What changed in this filing

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Item 1. Business

2023-02-27 compared with 2022-03-15 · 146 added, 157 removed, 476 unchanged (39% of the section changed)

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Peoples operates principally through its wholly-owned subsidiary, Peoples Bank, an Ohio state-chartered bank that was first chartered in 1902.

Peoples' other wholly-owned subsidiaries are Peoples Investment Company ("PIC"), Peoples Risk Management, Inc., a captive insurance subsidiary and Vantage Financial ("Vantage").

Peoples' other wholly-owned subsidiaries include Peoples Investment Company ("PIC") and Peoples Risk Management, Inc., a captive insurance subsidiary.

Peoples also holds all of the common securities of NB&T Statutory Trust III and FNB Capital Trust One.

Peoples Bank's operating subsidiaries include Peoples Insurance Agency, LLC ("Peoples Insurance"), and an asset management company, Peoples Tax Credit Equity, LLC.

Peoples Bank's operating subsidiaries include Peoples Insurance Agency, LLC ("Peoples Insurance") and Vantage Financial, LLC ("Vantage"), nationwide provider of equipment financing.

Business Overview

Peoples makes available a complete line of commercial and consumer banking, trust and investment, insurance, premium financing solutions, equipment leases and equipment financing agreements through its financial subsidiaries – Peoples Bank and Peoples Insurance.

These products and services include the following:

◦ various demand deposit accounts, savings accounts, money market accounts and certificates of deposit;

◦ various demand deposit accounts, savings accounts, money market accounts, certificates of deposit and governmental deposits;

◦ commercial loans, residential real estate loans, home equity lines of credit, consumer loans and Overdraft Privilege;

◦ insurance premium financing;

◦ commercial equipment leasing;

◦ technology equipment leasing;

◦ debit and automated teller machine ("ATM") cards;

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◦ person-to-person payment processing via Zelle®;

◦ mobile banking features including check deposit, withdrawals with cardless cash, alert notifications, Apple Pay® and Samsung Pay®;

◦ mobile banking features including check deposit, alert notifications, Apple Pay® and Samsung Pay®;

◦ safe deposit rental facilities;

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◦ third-party insurance administration services;

◦ insurance premium financing;

◦ commercial equipment leasing;

◦ technology equipment leasing;

◦ brokerage services;

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◦ underwriting, origination and servicing of equipment leases and equipment financing agreements.

Peoples' financial products and services are primarily offered through its financial service locations and ATMs in Ohio, West Virginia, Kentucky, Virginia, Washington, D.C.

Peoples' financial products and services are primarily offered through its financial service offices and ATMs in Ohio, West Virginia, Kentucky, Virginia, Washington, D.C.

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

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

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

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

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For a discussion of Peoples' financial performance for the fiscal year ended December 31, 2022, see Peoples' Consolidated Financial Statements and Notes to the Consolidated Financial Statements.

Peoples has a history of expanding its business, including its customer base and primary market area, through a combination of internal growth and targeted acquisitions.

Peoples has a history of expanding its business, including its customer base and primary market area, through a combination of organic growth and targeted acquisitions.

The internal growth may include opening de novo banking and loan production offices located in or near Peoples' existing market area.

Acquisitions have consisted of traditional banking offices and loan production offices, both individually and as part of entire financial institutions, insurance agencies, financial advisory books of business,

insurance premium financing and equipment leasing services.

premium financing and equipment leasing services.

The primary objectives of Peoples' expansion efforts include:

(1) providing opportunities to integrate non-traditional products and services, such as insurance, and investment administration and management, insurance premium financing and commercial leasing options, along with the traditional banking products offered to Peoples' clients;

(1) providing opportunities to integrate non-traditional products and services, such as insurance, and investment administration and management, insurance premium financing and commercial equipment leasing options, along with the traditional banking products offered to Peoples' clients;

(2) increasing market share in existing markets;

(3) expanding Peoples' core financial service businesses of banking, insurance, investment and investment management, insurance premium financing and equipment leasing services;

(3) expanding Peoples' core financial service businesses of banking, insurance, investment and investment management, insurance premium financing and commercial equipment leasing services;

and (4) improving operating efficiency by directing resources toward offices and markets with the greatest earnings opportunities.

Recent Corporate Developments

On March 7, 2022, Peoples wholly-owned subsidiary, Peoples Bank, closed on its acquisition of Vantage Financial, LLC ("Vantage"), a nationwide provider of equipment financing headquartered in Excelsior, Minnesota.

Under the terms of the agreement, Peoples Bank purchased 100% of the equity of Vantage for total cash consideration of $54.0 million.

Peoples Bank repaid approximately $28.9 million in recourse debt on behalf of Vantage.

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

Upon completion of the transaction, Vantage became a subsidiary of Peoples Bank.

As a subsidiary, Vantage will continue to operate under the name Vantage Financial, which will leverage Vantage's strong brand recognition within the equipment finance industry.

On September 17, 2021, Peoples' completed its merger with Premier Financial Bancorp, Inc.

("Premier"), in which Peoples acquired, in an all-stock merger, Premier, a bank holding company headquartered in Huntington, West Virginia, and the parent company of Premier Bank, Inc.

("Premier Bank") and Citizens Deposit Bank and Trust, Inc.

("Citizens").

Under the terms and subject to the conditions of the definitive Agreement and Plan of Merger dated March 26, 2021, Premier merged with and into Peoples (the "Merger"), and Premier Bank and Citizens subsequently merged with and into Peoples' wholly-owned subsidiary, Peoples Bank, in a transaction valued at $261.9 million.

At the close of business on September 17, 2021, the financial services offices of Premier Bank and Citizens became branches of Peoples Bank.

Peoples acquired $1.1 billion in loans and $1.8 billion in deposits.

Peoples preliminarily recorded $68.2 million in goodwill and $4.2 million in other intangible assets in connection with the Merger.

Refer to "Note 20 Acquisitions" of the Notes to the Consolidated Financial Statements for additional information.

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

Total consideration for this transaction was $325,000, with $162,500 paid at closing and the second installment in the amount of $162,500 to be paid on the first anniversary of the closing date, less any adjustments pursuant to adverse claims incurred or sustained by or imposed by Peoples Insurance.

Peoples recorded customer relationship intangible assets of $230,000 and goodwill of $46,000, related to this transaction.

Refer to "Note 20 Acquisitions" of the Notes to the Consolidated Financial Statements for additional information.

On March 31, 2021, Peoples completed its acquisition of NS Leasing, LLC ("NSL") pursuant to an Asset Purchase Agreement, dated March 24, 2021.

Peoples Bank acquired the equipment finance and leasing business of NSL.

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

Peoples Bank acquired assets comprising NSL's equipment finance business, including $83.3 million in leases and satisfied, on behalf of NSL, certain third-party debt of $69.1 million.

Peoples Bank paid total consideration of $116.6 million, plus a potential earn-out payment to NSL of up to $3.1 million.

