What changed in this filing

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Item 1A. Risk Factors

2023-02-27 compared with 2022-03-15 · 133 added, 140 removed, 279 unchanged (49% of the section changed)

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Economic, Political, Environmental and Market Risks

• The economic impact of COVID-19 or any other pandemic could adversely affect Peoples' business, financial condition, liquidity, and results of operations.

COVID-19 has negatively impacted global, national and local economies, disrupted global and national supply chains, lowered equity market valuations, and created significant volatility and disruption in financial markets.

In addition, the pandemic resulted in temporary closures of many businesses and the institution of social distancing and sheltering in place requirements in many states and communities and may result in the same or similar restrictions in the future.

As a result, the demand for Peoples’ products and services has been and may continue to be significantly impacted, which could adversely affect our revenue and results of operations.

Furthermore, the pandemic could continue to result in the recognition of credit losses in our loan portfolios and increases in our allowance for credit losses, particularly if businesses remain required to operate at diminished capacities or are required to close again, the impact on the global, national and local economies worsen, or more customers draw on their lines of credit or seek additional loans to help finance their businesses.

Peoples’ business operations may also be disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with COVID-19.

The extent to which COVID-19 impacts Peoples’ business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.

As of December 31, 2021, Peoples held and serviced PPP loans.

These PPP loans are subject to the provisions of the CARES Act and to complex and evolving rules and guidance issued by the SBA and other government agencies.

While a large number of PPP borrowers have applied for and received full or partial forgiveness of their loan obligations, Peoples still has credit risk on the remaining PPP loans in the event the SBA determines that there is a deficiency in the manner in which Peoples originated, funded or serviced such loans, including any issue with the eligibility of a borrower to receive funding.

Peoples could face additional risks in our administrative capabilities to service PPP loans and to properly determine loan forgiveness.

In the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which Peoples

originated, funded or serviced the PPP loan, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if the SBA has already paid under the guaranty, seek recovery of any loss related to the deficiency.

The spread of COVID-19, including new variants thereof, has also caused Peoples to modify business practices, including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences.

Further, technology in employees’ homes may not be as robust as in Peoples' offices and could cause the networks, information systems, applications and other tools available to such employees to be more limited or less reliable.

The continuation of these work-from-home measures also introduces additional operational risk, including increased cybersecurity risk from phishing, malware and other cybersecurity attacks, all of which could expose Peoples to risks of data or financial loss, and could seriously disrupt Peoples' operations and the operations of any impacted customers.

COVID-19, including the rise of new variants thereof, or a new pandemic, could subject Peoples to any of the following risks, any of which could, individually or in the aggregate, have a material adverse effect on Peoples' business, financial condition, liquidity and results of operations:

• demand for Peoples' products and services may decline, making it difficult to grow assets and income;

• if the economy continues to be unable to fully re-open, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;

• collateral for loans, especially real estate, may decline in value, which could cause credit losses to increase;

• Peoples' allowance for credit losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect Peoples' net income;

• the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to Peoples;

• a prolonged weakness in economic conditions resulting in a reduction of future projected earnings could result in Peoples recording a valuation allowance against current outstanding deferred tax assets;

• Peoples relies on third-party vendors for certain services and the unavailability of a critical service due to COVID-19 could have an adverse effect on Peoples;

• continued adverse economic conditions could result in protracted volatility in the price of Peoples' common shares.

Moreover, Peoples' future success and profitability substantially depend on the management skills of the executive officers and directors, many of whom have held officer and director positions with Peoples for many years.

The unanticipated loss or unavailability of key employees due to COVID-19, including new variants thereof, or any similar pandemic, could harm Peoples' ability to operate our business or execute our business strategy.

Peoples may not be successful in finding and integrating suitable successors in the event of key employee loss or unavailability.

Even after the COVID-19 pandemic subsides, the U.S.

economy will likely require time to recover, the length of which is unknown and during which the U.S.

may experience a recession or market correction.

Peoples’ business could be materially and adversely affected by any such recession or market correction.

Peoples continues to closely monitor COVID-19 and related risks as they evolve.

To the extent the effects of COVID-19 adversely impact Peoples’ business, financial condition, liquidity or results of operations, it may also have the effect of heightening many of the other risks described in this Item.

• Changes in economic and political conditions could adversely affect Peoples' earnings and capital through declines in deposits, quality of investment securities, loan demand, the ability of Peoples' borrowers to repay loans and the value of the collateral securing Peoples' loans.

Peoples’ success depends, in part, on local and national economic and political conditions, as well as governmental fiscal and monetary policies.

Conditions such as inflation, recession, unemployment, changes in interest rates, fiscal and monetary policy, an increasing federal government budget deficit, slowing gross domestic product, tariffs, a U.S.

Conditions such as inflation, recession, unemployment, changes in interest rates, fiscal and monetary policy, an increasing federal government budget deficit, the failure of the federal government to raise the federal debt ceiling, slowing gross domestic product, tariffs, a U.S.

withdrawal from or significant renegotiation of trade agreements, trade wars, and other factors beyond Peoples’ control may adversely affect Peoples Bank’s deposit levels and composition, the quality of investment securities available for purchase, the demand for loans, the ability of Peoples Bank’s borrowers to repay their loans, and the value of the collateral securing the loans Peoples Bank makes.

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limitations on the availability or increases in the cost of credit and capital;

increases in inflation or interest

increases in inflation or interest rates;

high unemployment;

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or a combination of these or other factors.

The continued impact on economic conditions caused by the COVID-19 pandemic could have an adverse effect on Peoples' asset quality, deposit levels and loan demand, and, therefore, Peoples' financial condition and results of operations.

The continued impact on economic conditions caused by rising inflation and increases in market interest rates could have an adverse effect on Peoples' asset quality, deposit levels and loan demand, and, therefore, Peoples' financial condition and results of operations.

