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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.09pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.06pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.23pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
losses+1
failure+1
shortages+1
conflicts+1
imbalances+1
Positive rising
No words rose this year.
Risk Factors (Item 1A)
10,902 words
ITEM 1A RISK FACTORS
The following are certain risks that management believes are specific to Peoples’ business. This should not be viewed as an all-inclusive list of risks or presenting the risk factors listed in any particular order. Additional risks that are not presently known or that Peoples presently deems to be immaterial could also have a material adverse impact on Peoples’ business, financial condition or results of operations.
Economic, Political, Environmental and Market Risks
• Changes in economic and political conditions could adversely affect Peoples’ earnings and capital through declines in deposits, quality of investment securities, loan demand, the ability of Peoples’ borrowers to repay loans and the value of the collateral securing Peoples’ loans.
Peoples’ success depends, in part, on local and national economic and political conditions, as well as governmental fiscal and monetary policies. Conditions such as inflation, recession, unemployment, supply chain issues or labor shortages, supply-demand imbalances affecting real estate prices, changes in interest rates, fiscal and monetary policy, an increasing federal government budget deficit, the failure of the federal government to raise the federal debt ceiling, slowing gross domestic product, 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 other factors beyond Peoples’ control may adversely affect Peoples Bank’s deposit levels and composition, the quality of investment securities available for purchase, the demand for loans, the ability of Peoples Bank’s borrowers to repay their loans, and the value of the collateral securing the loans Peoples Bank makes. in U.S. and global financial markets and changes in oil production in the Middle East also affect the economy and stock prices in the U.S., which can affect Peoples’ earnings and capital, as well as the ability of Peoples Bank’s customers to repay loans.
The local economies of the majority of Peoples’ market areas historically have been less robust than the economy of the nation as a whole and typically are not subject to the same extent of fluctuations as the national economy. In general, a favorable business environment and economic conditions are characterized by, among other factors, economic growth, efficient capital markets, low inflation, low unemployment, high business and investor confidence, and strong business earnings. Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business activity, or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; increases in inflation or interest rates; high unemployment; volatility in pricing and availability of natural resources; natural disasters; or a combination of these or other factors.
The continued impact on economic conditions caused by inflation and changes in market interest rates could have an adverse effect on Peoples’ asset quality, deposit levels and loan demand, and, therefore, Peoples’ financial condition and results of operations. Because a significant amount of Peoples Bank’s loans are secured by either commercial or residential real estate, decreases in real estate values could adversely affect the value of property used as collateral and Peoples Bank’s ability to sell the collateral upon foreclosure.
• Changes in interest rates may adversely affect Peoples’ profitability.
Peoples’ earnings and cash flows are dependent to a significant degree on net interest income, which is the amount by which interest income exceeds interest expense. Interest rates are highly sensitive to many factors that are beyond Peoples’ control, including general economic conditions and the policies of various governmental and regulatory agencies and, in particular, the Federal Reserve Board. Interest rates are significantly impacted by governmental interest rate policies, including changes to such
policies that may result from potential changes in the composition of the Federal Reserve Board, changes in the interest rate environment due to the 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. Changes in monetary policy, including changes in interest rates, not only could influence the interest Peoples receives on loans and securities, and the amount of interest Peoples pays on deposits and borrowings, but such changes could also affect (1) Peoples’ ability to originate loans and obtain deposits, (2) the fair value of Peoples’ financial assets and liabilities, and (3) the average duration of Peoples’ mortgage-backed securities portfolio. If the interest rates paid on deposits and borrowings increase at a faster rate than the interest rates received on loans and other investments, Peoples’ net interest income and, therefore, earnings, could be adversely affected. Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and borrowings.
Changes in interest rates may also negatively affect the ability of Peoples’ borrowers to repay their loans, particularly as interest rates rise and adjustable-rate loans become more expensive.
Peoples' management uses various measures to monitor interest rate risk and believes it has implemented effective asset and liability management strategies to reduce the potential effects of changes in interest rates on Peoples’ results of operations. Peoples’ management also periodically adjusts the mix of assets and liabilities to manage interest rate risk. However, any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on Peoples’ financial condition and results of operations.
A prolonged period of extremely volatile and unstable market conditions has the potential to increase Peoples’ funding costs and negatively affect market risk mitigation strategies. Higher revenue volatility from changes in interest rates and spreads to benchmark indices could cause a loss of future net interest income and a decrease in the fair market values of Peoples’ assets. Fluctuations in interest rates will impact both the level of income and expense recorded on most of Peoples’ assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, which in turn could have a material adverse effect on Peoples’ net income, results of operations and financial condition. Peoples cannot predict the nature or timing of future changes in monetary policies or the precise effects that they may have on Peoples’ activities and financial results.
See the sections captioned “Net Interest Income” and “Interest Rate Sensitivity and Liquidity” in “ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” of this Form 10-K for further discussion related to Peoples’ interest rate risk.
• Changes in market rates and economic conditions could cause the interest rate swaps Peoples Bank has entered into to become ineffective.
The accounting treatment of the interest rate swaps entered into by Peoples as part of Peoples’ interest rate management strategy may change if the hedging relationship is not as effective as currently anticipated. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for fixed payments from Peoples. At December 31, 2025, Peoples had five effective interest rate swaps, with an aggregate notional value of $45.0 million, which were designated as cash flow hedges of brokered deposits, and which are expected to be extended every 90 days through the maturity dates of the swaps.
Although Peoples expects that the hedging relationships described above will be highly effective, such relationships could prove ineffective. At December 31, 2025, the termination value of derivative financial instruments in a net liability position was $9.3 million, which included accrued interest but excluded any adjustment for nonperformance risk. At December 31, 2025, Peoples had $4.2 million of cash pledged with its derivative counterparties, while the counterparties had $2.1 million of cash collateral pledged. Peoples and its derivative counterparties did not have investment securities pledged at December 31, 2025. If Peoples had breached any of the provisions of the derivative financial instruments at December 31, 2025, Peoples could have been required to settle its obligations under the derivative financial agreements at the termination value.
• Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on Peoples’ results of operations and financial condition.
The macroeconomic environment in the U.S. is susceptible to global events and volatility in financial markets. In addition, trade negotiations between the U.S. and other nations remain uncertain and could adversely impact economic and market conditions for Peoples and its clients and counterparties. Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on the Peoples’ results of operations and financial condition.
For example, on February 24, 2022, Russian military forces invaded Ukraine, and sustained conflict and disruption in the region have occurred and remains likely to continue. In addition, the October 7, 2023 attack by Hamas in Israel has resulted in prolongedconflict and disruption in the Middle East. Further, there has been growing tension with Venezuela in recent months as well as increased trade competition with China. Although the length, impact and outcome of the global conflicts are highly unpredictable, these conflicts have resulted, and could continue to result, in significant market and other disruptions, including
significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences, as well as increases in cyberattacks and espionage. The extent and duration of the military action, sanctions and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and Peoples’ business for an unknown period of time.
• Inflation may have an adverse impact on Peoples’ business and on its customers.
Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. In addition, inflation generally increases the cost of goods and services Peoples uses in its business operations, such as electricity and other utilities, which increases non-interest expenses. Furthermore, Peoples’ customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans.
Any of the above-mentioned factors could affect Peoples’ business, financial condition and operating results. Any such disruptions may also magnify the impact of other risks described in this Form 10-K.
Business Operations Risks
• Peoples is exposed to operational risk.
Similar to any large organization, Peoples is exposed to many types of operational risk, including those discussed in more detail elsewhere in this Item, such as reputational risk, cybersecurity risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems.
Peoples may be subject to disruptions of its operating systems arising from events that are wholly or partially beyond its control, which may include, for example, computer viruses, cyber-attacks, spikes in transaction volume and/or customer activity, electrical or telecommunications outages, or natural disasters. Peoples could be adversely affected by operating systems disruptions if new or upgraded business management systems are defective, not installed properly or not properly integrated into existing operating systems. Although Peoples has programs in place related to business continuity, disaster recovery and information security to maintain the confidentiality, integrity and availability of its operating systems, business applications and customer information, such disruptions may give rise to interruptions in service to customers, loss of data privacy and loss or liability to Peoples.
Any failure or interruption in Peoples’ operating or information systems, or any security or data breach, could cause reputational damage, jeopardize the confidentiality of customer information, result in a loss of customer business, subject Peoples to regulatory intervention or expose Peoples to civil litigation and financial loss or liability, any of which could have a material adverse effect on Peoples.
Negative public opinion can result from Peoples’ actual or alleged conduct in any number of activities, including lending practices, corporate governance, acquisitions, social media and other marketing activities, and the implementation of environmental, social, and governance practices, and from actions taken by governmental regulators and community organizations in response to any of the foregoing. Negative public opinion could adversely affect Peoples’ ability to attract and keep customers, could expose Peoples to potential litigation or regulatory action, and could have a material adverse effect on the price of Peoples’ common shares or result in heightened volatility.
Given the volume of transactions Peoples processes, certain errors may be repeated or compounded before they are discovered and successfully rectified. Peoples’ necessary dependence upon automated systems to record and process its transaction volume may further increase the risk that technical system flaws or employee tampering or manipulation of those systems will result in losses that are difficult to detect, which may give rise to disruption of service to customers and to financial loss or liability. Peoples is further exposed to the risk that its external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as Peoples is) or that Peoples’ (or its vendors’) consumer compliance business continuity, and data security systems will prove to be .
Any future restrictions on the access of Peoples’ workforce to its facilities could limit Peoples’ ability to meet customer service expectations and have a material adverse effect on operations. Peoples relies on business processes and branch activity that largely depend on people and technology, including access to information technology systems as well as information, applications, payment systems and other services provided by third parties.
• Failures or material breaches in security of Peoples’ systems and telecommunications networks, or those of a third-party service provider, may have a material adverse effect on Peoples’ results of operations and financial condition and the price of Peoples’ common shares.
Peoples collects, processes and stores sensitive consumer data by utilizing computer systems and telecommunications networks operated by both Peoples and third-party service providers. Peoples’ dependence upon automated systems to record and process Peoples’ transactions poses the risk that technical system flaws, employee errors, tampering or manipulation of those
systems, or attacks by third parties will result in losses and may be difficult to detect. Peoples has security and backup and recovery systems in place, as well as a business continuity plan, designed to ensure the computer systems will not become inoperable, to the extent possible. Peoples also routinely reviews documentation of such controls and backups related to third-party service providers. Peoples’ inability to use or access these information systems at critical points in time could unfavorably impact the timeliness and efficiency of Peoples’ business operations.
Information security risks have increased due to the sophistication and activities of organized crime, hackers, terrorists and other external parties and the use of online, telephone, and mobile banking channels by clients. In recent years, several banks have experienced denial of service attacks in which individuals or organizations flood the bank’s website with extraordinarily high volumes of traffic, with the goal and effect of disrupting the ability of the bank to process transactions. Other businesses have been victims of ransomware attacks in which the business becomes unable to access the business’ own information and is presented with a demand to pay a ransom in order to once again have access to the business’ information. Peoples could be adversely affected if one of its employees or a third-party service provider causes a significant operational break-down or failure, either as a result of human error or where an individual purposefully sabotages or fraudulently Peoples’ operations or systems. Peoples may not be to prevent employee or third-party or , and the precautions Peoples takes to detect this type of activity might prove . Peoples is further to the risk that the third-party service providers may be to fulfill their contractual obligations (or will be subject to the same risks as Peoples is). These may with service to Peoples’ customers, cause additional regulatory and result in a financial or liability.
Any compromise to Peoples’ information security could impair Peoples’ reputation and deter Peoples’ clients from using Peoples’ banking services. Information security breaches can also disrupt the operation of information systems on which Peoples and its customers depend, adversely affecting business operations. Such events can result in costly remediation measures and litigation or governmental investigation and responding to security breaches can place unanticipated demands on the time and attention of management. Peoples relies on security systems to provide the protection and authentication necessary to secure transmission of data againstdamage by theft, fire, power loss, telecommunications failure or similar catastrophic event, as well as from security , ransomware, of service attacks, viruses, worms, and other caused by hackers. Computer -ins, phishing and other of customer or vendor systems could also the security of information stored in and transmitted through Peoples’ computer systems and network infrastructure.
Peoples’ associates also confront the risk of being compromised by emails sent by perpetrators posing as company executives or vendors in order to dupe Peoples’ personnel into sending large sums of money to accounts controlled by the perpetrators. Peoples requires all employees to complete annual information security awareness training to increase their awareness of these risks and to engage them in Peoples’ mitigation efforts. If these precautions are not sufficient to protect Peoples’ systems from data breaches or compromises, Peoples’ reputation and business could be adversely affected.
In addition, there have been instances where financial institutions have been victims of fraudulent activity in which criminals pose as customers to initiate wire and automated clearinghouse transactions out of customer accounts. Although Peoples has policies and procedures in place to verify the authenticity of its customers, Peoples cannot ensure that such policies and procedures will prevent all fraudulent transfers.
Peoples depends on the services of a variety of third-party vendors to meet data processing and communication needs, and Peoples has contracted with third parties to run their proprietary software on Peoples’ behalf. While Peoples performs reviews of security controls instituted by the vendor in accordance with industry standards and institutes Peoples’ own internal security controls, Peoples relies on continued maintenance of the controls by the outside party to safeguard customer data.
Additionally, Peoples issues debit cards which are susceptible to compromise at the point of sale via the physical terminal through which transactions are processed and by other means of hacking. The security and integrity of these transactions are dependent upon the retailers’ vigilance and willingness to invest in technology and upgrades. Issuing debit cards to Peoples’ clients exposes Peoples to potential losses which, in the event of a data breach at one or more major retailers may adversely affect Peoples’ business, financial condition, and results of operations.
Peoples is also at risk of the impact of natural disasters, terrorism and international hostilities on Peoples’ systems or from the effects of outages or other failures involving power or communications systems operated by others.
Peoples has implemented security controls to prevent unauthorized access to its computer systems, and Peoples requires that its third-party service providers maintain similar controls. However, Peoples’ management cannot be certain that these measures will be successful. A security breach of the computer systems and loss of confidential information, such as customer account numbers and related information, could result in a loss of customers’ confidence and, thus, loss of business. Peoples could also lose revenue if competitors gain access to confidential information about Peoples’ business operations and use such confidential information to compete with Peoples. While Peoples maintains specific “cyber” insurance coverage, which would apply in the event of various breach scenarios, the amount of coverage may not be adequate in any particular case. Furthermore, because cyber threat scenarios are inherently difficult to predict and can take many forms, some may not be covered under Peoples’ cyber insurance coverage.
Further, Peoples may be affected by data breaches at retailers and other third parties who participate in data interchanges with Peoples and its customers that involve the theft of customer credit and debit card data, which may include the theft of Peoples’ consumer and business debit card PIN numbers and commercial card information used to make purchases at such retailers and other third parties. Such data breaches could result in Peoples incurring significant expenses to reissue debit cards and cover losses, which could result in a material adverse effect on Peoples’ operations.
All of the types of cybersecurity incidents discussed above could result in damage to Peoples’ reputation, loss of customer business, increased costs of incentives to customers or business partners in order to maintain their relationships, litigation, increased regulatory scrutiny and potential enforcement actions, repairs of system damage, increased investments in cybersecurity (such as obtaining additional technology, making organizational changes, deploying additional personnel, training personnel and engaging consultants), increased insurance premiums, and loss of investor confidence and a reduction in the price of Peoples’ common shares, all of which could result in financial loss and material adverse effects on Peoples’ results of operations and financial condition.
• Noncompliance with the BSA and other anti-money laundering statutes and regulations could cause Peoples to incur a material financial loss.
The BSA and the USA Patriot Act contain anti-money laundering and financial transparency provisions intended to detect and prevent the use of the U.S. financial system for money laundering and terrorist financing activities. The BSA, as amended by the USA Patriot Act and the AMLA, requires depository institutions and their holding companies to undertake activities including maintaining an anti-money laundering program, verifying the identity of clients, monitoring for and reporting suspicious transactions, reporting on cash transactions exceeding specified thresholds, and responding to requests for information by regulatory authorities and law enforcement agencies. The Financial Crimes Enforcement Network (also known as FinCEN), a unit of the U.S. Department of the Treasury that administers the BSA, is authorized to impose significant civil money penalties for violations of those requirements. The AMLA is intended to be a comprehensive reform and modernization to U.S. bank secrecy and anti-money laundering laws, which includes a codified risk-based approach to anti-money compliance for financial institutions; requires the development of standards for evaluating technology and internal processes for BSA compliance; and expands enforcement-related and -related authority, including increasing available sanctions for certain BSA and instituting BSA whistleblower incentives and protections.
There is also increased scrutiny of compliance with the rules enforced by OFAC. If Peoples’ policies, procedures, and systems are deemed deficient, or if the policies, procedures, and systems of the financial institutions that Peoples has already acquired or may acquire in the future are deficient, Peoples may be subject to liability, including fines and regulatory actions such as restrictions on Peoples’ ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain planned business activities, including acquisition plans, which could negatively impact Peoples’ business, financial condition, and results of operations. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for Peoples.
For a more complete discussion of the BSA, the USA Patriot Act and the AMLA as well as OFAC, see the section captioned “Supervision and Regulation” in “ITEM 1 BUSINESS” of this Form 10-K.
• Peoples’ business could be adversely affected through events impacting third parties who perform significant operational services on behalf of Peoples.
The third parties performing operational services for Peoples are subject to risks similar to those faced by Peoples relating to cybersecurity, breakdowns or failures of their own systems, or misconduct of their employees. Like many other community bank organizations, Peoples relies, in significant part, on a single vendor for the systems which allow Peoples to provide banking services to Peoples’ customers, with the systems being maintained on Peoples’ behalf by this single vendor.
One or more of the third parties utilized by Peoples may experience a cybersecurity event or operational disruption and, if any such event or disruption does occur, it may not be adequately addressed, either operationally or financially, by such third party. Certain of these third parties may have limited indemnification obligations to Peoples in the event of a cybersecurity event or operational disruption, or may not have the financial capacity to satisfy their indemnification obligations.
Financial or operational difficulties of a third-party provider could also impair Peoples’ operations if those difficultiesinterfere with such third party’s ability to serve Peoples. If a critical third-party provider is unable to meet the needs of Peoples in a timely manner, or if the services or products provided by such third party are terminated or otherwise delayed, and if Peoples is not able to develop alternative sources for these services and products quickly and in a cost-effective manner, Peoples’ business could be materially adversely affected.
Additionally, regulatory guidance adopted by federal and state bank regulators addressing how banks select, engage and manage their third-party relationships, could affect the circumstances and conditions under which Peoples works with third parties and the cost of managing such relationships.
• Peoples’ failure to be in compliance with any material provision or covenant of its debt instruments could have a material adverse effect on Peoples’ liquidity and operations.
Peoples has a Loan Agreement with U.S. Bank National Association (the “U.S. Bank Loan Agreement”) that provides Peoples with a revolving line of credit. A Seventh Amendment to the U.S. Bank Loan Agreement, entered into on March 28, 2025, extended the maturity from March 31, 2025 to March 30, 2026. The U.S. Bank Loan Agreement imposes operating and financial covenants on Peoples. These restrictions may affect Peoples’ operations and may limit the ability to take advantage of potential business opportunities as they arise. Peoples’ ability to comply with the covenants contained in the U.S. Bank Loan Agreement may be affected by events beyond Peoples’ control, including deteriorating economic conditions, and these events could require Peoples to seek waivers or amendments of such covenants, or alternative sources of financing. Peoples’ ability to obtain such waivers, amendments or alternative financing, may be on terms unfavorable to Peoples.
A breach of any of the covenants or restrictions contained in any of the existing or future financing agreements, including financial covenants, could result in an event of default under the agreements. Such a default could allow the lenders under the financing agreements, if the agreements so provide, to discontinue lending, to accelerate the related debt, and/or to declare all borrowings outstanding thereunder to be due and payable. In addition, the lenders could terminate any commitments they have to provide Peoples with further funds. If any of these events occur, Peoples may not have sufficient funds available to pay in full the total amount of obligations that become due as a result of any such acceleration, or Peoples may not be able to find additional or alternative financing to refinance any such accelerated obligations. Even if additional or alternative financing is obtained, it may be on terms that are unfavorable to Peoples.
• Peoples’ exposure to credit risk could adversely affect Peoples’ earnings and financial condition.
There are certain risks inherent in making loans. These risks include interest rate changes over the time period in which loans are to be repaid, risks resulting from changes in the economy, risks that Peoples will have inaccurate or incomplete information about borrowers, risks that borrowers will become unable to repay loans, and, in the case of loans secured by collateral, risks resulting from uncertainties about the future value of the collateral.
Commercial loans comprise a significant portion of Peoples’ loan portfolio. Commercial loans generally are viewed as having a higher degree of credit risk than residential real estate or consumer loans because commercial loans usually involve larger loan balances to a single borrower and are more susceptible to a risk of default during an economic downturn. Since Peoples’ loan portfolio contains a significant number of commercial loans, the deterioration of one or a few of these loans could cause a significant increase in nonperforming loans, and ultimately could have a material adverse effect on Peoples’ earnings and financial condition. Peoples may also have credit exposures concentrated in a particular industry, resulting in a risk of a material adverse effect on earnings or financial condition, if there is an event adversely affecting such industry.
Peoples’ risks of timely loan repayment and the value of collateral supporting the loans are affected by the strength of the business of Peoples’ commercial borrowers and the financial circumstances of Peoples’ consumer borrowers. Economic conditions, including high inflation and elevated interest rates, and political climate could cause business shutdowns and slowdowns, limitations on commercial activity and financial transactions, labor shortages, supply chain interruptions, increased unemployment and commercial property vacancy rates, reduced profitability and ability for property owners to make mortgage, auto and other consumer loan payments, overall economic and financial market instability, which may affect individuals, households and business differently, and decreased consumer confidence generally, all of which may cause Peoples’ customers to be unable to make scheduled loan payments.
Additional information regarding Peoples’ credit exposure concentration at December 31, 2025 can be found in the section captioned “Loan Concentration” in “ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” of this Form 10-K.
• Peoples’ allowance for credit losses may be insufficient to absorb the expected, lifetime losses in its loan portfolio.
Peoples maintains an allowance for credit losses that is believed to be a reasonable estimate of the expected losses based on management’s quarterly analysis of its loan portfolio. The determination of the allowance for credit losses requires management to make various assumptions and judgments about the collectability of Peoples’ loans, including the creditworthiness of its borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans. Additional information regarding Peoples’ allowance for credit losses methodology and the sensitivity of the estimates can be found in the discussion of “Critical Accounting Policies” included in “ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” of this Form 10-K.
Peoples’ estimate of future credit losses is susceptible to changes in economic, operating and other conditions, including changes in regulations and interest rates, which may be beyond Peoples’ control, and the losses may exceed current estimates. Peoples cannot be assured of the amount or timing of losses, nor whether the allowance for credit losses will be adequate in the future.
If Peoples’ assumptions prove to be incorrect, Peoples’ allowance for credit losses may not be sufficient to cover the expected losses from its loan portfolio, resulting in the need for additions to the allowance for credit losses which could have a material adverse impact on Peoples’ financial condition and results of operations. In addition, bank regulators periodically review Peoples’ allowance for credit losses as part of their examination process and may require management to increase the allowance or recognize further loan charge-offs based on judgments different than those of management.
Under the CECL model, Peoples is required to use historical information, current conditions and reasonable and supportable forecasts to estimate the expected credit losses. If the methodologies and assumptions used by Peoples in the CECL model prove to be incorrect, or inadequate, the allowance for credit losses may not be sufficient, resulting in the need for additional allowance for credit losses to be established, which could have a material adverse impact on Peoples’ financial condition and results of operations. Additionally, the time horizon over which Peoples is required to estimate future credit losses expanded under CECL, which could result in increased volatility in future provisions for credit losses. Peoples may also experience a higher or more volatile provision for credit losses due to higher levels of nonperforming loans and net charge-offs if commercial and consumer customers are to make scheduled loan payments.
• Peoples’ accounting estimates and risk management processes rely on analytical and forecasting models.
The processes Peoples uses to estimate its expected credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on Peoples’ financial condition and results of operations, depend upon the use of analytical and, in some cases, forecasting models. These models reflect assumptions that may not be accurate, particularly in times of market stress or other unforeseen circumstances. Even if these assumptions are accurate, the model may prove to be inadequate or inaccurate because of other flaws in their design or their implementation. If the model Peoples uses for interest rate risk and asset-liability management is inadequate, Peoples may incur increased or unexpectedlosses upon changes in market interest rates or other market measures. If the model used by Peoples for determining its expected credit losses is inadequate, the allowance for credit may not be sufficient to support future charge-offs. If the model used by Peoples to measure the fair value of financial instruments is , the fair value of such financial instruments may fluctuate or may not accurately reflect what Peoples could realize upon sale or settlement of such financial instruments. Any such in Peoples’ analytical or forecasting models could have a material effect on Peoples’ business, financial condition and results of operations.
• Peoples and Peoples Bank may elect or be compelled to seek additional capital in the future, but such capital may not be available when needed.
Peoples and Peoples Bank are required by federal and state regulatory authorities to maintain adequate levels of capital to support their operations. Federal bank regulators have adopted extensive changes to their capital requirements, including raising required amounts and eliminating the inclusion of certain instruments from the calculation of capital. If Peoples Bank experiences significant losses, additional capital may be needed. In addition, Peoples and Peoples Bank may elect to raise additional capital to support the businesses or to finance acquisitions, if any, or for other unanticipated reasons. The ability to raise additional capital, if needed, will depend on financial performance, conditions in the capital markets, economic conditions and a number of other factors, many of which are outside of Peoples’ control. Therefore, there can be no assurance that additional capital will be available or that additional capital will be available on acceptable terms. The inability to raise additional capital may have a material adverse effect on Peoples’ financial condition, results of operations or potential acquisitions.
• Peoples and Peoples Bank operate in a highly regulated industry, and the laws and regulations that govern Peoples’ operations, corporate governance, executive compensation, financial accounting and financial reporting, including changes in, or failure to comply with, such laws and regulations may adversely affect Peoples.
The banking industry is highly regulated. Peoples is subject to supervision, regulation and examination by various federal and state regulators, including the Federal Reserve Board, the SEC, the CFPB, the FDIC, Financial Industry Regulatory Authority, Inc. (also known as FINRA), and various state regulatory agencies. The statutory and regulatory framework that governs Peoples is generally designed to protect depositors and customers, the DIF, the U.S. banking and financial system, and financial markets as a whole and not to protect Peoples’ shareholders. These laws and regulations, among other matters, prescribe minimum capital requirements, restrict the ability of Peoples Bank to guarantee Peoples’ debt, and impose limitations on Peoples Bank’s business activities (including foreclosure and collection practices), limit the dividends or distributions that Peoples Bank can pay, and impose certain specific accounting requirements that may be more restrictive and may result in greater or earlier charges to earnings or reductions in capital than would otherwise be required under U.S. generally accepted accounting principles (“US GAAP”). Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs. Both the scope of the laws and regulations, and the intensity of the supervision to which Peoples is subject, have increased in recent years in response to the perceived state of the financial services industry, as well as other factors such as technological and market changes. Such regulation and supervision may increase Peoples’ costs and limit its ability to pursue business . Further, Peoples’ to comply with these laws and regulations, even if the was or reflects a difference in interpretation, could subject Peoples to restrictions on business activities, , and other , any of which could affect the results of operations, the capital base, and the price of Peoples’ common shares.
Further, any new laws, rules, or regulations could make compliance more difficult or expensive or otherwise adversely affect Peoples’ business and financial condition.
• Peoples may not be able to adapt to technological change.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services, including artificial intelligence. The effective use of technology increases efficiency and enables financial institutions to better serve customers while reducing costs. Peoples’ future success depends, in part, upon its ability to address customer needs by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in its operations. This could include the development, implementation, and adaptation of digital or cryptocurrency, blockchain, and other “fintech” technology. Peoples may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to Peoples’ customers. Failure to successfully keep pace with technological changes affecting the financial services industry could affect Peoples’ growth, revenue and net income.
• Peoples may not be able to attract and retain key employees.
Peoples’ success depends, in large part, on its ability to attract, retain, motivate and develop key employees. Competition for key employees is ongoing and Peoples may not be able to attract, retain or hire the key employees who are wanted or needed, which may also negatively impact Peoples’ ability to execute identified business strategies. Many of Peoples’ offices are located in rural areas, resulting in the possible need for Peoples to offer higher compensation equal to or greater than what is offered in metropolitan areas to attract or retain key employees, which may adversely affect salaries and employee benefit costs.
Various restrictions on the compensation which may be paid to certain executive officers were imposed under the Dodd-Frank Act and other legislation and regulations. In addition, Peoples’ incentive compensation structure is subject to review by regulators, who may identify deficiencies in the structure or issue additional guidance on Peoples’ compensation practices, causing Peoples to make changes that may affect its ability to offer competitive compensation to these individuals or that place Peoples at a disadvantage to non-financial service competitors. Peoples’ ability to attract and retain talented employees may be affected by these restrictions, or any new executive compensation limits or regulations.
• Peoples’ ability to pay dividends is limited, and Peoples may not be in the position to pay dividends in the future.
Although Peoples has paid dividends on its common shares in the past, Peoples may, at the discretion of Peoples’ Board of Directors, reduce or eliminate dividends in the future, for any reason, including a determination to use funds for other purposes, or due to regulatory constraints. Peoples is a separate and distinct legal entity from Peoples’ subsidiaries. Peoples receives nearly all of its liquidity from dividends from Peoples Bank, which are limited by federal and state banking laws and regulations. These dividends also serve as the primary source of funds to pay dividends on Peoples’ common shares. The inability of Peoples Bank to pay sufficient dividends to Peoples could have a material, adverse effect on its business. Further discussion of Peoples’ ability to pay dividends can be found under the caption “Supervision and Regulation – Dividend Restrictions” in “ITEM 1 BUSINESS” of this Form 10-K and “Note 17 Regulatory Matters.”
• Peoples depends upon the accuracy and completeness of information about customers and counterparties.
In deciding whether to extend credit or enter into other transactions with customers and counterparties, Peoples may rely on information provided by customers and counterparties, including financial statements and other financial information. Peoples may also rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to a business, Peoples Bank may assume that the customer’s audited financial statements conform with US GAAP and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. Peoples Bank may also rely on the audit report covering those financial statements. Peoples’ financial condition, results of operations and cash flows could be negatively impacted to the extent that Peoples Bank relies on financial statements that do not comply with US GAAP or on financial statements and other financial information that are materially misleading.
• Peoples Bank may be required to repurchase loans it has sold or to indemnify loan purchasers under the terms of the sale agreements, which could adversely affect Peoples’ liquidity, results of operations and financial condition.
When Peoples Bank sells a mortgage loan, it may agree to repurchase or substitute a mortgage loan if Peoples Bank is later found to have breached any representation or warranty Peoples Bank made about the loan or if the borrower is later found to have committed fraud in connection with the origination of the loan. While Peoples Bank has underwriting policies and procedures designed to avoid breaches of representations and warranties and borrower fraud, there can be no assurance that a breach or fraud will not occur. Required repurchases, substitutions or indemnifications could have an adverse effect on Peoples’ liquidity, results of operations and financial condition.
• Peoples and its subsidiaries are subject to examinations and challenges by tax authorities.
In the normal course of business, Peoples and its subsidiaries are routinely subject to examinations and challenges from federal and state tax authorities regarding positions taken regarding their respective tax returns. State tax authorities have become increasingly aggressive in challenging tax positions taken by financial institutions, especially those positions relating to tax compliance and calculation of taxes subject to apportionment. Any challenge or examination by a tax authority may result in adjustments to the timing or amount of taxable net worth or taxable income, or deductions or the allocation of income among tax jurisdictions.
Management believes it has taken appropriate positions with respect to all tax returns and does not anticipate that any examination would have a material impact on Peoples’ Consolidated Financial Statements. However, the outcome of any such examination and the ultimate resolution of any resulting assessments are inherently difficult to predict. Thus, no assurance can be given that Peoples’ tax liability for any tax year open to examination will be as reflected in Peoples’ current and historical Consolidated Financial Statements.
• Peoples could experience an unexpectedinability to obtain needed liquidity which could adversely affect its business, profitability, and viability as a going concern.
Liquidity measures the ability to meet current and future cash flow needs as they become due. The liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows in deposits, and to take advantage of interest rate market opportunities and is essential to a financial institution’s business. The ability of a financial institution to meet its current financial obligations is a function of its balance sheet structure, its ability to liquidate assets, and its access to alternative sources of funds. The bank failures in recent years exemplify the potential serious results of the unexpectedinability of insured depository institutions to obtain needed liquidity to satisfy deposit withdrawal requests, including how quickly such requests can accelerate once uninsured depositors lose confidence in an institution’s ability to satisfy its obligations to depositors. Peoples seeks to ensure its funding needs are met by maintaining a level of liquidity through asset and liability management. If Peoples becomes to obtain funds when needed, it could have a material effect on Peoples’ business, financial condition, and results of operations.
Legislative, Regulatory and Tax Change Risks
• Legislative or regulatory changes or actions could adversely impact Peoples or the businesses in which it is engaged.
The financial services industry is heavily regulated under both federal and state law. Peoples is subject to regulation and supervision by the Federal Reserve Board, and Peoples Bank is subject to regulation and supervision by the ODFI, the Federal Reserve Board, and the FDIC, and the regulations of the CFPB. These regulations are primarily intended to protect depositors and the DIF, not Peoples’ shareholders. Peoples’ non-bank subsidiaries are also subject to the supervision of the Federal Reserve Board, in addition to other regulatory and self-regulatory agencies, including the SEC, and state securities and insurance regulators.
Regulations affecting banks and financial services businesses are undergoing continuous change, and Peoples’ management cannot predict the effect of those changes. The impact of any changes to laws and regulations or other actions by regulatory agencies could adversely affect Peoples’ business. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets held by an institution, the appropriateness of an institution’s allowance for credit losses and the ability to complete acquisitions. Additionally, actions by regulatory agencies or significant litigationagainst Peoples could cause Peoples to devote significant time and resources to defending its business and may lead to penalties that materially affect Peoples and its shareholders. Even the reduction of regulatory restrictions could have an adverse effect on Peoples and its shareholders if such lessening of restrictions increases competition within the financial services industry or Peoples’ market area.
Further information about government regulation of Peoples’ business can be found under the caption “Supervision and Regulation” in “ITEM 1 BUSINESS” of this Form 10-K.
• Changes in accounting standards, policies, estimates or procedures may impact Peoples’ reported financial condition or results of operations.
The entities responsible for setting accounting standards, including the Financial Accounting Standards Board (“FASB”), the SEC and other regulatory bodies, periodically change the financial accounting and reporting standards that govern the preparation of Peoples’ Consolidated Financial Statements. The pace of change continues to accelerate and changes in accounting standards can be difficult to predict and can materially impact how Peoples records and reports its financial condition and results of operations. In some cases, Peoples could be required to apply a new or revised guidance retroactively, resulting in the restatement of prior period financial statements.
The preparation of consolidated financial statements in conformity with US GAAP requires management to make significant estimates that affect the financial statements. Due to the inherent nature of these estimates, actual results may vary materially from
management’s estimates. Additional information regarding Peoples’ critical accounting policies and the sensitivity of estimates can be found in the section captioned “Critical Accounting Policies” in “ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” and “Note 1 Summary of Significant Accounting Policies” of this Form 10-K.
• Regulatory capital standards may have an adverse effect on its profitability, lending, and ability to pay dividends.
Peoples is subject to capital adequacy guidelines and other regulatory requirements specifying minimum amounts and types of capital that Peoples must maintain. From time to time, regulators implement changes to these regulatory capital adequacy guidelines. If Peoples fail to meet these minimum capital guidelines and/or other regulatory requirements, its financial condition would be materially and adversely affected. The Basel III capital framework requires Peoples to maintain significantly more capital as a result of higher required capital levels and more demanding regulatory capital risk weightings and calculations. Satisfying capital requirements may require Peoples to limit its banking operations, retain net income or reduce dividends to improve regulatory capital levels, which could negatively affect its business, financial condition and results of operations.
• Increases in FDIC insurance premiums may have a material adverse effect on Peoples’ earnings.
Peoples Bank has limited ability to control the amount of premiums it is required to pay for FDIC insurance. The DIF is funded by fees assessed on insured depository institutions, such as Peoples Bank. If the costs of future bank failures increase, deposit insurance premiums may also increase. Increases in FDIC insurance premiums may have a material adverse effect on Peoples’ results of operations and ability to continue to pay dividends on its common shares at the current rate or at all. The FDIC Board adopted a final rule which implemented a special assessment to recover the losses to the DIF arising from the failures of Silicon Valley Bank and Signature Bank. This special assessment was based on total uninsured deposits, which the value of such deposits held by Peoples was below the threshold set by the assessment, and thus Peoples was not subject to the assessment. However, there can be no assurance that assessments may not be changed in the future and/or that additional special assessments may not be imposed in the future by the FDIC, either in response to additional bank failures or otherwise, that could increase the amount of premiums required to be paid to the FDIC by Peoples Bank. Federal deposit insurance is described in more detail in the section captioned “Supervision and Regulation” in “ITEM 1 BUSINESS” of this Form 10-K.
Strategic Risks
• Peoples’ ability to complete acquisitions and integrate completed acquisitions may be unsuccessful or more difficult, time-consuming or costly than expected, which could have an adverse effect on Peoples’ business, earnings and financial condition.
Peoples actively evaluates opportunities to acquire other businesses. However, Peoples may not have the opportunity to make suitable acquisitions on favorable terms in the future, which could negatively impact the growth of its business. Peoples expects that other banking and financial companies, many of which have significantly greater resources, will compete to acquire compatible businesses. This competition could increase prices for acquisitions that Peoples would likely pursue, and its competitors may have greater resources to pay such acquisition prices. In addition, acquisitions of regulated businesses, such as banks, are subject to various regulatory approvals. If Peoples fails to receive the appropriate regulatory approvals, it will not be able to consummate an acquisition that it believes is in its best interest.
Peoples may not be able to integrate new acquisitions without encountering difficulties, including the loss of key employees and customers, the disruption of ongoing businesses or possible inconsistencies in standards, controls, procedures and policies. Peoples may not be able to fully achieve the strategic objectives and operating efficiencies anticipated in the acquisitions it completes. Future acquisitions may also result in other unforeseendifficulties, including in the integration of the combined companies. Further, benefits such as enhanced earnings anticipated from the acquisitions may not develop and future results of the combined companies may be materially below those estimated. In addition, Peoples may issue equity securities in connection with acquisitions, which could dilute the economic and voting interests of Peoples’ shareholders. Recent changes in the stock price of financial institutions could impact the valuation of potential target companies and, therefore, Peoples’ ability to compete for acquisitions.
• Changes in retail distribution strategies and consumer behavior may adversely impact Peoples’ investments in its financial service office premises and equipment and other assets, and may lead to increased expenditures to change its retail distribution channel.
Peoples has significant investments in financial service office premises and equipment for its financial service office network, including 20 financial service offices, consisting of LPOs and limited service locations, as well as its retail work force and other financial service office banking assets. Advances in technology such as e-commerce, telephone, internet and mobile banking, and in-branch self-service technologies including ATMs, ITMs, and other equipment, as well as changing customer preferences for these other methods of accessing Peoples’ products and services, could affect the value of Peoples’ financial service office network or other retail distribution assets and may cause Peoples to change its retail distribution strategy, close and/or sell certain financial service offices and restructure or reduce its remaining financial service offices and work force. Further advances in
technology and/or changes in customer preferences including those related to social media, digital or cryptocurrency, blockchain and other “fintech” technologies could result in additional changes in Peoples’ retail distribution strategy and/or financial service office network. These actions could lead to losses on these assets or could adversely impact the carrying value of other long-lived assets and may lead to increased expenditures to renovate and reconfigure remaining financial service offices or to otherwise reform Peoples’ retail distribution channel.
• Anti-takeover provisions may delay or prevent an acquisition or change in control by a third party.
Provisions in the Ohio General Corporation Law, Peoples’ Amended Articles of Incorporation and Peoples’ Code of Regulations, including a supermajority vote requirement for significant corporate changes, could discourage potential takeover attempts and make attempts by shareholders to remove Peoples’ Board of Directors and management more difficult. These provisions may also have the effect of delaying or preventing a transaction or change in control that might be in the best interests of Peoples’ shareholders.
General Risks
• Adverse changes in the financial markets may adversely impact Peoples’ results of operations.
While Peoples generally invests in securities issued by U.S. government agencies and sponsored entities and domestic state and local governments with limited credit risk, certain investment securities held by Peoples possess higher credit risk since they represent beneficial interests in structured investments collateralized by residential mortgages, debt obligations and other similar asset-backed assets. Even securities issued by governmental agencies and sponsored entities may entail risk depending on political and economic changes. Regardless of the level of credit risk, all investment securities are subject to changes in market value due to changing interest rates, implied credit spreads and credit ratings.
• Peoples is subject to environmental liability risk associated with lending activities.
A significant portion of Peoples’ loan portfolio is secured by real property. During the ordinary course of business, Peoples forecloses on and takes title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, Peoples may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws and evolving regulation may require Peoples to incur substantial expenses and may materially reduce the affected property’s value or limit Peoples’ ability to use or sell the affected property. In addition, future laws and regulations or more stringent interpretations or enforcement policies with respect to existing laws or regulations may increase Peoples’ exposure to environmental liability. Environmental reviews of real property before initiating foreclosure actions may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material effect on Peoples’ business, financial condition and results of operations.
• The value of Peoples’ goodwill and other intangible assets may decline in the future.
A significant decline in expected future cash flows, a significant adverse change in the business climate, slower growth rates or a significant and sustained decline in the price of Peoples’ common shares may necessitate taking charges in the future related to the impairment of goodwill and other intangible assets. If Peoples were to conclude that a future write-down of goodwill and other intangible assets is necessary, the appropriate charge will be recorded, which could have a material adverse effect on Peoples’ business, financial condition and results of operations.
• Peoples is at risk of increased losses from fraud.
Criminals are committing fraud at an increasing rate and are using more sophisticated techniques. In some cases, these individuals are part of larger criminal rings, which allow them to be more effective. Such fraudulent activity has taken many forms, ranging from wire fraud, debit card fraud, check fraud, mechanical devices attached to ATMs, ITMs, social engineering and phishing attacks to obtain personal information, or impersonation of clients through the use of falsified or stolen credentials. Additionally, an individual or business entity may properly identify itself, yet seek to establish a business relationship for the purpose of perpetratingfraud. An emerging type of fraud even involves the creation of synthetic identification in which fraudsters “create” individuals for the purpose of . In addition to committed directly Peoples, Peoples may as a result of activity committed third parties. Increased deployment of technologies, such as chip card technology, defray and reduce certain aspects of ; however, are turning to other sources to steal personally identifiable information, such as unaffiliated healthcare providers and government entities, in order to impersonate consumers and thereby commit .
• Peoples may not be able to remain competitive.
Peoples experiences significant competition in originating loans, obtaining deposits, and maintaining and growing insurance and trust customers, principally from other commercial banks, savings associations, credit unions, trust and brokerage companies, insurance agencies, fintechs and online service providers. Several of Peoples’ competitors have greater resources, larger branch systems and wider arrays of banking and non-banking services. This competition could reduce Peoples’ net income by decreasing
the number and size of loans that Peoples originates and the interest rates it can charge on these loans. Moreover, technology and other changes are allowing businesses and individuals to utilize alternative methods to complete financial transactions that historically have involved banks. For example, consumers can now maintain funds that have historically been held as bank deposits in brokerage accounts, mutual funds, or high yield savings accounts with online banks. Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. Digital or cryptocurrencies, blockchain, and other “fintech” technologies are designed to enhance transactional security and have the potential to disrupt the financial industry, change the way banks do business, and reduce the need for banks as financial deposit-keepers and intermediaries. The process of eliminating the use of banks to complete financial transactions could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and lower cost deposits as a source of funding could have a material adverse effect on Peoples’ financial condition and results of operations. If Peoples is to compete effectively, Peoples will market share, which could reduce income generated from deposits, loans and other products.
In July 2025, President Trump signed into law the GENIUS Act, which establishes a regulatory framework for “payment stablecoins” and their issuers. Consumers and businesses may view payment stablecoins as a substitute for traditional bank deposits, resulting in deposit withdrawals. Depending on consumer and business interest in payment stablecoins, and the characteristics and utility of payment stablecoins, the passage of the GENIUS Act could result in increased competition with respect to Peoples’ deposit products. However, the GENIUS Act requires the U.S. Treasury Department and federal and state regulators to issue regulations on numerous topics to interpret and implement the statute, so the effect of the GENIUS Act will depend on what those regulations provide. For a more complete discussion of Peoples’ competitive environment, see the section captioned “Competition” in “ITEM 1 BUSINESS” of this Form 10-K.
• Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to Peoples’ environmental, social and governance practices may impose additional costs on Peoples or expose Peoples to new or additional risks.
Financial institutions are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social, and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds, and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions, and human rights. Increased ESG-related compliance costs for Peoples as well as among its suppliers, vendors and various other parties within its supply chain could result in increases to its overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact its reputation, ability to do business with certain partners, access to capital, and the price of its common shares. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.
• Climate change, severe weather, natural disasters, acts of war or terrorism, the emergence of a pandemic and other adverse external events could significantly impact Peoples’ business.
Natural disasters, including severe weather events of increasing strength and frequency due to climate change, acts of war or terrorism, pandemics or concern about a possible pandemic, and other adverse external events could have a significant impact on Peoples’ ability to conduct business or upon third parties who perform operational services for Peoples or its customers. Such events could affect the stability of Peoples’ deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, disrupt the infrastructure that supports Peoples’ business and the communities Peoples is located in, negatively impact financial markets and interest rates, result in lost revenue or cause Peoples to incur additional expenses.
• Peoples or one of its subsidiaries may be a defendant from time to time in a variety of litigation and other actions, which could have a material adverse effect on Peoples’ financial condition, results of operations and cash flows.
Peoples and its subsidiaries may be involved from time to time in a variety of litigation arising out of each entity’s respective business. The risk of litigation increases in times of increased troubled loan collection activity. Peoples’ insurance may not cover all claims that may be asserted against Peoples and its subsidiaries, and any claims asserted against them, regardless of merit or eventual outcome, may harm their respective reputations. Should the ultimate judgments or settlements in any litigation exceed the applicable insurance coverage, they could have a material adverse effect on Peoples’ financial condition, results of operations and cash flows. In addition, Peoples or one of its subsidiaries may not be able to obtain appropriate types or levels of insurance in the future or to obtain adequate replacement policies with acceptable terms.
• The impact of larger or similar-sized financial institutions encountering problems may adversely affect Peoples’ business, earnings and financial condition.
Many financial institutions and their related operations are closely intertwined, and the soundness of such financial institutions may, to some degree, be interdependent. As a result, concerns about, or a default or threateneddefault by, one financial institution could lead to significant market-wide liquidity and credit problems and/or losses or defaults by other financial institutions. This “systemic risk” may adversely affect Peoples’ business.
Peoples is exposed to the risk that when a peer financial institution experiences financial difficulties, there could be an adverse impact on the regional banking industry and the business environment in which Peoples operates. For example, the bank failure of Republic First Bank during 2024, and the closures of Silicon Valley Bank in California, Signature Bank in New York, First Republic Bank in California, and Heartland Tri-State Bank in Kansas during 2023 caused a degree of panic and uncertainty in the investor community and among bank customers generally. Peoples will continue to monitor potential bank failures and volatility within the banking industry generally, together with any responsive measures taken by the banking regulators to mitigate or manage potential turmoil in the banking industry.
• Economic and other conditions may cause volatility in the price of Peoples’ common shares.
The price of Peoples’ common shares can fluctuate widely in response to a variety of factors, including: actual or anticipated variations in the Peoples’ quarterly operating results; recommendations by securities analysts; significant acquisitions or business combinations; strategic partnerships, joint ventures or capital commitments; operating and stock price performance of other companies that investors deem comparable to Peoples; new technology used or services offered by Peoples’ competitors; news reports relating to trends, concerns and other issues in the banking and financial services industry; and changes in government regulations. General market fluctuations, industry factors and general economic and political conditions and external events, including terrorist attacks, increased inflation, economic slowdowns or recessions, interest rate changes, credit loss trends or currency fluctuations, could also cause the price of Peoples’ common shares to decrease, regardless of Peoples’ operating results.
• Changes in tax laws could adversely affect Peoples’ performance.
Peoples is subject to extensive federal, state and local taxes, including income, excise, sales/use, payroll, franchise, withholding and ad valorem taxes. Changes to tax laws could have a material adverse effect on Peoples’ results of operations and the realization of net deferred tax assets. In addition, Peoples’ customers are subject to a wide variety of federal, state and local taxes. Changes in taxes paid by Peoples’ customers may adversely affect their ability to purchase homes or consumer products, which could adversely affect their demand for loans and deposit products. In addition, such negative effects on Peoples’ customers could result in defaults on the loans made by Peoples Bank and decrease the value of mortgage-backed securities in which Peoples has invested.
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MD&A (Item 7)
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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Certain statements made in this Form 10-K, which are not historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995. 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 are intended to identify these forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. Factors that might cause such a difference include, but are not limited to:
(1) the effects of interest rate policies, including any changes to such policies that may result from potential changes in the composition of the Federal Reserve Board, 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 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 interest rate policies of the Federal Reserve Board, the completion and successful integration of acquisitions, 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, including the ODFI, the FDIC, the Federal Reserve Board, and the CFPB, 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) the effects of easing restrictions on participants in the financial services industry;
(7) 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, an increasing federal government budget deficit, the failure of the federal government to raise the federal debt ceiling, 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 changes in the federal, state, and local government policy 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;
(8) Peoples may issue equity securities in connection with future acquisitions, which could cause ownership and economic dilution to Peoples’ current shareholders;
(9) 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 continued inflationary pressures and elevated interest rates, and may adversely impact the amount of interest income generated;
(10) 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;
(11) future credit quality and performance, including expectations regarding future credit losses and the allowance for credit losses;
(12) changes in accounting standards, policies, estimates or procedures may adversely affect Peoples’ reported financial condition or results of operations;
(13) the impact of assumptions, estimates and inputs used within models, which may vary materially from actual outcomes, including under the CECL model;
(14) adverse changes in the conditions and trends in the financial markets, including recent inflationary pressures and the impacts of potential or imposed tariffs on markets, 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;
(15) 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;
(16) Peoples’ ability to receive dividends from Peoples’ subsidiaries;
(17) Peoples’ ability to maintain required capital levels and adequate sources of funding and liquidity;
(18) the impact of larger or similar-sized financial institutions encountering problems, such as the failure in 2024 of Republic First Bank, and closures in 2023 of Silicon Valley Bank in California, Signature Bank in New York, First Republic Bank in California, which may adversely affect the banking industry and/or Peoples’ business generation and retention, funding and liquidity, including Peoples’ continued ability to grow deposits or maintain adequate deposit levels, and may further result in potential increased regulatory requirements, increase reputational risk and potential impacts to macroeconomic conditions;
(19) 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;
(20) 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;
(21) 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;
(22) 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;
(23) 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;
(24) 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;
(25) the impact on Peoples’ businesses, personnel, facilities or systems of losses related to acts of fraud, theft, misappropriation or violence;
(26) the impact on Peoples’ businesses, as well as on the risks described above, of various domestic or international widespread natural or other disasters including severe weather events, pandemics, cybersecurity attacks, system failures, civil unrest, military or terrorist activities or international conflicts (including Russia’s war in Ukraine and the ongoing conflicts in the Middle East, and mounting tensions with Venezuela);
(27) the potential deterioration of the U.S. economy due to financial, political or other shocks;
(28) 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;
(29) 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;
(30) risks and uncertainties associated with Peoples’ entry into new geographic markets and risks resulting from Peoples’ inexperience in these new geographic markets;
(31) changes in laws or regulations imposed by Peoples’ regulators impacting Peoples’ capital actions, including dividend payments and share repurchases;
(32) 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;
(33) regulatory and legal matters, including the failure to resolve outstanding matters on a timely basis and the potential of new regulatory matters, litigation, or other legal actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;
(34) Peoples’ business may be adversely affected by increased political and regulatory scrutiny of corporate ESG practices;
(35) the effect of a fall in stock market prices on the asset and wealth management business;
(36) the risk that energy tax credits purchased and used by Peoples to reduce tax liabilities will be disallowed by the Internal Revenue Service; and
(37) other risk factors relating to the banking industry or Peoples as detailed from time to time in Peoples’ reports filed with the SEC, including those risk factors included in the disclosures under the heading “ITEM 1A RISK FACTORS” of this Form 10-K.
All forward-looking statements speak only as of the filing date of this Form 10-K and are expressly qualified in their entirety by the cautionary statements. Although management believes the expectations in these forward-looking statements are based on reasonable assumptions within the bounds of management’s knowledge of Peoples’ business and operations, it is possible that actual results may differ materially from these projections. Additionally, Peoples undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the filing date of this Form 10-K or to reflect the occurrence of unanticipated events except as may be required by applicable legal requirements. Copies of documents filed with the SEC are available free of charge at the SEC’s website at www.sec.gov and/or through Peoples’ website – www.peoplesbancorp.com under the “Investor Relations” section.
The following discussion and analysis of Peoples’ Consolidated Financial Statements is presented to provide insight into management’s assessment of the financial position and results of operations for the periods presented. This discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto, as well as the ratios and statistics, contained elsewhere in this Form 10-K.
Summary of Significant Transactions and Events
The following is a summary of transactions or events that have impacted or are expected by management to impact Peoples’ results of operations or financial condition:
Mergers and Acquisitions
◦ During 2025, Peoples incurred noacquisition-related expenses, compared to $0.2 million for 2024 and $17.0 million for 2023. The acquisition-related expenses in 2024 and 2023 were related to a merger that occurred on the close of business on April 30, 2023, whereby Limestone Bancorp Inc. and Limestone Bank merged with and into Peoples and its wholly-owned subsidiary, Peoples Bank, respectively (collectively, the “Limestone Merger”).
◦ On October 25, 2022, Peoples announced the Limestone Merger, a transaction valued at $177.9 million. The Limestone Merger closed as of the close of business on April 30, 2023. Peoples acquired Limestone’s loan portfolio totaling $1.1 billion, $1.2 billion of deposits, $172.7 million of total investment securities, an aggregate of $99.5 million of short-term and long-term borrowings, and $93.5 million of total cash and cash equivalents. Peoples also recorded goodwill in the amount of $68.8 million and other intangible assets of $27.7 million, which consisted of core deposit intangibles.
Other Significant Developments
◦ During 2025, Peoples recorded a provision for credit losses of $42.2 million, compared to a provision for credit losses of $24.8 million for 2024 and a provision for credit losses of $15.2 million for 2023. The provision for credit losses during 2025 was driven by (i) net charge-offs, (ii) loan growth, (iii) deterioration in the economic forecasts used within the CECL model, (iv) a periodic refresh in the loss drivers utilized within the CECL model, and (v) an increase in reserves for leases originated by the North Star Leasing division. The provision for credit losses during 2024 was primarily driven by (i) net charge-offs, (ii) an increase in reserves for individually analyzed loans and leases, (iii) economic forecast deterioration, and (iv) loan growth.
◦ During the fourth quarter of 2025, Peoples completed a sale of an OREO property acquired in a previous acquisition, which resulted in a loss of $0.9 million.
◦ During the fourth quarter of 2025, Peoples redeemed early a tranche of subordinated debt acquired in the Limestone Merger, which resulted in a loss of $0.8 million.
◦ During the third quarter of 2025, Peoples executed the sale of $75.0 million of available-for-sale securities for an after-tax loss of $2.7 million.
◦ 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.
◦ On January 28, 2021, Peoples’ Board of Directors approved a share repurchase program authorizing Peoples to purchase up to an aggregate of $30.0 million of Peoples’ outstanding common shares. During 2025, Peoples repurchased 30,692 common shares totaling $0.8 million under the share repurchase program. During 2024, Peoples repurchased 100,905 common shares totaling $3.0 million under the share repurchase program. During 2023, Peoples repurchased 107,219 common shares totaling $3.0 million under the share repurchase program.
◦ On April 3, 2019, Peoples entered into the U.S. Bank Loan Agreement. A Seventh Amendment to the U.S. Bank Loan Agreement, entered into on March 28, 2025, extended the maturity from March 31, 2025 to March 30, 2026. The U.S. Bank Loan Agreement provides Peoples with a revolving line of credit in the maximum aggregate principal amount of $30.0 million that may be used: (i) for working capital purposes; (ii) to finance dividends or other distributions (other than stock dividends and stock splits) on or in respect of Peoples’ capital stock and redemptions, repurchases or other acquisitions of any of Peoples’ capital stock permitted under the U.S. Bank Loan Agreement; and (iii) to finance acquisitions permitted under the U.S. Bank Loan Agreement.
◦ To combat the effects of ongoing inflationary pressures, the Federal Reserve Board increased the Federal Funds Target Rate range to 0.25% to 0.50% beginning on March 16, 2022, and continued to raise rates up to 5.25% to 5.50% on July 27, 2023. This rate remained unchanged until the latter half of 2024, when multiple rate cuts reduced the rate down to 4.25% to 4.50%. The Federal Reserve Board cut interest rates three times during 2025, further reducing the rate to 3.50% to 3.75%. The Federal Reserve Board has signaled that future rate reductions continue to be a possibility.
The impact of these transactions, where material, is discussed in the applicable sections of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Critical Accounting Policies
The accounting and reporting policies of Peoples conform to US GAAP and to general practices within the financial services industry. A summary of significant accounting policies is contained in “Note 1 Summary of Significant Accounting Policies.” While all of these policies are important to understanding the Consolidated Financial Statements, certain accounting policies require management to exercise judgment and make estimates or assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes. These estimates and assumptions are based on information available as of the date of the Consolidated Financial Statements; accordingly, as this information changes, the Consolidated Financial Statements could reflect different estimates or assumptions.
Management has identified two accounting policies as those that, due to the judgments, estimates and assumptions inherent in the policies, are critical to an understanding of Peoples’ Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations. The two accounting policies identified were the allowance for credit losses and fair value measurements. These two accounting policies are described in further detail below.
Allowance for Credit Losses
The allowance for credit losses represents Peoples’ estimate of expected credit losses over the expected contractual life of the existing loan portfolio. The allowance for credit losses is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is measured on a pool basis, with loans collectively evaluated when similar risk characteristics exist. Peoples evaluated risk characteristics, including but not limited to: internal or third-party credit scores or credit ratings, risk ratings or classifications, financial asset type, collateral type, loan size, effective interest rate, term, geographical location, industry of the borrower, vintage, historical or credit loss patterns, and reasonable and supportable forecast periods. Peoples identified 20 segments for which it believes there are similar risk characteristics and utilized a discounted cash flow methodology in determining an allowance for credit losses for each segment.
In estimating credit losses, Peoples uses a loss driver method, which analyzes one or more economic variables to the change in default rate using a regression analysis. Variables that had a strong correlation were selected as economic factors, or variables, for the model. If a single variable was not found to be strongly correlated, additional variables were included. Peoples utilizes U.S. unemployment and Ohio unemployment as economic factors in modeling.
In general, Peoples completes a quarterly evaluation based on several qualitative factors to determine if there should be adjustments made to the allowance for credit losses. These factors include economic conditions, collateral, concentrations, troubled assets, Peoples’ loss trends, peer loss trends, delinquency trends, portfolio composition and loan growth, underwriting, and certain other risks.
Loans that do not share similar risk characteristics are evaluated on an individual basis. The allowance for credit losses related to these specific loans was based on management’s estimate of potential losses as determined by (1) the present value
of expected future cash flows, (2) the fair value of collateral if the loan is determined to be collateral dependent, or (3) the loan’s observable market price.
Peoples also completes a quarterly evaluation for unfunded commitments for loans that are not unconditionally cancellable, which includes construction loans, floor plan lines of credit, home equity lines of credit, other credit lines and letters of credit. Peoples performed a study to determine the historical funding rates of unadvanced portions of loans, and applied these funding rates to the unfunded commitments at period end. The loss rates, including qualitative factors, in determining the allowance for credit losses were applied at the segment level to the unfunded commitment amounts to determine the allowance for credit loss liability for unfunded commitments.
There can be no assurance that the allowance for credit losses will be adequate to cover all losses, but management believes the allowance for credit losses at December 31, 2025 was adequate to provide for expected losses from existing loans based on information available at that time. While management uses available information to estimate losses, the ultimate collectability of a substantial portion of the loan portfolio, and the need for future additions to the allowance, will be based on changes in economic conditions and other relevant factors. As such, adverse changes in economic conditions could reduce currently estimated cash flows for both commercial and consumer borrowers, which would likely cause Peoples to experience increases in problem assets, delinquencies and losses on loans in the future.
To demonstrate the sensitivity to key economic parameters used in the measurement of the allowance for credit losses at December 31, 2025, management calculated the difference between the modeled allowance for credit losses at December 31, 2025, compared to one based on an adverse scenario. The adverse scenario reflected increases of 100 basis points in both U.S. and Ohio unemployment. Excluding consideration of general reserve adjustments, this sensitivity analysis would result in a hypothetical increase in the allowance for credit losses of approximately $8.7 million at December 31, 2025.
Fair Value Measurements
Peoples designates certain of its investment securities as available-for-sale, the carrying value of which is impacted by the application of fair value measurements. The fair value used by Peoples in the measurement of its available-for-sale portfolio are obtained from an independent pricing service and represent either quoted market prices for the identical securities (Level 1) or fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, SOFR (or other relevant) yield curves, credit spreads, and prices from market makers and live trading systems (Level 2). Management reviews the valuation methodology and quality controls utilized by the pricing services in management’s overall assessment of the reasonableness of the fair values provided, and challenges prices when management believes a material discrepancy in pricing exists.
Detailed information regarding the fair value of available-for-sale securities can be found in “Note 2 Fair Value of Financial Instruments.”
New Accounting Guidance Pending Adoption
ASU 2025-08 - Financial Instruments - Credit Losses (Topic 326): Purchased Loans: The FASB issued an Accounting Standards Update (“ASU”) 2025-08 on November 12, 2025. The amendments “expand the population of acquired financial assets subject to the gross-up approach in Topic 326.” Specifically, the ASU expands the scope to include purchased “seasoned” loans, which are evaluated after purchase credit deteriorated (“PCD”) loans have been identified. These seasoned loans are defined as non-PCD loans that are obtained in a business combination accounted for using the acquisition method or non-PCD loans that are (i) obtained through a transfer that is not a business combination accounted for using the acquisition method or (ii) initially recognized through the consolidation of a variable interest entity.
The ASU applies to all public entities subject to the guidance in Topic 326, including public business entities, privates companies, and not-for-profit entities. The amendments in this update apply “prospectively to loans that are acquired on or after the initial application date.” The amendments in ASU 2025-08 are effective for all entities for fiscal years beginning after December 15, 2026 and interim periods within those annual reporting periods, with early adoption permitted. Peoples is currently evaluating the impact of this guidance.
EXECUTIVE SUMMARY
Net income for the year ended December 31, 2025, was $106.8 million, compared to $117.2 million for 2024 and $113.4 million for 2023, representing earnings per diluted common share of $2.99, $3.31, and $3.44, respectively. The decreases in 2025 earnings when compared to 2024 and 2023 were driven by increases in provision for credit losses and non-interest expenses. Non-core items, and the related tax effect of each, negatively impacted earnings per diluted common share by $0.13 for 2025 compared to $0.07 for 2024 and $0.59 for 2023.
Net interest income increased 2% to $355.2 million for 2025, compared to $348.7 million for 2024, and $339.4 million for 2023. Net interest margin was 4.14% in 2025, compared to 4.21% in 2024 and 4.55% in 2023. The increase in net interest income when compared to 2024 was driven by lower deposit and borrowing costs. Net interest margin for 2025 decreased 7 basis points when compared to 2024, which was primarily driven by lower accretion income. Net interest margin decreased during 2024 when compared
to 2023 largely due to higher borrowing costs, which offset higher earning asset yields. Accretion income, net of amortization expense, totaled $9.6 million for 2025, compared to $25.2 million for both 2024 and 2023, adding 11 basis points, 30 basis points, and 34 basis points, to the net interest margin for 2025, 2024, and 2023, respectively.
The provision for credit losses for 2025 was $42.2 million, compared to a provision of credit losses of $24.8 million for 2024 and $15.2 million for 2023. Net charge-offs for 2025 were $29.4 million, compared to $23.2 million for 2024 and $8.5 million for 2023. Net charge-offs as a percent of average total loans were 0.45% for 2025, 0.37% for 2024 and 0.15% for 2023. The provision for credit losses during 2025 was mainly a result of (i) net charge-offs, (ii) loan growth, (iii) deterioration in the economic forecasts used within the CECL model, (iv) a periodic refresh in loss drivers utilized within the CECL model, and (v) an increase in reserves for leases originated by the North Star Leasing division. The increase in provision for credit losses during 2024 compared to the provision for credit losses during 2023 was primarily driven by (i) net charge-offs, (ii) an increase in reserves for individually analyzed loans and leases, (iii) economic forecast deterioration, and (iv) loan growth. The increase in net-charge-offs as a percent of average total loans was driven by charge-offs on small-ticket leases primarily occurring in the second half of 2024 and continuing into 2025.
Total non-interest income, excluding gains and losses, for 2025 increased $6.7 million, or 6%, when compared to 2024. The increase was because of (i) a $5.1 million increase in lease income, driven by increases in month-to-month lease income and operating lease income, (ii) a $1.9 million increase in trust and investment income due to an increase in assets under administration and management, and (iii) a $0.3 million increase in bank owned life insurance income. These increases were partially offset by a $0.6 million decrease in deposit account service charges due to customer activity. Total non-interest income excluding gains and losses, for 2024 increased $9.1 million, or 10%, when compared to 2023. The increase was driven by (i) a $2.6 million increase in lease income, attributable to operating lease income, (ii) a $2.4 million increase in trust and investment income driven by an increase in assets under administration and management, (iii) a $1.4 million increase in insurance income because of higher contingency income and increased premiums, (iv) a $0.9 million increase in deposit account service charge income, and (v) a $0.7 million increase in mortgage banking income.
Total non-interest expense was $282.3 million for 2025, an increase of $8.5 million, or 3%, compared to 2024. The higher expense was driven by increases of (i) $6.5 million in salaries and employee benefits costs, which were driven by higher sales-based and incentive compensation and medical costs, (ii) $3.9 million in data processing and software expenses, due to costs associated with recent technology projects, and (iii) $1.1 million in operating lease expense, partially offset by a decrease of $2.3 million in amortization of other intangible assets. Total non-interest expense was $273.8 million for 2024, an increase of $7.3 million, or 3%, compared to 2023. Excluding acquisition-related expenses, non-interest expenses increased $24.1 million, or 10%, when compared to 2023 due to increases in salaries and employee benefit costs, data processing and software expenses, and net occupancy expense. The increases were primarily driven by recent growth, including through acquisitions.
Peoples’ efficiency ratio, which is calculated as total non-interest expense less amortization of other intangible assets divided by fully tax-equivalent (“FTE”) net interest income, plus total non-interest income, excluding all gains and losses, was 58.7% for 2025, compared to 58.0% for 2024 and 58.7% for 2023. The efficiency ratio increased when compared to 2024 due to increased non-interest expense. The efficiency ratio for 2024 improved when compared to 2023 due to increased revenue.
Income tax expense totaled $28.0 million for 2025, compared to $32.3 million for 2024 and $31.8 million for 2023. The effective tax rate was 20.8% for 2025, 21.6% for 2024 and 21.9% for 2023. The decreased expense for 2025 compared to 2024 and 2023 was driven by lower pre-tax income. The reduction in the effective tax rate was due to updated state tax rates driven by apportionment, reducing tax expense by $0.9 million, and a $0.7 million benefit relating to tax credits purchased in the fourth quarter of 2025.
Total assets increased 4% to $9.65 billion at December 31, 2025, compared to $9.25 billion at year-end 2024. The increase was primarily due to increases of $398.9 million in loans and leases and $57.4 million in investment securities, partially offset by a decrease of $28.7 million in cash and cash equivalents. The increase in loans and leases compared to December 31, 2024, was driven by increases of $208.0 million in other commercial real estate loans, $188.1 million in commercial and industrial loans, and $30.7 million in indirect consumer loans, partially offset by a decrease of $40.9 million in leases. The increase in investment securities from at December 31, 2024, was driven by purchases of longer duration, higher yielding held-to-maturity investment securities. The decrease in cash and cash equivalents is primarily related to investing activity and the purchase of both available-for-sale and held-to-maturity securities, partially offset by cash provided by operating activities. The allowance for credit losses increased to $75.7 million, or 1.12% of total loans, net of deferred fees and costs, compared to $63.3 million and 1.00%, respectively, at December 31, 2024. The increase in the allowance balance and the ratio of the allowance for credit losses to total loans at December 31, 2025, when compared to at December 31, 2024, was driven by (i) loan growth, (ii) deterioration in the economic forecasts used within the CECL model, (iii) a periodic refresh in the loss drivers utilized within the CECL model, (iv) an increase in reserves for leases originated by the North Star Leasing division, and (v) an increase in individually analyzed loans and leases.
Total liabilities were $8.44 billion at December 31, 2025, an increase of $300.4 million since December 31, 2024, primarily due to increases of $336.8 million in short-term borrowings and $20.0 million in period-end deposits, partially offset by a decrease of $33.9 million in long-term borrowings. Total demand deposit accounts comprised 35% and 34% of total deposits at December 31, 2025, and at December 31, 2024, respectively.
Total stockholders’ equity was $1.21 billion at December 31, 2025, an increase of $95.0 million, or 9%, from December 31, 2024, due to net income of $106.8 million for the full year of 2025 and a decrease in other comprehensive loss of $39.8 million, partially offset by dividends paid of $58.1 million. The decrease in other comprehensive loss was the result of changes in the market value of available-for-sale investment securities, which were primarily driven by changes in market interest rates.
Peoples continued to exceed the capital required by the Federal Reserve Board to be deemed “well capitalized.” Peoples’ tier 1 capital ratio was 12.73% at December 31, 2025, versus 12.39% at December 31, 2024, while the total capital ratio was 13.78% at December 31, 2025, versus 13.58% at December 31, 2024. The common equity tier 1 risk-based capital ratio was 12.29% at December 31, 2025, compared to 11.95% at December 31, 2024. Compared to at December 31, 2024, the tier 1 risk-based capital and the total risk-based capital ratios improved due to net income, partially offset by dividends paid. Peoples’ book value and tangible book value per share were $33.78 and $22.77, respectively, at December 31, 2025, compared to $31.26 and $19.94, respectively, at December 31, 2024. Additional information regarding capital requirements can be found in “Note 17 Regulatory Matters.”
RESULTS OF OPERATIONS
Net Interest Income
Peoples earns interest income on investments, loans and leases, and incurs interest expense on interest-bearing deposits and borrowed funds. Net interest income, the amount by which interest income exceeds interest expense, remains Peoples’ largest source of revenue and was 76% of total revenue during 2025. The amount of net interest income earned by Peoples is affected by various factors, including changes in market interest rates due primarily to the Federal Reserve Board’s monetary policy, the level and degree of pricing competition for both loans and deposits in Peoples’ markets, and the amount and composition of Peoples’ earning assets and interest-bearing liabilities.
Peoples monitors net interest income performance and manages its balance sheet composition through regular ALCO meetings. The asset-liability management process employed by the ALCO is intended to mitigate the impact of future interest rate changes on Peoples’ net interest income and earnings. However, the frequency and/or magnitude of changes in market interest rates are difficult to predict, and may have a greater impact on net interest income than management is able to mitigate through the asset-liability management process.
As part of the analysis of net interest income, management converts tax-exempt income earned on obligations of states and political subdivisions to the pre-tax equivalent of taxable income using a federal statutory corporate income tax rate of 21% for all periods presented. Management believes the resulting FTE net interest income allows for a more meaningful comparison of tax-exempt income and yields to their taxable equivalents. Net interest margin, which is calculated by dividing FTE net interest income by average interest-earning assets, serves as an important measurement of the net revenue stream generated by the volume, mix and pricing of earning assets and interest-bearing liabilities.
The following table details the calculation of FTE net interest income for the years ended December 31:
(Dollars in thousands)
Net interest income
Taxable equivalent adjustments
FTE net interest income
The following table details Peoples’ average balance sheets, with corresponding income/expense and yield/cost, for the years ended December 31:
( Dollars in thousands)
Average Balance
Income/ Expense
Yield/Cost
Average Balance
Income/Expense
Yield/Cost
Average Balance
Income/ Expense
Yield/Cost
Short-term investments (a)
Investment securities (b)(c):
Taxable
Nontaxable
Total investment securities
Loans (c)(d):
Construction
Commercial real estate, other
Commercial and industrial
Premium finance
Leases
Residential real estate (e)
Home equity lines of credit
Consumer, indirect
Consumer, direct
Total loans
Allowance for credit losses
Net loans
Total earning assets
Goodwill and other intangible assets
Other assets
Total assets
Interest-bearing deposits:
Savings accounts
Government deposit accounts
Interest-bearing demand accounts
Money market accounts
Retail certificates of deposit
Brokered deposits (f)
Total interest-bearing deposits
Borrowed funds:
Short-term FHLB advances (f)
Repurchase agreements and other (g)
Total short-term borrowings
Long-term FHLB advances
Long-term notes payable
Other borrowings
Total long-term borrowings
Total borrowed funds
Total interest-bearing liabilities
Non-interest-bearing deposits
Other liabilities
Total liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
Interest rate spread (b)
Net interest margin (b)
(a) Balances are primarily composed of interest bearing demand deposits at the FRB and FHLB.
(b) Average balances are based on carrying value.
(c) Interest income and yields are presented on a fully tax-equivalent basis, using a federal statutory corporate income tax rate of 21% for all periods presented.
(d) Average balances include nonaccrual, impaired loans, and loans held for sale. 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.
(e) Loans held for sale are included in the average loan balances listed. Related interest income on loans originated for sale prior to the loan being sold is included in loan interest income.
(f) Interest related to interest rate swap transactions is included, as appropriate to the transaction, in interest expense on short-term FHLB advances or interest expense on brokered deposits for the periods presented in which FHLB advances and/or brokered deposits were being utilized.
(g) Includes wholesale and other borrowings, which in 2024 was impacted by the Bank Term Funding Program.
Peoples’ average balances compared to the 2023 balances have been impacted by the Limestone Merger as of the close of business on April 30, 2023, which added to average short-term investments, average total investment securities, and average loans, deposit and borrowed funds balances. The asset yields and borrowing costs have moved in tandem with recent interest rate changes.
The following table provides an analysis of the changes in FTE net interest income:
(Dollars in thousands)
Changes from 2024 to 2025
Changes from 2023 to 2024
Increase (decrease) in:
Rate
Volume
Total (a)
Rate
Volume
Total (a)
INTEREST INCOME:
Short-term investments
Investment securities (b):
Taxable
Nontaxable
Total investment income
Loans (b) :
Construction
Commercial real estate, other
Commercial and industrial
Premium finance
Leases
Residential real estate
Home equity lines of credit
Consumer, indirect
Consumer, direct
Total loan income
Total interest income
INTEREST EXPENSE:
Deposits:
Savings accounts
Government deposit accounts
Interest-bearing demand accounts
Money market accounts
Retail certificates of deposit
Brokered deposit
Total deposit cost
Borrowed funds:
Short-term borrowings
Long-term borrowings
Total borrowed funds cost
Total interest expense
Net interest income
(a) The change in interest due to both rate and volume has been allocated to rate and volume changes in proportion to the relationship of the dollar amounts of the changes in each.
(b) Interest income and yields are presented on a fully tax-equivalent basis, using a federal statutory corporate income tax rate of 21% for all periods presented.
FTE net interest income increased $6.3 million, or 2%, for 2025 when compared to 2024, and net interest margin decreased 7 basis points to 4.14%. The increase in net interest income was driven by decreased borrowing costs. The decrease in net interest margin for 2025 compared to 2024 was primarily driven by lower accretion income. Accretion income, net of amortization expense, from acquisitions was $9.6 million for 2025 and $25.2 million for 2024, which added 11 and 30 basis points to net interest margin for 2025 and 2024, respectively.
During 2024, FTE net interest income increased $9.1 million, or 3%, when compared to 2023, and net interest margin decreased 34 basis points to 4.21%. The increase in net interest income was driven by increases in market interest rates and an additional four months of income from the Limestone Merger. The decrease in net interest margin for 2024 compared to 2023 was primarily driven by higher borrowings costs, which offset higher earning asset yields. Accretion income, net of amortization expense, from acquisitions was $25.2 million for 2024 and 2023, which added 30 and 34 basis points to net interest margin for 2024 and 2023, respectively.
Detailed information regarding changes in the Consolidated Balance Sheets can be found under appropriate captions of the “FINANCIAL CONDITION” section of this discussion. Additional information regarding Peoples’ interest rate risk and the potential impact of interest rate changes on Peoples’ results of operations and financial condition can be found later in this discussion under the caption “Interest Rate Sensitivity and Liquidity.”
Provision for Credit Losses
The following table details Peoples’ provision for credit losses recognized for the years ended December 31:
(Dollars in thousands)
Provision for other credit losses
Provision for checking account overdrafts
Provision for credit losses
As a percent of average total loans
The provision for credit losses represents the amount needed to maintain the appropriate level of the allowance for credit losses based on management’s formal quarterly analysis of the loan portfolio and procedural methodology that estimates the amount of probable credit losses. The CECL methodology utilized by Peoples relies on economic forecasts, as well as other key assumptions including prepayments, probability of default and loss given default.
For 2025, the increase in the provision for credit losses compared to 2024 was mainly a result of (i) an increase in net charge-offs, (ii) loan growth, (iii) deterioration in the economic forecasts used within the CECL model, (iv) a periodic refresh in loss drivers utilized within the CECL model, and (v) an increase in reserves for leases originated by the North Star Leasing division.
During 2024, the provision for credit losses was driven by (i) net charge-offs, (ii) an increase in reserves for individually analyzed loans and leases, (iii) economic forecast deterioration, and (iv) loan growth.
During 2023, the provision for credit losses was driven by (i) the addition of the provision for the loans acquired in the Limestone Merger, (ii) loan growth, and (iii) an increase in net charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers.
Additional information regarding changes in the allowance for credit losses and loan credit quality can be found later in this discussion under the caption “Allowance for Credit Losses.”
Net Losses Included in Total Non-Interest Income
Net losses include losses on investment securities, asset disposals and other transactions, which are recognized in total non-interest income.
The following table details the net losses for the years ended December 31 recognized by Peoples:
(Dollars in thousands)
Net loss on investment securities
Net loss on asset disposals and other transactions:
Net loss on other assets
Net loss on other real estate owned
Net loss on other transactions
Net loss on asset disposals and other transactions
For 2025, Peoples’ net loss on investment securities was primarily due to the sale of lower yielding available-for-sale securities in the third quarter of 2025. During 2024, Peoples’ net loss on investment securities was primarily due to the loss recorded on a contingent call of a security in the second quarter of 2024.
Peoples’ net loss on asset disposals and other transactions during 2025 was primarily driven by $1.4 million of net losses on repossessed assets, a $0.9 million loss on the sale of an other real estate owned (“OREO”) property, and a $0.8 million loss on the redemption of subordinated debt. During both 2024 and 2023, Peoples’ net loss on asset disposals was primarily driven by losses recognized on repossessed assets and write-downs of an OREO property for $1.2 million and $1.6 million, respectively.
Total Non-Interest Income Excluding Net Gains and Losses
Peoples generates total non-interest income excluding net gains and losses from five primary sources: electronic banking income (“e-banking”); trust and investment income; insurance income; deposit account service charges; and lease income. Peoples continues to focus on revenue growth from non-interest income sources in order to maintain a diversified revenue stream through greater reliance on total non-interest income excluding net gains and losses. Total non-interest income excluding net gains and losses accounted for 23.6% of Peoples’ total revenues (defined as net interest income plus total non-interest income excluding net gains and losses) in 2025, compared to 22.8% in 2024 and 21.7% in 2023.
The increase in Peoples’ total non-interest income excluding net gains and losses, as a percent of total revenue during 2025 compared to 2024, was largely due to the growth in lease income, primarily attributable to operating lease income, and growth in trust and investment income.
E-banking income comprised the largest portion of Peoples’ total non-interest income excluding net gains and losses, for 2025. The following table shows Peoples’ e-banking income for the years ended December 31:
(Dollars in thousands)
E-banking income
Peoples’ e-banking services include ATM and debit cards, direct deposit services, internet and mobile banking, and remote deposit capture, and serve as alternative delivery channels to traditional sales offices for providing services to clients. Revenue is derived largely from ATM and debit cards, as other services are mainly provided at no charge to the customers. The amount of e-banking income is largely dependent on the timing and volume of customer activity. For 2025, e-banking income was relatively flat when compared to 2024 and to 2023. In 2025, Peoples’ customers used their debit cards to complete $2.2 billion of transactions, up from $2.0 billion in 2024 and $1.9 billion in 2023.
Peoples’ fiduciary and brokerage revenues continue to be based primarily upon the value of assets under administration and management. The following table details Peoples’ trust and investment income for the years ended December 31:
(Dollars in thousands)
Brokerage
Fiduciary
Employee benefit plan fees
Trust and investment income
For 2025, trust and investment income increased compared to all prior periods primarily due to increases in brokerage and fiduciary income, as a result of the increase in assets under management.
The following table details Peoples’ assets under administration and management at December 31:
(Dollars in thousands)
Trust
Brokerage
Total
Annual average
The increase in total assets under administration and management at December 31, 2025, compared to December 31, 2024, was primarily due to growth, as Peoples added new accounts and the underlying market value of assets under management grew in 2025. During 2024, Peoples’ assets under administration and management increased primarily driven by market value increases.
The following table details Peoples’ insurance income for the years ended December 31:
(Dollars in thousands)
Property and casualty insurance commissions
Performance-based commissions
Life and health insurance commissions
Insurance income
Insurance income for 2025 increased compared to 2024, primarily driven by higher commissions from clientele added during 2025. Insurance income for 2024 increased compared to 2023, primarily driven by higher commissions and market increases for premiums.
Deposit account service charges are based on the costs associated with services provided by Peoples. The following table details deposit account service charges for the years ended December 31:
(Dollars in thousands)
Overdraft and non-sufficient funds fees
Account maintenance fees
Other fees and charges
Deposit account service charges
The amount of deposit account service charges, particularly fees for overdrafts and non-sufficient funds (‘NSF”), is largely dependent on the timing and volume of customer activity. Management periodically evaluates these fees to ensure they are reasonable based on operational costs and similar to fees charged in Peoples’ markets by competitors. Deposit account service charges in 2025 decreased compared to 2024 due to a decrease in customer activity and a change in the NSF fee structure. Deposit account service charges in 2024 increased compared to 2023 due to an increase in customer activity.
The following table details the other items included within Peoples’ total non-interest income for the years ended December 31:
(Dollars in thousands)
Lease income
Bank owned life insurance income
Mortgage banking income
Other non-interest income
Lease income is primarily comprised of (i) operating leases, (ii) month-to-month lease payments in excess of net investment in the lease, (iii) gains on the early termination of leases, net of any associated purchase accounting adjustments, (iv) fees received for referrals, (v) gains and losses recognized on the sales of residual assets, and (vi) syndication income. The increase in lease income for 2025 when compared to 2024 was driven primarily by an increase in month-to-month lease income and operating lease income from Vantage. The 2024 increase in lease income when compared to 2023 was driven primarily by an increase in operating lease income from Vantage.
Bank owned life insurance income (“BOLI”) for 2025 increased when compared to 2024 primarily due to changes in the cash surrender value of the underlying policies. BOLI income for 2024 remained flat when compared to 2023. Peoples purchased no additional BOLI policies during 2024 or 2025.
Mortgage banking income is comprised mostly of net gains from the origination and sale of long-term, fixed-rate real estate loans in the secondary market, as well as servicing income for sold loans. As a result, the amount of income recognized by Peoples is largely dependent on customer demand and long-term interest rates for residential real estate loans offered in the secondary market. Mortgage banking income decreased for 2025 when compared to 2024 primarily driven by the decreased volume in loans sold as more production has been kept on the balance sheet relative to prior periods. Mortgage banking income increased for 2024 when compared to 2023 driven by higher production. In 2025, Peoples sold approximately $13.6 million of loans to the secondary market with servicing retained and sold approximately $27.5 million in loans with servicing released, compared to approximately $24.1 million and $40.7 million, respectively, in 2024. Peoples sold $2.7 million of loans to the secondary market with servicing retained and $30.7 million of loans with servicing released during 2023. The volume of sales has a direct impact on the amount of mortgage banking income.
For 2025, other non-interest income increased when compared to 2024 due primarily to increased swap fee income which is driven by customer demand and increased wire fees. Other non-interest income increased during 2024, compared to 2023, primarily due to increased swap fee income which is driven by customer demand.
Total Non-Interest Expense
Salaries and employee benefit costs remain Peoples’ largest non-interest expense, accounting for over half of total non-interest expense. The following table details Peoples’ salaries and employee benefit costs for the years ended December 31:
(Dollars in thousands)
Base salaries and wages
Sales-based and incentive compensation
Employee benefit costs
Employee stock-based compensation
Deferred personnel costs
Payroll taxes and other employment costs
Salaries and employee benefit costs
Full-time equivalent employees:
Actual at end of the period
Average during the period
Base salaries and wages increased for 2025 compared to 2024, driven by annual merit increases. Base salaries and wages increased in 2024 compared to 2023, driven by an additional four months of salary expense associated with employees added from the Limestone Merger, coupled with annual merit increases.
The increase in sales-based and incentive compensation for 2025 compared to 2024 was primarily due to higher sales levels and the overall company performance measures used in calculating incentive awards. Sales-based and incentive compensation decreased in 2024 compared to 2023, due primarily due to the overall company performance measures used in calculating incentive awards. Peoples’ sales-based and incentive compensation plans are designed to grow core earnings, while not encouragingunnecessary and excessive risk-taking that could threaten the value of Peoples. The sales-based and incentive compensation plans are designed to reward employees for appropriate behaviors and include provisions addressing inappropriate practices with respect to Peoples and its customers, including clawbacks for executives.
The increase in employee benefit costs for 2025 compared to 2024 was mostly due to higher medical costs. Employee benefit costs in 2024 increased compared to 2023 due to increased medical and 401(k) costs reflecting a full year of expenses in 2024 for the additional employees added in the Limestone Merger.
Employee stock-based compensation is generally recognized over the vesting period, which typically ranges from immediate vesting to vesting at the end of three years, with an adjustment made at the vesting date to reverse expense for forfeited awards. The majority of Peoples’ stock-based compensation is attributable to annual equity-based incentive awards to employees, which are awarded in the first quarter and based upon Peoples achieving certain performance goals during the prior year. During the years presented in the table above, Peoples granted restricted common shares to officers and key employees with performance-based vesting periods and time-based vesting periods, generally with a three-year cliff vesting. Employee stock-based compensation for 2025 decreased when compared to 2024 due to less up-front expense on stock grants to certain retirement-eligible employees. Employee stock-based compensation increased for 2024 compared to 2023 due to additional employees primarily as a result of the full year impact from the Limestone Merger.
Deferred personnel costs represent the portion of current period salaries and employee benefit costs considered to be direct loan origination costs. These costs are capitalized and recognized over the life of the loan as a yield adjustment in interest income. As a result, the amount of deferred personnel costs for each period corresponds directly with the volume of loan originations, coupled with the average deferred costs per loan that are updated annually at the beginning of each year. Deferred personnel costs in 2025 increased compared to 2024 and 2023, primarily due to an increase in loan origination volume. Additional information regarding Peoples’ loan activity can be found later in this discussion under the caption “Loans” within “FINANCIAL CONDITION.”
For 2025, payroll taxes and other employment costs increased compared to 2024, primarily due to annual merit increases. Payroll taxes and other employee costs increased during 2024 compared to 2023, primarily due to the employees added from the Limestone Merger coupled with annual merit increases.
Peoples’ net occupancy and equipment expense for the years ended December 31 was comprised of the following:
(Dollars in thousands)
Depreciation expense
Repairs and maintenance costs
Net rent expense
Property taxes, utilities and other costs
Net occupancy and equipment expense
For 2025, net occupancy and equipment expense decreased when compared to 2024 due to an adjustment of property tax accruals resulting from a review of recent assessments. Net occupancy and equipment expense was higher during 2024 when compared to 2023 due to the full year impact of the Limestone Merger and a prior period one-time benefit to rent expense in 2023.
The following table details the other items included within Peoples’ total non-interest expense for the years ended December 31:
(Dollars in thousands)
Data processing and software expense
Professional fees
Amortization of other intangible assets
E-banking expense
FDIC insurance expense
Other loan expenses
Marketing expense
Franchise tax expense
Communication expense
Operating lease expense
Travel and entertainment expense
Other non-interest expense
Data processing and software expense includes software support, maintenance and depreciation expense. Data processing and software expense for 2025 increased relative to 2024, driven by costs associated with recent technology projects. During 2024, data processing and software expense increased when compared to 2023, driven by software upgrades and implementation of new systems, coupled with the increased size of Peoples’ organization as a result of the Limestone Merger.
Professional fees increased for 2025 when compared to 2024, primarily driven by higher exam and audit fees coupled with higher legal expense. Professional fees during 2024 decreased when compared to 2023, primarily driven by a $6.0 million decrease in acquisition-related expenses, related to the Limestone Merger in 2023.
Amortization of other intangible assets decreased for 2025 when compared to 2024 due to decreases in amortization on core deposits and customer relationship intangibles. Amortization of other intangible assets for 2024 remained relatively flat when compared to 2023.
Peoples’ e-banking expense is comprised of costs associated with debit and ATM cards, as well as internet and mobile banking costs. E-banking expense increased for 2025 when compared to 2024 and to 2023 due to increased processing fees.
FDIC insurance premiums for 2025 increased when compared to 2024 due to the increase in assets, driven by loan growth. FDIC insurance expense increased during 2024 compared to 2023 due to assets acquired in the Limestone Merger. The FDIC quarterly assessment rate is applied to average total assets less average tangible equity, and is based on the leverage ratio, net income before taxes, nonperforming loans as a percent of total assets, OREO, loan mix and asset growth. Additional information regarding Peoples’ FDIC insurance assessments may be found in “ITEM 1 BUSINESS” of this Form 10-K in the section captioned “Supervision and Regulation.”
Other loan expenses during 2025 increased when compared to 2024 primarily due to the increase in Down Payment Assistance Program expenses. Other loan expenses increased in 2024 compared to 2023, primarily due to increases in collection and underwriting costs.
Marketing expense, which includes advertising, donations, marketing campaigns, and other public relations costs, for 2025 decreased when compared to all prior periods, primarily driven by lower advertising expense.
Peoples is subject to state franchise taxes, which are based largely on Peoples’ equity at year-end, in the states where Peoples has a physical presence. Franchise tax expense also includes the Ohio Financial Institution Tax (“FIT”), which is a business privilege tax that is imposed on financial institutions organized for profit and doing business in Ohio. Franchise tax expense increased for 2025
when compared to 2024 primarily driven by the Ohio FIT. The Ohio FIT is based on the total equity capital in proportion to the taxpayer’s gross receipts in Ohio. Franchise tax expense decreased in 2024 compared to 2023 primarily driven by the Ohio FIT, which decreased due to lower apportionment in the state.
Communications expense decreased during 2025 when compared to 2024 due to upgrades that were implemented in the prior year. Communications expense increased during 2024 when compared to 2023, due to upgraded networking at certain branches (including new branches acquired in acquisitions and mergers) and increased costs compared to the prior period among certain vendors that provide communication services.
Operating lease expense increased in all years presented due to an increase in the volume of leases originated.
Travel and entertainment expense remained flat compared to 2024 and 2023. Travel and entertainment expense varies between periods due to the seasonality of travel.
Other non-interest expense for 2025 decreased when compared to 2024 due to lower corporate expenses. Other non-interest expense decreased for 2024 when compared to 2023, primarily due to higher acquisition costs and pension expense in the prior year of $2.5 million and $2.1 million, respectively, both of which were partially offset by an increase in miscellaneous expenses of $1.9 million for 2024, which was primarily attributable to one-time corporate expenses.
Income Tax Expense
A key driver for the amount of income tax expense recognized by Peoples each year is the amount of pre-tax income. In addition to the expense recognized, Peoples receives tax benefits from tax-exempt investments and loans, BOLI income, common share awards that settled or vested during the year, investments in tax credit funds, and transferrable tax credits, which reduce Peoples’ effective tax rate. A reconciliation of Peoples’ recorded income tax expense and effective tax rate to the statutory tax rate can be found in “Note 13 Income Taxes.”
For the full year of 2025, income tax expense totaled $28.0 million, compared to $32.3 million in 2024, and $31.8 million in 2023, and the effective tax rate was 20.8% for 2025, compared to 21.6% for 2024, and 21.9% for 2023. The decrease in income tax expense and the effective tax rate when compared to the prior years was impacted by updates to state tax rates driven by apportionment, reducing tax expense in 2025 by $0.9 million and a $0.7 million benefit relating to tax credits purchased in the fourth quarter of 2025. Income tax for 2024 was positively impacted by a $1.1 million one-time benefit recognized in 2024 related to a prior year amended return.
Peoples also recorded a tax benefit of $169,000 in 2025, $48,000 in 2024, and $128,000 in 2023 related to common share awards that settled or vested during the year, with the substantial majority recorded in the first quarter of each year.
Pre-Provision Net Revenue (non-US GAAP)
Pre-provision net revenue (“PPNR”) has become a key financial measure used by state and federal bank regulatory agencies when assessing the capital adequacy of financial institutions. PPNR is defined as net interest income plus total non-interest income, excluding all gains and losses, minus total non-interest expense. PPNR excludes income tax expense. As a result, PPNR represents the earnings capacity that can be either retained in order to build capital or used to absorb unexpectedlosses and preserve existing capital. PPNR represents a non-US GAAP financial measure since it excludes the provision for credit losses and all gains and losses included in earnings.
The following table provides a reconciliation of this non-US GAAP financial measure to the amounts of income before income taxes reported in Peoples’ Consolidated Financial Statements for the periods presented:
(Dollars in thousands)
Pre-Provision Net Revenue:
Income before income taxes
Add: provision for credit losses
Add: net loss on OREO
Add: net loss on investment securities
Add: net loss on other assets
Add: net loss on other transactions
Pre-provision net revenue
PPNR increased in 2025 when compared to 2024 mostly due to lower borrowing costs and an increase in non-interest income, driven by lease income. During 2024, PPNR increased when compared to 2023 mostly due to increased net interest income and increased non-interest income driven by higher rates and the additional four months of income from the Limestone Merger.
Efficiency Ratio (non-US GAAP)
The efficiency ratio is a key financial measure used to monitor performance. The efficiency ratio is calculated as total non-interest expense (less amortization of other intangible assets) as a percentage of FTE net interest income plus total non-interest income excluding net gains and losses. This financial measure is non-US GAAP since it excludes amortization of other intangible assets and all gains and/or losses included in earnings, and uses FTE net interest income.
The following table provides a reconciliation of this non-US GAAP financial measure to the amounts of total non-interest income and total non-interest expense reported in Peoples’ Consolidated Financial Statements for the years presented:
(Dollars in thousands)
Efficiency ratio:
Total non-interest expense
Less: amortization of other intangible assets
Adjusted total non-interest expense
Total non-interest income
Less: net loss on investment securities
Less: net (loss) gain on asset disposals and other transactions
Total non-interest income excluding net gains and losses
Net interest income
Add: fully-tax-equivalent adjustment (a)
Net interest income on a fully-tax equivalent basis
Adjusted revenue
Efficiency ratio
(a) Based on 21% statutory federal corporate income tax rate.
The efficiency ratio for 2025 increased when compared to 2024 due to the increase in non-interest expense. Managing expenses has been a major focus over recent years; however, during this time Peoples has continued to make meaningful investments in its infrastructure and systems. Peoples was primarily impacted in 2024 by the competition for deposits impacting funding costs, and in 2023 net interest income was positively impacted by a rising market interest rate environment.
Return on Average Assets Adjusted for Non-Core Items (non-US GAAP)
In addition to return on average assets, management uses return on average assets adjusted for non-core items to monitor performance. The return on average assets ratio 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, and pension settlement charges included in net income.
The following table provides a reconciliation of this non-US GAAP financial measure to the amounts of net income reported in Peoples’ Consolidated Financial Statements for the years presented:
(Dollars in thousands)
Net income adjusted for non-core items:
Net income
Add: net loss on investment securities
Less: tax effect of net loss on investment securities (a)
Less: net gain on investment securities
Add: tax effect of net gain on investment securities (a)
Add: net loss on asset disposals and other transactions
Less: tax effect of net loss on asset disposals and other transactions (a)
Add: acquisition-related expenses
Less: tax effect of acquisition-related expenses (a)
Add: pension settlement charges
Less: tax effect of pension settlement charges (a)
Net income adjusted for non-core items (after tax)
Return on average assets:
Net income
Total average assets
Return on average assets
Return on average assets adjusted for non-core items:
Net income adjusted for non-core items
Total average assets
Return on average assets adjusted for non-core items
(a) Based on a 21% statutory federal corporate income tax rate.
The decrease in the return on average assets and the return on average assets adjusted for non-core items for 2025 when compared to 2024 was primarily driven by an increase in average assets, driven by loan growth, and a decrease in net income from an increase in provision for credit losses. The decrease in the return on average assets and return on average assets adjusted for non-core items for 2024 compared to 2023 was driven by the assets acquired in the Limestone Merger.
Return on Average Tangible Equity (non-US GAAP)
The return on average tangible equity ratio is a key financial measure used to monitor performance. The return on tangible equity is calculated as net income (less after-tax impact of amortization of other intangible assets) divided by tangible equity. This measure is non-US GAAP since it excludes amortization of other intangible assets from earnings and the impact of goodwill and other intangible assets acquired through acquisitions on total stockholders’ equity.
The following table provides a reconciliation of this non-US GAAP financial measure to the amounts of total average stockholders’ equity and the return on average stockholders’ equity ratios reported in Peoples’ Consolidated Financial Statements for the years presented:
(Dollars in thousands)
Net income excluding amortization of other intangible assets:
Net income
Add: amortization of other intangible assets
Less: tax effect of amortization of other intangible assets (a)
Net income excluding amortization of other intangible assets
Average tangible equity:
Total average stockholders’ equity
Less: average goodwill and other intangible assets
Average tangible equity
Return on average stockholders’ equity ratio:
Net income
Average stockholders’ equity
Return on average stockholders’ equity
Return on average tangible equity ratio:
Net income excluding amortization of other intangible assets
Average tangible equity
Return on average tangible equity
(a) Based on a 21% statutory federal corporate income tax rate.
The return on total average stockholders’ equity and average tangible equity ratios decreased in 2025 when compared to 2024, primarily driven by an increase in average stockholders’ equity. Return on total average stockholders’ equity and average tangible equity ratios were lower in 2024 relative to 2023 due to higher average stockholders’ equity driven by the full year impact of the Limestone Merger. At the same time, average tangible equity for 2023 was negatively impacted by the Limestone Merger, for which Peoples recorded additional goodwill and other intangible assets.
FINANCIAL CONDITION
Cash and Cash Equivalents
Peoples considers cash and cash equivalents to consist of federal funds sold, cash and balances due from banks, interest-bearing balances in other institutions and other short-term investments that are readily liquid. The amount of cash and cash equivalents fluctuates on a daily basis due to customer activity and Peoples’ liquidity needs. At December 31, 2025, excess cash reserves at the FRB were $73.2 million, compared to $104.7 million at December 31, 2024. The amount of excess cash reserves maintained is dependent upon Peoples’ daily liquidity position, which is driven primarily by changes in deposits, loan balances and unpledged securities.
In 2025, Peoples’ total cash and cash equivalents decreased $28.7 million, due to cash used in investing activities of $424.4 million, which was partially offset by cash provided by financing activities of $261.0 million and operating activities of $134.7 million. Peoples’ investing activities reflected a net increase of $418.2 million in loans held for investment and $425.3 million in purchases of available-for-sale investment securities and held-to-maturity investment securities. These increases were partially offset by $427.9 million in net proceeds from sales, principal payments, calls and prepayments on available-for-sale and held-to-maturity investment securities. Cash provided by financing activities was primarily driven by an increase in overnight borrowings with the FHLB of $190.0 million.
In 2024, Peoples’ total cash and cash equivalents decreased $209.1 million, due to cash used in investing activities of $344.3 million and financing activities of $7.9 million, which were partially offset by cash provided by operating activities of $143.2 million. Peoples’ investing activities reflected a net increase of $199.2 million in loans held for investment and $584.8 million in purchases of
available-for-sale investment securities and held-to-maturity investment securities, which were partially offset by $446.6 million in net
proceeds from sales, principal payments, calls and prepayments on available-for-sale and held-to-maturity investment securities.
Financing activities included a net increase of $487.1 million in deposits, a decrease of $457.0 million in short-term borrowings, a net
increase of $20.6 million in long-term borrowings, as well as $56.3 million of cash dividends paid.
Further information regarding the management of Peoples’ liquidity position can be found later in this discussion under “Interest Rate Sensitivity and Liquidity.”
Investment Securities
The following table provides information regarding Peoples’ investment portfolio at December 31:
(Dollars in thousands)
Weighted average yield
Available-for-sale securities, at fair value:
Obligations of:
U.S. Treasury and government agencies
U.S. government sponsored agencies
States and political subdivisions
Residential mortgage-backed securities
Commercial mortgage-backed securities
Bank-issued trust preferred securities
Total fair value
Total amortized cost
Net unrealized loss
Held-to-maturity securities, at amortized cost:
Obligations of:
U.S. government sponsored agencies
States and political subdivisions (a)
Residential mortgage-backed securities
Commercial mortgage-backed securities
Total amortized cost
Other investment securities
Total investment securities:
Amortized cost
Carrying value
(a) A mortized cost is presented net of the allowance for credit losses of $236 at December 31, 2025, $237 at December 31, 2024 and $238 at December 31, 2023.
At December 31, 2025, Peoples’ investment securities represented approximately 20.5% of total assets, compared to 20.7% at December 31, 2024. For 2025 and 2024, total investment securities increased compared to the prior year, largely due to purchases of higher yielding, longer duration securities designated as held-to-maturity. During the third quarter of 2025, Peoples executed the sale of $75.0 million of available-for-sale securities for an after-tax loss of $2.7 million. Proceeds were used to reinvest in higher yielding agency securities and to pay down higher cost liabilities. During the first quarter of 2023, Peoples executed the sale 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 sale were used to pay down overnight borrowings. During the fourth quarter of 2023, Peoples executed the sale of an additional $36.5 million of its lower yielding available-for-sale investment securities for an after-tax loss of $1.3 million. Proceeds from the sale were used to purchase higher yielding agency investment securities.
Peoples designates certain securities as “held-to-maturity” at the time of their purchase if management determines Peoples would have the intent and ability to hold the purchased securities until maturity. The unrealized gain or loss related to held-to-maturity investment securities does not directly impact total stockholders’ equity, in contrast to the impact from the available-for-sale investment securities portfolio.
Additional information regarding Peoples’ investment portfolio can be found in “Note 3 Investment Securities.”
Loans
The following table provides information regarding outstanding loan balances at or for the year ended December 31:
(Dollars in thousands)
Originated loans:
Construction
Commercial real estate, other
Commercial real estate
Commercial and industrial
Premium finance
Leases
Residential real estate
Home equity lines of credit
Consumer, indirect
Consumer, direct
Consumer
Deposit account overdrafts
Total originated loans
Acquired loans:
Construction
Commercial real estate, other
Commercial real estate
Commercial and industrial
Leases
Residential real estate
Home equity lines of credit
Consumer, direct
Total acquired loans (a)
Total loans
Average total loans
Average allowance for credit losses
Average loans, net of average allowance for credit losses
Percent of loans to total loans:
Construction
Commercial real estate, other
Commercial real estate
Commercial and industrial
Premium finance
Leases
Residential real estate
Home equity lines of credit
Consumer, indirect
Consumer, direct
Consumer
Deposit account overdrafts (b)
(Dollars in thousands)
Total percentage
Residential real estate loans being serviced for others
(a) Includes all loans acquired, and related loan discount recorded as part of acquisition accounting, in 2012 and thereafter. Loans that were acquired and subsequently re-underwritten are reported as originated upon execution of such credit actions (for example, renewals, and increase in lines of credit).
(b) NM represents “not meaningful.”
As of December 31, 2025, total loans increased $398.9 million, compared to at December 31, 2024, due to growth in other commercial real estate loans, commercial and industrial loans, and indirect consumer loans of $208.0 million, $188.1 million, and $30.7 million, respectively, and were partially offset by a decrease in leases of $40.9 million.
As of December 31, 2024, total loans increased $198.8 million, compared to at December 31, 2023, primarily due to organic growth in our commercial and industrial and premium finance portfolios which increased by $162.7 million and $66.3 million, respectively, and were partially offset by a decrease in commercial real estate loans of $40.9 million.
The following table details the maturities of Peoples’ loan portfolio at December 31, 2025:
(Dollars in thousands)
Due in One Year or Less
Due in One to Five Years
Due in Five to Fifteen Years
Due After Fifteen Years
Total
% of Total
Construction:
Fixed
Variable
Total
Commercial real estate, other:
Fixed
Variable
Total
Commercial and industrial:
Fixed
Variable
Total
Premium finance:
Fixed
Leases:
Fixed
Residential real estate:
Fixed
Variable
Total
Home equity lines of credit:
Fixed
Variable
Total
Consumer, indirect:
Fixed
Consumer, direct:
Fixed
Variable
Total
Loan Concentration
Peoples categorizes its commercial loans according to standard industry classifications and monitors for concentrations in a single industry or multiple industries that could be impacted by changes in economic conditions in a similar manner. Peoples’ commercial lending activities continue to be spread over a diverse range of businesses from all sectors of the economy, with no single industry comprising over 11% of Peoples’ total loan portfolio.
Loans secured by commercial real estate, including commercial construction loans, continue to comprise the largest portion of Peoples’ loan portfolio.
The following table provides information regarding the largest concentrations of commercial real estate loans within the loan portfolio at December 31, 2025:
(Dollars in thousands)
Outstanding Balance
Available Loan Commitments
Total Exposure
% of Total Exposure
Construction:
Apartment complexes
Land development
Land only
Industrial
Residential property
Storage facilities
Warehouse facilities
Student housing
Retail
Other (a)
Construction
Commercial real estate, other:
Apartment complexes
Industrial facilities:
Owner occupied
Non-owner occupied
Total light industrial facilities
Retail facilities:
Owner occupied
Non-owner occupied
Total retail
Lodging and lodging related:
Owner occupied
Non-owner occupied
Total lodging and lodging related
Office buildings and complexes:
Owner occupied
Non-owner occupied
Total office buildings and complexes
Assisted living facilities and nursing homes
Warehouse facilities:
Owner occupied
Non-owner occupied
Total warehouse facilities
Restaurant/bar facilities:
Owner occupied
Non-owner occupied
Total restaurant/bar facilities
Mixed commercial use facilities:
Owner occupied
Non-owner occupied
Total mixed commercial use facilities
Healthcare:
Owner occupied
Non-owner occupied
Total healthcare facilities
Other (a)
Commercial real estate, other
(a) All other total exposures by industry are less than 2% of the Total Exposure.
Peoples’ commercial lending activities continue to focus on lending opportunities inside its primary and secondary market areas within Ohio, Kentucky, West Virginia, Virginia, Washington, D.C. and Maryland. In all other states, the aggregate outstanding balances of commercial loans in each state were less than 4% of total loans at both December 31, 2025 and December 31, 2024.
Additional information regarding Peoples’ loan portfolio can be found in “Note 4 Loans and Leases, and Allowance for Credit Losses.”
Allowance for Credit Losses
The amount of the allowance for credit losses at the end of each period represents management’s estimate of expected credit losses from existing loans based upon its formal quarterly analysis of the loan portfolio described in the “Critical Accounting Policies” section of this discussion. While this process involves making allocations to specific loans and pools of loans, the entire allowance is available for all losses incurred within the loan portfolio.
The following details management’s allocation of the allowance for credit losses at December 31:
(Dollars in thousands)
Construction
Commercial real estate
Commercial and industrial
Premium finance
Leases
Residential real estate
Home equity lines of credit
Consumer, indirect
Consumer, direct
Deposit account overdrafts
Allowance for credit losses
As a percent of total loans
The increase in the allowance balance at December 31, 2025, when compared to at December 31, 2024, was driven by (i) loan growth, (ii) deterioration in the economic forecasts used within the CECL model, (iii) a periodic refresh in the loss drivers utilized within the CECL model, (iv) an increase in reserves for leases originated by the North Star Leasing division, and (v) an increase in individually analyzed loans and leases.
The increase in the allowance balance at December 31, 2024, when compared to at December 31, 2023, was driven by an increase in reserves for individually analyzed loans and leases, as well as loan growth.
Additional information regarding Peoples’ allowance for credit losses can be found in “Note 1 Summary of Significant Accounting Policies” and “Note 4 Loans and Leases, and Allowance for Credit Losses.”
The following table summarizes the changes in the allowance for credit losses for the years ended December 31:
(Dollars in thousands)
Allowance for credit losses, January 1
Gross charge-offs:
Construction
Commercial real estate, other
Commercial and industrial
Premium finance
Leases
Residential real estate
Home equity lines of credit
Consumer, indirect
Consumer, direct
Consumer
Deposit account overdrafts
Total gross charge-offs
Recoveries:
Construction
Commercial real estate, other
Commercial and industrial
Premium finance
Leases
Residential real estate
Home equity lines of credit
Consumer, indirect
Consumer, direct
Consumer
Deposit account overdrafts
Total recoveries
Net charge-offs (recoveries):
Construction
Commercial real estate, other
Commercial and industrial
Premium finance
Leases
Residential real estate
Home equity lines of credit
Consumer, indirect
Consumer, direct
Consumer
Deposit account overdrafts
Total net charge-offs
Provision for credit losses, December 31 (a)
Initial allowance for PCD assets
Allowance for credit losses, December 31
Net charge-offs (recoveries) as a percent of average total loans:
Construction
Commercial real estate, other
Commercial and industrial
Premium finance
Leases
Residential real estate
Home equity lines of credit
Consumer, indirect
Consumer, direct
Consumer
Deposit account overdrafts
Total
(a) Amount does not include the provision for unfunded commitment liability.
Net charge-offs as a percent of average total loans for 2025 increased to 0.45% compared to 0.37% at 2024. The increase over all periods presented was due to an increase in charge-offs on small-ticket leases.
During 2024, net charge-offs as a percent of average total loans increased to 0.37%, compared to 0.15% for 2023. The increase was due to an increase in charge-offs on small-ticket leases that occurred during the second half of 2024.
The following table details Peoples’ nonperforming assets at December 31:
(Dollars in thousands)
Loans 90+ days past due and accruing:
Commercial real estate, other
Commercial and industrial
Premium finance
Leases
Residential real estate
Home equity lines of credit
Consumer, indirect
Consumer, direct
Consumer
Total loans 90+ days past due and accruing
Nonaccrual loans:
Commercial real estate, other
Commercial and industrial
Premium Finance
Leases
Residential real estate
Home equity lines of credit
Consumer, indirect
Consumer, direct
Consumer
Total nonaccrual loans
Total nonperforming loans (“NPLs”)
OREO:
Commercial
Residential
Total OREO
Total nonperforming assets (“NPAs”)
Criticized loans (a)
Classified loans (b)
Asset Quality Ratios:
Nonaccrual loans as a percent of total loans (c)
NPLs as a percent of total loans (c)(d)
NPAs as a percent of total assets (c)(d)
NPAs as a percent of total loans and OREO (c)(d)
Allowance for credit losses as a percent of nonaccrual loans (c)
Allowance for credit losses as a percent of NPLs (c)(d)
Criticized loans as a percent of total loans (a)(c)
Classified loans as a percent of total loans (b)(c)
(a) Includes loans categorized as special mention, substandard, doubtful, or loss.
(b) Includes loans categorized as substandard, doubtful, or loss.
(c) Data presented as of the end of the year indicated.
(d) Nonperforming loans include loans 90+ days past due and accruing, troubled debt restructured loans and nonaccrual loans. Nonperforming assets include nonperforming loans and OREO.
Peoples’ NPAs decreased to 0.45% of total assets at December 31, 2025, compared to 0.53% of total assets at December 31, 2024. This was driven by the sale of an OREO property in the fourth quarter of 2025. Loans 90+ days past due and accruing at December 31, 2025, decreased compared to at December 31, 2024, driven by payoffs on premium finance loans and Vantage leases. Past due premium finance loans carry low credit risk, due to the ability to cancel premiums and recover the majority of the receivable from the insurer. During 2025, criticized loans decreased due to paydowns and loan upgrades while classified loans increased due to downgrades.
Nonperforming assets increased to 0.53% of total assets at December 31, 2024, compared to 0.43% of total assets at December 31, 2023. This was driven by an increase in nonaccrual balances for other commercial real estate and commercial and industrial loans, partially offset by a decrease in commercial OREO. Loans 90+ days past due and accruing at December 31, 2024, increased compared to at December 31, 2023, driven by higher administrative delinquencies on premium finance loans. During 2024, both criticized and classified loans increased when compared to 2023, primarily due to loan downgrades.
The majority of Peoples’ nonaccrual commercial real estate loans consists of owner occupied commercial properties. In general, management believes repayment of these loans is dependent on the sale of the underlying collateral. As such, the carrying values of these loans are ultimately supported by management’s estimate of the net proceeds Peoples would receive upon the sale of the collateral. These estimates are based in part on market values provided by independent, licensed or certified appraisers periodically, but no less frequently than annually. Given the volatility in commercial real estate values, management continues to monitor changes in real estate values from quarter-to-quarter and updates its estimates as needed based on observable changes in market prices and/or updated appraisals for similar properties.
Peoples discontinues the accrual of interest on a loan when conditions cause management to believe collection of all or any portion of the loan’s contractual interest is doubtful. Such conditions may include the borrower being 90 days or more past due on any contractual payments or the availability of updated information regarding the borrower’s financial condition and repayment ability. All unpaid accrued interest deemed uncollectable is reversed, which would reduce Peoples’ net interest income. Interest received on nonaccrual loans is included in income only if principal recovery is reasonably assured. Interest income on loans classified as nonaccrual and renegotiated at each year-end that would have been recorded under the original terms of the loans was $1.6 million for 2025, $1.9 million for 2024, and $0.8 million for 2023. No portion of these amounts were recorded during 2025, 2024 or 2023.
Overall, management believes the allowance for credit losses was appropriate at December 31, 2025, based on all significant information currently available. Still, there can be no assurance that the allowance for credit losses will be adequate to cover future losses in Peoples’ loan portfolio.
Additional information regarding Peoples’ allowance for credit losses can be found in “Note 4 Loans and Leases, and Allowance for Credit Losses.”
Deposits
The following table details Peoples’ deposit balances at December 31:
(Dollars in thousands)
Non-interest-bearing deposits (a)
Interest-bearing deposits:
Interest-bearing demand accounts (a)
Savings accounts
Retail CDs
Money market deposit accounts
Governmental deposit accounts
Brokered deposits
Total interest-bearing deposits
Total deposits
(a) The sum of amounts presented are considered total demand deposits.
The increase in total deposits between December 31, 2025, and December 31, 2024, was primarily driven by increases in money market deposit accounts, retail CDs, driven by special promotional rate offerings over the past year, and non-interest bearing deposits, partially offset by a decrease in brokered deposits due to a strategic shift to other funding sources at lower rates. Total demand deposits comprised 35% and 34% of total deposits at December 31, 2025, and at December 31, 2024, respectively.
The increase in total deposits between December 31, 2024, and December 31, 2023, was primarily driven by special promotional rates over the past year on retail CDs. Total demand deposits comprised 34% and 38% of total deposits at December 31, 2024, and at December 31, 2023, respectively.
As part of its funding strategy, Peoples hedges 90-day brokered deposits with interest rate swaps. The swaps pay a fixed rate of interest while receiving three-month SOFR, which offsets the rate on the brokered deposits. As of December 31, 2025, Peoples had five effective interest rate swaps, with an aggregate notional value of $45.0 million, which were designated as cash flow hedges of brokered deposits, and are expected to be extended every 90 days through the maturity dates of the swaps. Peoples continually evaluates the overall balance sheet position given the interest rate environment.
Peoples’ governmental deposit accounts represent savings and interest-bearing transaction accounts from state and local governmental entities. These funds are subject to periodic fluctuations based on the timing of tax collections and subsequent expenditures or disbursements. Peoples normally experiences an increase in balances annually during the first and third quarters,
corresponding with tax collections, with declines normally in the second and fourth quarters of each year, corresponding with expenditures by the governmental entities. Peoples continues to emphasize growth of low-cost deposits, while continuing to migrate these customers to ICS network deposits that do not require Peoples to pledge assets as collateral.
The maturities of retail CDs with total balances of $100,000 or more at December 31 were as follows:
(Dollars in thousands)
3 months or less
Over 3 to 6 months
Over 6 to 12 months
Over 12 months
Total
Additional information regarding Peoples’ deposits can be found in “Note 8 Deposits.”
Borrowed Funds
The following table details Peoples’ short-term and long-term borrowings at December 31:
(Dollars in thousands)
Short-term borrowings:
FHLB overnight borrowings
Repurchase agreements
Bank Term Funding Program (“BTFP”)
Other short-term borrowings
Total short-term borrowings
Long-term borrowings:
FHLB advances
Vantage non-recourse debt
Other long-term borrowings
Total long-term borrowings
Total borrowed funds
Total borrowed funds, which include overnight borrowings, are mainly a function of loan growth and changes in total deposit balances. Other long-term borrowings include trust preferred securities held for investments and floating rate subordinated deferrable interest debentures. During 2025, Peoples redeemed early $25.0 million of subordinated debt it had acquired through a previous merger, which drove the decline in other long-term borrowings. Peoples continually evaluates its overall balance sheet position given the interest rate environment and liquidity needs. Total borrowed funds increased at December 31, 2025, compared to at December 31, 2024, due to higher FHLB overnight borrowings and higher other short-term borrowings. Peoples’ borrowed funds decreased at December 31, 2024, compared to at December 31, 2023, due to lower FHLB overnight borrowings and the payoff of the BTFP borrowing as of December 31, 2024.
On April 3, 2019, Peoples entered into the U.S. Bank Loan Agreement with U.S. Bank National Association, the term of which has been extended to March 30, 2026, through an amendment in March 2025. The U.S. Bank Loan Agreement provides Peoples with a revolving line of credit in the maximum aggregate principal amount of $30.0 million. There were no amounts drawn on the line of credit as of December 31, 2025.
Additional information regarding Peoples’ borrowed funds can be found in “Note 9 Short-Term Borrowings” and “Note 10 Long-Term Borrowings.”
Capital/Stockholders’ Equity
Peoples’ total stockholders’ equity at December 31, 2025, increased $95.0 million, or 9%, when compared to at December 31, 2024, which was due to net income of $106.8 million for 2025 and a decrease in other comprehensive loss of $39.8 million, partially offset by dividends paid of $58.1 million. The decrease in other comprehensive loss was the result of changes in the fair market value of available-for-sale investment securities, which were driven by changes in market interest rates. At December 31, 2025, capital levels for both Peoples and Peoples Bank remained substantially higher than the minimum amounts needed to be considered “well capitalized” under banking regulations. These higher capital levels reflect Peoples’ desire to maintain a strong capital position.
During 2024, total stockholders’ equity increased $58.1 million, or 6% ,when compared to at 2023 due to net income of $117.2 million for 2024, partially offset by an increase in other comprehensive loss of $8.8 million and dividends paid of $56.3 million. The
increase in other comprehensive loss was the result of changes in the fair market value of available-for-sale investment securities, which were driven by changes in market interest rates.
On January 1, 2020, Peoples recorded a one-time transition adjustment to reduce retained earnings by $3.7 million. This adjustment reflected the increase in the allowance for credit losses for loans (excluding the gross up of loan balances related to the establishment of an allowance for credit losses for PCD loans, the allowance for credit losses for held-to-maturity investment securities and the addition of an unfunded commitment liability, net of statutory federal corporate income taxes). Peoples elected to utilize the five-year phase-in period for the transition adjustment due to the implementation of ASU 2016-13. This phase-in period also included a 25% deferment of the impact on regulatory capital of the estimated increase in the allowance for credit losses related to the adoption of CECL, which was applied during the first two years of application. For the first two years of the phase-in period, 100% of the transition adjustment due to ASU 2016-13 was excluded for regulatory capital purposes, along with 25% of the increase in the allowance for credit losses compared to the January 1, 2020 allowance for credit losses. In year three of the phase-in (i.e., 2022), 75% of the transition adjustment, and the cumulative 25% increase in the allowance for credit losses compared to January 1, 2020, were excluded from regulatory capital, while 50% and 25% of these amounts were excluded in years four and five, respectively, under this phase-in period.
Under the risk-based capital rules, in order to avoid limitations on dividends, equity repurchases and compensation, Peoples must exceed the three minimum required ratios by at least a capital conservation buffer of 2.50%. These three minimum required ratios are the common equity tier 1 capital ratio, tier 1 risk-based capital ratio and total risk-based capital ratio. Peoples had a capital conservation buffer of 5.78% at December 31, 2025, 5.58% at December 31, 2024, and 5.17% at December 31, 2023. As such, Peoples exceeded the minimum ratios, including the capital conservation buffer, at December 31, 2025.
The following table details Peoples’ actual risk-based capital levels and corresponding ratios at December 31:
(Dollars in thousands)
Capital Amounts:
Common equity tier 1
Tier 1
Total (tier 1 and tier 2)
Net risk-weighted assets
Capital Ratios:
Common equity tier 1
Tier 1
Total (tier 1 and tier 2)
Tier 1 leverage ratio
In addition to traditional capital measurements, management uses tangible capital measures to evaluate the adequacy of Peoples’ total stockholders’ equity. Such financial measures represent non-US GAAP financial information since they exclude the impact of goodwill and other intangible assets acquired through acquisitions on the Consolidated Balance Sheets. Peoples’ management believes this information is useful to investors since it facilitates the comparison of Peoples’ operating performance, financial condition and trends to peers, especially those without a level of intangible assets similar to that of Peoples. Further, intangible assets generally are difficult to convert into cash, especially during a financial crisis, and could decrease substantially in value should there be deterioration in the overall franchise value. As a result, tangible equity represents a conservative measure of the capacity for Peoples to incur losses but remain solvent.
The following table reconciles the calculation of the identified non-US GAAP financial measures to amounts reported in Peoples’ Consolidated Financial Statements at December 31:
(Dollars in thousands)
Tangible equity:
Total stockholders’ equity
Less: goodwill and other intangible assets
Tangible equity
Tangible assets:
Total assets
Less: goodwill and other intangible assets
Tangible assets
Tangible book value per common share:
Tangible equity
Common shares outstanding
Tangible book value per common share
Tangible equity to tangible assets ratio:
Tangible equity
Tangible assets
Tangible equity to tangible assets
Tangible book value per common share increased to $22.77 at December 31, 2025, from $19.94 at December 31, 2024, which was primarily due to net income over the last 12 months coupled with a decrease in accumulated other comprehensive loss.
The increase in tangible book value per common share at December 31, 2024, from at December 31, 2023, was due to net income over the 12-month period.
Future Outlook
In 2026, Peoples expects to generate positive operating leverage for the year, excluding accretion and non-core costs, compared to 2025. Operating leverage is calculated by taking the percentage of total revenue growth (net interest income plus non-interest income, excluding gains and losses) from one period compared to another, and deducting the percentage of total non-interest expense growth over the same period.
For 2026, Peoples expects net interest margin to be between 4.00% and 4.20% for the full year, which anticipates one 25 basis point market interest rate cut. Each potential additional 25 basis point reduction in rates from the Federal Reserve would result in a 3 to 4 basis point decline in the net interest margin for the full year. These projections will vary depending on the timing and magnitude of the anticipated rate cuts and the level of competition for deposits. Peoples is in a relatively neutral interest rate risk position, and will actively manage its balance sheet mix during 2026 to mitigate the negative impact of any potential market interest rate changes.
Peoples projects total non-interest income, excluding net gains and losses, to be between $28 million and $30 million per quarter for 2026, with the first quarter elevated as it includes annual performance-based insurance commissions.
Total non-interest expenses are expected to be between $72 million and $74 million for the second, third and fourth quarters of 2026, with the first quarter of 2026 being higher due to annual expenses typically recognized during the first quarter of each year. The efficiency ratio should be relatively similar to 2025.
Peoples anticipates that the annual loan growth for 2026 will be between 3% and 5%. Peoples expects a slight reduction in net charge-offs, with a lower provision for credit losses for 2026, excluding any changes to economic forecasts.
Deposit balances are expected to grow slightly during 2026, and the loan-to-deposit ratio is projected to increase as deposit growth may be slower than loan growth during the year.
Management believes Peoples is in position to maintain strong asset quality metrics and continued growth into 2026. During 2025, Peoples experienced increased net charge-offs associated with its small-ticket leasing business, and that trend is expected to continue for the first half of 2026, with those levels tapering off through the back half of 2026. Peoples has made changes to the small-ticket leasing business during 2025 in an effort to originate higher quality credit tiers, while tightening the credit standards to more closely align with the expectations for the business.
For more information regarding risks and uncertainties that could impact the projections described above, please refer to “ITEM 1A RISK FACTORS” of this Form 10-K.
Interest Rate Sensitivity and Liquidity
While Peoples is exposed to various business risks, the risks relating to interest rate sensitivity and liquidity are major risks that can materially impact future results of operations and financial condition due to their complexity and dynamic nature. The objective of Peoples' asset-liability management function is to measure and manage these risks in order to optimize net interest income within the constraints of prudent capital adequacy, liquidity and safety. This objective requires Peoples to focus on interest rate risk exposure and adequate liquidity through its management of the mix of assets and liabilities, their related cash flows and the rates earned and paid on those assets and liabilities. Ultimately, the asset-liability management function is intended to guide management in the acquisition and disposition of earning assets and selection of appropriate funding sources.
Interest Rate Risk
Interest rate risk (“IRR”) is one of the most significant risks arising in the normal course of business of financial services companies like Peoples. IRR is the potential for economic loss due to future interest rate changes that can impact the earnings stream, as well as market values, of financial assets and financial liabilities. Peoples’ exposure to IRR is due primarily to differences in the maturity or repricing of earning assets and interest-bearing liabilities. In addition, other factors, such as prepayments of loans and investment securities, or early withdrawal of deposits, can affect Peoples’ exposure to IRR and increase interest costs or reduce revenue streams.
Peoples has assigned overall management of IRR to the ALCO, which has established an IRR management policy that sets minimum requirements and guidelines for monitoring and managing the level of IRR. The objective of Peoples’ IRR management policy is to assist the ALCO in its evaluation of the impact of changing interest rate conditions on earnings and the economic value of equity, as well as assist with the implementation of strategies intended to reduce Peoples’ IRR. The management of IRR involves either maintaining or changing the level of risk exposure by changing the repricing and maturity characteristics of the cash flows for specific assets or liabilities. Additional oversight of Peoples’ IRR is provided by the Board of Directors of Peoples Bank, which reviews and approves Peoples’ IRR management policy at least annually.
The ALCO uses various methods to assess and monitor the current level of Peoples’ IRR and the impact of potential strategies or other changes. However, the ALCO predominantly relies on simulation modeling in its overall management of IRR since it is a dynamic measure. Simulation modeling also estimates the impact of potential changes in interest rates and balance sheet structures on future earnings and projected economic value of equity. The methods used by ALCO to assess IRR remain largely unchanged from those disclosed for the year ended December 31, 2024.
The modeling process starts with a base case simulation using the current balance sheet and current interest rates held constant for the next twenty-four months. Alternate scenarios are prepared which simulate the impact of increasing and decreasing market interest rates, assuming parallel yield curve shifts. Comparisons produced from the simulation data, showing the changes in net interest income from the base interest rate scenario, illustrate the risks associated with the current balance sheet structure. Additional simulations, when deemed appropriate or necessary, are prepared using different interest rate scenarios from those used with the base case simulation and/or possible changes in balance sheet composition. The additional simulations include non-parallel shifts in interest rates whereby the direction and/or magnitude of changes in short-term interest rates is different from the changes applied to longer-term interest rates. Comparisons showing the net interest income and economic value of equity variances from the base case are provided to the ALCO for review and discussion.
The ALCO has established limits on changes in the twelve-month net interest income forecast and the economic value of equity from the base case. The ALCO may establish risk tolerances for other parallel and non-parallel rate movements, as deemed necessary. The following table details the current policy limits used to manage the level of Peoples’ IRR:
Immediate and Sustained Shift in Interest Rates
Net Interest Income
Economic Value of Equity
+ / - 100 basis points
+ / - 200 basis points
+ / - 300 basis points
The following table shows the estimated changes in net interest income and the economic value of equity based upon a standard, parallel shock analysis with balances held constant (dollars in thousands):
Increase (Decrease) in Interest Rates
Estimated Increase (Decrease) in
Net Interest Income
Estimated (Decrease) Increase in Economic Value of Equity
(in Basis Points)
December 31, 2025
December 31, 2024
December 31, 2025
December 31, 2024
This table uses a standard, parallel shock analysis for assessing the IRR to net interest income and the economic value of equity. A parallel shock assumes all points on the yield curve (one year, two year, three year, etc.) are directionally changed by the same degree. Management regularly assesses the impact of both increasing and decreasing interest rates. The table above shows the impact of upward and downward parallel shocks of 100, 200, and 300 basis points.
Estimated changes in net interest income and the economic value of equity are partially driven by assumptions regarding the rate at which non-maturity deposits will reprice given a move in short-term interest rates. These assumptions are monitored closely by Peoples and are reviewed at least semi-annually. At December 31, 2025, the actual deposit betas experienced by Peoples in the repricing of non-maturity deposits were lower than those used in Peoples’ interest rate risk modeling.
While parallel interest rate shock scenarios are useful in assessing the level of IRR inherent in the balance sheet, interest rates typically move in a nonparallel manner with differences in the timing, direction and magnitude of changes in short-term and long-term interest rates. Thus, any impact that might occur as a result of the Federal Reserve Board decreasing short-term interest rates in the future could be offset by an inverse movement in long-term rates, and vice versa. For this reason, Peoples considers other interest rate scenarios in addition to analyzing the impact of parallel yield curve shifts. These include various flattening and steepening scenarios in which short-term and long-term rates move in different directions with varying magnitude. Peoples believes these scenarios to be more reflective of how interest rates change versus the severe parallel rate shocks described above. Given the shape of market yield curves at December 31, 2025, consideration of the bull steepener and bear steepener scenarios provide insights which were not captured by parallel shifts.
The bull steepener scenario highlights the risk to net interest income and the economic value of equity when short-term rates fall faster than long-term rates. In such a scenario, Peoples’ deposit and short-term borrowing costs, which are correlated with short-term rates, decrease, while long-term asset yields and long-long term borrowing costs, which are correlated with long-term rates remain constant. Decreased deposit and funding costs increase net interest income over a longer horizon; resulting in an increased amount of net income and net interest margin over a 24-month period. At December 31, 2025, the bull steepener scenario resulted in an increase in net interest income of 0.20%, as the impact of recent term funding mitigates the impact of lower short-term rates over a 12-month horizon, and an increase in economic value of equity of 1.30%.
The bear steepener scenario highlights the risk to net interest income and the economic value of equity when short-term rates remain constant while long-term rates rise. In such a scenario, Peoples’ deposit and borrowing costs, which are generally correlated with short-term interest rates, remain constant, while asset yields, which are correlated with long-term interest rates, rise. At December 31, 2025, the bear steepener scenario resulted in an increase in net interest income of 1.00% and an increase in economic value of equity of 3.10%.
During 2025, Peoples’ was positioned to benefit from rising interest rates in terms of the potential impact on net interest income. The table above illustrates this point as net interest income increases in the rising rate scenarios and decreases in the falling rate scenarios.
Peoples has entered into interest rate swaps as part of its interest rate risk management strategy. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for Peoples making fixed payments. As of December 31, 2025, Peoples had five interest rate swap contracts, with an aggregate notional value of $45.0 million. Additional information regarding Peoples’ interest rate swaps can be found in “Note 15 Derivative Financial Instruments.”
An asset/liability model used to produce the analysis above requires assumptions to be made such as prepayment rates on interest-earning assets and repricing impact on non-maturity deposits. These business assumptions are based on business plans, economic and market trends, and available industry data. Management believes that its methodology for developing such assumptions is reasonable; however, there can be no assurance that modeled results will be achieved or are indicative of future results. The asset/liability model along with key modeling assumptions are subjected to a third-party review annually for effectiveness and regulatory compliance.
Liquidity
In addition to IRR management, another major objective of the ALCO is to ensure sufficient levels of liquidity are maintained. The ALCO defines liquidity as the ability to meet anticipated and unanticipated operating cash needs, loan demand and deposit withdrawals without incurring a sustained negative impact on profitability.
A primary source of liquidity for Peoples is deposits. Liquidity is also provided by cash generated from earning assets such as loans and investment securities. Peoples also uses various wholesale funding sources to supplement funding from customer deposits. These external sources provide Peoples with the ability to obtain large quantities of funds in a relatively short time period in the event of sudden unanticipated cash needs. However, an over-utilization of external funding sources can expose Peoples to greater liquidity risk, as these external sources may not be accessible during times of market stress. Additionally, Peoples may be exposed to the risk associated with providing excess collateral to external funding providers, commonly referred to as counterparty risk. As a result, the ALCO’s liquidity management policy sets limits on the net liquidity position and the concentration of non-core funding sources, which includes wholesale funding and brokered deposits.
In addition to external sources of funding, Peoples considers certain types of deposits to be less stable or “volatile funding.” These deposits include special money market products, large CDs and public funds. Peoples has established volatility factors for these various deposit products, and the liquidity management policy establishes a limit on the total level of volatile funding. Additionally, Peoples measures the maturities of external sources of funding for periods of one month, three months, six months and twelve months, and has established policy limits for the amounts maturing in each of these periods. The purpose of these limits is to minimize exposure to what is commonly termed rollover risk.
An additional strategy used by Peoples in the management of liquidity risk is maintaining a targeted level of liquid assets. Management defines liquid assets as unencumbered cash (including cash on deposit at the FRB), and the market value of unpledged U.S. government and agency securities. Excluded from this definition are pledged securities, non-government securities, non-agency securities, municipal securities and loans. Management has established a minimum level of liquid assets in the liquidity management policy, which is expressed as a percentage of total loans and unfunded loan commitments. At December 31, 2025, Peoples maintained liquid assets of $726.0 million, representing 6.6% of total assets plus unfunded loan commitments. Peoples has also established a policy limit around the level of liquefiable assets expressed as a percentage of total loans and unfunded loan commitments. Liquefiable assets are defined as liquid assets plus the market value of unpledged securities not included in the liquid asset measurement. At December 31, 2025, Peoples maintained liquefiable assets of $858.8 million, representing 7.8% of total assets plus unfunded loan commitments.
An essential element in the management of liquidity risk is a forecast of the sources and uses of anticipated cash flows. On a monthly basis, Peoples forecasts sources and uses of cash for the next twelve months. To assist in the management of liquidity, management has established a liquidity coverage ratio, which is defined as the total sources of cash divided by the total uses of cash. A ratio of greater than 1.0 times indicates that forecasted sources of cash are adequate to fund forecasted uses of cash. The liquidity management policy establishes a minimum limit of 1.0 times. At December 31, 2025, Peoples had a ratio of 4.82 times, which was within policy limits. Peoples also forecasts secondary or contingent sources of cash, and this includes external sources of funding and liquid assets. These sources of cash would be required if and when the forecasted liquidity coverage ratio dropped below the policy limit of 1.0 times. An additional liquidity measurement used by management includes the total forecasted sources of cash and the contingent sources of cash divided by the forecasted uses of cash. Management has established a minimum ratio of 3.0 times for this liquidity management policy limit. At December 31, 2025, Peoples had a ratio of 5.75 times, which was within policy limits.
Peoples maintains multiple contingent sources of liquidity including secured wholesale funding lines and unsecured brokered deposit networks. Peoples’ primary sources of secured wholesale funding are the FHLB of Cincinnati and the FRB. As of December 31, 2025, Peoples had unused collateral-based borrowing capacities of $314.9 million and $488.0 million, respectively, available with the FHLB of Cincinnati and the FRB. Together, these unused borrowing capacities represent 7.3% of total assets and unfunded loan commitments. Additionally, Peoples had $205.0 million of unpledged loan collateral eligible to secure additional borrowing capacity with the FRB as of December 31, 2025.
Disruptions in the sources and uses of cash can occur which can drastically alter the actual cash flows and negatively impact Peoples’ ability to access internal and external sources of cash. Such disruptions might occur due to increased withdrawals of deposits, increases in the funding required for loan commitments, a decrease in the ability to access external funding sources and other factors that would increase the need for funding and limit Peoples’ ability to access needed funds. As a result, Peoples maintains a liquidity contingency funding plan (“LCFP”) that considers various degrees of disruptions and develops action plans around these scenarios.
Peoples’ LCFP identifies scenarios where funding disruptions might occur and creates scenarios of varying degrees of severity. The disruptions considered include an increase in funding of unfunded loan commitments, unanticipated withdrawals of deposits, decreases in the renewal of maturing CDs, and reductions in cash earnings. Additionally, the LCFP creates stress scenarios where access to external funding sources, or contingency funding, is suddenly limited, which includes a significant increase in the margin requirements where securities or loans are pledged, limited access to funding from other banks and limited
access to funding from the FHLB of Cincinnati and the FRB. Peoples’ LCFP scenarios include a base scenario, a mild stress scenario, a moderate stress scenario and a severestress scenario. Each of these is defined as to the related severity and action plans are developed around each.
Liquidity management also requires the monitoring of risk indicators that may alert the ALCO to a developing liquidity situation or crisis. Early detection of stress scenarios allows Peoples to take actions to help mitigate the impact to Peoples Bank’s business operations. The LCFP contains various indicators, termed key risk indicators (“KRIs”), that are monitored on a monthly basis, at a minimum. The KRIs include both internal and external indicators and include loan delinquency levels, criticized and classified loan levels, the ratios of non-performing loans to loans and to total assets, the total loan to total deposit ratio, the level of net non-core funding dependence, the level of contingency funding sources, the liquidity coverage ratio, changes in regulatory capital levels, forecasted operating loss, negative media concerning Peoples, irrational competitor pricing that persists, and an increase in rates for external funding sources. The LCFP establishes levels that define each of these KRIs under base, mild, moderate and severe scenarios.
The LCFP is reviewed and updated at least on an annual basis by the ALCO and Peoples Bank’s Board of Directors. Additionally, testing of the LCFP is required on an annual basis. Various stress scenarios and the related actions are simulated according to the LCFP. The results are reviewed and discussed and changes or revisions are made to the LCFP accordingly. Additionally, the LCFP is subjected to a third-party review annually for effectiveness and regulatory compliance.
During 2023, the Federal Reserve continued a historically aggressive rate-hiking campaign, leading to higher interest rates and higher competition for deposits. As inflationary pressures cooled during 2024, the Federal Reserve began to lower rates starting in the second half of 2024 and throughout 2025. Peoples continued to offer various CD special rates to retain current clients and attract new clients.
Overall, management believes the current balance of cash and cash equivalents, anticipated investment portfolio cash flows and the availability of other funding sources will allow Peoples to meet anticipated cash obligations, as well as special needs and off-balance sheet commitments.
Off-Balance Sheet Activities and Contractual Obligations
Peoples routinely engages in activities that involve, to varying degrees, elements of risk that are not reflected in whole or in part in the Consolidated Financial Statements. These activities are part of Peoples’ normal course of business and include traditional off-balance sheet credit-related financial instruments, interest rate contracts, operating lease obligations, and commitments to make additional capital contributions in low-income housing tax credit investments.
The following is a summary of Peoples’ significant off-balance sheet activities and contractual obligations. Detailed information regarding these activities and obligations can be found in the Notes to the Consolidated Financial Statements.
Traditional off-balance sheet credit-related financial instruments are primarily commitments to extend credit and standby letters of credit. These activities are necessary to meet the financing needs of customers and could require Peoples to make cash payments to third parties in the event certain specified future events occur. The contractual amounts represent the extent of Peoples’ exposure in these off-balance sheet activities. However, since certain off-balance sheet commitments, particularly standby letters of credit, are expected to expire or be only partially used, the total amount of commitments does not necessarily represent future cash requirements.
Peoples continues to lease certain facilities and equipment under noncancellable operating leases with terms providing for fixed monthly payments over periods generally ranging from two to 30 years. Several of Peoples’ leased facilities are inside retail shopping centers or office buildings and, as a result, are not available for purchase. Management believes these leased facilities increase Peoples’ visibility within its markets and afford sales associates additional access to current and potential clients.
For certain acquisitions, often those involving insurance businesses and wealth management books of business, a portion of the consideration is contingent upon revenue metrics being achieved. US GAAP requires that the amounts be recorded upon acquisition based on the best estimate of the future amounts to be paid at the time of acquisition. Any subsequent adjustment to the estimate is recorded in net income. Based on the acquisitions completed to date, management does not expect contingent consideration to have a material impact on Peoples’ future performance.
Management does not anticipate that Peoples’ current off-balance sheet activities will have a material impact on its future results of operations and financial condition based on historical experience and recent trends.
Effects of Inflation on Financial Statements
Substantially all of Peoples’ assets relate to banking and are monetary in nature. As a result, inflation does not impact Peoples to the same degree as companies in capital-intensive industries in a replacement cost environment. During a period of rising prices, a net monetary asset position results in a loss in purchasing power and conversely a net monetary liability position results in an increase in purchasing power. The opposite would be true during a period of decreasing prices. In the banking industry, monetary assets typically exceed monetary liabilities.
