PEBO filing — read by section

Item 7. Management’s Discussion and Analysis

ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
 Forward-Looking Statements 
 Certain statements made in this Form 10-K, which are not historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “estimate,” “may,” “feel,” “expect,” “believe,” “plan,” “will,” “will likely,” “would,” “should,” “could,” “project,” “goal,” “target,” “potential,” “seek,” “intend,” “continue,” “remain,” and similar expressions are intended to identify these forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. Factors that might cause such a difference include, but are not limited to: 
 (1) the effects of interest rate policies, changes in the interest rate environment due to economic conditions and/or the fiscal and monetary policy measures undertaken by the U.S. government and the Federal Reserve Board, including changes in the Federal Funds Target Rate, in response to such economic conditions, which may adversely impact interest rates, the interest rate yield curve, interest margins, loan demand and interest rate sensitivity; 
 (2) the effects of inflationary pressures and the impact of rising interest rates on borrowers’ liquidity and ability to repay; 
 (3) the success, impact, and timing of the implementation of Peoples’ business strategies and Peoples’ ability to manage strategic initiatives, including the interest rate policies of the Federal Reserve Board, the completion and successful integration of acquisitions, including the Limestone Merger that closed in April 2023, and the expansion of commercial and consumer lending activities; 
 (4) competitive pressures among financial institutions, or from non-financial institutions, which may increase significantly, including product and pricing pressures, which can in turn impact Peoples’ credit spreads, changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and Peoples’ ability to attract, develop and retain qualified professionals; 
 (5) uncertainty regarding the nature, timing, cost, and effect of legislative or regulatory changes or actions, or deposit insurance premium levels, promulgated and to be promulgated by governmental and regulatory agencies in the State of Ohio, the FDIC, the Federal Reserve Board, and the CFPB, which may subject Peoples, its subsidiaries, or one or more acquired companies to a variety of new and more stringent legal and regulatory requirements; 
 (6) the effects of easing restrictions on participants in the financial services industry; 
 (7) current and future local, regional, national and international economic conditions (including the impact of persistent inflation, supply chain issues or labor shortages, supply-demand imbalances affecting local real estate prices, high unemployment rates in the local or regional economies in which Peoples operates and/or the U.S. economy generally, an increasing federal government budget deficit, the failure of the federal government to raise the federal debt ceiling, potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations, and changes in the relationship of the U.S. and U.S. global trading partners) and the impact these conditions may have on Peoples, Peoples’ customers and Peoples’ counterparties, and Peoples’ assessment of the impact, which may be different than anticipated; 
 
 
 (8) Peoples may issue equity securities in connection with future acquisitions, which could cause ownership and economic dilution to Peoples’ current shareholders; 
 (9) changes in prepayment speeds, loan originations, levels of nonperforming assets, delinquent loans, charge-offs, and customer and other counterparties’ performance and creditworthiness generally, which may be less favorable than expected in light of recent inflationary pressures and continued elevated interest rates, and may adversely impact the amount of interest income generated; 
 (10) Peoples may have more credit risk and higher credit losses to the extent there are loan concentrations by location or industry of borrowers or collateral; 
 (11) future credit quality and performance, including expectations regarding future credit losses and the allowance for credit losses; 
 (12) changes in accounting standards, policies, estimates or procedures may adversely affect Peoples’ reported financial condition or results of operations; 
 (13) the impact of assumptions, estimates and inputs used within models, which may vary materially from actual outcomes, including under the CECL model; 
 
 
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 (14) adverse changes in the conditions and trends in the financial markets, including recent inflationary pressures, which may adversely affect the fair value of securities within Peoples’ investment portfolio, the interest rate sensitivity of Peoples’ consolidated balance sheet, and the income generated by Peoples’ trust and investment activities; 
 (15) the volatility from quarter to quarter of mortgage banking income, whether due to interest rates, demand, the fair value of mortgage loans, or other factors; 
 (16) Peoples’ ability to receive dividends from Peoples’ subsidiaries; 
 (17) Peoples’ ability to maintain required capital levels and adequate sources of funding and liquidity; 
 (18) the impact of larger or similar-sized financial institutions encountering problems, such as the closures in 2023 of Silicon Valley Bank in California, Signature Bank in New York and First Republic Bank in California, which may adversely affect the banking industry and/or Peoples’ business generation and retention, funding and liquidity, including Peoples’ continued ability to grow deposits or maintain adequate deposit levels, and may further result in potential increased regulatory requirements, increased reputational risk and potential impacts to macroeconomic conditions; 
 
 
 (19) Peoples’ ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks, including those of Peoples’ third-party vendors and other service providers, which may prove inadequate, and could adversely affect customer confidence in Peoples and/or result in Peoples incurring a financial loss; 
 (20) any misappropriation of the confidential information which Peoples possesses could have an adverse impact on Peoples’ business and could result in regulatory actions, litigation and other adverse effects; 
 (21) Peoples’ ability to anticipate and respond to technological changes, and Peoples’ reliance on, and the potential failure of, a number of third-party vendors to perform as expected, including Peoples’ primary core banking system provider, which can impact Peoples' ability to respond to customer needs and meet competitive demands; 
 (22) operational issues stemming from and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems on which Peoples and Peoples’ subsidiaries are highly dependent; 
 (23) changes in consumer spending, borrowing and saving habits, whether due to changes in retail distribution strategies, consumer preferences and behavior, changes in business and economic conditions, legislative or regulatory initiatives, or other factors, which may be different than anticipated; 
 (24) the adequacy of Peoples’ internal controls and risk management program in the event of changes in strategic, reputational, market, economic, operational, cybersecurity, compliance, legal, asset/liability repricing, liquidity, credit and interest rate risks associated with Peoples’ business; 
 (25) the impact on Peoples’ businesses, personnel, facilities or systems of losses related to acts of fraud, theft, misappropriation or violence; 
 (26) the impact on Peoples’ businesses, as well as on the risks described above, of various domestic or international widespread natural or other disasters, pandemics, cybersecurity attacks, system failures, civil unrest, military or terrorist activities or international conflicts (including Russia’s war in Ukraine and the recent conflicts involving Israel and Hamas); 
 (27) the potential deterioration of the U.S. economy due to financial, political or other shocks; 
 (28) the potential influence on the U.S. financial markets and economy from the effects of climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; 
 (29) the impact on Peoples’ businesses and operating results of any costs associated with obtaining rights in intellectual property claimed by others and adequately protecting Peoples’ intellectual property; 
 (30) risks and uncertainties associated with Peoples’ entry into new geographic markets and risks resulting from Peoples’ inexperience in these new geographic markets; 
 (31) Peoples’ ability to integrate the Limestone Merger, which may be unsuccessful, or may be more difficult, time-consuming or costly than expected; 
 (32) the risk that expected revenue synergies and cost savings from the Limestone Merger may not be fully realized or realized within the expected time frame; 
 (33) changes in laws or regulations imposed by Peoples’ regulators impacting Peoples’ capital actions, including dividend payments and share repurchases; 
 
 
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 (34) the vulnerability of Peoples’ network and online banking portals, and the systems of parties with whom Peoples contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; 
 (35) Peoples’ business may be adversely affected by increased political and regulatory scrutiny of corporate environmental, social and governance (“ESG”) practices; 
 (36) the effect of a fall in stock market prices on the asset and wealth management business; and 
 (37) other risk factors relating to the banking industry or Peoples as detailed from time to time in Peoples’ reports filed with the SEC, including those risk factors included in the disclosures under the heading “ITEM 1A RISK FACTORS” of this Form 10-K. 
 All forward-looking statements speak only as of the filing date of this Form 10-K and are expressly qualified in their entirety by the cautionary statements. Although management believes the expectations in these forward-looking statements are based on reasonable assumptions within the bounds of management’s knowledge of Peoples’ business and operations, it is possible that actual results may differ materially from these projections. Additionally, Peoples undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the filing date of this Form 10-K or to reflect the occurrence of unanticipated events except as may be required by applicable legal requirements. Copies of documents filed with the SEC are available free of charge at the SEC’s website at www.sec.gov and/or through Peoples’ website – www.peoplesbancorp.com under the “Investor Relations” section. 
 The following discussion and analysis of Peoples’ Consolidated Financial Statements is presented to provide insight into management’s assessment of the financial position and results of operations for the periods presented. This discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto, as well as the ratios and statistics, contained elsewhere in this Form 10-K. 
 Summary of Significant Transactions and Events 
 The following is a summary of transactions or events that have impacted or are expected by management to impact Peoples’ results of operations or financial condition: 
 Mergers and Acquisitions 
 ◦ During 2023, Peoples incurred $17.0 million of acquisition-related expenses, compared to $3.0 million for 2022 and $21.4 million for 2021. The acquisition-related expenses in 2023 were primarily related to the Limestone Merger. The acquisition-related expenses in 2022 were related to the Vantage acquisition (as defined below), the Premier Merger (as defined below), and the Limestone Merger, and the acquisition-related expenses during 2021 were primarily related to the NSL acquisition (as defined below) and the Premier Merger. 
 ◦ On October 25, 2022, Peoples announced the Limestone Merger, a transaction valued at $177.9 million. The Limestone Merger closed as of the close of business on April 30, 2023. Peoples acquired Limestone’s loan portfolio totaling $1.1 billion, $1.2 billion of deposits, $172.7 million of total investment securities, an aggregate of $99.5 million of short-term and long-term borrowings, and $93.5 million of total cash and cash equivalents. Peoples also recorded goodwill in the amount of $68.8 million and other intangible assets of $27.7 million, which consisted of core deposit intangibles. 
 ◦ 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, a nationwide provider of equipment financing headquartered in Excelsior, Minnesota (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. 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 has continued to operate under the name Vantage Financial, which leverages Vantage’s strong brand recognition within the equipment finance industry. 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 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 conditions of the definitive Agreement and Plan of Merger dated March 26, 2021, Premier merged with and into 
 
 
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 Peoples and Premier’s wholly-owned subsidiaries, Premier Bank and Citizens, subsequently merged into Peoples’ wholly-owned subsidiary, Peoples Bank, in a transaction resulting in the issuance of 8,589,685 common shares valued at $261.9 million (the “Premier Merger”). At the close of business on September 17, 2021, the financial services offices of each of Premier Bank and Citizens became branches of Peoples Bank. Peoples acquired $1.2 billion in loans and $1.8 billion in deposits and recorded $66.9 million in goodwill and $4.2 million in other intangible assets in connection with the Premier Merger. 
 ◦ On May 4, 2021, Peoples Insurance acquired substantially all of the assets and rights of an insurance agency located in Pikeville, Kentucky and certain rights to related customer accounts, which were previously developed and maintained by Justice & Stamper Insurance Agency, Inc. Total consideration for this transaction was $325,000, 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. 
 ◦ On March 31, 2021, Peoples completed its acquisition of NS Leasing, LLC (“NSL”) pursuant to an Asset Purchase Agreement, dated March 24, 2021, in which Peoples Bank acquired the equipment finance and leasing business of NSL (the “NSL acquisition”). 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 in the amount of $69.1 million. Peoples Bank paid total consideration of $116.5 million, plus an earn-out payment to NSL of $3.0 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 goodwill in the amount of $24.7 million and other intangible assets of $14.0 million, which included a customer relationship intangible, a trade-name intangible and non-compete agreements related to this transaction. 
 Other Significant Developments 
 ◦ During the third quarter of 2023, Peoples terminated its pension plan by settling the remaining benefit obligation of $7.7 million. The pension plan had been closed to new entrants since January 1, 2010. Peoples recorded a settlement charge of $2.4 million in the third quarter of 2023 in relation to the termination of the pension plan. Peoples does not anticipate further expenses related to the termination. Peoples incurred $185,000 in pension settlement charges in 2022, compared to $143,000 in 2021, due to the aggregate amount of lump-sum distributions to participants in Peoples’ defined benefit pension plan exceeding the threshold for recognizing settlement charges during the period. 
 ◦ During 2023, Peoples recorded a provision for credit losses of $15.2 million, compared to a recovery of credit losses of $3.5 million for 2022 and a provision for credit losses of $0.7 million for 2021. The provision for credit losses during 2023 was driven by (i) the addition of the provision for the non-purchased credit deteriorated (“non-PCD”) loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers. The recovery of credit losses during 2022 was primarily due to the impact of economic forecast improvement in the CECL model, coupled with loan pay-offs during certain periods. 
 ◦ 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. During 2023, Peoples repurchased 107,219 common shares totaling $3.0 million under the share repurchase program. During 2022, Peoples repurchased 263,183 common shares totaling $7.4 million under the share repurchase program. During 2021, Peoples did not repurchase any common shares under the share repurchase program authorized on January 28, 2021. On October 25, 2022, after the announcement of the Limestone Merger, the share repurchase program was paused until the vote to approve the Limestone Merger by shareholders, which occurred on February 23, 2023. 
 ◦ On April 3, 2019, Peoples entered into the U.S. Bank Loan Agreement. A Fifth Amendment to the U.S. Bank Loan Agreement, entered into on March 31, 2023, extended the maturity from April 1, 2023 to March 31, 2024. The U.S. Bank Loan Agreement provides Peoples with a revolving line of credit in the maximum aggregate principal amount of $30.0 million that may be used: (i) for working capital purposes; (ii) to finance dividends or other distributions (other than stock dividends and stock splits) on or in respect of Peoples’ capital stock and redemptions, repurchases or other acquisitions of any of Peoples’ capital stock permitted under the U.S. Bank Loan Agreement; and (iii) to finance acquisitions permitted under the U.S. Bank Loan Agreement. 
 ◦ To combat the effects of ongoing inflationary pressures, the Federal Reserve Board increased the Federal Funds Target Rate range to 0.25% to 0.50% beginning on March 16, 2022, and continued to raise rates up to 5.50% on July 27, 2023. The Federal Reserve Board has kept rates unchanged since July 2023 but has signaled that it expects to begin reducing rates sometime in 2024. 
 The impact of these transactions, where material, is discussed in the applicable sections of this Management’s Discussion and Analysis of Financial Condition and Results of Operations. 
 
 
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 Critical Accounting Policies 
 The accounting and reporting policies of Peoples conform to US GAAP and to general practices within the financial services industry. A summary of significant accounting policies is contained in “Note 1 Summary of Significant Accounting Policies.” While all of these policies are important to understanding the Consolidated Financial Statements, certain accounting policies require management to exercise judgment and make estimates or assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes. These estimates and assumptions are based on information available as of the date of the Consolidated Financial Statements; accordingly, as this information changes, the Consolidated Financial Statements could reflect different estimates or assumptions. 
 Management has identified four accounting policies as those that, due to the judgments, estimates and assumptions inherent in the policies, are critical to an understanding of Peoples’ Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations. The four accounting policies identified were the allowance for credit losses, business combinations, goodwill and fair value measurements. These four accounting policies are described in further detail below. 
 Allowance for Credit Losses 
 The allowance for credit losses represents Peoples’ estimate of expected credit losses over the expected contractual life of the existing loan portfolio. The allowance for credit losses is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is measured on a pool basis, with loans collectively evaluated when similar risk characteristics exist. Peoples evaluated risk characteristics, including but not limited to: internal or third-party credit scores or credit ratings, risk ratings or classifications, financial asset type, collateral type, loan size, effective interest rate, term, geographical location, industry of the borrower, vintage, historical or credit loss patterns, and reasonable and supportable forecast periods. Peoples identified 20 segments for which it believes there are similar risk characteristics and utilized a discounted cash flow methodology in determining an allowance for credit losses for each segment. 
 In estimating credit losses, Peoples uses a loss driver method, which analyzes one or more economic variables to the change in default rate using a regression analysis. Variables that had a strong correlation were selected as economic factors, or variables, for the model. If a single variable was not found to be strongly correlated, additional variables were included. Peoples utilizes U.S. unemployment and Ohio unemployment as economic factors in modeling. 
 In general, Peoples completes a quarterly evaluation based on several qualitative factors to determine if there should be adjustments made to the allowance for credit losses. These factors include economic conditions, collateral, concentrations, troubled assets, Peoples’ loss trends, peer loss trends, delinquency trends, portfolio composition and loan growth, underwriting, and certain other risks. 
 Loans that do not share similar risk characteristics are evaluated on an individual basis. The allowance for credit losses related to these specific loans was based on management’s estimate of potential losses as determined by (1) the present value of expected future cash flows, (2) the fair value of collateral if the loan is determined to be collateral dependent, or (3) the loan’s observable market price. 
 Peoples also completes a quarterly evaluation for unfunded commitments for loans that are not unconditionally cancellable, which includes construction loans, floor plan lines of credit, home equity lines of credit, other credit lines and letters of credit. Peoples performed a study to determine the historical funding rates of unadvanced portions of loans, and applied these funding rates to the unfunded commitments at period end. The loss rates, including qualitative factors, in determining the allowance for credit losses were applied at the segment level to the unfunded commitment amounts to determine the allowance for credit loss liability for unfunded commitments. 
 There can be no assurance that the allowance for credit losses will be adequate to cover all losses, but management believes the allowance for credit losses at December 31, 2023 was adequate to provide for expected losses from existing loans based on information available at that time. While management uses available information to estimate losses, the ultimate collectability of a substantial portion of the loan portfolio, and the need for future additions to the allowance, will be based on changes in economic conditions and other relevant factors. As such, adverse changes in economic conditions could reduce currently estimated cash flows for both commercial and consumer borrowers, which would likely cause Peoples to experience increases in problem assets, delinquencies and losses on loans in the future. 
 To demonstrate the sensitivity to key economic parameters used in the measurement of the allowance for credit losses at December 31, 2023, management calculated the difference between the modeled allowance for credit losses at December 31, 2023, compared to one based on an adverse scenario. The adverse scenario reflected increases of 100 basis points in both U.S. and Ohio unemployment. Excluding consideration of general reserve adjustments, this sensitivity analysis would result in a hypothetical increase in the allowance for credit losses of approximately $6.6 million at December 31, 2023. 
 
