Peoples Bancorp Inc. Reports the Third Consecutive Quarter of Record Quarterly Net Income

MARIETTA, Ohio, Oct. 24, 2017 /PRNewswire/ -- Peoples Bancorp Inc. ("Peoples") (NASDAQ: PEBO) today announced results for the quarter ended September 30, 2017.  Net income totaled $10.9 million for the third quarter of 2017, representing earnings per diluted common share of $0.60.  Earnings per diluted common share were positively impacted by $0.07 due to the gain on bank equity investment securities of $1.8 million recognized during the third quarter of 2017. In comparison, earnings per diluted common share were $0.53 for the second quarter of 2017 and $0.43 for the third quarter of 2016.

"We are pleased to announce our third consecutive quarter of record quarterly net income.  Our key metrics, including earnings per share, efficiency ratio, return on average assets and return on average stockholders' equity, improved as we continued to focus our attention on strengthening our core business," said Chuck Sulerzyski, President and Chief Executive Officer.  "Our efficiency ratio was the lowest it has been in seven years.  We are being disciplined in our approach to growing revenues faster than expenses, and we believe we are poised to continue to provide strong shareholder returns as we move into the fourth quarter of 2017 and into 2018."

"We are delighted to continue to complement our current footprint with the agreement to acquire ASB Financial Corp.," continued Sulerzyski.  "We believe this acquisition will allow us to expand further into the Cincinnati market and positions us for future growth opportunities, including the addition of their successful mortgage origination division, which should double our mortgage origination capability."

Peoples entered into a merger agreement with ASB Financial Corp ("ASB") on October 23, 2017 that calls for ASB to merge into Peoples and for ASB's wholly-owned subsidiary, American Savings Bank, fsb, which operates 6 full service bank branches and two loan production offices located in southern Ohio and northern Kentucky, to merge into Peoples Bank.  This transaction is expected to close during the second quarter of 2018, subject to the satisfaction of customary closing conditions, including regulatory approvals and the approval of the shareholders of ASB.  As of June 30, 2017, ASB had approximately $293.6 million in total assets, which included approximately $241.5 million in net loans, and approximately $210.4 million in total deposits.  Under the terms of the ASB agreement, shareholders of ASB can elect to receive either 0.592 shares of Peoples' common stock for each share of ASB common stock or $20 cash per share with a limit of 15% of the merger consideration being paid in cash.

Statement of Operations Highlights:

• Net interest income grew 4% compared to the second quarter of 2017, and 12% compared to the third quarter of 2016.
• Net interest margin was 3.67% for the third quarter of 2017, compared to 3.62% for the linked quarter and 3.54% for the third quarter of 2016.
• Provision for loan losses was $1.1 million for the third quarter of 2017 and was driven by loan growth experienced during the quarter.
• Total fee-based income during the third quarter of 2017 declined by 7% compared to both the linked quarter and the third quarter of 2016.
• The decline compared to the linked quarter was largely due to the gain recognized on the sale of the government guaranteed portion of a loan for $437,000 in the second quarter of 2017.  Lower commercial loan swap fees contributed to the decline compared to both the linked quarter and third quarter of 2016.
• Total non-interest expense was relatively flat for the third quarter of 2017 compared to the linked quarter, and was down 1% compared to the third quarter of 2016.
• The efficiency ratio continued to improve and was 60.7% for the third quarter of 2017, compared to 61.2% for the second quarter of 2017 and 64.3% for the third quarter of 2016.
• A net gain on investment securities of $1.9 million was recognized during the third quarter of 2017.
• Certain bank equity investment securities were sold during the third quarter of 2017 as a result of a high amount of appreciation on these securities.

Balance Sheet Highlights:

• Period-end total loan balances at September 30, 2017 grew 6%, on an annualized basis, compared to June 30, 2017 and 7% compared to September 30, 2016.
• Indirect consumer loans at September 30, 2017 grew $29.7 million, or 39% annualized, compared to June 30, 2017, and increased 46% compared to September 30, 2016.
• Commercial loan balances grew $17.2 million, or 5% annualized, at September 30, 2017 compared to June 30, 2017 and increased 8% compared to September 30, 2016.
• Asset quality improved during the quarter.
• Nonperforming assets decreased to 0.86% of total loans and other real estate owned ("OREO") at September 30, 2017 compared to 0.88% at June 30, 2017.
• Nonaccrual loans at September 30, 2017 decreased $0.7 million, or 4%, compared to June 30, 2017.
• Classified loans, which are those categorized as substandard or doubtful, decreased $11.4 million, or 22%, at September 30, 2017 compared to June 30, 2017.
• Criticized loans, which are those categorized as special mention, substandard or doubtful, decreased $13.2 million, or 12%, at September 30, 2017 compared to June 30, 2017.
• Period-end total deposit balances at September 30, 2017 decreased $12.5 million compared to June 30, 2017.
• Total demand deposit balances were 42% of total deposits at September 30, 2017, compared to 40% at June 30, 2017.

Net Interest Income:
Net interest income was $29.2 million for the third quarter of 2017, a 4% increase compared to the linked quarter and a 12% increase over the third quarter of 2016.  Net interest margin increased to 3.67% for the third quarter of 2017, compared to 3.62% for the second quarter of 2017 and 3.54% for the third quarter of 2016.  For the first nine months of 2017, net interest income grew 8% compared to 2016, and net interest margin improved 6 basis points to 3.61%.  The increase in net interest income compared to all prior periods has largely been attributable to loan growth, and increasing interest rates.  In addition, during the third quarter of 2017, Peoples received proceeds of $611,000 on an investment security that had been previously written down due to an other-than-temporary-impairment.  These proceeds added 8 basis points to the net interest margin during the third quarter of 2017.

The accretion income, net of amortization expense, from acquisitions was $816,000 for the third quarter of 2017, compared to $735,000 for the second quarter of 2017 and $801,000 for the third quarter of 2016, which added 10 basis points to the net interest margin during the third and second quarters of 2017, and 11 basis points during the third quarter of 2016.  During the third quarter of 2017, the annual re-estimation of expected cash flows for purchased credit impaired loans was completed and resulted in adjustments to accretion income, which had a positive impact for the quarter.

Provision for Loan Losses:
The provision for loan losses was $1.1 million for the third quarter of 2017, compared to $0.9 million for the second quarter of 2017 and $1.1 million for the third quarter of 2016.  The slight increase in provision for loan losses recorded during the third quarter of 2017 compared to the linked quarter was reflective of the growth in loan balances during the quarter, and was partially offset by improved asset quality metrics.  For the first nine months of 2017, provision for loan losses was $2.7 million, compared to $2.8 million for the first nine months of 2016.

Total Fee-based Income:
Total fee-based income for the third quarter of 2017 declined 7%, compared to both the linked quarter and third quarter of 2016.  The decrease compared to the second quarter of 2017 was largely due to the gain recognized on the sale of the government guaranteed portion of a loan for $437,000 in the second quarter of 2017.  Commercial loan swap fees were impacted by lower customer demand and declined $575,000 for the third quarter of 2017 compared to the linked quarter, and were down $493,000 from the third quarter of 2016.  Service charges on deposit accounts declined $426,000, or 15%, compared to the third quarter of 2016, with the decline mostly due to lower overdraft fees.

For the first nine months of 2017, total fee-based income grew $575,000, or 1%, compared to 2016.  The increase compared to the first nine months of 2016 was mainly the result of a $647,000 increase in trust and investment income, a $560,000 increase in bank owned life insurance income and a $537,000 increase in mortgage banking income.  These increases were partially offset by declines in service charges on deposit accounts of $869,000 and electronic banking income of $175,000.

Total Non-interest Expense:
Total non-interest expense for the third quarter of 2017 was $26.6 million, compared to $26.7 million for the second quarter of 2017 and $26.8 million for the third quarter of 2016.  The decline compared to the linked quarter was due to decreased professional fees, and electronic banking expense, which were partially offset by higher marketing expense.  The decrease compared to the third quarter of 2016 was due to the system upgrade costs recognized during the third quarter of 2016, coupled with lower professional fees and electronic banking expense.  These reductions were partially offset by increases in salaries and employee benefit costs and data processing and software expense.

For the first nine months of 2017, total non-interest expense increased $940,000, or 1%.  The increase was primarily due to higher salaries and employee benefit costs, and was related to incentive compensation resulting from improved financial results of the company during the first nine months of 2017 compared to 2016.  This increase was partially offset by reductions in professional fees, communication expense and amortization of other intangible assets.  During the first nine months of 2016, Peoples recognized $513,000 of system upgrade costs.

The efficiency ratio for the third quarter of 2017 was 60.7%, compared to 61.2% for the linked quarter and 64.3% for the third quarter of 2016.  For the first nine months of 2017, the efficiency ratio was 62.2%, compared to 64.6% for the first nine months of 2016.  Excluding the system upgrade costs, the efficiency ratio during the third quarter of 2016 was 63.3%, and was 64.1% for the first nine months of 2016.  Higher net interest income was the primary driver of the decline in the efficiency ratio for the third quarter and first nine months of 2017 compared to the linked quarter, third quarter of 2016, and first nine months of 2016.

Loans:
Period-end total loan balances at September 30, 2017 increased $32.2 million, or 6% annualized, compared to June 30, 2017.  Indirect consumer lending continued to be a key component of loan growth, as balances increased $29.7 million, or 39% annualized, during the quarter.  The growth in indirect consumer lending included continued diversification in the portfolio beyond automobile loans, including loans for recreational vehicles and motorcycles.  Commercial loans grew $17.2 million, or 5% annualized, with commercial and industrial loans growing $12.5 million, or 12% annualized, during the quarter.

Compared to December 31, 2016, period-end loan balances at September 30, 2017 increased $102.1 million, or 5% annualized.   Indirect consumer loan balances increased $83 million, or 33% annualized.  Commercial real estate loans grew $36.4 million, or 6% annualized, while commercial and industrial loans grew $21.6 million, or 7% annualized, for the first nine months of 2017.

At September 30, 2017, period-end loan balances increased $157.8 million, or 7%, compared to September 30, 2016.  The increase was primarily the result of commercial loan growth of $101.1 million, or 8%, which was almost evenly split between commercial real estate and commercial and industrial loan balances.  From a bank regulatory perspective, non-owner-occupied commercial real estate loan balances as of September 30, 2017 remained well below the guidance from the regulators of financial institutions of 300% of total risk-based capital.  The ratio at September 30, 2017 of non-owner-occupied commercial real estate loans to total risk-based capital was 161%, compared to 147% as of September 30, 2016.  Indirect consumer lending also contributed  loan growth of $105.6 million, or 46%, compared to September 30, 2016.   At September 30, 2017, indirect consumer loan balances comprised 14% of the total loan portfolio, compared to 13% at June 30, 2017, and 11% at both December 31, 2016 and September 30, 2016.

Quarterly average gross loan balances increased $46.2 million, or 8% annualized, compared to the linked quarter.  Commercial loans provided $30.6 million of growth compared to June 30, 2017, while consumer indirect loans grew $28.2 million.  Quarterly average gross loan balances for the three months ended September 30, 2017 increased 9% compared to the same period in 2016, with commercial loan growth of $128.3 million, and consumer indirect loan growth of $103.8 million.  For the nine months ended September 30, 2017, average gross loan balances increased 9% compared to the same period in 2016, with the growth being almost evenly divided between commercial loans and consumer indirect loans.

Asset Quality:
Asset quality metrics improved during the third quarter of 2017.  Nonperforming assets as a percent of total loans and OREO decreased to 0.86% at September 30, 2017, compared to 0.88% at June 30, 2017 and 1.11% at September 30, 2016.  At September 30, 2017, nonperforming assets declined 17% from September 30, 2016.

Annualized net charge-offs were 0.16% of average gross loans during the third quarter of 2017, compared to 0.11% in the linked quarter and 0.14% in the third quarter of 2016.  The higher net charge-off rate during the third quarter of 2017 was largely due to increased net charge-offs of residential real estate, coupled with higher deposit account overdraft charge-offs.  For the first nine months of 2017, annualized net charge-offs were 0.12%, compared to 0.09% for the first nine months of 2016.  The increase compared to the first nine months of 2016 was mostly due to net recoveries on commercial real estate loans that were received in 2016.

Classified loans, which are those categorized as substandard or doubtful, decreased $11.8 million, or 22%, compared to June 30, 2017 and $12.5 million, or 23%, compared to September 30, 2016.  As a percent of total loans, classified loans were 1.77% at September 30, 2017, compared to 2.31% at June 30, 2017 and 2.48% at September 30, 2016.  Criticized loans, which are those categorized as special mention, substandard or doubtful, declined $14.8 million, or 13%, compared to June 30, 2017 and decreased $2.6 million, or 3%, compared to September 30, 2016.  As a percent of total loans, criticized loans were 4.15% at June 30, 2017, compared to 4.86% at June 30, 2017 and 4.58% at September 30, 2016.  Compared to the second quarter of 2017, the reduction in classified and criticized loans was mostly due to a large commercial loan relationship that was upgraded during the third quarter of 2017.

At September 30, 2017, the allowance for loan losses increased to $19.0 million, compared to $18.8 million at June 30, 2017, and $18.2 million at September 30, 2016.  The ratio of the allowance for loan losses as a percent of total loans was 0.82% at both September 30, 2017 and June 30, 2017, compared to 0.84% at September 30, 2016.  The ratio includes total acquired loans of $438.4 million and allowance for acquired loan losses of $0.1 million.

Deposits:
In the third quarter of 2017, Peoples announced a new consumer checking account product suite to its customers.  The migration of the customer accounts began late in the third quarter of 2017 and is expected to be completed early in the fourth quarter, with the effect being a shift of some accounts from non-interest-bearing to interest-bearing demand deposit accounts.  This migration impact is reflected in the comparisons set forth below.

As of September 30, 2017, period-end deposits declined $12.5 million compared to June 30, 2017, and increased $155.0 million, or 6%, compared to December 31, 2016.  Compared to June 30, 2017, period-end deposits at September 30, 2017 declined largely due to reductions of $17.9 million in brokered certificates of deposit, while a large portion of the decreases in non-interest-bearing deposits, money market accounts, governmental deposits and retail certificates of deposit were offset by increases in interest-bearing demand deposits.

Period-end deposits increased $89.2 million, or 3%, compared to September 30, 2016.  Most of this increase was due to growth of $113.8 million in interest-bearing demand deposits, which was partially offset by a decline of $20.6 million in non-interest-bearing deposits.  In addition, declines in money market accounts more than offset higher total certificates of deposit.

Average deposits for the third quarter of 2017 were relatively flat, increasing $3.9 million compared to the linked  quarter, with increases of $25.7 million in interest-bearing demand deposits and $8.2 million in governmental deposits being mostly offset by reductions in all other deposit categories.  Compared to the third quarter of 2016, average deposits increased $118.1 million, or 5%, with interest-bearing deposits increasing $71.4 million and non-interest-bearing deposits increasing $46.7 million.  The increase in interest-bearing deposits was due primarily to increases in brokered certificates of deposit and interest-bearing demand accounts, which were somewhat offset by a decrease in retail certificates of deposit.

For the first nine months of 2017, average deposits increased $78.3 million, or 3%, compared to the first nine months of 2016.  The increase was primarily due to an increase of $46.1 million, or 6%, in non-interest bearing deposits, coupled with an increase of $32.2 million in interest-bearing deposits.

Total demand deposit accounts comprised 42% of total deposits at September 30, 2017, compared to 40% at June 30, 2017 and December 31, 2016, and 39% at September 30, 2016.

Stockholders' Equity:
At September 30, 2017, the tier 1 risk-based capital ratio was 13.60%, compared to 13.47% at June 30, 2017, 13.21% at December 31, 2016 and 13.34% at September 30, 2016.  The total risk-based capital ratio was 14.49% at September 30, 2017, compared to 14.40% at June 30, 2017, 14.11% at December 31, 2016 and 14.24% at September 30, 2016.  The improvement in these capital ratios compared to the linked quarter was due mainly to increased earnings, which exceeded the dividends declared and paid during the third quarter of 2017 by $6.9 million.

Peoples Bancorp Inc. is a diversified financial services holding company with $3.6 billion in total assets, 76 locations, including 67 full-service bank branches, and 74 ATMs in Ohio, West Virginia and Kentucky.  Peoples makes available a complete line of banking, investment, insurance and trust solutions through its subsidiaries - Peoples Bank and Peoples Insurance Agency, LLC.  Peoples' common shares are traded on the NASDAQ Global Select Market® under the symbol "PEBO", and Peoples is a member of the Russell 3000 index of U.S. publicly-traded companies.  Learn more about Peoples at www.peoplesbancorp.com. 

Conference Call to Discuss Earnings:
Peoples will conduct a facilitated conference call to discuss third quarter 2017 results of operations today at 11:00 a.m., Eastern Daylight Savings 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-GAAP Financial Measures:
This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP").  Management uses these "non-GAAP" financial measures in its analysis of Peoples' performance and the efficiency of its operations. Management believes that these non-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 GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Below is a listing of the non-GAAP financial measures used in this news release:

• Core non-interest expenses are non-GAAP since they exclude the impact of items such as costs associated with the system upgrade of Peoples' core banking system, acquisition-related costs, pension settlement charges, severance charges and legal settlement charges.
• 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 fee-based income.  This measure is non-GAAP since it excludes amortization of other intangible assets and all gains and/or losses included in earnings (which are excluded from total fee-based income), and uses fully tax-equivalent net interest income.
• Tangible assets, tangible equity and tangible book value per common share measures are non-GAAP since they exclude the impact of goodwill and other intangible assets acquired through acquisitions on both total stockholders' equity and total assets.
• Pre-provision net revenue is defined as net interest income plus total fee-based income minus total non-interest expense.  This measure is non-GAAP since it excludes the provision for (recovery of) loan losses and all gains and/or losses included in earnings.
• Return on tangible stockholders' equity is calculated as net income (less after-tax impact of amortization of other intangible assets) divided by tangible stockholders' equity.  This measure is non-GAAP since it excludes the after-tax impact of amortization of other intangible assets from earnings and the impact of goodwill and other intangible assets acquired through acquisitions on total stockholders' equity.

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

Important Information for Investors and Shareholders:
This news release does not constitute an offer to sell or the solicitation of an offer to buy securities of Peoples.  Peoples will file a registration statement on Form S-4 and other documents regarding the proposed transaction referenced in this news release with the Securities and Exchange Commission ("SEC") to register the shares of the Peoples common stock to be issued to the shareholders of ASB.  The registration statement will include a proxy statement/prospectus, which will be sent to the shareholders of ASB in advance of its special meeting of shareholders to be held to consider the proposed merger.   Investors and security holders are urged to read the proxy statement/prospectus and any other relevant documents to be filed with the SEC in connection with the proposed transaction because they contain important information about Peoples, ASB and the proposed transaction.  Investors and security holders may obtain a free copy of these documents (when available) through the website maintained by the SEC at www.sec.gov.  These documents may also be obtained, free of charge, on Peoples' website at www.peoplesbancorp.com under the tab "Investor Relations" or by contacting Peoples' Investor Relations Department at: Peoples Bancorp Inc., 138 Putnam Street, PO Box 738, Marietta, Ohio 45750, Attn: Investor Relations.

Peoples and ASB and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of ASB in connection with the proposed merger.  Information about the directors and executive officers of Peoples is set forth in the proxy statement for Peoples' 2017 annual meeting of shareholders, as filed with the SEC on Schedule 14A on March 8, 2017.  Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the proxy statement/prospectus regarding the proposed merger when it becomes available.  Free copies of this document may be obtained as described in the preceding paragraph, when it becomes available.

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," "would," "should," "could" 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:

(1) the success, impact, and timing of the implementation of Peoples' business strategies, including the successful integration of acquisitions and the expansion of consumer lending activity;

(2) competitive pressures among financial institutions or from non-financial institutions which may increase significantly, including product and pricing pressures, changes to third-party relationships and revenues, and Peoples' ability to attract, develop and retain qualified professionals;

(3) changes in the interest rate environment due to economic conditions and/or the fiscal policies of the United States ("U.S.") government and the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which may adversely impact interest rates, interest margins, loan demand and interest rate sensitivity;

(4) uncertainty regarding the nature, timing and effect of legislative or regulatory changes or actions, promulgated and to be promulgated by governmental and regulatory agencies in the State of Ohio, the Federal Deposit Insurance Corporation, the Federal Reserve Board and the Consumer Financial Protection Bureau, which may subject Peoples, its subsidiaries, or one or more acquired companies to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses, including in particular the rules and regulations promulgated and to be promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the Basel III regulatory capital reform;

(5) changes in policy and other regulatory and legal developments accompanying the current presidential administration and uncertainty or speculation pending the enactment of such changes;

(6) Peoples' ability to leverage the core banking systems upgrade that occurred in the fourth quarter of 2016 (including the related core operating systems, data systems and products) without complications or difficulties that may otherwise result in the loss of customers, operational problems or one-time costs currently not anticipated to arise in connection with implementing new features and functionality;

(7) local, regional, national and international economic conditions and the impact these conditions may have on Peoples, its customers and its counterparties, and Peoples' assessment of the impact, which may be different than anticipated;

(8) Peoples' ability to integrate any future acquisitions which may be unsuccessful, or may be more difficult, time-consuming or costly than expected;

(9) Peoples may issue equity securities in connection with future acquisitions, which could cause ownership and economic dilution to Peoples' current shareholders;

(10) changes in prepayment speeds, loan originations, levels of nonperforming assets, delinquent loans and charge-offs, which may be less favorable than expected and adversely impact the amount of interest income generated;

(11) adverse changes in the economic conditions and/or activities, including, but not limited to, continued economic uncertainty in the U.S., the European Union (including the uncertainty surrounding the actions to be taken to implement the referendum by British voters to exit the European Union), Asia, and other areas, which could decrease sales volumes, add volatility to the global stock markets, and increase loan delinquencies and defaults;

(12) deterioration in the credit quality of Peoples' loan portfolio, which may adversely impact the provision for loan losses;

(13) changes in accounting standards, policies, estimates or procedures which may adversely affect Peoples' reported financial condition or results of operations;

(14) Peoples' assumptions and estimates used in applying critical accounting policies, which may prove unreliable, inaccurate or not predictive of actual results;

(15) adverse changes in the conditions and trends in the financial markets, including political developments, 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;

(16) Peoples' ability to receive dividends from its subsidiaries;

(17) Peoples' ability to maintain required capital levels and adequate sources of funding and liquidity;

(18) the impact of minimum capital thresholds established as a part of the implementation of Basel III;

(19) the impact of larger or similar sized financial institutions encountering problems, which may adversely affect the banking industry and/or Peoples' business generation and retention, funding and liquidity;

(20) the costs and effects of regulatory and legal developments, including the outcome of potential regulatory or other governmental inquiries and legal proceedings and results of regulatory examinations;

(21) Peoples' ability to secure confidential information through the use of computer systems and telecommunications networks, including those of Peoples' third-party vendors and other service providers, may prove inadequate, which could adversely affect customer confidence in Peoples and/or result in Peoples incurring a financial loss;

(22) ability to anticipate and respond to technological changes which can impact Peoples' ability to respond to customer needs and meet competitive demands;

(23) changes in consumer spending, borrowing and saving habits, whether due to changes in business and economic conditions, legislative or regulatory initiatives, or other factors, which may be different than anticipated;

(24) the overall adequacy of Peoples' risk management program;

(25) the impact on Peoples' businesses, as well as on the risks described above, of various domestic or international widespread natural or other disasters, pandemics, cyber attacks, civil unrest, military or terrorist activities or international conflicts;

(26) significant changes in the tax laws, which may adversely affect the fair values of deferred tax assets and obligations of states and political subdivisions held in Peoples' investment securities portfolio; and

(27) other risk factors relating to the banking industry or Peoples as detailed from time to time in Peoples' reports filed with the Securities and Exchange Commission (the "SEC"), including those risk factors included in the disclosures under the heading "ITEM 1A. RISK FACTORS" of Peoples' Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Peoples encourages readers of this news release to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance.  Peoples undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events, except as required by applicable legal requirements.  Copies of documents filed with the SEC are available free of charge at the SEC's website at http://www.sec.gov and/or from Peoples' website.

As required by U.S. GAAP, Peoples is required to evaluate the impact of subsequent events through the issuance date of its September 30, 2017 consolidated financial statements as part of its Quarterly Report on Form 10-Q to be filed with the SEC.  Accordingly, subsequent events could occur that may cause Peoples to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.