PEOPLES BANCORP INC. ANNOUNCES FIRST QUARTER 2023 RESULTS

MARIETTA, Ohio, April 25, 2023 /PRNewswire/ -- Peoples Bancorp Inc. ("Peoples") (Nasdaq: PEBO) today announced results for the three months ended March 31, 2023. Peoples reported net income of $26.6 million for the first quarter of 2023, representing earnings per diluted common share of $0.94. In comparison, Peoples reported earnings per diluted common share of $0.95 for the fourth quarter of 2022, and of $0.84 for the first quarter of 2022.

The provision for (recovery of) credit losses recorded represents the amount needed to maintain the appropriate level of the allowance for credit losses based on management's quarterly estimates. The provision for credit losses negatively impacted earnings per diluted common share by $0.05 for the first quarter of 2023, compared to $0.06 for the fourth quarter of 2022, while the release of provision positively impacted earnings per diluted common share by $0.18 for the first quarter of 2022.

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 $0.05 for the first quarter of 2023, $0.03 for the fourth quarter of 2022, and $0.04 for the first quarter of 2022.

"We are very pleased with our results for the first quarter of 2023. We are above well capitalized levels, even if we included our accumulated other comprehensive loss on our available-for-sale portfolio and unrealized losses on our held-to-maturity investment portfolio. Net interest margin was 4.53%, an improvement of 9 basis points compared to the linked quarter." said Chuck Sulerzyski, President and Chief Executive Officer. "Our return on average assets continued to be strong at 1.49%, and our tangible equity to tangible assets ratio improved 41 basis points to 7.08% when compared to at year-end. We continue to be optimistic about our ability to grow earnings and assets, while maintaining or improving credit quality."

Investment Portfolio Restructuring:
During the first quarter of 2023, Peoples executed the sale of $96.7 million of its lower yielding available-for-sale securities for an after-tax loss of $1.6 million. Proceeds from the sale were used to pay down overnight borrowings. The loss on the sale of these available-for-sale securities had a nominal impact on tangible book value as such loss was previously reflected in capital through accumulated other comprehensive loss. The realized losses recognized due to these transactions are projected to be earned back within the 2023 fiscal year.

Limestone Acquisition:
On October 25, 2022, Peoples announced the signing of a definitive Agreement and Plan of Merger pursuant to which Peoples will acquire, in an all-stock merger, Limestone Bancorp Inc. ("Limestone"), a bank holding company headquartered in Louisville, Kentucky, and the parent company of Limestone Bank. Under the terms of the Agreement and Plan of Merger, Limestone will merge with and into Peoples, and Limestone Bank will subsequently merge with and into Peoples' wholly-owned subsidiary, Peoples Bank (collectively, the "Limestone Merger"), in a transaction valued at approximately $208.2 million at the time of the announcement. The Limestone Merger is expected to close on April 30, 2023, as all regulatory and shareholder approvals have been received. As of March 31, 2023, Peoples had recognized $1.0 million in acquisition-related expenses associated with this pending transaction.

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

Statement of Operations Highlights:

• Net interest income increased $2.3 million, or 3%, compared to the linked quarter and increased $18.6 million, or 34%, compared to the first quarter of 2022.
• Net interest margin increased 9 basis points to 4.53% for the first quarter of 2023, compared to 4.44% for the linked quarter and increased 112 basis points compared to 3.41% for the first quarter of 2022.
• The increase in net interest margin compared to the linked quarter was driven by increases in market interest rates, by a change in the loan portfolio mix, and by recent purchases of higher yielding investment securities.
• The increase in net interest income for the first quarter of 2023 compared to the first quarter of 2022 was driven by increases in market interest rates and a full quarter of income from Vantage in the first quarter of 2023 compared to only one month of income in the first quarter of 2022.
• Peoples recorded a provision for credit losses of $1.9 million for the first quarter of 2023, compared to $2.3 million for the fourth quarter of 2022, and a recovery of credit losses of $6.8 million for the first quarter of 2022.
• The provisions for credit losses in the first quarter of 2023 and the linked quarter were largely attributable to a deterioration of macro-economic conditions and an increase in charge-off activity, partially offset by a reduction in reserves for individually analyzed loans. The recovery of credit losses in the first quarter of 2022 was attributable to an improvement in economic factors and loss drivers within the current expected credit loss ("CECL") model.
• Net charge-offs were $1.5 million, or 0.13% of average total loans annualized, for the first quarter of 2023, compared to $2.1 million, or 0.18%, for the linked quarter and $1.9 million, or 0.17%, for the first quarter of 2022.
• Total non-interest income, excluding net gains and losses, increased $1.7 million, or 9%, compared to the linked quarter, and increased $1.2 million, or 6%, compared to the first quarter of 2022.
• The increase in non-interest income, excluding gains and losses, when compared to the fourth quarter of 2022 was largely driven by increased insurance income due to seasonal performance-based commissions being earned in the first quarter of each year.
• Total non-interest income, excluding net gains and losses, for the first three months of 2023 was 23% of total revenue.
• Total non-interest expense increased $3.1 million, or 6%, compared to the linked quarter and increased $4.9 million, or 9%, compared to the first quarter of 2022.
• The increase in total non-interest expense for the first quarter of 2023 when compared to the linked quarter was primarily attributable to an increase in salaries and employee benefit costs due to anticipated annual expenses that occur in the first quarter of each year including annual merit increases, stock-based compensation expenses attributable to retirement-eligible employees and health savings account ("HSA") contributions.
• For the first quarter of 2023, the efficiency ratio was 57.8%. When adjusted for non-core items, the efficiency ratio was 57.2% for the first quarter of 2023.

Balance Sheet Highlights:

• Period-end total loan and lease balances increased $52.6 million, or 4% annualized, compared to December 31, 2022. Average total loan and lease balances for the three months ended March 31, 2023 increased $49.2 million compared to the three months ended December 31, 2022.
• The increases in period-end and average total loan and lease balances were primarily the result of growth in (i) other commercial real estate, (ii) indirect consumer loans and (iii) leases.
• Asset quality metrics remained stable during the quarter.
• Delinquency trends remained steady as loans considered current comprised 98.8% of the loan portfolio at March 31, 2023, compared to 98.6% at December 31, 2022.
• Nonperforming assets decreased $2.4 million compared to December 31, 2022. The decrease was primarily attributable to a reduction in nonaccrual residential real estate loans and other commercial real estate loans, mostly offset by an increase in nonperforming leases.
• Criticized loans increased $7.6 million during the first quarter of 2023. The increase was primarily driven by the downgrades of three commercial and industrial relationships.
• Classified loans increased $3.7 million during the first quarter of 2023. The increase was primarily driven by a downgrade of a commercial and industrial relationship.
• Period-end total deposit balances at March 31, 2023 increased $71.6 million, or 1%, compared to at December 31, 2022.
• The increase was driven by an increase in total certificates of deposits balances.
• The percentages of retail deposit balances and commercial deposit balances of the total deposit balance at March 31, 2023 were 75% and 25%, respectively, compared to 74% and 26%, respectively, at December 31, 2022.
• Total demand deposit balances were 46% and 48% of total deposit balances at March 31, 2023 and at December 31, 2022, respectively.
• Total loan balances were 82% of total deposit balances at both March 31, 2023 and December 31, 2022.
• At March 31, 2023, 32% of our deposit balances exceeded the FDIC insurance limit of $250,000 compared to 33% at December 31, 2022. Peoples pledges investment securities against certain governmental deposit accounts, which collateralized $698.9 million of the uninsured deposit balances at March 31, 2023.

Net Interest Income:
Net interest income was $72.9 million for the first quarter of 2023, an increase of $2.3 million, or 3%, compared to the linked quarter. Net interest margin was 4.53% for the first quarter of 2023, compared to 4.44% for the linked quarter. The increases in net interest income and net interest margin were driven by 50 basis points of improvement in loan yields due to recent increases in market interest rates and a shift in the composition of the loan portfolio into higher-yielding leases, and 41 basis points of improvement in investment yields when compared to the linked quarter due to purchases of investment securities with higher interest rates and sales of lower-yielding investment securities.

Net interest income for the first quarter of 2023 increased $18.6 million, or 34%, compared to the first quarter of 2022. Net interest margin increased 112 basis points compared to 3.41% for the first quarter of 2022. The increase in net interest income compared to the first quarter of 2022 was driven by increases in market interest rates and a full quarter of income from the Vantage acquisition.

Accretion income, net of amortization expense, from acquisitions was $2.0 million for the first quarter of 2023, $2.2 million for the fourth quarter of 2022 and $2.7 million for the first quarter of 2022, which added 13 basis points, 14 basis points and 17 basis points, respectively, to net interest margin. The decreases in accretion income for the first quarter of 2023 when compared to the linked quarter and the first quarter of 2022 were driven by less loan accretion due to lower pay-offs and less accretion from the merger with Premier Financial Bancorp, Inc. ("Premier") and the Vantage acquisition.

Provision for (Recovery of) Credit Losses:
The provision for credit losses was $1.9 million for the first quarter of 2023, compared to a provision for credit losses of $2.3 million for the linked quarter and a recovery of credit losses of $6.8 million for the first quarter of 2022. The provisions for credit losses in the first quarter of 2023 and the linked quarter were largely attributable to a deterioration of macro-economic conditions and an increase in charge-off activity, partially offset by a reduction in reserves for individually analyzed loans. The recovery of credit losses in the first quarter of 2022 was primarily due to an improvement in economic factors and loss drivers within the CECL model.

Net charge-offs for the first quarter of 2023 were $1.5 million, or 0.13% of average total loans annualized, compared to net charge-offs of $2.1 million, or 0.18% of average total loans annualized, for the linked quarter and net charge-offs of $1.9 million, or 0.17% of average total loans annualized, for the first quarter of 2022. For additional information on credit trends and the allowance for credit losses, see the "Asset Quality" section below.

Net Gains and Losses:
Net gains and losses include gains and losses on investment securities, asset disposals and other transactions, which are included in total non-interest income on the Consolidated Statements of Operations. The net loss realized during the first quarter of 2023 was $2.2 million, compared to a net loss of $0.5 million for the linked quarter, and a net gain of $3,000 for the first quarter of 2022. The net loss in the first quarter of 2023 was primarily due to the $2.0 million pre-tax net loss on the sale of the available-for-sale investment securities mentioned above. The net loss for the linked quarter was primarily due to net losses on repossessed assets and net losses on sales of investment securities.

Total Non-interest Income, Excluding Net Gains and Losses:
Total non-interest income, excluding net gains and losses, for the first quarter of 2023 increased $1.7 million compared to the linked quarter. The increase in non-interest income, excluding net gains and losses, was due to a $1.7 million increase in insurance income due to seasonal performance-based commissions being earned in the first quarter of each year.

Compared to the first quarter of 2022, non-interest income, excluding net gains and losses, increased $1.2 million, primarily due to a $0.7 million increase in insurance income which was attributable to an increase in property and casualty insurance commissions.

Total Non-interest Expense:
Total non-interest expense increased $3.1 million, or 6%, for the three months ended March 31, 2023, compared to the linked quarter. The increase in total non-interest expense for the first quarter of 2023 was attributable to an increase in salaries and employee benefit costs. The increase in salaries and employee benefit costs was due to anticipated additional expenses typically recognized in the first quarter of each year. These expenses included annual merit increases, stock-based compensation expenses attributable to retirement-eligible employees, and HSA contributions.

Compared to the first quarter of 2022, total non-interest expense increased $4.9 million, or 9%, primarily due to increases in (i) salaries and employee benefit costs, (ii) data processing and software expense and (iii) other non-interest expense. The increases were due to growth, including through acquisitions. Partially offsetting these increases were decreases in electronic banking expense and professional fees.

The efficiency ratio for the first quarter of 2023 was 57.8%, compared to 56.7% for the linked quarter, and 66.8% for the first quarter of 2022. The increase in the efficiency ratio compared to the linked quarter was primarily due to the increases in non-interest expenses, which were partially offset by higher net interest income due to increases in the market interest rates. The decrease in the efficiency ratio compared to the prior year quarter was primarily due to a decrease in acquisition-related expenses. The efficiency ratio, adjusted for non-core items, was 57.2% for the first quarter of 2023, compared to 55.9% for the linked quarter and 64.8% for the first quarter of 2022. Peoples continues to focus on controlling expenses, while recognizing necessary costs in order to continue growing the business. 

Income Tax Expense: 
Peoples recorded income tax expense of $7.0 million with an effective tax rate of 21.0% for the first quarter of 2023, compared to income tax expense of $7.1 million with an effective tax rate of 21.0% for the linked quarter, and income tax expense of $6.0 million with an effective tax rate of 20.2% for the first quarter of 2022. Income tax expense for the first quarter of 2023, compared to the linked quarter, was relatively flat due to similar net income before income taxes. The increase in income tax expense for the three months ended March 31, 2023, compared to the three months ended March 31, 2022, was driven by a higher income before income taxes.

Investment Securities and Liquidity:
Peoples' investment portfolio primarily consists of available-for-sale investment securities reported at fair value and held-to-maturity investment securities reported at amortized cost. The available-for-sale investment securities balance at March 31, 2023 decreased $81.9 million and $252.3 million when compared to at December 31, 2022 and at March 31, 2022, respectively. The change in the balance from December 31, 2022 was due to management's decision to sell $96.7 million of its lower yielding securities during the first quarter of 2023. The change in the balance from March 31, 2022 was due to a reduction in market value of available-for-sale securities driven by the recent increases in market interest rates and the sales of the lower-yielding available-for-sale securities mentioned above. The balances of unrealized losses on available-for-sale investment securities recognized within accumulated other comprehensive loss were $112.7 million, $129.9 million and $61.2 million at March 31, 2023, at December 31, 2022 and at March 31, 2022, respectively.

The held-to-maturity investment securities balance at March 31, 2023 increased $133.9 million and $309.4 million when compared to at December 31, 2022 and at March 31, 2022, respectively. The increases were driven by purchases of agency mortgage-backed securities, agency collateralized mortgage obligations, and agency debentures. Most of the securities purchased during the first quarter of 2023 were classified as held-to-maturity, which has contributed to the reduction of available-for-sale securities as a percentage of the bond portfolio. Management purchased these securities to increase portfolio yield and reduce Peoples' sensitivity to falling intermediate and long-term interest rates. The balances of unrealized losses on held-to-maturity investment securities were $69.9 million, $80.6 million and $37.0 million at March 31, 2023, at December 31, 2022 and at March 31, 2022, respectively.

The duration of the investment portfolio as of March 31, 2023 was estimated to be 5.60 years. The duration of Peoples' investments is managed as part of its Asset Liability Management program, and has the potential to impact both liquidity and capital, as mismatches in duration may require a liquidation of investment securities at market prices to meet funding needs. These assets are one component of Peoples' liquidity profile, which is discussed in further detail below.

Peoples maintains a number of liquid and liquefiable assets, borrowing capacity, and other contingent sources of liquidity to ensure the availability of funds. At March 31, 2023, Peoples' had liquid and liquefiable assets of $550.2 million, which represented (i) cash and cash equivalents, (ii) unpledged government and agency investment securities and (iii) unpledged non-agency investment securities that could be liquidated. At March 31, 2023, Peoples had a borrowing capacity of $693.3 million available through the Federal Home Loan Bank ("FHLB"), the Federal Reserve Bank ('FRB"), and federal funds. Additionally at March 31, 2023, Peoples had other contingent sources of liquidity totaling $1.9 billion.  

Loans and Leases:
The period-end total loan and lease balances at March 31, 2023 increased $52.6 million, or 4% annualized, compared to at December 31, 2022. The increase in the period-end loan and lease balances was primarily driven by increases of (i) $57.5 million in other commercial real estate loans, (ii) $17.8 million in indirect consumer loans and (iii) $9.5 million in leases, partially offset by reductions of $14.6 million in construction loans and $10.8 million in residential real estate loans. At March 31, 2023, commercial real estate loans were 36.0% of the total loan and lease balance compared to 35.4% of the total loan and lease balance at December 31, 2022.

The period-end total loan and lease balances increased $212.6 million compared to at March 31, 2022. The increase in the period-end loan and lease balances was primarily driven by increases of $122.4 million in indirect consumer loans and $87.6 million in leases, partially offset by a reduction of $43.8 million in residential real estate loans. Commercial real estate loans were 37.3% of the total loan and lease balance at March 31, 2022.

Quarterly average loan and lease balances increased $49.2 million in the first quarter of 2023 compared to the linked quarter. The increase was driven by increases of $39.6 million, $27.7 million, and $17.5 million in other commercial real estate loans, indirect consumer loans, and leases, respectively. These increases were partially offset by decreases of $13.5 million in both residential real estate loans and premium finance loans. Compared to the first quarter of 2022, quarterly average loan and lease balances increased $226.5 million, driven by increases of $180.3 million and $116.6 million in leases and indirect consumer loans, respectively, partially offset by a decrease of $73.9 million in residential real estate loans.

Asset Quality:
Asset quality metrics remained stable during the quarter. Total nonperforming assets decreased $2.4 million, or 5%, compared to at December 31, 2022, and $4.6 million, or 10%, compared to at March 31, 2022. The decrease in nonperforming assets compared to the linked quarter was primarily attributable to a reduction in nonaccrual residential real estate loans and other commercial real estate loans, partially offset by an increase in past due leases. The decrease from the prior year quarter was driven by a reduction in nonaccrual other commercial real estate loans, partially offset by an increase in past due leases. Nonperforming assets as a percent of total loans and OREO were 0.90% at March 31, 2023, down from 0.96% at December 31, 2022 and 1.04% at March 31, 2022.

Criticized loans, which are those categorized as special mention, substandard or doubtful, increased $7.6 million and $8.6 million compared to at December 31, 2022 and at March 31, 2022, respectively. As a percent of total loans, criticized loans were 4.18% at March 31, 2023, compared to 4.07% at December 31, 2022 and 4.19% at March 31, 2022. The increase in the amount of criticized loans compared to at December 31, 2022 was primarily related to downgrades of three commercial and industrial relationships. Compared to at March 31, 2022, the increase in the amount of criticized loans was largely due to downgrades of six commercial and industrial relationships, partially offset by pay-downs and upgrades of purchased credit deteriorated ("PCD") loans acquired from Premier. Classified loans, which are those categorized as substandard or doubtful, increased $3.7 million and decreased $16.3 million compared to December 31, 2022 and March 31, 2022, respectively. As a percent of total loans, classified loans were 1.96% at March 31, 2023, compared to 1.90% at December 31, 2022, and 2.41% at March 31, 2022. The increase in classified loans compared to the linked quarter was driven by the downgrade of one commercial and industrial relationship. The decrease in classified loans when compared to the first quarter of 2022 was largely attributable to the upgrade of one larger acquired lodging-related loan from substandard to special mention, as well as pay-downs, including the pay-off of three larger commercial relationships that were acquired.

Annualized net charge-offs were 0.13% of average total loans for the first quarter of 2023, compared to 0.18% for the linked quarter and 0.17% for the prior year quarter, with the decrease relative to the linked quarter driven by lower charge-offs on leases, residential real estate loans and deposit account overdrafts, partially offset by increased charge-offs on indirect consumer loans. The decrease in net charge-offs during the current quarter versus the prior year quarter was primarily attributable to decreases in net charge-offs in (i) commercial and industrial loans, (ii) residential real estate loans, and (iii) other commercial real estate loans, partially offset by an increase in net charge-offs in indirect consumer loans.

At March 31, 2023, the allowance for credit losses was $53.3 million, compared to $53.2 million at December 31, 2022, and $54.8 million at March 31, 2022. The change in the allowance for credit losses compared to at March 31, 2022  was driven by decreases in the allowances for individually analyzed loans, offset by loan growth and deterioration in the economic forecast. The ratio of the allowance for credit losses as a percent of total loans was 1.12% at March 31, 2023, compared to 1.13% at December 31, 2022 and 1.20% at March 31, 2022.

Deposits:
As of March 31, 2023, period-end deposit balances increased $71.6 million, or 1%, compared to December 31, 2022. The increase was primarily driven by increases of $147.6 million in brokered certificates of deposits, which are primarily used as a source of funding, and $91.9 million in retail certificates of deposit. Excluding the increase in brokered certificates of deposits, total deposits at March 31, 2023 decreased $76.0 million when compared to at December 31, 2022 primarily due to reductions of (i) $75.0 million in interest-bearing deposit accounts, (ii) $43.9 million in savings accounts, (iii) $37.9 million in money market deposit accounts, and (iv) $34.3 million in non-interest bearing deposit accounts.

Period-end deposit balances decreased $214.4 million, or 4%, compared to March 31, 2022. Deposits decreased primarily due to reductions in non-interest-bearing deposits, interest-bearing demand deposit accounts, governmental deposit accounts, and money market deposit accounts of $111.6 million, $94.0 million, $85.5 million and $77.2 million, respectively, partially offset by an increase of $185.8 million in brokered certificates of deposits.

The percentages of retail deposit balances and commercial deposit balances of the total deposit balance at March 31, 2023 were 75% and 25%, respectively, compared to 74% and 26%, respectively, at December 31, 2022 and 72% and 28%, respectively, at March 31, 2022.

Uninsured deposits were 32%, 33%, and 35% of total deposits at March 31, 2023, December 31, 2022, and March 31, 2022, respectively. Uninsured amounts are estimated based on the portion of customer account balances that met or exceeded the FDIC limit of $250,000. Peoples pledges investment securities against certain governmental deposit accounts, which collateralized $698.9 million of the uninsured deposit balances at March 31, 2023.

Average deposit balances during the first quarter of 2023 decreased $60.8 million compared to the linked quarter. This decrease was driven by lower non interest-bearing deposits, partially offset by an increase in interest-bearing deposits. Compared to the first quarter of 2022, quarterly average deposits decreased $140.4 million, driven by decreases in both non interest-bearing deposits and interest-bearing deposits. Total demand deposit accounts comprised 46%, 48% and 47% of total deposits at March 31, 2023, December 31, 2022, and March 31, 2022, respectively.

Stockholders' Equity:
Total stockholders' equity at March 31, 2023 increased by $34.2 million compared to December 31, 2022, which reflected net income for the quarter of $26.6 million and a decrease in accumulated other comprehensive loss of $16.2 million, partially offset by dividends paid of $10.7 million. The change in accumulated other comprehensive loss was the result of the changes in the market value of available-for-sale investment securities during the period. Accumulated unrealized losses related to the available-for-sale investment securities portfolio were $112.7 million and $129.9 million at March 31, 2023 and December 31, 2022, respectively.

Total stockholders' equity at March 31, 2023 increased $11.2 million compared to at March 31, 2022, which was primarily due to net income of $104.3 million in the last twelve months partially offset by an increase in accumulated other comprehensive loss of $48.3 million. The increase in accumulated other comprehensive loss was the result of an increase of $51.5 million in unrealized losses related to the available-for-sale investment securities portfolio from March 31, 2022 to March 31, 2023.

At March 31, 2023, the tier 1 risk-based capital ratio was 12.49%, compared to 12.19% at December 31, 2022, and 11.80% at March 31, 2022. The common equity tier 1 risk-based capital ratio was 12.22% at March 31, 2023, compared to 11.92% at December 31, 2022, and 11.51% at March 31, 2022. The total risk-based capital ratio was 13.35% at March 31, 2023, compared to 13.06% at December 31, 2022, and 12.78% at March 31, 2022. Peoples adopted the five-year transition to phase in the impact of the adoption of CECL, effective January 1, 2020, on regulatory capital ratios. Compared to December 31, 2022 and March 31, 2022, these capital ratios improved due to net income during the first quarter of 2023, partially offset by dividends paid.

Book value per common share and tangible book value per common share, which excludes goodwill and other intangible assets, were $28.77 and $17.37, respectively, at March 31, 2023, compared to $27.76 and $16.23, respectively, at December 31, 2022, and $28.41 and $16.39, respectively, at March 31, 2022. The ratio of total stockholders' equity to total assets was 11.21% at March 31, 2023, compared to 10.90% at December 31, 2022, and 11.17% at March 31, 2022. The ratio increased from March 31, 2022 due primarily to net income over the last twelve months. The tangible equity to tangible assets ratio, which excludes goodwill and other intangible assets, was 7.08% at March 31, 2023, compared to 6.67% and 6.76% at December 31, 2022, and March 31, 2022, respectively. The ratios increased compared to at December 31, 2022 due to a reduction in accumulated other comprehensive loss. The ratios increased compared to at March 31, 2022 primarily due to net income over the last twelve months, partially offset by an increase in accumulated other comprehensive loss.

Peoples Bancorp Inc. ("Peoples", Nasdaq: PEBO) is a diversified financial services holding company that makes available a complete line of banking, trust and investment, insurance, premium financing and equipment leasing solutions through its subsidiaries. Peoples has been headquartered in Marietta, Ohio since 1902. Peoples had $7.3 billion in total assets as of March 31, 2023, and 130 locations, including 113 full-service bank branches in Ohio, West Virginia, Kentucky, Virginia, Washington D.C. and Maryland. Peoples' vision is to be the Best Community Bank in America.

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

Conference Call to Discuss Earnings:
Peoples will conduct a facilitated conference call to discuss first quarter 2023 results of operations on April 25, 2023 at 11:00 a.m., Eastern Daylight Time, with members of Peoples' executive management participating. Analysts, media and individual investors are invited to participate in the conference call by calling (866) 890-9285. A simultaneous webcast of the conference call audio will be available online via the "Investor Relations" section of Peoples' website, www.peoplesbancorp.com. Participants are encouraged to call or sign in at least 15 minutes prior to the scheduled conference call time to ensure participation and, if required, to download and install the necessary software. A replay of the call will be available on Peoples' website in the "Investor Relations" section for one year.

Use of Non-US GAAP Financial Measures:
This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the U.S. ("US GAAP"). Management uses these "non-US GAAP" financial measures in its analysis of Peoples' performance and the efficiency of its operations. Management believes that these non-US GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods and peers. Peoples also uses the non-US GAAP financial measures for calculating incentive compensation. These disclosures should not be viewed as substitutes for financial measures determined in accordance with US GAAP, nor are they necessarily comparable to non-US GAAP performance measures that may be presented by other companies. Below is a listing of the non-US GAAP financial measures used in this news release:

• Core non-interest expense is a non-US GAAP financial measure since it excludes the impact of acquisition-related expenses, pension settlement charges, and COVID-19-related expenses.
• The efficiency ratio is calculated as total non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income, excluding net gains and losses. This ratio is a non-US GAAP financial measure since it excludes amortization of other intangible assets and all gains and losses included in earnings, and uses fully tax-equivalent net interest income.
• The efficiency ratio adjusted for non-core items is calculated as core non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income, excluding net gains and losses. This ratio is a non-US GAAP financial measure since it excludes the impact of acquisition-related expenses, pension settlement charges, COVID-19-related expenses and the amortization of other intangible assets and all gains and losses included in earnings, and uses fully tax-equivalent net interest income.
• Tangible assets, tangible equity, the tangible equity to tangible assets ratio and tangible book value per common share are non-US GAAP financial measures since they exclude the impact of goodwill and other intangible assets acquired through acquisitions on both total stockholders' equity and total assets. 
• Total non-interest income, excluding net gains and losses, is a non-US GAAP financial measure since it excludes all gains and losses included in earnings.
• Pre-provision net revenue is defined as net interest income plus total non-interest income, excluding net gains and losses, minus total non-interest expense. This measure is a non-US GAAP financial measure since it excludes the provision for (recovery of) credit losses and all gains and losses included in net income.
• Return on average assets adjusted for non-core items is calculated as annualized net income (less the after-tax impact of all gains and losses, acquisition-related expenses, pension settlement charges, and COVID-19-related expenses) divided by average assets. This measure is a non-US GAAP financial measure since it excludes the after-tax impact of all gains and losses, acquisition-related expenses, pension settlement charges, and COVID-19-related expenses.
• Return on average tangible equity is calculated as annualized net income (less the after-tax impact of amortization of other intangible assets) divided by average tangible equity. This measure is a non-US GAAP financial measure since it excludes the after-tax impact of amortization of other intangible assets from net income and the impact of average goodwill and other average intangible assets acquired through acquisitions on average stockholders' equity.

A reconciliation of these non-US GAAP financial measures to the most directly comparable US GAAP financial measures is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)."

Safe Harbor Statement:
Certain statements made in this news release regarding Peoples' financial condition, results of operations, plans, objectives, future performance and business, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by the fact they are not historical facts and include words such as "anticipate," "estimate," "may," "feel," "expect," "believe," "plan," "will," "will likely," "would," "should," "could," "project," "goal," "target," "potential," "seek," "intend," "continue," "remain," and similar expressions.

These forward-looking statements reflect management's current expectations based on all information available to management and its knowledge of Peoples' business and operations. Additionally, Peoples' financial condition, results of operations, plans, objectives, future performance and business are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, but are not limited to:

As required by US GAAP, Peoples is required to evaluate the impact of subsequent events through the issuance date of its March 31, 2023 consolidated financial statements as part of Peoples' Quarterly Report on Form 10-Q to be filed with the SEC. Accordingly, subsequent events could occur that may cause Peoples to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.