 
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 Business Combinations 
 Peoples utilizes the acquisition method of accounting for business combinations. As of the acquisition date, Peoples records the acquired company’s net assets at fair value. The determination of fair value as of the acquisition date requires management to consider various factors that involve judgment and estimation, including the application of discount rates, prepayment rates, attrition rates, future estimates of interest rates, as well as many other assumptions. These assumptions can have a material impact on the estimated fair value, and as a result, the goodwill recorded in a business combination. ASC 805 allows for a measurement period of 12 months beyond the acquisition date to finalize the fair value measurement of the acquired company’s net assets as additional information existing as of the acquisition date becomes available. Measurement period adjustments are recorded through goodwill. 
 Based on recent acquisitions, loans and leases acquired through business combinations have comprised the majority of purchase accounting adjustments in arriving at the fair values of acquired assets and liabilities, with the most significant adjustments relating to the creditworthiness of the acquired portfolios. The assumptions and inputs impacting the allowance for credit losses are discussed in the above paragraphs of this section of Management’s Discussion and Analysis. Those same judgments drive the measurement of the credit adjustments of acquired loan and lease portfolios when arriving at fair value. For further information regarding business combination accounting, please refer to “Note 20 Acquisitions.” 
 Goodwill 
 Peoples records goodwill as a result of acquisitions accounted for under the acquisition method of accounting. Under the acquisition method, Peoples is required to allocate the consideration paid for an acquired company to the assets acquired, including identified intangible assets, and liabilities assumed based on their estimated fair values at the date of acquisition. Goodwill represents the excess cost over the fair value of net assets acquired and is not amortized but is tested for impairment when indicators of impairment exist, and, in any case, at least annually. For further information regarding the fair values of assets and liabilities recently acquired in business combinations, please refer to “Note 20 Acquisitions.” 
 The value of recorded goodwill is supported by revenue that is driven by the volume of business transacted and Peoples’ ability to provide quality, cost-effective services in a competitive market place. A decline in earnings as a result of a lack of growth or the inability to deliver cost-effective services over sustained periods can lead to impairment of goodwill that could adversely impact earnings in future periods. Goodwill impairment exists when the carrying value of the reporting unit (as defined by US GAAP) exceeds its fair value and an impairment loss is recognized in earnings in an amount equal to that excess, limited to the total amount of goodwill allocated to the reporting unit. 
 The process of evaluating goodwill for impairment involves highly subjective and complex judgments, estimates and assumptions regarding the fair value of Peoples’ reporting unit and, in some cases, goodwill itself. As a result, changes to these judgments, estimates and assumptions in future periods could result in materially different results. 
 Peoples currently maintains a single reporting unit for goodwill impairment testing. While quoted market prices exist for Peoples’ common shares since they are publicly traded, these market prices do not necessarily reflect the value associated with gaining control of an entity. Thus, management takes into account all appropriate fair value measurements in determining the estimated fair value of the reporting unit. 
 Peoples performs its required annual impairment test as of October 1st each year. Peoples first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, including goodwill. In this evaluation, Peoples assesses relevant events and circumstances, which may include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, events specific to Peoples, significant changes in the reporting unit, or a sustained decrease in stock price. If Peoples determines that it is more-likely-than-not that the fair value of the reporting unit is greater than its carrying amount, then performing the quantitative impairment test is unnecessary. 
 At October 1, 2023, management completed a qualitative assessment of goodwill. This test resulted in management concluding it was more-likely-than-not that the fair value of the reporting unit exceeded its carrying value. 
 Peoples is required to perform interim tests for goodwill impairment in subsequent quarters if events occur or circumstances change that indicate potential goodwill impairment exists, such as adverse changes to Peoples’ business or a significant decline in Peoples’ market capitalization. For further information regarding goodwill, refer to “Note 7 Goodwill and Other Intangible Assets.” 
 Fair Value Measurements 
 As a financial services company, the carrying value of certain financial assets and liabilities is impacted by the application of fair value measurements, either directly or indirectly. In certain cases, an asset or liability is measured and reported at fair value on a recurring basis, such as available-for-sale investment securities. In other cases, management must rely on estimates or judgments to determine if an asset or liability not measured at fair value warrants an impairment write-down or whether a valuation reserve should be established. Given the inherent volatility, the use of fair value measurements 
 
 
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 may have a significant impact on the carrying value of assets or liabilities, or result in material changes to the Consolidated Financial Statements, from period to period. 
 Detailed information regarding fair value measurements can be found in “Note 2 Fair Value of Financial Instruments.” 
 New Accounting Guidance Pending Adoption 
 Accounting Standards Update (“ASU”) 2023-06 - Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative: The ASU was issued in response to the SEC’s August 2018 final rule that updated and simplified disclosure requirements that the SEC believed were “redundant, duplicative, overlapping, outdated, or superseded.” The new guidance is intended to align U.S. GAAP requirements with those of the SEC and to facilitate the application of U.S. GAAP for all entities. ASU 2023-06 applies to all reporting entities within the scope of the amended subtopics. The effective dates for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, prospectively, with early adoption prohibited. Peoples will adopt such requirements when they become effective and the guidance is not expected to materially impact Peoples’ consolidated financial statements. 
 ASU 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures: The FASB issued ASU 2023-07 on November 27, 2023. The amendments “improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.” In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to enable “investors to better understand an entity’s overall performance” and assess “potential future cash flows.” 
 The ASU applies to all public entities that are required to report segment information in accordance with ASC 280. The enhanced segment disclosure requirements apply “retrospectively to all prior periods presented in the financial statements.” The significant segment expense and other segment item amounts “disclosed in prior periods shall be based on the significant segment expense categories identified and disclosed in the period of adoption.” The amendments in ASU 2023-07 are effective for all public entities for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Peoples will adopt the expanded disclosure requirements beginning with its Annual Report on Form 10-K for the fiscal year ending December 31, 2024, and the guidance is not expected to materially impact Peoples’ consolidated financial statements. 
 ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures: The FASB issued ASU 2023-09 on December 14, 2023. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. ASU 2023-09 applies to all entities subject to income taxes. For public business entities, the new requirements will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively with early adoption is permitted. Peoples is still evaluating the applicability and materiality of the guidance. 
 
 EXECUTIVE SUMMARY 
 Net income for the year ended December 31, 2023 was $113.4 million, compared to $101.3 million for 2022 and $47.6 million for 2021, representing earnings per diluted common share of $3.44, $3.60 and $2.15, respectively. The increases in 2023 earnings when compared to 2022 and 2021 were driven by increases in net interest income, partially offset by increases in non-interest expenses. Non-core items, and the related tax effect of each, negatively impacted earnings per diluted common share by $0.59 for 2023 compared to $0.11 for 2022 and $0.85 for 2021. 
 Net interest income increased 34% to $339.4 million for 2023, compared to $253.4 million for 2022, and $172.6 million for 2021. Net interest margin was 4.56% in 2023, compared to 3.97% in 2022 and 3.40% in 2021. The increases in net interest income and net interest margin when compared to 2022 were driven by increases in market interest rates, the additional net interest income from the Limestone Merger, and improvement in investment yields. Partially offsetting these benefits was an increase in interest expense resulting from a shift in the composition of funding sources combined with an increase in market interest rates for deposits and other funding sources. Net interest margin increased during 2022 when compared to 2021 largely due to (i) the Premier Merger and the Vantage acquisition, (ii) organic growth and (iii) increases in market interest rates. Net interest margin in 2021 was impacted by PPP loan forgiveness and lower funding costs due to customers’ maintaining higher cash balances, as well as a higher volume of loans due to the Premier Merger and and insurance premium finance acquisition coupled with higher-yielding leases acquired from NSL and organic loan growth. Accretion income, net of amortization expense, from acquisitions totaled $25.3 million for 2023, $11.6 million for 2022, and $3.2 million for 2021, adding 34 basis points, 19 basis points, and 7 basis points, respectively, to the net interest margin. 
 The provision for credit losses for 2023 was $15.2 million, compared to a recovery of credit losses of $3.5 million for 2022 and a provision for credit losses of $0.7 million for 2021. Net charge-offs for 2023 were $8.5 million, compared to $7.3 million for 2022 and 
 
 
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 $4.7 million for 2021. Net charge-offs as a percent of average total loans were 0.15% for 2023, 0.16% for 2022 and 0.13% for 2021. The provision for credit losses during 2023 was driven by (i) the addition of the provision for the non-PCD loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers. The recovery of credit losses during 2022 compared to the provision for credit losses during 2021 was driven by improvements in economic forecasts, coupled with loan pay-offs and sales during certain periods. 
 Total non-interest income for 2023 increased $8.6 million, or 11%, when compared to 2022. The increase was driven by (i) a $4.1 million increase in electronic banking income, (ii) a $2.3 million increase in insurance income primarily due to growth in the property and casualty insurance line, (iii) a $2.1 million increase in deposit account service charges, (iv) a $1.5 million increase in bank owned life insurance income, and (v) a $2.7 million increase in other non-interest income. Insurance income increased due to new business and market increases for premiums. The increase in other non-interest income was due to an increase in operating lease income, which was partially offset by operating lease expense recognized in other non-interest expense. The other increases for the full year of 2023, when compared to the full year of 2022, were primarily due to the additional customers brought in from the Limestone Merger. Partially offsetting the increases was a $3.6 million increase in net losses on investment securities, primarily driven by a $3.6 million pre-tax ($2.9 million after-tax) net loss on the sales of available-for-sale investment securities during the first and fourth quarters of 2023, and a $2.2 million increase in net losses on assets disposals and other transactions, mostly due to a $1.6 million write-down of an other real estate owned (“OREO”) property during the second quarter of 2023. Total non-interest income for 2022 increased $10.0 million, or 14% when compared to 2021. The increase was driven by growth of $4.4 million in deposit account service charges and $3.1 million in electronic banking income, primarily attributable to customers added in the Premier Merger. Also contributing to the growth was a $3.0 million increase in lease income due to the Vantage acquisition. Partially offsetting the impact of these 2022 increases when compared to 2021 was a $2.0 million decline in mortgage banking income due to the increased market interest rate environment in 2022 resulting in a lower volume of new loan originations. 
 Total non-interest expense for the year ended December 31, 2023, was impacted by the Limestone Merger and acquisition-related non-interest expenses, which added $17.0 million across various line-items within non-interest expense. The table below summarizes the amount of acquisition-related expenses for each line item that is a component of non-interest expense. Acquisition-related expenses are considered a non-core non-interest expense by Peoples. This information is used by Peoples to provide information useful to investors in understanding Peoples’ operating performance and trends. 
 
 
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 (Dollars in thousands) 2023 2022 2021 
 Non-interest expense: 
 Salaries and employee benefit costs $ 144,031 $ 112,690 94,612 
 Data processing and software expense 21,607 14,241 10,542 
 Net occupancy and equipment expense 21,368 19,516 14,918 
 Professional fees 17,041 12,094 15,783 
 Amortization of other intangible assets 11,222 7,763 4,775 
 Electronic banking expense 7,150 9,231 8,885 
 Marketing expense 5,017 3,728 3,658 
 FDIC insurance premiums 4,785 3,702 1,976 
 Franchise tax expense 3,540 3,487 3,357 
 Other loan expenses 2,859 2,735 2,001 
 Communication expense 2,834 2,484 1,657 
 Other non-interest expense 25,033 15,476 21,573 
 Total non-interest expense 266,487 207,147 183,737 
 Acquisition-related non-interest expense: 
 Salaries and employee benefit costs 5,827 29 3,818 
 Data processing and software expense 1,850 410 65 
 Net occupancy and equipment expense 109 50 212 
 Professional fees 6,062 2,407 7,144 
 
 Electronic banking expense 115 (92) — 
 Marketing expense 81 51 241 
 
 
 Other loan expenses 2 (4) 3 
 Communication expense 1 2 54 
 Other non-interest expense 2,923 163 9,886 
 Total acquisition-related non-interest expense 16,970 3,016 21,423 
 Non-interest expense excluding acquisition-related expense: 
 Salaries and employee benefit costs 138,204 112,661 90,794 
 Data processing and software expense 19,757 13,831 10,477 
 Net occupancy and equipment expense 21,259 19,466 14,706 
 Professional fees 10,979 9,687 8,639 
 Amortization of other intangible assets 11,222 7,763 4,775 
 Electronic banking expense 7,035 9,323 8,885 
 Marketing expense 4,936 3,677 3,417 
 FDIC insurance premiums 4,785 3,702 1,976 
 Franchise tax expense 3,540 3,487 3,357 
 Other loan expenses 2,857 2,739 1,998 
 Communication expense 2,833 2,482 1,603 
 Other non-interest expense 22,110 15,313 11,687 
 Total non-interest expense excluding acquisition-related expense $ 249,517 $ 204,131 $ 162,314 
 

 Total non-interest expense was $266.5 million for 2023, an increase of $59.3 million, or 29%, compared to 2022. Excluding acquisition-related expenses, non-interest expenses increased $45.4 million, or 22%, due to increases in all non-interest expense line items except for electronic banking expense, which decreased $2.3 million when compared to 2022. The increases were primarily driven by non-interest expenses, excluding acquisition-related expenses, attributable to the Limestone Merger, as well as organic growth. The increase in other non-interest expense was also driven by the previously discussed pension plan settlement charges and a $1.7 million increase in operating lease depreciation expenses. Electronic banking expense decreased when compared to 2022 due to reduced costs for Peoples’ online banking platform and a reclassification of those costs relative to the prior period to data processing and software expense. Total non-interest expense was $207.1 million for 2022, an increase of $23.4 million compared to 2021. The growth was driven by increases of (i) $18.1 million in salaries and employee benefit costs, (ii) $4.6 million in net occupancy and equipment expense, (iii) $3.7 million in data processing and software expenses, and (iv) $3.0 million in intangible asset amortization. 
 
 
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 These increases were primarily due to growth over the last year, driven by mergers and acquisitions. Partially offsetting the impact of these increases on non-interest expense in 2022 was a decrease in acquisition-related expenses due to the amount of expenses incurred in connection with the Premier Merger in 2021. Included in total non-interest expense during 2023 were certain non-core expenses which included acquisition-related expenses of $17.0 million compared to $3.0 million in 2022. Non-core expenses for 2021 included acquisition-related expenses of $21.4 million (detailed in the table above), COVID-19-related expenses of $1.2 million, contract negotiation expenses of $1.2 million and a Peoples Bank Foundation, Inc. contribution of $0.5 million. 
 Peoples’ efficiency ratio, which is calculated as total non-interest expense less amortization of other intangible assets divided by fully tax-equivalent (“FTE”) net interest income, plus total non-interest income, excluding all gains and losses, was 58.7% for 2023, compared to 59.6% for 2022 and 73.6% for 2021. The efficiency ratio was elevated during 2021 primarily due to the non-core expenses discussed above. The efficiency ratio, when adjusted for non-core items, was 54.4% for 2023, 58.6% for 2022 and 63.5% for 2021. 
 Income tax expense totaled $31.8 million for 2023, compared to $27.3 million for 2022 and $9.4 million for 2021. The effective tax rate for 2023 was 21.9%, 21.3% for 2022 and 16.5%% for 2021. The increases for 2023 compared to 2022, and for 2022 compared to 2021, were driven by higher pre-tax income and a higher effective tax rate primarily due to apportionment in additional states due to recent acquisitions. 
 Total assets increased 27% to $9.16 billion at December 31, 2023, compared to $7.21 billion at year-end 2022. The increase was primarily due to $1.46 billion of assets, primarily loans, acquired in the Limestone Merger. Excluding the loans acquired in the Limestone Merger, the period-end loan and lease balance increased $472.2 million, or 10%, driven by increases of $203.6 million, $78.2 million, $68.9 million, $44.0 million, $37.9 million, and $37.0 million in other commercial real estate loans, commercial and industrial loans, leases, premium finance loans, construction loans, and indirect consumer loans, respectively. The increase in total assets from at December 31, 2022 was also impacted by purchases of held-to-maturity investment securities and sales of lower-yielding available-for-sale investment securities. Management underwent investment portfolio restructurings during 2023 to increase portfolio yield and reduce Peoples’ sensitivity to falling intermediate and long-term interest rates. The allowance for credit losses increased to $62.0 million or 1.01% of total loans, net of deferred fees and costs, compared to $53.2 million and 1.13%, respectively, at December 31, 2022. The increase in the allowance balance at December 31, 2023 when compared to at December 31, 2022 was driven by (i) the addition of the provision for the non-PCD loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers. The decrease in the ratio of the allowance for credit losses to total loans was due to the items noted above, primarily the release of reserves on individually analyzed loans. 
 Total liabilities were $8.10 billion at December 31, 2023, an increase of $1.68 billion since at December 31, 2022, primarily due to $1.35 billion of liabilities, primarily deposits, acquired in the Limestone Merger. Excluding Limestone deposit balances, total deposits at December 31, 2023 increased $615.3 million, or 11%, compared to at December 31, 2022, primarily due to increases of $785.6 million in retail certificates of deposit and $449.8 million in brokered certificates of deposit, partially offset by decreases of $226.8 million, $223.3 million, and $193.7 million, in non-interest bearing deposits, savings accounts, and interest-bearing demand deposit accounts, respectively. Total demand deposit accounts comprised 38% and 48% of total deposits at December 31, 2023, and at December 31, 2022, respectively. 
 Total stockholders’ equity was $1.05 billion at December 31, 2023, an increase of $268.2 million, or 34%, from December 31, 2022 due to (i) the issuance of 6.8 million common shares (valued at $177.9 million) in the Limestone Merger, (ii) net income of $113.4 million for the full year of 2023, and (iii) a decrease in other comprehensive loss of $25.5 million, partially offset by dividends paid of $52.1 million and share repurchases of $3.0 million. The decrease in other comprehensive loss was the result of changes in the market value of available-for-sale investment securities, which were primarily driven by changes in market interest rates. 
 Peoples continued to exceed the capital required by the Federal Reserve Board to be deemed “well capitalized.” Peoples’ tier 1 capital ratio was 12.58% at December 31, 2023, versus 12.19% at December 31, 2022, while the total capital ratio was 13.38% at December 31, 2023, versus 13.06% at December 31, 2022. The common equity tier 1 risk-based capital ratio was 11.75% at December 31, 2023 compared to 11.92% at December 31, 2022. Compared to at December 31, 2022, the tier 1 risk-based capital and the total risk-based capital ratios improved due to higher net income, partially offset by the impact of the Limestone Merger and dividends paid. The common equity tier 1 risk-based capital ratio at December 31, 2023 decreased compared to at December 31, 2022 due to the common shares issued in the Limestone Merger. Peoples’ book value and tangible book value per share were $29.83 and $18.16, respectively, at December 31, 2023, compared to $27.76 and $16.23, respectively, at December 31, 2022. Additional information regarding capital requirements can be found in “Note 17 Regulatory Matters.” 
 
 
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 RESULTS OF OPERATIONS 
 
 Net Interest Income 
 Peoples earns interest income on investments, loans and leases, and incurs interest expense on interest-bearing deposits and borrowed funds. Net interest income, the amount by which interest income exceeds interest expense, remains Peoples’ largest source of revenue and was 80% of total revenue during 2023. The amount of net interest income earned by Peoples is affected by various factors, including changes in market interest rates due to the Federal Reserve Board’s monetary policy, the level and degree of pricing competition for both loans and deposits in Peoples’ markets, and the amount and composition of Peoples’ earning assets and interest-bearing liabilities. 
 Peoples monitors net interest income performance and manages its balance sheet composition through regular ALCO meetings. The asset-liability management process employed by the ALCO is intended to mitigate the impact of future interest rate changes on Peoples’ net interest income and earnings. However, the frequency and/or magnitude of changes in market interest rates are difficult to predict, and may have a greater impact on net interest income than adjustments management is able to make. 
 As part of the analysis of net interest income, management converts tax-exempt income earned on obligations of states and political subdivisions to the pre-tax equivalent of taxable income using a blended federal and state corporate income tax rate of 23.3% for 2023 and 2022, and 22.3% for 2021. Management believes the resulting FTE net interest income allows for a more meaningful comparison of tax-exempt income and yields to their taxable equivalents. Net interest margin, which is calculated by dividing FTE net interest income by average interest-earning assets, serves as an important measurement of the net revenue stream generated by the volume, mix and pricing of earning assets and interest-bearing liabilities. 
 The following table details the calculation of FTE net interest income for the years ended December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 Net interest income $ 339,374 $ 253,442 $ 172,553 
 Taxable equivalent adjustments 1,703 1,644 1,349 
 FTE net interest income $ 341,077 $ 255,086 $ 173,902 

 
 
 
 
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 The following table details Peoples’ average balance sheets, with corresponding income/expense and yield/cost, for the years ended December 31: 
 
 2023 2022 2021 
 ( Dollars in thousands) 
 Average Balance Income/ Expense Yield/Cost Average Balance Income/Expense Yield/Cost Average Balance Income/ Expense Yield/Cost 
 Short-term investments (a) $ 57,464 $ 2,763 4.81 % $ 178,781 $ 1,710 0.96 % $ 219,849 $ 313 0.14 % 
 
 Investment securities (b)(c): 
 Taxable 1,621,852 49,469 3.05 % 1,481,368 29,091 1.96 % 1,042,419 15,219 1.46 % 
 Nontaxable 190,479 5,643 2.96 % 199,279 5,444 2.73 % 163,095 4,326 2.65 % 
 Total investment securities 1,812,331 55,112 3.04 % 1,680,647 34,535 2.05 % 1,205,514 19,545 1.62 % 
 Loans (c)(d): 
 Construction 347,317 27,833 7.90 % 223,197 10,732 4.74 % 131,834 5,130 3.84 % 
 Commercial real estate, other 1,757,676 120,479 6.76 % 1,327,064 65,405 4.86 % 1,061,323 42,308 3.93 % 
 Commercial and industrial 1,052,647 79,475 7.45 % 875,754 41,358 4.66 % 870,682 37,321 4.23 % 
 Premium finance 168,077 12,155 7.13 % 150,135 6,789 4.46 % 118,242 5,872 4.90 % 
 Leases 371,809 42,931 11.39 % 271,349 34,720 12.62 % 74,442 13,572 17.98 % 
 Residential real estate (e) 913,069 43,647 4.78 % 881,136 37,851 4.30 % 700,691 29,686 4.24 % 
 Home equity lines of credit 194,415 14,722 7.57 % 170,567 8,300 4.87 % 133,340 5,410 4.06 % 
 Consumer, indirect 656,736 33,263 5.06 % 563,887 23,029 4.08 % 529,994 21,480 4.05 % 
 Consumer, direct 
 128,707 8,726 6.78 % 111,148 6,769 6.09 % 88,611 5,501 6.21 % 
 Total loans 5,590,453 383,231 6.79 % 4,574,237 234,953 5.09 % 3,709,159 166,280 4.44 % 
 Allowance for credit losses 
 (57,391) (55,233) (56,038) 
 Net loans 5,533,062 383,231 6.86 % 4,519,004 234,953 5.15 % 3,653,121 166,280 4.51 % 
 Total earning assets 7,402,857 441,106 5.91 % 6,378,432 271,198 4.22 % 5,078,484 186,138 3.64 % 
 Goodwill and other intangible assets 384,172 322,639 234,667 
 Other assets 511,748 393,636 359,443 
 Total assets 
 $ 8,298,777 $ 7,094,707 $ 5,672,594 
 Interest-bearing deposits: 
 Savings accounts $ 1,034,713 $ 1,394 0.13 % $ 1,069,097 $ 356 0.03 % $ 772,726 $ 112 0.01 % 
 Government deposit accounts 
 709,887 12,252 1.73 % 701,587 2,172 0.31 % 529,955 2,035 0.38 % 
 Interest-bearing demand accounts 
 1,156,953 1,605 0.14 % 1,165,106 583 0.05 % 848,526 303 0.04 % 
 Money market accounts 684,015 9,986 1.46 % 632,364 1,015 0.16 % 575,237 390 0.07 % 
 Retail certificates of deposit 948,310 25,198 2.66 % 580,660 2,978 0.51 % 497,181 3,952 0.79 % 
 Brokered deposits (f) 483,483 21,712 4.49 % 88,234 2,067 2.34 % 150,716 3,130 2.08 % 
 Total interest-bearing deposits 
 5,017,361 72,147 1.44 % 4,237,048 9,171 0.22 % 3,374,341 9,922 0.29 % 
 Borrowed funds: 
 Short-term FHLB advances (f) 353,532 18,058 5.11 % 83,356 2,386 2.86 % 30,289 475 1.57 % 
 Repurchase agreements and other 110,025 1,664 1.54 % 113,434 275 0.24 % 70,674 66 0.09 % 
 Total short-term borrowings 463,557 19,722 4.27 % 196,790 2,661 1.35 % 100,963 541 0.54 % 
 Long-term FHLB advances 54,457 1,779 3.27 % 53,102 984 1.85 % 94,050 1,413 1.50 % 
 
 Long-term notes payable 45,038 2,560 5.43 % 56,865 2,562 4.51 % — — — % 
 Other borrowings 42,031 3,821 8.97 % 13,718 734 5.27 % 9,364 360 3.79 % 
 Total long-term borrowings 141,526 8,160 5.68 % 123,685 4,280 3.46 % 103,414 1,773 1.71 % 
 Total borrowed funds 605,083 27,882 4.59 % 320,475 6,941 2.15 % 204,377 2,314 1.13 % 
 Total interest-bearing liabilities 
 5,622,444 100,029 1.78 % 4,557,523 16,112 0.35 % 3,578,718 12,236 0.34 % 
 Non-interest-bearing deposits 1,598,009 1,637,690 1,347,702 
 Other liabilities 137,527 101,510 89,541 
 Total liabilities 7,357,980 6,296,723 5,015,961 
 
 
 Stockholders’ equity 940,797 797,984 656,633 
 Total liabilities and stockholders’ equity $ 8,298,777 $ 7,094,707 $ 5,672,594 
 Interest rate spread (b) $ 341,077 4.13 % $ 255,086 3.87 % $ 173,902 3.30 % 
 Net interest margin (b) 4.56 % 3.97 % 3.40 % 

 (a) Balances are primarily composed of interest bearing demand deposits at the FRB and FHLB. 
 (b) Average balances are based on carrying value. 
 
 
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 (c) Interest income and yields are presented on a fully tax-equivalent basis, using a blended federal and state corporate income tax rate of 23.3% for 2023 and 2022, and 22.3% for 2021. 
 (d) Average balances include nonaccrual, impaired loans, and loans held for sale. Interest income includes interest earned and received on nonaccrual loans prior to the loans being placed on nonaccrual status. Loan fees included in interest income were immaterial for all periods presented. 
 (e) Loans held for sale are included in the average loan balances listed. Related interest income on loans originated for sale prior to the loan being sold is included in loan interest income. 
 (f) Interest related to interest rate swap transactions is included, as appropriate to the transaction, in interest expense on short-term FHLB advances and interest expense on brokered deposits for the periods presented in which FHLB advances and brokered deposits were being utilized. 
 Peoples’ average balances compared to prior periods have been impacted by recent acquisitions, which included: (i) the Limestone Merger as of the close of business on April 30, 2023, which added to average short-term investments, average total investment securities, and average loan, deposit and borrowed funds balances, (ii) the acquisition of Vantage on March 7, 2022, which added to average lease and borrowed funds balances, and (iii) the Premier Merger on September 17, 2021, which added to average short-term investments, average total investment securities, average total loans and average total deposits. Additionally, Peoples completed the NSL acquisition on April 1, 2021 which also added to average lease balances. Peoples’ cash balances have increased primarily due to an increase in interest-bearing deposits in other banks, mostly with the FRB. The increases in market interest rates have increased asset yields and increased borrowing costs. 
 
 
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 The following table provides an analysis of the changes in FTE net interest income: 
 
 (Dollars in thousands) Changes from 2022 to 2023 Changes from 2021 to 2022 
 Increase (decrease) in: Rate Volume Total (a) 
 Rate Volume Total (a) 
 
 INTEREST INCOME: 
 Short-term investments $ 2,900 $ (1,847) $ 1,053 $ 1,461 $ (64) $ 1,397 
 
 Investment securities (b): 
 Taxable 17,396 2,982 20,378 6,436 7,436 13,872 
 Nontaxable 466 (267) 199 186 932 1,118 
 Total investment income 17,862 2,715 20,577 6,622 8,368 14,990 
 Loans (b) : 
 
 Construction 9,323 7,778 17,101 1,421 4,181 5,602 
 Commercial real estate, other 30,089 24,985 55,074 11,216 11,881 23,097 
 Commercial and industrial 28,502 9,615 38,117 3,818 219 4,037 
 Premium finance 4,474 892 5,366 (550) 1,467 917 
 Leases (3,577) 11,788 8,211 (5,031) 26,179 21,148 
 Residential real estate 4,387 1,409 5,796 419 7,746 8,165 
 Home equity lines of credit 5,132 1,290 6,422 1,204 1,686 2,890 
 Consumer, indirect 6,071 4,163 10,234 166 1,383 1,549 
 Consumer, direct 818 1,139 1,957 (137) 1,405 1,268 
 Total loan income 85,219 63,059 148,278 12,526 56,147 68,673 
 Total interest income 105,981 63,927 169,908 20,609 64,451 85,060 
 INTEREST EXPENSE: 
 Deposits: 
 Savings accounts 1,049 (11) 1,038 187 57 244 
 Government deposit accounts 10,054 26 10,080 (442) 579 137 
 Interest-bearing demand accounts 1,026 (4) 1,022 145 135 280 
 Money market accounts 8,881 90 8,971 582 43 625 
 Retail certificates of deposit 19,297 2,923 22,220 (1,562) 588 (974) 
 Brokered deposit 3,338 16,307 19,645 362 (1,425) (1,063) 
 Total deposit cost 43,645 19,331 62,976 (728) (23) (751) 
 Borrowed funds: 
 Short-term borrowings 4,455 12,606 17,061 761 1,359 2,120 
 Long-term borrowings 2,806 1,074 3,880 373 2,134 2,507 
 Total borrowed funds cost 7,261 13,680 20,941 1,134 3,493 4,627 
 Total interest expense 50,906 33,011 83,917 406 3,470 3,876 
 Net interest income $ 55,075 $ 30,916 $ 85,991 $ 20,203 $ 60,981 $ 81,184 

 (a) The change in interest due to both rate and volume has been allocated to rate and volume changes in proportion to the relationship of the dollar amounts of the changes in each. 
 (b) Interest income and yields are presented on a fully tax-equivalent basis, using a blended federal and state corporate income tax rate of 23.3% for 2023 and 2022, and 22.3% for 2021. 
 
 
 Net interest income increased $85.9 million, or 34%, for 2023 when compared to 2022, and net interest margin increased 59 basis points to 4.56%. The increase in net interest income was driven by increases in market interest rates, the additional net interest income from the Limestone Merger, and improvement in investment yields. Accretion income, net of amortization expense, from acquisitions was $25.3 million for 2023, which added 34 basis points to net interest margin for 2023. Accretion income for 2023 was primarily the result of the Limestone Merger, the Premier Merger, and the acquisitions of Vantage and NSL. 
 During 2022, net interest income increased $80.9 million, or 47%, when compared to 2021. The increase in net interest income was driven by (i) the Premier Merger and the Vantage acquisition, (ii) core growth and (iii) increases in market interest rates. Net interest margin increased 57 basis points to 3.97% compared to 2021. Accretion income, net of amortization expense, 
 
 
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 from acquisitions was $11.6 million for 2022, which added 19 basis points to net interest margin for 2022. Accretion income for 2022 was a result of the Premier Merger and the acquisitions of Vantage and NSL. 
 Additional interest income in 2023 from prepayment fees and interest recovered on nonaccrual loans was $0.7 million, compared to $0.6 million in 2022 and $0.8 million in 2021. 
 Detailed information regarding changes in the Consolidated Balance Sheets can be found under appropriate captions of the “FINANCIAL CONDITION” section of this discussion. Additional information regarding Peoples’ interest rate risk and the potential impact of interest rate changes on Peoples’ results of operations and financial condition can be found later in this discussion under the caption “Interest Rate Sensitivity and Liquidity.” 
 
 Provision for Credit Losses 
 The following table details Peoples’ provision for credit losses recognized for the years ended December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 Provision for (Recovery of) other credit losses $ 14,236 $ (4,560) $ 339 
 Provision for checking account overdrafts 938 1,050 392 
 Provision for (Recovery of) credit losses $ 15,174 $ (3,510) $ 731 
 As a percent of average total loans 0.27 % (0.08) % 0.02 % 

 The provision for credit losses represents the amount needed to maintain the appropriate level of the allowance for credit losses based on management’s formal quarterly analysis of the loan portfolio and procedural methodology that estimates the amount of probable credit losses. The CECL methodology utilized by Peoples relies on economic forecasts, as well as other key assumptions including prepayments, probability of default and loss given default. 
 For 2023, the provision for credit losses compared to a recovery of credit losses for 2022 was driven by (i) the addition of the provision for the non-PCD loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers. 
 During 2022, the recovery of credit losses was driven by improvements in economic forecasts, coupled with loan pay-offs during certain periods of 2022. 
 During 2021, the provision for credit losses was impacted by improvements in economic factors and loss drivers, partially offset by the provision for credit losses required to establish the allowance for credit losses for acquired non-PCD loans and leases during 2021. 
 Additional information regarding changes in the allowance for credit losses and loan credit quality can be found later in this discussion under the caption “Allowance for Credit Losses.” 
 
 Net (Losses) Gains Included in Total Non-Interest Income 
 Net (losses) gains include gains and losses on investment securities, asset disposals and other transactions, which are recognized in total non-interest income. 
 The following table details the net (losses) gains for the years ended December 31 recognized by Peoples: 
 
 (Dollars in thousands) 2023 2022 2021 
 
 Net loss on investment securities $ (3,700) $ (61) $ (862) 
 
 Net (loss) gain on asset disposals and other transactions: 
 Net loss on other assets $ (1,143) $ (326) $ (460) 
 
 Net (loss) gain on OREO (1,623) (139) 56 
 Net (loss) gain on other transactions (71) (151) 897 
 Net (loss) gain on asset disposals and other transactions $ (2,837) $ (616) $ 493 

 For 2023, Peoples’ net loss on investment securities was primarily due to the $3.7 million pre-tax net loss on the sales of available-for-sale investment securities in the first and fourth quarters of 2023. During the first quarter of 2023, Peoples executed sales of $96.7 million of lower yielding available-for-sale investment securities for a pre-tax loss of $2.0 million. Proceeds from sales were used to pay down overnight borrowings. During the fourth quarter of 2023, Peoples executed the sales of an additional $36.5 million of lower yielding available-for-sale investment securities for a pre-tax loss of $1.7 million. Proceeds from the sales were used to purchase higher yielding agency investment securities. 
 The loss on the sales of these available-for-sale investment securities had a nominal impact on tangible book value as such loss was previously reflected in capital through accumulated other comprehensive loss. The realized losses recognized due to the first 
 
 
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 quarter transactions were earned back within the 2023 fiscal year, and the realized losses recognized due to the fourth quarter transactions are expected to be earned back within 14 months. 
 Peoples’ net loss on asset disposals and other transactions during 2023 was primarily driven by a $1.6 million write-down of an OREO property during the second quarter of 2023, and net losses on repossessed assets. 
 During 2022, Peoples’ net loss on asset disposals and other transactions was primarily due to net losses on other assets, which was mainly due to net losses on repossessed assets. 
 During 2021, net gains on other transactions were driven by the sale of $59.8 million of predominantly purchased credit deteriorated (“PCD”) loans acquired in the Premier Merger ($52.9 million of which were criticized or classified) primarily in the hospitality industry. Peoples recognized a gain of $0.9 million related to the discount recorded on those PCD loans when they were acquired from Premier. 
 