Because a significant amount of Peoples Bank's loans are secured by either commercial or residential real estate, decreases in real estate values could adversely affect the value of property used as collateral and Peoples Bank's ability to sell the collateral upon foreclosure.

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However, any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on Peoples' financial condition and results of operations.

Peoples’ net interest income, lending activities, deposits and profitability could be negatively affected by volatility in interest rates caused by uncertainties stemming from COVID-19.

A prolonged period of extremely volatile and unstable market conditions would likely increase Peoples’ funding costs and negatively affect market risk mitigation strategies.

Peoples’ net interest income, lending activities, deposits and profitability could be negatively affected by continued rising interest rates.

A prolonged period of extremely volatile and unstable market conditions has the potential to increase Peoples’ funding costs and negatively affect market risk mitigation strategies.

Higher revenue volatility from changes in interest rates and spreads to benchmark indices could cause a loss of future net interest income and a decrease in the fair market values of Peoples’ assets.

Fluctuations in interest rates will impact both the level of income and expense recorded on most of Peoples’ assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, which in turn could have a material adverse effect on Peoples’ net income, results of operations and financial condition.

Peoples cannot predict the nature or timing of future changes in monetary policies in response to the COVID-19 outbreak or the precise effects that they may have on Peoples activities and financial results.

See the sections captioned “Interest Income and Expense” and “Interest Rate Sensitivity and Liquidity” in “ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” of this Form 10-K for further discussion related to Peoples’ interest rate risk.

Peoples cannot predict the nature or timing of future changes in monetary policies or the precise effects that they may have on Peoples activities and financial results.

See the sections captioned “Net Interest Income” and “Interest Rate Sensitivity and Liquidity” in “ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” of this Form 10-K for further discussion related to Peoples’ interest rate risk.

• Changes in market rates and economic conditions could cause the interest rate swaps Peoples Bank has entered into to become ineffective.

The accounting treatment of the interest rate swaps entered into by Peoples as part of Peoples' interest rate management strategy may change if the hedging relationship is not as effective as currently anticipated.

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

At December 31, 2022, Peoples had thirteen effective interest rate swaps, with an aggregate notional value of $125.0 million, of which $125.0 million were designated as cash flow hedges of brokered deposits, which are expected to be extended every 90 days through the maturity dates of the swaps.

Although Peoples expects that the hedging relationships described above will be highly effective, such relationships could prove ineffective.

At December 31, 2022, the termination value of derivative financial instruments in a net liability position was $28.5 million, which included accrued interest but excluded any adjustment for nonperformance risk.

At December 31, 2022, Peoples had no collateral posted with our derivative counterparties.

In addition, our derivative financial counterparties had $20.9 million of cash pledged and $2.5 million of investment securities pledged at December 31, 2022.

If Peoples had breached any of the provisions of the derivative financial instruments at December 31, 2022, Peoples could have been required to settle our obligations under the derivative financial agreements at the termination value.

• Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on Peoples' results of operations and financial condition.

The macroeconomic environment in the U.S.

is susceptible to global events and volatility in financial markets.

In addition, trade negotiations between the U.S.

and other nations remain uncertain and could adversely impact economic and market conditions for Peoples and our clients and counterparties.

Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on the Peoples' results of operations and financial condition.

For example, on February 24, 2022, Russian military forces invaded Ukraine, and sustained conflict and disruption in the region have occurred and remains likely to continue.

Although the length, impact and outcome of the ongoing war in Ukraine is highly unpredictable, this conflict has resulted, and could continue to result, in significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences, as well as increases in cyberattacks and espionage.

The extent and duration of the military action, sanctions and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and Peoples' business for an unknown period of time.

Any of the above-mentioned factors could affect Peoples' business, financial condition and operating results.

Any such disruptions may also magnify the impact of other risks described in this Form 10-K.

• A transition away from the London Interbank Offered Rate ("LIBOR") as a reference rate for financial instruments could negatively impact Peoples' income and expenses, and the value of various financial instruments.

LIBOR is used extensively in the U.S.

and globally as a benchmark for various commercial and financial contracts, including adjustable rate mortgages, corporate debt, interest rate swaps and other derivatives.

LIBOR is set based on interest rate information reported by certain banks, which may stop reporting such information after 2021.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority (“FCA”) announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021.

On November 30, 2020, to facilitate an orderly LIBOR transition, the OCC, the FDIC, and the Federal Reserve Board jointly announced that entering into new contracts using LIBOR as a reference rate after December 31, 2021, would create a safety and soundness risk.

On March 5, 2021, the FCA announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative immediately after December 31, 2021, in the case of 1-week and 2-month LIBOR, and immediately after June 30, 2023, in the case of the remaining LIBOR settings.

In the U.S., efforts to identify a set of alternative U.S.

dollar reference interest rates are ongoing, and the Alternative Reference Rate Committee (“ARRC”) has recommended the use of a Secured Overnight Funding Rate (“SOFR”).

LIBOR was used extensively in the U.S.

and globally as a benchmark for various commercial and financial contracts, including adjustable rate mortgages, corporate debt, interest rate swaps and other derivative financial instruments.

based on interest rate information reported by certain banks, which are set to stop reporting such information after June 30, 2023.

In the U.S., the Alternative Reference Rate Committee (“ARRC”) has recommended the use of a Secured Overnight Funding Rate (“SOFR”) as the set of alternative U.S.

dollar reference interest rates.

SOFR is different from LIBOR in that it is a backward-looking secured rate rather than a forward-looking unsecured rate.

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There are operational issues which may create a delay in the transition to SOFR or other substitute indices, leading to uncertainty across the industry.

These consequences cannot be

entirely predicted and could have an adverse impact on the market value for or value of LIBOR-linked securities, loans, and other financial obligations or extensions of credit.

Peoples has a significant number of loans, derivative contracts, borrowings and other financial instruments with attributes that are either directly or indirectly dependent on LIBOR.