Based in Burlington, Vermont, the North Star Leasing division underwrites, originates and services equipment leases and equipment financing agreements to businesses throughout the United States.

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

Peoples recorded an additional $0.6 million in non-interest expense during the last six months of 2021 related to an update to the estimated earn-out provision of $3.0 million.

As of December 31, 2021, equipment leases had grown to $122.5 million.

Refer to "Note 20 Acquisitions" of the Notes to the Consolidated Financial Statements for additional information.

On January 28, 2021, Peoples' Board of Directors approved a share repurchase program authorizing Peoples to purchase up to an aggregate of $30 million of Peoples' outstanding common shares, replacing the share repurchase program which had authorized Peoples to purchase up to an aggregate of $40 million of Peoples' outstanding common shares.

There were no common share repurchases during 2021, under the existing share repurchase program.

On February 27, 2020, Peoples' Board of Directors approved a share repurchase program authorizing Peoples to purchase up to an aggregate of $40.0 million of Peoples' outstanding common shares.

This program had replaced the share repurchase program authorizing Peoples to purchase up to an aggregate of $20.0 million of Peoples' outstanding common shares, which Peoples' Board of Directors had approved on November 3, 2015 and which was terminated on February 27, 2020.

During 2020, Peoples repurchased 1,299,577 of Peoples' common shares through Peoples' then-effective common share repurchase program for a total of $29.3 million.

On October 25, 2022, Peoples announced the signing of a definitive Agreement and Plan of Merger pursuant to which Peoples will acquire, in an all-stock merger, Limestone Bancorp Inc.

("Limestone"), a bank holding company headquartered in Louisville, Kentucky, and the parent company of Limestone Bank.

Under the terms of the Agreement and Plan of Merger, Limestone will merge with and into Peoples, and Limestone Bank will subsequently merge with and into Peoples’ wholly-owned subsidiary, Peoples Bank (collectively, the "Limestone Merger"), in a transaction valued at approximately $208.2 million at the time of the announcement.

The Limestone Merger is expected to close in the second quarter of 2023, subject to the satisfaction of closing conditions, including regulatory approvals.

As of December 31, 2022, Peoples had recognized $0.6 million in acquisition-related expenses associated with this pending transaction.

On April 1, 2022, Peoples Insurance acquired substantially all of the assets and rights of an insurance agency with five locations in eastern Kentucky and certain rights to related customer accounts, which were previously developed and maintained by Elite Agency, Inc.

("Elite"), pursuant to an Asset Purchase Agreement between Peoples Insurance and Elite.

Total consideration for this transaction was $4.4 million.

Peoples recognized intangibles of $2.1 million, primarily comprised of a customer relationship intangible.

On March 7, 2022, Peoples Bank purchased 100% of the equity of Vantage pursuant to an Equity Purchase Agreement, dated February 16, 2022 (the "Vantage acquisition").

Peoples Bank acquired assets comprising Vantage's lease business, including $154.9 million in leases and certain third-party debt in the amount of $106.9 million.

Peoples Bank paid cash consideration of $54.0 million and also repaid approximately $28.9 million in recourse debt on behalf of Vantage.

Peoples recorded goodwill in the amount of $27.2 million and other intangible assets of $13.2 million, which included a customer relationship intangible, a trade-name intangible and non-compete agreements related to this transaction.

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.

Peoples repurchased an aggregate of 263,183 of its common shares totaling $7.4 million during 2022, but did not repurchase any common shares during 2021, under the share repurchase program authorized on January 28, 2021.

Primary Market Area and Customers

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and Maryland.

Peoples currently operates 66 offices in

Ohio, 34 offices in West Virginia, 26 offices in Kentucky, three offices in Virginia, three offices in Washington D.C., one office in Maryland, an insurance premium finance lending office in Missouri, an equipment leasing office in Vermont and a technology equipment leasing office in Minnesota.

Peoples currently operates 65 offices in Ohio, 29 offices in West Virginia, 26 offices in Kentucky, two offices in Virginia, three offices in Washington D.C., one office in Maryland, an insurance premium finance lending office in Missouri, an equipment leasing office in Vermont and a technology equipment leasing office in Minnesota.

Peoples' market area consists of rural, small urban and metropolitan markets in which Peoples serves a diverse group of industries and employers.

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This broad-based economic area provides diversity, which helps prevent Peoples' revenue and earnings from being largely dependent upon any single industry segment.

The COVID-19 pandemic has created disruptions throughout Peoples' primary market area.

Governments, businesses, and the public have taken unprecedented actions to contain the spread of COVID-19, or variants thereof, and mitigate its effects.

These steps have included vaccines, quarantines, travel bans, shelter-in-place orders, closures of businesses and schools, government fiscal stimulus, payment programs, and legislation designed to deliver monetary aid as well as other actions taken by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") with respect to monetary policy.

These actions had a negative impact on the customers of Peoples, including businesses and individuals.

The availability, effectiveness and acceptance of vaccines for COVID-19, or variants thereof, to the general public could continue to impact Peoples' market area and customers.

Lending Activities

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However, Peoples Bank may occasionally originate loans outside its primary market area.

In general, Peoples Bank retains the majority of loans and leases it originates;

In general, Peoples Bank retains the majority of the loans and leases it originates;

however, certain longer-term fixed-rate mortgage loan originations, primarily one-to-four family residential mortgages, and portions of select commercial real estate loans and commercial and industrial loans are sold into the secondary market or to other financial institutions.

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Peoples Bank also originates variable rate loans with interest rate swaps, where the customer enters into an interest rate swap with Peoples Bank on terms that match the terms of the loan.

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

In addition, Peoples Bank offsets its exposure in each swap by entering into an offsetting interest rate swap with an unaffiliated financial institution.

By entering into the interest rate swap with the customer, the customer synthetically fixes the rate on the variable rate loan.

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

These interest rate swaps do not qualify as designated hedges;

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The CARES Act amended the loan program of the Small Business Administration (the "SBA"), in which Peoples Bank participates, to create a guaranteed, unsecured loan program, the Paycheck Protection Program (the "PPP"), to fund operational costs of eligible businesses, organizations and self-employed persons during COVID-19.

These economic relief measures were extended through the enactment in December 2020 of the Consolidated Appropriations Act, 2021.

These economic relief measures were extended through the enactment in December 2020 of the omnibus federal spending and economic stimulus legislation title the Consolidated Appropriations Act, 2021 (the "CAA").

The PPP loan program ended on May 31, 2021, meaning no new PPP loans have been originated since this date.

As of December 31, 2022, Peoples had $2.4 million aggregate principal amount, net of deferred fees, in PPP loans outstanding, which were included in commercial and industrial loan balances, compared to $87.1 million at December 31, 2021 (including $23.4 million acquired in the merger with Premier Financial Bancorp, Inc.

(“Premier” and the "Premier Merger")).

Commercial and Industrial Loans

Commercial and industrial loans are loans to operating companies for purposes of financing working capital needs, fixed asset acquisitions, acquisitions of other businesses, and other business activities.

Commercial and industrial loans are loans to operating companies for purposes of financing working capital needs, fixed asset purchases, acquisitions of other businesses, and other business activities.

Typically, these loans are secured with business assets and, in some cases, owner-occupied real estate and are personally guaranteed by the owners of the operating companies.

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The source of repayment for this type of loan is typically cash flow from the operating company occupying the real estate.

Investment commercial real estate generally includes office buildings and complexes, retail facilities, multifamily complexes, land under development, and industrial properties, as well as other commercial or industrial real estate.

Investment commercial real estate generally includes multifamily complexes, office buildings and complexes, retail facilities, land under development, and industrial properties, as well as other commercial or industrial real estate.

Typically, the primary source of repayment of this type of loan is rental income generated from leasing activities.

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The underwriting criteria for construction loans are generally the same as for non-construction loans.

Construction loans comprised 4.7% of Peoples Bank's total loan portfolio at both December 31, 2021 and December 31, 2020.

Construction financing is generally considered to involve higher credit risk since Peoples Bank is dependent largely upon the accuracy of the initial estimate of the property's value at the completion of construction and the estimated cost (including interest) of construction.

Construction loans comprised 5.2% of Peoples Bank's total loan portfolio at December 31, 2022 and 4.7% at December 31, 2021.

Construction financing is generally considered to involve higher credit risk than other types of loans since Peoples Bank is dependent largely upon the accuracy of the initial estimate of the property's value at the completion of construction and the estimated cost (including interest) of construction.

If the estimated construction cost proves to be inaccurate, Peoples Bank may be required to advance funds beyond the amount originally committed to enable completion of the project.

If the estimate of property's value upon completion proves inaccurate, Peoples Bank may be confronted, at or prior to the maturity of the loan, with a property having a value insufficient to ensure full repayment, should the borrower default.

If the estimate of a property's value upon completion proves inaccurate, Peoples Bank may be confronted, at or prior to the maturity of the loan, with a property having a value insufficient to ensure full repayment, should the borrower default.

In the event a default on a construction loan occurs and foreclosure follows, Peoples Bank must take control of the project and attempt to either arrange for completion of construction or sell the collateral of the unfinished project.

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Insurance Premium Finance Loans

Peoples Bank's portfolio of insurance premium finance loans comprised 3.0% of total loans at December 31, 2021, with the portfolio having been acquired during 2020.

Peoples Bank's portfolio of insurance premium finance loans comprised 3.4% of total loans at December 31, 2022, and 3.0% at December 31, 2021, with the portfolio having been acquired during 2020.

The insurance premium finance loans are originated through independent insurance agency partners nationwide and provide funding for the purchase by borrowers of property and casualty insurance policies from the insurance agency partners.

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Commercial Equipment Leases and Equipment Financing Agreements

Peoples Bank's portfolio of leases comprised 2.7% of total loans at December 31, 2021, with the portfolio having been acquired during 2021.

Based in Burlington, Vermont, the North Star Leasing division underwrites, originates and services equipment leases and equipment financing agreements to businesses throughout the United States.

Peoples Bank originates leases and equipment financing agreements through its North Star Leasing division and through its wholly-owned subsidiary Vantage.

Peoples Bank's portfolio of leases comprised 7.3% of total loans at December 31, 2022, and 2.7% at December 31, 2021.

Based in Burlington, Vermont, the North Star Leasing division underwrites, originates and services equipment leases and equipment financing agreements primarily to small businesses throughout the U.S.

These leases transfer substantially all of the benefits and risks of equipment ownership to the lessee.

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Lease origination costs are deferred and amortized as an adjustment of the related lease's yield.

Based in Excelsior, Minnesota, Vantage underwrites, originates and services primarily technology equipment leases to medium and large businesses throughout the U.S.

These leases transfer substantially all of the benefits and risks of equipment ownership to the lessee.

The present value of future lease payments and the estimated residual value are recorded as leases on Peoples' Consolidated Balance Sheet.

Revenue is recognized as a constant percentage return on the lease's carrying value.

Lease origination costs are deferred and amortized as an adjustment of the related lease's yield.

Residential Real Estate Loans

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The residential real estate loans originated by Peoples Bank may either be retained in its loan portfolio, or sold into the secondary market with servicing either retained by Peoples Bank or sold with the loan.

Peoples Bank also had $3.8 million of residential real estate loans held for sale and was servicing $430.6 million of loans, consisting primarily of one-to-four family residential mortgages, which had previously been sold into the secondary market, in each case, as of December 31, 2021.

Peoples Bank also had $2.1 million of residential real estate loans held for sale and was servicing $392.4 million of loans, consisting primarily of one-to-four family residential mortgages, which had previously been sold into the secondary market, in each case, at December 31, 2022.

Peoples Bank also originates and retains jumbo residential mortgage loans for primary and secondary residences, which are nonconforming loans that have higher loan amounts than those acceptable for sale to the government-sponsored enterprises to which Peoples Bank typically sells residential mortgage loans.

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Consumer Lending

Peoples Bank's consumer lending activities include consumer indirect loans and consumer direct loans, which primarily involve loans secured by automobiles, motorcycles, recreational vehicles and other personal property, as well as unsecured loans

and personal lines of credit.

Consumer loans generally involve more risk as to collectability than real estate mortgage loans because of the type and nature of the collateral or, in certain instances, the absence of collateral.

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These dealerships undergo an approval process whereby Peoples Bank reviews the dealership licensing and industry experience, evaluates customer experience with the dealership and completes an inspection of the inventory, showroom, and general facilities.

On an ongoing basis, the dealerships are monitored based on production volume, application approval rates, portfolio default rates, and adherence to loan pricing guidelines.

On an ongoing basis, the

dealerships are monitored based on production volume, application approval rates, portfolio default rates, and adherence to loan pricing guidelines.

Consumer Direct Loans

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Customers also have the ability to opt out of Overdraft Privilege offered by Peoples.

Once established, customers are permitted to overdraw their checking account at Peoples Bank's discretion, up to their Overdraft Privilege limit, with each item being charged Peoples Bank's regular overdraft fee, with a maximum of seven charges per day when the customer's account is overdrawn more than $5.

Once established, customers are permitted to overdraw their checking account at Peoples Bank's discretion, up to their Overdraft Privilege limit, with each item being charged Peoples Bank's regular overdraft fee, with a maximum of five charges per day when the customer's account is overdrawn more than $5.

Customers repay the overdraft with their next deposit.

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(1) employ excess funds not needed to support loan demand;

(2) provide a source of liquid

assets to accommodate unanticipated deposit and loan fluctuations, and overall liquidity needs;

(2) provide a source of liquid assets to accommodate unanticipated deposit and loan fluctuations, and overall liquidity needs;

(3) provide eligible securities to secure public and trust funds;

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Cash flows from both the loan and investment portfolios, which include scheduled payments, as well as prepayments, calls and maturities, also provide a relatively stable source of funds.

Peoples also utilizes a variety of short-term and long-term borrowings to fund asset growth and satisfy liquidity needs.

Peoples also utilizes a variety of short-term borrowings and long-term borrowings to fund asset growth and satisfy liquidity needs.

Peoples also hedges 90-day brokered deposits with interest rate swaps as part of its funding strategy.

The swaps pay a fixed rate of interest while receiving three-month LIBOR, which offsets the rate on the brokered deposits.

Peoples' funding sources are managed through Peoples' asset-liability management process and monitored by the ALCO, which is discussed further in the "Interest Rate Sensitivity and Liquidity" section of "ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" of this Form 10-K.

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Under these programs, funds from large customer deposits are placed into accounts issued by other members of the CDARS program or ICS network in increments below the federal deposit insurance limits to ensure both principal and interest remain eligible for insurance.

Peoples Bank also purchases certain "one-way buy" CDARS deposits, and overnight ICS network deposits which are utilized as a wholesale funding source, and these deposits are classified as brokered CDs in "Note 8 Deposits" of the Notes to the Consolidated Financial Statements.

Peoples Bank occasionally obtains deposits from clients outside its primary market area, generally in the form of CDs, and has the ability, if determined to be appropriate, to obtain deposits from deposit brokers.

These deposits are used to supplement Peoples Bank's deposits to fund loans originated to customers located outside its primary market area, as well as provide diversity in funding sources.

While these deposits may carry slightly higher interest costs than other wholesale funds, they do not require Peoples Bank to secure the funds with collateral, unlike most other borrowed funds.

Additionally, in recent years, Peoples has issued brokered CDs to fund fixed-rate interest rate swaps.

Additional information regarding the amounts and composition of Peoples Bank's deposits can be found in the "Deposits" section of "ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" of this Form 10-K and in "Note 8 Deposits" of the Notes to the Consolidated Financial Statements.

These deposits are used to supplement Peoples Bank's deposits to fund loans originated to customers located outside Peoples Bank's primary market area, as well as provide diversity in funding sources as they do not require Peoples Bank to secure the funds with collateral, unlike most other borrowed funds.

Additionally, in recent years, Peoples has issued brokered deposits to fund fixed-rate interest rate swaps.

Borrowed Funds

Peoples obtains funds through a variety of short-term and long-term borrowings, which typically include advances from the Federal Home Loan Bank of Cincinnati (the "FHLB") and repurchase agreements.

Peoples obtains funds through a variety of short-term borrowings and long-term borrowings, which typically include advances from the Federal Home Loan Bank of Cincinnati (the "FHLB") and repurchase agreements.

Peoples also has the ability to obtain funds, if determined to be appropriate, through federal funds purchased and advances from the Federal Reserve Discount Window.

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In recent years, Peoples has utilized interest rate swaps to obtain short-term borrowings at long-term fixed rates, effectively replacing maturing long-term borrowings.

Long-term borrowings provide cost-

effective options for funding asset growth and satisfying capital needs, due to the variety of pricing and maturity options available.

Additional information regarding the amounts and composition of Peoples' borrowed funds can be found in the "Borrowed Funds" section of "ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" of this Form 10-K and in "Note 9 Short-Term Borrowings" and "Note 10 Long-Term Borrowings" of the Notes to the Consolidated Financial Statements.

Peoples experiences intense competition within its primary market area due to the presence of several national, regional and local financial institutions and other service providers, including finance companies, financial technology companies, insurance agencies and mutual fund providers.

Long-term borrowings provide cost-effective options for funding asset growth and satisfying capital needs, due to the variety of pricing and maturity options available.

Competition within the financial services and insurance industries continues to increase as a result of mergers between, and expansion of, financial services and insurance providers within and outside of Peoples' primary market areas.

In addition, the deregulation of the financial services industry (see the discussion of the Gramm-Leach-Bliley Act of 1999 in the section of this item captioned "Supervision and Regulation – Bank Holding Company Regulation") has allowed securities firms and insurance companies that have elected to become financial holding companies to acquire commercial banks and other financial institutions, which can create additional competitive pressure.

In addition, financial technology companies, or "fintechs" are also providing nontraditional, but increasingly strong, competition for our borrowers, depositors, and other customers.

In addition, fintechs are also providing nontraditional, but increasingly strong, competition for our borrowers, depositors, and other customers.

Peoples primarily competes based on client service, convenience and responsiveness to customer needs, product characteristics, interest rates on loans, insurance premium financing, leases and deposits, and the availability and pricing of fiduciary, employee benefit plan, brokerage and insurance services.

However, some competitors may have greater resources, including additional technology offerings and higher lending limits than Peoples, which may adversely affect Peoples' ability to compete.

Peoples' business strategy includes the use of a "needs-based" sales and service approach to serve customers and is intended to promote customers' continued use of multiple financial products and services.

Peoples' business

strategy includes the use of a "needs-based" sales and service approach to serve customers and is intended to promote customers' continued use of multiple financial products and services.

Peoples continues to emphasize the integration of traditional commercial banking products with non-traditional financial products, such as insurance and investment products.

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Peoples offers paid time off, medical, dental and vision insurance, along with wellness programs, a 401(k) program, an employee stock purchase program, programs to assist with education-related costs, reward and recognition programs, as well as other various programs and benefits.

Peoples has also implemented a $15 minimum wage throughout the organization and is moving to have all associates at or above this threshold by January 2023.

Peoples has also implemented a $15 minimum wage throughout the organization and all associates are at or above this threshold as of January 2023.

Peoples Bank has been recognized by Newsweek as one of America’s Best Banks 2023 and Peoples Bank has been recognized as a Best Bank to Work For by American Banker in each of 2021 and 2022.

Peoples strives to be an inclusive and diverse workplace, free of harassment, and encourages employees to voice their opinions.

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Employees are encouraged to communicate their thoughts, whether it is with a co-worker, management or the Human Resources Department.

Peoples also provides many reward programs for employees and management to recognize contributions by individuals and teams within the organization.

Peoples also provides an anonymous ethics hotline for employees to report any issues that they may feel uncomfortable reporting to management.

Peoples maintains many reward programs for employees and management to recognize contributions by individuals and teams within the organization.

Peoples provides internal training throughout the organization, as well as opportunities to attend external and online training events.

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Peoples maintains a high level of commitment to its communities, which is shown both through employees volunteering and with donations made to many organizations within the Peoples footprint.

The safety of Peoples' employees is of utmost priority, and during 2021, the COVID-19 pandemic caused several changes.

A portion of Peoples' workforce continued working remotely, to facilitate a smaller number of employees in the same location if not necessary.

Peoples has also expanded the cleaning and sanitization of office locations, along with providing employees with appropriate protection equipment.

Peoples has supported its employees during the pandemic, and provided time off with pay for those

who were fully vaccinated and have either tested positive, or those caring for a family member who has tested positive, without requiring the employee to use paid time off that has been accrued.

In addition, Peoples is conducting scheduled calls to speak to employees about the changes and ask for feedback about plans regarding COVID-19, and encouraging employees who are sick to stay home.

Intellectual Property and Proprietary Rights

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Patent and Trademark Office (the "USPTO").

Peoples has submitted an application to register "Vantage Financial" as a trademark, but has yet to receive final approval.

Additionally, Peoples is the owner of "tradeIT", a registered service mark of Vantage.

These service marks currently have expiration dates ranging from 2022 to 2031.

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Peoples intends to continue to use its registered service marks and to timely renew the registration of each of them.

Peoples has proprietary interests in the Internet domain names "peoplespf.com," "pebo.com" and "peoplesbancorp.com." Internet domain names in the U.S.

Peoples has proprietary interests in the Internet domain names "pebo.com", “peoplespf.com”, “northstarleasing.com”, “vantagefncl.com” and "peoplesbancorp.com." Internet domain names in the U.S.

and in foreign countries are regulated, but the laws and regulations governing the Internet are continually evolving.

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Peoples and its subsidiaries are subject to extensive supervision and regulation by federal and state agencies.

The regulation of financial holding companies and their subsidiaries is intended primarily for the protection of consumers, depositors, borrowers, the Deposit Insurance Fund and the banking system as a whole, and not for the protection of shareholders.

Applicable laws and regulations restrict permissible activities and investments, and require actions to protect loan, deposit, brokerage, fiduciary and other customers, as well as the Deposit Insurance Fund.

Such laws and regulations may also restrict Peoples' ability to repurchase its common shares or to receive dividends from Peoples Bank, and impose capital adequacy and liquidity requirements.

The regulation of financial holding companies and their subsidiaries is intended primarily for the protection of consumers, depositors, borrowers, the Deposit Insurance Fund (the "DIF") of the Federal Deposit Insurance Corporation (the "FDIC") and the banking system as a whole, and not for the protection of shareholders.

Applicable laws and regulations restrict permissible activities and investments, and require actions to protect loan, deposit, brokerage, fiduciary and other customers, as well as the DIF.

Such laws and regulations may also restrict Peoples' ability to repurchase its common shares or to receive dividends from Peoples Bank, and may impose capital adequacy

and liquidity requirements.

The following is a summary of the regulatory agencies, statutes and related regulations that have, or could have, a material impact on Peoples' business.

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Peoples is a legal entity separate and distinct from its subsidiaries and affiliated companies.

As a financial holding company, Peoples is subject to regulation under the Bank Holding Company Act of 1956, as amended (the "BHC Act"), and to inspection, examination and supervision by the Federal Reserve Board.

The Federal Reserve Board has extensive enforcement authority over financial holding companies.

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Peoples Bank must also follow the regulations promulgated by the Consumer Financial Protection Bureau (the "CFPB"), which regulates consumer financial products and services and certain financial services providers.

Various requirements and restrictions under the laws of the U.S, and the states of Ohio, Kentucky, West Virginia, Virginia, Washington, D.C., Maryland and Minnesota affect the operations of Peoples Bank, including requirements to maintain reserves against deposits, restrictions on the nature and amount of loans that may be made and the interest that may be charged thereon, restrictions relating to investments and other activities, limitations on credit exposure to correspondent banks, limitations on activities based on capital and surplus, limitations on transactions between Peoples Bank and Peoples, limitations on the payment of dividends, and limitations on branching.

Various requirements and restrictions under the laws of the U.S, and the states of Ohio, Kentucky, West Virginia, Virginia, Washington, D.C., Maryland, Minnesota, Vermont and Missouri affect the operations of Peoples Bank, including requirements to maintain reserves against deposits, restrictions on the nature and amount of loans that may be made and the interest that may be charged thereon, restrictions relating to investments and other activities, limitations on credit exposure to correspondent banks, limitations on activities based on capital and surplus, limitations on transactions between Peoples Bank and Peoples, limitations on the payment of dividends, and limitations on branching.

Consumer laws and regulations that are designed to prevent unfair, deceptive and abusive acts and practices and that ensure that consumers have access to fair, transparent and competitive markets for consumer financial products and services also affect the services provided by Peoples Bank.

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As a member of the FHLB, Peoples Bank must maintain an investment in the capital stock of the FHLB in a specified amount.

Upon the origination or renewal of an advance, the FHLB is required by law to obtain and maintain a security interest in certain types of collateral.

Upon the origination or renewal of a loan or an advance, the FHLB is required by law to obtain and maintain a security interest in certain types of collateral.

The FHLB is required to establish standards of community investment or service that its members must maintain for continued access to long-term advances from the FHLB.

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The FDIC is an independent federal agency which insures the deposits, up to prescribed statutory limits, of federally-insured banks and savings associations, and safeguards the safety and soundness of the financial institution industry.

Peoples Bank's deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC and Peoples Bank is subject to deposit insurance assessments to maintain the Deposit Insurance Fund.

Peoples Bank's deposits are insured up to applicable limits by the DIF of the FDIC and Peoples Bank is subject to deposit insurance assessments to maintain the DIF.

The general insurance limit is $250,000 per separately insured depositor.

This insurance is backed by the full faith and credit of the U.S.

As insurer, the FDIC is authorized to conduct examinations of and to require routine reporting by insured institutions, including Peoples Bank, to prohibit any insured institution from engaging in any activity the FDIC determines by regulation or order to pose a threat to the Deposit Insurance Fund, and to take enforcement actions against insured institutions.

The FDIC may terminate insurance of deposits of any insured institution if the FDIC finds that the insured institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or any other regulatory agency.

Insured depository institutions are required to remit quarterly deposit insurance premiums to the FDIC, which are used to fund the Deposit Insurance Fund.

Insurance premiums for each insured depository institution are determined based upon the institution's capital level and supervisory rating provided to the FDIC by the institution's primary federal regulator and other information the FDIC determines to be relevant to the risk posed to the Deposit Insurance Fund by the insured depository institution.

As insurer, the FDIC is authorized to conduct examinations of and to require routine reporting by insured institutions, including Peoples Bank, to prohibit any insured institution from engaging in any activity the FDIC determines by regulation or order to pose a threat to the DIF, and to take enforcement actions against insured institutions.

The FDIC may terminate insurance of deposits of any insured institution if the FDIC finds that the insured institution has engaged in unsafe or unsound practices, is

in an unsafe or unsound condition, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or any other regulatory agency.

Insured depository institutions are required to remit quarterly deposit insurance premiums to the FDIC, which are used to fund the DIF.

The assessment rate determined by considering such information is then applied to the amount of the insured depository institution's average assets minus average tangible equity to determine the insured depository institution's insurance premium.

An increase in the assessment rate could have a material adverse effect on the earnings of the affected insured depository institution, depending on the amount of the increase.

The FDIC assesses a quarterly deposit insurance premium on each insured depository institution based on risk characteristics of the institution and may also impose special assessments in emergency situations.

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended (the "Dodd-Frank Act"), the FDIC has established 2.0% as the designated reserve ratio ("DRR"), which is the amount in the Deposit Insurance Fund as a percentage of all Deposit Insurance Fund insured deposits.

In March 2016, the FDIC adopted final rules designed to meet the statutory minimum DRR of 1.35% by September 30, 2020, the deadline imposed by the Dodd-Frank Act.

The FDIC assesses a quarterly deposit insurance premium on each insured depository institution based on perceived risk characteristics of the insured institution to the DIF, with institutions deemed less risky paying lower rates.

Currently, assessments for institutions of less that $10.0 billion of total assets are based on financials measures and supervisory ratings derived from statistical models estimating the probability of failure within three years.

The FDIC may increase or decrease the range of assessments uniformly, except that no adjustments can deviate more than two basis points from the base assessment without notice and comment rule making.

The FDIC may also impose special assessments in emergency situations.

The FDIC has established 2.0% as the designated reserve ratio ("DRR"), which is the amount in the DIF as a percentage of all DIF insured deposits.

In March 2016, the FDIC adopted final rules designed to meet the statutory minimum DRR of 1.35% by September 30, 2020, the deadline imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended (the "Dodd-Frank Act").

The Dodd-Frank Act required the FDIC to offset the effect on insured institutions with assets of less than $10.0 million of the increase in statutory minimum DRR to 1.35% from the former statutory minimum of 1.15%.

Although the FDIC's rules reduced assessment ratio on all banks, they imposed a surcharge on banks with assets of $10.0 million or more to be paid until the DRR reached 1.35%.

At September 30, 2018, the DRR met the statutory minimum of 1.35%.

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As part of this restoration plan, all scheduled assessment rates for all insured institutions were maintained.

On September 30, 2021, the DRR was 1.27%

In the semiannual update for the Restoration Plan in June 2022, the FDIC projected that the reserve ratio was at risk of not reaching the statutory minimum of 1.35% by September 30, 2028, the statutory deadline to restore the reserve ratio.

Based on this update, the FDIC Board approved an Amended Restoration Plan, and concurrently proposed an increase in initial base deposit insurance assessment rate schedules uniformly by 2 basis points (from three basis points to five basis points), applicable to all insured depository institutions.

In October 2022, the FDIC Board finalized the increase with an effective date of January 1, 2023, applicable to the first quarterly assessment period of 2023 (i.e., January 1 through March 31, 2023).

The revised assessment rate schedules are intended to increase the likelihood that the reserve ratio of the DIF reaches the statutory minimum level of 1.35 percent by September 30, 2028.

As of December 31, 2022, the DRR remains below the statutory minimum of 1.35%.

Bank Holding Company Regulation

In general, the BHC Act limits the business of bank holding companies to banking, managing or controlling banks, and other activities that the Federal Reserve Board determines to be so closely related to banking as to be a proper incident thereto.

As a result of the Gramm-Leach-Bliley Act of 1999 – also known as the Financial Services Modernization Act of 1999 – which amended the BHC Act, bank holding companies that are financial holding companies may engage in any activity, or acquire and retain the shares of a company engaged in any activity, that is either (1) financial in nature or incidental to such financial activity (as determined by the Federal Reserve Board in consultation with the Secretary of the Treasury), or (2) complementary to a financial activity, and that does not pose a substantial risk to the safety and soundness of depository institutions or the financial

system generally.

Activities that are financial in nature include securities underwriting and dealing, insurance underwriting and making merchant banking investments.

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The BHC Act and other federal and state statutes regulate acquisitions of commercial banks.

The BHC Act requires the prior approval of the Federal Reserve Board for the direct or indirect acquisition of more than 5% of the voting shares of a commercial bank or its parent holding company.

The BHC Act requires the prior approval of the Federal Reserve Board for the direct or indirect acquisition of more than 5% of the voting shares of a commercial

bank or its parent holding company.

Under the federal Bank Merger Act, as amended, the prior approval of the Federal Reserve Board is required for a state-chartered, Federal Reserve Bank member bank to merge with another bank or purchase the assets or assume the deposits of another bank.

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Congress will enact supplementary COVID-19 response legislation, including amendments to the CARES Act or new bills comparable in scope to the CARES Act.

Section 1102 of the CARES Act amended the loan program of the SBA, in which Peoples Bank participates, to create a guaranteed, unsecured loan program, the PPP, to fund operational costs of eligible businesses, organizations and self-employed

persons during COVID-19.

These loans are eligible to be forgiven if certain conditions are satisfied and are fully guaranteed by the SBA.

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In addition, neither the government nor lenders have been permitted to charge the recipients of PPP loans any fees.

On December 27, 2020, the President signed into law omnibus federal spending and economic stimulus legislation titled the "Consolidated Appropriations Act, 2021" that included the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the "HHSB Act").

On December 27, 2020, the President signed into law the CAA, which that included the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the "HHSB Act").

Among other things, the HHSB Act renewed the PPP, allocating $284.5 billion for both new first-time PPP loans under the existing PPP and the expansion of existing PPP loans for certain qualified, existing PPP borrowers.

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Capital levels, as measured by these standards, are also used to categorize financial institutions for purposes of certain prompt corrective action regulatory provisions.

In July 2013, the U.S.

banking regulators issued capital rules (the "Basel III Capital Rules") applicable to smaller banking organizations which also implement certain provisions of the Dodd-Frank Act.

Community banking organizations, including Peoples and Peoples Bank, began transitioning to the rules on January 1, 2015.

The minimum capital requirements became effective on January 1, 2015;

whereas, the capital conservation buffer and deductions from common equity capital phased in from January 1, 2016 through January 1, 2019, and most deductions from common equity tier 1 capital phased in from January 1, 2015 through January 1, 2019.

As of January 1, 2019, Peoples had fully phased in the Basel III Capital Rules.

The Basel III Capital Rules include:

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The Basel III Capital Rules also place restrictions on the payment of capital distributions, including dividends and share repurchases, and certain discretionary bonus payments to executive officers if the banking organization does not hold a capital conservation buffer of greater than 2.5% composed of common equity tier 1 capital above its minimum risk-based capital requirements, or if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5% at the beginning of the quarter.

In September 2019, the Federal Reserve Board, along with the other federal banking regulatory agencies, issued a final rule, effective January 1, 2020, that gave community banks, including Peoples Bank, the option to calculate a simple leverage ratio to measure capital adequacy if the community banks met certain requirements.

Under the rule, a community bank was eligible to elect the Community Bank Leverage Ratio ("CBLR") framework if the community bank had less than $10 billion in total consolidated assets, limited amounts of certain trading assets and liabilities and of off-balance sheet exposures, and a leverage ratio greater than 9.0%.

Qualifying institutions that elected to use the CBLR framework and that maintained a leverage ratio of greater than 9.0% were be considered to have satisfied the risk-based and leverage capital requirements in the regulatory agencies' generally applicable capital rules and to have met the well-capitalized ratio requirements.

Peoples has opted out of the simplified framework and continues to follow existing capital rules.

In October 2021, effective in November 2021, the FDIC issued a final rule to incorporate the CBLR rule into the Real Estate Lending Standards.

In October 2021, effective in November 2021, the FDIC issued a final rule to incorporate the Community Bank Leverage Ratio rule into the Real Estate Lending Standards.

This rule calculates the ratio of loans in excess of the supervisory loan-to-value limits ("LTV Limits") using Tier 1 capital plus the appropriate allowance for credit losses in the denominator.

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Additional information on the impact of Peoples' adoption of the CECL methodology can be found under the "FINANCIAL CONDITION - Allowance for Credit Losses" section of "ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" of this Form 10-K.

must not be subject to any written agreement, order, capital directive or prompt corrective action directive to meet and maintain a specific capital level for any capital measures.

In order to be "well capitalized," a bank must have a common equity tier 1 capital ratio of at least 6.5%, a tier 1 risk-based capital ratio of at least 8.0%, a total risk-based capital of at least 10.0%, and a tier 1 leverage ratio of at least 5.0%, and the bank must not be subject to any written agreement, order, capital directive or prompt corrective action directive to meet and maintain a specific capital level for any capital measures.

Peoples' management believes that Peoples Bank meets the ratio requirements to be deemed "well capitalized" according to the guidelines described above.

Additional information regarding Peoples' regulatory matters can be found in "Note 17 Regulatory Matters" of the Notes to the Consolidated Financial Statements.

Additional information regarding Peoples' regulatory matters can be found in "Note 17 Regulatory Matters."

Safety and Soundness Regulations

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Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit or other financial assistance to low-income and moderate-income individuals and communities.

Depository institutions are periodically examined for compliance with the CRA and are assigned ratings.

Depository institutions are periodically examined for compliance with the CRA and are assigned ratings that must be publicly disclosed.

The most recent performance evaluation by the Federal Reserve Board (which was Peoples Bank's primary federal banking regulator at the time of the examination) of Peoples Bank was conducted in 2021 and resulted in an overall rating of "Outstanding."

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Current banking regulations impose restrictions on Peoples Bank's ability to pay dividends to Peoples.

These restrictions include a limit on the amount of dividends that may be paid in a given year without prior approval of the Federal Reserve Board and a prohibition on paying dividends that would cause Peoples Bank's total capital to be less than the required minimum levels under the capital requirements imposed by the Federal Reserve Board and the amount of the capital conservation buffer.

These restrictions include a limit on the amount of dividends that may be paid in a given year without prior approval of the Federal Reserve Board

and a prohibition on paying dividends that would cause Peoples Bank's total capital to be less than the required minimum levels under the capital requirements imposed by the Federal Reserve Board and the amount of the capital conservation buffer.

Ohio law also limits the amount of dividends that may be paid in any given year without prior approval of the Ohio Superintendent of Financial Institutions.

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Peoples Bank's regulators may prohibit the payment of dividends at any time if the regulators determine the dividends represent unsafe and/or unsound banking practices, or reduce Peoples Bank's total capital below adequate levels.

For further discussion regarding regulatory restrictions on dividends, refer to "Note 17 Regulatory Matters" of the Notes to the Consolidated Financial Statements.

For further discussion regarding regulatory restrictions on dividends, refer to "Note 17 Regulatory Matters."

Peoples' ability to pay dividends to its shareholders may also be restricted.

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The Federal Reserve Board has also issued a policy statement with regard to the payment of cash dividends by financial holding companies and other bank holding companies.

The policy statement provides that, as a matter of prudent banking, a financial holding company or bank holding company should not maintain a rate of cash dividends unless its net income available to common shareholders over the current year has been sufficient to fully fund the dividends, and the prospective rate of earnings retention appears to be consistent with the financial holding company's or bank holding company's capital needs, asset quality and overall financial condition.

The policy statement provides that, as a matter of prudent banking, a financial holding company or bank holding company should not maintain a rate of cash dividends unless its net income available to common shareholders over the past year has been sufficient to fully fund the dividends, and the prospective rate of earnings retention appears to be consistent with the financial holding company's or bank holding company's capital needs, asset quality and overall financial condition.

Accordingly, a financial holding company or bank holding company should not pay cash dividends that exceed its net income or that can only be funded in ways that weaken the financial holding company's or bank holding company's financial health, such as by borrowing.

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In August 2021, the court overseeing the litigation challenging the Final Small Dollar Rule found in the CFPB's favor, and ordered the compliance date to be 286 days after the final judgment.

Lenders are required to comply by June 13, 2022.

In October 2022, the Fifth Circuit Court of Appeals reversed the lower court's decision and vacated the Final Small Dollar Rule.

In November 2022, the CFPB filed a petition for a writ of certiorari with the U.S.

Supreme Court seeking an expedited review of the appellate court decision.

The federal bank regulatory agencies also issued interagency guidance on May 20, 2020, to encourage banks, savings associations, and credit unions to offer responsible small-dollar loans to customers for consumer and small business purposes.

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OFAC publishes lists of specially designated targets and countries.

Peoples is responsible for, among other things, blocking accounts of, and transactions with, such targets and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked transactions after their occurrence.

Peoples is responsible for, among other

things, blocking accounts of, and transactions with, such targets and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked transactions after their occurrence.

Failure to comply with these sanctions could have serious financial, legal and reputational consequences, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.

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In light of the changing conditions in the U.S.

economy, including changes brought about by COVID-19, the money markets and the activities of monetary and fiscal authorities, Peoples can make no definitive predictions as to future changes in interest rates, credit availability or deposit levels.

economy, including with respect to inflation and the failure of the federal government to raise the federal debt ceiling, the money markets and the activities of monetary and fiscal authorities, Peoples can make no definitive predictions as to future changes in interest rates, credit availability or deposit levels.

Executive and Incentive Compensation

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Deficiencies will be incorporated into the organization's supervisory ratings, which can affect the organization's ability to make acquisitions and take other actions.

Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization's safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.

Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk

to the organization's safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.

Public company compensation committee members must meet heightened independence requirements and consider the independence of compensation consultants, legal counsel and other advisors to the compensation committee.

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SEC regulations require public companies such as Peoples to provide various disclosures about executive compensation in annual reports and proxy statements, and to present to their shareholders a non-binding vote on the approval of executive compensation.

Public companies will be required, once stock exchanges adopt additional listing requirements under the Dodd-Frank Act, to implement "clawback" procedures for incentive compensation payments and to disclose the details of the procedures which allow recovery of incentive compensation that was paid on the basis of erroneous financial information necessitating an accounting restatement due to material noncompliance with financial reporting requirements.

This clawback policy is intended to apply to compensation paid within a three-year look-back window of the restatement and would cover all executives (including former executives) who received incentive awards.

Public companies will be required, once stock exchanges adopt additional listing requirements under the Dodd-Frank Act and rules adopted by the SEC in October 2022, to adopt and implement "clawback" policies for incentive compensation payments and to disclose the details of the procedures which allow recovery of incentive compensation that was paid on the basis of erroneous financial information necessitating an accounting restatement due to material noncompliance with financial reporting requirements.

This clawback policy is intended to apply to compensation paid within the three completed fiscal years immediately preceding the date the issuer is required to prepare a restatement and would cover all executives (including former executives) who received incentive awards.

Peoples has implemented a clawback policy and it is posted under the "Corporate Overview – Governance Documents" tab of the "Investor Relations" page of Peoples' Internet website.

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These SEC guidelines, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations.

In November 2021, the federal bank regulatory agencies issued a final rule requiring banking organizations that experience a computer-security incident to notify certain entities.

In November 2021, the federal bank regulatory agencies issued a final rule, that became effective in May 2022, requiring banking organizations that experience a computer-security incident to notify certain entities.

A computer-security incident occurs when actual or potential harm to the confidentiality, integrity or availability of information or the information system occurs, or there is a violation or imminent threat of a violation to banking security policies and procedures.

The affected bank must notify its respective federal regulator of the computer-security incident has occurred.

These notifications are intended to promote early awareness of threats to banking organizations and will help banks react to those threats before they manifest into bigger incidents.

This rule also requires bank service providers to notify their customers of a computer-security incident.

The affected bank must notify its respective federal regulator of the computer-security incident as soon as possible and no later than 36 hours after the bank determine a computer-security incident that rises to the level of a notification incident has occurred.

These notifications are intended to promote early awareness of threats to banking organizations and will help banks react to those threats before they manifest into larger incidents.

This rule also requires bank service providers to notify their bank organization customers of a computer-security incident that has occurred, or is reasonably likely to cause, a material service disruption or degradation for four or more hours.

State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations.

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Peoples expects this trend of state-level activity in those areas to continue, and continues to monitor developments in the states in which Peoples' customers are located.

Furthermore, once final rules are adopted, the Cyber Incident Reporting for Critical Infrastructure Act, enacted in March 2022, will require certain covered entities to report a covered incident to the U.S.

Department of Homeland Security's Cybersecurity & Infrastructure Security Agency ("CISA") within 72 hours after a covered entity reasonably believes an incident has occurred.

Separate reporting to CISA will also be required within 24 hours if a ransom payment is made as a result of a ransomware attack.

In the ordinary course of business, Peoples relies on electronic communications and information systems to conduct its operations and to store sensitive data.

Peoples employs an in-depth, layered, defensive approach that leverages people, processes, and encryption and multi-factor authentication technology to manage and maintain cybersecurity controls.

Peoples employs a variety of preventative and detective tools to monitor, block, and provide alerts regarding suspicious activity, as well as to report on any suspected advanced persistent threats.

Peoples employs a

variety of preventative and detective tools to monitor, block, and provide alerts regarding suspicious activity, as well as to report on any suspected advanced persistent threats.

Notwithstanding the strength of Peoples’ defensive measures, the threat from cybersecurity attacks is severe, attacks are sophisticated and increasing in volume, and attackers respond rapidly to changes in defensive measures.

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Such trading activity included the purchase or sale as principal of a security, derivative, commodity future, option or similar instrument in order to benefit from short-term price movements or to realize short-term profits.

The Volcker Rule exempts trading in specified U.S.

The Volcker Rule exempted trading in specified U.S.

government, agency, state and/or municipal obligations.

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In addition, the Volcker Rule prohibited a banking entity from having an ownership interest in, or substantial relationships with, a hedge fund or private equity fund, also known as "covered funds", subject to a number of exceptions.

In July 2019, the federal agencies that adopted the Volcker Rule adopted a final rule to exempt certain community banks, including Peoples Bank, from the Volcker Rule, consistent with the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Under the final rule, community banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5.0% or less of total consolidated assets are excluded from the restrictions of the Volcker Rule.

In July 2019, the federal bank regulatory agencies that adopted the Volcker Rule adopted a final rule to exempt certain community banks, including Peoples Bank, from the Volcker Rule, consistent with the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Under the final rule, community banks with $10.0 billion or less in total consolidated assets and total trading assets and liabilities of 5.0% or less of total consolidated assets were excluded from the restrictions of the Volcker Rule.

On June 25, 2020, the federal bank regulatory agencies also finalized a rule modifying the Volcker Rule's prohibition on banking entities investing in or sponsoring covered funds.

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Effect of Environmental Regulation

Compliance with federal, state and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect upon the capital expenditures, earnings or competitive position of Peoples and its subsidiaries.

Peoples believes the nature of the operations of its subsidiaries has little, if any, environmental impact.

As a result, Peoples anticipates no material capital expenditures for environmental control facilities for its current fiscal year or for the foreseeable future.

Peoples believes the nature of the operations of Peoples' subsidiaries has little, if any, environmental impact.

As a result, Peoples anticipates no material capital expenditures for environmental control facilities for Peoples' current fiscal year or for the foreseeable future.

Peoples believes its primary exposure to environmental risk is through the lending activities of Peoples Bank.

Peoples limits its exposure to environmental risk by lending to a diverse range of consumer and commercial customers.

In cases where management believes environmental risk potentially exists, Peoples Bank mitigates its environmental risk exposure by requiring

environmental site assessments at the time of loan origination to confirm collateral quality as to commercial real estate parcels posing higher than normal potential for environmental impact, as determined by reference to present and past uses of the subject property and adjacent sites.

In cases where management believes environmental risk potentially exists, Peoples Bank mitigates its environmental risk exposure by requiring environmental site assessments at the time of loan origination to confirm collateral quality as to commercial real estate parcels posing higher than normal potential for environmental impact, as determined by reference to present and past uses of the subject property and adjacent sites.

In addition, environmental assessments are typically required prior to any foreclosure activity involving non-residential real estate collateral.

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Various and significant legislation affecting financial institutions and the financial industry is from time to time introduced by the U.S.

The CARES Act and the Consolidated Appropriations Act, 2021 ("CAA") were enacted during 2020.

The CARES Act and the CAA were enacted during 2020.

These Acts provided significant funding for PPP loans for businesses and fiscal stimulus funding for individuals, as well as updates related to reporting for troubled debt restructurings and other various changes.

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Such legislation may continue to change banking statutes and regulations, and the operating environment of Peoples and its subsidiaries in substantial and unpredictable ways, and such legislation could significantly increase or decrease costs of doing business, limit or expand permissible activities, and/or affect the competitive balance among financial institutions.

The enactment of the Dodd-Frank Act, the subsequent rollback and the continuing implementation of final rules and regulations thereunder, and continuing political change and impact of the COVID-19 pandemic makes the nature and extent of future legislative and regulatory changes affecting financial institutions unpredictable.

The enactment of the Dodd-Frank Act, the subsequent rollback and the

continuing implementation of final rules and regulations thereunder, makes the nature and extent of future legislative and regulatory changes affecting financial institutions unpredictable.

Website Access to Peoples' SEC Filings

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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-K

Item 1. Business