 Total Non-Interest Income Excluding Net Gains and Losses 
 Peoples generates total non-interest income excluding net gains and losses from four primary sources: electronic banking income (“e-banking”); trust and investment income; insurance income; and deposit account service charges. Peoples continues to focus on revenue growth from non-interest income sources in order to maintain a diversified revenue stream through greater reliance on total non-interest income excluding net gains and losses. Total non-interest income excluding net gains and losses accounted for 21.7% of Peoples’ total revenues (defined as net interest income plus total non-interest income excluding net gains and losses) in 2023, compared to 23.9% in 2022 and 28.6% in 2021. 
 The decline in Peoples’ total non-interest income excluding net gains and losses, as a percent of total revenue during 2023 compared to 2022, was largely due to the growth in net interest income of 34% outpacing the growth in non-interest income excluding gains and losses of 18% during 2023. The growth in net interest income was primarily driven by the Limestone Merger and rate increases. 
 E-banking income comprised the largest portion of Peoples’ total non-interest income excluding net gains and losses, for 2023. The following table shows Peoples’ e-banking income for the years ended December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 
 
 E-banking income $ 25,210 $ 21,094 $ 18,010 

 Peoples’ e-banking services include ATM and debit cards, direct deposit services, Internet and mobile banking, and remote deposit capture, and serve as alternative delivery channels to traditional sales offices for providing services to clients. Revenue is derived largely from ATM and debit cards, as other services are mainly provided at no charge to the customers. The amount of e-banking income is largely dependent on the timing and volume of customer activity. For 2023 compared to 2022, e-banking income grew 20%, primarily due to additional customers from the Limestone Merger as well as organic growth. For 2022 compared to 2021, e-banking income increased 17%, primarily from a full year’s impact of the acquired Premier accounts in addition to increased customer activity. In 2023, Peoples’ customers used their debit cards to complete $1.9 billion of transactions, up from $1.7 billion in 2022 and $1.4 billion in 2021. 
 Peoples’ fiduciary and brokerage revenues continue to be based primarily upon the value of assets under administration and management. The following table details Peoples’ trust and investment income for the years ended December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 Fiduciary $ 7,537 $ 7,508 $ 7,930 
 Brokerage 6,865 6,343 5,966 
 Employee benefit plan fees 2,758 2,540 2,560 
 Trust and investment income $ 17,160 $ 16,391 $ 16,456 

 For 2023, trust and investment income increased primarily due to increases in brokerage income, as Peoples added new accounts and the underlying market values of assets under administration and management grew, and employee benefit plan fees. For 2022, 
 
 
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 trust and investment was relatively flat compared to 2021, as the increase in brokerage income was offset by the decrease in fiduciary income. 
 The following table details Peoples’ assets under administration and management at December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 
 Trust $ 2,021,249 $ 1,764,639 $ 2,009,871 
 Brokerage 1,473,814 1,211,868 1,183,927 
 Total $ 3,495,063 $ 2,976,507 $ 3,193,798 
 Annual average $ 3,236,449 $ 2,965,985 $ 3,053,807 

 The increase in total assets under administration and management at December 31, 2023, compared to December 31, 2022, was primarily due to market value increases in 2023, new account activity and an acquisition of an independent financial advisor in January of 2023 which increased brokerage assets by $30 million. During 2022, Peoples’ assets under administration and management declined, driven by a decrease in market values throughout 2022 due to the economic downturn. 
 The following table details Peoples’ insurance income for the years ended December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 
 
 Property and casualty insurance commissions 
 $ 13,852 $ 11,986 $ 11,192 
 
 
 Performance-based commissions 1,634 1,424 2,044 
 Life and health insurance commissions 
 2,229 1,975 1,627 
 Other fees and charges 301 342 389 
 Insurance income $ 18,016 $ 15,727 $ 15,252 

 Insurance income for 2023 increased compared to 2022, primarily driven by the increases in (i) property and casualty insurance commissions, (ii) performance-based commissions and (iii) life and health insurance commissions, which were slightly offset by the decrease in other fees and charges. Peoples Insurance increased its clientele throughout 2023, which drove the increases in commissions. Insurance income for 2022 was relatively flat when compared to 2021, as the increases in property and casualty insurance commissions and life and health insurance commissions were substantially offset by the decrease in performance-based commissions. 
 Deposit account service charges are based on the costs associated with services provided by Peoples. The following table details deposit account service charges for the years ended December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 Overdraft and non-sufficient funds fees $ 9,016 $ 8,324 $ 5,528 
 Account maintenance fees 6,425 5,323 3,808 
 Other fees and charges 1,241 936 807 
 Deposit account service charges $ 16,682 $ 14,583 $ 10,143 

 The amount of deposit account service charges, particularly fees for overdrafts and non-sufficient funds, is largely dependent on the timing and volume of customer activity. Management periodically evaluates these fees to ensure they are reasonable based on operational costs and similar to fees charged in Peoples’ markets by competitors. Deposit account service charges in 2023 increased compared to 2022 due to the additional customers associated with the Limestone Merger, as well as organic growth. Deposit account service charges in 2022 increased compared to 2021 due to increased customer activity compared to the very low levels of early 2021, which had been impacted by fiscal stimulus payments and PPP loan proceeds provided to customers, along with changed customer spending habits due to the COVID-19 pandemic. Also contributing to the increases in 2022 when compared to 2021 were the additional customers associated with the Premier Merger, as 2022 had a full year of the benefit from the additional Premier accounts, whereas 2021 only had three and a half months of the benefit. Deposit account service charges were positively impacted during 2021 by the Premier Merger and associated additional accounts. 
 
 
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 The following table details the other items included within Peoples’ total non-interest income for the years ended December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 
 
 Lease income $ 5,552 $ 4,267 $ 1,293 
 Bank owned life insurance income 4,151 2,624 1,767 
 Mortgage banking income 1,078 1,397 3,439 
 Other non-interest income $ 6,101 $ 3,430 $ 2,894 
 

 Lease income is primarily comprised of (i) gains on the early termination of leases, net of any associated purchase accounting adjustments, (ii) month-to-month lease payments in excess of net investment in the lease, (iii) fees received for referrals, (iv) gains and losses recognized on the sales of residual assets, and (v) syndication income. The increase in lease income for 2023 when compared to 2022 was driven primarily by an increase in month-to-month lease income from Vantage. The 2022 increase in lease income when compared to 2021 was due to the Vantage acquisition. In 2021, Peoples acquired NSL which first introduced lease income as a component of non-interest income. 
 Bank owned life insurance income (“BOLI”) for 2023 increased when compared to 2022 due to a $0.4 million death benefit related to the cash surrender value of the underlying policy in the fourth quarter of 2023, and additional income from policies acquired in the Limestone Merger. BOLI income for 2022 increased when compared to 2021 due to a $248,000 death benefit related to the cash surrender value of the underlying policy in the third quarter of 2022 and $30.0 million of additional investments in policies. Peoples purchased no additional BOLI policies during 2023 or 2021. 
 Mortgage banking income is comprised mostly of net gains from the origination and sale of long-term, fixed-rate real estate loans in the secondary market, as well as servicing income for sold loans. As a result, the amount of income recognized by Peoples is largely dependent on customer demand and long-term interest rates for residential real estate loans offered in the secondary market. Mortgage banking income declined for 2023 when compared to 2022 and declined for 2022 when compared to 2021 due to lower volumes of new loan originations as a result of the rising market interest rate environment. In 2023, Peoples sold approximately $2.7 million of loans to the secondary market with servicing retained and sold approximately $30.7 million in loans with servicing released, compared to approximately $18.5 million and $31.1 million, respectively, in 2022. Peoples sold $57.6 million of loans to the secondary market with servicing retained and $37.4 million of loans with servicing released during 2021. The volume of sales has a direct impact on the amount of mortgage banking income. 
 For 2023, other non-interest income increased when compared to 2022 due primarily to increased operating lease income. Other non-interest income increased during 2022, primarily due to increased other operating income. Other non-interest income during 2021 was impacted by a decline in the fair value of equity securities during 2021. 
 
 Total Non-Interest Expense 
 Salaries and employee benefit costs remain Peoples’ largest non-interest expense, accounting for over half of total non-interest expense. The following table details Peoples’ salaries and employee benefit costs for the years ended December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 Base salaries and wages $ 95,604 $ 74,593 $ 60,622 
 Sales-based and incentive compensation 23,085 18,732 16,668 
 Employee benefit costs 16,249 13,654 11,091 
 Employee stock-based compensation 5,476 3,819 3,515 
 Deferred personnel costs (4,517) (4,975) (3,695) 
 Payroll taxes and other employment costs 8,134 6,867 6,411 
 Salaries and employee benefit costs $ 144,031 $ 112,690 $ 94,612 
 Full-time equivalent employees: 
 Actual at end of the period 1,478 1,267 1,188 
 Average during the period 1,411 1,245 1,003 

 Base salaries and wages increased for 2023 compared to 2022, driven by the additional salaries associated with the Limestone Merger, including $5.8 million in acquisition-related salary and employee benefit expenses related to the Limestone Merger in 2023. Base salaries and wages increased in 2022 compared to 2021, driven by the additional salaries associated with the acquisition of Vantage, and the Premier Merger. Base salaries and wages in 2021 were impacted by the Premier Merger and the NSL acquisition. During 2021, Peoples incurred $3.8 million of one-time expenses associated with acquisitions. Base salaries and wages were impacted by merit increases, as well as movement towards a $15 per hour minimum wage throughout Peoples’ organization. The $15 per hour minimum was phased in and fully implemented by January of 2023. 
 
 
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 The increase in sales-based and incentive compensation for 2023 compared to 2022 was primarily due to the overall company performance measures used in calculating incentive awards and $1.3 million in Vantage-related sales-based and incentive compensation. Sales-based and incentive compensation increased in 2022 compared to 2021, largely due to sales incentives earned by Vantage employees. Peoples’ sales-based and incentive compensation plans are designed to grow core earnings while managing risk, while not encouraging unnecessary and excessive risk-taking that could threaten the value of Peoples. The sales-based and incentive compensation plans are designed to reward employees for appropriate behaviors and include provisions addressing inappropriate practices with respect to Peoples and its customers, including clawbacks for executives. 
 The increase in employee benefit costs for 2023 compared to 2022 was due to increased medical and 401(k) costs with the addition of the Limestone employees. Employee benefit costs in 2022 increased compared to 2021 due to higher medical and 401(k) costs with the addition of the Premier and Vantage employees. 
 Employee stock-based compensation is generally recognized over the vesting period, which generally ranges from immediate vesting to vesting at the end of three years, and an adjustment is made at the vesting date to reverse expense for non-vested awards. The majority of Peoples’ stock-based compensation is attributable to annual equity-based incentive awards to employees, which are awarded in the first quarter and based upon Peoples achieving certain performance goals during the prior year. During the years presented in the table above, Peoples granted restricted common shares to officers and key employees with performance-based vesting periods and time-based vesting periods, generally with a three-year cliff vesting. Employee stock-based compensation for 2023 increased when compared to 2022 due to additional employees primarily as a result of the Limestone Merger, as well as a full year with Vantage employees. Employee stock-based compensation increased for 2022 compared to 2021 due to employees added in the acquisition of Vantage and the Premier Merger. 
 Deferred personnel costs represent the portion of current period salaries and employee benefit costs considered to be direct loan origination costs. These costs are capitalized and recognized over the life of the loan as a yield adjustment in interest income. As a result, the amount of deferred personnel costs for each period corresponds directly with the volume of loan originations, coupled with the average deferred costs per loan that are updated annually at the beginning of each year. Deferred personnel costs in 2023 decreased compared to 2022, primarily due to a decrease in business loan origination volume. Higher deferred personnel costs in 2022 compared to 2021 was primarily due to an increase in loan origination volume. Additional information regarding Peoples’ loan activity can be found later in this discussion under the caption “Loans” within “FINANCIAL CONDITION.” 
 For 2023, payroll taxes and other employment costs increased compared to 2022, primarily due to the employees added from the Limestone Merger. Payroll taxes and other employee costs increased during 2022 compared to 2021, primarily due to recent mergers and acquisitions. 
 Peoples’ net occupancy and equipment expense for the years ended December 31 was comprised of the following: 
 
 (Dollars in thousands) 2023 2022 2021 
 Depreciation expense $ 7,724 $ 7,015 $ 6,143 
 Repairs and maintenance costs 6,037 5,323 3,972 
 Net rent expense 2,780 2,974 1,723 
 Property taxes, utilities and other costs 4,827 4,204 3,080 
 Net occupancy and equipment expense $ 21,368 $ 19,516 $ 14,918 

 For 2023, net occupancy and equipment expense increased when compared to 2022 due to the additional locations and equipment from the Limestone Merger. Net occupancy and equipment expense grew during 2022 when compared to 2021 due to the additional locations and equipment from recent mergers and acquisitions. 
 The following table details the other items included within Peoples’ total non-interest expense for the years ended December 31: 
 
 
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 (Dollars in thousands) 2023 2022 2021 
 Data processing and software expense $ 21,607 $ 14,241 $ 10,542 
 Professional fees 17,041 12,094 15,783 
 Amortization of other intangible assets 11,222 7,763 4,775 
 E-banking expense 7,150 9,231 8,885 
 Marketing expense 5,017 3,728 3,658 
 FDIC insurance expense 4,785 3,702 1,976 
 Franchise tax expense 3,540 3,487 3,357 
 Other loan expenses 2,859 2,735 2,001 
 Communication expense 2,834 2,484 1,657 
 Other non-interest expense $ 25,033 $ 15,476 $ 21,573 
 

 Data processing and software expense includes software support, maintenance and depreciation expense. Data processing and software expense for 2023 increased relative to 2022, driven by (i) software upgrades, (ii) implementation of new systems, (iii) growth from the Limestone Merger, and (iv) $1.9 million in acquisition-related expenses related to the Limestone Merger. During 2022, data processing and software expense grew when compared to 2021 due to software upgrades and implementation of new systems, coupled with the increased size of Peoples’ organization. 
 Professional fees increased for 2023 when compared to 2022, primarily driven by a $3.7 million increase in acquisition-related expenses, due to increased expenses related to the Limestone Merger in 2023. Professional fees during 2022 decreased when compared 2021, primarily driven by acquisition-related expenses related to the Premier Merger which had been realized in 2021. 
 Amortization of other intangible assets increased for 2023 when compared to 2022 due to the increased intangible assets recognized as a result of the Limestone Merger. During 2022, amortization of other intangible assets increased when compared to 2021 due to the increased intangible assets recognized as a result of the recent mergers and acquisitions. 
 Peoples’ e-banking expense is comprised of costs associated with debit and ATM cards, as well as Internet and mobile banking costs. E-banking expense decreased for 2023 when compared to 2022 due to decreased costs for Peoples’ online banking platform. E-banking expense increased for 2022 when compared to 2021 due to both core growth, and growth through mergers and acquisitions. 
 Marketing expense, which includes advertising, donations, marketing campaigns, and other public relations costs, for 2023 increased when compared to 2022, primarily driven by increased marketing related to the Limestone Merger, an increase in donations, and a full year of expenses from Vantage. Marketing expense was relatively flat for 2022, compared to 2021. 
 FDIC insurance premiums for 2023 increased when compared to 2022 due to organic and acquisitive growth, in addition to an increase in rates assessed by the FDIC. FDIC insurance expense increased during 2022 compared to 2021 due to organic and acquisitive growth. The FDIC quarterly assessment rate is applied to average total assets less average tangible equity, and is based on the leverage ratio, net income before taxes, nonperforming loans as a percent of total assets, OREO, loan mix and asset growth. Additional information regarding Peoples’ FDIC insurance assessments may be found in “ITEM 1 BUSINESS” of this Form 10-K in the section captioned “Supervision and Regulation.” 
 Peoples is subject to state franchise taxes, which are based largely on Peoples’ equity at year-end, in the states where Peoples has a physical presence. Franchise tax expense for 2023 when compared to 2022 was relatively flat. Franchise tax expense increased during 2022 versus 2021, driven by recent growth through acquisitions and organic means. Franchise tax expense also includes the Ohio Financial Institution Tax (“FIT”), which is a business privilege tax that is imposed on financial institutions organized for profit and doing business in Ohio. The Ohio FIT is based on the total equity capital in proportion to the taxpayer’s gross receipts in Ohio. 
 Other loan expenses during 2023 increased when compared to 2022 primarily due to Limestone-related expenses and increases in business loan expenses and credit bureau expenses. During 2022, other loan expenses increased primarily due to higher indirect lending volume and increased collection expense driven by the Premier Merger. 
 Communications expense increased during 2023 when compared to 2022 and increased during 2022 when compared to 2021, in each case due to upgraded networking to certain branches (including new branches acquired in acquisitions and mergers) and increased costs compared to the prior period among certain vendors that provide communication services. 
 Other non-interest expense for 2023 increased when compared to 2022 primarily due to $2.8 million in additional acquisition-related expenses related to the Limestone Merger, a $2.4 million settlement charge in relation to the termination of the pension plan and $1.7 million in operating lease expense. Other non-interest expense decreased for 2022 when compared to 2021, which was primarily due to less acquisition-related expenses. 
 
 Income Tax Expense 
 
 
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 A key driver for the amount of income tax expense or benefit recognized by Peoples each year is the amount of pre-tax income. In addition to the expense recognized, Peoples receives tax benefits from tax-exempt investments and loans, BOLI income, common share awards that settled or vested during the year, and investments in tax credit funds, which reduce Peoples’ effective tax rate. A reconciliation of Peoples’ recorded income tax expense/benefit and effective tax rate to the statutory tax rate can be found in “Note 13 Income Taxes.” 
 For the full year of 2023, income tax expense totaled $31.8 million, compared to $27.3 million in 2022, and $9.4 million in 2021, and the effective tax rate for 2023 was 21.9%, compared to 21.3% for 2022, and 16.5% for 2021. The 2023 increase in income tax expense when compared to 2022 was driven by higher pre-tax income. Income tax expense increased during 2022 when compared to 2021, which was driven by higher pre-tax income and a higher effective tax rate primarily due to apportionment in additional states due to recent acquisitions. Income tax expense for 2021 was impacted by an income tax benefit related to an adjustment from the prior period of $1.1 million. 
 Peoples also recorded a tax benefit of $128,000 in 2023, a tax benefit of $5,000 in 2022, and a tax expense of $74,000 in 2021 related to common share awards that settled or vested during the year, with the substantial majority recorded in the first quarter of each year. 
 
