MARIETTA, Ohio, Oct. 24,
2023 /PRNewswire/ -- Peoples Bancorp Inc. ("Peoples")
(Nasdaq: PEBO) today announced results for the three and nine
months ended September 30, 2023. Peoples reported net income
of $31.9 million for the third
quarter of 2023, representing earnings per diluted common share of
$0.90. In comparison, Peoples
reported net income of $21.1 million,
representing earnings per diluted common share of $0.64, for the second quarter of 2023, and net
income of $26.0 million, representing
earnings per diluted common share of $0.92, for the third quarter of 2022. For the
nine months ended September 30, 2023, Peoples recorded net
income of $79.5 million, or
$2.47 per diluted common share,
compared to $74.4 million, or
$2.65 per diluted common share, for
the nine months ended September 30, 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 $0.09 for the third quarter of 2023, compared to
$0.19 for the second quarter of 2023,
and $0.05 for the third quarter of
2022. For the first nine months of 2023, the provision negatively
impacted earnings per diluted common share by $0.33, compared to the release of provision
positively impacting earnings per diluted common share by
$0.16 for the first nine months of
2022.
Non-core items, and the related tax effect of each, in net
income primarily included acquisition-related expenses and a
$2.4 million pension settlement
charge recognized in the third quarter of 2023. Non-core items
negatively impacted earnings per diluted common share by
$0.16 for the third quarter of 2023,
$0.28 for the second quarter of 2023,
and $0.01 for the third quarter of
2022. Non-core items negatively impacted earnings per diluted share
by $0.52 and $0.07 for the nine months ended
September 30, 2023 and 2022, respectively.
"We are proud to continue our trend of strong earnings and asset
quality. We generated record net income and we had many other
positive metrics for the third quarter and the first nine months of
2023 compared to prior periods," said Chuck
Sulerzyski, President and Chief Executive Officer. "We are
looking forward to capitalizing on our recent successes and will
continue to develop our relationships with our clients. Our
associates are focused on working together to identify client needs
and improve our overall client experience."
Pension Plan Termination
During the third quarter of
2023, Peoples terminated its pension plan by settling the remaining
benefit obligation of $7.7 million.
The pension plan had been closed to new entrants since January 1, 2010. Peoples recorded a settlement
charge of $2.4 million in the third
quarter of 2023 in relation to the termination of the pension plan.
Peoples does not anticipate further expenses related to the
termination.
Completion of the Limestone Merger:
As of close of
business on April 30, 2023, Peoples
completed its previously announced merger with Limestone Bancorp,
Inc. ("Limestone"), a bank holding company headquartered in
Louisville, Kentucky, and the
parent company of Limestone Bank, pursuant to a definitive
Agreement and Plan of Merger (the "Merger Agreement") dated
October 24, 2022. Under the terms of
the Merger Agreement, Limestone merged with and into Peoples, and
immediately thereafter Limestone Bank merged with and into Peoples'
wholly-owned subsidiary, Peoples Bank (collectively, the "Limestone
Merger"), in a transaction valued at $177.9
million. Peoples recorded acquisition-related expenses
primarily related to the Limestone Merger which included
$4.4 million and $15.7 million in other non-interest expense for
the third quarter and the nine months ended September 30,
2023, respectively. For the third quarter of 2023, the $4.4 million of acquisition-related non-interest
expense consisted of $2.1 million in
other non-interest expense, $1.3
million in data processing and software expense,
$0.6 million in salaries and employee
benefit costs, and $0.4 million
in professional fees. For the nine months ended September 30,
2023, the $15.7 million of
acquisition-related non-interest expense primarily consisted of
$5.7 million in salaries and employee
benefit costs, $5.5 million in
professional fees, $3.0 million in other non-interest expense,
$1.3 million in data processing and
software expense, and $0.2 million in
various other non-interest expense line items. The other
non-interest expenses were primarily due to $1.8 million of early contract termination fees
on Limestone contracts driven by the system conversions, which took
place in the third quarter of 2023.
Investment Portfolio Restructuring:
During the first
quarter of 2023, Peoples executed the sales of $96.7 million of its lower yielding
available-for-sale investment securities for an after-tax loss of
$1.6 million. Proceeds from the
sales were used to pay down overnight borrowings. The loss on the
sale of these available-for-sale investment 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.
Statement of Operations Highlights:
- Net interest income for the third quarter of 2023
increased $8.4 million, or 10%,
compared to the linked quarter and increased $26.2 million, or 39%, compared to the third
quarter of 2022.
- Net interest margin increased 16 basis points to 4.70% for the
third quarter of 2023, compared to 4.54% for the linked quarter and
increased 53 basis points compared to 4.17% for the third quarter
of 2022.
- The increase in net interest margin for the third quarter of
2023 compared to the linked quarter was primarily driven by a full
quarter of accretion on the acquired Limestone portfolio in the
third quarter compared to only two months in the second quarter.
The third quarter was also impacted by a true-up of $3.6 million to the preliminary Limestone-related
accretion recorded in the second quarter of 2023, $1.9 million of which would have benefited the
net interest margin for the second quarter of 2023.
- The increase in net interest income for the third quarter of
2023 compared to the third quarter of 2022 was driven by increases
in market interest rates and the accretion on the acquired
Limestone portfolio.
- Peoples recorded a provision for credit losses of
$4.1 million for the third quarter of
2023, compared to a provision for credit losses of $8.0 million for the second quarter of 2023, and
a provision for credit losses of $1.8
million for the third quarter of 2022.
- The provision for credit losses in the third quarter of 2023
was driven by (i) loan growth, (ii) an increase in net charge-offs,
(iii) updates to our prepayment, curtailment, and funding rates,
and (iv) a deterioration in macro-economic conditions used within
the current expected credit loss ("CECL") model, partially offset
by the release of reserves on individually analyzed loans.
- Net charge-offs were $2.3
million, or 0.15% of average total loans annualized, for the
third quarter of 2023, compared to $1.2
million, or 0.09%, for the linked quarter and $1.7 million, or 0.15%, for the third quarter of
2022.
- Total non-interest income, excluding net gains and
losses, for the third quarter of 2023 increased $0.7 million, or 3%, compared to the linked
quarter, and increased $3.1 million,
or 15%, compared to the third quarter of 2022.
- The increase in non-interest income, excluding gains and
losses, for the third quarter of 2023 when compared to the second
quarter of 2023 was primarily due to increases in other
non-interest income and bank owned life insurance income due to a
death benefit recognized in the third quarter of 2023, partially
offset by a decrease in lease income. The increase in other
non-interest income was attributable to an increase in operating
lease income, which was partially offset by operating lease expense
recognized in other non-interest expense when compared to the
linked quarter.
- Total non-interest income, excluding net gains and losses, for
the first nine months of 2023 was 21% of total revenue (defined as
net interest income plus total non-interest income excluding net
gains and losses).
- Total non-interest expense for the third quarter of 2023
increased $1.1 million, or 2%,
compared to the linked quarter and increased $19.4 million, or 37%, compared to the third
quarter of 2022.
- The increase in total non-interest expense for the third
quarter of 2023 when compared to the linked quarter was primarily
attributable to increases in other non-interest expense, data
processing and software expenses, and amortization of other
intangible assets. The increase in other non-interest expense was
due to expenses recognized in relation to the pension plan
termination, Limestone acquisition-related expenses, and operating
lease depreciation expenses. The increase in total non-interest
expense was partially offset by decreases in professional fees and
salaries and employee benefit costs, due to lower
acquisition-related expenses.
- Excluding acquisition-related expenses, total non-interest
expense for the third quarter of 2023 increased $7.3 million when compared to the linked quarter,
primarily due to increases in (i) other non-interest expenses, (ii)
salaries and employee benefit costs, and (iii) data processing and
software expense. The increase in other non-interest expenses was
primarily due to the previously discussed pension plan termination
and operating lease expenses and a full quarter of expense from
Limestone in the third quarter of 2023 compared to only two months
in the linked quarter.
- For the third quarter of 2023, the efficiency ratio was 58.4%
compared to 62.7% for the linked quarter. When adjusted for
non-core items, the efficiency ratio was 52.5% for the third
quarter of 2023 compared to 53.3% for the linked quarter.
Balance Sheet Highlights:
- Period-end total loan and lease balances at September 30, 2023 increased $109.8 million, or 7% annualized, compared to
June 30, 2023.
- The increases in period-end and average total loan and lease
balances were primarily the result of growth in (i) commercial real
estate loans, (ii) premium finance loans and (iii) leases,
partially offset by reductions in construction loans and commercial
and industrial loans. The increase in average total loan and lease
balances was also impacted by a full quarter of loan balances
acquired in the Limestone Merger compared to only two months in the
linked quarter.
- Asset quality metrics remained stable during the
quarter.
- Delinquency trends remained stable as loans considered current
comprised 99.0% of the loan portfolio at both September 30, 2023 and at June 30, 2023.
- Nonperforming assets at September 30,
2023 increased $0.6 million
compared to June 30, 2023. The
increase was primarily attributable to increases in nonperforming
leases, which were largely offset by decreases in nonperforming
commercial real estate loans.
- Criticized loans decreased $6.7
million during the third quarter of 2023 when compared to
June 30, 2023. The decrease was
primarily driven by criticized loan pay-offs, partially offset by
loan downgrades.
- Classified loans increased $13.9
million during the third quarter of 2023 when compared to
June 30, 2023. The increase was
primarily driven by loan downgrades, partially offset by classified
loan pay-offs.
- Period-end total deposit balances at September 30, 2023 increased $77.6 million, or 1%, compared to at June 30, 2023.
- The increase was driven by growth in (i) retail certificates of
deposit, (ii) governmental deposit accounts and (iii) brokered
deposits, partially offset by reductions in (i) savings accounts,
(ii) non-interest-bearing checking accounts and (iii)
interest-bearing checking accounts.
- The percentages of retail deposit balances and commercial
deposit balances of the total deposit balance at September 30, 2023 were 79% and 21%,
respectively, compared to 78% and 22%, respectively, at
June 30, 2023.
- Total demand deposit balances were 39% and 42% of total deposit
balances at September 30, 2023 and at
June 30, 2023, respectively.
- Total loan balances were 86% of total deposit balances at both
September 30, 2023 and June 30, 2023.
- Deposit balances that exceeded the Federal Deposit Insurance
Corporation ("FDIC") insurance limit of $250,000 were 31% of total deposits at
September 30, 2023 and 32% of total
deposits at June 30, 2023. Peoples
pledges investment securities against certain governmental deposit
accounts, which collateralized $812.7
million, or 42%, of the uninsured deposit balances at
September 30, 2023.
Net Interest Income:
Net interest income was
$93.3 million for the third quarter
of 2023, an increase of $8.4 million,
or 10%, compared to the linked quarter. The increase in net
interest income was primarily due to a full quarter of net interest
income provided by the Limestone Merger in the third quarter
compared to only two months of net interest income in the linked
quarter. Net interest margin was 4.70% for the third quarter of
2023, compared to 4.54% for the linked quarter. The increase in net
interest margin was primarily driven by a full quarter of the
accretion on the acquired Limestone portfolio compared to two
months in the linked quarter. The increase in net interest margin
was also impacted by a true-up of $3.6
million in the third quarter of 2023 to the preliminary
Limestone-related accretion, $1.9
million of which would have benefited the second quarter of
2023. Also impacting the increases in net interest income and net
interest margin was six basis points of improvement in investment
yields due to sales of lower-yielding investment securities and a
full quarter of yields from the securities acquired in the
Limestone Merger compared to two months in the linked quarter.
Partially offsetting these benefits was an increase in interest
expense resulting from a shift in the composition of funding
sources to retail and brokered certificates of deposits ("CDs")
from non-interest bearing deposits combined with an increase in
market interest rates for deposits and other funding sources.
Net interest income for the third quarter of 2023 increased
$26.2 million, or 39%, compared to
the third quarter of 2022. Net interest margin for the third
quarter of 2023 increased 53 basis points compared to 4.17% for the
third quarter of 2022. The increase in net interest income compared
to the third quarter of 2022 was driven by increases in market
interest rates, the Limestone Merger, and organic growth.
Accretion income, net of amortization expense, from acquisitions
was $9.8 million for the third
quarter of 2023, $4.5 million for the
second quarter of 2023 and $2.8
million for the third quarter of 2022, which added 49 basis
points, 24 basis points and 16 basis points, respectively, to net
interest margin. The increases in accretion income for the third
quarter of 2023 when compared to the linked quarter and the third
quarter of 2022 were driven by accretion from the Limestone Merger
and the aforementioned third quarter 2023 true-up to the
preliminary Limestone-related accretion.
For the first nine months of 2023, net interest income increased
$68.2 million, or 37%, compared to
the first nine months of 2022, while net interest margin increased
93 basis points to 4.74%. The increase in net interest income was
driven by increases in market interest rates, the additional net
interest income from the Limestone Merger, and improvement in
investment yields. Partially offsetting these benefits was an
increase in interest expense resulting from a shift in the
composition of funding sources combined with an increase in market
interest rates for deposits and other funding sources.
Accretion income, net of amortization expense, from acquisitions
was $16.3 million for the nine months
ended September 30, 2023, compared to $9.4 million for the nine months ended
September 30, 2022, which added 30 and 20 basis points,
respectively, to net interest margin. The increase in accretion
income for the first nine months of 2023 compared to the same
period in 2022 was due to higher accretion recognized from the
Limestone Merger than was recorded due to the acquisitions of
Vantage Financial, LLC ("Vantage") and NS Leasing, LLC ("NSL") and
the merger with Premier Financial Bancorp, Inc. ("Premier") in the
prior period.
Provision for (Recovery of) Credit Losses:
The
provisions for credit losses were $4.1
million, $8.0 million, and
$1.8 million for the third quarter of
2023, the linked quarter, and the third quarter of 2022,
respectively. The provision for credit losses for the third quarter
of 2023 was driven by (i) loan growth, (ii) an increase in net
charge-offs, (iii) updates to our prepayment, curtailment and
funding rates, and (iv) a deterioration in macro-economic
conditions used within the CECL model, partially offset by the
release of reserves on individually analyzed loans. The provision
for credit losses in the linked quarter was due to a provision of
$9.4 million for the non-purchased
credit deteriorated loans acquired in the Limestone Merger,
partially offset by the release of reserves of $1.7 million on individually analyzed loans and a
recovery of $1.0 million due to
improvements in macro-economic conditions. The provision for credit
losses for the third quarter of 2022 was largely attributable to a
deterioration of macro-economic conditions, partially offset by a
release of reserves on individually analyzed loans.
The provision for credit losses for the first nine months of
2023 was $13.9 million, compared to a
recovery of credit losses of $5.8
million for the first nine months of 2022. The provision for
credit losses during the first nine months of 2023 was driven by
(i) the addition of the provision for the non-purchased credit
deteriorated loans acquired in the Limestone Merger, (ii) loan
growth and (ii) economic forecast deterioration, partially offset
by a reduction in the reserves for individually analyzed loans and
the use of updated loss drivers. The recovery of credit losses for
the first nine months of 2022 was primarily due to the impact of
economic assumptions used in the CECL model.
Net charge-offs for the third quarter of 2023 were $2.3 million, or 0.15% of average total loans
annualized, compared to net charge-offs of $1.2 million, or 0.09% of average total loans
annualized, for the linked quarter and net charge-offs of
$1.7 million, or 0.15% of average
total loans annualized, for the third quarter of 2022. Net
charge-offs for the first nine months of 2023 were $5.1 million, or 0.13% of average total loans
annualized, compared to net charge-offs of $5.1 million, or 0.15% annualized, for the first
nine months 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 third quarter of 2023 was $0.3 million, compared to net losses of
$1.8 million and $14,000 for the linked quarter and the third
quarter of 2022, respectively. The net loss for the third quarter
of 2023 was due to $0.3 million of
net losses on repossessed assets. The net loss for the linked
quarter was primarily due to the $1.6 million write-down of an other real
estate owned ("OREO") property due to a pending sale of the
property.
The net loss realized during the first nine months of 2023 was
$4.3 million, compared to
$207,000 for the first nine
months of 2022. The net loss for the first nine months of 2023
was primarily driven by the $2.0 million pre-tax ($1.6 million after-tax) net loss on the sales of
the available-for-sale investment securities during the first
quarter of 2023, as mentioned above, and the $1.6 million write-down of the OREO property
during the second quarter of 2023, as mentioned above. The net loss
recognized in the first nine months of 2022 was attributable to (i)
a $119,000 loss recorded on
repossessed assets, (ii) a $44,000
loss on the sale of investment securities in order to reinvest into
higher-yielding securities, and (iii) an adjustment to the gain on
sale of loans recognized in the fourth quarter of 2021 due to a
measurement period adjustment to the acquisition-date fair value of
Premier loans acquired that were subsequently sold.
Total Non-interest Income, Excluding Net Gains and
Losses:
Total non-interest income, excluding net gains and
losses, for the third quarter of 2023 increased $0.7 million compared to the linked quarter. The
increase in non-interest income, excluding net gains and losses,
was due to a $1.4 million
increase in other non-interest income and a $0.5 million increase in bank owned life
insurance income, mostly offset by a $1.8 million decrease in lease income. The
increase in other non-interest income was attributable to a
$1.0 million increase in operating
lease income, which was partially offset by a $0.6 million
increase in operating lease expense recognized in other
non-interest expense when compared to the linked quarter. Bank
owned life insurance income increased primarily due to a death
benefit of $0.4 million recognized in
the third quarter of 2023.
Compared to the third quarter of 2022, non-interest income,
excluding net gains and losses, increased $3.1 million, due to (i) a $1.5 million increase in other non-interest
income, (ii) a $1.2 million increase
in electronic banking income, (iii) a $0.7
million increase in deposit account service charges, (iv) a
$0.7 million increase in bank owned
life insurance income due to the aforementioned death benefit, and
(v) a $0.6 million increase in
insurance income. The increase in other non-interest income was due
to the increase in operating lease income mentioned above.
Insurance income increased due to new business and market increases
for premiums. The other increases were primarily due to the
additional customers brought in from the Limestone Merger when
compared to the third quarter of 2022.
For the first nine months of 2023, total non-interest income,
excluding gains and losses, increased $7.6
million, or 13%, compared to the first nine months of 2022.
The increase was driven by (i) a $2.4
million increase in electronic banking income, (ii) a
$1.7 million increase in insurance
income due to growth in the property and casualty insurance line,
(iii) a $1.4 million increase in
deposit account service charges, (iv) a $1.4
million increase in other non-interest income, and (v) a
$1.0 million increase in bank owned
life insurance income. The increase in other non-interest income
was due to the increase in operating lease income mentioned above.
Insurance income increased due to new business and market increases
for premiums. Bank owned life insurance income increased primarily
due to the aforementioned death benefit. The other increases were
primarily due to the additional customers brought in from the
Limestone Merger when compared to the first nine months of
2022.
Total Non-interest Expense:
Total non-interest
expenses for the third quarter and the nine months ended
September 30, 2023 were impacted by
the Limestone Merger and acquisition-related non-interest expenses.
Total acquisition-related non-interest expenses added $4.4 million and $15.7
million, respectively, across various line-items within
non-interest expense. During the third quarter of 2023, the
acquisition-related expenses recognized were primarily attributable
to early contract termination fees, system conversion costs,
salaries and employee benefit costs, and professional fees
attributable to the Limestone Merger. For the second quarter of
2023, the acquisition-related non-interest expenses were primarily
attributable to salaries and employee benefit costs and
professional fees related to the Limestone Merger.
The table below summarizes the amount of acquisition-related
expenses for each line item that is a component of non-interest
expense. Acquisition-related expenses are considered a non-core
non-interest expense by Peoples. This information is used by
Peoples to provide information useful to investors in understanding
Peoples' operating performance and trends.
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
(Dollars in
thousands)
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Non-interest
expense:
|
|
|
|
|
|
|
|
|
|
Salaries and employee
benefit costs
|
$
36,608
|
|
$ 38,025
|
|
$
28,618
|
|
$
106,661
|
|
$ 83,932
|
Net occupancy and
equipment expense
|
5,501
|
|
5,380
|
|
4,813
|
|
15,836
|
|
14,669
|
Professional
fees
|
3,456
|
|
7,438
|
|
2,832
|
|
13,775
|
|
8,784
|
Data processing and
software expense
|
6,288
|
|
4,728
|
|
3,279
|
|
15,578
|
|
9,228
|
Amortization of other
intangible assets
|
3,280
|
|
2,800
|
|
2,023
|
|
7,951
|
|
5,765
|
Electronic banking
expense
|
1,836
|
|
1,832
|
|
2,648
|
|
5,159
|
|
8,134
|
Marketing
expense
|
1,267
|
|
1,357
|
|
1,136
|
|
3,554
|
|
2,991
|
FDIC insurance
premiums
|
1,260
|
|
1,464
|
|
709
|
|
3,525
|
|
2,921
|
Franchise tax
expense
|
772
|
|
872
|
|
1,075
|
|
2,678
|
|
2,941
|
Communication
expense
|
752
|
|
724
|
|
599
|
|
2,089
|
|
1,873
|
Other loan
expenses
|
856
|
|
538
|
|
511
|
|
2,133
|
|
1,788
|
Other non-interest
expense
|
9,820
|
|
5,465
|
|
4,010
|
|
19,859
|
|
10,755
|
Total
non-interest expense
|
71,696
|
|
70,623
|
|
52,253
|
|
198,798
|
|
153,781
|
Acquisition-related
non-interest expense:
|
|
|
|
|
|
|
|
|
|
Salaries and employee
benefit costs
|
562
|
|
5,125
|
|
—
|
|
5,708
|
|
29
|
Net occupancy and
equipment expense
|
2
|
|
20
|
|
7
|
|
31
|
|
36
|
Professional
fees
|
429
|
|
4,812
|
|
221
|
|
5,532
|
|
1,791
|
Data processing and
software expense
|
1,289
|
|
1
|
|
129
|
|
1,290
|
|
410
|
Electronic banking
expense
|
—
|
|
115
|
|
—
|
|
115
|
|
(92)
|
Marketing
expense
|
38
|
|
14
|
|
5
|
|
61
|
|
45
|
Communication
expense
|
1
|
|
—
|
|
—
|
|
1
|
|
1
|
Other loan
expenses
|
—
|
|
1
|
|
—
|
|
1
|
|
—
|
Other non-interest
expense
|
2,113
|
|
621
|
|
(23)
|
|
2,955
|
|
94
|
Total
acquisition-related non-interest expense
|
4,434
|
|
10,709
|
|
339
|
|
15,694
|
|
2,314
|
Non-interest expense
excluding acquisition-
related expense:
|
|
|
|
|
|
|
|
|
|
Salaries and employee
benefit costs
|
36,046
|
|
32,900
|
|
28,618
|
|
100,953
|
|
83,903
|
Net occupancy and
equipment expense
|
5,499
|
|
5,360
|
|
4,806
|
|
15,805
|
|
14,633
|
Professional
fees
|
3,027
|
|
2,626
|
|
2,611
|
|
8,243
|
|
6,993
|
Data processing and
software expense
|
4,999
|
|
4,727
|
|
3,150
|
|
14,288
|
|
8,818
|
Amortization of other
intangible assets
|
3,280
|
|
2,800
|
|
2,023
|
|
7,951
|
|
5,765
|
Electronic banking
expense
|
1,836
|
|
1,717
|
|
2,648
|
|
5,044
|
|
8,226
|
Marketing
expense
|
1,229
|
|
1,343
|
|
1,131
|
|
3,493
|
|
2,946
|
FDIC insurance
premiums
|
1,260
|
|
1,464
|
|
709
|
|
3,525
|
|
2,921
|
Franchise tax
expense
|
772
|
|
872
|
|
1,075
|
|
2,678
|
|
2,941
|
Communication
expense
|
751
|
|
724
|
|
599
|
|
2,088
|
|
1,872
|
Other loan
expenses
|
856
|
|
537
|
|
511
|
|
2,132
|
|
1,788
|
Other non-interest
expense
|
7,707
|
|
4,844
|
|
4,033
|
|
16,904
|
|
10,661
|
Total non-interest
expense excluding acquisition-
related expense
|
$
67,262
|
|
$ 59,914
|
|
$
51,914
|
|
$
183,104
|
|
$
151,467
|
|
|
|
|
|
|
|
|
|
|
Total non-interest expense increased $1.1
million, or 2%, for the three months ended
September 30, 2023, compared to the linked quarter. Excluding
acquisition-related expense, total non-interest expense increased
$7.3 million, or 12%, primarily due
to increases of (i) $3.1 million in
salaries and employee benefit costs, (ii) $2.9 million in other non-interest expense, (iii)
$0.5 million in amortization of other
intangible assets, and (iv) $0.4
million in professional fees. For the third quarter of 2023,
additional total non-interest expenses from the Limestone Merger
excluding acquisition-related expenses, were $7.2 million compared to $5.4 million in the linked quarter. The increase
in the third quarter of 2023 total non-interest expenses
attributable to the Limestone Merger, excluding acquisition-related
expense, when compared to the linked quarter was due to a full
quarter of expenses in the third quarter from the Limestone Merger
compared to only two months of expenses in the linked quarter.
Excluding the impact from the Limestone Merger, the increase in
other non-interest expenses was also due to the previously
discussed pension plan settlement charge as well as a $0.6 million increase in operating lease
depreciation expenses. The increases in salaries and employee
benefit costs and data processing and professional fees were
primarily due to growth.
Compared to the third quarter of 2022, total non-interest
expense for the third quarter of 2023 increased $19.4 million, or 37%. Excluding
acquisition-related expenses, non-interest expenses increased
$15.3 million, or 30%, primarily due
to a $7.4 million increase in
salaries and employee benefit costs, a $3.7
million increase in other non-interest expense, a
$1.8 million increase in data
processing and software expense, and a $1.3
million increase in amortization of other intangible assets.
The increases were impacted by total non-interest expenses
attributable to the Limestone Merger, excluding acquisition-related
expense, which added $7.2 million
throughout the non-interest expense line items. A majority of the
remaining variance, excluding acquisition-related expense, was due
to the Limestone Merger. The increase in other non-interest
expenses was primarily due to the previously discussed pension plan
settlement charges and a $0.9 million
increase in operating lease depreciation expenses, while the other
increases were due to growth.
For the nine months ended September 30, 2023, total
non-interest expense increased $45.0
million, or 29.3%, compared to the first nine months of
2022. Excluding acquisition-related expenses, non-interest expenses
increased $31.6 million, or 20.9%.
This variance was driven by increases of $17.1 million, $6.2
million, $5.5 million and
$2.2 million in salaries and employee
benefit costs, other non-interest expense, data processing and
software expense and amortization of other intangible assets,
respectively, partially offset by a $3.2
million decrease in electronic banking expense. The
increases were impacted by $12.6
million of total non-interest expenses attributable to the
Limestone Merger, excluding acquisition-related expense, which
impacted various non-interest expense line items. The increase in
other non-interest expense was primarily due to the previously
discussed pension plan settlement charges and a $1.1 million increase in operating lease
depreciation expenses, while the other increases were due to
growth.
The efficiency ratio for the third quarter of 2023 was 58.4%,
compared to 62.7% for the linked quarter, and 57.2% for the third
quarter of 2022. The decrease in the efficiency ratio compared to
the linked quarter was primarily due to higher net interest income
due to an increase in market interest rates and a full quarter with
the additional customers from the Limestone Merger compared to two
months in the linked quarter and less acquisition-related expenses,
partially offset by an increase in non-acquisition-related
non-interest expenses. The increase in the efficiency ratio
compared to the prior year quarter was primarily due to the
increase in non-interest expense, primarily from the Limestone
Merger, which was mostly offset by higher net interest income due
to increases in the market interest rates and additional customers
from the Limestone Merger. The efficiency ratio, adjusted for
non-core items, was 52.5% for the third quarter of 2023, compared
to 53.3% for the linked quarter and 56.6% for the third 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 $8.8
million with an effective tax rate of 21.7% for the third
quarter of 2023, compared to income tax expense of $6.2 million with an effective tax rate of 22.6%
for the linked quarter, and income tax expense of $7.4 million with an effective tax rate of 22.2%
for the third quarter of 2022. Income tax expense for the third
quarter of 2023, compared to the linked quarter and third quarter
of 2022, increased due to higher net income before income taxes.
The effective rate decrease for the third quarter of 2023, when
compared to the linked quarter and the third quarter of 2022, was
primarily due to updates to the blended state tax rate. Peoples
recorded income tax expense of $22.1
million with an effective tax rate of 21.7% in the first
nine months of 2023 and $20.2 million
with an effective tax rate of 21.4% in the first nine months of
2022. The increase in income tax expense for the first nine months
of 2023 when compared to the same 2022 period was driven by higher
pre-tax income.
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
September 30, 2023 decreased $114.9
million, $112.8 million, and
$151.3 million when compared to at
June 30, 2023, at December 31, 2022, and at
September 30, 2022, respectively. The decrease in the balance
when compared to the prior periods 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
decreases in the balances from December 31, 2022 and
September 30, 2022 were partially offset by available-for-sale
investment securities acquired in the Limestone Merger. The
balances of unrealized losses, net of tax, on available-for-sale
investment securities recognized within accumulated other
comprehensive loss were $148.1
million, $121.5 million,
$129.9 million and $138.1 million at September 30, 2023, at
June 30, 2023, at December 31,
2022 and at September 30, 2022, respectively.
The held-to-maturity investment securities balance at
September 30, 2023 increased $1.5
million, $115.2 million, and
$267.6 million when compared to at
June 30, 2023, at December 31, 2022, and at
September 30, 2022, respectively. The increases when compared
to prior periods were driven by purchases of agency mortgage-backed
securities, agency collateralized mortgage obligations, and agency
debentures. Most of the securities purchased during 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 net
unrealized losses on held-to-maturity investment securities were
$105.5 million, $79.7 million, $81.7
million and $81.3 million at
September 30, 2023, at June 30, 2023, at December 31, 2022 and at September 30, 2022,
respectively.
The duration of the investment portfolio as of
September 30, 2023 was estimated to be 5.74 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 September 30, 2023,
Peoples had liquid and liquefiable assets of $576.6 million, which included (i) cash and cash
equivalents, (ii) unpledged government and agency investment
securities and (iii) unpledged non-agency investment securities
that could be liquidated. At September 30, 2023, Peoples had a
borrowing capacity of $572.8 million
available through the Federal Home Loan Bank ("FHLB"), the Federal
Reserve Bank ('FRB"), and federal funds. Additionally at
September 30, 2023, Peoples had other contingent sources of
liquidity totaling $2.0
billion.
Loans and Leases:
The period-end total loan and lease
balances at September 30, 2023 increased $109.8 million, or 7% annualized, compared to at
June 30, 2023. The increase in the period-end loan and lease
balance was primarily driven by increases of (i) $118.5 million in other commercial real estate
loans, (ii) $26.9 million in premium
finance loans and (iii) $24.8 million
in leases, partially offset by decreases of $44.7 million in construction loans and
$31.5 million in commercial and
industrial loans.
The period-end total loan and lease balance at September 30, 2023 increased $1.4 billion compared to at December 31,
2022 primarily due to the Limestone Merger. Excluding the loans
acquired in the Limestone Merger, the period-end loan and lease
balance increased $358.6 million, or
10% annualized, driven by increases of $182.8 million, $57.5
million, $48.4 million,
$38.9 million and $30.1 million in other commercial real estate
loans, leases, construction loans, indirect consumer loans, and
premium finance loans, respectively. These increases were partially
offset by a decrease of $13.1 million
in consumer residential real estate loans.
The period-end total loan and lease balance increased
$1.5 billion compared to at
September 30, 2022 primarily due to the Limestone Merger.
Excluding the loans acquired in the Limestone Merger, the
period-end loan and lease balance increased $454.6 million, or 10% annualized, primarily due
to increases of $182.9 million,
$89.8 million, $79.8 million, $76.1
million and $21.6 million in
other commercial real estate loans, leases, construction loans,
indirect consumer loans, and premium finance loans, respectively.
These increases were partially offset by a reduction of
$23.1 million in consumer residential
real estate loans.
The quarterly average loan and lease balance increased
$449.8 million, or 8%, in the third
quarter of 2023 compared to the linked quarter, mostly due to a
full quarter with the loans acquired in the Limestone Merger in the
third quarter of 2023 compared to only two months in the linked
quarter. Compared to the third quarter of 2022, the quarterly
average loan and lease balances increased $1.4 billion, or 31%, primarily driven by the
loans acquired in the Limestone Merger.
For the first nine months of 2023, the average loan and lease
balance increased $659.6 million, or
15%, compared to the same period of 2022. The increase was driven
by loans acquired in the Limestone Merger, and to lesser extents,
growth in commercial real estate loans, leases, commercial and
industrial loans and indirect consumer loans.
Asset Quality:
Asset quality metrics remained
stable during the third quarter of 2023. Total nonperforming assets
increased $0.6 million, or 1%,
compared to at June 30, 2023, decreased $2.7 million, or 6%, compared to at December 31, 2022, and decreased $2.6 million, or 6%, compared to at
September 30, 2022. The increase in nonperforming assets at
September 30, 2023 compared to at June 30, 2023 was
primarily attributable to increases in nonperforming leases,
largely offset by decreases in nonperforming commercial real estate
loans. The decreases from at December 31,
2022 and at September 30, 2022 were driven by
reductions in nonaccrual commercial real estate loans and OREO,
partially offset by increases in nonperforming leases.
Nonperforming assets as a percent of total loans and OREO were
0.70% at both September 30, 2023 and June 30, 2023, down
from 0.96% at December 31, 2022, and
0.98% at September 30, 2022.
Criticized loans, which are those categorized as special
mention, substandard or doubtful, decreased $6.7 million compared to at June 30, 2023,
and increased $21.8 million and
$48.4 million compared to at
December 31, 2022 and at
September 30, 2022, respectively. As a percent of total loans,
criticized loans were 3.50% at September 30, 2023, compared to
3.68% at June 30, 2023, 4.18% at December 31, 2022 and 3.57% at September 30,
2022. The decrease in the amount of criticized loans compared to at
June 30, 2023 was primarily driven by criticized loan
pay-offs, partially offset by loan downgrades. The increases in
criticized loans compared to at December 31,
2022 and at September 30, 2022 were primarily driven by
the acquisition of criticized loans in the Limestone Merger.
However, criticized loans as a percent of total loans decreased, as
criticized loans made up a smaller relative portion of the total
loans acquired in the Limestone Merger.
Classified loans, which are those categorized as substandard or
doubtful, increased $13.9 million,
$35.2 million and $30.0 million compared to at June 30, 2023,
at December 31, 2022 and at
September 30, 2022, respectively. As a percent of total loans,
classified loans were 2.05% at September 30, 2023, compared to
1.86% at June 30, 2023, 1.96% at December 31, 2022 and 2.06% at September 30,
2022. The increase in classified loans compared to at June 30,
2023 was primarily driven by loan downgrades, partially offset by
classified loan pay-offs. The increases in classified loans
compared to at December 31, 2022 and
at September 30, 2022 were primarily driven by the acquisition
of classified loans in the Limestone Merger.
Annualized net charge-offs were 0.15% of average total loans for
the third quarter of 2023, compared to 0.09% for the linked quarter
and 0.15% for the prior year third quarter, with the increase
relative to the linked quarter driven by an increase in charge-offs
on leases, commercial real estate loans and commercial and
industrial loans during the third quarter of 2023. The increase in
net charge-offs during the third quarter of 2023 versus the prior
year third quarter was primarily attributable to an increase in
charge-offs on indirect consumer loans, commercial real estate
loans and leases, partially offset by increase in recoveries.
Annualized net charge-offs were 0.13% of average total loans for
the first nine months of 2023, compared to 0.15% for the same 2022
period. The decrease was driven by an increase in recoveries and a
decrease in charge-offs on commercial and industrial loans,
partially offset by an increase in charge-offs on indirect consumer
loans.
At September 30, 2023, the allowance for credit losses was
$62.9 million, compared to
$61.2 million at June 30, 2023,
$53.2 million at December 31, 2022 and $52.9 million at September 30, 2022. The
allowance for credit losses at September 30, 2023 and at
June 30, 2023 was impacted by the establishment of an
allowance for credit losses for loans acquired in the Limestone
Merger during the second quarter of 2023 when compared to at
December 31, 2022 and at
September 30, 2022. The ratio of the allowance for credit
losses as a percent of total loans was 1.03% at September 30,
2023, compared to 1.02% at June 30, 2023 and 1.15% at
September 30, 2022.
Deposits:
At September 30, 2023, period-end total
deposits increased $77.6 million, or
1%, compared to at June 30, 2023, primarily driven by
increases of (i) $248.0 million in
retail certificates of deposit, (ii) $56.0
million in governmental deposits and (iii) $49.0 million in brokered deposits, which are
primarily used as a source of funding, partially offset by
decreases of (a) $129.5 million in
savings accounts, (b) $113.5 million
in non-interest-bearing demand deposit accounts, and (c)
$44.6 million in interest-bearing demand deposit accounts. The
increase in governmental deposit accounts was due to the
seasonality of the balances, which are typically higher in the
first quarter and third quarter of each year.
Period-end total deposits at September 30, 2023 increased
$1.3 billion, or 23%, compared to at
December 31, 2022. The increase was primarily driven by
deposits acquired in the Limestone Merger. Excluding Limestone
deposit balances, total deposits at September 30, 2023
increased $399.8 million, or 7%,
compared to at December 31, 2022, primarily due to increases
of $483.3 million in brokered
certificates of deposit and of $444.1 million in retail certificates of
deposit, partially offset by decreases of $203.5 million, $180.6 million, and $174.0 million in non-interest bearing
deposits, savings accounts, and interest-bearing demand deposit
accounts, respectively.
Period-end total deposits at September 30, 2023 increased
$1.2 billion, or 20%, compared to at
September 30, 2022 due to the deposits acquired in the
Limestone Merger. Excluding Limestone deposit balances, total
deposits at September 30, 2023 increased $251.1 million, or 4%, compared to at
September 30, 2022. The increase was primarily driven by
increases of $522.8 million in
brokered deposits and $429.6 million in retail certificates of
deposit, partially offset by decreases of $250.0 million, $189.5 million, $175.9 million and $78.8 million in non-interest-bearing demand
deposit accounts, savings accounts, interest-bearing demand deposit
accounts, and governmental deposit accounts, respectively.
The percentages of retail deposit balances and commercial
deposit balances of the total deposit balance at September 30,
2023 were 79% and 21%, respectively, compared to 78% and 22%,
respectively, at June 30, 2023, 74% and 26%, respectively, at
December 31, 2022 and 73% and 27%, respectively, at
September 30, 2022.
Uninsured deposits were 31%, 32%, 33% and 34% of total deposits
at September 30, 2023, at June 30, 2023, at
December 31, 2022 and at September 30, 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 $812.7 million, or
42%, of the uninsured deposit balances at September 30,
2023.
Average deposit balances during the third quarter of 2023
increased $444.5 million compared to
the linked quarter. Compared to the third quarter of 2022,
quarterly average deposits increased $1.1
billion. These increases were driven by the deposits
acquired in the Limestone Merger. Total demand deposits
comprised 39%, 42%, 48% and 48% of total deposits at
September 30, 2023, at June 30, 2023, at December 31, 2022 and at September 30, 2022,
respectively.
Stockholders' Equity:
Total stockholders' equity at
September 30, 2023 decreased by $5.7
million compared to at June 30, 2023, which was
primarily due to an increase in accumulated other comprehensive
loss of $24.9 million and dividends
paid of $13.8 million, partially
offset by net income for the third quarter of 2023 of $31.9 million. The change in accumulated other
comprehensive loss was primarily 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
$148.1 million and $121.5 million at September 30, 2023 and at
June 30, 2023, respectively.
Total stockholders' equity at September 30, 2023 increased
by $207.9 million compared to at
December 31, 2022, which was
primarily due to common shares issued in the Limestone Merger and
net income for the first nine months of 2023 of $79.5 million, partially offset by an increase in
accumulated other comprehensive loss of $16.7 million and dividends paid of $37.9 million. Accumulated unrealized losses
related to the available-for-sale investment securities portfolio
were $129.9 million at December 31, 2022.
Total stockholders' equity at September 30, 2023 increased
$232.7 million compared to at
September 30, 2022, which was primarily due to 6.8 million
common shares issued (valued at $177.9
million) in the Limestone Merger and net income of
$106.4 million in the last twelve
months, partially offset by dividends paid of $48.7 million and an increase in accumulated
other comprehensive loss of $8.9
million. The increase in accumulated other comprehensive
loss was the result of an increase of $10.0
million in unrealized losses related to the
available-for-sale investment securities portfolio from
September 30, 2022 to September 30, 2023, partially
offset by the realization of $2.4
million of pre-tax accumulated losses for the pension plan
when it was terminated during the third quarter of 2023.
Accumulated unrealized losses related to the available-for-sale
investment securities portfolio were $138.1
million at September 30, 2022.
At September 30, 2023, the tier 1 risk-based capital ratio
was 12.23%, compared to 12.10% at June 30, 2023, 12.19% at
December 31, 2022, and 12.08% at
September 30, 2022. The common equity tier 1 risk-based
capital ratio was 11.49% at September 30, 2023, compared to
11.36% at June 30, 2023, 11.92% at December 31, 2022, and 11.80% at
September 30, 2022. The total risk-based capital ratio was
13.06% at September 30, 2023, compared to 12.92% at
June 30, 2023, 13.06% at December 31,
2022, and 12.98% at September 30, 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 at June 30, 2023, these
capital ratios increased slightly due to higher net income,
primarily due to a full quarter of net income from the Limestone
Merger compared to only two months of income in the linked quarter,
partially offset by an increase in expenses from the Limestone
Merger. Compared to at September 30, 2022 and at December 31, 2022, the tier 1 risk-based capital
and the total risk-based capital ratios improved due to higher net
income, partially offset by the impact of the Limestone Merger and
dividends paid. The common equity tier 1 risk-based capital ratio
at September 30, 2023 decreased compared to at December 31, 2022 and September 30, 2022 due
to the common shares issued in the Limestone Merger.
Book value per common share and tangible book value per common
share, which excludes goodwill and other intangible assets, were
$28.06 and $16.52, respectively, at September 30, 2023,
compared to $28.24 and $16.56, respectively, at June 30, 2023,
$27.76 and $16.23, respectively, at December 31, 2022, and $26.89 and $15.28,
respectively, at September 30, 2022.
The ratio of total stockholders' equity to total assets was
11.11% at September 30, 2023, compared to 11.37% at
June 30, 2023, 10.90% at December
31, 2022 and 10.86% at September 30, 2022. The ratio
increased from at December 31, 2022
and at September 30, 2022 due primarily to additional common
shares issued in the Limestone Merger as well as net income over
the comparative prior periods. The tangible equity to tangible
assets ratio, which excludes goodwill and other intangible assets,
was 6.85% at September 30, 2023, compared to 7.00%, 6.67% and
6.47% at June 30, 2023, at December 31,
2022 and at September 30, 2022, respectively. The ratio
decreased compared to at June 30, 2023 due to an increase in
accumulated other comprehensive loss. The ratio increased compared
to at December 31, 2022 and at
September 30, 2022 primarily due to net income over the prior
comparative periods, 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 $8.9 billion in total assets as of
September 30, 2023, and 149 locations, including 132
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 North Star Leasing), Peoples Insurance Agency,
LLC and Vantage Financial, LLC.
Conference Call to Discuss Earnings:
Peoples will conduct a facilitated conference call to discuss third
quarter 2023 results of operations on October 24, 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, COVID-19-related expenses and COVID-19
Employee Retention Credits received.
- 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, COVID-19 Employee Retention Credits
received 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, COVID-19-related expenses, and COVID-19
Employee Retention Credits received) 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, COVID-19-related expenses and
COVID-19 Employee Retention Credits received.
- 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:
(1)
|
ongoing increasing
interest rate policies, changes in the interest rate environment
due to economic conditions and/or the fiscal and monetary policy
measures undertaken by the U.S. government and the Federal Reserve
Board, including changes in the Federal Funds Target Rate, in
response to such economic conditions, which may adversely impact
interest rates, the interest rate yield curve, interest margins,
loan demand and interest rate sensitivity;
|
|
|
(2)
|
the effects of
inflationary pressures and the impact of rising interest rates on
borrowers' liquidity and ability to repay;
|
|
|
(3)
|
the success, impact,
and timing of the implementation of Peoples' business strategies
and Peoples' ability to manage strategic initiatives, including the
ongoing increasing interest rate policies of the Federal Reserve
Board, the completion and successful integration of planned
acquisitions, including the recently-completed acquisition of
Vantage and the Limestone Merger, and the expansion of commercial
and consumer lending activities;
|
|
|
(4)
|
competitive pressures
among financial institutions, or from non-financial institutions,
which may increase significantly, including product and pricing
pressures, which can in turn impact Peoples' credit spreads,
changes to third-party relationships and revenues, changes in the
manner of providing services, customer acquisition and retention
pressures, and Peoples' ability to attract, develop and retain
qualified professionals;
|
|
|
(5)
|
uncertainty regarding
the nature, timing, cost, and effect of legislative or regulatory
changes or actions, or deposit insurance premium levels,
promulgated and to be promulgated by governmental and regulatory
agencies in the State of Ohio, the Federal Deposit Insurance
Corporation, the Federal Reserve Board and the Consumer Financial
Protection Bureau, including the FDIC's recently issued notice of
proposed rulemaking for a special assessment to recover the
uninsured deposit losses from recent bank failures that adversely
affect their respective businesses, which may subject Peoples, its
subsidiaries, or one or more acquired companies to a variety of new
and more stringent legal and regulatory requirements;
|
|
|
(6)
|
potential adverse
impacts as a result of the Inflation Reduction Act of 2022, which
may negatively impact Peoples' operations and financial
results;
|
|
|
(7)
|
the effects of easing
restrictions on participants in the financial services
industry;
|
|
|
(8)
|
current and future
local, regional, national and international economic conditions
(including the impact of persistent inflation, supply chain issues
or labor shortages, supply-demand imbalances affecting local real
estate prices, high unemployment rates in the local or regional
economies in which Peoples operates and/or the U.S. economy
generally, ineffective management of the U.S. federal budget or
debt, potential or imposed tariffs, a U.S. withdrawal from or
significant renegotiation of trade agreements, trade wars and other
changes in trade regulations, and changes in the relationship of
the U.S. and U.S. global trading partners) and the impact these
conditions may have on Peoples, Peoples' customers and Peoples'
counterparties, and Peoples' assessment of the impact, which may be
different than anticipated;
|
|
|
(9)
|
Peoples may issue
equity securities in connection with future acquisitions, which
could cause ownership and economic dilution to Peoples' current
shareholders;
|
|
|
(10)
|
changes in prepayment
speeds, loan originations, levels of nonperforming assets,
delinquent loans, charge-offs, and customer and other
counterparties' performance and creditworthiness generally, which
may be less favorable than expected in light of recent inflationary
pressures and continued elevated interest rates, and may adversely
impact the amount of interest income generated;
|
|
|
(11)
|
Peoples may have more
credit risk and higher credit losses to the extent there are loan
concentrations by location or industry of borrowers or
collateral;
|
|
|
(12)
|
future credit quality
and performance, including expectations regarding future credit
losses and the allowance for credit losses;
|
|
|
(13)
|
changes in accounting
standards, policies, estimates or procedures may adversely affect
Peoples' reported financial condition or results of
operations;
|
|
|
(14)
|
the impact of
assumptions, estimates and inputs used within models, which may
vary materially from actual outcomes, including under the CECL
model;
|
|
|
(15)
|
the replacement of the
London Interbank Offered Rate ("LIBOR") with other reference rates
which may result in increased expenses and litigation, and
adversely impact the effectiveness of hedging
strategies;
|
|
|
(16)
|
adverse changes in the
conditions and trends in the financial markets, including recent
inflationary pressures, which may adversely affect the fair value
of securities within Peoples' investment portfolio, the interest
rate sensitivity of Peoples' consolidated balance sheet, and the
income generated by Peoples' trust and investment
activities;
|
|
|
(17)
|
the volatility from
quarter to quarter of mortgage banking income, whether due to
interest rates, demand, the fair value of mortgage loans, or other
factors;
|
|
|
(18)
|
Peoples' ability to
receive dividends from Peoples' subsidiaries;
|
|
|
(19)
|
Peoples' ability to
maintain required capital levels and adequate sources of funding
and liquidity;
|
|
|
(20)
|
the impact of larger or
similar-sized financial institutions encountering problems, such as
the closures earlier in 2023 of Silicon Valley Bank in California,
Signature Bank in New York and First Republic Bank in California,
which may adversely affect the banking industry and/or Peoples'
business generation and retention, funding and liquidity, including
potential increased regulatory requirements, and increased
reputational risk and potential impacts to macroeconomic
conditions;
|
|
|
(21)
|
in light of the recent
bank failures, Peoples' continued ability to grow deposits or
maintain adequate deposit levels may be adversely impacted, and
Peoples may experience an unexpected outflow of uninsured deposits,
which may require Peoples to sell investment securities at a
loss;
|
|
|
(22)
|
Peoples' ability to
secure confidential information and deliver products and services
through the use of computer systems and telecommunications
networks, including those of Peoples' third-party vendors and other
service providers, which may prove inadequate, and could adversely
affect customer confidence in Peoples and/or result in Peoples
incurring a financial loss;
|
|
|
(23)
|
any misappropriation of
the confidential information which Peoples possesses could have an
adverse impact on Peoples' business and could result in regulatory
actions, litigation and other adverse effects;
|
|
|
(24)
|
Peoples' ability to
anticipate and respond to technological changes, and Peoples'
reliance on, and the potential failure of, a number of third-party
vendors to perform as expected, including Peoples' primary core
banking system provider, which can impact Peoples' ability to
respond to customer needs and meet competitive demands;
|
|
|
(25)
|
operational issues
stemming from and/or capital spending necessitated by the potential
need to adapt to industry changes in information technology systems
on which Peoples and Peoples' subsidiaries are highly
dependent;
|
|
|
(26)
|
changes in consumer
spending, borrowing and saving habits, whether due to changes in
retail distribution strategies, consumer preferences and behavior,
changes in business and economic conditions, legislative or
regulatory initiatives, or other factors, which may be different
than anticipated;
|
|
|
(27)
|
the adequacy of
Peoples' internal controls and risk management program in the event
of changes in strategic, reputational, market, economic,
operational, cybersecurity, compliance, legal, asset/liability
repricing, liquidity, credit and interest rate risks associated
with Peoples' business;
|
|
|
(28)
|
the impact on Peoples'
businesses, personnel, facilities, or systems, of losses related to
acts of fraud, theft, misappropriation or violence;
|
|
|
(29)
|
the impact on Peoples'
businesses, as well as on the risks described above, of various
domestic or international widespread natural or other disasters,
pandemics, cybersecurity attacks, system failures, civil unrest,
military or terrorist activities or international conflicts
(including Russia's war in Ukraine and the recent conflicts
involving Israel and Hamas);
|
|
|
(30)
|
the potential further
deterioration of the U.S. economy due to financial, political or
other shocks;
|
|
|
(31)
|
the potential influence
on the U.S. financial markets and economy from the effects of
climate change, including any enhanced regulatory, compliance,
credit and reputational risks and costs;
|
|
|
(32)
|
the impact on Peoples'
businesses and operating results of any costs associated with
obtaining rights in intellectual property claimed by others and
adequately protecting Peoples' intellectual property;
|
|
|
(33)
|
risks and uncertainties
associated with Peoples' entry into new geographic markets and
risks resulting from Peoples' inexperience in these new geographic
markets;
|
|
|
(34)
|
Peoples' ability to
integrate the Limestone Merger, which may be unsuccessful, or may
be more difficult, time-consuming or costly than
expected;
|
|
|
(35)
|
the risk that expected
revenue synergies and cost savings from the Limestone Merger, may
not be fully realized or realized within the expected time
frame;
|
|
|
(36)
|
changes in laws or
regulations imposed by Peoples' regulators impacting Peoples'
capital actions, including dividend payments and share
repurchases;
|
|
|
(37)
|
the vulnerability of
Peoples' network and online banking portals, and the systems of
parties with whom Peoples contracts, to unauthorized access,
computer viruses, phishing schemes, spam attacks, human error,
natural disasters, power loss and other security
breaches;
|
|
|
(38)
|
Peoples' business may
be adversely affected by increased political and regulatory
scrutiny of corporate environmental, social and governance ("ESG")
practices;
|
|
|
(39)
|
the effect of a fall in
stock market prices on the asset and wealth management business;
and
|
|
|
(40)
|
other risk factors
relating to the banking industry or Peoples as detailed from time
to time in Peoples' reports filed with the Securities and Exchange
Commission (the "SEC"), including those risk factors included in
the disclosures under the heading "ITEM 1A. RISK FACTORS" of
Peoples' Annual Report on Form 10-K for the fiscal year ended
December 31, 2022 and under the heading "ITEM 1A. RISK FACTORS" in
Part II of Peoples' Quarterly Reports on Form 10-Q for the
quarterly periods ended March 31, 2023 and June 30, 2023. Peoples
encourages readers of this news release to understand
forward-looking statements to be strategic objectives rather than
absolute targets of future performance. Peoples undertakes no
obligation to update these forward-looking statements to reflect
events or circumstances after the date of this news release or to
reflect the occurrence of unanticipated events, except as required
by applicable legal requirements. Copies of documents filed with
the SEC are available free of charge at the SEC's website at
http://www.sec.gov and/or from Peoples' website -
www.peoplesbancorp.com under the "Investor Relations"
section.
|
As required by US GAAP, Peoples is required to evaluate the
impact of subsequent events through the issuance date of Peoples'
September 30, 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.
PER COMMON SHARE
DATA AND SELECTED RATIOS (Unaudited)
|
|
|
At or For the Three
Months Ended
|
|
At or For the Nine
Months Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
PER COMMON
SHARE:
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
0.91
|
|
$
0.64
|
|
$
0.93
|
|
$
2.49
|
|
$
2.65
|
Diluted
|
0.90
|
|
0.64
|
|
0.92
|
|
2.47
|
|
2.65
|
Cash dividends declared
per common share
|
0.39
|
|
0.39
|
|
0.38
|
|
1.16
|
|
1.12
|
Book value per common
share (a)
|
28.06
|
|
28.24
|
|
26.89
|
|
28.06
|
|
26.89
|
Tangible book value per
common share (a)(b)
|
16.52
|
|
16.56
|
|
15.28
|
|
16.52
|
|
15.28
|
Closing price of common
shares at end of period (a)
|
$
25.38
|
|
$
26.55
|
|
$
28.93
|
|
$
25.38
|
|
$
28.93
|
|
|
|
|
|
|
|
|
|
|
SELECTED
RATIOS:
|
|
|
|
|
|
|
|
|
|
Return on average
stockholders' equity (c)
|
12.59 %
|
|
8.89 %
|
|
12.92 %
|
|
11.56 %
|
|
12.32 %
|
Return on average
tangible equity (c)(d)
|
23.04 %
|
|
16.56 %
|
|
23.36 %
|
|
21.05 %
|
|
21.70 %
|
Return on average
assets (c)
|
1.44 %
|
|
1.01 %
|
|
1.45 %
|
|
1.35 %
|
|
1.40 %
|
Return on average
assets adjusted for non-core items (c)(e)
|
1.69 %
|
|
1.47 %
|
|
1.47 %
|
|
1.64 %
|
|
1.44 %
|
Efficiency ratio
(f)
|
58.36 %
|
|
62.71 %
|
|
57.20 %
|
|
59.66 %
|
|
60.67 %
|
Efficiency ratio
adjusted for non-core items (g)(i)
|
52.51 %
|
|
53.32 %
|
|
56.64 %
|
|
54.17 %
|
|
59.61 %
|
Pre-provision net
revenue to total average assets (c)(h)
|
2.03 %
|
|
1.78 %
|
|
1.96 %
|
|
2.03 %
|
|
1.68 %
|
Net interest margin
(c)
|
4.70 %
|
|
4.54 %
|
|
4.17 %
|
|
4.74 %
|
|
3.81 %
|
Dividend payout ratio
(j)
|
43.26 %
|
|
63.62 %
|
|
41.39 %
|
|
47.70 %
|
|
42.56 %
|
|
|
(a)
|
Data presented as of
the end of the period indicated.
|
(b)
|
Tangible book value per
common share represents a non-US GAAP financial measure since it
excludes the balance sheet impact of goodwill and other intangible
assets acquired through acquisitions on stockholders' equity.
Additional information regarding the calculation of this ratio is
included at the end of this news release under the caption of
"Non-US GAAP Financial Measures (Unaudited)."
|
(c)
|
Ratios are presented on
an annualized basis.
|
(d)
|
Return on average
tangible equity represents a non-US GAAP financial measure since it
excludes the after-tax impact of amortization of other intangible
assets from net income and it excludes the balance sheet impact of
average goodwill and other intangible assets acquired through
acquisitions on average stockholders' equity. Additional
information regarding the calculation of this ratio is included at
the end of this news release under the caption of "Non-US GAAP
Financial Measures (Unaudited)."
|
(e)
|
Return on average
assets adjusted for non-core items represents a non-US GAAP
financial measure since it excludes the after-tax impact of all
gains and losses, acquisition-related expenses, pension settlement
charges, COVID-19-related expenses and COVID-19 Employee Retention
Credits received. Additional information regarding the calculation
of this ratio is included at the end of this news release under the
caption of "Non-US GAAP Financial Measures (Unaudited)."
|
(f)
|
The efficiency ratio is
defined 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 all gains
and losses). This ratio represents 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. Additional information
regarding the calculation of this ratio is included at the end of
this news release under the caption of "Non-US GAAP Financial
Measures (Unaudited)."
|
(g)
|
The efficiency ratio
adjusted for non-core items is defined 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 all gains and losses). This ratio represents a
non-US GAAP financial measure since it excludes the impact of all
gains and losses, acquisition-related expenses, pension settlement
charges, COVID-19-related expenses and COVID-19 Employee Retention
Credits received included in earnings, and uses fully
tax-equivalent net interest income. Additional information
regarding the calculation of this ratio is included at the end of
this news release under the caption of "Non-US GAAP Financial
Measures (Unaudited)."
|
(h)
|
Pre-provision net
revenue is defined as net interest income plus total non-interest
income (excluding all gains and losses) minus total non-interest
expense. This measure represents 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. This measure is a key
metric used by federal bank regulatory agencies in their evaluation
of capital adequacy for financial institutions. Additional
information regarding the calculation of this ratio is included at
the end of this news release under the caption of "Non-US GAAP
Financial Measures (Unaudited)."
|
(i)
|
Information presented
on a fully tax-equivalent basis, using a 23.3% blended corporate
income tax rate for September 30, 2023, a 23.6% blended corporate
income tax rate for June 30, 2023 and a 23.3% blended corporate
income tax rate for September 30, 2022.
|
(j)
|
This ratio is
calculated based on dividends declared during the period divided by
net income for the period.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
(Dollars in
thousands, except per share data)
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Total interest
income
|
$
123,593
|
|
$
106,417
|
|
$
70,871
|
|
$
314,159
|
|
$
193,352
|
Total interest
expense
|
30,319
|
|
21,564
|
|
3,820
|
|
63,154
|
|
10,523
|
Net interest
income
|
93,274
|
|
84,853
|
|
67,051
|
|
251,005
|
|
182,829
|
Provision for (recovery
of) credit losses
|
4,053
|
|
7,983
|
|
1,776
|
|
13,889
|
|
(5,811)
|
Net interest income
after provision for (recovery of)
credit losses
|
89,221
|
|
76,870
|
|
65,275
|
|
237,116
|
|
188,640
|
Non-interest
income:
|
|
|
|
|
|
|
|
|
|
Electronic banking
income
|
6,466
|
|
6,466
|
|
5,261
|
|
18,375
|
|
15,933
|
Deposit account service
charges
|
4,516
|
|
4,153
|
|
3,833
|
|
12,192
|
|
10,817
|
Trust and investment
income
|
4,288
|
|
4,414
|
|
3,954
|
|
12,786
|
|
12,476
|
Insurance
income
|
4,250
|
|
4,004
|
|
3,618
|
|
13,679
|
|
11,995
|
Bank owned life
insurance income
|
1,375
|
|
842
|
|
694
|
|
2,924
|
|
1,922
|
Mortgage banking
income
|
237
|
|
189
|
|
328
|
|
740
|
|
1,116
|
Net (loss) gain on
investment securities
|
(7)
|
|
(166)
|
|
21
|
|
(2,108)
|
|
107
|
Lease (loss)
income
|
(66)
|
|
1,719
|
|
1,725
|
|
2,730
|
|
2,931
|
Net loss on asset
disposals and other transactions
|
(307)
|
|
(1,665)
|
|
(35)
|
|
(2,218)
|
|
(314)
|
Other non-interest
income
|
2,452
|
|
1,059
|
|
967
|
|
4,179
|
|
2,819
|
Total
non-interest income
|
23,204
|
|
21,015
|
|
20,366
|
|
63,279
|
|
59,802
|
Non-interest
expense:
|
|
|
|
|
|
|
|
|
|
Salaries and employee
benefit costs
|
36,608
|
|
38,025
|
|
28,618
|
|
106,661
|
|
83,932
|
Data processing and
software expense
|
6,288
|
|
4,728
|
|
3,279
|
|
15,578
|
|
9,228
|
Net occupancy and
equipment expense
|
5,501
|
|
5,380
|
|
4,813
|
|
15,836
|
|
14,669
|
Professional
fees
|
3,456
|
|
7,438
|
|
2,832
|
|
13,775
|
|
8,784
|
Amortization of other
intangible assets
|
3,280
|
|
2,800
|
|
2,023
|
|
7,951
|
|
5,765
|
Electronic banking
expense
|
1,836
|
|
1,832
|
|
2,648
|
|
5,159
|
|
8,134
|
Marketing
expense
|
1,267
|
|
1,357
|
|
1,136
|
|
3,554
|
|
2,991
|
FDIC insurance
premiums
|
1,260
|
|
1,464
|
|
709
|
|
3,525
|
|
2,921
|
Other loan
expenses
|
856
|
|
538
|
|
511
|
|
2,133
|
|
1,788
|
Franchise tax
expense
|
772
|
|
872
|
|
1,075
|
|
2,678
|
|
2,941
|
Communication
expense
|
752
|
|
724
|
|
599
|
|
2,089
|
|
1,873
|
Other non-interest
expense
|
9,820
|
|
5,465
|
|
4,010
|
|
19,859
|
|
10,755
|
Total
non-interest expense
|
71,696
|
|
70,623
|
|
52,253
|
|
198,798
|
|
153,781
|
Income before income
taxes
|
40,729
|
|
27,262
|
|
33,388
|
|
101,597
|
|
94,661
|
Income tax
expense
|
8,847
|
|
6,166
|
|
7,410
|
|
22,059
|
|
20,218
|
Net
income
|
$
31,882
|
|
$
21,096
|
|
$
25,978
|
|
$
79,538
|
|
$
74,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER COMMON SHARE
DATA:
|
|
|
|
|
|
|
|
|
|
Net income available to
common shareholders
|
$
31,882
|
|
$
21,096
|
|
$
25,978
|
|
$
79,538
|
|
$
74,443
|
Less: Dividends paid on
unvested common shares
|
143
|
|
144
|
|
102
|
|
388
|
|
252
|
Less: Undistributed
loss allocated to unvested common
shares
|
79
|
|
13
|
|
24
|
|
190
|
|
65
|
Net earnings
allocated to common shareholders
|
$
31,660
|
|
$
20,939
|
|
$
25,852
|
|
$
78,960
|
|
$
74,126
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding
|
34,818,346
|
|
32,526,962
|
|
27,865,416
|
|
31,771,061
|
|
27,929,720
|
Effect of potentially
dilutive common shares
|
243,551
|
|
123,014
|
|
107,839
|
|
206,425
|
|
79,543
|
Total
weighted-average diluted common shares
outstanding
|
35,061,897
|
|
32,649,976
|
|
27,973,255
|
|
31,977,486
|
|
28,009,263
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share – basic
|
$
0.91
|
|
$
0.64
|
|
$
0.93
|
|
$
2.49
|
|
$
2.65
|
Earnings per common
share – diluted
|
$
0.90
|
|
$
0.64
|
|
$
0.92
|
|
$
2.47
|
|
$
2.65
|
Cash dividends declared
per common share
|
$
0.39
|
|
$
0.39
|
|
$
0.38
|
|
$
1.16
|
|
$
1.12
|
Weighted-average common
shares outstanding – basic
|
34,818,346
|
|
32,526,962
|
|
27,865,416
|
|
31,771,061
|
|
27,929,720
|
Weighted-average common
shares outstanding – diluted
|
35,061,897
|
|
32,649,976
|
|
27,973,255
|
|
31,977,486
|
|
28,009,263
|
Common shares
outstanding at end of period
|
35,395,990
|
|
35,374,916
|
|
28,278,078
|
|
35,395,990
|
|
28,278,078
|
CONSOLIDATED BALANCE
SHEETS
|
|
|
September
30,
|
|
December
31,
|
|
2023
|
|
2022
|
(Dollars in
thousands)
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Cash and cash
equivalents:
|
|
|
|
Cash and due
from banks
|
$
108,107
|
|
$
94,679
|
Interest-bearing
deposits in other banks
|
191,002
|
|
59,343
|
Total cash and cash equivalents
|
299,109
|
|
154,022
|
Available-for-sale
investment securities, at fair value (amortized cost of $1,211,794
at September 30, 2023 and
$1,300,719 at December 31, 2022) (a)
|
1,018,581
|
|
1,131,399
|
Held-to-maturity
investment securities, at amortized cost (fair value of $569,888 at
September 30, 2023 and
$478,509 at December 31, 2022) (a)
|
675,409
|
|
560,212
|
Other investment
securities
|
66,332
|
|
51,609
|
Total investment securities (a)
|
1,760,322
|
|
1,743,220
|
Loans and leases, net
of deferred fees and costs (b)
|
6,084,390
|
|
4,707,150
|
Allowance for credit
losses
|
(62,924)
|
|
(53,162)
|
Net
loans and leases
|
6,021,466
|
|
4,653,988
|
Loans held for
sale
|
2,699
|
|
2,140
|
Bank premises and
equipment, net of accumulated depreciation
|
103,877
|
|
82,934
|
Bank owned life
insurance
|
139,554
|
|
105,292
|
Goodwill
|
355,106
|
|
292,397
|
Other intangible
assets
|
53,388
|
|
33,932
|
Other assets
|
207,013
|
|
139,379
|
Total assets
|
$
8,942,534
|
|
$
7,207,304
|
Liabilities
|
|
|
|
Deposits:
|
|
|
|
Non-interest-bearing
|
$
1,569,095
|
|
$
1,589,402
|
Interest-bearing
|
5,468,423
|
|
4,127,539
|
Total deposits
|
7,037,518
|
|
5,716,941
|
Short-term
borrowings
|
585,437
|
|
500,138
|
Long-term
borrowings
|
173,312
|
|
101,093
|
Accrued expenses and
other liabilities
|
153,048
|
|
103,804
|
Total liabilities
|
7,949,315
|
|
6,421,976
|
Stockholders'
equity
|
|
|
|
Preferred shares, no
par value, 50,000 shares authorized, no shares issued at
September 30, 2023 or at
December 31, 2022
|
—
|
|
—
|
Common shares, no par
value, 50,000,000 shares authorized, 36,723,893 shares issued at
September 30, 2023
and 29,857,920 shares issued at December 31, 2022,
including shares held in treasury
|
864,010
|
|
686,450
|
Retained
earnings
|
307,534
|
|
265,936
|
Accumulated other
comprehensive loss, net of deferred income taxes
|
(143,796)
|
|
(127,136)
|
Treasury stock, at
cost, 1,412,650 common shares at September 30, 2023 and
1,643,461 common shares at
December 31, 2022
|
(34,529)
|
|
(39,922)
|
Total stockholders' equity
|
993,219
|
|
$
785,328
|
Total liabilities and stockholders' equity
|
$
8,942,534
|
|
$
7,207,304
|
|
|
(a)
|
Available-for-sale
investment securities and held-to-maturity investment securities
are presented net of allowance for credit losses of $0 and $238,
respectively, at September 30, 2023, and $0 and $241, respectively,
at December 31, 2022.
|
(b)
|
Also referred to
throughout this document as "total loans" and "loans held for
investment."
|
SELECTED FINANCIAL
INFORMATION (Unaudited)
|
|
|
September
30,
|
June
30,
|
March
31,
|
December
31,
|
September
30,
|
(Dollars in
thousands)
|
2023
|
2023
|
2023
|
2022
|
2022
|
Loan
Portfolio
|
|
|
|
|
|
Construction
|
$
374,016
|
$
418,741
|
$
232,296
|
$
246,941
|
$
215,621
|
Commercial real estate,
other
|
2,189,984
|
2,071,514
|
1,481,062
|
1,423,518
|
1,423,479
|
Commercial and
industrial
|
1,128,809
|
1,160,310
|
891,139
|
892,634
|
877,472
|
Premium
finance
|
189,251
|
162,357
|
158,263
|
159,197
|
167,682
|
Leases
|
402,635
|
377,791
|
354,641
|
345,131
|
312,847
|
Residential real
estate
|
791,965
|
791,442
|
712,602
|
723,360
|
733,361
|
Home equity lines of
credit
|
203,940
|
199,221
|
174,383
|
177,858
|
174,525
|
Consumer,
indirect
|
668,371
|
654,371
|
647,177
|
629,426
|
592,309
|
Consumer,
direct
|
134,562
|
138,019
|
107,406
|
108,363
|
113,314
|
Deposit account
overdrafts
|
857
|
830
|
749
|
722
|
597
|
Total loans and leases
|
$
6,084,390
|
$
5,974,596
|
$ 4,759,718
|
$ 4,707,150
|
$ 4,611,207
|
Total acquired loans
and leases (a)
|
$
1,925,554
|
$
2,032,505
|
$ 1,024,739
|
$ 1,108,728
|
$ 1,186,069
|
Total originated loans and leases
|
$
4,158,836
|
$
3,942,091
|
$ 3,734,979
|
$ 3,598,422
|
$ 3,425,138
|
Deposit
Balances
|
|
|
|
|
|
Non-interest-bearing
deposits (b)
|
$
1,569,095
|
$
1,682,634
|
$ 1,555,064
|
$ 1,589,402
|
$ 1,635,953
|
Interest-bearing
deposits:
|
|
|
|
|
|
Interest-bearing
demand accounts (b)
|
1,181,079
|
1,225,646
|
1,085,169
|
1,160,182
|
1,162,012
|
Retail
certificates of deposit
|
1,198,733
|
950,783
|
622,091
|
530,236
|
544,741
|
Money market
deposit accounts
|
730,902
|
718,633
|
579,106
|
617,029
|
624,708
|
Governmental
deposit accounts
|
761,625
|
705,596
|
649,303
|
625,965
|
734,734
|
Savings
accounts
|
987,170
|
1,116,622
|
1,024,638
|
1,068,547
|
1,077,383
|
Brokered
deposits
|
608,914
|
559,955
|
273,156
|
125,580
|
86,089
|
Total interest-bearing deposits
|
$
5,468,423
|
$
5,277,235
|
$ 4,233,463
|
$ 4,127,539
|
$ 4,229,667
|
Total deposits
|
$
7,037,518
|
$
6,959,869
|
$ 5,788,527
|
$ 5,716,941
|
$ 5,865,620
|
Total demand deposits
(b)
|
$
2,750,174
|
$
2,908,280
|
$ 2,640,233
|
$ 2,749,584
|
$ 2,797,965
|
Asset
Quality
|
|
|
|
|
|
Nonperforming assets
(NPAs): (c)
|
|
|
|
|
|
Loans 90+ days
past due and accruing
|
$
9,117
|
$
5,924
|
$
4,014
|
$
4,842
|
$
8,424
|
Nonaccrual
loans
|
26,187
|
28,796
|
29,980
|
31,473
|
27,831
|
Total nonperforming loans (NPLs) (c)
|
35,304
|
34,720
|
33,994
|
36,315
|
36,255
|
Other real
estate owned (OREO)
|
7,174
|
7,166
|
8,778
|
8,895
|
8,840
|
Total NPAs
(c)
|
$
42,478
|
$
41,886
|
$
42,772
|
$
45,210
|
$
45,095
|
Criticized loans
(d)
|
$
213,156
|
$
219,885
|
$
198,812
|
$
191,355
|
$
164,775
|
Classified loans
(e)
|
124,836
|
110,972
|
93,168
|
89,604
|
94,848
|
Allowance for credit
losses as a percent of NPLs (c)
|
178.23 %
|
176.30 %
|
156.80 %
|
146.39 %
|
145.82 %
|
NPLs as a percent of
total loans (c)
|
0.58 %
|
0.58 %
|
0.71 %
|
0.77 %
|
0.79 %
|
NPAs as a percent of
total assets (c)
|
0.48 %
|
0.48 %
|
0.58 %
|
0.63 %
|
0.64 %
|
NPAs as a percent of
total loans and OREO (c)
|
0.70 %
|
0.70 %
|
0.90 %
|
0.96 %
|
0.98 %
|
Criticized loans as a
percent of total loans (d)
|
3.50 %
|
3.68 %
|
4.18 %
|
4.07 %
|
3.57 %
|
Classified loans as a
percent of total loans (e)
|
2.05 %
|
1.86 %
|
1.96 %
|
1.90 %
|
2.06 %
|
Allowance for credit
losses as a percent of total loans
|
1.03 %
|
1.02 %
|
1.12 %
|
1.13 %
|
1.15 %
|
Total demand deposits
as a percent of total deposits (b)
|
39.08 %
|
41.79 %
|
45.61 %
|
48.10 %
|
47.70 %
|
Capital Information
(f)(g)(h)(i)
|
|
|
|
|
|
Common equity tier 1
risk-based capital ratio
|
11.49 %
|
11.36 %
|
12.22 %
|
11.92 %
|
11.80 %
|
Tier 1 risk-based
capital ratio
|
12.23 %
|
12.10 %
|
12.49 %
|
12.19 %
|
12.08 %
|
Total risk-based
capital ratio (tier 1 and tier 2)
|
13.06 %
|
12.92 %
|
13.35 %
|
13.06 %
|
12.98 %
|
Tier 1 leverage
ratio
|
9.45 %
|
9.64 %
|
9.02 %
|
8.92 %
|
8.64 %
|
Common equity tier 1
capital
|
$
746,630
|
$
728,892
|
$
624,292
|
$
604,566
|
$
584,880
|
Tier 1
capital
|
794,912
|
776,753
|
638,116
|
618,354
|
598,633
|
Total capital (tier 1
and tier 2)
|
848,956
|
828,910
|
682,477
|
662,421
|
643,189
|
Total risk-weighted
assets
|
$
6,497,970
|
$ 6,417,511
|
$ 5,110,318
|
$ 5,071,240
|
$ 4,955,627
|
Total stockholders'
equity to total assets
|
11.11 %
|
11.37 %
|
11.21 %
|
10.90 %
|
10.86 %
|
Tangible equity to
tangible assets (j)
|
6.85 %
|
7.00 %
|
7.08 %
|
6.67 %
|
6.47 %
|
|
|
(a)
|
Includes all loans and
leases acquired and purchased in 2012 and thereafter.
|
(b)
|
The sum of
non-interest-bearing deposits and interest-bearing demand accounts
is considered total demand deposits.
|
(c)
|
Nonperforming loans and
leases include loans 90+ days past due and accruing, renegotiated
loans and nonaccrual loans. Nonperforming assets include
nonperforming loans and leases, and OREO.
|
(d)
|
Includes loans and
leases categorized as a special mention, substandard, or
doubtful.
|
(e)
|
Includes loans and
leases categorized as substandard or doubtful.
|
(f)
|
Data presented as of
the end of the period indicated.
|
(g)
|
September 30, 2023 data
based on preliminary analysis and subject to revision.
|
(h)
|
Peoples' capital
conservation buffer was 5.06% at September 30, 2023, 4.92% at June
30, 2023, 5.35% at March 31, 2023, 5.06% at December 31, 2022 and
4.98% at September 30, 2022, compared to required capital
conservation buffer of 2.50%.
|
(i)
|
Peoples has adopted the
five-year transition to phase in the impact of the adoption of
CECL, effective January 1, 2020, on regulatory capital
ratios.
|
(j)
|
This ratio represents a
non-US GAAP financial measure since it excludes the balance sheet
impact of intangible assets acquired through acquisitions on both
total stockholders' equity and total assets. Additional information
regarding the calculation of this ratio is included at the end of
this news release under the caption of "Non-US GAAP Financial
Measures (Unaudited)."
|
PROVISION FOR
(RECOVERY OF) CREDIT LOSSES INFORMATION (Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
(Dollars in
thousands)
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Provision for
(recovery of) credit losses
|
|
|
|
|
|
|
|
|
|
Provision for (recovery
of) other credit losses
|
$
3,764
|
|
$
7,751
|
|
$
1,558
|
|
$
13,188
|
|
$
(6,583)
|
Provision for checking
account overdraft credit losses
|
289
|
|
232
|
|
218
|
|
701
|
|
772
|
Total provision for
(recovery of) credit losses
|
$
4,053
|
|
$
7,983
|
|
$
1,776
|
|
$
13,889
|
|
$
(5,811)
|
|
|
|
|
|
|
|
|
|
|
Net
charge-offs
|
|
|
|
|
|
|
|
|
|
Gross
charge-offs
|
$
2,834
|
|
$
2,041
|
|
$
1,990
|
|
$
6,730
|
|
$ 6,274
|
Recoveries
|
516
|
|
845
|
|
302
|
|
1,672
|
|
1,135
|
Net
charge-offs
|
$
2,318
|
|
$
1,196
|
|
$
1,688
|
|
$
5,058
|
|
$ 5,139
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) by type
|
|
|
|
|
|
|
|
|
|
Construction
|
$
—
|
|
$
—
|
|
$
—
|
|
$
9
|
|
$
—
|
Commercial real estate,
other
|
$
181
|
|
$
(9)
|
|
$
18
|
|
$
178
|
|
$
93
|
Commercial and
industrial
|
196
|
|
(440)
|
|
33
|
|
(243)
|
|
910
|
Premium
finance
|
21
|
|
20
|
|
37
|
|
55
|
|
73
|
Leases
|
737
|
|
515
|
|
632
|
|
1,641
|
|
1,358
|
Residential real
estate
|
23
|
|
(10)
|
|
132
|
|
25
|
|
460
|
Home equity lines of
credit
|
32
|
|
55
|
|
5
|
|
106
|
|
17
|
Consumer,
indirect
|
777
|
|
812
|
|
529
|
|
2,439
|
|
1,194
|
Consumer,
direct
|
81
|
|
43
|
|
72
|
|
213
|
|
246
|
Deposit account
overdrafts
|
270
|
|
210
|
|
230
|
|
635
|
|
788
|
Total net
charge-offs
|
$
2,318
|
|
$
1,196
|
|
$
1,688
|
|
$
5,058
|
|
$ 5,139
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs as a
percent of average total loans (annualized)
|
0.15 %
|
|
0.09 %
|
|
0.15 %
|
|
0.13 %
|
|
0.15 %
|
SUPPLEMENTAL
INFORMATION (Unaudited)
|
|
|
September
30,
|
|
June
30,
|
|
March
31,
|
|
December
31,
|
|
September
30,
|
(Dollars in
thousands)
|
2023
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Trust assets under
administration and
management
|
$
1,900,488
|
|
$
1,931,789
|
|
$
1,803,887
|
|
$
1,764,639
|
|
$
1,682,334
|
Brokerage assets under
administration and
management
|
1,364,372
|
|
1,379,309
|
|
1,318,300
|
|
1,211,868
|
|
1,127,831
|
Mortgage loans serviced
for others
|
$
366,996
|
|
$
375,882
|
|
$
384,005
|
|
$
392,364
|
|
$
400,736
|
Employees (full-time
equivalent)
|
1,482
|
|
1,500
|
|
1,286
|
|
1,267
|
|
1,244
|
CONSOLIDATED AVERAGE
BALANCE SHEETS AND NET INTEREST INCOME (Unaudited)
|
|
|
Three Months
Ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
(Dollars in
thousands)
|
Average
Balance
|
Income/
Expense
|
Yield/
Cost
|
|
Average
Balance
|
Income/
Expense
|
Yield/
Cost
|
|
Average
Balance
|
Income/
Expense
|
Yield/
Cost
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
investments
|
$
62,609
|
$
801
|
5.08 %
|
|
$ 58,245
|
$ 673
|
4.63 %
|
|
$
159,522
|
$ 847
|
2.11 %
|
Investment securities
(a)(b)
|
1,819,248
|
14,150
|
3.11 %
|
|
1,873,944
|
14,294
|
3.05 %
|
|
1,685,134
|
9,009
|
2.13 %
|
Loans
(b)(c):
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
400,396
|
9,983
|
9.76 %
|
|
358,732
|
6,491
|
7.16 %
|
|
222,966
|
2,765
|
4.85 %
|
Commercial real estate,
other
|
1,965,927
|
34,369
|
6.84 %
|
|
1,735,466
|
28,240
|
6.44 %
|
|
1,300,173
|
16,593
|
4.99 %
|
Commercial and
industrial
|
1,128,420
|
22,568
|
7.83 %
|
|
1,069,529
|
19,569
|
7.24 %
|
|
865,436
|
11,140
|
5.04 %
|
Premium
finance
|
179,390
|
3,565
|
7.78 %
|
|
154,557
|
2,659
|
6.81 %
|
|
162,057
|
1,949
|
4.71 %
|
Leases
|
384,606
|
11,508
|
11.71 %
|
|
359,016
|
10,275
|
11.32 %
|
|
307,459
|
9,628
|
12.25 %
|
Residential real estate
(d)
|
952,863
|
11,879
|
4.99 %
|
|
921,012
|
10,818
|
4.70 %
|
|
869,444
|
9,439
|
4.34 %
|
Home equity lines of
credit
|
201,973
|
4,012
|
7.88 %
|
|
191,915
|
3,656
|
7.64 %
|
|
173,032
|
2,217
|
5.08 %
|
Consumer,
indirect
|
662,462
|
8,774
|
5.25 %
|
|
651,669
|
7,942
|
4.89 %
|
|
576,826
|
5,907
|
4.06 %
|
Consumer,
direct
|
139,595
|
2,416
|
6.87 %
|
|
123,899
|
2,246
|
7.27 %
|
|
113,609
|
1,764
|
6.16 %
|
Total loans and
leases
|
6,015,632
|
109,074
|
7.13 %
|
|
5,565,795
|
91,896
|
6.55 %
|
|
4,591,002
|
61,402
|
5.26 %
|
Allowance for credit
losses
|
(60,724)
|
|
|
|
(53,427)
|
|
|
|
(52,719)
|
|
|
Net loans and
leases
|
5,954,908
|
|
|
|
5,512,368
|
|
|
|
4,538,283
|
|
|
Total earning
assets
|
7,836,765
|
124,025
|
6.23 %
|
|
7,444,557
|
106,863
|
5.70 %
|
|
6,382,939
|
71,258
|
4.40 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and other
intangible assets
|
411,229
|
|
|
|
387,055
|
|
|
|
329,482
|
|
|
Other assets
|
558,415
|
|
|
|
511,271
|
|
|
|
411,687
|
|
|
Total assets
|
$
8,806,409
|
|
|
|
$ 8,342,883
|
|
|
|
$ 7,124,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
deposits:
|
|
|
|
|
|
|
|
|
|
|
|
Savings
accounts
|
$
1,058,606
|
$
447
|
0.17 %
|
|
$ 1,095,713
|
$ 583
|
0.21 %
|
|
$ 1,079,580
|
$ 139
|
0.05 %
|
Governmental deposit
accounts
|
758,409
|
4,012
|
2.10 %
|
|
693,725
|
2,330
|
1.35 %
|
|
741,836
|
543
|
0.29 %
|
Interest-bearing demand
accounts
|
1,198,100
|
520
|
0.17 %
|
|
1,178,614
|
532
|
0.18 %
|
|
1,158,970
|
190
|
0.07 %
|
Money market deposit
accounts
|
717,765
|
2,943
|
1.63 %
|
|
679,123
|
2,006
|
1.18 %
|
|
623,144
|
292
|
0.19 %
|
Retail certificates of
deposit
|
1,043,579
|
7,161
|
2.72 %
|
|
825,155
|
4,209
|
2.05 %
|
|
560,532
|
644
|
0.46 %
|
Brokered deposits
(e)
|
631,410
|
7,399
|
4.65 %
|
|
480,640
|
4,743
|
3.96 %
|
|
86,524
|
508
|
2.33 %
|
Total interest-bearing
deposits
|
5,407,869
|
22,482
|
1.65 %
|
|
4,952,970
|
14,403
|
1.17 %
|
|
4,250,586
|
2,316
|
0.22 %
|
Short-term borrowings
(e)
|
458,462
|
5,169
|
4.48 %
|
|
493,561
|
5,314
|
4.32 %
|
|
202,765
|
393
|
0.77 %
|
Long-term
borrowings
|
148,234
|
2,668
|
7.10 %
|
|
132,091
|
1,847
|
5.56 %
|
|
111,882
|
1,111
|
3.97 %
|
Total borrowed
funds
|
606,696
|
7,837
|
5.12 %
|
|
625,652
|
7,161
|
4.58 %
|
|
314,647
|
1,504
|
1.91 %
|
Total interest-bearing
liabilities
|
6,014,565
|
30,319
|
1.96 %
|
|
5,578,622
|
21,564
|
1.55 %
|
|
4,565,233
|
3,820
|
0.33 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing
deposits
|
1,627,231
|
|
|
|
1,637,671
|
|
|
|
1,655,888
|
|
|
Accrued expenses and
other liabilities
|
159,755
|
|
|
|
175,152
|
|
|
|
105,128
|
|
|
Total
liabilities
|
7,801,551
|
|
|
|
7,391,445
|
|
|
|
6,326,249
|
|
|
Stockholders'
equity
|
1,004,858
|
|
|
|
951,438
|
|
|
|
797,859
|
|
|
Total liabilities and
stockholders' equity
|
$
8,806,409
|
|
|
|
$ 8,342,883
|
|
|
|
$ 7,124,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income/spread (b)
|
|
$
93,706
|
4.27 %
|
|
|
$
85,299
|
4.15 %
|
|
|
$
67,438
|
4.07 %
|
Net interest margin
(b)
|
|
|
4.70 %
|
|
|
|
4.54 %
|
|
|
|
4.17 %
|
|
Nine Months
Ended
|
|
September 30,
2023
|
|
September 30,
2022
|
(Dollars in
thousands)
|
Average
Balance
|
Income/
Expense
|
Yield/
Cost
|
|
Average
Balance
|
Income/
Expense
|
Yield/
Cost
|
Assets
|
|
|
|
|
|
|
|
Short-term
investments
|
$
52,379
|
$
1,862
|
4.75 %
|
|
$
224,060
|
$
1,306
|
0.78 %
|
Investment securities
(a)(b)
|
1,827,261
|
40,791
|
2.98 %
|
|
1,688,124
|
24,703
|
1.95 %
|
Loans
(b)(c):
|
|
|
|
|
|
|
|
Construction
|
312,173
|
20,437
|
8.63 %
|
|
219,478
|
7,136
|
4.29 %
|
Commercial real estate,
other
|
1,535,815
|
82,403
|
7.08 %
|
|
1,338,375
|
46,974
|
4.63 %
|
Commercial and
industrial
|
981,382
|
56,747
|
7.63 %
|
|
872,601
|
27,878
|
4.21 %
|
Premium
finance
|
160,729
|
8,374
|
6.87 %
|
|
146,345
|
4,891
|
4.41 %
|
Leases
|
362,222
|
31,426
|
11.44 %
|
|
253,231
|
26,271
|
13.68 %
|
Residential real estate
(d)
|
898,531
|
32,414
|
4.81 %
|
|
890,499
|
28,531
|
4.27 %
|
Home equity lines of
credit
|
183,993
|
10,634
|
7.73 %
|
|
168,137
|
5,577
|
4.43 %
|
Consumer,
indirect
|
651,578
|
23,947
|
4.91 %
|
|
547,438
|
16,195
|
3.96 %
|
Consumer,
direct
|
119,750
|
6,401
|
7.15 %
|
|
110,509
|
5,006
|
6.06 %
|
Total loans and
leases
|
5,206,173
|
272,783
|
6.93 %
|
|
4,546,613
|
168,459
|
4.91 %
|
Allowance for credit
losses
|
(55,756)
|
|
|
|
(56,237)
|
|
|
Net loans and
leases
|
5,150,417
|
|
|
|
4,490,376
|
|
|
Total earning
assets
|
7,030,057
|
315,436
|
5.94 %
|
|
6,402,560
|
194,468
|
4.03 %
|
|
|
|
|
|
|
|
|
Goodwill and other
intangible assets
|
374,924
|
|
|
|
321,043
|
|
|
Other assets
|
496,497
|
|
|
|
380,376
|
|
|
Total assets
|
$
7,901,478
|
|
|
|
$
7,103,979
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
Interest-bearing
deposits:
|
|
|
|
|
|
|
|
Savings
accounts
|
$
1,040,157
|
$
1,166
|
0.15 %
|
|
$
1,068,912
|
$
218
|
0.03 %
|
Governmental deposit
accounts
|
669,397
|
7,408
|
1.48 %
|
|
705,891
|
1,462
|
0.28 %
|
Interest-bearing demand
accounts
|
1,117,529
|
1,232
|
0.15 %
|
|
1,169,284
|
397
|
0.05 %
|
Money market deposit
accounts
|
634,271
|
5,774
|
1.22 %
|
|
638,061
|
492
|
0.10 %
|
Retail certificates of
deposit
|
771,186
|
13,120
|
2.27 %
|
|
596,335
|
2,262
|
0.51 %
|
Brokered deposits
(e)
|
451,719
|
13,846
|
4.10 %
|
|
88,336
|
1,552
|
2.35 %
|
Total interest-bearing
deposits
|
4,684,259
|
42,546
|
1.21 %
|
|
4,266,819
|
6,383
|
0.20 %
|
Short-term borrowings
(e)
|
477,826
|
14,940
|
4.18 %
|
|
169,360
|
992
|
0.78 %
|
Long-term
borrowings
|
126,449
|
5,668
|
5.95 %
|
|
131,129
|
3,148
|
3.20 %
|
Total borrowed
funds
|
604,275
|
20,608
|
4.55 %
|
|
300,489
|
4,140
|
1.83 %
|
Total interest-bearing
liabilities
|
5,288,534
|
63,154
|
1.55 %
|
|
4,567,308
|
10,523
|
0.31 %
|
|
|
|
|
|
|
|
|
Non-interest-bearing
deposits
|
1,562,923
|
|
|
|
1,637,053
|
|
|
Accrued expenses and
other liabilities
|
130,023
|
|
|
|
91,749
|
|
|
Total
liabilities
|
6,981,480
|
|
|
|
6,296,110
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
919,998
|
|
|
|
807,869
|
|
|
Total liabilities and
stockholders' equity
|
$
7,901,478
|
|
|
|
$
7,103,979
|
|
|
|
|
|
|
|
|
|
|
Net interest
income/spread (b)
|
|
$ 252,282
|
4.39 %
|
|
|
$
183,945
|
3.72 %
|
Net interest margin
(b)
|
|
|
4.74 %
|
|
|
|
3.81 %
|
|
|
(a)
|
Average balances are
based on carrying value.
|
(b)
|
Interest income and
yields are presented on a fully tax-equivalent basis, using a 23.3%
blended corporate income tax rate at September 30, 2023, a 23.6%
blended corporate income tax rate at June 30, 2023 and a 23.3%
blended corporate income tax rate at September 30, 2022.
|
(c)
|
Average balances
include nonaccrual and impaired loans. Interest income includes
interest earned and received on nonaccrual loans prior to the loans
being placed on nonaccrual status. Loan fees included in interest
income were immaterial for all periods presented.
|
(d)
|
Loans held for sale are
included in the average loan balance listed. Related interest
income on loans originated for sale prior to the loan being sold is
included in loan interest income.
|
(e)
|
Interest related to
interest rate swap transactions is included, as appropriate to the
transaction, in interest expense on brokered deposits and interest
expense on short-term FHLB advances (included in short-term
borrowings) for all periods presented.
|
NON-U.S. GAAP
FINANCIAL MEASURES (Unaudited)
|
|
The following non-U.S.
GAAP financial measures used by Peoples provide information useful
to investors in understanding Peoples' operating performance and
trends, and facilitate comparisons with the performance of Peoples'
peers. Peoples also uses the non-U.S. GAAP financial measures for
calculating incentive compensation. The following tables summarize
the non-U.S. GAAP financial measures derived from amounts reported
in Peoples' consolidated financial statements:
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
(Dollars in
thousands)
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Core non-interest
expense:
|
|
|
|
|
|
|
|
|
|
Total non-interest
expense
|
$
71,696
|
|
$
70,623
|
|
$
52,253
|
|
$
198,798
|
|
$
153,781
|
Less:
acquisition-related expenses
|
4,434
|
|
10,709
|
|
339
|
|
15,694
|
|
2,314
|
Less: pension
settlement charges
|
2,424
|
|
—
|
|
139
|
|
2,424
|
|
139
|
Less: COVID-19-related
expenses
|
—
|
|
—
|
|
9
|
|
—
|
|
132
|
Add: COVID -19 Employee
Retention Credit
|
—
|
|
548
|
|
—
|
|
548
|
|
—
|
Core non-interest
expense
|
$
64,838
|
|
$
60,462
|
|
$
51,766
|
|
$
181,228
|
|
$
151,196
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
(Dollars in
thousands)
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Efficiency
ratio:
|
|
|
|
|
|
|
|
|
|
Total non-interest
expense
|
71,696
|
|
$
70,623
|
|
52,253
|
|
198,798
|
|
153,781
|
Less: amortization of
other intangible assets
|
3,280
|
|
2,800
|
|
2,023
|
|
7,951
|
|
5,765
|
Adjusted non-interest
expense
|
$
68,416
|
|
$
67,823
|
|
$
50,230
|
|
$ 190,847
|
|
$ 148,016
|
|
|
|
|
|
|
|
|
|
|
Total non-interest
income
|
$
23,204
|
|
$
21,015
|
|
$
20,366
|
|
$
63,279
|
|
$
59,802
|
Less: net (loss) gain
on investment securities
|
(7)
|
|
(166)
|
|
21
|
|
(2,108)
|
|
107
|
Less: net loss on asset
disposals and other transactions
|
(307)
|
|
(1,665)
|
|
(35)
|
|
(2,218)
|
|
(314)
|
Total non-interest
income, excluding net gains and losses
|
$
23,518
|
|
$
22,846
|
|
$
20,380
|
|
$
67,605
|
|
$
60,009
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
93,274
|
|
$
84,853
|
|
$
67,051
|
|
$ 251,005
|
|
$ 182,829
|
Add: fully
tax-equivalent adjustment (a)
|
432
|
|
446
|
|
387
|
|
1,277
|
|
1,116
|
Net interest income on
a fully tax-equivalent basis
|
$
93,706
|
|
$
85,299
|
|
$
67,438
|
|
$ 252,282
|
|
$ 183,945
|
|
|
|
|
|
|
|
|
|
|
Adjusted
revenue
|
$
117,224
|
|
$ 108,145
|
|
$
87,818
|
|
$ 319,887
|
|
$ 243,954
|
|
|
|
|
|
|
|
|
|
|
Efficiency
ratio
|
58.36 %
|
|
62.71 %
|
|
57.20 %
|
|
59.66 %
|
|
60.67 %
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio
adjusted for non-core items:
|
|
|
|
|
|
|
|
|
Core non-interest
expense
|
$
64,838
|
|
$
60,462
|
|
$
51,766
|
|
$ 181,228
|
|
$ 151,196
|
Less: amortization of
other intangible assets
|
3,280
|
|
2,800
|
|
2,023
|
|
7,951
|
|
5,765
|
Adjusted core
non-interest expense
|
$
61,558
|
|
$
57,662
|
|
$
49,743
|
|
$ 173,277
|
|
$ 145,431
|
|
|
|
|
|
|
|
|
|
|
Adjusted
revenue
|
$
117,224
|
|
$ 108,145
|
|
$
87,818
|
|
$ 319,887
|
|
$ 243,954
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio
adjusted for non-core items
|
52.51 %
|
|
53.32 %
|
|
56.64 %
|
|
54.17 %
|
|
59.61 %
|
|
|
(a)
|
Tax effect is
calculated using a 23.3% blended corporate income tax rate at
September 30, 2023, a 23.6% blended corporate income tax rate at
June 30, 2023 and a 23.3% blended corporate income tax rate for
September 30, 2022.
|
NON-US GAAP
FINANCIAL MEASURES (Unaudited) -- (Continued)
|
|
(Dollars in
thousands, except per share data)
|
September
30,
|
June
30,
|
March
31,
|
December
31,
|
September
30,
|
2023
|
2023
|
2023
|
2022
|
2022
|
|
|
|
|
|
|
Tangible
equity:
|
|
|
|
|
|
Total stockholders'
equity
|
$
993,219
|
$
998,907
|
$
819,543
|
$
785,328
|
$
760,511
|
Less: goodwill and
other intangible assets
|
408,494
|
413,172
|
324,562
|
326,329
|
328,428
|
Tangible
equity
|
$
584,725
|
$
585,735
|
$
494,981
|
$
458,999
|
$
432,083
|
|
|
|
|
|
|
Tangible
assets:
|
|
|
|
|
|
Total assets
|
$
8,942,534
|
$
8,786,635
|
$ 7,311,520
|
$
7,207,304
|
$
7,005,854
|
Less: goodwill and
other intangible assets
|
408,494
|
413,172
|
324,562
|
326,329
|
328,428
|
Tangible
assets
|
$
8,534,040
|
$
8,373,463
|
$ 6,986,958
|
$
6,880,975
|
$
6,677,426
|
|
|
|
|
|
|
Tangible book value
per common share:
|
|
|
|
|
|
Tangible
equity
|
$
584,725
|
$
585,735
|
$
494,981
|
$
458,999
|
$
432,083
|
Common shares
outstanding
|
35,395,990
|
35,374,916
|
28,488,158
|
28,287,837
|
28,278,078
|
|
|
|
|
|
|
Tangible book value per
common share
|
$
16.52
|
$
16.56
|
$
17.37
|
$
16.23
|
$
15.28
|
|
|
|
|
|
|
Tangible equity to
tangible assets ratio:
|
|
|
|
|
|
Tangible
equity
|
$
584,725
|
$
585,735
|
$
494,981
|
$
458,999
|
$
432,083
|
Tangible
assets
|
$
8,534,040
|
$
8,373,463
|
$ 6,986,958
|
$
6,880,975
|
$
6,677,426
|
|
|
|
|
|
|
Tangible equity to
tangible assets ratio
|
6.85 %
|
7.00 %
|
7.08 %
|
6.67 %
|
6.47 %
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
(Dollars in
thousands, except per share data)
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Pre-provision net
revenue:
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
$
40,729
|
|
$
27,262
|
|
$
33,388
|
|
$ 101,597
|
|
$
94,661
|
Add: provision for
credit losses
|
4,053
|
|
7,983
|
|
1,776
|
|
13,889
|
|
1,776
|
Add: loss on
OREO
|
1
|
|
1,612
|
|
105
|
|
1,623
|
|
138
|
Add: loss on investment
securities
|
7
|
|
166
|
|
—
|
|
2,108
|
|
44
|
Add: loss on other
assets
|
283
|
|
45
|
|
—
|
|
557
|
|
142
|
Add: net loss on other
transactions
|
23
|
|
8
|
|
24
|
|
38
|
|
128
|
Less: recovery of
credit losses
|
—
|
|
—
|
|
—
|
|
—
|
|
7,587
|
Less: gain on
investment securities
|
—
|
|
—
|
|
21
|
|
—
|
|
151
|
Less: gain on other
assets
|
—
|
|
—
|
|
94
|
|
—
|
|
94
|
Pre-provision net
revenue
|
$
45,096
|
|
$
37,076
|
|
$
35,178
|
|
$ 119,812
|
|
$
89,057
|
Total average
assets
|
$ 8,806,409
|
|
$
8,342,883
|
|
$ 7,124,108
|
|
$
7,901,478
|
|
$
7,103,979
|
|
|
|
|
|
|
|
|
|
|
Pre-provision net
revenue to total average assets
(annualized)
|
2.03 %
|
|
1.78 %
|
|
1.96 %
|
|
2.03 %
|
|
1.68 %
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding – diluted
|
35,061,897
|
|
32,649,976
|
|
27,973,255
|
|
31,977,486
|
|
28,009,263
|
Pre-provision net
revenue per common share – diluted
|
$1.28
|
|
$1.13
|
|
$1.25
|
|
$3.72
|
|
$3.17
|
NON-US GAAP
FINANCIAL MEASURES (Unaudited) -- (Continued)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
(Dollars in
thousands)
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Annualized net
income adjusted for non-core items:
|
|
|
|
|
Net income
|
$
31,882
|
|
$
21,096
|
|
$
25,978
|
|
$
79,538
|
|
$ 74,443
|
Add: loss on investment
securities
|
7
|
|
166
|
|
—
|
|
2,108
|
|
—
|
Less: tax effect of
loss on investment securities (a)
|
2
|
|
35
|
|
—
|
|
443
|
|
—
|
Less: gain on
investment securities
|
—
|
|
—
|
|
21
|
|
—
|
|
107
|
Add: tax effect of net
gain on investment securities (a)
|
—
|
|
—
|
|
4
|
|
—
|
|
22
|
Add: net loss on asset
disposals and other transactions
|
307
|
|
1,665
|
|
35
|
|
2,218
|
|
314
|
Less: tax effect of net
loss on asset disposals and other transactions (a)
|
65
|
|
349
|
|
7
|
|
466
|
|
66
|
Add:
acquisition-related expenses
|
4,434
|
|
10,709
|
|
339
|
|
15,694
|
|
2,314
|
Less: tax effect of
acquisition-related expenses (a)
|
931
|
|
2,249
|
|
71
|
|
3,296
|
|
486
|
Add: pension settlement
charges
|
2,424
|
|
—
|
|
139
|
|
2,424
|
|
139
|
Less: tax effect of
pension settlement charges (a)
|
509
|
|
—
|
|
29
|
|
509
|
|
29
|
Add: COVID-19-related
expenses
|
—
|
|
—
|
|
9
|
|
—
|
|
132
|
Less: tax effect of
COVID-19-related expenses (a)
|
—
|
|
—
|
|
2
|
|
—
|
|
28
|
Less: COVID -19
Employee Retention Credit
|
—
|
|
548
|
|
—
|
|
548
|
|
—
|
Add: tax effect of
COVID -19 Employee Retention Credit
|
—
|
|
115
|
|
—
|
|
115
|
|
—
|
Net income adjusted for
non-core items (after tax)
|
$
37,547
|
|
$
30,570
|
|
$
26,374
|
|
$
96,835
|
|
$ 76,648
|
|
|
|
|
|
|
|
|
|
|
Days in the
period
|
92
|
|
91
|
|
92
|
|
273
|
|
273
|
Days in the
year
|
365
|
|
365
|
|
365
|
|
365
|
|
365
|
Annualized net
income
|
$
126,488
|
|
$
84,616
|
|
$
103,065
|
|
$
106,342
|
|
$ 99,530
|
Annualized net income
adjusted for non-core items (after tax)
|
$
148,964
|
|
$ 122,616
|
|
$
104,636
|
|
$
129,468
|
|
$
102,478
|
Return on average
assets:
|
|
|
|
|
|
|
|
|
|
Annualized net
income
|
$
126,488
|
|
$
84,616
|
|
$
103,065
|
|
$
106,342
|
|
$ 99,530
|
Total average
assets
|
$
8,806,409
|
|
$
8,342,883
|
|
$
7,124,108
|
|
$
7,901,478
|
|
$
7,103,979
|
Return on average
assets
|
1.44 %
|
|
1.01 %
|
|
1.45 %
|
|
1.35 %
|
|
1.40 %
|
Return on average
assets adjusted for non-core items:
|
|
|
|
|
Annualized net income
adjusted for non-core items (after tax)
|
$
148,964
|
|
$ 122,616
|
|
$
104,636
|
|
$
129,468
|
|
$
102,478
|
Total average
assets
|
$
8,806,409
|
|
$
8,342,883
|
|
$
7,124,108
|
|
$
7,901,478
|
|
$
7,103,979
|
Return on average
assets adjusted for non-core items
|
1.69 %
|
|
1.47 %
|
|
1.47 %
|
|
1.64 %
|
|
1.44 %
|
|
|
(a)
|
Tax effect is
calculated using a 21% statutory federal corporate income tax
rate.
|
NON-US GAAP
FINANCIAL MEASURES (Unaudited) -- (Continued)
|
|
|
Three Months
Ended
|
|
At or For the Nine
Months Ended
|
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
|
(Dollars in
thousands)
|
2023
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized net
income excluding amortization of other intangible
assets:
|
|
Net income
|
$
31,882
|
|
$ 21,096
|
|
$
25,978
|
|
$ 79,538
|
|
$ 74,443
|
|
Add: amortization of
other intangible assets
|
3,280
|
|
2,800
|
|
2,023
|
|
7,951
|
|
5,765
|
|
Less: tax effect of
amortization of other intangible assets (a)
|
689
|
|
588
|
|
425
|
|
1,670
|
|
1,211
|
|
Net income excluding
amortization of other intangible assets
(after tax)
|
$
34,473
|
|
$ 23,308
|
|
$
27,576
|
|
$ 85,819
|
|
$ 78,997
|
|
|
|
|
|
|
|
|
|
|
|
|
Days in the
period
|
92
|
|
91
|
|
92
|
|
273
|
|
273
|
|
Days in the
year
|
365
|
|
365
|
|
365
|
|
365
|
|
365
|
|
Annualized net
income
|
$ 126,488
|
|
$ 84,616
|
|
$ 103,065
|
|
$
106,342
|
|
$ 99,530
|
|
Annualized net income
excluding amortization of other
intangible assets (after tax)
|
$ 136,768
|
|
$ 93,488
|
|
$ 109,405
|
|
$
114,740
|
|
$
105,619
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible
equity:
|
|
Total average
stockholders' equity
|
$
1,004,858
|
|
$
951,438
|
|
$ 797,859
|
|
$
919,998
|
|
$
807,869
|
|
Less: average goodwill
and other intangible assets
|
411,229
|
|
387,055
|
|
329,482
|
|
374,924
|
|
321,043
|
|
Average tangible
equity
|
$ 593,629
|
|
$
564,383
|
|
$ 468,377
|
|
$
545,074
|
|
$
486,826
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on total
average stockholders' equity ratio:
|
|
|
|
|
|
Annualized net
income
|
$ 126,488
|
|
$ 84,616
|
|
$ 103,065
|
|
$
106,342
|
|
$ 99,530
|
|
Total average
stockholders' equity
|
$
1,004,858
|
|
$
951,438
|
|
$ 797,859
|
|
$
919,998
|
|
$
807,869
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on total average
stockholders' equity ratio
|
12.59 %
|
|
8.89 %
|
|
12.92 %
|
|
11.56 %
|
|
12.32 %
|
|
|
|
|
|
|
|
Return on average
tangible equity ratio:
|
|
|
|
|
|
Annualized net income
excluding amortization of other
intangible assets (after tax)
|
$ 136,768
|
|
$ 93,488
|
|
$ 109,405
|
|
$
114,740
|
|
$
105,619
|
|
Average tangible
equity
|
$ 593,629
|
|
$
564,383
|
|
$ 468,377
|
|
$
545,074
|
|
$
486,826
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
tangible equity ratio
|
23.04 %
|
|
16.56 %
|
|
23.36 %
|
|
21.05 %
|
|
21.70 %
|
|
|
|
(a)
|
Tax effect is
calculated using a 21% statutory federal corporate income tax
rate.
|
View original
content:https://www.prnewswire.com/news-releases/peoples-bancorp-inc-announces-third-quarter-2023-results-and-record-net-income-301965113.html
SOURCE Peoples Bancorp Inc.