PEOPLES BANCORP INC 10-Q

ITEM 1. FINANCIAL STATEMENTS PEOPLES BANCORP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 2024 December 31, 2023 (Dollars in thousands) (Unaudited) Assets Cash and cash equivalents: Cash and balances due from banks $ 103,784 $ 111,680 Interest-bearing deposits in other banks 325,936 315,042 Total cash and cash equivalents 429,720 426,722 Available-for-sale investment securities, at fair value (amortized cost of $ 1,262,319 at March 31, 2024 and $ 1,184,288 at December 31, 2023) (a) 1,116,466 1,048,322 Held-to-maturity investment securities, at amortized cost (fair value of $ 602,112 at March 31, 2024 and $ 612,022 at December 31, 2023) (a) 679,506 683,657 Other investment securities 62,939 63,421 Total investment securities (a) 1,858,911 1,795,400 Loans and leases, net of deferred fees and costs (b) 6,202,827 6,159,196 Allowance for credit losses ( 64,822 ) ( 62,011 ) Net loans and leases (c) 6,138,005 6,097,185 Loans held for sale 3,030 1,866 Bank premises and equipment, net of accumulated depreciation 107,258 103,856 Bank owned life insurance 141,568 140,554 Goodwill 362,169 362,169 Other intangible assets 47,116 50,003 Other assets 182,997 179,627 Total assets $ 9,270,774 $ 9,157,382 Liabilities Deposits: Non-interest-bearing $ 1,468,363 $ 1,567,649 Interest-bearing 5,858,193 5,584,648 Total deposits 7,326,556 7,152,297 Short-term borrowings 513,496 601,121 Long-term borrowings 236,283 216,241 Accrued expenses and other liabilities 132,437 134,189 Total liabilities 8,208,772 8,103,848 Stockholders’ equity Preferred shares, no par value, 50,000 shares authorized, no shares issued at March 31, 2024 or at December 31, 2023 — — Common shares, no par value, 50,000,000 shares authorized, 36,747,787 shares issued at March 31, 2024 and 36,736,041 shares issued at December 31, 2023, including at each date shares held in treasury 861,925 865,227 Retained earnings 343,076 327,237 Accumulated other comprehensive loss, net of deferred income taxes ( 108,940 ) ( 101,590 ) Treasury stock, at cost, 1,355,337 shares at March 31, 2024 and 1,511,348 shares at December 31, 2023 ( 34,059 ) ( 37,340 ) Total stockholders’ equity 1,062,002 1,053,534 Total liabilities and stockholders’ equity $ 9,270,774 $ 9,157,382 (a) Available-for-sale investment securities and held-to-maturity investment securities are presented net of allowance for credit losses of $ 0 and $ 238 , respectively, at March 31, 2024, and $ 0 and $ 238 , respectively, at December 31, 2023. (b) Also referred to throughout this Quarterly Report on Form 10-Q as "total loans" and "loans held for investment." (c) Also referred to throughout this Quarterly Report on Form 10-Q as "net loans." See Notes to the Unaudited Condensed Consolidated Financial Statements 3 Table of Co n tents PEOPLES BANCORP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, (Dollars in thousands, except per share data) 2024 2023 Interest income: Interest and fees on loans and leases $ 110,749 $ 71,762 Interest and dividends on taxable investment securities 13,919 11,003 Interest on tax-exempt investment securities 1,003 996 Other interest income 1,922 388 Total interest income 127,593 84,149 Interest expense: Interest on deposits 33,304 5,661 Interest on short-term borrowings 4,184 4,457 Interest on long-term borrowings 3,465 1,153 Total interest expense 40,953 11,271 Net interest income 86,640 72,878 Provision for credit losses 6,102 1,853 Net interest income after provision for credit losses 80,538 71,025 Non-interest income: Insurance income 6,498 5,425 Electronic banking income 6,046 5,443 Trust and investment income 4,599 4,084 Deposit account service charges 4,223 3,523 Bank owned life insurance income 1,500 707 Lease income 1,236 1,077 Mortgage banking income 321 314 Net loss on investment securities ( 1 ) ( 1,935 ) Net loss on asset disposals and other transactions ( 341 ) ( 246 ) Other non-interest income 1,698 668 Total non-interest income 25,779 19,060 Non-interest expense: Salaries and employee benefit costs 38,893 32,028 Net occupancy and equipment expense 6,283 4,955 Data processing and software expense 5,769 4,562 Professional fees 2,967 2,881 Amortization of other intangible assets 2,788 1,871 Electronic banking expense 1,781 1,491 Federal Deposit Insurance Corporation ("FDIC") insurance expense 1,186 801 Other loan expenses 1,076 739 Marketing expense 1,056 930 Franchise tax expense 881 1,034 Communication expense 799 613 Other non-interest expense 4,986 4,574 Total non-interest expense 68,465 56,479 Income before income taxes 37,852 33,606 Income tax expense 8,268 7,046 Net income $ 29,584 $ 26,560 Earnings per common share - basic $ 0.85 $ 0.95 Earnings per common share - diluted $ 0.84 $ 0.94 Weighted-average number of common shares outstanding - basic 34,740,349 27,891,760 Weighted-average number of common shares outstanding - diluted 35,051,810 28,021,879 Cash dividends declared $ 13,745 $ 10,725 Cash dividends declared per common share $ 0.39 $ 0.38 See Notes to the Unaudited Condensed Consolidated Financial Statements 4 Table of Co n tents PEOPLES BANCORP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended March 31, (Dollars in thousands) 2024 2023 Net income $ 29,584 $ 26,560 Other comprehensive (loss) income: Available-for-sale investment securities: Gross unrealized holding (loss) gain arising during the period ( 9,887 ) 20,362 Related tax benefit (expense) 2,340 ( 4,647 ) Reclassification adjustment for net loss included in net income 1 1,935 Related tax expense — ( 452 ) Net effect on other comprehensive (loss) income ( 7,546 ) 17,198 Defined benefit plan: Amortization of unrecognized loss and service cost on benefit plans — 2 Net effect on other comprehensive (loss) income — 2 Cash flow hedges: Net gain (loss) arising during the period 256 ( 1,356 ) Related tax (expense) benefit ( 60 ) 313 Net effect on other comprehensive (loss) income 196 ( 1,043 ) Total other comprehensive (loss) income, net of tax ( 7,350 ) 16,157 Total comprehensive income $ 22,234 $ 42,717 See Notes to the Unaudited Condensed Consolidated Financial Statements 5 Table of Co n tents PEOPLES BANCORP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) Accumulated Other Comprehensive Loss Total Stockholders' Equity Common Shares Retained Earnings Treasury Stock (Dollars in thousands) Balance, December 31, 2023 $ 865,227 $ 327,237 $ ( 101,590 ) $ ( 37,340 ) $ 1,053,534 Net income — 29,584 — — 29,584 Other comprehensive loss, net of tax — — ( 7,350 ) — ( 7,350 ) Cash dividends declared — ( 13,745 ) — — ( 13,745 ) Reissuance of treasury stock for common share awards ( 6,862 ) — — 6,862 — Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors — — — ( 869 ) ( 869 ) Common shares repurchased under share repurchase program — — — ( 3,000 ) ( 3,000 ) Common shares issued under dividend reinvestment plan 455 — — — 455 Common shares issued under compensation plan for Boards of Directors 21 — — 117 138 Common shares issued under employee stock purchase plan 60 — — 171 231 Stock-based compensation 3,024 — — — 3,024 Balance, March 31, 2024 $ 861,925 $ 343,076 $ ( 108,940 ) $ ( 34,059 ) $ 1,062,002 Accumulated Other Comprehensive Loss Total Stockholders' Equity Common Shares Retained Earnings Treasury Stock (Dollars in thousands) Balance, December 31, 2022 $ 686,450 $ 265,936 $ ( 127,136 ) $ ( 39,922 ) $ 785,328 Net income — 26,560 — — 26,560 Other comprehensive income, net of tax — — 16,157 — 16,157 Cash dividends declared — ( 10,725 ) — — ( 10,725 ) Reissuance of treasury stock for common share awards ( 4,685 ) — — 4,685 — Repurchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors — — — ( 920 ) ( 920 ) Common shares issued under dividend reinvestment plan 402 — — — 402 Common shares issued under compensation plan for Boards of Directors 8 — — 128 136 Common shares issued under employee stock purchase plan 42 — — 413 455 Stock-based compensation 2,150 — — — 2,150 Balance, March 31, 2023 $ 684,367 $ 281,771 $ ( 110,979 ) $ ( 35,616 ) $ 819,543 See Notes to the Unaudited Condensed Consolidated Financial Statements 6 Table of Co n tents PEOPLES BANCORP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, (Dollars in thousands) 2024 2023 Net cash provided by operating activities $ 37,009 $ 47,997 Investing activities: Available-for-sale investment securities: Purchases ( 105,652 ) ( 22,873 ) Proceeds from sales — 95,362 Proceeds from principal payments, calls and prepayments 26,976 27,922 Held-to-maturity investment securities: Purchases ( 5,114 ) ( 167,169 ) Proceeds from principal payments 9,268 33,324 Other investment securities: Purchases ( 7,302 ) ( 4,792 ) Proceeds from sales 8,028 3,746 Net increase in loans held for investment ( 43,339 ) ( 52,386 ) Net expenditures for premises and equipment ( 3,870 ) ( 2,757 ) Proceeds from sales of other real estate owned — 107 Business acquisitions, net of cash received — ( 200 ) Proceeds from bank owned life insurance contracts 486 — Investment in limited partnership and tax credit funds ( 2,566 ) ( 267 ) Net cash used in investing activities ( 123,085 ) ( 89,983 ) Financing activities: Net decrease in non-interest-bearing deposits ( 99,286 ) ( 34,338 ) Net increase in interest-bearing deposits 273,573 105,991 Net decrease in short-term borrowings ( 87,625 ) ( 9,468 ) Proceeds from long-term borrowings 26,770 2,899 Payments on long-term borrowings ( 7,047 ) ( 8,450 ) Cash dividends paid ( 13,893 ) ( 10,993 ) Purchase of treasury stock under share repurchase program ( 3,000 ) — Purchase of treasury stock in connection with employee incentive program and compensation plan for Boards of Directors to be held as treasury stock ( 869 ) ( 920 ) Proceeds from issuance of common shares 451 397 Net cash provided by financing activities 89,074 45,118 Net increase in cash and cash equivalents 2,998 3,132 Cash and cash equivalents at beginning of period 426,722 154,022 Cash and cash equivalents at end of period $ 429,720 $ 157,154 Supplemental cash flow information: Interest paid $ 37,614 $ 9,675 Income taxes paid 70 105 Supplemental noncash disclosures: Transfers from total loans to other real estate owned 64 — Noncash recognition of new leases 509 336 See Notes to the Unaudited Condensed Consolidated Financial Statements 7 Table of Co n tents PEOPLES BANCORP INC. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1 Summary of Significant Accounting Policies Basis of Presentation: The accompanying Unaudited Condensed Consolidated Financial Statements of Peoples Bancorp Inc. and its subsidiaries ("Peoples" refers to Peoples Bancorp Inc. and its consolidated subsidiaries collectively, except where the context indicates the reference relates solely to Peoples Bancorp Inc.) have been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP") for interim financial information and the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not contain all of the information and footnotes required by US GAAP for annual financial statements and should be read in conjunction with Peoples’ Annual Report on Form 10-K for the fiscal year ended December 31, 2023 ("Peoples' 2023 Form 10-K"). The accounting and reporting policies followed in the presentation of the accompanying Unaudited Condensed Consolidated Financial Statements are consistent with those described in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples’ 2023 Form 10-K, as updated by the information contained in this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024 (this "Form 10-Q"). Management has evaluated all significant events and transactions that occurred after March 31, 2024 for potential recognition or disclosure in these Unaudited Condensed Consolidated Financial Statements. In the opinion of management, these Unaudited Condensed Consolidated Financial Statements reflect all adjustments necessary to present fairly such information for the periods and at the dates indicated. Such adjustments are normal and recurring in nature. Intercompany accounts and transactions have been eliminated. The Consolidated Balance Sheet at December 31, 2023, contained herein, has been derived from the audited Consolidated Balance Sheet included in Peoples’ 2023 Form 10-K. The preparation of the condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Results of operations for interim periods are not necessarily indicative of the results to be expected for the full year, due in part to seasonal variations and unusual or infrequently occurring items. New Accounting Pronouncements: From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies that are adopted by Peoples as of the required effective dates. Refer to "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples’ 2023 Form 10-K. Unless otherwise discussed, management believes the impact of any recently issued standards, including those issued but not yet effective, will not have a material impact on Peoples' financial statements taken as a whole. Note 2 Fair Value of Assets and Liabilities Fair value represents the amount expected to be received to sell an asset or paid to transfer a liability in its principal or most advantageous market in an orderly transaction between market participants at the measurement date. In accordance with fair value accounting guidance, Peoples measures, records and reports various types of assets and liabilities at fair value on either a recurring or a non-recurring basis in the Unaudited Condensed Consolidated Financial Statements. Those assets and liabilities are presented below in the sections entitled “Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis” and “Assets and Liabilities Required to be Measured and Reported at Fair Value on a Non-Recurring Basis.” Depending on the nature of the asset or the liability, Peoples uses various valuation methodologies and assumptions to estimate fair value. The measurement of fair value under US GAAP uses a hierarchy, which is described in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' 2023 Form 10-K. Assets and liabilities are assigned to a level within the fair value hierarchy based on the lowest level of significant input used to measure fair value. Assets and liabilities may change levels within the fair value hierarchy due to market conditions or other circumstances. Those transfers are recognized on the date of the event that prompted the transfer. There were no transfers of assets or liabilities required to be measured at fair value on a recurring basis between levels of the fair value hierarchy during the periods presented. 