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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;
−Removed: (2) the effects of inflationary pressures and the impact of rising interest rates on borrowers’ liquidity and ability to repay;
−Removed: (3) the success, impact, and timing of the implementation of Peoples’ business strategies and Peoples’ ability to manage strategic initiatives, including the interest rate policies of the Federal Reserve Board, the completion and successful integration of acquisitions, including the Limestone Merger that closed in April 2023, and the expansion of commercial and consumer lending activities;
+Added: (2) the effects of inflationary pressures on borrowers’ liquidity and ability to repay;
+Added: (3) the success, impact, and timing of the implementation of Peoples’ business strategies and Peoples’ ability to manage strategic initiatives, including the interest rate policies of the Federal Reserve Board, the completion and successful integration of acquisitions, and the expansion of commercial and consumer lending activities;
(4) competitive pressures among financial institutions, or from non-financial institutions, which may increase significantly, including product and pricing pressures, which can in turn impact Peoples’ credit spreads, changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and Peoples’ ability to attract, develop and retain qualified professionals;
−Removed: (5) uncertainty regarding the nature, timing, cost, and effect of legislative or regulatory changes or actions, or deposit insurance premium levels, promulgated and to be promulgated by governmental and regulatory agencies in the State of Ohio, the FDIC, the Federal Reserve Board, and the CFPB, which may subject Peoples, its subsidiaries, or one or more acquired companies to a variety of new and more stringent legal and regulatory requirements;
+Added: (5) uncertainty regarding the nature, timing, cost, and effect of legislative or regulatory changes or actions, or deposit insurance premium levels, promulgated and to be promulgated by governmental and regulatory agencies, including the ODFI, the FDIC, the Federal Reserve Board, and the CFPB, which may subject Peoples, its subsidiaries, or one or more acquired companies to a variety of new and more stringent legal and regulatory requirements;
(6) the effects of easing restrictions on participants in the financial services industry;
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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.
−Removed: global trading partners) and the impact these conditions may have on Peoples, Peoples’ customers and Peoples’ counterparties, and Peoples’ assessment of the impact, which may be different than anticipated;
+Added: global trading partners), and changes in the federal, state, and local government policy and the impact these conditions may have on Peoples, Peoples’ customers and Peoples’ counterparties, and Peoples’ assessment of the impact, which may be different than anticipated;
(8) Peoples may issue equity securities in connection with future acquisitions, which could cause ownership and economic dilution to Peoples’ current shareholders;
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(17) Peoples’ ability to maintain required capital levels and adequate sources of funding and liquidity;
−Removed: (18) the impact of larger or similar-sized financial institutions encountering problems, such as the closures in 2023 of Silicon Valley Bank in California, Signature Bank in New York and First Republic Bank in California, which may adversely affect the banking industry and/or Peoples’ business generation and retention, funding and liquidity, including Peoples’ continued ability to grow deposits or maintain adequate deposit levels, and may further result in potential increased regulatory requirements, increased reputational risk and potential impacts to macroeconomic conditions;
+Added: (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, First Republic Bank in California, and Heartland Tri-State Bank in Kansas, which may adversely affect the banking industry and/or Peoples’ business generation and retention, funding and liquidity, including Peoples’ continued ability to grow deposits or maintain adequate deposit levels, and may further result in potential increased regulatory requirements, increase 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;
−Removed: (26) the impact on Peoples’ businesses, as well as on the risks described above, of various domestic or international widespread natural or other disasters, pandemics, cybersecurity attacks, system failures, civil unrest, military or terrorist activities or international conflicts (including Russia’s war in Ukraine and the recent conflicts involving Israel and Hamas);
+Added: (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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(30) risks and uncertainties associated with Peoples’ entry into new geographic markets and risks resulting from Peoples’ inexperience in these new geographic markets;
−Removed: (31) Peoples’ ability to integrate the Limestone Merger, which may be unsuccessful, or may be more difficult, time-consuming or costly than expected;
(31) the risk that expected revenue synergies and cost savings from the Limestone Merger may not be fully realized or realized within the expected time frame;
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(33) 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;
−Removed: (35) Peoples’ business may be adversely affected by increased political and regulatory scrutiny of corporate environmental, social and governance (“ESG”) practices;
+Added: (34) regulatory and legal matters, including the failure to resolve 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;
+Added: (35) Peoples’ business may be adversely affected by increased political and regulatory scrutiny of corporate ESG practices;
(36) the effect of a fall in stock market prices on the asset and wealth management business;
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◦ During 2024, Peoples incurred $0.2 million of acquisition-related expenses, compared to $17.0 million for 2023 and $3.0 million for 2022.
−Removed: The acquisition-related expenses in 2023 were primarily related to the Limestone Merger.
−Removed: The acquisition-related expenses in 2022 were related to the Vantage acquisition (as defined below), the Premier Merger (as defined below), and the Limestone Merger, and the acquisition-related expenses during 2021 were primarily related to the NSL acquisition (as defined below) and the Premier Merger.
+Added: The acquisition-related expenses in 2024 and 2023 were related to the Limestone Merger.
+Added: The acquisition-related expenses in 2022 were related to the Vantage acquisition (defined below), the merger with Premier Financial Bancorp, Inc (“Premier Merger”), and the Limestone Merger.
◦ On October 25, 2022, Peoples announced the Limestone Merger, a transaction valued at $177.9 million.
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Vantage offers mid-ticket equipment leases, primarily for business essential information technology equipment across a wide array of industries.
−Removed: Upon completion of the transaction, Vantage became a subsidiary of Peoples Bank.
+Added: Upon completion of the Vantage transaction, Vantage became a subsidiary of Peoples Bank.
As a subsidiary, Vantage has continued to operate under the name Vantage Financial, which leverages Vantage’s strong brand recognition within the equipment finance industry.
Peoples recorded goodwill in the amount of $27.2 million and other intangible assets of $13.2 million, which included a customer relationship intangible, a trade-name intangible and non-compete agreements related to this transaction.
−Removed: ◦ On September 17, 2021, Peoples completed its merger with Premier Financial Bancorp, Inc.
−Removed: (“Premier”), in which Peoples acquired, in an all-stock merger, Premier, a bank holding company headquartered in Huntington, West Virginia, and the parent company of Premier Bank, Inc.
−Removed: (“Premier Bank”) and Citizens Deposit Bank and Trust, Inc.
−Removed: (“Citizens”).
−Removed: Under the terms and conditions of the definitive Agreement and Plan of Merger dated March 26, 2021, Premier merged with and into
−Removed: Peoples and Premier’s wholly-owned subsidiaries, Premier Bank and Citizens, subsequently merged into Peoples’ wholly-owned subsidiary, Peoples Bank, in a transaction resulting in the issuance of 8,589,685 common shares valued at $261.9 million (the “Premier Merger”).
−Removed: At the close of business on September 17, 2021, the financial services offices of each of Premier Bank and Citizens became branches of Peoples Bank.
−Removed: Peoples acquired $1.2 billion in loans and $1.8 billion in deposits and recorded $66.9 million in goodwill and $4.2 million in other intangible assets in connection with the Premier Merger.
−Removed: ◦ On May 4, 2021, Peoples Insurance acquired substantially all of the assets and rights of an insurance agency located in Pikeville, Kentucky and certain rights to related customer accounts, which were previously developed and maintained by Justice & Stamper Insurance Agency, Inc.
−Removed: Total consideration for this transaction was $325,000, less any adjustments pursuant to adverse claims incurred or sustained by or imposed by Peoples Insurance.
−Removed: Peoples recorded customer relationship intangible assets of $230,000 and goodwill of $46,000 related to this transaction.
−Removed: ◦ On March 31, 2021, Peoples completed its acquisition of NS Leasing, LLC (“NSL”) pursuant to an Asset Purchase Agreement, dated March 24, 2021, in which Peoples Bank acquired the equipment finance and leasing business of NSL (the “NSL acquisition”).
−Removed: The transaction closed after the end of business on March 31, 2021 and Peoples Bank began operating the acquired business as North Star Leasing, a division of Peoples Bank, on April 1, 2021.
−Removed: Peoples Bank acquired assets comprising NSL’s equipment finance business, including $83.3 million in leases and satisfied, on behalf of NSL, certain third-party debt in the amount of $69.1 million.
−Removed: Peoples Bank paid total consideration of $116.5 million, plus an earn-out payment to NSL of $3.0 million.
−Removed: Based in Burlington, Vermont, the North Star Leasing division underwrites, originates and services equipment leases and equipment financing agreements to businesses throughout the United States.
−Removed: Peoples recorded goodwill in the amount of $24.7 million and other intangible assets of $14.0 million, which included a customer relationship intangible, a trade-name intangible and non-compete agreements related to this transaction.
Other Significant Developments
+Added: ◦ During 2024, Peoples recorded a provision for credit losses of $24.8 million, compared to a provision for credit losses of $15.2 million for 2023 and a recovery of credit losses of $3.5 million for 2022.
+Added: The provision for credit losses during 2024 was driven by (i) higher net charge-offs, (ii) an increase in reserves for individually analyzed loans and leases, (iii) economic forecast deterioration and (iv) loan growth.
+Added: The provision for credit losses during 2023 was primarily driven by (i) the
+Added: addition of the provision for the loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers.
◦ During the third quarter of 2023, Peoples terminated its pension plan by settling the remaining benefit obligation of $7.7 million.
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Peoples recorded a settlement charge of $2.4 million in the third quarter of 2023 in relation to the termination of the pension plan.
−Removed: Peoples does not anticipate further expenses related to the termination.
Peoples incurred $185,000 in pension settlement charges in 2022, compared to $143,000 in 2021, due to the aggregate amount of lump-sum distributions to participants in Peoples’ defined benefit pension plan exceeding the threshold for recognizing settlement charges during the period.
−Removed: ◦ During 2023, Peoples recorded a provision for credit losses of $15.2 million, compared to a recovery of credit losses of $3.5 million for 2022 and a provision for credit losses of $0.7 million for 2021.
−Removed: The provision for credit losses during 2023 was driven by (i) the addition of the provision for the non-purchased credit deteriorated (“non-PCD”) loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers.
−Removed: The recovery of credit losses during 2022 was primarily due to the impact of economic forecast improvement in the CECL model, coupled with loan pay-offs during certain periods.
◦ On January 28, 2021, Peoples’ Board of Directors approved a share repurchase program authorizing Peoples to purchase up to an aggregate of $30.0 million of Peoples’ outstanding common shares, replacing the February 27, 2020 share repurchase program which had authorized Peoples to purchase up to an aggregate of $40.0 million of Peoples’ outstanding common shares.
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During 2023, Peoples repurchased 107,219 common shares totaling $3.0 million under the share repurchase program.
−Removed: During 2021, Peoples did not repurchase any common shares under the share repurchase program authorized on January 28, 2021.
−Removed: On October 25, 2022, after the announcement of the Limestone Merger, the share repurchase program was paused until the vote to approve the Limestone Merger by shareholders, which occurred on February 23, 2023.
+Added: During 2022, Peoples repurchased 263,183 common shares totaling $7.4 million under the share repurchase program.
◦ On April 3, 2019, Peoples entered into the U.S.
Bank Loan Agreement.
−Removed: A Fifth Amendment to the U.S.
+Added: A Sixth Amendment to the U.S.
Bank Loan Agreement, entered into on March 31, 2024, extended the maturity from April 1, 2024 to March 31, 2025.
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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.
−Removed: The Federal Reserve Board has kept rates unchanged since July 2023 but has signaled that it expects to begin reducing rates sometime in 2024.
+Added: The Federal Reserve Board had kept rates unchanged since July 2023, before beginning to cut rates in September 2024.
The impact of these transactions, where material, is discussed in the applicable sections of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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If Peoples determines that it is more-likely-than-not that the fair value of the reporting unit is greater than its carrying amount, then performing the quantitative impairment test is unnecessary.
−Removed: At October 1, 2023, management completed a qualitative assessment of goodwill.
−Removed: This test resulted in management concluding it was more-likely-than-not that the fair value of the reporting unit exceeded its carrying value.
+Added: None of the indicators noted above triggered the quantitative test, but management felt it was prudent to perform a quantitative test given the time since Peoples' prior quantitative test.
+Added: At October 1, 2024, management completed a quantitative assessment of goodwill.
+Added: This test resulted in management concluding that the fair value of the reporting unit exceeded its carrying value.
Peoples is required to perform interim tests for goodwill impairment in subsequent quarters if events occur or circumstances change that indicate potential goodwill impairment exists, such as adverse changes to Peoples’ business or a significant decline in Peoples’ market capitalization.
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In certain cases, an asset or liability is measured and reported at fair value on a recurring basis, such as available-for-sale investment securities.
−Removed: In other cases, management must rely on estimates or judgments to determine if an asset or liability not measured at fair value warrants an impairment write-down or whether a valuation reserve should be established.
−Removed: Given the inherent volatility, the use of fair value measurements
−Removed: may have a significant impact on the carrying value of assets or liabilities, or result in material changes to the Consolidated Financial Statements, from period to period.
+Added: In other cases, management must
+Added: rely on estimates or judgments to determine if an asset or liability not measured at fair value warrants an impairment write-down or whether a valuation reserve should be established.
+Added: Given the inherent volatility, the use of fair value measurements may have a significant impact on the carrying value of assets or liabilities, or result in material changes to the Consolidated Financial Statements, from period to period.
Detailed information regarding fair value measurements can be found in “Note 2 Fair Value of Financial Instruments.”
New Accounting Guidance Pending Adoption
−Removed: Accounting Standards Update (“ASU”) 2023-06 - Disclosure Improvements:
−Removed: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative:
−Removed: The ASU was issued in response to the SEC’s August 2018 final rule that updated and simplified disclosure requirements that the SEC believed were “redundant, duplicative, overlapping, outdated, or superseded.” The new guidance is intended to align U.S.
