PEOPLES BANCORP INC

Peoples reported net income of $32.6 million for the third quarter of 2026, representing earnings per diluted common share of $0.91. In comparison, Peoples reported net income of $28.0 million, representing earnings per diluted common share of $0.78, for the second quarter of 2026, and net income of $29.5 million, representing earnings per diluted common share of $0.83, for the third quarter of 2025. Non-core items, which include one-time losses and acquisition-related expenses, negatively impacted earnings per diluted common share by $0.13 for the third quarter of 2026, $0.18 for the second quarter of 2026, and $0.07 for the third quarter of 2025. For the nine months ended September 30, 2026, Peoples recorded net income of $89.6 million, or $2.49 per diluted common share, compared to $75.0 million, or $2.10 per diluted common share, for the nine months ended September 30, 2025. Non-core items, which include one-time losses and acquisition-related expenses, negatively impacted earnings per diluted common share by $0.35 for the nine months ended September 30, 2026, compared to $0.08 for the nine months ended September 30, 2025.

Net interest income was $93.8 million for the third quarter of 2026, an increase of $1.1 million when compared to the linked quarter. Net interest margin was 4.31% for the third quarter of 2026, compared to 4.23% for the linked quarter. The increase in net interest income was driven by higher loan income, while the increase in net interest margin was driven by higher investment and loan yields. Net interest income for the third quarter of 2026 increased $2.5 million, or 3%, compared to the third quarter of 2025. Net interest margin for the third quarter of 2026 increased 15 basis points compared to 4.16% for the third quarter of 2025. The increases in net interest income and net interest margin were primarily driven by lower deposit and borrowing costs compared to the third quarter of 2025. For the first nine months of 2026, net interest income increased $12.8 million compared to the same period of 2025, while net interest margin increased 8 basis points to 4.23%. The increases in net interest income and net interest margin were driven by lower deposit costs compared to the first nine months of 2025.

Accretion income, net of amortization expense, was $1.0 million for the third quarter of 2026, $1.1 million for the second quarter of 2026 and $1.7 million for the third quarter of 2025, which added 4 basis points, 5 basis points and 8 basis points, respectively, to net interest margin. The decrease in accretion income for the third quarter of 2026 when compared to the linked quarter and the third quarter of 2025 was driven by less accretion income in 2026 associated with the Limestone Bancorp Inc. merger that closed in 2023 (the "Limestone Merger"). Accretion income, net of amortization expense, was $3.4 million and $7.8 million for the first nine months of 2026 and 2025, respectively. Accretion income added 5 basis points and 12 basis points to net interest margin for the first nine months of 2026 and 2025, respectively. The decrease in accretion income for the first nine months of 2026 compared to the same period in 2025 was due to less accretion income in 2026 from the Limestone Merger.

The provision for credit losses was $3.6 million for the third quarter of 2026, compared to a provision for credit losses of $4.7 million for the linked quarter and a provision for credit losses of $7.3 million for the third quarter of 2025. The provision for credit losses for the third quarter of 2026 was driven by net charge-offs, partially offset by a decrease in reserves for individually analyzed loans and leases and updates to prepayment, curtailment, and funding rates. The provision for credit losses for the linked quarter was primarily driven by net charge-offs and an increase in reserves for individually analyzed loans and leases, partially offset by a reduction in balances of loan segments with higher loss rates. The provision for credit losses for the third quarter of 2025 was primarily driven by (i) net charge-offs, (ii) loan growth, and (iii) a slight deterioration in the economic forecasts used within the CECL model, partially offset by reductions in reserves for individually analyzed loans and leases. Net charge-offs for the third quarter of 2026 were $6.0 million, or 0.35% of average total loans annualized, compared to net charge-offs of $5.2 million, or 0.31% of average total loans annualized, for the linked quarter and net charge-offs of $6.8 million, or 0.41% of average total loans annualized, for the third quarter of 2025. For additional information on credit trends and the allowance for credit losses, see the "FINANCIAL CONDITION - Allowance for Credit Losses" section below.

The provision for credit losses for the first nine months of 2026 was $18.0 million, compared to a provision for credit losses of $34.1 million for the first nine months of 2025. The provision for credit losses during the first nine months of 2026 was mainly a result of net charge-offs and a deterioration of macroeconomic conditions used within the CECL model, partially offset by updates to prepayment, curtailment, and funding rates and a reduction in balances of loans within higher loss rate segments. The provision for credit losses for the first nine months of 2025 was mainly a result of (i) net charge-offs, (ii) an increase in reserves for individually analyzed loans and leases, (iii) an increase in reserves for leases originated by our North Star Leasing division, (iv) deterioration in the economic forecasts used within the CECL model, and (v) loan growth. Net charge-offs for the first nine months of 2026 were $17.8 million, or 0.35% of average total loans and leases annualized, compared to net charge-offs of $21.9 million, or 0.45% annualized, for the first nine months of 2025. For additional information on credit trends and the allowance for credit losses, see the "FINANCIAL CONDITION - Allowance for Credit Losses" section below.

Net gains and losses include gains and losses on investment securities, asset disposals and other transactions, which are included in total non-interest income on the Consolidated Statements of Operations. The net loss realized during the third quarter of 2026 was

$4.8 million, compared to a net loss of $8.6 million for the linked quarter and a net loss of $3.1 million for the third quarter of 2025. The net loss for the third quarter of 2026 was driven by the sale of $58.5 million of available-for-sale securities at a net loss of $4.5 million. The net losses for the second quarter of 2026 was driven by the sale of $135.2 million of available-for-sale securities at a net loss of $8.2 million. The sales of available-for-sale securities in both the third and second quarters of 2026 were driven by Peoples managing its balance sheet under $10 billion in assets ahead of the pending Citizens merger. The net loss for the third quarter of 2025 was due to a $2.7 million loss on the sale of lower-yielding available-for-sale securities. For the nine months ended September 30, 2026, the total net loss was $13.9 million, compared to a net loss of $3.7 million for the same period in 2025. The net loss for the first nine months of 2026 was primarily driven by the aforementioned sale and investment portfolio restructure in the third and second quarters. The net loss recognized in the first nine months of 2025 was primarily driven by the aforementioned sale of available-for-sale investment securities.

Total non-interest income, excluding net gains and losses, for the third quarter of 2026 increased $1.5 million compared to the linked quarter. The increase in non-interest income, excluding net gains and losses, was primarily impacted by increases of $0.7 million in lease income, driven by an increase in gains on terminated leases, $0.2 million in other non-interest income, driven by swap fee income, $0.2 million in deposit account service charges, and $0.2 million in trust and investment income, driven by higher assets under administration and management. Compared to the third quarter of 2025, total non-interest income, excluding net gains and losses, increased $3.6 million, due to increases of $2.1 million in lease income, driven by higher operating lease income and gains on terminated leases, $0.8 million in trust and investment income, driven by an increase in assets under administration and management, $0.4 million in deposit account service charges, and $0.3 million in mortgage banking income, partially offset by a decrease of $0.2 million in insurance income.

For the first nine months of 2026, total non-interest income, excluding gains and losses, increased $6.6 million, or 8%, compared to the first nine months of 2025. The increase was primarily due to increases of $3.9 million in lease income, driven by operating lease income, $2.0 million in trust and investment income, driven by an increase in assets under administration and management, $1.1 million in deposit account service charges, and $0.7 million in mortgage banking income, partially offset by decreases of $0.9 million in both insurance income and other non-interest income, driven by lower swap fee income.

Total non-interest expense increased $1.8 million for the three months ended September 30, 2026, compared to the linked quarter. The increase in total non-interest expense was primarily due to increases of $0.7 million in professional fees, driven by acquisition-related expenses, $0.5 million in salaries and employee benefits costs, driven by higher sales-based incentives, $0.4 million in marketing expense, due to a vendor credit received in the second quarter of 2026, and $0.2 million in operating lease expense, which were partially offset with a decrease of $0.1 million in travel and entertainment expense, driven by timing of travel.

Compared to the third quarter of 2025, total non-interest expense increased $4.6 million, or 7%. The increase in total non-interest expense was primarily driven by increases of $1.9 million in professional fees, driven by acquisition-related expenses, $1.9 million in salaries and benefit costs due to annual merit increases coupled with higher sales levels and overall company performance measures used in calculating incentive awards, $1.0 million in operating lease expense, and $0.5 million in data processing and software expense due to costs associated with recent technology projects, partially offset by a decrease of $0.5 million in amortization of other intangible assets, driven by decreases in amortization on core deposits and customer relationship intangibles.

For the nine months ended September 30, 2026, total non-interest expense increased $7.9 million, or 4%, compared to the first nine months of 2025. This increase was primarily driven by increases of $3.0 million in salaries and employee benefit costs due to annual merit increases and an increase in sales incentives, $2.5 million in operating lease expense, driven by the increase in operating lease volume, $2.0 million in professional fees, driven by acquisition-related expenses, and $1.6 million in data processing and software expenses, driven by recent technology projects, partially offset by a decrease of $1.5 million in amortization of other intangible assets, due to decreases in amortization on core deposits and customer relationship intangibles.

The table below summarizes the amount of acquisition-related expenses for each line item that is a component of non-interest expense. Acquisition-related expenses are considered a non-core non-interest expense by Peoples. This information is used by Peoples to provide information useful to investors in understanding Peoples' operating performance and trends.

The efficiency ratio for the third quarter of 2026 was 58.5%, compared to 58.3% for the linked quarter and 57.1% for the third quarter of 2025. The efficiency ratio increased slightly compared to the linked quarter mainly as the result of higher non-interest expense, largely driven by acquisition-related expenses. The efficiency ratio for the first nine months of 2026 was 58.5%, compared to 59.0% for the same period of 2025. The efficiency ratio improved compared to the same period of 2025 due to higher revenue. The efficiency ratio adjusted for non-core items was 57.3% and 57.9% for the third and second quarters of 2026, respectively. Peoples continues to focus on controlling expenses, while recognizing necessary costs in order to continue growing the business.

Peoples recorded income tax expense of $8.8 million with an effective tax rate of 21.2% for the third quarter of 2026, compared to income tax expense of $7.7 million with an effective tax rate of 21.6% for the linked quarter, and income tax expense of $8.5 million with an effective tax rate of 22.4% for the third quarter of 2025. The increase in income tax expense when compared to the linked quarter was impacted by higher pretax income and a $0.5 million benefit relating to tax credits purchased in the second quarter of 2026. Peoples' income tax expense for the first nine months of 2026 was $24.8 million with an effective tax rate of 21.7%, compared to $21.8 million with an effective tax rate of 22.5% for the same period of 2025. The increase in income tax expense when compared to the nine month period ended September 30, 2025, was driven by higher pretax income.

Total assets were $9.65 billion as of September 30, 2026, $9.54 billion at June 30, 2026, $9.65 billion at December 31, 2025, and $9.62 billion at September 30, 2025. Total assets at September 30, 2026 increased when compared to at June 30, 2026 primarily due to increases of $121.1 million in cash and cash equivalents and $19.2 million in period end total loans and leases, partially offset by a decrease of $52.8 million in total investment securities compared to at June 30, 2026. Total assets at September 30, 2026 increased compared to at December 31, 2025 due to an increase of $111.8 million in cash and cash equivalents and $83.9 million in total loans and leases, partially offset by a decrease of $211.1 million in total investment securities. Total assets at September 30, 2026 increased compared to at September 30, 2025 due to increases of $112.1 million in total loans and leases and $110.6 million in total cash and cash equivalents, partially offset by a decrease of $208.0 million in total investment securities. The decrease in investment securities compared to all prior periods was driven by the sale of $193.7 million in available-for-sale securities as part of portfolio restructures in advance of the pending Citizens Merger.

Total liabilities were $8.42 billion at September 30, 2026, $8.30 billion at June 30, 2026, $8.44 billion at December 31, 2025, and $8.44 billion at September 30, 2025. The increase in total liabilities when compared to at June 30, 2026 was primarily due to an increase of $115.5 million in short-term borrowings, partially offset with a decrease of $14.3 million in period-end deposits. Total liabilities decreased compared to at December 31, 2025 due to decreases of $262.5 million in period end deposits and $49.1 million in long-term borrowings, partially offset by an increase of $268.2 million in short-term borrowings. The decrease in total liabilities when compared to at September 30, 2025 was primarily due to decreases of $390.4 million and $72.2 million in period-end deposits and long-term borrowings, respectively, partially offset by an increase of $420.9 million in short-term borrowings. The decrease in total deposits was primarily driven by a decrease of $425.0 million in brokered deposits and $177.0 million in retail certificates of deposit, partially offset by increases of $93.7 million in money market deposit accounts, $78.3 million in interest-bearing demand accounts, $29.6 million in savings accounts, and $24.1 million in non-interest bearing deposits.

Total stockholders' equity at September 30, 2026 decreased $8.6 million compared to at June 30, 2026, which was primarily due to an increase of $28.5 million in accumulated other comprehensive loss during the quarter and dividends paid of $15.1 million, partially offset by net income for the quarter of $32.6 million. Accumulated unrealized losses related to the available-for-sale investment securities portfolio were $99.8 million and $71.2 million at September 30, 2026 and at June 30, 2026, respectively. Total stockholders' equity at September 30, 2026 increased $21.3 million, or 2%, compared to at December 31, 2025, which was due to net income of $89.6 million in the first nine months of 2026, partially offset by dividends paid of $44.9 million and an increase of $28.8 million in accumulated other comprehensive loss during the quarter. Total stockholders' equity at September 30, 2026 increased $45.1 million compared to at September 30, 2025, which was due to net income of $121.3 million for the last twelve months, partially offset by dividends paid of $59.5 million and an increase in accumulated other comprehensive loss of $21.8 million.