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Item 2. Management’s Discussion and Analysis

2025-05-01 compared with 2024-10-31 · 293 added, 523 removed, 847 unchanged (49% of the section changed)

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

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

Management’s Discussion and Analysis (“MD&A”) represents an overview of the results of operations and financial condition of Peoples at and for the three months ended March 31, 2025 and March 31, 2024.

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

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

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

Presidential election and potential changes in the U.S.

Senate and House of Representatives, a U.S.

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

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;

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

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

global trading partners), and changes in the federal, state, and local governmental 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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(12) changes in accounting standards, policies, estimates or procedures may adversely affect Peoples' reported financial condition or results of operations;

(13) the impact of assumptions, estimates and inputs used within models, which may vary materially from actual outcomes, including under the CECL model;

(14) adverse changes in the conditions and trends in the financial markets, including recent inflationary pressures, which may adversely affect the fair value of securities within Peoples' investment portfolio, the interest rate sensitivity of Peoples' consolidated balance sheet, and the income generated by Peoples' trust and investment activities;

(13) the impact of assumptions, estimates and inputs used within models, which may vary materially from actual outcomes, including under the current expected credit losses ("CECL") model;

(14) adverse changes in the conditions and trends in the financial markets, including recent inflationary pressures, and the impacts of potential or imposed tariffs on markets, which may adversely affect the fair value of securities within Peoples' investment portfolio, the interest rate sensitivity of Peoples' consolidated balance sheet, and the income generated by Peoples' trust and investment activities;

(15) the volatility from quarter to quarter of mortgage banking income, whether due to interest rates, demand, the fair value of mortgage loans, or other factors;

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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;

(31) Peoples' ability to integrate the Limestone Merger, which may be unsuccessful, or may be more difficult, time-consuming or costly than expected;

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

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

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

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

RISK FACTORS" of Peoples' 2024 Form 10-K.

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

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Peoples is a diversified financial services holding company that makes available a complete line of banking, trust and investment, insurance, premium financing and equipment leasing solutions through its subsidiaries.

Peoples' business activities are currently limited to one reporting unit and reportable operating segment, which is community banking.

Peoples provides services through traditional offices, automated teller machines ("ATMs"), interactive teller machines ("ITMs"), mobile banking, telephone and internet-based banking.

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

As of September 30, 2024, Peoples had 149 locations, including 130 full-service bank branches in Ohio, Kentucky, West Virginia, Virginia, Washington D.C.

As of March 31, 2025, Peoples had 147 locations, including 128 full-service bank branches in Ohio, Kentucky, West Virginia, Virginia, Washington D.C.

and Maryland.

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

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

Management has identified the accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are critical to understanding Peoples’ Unaudited Condensed Consolidated Financial Statements, and this MD&A at March 31, 2025, which have been disclosed in Peoples' 2024 Form 10-K and updated as necessary in "Note 1 Summary of Significant Accounting Policies" in the Notes to the Unaudited Condensed Consolidated Financial Statements included in this Form 10-Q.

This MD&A should be read in conjunction with the policies disclosed in Peoples’ 2024 Form 10-K.

New Accounting Guidance Pending Adoption

ASU 2023-09 - Income Taxes (Topic 740):

Improvements to Income Tax Disclosures:

The FASB issued ASU 2023-09 on December 14, 2023.

The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions.

ASU 2023-09 applies to all entities subject to income taxes.

For public business entities, the new requirements 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.

Peoples does not expect the update will have a material impact on its annual consolidated financial statements.

ASU 2025-01 - Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date:

T he FASB issued ASU 2025-01 on January 6, 2025.

It clarifies the effective date of ASU 2024-03, which pertains to disaggregation of income statement expenses.

For public business entities, the new requirements will be effective for annual periods beginning after December 15, 2026.

Peoples is currently evaluating the impact of adopting this new guidance on the consolidated financial statements.

Summary of Recent Transactions and Events

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

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

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

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

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

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

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

◦ For the first quarter of 2025, Peoples recorded a provision for credit losses of $10.2 million, compared to a provision for credit losses of $6.3 million for the linked quarter and a provision for credit losses of $6.1 million for the first quarter of 2024.

The provision for credit losses for the first quarter of 2025 and fourth quarter of 2024 was primarily driven by net charge-offs.

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

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

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

The Limestone Merger closed as of the close of business on April 30, 2023.

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

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

◦ 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.

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

Subsequent 25 basis point cuts in both November and December 2024 brought the rate down further to 4.25% to 4.50%.

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

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EXECUTIVE SUMMARY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

was a result of the accretion from the Limestone Merger.

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

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

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

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

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

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

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

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

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

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

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

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

Peoples reported net income of $24.3 million for the first quarter of 2025, representing earnings per diluted common share of $0.68.

In comparison, Peoples reported net income of $26.9 million, representing earnings per diluted common share of $0.76, for the fourth quarter of 2024, and net income of $29.6 million, representing earnings per diluted common share of $0.84, for the first quarter of 2024.

Non-core items negatively impacted earnings per diluted common share by $0.01 for the first quarter of 2025, $0.04 for the fourth quarter of 2024, and $0.01 for the first quarter of 2024.

Net interest income was $85.3 million for the first quarter of 2025, and decreased $1.3 million when compared to the linked quarter.

Net interest margin was 4.12% for the first quarter of 2025, compared to 4.15% for the linked quarter.

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

Net interest income for the first quarter of 2025 decreased $1.4 million, or 2%, compared to the first quarter of 2024.

The decrease in net interest income compared to the first quarter of 2024 was driven by lower accretion income.

Net interest margin for the first quarter of 2025 was 4.12% and decreased 14 basis points compared to 4.26% for the first quarter of 2024, driven primarily by lower accretion income.

Accretion income, net of amortization expense, from acquisitions was $3.5 million for the first quarter of 2025, $4.9 million for the fourth quarter of 2024 and $6.5 million for the first quarter of 2024, which added 17 basis points, 23 basis points and 32 basis points, respectively, to net interest margin.

The decrease in accretion income for the first quarter of 2025 when compared to the linked quarter and the first quarter of 2024 was driven by fewer loan payoffs.

The provision for credit losses was $10.2 million for the first quarter of 2025, compared to a provision for credit losses of $6.3 million for the linked quarter and a provision for credit losses of $6.1 million for the first quarter of 2024.

The provision for credit losses for the first quarter of 2025 and fourth quarter of 2024 was primarily driven by net charge-offs.

Net charge-offs for the first quarter of 2025 were $8.1 million, or 0.52% of average total loans annualized, compared to net charge-offs of $9.6 million, or 0.61% of average total

loans annualized, for the linked quarter and net charge-offs of $3.3 million, or 0.22% of average total loans annualized, for the first quarter of 2024.

The decrease relative to the linked quarter was driven by a decrease in charge-offs on leases originated by our North Star Leasing business, which comprised 31 basis points of the first quarter net charge-off rate and 49 basis points of the linked quarter net charge-off rate.

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

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

The net loss realized during the third quarter of 2024 was $0.9 million, compared to a net loss of $0.8 million for the linked quarter and a net loss of $0.3 million for the third quarter of 2023.

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

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

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

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

During the first nine months of 2024, Peoples sold $96.7 million of it's lower yielding available-for-sale investment securities, with proceeds from the sale used to pay down overnight borrowings.

Total non-interest income, excluding net gains and losses, for the third quarter of 2024 increased $1.2 million compared to the linked quarter.

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

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

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

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

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

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

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

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

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

Excluding acquisition-related expenses, non-

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

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

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

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

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

Three Months Ended Nine Months Ended

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

(Dollars in thousands) 2024 2024 2023 2024 2023

Non-interest expense:

Salaries and employee benefit costs $ 37,085 $ 36,564 $ 36,608 $ 112,542 $ 106,661

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

Professional fees 2,896 2,935 3,456 8,798 13,775

Data processing and software expense 6,111 6,743 6,288 18,623 15,578

Amortization of other intangible assets 2,786 2,787 3,280 8,361 7,951

Electronic banking expense 1,844 1,941 1,836 5,566 5,159

Marketing expense 971 681 1,267 2,708 3,554

FDIC insurance premiums 1,241 1,251 1,260 3,678 3,525

Franchise tax expense 917 760 772 2,558 2,678

Communication expense 814 736 752 2,349 2,089

Other loan expenses 1,178 1,036 856 3,290 2,133

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

Total non-interest expense 66,090 68,758 71,696 203,313 198,798

Acquisition-related non-interest expense:

Salaries and employee benefit costs — — 562 16 5,708

Net occupancy and equipment expense — — 2 — 31

Professional fees — — 429 (38) 5,532

Data processing and software expense — — 1,289 (18) 1,290

Electronic banking expense — — — (100) 115

Marketing expense — — 38 10 61

Communication expense — — 1 — 1

Other loan expenses — — — — 1

Other non-interest expense (662) — 2,113 (616) 2,955

Total acquisition-related non-interest expense (662) — 4,434 (746) 15,694

Non-interest expense excluding acquisition-related expense:

Salaries and employee benefit costs 37,085 36,564 36,046 112,526 100,953

Net occupancy and equipment expense 5,905 6,142 5,499 18,330 15,805

Professional fees 2,896 2,935 3,027 8,836 8,243

Data processing and software expense 6,111 6,743 4,999 18,641 14,288

Amortization of other intangible assets 2,786 2,787 3,280 8,361 7,951

Electronic banking expense 1,844 1,941 1,836 5,666 5,044

Marketing expense 971 681 1,229 2,698 3,493

FDIC insurance premiums 1,241 1,251 1,260 3,678 3,525

Franchise tax expense 917 760 772 2,558 2,678

Communication expense 814 736 751 2,349 2,088

Other loan expenses 1,178 1,036 856 3,290 2,132

Other non-interest expense 5,004 7,182 7,707 17,126 16,904

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

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

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

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

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

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

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

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

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

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

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

The increase was driven by higher pre-tax income.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The net loss realized during the first quarter of 2025 was $0.4 million, compared to a net loss of $1.7 million for the linked quarter and a net loss of $0.3 million for the first quarter of 2024.

The net losses for the first quarter of 2025 and the first quarter of 2024 were driven primarily by net losses on repossessed assets of $0.3 million.

The net loss reported as of December 31, 2024 was attributable to the write-down of an OREO property which totaled $1.2 million.

Total non-interest income, excluding net gains and losses, for the first quarter of 2025 increased $0.6 million compared to the linked quarter.

The increase in non-interest income, excluding net gains and losses, was primarily impacted by an increase of $1.5 million in insurance income due to seasonal performance-based commissions being paid in the first quarter of each year, partially offset by decreases in deposit account service charges and electronic banking income of $0.5 million and $0.4 million, respectively.

Compared to the first quarter of 2024, total non-interest income, excluding net gains and losses, increased $1.3 million due to additional operating lease income of $1.4 million and additional trust and investment income of $0.5 million income, offset by decreases of $0.4 million in both insurance income and bank owned life insurance ("BOLI").

Total non-interest expense increased $0.3 million for the three months ended March 31, 2025, compared to the linked quarter.

The increase in total non-interest expense was primarily due to an increase of $2.3 million in salaries and employee benefit costs, which was driven by annual merit increases, $1.3 million in stock-based compensation expenses attributable to forfeiture rate true-up on stock vested during the first quarter along with up-front expense on stock grants to certain retirement-eligible employees, and $0.7 million in health savings account ("HSA") contributions, partially offset by a decrease of $1.3 million in other non-interest expense, driven by acquisition-related expenses, coupled with decreases in amortization of other intangible assets and marketing expense.

Compared to the first quarter of 2024, total non-interest expense increased $2.3 million, or 3%.

The increase in total non-interest expense was primarily driven by increases of $1.2 million in data processing and software expense, $0.9 million in salaries and employee benefit costs, driven by higher sales-based compensation and higher medical costs, and $0.9 million in other non-interest expense, driven by increases in miscellaneous expense and higher postage costs, partially offset by a decrease of $0.7 million in net occupancy and equipment expense.

The efficiency ratio for the first quarter of 2025 was 60.7%, compared to 59.6% for the linked quarter and 58.1% for the first quarter of 2024.

The efficiency ratio increased compared to the linked quarter mainly as the result of higher non-interest expense, which was driven by annual expenses that occur in the first quarter of each year.

The efficiency ratio increased for the first quarter of 2025 compared to the first quarter of 2024 due to higher non-interest expense.

Peoples recorded income tax expense of $7.0 million with an effective tax rate of 22.4% for the first quarter of 2025, compared to income tax expense of $7.9 million with an effective tax rate of 22.7% for the linked quarter, and income tax expense of $8.3 million with an effective tax rate of 21.8% for the first quarter of 2024.

The decrease in income tax expense for the first quarter of 2025 compared to the linked quarter and to the first quarter of 2024 was primarily due to lower net income.

Total assets were $9.25 billion as of both March 31, 2025 and at December 31, 2024, and $9.27 billion at March 31, 2024.

Total assets at March 31, 2025 remained flat when compared to at December 31, 2024 primarily due to a decrease in investment securities and cash and cash equivalents, offset by an increase in period-end loan and lease balances.

The period-end total loan and lease balances at March 31, 2025 increased $70.5 million, or 4% annualized, compared to at December 31, 2024.

The increase in the period-end total loan and lease balances was primarily driven by an increase of $74.5 million in other commercial real estate loans.

Total assets at March 31, 2025 decreased compared to March 31, 2024 due to a decrease of $242.7 million in cash and cash equivalents, partially offset by an increase of $225.7 million in total loans and leases.

The period-end loan and lease balances increased from March 31, 2024 to March 31, 2025 primarily as a result of organic growth in our commercial and industrial, residential real estate, and consumer indirect portfolios of $129.2 million, $66.3 million, and $30.0 million, respectively.

Total liabilities were $8.11 billion at March 31, 2025, down from $8.14 billion at December 31, 2024, and $8.21 billion at March 31, 2024.

The decrease in total liabilities when compared to at December 31, 2024 was primarily due to a decrease of $174.2 million in short-term borrowings, partially offset by an increase of $144.5 million in period-end total deposits.

The decrease in total liabilities when compared to at March 31, 2024 was primarily due to a $494.3 million decrease in short- term borrowings, partially offset by a increase of $408.2 million in period-end deposits.

The increase in deposits was primarily driven by an increase of $285.6 million in retail certificates of deposit, driven by current promotional offerings, and an increase of $107.4 million in money market deposit accounts.

Total stockholders' equity at March 31, 2025 increased by $26.2 million compared to at December 31, 2024, which was primarily due to net income for the quarter of $24.3 million and a decrease of $14.7 million in accumulated other comprehensive loss, partially

offset by dividends paid of $14.2 million.

Accumulated unrealized losses related to the available-for-sale investment securities portfolio were $96.6 million and $111.8 million at March 31, 2025 and at December 31, 2024, respectively.

Total stockholders' equity at March 31, 2025 increased by $75.8 million compared to at March 31, 2024 and was impacted by net income of $112.0 million in the last twelve months and a decrease in accumulated other comprehensive loss of $13.2 million, partially offset by dividends paid of $56.8 million.

RESULTS OF OPERATIONS

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

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

FTE net interest income is calculated by increasing interest income to convert tax-exempt income earned on obligations of states and political subdivisions and tax-exempt loans to the pre-tax equivalent of taxable income using a federal statutory corporate income tax rate of 21% for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024.

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

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

4 unchanged sentences

For the Three Months Ended

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

March 31, 2025 December 31, 2024 March 31, 2024

( Dollars in thousands)

51 unchanged sentences

Net interest margin (b) 4.12 % 4.15 % 4.26 %

For the Nine Months Ended

September 30, 2024 September 30, 2023

( Dollars in thousands)

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

Short-term investments $ 125,720 $ 5,377 5.71 % $ 57,271 $ 1,862 4.35 %

Investment securities (a)(b):

Taxable 1,685,945 43,997 3.48 % 1,632,594 36,544 2.98 %

Nontaxable 181,058 3,778 2.78 % 194,667 4,129 2.83 %

Total investment securities 1,867,003 47,775 3.41 % 1,827,261 40,673 2.97 %

Loans (b)(c):

Construction 333,048 19,652 7.75 % 333,895 20,437 8.07 %

Commercial real estate, other 2,066,631 111,302 7.08 % 1,671,019 82,403 6.50 %

Commercial and industrial 1,229,491 72,142 7.71 % 1,021,573 56,728 7.32 %

Premium finance 253,383 16,362 8.48 % 160,729 8,374 6.87 %

Leases 418,084 35,970 11.30 % 362,222 31,426 11.44 %

Residential real estate (d) 925,756 34,892 5.03 % 903,622 32,414 4.78 %

Home equity lines of credit 224,648 13,745 8.17 % 190,225 10,634 7.47 %

Consumer, indirect 664,610 29,322 5.89 % 651,578 23,947 4.91 %

Consumer, direct 121,359 6,465 7.12 % 125,826 6,401 6.80 %

Total loans 6,237,010 339,852 7.19 % 5,420,689 272,764 6.66 %

Allowance for credit losses

(64,052) (55,757)

Net loans 6,172,958 339,852 7.26 % 5,364,932 272,764 6.73 %

Total earning assets 8,165,681 393,004 6.36 % 7,249,464 315,299 5.76 %

Goodwill and other intangible assets 407,858 374,924

Other assets 541,510 496,497

$ 9,115,049 $ 8,120,885

Interest-bearing deposits:

Savings accounts $ 889,629 $ 675 0.10 % $ 1,066,783 $ 1,166 0.15 %

Governmental deposit accounts

795,019 16,639 2.80 % 696,359 7,408 1.42 %

Interest-bearing demand accounts

1,092,407 1,538 0.19 % 1,160,698 1,232 0.14 %

Money market accounts 829,825 15,917 2.56 % 661,272 5,774 1.17 %

Retail CDs 1,730,818 54,472 4.20 % 817,512 13,120 2.15 %

Brokered CDs (e) 486,832 16,972 4.66 % 452,574 13,846 4.09 %

Total interest-bearing deposits

5,824,530 106,213 2.44 % 4,855,198 42,546 1.17 %

Borrowed funds:

Short-term FHLB advances (e) 156,666 6,452 5.50 % 373,304 13,969 5.00 %

Repurchase agreements and other 214,760 6,760 4.20 % 104,522 971 1.24 %

Total short-term borrowings 371,426 13,212 4.75 % 477,826 14,940 4.18 %

Long-term FHLB advances 130,246 3,886 3.99 % 42,870 930 2.90 %

Long-term notes payable 48,890 2,547 6.95 % 44,903 1,837 5.45 %

Other long-term borrowings (f) 54,207 3,959 9.60 % 38,676 2,901 9.89 %

Total long-term borrowings 233,343 10,392 5.91 % 126,449 5,668 5.98 %

Total borrowed funds 604,769 23,604 5.20 % 604,275 20,608 4.14 %

Total interest-bearing liabilities

6,429,299 129,817 2.70 % 5,459,473 63,154 1.50 %

Non-interest-bearing deposits 1,482,318 1,607,411

Other liabilities 131,998 134,003

Total liabilities 8,043,615 7,200,887

Total stockholders’ equity 1,071,434 919,998

Total liabilities and stockholders’ equity $ 9,115,049 $ 8,120,885

Interest rate spread (b) $ 263,187 3.66 % $ 252,145 4.26 %

Net interest margin (b) 4.24 % 4.60 %

(a) Average balances are based on carrying value.

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

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

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

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

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

Three Months Ended September 30, 2024 Compared to

Nine Months Ended September 30, 2024 Compared to

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

Three Months Ended March 31, 2025 Compared to

(Dollars in thousands) December 31, 2024 March 31, 2024

Increase (decrease) in:

1 unchanged sentence

Rate Volume Total (a)

INTEREST INCOME:

31 unchanged sentences

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

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

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

The increase in net

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

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

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

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

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

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

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

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

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

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

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

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

Net interest income was $85.3 million for the first quarter of 2025 and decreased $1.3 million when compared to the linked quarter.

Net interest margin was 4.12% for the first quarter of 2025, compared to 4.15% for the linked quarter.

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

Net interest income for the first quarter of 2025 decreased $1.4 million, or 2%, compared to the first quarter of 2024.

Net interest margin decreased 14 basis points when compared to the first quarter of 2024.

The decrease in net interest income and net interest margin compared to the first quarter of 2024 was driven by lower accretion income.

Accretion income, net of amortization expense, from acquisitions was $3.5 million for the first quarter of 2025, $4.9 million for the linked quarter and $6.5 million for the first quarter of 2024, which added 17 basis points, 23 basis points and 32 basis points, respectively, to net interest margin.

The decrease in accretion income for the first quarter of 2025 when compared to the linked quarter and the first quarter of 2024 was driven by fewer loan payoffs.

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

2 unchanged sentences

The following table details Peoples’ provision for credit losses:

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

3 unchanged sentences

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

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

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

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

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

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

The provision for credit losses for the first quarter of 2025 and the fourth quarter of 2024 was mainly a result of net charge-offs.

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

Net Loss Included in Total Non-Interest Income

Net loss includes net losses on investment securities, asset disposals and other transactions, which are recognized in total non-interest income.

Net Gain (Loss) Included in Total Non-Interest Income

Net gain (loss) includes net gains and losses on investment securities, asset disposals and other transactions, which are recognized in total non-interest income.

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

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

Net loss on investment securities $ (74) $ (353) $ (7) $ (428) $ (2,108)

Net (loss) gain on investment securities $ (2) $ 12 $ (1)

Net loss on asset disposals and other transactions:

Net loss on other assets (330) (458) (309)

Net loss on OREO (2) — — (2) (1,623)

Net gain (loss) on OREO 20 (1,228) —

Net loss on other transactions (51) (60) (32)

Net loss on asset disposals and other transactions $ (361) $ (1,746) $ (341)

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

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

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

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

The net loss on other assets during the first quarter of 2025 was driven by the loss recorded on repossessed assets.

The net loss reported for the linked quarter was attributable to the write-down of an OREO property which totaled $1.2 million.

The net loss reported for the quarter ended March 31, 2024 was driven by repossessed assets.

Total Non-Interest Income, Excluding Net Gains and Losses

Total non-interest income, excluding net gains and losses, comprised 22% of Peoples' total revenues (defined as net interest income plus total non-interest income excluding net gains and losses) for the third quarter of 2024, 22% for the linked quarter, and 20% for the third quarter of 2023.

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

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

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

The following table details Peoples' e-banking income:

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

E-banking income $ 6,359 $ 6,470 $ 6,466 $ 18,875 $ 18,375

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

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

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

Total non-interest income, excluding net gains and losses, comprised 24% of Peoples' total revenues (defined as net interest income plus total non-interest income excluding net gains and losses) for the first quarter of 2025, 24% for the linked quarter, and 23% for the first quarter of 2024.

For the first quarter of 2025, insurance income comprised the largest portion of Peoples' total non-interest income, excluding net gains and losses.

The following table details Peoples' insurance income:

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

4 unchanged sentences

Life and health insurance commissions

687 672 548 2,059 1,647

Other fees and charges

Insurance income $ 6,054 $ 4,523 $ 6,498

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

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

Peoples' insurance income for the first quarter of 2025 increased $1.5 million when compared to the linked quarter primarily due to seasonal performance-based commission being paid, which are annual in nature and typically occur in the first quarter of each year.

Insurance income for the first quarter of 2025 decreased when compared to the first quarter of 2024 due to a decrease in the annual performance-based commissions being paid, partially offset with an increase in property and casualty insurance income.

The following table details Peoples' e-banking income:

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

E-banking income $ 5,885 $ 6,267 $ 6,046

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

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

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

The following table details Peoples’ trust and investment income:

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

3 unchanged sentences

Trust and investment income $ 5,061 $ 5,033 $ 4,599

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

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

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

Fiduciary income and brokerage income in the first quarter of 2025 remained flat relative to the linked quarter.

When compared to the first quarter of 2024, trust and investment income increased $0.5 million, which was driven by an increase in assets under administration and management.

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

2025 December 31,

2024 September 30,

1 unchanged sentence

2024 March 31,

2024 December 31,

2023 September 30,

(Dollars in thousands)

3 unchanged sentences

Quarterly average $ 3,711,527 $ 3,706,804 $ 3,683,334 $ 3,587,952 $ 3,521,188

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

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

The decrease in assets under administration and management at March 31, 2025 compared to at December 31, 2024 were driven by market value fluctuations.

The increase in assets under administration and management at March 31, 2025 when compared to at March 31, 2024 were primarily due to growth, as Peoples added new accounts and the underlying market values of assets under management grew.

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

The following table details Peoples' deposit account service charges:

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

5 unchanged sentences

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

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

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

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

Deposit account service charges decreased for the first quarter of 2025 compared to the linked quarter due to seasonality of customer activity.

Deposit account service charges decreased slightly when comparing the first quarter of 2025 to the first quarter of 2024.

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

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

3 unchanged sentences

Mortgage banking income 396 173 321

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

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

Bank owned life insurance income for the third quarter of 2024 decreased compared to the linked quarter and the prior year quarter primarily due changes in the cash surrender values of the underlying policies.

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

Other non-interest income decreased $0.4 million for the three months ended March 31, 2025 when compared to the linked quarter and increased $0.6 million compared to the first quarter of 2024.

Bank owned life insurance income for the first quarter of 2025 decreased compared to the linked quarter and the prior year quarter primarily due to changes in the cash surrender values of the underlying policies.

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

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

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

Lease income for the first quarter of 2025 increased compared to the linked quarter due to an increase in month-to-month lease income.

The increase when compared to the first quarter of 2024 was driven by increases in month-to-month lease income, operating lease income, and gains on terminated leases.

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

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

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

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

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

Mortgage banking income for the first quarter of 2025 increased when compared to each of the prior periods and was primarily driven by higher production.

In the first quarter of 2025, Peoples sold $0.2 million in loans into the secondary market with servicing retained and $4.7 million in loans with servicing released, compared to $6.5 million and $9.9 million, respectively, in the fourth quarter of 2024, and $0.2 million and $6.9 million, respectively, in the first quarter of 2024.

Non-Interest Expense

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

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

9 unchanged sentences

Average during the period 1,467 1,487 1,492

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

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

Sales-based incentive compensation increased for the third quarter of 2024 compared to the linked quarter due to an increase of $0.4 million of Vantage-related incentive compensation.

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

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

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

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

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

Base salaries and wages for the first quarter of 2025 decreased compared to the linked quarter and remained relatively flat compared to the first quarter of 2024.

Sales-based and incentive compensation increased for the first quarter of 2025 compared to the linked quarter and the first quarter of 2024 due to an increase in corporate incentives.

The decrease in employee benefits for the first quarter of 2025 compared to the linked quarter was primarily related to an adjustment related to prior period nonqualified deferred compensation expense.

The increase over the first quarter of 2024 was primarily due to increased medical costs.

Payroll taxes and other employment costs for the first quarter of 2025 increased compared to the linked quarter due to seasonal expenses recognized in the first quarter of each year.

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

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

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

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

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

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

Deferred personnel costs for the first quarter of 2025 remained relatively flat when compared to both the fourth quarter of 2024 and the first quarter of 2024.

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

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

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Net occupancy and equipment expense $ 5,612 $ 5,821 $ 6,283

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

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

Net occupancy and equipment expense decreased for the first quarter compared to both the linked quarter and the first quarter of 2024 due to an adjustment of property tax accruals resulting from a review of recent assessments.

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

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

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Other loan expenses 1,119 857 1,076

Operating lease expense 985 1,102 639

Franchise tax expense 929 664 881

Communication expense 814 736 752 2,349 2,089

Marketing expense 903 1,206 1,056

Communication expense 734 796 799

Travel and entertainment expense 500 723 608

Other non-interest expense 4,603 5,893 3,739

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

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

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

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

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

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

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

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

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

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

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

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

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

Marketing expense for the third quarter of 2024 increased when compared to the linked quarter due to higher advertising expense and donations.

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

Data processing and software expenses for the first quarter of 2025 increased over all periods presented due to costs associated with recent technology projects.

Professional fees for the first quarter of 2025 decreased when compared to the linked quarter due to lower costs of professional services and fewer legal expenses incurred.

Professional fees for the first quarter of 2025 compared to the same period in 2024 remained flat.

Amortization of other intangible assets for the first quarter of 2025 decreased $0.6 million compared to both the linked quarter and the prior year quarter due to decreases in amortization on core deposits and customer relationship intangibles.

Peoples' e-banking expense is comprised of costs associated with debit and ATM cards and is driven by timing of customer activity.

E-banking expense remained relatively flat compared to the linked quarter and increased $0.2 million compared to the first quarter of 2024.

Peoples' FDIC insurance premiums for the first quarter of 2025 were relatively flat when compared to the linked quarter and the first quarter of 2024.

Other loan expenses during the first quarter of 2025 increased $0.3 million when compared to the linked quarter.

Other loan expenses were relatively flat when compared to the first quarter of 2024.

Operating lease expense decreased when compared to the linked quarter due to less expense associated with Vantage and increased compared to the same period in 2024 due to the volume of leases.

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

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

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

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

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

The increase in franchise tax expense for the first quarter of 2025 compared to the linked quarter relates to the prior quarter including a true-up driven by lower than estimated

apportionment in Ohio.

The increase in franchise tax expense for the first quarter of 2025 when compared to the first quarter of 2024 was due to higher equity.

Marketing expense for the first quarter of 2025 decreased when compared to both the linked quarter and the first quarter of 2024 due to less advertising expenses and promotional items.

Communication expense remained relatively flat for the first quarter of 2025 when compared to both the linked quarter and the same period of the prior year.

Travel and entertainment expense decreased over both the linked quarter and the same period for 2024 due to the timing of travel.

Travel and entertainment expense will commonly spike in the fourth quarter due to additional travel and holiday gatherings.

Other non-interest expense for the first quarter of 2025 decreased when compared to the linked quarter primarily due to a a legal contingency accrued at the end of the prior period of approximately $1.0 million.

Other non-interest expense for the first quarter of 2025 compared to the same period of 2024 increased due to an increase in miscellaneous expense of $0.4 million and postage which was approximately $0.3 million.

Income Tax Expense

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

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

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

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

The increase was driven by higher pre-tax income.

Peoples recorded income tax expense of $7.0 million with an effective tax rate of 22.4% for the first quarter of 2025, compared to income tax expense of $7.9 million with an effective tax rate of 22.7% for the linked quarter and income tax expense of $8.3 million with an effective tax rate of 21.8% for the first quarter of 2024.

The decrease in income tax expense when compared to the linked quarter and to the first quarter of 2024 was primarily due to lower net income.

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

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

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

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loss on other transactions 51 60 32

gain on OREO 20 — —

gain on investment securities — 12 —

Pre-provision net revenue $ 41,930 $ 42,856 $ 44,296

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

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

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

Core Non-Interest Expense (Non-US GAAP)

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

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

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

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

(Dollars in thousands) 2024 2023

Core non-interest expense:

Total non-interest expense $ 66,090 $ 68,758 $ 71,696 $ 203,313 $ 198,798

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

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

COVID-19 Employee Retention Credit — — — — 548

Core non-interest expense $ 66,752 $ 68,758 $ 64,838 $ 204,059 $ 181,228

The decrease in the PPNR for the first quarter of 2025 compared to the linked quarter and the first quarter of 2024 was driven by lower accretion income.

Efficiency Ratio (Non-US GAAP)

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Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

4 unchanged sentences

Total non-interest income 27,099 25,089 25,779

net loss on investment securities (74) (353) (7) (428) (2,108)

net (loss) gain on investment securities (2) 12 (1)

net loss on asset disposals and other transactions (361) (1,746) (341)

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Efficiency ratio 60.68 % 59.57 % 58.06 %

Efficiency ratio adjusted for non-core items:

Core non-interest expense $ 66,752 $ 68,758 $ 64,838 $ 204,059 $ 181,228

amortization of other intangible assets 2,786 2,787 3,280 8,361 7,951

Adjusted core non-interest expense 63,966 65,971 61,558 195,698 173,277

Non-interest income excluding net losses 25,663 24,485 23,518 76,269 67,605

Net interest income on an FTE basis 89,230 86,965 93,665 263,187 252,145

Adjusted revenue $ 114,893 $ 111,450 $ 117,183 $ 339,456 $ 319,750

Efficiency ratio adjusted for non-core items 55.67 % 59.19 % 52.53 % 57.65 % 54.19 %

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

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

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

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

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

The efficiency ratio for the first quarter of 2025 was 60.7%, compared to 59.6% for the linked quarter and 58.1% for the first quarter of 2024.

The efficiency ratio increased compared to the linked quarter mainly as the result of higher non-interest expense, which was driven by annual expenses that occur in the first quarter of each year.

The efficiency ratio increased for the first quarter of 2025 compared to the first quarter of 2024 due to higher non-interest expense.

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

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Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

2 unchanged sentences

net loss on investment securities

74 353 7 428 2,108

tax effect of net loss on investment securities (a)

16 74 2 90 443

net gain on investment securities

tax effect of net gain on investment securities (a)

net loss on asset disposals and other transactions

1 unchanged sentence

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

167 90 65 328 466

acquisition-related expenses

(662) — 4,434 (746) 15,694

tax effect of acquisition-related expenses (a)

(139) — 931 (157) 3,296

pension settlement charges

— — 2,424 — 2,424

tax effect of pension settlement charges (a)

— — 509 — 509

COVID-19 Employee Retention Credit — — — — 548

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

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

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

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

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

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

The return on average assets and the return on average assets adjusted for non-core items for the first quarter of 2025 decreased when compared to the linked quarter, due to a decrease in annualized net income resulting from higher non-interest expense and lower net interest income.

The decrease in the return on average assets and return on average assets adjusted for non-core items for the first quarter of 2025, compared to the first quarter of 2024, was attributable to a decrease in annualized net income resulting from higher non-interest expense and an increase in average assets.

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

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

Three Months Ended Nine Months Ended

September 30,

2024 June 30,

2024 September 30,

2023 September 30,

Three Months Ended

2025 December 31,

2024 March 31,

(Dollars in thousands)

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tax effect of amortization of other intangible assets (a)

585 585 689 1,756 1,670

Net income excluding amortization of other intangible assets

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Days in the period

92 91 92 274 273

Days in the year

366 366 365 366 365

Annualized net income

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

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

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

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

The decreases in the return on total average stockholders' equity and average tangible equity ratios for the first quarter of 2025 compared to the same period of 2024 was driven by lower net income.

FINANCIAL CONDITION

Cash and Cash Equivalents

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

The total cash and cash equivalents balance included $137.6 million of excess cash reserves being maintained at the FRB of Cleveland at September 30, 2024, compared to $309.8 million at December 31, 2023.

At March 31, 2025, Peoples' interest-bearing deposits in other banks had decreased $48.3 million from December 31, 2024.

The total cash and cash equivalents balance included $52.6 million of excess cash reserves being maintained at the FRB of Cleveland at March 31, 2025, compared to $104.7 million at December 31, 2024.

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

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

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

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

Through the first three months of 2025, Peoples' total cash and cash equivalents decreased $30.7 million, which reflected cash outflows of $47.3 million for financing activities and $17.6 million for investing activities, partially offset by cash inflows of $34.3 million from operating activities.

Peoples' use of cash in investing activities reflected a $74.8 million net increase in loans held for investment, partially offset by net cash inflows for available-for-sale investment securities and held-to-maturity investment securities for $29.4 million and $21.6 million, respectively.

The cash used in financing activities was largely driven by a net decrease in short-term borrowings of $174.2 million, partially offset by an increase of $125.7 million in interest-bearing deposits and $18.6 million of non-interest bearing deposits.

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

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The following table provides information regarding Peoples’ investment portfolio:

(Dollars in thousands) Weighted Average Yield September 30,

2024 June 30,

2024 March 31,

(Dollars in thousands) Weighted Average Yield March 31,

2025 December 31,

2024 September 30,

2024 June 30,

2024 March 31,

Available-for-sale securities, at fair value:

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Carrying value $ 1,878,699 $ 1,918,724 $ 1,830,231 $ 1,884,103 $ 1,859,149

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

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

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

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

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

(a) Amortized cost is presented net of the allowance for credit losses of $237 at March 31, 2025 and at December 31, 2024 and $238 at March 31, 2024.

For the first quarter of 2025, total investment securities decreased compared to the linked quarter due to principal payments received.

Compared to March 31, 2024, held-to-maturity securities increased due to the purchases of higher-yielding, longer duration securities booked to held-to-maturity.

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

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The following table provides information regarding outstanding loan balances:

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

(Dollars in thousands) March 31,

2025 December 31,

2024 September 30,

2024 June 30,

2024 March 31,

Originated loans and leases:

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

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

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

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

The period-end total loan and lease balances at March 31, 2025 increased $70.5 million, or 4% annualized, compared to at December 31, 2024.

The increase in the period-end loan and lease balances at March 31, 2025 compared to December 31, 2024 was primarily driven by increases of $74.5 million in other commercial real estate loans, $13.1 million of residential real estate loans, and $10.4 million in indirect consumer loans, partially offset by a decrease of $11.1 million and $9.3 million in leases and construction loans, respectively.

The increase in the period-end loan and lease balances at March 31, 2025 compared to at March 31, 2024 was primarily driven by loan growth of $129.2 million of commercial and industrial loans, $66.3 million of residential real estate loans, $30.0 million of indirect consumer loans, and $25.1 million of premium finance loans.

These were partially offset by reductions in leases of $27.2 million and commercial real estate loans of $13.2 million.

Loan Concentration

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

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

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

Loans secured by commercial real estate, including commercial construction loans, continued to comprise the largest portion of Peoples' loan portfolio at March 31, 2025.

The following tables provide information regarding the largest concentrations of commercial construction loans and other commercial real estate loans within the loan portfolio at March 31, 2025:

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

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Lodging and lodging related 11,709 12,520 24,229 3.7 %

Warehouse facilities 328 16,315 16,643 2.6 %

Student housing 15,000 — 15,000 2.3 %

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and Maryland.

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

For all other states, the aggregate outstanding balances of commercial loans in each state were less than 5% of total loans at March 31, 2025 and December 31, 2024.

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

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

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

(Dollars in thousands) March 31,

2025 December 31,

2024 September 30,

2024 June 30,

2024 March 31,

Construction $ 1,156 $ 878 $ 854 $ 673 $ 701

10 unchanged sentences

As a percent of total loans 1.01 % 1.00 % 1.06 % 1.05 % 1.05 %

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

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

The increase in the allowance for credit losses at March 31, 2025 compared to December 31, 2024 was primarily due to (i) a deterioration of macro-economic conditions used within the CECL model, (ii) an increase of reserves on individually analyzed loans and (iii) loan growth.

The increase in the allowance balance at March 31, 2025 when compared to March 31, 2024 was driven by loan growth and a slight increase of reserves on individually analyzed loans.

Additional information regarding Peoples' allowance for credit losses can be found in "Note 1 Summary of Significant Accounting Policies" in Peoples' 2024 Form 10-K and "Note 4 Loans and Leases" of the Notes to the Unaudited Condensed Consolidated Financial Statements in this Form 10-Q.

1 unchanged sentence

Three Months Ended

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

(Dollars in thousands) March 31,

2025 December 31,

2024 September 30,

2024 June 30,

2024 March 31,

Gross charge-offs:

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Net charge-offs (recoveries):

Construction $ — $ — $ — $ — $ —

Commercial real estate, other 211 195 (100) 80 129

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Ratio of net charge-offs (recoveries) to average total loans (annualized):

Construction — % — % — % — % — %

Commercial real estate, other 0.01 % 0.01 % (0.01) % 0.01 % 0.01 %

10 unchanged sentences

Each with "--%" not meaningful.

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

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

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

Total net charge-offs during the first quarter of 2025 were $8.1 million, or 0.52% of average total loans on an annualized basis, compared to $9.6 million, or 0.61% of average total loans on an annualized basis, during the linked quarter and $3.3 million, or 0.22% of average total loans on an annualized basis, during the first quarter of 2024.

The decrease in net charge-offs when compared to the linked quarter was primarily related to a slight improvement in the lease portfolio of $2.2 million, partially offset by an increase of $0.5 million in indirect consumer loans.

The net charge-offs for the lease portfolio remain higher than historic norms and are the driver for the increase over March 31, 2024.

The following table details Peoples’ nonperforming assets:

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

(Dollars in thousands) March 31,

2025 December 31,

2024 September 30,

2024 June 30,

2024 March 31,

Loans 90+ days past due and accruing:

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NPAs include nonperforming loans and OREO.

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

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

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

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

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

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

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

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

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

Compared to at December 31, 2024, Peoples' NPAs decreased from 0.53% of total assets to 0.50% of total assets at March 31, 2025.

Total loans 90+ days past due and accruing in total decreased at March 31, 2025 compared to March 31, 2024 because of a reduction of leases.

During the first quarter of 2025, criticized loans decreased $14.8 million, while classified loans decreased $5.0 million when compared to at December 31, 2024.

The decrease in the amounts of criticized and classified loans compared to at December 31, 2024 and at March 31, 2024 was primarily driven by paydowns and upgrades of the risk rating of commercial loans.

The decrease in NPAs compared to at December 31, 2024, was primarily driven by decreases of residential real estate loans and premium finance loans that were 90+ days past due and accruing.

The decrease in NPAs compared to at March 31, 2024, was driven primarily by leases 90+ days past due and accruing and a reduction of OREO, partially offset by an increase in nonaccrual leases.

The following table details Peoples’ deposit balances:

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

(Dollars in thousands) March 31,

2025 December 31,

2024 September 30,

2024 June 30,

2024 March 31,

Non-interest-bearing deposits (a) $ 1,526,285 $ 1,507,661 $ 1,453,441 $ 1,472,697 $ 1,468,363

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

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

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

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

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

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

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

At March 31, 2025, period-end total deposits increased $144.5 million, or 2%, compared to at December 31, 2024, driven by increases of $89.1 million in money market deposit accounts, $58.6 million in governmental deposit accounts, and $44.6 million in retail certificates of deposits, partially offset by a decrease of $96.0 million in brokered deposits.

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

The decrease in brokered deposit accounts was due to the aforementioned influx of deposits.

Compared to March 31, 2024, period-end deposit balances increased $408.2 million, or 6%.

The increase was driven by increases of $285.6 million in retail certificates of deposits, $107.4 million in money market deposit accounts, and $57.9 million of non-interest bearing deposits, partially offset by decreases of $24.5 million and $21.6 million in brokered deposits and interest-bearing deposits, respectively.

The increase in retail certificates of deposits was driven by special promotional rate offerings over the past year.

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

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

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

As of September 30, 2024, Peoples had 9 effective interest rate swaps, with an aggregate notional value of $85.0 million, which were designated as cash flow hedges.

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

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

As of March 31, 2025, Peoples had seven effective interest rate swaps, with an aggregate notional value of $65.0 million, which were designated as cash flow hedges.

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

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

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

(Dollars in thousands) March 31,

2025 December 31,

2024 September 30,

2024 June 30,

2024 March 31,

Short-term borrowings:

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Bank Term Funding Program ("BTFP") — — 163,000 163,000 163,000

Other short-term borrowings — 107 — — —

Total short-term borrowings

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Total borrowed funds, which include overnight borrowings, are mainly a function of loan growth and changes in total deposit balances.

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

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

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

Total borrowed funds at March 31, 2025 decreased compared to at December 31, 2024 and at March 31, 2024, primarily due to lower FHLB overnight borrowings.

Capital/Stockholders’ Equity

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

At March 31, 2025, capital levels for both Peoples and Peoples Bank remained substantially higher than the minimum amounts needed to be considered "well capitalized" institutions under applicable banking regulations.

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

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

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

At March 31, 2025, Peoples had a capital conservation buffer of 5.75%.

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

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

(Dollars in thousands) March 31,

2025 December 31,

2024 September 30,

2024 June 30,

2024 March 31,

Capital Amounts:

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Tier 1 leverage ratio 9.81 % 9.73 % 9.59 % 9.29 % 9.16 %

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

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

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

Peoples' risk-based capital ratios at March 31, 2025 increased when compared to at December 31, 2024, and to at March 31, 2024, due to net income during the quarter, partially offset by dividends paid.

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

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

(Dollars in thousands) September 30,

2024 June 30,

2024 March 31,

(Dollars in thousands) March 31,

2025 December 31,

2024 September 30,

2024 June 30,

2024 March 31,

Tangible equity:

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8.34 % 8.01 % 8.25 % 7.61 % 7.37 %

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

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

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

Tangible book value per common share increased to $20.68 at March 31, 2025 compared to $19.94 at December 31, 2024.

The change in tangible book value per common share was due to tangible equity increasing during the first quarter of 2025 primarily due to a decrease in accumulated other comprehensive loss over the last three months.

Tangible book value per common share at March 31, 2025 increased compared to at March 31, 2024 primarily due to net income over the last twelve months.

Interest Rate Sensitivity and Liquidity

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

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

(in Basis Points) March 31, 2025 December 31, 2024 March 31, 2025 December 31, 2024

300 $ 18,876 5.3 % $ 10,471 3.0 % $ (108,903) (6.0) % $ (127,697) (7.2) %

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

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

Given the shape of market yield curves at March 31, 2025, consideration of the bear steepener and bull steepener scenarios provide insights which were not captured by parallel shifts.

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

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

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

At March 31, 2025, the bear steepener scenario produced an increase in net interest income of 0.8% and an increase in the economic value of equity of 5.6%.

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

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

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

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

At March 31, 2025, the bull steepener scenario produced a decline of 0.7% to net interest income, as the impact of recent term funding mitigates the impact of lower short-term rates over a 12-month horizon, and an increase in the economic value of equity of 2.6%.

Over a 24-month horizon, the bull steepener scenario produced a decrease of 1.2% to net interest income.

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

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

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

As of March 31, 2025, Peoples had entered into seven interest rate swap contracts with an aggregate notional value of $65.0 million.

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

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

At March 31, 2025, Peoples' Unaudited Consolidated Balance Sheet was positioned to benefit from rising interest rates, while also mitigating the impact to net interest income decreasing rate scenarios.

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

In addition to IRR management, another major objective of the ALCO is to maintain a sufficient level of liquidity.

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

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

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

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

evaluate the adequacy of Peoples Bank's liquidity position remain appropriate and are largely unchanged from those disclosed in Peoples' 2024 Form 10-K.

At March 31, 2025, Peoples Bank had liquid assets of $520.4 million, which represented 4.9% of total assets and unfunded loan commitments.

Peoples also had an additional $158.1 million of unpledged investment securities not included in the measurement of liquid assets.

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(Dollars in thousands)

2025 December 31,

2024 September 30,

1 unchanged sentence

2024 March 31,

2024 December 31,

2023 September 30,

Home equity lines of credit $ 257,349 $ 254,168 $ 248,400 $ 247,757 $ 246,035

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis