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Item 2. Management’s Discussion and Analysis

2024-08-01 compared with 2024-05-02 · 405 added, 318 removed, 954 unchanged (43% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis (“MD&A”) represents an overview of the results of operations and financial condition of Peoples at and for the three months ended March 31, 2024 and March 31, 2023.

Management’s Discussion and Analysis (“MD&A”) represents an overview of the results of operations and financial condition of Peoples at and for the three months and six months ended June 30, 2024 and June 30, 2023.

This MD&A should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and the Notes thereto.

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(2) the effects of inflationary pressures and the impact of rising interest rates on borrowers’ liquidity and ability to repay;

(3) the success, impact, and timing of the implementation of Peoples' business strategies and Peoples' ability to manage strategic initiatives, including the ongoing increasing interest rate policies of the Federal Reserve Board, the completion and successful integration of planned acquisitions, including the Limestone Merger that closed in April 2023, and the expansion of commercial and consumer lending activities;

(3) the success, impact, and timing of the implementation of Peoples' business strategies and Peoples' ability to manage strategic initiatives, including the interest rate policies of the Federal Reserve Board, the completion and successful integration of acquisitions, and the expansion of commercial and consumer lending activities;

(4) competitive pressures among financial institutions, or from non-financial institutions, which may increase significantly, including product and pricing pressures, which can in turn impact Peoples' credit spreads, changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and Peoples' ability to attract, develop and retain qualified professionals;

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(11) future credit quality and performance, including expectations regarding future credit losses and the allowance for credit losses;

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(12) changes in accounting standards, policies, estimates or procedures may adversely affect Peoples' reported financial condition or results of operations;

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(17) Peoples' ability to maintain required capital levels and adequate sources of funding and liquidity;

(18) the impact of larger or similar-sized financial institutions encountering problems, such as the closures in 2023 of Silicon Valley Bank in California, Signature Bank in New York, First Republic Bank in California, and Heartland Tri-State Bank in Kansas, which may adversely affect the banking industry and/or Peoples' business generation and retention, funding and liquidity, including potential increased regulatory requirements, and increased reputational risk and potential impacts to macroeconomic conditions;

(18) the impact of larger or similar-sized financial institutions encountering problems, such as the failure in 2024 of Republic First Bank, and closures in 2023 of Silicon Valley Bank in California, Signature Bank in New York, and First Republic Bank in California, which may adversely affect the banking industry and/or Peoples' business generation and retention, funding and liquidity, including potential increased regulatory requirements, increased reputational risk and potential impacts to macroeconomic conditions;

(19) Peoples' ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks, including those of Peoples' third-party vendors and other service providers, which may prove inadequate, and could adversely affect customer confidence in Peoples and/or result in Peoples incurring a financial loss;

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(32) the risk that expected revenue synergies and cost savings from the Limestone Merger, may not be fully realized or realized within the expected time frame;

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(33) changes in laws or regulations imposed by Peoples' regulators impacting Peoples' capital actions, including dividend payments and share repurchases;

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(35) Peoples' business may be adversely affected by increased political and regulatory scrutiny of corporate environmental, social and governance ("ESG") practices;

(36) the effect of a fall in stock market prices on the asset and wealth management business;

(36) the effect of a fall in stock market prices on Peoples' asset and wealth management business;

(37) other risk factors relating to the banking industry or Peoples as detailed from time to time in Peoples' reports filed with the Securities and Exchange Commission (the "SEC"), including those risk factors included in the disclosures under the heading "ITEM 1A.

RISK FACTORS" of Peoples' 2023 Form 10-K and under the heading "ITEM 1A.

RISK FACTORS" in Part II of this Form 10-Q.

RISK FACTORS" of Peoples' 2023 Form 10-K.

Peoples encourages readers of this Form 10-Q to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance.

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Peoples also offers lease financing through its North Star Leasing division and through Vantage, a subsidiary of Peoples Bank.

As of March 31, 2024, Peoples had 152 locations, including 133 full-service bank branches in Ohio, Kentucky, West Virginia, Virginia, Washington D.C.

As of June 30, 2024, Peoples had 150 locations, including 130 full-service bank branches in Ohio, Kentucky, West Virginia, Virginia, Washington D.C.

and Maryland.

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Note 1 of the Notes to the Unaudited Condensed Consolidated Financial Statements describes Peoples' significant accounting policies.

Management has identified the accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are critical to understanding Peoples’ Unaudited Condensed Consolidated Financial Statements, and MD&A at March 31, 2024, which have been disclosed in Peoples' 2023 Form 10-K and updated in "Note 1 Summary of Significant Accounting Policies" in this Form 10-Q.

Management has identified the accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are critical to understanding Peoples’ Unaudited Condensed Consolidated Financial Statements, and this MD&A at June 30, 2024, which have been disclosed in Peoples' 2023 Form 10-K and updated in "Note 1 Summary of Significant Accounting Policies" in this Form 10-Q.

This MD&A should be read in conjunction with the policies disclosed in Peoples’ 2023 Form 10-K.

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The following is a summary of recent transactions and events that have impacted or are expected to impact Peoples’ results of operations or financial condition:

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◦ For the first quarter of 2024, Peoples incurred $(0.1) million of acquisition-related expenses, compared to $1.3 million for the fourth quarter of 2023 and $0.6 million for the first quarter of 2023.The acquisition-related expenses in 2024 and 2023 were primarily related to the Limestone Merger.

◦ During the first quarter of 2024, Peoples recorded a provision for credit losses of $6.1 million, compared to a provision for credit losses of $1.3 million in the linked quarter and a provision for credit losses of $1.9 million in the first quarter of 2023.

The provision for credit losses for the first quarter of 2024 was driven by (i) a deterioration in macro-economic conditions used within the CECL model, (ii) an increase of reserves on individually analyzed loans and (iii) loan growth.

The provision for credit losses in the linked quarter was largely attributable to higher net charge-offs, offset by an improvement of macro-economic conditions and the release of reserves on individually analyzed loans.

The provision for credit losses in the first quarter of 2023 was largely attributable to a deterioration of macro-economic conditions, partially offset by a reduction in reserves for individually analyzed loans.

◦ For the first six months of 2024, Peoples incurred $(0.1) million of acquisition-related expenses compared to $11.3 million for the first six months of 2023.

Peoples recorded acquisition-related expenses, primarily related to the Limestone Merger,

which included $(0.1) million for the first quarter of 2024 and $10.7 million for the second quarter of 2023.

There was no such expense for the three months ended June 30, 2024.

◦ For the second quarter of 2024, Peoples recorded a provision for credit losses of $5.7 million, compared to a provision for credit losses of $6.1 million for the linked quarter and a provision for credit losses of $8.0 million for the second quarter of 2023.

For the first half of 2024, Peoples recorded a provision for credit losses of $11.8 million, compared to a provision for credit losses of $9.8 million for 2023.

The provision for credit losses for the second quarter and the first six months of 2024 was mainly the result of (i) higher net charge-offs, (ii) an increase of reserves on individually analyzed loans and leases and (iii) loan growth.

For more information, please refer to the section titled "RESULTS OF OPERATIONS - Provision for Credit Losses" found later in this discussion.

◦ 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.

◦ On October 25, 2022, Peoples announced the Limestone Merger, a transaction valued at $177.9 million.

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Peoples acquired Limestone's loan portfolio totaling $1.1 billion, $1.2 billion of deposits, $172.7 million of total investment securities, an aggregate of $99.5 million of short-term and long-term borrowings, and $93.5 million of total cash and cash equivalents.

Peoples also recorded preliminary goodwill in the amount of $68.8 million and other intangible assets of $27.7 million, which consisted of core deposit intangibles.

Peoples also recorded goodwill in the amount of $68.8 million and other intangible assets of $27.7 million, which consisted of core deposit intangibles.

◦ To combat the effects of ongoing inflationary pressures, the Federal Reserve Board increased the Federal Funds Target Rate range to 0.25% to 0.50% beginning on March 16, 2022, and continued to raise rates up to 5.50% on July 27, 2023.

The Federal Reserve Board has kept rates unchanged since July 2023 but has signaled that it expects to begin reducing rates sometime in 2024.

The Federal Reserve Board has kept rates unchanged since July 2023 but has signaled that it may begin reducing rates sometime in 2024.

The impact of these transactions and events, where material, is discussed in the applicable sections of this MD&A.

EXECUTIVE SUMMARY

Peoples reported net income of $29.6 million for the first quarter of 2024, representing earnings per diluted common share of $0.84.

In comparison, Peoples reported net income of $33.8 million, representing earnings per diluted common share of $0.96, for the fourth quarter of 2023, and net income of $26.6 million, representing earnings per diluted common share of $0.94, for the first quarter of 2023.

Non-core items negatively impacted earnings per diluted common share by $0.01 for the first quarter of 2024, $0.08 for the fourth quarter of 2023, and $0.05 for the first quarter of 2023.

Net interest income was $86.6 million for the first quarter of 2024, a decrease of $1.7 million, or 2.0%, compared to the linked quarter.

Net interest margin was 4.27% for the first quarter of 2024, compared to 4.44% for the linked quarter.

The decreases in net interest income and net interest margin were primarily driven by a decrease in accretion income, net of amortization, from our acquisitions.

The linked quarter was impacted by a true-up of $1.3 million to the preliminary Limestone-related accretion, which added to net interest income.

The small remaining decline in net interest margin, compared to the linked quarter, was mostly due to excess cash on-hand during the quarter for liquidity purposes.

Net interest income for the first quarter of 2024 increased $13.8 million, or 18.9%, compared to the first quarter of 2023.

Net interest margin for the first quarter of 2024 decreased 26 basis points compared to 4.53% for the first quarter of 2023, driven primarily by an increase in interest expense on deposits.

Accretion income, net of amortization expense, from acquisitions was $6.6 million for the first quarter of 2024, $9.0 million for the fourth quarter of 2023 and $2.0 million for the first quarter of 2023, which added 32 basis points, 45 basis points and 13 basis points, respectively, to net interest margin.

The decrease in accretion income for the first quarter of 2024 when compared to the linked quarter was driven by a fourth quarter 2023 true-up to the preliminary Limestone-related accretion.

The increase in accretion income for the current quarter compared to the first quarter of 2023 was a result of the accretion from the Limestone Merger.

The provision for credit losses was $6.1 million for the first quarter of 2024, compared to a provision for credit losses of $1.3 million for the linked quarter and a provision for credit losses of $1.9 million for the first quarter of 2023.

The provision for credit losses for the fourth quarter of 2023 was largely attributable to higher net charge-offs, offset by an improvement of macro-economic conditions and the release of reserves on individually analyzed loans.

Net charge-offs for the first quarter of 2024 were $3.3 million, or 0.22% of average total loans annualized, compared to net charge-offs of $3.5 million, or 0.23% of average total loans annualized, for the linked quarter and net charge-offs of $1.5 million, or 0.13% of average total loans annualized, for the first quarter of 2023.

Peoples reported net income of $29.0 million for the second quarter of 2024, representing earnings per diluted common share of $0.82.

In comparison, Peoples reported net income of $29.6 million, representing earnings per diluted common share of $0.84, for the first quarter of 2024, and net income of $21.1 million, representing earnings per diluted common share of $0.64, for the second quarter of 2023.

For the six months ended June 30, 2024, Peoples recorded net income of $58.6 million, or $1.66 per diluted common share, compared to $47.7 million, or $1.56 per diluted common share, for the six months ended June 30, 2023.

Non-core items negatively impacted earnings per diluted common share by $0.02 for the second quarter of 2024, $0.01 for the first quarter of 2024, and $0.28 for the second quarter of 2023.

Non-core items negatively impacted earnings per diluted share by $0.02 and $0.37 for the six months ended June 30, 2024 and 2023, respectively.

Net interest income was $86.6 million for the second quarter of 2024, which was flat when to compared to the linked quarter.

Net interest margin was 4.18% for the second quarter of 2024, compared to 4.26% for the linked quarter.

The decrease in net interest margin was primarily driven by a decrease in accretion income, net of amortization, from our acquisitions and higher borrowing costs.

Net interest income for the second quarter of 2024 increased $1.8 million, or 2%, compared to the second quarter of 2023.