8 Table of Co n tents Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis The following table provides the fair value for assets and liabilities required to be measured and reported at fair value on a recurring basis on the Unaudited Consolidated Balance Sheets by level in the fair value hierarchy. Recurring Fair Value Measurements at Reporting Date March 31, 2024 December 31, 2023 (Dollars in thousands) Level 1 Level 2 Level 1 Level 2 Assets: Available-for-sale investment securities: Obligations of: U.S. Treasury and government agencies $ 28,773 $ — $ 30,296 $ — U.S. government sponsored agencies — 200,460 — 118,607 States and political subdivisions — 208,750 — 213,296 Residential mortgage-backed securities — 621,691 — 628,924 Commercial mortgage-backed securities — 50,791 — 51,234 Bank-issued trust preferred securities — 6,001 — 5,965 Total available-for-sale securities $ 28,773 $ 1,087,693 $ 30,296 $ 1,018,026 Equity investment securities (a) 197 236 191 237 Derivative assets (b) — 25,149 — 22,304 Liabilities: Derivative liabilities (c) $ — $ 21,684 $ — $ 19,122 (a) Included in "Other investment securities" on the Unaudited Consolidated Balance Sheets. For additional information, see "Note 3 Investment Securities" of the Notes to the Unaudited Condensed Consolidated Financial Statements. (b) Included in " Other assets " on the Unaudited Consolidated Balance Sheets. For additional information, see "Note 10 Derivative Financial Instruments" of the Notes to the Unaudited Condensed Consolidated Financial Statements. (c) Included in " Accrued expenses and other liabilities " on the Unaudited Consolidated Balance Sheets. For additional information, see "Note 10 Derivative Financial Instruments" of the Notes to the Unaudited Condensed Consolidated Financial Statements. Available-for-Sale Investment Securities: The fair values used by Peoples are obtained from an independent pricing service and represent either quoted market prices for the identical securities (Level 1) or fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, secured overnight funding rate ("SOFR") (or other relevant) yield curves, credit spreads and prices from market makers and live trading systems (Level 2). Management reviews the valuation methodology and quality controls utilized by the pricing services or broker in management's overall assessment of the reasonableness of the fair values provided, and challenges prices when management believes a material discrepancy in pricing exists. Equity Investment Securities: The fair values of Peoples' equity investment securities are obtained from q uoted prices in active exchange markets for identical assets or liabilities (Level 1) or quoted prices in less active markets (Level 2). Derivative Assets and Derivative Liabilities : Derivative assets and derivative liabilities are recognized on the Unaudited Consolidated Balance Sheets at their fair value within "Other assets" and "Accrued expenses and other liabilities", respectively. The fair value for derivative financial instruments is determined based on market prices, broker-dealer quotations on similar products, or other related input parameters (Level 2). 9 Table of Co n tents Assets and Liabilities Required to be Measured and Reported at Fair Value on a Non-Recurring Basis The following table provides the fair value for each class of assets and liabilities required to be measured and reported at fair value on a non-recurring basis on the Unaudited Consolidated Balance Sheets by level in the fair value hierarchy at March 31, 2024 and December 31, 2023. Non-Recurring Fair Value Measurements at Reporting Date March 31, 2024 December 31, 2023 (Dollars in thousands) Level 2 Level 3 Level 2 Level 3 Assets: Collateral dependent loans $ — $ 1,928 $ — $ 501 Loans held for sale (a) 2,123 — 1,663 — Other real estate owned — 63 — 7,118 (a) Loans held for sale are presented gross of a valuation allowance of $ 138 and $ 163 at March 31, 2024 and at December 31, 2023, respectively. Collateral Dependent Loans: Loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty, are considered collateral dependent. Peoples utilizes outside third-party appraisal services to value the underlying collateral, which Peoples then uses to report the loans at their fair value (Level 3). Loans Held for Sale: Loans originated and intended to be sold in the secondary market, generally one-to-four family residential loans, are carried, in aggregate, at the lower of cost or estimated fair value. Peoples uses a valuation model using quoted market prices of similar instruments in arriving at the fair value (Level 2). Other Real Estate Owned ("OREO"): OREO, included in "Other assets" on the Unaudited Consolidated Balance Sheets, is comprised primarily of commercial and residential real estate properties acquired by Peoples in satisfaction of a loan. OREO obtained in satisfaction of a loan is recorded at the lower of cost or estimated fair value, less estimated costs to sell the property. The carrying value of OREO is not re-measured to fair value on a recurring basis, but is based on recent real estate appraisals and is updated at least annually. These appraisals may utilize a single valuation approach or a combination of approaches, including the comparable sales approach and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available (Level 3). 10 Table of Co n tents Financial Instruments Not Required to be Measured or Reported at Fair Value The following table provides the carrying amount for each class of assets and liabilities and the fair value for certain financial instruments that are not required to be measured or reported at fair value on the Unaudited Consolidated Balance Sheets. Fair Value Measurements of Other Financial Instruments (Dollars in thousands) Fair Value Hierarchy Level March 31, 2024 December 31, 2023 Carrying Amount Fair Value Carrying Amount Fair Value Assets: Cash and cash equivalents 1 $ 429,720 $ 429,720 $ 426,722 $ 426,722 Held-to-maturity investment securities: Obligations of: U.S. government sponsored agencies 2 188,423 179,645 188,475 180,825 States and political subdivisions (a) 2 144,315 113,075 144,496 114,288 Residential mortgage-backed securities 2 246,579 225,621 248,559 231,620 Commercial mortgage-backed securities 2 100,427 83,771 102,365 85,289 Total held-to-maturity securities 679,744 602,112 683,895 612,022 Other investment securities: Other investment securities at cost: Federal Home Loan Bank ("FHLB") stock N/A 28,426 28,426 29,949 29,949 Federal Reserve Bank ("FRB") stock N/A 27,114 27,114 26,896 26,896 Total other investment securities at cost 55,540 55,540 56,845 56,845 Other investment securities at fair value: Nonqualified deferred compensation (b) 1 3,890 3,890 3,162 3,162 Other investment securities (c) 2 3,076 3,076 2,985 2,985 Total other investment securities 62,506 62,506 62,992 62,992 Loans and leases, net of deferred fees and costs (d) 3 6,202,827 6,059,878 6,159,196 6,064,999 Bank owned life insurance 2 141,568 141,568 140,554 140,554 Liabilities: Deposits 2 $ 7,326,556 $ 6,410,812 $ 7,152,297 $ 6,319,885 Short-term borrowings 2 513,496 527,408 601,121 619,999 Long-term borrowings 2 236,283 242,685 216,241 222,743 (a) Held-to-maturity investment securities are presented gross of an allowance for credit losses of $ 238 at both March 31, 2024 and December 31, 2023. (b) Nonqualified deferred compensation includes mutual funds as part of the investment. (c) "Other investment securities", as reported on the Unaudited Consolidated Balance Sheets, also included equity investment securities at March 31, 2024 and at December 31, 2023, which are reported in the Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis table above and not included in this table. (d) Loans and leases, net of deferred fees and costs, are presented gross of an allowance for credit losses of $ 64.8 million and $ 62.0 million at March 31, 2024 and at December 31, 2023, respectively. For certain financial assets and liabilities, carrying value approximates fair value due to the nature of the financial instrument. These financial instruments include cash and cash equivalents and overnight borrowings. Peoples used the following methods and assumptions in estimating the fair value of the following financial instruments: Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, balances due from other banks, interest-bearing deposits in other banks, federal funds sold and other short-term investments with original maturities of ninety days or less. The carrying amount for cash and cash equivalents balances are a reasonable estimate of fair value (Level 1). Held-to-Maturity Investment Securities: The fair values used by Peoples are obtained from an independent pricing service and represent fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, relevant yield curves, credit spreads and prices from market makers and live trading systems (Level 2). When observable market data is absent, the independent pricing service estimates prices based on underlying cash flow characteristics and discount rates and compares them to similar securities (Level 3). Management reviews the valuation methodology and quality controls utilized by the pricing services in management's overall assessment 11 Table of Co n tents of the reasonableness of the fair values provided, and challenges prices when management believes a material discrepancy in pricing exists. Other Investment Securities: Other investment securities at cost are not recorded at fair value as they are not marketable securities. Other investment securities at fair value are valued using quoted prices in an active market (Level 1) or quoted prices in less active markets (Level 2). Loans and Leases, Net of Deferred Fees and Costs: The fair value of portfolio loans and leases assumes sale of the underlying notes to a third-party financial investor. Accordingly, this value is not necessarily the value to Peoples if the notes were held to maturity. Peoples considers interest rate, credit and market factors in estimating the fair value of loans and leases (Level 3). Fair values for loans and leases are estimated using a discounted cash flow methodology. The discount rates take into account interest rates currently being offered to customers for loans and leases with similar terms, the credit risk associated with the loans and leases and other market factors, including liquidity. Bank Owned Life Insurance: Peoples' bank owned life insurance policies are recorded at their cash surrender value (Level 2). Peoples recognizes tax-exempt income from the periodic increases in the cash surrender value of these policies and from death benefits. Deposits: The fair value of fixed-maturity certificates of deposit ("CDs") is estimated using a discounted cash flow calculation based on current rates offered for deposits of similar remaining maturities. Demand and other non-fixed-maturity deposits are estimated using a discounted cash flow calculation based on maturity, attrition and re-pricing assumptions (Level 2). Short-term Borrowings: The fair value of short-term borrowings is estimated using a discounted cash flow analysis based on rates currently available to Peoples for borrowings with similar terms (Level 2). Long-term Borrowings: The fair value of long-term borrowings is estimated using a discounted cash flow analysis based on rates currently available to Peoples for borrowings with similar terms (Level 2). Certain financial assets and financial liabilities that are not required to be measured or reported at fair value can be subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These financial assets and financial liabilities include the following: customer relationships, the deposit base, and other information required to compute Peoples’ aggregate fair value, which are not included in the above information. Accordingly, the fair values described above are not intended to represent the aggregate fair value of Peoples. 