 Pre-Provision Net Revenue (non-US GAAP) 
 Pre-provision net revenue (“PPNR”) has become a key financial measure used by state and federal bank regulatory agencies when assessing the capital adequacy of financial institutions. PPNR is defined as net interest income plus total non-interest income, excluding all gains and losses, minus total non-interest expense. PPNR excludes income tax expense. As a result, PPNR represents the earnings capacity that can be either retained in order to build capital or used to absorb unexpected losses and preserve existing capital. This ratio represents a non-US GAAP financial measure since it excludes the provision for credit losses and all gains and losses included in earnings. 
 The following table provides a reconciliation of this non-US GAAP financial measure to the amounts of income before income taxes reported in Peoples’ Consolidated Financial Statements for the periods presented: 
 
 (Dollars in thousands) 2023 2022 2021 
 
 Pre-Provision Net Revenue: 
 Income before income taxes $ 145,126 $ 128,641 $ 56,970 
 Add: provision for credit losses 15,174 — 731 
 
 Add: net loss on OREO 1,623 138 — 
 Add: net loss on investment securities 3,700 61 862 
 Add: net loss on other assets 1,143 326 252 
 Add: net loss on other transactions 71 151 — 
 Less: recovery of credit losses — 3,510 — 
 
 Less: net gain on OREO — — 56 
 
 
 Less: net gain on other transactions — — 897 
 Pre-provision net revenue $ 166,837 $ 125,807 $ 57,862 
 
 Total average assets $ 8,298,777 $ 7,094,707 $ 5,672,594 
 
 Pre-provision net revenue to total average assets 2.01 % 1.77 % 1.02 % 
 Weighted-average common shares outstanding - diluted 32,760,808 27,999,602 21,959,883 
 Pre-provision net revenue per common share - diluted $ 5.06 $ 4.48 $ 2.63 

 PPNR grew in 2023 when compared to 2022 mostly due to (i) the impact of the Limestone Merger in improving net interest income, (ii) increases in market interest rates, and (iii) higher non-interest income. During 2022, PPNR grew when compared to 2021 mostly due to (i) the impact of the Premier Merger and the Vantage and NSL acquisitions in improving net interest income, (ii) the increases in market interest rates, (iii) higher non-interest income, and (iv) lower acquisition-related expenses. 
 Core Non-Interest Expense (non-US GAAP) 
 Core non-interest expense is a financial measure used to evaluate Peoples’ recurring expense stream. This measure is a non-US GAAP financial measure since it excludes the impact of all COVID-19-related expenses, severance expenses, pension settlement charges, acquisition-related expenses, a Peoples Bank Foundation, Inc. contribution, and contract negotiation non-recurring expenses. 
 
 
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 The following table provides a reconciliation of this non-US GAAP financial measure to the amounts of total non-interest expense reported in Peoples’ Consolidated Financial Statements for the years presented: 
 
 (Dollars in thousands) 2023 2022 2021 
 
 Core non-interest expense: 
 Total non-interest expense $ 266,487 $ 207,147 $ 183,737 
 Less: COVID-19-related expenses — 134 1,248 
 Less: severance expenses — — 79 
 Less: pension settlement charges 2,424 185 143 
 Less: acquisition-related expenses 16,970 3,016 21,423 
 Less: Peoples Bank Foundation, Inc. contribution — — 500 
 Less: contract negotiation expenses — — 1,248 
 Add: COVID-19 Employee Retention Credit 548 — — 
 Core non-interest expense $ 247,641 $ 203,812 $ 159,096 

 Efficiency Ratio (non-US GAAP) 
 The efficiency ratio is a key financial measure used to monitor performance. The efficiency ratio is calculated as total non-interest expense (less amortization of other intangible assets) as a percentage of FTE net interest income plus total non-interest income excluding net gains and losses. This financial measure is non-US GAAP since it excludes amortization of other intangible assets and all gains and/or losses included in earnings, and uses FTE net interest income. 
 The following table provides a reconciliation of this non-US GAAP financial measure to the amounts of total non-interest income and total non-interest expense reported in Peoples’ Consolidated Financial Statements for the years presented: 
 
 
 
 (Dollars in thousands) 2023 2022 2021 
 
 Efficiency ratio: 
 Total non-interest expense $ 266,487 $ 207,147 $ 183,737 
 Less: amortization of other intangible assets 11,222 7,763 4,775 
 Adjusted total non-interest expense 255,265 199,384 178,962 
 
 Total non-interest income 87,413 78,836 68,885 
 Less: net loss on investment securities (3,700) (61) (862) 
 Less: net (loss) gain on asset disposals and other transactions (2,837) (616) 493 
 Total non-interest income excluding net gains and losses 93,950 79,513 69,254 
 
 Net interest income 339,374 253,442 172,553 
 Add: fully-tax-equivalent adjustment (a) 1,703 1,644 1,349 
 Net interest income on a fully-tax equivalent basis 341,077 255,086 173,902 
 
 Adjusted revenue $ 435,027 $ 334,599 $ 243,156 
 
 Efficiency ratio 58.68 % 59.59 % 73.60 % 
 
 Efficiency ratio adjusted for non-core items: 
 Core non-interest expense $ 247,641 $ 203,812 $ 159,096 
 Less: amortization of other intangible assets 11,222 7,763 4,775 
 Adjusted core non-interest expense 236,419 196,049 154,321 
 
 Core non-interest income excluding net gains and losses 93,950 79,513 69,254 
 Net interest income on a fully-tax-equivalent basis 341,077 255,086 173,902 
 Adjusted core revenue $ 435,027 $ 334,599 $ 243,156 
 
 Efficiency ratio adjusted for non-core items 54.35 % 58.59 % 63.47 % 

 (a) Based on 21% statutory federal corporate income tax rate. 
 
 
 
 
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 The efficiency ratio and the efficiency ratio adjusted for non-core items for 2023 improved when compared to 2022, due to higher net interest income driven by the Limestone Merger, increases in market interest rates, and higher non-interest income. The efficiency ratio and the efficiency ratio adjusted for non-core items for 2022 improved when compared to 2021, due to higher net interest income driven by increases in market interest rates. 
 Managing expenses has been a major focus over recent years; however, during this time Peoples has continued to make meaningful investments in its infrastructure and systems. Peoples was positively impacted in 2023 and 2022 by the rising market interest rate environment and the related increase to net interest income; whereas, 2021 net interest income was negatively impacted by a lower market interest rate environment. 
 Return on Average Assets Adjusted for Non-Core Items (non-US GAAP) 
 In addition to return on average assets, management uses return on average assets adjusted for non-core items to monitor performance. The return on average assets ratio adjusted for non-core items represents a non-US GAAP financial measure since it excludes the after-tax impact of all gains and losses, acquisition-related expenses, pension settlement charges, severance expenses, COVID-19-related expenses, Peoples Bank Foundation, Inc. contributions and contract negotiation non-recurring expenses included in net income. 
 The following table provides a reconciliation of this non-US GAAP financial measure to the amounts of net income reported in Peoples’ Consolidated Financial Statements for the years presented: 
 
 (Dollars in thousands) 2023 2022 2021 
 
 Net income adjusted for non-core items: 
 Net income $ 113,363 $ 101,292 $ 47,555 
 
 
 Add: net loss on investment securities 
 3,700 61 862 
 Less: tax effect of net loss on investment securities (a) 
 777 13 181 
 
 
 Add: net loss on asset disposals and other transactions 
 2,837 616 — 
 Less: tax effect of net loss on asset disposals and other transactions (a) 
 596 129 — 
 
 
 Less: net gain on asset disposals and other transactions (a) — — 493 
 Add: tax effect of net gain on asset disposals and other transactions (a) — — 104 
 Add: acquisition-related expenses 
 16,970 3,016 21,423 
 Less: tax effect of acquisition-related expenses (a) 
 3,564 633 4,499 
 Add: severance expenses — — 79 
 Less: tax effect of severance expenses (a) — — 17 
 Add: pension settlement charges 
 2,424 185 143 
 Less: tax effect of pension settlement charges (a) 
 509 39 30 
 
 
 
 
 
 Add: COVID-19-related expenses — 134 1,248 
 Less: tax effect of COVID-19-related expenses (a) — 28 262 
 Add: Peoples Bank Foundation, Inc. contribution — — 500 
 Less: tax effect of Peoples Bank Foundation, Inc. contribution — — 105 
 Add: contract negotiation expenses — — 1,248 
 Less: tax effect of contract negotiation expenses — — 262 
 Net income adjusted for non-core items (after tax) $ 133,848 $ 104,462 $ 67,313 
 Return on average assets: 
 Net income $ 113,363 $ 101,292 $ 47,555 
 Total average assets 8,298,777 7,094,707 5,672,594 
 Return on average assets 1.37 % 1.43 % 0.84 % 
 Return on average assets adjusted for non-core items: 
 Net income adjusted for non-core items 
 $ 133,848 $ 104,462 $ 67,313 
 Total average assets 
 8,298,777 7,094,707 5,672,594 
 Return on average assets adjusted for non-core items 
 1.61 % 1.47 % 1.19 % 

 (a) Based on a 21% statutory federal corporate income tax rate. 
 The decrease in the return on average assets for 2023 compared to 2022 was attributable to a greater impact from non-core items, primarily due to (i) an increase in net acquisition-related expenses as a result of the Limestone Merger, (ii) higher net losses on 
 
 
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 investment securities and asset disposals and other transactions, and (iii) pension settlement charges of $2.4 million in relation to the termination of the pension plan. Return on average assets adjusted for non-core items for 2023 increased when compared to 2022 due to higher net interest income and non-interest income, which were driven by the Limestone Merger, and increases in market interest rates. The increase in the return on average assets for 2022 compared to 2021 was attributable to higher net interest income and non-interest income, which were driven by the recent acquisitions and mergers and increases in market interest rates. 
 Return on Average Tangible Equity (non-US GAAP) 
 The return on average tangible equity ratio is a key financial measure used to monitor performance. The return on tangible equity is calculated as net income (less after-tax impact of amortization of other intangible assets) divided by tangible equity. This measure is non-US GAAP since it excludes amortization of other intangible assets from earnings and the impact of goodwill and other intangible assets acquired through acquisitions on total stockholders’ equity. 
 The following table provides a reconciliation of this non-US GAAP financial measure to the amounts of total average stockholders’ equity and the return on average stockholders’ equity ratios reported in Peoples’ Consolidated Financial Statements for the years presented: 
 
 
 
 (Dollars in thousands) 2023 2022 2021 
 Net income excluding amortization of other intangible assets: 
 Net income $ 113,363 $ 101,292 $ 47,555 
 Add: amortization of other intangible assets 11,222 7,763 4,775 
 Less: tax effect of amortization of other intangible assets (a) 2,357 1,630 1,003 
 Net income excluding amortization of other intangible assets 122,228 107,425 51,327 
 Average tangible equity: 
 Total average stockholders’ equity $ 940,797 $ 797,984 $ 656,633 
 Less: average goodwill and other intangible assets 384,172 322,639 234,667 
 Average tangible equity $ 556,625 $ 475,345 $ 421,966 
 Return on average stockholders’ equity ratio: 
 Net income $ 113,363 $ 101,292 $ 47,555 
 Average stockholders’ equity $ 940,797 $ 797,984 $ 656,633 
 Return on average stockholders’ equity 12.05 % 12.69 % 7.24 % 
 Return on average tangible equity ratio: 
 Net income excluding amortization of other intangible assets $ 122,228 $ 107,425 $ 51,327 
 Average tangible equity $ 556,625 $ 475,345 $ 421,966 
 Return on average tangible equity 21.96 % 22.60 % 12.16 % 

 (a) Based on a 21% statutory federal corporate income tax rate. 
 The return on total average stockholders’ equity and average tangible equity ratios were lower in 2023 relative to 2022, due to (i) the issuance of 6.8 million common shares as consideration in the Limestone Merger, (ii) an increase in acquisition-related expenses, and (iii) an increase in the provision for credit losses due to the initial provision for the non-PCD loans acquired from Limestone, partially offset by an increase in total net interest income driven by the recent increases in market interest rates and additional net interest income from Limestone following the Limestone Merger. At the same time, average tangible equity for 2023 was negatively impacted by the Limestone Merger, for which Peoples recorded additional goodwill and other intangible assets. Return on total average stockholders’ equity and average tangible equity ratios were higher in 2022 relative to 2021, due to higher total net interest income driven by the recent increases in market interest rates and loans and leases added in the Premier Merger and the acquisitions of Vantage and NSL, coupled with higher non-interest income. At the same time, average tangible equity for 2022 was negatively impacted by the Vantage acquisition, for which People did not issue any equity, and recorded additional goodwill and other intangible assets. 
 
 FINANCIAL CONDITION 
 
 Cash and Cash Equivalents 
 Peoples considers cash and cash equivalents to consist of federal funds sold, cash and balances due from banks, interest-bearing balances in other institutions and other short-term investments that are readily liquid. The amount of cash and cash equivalents fluctuates on a daily basis due to customer activity and Peoples’ liquidity needs. At December 31, 2023, excess cash reserves at the FRB were $309.8 million, compared to $33.1 million at December 31, 2022. The amount of excess cash reserves maintained is dependent upon Peoples’ daily liquidity position, which is driven primarily by changes in deposit and loan balances. 
 
 
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 In 2023, Peoples’ total cash and cash equivalents increased $272.7 million, due to cash provided by financing activities of $262.0 million and cash provided by operating activities of $143.6 million, partially offset by cash used in investing activities of $132.9 million. Peoples’ investing activities reflected a net increase of $356.1 million in loans held for investment and $282.8 million in purchases of available-for-sale investment securities and held-to-maturity investment securities, which were more than offset by $434.1 million in net proceeds from sales, principal payments, calls and prepayments on available-for-sale and held-to-maturity investment securities. Financing activities included a $201.4 million net increase in deposits, an increase of $41.0 million in short-term borrowings, a net increase of $74.9 million in long-term borrowings, as well as $51.8 million of cash dividends paid. 
 In 2022, Peoples’ total cash and cash equivalents decreased $261.7 million, due to cash used in investing activities of $414.2 million, partially offset by cash provided by operating activities and financing activities of $119.8 million and $32.7 million, respectively. Peoples’ investing activities reflected a net decrease of $58.1 million in loans held for investment and $452.9 million in purchases of available-for-sale investment securities and held-to-maturity investment securities, which were primarily offset by $237.8 million in net proceeds from sales, principal payments, calls and prepayments on available-for-sale and held-to-maturity investment securities. Financing activities included a $145.1 million net decrease in deposits and an increase of $328.6 million in short-term borrowings, as well as $42.4 million of cash dividends paid. 
 Further information regarding the management of Peoples’ liquidity position can be found later in this discussion under “Interest Rate Sensitivity and Liquidity.” 
 
 Investment Securities 
 The following table provides information regarding Peoples’ investment portfolio at December 31: 
 
 (Dollars in thousands) Weighted average yield 2023 2022 2021 
 Available-for-sale securities, at fair value: 
 Obligations of: 
 U.S. Treasury and government agencies 3.30 % $ 30,296 $ 152,422 $ 35,604 
 U.S. government sponsored agencies 2.97 % 118,607 88,115 81,739 
 States and political subdivisions 2.74 % 213,296 225,882 259,319 
 Residential mortgage-backed securities 2.44 % 628,924 604,653 828,517 
 Commercial mortgage-backed securities 1.86 % 51,234 50,049 63,519 
 Bank-issued trust preferred securities 3.70 % 5,965 10,278 6,795 
 
 
 
 Total fair value $ 1,048,322 $ 1,131,399 $ 1,275,493 
 Total amortized cost $ 1,184,288 $ 1,300,719 $ 1,283,146 
 Net unrealized loss $ (135,966) $ (169,320) $ (7,653) 
 
 Held-to-maturity securities, at amortized cost: 
 Obligations of: 
 U.S. government sponsored agencies 5.29 % $ 188,475 $ 132,366 $ 36,431 
 States and political subdivisions (a) 2.94 % 144,258 145,022 151,402 
 Residential mortgage-backed securities 3.44 % 248,559 176,215 110,708 
 Commercial mortgage-backed securities 2.22 % 102,365 106,609 75,588 
 Total amortized cost $ 683,657 $ 560,212 $ 374,129 
 
 Other investment securities $ 63,421 $ 51,609 $ 33,987 
 
 Total investment securities: 
 Amortized cost $ 1,931,366 $ 1,912,540 $ 1,691,262 
 Carrying value $ 1,795,400 $ 1,743,220 $ 1,683,609 

 (a) A mortized cost is presented net of the allowance for credit losses of $238 at December 31, 2023, $241 at December 31, 2022 and $286 at December 31, 2021. 
 At December 31, 2023, Peoples’ investment securities represented approximately 19.6% of total assets, compared to 24.2% at December 31, 2022. For 2023, total investment securities increased compared to the prior year, largely due to purchases of held-to-maturity securities, partially offset by available-for-sale securities sold, both of which were part of portfolio restructurings throughout 2023. During the first quarter of 2023, Peoples executed the sales of $96.7 million of its lower yielding available-for-sale investment securities for an after-tax loss of $1.6 million. Proceeds from the sales were used to pay down overnight borrowings. During the fourth quarter of 2023, Peoples executed the sales of an additional $36.5 million of its lower yielding available-for-sale investment securities for an after-tax loss of $1.3 million. Proceeds from the sales were used to purchase higher yielding agency investment securities. During 2022, total investment securities increased compared to the prior year, largely due to investments made in held-to-maturity securities, in an effort to deploy cash, improve investment yields and reduce risk, partially offset by the reduction in market value of 
 
 
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 available-for-sale securities driven by the increases in market interest rates during 2022. During 2021, Peoples acquired, in the Premier Merger, investment securities totaling $552.0 million and subsequently sold $395.2 million of available-for-sale securities. During 2021, Peoples acquired from Premier, and made investments into, tax-exempt securities, which are included in obligations of state and political subdivisions. The investments into these securities were made in an effort to reduce exposure to amortizing investment securities, while also maintaining an appropriate level of risk-adjusted yield. 
 Peoples designates certain securities as “held-to-maturity” at the time of their purchase if management determines Peoples would have the intent and ability to hold the purchased securities until maturity. The unrealized gain or loss related to held-to-maturity investment securities does not directly impact total stockholders’ equity, in contrast to the impact from the available-for-sale investment securities portfolio. 
 Additional information regarding Peoples’ investment portfolio can be found in “Note 3 Investment Securities.” 
 
 Loans 
 The following table provides information regarding outstanding loan balances at or for the year ended December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 Originated loans: 
 Construction $ 279,335 $ 212,869 $ 137,437 
 Commercial real estate, other 1,209,204 919,531 861,610 
 Commercial real estate 1,488,539 1,132,400 999,047 
 Commercial and industrial 938,659 835,178 779,064 
 Premium finance 203,177 159,197 136,121 
 Leases 357,217 226,438 69,169 
 Residential real estate 418,570 384,262 350,595 
 Home equity lines of credit 148,155 132,093 104,176 
 Consumer, indirect 666,472 629,426 530,532 
 Consumer, direct 112,292 98,706 81,330 
 Consumer 778,764 728,132 611,862 
 Deposit account overdrafts 986 722 756 
 Total originated loans $ 4,334,067 $ 3,598,422 $ 3,050,790 
 Acquired loans: 
 Construction $ 84,684 $ 34,072 $ 72,795 
 Commercial real estate, other 987,753 503,987 688,471 
 Commercial real estate 1,072,437 538,059 761,266 
 Commercial and industrial 246,327 57,456 112,328 
 Premium finance — — 15 
 Leases 56,843 118,693 53,339 
 Residential real estate 372,525 339,098 421,123 
 Home equity lines of credit 60,520 45,765 59,417 
 
 Consumer, direct 16,477 9,657 23,322 
 
 Total acquired loans (a) $ 1,825,129 $ 1,108,728 $ 1,430,810 
 Total loans $ 6,159,196 $ 4,707,150 $ 4,481,600 
 Average total loans 5,590,453 4,574,237 3,709,159 
 Average allowance for credit losses (57,391) (55,233) (56,038) 
 Average loans, net of average allowance for credit losses $ 5,533,062 $ 4,519,004 $ 3,653,121 

 
 
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 (Dollars in thousands) 2023 2022 2021 
 Percent of loans to total loans: 
 Construction 5.9 % 5.2 % 4.7 % 
 Commercial real estate, other 35.7 % 30.2 % 34.7 % 
 Commercial real estate 41.6 % 35.4 % 39.4 % 
 Commercial and industrial 19.2 % 19.0 % 19.9 % 
 Premium finance 3.3 % 3.4 % 3.0 % 
 Leases 6.7 % 7.3 % 2.7 % 
 Residential real estate 12.9 % 15.4 % 17.2 % 
 Home equity lines of credit 3.4 % 3.8 % 3.7 % 
 Consumer, indirect 10.8 % 13.4 % 11.8 % 
 Consumer, direct 2.1 % 2.3 % 2.3 % 
 Consumer 12.9 % 15.7 % 14.1 % 
 
 Deposit account overdrafts (b) NM NM NM 
 Total percentage 100.0 % 100.0 % 100.0 % 
 Residential real estate loans being serviced for others $ 356,784 $ 392,364 $ 430,597 

 (a) Includes all loans acquired, and related loan discount recorded as part of acquisition accounting, in 2012 and thereafter. Loans that were acquired and subsequently re-underwritten are reported as originated upon execution of such credit actions (for example, renewals, and increase in lines of credit). 
 (b) NM=not meaningful. 
 As of December 31, 2023, total loans increased $1.5 billion, compared to at December 31, 2022, primarily due to the Limestone Merger. Excluding the loans acquired in the Limestone Merger, the period-end loan and lease balance increased $472.2 million, or 10%, driven by increases of $203.6 million in other commercial real estate loans, $78.2 million in commercial and industrial loans, $68.9 million in leases, $44.0 million in premium finance loans, $37.9 million in construction loans, and $37.0 million in indirect consumer loans, respectively. 
 As of December 31, 2022, total loans increased 5%, compared to at December 31, 2021. The increase in 2022 total loan and lease balances was primarily driven by $89.4 million in leases acquired from Vantage remaining at December 31, 2022 and increases of (i) $98.9 million in indirect consumer loans, (ii) $36.7 million in construction loans and (iii) $23.1 million in premium finance loans, partially offset by reductions of $126.6 million in other commercial real estate loans and $48.4 million in residential real estate loans. 
 
 
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 The following table details the maturities of Peoples’ loan portfolio at December 31, 2023: 
 
 (Dollars in thousands) Due in One Year or Less Due in One to Five Years Due in Five to Fifteen Years Due After Fifteen Years Total % of Total 
 Construction: 
 Fixed $ 5,488 $ 28,100 $ 10,154 $ 3,677 $ 47,419 13.0 % 
 Variable 129,176 166,590 18,311 2,523 316,600 87.0 % 
 Total 134,664 194,690 28,465 6,200 364,019 100.0 % 
 Commercial real estate, other: 
 Fixed 68,743 474,639 400,452 48,870 992,704 45.2 % 
 Variable 127,363 406,304 462,898 207,688 1,204,253 54.8 % 
 Total 196,106 880,943 863,350 256,558 2,196,957 100.0 % 
 Commercial and industrial: 
 Fixed 188,236 167,872 117,718 391 474,217 40.0 % 
 Variable 223,166 165,969 310,129 11,505 710,769 60.0 % 
 Total 411,402 333,841 427,847 11,896 1,184,986 100.0 % 
 Premium finance: 
 Fixed 203,177 — — — 203,177 100.0 % 
 
 
 Leases: 
 Fixed 89,117 309,810 15,133 — 414,060 100.0 % 
 Residential real estate: 
 Fixed 51,407 19,200 153,777 311,203 535,587 67.7 % 
 Variable 8,182 7,288 72,733 167,305 255,508 32.3 % 
 Total 59,589 26,488 226,510 478,508 791,095 100.0 % 
 Home equity lines of credit: 
 Fixed 37 231 1,397 207 1,872 0.9 % 
 Variable 7,159 31,239 159,186 9,219 206,803 99.1 % 
 Total 7,196 31,470 160,583 9,426 208,675 100.0 % 
 Consumer, indirect: 
 Fixed 4,416 333,965 328,091 — 666,472 100.0 % 
 Consumer, direct: 
 Fixed 20,566 66,082 35,652 72 122,372 95.0 % 
 Variable 1,477 2,941 1,876 103 6,397 5.0 % 
 Total 22,043 69,023 37,528 175 128,769 100.0 % 

 Loan Concentration 
 Peoples categorizes its commercial loans according to standard industry classifications and monitors for concentrations in a single industry or multiple industries that could be impacted by changes in economic conditions in a similar manner. Peoples’ commercial lending activities continue to be spread over a diverse range of businesses from all sectors of the economy, with no single industry comprising over 10% of Peoples’ total loan portfolio. 
 Loans secured by commercial real estate, including commercial construction loans, continue to comprise the largest portion of Peoples’ loan portfolio. 
 The following table provides information regarding the largest concentrations of commercial real estate loans within the loan portfolio at December 31, 2023: 
 
 
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 (Dollars in thousands) Outstanding Balance Available Loan Commitments Total Exposure % of Total Exposure 
 Construction: 
 Apartment complexes $ 202,217 $ 228,038 $ 430,255 61.7 % 
 
 Land development 40,508 17,150 57,658 8.3 % 
 Land only 31,538 2,808 34,346 4.9 % 
 
 Retail 23,643 5,012 28,655 4.1 % 
 
 
 Lodging and lodging related 3,677 16,456 20,133 2.9 % 
 
 
 
 
 Industrial 10,108 7,002 17,110 2.5 % 
 Student housing 7,022 7,978 15,000 2.2 % 
 Other (a) 45,306 48,998 94,304 13.4 % 
 Construction $ 364,019 $ 333,442 $ 697,461 100.0 % 
 Commercial real estate, other: 
 Apartment complexes 307,060 4,565 311,625 13.7 % 
 Retail facilities: 
 Owner occupied 59,082 1,525 60,607 2.7 % 
 Non-owner occupied 220,188 897 221,085 9.7 % 
 Total retail 279,270 2,422 281,692 12.4 % 
 Light industrial facilities: 
 Owner occupied 143,460 2,721 146,181 6.4 % 
 Non-owner occupied 97,386 5,496 102,882 4.5 % 
 Total light industrial facilities 240,846 8,217 249,063 10.9 % 
 Office buildings and complexes: 
 Owner occupied 85,004 3,616 88,620 3.9 % 
 Non-owner occupied 135,423 7,011 142,434 6.3 % 
 Total office buildings and complexes 220,427 10,627 231,054 10.2 % 
 Lodging and lodging related: 
 Owner occupied 25,524 1,902 27,426 1.2 % 
 Non-owner occupied 136,854 1 136,855 6.0 % 
 Total lodging and lodging related 162,378 1,903 164,281 7.2 % 
 Assisted living facilities and nursing homes 130,907 6,412 137,319 6.0 % 
 Warehouse facilities: 
 Owner occupied 47,818 679 48,497 2.1 % 
 Non-owner occupied 44,041 494 44,535 2.0 % 
 Total warehouse facilities 91,859 1,173 93,032 4.1 % 
 Restaurant/bar facilities: 
 Owner occupied 42,142 89 42,231 1.9 % 
 Non-owner occupied 35,954 — 35,954 1.6 % 
 Total restaurant/bar facilities 78,096 89 78,185 3.5 % 
 Healthcare: 
 Owner occupied 23,643 221 23,864 1.1 % 
 Non-owner occupied 25,668 769 26,437 1.2 % 
 Total healthcare facilities 49,311 990 50,301 2.3 % 
 Education services: 
 Owner occupied 16,519 — 16,519 0.7 % 
 Non-owner occupied 29,983 4,000 33,983 1.5 % 
 Total education services 46,502 4,000 50,502 2.2 % 
 
 Mixed commercial use facilities: 
 Owner occupied 22,655 1,227 23,882 1.1 % 
 Non-owner occupied 24,090 1,636 25,726 1.1 % 
 Total mixed commercial use facilities 46,745 2,863 49,608 2.2 % 
 
 
 
 
 
 Other (a) 543,556 31,032 574,588 25.3 % 
 Commercial real estate, other $ 2,196,957 $ 74,293 $ 2,271,250 100.0 % 

 
 
 (a) All other total exposures by industry are less than 2% of the Total Exposure. 
 
 
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 Peoples’ commercial lending activities continue to focus on lending opportunities inside its primary and secondary market areas within Ohio, Kentucky, West Virginia, Virginia, Washington, D.C. and Maryland. In all other states, the aggregate outstanding balances of commercial loans in each state were less than 4% of total loans at both December 31, 2023 and December 31, 2022. 
 Additional information regarding Peoples’ loan portfolio can be found in “Note 4 Loans and Leases.” 
 
 Allowance for Credit Losses 
 The amount of the allowance for credit losses at the end of each period represents management’s estimate of expected credit losses from existing loans based upon its formal quarterly analysis of the loan portfolio described in the “Critical Accounting Policies” section of this discussion. While this process involves making allocations to specific loans and pools of loans, the entire allowance is available for all losses incurred within the loan portfolio. 
 The following details management’s allocation of the allowance for credit losses at December 31: 
 
 
 
 (Dollars in thousands) 2023 2022 2021 
 Construction $ 699 $ 1,250 $ 2,999 
 Commercial real estate 20,915 17,710 29,147 
 Commercial and industrial 10,490 8,229 11,063 
 Premium finance 484 344 379 
 Leases 10,850 8,495 4,797 
 Residential real estate 5,937 6,357 7,233 
 Home equity lines of credit 1,588 1,693 2,005 
 Consumer, indirect 8,590 7,448 5,326 
 Consumer, direct 2,343 1,575 961 
 Deposit account overdrafts 115 61 57 
 
 
 Allowance for credit losses $ 62,011 $ 53,162 $ 63,967 
 As a percent of total loans 1.01 % 1.13 % 1.43 % 

 The increase in the allowance balance at December 31, 2023 when compared to at December 31, 2022 was driven by (i) the additional allowance related to the loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of the reserves on individually analyzed loans and the use of updated loss drivers. 
 The decline in the allowance balance at December 31, 2022 when compared to at December 31, 2021 was driven by decreases in the allowances for individually analyzed loans, as well as changes in qualitative factors period-over-period and the use of updated prepayment speeds. Those decreases were partially offset by loan growth and deterioration in the economic forecast. Peoples recorded $0.8 million of provision for credit losses to establish the allowance for credit losses for non-PCD leases acquired from Vantage. The allowance for credit losses as a percent of total loans at December 31, 2022 decreased compared to at December 31, 2021, which was mostly due to the composition of Peoples’ loan and lease portfolio as well as the aforementioned reduction in the allowance for credit losses. 
 Additional information regarding Peoples’ allowance for credit losses can be found in “Note 1 Summary of Significant Accounting Policies” and “Note 4 Loans and Leases.” 
 The following table summarizes the changes in the allowance for credit losses for the years ended December 31: 
 
 
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 (Dollars in thousands) 2023 2022 2021 
 Allowance for credit losses, January 1 $ 53,162 $ 63,967 $ 50,359 
 Gross charge-offs: 
 Construction 9 16 — 
 Commercial real estate, other 614 489 387 
 
 Commercial and industrial 851 943 1,057 
 Premium finance 122 124 45 
 Leases 3,997 2,585 1,434 
 Residential real estate 170 668 385 
 Home equity lines of credit 110 88 197 
 Consumer, indirect 4,030 2,233 1,756 
 Consumer, direct 416 363 152 
 Consumer 4,446 2,596 1,908 
 Deposit account overdrafts 1,161 1,246 575 
 Total gross charge-offs 11,480 8,755 5,988 
 Recoveries: 
 
 
 Commercial real estate, other 965 297 204 
 Commercial and industrial 552 49 26 
 Premium finance 24 13 — 
 Leases 362 420 339 
 Residential real estate 192 84 143 
 Home equity lines of credit 1 45 41 
 Consumer, indirect 487 328 253 
 Consumer, direct 73 47 112 
 Consumer 560 375 365 
 Deposit account overdrafts 277 200 177 
 Total recoveries 2,933 1,483 1,295 
 Net charge-offs (recoveries): 
 Construction 9 16 — 
 Commercial real estate, other (351) 192 183 
 
 Commercial and industrial 299 894 1,031 
 Premium finance 98 111 45 
 Leases 3,635 2,165 1,095 
 Residential real estate (22) 584 242 
 Home equity lines of credit 109 43 156 
 Consumer, indirect 3,543 1,905 1,503 
 Consumer, direct 343 316 40 
 Consumer 3,886 2,221 1,543 
 Deposit account overdrafts 884 1,046 398 
 Total net charge-offs $ 8,547 $ 7,272 $ 4,693 
 Provision for (recovery of) credit losses, December 31 (a) 15,345 (2,904) 731 
 Initial allowance for PCD assets $ 2,051 $ (629) $ 17,570 
 Allowance for credit losses, December 31 $ 62,011 $ 53,162 $ 63,967 
 Net charge-offs (recoveries) as a percent of average total loans: 
 Construction — % — % — % 
 Commercial real estate, other (0.01) % 0.01 % — % 
 
 Commercial and industrial 0.01 % 0.02 % 0.03 % 
 Premium finance — % — % — % 
 Leases 0.06 % 0.05 % 0.03 % 
 Residential real estate — % 0.01 % 0.01 % 
 Home equity lines of credit — % — % — % 
 Consumer, indirect 0.06 % 0.04 % 0.05 % 
 Consumer, direct 0.01 % 0.01 % — % 
 Consumer 0.07 % 0.05 % 0.05 % 
 Deposit account overdrafts 0.02 % 0.02 % 0.01 % 
 Total 0.15 % 0.16 % 0.13 % 

 
 
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 (a) Amount does not include the provision for unfunded commitment liability. 
 
 
 Net charge-offs as a percent of average total loans for 2023 decreased to 0.15% compared to 0.16% at 2022. The decrease was due to (i) an increase in average loan balances, primarily driven by the loans acquired in the Limestone Merger, (ii) decreases in net charge-offs of residential real estate loan balances and commercial and industrial loan balances, and (iii) net recoveries in 2023 compared to net charge-offs in 2022 of other commercial real estate loan balances, mostly offset by increases in net charge-offs related to total consumer loan balances and lease balances. 
 During 2022, net charge-offs as a percent of average total loans increased to 0.16%, compared to 0.13% for 2021. The increase was due to increases in net charge-offs related to (i) lease balances, (ii) total consumer loan balances, and (iii) deposit account overdraft balances. 
 
 
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 The following table details Peoples’ nonperforming assets at December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 Loans 90+ days past due and accruing: 
 Construction $ — $ — $ 90 
 Commercial real estate, other 78 167 689 
 Commercial and industrial 316 130 1,139 
 Premium finance 1,355 504 865 
 Leases 3,826 3,041 — 
 Residential real estate 877 917 805 
 Home equity lines of credit 171 58 50 
 Consumer, indirect 68 — — 
 Consumer, direct 25 25 85 
 Consumer 93 25 85 
 Total loans 90+ days past due and accruing 6,716 4,842 3,723 
 Nonaccrual loans: 
 Construction — 12 6 
 Commercial real estate, other 2,816 12,121 17,067 
 Commercial and industrial 2,758 3,462 3,572 
 Leases 8,436 3,178 1,581 
 Residential real estate 7,921 9,496 9,647 
 Home equity lines of credit 1,022 820 1,039 
 Consumer, indirect 2,412 2,176 1,574 
 Consumer, direct 112 208 279 
 Consumer 2,524 2,384 1,853 
 Total nonaccrual loans 25,477 31,473 34,765 
 Total nonperforming loans (“NPLs”) 32,193 36,315 38,488 
 OREO: 
 Commercial 7,118 8,730 9,105 
 Residential 56 165 391 
 Total OREO 7,174 8,895 9,496 
 Total nonperforming assets (“NPAs”) $ 39,367 $ 45,210 $ 47,984 
 Criticized loans (a) $ 235,239 $ 191,355 $ 194,016 
 Classified loans (b) 120,027 89,604 106,547 
 Asset Quality Ratios: 
 Nonaccrual loans as a percent of total loans (c) 0.41 % 0.67 % 0.78 % 
 NPLs as a percent of total loans (c)(d) 0.52 % 0.77 % 0.86 % 
 NPAs as a percent of total assets (c)(d) 0.43 % 0.63 % 0.68 % 
 NPAs as a percent of total loans and OREO (c)(d) 0.64 % 0.96 % 1.07 % 
 Allowance for credit losses as a percent of nonaccrual loans (c) 245.79 % 168.91 % 184.00 % 
 Allowance for credit losses as a percent of NPLs (c)(d) 194.38 % 146.39 % 166.20 % 
 Criticized loans as a percent of total loans (a)(c) 3.82 % 4.07 % 4.33 % 
 Classified loans as a percent of total loans (b)(c) 1.95 % 1.90 % 2.38 % 

 (a) Includes loans categorized as special mention, substandard or doubtful. 
 (b) Includes loans categorized as substandard or doubtful. 
 (c) Data presented as of the end of the year indicated. 
 (d) Nonperforming loans include loans 90+ days past due and accruing, troubled debt restructured loans and nonaccrual loans. Nonperforming assets include nonperforming loans and OREO. 
 Peoples’ NPAs decreased to 0.43% of total assets at December 31, 2023, compared to 0.63% of total assets at December 31, 2022. Loans 90+ days past due and accruing increased compared to at December 31, 2022, primarily due to the loans acquired in the Limestone Merger and an increase in leases and premium finance loans 90+ days past due and accruing. During 2023, both criticized and classified loans increased when compared to 2022, primarily due to criticized and classified loans acquired in the Limestone Merger. 
 Nonperforming assets decreased to 0.63% of total assets at December 31, 2022 compared to 0.68% of total assets at December 31, 2021. Loans 90+ days past due and accruing increased compared to at December 31, 2021, mostly due to the leases acquired in the 
 
 
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 Vantage acquisition. During 2022, both criticized and classified loans declined when compared to 2021. The decrease at December 31, 2022 in the amount of criticized loans when compared to at December 31, 2021 was largely due to a reduction in the criticized loans acquired in the Premier Merger. The decrease in classified loans when compared to December 31, 2021 was largely attributable to pay-offs and upgrades of classified loans acquired in the Premier Merger. 
 The majority of Peoples’ nonaccrual commercial real estate loans consists primarily of owner occupied commercial properties. In general, management believes repayment of these loans is dependent on the sale of the underlying collateral. As such, the carrying values of these loans are ultimately supported by management’s estimate of the net proceeds Peoples would receive upon the sale of the collateral. These estimates are based in part on market values provided by independent, licensed or certified appraisers periodically, but no less frequently than annually. Given the volatility in commercial real estate values, management continues to monitor changes in real estate values from quarter-to-quarter and updates its estimates as needed based on observable changes in market prices and/or updated appraisals for similar properties. 
 Peoples discontinues the accrual of interest on a loan when conditions cause management to believe collection of all or any portion of the loan’s contractual interest is doubtful. Such conditions may include the borrower being 90 days or more past due on any contractual payments or the availability of updated information regarding the borrower’s financial condition and repayment ability. All unpaid accrued interest deemed uncollectable is reversed, which would reduce Peoples’ net interest income. Interest received on nonaccrual loans is included in income only if principal recovery is reasonably assured. Interest income on loans classified as nonaccrual and renegotiated at each year-end that would have been recorded under the original terms of the loans was $0.8 million for 2023, $1.7 million for 2022 and $1.3 million for 2021. No portion of these amounts was recorded during 2023, 2022 or 2021. 
 Overall, management believes the allowance for credit losses was appropriate at December 31, 2023, based on all significant information currently available. Still, there can be no assurance that the allowance for credit losses will be adequate to cover future losses in Peoples’ loan portfolio. 
 Additional information regarding Peoples’ allowance for credit losses can be found in “Note 4 Loans and Leases.” 
 
 Deposits 
 The following table details Peoples’ deposit balances at December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 Non-interest-bearing deposits (a) $ 1,567,649 $ 1,589,402 $ 1,641,422 
 Interest-bearing deposits: 
 Interest-bearing demand accounts (a) 1,144,357 1,160,182 1,167,460 
 Savings accounts 919,244 1,068,547 1,036,738 
 Retail CDs 1,443,417 530,236 643,759 
 Money market deposit accounts 775,488 617,029 651,169 
 Governmental deposit accounts 726,713 625,965 617,259 
 
 Brokered deposits 575,429 125,580 104,745 
 Total interest-bearing deposits 5,584,648 4,127,539 4,221,130 
 Total deposits $ 7,152,297 $ 5,716,941 $ 5,862,552 

 (a) The sum of amounts presented are considered total demand deposits. 
 The increase in total deposits between December 31, 2023 and December 31, 2022 was primarily due to deposits acquired in the Limestone Merger. Excluding Limestone deposit balances, total deposits at December 31, 2023 increased $615.3 million, or 11%, compared to at December 31, 2022, primarily due to increases of $785.6 million in retail certificates of deposit (“CDs”) and $449.8 million in brokered deposits, partially offset by decreases of $226.8 million, $223.3 million, and $193.7 million, in non-interest bearing deposits, savings accounts, and interest-bearing demand deposit accounts, respectively. Total demand deposits comprised 38% and 48% of total deposits at December 31, 2023 and December 31, 2022, respectively. 
 The decrease in total deposits between December 31, 2022 and December 31, 2021 was due to decreases in both interest-bearing and non-interest-bearing deposits. The variance was driven by decreases of (i) $113.5 million in retail CDs, (ii) $52.0 million in total non-interest-bearing deposit accounts and (iii) $34.1 million in money market deposit accounts, partially offset by increases of $31.8 million in savings account deposits and $20.8 million in brokered deposits. Total demand deposits comprised 48% of total deposits at each of December 31, 2022 and December 31, 2021. 
 As part of its funding strategy, Peoples hedges 90-day brokered deposits with interest rate swaps. The swaps pay a fixed rate of interest while receiving three-month SOFR, which offsets the rate on the brokered deposits. As of December 31, 2023, Peoples had eleven effective interest rate swaps, with an aggregate notional value of $105.0 million, which were designated as cash flow hedges of brokered deposits, and are expected to be extended every 90 days through the maturity dates of the swaps. Peoples continually evaluates the overall balance sheet position given the interest rate environment. 
 
 
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 Peoples’ governmental deposit accounts represent savings and interest-bearing transaction accounts from state and local governmental entities. These funds are subject to periodic fluctuations based on the timing of tax collections and subsequent expenditures or disbursements. Peoples normally experiences an increase in balances annually during the first and third quarters, corresponding with tax collections, with declines normally in the second and fourth quarters of each year, corresponding with expenditures by the governmental entities. Peoples continues to emphasize growth of low-cost deposits that do not require Peoples to pledge assets as collateral, which is required in the case of governmental deposit accounts. 
 The maturities of retail CDs with total balances of $100,000 or more at December 31 were as follows: 
 
 (Dollars in thousands) 2023 2022 2021 
 3 months or less $ 135,806 $ 54,471 $ 71,374 
 Over 3 to 6 months 239,057 39,031 74,529 
 Over 6 to 12 months 353,433 58,342 83,094 
 Over 12 months 86,489 110,972 90,864 
 Total $ 814,785 $ 262,816 $ 319,861 

 Additional information regarding Peoples’ deposits can be found in “Note 8 Deposits.” 
 Borrowed Funds 
 The following table details Peoples’ short-term and long-term borrowings at December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 Short-term borrowings: 
 FHLB overnight borrowings $ 369,000 $ 400,000 $ — 
 FHLB 90-day advances — — 40,000 
 Current portion of long-term FHLB advances — — 15,000 
 Repurchase agreements 99,121 100,138 111,482 
 Bank Term Funding Program (“BTFP”) 133,000 — — 
 
 Total short-term borrowings 601,121 500,138 166,482 
 Long-term borrowings: 
 FHLB advances 112,865 34,158 85,825 
 Vantage non-recourse debt 49,572 53,147 — 
 
 
 Other long-term borrowings 53,804 13,788 13,650 
 Total long-term borrowings 216,241 101,093 99,475 
 
 Total borrowed funds $ 817,362 $ 601,231 $ 265,957 
 

 Total borrowed funds, which include overnight borrowings, are mainly a function of loan growth and changes in total deposit balances. Other long-term borrowings include trust preferred securities held for investments and floating rate junior subordinated deferrable interest debentures. Peoples continually evaluates its overall balance sheet position given the interest rate environment and liquidity needs. Total borrowed funds increased at December 31, 2023 compared to at December 31, 2022 due to the addition of $133.0 million of BTFP borrowings at December 31, 2023, an increase in FHLB long-term advances, and an increase in other long-term borrowings assumed in the Limestone Merger. Peoples’ borrowed funds increased at December 31, 2022 compared to at December 31, 2021 due to FHLB overnight borrowings of $400.0 million at December 31, 2022. 
 On April 3, 2019, Peoples entered into the U.S. Bank Loan Agreement with U.S. Bank National Association, the term of which has been extended to March 31, 2024 through an amendment in March 2023. The U.S. Bank Loan Agreement provides Peoples with a revolving line of credit in the maximum aggregate principal amount of $30.0 million. 
 Additional information regarding Peoples’ borrowed funds can be found in “Note 9 Short-Term Borrowings” and “Note 10 Long-Term Borrowings.” 
 
 Capital/Stockholders’ Equity 
 Peoples’ total stockholders’ equity at December 31, 2023 increased 34% when compared to at December 31, 2022, which was due to (i) 6.8 million common shares (valued at $177.9 million) issued in the Limestone Merger, (ii) net income of $113.4 million for 2023, and (iii) a decrease in other comprehensive loss of $25.5 million, partially offset by dividends paid of $52.1 million and share repurchases of $3.0 million. The decrease in other comprehensive loss was the result of changes in the fair market value of available-for-sale investment securities, which were driven by changes in market interest rates. At December 31, 2023, capital levels for both 
 
 
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 Peoples and Peoples Bank remained substantially higher than the minimum amounts needed to be considered “well capitalized” under banking regulations. These higher capital levels reflect Peoples’ desire to maintain a strong capital position. 
 During 2022, total stockholders’ equity decreased 7% when compared to 2021 due to (i) an other comprehensive loss of $115.5 million, (ii) dividends paid of $42.4 million and (iii) common share repurchases of $7.4 million, partially offset by net income of $101.3 million for 2022. The other comprehensive loss was the result of changes in the market value of available-for-sale investment securities, which were driven by changes in market interest rates. 
 On January 1, 2020, Peoples recorded a one-time transition adjustment to reduce retained earnings by $3.7 million. This adjustment reflected the increase in the allowance for credit losses for loans (excluding the gross up of loan balances related to the establishment of an allowance for credit losses for PCD loans, the allowance for credit losses for held-to-maturity investment securities and the addition of an unfunded commitment liability, net of statutory federal corporate income taxes. Peoples elected to utilize the five-year phase-in period for the transition adjustment due to the implementation of ASU 2016-13. This phase-in period also includes a 25% deferment of the impact on regulatory capital of the estimated increase in the allowance for credit losses related to the CECL model, which was applied during the first two years of application. For the first two years of the phase-in period, 100% of the transition adjustment due to ASU 2016-13 was excluded for regulatory capital purposes, along with 25% of the increase in the allowance for credit losses compared to the January 1, 2020 allowance for credit losses. In year three of the phase-in (i.e., 2023), 75% of the transition adjustment, and the cumulative 25% increase in the allowance for credit losses compared to January 1, 2020, were excluded from regulatory capital, while 50% and 25% of these amounts will be excluded in years four and five, respectively, under this phase-in period. 
 Under the risk-based capital rules, in order to avoid limitations on dividends, equity repurchases and compensation, Peoples must exceed the three minimum required ratios by at least a capital conservation buffer of 2.50%. These three minimum required ratios are the common equity tier 1 capital ratio, tier 1 risk-based capital ratio and total risk-based capital ratio. Peoples had a capital conservation buffer of 5.38% at December 31, 2023, 5.06% at December 31, 2022 and 6.06% at December 31, 2021. As such, Peoples exceeded the minimum ratios, including the capital conservation buffer, at December 31, 2023. 
 The following table details Peoples’ actual risk-based capital levels and corresponding ratios at December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 Capital Amounts: 
 Common equity tier 1 $ 766,691 $ 604,566 $ 577,565 
 Tier 1 820,495 618,354 591,215 
 Total (tier 1 and tier 2) 873,225 662,421 648,948 
 Net risk-weighted assets $ 6,524,577 $ 5,071,240 $ 4,614,259 
 Capital Ratios: 
 Common equity tier 1 11.75 % 11.92 % 12.52 % 
 Tier 1 12.58 % 12.19 % 12.81 % 
 Total (tier 1 and tier 2) 13.38 % 13.06 % 14.06 % 
 Tier 1 leverage ratio 9.57 % 8.92 % 8.67 % 

 In addition to traditional capital measurements, management uses tangible capital measures to evaluate the adequacy of Peoples’ total stockholders’ equity. Such financial measures represent non-US GAAP financial information since they exclude the impact of goodwill and other intangible assets acquired through acquisitions on the Consolidated Balance Sheets. Peoples’ management believes this information is useful to investors since it facilitates the comparison of Peoples’ operating performance, financial condition and trends to peers, especially those without a level of intangible assets similar to that of Peoples. Further, intangible assets generally are difficult to convert into cash, especially during a financial crisis, and could decrease substantially in value should there be deterioration in the overall franchise value. As a result, tangible equity represents a conservative measure of the capacity for Peoples to incur losses but remain solvent. 
 
 
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 The following table reconciles the calculation of the identified non-US GAAP financial measures to amounts reported in Peoples’ Consolidated Financial Statements at December 31: 
 
 (Dollars in thousands) 2023 2022 2021 
 Tangible equity: 
 Total stockholders’ equity $ 1,053,534 $ 785,328 $ 845,025 
 Less: goodwill and other intangible assets 412,172 326,329 291,009 
 Tangible equity $ 641,362 $ 458,999 $ 554,016 
 
 
 
 
 
 
 Tangible assets: 
 Total assets $ 9,157,382 $ 7,207,304 $ 7,063,521 
 Less: goodwill and other intangible assets 412,172 326,329 291,009 
 Tangible assets $ 8,745,210 $ 6,880,975 $ 6,772,512 
 
 Tangible book value per common share: 
 
 Tangible equity $ 641,362 $ 458,999 $ 554,016 
 Common shares outstanding 35,314,745 28,287,837 28,297,771 
 
 Tangible book value per common share $ 18.16 $ 16.23 $ 19.58 
 
 Tangible equity to tangible assets ratio: 
 Tangible equity $ 641,362 $ 458,999 $ 554,016 
 Tangible assets $ 8,745,210 $ 6,880,975 $ 6,772,512 
 
 Tangible equity to tangible assets 7.33 % 6.67 % 8.18 % 
 
 
 
 
 
 

 The increase in tangible book value per common share at December 31, 2023 from at December 31, 2022 was due to tangible equity increasing as a result of common shares issued throughout 2023, including shares issued due to the Limestone Merger, a decrease in other comprehensive losses recognized on available-for-sale investment securities, which was driven by changes in market interest rates, and net income for 2023. 
 The decline in tangible book value per common share at December 31, 2022 from December 31, 2021 was due to tangible equity declining as a result of other comprehensive losses recognized on available-for-sale investment securities, which were driven by changes in market interest rates. 
 
 Future Outlook 
 Peoples improved its performance for the second consecutive year during 2023, recording record annual net income despite the challenges that were presented to the banking industry due to the bank failures in 2023. In 2024, Peoples expects net interest income to benefit from the full year impact of the Limestone Merger, but to also be impacted by the projected market interest rate reductions in 2024. 
 For 2024, Peoples expects net interest margin to be between 4.10% and 4.30% for the full year, which is based on between 75 to 150 basis points of reductions in the Federal Funds effective rate. These projections will vary depending on the timing and magnitude of the anticipated rate cuts and the level of competition for deposits. 
 Peoples projects growth in total non-interest income, excluding net gains and losses, to be in the high single-digits to low double-digits in 2024 compared to 2023. Total non-interest expenses, excluding acquisition-related expenses, are expected to be between $67 million and $69 million for the second, third and fourth quarters of 2024, with the first quarter of 2024 being higher due to annual expenses typically recognized during the first quarter of each year. The efficiency ratio is projected to be between 55% and 60% for 2024. 
 Peoples will continue to place importance on loan growth. Peoples anticipates that the annual loan growth for 2024, compared to 2023, will be between 6% and 8%. With the anticipated loan growth and return of net charge-offs to pre-pandemic levels, there is an expectation of an increase in the provision for credit losses during 2024 with a charge-off rate of approximately 20 basis points. The balance sheet mix of Peoples will be continually evaluated in an effort to mitigate exposure risk during 2024. 
 Total deposit balances are expected to grow by approximately 2% in 2024. Peoples expects continued growth despite increased competition in its markets plus additional upward pressure on rates paid. Throughout 2023, deposits balances increased primarily due to the Limestone Merger, as well as promotional efforts throughout the second half of the year. 
 
 
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 Management believes Peoples is in position to maintain strong asset quality metrics and continued growth into 2024. Peoples came through 2023 with positive financial results despite the challenging economic environment and believes it will continue this trend into 2024. 
 For more information regarding risks and uncertainties that could impact the projections described above, please refer to “ITEM 1A RISK FACTORS” of this Form 10-K. 
 
 Interest Rate Sensitivity and Liquidity 
 While Peoples is exposed to various business risks, the risks relating to interest rate sensitivity and liquidity are major risks that can materially impact future results of operations and financial condition due to their complexity and dynamic nature. The objective of Peoples' asset-liability management function is to measure and manage these risks in order to optimize net interest income within the constraints of prudent capital adequacy, liquidity and safety. This objective requires Peoples to focus on interest rate risk exposure and adequate liquidity through its management of the mix of assets and liabilities, their related cash flows and the rates earned and paid on those assets and liabilities. Ultimately, the asset-liability management function is intended to guide management in the acquisition and disposition of earning assets and selection of appropriate funding sources. 
 Interest Rate Risk 
 Interest rate risk (“IRR”) is one of the most significant risks arising in the normal course of business of financial services companies like Peoples. IRR is the potential for economic loss due to future interest rate changes that can impact the earnings stream, as well as market values, of financial assets and financial liabilities. Peoples’ exposure to IRR is due primarily to differences in the maturity or repricing of earning assets and interest-bearing liabilities. In addition, other factors, such as prepayments of loans and investment securities, or early withdrawal of deposits, can affect Peoples’ exposure to IRR and increase interest costs or reduce revenue streams. 
 Peoples has assigned overall management of IRR to the ALCO, which has established an IRR management policy that sets minimum requirements and guidelines for monitoring and managing the level of IRR. The objective of Peoples’ IRR management policy is to assist the ALCO in its evaluation of the impact of changing interest rate conditions on earnings and the economic value of equity, as well as assist with the implementation of strategies intended to reduce Peoples’ IRR. The management of IRR involves either maintaining or changing the level of risk exposure by changing the repricing and maturity characteristics of the cash flows for specific assets or liabilities. Additional oversight of Peoples’ IRR is provided by the Board of Directors of Peoples Bank, which reviews and approves Peoples’ IRR management policy at least annually. 
 The ALCO uses various methods to assess and monitor the current level of Peoples’ IRR and the impact of potential strategies or other changes. However, the ALCO predominantly relies on simulation modeling in its overall management of IRR since it is a dynamic measure. Simulation modeling also estimates the impact of potential changes in interest rates and balance sheet structures on future earnings and projected economic value of equity. The methods used by ALCO to assess IRR remain largely unchanged from those disclosed for the year ended December 31, 2022. 
 The modeling process starts with a base case simulation using the current balance sheet and current interest rates held constant for the next twenty-four months. Alternate scenarios are prepared which simulate the impact of increasing and decreasing market interest rates, assuming parallel yield curve shifts. Comparisons produced from the simulation data, showing the changes in net interest income from the base interest rate scenario, illustrate the risks associated with the current balance sheet structure. Additional simulations, when deemed appropriate or necessary, are prepared using different interest rate scenarios from those used with the base case simulation and/or possible changes in balance sheet composition. The additional simulations include non-parallel shifts in interest rates whereby the direction and/or magnitude of changes in short-term interest rates is different from the changes applied to longer-term interest rates. Comparisons showing the net interest income and economic value of equity variances from the base case are provided to the ALCO for review and discussion. 
 The ALCO has established limits on changes in the twelve-month net interest income forecast and the economic value of equity from the base case. The ALCO may establish risk tolerances for other parallel and non-parallel rate movements, as deemed necessary. The following table details the current policy limits used to manage the level of Peoples’ IRR: 
 
 Immediate and Sustained Shift in Interest Rates Net Interest Income Economic Value of Equity 
 + / - 100 basis points -5% -10% 
 + / - 200 basis points -10% -15% 
 + / - 300 basis points -15% -20% 

 The following table shows the estimated changes in net interest income and the economic value of equity based upon a standard, parallel shock analysis with balances held constant (dollars in thousands): 
 
 
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 Increase (Decrease) in Interest Rates Estimated Increase (Decrease) in 
Net Interest Income Estimated (Decrease) Increase in Economic Value of Equity 
 (in Basis Points) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 
 
 300 15,063 4.6 % 13,000 4.4 % (157,625) (9.4) % (82,959) (5.4) % 
 200 10,282 3.1 % 8,716 3.0 % (107,620) (6.4) % (55,809) (3.6) % 
 100 5,468 1.7 % 4,380 1.5 % (53,585) (3.2) % (28,157) (1.8) % 
 (100) (7,427) (2.3) % (11,404) (3.9) % 31,722 1.9 % (21,124) (1.4) % 
 (200) (15,446) (4.7) % (27,659) (9.4) % 46,537 2.8 % (80,484) (5.2) % 
 (300) (16,822) (5.1) % (43,728) (14.8) % 47,198 2.8 % (152,152) (9.8) % 
 

 This table uses a standard, parallel shock analysis for assessing the IRR to net interest income and the economic value of equity. A parallel shock assumes all points on the yield curve (one year, two year, three year, etc.) are directionally changed by the same degree. Management regularly assesses the impact of both increasing and decreasing interest rates. The table above shows the impact of upward and downward parallel shocks of 100, 200 and 300 basis points. 
 Estimated changes in net interest income and the economic value of equity are partially driven by assumptions regarding the rate at which non-maturity deposits will reprice given a move in short-term interest rates. These assumptions are monitored closely by Peoples and are reviewed at least semi-annually. At December 31, 2023, the actual deposit betas experienced by Peoples in the repricing of non-maturity deposits were lower than those used in Peoples’ interest rate risk modeling. 
 While parallel interest rate shock scenarios are useful in assessing the level of IRR inherent in the balance sheet, interest rates typically move in a nonparallel manner with differences in the timing, direction and magnitude of changes in short-term and long-term interest rates. Thus, any impact that might occur as a result of the Federal Reserve Board increasing short-term interest rates in the future could be offset by an inverse movement in long-term rates, and vice versa. For this reason, Peoples considers other interest rate scenarios in addition to analyzing the impact of parallel yield curve shifts. These include various flattening and steepening scenarios in which short-term and long-term rates move in different directions with varying magnitude. Peoples believes these scenarios to be more reflective of how interest rates change versus the severe parallel rate shocks described above. Given the shape of market yield curves at December 31, 2023, consideration of the bear steepener and bear flattener scenarios provide insights which were not captured by parallel shifts. 
 The bear steepener scenario highlights the risk to net interest income and the economic value of equity when short-term rates remain constant while long-term rates rise. In such a scenario, Peoples’ variable rate asset yields along with deposit and short-term borrowing costs, which are correlated with short-term rates, remain constant, while long-term asset yields and long-term borrowing costs, which are more correlated with long-term rates, rise. Increased asset yields would not be offset by increases in deposit or funding costs, resulting in an increased amount of net interest income and higher net interest margin. At December 31, 2023, the bear steepener scenario resulted in an increase in net interest income of 0.90% and a decrease in economic value of equity of 1.00%. 
 The bear flattener scenario highlights the risk to net interest income and the economic value of equity when short-term rates rise while long-term rates remain constant. In such a scenario, Peoples’ variable rate asset yields along with deposit and short-term borrowing costs, which are correlated with short-term rates, increase, while long-term asset yields and long-term borrowing costs, which are more correlated with long-term rates, remain constant. Increased deposit and funding costs would be more than offset by increased variable rate asset yields; resulting in an increased amount of net interest income and higher net interest margin. At December 31, 2023, the bear flattener scenario resulted in an increase in net interest income of 2.00%% and an increase in economic value of equity of 0.50% 
 During 2023, Peoples’ Consolidated Balance Sheet was positioned to benefit from rising interest rates in terms of the potential impact on net interest income, while in 2024, Peoples is positioned to see slight declines in net interest income in a projected falling interest rate environment. The table above illustrates this point as net interest income increases in the rising rate scenarios and decreases in the falling rate scenarios. 
 Peoples has entered into interest rate swaps as part of its interest rate risk management strategy. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for Peoples making fixed payments. As of December 31, 2023, Peoples had eleven interest rate swap contracts, with an aggregate notional value of $105.0 million. Additional information regarding Peoples’ interest rate swaps can be found in “Note 15 Derivative Financial Instruments.” 
 An asset/liability model used to produce the analysis above requires assumptions to be made such as prepayment rates on interest-earning assets and repricing impact on non-maturity deposits. These business assumptions are based on business plans, economic and market trends, and available industry data. Management believes that its methodology for developing such assumptions is reasonable; however, there can be no assurance that modeled results will be achieved or are indicative of future 
 
 
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 results. The asset/liability model along with key modeling assumptions are subjected to a third-party review annually for effectiveness and regulatory compliance. 
 Liquidity 
 In addition to IRR management, another major objective of the ALCO is to ensure sufficient levels of liquidity are maintained. The ALCO defines liquidity as the ability to meet anticipated and unanticipated operating cash needs, loan demand and deposit withdrawals without incurring a sustained negative impact on profitability. 
 A primary source of liquidity for Peoples is deposits. Liquidity is also provided by cash generated from earning assets such as loans and investment securities. Peoples also uses various wholesale funding sources to supplement funding from customer deposits. These external sources provide Peoples with the ability to obtain large quantities of funds in a relatively short time period in the event of sudden unanticipated cash needs. However, an over-utilization of external funding sources can expose Peoples to greater liquidity risk, as these external sources may not be accessible during times of market stress. Additionally, Peoples may be exposed to the risk associated with providing excess collateral to external funding providers, commonly referred to as counterparty risk. As a result, the ALCO’s liquidity management policy sets limits on the net liquidity position and the concentration of non-core funding sources, which includes wholesale funding and brokered deposits. 
 In addition to external sources of funding, Peoples considers certain types of deposits to be less stable or “volatile funding.” These deposits include special money market products, large CDs and public funds. Peoples has established volatility factors for these various deposit products, and the liquidity management policy establishes a limit on the total level of volatile funding. Additionally, Peoples measures the maturities of external sources of funding for periods of one month, three months, six months and twelve months, and has established policy limits for the amounts maturing in each of these periods. The purpose of these limits is to minimize exposure to what is commonly termed rollover risk. 
 An additional strategy used by Peoples in the management of liquidity risk is maintaining a targeted level of liquid assets. Management defines liquid assets as unencumbered cash (including cash on deposit at the FRB), and the market value of unpledged U.S. government and agency securities. Excluded from this definition are pledged securities, non-government securities, non-agency securities, municipal securities and loans. Management has established a minimum level of liquid assets in the liquidity management policy, which is expressed as a percentage of total loans and unfunded loan commitments. At December 31, 2023, Peoples maintained liquid assets of $457.1 million, representing 4.5% of total assets plus unfunded loan commitments. Peoples has also established a policy limit around the level of liquefiable assets expressed as a percentage of total loans and unfunded loan commitments. Liquefiable assets are defined as liquid assets plus the market value of unpledged securities not included in the liquid asset measurement. At December 31, 2023, Peoples maintained liquefiable assets of $616.6 million, representing 6.0% of total assets plus unfunded loan commitments. 
 An essential element in the management of liquidity risk is a forecast of the sources and uses of anticipated cash flows. On a monthly basis, Peoples forecasts sources and uses of cash for the next twelve months. To assist in the management of liquidity, management has established a liquidity coverage ratio, which is defined as the total sources of cash divided by the total uses of cash. A ratio of greater than 1.0 times indicates that forecasted sources of cash are adequate to fund forecasted uses of cash. The liquidity management policy establishes a minimum limit of 1.0 times. At December 31, 2023, Peoples had a ratio of 3.36 times, which was within policy limits. Peoples also forecasts secondary or contingent sources of cash, and this includes external sources of funding and liquid assets. These sources of cash would be required if and when the forecasted liquidity coverage ratio dropped below the policy limit of 1.0 times. An additional liquidity measurement used by management includes the total forecasted sources of cash and the contingent sources of cash divided by the forecasted uses of cash. Management has established a minimum ratio of 3.0 times for this liquidity management policy limit. At December 31, 2023, Peoples had a ratio of 3.85 times, which was within policy limits. 
 Peoples maintains multiple contingent sources of liquidity including secured wholesale funding lines and unsecured brokered deposit networks. Peoples’ primary sources of secured wholesale funding are the FHLB of Cincinnati and the FRB. As of December 31, 2023, Peoples had unused collateral-based borrowing capacities of $322.2 million and $318.7 million, respectively, available with the FHLB of Cincinnati and the FRB. Together, these unused borrowing capacities represent 6.3% of total assets and unfunded loan commitments. Additionally, Peoples had $150.9 million of unpledged loan collateral eligible to secure additional borrowing capacity with the FRB as of December 31, 2023. 
 Disruptions in the sources and uses of cash can occur which can drastically alter the actual cash flows and negatively impact Peoples’ ability to access internal and external sources of cash. Such disruptions might occur due to increased withdrawals of deposits, increases in the funding required for loan commitments, a decrease in the ability to access external funding sources and other factors that would increase the need for funding and limit Peoples’ ability to access needed funds. As a result, Peoples maintains a liquidity contingency funding plan (“LCFP”) that considers various degrees of disruptions and develops action plans around these scenarios. 
 Peoples’ LCFP identifies scenarios where funding disruptions might occur and creates scenarios of varying degrees of severity. The disruptions considered include an increase in funding of unfunded loan commitments, unanticipated withdrawals of 
 
 
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 deposits, decreases in the renewal of maturing CDs, and reductions in cash earnings. Additionally, the LCFP creates stress scenarios where access to external funding sources, or contingency funding, is suddenly limited, which includes a significant increase in the margin requirements where securities or loans are pledged, limited access to funding from other banks and limited access to funding from the FHLB of Cincinnati and the FRB. Peoples’ LCFP scenarios include a base scenario, a mild stress scenario, a moderate stress scenario and a severe stress scenario. Each of these is defined as to the related severity and action plans are developed around each. 
 Liquidity management also requires the monitoring of risk indicators that may alert the ALCO to a developing liquidity situation or crisis. Early detection of stress scenarios allows Peoples to take actions to help mitigate the impact to Peoples Bank’s business operations. The LCFP contains various indicators, termed key risk indicators (“KRIs”), that are monitored on a monthly basis, at a minimum. The KRIs include both internal and external indicators and include loan delinquency levels, criticized and classified loan levels, the ratios of non-performing loans to loans and to total assets, the total loan to total deposit ratio, the level of net non-core funding dependence, the level of contingency funding sources, the liquidity coverage ratio, changes in regulatory capital levels, forecasted operating loss and negative media concerning Peoples, irrational competitor pricing that persists, and an increase in rates for external funding sources. The LCFP establishes levels that define each of these KRIs under base, mild, moderate and severe scenarios. 
 The LCFP is reviewed and updated at least on an annual basis by the ALCO and Peoples Bank’s Board of Directors. Additionally, testing of the LCFP is required on an annual basis. Various stress scenarios and the related actions are simulated according to the LCFP. The results are reviewed and discussed and changes or revisions are made to the LCFP accordingly. Additionally, the LCFP is subjected to a third-party review annually for effectiveness and regulatory compliance. 
 Starting at March 31, 2020, there was an increase in deposit balances due to the influx of funds from fiscal stimulus, the PPP and other government actions that persisted throughout 2021. During 2022, deposit balances declined due to customers returning to pre-COVID-19 pandemic balances as well as rising market interest rates due to high levels of inflation. During 2023, the Federal Reserve continued a historically aggressive rate-hiking campaign, leading to higher interest rates. As a result, competition for deposits increased. Peoples responded to the increased competition by offering various CD special rates to retain current clients and attract new clients. 
 Overall, management believes the current balance of cash and cash equivalents, anticipated investment portfolio cash flows and the availability of other funding sources will allow Peoples to meet anticipated cash obligations, as well as special needs and off-balance sheet commitments. 
 
 Off-Balance Sheet Activities and Contractual Obligations 
 Peoples routinely engages in activities that involve, to varying degrees, elements of risk that are not reflected in whole or in part in the Consolidated Financial Statements. These activities are part of Peoples’ normal course of business and include traditional off-balance sheet credit-related financial instruments, interest rate contracts and commitments to make additional capital contributions in low-income housing tax credit investments. 
 The following is a summary of Peoples’ significant off-balance sheet activities and contractual obligations. Detailed information regarding these activities and obligations can be found in the Notes to the Consolidated Financial Statements. 
 
 Activity or Obligation Note 
 Off-balance sheet credit-related financial instruments 16 
 Operating lease obligations 6 
 Long-term borrowing obligations 10 

 Traditional off-balance sheet credit-related financial instruments are primarily commitments to extend credit and standby letters of credit. These activities are necessary to meet the financing needs of customers and could require Peoples to make cash payments to third parties in the event certain specified future events occur. The contractual amounts represent the extent of Peoples’ exposure in these off-balance sheet activities. However, since certain off-balance sheet commitments, particularly standby letters of credit, are expected to expire or be only partially used, the total amount of commitments does not necessarily represent future cash requirements. 
 Peoples continues to lease certain facilities and equipment under noncancellable operating leases with terms providing for fixed monthly payments over periods generally ranging from two to 25 years. Several of Peoples’ leased facilities are inside retail shopping centers or office buildings and, as a result, are not available for purchase. Management believes these leased facilities increase Peoples’ visibility within its markets and afford sales associates additional access to current and potential clients. 
 For certain acquisitions, often those involving insurance businesses and wealth management books of business, a portion of the consideration is contingent upon revenue metrics being achieved. US GAAP requires that the amounts be recorded upon acquisition based on the best estimate of the future amounts to be paid at the time of acquisition. Any subsequent adjustment to the estimate is recorded in net income. Based on the acquisitions completed to date, management does not expect contingent consideration to have a material impact on Peoples’ future performance. 
 
 
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 Management does not anticipate that Peoples’ current off-balance sheet activities will have a material impact on its future results of operations and financial condition based on historical experience and recent trends. 
 
 Effects of Inflation on Financial Statements 
 Substantially all of Peoples’ assets relate to banking and are monetary in nature. As a result, inflation does not impact Peoples to the same degree as companies in capital-intensive industries in a replacement cost environment. During a period of rising prices, a net monetary asset position results in a loss in purchasing power and conversely a net monetary liability position results in an increase in purchasing power. The opposite would be true during a period of decreasing prices. In the banking industry, monetary assets typically exceed monetary liabilities. 
 
 ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 
 Refer to the section captioned “Interest Rate Sensitivity and Liquidity” under “ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” of this Form 10-K, which is incorporated herein by reference.
PEOPLES BANCORP INC 10-K

Item 7. Management’s Discussion and Analysis
