PEOPLES BANCORP INC MANAGEMENT REPORT ON FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

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Management's Discussion and Analysis ("MD&A") represents an overview of the
results of operations and financial condition of Peoples for the three months
ended March 31, 2022 and March 31, 2021. This MD&A should be read in conjunction
with the Unaudited Condensed Consolidated Financial Statements and the Notes
thereto.
Certain statements in this Form 10-Q, which are not historical fact, 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 factors 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 thereof
- on economies (local, national and international), supply chains and markets,
on the labor market, including the potential for a sustained reduction in labor
force participation, and on our customers, 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, including
public health actions directed toward the containment of the COVID-19 pandemic
(such as quarantines, shut downs and other restrictions on travel and
commercial, social and other activities), the availability, effectiveness and
acceptance of vaccines, and the implementation of fiscal stimulus packages,
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 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 merger with Premier and the recently-completed acquisitions
of NSL and Vantage, and the expansion of commercial and consumer lending
activities, in light of the continuing impact of the COVID-19 pandemic on
customers' operations and financial condition;
(4)competitive pressures among financial institutions, or from non-financial
institutions, which may increase significantly, including product and pricing
pressures, which can in turn impact Peoples' credit spreads, changes to
third-party relationships and revenues, changes in the manner of providing
services, customer acquisition and retention pressures, and Peoples' ability to
attract, develop and retain qualified professionals;
(5)uncertainty regarding the nature, timing, cost, and effect of legislative or
regulatory changes or actions, or deposit insurance premium levels, promulgated
and to be promulgated by governmental and regulatory agencies in the State of
Ohio, the 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
Rescue Plan Act of 2021, the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, and the Basel III regulatory capital reform;
(6)the effects of easing restrictions on participants in the financial services
industry;
(7)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;
(8)Peoples may issue equity securities in connection with future acquisitions,
which could cause ownership and economic dilution to Peoples' current
shareholders;

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(9)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 adversely impact the amount of
interest income generated;
(10)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;
(11)future credit quality and performance, including expectations regarding
future credit losses and the allowance for credit losses;
(12)changes in accounting standards, policies, estimates or procedures may
adversely affect Peoples' reported financial condition or results of operations;
(13)the impact of assumptions, estimates and inputs used within models, which
may vary materially from actual outcomes, including under the CECL model;
(14)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;
(15)adverse changes in the conditions and trends in the financial markets,
including the impacts of the COVID-19 pandemic and the related responses by
governmental and nongovernmental authorities to the pandemic, 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;
(16)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;
(17)Peoples' ability to receive dividends from its subsidiaries;
(18)Peoples' ability to maintain required capital levels and adequate sources of
funding and liquidity;
(19)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;
(20)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;
(21)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;
(22)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;
(23)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;
(24)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;
(25)the impact on Peoples' businesses, personnel, facilities, or systems, of
losses related to acts of fraud, theft, misappropriation or violence;
(26)the impact on Peoples' businesses, as well as on the risks described above,
of various domestic or international widespread natural or other disasters,
pandemics (including COVID-19), cybersecurity attacks, system failures, civil
unrest, military or terrorist activities or international conflicts;
(27)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;
(28)risks and uncertainties associated with Peoples' entry into new geographic
markets and risks resulting from Peoples' inexperience in these new geographic
markets;
(29)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;
(30)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;
(31)changes in laws or regulations imposed by Peoples' regulators impacting
Peoples' capital actions, including dividend payments and share repurchases;
(32)the effect of a fall in stock market prices on the asset and wealth
management business;
(33)Peoples' continued ability to grow deposits;
(34)the impact of future governmental and regulatory actions upon Peoples'
participation in and execution of government programs related to the COVID-19
pandemic;

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(35)uncertainty regarding the impact of the current U.S. presidential
administration and Congress on the regulatory landscape, capital markets,
elevated government debt, potential changes in tax legislation that may increase
tax rates and the response to and management of the COVID-19 pandemic,
infrastructure spending and social programs; and,
(36)other risk factors relating to the banking industry or Peoples as detailed
from time to time in Peoples' reports filed with the Securities and Exchange
Commission (the "SEC"), including those risk factors included in the disclosures
under the heading "ITEM 1A. RISK FACTORS" of Peoples' Annual Report on Form 10-K
for the fiscal year ended December 31, 2021. Peoples encourages readers of this
Form 10-Q 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 Form 10-Q 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.

All forward-looking statements speak only as of the filing date of this Form
10-Q and are expressly qualified in their entirety by the cautionary
statements. Although management believes the expectations in these
forward-looking statements are based on reasonable assumptions within the bounds
of management's knowledge of Peoples' business and operations, it is possible
that actual results may differ materially from these projections. Additionally,
Peoples undertakes no obligation to update these forward-looking statements to
reflect events or circumstances after the filing date of this Form 10-Q or to
reflect the occurrence of unanticipated events except as may be required by
applicable legal requirements. Copies of documents filed with the SEC are
available free of charge at the SEC's website at www.sec.gov and/or from
Peoples' website - www.peoplesbancorp.com under the "Investor Relations"
section.

This discussion and analysis should be read in conjunction with the Audited
Consolidated Financial Statements, and Notes thereto, contained in Peoples' 2021
Form 10-K, as well as the Unaudited Condensed Consolidated Financial Statements,
Notes to the Unaudited Condensed Consolidated Financial Statements, ratios,
statistics and discussions contained elsewhere in this Form 10-Q.

Business Overview The following discussion and analysis of Peoples’ unaudited condensed consolidated financial statements is presented to provide an overview of management’s assessment of financial condition and results of operations.

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 provides
services through traditional offices, ATMs, mobile banking and telephone and
internet-based banking. Peoples Insurance Agency, LLC ("Peoples Insurance") also
offers a complete array of insurance products, commercial leasing and premium
financing solutions, and makes available custom-tailored fiduciary, employee
benefit plan and asset management services. Brokerage services are offered by
Peoples exclusively through an unaffiliated registered broker-dealer located at
Peoples Bank's offices.  Peoples Bank offers insurance premium finance lending
nationwide through its Peoples Premium Finance division, and lease financing
through its North Star Leasing division since April 1, 2021, and as of March 7,
2022 through Vantage, a subsidiary of Peoples Bank. As of March 31, 2022,
Peoples has 136 locations, including 119 full-service bank branches in Ohio,
West Virginia, Kentucky, Virginia, Washington D.C. and Maryland. Peoples Bank is
subject to regulation and examination primarily by the Ohio Division of
Financial Institutions (the "ODFI"), the Federal Reserve Bank ("FRB") of
Cleveland and the Federal Deposit Insurance Corporation (the "FDIC"). Peoples
Bank must also follow the regulations promulgated by the Consumer Financial
Protection Bureau (the "CFPB") which regulates consumer financial products and
services and certain financial services providers. Peoples Insurance is subject
to regulation by the Ohio Department of Insurance and the state insurance
regulatory agencies of those states in which Peoples Insurance may do business.

Critical Accounting Policies
The accounting and reporting policies of Peoples conform to US GAAP. The
preparation of the financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could materially
differ from those estimates. Note 1 of the Notes to the Unaudited Condensed
Consolidated Financial Statements describes Peoples' significant account
policies. Management has identified the accounting policies that, due to the
judgments, estimates and assumptions inherent in those policies, are critical to
understanding Peoples' Unaudited Condensed Consolidated Financial Statements,
and MD&A at March 31, 2022, which have been updated in "Note 1 Summary of
Significant Accounting Policies" in this Form 10-Q, and should be read in
conjunction with the policies disclosed in Peoples' 2021 Form 10-K.

Summary of recent transactions and events

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

•On April 1, 2022, Peoples Insurance acquired substantially all of the assets
and rights of an insurance agency with five locations in eastern Kentucky and
certain rights to related customer accounts, which were previously developed and
maintained by Elite Agency, Inc. ("Elite"), pursuant to an Asset Purchase
Agreement between Peoples Insurance and Elite. Total consideration for this
transaction was $3.8 million.


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•On March 7, 2022, Peoples completed its acquisition of Vantage pursuant to an
Asset Purchase Agreement, dated February 16, 2022, in which Peoples Bank
purchased 100% of the equity of Vantage. Peoples Bank acquired assets comprising
Vantage's lease business, including $140.2 million in leases and certain
third-party debt in the amount of $107.4 million. Peoples paid total
consideration of $82.9 million. Based in Excelsior, Minnesota, Vantage offers
mid-ticket equipment leases primarily for business essential information
technology equipment across a wide-array of industries. Peoples recorded
preliminary goodwill in the amount of $40.4 million and preliminary other
intangible assets of $13.2 million, which included a customer relationship
intangible, a trade-name intangible and non-compete agreements related to this
transaction. .

•On September 17, 2021, Peoples completed its merger with Premier, in which
Peoples acquired, in an all-stock merger, 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 ("Merger Agreement"), Premier merged with and into
Peoples (the "Merger"), and Premier Bank and Citizens subsequently merged with
and into Peoples' wholly-owned subsidiary, Peoples Bank, in a transaction valued
at $261.9 million. At the close of business on September 17, 2021, the financial
services offices of each of Premier Bank and Citizens became branches of Peoples
Bank. Peoples acquired $1.2 billion in loans, $1.8 billion in deposits and
recorded preliminary goodwill of $67.2 million and other intangible assets of
$4.2 million in connection with the Merger on September 17, 2021.

•On May 4, 2021, Peoples Insurance acquired substantially all of the assets and
rights of an insurance agency located in Pikeville, Kentucky and certain rights
to related customer accounts, which were previously developed and maintained by
Justice & Stamper Insurance Agency, Inc., pursuant to an Asset Purchase
Agreement between Peoples Insurance and Justice & Stamper Insurance Agency, Inc.
Total consideration for this transaction was $325,000, with $162,500 paid at
closing and the second installment in the amount of $162,500 to be paid on the
first anniversary of the closing date, less any adjustments pursuant to adverse
claims incurred or sustained by or imposed by Peoples Insurance. Peoples
recorded customer relationship intangible assets of $230,000 and goodwill of
$46,000, related to this transaction.

•On March 31, 2021, Peoples completed its acquisition of NS Leasing, LLC ("NSL")
pursuant to an Asset Purchase Agreement, dated March 24, 2021 in which Peoples
Bank acquired the equipment finance and leasing business of NSL. The transaction
closed after the end of business on March 31, 2021 and Peoples Bank began
operating the acquired business as North Star Leasing, a division of Peoples
Bank on April 1, 2021. Peoples Bank acquired assets comprising NSL's equipment
finance business, including $83.3 million in leases and satisfied, on behalf of
NSL, certain third-party debt in the amount of $69.1 million. Peoples Bank paid
total consideration of $116.6 million, plus a potential earn-out payment to NSL
of up to $3.1 million. Based in Burlington, Vermont, the North Star Leasing
division underwrites, originates and services equipment leases and equipment
financing agreements to businesses throughout the United States. Peoples
recorded goodwill in the amount of $24.7 million and other intangibles of $14.0
million, which included a customer relationship intangible, a trade-name
intangible and non-compete agreements related to this transaction.

•Peoples began originating loans during the second quarter of 2020, and
continued to originate loans during the first five months of 2021 under the loan
guarantee program created under the CARES Act, called the Paycheck Protection
Program ("PPP"). These loans were targeted to provide small businesses with
financial support to cover payroll and certain other specified types of expenses
for a specified period of time. Loans made under the PPP are fully guaranteed by
the Small Business Administration ("SBA"). As of March 31, 2022, Peoples had
$41.9 million aggregate principal amount in PPP loans outstanding (including
$15.0 million acquired in the merger with Premier), which were included in
commercial and industrial loan balances, compared to $87.1 million (including
$23.4 million acquired in the merger with Premier) at December 31, 2021. Peoples
recognized interest income of $1.2 million for deferred loan fees/costs and
$154,000 of interest income on PPP loans during the first quarter of 2022,
compared to $1.8 million and $282,000, respectively, for the fourth quarter of
2021, and $4.7 million and $0.9 million, respectively, for the first quarter of
2021.

•During the first quarter of 2022, Peoples recorded a recovery of credit losses
of $6.8 million, compared to $6.6 million in the linked quarter and $4.7 million
in the first quarter of 2021. The release of credit losses for these periods was
driven by improvements in economic forecasts, coupled with loan payoffs and
sales during certain periods. For more information, please refer to the section
titled "RESULTS OF OPERATIONS - (Recovery of) Provision for Credit Losses" found
later in this discussion.

•During the first quarter of 2022, Peoples incurred $1.4 million of
acquisition-related expenses, compared to $0.9 million in the fourth quarter of
2021 and $1.9 million in the first quarter of 2021. The acquisition-related
expenses in 2022 were primarily related to the Vantage acquisition, while the
2021 expenses were primarily related to the NSL acquisition and the Premier
merger.

•In an effort to stimulate an economy that was being adversely impacted by the
impacts of the COVID-19 pandemic, the Federal Reserve Board first lowered the
benchmark Federal Funds Target Rate by 50 basis points on March 3, 2020, then
lowered the target rate another 100 basis points at the next FOMC meeting on
March 15, 2020. The Federal Funds Target Rate range was 0% - 0.25% as of March
31, 2020 and maintained this rate until March 16, 2022. The Federal Reserve
Board increased the Federal Funds Target Rate range to 0.25% to 0.50% on March
16, 2022, and has stated it anticipates continuing to raise rates throughout
2022.

The impact of these transactions and events, when material, are described in the applicable sections of this MD&A.

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Contents

                               EXECUTIVE SUMMARY

Peoples reported net income of $23.6 million for the first quarter of 2022,
representing income per diluted common share of $0.84. In comparison, Peoples
recognized earnings per diluted common share of $0.98 for the fourth quarter of
2021, and earnings per diluted common share of $0.79 for the first quarter of
2021. Non-core items, and the related tax effect of each, in net income
primarily included acquisition-related expenses. Non-core items negatively
impacted earnings per diluted common share by $0.04 for the first quarter of
2022, $0.02 for the fourth quarter of 2021, and $0.13 for the first quarter of
2021.

Net interest income was $54.3 million for the first quarter of 2022, a decrease
of $0.4 million, or 1%, compared to the linked quarter. Net interest margin was
3.41% for the first quarter of 2022, compared to 3.37% for the linked quarter.
The decrease in net interest income was driven primarily by higher funding costs
resulting from the Vantage acquisition, partially offset by accretion income
recognized on the commercial real estate portfolio. Net interest income and net
interest margin both continue to be impacted by the excess liquidity environment
present in the financial services sector since the beginning of the COVID-19
pandemic by way of increased low yielding cash reserves. The impact of the
recent increase in the Federal Reserve benchmark interest rate was not
meaningful for the current quarter given the proximity of its timing to
quarter-end. Net interest income for the first quarter of 2022 increased $18.7
million, or 53%, compared to the first quarter of 2021. Net interest margin
increased 15 basis points compared to 3.26% for the first quarter of 2021. The
increase in net interest income compared to the first quarter of 2021 was driven
by lower funding costs, which were primarily attributable to deposits acquired
from Premier.

Accretion income, net of amortization expense, from acquisitions was $2.7
million for the first quarter of 2022, $1.0 million for the fourth quarter of
2021 and $0.4 million for the first quarter of 2021, which added 17 basis
points, 6 basis points and 4 basis points, respectively, to net interest margin.
Accretion income for the current quarter was driven by payoffs on several large
commercial loans.

The recovery of credit losses was $6.8 million for the first quarter of 2022,
compared to $6.6 million for the linked quarter and $4.7 million for the first
quarter of 2021. The changes in the recovery of credit losses compared to the
linked quarter and prior year quarter were primarily due to continued
improvement in economic factors and changes in loss drivers used in the CECL
model. Net charge-offs for the first quarter of 2022 were $1.9 million, or 0.17%
of average total loans annualized, compared to net charge-offs of $1.3 million,
or 0.11% of average total loans annualized, for the linked quarter and net
charge-offs of $1.1 million, or 0.13% of average total loans annualized, for the
first quarter of 2021. Net charge-offs for the first quarter of 2022 included
two commercial and industrial loans aggregating $0.7 million. For additional
information on credit trends and the allowance for credit losses, see the
"FINANCIAL CONDITION - Allowance for Credit Losses" section below.

Total non-interest income, excluding net gains and losses, for the first quarter
of 2022 was up $1.0 million compared to the linked quarter. The increase in
non-interest income, excluding net gains and losses, was the result of higher
insurance income, which included annual performance-based insurance commissions
of $1.3 million that are recognized in the first quarter of each year, offset
partially by a decline in mortgage banking income. Compared to the first quarter
of 2021, non-interest income, excluding net gains and losses, increased $2.8
million. Deposit account service charges increased $1.4 million and electronic
banking income increased $1.3 million. The increase in deposit account service
charges was primarily attributable to overdraft and NSF fees driven higher by a
larger customer base following the merger with Premier. Electronic banking
income increased in the first quarter of 2022 due to an increase in interchange
income earned from customers' debit card usage, driven partially by customers
added in the Premier merger.

Total non-interest expense was up $3.6 million, or 8%, for the three months
ended March 31, 2022, compared to the linked quarter. The increase in total
non-interest expense for the first quarter of 2022 was attributable to increases
in salaries and employee benefit costs, professional fees and FDIC insurance
premiums. The increase in salaries and employee benefit costs was driven by
merit increases, employer contributions to health savings accounts, stock-based
compensation expense and higher payroll taxes, which are generally higher in the
first quarter. Total non-interest expense in the first quarter of 2022 also
contained non-core expenses, including acquisition-related expenses of $1.4
million. During the fourth quarter of 2021, non-core expenses included
acquisition-related expenses of $0.9 million. Compared to the first quarter of
2021, total non-interest expense increased $13.6 million, or 36%, primarily due
to an increase in salaries and employee benefit costs of $7.0 million, an
increase in net occupancy and equipment costs of $1.8 million, an increase in
amortization of intangible assets of $1.1 million, and an increase in the FDIC
insurance premiums of $1.0 million. Those increases were primarily the result of
the acquisitions of Premier and NSL. During the first quarter of 2021, non-core
expenses included acquisition-related expenses of $1.9 million and a
contribution to the Peoples Bank Foundation, Inc. of $0.5 million.

The efficiency ratio for the first quarter of 2022 was 66.8%, compared to 62.7%
for the linked quarter, and 70.4% for the first quarter of 2021. The change in
the efficiency ratio compared to the linked quarter was primarily due to the
increases in salaries and employee benefit costs, professional fees and the FDIC
insurance premiums mentioned above. The efficiency ratio, adjusted for non-core
items, was 64.8% for the first quarter of 2022, compared to 61.5% for the linked
quarter and 65.2% for the first quarter of 2021. The efficiency ratio is
typically higher in the first quarter of the year driven by the aforementioned
salaries and employee benefit costs, and specifically by higher payroll taxes,
employer contributions to health savings accounts and stock-based compensation
expenses for certain employees. Peoples continues to focus on controlling
expenses, while recognizing some necessary costs in order to continue growing
the business.


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Peoples recorded income tax expense of $6.0 million for the first quarter of
2022, compared to income tax expense of $5.4 million for the linked quarter and
$3.8 million for the first quarter of 2021. The increase in income tax expense
for the first quarter of 2022, compared to the linked quarter, was due to an
increase in Peoples' effective tax rate. The increase for the three months ended
March 31, 2022, compared to the three months ended March 30, 2021, was largely
driven by higher pre-tax income.

At March 31, 2022, total assets were $7.24 billion, compared to $7.06 billion at
December 31, 2021 and $5.14 billion at March 31, 2021. The growth in total
assets of 2% compared to December 31, 2021 was largely attributable to the
Vantage acquisition, which added $140.2 million in leases as of the acquisition
date. The 41% increase compared to March 31, 2021 was driven primarily by $1.1
billion of loans and $0.6 billion of investment securities added in the Premier
merger as of the merger date, along with leases acquired from North Star and
Vantage totaling $223.2 million, both as of the acquisition date. The allowance
for credit losses at March 31, 2022 decreased to $54.8 million, or 1.20% of
total loans, compared to $64.0 million and 1.43%, respectively, at December 31,
2021, and $44.9 million and 1.32%, respectively, at March 31, 2021.

Total liabilities were $6.43 billion at March 31, 2022, up from $6.22 billion at
December 31, 2021 and $4.56 billion at March 31, 2021. The increase in total
liabilities compared to December 31, 2021 was primarily due to seasonal growth
in governmental deposits of $117.5 million, and $107.4 million of long-term
borrowings assumed from Vantage. Also contributing to the increase compared to
March 31, 2021 was $1.75 billion in deposits acquired from Premier.

At March 31, 2022, total stockholders' equity was $808.3 million, a decrease of
$36.7 million compared to December 31, 2021. The decrease in total stockholders'
equity reflected an other comprehensive loss of $51.0 million and dividends paid
during the quarter of $10.2 million, partially offset by net income for the
quarter of $23.3 million. Total stockholders' equity at March 31, 2022 increased
$229.2 million, or 40%, compared to March 31, 2021, which was mainly due to
common shares issued for the acquisition of Premier and $55.7 million in net
income during the prior twelve-month period, offset by an increase in
accumulated other comprehensive loss of $57.7 million and dividends paid of
$34.5 million.

                             RESULTS OF OPERATIONS

Net Interest Income
Net interest income, the amount by which interest income exceeds interest
expense, remains Peoples' largest source of revenue. The amount of net interest
income earned by Peoples each quarter is affected by various factors, including
changes in market interest rates due to the Federal Reserve's monetary policy,
the level and degree of pricing competition for loans and deposits in Peoples'
markets, and the amount and composition of Peoples' earning assets and
interest-bearing liabilities.

Net interest margin, which is calculated by dividing FTE net interest income by
average interest-earning assets, serves as an important measurement of the net
revenue stream generated by the volume, mix and pricing of interest-earning
assets and interest-bearing liabilities. FTE net interest income is calculated
by increasing interest income to convert tax-exempt income earned on obligations
of states and political subdivisions and tax-exempt loans to the pre-tax
equivalent of taxable income using a blended federal and state corporate income
tax rate of 22.9%.

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

                                                         Three Months Ended
                                                March 31,   December 31,    March 31,
    (Dollars in thousands)                        2022          2021          2021
    Net interest income                        $  54,310   $      54,737   $  35,578
    Taxable equivalent adjustment                    391             379   

257

Fully tax-equivalent net interest income $54,701 $55,116 $35,835




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The following tables detail Peoples' average balance sheets for the periods
presented:
                                                                                                                       For the Three Months Ended
                                                                    March 31, 2022                                          December 31, 2021                                          March 31, 2021
                                                                        Income/                                                   Income/                                                  Income/
(Dollars in thousands)                              Average Balance     Expense        Yield/Cost             Average Balance     Expense       Yield/Cost             Average Balance     Expense       Yield/Cost
Short-term investments                            $        332,098    $     160               0.20  %       $        350,692    $     138              0.16  %       $        146,957    $      40              0.11  %

Investment securities (a)(b):
Taxable                                                  1,465,998        6,096               1.66  %              1,466,423        5,583              1.52  %                833,769        2,620              1.26  %
Nontaxable                                                 204,381        1,316               2.58  %                203,034        1,291              2.54  %                106,698          773              2.90  %
Total investment securities                              1,670,379        7,412               1.78  %              1,669,457        6,874              1.65  %                940,467        3,393              1.44  %
Loans (b)(c):
Construction                                               225,676        2,155               3.82  %                200,009        1,961              3.84  %                114,204          994              3.48  %
Commercial real estate, other                            1,362,434       14,782               4.34  %              1,450,566       15,370              4.15  %                879,335        8,602              3.91  %
Commercial and industrial                                  888,598        8,023               3.61  %                865,519        8,548              3.86  %                941,625       10,592              4.50  %
Premium finance                                            132,758        1,164               3.51  %                134,023        1,735              5.07  %                107,390        1,297              4.83  %
Leases                                                     162,277        6,102              15.04  %                112,694        4,547             15.79  %                      -            -                 -  %
Residential real estate (d)                                913,730        9,766               4.28  %                925,316        9,937              4.30  %                614,692        6,672              4.34  %
Home equity lines of credit                                163,339        1,612               4.00  %                164,851        1,772              4.26  %                121,864        1,187              3.95  %
Consumer, indirect                                         523,770        5,045               3.91  %                539,176        5,455              4.01  %                509,845        5,203              4.14  %
Consumer, direct                                           106,298        1,595               6.09  %                107,780        1,605              5.91  %                 79,022        1,239              6.36  %
Total loans                                              4,478,880       50,244               4.50  %              4,499,934       50,930              4.46  %              3,367,977       35,786              4.26  %
Allowance for credit losses                                (61,947)                                                  (75,488)                                                 (49,854)
Net loans                                                4,416,933       50,244               4.56  %              4,424,446       50,930              4.53  %              3,318,123       35,786              4.33  %
Total earning assets                                     6,419,410       57,816               3.61  %              6,444,595       57,942              3.55  %              4,405,547       39,219              3.57  %
Goodwill and other intangible assets                       304,124                                                   298,276                                                  184,253
Other assets                                               344,282                                                   356,004                                                  322,276
  Total assets                                    $      7,067,816                                          $      7,098,875                                         $      4,912,076
Interest-bearing deposits:
Savings accounts                                  $      1,050,813    $      34               0.01  %       $      1,021,821    $      33              0.01  %       $        646,750    $      35              0.02  %
Governmental deposit accounts                              670,419          447               0.27  %                648,013          433              0.27  %                429,503          594              0.56  %
Interest-bearing demand accounts                         1,171,266           92               0.03  %              1,159,995           98              0.03  %                700,160           65              0.04  %
Money market accounts                                      650,272           97               0.06  %                637,681           96              0.06  %                564,836          132              0.09  %
Retail certificates of deposit (e)                         626,978          871               0.56  %                665,513          898              0.54  %                439,819        1,123              1.04  %
Brokered deposits (e)                                       91,531          512               2.27  %                105,364          571              2.15  %                175,326          868              2.01  %
Total interest-bearing deposits                          4,261,279        2,053               0.20  %              4,238,387        2,129              0.20  %              2,956,394        2,817              0.39  %
Borrowed funds:
Short-term FHLB advances                                    55,000          313               2.31  %                 64,461          228              1.40  %                 20,000           88              1.78  %
Repurchase agreements and other                             99,346           25               0.10  %                116,887           30              0.10  %                 51,089           12              0.09  %
Total short-term borrowings                                154,346          338               0.89  %                181,348          258              0.56  %                 71,089          100              0.57  %
Long-term FHLB advances                                     85,653          306               1.45  %                 85,991          314              1.45  %                102,753          390              1.54  %

Other borrowings                                            43,445          418               3.85  %                 13,631          125              3.59  %                  7,631           77              4.04  %
Total long-term borrowings                                 129,098          724               2.26  %                 99,622          439              1.75  %                110,384          467              1.71  %
 Total borrowed funds                                      283,444        1,062               1.51  %                280,970          697              0.99  %                181,473          567              1.26  %
   Total interest-bearing liabilities                    4,544,723        3,115               0.28  %              4,519,357        2,826              0.25  %              3,137,867        3,384              0.44  %
Non-interest-bearing deposits                            1,606,665                                                 1,642,577                                                1,110,993
Other liabilities                                           81,676                                                   100,144                                                   85,628
Total liabilities                                        6,233,064                                                 6,262,078                                                4,334,488

Total stockholders' equity                                 834,752                                                   836,797                                                  577,588

Total Liabilities and Equity $7,067,816

                                 $      7,098,875                                         $      4,912,076
Interest rate spread (b)                                              $  54,701               3.33  %                           $  55,116              3.30  %                           $  35,835              3.13  %
Net interest margin (b)                                                                       3.41  %                                                  3.37  %                                                  3.26  %





(a) Average balances are based on book value.

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(b)Interest income and yields are presented on a fully tax-equivalent basis, a
blended federal and state corporate income tax rate of 22.9%.
(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
and interest expense on brokered deposits for the periods presented in which
FHLB advances and brokered deposits were being utilized.

Peoples' average balances compared to prior periods have been impacted by recent
acquisitions, which included; (i) Vantage on March 7, 2022, which added to
average lease and borrowed funds balances; (ii) Premier on September 17, 2021,
which added to average short-term investments, average total investment
securities, average total loans and average total deposits; and (iii) NSL on
April 1, 2021, which added to average lease balances. Peoples has maintained
high cash balances in recent periods due to an influx of deposits, coupled with
PPP proceeds.



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Contents

The following table provides an analysis of the evolution of ETP net interest income:

                                                           Three Months Ended March 31, 2022 Compared to
(Dollars in thousands)                             December 31, 2021                              March 31, 2021
Increase (decrease) in:                     Rate         Volume      Total (a)            Rate       Volume     Total (a)
INTEREST INCOME:
Short-term investments                  $       60    $     (38)   $       22          $     43    $     77    $     120

Investment Securities (b):
Taxable                                        521           (8)          513             1,042       2,434        3,476
Nontaxable                                      15           10            25              (555)      1,098          543
Total investment income                        536            2           538               487       3,532        4,019
Loans (b):
Construction                                   (59)         253           194               105       1,056        1,161
Commercial real estate, other                2,918       (3,506)         (588)            1,024       5,156        6,180
Commercial and industrial                   (1,641)       1,116          (525)           (1,999)       (570)      (2,569)
Premium finance                               (554)         (17)         (571)           (1,388)      1,255         (133)
Leases                                      (1,369)       2,924         1,555                 -       6,102        6,102
Residential real estate                        (47)        (124)         (171)             (699)      3,793        3,094
Home equity lines of credit                   (139)         (21)         (160)               16         409          425
Consumer, indirect                            (198)        (212)         (410)             (882)        724         (158)
Consumer, direct                               114         (124)          (10)             (345)        701          356
Total loan income                             (975)         289          (686)           (4,168)     18,626       14,458
Total interest income                   $     (379)   $     253    $     (126)         $ (3,638)   $ 22,235    $  18,597
INTEREST EXPENSE:
Deposits:
Savings accounts                        $       (2)   $       3    $        1          $    (70)   $     69    $      (1)
Governmental deposit accounts                    5            9            14            (1,368)      1,221         (147)
Interest-bearing demand accounts               (12)           6            (6)              (62)         89           27
Money market accounts                            -            1             1              (139)        104          (35)
Retail certificates of deposit                 183         (210)          (27)           (2,135)      1,883         (252)
Brokered deposits                              158         (217)          (59)              643        (999)        (356)
Total deposit cost                             332         (408)          (76)           (3,131)      2,367         (764)
Borrowed funds:
Short-term borrowings                          289         (209)           80                33         205          238
Long-term borrowings                             7          278           285               (46)        303          257
Total borrowed funds cost                      296           69           365               (13)        508          495
Total interest expense                         628         (339)          289            (3,144)      2,875         (269)
Fully tax-equivalent net interest
income                                  $   (1,007)   $     592    $     

(415) ($494) $19,360 $18,866


(a)The change in interest due to both rate and volume has been allocated to rate
and volume changes in proportion to the
relationship of the dollar amounts of the change in each.
(b)Interest income and yields are presented on a fully tax-equivalent basis a
blended federal and state corporate income tax rate of 22.9%.

Net interest income declined by 1% compared to the linked quarter, and was
driven lower by higher funding costs, which were due to the borrowings
associated with the Vantage acquisition, which were partially offset by
accretion income recognized on the commercial real estate loan portfolio. Net
interest margin increased 4 basis points for the first quarter of 2022, compared
to the fourth quarter of 2021, and was driven by higher investment securities
and loan yields, which were tempered by increased funding costs. Net interest
income and net interest margin both have been negatively impacted by the excess
liquidity environment present in the financial services sector since the
beginning of the COVID-19 pandemic by way of increased low yielding cash
reserves. Peoples recognized interest income on deferred loan fees/costs of $1.2
million, $1.8 million and $4.7 million during the first quarter of 2022 and the
fourth and first quarters of 2021, respectively, along with $154,000, $282,000,
and $0.8 million of interest earned on PPP loans, respectively. The recent
increase in the Federal Reserve benchmark interest rate did not have a
meaningful impact during the first quarter of 2021, given the proximity of its
timing to quarter-end.


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Compared to the first quarter of 2021, net interest income increased 53%, and
was driven by the Vantage and NSL acquisitions, and the Premier merger coupled
with organic growth. Net interest margin expanded by 15 basis points and was
primarily due to the leasing portfolio, which added 24 basis points to net
interest margin, coupled with lower funding costs.

Accretion income, net of amortization expense, from acquisitions was $2.7
million for the first quarter of 2022, $1.0 million for the linked quarter and
$0.4 million for the first quarter of 2021, which added 17 basis points, 6 basis
points and 4 basis points, respectively, to net interest margin. PPP income
added $1.4 million for the first quarter of 2022, $2.1 million for the linked
quarter and $5.6 million for the first quarter of 2021, which added 5 basis
points, 6 basis points and 28 basis points, respectively, to net interest
margin.

Additional information regarding changes in the Unaudited Consolidated Balance
Sheets can be found under appropriate captions of the "FINANCIAL CONDITION"
section of this MD&A. Additional information regarding Peoples' interest rate
risk and the potential impact of interest rate changes on Peoples' results of
operations and financial condition can be found later in this MD&A under the
caption "FINANCIAL CONDITION - Interest Rate Sensitivity and Liquidity."

Recovery of Credit Losses
The following table details Peoples' (recovery of) provision for credit losses:

                                                                    Three Months Ended
                                                        March 31,      December 31,      March 31,
(Dollars in thousands)                                    2022             2021            2021
Recovery of other credit losses                      $     (7,006)   $      (6,786)   $     (4,780)
Provision for checking account overdraft credit
losses                                                        199              184              31
Recovery of credit losses                            $     (6,807)   $      (6,602)   $     (4,749)
As a percentage of average total loans (a)                  (0.62) %         (0.58) %        (0.57) %
(a) Presented on an annualized basis.


The (recovery of) provision for credit losses recorded represents the amount
needed to maintain the appropriate level of the allowance for credit losses
based on management's quarterly estimates. For the first quarter of 2022, the
recovery of credit losses was related to an improvement in the economic
forecast, along with payoffs of several loans during the quarter, which were
partially offset by $387,000 for the establishment of an allowance for credit
losses for the non-purchased credit deteriorated leases from the Vantage
acquisition.
The recovery of credit losses during the fourth quarter of 2021 was a result of
the sale of acquired Premier loans, which reduced the required allowance for
credit losses, coupled with improvements in the economic forecast. The recovery
of credit losses during the first quarter of 2021 was also driven by
improvements in the economic forecast compared to the prior period.
Additional information regarding changes in the allowance for credit losses and
loan credit quality can be found later in this MD&A under the caption "FINANCIAL
CONDITION - Allowance for Credit Losses."

net profit (Loss) Included in total non-interest income Net gain (loss) includes gains and losses on investment securities, asset disposals and other transactions, which are recognized in total non-interest income. The following table details Peoples’ net gains and losses for the periods presented:

                                                                          Three Months Ended
                                                               March 31,     December 31,      March 31,
(Dollars in thousands)                                           2022            2021            2021
Net gain (loss) on investment securities                    $        130    

$ (158) $(336)

Net (loss) gain on asset disposals and other transactions:
Net loss on other assets                                    $        (22)   $        (31)   $        (27)
Net (loss) gain on OREO                                               (1)             80               -

Net (loss) gain on other transactions                               (104)            903               -

Net gain (loss) on disposals of assets and other transactions $ (127) $952 $ (27)


For the first three months of 2022, Peoples sold several investment securities,
resulting a net gain on investment securities, which was offset by a net loss on
other transactions primarily driven by an adjustment to the gain on sale of
loans recognized in the fourth quarter of 2022, and was driven by changes to the
acquisition-date fair value of Premier loans acquired that were subsequently
sold.

During the first and fourth quarters of 2021, Peoples recognized net losses on
investment securities in order to reinvest proceeds into higher yielding
investment securities. During the fourth quarter of 2021, the net gain on other
transactions was driven by the sale of $59.8 million of predominantly purchased
credit deteriorated loans acquired in the Premier merger ($52.9 million of which
were


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criticized or classified) primarily in the hospitality industry. Peoples
recognized a gain of $897,000 related to the discount recorded on those loans
when they were acquired from Premier.

Total Non-Interest Income, Excluding Net Gains and Losses
Total non-interest income, excluding net gains and losses, comprised 27% of
Peoples' total revenues (defined as net interest income plus total non-interest
income excluding net gains and losses) for the three months ended March 31,
2022, compared to 26% for the linked quarter and 33% for the first quarter of
2021. The decline in this ratio compared to the first quarter of 2021 was driven
by the recent merger with Premier and acquisition of NSL, which increased net
interest income.

For the first quarter of 2022, electronic banking income comprised the largest
portion of Peoples' total non-interest income, excluding net gains and losses.
Peoples' electronic banking ("e-banking") services include ATM and debit cards,
direct deposit services, internet and mobile banking, and remote deposit
capture, and serve as alternative delivery channels to traditional sales offices
for providing services to clients. The following table details Peoples'
e-banking income:

                                                Three Months Ended
                                      March 31,    December 31,    March 31,
            (Dollars in thousands)       2022          2021           2021

            E-banking income         $    5,253   $       5,355   $    3,911


Peoples' e-banking income is derived largely from ATM and debit cards, as other
services are mainly provided at no charge to customers. The amount of e-banking
income is largely dependent on the timing and volume of customer activity.
E-banking income declined slightly from the linked quarter, driven by a seasonal
decrease typically experienced in the first quarter compared to the fourth
quarter; however, it grew 34% compared to the first quarter of 2021. This
increase was driven by the addition of the Premier customers during the third
quarter of 2021, coupled with increased usage of debit cards by customers.

The following table details personal insurance income:

                                                           Three Months Ended
                                                 March 31,    December 31,    March 31,
  (Dollars in thousands)                            2022          2021           2021

Property and liability insurance commissions $2,862 $2,836

$2,755

  Performance-based commissions                      1,346               -  

1,950

  Life and health insurance commissions                452             379          421
  Other fees and charges                                72             114           95
  Insurance income                              $    4,732   $       3,329   $    5,221


During the first quarter of 2022, Peoples' insurance income grew 42%. This
increase was mostly due to the recognition of $1.3 million of performance-based
insurance commissions, which are annual in nature and typically occur in the
first quarter of each year. Compared to the first quarter of 2021, insurance
income declined 9% and was driven by lower performance-based commissions, which
are unpredictable, and are related to how much loss is incurred within
underlying policies and the overall performance of the insurance carriers.

Peoples' fiduciary income and brokerage income continued to be based primarily
upon the value of assets under administration and management, with additional
income generated from transaction commissions, cross-selling of products and
additional retirement plan services business. The following tables detail
Peoples' trust and investment income and related assets under administration and
management:

                                                   Three Months Ended
                                         March 31,    December 31,    March 31,
          (Dollars in thousands)            2022          2021           2021
          Fiduciary income              $    1,965   $       1,989   $    1,902
          Brokerage income                   1,649           1,559        1,337
          Employee benefit fees                662             686          606
          Trust and investment income   $    4,276   $       4,234   $    3,845


Fiduciary income and brokerage income are mostly driven by the values of assets
under administration and management, which were relatively stable compared to
the linked quarter. An improvement in the values of assets under administration
and management, coupled with new accounts added, contributed to the growth in
trust and investment income compared to the first quarter of 2021.

The following table details the assets under administration and management of Peoples:

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                                              March 31,     December 31,     September 30,      June 30,      March 31,
(Dollars in thousands)                           2022           2021             2021             2021           2021

Trust                                       $ 1,927,828    $  2,009.871    $    1,937.123    $ 1,963,884    $ 1,916,892
Brokerage                                     1,152,530       1,183.927         1,133.668      1,119,247      1,071,126
Total                                       $ 3,080,358    $  3,193.798    $    3,070,791    $ 3,083,131    $ 2,988,018
Quarterly average                           $ 3,106,021    $  3,126.398    $    3,077.554    $ 3,051,027    $ 2,927,458


The slight decline in assets under administration and management at March 31,
2022, compared to year-end, was driven by a decrease in market values during the
first quarter of 2022 as the market became more volatile. The improvement
compared to March 31, 2021 was mostly due to new accounts added, as well as a
recovery in market values from earlier in the COVID-19 pandemic.

Deposit account service charges are based on the recovery of costs associated
with services provided. The following table details Peoples' deposit account
service charges:

                                                         Three Months Ended
                                               March 31,    December 31,    March 31,
    (Dollars in thousands)                        2022          2021           2021
    Overdraft and non-sufficient funds fees   $    1,902   $       2,099   $      997
    Account maintenance fees                       1,311           1,210          810
    Other fees and charges                           213             256          178
    Deposit account service charges           $    3,426   $       3,565   $    1,985


The amount of deposit account service charges, particularly fees for overdrafts
and non-sufficient funds, is largely dependent on the timing and volume of
customer activity. Management periodically evaluates its cost recovery fees to
ensure they are reasonable based on operational costs and similar to fees
charged in Peoples' markets by competitors. Deposit account service charges
decreased 4% compared to the linked quarter, as increases in account maintenance
fees were more than offset by reductions in overdraft and non-sufficient funds
fees. Compared to the first quarter of 2021, deposit account service charges
increased 73%, resulting from the additional customers associated with the
Premier acquisition, coupled with increased customer activity in recent
quarters, compared to the very low levels of early 2021 associated with fiscal
stimulus payments and PPP loan proceeds provided to customers, along with
changed customer spending habits due to the COVID-19 pandemic.

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

                                                      Three Months Ended
                                             March 31,   December 31,   March 31,
         (Dollars in thousands)                2022          2021         2021

         Mortgage banking income               436           713        1,140
         Bank owned life insurance income      431           438          446
         Commercial loan swap fees             168           349           60
         Other non-interest income           1,326         1,039          658


Mortgage banking income is comprised mostly of net gains from the origination
and sale of real estate loans in the secondary market, and, to a lesser extent,
servicing income for loans sold with servicing retained. As a result, the amount
of income recognized by Peoples is largely dependent on customer demand and
long-term interest rates for residential real estate loans offered in the
secondary market. Mortgage banking income declined during the first quarter of
2022, compared to the linked quarter and the first quarter of 2021, as
refinancing activity slowed and there was a lower volume of new loan
originations due to the lack of inventory of homes for sale.

In the first quarter of 2022, Peoples sold $7.2 million in loans to the
secondary market with servicing retained and $7.9 million in loans with
servicing released compared to $13.7 million and $9.7 million, respectively, for
the fourth quarter of 2021, and $17.2 million and $9.6 million, respectively,
for the first quarter of 2021.

Bank owned life insurance income was relatively flat for the first quarter of
2022, fourth quarter of 2021 and first quarter of 2021, as there had been no
changes to the underlying assets compared to prior periods.

Commercial loan swap fees are largely dependent on timing, interest rates, and
the volume of customer activity. Commercial loan swap fees declined compared to
the fourth quarter of 2021, mainly due to one large swap entered into during the
fourth quarter of 2021. Commercial loan swap fees were higher during the first
quarter of 2022, compared to the first quarter of 2021, and was the result of
increased volume of customer activity.


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Other non-interest income increased 28% compared to the linked quarter, and was
driven by higher fee income associated with the leasing division, which grew
$198,000. Compared to the first quarter of 2021, other non-interest income
doubled, and was related to $775,000 of fee income from the leasing division.

Non-interest expenses Salaries and benefit costs continue to be Peoples’ largest non-interest expenses, accounting for more than half of total non-interest expenses. The following table details Peoples salaries and benefits costs:

                                                         Three Months Ended
                                                March 31,   December 31,    March 31,
    (Dollars in thousands)                        2022          2021          2021
    Base salaries and wages                    $  17,676   $      16,876   $  12,765
    Sales-based and incentive compensation         3,636           4,634   

3,428

    Employee benefits                              3,621           2,753   

2,898

    Payroll taxes and other employment costs       2,091           1,940   
   1,493
    Stock-based compensation                       1,605           1,078       1,215
    Deferred personnel costs                        (900)           (945)     (1,040)

Salaries and benefit costs $27,729 $26,337 $20,759

Full-time equivalent employees:

    Actual at end of period                        1,245           1,188         887
    Average during the period                      1,215           1,185         891


Base salaries and wages increased 5% compared to the linked quarter and
increased 38% compared to the first quarter of 2021. The increase for the first
quarter of 2022 compared to the linked quarter was driven by the annual merit
increases. The key driver of the increase compared to the first quarter of
2021was the additional salaries associated with Premier and NSL.

The decrease in sales-based compensation and incentive compensation for the first quarter of 2022 compared to the related quarter was mainly due to the overall company performance measures used in the calculation of incentive bonuses.

The increase in employee benefits for first quarter of 2022, compared to the
linked quarter, was primarily due to annual contributions to employee health
benefit accounts which resulted in expense of $620,000. These contributions
occur primary in the first quarter of each year. The increase in employee
benefits compared to the first quarter of 2021 was due to higher medical costs
with the addition of the Premier and NSL employees.

The increase in payroll taxes and other labor costs compared to the first quarter of 2021 was mainly related to higher base salaries and wages, coupled with the additional Premier and NSL associates.

Stock-based compensation is generally recognized over the vesting period, which
generally ranges from immediate vesting to vesting at the end of three years,
adjusted for an estimate of the portion of awards that will be forfeited. At the
vesting date, an adjustment is made to increase or reverse expense for the
amount of actual forfeitures compared to the estimate. Stock grants to
retirement eligible grantees are expensed either immediately or over a shorter
period than three years. The majority of Peoples' stock-based compensation is
attributable to annual equity-based incentive awards to employees, which are
awarded in the first quarter of each year and are based upon Peoples achieving
certain performance goals during the prior year. Stock-based compensation for
the first quarter of 2022 increased $528,000 compared to the linked quarter,
which included expense related to stock grants of retirement eligible
individuals and the annual vesting of prior stock grants.

Deferred personnel costs represent the portion of current period salaries and
employee benefit costs considered to be direct loan origination costs. These
costs are capitalized and recognized over the life of the loan as a yield
adjustment in interest income. As a result, the amount of deferred personnel
costs for each period corresponds directly with the volume of loan originations,
coupled with the average deferred costs per loan that are updated annually at
the beginning of each year. The decrease in deferred personnel costs compared to
the first quarter of 2021 was primarily due to a reduction in loan origination
volume as Peoples originated PPP loans during the first quarter of 2021.


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

                                                          Three Months Ended
                                                March 31,    December 31,    March 31,
   (Dollars in thousands)                          2022          2021           2021
   Depreciation                                $    1,823   $       2,009   $    1,371
   Repairs and maintenance costs                    1,378           1,108          943
   Net rent expense                                   685             630          340
   Property taxes, utilities and other costs        1,202           1,004          673
   Net occupancy and equipment expense         $    5,088   $       4,751   $    3,327


Depreciation on capitalized assets declined compared to the linked quarter as a
result of certain capitalized assets and improvements reaching the end of their
depreciable lives. For the first quarter of 2022, compared to the fourth quarter
of 2021, repairs and maintenance costs grew as Peoples' experienced increased
costs across its footprint, which was partially due to higher snow removal
costs. Compared to the first quarter of 2021, net occupancy and equipment
expense increased 53% and was driven by the additional geographic locations from
recent acquisitions.

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

                                                         Three Months Ended
                                               March 31,    December 31,    March 31,
    (Dollars in thousands)                        2022          2021           2021
    Professional fees                         $    3,672   $       2,324   $    3,468
    Data processing and software expense           2,916           3,148        2,454
    E-banking expense                              2,759           2,879        1,894
    Amortization of other intangible assets        1,708           1,508          620
    FDIC insurance premiums                        1,194             380          463
    Marketing expense                                995             848          911
    Other loan expenses                              832             558          462
    Franchise tax expense                            764             870          855
    Communication expense                            625             578          282
    Other non-interest expense                     3,347           3,811        2,492


Professional fees increased $1.3 million from the linked quarter primarily due
to higher exam and audit fees, coupled with investment banking fees and other
acquisition-related expenses related to the purchase of Vantage. Peoples also
recorded a benefit of $603,000 for a true-up of expense related to contact
negotiations during the fourth quarter of 2021. Professional fees included
acquisition-related expenses of $1.0 million for the first quarter of 2022,
$917,000 for the fourth quarter of 2021, and $1.9 million for the first quarter
of 2021.

Data processing and software expense declined 7% compared to the linked quarter,
and was up 19% compared to the first quarter of 2021. The decline compared to
the linked quarter was related to a negotiated reduction in costs from Peoples'
core provider. The increase compared to the first quarter of 2021 was due to
software upgrades and implementation of new systems, coupled with the increased
size of Peoples' organization.

E-banking expense declined compared to the linked quarter, and is directly
correlated to e-banking income, which experienced a seasonal decline compared to
the fourth quarter of 2021. Compared to the first quarter of 2021, e-banking
expense grew 46%, as customer activity increased and there was a higher number
of accounts related to the Premier merger.

Amortization of other intangible assets is associated with acquisition-related
activity, and grew 13% compared to the linked quarter, as Peoples completed the
Vantage acquisition. Compared to the first quarter of 2021, amortization of
other intangible assets increased $1.1 million as Peoples merged with Premier,
and acquired NSL and Vantage on April 1, 2021, September 17, 2021 and March 7,
2022, respectively.

Peoples' FDIC insurance premiums increased compared to the linked quarter and
first quarter of 2021, as Peoples recorded the increased premiums after the
acquisition of Premier. Peoples also recorded an adjustment to FDIC insurance
premiums during the first quarter of 2022 related to the fourth quarter of 2021,
based on an invoice received during the first quarter of 2022.

Marketing expense grew 17% compared to the linked quarter and 9% compared to the
first quarter of 2021. The increase was mainly due to higher media advertising
expenses and donations compared to prior periods, which are seasonally higher in
the first quarter.


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Other loan expenses increased $274,000 compared to the linked quarter and were
driven by higher commercial loan expenses. Compared to the first quarter of
2021, other loan expenses grew $370,000 and were mostly related to higher
residential real estate loan expenses.

Peoples is subject to state franchise taxes, which are based largely on Peoples'
equity, in the states where Peoples has a physical presence. Franchise tax
expense also includes the Ohio Financial Institution Tax ("FIT"), which is a
business privilege tax that is imposed on financial institutions organized for
profit and doing business in Ohio. The Ohio FIT is based on the total equity
capital in proportion to the taxpayer's gross receipts in Ohio as of the most
recent year-end.

Communications expense increased 8% compared to the linked quarter and was up
$343,000 compared to the first quarter of 2021. The increase compared to the
linked quarter was due to a credit received from a communications provider
during the fourth quarter of 2021. The growth compared to the first quarter of
2021 was due to upgraded networking to certain branches (including new branches
acquired from Premier coupled with the addition of the NSL location acquired)
and increased costs compared to the prior periods among certain vendors that
provide communication services.

Other non-interest expense declined 12% compared to the linked quarter and was
impacted by lower travel and entertainment expense, coupled with lower postage
costs. Compared to the first quarter of 2021, other non-interest expense grew
34% as Peoples recognized higher ongoing costs after its recent acquisitions,
mostly due to increased postage, travel and entertainment, insurance and
supplies expense.

Income Tax Expense
Peoples recorded an income tax expense of $6.0 million for the first quarter of
2022, compared to income tax expense of $5.4 million for the linked quarter and
income tax expense of $3.8 million for the first quarter of 2021. The increase
in income tax expense for the first quarter of 2022, compared to the linked
quarter, was due to an increase in Peoples' effective tax rate. The increase in
income tax expense for the three months ended March 31, 2022 compared to the
three months ended March 31, 2021, was largely driven by higher pre-tax income.

Additional information regarding income taxes can be found in "Note 13 Income
Taxes" of the Notes to the Condensed Consolidated Financial Statements included
in Peoples' 2021 Form 10-K.

Pre-Provision Net Revenue (Non-US GAAP)
Pre-provision net revenue ("PPNR") has become a key financial measure used by
state and federal bank regulatory agencies when assessing the capital adequacy
of financial institutions. PPNR is defined as net interest income plus total
non-interest income, excluding all gains and losses, minus total non-interest
expense. As a result, PPNR represents the earnings capacity that can be either
retained in order to build capital or used to absorb unexpected losses and
preserve existing capital. This ratio represents a Non-US GAAP financial measure
since it excludes the provision for (recovery of) credit losses and all gains
and losses included in earnings.


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

                                                                     Three Months Ended
                                                       March 31,        December 31,        March 31,
(Dollars in thousands)                                   2022               2021              2021
Pre-provision net revenue:
Income before income taxes                         $       29,538    $        33,163    $       19,243

Add: loss on OREO                                               1                  -                 -
Add: loss on investment securities                              -                158               336
Add: loss on other assets                                      22                 31                27
Add: loss on other transactions                               104                  -                 -
Less: gain on OREO                                              -                 80                 -
Less: recovery of credit losses                             6,807              6,602             4,749
Less: gain on investment securities                           130                  -                 -
Less: gain on other transactions                                -                903                 -

Pre-provision net revenue                          $       22,728    $        25,767    $       14,857

Total average assets                                  $7,067,816         $7,098,875        $4,912,076
Pre-provision net revenue to total average assets
(annualized)                                                 1.30  %            1.44  %           1.23  %

Weighted-average common shares outstanding -
diluted                                               28,129,131         28,114,980        19,436,311
Pre-provision net revenue per common share -
diluted                                            $         0.81    $      

$0.92 0.76


The decline in PPNR compared to the linked quarter was driven by increased total
non-interest expense from higher salaries and employee benefit costs,
professional fees and FDIC insurance premiums. The PPNR grew compared to the
first quarter of 2021 and was mostly due to the impact of the Premier merger and
Vantage and NSL acquisitions improving net interest income, coupled with higher
non-interest income.

Core Non-Interest Expense (Non-US GAAP)
Core non-interest expense is a financial measure used to evaluate Peoples'
recurring expense stream. This measure is Non-US GAAP since it excludes the
impact of all acquisition-related expenses, contract negotiation benefits,
severance expenses, COVID-19-related expenses and a Peoples Bank Foundation,
Inc. contribution.

The following table provides a reconciliation of this non-GAAP measure to amounts disclosed in Peoples’ unaudited condensed consolidated financial statements for the periods presented:

                                                                        Three Months Ended
                                                           March 31,       December 31,       March 31,
(Dollars in thousands)                                       2022              2021             2021

Core non-interest expense:
Total non-interest expense                             $       51,629    $      47,991    $       37,987

Less: acquisition-related expenses                              1,373              903             1,911

Less: severance expenses                                            -               16                49

Less: COVID-19-related expenses                                    94              565               292
Less: Peoples Bank Foundation, Inc. contribution                    -                -               500
Add: contract negotiation benefits                                  -              603                 -
Core non-interest expense                              $       50,162    $      47,110    $       35,235


Efficiency Ratio (Non-US GAAP)
The efficiency ratio is a key financial measure used to monitor performance. 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
measure is Non-US GAAP since it excludes amortization of other intangible assets
and all gains and losses included in earnings, and uses fully tax-equivalent net
interest income.


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

                                                                   Three Months Ended
                                                        March 31,     December 31,      March 31,
(Dollars in thousands)                                    2022            2021            2021

Efficiency ratio:
Total non-interest expense                           $     51,629    $     47,991    $     37,987
Less: amortization of other intangible assets               1,708           1,508             620
Adjusted total non-interest expense                        49,921          46,483          37,367

Total non-interest income                                  20,050          19,815          16,903

Less: net gain (loss) on investment securities                130            (158)           (336)

Less: net gain (loss) on disposals of assets and other transactions

                                                 (127)            952             (27)
Total non-interest income excluding net gains and
losses                                                     20,047          19,021          17,266

Net interest income                                        54,310          54,737          35,578
Add: fully tax-equivalent adjustment (a)                      391             379             257
Net interest income on a fully tax-equivalent basis        54,701          55,116          35,835
Adjusted revenue                                     $     74,748    $     74,137    $     53,101
Efficiency ratio                                            66.79  %        62.70  %        70.37  %

Efficiency ratio adjusted for non-core items:
Core non-interest expense                            $     50,162    $     47,110    $     35,235
Less: amortization of other intangible assets               1,708           1,508             620
Adjusted core non-interest expense                         48,454          45,602          34,615
Core non-interest income excluding net gains and
losses                                                     20,047          19,021          17,266
Net interest income on a fully tax-equivalent basis        54,701          55,116          35,835
Adjusted revenue                                     $     74,748    $     74,137    $     53,101
Efficiency ratio adjusted for non-core items                64.82  %        

61.51% 65.19%

(a) Based on a tax rate of 22.9% for the period ending March 31, 2022, 22.3% for the period ending December 31, 2021and 21.0% for the period ending March 31, 2021.

The efficiency ratio for the first quarter of 2022 increased compared to the
linked quarter, as growth in salaries and employee benefit costs, professional
fees and FDIC insurance premiums resulted in higher total non-interest expense.
The efficiency ratio, adjusted for non-core items, also grew and was
attributable to the items previously mentioned. Additionally, compared to the
first quarter of 2021, the efficiency ratio and adjusted efficiency ratio, both
declined due to improvements in net interest income from the recent
acquisitions, coupled with higher non-interest income, outpacing increases in
total non-interest expense.

Return on Average Assets Adjusted for Non-Core Items Ratio (Non-US GAAP)
In addition to return on average assets, management uses return on average
assets adjusted for non-core items to monitor performance. The return on average
assets adjusted for non-core items ratio represents a Non-US GAAP financial
measure since it excludes the after-tax impact of all gains and losses,
acquisition-related expenses, contract negotiation benefits, severance expenses,
COVID-19-related expenses and a Peoples Bank Foundation, Inc. contribution.


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

                                                                         

Three months completed

                                                            March 31,       December 31,       March 31,
(Dollars in thousands)                                        2022              2021             2021

Annualized net income adjusted for non-strategic items: Net income

                                              $       23,577    $ 

27,747 $15,463

Add: net loss on investment securities                               -              158               336

Less: tax effect of net loss on investment securities (a)

                                                                  -               33                71
Less: net gain on investment securities                            130                -                 -

Add: tax effect of the net gain on investment securities (a)

                                                                 27                -                 -
Add: net loss on asset disposals and other transactions            127                -                27

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

                                              27                -                 6
Less: net gain on asset disposals and other
transactions                                                         -              953                 -

Add: tax effect of the net loss on disposals of assets and other transactions (a)

                                               -              200                 -

Add: acquisition-related expenses                                1,373              903             1,911
Less: tax effect of acquisition-related expenses (a)               288              190               401

Add: severance expenses                                              -               16                49
Less: tax effect of severance expenses (a)                           -                3                10
Add: COVID-19-related expenses                                      94              565               292
Less: tax effect of COVID-19-related expenses (a)                   20              119                61
Add: Peoples Bank Foundation, Inc. contribution                      -                -               500
Less: tax effect of Peoples Bank Foundation, Inc.
contribution (a)                                                     -                -               105

Less: refund of contract negotiation benefits                        -              603                 -

Add: tax effect of reimbursement of contract negotiation fees (a)

                                                                  -              127                 -

Net income adjusted for non-strategic items (after tax) $24,733 $

      27,815    $       17,924
Days in the period                                                  90               92                90
Days in the year                                                   365              365               365
Annualized net income                                   $       95,618    $     110,083    $       62,711
Annualized net income adjusted for non-core items
(after tax)                                             $      100,306    $     110,353    $       72,692
Return on average assets:
Annualized net income                                   $       95,618    $     110,083    $       62,711
Total average assets                                         7,067,816        7,098,875         4,912,076
Return on average assets                                          1.35  %          1.55  %           1.28  %

Return on average assets adjusted for non-core items: annualized net income adjusted for non-core items (after tax)

                                             $      100,306    $     110,353    $       72,692
Total average assets                                         7,067,816        7,098,875         4,912,076
Return on average assets adjusted for non-core items              1.42  %          1.55  %           1.48  %


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

The return on average assets declined compared to the linked quarter, and was
primarily due to higher total non-interest expense from increased salaries and
employee benefit costs, professional fees and FDIC insurance premiums. The
increase in return on


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average assets for the first quarter of 2022, compared to the first quarter of
2021, was attributable to higher net interest income and non-interest income,
which were driven by the recent acquisitions. At the same time, the decline in
return on average assets, adjusted for non-core items, was due to the
improvement in annualized net income, adjusted for non-core items, not outpacing
the higher average total assets.

Return on Average Tangible Equity Ratio (Non-US GAAP)
The return on average tangible equity ratio is a key financial measure used to
monitor performance. This ratio 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 Non-US GAAP since it excludes amortization of
other intangible assets from earnings and the impact of goodwill and other
intangible assets acquired through acquisitions on total stockholders' equity.

                                                                         Three Months Ended
                                                              March 31,       December 31,     March 31,
(Dollars in thousands)                                          2022              2021           2021

Annualized net income excluding amortization of other intangible assets: Net income

                                                $      23,577     $      27,747    $   15,463
Add: amortization of other intangible assets                      1,708             1,508           620

Less: tax effect of amortization of other intangible assets (a)

                                                          359               317           130
Net income excluding amortization of other intangible
assets                                                    $      24,926     $      28,938    $   15,953
Days in the period                                                   90                92            90
Days in the year                                                    365               365           365
Annualized net income                                     $      95,618    

$110,083 $62,711
Annualized net income excluding amortization of other intangible assets

                                         $     101,089     $     114,808    $   64,698
Average tangible equity:
Total average stockholders' equity                        $     834,752     $     836,797    $  577,588
Less: average goodwill and other intangible assets              304,124           298,276       184,253
Average tangible equity                                   $     530,628     $     538,521    $  393,335
Return on average stockholders' equity ratio:
Annualized net income                                     $      95,618     $     110,083    $   62,711
Average stockholders' equity                              $     834,752     $     836,797    $  577,588
Return on average stockholders' equity                            11.45   %         13.16  %      10.86  %
Return on average tangible equity ratio:
Annualized net income excluding amortization of other
intangible assets                                         $     101,089     $     114,808    $   64,698
Average tangible equity                                   $     530,628     $     538,521    $  393,335
Return on average tangible equity                                 19.05   % 

21.32% 16.45%

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

The return on average stockholders' equity and average tangible equity ratios
were negatively impacted by higher total non-interest expense during the first
quarter of 2022, compared to the linked quarter. Total non-interest expense is
seasonally higher during the first quarter of each year due to annual stock
grants resulting in increased stock-based compensation, health saving account
employer contributions and payroll taxes. At the same time, the average tangible
equity was negatively impacted by the Vantage acquisition, for which People did
not issue any equity, and recorded additional goodwill and other intangible
assets. Additionally, average tangible equity declined compared to the fourth
quarter of 2021 due to a higher accumulated other comprehensive loss during the
first quarter of 2022 as a result of the impact of the interest rate environment
on the available-for-sale investment securities portfolio. Compared to the first
quarter of 2021, the return on average stockholders' equity and average tangible
equity ratios were positively impacted by the recent acquisitions, and the
related increase in net interest income, coupled with higher non-interest
income.



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                              FINANCIAL CONDITION

Cash and Cash Equivalents
At March 31, 2022, Peoples' interest-bearing deposits in other banks decreased
$49.8 million from December 31, 2021. The total cash and cash equivalents
balance included $268.7 million of excess cash reserves being maintained at the
FRB of Cleveland at March 31, 2022, compared to $318.1 million at December 31,
2021. Peoples paid $82.9 million for the Vantage acquisition during the first
quarter of 2022. The amount of excess cash reserves maintained is dependent upon
Peoples' daily liquidity position, which is driven primarily by changes in
deposit and loan balances.

Through the first three months of 2022, Peoples' total cash and cash equivalents
decreased $10.0 million as Peoples had net cash used in investing activities of
$127.4 million, which more than offset cash provided by financing activities of
$101.6 million and by operating activities of $15.7 million. Peoples' investing
activities reflected purchases of available-for-sale investment securities
totaling $165.3 million, cash outflows for business combinations of $80.5
million, net of decreases in loans held for investment of $75.7 million and
proceeds from principal payments, calls and prepayments of available-for-sale
investment securities of $60.5 million. The cash provided by financing
activities was largely driven by increases in interest-bearing deposits of
$115.3 million, which was driven by higher governmental deposits, which are
seasonal in nature.

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

Investment Securities The following table provides information about Peoples’ investment portfolio:

                                   Weighted Average    March 31,     

the 31st of December, September 30, June 30th, March, 31st(dollars in thousands)

                  Yield             2022           2021             2021             2021           2021
Available-for-sale securities, at fair value:
Obligations of:
U.S. Treasury and government
agencies                                     1.86  % $   167,406    $     35,604    $            -    $         -    $         -
U.S. government sponsored
agencies                                     0.14  %      80,654          81,739            78,481         14,235         18,471
States and political subdivisions            2.20  %     231,644         259,319           252,919        223,853        218,484
Residential mortgage-backed
securities                                   1.62  %     753,353         828,517           898,459        579,152        596,181
Commercial mortgage-backed
securities                                   1.39  %      58,112          63,519            62,552         27,631         27,481
Bank-issued trust preferred
securities                                   1.51  %      10,670           6,795             4,679          4,766          4,730

Total fair value                                     $ 1,301,839    $  1,275,493    $    1,297,090    $   849,637    $   865,347
Total amortized cost                                 $ 1,381,259    $  1,283,146    $    1,294,654    $   839,682    $   859,120
Net unrealized (loss) gain                           $   (79,420)   $     (7,653)   $        2,436    $     9,955    $     6,227
Held-to-maturity securities, at amortized cost:
Obligations of:
U.S. government sponsored
agencies                                     1.64  % $    38,486    $     

36,431 $29,995 $30,103 $30,211
States and political subdivisions (a)

                                          2.24  %     151,217         151,402           124,181        102,224         92,436
Residential mortgage-backed
securities                                   1.87  %     115,613         110,708            41,035         24,067         24,878
Commercial mortgage-backed
securities                                   1.76  %      79,340          75,588            47,889         23,830         18,705
Total amortized cost                                 $   384,656    $    

374 129 $243,100 $180,224 $166,230
Other investment securities

                          $    41,840    $     33,987    $       34,486    $    32,584    $    34,026
Total investment securities:
Amortized cost                                       $ 1,807,755    $  1,691,262    $    1,572,240    $ 1,052,490    $ 1,059,376
Carrying value                                       $ 1,728,335    $  1,683,609    $    1,574,676    $ 1,062,445    $ 1,065,603


(a)Amortized cost is presented net of the allowance for credit losses of $286 at
March 31, 2022 and December 31, 2021; $236 at September 30, 2021; $201 at June
30, 2021 and $182 at March 31, 2021.

For the first quarter of 2022, total investment securities increased, and was
largely due to investments made in U.S. Treasury and government agencies'
obligations late in the quarter, in an effort to deploy cash, improve investment
yields and reduce risk. At the same time, unrealized losses on the
available-for-sale investment securities portfolio were driven by the increased
interest rate environment, and was deemed temporary in nature. During the third
quarter of 2021, Peoples acquired investment securities in the Premier
acquisition, driving the increase compared to June 30, 2021.


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

Loans

The following table provides information about outstanding loan balances:

                                     March 31,     December 31,   September 30,     June 30,      March 31,
(Dollars in thousands)                  2022           2021           2021            2021           2021
Originated loans:
Construction                       $   171,934    $   137,437    $    108,334    $    97,424    $    75,189
Commercial real estate, other          854,721        861,610         838,333        836,613        832,399
   Commercial real estate            1,026,655        999,047         946,667        934,037        907,588
Commercial and industrial              791,307        779,064         715,169        778,122        935,150
Premium finance                        145,813        136,121         134,755        117,039        109,129
Leases                                  97,168         69,169          49,464         24,217              -
Residential real estate                364,989        350,595         334,838        324,321        306,440
Home equity lines of credit            107,414        104,176          98,806         95,376         92,540
Consumer, indirect                     524,778        530,532         543,243        537,926        519,749
Consumer, direct                        87,994         81,330          80,746         78,736         75,998
  Consumer                             612,772        611,862         623,989        616,662        595,747
Deposit account overdrafts                 699            756             927            498            298
Total originated loans             $ 3,146,817    $ 3,050,790    $  2,904,615    $ 2,890,272    $ 2,946,892
Acquired loans (a):
Construction                       $    66,371    $    72,795    $     66,450    $     3,175    $     3,510
Commercial real estate, other          602,511        688,471         790,783        111,647        132,850
   Commercial real estate              668,882        761,266         857,233        114,822        136,360
Commercial and industrial               95,844        112,328         143,369         27,629         29,611
Premium finance                              -             15               -             49          1,461
Leases                                 169,900         53,339          61,982         71,426              -
Residential real estate                391,440        421,123         433,296        242,276        267,260
Home equity lines of credit             54,874         59,417          62,564         23,025         24,886
Consumer, indirect                           -              -              13              -              -
Consumer, direct                        19,396         23,322          27,956          2,700          3,206
  Consumer                              19,396         23,322          27,969          2,700          3,206
Total acquired loans               $ 1,400,336    $ 1,430,810    $  1,586,413    $   481,927    $   462,784
Total loans                        $ 4,547,153    $ 4,481,600    $  

4,491,028 $3,372,199 $3,409,676

Percent of loans to total loans:
Construction                               5.2  %         4.7  %          3.9  %         3.0  %         2.3  %
Commercial real estate, other             32.1  %        34.7  %         36.3  %        28.1  %        28.3  %
   Commercial real estate                 37.3  %        39.4  %         40.2  %        31.1  %        30.6  %
Commercial and industrial                 19.5  %        19.9  %         19.1  %        23.9  %        28.3  %
Premium finance                            3.2  %         3.0  %          3.0  %         3.5  %         3.2  %
Leases                                     5.9  %         2.7  %          2.5  %         2.8  %           -  %
Residential real estate                   16.6  %        17.2  %         17.1  %        16.8  %        16.8  %
Home equity lines of credit                3.6  %         3.7  %          3.6  %         3.5  %         3.5  %
Consumer, indirect                        11.5  %        11.8  %         12.1  %        16.0  %        15.3  %
Consumer, direct                           2.4  %         2.3  %          2.4  %         2.4  %         2.3  %
  Consumer                                13.9  %        14.1  %         14.5  %        18.4  %        17.6  %

Total percentage                         100.0  %       100.0  %        100.0  %       100.0  %       100.0  %
Residential real estate loans
being serviced for others          $   420,024    $   430,597    $    441,085    $   454,399    $   469,788


(a)  Includes all loans acquired, and related loan discount recorded as part of
acquisition accounting, in 2012 or thereafter. Loans that were acquired and
subsequently re-underwritten are reported as originated upon execution of such
credit actions (for example, renewals and increases in lines of credit).

Period-end total loan balances at March 31, 2022 increased $65.6 million
compared to December 31, 2021, and was driven by leases acquired from Vantage,
coupled with originated growth, and was partially offset by payoffs of
previously-acquired loans and PPP loan forgiveness. The originated loan growth
was mostly in construction loans, which grew $34.5 million, commercial and
industrial balances, which were up $12.2 million, and premium finance loans,
which increased $9.7 million.


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Table of contents The increase in lending to September 30, 2021compared to June 30, 2021is mainly attributable to the acquisition of Premier, which added $1.1 billion in loans.

Loan Concentration
Peoples categorizes its commercial loans according to standard industry
classifications and monitors for concentrations in a single industry or multiple
industries that could be impacted by changes in economic conditions in a similar
manner. Peoples' commercial lending activities continue to be spread over a
diverse range of businesses from all sectors of the economy, with no single
industry comprising over 10% of Peoples' total loan portfolio.

Loans secured by commercial real estate, including commercial construction
loans, continued to comprise the largest portion of Peoples' loan portfolio. The
following tables provide information regarding the largest concentrations of
commercial construction loans and commercial real estate loans within the loan
portfolio at March 31, 2022:

                                                  Outstanding
(Dollars in thousands)                              Balance        Loan 

Commitments Total exposure % of total

Construction:
Apartment complexes                             $      84,783    $         103,538    $       188,321                 43.0  %
Mixed-use facilities                                   34,822               26,481             61,303                 14.0  %
Assisted living facilities and nursing homes           23,464               21,050             44,514                 10.2  %
Land only                                              22,415                6,157             28,572                  6.5  %
Office buildings and complexes                          8,587               13,013             21,600                  4.9  %
Storage facility                                        5,742                  644              6,386                  1.5  %
Lodging and lodging related                            12,596                1,472             14,068                  3.2  %
Retail                                                  9,167                2,709             11,876                  2.7  %
Residential property                                    7,863                9,791             17,654                  4.0  %

Other (a)                                              28,866               14,508             43,374                 10.0  %
Total construction                              $     238,305    $         199,363    $       437,668                100.0  %

(a) All other outstanding balances represent less than 2% of the total loan portfolio.

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                                                  Outstanding
(Dollars in thousands)                              Balance      Loan Commitments     Total Exposure        % of Total
Commercial real estate, other:
Office buildings and complexes:
Owner occupied                                  $     77,603    $          3,492    $        81,095                  5.4  %
Non-owner occupied                                    94,634               4,822             99,456                  6.6  %
Total office buildings and complexes                 172,237               8,314            180,551                 12.0  %
Retail facilities:
Owner occupied                                        55,513               1,965             57,478                  3.8  %
Non-owner occupied                                   134,230               1,736            135,966                  9.0  %
Total retail facilities                              189,743               3,701            193,444                 12.8  %
Mixed-use facilities:
Owner occupied                                        53,673                 424             54,097                  3.6  %
Non-owner occupied                                    58,716               4,000             62,716                  4.2  %
Total mixed-use facilities                           112,389               4,424            116,813                  7.8  %
Apartment complexes                                   93,246               3,508             96,754                  6.4  %
Light industrial facilities:
Owner occupied                                        91,329               1,891             93,220                  6.2  %
Non-owner occupied                                    38,666                 633             39,299                  2.6  %
Total light industrial facilities                    129,995               2,524            132,519                  8.8  %
Assisted living facilities and nursing homes          81,349                 750             82,099                  5.4  %
Warehouse facilities:
Owner occupied                                        40,271               2,790             43,061                  2.9  %
Non-owner occupied                                    40,176                  74             40,250                  2.7  %
Total warehouse facilities                            80,447               2,864             83,311                  5.6  %
Lodging and lodging related:
Owner occupied                                        13,941                   -             13,941                  0.9  %
Non-owner occupied                                    85,713                 150             85,863                  5.7  %
Total lodging and lodging related                     99,654                 150             99,804                  6.6  %
Education services:
Owner occupied                                        16,896                  98             16,994                  1.1  %
Non-owner occupied                                    22,508               4,000             26,508                  1.8  %
Total education services                              39,404               4,098             43,502                  2.9  %
Healthcare facilities:
Owner occupied                                        26,085                 422             26,507                  1.8  %
Non-owner occupied                                    11,482                   -             11,482                  0.8  %
Total healthcare facilities                           37,567                 422             37,989                  2.6  %
Restaurant/bar facilities:
Owner occupied                                        24,482                   -             24,482                  1.6  %
Non-owner occupied                                    12,908                   -             12,908                  0.9  %
Total restaurant/bar facilities                       37,390                   -             37,390                  2.5  %

Agriculture                                           30,792               1,536             32,328                  2.1  %
Other (a)                                            353,019              17,558            370,577                 24.5  %
Total commercial real estate, other             $  1,457,232    $         49,849    $     1,507,081                100.0  %


(a) All other outstanding balances represent less than 2% of the total loan portfolio.

Peoples' commercial lending activities continue to focus on lending
opportunities within Ohio, Kentucky, West Virginia, Virginia, Washington, D.C.
and Maryland. In all other states, the aggregate outstanding balances of
commercial loans in each state were less than 4% of total loans at both
March 31, 2022 and December 31, 2021. The repayment of premium finance loans are
secured by the underlying insurance policy prepaid premium, and therefore, have
no geographical impact from a repayment perspective. The repayment of leases are
secured by the underlying equipment collateral and not real estate, which
mitigates geographic risk.

Small Business Administration Paycheck Protection Program

In March 2020, the CARES Act created the PPP targeted to provide small
businesses with support to cover payroll and certain other specified expenses.
Loans made under the PPP are fully guaranteed by the SBA. The PPP loans also
afford borrowers forgiveness up to the principal amount of the PPP covered loan,
plus accrued interest, if the loan proceeds are used to retain workers


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and maintain payroll and/or to make certain mortgage interest, lease and utility
payments, and certain other criteria are satisfied. The SBA will reimburse PPP
lenders for any amount of a PPP covered loan that is forgiven, and PPP lenders
will not be held liable for any representations made by PPP borrowers in
connection with their requests for loan forgiveness.

Peoples is a PPP participating lender, and the PPP loans originated are included
in commercial and industrial loans. Peoples also recorded deferred loan
origination fees related to the PPP loans, net of deferred loan origination
costs, which will be amortized over the life of the respective loans, or until
forgiven by the SBA, and will be recognized in net interest income. The
following tables detail Peoples' PPP loans and related income:

                                     March 31,     December 31,     September 30,      June 30,      March 31,
(Dollars in millions)                  2022            2021             2021             2021           2021
PPP aggregate outstanding
principal balances                $       42.9    $       89.3    $        139.8    $     194.7    $     349.9
PPP net deferred loan origination
fees                                       1.0             2.2               4.0            7.1            9.3
Accretion of net deferred loan
origination fees                           1.2             1.8               3.1            3.4            4.7


Allowance for Credit Losses
The amount of the allowance for credit losses at the end of each period
represents management's estimate of expected losses from existing loans based
upon its quarterly analysis of the loan portfolio. While this process involves
allocations being made to specific loans and pools of loans, the entire
allowance is available for all losses expected within the loan portfolio.

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

                                         March 31,     December 31,    September 30,     June 30,      March 31,
(Dollars in thousands)                      2022           2021             2021           2021          2021
Commercial real estate                 $    23,786    $     32,146    $      39,252    $   18,147    $   18,663
Commercial and industrial                   10,114          11,063           13,378         8,686        10,108
Premium finance                                345             379            1,137           998         1,160
Leases                                       5,875           4,797            4,505         3,715             -

Residential real estate                      6,495           7,233            9,568         4,837         4,935
Home equity lines of credit                  1,894           2,005            2,224         1,504         1,494
Consumer, indirect                           5,172           5,326            6,160         8,841         7,522
Consumer, direct                             1,036             961            1,079         1,161           970

Deposit account overdrafts                      51              57               79            53            45
Allowance for credit losses            $    54,768    $     63,967    $      77,382    $   47,942    $   44,897
As a percent of total loans                   1.20  %         1.43  %          1.72  %       1.42  %       1.32  %


At March 31, 2022, the reduction in the allowance for credit losses compared to
December 31, 2021 was due to improvements in economic forecasts and loss
drivers, along with reductions in loan balances from acquired loan from payoffs
during the quarter. Peoples recorded $387,000 of provision for credit losses
during the first quarter of 2022 to establish the allowance for credit losses
for non-purchased credit deteriorated leases acquired from Vantage.

The increase in the allowance for credit losses at September 30, 2021, compared
to June 30, 2021, was related to the provision for credit losses recorded of
$11.0 million in order to establish an allowance for credit losses for
non-purchase credit deteriorated loans of $10.6 million, and a liability for
unfunded commitments of $0.4 million, both relating to the acquisition of
Premier. Peoples also recorded a $22.3 million increase in the allowance for
credit losses during the third quarter of 2021 related to the purchase credit
deteriorated loans acquired from Premier.

Additional information regarding Peoples' allowance for credit losses can be
found in "Note 1 Summary of Significant Accounting Policies" in Peoples' 2021
Form 10-K and "Note 4 Loans and Leases" of the Notes to the Unaudited Condensed
Consolidated Financial Statements.



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The following table summarizes Peoples' net charge-offs and recoveries:
                                                                      Three Months Ended
                                            March 31,     December 31,   September 30,    June 30,      March 31,
(Dollars in thousands)                         2022           2021           2021           2021           2021
Gross charge-offs:

Commercial real estate, other             $       278    $       226    $          -    $        4    $       157

Commercial and industrial                         463            105             654             5            293
Premium finance                                    14             15               7             7             16
Leases                                            473            478             431           525              -
Residential real estate                           309             72              44           136            133
Home equity lines of credit                        16              1             180             4             12
Consumer, indirect                                385            566             416           269            505
Consumer, direct                                  136             56              29            31             36
  Consumer                                        521            622             445           300            541
Deposit account overdrafts                        259            248             135            89            103
Total gross charge-offs                   $     2,333    $     1,767    $      1,896    $    1,070    $     1,255
Recoveries:

Commercial real estate, other             $        49    $       196    $          4    $        4    $         -

Commercial and industrial                           4              4               4            18              -
Premium finance                                     -              -               -             -              -
Leases                                            176            109             120           110              -
Residential real estate                            14             40              48            40             15
Home equity lines of credit                        29              -              37             -              4
Consumer, indirect                                 86             42              43            63            105
Consumer, direct                                   11             58              17            11             26
  Consumer                                         97            100              60            74            131
Deposit account overdrafts                         54             42              37            44             54
Total recoveries                          $       423    $       491    $        310    $      290    $       204
Net charge-offs (recoveries):

Commercial real estate, other             $       229    $        30    $   

(4) $- $157

Commercial and industrial                         459            101             650           (13)           293
Premium finance                                    14             15               7             7             16
Leases                                            297            369             311           415              -
Residential real estate                           295             32              (4)           96            118
Home equity lines of credit                       (13)             1             143             4              8
Consumer, indirect                                299            524             373           206            400
Consumer, direct                                  125             (2)             12            20             10
  Consumer                                        424            522             385           226            410
Deposit account overdrafts                        205            206              98            45             49
Total net charge-offs                     $     1,910    $     1,276    $      1,586    $      780    $     1,051
Ratio of net charge-offs to average total loans (annualized):

Commercial real estate, other                    0.02  %           -  %            -  %          -  %        0.02  %

Commercial and industrial                        0.03  %        0.01  %         0.08  %          -  %        0.04  %

Leases                                           0.03  %        0.03  %         0.03  %       0.05  %           -  %
Residential real estate                          0.03  %           -  %            -  %       0.01  %        0.01  %
Home equity lines of credit                         -  %           -  %         0.02  %          -  %           -  %
Consumer, indirect                               0.03  %        0.05  %         0.04  %       0.02  %        0.05  %
Consumer, direct                                 0.01  %           -  %            -  %          -  %           -  %
  Consumer                                       0.04  %        0.05  %         0.04  %       0.02  %        0.05  %
Deposit account overdrafts                       0.02  %        0.02  %         0.01  %       0.01  %        0.01  %
Total                                            0.17  %        0.11  %         0.18  %       0.09  %        0.13  %

Each with “–%” not significant.

Net charge-offs during the first quarter of 2022 were 0.17% of average total
loans on an annualized basis. Peoples has anticipated an increase in the net
charge-offs to average total loans, as recent periods have been below historical
levels. Higher residential real estate gross charge-offs contributed to the
increase, coupled with lower recoveries experienced on commercial real estate
loans.


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The following table details Peoples non-performing assets:

                                        March 31,     December 31,     September 30,     June 30,    March 31,
(Dollars in thousands)                     2022           2021             2021            2021         2021
Loans 90+ days past due and accruing:
Construction                           $       -    $          90    $            -    $       -    $       -
Commercial real estate, other                603              689             1,912        1,361           55
Commercial and industrial                     53            1,139                98          161            -
Premium finance                              613              865               368          216          109
Leases                                     3,921                -             1,736        1,522            -
Residential real estate                      677              805             1,156          342          662
Home equity lines of credit                   75               50                61           60          180
Consumer, indirect                            17                -                 -           39           24
Consumer, direct                               -               85                32           40           14
  Consumer                                    17               85                32           79           38
Total loans 90+ days past due and
accruing                               $   5,959    $       3,723    $        5,363    $   3,741    $   1,044
Nonaccrual loans:
Construction                           $       6    $           6    $            -    $       4    $       4
Commercial real estate, other             14,745           16,849            17,207        7,965        8,084
Commercial and industrial                  2,394            2,505             4,133        3,938        4,067
Leases                                     1,731            1,581             1,411            -            -
Residential real estate                    7,459            8,016             8,046        5,811        6,182
Home equity lines of credit                  604              687               661          572          624
Consumer, indirect                         1,408            1,302               850          704          825
Consumer, direct                             231              273               177          100          146
  Consumer                                 1,639            1,575             1,027          804          971
Total nonaccrual loans                 $  28,578    $      31,219    $       32,485    $  19,094    $  19,932
Nonaccrual troubled debt
restructurings ("TDRs"):

Business real estate, other $197 $218

     94           99    $     337
Commercial and industrial                    999            1,067             1,223        1,774        2,034
Residential real estate                    1,676            1,631             1,689        1,784        2,064
Home equity lines of credit                  333              352               315          129          156
Consumer, indirect                           220              272               219          193          206
Consumer, direct                               -                6                 9            6           15
  Consumer                                   220              278               228          199          221
Total nonaccrual TDRs                  $   3,425    $       3,546    $        3,549    $   3,985    $   4,812
Total nonperforming loans ("NPLs")     $  37,962    $      38,488    $       41,397    $  26,820    $  25,788
OREO:
Commercial                             $   9,106    $       9,105    $       10,804    $       -    $       -
Residential                                  301              391               464          239          134
Total OREO                             $   9,407    $       9,496    $       11,268    $     239    $     134
Total nonperforming assets ("NPAs")    $  47,369    $      47,984    $       52,665    $  27,059    $  25,922
Criticized loans (a)                   $ 190,315    $     194,016    $      234,845    $ 113,802    $ 116,424
Classified loans (b)                     109,530          106,547           142,628       69,166       76,095



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                                           March 31,           December 31,           September 30,           June 30,           March 31,
(Dollars in thousands)                       2022                  2021                   2021                  2021               2021
Asset Quality Ratios (c):
Nonaccrual loans as a percent of                  0.70  %                0.78  %                 0.80  %            0.68  %             0.73  %
total loans (d)
NPLs as a percent of total loans (d)              0.83  %                0.86  %                 0.92  %            0.79  %             0.76  %
NPAs as a percent of total assets (d)             0.65  %                0.68  %                 0.75  %            0.53  %             0.50  %
NPAs as a percent of total loans and              1.04  %                1.07  %                 1.17  %            0.80  %             0.76  %

OREO®

Allowance for credit losses as a
percent of nonaccrual loans (d)                 171.13  %              184.00  %               214.75  %          207.73  %           181.45  %
Allowance for credit losses as a
percent of NPLs (d)                             144.27  %              166.20  %               186.93  %          178.75  %           174.10  %
Criticized loans as a percent of                                         4.33  %
total loans (a)                                   4.19  %                                        5.23  %            3.37  %             3.41  %
Classified loans as a percent of                                         2.38  %
total loans (b)                                   2.41  %                                        3.18  %            2.05  %             2.23  %


(a)  Includes loans categorized as special mention, substandard or doubtful.
(b)  Includes loans categorized as substandard or doubtful.
(c)  Data presented as of the end of the period indicated.
(d)  Nonperforming loans include loans 90+ days past due and accruing, TDRs and
nonaccrual loans. Nonperforming assets include nonperforming loans and OREO.

Compared to December 31, 2021, Peoples' nonperforming assets declined to 0.65%,
from 0.68%, with the reduction being driven by decreases in nonaccrual loans,
which were partially due to a $1.5 million payoff of one commercial
relationship. Loans 90+ days past due and accruing increased compared to
December 31, 2021, mostly due to the Vantage acquisition. During the first
quarter of 2022, criticized loans, which are those categorized as special
mention, substandard or doubtful, declined $3.7 million, while classified loans,
which are those categorized as substandard or doubtful, grew $3.0 million.

During the third quarter of 2021, non-performing assets, criticized and classified loans increased due to the Premier merger.

On March 22, 2020, federal and state government banking regulators issued a
joint statement, with which the FASB concurred as to the approach, regarding
accounting for loan modifications for borrowers affected by COVID-19. In this
guidance, short-term modifications, made on a good faith basis in response to
COVID-19, to borrowers who were current prior to any relief, are not considered
TDRs. This includes short-term modifications such as payment deferrals, fee
waivers, extensions of repayment terms, or other delays in payment which are
insignificant. Under the guidance, borrowers that are considered to be current
are those that were less than 30 days past due on their contractual payments at
the time a modification program is implemented. In addition, modification or
deferral programs mandated by the U.S. federal government or any state
government related to COVID-19 are not TDRs within the scope of ASC 310-40.

On August 3, 2020, federal and state banking regulators issued a joint
statement, encouraging financial institutions to consider prudent accommodation
options to mitigate losses for the borrower and financial institution beyond the
initial accommodation period. In this guidance, institutions should also provide
consumers with available options for repaying missed payments at the end of
their accommodation to avoid delinquencies, as well as options for changes to
terms to support sustainable and affordable payments for the long term. These
considerations should also include prudent risk management practices at the
financial institution based on the credit risk of the borrower. Peoples is
actively working with its customers to address any further accommodation needs
while carefully evaluating the associated credit risk of the borrowers.



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Deposits

The following table details Peoples deposit balances:

                                           March 31,     December 31,   September 30,     June 30,      March 31,
(Dollars in thousands)                        2022           2021           2021            2021           2021
Non-interest-bearing deposits (a)        $ 1,666,668    $ 1,641,422    $  1,559,993    $ 1,181,045    $ 1,206,034
Interest-bearing deposits:
Interest-bearing demand accounts (a)       1,179,199      1,167,460       1,140,639        732,478        722,470
Savings accounts                           1,065,678      1,036,738       1,016,755        689,086        676,345
Retail certificates of deposit ("CDs")       612,936        643,759         691,680        417,466        433,214
Money market deposit accounts                656,266        651,169         637,635        547,412        586,099
Governmental deposit accounts                734,784        617,259         679,305        498,390        511,937
Brokered deposits                             87,395        104,745         106,013        166,746        168,130
Total interest-bearing deposits            4,336,258      4,221,130       

4,272,027 3,051,578 3,098,195

 Total deposits                          $ 6,002,926    $ 5,862,552    $  5,832,020    $ 4,232,623    $ 4,304,229
Demand deposits as a percent of total
deposits                                          47  %          48  %      

46% 45% 45%

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

At March 31, 2022, period-end deposits increased $140.4 million, or 2%, compared
to December 31, 2021, and increased $1.7 billion, or 39%, compared to March 31,
2021. The increase compared to December 31, 2021, was driven by seasonal growth
in governmental deposits of $117.5 million, an increase in non-interest bearing
checking deposits of $30.8 million, and an increase in savings deposits of $28.9
million, offset partially by decreases in retail and brokered certificates of
deposits. The increase in total deposits at September 30, 2021, compared to June
30, 2021, was driven by deposits acquired from Premier. Total deposits in all
periods presented were higher due to customers maintaining larger balances, as a
result of PPP loan proceeds, fiscal stimulus payments and changes in customer
spending habits in light of the COVID-19 pandemic. In prior quarterly periods in
the table above, Peoples experienced increases in most low-cost deposit
categories.

Peoples reduced its reliance on brokered deposits in each quarterly period,
beginning after June 30, 2020. This decline was largely due to the increase in
deposit balances from customers, which allowed Peoples to reduce its position in
the higher-cost brokered CDs during each period. As part of its funding
strategy, Peoples hedges 90-day brokered deposits with interest rate swaps. The
swaps pay a fixed rate of interest while receiving three-month LIBOR, which
offsets the rate on the brokered deposits. As of March 31, 2022, Peoples had
thirteen effective interest rate swaps, with an aggregate notional value of
$125.0 million, of which $85.0 million were designated as cash flow hedges of
overnight brokered deposits, which are expected to be extended every 90 days
through the maturity dates of the swaps. The remaining $40.0 million of interest
rate swaps hedged 90-day FHLB advances, which are also expected to be extended
every 90 days through the maturity dates of the swaps. Peoples continually
evaluates the overall balance sheet position given the interest rate
environment.

Borrowed Funds
The following table details Peoples' short-term and long-term borrowings:

                                      March 31,     December 31,     September 30,     June 30,      March 31,
(Dollars in thousands)                  2022            2021             2021            2021          2021

Short-term loans:

FHLB 90-day advances                $   40,000    $      40,000    $       50,000    $        -    $        -
Current portion of long-term FHLB       15,000           15,000            15,000        15,000        20,000
advances
Retail repurchase agreements            89,275          111,482           

119,693 51,496 47,868

Total short-term borrowings         $  144,275    $     166,482    $      184,693    $   66,496    $   67,868
Long-term borrowings:
FHLB advances                       $   85,564    $      85,825    $       86,483    $   87,393    $  102,645

Vantage non-recourse debt              102,364                -                 -             -             -
Junior subordinated debt securities     13,682           13,650            12,928         7,688         7,650
Total long-term borrowings          $  201,610    $      99,475    $       99,411    $   95,081    $  110,295
Total borrowed funds                $  345,885    $     265,957    $      284,104    $  161,577    $  178,163


Borrowed funds, in total, which include overnight borrowings, are mainly a
function of loan growth and changes in total deposit balances. Borrowed funds
increased compared to December 31, 2021, driven by non-recourse debt assumed in
the Vantage acquisition partially offset by a decline in retail repurchase
agreements of $22.2 million. The increase in total borrowed funds at


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September 30, 2021, compared to June 30, 2021, was primarily due to the addition
of $63.8 million retail repurchase agreements from Premier.

Capital/Stockholders' Equity
At March 31, 2022, capital levels for both Peoples and Peoples Bank remained
substantially higher than the minimum amounts needed to be considered "well
capitalized" institutions under applicable banking regulations. These higher
capital levels reflect Peoples' desire to maintain a strong capital position. In
order to avoid limitations on dividends, equity repurchases and compensation,
Peoples must exceed the three minimum required ratios by at least the capital
conservation buffer of 2.50%, which applies to the common equity tier 1 ("CET1")
ratio, the tier 1 capital ratio and the total risk-based capital ratio. At
March 31, 2022, Peoples had a capital conservation buffer of 4.78%.

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

                                             March 31,     December 31,   September 30,     June 30,      March 31,
(Dollars in thousands)                          2022           2021           2021            2021           2021
Capital Amounts:
Common Equity Tier 1                       $   547,215    $   577,565    $    567,172    $   383,502    $   418,089
Tier 1                                         560,897        591,215         580,100        391,190        425,739
Total (Tier 1 and Tier 2)                      607,493        648,948         637,802        431,424        463,872
Net risk-weighted assets                   $ 4,752,428    $ 4,614,258    $  4,611,321    $ 3,382,736    $ 3,365,637
Capital Ratios:
Common Equity Tier 1                             11.51  %       12.52  %        12.30  %       11.34  %       12.42  %
Tier 1                                           11.80  %       12.81  %        12.58  %       11.56  %       12.65  %
Total (Tier 1 and Tier 2)                        12.78  %       14.06  %        13.83  %       12.75  %       13.78  %
Tier 1 leverage ratio                             8.29  %        8.67  %    

11.20% 7.87% 9.00%


Peoples' regulatory capital and related ratio levels declined during the first
quarter of 2022. The ratios were negatively impacted by the cash acquisition of
Vantage, for which Peoples recorded goodwill and intangible assets, which impact
was partially offset by net income exceeding dividends declared during the
period. Peoples believes this reduction in regulatory capital and ratios is
temporary, and will be recovered in future periods. As of September 30, 2021,
regulatory capital ratios increased compared to June 30, 2021 due to the Premier
acquisition, which included an equity issuance of $261.9 million. At June 30,
2021, regulatory capital ratios declined compared to March 31, 2021, which was
the result of the NSL acquisition, for which Peoples paid cash and recorded
goodwill and intangible assets.

In addition to traditional capital measurements, management uses tangible
capital measures to evaluate the adequacy of Peoples' stockholders' equity. Such
ratios represent Non-US GAAP financial measures since their calculation removes
the impact of goodwill and other intangible assets acquired through acquisitions
on amounts reported in the Unaudited Consolidated Balance Sheets. Management
believes this information is useful to investors since it facilitates the
comparison of Peoples' operating performance, financial condition and trends to
peers, especially those without a similar level of intangible assets to that of
Peoples. Further, intangible assets generally are difficult to convert into
cash, especially during a financial crisis, and could decrease substantially in
value should there be deterioration in the overall franchise value. As a result,
tangible equity represents a conservative measure of the capacity for Peoples to
incur losses but remain solvent.


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

                                      March 31,     December 31,   September 30,     June 30,      March 31,
(Dollars in thousands)                   2022           2021           2021            2021           2021
Tangible equity:
Total stockholders' equity          $   808,340    $   845,025    $    831,882    $   585,505    $   578,893
Less: goodwill and other intangible
assets                                  341,865        291,009         295,415        221,576        184,007
Tangible equity                     $   466,475    $   554,016    $    536,467    $   363,929    $   394,886

Tangible assets:
Total assets                        $ 7,239,261    $ 7,063,521    $  7,059,752    $ 5,067,634    $ 5,143,052
Less: goodwill and other intangible
assets                                  341,865        291,009         295,415        221,576        184,007
Tangible assets                     $ 6,897,396    $ 6,772,512    $  6,764,337    $ 4,846,058    $ 4,959,045

Tangible book value per common share:
Tangible equity                     $   466,475    $   554,016    $    536,467    $   363,929    $   394,886
Common shares outstanding            28,453,175     28,297,771      28,265,791     19,660,877     19,629,633

Tangible book value per common share $16.39 $19.58 $18.98 $18.51 $20.12
share

Tangible equity to tangible assets ratio:
Tangible equity                     $   466,475    $   554,016    $    536,467    $   363,929    $   394,886
Tangible assets                     $ 6,897,396    $ 6,772,512    $  6,764,337    $ 4,846,058    $ 4,959,045

Tangible equity on tangible fixed assets 6.76% 8.18% 7.93% 7.51% 7.96%


Tangible book value per common share declined to $16.39 at March 31, 2022,
compared to $19.58 at December 31, 2021. The change in tangible book value per
common share was due to tangible equity declining as the Vantage acquisition
included no issuance of equity, coupled with the addition of goodwill and other
intangible assets. Also contributing to the decline compared to December 31,
2021, was a $51.0 million reduction in accumulated other comprehensive loss. The
increase in tangible equity to tangible assets at September 30, 2021, was
attributable to the Premier acquisition, and related equity issued. The decline
in tangible equity to tangible assets at June 30, 2021, compared to March 31,
2021, was due to the NSL acquisition.

Interest Rate Sensitivity and Liquidity
While Peoples is exposed to various business risks, the risks relating to
interest rate sensitivity and liquidity are major risks that can materially
impact future results of operations and financial condition due to their
complexity and dynamic nature. The objective of Peoples' asset-liability
management function is to measure and manage these risks in order to optimize
net interest income within the constraints of prudent capital adequacy,
liquidity and safety. This objective requires Peoples to focus on interest rate
risk exposure and adequate liquidity through its management of the mix of assets
and liabilities, their related cash flows and the rates earned and paid on those
assets and liabilities. Ultimately, the asset-liability management function is
intended to guide management in the acquisition and disposition of earning
assets and selection of appropriate funding sources.

Interest Rate Risk
Interest rate risk ("IRR") is one of the most significant risks arising in the
normal course of business of financial services companies like Peoples. IRR is
the potential for economic loss due to future interest rate changes that can
impact the earnings stream, as well as market values, of financial assets and
liabilities. Peoples' exposure to IRR is due primarily to differences in the
maturity or repricing of earning assets and interest-bearing liabilities. In
addition, other factors, such as prepayments of loans and investment securities,
or early withdrawal of deposits, can affect Peoples' exposure to IRR and
increase interest costs or reduce revenue streams.

Peoples has assigned overall management of IRR to its Asset-Liability Committee
(the "ALCO"), which has established an IRR management policy that sets minimum
requirements and guidelines for monitoring and managing the level of IRR. The
methods used by the ALCO to assess IRR remain largely unchanged from those
disclosed in Peoples' 2021 Form 10-K.


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The following table shows the estimated changes in net interest income and the
economic value of equity based upon a standard, parallel shock analysis with
balances held constant (dollars in thousands):


Increase (Decrease) in               Estimated Increase (Decrease) in
    Interest Rate                           Net Interest Income                                     Estimated Decrease in Economic Value of Equity
  (in Basis Points)            March 31, 2022                  December 31, 2021                    March 31, 2022                    December 31, 2021
         300           $  24,211              10.5  %       $  24,903        11.7  %       $   (30,884)             (2.4) %       $  (24,232)       (2.0) %
         200              15,448               6.7  %          16,312         7.7  %           (25,145)             (1.9) %          (16,541)       (1.3) %
         100               7,094               3.1  %           7,899         7.1  %           (15,656)             (1.2) %           (5,308)       (0.4) %
        (100)             (8,348)             (3.6) %          (8,615)       (4.1) %           (41,873)             (3.2) %          (91,568)       (7.4) %


Estimated changes in net interest income and the economic value of equity are
partially driven by assumptions regarding the rate at which non-maturity
deposits will reprice given a move in short-term interest rates, as well as
assumptions regarding prepayment speeds on mortgage-backed securities. These and
other modeling assumptions are monitored closely by Peoples on an ongoing basis.

With respect to investment prepayment speeds, the assumptions used are the
results of a third-party prepayment model which projects the rate at which the
underlying mortgages will prepay. These prepayment speeds affect the amount
forecasted for cash flow reinvestment, premium amortization, and discount
accretion assumed in interest rate risk modeling results. This prepayment
activity is generally the result of refinancing activity and tends to increase
as longer term interest rates decline, and decrease as interest rates increase.
The assumptions in the interest rate risk model could be incorrect, leading to
either a lesser or greater impact on net interest income or asset duration.

While parallel interest rate shock scenarios are useful in assessing the level
of IRR inherent in the balance sheet, interest rates typically move in a
nonparallel manner with differences in the timing, direction and magnitude of
changes in short-term and long-term interest rates. Thus, any benefit that might
occur as a result of the Federal Reserve increasing short-term interest rates in
the future could be offset by an inverse movement in long-term rates, and vice
versa. For this reason, Peoples considers other interest rate scenarios in
addition to analyzing the impact of parallel yield curve shifts. These include
various flattening and steepening scenarios in which short-term and long-term
rates move in different directions with varying magnitude. Peoples believes
these scenarios to be more reflective of how interest rates change versus the
severe parallel rate shocks described above. Given the shape of market yield
curves at March 31, 2022, consideration of the bear steepener and bull flattener
scenarios provides insights which were not captured by parallel shifts. These
scenarios were evaluated as the current environment suggests these may be
possible outcomes for the trajectory of interest rates.

The bear steepener scenario highlights the risk to net interest income and the
economic value of equity when short-term rates remain constant while long-term
rates rise. In such a scenario, Peoples' deposit and borrowing costs, which are
generally correlated with short-term rates, remain constant, while asset yields,
which are correlated with long-term rates, rise. Increased asset yields would
not be offset by increases in deposit or funding costs; resulting in an
increased amount of net interest income and higher net interest margin. At March
31, 2022, the bear steepener scenario resulted in an increase in both net
interest income and the economic value of equity of 0.2% and 2.9%, respectively.

The bull flattener scenario highlights the risk to net interest income and the
economic value of equity when short-term rates remain constant while long-term
rates fall. In such a scenario, Peoples' deposit and borrowing costs, which are
correlated with short-term rates, remain constant while asset yields, which are
correlated with long-term rates, fall. Asset yields driven lower by increased
investment securities premium amortization would not be offset by reductions in
deposit or funding costs; resulting in a decreased amount of net interest income
and lower net interest margin. At March 31, 2022, the bull flattener scenario
resulted in a decrease in net interest income and an increase in the economic
value of equity of -0.1% and 0.8%, respectively. Peoples was within the policy
limitations for this alternative scenario as of March 31, 2022, which sets the
maximum allowable downside exposure as 5.0% of net interest income and 10.0% of
economic value of equity.

Peoples has entered into interest rate swaps as part of its interest rate risk
management strategy. These interest rate swaps are designated as cash flow
hedges and involve the receipt of variable rate amounts from a counterparty in
exchange for Peoples making fixed payments. As of March 31, 2022, Peoples had
entered into thirteen interest rate swap contracts with an aggregate notional
value of $125.0 million. Additional information regarding Peoples' interest rate
swaps can be found in "Note 10 Derivative Financial Instruments" of the Notes to
the Unaudited Condensed Consolidated Financial Statements.

At March 31, 2022, Peoples' Unaudited Consolidated Balance Sheet was positioned
to benefit from rising interest rates in terms of the potential impact on net
interest income. The table above illustrates this point as changes to net
interest income increase in the rising rate scenarios. While the heavy
concentration of floating rate loans remains the largest contributor to the
level of asset sensitivity, the decrease in economic value of equity asset
sensitivity, as measured, from December 31, 2021 was largely attributable to
increased effective duration in the investment securities portfolio.


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Liquidity

Besides managing the TRI, another major objective of the ALCO is to maintain a sufficient level of liquidity. The methods used by ALCO to monitor and assess the adequacy of People’s Bank the liquidity position remains unchanged from that disclosed in Peoples’ 2021 Form 10-K.

At March 31, 2022, Peoples Bank had liquid assets of $582.5 million, which
represented 7.3% of total assets and unfunded loan commitments. Peoples also had
an additional $238.4 million of unpledged investment securities not included in
the measurement of liquid assets.

Management believes that the current balance of cash and cash equivalents, the expected cash flows from the investment portfolio and the availability of other sources of funding will allow Peoples to meet expected cash obligations, as well as special needs and off-balance sheet commitments.

Since March 31, 2020, there has been an increase in deposit balances due to the
influx of funds from the government fiscal stimulus, the PPP and other
government actions. Peoples anticipates that these deposit balances will decline
over time as the funds are used for intended business purposes; however, this
deposit outflow should be partially offset as the associated PPP loans are
forgiven and loan reimbursement funds are received. At the same time, we have
experienced a decrease in the utilization rate for commercial lines of credit.
This decrease is related to the receipt of PPP loan proceeds and other increased
cash flows to certain companies. Peoples expects the commercial line of credit
utilization percentage to revert back to more historical averages as time
progresses. The utilization percentage for consumer line of credit products has
been relatively steady.

Off-Balance Sheet Activities and Contractual Obligations
In the normal course of business, Peoples is a party to financial instruments
with off-balance sheet risk necessary to meet the financing needs of Peoples'
customers. These financial instruments include commitments to extend credit and
standby letters of credit. The instruments involve, to varying degrees, elements
of credit risk in excess of the amount recognized in the Unaudited Consolidated
Balance Sheets. The contract amounts of these instruments express the extent of
involvement Peoples has in these financial instruments.

Loan Commitments and Standby Letters of Credit
Loan commitments are made to accommodate the financial needs of Peoples'
customers. Standby letters of credit are instruments issued by Peoples Bank
guaranteeing the beneficiary payment by Peoples Bank in the event of default by
Peoples Bank's customer in the performance of an obligation or service.
Historically, most loan commitments and standby letters of credit expire unused.
Peoples Bank's exposure to credit loss in the event of nonperformance by the
counter-party to the financial instrument for loan commitments and standby
letters of credit is represented by the contractual amount of those instruments.
Peoples Bank uses the same underwriting standards in making commitments and
conditional obligations as it does for on-balance sheet instruments. The amount
of collateral obtained is based on management's credit evaluation of the
customer. Collateral held varies, but may include accounts receivable,
inventory, property, plant, and equipment, and income-producing commercial
properties.

Peoples Bank routinely engages in activities that involve, to varying degrees,
elements of risk that are not reflected in whole or in part in the Unaudited
Condensed Consolidated Financial Statements. These activities are part of
Peoples Bank's normal course of business and include traditional off-balance
sheet credit-related financial instruments, interest rate contracts and
commitments to make additional capital contributions in low-income housing tax
credit investments. Traditional off-balance sheet credit-related financial
instruments continue to represent the most significant off-balance sheet
exposure.

The following table details the total contractual amount of loan commitments and stand-by letters of credit:

                                           March 31,      December 31,     

September 30, June 30th, March, 31st,

 (Dollars in thousands)                       2022            2021             2021            2021          2021
Home equity lines of credit              $   184,616    $     177,262    $      177,963    $  134,516    $  124,027
Unadvanced construction loans                203,719          227,135           271,483       207,403       190,715
Other loan commitments                       616,696          577,170           646,374       542,429       555,102
Loan commitments                         $ 1,005,031    $     981,567    $    1,095,820    $  884,348    $  869,844
Standby letters of credit                $    12,729    $      12,805    $       12,358    $   10,252    $   10,295

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