12 Table of Co n tents Note 3 Investment Securities Available-for-sale The following table summarizes Peoples' available-for-sale investment securities: (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value March 31, 2024 Obligations of: U.S. Treasury and government agencies $ 29,807 $ 113 $ ( 1,147 ) $ 28,773 U.S. government sponsored agencies 210,871 597 ( 11,008 ) 200,460 States and political subdivisions 237,207 92 ( 28,549 ) 208,750 Residential mortgage-backed securities 717,657 1,366 ( 97,332 ) 621,691 Commercial mortgage-backed securities 60,277 1 ( 9,487 ) 50,791 Bank-issued trust preferred securities 6,500 — ( 499 ) 6,001 Total available-for-sale securities $ 1,262,319 $ 2,169 $ ( 148,022 ) $ 1,116,466 December 31, 2023 Obligations of: U.S. Treasury and government agencies $ 30,999 $ 292 $ ( 995 ) $ 30,296 U.S. government sponsored agencies 128,500 639 ( 10,532 ) 118,607 States and political subdivisions 239,906 485 ( 27,095 ) 213,296 Residential mortgage-backed securities 717,772 1,819 ( 90,667 ) 628,924 Commercial mortgage-backed securities 60,611 5 ( 9,382 ) 51,234 Bank-issued trust preferred securities 6,500 — ( 535 ) 5,965 Total available-for-sale securities $ 1,184,288 $ 3,240 $ ( 139,206 ) $ 1,048,322 The gross gains and losses realized by Peoples from sales of available-for-sale securities for the periods ended March 31 were as follows: Three Months Ended March 31, (Dollars in thousands) 2024 2023 Gross gains realized $ — $ 78 Gross losses realized 1 2,013 Net (loss) gain realized $ ( 1 ) $ ( 1,935 ) The cost of investment securities sold, and any resulting gain or loss, were based on the specific identification method and recognized as of the trade date. 13 Table of Co n tents The following table presents a summary of available-for-sale investment securities that have been in a continuous unrealized loss position for the periods identified: Less than 12 Months 12 Months or More Total (Dollars in thousands) Fair Value Unrealized Loss No. of Securities Fair Value Unrealized Loss No. of Securities Fair Value Unrealized Loss March 31, 2024 Obligations of: U.S. Treasury and government agencies $ 12,003 $ 173 23 $ 11,565 $ 974 5 $ 23,568 $ 1,147 U.S. government sponsored agencies 63,921 114 10 77,014 10,894 15 140,935 11,008 States and political subdivisions 26,352 439 66 171,591 28,110 144 197,943 28,549 Residential mortgage-backed securities 70,006 1,833 75 517,070 95,499 239 587,076 97,332 Commercial mortgage-backed securities 6,380 152 8 44,290 9,335 21 50,670 9,487 Bank-issued trust preferred securities 1,988 12 1 4,013 487 3 6,001 499 Total $ 180,650 $ 2,723 183 $ 825,543 $ 145,299 427 $ 1,006,193 $ 148,022 December 31, 2023 Obligations of: U.S. Treasury and government agencies $ 8,568 $ 83 22 $ 11,631 $ 912 5 $ 20,199 $ 995 U.S. government sponsored agencies 14,439 35 4 74,211 10,497 15 88,650 10,532 States and political subdivisions 18,268 136 32 167,346 26,959 138 185,614 27,095 Residential mortgage-backed securities 58,671 1,150 66 529,895 89,517 238 588,566 90,667 Commercial mortgage-backed securities 6,000 112 7 44,656 9,270 21 50,656 9,382 Bank-issued trust preferred securities 1,984 16 1 3,981 519 3 5,965 535 Total $ 107,930 $ 1,532 132 $ 831,720 $ 137,674 420 $ 939,650 $ 139,206 Management evaluates available-for-sale investment securities for an allowance for credit losses on a quarterly basis. At March 31, 2024, management concluded that no individual securities at an unrealized loss position required an allowance for credit losses. At March 31, 2024, Peoples did not have the intent to sell, nor was it more likely than not that Peoples would be required to sell, any of the securities with an unrealized loss prior to recovery. Further, the unrealized losses at both March 31, 2024 and December 31, 2023 were largely attributable to changes in market interest rates and spreads since the securities were purchased, and were not credit-related losses. Accrued interest receivable is not included in investment securities balances, and is presented in the “Other assets” line of the Unaudited Consolidated Balance Sheets, with no recorded allowance for credit losses. Interest receivable on investment securities was $ 9.8 million at March 31, 2024 and $ 8.8 million at December 31, 2023. The unrealized loss with respect to the three bank-issued trust preferred securities that had been in an unrealized loss position for twelve months or more at March 31, 2024 was attributable to the subordinated nature of the trust preferred securities. 14 Table of Co n tents The table below presents the amortized cost, fair value and total weighted-average yield of available-for-sale securities by contractual maturity at March 31, 2024. The weighted-average yields are based on the amortized cost. In some cases, the issuers may have the right to call or prepay obligations without call or prepayment penalties prior to the contractual maturity date. (Dollars in thousands) Within 1 Year 1 to 5 Years 5 to 10 Years Over 10 Years Total Amortized cost Obligations of: U.S. Treasury and government agencies $ 985 $ 15,661 $ 7,272 $ 5,889 $ 29,807 U.S. government sponsored agencies — 62,046 64,074 84,751 210,871 States and political subdivisions 10,319 45,388 59,362 122,138 237,207 Residential mortgage-backed securities 1 3,330 59,060 655,266 717,657 Commercial mortgage-backed securities — 12,392 27,108 20,777 60,277 Bank-issued trust preferred securities 2,000 1,000 3,500 — 6,500 Total available-for-sale securities $ 13,305 $ 139,817 $ 220,376 $ 888,821 $ 1,262,319 Fair value Obligations of: U.S. Treasury and government agencies $ 978 $ 14,619 $ 7,303 $ 5,873 $ 28,773 U.S. government sponsored agencies — 57,082 60,078 83,300 200,460 States and political subdivisions 10,264 42,516 50,785 105,185 208,750 Residential mortgage-backed securities 1 3,208 53,811 564,671 621,691 Commercial mortgage-backed securities — 11,223 22,783 16,785 50,791 Bank-issued trust preferred securities 1,988 942 3,071 — 6,001 Total available-for-sale securities $ 13,231 $ 129,590 $ 197,831 $ 775,814 $ 1,116,466 Total weighted-average yield 3.59 % 2.31 % 2.77 % 2.73 % 2.70 % Held-to-maturity The following table summarizes Peoples’ held-to-maturity investment securities: (Dollars in thousands) Amortized Cost Allowance for Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value March 31, 2024 Obligations of: U.S. government sponsored agencies $ 188,423 $ — $ 309 $ ( 9,087 ) $ 179,645 States and political subdivisions 144,315 ( 238 ) 73 ( 31,075 ) 113,075 Residential mortgage-backed securities 246,579 — 672 ( 21,630 ) 225,621 Commercial mortgage-backed securities 100,427 — — ( 16,656 ) 83,771 Total held-to-maturity investment securities $ 679,744 $ ( 238 ) $ 1,054 $ ( 78,448 ) $ 602,112 December 31, 2023 Obligations of: U.S. government sponsored agencies $ 188,475 $ — $ 489 $ ( 8,139 ) $ 180,825 States and political subdivisions 144,496 ( 238 ) 134 ( 30,104 ) 114,288 Residential mortgage-backed securities 248,559 — 1,643 ( 18,582 ) 231,620 Commercial mortgage-backed securities 102,365 — — ( 17,076 ) 85,289 Total held-to-maturity investment securities $ 683,895 $ ( 238 ) $ 2,266 $ ( 73,901 ) $ 612,022 There were no sales of held-to-maturity investment securities during either of the three months ended March 31, 2024 or 2023. Management evaluates held-to-maturity investment securities for an allowance for credit losses on a quarterly basis. Peoples has determined that the loss given default for U.S. government sponsored agencies investment securities is zero , due to the fact that it is unlikely the ultimate guarantor (the U.S. government) would not perform on its implicit guarantee in the event of default. The remaining securities are included in the calculation of the allowance for credit losses for held-to-maturity investment securities. Peoples reported $ 0.2 million of allowance for credit losses for held-to-maturity securities at both March 31, 2024, and December 31, 2023. The following table presents a summary of held-to-maturity investment securities that had been in a continuous unrealized loss position for the periods identified: 15 Table of Co n tents Less than 12 Months 12 Months or More Total (Dollars in thousands) Fair Value Unrealized Loss No. of Securities Fair Value Unrealized Loss No. of Securities Fair Value Unrealized Loss March 31, 2024 Obligations of: U.S. government sponsored agencies $ 35,986 $ 537 12 118,531 8,550 21 $ 154,517 $ 9,087 States and political subdivisions — — — 109,887 31,075 67 109,887 31,075 Residential mortgage-backed securities 51,550 1,274 17 133,314 20,356 39 184,864 21,630 Commercial mortgage-backed securities 8,575 1,297 5 73,196 15,359 30 81,771 16,656 Total $ 96,111 $ 3,108 34 $ 434,928 $ 75,340 157 $ 531,039 $ 78,448 December 31, 2023 Obligations of: U.S. government sponsored agencies $ 64,487 $ 356 14 $ 86,071 $ 7,783 18 $ 150,558 $ 8,139 States and political subdivisions — — — 111,040 30,104 67 111,040 30,104 Residential mortgage-backed securities 44,379 1,105 14 117,654 17,477 34 162,033 18,582 Commercial mortgage-backed securities 13,919 1,845 6 71,370 15,231 31 85,289 17,076 Total $ 122,785 $ 3,306 34 $ 386,135 $ 70,595 150 $ 508,920 $ 73,901 The table below presents the amortized cost, fair value and total weighted-average yield of held-to-maturity investment securities by contractual maturity at March 31, 2024. The weighted-average yields are based on the amortized cost and are computed on a fully taxable-equivalent basis using a blended federal and state corporate income tax rate of 23.2 % at March 31, 2024. In some cases, the issuers may have the right to call or prepay obligations without call or prepayment penalties prior to the contractual maturity date. (Dollars in thousands) Within 1 Year 1 to 5 Years 5 to 10 Years Over 10 Years Total Amortized cost Obligations of: U.S. government sponsored agencies 10,500 $ 10,643 $ 67,056 $ 100,224 $ 188,423 States and political subdivisions — 6,422 11,419 126,474 144,315 Residential mortgage-backed securities — 451 4,241 241,887 246,579 Commercial mortgage-backed securities 1,490 9,371 38,821 50,745 100,427 Total held-to-maturity investment securities $ 11,990 $ 26,887 $ 121,537 $ 519,330 $ 679,744 Fair value Obligations of: U.S. government sponsored agencies 10,419 $ 10,144 $ 66,436 $ 92,646 $ 179,645 States and political subdivisions — 6,249 9,813 97,013 113,075 Residential mortgage-backed securities — 441 3,696 221,484 225,621 Commercial mortgage-backed securities 1,478 8,719 32,914 40,660 83,771 Total held-to-maturity investment securities $ 11,897 $ 25,553 $ 112,859 $ 451,803 $ 602,112 Total weighted-average yield 3.85 % 2.51 % 4.00 % 3.51 % 3.57 % Other Investment Securities Peoples' other investment securities on the Unaudited Consolidated Balance Sheets consist largely of shares of FHLB stock and of FRB stock. 16 Table of Co n tents The following table summarizes the carrying value of Peoples' other investment securities: (Dollars in thousands) March 31, 2024 December 31, 2023 FHLB stock $ 28,426 $ 29,949 FRB stock 27,114 26,896 Nonqualified deferred compensation 3,890 3,162 Equity investment securities 2,640 2,545 Other investment securities 869 869 Total other investment securities $ 62,939 $ 63,421 During the three months ended March 31, 2024, Peoples redeemed $ 8.0 million of FHLB stock in order to be in compliance with the requirements of the FHLB. Peoples purchased $ 6.5 million of additional FHLB stock during the three months ended March 31, 2024, as a result of the FHLB's capital requirements on FHLB advances. For the three months ended March 31, 2024 and 2023, Peoples recorded the change in the fair value of equity investment securities held during the period, in "Other non-interest income", resulting in an unrealized gains of $ 47,000 and $ 21,000 , respectively. At March 31, 2024, Peoples' investment in equity investment securities was comprised largely of common stocks issued by various unrelated bank holding companies. There were no equity investment securities of a single issuer that exceeded 10% of Peoples' stockholders' equity at March 31, 2024. Pledged Securities Peoples has pledged available-for-sale investment securities and held-to-maturity investment securities to secure public and trust department deposits, and repurchase agreements in accordance with federal and state requirements. Peoples has also pledged available-for-sale investment securities to secure additional borrowing capacity at the FHLB and the FRB. The following table summarizes the carrying amount of Peoples' pledged securities: Carrying Amount (Dollars in thousands) March 31, 2024 December 31, 2023 Securing public and trust department deposits, and repurchase agreements: Available-for-sale $ 809,988 $ 713,033 Held-to-maturity 568,473 559,142 Securing additional borrowing capacity at the FHLB and the FRB: Available-for-sale 98,146 85,899 Held-to-maturity 50,046 39,607 Note 4 Loans and Leases Peoples' loan portfolio consists of various types of loans and leases originated primarily as a result of lending opportunities within Peoples' footprint. Peoples also originates insurance premium finance loans nationwide through its Peoples Premium Finance division, and originates leases nationwide through its North Star Leasing ("NSL") division and its Vantage Financial, LLC ("Vantage") subsidiary. 