These consequences cannot be entirely predicted and could have an adverse impact on the market value for or value of LIBOR-linked securities, loans, and other financial obligations or extensions of credit.

Peoples has a significant number of loans, derivative financial instruments, borrowings and other financial instruments with attributes that are either directly or indirectly dependent on LIBOR.

The transition from LIBOR could create considerable costs and additional risk.

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Furthermore, failure to adequately manage this transition process with Peoples’ customers could adversely impact our reputation.

Peoples established a working group, consisting of key stakeholders from throughout the company, to monitor developments relating to LIBOR changes and to guide the transition.

This team has worked to successfully ensure that technology systems are prepared for the transition, loan documents that reference LIBOR-based rates have been appropriately amended to reference other methods of interest rate determinations and internal and external stakeholders have been apprised of the transition.

Based on the transition progress to date, Peoples ceased originating LIBOR-based products and began originating SOFR indexed products.

Peoples will continue to transition all remaining LIBOR-based products to SOFR-based products.

Peoples will also continue to evaluate the transition process and align its trajectory with regulatory guidelines regarding the cessation of LIBOR as well as monitor new developments for transitioning to alternative reference rates, if necessary and as needed.

Although Peoples is currently unable to assess what the ultimate impact of the transition from LIBOR will be, failure to adequately manage the transition could have a material adverse effect on Peoples’ business, financial condition and results of operations.

In 2019, Peoples Bank formed a LIBOR Change Committee.

The goal of the LIBOR Change Committee was to monitor Peoples Bank’s efforts to ensure an orderly transition away from LIBOR by the end of 2021, if necessary.

The LIBOR Change Committee has taken actions to ensure that documentation in the loan portfolios provides for a substitution of an index if the original index is either no longer available or is replaced by a new index.

Documentation on interest rate swaps has been amended in the International Swaps and Derivative Association agreements.

While Peoples Bank’s securities portfolio is not heavily invested in variable rate securities, there is LIBOR exposure in the agency collateralized mortgage obligation sector.

Peoples Bank will be monitoring the transition of these securities to the new index over the next several months.

• Changes in market rates and economic conditions could cause the interest rate swaps Peoples Bank has entered into to become ineffective.

The accounting treatment of the interest rate swaps entered into by Peoples as part of its interest rate management strategy may change if the hedging relationship is not as effective as currently anticipated.

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

As of December 31, 2021, Peoples had thirteen effective interest rate swaps, with an aggregate notional value of $125.0 million, of which $85.0 million were funded by brokered demand and savings deposits and $40.0 million were funded with FHLB advances.

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

Although Peoples expects that the hedging relationships described above will be highly effective, such relationships could prove ineffective.

As of December 31, 2021, the termination value of derivative financial instruments in a net liability position was $12.1 million, which included accrued interest but excluded any adjustment for nonperformance risk.

As of December 31, 2021, Peoples had $28.1 million collateral posted with certain of our derivative counterparties.

However, the counterparties had no collateral posted against their obligations under these agreements.

If Peoples had breached any of the provisions of the agreements at December 31, 2021, Peoples could have been required to settle our obligations under the agreements at the termination value.

• The economic impact of COVID-19 or any other pandemic could adversely affect Peoples' business, financial condition, liquidity, and results of operations.

The extent to which COVID-19 will continue to impact Peoples’ business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted.

As of December 31, 2022, Peoples held and serviced PPP loans.

These PPP loans are subject to the provisions of the CARES Act and to complex and evolving rules and guidance issued by the SBA and other government agencies.

Substantially all of Peoples' PPP borrowers have applied for and received full or partial forgiveness.

The remaining PPP balance is not considered material to Peoples' financial statements.

Business Operations Risks

• Peoples is exposed to operational risk.

Similar to any large organization, Peoples is exposed to many types of operational risk, including those discussed in more detail elsewhere in this Item, such as reputational risk, cyber, legal and compliance risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems.

These risks are heightened in light of COVID-19.

Similar to any large organization, Peoples is exposed to many types of operational risk, including those discussed in more detail elsewhere in this Item, such as reputational risk, cybersecurity risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems.

Peoples may be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control, which may include, for example, computer viruses, cyber-attacks, spikes in transaction volume and/or customer activity, electrical or telecommunications outages, or natural disasters.

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Any failure or interruption in Peoples' operating or information systems, or any security or data breach, could cause reputational damage, jeopardize the confidentiality of customer information, result in a loss of customer business, subject Peoples to regulatory intervention or expose Peoples to civil litigation and financial loss or liability, any of which could have a material adverse effect on Peoples.

Negative public opinion can result from Peoples’ actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions, social media and other marketing activities, the implementation of environmental, social, and governance practices, and from actions taken by governmental regulators and community organizations

in response to any of the foregoing.

Negative public opinion can result from Peoples’ actual or alleged conduct in any number of activities, including lending practices, corporate governance, acquisitions, social media and other marketing activities, and the implementation of environmental, social, and governance practices, and from actions taken by governmental regulators and community organizations in response to any of the foregoing.

Negative public opinion could adversely affect Peoples’ ability to attract and keep customers, could expose Peoples to potential litigation or regulatory action, and could have a material adverse effect on the price of Peoples’ common shares or result in heightened volatility.

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Peoples’ necessary dependence upon automated systems to record and process our transaction volume may further increase the risk that technical system flaws or employee tampering or manipulation of those systems will result in losses that are difficult to detect, which may give rise to disruption of service to customers and to financial loss or liability.

Peoples is further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as Peoples) or that Peoples' (or our vendors’) consumer compliance business continuity, and data security systems will prove to be inadequate.

Peoples is further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as Peoples is) or that Peoples' (or our vendors’) consumer compliance business continuity, and data security systems will prove to be inadequate.

Current and future restrictions on the access of Peoples' workforce to our facilities could limit Peoples' ability to meet customer service expectations and have a material adverse effect on operations.

