PEOPLES BANCORP INCPEBO
PEOPLES BANCORP INC Income Taxes Disclosure
Income Taxes
The reported income tax expense and effective tax rate in the Consolidated Statements of Income differ from the amounts computed by applying the statutory federal corporate income tax rate as follows for the years ended December 31:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| (Dollars in thousands) | Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||||||||||
| Income tax computed at statutory federal corporate income tax rate | $ | 28,310 | 21.0 | % | $ | 31,387 | 21.0 | % | $ | 30,476 | 21.0 | % | |||||||||||||||||
| Differences in rate resulting from: | |||||||||||||||||||||||||||||
| State taxes, net of federal benefit (a) | 1,694 | 1.3 | % | 3,286 | 2.2 | % | 3,053 | 2.1 | % | ||||||||||||||||||||
| Amortization and recognition of tax credits | (1,279) | (0.9) | % | (601) | (0.4) | % | (352) | (0.2) | % | ||||||||||||||||||||
| Nontaxable or nondeductible items: | |||||||||||||||||||||||||||||
| Nondeductible acquisition costs | — | — | % | — | — | % | 168 | 0.1 | % | ||||||||||||||||||||
| Common share awards | (149) | (0.1) | % | (22) | — | % | (99) | (0.1) | % | ||||||||||||||||||||
| Bank owned life insurance | (958) | (0.7) | % | (885) | (0.6) | % | (872) | (0.6) | % | ||||||||||||||||||||
| Captive insurance benefit | — | — | % | — | — | % | (330) | (0.2) | % | ||||||||||||||||||||
| Tax-exempt interest income | (281) | (0.2) | % | (258) | (0.2) | % | (555) | (0.4) | % | ||||||||||||||||||||
| Changes in unrecognized tax benefits | (88) | (0.1) | % | 45 | — | % | 438 | 0.3 | % | ||||||||||||||||||||
| Other, net | 782 | 0.5 | % | (693) | (0.4) | % | (164) | (0.1) | % | ||||||||||||||||||||
| Income tax expense | $ | 28,031 | 20.8 | % | $ | 32,259 | 21.6 | % | $ | 31,763 | 21.9 | % | |||||||||||||||||
| (a) State taxes in West Virginia and Kentucky make up the majority (greater than 50 percent) of the tax effect in this category. | |||||||||||||||||||||||||||||
Peoples’ reported income tax expense consisted of the following for the years ended December 31:
| (Dollars in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current income tax expense | $ | 29,238 | $ | 25,286 | $ | 32,001 | ||||||||||||||
| Deferred income tax (benefit) expense | (1,207) | 6,973 | (238) | |||||||||||||||||
| Income tax expense | $ | 28,031 | $ | 32,259 | $ | 31,763 | ||||||||||||||
The significant components of Peoples’ deferred tax assets and deferred tax liabilities consisted of the following at December 31:
| (Dollars in thousands) | 2025 | 2024 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Available-for-sale securities | $ | 21,594 | $ | 33,996 | ||||||||||
| Allowance for credit losses | 18,077 | 15,035 | ||||||||||||
| Nonaccrual loan interest income | 1,221 | 1,312 | ||||||||||||
| Accrued employee benefits | 8,769 | 7,472 | ||||||||||||
| Lease obligation | 2,292 | 2,523 | ||||||||||||
| Net operating loss carryforward | 5,709 | 8,393 | ||||||||||||
| Other | 788 | 1,837 | ||||||||||||
| Gross deferred tax assets | $ | 58,450 | $ | 70,568 | ||||||||||
| Valuation allowance | $ | 158 | $ | 158 | ||||||||||
| Total deferred tax assets | $ | 58,292 | $ | 70,410 | ||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Equipment leases | $ | 10,235 | $ | 11,790 | ||||||||||
| Deferred loan income | 1,493 | 2,015 | ||||||||||||
| Purchase accounting adjustments | 5,895 | 3,219 | ||||||||||||
| Bank premises and equipment | 6,013 | 5,283 | ||||||||||||
| Lease right-of-use assets | 2,160 | 2,397 | ||||||||||||
| Derivative instruments | 121 | 416 | ||||||||||||
| Other | 297 | 2,312 | ||||||||||||
| Total deferred tax liabilities | $ | 26,214 | $ | 27,432 | ||||||||||
| Net deferred tax asset | $ | 32,078 | $ | 42,978 | ||||||||||
At December 31, 2025, Peoples had approximately $26 million of federal net operating loss carryforwards and $208,000 of federal tax credit carryforwards, the annual utilization of which are subject to limitation under Internal Revenue Code sections 382 and 383, respectively. Peoples has recorded a deferred tax asset only for the portion of these net operating loss and tax credit carryforwards it is able to, and expects to, utilize under these limitations. At December 31, 2025, Peoples had approximately $2.2 million of state net operating loss carryforwards, the annual utilization of which are subject to limitation under applicable state tax law. However, all $2.2 million of state net operating loss carryforwards are unlikely to be utilized, resulting in a valuation allowance against the net tax benefit of approximately $158,000.
The federal income tax benefit from sales of investment securities was $558,000 in 2025, $87,000 in 2024, and $777,000 in 2023.
Income tax benefits are recognized in the Consolidated Financial Statements for a tax position only if it is considered “more-likely-than-not” of being sustained in an audit, based solely on the technical merits of the income tax position. If the recognition criteria are met, the amount of income tax benefits to be recognized are measured based on the largest income tax benefit that is more than 50 percent likely to be realized on ultimate resolution of the tax position. The following table provides a reconciliation of uncertain tax positions at December 31:
| (Dollars in thousands) | 2025 | 2024 | |||||||||
| Uncertain tax positions, beginning of year | $ | 572 | $ | 527 | |||||||
| Gross increase based on tax positions related to current year | — | 45 | |||||||||
| Gross decrease due to the statute of limitations | (88) | — | |||||||||
| Uncertain tax positions, end of year | $ | 484 | $ | 572 | |||||||
All of the gross unrecognized tax benefits would impact People’s effective tax rate if recognized.
Peoples is subject to U.S. federal income tax, as well as to tax in various state income tax jurisdictions. Peoples’ income tax returns are subject to review and examination by federal and state taxing authorities. Peoples is currently open to audit under the applicable statutes of limitations by the Internal Revenue Service for the years ended December 31, 2022 through 2025. The years open to examination by state taxing authorities vary by jurisdiction.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Mar 15, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 3, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 26, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.