17 Table of Co n tents The major classifications of loan balances (in each case, net of deferred fees and costs) excluding loans held for sale, were as follows: (Dollars in thousands) March 31, 2024 December 31, 2023 Construction $ 314,687 $ 364,019 Commercial real estate, other 2,243,780 2,196,957 Commercial and industrial 1,214,615 1,184,986 Premium finance 238,962 203,177 Leases 422,694 414,060 Residential real estate 781,888 791,095 Home equity lines of credit 221,079 208,675 Consumer, indirect 650,228 666,472 Consumer, direct 113,588 128,769 Deposit account overdrafts 1,306 986 Total loans, at amortized cost $ 6,202,827 $ 6,159,196 Accrued interest receivable is not included within the loan balances, but is presented in the “Other assets” line of the Unaudited Consolidated Balance Sheets, with no recorded allowance for credit losses. Total interest receivable on loans was $ 24.3 million at March 31, 2024 and $ 24.5 million at December 31, 2023. Nonaccrual and Past Due Loans A loan is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan agreement. A loan may be placed on nonaccrual status regardless of whether or not such loan is considered past due. The amortized cost of loans on nonaccrual status and of loans delinquent for 90 days or more and accruing was as follows: March 31, 2024 December 31, 2023 (Dollars in thousands) Nonaccrual (a) Accruing Loans 90+ Days Past Due Nonaccrual (a) Accruing Loans 90+ Days Past Due Construction $ — $ — $ — $ — Commercial real estate, other 3,773 231 2,816 78 Commercial and industrial 6,205 10 2,758 316 Premium finance — 2,208 — 1,355 Leases 10,136 4,070 8,436 3,826 Residential real estate 7,450 780 7,921 877 Home equity lines of credit 1,134 181 1,022 171 Consumer, indirect 2,506 134 2,412 68 Consumer, direct 157 48 112 25 Total loans, at amortized cost $ 31,361 $ 7,662 $ 25,477 $ 6,716 (a) There were $ 3.8 million of nonaccrual loans for which there was no allowance for credit losses at March 31, 2024 and $ 1.2 million of nonaccrual loans for which there was no allowance for credit losses at December 31, 2023. During the first three months of 2024, nonaccrual loans increased compared to at December 31, 2023, which was primarily due to one large commercial and industrial loan of approximately $ 1.9 million that went on nonaccrual status during the first quarter of 2024. Further, two leases went on nonaccrual status during the quarter which increased the amount reported by $ 1.4 million. The increase in accruing loans 90+ days past due at March 31, 2024 when compared to at December 31, 2023, was primarily due to an increase in premium finance loans of approximately $ 0.9 million which was partially offset by a decrease in commercial and industrial loans. The amount of interest income recognized on accruing loans 90+ days past due during the three months ended March 31, 2024 was $ 0.5 million. The following table presents the aging of the amortized cost of past due loans: 18 Table of Co n tents Loans Past Due Current Loans Total Loans (Dollars in thousands) 30 - 59 days 60 - 89 days 90 + Days Total March 31, 2024 Construction $ — $ 15 $ — $ 15 $ 314,672 $ 314,687 Commercial real estate, other 2,369 1,332 2,315 6,016 2,237,764 2,243,780 Commercial and industrial 2,482 850 3,772 7,104 1,207,511 1,214,615 Premium finance 1,436 889 2,208 4,533 234,429 238,962 Leases 15,567 2,496 13,902 31,965 390,729 422,694 Residential real estate 11,726 1,179 4,177 17,082 764,806 781,888 Home equity lines of credit 1,386 731 870 2,987 218,092 221,079 Consumer, indirect 5,448 569 1,421 7,438 642,790 650,228 Consumer, direct 553 129 105 787 112,801 113,588 Deposit account overdrafts — — — — 1,306 1,306 Total loans, at amortized cost $ 40,967 $ 8,190 $ 28,770 $ 77,927 $ 6,124,900 $ 6,202,827 December 31, 2023 Construction $ 13 $ 52 $ — $ 65 $ 363,954 $ 364,019 Commercial real estate, other 2,728 4,556 1,572 8,856 2,188,101 2,196,957 Commercial and industrial 1,717 1,491 3,052 6,260 1,178,726 1,184,986 Premium finance 1,288 867 1,355 3,510 199,667 203,177 Leases 12,743 4,932 12,014 29,689 384,371 414,060 Residential real estate 14,021 2,733 4,481 21,235 769,860 791,095 Home equity lines of credit 1,561 691 683 2,935 205,740 208,675 Consumer, indirect 7,488 1,550 1,230 10,268 656,204 666,472 Consumer, direct 536 282 43 861 127,908 128,769 Deposit account overdrafts — — — — 986 986 Total loans, at amortized cost $ 42,095 $ 17,154 $ 24,430 $ 83,679 $ 6,075,517 $ 6,159,196 Delinquency trends improved slightly, as 98.7 % of Peoples' loan portfolio was considered “current” at March 31, 2024, compared to 98.6 % at December 31, 2023. Pledged Loans Peoples has pledged certain loans secured by one-to-four family and multifamily residential mortgages, home equity lines of credit and commercial real estate loans under a blanket collateral agreement to secure borrowings from the FHLB. Peoples also has pledged eligible commercial and industrial loans to secure borrowings with the FRB. Loans pledged are summarized as follows: (Dollars in thousands) March 31, 2024 December 31, 2023 Loans pledged to FHLB $ 1,173,512 $ 1,206,134 Loans pledged to FRB 445,922 419,245 Credit Quality Indicators As discussed in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' 2023 Form 10-K, Peoples categorizes the majority of its loans into risk categories based upon an established risk grading matrix using a scale of 1 to 8. Loan grades are assigned at the time a new loan or lending commitment is extended by Peoples and may be changed at any time when circumstances warrant. Commercial loans to borrowers with an aggregate unpaid principal balance in excess of $ 1.0 million are reviewed at least on an annual basis for possible credit deterioration. Commercial leases, as well as loan relationships whose aggregate credit exposure to Peoples is equal to or less than $ 1.0 million, are reviewed on an event driven basis. Triggers for review include knowledge of adverse events affecting the borrower's business, receipt of financial statements indicating deteriorating credit quality or other similar events. Adversely classified loans are reviewed on a quarterly basis. A description of the general characteristics of the risk grades used by Peoples, follows: “Pass” (grades 1 through 4): Loans in this risk category involve borrowers of acceptable-to-strong credit quality and risk who have the apparent ability to satisfy their loan obligations. Loans in this risk category would possess sufficient mitigating factors, such as adequate collateral or strong guarantors possessing the capacity to repay the loan if required, for any weakness that may exist. 19 Table of Co n tents “Special Mention” (grade 5): Loans in this risk grade are the equivalent of the regulatory definition of “Other Assets Especially Mentioned.” Loans in this risk category possess some credit deficiency or potential weakness, which requires a high level of management attention. Potential weaknesses include declining trends in operating earnings and cash flows and/or reliance on a secondary source of repayment. If left uncorrected, these potential weaknesses may result in noticeable deterioration of the repayment prospects for the loan or in Peoples' credit position. “Substandard” (grade 6): Loans in this risk grade are inadequately protected by the borrower's current financial condition and payment capability or the collateral pledged, if any. Loans so classified have one or more well-defined weaknesses that jeopardize the orderly repayment of the loans. They are characterized by the distinct possibility that Peoples will sustain some loss if the weaknesses are not corrected. “Doubtful” (grade 7): Loans in this risk grade have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or orderly repayment in full, on the basis of current existing facts, conditions and values, highly questionable and improbable. Possibility of loss is extremely high, but because of certain important and reasonably specific factors that may work to the advantage and strengthening of the exposure, classification of each of these loans as an estimated loss is deferred until its more exact status may be determined. “Loss” (grade 8): Loans in this risk grade are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean a loan has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan, even though partial recovery may be obtained in the future. Charge-offs against the allowance for credit losses are taken during the period in which the loan becomes uncollectible. Consequently, Peoples typically does not maintain a recorded investment in loans within this category. Consumer loans and other smaller-balance loans are evaluated and categorized as "substandard," "doubtful" or "loss" based upon the regulatory definition of these classes and consistent with regulatory requirements. Leases are categorized as "special mention", "substandard", or "loss" based upon delinquency status and the prospect of collecting the remaining net investment balance owed under the lease. All other loans not evaluated individually, nor meeting the regulatory conditions to be categorized as described above, would be considered as being "not rated." The following table summarizes the risk category of loans within Peoples' loan portfolio, including acquired loans, based upon the most recent analysis performed at March 31, 2024: Term Loans at Amortized Cost by Origination Year Revolving Loans Converted to Term (Dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Total Loans Construction Pass $ 13,704 $ 94,507 $ 124,789 $ 56,375 $ 3,724 $ 17,756 $ — $ — $ 310,855 Special mention — — 918 — — 121 — — 1,039 Substandard — 1,192 1,573 — — 28 — — 2,793 Total 13,704 95,699 127,280 56,375 3,724 17,905 — — 314,687 Current period gross charge-offs — — — — — — — Commercial real estate, other Pass 36,998 206,459 356,061 380,773 224,446 873,082 44,060 186 2,121,879 Special mention — 751 16,484 3,660 7,038 21,538 394 38 49,865 Substandard — 441 2,197 14,316 8,509 46,271 292 — 72,026 Doubtful — — — — — 10 — — 10 Total 36,998 207,651 374,742 398,749 239,993 940,901 44,746 224 2,243,780 Current period gross charge-offs — — 212 — — — 212 Commercial and industrial Pass 60,989 224,493 168,480 164,175 78,926 186,985 228,165 1,137 1,112,213 Special mention — 3,474 11,329 1,562 9,340 5,517 23,638 5,500 54,860 Substandard — 93 2,868 30,387 4,595 5,685 1,829 778 45,457 Doubtful — — 1,911 — — 174 — — 2,085 Total 60,989 228,060 184,588 196,124 92,861 198,361 253,632 7,415 1,214,615 20 Table of Co n tents Term Loans at Amortized Cost by Origination Year Revolving Loans Converted to Term (Dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Total Loans Current period gross charge-offs — — — 15 57 163 235 Premium Finance Pass 134,052 104,528 382 — — — — — 238,962 Total 134,052 104,528 382 — — — — — 238,962 Current period gross charge-offs — 31 23 — — — 54 Leases Pass 74,212 177,358 100,634 44,614 10,630 2,054 — — 409,502 Special mention — 1,575 1,179 295 105 — — — 3,154 Substandard — 2,378 4,555 2,364 328 413 — — 10,038 Total 74,212 181,311 106,368 47,273 11,063 2,467 — — 422,694 Current period gross charge-offs — 596 454 169 28 23 1,270 Residential real estate Pass 13,458 73,850 89,518 137,348 57,315 400,297 — — 771,786 Substandard — 119 188 453 178 9,082 — — 10,020 Loss — — — — — 82 — — 82 Total 13,458 73,969 89,706 137,801 57,493 409,461 — — 781,888 Current period gross charge-offs — — — 5 — 75 80 Home equity lines of credit Pass 18,738 40,864 41,076 31,757 18,917 68,214 26 1,066 219,592 Substandard — 40 58 95 34 1,252 — — 1,479 Loss — — — — — 8 — — 8 Total 18,738 40,904 41,134 31,852 18,951 69,474 26 1,066 221,079 Current period gross charge-offs — — — — — — — Consumer, indirect Pass 42,573 232,913 204,737 85,796 50,864 29,835 — — 646,718 Substandard — 760 934 756 568 412 — — 3,430 Loss — 30 45 3 — 2 — — 80 Total 42,573 233,703 205,716 86,555 51,432 30,249 — — 650,228 Current period gross charge-offs — 564 550 219 75 53 1,461 Consumer, direct Pass 16,228 35,984 32,493 15,127 7,061 6,405 — — 113,298 Substandard — 52 93 48 16 75 — — 284 21 