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Item 2. Management’s Discussion and Analysis

2024-10-31 compared with 2024-08-01 · 350 added, 339 removed, 1020 unchanged (40% 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 and six months ended June 30, 2024 and June 30, 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 nine months ended September 30, 2024 and September 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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government and the Federal Reserve Board, including changes in the Federal Funds Target Rate, in response to such economic conditions, which may adversely impact interest rates, the interest rate yield curve, interest margins, loan demand and interest rate sensitivity;

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

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

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

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(7) current and future local, regional, national and international economic conditions (including the impact of persistent inflation, supply chain issues or labor shortages, supply-demand imbalances affecting local real estate prices, high unemployment rates in the local or regional economies in which Peoples operates and/or the U.S.

economy generally, an increasing federal government budget deficit, the failure of the federal government to raise the federal debt ceiling, potential or imposed tariffs, a U.S.

economy generally, an increasing federal government budget deficit, the failure of the federal government to raise the federal debt ceiling, potential or imposed tariffs, uncertainties surrounding the upcoming U.S.

Presidential election and potential changes in the U.S.

Senate and House of Representatives, a U.S.

withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations, and changes in the relationship of the U.S.

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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 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;

(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 Peoples' continued ability to grow deposits or maintain adequate deposit levels, and may further result in potential increased regulatory requirements, increased reputational risk and potential impacts to macroeconomic conditions;

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

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(25) the impact on Peoples' businesses, personnel, facilities, or systems of losses related to acts of fraud, theft, misappropriation or violence;

(26) the impact on Peoples' businesses, as well as on the risks described above, of various domestic or international widespread natural or other disasters, pandemics, cybersecurity attacks, system failures, civil unrest, military or terrorist activities or international conflicts (including Russia’s war in Ukraine and the ongoing conflicts in the Middle East);

(26) the impact on Peoples' businesses, as well as on the risks described above, of various domestic or international widespread natural or other disasters (including severe weather events), pandemics, cybersecurity attacks, system failures, civil unrest, military or terrorist activities or international conflicts (including Russia’s war in Ukraine and the ongoing conflicts in the Middle East);

(27) the potential deterioration of the U.S.

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(34) the vulnerability of Peoples' network and online banking portals, and the systems of parties with whom Peoples contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches;

(35) regulatory and legal matters, including the failure to resolve any outstanding matters on a timely basis and the potential of new regulatory matters, litigation, or other legal actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;

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

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(38) 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.

RISK FACTORS" of Peoples' Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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

As of September 30, 2024, Peoples had 149 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 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.

Peoples' 2023 Form 10-K and updated in "Note 1 Summary of Significant Accounting Policies" in the Notes to the Unaudited Condensed Consolidated Financial Statements included 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:

◦ 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.

◦ For the first nine months of 2024, Peoples incurred $(0.7) million of acquisition-related expenses compared to $15.7 million for the first nine months of 2023.

Peoples recorded acquisition-related expenses, primarily related to the Limestone Merger, which included $(0.7) million for the third quarter of 2024 and $4.4 million for the third quarter of 2023.

◦ For the third quarter of 2024, Peoples recorded a provision for credit losses of $6.7 million, compared to a provision for credit losses of $5.7 million for the linked quarter and a provision for credit losses of $4.1 million for the third quarter of 2023.

For the first nine months of 2024, Peoples recorded a provision for credit losses of $18.5 million, compared to a provision for credit losses of $13.9 million for 2023.

The provision for credit losses for the third quarter of 2024 was mainly a result of net charge-offs.

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

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

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

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◦ 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 may begin reducing rates sometime in 2024.

This rate remained unchanged until September 2024, at which point the Federal Reserve Board decreased rates by 50 basis points, reducing the rate to 4.75% to 5.00%.

The Federal Reserve Board has signaled that future rate reductions continue to be a possibility.

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 $29.0 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%.

Peoples reported net income of $31.7 million for the third quarter of 2024, representing earnings per diluted common share of $0.89.

In comparison, Peoples reported net income of $29.0 million, representing earnings per diluted common share of $0.82, for the second quarter of 2024, and net income of $31.9 million, representing earnings per diluted common share of $0.90, for the third quarter of 2023.

For the nine months ended September 30, 2024, Peoples recorded net income of $90.3 million, or $2.55 per diluted common share, compared to $79.5 million, or $2.47 per diluted common share, for the nine months ended September 30, 2023.

Non-core items negatively impacted earnings per diluted common share by $0.01 for the third quarter of 2024, $0.02 for the second quarter of 2024, and $0.16 for the third quarter of 2023.

Non-core items negatively impacted earnings per diluted share by $0.03 and $0.52 for the nine months ended September 30, 2024 and 2023, respectively.

Net interest income was $88.9 million for the third quarter of 2024, and increased $2.3 million when compared to the linked quarter.

Net interest margin was 4.27% for the third quarter of 2024, compared to 4.18% for the linked quarter.

The increase in net interest income and net interest margin was primarily driven by an increase in accretion income, net of amortization, from our acquisitions and higher earning asset yields, which were partially offset by higher borrowings costs.

Net interest income for the third quarter of 2024 decreased $4.4 million, or 5%, compared to the third quarter of 2023.

The decrease in net interest income compared to the third quarter of 2023 was driven by higher funding costs.

Net interest margin for the third quarter of 2024 was 4.27% and decreased 43 basis points compared to 4.70% for the third quarter of 2023, driven primarily by an increase in interest expense on deposits.

For the first nine months of 2024, net interest income increased $11.2 million, or 4%, compared to the first nine months of 2023, while net interest margin decreased 36 basis points to 4.24%.

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.

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 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.

The decrease in net interest margin for the first nine months of 2024 compared to the first nine 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 $8.1 million for the third quarter of 2024, $5.8 million for the second quarter of 2024 and $9.5 million for the third quarter of 2023, which added 39 basis points, 28 basis points and 48 basis points, respectively, to net interest margin.

The increase in accretion income for the third quarter of 2024 when compared to the linked quarter was driven by higher pay-offs.

The decrease in accretion income for the current quarter compared to the third quarter of 2023

was a result of the accretion from the Limestone Merger.

Accretion income, net of amortization expense, from acquisitions was $20.3 million for the nine months ended September 30, 2024, compared to $15.8 million for the nine months ended September 30, 2023, which added 33 and 29 basis points, respectively, to net interest margin.

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

The provision for credit losses was $6.7 million for the third quarter of 2024, compared to a provision for credit losses of $5.7 million for the linked quarter and a provision for credit losses of $4.1 million for the third quarter of 2023.

The provision for credit losses for the third quarter of 2024 was mainly a result of net charge-offs.

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

The provision for credit losses for the third quarter of 2023 was driven by (i) loan growth, (ii) an increase in net charge-offs, (iii) updates to our prepayment, curtailment and funding rates, and (iv) a deterioration in macro-economic conditions used within the CECL model, partially offset by the release of reserves on individually analyzed loans.

Net charge-offs for the third quarter of 2024 were $6.1 million, or 0.38% of average total loans annualized, compared to net charge-offs of $4.2 million, or 0.27% of average total loans annualized, for the linked quarter and net charge-offs of $2.3 million, or 0.15% of average total loans annualized, for the third quarter of 2023.

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

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.

The provision for credit losses for the first nine months of 2024 was $18.5 million, compared to $13.9 million for the first nine months of 2023.

The provision for credit losses for the first nine 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) economic forecast deterioration and (iv) loan growth.

The provision for credit losses for the first nine 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 nine months of 2024 were $13.6 million, or 0.29% of average total loans annualized, compared to net charge-offs of $5.1 million, or 0.12% of average total loans annualized, for the first nine months of 2023.

For additional information on credit trends and the allowance for credit losses, see the "FINANCIAL CONDITION - Allowance for Credit Losses" 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 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 net loss realized during the third quarter of 2024 was $0.9 million, compared to a net loss of $0.8 million for the linked quarter and a net loss of $0.3 million for the third quarter of 2023.

The net loss for the third quarter of 2024, the second quarter of 2024, and the third quarter of 2023 was driven primarily by net losses on repossessed assets of $0.5 million, $0.4 million and $0.3 million, respectively.

The net loss realized during the first nine months of 2024 was $2.0 million, compared to $4.3 million for the first nine months of 2023.

The net loss for the first nine months of 2024 was driven by $1.3 million of net losses on repossessed assets.

The net loss for the first nine 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 an OREO property.

During the first nine months of 2024, 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 third quarter of 2024 increased $1.2 million compared to the linked quarter.

The increase in non-interest income, excluding net gains and losses, was primarily impacted by increases of $0.8 million in mortgage banking income and $0.7 million in lease income, partially offset by a decrease of $0.6 million in bank-owned life insurance income ("BOLI").

Compared to the third quarter of 2023, total non-interest income, excluding net gains and losses, increased $2.1 million, primarily due to a $1.9 million increase in lease income, a $0.8 million increase in mortgage banking income, and a $0.6 million increase in trust and investment income, partially offset by a $0.9 million decrease in BOLI income.

The increases for the third quarter of 2024, when compared to the third quarter of 2023, were primarily due to gains on early terminations on leases that paid off, higher production in mortgage banking, and an increase in trust and investment income driven by an increase in assets under administration and management.

For the first nine months of 2024, total non-interest income, excluding gains and losses, increased $8.7 million, or 13%, compared to the first nine months of 2023.

The increase was driven by (i) a $2.0 million increase in other non-interest income, driven by operating lease income, (ii) a $1.7 million increase in trust and investment income driven by increases in assets under administration and management, (iii) a $1.4 million increase in lease income driven by gains on terminated leases, (iv) a $1.2 million increase in insurance income driven by higher contingency income and market increases for premiums, (v) a $0.9 million increase in deposit account service charge income, and (vi) a $0.9 million increase in mortgage banking income.

Total non-interest expense decreased $2.7 million, or 4%, for the three months ended September 30, 2024, compared to the linked quarter.

The decrease in total non-interest expense was primarily due to decreases of $2.9 million in other non-interest expense, driven by a one-time $1.3 million true-up of corporate expenses recorded in the linked quarter, and a decrease of $0.6 million in data processing and software expense.

Compared to the third quarter of 2023, total non-interest expense decreased $5.6 million, or 8%.

The decrease in total non-interest expense was primarily due to acquisition-related expenses in the third quarter of 2023.

Excluding acquisition-related expenses, non-

interest expenses decreased $0.5 million, or 1%, primarily due to a decrease of $2.7 million in other non-interest expense, partially offset by an increase of $1.1 million in data processing and software expense.

For the nine months ended September 30, 2024, total non-interest expense increased $4.5 million, or 2%, compared to the first nine months of 2023.

Excluding acquisition-related expenses, non-interest expenses increased $21.0 million, or 11%, primarily due to increases of $11.6 million in salaries and employee benefit costs due to additional employees added in the Limestone Merger, $4.4 million and $2.5 million in data processing and software expense and in net occupancy and equipment expense, respectively, due to recent technology projects and growth, including 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.

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 30, June 30, September 30, September 30,

(Dollars in thousands) 2024 2024 2023 2024 2023

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Marketing expense — — 38 10 61

Communication expense — — 1 — 1

Other loan expenses — — — — 1

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Total non-interest expense excluding acquisition-related expense $ 66,752 $ 68,758 $ 67,262 $ 204,059 $ 183,104

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.

The efficiency ratio for the third quarter of 2024 was 55.1%, compared to 59.2% for the linked quarter, and 58.4% for the third quarter of 2023.

The efficiency ratio, adjusted for non-core items, was 55.7% for the third quarter of 2024, compared to 59.2% for the linked quarter and 52.5% for the third quarter of 2023.

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

The efficiency ratio for the first nine months of 2024 was 57.4%, compared to 59.7% for the first nine months of 2023.

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

The efficiency ratio, adjusted for non-core items, was 57.7% for the first nine months of 2024, compared to 54.2% for the first nine 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 $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.

Peoples recorded income tax expense of $9.2 million with an effective tax rate of 22.5% for the third quarter of 2024, compared to income tax expense of $6.9 million with an effective tax rate of 19.1% for the linked quarter, and income tax expense of $8.8 million with an effective tax rate of 21.7% for the third quarter of 2023.

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

Peoples recorded income tax expense of $24.3 million with an effective tax rate of 21.2% for the first nine months of 2024 and $22.1 million with an effective tax rate of 21.7% for the first nine 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.

At September 30, 2024, total assets were $9.14 billion, compared to $9.23 billion at June 30, 2024, $9.16 billion at December 31, 2023 and $8.94 billion at September 30, 2023.

Total assets at September 30, 2024 decreased when compared to at June 30, 2024 primarily due to a decrease in loans and investment securities, partially offset by an increase in cash and cash equivalents.

The period-end total loan and lease balances at September 30, 2024 decreased $53.5 million, or 3% annualized, compared to at June 30, 2024.

The decrease in the period-end total loan and lease balances was primarily driven by decreases of (i) $20.5 million in construction loans, (ii) $15.5 million in other commercial real estate loans, (iii) $11.8 million in residential real estate loans, and (iv) $7.9 million in commercial and industrial loans, partially offset by an increase of $5.5 million in home equity lines of credit.

Total assets at September 30, 2024 decreased compared to December 31, 2023 due to a decrease of $143.0 million in total cash and cash equivalents, partially offset by an increase of $112.6 million in loans and leases.

Total assets at September 30, 2024 increased compared to September 30, 2023 due to an increase of $187.4 million in total loans and leases.

The period-end loan and lease increased from September 30, 2023 to September 30, 2024 primarily as a result of organic growth in our commercial and industrial, premium finance, and lease portfolios of $121.3 million, $97.7million, and $30.4 million, respectively.

Total liabilities were $8.02 billion at September 30, 2024, down from $8.15 billion at June 30, 2024 and $8.10 billion at December 31, 2023, and up from $7.95 billion at September 30, 2023.

The decrease in total liabilities when compared to at June 30, 2024 was primarily due to a decrease of $306.8 million in short-term borrowings, partially offset by an increase of $185.4 million in period-end total deposits.

The decrease in total liabilities when compared to at December 31, 2023 was primarily due to a decrease of $425.2 million in short-term borrowings, partially offset by an increase of $330.9 million in total period end deposits.

The increase in total liabilities when compared to at September 30, 2023 was primarily due to a $445.6 million increase in period in deposits, partially offset by a decrease of $409.5 million in short-term borrowings.

The increase in deposits was primarily driven by increases of $685.4 million in retail certificates of deposit, $163.8 million in money market deposit accounts, and $62.5 million in governmental deposit accounts, partially offset by decreases of $122.2 million, $115.6 million, $115.2 million, and $113.0 million in savings accounts, non-interest bearing deposits, interest-bearing demand deposit accounts and brokered certificates of deposit, respectively.

The increase in retail certificates of deposits was driven by current promotional offerings.

Total stockholders' equity at September 30, 2024 increased by $47.1 million compared to at June 30, 2024, which was primarily due to net income for the third quarter of 2024 of $31.7 million and a decrease of $27.7 million in accumulated other comprehensive loss, partially offset by dividends paid of $14.2 million.

Accumulated unrealized losses related to the available-for-sale investment securities portfolio were $83.7 million and $112.7 million at September 30, 2024 and at June 30, 2024, respectively.

Total stockholders' equity at September 30, 2024 increased by $71.6 million compared to at December 31, 2023, which was primarily due to net income of $90.3 million for the first nine months of 2024 and a decrease of $19.1 million in accumulated other comprehensive loss, partially offset by dividends paid of $42.1 million.

The increase in total stockholders' equity at September 30, 2024 when compared to at September 30, 2023 was impacted by net income of $124.1 million in the last twelve months and a decrease in accumulated other comprehensive loss of $61.3 million, partially offset by dividends paid of $56.2 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.

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.

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 and nine months ended September 30, 2024, for the three months ended June 30, 2024 and for the three and nine months ended September 30, 2023.

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

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

4 unchanged sentences

For the Three Months Ended

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

September 30, 2024 June 30, 2024 September 30, 2023

( Dollars in thousands)

51 unchanged sentences

Net interest margin (b) 4.27 % 4.18 % 4.70 %

For the Six Months Ended

June 30, 2024 June 30, 2023

For the Nine Months Ended

September 30, 2024 September 30, 2023

( Dollars in thousands)

61 unchanged sentences

(f) Included in other long-term borrowings are trust preferred securities held for investments and floating rate junior subordinated deferrable interest debentures.

Peoples' average balances compared to prior periods have been impacted by recent acquisitions, including the Limestone Merger as of the close of business on April 30, 2023, which added to average loan, deposit and borrowed funds balances.

Peoples' cash balances have increased primarily due to an increase in interest-bearing deposits in other banks, mostly with the FRB.

The increases in market interest rates have increased asset yields and deposit outflows (which have increased borrowings).

Peoples' average balances compared to prior year periods have been impacted by recent acquisitions, including the Limestone Merger as of the close of business on April 30, 2023, which added to average loan, deposit and borrowed funds balances.

Peoples' deposit balances have increased primarily due to an increase in retail certificates of deposits driven by special promotional rate offerings over the past year.

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

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

Three Months Ended September 30, 2024 Compared to

Nine Months Ended September 30, 2024 Compared to

(Dollars in thousands) June 30, 2024 September 30, 2023 September 30, 2023

Increase (decrease) in:

35 unchanged sentences

(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%.

Net interest income was $88.9 million for the third quarter of 2024 and increased $2.3 million when compared to the linked quarter.

Net interest margin was 4.27% for the third quarter of 2024, compared to 4.18% for the linked quarter.

The increase in net

interest income and net interest margin was primarily driven by an increase in accretion income, net of amortization, from acquisitions and higher borrowing costs, which offset higher earning asset yields.

Net interest income for the third quarter of 2024 decreased 5% over the prior year quarter and net interest margin decreased by 43 basis points.

The decrease in net interest income compared to the third quarter of 2023 was driven by higher funding costs.

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

For the first nine months of 2024, net interest income increased $11.2 million, or 4%, compared to the first nine months of 2023, while net interest margin decreased 36 basis points to 4.24%.

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.

The decrease in net interest margin for the first nine months of 2024 compared to the first nine months of 2023 was primarily driven by the full year impact of assets added in the Limestone Merger, which offset higher earning asset yields.

Accretion income, net of amortization expense, from acquisitions was $8.1 million for the third quarter of 2024, $5.8 million for the linked quarter and $9.5 million for the third quarter of 2023, which added 39 basis points, 28 basis points and 48 basis points, respectively, to net interest margin.

The increase in accretion income for the third quarter of 2024, when compared to the linked quarter was driven by higher payoffs.

The decrease in accretion income for the third quarter of 2024 compared to the third quarter of 2023 was a result of lower accretion from the Limestone Merger.

For the first nine months of 2024, accretion income totaled $20.3 million and added 33 basis points to net interest margin compared to $15.8 million and 29 basis points for the first nine months of 2023.

The increase in accretion income for the first nine months of 2024 compared to the same period in 2023 was due to more accretion 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 Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

3 unchanged sentences

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 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.

The provision for credit losses for the third quarter of 2024 was mainly a result of net charge-offs.

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

The provision for credit losses for the third quarter of 2023 was driven by (i) loan growth, (ii) an increase in net charge-offs, (iii) updates to our prepayment, curtailment, and funding rates, and (iv) a deterioration in macro-economic conditions used within the CECL model, partially offset by a release of reserves on individually analyzed loans.

For the first nine months 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) economic forecast deterioration and (iv) loan growth.

For the first nine 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.”

2 unchanged sentences

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

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

5 unchanged sentences

Net loss on asset disposals and other transactions $ (795) $ (428) $ (307) $ (1,564) $ (2,218)

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.

The net loss on investment securities for the third 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 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.

The net loss on assets disposals and other transactions for the third quarter of 2024, the second quarter of 2024, and the third quarter of 2023 were driven primarily by net losses on repossessed assets of $0.5 million, $0.4 million and $0.3 million, respectively.

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.

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 third quarter of 2024, 22% for the linked quarter, and 20% for the third quarter of 2023.

For the first nine months of 2024, total non-interest income, excluding net gains and losses, totaled 23% of total revenues compared to 21% for the first nine months of 2023.

For the third 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,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

2 unchanged sentences

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.

E-banking income increased for the first nine months of 2024 compared to the first nine months of 2023 primarily driven by an increase in customer activity.

The following table details Peoples' insurance income:

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

5 unchanged sentences

687 672 548 2,059 1,647

Other fees and charges

Insurance income $ 4,271 $ 4,109 $ 4,250 $ 14,878 $ 13,679

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.

Peoples' insurance income for the third quarter of 2024 remained relatively flat when compared to the linked quarter and the prior year quarter.

Insurance income in the first nine months of 2024 increased 9% when compared to the first nine months of 2023 due to higher commissions and additional customers.

Peoples' trust and investment income, which includes fiduciary income, brokerage income, and employee benefit fees, 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 Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

3 unchanged sentences

Trust and investment income $ 4,882 $ 4,999 $ 4,288 $ 14,480 $ 12,786

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.

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

When compared to the third quarter of 2023, fiduciary income and brokerage income increased $0.5 million, which was driven by an increase in assets under administration and management.

For the first nine months of 2024, trust and investment income increased when compared to the same period in 2023 due to higher fiduciary and brokerage income, primarily reflecting an increase in assets under management and market volatility.

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

September 30,

2024 June 30,

2024 March 31,

1 unchanged sentence

2023 September 30,

2023 June 30,

(Dollars in thousands)

3 unchanged sentences

Quarterly average $ 3,683,334 $ 3,587,952 $ 3,521,188 $ 3,341,868 $ 3,319,655

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.

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

The increases in assets under administration and management at September 30, 2024 when compared to at September 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 Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 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 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.

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

Deposit account service charges were flat when comparing the third quarter of 2024 to the third quarter of 2023.

Deposit account service charges also increased for the first nine 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 Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

3 unchanged sentences

Mortgage banking income 1,051 243 237 1,615 740

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.

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.

Other non-interest income was relatively flat for the three months ended September 30,2024 when compared to the linked quarter and the third quarter of 2023.

The increase in other non-interest income for the first nine 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 third quarter of 2024 decreased compared to the linked quarter and the prior year quarter primarily due changes in the cash surrender values of the underlying policies.

Bank owned life insurance income for the first nine months of 2024 remained relatively flat when compared to the first nine months of 2023.

Lease income for the third quarter of 2024 increased compared to the linked quarter and the third quarter of 2023 due to an increase in gains on terminated leases.

Lease income for the first nine months of 2024 compared to the first nine months of 2023 was primarily driven by an increase in gains on early terminations on leases that paid off.

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 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.

Mortgage banking income for the third quarter of 2024 increased $0.8 million when compared to each of the prior periods and was primarily driven by higher production.

In the third quarter of 2024, Peoples sold $14.9 million in loans into the secondary market with servicing retained and $12.0 million in loans with servicing released, compared to $2.6 million and $11.8 million, respectively, in the second quarter of 2024, and $0.8 million and $9.4 million, respectively, in the third quarter of 2023.

For the first nine months of 2024, Peoples sold $17.6 million in loans into the secondary market with servicing retained, and $30.8 million with servicing released, compared to $2.7 million and $22.8 million, respectively, for the first nine months of 2023.

Non-Interest Expense

1 unchanged sentence

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

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

9 unchanged sentences

Average during the period 1,495 1,492 1,494 1,493 1,359

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.

Base salaries and wages for the third quarter of 2024 remained relatively flat compared to the linked quarter and to the third quarter of 2023.

Base salaries and wages for the first nine months of 2024 increased compared to the first nine 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 increased for the third quarter of 2024 compared to the linked quarter due to an increase of $0.4 million of Vantage-related incentive compensation.

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

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

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

Payroll taxes and other employment costs for the third quarter of 2024 increased compared to the linked quarter due to a refund received in the second quarter of 2024 due to change in tax rate in the first quarter of 2024.

The increase for the first nine months of 2024 compared to the first nine 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.

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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 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.

Stock-based compensation for the first nine months of 2024 increased when compared to the first nine months of 2023 due to the additional employees added in the Limestone Merger.

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 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.

Deferred personnel costs for the third quarter of 2024 remained flat when compared to both the second quarter of 2024 and the third quarter of 2023.

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

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

4 unchanged sentences

Net occupancy and equipment expense $ 5,905 $ 6,142 $ 5,501 $ 18,330 $ 15,836

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.

Net rent expense for the third quarter and first nine months of 2024 compared to the same periods of 2023 increased due to a prior period one time benefit to rent expense recognized in the third quarter of 2023.

The third quarter and the first nine 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 Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

9 unchanged sentences

Other non-interest expense 4,342 7,182 9,820 16,510 19,859

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.

Data processing and software expenses for the third quarter of 2024 decreased compared to the linked quarter due to lower costs associated with recent technology projects.

The increase for the first nine months of 2024 when compared to the same period 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 third quarter of 2024 were flat when compared to the linked quarter.

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

Amortization of other intangible assets for the third quarter of 2024 was flat compared to the linked quarter and decreased $0.6 million compared to the prior year quarter due to decreases in amortization on core deposits and customer relationship intangibles.

Amortization of other intangible assets for the first nine 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 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.

E-banking expense compared to the linked quarter and the third quarter of 2023 remained relatively flat.

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

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

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

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

Other loan expenses increased for the third quarter and the first nine 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 third quarter of 2024 increased when compared to the linked quarter due to higher advertising expense and donations.

Marketing expense for the third quarter and the first nine 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.

1 unchanged sentence

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 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.

The increase in franchise tax expense for the third quarter of 2024 when compared to the third quarter of 2023 was due to higher equity driven by the Limestone Merger.

Other non-interest expense for the third quarter of 2024 decreased when compared to the linked quarter primarily due to a one-time prior period true-up of corporate expenses recognized in the second quarter of 2024.

Other non-interest expense for the third quarter and first nine months of 2024 compared to the same periods of 2023 decreased due to a less acquisition-related expenses.

Income Tax Expense

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.

Peoples recorded income tax expense of $9.2 million with an effective tax rate of 22.5% for the third quarter of 2024, compared to income tax expense of $6.9 million with an effective tax rate of 19.1% for the linked quarter and income tax expense of $8.8 million with an effective tax rate of 21.7% for the third quarter of 2023.

The increase in income tax expense when compared to the linked quarter was driven by a $1.1 million one-time benefit recognized in the second quarter of 2024 related to a prior year amended return and higher pre-tax income.

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

Peoples recorded income tax expense of $24.3 million with an effective tax rate of 21.2% in the first nine months of 2024 and $22.1 million with an effective tax rate of 21.7% in the first nine months of 2023.

The increase was driven by higher pre-tax income.

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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 Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

7 unchanged sentences

Pre-provision net revenue $ 48,484 $ 42,340 $ 45,096 $ 135,121 $ 119,812

Total average assets $9,180,454 $9,021,651 $8,342,883 $9,101,052 $7,792,579

Pre-provision net revenue to total average assets (annualized) 1.85 % 1.97 % 1.78 % 1.91 % 1.93 %

Weighted-average common shares outstanding - diluted 35,117,648 35,051,810 32,649,976 35,071,550 30,314,504

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 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.

The increase in the PPNR for the third quarter of 2024 compared to the linked quarter was driven by increased non-interest income and higher accretion income.

The increase in PPNR for the third quarter of 2024 when compared to the third quarter of 2023 was due to increased net interest income driven by higher rates.

The increase in PPNR for the first nine months of 2024 compared to the first nine months of 2023 was driven by increased non-interest income and increased net interest income driven by higher rates.

Core Non-Interest Expense (Non-US GAAP)

Core non-interest expense is a financial measure used to evaluate Peoples' recurring expense stream.

This measure is Non-US GAAP since it excludes the impact of all acquisition-related expenses.

This measure is Non-US GAAP since it excludes the impact of all acquisition-related expenses, pension settlement charges, and the COVID-19 employee retention credit.

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 Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

2 unchanged sentences

acquisition-related expenses (662) — 4,434 (746) 15,694

pension settlement charges — — 2,424 — 2,424

COVID-19 Employee Retention Credit — — — — 548

5 unchanged sentences

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

21 unchanged sentences

(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.

The efficiency ratio and the adjusted for non-core items efficiency ratio improved compared to the linked quarter improved mainly as the result of a reduction in non-interest expense and increase in net interest income.

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

The efficiency ratio, adjusted for non-core items, was 57.7% for the first nine months of 2024, compared to 54.2% for the first nine months of 2023.

The increase in the efficiency ratio, adjusted for non-core items, for the first nine months of 2024 compared to the first nine months of 2023 was due to higher non-interest expense.

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

3 unchanged sentences

Three Months Ended Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

13 unchanged sentences

(139) — 931 (157) 3,296

pension settlement charges

— — 2,424 — 2,424

tax effect of pension settlement charges (a)

— — 509 — 509

COVID-19 Employee Retention Credit — — — — 548

22 unchanged sentences

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

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.

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

The decrease in the return on average assets adjusted for non-core items for the third quarter of 2024, compared to the third quarter of 2023, was attributable to the assets acquired in the Limestone Merger.

The decrease in return on average assets adjusted for non-core items for the first nine months of 2024 when compared to the first nine months of 2023, was primarily driven by the assets acquired in the Limestone Merger.

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

2 unchanged sentences

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 Six Months Ended

2024 March 31,

2024 June 30,

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

37 unchanged sentences

(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 non-interest income.

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.

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

The decreases in the return on total average stockholders' equity and average tangible equity ratios for the third quarter and first nine months of 2024 compared to the same periods of 2023 were driven by higher average stockholders' equity.

FINANCIAL CONDITION

Cash and Cash Equivalents

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.

At September 30, 2024, Peoples' interest-bearing deposits in other banks had decreased $170.6 million from December 31, 2023.

The total cash and cash equivalents balance included $137.6 million of excess cash reserves being maintained at the FRB of Cleveland at September 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 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.

Through the first nine months of 2024, Peoples' total cash and cash equivalents decreased $143.0 million, which reflected cash outflows of $126.6 million for investing activities and $119.6 million for financing activities, partially offset by cash inflows of $103.2 million from operating activities.

Peoples' use of cash in investing activities reflected a $108.1 million net increase in loans held for investment and a net cash outflow from held-to-maturity investment securities of $9.9 million.

The cash provided by financing activities was largely driven by a $445.0 million net increase in interest-bearing deposits, mostly offset by a net decrease in short-term borrowings of $425.2 million and a net decrease in non-interest bearing deposits of $114.2 million.

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The following table provides information regarding Peoples’ investment portfolio:

(Dollars in thousands) Weighted Average Yield June 30,

(Dollars in thousands) Weighted Average Yield September 30,

2024 June 30,

2024 March 31,

1 unchanged sentence

2023 September 30,

2023 June 30,

Available-for-sale securities, at fair value:

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Carrying value $ 1,830,231 $ 1,884,103 $ 1,859,149 $ 1,795,400 $ 1,760,322

(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.

(a) Amortized cost is presented net of the allowance for credit losses of $236 at September 30, 2024 and $238 at both June 30, 2024 and September 30, 2023.

For the third quarter of 2024, total investment securities decreased compared to prior periods due to maturities and calls on securities during the quarter.

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.

4 unchanged sentences

The following table provides information regarding outstanding loan balances:

(Dollars in thousands) June 30,

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

1 unchanged sentence

2023 September 30,

2023 June 30,

Originated loans and leases:

65 unchanged sentences

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 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.

The period-end total loan and lease balances at September 30, 2024 decreased $53.5 million, or 3% annualized, compared to at June 30, 2024.

The decrease in the period-end loan and lease balance at September 30, 2024 compared to June 30, 2024 was primarily driven by decreases of (i) $20.5 million in construction loans, (ii) $15.5 million in other commercial real estate loans (iii) $11.8 million of residential real estate loans, (iv) and $7.9 million in commercial and industrial loans.

The increase in the period-end loan and lease balances at September 30, 2024 compared to at September 30, 2023 was primarily driven by loan growth for commercial and industrial and premium finance loans.

Loan Concentration

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Peoples' commercial lending activities continue to be spread over a diverse range of businesses from all sectors of the economy, with no single industry comprising over 10% of Peoples' total loan portfolio.

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

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:

Loans secured by commercial real estate, including commercial construction loans, continued to comprise the largest portion of Peoples' loan portfolio at September 30, 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 September 30, 2024:

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

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Total mixed-use facilities $ 64,508 $ 2,694 $ 67,202 3.0 %

Education services:

Healthcare facilities:

Owner occupied $ 39,810 $ 198 $ 40,008 1.8 %

Non-owner occupied 15,495 783 16,278 0.7 %

Total education services $ 44,902 $ 4,000 $ 48,902 2.2 %

Total healthcare facilities $ 55,305 $ 981 $ 56,286 2.5 %

Other (a) 575,268 32,782 608,050 27.2 %

3 unchanged sentences

and Maryland.

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.

For all other states, the aggregate outstanding balances of commercial loans in each state were less than 3% of total loans at September 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.

4 unchanged sentences

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

(Dollars in thousands) June 30,

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

1 unchanged sentence

2023 September 30,

2023 June 30,

Construction $ 854 $ 673 $ 701 $ 699 $ 1,241

10 unchanged sentences

As a percent of total loans 1.06 % 1.05 % 1.05 % 1.01 % 1.03 %

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.

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

The increase in the allowance balance at September 30, 2024 when compared to September 30, 2023 was driven by increase in reserves for individually analyzed loans and leases and loan growth.

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) June 30,

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

1 unchanged sentence

2023 September 30,

2023 June 30,

Gross charge-offs:

Construction $ — $ — $ — $ — $ —

Commercial real estate, other — — 212 296 278

18 unchanged sentences

Consumer 205 132 80 142 160

Three Months Ended

(Dollars in thousands) June 30,

2024 March 31,

2024 December 31,

2023 September 30,

2023 June 30,

Deposit account overdrafts 83 67 74 103 49

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Each with "--%" not meaningful.

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.

Total net charge-offs during the third quarter of 2024 were $6.1 million, or 0.38% of average total loans on an annualized basis, compared to $4.2 million, or 0.27% of average total loans on an annualized basis, during the linked quarter and $2.3 million, or 0.15% of average total loans on an annualized basis, during the third quarter of 2023.

The increase for the third 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 division.

The increase in net charge-offs during the third quarter of 2024 versus the prior year third quarter was primarily attributable to an increase in charge-offs on leases originated by our North Star Leasing division and indirect consumer loans.

The following table details Peoples’ nonperforming assets:

(Dollars in thousands) June 30,

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

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2023 September 30,

2023 June 30,

Loans 90+ days past due and accruing:

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NPAs include nonperforming loans and OREO.

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.

Compared to at June 30, 2024, Peoples' NPAs increased from 0.53% of total assets to 0.76% at September 30, 2024.

Total loans 90+ days past due and accruing and nonaccrual loans in total increased at September 30, 2024 compared to at June 30, 2024 due primarily to increases in nonperforming leases.

Total loans 90+ days past due increased from $7.6 million at June 30,2024 to $27.6 million at September 30, 2024, and were impacted by increases in leases, premium finance loans, and other commercial real estate loans.

The increase in loans 90+ days past due is driven by higher administrative delinquencies on Vantage leases and premium finance loans.

During the third quarter of 2024, criticized loans decreased $2.3 million, while classified loans increased $13.1 million when compared to at June 30, 2024.

The decrease in the amounts of criticized loans compared to at June 30, 2024 was primarily driven by paydowns and upgrades of the risk rating.

The increase in the amount of classified loans compared to at June 30, 2024 was primarily due to downgrades in the risk rating from newly reported loans.

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

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

The following table details Peoples’ deposit balances:

(Dollars in thousands) June 30,

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

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2023 September 30,

2023 June 30,

Non-interest-bearing deposits (a) $ 1,453,441 $ 1,472,697 $ 1,468,363 $ 1,567,649 $ 1,569,095

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

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.

At September 30, 2024, period-end total deposits increased $185.4 million, or 3%, compared to at June 30, 2024, primarily driven by increases of (i) $83.3 million in brokered certificates of deposit, (ii) $71.3 million in retail certificates of deposit, and (iii) $57.8 million in governmental deposit accounts, partially offset by a decrease of $19.3 million in non-interest bearing deposits.

The increase in retail certificates of deposits was due to current specials being offered, while the increase in governmental deposit accounts was due to the seasonality of those balances.

The increase in brokered deposits was due to the lower-cost of funding available compared to Federal Home Loan Bank ("FHLB") advances.

At September 30, 2024, period-end total deposits increased $445.6 million, or 6%, compared to at September 30, 2023.

The increase was primarily driven by increases of $685.4 million in retail certificates of deposit, $163.8 million in money market deposit accounts, and $62.5 million in governmental deposit accounts, offset by decreases of $122.2 million, $115.7 million, $115.2 million, and $113.0 million in savings accounts, non-interest bearing deposits, interest-bearing demand deposit accounts and brokered certificates of deposit, respectively.

The increase in retail certificates of deposits was driven by current promotions being offered.

Given the rate environment, there has been a mix shift in the deposit portfolio over the last twelve months.

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 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.

As of September 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.

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

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

(Dollars in thousands) June 30,

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

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2023 September 30,

2023 June 30,

Short-term borrowings:

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

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.

Total borrowed funds at September 30, 2024 decreased compared to at June 30, 2024 and at September 30, 2023, primarily due to lower FHLB overnight borrowings.

Capital/Stockholders’ Equity

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.

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

At September 30, 2024, Peoples had a capital conservation buffer of 5.49%.

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

(Dollars in thousands) June 30,

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

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2023 September 30,

2023 June 30,

Capital Amounts:

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Tier 1 leverage ratio 9.86 % 9.56 % 9.43 % 9.57 % 9.34 %

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.

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

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

The common equity tier 1 risk-based capital ratio at September 30, 2024 also increased compared to at September 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.

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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) June 30,

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

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2023 September 30,

2023 June 30,

Tangible equity:

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8.25 % 7.61 % 7.37 % 7.33 % 6.85 %

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.

Tangible book value per common share increased to $20.29 at September 30, 2024 compared to $18.91 at June 30, 2024.

The change in tangible book value per common share was due to tangible equity increasing during the third quarter of 2024 primarily due to net income and a decrease in accumulated other comprehensive loss over the last three months.

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

Interest Rate Sensitivity and Liquidity

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

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

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

300 $ 24,025 7.2 % $ 15,063 4.6 % $ (53,947) (3.2) % $ (157,625) (9.4) %

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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 June 30, 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 September 30, 2024, consideration of the bear steepener and bull steepener 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 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.

In such a scenario, Peoples' variable rate asset yields along with deposit and short-term borrowing costs, which are correlated with short-term rates, increase, while long-term asset yields and long-term borrowing costs, which are more correlated with long-term rates, remain constant.

Increased deposit and funding costs would be more than offset by increased variable rate asset yields;

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

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%.

At September 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 bull steepener scenario highlights the risk to net interest income and the economic value of equity when short-term rates fall faster than long-term rates.

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

Decreased deposit and funding costs would be more than offset by increased variable rate asset yields over a longer horizon;

resulting in an increased amount of net interest income and net interest margin over a 24-month period.

At September 30, 2024, the bull steepener scenario produced a decline of 0.4% to net interest income, as the impact of recent term funding mitigates the impact of lower short-term rates over a 12-month horizon, and an increase in the economic value of equity of 2.8%.

Over a 24-month horizon, the bull steepener scenario produced an increase of 1.0% to net interest income.

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

As of September 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 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.

At September 30, 2024, Peoples' Unaudited Consolidated Balance Sheet was positioned to benefit from rising interest rates, while also mitigating the impact to net interest income decreasing rate scenarios.

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

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

At September 30, 2024, Peoples Bank had liquid assets of $444.5 million, which represented 4.3% of total assets and unfunded loan commitments.

Peoples also had an additional $167.0 million of unpledged investment securities not included in the measurement of liquid assets.

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(Dollars in thousands)

September 30,

2024 June 30,

2024 March 31,

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2023 September 30,

2023 June 30,

Home equity lines of credit $ 248,400 $ 247,757 $ 246,035 $ 244,367 $ 245,764

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by this Item 3 is provided under the caption “Interest Rate Sensitivity and Liquidity” under “ITEM 2.

The information called for by this Item 3 is provided under the caption “FINANCIAL CONDITION - Interest Rate Sensitivity and Liquidity” under “ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” in this Form 10-Q, and is incorporated herein by reference.

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