Net interest margin for the second quarter of 2024 was 4.18% and decreased 36 basis points compared to 4.54% for the second quarter of 2023, driven primarily by an increase in interest expense on deposits.

For the first six months of 2024, net interest income increased $15.5 million, or 10%, compared to the first six months of 2023, while net interest margin decreased 32 basis points to 4.22%.

The increase in net interest income was driven by increases in market interest rates and an additional four months of income from the Limestone Merger.

The decrease in net interest margin for the first six months of 2024 compared to the first six months of 2023 was primarily driven by higher borrowing costs, which offset higher earning asset yields.

Accretion income, net of amortization expense, from acquisitions was $5.8 million for the second quarter of 2024, $6.5 million for the first quarter of 2024 and $4.5 million for the second quarter of 2023, which added 28 basis points, 32 basis points and 23 basis points, respectively, to net interest margin.

The decrease in accretion income for the second quarter of 2024 when compared to the linked quarter was driven by lower pay-offs.

The increase in accretion income for the current quarter compared to the second quarter of 2023 was a result of the accretion from the Limestone Merger.

Accretion income, net of amortization expense, from acquisitions was $12.3 million for the six months ended June 30, 2024, compared to $6.5 million for the six months ended June 30, 2023, which added 30 and 18 basis points, respectively, to net interest margin.

The increase in accretion income for the first six months of 2024 compared to the same period in 2023 was due to an additional four months of accretion in 2024 from the Limestone Merger.

The provision for credit losses was $5.7 million for the second quarter of 2024, compared to a provision for credit losses of $6.1 million for the linked quarter and a provision for credit losses of $8.0 million for the second quarter of 2023.

The provision for credit losses for the second quarter of 2024 was a result of (i) higher net charge-offs, (ii) an increase of reserves for individually analyzed loans and leases, and (iii) loan growth.

Net charge-offs for the second quarter of 2024 were $4.2 million, or 0.27% of average total loans annualized, compared to net charge-offs of $3.3 million, or 0.22% of average total loans annualized, for the linked quarter and net charge-offs of

$1.2 million, or 0.09% of average total loans annualized, for the second quarter of 2024.

For additional information on credit trends and the allowance for credit losses, see the "FINANCIAL CONDITION - Allowance for Credit Losses" section below.

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The provision for credit losses for the first six months of 2024 was $11.8 million, compared to a provision for credit losses of $9.8 million for the first six months of 2023.

The provision for credit losses for the first six months of 2024 was mainly the result of (i) higher net charge-offs, (ii) an increase in reserves for individually analyzed loans and leases and (iii) loan growth.

The provision for credit losses for the first six months of 2023 was driven by (i) the addition of the provision for the non-purchased credit deteriorated loans acquired in the Limestone Merger, (ii) loan growth and (iii) economic forecast deterioration, partially offset by a reduction in the reserves for individually analyzed loans and leases and the use of updated loss drivers.

Net charge-offs for the first six months of 2024 were $7.6 million, or 0.24% of average total loans annualized, compared to net charge-offs of $2.7 million, or 0.11% annualized, for the first six months of 2023.

For additional information on credit trends and the allowance for credit losses, see the "Asset Quality" section below.

Net gains and losses include gains and losses on investment securities, asset disposals and other transactions, which are included in total non-interest income on the Consolidated Statements of Operations.

The net loss realized during the first quarter of 2024 was $0.3 million, compared to a net loss of $2.2 million for each of the linked quarter and the first quarter of 2023.

The net loss for the first quarter of 2024 was due to $0.3 million of net losses on repossessed assets.

The net loss for the linked quarter was primarily due to the sales of $36.5 million of lower yielding available-for-sale investment securities for a pre-tax loss of $1.7 million.

The net loss for the first quarter of 2023 was primarily due to a pre-tax net loss of $2.0 million on the sale of $96.7 million of its lower yielding available-for-sale securities.

Total non-interest income, excluding net gains and losses, for the first quarter of 2024 decreased $0.2 million compared to the linked quarter.

The decrease in non-interest income, excluding net gains and losses, was primarily due to decreases of $1.6 million in lease income and $0.8 million in electronic banking income.

The decrease in lease income was due to a large lease buyout in the fourth quarter of 2023, while the decrease in electronic banking income was due to a decline in customer activity.

Partially offsetting the decreases was a $2.2 million increase in insurance income due to seasonal performance-based commissions being paid in the first quarter of the year.

Compared to the first quarter of 2023, total non-interest income, excluding net gains and losses, increased $4.9 million, primarily due to (i) a $1.1 million increase in insurance income, (ii) a $1.0 million increase in other non-interest income, (iii) a $0.8 million increase in bank owned life insurance income, (iv) a $0.7 million increase in deposit account service charges, (v) a $0.6 million increase in electronic banking income.

Insurance income increased due to higher contingency income, new business, and market increases for premiums.

Bank owned life insurance increased due to a $0.5 million death benefit in the first quarter of 2024 and additional income from policies acquired in the Limestone Merger.

The other increases for the first quarter of 2024, when compared to the first quarter of 2023, were primarily due to the additional customers brought in from the Limestone Merger.

Total non-interest expenses for the first three months ended March 31, 2024 were impacted by anticipated annual expenses that occur in the first quarter of each year including annual merit increases, stock-based compensation expenses attributable to retirement-eligible employees and health savings account ("HSA") contributions.

Total non-interest expense for the prior periods were impacted by the Limestone Merger and acquisition-related non-interest expense.

The net loss realized during the second quarter of 2024 was $0.8 million, compared to a net loss of $0.3 million for the linked quarter and a net loss of $1.8 million for the second quarter of 2023.

The net loss for the second quarter of 2024 was due to $0.4 million of net losses on repossessed assets.

The net loss for the linked quarter was due to $0.3 million of net losses on repossessed assets.

The net loss for the second quarter of 2023 was primarily driven by a $1.6 million write-down of an OREO property due to a potential sale of the property.

The net loss realized during the first six months of 2024 was $1.1 million, compared to $4.0 million for the first six months of 2023.

The net loss for the first six months of 2024 was driven by the $0.7 million of net losses on repossessed assets mentioned above.

The net loss for the first six months of 2023 was primarily driven by a $2.0 million pre-tax net loss on the sale of available-for-sale investment securities and the $1.6 million writedown of the OREO property mentioned above.

Peoples sold $96.7 million of it's lower yielding available-for-sale investment securities, with proceeds from the sale used to pay down overnight borrowings.

Total non-interest income, excluding net gains and losses, for the second quarter of 2024 decreased $1.6 million compared to the linked quarter.

The decrease in non-interest income, excluding net gains and losses, was primarily due to a decrease of $2.4 million in insurance income due primarily to seasonal performance-based commissions being paid in the first quarter of each year.

Partially offsetting the decrease was an increase of $0.4 million in each of electronic banking income and trust and investment income.

Compared to the second quarter of 2023, total non-interest income, excluding net gains and losses, increased $1.6 million, primarily due to a $1.1 million increase in other non-interest income, driven by operating lease income, and a $0.6 million increase in trust and investment income, partially offset by a decrease of $0.6 million in lease income.

The other increases for the second quarter of 2024, when compared to the second quarter of 2023, were primarily due to the additional customers brought in from the Limestone Merger and increases of assets under administration and management.

For the first six months of 2024, total non-interest income, excluding gains and losses, increased $6.5 million, or 15%, compared to the first six months of 2023.

The increase was driven by (i) a $2.1 million increase in other non-interest income, driven by operating lease income, (ii) a $1.2 million increase in insurance income, (iii) a $1.1 million increase in trust and investment income, (iv) a $1.0 million increase in bank owned life insurance income, (v) a $0.9 million increase in deposit account service charge income, and (vi) a $0.6 million increase in electronic banking income, offset by a decrease of $0.4 million in lease income.

The other increases for the first six months of 2024, when compared to the first six months of 2023, were primarily due to the additional customers brought in from the Limestone Merger, increases of assets under management, higher insurance performance-based commission, and market increases for insurance premiums.

Total non-interest expense increased $0.3 million for the three months ended June 30, 2024, compared to the linked quarter.

The increase in total non-interest expense was primarily due to increases of $2.2 million in other non-interest expense driven by a one-time true-up of $1.3 million of corporate expenses and $1.0 million in data processing and software expense driven by higher expenses attributable to recent technology projects, partially offset by a decrease of $2.3 million in salaries and employee benefit costs.

The decrease in salaries and employee benefit costs was due to anticipated annual expenses that occur in the first quarter of each year including stock-based compensation expenses attributable to retirement-eligible employees and health savings account ("HSA") contributions.

Compared to the second quarter of 2023, total non-interest expense decreased $1.9 million, or 3%.

Excluding acquisition-related expenses, non-interest expenses increased $8.8 million, or 15%, primarily due to increases of $3.6 million in salaries and employee benefit costs due to additional employees added in the Limestone Merger and $2.0 million data processing and software expense due to recent technology projects.

For the six months ended June 30, 2024, total non-interest expense increased $10.1 million, or 8%, compared to the first six months of 2023.

Excluding acquisition-related expenses, non-interest expenses increased $21.5 million, or 19%, primarily due to increases of $10.5 million in salaries and employee benefit costs due to additional employees added in the Limestone Merger, $3.2 million and $2.1 million in data processing and software expense and in net occupancy and equipment expense, respectively, due to recent technology projects and growth, included through acquisitions.

The table below summarizes the amount of acquisition-related expenses for each line item that is a component of non-interest expense.

This information is used by Peoples to provide information useful to investors in understanding Peoples' operating performance and trends.

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Three Months Ended

March 31, December 31, March 31,

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30,

(Dollars in thousands) 2024 2024 2023 2024 2023

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Total non-interest expense excluding acquisition-related expense $ 68,758 $ 68,549 $ 59,914 $ 137,307 $ 115,842

Total non-interest expense increased $0.8 million, or 1%, for the three months ended March 31, 2024, compared to the linked quarter.

Excluding acquisition-related expense, total non-interest expense increased $2.1 million, or 3%, primarily due to increases of $1.6 million in salaries and employee benefit costs.

The increase in salaries and employee benefit costs was due to anticipated annual expenses that occur in the first quarter of each year including annual merit increases, stock-based compensation expenses attributable to retirement-eligible employees and HSA contributions.

Compared to the first quarter of 2023, total non-interest expense increased $12.0 million, or 21%.

Excluding acquisition-related expenses, non-interest expenses increased $12.6 million, or 23%, primarily due to a increases of $6.9 million in salaries and employee

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benefits costs due to additional employees added in the Limestone Merger and $1.3 million and $1.2 million in net occupancy and equipment expense and data processing and software expense, respectively, due to the recent growth, including through acquisitions.

The efficiency ratio for the first quarter of 2024 was 58.0%, compared to 56.0% for the linked quarter, and 57.8% for the first quarter of 2023.

The increase in the efficiency ratio compared to the linked quarter was largely a result of an increase in interest expense on deposits.

The efficiency ratio compared to the prior year quarter was relatively flat.

The efficiency ratio, adjusted for non-core items, was 58.1% for the first quarter of 2024, compared to 54.8% for the linked quarter and 57.19% for the first quarter of 2023.

The efficiency ratio for the second quarter of 2024 was 59.2%, compared to 58.1% for the linked quarter, and 62.8% for the second quarter of 2023.

The improvement in the efficiency ratio compared to the prior year quarter was largely a result of a decrease in acquisition-related expenses.

The efficiency ratio, adjusted for non-core items, was 59.2% for the second quarter of 2024, compared to 58.1% for the linked quarter and 53.3% for the second quarter of 2023.

The efficiency ratio and the adjusted efficiency ratio for non-core items increased compared to the linked quarterly mainly as a result of a reduction in non-interest income.

The efficiency ratio for the first six months of 2024 was 58.6%, compared to 60.4% for the first six months of 2023.

The efficiency ratio improved compared to the prior year first six months due to the decrease in acquisition-related expenses.

The efficiency ratio, adjusted for non-core items, was 58.7% for the first six months of 2024, compared to 55.2% for the first six months of 2023.

Peoples continues to focus on controlling expenses, while recognizing necessary costs in order to continue growing the business.

Peoples recorded income tax expense of $8.3 million with an effective tax rate of 21.8% for the first quarter of 2024, compared to income tax expense of $9.7 million with an effective tax rate of 22.3% for the linked quarter, and income tax expense of $7.0 million with an effective tax rate of 21.0% for the first quarter of 2023.

Income tax expense for the first quarter of 2024 compared to the linked quarter decreased due to lower pre-tax income.

The increase for the first quarter of 2024 compared to the first quarter of 2023, was driven by higher pre-tax income.

At March 31, 2024, total assets were $9.27 billion, compared to $9.16 billion at December 31, 2023 and $7.31 billion at March 31, 2023.

Total assets at March 31, 2024 increased when compared to at December 31, 2023 primarily due to increases in investment securities and period-end total loan and lease balances.

The period-end total loan and lease balances at March 31, 2024 increased $43.6 million, or 3% annualized, compared to at December 31, 2023.

The increase in the period-end loan and lease balance was primarily driven by increases of (i) $46.8 million in other commercial real estate loans, (ii)$35.8 million in premium finance loans, and (iii) $29.6 million in commercial and industrial loans, partially offset by reductions of (a) $49.3 million in construction loans, (b) $16.2 million in indirect consumer loans, and (c) $15.2 million in direct consumer loans.

Total assets at March 31, 2024 increased compared to March 31, 2023 due to $1.46 billion of assets, primarily loans, acquired in the Limestone Merger.

Excluding the loans acquired in the Limestone Merger, the period-end loan and lease balance at March 31, 2024 increased $499.3 million, or 10%, driven by increases of $198.1 million, $100.6 million, $80.7 million, $68.1 million, $37.3 million, and $23.5 million in other commercial real estate loans, commercial and industrial loans, premium finance loans, leases, construction loans, and home equity lines of credit, respectively.

Total liabilities were $8.21 billion at March 31, 2024, up from $8.10 billion at December 31, 2023 and $6.49 billion at March 31, 2023.

The increase in total liabilities when compared to at December 31, 2023 was primarily due to an increase of $174.3 million in period-end total deposits, partially offset by a decrease of $87.6 million in short-term borrowings.

The increase in period-end total deposits when compared to at December 31, 2023 was primarily driven by increases of (i) $237.0 million in retail CDs, (ii) $98.5 million in governmental deposits and (iii) $84.5 million in money market deposit accounts, partially offset by decreases of (a) $99.3 million in non-interest bearing deposit accounts, (b) $41.8 million in brokered CDs, (c) $36.6 million in interest-bearing demand deposit accounts, and (d) $17.8 million in savings accounts.

The increase in governmental deposit accounts was due to the seasonality of the balances, which are typically higher in the first quarter each year.

The increase in total liabilities when compared to at March 31, 2023 was primarily due to $1.35 billion of liabilities, primarily deposits, acquired in the Limestone Merger.

Excluding deposits acquired in the Limestone Merger, period-end total deposits at March 31, 2024 increased $784.8 million, or 14%, compared to at March 31, 2023.

The increase was primarily driven by increases of $956.9 million in retail CDs, $210.3 million in brokered CDs, and $191.2 million in money market deposit accounts, partially offset by decreases of $270.9 million, $191.8 million, and $158.4 million in non-interest-bearing deposit accounts, savings accounts, and interest-bearing demand deposit accounts, respectively.

Total stockholders' equity at March 31, 2024 increased by $8.5 million compared to at December 31, 2023, which was primarily due to net income for the first quarter of 2024 of $29.6 million, partially offset by dividends paid of $13.7 million and a $7.4 million increase in accumulated other comprehensive loss.

The change in accumulated other comprehensive loss was primarily the result of the changes in the market value of available-for-sale investment securities during the period.

Accumulated unrealized losses related to the available-for-sale investment securities portfolio were $111.8 million and $104.2 million at March 31, 2024 and at December 31, 2023, respectively.

The increase in total stockholders' equity at March 31, 2024 when compared to at March 31, 2023 was also impacted by net income of $116.4 million in the last twelve months and a decrease in accumulated other comprehensive loss of $2.0 million, partially offset by dividends paid of $55.1 million and share repurchases of $6.0 million.

Peoples recorded income tax expense of $6.9 million with an effective tax rate of 19.1% for the second quarter of 2024, compared to income tax expense of $8.3 million with an effective tax rate of 21.8% for the linked quarter, and income tax expense of $6.2 million with an effective tax rate of 22.6% for the second quarter of 2023.

The decrease in income tax expense for the second quarter of 2024 compared to the linked quarter was driven by a $1.1 million one-time benefit related to a prior year amended return.

Peoples recorded income tax expense of $15.1 million with an effective tax rate of 20.5% for the first six months of 2024 and $13.2 million with an effective tax rate of 21.7% for the first six months of 2023.

The increase was driven by higher pre-tax income.

At June 30, 2024, total assets were $9.23 billion, compared to $9.27 billion at March 31, 2024, $9.16 billion at December 31, 2023 and $8.79 billion at June 30, 2023.

Total assets at June 30, 2024 decreased when compared to at March 31, 2024 primarily due to a decrease in interest-bearing deposits in other banks, partially offset by increases in loans and investment securities.

The period-end total loan and lease balances at June 30, 2024 increased $122.5 million, or 8% annualized, compared to at March 31, 2024.

The increase in the period-end total loan and lease balances was primarily driven by increases of (i) $54.4 million in premium finance loans, (ii) $43.4 million in commercial and industrial loans, (iii) $25.9 million in construction loans, and (iv) $24.8 million in indirect consumer loans, partially offset by a reduction of $47.8 million in other commercial real estate loans.

Total assets at June 30, 2024 increased compared to December 31, 2023 due to increases of $166.2 million in total loans and leases and $88.5 million in investment securities, partially offset by a decrease of $190.9 million in total cash and cash equivalents.

Total assets at June 30, 2024 increased compared to June 30, 2023 due to an increase of $350.8 million in total loans and leases.

The period-end loan and lease balance at June 30, 2024 increase compared to June 30, 2023 was primarily driven by organic growth in our premium finance, other commercial real estate, commercial and industrial, and lease portfolios of $130.1 million, $124.5 million, $97.8 million, and $52.9 million, respectively.

Total liabilities were $8.15 billion at June 30, 2024, down from $8.21 billion at March 31, 2024, $8.10 billion at December 31, 2023 and $7.79 billion at June 30, 2023.

The decrease in total liabilities when compared to at March 31, 2024 was primarily due to a decrease of $28.8 million in period-end total deposits.

The decrease was primarily driven by decreases of (i) $70.8 million in brokered CDs, (ii) $58.8 million in governmental deposit accounts, and (iii) $24.2 million in interest-bearing demand deposit accounts, partially offset by an increase of $132.5 million in retail CDs.

The increase in retail CDs was due to current specials being offered, while the decrease in governmental deposit accounts was due to the seasonality of those balances, which are typically higher in the first quarter.

Excluding a decrease in brokered CDs of $70.8 million, core deposits were up $42.0 million compared to the linked quarter, driven by the aforementioned increase in retail CDs and higher money market deposit accounts.

The increase in total liabilities when compared to at December 31, 2023 was primarily due to increases of $369.5 million in retail CDs and $93.7 million in money market deposit accounts, partially offset by decreases of (i) $162.8 million in brokered deposits, (ii) $95.0 million in non-interest bearing deposits, and (iii) $60.8 million in interest-bearing demand deposit accounts.

The increase in total liabilities when compared to at June 30, 2023 was primarily due to a $337.9 million increase in period in deposits.

The increase was primarily driven by increases of $862.1 million in retail CDs, $150.5 million in money market deposit accounts, and $60.7 million in governmental deposit accounts, offset by decreases of $236.1 million, $209.9 million, $147.3 million, and $142.1 million in savings accounts, non-interest bearing deposits, brokered CDs, and interest-bearing demand deposit accounts, respectively.

The increase in retail CDs was driven by current promotions being offered.

Total stockholders' equity at June 30, 2024 increased by $15.8 million compared to at March 31, 2024, which was primarily due to net income for the second quarter of 2024 of $29.0 million, partially offset by dividends paid of $14.2 million.

Accumulated unrealized losses related to the available-for-sale investment securities portfolio were $110.2 million and $111.8 million at June 30, 2024 and at March 31, 2024, respectively.

Total stockholders' equity at June 30, 2024 increased by $24.3 million compared to at December 31, 2023 was primarily due to net income of $58.6 million for the first six months of 2024, partially offset by dividends paid of $27.9 million.

Total stockholders' equity at June 30, 2024 increased by $78.9 million compared to at June 30, 2023.

The increase in total stockholders' equity at June 30, 2024 when compared to at June 30, 2023 was impacted by net income of $124.3 million in the last twelve months and a decrease in accumulated other comprehensive loss of $8.7 million, partially offset by dividends paid of $55.9 million.

RESULTS OF OPERATIONS

3 unchanged sentences

Net interest margin, which is calculated by dividing fully tax-equivalent ("FTE") net interest income by average interest-earning assets, serves as an important measurement of the net revenue stream generated by the volume, mix and pricing of interest-earning assets and interest-bearing liabilities.

Table of Co n tents

using a blended corporate income tax rate of 23.2% for the three months ended March 31, 2024, and 23.3% for the three months ended December 31, 2023 and March 31, 2023.

FTE net interest income is calculated by increasing interest income to convert tax-exempt income earned on obligations of states and political subdivisions and tax-exempt loans to the pre-tax equivalent of taxable income using a federal statutory corporate income tax rate of 21% for the three months ended June 30, 2024, for the three months ended March 31, 2024 and for the three and six months ended June 30, 2023.

The following table details the calculation of FTE net interest income:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

2 unchanged sentences

FTE net interest income $ 86,965 $ 86,992 $ 85,239 $ 173,958 $ 158,469

Table of Co n tents

The following tables detail Peoples’ average balance sheets for the periods presented:

For the Three Months Ended

March 31, 2024 December 31, 2023 March 31, 2023

June 30, 2024 March 31, 2024 June 30, 2023

( Dollars in thousands)

51 unchanged sentences

Net interest margin (b) 4.18 % 4.26 % 4.54 %

Table of Co n tents

For the Six Months Ended

June 30, 2024 June 30, 2023

( Dollars in thousands)

Average Balance Income/ Expense Yield/Cost Average Balance Income/ Expense Yield/Cost

Short-term investments $ 160,238 $ 4,424 5.55 % $ 47,008 $ 1,062 4.56 %

Investment securities (a)(b):

Taxable 1,671,453 28,850 3.45 % 1,635,773 23,863 2.92 %

Nontaxable 180,032 2,528 2.81 % 195,562 2,684 2.74 %

Total investment securities 1,851,485 31,378 3.39 % 1,831,335 26,547 2.90 %

Loans (b)(c):

Construction 334,196 12,998 7.69 % 300,270 10,454 6.92 %

Commercial real estate, other 2,075,468 73,662 7.02 % 1,538,771 48,034 6.21 %

Commercial and industrial 1,216,743 47,412 7.71 % 975,633 34,165 6.96 %

Premium finance 235,459 10,310 8.66 % 151,244 4,809 6.32 %

Leases 414,817 24,049 11.47 % 350,845 19,919 11.29 %

Residential real estate (d) 928,309 22,782 4.91 % 881,514 20,535 4.66 %

Home equity lines of credit 221,053 8,909 8.10 % 184,337 6,622 7.24 %

Consumer, indirect 656,324 18,950 5.81 % 646,045 15,173 4.74 %

Consumer, direct 121,569 4,194 6.94 % 116,377 3,985 6.91 %

Total loans 6,203,938 223,266 7.14 % 5,145,036 163,696 6.35 %

Allowance for credit losses

(62,990) (53,052)

Net loans 6,140,948 223,266 7.22 % 5,091,984 163,696 6.41 %

Total earning assets 8,152,671 259,068 6.32 % 6,970,327 191,305 5.49 %

Goodwill and other intangible assets 409,292 356,470

Other assets 539,089 465,782

$ 9,101,052 $ 7,792,579

Interest-bearing deposits:

Savings accounts $ 899,089 $ 448 0.10 % $ 1,071,174 $ 719 0.14 %

Governmental deposit accounts

779,906 10,679 2.75 % 666,683 3,396 1.03 %

Interest-bearing demand accounts

1,102,293 947 0.17 % 1,142,648 712 0.13 %

Money market accounts 817,567 10,307 2.54 % 632,561 2,831 0.90 %

Retail CDs 1,662,832 34,323 4.15 % 702,809 5,959 1.71 %

Brokered CDs (e) 525,653 12,259 4.69 % 353,760 6,447 3.68 %

Total interest-bearing deposits

5,787,340 68,963 2.40 % 4,569,635 20,064 0.89 %

Borrowed funds:

Short-term FHLB advances (e) 167,525 4,582 5.50 % 382,677 9,252 4.88 %

Repurchase agreements and other 230,527 4,580 3.97 % 99,966 520 1.04 %

Total short-term borrowings 398,052 9,162 4.62 % 482,643 9,772 4.08 %

Long-term FHLB advances 129,255 2,557 3.98 % 33,916 409 2.43 %

Long-term notes payable 49,291 1,704 6.91 % 47,557 1,201 5.05 %

Other long-term borrowings (f) 54,071 2,724 9.97 % 33,902 1,390 8.15 %

Total long-term borrowings 232,617 6,985 5.99 % 115,375 3,000 5.19 %

Total borrowed funds 630,669 16,147 5.12 % 598,018 12,771 4.30 %

Total interest-bearing liabilities

6,418,009 85,110 2.66 % 5,167,653 32,836 1.28 %

Non-interest-bearing deposits 1,489,304 1,598,985

Other liabilities 136,622 149,075

Total liabilities 8,043,935 6,915,713

Total stockholders’ equity 1,057,117 876,866

Total liabilities and stockholders’ equity $ 9,101,052 $ 7,792,579

Interest rate spread (b) $ 173,958 3.66 % $ 158,469 4.21 %

Net interest margin (b) 4.22 % 4.54 %

(a) Average balances are based on carrying value.

(b) Interest income and yields are presented on an FTE basis, using a 23.2% blended corporate income tax rate for the three months ended March 31, 2024, and 23.3% for the three months ended December 31, 2023 and March 31, 2023.

(b) Interest income and yields are presented on a fully tax-equivalent basis, using a 21% statutory federal corporate income tax rate.

9 unchanged sentences

The following table provides an analysis of the changes in FTE net interest income:

Three Months Ended March 31, 2024 Compared to

(Dollars in thousands) December 31, 2023 March 31, 2023

Three Months Ended June 30, 2024 Compared to

Six Months Ended June 30, 2024 Compared to

(Dollars in thousands) March 31, 2024 June 30, 2023 June 30, 2023

Increase (decrease) in:

1 unchanged sentence

Rate Volume Total (a)

INTEREST INCOME:

29 unchanged sentences

FTE net interest income $ (1,733) $ 1,707 $ (26) $ (6,007) $ 7,733 $ 1,726 $ (9,577) $ 25,067 $ 15,490

Table of Co n tents

(a) The change in interest due to both rate and volume has been allocated to rate and volume changes in proportion to the relationship of the dollar amounts of the change in each.

Compared to the linked quarter, net interest income decreased $1.7 million, or 2.0%.

Net interest margin was 4.27% for the first quarter of 2024, compared to 4.44% for the linked quarter.

The decreases in net interest income and net interest margin were primarily due to a decrease in accretion income, net of amortization, from our acquisitions as well as excess cash on hand during the first quarter of 2024 for liquidity purposes.

Net interest income for the first quarter of 2024 grew 18.9% over the prior year quarter and net interest margin decreased by 26 basis points.

The increase in net interest income compared to the first quarter of 2023 was driven by increases in market interest rates, the Limestone Merger, and organic growth.

The decrease in net interest margin for the first quarter of 2024 compared to the first quarter of 2023, was driven primarily by an increase in interest expense on deposits.

Accretion income, net of amortization expense, from acquisitions was $6.6 million for the first quarter of 2024, $9.0 million for the linked quarter and $2.0 million for the first quarter of 2023, which added 32 basis points, 45 basis points and 13 basis points, respectively, to net interest margin.

The decrease in accretion income for the first quarter of 2024, when compared to the linked quarter was driven by a fourth quarter 2023 true-up to the preliminary Limestone-related accretion.

The increase in accretion income for the first quarter of 2024 compared to the first quarter of 2023 was a result of accretion from the Limestone Merger.

(b) Interest income and yields are presented on a fully tax-equivalent basis, using a 21% statutory federal corporate income tax rate.

Compared to the linked quarter, net interest income was relatively flat for the second quarter of 2024.

Net interest margin was 4.18% for the second quarter of 2024, compared to 4.26% for the linked quarter.

The decrease in net interest margin was primarily

driven by a decrease in accretion income, net of amortization, from our acquisitions and higher borrowing costs, which offset higher earning asset yields.

Net interest income for the second quarter of 2024 grew 2% over the prior year quarter and net interest margin decreased by 36 basis points.

The increase in net interest income compared to the second quarter of 2023 was driven by increases in market interest rates, the Limestone Merger, and organic growth.

The decrease in net interest margin for the second quarter of 2024 compared to the second quarter of 2023, was driven primarily by an increase in interest expense on deposits.

For the first six months of 2024, net interest income increased $15.5 million, or 10%, compared to the first six months of 2023, while net interest margin decreased 32 basis points to 4.22%.

The increase in net interest income was driven by increases in market interest rates and an additional four months of income from the Limestone Merger.

The decrease in net interest margin for the first six months of 2024 compared to the first six months of 2023 was primarily driven by higher borrowing costs, which offset higher earning asset yields.

Accretion income, net of amortization expense, from acquisitions was $5.8 million for the second quarter of 2024, $6.5 million for the linked quarter and $4.5 million for the second quarter of 2023, which added 28 basis points, 32 basis points and 23 basis points, respectively, to net interest margin.

The decrease in accretion income for the second quarter of 2024, when compared to the linked quarter was driven by lower loan pay-offs.

The increase in accretion income for the second quarter of 2024 compared to the second quarter of 2023 was a result of accretion from the Limestone Merger.

For the first half of 2023, accretion income totaled $12.3 million and added 30 basis points to net interest margin compared to $6.5 million and 18 basis points for the first half of 2023.

The increase in accretion income for the first six months of 2024 compared to the same period in 2023 was due to more accretion in 2024 from the Limestone Merger.

Additional information regarding changes in the Unaudited Consolidated Balance Sheets can be found under appropriate captions of the “FINANCIAL CONDITION” section of this MD&A.

2 unchanged sentences

The following table details Peoples’ provision for credit losses:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

2 unchanged sentences

Provision for credit losses $ 5,683 $ 6,102 $ 7,983 $ 11,785 $ 9,836

As a percentage of average total loans (a) 0.40 % 0.08 % 0.16 %

(a) Presented on an annualized basis.

The provision for credit losses recorded represents the amount needed to maintain the appropriate level of the allowance for credit losses based on management’s quarterly estimates.

The provision for credit losses for the first quarter of 2023 was largely attributable to a deterioration of macro-economic conditions and an increase in charge-off activity, partially offset by a reduction in reserves for individually analyzed loans.

The provision for credit losses for the second quarter of 2024 was a result of (i) higher net-charge offs, (ii) an increase in reserves for individually analyzed loans and leases, and (iii) loan growth.

The provision for credit losses for the second quarter of 2023 was due to a provision for the non-purchased credit deteriorated loans acquired in the Limestone Merger, partially offset by the release of reserves on individually analyzed loans and improvements in macro-economic conditions.

For the first half of 2024, the provision for credit losses was mainly the result of (i) higher net charge-offs, (ii) an increase of reserves on individually analyzed loans and leases and (iii) loan growth.

For the first six months of 2023, the provision for credit losses was driven by (i) the addition of the provision for the non-purchased credit deteriorated loans acquired in the Limestone Merger, (ii) loan growth and (iii) economic forecast deterioration, partially offset by a reduction in the reserves for individually analyzed loans and leases and the use of updated loss drivers.

Additional information regarding changes in the allowance for credit losses and loan credit quality can be found later in this MD&A under the caption “FINANCIAL CONDITION - Allowance for Credit Losses.”

Table of Co n tents

Net Loss Included in Total Non-Interest Income

1 unchanged sentence

The following table details Peoples’ net losses for the periods presented:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

5 unchanged sentences

Net loss on asset disposals and other transactions $ (428) $ (341) $ (1,665) $ (769) $ (1,911)

During the fourth quarter of 2023, Peoples executed the sale of $36.5 million of lower yielding available-for-sale investment securities.

Proceeds from the sales were used to purchase higher yielding agency investment securities.

The net loss on investment securities for the second quarter of 2024 was driven by the loss recorded on a contingent call of a security.

During the first quarter of 2023, Peoples executed sales of $96.7 million of its lower yielding available-for-sale securities which were used to pay down overnight borrowings.

The loss on the sales of the available-for-sale investment securities had a nominal impact on tangible book value as such loss was previously reflected in capital through accumulated other comprehensive loss.

The net loss on asset disposals and other transactions for the first quarter of 2024 and the linked quarter was due to $0.3 million of net losses on repossessed assets.

The net loss for the second quarter of 2024 was driven primarily by $0.4 million of net losses on repossessed assets.

The net loss on asset disposals and other transactions for the first quarter of 2024 was due to $0.3 million of net losses on repossessed assets.

During the second quarter of 2023, Peoples recognized a $1.6 million write-down of an OREO property due to the potential sale of the property.

Total Non-Interest Income, Excluding Net Gains and Losses

Total non-interest income, excluding net gains and losses, comprised 23% of Peoples' total revenues (defined as net interest income plus total non-interest income excluding net gains and losses) for the first quarter of 2024, for the linked quarter, and the for first quarter of 2023.

For the first quarter of 2024, insurance income comprised the largest portion of Peoples' total non-interest income, excluding net gains and losses.

Total non-interest income, excluding net gains and losses, comprised 22% of Peoples' total revenues (defined as net interest income plus total non-interest income excluding net gains and losses) for the second quarter of 2024, 23% for the linked quarter, and 21% for the second quarter of 2023.

For the first six months of 2024, total non-interest income, excluding net gains and losses, totaled 23% of total revenues compared to 22% for the first six months of 2023.

For the second quarter of 2024, electronic banking income comprised the largest portion of Peoples' total non-interest income, excluding net gains and losses.

Peoples' electronic banking ("e-banking") services include ATM and debit cards, direct deposit services, internet and mobile banking, and remote deposit capture, and serve as alternative delivery channels to traditional sales offices for providing services to customers.

The following table details Peoples' e-banking income:

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

E-banking income $ 6,470 $ 6,046 $ 6,466 $ 12,516 $ 11,909

Peoples' e-banking income is derived largely from ATM and debit cards, as other services are mainly provided at no charge to customers.

The amount of e-banking income is largely dependent on the timing and volume of customer activity.

E-banking income increased for the second quarter of 2024 compared to the linked quarter primarily driven by an increase in customer activity.

The following table details Peoples' insurance income:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

4 unchanged sentences

Life and health insurance commissions

Other fees and charges

672 700 609 1,372 1,255

Insurance income $ 4,109 $ 6,498 $ 4,004 $ 10,607 $ 9,429

Peoples' insurance income for the first quarter of 2024 increased $2.2 million when compared to linked quarter.

This increase in insurance income was due to seasonal performance-based commissions being paid, which are annual in nature and typically occur in the first quarter of each year.

Insurance income for the first quarter of 2024 increased $1.1 million when compared to first quarter of 2023, primarily due to new business and market increases for premiums.

The following table details Peoples' e-banking income:

Three Months Ended

2024 December 31,

2023 March 31,

(Dollars in thousands)

E-banking income $ 6,046 $ 6,835 $ 5,443

Peoples' e-banking income is derived largely from ATM and debit cards, as other services are mainly provided at no charge to customers.

The amount of e-banking income is largely dependent on the timing and volume of customer activity.

E-banking income decreased for the first quarter of 2024 compared to the linked quarter primarily driven by a decrease in customer activity.

Table of Co n tents

Peoples' insurance income for the second quarter of 2024 decreased $2.4 million when compared to the linked quarter.

The decrease in insurance income was due to seasonal performance-based commissions, which are annual in nature and typically occur in the first quarter of each year.

Insurance income for the second quarter of 2024 increased $0.1 million when compared to the second quarter of 2023, primarily due to new business and market increases for premiums.

