21,718 27,235 27,235

FRB stock 2 13,311 13,311 13,310 13,310

Nonqualified deferred compensation 2 1,867 1,867 1,499 1,499

Other investment securities 2 365 365 365 365

Other investment securities (a) 37,261 37,261 42,409 42,409

Net loans 3 3,352,581 3,408,373 2,851,969 3,147,190

Loans held for sale 2 4,659 4,733 6,499 6,553

Other investment securities at cost:

Federal Home Loan Bank ("FHLB") stock N/A 17,308 17,308 21,718 21,718

Federal Reserve Bank ("FRB") stock N/A 13,311 13,311 13,311 13,311

Total other investment securities at cost 30,619 30,619 35,029 35,029

Other investment securities at fair value:

Nonqualified deferred compensation (b) 1 2,240 2,240 1,867 1,867

Other investment securities (c) 2 784 784 365 365

Total other investment securities at fair value 33,643 33,643 37,261 37,261

Loans and leases, net of deferred fees and cost (d) 3 4,481,600 4,510,605 3,402,940 3,408,373

Bank owned life insurance 2 73,358 73,358 71,591 71,591

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Long-term borrowings 2 99,475 101,664 110,568 117,364

(a) Other investment securities, as reported on the Consolidated Balance Sheets, also includes equity investment securities for 2020 and 2019, which are reported in the Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis table above.

(a) Held-to-maturity investment securities are presented gross of allowance for credit losses of $ 286 and $ 60 , as of December 31, 2021 and December 31, 2020, respectively.

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

(c) "Other investment securities", as reported on the Consolidated Balance Sheets, also included equity investment securities at December 31, 2021

and at December 31, 2020, 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 cost are presented gross of allowance for credit losses of $64.0 million and $50.4 million, as of December 31,2021 and December 31,2020, respectively.

For certain financial assets and liabilities, carrying value approximates fair value due to the nature of the financial instrument.

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Other Investment Securities:

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

The fair value of portfolio loans assumes the sale of the notes to a third-party financial investor.

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.

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Fair values for loans are estimated using a discounted cash flow methodology.

The discount rates take into account interest rates currently being offered to customers for loans with similar terms, the credit risk associated with the loan and other market factors, including liquidity.

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.

The use of a valuation model using quoted prices of similar instruments are significant inputs in arriving at the fair value (Level 2).

The discount rates take into account interest rates currently being offered to customers for loans with similar terms, the credit risk associated with the loans and other market factors, including liquidity.

Bank Owned Life Insurance:

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Peoples recognizes tax-exempt income from the periodic increases in the cash surrender value of these policies and from death benefits.

Servicing Rights :

The fair value of the 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 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 (Level 2).

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Obligations of:

Treasury and government agencies $ 35,609 $ 12 $ ( 17 ) $ 35,604

government sponsored agencies 83,019 58 ( 1,338 ) 81,739

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Obligations of:

Treasury and government agencies

$ 16,914 $ 17 6 $ — $ — — $ 16,914 $ 17

government sponsored agencies

72,406 1,192 13 4,854 146 1 77,260 1,338

States and political subdivisions 101,397 2,075 71 30,853 1,301 11 132,250 3,376

1 unchanged sentence

573,139 9,051 113 51,103 2,325 14 624,242 11,376

Commercial mortgage-backed securities

60,134 1,494 21 — — — 60,134 1,494

Bank-issued trust preferred securities

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156,659 1,795 45 9,892 229 13 166,551 2,024

Commercial mortgage-backed securities

970 21 1 2,409 114 3 3,379 135

Bank-issued trust preferred securities

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At December 31, 2021, 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 December 31, 2020 and 2019 were largely attributable to changes in market interest rates and spreads since the securities were purchased and were not credit related losses.

Further, the unrealized losses at both December 31, 2021 and 2020 were largely attributable to changes in market interest rates and spreads since the securities were purchased.

Accrued interest receivable is not included in investment securities balances, and is presented in the "Other assets" line of the Consolidated Balance Sheets, with no recorded allowance for credit losses.

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The remaining 1 %, or two positions, consisted of privately issued mortgage-backed securities with all of the underlying mortgages originated prior to 2004.

Neither of the two positions had a fair value of less than 90 % of their book value.

Neither of the two positions had a fair value of less than 90 % of its book value.

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 number of loans underlying these securities.

The unrealized losses with respect to the two bank-issued trust preferred securities that had been in an unrealized loss position for twelve months or more at December 31, 2020 were primarily attributable to the subordinated nature of the debt.

The unrealized losses with respect to the one bank-issued trust preferred securities that had been in an unrealized loss position for twelve months or more at December 31, 2021 were primarily attributable to the subordinated nature of the debt.

The table below presents the amortized cost, fair value and total weighted-average yield of available-for-sale securities by contractual maturity at December 31, 2021.

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Obligations of:

Treasury and government agencies $ — $ 35,609 $ — $ — $ 35,609

government sponsored agencies 2,000 3,423 69,274 8,322 83,019

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Obligations of:

Treasury and government agencies $ — $ 35,604 $ — $ — $ 35,604

government sponsored agencies 2,020 3,461 68,176 8,082 81,739

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The following table summarizes Peoples’ held-to-maturity investment securities at December 31:

(Dollars in thousands) Amortized Cost Allowance for Credit Losses (a) 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

Obligations of:

government sponsored agencies $ 36,431 $ — $ 86 $ ( 1,004 ) $ 35,513

States and political subdivisions 151,688 $ ( 286 ) 1,006 ( 2,270 ) 150,138

7 unchanged sentences

Total held-to-maturity securities $ 66,518 $ ( 60 ) $ 1,789 $ ( 165 ) $ 68,082

(a) On January 1, 2020, Peoples adopted ASU 2016-13 and adopted the CECL model, which resulted in the establishment of a $ 7,000 allowance

for credit losses for held-to-maturity investment securities

There were no gross gains or gross losses realized by Peoples from sales of held-to-maturity securities for the years ended December 31, 2020, 2019 and 2018.

There were no sales of held-to-maturity securities for the years ended December 31, 2021 and December 31, 2020.

Management evaluates held-to-maturity investment securities for an allowance for credit losses on a quarterly basis.

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Peoples analyzed these securities using cumulative default rate averages for investment grade municipal securities.

As a result, at December 31, 2020, Peoples recorded $ 60,000 of allowance for credit losses for held-to-maturity securities, compared to $ 7,000 at January 1, 2020.

The following table presents a summary of held-to-maturity investment securities that had an unrealized loss at December 31:

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Obligations of:

government sponsored agencies $ 17,328 $ 504 6 $ 14,635 $ 500 2 $ 31,963 $ 1,004

States and political subdivisions

61,954 1,041 34 27,328 1,229 6 $ 89,282 $ 2,270

Total $ 18,662 $ 165 5 $ — $ — — $ 18,662 $ 165

Residential mortgage-backed securities

3 unchanged sentences

Total $ 235,557 $ 4,089 78 $ 41,963 $ 1,729 8 $ 277,520 $ 5,818

Obligations of:

States and political subdivisions

$ 18,662 $ 165 5 $ — $ — — $ 18,662 $ 165

Total $ 18,662 $ 165 5 $ — $ — — $ 18,662 $ 165

The table below presents the amortized cost, fair value and total weighted-average yield of held-to-maturity securities by contractual maturity at December 31, 2021.

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Obligations of:

government sponsored agencies $ — $ 6,546 $ — $ 29,885 $ 36,431

States and political subdivisions — 3,202 6,766 141,720 151,688

3 unchanged sentences

Obligations of:

government sponsored agencies $ — $ 6,524 $ — $ 28,989 $ 35,513

States and political subdivisions — 3,384 7,013 139,741 150,138

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Other Investment Securities

Peoples' other investment securities on the Consolidated Balance Sheets consist largely of shares of FHLB of Cincinnati and FRB of Cleveland stock, and other equity investment securities.

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

The following table summarizes the carrying value of Peoples' other investment securities at December 31:

6 unchanged sentences

Total other investment securities $ 33,987 $ 37,560

During 2020, Peoples redeemed $ 10.5 million of FHLB stock in order to be in compliance with the requirements of the FHLB.

Peoples purchased $ 5.0 million of additional FHLB stock during 2020, as a result of the FHLB's capital requirements on FHLB advances during the year.

During 2019, Peoples redeemed $ 4.9 million of FHLB stock in order to be in compliance with the requirements of the FHLB, and acquired $ 2.8 million of FHLB stock through the First Prestonsburg acquisition.

As of January 1, 2018, Peoples adopted ASU 2016-01, which requires changes in the fair value of equity investment securities to be recognized in net income.

Prior to 2018, changes in the fair value of equity investment securities were recognized through AOCI.

During the year ended December 31, 2020, Peoples recorded the change in the fair value of equity investment securities held at December 31, 2020 in other non-interest income, resulting in an unrealized loss of $ 19,000 .

Net realized gains on sales of equity investment securities included in other non-interest income during 2020 consisted of a realized gain of $ 680,000 related to the sale of

restricted Class B Visa stock, which had been held at a carrying cost and fair value of zero due to the litigation liability associated with the stock.

During the year ended December 31, 2019, Peoples recorded the change in the fair value of equity investment securities held at December 31, 2019 in other non-interest income, resulting in unrealized gain of $ 44,000 .

Additionally, the adoption of ASU 2016-01 resulted in the reclassification of equity investment securities from available-for-sale investment securities to other investment securities.

Consequently, as of January 1, 2018, net realized gains on the sale of equity investment securities are included in other non-interest income on the Consolidated Statements of Income.

Peoples redeemed $ 8.2 million and $ 10.5 million of FHLB stock in 2021 and 2020, respectively, in order to be in compliance with the requirements of the FHLB.

Peoples purchased $ 3.8 million and $ 5.0 million of additional FHLB stock during 2021 and 2020, respectively, as a result of the FHLB's capital requirements on FHLB advances during the year.

During 2021, Peoples recorded the change in the fair value of equity investment securities held at December 31, 2021 in other non-interest income, resulting in a realized net gain of $ 111,000 .

During 2020, Peoples recorded the change in the fair value of equity investment securities held at December 31, 2020 in "Other non-interest income", resulting in unrealized gain of $ 19,000 .

Net realized gains on sales of equity investment securities included in other non-interest income during 2020 consisted of a realized gain of $ 680,000 related to the sale of restricted Class B Visa stock, which had been held at a carrying cost and fair value of zero due to the litigation liability associated with the stock.

During 2018, there was a $ 413,000 realized loss on the sale of equity investment securities, included in other non-interest income.

At December 31, 2021, Peoples' investment in equity investment securities was comprised largely of common stocks issued by various unrelated bank holding companies.

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Pledged Securities

Peoples had 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 also pledged available-for-sale investment securities and held-to-maturity securities to secure additional borrowing capacity at the FHLB and the FRB.

At December 31, 2021 and 2020, Peoples had 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 also pledged available-for-sale investment securities and held-to-maturity securities as collateral for cash flow hedge swaps and to secure additional borrowing capacity at the FHLB and the FRB.

The following table summarizes the carrying value of Peoples' pledged investment securities as of December 31:

4 unchanged sentences

Held-to-maturity 160,643 16,971

Securing collateral for cash flow hedge swaps:

Available-for-sale 18,208 —

Held-to-maturity 9,936 —

Securing additional borrowing capacity at the FHLB and the FRB:

1 unchanged sentence

Held-to-maturity 549 11,316

Peoples' loan portfolio consists of various types of loans originated primarily as a result of lending opportunities within Peoples' primary market areas of northeastern, central, southwestern and southeastern Ohio, central and eastern Kentucky and west central West Virginia.

Peoples also originates insurance premium finance loans nationwide through its premium finance division.

Acquired loans consist of loans purchased 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).

Note 4 Loans and Leases

Peoples' loan portfolio consists of various types of loans and leases originated primarily as a result of lending opportunities within Peoples' footprint.

Peoples also originates insurance premium finance loans and leases nationwide through its Peoples Premium Finance and North Star Leasing divisions, respectively.

Loans and leases throughout this Form 10-K are referred to as "total loans" and "loans held for investment".

The major classifications of loan balances (in each case, net of deferred fees and costs) excluding loans held for sale, were as follows at December 31:

4 unchanged sentences

Premium finance 136,136 114,758

Leases 122,508 —

Residential real estate 771,718 574,007

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Total loans, at amortized cost $ 4,481,600 $ 3,402,940

Commercial and industrial loan balances grew significantly compared to December 31, 2019.

Peoples began participating as a Small Business Administration ("SBA") Paycheck Protection Program ("PPP") lender during the second quarter of 2020, and

originated $ 488.9 million of PPP loans during 2020.

Net deferred loan origination costs were $ 13.5 million and $ 5.1 million at December 31, 2021 and 2020, respectively.

On September 17, 2021, Peoples completed the merger with Premier effective after the close of the business day.

Peoples acquired $ 1.1 billion in net loans, of which $ 176.2 million were considered purchased credit deteriorated loans.

Effective after the close of business on March 31, 2021, Peoples acquired $ 83.3 million in leases from NS Leasing, LLC ("NSL"), of which $ 5.2 million were considered purchase d credit d eteriorated leases.

Refer to "Note 20 Acquisitions" for more detail on the loans acquired from Premier and of leases acquired from NSL.

Peoples began participating as a Small Business Administration ("SBA") Paycheck Protection Program ("PPP") lender during the second quarter of 2020, and originated $ 488.9 million of PPP loans during 2020 and $159.1 million during 2021.

At December 31, 2021, the PPP loans had an amortized cost of $ 87.1 million, and were included in commercial and industrial loan balances.

Peoples recorded deferred loan origination fees related to the PPP loans, net of deferred loan origination costs, which totaled $ 2.2 million at December 31, 2021.

During 2020, Peoples recorded accretion of net deferred loan origination fees of $ 7.5 million on PPP loans.

During 2021 and 2020, Peoples recorded accretion of net deferred loan origination fees of $ 13.0 million and $ 7.5 million, respectively, on PPP loans.

The remaining net deferred loan origination fees will be accreted over the life of the respective loans, or until forgiven by the SBA, and will be recognized in net interest income.

The PPP expired on May 31, 2021 and no new originations were made under the program;

however, forgiveness proceeds will continue to be received until the loans are paid in full.

Accrued interest receivable is not included within the loan balances, but is presented in the “Other assets” line of the Consolidated Balance Sheets, with no recorded allowance for credit losses as Peoples elected the practical expedient not to measure allowance for credit losses for accrued interest receivables.

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The amortized cost of loans on nonaccrual status and loans delinquent for 90 days or more and accruing were as follows at December 31:

(Dollars in thousands) Nonaccrual (a)(b)

(Dollars in thousands) Nonaccrual (a)

Accruing Loans 90+ Days Past Due Nonaccrual (a)

Accruing Loans 90+ Days Past Due (b)

Accruing Loans 90+ Days Past Due

Construction $ 6 $ 90 $ 4 $ —

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Premium finance — 865 — 589

Leases 1,581 — — —

Residential real estate 9,647 805 8,375 1,975

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(a) There were $ 2.6 million of nonaccrual loans for which there was no allowance for credit losses as of December 31, 2021 and $ 1.3 million of such loans at December 31, 2020.

(b) The new accounting for purchased credit deteriorated loans under ASU 2016-13 resulted in the movement of $ 3.9 million of loans from the 90+ days past due and accruing category to the nonaccrual category as of January 1, 2020.

At December 31, 2019, these loans were presented as 90+ days past due and accruing.

As of December 31, 2020, Peoples had made short-term modifications, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment for current borrowers, which were insignificant.

Under the CARES Act and interagency guidance, borrowers that are considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented.

As such, these modifications made under the CARES Act are not included in Peoples' nonaccrual or accruing loans 90+ days past due as of December 31, 2020.

The new accounting for purchased credit deteriorated loans under ASU 2016-13 resulted in the movement of $ 3.9 million of loans from the 90+ days past due and accruing category to the nonaccrual category as of January 1, 2020.

As of December 31, 2019, these loans were presented as 90+ days past due and accruing.

Although they were not accruing contractual interest income, they were accreting income from the discount that was recognized due to acquisition accounting.

The additional increase in nonaccrual loans at December 31, 2020, compared to December 31, 2019, was due to two commercial relationships aggregating $ 3.2 million and several smaller commercial relationships being placed on nonaccrual.

The amount of interest income recognized on nonaccrual loans during 2020 was $ 1.6 million.

As of December 31, 2021, Peoples had made short-term modifications, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment for current borrowers, in amounts which were insignificant.

Under the CARES Act, borrowers that are considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented.

As such, these modifications made in accordance with the CARES Act were not included in Peoples' nonaccrual or accruing loans 90+ days past due as of December 31, 2021 and 2020.

The amount of interest income recognized on loans past due 90 days or more during 2021 and 2020 was $ 1.3 million and $ 1.6 million, respectively .

The following tables present the aging of the recorded investment in past due loans at December 31:

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Premium finance 751 266 865 1,882 134,254 136,136

Leases 426 247 1,581 2,254 120,254 122,508

Residential real estate 8,276 2,241 5,188 15,705 756,013 771,718

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Commercial and industrial 567 552 4,535 5,654 967,991 973,645

Premium finance 928 1,073 204 2,205 112,553 114,758

Residential real estate 6,739 2,688 5,512 14,939 559,068 574,007

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Total loans, at amortized cost $ 15,272 $ 5,774 $ 20,149 $ 41,195 $ 3,361,745 $ 3,402,940

The increase in loans 90+ days past due, compared to December 31, 2019, was mostly due to a $ 1.5 million commercial relationship.

Delinquency trends remained stable as 98.8 % of Peoples' portfolio was considered "current" at December 31, 2021, compared to 98.8 % at December 31, 2020.

Pledged Loans

Peoples has pledged certain loans secured by one-to-four family and multifamily residential mortgages, and home equity lines of credit under a blanket collateral agreement to secure borrowings from the FHLB.

Peoples has pledged certain loans secured by one-to-four family and multifamily residential mortgages, commercial real estate and home equity lines of credit under a blanket collateral agreement to secure borrowings from the FHLB.

Peoples also has pledged commercial loans to secure borrowings with the FRB.

3 unchanged sentences

Loans pledged to FRB 294,728 107,340

During 2020, Peoples pledged additional collateral to the FHLB and FRB to secure potential funding needs in light of the COVID-19 pandemic, as well as to fund the PPP loan originations that occurred during the year.

During 2021, Peoples pledged additional collateral to the FHLB and FRB to secure potential funding needs in light of the COVID-19 pandemic, as well as to fund the PPP loan originations that occurred during 2021 and 2020.

Related Party Loans

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Balance, December 31, 2020 $ 13,131

Acquired loans 14,868

New loans and disbursements 2,763

Repayments ( 4,899 )

Other changes ( 1,128 )

Balance, December 31, 2021 $ 25,863

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The following tables summarize the risk category of Peoples' loan portfolio based upon the most recent analysis performed at December 31, 2021:

Term Loans at Amortized Cost by Origination Year

(Dollars in thousands) 2021 2020 2019 2018 2017 Prior Revolving Loans Revolving Loans Converted to Term Total

8 unchanged sentences

Doubtful — — — — — 542 — — 542

Loss — — — — — 23 — — 23

Total 253,416 263,504 226,637 147,624 153,391 483,818 21,691 12,026 1,550,081

8 unchanged sentences

Total 135,896 240 — — — — — — 136,136

Pass 78,048 25,954 13,368 2,972 337 — — 120,679

Special mention 34 29 22 159 4 — 248

Substandard 196 438 462 479 6 — 1,581

Total 78,278 26,421 13,852 3,610 347 — — — 122,508

Residential real estate

14 unchanged sentences

Total loans, at amortized cost $ 1,304,914 $ 775,708 $ 508,459 $ 318,793 $ 270,623 $ 1,091,276 $ 211,827 $ 38,625 $ 4,481,600

During 2020, Peoples downgraded several relationships due to the COVID-19 pandemic.

The COVID-related downgrades contributed to increases of $ 29.8 million of additional criticized loans and $ 9.4 million of additional classified loans compared to balances at December 31, 2019.

At December 31, 2020, Peoples had a total of $ 1.5 million of loans secured by residential real estate mortgages that were in the process of foreclosure.

The following tables summarize the risk category of Peoples' loan portfolio based upon the most recent analysis performed at December 31, 2020:

Term Loans at Amortized Cost by Origination Year

(Dollars in thousands) 2020 2019 2018 2017 2016 Prior Revolving Loans Revolving Loans Converted to Term Total

Pass $ 27,670 $ 56,361 $ 554 $ 15,089 $ 824 $ 1,194 $ 3,199 $ 2,003 $ 104,891

Special mention — — 496 — — 143 — — 639

Substandard — — — 186 — 1,076 — — 1,262

Total 27,670 56,361 1,050 15,275 824 2,413 3,199 2,003 106,792

Commercial real estate, other

Pass 116,441 125,373 99,522 94,465 99,668 215,385 109,160 9,748 860,014

Special mention 297 5,806 999 5,296 5,125 12,932 3,967 60 34,422

Substandard — 1,191 677 1,709 1,663 27,066 3,033 110 35,339

Doubtful — — — — — 78 — — 78

Total 116,738 132,370 101,198 101,470 106,456 255,461 116,160 9,918 929,853

Commercial and industrial

Pass 409,237 97,362 67,284 38,450 45,026 77,009 199,597 30,680 933,965

Special mention 1,034 366 2,018 287 1,453 1,452 12,429 526 19,039

Substandard 2,226 3,569 2,873 2,167 318 4,163 3,436 1,083 18,752

Doubtful — — — — 1,698 191 — 187 1,889

Total 412,497 101,297 72,175 40,904 48,495 82,815 215,462 32,476 973,645

Premium finance

Pass 114,758 — — — — — — — 114,758

Total 114,758 — — — — — — — 114,758

Residential real estate

Pass 47,147 40,223 24,235 29,142 43,105 309,795 65,168 305 558,815

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

Loss — — — — — 144 — — 144

Total 47,147 40,223 24,235 29,142 43,105 324,987 65,168 305 574,007

Home equity lines of credit

Pass 16,469 13,513 12,548 12,382 11,869 40,626 13,506 4,091 120,913

Total 16,469 13,513 12,548 12,382 11,869 40,626 13,506 4,091 120,913

Consumer, indirect

Pass 210,014 92,696 71,807 39,608 17,156 11,563 60,683 — 503,527

Total 210,014 92,696 71,807 39,608 17,156 11,563 60,683 — 503,527

Consumer, direct

Pass 31,689 15,923 11,085 4,531 2,529 4,193 9,144 — 79,094

Total 31,689 15,923 11,085 4,531 2,529 4,193 9,144 — 79,094

Deposit account overdrafts 351 — — — — — — — 351

Total loans, at amortized cost $ 977,333 $ 452,383 $ 294,098 $ 243,312 $ 230,434 $ 722,058 $ 483,322 $ 48,793 $ 3,402,940

Collateral Dependent Loans

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The following provides more detail about the types of collateral that secure collateral dependent loans:

• Construction loans are typically secured by owner occupied commercial real estate or non-owner occupied investment real estate.

Typically, owner occupied construction loans are secured by office buildings, warehouses, manufacturing facilities, and other commercial and industrial properties that are in process of construction.

Non-owner occupied commercial construction loans are generally secured by office buildings and complexes, multi-family complexes, land under development, and other commercial and industrial real estate in process of construction.

• Commercial real estate loans can be secured by either owner occupied commercial real estate or non-owner occupied investment commercial real estate.

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Non-owner occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development, industrial properties, as well as other commercial or industrial real estate.

• Commercial and industrial loans are general 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.

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Some consumer loans are unsecured and have no underlying collateral.

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

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

The following table details Peoples' amortized cost of collateral dependent loans at December 31:

(Dollars in thousands) 2021 2020

Construction $ 1,291 $ —

Commercial real estate, other 37,220 8,467

2 unchanged sentences

Home equity lines of credit 391 403

Consumer, indirect — 713

Consumer, direct — 94

Total collateral dependent loans $ 50,119 $ 16,873

The increase in collateral dependent commercial and industrial loans at December 31, 2020 compared to December 31, 2019 was mostly due to two commercial relationship that became collateral dependent, coupled with some smaller relationships.

In addition, the increase in collateral dependent consumer loans was driven by a change in the policy threshold for evaluation of individually impaired loans, which was previously $ 100,000 and on January 1, 2020 was changed to $ 250,000 , thereby reducing the amount of loans considered collateral dependent which were no longer above the threshold.

The following table summarizes the loans that were modified as TDRs during the years ended December 31, 2020 and 2019.

The increase in collateral dependent loans at December 31, 2021 compared to December 31, 2020, was primarily due to $ 37.1 million in collateral dependent loans acquired from Premier.

The following table summarizes the loans that were modified as TDRs during the years ended 2021 and 2020.

Recorded Investment (a)

(Dollars in thousands) Number of Contracts Pre-Modification Post-Modification Remaining Recorded Investment

Construction 1 $ 344 $ 344 $ 344

Commercial real estate, other 7 218 218 217

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Total 105 $ 4,028 $ 4,091 $ 3,851

Originated loans:

Commercial real estate, other 5 $ 2,294 $ 2,294 $ 2,217

Commercial and industrial 6 3,820 3,820 3,736

5 unchanged sentences

Total 68 $ 8,073 $ 8,108 $ 7,877

Acquired loans:

Construction 3 $ 101 $ 76 $ 76

Commercial and industrial 5 1,557 1,557 1,464

Residential real estate 38 2,069 2,069 1,967

Home equity lines of credit 8 172 173 164

Consumer, direct 10 124 124 114

Total 64 $ 4,023 $ 3,999 $ 3,785

(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.

The following table presents those loans modified into a TDR during 2020 that subsequently defaulted (i.e., 90 days or more past due following a modification during 2020).

There were no loans modified into a TDR during the year that subsequently defaulted in 2019.

The following table presents those loans modified into a TDR during year that subsequently defaulted (i.e., 90 days or more past due following a modification during the year).

(Dollars in thousands) Number of Contracts Recorded Investment (a)

Impact on the Allowance for Credit Losses

Impact on the Allowance for Credit Losses Number of Contracts Recorded Investment (a) Impact on the Allowance for Credit Losses

Commercial real estate, other — $ — $ — 1 $ 54 $ —

Residential real estate 3 156 — — — —

Consumer, indirect 1 26 — 1 15 —

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Allowance for Credit Losses

Changes in the allowance for credit losses for the period ended December 31, 2020 are summarized below:

Changes in the allowance for credit losses for 2021 are summarized below:

(Dollars in thousands) Beginning Balance,

January 1, 2020 Initial Allowance for Purchased Credit Deteriorated Assets Provision for Credit Losses (a) Charge-offs Recoveries Ending Balance, December 31, 2020

December 31, 2020 Initial Allowance for Acquired Purchased Credit Deteriorated Assets Provision for (Recovery of) Credit Losses (a) Charge-offs Recoveries Ending Balance, December 31, 2021

Construction $ 1,887 $ 2,006 $ ( 894 ) $ — $ — $ 2,999

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Premium finance 1,095 — ( 671 ) ( 45 ) — 379

Leases — 493 5,399 ( 1,434 ) 339 4,797

Residential real estate 6,044 1,206 225 ( 385 ) 143 7,233

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(a) Amount does not include the provision for unfunded commitment liability.

The significant increase in the allowance for credit losses as of December 31, 2020 compared to January 1, 2020 was mostly due to the COVID-19 pandemic, and the resulting impact on economic forecasts utilized in the CECL model.

Peoples calculates its allowance for credit losses using a discounted cash flow model, and incorporates economic forecasts, including U.S.

unemployment, Ohio unemployment, Ohio Gross Domestic Product, and the Ohio Case Shiller Home Price Indices as economic factors.

The economic forecast used in the December 31, 2020 calculation of the allowance for credit losses included higher unemployment rates and lower Ohio Gross Domestic Product than those at January 1, 2020, which drove much of the increase in the allowance for credit losses at December 31, 2020.

In addition, Peoples recorded an increase of $ 5.8 million in allowance for credit losses on January 1, 2020 related to the implementation of ASU 2016-13.

During 2020, Peoples recognized a recovery of $ 2.5 million on a commercial and industrial loan that was previously charged-off.

As of December 31, 2020, Peoples had recorded an unfunded commitment liability of $ 2.9 million, an increase compared to the $ 1.5 million that was recorded on January 1, 2020.

The unfunded commitment liability is presented in the “Accrued expenses and other liabilities” line of the Consolidated Balance Sheets.