Table of Co n tents Term Loans at Amortized Cost by Origination Year Revolving Loans Converted to Term (Dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Total Loans Loss — — — — — 6 — — 6 Total 16,228 36,036 32,586 15,175 7,077 6,486 — — 113,588 Current period gross charge-offs — 48 82 11 7 78 226 Deposit account overdrafts 1,306 — — — — — — — 1,306 Current period gross charge-offs 336 — — — — — 336 Total loans, at amortized cost 412,258 1,201,861 1,162,502 969,904 482,594 1,675,304 298,404 8,705 6,202,827 Total current period gross charge-offs $ 336 $ 1,239 $ 1,321 $ 419 $ 167 $ 392 $ 3,874 The following table summarizes the risk category of loans within Peoples' loan portfolio, including acquired loans, based upon the then most recent analysis performed at December 31, 2023: Term Loans at Amortized Cost by Origination Year (Dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Revolving Loans Converted to Term Total Loans Construction Pass $ 80,273 $ 141,245 $ 85,913 $ 27,169 $ 9,995 $ 12,723 $ — $ — $ 357,318 Special mention — 3,757 — — — 123 — — 3,880 Substandard 1,200 1,590 — — — 31 — — 2,821 Total 81,473 146,592 85,913 27,169 9,995 12,877 — — 364,019 Current period gross charge-offs — — 9 — — — 9 Commercial real estate, other Pass 199,565 327,762 366,752 227,604 262,099 650,265 37,177 189 2,071,224 Special mention 999 12,975 4,850 10,324 7,074 22,186 408 41 58,816 Substandard 287 2,421 5,878 8,679 1,972 47,213 457 — 66,907 Doubtful — — — — — 10 — — 10 Total 200,851 343,158 377,480 246,607 271,145 719,674 38,042 230 2,196,957 Current period gross charge-offs — — — 39 — 575 614 Commercial and industrial Pass 225,894 180,068 212,938 86,934 55,434 132,675 213,714 38 1,107,657 Special mention 540 12,051 533 9,723 4,722 6,336 16,236 8,614 50,141 Substandard 78 6,441 5,104 5,617 1,602 6,278 1,889 779 27,009 Doubtful — — — — — 179 — — 179 Total 226,512 198,560 218,575 102,274 61,758 145,468 231,839 9,431 1,184,986 Current period gross charge-offs — 36 202 25 173 415 851 Premium finance Pass 201,659 1,517 1 — — — — — 203,177 Total 201,659 1,517 1 — — — — — 203,177 Current period gross charge-offs 25 97 — — — — 122 Leases 22 Table of Co n tents Term Loans at Amortized Cost by Origination Year (Dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Revolving Loans Converted to Term Total Loans Pass 216,559 114,327 51,307 14,061 4,883 1,501 — — 402,638 Special mention 363 1,529 476 81 1 5 — — 2,455 Substandard 1,937 3,006 2,944 448 321 311 — — 8,967 Total 218,859 118,862 54,727 14,590 5,205 1,817 — — 414,060 Current period gross charge-offs 963 1,328 1,173 233 165 135 3,997 Residential real estate Pass 75,957 91,506 140,157 58,144 45,507 369,552 — — 780,823 Substandard 43 243 585 182 529 8,604 — — 10,186 Loss — — — — — 86 — — 86 Total 76,000 91,749 140,742 58,326 46,036 378,242 — — 791,095 Current period gross charge-offs — — — — — 170 170 Home equity lines of credit Pass 39,706 42,565 33,406 19,838 14,297 57,482 27 1,346 207,321 Substandard 19 — 61 34 123 1,109 — — 1,346 Loss — — — — — 8 — — 8 Total 39,725 42,565 33,467 19,872 14,420 58,599 27 1,346 208,675 Current period gross charge-offs — — — — — 110 110 Consumer, indirect Pass 247,829 225,225 96,698 59,044 18,644 15,977 — — 663,417 Substandard 333 934 789 558 190 206 — — 3,010 Loss 7 34 2 — 2 — — — 45 Total 248,169 226,193 97,489 59,602 18,836 16,183 — — 666,472 Current period gross charge-offs 609 2,091 865 255 63 147 4,030 Consumer, direct Pass 58,445 37,050 17,434 8,282 3,185 4,081 — — 128,477 Substandard 55 79 47 28 30 27 — — 266 Loss — — — — — 26 — — 26 Total 58,500 37,129 17,481 8,310 3,215 4,134 — — 128,769 Current period gross charge-offs 36 154 77 100 14 35 416 Deposit account overdrafts 986 — — — — — — — 986 Current period gross charge-offs 1,161 1,161 Total loans, at amortized cost $ 1,352,734 $ 1,206,325 $ 1,025,875 $ 536,750 $ 430,610 $ 1,336,994 $ 269,908 $ 11,007 $ 6,159,196 Current period gross charge-offs $ 2,794 $ 3,706 $ 2,326 $ 652 $ 415 $ 1,587 $ 11,480 Collateral Dependent Loans Peoples has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following provides more detail about the types of collateral that secure collateral dependent loans: • Construction loans are typically secured by owner occupied commercial real estate or non-owner occupied investment real estate. Typically, owner occupied construction loans are secured by office buildings, warehouses, manufacturing facilities, 23 Table of Co n tents and other commercial and industrial properties that are in process of construction. Non-owner occupied commercial construction loans are generally secured by multi-family complexes, warehouse buildings, industrial buildings, land under development, and other commercial real estate in process of construction. • Commercial real estate loans can be secured by either owner occupied commercial real estate or non-owner occupied investment commercial real estate. Typically, owner occupied commercial real estate loans are secured by office buildings, warehouses, manufacturing facilities and other commercial and industrial properties occupied by operating companies. Non-owner occupied commercial real estate loans are generally secured by multifamily complexes, retail facilities, office buildings and complexes, warehouses, industrial buildings, land under development, as well as other commercial real estate. • Commercial and industrial loans are generally secured by equipment, inventory, accounts receivable, and other commercial property. • Residential real estate loans are typically secured by first mortgages, and in some cases could be secured by a second mortgage, on residential real estate property. • Home equity lines of credit are generally secured by second mortgages on residential real estate property. • Consumer loans are generally secured by automobiles, motorcycles, recreational vehicles and other personal property. Some consumer loans are unsecured and have no underlying collateral. • Leases are secured by commercial equipment and other essential business assets. • Premium finance loans are secured by the unearned portion of the insurance premium being financed. The following table details Peoples' amortized cost of collateral dependent loans: (Dollars in thousands) March 31, 2024 December 31, 2023 Commercial real estate, other $ 689 $ — Leases 738 — Residential real estate 501 501 Total collateral dependent loans $ 1,928 $ 501 The increase in collateral dependent loans at March 31, 2024, compared to December 31, 2023, was primarily due to the addition of a commercial real estate loan and a lease as collateral dependent loans during the three months ended March 31, 2024. Modifications for Borrowers Experiencing Financial Difficulty As part of Peoples' loss mitigation activities, Peoples may agree to modify the contractual terms of a loan to a borrower experiencing financial difficulty. The most common modifications to the contractual terms of a loan to a borrower experiencing financial difficulty include an extension of the maturity date, a reduction in the interest rate for the remaining life of the loan, a temporary period of interest-only payments, and a reduction in the contractual payment amount for either a short period or the remaining term of the loan. In addition to loan modifications, Peoples also provides other loss mitigation options, such as forbearance and repayment plans, to assist borrowers who experience financial difficulties. In assessing whether or not a borrower is experiencing financial difficulty, Peoples considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (1) the borrower is currently in payment default on any of the borrower's debt; (2) a payment default is probable in the foreseeable future without the modification; (3) the borrower has declared or is in the process of declaring bankruptcy; and (4) the borrower's projected cash flow is insufficient to satisfy contractual payments due under the original terms of the loan without a modification. The following tables display the amortized cost of loans that were restructured during the three months ended March 31, 2024 and March 31, 2023, presented by loan classification. 24 Table of Co n tents Payment Delay (Only) (Dollars in thousands) Forbearance Plan Payment Deferral Term Extension Forbearance Plan and Term Extension Total Percentage of Total by Loan Category (a)(b) During the Three Months Ended March 31, 2024 Commercial real estate — — $ 565 $ — $ 565 0.03 % Commercial and industrial — — 10,203 — 10,203 0.84 % Leasing — 25 — — 25 0.01 % Residential real estate — — 76 — 76 0.01 % Total $ — $ 25 $ 10,844 $ — $ 10,869 0.18 % During the Three Months Ended March 31, 2023 Construction $ — $ 1,600 $ — $ — $ 1,600 0.69 % Commercial real estate 200 — — — 200 0.01 % Commercial and industrial — — 9 335 344 0.04 % Residential real estate — — 221 — 221 0.03 % Consumer, indirect — — 28 — 28 — % Total $ 200 $ 1,600 $ 258 $ 335 $ 2,393 0.05 % (a) Based on the amortized cost basis as of period end, divided by the period end amortized cost basis of the corresponding class of financing receivable. (b) The table presented above excludes loans that were paid off or otherwise no longer included in the loan portfolio of period end. The following table summarizes the financial impacts of loan modifications and payment deferrals made to loans during both the three months ended March 31, 2024 and March 31, 2023, presented by loan classification. Weighted-Average Term Extension (in months) Average Amount Capitalized as a Result of a Payment Delay (a) During the Three Months Ended March 31, 2024 Commercial real estate 6 $ — Commercial and industrial 6 — Leasing 9 — Residential real estate 2 — During the Three Months Ended March 31, 2023 Commercial and industrial 12 — Residential real estate 210 8,969 Consumer, indirect 2 — (a) Represents the average amount of delinquency-related amounts that were capitalized as part of the loan balance. Amounts are in whole dollars. The following table displays the amortized cost of loans that received a completed modification or payment deferral within the previous 12 months and that had a payment default in the period presented. For purposes of this disclosure, Peoples defines loans that had a payment default as loans that were 90 days or more past due following a modification. 25 Table of Co n tents For the Three Months Ended March 31, 2024 Payment Delay as a Result of a Payment Deferral (Only) (a) Total Commercial and industrial $ 648 $ 648 (a) Represents the sum of amortized cost and gross charge-off as of period end. Excludes loans that liquidated either through foreclosure, deed-in-lieu of foreclosure, or a short sale. As of March 31, 2023, there were no loans that were modified for borrowers experiencing financial difficulty since the adoption of ASU 2022-02 on January 1, 2023, and subsequently defaulted during the three months ended March 31, 2023. The following table displays an aging analysis of loans that were modified during the twelve months prior to March 31, 2024, presented by classification and class of financing receivable. As of March 31, 2024 (Dollars in thousands) 30-59 Days Delinquent 60-89 Days Delinquent 90+ Days Delinquent Total Delinquent Current Total Construction $ — $ — $ — $ — $ 70 $ 70 Commercial real estate 193 — — 193 2,443 2,636 Commercial and industrial — 667 648 1,315 12,752 14,067 Leasing — — — — 25 25 Residential real estate 76 — — 76 24 100 Home equity lines of credit — — — — 207 207 Total loans modified (a) $ 269 $ 667 $ 648 $ 1,584 $ 15,521 $ 17,105 (a) Represents the amortized cost basis as of period end. The following table displays an aging analysis of loans that were modified on or after January 1, 2023, the date Peoples adopted ASU 2022-02, through March 31, 2023, presented by classification and class of financing receivable. As of March 31, 2023 (Dollars in thousands) 30-59 Days Delinquent 60-89 Days Delinquent 90+ Days Delinquent Total Delinquent Current Total Construction $ — $ — $ — $ — $ 1,600 $ 1,600 Commercial real estate 0 0 0 0 200 200 Commercial and industrial 0 0 0 0 344 344 Residential real estate 0 0 0 0 221 221 Consumer, indirect 28 0 0 28 0 28 Total loans modified (a) $ 28 $ — $ — $ 28 $ 2,365 $ 2,393 (a) Represents the amortized cost basis as of period end. Allowance for Credit Losses As discussed in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' 2023 Form 10-K, Peoples estimates the allowance for credit losses using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. In management's estimation of expected credit losses, Peoples uses a one-year reasonable and supportable period across all segments. Following the reasonable and supportable period, Peoples reverts the macroeconomic variables to their long run average over a four-quarter reversion period. 26 Table of Co n tents Changes in the allowance for credit losses for the three months ended March 31, 2024 and March 31, 2023 are summarized below: (Dollars in thousands) Beginning Balance, December 31, 2023 Initial Allowance for Acquired PCD Assets Provision for (Recovery of) Credit Losses (a) Charge-offs Recoveries Ending Balance, March 31, 2024 Construction $ 699 $ — $ 2 $ — $ — $ 701 Commercial real estate, other 20,915 — 1,002 ( 212 ) 83 21,788 Commercial and industrial 10,490 — 319 ( 235 ) 7 10,581 Premium finance 484 — 169 ( 54 ) 8 607 Leases 10,850 — 3,097 ( 1,270 ) 212 12,889 Residential real estate 5,937 — ( 74 ) ( 80 ) 83 5,866 Home equity lines of credit 1,588 — 94 — 7 1,689 Consumer, indirect 8,590 — 1,101 ( 1,461 ) 71 8,301 Consumer, direct 2,343 — 153 ( 226 ) 9 2,279 Deposit account overdrafts 115 — 268 ( 336 ) 74 121 Total $ 62,011 $ — $ 6,131 $ ( 3,874 ) $ 554 $ 64,822 (a) Amount does not include the provision for the allowance for credit losses on unfunded commitments. (Dollars in thousands) Beginning Balance, December 31, 2022 Initial Allowance for Acquired PCD Assets (a) Provision for (Recovery of) Credit Losses (b) Charge-offs Recoveries Ending Balance, March 31, 2023 Construction $ 1,250 $ — $ 32 $ ( 9 ) $ — $ 1,273 Commercial real estate, other 17,710 — ( 1,230 ) ( 33 ) 27 16,474 Commercial and industrial 8,229 — 79 ( 1 ) — 8,307 Premium finance 344 — 103 ( 23 ) 9 433 Leases 8,495 — 1,003 ( 469 ) 80 9,109 Residential real estate 6,357 — 159 ( 41 ) 29 6,504 Home equity lines of credit 1,693 — 43 ( 19 ) — 1,717 Consumer, indirect 7,448 — 1,183 ( 929 ) 79 7,781 Consumer, direct 1,575 — 133 ( 104 ) 15 1,619 Deposit account overdrafts 61 — 180 ( 227 ) 72 86 Total $ 53,162 $ — $ 1,685 $ ( 1,855 ) $ 311 $ 53,303 (a) Includes purchase price adjustments related to acquisitions previously completed but were within the 12-month measurement period. (b) Amount does not include the provision for the allowance for credit losses on unfunded commitments. During the first quarter of 2024, Peoples recorded a total provision for credit losses of $ 6.1 million, which was driven by (i) a deterioration in macro-economic conditions used within the current expected credit loss ("CECL") model, (ii) an increase of reserves on individually analyzed loans, (iii) and loan growth. The increase in the allowance for credit losses at March 31, 2024 when compared to prior periods was driven by the establishment of an allowance for credit losses for loans acquired in the Limestone Merger. 27 Table of Co n tents During the first quarter of 2023, Peoples recorded a provision for credit losses of $ 1.7 million, largely attributable to a deterioration of macro-economic conditions, partially offset by a reduction in reserves for individually analyzed loans. Net charge-offs for the first quarter of 2023 were $ 1.5 million, primarily due to net charge-offs of indirect consumer loans of $ 0.9 million. Peoples had recorded an allowance for unfunded commitments of $ 1.7 million and $ 1.8 million as of March 31, 2024 and December 31, 2023, respectively. The allowance for unfunded commitments (also referred to as "unfunded commitment liability") is presented in the “Accrued expenses and other liabilities” line of the Unaudited Consolidated Balance Sheets. The change in the allowance for unfunded commitments is also reflected in the "Provision for (recovery of) credit losses" line of the Unaudited Consolidated Statements of Operations. Note 5 Goodwill and Other Intangible Assets Goodwill The following table details changes in the recorded amount of goodwill: (Dollars in thousands) March 31, 2024 December 31, 2023 Goodwill, beginning of year $ 362,169 $ 292,397 Goodwill recorded from acquisitions — 69,772 Goodwill, end of period $ 362,169 $ 362,169 As of the close of business on April 30, 2023, Peoples completed its merger with Limestone Bancorp, Inc. ("Limestone") pursuant to an Agreement and Plan of Merger dated October 24, 2022, at which point Limestone merged with and into Peoples, and immediately thereafter, Limestone Bank, Inc., the subsidiary bank of Limestone, merged with and into Peoples Bank (collectively, the “Limestone Merger”). As of March 31, 2024, Peoples recorded $ 68.8 million of Goodwill related to the Limestone Merger. Other Intangible Assets Other intangible assets were comprised of the following at March 31, 2024 , and at December 31, 2023 : (Dollars in thousands) Core Deposits Customer Relationships Indefinite-Lived Trade Names Total March 31, 2024 Gross intangibles $ 54,186 $ 37,920 $ 2,491 $ 94,597 Intangibles recorded from acquisitions — — — — Accumulated amortization ( 27,138 ) ( 21,938 ) — ( 49,076 ) Total acquisition-related intangibles $ 27,048 $ 15,982 $ 2,491 $ 45,521 Servicing rights 1,285 Non-compete agreements 310 Total other intangibles $ 47,116 December 31, 2023 Gross intangibles $ 26,464 $ 37,920 $ 2,491 $ 66,875 Intangibles recorded from acquisitions 27,722 — — 27,722 Accumulated amortization ( 25,670 ) ( 20,680 ) — ( 46,350 ) Total acquisition-related intangibles $ 28,516 $ 17,240 $ 2,491 $ 48,247 Servicing rights 1,385 Non-compete agreements 371 Total other intangibles $ 50,003 As of March 31, 2024, Peoples recorded $ 27.7 million of core deposit intangibles related to the Limestone Merger. Refer to "Note 13 Acquisitions" for additional information. The following table details estimated aggregate future amortization of other intangible assets at March 31, 2024: 28 Table of Co n tents (Dollars in thousands) Core Deposits Customer Relationships Non-Compete Agreements Total Remaining nine months of 2024 $ 4,406 $ 3,770 $ 182 $ 8,358 2025 4,609 4,038 112 $ 8,759 2026 3,736 2,954 16 $ 6,706 2027 3,043 2,112 — $ 5,155 2028 2,608 1,392 — $ 4,000 Thereafter 8,646 1,716 — $ 10,362 Total $ 27,048 $ 15,982 $ 310 $ 43,340 The weighted average amortization period of other intangible assets is 8.5 years. Note 6 Deposits Peoples’ deposit balances were comprised of the following: (Dollars in thousands) March 31, 2024 December 31, 2023 Retail certificates of deposits ("CDs"): $100 or more $ 956,845 $ 815,300 Less than $100 723,569 628,117 Total Retail CDs 1,680,414 1,443,417 Interest-bearing deposit accounts 1,107,711 1,144,357 Savings accounts 901,493 919,244 Money market deposit accounts 859,961 775,488 Governmental deposit accounts 825,170 726,713 Brokered CDs 483,444 575,429 Total interest-bearing deposits 5,858,193 5,584,648 Non-interest-bearing deposits $ 1,468,363 1,567,649 Total deposits $ 7,326,556 $ 7,152,297 Uninsured deposits were $ 2.1 billion and $ 2.0 billion at March 31, 2024 and at December 31, 2023 , respectively. Uninsured amounts are estimated based on the portion of the respective customer account balances that exceeded the FDIC limit of $250,000. Peoples pledges investment securities against certain governmental deposit accounts, which covered o ver $ 865.6 million o f the uninsured deposit balances at March 31, 2024 . 29 Table of Co n tents Uninsured time deposits are broken out below by time remaining until maturity. (Dollars in thousands) March 31, 2024 December 31, 2023 3 months or less $ 99,470 $ 58,708 Over 3 to 6 months 127,433 99,928 Over 6 to 12 months 148,528 131,263 Over 12 months 21,465 37,180 Total $ 396,896 $ 327,079 The contractual maturities of CDs for each of the next five years, including the remainder of 2024, and thereafter are as follows: (Dollars in thousands) Retail Brokered Total Remaining nine months ending December 31, 2024 $ 1,407,331 $ 483,444 $ 1,890,775 Year ending December 31, 2025 221,303 — 221,303 Year ending December 31, 2026 17,753 — 17,753 Year ending December 31, 2027 24,770 — 24,770 Year ending December 31, 2028 7,544 — 7,544 Thereafter 1,713 — 1,713 Total CDs $ 1,680,414 $ 483,444 $ 2,163,858 At March 31, 2024, Peoples had 11 effective interest rate swaps, with an aggregate notional value of $ 105.0 million, all of which were funded by brokered CDs. Brokered CDs used to fund interest rate swaps are expected to be extended every 90 days through the maturity dates of the swaps. Additional information regarding Peoples' interest rate swaps can be found in "Note 10 Derivative Financial Instruments." Note 7 Stockholders’ Equity The following table details the progression in Peoples’ common shares and treasury stock during the three months ended March 31, 2024: Common Shares Treasury Stock Shares at December 31, 2023 36,736,041 1,511,348 Changes related to stock-based compensation awards: Release of restricted common shares — 25,458 Cancellation of restricted common shares — 16,972 Grant of restricted common shares — ( 291,480 ) Changes related to deferred compensation plan for Boards of Directors: Purchase of treasury stock — 4,643 Disbursed out of treasury stock — ( 911 ) Common shares repurchased under share repurchase program — 100,905 Common shares issued under dividend reinvestment plan 11,746 — Common shares issued under compensation plan for Boards of Directors — ( 4,680 ) Common shares issued under employee stock purchase plan — ( 6,918 ) Shares at March 31, 2024 36,747,787 1,355,337 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. As of March 31, 2024, Peoples had repurchased 471,307 common shares totaling $ 13.4 million under the share repurchase program. There were 100,905 common shares totaling $ 3.0 million repurchased during the first three months of 2024. Under Peoples' Amended Articles of Incorporation, Peoples is authorized to issue up to 50,000 preferred shares, in one or more series, having such voting powers, designations, preferences, rights, qualifications, limitations and restrictions as designated by Peoples' Board of Directors. At March 31, 2024, Peoples had no preferred shares issued or outstanding. On January 22, 2024, Peoples' Board of Directors declared a quarterly cash dividend of $ 0.39 per common share, payable on February 20, 2024, to shareholders of record on February 5, 2024. On April 22, 2024, Peoples' Board of Directors declared a quarterly cash dividend of $ 0.40 per common share, payable on May 20, 2024, to shareholders of record on May 6, 2024. The following table details the cash dividends declared per common share during the first two quarters of 2024 and the comparable periods of 2023: 2024 2023 First quarter $ 0.39 $ 0.38 Second quarter 0.40 0.39 Total dividends declared $ 0.79 $ 0.77 Accumulated Other Comprehensive (Loss) Income The following table details the change in the components of Peoples’ accumulated other comprehensive (loss) income during the three months ended March 31, 2024: (Dollars in thousands) Unrealized (Loss) Gain on Securities Unrealized Gain on Cash Flow Hedges Accumulated Other Comprehensive (Loss) Income Balance, December 31, 2023 $ ( 104,222 ) $ 2,632 $ ( 101,590 ) Reclassification adjustments to net income: Realized loss on sale of securities, net of tax 1 — 1 Other comprehensive (loss) income, net of reclassifications and tax ( 7,547 ) 196 ( 7,351 ) Balance, March 31, 2024 $ ( 111,768 ) $ 2,828 $ ( 108,940 ) Note 8 Employee Benefit Plans Peoples sponsored a noncontributory defined benefit pension plan that covered substantially all employees hired before January 1, 2010. The plan provided retirement benefits based on an employee’s years of service and compensation. For employees hired before January 1, 2003, the amount of post-retirement benefit was based on the employee’s average monthly compensation over the highest five consecutive years out of the employee’s last ten years with Peoples while an eligible employee. For employees hired on or after January 1, 2003, the amount of post-retirement benefit was based on 2 % of the employee’s annual compensation during the years 2003 through 2009, plus accrued interest. 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. Retirement Savings Plan Peoples also maintains a retirement savings plan, or 401(k) plan, which covers substantially all employees. The plan provides participants with the opportunity to save for retirement on a tax-deferred basis. As of January 1, 2021, Peoples matches 100 % of participants’ contributions up to 6 % of the participants’ compensation. Matching contributions made by Peoples during the first quarter of 2024 totaled $ 1.5 million. Matching contributions totaled $ 5.4 million in 2023 and $ 4.4 million in 2022. 30 Table of Co n tents Note 9 Earnings Per Common Share The calculations of basic and diluted earnings per common share were as follows: Three Months Ended March 31, (Dollars in thousands, except per common share data) 2024 2023 Net income available to common shareholders $ 29,584 $ 26,560 Less: Dividends paid on unvested common shares ( 143 ) ( 102 ) Less: Undistributed income allocated to unvested common shares ( 64 ) ( 34 ) Net earnings allocated to common shareholders $ 29,377 $ 26,424 Weighted-average common shares outstanding 34,740,349 27,891,760 Effect of potentially dilutive common shares 311,461 130,119 Total weighted-average diluted common shares outstanding 35,051,810 28,021,879 Earnings per common share: Basic $ 0.85 $ 0.95 Diluted $ 0.84 $ 0.94 Anti-dilutive common shares excluded from calculation: Restricted common shares 3,180 155,018 Note 10 Derivative Financial Instruments Peoples utilizes interest rate swap agreements as part of its asset/liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements. The fair value of derivative financial instruments is included in the "Other assets" and the "Accrued expenses and other liabilities" lines in the accompanying Unaudited Consolidated Balance Sheets, while cash activity related to these derivative financial instruments is included in the activity in "Net cash provided by operating activities" in the Unaudited Condensed Consolidated Statements of Cash Flows. Derivative Financial Instruments and Hedging Activities - Risk Management Objective of Using Derivative Financial Instruments Peoples is exposed to certain risks arising from both its business operations and economic conditions. Peoples principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. Peoples manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its assets and liabilities. Peoples also manages interest rate risk through the use of derivative financial instruments. Specifically, Peoples enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known or expected cash amounts, the values of which are determined by interest rates. Peoples’ derivative financial instruments are used to manage differences in the amount, timing and duration of Peoples' known or expected cash receipts and its known or expected cash payments principally related to certain variable rate borrowings. Peoples also has interest rate derivative financial instruments that result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in Peoples' assets or liabilities. Peoples manages a matched book with respect to customer-related derivative financial instruments in order to minimize its net risk exposure resulting from such transactions. Cash Flow Hedges of Interest Rate Risk Peoples' objectives in using interest rate derivative financial instruments are to add stability to interest income and expense, and to manage its exposure to interest rate movements. To accomplish these objectives, 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. At March 31, 2024, Peoples had entered into 11 interest rate swap contracts with an aggregate notional value of $ 105.0 million. Peoples will pay a fixed rate of interest for up to ten years while receiving a floating rate component of interest equal to term SOFR. The interest received on the floating rate component is intended to offset the interest paid on rolling three-month brokered CDs, which will continue to be rolled through the life of the interest rate swaps. At both March 31, 2024 and at December 31, 2023, the interest rate swaps were designated as cash flow hedges of $ 105.0 million, in brokered CDs, which are expected to be extended every 90 days through the maturity dates of the interest rate swaps. 31 Table of Co n tents For derivative financial instruments designated as cash flow hedges, the effective and ineffective portions of changes in the fair value of each derivative financial instrument is reported in accumulated other comprehensive (loss) income ("AOCI") (outside of earnings), net of tax, and are reclassified to interest expense as interest payments are made or received on Peoples' variable-rate liabilities. Peoples assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the hedging derivative financial instrument with the changes in cash flows of the designated hedged transaction. The reset dates and the payment dates on the brokered CDs are matched to the reset dates and payment dates on the receipt of the term SOFR rate (or the three-month LIBOR floating portion prior to June 30, 2023) of the swaps to ensure effectiveness of the cash flow hedge. During the three months ended March 31, 2024, and 2023, Peoples recorded reclassifications of losses to earnings of $ 0.9 million and $ 0.1 million, respectively. During the next twelve months, Peoples estimates that $ 1.4 million of AOCI will be reclassified as an addition to interest expense. The following table summarizes information about the interest rate swaps designated as cash flow hedges: (Dollars in thousands) March 31, 2024 December 31, 2023 Notional amount $ 105,000 $ 105,000 Weighted average pay rates 2.22 % 2.22 % Weighted average receive rates 5.02 % 4.63 % Weighted average maturity 1.7 years 2.0 years Pre-tax changes in fair value included in AOCI $ 3,689 $ 3,434 The following table presents changes in fair value recorded in AOCI and in the Consolidated Statements of Operations related to the cash flow hedges: Three Months Ended March 31, (Dollars in thousands) 2024 2023 Amount of losses (gains) recorded in AOCI, pre-tax $ ( 1,872 ) $ 1,356 The following table reflects the cash flow hedges, which are included in the Unaudited Consolidated Balance Sheets at fair value: March 31, 2024 December 31, 2023 (Dollars in thousands) Notional Amount Fair Value Notional Amount Fair Value Included in "Other assets": Interest rate swaps related to debt $ 105,000 $ 3,574 $ 105,000 $ 3,314 Non-Designated Hedges Peoples maintains an interest rate protection program for commercial loan customers, which was established in 2010. Under this program, Peoples originates variable rate loans with interest rate swaps, where the customer enters into an interest rate swap with Peoples on terms that match the terms of the loan. By entering into the interest rate swap with the customer, Peoples Bank effectively provides the customer with a fixed rate loan while creating a variable rate asset for Peoples Bank. Peoples Bank offsets its exposure in the interest rate swap by entering into an offsetting interest rate swap with an unaffiliated institution. These interest rate swaps do not qualify as designated hedges; therefore, each interest rate swap is accounted for as a standalone derivative financial instrument. These interest rate swaps did not have a material impact on Peoples' results of operations or financial condition at or for the three months ended March 31, 2024 and at or for the year ended December 31, 2023. The following table reflects the non-designated hedges, which are included in the Unaudited Consolidated Balance Sheets at fair value: March 31, 2024 December 31, 2023 (Dollars in thousands) Notional Amount Fair Value Notional Amount Fair Value Included in "Other assets": Interest rate swaps related to commercial loans $ 399,071 $ 21,575 $ 416,106 $ 18,990 Included in "Accrued expenses and other liabilities": Interest rate swaps related to commercial loans $ 399,071 $ 21,688 $ 416,106 $ 19,122 32 Table of Co n tents Pledged Collateral Peoples pledges or receives collateral for all interest rate swaps. When the fair value of Peoples' interest rate swaps is in a net liability position, Peoples must pledge collateral, and, when the fair value of Peoples' interest rate swaps is in a net asset position, the respective counterparties must pledge collateral. At March 31, 2024 and at December 31, 2023, Peoples had no cash pledged, while counterparties had $ 15.5 million of cash pledged at March 31, 2024 and $ 12.8 million of cash pledged at December 31, 2023. Peoples had no pledged investment securities at March 31, 2024 or at December 31, 2023, while the counterparties had pledged investment securities in the amounts of $ 2.1 million at March 31, 2024 and $ 2.2 million at December 31, 2023. Note 11 Stock-Based Compensation Under the Peoples Bancorp Inc. Fourth Amended and Restated 2006 Equity Plan (the "2006 Equity Plan"), Peoples may grant, among other awards, nonqualified stock options, incentive stock options, restricted common share awards, stock appreciation rights, performance units and unrestricted common share awards to employees and non-employee directors. The total number of common shares available under the 2006 Equity Plan is 1,493,297 . The maximum number of common shares that can be issued for incentive stock options is 750,000 common shares. Since February 2009, Peoples has granted restricted common shares to employees, and periodically to non-employee directors, subject to the terms and conditions prescribed by the 2006 Equity Plan. In general, common shares issued in connection with stock-based awards are issued from treasury shares to the extent available. If no treasury shares are available, common shares are issued from authorized but unissued common shares. Restricted Common Shares Under the 2006 Equity Plan, Peoples may award restricted common shares to officers, key employees and non-employee directors. In general, the restrictions on the restricted common shares awarded to officers and key employees expire after periods ranging from one to five years . Since 2018, common shares awarded to non-employee directors have vested immediately upon grant with no restrictions. In the first three months of 2024, Peoples granted an aggregate of 283,712 restricted common shares subject to performance-based vesting to officers and key employees with restrictions that will lapse three years after the grant date; provided that in order for the restricted common shares to vest in full, Peoples must have reported positive net income and maintained a well-capitalized status by regulatory standards for each of the three fiscal years preceding the vesting date. The following table summarizes the changes to Peoples’ restricted common shares for the three months ended March 31, 2024: Time-Based Vesting Performance-Based Vesting Number of Common Shares Weighted-Average Grant Date Fair Value Number of Common Shares Weighted-Average Grant Date Fair Value Oustanding at January 1, 2024 142,419 $ 28.78 403,970 $ 31.21 Awarded 7,768 28.95 283,712 27.92 Released ( 5,316 ) 31.35 ( 72,550 ) 31.48 Forfeited ( 5,938 ) 31.99 ( 11,034 ) 29.48 Outstanding at March 31, 2024 138,933 $ 28.56 604,098 $ 29.66 For the three months ended March 31, 2024, the intrinsic value for restricted common shares released was $ 2.2 million compared to $ 2.3 million for the three months ended March 31, 2023. Stock-Based Compensation Peoples recognizes stock-based compensation, which is included as a component of Peoples’ salaries and employee benefit costs, for restricted and unrestricted common shares, as well as purchases made by participants in the employee stock purchase plan. For restricted common shares, Peoples recognizes stock-based compensation based on the estimated fair value of the awards expected to vest on the grant date. The estimated fair value is then expensed over the vesting period, which is normally three years . Peoples also has an employee stock purchase plan whereby employees can purchase Peoples' common shares at a discount of 15 %. The following table summarizes the amount of stock-based compensation expense and related tax benefit recognized for each period: 33 Table of Co n tents Three Months Ended March 31, (Dollars in thousands) 2024 2023 Employee stock-based compensation expense: Stock grant expense $ 3,024 $ 2,150 Employee stock purchase plan expense 66 39 Total employee stock-based compensation expense $ 3,090 $ 2,189 Non-employee director stock-based compensation expense $ 138 $ 136 Total stock-based compensation expense $ 3,228 $ 2,325 Recognized tax benefit ( 752 ) ( 543 ) Net stock-based compensation expense $ 2,476 $ 1,782 The fair value of restricted common share awards on the grant date is the market price of Peoples' common shares on that date. Total unrecognized stock-based compensation expense related to unvested restricted common share awards was $ 9.4 million at March 31, 2024, which will be recognized over a weighted-average period of 2.3 years. Note 12 Revenue The following table details Peoples' revenue from contracts with customers: Three Months Ended March 31, (Dollars in thousands) 2024 2023 Insurance income: Commission and fees from sale of insurance policies (a) $ 4,199 $ 3,816 Fees related to third-party administration services (a) 86 82 Performance-based commissions (b) 2,213 1,527 Trust and investment income: Fiduciary income (a) 2,757 2,457 Brokerage income (a) 1,842 1,627 Electronic banking income: Interchange income (a) 4,797 4,181 Promotional and usage income (a) 1,249 1,262 Deposit account service charges: Ongoing maintenance fees for deposit accounts (a) 1,718 1,461 Transaction-based fees (b) 2,505 2,062 Commercial loan swap fees (b) 52 — Other non-interest income transaction-based fees (b) 504 430 Total revenue from contracts with customers $ 21,922 $ 18,905 Timing of revenue recognition: Services transferred over time $ 16,648 $ 14,886 Services transferred at a point in time 5,274 4,019 Total revenue from contracts with customers $ 21,922 $ 18,905 (a) Services transferred over time. (b) Services transferred at a point in time. Peoples records contract assets for income that has been recognized over a period of time for fulfillment of performance obligations, but has not yet been received related to electronic banking income and certain insurance income. This income typically relates to bonuses for which Peoples is eligible, but