Financial Performance - Total interest income for Q3 2021 was $45,467,000, an increase of 16.4% compared to $39,013,000 in Q3 2020[186] - Net interest income for the nine months ended September 30, 2021, was $117,816,000, up 12.6% from $104,615,000 in the same period of 2020[186] - Net loss for Q3 2021 was $(5,758,000), a decline from net income of $10,210,000 in Q3 2020[186] - For the first nine months of 2021, net income was $19.8 million, or $0.99 per diluted common share, compared to $14.2 million, or $0.70 per diluted common share, for the same period in 2020[208] - Net interest income was $42.6 million for Q3 2021, up 7% from $39.7 million in Q2 2021, and increased 21% from $35.1 million in Q3 2020[209] - Peoples recorded a net loss of $5.8 million for Q3 2021, or $0.28 per diluted common share, compared to net income of $10.1 million, or $0.51 per diluted common share, for Q2 2021[207] Credit Losses and Provisions - Provision for credit losses increased to $8,994,000 in Q3 2021 from $4,728,000 in Q3 2020, reflecting a significant rise in credit loss provisions[186] - Peoples recorded a provision for credit losses of $9.0 million in Q3 2021, compared to $3.1 million in Q2 2021 and $4.7 million in Q3 2020[211] - The provision for credit losses during the first nine months of 2021 was $7.3 million, significantly lower than $33.5 million for the same period in 2020[212] - The allowance for credit losses increased to $77.4 million, or 1.72% of total loans, as of September 30, 2021, compared to $50.4 million and 1.48% at December 31, 2020[220] - Total gross charge-offs for Q3 2021 were $1.9 million, with net charge-offs amounting to $1.6 million, resulting in a net charge-off ratio of 0.18% of average total loans[319] Assets and Liabilities - Total assets increased to $7,059,752,000 as of September 30, 2021, compared to $4,911,807,000 a year earlier, representing a growth of 43.8%[186] - Total liabilities increased to $6.23 billion at September 30, 2021, up from $4.48 billion at June 30, 2021, primarily due to $1.8 billion in deposits acquired from Premier[221] - Total stockholders' equity was $831.9 million at September 30, 2021, an increase of $256.2 million compared to December 31, 2020, driven by common shares issued for the Premier acquisition[222] - Total average assets for Q3 2021 were $5,475,147 thousand, compared to $5,183,146 thousand in Q2 2021 and $4,906,614 thousand in Q3 2020[288] Mergers and Acquisitions - Peoples completed its merger with Premier Financial Bancorp, acquiring $1.1 billion in loans and $1.8 billion in deposits, with a transaction valued at $261.9 million[201] - The merger resulted in the preliminary recording of $71.0 million in goodwill and $4.2 million in other intangible assets[202] - The acquisition of NS Leasing, LLC involved total consideration of $116.6 million, including $83.3 million in leases and $69.1 million in third-party debt satisfied[204] - The company completed the acquisition of Premier on September 17, 2021, which positively impacted average total loan and deposit balances for the third quarter of 2021[233] Non-Interest Income and Expenses - Total non-interest income excluding net gains and losses was $16,820,000 for Q3 2021, slightly up from $16,796,000 in Q3 2020[186] - Total non-interest expense rose to $57,860,000 in Q3 2021, compared to $34,315,000 in Q3 2020, indicating a 68.8% increase[186] - Total non-interest income increased by $0.5 million, or 3%, compared to Q2 2021, but decreased by $0.4 million, or 3%, from Q3 2020[213] - Total non-interest income, excluding net gains and losses, accounted for 28% of total revenues for the three months ended September 30, 2021, down from 32% in the same quarter of 2020[245] Employee Costs and Benefits - Salaries and employee benefit costs for the third quarter of 2021 were $25,589,000, a 34% increase compared to the same quarter of 2020, largely due to acquisition-related expenses[259] - The average number of full-time equivalent employees increased to 942 during the first nine months of 2021, compared to 893 in the same period of 2020[259] - Employee benefits increased in the first nine months of 2021 compared to the same period in 2020, driven by a higher employer 401(k) match and increased medical costs[261] Regulatory and Market Conditions - The company is subject to regulatory changes that may affect its business operations and financial condition[194] - Competitive pressures among financial institutions may increase, impacting credit spreads and customer acquisition[193] - The company continues to focus on controlling expenses while recognizing necessary costs for business growth[218] Loan Portfolio and Performance - Total loans reached $3,535,224 thousand, an increase of 3.28% from $3,422,975 thousand in the prior quarter[228] - The total loans outstanding as of September 30, 2021, reached $4.49 billion, compared to $3.37 billion on June 30, 2021[302] - Commercial real estate loans continued to represent the largest portion of the loan portfolio, comprising 40.2% of total loans as of September 30, 2021[306] - The company reported a decline in commercial and industrial loan balances due to $186.4 million in forgiveness proceeds from PPP loans during the second quarter[303] Interest Rate Management - Interest rate risk is managed by the Asset-Liability Committee (ALCO) to optimize net interest income while ensuring liquidity and capital adequacy[345] - Estimated increase in net interest income of $26,191 thousand (12.5%) is projected with a 300 basis points increase in interest rates[348] Nonperforming Loans and Assets - Nonperforming loans as a percent of total loans increased to 0.92% in Q3 2021 from 0.84% in Q3 2020[187] - Total nonperforming loans ("NPLs") reached $41.4 million as of September 30, 2021, up from $26.8 million at June 30, 2021, representing a 54% increase[321] - Nonperforming assets increased by $25.6 million, or 95%, compared to June 30, 2021, primarily due to nonperforming loans and other real estate owned acquired from Premier[324]

Financial Data and Key Metrics Changes - The company reported a net loss of $5.8 million or $0.28 per diluted share for Q3 2021, with anticipated reduced earnings due to acquisition-related costs and provisions for credit losses [13] - Total revenue increased at an annualized rate of 26% compared to the linked quarter, with net interest income improving by 7% compared to the linked quarter and 21% over the prior year quarter [12][24] - The common equity Tier 1 ratio improved by 72 basis points to 12.1%, and the total risk-based capital ratio increased by 84 basis points to 13.6% compared to June 30 [12][46] Business Line Data and Key Metrics Changes - The premium finance and leasing divisions both experienced over 60% annualized growth in loan and lease balances compared to the linked quarter [10][20] - Fee-based income from leasing division added $716,000 year-to-date, with trust and investment income up 22% and insurance income up 9% compared to 2020 [11][32] - The total loan portfolio grew by 33% compared to the linked quarter, driven by the Premier acquisition, with acquired loans totaling $1.1 billion [19] Market Data and Key Metrics Changes - The loan-to-deposit ratio declined to 77% at September 30, and the company experienced a seasonal increase in governmental deposits, which is expected to run off during the fourth quarter [12][43] - The company anticipates that line of credit utilization rates will continue to recover after bottoming out during the first quarter of the year [22] Company Strategy and Development Direction - The company aims to leverage the Premier acquisition to enhance interactions between lines of business and expand its footprint [7][48] - Future growth strategies include introducing insurance and investment products in new markets and exploring non-bank acquisitions to support the insurance and investment businesses [96] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the credit quality of acquired loans and anticipates improvements in credit metrics over time [60] - The company expects net interest margin to grow and settle between 3.5% and 3.6% for Q4 2021, with loan growth anticipated at 4% to 6% annualized [51] Other Important Information - The company incurred one-time expenses of $16.5 million for the quarter related to the acquisition, impacting diluted earnings per share significantly [13][35] - The investment portfolio grew by nearly 50% from the linked quarter end due to acquired investments, with an investments-to-total-assets ratio of 22% [40][41] Q&A Session Summary Question: Concerns about credit metrics and quality post-acquisition - Management is comfortable with the credit quality of acquired loans and believes they can align with historic performance [60] Question: Steady state reserve expectations - Management indicated that reserves will likely decrease as credit quality improves, with current levels elevated due to the Premier acquisition [64] Question: Loan pipeline strength and pricing - The company sees strong production across various sectors, with stable pricing and no significant pressure on loan pricing [70][71] Question: Capital deployment capacity - Management does not foresee share repurchases at current prices but is open to non-bank acquisitions to enhance business lines [73] Question: Operating expense guidance and personnel costs - The company has budgeted for a merit pool of 3.75% and has seen lower turnover rates compared to the previous year [84] Question: NIM outlook and drivers - Management expects NIM to be impacted by the mix of higher-margin products and cash deployment from the Premier acquisition [106] Question: Fee income growth opportunities - The company sees potential in treasury management and leasing opportunities to drive fee income growth [111]

Financial Performance - Total interest income for Q2 2021 was $42,797,000, an increase of 6.35% from $39,306,000 in Q2 2020[165] - Net income for the first six months of 2021 reached $25,566,000, significantly up from $3,984,000 in the same period of 2020, representing a 540.4% increase[165] - Peoples recorded net income of $10.1 million for Q2 2021, down from $15.5 million in Q1 2021, and up from $4.7 million in Q2 2020, with earnings per diluted share of $0.51[185] - For the first six months of 2021, net income was $25.6 million, or $1.31 per diluted common share, compared to $4.0 million, or $0.19 per diluted common share for the same period in 2020[186] Income and Expenses - Total non-interest income excluding net gains and losses increased to $33,413,000 for the first six months of 2021, up from $30,229,000 in 2020, marking an increase of 7.2%[165] - Total non-interest income for Q2 2021 decreased by $1.1 million, or 6%, compared to Q1 2021, but increased by $1.2 million, or 8%, from Q2 2020[191] - Total non-interest expense increased by $1.9 million, or 5%, for Q2 2021 compared to Q1 2021, and by $8.1 million, or 25%, compared to Q2 2020[193] - Core non-interest expense for Q2 2021 was $37.3 million, compared to $35.2 million in Q1 2021 and $30.6 million in Q2 2020[264] Asset and Liability Management - Total assets increased to $5,067,634,000 as of June 30, 2021, up from $4,985,819,000 a year earlier, reflecting a growth of 1.64%[165] - Total liabilities were $4.48 billion at June 30, 2021, up $297.0 million, or 8%, since December 31, 2020[198] - Total stockholders' equity increased to $585.5 million at June 30, 2021, an increase of $9.8 million compared to December 31, 2020[199] - The allowance for credit losses decreased to $47.9 million, or 1.42% of total loans, from $50.4 million, or 1.48%, at December 31, 2020[197] Credit Quality - The provision for credit losses showed a recovery of $(1,661,000) in the first half of 2021, compared to a provision of $28,803,000 in the first half of 2020[165] - Net charge-offs for Q2 2021 were $780,000, or 0.09% of average total loans annualized, compared to $1.1 million, or 0.13% in Q1 2021[189] - Nonperforming loans as a percentage of total loans remained stable at 0.79% for both Q2 2021 and Q2 2020[166] - The allowance for credit losses at June 30, 2021, is $47,942,000, representing 1.42% of total loans[299] Capital and Ratios - Common equity tier 1 capital ratio was 11.34% as of June 30, 2021, down from 13.30% in the previous year, indicating a decrease in capital strength[166] - The efficiency ratio for Q2 2021 was 68.64%, compared to 62.34% in Q2 2020, indicating a decrease in operational efficiency[166] - The return on average stockholders' equity improved to 8.89% for the first half of 2021, compared to 1.37% in the same period of 2020[166] - The return on average tangible equity ratio for the second quarter of 2021 was 12.49%, compared to 16.45% in the linked quarter, indicating a decline of about 24.0%[273] Mergers and Acquisitions - The company is currently integrating the recently-completed acquisition of NSL and is planning a merger with Premier, which may present challenges in terms of timing and execution[28]. - Peoples acquired NS Leasing for $118.8 million, including $83.3 million in leases, with preliminary goodwill of $25.2 million and other intangibles of $13.5 million[181] - The merger with Premier Financial Bancorp is valued at approximately $292.3 million and is expected to close in Q3 2021[181] Market Conditions and Risks - The ongoing impact of the COVID-19 pandemic continues to affect customer operations and financial conditions, influencing loan demand and credit risk[28]. - Changes in the interest rate environment due to economic conditions related to the COVID-19 pandemic may adversely impact interest margins and loan demand[28]. - The company faces competitive pressures from both financial and non-financial institutions, which may impact credit spreads and customer retention[28]. Deposits and Funding - The increase in deposits of $322.2 million was primarily driven by growth in non-interest-bearing checking accounts of $183.7 million[198] - Peoples recorded a net cash used in investing activities of $230.0 million, which was less than the total cash provided by financing and operating activities of $285.3 million and $38.7 million, respectively[278] - The company anticipates a decline in deposit balances over time as government stimulus funds are utilized, but expects this to be partially offset by PPP loan forgiveness[343] Interest Income and Margin - Net interest income for Q2 2021 was $39.7 million, an 11% increase from $35.6 million in Q1 2021 and a 14% increase from $34.9 million in Q2 2020[187] - Net interest margin improved to 3.45% in Q2 2021, up from 3.26% in Q1 2021 and 3.19% in Q2 2020, driven by leases acquired from NSL and PPP loan forgiveness[187] - Interest income from loans totaled $74,542,000 for the six months ended June 30, 2021, compared to $69,178,000 in the prior year, reflecting an increase of 7.5%[209] Operational Efficiency - The efficiency ratio for Q2 2021 was 68.6%, an improvement from 70.4% in Q1 2021, but higher than 62.3% in Q2 2020[195] - Pre-provision net revenue (PPNR) for Q2 2021 was $15.9 million, a decrease from $19.2 million in Q1 2021 and $17.8 million in Q2 2020[262] - The company emphasizes the importance of interest rate sensitivity and liquidity in its financial condition analysis[349]

Financial Performance - Total interest income decreased to $38,962,000 in Q1 2021 from $40,862,000 in Q1 2020, a decline of 4.66%[138] - Net income for Q1 2021 was $15,463,000, compared to a net loss of $765,000 in Q1 2020, representing a significant turnaround[138] - Non-interest income excluding net gains and losses rose to $17,266,000 in Q1 2021, up from $15,505,000 in Q1 2020, a growth of 11.35%[138] - Return on average stockholders' equity improved to 10.86% in Q1 2021 from a negative 0.52% in Q1 2020[139] - Net interest income was $35.6 million for Q1 2021, a 4% increase from $34.3 million in Q4 2020, and a 3% increase from $34.6 million in Q1 2020[158] - Net income for Q1 2021 was $15.463 million, down from $20.573 million in Q4 2020 and a loss of $0.765 million in Q1 2020[228] Loan and Asset Growth - Total loans increased to $3,409,676,000 in Q1 2021 from $2,911,437,000 in Q1 2020, an increase of 17.06%[138] - Total assets increased to $5.14 billion as of March 31, 2021, an 8% increase from $4.76 billion at December 31, 2020[165] - Total originated loans reached $2,946.9 million as of March 31, 2021, an increase from $2,881.5 million at December 31, 2020, primarily due to growth in commercial real estate and consumer indirect loans[239] - The total loan balance increased by $6.7 million from December 31, 2020, with commercial real estate balances rising by $35.4 million and commercial and industrial loans increasing by $8.1 million, excluding PPP loans[240] Credit Losses and Allowance - The allowance for credit losses increased to $44,897,000 in Q1 2021 from $42,833,000 in Q1 2020, reflecting a rise of 4.82%[138] - Peoples recorded a recovery of credit losses of $4.7 million in Q1 2021, compared to a recovery of $7.3 million in the previous quarter and a provision for credit losses of $17.0 million in Q1 2020[154] - The allowance for credit losses at March 31, 2021, was $44.9 million, representing 1.32% of total loans[256] - Net charge-offs for Q1 2021 were $1,051,000, representing 0.13% of average total loans on an annualized basis[262] Non-Interest Income and Expenses - Total non-interest income increased by $402,000, or 2%, compared to Q4 2020, and by $1.2 million, or 7%, compared to Q1 2020[161] - Total non-interest expense rose by $4.7 million, or 14%, compared to Q4 2020, and by $3.7 million, or 11%, compared to Q1 2020[162] - Total non-interest expense for Q1 2021 was $37,987,000, up 14% from Q4 2020[223] - Core non-interest expense for Q1 2021 was $35,235,000, reflecting a 9% increase from Q4 2020[223] Capital and Equity - The common equity tier 1 capital ratio decreased to 12.42% in Q1 2021 from 13.91% in Q1 2020[139] - The total stockholders' equity at the end of Q1 2021 was $578,893,000, down from $583,721,000 at the end of Q1 2020[138] - Tangible book value per common share increased to $20.12 as of March 31, 2021, up from $19.99 at December 31, 2020, primarily due to net income exceeding declared dividends[284] Mergers and Acquisitions - Peoples signed a definitive agreement to acquire Premier Financial Bancorp in an all-stock merger valued at approximately $292.3 million, expected to close in Q3 2021[154] - Peoples Bank acquired NS Leasing's equipment finance business for approximately $116.6 million, with an additional potential earnout of up to $3.1 million[154] Regulatory and Operational Aspects - The company is subject to regulation by various financial authorities, including the Federal Reserve and the FDIC[151] - Peoples operates 88 locations and 85 ATMs across multiple states, offering a range of financial products and services[151] Deposit and Liquidity Management - As of March 31, 2021, total deposits increased by $393.8 million, or 10%, compared to December 31, 2020, and by $905.8 million, or 27%, compared to March 31, 2020[272] - Non-interest-bearing deposits reached $1,206.0 million, up from $997.3 million at December 31, 2020, reflecting higher customer balances due to PPP loan proceeds and fiscal stimulus payments[271][272] - The company maintained $120.0 million in excess cash reserves at the FRB of Cleveland as of March 31, 2021, compared to $25.1 million at December 31, 2020[234] Interest Rate and Economic Sensitivity - The interest rate spread increased to 3.13%, up from 3.00% in the previous quarter, indicating better profitability on interest-earning assets[174] - Estimated increase in net interest income for a 300 basis point increase in interest rates is $20,996 thousand, representing a 15.8% increase from December 31, 2020[291] COVID-19 Impact and Relief Measures - Peoples provided relief solutions to borrowers during the COVID-19 pandemic, including forbearance and modifications[154] - At March 31, 2021, approximately $13.0 million of deferments were outstanding, with commercial loan deferments comprising about $12.0 million[254]

Loan Portfolio Composition - Peoples Bank's commercial loans represented approximately 59.0% of total loans as of December 31, 2020, compared to 55.2% as of December 31, 2019[26]. - The acquisition of Triumph Premium Finance added $84.7 million in loans at acquisition date, which grew to $114.8 million by December 31, 2020[21]. - Peoples Bank's portfolio of premium finance loans comprised 3.4% of total loans at December 31, 2020[38]. - Residential real estate loans made up 16.9% of total loans at December 31, 2020, down from 23.0% at December 31, 2019[39]. - Commercial and industrial loans comprised 28.6% of Peoples Bank's total loan portfolio at December 31, 2020, up from 23.1% at December 31, 2019[32]. - Peoples Bank's commercial real estate loans accounted for 27.3% of total loans at December 31, 2020, down from 29.0% at December 31, 2019[33]. - As of December 31, 2020, home equity lines of credit comprised 3.6% of Peoples Bank's total loans, down from 4.6% in 2019[43]. - Consumer indirect loans represented 14.8% of Peoples Bank's total loan portfolio at December 31, 2020, compared to 14.5% in 2019[46]. - Consumer direct loans accounted for 2.3% of Peoples Bank's total loan portfolio at December 31, 2020, down from 2.7% in 2019[48]. - At December 31, 2020, the unfunded commitment related to Overdraft Privilege was $50.1 million[49]. Financial Performance and Capital Management - The company authorized a share repurchase program for up to $30 million of its outstanding common shares, replacing a previous program of $40 million[20]. - Investment securities comprised 18.0% of Peoples Bank's total assets at December 31, 2020, down from 23.2% in 2019[50]. - Peoples Bank's primary sources of funds include interest-bearing and non-interest-bearing deposits, which are crucial for lending and investing activities[54]. - Peoples Bank utilizes short-term and long-term borrowings, including advances from the Federal Home Loan Bank, to manage liquidity needs[60]. - The Federal Reserve lowered the target range for the federal funds rate to 0% to 0.25% in response to COVID-19, which could negatively affect Peoples' net interest income and profitability[172]. - The Basel III Capital Rules require a minimum common equity tier 1 capital ratio of 4.5%, a tier 1 risk-based capital ratio of 6.0%, and a total risk-based capital ratio of 8.0%[107]. - Peoples Bank has fully phased in the Basel III Capital Rules as of January 1, 2019[106]. - To be considered "well capitalized," a bank must maintain a common equity tier 1 capital ratio of at least 6.5% and a tier 1 leverage ratio of at least 5.0%[118]. - The Federal Reserve Board restricts Peoples Bank from paying dividends that would reduce total capital below required minimum levels[121]. - Peoples Bank's ability to pay dividends may be further restricted if it needs to commit resources to support its banking subsidiaries[122]. Regulatory Environment - The Federal Reserve Board regulates Peoples as a financial holding company, requiring compliance with various capital and operational standards[74]. - The company is subject to extensive regulation, which may impact its ability to repurchase shares or pay dividends[73]. - Peoples Bank is subject to numerous federal and state laws aimed at protecting consumer privacy and financial information[127]. - The Anti-Money Laundering Act of 2020 aims to modernize U.S. bank secrecy and anti-money laundering laws, impacting compliance requirements for Peoples Bank[131]. - The Federal Reserve Board's monetary policies significantly affect the operating results of financial institutions, including Peoples Bank[134]. - Peoples Bank has established policies to comply with the USA Patriot Act, ensuring proper identification procedures for new accounts[132]. - The Federal Reserve Board issued a final rule effective January 1, 2020, allowing community banks to calculate a simple leverage ratio if they meet certain requirements[114]. - The regulatory capital treatment of credit loss allowances under the CECL model allows for a phased-in approach over three years to mitigate adverse effects on regulatory capital[115]. - The Federal Reserve Board and other regulatory agencies have adopted safety and soundness guidelines to manage risks and exposures in banking operations[119]. Impact of COVID-19 - The COVID-19 pandemic has negatively impacted the customers of Peoples, including businesses and individuals, due to various government and public actions[23]. - Peoples Bank continues to monitor legislative and regulatory developments related to COVID-19 response programs[98]. - During the COVID-19 pandemic, Peoples adapted by allowing remote work and providing paid time off for employees affected by the virus[69]. - The economic impact of COVID-19 has caused significant dislocation in the U.S., leading to increased unemployment and a slowdown in economic activity, which could adversely affect Peoples' business and financial condition[157]. - As of December 31, 2020, Peoples held and serviced PPP loans, with expectations that the majority of borrowers will seek loan forgiveness[158]. - The CARES Act provided $284.5 billion for new and expanded Paycheck Protection Program (PPP) loans to support eligible businesses during the COVID-19 pandemic[99]. - The PPP loans are guaranteed by the SBA and can be forgiven if certain conditions are met, with no collateral or personal guarantees required[99]. Employee and Community Engagement - As of December 31, 2020, Peoples had 894 full-time equivalent employees, a decrease from 900 in the previous year[65]. - Peoples has implemented a $15 minimum wage throughout the organization to enhance employee satisfaction and retention[65]. - The company emphasizes a culture of learning and provides various employee benefits, including wellness programs and a 401(k) program[66]. - Peoples is committed to community engagement through employee volunteering and donations[67]. Cybersecurity and Operational Risks - Peoples Bank employs a layered cybersecurity approach to protect sensitive data and manage risks associated with cyber threats[146]. - The company has security controls in place to prevent unauthorized access to its systems, but risks remain due to evolving cybersecurity threats[198]. - Peoples has not experienced any material losses from cyber-attacks to date, but the risk remains heightened due to the nature of these threats[201]. - Current and future restrictions on workforce access to facilities could adversely affect Peoples' ability to meet customer service expectations[188]. - Peoples has modified business practices in response to COVID-19, with a portion of employees working remotely to limit operational interruptions[189]. - Peoples maintains specific "cyber" insurance coverage, but the adequacy of this coverage may vary depending on breach scenarios[204]. - Peoples relies significantly on a single vendor for operational services, which poses risks related to cybersecurity and operational disruptions[208]. - Financial difficulties of third-party providers could materially adversely affect Peoples' operations if services are delayed or terminated[210]. Interest Rate and Economic Risks - A transition away from LIBOR as a reference rate could negatively impact Peoples' income and expenses, as LIBOR is widely used in financial contracts[174]. - The transition from LIBOR could create considerable costs and additional risk for Peoples, as many loans and financial instruments are dependent on LIBOR[178]. - Peoples' securities portfolio has LIBOR exposure in the agency collateralized mortgage obligation sector, which will be monitored during the transition[179]. - Peoples has implemented a LIBOR Change Committee to ensure an orderly transition away from LIBOR by the end of 2021[179]. - Changes in economic and political conditions, including inflation and recession, could adversely affect Peoples' earnings, capital, and loan demand[163].

Financial Data and Key Metrics Changes - The company reported record quarterly net income with diluted EPS of $1.05 in Q4 2020, compared to $0.51 in the linked quarter and $0.72 in Q4 2019 [7] - For the full year 2020, diluted EPS was $1.73, down from $2.63 in 2019 [7] - The company achieved positive operating leverage for the full year 2020 compared to 2019, meaning revenue growth outpaced expense growth [8] - The provision for credit losses totaled $26.3 million for 2020, with a recovery of $7.3 million recognized in Q4 [9][10] Business Line Data and Key Metrics Changes - The company’s PPP loan balances declined by $94 million or 20% from September 30, 2020, with $3.7 million of interest income recognized from PPP loans in Q4 [8][9] - New deposit accounts associated with PPP clients totaled nearly $15 million, with $35 million in loans [9] - The loan portfolio saw a 2% decline from September 30, 2020, primarily due to the forgiveness of PPP loans [19] Market Data and Key Metrics Changes - The company noted improvements in economic forecasts, with a 2% improvement in U.S. unemployment and a 3% improvement in Ohio GDP compared to previous forecasts [9] - The delinquency rate improved, with 98.9% of the total loan portfolio considered current at the end of December 2020, compared to 98.6% at the end of 2019 [16] Company Strategy and Development Direction - The company aims for low single-digit loan growth in 2021, excluding PPP loans, contingent on continued economic improvement [40] - The management expressed optimism about potential acquisitions within their footprint and emphasized a commitment to maintaining capital levels while considering stock buybacks [55][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant impact of the COVID-19 pandemic on operations and expressed confidence in the resilience of their business model [6] - The company anticipates higher expenses in Q1 2021 due to seasonal factors but remains optimistic about loan growth based on early indicators [40] - Management expects to see a stabilization in charge-offs, projecting them to remain flat year-over-year in 2021, depending on economic recovery and vaccination progress [81] Other Important Information - The company repurchased $4.3 million in shares during Q4 2020, totaling nearly $30 million for the year [36] - The allowance for credit losses stood at 1.48% of total loans at December 31, 2020, a reduction from 1.67% at September 30, 2020 [37] Q&A Session Summary Question: What is the trend for PPP forgiveness? - Management indicated that approximately 31% of the PPP loans have been forgiven as of the call, with expectations for most of the first batch to be forgiven in Q1 and Q2 2021 [45] Question: What are the expectations for net charge-offs in 2021? - Management believes charge-offs may remain flat year-over-year, with a potential return to more normal levels in the 20 to 30 basis points range, depending on economic conditions [81] Question: What are the capital priorities for 2021? - The company remains committed to dividends and is optimistic about acquisitions, while expecting less buyback activity compared to 2020 [55]

Financial Data and Key Metrics Changes - The company reported diluted EPS of $0.51 for Q3 2020, up from $0.23 in the linked quarter but down from $0.70 for the first nine months of 2020 compared to $1.91 for the same period in 2019 [12] - Noncore items during the quarter included acquisition-related expenses of $1.3 million, additional income tax expense of $575,000, pension settlement charges of $531,000, and COVID-related costs of $148,000, which collectively impacted diluted EPS negatively [12][13] - The provision for credit losses declined by $7.1 million compared to the linked quarter, reflecting an improved economic outlook [17] Business Line Data and Key Metrics Changes - The company completed the acquisition of a premium finance company, which is expected to generate additional growth [12] - The total loan portfolio, excluding PPP and premium finance loans, remained relatively flat compared to the linked quarter, with a record growth of 37% annualized in consumer indirect loans [31] - Commercial loan balances decreased by $9.3 million compared to June 30, 2020, due to payoffs and low utilization rates of commercial lines of credit [31][32] Market Data and Key Metrics Changes - The company had $460 million in PPP loan balances at the end of September, with a small amount of growth during the quarter [14] - New deposit accounts totaled $50 million, with $24 million of loans related to PPP clients, indicating successful cross-selling efforts [16] Company Strategy and Development Direction - The company aims to expand its premium finance business and capitalize on market opportunities created by competitor branch closures [35][80] - Management is focused on reducing ongoing costs through organizational changes, resulting in approximately $2 million in annual savings starting October 1, 2020 [33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the credit outlook, noting low delinquency rates and minimal credit deterioration despite the pandemic [72][55] - The company anticipates slight compression in net interest margin due to the low rate environment but expects to maintain core margin stability [69][86] Other Important Information - The allowance for credit losses stood at 1.67% of total loans at quarter end, reflecting a 7% increase compared to the linked quarter [52] - The company has been actively supporting communities, raising over $300,000 for food banks [54] Q&A Session Summary Question: How did the margin hold up relative to expectations? - Management indicated that the margin held up well on a core perspective, with slight pressure expected due to PPP loans and lower accretion income [63] Question: What industries saw downgrades in credit? - Downgrades were primarily in the hotel and construction sectors, with specific concerns about one hotel operator [66] Question: What is the credit outlook? - Management feels optimistic about credit performance, noting strong consumer credit quality and low delinquency rates [72] Question: What is the current status of PPP forgiveness applications? - The company has submitted $62.2 million in forgiveness requests, representing 11.1% of the total [95][101]

Financial Data and Key Metrics Changes - The company reported net income of $4.7 million for Q2 2020, or $0.23 per diluted share, compared to $4 million or $0.19 per diluted share for the first six months of 2020 [16] - The provision for credit losses was $11.8 million in Q2 2020, down from $17 million in the linked quarter and up from $626,000 in the prior year [17] - The return on average assets for Q2 was 40 basis points, compared to negative 7 basis points in the linked quarter and 91 basis points in the prior year [21] - The efficiency ratio improved to 62.34% compared to 66.64% in the linked quarter and 73.24% in the prior year [24] Business Line Data and Key Metrics Changes - Consumer indirect lending saw a significant annualized growth of 31% compared to the linked quarter [12] - Total non-interest income, excluding gains and losses, grew 3% compared to the linked quarter, with notable performance in commercial loan swap fees [13] - Core deposit growth, excluding CDs, was 16% compared to March 31, 2020 [14] Market Data and Key Metrics Changes - The company closed nearly $500 million in loans under the Paycheck Protection Program (PPP), with approximately 40% of these loans going to new clients [10] - The commercial line of credit utilization rate declined from approximately 50% to 37% at the end of June [31] - Total deposits increased by 15% compared to the linked quarter and 17% compared to the prior year second quarter [66] Company Strategy and Development Direction - The company is focused on expanding commercial and consumer lending activity and has successfully cross-sold financial products to new clients [10] - The acquisition of a premium finance company was completed, which is expected to complement the current business structure and offer additional services [15][82] - The management emphasized the importance of maintaining a strong capital position and liquidity management during the economic uncertainty caused by COVID-19 [74] Management's Comments on Operating Environment and Future Outlook - Management noted that the economic outlook remains uncertain due to the ongoing effects of the COVID-19 pandemic, and they will not provide financial expectations for the foreseeable future [83] - The company is optimistic about the potential for loan forgiveness under the PPP, estimating that 80-85% of the loans could be forgiven within the calendar year [92] - Management expressed confidence in the stability of their credit quality despite the economic challenges [37][110] Other Important Information - The company donated $250,000 to local food banks and pantries during the quarter, reflecting its commitment to community support [81] - The allowance for credit losses increased to 1.62% of gross loans compared to 1.47% in the linked quarter [77] Q&A Session Summary Question: Can you expand on the deferred personnel costs related to PPP loans? - The deferred personnel costs are not a structural reduction in expenses but are amortized over the life of the loans originated [89] Question: What is the expected timing and percentage of PPP loan forgiveness? - The company anticipates that 80-85% of the PPP loans will be forgiven, but the timing is uncertain due to the lack of clarity in the forgiveness process [92] Question: Can you discuss the decision to continue share buybacks? - The company believes its stock is undervalued and will continue to analyze stock purchases while maintaining high capital levels [96] Question: What are the underlying assumptions for GDP and unemployment in your CECL model? - The assumptions include U.S. unemployment at 9.68%, Ohio unemployment at 10.34%, and Ohio GDP growth at 4.51% [125]

Financial Data and Key Metrics Changes - The company reported a loss of $0.04 per share for Q1 2020, significantly impacted by COVID-19 and related economic conditions [5][13] - Net charge-off rate was 7 basis points for the quarter, with total provision for credit losses amounting to $17 million, affecting diluted EPS by $0.65 [12][13] - Return on average assets was a negative 7 basis points, with a pre-tax pre-provision return on average assets of 1.5% [16] Business Line Data and Key Metrics Changes - Loan growth was 5% annualized compared to the linked quarter, primarily driven by construction, commercial, and residential real estate loans [20] - Commercial lending modifications totaled approximately $500 million, with consumer loan relief solutions also being offered [9][10] - Core deposit growth was 7% from the linked quarter, with a notable increase in non-interest-bearing deposits [35] Market Data and Key Metrics Changes - The company approved 2,432 PPP loans totaling $426 million, with expectations of continued demand once additional funding is available [7] - The company was selected by JobsOhio for a loan program aimed at aiding small businesses, providing a 90% guarantee on the first $25 million of increased exposure [8] Company Strategy and Development Direction - The company announced an acquisition of a premium finance company with approximately $100 million in assets, aimed at diversifying product offerings [4] - Management emphasized the importance of maintaining a diversified revenue stream, which includes insurance and fee-based businesses [27][47] - The company plans to continue supporting clients through loan modifications and relief programs during the pandemic [6][48] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the pandemic but expressed confidence in the stability of their loan portfolio due to diversified exposure [17][48] - The company anticipates a net interest margin between 3.3% and 3.45% for the latter part of 2020, with total non-interest expense projected between $33 million and $34 million per quarter [49] - Future loan growth is expected to be between 0% and 2% for 2020, with potential for improvement in the latter half of the year [49] Other Important Information - The company implemented the CECL accounting standard, resulting in a significant increase in the allowance for credit losses [41][43] - The company maintained a strong capital position with a Tier 1 capital ratio of 14.1% and tangible equity to tangible assets ratio of 9.5% [38] Q&A Session Summary Question: Key assumptions for reserve calculations - Management used Moody's baseline scenario, projecting US unemployment to rise to approximately 8.66% and Ohio GDP to drop by 3% [57] Question: Aggregate number for stressed industries - Approximately $612 million of the loan portfolio is in industries considered vulnerable, with a significant portion in stable franchises like McDonald's [59][60] Question: Near-term operating expense run rate - Expected operating expenses are projected to be between $33 million and $34 million per quarter for the remainder of the year [70][73] Question: Clarification on deferrals - The $500 million in deferrals primarily pertains to commercial loans, with consumer loan deferrals totaling about $46 million [80] Question: Impact of PPP on income - The company expects to earn approximately $13 million in pre-tax income from the PPP program, primarily from origination fees [82][83] Question: Internal stress testing assumptions - Management indicated that potential aggregate loss rates are projected to be in the high single-digits under stressed scenarios [86]

Financial Data and Key Metrics Changes - For the full year 2019, net income increased by 16% and diluted earnings per share (EPS) rose by 9%, resulting in record EPS of $2.63 [11][13] - The reported return on average assets improved by eight basis points to 1.27%, while the adjusted basis increased by ten basis points to 1.42% [11] - Non-interest income, excluding net gains and losses, grew by 13%, comprising 32% of total revenue compared to 31% in 2018 [12][40] - The efficiency ratio improved, with a 59 basis point decline in the reported efficiency ratio and a 23 basis point decline in the adjusted efficiency ratio [12] Business Line Data and Key Metrics Changes - Organic loan growth for the fourth quarter was 4%, primarily driven by commercial and industrial loans, while construction and indirect consumer loans saw declines [20][21] - For the full year, organic loan growth was only 1%, heavily impacted by payoffs, despite a 37% increase in production [22][23] - Non-interest income from electronic banking, trust and investments, and mortgage banking all saw increases compared to the linked quarter [10][36] Market Data and Key Metrics Changes - Core deposits, excluding CDs, declined by 1% from the linked quarter but increased by 13% compared to December 31, 2018 [49] - Demand deposits as a percentage of total deposits grew to 40% at quarter-end, compared to 39% at the linked quarter [50] - Average total deposits grew by 11% year-to-date, primarily due to the First Prestonsburg acquisition [51] Company Strategy and Development Direction - The company plans to continue investing in technology and enhancing its service offerings, including the recent acquisition of a small insurance agency [17][60] - The target for loan growth in 2020 is set at 5% to 7%, with expectations for increased credit costs due to the implementation of new accounting guidance [61][62] - The company aims to maintain a target efficiency ratio between 60% and 62% for 2020 while actively seeking quality acquisition opportunities [64] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about stabilizing net interest margins in early 2020, with improvements expected as the year progresses [11][28] - The competitive environment remains challenging, with increased aggressiveness in pricing among competitors due to low loan growth [80] - Management anticipates that the historically low charge-off levels are not sustainable and expects an increase in credit costs [61] Other Important Information - The company closed three branch locations in 2019, with two closures occurring in the fourth quarter [16] - The implementation of the new CECL accounting standard is expected to increase the allowance for credit losses significantly [54][57] Q&A Session Summary Question: Guidance on margin and security yields - Management indicated that the margin guidance of $3.55 to $3.65 assumes a pickup in core margin and normalization in accretion [69][70] Question: Loan growth expectations - Production in commercial lending increased by 37% in 2019, but payoffs also rose significantly, impacting overall growth [78] Question: Competitive environment changes - Management noted that the competitive landscape remains similar, with increased aggressiveness in pricing due to low loan growth [80] Question: Technology investments and efficiency - The company plans to continue enhancing its technology capabilities while looking for efficiencies to offset costs [82][84]