Changes in the allowance for credit losses for 2020 are summarized below:

(Dollars in thousands) Beginning Balance,

January 1, 2020 Impact of CECL Implementation for Purchased Credit Deteriorated Assets Provision for Credit Losses (a) Charge-offs Recoveries Ending Balance, December 31, 2020

Construction $ 600 $ 51 $ 1,236 $ — $ — $ 1,887

Commercial real estate, other 7,193 1,356 9,315 ( 528 ) 200 17,536

Commercial and industrial 4,960 860 5,987 ( 1,565 ) 2,521 12,763

Premium finance — — 1,098 ( 3 ) — 1,095

Residential real estate 3,977 383 1,735 ( 353 ) 302 6,044

Home equity lines of credit 1,570 2 379 ( 103 ) 12 1,860

Consumer, indirect 5,389 — 4,262 ( 1,923 ) 302 8,030

Consumer, direct 856 34 329 ( 187 ) 49 1,081

Deposit account overdrafts 94 — 456 ( 673 ) 186 63

Total $ 24,639 $ 2,686 $ 24,797 $ ( 5,335 ) $ 3,572 $ 50,359

(a) Amount does not include the provision for unfunded commitment liability.

During 2021, the increase in allowance for credit loss was largely due to the Premier and North Star Leasing acquisitions, and the related need to establish an allowance for credit losses on those portfolios, coupled with organic growth in loan balances.

The North Star Leasing acquisition added $ 3.3 million in allowance for credit losses at the acquisition date, of which $ 0.5 million was established for purchased credit deteriorated loans as part of the acquisition accounting, and the remainder was established using provision for credit losses.

The Premier acquisition added $ 28.6 million to the allowance for credit losses during the third quarter of 2021, of which $16.9 million was established for purchased credit deteriorated loans as part of the acquisition accounting, and the remainder was established using provision for credit losses.

Also during 2021, economic factors and loss drivers improved compared to 2020, and had a positive impact on the CECL model.

The allowance for credit losses as a percent of total loans decreased slightly during 2021, compared to 2020.

There were no purchased credit deteriorated loans acquired in the acquisition of Premium Finance.

As of December 31, 2021, Peoples had recorded an unfunded commitment liability of $ 2.5 million, a decrease compared to the $ 2.9 million that was recorded as of December 31, 2020.

The allowance for unfunded commitments (also referred to as "unfunded commitment liability") is presented in the “Accrued expenses and other liabilities” line of the Consolidated Balance Sheets.

During 2021, Peoples recorded a recovery of credit losses on unfunded commitments of $360,000, compared to a provision for credit losses on unfunded commitments of $ 1.4 million for 2020.

The change in the allowance for unfunded commitments is reflected in the "Provision for credit losses" line of the Consolidated Statements of Income.

Note 5 Bank Premises and Equipment

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Net book value $ 89,260 $ 60,094

Peoples depreciates its building and premises, and furniture, fixtures and equipment over estimated useful lives generally ranging from five to forty years and two to ten years, respectively.

Depreciation expense was $ 6.0 million in 2020, $ 5.7 million in 2019 and $ 4.9 million in 2018.

Peoples depreciates its building and premises, and furniture, fixtures and equipment over estimated useful lives generally ranging from five to forty to years and two to ten years, respectively.

Depreciation expense was $ 6.1 million in 2021 and $ 6.0 million in 2020.

Note 6 Leases

Lessor Arrangements

Leases originated by Peoples, that Peoples has the positive intent and ability to hold for the foreseeable future or to maturity or payoff, are reported at the net investment of the lease, net of initial direct costs, charge-offs and an allowance for credit losses.

Peoples considers leases past due if any required principal or interest payments have not been received as of the date such payments were required to be made under the terms of the lease agreement.

Upon detection of the reduced ability of a lessee to meet cash flow obligations, leases are typically charged down to the net realizable value, with the residual balance placed on nonaccrual status.

Leases deemed to be uncollectable are charged against the allowance for credit losses, while recoveries of previously charged-off amounts are credited to the allowance for credit losses.

Peoples began originating leases with the acquisition of leases from NSL.

The leases acquired were determined to be sales-type leases, as the premise for the leases is dollar buy-out, whereby the lessee pays one dollar at maturity of the lease to purchase the equipment.

Originated leases continue to be classified as sales-type leases.

As a lessor, Peoples originates commercial equipment leases either directly to the customer or indirectly through vendor programs.

Equipment leases consist of automotive, construction, healthcare, manufacturing, office, restaurant, and other equipment.

These sales-type leases do not typically contain residual value guarantees;

however, if a lease contains a residual value guarantee, Peoples reduces its residual asset risk by obtaining a security deposit from the lessee.

Other non-interest income noted in the table below includes gain on the early termination of leases, syndicated leases, and other fees.

Additional information regarding Peoples' sales-type leases can be found in "Note 4 Loans and Leases".

The table below details Peoples' lease income at December 31:

(Dollars in thousands) 2021

Interest and fees on leases (a) $ 13,572

Other non-interest income 1,293

Total lease income $ 14,865

(a) Included in "Interest and fees on loans" on the Consolidated Statements of Income.

For additional

information, see "Note 4 Loans and Leases" of the Notes to the Consolidated Financial Statements.

The following table summarizes the net investments in sales-type leases, which are included in "Loans and leases, net of deferred costs" on the Consolidated Balance Sheets at December 31:

(Dollars in thousands) 2021

Lease payments receivable, at amortized cost $ 152,202

Estimated residual values 129

Initial direct costs 1,427

Deferred revenue ( 31,250 )

Total leases, at amortized cost 122,508

Allowance for credit losses - leases ( 4,797 )

Net investment in sales-type leases $ 117,711

The following table summarizes the contractual maturities of leases:

(Dollars in thousands) Balance

2022 $ 54,090

Thereafter 881

Lease payments receivable, at amortized cost $ 152,202

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.

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.

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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.

Peoples elected certain practical expedients, in accordance with the adoption of ASC 842.

Peoples elected to recognize a cumulative-effect adjustment to the opening balance of retained earnings on January 1, 2019 for the implementation of ASU 2016-02.

Peoples 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.

Operating lease ROU assets exclude lease incentives and nonlease components.

The table below details Peoples' lease expense, which is included in "Net occupancy and equipment expense" in the Consolidated Statements of Income at December 31:

5 unchanged sentences

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 asset, the lease liability and other information related to Peoples' operating leases:

(Dollars in thousands) December 31, 2020 December 31, 2019

The following table details the ROU asset, the lease liability and other information related to Peoples' operating leases on the Consolidated Balance Sheet at December 31:

(Dollars in thousands) 2021 2020

Right-of-use asset:

7 unchanged sentences

Additions for right-of-use assets obtained during the year ended $ 2,482 $ 62

T he following table summarizes the future lease payments of operating leases:

The following table summarizes the future lease payments of operating leases:

(Dollars in thousands) Payments

Year ending December 31, 2021

Year ending December 31, 2022

Year ending December 31, 2023

Year ending December 31, 2024

Year ending December 31, 2025

Thereafter 3,806

8 unchanged sentences

Goodwill, end of year $ 264,193 $ 171,260

Peoples performed the required annual goodwill impairment test as of October 1, 2020, and concluded there was no impairment in the recorded value of goodwill as of October 1, 2020, based upon the estimated fair value of the single reporting unit.

Peoples elected to bypass the qualitative assessment and perform the quantitative impairment test.

Peoples performed a qualitative assessment of goodwill as of October 1, 2021, and concluded it was not more likely than not that the fair value of Peoples' reporting unit was less than its carrying amount.

On April 1, 2021, Peoples preliminarily recorded $ 24.7 million of goodwill related to the acquisition of NSL.

On May 4, 2021, Peoples Insurance recorded $ 46,000 of goodwill from the acquisition of an insurance agency.

On September 17, 2021, Peoples completed the merger with Premier, for which Peoples preliminarily recorded $ 68.2 million of goodwill.

On January 1, 2020, Peoples Insurance acquired a property and casualty-focused independent insurance agency, for which Peoples recorded $ 0.1 million of goodwill.

On July 1, 2020, Peoples completed its acquisition of Triumph Premium Finance, for which Peoples recorded $ 5.5 million of goodwill.

On April 12, 2019, Peoples completed its acquisition of First Prestonsburg, for which Peoples recorded $ 14.5 million of goodwill.

For additional information on these acquisitions, refer to "Note 20 Acquisitions."

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Gross intangibles $ 22,233 $ 12,495 $ 34,728

Intangibles recorded from acquisitions — 5,015 5,015

Intangibles recorded from acquisitions (a) 4,233 13,014 17,247

Accumulated amortization ( 19,048 ) ( 9,603 ) ( 28,651 )

1 unchanged sentence

Servicing rights 2,218

Indefinite-lived trade name intangible 1,274

Total other intangibles $ 26,816

5 unchanged sentences

Total other intangibles $ 13,337

(a) Peoples included in customer relationship intangibles an intangible asset related to a non-compete agreement in the

amount of $ 0.3 million

Peoples performed other intangible assets impairment testing as of October 1, 2021 and concluded there was no impairment in the recorded value of other intangible assets as of October 1, 2021.

During the annual other intangible assets impairment test, Peoples assessed qualitative factors, including relevant events and circumstances, to determine that it was more-likely-than-not that the fair value of other intangible assets exceeded the carrying value.

Other intangible assets recorded from the above mentioned acquisitions in 2020 were $ 5.0 million of customer relationship intangible assets.

During the annual impairment test, Peoples assessed qualitative factors, including relevant events and circumstances, to determine that it was more-likely-than-not that the fair value of other intangible assets exceeded the carrying value.

Other intangible assets recorded from the above mentioned acquisitions in 2021 were $ 12.7 million of customer relationship intangible assets and $ 4.2 million of core deposit intangible assets.

Refer to "Note 20 Acquisitions" for additional information.

Other intangible assets recorded from the First Prestonsburg acquisition in 2019 were $ 4.2 million of core deposit intangible assets.

Other intangible assets recorded in 2020 included $ 5.0 million of customer relationship intangible assets from the Premium Finance and Peoples Insurance acquisitions.

The following table details estimated aggregate future amortization of other intangible assets at December 31, 2021:

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Balance, end of year $ 2,218 $ 2,486 $ 2,742

During 2020, Peoples recorded a valuation allowance of $ 161,000 related to the decrease in the fair value of servicing rights.

No valuation allowances were required at December 31, 2019 and 2018 for Peoples’ servicing rights since, at each date, the fair value equaled or exceeded the book value.

The fair value of servicing rights was $ 2.6 million and $ 3.9 million at December 31, 2020 and 2019, respectively.

Fair value at December 31, 2020 was determined using discount rates ranging from 8.3 % to 10.8 %, and prepayment speeds ranging from 12.8 % to 21.1 %, depending on the stratification of the specific right, utilizing state delinquency to calculate the default rate.

Fair value at December 31, 2019 was determined using discount rates ranging from 9.8 % to 12.3 %, and prepayment speeds ranging from 8.9 % to 12.8 %.

As of December 31, 2021 and 2020, Peoples recorded a valuation allowance of $ 12,000 and $ 161,000 related to the decrease in the fair value of servicing rights.

The following is the breakdown of the discount rates and prepayment speeds of servicing rights for the years ended December 31:

Minimum Maximum Minimum Maximum

Discount rates 8.3 % 10.8 % 8.3 % 10.8 %

Prepayment speeds 8.9 % 27.1 % 12.8 % 21.1 %

The fair value of servicing rights was $ 2.6 million at both December 31, 2021 and 2020.

Note 8 Deposits

3 unchanged sentences

Less than $100 323,185 225,398

Retail CDs 445,930 490,830

Total retail CDs 643,759 445,930

Interest-bearing deposit accounts 1,167,460 692,113

6 unchanged sentences

Total deposits $ 5,862,552 $ 3,910,459

Time deposits that meet or exceed the Federal Deposit Insurance Corporation ("FDIC") limit of $ 250,000 were $ 89.0 million and $ 100.8 million at December 31, 2020 and 2019, respectively.

Time deposits that met or exceeded the Federal Deposit Insurance Corporation ("FDIC") limit of $ 250,000 , or otherwise uninsured, were $ 121.3 million and $ 89.0 million at December 31, 2021 and 2020, respectively, and are broken out below by time remaining until maturity.

(Dollars in thousands) 2021 2020

3 months or less $ 23,779 $ 27,857

Over 3 to 6 months 26,964 20,441

Over 6 to 12 months 34,434 8,229

Over 12 months 36,115 32,424

Total $ 121,292 $ 88,951

The contractual maturities of CDs and brokered demand and savings deposits for each of the next five years and thereafter are as follows:

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(a) Brokered includes $ 100.0 million of brokered demand and savings deposits.

Deposits from related parties were $ 11.5 million at December 31, 2020 and 2019.

As of December 31, 2020, Peoples had seventeen effective interest rate swaps, with an aggregate notional value of $ 160.0 million, of which $ 50.0 million were funded by 90-day brokered CDs and $ 110.0 million were funded by brokered demand and savings deposits.

Brokered CDs and deposits are expected to be extended every 90 days through the maturity dates of the swaps.

Deposits from related parties were $ 12.6 million and $ 11.5 million at December 31, 2021 and 2020, respectively.

As of December 31, 2021, Peoples had thirteen effective interest rate swaps, with an aggregate notional value of $ 125.0 million, of which $ 85.0 million were funded by brokered demand deposits.

In the fourth quarter of 2021, Peoples terminated three interest rate swap agreements with an aggregate notional value of $ 25.0 million, of which $ 15 million were brokered deposits that were not immediately terminated, but instead allowed to mature.

Brokered deposits 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 15 Derivative Financial Instruments."

2 unchanged sentences

(Dollars in thousands) Retail Repurchase Agreements FHLB

National Market Repurchase Agreements Other (a)

Ending balance $ 111,482 $ 55,000 $ — $ 166,482

11 unchanged sentences

End of year 0.06 % 1.78 % — % 0.53 %

During the year 0.57 % 2.25 % — % NM

During the year 0.17 % 1.92 % 0.25 % 1.46 %

Ending balance $ 42,968 $ 274,009 $ — $ 316,977

4 unchanged sentences

End of year 0.37 % 1.74 % — % 1.55 %

During the year 0.30 % 2.04 % 3.68 % NM

(a) NM = not meaningful.

