PEOPLES BANCORP INC. ANNOUNCES THIRD QUARTER 2022 RESULTS

MARIETTA, Ohio, Oct. 25, 2022 /PRNewswire/ -- Peoples Bancorp Inc. ("Peoples") (Nasdaq: PEBO) today announced results for the quarter and nine months ended September 30, 2022.  Peoples reported net income of $26.0 million for the third quarter of 2022, representing earnings per diluted common share of $0.92.  In comparison, Peoples recognized earnings per diluted common share of $0.88 for the second quarter of 2022, and a loss per diluted common share of $0.28 for the third quarter of 2021.  For the nine months ended September 30, 2022, Peoples recorded net income of $74.4 million, or $2.65 per diluted common share, compared to $19.8 million, or $0.99 per diluted common share, for the nine months ended September 30, 2021.

The provision for (recovery of) credit losses recorded represents the amount needed to maintain the appropriate level of the allowance for credit losses based on management's quarterly estimates.  The provision for credit losses negatively impacted earnings per diluted share by $0.05 for the third quarter of 2022, and the release of provision positively impacted earnings per diluted share by $0.02 for the second quarter of 2022, while the provision for credit losses had a negative impact on earnings per diluted share of $0.34 for the third quarter of 2021.  For the first nine months of 2022, the release of provision positively impacted earnings per diluted share by $0.16, compared to a provision for credit losses that negatively impacted earnings per diluted share by $0.29 for the first nine months of 2021.

Non-core items, and the related tax effect of each, in net income primarily included acquisition-related and COVID-19-related expenses. Non-core items negatively impacted earnings per diluted common share by $0.01 for the third quarter of 2022, $0.02 for the second quarter of 2022, and $0.71 for the third quarter of 2021.  Non-core items negatively impacted earnings per diluted share by $0.07 and $0.98 for the nine months ended September 30, 2022 and 2021, respectively.

"We are very pleased with our results for the first nine months of 2022. Net income more than tripled, net interest margin was up 40 basis points and the efficiency ratio improved 23% compared to 2021, primarily due to our recent acquisitions and organic growth," said Chuck Sulerzyski, President and Chief Executive Officer.  "Our return on average assets improved to 1.45%, and our return on average stockholders' equity grew to 12.9% for the third quarter. We will continue our hard work to close out the year in a strong financial position." 

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

Premier Financial:
On September 17, 2021, Peoples completed its merger with Premier Financial Bancorp, Inc. ("Premier"), in which Peoples acquired, in an all-stock merger, Premier, a bank holding company headquartered in Huntington, West Virginia, and the parent company of Premier Bank, Inc. ("Premier Bank") and Citizens Deposit Bank and Trust, Inc. ("Citizens"). Under the terms and subject to the conditions of the definitive Agreement and Plan of Merger, dated March 26, 2021, Premier merged with and into Peoples (the "Premier Merger"), and Premier Bank and Citizens subsequently merged with and into Peoples Bank, in a transaction valued at $261.9 million as of September 17, 2021. At the close of business on September 17, 2021, the financial services offices of Premier Bank and Citizens became branches of Peoples Bank. Peoples acquired $1.1 billion in loans and $1.8 billion in deposits in the Premier Merger. In addition, Peoples recorded $66.9 million in goodwill and $4.2 million in other intangible assets in connection with the Premier Merger.

Statement of Operations Highlights:

• Net interest income increased $5.6 million, or 9%, compared to the linked quarter and increased $24.5 million, or 57%, compared to the third quarter of 2021.
• Net interest margin increased 33 basis points to 4.17% for the third quarter of 2022, compared to 3.84% for the linked quarter and increased 67 basis points compared to 3.50% for the third quarter of 2021.
• The increase in net interest margin compared to the linked quarter was primarily driven by recent increases in market interest rates.
• The increase in net interest income for the third quarter of 2022 compared to the third quarter of 2021 was driven by the Premier Merger and Vantage acquisition, core growth and the increases in market interest rates.
• Peoples recorded a provision for credit losses of $1.8 million for the third quarter of 2022, compared to a recovery of $0.8 million for the second quarter of 2022, and a provision for credit losses of $9.0 million for the third quarter of 2021.
• The provision for credit losses in the third quarter of 2022 was primarily due to a deterioration of macro-economic conditions, partially offset by a reduction in reserves for individually analyzed loans.
• Net charge-offs were $1.7 million, or 0.15% of average total loans annualized, for the third quarter of 2022, compared to $1.5 million, or 0.14%, for the linked quarter and $1.6 million, or 0.18%, for the third quarter of 2021.
• Total non-interest income, excluding net gains and losses, increased $0.8 million, or 4%, compared to the linked quarter, and increased $3.6 million, or 21.2%, compared to the third quarter of 2021.
• The increase in non-interest income, excluding gains and losses, when compared to the second quarter of 2022 was largely driven by increases in other non-interest income due to increased leasing income.
• Total non-interest income, excluding net gains and losses, for the first nine months of 2022 was 25% of total revenue.
• Total non-interest expense increased $2.4 million, or 5%, compared to the linked quarter and decreased $5.6 million, or 10%, compared to the third quarter of 2021.
• The increase in total non-interest expense for the third quarter of 2022 when compared to the linked quarter was primarily attributable to increases in (i) salaries and employee benefit costs, (ii) professional fees, (iii) marketing expense and (iv) data processing and software expense.
• For the third quarter of 2022, the efficiency ratio was 57.2%. When adjusted for non-core items, the efficiency ratio was 56.6% for the third quarter of 2022.

Balance Sheet Highlights:

• Period-end total loan and lease balances increased $35.3 million, or 3% annualized, compared to June 30, 2022. Average total loan and lease balances increased $22.3 million compared to June 30, 2022.
• The increases in period-end and average total loan and lease balances were primarily the result of growth in (i) indirect consumer loans, (ii) commercial and industrial loans, (iii) premium finance loans and (iv) construction loans, partially offset by a reduction in other commercial real estate loans.
• Excluding forgiveness received on Paycheck Protection Program ("PPP") loans, total loan and lease balances grew at a 4% annualized rate.
• Asset quality metrics remained stable during the quarter.
• Delinquency trends remained steady as loans considered current comprised 98.9% of the loan portfolio at September 30, 2022, compared to 98.8% at June 30, 2022.
• Nonperforming assets decreased $1.8 million compared to June 30, 2022. The decrease was primarily attributable to a reduction in nonaccrual other commercial real estate loans and residential real estate loans, mostly offset by an increase in nonperforming leases.
• Criticized loans decreased $16.6 million during the third quarter of 2022. The decrease was primarily driven by pay-downs and upgrades in the quarter.
• Classified loans decreased $20.6 million during the third quarter of 2022. The decrease was driven by the upgrade of one large commercial real estate loan and the pay-offs of two large commercial and industrial loans and one large commercial real estate loan.
• Period-end total deposit balances at September 30, 2022 decreased $63.6 million, or 1%, compared to June 30, 2022.
• The decrease was primarily driven by reductions in (i) retail certificates of deposits, (ii) money market deposits and (iii) non-interest bearing checking accounts.
• Total demand deposit balances were 48% and 47% of total deposit balances at September 30, 2022 and at June 30, 2022, respectively.
• Total loan balances were 79% and 77% of total deposit balances at September 30, 2022 and at June 30, 2022, respectively.

Net Interest Income:
Net interest income was $67.1 million for the third quarter of 2022, an increase of $5.6 million, or 9%, compared to the linked quarter.  Net interest margin was 4.17% for the third quarter of 2022, compared to 3.84% for the linked quarter.  The increase in net interest income and net interest margin was primarily driven by 32 basis points of improvement in loan yields and 17 basis points of improvement in investment yields when compared to the linked quarter due to the recent increases in market interest rates.

Net interest income for the third quarter of 2022 increased $24.5 million, or 57%, compared to the third quarter of 2021.  Net interest margin increased 67 basis points compared to 3.50% for the third quarter of 2021.  The increase in net interest income compared to the third quarter of 2021 was driven by (i) the Premier Merger and Vantage acquisition, (ii) organic growth and (iii) increases in market interest rates.

Accretion income, net of amortization expense, from acquisitions was $2.7 million for the third quarter of 2022, $3.9 million for the second quarter of 2022 and $1.0 million for the third quarter of 2021, which added 16 basis points, 25 basis points and 8 basis points, respectively, to net interest margin. The decrease in accretion income when compared to the linked quarter was driven by less loan accretion due to lower pay-offs and less accretion from the Premier Merger. The increase in accretion income for the current quarter compared to the third quarter of 2021 was a result of the acquisition of Vantage and a full quarter of accretion from the Premier Merger.

For the first nine months of 2022, net interest income increased $65.0 million, or 55%, compared to the first nine months of 2021, while net interest margin increased 40 basis points to 3.81%. The increase in net interest income was driven by (i) the Premier Merger and Vantage acquisition, (ii) organic growth and (iii) increases in market interest rates.

Accretion income, net of amortization expense, from acquisitions was $9.4 million for the nine months ended September 30, 2022, compared to $2.2 million for the nine months ended September 30, 2021, which added 20 and 6 basis points, respectively, to net interest margin. The increase in accretion income for the first nine months of 2022 compared to 2021 was a result of the Premier Merger and the acquisitions of Vantage and NS Leasing, LLC ("NSL").

Provision for (Recovery of) Credit Losses:
The provision for credit losses was $1.8 million for the third quarter of 2022, compared to a recovery of $0.8 million for the linked quarter and a provision for credit losses of $9.0 million for the third quarter of 2021.  The provision for credit losses in the third quarter of 2022 was largely attributable to a deterioration of macro-economic conditions, partially offset by a reduction in reserves for individually analyzed loans. The release of credit losses in the linked quarter was largely attributable to a reduction in reserves for individually analyzed loans. The provision for credit losses in the third quarter of 2021 was primarily due to the establishment of the allowance for credit losses of $11.0 million related to the loans acquired from Premier.

The recovery of credit losses during the first nine months of 2022 was $5.8 million, compared to a provision for credit losses of $7.3 million for the first nine months of 2021. The recovery of credit losses during the first nine months of 2022 was driven by improvements in economic forecasts, coupled with loan payoffs and sales during certain periods.  The provision for credit losses during the first nine months of 2021 was due to recording a provision for credit losses in connection with the Premier Merger of $11.0 million in order to establish an allowance for credit losses for non-purchased credit deteriorated loans of $10.6 million, and a liability for unfunded commitments of $0.4 million in the third quarter of 2021.

Net charge-offs for the third quarter of 2022 were $1.7 million, or 0.15% of average total loans annualized, compared to net charge-offs of $1.5 million, or 0.14% of average total loans annualized, for the linked quarter and net charge-offs of $1.6 million, or 0.18% of average total loans annualized, for the third quarter of 2021. Net charge-offs for the first nine months of 2022 were $5.1 million, or 0.15% of average total loans annualized, compared to net charge-offs of $3.4 million, or 0.13% annualized, for the first nine months of 2021. For additional information on credit trends and the allowance for credit losses, see the "Asset Quality" section below.

Net Gains and Losses:
Net gains and losses include gains and losses on investment securities, asset disposals and other transactions, which are included in total non-interest income on the Consolidated Statements of Operations.  The net loss realized during the third quarter of 2022 was $14,000, compared to net losses of $196,000 and $0.5 million for the linked quarter and the third quarter of 2021, respectively. The net loss for the linked quarter was attributable to a $119,000 loss recorded on repossessed assets coupled with a $44,000 loss on the sale of investment securities in order to reinvest into higher-yielding securities.

The net loss realized during the first nine months of 2022 was $207,000 compared to $1.2 million for the first nine months of 2021.  Net losses recognized in the first nine months of 2021 were primarily the result of a net loss of $0.7 million on the sales of available-for-sale investment securities in order to reinvest proceeds into higher-yielding investment securities and a net loss of $0.3 million on the disposal of fixed assets, primarily those acquired in the Premier Merger.

Total Non-interest Income, Excluding Net Gains and Losses:
Total non-interest income, excluding net gains and losses, for the third quarter of 2022 increased $0.8 million compared to the linked quarter.  The increase in non-interest income, excluding net gains and losses, was primarily impacted by an increase in other non-interest income due to an $1.3 million increase in lease income. Also impacting the third quarter increase was an increase of  $0.3 million in deposit account service charges primarily due to customer activity. Partially offsetting these increases in non-interest income, excluding net gains and losses, were declines of $0.3 million, $0.2 million, and $103,000 in trust and investment income, electronic banking income, and bank owned life insurance income, respectively. The decrease in trust and investment income was primarily due to lower market values of trust and investment assets managed. The decrease in electronic banking income was due to less customer activity than in the linked quarter. The lower bank owned life insurance income was primarily driven by $0.2 million recognized on a one-time death benefit during the linked quarter.

Compared to the third quarter of 2021, non-interest income, excluding net gains and losses, increased $3.6 million.  Lease income, deposit account service charges, and electronic banking income increased $1.7 million, $1.3 million, and $0.9 million, respectively. The increases in deposit account service charges and electronic banking income were primarily attributable to the acquired Premier accounts as well as increased customer activity in recent periods.

For the first nine months of 2022, total non-interest income, excluding gains and losses, increased $9.8 million, or 19%, compared to the first nine months of 2021. The increase was driven by growth of $4.2 million, or 64%, in service charges on deposit accounts, and $3.3 million, or 26%, in electronic banking income, primarily attributable to customers added in the Premier Merger. Also contributing to the growth was an increase in other non-interest income due to a $2.9 million increase in lease income. Partially offsetting the 2022 increase when compared to the same period in 2021 was an $1.6 million decline in mortgage banking income due to the increased market interest rate environment in the first nine months of 2022 and a lower volume of new loan originations.

Total Non-interest Expense:
Total non-interest expense increased $2.4 million, or 5%, for the three months ended September 30, 2022, compared to the linked quarter.  Total non-interest expense in the third and second quarters of 2022 contained non-core expenses, including acquisition-related expenses of $0.3 million and $0.6 million, respectively.  The increase in total non-interest expense for the third quarter of 2022 was attributable to increases in (i) salaries and employee benefit costs, (ii) professional fees, (iii) marketing expense and (iv) data processing and software expense. Partially offsetting the increase in non-interest expenses was a decrease in electronic banking expense. The increases in non-interest expenses were primarily driven by growth as well as sales incentives and minimum wage increases at Premier in regards to salaries and employee benefit costs.

Compared to the third quarter of 2021, total non-interest expense decreased $5.6 million, or 10%, primarily due to decreases in acquisition-related expenses and professional fees, due to the Premier Merger, which totaled $16.2 million for the third quarter of 2021.  Partially offsetting these decreases in non-interest expense were increases in (i) salaries and employee benefit costs, (ii) net occupancy and equipment expense, (iii) data processing and software expense, (iv) amortization of other intangible assets, and (v) electronic banking expense. The increases were due to the recent growth, including through mergers and acquisitions.  

For the nine months ended September 30, 2022, total non-interest expense increased $18.0 million, or 13%, compared to the first nine months of 2021. The variance was driven by increases of (i) $15.7 million in salaries and employee benefit costs, (ii) $4.5 million in net occupancy and equipment expense, (iii) $2.5 million in intangible asset amortization, (iv) $2.1 million in electronic banking expense, (v) $1.8 million in data processing and software expenses, and (vi) $1.3 million in FDIC insurance premiums. These increases were primarily due to growth over the last year, driven by mergers and acquisitions. Partially offsetting the increase in non-interest expense was a decrease in acquisition-related expenses.

The efficiency ratio for the third quarter of 2022 was 57.2%, compared to 58.8% for the linked quarter, and 94.7% for the third quarter of 2021.  The change in the efficiency ratio compared to the linked quarter was primarily due to increases in market interest rates coupled with decreases in acquisition-related expenses.  The efficiency ratio, adjusted for non-core items, was 56.6% for the third quarter of 2022, compared to 58.0% for the linked quarter and 63.9% for the third quarter of 2021.  Peoples continues to focus on controlling expenses, while recognizing  necessary costs in order to continue growing the business. 

Income Tax Expense: 
Peoples recorded income tax expense of $7.4 million with an effective tax rate of 22.2% for the third quarter of 2022, compared to income tax expense of $6.8 million with an effective tax rate of 21.6% for the linked quarter and an income tax benefit of $2.2 million with an effective tax rate of 27.4% for the third quarter of 2021.  The increase in income tax expense for the third quarter of 2022, compared to the linked quarter, was due to higher pre-tax net income.  The increase in income tax expense for the three months ended September 30, 2022, compared to the three months ended September 30, 2021, was driven by net income in the third quarter of 2022 versus a net loss in the same period of 2021.  Peoples recorded income tax expense of $20.2 million with an effective tax rate of 21.4% in the first nine months of 2022 and $4.0 million with an effective tax rate of 16.8% in the first nine months of 2021. The increase was driven by higher pre-tax income and a higher effective tax rate primarily due to apportionment in additional states due to recent acquisitions.  

Loans and Leases:
The period-end total loan and lease balances at September 30, 2022 increased $35.3 million, or 3% annualized, compared to June 30, 2022.  The increase in the period-end loan and lease balances was primarily driven by increases of (i) $29.2 million in consumer indirect loans, (ii) $19.0 million in commercial and industrial loans, (iii) $15.4 million in premium finance loans and (iv) $13.0 million in construction loans, partially offset by a reduction in other commercial real estate loans of $36.5 million.  Excluding $11.4 million forgiveness received on PPP loans, loan and lease balances grew at a 4% annualized rate. As of September 30, 2022, the remaining balance of PPP loans was $3.7 million.

The period-end total loan and lease balances increased $129.6 million, or 3%, compared to December 31, 2021. The increase in the period-end loan and lease balances was primarily driven by $154.9 million of leases acquired from Vantage and an increase of $61.8 million in indirect consumer loans, partially offset by a reduction of $126.6 million in other commercial real estate loans.

The period-end total loan and lease balances increased $120.2 million compared to September 30, 2021.  The increase in the period-end loan and lease balances was driven by increases of (i) $201.4 million in leases, primarily due to the leases acquired from Vantage and growth from the North Star Leasing division, (ii) $49.1 million in indirect consumer loans and (iii) $40.8 million in construction loans, partially offset by a reduction of $205.6 million in other commercial real estate loans.

Quarterly average loan and lease balances increased $22.3 million in the third quarter of 2022 compared to the linked quarter.  The increase was driven by increases of $35.7 million, $19.1 million, $18.2 million, and $13.1 million in indirect consumer loans, residential real estate loans, premium finance loans, and construction loans, respectively. These increases were substantially offset by decreases of $53.0 million and $19.4 million in other commercial real estate loans and residential real estate loans, respectively.  Compared to the third quarter of 2021, quarterly average loan and lease balances increased $1.1 billion, or 30%, driven by loans acquired from Premier, and leases acquired from Vantage, as well as leases originated. 

For the first nine months of 2022, average loan and lease balances increased $1.1 billion, or 32%, compared to the same period in 2021. The increase was driven by loans and leases acquired from Premier, Vantage and NSL.

Asset Quality:
Asset quality metrics remained stable during the quarter.  Total nonperforming assets decreased $1.8 million, or 4%, compared to June 30, 2022, and $7.6 million, or 14%, compared to September 30, 2021.  The decrease in nonperforming assets compared to the linked quarter was primarily attributable to a reduction in nonaccrual other commercial real estate loans and residential real estate loans, substantially offset by an increase in past due leases.  The decrease from the prior year quarter was driven by a reduction in nonaccrual other commercial real estate loans. Nonperforming assets as a percent of total loans and OREO were 0.98% at September 30, 2022, down from 1.02% at June 30, 2022 and 1.17% at September 30, 2021.

Criticized loans, which are those categorized as special mention, substandard or doubtful, decreased $16.6 million and $70.1 million compared to June 30, 2022  and September 30, 2021, respectively.  As a percent of total loans, criticized loans were 3.57% at September 30, 2022, compared to 3.96% at June 30, 2022 and 5.23% at September 30, 2021.  The decrease in the amount of criticized loans compared to June 30, 2022 was primarily related to pay-downs and upgrades during the quarter.  Compared to September 30, 2021, the decrease in the amount of criticized loans was largely due to a reduction in the criticized loans acquired from Premier.  Classified loans, which are those categorized as substandard or doubtful, decreased $20.6 million and $47.8 million compared to June 30, 2022 and September 30, 2021, respectively.  As a percent of total loans, classified loans were 2.06% at September 30, 2022, compared to 2.52% at June 30, 2022, and 3.18% at September 30, 2021.  The decrease in classified loans compared to the prior quarter was driven by the upgrade of one large commercial real estate loan and the pay-offs of two large commercial and industrial loans and one large commercial real estate loan. The decrease in classified loans when compared to the third quarter of 2021 was largely attributable to loan sales, pay-offs, and upgrades of classified loans acquired from Premier.

Annualized net charge-offs were 0.15% of average total loans for the third quarter of 2022, compared to 0.14% for the linked quarter and 0.18% for the prior year quarter, with the increase relative to the linked quarter driven by higher charge-offs on leases, consumer loans, and other commercial real estate loans, substantially offset by less charge-offs on commercial and industrial loans and deposit account overdrafts. The decrease in net charge-offs during the current quarter versus the prior year quarter was primarily attributable to one commercial and industrial loan charge-off of $500,000 during the third quarter of 2021.

At September 30, 2022, the allowance for credit losses was $52.9 million, compared to $52.3 million at June 30, 2022, and $77.4 million at September 30, 2021. The change in the allowance for credit losses compared to June 30, 2022 was primarily due to a deterioration of macro-economic conditions, partially offset by a reduction in reserves for individually analyzed loans.  The ratio of the allowance for credit losses as a percent of total loans was 1.15% at September 30, 2022, compared to 1.14% at June 30, 2022 and 1.72% at September 30, 2021. The higher ratio of the allowance for credit losses as a percent of total loans at September 30, 2021 was due to the establishment of a provision for credit losses of $11.0 million and $22.3 million for non-purchased credit deteriorated loans and purchased credit deteriorated loans, respectively, which had been acquired in the Premier Merger.

The ratio of the allowance for credit losses as a percent of total loans includes PPP loans that do not have an allowance because of the guarantee by the Small Business Administration.  Excluding PPP loans, the ratio of the allowance for credit losses as a percent of total loans would remain 1.15% at September 30, 2022, compared to 1.15% at June 30, 2022, and 1.78% at September 30, 2021.

Deposits:
As of September 30, 2022, period-end deposit balances decreased $63.6 million, or 1%, compared to June 30, 2022.  The decrease was primarily driven by reductions of (i) $39.5 million in retail certificates of deposits, (ii) $20.5 million in money market deposit accounts, and (iii) $16.5 million in non-interest bearing checking accounts.

Period-end deposit balances increased $3.1 million compared to December 31, 2021. The variance was driven by increases of $117.5 million in governmental deposit accounts and $40.6 million in savings accounts, substantially offset by decreases of $117.7 million in total certificates of deposits and $26.5 million in money market deposits.

Period-end deposit balances grew $33.6 million, or 1%, compared to September 30, 2021.  Deposits increased primarily due to growth in non-interest-bearing deposits, savings accounts, and governmental deposit accounts of $76.0 million, $60.6 million, and $55.4 million, respectively, substantially offset by a decrease of $166.9 million in total certificates of deposits.  Customers continued to maintain higher balances due primarily to economic stimulus payments provided by the U.S. federal government, as well as changes in customer buying habits.  

Average deposit balances during the third quarter of 2022 decreased $30.3 million compared to the linked quarter.  This decrease was driven by lower interest-bearing deposits, partially offset by an increase in non-interest-bearing deposits. Compared to the third quarter of 2021, quarterly average deposits increased $1.3 billion, or 29%, driven by deposits acquired from Premier.  Total demand deposit accounts comprised 48%, 47%, 48% and 46% of total deposits at September 30, 2022, June 30, 2022, December 31, 2021 and September 30, 2021, respectively.

Stockholders' Equity:
Total stockholders' equity at September 30, 2022 decreased by $26.3 million compared to June 30, 2022, which reflected an other comprehensive loss of $41.6 million, dividends paid of $10.8 million, and share repurchases of $1.2 million, partially offset by net income for the quarter of $26.0 million. The other comprehensive loss was the result of changes in the market value of available-for-sale investment securities, which were driven by changes in market interest rates. 

Total stockholders' equity at September 30, 2022 decreased by $84.5 million compared to December 31, 2021, which was due to (i) an other comprehensive loss of $123.3 million, (ii) dividends paid of $31.7 million and (iii) share repurchases of $7.1 million, partially offset by net income of $74.4 million for the first nine months of 2022. The other comprehensive loss was the result of changes in the market value of available-for-sale investment securities, which were driven by changes in market interest rates.

Total stockholders' equity at September 30, 2022 decreased $71.4 million compared to September 30, 2021, which was due to an other comprehensive loss of (i) $129.0 million, (ii) dividends paid of $41.9 million and (iii) share repurchases of $7.1million, partially offset by net income of $102.2 million during the twelve-month period. The increase in accumulated other comprehensive loss was the result of unrealized losses related to the available-for-sale investment securities portfolio from September 30, 2021 to September 30, 2022.

At September 30, 2022, the tier 1 risk-based capital ratio was 12.08%, compared to 11.91% at June 30, 2022, and 12.58% at September 30, 2021.  The common equity tier 1 risk-based capital ratio was 11.80% at September 30, 2022, compared to 11.62% at June 30, 2022, and 12.30% at September 30, 2021.  The total risk-based capital ratio was 12.98% at September 30, 2022, compared to 12.81% at June 30, 2022, and 13.83% at September 30, 2021.  Peoples adopted the five-year transition to phase in the impact of the adoption of CECL, effective January 1, 2020, on regulatory capital ratios.  Compared to June 30, 2022, these ratios improved due to higher net income.  Compared to September 30, 2021, the capital ratios decreased due to the Vantage acquisition.

Book value per common share and tangible book value per common share, which excludes goodwill and other intangible assets, were $26.89 and $15.28, respectively, at September 30, 2022, compared to $27.81 and $16.21, respectively, at June 30, 2022, and $29.43 and $18.98, respectively, at September 30, 2021.  Both ratios decreased compared to June 30, 2022 and September 30, 2021 primarily due to other comprehensive losses recognized in the third quarter and the first nine months of 2022.

The ratio of total stockholders' equity to total assets was 10.86% at September 30, 2022, compared to 10.81% at June 30, 2022, and 11.78% at September 30, 2021. The ratio decreased from September 30, 2021 due primarily to other comprehensive losses in the twelve-month period.  The tangible equity to tangible assets ratio, which excludes goodwill and other intangible assets, was 6.47% at September 30, 2022 compared to 6.60% and 7.93% at June 30, 2022, and September 30, 2021, respectively. The decreases in the ratio were due primarily to increases in accumulated other comprehensive loss. 

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

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

Conference Call to Discuss Earnings:

Peoples will conduct a facilitated conference call to discuss third quarter 2022 results of operations on October 25, 2022 at 11:00 a.m., Eastern Daylight Time, with members of Peoples' executive management participating.  Analysts, media and individual investors are invited to participate in the conference call by calling (866) 890-9285.  A simultaneous webcast of the conference call audio will be available online via the "Investor Relations" section of Peoples' website, www.peoplesbancorp.com.  Participants are encouraged to call or sign in at least 15 minutes prior to the scheduled conference call time to ensure participation and, if required, to download and install the necessary software.  A replay of the call will be available on Peoples' website in the "Investor Relations" section for one year.

Use of Non-US GAAP Financial Measures:

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

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

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

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

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

As required by US GAAP, Peoples is required to evaluate the impact of subsequent events through the issuance date of its September 30, 2022 consolidated financial statements as part of its Quarterly Report on Form 10-Q to be filed with the SEC.  Accordingly, subsequent events could occur that may cause Peoples to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.