Peoples relies on business processes and branch activity that largely depends on people and technology, including access to information technology systems as well as information, applications, payment systems and other services provided by third parties.

Moreover, Peoples relies on many third parties in business operations, including appraisers of real property collateral, vendors that supply essential services such as loan servicers, providers of financial information, systems and analytical tools, and providers of electronic payment and settlement systems, and local and federal government agencies, offices, and courthouses.

In light of the developing measures responding to the pandemic, many of these entities may limit the availability and access of their services.

Peoples relies on business processes and branch activity that largely depend on people and technology, including access to information technology systems as well as information, applications, payment systems and other services provided by third parties.

Moreover, Peoples relies on many third parties in business operations, including appraisers of real property collateral, vendors that supply essential services such as loan servicers, providers of financial information, systems and analytical tools, and providers of electronic payment and settlement systems, as well as local and federal governmental agencies, offices, and courthouses.

In light of the measures developed in the response to the pandemic, many of these entities have limited and may continue to limit the availability and access of their services.

For example, loan origination could be delayed due to the limited availability of real estate appraisers for the underlying collateral.

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If the third-party service providers continue to have limited capacities for a prolonged period, or if additional limitations or potential disruptions in these services materialize, it may negatively affect Peoples' operations.

• Peoples’ policies concerning COVID-19 vaccination of employees could have a material adverse impact on our business and results of operations.

Peoples requires any new employees to be fully-vaccinated, with few exceptions.

Peoples cannot predict with any amount of certainty the impact that this policy will have on our workforce.

Additional vaccine mandates may be announced in jurisdictions in which Peoples’ businesses operate.

Peoples’ implementation of these requirements may result in attrition, including attrition of critically skilled labor, and difficulty securing future labor needs, which could have a material adverse effect on Peoples’ business, financial condition, and results of operations.

• Failures or material breaches in security of Peoples' systems and telecommunications networks, or those of a third-party service provider, may have a material adverse effect on Peoples' results of operations and financial condition and the price of Peoples' common shares.

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In recent years, several banks have experienced denial of service attacks in which individuals or organizations flood the bank’s website with extraordinarily high volumes of traffic, with the goal and effect of disrupting the ability of the bank to process transactions.

Other businesses have been victims of ransomware attacks in which the business becomes unable to access its own information and is presented with a demand to pay a ransom in order to once again have access to its information.

Peoples could be adversely affected if one of our employees or a third-party service provider causes a significant operational break-down or failure, either as a result of human error or where the individual purposefully sabotages or fraudulently manipulates Peoples’ operations or systems.

Other businesses have been victims of ransomware attacks in which the business becomes unable to access the business' own information and is presented with a demand to pay a ransom in order to once again have access to the business' information.

Peoples could be adversely affected if one of our employees or a third-party service provider causes a significant operational break-down or failure, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates Peoples’ operations or systems.

Peoples may not be able to prevent employee or third-party errors or misconduct, and the precautions Peoples takes to detect this type of activity might prove ineffective.

Peoples is further exposed to the risk that the third-party service providers may be unable to fulfill their contractual obligations (or will be subject to the same risks as Peoples).

Peoples is further exposed to the risk that the third-party service providers may be unable to fulfill their contractual obligations (or will be subject to the same risks as Peoples is).

These disruptions may interfere with service to Peoples’ customers, cause additional regulatory scrutiny and result in a financial loss or liability.

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In addition, there have been instances where financial institutions have been victims of fraudulent activity in which criminals pose as customers to initiate wire and automated clearinghouse transactions out of customer accounts.

Although Peoples has

policies and procedures in place to verify the authenticity of our customers, Peoples cannot ensure that such policies and procedures will prevent all fraudulent transfers.

Although Peoples has policies and procedures in place to verify the authenticity of our customers, Peoples cannot ensure that such policies and procedures will prevent all fraudulent transfers.

Peoples has implemented security controls to prevent unauthorized access to our computer systems, and Peoples requires that our third-party service providers maintain similar controls.

However, Peoples’ management cannot be certain that these measures will be successful.

However, Peoples’ management cannot be certain that these measures

will be successful.

A security breach of the computer systems and loss of confidential information, such as customer account numbers and related information, could result in a loss of customers’ confidence and, thus, loss of business.

Peoples could also lose revenue if competitors gain access to confidential information about Peoples’ business operations and use it to compete with Peoples.

Peoples could also lose revenue if competitors gain access to confidential information about Peoples’ business operations and use such confidential information to compete with Peoples.

While Peoples maintains specific “cyber” insurance coverage, which would apply in the event of various breach scenarios, the amount of coverage may not be adequate in any particular case.

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Such data breaches could result in Peoples incurring significant expenses to reissue debit cards and cover losses, which could result in a material adverse effect on Peoples’ operations.

All of the types of cyber incidents discussed above could result in damage to Peoples’ reputation, loss of customer business, increased costs of incentives to customers or business partners in order to maintain their relationships, litigation, increased regulatory scrutiny and potential enforcement actions, repairs of system damage, increased investments in cybersecurity (such as obtaining additional technology, making organizational changes, deploying additional personnel, training personnel and engaging consultants), increased insurance premiums, and loss of investor confidence and a reduction in the price of Peoples’ common shares, all of which could result in financial loss and material adverse effects on Peoples’ results of operations and financial condition.

• Noncompliance with the BSA and other anti-money laundering statutes and regulations could cause Peoples a material financial loss.

All of the types of cybersecurity incidents discussed above could result in damage to Peoples’ reputation, loss of customer business, increased costs of incentives to customers or business partners in order to maintain their relationships, litigation, increased regulatory scrutiny and potential enforcement actions, repairs of system damage, increased investments in cybersecurity (such as obtaining additional technology, making organizational changes, deploying additional personnel, training personnel and engaging consultants), increased insurance premiums, and loss of investor confidence and a reduction in the price of Peoples’ common shares, all of which could result in financial loss and material adverse effects on Peoples’ results of operations and financial condition.