will not receive until a certain time in the future. Peoples records contract liabilities for payments received for commission income related to the sale of insurance policies, for which the performance obligations have not yet been fulfilled. The contract liabilities are recognized as income over time, during the period in which the performance obligations are fulfilled, which is over the insurance policy period. Peoples also records contract liabilities for bonuses received related to electronic banking income, for which the performance obligations have not yet been fulfilled. The contract 34 Table of Co n tents liabilities are recognized as income over time, during the period in which the performance obligations are fulfilled related to electronic banking income. The following table details the changes in Peoples' contract assets and contract liabilities for the three-month period ended March 31, 2024: Contract Assets Contract Liabilities (Dollars in thousands) Balance, January 1, 2024 $ 753 $ 5,776 Additional income receivable 37 — Additional deferred income — 26 Receipt of income previously receivable ( 50 ) — Recognition of income previously deferred — ( 529 ) Balance, March 31, 2024 $ 740 $ 5,273 Note 13 Acquisitions Limestone Bancorp, Inc. As of the close of business on April 30, 2023, Peoples completed the Limestone Merger. In connection with the Limestone Merger, Limestone Bank, Inc., which operated 20 branches in Kentucky, merged into Peoples Bank. As consideration in the Limestone Merger, Limestone shareholders were paid 0.90 common shares of Peoples for each full share of Limestone that was owned at the merger date, resulting in the issuance of 6,827,668 common shares by Peoples, or aggregate consideration of $ 177.9 million. Peoples accounted for this transaction as a business combination under the acquisition method. Peoples recorded acquisition-related expenses primarily related to the Limestone Merger, which included $( 0.1 ) million in non-interest expense for the three months ended March 31, 2024. Peoples recorded acquisition-related expenses related to the Limestone Merger, which included $ 16.9 million in non-interest expense for the year ended December 31, 2023. The following table provides the preliminary purchase price calculation as of the date of the Limestone Merger, and the assets acquired and liabilities assumed at their estimated fair values. The estimated fair values below are subject to adjustment for up to one year after April 30, 2023, which include, but are not limited to, loans, including the designation of PCD loans, deferred tax assets and liabilities, long-term borrowings, and certain other assets and other liabilities. (Dollars in thousands) Fair Value Total purchase price $ 177,931 Assets Cash and balances due from banks 6,422 Interest-bearing deposits in other banks 87,115 Total cash and cash equivalents 93,537 Available-for-sale investment securities, at fair value 166,944 Other investment securities 5,716 Total investment securities 172,660 Loans 1,077,929 Allowance for credit losses (on PCD loans) ( 2,051 ) Net loans 1,075,878 Bank premises and equipment, net of accumulated depreciation 17,690 35 Table of Co n tents (Dollars in thousands) Fair Value Bank owned life insurance 31,343 Other intangible assets 27,722 Other assets 36,874 Total assets 1,455,704 Liabilities Deposits: Non-interest-bearing 262,727 Interest-bearing 971,457 Total deposits 1,234,184 Short-term borrowings 60,000 Long-term borrowings 39,453 Accrued expenses and other liabilities 12,967 Total liabilities 1,346,604 Net assets 109,100 Goodwill $ 68,831 The goodwill recorded in connection with the Limestone Merger is related to expected synergies to be gained from the combination of Limestone with Peoples' operations. The employees retained from the Limestone Merger and the geographic locations of Limestone should allow Peoples to continue to grow the loan and deposit portfolios while also increasing Peoples' ability to penetrate the new markets, which should benefit Peoples in future periods. During Peoples' evaluation of intangible assets, it was determined that an assembled workforce intangible asset was not separately recognizable and was included in goodwill. Peoples recorded a core deposit asset in other intangible assets related to the Limestone Merger. There were no changes in the estimated fair value that impacted goodwill for the three months ended March 31, 2024. Loans acquired by Peoples in a business combination that have evidence of more than insignificant credit deterioration, which includes loans as to which Peoples believes it is probable that Peoples will be unable to collect all contractually required payments, are considered "purchased credit deteriorated" (or "PCD") loans. Acquired PCD loans are reported net of the unamortized fair value adjustment. These loans are recorded at the purchase price, and an allowance for credit losses is determined based upon discrete credit marks, along with discounted cash flow models based upon similar pools of loans, using a similar methodology as for other loans. The following table details the fair value adjustment for acquired PCD loans as of the acquisition date: (Dollars in thousands) Par Value Allowance for Credit Losses Non-Credit (Discount) Premium Fair Value PCD loans Commercial real estate, other 30,907 ( 1,340 ) ( 2,160 ) 27,407 Commercial and industrial 16,466 ( 379 ) ( 610 ) 15,477 Residential real estate 6,328 ( 228 ) ( 770 ) 5,330 Home equity lines of credit 774 ( 18 ) 11 767 Consumer 1,029 ( 86 ) 78 1,021 Fair value $ 55,504 $ ( 2,051 ) $ ( 3,451 ) $ 50,002 Note 14 Leases Peoples has elected certain practical expedients, in accordance with ASC 842 - Leases ("ASC 842"). As a lessor, Peoples has made an accounting policy election to exclude from the consideration in the contract, and from variable payments not included in the consideration in the contract, all sales and other similar taxes assessed. Peoples has also made an accounting policy election to account for each separate lease component of a contract and its associated non-lease components as a single lease component for all leases subject to ASC 842. 36 Table of Co n tents Lessor Arrangements Leases originated by Peoples, that Peoples has the positive intent and ability to hold for the foreseeable future or to maturity or payoff, are reported at the net investment in the lease, net of initial direct costs, charge-offs and an allowance for credit losses. Peoples considers leases past due if any required principal or interest payments have not been received as of the date such payments were required to be made under the terms of the lease agreement. Upon detection of the reduced ability of a lessee to meet cash flow obligations, a lease is typically charged down to the net realizable value, with the residual balance placed on nonaccrual status. Leases deemed to be uncollectable are charged against the allowance for credit losses, while recoveries of previously charged-off amounts are credited to the allowance for credit losses. Peoples originates sales-type leases through its NSL division, as these leases are structured as dollar buy-out, whereby the lessee pays one dollar at maturity of the lease to purchase the equipment. These leases do not typically contain residual value guarantees; however, if a lease contains a residual value guarantee, Peoples reduces its residual asset risk by obtaining a security deposit from the lessee. Peoples also originates leases through its Vantage subsidiary, which are classified as either sales-type or direct financing leases based primarily on whether they included a dollar buy-out or a fair market value buy-out, respectively. As a lessor, Peoples originates commercial equipment leases either directly to the customer or indirectly through vendor programs. Equipment leases relate to automotive, construction, health care, manufacturing, office, restaurant, information technology and other equipment. Finance leases include an estimated residual value, which is assessed for impairment as part of the allowance for credit losses. Lease (loss) income noted in the table below includes (i) gains on the early termination of leases, (ii) fees received for referrals, (iii) gains and losses recognized on the sales of residual assets and (iv) syndication income. Additional information regarding Peoples' leases can be found in "Note 4 Loans and Leases." The table below details Peoples' lease income: Three Months Ended (Dollars in thousands) March 31, 2024 March 31, 2023 Interest and fees on leases (a) $ 12,067 $ 9,643 Lease income 1,236 1,077 Other non-interest income 785 — Total lease income $ 14,088 $ 10,720 (a) Included in "Interest and fees on loans and leases" in the Unaudited Consolidated Statements of Operations. For additional information, see "Note 4 Loans and Leases" of the Notes to the Unaudited Condensed Consolidated Financial Statements. The following table summarizes the net investment in leases, which is included in "Loans and leases, net of deferred fees and costs" on the Unaudited Consolidated Balance Sheets: (Dollars in thousands) March 31, 2024 December 31, 2023 Lease payments receivable, at amortized cost $ 473,987 $ 463,742 Estimated residual values 34,157 33,448 Initial direct costs 7,334 7,114 Deferred revenue ( 92,784 ) ( 90,244 ) Net investment in leases 422,694 414,060 Allowance for credit losses - leases ( 12,889 ) ( 10,850 ) Net investment in leases, after allowance for credit losses $ 409,805 $ 403,210 The following table summarizes the contractual maturities of leases: (Dollars in thousands) Balance Remaining nine months ending December 31, 2024 $ 103,408 Year ending December 31, 2025 109,429 Year ending December 31, 2026 100,493 Year ending December 31, 2027 82,587 Year ending December 31, 2028 55,038 Thereafter 23,032 Lease payments receivable, at amortized cost $ 473,987 37 Table of Co n tents Lessee Arrangements Peoples leases certain banking facilities and equipment under various agreements with original terms providing for fixed monthly payments over periods generally ranging from two to thirty years . Certain leases may include options to extend or terminate the lease. Only those renewal and termination options which Peoples is reasonably certain of exercising are included in the calculation of the lease liability. Certain leases contain rent escalation clauses calling for rent increases over the term of the lease, which are included in the calculation of the lease liability. At March 31, 2024, Peoples did not have any leases that met the criteria for finance leases. Right of Use ("ROU") assets represent the right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at the commencement or the remeasurement date of a lease based on the present value of lease payments over the remaining lease term. Operating lease ROU assets include lease payments made at or before the commencement date and initial indirect costs. Operating lease ROU assets exclude lease incentives. Short-term leases of certain facilities and equipment, with lease terms of 12 months or less, are recognized on a straight-line basis over the lease term and do not have an ROU asset or lease liability. The table below details Peoples' lease expense, which is included in "Net occupancy and equipment expense" in the Unaudited Consolidated Statements of Operations: Three Months Ended (Dollars in thousands) March 31, 2024 March 31, 2023 Operating lease expense 735 695 Short-term lease expense 305 95 Total lease expense $ 1,040 $ 790 Peoples utilizes an incremental borrowing rate to determine the present value of lease payments for each lease, as the lease agreements do not provide an implicit rate. The estimated incremental borrowing rate reflects a secured rate and is based on the term of the lease and the interest rate environment at the lease commencement or remeasurement date. The following table details the ROU assets, the lease liabilities and other information related to Peoples' operating leases at the dates shown: (Dollars in thousands) March 31, 2024 December 31, 2023 ROU assets: Other assets $ 11,682 $ 11,689 Lease liabilities: Accrued expenses and other liabilities $ 12,062 $ 12,080 Other information: Weighted-average remaining lease term 9.2 years 9.5 years Weighted-average discount rate 3.92 % 3.34 % Additions for ROU assets obtained during the year $ 509 $ 4,428 During both the three months ended March 31, 2024 and 2023, Peoples paid cash of $ 0.7 million for operating leases. The following table summarizes the maturity of remaining lease liabilities: (Dollars in thousands) Balance Remaining nine months ending December 31, 2024 $ 2,280 Year ending December 31, 2025 2,210 Year ending December 31, 2026 1,950 Year ending December 31, 2027 1,762 Year ending December 31, 2028 1,338 Thereafter 5,412 Total undiscounted lease payments $ 14,952 Imputed interest $ ( 2,890 ) Total lease liabilities $ 12,062 38 Table of Co n tents