PEOPLES BANCORP INC. ANNOUNCES 4TH QUARTER AND RECORD ANNUAL RESULTS FOR 2022

MARIETTA, Ohio, Jan. 24, 2023 /PRNewswire/ -- Peoples Bancorp Inc. ("Peoples") (NASDAQ: PEBO) today announced results for the quarter and year ended December 31, 2022.  Net income totaled $26.8 million for the fourth quarter of 2022, representing earnings per diluted common share of $0.95.  In comparison, earnings per diluted common share were $0.92 for the third quarter of 2022 and $0.98 for the fourth quarter of 2021. For the full year, net income was $101.3 million in 2022 versus $47.6 million in 2021, representing earnings per diluted common share of $3.60 and $2.15, respectively.

The provision for (recovery of) credit losses recorded represents the amount needed to maintain the appropriate level of the allowance for credit losses based on management's quarterly estimates. The provision for credit losses negatively impacted earnings per diluted common share by $0.06 for the fourth quarter of 2022 and $0.05 for the third quarter of 2022, while the recovery of credit losses had a positive impact on earnings per diluted common share of $0.21 for the fourth quarter of 2021. For the full year of 2022, the recovery of credit losses positively impacted earnings per diluted common share by $0.10, compared to a provision for credit losses that negatively impacted earnings per diluted common share by $0.01 for the full year of 2021.

 Non-core items, and the related tax effect of each, in net income included acquisition-related expenses, contract negotiation expenses and refunds, COVID-19-related expenses, a contribution to Peoples Bank Foundation, Inc., pension settlement charges, severance expenses, gains and losses on investment securities, and gains and losses on asset disposals and other transactions.  Non-core items negatively impacted diluted earnings per common share for the fourth quarter of 2022 by $0.03 and by $0.01 for the third quarter of 2022, and had no impact on diluted earnings per common share for the fourth quarter of 2021. Non-core items negatively impacted earnings per diluted common share by $0.11 and $0.85 for the full years of 2022 and 2021, respectively.

"2022 was a record year for Peoples," said Chuck Sulerzyski, President and Chief Executive Officer. "We benefited from increasing margins, organic growth and our prior acquisitions. We remain bullish on our ability to further improve our performance in 2023. I am grateful to our colleagues and clients for making all of this possible."

Limestone Acquisition:
On October 25, 2022, Peoples announced the signing of a definitive Agreement and Plan of Merger pursuant to which Peoples will acquire, in an all-stock merger, Limestone Bancorp Inc. ("Limestone"), a bank holding company headquartered in Louisville, Kentucky, and the parent company of Limestone Bank. Under the terms of the Agreement and Plan of Merger, Limestone will merge with and into Peoples, and Limestone Bank will subsequently merge with and into Peoples' wholly-owned subsidiary, Peoples Bank (collectively, the "Limestone Merger"), in a transaction valued at approximately $208.2 million at the time of the announcement. The Limestone merger is expected to close in the second quarter of 2023, subject to the satisfaction of closing conditions, including regulatory approvals and the approval of the shareholders of Peoples and of Limestone. As of December 31, 2022, Peoples had recognized $0.6 million in acquisition-related costs associated with this pending transaction.

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

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

Statement of Operations Highlights:

• Net interest income for the fourth quarter of 2022 increased $3.6 million, or 5%, compared to the linked quarter and increased $15.9 million, or 29%, compared to the fourth quarter of 2021.
• Net interest margin increased 27 basis points to 4.44% for the fourth quarter of 2022, compared to the linked quarter, and increased 107 basis points compared to the fourth quarter of 2021. The increases in net interest margin when compared to the linked quarter and the fourth quarter of 2021 were primarily driven by recent increases in market interest rates.
• The increases in net interest income for the fourth quarter of 2022, compared to the linked quarter and the fourth quarter of 2021, were driven by the Vantage acquisition, core growth and increases in market interest rates.
• Peoples recorded a provision for credit losses of $2.3 million for the fourth quarter of 2022, compared to a provision for credit losses of $1.8 million for the third quarter of 2022, and a recovery of credit losses of $6.6 million for the fourth quarter of 2021.
• The increase in the provision for credit losses for the fourth quarter of 2022 compared to the linked quarter was due primarily to a deterioration of macro-economic conditions and an increase in charge-off activity, partially offset by a reduction in reserves for individually analyzed loans.
• Net charge-offs were $2.1 million, or 0.18% of average total loans, annualized, for the fourth quarter of 2022.
• For the full year of 2022, net charge-offs were $7.3 million, or 0.16% of average total loans, up from $4.7 million, or 0.13% of average total loans, for 2021.
• Total non-interest income, excluding net gains and losses, decreased $0.9 million, or 4%, for the fourth quarter of 2022 compared to the linked quarter, and increased $0.5 million, compared to the fourth quarter of 2021.
• The decrease in total non-interest income, excluding gains and losses, compared to the third quarter of 2022 was largely driven by decreases in (i) other non-interest income due to a decline in commercial loan swap fees, (ii) lease income and (iii) electronic banking income.
• Total non-interest income, excluding net gains and losses, for the full year of 2022 was 24% of total revenue.
• Total non-interest expense for the fourth quarter of 2022 increased $1.1 million, or 2%, compared to the linked quarter and increased $5.4 million, or 11%, compared to the fourth quarter of 2021.
• The increase in total non-interest expense for the fourth quarter of 2022 when compared to the linked quarter was primarily attributable to increases in (i) data processing and software expense, (ii) other non-interest expenses, (iii) professional fees and (iv) foreclosed real estate and other loan expenses.
• The efficiency ratio was 56.7% for the fourth quarter of 2022. When adjusted for non-core expenses, the efficiency ratio was 55.9% for the fourth quarter of 2022.

Balance Sheet Highlights:

• Period-end total loan and lease balances at December 31, 2022 increased $96.0 million, or 8% annualized, compared to at September 30, 2022. Average total loan and lease balances for the fourth quarter of 2022 increased $65.2 million compared to the linked quarter.
• The increases in period-end and average total loan and lease balances were primarily the result of growth in (i) indirect consumer loans, (ii) leases, (iii) construction loans, and (iv) commercial and industrial loans; partially offset by a reduction in residential real estate loans.
• Asset quality metrics remained stable during the fourth quarter of 2022.
• Delinquency trends remained relatively stable as loans considered current comprised 98.6% of the loan portfolio at December 31, 2022, compared to 98.9% at September 30, 2022.
• Nonperforming assets at December 31, 2022 remained relatively unchanged compared to at September 30, 2022.
• Criticized loans increased $26.6 million during the fourth quarter of 2022. The increase was primarily driven by the downgrade of three commercial and industrial loan relationships.
• Classified loans decreased $5.2 million during the fourth quarter of 2022, driven by $7 million in upgrades and $3 million in pay-offs.
• Period-end total deposit balances at December 31, 2022 decreased $148.7 million, or 3%, compared to at September 30, 2022.
• The decrease was primarily driven by the seasonal reduction in governmental deposit account balances and a decrease in non-interest bearing checking account balances.
• Total demand deposit balances were 48% of total deposits at each of December 31, 2022, September 30, 2022 and December 31, 2021.
• Total loan balances were 82% and 79% of total deposit balances at December 31, 2022 and at September 30, 2022, respectively.

Net Interest Income
Net interest income was $70.6 million for the fourth quarter of 2022, an increase of $3.6 million, or 5%, compared to the linked quarter. Net interest margin was 4.44% for the fourth quarter of 2022, compared to 4.17% for the linked quarter. The increases in net interest income and net interest margin were primarily driven by 36 basis points of improvement in loan yields and 22 basis points of improvement in investment yields when compared to the linked quarter. The increases in loan and investment yields for the fourth quarter of 2022, when compared to the linked quarter were due to the recent increases in market interest rates.

Net interest income for the fourth quarter of 2022 increased $15.9 million, or 29%, compared to the fourth quarter of 2021. Net interest margin increased 107 basis points from 3.37% for the fourth quarter of 2021. The increase in net interest income compared to the fourth quarter of 2021 was driven by (i) the Vantage acquisition, (ii) core growth and (iii) increases in market interest rates.

Accretion income, net of amortization expense, from acquisitions was $2.2 million for the fourth quarter of 2022, $2.8 million for the third quarter of 2022 and $1.0 million for the fourth quarter of 2021, which added 14 basis points, 16 basis points and 6 basis points, respectively, to net interest margin. The decrease in accretion income when compared to the linked quarter was driven by lower pay-offs and less accretion from the Premier Merger. The increase in accretion income for the current quarter compared to the fourth quarter of 2021 was a result of the acquisition of Vantage.

Net interest income increased $80.9 million, or 47%, for 2022 compared to 2021, and net interest margin increased 57 basis points to 3.97%. The increase in net interest income was driven by (i) the Premier Merger and the Vantage acquisition, (ii) core growth and (iii) increases in market interest rates.

Accretion income, net of amortization expense, from acquisitions was $11.6 million for 2022 and $3.2 million for 2021, respectively, which added 18 basis points and 7 basis points to net interest margin for the full years of 2022 and 2021, respectively. The increase in accretion income for the full year of 2022 compared to the same 2021 period was a result of the Premier Merger and the acquisitions of Vantage and NS Leasing, LLC ("NSL").

Provision for (Recovery of) Credit Losses:
The provision for credit losses was $2.3 million for the fourth quarter of 2022, compared to $1.8 million for the linked quarter and a recovery of credit losses of $6.6 million for the fourth quarter of 2021. The provision for credit losses in the fourth quarter of 2022 and the third quarter of 2022 were largely attributable to a deterioration of macro-economic conditions and an increase in charge-off activity, partially offset by a reduction in reserves for individually analyzed loans. The recovery of credit losses for the fourth quarter of 2021 was the result of improvement in loss drivers and economic outlook and a release of reserves related to the sale of $59.8 million in predominantly purchased credit deteriorated loans acquired from Premier.

For the full year of 2022, the recovery of credit losses was $3.5 million, compared to a provision for credit losses of $0.7 million for 2021. The recovery of credit losses during 2022 compared to the provision for credit losses during 2021 was driven by improvements in economic forecasts, coupled with loan pay-offs during certain periods.

Net charge-offs for the fourth quarter of 2022 were $2.1 million, or 0.18% annualized, of average total loans, compared to $1.7 million, or 0.15% annualized, of average total loans, for the linked quarter and $1.3 million, or 0.11% annualized, of average total loans, for the fourth quarter of 2021.  Net charge-offs for the full year of 2022 were $7.3 million, or 0.16%, of average total loans, compared to $4.7 million, or 0.13% of average total loans, for the full year of 2021. For additional information on credit trends and the allowance for credit losses, see the "Asset Quality" section below.

Net Gains and Losses:
Net gains and losses include gains and losses on investment securities, asset disposals and other transactions, which are included in total non-interest income on the Consolidated Statements of Income. Net loss for the fourth quarter of 2022 was $0.5 million, compared to net loss of $14,000 for the linked quarter, and net gain of $0.8 million in the fourth quarter of 2021. The fourth quarter of 2022 net loss was primarily due to net losses on repossessed assets and net losses on sales of investment securities. During the fourth quarter of 2021, Peoples sold $59.8 million of predominantly purchased credit deteriorated loans ($52.9 million of which were criticized or classified), primarily in the hospitality industry, and recognized a gain related to the acceleration of the discount recorded on those loans when they were acquired. Net gain for the fourth quarter of 2021 was driven primarily by gains of $1.5 million recognized on the sale of $59.8 million in loans acquired from Premier and the disposal of other real estate owned of $0.3 million, offset by a loss on the sale of investment securities.

For the full year of 2022, net loss was $0.7 million compared to net loss of $0.4 million in 2021. The increase in net loss for the full year of 2022 when compared to the same period of 2021 was primarily due to higher net losses on repossessed assets and net losses on other real estate owned ("OREO"). The net loss during 2021 was driven by losses on sales of investment securities, partially offset by the aforementioned activity related to the sale of loans acquired from Premier and gains recognized on the sale of other real estate owned.

Total Non-interest Income, Excluding Net Gains and Losses:
Total non-interest income, excluding net gains and losses, for the fourth quarter of 2022 decreased $0.9 million compared to the linked quarter. The decrease in non-interest income, excluding net gains and losses, was primarily impacted by a decline of $0.3 million in lease income. Also impacting the fourth quarter decrease when compared to the linked quarter was a decrease in other non-interest income due to a $0.2 million decline in commercial loan swap fees.

Compared to the fourth quarter of 2021, total non-interest income, excluding net gains and losses, increased $0.5 million, primarily due to growth of $0.8 million in lease income due to the Vantage acquisition and a $0.4 million increase in insurance commissions. Partially offsetting the fourth quarter of 2022 increase in total non-interest income, excluding net gains and losses, when compared to the same 2021 period was a decrease of $0.4 million in mortgage banking income. The decrease in mortgage banking income was due to the increased market interest rate environment in 2022 resulting in a lower volume of new loan originations.

For the full year of 2022, total non-interest income, excluding net gains and losses, increased $10.3 million compared to 2021. The increase was driven by growth of $4.4 million in service charges on deposit accounts and $3.1 million in electronic banking income, primarily attributable to customers added in the Premier Merger. Also contributing to the growth was a $3.0 million increase in lease income due primarily to the Vantage acquisition. Partially offsetting the impact of these 2022 increases when compared to the same period in 2021 was a $2.0 million decline in mortgage banking income due to the factors described above.

Total Non-interest Expense:
Total non-interest expense increased $1.1 million, or 2%, for the fourth quarter of 2022, compared to the linked quarter. Total non-interest expense in the fourth and third quarters of 2022 contained non-core expenses, including acquisition-related expenses of $0.7 million and $0.3 million, respectively, with the increase in the fourth quarter being attributable to the pending Limestone Merger. The increase in total non-interest expense for the fourth quarter of 2022 was primarily attributable to increases in (i) data processing and software expense, (ii) other non-interest expense, (iii) professional fees and (iv) other loan expenses. Partially offsetting these increases in non-interest expenses was a decrease in electronic banking expense. The increases in non-interest expenses were primarily driven by core and acquisitive growth.

Compared to the fourth quarter of 2021, total non-interest expense increased $5.4 million, or 11%. The increase was primarily due to increases in (i) salaries and employee benefit costs, (ii) data processing and software expense and (iii) professional fees. The increases were due to the recent growth, including through mergers and acquisitions. Partially offsetting these increases within non-interest expense was a decrease in electronic banking expenses due to changes in customer activity.

For the full year of 2022, total non-interest expense was $207.1 million, an increase of $23.4 million, or 13%, compared to 2021. The variance was driven by increases of (i) $18.1 million in salaries and employee benefit costs, (ii) $4.6 million in net occupancy and equipment expense, (iii) $3.7 million in data processing and software expenses, and (iv) $3.0 million in intangible asset amortization. These increases were primarily due to growth over the last year, driven by mergers and acquisitions. Partially offsetting the impact of these increases on non-interest expense was a decrease in acquisition-related expenses due to the amount of expenses incurred in connection with the Premier Merger in 2021.

The efficiency ratio for the fourth quarter of 2022 was 56.7%, compared to 57.2% for the linked quarter and 62.7%  for the fourth quarter of 2021. The efficiency ratio improved compared to the linked quarter mainly as the result of an increase in interest income due to the continued rising market interest rates and growth. The efficiency ratio, adjusted for non-core items, was 55.9% for the fourth quarter of 2022, compared to 56.6% for the linked quarter, and 61.5% for the fourth quarter of 2021.  For the full year of 2022, the efficiency ratio was 59.6% compared to 73.6% for 2021.  Adjusted for non-core items, the efficiency ratio for the full year of 2022 was 58.6%, compared to 63.5% for 2021. Peoples continues to focus on controlling expenses, while recognizing  necessary costs in order to continue growing the business. 

Income Tax Expense: 
Peoples recorded income tax expense of $7.1 million with an effective tax rate of 21.0% for the fourth quarter of 2022, compared to income tax expense of $7.4 million with an effective tax rate of 22.2% for the linked quarter and income tax expense of $5.4 million with an effective tax rate of 16.3% for the fourth quarter of 2021. The increase in income tax expense when compared to the fourth quarter of 2021 was primarily due to higher pre-tax income. Income tax expense for the fourth quarter of 2021 was also impacted by an income tax benefit related to an adjustment from a prior period of $1.1 million.

Peoples recognized income tax expense of $27.3 million with an effective tax rate of 21.3% in the full year of 2022, compared to $9.4 million with an effective tax rate 16.5% in the full year of 2021. The increase was driven by higher pre-tax income and a higher effective tax rate primarily due to apportionment in additional states due to recent acquisitions. The full year of 2021 was also impacted by the adjustment mentioned in the previous paragraph.

Loans and Leases:
The period-end total loan and lease balances at December 31, 2022 increased $96.0 million, compared to at September 30, 2022. The increase in the period-end total loan and lease balances was primarily driven by increases of (i) $37.1 million in consumer indirect loans, (ii) $32.3 million in leases, (iii) $31.3 million in construction loans, and (iv) $15.2 million in commercial and industrial loans, partially offset by a reduction in residential real estate loans of $10.0 million. Excluding $1.3 million of forgiveness payments received on PPP loans, total loan and lease balances grew at an 8% annualized rate. As of December 31, 2022, the remaining balance of PPP loans was $2.4 million.

The period-end total loan and lease balances at December 31, 2022 increased $225.6 million, or 5%, compared to at December 31, 2021. The increase in the period-end total loan and lease balances was primarily driven by $154.9 million of leases acquired from Vantage and increases of (i) $98.9 million in indirect consumer loans, (ii) $36.7 million in construction loans and (iii) $23.1 million in premium finance loans, partially offset by reductions of $126.6 million in other commercial real estate loans and $48.4 million in residential real estate loans.

Quarterly average total loan balances increased $65.2 million compared to the linked quarter. The increase in period-end and average total loan and lease balances when compared to the linked quarter were primarily the result of growth of (i) $35.9 million in indirect consumer loans, (ii) $19.7 million in commercial and industrial loans, (iii) $17.7 million in leases and (iv) $11.3 million in commercial real estate construction loans, partially offset by a reduction of $16.1 million in residential real estate loans.

Compared to the fourth quarter of 2021, quarterly average loan balances in the current quarter increased $156.3 million, or 3%, driven by an increase of leases acquired from Vantage, as well as leases originated, partially offset by a reduction in commercial real estate loans.

Asset Quality:
Overall, asset quality remained relatively stable through the fourth quarter of 2022. Total nonperforming assets at December 31, 2022 increased $0.1 million compared to at September 30, 2022 and decreased $2.8 million, or 6%, compared to at December 31, 2021. The slight increase in nonperforming assets compared to the linked quarter was primarily due to an increase in nonaccrual leases and commercial and industrial loans substantially offset by a decrease in past due total loan and lease balances. The decrease in nonperforming assets compared to at December 31, 2021was primarily attributable to a reduction in nonaccrual other commercial real estate loans and residential real estate loans, partially offset by an increase in past due leases. Nonperforming assets as a percent of total loans and OREO was 0.96% at December 31, 2022, down from 0.98% at September 30, 2022 and 1.07% at December 31, 2021.

Criticized loans, which are those categorized as special mention, substandard or doubtful, increased $26.6 million, or 16%, compared to at September 30, 2022 and decreased $2.7 million, or 1%, compared to at December 31, 2021. As a percent of total loans, criticized loans were 4.07% at December 31, 2022, compared to 3.57% at September 30, 2022, and 4.33% at December 31, 2021. The increase in the amount of criticized loans compared to at September 30, 2022 was primarily driven by the downgrade of three commercial and industrial loan relationships. Compared to December 31, 2021, the decrease in the amount of criticized loans was largely due to a reduction in the criticized loans acquired from Premier.

Classified loans, which are those categorized as substandard or doubtful, decreased $5.2 million, or 6%, compared to at September 30, 2022, and $16.9 million, or 16%, compared to at December 31, 2021. As a percent of total loans, classified loans were 1.90% at December 31, 2022, compared to 2.06% at September 30, 2022, and 2.38% at December 31, 2021. The decrease in classified loans compared to at September 30, 2022 was driven by $7 million in upgrades and $3 million in pay-offs, partially offset by $7 million in downgrades, consisting of various smaller commercial and industrial loans. The decrease in classified loans when compared to at December 31, 2021 was largely attributable to pay-offs and upgrades of classified loans acquired from Premier.

Annualized net charge-offs were 0.18% of average total loans during the fourth quarter of 2022, compared to 0.15% in the linked quarter, and 0.11% in the fourth quarter of 2021. Net charge-offs were 0.16% of average total loans for 2022, compared to 0.13% for 2021.

At December 31, 2022, the allowance for credit losses increased $0.3 million, from $52.9 million at September 30, 2022, and decreased $10.8 million from $64.0 million at December 31, 2021. The ratio of the allowance for credit losses as a percent of total loans decreased to 1.13% at December 31, 2022, compared to 1.15% at September 30, 2022, and 1.43% at December 31, 2021. The ratio of the allowance for credit losses as a percent of total loans includes PPP loans that do not have an allowance for credit losses because of the guarantee by the SBA. Excluding PPP loans, the ratio of the allowance for credit losses as a percent of total loans would have been 1.13% at December 31, 2022, compared to 1.15% at September 30, 2022, and 1.54% at December 31, 2021.  

Deposits:
As of December 31, 2022, period-end total deposits were down $148.7 million, or 3%, compared to at September 30, 2022. The decrease was primarily driven by reductions of $108.8 million in governmental deposit accounts and $46.6 million in non-interest bearing deposit accounts, partially offset by an increase of $39.5 million in brokered certificate of deposit accounts. The decrease in governmental deposit accounts is a typical seasonal trend that occurs during the fourth quarter of each year. The brokered certificate of deposit account balances increased as they became a more favorable funding source in the fourth quarter of 2022 relative to prior quarters.

Compared to December 31, 2021, period-end deposit balances decreased $145.7 million, or 2%. The variance was driven by decreases of (i) $113.5 million in retail certificates of deposits, (ii) $52.0 million in total non-interest-bearing deposit accounts and (iii) $34.1 million in money market deposit accounts, partially offset by increases of $31.8 million in savings account deposits and $20.8 million in brokered certificate of deposit accounts.

Average deposit balances during the fourth quarter of 2022 decreased $118.2 million, or 2%, compared to the linked quarter and $92.7 million, or 2%, compared to the fourth quarter of 2021.  For the full year of 2022, average deposit balances grew $1.2 billion, or 24%, driven by deposits acquired in the Premier Merger. Total demand deposit accounts comprised 48% of total deposits at each of December 31, 2022, September 30, 2022 and December 31, 2021.

Stockholders' Equity:
Total stockholders' equity at December 31, 2022 increased $24.8 million, or 3%, compared to at September 30, 2022.  This change was primarily driven by net income of $26.8 million during the quarter and a $7.8 million decrease in accumulated other comprehensive loss. The change in accumulated other comprehensive loss was the result of the changes in the market value of available-for-sale investment securities during the period. 

Total stockholders' equity at December 31, 2022 decreased $59.7 million, or 7%, compared to at December 31, 2021, which was due to (i) an other comprehensive loss of $115.5 million, (ii) dividends paid of $42.4 million and (iii) share repurchases of $7.4 million, partially offset by net income of $101.3 million for the full year of 2022. The other comprehensive loss was the result of changes in the market value of available-for-sale investment securities, which were driven by changes in market interest rates.

At December 31, 2022, the tier 1 risk-based capital ratio was 12.31%, compared to 12.08% at September 30, 2022 and 12.81% at December 31, 2021. The common equity tier 1 risk-based capital ratio was 12.04% at December 31, 2022, compared to 11.80% at September 30, 2022 and 12.52% at December 31, 2021. The total risk-based capital ratio was 13.19% at December 31, 2022, compared to 12.98% at September 30, 2022 and 14.06% at December 31, 2021. Peoples adopted the five-year transition to phase in the impact of the adoption of Current Expected Credit Losses ("CECL") on regulatory capital ratios.  Compared to at September 30, 2022, these ratios improved due to higher net income. Compared to at December 31, 2021, the capital ratios decreased due to the Vantage acquisition.

At December 31, 2022, book value per common share and tangible book value per common share, which excludes goodwill and other intangible assets, were $27.76 and $16.23, respectively, compared to $26.89 and $15.28, respectively, at September 30, 2022, and $29.86 and $19.58, respectively, at December 31, 2021. The ratio of total stockholders' equity to total assets increased 4 basis points when compared to September 30, 2022. The tangible equity to tangible assets ratio, which excludes goodwill and other intangible assets, increased 20 basis points when compared to at September 30, 2022, due primarily to the changes in equity noted above. Compared to at December 31, 2021, the total stockholders' equity to total assets ratio decreased from 11.96% to 10.90%, and the tangible equity to tangible assets ratio decreased from 8.18% to 6.67%, respectively.

Peoples Bancorp Inc. ("Peoples", Nasdaq: PEBO) is a diversified financial services holding company and makes available a complete line of banking, trust and investment, insurance and premium financing solutions through its subsidiaries. Headquartered in Marietta, Ohio since 1902, Peoples has established a heritage of financial stability, growth and community impact. Peoples had $7.2 billion in total assets as of December 31, 2022, and 130 locations, including 113 full-service bank branches in Ohio, West Virginia, Kentucky, Virginia, Washington D.C. and Maryland. Peoples Bank has been recognized by Newsweek as one of America's Best Banks 2023 and Peoples Bank has been recognized as a Best Bank to Work For by American Banker in 2021 and 2022.

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

Conference Call to Discuss Earnings:
Peoples will conduct a facilitated conference call to discuss fourth quarter and full year 2022 results of operations on January 24, 2023 at 11:00 a.m., Eastern Time, with members of Peoples' executive management participating.  Analysts, media and individual investors are invited to participate in the conference call by calling (866) 890-9285.  A simultaneous webcast of the conference call audio will be available online via the "Investor Relations" section of Peoples' website, www.peoplesbancorp.com.  Participants are encouraged to call or sign in at least 15 minutes prior to the scheduled conference call time to ensure participation and, if required, to download and install the necessary software.  A replay of the call will be available on Peoples' website in the "Investor Relations" section for one year.

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

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

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

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

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

As required by U.S. GAAP, Peoples is required to evaluate the impact of subsequent events through the issuance date of its December 31, 2022 consolidated financial statements as part of its Annual Report on Form 10-K to be filed with the SEC.  Accordingly, subsequent events could occur that may cause Peoples to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.

SOURCE Peoples Bancorp Inc.