• Noncompliance with the BSA and other anti-money laundering statutes and regulations could cause Peoples to incur a material financial loss.

The BSA and the USA Patriot Act contain anti-money laundering and financial transparency provisions intended to detect and prevent the use of the U.S.

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Treasury Department that administers the BSA, is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the federal bank regulatory agencies, as well as the U.S.

Department of Justice, Drug Enforcement Administration, and Internal Revenue Service.

Department of Justice, the U.S.

Drug Enforcement Administration, and the U.S.

Internal Revenue Service.

The AMLA is intended to be a comprehensive reform and modernization to U.S.

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requires the development of standards for evaluating technology and internal processes for BSA compliance;

expands enforcement-related and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower incentives and protections.

and expands enforcement-related and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower incentives and protections.

There is also increased scrutiny of compliance with the rules enforced by OFAC.

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Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for Peoples.

For a more complete discussion of the BSA, the USA Patriot Act and the AMLA, see the section captioned "Supervision and Regulation" in "ITEM 1 BUSINESS" of this Form 10-K.

For a more complete discussion of the BSA, the USA Patriot Act and the AMLA as well as OFAC, see the section captioned "Supervision and Regulation" in "ITEM 1 BUSINESS" of this Form 10-K.

• Peoples' business could be adversely affected through events impacting third parties who perform significant operational services on behalf of Peoples.

The third parties performing operational services for Peoples are subject to risks similar to those faced by Peoples relating to cybersecurity, breakdowns or failures of their own systems, or misconduct of their employees.

Like many other community banks, Peoples relies, in significant part, on a single vendor for the systems which allow Peoples to provide banking services to Peoples’ customers, with the systems being maintained on Peoples' behalf by this single vendor.

Like many other community bank organizations, Peoples relies, in significant part, on a single vendor for the systems which allow Peoples to provide banking services to Peoples’ customers, with the systems being maintained on Peoples' behalf by this single vendor.

One or more of the third parties utilized by Peoples may experience a cybersecurity event or operational disruption and, if any such event or disruption does occur, it may not be adequately addressed, either operationally or financially, by such third party.

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If a critical third-party provider is unable to meet the needs of Peoples in a timely manner, or if the services or products provided by such third party are terminated or otherwise delayed, and if Peoples is not able to develop alternative sources for these services and products quickly and in a cost-effective manner, Peoples’ business could be materially adversely affected.

Additionally, regulatory guidance adopted by federal bank regulators addressing how banks select, engage and manage their third-party relationships, could affect the circumstances and conditions under which Peoples works with third parties and the cost of managing such relationships.

Additionally, regulatory guidance adopted by federal and state bank regulators addressing how banks select, engage and manage their third-party relationships, could affect the circumstances and conditions under which Peoples works with third parties and the cost of managing such relationships.

• Peoples' failure to be in compliance with any material provision or covenant of its debt instruments could have a material adverse effect on Peoples' liquidity and operations.

On April 2, 2020, Peoples entered into a Loan Agreement (the “U.S.

Bank Loan Agreement”) with U.S.

Bank National Association.

Bank Loan Agreement had an original one-year term, which has been extended by a second one-year term, and provides Peoples with a revolving line of credit in the maximum aggregate principal amount of $20.0 million.

Peoples has a Loan Agreement (the "U.S.

Bank Loan Agreement") with the U.S.

Bank National Association that provides Peoples with a revolving line of credit.

Bank Loan Agreement imposes operating and financial covenants on Peoples.

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Even if additional or alternative financing is obtained, it may be on terms that are unfavorable to Peoples.

Bank Loan Agreement matures on March 31, 2022.

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

• Peoples' exposure to credit risk could adversely affect Peoples' earnings and financial condition.

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Peoples' risks of timely loan repayment and the value of collateral supporting the loans are affected by the strength of the business of Peoples' commercial borrowers and the financial circumstances of Peoples' consumer borrowers.

COVID-19 has caused, and is likely to continue to cause, business shutdowns and slowdowns, limitations on commercial activity and financial transactions, labor shortages, supply chain interruptions, increased unemployment and commercial property vacancy rates, reduced profitability and ability for property owners to make mortgage, auto and other consumer loan payments, and overall economic and financial market instability, which may affect individuals, households and business differently, and decreased consumer confidence generally, all of which may cause Peoples' customers to be unable to make scheduled loan payments.

Additional information regarding Peoples' credit exposure concentration as of December 31, 2021 can be found in the section captioned "Loan Concentration" in "ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" of this Form 10-K.

The current economic conditions, inflation, increases in interest rates, and political climate could cause business shutdowns and slowdowns, limitations on commercial activity and financial transactions, labor shortages, supply chain interruptions, increased unemployment and commercial property vacancy rates, reduced profitability and ability for property owners to make mortgage, auto and other consumer loan payments, and overall economic and financial market instability, which may affect individuals, households and business differently, and decreased consumer confidence generally, all of which may cause Peoples' customers to be unable to make scheduled loan payments.

Additional information regarding Peoples' credit exposure concentration at December 31, 2022 can be found in the section captioned "Loan Concentration" in "ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" of this Form 10-K.

• Peoples' allowance for credit losses may be insufficient to absorb the expected, lifetime losses in our loan portfolio.

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The determination of the allowance for credit losses requires management to make various assumptions and judgments about the collectability of Peoples' loans, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans.

Additional information regarding Peoples' allowance for credit losses methodology and the sensitivity of the estimates can be found in the discussion of "Critical Accounting Policies" included in "ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" of this Form 10-K.

Additional information regarding Peoples' allowance for credit losses methodology and the sensitivity of the estimates can be

found in the discussion of "Critical Accounting Policies" included in "ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" of this Form 10-K.

Peoples' estimation of future credit losses is susceptible to changes in economic, operating and other conditions, including changes in regulations and interest rates, which may be beyond Peoples' control, and the losses may exceed current estimates.

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In addition, bank regulators periodically review Peoples' allowance for credit losses as part of their examination process and may require management to increase the allowance or recognize further loan charge-offs based on judgments different than those of management.

On June 16, 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-13 "Financial Instruments – Credit Losses", which replaced the incurred loss model with the CECL model, an expected loss model.

The new accounting guidance became effective for Peoples beginning January 1, 2020, and included most debt instruments under the new framework.

The new accounting guidance under the CECL model requires banks to record, at the time of origination, credit losses expected throughout the life of financial assets measured at amortized cost, including loan receivables, held-to-maturity debt securities and reinsurance receivables, and off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees and other similar instruments) and net investments in leases recognized by a lessor.

Under the CECL model, Peoples is required to use historical information, current conditions and reasonable and supportable forecasts to estimate the expected credit losses.

If the methodologies and assumptions used by Peoples in the CECL model prove to be incorrect, or inadequate, the allowance for credit losses may not be sufficient, resulting in the need for additional allowance for credit losses to be established, which could have a material adverse impact on Peoples' financial condition and results of operations.

The adoption of CECL by Peoples resulted in a reduction to the retained earnings balance of $3.7 million, net of income tax, and a pre-tax increase to the allowance for credit losses of $5.8 million.

Due to the COVID-19 pandemic, Peoples’ financial results were negatively impacted as deteriorating economic conditions forecasted increased Peoples’ expectations for credit losses, resulting in higher provision for credit losses during 2020.

Improvement in the economic forecasts used in the CECL model during 2021 resulted in a lower provision for credit losses for the year ended December 31, 2021.

As a result of the implementation of the CECL model, the time horizon over which Peoples is required to estimate future credit losses expanded, which could result in increased volatility in future provisions for credit losses.

Additionally, the time horizon over which Peoples is required to estimate future credit losses expanded under CECL, which could result in increased volatility in future provisions for credit losses.

Peoples may also experience a higher or more volatile provision for credit losses due to higher levels of nonperforming loans and net charge-offs if commercial and consumer customers are unable to make scheduled loan payments.

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Even if these assumptions are accurate, the model may prove to be inadequate or inaccurate because of other flaws in their design or their implementation.

If the model Peoples uses for interest rate risk and asset-liability management are inadequate, Peoples may incur increased or unexpected losses upon changes in market interest rates or other market measures.

If the model Peoples uses for interest rate risk and asset-liability management is inadequate, Peoples may incur increased or unexpected losses upon changes in market interest rates or other market measures.

If the model used by Peoples for determining our expected credit losses is inadequate, the allowance for credit losses may not be sufficient to support future charge-offs.

If the model used by Peoples to measure the fair value of financial instruments are inadequate, the fair value of such financial instruments may fluctuate unexpectedly or may not accurately reflect what Peoples could realize upon sale or settlement of such financial instruments.

If the model used by Peoples to measure the fair value of financial instruments is inadequate, the fair value of such financial instruments may fluctuate unexpectedly or may not accurately reflect what Peoples could realize upon sale or settlement of such financial instruments.

Any such failure in Peoples' analytical or forecasting models could have a material adverse effect on Peoples' business, financial condition and results of operations.

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The ability to raise additional capital, if needed, will depend on financial performance, conditions in the capital markets, economic conditions and a number of other factors, many of which are outside of Peoples' control.

Therefore, there can be no assurance that additional capital will be available or that capital will be available on acceptable terms.

The inability to raise capital may have a material adverse effect on Peoples' financial condition, results of operations or potential acquisitions.

Therefore, there can be no assurance that additional capital will be available or that additional capital will be available on acceptable terms.

The inability to raise additional capital may have a material adverse effect on Peoples' financial condition, results of operations or potential acquisitions.

• Peoples and Peoples Bank operate in a highly regulated industry, and the laws and regulations that govern Peoples’ operations, corporate governance, executive compensation and financial accounting, or financial reporting, including changes in, or failure to comply with, such laws and regulations may adversely affect Peoples.

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(also known as FINRA), and various state regulatory agencies.

The statutory and regulatory framework that governs Peoples is generally designed to protect depositors and customers, the Deposit Insurance Fund, the U.S.

The statutory and regulatory framework that governs Peoples is generally designed to protect depositors and customers, the DIF, the U.S.

banking and financial system, and financial markets as a whole and not to protect Peoples' shareholders.

These laws and regulations, among other matters, prescribe minimum capital requirements, restrict the ability of Peoples Bank to guarantee Peoples' debt, and impose limitations on Peoples’ business activities (including foreclosure and collection practices), limit the dividends or distributions that Peoples can pay, and impose certain specific accounting requirements that may be more restrictive and may result in greater or earlier charges to earnings or reductions in capital than would otherwise be required under U.S.

impose certain specific accounting requirements that may be more restrictive and may result in greater or earlier charges to earnings or reductions in capital than would otherwise be required under U.S.

generally accepted accounting principles ("US GAAP").

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This could include the development, implementation, and adaptation of digital or cryptocurrency, blockchain, and other “fintech” technology.

Peoples may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to its customers.

Peoples may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to Peoples' customers.

Failure to successfully keep pace with technological changes affecting the financial services industry could negatively affect Peoples’ growth, revenue and net income.

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The inability of Peoples Bank to pay sufficient dividends to Peoples could have a material, adverse effect on our business.

Further discussion of Peoples' ability to pay dividends can be found under the caption "Supervision and Regulation – Dividend Restrictions" in "ITEM 1 BUSINESS" of this Form 10-K and "Note 17 Regulatory Matters" of the Notes to the Consolidated Financial Statements.

• Peoples depends upon the accuracy and completeness of information about customers and counterparties.

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Thus, no assurance can be given that Peoples' tax liability for any tax year open to examination will be as reflected in Peoples' current and historical Consolidated Financial Statements.

• Peoples has identified a material weakness in its internal control over financial reporting.

If Peoples fails to remediate the material weaknesses, or if Peoples fails to establish and maintain effective internal control over financial reporting, its ability to accurately and timely report financial results could be adversely affected.

• Peoples had identified a material weakness in our internal control over financial reporting as of December 31, 2021, which was remediated as of December 31, 2022.

If Peoples fails to maintain an effective system of internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected.

The effectiveness of any controls or procedures is subject to certain inherent limitations, and as a result, there can be no assurance that our controls and procedures will prevent or detect misstatements.

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Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

With the participation of the Chief Executive Officer of Peoples and the Executive Vice President and Chief Financial Officer of Peoples, management evaluated the effectiveness of Peoples’ internal control over financial reporting as of December 31, 2021 using criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on management’s assessment of Peoples’ internal control over financial reporting, under the criteria described in the preceding sentence, management has identified a control deficiency during the fiscal year ended December 31, 2021, that constituted a material weakness as described within “ITEM 9A.

CONTROLS & PROCEDURES.”

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

If Peoples fails to remediate the material weakness, or are otherwise unable to maintain effective internal control over financial reporting, management could be required to expend significant resources and we could fail to meet our public reporting requirements on a timely basis, and be subject to fines, penalties, investigations or judgments, all of which could negatively affect investor confidence and adversely impact our stock price.

With the participation of Peoples’ President and Chief Executive Officer and Peoples’ Executive Vice President, Chief Financial Officer and Treasurer, management identified control deficiencies during the fiscal year ended December 31, 2021, that constituted a material weakness as described within “ITEM 9A.

CONTROLS & PROCEDURES” of the Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Peoples has taken measures to remediate the material weakness described herein and believes that it has been remediated.

However if management identifies additional material weaknesses or significant deficiencies in Peoples' internal controls or disclosure controls, Peoples may be unable to provide required financial information in a timely and reliable manner and Peoples may incorrectly report financial information.

If the financial statements are not filed on a timely basis, Peoples could be subject to adverse action by shareholders, Nasdaq, the SEC or other regulatory authorities.

The existence of material weaknesses or significant deficiencies in internal control over financial reporting could adversely affect Peoples' reputation or investor perceptions, which could have a negative effect on the trading price of Peoples' common shares.

In addition, Peoples may incur additional costs to remediate material weaknesses or significant deficiencies in Peoples' internal control over financial reporting.

People's management cannot make assurances that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting.

In the future, current controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of the financial statements.

Legislative, Regulatory and Tax Change Risks

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Peoples is subject to regulation and supervision by the Federal Reserve Board, and Peoples Bank is subject to regulation and supervision by the ODFI, the Federal Reserve Board, the FDIC and the CFPB.

These regulations are primarily intended to protect depositors and the Deposit Insurance Fund, not Peoples' shareholders.

These regulations are primarily intended to protect depositors and the DIF, not Peoples' shareholders.

Peoples' non-bank subsidiaries are also subject to the supervision of the Federal Reserve Board, in addition to other regulatory and self-regulatory agencies, including the SEC, and state securities and insurance regulators.

Regulations affecting banks and financial services businesses are undergoing continuous change, especially in light of COVID-19 and the stimulus programs implemented in connection therewith, and Peoples' management cannot predict the effect of those changes.

While such changes are generally intended to lessen the regulatory burden on financial institutions, the impact of any changes to laws and regulations or other actions by regulatory agencies could adversely affect Peoples' business.

Regulations affecting banks and financial services businesses are undergoing continuous change, and Peoples' management cannot predict the effect of those changes.

While such changes are generally intended to lessen the regulatory burden on financial

institutions, the impact of any changes to laws and regulations or other actions by regulatory agencies could adversely affect Peoples' business.

Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets held by an institution, the appropriateness of an institution's allowance for credit losses and the ability to complete acquisitions.

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Additional information regarding Peoples' critical accounting policies and the sensitivity of estimates can be found in the section captioned "Critical Accounting Policies" in "ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" of this Form 10-K.

• Regulatory capital standards may have an adverse effect on our profitability, lending, and ability to pay dividends.

Peoples is subject to capital adequacy guidelines and other regulatory requirements specifying minimum amounts and types of capital that we must maintain.

From time to time, regulators implement changes to these regulatory capital adequacy guidelines.

If we fail to meet these minimum capital guidelines and/or other regulatory requirements, our financial condition would be materially and adversely affected.

The Basel III capital framework requires us to maintain significantly more capital as a result of higher required capital levels and more demanding regulatory capital risk weightings and calculations.

Satisfying capital requirements may require us to limit our banking operations, retain net income or reduce dividends to improve regulatory capital levels, which could negatively affect our business, financial condition and results of operations.

• Increases in FDIC insurance premiums may have a material adverse effect on Peoples' earnings.

Peoples Bank has limited ability to control the amount of premiums it is required to pay for FDIC insurance.

The Deposit Insurance Fund is funded by fees assessed on insured depository institutions, such as Peoples Bank.

The DIF is funded by fees assessed on insured depository institutions, such as Peoples Bank.

If the costs of future bank failures increase, deposit insurance premiums may also increase.

Increases in FDIC insurance premiums may have a material adverse effect on Peoples' results of operations and ability to continue to pay dividends on our common shares at the current rate or at all.

The FDIC has adopted rules revising its assessments in a manner benefiting banks with assets totaling less than $10 billion in assets.

There can be no assurance, however, that assessments may not be changed in the future.

In October 2022, FDIC Board adopted as final, and without change, an increase in initial base deposit insurance assessment rate schedules uniformly by 2 basis points, beginning in the first quarterly assessment period of 2023.

There can be no assurance that assessments may not be changed again in the future.

Federal deposit insurance is described in more detail in the section captioned "Supervision and Regulation" in "ITEM 1 BUSINESS" of this Form 10-K.

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In addition, acquisitions of regulated businesses, such as banks, are subject to various regulatory approvals.

If Peoples fails to receive the appropriate approvals, we will not be able to consummate an acquisition that we believe is in our best interest.

If Peoples fails to receive the appropriate regulatory approvals, we will not be able to consummate an acquisition that we believe is in our best interest.

Peoples may not be able to integrate new acquisitions without encountering difficulties, including the loss of key employees and customers, the disruption of ongoing businesses or possible inconsistencies in standards, controls, procedures and policies.

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• Changes in retail distribution strategies and consumer behavior may adversely impact Peoples’ investments in our financial service office premises and equipment and other assets, and may lead to increased expenditures to change our retail distribution channel.

Peoples has significant investments in financial service office premises and equipment for our financial service office network, including 13 financial service offices as well as our retail work force and other financial service office banking assets.

Advances in technology such as e-commerce, telephone, internet and mobile banking, and in-branch self-service technologies including automatic teller machines and other equipment, as well as changing customer preferences for these other methods of accessing Peoples’ products and services, could affect the value of Peoples’ financial service office network or other retail distribution assets and may cause Peoples to change our retail distribution strategy, close and/or sell certain financial service offices and restructure or reduce our remaining financial service offices and work force.

Peoples has significant investments in financial service office premises and equipment for our financial service office network, including 13 financial service offices, which consist of loan production offices ("LPO") and limited service locations, as well as our retail work force and other financial service office banking assets.

Advances in technology such as e-commerce, telephone, internet and mobile banking, and in-branch self-service technologies including ATMs and other equipment, as well as changing customer preferences for these other methods of accessing Peoples’ products and services, could affect the value of Peoples’ financial service office network or other retail distribution assets and may cause Peoples to change our retail distribution strategy, close and/or sell certain financial service offices and restructure or reduce our remaining financial service offices and work force.

Further advances in technology and/or changes in customer preferences including those related to social media, digital or cryptocurrency, blockchain and other "fintech" technologies could result in additional changes in Peoples’ retail distribution strategy and/or financial service office network.

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If hazardous or toxic substances are found, Peoples may be liable for remediation costs, as well as for personal injury and property damage.

Environmental laws and evolving regulation may require Peoples to incur

substantial expenses and may materially reduce the affected property’s value or limit Peoples’ ability to use or sell the affected property.

Environmental laws and evolving regulation may require Peoples to incur substantial expenses and may materially reduce the affected property’s value or limit Peoples’ ability to use or sell the affected property.

In addition, future laws and regulations or more stringent interpretations or enforcement policies with respect to existing laws or regulations may increase Peoples’ exposure to environmental liability.

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• The value of Peoples’ goodwill and other intangible assets may decline in the future.

As of December 31, 2021, Peoples had $291.0 million of goodwill and other intangible assets.

A significant decline in expected future cash flows, a significant adverse change in the business climate, slower growth rates or a significant and sustained decline in the price of Peoples’ common shares may necessitate taking charges in the future related to the impairment of goodwill and other intangible assets.

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For a more complete discussion of Peoples' competitive environment, see the section captioned "Competition" in "ITEM 1 BUSINESS" of this Form 10-K.

• Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to Peoples’ environmental, social and governance practices may impose additional costs on Peoples or expose Peoples to new or additional risks.

Financial institutions are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social, and governance (“ESG”) practices and disclosure.

Investor advocacy groups, investment funds, and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions, and human rights.

Increased ESG-related compliance costs for Peoples as well as among our suppliers, vendors and various other parties within our supply chain could result in increases to our overall operational costs.

Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, access to capital, and the price of our common shares.

New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.

• Climate change, severe weather, natural disasters, acts of war or terrorism, the emergence of a pandemic and other adverse external events could significantly impact Peoples' business.

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• Peoples or one of our subsidiaries may be a defendant from time to time in a variety of litigation and other actions, which could have a material adverse effect on Peoples' financial condition, results of operations and cash flows.

Peoples and our subsidiaries may be involved from time to time in a variety of litigation arising out of their respective businesses.

Peoples and our subsidiaries may be involved from time to time in a variety of litigation arising out of each entity's respective business.

The risk of litigation increases in times of increased troubled loan collection activity.

Peoples' insurance may not cover all claims that may be asserted against Peoples and our subsidiaries, and any claims asserted against them, regardless of merit or eventual outcome, may harm their respective reputations.

Peoples' insurance may not cover

all claims that may be asserted against Peoples and our subsidiaries, and any claims asserted against them, regardless of merit or eventual outcome, may harm their respective reputations.

Should the ultimate judgments or settlements in any litigation exceed the applicable insurance coverage, they could have a material adverse effect on Peoples' financial condition, results of operations and cash flows.

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These factors could cause Peoples to recognize impairment losses on our investment in bank-issued trust preferred securities in future periods.

• Economic and other conditions may cause volatility in the price of Peoples’ common shares.

The price of Peoples’ common shares can fluctuate widely in response to a variety of factors, including:

actual or anticipated variations in the Peoples’ quarterly operating results;

recommendations by securities analysts;

significant acquisitions or business combinations;

strategic partnerships, joint ventures or capital commitments;

operating and stock price performance of other companies that investors deem comparable to Peoples;

new technology used or services offered by Peoples’ competitors;

news reports relating to trends, concerns and other issues in the banking and financial services industry, and changes in government regulations.

General market fluctuations, industry factors and general economic and political conditions and external events, including terrorist attacks, increased inflation, economic slowdowns or recessions, interest rate changes, credit loss trends or currency fluctuations, could also cause the price of Peoples’ common shares to decrease, regardless of Peoples’ operating results.

• Changes in tax laws could adversely affect Peoples' performance.

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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 1A. Risk Factors