−Removed: GAAP requirements with those of the SEC and to facilitate the application of U.S.
−Removed: GAAP for all entities.
−Removed: ASU 2023-06 applies to all reporting entities within the scope of the amended subtopics.
−Removed: The effective dates for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, prospectively, with early adoption prohibited.
−Removed: Peoples will adopt such requirements when they become effective and the guidance is not expected to materially impact Peoples’ consolidated financial statements.
−Removed: ASU 2023-07 - Segment Reporting (Topic 280):
−Removed: Improvements to Reportable Segment Disclosures:
−Removed: The FASB issued ASU 2023-07 on November 27, 2023.
−Removed: The amendments “improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.” In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements.
−Removed: The purpose of the amendments is to enable “investors to better understand an entity’s overall performance” and assess “potential future cash flows.”
−Removed: The ASU applies to all public entities that are required to report segment information in accordance with ASC 280.
−Removed: The enhanced segment disclosure requirements apply “retrospectively to all prior periods presented in the financial statements.” The significant segment expense and other segment item amounts “disclosed in prior periods shall be based on the significant segment expense categories identified and disclosed in the period of adoption.” The amendments in ASU 2023-07 are effective for all public entities for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.
−Removed: Peoples will adopt the expanded disclosure requirements beginning with its Annual Report on Form 10-K for the fiscal year ending December 31, 2024, and the guidance is not expected to materially impact Peoples’ consolidated financial statements.
ASU 2023-09 - Income Taxes (Topic 740):
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ASU 2023-09 applies to all entities subject to income taxes.
−Removed: For public business entities, the new requirements will be effective for annual periods beginning after December 15, 2024.
+Added: For public business entities, the new requirements were effective for annual periods beginning after December 15, 2024.
The guidance will be applied on a prospective basis with the option to apply the standard retrospectively with early adoption is permitted.
−Removed: Peoples is still evaluating the applicability and materiality of the guidance.
+Added: Peoples does not expect the update will have a material impact on its consolidated financial statements.
EXECUTIVE SUMMARY
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Net interest margin was 4.21% in 2024, compared to 4.55% in 2023 and 3.96% in 2022.
−Removed: The increases in net interest income and net interest margin when compared to 2022 were driven by increases in market interest rates, the additional net interest income from the Limestone Merger, and improvement in investment yields.
−Removed: Partially offsetting these benefits was an increase in interest expense resulting from a shift in the composition of funding sources combined with an increase in market interest rates for deposits and other funding sources.
−Removed: Net interest margin increased during 2022 when compared to 2021 largely due to (i) the Premier Merger and the Vantage acquisition, (ii) organic growth and (iii) increases in market interest rates.
−Removed: Net interest margin in 2021 was impacted by PPP loan forgiveness and lower funding costs due to customers’ maintaining higher cash balances, as well as a higher volume of loans due to the Premier Merger and and insurance premium finance acquisition coupled with higher-yielding leases acquired from NSL and organic loan growth.
+Added: The increases in net interest income when compared to 2023 were driven by increases in market interest rates and the full year impact of net interest income from the Limestone Merger.
+Added: Net interest margin for 2024 decreased 34 basis points when compared to 2023, which was primarily driven by higher borrowings costs, which offset higher earning asset yields.
+Added: Net interest margin increased during 2023 when compared to 2022 largely due to increases in market interest rates, additional net interest income stemming from the Limestone Merger, and improvements in investment yields.
Accretion income, net of amortization expense, from acquisitions totaled $25.2 million for 2024, $25.2 million for 2023, and $11.6 million for 2022, adding 30 basis points, 34 basis points, and 19 basis points, respectively, to the net interest margin.
−Removed: The provision for credit losses for 2023 was $15.2 million, compared to a recovery of credit losses of $3.5 million for 2022 and a provision for credit losses of $0.7 million for 2021.
−Removed: Net charge-offs for 2023 were $8.5 million, compared to $7.3 million for 2022 and
−Removed: $4.7 million for 2021.
+Added: The provision for credit losses for 2024 was $24.8 million, compared to a provision of credit losses of $15.2 million for 2023 and a recovery of credit losses of $3.5 million for 2022.
+Added: Net charge-offs for 2024 were $23.2 million, compared to $8.5 million for 2023 and $7.3 million for 2022.
Net charge-offs as a percent of average total loans were 0.37% for 2024, 0.15% for 2023 and 0.16% for 2022.
−Removed: The provision for credit losses during 2023 was driven by (i) the addition of the provision for the non-PCD loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers.
−Removed: The recovery of credit losses during 2022 compared to the provision for credit losses during 2021 was driven by improvements in economic forecasts, coupled with loan pay-offs and sales during certain periods.
−Removed: Total non-interest income for 2023 increased $8.6 million, or 11%, when compared to 2022.
−Removed: The increase was driven by (i) a $4.1 million increase in electronic banking income, (ii) a $2.3 million increase in insurance income primarily due to growth in the property and casualty insurance line, (iii) a $2.1 million increase in deposit account service charges, (iv) a $1.5 million increase in bank owned life insurance income, and (v) a $2.7 million increase in other non-interest income.
−Removed: Insurance income increased due to new business and market increases for premiums.
−Removed: The increase in other non-interest income was due to an increase in operating lease income, which was partially offset by operating lease expense recognized in other non-interest expense.
−Removed: The other increases for the full year of 2023, when compared to the full year of 2022, were primarily due to the additional customers brought in from the Limestone Merger.
−Removed: Partially offsetting the increases was a $3.6 million increase in net losses on investment securities, primarily driven by a $3.6 million pre-tax ($2.9 million after-tax) net loss on the sales of available-for-sale investment securities during the first and fourth quarters of 2023, and a $2.2 million increase in net losses on assets disposals and other transactions, mostly due to a $1.6 million write-down of an other real estate owned (“OREO”) property during the second quarter of 2023.
+Added: The provision for credit losses during 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.
+Added: The provision for credit losses during 2023 compared to the provision for credit losses during 2022 was primarily driven by the addition of the provision for loans acquired in the Limestone Merger.
+Added: The increase in net-charge-offs as a percent of average total loans was driven by charge-offs on small-ticket leases primarily occurring in the second half of 2024.
+Added: Total non-interest income, excluding gains and losses, for 2024 increased $9.1 million, or 10%, when compared to 2023.
+Added: The increase was driven by (i) a $2.6 million increase in lease income, primarily attributable to operating lease income, (ii) a $2.4 million increase in trust and investment income driven by an increase in assets under administration and management, (iii) a $1.4 million increase in insurance income driven by higher contingency income and market increases for premiums, (iv) a $0.9 million increase in deposit account service charge income, and (vi) a $0.7 million increase in mortgage banking income.
Total non-interest income for 2023 increased $8.6 million, or 11% when compared to 2022.
−Removed: The increase was driven by growth of $4.4 million in deposit account service charges and $3.1 million in electronic banking income, primarily attributable to customers added in the Premier Merger.
−Removed: Also contributing to the growth was a $3.0 million increase in lease income due to the Vantage acquisition.
−Removed: Partially offsetting the impact of these 2022 increases when compared to 2021 was a $2.0 million decline in mortgage banking income due to the increased market interest rate environment in 2022 resulting in a lower volume of new loan originations.
−Removed: Total non-interest expense for the year ended December 31, 2023, was impacted by the Limestone Merger and acquisition-related non-interest expenses, which added $17.0 million across various line-items within non-interest expense.
+Added: The increase was driven by growth of $4.1 million in electronic banking income, $2.3 million in insurance income, and $2.1 million in deposit account services charges.
+Added: Total non-interest expense for 2024 and 2023, was impacted by the Limestone Merger and acquisition-related non-interest expenses, which added $0.2 million and $17.0 million, respectively, across various line-items within non-interest expense.
The table below summarizes the amount of acquisition-related expenses for each line item that is a component of non-interest expense.
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Communication expense 3,145 2,834 2,484
+Added: Operating lease expense 3,539 1,687 —
+Added: Travel and entertainment expense 2,656 2,401 1,400
Other non-interest expense 18,033 20,945 14,076
9 unchanged sentences
Communication expense — 1 2
+Added: Travel and entertainment expense 84 326 —
Other non-interest expense 336 2,597 163
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Communication expense 3,145 2,833 2,482
+Added: Operating lease expense 3,539 1,687 —
+Added: Travel and entertainment expense 2,572 2,075 1,400
Other non-interest expense 17,697 18,348 13,913
1 unchanged sentence
Total non-interest expense was $273.8 million for 2024, an increase of $7.3 million, or 3%, compared to 2023.
−Removed: Excluding acquisition-related expenses, non-interest expenses increased $45.4 million, or 22%, due to increases in all non-interest expense line items except for electronic banking expense, which decreased $2.3 million when compared to 2022.
−Removed: The increases were primarily driven by non-interest expenses, excluding acquisition-related expenses, attributable to the Limestone Merger, as well as organic growth.
−Removed: The increase in other non-interest expense was also driven by the previously discussed pension plan settlement charges and a $1.7 million increase in operating lease depreciation expenses.
−Removed: Electronic banking expense decreased when compared to 2022 due to reduced costs for Peoples’ online banking platform and a reclassification of those costs relative to the prior period to data processing and software expense.
+Added: Excluding acquisition-related expenses, non-interest expenses increased $24.1 million, or 10%, due to increases in all non-interest expense line items except for marketing expense, franchise tax expense and amortization of other intangible assets, which decreased $1.0 million, $0.3 million, and $0.1 million, respectively, when compared to 2023.
+Added: The increases were primarily driven by recent growth, including
+Added: through acquisitions.
Total non-interest expense was $266.5 million for 2023, an increase of $59.3 million compared to 2022.
−Removed: The growth was driven by increases of (i) $18.1 million in salaries and employee benefit costs, (ii) $4.6 million in net occupancy and equipment expense, (iii) $3.7 million in data processing and software expenses, and (iv) $3.0 million in intangible asset amortization.
−Removed: These increases were primarily due to growth over the last year, driven by mergers and acquisitions.
−Removed: Partially offsetting the impact of these increases on non-interest expense in 2022 was a decrease in acquisition-related expenses due to the amount of expenses incurred in connection with the Premier Merger in 2021.
−Removed: Included in total non-interest expense during 2023 were certain non-core expenses which included acquisition-related expenses of $17.0 million compared to $3.0 million in 2022.
−Removed: Non-core expenses for 2021 included acquisition-related expenses of $21.4 million (detailed in the table above), COVID-19-related expenses of $1.2 million, contract negotiation expenses of $1.2 million and a Peoples Bank Foundation, Inc.
−Removed: contribution of $0.5 million.
+Added: The growth was driven by increases of (i) $31.3 million in salaries and employee benefit costs, (ii) $7.4 million in data processing and software expenses, (iii) $4.9 million in professional fees, and (iv) $3.5 million in intangible asset amortization.
+Added: These increases were primarily attributable to the Limestone Merger, as well as organic growth.
Peoples’ efficiency ratio, which is calculated as total non-interest expense less amortization of other intangible assets divided by fully tax-equivalent (“FTE”) net interest income, plus total non-interest income, excluding all gains and losses, was 58.0% for 2024, compared to 58.7% for 2023 and 59.6% for 2022.
−Removed: The efficiency ratio was elevated during 2021 primarily due to the non-core expenses discussed above.
+Added: The efficiency ratio improved when compared to prior periods due to increased revenue.
The efficiency ratio, when adjusted for non-core items, was 57.9% for 2024, 54.4% for 2023 and 58.6% for 2022.
+Added: The increase in the efficiency ratio, adjusted for non-core items, for 2024 compared to 2023 was driven by higher non-interest expense.
+Added: The efficiency ratio and the efficiency ratio, adjusted for non-core items for 2023 improved when compared to 2022, due to higher net interest income driven by the Limestone Merger, increases in market interest rates, and higher non-interest income.
Income tax expense totaled $32.3 million for 2024, compared to $31.8 million for 2023 and $27.3 million for 2022.
The effective tax rate for 2024 was 21.6%, 21.9% for 2023 and 21.3% for 2022.
−Removed: The increases for 2023 compared to 2022, and for 2022 compared to 2021, were driven by higher pre-tax income and a higher effective tax rate primarily due to apportionment in additional states due to recent acquisitions.
+Added: The increased expense for 2024 compared to 2023 and 2022 was driven by higher pre-tax income.
+Added: Peoples’ effective tax rate has increased primarily due to apportionment in additional states due to recent acquisitions, but was lower in 2024 due to a one-time benefit relating to a prior year amended return.
Total assets increased 1% to $9.25 billion at December 31, 2024, compared to $9.16 billion at year-end 2023.
−Removed: The increase was primarily due to $1.46 billion of assets, primarily loans, acquired in the Limestone Merger.
−Removed: Excluding the loans acquired in the Limestone Merger, the period-end loan and lease balance increased $472.2 million, or 10%, driven by increases of $203.6 million, $78.2 million, $68.9 million, $44.0 million, $37.9 million, and $37.0 million in other commercial real estate loans, commercial and industrial loans, leases, premium finance loans, construction loans, and indirect consumer loans, respectively.
−Removed: The increase in total assets from at December 31, 2022 was also impacted by purchases of held-to-maturity investment securities and sales of lower-yielding available-for-sale investment securities.
+Added: The increase was primarily due to increases of $198.8 million in loans and leases and $123.1 million in investment securities, partially offset by a decrease of $209.1 million in cash and cash equivalents.
+Added: The increase in loans and leases compared to December 31, 2023 was driven by growth of $162.7 million and $66.3 million in the commercial and industrial and premium finance segments, respectively, which was partially offset by a reduction of $40.9 million in commercial real estate.
+Added: The decrease in cash and cash equivalents is primarily related to investing activity and the purchase of both available-for-sale and held-to-maturity securities, partially offset by cash provided by operating activities.
+Added: The increase in investment securities from at December 31, 2023 was driven by purchases of longer duration, higher yielding held-to-maturity investment securities.
Management underwent investment portfolio restructurings during 2023 to increase portfolio yield and reduce Peoples’ sensitivity to falling intermediate and long-term interest rates.
The allowance for credit losses increased to $63.3 million, or 1.00% of total loans, net of deferred fees and costs, compared to $62.0 million and 1.01%, respectively, at December 31, 2023.
−Removed: The increase in the allowance balance at December 31, 2023 when compared to at December 31, 2022 was driven by (i) the addition of the provision for the non-PCD loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers.
−Removed: The decrease in the ratio of the allowance for credit losses to total loans was due to the items noted above, primarily the release of reserves on individually analyzed loans.
−Removed: Total liabilities were $8.10 billion at December 31, 2023, an increase of $1.68 billion since at December 31, 2022, primarily due to $1.35 billion of liabilities, primarily deposits, acquired in the Limestone Merger.
−Removed: Excluding Limestone deposit balances, total deposits at December 31, 2023 increased $615.3 million, or 11%, compared to at December 31, 2022, primarily due to increases of $785.6 million in retail certificates of deposit and $449.8 million in brokered certificates of deposit, partially offset by decreases of $226.8 million, $223.3 million, and $193.7 million, in non-interest bearing deposits, savings accounts, and interest-bearing demand deposit accounts, respectively.
+Added: The increase in the allowance balance at December 31, 2024 when compared to at December 31, 2023 was driven by an increase in reserves for individually analyzed loans and leases, as well as loan growth.
+Added: The decrease in the ratio of the allowance for credit losses to total loans was due to loan growth.
+Added: Total liabilities were $8.14 billion at December 31, 2024, an increase of $38.8 million since December 31, 2023, primarily due to an increase of $487.3 million in total deposits which was driven primarily by promotional offerings on retail CDs, partially offset by a decrease in $435.2 million in total borrowings due to the payoff of the BTFP and lower FHLB overnight borrowings.
Total demand deposit accounts comprised 34% and 38% of total deposits at December 31, 2024, and at December 31, 2023, respectively.
−Removed: Total stockholders’ equity was $1.05 billion at December 31, 2023, an increase of $268.2 million, or 34%, from December 31, 2022 due to (i) the issuance of 6.8 million common shares (valued at $177.9 million) in the Limestone Merger, (ii) net income of $113.4 million for the full year of 2023, and (iii) a decrease in other comprehensive loss of $25.5 million, partially offset by dividends paid of $52.1 million and share repurchases of $3.0 million.
−Removed: The decrease in other comprehensive loss was the result of changes in the market value of available-for-sale investment securities, which were primarily driven by changes in market interest rates.
+Added: Total stockholders’ equity was $1.11 billion at December 31, 2024, an increase of $58.1 million, or 6%, from December 31, 2023 due to net income of $117.2 million for the full year of 2024, partially offset by an increase in other comprehensive loss of $8.8 million and dividends paid of $56.3 million.
+Added: The increase in other comprehensive loss was the result of changes in the market value of available-for-sale investment securities, which were primarily driven by changes in market interest rates.
Peoples continued to exceed the capital required by the Federal Reserve Board to be deemed “well capitalized.” Peoples’ tier 1 capital ratio was 12.39% at December 31, 2024, versus 12.37% at December 31, 2023, while the total capital ratio was 13.58% at December 31, 2024, versus 13.17% at December 31, 2023.
The common equity tier 1 risk-based capital ratio was 11.95% at December 31, 2024 compared to 11.56% at December 31, 2023.
−Removed: Compared to at December 31, 2022, the tier 1 risk-based capital and the total risk-based capital ratios improved due to higher net income, partially offset by the impact of the Limestone Merger and dividends paid.
−Removed: The common equity tier 1 risk-based capital ratio at December 31, 2023 decreased compared to at December 31, 2022 due to the common shares issued in the Limestone Merger.
+Added: Compared to at December 31, 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.
Peoples’ book value and tangible book value per share were $31.26 and $19.94, respectively, at December 31, 2024, compared to $29.83 and $18.16, respectively, at December 31, 2023.
4 unchanged sentences
Net interest income, the amount by which interest income exceeds interest expense, remains Peoples’ largest source of revenue and was 77% of total revenue during 2024.
−Removed: The amount of net interest income earned by Peoples is affected by various factors, including changes in market interest rates due to the Federal Reserve Board’s monetary policy, the level and degree of pricing competition for both loans and deposits in Peoples’ markets, and the amount and composition of Peoples’ earning assets and interest-bearing liabilities.
+Added: The amount of net interest income earned by Peoples is affected by various factors, including changes in market interest rates due primarily to the Federal Reserve Board’s monetary policy, the level and degree of pricing competition for both loans and deposits in Peoples’ markets, and the amount and composition of Peoples’ earning assets and interest-bearing liabilities.
Peoples monitors net interest income performance and manages its balance sheet composition through regular ALCO meetings.
The asset-liability management process employed by the ALCO is intended to mitigate the impact of future interest rate changes on Peoples’ net interest income and earnings.
−Removed: However, the frequency and/or magnitude of changes in market interest rates are difficult to predict, and may have a greater impact on net interest income than adjustments management is able to make.
−Removed: As part of the analysis of net interest income, management converts tax-exempt income earned on obligations of states and political subdivisions to the pre-tax equivalent of taxable income using a blended federal and state corporate income tax rate of 23.3% for 2023 and 2022, and 22.3% for 2021.
+Added: However, the frequency and/or magnitude of changes in market interest rates are difficult to predict, and may have a greater impact on net interest income than management is able to mitigate through the asset-liability management process.
+Added: As part of the analysis of net interest income, management converts tax-exempt income earned on obligations of states and political subdivisions to the pre-tax equivalent of taxable income using a federal statutory corporate income tax rate of 21% for all periods presented.
Management believes the resulting FTE net interest income allows for a more meaningful comparison of tax-exempt income and yields to their taxable equivalents.
64 unchanged sentences
(b) Average balances are based on carrying value.
−Removed: (c) Interest income and yields are presented on a fully tax-equivalent basis, using a blended federal and state corporate income tax rate of 23.3% for 2023 and 2022, and 22.3% for 2021.
+Added: (c) Interest income and yields are presented on a fully tax-equivalent basis, using a federal statutory corporate income tax rate of 21% for all periods presented.
(d) Average balances include nonaccrual, impaired loans, and loans held for sale.
5 unchanged sentences
Peoples’ average balances compared to prior periods have been impacted by recent acquisitions, which included:
−Removed: (i) the Limestone Merger as of the close of business on April 30, 2023, which added to average short-term investments, average total investment securities, and average loan, deposit and borrowed funds balances, (ii) the acquisition of Vantage on March 7, 2022, which added to average lease and borrowed funds balances, and (iii) the Premier Merger on September 17, 2021, which added to average short-term investments, average total investment securities, average total loans and average total deposits.
−Removed: Additionally, Peoples completed the NSL acquisition on April 1, 2021 which also added to average lease balances.
−Removed: Peoples’ cash balances have increased primarily due to an increase in interest-bearing deposits in other banks, mostly with the FRB.
+Added: (i) the Limestone Merger as of the close of business on April 30, 2023, which added to average short-term investments, average total investment securities, and average loans, deposit and borrowed funds balances and (ii) the acquisition of Vantage on March 7, 2022, which added to average lease and borrowed funds balances.
+Added: Peoples’ cash balances have decreased primarily due to a decrease in interest-bearing deposits in other banks, mostly with the FRB.
The increases in market interest rates have increased asset yields and increased borrowing costs.
36 unchanged sentences
(a) The change in interest due to both rate and volume has been allocated to rate and volume changes in proportion to the relationship of the dollar amounts of the changes in each.
−Removed: (b) Interest income and yields are presented on a fully tax-equivalent basis, using a blended federal and state corporate income tax rate of 23.3% for 2023 and 2022, and 22.3% for 2021.
−Removed: Net interest income increased $85.9 million, or 34%, for 2023 when compared to 2022, and net interest margin increased 59 basis points to 4.56%.
−Removed: The increase in net interest income was driven by increases in market interest rates, the additional net interest income from the Limestone Merger, and improvement in investment yields.
−Removed: Accretion income, net of amortization expense, from acquisitions was $25.3 million for 2023, which added 34 basis points to net interest margin for 2023.
−Removed: Accretion income for 2023 was primarily the result of the Limestone Merger, the Premier Merger, and the acquisitions of Vantage and NSL.
−Removed: During 2022, net interest income increased $80.9 million, or 47%, when compared to 2021.
−Removed: The increase in net interest income was driven by (i) the Premier Merger and the Vantage acquisition, (ii) core growth and (iii) increases in market interest rates.
−Removed: Net interest margin increased 57 basis points to 3.97% compared to 2021.
−Removed: Accretion income, net of amortization expense,
−Removed: from acquisitions was $11.6 million for 2022, which added 19 basis points to net interest margin for 2022.
−Removed: Accretion income for 2022 was a result of the Premier Merger and the acquisitions of Vantage and NSL.
−Removed: Additional interest income in 2023 from prepayment fees and interest recovered on nonaccrual loans was $0.7 million, compared to $0.6 million in 2022 and $0.8 million in 2021.
+Added: (b) Interest income and yields are presented on a fully tax-equivalent basis, using a federal statutory corporate income tax rate of 21% for all periods presented.
+Added: FTE net interest income increased $9.1 million, or 3%, for 2024 when compared to 2023, and net interest margin decreased 34 basis points to 4.21%.
+Added: 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.
+Added: The decrease in net interest margin for 2024 compared to 2023 was primarily driven by higher borrowings costs, which offset higher earning asset yields.
+Added: Accretion income, net of amortization expense, from acquisitions was $25.2 million for 2024 and 2023, which added 30 and 34 basis points to net interest margin for 2024 and 2023, respectively.
+Added: During 2023, FTE net interest income increased $85.9 million, or 34%, when compared to 2022, and net interest margin increased 59 basis points to 4.55%.
+Added: The increase in net interest income was driven by increase in market interest rates, additional net interest income from the Limestone Merger, and improved investment yields.
+Added: Accretion income, net of amortization expense, from acquisitions was $25.2 million for 2023, which added 34 basis points to net interest margin for 2023 and was primarily driven by the Limestone Merger.
Detailed information regarding changes in the Consolidated Balance Sheets can be found under appropriate captions of the “FINANCIAL CONDITION” section of this discussion.
9 unchanged sentences
The CECL methodology utilized by Peoples relies on economic forecasts, as well as other key assumptions including prepayments, probability of default and loss given default.
−Removed: For 2023, the provision for credit losses compared to a recovery of credit losses for 2022 was driven by (i) the addition of the provision for the non-PCD loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers.
−Removed: During 2022, the recovery of credit losses was driven by improvements in economic forecasts, coupled with loan pay-offs during certain periods of 2022.
−Removed: During 2021, the provision for credit losses was impacted by improvements in economic factors and loss drivers, partially offset by the provision for credit losses required to establish the allowance for credit losses for acquired non-PCD loans and leases during 2021.
+Added: For 2024, the increase in the provision for credit losses compared to 2023 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.
+Added: During 2023, the provision for credit losses was driven by (i) the addition of the provision for the loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers.
+Added: During 2022, the recovery of credit losses was driven by improvements in economic forecasts, coupled with loan pay-offs.
Additional information regarding changes in the allowance for credit losses and loan credit quality can be found later in this discussion under the caption “Allowance for Credit Losses.”
−Removed: Net (Losses) Gains Included in Total Non-Interest Income
−Removed: Net (losses) gains include gains and losses on investment securities, asset disposals and other transactions, which are recognized in total non-interest income.
−Removed: The following table details the net (losses) gains for the years ended December 31 recognized by Peoples:
+Added: Net Losses Included in Total Non-Interest Income
+Added: Net losses include and losses on investment securities, asset disposals and other transactions, which are recognized in total non-interest income.
+Added: The following table details the net losses for the years ended December 31 recognized by Peoples:
(Dollars in thousands) 2024 2023 2022
Net loss on investment securities $ (416) $ (3,700) $ (61)
−Removed: Net (loss) gain on asset disposals and other transactions:
+Added: Net loss on asset disposals and other transactions:
Net loss on other assets $ (1,928) $ (1,143) $ (326)
−Removed: Net (loss) gain on OREO (1,623) (139) 56
−Removed: Net (loss) gain on other transactions (71) (151) 897
−Removed: Net (loss) gain on asset disposals and other transactions $ (2,837) $ (616) $ 493
−Removed: For 2023, Peoples’ net loss on investment securities was primarily due to the $3.7 million pre-tax net loss on the sales of available-for-sale investment securities in the first and fourth quarters of 2023.
+Added: Net loss on OREO (1,230) (1,623) (139)
+Added: Net loss on other transactions (152) (71) (151)
+Added: Net loss on asset disposals and other transactions $ (3,310) $ (2,837) $ (616)
+Added: For 2024, Peoples’ net loss on investment securities was primarily due to the loss recorded on a contingent call of a security in the second quarter of 2024.
During the first quarter of 2023, Peoples executed sales of $96.7 million of lower yielding available-for-sale investment securities for a pre-tax loss of $2.0 million.
3 unchanged sentences
The loss on the sales of these available-for-sale investment securities had a nominal impact on tangible book value as such loss was previously reflected in capital through accumulated other comprehensive loss.
−Removed: The realized losses recognized due to the first
−Removed: quarter transactions were earned back within the 2023 fiscal year, and the realized losses recognized due to the fourth quarter transactions are expected to be earned back within 14 months.
−Removed: Peoples’ net loss on asset disposals and other transactions during 2023 was primarily driven by a $1.6 million write-down of an OREO property during the second quarter of 2023, and net losses on repossessed assets.
−Removed: During 2022, Peoples’ net loss on asset disposals and other transactions was primarily due to net losses on other assets, which was mainly due to net losses on repossessed assets.
−Removed: During 2021, net gains on other transactions were driven by the sale of $59.8 million of predominantly purchased credit deteriorated (“PCD”) loans acquired in the Premier Merger ($52.9 million of which were criticized or classified) primarily in the hospitality industry.
−Removed: Peoples recognized a gain of $0.9 million related to the discount recorded on those PCD loans when they were acquired from Premier.
+Added: The realized losses recognized in 2023 due to the first quarter transactions were earned back within the 2023 fiscal year, and the realized losses recognized due to the fourth quarter transactions were earned back by December 31, 2024.
+Added: Peoples’ net loss on asset disposals and other transactions during 2024 was primarily driven by $1.8 million of net losses on repossessed assets and a $1.2 million write-down of an OREO property.
+Added: During 2023, Peoples’ net loss on asset disposals was primarily driven by a $1.6 million write-down of an OREO property and net losses on repossessed assets.
+Added: During 2022, net losses on asset disposals and other transactions were primarily driven by losses on repossessed assets.
Total Non-Interest Income Excluding Net Gains and Losses
6 unchanged sentences
Total non-interest income excluding net gains and losses accounted for 22.8% of Peoples’ total revenues (defined as net interest income plus total non-interest income excluding net gains and losses) in 2024, compared to 21.7% in 2023 and 23.9% in 2022.
−Removed: The decline in Peoples’ total non-interest income excluding net gains and losses, as a percent of total revenue during 2023 compared to 2022, was largely due to the growth in net interest income of 34% outpacing the growth in non-interest income excluding gains and losses of 18% during 2023.
−Removed: The growth in net interest income was primarily driven by the Limestone Merger and rate increases.
+Added: The increase in Peoples’ total non-interest income excluding net gains and losses, as a percent of total revenue during 2024 compared to 2023, was largely due to the growth in lease income, primarily attributable to operating lease income, and growth in trust and investment income, and insurance income.
E-banking income comprised the largest portion of Peoples’ total non-interest income excluding net gains and losses, for 2024.
5 unchanged sentences
The amount of e-banking income is largely dependent on the timing and volume of customer activity.
−Removed: For 2023 compared to 2022, e-banking income grew 20%, primarily due to additional customers from the Limestone Merger as well as organic growth.
−Removed: For 2022 compared to 2021, e-banking income increased 17%, primarily from a full year’s impact of the acquired Premier accounts in addition to increased customer activity.
+Added: For 2024, e-banking income was relatively flat when compared to 2023.
+Added: For 2023 compared to 2022, e-banking income increased 20%, primarily due to additional customers from the Limestone Merger as well as organic growth.
In 2024, Peoples’ customers used their debit cards to complete $2.0 billion of transactions, up from $1.9 billion in 2023 and $1.7 billion in 2022.
6 unchanged sentences
Trust and investment income $ 19,513 $ 17,160 $ 16,391
−Removed: For 2023, trust and investment income increased primarily due to increases in brokerage income, as Peoples added new accounts and the underlying market values of assets under administration and management grew, and employee benefit plan fees.
−Removed: trust and investment was relatively flat compared to 2021, as the increase in brokerage income was offset by the decrease in fiduciary income.
+Added: For 2024, trust and investment income increased primarily due to increases in fiduciary and brokerage income, primarily reflecting an increase in assets under management and market performance.
+Added: For 2023, trust and investment increased compared to
+Added: 2022 due to increases in brokerage income, as Peoples added new accounts and the underlying market values of assets under administration and management grew, and employee benefit plan fees.
The following table details Peoples’ assets under administration and management at December 31:
4 unchanged sentences
Annual average $ 3,617,882 $ 3,236,449 $ 2,965,985
−Removed: The increase in total assets under administration and management at December 31, 2023, compared to December 31, 2022, was primarily due to market value increases in 2023, new account activity and an acquisition of an independent financial advisor in January of 2023 which increased brokerage assets by $30 million.
−Removed: During 2022, Peoples’ assets under administration and management declined, driven by a decrease in market values throughout 2022 due to the economic downturn.
+Added: The increase in total assets under administration and management at December 31, 2024, compared to December 31, 2023, was primarily due to market value increases in 2024.
+Added: During 2023, Peoples’ assets under administration and management increased primarily driven by market performance, new account activity, and an acquisition of an independent financial advisor in January of 2023 which increased brokerage assets by $30 million.
The following table details Peoples’ insurance income for the years ended December 31:
5 unchanged sentences
2,760 2,530 2,317
−Removed: Other fees and charges 301 342 389
Insurance income $ 19,401 $ 18,016 $ 15,727
−Removed: Insurance income for 2023 increased compared to 2022, primarily driven by the increases in (i) property and casualty insurance commissions, (ii) performance-based commissions and (iii) life and health insurance commissions, which were slightly offset by the decrease in other fees and charges.
+Added: Insurance income for 2024 increased compared to 2023, primarily driven by higher commissions and market increases for premiums.
Peoples Insurance increased its clientele throughout 2024, which drove the increases in commissions.
−Removed: Insurance income for 2022 was relatively flat when compared to 2021, as the increases in property and casualty insurance commissions and life and health insurance commissions were substantially offset by the decrease in performance-based commissions.
+Added: Insurance income for 2023 increased compared to 2022, primarily due to increases in (i) property and casualty insurance commissions, (ii) performance-based commissions and (iii) life and health insurance commissions.
Deposit account service charges are based on the costs associated with services provided by Peoples.
7 unchanged sentences
Management periodically evaluates these fees to ensure they are reasonable based on operational costs and similar to fees charged in Peoples’ markets by competitors.
−Removed: Deposit account service charges in 2023 increased compared to 2022 due to the additional customers associated with the Limestone Merger, as well as organic growth.
−Removed: Deposit account service charges in 2022 increased compared to 2021 due to increased customer activity compared to the very low levels of early 2021, which had been impacted by fiscal stimulus payments and PPP loan proceeds provided to customers, along with changed customer spending habits due to the COVID-19 pandemic.
−Removed: Also contributing to the increases in 2022 when compared to 2021 were the additional customers associated with the Premier Merger, as 2022 had a full year of the benefit from the additional Premier accounts, whereas 2021 only had three and a half months of the benefit.
−Removed: Deposit account service charges were positively impacted during 2021 by the Premier Merger and associated additional accounts.
+Added: Deposit account service charges in 2024 increased compared to 2023 due to an increase in customer activity.
+Added: Deposit account service charges in 2023 increased compared to 2022 due to increased customers added in conjunction with the Limestone Merger, as well as organic growth.
The following table details the other items included within Peoples’ total non-interest income for the years ended December 31:
4 unchanged sentences
Other non-interest income 5,040 3,809 3,430
−Removed: Lease income is primarily comprised of (i) gains on the early termination of leases, net of any associated purchase accounting adjustments, (ii) month-to-month lease payments in excess of net investment in the lease, (iii) fees received for referrals, (iv) gains and losses recognized on the sales of residual assets, and (v) syndication income.
−Removed: The increase in lease income for 2023 when compared to 2022 was driven primarily by an increase in month-to-month lease income from Vantage.
−Removed: The 2022 increase in lease income when compared to 2021 was due to the Vantage acquisition.
−Removed: In 2021, Peoples acquired NSL which first introduced lease income as a component of non-interest income.
−Removed: Bank owned life insurance income (“BOLI”) for 2023 increased when compared to 2022 due to a $0.4 million death benefit related to the cash surrender value of the underlying policy in the fourth quarter of 2023, and additional income from policies acquired in the Limestone Merger.
−Removed: BOLI income for 2022 increased when compared to 2021 due to a $248,000 death benefit related to the cash surrender value of the underlying policy in the third quarter of 2022 and $30.0 million of additional investments in policies.
+Added: Lease income is primarily comprised of (i) gains on the early termination of leases, net of any associated purchase accounting adjustments, (ii) month-to-month lease payments in excess of net investment in the lease, (iii) fees received for referrals, (iv) gains and losses recognized on the sales of residual assets, (v) syndication income, and (vi) operating leases.
+Added: The increase in lease income for 2024 when compared to 2023 was driven primarily by an increase in operating lease income from Vantage.
+Added: The 2023 increase in lease income when compared to 2022 was due month-to-month lease income from Vantage.
+Added: Bank owned life insurance income (“BOLI”) for 2024 remained flat when compared to 2023.
+Added: BOLI income for 2023 increased when compared to 2022 due to a $0.4 million death benefit related to the cash surrender value of the underlying policy in the fourth
+Added: quarter of 2023, and additional income from policies acquired in the Limestone Merger.
Peoples purchased no additional BOLI policies during 2023 or 2024.
1 unchanged sentence
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.
−Removed: Mortgage banking income declined for 2023 when compared to 2022 and declined for 2022 when compared to 2021 due to lower volumes of new loan originations as a result of the rising market interest rate environment.
+Added: Mortgage banking income increased for 2024 when compared to 2023 primarily driven by higher production.
+Added: Mortgage banking income declined for 2023 when compared to 2022 due to lower volumes of new loan originations as a result of the rising market interest rate environment.
In 2024, Peoples sold approximately $24.1 million of loans to the secondary market with servicing retained and sold approximately $40.7 million in loans with servicing released, compared to approximately $2.7 million and $30.7 million, respectively, in 2023.
1 unchanged sentence
The volume of sales has a direct impact on the amount of mortgage banking income.
−Removed: For 2023, other non-interest income increased when compared to 2022 due primarily to increased operating lease income.
−Removed: Other non-interest income increased during 2022, primarily due to increased other operating income.
−Removed: Other non-interest income during 2021 was impacted by a decline in the fair value of equity securities during 2021.
+Added: For 2024, other non-interest income increased when compared to 2023 due primarily to increased swap fee income which is driven by customer demand.
+Added: Other non-interest income increased during 2023, compared to 2022, primarily due to swap fee income and other operating income.
Total Non-Interest Expense
12 unchanged sentences
Average during the period 1,491 1,411 1,245
−Removed: Base salaries and wages increased for 2023 compared to 2022, driven by the additional salaries associated with the Limestone Merger, including $5.8 million in acquisition-related salary and employee benefit expenses related to the Limestone Merger in 2023.
−Removed: Base salaries and wages increased in 2022 compared to 2021, driven by the additional salaries associated with the acquisition of Vantage, and the Premier Merger.
−Removed: Base salaries and wages in 2021 were impacted by the Premier Merger and the NSL acquisition.
−Removed: During 2021, Peoples incurred $3.8 million of one-time expenses associated with acquisitions.
+Added: Base salaries and wages increased for 2024 compared to 2023, driven by an additional four months of salary expense associated with employees added from the Limestone Merger, coupled with annual merit increases.
+Added: Base salaries and wages increased in 2023 compared to 2022, driven by the additional salaries associated with the Limestone Merger, including $5.8 million in acquisition-related salary and employee benefit expenses related to the Limestone Merger in 2023.
Base salaries and wages were impacted by merit increases, as well as movement towards a $15 per hour minimum wage throughout Peoples’ organization.
The $15 per hour minimum was phased in and fully implemented by January of 2023.
−Removed: The increase in sales-based and incentive compensation for 2023 compared to 2022 was primarily due to the overall company performance measures used in calculating incentive awards and $1.3 million in Vantage-related sales-based and incentive compensation.
−Removed: Sales-based and incentive compensation increased in 2022 compared to 2021, largely due to sales incentives earned by Vantage employees.
+Added: The decrease in sales-based and incentive compensation for 2024 compared to 2023 was primarily due to the overall company performance measures used in calculating incentive awards.
+Added: Sales-based and incentive compensation increased in 2023 compared to 2022, due primarily to the overall company performance measures used in calculating incentive awards and $1.3 million in Vantage-related sales-based and incentive compensation.
Peoples’ sales-based and incentive compensation plans are designed to grow core earnings while managing risk, while not encouraging unnecessary and excessive risk-taking that could threaten the value of Peoples.
The sales-based and incentive compensation plans are designed to reward employees for appropriate behaviors and include provisions addressing inappropriate practices with respect to Peoples and its customers, including clawbacks for executives.
−Removed: The increase in employee benefit costs for 2023 compared to 2022 was due to increased medical and 401(k) costs with the addition of the Limestone employees.
−Removed: Employee benefit costs in 2022 increased compared to 2021 due to higher medical and 401(k) costs with the addition of the Premier and Vantage employees.
−Removed: Employee stock-based compensation is generally recognized over the vesting period, which generally ranges from immediate vesting to vesting at the end of three years, and an adjustment is made at the vesting date to reverse expense for non-vested awards.
+Added: The increase in employee benefit costs for 2024 compared to 2023 was due to increased medical and 401(k) costs reflecting a full year of expenses in 2024 for the additional employees added in the Limestone Merger.
+Added: Employee benefit costs in 2023 increased compared to 2022 due to higher medical and 401(k) costs from additional employees added in the Limestone Merger.
+Added: Employee stock-based compensation is generally recognized over the vesting period, which generally ranges from immediate vesting to vesting at the end of three years, with an adjustment made at the vesting date to reverse expense for forfeited awards.
The majority of Peoples’ stock-based compensation is attributable to annual equity-based incentive awards to employees, which are awarded in the first quarter and based upon Peoples achieving certain performance goals during the prior year.
During the years presented in the table above, Peoples granted restricted common shares to officers and key employees with performance-based vesting periods and time-based vesting periods, generally with a three-year cliff vesting.
−Removed: Employee stock-based compensation for 2023 increased when compared to 2022 due to additional employees primarily as a result of the Limestone Merger, as well as a full year with Vantage employees.
−Removed: Employee stock-based compensation increased for 2022 compared to 2021 due to employees added in the acquisition of Vantage and the Premier Merger.
+Added: Employee stock-based compensation for 2024 increased when compared to 2023 due to additional employees primarily as a result of the full year impact from the Limestone Merger.
+Added: Employee stock-based compensation increased for 2023 compared to 2022 due to additional employees primarily as a result of the Limestone Merger, as well as a full year with Vantage employees.
Deferred personnel costs represent the portion of current period salaries and employee benefit costs considered to be direct loan origination costs.
1 unchanged sentence
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.
−Removed: Deferred personnel costs in 2023 decreased compared to 2022, primarily due to a decrease in business loan origination volume.
−Removed: Higher deferred personnel costs in 2022 compared to 2021 was primarily due to an increase in loan origination volume.
+Added: Deferred personnel costs in 2024 increased compared to 2023, primarily due to an increase in business loan origination volume.
+Added: Lower deferred personnel costs in 2023 compared to 2022 were primarily due to an decrease in loan origination volume.
Additional information regarding Peoples’ loan activity can be found later in this discussion under the caption “Loans” within “FINANCIAL CONDITION.”
−Removed: For 2023, payroll taxes and other employment costs increased compared to 2022, primarily due to the employees added from the Limestone Merger.
−Removed: Payroll taxes and other employee costs increased during 2022 compared to 2021, primarily due to recent mergers and acquisitions.
+Added: For 2024, payroll taxes and other employment costs increased compared to 2023, primarily due to the employees added from the Limestone Merger coupled with annual merit increases.
+Added: Payroll taxes and other employee costs increased during 2023 compared to 2022, primarily due to the employees added from the Limestone Merger.
Peoples’ net occupancy and equipment expense for the years ended December 31 was comprised of the following:
5 unchanged sentences
Net occupancy and equipment expense $ 24,151 $ 21,368 $ 19,516
−Removed: For 2023, net occupancy and equipment expense increased when compared to 2022 due to the additional locations and equipment from the Limestone Merger.
−Removed: Net occupancy and equipment expense grew during 2022 when compared to 2021 due to the additional locations and equipment from recent mergers and acquisitions.
+Added: For 2024, net occupancy and equipment expense increased when compared to 2023 due to the full year impact of the Limestone Merger and a prior period one-time benefit to rent expense in 2023.
+Added: Net occupancy and equipment expense grew during 2023 when compared to 2022 due to the additional locations and equipment added in the Limestone Merger.
The following table details the other items included within Peoples’ total non-interest expense for the years ended December 31:
4 unchanged sentences
E-banking expense 7,548 7,150 9,231
−Removed: Marketing expense 5,017 3,728 3,658
FDIC insurance expense 4,929 4,785 3,702
−Removed: Franchise tax expense 3,540 3,487 3,357
Other loan expenses 4,147 2,859 2,735
+Added: Marketing expense 3,914 5,017 3,728
+Added: Franchise tax expense 3,222 3,540 3,487
Communication expense 3,145 2,834 2,484
+Added: Operating lease expense 3,539 1,687 —
+Added: Travel and entertainment expense 2,656 2,401 1,400
Other non-interest expense $ 18,033 $ 20,945 $ 14,076
Data processing and software expense includes software support, maintenance and depreciation expense.
−Removed: Data processing and software expense for 2023 increased relative to 2022, driven by (i) software upgrades, (ii) implementation of new systems, (iii) growth from the Limestone Merger, and (iv) $1.9 million in acquisition-related expenses related to the Limestone Merger.
−Removed: During 2022, data processing and software expense grew when compared to 2021 due to software upgrades and implementation of new systems, coupled with the increased size of Peoples’ organization.
−Removed: Professional fees increased for 2023 when compared to 2022, primarily driven by a $3.7 million increase in acquisition-related expenses, due to increased expenses related to the Limestone Merger in 2023.
−Removed: Professional fees during 2022 decreased when compared 2021, primarily driven by acquisition-related expenses related to the Premier Merger which had been realized in 2021.
−Removed: Amortization of other intangible assets increased for 2023 when compared to 2022 due to the increased intangible assets recognized as a result of the Limestone Merger.
−Removed: During 2022, amortization of other intangible assets increased when compared to 2021 due to the increased intangible assets recognized as a result of the recent mergers and acquisitions.
+Added: Data processing and software expense for 2024 increased relative to 2023, driven by software upgrades and implementation of new systems, coupled with the increased size of Peoples’ organization as a result of the Limestone Merger.
+Added: During 2023, data processing and software expense grew when compared to 2022 was driven by (i) software upgrades, (ii) implementation of new systems, (iii) growth from the Limestone Merger, and (iv) $1.9 million in acquisition-related expenses related to the Limestone Merger.
+Added: Professional fees decreased for 2024 when compared to 2023, primarily driven by a $6.0 million decrease in acquisition-related expenses, due to expenses related to the Limestone Merger in 2023.
+Added: Professional fees during 2023 increased when compared 2022, primarily driven by a $3.7 million increase in acquisition-related expenses, due to increased expenses related to the Limestone Merger in 2023.
+Added: Amortization of other intangible assets remained relatively flat for 2024 when compared to 2023.
+Added: During 2023, amortization of other intangible assets increased when compared to 2022 due to the increased intangible assets recognized as a result of the Limestone Merger.
Peoples’ e-banking expense is comprised of costs associated with debit and ATM cards, as well as Internet and mobile banking costs.
+Added: E-banking expense increased for 2024 when compared to 2023 due to increased processing fees.
E-banking expense decreased for 2023 when compared to 2022 due to decreased costs for Peoples’ online banking platform.
−Removed: E-banking expense increased for 2022 when compared to 2021 due to both core growth, and growth through mergers and acquisitions.
−Removed: Marketing expense, which includes advertising, donations, marketing campaigns, and other public relations costs, for 2023 increased when compared to 2022, primarily driven by increased marketing related to the Limestone Merger, an increase in donations, and a full year of expenses from Vantage.
−Removed: Marketing expense was relatively flat for 2022, compared to 2021.
−Removed: FDIC insurance premiums for 2023 increased when compared to 2022 due to organic and acquisitive growth, in addition to an increase in rates assessed by the FDIC.
−Removed: FDIC insurance expense increased during 2022 compared to 2021 due to organic and acquisitive growth.
+Added: Marketing expense, which includes advertising, donations, marketing campaigns, and other public relations costs, for 2024 decreased when compared to 2023, primarily driven by decreased advertising expense.
+Added: Marketing expense increased for 2023 compared to 2022, which was driven by increased marketing related to the Limestone Merger, an increase in donations, and a full year of expenses from Vantage.
+Added: FDIC insurance premiums for 2024 increased when compared to 2023 due to organic growth.
+Added: FDIC insurance expense increased during 2023 compared to 2022 due to organic and acquisitive growth, in addition to an increase in rates assessed by the FDIC.
The FDIC quarterly assessment rate is applied to average total assets less average tangible equity, and is based on the leverage ratio, net income before taxes, nonperforming loans as a percent of total assets, OREO, loan mix and asset growth.
1 unchanged sentence
Peoples is subject to state franchise taxes, which are based largely on Peoples’ equity at year-end, in the states where Peoples has a physical presence.
−Removed: Franchise tax expense for 2023 when compared to 2022 was relatively flat.
−Removed: Franchise tax expense increased during 2022 versus 2021, driven by recent growth through acquisitions and organic means.
Franchise tax expense also includes the Ohio Financial Institution Tax (“FIT”), which is a business privilege tax that is imposed on financial institutions organized for profit and doing business in Ohio.
+Added: Franchise tax expense decreased for 2024 when compared to 2023 primarily driven by the Ohio FIT, which decreased due to lower apportionment in the state.
The Ohio FIT is based on the total equity capital in proportion to the taxpayer’s gross receipts in Ohio.
−Removed: Other loan expenses during 2023 increased when compared to 2022 primarily due to Limestone-related expenses and increases in business loan expenses and credit bureau expenses.
−Removed: During 2022, other loan expenses increased primarily due to higher indirect lending volume and increased collection expense driven by the Premier Merger.
+Added: Franchise tax expense was relatively flat in 2023 compared to 2022.
+Added: Other loan expenses during 2024 increased when compared to 2023 primarily due to increases in collection and underwriting costs.
+Added: Other loans expenses increased in 2023 compared to 2022, primarily due to Limestone-related expenses and increases in business loan expenses and credit bureau expenses.
Communications expense increased during 2024 when compared to 2023 and increased during 2023 when compared to 2022, in each case due to upgraded networking to certain branches (including new branches acquired in acquisitions and mergers) and increased costs compared to the prior period among certain vendors that provide communication services.
−Removed: Other non-interest expense for 2023 increased when compared to 2022 primarily due to $2.8 million in additional acquisition-related expenses related to the Limestone Merger, a $2.4 million settlement charge in relation to the termination of the pension plan and $1.7 million in operating lease expense.
−Removed: Other non-interest expense decreased for 2022 when compared to 2021, which was primarily due to less acquisition-related expenses.
+Added: Other non-interest expense for 2024 decreased when compared to 2023 due to higher acquisition costs and pension expense in the prior year of $2.5 million and $2.1 million, respectively, both of which were partially offset by an increase in miscellaneous expenses of $1.9 million, which was primarily attributable to one-time corporate expenses.
+Added: Other non-interest expense increased for 2023 when compared to 2022, primarily due to $2.8 million in additional acquisition-related expenses related to the Limestone Merger and a $2.4 million settlement charge in relation to the termination of the pension plan.
Income Tax Expense
3 unchanged sentences
For the full year of 2024, income tax expense totaled $32.3 million, compared to $31.8 million in 2023, and $27.3 million in 2022, and the effective tax rate for 2024 was 21.6%, compared to 21.9% for 2023, and 21.3% for 2022.
−Removed: The 2023 increase in income tax expense when compared to 2022 was driven by higher pre-tax income.
−Removed: Income tax expense increased during 2022 when compared to 2021, which was driven by higher pre-tax income and a higher effective tax rate primarily due to apportionment in additional states due to recent acquisitions.
−Removed: Income tax expense for 2021 was impacted by an income tax benefit related to an adjustment from the prior period of $1.1 million.
−Removed: Peoples also recorded a tax benefit of $128,000 in 2023, a tax benefit of $5,000 in 2022, and a tax expense of $74,000 in 2021 related to common share awards that settled or vested during the year, with the substantial majority recorded in the first quarter of each year.
+Added: Income tax was positively impacted by a $1.1 million one-time benefit recognized in 2024 related to a prior year amended return.
+Added: Income tax expense increased during 2023 when compared to 2022, which was driven by higher pre-tax income.
+Added: Peoples also recorded a tax benefit of $48,000 in 2024, $128,000 in 2023, and $5,000 in 2022 related to common share awards that settled or vested during the year, with the substantial majority recorded in the first quarter of each year.
Pre-Provision Net Revenue (non-US GAAP)
3 unchanged sentences
As a result, PPNR represents the earnings capacity that can be either retained in order to build capital or used to absorb unexpected losses and preserve existing capital.
−Removed: This ratio represents a non-US GAAP financial measure since it excludes the provision for credit losses and all gains and losses included in earnings.
+Added: PPNR represents a non-US GAAP financial measure since it excludes the provision for credit losses and all gains and losses included in earnings.
The following table provides a reconciliation of this non-US GAAP financial measure to the amounts of income before income taxes reported in Peoples’ Consolidated Financial Statements for the periods presented:
8 unchanged sentences
recovery of credit losses — — 3,510
−Removed: net gain on OREO — — 56
−Removed: net gain on other transactions — — 897
Pre-provision net revenue $ 177,977 $ 166,837 $ 125,807
−Removed: Total average assets $ 8,298,777 $ 7,094,707 $ 5,672,594
−Removed: Pre-provision net revenue to total average assets 2.01 % 1.77 % 1.02 %
−Removed: Weighted-average common shares outstanding - diluted 32,760,808 27,999,602 21,959,883
−Removed: Pre-provision net revenue per common share - diluted $ 5.06 $ 4.48 $ 2.63
−Removed: PPNR grew in 2023 when compared to 2022 mostly due to (i) the impact of the Limestone Merger in improving net interest income, (ii) increases in market interest rates, and (iii) higher non-interest income.
−Removed: During 2022, PPNR grew when compared to 2021 mostly due to (i) the impact of the Premier Merger and the Vantage and NSL acquisitions in improving net interest income, (ii) the increases in market interest rates, (iii) higher non-interest income, and (iv) lower acquisition-related expenses.
+Added: PPNR increased in 2024 when compared to 2023 mostly due to increased net interest income and increased non-interest income driven by higher rates and the additional four months of income from the Limestone Merger.
+Added: During 2023, PPNR grew when compared to 2022 mostly due to (i) the impact of the Limestone Merger in improving net interest income, (ii) increases in market interest rates, and (iii) higher non-interest income.
Core Non-Interest Expense (non-US GAAP)
Core non-interest expense is a financial measure used to evaluate Peoples’ recurring expense stream.
−Removed: This measure is a non-US GAAP financial measure since it excludes the impact of all COVID-19-related expenses, severance expenses, pension settlement charges, acquisition-related expenses, a Peoples Bank Foundation, Inc.
−Removed: contribution, and contract negotiation non-recurring expenses.
+Added: This measure is a non-US GAAP financial measure since it excludes the impact of all COVID-19-related expenses, pension settlement charges, and acquisition-related expenses.
The following table provides a reconciliation of this non-US GAAP financial measure to the amounts of total non-interest expense reported in Peoples’ Consolidated Financial Statements for the years presented:
3 unchanged sentences
COVID-19-related expenses — — 134
−Removed: severance expenses — — 79
pension settlement charges — 2,424 185
acquisition-related expenses 169 16,970 3,016
−Removed: Peoples Bank Foundation, Inc.
−Removed: contribution — — 500
−Removed: contract negotiation expenses — — 1,248
COVID-19 Employee Retention Credit — 548 —
28 unchanged sentences
(a) Based on 21% statutory federal corporate income tax rate.
+Added: The efficiency ratio for 2024 improved when compared to 2023 due to increased revenue.
+Added: The increase in the efficiency ratio, adjusted for non-core items for 2024 when compared to 2023 was due to higher non-interest expense.
The efficiency ratio and the efficiency ratio adjusted for non-core items for 2023 improved when compared to 2022, due to higher net interest income driven by the Limestone Merger, increases in market interest rates, and higher non-interest income.
−Removed: The efficiency ratio and the efficiency ratio adjusted for non-core items for 2022 improved when compared to 2021, due to higher net interest income driven by increases in market interest rates.
Managing expenses has been a major focus over recent years;
however, during this time Peoples has continued to make meaningful investments in its infrastructure and systems.
−Removed: Peoples was positively impacted in 2023 and 2022 by the rising market interest rate environment and the related increase to net interest income;
−Removed: whereas, 2021 net interest income was negatively impacted by a lower market interest rate environment.
+Added: Peoples was primarily impacted in 2024 by the competition for deposits impacting funding costs;
+Added: whereas, 2023 and 2022 net interest income was positively impacted by rising market interest rate environment.
Return on Average Assets Adjusted for Non-Core Items (non-US GAAP)
In addition to return on average assets, management uses return on average assets adjusted for non-core items to monitor performance.
−Removed: The return on average assets ratio adjusted for non-core items represents a non-US GAAP financial measure since it excludes the after-tax impact of all gains and losses, acquisition-related expenses, pension settlement charges, severance expenses, COVID-19-related expenses, Peoples Bank Foundation, Inc.
−Removed: contributions and contract negotiation non-recurring expenses included in net income.
+Added: The return on average assets ratio adjusted for non-core items represents a non-US GAAP financial measure since it excludes the after-tax impact of all gains and losses, acquisition-related expenses, and pension settlement charges included in net income.
The following table provides a reconciliation of this non-US GAAP financial measure to the amounts of net income reported in Peoples’ Consolidated Financial Statements for the years presented:
5 unchanged sentences
net loss on asset disposals and other transactions
+Added: 3,310 2,837 616
tax effect of net loss on asset disposals and other transactions (a)
−Removed: net gain on asset disposals and other transactions (a) — — 493
−Removed: tax effect of net gain on asset disposals and other transactions (a) — — 104
acquisition-related expenses
1 unchanged sentence
tax effect of acquisition-related expenses (a)
−Removed: 3,564 633 4,499
−Removed: severance expenses — — 79
−Removed: tax effect of severance expenses (a) — — 17
pension settlement charges
−Removed: 2,424 185 143
tax effect of pension settlement charges (a)
1 unchanged sentence
tax effect of COVID-19-related expenses (a) — — 28
−Removed: Peoples Bank Foundation, Inc.
−Removed: contribution — — 500
−Removed: tax effect of Peoples Bank Foundation, Inc.
−Removed: contribution — — 105
−Removed: contract negotiation expenses — — 1,248
−Removed: tax effect of contract negotiation expenses — — 262
Net income adjusted for non-core items (after tax) $ 120,283 $ 133,848 $ 104,462
11 unchanged sentences
(a) Based on a 21% statutory federal corporate income tax rate.
−Removed: The decrease in the return on average assets for 2023 compared to 2022 was attributable to a greater impact from non-core items, primarily due to (i) an increase in net acquisition-related expenses as a result of the Limestone Merger, (ii) higher net losses on
−Removed: investment securities and asset disposals and other transactions, and (iii) pension settlement charges of $2.4 million in relation to the termination of the pension plan.
−Removed: Return on average assets adjusted for non-core items for 2023 increased when compared to 2022 due to higher net interest income and non-interest income, which were driven by the Limestone Merger, and increases in market interest rates.
−Removed: The increase in the return on average assets for 2022 compared to 2021 was attributable to higher net interest income and non-interest income, which were driven by the recent acquisitions and mergers and increases in market interest rates.
+Added: The decrease in the return on average assets for 2024 compared to 2023 was primarily driven by the assets acquired in the Limestone Merger.
+Added: The decrease in return on average assets adjusted for non-core items for 2024 compared to 2023 was primarily driven by higher non-interest expense, and the assets acquired in the Limestone Merger.
+Added: The decrease in the return on average assets for 2023 compared to 2022 was attributable to a greater impact from non-core items, primarily due to (i) an increase in net acquisition-related expenses as a result of the Limestone Merger, (ii) higher net losses on investment securities and asset disposals and other transactions, and (iii) pension settlement charges of $2.4 million in relation to the termination of the pension plan.
Return on Average Tangible Equity (non-US GAAP)
22 unchanged sentences
(a) Based on a 21% statutory federal corporate income tax rate.
−Removed: The return on total average stockholders’ equity and average tangible equity ratios were lower in 2023 relative to 2022, due to (i) the issuance of 6.8 million common shares as consideration in the Limestone Merger, (ii) an increase in acquisition-related expenses, and (iii) an increase in the provision for credit losses due to the initial provision for the non-PCD loans acquired from Limestone, partially offset by an increase in total net interest income driven by the recent increases in market interest rates and additional net interest income from Limestone following the Limestone Merger.
+Added: The return on total average stockholders’ equity and average tangible equity ratios decreased in 2024 when compared to 2023, due to higher average stockholders’ equity driven by the full year impact of the Limestone Merger.
+Added: Return on total average stockholders’ equity and average tangible equity ratios were lower in 2023 relative to 2022 due to (i) the issuance of 6.8 million common shares as consideration in the Limestone Merger, (ii) an increase in acquisition-related expenses, and (iii) an increase in the provision for credit losses due to the initial provision for the non-purchase credit deteriorated (“PCD”) loans acquired from Limestone, partially offset by an increase in total net interest income driven by the recent increases in market interest rates and additional net interest income resulting from the Limestone Merger.
At the same time, average tangible equity for 2023 was negatively impacted by the Limestone Merger, for which Peoples recorded additional goodwill and other intangible assets.
−Removed: Return on total average stockholders’ equity and average tangible equity ratios were higher in 2022 relative to 2021, due to higher total net interest income driven by the recent increases in market interest rates and loans and leases added in the Premier Merger and the acquisitions of Vantage and NSL, coupled with higher non-interest income.
−Removed: At the same time, average tangible equity for 2022 was negatively impacted by the Vantage acquisition, for which People did not issue any equity, and recorded additional goodwill and other intangible assets.
FINANCIAL CONDITION
3 unchanged sentences
At December 31, 2024, excess cash reserves at the FRB were $104.7 million, compared to $309.8 million at December 31, 2023.
−Removed: 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.
+Added: The amount of excess cash reserves maintained is dependent upon Peoples’ daily liquidity position, which is driven primarily by changes in deposits, loan balances and unpledged securities.
+Added: In 2024, Peoples’ total cash and cash equivalents decreased $209.1 million, due to cash used in investing activities of $344.3 million and financing activities of $7.9 million, which were partially offset by cash provided by operating activities of $143.2 million.
+Added: Peoples’ investing activities reflected a net increase of $199.2 million in loans held for investment and $584.8 million in purchases of available-for-sale investment securities and held-to-maturity investment securities, which were partially offset by $446.6 million in net proceeds from sales, principal payments, calls and prepayments on available-for-sale and held-to-maturity investment securities.
+Added: Financing activities included a net increase of $437.7 million in deposits, a decrease of $457.0 million in short-term borrowings, a net increase of $20.6 million in long-term borrowings, as well as $55.8 million of cash dividends paid.
In 2023, Peoples’ total cash and cash equivalents increased $272.7 million, due to cash provided by financing activities of $262.0 million and cash provided by operating activities of $143.6 million, partially offset by cash used in investing activities of $132.9 million.
Peoples’ investing activities reflected a net increase of $356.1 million in loans held for investment and $282.8 million in purchases of available-for-sale investment securities and held-to-maturity investment securities, which were more than offset by $434.1 million in net proceeds from sales, principal payments, calls and prepayments on available-for-sale and held-to-maturity investment securities.
−Removed: Financing activities included a $201.4 million net increase in deposits, an increase of $41.0 million in short-term borrowings, a net increase of $74.9 million in long-term borrowings, as well as $51.8 million of cash dividends paid.
−Removed: In 2022, Peoples’ total cash and cash equivalents decreased $261.7 million, due to cash used in investing activities of $414.2 million, partially offset by cash provided by operating activities and financing activities of $119.8 million and $32.7 million, respectively.
−Removed: Peoples’ investing activities reflected a net decrease of $58.1 million in loans held for investment and $452.9 million in purchases of available-for-sale investment securities and held-to-maturity investment securities, which were primarily offset by $237.8 million in net proceeds from sales, principal payments, calls and prepayments on available-for-sale and held-to-maturity investment securities.
−Removed: Financing activities included a $145.1 million net decrease in deposits and an increase of $328.6 million in short-term borrowings, as well as $42.4 million of cash dividends paid.
+Added: Financing activities included a net increase of $201.4 million in deposits, an increase of $41.0 million in short-term borrowings, a net increase of $74.9 million in long-term borrowings, as well as $51.8 million of cash dividends paid.
Further information regarding the management of Peoples’ liquidity position can be found later in this discussion under “Interest Rate Sensitivity and Liquidity.”
26 unchanged sentences
At December 31, 2024, Peoples’ investment securities represented approximately 20.7% of total assets, compared to 19.6% at December 31, 2023.
−Removed: For 2023, total investment securities increased compared to the prior year, largely due to purchases of held-to-maturity securities, partially offset by available-for-sale securities sold, both of which were part of portfolio restructurings throughout 2023.
+Added: For 2024, total investment securities increased compared to the prior year, largely due to purchases of higher yielding, longer duration securities designated as held-to-maturity.
+Added: During 2023, total investment securities increased compared to the prior year, largely due to purchases of held-to-maturity securities, partially offset by available-for-sale securities sold, both of which were part of portfolio restructurings throughout 2023.
During the first quarter of 2023, Peoples executed the sales of $96.7 million of its lower yielding available-for-sale investment securities for an after-tax loss of $1.6 million.
2 unchanged sentences
Proceeds from the sales were used to purchase higher yielding agency investment securities.
−Removed: During 2022, total investment securities increased compared to the prior year, largely due to investments made in held-to-maturity securities, in an effort to deploy cash, improve investment yields and reduce risk, partially offset by the reduction in market value of
−Removed: available-for-sale securities driven by the increases in market interest rates during 2022.
−Removed: During 2021, Peoples acquired, in the Premier Merger, investment securities totaling $552.0 million and subsequently sold $395.2 million of available-for-sale securities.
−Removed: During 2021, Peoples acquired from Premier, and made investments into, tax-exempt securities, which are included in obligations of state and political subdivisions.
−Removed: The investments into these securities were made in an effort to reduce exposure to amortizing investment securities, while also maintaining an appropriate level of risk-adjusted yield.
Peoples designates certain securities as “held-to-maturity” at the time of their purchase if management determines Peoples would have the intent and ability to hold the purchased securities until maturity.
22 unchanged sentences
Commercial and industrial 184,868 246,327 57,456
−Removed: Premium finance — — 15
Leases 24,524 56,843 118,693
7 unchanged sentences
Average loans, net of average allowance for credit losses $ 6,173,579 $ 5,533,062 $ 4,519,004
−Removed: (Dollars in thousands) 2023 2022 2021
Percent of loans to total loans:
11 unchanged sentences
Deposit account overdrafts (b) NM NM NM
+Added: (Dollars in thousands) 2024 2023 2022
Total percentage 100.0 % 100.0 % 100.0 %
2 unchanged sentences
Loans that were acquired and subsequently re-underwritten are reported as originated upon execution of such credit actions (for example, renewals, and increase in lines of credit).
−Removed: (b) NM=not meaningful.
+Added: (b) NM represents “not meaningful.”
+Added: As of December 31, 2024, total loans increased $198.8 million, compared to at December 31, 2023, due to organic growth in our commercial and industrial and premium finance portfolios which increased by $162.7 million and $66.3 million, respectively, and were partially offset by a decrease in commercial real estate loans of $40.9 million.
As of December 31, 2023, total loans increased $1.5 billion, compared to at December 31, 2022, primarily due to the Limestone Merger.
Excluding the loans acquired in the Limestone Merger, the period-end loan and lease balance increased $472.2 million, or 10%, driven by increases of $203.6 million in other commercial real estate loans, $78.2 million in commercial and industrial loans, $68.9 million in leases, $44.0 million in premium finance loans, $37.9 million in construction loans, and $37.0 million in indirect consumer loans, respectively.
−Removed: As of December 31, 2022, total loans increased 5%, compared to at December 31, 2021.
−Removed: The increase in 2022 total loan and lease balances was primarily driven by $89.4 million in leases acquired from Vantage remaining at December 31, 2022 and increases of (i) $98.9 million in indirect consumer loans, (ii) $36.7 million in construction loans and (iii) $23.1 million in premium finance loans, partially offset by reductions of $126.6 million in other commercial real estate loans and $48.4 million in residential real estate loans.
The following table details the maturities of Peoples’ loan portfolio at December 31, 2024:
38 unchanged sentences
Land development 36,214 15,458 51,672 7.6 %
+Added: Residential property 30,573 19,693 50,266 7.4 %
Land only 7,881 26,626 34,507 5.1 %
−Removed: Retail 23,643 5,012 28,655 4.1 %
Lodging and lodging related 10,313 13,916 24,229 3.6 %
−Removed: Industrial 10,108 7,002 17,110 2.5 %
+Added: Assisted living facilities and nursing homes 6,567 16,972 23,539 3.5 %
+Added: Warehouse facilities 331 16,315 16,646 2.5 %
Student housing 14,288 712 15,000 2.2 %
31 unchanged sentences
Total healthcare facilities 55,350 710 56,060 2.5 %
−Removed: Education services:
−Removed: Owner occupied 16,519 — 16,519 0.7 %
−Removed: Non-owner occupied 29,983 4,000 33,983 1.5 %
−Removed: Total education services 46,502 4,000 50,502 2.2 %
Mixed commercial use facilities:
8 unchanged sentences
In all other states, the aggregate outstanding balances of commercial loans in each state were less than 4% of total loans at both December 31, 2024 and December 31, 2023.
−Removed: Additional information regarding Peoples’ loan portfolio can be found in “Note 4 Loans and Leases.”
+Added: Additional information regarding Peoples’ loan portfolio can be found in “Note 4 Loans and Leases, and Allowance for Credit Losses.”
Allowance for Credit Losses
15 unchanged sentences
As a percent of total loans 1.00 % 1.01 % 1.13 %
−Removed: The increase in the allowance balance at December 31, 2023 when compared to at December 31, 2022 was driven by (i) the additional allowance related to the loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of the reserves on individually analyzed loans and the use of updated loss drivers.
−Removed: The decline in the allowance balance at December 31, 2022 when compared to at December 31, 2021 was driven by decreases in the allowances for individually analyzed loans, as well as changes in qualitative factors period-over-period and the use of updated prepayment speeds.
−Removed: Those decreases were partially offset by loan growth and deterioration in the economic forecast.
−Removed: Peoples recorded $0.8 million of provision for credit losses to establish the allowance for credit losses for non-PCD leases acquired from Vantage.
−Removed: The allowance for credit losses as a percent of total loans at December 31, 2022 decreased compared to at December 31, 2021, which was mostly due to the composition of Peoples’ loan and lease portfolio as well as the aforementioned reduction in the allowance for credit losses.
−Removed: Additional information regarding Peoples’ allowance for credit losses can be found in “Note 1 Summary of Significant Accounting Policies” and “Note 4 Loans and Leases.”
+Added: The increase in the allowance balance at December 31, 2024 when compared to at December 31, 2023 was driven by an increase in reserves for individually analyzed loans and leases, as well as loan growth.
+Added: The increase in the allowance balance at December 31, 2023 when compared to at December 31, 2022 was driven by (i) the additional allowance related to the loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers.
+Added: Additional information regarding Peoples’ allowance for credit losses can be found in “Note 1 Summary of Significant Accounting Policies” and “Note 4 Loans and Leases, and Allowance for Credit Losses.”
The following table summarizes the changes in the allowance for credit losses for the years ended December 31:
55 unchanged sentences
(a) Amount does not include the provision for unfunded commitment liability.
−Removed: Net charge-offs as a percent of average total loans for 2023 decreased to 0.15% compared to 0.16% at 2022.
+Added: Net charge-offs as a percent of average total loans for 2024 increased to 0.37% compared to 0.15% at 2023.
+Added: The increase over all periods presented was due to an increase in charge-offs on small-ticket leases that occurred during the second half of 2024.
+Added: During 2023, net charge-offs as a percent of average total loans decreased to 0.15%, compared to 0.16% for 2022.
The decrease was due to (i) an increase in average loan balances, primarily driven by the loans acquired in the Limestone Merger, (ii) decreases in net charge-offs of residential real estate loan balances and commercial and industrial loan balances, and (iii) net recoveries in 2023 compared to net charge-offs in 2022 of other commercial real estate loan balances, mostly offset by increases in net charge-offs related to total consumer loan balances and lease balances.
−Removed: During 2022, net charge-offs as a percent of average total loans increased to 0.16%, compared to 0.13% for 2021.
−Removed: The increase was due to increases in net charge-offs related to (i) lease balances, (ii) total consumer loan balances, and (iii) deposit account overdraft balances.
The following table details Peoples’ nonperforming assets at December 31:
1 unchanged sentence
Loans 90+ days past due and accruing:
−Removed: Construction $ — $ — $ 90
Commercial real estate, other 227 78 167
40 unchanged sentences
Nonperforming assets include nonperforming loans and OREO.
−Removed: Peoples’ NPAs decreased to 0.43% of total assets at December 31, 2023, compared to 0.63% of total assets at December 31, 2022.
−Removed: Loans 90+ days past due and accruing increased compared to at December 31, 2022, primarily due to the loans acquired in the Limestone Merger and an increase in leases and premium finance loans 90+ days past due and accruing.
−Removed: During 2023, both criticized and classified loans increased when compared to 2022, primarily due to criticized and classified loans acquired in the Limestone Merger.
+Added: Peoples’ NPAs increased to 0.53% of total assets at December 31, 2024, compared to 0.43% of total assets at December 31, 2023.
+Added: This was driven by an increase in nonaccrual balances for commercial real estate and commercial and industrial loans, partially offset by a decrease in commercial OREO.
+Added: Loans 90+ days past due and accruing at December 31, 2024 increased compared to at December 31, 2023, driven by higher administrative delinquencies on premium finance loans.
+Added: Past due premium finance loans carry low credit risk, due to the ability to cancel premiums and recover the majority of the receivable from the insurer.
+Added: During 2024, both criticized and classified loans increased when compared to 2023, primarily due to loan downgrades.
Nonperforming assets decreased to 0.43% of total assets at December 31, 2023 compared to 0.63% of total assets at December 31, 2022.
−Removed: Loans 90+ days past due and accruing increased compared to at December 31, 2021, mostly due to the leases acquired in the
−Removed: Vantage acquisition.
−Removed: During 2022, both criticized and classified loans declined when compared to 2021.
−Removed: The decrease at December 31, 2022 in the amount of criticized loans when compared to at December 31, 2021 was largely due to a reduction in the criticized loans acquired in the Premier Merger.
−Removed: The decrease in classified loans when compared to December 31, 2021 was largely attributable to pay-offs and upgrades of classified loans acquired in the Premier Merger.
−Removed: The majority of Peoples’ nonaccrual commercial real estate loans consists primarily of owner occupied commercial properties.
+Added: Loans 90+ days past due and accruing at December 31, 2023 increased compared to at December 31, 2022, primarily due to the
+Added: loans acquired in the Limestone Merger and an increase in leases and premium finance loans 90+ days past due and accruing.
+Added: During 2023, both criticized and classified loans increased when compared to 2022, primarily due to criticized and classified loans acquired in the Limestone Merger.
+Added: The majority of Peoples’ nonaccrual commercial real estate loans consists of owner occupied commercial properties.
In general, management believes repayment of these loans is dependent on the sale of the underlying collateral.
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Interest income on loans classified as nonaccrual and renegotiated at each year-end that would have been recorded under the original terms of the loans was $1.9 million for 2024, $0.8 million for 2023 and $1.7 million for 2022.
−Removed: No portion of these amounts was recorded during 2023, 2022 or 2021.
+Added: No portion of these amounts were recorded during 2024, 2023 or 2022.
Overall, management believes the allowance for credit losses was appropriate at December 31, 2024, based on all significant information currently available.
Still, there can be no assurance that the allowance for credit losses will be adequate to cover future losses in Peoples’ loan portfolio.
−Removed: Additional information regarding Peoples’ allowance for credit losses can be found in “Note 4 Loans and Leases.”
+Added: Additional information regarding Peoples’ allowance for credit losses can be found in “Note 4 Loans and Leases, and Allowance for Credit Losses.”
The following table details Peoples’ deposit balances at December 31:
11 unchanged sentences
(a) The sum of amounts presented are considered total demand deposits.
+Added: The increase in total deposits between December 31, 2024 and December 31, 2023 was primarily driven by special promotional rates over the past year on retail CDs.
+Added: Total demand deposits comprised 34% and 38% of total deposits at December 31, 2024 and at December 31, 2023, respectively.
The increase in total deposits between December 31, 2023 and December 31, 2022 was primarily due to deposits acquired in the Limestone Merger.
−Removed: Excluding Limestone deposit balances, total deposits at December 31, 2023 increased $615.3 million, or 11%, compared to at December 31, 2022, primarily due to increases of $785.6 million in retail certificates of deposit (“CDs”) and $449.8 million in brokered deposits, partially offset by decreases of $226.8 million, $223.3 million, and $193.7 million, in non-interest bearing deposits, savings accounts, and interest-bearing demand deposit accounts, respectively.
+Added: Excluding Limestone deposit balances, total deposits at December 31, 2023 increased $565.9 million, or 10%, compared to at December 31, 2022, primarily due to increases of $785.6 million in retail CDs and $351.1 million in brokered deposits, partially offset by decreases of $226.8 million, $223.3 million, and $193.7 million, in non-interest bearing deposits, savings accounts, and interest-bearing demand deposit accounts, respectively.
Total demand deposits comprised 38% and 48% of total deposits at December 31, 2023 and December 31, 2022, respectively.
−Removed: The decrease in total deposits between December 31, 2022 and December 31, 2021 was due to decreases in both interest-bearing and non-interest-bearing deposits.
−Removed: The variance was driven by decreases of (i) $113.5 million in retail CDs, (ii) $52.0 million in total non-interest-bearing deposit accounts and (iii) $34.1 million in money market deposit accounts, partially offset by increases of $31.8 million in savings account deposits and $20.8 million in brokered deposits.
−Removed: Total demand deposits comprised 48% of total deposits at each of December 31, 2022 and December 31, 2021.
As part of its funding strategy, Peoples hedges 90-day brokered deposits with interest rate swaps.
The swaps pay a fixed rate of interest while receiving three-month SOFR, which offsets the rate on the brokered deposits.
−Removed: As of December 31, 2023, Peoples had eleven effective interest rate swaps, with an aggregate notional value of $105.0 million, which were designated as cash flow hedges of brokered deposits, and are expected to be extended every 90 days through the maturity dates of the swaps.
+Added: As of December 31, 2024, Peoples had eight effective interest rate swaps, with an aggregate notional value of $75.0 million, which were designated as cash flow hedges of brokered deposits, and are expected to be extended every 90 days through the maturity dates of the swaps.
Peoples continually evaluates the overall balance sheet position given the interest rate environment.
1 unchanged sentence
These funds are subject to periodic fluctuations based on the timing of tax collections and subsequent expenditures or disbursements.
−Removed: Peoples normally experiences an increase in balances annually during the first and third quarters, corresponding with tax collections, with declines normally in the second and fourth quarters of each year, corresponding with expenditures by the governmental entities.
−Removed: Peoples continues to emphasize growth of low-cost deposits that do not require Peoples to pledge assets as collateral, which is required in the case of governmental deposit accounts.
+Added: Peoples normally experiences an increase in balances annually during the first and third quarters,
+Added: corresponding with tax collections, with declines normally in the second and fourth quarters of each year, corresponding with expenditures by the governmental entities.
+Added: Peoples continues to emphasize growth of low-cost deposits, while continuing to migrate these customers to ICS network deposits that do not require Peoples to pledge assets as collateral.
The maturities of retail CDs with total balances of $100,000 or more at December 31 were as follows:
11 unchanged sentences
FHLB overnight borrowings $ 175,000 $ 369,000 $ 400,000
−Removed: FHLB 90-day advances — — 40,000
−Removed: Current portion of long-term FHLB advances — — 15,000
Repurchase agreements 18,367 99,121 100,138
Bank Term Funding Program (“BTFP”) — 133,000 —
+Added: Other short-term borrowings 107 49,376 —
Total short-term borrowings 193,474 650,497 500,138
6 unchanged sentences
Total borrowed funds, which include overnight borrowings, are mainly a function of loan growth and changes in total deposit balances.
−Removed: Other long-term borrowings include trust preferred securities held for investments and floating rate junior subordinated deferrable interest debentures.
+Added: Other long-term borrowings include trust preferred securities held for investments and floating rate subordinated deferrable interest debentures.
Peoples continually evaluates its overall balance sheet position given the interest rate environment and liquidity needs.
−Removed: Total borrowed funds increased at December 31, 2023 compared to at December 31, 2022 due to the addition of $133.0 million of BTFP borrowings at December 31, 2023, an increase in FHLB long-term advances, and an increase in other long-term borrowings assumed in the Limestone Merger.
−Removed: Peoples’ borrowed funds increased at December 31, 2022 compared to at December 31, 2021 due to FHLB overnight borrowings of $400.0 million at December 31, 2022.
+Added: Total borrowed funds decreased at December 31, 2024 compared to at December 31, 2023 due to lower FHLB overnight borrowings and the payoff of the BTFP borrowing as of December 31, 2024.
+Added: Peoples’ borrowed funds increased at December 31, 2023 compared to at December 31, 2022 due to the addition of $133.0 million of BTFP borrowings at December 31, 2023, an increase in FHLB long-term advances, and an increase in other long-term borrowings assumed in the Limestone Merger.
On April 3, 2019, Peoples entered into the U.S.
4 unchanged sentences
Capital/Stockholders’ Equity
−Removed: Peoples’ total stockholders’ equity at December 31, 2023 increased 34% when compared to at December 31, 2022, which was due to (i) 6.8 million common shares (valued at $177.9 million) issued in the Limestone Merger, (ii) net income of $113.4 million for 2023, and (iii) a decrease in other comprehensive loss of $25.5 million, partially offset by dividends paid of $52.1 million and share repurchases of $3.0 million.
−Removed: The decrease in other comprehensive loss was the result of changes in the fair market value of available-for-sale investment securities, which were driven by changes in market interest rates.
−Removed: At December 31, 2023, capital levels for both
−Removed: Peoples and Peoples Bank remained substantially higher than the minimum amounts needed to be considered “well capitalized” under banking regulations.
+Added: Peoples’ total stockholders’ equity at December 31, 2024 increased $58.1 million, or 6%, when compared to at December 31, 2023, which was due to net income of $117.2 million for 2024, partially offset by an increase in other comprehensive loss of $8.8 million and dividends paid of $56.3 million.
+Added: The increase in other comprehensive loss was the result of changes in the fair market value of available-for-sale investment securities, which were driven by changes in market interest rates.
+Added: At December 31, 2024, capital levels for both Peoples and Peoples Bank remained substantially higher than the minimum amounts needed to be considered “well capitalized” under banking regulations.
These higher capital levels reflect Peoples’ desire to maintain a strong capital position.
−Removed: During 2022, total stockholders’ equity decreased 7% when compared to 2021 due to (i) an other comprehensive loss of $115.5 million, (ii) dividends paid of $42.4 million and (iii) common share repurchases of $7.4 million, partially offset by net income of $101.3 million for 2022.
−Removed: The other comprehensive loss was the result of changes in the market value of available-for-sale investment securities, which were driven by changes in market interest rates.
+Added: During 2023, total stockholders’ equity increased 34% when compared to 2022 due to (i) 6.8 million common shares (valued at $177.9 million) issued in the Limestone Merger, (ii) net income of $113.4 million for 2023, and (iii) a decrease in other comprehensive loss of $25.5 million, partially offset by dividends paid of $52.1 million and share repurchases of $3.0 million.
+Added: decrease in other comprehensive loss was the result of changes in the fair market value of available-for-sale investment securities, which were driven by changes in market interest rates.
On January 1, 2020, Peoples recorded a one-time transition adjustment to reduce retained earnings by $3.7 million.
3 unchanged sentences
For the first two years of the phase-in period, 100% of the transition adjustment due to ASU 2016-13 was excluded for regulatory capital purposes, along with 25% of the increase in the allowance for credit losses compared to the January 1, 2020 allowance for credit losses.
−Removed: In year three of the phase-in (i.e., 2023), 75% of the transition adjustment, and the cumulative 25% increase in the allowance for credit losses compared to January 1, 2020, were excluded from regulatory capital, while 50% and 25% of these amounts will be excluded in years four and five, respectively, under this phase-in period.
+Added: In year three of the phase-in (i.e., 2022), 75% of the transition adjustment, and the cumulative 25% increase in the allowance for credit losses compared to January 1, 2020, were excluded from regulatory capital, while 50% and 25% of these amounts were excluded in years four and five, respectively, under this phase-in period.
Under the risk-based capital rules, in order to avoid limitations on dividends, equity repurchases and compensation, Peoples must exceed the three minimum required ratios by at least a capital conservation buffer of 2.50%.
37 unchanged sentences
Tangible equity to tangible assets 8.01 % 7.33 % 6.67 %
+Added: Tangible book value per common share increased to $19.94 at December 31, 2024 from $18.16 at December 31, 2023 and was primarily due to net income over the last twelve months.
The increase in tangible book value per common share at December 31, 2023 from at December 31, 2022 was due to tangible equity increasing as a result of common shares issued throughout 2023, including shares issued due to the Limestone Merger, a decrease in other comprehensive losses recognized on available-for-sale investment securities, which was driven by changes in market interest rates, and net income for 2023.
−Removed: The decline in tangible book value per common share at December 31, 2022 from December 31, 2021 was due to tangible equity declining as a result of other comprehensive losses recognized on available-for-sale investment securities, which were driven by changes in market interest rates.
Future Outlook
−Removed: Peoples improved its performance for the second consecutive year during 2023, recording record annual net income despite the challenges that were presented to the banking industry due to the bank failures in 2023.
−Removed: In 2024, Peoples expects net interest income to benefit from the full year impact of the Limestone Merger, but to also be impacted by the projected market interest rate reductions in 2024.
−Removed: For 2024, Peoples expects net interest margin to be between 4.10% and 4.30% for the full year, which is based on between 75 to 150 basis points of reductions in the Federal Funds effective rate.
+Added: Peoples improved its performance for the third consecutive year during 2024, recording record annual net income despite the challenges that were presented to the banking industry due to the bank failures in 2023.
+Added: In 2025, Peoples expects to generate positive operating leverage for the year, compared to 2024.
+Added: For 2025, Peoples expects net interest margin to be between 4.00% and 4.20% for the full year, which is assuming another 50 basis point reduction by the Federal Reserve, spread over the first nine months of 2025.
These projections will vary depending on the timing and magnitude of the anticipated rate cuts and the level of competition for deposits.
−Removed: Peoples projects growth in total non-interest income, excluding net gains and losses, to be in the high single-digits to low double-digits in 2024 compared to 2023.
−Removed: Total non-interest expenses, excluding acquisition-related expenses, are expected to be between $67 million and $69 million for the second, third and fourth quarters of 2024, with the first quarter of 2024 being higher due to annual expenses typically recognized during the first quarter of each year.
+Added: Peoples projects growth in total non-interest income, excluding net gains and losses, to be in the mid-to-high single-digits in 2025 compared to 2024.
+Added: Total non-interest expenses are expected to be between $69 million and $71 million for the second, third and fourth quarters of 2025, with the first quarter of 2025 being higher due to annual expenses typically recognized during the first quarter of each year.
The efficiency ratio is projected to be between 55% and 60% for 2025.
Peoples will continue to place importance on loan growth.
−Removed: Peoples anticipates that the annual loan growth for 2024, compared to 2023, will be between 6% and 8%.
−Removed: With the anticipated loan growth and return of net charge-offs to pre-pandemic levels, there is an expectation of an increase in the provision for credit losses during 2024 with a charge-off rate of approximately 20 basis points.
+Added: Peoples anticipates that the annual loan growth for 2025 will be between 4% and 6%.
+Added: Provision for credit losses is expected to be at a similar quarterly run rate compared to 2024, with a modest reduction in our net charge-off rate compared to 2024.
The balance sheet mix of Peoples will be continually evaluated in an effort to mitigate exposure risk during 2025.
1 unchanged sentence
Peoples expects continued growth despite increased competition in its markets plus additional upward pressure on rates paid.
−Removed: Throughout 2023, deposits balances increased primarily due to the Limestone Merger, as well as promotional efforts throughout the second half of the year.
+Added: Throughout 2024, deposits balances increased primarily due to special promotional offerings on retail CDs throughout the year.
Management believes Peoples is in position to maintain strong asset quality metrics and continued growth into 2025.
50 unchanged sentences
While parallel interest rate shock scenarios are useful in assessing the level of IRR inherent in the balance sheet, interest rates typically move in a nonparallel manner with differences in the timing, direction and magnitude of changes in short-term and long-term interest rates.
−Removed: Thus, any impact that might occur as a result of the Federal Reserve Board increasing short-term interest rates in the future could be offset by an inverse movement in long-term rates, and vice versa.
+Added: Thus, any impact that might occur as a result of the Federal Reserve Board decreasing short-term interest rates in the future could be offset by an inverse movement in long-term rates, and vice versa.
For this reason, Peoples considers other interest rate scenarios in addition to analyzing the impact of parallel yield curve shifts.
1 unchanged sentence
Peoples believes these scenarios to be more reflective of how interest rates change versus the severe parallel rate shocks described above.
−Removed: Given the shape of market yield curves at December 31, 2023, consideration of the bear steepener and bear flattener scenarios provide insights which were not captured by parallel shifts.
+Added: Given the shape of market yield curves at December 31, 2024, consideration of the bull steepener and bear steepener scenarios provide insights which were not captured by parallel shifts.
+Added: 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.
+Added: 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-long term borrowing costs, which are correlated with long-term rates remain constant.
+Added: Decreased deposit and funding costs increase net interest income over a longer horizon;
+Added: resulting in an increased amount of net income and net interest margin over a 24-month period.
+Added: At December 31, 2024, the bull steepener scenario resulted in a decline in net interest income of 0.73%, as the impact of recent term funding mitigates the impact of lower short-term rates over a 12-month horizon, and an increase in economic value of equity of 1.90%.
The bear steepener scenario highlights the risk to net interest income and the economic value of equity when short-term rates remain constant while long-term rates rise.
−Removed: In such a scenario, Peoples’ variable rate asset yields along with deposit and short-term borrowing costs, which are correlated with short-term rates, remain constant, while long-term asset yields and long-term borrowing costs, which are more correlated with long-term rates, rise.
−Removed: Increased asset yields would not be offset by increases in deposit or funding costs, resulting in an increased amount of net interest income and higher net interest margin.
−Removed: At December 31, 2023, the bear steepener scenario resulted in an increase in net interest income of 0.90% and a decrease in economic value of equity of 1.00%.
−Removed: 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.
−Removed: 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.
−Removed: Increased deposit and funding costs would be more than offset by increased variable rate asset yields;
−Removed: resulting in an increased amount of net interest income and higher net interest margin.
−Removed: At December 31, 2023, the bear flattener scenario resulted in an increase in net interest income of 2.00%% and an increase in economic value of equity of 0.50%
−Removed: During 2023, Peoples’ Consolidated Balance Sheet was positioned to benefit from rising interest rates in terms of the potential impact on net interest income, while in 2024, Peoples is positioned to see slight declines in net interest income in a projected falling interest rate environment.
+Added: 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.
+Added: At December 31, 2024, the bear steepener scenario resulted in an increase in net interest income of 0.79% and an increase in economic value of equity of 5.60%
+Added: During 2024, Peoples’ was positioned to benefit from rising interest rates in terms of the potential impact on net interest income.
The table above illustrates this point as net interest income increases in the rising rate scenarios and decreases in the falling rate scenarios.
1 unchanged sentence
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.
−Removed: As of December 31, 2023, Peoples had eleven interest rate swap contracts, with an aggregate notional value of $105.0 million.
+Added: As of December 31, 2024, Peoples had eight interest rate swap contracts, with an aggregate notional value of $75.0 million.
Additional information regarding Peoples’ interest rate swaps can be found in “Note 15 Derivative Financial Instruments.”
2 unchanged sentences
Management believes that its methodology for developing such assumptions is reasonable;
−Removed: however, there can be no assurance that modeled results will be achieved or are indicative of future
+Added: however, there can be no assurance that modeled results will be achieved or are indicative of future results.
The asset/liability model along with key modeling assumptions are subjected to a third-party review annually for effectiveness and regulatory compliance.
41 unchanged sentences
Peoples’ LCFP identifies scenarios where funding disruptions might occur and creates scenarios of varying degrees of severity.
−Removed: The disruptions considered include an increase in funding of unfunded loan commitments, unanticipated withdrawals of
−Removed: deposits, decreases in the renewal of maturing CDs, and reductions in cash earnings.
−Removed: Additionally, the LCFP creates stress scenarios where access to external funding sources, or contingency funding, is suddenly limited, which includes a significant increase in the margin requirements where securities or loans are pledged, limited access to funding from other banks and limited access to funding from the FHLB of Cincinnati and the FRB.
+Added: The disruptions considered include an increase in funding of unfunded loan commitments, unanticipated withdrawals of deposits, decreases in the renewal of maturing CDs, and reductions in cash earnings.
+Added: Additionally, the LCFP creates stress scenarios where access to external funding sources, or contingency funding, is suddenly limited, which includes a significant increase in the margin requirements where securities or loans are pledged, limited access to funding from other banks and limited
+Added: access to funding from the FHLB of Cincinnati and the FRB.
Peoples’ LCFP scenarios include a base scenario, a mild stress scenario, a moderate stress scenario and a severe stress scenario.
3 unchanged sentences
The LCFP contains various indicators, termed key risk indicators (“KRIs”), that are monitored on a monthly basis, at a minimum.
−Removed: The KRIs include both internal and external indicators and include loan delinquency levels, criticized and classified loan levels, the ratios of non-performing loans to loans and to total assets, the total loan to total deposit ratio, the level of net non-core funding dependence, the level of contingency funding sources, the liquidity coverage ratio, changes in regulatory capital levels, forecasted operating loss and negative media concerning Peoples, irrational competitor pricing that persists, and an increase in rates for external funding sources.
+Added: The KRIs include both internal and external indicators and include loan delinquency levels, criticized and classified loan levels, the ratios of non-performing loans to loans and to total assets, the total loan to total deposit ratio, the level of net non-core funding dependence, the level of contingency funding sources, the liquidity coverage ratio, changes in regulatory capital levels, forecasted operating loss, negative media concerning Peoples, irrational competitor pricing that persists, and an increase in rates for external funding sources.
The LCFP establishes levels that define each of these KRIs under base, mild, moderate and severe scenarios.
6 unchanged sentences
During 2022, deposit balances declined due to customers returning to pre-COVID-19 pandemic balances as well as rising market interest rates due to high levels of inflation.
−Removed: During 2023, the Federal Reserve continued a historically aggressive rate-hiking campaign, leading to higher interest rates.
−Removed: As a result, competition for deposits increased.
−Removed: Peoples responded to the increased competition by offering various CD special rates to retain current clients and attract new clients.
+Added: During 2023, the Federal Reserve continued a historically aggressive rate-hiking campaign, leading to higher interest rates and higher competition for deposits.
+Added: As inflationary pressures cooled during 2024, the Federal Reserve began to lower rates starting the second half of the calendar year.
+Added: Peoples continued to offer various CD special rates to retain current clients and attract new clients.
Overall, management believes the current balance of cash and cash equivalents, anticipated investment portfolio cash flows and the availability of other funding sources will allow Peoples to meet anticipated cash obligations, as well as special needs and off-balance sheet commitments.
1 unchanged sentence
Peoples routinely engages in activities that involve, to varying degrees, elements of risk that are not reflected in whole or in part in the Consolidated Financial Statements.
−Removed: These activities are part of Peoples’ normal course of business and include traditional off-balance sheet credit-related financial instruments, interest rate contracts and commitments to make additional capital contributions in low-income housing tax credit investments.
+Added: These activities are part of Peoples’ normal course of business and include traditional off-balance sheet credit-related financial instruments, interest rate contracts, operating lease obligations, and commitments to make additional capital contributions in low-income housing tax credit investments.
The following is a summary of Peoples’ significant off-balance sheet activities and contractual obligations.
2 unchanged sentences
Off-balance sheet credit-related financial instruments 16
+Added: Interest rate contracts 15
Operating lease obligations 6
21 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.