UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: October 25, 2022

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PEOPLES BANCORP INC.
(Exact name of Registrant as specified in its charter)
Ohio000-1677231-0987416
(State or other jurisdiction(Commission File(I.R.S. Employer
of incorporation)Number)Identification Number)
138 Putnam Street, PO Box 738
Marietta,Ohio45750-0738
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code:(740)373-3155
Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, no par valuePEBOThe Nasdaq Stock Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02     Results of Operation and Financial Condition.
On October 25, 2022 Peoples Bancorp Inc. ("Peoples") issued a news release regarding its financial results for the third quarter of 2022. A copy of the news release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
Conference Call to Discuss Earnings:
Peoples will conduct a facilitated conference call to discuss third quarter 2022 results of operations as well as the transactions described in the Merger Agreement (defined below) today at 11:00 a.m., Eastern Daylight Time, with members of Peoples' executive management participating.  Analysts, media and individual investors are invited to participate in the conference call by calling (866) 890-9285.  A simultaneous webcast of the conference call audio will be available online via the “Investor Relations” section of Peoples' website, www.peoplesbancorp.com.  Participants are encouraged to call or sign in at least 15 minutes prior to the scheduled conference call time to ensure participation and, if required, to download and install the necessary software.  A replay of the call will be available on Peoples' website in the “Investor Relations” section for one year.
Item 7.01 Regulation FD Disclosure
On October 25, 2022, Peoples Bancorp Inc. (“Peoples”) released a presentation to investors about the transactions described in the Merger Agreement (defined below). The presentation is attached to this Current Report on Form 8-K as Exhibit 99.2 and is incorporated herein by reference.
The preceding information, as well as Exhibit 99.2 referenced therein, shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01     Other Events
Dividend Declaration
On October 25, 2022, Peoples issued a news release announcing that the Board of Directors declared a quarterly dividend of $0.38 per common share. A copy of the news release is included as Exhibit 99.3 to this Current Report on Form 8-K.
Merger Agreement
On October 25, 2022, Peoples Bancorp Inc. (“Peoples”) announced that it has entered into an Agreement and Plan of Merger dated October 24, 2022 (“Merger Agreement”) with Limestone Bancorp, Inc. (“Limestone”). The Merger Agreement calls for Limestone to merge into Peoples and for Limestone’s wholly owned subsidiary, Limestone Bank, Inc., which operates 20 branches in the Commonwealth of Kentucky, to merger into Peoples’ wholly owned subsidiary, Peoples Bank.
A copy of the press release is attached hereto as Exhibit 99.4 and is incorporated herein by reference.
Important Additional Information about the Merger
This communication does not constitute an offer to sell or the solicitation of an offer to buy securities of Peoples. Peoples will file a registration statement on Form S-4 and other documents regarding the proposed merger with Limestone with the Securities and Exchange Commission (“SEC”). The registration statement will include a joint proxy statement/prospectus which will be sent to the shareholders of both Peoples and Limestone in advance of their respective special meetings of shareholders to be held to consider the proposed merger. Investors and security holders are urged to read the proxy statement/prospectus and any other relevant documents to be filed with the SEC in
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connection with the proposed transaction because they contain important information about Peoples, Limestone and the proposed merger.
Investors and security holders may obtain a free copy of these documents (when available) through the website maintained by the SEC at www.sec.gov. These documents may also be obtained, free of charge, on Peoples’ website at www.peoplesbancorp.com under the tab “Investor Relations” or by contacting Peoples’ Investor Relations Department at: Peoples Bancorp Inc., 138 Putnam Street, PO Box 738, Marietta, Ohio 45750, Attn: Investor Relations.
Peoples, Limestone, and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies in connection with the proposed merger. Information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the proxy statement/prospectus regarding the proposed merger when it becomes available. Additional information about the directors and executive officers of Peoples is set forth in the proxy statement for Peoples' 2022 annual meeting of shareholders, as filed with the SEC on Schedule 14A on March 17, 2022.
Cautionary Statements Regarding Forward-Looking Information
Statements in this communication which are not historical are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, certain plans, expectations, goals, projections and benefits related to the transactions described in this communication.
The information contained in this communication should be read in conjunction with Peoples’ Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) and available on the SEC’s website (www.sec.gov) or at Peoples’ website (www.peoplesbancorp.com).
Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed in Peoples’ 2021 Annual Report on Form 10-K filed with the SEC under the section, “Risk Factors” in Part I, Item 1A. Additional risks and uncertainties include, but are not limited to: the possibility that Peoples’ merger with Limestone and any future acquisitions will be unsuccessful or more difficult, time-consuming or costly than expected; the possibility that Peoples is unable to obtain regulatory and shareholder approvals of the proposed merger with Limestone on the proposed terms and schedule; and the possibility that Limestone is unable to obtain the approval of the merger by its shareholders. As such, actual results could differ materially from those contemplated by forward-looking statements made in this communication. Management believes that the expectations in these forward-looking statements are based upon reasonable assumptions within the bounds of management's knowledge of Peoples’ business and operations. Peoples disclaims any responsibility to update these forward-looking statements to reflect events or circumstances after the date of this presentation.

Item 9.01     Financial Statements and Exhibits

a) - c)
Not applicable.

d) Exhibits
See Index to Exhibits on Page 3.


SIGNATURES


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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PEOPLES BANCORP INC.
Date:October 25, 2022By:/s/KATIE BAILEY
Katie Bailey
Executive Vice President,
Chief Financial Officer and Treasurer

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INDEX TO EXHIBITS
Exhibit NumberDescription
News Release issued by Peoples Bancorp Inc. on October 25, 2022
Investor Presentation issued by Peoples Bancorp Inc. on October 25, 2022
News Release issued by Peoples Bancorp Inc. on October 25, 2022
News Release issued by Peoples Bancorp Inc. on October 25, 2022
104Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)

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P.O. BOX 738 - MARIETTA, OHIO - 45750NEWS RELEASE
www.peoplesbancorp.com
FOR IMMEDIATE RELEASEContact:Katie Bailey
October 25, 2022Chief Financial Officer and Treasurer
(740) 376-7138

PEOPLES BANCORP INC. ANNOUNCES THIRD QUARTER 2022 RESULTS
__________________________________________________________________________________________________

MARIETTA, Ohio - Peoples Bancorp Inc. ("Peoples") (Nasdaq: PEBO) today announced results for the quarter and nine months ended September 30, 2022. Peoples reported net income of $26.0 million for the third quarter of 2022, representing earnings per diluted common share of $0.92. In comparison, Peoples recognized earnings per diluted common share of $0.88 for the second quarter of 2022, and a loss per diluted common share of $0.28 for the third quarter of 2021. For the nine months ended September 30, 2022, Peoples recorded net income of $74.4 million, or $2.65 per diluted common share, compared to $19.8 million, or $0.99 per diluted common share, for the nine months ended September 30, 2021.
The provision for (recovery of) 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 negatively impacted earnings per diluted share by $0.05 for the third quarter of 2022, and the release of provision positively impacted earnings per diluted share by $0.02 for the second quarter of 2022, while the provision for credit losses had a negative impact on earnings per diluted share of $0.34 for the third quarter of 2021. For the first nine months of 2022, the release of provision positively impacted earnings per diluted share by $0.16, compared to a provision for credit losses that negatively impacted earnings per diluted share by $0.29 for the first nine months of 2021.
Non-core items, and the related tax effect of each, in net income primarily included acquisition-related and COVID-19-related expenses. Non-core items negatively impacted earnings per diluted common share by $0.01 for the third quarter of 2022, $0.02 for the second quarter of 2022, and $0.71 for the third quarter of 2021. Non-core items negatively impacted earnings per diluted share by $0.07 and $0.98 for the nine months ended September 30, 2022 and 2021, respectively.
"We are very pleased with our results for the first nine months of 2022. Net income more than tripled, net interest margin was up 40 basis points and the efficiency ratio improved 23% compared to 2021, primarily due to our recent acquisitions and organic growth," said Chuck Sulerzyski, President and Chief Executive Officer. "Our return on average assets improved to 1.45%, and our return on average stockholders' equity grew to 12.9% for the third quarter. We will continue our hard work to close out the year in a strong financial position."

Completion of Vantage Acquisition:
On March 7, 2022, Peoples Bank acquired Vantage Financial, LLC (“Vantage”), a nationwide provider of equipment financing headquartered in Excelsior, Minnesota. Under the terms of the agreement, Peoples Bank purchased 100% of the equity of Vantage for total cash consideration of $54.0 million. Peoples Bank also repaid $28.9 million in recourse debt on behalf of Vantage, for total consideration of $82.9 million. Vantage offers mid-ticket equipment leases, primarily for business essential information technology equipment across a wide-array of industries. Upon completion of the transaction, Vantage became a subsidiary of Peoples Bank. Peoples recognized lease assets of approximately $154.9 million as of the acquisition date. Peoples preliminarily recorded $27.2 million in goodwill and $13.2 million in other intangible assets in connection with the Vantage acquisition.

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Premier Financial:
On September 17, 2021, Peoples completed its merger with Premier Financial Bancorp, Inc. ("Premier"), in which Peoples acquired, in an all-stock merger, Premier, a bank holding company headquartered in Huntington, West Virginia, and the parent company of Premier Bank, Inc. ("Premier Bank") and Citizens Deposit Bank and Trust, Inc. ("Citizens"). Under the terms and subject to the conditions of the definitive Agreement and Plan of Merger, dated March 26, 2021, Premier merged with and into Peoples (the "Premier Merger"), and Premier Bank and Citizens subsequently merged with and into Peoples Bank, in a transaction valued at $261.9 million as of September 17, 2021. At the close of business on September 17, 2021, the financial services offices of Premier Bank and Citizens became branches of Peoples Bank. Peoples acquired $1.1 billion in loans and $1.8 billion in deposits in the Premier Merger. In addition, Peoples recorded $66.9 million in goodwill and $4.2 million in other intangible assets in connection with the Premier Merger.
Statement of Operations Highlights:
Net interest income increased $5.6 million, or 9%, compared to the linked quarter and increased $24.5 million, or 57%, compared to the third quarter of 2021.
Net interest margin increased 33 basis points to 4.17% for the third quarter of 2022, compared to 3.84% for the linked quarter and increased 67 basis points compared to 3.50% for the third quarter of 2021.
The increase in net interest margin compared to the linked quarter was primarily driven by recent increases in market interest rates.
The increase in net interest income for the third quarter of 2022 compared to the third quarter of 2021 was driven by the Premier Merger and Vantage acquisition, core growth and the increases in market interest rates.
Peoples recorded a provision for credit losses of $1.8 million for the third quarter of 2022, compared to a recovery of $0.8 million for the second quarter of 2022, and a provision for credit losses of $9.0 million for the third quarter of 2021.
The provision for credit losses in the third quarter of 2022 was primarily due to a deterioration of macro-economic conditions, partially offset by a reduction in reserves for individually analyzed loans.
Net charge-offs were $1.7 million, or 0.15% of average total loans annualized, for the third quarter of 2022, compared to $1.5 million, or 0.14%, for the linked quarter and $1.6 million, or 0.18%, for the third quarter of 2021.
Total non-interest income, excluding net gains and losses, increased $0.8 million, or 4%, compared to the linked quarter, and increased $3.6 million, or 21.2%, compared to the third quarter of 2021.
The increase in non-interest income, excluding gains and losses, when compared to the second quarter of 2022 was largely driven by increases in other non-interest income due to increased leasing income.
Total non-interest income, excluding net gains and losses, for the first nine months of 2022 was 25% of total revenue.
Total non-interest expense increased $2.4 million, or 5%, compared to the linked quarter and decreased $5.6 million, or 10%, compared to the third quarter of 2021.
The increase in total non-interest expense for the third quarter of 2022 when compared to the linked quarter was primarily attributable to increases in (i) salaries and employee benefit costs, (ii) professional fees, (iii) marketing expense and (iv) data processing and software expense.
For the third quarter of 2022, the efficiency ratio was 57.2%. When adjusted for non-core items, the efficiency ratio was 56.6% for the third quarter of 2022.
Balance Sheet Highlights:
Period-end total loan and lease balances increased $35.3 million, or 3% annualized, compared to June 30, 2022. Average total loan and lease balances increased $22.3 million compared to June 30, 2022.
The increases in period-end and average total loan and lease balances were primarily the result of growth in (i) indirect consumer loans, (ii) commercial and industrial loans, (iii) premium finance loans and (iv) construction loans, partially offset by a reduction in other commercial real estate loans.
Excluding forgiveness received on Paycheck Protection Program ("PPP") loans, total loan and lease balances grew at a 4% annualized rate.
Asset quality metrics remained stable during the quarter.
Delinquency trends remained steady as loans considered current comprised 98.9% of the loan portfolio at September 30, 2022, compared to 98.8% at June 30, 2022.
Nonperforming assets decreased $1.8 million compared to June 30, 2022. The decrease was primarily attributable to a reduction in nonaccrual other commercial real estate loans and residential real estate loans, mostly offset by an increase in nonperforming leases.
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Criticized loans decreased $16.6 million during the third quarter of 2022. The decrease was primarily driven by pay-downs and upgrades in the quarter.
Classified loans decreased $20.6 million during the third quarter of 2022. The decrease was driven by the upgrade of one large commercial real estate loan and the pay-offs of two large commercial and industrial loans and one large commercial real estate loan.
Period-end total deposit balances at September 30, 2022 decreased $63.6 million, or 1%, compared to June 30, 2022.
The decrease was primarily driven by reductions in (i) retail certificates of deposits, (ii) money market deposits and (iii) non-interest bearing checking accounts.
Total demand deposit balances were 48% and 47% of total deposit balances at September 30, 2022 and at June 30, 2022, respectively.
Total loan balances were 79% and 77% of total deposit balances at September 30, 2022 and at June 30, 2022, respectively.
Net Interest Income:
Net interest income was $67.1 million for the third quarter of 2022, an increase of $5.6 million, or 9%, compared to the linked quarter. Net interest margin was 4.17% for the third quarter of 2022, compared to 3.84% for the linked quarter. The increase in net interest income and net interest margin was primarily driven by 32 basis points of improvement in loan yields and 17 basis points of improvement in investment yields when compared to the linked quarter due to the recent increases in market interest rates.
Net interest income for the third quarter of 2022 increased $24.5 million, or 57%, compared to the third quarter of 2021. Net interest margin increased 67 basis points compared to 3.50% for the third quarter of 2021. The increase in net interest income compared to the third quarter of 2021 was driven by (i) the Premier Merger and Vantage acquisition, (ii) organic growth and (iii) increases in market interest rates.
Accretion income, net of amortization expense, from acquisitions was $2.7 million for the third quarter of 2022, $3.9 million for the second quarter of 2022 and $1.0 million for the third quarter of 2021, which added 16 basis points, 25 basis points and 8 basis points, respectively, to net interest margin. The decrease in accretion income when compared to the linked quarter was driven by less loan accretion due to lower pay-offs and less accretion from the Premier Merger. The increase in accretion income for the current quarter compared to the third quarter of 2021 was a result of the acquisition of Vantage and a full quarter of accretion from the Premier Merger.
For the first nine months of 2022, net interest income increased $65.0 million, or 55%, compared to the first nine months of 2021, while net interest margin increased 40 basis points to 3.81%. The increase in net interest income was driven by (i) the Premier Merger and Vantage acquisition, (ii) organic growth and (iii) increases in market interest rates.
Accretion income, net of amortization expense, from acquisitions was $9.4 million for the nine months ended September 30, 2022, compared to $2.2 million for the nine months ended September 30, 2021, which added 20 and 6 basis points, respectively, to net interest margin. The increase in accretion income for the first nine months of 2022 compared to 2021 was a result of the Premier Merger and the acquisitions of Vantage and NS Leasing, LLC ("NSL").
Provision for (Recovery of) Credit Losses:
The provision for credit losses was $1.8 million for the third quarter of 2022, compared to a recovery of $0.8 million for the linked quarter and a provision for credit losses of $9.0 million for the third quarter of 2021. The provision for credit losses in the third quarter of 2022 was largely attributable to a deterioration of macro-economic conditions, partially offset by a reduction in reserves for individually analyzed loans. The release of credit losses in the linked quarter was largely attributable to a reduction in reserves for individually analyzed loans. The provision for credit losses in the third quarter of 2021 was primarily due to the establishment of the allowance for credit losses of $11.0 million related to the loans acquired from Premier.
The recovery of credit losses during the first nine months of 2022 was $5.8 million, compared to a provision for credit losses of $7.3 million for the first nine months of 2021. The recovery of credit losses during the first nine months of 2022 was driven by improvements in economic forecasts, coupled with loan payoffs and sales during certain periods. The provision for credit losses during the first nine months of 2021 was due to recording a provision for credit losses in connection with the Premier Merger of $11.0 million in order to establish an allowance for credit losses for non-purchased credit deteriorated loans of $10.6 million, and a liability for unfunded commitments of $0.4 million in the third quarter of 2021.
Net charge-offs for the third quarter of 2022 were $1.7 million, or 0.15% of average total loans annualized, compared to net charge-offs of $1.5 million, or 0.14% of average total loans annualized, for the linked quarter and net charge-offs of $1.6 million, or 0.18% of average total loans annualized, for the third quarter of 2021. Net charge-offs for the first nine months of 2022 were $5.1 million, or 0.15% of average total loans annualized, compared to net charge-offs of $3.4 million,
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or 0.13% annualized, for the first nine months of 2021. For additional information on credit trends and the allowance for credit losses, see the "Asset Quality" section below.
Net Gains and Losses:
Net gains and losses include gains and losses on investment securities, asset disposals and other transactions, which are included in total non-interest income on the Consolidated Statements of Operations. The net loss realized during the third quarter of 2022 was $14,000, compared to net losses of $196,000 and $0.5 million for the linked quarter and the third quarter of 2021, respectively. The net loss for the linked quarter was attributable to a $119,000 loss recorded on repossessed assets coupled with a $44,000 loss on the sale of investment securities in order to reinvest into higher-yielding securities.
The net loss realized during the first nine months of 2022 was $207,000 compared to $1.2 million for the first nine months of 2021. Net losses recognized in the first nine months of 2021 were primarily the result of a net loss of $0.7 million on the sales of available-for-sale investment securities in order to reinvest proceeds into higher-yielding investment securities and a net loss of $0.3 million on the disposal of fixed assets, primarily those acquired in the Premier Merger.
Total Non-interest Income, Excluding Net Gains and Losses:
Total non-interest income, excluding net gains and losses, for the third quarter of 2022 increased $0.8 million compared to the linked quarter. The increase in non-interest income, excluding net gains and losses, was primarily impacted by an increase in other non-interest income due to an $1.3 million increase in lease income. Also impacting the third quarter increase was an increase of $0.3 million in deposit account service charges primarily due to customer activity. Partially offsetting these increases in non-interest income, excluding net gains and losses, were declines of $0.3 million, $0.2 million, and $103,000 in trust and investment income, electronic banking income, and bank owned life insurance income, respectively. The decrease in trust and investment income was primarily due to lower market values of trust and investment assets managed. The decrease in electronic banking income was due to less customer activity than in the linked quarter. The lower bank owned life insurance income was primarily driven by $0.2 million recognized on a one-time death benefit during the linked quarter.
Compared to the third quarter of 2021, non-interest income, excluding net gains and losses, increased $3.6 million. Lease income, deposit account service charges, and electronic banking income increased $1.7 million, $1.3 million, and $0.9 million, respectively. The increases in deposit account service charges and electronic banking income were primarily attributable to the acquired Premier accounts as well as increased customer activity in recent periods.
For the first nine months of 2022, total non-interest income, excluding gains and losses, increased $9.8 million, or 19%, compared to the first nine months of 2021. The increase was driven by growth of $4.2 million, or 64%, in service charges on deposit accounts, and $3.3 million, or 26%, in electronic banking income, primarily attributable to customers added in the Premier Merger. Also contributing to the growth was an increase in other non-interest income due to a $2.9 million increase in lease income. Partially offsetting the 2022 increase when compared to the same period in 2021 was an $1.6 million decline in mortgage banking income due to the increased market interest rate environment in the first nine months of 2022 and a lower volume of new loan originations.
Total Non-interest Expense:
Total non-interest expense increased $2.4 million, or 5%, for the three months ended September 30, 2022, compared to the linked quarter. Total non-interest expense in the third and second quarters of 2022 contained non-core expenses, including acquisition-related expenses of $0.3 million and $0.6 million, respectively. The increase in total non-interest expense for the third quarter of 2022 was attributable to increases in (i) salaries and employee benefit costs, (ii) professional fees, (iii) marketing expense and (iv) data processing and software expense. Partially offsetting the increase in non-interest expenses was a decrease in electronic banking expense. The increases in non-interest expenses were primarily driven by growth as well as sales incentives and minimum wage increases at Premier in regards to salaries and employee benefit costs.
Compared to the third quarter of 2021, total non-interest expense decreased $5.6 million, or 10%, primarily due to decreases in acquisition-related expenses and professional fees, due to the Premier Merger, which totaled $16.2 million for the third quarter of 2021. Partially offsetting these decreases in non-interest expense were increases in (i) salaries and employee benefit costs, (ii) net occupancy and equipment expense, (iii) data processing and software expense, (iv) amortization of other intangible assets, and (v) electronic banking expense. The increases were due to the recent growth, including through mergers and acquisitions.
For the nine months ended September 30, 2022, total non-interest expense increased $18.0 million, or 13%, compared to the first nine months of 2021. The variance was driven by increases of (i) $15.7 million in salaries and employee benefit costs, (ii) $4.5 million in net occupancy and equipment expense, (iii) $2.5 million in intangible asset amortization, (iv) $2.1
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million in electronic banking expense, (v) $1.8 million in data processing and software expenses, and (vi) $1.3 million in FDIC insurance premiums. These increases were primarily due to growth over the last year, driven by mergers and acquisitions. Partially offsetting the increase in non-interest expense was a decrease in acquisition-related expenses.
The efficiency ratio for the third quarter of 2022 was 57.2%, compared to 58.8% for the linked quarter, and 94.7% for the third quarter of 2021. The change in the efficiency ratio compared to the linked quarter was primarily due to increases in market interest rates coupled with decreases in acquisition-related expenses. The efficiency ratio, adjusted for non-core items, was 56.6% for the third quarter of 2022, compared to 58.0% for the linked quarter and 63.9% for the third quarter of 2021. Peoples continues to focus on controlling expenses, while recognizing necessary costs in order to continue growing the business.

Income Tax Expense:
Peoples recorded income tax expense of $7.4 million with an effective tax rate of 22.2% for the third quarter of 2022, compared to income tax expense of $6.8 million with an effective tax rate of 21.6% for the linked quarter and an income tax benefit of $2.2 million with an effective tax rate of 27.4% for the third quarter of 2021. The increase in income tax expense for the third quarter of 2022, compared to the linked quarter, was due to higher pre-tax net income. The increase in income tax expense for the three months ended September 30, 2022, compared to the three months ended September 30, 2021, was driven by net income in the third quarter of 2022 versus a net loss in the same period of 2021. Peoples recorded income tax expense of $20.2 million with an effective tax rate of 21.4% in the first nine months of 2022 and $4.0 million with an effective tax rate of 16.8% in the first nine months of 2021. The increase was driven by higher pre-tax income and a higher effective tax rate primarily due to apportionment in additional states due to recent acquisitions.
Loans and Leases:
The period-end total loan and lease balances at September 30, 2022 increased $35.3 million, or 3% annualized, compared to June 30, 2022. The increase in the period-end loan and lease balances was primarily driven by increases of (i) $29.2 million in consumer indirect loans, (ii) $19.0 million in commercial and industrial loans, (iii) $15.4 million in premium finance loans and (iv) $13.0 million in construction loans, partially offset by a reduction in other commercial real estate loans of $36.5 million. Excluding $11.4 million forgiveness received on PPP loans, loan and lease balances grew at a 4% annualized rate. As of September 30, 2022, the remaining balance of PPP loans was $3.7 million.
The period-end total loan and lease balances increased $129.6 million, or 3%, compared to December 31, 2021. The increase in the period-end loan and lease balances was primarily driven by $154.9 million of leases acquired from Vantage and an increase of $61.8 million in indirect consumer loans, partially offset by a reduction of $126.6 million in other commercial real estate loans.
The period-end total loan and lease balances increased $120.2 million compared to September 30, 2021. The increase in the period-end loan and lease balances was driven by increases of (i) $201.4 million in leases, primarily due to the leases acquired from Vantage and growth from the North Star Leasing division, (ii) $49.1 million in indirect consumer loans and (iii) $40.8 million in construction loans, partially offset by a reduction of $205.6 million in other commercial real estate loans.
Quarterly average loan and lease balances increased $22.3 million in the third quarter of 2022 compared to the linked quarter. The increase was driven by increases of $35.7 million, $19.1 million, $18.2 million, and $13.1 million in indirect consumer loans, residential real estate loans, premium finance loans, and construction loans, respectively. These increases were substantially offset by decreases of $53.0 million and $19.4 million in other commercial real estate loans and residential real estate loans, respectively. Compared to the third quarter of 2021, quarterly average loan and lease balances increased $1.1 billion, or 30%, driven by loans acquired from Premier, and leases acquired from Vantage, as well as leases originated.
For the first nine months of 2022, average loan and lease balances increased $1.1 billion, or 32%, compared to the same period in 2021. The increase was driven by loans and leases acquired from Premier, Vantage and NSL.
Asset Quality:
Asset quality metrics remained stable during the quarter. Total nonperforming assets decreased $1.8 million, or 4%, compared to June 30, 2022, and $7.6 million, or 14%, compared to September 30, 2021. The decrease in nonperforming assets compared to the linked quarter was primarily attributable to a reduction in nonaccrual other commercial real estate loans and residential real estate loans, substantially offset by an increase in past due leases. The decrease from the prior year quarter was driven by a reduction in nonaccrual other commercial real estate loans. Nonperforming assets as a percent of total loans and OREO were 0.98% at September 30, 2022, down from 1.02% at June 30, 2022 and 1.17% at September 30, 2021.
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Criticized loans, which are those categorized as special mention, substandard or doubtful, decreased $16.6 million and $70.1 million compared to June 30, 2022 and September 30, 2021, respectively. As a percent of total loans, criticized loans were 3.57% at September 30, 2022, compared to 3.96% at June 30, 2022 and 5.23% at September 30, 2021. The decrease in the amount of criticized loans compared to June 30, 2022 was primarily related to pay-downs and upgrades during the quarter. Compared to September 30, 2021, the decrease in the amount of criticized loans was largely due to a reduction in the criticized loans acquired from Premier. Classified loans, which are those categorized as substandard or doubtful, decreased $20.6 million and $47.8 million compared to June 30, 2022 and September 30, 2021, respectively. As a percent of total loans, classified loans were 2.06% at September 30, 2022, compared to 2.52% at June 30, 2022, and 3.18% at September 30, 2021. The decrease in classified loans compared to the prior quarter was driven by the upgrade of one large commercial real estate loan and the pay-offs of two large commercial and industrial loans and one large commercial real estate loan. The decrease in classified loans when compared to the third quarter of 2021 was largely attributable to loan sales, pay-offs, and upgrades of classified loans acquired from Premier.
Annualized net charge-offs were 0.15% of average total loans for the third quarter of 2022, compared to 0.14% for the linked quarter and 0.18% for the prior year quarter, with the increase relative to the linked quarter driven by higher charge-offs on leases, consumer loans, and other commercial real estate loans, substantially offset by less charge-offs on commercial and industrial loans and deposit account overdrafts. The decrease in net charge-offs during the current quarter versus the prior year quarter was primarily attributable to one commercial and industrial loan charge-off of $500,000 during the third quarter of 2021.
At September 30, 2022, the allowance for credit losses was $52.9 million, compared to $52.3 million at June 30, 2022, and $77.4 million at September 30, 2021. The change in the allowance for credit losses compared to June 30, 2022 was primarily due to a deterioration of macro-economic conditions, partially offset by a reduction in reserves for individually analyzed loans. The ratio of the allowance for credit losses as a percent of total loans was 1.15% at September 30, 2022, compared to 1.14% at June 30, 2022 and 1.72% at September 30, 2021. The higher ratio of the allowance for credit losses as a percent of total loans at September 30, 2021 was due to the establishment of a provision for credit losses of $11.0 million and $22.3 million for non-purchased credit deteriorated loans and purchased credit deteriorated loans, respectively, which had been acquired in the Premier Merger.
The ratio of the allowance for credit losses as a percent of total loans includes PPP loans that do not have an allowance because of the guarantee by the Small Business Administration. Excluding PPP loans, the ratio of the allowance for credit losses as a percent of total loans would remain 1.15% at September 30, 2022, compared to 1.15% at June 30, 2022, and 1.78% at September 30, 2021.
Deposits:
As of September 30, 2022, period-end deposit balances decreased $63.6 million, or 1%, compared to June 30, 2022. The decrease was primarily driven by reductions of (i) $39.5 million in retail certificates of deposits, (ii) $20.5 million in money market deposit accounts, and (iii) $16.5 million in non-interest bearing checking accounts.
Period-end deposit balances increased $3.1 million compared to December 31, 2021. The variance was driven by increases of $117.5 million in governmental deposit accounts and $40.6 million in savings accounts, substantially offset by decreases of $117.7 million in total certificates of deposits and $26.5 million in money market deposits.
Period-end deposit balances grew $33.6 million, or 1%, compared to September 30, 2021. Deposits increased primarily due to growth in non-interest-bearing deposits, savings accounts, and governmental deposit accounts of $76.0 million, $60.6 million, and $55.4 million, respectively, substantially offset by a decrease of $166.9 million in total certificates of deposits. Customers continued to maintain higher balances due primarily to economic stimulus payments provided by the U.S. federal government, as well as changes in customer buying habits.
Average deposit balances during the third quarter of 2022 decreased $30.3 million compared to the linked quarter. This decrease was driven by lower interest-bearing deposits, partially offset by an increase in non-interest-bearing deposits. Compared to the third quarter of 2021, quarterly average deposits increased $1.3 billion, or 29%, driven by deposits acquired from Premier. Total demand deposit accounts comprised 48%, 47%, 48% and 46% of total deposits at September 30, 2022, June 30, 2022, December 31, 2021 and September 30, 2021, respectively.
Stockholders' Equity:
Total stockholders' equity at September 30, 2022 decreased by $26.3 million compared to June 30, 2022, which reflected an other comprehensive loss of $41.6 million, dividends paid of $10.8 million, and share repurchases of $1.2 million, partially offset by net income for the quarter of $26.0 million. The other comprehensive loss was the result of changes in the market value of available-for-sale investment securities, which were driven by changes in market interest rates.
Total stockholders' equity at September 30, 2022 decreased by $84.5 million compared to December 31, 2021, which was due to (i) an other comprehensive loss of $123.3 million, (ii) dividends paid of $31.7 million and (iii) share
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repurchases of $7.1 million, partially offset by net income of $74.4 million for the first nine months of 2022. The other comprehensive loss was the result of changes in the market value of available-for-sale investment securities, which were driven by changes in market interest rates.
Total stockholders' equity at September 30, 2022 decreased $71.4 million compared to September 30, 2021, which was due to an other comprehensive loss of (i) $129.0 million, (ii) dividends paid of $41.9 million and (iii) share repurchases of $7.1million, partially offset by net income of $102.2 million during the twelve-month period. The increase in accumulated other comprehensive loss was the result of unrealized losses related to the available-for-sale investment securities portfolio from September 30, 2021 to September 30, 2022.
At September 30, 2022, the tier 1 risk-based capital ratio was 12.08%, compared to 11.91% at June 30, 2022, and 12.58% at September 30, 2021. The common equity tier 1 risk-based capital ratio was 11.80% at September 30, 2022, compared to 11.62% at June 30, 2022, and 12.30% at September 30, 2021. The total risk-based capital ratio was 12.98% at September 30, 2022, compared to 12.81% at June 30, 2022, and 13.83% at September 30, 2021. Peoples adopted the five-year transition to phase in the impact of the adoption of CECL, effective January 1, 2020, on regulatory capital ratios. Compared to June 30, 2022, these ratios improved due to higher net income. Compared to September 30, 2021, the capital ratios decreased due to the Vantage acquisition.
Book value per common share and tangible book value per common share, which excludes goodwill and other intangible assets, were $26.89 and $15.28, respectively, at September 30, 2022, compared to $27.81 and $16.21, respectively, at June 30, 2022, and $29.43 and $18.98, respectively, at September 30, 2021. Both ratios decreased compared to June 30, 2022 and September 30, 2021 primarily due to other comprehensive losses recognized in the third quarter and the first nine months of 2022.
The ratio of total stockholders’ equity to total assets was 10.86% at September 30, 2022, compared to 10.81% at June 30, 2022, and 11.78% at September 30, 2021. The ratio decreased from September 30, 2021 due primarily to other comprehensive losses in the twelve-month period. The tangible equity to tangible assets ratio, which excludes goodwill and other intangible assets, was 6.47% at September 30, 2022 compared to 6.60% and 7.93% at June 30, 2022, and September 30, 2021, respectively. The decreases in the ratio were due primarily to increases in accumulated other comprehensive loss.
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Peoples Bancorp Inc. ("Peoples", Nasdaq: PEBO) is a diversified financial services holding company that makes available a complete line of banking, trust and investment, insurance, premium financing and equipment leasing solutions through its subsidiaries. Peoples has been headquartered in Marietta, Ohio since 1902. Peoples had $7.0 billion in total assets as of September 30, 2022, and 130 locations, including 113 full-service bank branches in Ohio, West Virginia, Kentucky, Virginia, Washington D.C. and Maryland. Peoples' vision is to be the Best Community Bank in America.
Peoples is a member of the Russell 3000 index of U.S. publicly-traded companies. Peoples offers services through Peoples Bank (which includes the divisions of Peoples Investment Services, Peoples Premium Finance and NSL), Peoples Insurance Agency, LLC and Vantage.
Conference Call to Discuss Earnings:
Peoples will conduct a facilitated conference call to discuss third quarter 2022 results of operations on October 25, 2022 at 11:00 a.m., Eastern Daylight Time, with members of Peoples' executive management participating. Analysts, media and individual investors are invited to participate in the conference call by calling (866) 890-9285. A simultaneous webcast of the conference call audio will be available online via the "Investor Relations" section of Peoples' website, www.peoplesbancorp.com. Participants are encouraged to call or sign in at least 15 minutes prior to the scheduled conference call time to ensure participation and, if required, to download and install the necessary software. A replay of the call will be available on Peoples' website in the "Investor Relations" section for one year.
Use of Non-US GAAP Financial Measures:
This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). Management uses these "non-US GAAP" financial measures in its analysis of Peoples' performance and the efficiency of its operations. Management believes that these non-US GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods and peers. Peoples also uses the non-US GAAP financial measures for calculating incentive compensation. These disclosures should not be viewed as substitutes for financial measures determined in accordance with US GAAP, nor are they necessarily comparable to non-US GAAP performance measures that may be presented by other companies. Below is a listing of the non-US GAAP financial measures used in this news release:
Core non-interest expense is a non-US GAAP financial measure since it excludes the impact of acquisition-related expenses, pension settlement charges, severance expenses, COVID-19-related expenses, the contribution to Peoples Bank Foundation, Inc. and contract negotiation expenses.
The efficiency ratio is calculated as total non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income, excluding net gains and losses. This ratio is a non-US GAAP financial measure since it excludes amortization of other intangible assets and all gains and losses included in earnings, and uses fully tax-equivalent net interest income.
The efficiency ratio adjusted for non-core items is calculated as core non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income, excluding net gains and losses. This ratio is a non-US GAAP financial measure since it excludes the impact of acquisition-related expenses, pension settlement charges, severance expenses, COVID-19-related expenses, the contribution to Peoples Bank Foundation, Inc., contract negotiation expenses and the amortization of other intangible assets and all gains and losses included in earnings, and uses fully tax-equivalent net interest income.
Tangible assets, tangible equity, the tangible equity to tangible assets ratio and tangible book value per common share are non-US GAAP financial measures since they exclude the impact of goodwill and other intangible assets acquired through acquisitions on both total stockholders' equity and total assets.
Total non-interest income, excluding net gains and losses, is a non-US GAAP financial measure since it excludes all gains and losses included in earnings.
Pre-provision net revenue is defined as net interest income plus total non-interest income, excluding net gains and losses, minus total non-interest expense. This measure is a non-US GAAP financial measure since it excludes the provision for (recovery of) credit losses and all gains and losses included in net income.
Return on average assets adjusted for non-core items is calculated as annualized net income (less the after-tax impact of all gains and losses, acquisition-related expenses, pension settlement charges, severance expenses, COVID-19-related expenses, the contribution to Peoples Bank Foundation Inc. and contract negotiation expenses) divided by average assets. This measure is a non-US GAAP financial measure since it excludes the
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after-tax impact of all gains and losses, acquisition-related expenses, severance expenses, COVID-19-related expenses, and the contribution to Peoples Bank Foundation, Inc.
Return on average tangible equity is calculated as annualized net income (less the after-tax impact of amortization of other intangible assets) divided by average tangible equity. This measure is a non-US GAAP financial measure since it excludes the after-tax impact of amortization of other intangible assets from net income and the impact of average goodwill and other average intangible assets acquired through acquisitions on average stockholders' equity.
A reconciliation of these non-US GAAP financial measures to the most directly comparable US GAAP financial measures is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)."
Safe Harbor Statement:
Certain statements made in this news release regarding Peoples' financial condition, results of operations, plans, objectives, future performance and business, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by the fact they are not historical facts and include words such as "anticipate," "estimate," "may," "feel," "expect," "believe," "plan," "will," "will likely," "would," "should," "could," "project," "goal," "target," "potential," "seek," "intend," "continue," "remain," and similar expressions.
These forward-looking statements reflect management's current expectations based on all information available to management and its knowledge of Peoples' business and operations. Additionally, Peoples' financial condition, results of operations, plans, objectives, future performance and business are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, but are not limited to:
(1)the ever-changing effects of the global COVID-19 pandemic - the duration, extent and severity of which are impossible to predict, including the possibility of further resurgence in the spread of COVID-19 or variants or mutations thereof - on economies (local, national and international), supply chains and financial markets, on the labor market, including the potential for a sustained reduction in labor force participation, and on Peoples' customers (including potential changes to their bank preferences and behaviors), counterparties, employees and third-party service providers, as well as the effects of various responses of governmental and nongovernmental authorities to the COVID-19 pandemic, which could adversely impact sales volumes, add volatility to the global stock markets, and increase loan delinquencies and defaults;
(2)changes in the interest rate environment due to economic conditions related to the COVID-19 pandemic or other factors and/or the fiscal and monetary policy measures undertaken by the U.S. government and the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") in response to such economic conditions, which may adversely impact interest rates, the interest rate yield curve, interest margins, loan demand and interest rate sensitivity;
(3)the effects of inflationary pressures and the impact of rising interest rates on borrowers’ liquidity and ability to repay;
(4)the success, impact, and timing of the implementation of Peoples' business strategies and Peoples' ability to manage strategic initiatives, including the completion and successful integration of planned acquisitions, including the recently-completed Premier Merger and the recently-completed acquisition of Vantage, and the expansion of commercial and consumer lending activities, in light of the potential impact of the COVID-19 pandemic on customers' operations and financial condition;
(5)competitive pressures among financial institutions, or from non-financial institutions, which may increase significantly, including product and pricing pressures, which can in turn impact Peoples' credit spreads, changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and Peoples' ability to attract, develop and retain qualified professionals;
(6)uncertainty regarding the nature, timing, cost, and effect of legislative or regulatory changes or actions, or deposit insurance premium levels, promulgated and to be promulgated by governmental and regulatory agencies in the State of Ohio, the Federal Deposit Insurance Corporation, the Federal Reserve Board and the Consumer Financial Protection Bureau, which may subject Peoples, its subsidiaries, or one or more acquired companies to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses, including in particular the rules and regulations promulgated and to be promulgated under the CARES Act, and the follow-up legislation enacted as the Consolidated Appropriations Act, 2021, the American
9


Rescue Plan Act of 2021, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the Basel III regulatory capital reform;
(7)the effects of easing restrictions on participants in the financial services industry;
(8)local, regional, national and international economic conditions (including the impact of potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations, and changes in the relationship of the U.S. and its global trading partners) and the impact these conditions may have on Peoples, its customers and its counterparties, and Peoples' assessment of the impact, which may be different than anticipated;
(9)Peoples may issue equity securities in connection with future acquisitions, which could cause ownership and economic dilution to Peoples' current shareholders;
(10)changes in prepayment speeds, loan originations, levels of nonperforming assets, delinquent loans, charge-offs, and customer and other counterparties' performance and creditworthiness generally, which may be less favorable than expected in light of the COVID-19 pandemic and recent inflationary pressures and adversely impact the amount of interest income generated;
(11)Peoples may have more credit risk and higher credit losses to the extent there are loan concentrations by location or industry of borrowers or collateral;
(12)future credit quality and performance, including expectations regarding future credit losses and the allowance for credit losses;
(13)changes in accounting standards, policies, estimates or procedures may adversely affect Peoples' reported financial condition or results of operations;
(14)the impact of assumptions, estimates and inputs used within models, which may vary materially from actual outcomes, including under the CECL model;
(15)the replacement of the London Interbank Offered Rate ("LIBOR") with other reference rates which may result in increased expenses and litigation, and adversely impact the effectiveness of hedging strategies;
(16)adverse changes in the conditions and trends in the financial markets, including the impacts of the COVID-19 pandemic and recent inflationary pressures, which may adversely affect the fair value of securities within Peoples' investment portfolio, the interest rate sensitivity of Peoples' consolidated balance sheet, and the income generated by Peoples' trust and investment activities;
(17)the volatility from quarter to quarter of mortgage banking income, whether due to interest rates, demand, the fair value of mortgage loans, or other factors;
(18)Peoples' ability to receive dividends from its subsidiaries;
(19)Peoples' ability to maintain required capital levels and adequate sources of funding and liquidity;
(20)the impact of larger or similar-sized financial institutions encountering problems, which may adversely affect the banking industry and/or Peoples' business generation and retention, funding and liquidity;
(21)Peoples' ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks, including those of Peoples' third-party vendors and other service providers, which may prove inadequate, and could adversely affect customer confidence in Peoples and/or result in Peoples incurring a financial loss;
(22)Peoples' ability to anticipate and respond to technological changes, and Peoples' reliance on, and the potential failure of, a number of third-party vendors to perform as expected, including Peoples' primary core banking system provider, which can impact Peoples' ability to respond to customer needs and meet competitive demands;
(23)operational issues stemming from and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems on which Peoples and its subsidiaries are highly dependent;
(24)changes in consumer spending, borrowing and saving habits, whether due to changes in retail distribution strategies, consumer preferences and behavior, changes in business and economic conditions (including as a result of the COVID-19 pandemic), legislative or regulatory initiatives (including those in response to the COVID-19 pandemic), or other factors, which may be different than anticipated;
(25)the adequacy of Peoples' internal controls and risk management program in the event of changes in strategic, reputational, market, economic, operational, cybersecurity, compliance, legal, asset/liability repricing, liquidity, credit and interest rate risks associated with Peoples' business;
(26)the impact on Peoples' businesses, personnel, facilities, or systems, of losses related to acts of fraud, theft, misappropriation or violence;
(27)the impact on Peoples' businesses, as well as on the risks described above, of various domestic or international widespread natural or other disasters, pandemics (including COVID-19), cybersecurity attacks, system failures, civil unrest, military or terrorist activities or international conflicts;
(28)the potential further deterioration of the U.S. economy due to financial, political or other shocks;
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(29)the potential influence on the U.S. financial markets and economy from the effects of climate change;
(30)the impact on Peoples' businesses and operating results of any costs associated with obtaining rights in intellectual property claimed by others and adequately protecting Peoples' intellectual property;
(31)risks and uncertainties associated with Peoples' entry into new geographic markets and risks resulting from Peoples' inexperience in these new geographic markets;
(32)Peoples' ability to integrate the NSL and Vantage acquisitions, and the merger of Premier into Peoples, which may be unsuccessful, or may be more difficult, time-consuming or costly than expected;
(33)the risk that expected revenue synergies and cost savings from the merger of Peoples and Premier may not be fully realized or realized within the expected time frame;
(34)changes in laws or regulations imposed by Peoples' regulators impacting Peoples' capital actions, including dividend payments and share repurchases;
(35)the effect of a fall in stock market prices on the asset and wealth management business;
(36)Peoples' continued ability to grow deposits;
(37)other risk factors relating to the banking industry or Peoples as detailed from time to time in Peoples' reports filed with the Securities and Exchange Commission (the "SEC"), including those risk factors included in the disclosures under the heading "ITEM 1A. RISK FACTORS" of Peoples' Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Peoples encourages readers of this news release to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance. Peoples undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events, except as required by applicable legal requirements. Copies of documents filed with the SEC are available free of charge at the SEC's website at http://www.sec.gov and/or from Peoples' website - www.peoplesbancorp.com under the “Investor Relations” section.
As required by US GAAP, Peoples is required to evaluate the impact of subsequent events through the issuance date of its September 30, 2022 consolidated financial statements as part of its Quarterly Report on Form 10-Q to be filed with the SEC. Accordingly, subsequent events could occur that may cause Peoples to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.
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PER COMMON SHARE DATA AND SELECTED RATIOS (Unaudited)
At or For the Three Months EndedAt or For the Nine Months Ended
September 30,June 30,September 30,September 30,
20222022202120222021
PER COMMON SHARE (a):
Earnings (loss) per common share:
   Basic$0.93 $0.89 $(0.28)$2.65 $0.99 
   Diluted0.92 0.88 (0.28)2.65 0.99 
Cash dividends declared per common share0.38 0.38 0.36 1.12 1.07 
Book value per common share (b)26.89 27.81 29.43 26.89 29.43 
Tangible book value per common share (b)(c)15.28 16.21 18.98 15.28 18.98 
Closing price of common shares at end of period (b)$28.93 $26.60 $31.61 $28.93 $31.61 
SELECTED RATIOS (a):
Return on average stockholders' equity (d)12.92 %12.61 %(3.64)%12.32 %4.44 %
Return on average tangible equity (d)(e)23.36 %22.99 %(4.76)%21.70 %7.82 %
Return on average assets (d)1.45 %1.40 %(0.42)%1.40 %0.51 %
Return on average assets adjusted for non-core items (d)(f)1.47 %1.44 %0.66 %1.44 %1.02 %
Efficiency ratio (g)57.20 %58.76 %94.70 %60.67 %78.38 %
Efficiency ratio adjusted for non-core items (h)(j)56.64 %57.98 %63.93 %59.61 %64.32 %
Pre-provision net revenue to total average assets (d)(i)1.96 %1.75 %0.11 %2.53 %0.83 %
Net interest margin (d)4.17 %3.84 %3.50 %3.81 %3.41 %
Dividend payout ratio (k)(l)41.39 %43.22 %NM42.56 %NM
(a)Reflects the impact of the acquisition of NSL beginning April 1, 2021, of the Premier Merger beginning September 17, 2021, and of the acquisition of Vantage beginning March 7, 2022.
(b)Data presented as of the end of the period indicated.
(c)Tangible book value per common share represents a non-US GAAP financial measure since it excludes the balance sheet impact of goodwill and other intangible assets acquired through acquisitions on stockholders' equity. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)."
(d)Ratios are presented on an annualized basis.
(e)Return on average tangible equity represents a non-US GAAP financial measure since it excludes the after-tax impact of amortization of other intangible assets from net income and it excludes the balance sheet impact of average goodwill and other intangible assets acquired through acquisitions on average stockholders' equity. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)."
(f)Return on average assets adjusted for non-core items represents a non-US GAAP financial measure since it excludes the after-tax impact of all gains and losses, acquisition-related expenses, pension settlement charges, severance expenses, COVID-19-related expenses, the contribution to Peoples Bank Foundation, Inc. and contract negotiation expenses. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)."
(g)The efficiency ratio is defined as total non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income (excluding all gains and losses). This ratio represents a non-US GAAP financial measure since it excludes amortization of other intangible assets, and all gains and losses included in earnings, and uses fully tax-equivalent net interest income. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)."
(h)The efficiency ratio adjusted for non-core items is defined as core non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income (excluding all gains and losses). This ratio represents a non-US GAAP financial measure since it excludes the impact of all gains and losses, acquisition-related expenses, pension settlement charges, severance expenses, COVID-19-related expenses, the contribution to Peoples Bank Foundation, Inc. and contract negotiation expenses included in earnings, and uses fully tax-equivalent net interest income. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)."
(i)Pre-provision net revenue is defined as net interest income plus total non-interest income (excluding all gains and losses) minus total non-interest expense. This measure represents a non-US GAAP financial measure since it excludes the provision for (recovery of) credit losses and all gains and losses included in net income. This measure is a key metric used by federal bank regulatory agencies in their evaluation of capital adequacy for financial institutions. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)."
(j)Information presented on a fully tax-equivalent basis, using a 21.4% blended corporate income tax rate for September 30, 2022, a 23.3% blended corporate income tax rate for June 30, 2022, and a 22.3% blended corporate income tax rate for September 30, 2021.
(k)This ratio, when applicable, is calculated based on dividends declared during the period divided by net income for the period.
(l)NM = not meaningful.
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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,
(Dollars in thousands, except per share data)20222022202120222021
Total interest income$70,871 $65,056 $45,467 $193,352 $127,226 
Total interest expense3,820 3,588 2,889 10,523 9,410 
Net interest income67,051 61,468 42,578 182,829 117,816 
Provision for (recovery of) credit losses1,776 (780)8,994 (5,811)7,333 
Net interest income after provision for (recovery of) credit losses65,275 62,248 33,584 188,640 110,483 
Non-interest income:
Electronic banking income5,261 5,419 4,326 15,933 12,655 
Trust and investment income3,954 4,246 4,158 12,476 12,223 
Insurance income3,618 3,646 3,367 11,995 11,923 
Deposit account service charges3,833 3,558 2,549 10,817 6,578 
Bank owned life insurance income694 797 437 1,922 1,329 
Mortgage banking income328 352 766 1,116 2,726 
Commercial loan swap fees224 270 73 662 194 
Net gain (loss) on investment securities21 (44)(166)107 (704)
Net loss on asset disposals and other transactions(35)(152)(308)(314)(459)
Other non-interest income2,468 1,294 1,144 5,088 2,605 
  Total non-interest income20,366 19,386 16,346 59,802 49,070 
Non-interest expense:
Salaries and employee benefit costs28,618 27,585 25,589 83,932 68,276 
Net occupancy and equipment expense4,813 4,768 3,551 14,669 10,167 
Data processing and software expense3,279 3,033 2,529 9,228 7,394 
Electronic banking expense2,648 2,727 2,037 8,134 6,006 
Professional fees2,832 2,280 6,426 8,784 13,459 
Amortization of other intangible assets2,023 2,034 1,279 5,765 3,267 
Franchise tax expense1,075 1,102 810 2,941 2,487 
FDIC insurance premiums709 1,018 807 2,921 1,596 
Marketing expense1,136 860 1,223 2,991 2,810 
Communication expense599 649 411 1,873 1,079 
Other loan expenses511 445 487 1,788 1,443 
Other non-interest expense4,010 3,398 12,711 10,755 17,762 
  Total non-interest expense52,253 49,899 57,860 153,781 135,746 
Income (loss) before income taxes33,388 31,735 (7,930)94,661 23,807 
Income tax expense (benefit)7,410 6,847 (2,172)20,218 3,999 
    Net income (loss)$25,978 $24,888 $(5,758)$74,443 $19,808 
PER COMMON SHARE DATA:
Earnings (loss) per common share – basic$0.93 $0.89 $(0.28)$2.65 $0.99 
Earnings (loss) per common share – diluted$0.92 $0.88 $(0.28)$2.65 $0.99 
Cash dividends declared per common share$0.38 $0.38 $0.36 $1.12 $1.07 
Weighted-average common shares outstanding – basic27,865,416 27,919,133 20,640,519 27,929,720 19,751,853 
Weighted-average common shares outstanding – diluted27,973,255 28,061,736 20,789,271 28,009,263 19,890,672 
Common shares outstanding at end of period28,278,078 28,290,115 28,265,791 28,278,078 28,265,791 
13


CONSOLIDATED BALANCE SHEETS
September 30,December 31,
20222021
(Dollars in thousands)(Unaudited)
Assets
Cash and cash equivalents:
  Cash and due from banks$93,908 $74,354 
  Interest-bearing deposits in other banks51,276 341,373 
    Total cash and cash equivalents145,184 415,727 
Available-for-sale investment securities, at fair value (amortized cost of $1,349,800 at September 30, 2022 and $1,283,146 at December 31, 2021) (a)
1,169,844 1,275,493 
Held-to-maturity investment securities, at amortized cost (fair value of $326,457 at September 30, 2022 and $369,955 at December 31, 2021) (a)
407,801 374,129 
Other investment securities39,039 33,987 
    Total investment securities (a)1,616,684 1,683,609 
Loans and leases, net of deferred fees and costs (b)4,611,207 4,481,600 
Allowance for credit losses (52,866)(63,967)
    Net loans and leases4,558,341 4,417,633 
Loans held for sale2,649 3,791 
Bank premises and equipment, net of accumulated depreciation83,863 89,260 
Bank owned life insurance104,591 73,358 
Goodwill292,397 264,193 
Other intangible assets36,031 26,816 
Other assets166,114 89,134 
    Total assets$7,005,854 $7,063,521 
Liabilities
Deposits:
Non-interest-bearing$1,635,953 $1,641,422 
Interest-bearing4,229,667 4,221,130 
    Total deposits5,865,620 5,862,552 
Short-term borrowings133,611 166,482 
Long-term borrowings104,196 99,475 
Accrued expenses and other liabilities 141,916 89,987 
    Total liabilities6,245,343 6,218,496 
Stockholders' equity
Preferred shares, no par value, 50,000 shares authorized, no shares issued at September 30, 2022 and December 31, 2021
 — 
Common shares, no par value, 50,000,000 shares authorized, 29,845,795 shares issued at September 30, 2022 and 29,814,401 shares issued at December 31, 2021, including shares held in treasury
685,351 686,282 
Retained earnings 249,833 207,076 
Accumulated other comprehensive loss, net of deferred income taxes(134,923)(11,619)
Treasury stock, at cost, 1,638,574 shares at September 30, 2022 and 1,577,359 shares at December 31, 2021
(39,750)(36,714)
    Total stockholders' equity760,511 $845,025 
    Total liabilities and stockholders' equity$7,005,854 $7,063,521 
(a)    Available-for-sale investment securities and held-to-maturity investment securities are presented net of allowance for credit losses of $0 and $238, respectively, as of September 30, 2022 and $0 and $286, respectively, at December 31, 2021.
(b)    Also referred to throughout this document as "total loans" and "loans held for investment."





14


SELECTED FINANCIAL INFORMATION (Unaudited)
September 30,June 30,March 31,December 31,September 30,
(Dollars in thousands)20222022202220212021
Loan Portfolio
Construction$215,621 $202,588 $238,305 $210,232 $174,784 
Commercial real estate, other1,423,479 1,460,023 1,457,232 1,550,081 1,629,116 
Commercial and industrial877,472 858,452 887,151 891,392 858,538 
Premium finance167,682 152,237 145,813 136,136 134,755 
Leases312,847 314,522 267,068 122,508 111,446 
Residential real estate733,361 743,005 756,429 771,718 768,134 
Home equity lines of credit174,525 169,335 162,288 163,593 161,370 
Consumer, indirect592,309 563,088 524,778 530,532 543,256 
Consumer, direct113,314 111,804 107,390 104,652 108,702 
Deposit account overdrafts597 851 699 756 927 
    Total loans and leases$4,611,207 $4,575,905 $4,547,153 $4,481,600 $4,491,028 
Total acquired loans and leases (a)(b)$1,186,069 $1,304,633 $1,400,336 $1,430,810 $1,586,413 
    Total originated loans and leases$3,425,138 $3,271,272 $3,146,817 $3,050,790 $2,904,615 
Deposit Balances (a)
Non-interest-bearing deposits (c)$1,635,953 $1,661,865 $1,666,668 $1,641,422 $1,559,993 
Interest-bearing deposits:
  Interest-bearing demand accounts (c)1,162,012 1,143,010 1,179,199 1,167,460 1,140,639 
  Retail certificates of deposit544,741 584,259 612,936 643,759 691,680 
  Money market deposit accounts624,708 645,242 656,266 651,169 637,635 
  Governmental deposit accounts734,734 728,057 734,784 617,259 679,305 
  Savings accounts1,077,383 1,080,053 1,065,678 1,036,738 1,016,755 
  Brokered deposits86,089 86,739 87,395 104,745 106,013 
    Total interest-bearing deposits$4,229,667 $4,267,360 $4,336,258 $4,221,130 $4,272,027 
    Total deposits$5,865,620 $5,929,225 $6,002,926 $5,862,552 $5,832,020 
Total demand deposits (c)$2,797,965 $2,804,875 $2,845,867 $2,808,882 $2,700,632 
Asset Quality (a)
Nonperforming assets (NPAs): (d)
  Loans 90+ days past due and accruing$8,424 $8,236 $5,959 $3,723 $5,363 
  Nonaccrual loans 27,831 29,488 32,003 34,765 36,034 
    Total nonperforming loans (NPLs) (d)36,255 37,724 37,962 38,488 41,397 
  Other real estate owned (OREO)8,840 9,210 9,407 9,496 11,268 
Total NPAs (d)$45,095 $46,934 $47,369 $47,984 $52,665 
Criticized loans (e)$164,775 $181,395 $190,315 $194,016 $234,845 
Classified loans (f)94,848 115,483 109,530 106,547 142,628 
Allowance for credit losses as a percent of NPLs (d)145.82 %138.76 %144.27 %166.20 %186.93 %
NPLs as a percent of total loans (d)0.79 %0.82 %0.83 %0.86 %0.92 %
NPAs as a percent of total assets (d)0.64 %0.64 %0.65 %0.68 %0.75 %
NPAs as a percent of total loans and OREO (d)0.98 %1.02 %1.04 %1.07 %1.17 %
Criticized loans as a percent of total loans (e)3.57 %3.96 %4.19 %4.33 %5.23 %
Classified loans as a percent of total loans (f)2.06 %2.52 %2.41 %2.38 %3.18 %
Allowance for credit losses as a percent of total loans 1.15 %1.14 %1.20 %1.43 %1.72 %
Total demand deposits as a percent of total deposits (c)47.70 %47.31 %47.41 %47.91 %46.31 %
Capital Information (a)(g)(h)(i)(j)
Common equity tier 1 risk-based capital ratio11.80 %11.62 %11.51 %12.52 %12.30 %
Tier 1 risk-based capital ratio12.08 %11.91 %11.80 %12.81 %12.58 %
Total risk-based capital ratio (tier 1 and tier 2)12.98 %12.81 %12.78 %14.06 %13.83 %
Tier 1 leverage ratio8.64 %8.38 %8.29 %8.67 %11.20 %
Common equity tier 1 capital$584,880 $564,708 $547,215 $577,565 $567,172 
Tier 1 capital598,633 578,425 560,897 591,215 580,100 
Total capital (tier 1 and tier 2)643,189 622,516 607,493 648,948 637,802 
Total risk-weighted assets$4,955,627 $4,857,818 $4,752,428 $4,614,258 $4,611,321 
Total stockholders' equity to total assets10.86 %10.81 %11.17 %11.96 %11.78 %
Tangible equity to tangible assets (k)6.47 %6.60 %6.76 %8.18 %7.93 %

15


(a)Reflects the impact of the acquisition of NSL beginning April 1, 2021, the Premier Merger beginning September 17, 2021, and the acquisition of Vantage beginning March 7, 2022.
(b)Includes all loans and leases acquired and purchased in 2012 and thereafter.
(c)The sum of non-interest-bearing deposits and interest-bearing deposits is considered total demand deposits.
(d)Nonperforming loans and leases include loans 90+ days past due and accruing, renegotiated loans and nonaccrual loans. Nonperforming assets include nonperforming loans and leases, and OREO.
(e)Includes loans and leases categorized as a special mention, substandard, or doubtful.
(f)Includes loans and leases categorized as substandard or doubtful.
(g)Data presented as of the end of the period indicated.
(h)September 30, 2022 data based on preliminary analysis and subject to revision.
(i)Peoples' capital conservation buffer was 4.98% at September 30, 2022, 4.81% at June 30, 2022, 4.78% at March 31, 2022, 6.06% at December 31, 2021, 5.83% at September 30, 2021, compared to required capital conservation buffer of 2.50%.
(j)Peoples has adopted the five-year transition to phase in the impact of the adoption of CECL, effective January 1, 2020, on regulatory capital ratios.
(k)This ratio represents a non-US GAAP financial measure since it excludes the balance sheet impact of intangible assets acquired through acquisitions on both total stockholders' equity and total assets. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)."





PROVISION FOR (RECOVERY OF) CREDIT LOSSES INFORMATION (Unaudited)
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,
(Dollars in thousands)20222022202120222021
Provision for (recovery of) credit losses
Provision for (recovery of) other credit losses$1,558 $(1,135)$8,870 $(6,583)$7,125 
Provision for checking account overdraft credit losses218 355 124 772 208 
  Total provision for (recovery of) credit losses$1,776 $(780)$8,994 $(5,811)$7,333 
Net charge-offs
Gross charge-offs$1,990 $1,951 $1,896 $6,274 $4,221 
Recoveries302 410 310 1,135 804 
  Net charge-offs $1,688 $1,541 $1,586 $5,139 $3,417 
Net charge-offs (recoveries) by type
Commercial real estate, other$18 $(154)$(4)$93 $153 
Commercial and industrial33 418 650 910 930 
Premium finance37 22 73 30 
Leases632 429 311 1,358 726 
Residential real estate132 33 (4)460 210 
Home equity lines of credit5 25 143 17 155 
Consumer, indirect529 366 373 1,194 979 
Consumer, direct72 49 12 246 42 
Deposit account overdrafts230 353 98 788 192 
  Total net charge-offs$1,688 $1,541 $1,586 $5,139 $3,417 
Net charge-offs as a percent of average total loans (annualized)0.15 %0.14 %0.18 %0.15 %0.13 %



16


SUPPLEMENTAL INFORMATION (Unaudited)

September 30,June 30,March 31,December 31,September 30,
(Dollars in thousands)20222022202220212021
Trust assets under administration and management$1,672,633 $1,731,454 $1,927,828 $2,009,871 $1,937,123 
Brokerage assets under administration and management1,127,831 1,068,261 1,152,530 1,183,927 1,133,668 
Mortgage loans serviced for others$400,736 $410,007 $420,024 $430,597 $441,085 
Employees (full-time equivalent) (a)1,244 1,261 1,245 1,188 1,181 
(a) The change in full-time equivalent employees between December 31, 2021 and March 31, 2022 was due to the Vantage acquisition on March 7, 2022.
17


CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME (Unaudited)
Three Months Ended
September 30, 2022June 30, 2022September 30, 2021
(Dollars in thousands)Average BalanceIncome/
Expense
Yield/ CostAverage BalanceIncome/
Expense
Yield/ CostAverage BalanceIncome/
Expense
Yield/ Cost
Assets
Short-term investments $159,522 $847 2.11 %$182,456 $299 0.66 %$199,007 $82 0.16 %
Investment securities (a)(b)1,685,134 9,009 2.13 %1,708,759 8,358 1.96 %1,152,737 4,935 1.71 %
Loans (b)(c):
Construction222,966 2,765 4.85 %209,822 2,216 4.18 %125,178 1,196 3.74 %
Commercial real estate, other1,300,173 16,593 4.99 %1,353,201 15,599 4.56 %993,259 9,507 3.75 %
Commercial and industrial865,436 11,140 5.04 %864,023 8,715 3.99 %789,555 8,933 4.43 %
Premium finance 162,057 1,949 4.71 %143,898 1,778 4.89 %122,828 1,542 4.91 %
Leases307,459 9,628 12.25 %288,360 10,541 14.46 %97,068 4,810 19.39 %
Residential real estate (d)869,444 9,439 4.34 %888,809 9,326 4.20 %652,184 6,648 4.08 %
Home equity lines of credit173,032 2,217 5.08 %167,935 1,748 4.17 %126,888 1,271 3.97 %
Consumer, indirect576,826 5,907 4.06 %541,135 5,243 3.89 %541,329 5,509 4.04 %
Consumer, direct113,609 1,764 6.16 %111,541 1,647 5.92 %86,935 1,385 6.32 %
Total loans and leases4,591,002 61,402 5.26 %4,568,724 56,813 4.94 %3,535,224 40,801 4.55 %
Allowance for credit losses (52,719)(54,148)(51,610)
Net loans and leases4,538,283 4,514,576 3,483,614 
Total earning assets6,382,939 71,258 4.40 %6,405,791 65,470 4.06 %4,835,358 45,818 3.74 %
Goodwill and other intangible assets329,482 329,243 232,361 
Other assets411,687 386,629 407,428 
Total assets$7,124,108 $7,121,663 $5,475,147 
Liabilities and Equity
Interest-bearing deposits:
Savings accounts$1,079,580 $139 0.05 %$1,076,028 $45 0.02 %$737,771 $23 0.01 %
Governmental deposit accounts741,836 543 0.29 %704,632 471 0.27 %542,855 458 0.33 %
Interest-bearing demand accounts1,158,970 190 0.07 %1,177,751 115 0.04 %795,565 74 0.04 %
Money market deposit accounts623,144 292 0.19 %641,066 104 0.07 %533,497 67 0.05 %
Retail certificates of deposit560,532 644 0.46 %602,225 747 0.50 %457,073 951 0.83 %
Brokered deposits (e)86,524 508 2.33 %87,006 532 2.45 %155,779 826 2.10 %
Total interest-bearing deposits4,250,586 2,316 0.22 %4,288,708 2,014 0.19 %3,222,540 2,399 0.30 %
Short-term borrowings (e)202,765 393 0.77 %150,435 261 0.70 %80,400 91 0.45 %
Long-term borrowings111,882 1,111 3.97 %152,595 1,313 3.44 %95,031 399 1.67 %
Total borrowed funds314,647 1,504 1.91 %303,030 1,574 2.08 %175,431 490 1.11 %
Total interest-bearing liabilities4,565,233 3,820 0.33 %4,591,738 3,588 0.31 %3,397,971 2,889 0.34 %
Non-interest-bearing deposits1,655,888 1,648,067 1,358,652 
Accrued expenses and other liabilities105,128 90,457 90,741 
Total liabilities6,326,249 6,330,262 4,847,364 
Stockholders’ equity797,859 791,401 627,783 
Total liabilities and stockholders' equity$7,124,108 $7,121,663 $5,475,147 
Net interest income/spread (b)$67,438 4.07 %$61,882 3.75 %$42,929 3.40 %
Net interest margin (b)4.17 %3.84 %3.50 %

18


Nine Months Ended
Nine Months Ended
September 30, 2022September 30, 2021
(Dollars in thousands)Average BalanceIncome/
Expense
Yield/ CostAverage BalanceIncome/
Expense
Yield/ Cost
Assets
Short-term investments$224,060 $1,306 0.78 %$175,755 $175 0.13 %
Investment securities (a)(b)1,688,124 24,703 1.95 %1,049,167 12,671 1.61 %
Loans (b)(c):
Construction219,478 7,136 4.29 %108,859 3,169 3.84 %
Commercial real estate, other1,338,375 46,974 4.63 %930,150 26,938 3.82 %
Commercial and industrial872,601 27,878 4.21 %872,421 28,773 4.35 %
Premium finance146,345 4,891 4.41 %112,925 4,137 4.83 %
Leases253,231 26,271 13.68 %61,551 9,025 19.34 %
Residential real estate (d)890,499 28,531 4.27 %624,993 19,749 4.21 %
Home equity lines of credit168,137 5,577 4.43 %122,720 3,638 3.96 %
Consumer, indirect547,438 16,195 3.96 %526,900 16,025 4.07 %
Consumer, direct110,509 5,006 6.06 %82,151 3,896 6.34 %
Total loans and leases4,546,613 168,459 4.91 %3,442,670 115,350 4.44 %
Allowance for credit losses(56,237)(49,483)
Net loans and leases4,490,376 3,393,187 
Total earning assets6,402,560 194,468 4.03 %4,618,109 128,196 3.68 %
Goodwill and other intangible assets321,043 213,232 
Other assets380,376 360,842 
Total assets$7,103,979 $5,192,183 
Liabilities and Equity
Interest-bearing deposits:
Savings accounts$1,068,912 $218 0.03 %$688,782 $79 0.02 %
Governmental deposit accounts705,891 1,462 0.28 %490,170 1,602 0.44 %
Interest-bearing demand accounts1,169,284 397 0.05 %743,562 205 0.04 %
Money market deposit accounts638,061 492 0.10 %554,194 294 0.07 %
Retail certificates of deposit 596,335 2,262 0.51 %440,454 3,054 0.93 %
Brokered deposits (e)88,336 1,552 2.35 %166,000 2,559 2.06 %
Total interest-bearing deposits4,266,819 6,383 0.20 %3,083,162 7,793 0.34 %
Short-term borrowings (e)169,360 992 0.78 %73,873 283 0.51 %
Long-term borrowings131,129 3,148 3.20 %104,691 1,334 1.70 %
Total borrowed funds300,489 4,140 1.83 %178,564 1,617 1.21 %
Total interest-bearing liabilities4,567,308 10,523 0.31 %3,261,726 9,410 0.39 %
Non-interest-bearing deposits1,637,053 1,248,330 
Accrued expenses and other liabilities91,749 86,209 
Total liabilities6,296,110 4,596,265 
Stockholders’ equity807,869 595,918 
Total liabilities and stockholders' equity$7,103,979 $5,192,183 
Net interest income/spread (b)$183,945 3.72 %$118,786 3.29 %
Net interest margin (b)3.81 %3.41 %
(a)Average balances are based on carrying value.
(b)Interest income and yields are presented on a fully tax-equivalent basis, using a 21.4% blended corporate income tax rate for September 30, 2022, a 23.3% blended corporate income tax rate for June 30, 2022, and a 22.3% blended corporate income tax rate for September 30, 2021.
(c)Average balances include nonaccrual and impaired loans. Interest income includes interest earned and received on nonaccrual loans prior to the loans being placed on nonaccrual status. Loan fees included in interest income were immaterial for all periods presented.
(d)Loans held for sale are included in the average loan balance listed. 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 (included in short-term borrowings) and interest expense on brokered deposits for all periods presented.


19


NON-US GAAP FINANCIAL MEASURES (Unaudited)
The following non-US GAAP financial measures used by Peoples provide information useful to investors in understanding Peoples' operating performance and trends, and facilitate comparisons with the performance of Peoples' peers. Peoples also uses the non-US GAAP financial measures for calculating incentive compensation. The following tables summarize the non-US GAAP financial measures derived from amounts reported in Peoples' consolidated financial statements:
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,
(Dollars in thousands)20222022202120222021
Core non-interest expense:
Total non-interest expense$52,253 $49,899 $57,860 $153,781 $135,746 
Less: acquisition-related expenses339 602 16,209 2,314 20,520 
Less: pension settlement charges139 — 143 139 143 
Less: severance expenses— — — — 63 
Less: COVID-19-related expenses29 181 132 683 
Less: Peoples Bank Foundation, Inc. contribution— — — — 500 
Less: contract negotiation expense— — 1,851 — 1,851 
Core non-interest expense$51,766 $49,268 $39,476 $151,196 $111,986 
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,
(Dollars in thousands)20222022202120222021
Efficiency ratio:
Total non-interest expense52,253 $49,899 57,860 153,781 135,746 
Less: amortization of other intangible assets2,023 2,034 1,279 5,765 3,267 
Adjusted non-interest expense$50,230 $47,865 $56,581 $148,016 $132,479 
Total non-interest income$20,366 $19,386 $16,346 $59,802 $49,070 
Less: net gain (loss) on investment securities21 (44)(166)107 (704)
Less: net loss on asset disposals and other transactions(35)(152)(308)(314)(459)
Total non-interest income, excluding net gains and losses$20,380 $19,582 $16,820 $60,009 $50,233 
Net interest income$67,051 $61,468 $42,578 $182,829 $117,816 
Add: fully tax-equivalent adjustment (a)387 414 351 1,116 970 
Net interest income on a fully tax-equivalent basis$67,438 $61,882 $42,929 $183,945 $118,786 
Adjusted revenue$87,818 $81,464 $59,749 $243,954 $169,019 
Efficiency ratio57.20 %58.76 %94.70 %60.67 %78.38 %
Efficiency ratio adjusted for non-core items:
Core non-interest expense$51,766 $49,268 $39,476 $151,196 $111,986 
Less: amortization of other intangible assets2,023 2,034 1,279 5,765 3,267 
Adjusted core non-interest expense$49,743 $47,234 $38,197 $145,431 $108,719 
Adjusted revenue$87,818 $81,464 $59,749 $243,954 $169,019 
Efficiency ratio adjusted for non-core items56.64 %57.98 %63.93 %59.61 %64.32 %
`
(a) Tax effect is calculated using a 21.4% blended corporate income tax rate for September 30, 2022, 23.3% blended corporate income tax rate for June 30, 2022, and 22.3% blended corporate income tax rate for September 30, 2021.
20


NON-US GAAP FINANCIAL MEASURES (Unaudited) -- (Continued)

(Dollars in thousands, except per share data)September 30,June 30,March 31,December 31,September 30,
20222022202220212021
Tangible equity:
Total stockholders' equity$760,511 $786,824 $808,340 $845,025 $831,882 
Less: goodwill and other intangible assets328,428 328,132 341,865 291,009 295,415 
Tangible equity$432,083 $458,692 $466,475 $554,016 $536,467 
Tangible assets:
Total assets$7,005,854 $7,278,292 $7,239,261 $7,063,521 $7,059,752 
Less: goodwill and other intangible assets328,428 328,132 341,865 291,009 295,415 
Tangible assets$6,677,426 $6,950,160 $6,897,396 $6,772,512 $6,764,337 
Tangible book value per common share:
Tangible equity$432,083 $458,692 $466,475 $554,016 $536,467 
Common shares outstanding28,278,078 28,290,115 28,453,175 28,297,771 28,265,791 
Tangible book value per common share$15.28 $16.21 $16.39 $19.58 $18.98 
Tangible equity to tangible assets ratio:
Tangible equity$432,083 $458,692 $466,475 $554,016 $536,467 
Tangible assets$6,677,426 $6,950,160 $6,897,396 $6,772,512 $6,764,337 
Tangible equity to tangible assets ratio6.47 %6.60 %6.76 %8.18 %7.93 %
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,
(Dollars in thousands, except per share data)20222022202120222021
Pre-provision net revenue:
Income (loss) before income taxes$33,388 $31,735 $(7,930)$94,661 $23,807 
Add: provision for credit losses 1,776 — 8,994 1,776 7,333 
Add: loss on OREO105 32 32 138 32 
Add: loss on investment securities— 44 316 44 1,490 
Add: loss on other assets— 120 363 142 687 
Add: net loss on other transactions24 — 128 
Less: recovery of credit losses— 780 — 7,587 — 
Less: gain on OREO— — — — 
Less: gain on investment securities21 — 150 151 786 
Less: gain on other assets94 — 93 94 258 
Pre-provision net revenue$35,178 $31,151 $1,538 $89,057 $32,303 
Total average assets$7,124,108 $7,121,663 $5,475,147 $7,103,979 $5,192,183 
Pre-provision net revenue to total average assets (annualized)1.96 %1.75 %0.11 %2.53 %0.83 %
Weighted-average common shares outstanding – diluted27,973,25528,061,73620,789,27128,009,26319,890,672
Pre-provision net revenue per common share – diluted$1.25$1.11$0.07$3.17$1.61

21


NON-US GAAP FINANCIAL MEASURES (Unaudited) -- (Continued)

Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,
(Dollars in thousands)20222022202120222021
Annualized net income (loss) adjusted for non-core items:
Net income (loss)$25,978 $24,888 $(5,758)$74,443 $19,808 
Add: loss on investment securities— 44 166 — 704 
Less: tax effect of loss on investment securities (a)— 35 — 148 
Less: gain on investment securities21 — — 107 — 
Add: tax effect of net gain on investment securities (a)— — 22 — 
Add: net loss on asset disposals and other transactions35 152 308 314 459 
Less: tax effect of net loss on asset disposals and other transactions (a)32 65 66 96 
Add: acquisition-related expenses339 602 16,209 2,314 20,520 
Less: tax effect of acquisition-related expenses (a)71 126 3,404 486 4,309 
Add: pension settlement charges139 — 143 139 143 
Less: tax effect of pension settlement charges (a)29 — 30 29 30 
Add: severance expenses— — — — 63 
Less: tax effect of severance expenses (a)— — — — 13 
Add: COVID-19-related expenses29 181 132 683 
Less: tax effect of COVID-19-related expenses (a)38 28 143 
Add: Peoples Bank Foundation, Inc. contribution
— — — — 500 
Less: tax effect of Peoples Bank Foundation, Inc. contribution (a)
— — — — 105 
Add: contract negotiation expenses
— — 1,851 — 1,851 
Less: tax effect of contract negotiation expenses (a)
— — $389 $— $389 
Net income adjusted for non-core items (after tax)$26,374 $25,542 $9,139 $76,648 $39,498 
Days in the period92 91 92 273 273 
Days in the year365 365 365 365 365 
Annualized net income (loss)$103,065 $99,825 $(22,844)$99,530 $26,483 
Annualized net income adjusted for non-core items (after tax)$104,636 $102,449 $36,258 $102,478 $52,809 
Return on average assets:
Annualized net income (loss)$103,065 $99,825 $(22,844)$99,530 $26,483 
Total average assets$7,124,108 $7,121,663 $5,475,147 $7,103,979 $5,192,183 
Return on average assets1.45 %1.40 %(0.42)%1.40 %0.51 %
Return on average assets adjusted for non-core items:
Annualized net income adjusted for non-core items (after tax)$104,636 $102,449 $36,258 $102,478 $52,809 
Total average assets$7,124,108 $7,121,663 $5,475,147 $7,103,979 $5,192,183 
Return on average assets adjusted for non-core items1.47 %1.44 %0.66 %1.44 %1.02 %
(a) Tax effect is calculated using a 21% statutory federal corporate income tax rate.


22


NON-US GAAP FINANCIAL MEASURES (Unaudited) -- (Continued)
Three Months EndedAt or For the Nine Months Ended
September 30,June 30,September 30,September 30,
(Dollars in thousands)20222022202120222021
Annualized net income (loss) excluding amortization of other intangible assets:
Net income (loss)$25,978 $24,888 $(5,758)$74,443 $19,808 
Add: amortization of other intangible assets2,023 2,034 1,279 5,765 3,267 
Less: tax effect of amortization of other intangible assets (a)425 427 269 1,211 686 
Net income (loss) excluding amortization of other intangible assets (after tax)$27,576 $26,495 $(4,748)$78,997 $22,389 
Days in the period92 91 92 273 273 
Days in the year365 365 365 365 365 
Annualized net income (loss)$103,065 $99,825 $(22,844)$99,530 $26,483 
Annualized net income (loss) excluding amortization of other intangible assets (after tax)$109,405 $106,271 $(18,837)$105,619 $29,934 
Average tangible equity:
Total average stockholders' equity$797,859 $791,401 $627,783 $807,869 $595,918 
Less: average goodwill and other intangible assets329,482 329,243 232,361 321,043 213,232 
Average tangible equity$468,377 $462,158 $395,422 $486,826 $382,686 
Return on total average stockholders' equity ratio:
Annualized net income (loss)$103,065 $99,825 $(22,844)$99,530 $26,483 
Total average stockholders' equity$797,859 $791,401 $627,783 $807,869 $595,918 
Return on total average stockholders' equity ratio12.92 %12.61 %(3.64)%12.32 %4.44 %
Return on average tangible equity ratio:
Annualized net income (loss) excluding amortization of other intangible assets (after tax)$109,405 $106,271 $(18,837)$105,619 $29,934 
Average tangible equity$468,377 $462,158 $395,422 $486,826 $382,686 
Return on average tangible equity ratio23.36 %22.99 %(4.76)%21.70 %7.82 %
(a) Tax effect is calculated using a 21% statutory federal corporate income tax rate.
END OF RELEASE
23
Acquisition of Limestone Bancorp, Inc. October 25, 2022


 
Safe Harbor Statement Statements in this presentation which are not historical are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include discussions of the strategic plans and objectives or anticipated future performance and events of Peoples Bancorp Inc. (“Peoples”). The information contained in this presentation should be read in conjunction with Peoples’ Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) and available on the SEC’s website (www.sec.gov) or at Peoples’ website (www.peoplesbancorp.com). Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed in Peoples’ 2021 Annual Report on Form 10-K filed with the SEC under the section, “Risk Factors” in Part I, Item 1A. As such, actual results could differ materially from those contemplated by forward-looking statements made in this presentation. Management believes that the expectations in these forward-looking statements are based upon reasonable assumptions within the bounds of management's knowledge of Peoples’ business and operations. Peoples disclaims any responsibility to update these forward-looking statements to reflect events or circumstances after the date of this presentation. 2


 
Safe Harbor Statement This call does not constitute an offer to sell or the solicitation of an offer to buy securities of Peoples Bancorp Inc. (“Peoples”). Peoples will file a registration statement on Form S-4 and other documents regarding the proposed merger with Limestone Bancorp, Inc. (“Limestone”) with the Securities and Exchange Commission (“SEC”). The registration statement will include a joint proxy statement/prospectus which will be sent to the shareholders of both Peoples and Limestone in advance of their respective special meetings of shareholders to be held to consider the proposed merger. Investors and security holders are urged to read the proxy statement/prospectus and any other relevant documents to be filed with the SEC in connection with the proposed transaction because they contain important information about Peoples, Limestone and the proposed merger. Investors and security holders may obtain a free copy of these documents (when available) through the website maintained by the SEC at www.sec.gov. These documents may also be obtained, free of charge, on Peoples’ website at www.peoplesbancorp.com under the tab “Investor Relations” or by contacting Peoples’ Investor Relations Department at: Peoples Bancorp Inc., 138 Putnam Street, PO Box 738, Marietta, Ohio 45750, Attn: Investor Relations. Peoples, Limestone, and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies in connection with the proposed merger. Information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the proxy statement/prospectus regarding the proposed merger when it becomes available. Additional information about the directors and executive officers of Peoples is set forth in the proxy statement for Peoples' 2022 annual meeting of shareholders, as filed with the SEC on Schedule 14A on March 7, 2022. 3


 
4 Strategic Rationale Strong Strategic Fit • #6 in pro forma Kentucky deposit market share among community banks(1) • Strategic entrance into selected Kentucky markets, including the Louisville, Lexington, Frankfort, Owensboro and Elizabethtown, KY MSAs • Strong and complementary corporate and credit culture • CRE and C&I lending focus further diversifies loan portfolio • Accelerates goal of becoming the Best Community Bank in America Enhanced Performance • Benefits of additional scale and operating leverage while staying under $10B in assets • Enhanced earnings profile – ~1.50% estimated pro forma 2024 ROAA • 30% cost savings to drive meaningful improvement in efficiency • Potential revenue synergies across multiple business lines (not modeled) Note: Pro forma balance sheet data as of September 30, 2022, excluding merger adjustments (1) Includes community banks with less than $50 billion in total assets (2) Inclusive of interest rate marks Sound Risk Profile Financially Compelling Pro Forma Results • Grows balance sheet with high-quality loans and core deposits • Excellent credit discipline and asset quality • Non-complex business lines in stable markets • Leverages Peoples’ experience in acquisitions and integration • Diversifies balance sheet, geography and overall risk profile Total Assets Total Loans ‘24E EPS Accretion IRRTBV Earnback(2) ’24 ROATCE $8.5B $5.7B 11+% 20%+2.8 years ~22% Total Deposits $7.1B ’24 ROAA ~1.50%


 
5Source: S&P Capital IQ Pro Note: Financial data as of September 30, 2022 Company Overview Loan and Deposit Detail 1-4 Family 12.2% NOO CRE & Multi-family 35.0% C&D 11.3% Home Equity 2.6% Owner Occ. CRE 10.5% C&I 25.5% Consumer & Other 3.0% Non-interest Bearing 23.6% IB, MMDA & Savings 53.9% Retail CDs 8.1% Jumbo CDs 14.3% L o a n C o m p o s it io n D e p o s it C o m p o s it io n $1,128 MM $1,219 MM Total Loans Total Deposits Company Overview Company Name Limestone Bancorp, Inc. Headquarters Louisville, KY Ticker LMST MRQ Balance Sheet ($000) Total Assets 1,493,695 Total Loans 1,127,945 Total Deposits 1,218,580 Tangible Common Equity 120,322 Loans / Deposits (%) 93 TCE / TA (%) 8.1 MRQ Profitability ($000) Net Income 5,813 ROAA (%) 1.59 ROAE (%) 17.83 Net Interest Margin (%) 3.73 Efficiency Ratio (%) 57.4 MRQ Asset Quality (%) NPAs / Assets (%) 0.08 LLR / Gross Loans (%) 1.16 MRQ Yield on Loans 4.77% MRQ Cost of Deposits 0.41%


 
Pro Forma Branch Map Source: S&P Capital IQ Pro Note: Pro forma deposit data as of June 30, 2022 Entering Louisville, Bolstering Kentucky Franchise 6 PEBO (117) LMST (20) Kentucky Deposit Market Share Key Markets | Louisville • Few sizeable independent banks headquartered in or around Louisville • Top ranked manufacturing sector provides target rich C&I lending opportunities • Ranked amongst best large cities to live in and start a business Marietta, OH Louisville, KY Deposits Market 2022 Branches In Market Share Rank Company (#) ($M) (%) 1 The PNC Finl Svcs Grp (PA) 69 12,654 10.7 2 JPMorgan Chase & Co. (NY) 47 11,140 9.4 3 Fifth Third Bancorp (OH) 72 9,030 7.6 4 Truist Financial Corp. (NC) 61 7,391 6.2 5 U.S. Bancorp (MN) 95 5,897 5.0 6 Stock Yards Bancorp Inc. (KY) 63 5,685 4.8 7 Community Trust Bancorp Inc. (KY) 71 3,961 3.3 8 Republic Bancorp Inc. (KY) 27 3,934 3.3 9 Central Bancshares Inc. (KY) 28 3,124 2.6 10 Independence Bancshares Inc. (KY) 28 2,905 2.4 Pro Forma 44 2,007 1.7 11 WesBanco Inc. (WV) 34 1,993 1.7 12 Traditional Bancorp. Inc. (KY) 17 1,980 1.7 13 First Breckinridge Bcshs Inc. (KY) 25 1,890 1.6 14 Whitaker Bank Corp. of KY (KY) 46 1,764 1.5 15 German American Bancorp Inc. (IN) 28 1,561 1.3


 
Transaction Terms and Key Assumptions 7 Consideration(1) • Approximately $208.2 million deal value, $27.25 per LMST share • 100% stock consideration • 0.90x fixed exchange ratio Pricing Multiples(1) • Price / Tangible Book Per Share: 173% • Price / LTM EPS: 12.3x • Core Deposit Premium: 8.4% Key Transaction Assumptions • 30% cost savings (75% phased in 2023 and 100% in 2024 and thereafter) • $17.7 million in pre-tax merger expenses • Credit mark of 1.65% of LMST total loans - 25% PCD, 75% non-PCD • Interest rate marks: - $39.8 million loan mark, accreted back over 3.5 years - $9.4 million write down of LMST HTM securities, accreted back over 11.8 years - $18.9 million write down of AOCI, accreted back over 5.3 years - Combined $3.6 write down of time deposits, trust preferred, sub-debt and FHLB marks Core Deposit Intangible • 3.60% of LMST’s core deposits, amortized SYD over 10 years Financial Impact • 2024 EPS accretion (fully phased): 11+% • Initial TBVPS dilution of 9.6%, with an earnback of 2.8 years (crossover, inclusive of rate marks) Pro Forma Ownership • 80% PEBO shareholders, 20% LMST shareholders • One board seat to be offered to Limestone’s existing Chairman Timing & Approvals • Shareholder approval • Customary regulatory approvals and closing conditions • Targeted closing in the second quarter of 2023 (1) Based on Peoples’ closing price of $30.28 per share as of October 21, 2022


 
(1) No rate mark scenario assumes no loan interest rate mark, HTM securities mark, AOCI mark, time deposit mark, FHLB mark, subordinated debt mark, TruPS mark or amortization as a result of CDI Expected Financial Impact (with and without interest rate marks) 8 Financial Impact TBV Acc. / (Dil.) (0.2%) TBV Earnback 0.3 Years EPS Accretion: 2024 5.2% Pro Forma Capital Ratios At Close TCE 7.0% Leverage 9.0% CET1 11.2% Tier 1 11.7% Total Capital 13.1% Financial Impact TBV Acc. / (Dil.) (9.6%) TBV Earnback 2.8 Years EPS Accretion: 2024 11.7% Pro Forma Capital Ratios At Close TCE 6.4% Leverage 8.4% CET1 10.4% Tier 1 10.9% Total Capital 12.3% Including AOCI and Rate Marks Excluding AOCI and Rate Marks(1)


 
Comprehensive Due Diligence 9 • PEBO is an experienced acquirer with 9 bank transactions completed since 2012 • Track record of successful integration and realization of cost savings • Comprehensive process including business, operational, credit, financial, legal, HR and regulatory review • Detailed credit review completed by internal team with assistance from external partners • Due diligence team reviewed approximately 75% of the target’s commercial loan portfolio • Nearly 100% review of loan exposures over $1 million, 90% over $500,000 and 100% of criticized relationships over $100,000 • Detailed review of cost structure, interest rate risk, and growth strategy • Thorough review of regulatory, compliance, legal & operational risks • Third party valuation firm analyzed interest rate marks including CDI and loan rate marks • Outside tax accountants reviewed and assessed Limestone’s existing Deferred Tax Assets and NOLs Comprehensive Diligence Process Disciplined Acquirer


 
Transaction Highlights • Strong corporate franchise which provides a solid entry into the Louisville market • CRE and C&I focused franchise further diversifies pro forma loan portfolio • Similar business model which provides for a seamless integration; strong credit discipline and excellent asset quality • Expands presence in KY markets, moving Peoples to 11th in KY deposit market share • Provides diversification and expansion of franchise while staying under $10 billion in total assets • Financially attractive with strong, double-digit earnings accretion (fully phased-in) and manageable tangible book earnback • Experienced acquirer with significant integration experience 10


 
Appendix


 
Combined Pro Forma Loan Composition 12Source: Company provided documents Note: Financial data as of September 30, 2022; Excludes purchase accounting adjustments Peoples Bancorp Inc. Limestone Bancorp, Inc. Pro Forma Pro Forma Yield on Loans Calk Pro Forma CRE Concentration Dollars in millions Dollars in millions Dollars in millions Loan Type Balance % Loan Type Balance % Loan Type Balance % 1-4 Family $733.4 15.9% 1-4 Family $137.4 12.2% 1-4 Family $870.7 15.2% NOO CRE & Multi-family 882.0 19.1% NOO CRE & Multi-family 394.7 35.0% NOO CRE & Multi-family 1,276.7 22.2% C&D 215.6 4.7% C&D 127.3 11.3% C&D 342.9 6.0% Home Equity 174.5 3.8% Home Equity 29.4 2.6% Home Equity 203.9 3.6% Owner Occ. CRE 541.5 11.7% Owner Occ. CRE 118.0 10.5% Owner Occ. CRE 659.5 11.5% C&I 877.5 19.0% C&I 287.4 25.5% C&I 1,164.8 20.3% Consumer & Other 1,186.7 25.7% Consumer & Other 33.9 3.0% Consumer & Other 1,220.6 21.3% Gross Loans (HFI) $4,611.2 100.0% Gross Loans (HFI) $1,127.9 100.0% Gross Loans (HFI) $5,739.2 100.0% MRQ Yield on Loans: 5.26% MRQ Yield on Loans: 4.77% MRQ Yield on Loans: 5.16% 1-4 Family 15.9% NOO CRE & Multi-family 19.1% C&D 4.7% Home Equity 3.8% Owner Occ. CRE 11.7% C&I 19.0% Consumer & Other 25.7% 1-4 Family 12.2% NOO CRE & Multi-family 35.0% C&D 11.3% Home Equity 2.6% Owner Occ. CRE 10.5% C&I 25.5% Consumer & Other 3.0% 1-4 Family 15.2% NOO CRE & Multi-family 22.2% C&D 6.0% Home Equity 3.6% Owner Occ. CRE 11.5% C&I 20.3% Consumer & Other 21.3%


 
Pro Forma Deposit Composition 13 Combined Source: Company provided documents Note: Financial data as of September 30, 2022; Excludes purchase accounting adjustments Peoples Bancorp Inc. Limestone Bancorp, Inc. Pro Forma Pro Forma Cost of Deposits Calc Pro Forma Cost of Funds Calc Dollars in millions Dollars in millions Dollars in millions Deposit Type Balance % Deposit Type Balance % Deposit Type Balance % Non-IB Demand $1,636.0 27.9% Non-IB Demand $287.9 23.6% Non-IB Demand $1,923.9 27.2% Money Market 624.7 10.7% Money Market 215.5 17.7% Money Market 840.2 11.9% Savings 1,077.4 18.4% Savings 154.5 12.7% Savings 1,231.9 17.4% Other IB Demand 1,896.7 32.3% Other IB Demand 286.9 23.5% Other IB Demand 2,183.6 30.8% Time Deposits 630.8 10.8% Time Deposits 273.8 22.5% Time Deposits 904.6 12.8% Total Deposits $5,865.6 100.0% Total Deposits $1,218.6 100.0% Total Deposits $7,084.2 100.0% MRQ Cost of Deposits: 0.16% MRQ Cost of Deposits: 0.41% MRQ Cost of Deposits: 0.20% Loans / Deposits: 79% Loans / Deposits: 93% Loans / Deposits: 81% Non-IB Demand 27.9% Money Market 10.7% Savings 18.4% Other IB Demand 32.3% Time Deposits 10.8% Non-IB Demand 23.6% Money Market 17.7% Savings 12.7% Other IB Demand 23.5% Time Deposits 22.5% Non-IB Demand 27.2% Money Market 11.9% Savings 17.4% Other IB Demand 30.8% Time Deposits 12.8%


 
Limestone Financial Highlights Source: S&P Capital IQ Pro Note: YTD data as of September 30, 2022 14 ($000s) 2018Y 2019Y 2020Y 2021Y YTD Balance Sheet Total Assets 1,069,692 1,245,779 1,312,302 1,415,692 1,493,695 Total Loans HFI 765,244 926,271 962,081 1,001,840 1,127,945 Total Deposits 894,231 1,026,975 1,119,607 1,208,668 1,218,580 Loans / Deposits (%) 86 90 86 83 93 Yield on Interest Earning Assets (%) 4.55 4.76 4.20 3.92 4.05 Cost of Interest-bearing Liab (%) 1.23 1.66 1.05 0.59 0.66 Capital Position Total Equity 92,097 105,750 116,024 130,959 128,371 Tang. Common Equity 92,097 96,998 107,528 122,718 120,322 TCE Ratio (%) 8.61 7.84 8.25 8.72 8.10 Profitability Net Income 8,794 10,518 9,005 14,909 13,428 ROAA (%) 0.86 0.95 0.70 1.09 1.26 ROAE (%) 10.36 10.50 8.19 12.03 13.87 NII / AA (%) 0.53 0.53 0.53 0.57 0.61 NIE / AA (%) 2.75 2.62 2.50 2.34 2.33 Efficiency Ratio (%) 72.3 70.6 67.6 61.0 58.7 Net Interest Margin (%) 3.52 3.39 3.35 3.46 3.56 Asset Quality and LLR NPAs / Assets (%) 0.60 0.42 0.30 0.24 0.08 LLR / Gross Loans (%) 1.16 0.90 1.29 1.15 1.16 NCOs / Avg. Loans (%) (0.16) 0.06 0.03 0.22 (0.20)


 
Limestone Metro Market Overview Source: S&P Capital IQ Pro Note: Four largest cities in KY, data as of June 30, 2022 15 Louisville Lexington Owensboro Bowling Green Corporate Headquarters: Brown-Forman, Churchill Downs, Humana, Kindred Healthcare, Papa John’s International, Texas Roadhouse, and Yum! Brands Corporate Headquarters: Fasig Tipton, Jif (peanut butter), Keeneland, Lexmark, and Tempur Sealy Corporate Headquarters: Owensboro Health Corporate Headquarters: Camping World, Fruit of the Loom, Houchens Industries, and the Medical Center at Bowling Green Other large employers: UPS, Ford Motor Company, GE Appliances, and Norton Healthcare Other large employers: Xerox, Toyota, IBM, Lockheed Martin, and Valvoline Other large employers: Kimberly-Clark, US Bank Mortgage Processing, and Toyotetsu Other large employers: General Motors Corvette plant, Rafferty’s Restaurants Universities: University of Louisville and Bellarmine University Universities: University of Kentucky and Transylvania University Universities: Kentucky Wesleyan University and Brescia University Universities: Western Kentucky University Deposits in MSA: $43.3 billion Limestone market share: 1.0% MSA Population: 1.284 mil Deposits in MSA: $16.2 billion Limestone market share: 0.7% MSA Population: 530k Deposits in MSA: $3.4 billion Limestone market share: 2.3% MSA Population: 121k Deposits in MSA: $4.6 billion Limestone market share: 2.7% MSA Population: 185k


 

pebonewlogoa25a.jpg
P.O. BOX 738 - MARIETTA, OHIO - 45750NEWS RELEASE
www.peoplesbancorp.com
FOR IMMEDIATE RELEASEContact:Katie Bailey
October 25, 2022Chief Financial Officer and Treasurer
(740) 376-7138

PEOPLES BANCORP INC. DECLARES
QUARTERLY DIVIDEND
_____________________________________________________________________

MARIETTA, Ohio - The Board of Directors of Peoples Bancorp Inc. (“Peoples”) (Nasdaq: PEBO) declared a quarterly cash dividend of $0.38 per common share on October 24, 2022, payable on November 21, 2022, to shareholders of record on November 7, 2022.
This dividend represents a payout of approximately $10.7 million. Based on the closing stock price of Peoples’ common shares of $29.60 on October 20, 2022, the quarterly dividend produces an annualized yield of 5.14%.
Peoples is a diversified financial services holding company that makes available a complete line of banking, trust and investment, insurance, premium financing and equipment leasing solutions through its subsidiaries. Peoples has been headquartered in Marietta, Ohio since 1902. Peoples had $7.0 billion in total assets as of September 30, 2022, and 130 locations, including 113 full-service bank branches in Ohio, West Virginia, Kentucky, Virginia, Washington D.C. and Maryland. Peoples' vision is to be the Best Community Bank in America.
Peoples is a member of the Russell 3000 index of U.S. publicly-traded companies. Peoples offers services through Peoples Bank (which includes the divisions of Peoples Investment Services, Peoples Premium Finance and North Star Leasing), Peoples Insurance Agency, LLC and Vantage Financial.


END OF RELEASE



Filed by Peoples Bancorp Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934

Subject Company: Limestone Bancorp, Inc.
Commission File No. 001-33033
image_0a.jpg                image_1a.jpg    
P.O. BOX 738 - MARIETTA, OHIO - 45750 2500 Eastpoint Parkway – LOUISVILLE, KENTUCKY – 40223
www.peoplesbancorp.com www.limestonebank.com

NEWS RELEASE
FOR IMMEDIATE RELEASE
October 25, 2022
Contacts:Chuck W. SulerzyskiJohn T. Taylor
President and Chief Executive OfficerPresident and Chief Executive Officer
Peoples Bancorp Inc.Limestone Bancorp, Inc.
(740) 374-6163(502) 499-4800

PEOPLES BANCORP INC. AND LIMESTONE BANCORP, INC. ANNOUNCE DEFINITIVE MERGER AGREEMENT
_____________________________________________________________________

MARIETTA, Ohio, and LOUISVILLE, Kentucky - Peoples Bancorp Inc. (“Peoples”) (NASDAQ: PEBO) and Limestone Bancorp, Inc. (“Limestone”) (NASDAQ: LMST), jointly announced today the signing of a definitive agreement and plan of merger (the “Merger Agreement”) pursuant to which Peoples will acquire, in an all-stock merger, Limestone, a bank holding company headquartered in Louisville, Kentucky, and the parent company of Limestone Bank, Inc. (“Limestone Bank”). Under the terms of the Merger Agreement, Limestone will merge with and into Peoples (the “Merger”), and Limestone Bank will subsequently merge with and into Peoples’ wholly owned subsidiary, Peoples Bank, in a transaction valued at approximately $208.2 million.
Upon completion of the Merger, the combined company will have approximately $8.5 billion in total assets, $5.7 billion in total loans and $7.1 billion in total deposits with 150 locations in Ohio, West Virginia, Kentucky, Maryland, Virginia and Washington, D.C.
Limestone, through its community bank subsidiary and 226 associates, operates 20 branches in 14 counties in Kentucky. As of September 30, 2022, Limestone had, on a consolidated basis, $1.5 billion in total assets, which included $1.1 billion in total net loans, and $1.2 billion in total deposits.
“We are excited about our partnership with Limestone and our entrance into strategically important markets in Kentucky. We view Limestone’s corporate culture and philosophy as very similar to our own and have been impressed with what John Taylor and his team have been able to accomplish,” said Chuck Sulerzyski, President and Chief Executive Officer of Peoples. “Over the years we have expanded our presence in Kentucky to 25 branches, with Limestone adding an additional 20



branches to our Kentucky footprint. We look forward to welcoming Limestone shareholders, employees and customers to become part of the Peoples team, and we are ecstatic to offer additional locations to new and existing Peoples Bank clients.”
John Taylor, President and Chief Executive Officer of Limestone commented, “Peoples is an outstanding organization with exceptional leadership. Our shareholders, customers and employees will benefit from Peoples’ track record of profitable growth and successfully executing acquisitions, and the opportunities this merger of our banks offers. We are excited about Peoples’ expansive suite of products, which will provide us the ability to deliver new products and services, including insurance and investment products, to our valued customers in the communities we serve. Peoples’ community banking model, culture and commitment to high-quality customer service makes Peoples an excellent partner for Limestone.”
According to the terms of the Merger Agreement, which has been unanimously approved by the Boards of Directors of both companies, shareholders of Limestone will receive 0.90 shares of Peoples common stock for each share of Limestone common stock, and the Merger is expected to qualify as a tax-free reorganization for Limestone shareholders. Based on Peoples’ closing price of $30.28 per share as of October 21, 2022, the aggregate deal value is approximately $208.2 million, or $27.25 per share. The transaction is expected to be immediately accretive to Peoples’ estimated earnings before one-time costs, with a tangible book value earn back of approximately 2.8 years (inclusive of interest rate marks), and an internal rate of return in excess of 20%.
The acquisition is expected to close during the second quarter of 2023, subject to the satisfaction of customary closing conditions, including regulatory approvals and the approval of the shareholders of Peoples and Limestone.
Peoples was advised by Raymond James & Associates, Inc. and the law firm of Dinsmore & Shohl LLP. Limestone was advised by Piper Sandler & Co. and the law firm of Wyatt, Tarrant & Combs, LLP.

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Important Information for Investors and Shareholders:
    This news release does not constitute an offer to sell or the solicitation of an offer to buy securities of Peoples. Peoples will file a registration statement on Form S-4 and other documents regarding the proposed transaction referenced in this news release with the Securities and Exchange Commission (“SEC”) to register the shares of Peoples common stock to be issued to the shareholders of Limestone. The registration statement will include a joint proxy statement/prospectus, which will be sent to the shareholders of both Peoples and Limestone in advance of their respective special meetings of shareholders to be held to consider the proposed merger. Investors and security holders are urged to read the proxy statement/prospectus and any other relevant documents to be filed with the SEC in connection with the proposed transaction because they contain important information about Peoples, Limestone and the proposed transaction. Investors and security holders may obtain a free copy of these documents (when available) through the website maintained by the SEC at www.sec.gov. These documents may also be obtained, without charge, by directing a request to Peoples Bancorp Inc., 138 Putnam Street, P.O. Box 738, Marietta, Ohio 45750, Attn.: Investor Relations.

    Peoples and Limestone and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Limestone in connection with the proposed merger. Information about the directors and executive officers of Peoples is set forth in the proxy statement for Peoples’ 2022 annual meeting of shareholders, as filed with the SEC on Schedule 14A on March 17, 2022. Information about the directors and executive officers of Limestone is set forth in the proxy statement for Limestone’s 2022 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on April 15, 2022. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.

About Peoples Bancorp Inc.:
Peoples is a diversified financial services holding company that makes available a complete line of banking, trust and investment, insurance, premium financing and equipment leasing solutions through its subsidiaries. Peoples has been headquartered in Marietta, Ohio since 1902. Peoples had $7.0 billion in total assets as of September 30, 2022, and 130 locations, including 113 full-service bank branches in Ohio, West Virginia, Kentucky, Virginia, Washington D.C. and Maryland. Peoples' vision is to be the Best Community Bank in America.



Peoples is a member of the Russell 3000 index of U.S. publicly-traded companies. Peoples offers services through Peoples Bank (which includes the divisions of Peoples Investment Services, Peoples Premium Finance and NSL), Peoples Insurance Agency, LLC and Vantage Financial, LLC ("Vantage").

About Limestone Bancorp, Inc.:
Limestone is a Louisville, Kentucky-based bank holding company with $1.5 billion in assets as of September 30, 2022. It operates banking centers in 14 counties through its wholly-owned subsidiary Limestone Bank. Limestone’s markets include metropolitan Louisville in Jefferson County and the surrounding counties of Bullitt and Henry and extend south along the Interstate 65 corridor. Limestone serves south central, southern, and western Kentucky from banking centers in Barren, Butler, Daviess, Edmonson, Green, Hardin, Hart, Ohio, and Warren counties. Limestone also has banking centers in Lexington, Kentucky, the second largest city in the state, and Frankfort, Kentucky, the state capital. Limestone Bank is a traditional community bank with a wide range of personal and business banking products and services.

Safe Harbor Statement:
Statements made in this news release that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties including, but not limited to, the successful completion and integration of the transaction contemplated in this release, which includes the retention of the acquired customer relationships, adverse changes in economic conditions, the impact of competitive products and pricing and the other risks set forth in the Company’s filings with the SEC. As a result, actual results may differ materially from the forward-looking statements in this news release. These factors are not necessarily all of the factors that could cause Peoples or the combined company’s actual results, performance, or achievements to differ materially from those expressed in or implied by any of the forward-looking statements. Other unknown or unpredictable factors also could harm Peoples or the combined company’s results

Peoples and Limestone encourages readers of this news release to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance. The Companies undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events, except as required by applicable legal requirements. If Peoples or Limestone updates one or more forward-looking statements, no inference should be drawn that Peoples or Limestone will make additional updates with respect to those or other forward-looking statements. Copies of documents filed with the SEC are available free of charge at the SEC’s website at http://www.sec.gov and/or from Peoples’ website (with respect to Peoples’ SEC filings) and Limestone’s website (with respect to Limestone’s filings).

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