Insurance income in the first half of 2024 increased 12% when compared to the first half of 2023 due to higher commissions and additional customers.

Peoples' fiduciary income and brokerage income continued to be based primarily upon the value of assets under administration and management, with additional income generated from transaction commissions, cross-selling of products and additional retirement plan services business.

The following table details Peoples’ trust and investment income:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

3 unchanged sentences

Trust and investment income $ 4,999 $ 4,599 $ 4,414 $ 9,598 $ 8,498

Fiduciary income and brokerage income increased in the first quarter of 2024 relative to the linked quarter due to market volatility.

When compared to the first quarter of 2023, fiduciary income and brokerage income increased, which was driven by an increase in fiduciary income due to an increase in assets under administration and management.

Fiduciary income and brokerage income increased in the second quarter of 2024 relative to the linked quarter due to market performance.

When compared to the second quarter of 2023, fiduciary income and brokerage income increased, which was driven by an increase in assets under administration and management.

For the first half of 2024, trust and investment income increased when compared to the same period in 2023 due to higher fiduciary and brokerage income, primarily reflecting market volatility.

The following table details Peoples' assets under administration and management:

2024 March 31,

2024 December 31,

1 unchanged sentence

2023 June 30,

2023 March 31,

(Dollars in thousands)

3 unchanged sentences

Quarterly average $ 3,587,952 $ 3,521,188 $ 3,341,868 $ 3,319,655 $ 3,205,186

The increases in assets under administration and management at March 31, 2024 compared to at December 31, 2023 were driven by market value fluctuations.

The increases in assets under administration and management at March 31, 2024 when compared to at March 31, 2023 were primarily due to increases in brokerage income, as Peoples added new accounts and the underlying market values of assets under management grew.

The increases in assets under administration and management at June 30, 2024 compared to at March 31, 2024 were driven by market value fluctuations.

The increases in assets under administration and management at June 30, 2024 when compared to at June 30, 2023 were primarily due to recent growth, through acquisitions, as Peoples added new accounts and the underlying market values of assets under management grew.

Deposit account service charges are based on the recovery of costs associated with services provided.

The following table details Peoples' deposit account service charges:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

5 unchanged sentences

Management periodically evaluates its cost recovery fees to ensure they are reasonable based on operational costs and similar to fees charged in Peoples' markets by competitors.

Deposit account service charges decreased for the first quarter of 2024 compared to the linked quarter due to seasonality of customer activity.

Deposit account service charges increased when comparing the first quarter of 2024 to the first quarter of 2023 due to the Limestone Merger and increased maintenance fee rates.

Deposit account service charges increased for the second quarter of 2024 compared to the linked quarter due to seasonality of customer activity.

Deposit account service charges increased when comparing the second quarter of 2024 to the second quarter of 2023 due to the Limestone Merger.

Deposit account service charges also increased for the first six months of 2024 compared to the same period of 2023 due to the Limestone Merger.

The following table details the other items included within Peoples' total non-interest income:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

3 unchanged sentences

Mortgage banking income 243 321 189 564 503

Table of Co n tents

The decrease in other non-interest income when comparing the three months ended March 31, 2024 to the linked quarter was primarily due to an excess recovery of a previously charged-off loan.

The increase in other non-interest income for the first quarter of 2024 when compared to the first quarter of 2023 was driven by increased operating lease income.

Bank owned life insurance income for the first quarter of 2024 increased compared to the linked quarter primarily due to a $0.5 million death benefit.

Bank owned life insurance income for the first quarter of 2024 increased when compared to the first quarter of 2023, due to the additional insurance policies acquired in the Limestone Merger.

The increase in other non-interest income when comparing the three months ended June 30, 2024 to the linked quarter and the prior year quarter was primarily due to an increase in operating lease income.

The increase in other non-interest income for the first six months of 2024 when compared to the same period of 2023 was driven by increased operating lease income.

Bank owned life insurance income for the second quarter of 2024 decreased compared to the linked quarter primarily due to a $0.5 million death benefit recorded in the first quarter of 2024.

Bank owned life insurance income for the second quarter and the first six months of 2024 increased when compared to the second quarter and first six months of 2023, due to the additional insurance policies acquired in the Limestone Merger and the aforementioned death benefit.

Lease income is primarily comprised of (i) gains on the early termination of leases, net of any associated purchase accounting adjustments, (ii) month-to-month lease payments in excess of net investment in the lease, net of any associated purchase accounting adjustment, (iii) fees received for referrals, (iv) gains and losses recognized on the sales of residual assets and (v) syndication income.

The first quarter of 2024 decrease in lease income when compared to the linked quarter was due to a large lease buyout in the fourth quarter of 2023.

Lease income for the second quarter of 2024 decreased compared to the second quarter of 2023 due to a decrease in gains on terminated leases and lower syndication income.

Mortgage banking income is comprised mostly of net gains from the origination and sale of real estate loans in the secondary market, and, to a lesser extent, servicing income for loans sold with servicing retained.

As a result, the amount of income recognized by Peoples is largely dependent on customer demand and long-term interest rates for residential real estate loans offered in the secondary market.

Mortgage banking income for the first quarter of 2024 was relatively flat when compared to each of the prior periods.

In the first quarter of 2024, Peoples sold $0.2 million in loans into the secondary market with servicing retained and $6.9 million in loans with servicing released, compared to $26,000 and $7.9 million, respectively, in the fourth quarter of 2023, and $0.8 million and $7.4 million, respectively, in the first quarter of 2023.

Mortgage banking income for the second quarter of 2024 was relatively flat when compared to each of the prior periods.

In the second quarter of 2024, Peoples sold $2.6 million in loans into the secondary market with servicing retained and $11.8 million in loans with servicing released, compared to $0.2 million and $6.9 million, respectively, in the first quarter of 2024, and $1.1 million and $6.1 million, respectively, in the second quarter of 2023.

For the first six months of 2024, Peoples sold $2.7 million in loans into the secondary market with servicing retained, and $18.8 million with servicing released, compared to $1.9 million and $13.5 million, respectively, for the first six months of 2023.

Non-Interest Expense

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The following table details Peoples' salaries and employee benefit costs:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

9 unchanged sentences

Average during the period 1,492 1,492 1,393 1,491 1,305

Base salaries and wages for the first quarter of 2024 increased compared to the linked quarter primarily due to annual merit increases.

The current quarter increase compared to the first quarter of 2023 was primarily driven by the additional employees added in the Limestone Merger as well as annual merit increases.

The decrease in sales-based and incentive compensation for the first quarter of 2024 compared to the linked quarter was primarily due to $1.3 million of Vantage-related sales-based incentive compensation.

Sales-based and incentive compensation increased in the first quarter of 2024 when compared to the prior year quarter due to overall company performance measures used in calculating incentive awards.

The decrease in employee benefits for the first quarter of 2024 compared to the linked quarter and the first quarter of 2023 was primarily due to decreased medical costs.

Payroll taxes and other employment costs for the first quarter of 2024 increased compared to the linked quarter and the first quarter of 2024 and were primarily related to higher base salaries and wages.

Also impacting the increase in payroll taxes and other employment costs when compared to the first quarter of 2023 were the additional employees added in the Limestone Merger.

Base salaries and wages for the second quarter of 2024 remained relatively flat compared to the linked quarter.

The current quarter decrease compared to the second quarter of 2023 was primarily due to the decrease of acquisition-related expenses.

Base salaries and wages for the first six months of 2024 increased compared to the first six months of 2023 due to the additional expense associated with employees added with the Limestone Merger coupled with annual merit increases.

Sales-based incentive compensation for the first six months of 2024 compared to the first six months of 2023 increased primarily due to additional employees added with the Limestone Merger.

The increase in employee benefits for the second quarter of 2024 compared to the linked quarter and the second quarter of 2023 was primarily due to increased medical costs.

The increase for the first six months of 2024 compared to the first six months of 2023 was primarily due to higher medical costs reflecting a full six months of expenses in 2024 for the additional employees added with the Limestone Merger.

Payroll taxes and other employment costs for the second quarter of 2024 decreased compared to the linked quarter due to seasonal expenses recognized in the first quarter of each year.

Also impacting the increase in payroll taxes and other employment costs when compared to the second quarter of 2023 were the additional employees added in the Limestone Merger.

The increase for the first six

months of 2024 compared to the first six months of 2023 was driven by the additional employees added in the Limestone Merger coupled with annual merit increases.

Stock-based compensation is generally recognized over the vesting period, which generally ranges from immediate vesting to vesting at the end of three years.

An adjustment is made at the vesting date to reverse expense relating to forfeitures for performance awards, and at the date of forfeiture to reverse expense for non-vested restricted common share awards.

Stock grants to retirement

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eligible grantees are expensed either immediately or over a shorter period than three years.

Stock grants to retirement eligible grantees are expensed either immediately or over a shorter period than three years.

The majority of Peoples' stock-based compensation is attributable to annual equity-based incentive awards to employees, which are awarded in the first quarter of each year based upon Peoples achieving certain performance goals during the prior year, and are generally contingent on employment through the vesting period.

Stock-based compensation for the first quarter of 2024 increased when compared to the fourth quarter of 2023 and the first three months of 2023 due to additional employees, including the ones added in the Limestone Merger.

Stock-based compensation for the second quarter of 2024 decreased when compared to the first quarter of 2024 due to seasonal expenses recognized in the first quarter of each year.

Deferred personnel costs represent the portion of current period salaries and employee benefit costs considered to be direct loan origination costs.

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As a result, the amount of deferred personnel costs for each period corresponds directly with the volume of loan originations, coupled with the average deferred costs per loan that are updated annually at the beginning of each year.

Deferred personnel costs for the first quarter of 2024 remained relatively flat when compared to both the fourth quarter of 2023 and the first quarter of 2023.

Deferred personnel costs for the second quarter of 2024 increased when compared to both the first quarter of 2024 and the second quarter of 2023 due to an increase in loan origination volume.

Peoples' net occupancy and equipment expense was comprised of the following:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

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Net occupancy and equipment expense $ 6,142 $ 6,283 $ 5,380 $ 12,425 $ 10,335

The first quarter of 2024 net occupancy and equipment expense increased when compared to the linked quarter due to a prior period one time benefit to rent expense.

The first quarter of 2024 net occupancy and equipment expense increased when compared to the first quarter of 2023 due to additional net occupancy and equipment expense from the Limestone Merger.

The second quarter of 2024 net occupancy and equipment expense was relatively flat when compared to the linked quarter.

The second quarter and the first six months of 2024 net occupancy and equipment expense increased when compared to the same periods of 2023 due to additional net occupancy and equipment expense from the Limestone Merger.

The following table details the other items included in total non-interest expense:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

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Other loan expenses 1,036 1,076 538 2,112 1,277

Marketing expense 1,056 1,463 930

Franchise tax expense 760 881 872 1,641 1,906

Communication expense 736 799 724 1,535 1,337

Marketing expense 681 1,056 1,357 1,737 2,287

Other non-interest expense 7,182 4,986 5,465 12,168 10,039

Data processing and software expenses for the first quarter 2024 decreased compared to the linked quarter due to $0.6 million of acquisition-related expense in the linked quarter.

The increase for the first quarter 2024 when compared to the first quarter 2023 was driven by software upgrades and implementation of new systems, coupled with the increased size of Peoples' organization.

Professional fees for the first quarter of 2024 decreased when compared to the linked quarter due to less acquisition-related expenses.

Professional fees for the first quarter of 2024 was relatively flat when compared to the first quarter of 2023.

Amortization of other intangible assets for the first quarter of 2024 decreased when compared to the linked quarter due to additional expenses attributable to the Limestone Merger during the fourth quarter of 2023.

Amortization of other intangible assets for the current quarter increased when compared to the first quarter of 2023 due to amortization of intangible assets recognized in the Limestone Merger during the first quarter of 2023.

Data processing and software expenses for the second quarter of 2024 increased compared to the linked quarter due to higher expenses attributable to recent technology projects.

The increase for the second quarter and the first six months of 2024 when compared to the same periods in 2023 was driven by software upgrades and implementation of new systems, coupled with the increased size of Peoples' organization as a result of the Limestone Merger.

Professional fees for the second quarter of 2024 were flat when compared to the linked quarter.

Professional fees for the second quarter and first six months of 2024 compared to the same periods in 2023 decreased due to less acquisition-related expenses.

Amortization of other intangible assets for the second quarter of 2024 was flat compared to the linked quarter and the prior year quarter.

Amortization of other intangible assets for the first six months of 2024 increased when compared to the same period of 2023 due to amortization of intangible assets recognized in the Limestone Merger.

Peoples' e-banking expense is comprised of costs associated with debit and ATM cards.

The decrease in electronic banking income compared to the linked quarter was due to a decline in customer activity.

E-banking expense increased for the first quarter of 2024 when compared to the first quarter of 2023 due to additional customers brought in from the Limestone Merger.

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Peoples' FDIC insurance premiums for the first quarter of 2024 were relatively flat when compared to the linked quarter.

FDIC insurance premiums for the first quarter of 2024 increased when compared to the first quarter of 2023 due to organic and acquisitive growth and an increase in rates assessed by the FDIC.

Other loan expenses during the first quarter of 2024 increased when compared to the respective prior comparative periods primarily due to increases in miscellaneous loan and collection expenses.

Marketing expense for the first quarter of 2024 decreased when compared to the linked quarter due to lower advertising expense.

Marketing expense for the first quarter of 2024 increased when compared to the first quarter of 2023 due to higher donations.

The increase in electronic banking income compared to the linked quarter and the first quarter of 2023 was due to an increase in customer activity.

E-banking expense increased for the first six months of 2024 when compared to the first six months of 2023 due to additional customers brought in from the Limestone Merger.

Peoples' FDIC insurance premiums for the second quarter of 2024 were relatively flat when compared to the linked quarter and the first quarter of 2023.

FDIC insurance premiums for the first six months of 2024 increased when compared to the first six months of 2023 due to organic and acquisitive growth and an increase in rates assessed by the FDIC.

Other loan expenses during the second quarter of 2024 were relatively flat when compared to the linked quarter.

Other loan expenses increased for the second quarter and the first six months of 2024 when compared to the same periods of 2023 primarily due to increases in miscellaneous loan and collection expenses as a result of increased insurance costs associated with consumer indirect loans.

Marketing expense for the second quarter of 2024 decreased when compared to the linked quarter due to lower advertising expense.

Marketing expense for the second quarter and the first six months of 2024 decreased when compared to the same periods of 2023 due to lower acquisition-related expenses.

Peoples is subject to state franchise taxes, which are based largely on Peoples' equity, in the states where Peoples has a physical presence.

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The Ohio FIT is based on the total equity capital in proportion to the taxpayer's gross receipts in Ohio as of the most recent year-end.

The decrease in franchise tax expense for the first quarter of 2024 when compared to the first quarter of 2023 was driven by a lower apportionment in Ohio.

Other non-interest expense for the first quarter of 2024 decreased when compared to the linked quarter due to a decrease in postage expense.

The increase for the first quarter of 2024 when compared to the first quarter of 2023 was driven by the increase in depreciation expense for operating leases.

The decrease in franchise tax expense for the second quarter of 2024 when compared to the second quarter of 2023 was driven by a lower apportionment in Ohio.

Other non-interest expense for the second quarter of 2024 increased when compared to the linked quarter and the second quarter of 2023 due to a one-time prior period true-up of corporate expenses.

Income Tax Expense

Peoples recorded income tax expense of $8.3 million with an effective tax rate of 21.8% for the first quarter of 2024, compared to income tax expense of $9.7 million with an effective tax rate of 22.3% for the linked quarter and income tax expense of $7.0 million with an effective tax rate of 21.0% for the first quarter of 2023.

The decrease in income tax expense when compared to the fourth quarter of 2023 was primarily due to lower pre-tax income.

Peoples recorded income tax expense of $6.9 million with an effective tax rate of 19.1% for the second quarter of 2024, compared to income tax expense of $8.3 million with an effective tax rate of 21.8% for the linked quarter and income tax expense of $6.2 million with an effective tax rate of 22.6% for the second quarter of 2023.

The decrease in income tax expense when compared to the prior quarter was driven by a $1.1 million one-time benefit related to a prior year amended return.

The increase in income tax expense when compared to the second quarter of 2023 was primarily due to higher pre-tax income.

Peoples recorded income tax expense of $15.1 million with an effective tax rate of 20.5% in the first six months of 2024 and $13.2 million with an effective tax rate of 21.7% in the first six months of 2023.

The increase was driven by higher pre-tax income.

Additional information regarding income taxes can be found in "Note 13.

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As a result, PPNR represents the earnings capacity that can be either retained in order to build capital or used to absorb unexpected losses and preserve existing capital.

This ratio represents a Non-US GAAP financial measure since it excludes the provision for (recovery of) credit losses and all gains and losses included in earnings.

This measure represents a Non-US GAAP financial measure since it excludes the provision for (recovery of) credit losses and all gains and losses included in earnings.

The following table provides a reconciliation of this Non-US GAAP financial measure to the amounts reported in Peoples' Unaudited Condensed Consolidated Financial Statements for the periods presented:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

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Pre-provision net revenue per common share - diluted $ 1.20 $ 1.26 $ 1.13 $ 2.45 $ 2.45

The decrease in the PPNR for the first quarter of 2024 compared to the fourth quarter of 2023 was driven by decreased net interest income and lower accretion income.

The increase in PPNR for the first quarter of 2024 when compared to the first quarter of 2023 was

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due to increased net interest income reflecting the positive impact of the additional net interest income from Limestone customers after the Limestone Merger.

The decrease in the PPNR for the second quarter of 2024 compared to the linked quarter was driven by decreased non-interest income and lower accretion income.

The increase in PPNR for the second quarter of 2024 when compared to the second quarter of 2023 was due to increased net interest income reflecting the positive impact of the additional net interest income from Limestone customers after the Limestone Merger.

Core Non-Interest Expense (Non-US GAAP)

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The following table provides a reconciliation of this Non-US GAAP measure to the amounts reported in Peoples' Unaudited Condensed Consolidated Financial Statements for the periods presented:

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

2 unchanged sentences

acquisition-related expenses — (84) 10,709 (84) 11,260

COVID-19 Employee Retention Credit — — 548 — 548

Core non-interest expense $ 68,758 $ 68,549 $ 60,462 $ 137,307 $ 116,390

4 unchanged sentences

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

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Efficiency ratio adjusted for non-core items 59.19 % 58.14 % 53.35 % 58.66 % 55.15 %

(a) Tax effect is calculated using a 23.2% blended corporate income tax rate for the three months ended March 31, 2024, and a 23.3% blended corporate income tax rate for the three months ended December 31, 2023 and March 31, 2023.

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The efficiency ratio increased compared to the linked quarter mainly as the result of an increase of interest expense on deposits.

The efficiency ratio compared to the prior year quarter was relatively flat.

The efficiency ratio, adjusted for non-core items, was 58.1% for the first quarter of 2024, compared to 54.9% for the linked quarter, and 57.2% for the first quarter of 2023.

(a) Interest income and yields are presented on a fully tax-equivalent basis, using a 21% statutory federal corporate income tax rate.

The efficiency ratio for the second quarter of 2024 when compared to the linked quarter was higher as the result of a reduction in fee-based income and improved compared to prior year quarter due to the decrease in acquisition-related expenses.

The efficiency ratio, adjusted for non-core items, increased compared to the linked quarter mainly as a result of a reduction in non-interest income.

The efficiency ratio for the first six months of 2024 improved compared to the prior year first six months due to the decrease in acquisition-related expenses.

The efficiency ratio, adjusted for non-core items, increased for the first six months of 2024 when compared to the first six months of 2023, primarily due to increased non-interest expense.

Peoples continues to focus on controlling expenses, while recognizing necessary costs in order to continue growing the business.

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Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

4 unchanged sentences

tax effect of net loss on investment securities (a)

74 — 35 74 441

net loss on asset disposals and other transactions

428 341 1,665 769 1,911

tax effect of net loss on asset disposals and other transactions (a)

90 72 349 161 401

acquisition-related expenses

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tax effect of acquisition-related expenses (a)

— (18) 2,249 (18) 2,365

COVID-19 Employee Retention Credit — — 548 — 548

tax effect of COVID-19 Employee Retention Credit (a) — — 115 — 115

Net income adjusted for non-core items (after tax)

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(a) Based on a 21% statutory federal corporate income tax rate.

The return on average assets adjusted for non-core items for the first quarter of 2024 decreased when compared to the linked quarter, due to a decrease in annualized net income resulting from lower net interest income, partially offset by an increase in average assets resulting from the excess cash held on balance sheet as well as increases in non-interest expenses.

The decrease in the return on average assets adjusted for non-core items for the first quarter of 2024, compared to the first quarter of 2023, was attributable to an increase in annualized net income primarily due to an increase in net interest income, partially offset by the assets acquired in the Limestone Merger and an increase in expenses.

The return on average assets and the return on average assets adjusted for non-core items for the second quarter of 2024 decreased when compared to the linked quarter, due to a decrease in annualized net income resulting from lower non-interest income and by an increase in average assets.

The decrease in the return on average assets adjusted for non-core items for the second quarter of 2024, compared to the second quarter of 2023, was attributable to an increase in annualized net income primarily due to an increase in net interest income, partially offset by the assets acquired in the Limestone Merger and an increase in expenses.

The decrease in return on average assets adjusted for non-core items for the first six months of 2024 when compared to the first six months of 2023, was primarily driven by an increase in annualized net income, partially offset with assets acquired in the Limestone Merger.

Return on Average Tangible Equity Ratio (Non-US GAAP)

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This ratio is calculated as annualized net income (less the after-tax impact of amortization of other intangible assets) divided by average tangible equity.

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measure is Non-US GAAP since it excludes amortization of other intangible assets from earnings and the impact of goodwill and other intangible assets acquired through acquisitions on total stockholders' equity.

Three Months Ended

2024 December 31,

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

2023 June 30,

(Dollars in thousands) 2024 2023

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tax effect of amortization of other intangible assets (a)

585 585 588 1,171 981

Net income excluding amortization of other intangible assets

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Days in the period

91 91 91 182 181

Days in the year

366 366 365 366 365

Annualized net income

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(a) Based on a 21% statutory federal corporate income tax rate.

The return on total average stockholders' equity and average tangible equity ratios decreased when compared to the linked quarter due to a decrease in annualized net income mainly attributable to a decrease in net interest income and an increase in non-interest expense.

The decreases in the return on total average stockholders' equity and average tangible equity ratios in the first quarter of 2024 when compared to the same period of 2023 were due to the issuance of 6.8 million common shares as consideration in the Limestone Merger, an increase in acquisition-related expenses, partially offset by an increase in total net interest income driven by the 2023 increases in market interest rates and additional net interest income from Limestone following the Limestone Merger.

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The increases in the return on total average stockholders' equity and average tangible equity ratios in the second quarter of 2024 when compared to the same period of 2023 were due to an increase in total net interest income driven by the 2023 increases in market interest rates and additional net interest income from Limestone following the Limestone Merger.

FINANCIAL CONDITION

Cash and Cash Equivalents

At March 31, 2024, Peoples' interest-bearing deposits in other banks had increased $10.9 million from December 31, 2023.

The total cash and cash equivalents balance included $318.5 million of excess cash reserves being maintained at the FRB of Cleveland at March 31, 2024, compared to $309.8 million at December 31, 2023.

At June 30, 2024, Peoples' interest-bearing deposits in other banks had decreased $199.2 million from December 31, 2023.

The total cash and cash equivalents balance included $109.7 million of excess cash reserves being maintained at the FRB of Cleveland at June 30, 2024, compared to $309.8 million at December 31, 2023.

The amount of excess cash reserves maintained is dependent upon Peoples' daily liquidity position, which is driven primarily by changes in deposit and loan balances.

Through the first three months of 2024, Peoples' total cash and cash equivalents increased $3.0 million, which reflected cash inflows of $37.0 million of cash provided by operating activities and $89.1 million of cash provided by financing activities, mostly offset by cash outflows of $123.1 million of cash used in investing activities.

The cash provided by financing activities was largely driven by a $273.6 million net increase in interest-bearing deposits and $26.8 million of proceeds from long-term borrowings, partially offset by a net decrease in non-interest bearing deposits of $99.3 million and a net decrease in short-term borrowings of $87.6 million.

Peoples' use of cash in investing activities reflected a net cash outflow from available-for-sale investment securities of $78.7 million and a $43.3 million net increase in loans held for investment.

Through the first six months of 2024, Peoples' total cash and cash equivalents decreased $190.9 million, which reflected cash outflows of $273.4 million of cash used in investing activities, partially offset by cash inflows of $69.1 million of cash provided by operating activities and $13.4 million of cash provided by financing activities.

Peoples' use of cash in investing activities reflected a $164.5 million net increase in loans held for investment and a net cash outflow from available-for-sale investment securities of $83.4 million.

The cash provided by financing activities was largely driven by a $240.4 million net increase in interest-bearing deposits, mostly offset by a net decrease in short-term borrowings of $118.4 million and a net decrease in non-interest bearing deposits of $95.0 million.

Further information regarding the management of Peoples' liquidity position can be found later in this discussion under “Interest Rate Sensitivity and Liquidity.”

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The following table provides information regarding Peoples’ investment portfolio:

(Dollars in thousands) Weighted Average Yield March 31,

(Dollars in thousands) Weighted Average Yield June 30,

2024 March 31,

2024 December 31,

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2023 June 30,

2023 March 31,

Available-for-sale securities, at fair value:

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Carrying value $ 1,884,103 $ 1,859,149 $ 1,795,400 $ 1,760,322 $ 1,870,943

(a) Amortized cost is presented net of the allowance for credit losses of $238 at March 31, 2024 and at December 31, 2023, and $241 at March 31, 2023.

For the first quarter of 2024, total investment securities increased compared to the linked quarter, largely due to purchases of higher yielding government sponsored agency securities which were used to collateralize certain government deposits.

(a) Amortized cost is presented net of the allowance for credit losses of $238 at June 30, 2024 and at March 31, 2024, and $241 at June 30, 2023.

For the second quarter of 2024, total investment securities increased compared to all prior periods due to higher yielding, longer duration securities booked to held-to-maturity.

During the fourth quarter of 2023, Peoples executed the sales of $36.5 million of lower yielding available-for-sale investment securities for an after-tax loss of $1.3 million.

Proceeds from the sales were used to purchase higher yielding agency investment securities.

During the first quarter of 2023, Peoples executed the sales of $96.7 million of its lower yielding available-for-sale securities for an after-tax loss of $1.6 million.

Proceeds from the sales were used to pay down overnight borrowings.

The realized losses recognized due to the first

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quarter of 2023 transactions were earned back within the 2023 fiscal year, and the realized losses recognized due to the fourth quarter of 2023 transactions are expected to be earned back within 14 months of the transaction dates.

The realized losses recognized due to the fourth quarter of 2023 sales are expected to be earned back within 14 months of the transaction dates.

Additional information regarding Peoples' investment portfolio can be found in "Note 3 Investment Securities" of the Notes to the Unaudited Condensed Consolidated Financial Statements.

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The following table provides information regarding outstanding loan balances:

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2024 March 31,

2024 December 31,

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2023 June 30,

2023 March 31,

Originated loans and leases:

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Loans that were acquired and subsequently re-underwritten are reported as originated upon execution of such credit actions (for example, renewals and increases in lines of credit).

The period-end total loan and lease balances at March 31, 2024 increased $43.6 million, or 3% annualized, compared to at December 31, 2023.

The increase in the period-end loan and lease balance at March 31, 2024 compared to December 31, 2023 was primarily driven by increases of (i) $46.8 million in other commercial real estate loans, (ii) $35.8 million in premium finance loans and

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(iii) $29.6 million in commercial and industrial loans, partially offset by decreases of (a) $49.3 million in construction loans, (b) $16.2 million in indirect consumer loans and (c) $15.2 million in direct consumer loans.

The increase in the period-end loan and lease balances at March 31, 2024 compared to at March 31, 2023 was primarily driven by loans acquired in the Limestone Merger totaling $1.1 billion.

Excluding the loans acquired in the Limestone Merger, the period-end loan and lease balance increased $499.3 million, or 10%, driven by increases of $198.1 million, $100.6 million, $80.7 million, $68.1 million, $37.3 million, and $23.5 million in other commercial real estate loans, commercial and industrial loans, premium finance loans, leases, construction loans, and home equity lines of credit, respectively.

The period-end total loan and lease balances at June 30, 2024 increased $122.5 million, or 8% annualized, compared to at March 31, 2024.

The increase in the period-end loan and lease balance at June 30, 2024 compared to March 31, 2024 was primarily driven by increases of (i) $54.4 million in premium finance loans, (ii) $43.4 million in commercial and industrial loans, (iii) $25.9 million in construction loans, (iv) and $24.8 million in indirect consumer loans.

These were partially offset by a decrease of $47.8 million in other commercial real estate loans.

The increase in the period-end loan and lease balances at June 30, 2024 compared to at June 30, 2023 was primarily driven by loan growth.

Loan Concentration

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Loans secured by commercial real estate, including commercial construction loans, continued to comprise the largest portion of Peoples' loan portfolio.

The following tables provide information regarding the largest concentrations of commercial construction loans and commercial real estate loans within the loan portfolio at March 31, 2024:

The following tables provide information regarding the largest concentrations of commercial construction loans and other commercial real estate loans within the loan portfolio at June 30, 2024:

(Dollars in thousands) Outstanding Balance Loan Commitments Total Exposure % of Total

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Lodging and lodging related — 16,270 16,270 2.3 %

Industrial 10,619 5,287 15,906 2.5 %

Student housing 12,597 2,403 15,000 2.2 %

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(a) All other total exposures by industry are less than 2% of the Total Exposure.

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(Dollars in thousands) Outstanding Balance Loan Commitments Total Exposure % of Total

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and Maryland.

For all other states, the aggregate outstanding balances of commercial loans in each state were less than 3% of total loans at both March 31, 2024 and December 31, 2023.

For all other states, the aggregate outstanding balances of commercial loans in each state were less than 3% of total loans at June 30, 2024 and December 31, 2023.

The repayment of premium finance loans is secured by the underlying insurance policy prepaid premium, and therefore, has no geographical impact from a repayment perspective.

The repayment of leases is secured by the underlying equipment collateral and not real estate, which mitigates geographic risk.

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Allowance for Credit Losses

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The following details management's allocation of the allowance for credit losses:

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2024 March 31,

2024 December 31,

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2023 June 30,

2023 March 31,

Construction $ 673 $ 701 $ 699 $ 1,241 $ 1,496

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As a percent of total loans 1.05 % 1.05 % 1.01 % 1.03 % 1.02 %

The increase in the allowance for credit losses at March 31, 2024 compared to December 31, 2023 was largely attributable to (i) a deterioration in macro-economic conditions used within the CECL model, (ii) an increase of reserves on individually analyzed loans and (iii) loan growth.

The increase in the allowance for credit losses at September 30, 2023 and at June 30, 2023, when compared to the prior periods presented was driven by the establishment of an allowance for credit losses for loans acquired in the Limestone Merger.

The increase in the allowance for credit losses at June 30, 2024 compared to March 31, 2024 was primarily due to an increase of reserves on individually analyzed loans and leases.

The increase in the allowance balance at June 30, 2024 when compared to June 30, 2023 was driven by loan growth and a deterioration in macro-economic conditions used within the CECL model, partially offset by a release of reserves on individually analyzed loans and leases.

Additional information regarding Peoples' allowance for credit losses can be found in "Note 1 Summary of Significant Accounting Policies" in Peoples' 2023 Form 10-K and "Note 4 Loans and Leases" of the Notes to the Unaudited Condensed Consolidated Financial Statements in this Form 10-Q.

1 unchanged sentence

Three Months Ended

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2024 March 31,

2024 December 31,

1 unchanged sentence

2023 June 30,

2023 March 31,

Gross charge-offs:

19 unchanged sentences

Consumer, direct 15 9 12 11 35

Table of Co n tents

Consumer 132 80 142 160 164

Three Months Ended

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2024 March 31,

2024 December 31,

1 unchanged sentence

2023 June 30,

2023 March 31,

Consumer 80 142 160 164 94

Deposit account overdrafts 67 74 103 49 53

27 unchanged sentences

Each with "--%" not meaningful.

Total net charge-offs during the first quarter of 2024 were $3.3 million, or 0.22% of average total loans on an annualized basis, compared to $3.5 million, or 0.23% of average total loans on an annualized basis, during the fourth quarter of 2023 and $1.5 million, or 0.13% of average total loans on an annualized basis, during the first quarter of 2023.

The decrease for the first quarter of 2024 when compared to the linked quarter was driven by a decrease in net charge-offs on leases and commercial and industrial loans during the first quarter of 2024.

The increase in net charge-offs during the first quarter of 2024 versus the prior year first quarter was primarily attributable to an increase in charge-offs on (i) leases, (ii) indirect consumer loans, (iii) commercial industrial loans, and (iv) other commercial real estate loans, partially offset by an increase in recoveries on leases during the first quarter of 2024.

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Total net charge-offs during the second quarter of 2024 were $4.2 million, or 0.27% of average total loans on an annualized basis, compared to $3.3 million, or 0.22% of average total loans on an annualized basis, during the linked quarter and $1.2 million, or 0.09% of average total loans on an annualized basis, during the second quarter of 2023.

The increase for the second quarter of 2024 when compared to the linked quarter was driven by an increase in net charge-offs on leases originated by our North Star Leasing business.

The increase in net charge-offs during the second quarter of 2024 versus the prior year second quarter was primarily attributable to an increase in charge-offs on (i) leases originated by our North Star Leasing business, (ii) indirect consumer loans, and (iii) commercial and industrial loans.

The following table details Peoples’ nonperforming assets:

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2024 March 31,

2024 December 31,

1 unchanged sentence

2023 June 30,

2023 March 31,

Loans 90+ days past due and accruing:

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Nonaccrual loans:

Construction $ — $ — $ — $ — $ 1

Commercial real estate, other 4,833 3,773 2,816 3,661 8,987

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Asset Quality Ratios (c):

Nonaccrual loans as a percent of total loans (d) 0.51 % 0.41 % 0.43 % 0.48 % 0.63 %

Nonaccrual loans as a percent of total loans 0.53 % 0.51 % 0.41 % 0.43 % 0.48 %

NPLs as a percent of total loans (d) 0.65 % 0.63 % 0.52 % 0.58 % 0.58 %

10 unchanged sentences

NPAs include nonperforming loans and OREO.

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Compared to at December 31, 2023, Peoples' NPAs increased from 0.43% of total assets to 0.50% at March 31, 2024.

Total loans 90+ days past due and accruing increased at March 31, 2024 compared to at December 31, 2023, mostly due to increases in nonperforming premium finance loans.

Total nonaccrual loans increased at March 31, 2024 compared to at December 31, 2023, mostly due to increases in nonaccrual commercial and industrial loans and leases.

During the first quarter of 2024, criticized loans increased $21.3 million, while classified loans increased $27.5 million when compared to at December 31, 2023.

The increase in the amounts of criticized loans compared to at December 31, 2023 was primarily driven by loan downgrades, partially offset by loan upgrades and criticized loan pay-offs.

The increase in the amount of classified loans compared to at December 31, 2023 was primarily driven by loan downgrades, partially offset by loan upgrades and classified loan pay-offs.

Compared to at March 31, 2024, Peoples' NPAs increased from 0.50% of total assets to 0.53% at June 30, 2024.

Total loans 90+ days past due and accruing decreased at June 30, 2024 compared to at March 31, 2024, mostly due to decreases in nonperforming leases.

Total nonaccrual loans increased at June 30, 2024 compared to at March 31, 2024, mostly due to increases in nonaccrual leases and other commercial real estate.

During the second quarter of 2024, criticized loans decreased $16.6 million, while classified loans decreased $27.3 million when compared to at March 31, 2024.

The decrease in the amounts of criticized loans compared to at March 31, 2024 was primarily driven by by loan upgrades and several large criticized loan pay-offs.

The decrease in the amount of classified loans compared to at March 31, 2024 was primarily by loan upgrades and classified loan pay-offs.

The increase in NPAs compared to at December 31, 2023, was primarily driven by increases of nonaccrual leases originated by our North Star Leasing business, commercial and industrial loans, and other commercial real estate loans.

The increase in NPAs compared to at June 30, 2023, was impacted by the increase of nonaccrual leases originated by our North Star Leasing business and an increase in loans past due and accruing.

The following table details Peoples’ deposit balances:

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2024 March 31,

2024 December 31,

1 unchanged sentence

2023 June 30,

2023 March 31,

Non-interest-bearing deposits (a) $ 1,472,697 $ 1,468,363 $ 1,567,649 $ 1,569,095 $ 1,682,634

10 unchanged sentences

(a) The sum of amounts presented is considered total demand deposits.

At March 31, 2024, period-end total deposits increased $174.3 million, or 2%, compared to at December 31, 2023, primarily driven by increases of (i) $237.0 million in retail CDs, (ii) $98.5 million in governmental deposits, partially offset by decreases of (a) $99.3 million in non-interest-bearing demand deposit accounts, (b) $92.0 million in brokered CDs, (c) $36.6 million in interest-bearing demand deposit accounts, and (d) $17.8 million in savings accounts.

The increase in governmental deposit accounts was due to the seasonality of those balances, which are typically higher in the first quarter and third quarter of each year.

At March 31, 2024, period-end total deposits increased $1.5 billion, or 27%, compared to at March 31, 2023, primarily driven by deposits acquired in the Limestone Merger.

Excluding Limestone deposit balances, total deposits at March 31, 2024 increased $784.8 million, or 14%, compared to at March 31,2023, primarily due to increases of $956.9 million in retail CDs, $210.3 million in brokered CDs, and $191.2 million in money market deposit accounts, partially offset by decreases of $270.9 million, $191.8 million, and $158.4 million in non-interest bearing deposits, savings accounts, and interest-bearing demand deposit accounts, respectively.

At June 30, 2024, period-end total deposits decreased $28.8 million compared to at March 31, 2024, primarily driven by decreases of (i) $70.8 million in brokered CDs, (ii) $58.8 million in governmental deposits, and (iii) $24.2 million in interest-bearing demand deposit accounts, partially offset by an increase of $132.5 million in retail CDs.

At June 30, 2024, period-end total deposits increased $337.9 million, or 5%, compared to at June 30, 2023.

The increase in retail CDs was driven by current promotions being offered.

As part of its funding strategy, Peoples hedges 90-day brokered CDs with interest rate swaps.

The interest rate swaps pay a fixed rate of interest while receiving a floating rate component of interest tied to term SOFR, which offsets the rate on the brokered CDs.

As of March 31, 2024, Peoples had 11 effective interest rate swaps, with an aggregate notional value of $105.0 million, which were designated as cash flow hedges of overnight brokered CDs and are expected to be extended every 90 days through the maturity dates of the interest rate swaps.

As of June 30, 2024, Peoples had 9 effective interest rate swaps, with an aggregate notional value of $85.0 million, which were designated as cash flow hedges of overnight brokered CDs and are expected to be extended every 90 days through the maturity dates of the interest rate swaps.

Peoples continually evaluates the overall balance sheet position given the interest rate environment.

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Borrowed Funds

The following table details Peoples’ short-term borrowings and long-term borrowings:

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2024 March 31,

2024 December 31,

1 unchanged sentence

2023 June 30,

2023 March 31,

Short-term borrowings:

19 unchanged sentences

Other long-term borrowings include trust preferred securities held for investments and floating rate junior subordinated deferrable interest debentures.

Total borrowed funds at March 31, 2024 decreased compared to at December 31, 2023, primarily due to lower overnight borrowings.

Total long-term borrowings at March 31, 2024 increased when compared to at March 31, 2023 due to an increase in FHLB advances and other long-term borrowings assumed in the Limestone Merger as well as additional borrowings under the BTFP.

Total borrowed funds at June 30, 2024 decreased compared to at March 31, 2024, primarily due to lower retail repurchase agreements.

Total long-term borrowings at June 30, 2024 increased when compared to at June 30, 2023 due to an increase in FHLB long term advances.

Capital/Stockholders’ Equity

At March 31, 2024, capital levels for both Peoples and Peoples Bank remained substantially higher than the minimum amounts needed to be considered "well capitalized" institutions under applicable banking regulations.

At June 30, 2024, capital levels for both Peoples and Peoples Bank remained substantially higher than the minimum amounts needed to be considered "well capitalized" institutions under applicable banking regulations.

These higher capital levels reflect Peoples' desire to maintain a strong capital position.

In order to avoid limitations on dividends, equity repurchases and compensation, Peoples must exceed the three minimum required ratios by at least the capital conservation buffer of 2.50%, which applies to the common equity tier 1 ("CET1") ratio, the tier 1 capital ratio and the total risk-based capital ratio.

At March 31, 2024, Peoples had a capital conservation buffer of 5.60%.

At June 30, 2024, Peoples had a capital conservation buffer of 5.66%.

The following table details Peoples' risk-based capital levels and corresponding ratios:

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2024 March 31,

2024 December 31,

1 unchanged sentence

2023 June 30,

2023 March 31,

Capital Amounts:

8 unchanged sentences

Tier 1 leverage ratio 9.65 % 9.43 % 9.57 % 9.34 % 9.64 %

Peoples' risk-risk based capital ratios at March 31, 2024 decreased slightly when compared to December 31, 2023, due to lower net income, partially offset by an increase in expenses from the Limestone Merger.

Compared to at March 31, 2023, the tier 1 risk-based capital and the total risk-based capital ratios improved due to higher net income, partially offset by the impact of the Limestone Merger and dividends paid.

The common equity tier 1 risk-based capital ratio at March 31, 2024 decreased compared to at March 31, 2023 due to the common shares issued in the Limestone Merger.

Peoples' risk-based capital ratios at June 30, 2024 increased when compared to March 31, 2024, due to net income during the quarter, partially offset by dividends paid.

Compared to at June 30, 2023, the tier 1 risk-based capital and the total risk-based capital ratios improved due to higher net income, partially offset by the impact of the Limestone Merger and dividends paid.

The common equity tier 1 risk-based capital ratio at June 30, 2024 also increased compared to at June 30, 2023 due to higher net income.

In addition to traditional capital measurements, management uses tangible capital measures to evaluate the adequacy of Peoples' stockholders' equity.

Such ratios represent Non-US GAAP financial measures since their calculation removes the impact of goodwill and other intangible assets acquired through acquisitions on amounts reported in the Unaudited Consolidated Balance Sheets.

Management believes this information is useful to investors since it facilitates the comparison of Peoples' operating performance,

Table of Co n tents

financial condition and trends to peers, especially those without a similar level of intangible assets to that of Peoples.

Further, intangible assets generally are difficult to convert into cash, especially during a financial crisis, and could decrease substantially in value should there be deterioration in the overall franchise value.

Management believes this information is useful to investors since it facilitates the comparison of Peoples' operating performance, financial condition and trends to peers, especially those without a similar level of intangible assets to that of Peoples.

Further, intangible assets generally are difficult to convert into cash, especially during a financial crisis, and could decrease substantially in

value should there be deterioration in the overall franchise value.

As a result, tangible equity represents a conservative measure of the capacity for Peoples to incur losses but remain solvent.

The following table reconciles the calculation of these Non-US GAAP financial measures to amounts reported in Peoples' Unaudited Condensed Consolidated Financial Statements:

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2024 March 31,

2024 December 31,

1 unchanged sentence

2023 June 30,

2023 March 31,

Tangible equity:

25 unchanged sentences

7.61 % 7.37 % 7.33 % 6.85 % 7.00 %

Tangible book value per common share increased to $18.39 at March 31, 2024 compared to $18.16 at December 31, 2023.

The change in tangible book value per common share was due to tangible equity increasing during the first quarter of 2024 primarily due to net income over the last three months, which was partially offset by an increase in other comprehensive losses recognized on available-for-sale securities.

Tangible book value per common share at March 31, 2024 increased compared to at March 31, 2023 primarily due to net income over the last twelve months, which was partially offset by an increase in accumulated other comprehensive loss as well as the impact of the common shares issued in the Limestone Merger.

Tangible book value per common share increased to $18.91 at June 30, 2024 compared to $18.39 at March 31, 2024.

The change in tangible book value per common share was due to tangible equity increasing during the second quarter of 2024 primarily due to net income over the last three months.

Tangible book value per common share at June 30, 2024 increased compared to at June 30, 2023 primarily due to net income over the last twelve months.

Interest Rate Sensitivity and Liquidity

9 unchanged sentences

Peoples has assigned overall management of IRR to its Asset-Liability Committee (the “ALCO”), which has established an IRR management policy that sets minimum requirements and guidelines for monitoring and managing the level of IRR, including the review of assumptions used in modeling IRR.

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The following table shows the estimated changes in net interest income and the economic value of equity based upon a standard, parallel shock analysis with balances held constant (dollars in thousands):

1 unchanged sentence

Net Interest Income Estimated (Decrease) Increase in Economic Value of Equity

(in Basis Points) March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

(in Basis Points) June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

300 $ 5,530 1.6 % $ 15,063 4.6 % $ (154,437) (9.0) % $ (157,625) (9.4) %

15 unchanged sentences

Peoples believes these scenarios to be more reflective of how interest rates change versus the severe parallel rate shocks described above.

Given the shape of market yield curves at March 31, 2024, consideration of the bear steepener and bear flattener scenarios provide insights which were not captured by parallel shifts.

Given the shape of market yield curves at June 30, 2024, consideration of the bear steepener and bear flattener scenarios provide insights which were not captured by parallel shifts.

The bear steepener scenario highlights the risk to net interest income and economic value of equity when short-term interest rates remain constant while long-term interest rates rise.

In such a scenario, Peoples' deposit and borrowing costs, which are generally correlated with short-term interest rates, remain constant, while asset yields, which are correlated with long-term interest rates, rise.

At March 31, 2024, the bear steepener scenario produced an increase in net interest income of 0.7% and a decline in the economic value of equity of 0.7%.

At June 30, 2024, the bear steepener scenario produced an increase in net interest income of 0.8% and an increase in the economic value of equity of 5.6%.

The bear flattener scenario highlights the risk to net interest income and the economic value of equity when short-term rates rise while long-term rates remain constant.

2 unchanged sentences

resulting in an increased amount of net interest income and a higher net interest margin.

At March 31, 2024, the bear flattener scenario produced an increase of 3.0% to net interest income and a decline in the economic value of equity of 1.0%.

At June 30, 2024, the bear flattener scenario produced an increase of 1.0% to net interest income and a decline in the economic value of equity of 1.8%.

Peoples has entered into interest rate swaps as part of its interest rate risk management strategy.

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

As of March 31, 2024, Peoples had entered into 11 interest rate swap contracts with an aggregate notional value of $105.0 million.

As of June 30, 2024, Peoples had entered into 9 interest rate swap contracts with an aggregate notional value of $85.0 million.

Additional information regarding Peoples’ interest rate swaps can be found in “Note 10 Derivative Financial Instruments” of the Notes to the Unaudited Condensed Consolidated Financial Statements.

At March 31, 2024, Peoples' Unaudited Consolidated Balance Sheet was positioned to benefit from rising interest rates in terms of the potential impact on net interest income.

At June 30, 2024, Peoples' Unaudited Consolidated Balance Sheet was positioned to benefit from rising interest rates in terms of the potential impact on net interest income.

The table above illustrates this point as changes to net interest income increase in the rising interest rate scenarios.

1 unchanged sentence

In light of the bank failures in 2023, Peoples revisited the model assumptions, and determined the methods used by the ALCO to monitor

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and evaluate the adequacy of Peoples Bank's liquidity position remain appropriate and are largely unchanged from those disclosed in Peoples' 2023 Form 10-K.

At March 31, 2024, Peoples Bank had liquid assets of $565.4 million, which represented 5.4% of total assets and unfunded loan commitments.

At June 30, 2024, Peoples Bank had liquid assets of $408.8 million, which represented 4.0% of total assets and unfunded loan commitments.

Peoples also had an additional $156.7 million of unpledged investment securities not included in the measurement of liquid assets.

18 unchanged sentences

(Dollars in thousands)

2024 March 31,

2024 December 31,

1 unchanged sentence

2023 June 30,

2023 March 31,

Home equity lines of credit $ 247,757 $ 246,035 $ 244,367 $ 245,764 $ 208,805

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis