Acquisitions

12 Months Ended

Dec. 31, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Limestone Bancorp, Inc.

As of the close of business on April 30, 2023, Peoples completed the Limestone Merger. In connection with the Limestone Merger, Limestone Bank, Inc., which operated 20 branches in Kentucky, merged into Peoples Bank. As consideration in the Limestone Merger, Limestone shareholders were paid 0.90 common shares of Peoples for each full share of Limestone that was owned at the merger date, resulting in the issuance of 6,827,668 common shares by Peoples, or aggregate consideration of $177.9 million. Peoples accounted for this transaction as a business combination under the acquisition method.

Peoples recorded acquisition-related expenses related to the Limestone Merger, which included $0.2 million and $16.9 million in non-interest expense for the years ended December 31, 2024 and December 31, 2023. For 2024, acquisition-related expenses included $0.4 million of other non-interest expense, which was partially offset by the reversal of an accrual for data processing and software expense. During 2023, acquisition-related non-interest expenses consisted of $6.0 million in professional fees, $5.9 million in salaries and employee benefit costs, $2.9 million in other non-interest expense, $1.8 million in data processing and software expense, and $0.3 million in various other non-interest expense line items. The other non-interest expenses were primarily due to $1.8 million of early contract termination fees on Limestone contracts driven by the system conversions, which took place in the third quarter of 2023.

The following table provides the purchase price calculation as of the date of the Limestone Merger, and the assets acquired and liabilities assumed at their estimated fair values.


(Dollars in thousands)	Fair Value
Total purchase price	$	177,931










Assets
Cash and balances due from banks	6,422
Interest-bearing deposits in other banks	87,115
Total cash and cash equivalents	93,537
Available-for-sale investment securities, at fair value	166,944

Other investment securities	5,716

Total investment securities	172,660
Loans and leases	1,077,929

Allowance for credit losses (on PCD loans)	(2,051)
Net loans	1,075,878












Bank premises and equipment, net of accumulated depreciation	17,690
Bank owned life insurance	31,343



Other intangible assets	27,722
Other assets	36,874
Total assets	1,455,704
Liabilities
Deposits:

Non-interest-bearing	262,727
Interest-bearing	971,457
Total deposits	1,234,184
Short-term borrowings	60,000
Long-term borrowings	39,453
Accrued expenses and other liabilities	12,967
Total liabilities	1,346,604


Net assets	109,100
Goodwill	$	68,831

The goodwill recorded in connection with the Limestone Merger is related to expected synergies to be gained from the combination of Limestone with Peoples’ operations. The employees retained from the Limestone Merger and the geographic locations of Limestone should allow Peoples to continue to grow its loan and deposit portfolios while also increasing Peoples’ ability to penetrate the new markets, which should benefit Peoples in future periods. During Peoples’ evaluation of intangible assets, it was determined that an assembled workforce intangible asset was not separately recognizable and was included in goodwill. Peoples recorded a core deposit intangible asset in other intangible assets related to the Limestone Merger.

Loans acquired by Peoples in a business combination that have evidence of more than insignificant credit deterioration, which includes loans as to which Peoples believes it is probable that Peoples will be unable to collect all contractually required payments, are considered PCD loans. Acquired PCD loans are reported net of the unamortized fair value adjustment. These loans are recorded at the purchase price, and an allowance for credit losses is determined based upon discrete credit marks, along with discounted cash flow models based upon similar pools of loans, using a similar methodology as for other loans. The following table details the fair value adjustment for acquired PCD loans as of the acquisition date:



(Dollars in thousands)	Par Value		Allowance for Credit Losses		Non-Credit (Discount) Premium		Fair Value
PCD loans

Commercial real estate, other	$	30,907	$	(1,340)	$	(2,160)	$	27,407
Commercial and industrial	16,466		(379)		(610)		15,477

Residential real estate	6,328		(228)		(770)		5,330
Home equity lines of credit	774		(18)		11		767

Consumer	1,029		(86)		78		1,021
Fair value	$	55,504	$	(2,051)	$	(3,451)	$	50,002