During the year 0.57 % 2.25 % — % 1.92 %

Peoples’ retail Repurchase Agreements consist of overnight agreements with Peoples’ commercial customers and serve as a cash management tool.

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Peoples' FHLB advances of $ 70.0 million and $ 163.0 million matured in 2021 and 2020, respectively.

Peoples' national market Repurchase Agreements consisted of agreements with unrelated financial service companies.

Other short-term borrowings consisted primarily of federal funds purchased and advances from the Federal Reserve Discount Window.

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At December 31, 2021, Peoples had available Federal Reserve Discount Window credit of $ 174.4 million.

Other short-term borrowings at December 31, 2018 also included the unamortized debt issuance costs related to the costs associated with the Credit Agreement (the "RJB Credit Agreement") with Raymond James Bank, N.A.

which was terminated effective April 3, 2019.

As of April 3, 2019, Peoples entered into a Loan Agreement (the “U.S.

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Bank Loan Agreement.

Bank Loan Agreement is unsecured.

However, the U.S.

Bank Loan Agreement contains negative covenants which preclude Peoples from:

(i) taking any action which could, directly or indirectly, decrease Peoples' ownership (alone or together with any of Peoples' subsidiaries) interest in Peoples Bank (Peoples' Ohio state-chartered subsidiary bank) or any of Peoples Bank's subsidiaries to a level below the percentage of equity interests held as of April 3, 2019;

(ii) taking any action to or allowing Peoples Bank or any of Peoples Bank's subsidiaries to take any action to directly or indirectly create, assume, incur, suffer or permit to exist any pledge, encumbrance, security interest, assignment, lien or charge of any kind or character on the equity interests of Peoples Bank or any of Peoples Bank's subsidiaries;

or (iii) taking any action to or allow Peoples Bank or any of Peoples Bank's subsidiaries to sell, transfer, issue, reissue or exchange, or grant any option with respect to, any equity interest of Peoples Bank or any of Peoples Bank's subsidiaries.

There are also negative covenants limiting the actions which may be taken with respect to the authorization or issuance of additional shares of any class of equity interests of Peoples Bank or any of Peoples Bank's subsidiaries or the grant to any person other than U.S.

Bank of any proxy for existing equity interests of Peoples Bank or any of Peoples Bank's subsidiaries.

Bank Loan Agreement contains financial covenants, which are usual and customary for comparable transactions, applicable to Peoples and its subsidiaries including limitations on the ability to incur additional indebtedness, create liens on property, enter into mergers or consolidations, sell property other than in the ordinary course of business, and make investments, all subject to permitted exceptions as more fully set forth in the U.S.

Bank Loan Agreement.

Bank Loan Agreement also precludes Peoples from:

(i) taking any action which would result in Peoples Bank no longer being a wholly-owned subsidiary of Peoples;

and (ii) declaring and making dividends or stock repurchases if an Event of Default (as defined in the U.S.

Bank Loan Agreement) has occurred and is continuing under the U.S.

Bank Loan Agreement.

Peoples and Peoples Bank are also required to satisfy certain financial covenants including:

(i) Peoples (on a consolidated basis) and Peoples Bank must be "well capitalized" at all times, as defined and determined by the applicable governmental authority having jurisdiction over Peoples or Peoples Bank;

(ii) Peoples (on a consolidated basis) must maintain a total risk-based capital ratio (as defined by the applicable governmental authority having regulatory authority over Peoples or Peoples Bank) of at least 12.0 % at all times;

(iii) Peoples (on a consolidated basis) must maintain a ratio of "Non-Performing Assets" to "Primary Capital" of not more than 15 % as of the last day of each fiscal quarter;

(iv) Peoples (on a consolidated basis) must maintain a ratio of "Return on Average Assets" of at least 0.5 % as of the end of each fiscal quarter, with the items used in this ratio being determined on a trailing four-fiscal quarter basis.

Bank Loan Agreement is unsecured, and contains certain negative and financial covenants.

The financial covenants are applicable to Peoples and its subsidiaries, and are usual and customary for comparable transactions.

As of December 31, 2021, Peoples was in compliance with the applicable covenants imposed by the U.S.

Bank Loan Agreement.

Bank Loan Agreement matures on April 1, 2021.

Bank Loan Agreement matures on March 31, 2022.

Peoples is in the process of renewing this facility and expects that it will be renewed prior to its expiration.

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Peoples continually evaluates its overall balance sheet position given the interest rate environment.

During 2020, Peoples borrowed one additional $ 50.0 million FHLB putable, non-amortizing fixed-rate advance with an interest rate of 0.77 %, which matures in 2030.

During 2021, Peoples did not borrow any additional long-term advances from the FHLB.

At December 31, 2021, outstanding long-term FHLB non-amortizing advances, which have interest rates ranging from 0.77 % to 3.20 %, mature between 2026 and 2030.

Outstanding long-term FHLB amortizing, fixed rate advances have interest

rates ranging from 1.25 % to 3.83 %, mature between 2026 and 2031.

Peoples also reclassified two long-term FHLB non-amortizing advances totaling $ 20.0 million to short-term borrowings as the time to maturity became less than one year.

The FHLB putable, non-amortizing, fixed rate advances have maturities ranging f rom one to nine years that may be repaid prior to maturity, subject to the payment of termination fees.

Outstanding long-term FHLB amortizing, fixed rate advances, which have interest rates ranging from 1.25 % to 3.83 %, mature between 2026 and 2031.

Peoples also reclassified one long-term FHLB non-amortizing advance during 2021 totaling $ 15.0 million to short-term borrowings as the time to maturity became less than one year.

The FHLB putable, non-amortizing, fixed rate advances have maturities ranging from five to nine years that may be repaid prior to maturity, subject to the payment of termination fees.

The FHLB has the option, at its sole discretion, to terminate each advance after the initial fixed rate period of three months , requiring full repayment of the advance by Peoples, prior to the stated maturity.

1 unchanged sentence

These advances require monthly interest payments, with no repayment of principal until the earlier of either an option to terminate being exercised by the FHLB or the stated maturity.

The FHLB amortizing, fixed rate advances have a fixed rate for the term of each advance, with maturities ranging from five to ten years .

The FHLB amortizing, fixed rate advances have a fixed rate for the term of each advance, with maturities ranging fro m five to ten years .

Th ese advances require monthly principal and interest payments, with some having a constant prepayment rate requiring an additional principal payment annually.

1 unchanged sentence

Long-term FHLB advances are collateralized by assets owned by Peoples.

During 2019, Peoples did not borrow any additional long-term advances from the FHLB.

At December 31, 2019, outstanding long-term FHLB non-amortizing advances, which have interest rates ranging from 1.40 % to 3.20 %, mature between 2021 and 2027.

During 2019, $ 20.0 million of long-term FHLB non-amortizing advances and $ 3.2 million long-term FHLB amortizing advances were reclassified to short-term borrowings as the time to maturity became less than one year.

The “Junior subordinated debt securities” are comprised of two trust preferred securities assumed from two prior acquisitions.

On March 6, 2015, Peoples completed its acquisition of NB&T Financial Group, Inc.

("NB&T"), which included the assumption of Fixed/Floating Rate Junior Subordinated Debt Securities due in 2037 (the "junior subordinated debt securities") at an acquisition-date fair value of $ 6.6 million, held in a wholly-owned statutory trust whose common securities were wholly-owned by NB&T.

The sole assets of the statutory trust are the junior subordinated debt securities and related payments.

The junior subordinated debt securities and the back-up obligations, in the aggregate, constitute a full and unconditional guarantee of the obligations of the statutory trust under the Capital Securities held by third-party investors.

Distributions on the Capital Securities are payable at the annual rate of 1.50 % over the 3-month LIBOR rate.

Distributions on the Capital Securities are included in interest expense in the Consolidated Financial Statements.

These securities are considered tier I capital (with certain limitations applicable) under current regulatory guidelines.

The junior subordinated debt securities are subject to mandatory redemption, in whole or in part, upon repayment of the Capital Securities at maturity or their earlier redemption at the liquidation amount.

Subject to prior approval of the FRB, the Capital Securities are redeemable prior to the maturity date of September 6, 2037, and are redeemable at par.

Distributions on the Capital Securities can be deferred from time to time for a period not to exceed 20 consecutive quarterly periods.

(“NB&T”), which included a trust preferred security due in 2037 with a $ 9 million par value and a $ 6.6 million fair value at acquisition.

As of December 31, 2021, this trust preferred security had a carrying value of $ 7.8 million with a yield of 3.52 %, inclusive of the impact of fair value adjustments.

On September 17, 2021, Peoples completed its acquisition of Premier, which included a trust preferred security due in 2034 with a $ 6.2 million par value and a $ 6.1 million fair value at acquisition.

As of December 31, 2021, this trust preferred security had a carrying value of $ 5.9 million and a yield of 3.18 %, inclusive of the impact of fair value adjustments.

These trust preferred securities are considered tier 1 capital (with certain limitations applicable) under current regulatory guidelines.

At December 31, 2021, the aggregate minimum annual retirements of long-term borrowings in future periods were as follows:

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Cancellation of restricted common shares — 11,113

Exercise of stock options for common shares — ( 102 )

Grant of common shares — ( 5,130 )

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Purchase of treasury stock — 7,227

Sale of treasury stock — ( 10 )

Disbursed out of treasury stock — ( 2,187 )

Common shares purchased under repurchase program — 26,427

Common shares issued under dividend reinvestment plan 26,287 —

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Common shares issued under employee stock purchase plan — ( 13,050 )

Issuance of common shares related to acquisition of ASB 1,152,711 —

Issuance of common shares related to acquisition of First Prestonsburg 1,005,478 —

Shares at December 31, 2019 21,156,143 504,182

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Common shares issued under compensation plan for Boards of Directors — ( 11,553 )

Common shares issued under performance unit awards — (6,127)

Common shares issued under employee stock purchase plan — ( 18,872 )

Issuance of common shares related to acquisition of First Prestonsburg 1,005,478 —

Shares at December 31, 2020 21,193,402 1,686,046

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Disbursed out of treasury stock — ( 2,983 )

Common shares repurchased under repurchase program — 1,299,577

Common shares issued under dividend reinvestment plan 31,314 —

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Common shares issued under employee stock purchase plan — ( 17,093 )

Issuance of common shares related to acquisition of Premier 8,589,685 —

Shares at December 31, 2021 29,814,401 1,577,359

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 $ 30.0 million of its outstanding common shares, replacing the February 27, 2020 share repurchase program which had authorized Peoples to purchase up to an aggregate of $ 40.0 million of its outstanding common shares.

On February 27, 2020, Peoples' Board of Directors authorized a share repurchase program authorizing Peoples to purchase up to an aggregate of $ 40.0 million of its outstanding common shares, replacing the previous share repurchase program which had

authorized Peoples to purchase up to an aggregate of $ 20 million of its outstanding common shares.

On January 28, 2021, Peoples' Board of Directors approved a share repurchase program authorizing Peoples to purchase up to an aggregate of $ 30.0 million of Peoples' outstanding common shares, replacing the February 27, 2020 share repurchase program which

had authorized Peoples to purchase up to an aggregate of $ 40.0 million of its outstanding common shares.

During 2021, Peoples did not repurchase any common shares under the share repurchase program authorized on January 28, 2021.

An aggregate of $ 6.3 million of Peoples' common shares were purchased under the previous share repurchase program from inception through its termination date, which was February 27, 2020.

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During 2019, Peoples purchased an aggregate of 26,427 of its common shares through the then-authorized share repurchase program.

No common shares were repurchased in 2018.

Under its Amended Articles of Incorporation, Peoples is authorized to issue up to 50,000 preferred shares, in one or more series, having such voting powers, designations, preferences, rights, qualifications, limitations and restrictions as determined by Peoples' Board of Directors.

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Total dividends declared $ 1.43 $ 1.37

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive (Loss) Income

The following details the change in the components of Peoples’ accumulated other comprehensive (loss) income for the years ended December 31:

(Dollars in thousands) Unrealized Gain (Loss) on Securities Unrecognized Net Pension and Postretirement Costs Unrealized Gain (Loss) on Cash Flow Hedge Accumulated Other Comprehensive Income (Loss)

(Dollars in thousands) Unrealized (Loss) Gain on Securities Unrecognized Net Pension and Postretirement Costs Unrealized Gain (Loss) on Cash Flow Hedge Accumulated Other Comprehensive (Loss) Income

Balance, December 31, 2018 $ ( 10,082 ) $ ( 3,711 ) $ 860 $ ( 12,933 )

Reclassification adjustments to net income:

Realized gain on sale of securities, net of tax 115 — — 115

Realized loss due to settlement and curtailment, net of tax — 211 — 211

Amounts reclassified out of accumulated other comprehensive loss per ASU 2016-01 ( 5,020 ) — — ( 5,020 )

Other comprehensive (loss) income, net of reclassifications and tax ( 3,089 ) 334 ( 269 ) ( 3,024 )

Realized loss on sale of securities, net of tax ( 130 ) — — ( 130 )

Other comprehensive income (loss), net of reclassifications and tax 15,512 ( 247 ) ( 3,627 ) 11,638

Balance, December 31, 2019 $ 5,300 $ ( 3,958 ) $ ( 2,767 ) $ ( 1,425 )

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Realized gain on sale of securities, net of tax 291 — — 291

Realized loss due to settlement and curtailment, net of tax — 833 — 833

Other comprehensive income (loss), net of reclassifications and tax 9,001 ( 747 ) ( 6,617 ) 1,637

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Realized loss due to settlement and curtailment, net of tax — 111 — 111

Other comprehensive income (loss), net of reclassifications and tax 9,001 ( 747 ) ( 6,617 ) 1,637

Other comprehensive (loss) income, net of reclassifications and tax ( 21,208 ) 1,880 5,592 ( 13,736 )

Balance, December 31, 2021 $ ( 5,946 ) $ ( 1,881 ) $ ( 3,792 ) $ ( 11,619 )

As of January 1, 2018, Peoples adopted ASU 2016-01, which resulted in the reclassification of $ 5.0 million in net unrealized gains on equity investment securities from AOCI to retained earnings.

Note 12 Employee Benefit Plans

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Plan participants’ contributions — — 51 59

Actuarial loss 1,708 1,696 6 —

Actuarial (gain) loss ( 1,367 ) 1,708 1 6

Benefit payments ( 220 ) ( 238 ) ( 63 ) ( 71 )

Settlements ( 519 ) ( 2,154 ) — —

Obligation at December 31 $ 12,310 $ 12,668 $ 71 $ 75

Accumulated benefit obligation at December 31 $ 10,463 $ 12,310 $ 62 $ 71

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Amounts recognized in Consolidated Balance Sheets:

Prepaid benefit costs $ 1,255 $ — $ — $ —

Accrued benefit liability $ — $ ( 1,458 ) $ ( 62 ) $ ( 71 )

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The estimated costs relating to Peoples’ pension benefits that will be amortized from AOCI into net periodic cost over the next fiscal year are $ 83,000 .

Net Periodic Cost (Benefit)

The following table details the components of the net periodic cost (benefit) for the plans at December 31:

Net Periodic (Benefit) Cost

The following table details the components of the net periodic (benefit) cost for the plans at December 31:

Pension Benefits Post-retirement Benefits

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Settlement of benefit obligation 143 1,054 — — — —

Net periodic cost (benefit) $ 765 $ ( 266 ) $ 154 $ ( 3 ) $ ( 3 ) $ ( 2 )

Net periodic (benefit) cost $ ( 149 ) $ 765 $ ( 266 ) $ ( 2 ) $ ( 3 ) $ ( 3 )

Weighted-average assumptions:

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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.

There were $ 1.1 million in settlement charges recorded in 2020, compared to none recorded in 2019, and $ 267,000 recorded in 2018.

There were $ 143,000 in settlement charges recorded in 2021, compared to $ 1.1 million recorded in 2020, and none recorded in 2019.

Determination of Expected Long-term Rate of Return

The expected long-term rate of return on the pension plan's total assets is based on the expected return of each category of the pension plan's assets.

The expected long-term rate of return on the pension plan's total assets is based on a weighted average of the expected return of each category of the pension plan's assets.

Peoples' investment strategy for the pension plan's assets continues to allocate 60 %- 75 % to equity securities.

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(Dollars in thousands) Fair Value Quoted Prices in Active Markets for Identical Assets

Significant Other Observable Inputs

Equity securities:

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Mutual funds – taxable income

2,898 2,898 —

Total fair value of pension assets $ 11,428 $ 11,428

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Mutual funds – taxable income

3,163 3,163 —

Total fair value of pension assets $ 10,692 $ 10,692

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Beginning January 1, 2020, Peoples began matching 100% of participants' contributions that did not exceed 4 % of the participants' compensation, plus 50% of participants' contributions between 4 % and 6 % of the participants' compensation.

As of January 1, 2021, Peoples began matching 100% of participants' contributions up to 6% of the participants' compensation.

Note 13 Income Taxes

The TCJ Act was enacted on December 22, 2017 and required Peoples to reflect the changes associated with the TCJ Act’s provisions in the fourth quarter of 2017.

As of December 31, 2017, Peoples was not able to make reasonable estimates for all items based on its knowledge of accounting under ASC 740, and the provisions of the tax laws that were in effect immediately prior to enactment.

As of December 31, 2018, Peoples finalized the remeasurement of its net deferred tax assets and net deferred tax liabilities at the new statutory federal corporate income tax rate of 21 %, which resulted in a reduction to income tax expense of $ 0.7 million in 2018.

The final adjustment was mainly due to Peoples' contribution of $ 3.2 million to Peoples' defined benefit pension plan during 2018.

The reported income tax expense and effective tax rate in the Consolidated Statements of Income differ from the amounts computed by applying the statutory federal corporate income tax rate as follows for the years ended December 31:

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Differences in rate resulting from:

Tax-exempt interest income ( 668 ) ( 1.6 ) % ( 659 ) ( 1.0 ) % ( 554 ) ( 1.0 ) %

Investments in tax credit funds ( 415 ) ( 1.0 ) % ( 530 ) ( 0.8 ) % ( 125 ) ( 0.2 ) %

Bank owned life insurance ( 415 ) ( 1.0 ) % ( 510 ) ( 0.8 ) % ( 393 ) ( 0.7 ) %

Nondeductible acquisition costs 269 0.5 % — — % — — %

Stock awards 74 0.1 % ( 5 ) — % ( 135 ) ( 0.2 ) %

Bank owned life insurance ( 371 ) ( 0.6 ) % ( 415 ) ( 1.0 ) % ( 510 ) ( 0.8 ) %

Investments in tax credit funds ( 381 ) ( 0.7 ) % ( 415 ) ( 1.0 ) % ( 530 ) ( 0.8 ) %

Captive insurance benefit ( 435 ) ( 0.8 ) % ( 412 ) ( 1.0 ) % — — %

Release of valuation allowance — — % — — % ( 805 ) ( 1.5 ) %

TCJ Act — — % — — % ( 705 ) ( 1.3 ) %

Tax-exempt interest income ( 835 ) ( 1.5 ) % ( 668 ) ( 1.6 ) % ( 659 ) ( 1.0 ) %

Fixed asset depreciation ( 1,142 ) ( 2.0 ) % — — % — — %

Other, net 282 0.5 % 838 2.1 % ( 228 ) ( 0.4 ) %

Income tax expense $ 9,415 16.5 % $ 7,879 18.5 % $ 11,663 17.8 %

On January 1, 2018, Peoples began recognizing income tax expense at the 21 % statutory federal corporate income tax rate.

During 2018, Peoples released a valuation allowance which reduced income tax expense by $ 0.8 million.

The valuation allowance was related to a historic tax credit that Peoples had invested in during 2015.

Peoples sold $ 6.7 million of equity investment securities in 2018, which resulted in a capital gain for tax purposes.

This capital gain was large enough to offset an anticipated future capital loss expected to be recognized due to the structure of the historic tax credit investment, resulting in the release of the valuation allowance.

Peoples' reported income tax expense consisted of the following for the years ended December 31:

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Current income tax expense $ 6,541 $ 15,980 $ 11,554

Deferred income tax (benefit) expense ( 8,101 ) 109 ( 309 )

Deferred income tax expense (benefit) 2,874 ( 8,101 ) 109

Income tax expense $ 9,415 $ 7,879 $ 11,663

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Lease obligation 1,960 1,423

Available-for-sale securities 1,905 —

Tax credit investments 1,096 1,799

Derivative instruments 1,088 2,494

Net operating loss carryforward 223 —

Gross deferred tax assets $ 26,467 $ 22,246

Valuation allowance $ 158 $ —

Total deferred tax assets $ 26,309 $ 22,246

Deferred tax liabilities:

Purchase accounting adjustments $ 4,522 $ 5,970

Bank premises and equipment (a) 3,274 3,300

Bank premises and equipment $ 3,838 $ 3,274

Deferred loan income 5,249 2,174

Purchase accounting adjustments 3,166 4,522

Lease right-of-use assets 1,788 1,370

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Net deferred tax asset (liability) $ 11,606 $ 6,437

(a) Peoples elected Internal Revenue Code Section 179 bonus depreciation in 2019, which increased the

bonus depreciation percentage from 50% to 100% for qualified properties acquired and placed in

service after September 27, 2017, and before January 1, 2023.

As of December 31, 2020, Peoples had no operating loss carryforwards for tax purposes.

As of December 31, 2021, Peoples acquired a net operating loss carryforward of approximately $ 0.3 million related to the Premier merger, net of a valuation allowance of $158,000, which will be available to offset future taxable income.

The federal income tax benefit from sales of investment securities was $ 181,000 in 2021 and $ 77,000 in 2020.

The federal income tax expense from sales of investment securities was $ 34,000 in 2019.

The federal income tax expense from sale of investment securities was $ 34,000 in 2019.

Income tax benefits are recognized in the Consolidated Financial Statements for a tax position only if it is considered "more-likely-than-not" of being sustained in an audit, based solely on the technical merits of the income tax position.

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Gross increase based on tax positions related to current year $ — $ 12

Gross increase for tax position taken during prior years $ — $ 8

Gross decrease due to the statute of limitations $ ( 43 ) $ ( 113 )

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(Dollars in thousands, except per common share data) 2021 2020 2019

Distributed earnings allocated to common shareholders $ 27,082 $ 26,503 $ 21,334

Undistributed earnings allocated to common shareholders 7,313 26,796 24,660

Net income available to common shareholders $ 47,555 $ 34,767 $ 53,695

Dividends paid on unvested shares ( 295 ) ( 367 ) ( 348 )

Undistributed earnings (loss) allocated to unvested shares ( 26 ) ( 5 ) ( 47 )

Net earnings allocated to common shareholders $ 47,234 $ 34,395 $ 53,300

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Anti-dilutive common shares excluded from calculation:

Restricted shares, stock options and stock appreciation rights 64,145 — 1,748

Restricted shares 275 64,145 —

Note 15 Derivative Financial Instruments

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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, and 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 value of which is determined by interest rates.

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.

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.

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These interest rate swaps were 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 December 31, 2020, Peoples had entered into seventeen interest rate swaps with an aggregate notional value of $ 160.0 million.

As of December 31, 2021, Peoples had entered into thirteen interest rate swaps with an aggregate notional value of $ 125.0 million.

Peoples will pay a fixed rate of interest for up to ten years while receiving a floating rate component of interest equal to the three-month LIBOR rate.

The interest received on the floating rate component is intended to offset the interest paid on rolling three-month brokered CDs, which will continue to be rolled through the life of the swaps.

As of December 31, 2020, the interest rate swaps were funded by $ 110.0 million of Insured Cash Sweep Services ("ICS") demand deposits and $ 50.0 million rolling three-month brokered CDs.

Amounts reported in AOCI related to derivatives will be reclassified to interest income or expense as interest payments are made or received on Peoples' variable-rate assets or liabilities.

During the years ended December 31, 2020 and December 31, 2019, Peoples had reclassifications of loss to earnings of

$ 2.0 million and gains to interest expense of $ 133,000 , respectively.

During the next twelve months, Peoples estimates that minimal interest expense will be reclassified.

For derivative financial instruments designated as cash flow hedges, the effective portion of changes in the fair value of each derivative financial instrument is reported in AOCI (outside of earnings), net of tax, and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative financial instrument is recognized directly in earnings.

The reset dates and the payment dates on the 90-day advances or brokered CDs used to fund the swaps are matched to the reset dates and payment dates on the receipt of the three-month LIBOR floating rate portion of the swaps to ensure effectiveness of the cash flow hedge.

Effectiveness is measured by ensuring that reset dates and payment dates are matched.

The interest received on the floating rate component is intended to offset the interest paid on rolling three-month brokered CDs and brokered demand deposits, which will continue to be rolled through the life of the swaps.

At December 31, 2021, the interest rate swaps were designated as cash flow hedges of $ 85.0 million in brokered demand deposits, which are expected to be extended every 90 days through the maturity dates of the swaps.

The remaining $ 40.0 million of interest rate swaps were designated as cash flow hedges of 90-day FHLB Advances.

In the fourth quarter of 2021, Peoples terminated three interest rate swap agreements with an aggregate notional value of $ 25.0 million which were designated as cash flow hedges.

The terminations resulted in a pre-tax loss of $ 0.2 million.

The associated

$ 10.0 million in FHLB advances and $ 15.0 million in brokered demand deposits were not immediately terminated but instead allowed to mature.

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 AOCI (outside of earnings), net of tax, and are reclassified to interest expense as interest payments are made or received on Peoples' variable-rate liabilities.

Peoples assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the hedging derivative financial instrument with the changes in cash flows of the designated hedged transaction.

The reset dates and the payment dates on the 90-day advances or brokered CDs are matched to the reset dates and payment dates on the receipt of the three-month LIBOR floating portion of the swaps to ensure effectiveness of the cash flow hedge.

During the years ended December 31, 2021 and December 31, 2020, Peoples had reclassifications of loss to earnings of $ 3.5 million and gains to interest expense of $ 2.0 million, respectively.

The following table summarizes information about the interest rate swaps designated as cash flow hedges at December 31:

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Amount of loss recognized in AOCI, pre-tax $ 6,999 $ 8,376

Amount of loss recognized in earnings — ( 19 )

The following table reflects the cash flow hedges, which are included in the Consolidated Balance Sheets at fair value, at December 31:

1 unchanged sentence

Notional Amount Fair Value Notional Amount Fair Value

Included in other assets:

Interest rate swaps related to debt $ — $ — $ 55,000 $ 644

Total included in other assets $ — $ — $ 55,000 $ 644

Included in "Accrued expenses and other liabilities":

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Non-Designated Hedges

Peoples Bank maintains an interest rate protection program for commercial loan customers, which was established in 2010.

Under this program, Peoples Bank originates variable rate loans with interest rate swaps, where the customer enters into an interest rate swap with Peoples Bank on terms that match the terms of the loan.

By entering into the interest rate swap with the customer, Peoples Bank effectively provides the customer with a fixed rate loan while creating a variable rate asset for Peoples Bank.

Peoples Bank offsets its exposure in the swap by entering into an offsetting interest rate swap with an unaffiliated institution.

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 effectively provides the customer with a fixed rate loan while creating a variable rate asset for Peoples.

Peoples offsets its exposure in the swap by entering into an offsetting interest rate swap with an unaffiliated institution.

These interest rate swaps do not qualify as designated hedges;

therefore, each swap is accounted for as a standalone derivative financial instrument.

These interest rate swaps did not have a material impact on Peoples' results of operation or financial condition.

These interest rate swaps did not have a material impact on Peoples' results of operation or financial condition at the year ended December 31,2021 and 2020.

The following table reflects the non-designated hedges, which are included in the Consolidated Balance Sheets at fair value, at December 31:

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Pledged Collateral

When the fair value of Peoples' interest rate swaps are in a net liability position, Peoples must pledge collateral and when the interest rate swaps are in a net asset position, the counterparties must pledge collateral.

At December 31, 2020, Peoples had $ 41.0 million of cash pledged, while the counterparties had no amount of cash pledged.

At December 31, 2019, Peoples had $ 20.0 million of cash pledged, while the counterparties had no amount of cash pledged.

Peoples pledges or receives collateral for all interest swaps.

When the fair value of Peoples' interest rate swaps are in a net liability position, Peoples must pledge collateral, and, when the fair value of Peoples' interest rate swaps are in a net asset position, the respective counterparties must pledge collateral.

At December 31, 2021 and December 31, 2020, Peoples had $ 28.1 million and zero , respectively, in investment securities pledged.

At December 31, 2021 and December 31, 2020, Peoples had zero and $ 41.0 million, respectively, of cash pledged.

Cash pledged is included in "Interest-bearing deposits in other banks" on the Consolidated Balance Sheets.

Investment securities pledged are included in "Available-for-sale investment securities" and "Held-to-maturity investment securities" on the Consolidated Balance Sheets.

Note 16 Off-Balance Sheet Risk

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Peoples Bank is required to maintain a minimum level of reserves, consisting of cash on hand and non-interest-bearing balances with the FRB of Cleveland, based on the amount of total deposits.

Average required reserve balances were approximately $ 3.7 million and $ 16.5 million in 2020 and 2019, respectively.

Average required reserve balances were $ 0 and $ 3.7 million in 2021 and 2020, respectively.

Limits on Dividends

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The total intrinsic value of restricted common shares released was $ 2.6 million, $ 2.0 million and $ 1.8 million in 2021, 2020 and 2019, respectively.

Performance Unit Awards

Under the 2006 Equity Plan, Peoples may grant performance unit awards to officers, key employees and non-employee directors.

On July 26, 2017, Peoples granted a total of seven performance unit awards to officers, with a maximum aggregate dollar amount of $ 1.3 million represented by the performance units subject to such awards and each performance unit representing $ 1.00 .

During 2019, one of the seven performance unit awards was forfeited as the individual to whom the performance unit award was granted left Peoples before meeting the minimum service requirement to retain the performance unit award.

The performance unit awards granted covered the performance period beginning January 1, 2018 and ending on December 31, 2019, and were subject to two performance goals.

Twenty-five percent of the performance units subject to each award was to vest if, but only if, the related company-specific target performance goal was achieved.

As of December 31, 2019, the target level of achievement for the company-specific target performance goal was reached for the performance period.

The remaining 75 % of the performance units subject to each award was to vest based on the relative performance of Peoples compared to a defined peer group (measured by percentile ranking) with respect to the related maximum performance goal.

As of December 31, 2019, Peoples did not achieve the second performance goal.

On February 27, 2020, the Compensation Committee of the Board of Directors certified the level of achievement of the performance goals that had been satisfied and a portion of the performance unit awards vested based on the performance achieved.

The vested performance unit awards were settled in common shares of Peoples equal to (i) the aggregate number of the participant's performance units (and equivalent dollar value of such performance units) that vested based on the performance achieved under both performance goals (ii) divided by the fair market value of a common share of Peoples on the date the performance units were deemed to have vested (which was the certification date) and rounded down to the nearest whole common share.

As a result, during the first quarter of 2020, the remaining six officers holding performance unit awards received an aggregate of 9,395 common shares at a fair market value of $ 29.26 per common share on the date the performance units were deemed vested, with a related expense of $ 275,000 , recorded in the prior year.

Stock-Based Compensation

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Employee stock purchase plan expense 79 63 63

Performance stock unit expense ( 12 ) 130 156

Performance stock unit (benefit) expense — ( 12 ) 130

Total employee stock-based compensation expense 3,515 3,607 3,655

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The fair value of restricted common share awards on the grant date is the market price of Peoples' common shares.

unrecognized stock-based compensation related to unvested restricted common share awards was $ 2.8 million at December 31, 2020, which will be recognized over a weighted-average period of 1.8 years.

Total unrecognized stock-based compensation related to unvested restricted common share awards was $ 2.6 million at December 31, 2021, which will be recognized over a weighted-average period of 1.8 years.

In 2021, the Board of Directors granted 4,347 unrestricted common shares to non-employee directors, with related stock-based compensation of $ 135,000 .

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Additional income receivable 197 —

Additional deferred income — 244

Receipt of income previously receivable ( 701 ) —

Recognition of income previously deferred — ( 413 )

Balance, December 31, 2021 $ 743 $ 4,811

From more information on Peoples' revenue recognition policies, see "Note 1 Summary of Significant Accounting Policies."

For more information on Peoples' revenue recognition policies, see "Note 1 Summary of Significant Accounting Policies."

Note 20 Acquisitions

Effective July 1, 2020, Peoples closed on a business combination under which Peoples Bank acquired the operations and assets of Triumph Premium Finance (referred to as "premium finance acquisition"), a division of TBK Bank, SSB.

Based in Kansas City, Missouri, the division operating as Peoples Premium Finance continues to provide insurance premium financing loans for commercial

customers to purchase property and casualty insurance products through its growing network of independent insurance agency partners nationwide.

The following table provides the purchase price calculation as of the date of acquisition, and the assets acquired and liabilities assumed at their estimated fair values.

(Dollars in thousands, except per share data)

Total purchase price $ 94,526

Premier Financial Bancorp, Inc.

On September 17, 2021, Peoples completed its merger with Premier.

Premier merged into Peoples, and Premier’s wholly-owned subsidiaries, Premier Bank, Inc., and Citizens Deposit Bank and Trust, Inc., which combined operate 48 branches in Kentucky, Maryland, Ohio, Virginia, West Virginia and Washington, D.C., merged into Peoples’ wholly-owned subsidiary, Peoples Bank.

As consideration, Premier shareholders were paid 0.58 common shares of Peoples for each full share of Premier that was owned at the acquisition date, resulting in the issuance of 8,589,685 common shares by Peoples, or $ 261.9 million.

Peoples accounted for this transaction as a business combination under the acquisition method.

Peoples completed the merger in an effort to diversify and expand its franchise, and further enhance its size and scale.

Peoples believes the growth potential, and attractive market areas will benefit its future financial performance.

Peoples recorded acquisition-related expenses of $19.5 million related to the Premier merger, which included $ 9.7 million in other non-interest expense;

$ 5.1 million in professional fees;

$ 3.8 million in salaries and employee benefit costs;

$0.4 million in net occupancy and equipment expense, $ 0.2 million in marketing expense;

$ 66,000 in net occupancy and equipment expense;

$ 62,000 in data processing and software expense;

and $ 54,000 in communication expense.

The estimated fair values below were considered preliminary as of December 31, 2021, and are subject to adjustment for up to one year after September 17, 2021.

Valuations subject to change include, but are not limited to, loans, including the designation of such as PCD, deferred tax assets and liabilities, and certain other assets and other liabilities.

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

(Dollars in thousands) Unpaid Principal Balance Fair Value

Premier common shares 14,811,200

Number of common shares of Peoples issued for each common share of Premier 0.58

Price per Peoples common share, based at closing date $ 30.49

Common share consideration 261,899

Cash paid in lieu of fractional common shares 25

Total consideration $ 261,924

Net assets at fair value

Cash and due from banks $ 248,360

Loans, net of deferred fees and costs 84,704

Bank premises and equipment, net of accumulated depreciation 45

Customer relationship intangible assets 4,280

Interest-bearing deposits in other banks 1,025

Total cash and cash equivalents 249,385

Available-for-sale investment securities 551,953

Other investment securities 4,159

Total investment securities 556,112

Construction 97,262 96,051

Commercial real estate, other 544,950 534,910

Commercial and industrial 132,293 132,097

Residential real estate 332,269 331,110

Home equity lines of credit 46,969 45,887

Consumer 21,083 21,636

Total loans 1,174,826 1,161,691

Allowance for Credit Losses (on PCD Loans) ( 16,944 )

Net loans 1,144,747

Bank premises and equipment 30,098

Other intangible assets 4,233

(Dollars in thousands) Unpaid Principal Balance Fair Value

Other assets 27,335

Total assets $ 2,022,991

Non-interest-bearing $ 733,157

Interest-bearing 1,018,387

Total deposits 1,751,544

Short-term borrowings 63,807

Long-term borrowings 6,070

Accrued expenses and other liabilities 7,813

2 unchanged sentences

Goodwill $ 68,167

The accounting for the premium finance acquisition has been completed.

The estimated fair values presented in the above table reflect additional information that was obtained during the three months ended December 31, 2021, which resulted in changes to certain fair value estimates made as of the date of acquisition.

Adjustments to acquisition date estimated fair values are recorded during the period in which they occur and, as a result, previously recorded results have changed.

The below table reflects the changes in the estimated fair value at December 31, 2020 from balances reported at September 30, 2020:

The below table reflects the changes in the estimated fair value as they impact goodwill at December 31, 2021:

(Dollars in thousands) Change in fair value

Loans $ ( 113 )

Customer relationship intangible assets 108

Cash and cash equivalents $ ( 3,403 )

Total investment securities ( 11,341 )

Net loans 10,857

Bank premises and equipment, net of accumulated depreciation ( 3,737 )

Other assets 7,664

Deposits 4,579

Accrued expenses and other liabilities ( 1,777 )

Change in goodwill $ 2,822

Peoples recorded a customer relationship intangible of $ 4.3 million.

Peoples expects to amortize the intangible over 10 years, and recorded $ 310,000 of intangible amortization during 2020.

As of the acquisition date, Peoples estimated an allowance for credit losses of $ 923,000 for the acquired loans through the income statement, which was included in the provision for credit losses during the third quarter of 2020.

Acquired loans are reported net of the unamortized fair value adjustment.

The following table details the fair value adjustment for acquired loans as of the acquisition date:

(Dollars in thousands, except per share data) Triumph Premium Finance

Nonimpaired Loans

Contractual cash flows $ 84,968

Nonaccretable difference ( 179 )

Expected cash flows 85,147

Accretable yield 443

The recorded goodwill associated with the Premier merger is related to expected synergies and operational efficiencies to be gained from the combination of Premier with Peoples' operations.

None of the goodwill associated with the Premier merger is expected to be deductible for tax purposes.

The geographic locations of Premier will allow Peoples to continue to grow the loan and deposit portfolios, while also increasing Peoples' ability to penetrate the new markets with wealth management and insurance services, which should benefit Peoples in future periods.

Additional information regarding other intangibles recognized in the acquisition can be found in "Note 7 Goodwill and Other Intangible Assets."

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

Cash and Cash Equivalents:

The carrying amount for cash and due from banks is a reasonable estimate of fair value.

Investment Securities:

Fair values for investment securities are based on quoted market prices, where available.

If quoted market prices are not available, fair value estimates are based on observable inputs including quoted market prices for similar instruments, quoted market prices that are not in an active market or other inputs that are observable in the market.

In the absence of observable inputs, fair value is estimated based on pricing models and/or discounted cash flow methodologies.

Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan, related collateral, classification status, fixed or variable interest rate, term, amortization status and current discount rates.

Loans were grouped together according to similar characteristics when applying various valuation techniques.

The discount rates used for loans are based on current market rates at the acquisition date for new originations for comparable loans and include adjustments for liquidity.

The discount rate does not include a factor for credit losses as that has been

included as a reduction to the estimated cash flows.

Fair values for loans that were individually assessed were based on third-party valuations.

Bank Premises and Equipment:

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

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

Customer Deposit Intangible:

The customer deposit intangible represents the low cost of funding acquired core deposits provide relative to a marginal cost of funds.

The fair value was estimated based on a discounted cash flow methodology that gave consideration to expected customer attrition rates, the net maintenance cost of the deposit base, the alternative cost of funds, and the interest costs associated with customer deposits.

The customer deposit intangible is being amortized over 10 years based upon the period over which estimated economic benefits are estimated to be received.

The fair values used for the demand and savings deposits equal the amount payable on demand at the acquisition date.

The fair values for time deposits were estimated using a discounted cash flow calculation that applies interest rates being offered at the acquisition date to the contractual interest rates on such time deposits.

Short-term borrowings consist of overnight repurchase agreements, and given their short-term nature book value approximated fair value.

The fair values of long-term borrowings, including trust preferred securities, are estimated using discounted cash flow analyses, based on incremental borrowing rates at acquisition date for similar types of instruments.

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

Acquired purchased credit deteriorated loans are reported net of the unamortized fair value adjustment.

These loans are recorded at the purchase price, and an allowance for credit losses is determined based upon discrete credit marks, along with discounted cash flow models based upon similar pools of loans, using a similar methodology as for other loans.

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

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

Purchased credit deteriorated loans

Construction $ 20,231 $ ( 2,006 ) $ ( 198 ) $ 18,027

Commercial real estate, other 105,185 ( 9,503 ) ( 2,184 ) 93,498

Commercial and industrial 15,205 ( 4,048 ) 241 11,398

Residential real estate 31,973 ( 1,206 ) ( 669 ) 30,098

Home equity lines of credit 2,014 ( 66 ) ( 103 ) 1,845

Consumer 1,614 ( 115 ) 60 1,559

Fair value $ 176,222 $ ( 16,944 ) $ ( 2,853 ) $ 156,425

On January 1, 2020, Peoples Insurance acquired a property and casualty-focused independent insurance agency for a purchase price amount equal to $ 866,000 , and recorded $ 735,000 of customer relationship intangibles, and $ 27,000 of other assets, resulting in $ 104,000 of goodwill.

The acquisition will not materially impact Peoples' financial position, results of operations or cash flows.

As of December 31, 2020, Peoples had $ 339,000 of contingent consideration payable related to the acquisition.

Peoples' operating results for 2021 include the operating results of the acquired assets and assumed liabilities of Premier subsequent to the acquisition on September 17, 2021.

Due to the conversion of Premier systems during the third quarter of 2021, as well as other streamlining and integration of the operating activities into those of Peoples, historical reporting for the former Premier operations is impracticable and the disclosures of revenue from the assets acquired and income before income taxes is impracticable for the period subsequent to the acquisition.

The following table presents unaudited pro forma information as if the acquisition of Premier had occurred on January 1, 2020.

The pro forma adjustments include any changes in interest income due to the accretion of discounts, or amortization of premiums, associated with the fair value adjustments to acquired loans, interest-bearing deposits, long-term borrowings, trust preferred securities and customer deposit intangibles that would have resulted had the assets and liabilities been acquired as of January 1, 2020.

The pro forma information excludes Peoples' acquisition-related expenses, which primarily included, but were not limited to, salaries and employee benefit costs, severance costs, professional fees, marketing expenses and deconversion costs.

Those acquisition-related expenses totaled $ 19.0 million and $ 0.9 million for 2021 and 2020, respectively.

The pro forma information also excludes a provision of credit losses of $12.1 million recorded to establish an allowance for credit losses for non-purchased credit deteriorated loans of $ 11.7 million, and a liability for unfunded commitments of $ 0.4 million, both relating to the acquired loans.

The pro forma information does not necessarily reflect the results of operations that would have occurred had Peoples acquired Premier on January 1, 2020.

Additionally, cost savings and other business synergies related to the acquisition are not reflected in the pro forma amounts.

Unaudited Pro Forma For

Twelve Months Ended

(Dollars in thousands) December 31,

2021 December 31,

Net interest income $ 240,143 $ 209,065

Non-interest income 79,540 72,118

Net income 91,394 58,663

Pikeville, Kentucky Insurance Agency

On May 4, 2021, Peoples Insurance acquired substantially all of the assets and rights of an insurance agency located in Pikeville, Kentucky and certain rights to related customer accounts, which were previously developed and maintained by Justice & Stamper Insurance Agency, Inc.

Total consideration for this transaction was $ 325,000 .

Peoples accounted for this transaction as a business combination under the acquisition method.

NS Leasing, LLC

Peoples Bank entered into an Asset Purchase Agreement, dated March 24, 2021 with NS Leasing, LLC, which is headquartered in Burlington, Vermont, and does business as “North Star Leasing”.

The transaction closed after the end of business on March 31, 2021 and Peoples Bank began operating the acquired business as a division of Peoples Bank on April 1, 2021.

Peoples Bank acquired assets comprising NSL’s equipment finance business and assumed from NSL certain specified liabilities for total cash consideration of $ 116.5 million, plus a potential earnout payment to NSL of up to $ 3.1 million.

Peoples Bank acquired $ 83.3 million in leases and satisfied, on behalf of NSL, certain third-party debt in the amount of $ 69.1 million.

NSL underwrites, originates and services equipment leases and equipment financing agreements to businesses throughout the United States.

Peoples recorded preliminary goodwill in the amount of $ 24.7 million and preliminary other intangibles of $ 14.0 million, which included a customer relationship intangible, trade name intangible and non-compete agreements related to this transaction.

Peoples recorded an additional $ 0.7 million in non-interest expense during the third and fourth quarters of 2021 related to an update to the estimated earn-out provision of $ 3.0 million.

The bonus earn-out provision recorded by Peoples related to the NSL acquisition was determined based on a weighting of probability of outcomes, at present value.

Peoples predominately weighted the outcomes of the factors at approximately 100% payout expectation of the base earn-out, which is $ 2.5 million in total.

Adjusting weighting into the bonus earn-out expectation in the third and fourth quarter resulted in an additional $ 0.7 million of potential payout.

NSL met the minimums for the base earn-out payment and the targets set at acquisition for a 100% payout of the base earn-out.

As of December 31, 2021, leases had grown to $ 122.5 million.

Peoples accounted for this transaction as a business combination under the acquisition method.

The recorded goodwill associated with the NSL acquisition is related to expected synergies and operational efficiencies to be gained from the combination of NSL with Peoples' operations.

The employees retained from the NSL acquisition should allow Peoples to continue to grow the lease portfolio, along with Peoples' resources, and should benefit Peoples in future periods.

During Peoples' evaluation of intangible assets, it was determined that an assembled workforce intangible asset was not separately recognizable and was included in goodwill.

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

(Dollars in thousands)

Total purchase price (a) $ 118,846

Net assets at fair value

Cash and due from banks $ 216

Net leases 82,833

Bank premises and equipment, net of accumulated depreciation 470

Other intangible assets 14,009

Other assets 1,225

Total assets $ 98,753

Accrued expenses and other liabilities $ 4,627

Total liabilities $ 4,627

Net assets $ 94,126

Goodwill $ 24,720

(a) Includes preliminary contingent consideration related to the bonus earn-out provision of $ 2.3 million.

Peoples recorded an additional $ 0.7 million in non-interest expense related to an update to the estimated earn-out provision.

Leases acquired by Peoples in a business combination that have evidence of more than insignificant credit deterioration, which includes leases that Peoples believes it is probable that Peoples will be unable to collect all contractually required payments, are considered "purchased credit deteriorated" leases.

These leases are recorded at the purchase price, and an allowance for credit losses is determined using the same methodology as for other leases.

Acquired purchased credit deteriorated leases are reported net of the unamortized fair value adjustment.

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

(Dollars in thousands) NSL

Purchased credit deteriorated leases

Par value $ 5,248

Allowance for credit losses ( 493 )

Non-credit premium 85

Fair value $ 4,840

Peoples recorded acquisition-related expenses related to the NSL acquisition which included $ 2.1 million in professional fees;

$ 0.2 million in other non-interest expense;

$ 3,000 in salaries and employee benefit costs;

$ 3,000 in data processing and software expense;

$ 2,000 in net occupancy and equipment expense;

and $ 2,000 in marketing expense.

Note 21 Parent Company Only Financial Information

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Dividends payable 767 602

Mandatorily redeemable capital securities of subsidiary trust 9,906 9,745

Mandatorily redeemable capital securities of subsidiary trusts 16,130 9,906

Total liabilities 22,557 16,761

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Applicable income tax expense ( 1,295 ) ( 1,128 ) ( 1,670 )

(Excess dividends from) equity in undistributed earnings of subsidiaries ( 8,259 ) 22,517 34,115

Equity in (excess dividends from) undistributed earnings of subsidiaries 22,782 ( 8,259 ) 22,517

Net income $ 47,555 $ 34,767 $ 53,695

5 unchanged sentences

Depreciation, amortization and accretion, net 6,224 161 168

Excess dividends from (equity in) undistributed earnings of subsidiaries 8,259 ( 22,517 ) ( 34,115 )

(Equity in) excess dividends from undistributed earnings of subsidiaries ( 22,782 ) 8,259 ( 22,517 )

Gain on investment securities — ( 8 ) —

7 unchanged sentences

Other, net ( 1,998 ) ( 76 ) 226

Net cash (used in) provided by investing activities ( 585 ) ( 1,217 ) 5,402

Net cash used in investing activities ( 2,636 ) ( 585 ) ( 1,217 )

Financing activities

Purchase of treasury stock ( 1,306 ) ( 30,409 ) ( 1,650 )

Proceeds from issuance of common stock 594 6 25

Proceeds from issuance of common shares 906 594 6

Cash dividends paid ( 31,002 ) ( 27,052 ) ( 25,942 )

Net cash used in financing activities ( 31,402 ) ( 56,867 ) ( 27,586 )

Net (decrease) increase in cash and cash equivalents ( 5,781 ) 6,344 4,480

Net increase (decrease) in cash and cash equivalents 889 ( 5,781 ) 6,344

Cash and cash equivalents at the beginning of year 14,363 20,144 13,800

3 unchanged sentences

Interest paid $ 331 $ 385 $ 544

Note 21 Summarized Quarterly Information (Unaudited)

(Dollars in thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter

Total interest income $ 40,862 $ 39,306 $ 39,013 $ 37,923

Total interest expense 6,226 4,446 3,894 3,615

Net interest income 34,636 34,860 35,119 34,308

Provision (recovery) for credit losses (a) 16,969 11,834 4,728 ( 7,277 )

Net gain (loss) on investment securities (b) 319 62 2 ( 751 )

Net loss on asset disposals and other transactions (b) ( 87 ) ( 122 ) ( 28 ) ( 53 )

Total non-interest income excluding net gains and losses (b) 15,505 14,724 16,796 17,305

Amortization of other intangible assets 729 728 857 909

Acquisition-related expenses 30 47 335 77

Total non-interest expense excluding amortization of other intangible assets and acquisition-related expenses 33,566 31,030 33,123 32,264

Income tax (benefit) expense ( 156 ) 1,136 2,636 4,263

Net (loss) income $ ( 765 ) $ 4,749 $ 10,210 $ 20,573

(Loss) earnings per common share – basic

$ ( 0.04 ) $ 0.24 $ 0.52 $ 1.06

(Loss) earnings per common share – diluted

$ ( 0.04 ) $ 0.23 $ 0.51 $ 1.05

Weighted-average common shares outstanding – basic

20,367,564 19,720,315 19,504,503 19,302,919

Weighted-average common shares outstanding – diluted

20,538,214 19,858,880 19,637,689 19,442,284

(Dollars in thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter

Total interest income $ 40,576 $ 43,621 $ 43,609 $ 42,289

Total interest expense 6,662 7,572 7,855 7,168

Net interest income 33,914 36,049 35,754 35,121

(Recovery) provision for credit losses (a) ( 263 ) 626 1,005 1,136

Net gain (loss) on investment securities (b) 30 ( 57 ) 97 94

Net loss on asset disposals and other transactions (b) ( 182 ) ( 293 ) ( 78 ) ( 229 )

Total non-interest income excluding net gains and losses (b) 15,581 15,639 16,374 17,298

Amortization of other intangible assets 694 824 953 888

Acquisition-related expenses 253 6,770 199 65

Total non-interest expense excluding amortization of other intangible and acquisition-related expenses 30,913 31,282 31,841 32,568

Income tax expense 3,377 2,238 3,281 2,767

Net income $ 14,369 $ 9,598 $ 14,868 $ 14,860

Earnings per common share – basic

$ 0.74 $ 0.47 $ 0.72 $ 0.72

Earnings per common share – diluted

$ 0.73 $ 0.46 $ 0.72 $ 0.72

Weighted-average common shares outstanding – basic

19,366,008 20,277,028 20,415,245 20,407,505

Weighted-average common shares outstanding – diluted

19,508,868 20,442,366 20,595,769 20,599,127

(a) On January 1, 2020, Peoples adopted ASU 2016-13 and implemented the CECL model.

Prior to the adoption of CECL, the provision for credit losses was the "provision for loan losses." The provision for credit losses includes changes related to the allowance for credit losses on loans, which includes purchased credit deteriorated loans, held-to-maturity investment securities, and the unfunded commitment liability.

(b) The sum of amounts are considered total non-interest income.

ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

54 unchanged sentences

The following reports of the independent registered public accounting firm and consolidated financial statements of Peoples Bancorp Inc.

and subsidiaries are filed as required by Item 8 Financial Statements and Supplementary Data and set forth immediately following "ITEM 9B OTHER INFORMATION" of this Form 10-K:

and subsidiaries are filed as required by "ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" and set forth immediately following "ITEM 9C DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS" of this Form 10-K:

Report of Independent Registered Public Accounting Firm (Ernst & Young LLP) on Effectiveness of Internal Control Over Financial Reporting

21 unchanged sentences

and ASB Financial Corp.

Included as Annex A to the definitive proxy statement/prospectus which forms a part of the Registration Statement of Peoples Bancorp Inc.

on Form S-4/A (Registration No.

Included as Annex A to the preliminary proxy statement/prospectus which forms a part of the Registration Statement of Peoples Bancorp Inc.

on Form S-4/A filed on January 19, 2018 (Registration No.

Agreement and Plan of Merger, dated as of October 29, 2018, as amended on December 18, 2018, between Peoples Bancorp Inc.

and First Prestonsburg Bancshares Inc.

Included as Annex A to the definitive proxy statement/prospectus which forms a part of the Registration Statement of Peoples Bancorp Inc.

on Form S-4/A (Registration No.

Included as Annex A to the preliminary proxy statement/prospectus which forms a part of the Registration Statement of Peoples Bancorp Inc.

on Form S-4/A filed on December 20, 2018 (Registration No.

Agreement and Plan of Merger, dated as of March 26, 2021, between Peoples Bancorp Inc.

and Premier Financial Bancorp, Inc.

Included as Annex A to the preliminary proxy statement/prospectus which forms a part of the Registration Statement of Peoples Bancorp Inc.

on Form S-4/A filed on June 1, 2021 (Registration No.

3.1(a) Amended Articles of Incorporation of Peoples Bancorp Inc.

19 unchanged sentences

on Form 8-K dated and filed on February 2, 2009 (File No.

Amended Articles of Incorporation of Peoples Bancorp Inc.

[This document represents the Amended Articles of Incorporation of Peoples Bancorp Inc.

in compiled form incorporating all amendments.

The compiled document has not been filed with the Ohio Secretary of State.] Incorporated herein by reference to Exhibit 3.1(g) to the Annual Report of Peoples Bancorp Inc.

on Form 10-K for the fiscal year ended December 31, 2008 (File No.

0-16772) (“Peoples’ 2008 Form 10-K”)

3.2(a) Code of Regulations of Peoples Bancorp Inc.

Incorporated herein by reference to Exhibit 3(b) to the Registration Statement of Peoples Bancorp Inc.

on Form 8-B filed July 20, 1993 (File No.

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

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 the Quarterly Report of Peoples Bancorp Inc.

on Form 10-Q for the quarterly period ended March 31, 2004 (File No.

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 the Quarterly Report on Form 10-Q of Peoples Bancorp Inc.

for the quarterly period ended June 30, 2021 (File No.

0-16772) ("Peoples' June 30, 2021 Form 10-Q")

+ Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of SEC Regulation S-K, as in effect at the time of filing of the Agreement and Plan of Merger.

1 unchanged sentence

to the SEC on a confidential basis upon request.

++ 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 on a confidential basis upon request.

P Peoples Bancorp Inc.

1 unchanged sentence

Exhibit Location

3.2(a) Code of Regulations of Peoples Bancorp Inc.

Incorporated herein by reference to Exhibit 3(b) to the Registration Statement of Peoples Bancorp Inc.

on Form 8-B filed July 20, 1993 (File No.

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

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 the Quarterly Report on Form 10-Q of Peoples Bancorp Inc.

for the quarterly period ended March 31, 2004 (File No.

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 the Current Report of Peoples Bancorp Inc.

on Form 8-K dated and filed on April 14, 2006 (File No.

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 the Quarterly Report of Peoples Bancorp Inc.

on Form 10-Q/A (Amendment No.

1) of Peoples Bancorp Inc.

for the quarterly period ended June 30, 2010 (File No.

7 unchanged sentences

Agreement to furnish instruments and agreements defining rights of holders of long-term debt Filed herewith

Indenture, dated as of June 25, 2007, between NB&T Financial Group, Inc., as issuer, and Wilmington Trust Company, as trustee, relating to Fixed/Floating Rate Junior Subordinated Debt Securities due 2037 Incorporated herein by reference to Exhibit 4.1(a) to the Quarterly Report of Peoples Bancorp Inc.

on Form 10-Q for the quarterly period ended June 30, 2015 (File No.

for the quarterly period ended June 30, 2015 (File No.

0-16772) ("Peoples' June 30, 2015 Form 10-Q")

4 unchanged sentences

succeeded to and was substituted for NB&T Financial Group, Inc.

as "Sponsor" Incorporated herein by reference to Exhibit 4.2(a) to Peoples' June 30, 2015 Form 10-Q

Incorporated herein by reference to Exhibit 4.2(a) to Peoples' June 30, 2015 Form 10-Q

Notice of Removal of Administrators and Appointment of Replacements, dated June 5, 2015, delivered to Wilmington Trust Company by the Successor Administrators named therein and Peoples Bancorp Inc.

1 unchanged sentence

Notice of Removal of Administrator and Appointment of Replacement, dated February 11, 2021, delivered to Wilmington Trust Company by the Continuing Administrators and the Successor Administrator named therein and Peoples Bancorp Inc.

Filed herewith

Incorporated herein by reference to Exhibit 4.3(c) to the Annual Report on Form 10-K of Peoples Bancorp Inc.

for the fiscal year ended December 31, 2020 (File No.

P Peoples 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.

Exhibit Location

Guarantee Agreement, dated as of June 25, 2007, between NB&T Financial Group, Inc.

2 unchanged sentences

succeeded to and was substituted for NB&T Financial Group, Inc.

as "Guarantor" Incorporated herein by reference to Exhibit 4.3 to Peoples' June 30, 2015 Form 10-Q

Description of Capital Stock of Peoples Bancorp Inc.

Incorporated herein by reference to Exhibit 4.5 to the Annual Report of Peoples Bancorp Inc.

on Form 10-K for the fiscal year ended December 31, 2019 (File No.

0-16772) ("Peoples' 2019 Form 10-K")

as "Guarantor"

Incorporated herein by reference to Exhibit 4.3 to Peoples' June 30, 2015 Form 10-Q

Indenture, dated as of February 26, 2004, between First National Bankshares Corporation, as Issuer, and Wilmington Trust Company, as Trustee, relating to Floating Rate Junior Subordinated Debt Securities Due 2034 Incorporated herein by reference to Exhibit 4.1(a) to the Quarterly Report on Form 10-Q of Peoples Bancorp Inc.

for the quarterly period ended September 30, 2021 (File No.

0-16772) ("Peoples' September 30, 2021 Form 10-Q")

First Supplemental Indenture, dated as of January 15, 2016, between Wilmington Trust Company, as Trustee, and Premier Financial Bancorp, Inc., as successor to First National Bankshares Corporation Incorporated herein by reference to Exhibit 4.1(b) to Peoples' September 30, 2021 Form 10-Q

Second Supplemental Indenture, dated as of September 17, 2021, between Wilmington Trust Company, as Trustee, and Peoples Bancorp Inc., as successor to Premier Financial Bancorp, Inc.

Incorporated herein by reference to Exhibit 4.1 (c) to Peoples' September 30, 2021 Form 10-Q

Amended and Restated Declaration of Trust of FNB Capital Trust One, dated as of February 26, 2004 NOTE:

Pursuant to the First Supplemental Indenture, dated as of January 15, 2016, between Wilmington Trust Company, as Trustee, and Premier Bancorp, Inc., Premier Bancorp, Inc., succeeded to and was substituted for First National Bankshares Corporation as "Sponsor" and pursuant to the Second Supplemental Indenture, dated as of September 17, 2021, between Wilmington Trust Company, as Trustee, and Peoples Bancorp Inc., Peoples Bancorp Inc., succeeded and was substituted for Premier Financial Bancorp, Inc.

Incorporated herein by reference to Exhibit 4.2 to Peoples' September 30, 2021 Form 10-Q

Notice of Removal of Administrators and Appointment of Replacements, dated September 17, 2021, delivered to Wilmington Trust Company by the Successor Administrators named therein and Peoples Bancorp Inc.

Incorporated herein by reference to Exhibit 4.3 to Peoples' September 30, 2021 Form 10-Q

Guarantee Agreement, dated as of February 26, 2004, between First National Bankshares Corporation, as Guarantor, and Wilmington Trust Company, as Guarantee Trustee, related to the Capital Securities (as defined therein) NOTE:

Pursuant to the First Supplemental Indenture, dated as of January 15, 2016, between Wilmington Trust Company, as Trustee, and Premier Financial Bancorp, Inc., Premier Financial Bancorp, Inc.

succeeded to and was substituted for First National Bankshares Corporation as "Guarantor" and pursuant to the Second Supplemental Indenture, dated as of September 17, 2021, between Wilmington Trust Company, as Trustee, and Peoples Bancorp Inc., Peoples Bancorp Inc.

succeeded and was substituted for Premier Financial Bancorp, Inc.

as "Guarantor"

Incorporated herein by reference to Exhibit 4.4 to Peoples' September 30, 2021 Form 10-Q

Description of Common Shares of Peoples Bancorp Inc.

Filed herewith

Peoples Bancorp Inc.

Third Amended and Restated Deferred Compensation Plan for Directors of Peoples Bancorp Inc.

and Subsidiaries (Amended and Restated Effective June 26, 2014)* Incorporated herein by reference to Exhibit 10.1(a) to Peoples' 2015 Form 10-K

and Subsidiaries (Amended and Restated Effective June 26, 2014)* Incorporated herein by reference to Exhibit 10.1(a) the Annual Report on Form 10-K of Peoples Bancorp Inc.

for the fiscal year ended December 31, 2015 (File No.

*Management Compensation Plan or Agreement

1 unchanged sentence

Rabbi Trust Agreement, made January 6, 1998, between Peoples Bancorp Inc.

and The Peoples Banking and Trust Company (predecessor to Peoples Bank, National Association and now known as Peoples Bank following conversion to state-chartered bank) as Trustee* Incorporated herein by reference to Exhibit 10.1(c) to the Annual Report of Peoples Bancorp Inc.

on Form 10-K for the fiscal year ended December 31, 2007 (File No.

for the fiscal year ended December 31, 2007 (File No.

Summary of Peoples Bancorp Inc.

1 unchanged sentence

[Effective beginning with the fiscal year beginning January 1, 2012 and ending with the fiscal year ended December 31, 2019]* Incorporated herein by reference to Exhibit 10.2(c)

to the Annual Report of Peoples Bancorp Inc.

Form 10-K for the fiscal year ended December 31,

to the Annual Report on Form 10-K of Peoples Bancorp Inc.

for the fiscal year ended December 31,

2011 (File No.

1 unchanged sentence

Annual Incentive Program for Executive Officers and other employees of Peoples Bancorp Inc.

[Effective for fiscal year ended December 31, 2020]* Incorporated herein by reference to Exhibit 10.3 to Peoples' 2019 Form 10-K

[Effective for fiscal year ended December 31, 2020]* Incorporated herein by reference to Exhibit 10.3 to the Annual Report on Form 10-K of Peoples Bancorp Inc.

for the fiscal year ended December 31, 2019 (File No.

0-16772) ("Peoples' 2019 Form 10-K")

Summary of Peoples Bancorp Inc.

Annual Incentive Program for Executive Officers and other employees of Peoples Bancorp Inc.

[Effective beginning with the fiscal year beginning January 1, 2021]* Filed herewith

[Effective beginning with the fiscal year beginning January 1, 2021]* Incorporated herein by reference to Exhibit 10.4 to the Annual Report on Form 10-K of Peoples Bancorp Inc.

for the fiscal year ended December 31, 2020 (File No.

Summary of Perquisites for Executive Officers of Peoples Bancorp Inc.* Filed herewith

11 unchanged sentences

Third Amended and Restated 2006 Equity Plan Time-Based Restricted Stock Award Agreement (for Executives) used and to be used to evidence awards of time-based restricted stock granted to executives of Peoples Bancorp Inc.

on and after July 31, 2018 * Incorporated herein by reference to Exhibit 10.1 to the Quarterly Report of Peoples Bancorp Inc.

on Form 10-Q for the quarterly period ended September 30, 2018 (File No.

on and after July 31, 2018 * Incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Peoples Bancorp Inc.

for the quarterly period ended September 30, 2018 (File No.

0-16772) ("Peoples' September 30, 2018 Form 10-Q")

3 unchanged sentences

Peoples Bancorp Inc.

Amended and Restated Nonqualified Deferred Compensation Plan (adopted effective July 11, 2019)* Incorporated herein by reference to Exhibit 10.3 to the Quarterly Report of Peoples Bancorp Inc.

on Form 10-Q for the quarterly period ended June 30, 2019 (File No.

Amended and Restated Nonqualified Deferred Compensation Plan (adopted effective July 11, 2019)* Incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Peoples Bancorp Inc.

for the quarterly period ended June 30, 2019 (File No.

Peoples Bancorp Inc.

1 unchanged sentence

and Charles W.

Sulerzyski (adopted April 4, 2011)* Incorporated herein by reference to Exhibit 10.2 to the Quarterly Report of Peoples Bancorp Inc.

on Form 10-Q for the quarterly period ended June 30, 2011 (File No.

Sulerzyski (adopted April 4, 2011)* Incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Peoples Bancorp Inc.

for the quarterly period ended June 30, 2011 (File No.

Peoples Bancorp Inc.

3 unchanged sentences

Second Amended and Restated 2006 Equity Plan Performance-Based Restricted Stock Agreement used to evidence awards of performance-based restricted stock granted to employees of Peoples Bancorp Inc.

on and after January 29, 2015 and prior to July 31, 2018* Incorporated herein by reference to Exhibit 10.2 to the Quarterly Report of Peoples Bancorp Inc.

on Form 10-Q for the quarterly period ended March 31, 2017 (File No.

on and after January 29, 2015 and prior to July 31, 2018* Incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of Peoples Bancorp Inc.

for the quarterly period ended March 31, 2017 (File No.

0-16772) ("Peoples' March 31, 2017 Form 10-Q")

3 unchanged sentences

Second Amended and Restated 2006 Equity Plan Performance-Based Restricted Stock Award Agreement used to evidence awards of performance-based restricted stock granted to executive officers of Peoples Bancorp Inc.

on and after January 29, 2015 and prior to January 1, 2018* Incorporated herein by reference Exhibit 10.1 to the Quarterly Report of Peoples Bancorp Inc.

on Form 10-Q for the quarterly period ended March 31, 2015 (File No.

on and after January 29, 2015 and prior to January 1, 2018* Incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Peoples Bancorp Inc.

for the quarterly period ended March 31, 2015 (File No.

Form of Peoples Bancorp Inc.

1 unchanged sentence

and individuals who are first elected as executive officers of Peoples Bancorp Inc.

after March 24, 2016* Incorporated herein by reference to Exhibit 10.3 to the Quarterly Report of Peoples Bancorp Inc.

on Form 10-Q for the quarterly period ended March 31, 2016 (File No.

after March 24, 2016* Incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Peoples Bancorp Inc.

for the quarterly period ended March 31, 2016 (File No.

Peoples Bancorp Inc.

1 unchanged sentence

and Douglas Wyatt (adopted May 2, 2016)* Incorporated herein by reference to Exhibit 10.1 to Peoples' March 31, 2017 Form 10-Q

Loan Agreement, made and entered into as of April 3, 2019, between Peoples Bancorp Inc., as Borrower, and U.S.

Bank National Association, as Lender Incorporated herein by reference to Exhibit 10.1 to the Current Report of Peoples Bancorp Inc.

on Form 8-K dated and filed on April 9, 2019 (File No.

0-16772) ("Peoples' April 9, 2019 Form 8-K")

Revolving Credit Note issued by Peoples Bancorp Inc.

on April 3, 2019 to U.S.

Bank National Association in the principal amount of $20,000,000 Incorporated herein by reference to Exhibit 10.2 to Peoples' April 9, 2019 Form 8-K

First Amendment to Loan Agreement, made and entered into as of April 2, 2020, between Peoples Bancorp Inc., as Borrower, and U.S.

Bank National Association, as Lender Incorporated herein by reference to Exhibit 10.1 to the Current Report of Peoples Bancorp Inc.

on Form 8-K dated and filed on April 6, 2020 (File No.

Form of Peoples Bancorp Inc.

Second Amended and Restated 2006 Equity Plan Performance Unit Award Agreement used and to be used to evidence grants of performance units to executive officers of Peoples Bancorp Inc.

on and after July 26, 2017* Incorporated herein by reference to Exhibit 10.1 to the Quarterly Report of Peoples Bancorp Inc.

on Form 10-Q for the quarterly period ended June 30, 2017 (File No.

on and after July 26, 2017* Incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Peoples Bancorp Inc.

for the quarterly period ended June 30, 2017 (File No.

Peoples Bancorp Inc.

3 unchanged sentences

Change in Control Agreement between Peoples Bancorp Inc.

Eakle (adopted April 1, 2020)* Incorporated herein by reference to Exhibit 10.3 to the Quarterly Report of Peoples Bancorp Inc.

on Form 10-Q for the quarterly period ended June 30, 2020 (File No.

Eakle (adopted April 1, 2020)* Incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Peoples Bancorp Inc.

for the quarterly period ended June 30, 2020 (File No.

Peoples Bancorp Inc.

1 unchanged sentence

and Kathryn M.

Bailey (adopted October 1, 2020)* Incorporated herein by reference to Exhibit 10.1 to the Quarterly Report of Peoples Bancorp Inc.

on Form 10-Q for the quarterly period ended September 30, 2020 (File No.

Bailey (adopted October 1, 2020)* Incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form-10-Q of Peoples Bancorp Inc.

for the quarterly period ended September 30, 2020 (File No.

0-16772) ("Peoples September 30, 2020 Form 10-Q")

5 unchanged sentences

and Tyler Wilcox (adopted October 1, 2020)* Incorporated herein by reference to Exhibit 10.3 to Peoples' September 30, 2020 Form 10-Q

Separation Agreement and General Release between John C.

Rogers (executed on October 5, 2020) and Peoples Bank (executed on October 6, 2020)* Incorporated herein by reference to Exhibit 10.4 to Peoples' September 30, 2020 Form 10-Q

Subsidiaries of Peoples Bancorp Inc.

5 unchanged sentences

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

*Management Compensation Plan or Agreement

Exhibit Location

Rule 13a-14(a)/15d-14(a) Certifications [Executive Vice President, Chief Financial Officer and Treasurer] Filed herewith

6 unchanged sentences

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Submitted electronically herewith #

*Management Compensation Plan or Agreement

Exhibit Location

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Submitted electronically herewith #

28 unchanged sentences

JAMES* Director 3/15/2022

MEAD* Director 3/1/2021

REEVES* Director 3/15/2022

RECTOR* Chairman of the Board and Director 3/15/2022

/s/ DOUGLAS V.

REYNOLDS* Director 3/15/2022

/s/ FRANCES A.

SKINNER* Director 3/15/2022

/s/ MICHAEL N.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures