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Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-05-01 · 382 added, 255 removed, 885 unchanged (42% of the section changed)

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

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

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 and six months ended June 30, 2025 and June 30, 2024.

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

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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 current expected credit losses ("CECL") model;

(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, 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;

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

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

As of June 30, 2025, Peoples had 145 locations, including 127 full-service bank branches in Ohio, Kentucky, West Virginia, Virginia, Washington D.C.

and Maryland.

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

Management has identified the accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are critical to understanding Peoples’ Unaudited Condensed Consolidated Financial Statements, and this MD&A at 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.

Management has identified the accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are critical to understanding Peoples’ Unaudited Condensed Consolidated Financial Statements, and this MD&A at June 30, 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.

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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.

The guidance will be applied on a prospective basis with the option to apply the standard retrospectively with early adoption permitted.

Peoples does not expect the update will have a material impact on its 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.

The 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.

Peoples is currently evaluating the impact of adopting this new guidance on its 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 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 the second quarter of 2025, Peoples recorded a provision for credit losses of $16.6 million, compared to a provision for credit losses of $10.2 million for the linked quarter and a provision for credit losses of $5.7 million for the second quarter of 2024.

The provision for credit losses for the second quarter of 2025 was primarily driven by (i) net charge offs, (ii) an increase in reserves for individually-analyzed loans and leases, (iii) an increase in reserves for leases originated by our North Star Leasing division, (iv) a periodic refresh in loss drivers utilized within the CECL model, (v) deterioration in the economic forecasts used within the CECL model, and (vi) loan growth.

The provision for the first quarter of 2025 was primarily driven by 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 in reserves for individually analyzed loans, and (iii) loan growth.

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

◦ 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%.

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EXECUTIVE SUMMARY

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.

Peoples reported net income of $21.2 million for the second quarter of 2025, representing earnings per diluted common share of $0.59.

In comparison, Peoples reported net income of $24.3 million, representing earnings per diluted common share of $0.68, for the first quarter of 2025, and net income of $29.0 million, representing earnings per diluted common share of $0.82, for the second quarter of 2024.

Non-core items negatively impacted earnings per diluted common share by $0.01 for the second quarter of 2025, $0.01 for the first quarter of 2025, and $0.02 for the second quarter of 2024.

For the six months ended June 30, 2025, Peoples recorded net income of $45.5 million, or $1.28 per diluted common share, compared to $58.6 million, or $1.66 per diluted common share, for the six months ended June 30, 2024.

Net interest income was $87.6 million for the second quarter of 2025, and increased $2.3 million when compared to the linked quarter.

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

The increase in net interest income and net interest margin was primarily driven by lower deposit and borrowing costs.

Net interest income for the second quarter of 2025 increased $1.0 million, or 1%, compared to the second quarter of 2024.

The increase in net interest income compared to the second quarter of 2024 was driven by higher loan balances.

Net interest margin for the second quarter of 2025 was 4.15% and decreased 3 basis points compared to 4.18% for the second quarter of 2024, impacted primarily by reductions in loan yields, driven by lower accretion income, partially offset by lower funding costs.

Net interest income for the first six months of 2025 was $172.8 million, compared to $173.3 million for the same period of 2024.

Net interest margin for the first six months of 2025 was 4.14%, compared to 4.22% for the same period of 2024 and was driven by lower accretion income.

Accretion income, net of amortization expense, from acquisitions was $2.6 million for the second quarter of 2025, $3.5 million for the first quarter of 2025 and $5.8 million for the second quarter of 2024, which added 12 basis points, 17 basis points and 28 basis points, respectively, to net interest margin.

The decrease in accretion income for the second quarter of 2025 when compared to the linked quarter and the second quarter of 2024 was driven by fewer loan payoffs and more accretion income recognized in 2024 from

the merger with Limestone Bancorp Inc.

(the "Limestone Merger").

Accretion income, net of amortization expense, was $6.1 million and $12.3 million for the first six months of 2025 and 2024, respectively.

Accretion income added 15 basis points and 30 basis points to net interest margin for the first six months of 2025 and 2024, respectively.

The decrease in accretion income for the first six months of 2025 compared to the same period in 2024 was due to more accretion recognized in 2024 from the Limestone Merger.

The provision for credit losses was $16.6 million for the second quarter of 2025, compared to a provision for credit losses of $10.2 million for the linked quarter and a provision for credit losses of $5.7 million for the second quarter of 2024.

The provision for credit losses for the linked quarter was primarily driven by net charge-offs.

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

Net charge-offs for the second quarter of 2025 were $7.0 million, or 0.43% of average total loans annualized, compared to net charge-offs of $8.1 million, or 0.52% of average total loans annualized, for the linked quarter and net charge-offs of $4.2 million, or 0.27% of average total loans annualized, for the second quarter of 2024.

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

The provision for credit losses for the first six months of 2025 was $26.8 million, compared to a provision for credit losses of $11.8 million for the first six months of 2024.

The provision for credit losses for the first six months of 2025 was mainly a result of (i) net charge offs, (ii) an increase in reserves for individually-analyzed loans and leases, (iii) an increase in reserves for leases originated by our North Star Leasing division, (iv) a periodic refresh in loss drivers utilized within the CECL model, (v) deterioration in the economic forecasts used within the CECL model, and (vi) loan growth.

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

Net charge-offs for the first six months of 2025 were $15.1 million, or 0.48% of average total loans annualized, compared to net charge-offs of $7.6 million, or 0.23% annualized, for the first six months of 2024.

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

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

The net loss realized during the first quarter of 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.

The net loss realized during the second quarter of 2025 was $0.3 million, compared to a net loss of $0.4 million for the linked quarter and a net loss of $0.8 million for the second quarter of 2024.

Net losses in both the second and first quarter of 2025 were driven by a $0.3 million loss on repossessed assets in each quarter.

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

For the six months ended June 30, 2025, the total net loss was $0.6 million, compared to $1.1 million for the same period in 2024.

These losses were primarily driven by $0.6 million and $0.7 million of losses on repossessed assets, respectively.

Total non-interest income, excluding net gains and losses, for the second quarter of 2025 decreased $0.3 million compared to the linked quarter.

The decrease in non-interest income, excluding net gains and losses, was primarily impacted by a decrease 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 increases in lease income and electronic banking income of $0.7 million and $0.4 million, respectively.

Compared to the second quarter of 2024, total non-interest income, excluding net gains and losses, increased $2.7 million, due to an increase of $2.0 million in lease income, driven by operating lease income, an increase of $0.4 million in insurance income, and an increase of $0.3 million in other non-interest income, partially offset by a decrease of $0.3 million in deposit account service charges.

For the first six months of 2025, total non-interest income, excluding gains and losses, increased $4.0 million, or 8%, compared to the first six months of 2024.

The increase was driven by (i) a $3.5 million increase in lease income, driven by gains on early Vantage lease terminations and operating lease income, (ii) a $0.9 million increase in other non-interest income, driven by an increase in swap fee income due to customer demand, and (iii) a $0.7 million increase in trust and investment income, driven by an increase in assets under administration and management.

These increases were partially offset by a $0.5 million decrease in deposit account service charges and a $0.4 million decrease in electronic banking income due to customer activity.

Total non-interest expense decreased $0.4 million for the three months ended June 30, 2025, compared to the linked quarter.

The decrease in total non-interest expense was primarily due to a decreases of $0.9 million in salaries and employee benefit costs and $0.4 million in other non-interest expense, partially offset by increases of $0.5 million in professional fees and $0.4 million in data processing and software expenses.

The decrease in salaries and employee benefit costs was due to annual expenses that occur in the first quarter of each year including stock-based compensation expenses attributable to the forfeiture rate true-up on stock vested along with up-front expense on stock grants to certain retirement-eligible employees, and health savings account ("HSA") contributions.

Compared to the second quarter of 2024, total non-interest expense increased $1.6 million, or 2%.

The increase in total non-interest expense was primarily driven by increases of $2.3 million in salaries and employee benefit costs, which were driven by higher sales-based incentive, medical costs, and payroll taxes, $0.7 million in professional fees, and $0.6 million in data processing and software expense, offset by decreases of $1.6 million in other non-interest expense, driven by a one-time $1.3 million true-up of corporate expenses recorded in the second quarter of 2024, and $0.6 million in amortization of other intangible assets.

For the six months ended June 30, 2025, total non-interest expense increased $3.9 million, or 3%, compared to the first six months of 2024.

The increase was driven by increases of (i) $3.3 million in salaries and employee benefits costs, which were driven by higher sales-based incentive and medical costs, (ii) $1.8 million in data processing and software expenses, (iii) $0.8 million in professional fees, and (iv) $0.6 million in operating lease expense, partially offset by decreases of $1.2 million in amortization of other intangible assets and $1.1 million in net occupancy and equipment expense.

The efficiency ratio for the second quarter of 2025 was 59.3%, compared to 60.7% for the linked quarter and 59.2% for the second quarter of 2024.

The efficiency ratio improved compared to the linked quarter mainly as the result of higher higher net interest income and lower non-interest expenses.

The efficiency ratio for the first six months of 2025 was 60.0%, compared to 58.6% for the first six months of 2024.

The efficiency ratio increased compared to the prior year first six months due to the increase in non-interest expense and lower net interest income.

Peoples recorded income tax expense of $6.2 million with an effective tax rate of 22.7% for the second quarter of 2025, compared to income tax expense of $7.0 million with an effective tax rate of 22.4% for the linked quarter, and income tax expense of $6.9 million with an effective tax rate of 19.1% for the second quarter of 2024.

The decrease in income tax expense when compared to the prior quarter was primarily due to lower net income.

Peoples' income tax expense for the first half of 2025 was $13.3 million with an effective tax rate of 22.6%, compared to $15.1 million with an effective tax rate of 20.5% for the same period of 2024.

Total assets were $9.54 billion as of June 30, 2025, $9.25 billion at March 31, 2025, $9.25 billion at December 31, 2024, and $9.23 billion at June 30, 2024.

Total assets at June 30, 2025 increased when compared to at March 31, 2025 primarily due to increases in period-end loan and lease balances.

The period-end total loan and lease balances at June 30, 2025 increased $173.1 million, or 11% annualized, compared to at March 31, 2025.

The increase in the period-end total loan and lease balances was primarily driven by increases of $63.6 million in commercial and industrial loans, $29.8 million in residential real estate loans, $22.2 million in construction loans, $17.7 million in other commercial real estate loans, $13.5 million in premium finance loans, and $18.5 million in Vantage leases, offset by a decrease of $13.9 million in North Star leases.

Total assets at June 30, 2025 increased compared to at June 30, 2024 due to increases of $276.2 million in total loans and leases and $135.2 million in total investment securities, partially offset by a decrease of $49.8 million in total cash and cash equivalents.

Total liabilities were $8.39 billion at June 30, 2025, up from $8.11 billion at March 31, 2025, $8.14 billion at December 31, 2024, and $8.15 billion at June 30, 2024.

The increase in total liabilities when compared to at March 31, 2025 was primarily due to an increase of $377.6 million in short-term borrowings, partially offset by a decrease of $97.5 million in period-end total deposits.

The increase in total liabilities when compared to at June 30, 2024 was primarily due to a $339.4 million increase in period-end deposits, partially offset with a decrease of $85.9 million in short-term borrowings.

The increase in deposits was primarily driven by an increase of $192.4 million in retail certificates of deposit, driven by current promotional offerings, an increase of $58.4 million in money market deposit accounts, an increase of $58.0 million in non-interest-bearing deposits, and an increase of $30.0 million in brokered certificates of deposit.

Total stockholders' equity at June 30, 2025 increased $15.5 million compared to at March 31, 2025, which was primarily due to net income for the quarter of $21.2 million and a decrease of $5.4 million in accumulated other comprehensive loss, partially offset by dividends paid of $14.6 million.

Accumulated unrealized losses related to the available-for-sale investment securities portfolio were $90.9 million and $96.6 million at June 30, 2025 and at March 31, 2025, respectively.

Total stockholders' equity at June 30, 2025 increased $41.8 million, or 4%, compared to at December 31, 2024, which was due to net income of $45.5 million in the first six months of 2025 and a decrease of $20.1 million in accumulated other comprehensive loss, partially offset by dividends paid of $28.8 million.

Total stockholders' equity at June 30, 2025 increased by $75.5 million compared to at June 30, 2024 and was impacted by net income of $104.2 million in the last twelve months and a decrease in accumulated other comprehensive loss of $19.9 million, partially offset by dividends paid of $57.2 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 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

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

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For the Three Months Ended

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

June 30, 2025 March 31, 2025 June 30, 2024

( Dollars in thousands)

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Net interest margin (b) 4.15 % 4.12 % 4.18 %

For the Six Months Ended

June 30, 2025 June 30, 2024

( Dollars in thousands)

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

Short-term investments $ 87,780 $ 1,938 4.45 % $ 160,238 $ 4,424 5.55 %

Investment securities (a)(b):

Taxable 1,726,366 30,965 3.59 % 1,671,453 28,850 3.45 %

Nontaxable 177,631 2,441 2.75 % 180,032 2,528 2.81 %

Total investment securities 1,903,997 33,406 3.51 % 1,851,485 31,378 3.39 %

Loans (b)(c):

Construction 324,325 11,507 7.06 % 334,196 12,998 7.69 %

Commercial real estate, other 2,090,163 66,693 6.35 % 2,075,468 73,662 7.02 %

Commercial and industrial 1,331,026 46,635 6.97 % 1,216,743 47,412 7.71 %

Premium finance 263,290 11,328 8.56 % 235,459 10,310 8.66 %

Leases 389,646 20,485 10.46 % 414,817 24,049 11.47 %

Residential real estate (d) 965,176 24,440 5.06 % 928,309 22,782 4.91 %

Home equity lines of credit 236,543 8,922 7.61 % 221,053 8,909 8.10 %

Consumer, indirect 680,415 21,586 6.40 % 656,324 18,950 5.81 %

Consumer, direct 118,623 4,572 7.77 % 121,569 4,194 6.94 %

Total loans 6,399,207 216,168 6.74 % 6,203,938 223,266 7.14 %

Allowance for credit losses

(64,129) (62,990)

Net loans 6,335,078 216,168 6.81 % 6,140,948 223,266 7.22 %

Total earning assets 8,326,855 251,512 6.03 % 8,152,671 259,068 6.32 %

Goodwill and other intangible assets 400,135 409,292

Other assets 517,505 539,089

$ 9,244,495 $ 9,101,052

Interest-bearing deposits:

Savings accounts $ 884,282 $ 437 0.10 % $ 899,089 $ 448 0.10 %

Governmental deposit accounts

796,885 9,526 2.41 % 779,906 10,679 2.75 %

Interest-bearing demand accounts

1,079,921 1,086 0.20 % 1,102,293 947 0.17 %

Money market accounts 926,264 10,884 2.37 % 817,567 10,307 2.54 %

Retail CDs 1,968,840 36,669 3.76 % 1,662,832 34,323 4.15 %

Brokered CDs (e) 491,567 10,440 4.28 % 525,653 11,015 4.21 %

Total interest-bearing deposits

6,147,759 69,042 2.26 % 5,787,340 67,719 2.35 %

Borrowed funds:

Short-term FHLB advances (e) 60,392 1,357 4.53 % 167,525 4,582 5.50 %

Repurchase agreements and other 31,944 539 3.37 % 230,527 5,824 5.05 %

Total short-term borrowings 92,336 1,896 4.13 % 398,052 10,406 5.24 %

Long-term FHLB advances 131,697 2,617 4.01 % 129,255 2,557 3.98 %

Long-term notes payable 48,720 1,750 7.18 % 49,291 1,704 6.91 %

Other long-term borrowings (f) 55,125 2,812 10.15 % 54,071 2,724 9.97 %

Total long-term borrowings 235,542 7,179 6.10 % 232,617 6,985 5.99 %

Total borrowed funds 327,878 9,075 5.55 % 630,669 17,391 5.12 %

Total interest-bearing liabilities

6,475,637 78,117 2.43 % 6,418,009 85,110 2.66 %

Non-interest-bearing deposits 1,522,851 1,489,304

Other liabilities 110,883 136,622

Total liabilities 8,109,371 8,043,935

Total stockholders’ equity 1,135,124 1,057,117

Total liabilities and stockholders’ equity $ 9,244,495 $ 9,101,052

Interest rate spread (b) $ 173,395 3.60 % $ 173,958 3.66 %

Net interest margin (b) 4.14 % 4.22 %

(a) Average balances are based on carrying value.

5 unchanged sentences

Related interest income on loans originated for sale prior to the loan being sold is included in loan interest income.

(e) Interest related to interest rate swap transactions is included, as appropriate to the transaction, in interest expense on short-term FHLB advances and interest expense on brokered CDs for the periods presented in which FHLB advances and brokered CDs were being utilized.

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

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.

(e) Interest related to interest rate swap transactions is included, as appropriate to the transaction, in interest expense on short-term FHLB advances and interest expense on brokered CDs for the periods presented in which interest payments on FHLB advances or brokered CDs were being hedged.

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

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

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

Three Months Ended March 31, 2025 Compared to

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

Three Months Ended June 30, 2025 Compared to

Six Months Ended June 30, 2025 Compared to

(Dollars in thousands) March 31, 2025 June 30, 2024 June 30, 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 $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.

Net interest income was $87.6 million for the second quarter of 2025 and increased $2.3 million when compared to the linked quarter.

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

The increase in net interest income and margin was primarily driven by lower deposit and borrowing costs.

Net interest income for the second quarter of 2025 increased $1.0 million, or 1%, compared to the second quarter of 2024.

Net interest margin decreased 3 basis points when compared to the second quarter of 2024.

The increase in net interest income was primarily driven by higher loan balances.

The decrease in net interest margin was impacted by reductions in loan yields, driven by lower accretion income, partially offset with lower funding costs.

For the first six months of 2025, net interest income decreased $0.4 million compared to the first six months of 2024, while net interest margin decreased 8 basis points to 4.14%.

The decrease in net interest income and net interest margin for the first six months of 2025 compared to the first six months of 2024 was primarily driven by lower accretion income.

Accretion income, net of amortization expense, from acquisitions was $2.6 million for the second quarter of 2025, $3.5 million for the linked quarter and $5.8 million for the second quarter of 2024, which added 12 basis points, 17 basis points and 28 basis points, respectively, to net interest margin.

Accretion income, net of amortization expense, was $6.1 million and $12.3 million for the first six months of 2025 and 2024, respectively.

Accretion income added 15 basis points and 30 basis points to net interest margin for the first six months of 2025 and 2024, respectively.

The decrease in accretion income for the first six months of 2025 compared to the same period in 2024 was due to less accretion recognized from the Limestone Merger.

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

2 unchanged sentences

The following table details Peoples’ provision for credit losses:

Three Months Ended

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

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 first quarter of 2025 and the fourth quarter of 2024 was mainly a result of net charge-offs.

The provision for credit losses for the first quarter of 2025 was primarily driven by 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 in reserves for individually analyzed loans and leases, and (iii) loan growth.

For the first half of 2025, the provision for credit losses was mainly a result of (i) net charge offs, (ii) an increase in reserves for individually-analyzed loans and leases, (iii) an increase in reserves for leases originated by our North Star Leasing division, (iv) a periodic refresh in loss drivers utilized within the CECL model, (v) deterioration in the economic forecasts used within the CECL model, and (vi) loan growth.

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

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

2 unchanged sentences

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

Three Months Ended

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

2 unchanged sentences

Net loss on other assets (267) (330) (397) (597) (706)

Net gain (loss) on OREO 20 (1,228) —

Net gain on OREO 10 20 — 30 —

Net loss on other transactions (23) (51) (31) (74) (63)

Net loss on asset disposals and other transactions $ (280) $ (361) $ (428) $ (641) $ (769)

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.

The net loss on other assets for all periods presented was driven by losses recorded on repossessed assets.

The net loss on investment securities reported for the second quarter of 2024 was attributable to a loss recorded on a contingent call of a security.

Total Non-Interest Income, Excluding Net Gains and Losses

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.

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 second quarter of 2025, 24% for the linked quarter, and 22% for the second quarter of 2024.

For the first six months of 2025, total non-interest income, excluding net gains and losses, totaled 24% of total revenue compared to 23% for the same period in 2024.

For the second quarter of 2025, electronic banking ("e-banking") income comprised the largest portion of Peoples' total non-interest income, excluding net gains and losses.

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

The following table details Peoples' e-banking income:

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

E-banking income $ 6,272 $ 5,885 $ 6,470 $ 12,157 $ 12,516

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.

The following table details Peoples' insurance income:

Three Months Ended

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

4 unchanged sentences

Life and health insurance commissions

659 689 672 1,348 1,372

Insurance income $ 4,549 $ 6,054 $ 4,109 $ 10,603 $ 10,607

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.

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

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

Insurance income for the second quarter of 2025 increased when compared to the second quarter of 2024 due to higher commissions.

Insurance income in the first half of 2025 remained flat compared to the same period of 2024.

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

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

3 unchanged sentences

Trust and investment income $ 5,281 $ 5,061 $ 4,999 $ 10,342 $ 9,598

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.

Fiduciary income and brokerage income in the second quarter of 2025 increased when compared to the linked quarter and to the second quarter of 2024 and was driven by an increase in assets under administration and management.

Trust and investment income increased $0.7 million for the first half of 2025 when compared to 2024, due to higher brokerage income, primarily reflecting the increase in assets under management.

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

2025 March 31,

2025 December 31,

1 unchanged sentence

2024 June 30,

2024 March 31,

(Dollars in thousands)

3 unchanged sentences

Quarterly average $ 3,736,778 $ 3,711,527 $ 3,706,804 $ 3,683,334 $ 3,587,952

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.

The increase in assets under administration and management at June 30, 2025 compared to at March 31, 2025 was driven by market value fluctuations.

The increase in assets under administration and management at June 30, 2025 when compared to at June 30, 2024 was 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

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

5 unchanged sentences

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

Deposit account service charges decreased for the first quarter of 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.

Deposit account service charges remained relatively flat for the second quarter of 2025 compared to the linked quarter.

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

For the first half of 2025, total deposit account services charges decreased by $0.5 million from the same period of 2024, driven by timing of customer activity.

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

Three Months Ended

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

Lease income 4,189 3,446 2,147 7,635 4,163

Other non-interest income 1,478 1,472 1,141 2,950 2,059

Bank owned life insurance income 1,112 1,133 1,037 2,245 2,537

Lease income 3,446 3,200 2,016

Mortgage banking income 220 396 243 616 564

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 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.

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

residual assets, net of any purchase accounting impact, and (vi) syndication income.

Lease income for the second quarter of 2025 increased compared to the linked quarter due to gains on early terminated Vantage leases.

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

Lease income increased $3.5 million for the first six months of 2025 when compared to the same period of 2024 due to gains on early Vantage lease terminations and an increase in operating lease income.

Other non-interest income remained flat for the three months ended June 30, 2025 when compared to the linked quarter and increased $0.3 million compared to the second quarter of 2024 due to an increase in swap fee income.

For the first half of 2025, other non-interest income increased by $0.9 million from the same period of 2024, primarily due to the increase in swap fee income which is driven by customer demand.

Bank owned life insurance income for the second quarter of 2025 remained flat when compared to the linked quarter and the prior year quarter.

Bank owned life insurance income decreased for the first half of 2025 when compared to the same period of 2024 primarily due to death benefits recorded in 2024.

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

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

Mortgage banking income for the first quarter of 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.

Mortgage banking income for the second quarter of 2025 decreased when compared to each of the prior periods and was primarily driven by the decreased volume in loans sold as more production has been kept on the balance sheet relative to prior periods.

Mortgage banking income increased for the first six months of 2025 when compared to the same period of 2024 due to higher production.

In the second quarter of 2025, Peoples sold $0.3 million in loans into the secondary market with servicing retained and $10.3 million in loans with servicing released, compared to $0.2 million and $4.7 million, respectively, in the first quarter of 2025, and $2.6 million and $11.8 million, respectively, in the second quarter of 2024.

For the first six months of 2025, Peoples sold $0.5 million in loans into the secondary market with servicing retained, and $10.3 million with servicing released, compared to $2.7 million and $18.8 million, respectively, for the first six months of 2024.

Non-Interest Expense

1 unchanged sentence

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

Three Months Ended

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

9 unchanged sentences

Average during the period 1,462 1,467 1,492 1,478 1,491

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.

Base salaries and wages for the second quarter of 2025 and the first six months of 2025 increased compared to all prior periods.

The increases when compared to the second quarter of 2024 and the first six months of 2024 were primarily driven by annual merit increases.

Sales-based and incentive compensation decreased for the second quarter of 2025 compared to the linked quarter driven by a decrease in corporate incentives.

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

Sales-based and incentive compensation increased for the first half of 2025 when compare to 2024, due to an increase in corporate incentives and insurance commissions.

The increase in employee benefits for the second quarter of 2025 compared to the linked quarter was primarily related to higher medical costs and an adjustment related to prior period nonqualified deferred compensation expense.

Employee benefits increased for the second quarter of 2025 and the first six months of 2025 when compared to the same periods for 2024 due to higher medical costs.

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

For the first six months of 2025, payroll taxes and other employment costs increased slightly compared to the same period of 2024.

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

5 unchanged sentences

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

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

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

Similarly, deferred personnel costs increased for the first half of 2025 when compared to 2024.

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

Three Months Ended

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

4 unchanged sentences

Net occupancy and equipment expense $ 5,690 $ 5,612 $ 6,142 $ 11,302 $ 12,425

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.

Net occupancy and equipment expense remained flat for the second quarter compared to the linked quarter and decreased $0.5 million compared to the second quarter of 2024 primarily due to a one time rent expense true-up adjustment recorded in the second quarter of 2024.

Net occupancy and equipment expense for the first half of 2025 decreased when compared to the same period of the previous year 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

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

6 unchanged sentences

Operating lease expense 1,053 985 788 2,038 1,427

Franchise tax expense 929 664 881

Marketing expense 718 903 681 1,621 1,737

Communication expense 734 796 799

Travel and entertainment expense 713 500 530 1,213 1,138

Communication expense 712 734 736 1,446 1,535

Franchise tax expense 678 929 760 1,607 1,641

Other non-interest expense 4,246 4,603 5,864 8,849 9,603

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.

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

Professional fees for the second quarter of 2025 increased when compared to the linked quarter and to the second quarter of 2024 due to increased costs of professional services, primarily related to our credit card portfolio, and higher legal expenses incurred.

Professional fees increased for the first half of 2025 when compared to 2024 due to increased exam and audit fees and higher legal expenses.

Amortization of other intangible assets for the second quarter of 2025 remained 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 decreased for the first half of 2025 when compared to 2024 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 the timing and volume of customer activity.

E-banking expense remained relatively flat compared to the linked quarter and the second quarter of 2024.

E-banking expense increased for the first half of 2025 when compared to 2024 due to customer activity.

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

FDIC premiums increased slightly for the first half of 2025 when compared to 2024.

Other loan expenses during the second quarter of 2025 remained relatively flat when compared to the linked quarter and increased slightly compared to the second quarter of 2024.

Other loan expenses increased for the first half of 2025 when compared to 2024 due to increased down payment assistance expenses.

Operating lease expense remained flat when compared to the linked quarter and increased compared to the second quarter of 2024 due to increased expense associated with an increase in the origination of operating leases.

Operating lease expense increased for the first half of 2025 when compared to 2024 due to an increased volume of leases.

Marketing expense for the second quarter of 2025 decreased when compared to the linked quarter primarily driven by a vendor credit received in the second quarter.

Marketing expense decreased for the first half of 2025 when compared to 2024 due to decreased advertising expenses.

Travel and entertainment expense increased compared to the linked quarter and to the second quarter of 2024 due to the timing of travel.

Travel and entertainment remained flat for the first half of 2025 when compared to 2024.

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

Communication expense decreased slightly for the first half of 2025 when compared to 2024.

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

1 unchanged sentence

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

The 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.

The decrease in franchise tax expense for the second quarter of 2025 compared to the linked quarter related to a one-time refund from the State of Ohio.

Franchise tax expense remained flat for the first half of 2025 when compared to the first half of 2024.

Other non-interest expense for the second quarter of 2025 decreased when compared to the linked quarter primarily due to lower corporate expenses.

Other non-interest expense decreased for the second quarter and the first half of 2025 when compared to same periods in 2024 due to a one-time prior period true-up of corporate expenses recognized in the second quarter of 2024.

Income Tax 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 when compared to the linked quarter and to the first quarter of 2024 was primarily due to lower net income.

Peoples recorded income tax expense of $6.2 million with an effective tax rate of 22.7% for the second quarter of 2025, compared to income tax expense of $7.0 million with an effective tax rate of 22.4% for the linked quarter and income tax expense of $6.9 million with an effective tax rate of 19.1% for the second quarter of 2024.

The decrease in income tax expense when compared to the prior quarter is primarily due to lower pre-tax income.

The effective tax rate in the prior year quarter was lower due to a $1.1 million one-time benefit related to a prior year amended return.

Peoples recorded income tax expense of $13.3 million and $15.1 million, through the first six months of 2025 and 2024, respectively.

The decrease for the first six months of 2025 compared to 2024 was driven by lower pre-tax income.

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

6 unchanged sentences

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

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

2 unchanged sentences

provision for credit losses 16,642 10,190 5,683 26,832 11,785

loss on OREO — 1,228 —

loss on investment securities — 2 353 2 354

2 unchanged sentences

gain on OREO 10 20 — 30 —

gain on investment securities — 12 —

Pre-provision net revenue $ 44,375 $ 41,930 $ 42,340 $ 86,305 $ 86,636

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.

The increase in the PPNR for the second quarter of 2025 compared to the linked quarter and the second quarter of 2024 was driven by an increase in net interest income due to higher income on loans and lower deposit and borrowing costs.

PPNR for the first half of 2025 decreased slightly compared to 2024, primarily driven by lower accretion income, partially offset by lower funding costs.

Efficiency Ratio (Non-US GAAP)

3 unchanged sentences

Three Months Ended

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

13 unchanged sentences

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

The efficiency ratio for the 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.

The efficiency ratio for the second quarter of 2025 was 59.3%, compared to 60.7% for the linked quarter and 59.2% for the second quarter of 2024.

The efficiency ratio improved compared to the linked quarter mainly as the result of higher net interest income and lower non-interest expenses.

The efficiency ratio increased compared to the prior year first six months due to the increase in non-interest expense and lower net interest income.

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

3 unchanged sentences

Three Months Ended

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

2 unchanged sentences

net loss on investment securities

— 2 353 2 354

tax effect of net loss on investment securities (a)

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)

59 76 90 135 161

acquisition-related expenses

22 unchanged sentences

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

The return on average assets and the return on average assets adjusted for non-core items for the 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.

The return on average assets and the return on average assets adjusted for non-core items for the second quarter of 2025 decreased when compared to the linked quarter due to lower annualized net income.

The decrease in the return on average assets and return on average assets adjusted for non-core items for the second quarter of 2025, compared to the second quarter of 2024, was attributable to a decrease in annualized net income driven by an increase in provision for credit losses and an increase in average assets.

The decrease in return on average assets and return on average assets adjusted for non-core items for the first half of 2025 when compared to the same period of 2024 was primarily driven by a decrease in annualized net income from an increase in provision for credit losses and an increase in average assets.

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

2 unchanged sentences

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

Three Months Ended

2025 December 31,

Three Months Ended Six Months Ended

2025 March 31,

2025 June 30,

2024 June 30,

(Dollars in thousands) 2025 2024

4 unchanged sentences

tax effect of amortization of other intangible assets (a)

464 465 585 929 1,171

Net income excluding amortization of other intangible assets

1 unchanged sentence

Days in the period

91 90 91 181 182

Days in the year

365 365 366 365 366

Annualized net income

24 unchanged sentences

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

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

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.

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

FINANCIAL CONDITION

Cash and Cash Equivalents

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.

At June 30, 2025, Peoples' interest-bearing deposits in other banks had decreased $45.0 million from December 31, 2024.

The total cash and cash equivalents balance included $60.0 million of excess cash reserves being maintained at the FRB of Cleveland at June 30, 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 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.

Through the first six months of 2025, Peoples' total cash and cash equivalents decreased $31.6 million, which reflected cash outflows of $331.0 million for investing activities, partially offset by cash inflows of $214.4 million for financing activities and $85.0 million from operating activities.

Peoples' use of cash in investing activities reflected a $252.8 million net increase in loans held for investment and net cash outflows of $124.7 million related to the purchases of held-to-maturity investment securities.

These were partially offset by net cash inflows for available-for-sale investment securities of $58.8 million.

The cash provided by financing activities was driven by a net increase in short-term borrowings of $203.4 million.

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

1 unchanged sentence

The following table provides information regarding Peoples’ investment portfolio:

(Dollars in thousands) Weighted Average Yield March 31,

(Dollars in thousands) Weighted Average Yield June 30,

2025 March 31,

2025 December 31,

1 unchanged sentence

2024 June 30,

2024 March 31,

Available-for-sale securities, at fair value:

17 unchanged sentences

Total amortized cost $ 900,256 $ 753,703 $ 775,037 $ 693,873 $ 702,222

Other investment securities $ 51,322 $ 60,132 $ 55,691 $ 62,742 $ 62,939

Other investments $ 67,538 $ 51,322 $ 60,132 $ 55,691 $ 62,742

Total investment securities:

1 unchanged sentence

Carrying value $ 2,019,291 $ 1,878,699 $ 1,918,724 $ 1,830,231 $ 1,884,103

(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.

(a) Amortized cost is presented net of the allowance for credit losses of $237 at June 30, 2025 and at March 31, 2025 and $238 at June 30, 2024.

For the second quarter of 2025, total investment securities increased compared to all prior periods 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.

1 unchanged sentence

The following table provides information regarding outstanding loan balances:

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2025 March 31,

2025 December 31,

1 unchanged sentence

2024 June 30,

2024 March 31,

Originated loans and leases:

65 unchanged sentences

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

The period-end total loan and lease balances at 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.

The period-end total loan and lease balances at June 30, 2025 increased $173.1 million, or 11% annualized, compared to at March 31, 2025.

The increase in the period-end loan and lease balances at June 30, 2025 compared to March 31, 2025 was primarily driven by increases of $63.6 million in commercial and industrial loans, $29.8 million in residential real estate loans, $22.2 million in construction loans, $17.7 million in other commercial real estate loans, and $13.5 million in premium finance loans.

The increase in the period-end loan and lease balances at June 30, 2025 compared to at June 30, 2024 was primarily driven by loan growth of $149.3 million in commercial and industrial loans, $88.6 million in residential real estate loans, and $52.2 million in commercial real estate loans, partially offset by decreases of $30.6 million and $15.7 million in leases and premium finance loans, respectively.

Loan Concentration

1 unchanged sentence

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 12% 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 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:

Loans secured by commercial real estate, including commercial construction loans, continued to comprise the largest portion of Peoples' loan portfolio at June 30, 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 June 30, 2025:

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

1 unchanged sentence

Apartment complexes $ 196,815 $ 199,916 $ 396,731 57.7 %

Residential property 16,138 21,952 38,090 5.8 %

Land development 38,766 33,742 72,508 10.5 %

Land only 18,562 22,094 40,656 5.9 %

Residential property 10,143 22,185 32,328 4.7 %

Assisted living facilities and nursing homes 13,224 10,334 23,558 3.4 %

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

Industrial 3,931 19,370 23,301 3.4 %

Warehouse facilities 326 16,315 16,641 2.4 %

14 unchanged sentences

Total light industrial facilities $ 242,771 $ 5,630 $ 248,401 10.8 %

Office buildings and complexes:

Owner occupied $ 73,632 $ 2,560 $ 76,192 3.3 %

Non-owner occupied 118,803 1,462 120,265 5.2 %

Total office buildings and complexes $ 192,435 $ 4,022 $ 196,457 8.5 %

Lodging and lodging related:

2 unchanged sentences

Total lodging and lodging related $ 198,890 $ 2,676 $ 201,566 8.7 %

Office buildings and complexes:

Owner occupied $ 66,798 $ 2,905 $ 69,703 3.0 %

Non-owner occupied 115,323 2,132 117,455 5.1 %

Total office buildings and complexes $ 182,121 $ 5,037 $ 187,158 8.1 %

Assisted living facilities and nursing homes $ 117,127 $ 16 $ 117,143 5.1 %

20 unchanged sentences

and Maryland.

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.

For all other states, the aggregate outstanding balances of commercial loans in each state were less than 4% of total loans at June 30, 2025 and at December 31, 2024.

The repayment of premium finance loans is secured by the underlying insurance policy prepaid premium, and therefore, geography is not a factor from a repayment perspective.

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

3 unchanged sentences

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

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2025 March 31,

2025 December 31,

1 unchanged sentence

2024 June 30,

2024 March 31,

Construction $ 1,347 $ 1,156 $ 878 $ 854 $ 673

10 unchanged sentences

As a percent of total loans 1.13 % 1.01 % 1.00 % 1.06 % 1.05 %

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.

The increase in the allowance for credit losses at June 30, 2025 compared to at March 31, 2025 and at June 30, 2024 was due to (i) an increase in reserves for individually-analyzed loans and leases, (ii) an increase in reserves for leases originated by our North Star Leasing division, (iii) a periodic refresh in loss drivers utilized within the CECL model, (iv) deterioration in the economic forecasts used within the CECL model, and (v) loan growth.

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) March 31,

(Dollars in thousands) June 30,

2025 March 31,

2025 December 31,

1 unchanged sentence

2024 June 30,

2024 March 31,

Gross charge-offs:

46 unchanged sentences

Each with "--%" not meaningful.

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.

Total net charge-offs during the second quarter of 2025 were $7.0 million, or 0.43% of average total loans on an annualized basis, compared to $8.1 million, or 0.52% of average total loans on an annualized basis, during the linked quarter and $4.2 million, or 0.27% of average total loans on an annualized basis, during the second quarter of 2024.

The decrease in net charge-offs when compared to the linked quarter was primarily related to improvements of $0.6 million in the lease portfolio and $0.4 million in indirect consumer loans, partially offset by an increase of $0.2 million in net charge-offs in commercial and industrial loans.

The net charge-offs for the lease portfolio remain higher than historic norms and are the driver for the increase over June 30, 2024.

The following table details Peoples’ nonperforming assets:

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2025 March 31,

2025 December 31,

1 unchanged sentence

2024 June 30,

2024 March 31,

Loans 90+ days past due and accruing:

40 unchanged sentences

NPAs include nonperforming loans and OREO.

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.

Peoples' NPAs decreased from 0.50% of total assets at March 31, 2025 to 0.49% of total assets at June 30, 2025.

Total loans 90+ days past due and accruing decreased at June 30, 2025 compared to June 30, 2024 driven down by leases.

During the second quarter of 2025, criticized loans increased $17.9 million, while classified loans increased $1.2 million when compared to at March 31, 2025.

The increase in criticized loans was driven by loan downgrades associated with one customer relationship, while the increase in the amounts of classified loans compared to at March 31, 2025 and at June 30, 2024 was driven by loan downgrades.

The increase in NPAs compared to at March 31, 2025, was primarily driven by an increase in premium finance loans that were 90+ days past due and accruing.

The decrease in NPAs compared to at June 30, 2024, was driven primarily by a reductions in leases that were 90+ days past due and accruing and commercial OREO, partially offset by an increase in residential real estate loans that were on nonaccrual status as of June 30, 2025.

The following table details Peoples’ deposit balances:

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2025 March 31,

2025 December 31,

1 unchanged sentence

2024 June 30,

2024 March 31,

Non-interest-bearing deposits (a) $ 1,530,824 $ 1,526,285 $ 1,507,661 $ 1,453,441 $ 1,472,697

10 unchanged sentences

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

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.

At June 30, 2025, period-end total deposits decreased $97.5 million compared to at March 31, 2025, driven by decreases of $52.5 million in governmental deposits, $39.8 million in money market deposits, $28.3 million in interest-bearing demand accounts, and $16.2 million in brokered deposits, partially offset by an increase of $39.3 million in retail certificates of deposit.

The decrease in governmental deposit accounts was due to the seasonality of those balances while the decrease in brokered deposit accounts was due to a strategic shift to other funding sources at lower rates.

The increase in retail certificates of deposits was due to current specials being offered.

Compared to June 30, 2024, period-end deposit balances increased $339.4 million, or 5%.

The increase in total deposits was primarily driven by increases of $192.4 million in retail certificates of deposit, $58.4 million in money market deposits, and $58.1 million in non-interest bearing deposits.

These were partially offset by a decrease of $24.6 million in interest-bearing demand accounts.

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 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.

As of June 30, 2025, Peoples had six effective interest rate swaps, with an aggregate notional value of $55.0 million, which were designated as cash flow hedges.

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

1 unchanged sentence

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

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2025 March 31,

2025 December 31,

1 unchanged sentence

2024 June 30,

2024 March 31,

Short-term borrowings:

20 unchanged sentences

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.

Total borrowed funds at June 30, 2025 increased compared to at March 31, 2025 due to higher FHLB overnight borrowings.

Total borrowed funds decreased compared to at June 30, 2024 due to the payoff of the Bank Term Funding Program, partially offset by an increase in FHLB overnight borrowings.

Capital/Stockholders’ Equity

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.

At June 30, 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 March 31, 2025, Peoples had a capital conservation buffer of 5.75%.

At June 30, 2025, Peoples had a capital conservation buffer of 5.71%.

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

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2025 March 31,

2025 December 31,

1 unchanged sentence

2024 June 30,

2024 March 31,

Capital Amounts:

8 unchanged sentences

Tier 1 leverage ratio 9.83 % 9.80 % 9.73 % 9.59 % 9.29 %

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.

Peoples' risk-based capital ratios at June 30, 2025 decreased when compared to at March 31, 2025 due to the increase in assets, driven by loan growth in the quarter.

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

5 unchanged sentences

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

(Dollars in thousands) March 31,

(Dollars in thousands) June 30,

2025 March 31,

2025 December 31,

1 unchanged sentence

2024 June 30,

2024 March 31,

Tangible equity:

25 unchanged sentences

8.26 % 8.34 % 8.01 % 8.25 % 7.61 %

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.

Tangible book value per common share increased to $21.18 at June 30, 2025 compared to $20.68 at March 31, 2025.

The change in tangible book value per common share was due to tangible equity increasing during the second 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 June 30, 2025 increased compared to at June 30, 2024 primarily due to net income over the last twelve months.

Interest Rate Sensitivity and Liquidity

12 unchanged sentences

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

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

(in Basis Points) June 30, 2025 December 31, 2024 June 30, 2025 December 31, 2024

300 $ 33,082 9.0 % $ 10,471 3.0 % $ (173,191) (8.9) % $ (127,697) (7.2) %

15 unchanged sentences

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

Given the shape of market yield curves at March 31, 2025, 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 June 30, 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 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%.

At June 30, 2025, the bear steepener scenario produced an increase in net interest income of 1.4% and an increase in the economic value of equity of 3.1%.

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

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

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

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

At 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.

Deposit costs decrease less quickly than variable rate asset yields over a short-term horizon but are mitigated to some extent over a longer horizon, resulting in a decreased amount of net interest income (margin) in a 12 month period and a relatively neutral impact to net interest income (margin) in a 24 month period.

At June 30, 2025, the bull steepener scenario produced a decline of 0.9% to net interest income, as the impact of revised assumptions around deposit betas mitigate the impact of lower short-term rates over a 12-month horizon, and an increase in the economic value of equity of 0.6%.

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

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

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

As of June 30, 2025, Peoples had entered into six interest rate swap contracts with an aggregate notional value of $55.0 million.

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

At March 31, 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.

At June 30, 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.

2 unchanged sentences

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.

At June 30, 2025, Peoples Bank had liquid assets of $735.9 million, which represented 6.7% of total assets and unfunded loan commitments.

Peoples also had an additional $142.7 million of unpledged investment securities not included in the measurement of liquid assets.

4 unchanged sentences

The instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Unaudited Consolidated Balance Sheets.

The contract amounts of these instruments express the extent of involvement Peoples has in these financial instruments.

The contractual amounts of these instruments express the extent of involvement Peoples has in these financial instruments.

Loan Commitments and Standby Letters of Credit

11 unchanged sentences

(Dollars in thousands)

2025 March 31,

2025 December 31,

1 unchanged sentence

2024 June 30,

2024 March 31,

Home equity lines of credit $ 268,217 $ 257,349 $ 254,168 $ 248,400 $ 247,757

7 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis