What changed in this filing

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Item 1. Financial Statements

2022-05-06 compared with 2021-11-05 · 368 added, 495 removed, 1064 unchanged (45% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2022 December 31,

4 unchanged sentences

Total cash and cash equivalents 405,679 415,727

Available-for-sale investment securities, at fair value (amortized cost of $ 1,294,654 at September 30, 2021 and $ 734,544 at December 31, 2020) (a)

Available-for-sale investment securities, at fair value (amortized cost of $ 1,381,259 at March 31, 2022 and $ 1,283,146 at December 31, 2021) (a)

1,301,839 1,275,493

Held-to-maturity investment securities, at amortized cost (fair value of $ 240,000 at September 30, 2021 and $ 68,082 at December 31, 2020) (a)

Held-to-maturity investment securities, at amortized cost (fair value of $ 347,978 at March 31, 2022 and $ 369,955 at December 31, 2021) (a)

384,656 374,129

3 unchanged sentences

Allowance for credit losses ( 54,768 ) ( 63,967 )

Net loans 4,413,646 3,352,581

Net loans and leases (c) 4,492,385 4,417,633

Loans held for sale 1,460 3,791

13 unchanged sentences

Stockholders’ equity

Preferred shares, no par value, 50,000 shares authorized, no shares issued at September 30, 2021 and at December 31, 2020

Common stock, no par value, 50,000,000 shares authorized, 29,806,435 shares issued at September 30, 2021 and 21,193,402 shares issued at December 31, 2020, including at each date shares held in treasury

Preferred shares, no par value, 50,000 shares authorized, no shares issued at March 31, 2022 and at December 31, 2021

Common stock, no par value, 50,000,000 shares authorized, 29,824,684 shares issued at March 31, 2022 and 29,814,401 shares issued at December 31, 2021, including at each date shares held in treasury

684,243 686,282

Retained earnings 220,477 207,076

Accumulated other comprehensive (loss) income, net of deferred income taxes ( 5,888 ) 1,336

Treasury stock, at cost, 1,599,593 shares at September 30, 2021 and 1,686,046 shares at December 31, 2020

Accumulated other comprehensive loss, net of deferred income taxes ( 62,667 ) ( 11,619 )

Treasury stock, at cost, 1,434,441 shares at March 31, 2022 and 1,577,359 shares at December 31, 2021

( 33,713 ) ( 36,714 )

1 unchanged sentence

Total liabilities and stockholders’ equity $ 7,239,261 $ 7,063,521

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

(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, at March 31, 2022 and $ 0 and $ 286 , respectively, at December 31, 2021.

(b) Also referred to throughout this document as "total loans" and "loans held for investment."

See Notes to the Unaudited Condensed Consolidated Financial Statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(Dollars in thousands, except per share data) 2022 2021

11 unchanged sentences

Net interest income 54,310 35,578

Provision for credit losses 8,994 4,728 7,333 33,531

Net interest income after provision for credit losses 33,584 30,391 110,483 71,084

Recovery of credit losses ( 6,807 ) ( 4,749 )

Net interest income after recovery of credit losses 61,117 40,327

Non-interest income:

Electronic banking income 5,253 3,911

Trust and investment income 4,158 3,435 12,223 10,013

Insurance income 4,731 5,221

Trust and investment income 4,276 3,845

Deposit account service charges 3,426 1,985

3 unchanged sentences

Net loss on asset disposals and other transactions ( 127 ) ( 27 )

Net (loss) gain on investment securities ( 166 ) 2 ( 704 ) 383

Net gain (loss) on investment securities 130 ( 336 )

Other non-interest income 1,326 658

2 unchanged sentences

Salaries and employee benefit costs 27,729 20,759

Professional fees 6,426 1,720 13,459 5,247

Net occupancy and equipment expense 5,088 3,327

Professional fees 3,672 3,468

Data processing and software expense 2,916 2,454

1 unchanged sentence

Amortization of other intangible assets 1,708 620

FDIC insurance premiums 1,194 463

Marketing expense 995 911

Franchise tax expense 810 882 2,487 2,645

FDIC insurance premium 807 570 1,596 717

Other loan expenses 832 462

Franchise tax expense 764 855

Communication expense 625 282

1 unchanged sentence

Total non-interest expense 51,629 37,987

(Loss) income before income taxes ( 7,930 ) 12,846 23,807 17,810

Income tax (benefit) expense ( 2,172 ) 2,636 3,999 3,616

Net (loss) income $ ( 5,758 ) $ 10,210 $ 19,808 $ 14,194

(Loss) earnings per common share - basic $ ( 0.28 ) $ 0.52 $ 0.99 $ 0.70

(Loss) earnings per common share - diluted $ ( 0.28 ) $ 0.51 $ 0.99 $ 0.70

Income before income taxes 29,538 19,243

Income tax expense 5,961 3,780

Net income $ 23,577 $ 15,463

Earnings per common share - basic $ 0.84 $ 0.80

Earnings per common share - diluted $ 0.84 $ 0.79

Weighted-average number of common shares outstanding - basic 28,006,165 19,282,665

6 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(Dollars in thousands) 2022 2021

Net (loss) income $ ( 5,758 ) $ 10,210 $ 19,808 $ 14,194

Net income $ 23,577 $ 15,463

Other comprehensive (loss) income:

Available-for-sale investment securities:

Gross unrealized holding (loss) gain arising during the period ( 7,685 ) ( 2,974 ) ( 16,738 ) 15,480

Related tax benefit (expense) 1,592 624 3,493 ( 3,251 )

Reclassification adjustment for net loss (gain) included in net (loss) income 166 ( 2 ) 704 ( 383 )

Gross unrealized holding loss arising during the period ( 71,637 ) ( 12,578 )

Related tax benefit 16,448 2,642

Reclassification adjustment for net (loss) gain included in net income ( 130 ) 336

Related tax benefit (expense) 30 ( 71 )

Net effect on other comprehensive (loss) income ( 5,971 ) ( 2,352 ) ( 12,698 ) 11,926

Net effect on other comprehensive loss ( 55,289 ) ( 9,671 )

Defined benefit plan:

Net gain (loss) arising during the period 1,818 ( 533 ) 1,826 ( 1,054 )

Related tax (expense) benefit ( 407 ) 113 ( 408 ) 222

Net (loss) gain arising during the period ( 14 ) 5

Related tax benefit (expense) 3 ( 1 )

Amortization of unrecognized gain and service cost on benefit plans 21 30

Related tax expense ( 5 ) ( 7 )

Recognition of gain due to settlement and curtailment 143 531 143 1,050

Related tax expense ( 32 ) ( 112 ) ( 32 ) ( 221 )

Net effect on other comprehensive income 5 27

Cash flow hedges:

Net gain (loss) arising during the period 858 803 4,800 ( 9,661 )

Related tax (expense) benefit ( 90 ) ( 168 ) ( 918 ) 2,029

Net effect on other comprehensive income (loss) 768 635 3,882 ( 7,632 )

Total other comprehensive (loss) income, net of tax ( 3,666 ) ( 1,692 ) ( 7,224 ) 4,367

Net gain arising during the period 5,456 4,236

Related tax expense ( 1,220 ) ( 890 )

Net effect on other comprehensive income 4,236 3,346

Total other comprehensive loss, net of tax ( 51,048 ) ( 6,298 )

Total comprehensive (loss) income $ ( 27,471 ) $ 9,165

6 unchanged sentences

(Dollars in thousands)

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

Net loss — ( 5,758 ) — — ( 5,758 )

Other comprehensive loss, net of tax — — ( 3,666 ) — ( 3,666 )

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

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

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

Common shares issued under dividend reinvestment plan 277 — — — 277

Common shares issued under compensation plan for Boards of Directors 16 — — 44 60

Common shares issued under employee stock purchase plan 37 — — 101 138

Stock-based compensation 598 — — — 598

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

261,899 — — — 261,899

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

Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

Common Shares Retained Earnings Treasury Stock

(Dollars in thousands)

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

3 unchanged sentences

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

Reissuance of treasury stock for deferred compensation plan for Boards of Directors — — — 74 74

Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors — — — ( 1,230 ) ( 1,230 )

3 unchanged sentences

Stock-based compensation 1,577 — — — 1,577

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

261,899 — — — 261,899

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

Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

Common Shares Retained Earnings Treasury Stock

(Dollars in thousands)

Balance, June 30, 2020 $ 421,236 $ 173,572 $ 4,634 $ ( 30,265 ) $ 569,177

Net income — 10,210 — — 10,210

Other comprehensive income, net of tax — — ( 1,692 ) — ( 1,692 )

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

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

Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors — — — ( 66 ) ( 66 )

Common shares repurchased under share repurchase program then in effect — — — ( 5,000 ) ( 5,000 )

Common shares issued under dividend reinvestment plan 220 — — — 220

Common shares issued under compensation plan for Boards of Directors ( 11 ) — — 63 52

Common shares issued under employee stock purchase plan ( 23 ) — — 134 111

Stock-based compensation 614 — — — 614

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

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

Accumulated Other Comprehensive (Loss) Income Total Stockholders' Equity

3 unchanged sentences

Net income — 15,463 — — 15,463

Other comprehensive income, net of tax — — 4,367 — 4,367

Other comprehensive loss, net of tax — — ( 6,298 ) — ( 6,298 )

Cash dividends declared — ( 6,833 ) — — ( 6,833 )

2 unchanged sentences

Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors — — — ( 911 ) ( 911 )

Common shares repurchased under share repurchase program then in effect — — — ( 25,000 ) ( 25,000 )

Common shares issued under dividend reinvestment plan 288 — — — 288

Common shares issued under compensation plan for Boards of Directors 53 — — 141 194

Common shares issued under performance unit awards, net of tax 41 — — 138 179

Common shares issued under employee stock purchase plan 35 — — 82 117

Stock-based compensation 1,198 — — — 1,198

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

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

(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.

Balance, March 31, 2021 $ 422,370 $ 199,321 $ ( 4,962 ) $ ( 37,836 ) $ 578,893

See Notes to the Unaudited Condensed Consolidated Financial Statements

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Nine Months Ended

September 30,

Three Months Ended

(Dollars in thousands) 2022 2021

14 unchanged sentences

Proceeds from sales of other real estate owned 124 —

Proceeds from bank owned life insurance contracts — 109

Business acquisitions, net of cash received ( 80,532 ) ( 117,000 )

Investment in limited partnership and tax credit funds ( 2,900 ) ( 13 )

Net cash provided by (used in) investing activities 106,289 ( 517,709 )

(Investment in) proceeds from limited partnership and tax credit funds ( 1,151 ) 4

Net cash used in investing activities ( 127,361 ) ( 350,292 )

Financing activities:

1 unchanged sentence

Net increase in interest-bearing deposits 115,255 185,059

Net increase (decrease) in short-term borrowings 32,625 ( 154,914 )

Proceeds from long-term borrowings — 50,000

Net decrease in short-term borrowings ( 27,252 ) ( 5,393 )

Payments on long-term borrowings ( 260 ) ( 311 )

Cash dividends paid ( 10,438 ) ( 7,080 )

Purchase of treasury stock under share repurchase program — ( 25,000 )

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

1 unchanged sentence

Proceeds from issuance of common shares 282 286

Contingent consideration payments made after a business acquisition — ( 116 )

Net cash provided by financing activities 101,603 380,245

Net increase in cash and cash equivalents 347,582 46,058

Net (decrease) increase in cash and cash equivalents ( 10,048 ) 48,275

Cash and cash equivalents at beginning of period 415,727 152,100

2 unchanged sentences

Interest paid $ 2,656 $ 4,199

Income taxes paid 6,450 7,500

Supplemental noncash disclosures:

11 unchanged sentences

Accordingly, these financial statements do not contain all of the information and footnotes required by US GAAP for annual financial statements and should be read in conjunction with Peoples’ Annual Report on Form 10-K for the fiscal year ended December 31, 2021 ("Peoples' 2021 Form 10-K").

The accounting and reporting policies followed in the presentation of the accompanying Unaudited Condensed Consolidated Financial Statements are consistent with those described in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples’ 2020 Form 10-K, as updated by the information contained in this quarterly report on Form 10-Q for the quarterly period ended September 30, 2021 (this "Form 10-Q").

Management has evaluated all significant events and transactions that occurred after September 30, 2021 for potential recognition or disclosure in these unaudited condensed consolidated financial statements.

The accounting and reporting policies followed in the presentation of the accompanying Unaudited Condensed Consolidated Financial Statements are consistent with those described in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples’ 2021 Form 10-K, as updated by the information contained in this quarterly report on Form 10-Q for the quarterly period ended March 31, 2022 (this "Form 10-Q").

Management has evaluated all significant events and transactions that occurred after March 31, 2022 for potential recognition or disclosure in these unaudited condensed consolidated financial statements.

In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated.

2 unchanged sentences

The Consolidated Balance Sheet at December 31, 2021, contained herein, has been derived from the audited Consolidated Balance Sheet included in Peoples’ 2021 Form 10-K.

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

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

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

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

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

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

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

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

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

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

The preparation of the condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.

4 unchanged sentences

Unless otherwise discussed, management believes the impact of any recently issued standards, including those issued but not yet effective, will not have a material impact on Peoples' financial statements taken as a whole.

Accounting Standards Update ("ASU") 2021-05 - Leases (Topic 842):

Lessors - Certain Leases with Variable Lease Payments.

This ASU addresses stakeholders' concerns by amending the lease classification requirements for lessors to align them with practice under Topic 840.

This ASU is effective for fiscal years beginning after December 15, 2021, for all entities.

Peoples early adopted this ASU as of September 30, 2021.

The adoption of this ASU did not have an impact on Peoples' consolidated financial statements.

ASU 2020-04 - Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This ASU allows relief where the benchmark interest rate is changed on a loan, lease or hedging relationship between March 12, 2020

and December 31, 2022.

This ASU was early adopted as of September 30, 2021, and is not expected to 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.

The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

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

These amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

Peoples adopted this ASU as of January 1, 2021.

The adoption of this ASU did not have a material effect on Peoples' consolidated financial statements.

ASU 2022-01 - Fair Value Hedging - Portfolio Layer Method - Derivatives and Hedging (Topic 815).

This ASU clarifies the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets.

The update expands and clarifies the current guidance on accounting for fair value hedge basis adjustments under the portfolio layer method for both single-layer and multiple-layer hedges.

For entities that have already adopted ASU 2017-12, as Peoples has, the amendments in ASU 2022-01 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The amendments in the ASU may also be early adopted, including adoption in any interim period.

Peoples is currently evaluating the impact of the amendments in the ASU on Peoples' consolidated financial statements.

ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings ("TDRs") and Vintage Disclosures.

This ASU eliminates the accounting guidance on troubled debt restructurings (TDRs) for creditors and amends the guidance on disclosures to include current-period gross write-offs by year of origination.

The ASU also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty.

For entities that have already adopted ASU 2016-13, as Peoples has, the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The amendments in the ASU may also be early adopted, including adoption in any interim period.

Peoples is currently evaluating the impact of the amendments in the ASU on Peoples' consolidated financial statements.

Note 2 Fair Value of Assets and Liabilities

11 unchanged sentences

Recurring Fair Value Measurements at Reporting Date

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

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

1 unchanged sentence

Obligations of:

Treasury and government agencies

$ 167,406 $ — $ — $ 35,604 $ — $ —

government sponsored agencies — 80,654 — — 81,739 —

15 unchanged sentences

Available-for-Sale Investment Securities:

The fair values reported by Peoples are determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, London Interbank Offered Rate ("LIBOR") yield curves, credit spreads and prices from market makers and live trading systems (Level 2).

The fair values used by Peoples are obtained from an independent pricing service and represent either quoted market prices for the identical securities (Level 1) or fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, LIBOR (or other relevant) yield curves, credit spreads and prices from market makers and live trading systems (Level 2).

Management reviews the valuation methodology and quality controls utilized by the pricing services in management's overall assessment of the reasonableness of the fair values provided, and challenges prices when management believes a material discrepancy in pricing exists.

2 unchanged sentences

Derivative Assets and Liabilities :

The fair value for derivative instruments is determined based on market prices, broker-dealer quotations on similar products, or other related market input parameters (Level 2).

Derivative assets and liabilities are recognized on the Unaudited Consolidated Balance Sheets at their fair value within other assets, and accrued expenses and other liabilities, respectively.

The fair value for derivative financial instruments is determined based on market prices, broker-dealer quotations on similar products, or other related input parameters (Level 2).

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

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

Non-Recurring Fair Value Measurements at Reporting Date

September 30, 2021 December 31, 2020

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

Loans held for sale $ — $ 2,751 $ — $ — $ 4,733 $ —

March 31, 2022 December 31, 2021

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

Collateral Dependent Loans $ — $ 9,395 $ — $ 430

Loans held for sale (a) $ 1,291 $ — $ 418 $ —

Other real estate owned ("OREO") $ — $ 35 $ — $ 87

Servicing rights (a)(b) $ — $ — $ 2,294 $ — $ — $ 2,591

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

Servicing rights (b)(c) $ — $ 20 $ — $ 22

(a) Loans held for sale are presented gross of allowance for credit losses of $ 24 and $ 0 as of March 31,2022 and December 31,2021, respectively.

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

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

(b) Peoples established a valuation allowance on servicing rights of $ 16 at September 30, 2021 and $ 161 at December 31, 2020, as the fair value of the servicing rights was less than the carrying value.

(c) As of March 31, 2022, Peoples recorded a minimal addition to the valuation allowance related to changes in the fair value of servicing rights.

Peoples established a valuation allowance on servicing rights of $ 12 at March 31, 2022 and December 31, 2021.

The fair value of the servicing rights was less than the carrying value on 10 year fixed rate loans.

Loans Held for Sale:

4 unchanged sentences

OREO obtained in satisfaction of a loan is recorded at the lower of cost or estimated fair value, less estimated costs to sell the property.

The carrying value of OREO is not re-measured to fair value on a recurring basis.

Peoples assesses the carrying value of OREO quarterly for impairment considering market activity and recent real estate appraisals.

These appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales approach and the income approach (Level 3).

The increase in OREO for the nine months ended September 30, 2021 was due to the OREO acquired in the Premier Financial Bancorp Inc.

("Premier") acquisition.

The carrying value of OREO is not re-measured to fair value on a recurring basis, but is based on recent real estate appraisals and is updated at least annually.

These appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales approach and the income approach.

Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available (Level 3).

Servicing Rights :

6 unchanged sentences

Fair Value Measurements of Other Financial Instruments

(Dollars in thousands) Fair Value Hierarchy Level September 30, 2021 December 31, 2020

(Dollars in thousands) Fair Value Hierarchy Level March 31, 2022 December 31, 2021

Carrying Amount Fair Value Carrying Amount Fair Value

3 unchanged sentences

government sponsored agencies 2 38,486 34,281 36,431 35,513

States and political subdivisions 2 124,181 122,435 35,139 35,484

States and political subdivisions (a) 2 151,503 133,694 151,688 150,138

Residential mortgage-backed securities 2 115,613 108,199 110,708 110,159

7 unchanged sentences

Other investment securities at fair value:

Nonqualified deferred compensation (a) 2 2,083 2,083 1,867 1,867

Other investment securities (b) 2 784 784 365 365

Total other investment securities at fair value 2,867 2,867 2,232 2,232

Total other investment securities (b) 34,096 34,096 37,261 37,261

Loans and leases, net of deferred fees and costs 3 4,491,028 4,595,800 3,402,940 3,458,732

Nonqualified deferred compensation (b) 1 2,222 2,222 2,240 2,240

Other investment securities (c) 2 784 784 784 784

Total other investment securities 41,503 41,503 33,643 33,643

Loans and leases, net of deferred fees and costs (d) 3 4,547,153 4,361,994 4,481,600 4,510,605

Bank owned life insurance 2 73,789 73,789 73,358 73,358

2 unchanged sentences

Long-term borrowings 2 201,610 206,652 99,475 101,664

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

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

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

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

(c) "Other investment securities", as reported on the Unaudited Consolidated Balance Sheets, also included equity investment securities at March 31, 2022

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

table above and not included in this table.

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

These instruments include cash and cash equivalents, demand and other non-maturity deposits, and overnight borrowings.

(d) Loans and leases, net of deferred fees and cost are presented gross of allowance for credit losses of $ 54.8 million and $ 64.0 million, as of March 31, 2022 and December 31, 2021, respectively.

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

These financial instruments include cash and cash equivalents, and overnight borrowings.

Peoples used the following methods and assumptions in estimating the fair value of the following financial instruments:

1 unchanged sentence

Cash and cash equivalents include cash on hand, balances due from other banks, interest-bearing deposits in other banks, federal funds sold and other short-term investments with original maturities of ninety days or less.

The carrying amount for cash and balances due from banks is a reasonable estimate of fair value (Level 1).

The carrying amount for cash on hand and balances due from banks is a reasonable estimate of fair value (Level 1).

Held-to-Maturity Investment Securities:

The fair values used by Peoples are obtained from an independent pricing service and represent fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, LIBOR yield curves, credit spreads and prices from market makers and live trading systems (Level 2).

Management reviews the valuation methodology and quality controls utilized by the pricing service in management's overall assessment of the reasonableness of the fair values provided, and challenges prices when management believes a material discrepancy in pricing exists.

The fair values used by Peoples are obtained from an independent pricing service and represent fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, relevant yield curves, credit spreads and prices from market makers and live trading systems (Level 2).

Other Investment Securities:

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

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:

1 unchanged sentence

Accordingly, this value is not necessarily the value to Peoples if the notes were held-to-maturity.

Peoples considered interest rate, credit and market factors in estimating the fair value of loans (Level 3).

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 loans and other market factors, including liquidity.

Peoples considered interest rate, credit and market factors in estimating the fair value of loans and leases (Level 3).

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

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

Bank Owned Life Insurance:

2 unchanged sentences

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).

Demand and other non-fixed-maturity deposits are estimated using a discounted cash flow calculation based on maturity, attrition and re-pricing assumptions.

Short-term Borrowings:

2 unchanged sentences

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

Certain assets and financial liabilities that are not required to be measured or reported at fair value can be subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

These assets and liabilities include the following:

customer relationships, the deposit base, and other information required to compute Peoples’ aggregate fair value that are not included in the above information.

Certain financial assets and financial liabilities that are not required to be measured or reported at fair value can be subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

These financial assets and liabilities include the following:

customer relationships, the deposit base, and other information required to compute Peoples’ aggregate fair value, which are not included in the above information.

Accordingly, the above fair values are not intended to represent the aggregate fair value of Peoples.

3 unchanged sentences

(Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

September 30, 2021

March 31, 2022

Obligations of:

Treasury and government agencies $ 169,331 $ 1 $ ( 1,926 ) $ 167,406

government sponsored agencies 87,219 12 ( 6,577 ) 80,654

6 unchanged sentences

Obligations of:

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

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

4 unchanged sentences

Total available-for-sale securities $ 1,283,146 $ 10,079 $ ( 17,732 ) $ 1,275,493

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

Three Months Ended Nine Months Ended

September 30, September 30,

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

Three Months Ended

(Dollars in thousands) 2022 2021

1 unchanged sentence

Gross losses realized ( 16 ) ( 675 )

Net (loss) gain realized $ ( 166 ) $ 2 $ ( 704 ) $ 383

Net gain (loss) realized $ 130 $ ( 336 )

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

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

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

Less than 12 Months 12 Months or More Total

5 unchanged sentences

Unrealized Loss

September 30, 2021

March 31, 2022

Obligations of:

Treasury and government agencies

$ 107,070 $ 1,926 24 $ — $ — — $ 107,070 $ 1,926

government sponsored agencies

10 unchanged sentences

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

2 unchanged sentences

Management evaluates available-for-sale investment securities for an allowance for credit losses on a quarterly basis.

At September 30, 2021, management concluded that no individual securities at an unrealized loss position required an allowance for credit losses.

At September 30, 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 September 30, 2021 and December 31, 2020 were largely attributable to changes in market interest rates and spreads since the securities were purchased, and were not credit related losses.

At March 31, 2022, management concluded that no individual securities at an unrealized loss position required an allowance for credit losses.

At March 31, 2022, Peoples did not have the intent to sell, nor was it more likely than not that Peoples would be required to sell, any of the securities with an unrealized loss prior to recovery.

Further, the unrealized losses at both March 31, 2022 and December 31, 2021 were largely attributable to changes in market interest rates and spreads since the securities were purchased, and were not credit related losses.

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

Interest receivable on investment securities was $ 5.7 million at September 30, 2021 and $ 2.7 million at December 31, 2020.

At September 30, 2021, approximately 99 % of the mortgage-backed securities with a market value that had been at an unrealized loss position for twelve months or more were issued by U.S.

Interest receivable on investment securities was $ 7.0 million at March 31, 2022 and $ 5.5 million at December 31, 2021.

At March 31, 2022, approximately 99 % of the mortgage-backed securities with a market value that had been at an unrealized loss position for twelve months or more were issued by U.S.

government sponsored agencies.

The remaining 1 %, or 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 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 remaining 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 September 30, 2021 were 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 September 30, 2021.

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

All three 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 remaining number of loans underlying these securities.

The unrealized loss with respect to the one bank-issued trust preferred securities that had been in an unrealized loss position for twelve months or more at March 31, 2022 were 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 March 31, 2022.

The weighted-average yields are based on the amortized cost.

3 unchanged sentences

Obligations of:

Treasury and government agencies $ — $ 169,331 $ — $ — $ 169,331

government sponsored agencies 2,404 9,704 66,801 8,310 87,219

5 unchanged sentences

Obligations of:

Treasury and government agencies $ — $ 167,406 $ — $ — $ 167,406

government sponsored agencies 2,407 9,386 61,518 7,343 80,654

8 unchanged sentences

(Dollars in thousands) Amortized Cost Allowance for Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value

September 30, 2021

March 31, 2022

Obligations of:

6 unchanged sentences

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

2 unchanged sentences

Total held-to-maturity securities $ 374,415 $ ( 286 ) $ 1,644 $ ( 5,818 ) $ 369,955

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

There were no sales of held-to-maturity securities for either of the three months ended March 31, 2022 or 2021.

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

2 unchanged sentences

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

Since December 31, 2020, Peoples has purchased securities and designated them as held-to maturity and, as a result, at September 30, 2021, Peoples recorded $ 236,000 of allowance for credit losses for held-to-maturity securities, compared to $ 60,000 at December 31, 2020.

Peoples recorded $ 286,000 of allowance for credit losses for held-to-maturity securities at each of March 31, 2022, and December 31, 2021.

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

6 unchanged sentences

Value Unrealized Loss

September 30, 2021

March 31, 2022

Obligations of:

8 unchanged sentences

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

Residential mortgage-backed securities

88,937 919 17 — — — 88,937 919

Commercial mortgage-backed securities

67,338 1,625 21 — — — 67,338 1,625

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

The table below presents the amortized cost, fair value and total weighted-average yield of held-to-maturity securities by contractual maturity at September 30, 2021.

The weighted-average yields are based on the amortized cost and are computed on a fully taxable-equivalent basis using a blended federal and state corporate income tax rate of 22.3 %.

The table below presents the amortized cost, fair value and total weighted-average yield of held-to-maturity securities by contractual maturity at March 31, 2022.

The weighted-average yields are based on the amortized cost and are computed on a fully taxable-equivalent basis using a blended federal and state corporate income tax rate of 22.9 % and 22.3 % for the periods ending March 31, 2022 and December 31, 2021, respectively.

In some cases, the issuers may have the right to call or prepay obligations without call or prepayment penalties prior to the contractual maturity date.

17 unchanged sentences

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

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

(Dollars in thousands) March 31, 2022 December 31, 2021

FHLB stock $ 17,308 $ 17,308

4 unchanged sentences

Total other investment securities $ 41,840 $ 33,987

During the nine months ended September 30, 2021, Peoples redeemed $ 7.5 million of FHLB stock as requested by the FHLB.

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

During the three and nine months ended September 30, 2021 , Peoples recorded the change in the fair value of equity investment securities held during the period, in "Other non-interest income", resulting in an unrealized gain of $ 18,000 and $ 91,000 , respectively.

During the three and nine months ended September 30, 2020, Peoples recorded the change in the fair value of equity investment securities held during the period, in "Other non-interest income", resulting in an unrealized gain of $ 1,000 and an unrealized loss of $ 15,000 , respectively.

At September 30, 2021, Peoples' investment in equity investment securities was comprised largely of common stocks issued by various unrelated bank holding companies.

During the three months ended March 31, 2022, Peoples purchased $ 7.9 million of FRB stock as requested by the FRB as a result of the Premier acquisition.

During the three months ended March 31, 2022 and 2021, Peoples recorded the change in the fair value of equity investment securities held during the period, in "Other non-interest income", resulting in an unrealized loss of $ 7,000 and an unrealized gain of $ 31,000 .

At March 31, 2022, Peoples' investment in equity investment securities was comprised largely of common stocks issued by various unrelated bank holding companies.

There were no equity investment securities of a single issuer that exceeded 10% of Peoples' stockholders' equity.

4 unchanged sentences

Carrying Amount

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

(Dollars in thousands) March 31, 2022 December 31, 2021

Securing public and trust department deposits, and repurchase agreements:

3 unchanged sentences

Available-for-sale 5,711 18,208

Held-to-maturity — 9,936

Securing additional borrowing capacity at the FHLB and the FRB:

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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.

Peoples also originates insurance premium finance loans and leases nationwide through its Peoples Premium Finance and North Star Leasing divisions, and Vantage Financial, LLC ("Vantage") subsidiary, respectively.

Loans and leases throughout this document are referred to as "total loans" and "loans held for investment".

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

(Dollars in thousands) September 30,

(Dollars in thousands) March 31,

2022 December 31, 2021

10 unchanged sentences

Total loans, at amortized cost $ 4,547,153 $ 4,481,600

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

Peoples acquired $ 1.1 billion in loans, of which $ 285.3 million were considered purchased credit deteriorated loans.

Acquisitions" for more detail on the merger with Premier.

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

Refer to "Note 13 Acquisitions" for more detail on the acquisition of leases from NSL.

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

Peoples originated PPP loans of $ 159.2 million during the first nine months of 2021 and $ 488.9 million of PPP loans during the full year of 2020.

At September 30, 2021, the PPP loans (including $28.2 million acquired from Premier) had an amortized cost of $ 135.8 million, and were included in commercial and industrial loan balance.

As of September 30, 2021, deferred loan origination fees, net of deferred origination costs, totaled $ 4.0 million.

During the third quarter of 2021, Peoples recorded amortization of net deferred loan origination fees of $ 3.8 million on PPP loans compared to $ 1.9 million for the third quarter of 2020.

Peoples recorded accretion of net deferred loan origination fees of $ 11.2 million and $ 3.8 million, for the nine months ended September 30, 2021 and 2020, respectively.

On March 7, 2022, Peoples completed the acquisition of Vantage, which included $ 140.3 million of leases.

During the first quarter of 2022, Peoples experienced elevated levels of payoffs and amortization of previously-acquired loans, which partially offset loan growth.

Peoples is a Small Business Administration ("SBA") Paycheck Protection Program ("PPP") lender.

At March 31, 2022, the PPP loans had an amortized cost of $ 41.9 million, and were included in the commercial and industrial loan balances.

As of March 31, 2022, deferred loan origination fees, net of deferred origination costs, totaled $ 1.0 million for PPP loans.

During the first quarter of 2022, Peoples recorded amortization of net deferred loan origination fees of $ 1.2 million on PPP loans compared to $ 4.7 million for the first quarter of 2021.

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

Accrued interest receivable is not included within the loan balances, but is presented in the “Other assets” line of the Unaudited Consolidated Balance Sheets, with no recorded allowance for credit losses.

Total interest receivable on loans was $ 12.4 million at September 30, 2021 and $ 10.9 million at December 31, 2020.

Total interest receivable on loans was $ 11.2 million at March 31, 2022 and $ 12.0 million at December 31, 2021.

Nonaccrual and Past Due Loans

2 unchanged sentences

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(Dollars in thousands) Nonaccrual (a)

11 unchanged sentences

Total loans, at amortized cost $ 32,003 $ 5,959 $ 34,765 $ 3,723

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

During the first nine months of 2021, nonaccrual loans increased compared to December 31, 2020, primarily due to the non-accrual loans acquired from Premier, which added $ 13.0 million in nonaccrual loans at the end of the third quarter of 2021.

As of September 30, 2021, the short-term modifications, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment for current borrowers, Peoples had made were insignificant.

(a) There were $ 3.0 million of nonaccrual loans for which there was no allowance for credit losses at March 31, 2022 and $ 2.6 million at December 31, 2021.

During the first three months of 2022, nonaccrual loans declined compared to December 31, 2021, which was due to the payoff of one commercial relationship, coupled with other smaller reductions.

The increase in accruing loans 90+ days past due, compared to December 31, 2021, was the result of the additional leases acquired from Vantage, the majority of which related to in-process renewals.

As of March 31, 2022, the short-term modifications, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment for current borrowers, Peoples had made were insignificant.

Under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), borrowers that are considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented.

As such, these modifications made in accordance with the CARES Act were not included in Peoples' nonaccrual or accruing loans 90+ days past due at September 30, 2021.

During the third quarter of 2021, accruing loans 90+ days past due increased primarily due to the loans acquired from Premier.

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

As such, these modifications made in accordance with the CARES Act were not included in Peoples' nonaccrual or accruing loans 90+ days past due at March 31, 2022.

The amount of interest income recognized on loans past due 90 days or more during the three months ended March 31, 2022 was $ 0.3 million.

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

1 unchanged sentence

(Dollars in thousands) 30 - 59 days 60 - 89 days 90 + Days Total

September 30, 2021

March 31, 2022

Construction $ — $ 50 $ — $ 50 $ 238,255 $ 238,305

9 unchanged sentences

Total loans, at amortized cost $ 17,296 $ 5,550 $ 25,116 $ 47,962 $ 4,499,191 $ 4,547,153

Loans Past Due Current

(Dollars in thousands) 30 - 59 days 60 - 89 days 90 + Days Total

December 31, 2021

3 unchanged sentences

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

4 unchanged sentences

Total loans, at amortized cost $ 19,948 $ 7,281 $ 25,320 $ 52,549 $ 4,429,051 $ 4,481,600

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

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

Pledged Loans

2 unchanged sentences

Loans pledged are summarized as follows:

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

(Dollars in thousands) March 31, 2022 December 31, 2021

Loans pledged to FHLB $ 778,724 $ 769,863

7 unchanged sentences

Adversely classified loans are reviewed on a quarterly basis.

A description of the general characteristics of the risk grades used by Peoples, including loans acquired from Premier, is as follows:

A description of the general characteristics of the risk grades used by Peoples, including loans acquired from Premier Financial Bancorp, Inc.

("Premier"), is as follows:

“Pass” (grades 1 through 4):

11 unchanged sentences

Loans in this risk grade have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or orderly repayment in full, on the basis of current existing facts, conditions and values, highly questionable and improbable.

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

Possibility of loss is extremely high, but because of certain

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

“Loss” (grade 8):

6 unchanged sentences

All other loans not evaluated individually, nor meeting the regulatory conditions to be categorized as described above, would be considered as “pass" for disclosure purposes.

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

The following table summarizes the risk category of loans within Peoples' loan portfolio, including acquired loans, based upon the most recent analysis performed at March 31, 2022:

Term Loans at Amortized Cost by Origination Year Revolving Loans Converted to Term

14 unchanged sentences

Special mention — 80 11,521 2,765 2,135 5,348 11,783 8 33,632

Term Loans at Amortized Cost by Origination Year Revolving Loans Converted to Term

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

Substandard 50 452 1,757 2,357 1,303 8,431 3,646 354 17,996

8 unchanged sentences

Total 37,678 127,278 57,635 32,241 9,253 2,983 — — 267,068

Term Loans at Amortized Cost by Origination Year Revolving Loans Converted to Term

(Dollars in thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Total

Residential real estate

14 unchanged sentences

Total loans, at amortized cost $ 314,020 $ 1,207,501 $ 755,810 $ 503,157 $ 288,635 $ 1,250,122 $ 227,908 $ 32,601 $ 4,547,153

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

The following table summarizes the risk category of loans within Peoples' loan portfolio, including acquired loans, 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

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

Commercial and industrial

7 unchanged sentences

Total 135,896 240 — — — — — — 136,136

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

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

24 unchanged sentences

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.

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

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

5 unchanged sentences

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

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

(Dollars in thousands) March 31, 2022 December 31, 2021

Construction $ 1,279 $ 1,291

4 unchanged sentences

Total collateral dependent loans $ 19,146 $ 50,119

The increase in collateral dependent loans at September 30, 2021, compared to December 31, 2020, was primarily due to $39.1 million in collateral dependent loans acquired from Premier.

The decrease in collateral dependent loans at March 31, 2022, compared to December 31, 2021, was primarily due to three large commercial relationships that were no longer considered collateral dependent at March 31, 2022.

Troubled Debt Restructurings

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

The following tables summarize the loans that were modified as TDRs during the three months ended March 31:

Three Months Ended

1 unchanged sentence

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

September 30, 2021

March 31, 2022

Construction 1 $ 344 $ 344 $ 343

1 unchanged sentence

Commercial and industrial 1 4 4 4

Leases 2 182 184 178

Residential real estate 10 493 502 501

4 unchanged sentences

Total 26 $ 1,085 $ 1,094 $ 1,090

September 30, 2020

Commercial real estate, other 3 $ 2,214 $ 2,214 $ 1,112

Commercial and industrial 4 3,657 3,657 3,658

Residential real estate 10 608 608 608

Home equity lines of credit 3 68 68 68

Consumer, indirect 11 126 126 126

Consumer, direct 2 16 16 16

Consumer 13 142 142 142

Total 33 $ 6,689 $ 6,689 $ 5,588

(a) The amounts shown are inclusive of all partial paydowns and charge-offs.

Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Nine Months Ended

Recorded Investment (a)

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

September 30, 2021

March 31, 2021

Construction 1 $ 344 $ 344 $ 344

Commercial real estate, other 3 37 37 37

Commercial and industrial 3 327 327 327

Leases 5 340 348 334

Residential real estate 3 170 174 172

4 unchanged sentences

Total 12 $ 656 $ 660 $ 658

September 30, 2020

Commercial real estate, other 5 $ 2,533 $ 2,533 $ 1,430

Commercial and industrial 5 3,803 3,803 3,804

Residential real estate 16 1,237 1,267 1,261

Home equity lines of credit 7 123 123 121

Consumer, indirect 23 235 235 216

Consumer, direct 5 68 68 63

Consumer 28 303 303 279

Total 61 $ 7,999 $ 8,029 $ 6,895

(a) The amounts shown are inclusive of all partial paydowns and charge-offs.

Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Three Months Ended

On March 22, 2020, federal and state government banking regulators issued a joint statement, with which the FASB concurred as to the approach, regarding accounting for loan modifications for borrowers affected by COVID-19.

4 unchanged sentences

federal government or any state government related to COVID-19 are not in the scope of accounting for TDRs, as defined in ASC 310-40.

The following table presents those loans modified into a TDR during the year that subsequently defaulted (i.e., 90 days or more past due following a modification) during the nine-month periods ended September 30:

September 30, 2021 September 30, 2020

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

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

Residential real estate 3 113 — — — —

Total 3 $ 113 $ — 1 $ 54 $ —

(a) The amounts shown are inclusive of all partial paydowns and charge-offs.

Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Peoples did not have any loans that were modified as a TDR during the first three months ended March 31, 2022 or March 31, 2021 that subsequently defaulted (i.e., 90 days or more past due following a modification during the year).

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

Allowance for Credit Losses

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

(Dollars in thousands) Beginning Balance, June 30, 2021

Initial Allowance for Acquired Purchased Credit Deteriorated Assets Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets (Recovery of) Provision for Credit Losses (a) Charge-offs Recoveries Ending Balance, September 30, 2021

Changes in the allowance for credit losses for the three months ended March 31, 2022 and March 31, 2021 are summarized below:

(Dollars in thousands) Beginning Balance, December 31, 2021

Initial Allowance for Acquired Purchased Credit Deteriorated Assets (Recovery of) Provision for Credit Losses (a) Charge-offs Recoveries Ending Balance, March 31, 2022

Construction $ 2,999 $ — $ ( 268 ) $ — $ — $ 2,731

10 unchanged sentences

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

(Dollars in thousands) Beginning Balance, June 30, 2020 Initial Allowance for Acquired Purchased Credit Deteriorated Assets Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets (Recovery of) Provision for Credit Losses (a) Charge-offs Recoveries Ending Balance, September 30, 2020

Construction $ 2,662 $ — $ — $ ( 148 ) $ — $ — $ 2,514

Commercial real estate, other 19,148 — — ( 8 ) ( 109 ) 4 19,035

Commercial and industrial 10,106 — — 3,139 ( 146 ) — 13,099

Premium finance — — 990 ( 2 ) ( 2 ) — 986

Residential real estate 6,380 — — ( 371 ) ( 121 ) 100 5,988

Home equity lines of credit 1,755 — — 40 — 2 1,797

Consumer, indirect 12,293 — — 785 ( 370 ) 64 12,772

Consumer, direct 1,941 — — ( 78 ) ( 15 ) 13 1,861

Deposit account overdrafts 77 — — 154 ( 202 ) 47 76

Total $ 54,362 $ — $ 990 $ 3,511 $ ( 965 ) $ 230 $ 58,128

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

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

(Dollars in thousands) Beginning Balance,

December 31, 2020

December 31, 2020 (Recovery of) Provision for Credit Losses (a) Charge-offs Recoveries Ending Balance, March 31, 2021

Construction $ 1,887 $ ( 1,058 ) $ — $ — $ 829

2 unchanged sentences

Premium finance 1,095 81 ( 16 ) — 1,160

Leases — 493 3,288 1,450 ( 956 ) 230 4,505

Residential real estate 6,044 ( 991 ) ( 133 ) 15 4,935

5 unchanged sentences

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

(Dollars in thousands) Beginning Balance,

January 1, 2020 (a) Initial Allowance for Acquired Purchased Credit Deteriorated Assets Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets Provision for (Recovery of) Credit Losses (b) Charge-offs Recoveries Ending Balance, September 30, 2020

Construction $ 600 $ 51 $ — $ 1,863 $ — $ — $ 2,514

Commercial real estate, other 7,193 1,356 — 10,614 ( 254 ) 126 19,035

Commercial and industrial 4,960 860 — 6,368 ( 1,098 ) 2,009 13,099

Premium finance — — 990 ( 2 ) ( 2 ) — 986

Residential real estate 3,977 383 — 1,626 ( 255 ) 257 5,988

Home equity lines of credit 1,570 2 — 237 ( 23 ) 11 1,797

Consumer, indirect 5,389 — — 8,549 ( 1,427 ) 261 12,772

Consumer, direct 856 34 — 1,062 ( 128 ) 37 1,861

Deposit account overdrafts 94 — — 360 ( 534 ) 156 76

Total $ 24,639 $ 2,686 $ 990 $ 30,677 $ ( 3,721 ) $ 2,857 $ 58,128

(Dollars in thousands)

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

(Dollars in thousands)

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

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

During the third quarter of 2021, Peoples recorded a provision for credit losses of $ 11.0 million in order to establish an allowance for credit losses for non-purchase credit deteriorated loans of $ 10.6 million, and a liability for unfunded commitments of $ 0.4 million, both relating to the acquisition of Premier.

Peoples also recorded a $ 22.3 million increase in the allowance for credit losses during the third quarter of 2021 related to the purchase credit deteriorated loans acquired from Premier.

During the second quarter of 2021, Peoples recorded provision for credit losses to establish the allowance for credit losses of $ 3.3 million for the acquired non-purchased credit deteriorated leases from NSL along with an increase in allowance for credit loss of $ 0.5 million related to the purchase credit

deteriorated leases acquired from NSL.

Lastly, economic assumptions and loss drivers used in the CECL model continued to improve in the current year, partially offsetting the increase in allowance driven by the aforementioned acquired loans and leases.

The PPP loans originated during 2021 and 2020 are guaranteed by the SBA, and therefore, had no impact on the allowance for credit losses at September 30, 2021 and at December 31, 2020.

At September 30, 2021, Peoples had recorded an allowance for unfunded commitments of $ 2.4 million, an increase compared to $ 2.2 million at June 30, 2021, and a decrease compared to $ 2.9 million at December 31, 2020.

The total amount of unfunded commitments had increased compared to June 30, 2021 due to the unfunded commitments associated with the Premier acquisition and decreased compared to December 31, 2020 due to the improved economic forecast conditions.

During the first quarter of 2022, Peoples recorded a recovery of credit losses of $ 6.8 million driven by a continued improvement in economic factors and changes in loss drivers used in the CECL model.

Leases designated as purchased-credit deteriorated ("PCD") acquired from Vantage increased the allowance for credit losses by $ 132,000 .

Net charge-offs for the first quarter of 2022 were $ 1.9 million, and included charge-offs of two commercial and industrial loans aggregating $ 0.7 million.

At March 31, 2022, Peoples had recorded an allowance for unfunded commitments of $ 2.2 million, a decrease compared to $ 2.5 million at December 31, 2021.

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

The change in the allowance for unfunded commitments is also reflected in the "Provision for (recovery of) credit losses" line of the Unaudited Consolidated Statements of Operations.

The change in the allowance for unfunded commitments is also reflected in the "Recovery of credit losses" line of the Unaudited Consolidated Statements of Operations.

Note 5 Goodwill and Other Intangible Assets

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

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

(Dollars in thousands) March 31, 2022 December 31, 2021

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

1 unchanged sentence

Goodwill, end of period $ 303,651 $ 264,193

Peoples Bank entered into the Asset Purchase Agreement, dated March 24, 2021 with NSL.

The transaction closed after the close of business on March 31, 2021 and Peoples Bank began operating the acquired business as a division of Peoples Bank on April 1, 2021.

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

On May 4, 2021, Peoples Insurance Agency, LLC ("Peoples Insurance") acquired substantially all of the assets and rights of an insurance agency located in Pikeville, Kentucky and certain rights to related customer accounts, which were previously developed and maintained by Justice & Stamper Insurance Agency, Inc.

Peoples recorded $ 46,000 of goodwill from this completed acquisition.

On September 17, 2021, Peoples completed the merger with Premier, for which Peoples recorded $ 71.0 million of goodwill.

In 2020, Peoples completed its acquisition of Premium Finance, recording $ 5.5 million in goodwill.

Also, in 2020 Peoples Insurance completed an acquisition of a property and casualty-focused independent insurance agency for which $ 0.1 million of goodwill was recorded.

Peoples Bank entered into an Asset Purchase Agreement, dated March 7, 2022 with Vantage, at which point Vantage became a legal subsidiary of Peoples Bank.

In the current quarter, Peoples preliminarily recorded $ 40.4 million of goodwill related to this acquisition, which was offset by adjustments to Premier's goodwill balance during the measurement period.

On April 1, 2021, Peoples recorded $ 24.7 million of goodwill related to the acquisition of NS Leasing, LLC ("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 $ 67.2 million of goodwill.

For additional information on these acquisitions, refer to "Note 13 Acquisitions."

Other Intangible Assets

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

Other intangible assets were comprised of the following at end of period, March 31, 2022, and end of year, December 31, 2021:

(Dollars in thousands) Core Deposits Customer Relationships Total

September 30, 2021

March 31, 2022

Gross intangibles $ 26,467 $ 25,174 $ 51,641

Intangibles recorded from acquisitions (a) — 11,990 11,990

Accumulated amortization ( 19,464 ) ( 10,561 ) ( 30,025 )

1 unchanged sentence

Servicing rights 2,117

Indefinite-lived intangibles 1,274

Indefinite-lived intangibles (b) 2,491

Total other intangibles $ 38,214

1 unchanged sentence

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

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

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

1 unchanged sentence

Servicing rights 2,218

Indefinite-lived intangibles (d) 1,274

Total other intangibles $ 26,816

Other intangible assets recorded from the above-mentioned acquisitions year-to-date as of September 30, 2021 were $ 13.0 million of customer relationship intangible assets related to the NSL and Peoples Insurance acquisitions, and $ 4.2 million of core deposit intangible assets related to Premier.

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

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

intangible assets related to the NSL acquisition .

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

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

Other intangible assets preliminarily recorded for the three months ended March 31, 2022 included $ 10.8 million of customer relationship intangible assets, $ 1.2 million of trade name intangible assets, and $ 1.2 million of non-compete intangible assets related to the Vantage acquisition.

Other intangible assets recorded in 2021 included $ 12.7 million of customer relationship intangible assets related to the NSL acquisition, $ 4.2 million of core deposit intangible assets related to the Premier merger, and $ 0.3 million of non-compete intangible assets, and $ 1.3 million of trade name intangible assets, both related to the NSL acquisition.

Refer to "Note 13 Acquisitions" for additional information.

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

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

The following table details estimated aggregate future amortization of other intangible assets at March 31, 2022:

(Dollars in thousands) Core Deposits Customer Relationships Total

8 unchanged sentences

Servicing Rights

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

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

The following is an analysis of activity of servicing rights for the periods ended March 31, 2022 and December 31, 2021:

(Dollars in thousands) March 31, 2022 December 31, 2021

Balance, beginning of year $ 2,218 $ 2,486

4 unchanged sentences

Peoples accounts for its servicing rights under the amortization method, recognizing a valuation allowance when amortized cost exceeds fair value.

As of September 30, 2021, Peoples has recorded a valuation allowance of $ 16,000 related to the decrease in the fair value of servicing rights.

As of March 31, 2022, Peoples recorded a minimal addition to the valuation allowance related to changes in the fair value of servicing rights.

During 2021, Peoples recorded a valuation allowance of $ 12,000 related to the decrease in the fair value of servicing rights.

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

September 30, 2021 December 31, 2020

The following is the breakdown of the discount rates and prepayment speeds of servicing rights for the periods ended March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

Minimum Maximum Minimum Maximum

1 unchanged sentence

Prepayment speeds 12.6 % 22.7 % 8.9 % 27.1 %

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

The fair value of servicing rights was $ 3.0 million and $ 2.6 million at March 31, 2022 and December 31, 2021, respectively.

Note 6 Deposits

Peoples’ deposit balances were comprised of the following:

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

(Dollars in thousands) March 31, 2022 December 31, 2021

$100 or more $ 305,357 $ 320,574

9 unchanged sentences

Total deposits $ 6,002,926 $ 5,862,552

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

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

$ 110.0 million of brokered demand deposits

Time deposits that met or exceeded the Federal Deposit Insurance Corporation ("FDIC") limit of $ 250,000 were $ 134.3 million and $ 89.0 million at September 30, 2021 and December 31, 2020, respectively.

The increase compared to December 31, 2020 was mostly due to the deposits acquired from Premier.

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

Time deposits that met or exceeded the Federal Deposit Insurance Corporation ("FDIC") limit of $ 250,000 were $ 118.1 million and $ 121.3 million at March 31, 2022 and December 31, 2021, respectively.

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

(Dollars in thousands) Retail Brokered Total

Remaining three months ending December 31, 2021 (a) $ 142,996 $ 101,307 $ 244,303

Remaining nine months ending December 31, 2022 (a) $ 366,748 $ 86,901 $ 453,649

Year ending December 31, 2023 121,358 494 121,852

5 unchanged sentences

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

At September 30, 2021, Peoples had sixteen effective interest rate swaps, with an aggregate notional value of $ 150.0 million, of which $ 100.0 million were funded by brokered demand and savings deposits.

At March 31, 2022, 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 and savings deposits.

Brokered demand deposits hedged by interest rate swaps are expected to be extended every 90 days through the maturity dates of the swaps.

1 unchanged sentence

Note 7 Stockholders’ Equity

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

The following table details the progression in Peoples’ common shares and treasury stock during the three months ended March 31, 2022:

Common Shares Treasury

7 unchanged sentences

Purchase of treasury stock — 2,203

Disbursed out of treasury stock — ( 2,983 )

Common shares issued under dividend reinvestment plan 10,283 —

1 unchanged sentence

Common shares issued under employee stock purchase plan

Issuance of common shares related to the merger with Premier Financial Bancorp, Inc.

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

On January 28, 2021, Peoples' Board of Directors approved a share repurchase program authorizing Peoples to purchase up to an aggregate of $ 30.0 million of Peoples' outstanding common shares, replacing the February 27, 2020 share repurchase program which had authorized Peoples to purchase up to an aggregate of $ 40.0 million of Peoples' outstanding common shares.

At September 30, 2021, Peoples had no t repurchased any common shares under the share repurchase program authorized on January 28, 2021.

Shares at March 31, 2022 29,824,684 1,434,441

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.

At March 31, 2022, Peoples had no t repurchased any common shares under the share repurchase program authorized on January 28, 2021.

Under Peoples' Amended Articles of Incorporation, Peoples is authorized to issue up to 50,000 preferred shares, in one or more series, having such voting powers, designations, preferences, rights, qualifications, limitations and restrictions as determined by Peoples' Board of Directors.

At September 30, 2021, Peoples had no preferred shares issued or outstanding.

On October 25, 2021, Peoples' Board of Directors declared a quarterly cash dividend of $ 0.36 per common share, payable on November 22, 2021, to shareholders of record on November 8, 2021.

The following table details the cash dividends declared per common share during the four quarters of 2021 and the comparable periods of 2020:

At March 31, 2022, Peoples had no preferred shares issued or outstanding.

On April 25, 2022, Peoples' Board of Directors declared a quarterly cash dividend of $ 0.38 per common share, payable on May 23, 2022, to shareholders of record on May 9, 2022.

The following table details the cash dividends declared per common share during the two quarters of 2022 and the comparable periods of 2021:

First quarter $ 0.36 $ 0.35

Second quarter 0.38 0.36

Third quarter 0.36 0.34

Fourth quarter $ 0.36 $ 0.35

Total dividends declared $ 0.74 $ 0.71

Accumulated Other Comprehensive (Loss) Income

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

(Dollars in thousands) Unrealized Gain on Securities Unrecognized Net Pension and Postretirement Costs Unrealized Loss on Cash Flow Hedge Accumulated Other Comprehensive (Loss) Income

The following table details the change in the components of Peoples’ accumulated other comprehensive (loss) income for the three months ended March 31, 2022:

(Dollars in thousands) Unrealized Loss on Securities Unrecognized Net Pension and Postretirement Costs Unrealized (Loss) Gain on Cash Flow Hedge Accumulated Other Comprehensive (Loss) Income

Balance, December 31, 2021 $ ( 5,946 ) $ ( 1,881 ) $ ( 3,792 ) $ ( 11,619 )

1 unchanged sentence

Realized gain on sale of securities, net of tax ( 100 ) — — ( 100 )

Realized loss due to settlement and curtailment, net of tax — 111 — 111

Other comprehensive (loss) income, net of reclassifications and tax

( 55,189 ) 5 4,236 ( 50,948 )

Balance, September 30, 2021 $ 1,894 $ ( 2,280 ) $ ( 5,502 ) $ ( 5,888 )

Balance, March 31, 2022 $ ( 61,235 ) $ ( 1,876 ) $ 444 $ ( 62,667 )

Note 8 Employee Benefit Plans

7 unchanged sentences

Effective July 1, 2013, a participant in the pension plan who is employed by Peoples may elect to receive or to commence receiving such person's retirement benefits as of the later of such person's normal retirement date or the first day of the month first following the date such person makes an election to receive his or her retirement benefits.

Peoples also provides post-retirement health and life insurance benefits to certain former employees and directors.

Only those individuals who retired before January 27, 2012 were eligible for life insurance benefits.

As of January 1, 2011, all retirees who desire to participate in the Peoples Bank medical plan do so by electing COBRA, which provides up to 18 months of coverage;

retirees over the age of 65 also have the option to pay to participate in a group Medicare supplemental plan.

Peoples only pays 100 % of the cost of health benefits for those individuals who retired before January 1, 1993.

For all others, the retiree is responsible for most, if not all, of the cost of the health benefits.

Peoples’ policy is to fund the cost of the benefits as they arise.

The expected long-term rate of return on plan assets, which was determined as of January 1, 2022, is 7.0 %.

1 unchanged sentence

Pension Benefits

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(Dollars in thousands) 2022 2021

3 unchanged sentences

Settlement of benefit obligation — —

Net periodic loss (income) $ 81 $ 459 $ ( 71 ) $ 830

Net periodic income $ ( 82 ) $ ( 76 )

Under US GAAP, Peoples is required to recognize a settlement gain or loss when the aggregate amount of lump-sum distributions to participants equals or exceeds the sum of the service and interest cost components of the net periodic pension cost.

1 unchanged sentence

In general, both the projected benefit obligation and the fair value of plan assets are required to be remeasured in order to determine the settlement gain or loss.

Peoples recorded a settlement charge of $ 143,000 during the three and nine months ended September 30, 2021 under the noncontributory defined benefit pension plan.

Peoples recorded settlement charges of $ 531,000 and $ 1.1 million, respectively, during the three and nine months ended September 30, 2020 under the noncontributory defined benefit pension plan.

Peoples did not record a settlement charge for the three months ended March 31, 2022 or March 31, 2021 under the noncontributory defined benefit pension plan.

Note 9 Earnings Per Common Share

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

Three Months Ended Nine Months Ended

September 30, September 30,

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

Three Months Ended

(Dollars in thousands, except per common share data) 2022 2021

Net (loss) income available to common shareholders $ ( 5,758 ) $ 10,210 $ 19,808 $ 14,194

Dividends paid on unvested shares ( 79 ) ( 96 ) ( 214 ) ( 274 )

Undistributed earnings (loss) allocated to unvested shares 21 ( 2 ) 2 4

Net (loss) earnings allocated to common shareholders $ ( 5,816 ) $ 10,112 $ 19,596 $ 13,924

Net income available to common shareholders $ 23,577 $ 15,463

Dividends paid on unvested common shares ( 48 ) ( 54 )

Undistributed loss allocated to unvested common shares ( 21 ) ( 15 )

Net earnings allocated to common shareholders $ 23,508 $ 15,394

Weighted-average common shares outstanding 28,006,165 19,282,665

1 unchanged sentence

Total weighted-average diluted common shares outstanding 28,129,131 19,436,311

(Loss) earnings per common share:

Earnings per common share:

Basic $ 0.84 $ 0.80

1 unchanged sentence

Anti-dilutive common shares excluded from calculation:

Restricted shares — 69,459 — 67,759

Restricted common shares — —

Note 10 Derivative Financial Instruments

16 unchanged sentences

These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for Peoples making fixed payments.

At September 30, 2021, Peoples had entered into sixteen interest rate swap contracts with an aggregate notional value of $ 150.0 million.

At March 31, 2022, Peoples had entered into thirteen interest rate swap contracts 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 and brokered demand deposits, which will continue to be rolled through the life of the swaps.

At September 30, 2021, the interest rate swaps were designated as cash flow hedges of $ 100.0 million in brokered demand deposits, which are expected to be extended every 90 days through the maturity dates of the swaps.

The interest received on the floating rate component is intended to offset the interest paid on rolling three-month brokered CDs and 90-day FHLB Advances, which will continue to be rolled through the life of the swaps.

At March 31, 2022, 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.

2 unchanged sentences

The reset dates and the payment dates on the 90-day advances or brokered CDs are matched to the reset dates and payment dates on the receipt of the three-month LIBOR floating portion of the swaps to ensure effectiveness of the cash flow hedge.

During the three and nine months ended September 30, 2021, Peoples had reclassifications of losses to earnings of $ 766,000 and $ 2.3 million, respectively.

During the three and nine months ended September 30, 2020, Peoples had reclassifications of losses to earnings of $ 732,000 and $ 1.2 million, respectively.

During the next twelve months, Peoples estimates that minimal interest expense will be reclassified.

During the three months ended March 31, 2022, and March 31, 2021, Peoples had reclassifications of losses to earnings of $ 0.6 million and $ 0.8 million, respectively.

During the next twelve months, based on interest rates, yield curves, and notional amounts, Peoples estimates that approximately $ 1.0 million of AOCI will be reclassified to interest expense.

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

(Dollars in thousands) September 30,

(Dollars in thousands) March 31,

2022 December 31,

3 unchanged sentences

Weighted average maturity 3.3 years 3.6 years

Pre-tax unrealized losses included in AOCI $ ( 7,143 ) $ ( 11,879 )

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

Three Months Ended Nine Months Ended

September 30, September 30,

Pre-tax unrealized gain (losses) included in AOCI $ 577 $ ( 4,879 )

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

Three Months Ended

(Dollars in thousands) 2022 2021

Amount of (gain) loss recognized in AOCI, pre-tax $ ( 858 ) $ ( 803 ) $ ( 4,800 ) $ 9,661

Amount of gains recognized in AOCI, pre-tax $ 5,456 $ 4,236

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

September 30,

2022 December 31,

(Dollars in thousands) Notional Amount Fair Value Notional Amount Fair Value

Included in "Other assets":

Interest rate swaps related to debt $ 75,000 $ 1,319 $ — $ —

Included in "Accrued expenses and other liabilities":

7 unchanged sentences

therefore, each swap is accounted for as a standalone derivative financial instrument.

These interest rate swaps did not have a material impact on Peoples' results of operations or financial condition at or for the three and nine months ended September 30, 2021 and at or for the year ended December 31, 2020.

These interest rate swaps did not have a material impact on Peoples' results of operations or financial condition at or for the three months ended March 31, 2022 and as of or for the year ended December 31, 2021.

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

September 30,

2022 December 31,

7 unchanged sentences

When the fair value of Peoples' interest rate swaps is in a net liability position, Peoples must pledge collateral, and, when the fair value of Peoples' interest rate swaps is in a net asset position, the respective counterparties must pledge collateral.

At September 30, 2021 and December 31, 2020, Peoples had zero and $ 41.0 million, respectively, of cash pledged, while the counterparties had no amount of cash pledged at either date.

Cash pledged was included in "Interest-bearing deposits in other banks" on the Audited Consolidated Balance Sheet as of December 31, 2020.

Peoples had pledged $ 36.3 million and zero in investment securities at September 30, 2021 and December 31, 2020, respectively.

At March 31, 2022 and December 31, 2021, Peoples had zero cash pledged, while the counterparties had no amount of cash pledged at either date.

Peoples had pledged $ 5.7 million and $ 28.1 million in investment securities at March 31, 2022 and December 31, 2021, respectively.

Note 11 Stock-Based Compensation

4 unchanged sentences

Since February 2009, Peoples has granted restricted common shares to employees, and periodically to non-employee directors, subject to the terms and conditions prescribed by the 2006 Equity Plan.

Additionally, in 2020 and 2021, Peoples granted unrestricted common shares to non-employee directors (in addition to their directors' fees paid in common shares).

Additionally, in 2021, Peoples granted unrestricted common shares to non-employee directors (in addition to their directors' fees paid in common shares).

In general, common shares issued in connection with stock-based awards are issued from treasury shares to the extent available.

4 unchanged sentences

Since 2018, common shares awarded to non-employee directors have vested immediately upon grant with no restrictions.

In the first nine months of 2021, Peoples granted an aggregate of 76,819 restricted common shares subject to performance-based vesting to officers and key employees with restrictions that will lapse three years after the grant date;

In the first three months of 2022, Peoples granted an aggregate of 154,645 restricted common shares subject to performance-based vesting to officers and key employees with restrictions that will lapse three years after the grant date;

provided that in order for the restricted common shares to vest in full, Peoples must have reported positive net income and maintained a well-capitalized status by regulatory standards for each of the three fiscal years preceding the vesting date.

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

The following table summarizes the changes to Peoples’ restricted common shares for the three months ended March 31, 2022:

Time-Based Vesting Performance-Based Vesting

4 unchanged sentences

Forfeited — — ( 1,377 ) 32.28

Outstanding at September 30 83,238 $ 25.01 247,532 $ 32.19

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

Outstanding at March 31, 2022 105,776 $ 26.39 300,523 $ 32.19

For the three months ended March 31, 2022, the total intrinsic value for restricted common shares released was $ 3.3 million compared to $ 2.4 million for the three months ended March 31, 2021.

Stock-Based Compensation

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

For restricted common shares, Peoples recognizes stock-based compensation based on the estimated fair value of

the awards expected to vest on the grant date.

Peoples recognizes stock-based compensation, which is included as a component of Peoples’ salaries and employee benefit costs, for restricted and unrestricted common shares, as well as purchases made by participants in the employee stock purchase plan.

For restricted common shares, Peoples recognizes stock-based compensation based on the estimated fair value of the awards expected to vest on the grant date.

The estimated fair value is then expensed over the vesting period, which is normally three years.

For performance unit awards, Peoples recognizes stock-based compensation over the performance period, based on the portion of the awards that was expected to vest based on the expected level of achievement of the two performance goals.

Peoples also has an employee stock purchase plan whereby employees can purchase Peoples' common shares at a discount of 15 %.

Peoples also has an

employee stock purchase plan whereby employees can purchase Peoples' common shares at a discount of 15 %.

The following table summarizes the amount of stock-based compensation expense and related tax benefit recognized for each period:

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(Dollars in thousands) 2022 2021

2 unchanged sentences

Employee stock purchase plan expense 28 17

Performance unit benefit — — $ — $ ( 12 )

Total employee stock-based compensation expense 1,605 1,215

3 unchanged sentences

Net stock-based compensation expense $ 1,333 $ 1,114

Restricted common shares were the primary form of stock-based compensation awards granted by Peoples in the nine months ended September 30, 2021 and 2020.

Restricted common shares were the primary form of stock-based compensation awards granted by Peoples in the three months ended March 31, 2022 and 2021.

The fair value of restricted common share awards on the grant date is the market price of Peoples' common shares on that date.

Total unrecognized stock-based compensation expense related to unvested restricted common share awards was $ 3.0 million at September 30, 2021, which will be recognized over a weighted-average period of 1.9 years.

On April 1, 2020, an aggregate of 18,952 unrestricted common shares were granted as a one-time special award to employees under the level of Vice President, with a related stock-based compensation expense of $ 396,000 being recognized.

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

Total unrecognized stock-based compensation expense related to unvested restricted common share awards was $ 5.3 million at March 31, 2022, which will be recognized over a weighted-average period of 2.3 years.

Note 12 Revenue

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

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(Dollars in thousands) 2022 2021

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The contract liabilities are recognized as income over time, during the period in which the performance obligations are fulfilled related to electronic banking income.

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

The following table details the changes in Peoples' contract assets and contract liabilities for the three-month period ended March 31, 2022:

Contract Assets Contract Liabilities

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Additional income receivable 74 —

Receipt of income previously receivable ( 701 ) —

Recognition of income previously deferred — ( 349 )

Balance, September 30, 2021 $ 690 $ 4,736

Balance, March 31, 2022 $ 817 $ 4,462

Note 13 Acquisitions

Vantage Financial, LLC

On March 7, 2022, Peoples Bank purchased 100 % of the equity of Vantage Financial, LLC (“Vantage”), a nationwide provider of equipment financing headquartered in Excelsior, Minnesota.

Peoples Bank acquired assets comprising Vantage's lease business, including $ 140.2 million in leases and certain third-party debt in the amount of $ 107.4 million.

Under the terms of the agreement, Peoples Bank paid cash consideration of $ 54.0 million, and also repaid $ 28.9 million in recourse debt on behalf of Vantage, for total consideration of $ 82.9 million.

Vantage offers mid-ticket equipment leases, primarily for business essential information technology equipment across a wide-array of industries.

Peoples recorded acquisition-related expenses related to the Vantage acquisition, which included $ 0.8 million in professional fees.

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

Peoples recorded the estimates of fair value based on initial valuations available at March 7, 2022.

Due to the timing of the transaction closing date and the filing date for this Form 10-Q, these estimated fair values were considered preliminary as of March 31, 2022, and are subject to adjustment for up to one year after March 7, 2022.

Valuations subject to change include leases, other intangible assets and borrowings.

(Dollars in thousands) Fair Value

Total Purchase Price $ 82,893

Net assets at fair value

Cash and due from banks $ 1,444

Leases 140,346

Allowance for credit losses ( 132 )

Net leases 140,214

Bank premises and equipment 1,926

Other intangible assets 13,207

Other assets 1,603

Total assets $ 158,394

Borrowings $ 107,409

Accrued expenses and other liabilities $ 8,479

Total liabilities $ 115,888

Net assets $ 42,506

Goodwill $ 40,387

The goodwill recorded in connection with the Vantage acquisition is related to expected synergies to be gained from the combination of Vantage with Peoples' operations.

The employees retained from the Vantage acquisition should allow Peoples to continue to grow the lease portfolio, along with Peoples' resources, and should benefit Peoples in future periods.

During Peoples' evaluation of intangible assets, it was determined that an assembled workforce intangible asset was not separately recognizable and was included in goodwill.

Premier Financial Bancorp, Inc.

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Peoples believes the growth potential, and attractive market areas will benefit its future financial performance.

Peoples recorded acquisition-related expenses related to the Premier merger which included $ 9.8 million in other non-interest expense;

$ 4.2 million in professional fees;

$ 3.7 million in salaries and employee benefit costs;

$ 181,000 in marketing expense;

and $ 83,000 in data processing and software expense.

Peoples recorded the estimate of fair value based on initial valuations available at September 17, 2021.

Due to the timing of the transaction closing date and this Form 10-Q, these estimated fair values are considered preliminary as of September 30, 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, bank premises, customer deposit intangibles (included in other intangible assets), certain deposits, trust preferred securities, deferred tax assets and liabilities, and certain other assets and other liabilities.

Peoples recorded acquisition-related expenses related to the Premier merger during the first quarter of 2022 of $ 137,000 .

Peoples recorded the estimate of fair value based on initial valuations available at September 17, 2021, and has revised fair values of the acquired assets and liabilities in the periods since based on subsequent information obtained where those facts and

circumstances existed as of the acquisition date.

The estimates of fair value are subject to adjustment for up to one year after September 17, 2021.

Valuations subject to change include loans and deferred tax assets and 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.

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Total loans 1,174,704 1,161,933

Allowance for credit losses (on PCD loans) ( 15,988 )

Net loans 1,145,945

Bank premises and equipment 30,098

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Total assets $ 2,023,921

(Dollars in thousands) Unpaid Principal Balance Fair Value

Non-interest-bearing $ 733,157

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Goodwill $ 67,237

The recorded goodwill associated with the Premier merger is related to expected synergies and operational efficiencies to be gained from the combination of Premier with Peoples' operations.

None of the goodwill associated with the Premier merger is expected to be deductible for tax purposes.

The geographic locations of Premier will allow Peoples to continue to grow the loan and deposit portfolios, while also increasing Peoples' ability to penetrate the new markets with wealth management and insurance services, which should benefit Peoples in future periods.

Additional information regarding other intangibles recognized in the acquisition can be found in "Note 5 Goodwill and Other Intangible Assets."

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

Cash and Cash Equivalents:

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.

Bank Premises and Equipment:

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

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

Customer Deposit Intangible:

The customer deposit intangible represents the low cost of funding acquired core deposits provide relative to a marginal cost of funds.

The fair value was estimated based on a discounted cash flow methodology that gave consideration to expected customer attrition rates, net maintenance cost of the deposit base, alternative cost of funds, and the interest costs associated with customer deposits.

The customer deposit intangible is being amortized over 10 years based upon the period over which estimated economic benefits are estimated to be received.

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 rates, and given their short-term nature book value approximated fair value.

The fair values of long-term borrowings are estimated using discounted cash flow analyses, based on incremental borrowing rates at acquisition date for similar types of instruments.

The estimated fair values presented in the above table reflect additional information that was obtained during the three months ended March 31, 2022, which resulted in changes to certain fair value estimates made as of the date of acquisition.

Adjustments to acquisition date estimated fair values are recorded during the period in which they occur and, as a result, previously recorded results have changed.

The below table reflects the changes in the estimated fair value as they impact goodwill at March 31, 2022:

(Dollars in thousands) Change in fair value

Net loans $ ( 1,198 )

Other assets 268

Change in goodwill $ ( 930 )

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.

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.

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Fair value $ 149,640 $ ( 15,988 ) $ ( 2,401 ) $ 131,251

Peoples' operating results for the three-month and nine-month periods ended September 30, 2021 include the operating results of the acquired assets and assumed liabilities of Premier subsequent to the acquisition on September 17, 2021.

Due to the conversion of Premier systems during the third quarter of 2021, as well as other streamlining and integration of the operating activities into those of Peoples, historical reporting for the former Premier operations is impracticable and the disclosures of revenue from the assets acquired and income before income taxes is impracticable for the period subsequent to the acquisition.

The following table presents unaudited pro forma information as if the acquisition of Premier had occurred on January 1, 2020.

The pro forma adjustments include any changes in interest income due to the accretion of discounts, or amortization of premiums, associated with the fair value adjustments to acquired loans, interest-bearing deposits, long-term borrowings, trust preferred securities and customer deposit intangibles that would have resulted had the assets and liabilities been acquired as of January 1, 2020.

The pro forma information excludes Peoples' acquisition-related expenses, which primarily included, but were not limited to, salaries and employee benefit costs, severance costs, professional fees, marketing expenses and deconversion costs.

Those acquisition-related expenses totaled $16.2 million and $18.1 million for the quarter and year-to-date, respectively.

The pro forma information also excludes a provision of credit losses of $11.0 million recorded to establish an allowance for credit losses for non-purchased credit deteriorated loans of $10.6 million, and a liability for unfunded commitments of $0.4 million, both relating to the acquired loans.

The pro forma information does not necessarily reflect the results of operations that would have occurred had Peoples acquired Premier on January 1, 2020.

Additionally, cost savings and other business synergies related to the acquisition are not reflected in the pro forma amounts.

Unaudited Pro Forma For

Three Months Ended Nine Months Ended

(Dollars in thousands) September 30,

2021 September 30,

2020 September 30,

2021 September 30,

Net interest income $ 59,248 $ 52,646 $ 168,644 $ 156,285

Non-interest income 19,071 18,967 57,061 53,507

Net income 17,492 16,151 56,862 31,529

Pikeville, Kentucky Insurance Agency

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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 $ 0.4 million in non-interest expense during the third quarter of 2021 related to an update to the estimated earn-out provision of $ 2.7 million.

September 30, 2021, leases had grown to $ 111.4 million.

Peoples recorded goodwill in the amount of $ 24.7 million and other intangibles of $ 14.0 million, which included a customer relationship intangible, a trade-name intangible and non-compete agreements related to this transaction.

Peoples also recorded and paid an earn-out provision of approximately $ 3.0 million.

As of March 31, 2022, leases had grown to $ 136.6 million.

Peoples accounted for this transaction as a business combination under the acquisition method.

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During Peoples' evaluation of intangible assets, it was determined that an assembled workforce intangible asset was not separately recognizable and was included in goodwill.

The bonus earn-out provision recorded by Peoples related to the NSL acquisition was determined based on a weighting of probability of outcomes, at present value.

Peoples predominately weighted the outcomes of the factors at around a 100% payout expectation of the base earn-out, which is $ 2.7 million in total.

Adjusting weighting into the bonus expectation in the third quarter resulted in an additional $ 625,000 of potential payout.

Peoples anticipates that NSL will meet the minimums for the base earn-out payment, and will likely meet the targets set at acquisition for a 100% payout of the base earn-out.

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.

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

(Dollars in thousands)

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Peoples recorded an additional $ 0.7 million in non-interest expense related to an update to the estimated earn-out provision.

The estimated fair values presented in the above table reflect additional information that was obtained during the three months ended September 30, 2021, which resulted in changes to certain fair value estimates made as of the date of acquisition.

Adjustments to acquisition date estimated fair values are recorded during the period in which they occur and, as a result, previously recorded results have changed.

The below table reflects the changes in the estimated fair value as they impact goodwill at September 30, 2021:

(Dollars in thousands) Change in fair value

Other intangible assets $ ( 474 )

Other assets ( 380 )

Accrued expenses and other liabilities 380

Change in goodwill $ ( 474 )

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Fair value $ 4,840

Peoples recorded acquisition-related expenses related to the NSL acquisition during the third quarter of 2021, which included $ 13,000 in professional fees.

For the first nine months of 2021, Peoples recorded acquisition-related expenses related to the NSL acquisition which included $ 2.1 million in professional fees;

$ 209,000 in other non-interest expense;

$ 3,000 in salaries and employee benefit costs;

$ 3,000 in data processing and software expense;

$ 2,000 in net occupancy and equipment expense;

and $ 2,000 in marketing expense.

Peoples recorded acquisition-related expenses related to the NSL acquisition during the first quarter of 2022, which included $ 89,000 in professional fees.

Note 14 Leases

Peoples has elected certain practical expedients, in accordance with Accounting Standards Codification 842 - Leases ("ASC 842").

As a lessor, Peoples has made an accounting policy election to exclude from consideration in the contract, and from variable payments not included in the consideration in the contract, all sales and other similar taxes assessed.

Peoples has also made an accounting policy election to account for each separate lease component of a contract and its associated non-lease components as a single lease component for all leases subject to ASC 842.

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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.

Peoples began originating leases with the acquisition of leases from NSL in the second quarter of 2021, and expanded its lease portfolio with the acquisition of Vantage in the current quarter.

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

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

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

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

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

These leases do not typically contain residual value guarantees;

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

The leases acquired from Vantage were determined to be either sales-type or direct financing leases based primarily on whether they included a dollar buy-out or a fair market value buy-out, respectively.

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

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

These leases include estimated residual value, which are assessed for impairment as part of the allowance for credit losses.

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

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

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

The table below details Peoples' lease income:

Three Months Ended Nine Months Ended

(Dollars in thousands) September 30, 2021 September 30, 2021

Three Months Ended

(Dollars in thousands) March 31, 2022

Interest and fees on leases (a) $ 6,102

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Total lease income $ 6,877

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

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

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

Consolidated Financial Statements.

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

(Dollars in thousands) September 30, 2021

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

(Dollars in thousands) March 31, 2022

Lease payments receivable, at amortized cost $ 290,903

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Allowance for credit losses - leases ( 5,875 )

Net investment in sales-type leases $ 106,941

Net investment in leases $ 261,193

The following table summarizes the contractual maturities of leases:

(Dollars in thousands) Balance

Remaining three months ending December 31, 2021 $ 13,980

Remaining nine months ending December 31, 2022 $ 56,604

Year ending December 31, 2023 68,183

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Certain leases contain rent escalation clauses calling for rent increases over the term of the lease, which are included in the calculation of the lease liability.

At September 30, 2021, Peoples did not have any leases that met the criteria for finance leases.

At March 31, 2022, Peoples did not have any leases that met the criteria for finance leases.

Right of Use ("ROU") assets represent the right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease.

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

Three Months Ended Nine Months Ended

(Dollars in thousands) September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Three Months Ended

(Dollars in thousands) March 31, 2022 March 31, 2021

Operating lease expense $ 603 $ 330

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The estimated incremental borrowing rate reflects a secured rate and is based on the term of the lease and the interest rate environment at the lease commencement or remeasurement date.

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

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

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

(Dollars in thousands) March 31, 2022 December 31, 2021

Other assets $ 7,606 $ 7,911

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Weighted-average discount rate 2.15 % 2.36 %

During the three and nine months ended September 30, 2021, Peoples paid cash of $ 345,000 and $ 1,005,000 , respectively, for operating leases.

During the three and nine months ended September 30, 2020, Peoples paid cash of $ 320,000 and $ 960,000 , respectively, for operating leases.

During the three months ended March 31, 2022 and March 31, 2021, Peoples paid cash of $ 590,000 and $ 320,000 , respectively, for operating leases.

The following table summarizes the maturity of remaining lease liabilities:

(Dollars in thousands) Balance

Remaining three months ending December 31, 2021 $ 728

Remaining nine months ending December 31, 2022 $ 2,090

Year ending December 31, 2023 1,985

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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-Q

Item 1. Financial Statements