Good morning, and welcome to Peoples Bancorp Inc. Conference Call. My name is Arlee, and I will be your conference facilitator. Today's call will cover a discussion of the results of operations for the quarterly period and six months ended June 31, 2021. Please be advised that all lines have been placed on mute to prevent any background noise.

After the speakers’ remarks there will be a question-and-answer period. [Operator Instructions] This call is also being recorded. If you object to the recording, please disconnect at this time.

Please be advised that the commentary on this call will contain projections or other forward-looking statements regarding Peoples' future financial performance or future events. These statements are based on management's current expectations.

The statements in this call, which are not historical fact, are forward-looking statements and involve a number of risks and uncertainties detailed in Peoples' Securities and Exchange Commission filings.

These include, but are not limited to, the completing and integration of current and planned acquisitions including the pending merger with Premier Financial Bancorp Inc., and any future acquisitions which maybe unsuccessful or maybe more difficult, time-consuming or costly than expected and the risk of expansion into new markets.

Peoples’ ability to obtain all remaining regulatory approvals other proposed merger with Premier Financial Bancorp Inc. or Premier on the proposed terms and schedule and adaption of the merger agreements by the shareholders of Peoples.

The ever-changing effects of the COVID-19 pandemic on economies and markets, and on our customers, counterparties, employees and third-party service providers, as well as the effects of various responses of governmental or non-governmental authorities to the COVID-19 pandemic, including public health actions directed towards the containment of the COVID-19 pandemic and the development, availability and effectiveness of vaccine.

Changes in the interest rate environment due to economic conditions related to the COVID-19 pandemic or other factors and/or the fiscal and monetary policy measures undertaken and implementation of related economic stimulus packages, which may adversely impact interest rates, the interest rate yield curve, interest margins, loan demand and interest rate sensitivity.

The success, impact and timing of the implementation of Peoples’ business strategies and Peoples’ ability to manage strategic initiatives, including the expansion of commercial and consumer lending activities in light of the continuing impact of the COVID-19 pandemic on customers, operations and financial conditions.

The competitive nature of the financial services industry, the impact of assumptions, estimates and inputs used within models, which may vary materially from actual outcomes, including in connection with the current expected CECL model, the discontinuation of the LIBOR and other reference rates, which may result in increased expenses and litigation and adversely impact the effectiveness of hedging strategies, uncertainty regarding the nature, timing, cost and effect of federal and/or state banking, insurance, impacts, legislative or regulatory changes or actions, and changes in accounting standards, policies, estimates or procedures.

Management believes the forward-looking statements made during this call are based on reasonable assumptions within the bounds of their knowledge of Peoples' business and operations. However, it is possible actual results may differ materially from these forward-looking statements.

Peoples disclaims any responsibility to update these forward-looking statements after this call, except as may be required by applicable legal requirements. Peoples’ second quarter 2021 earnings release was issued this morning and is available at peoplesbancorp.com under Investor Relations.

A reconciliation of the non-GAAP financial measures discussed during this call to the most directly comparable GAAP financial measures is included at the end of the earnings release. This call will include about 20 to 25-minutes of prepared commentary, followed by a question-and-answer period, which I will facilitate.

An archived webcast of this call will be available on peoplesbancorp.com in the Investor Relations section for one year. Participants in today's call will be Chuck Sulerzyski, President and Chief Executive Officer; and Katie Bailey, Chief Financial Officer and Treasurer; and each will be available for questions following opening statements. Mr.

Sulerzyski, you may begin your conference..

Thank you, Arlee. Good morning, everyone. Thank you for joining us. We have some exciting news to share with you regarding our second quarter, which includes, total loan balances declined 1% for the quarter, however, we had loan growth of 4% annualized compared to the linked quarter-end, excluding PPP loans and the lease balances.

Net interest income growth of 11% compared to the linked quarter, with a 19 basis points expansion of our net interest margin. Our fee based business income increased 10% compared to the second quarter of 2020.

Our total revenue grew 13% compared to the second quarter of 2020, and, our efficiency ratio, adjusted for non-core cost improved compared to the linked quarter. During the last three months, we have also integrated and streamlined processes with our North Star Leasing division, which is a division of People's Bank.

We acquired North Star at the end of March, but began accounting for on April 1. This division is growing as we had anticipated, and benefited both on net interest income and margin during the second quarter. This division has added over $12 million to lease balances since acquisition, resulting in an annualized growth rate of 59% for the quarter.

They also provided over $4 million of interest income and added 29 basis points to net interest margin for the quarter. We have spent a lot of time in recent months visiting and planning with our partners at Premier Financial Bancorp and their two banking subsidiaries, Premier Bank and Citizens Bank.

We have developed plans on integration, training, client impact, and are working to communicate with both the associates and the clients of Premier to make this a seamless transition. At this point, we are on target to meet our anticipated expense reductions.

We continue to move forward and plan to close the merger late in the third quarter of 2021, subject to the satisfaction of customary closing conditions, including approval from the Ohio Department of Financial Institutions and Peoples’ shareholders. In addition, in May, we acquired a small Insurance Agency located in Pikeville, Kentucky.

This complements insurance services we already provide in that geographic area. Recently, we were recognized by Forbes magazine as the second-best in state bank in both states of Ohio and West Virginia, and are one of 16 banks in the country that we recognized in two or more states this year.

We are the smallest as far as asset side of the banks being recognized in two states. Overall, there were nearly 5,000 banks eligible for the award from Forbes. We are also honored with a top workplace designation from Cleveland.Com and Cincinnati.com.

The recognition that we have received both of these designations and others proves that we work hard to do the right thing for our clients, associates, communities and shareholders. Moving on to our financial performance for the second quarter, we reported diluted earnings per share of $0.51, and net income totaling $10.1 million.

While diluted EPS declined compared to the linked quarter, this was mainly due to a higher provision for credit losses driven by the establishment of the allowance for credit losses related to the North Star leases. At the same time, we had significant growth in net interest income and net interest margin, both due to the acquired leases.

Acquisition related costs totaled $5.5 million for the quarter, and were $7.6 million for the first-half of 2021. These costs reduced diluted EPS by $0.22 for the quarter and $0.31 for the first six months of 2021.

As we have noted previously, we anticipated that earnings would experience volatility related to our provision for credit losses in future quarters.

For the second quarter, our allowance for credit losses was relatively unchanged in terms of dollars, while the addition of the acquired leases required us to record provision to establish the allowance for credit losses on that portfolio. This resulted in $3.2 million of provision for credit losses during the second quarter.

After the additional portfolio, our provision for credit losses would have been minimal for the quarter. Moving on to our loan modifications, at the end of June our COVID-related loan modifications stood at over $17 million.

Nearly all of this amount represented commercial modifications consisting of two relationships, while consumer modifications totaled $500,000.

The increase in commercial loan modification balances, which were around $12 million at the end of March was related to one hotel operator, however, the aggregate payment relief totaled six months, which is consistent with our approach to other customers operating in this industry.

Both commercial relationships are set to resume normal, principal and interest payments this quarter, and no issues anticipated. We continue to be pleased with our credit quality metrics. The current portion of our loan portfolio was 99.1%, which was higher than at the linked quarter-end.

Our quarterly annualized net charge-off rate was 9 basis points, which improved from 13 basis points in the linked quarter. This rate included the lease net charge-offs which were lower than we anticipated, and were around 2% of lease balances for the second quarter. Our non-performing assets grew $1.1 million compared to the linked quarter-end.

Compared to the end of March, or non-accrual loans declined $1.7 million or 7%, and was largely due to many smaller relationships. Also, compared to the linked quarter-end, all loans 90 plus days past due and accruing increased $2.7 million, and was driven by $1.5 million of past due leases.

In addition, we had one commercial loan of $1.4 million move into 90 plus days past due and accruing category during the second quarter. Compared to March 31, our criticized loans decreased by nearly $3 million and was due the pay off at several smaller commercial relationships.

Additionally, our classified loans declined almost $7 million, as we had an upgrade of one commercial relationship and the payoff of some smaller relationships. As for our loan portfolio, balance declined over $37 million compared to the linked quarter-end.

Although, we added the lease portfolio during the quarter, which totaled around $96 million at quarter-end, and have loan growth in other categories, these were more than offset by $162 million decrease in PPP loan balances.

For our PPP loans, we have originated to-date, we have had 70% in terms of dollars of those loans either paid off, paid down or forgiven by the SBA. If you exclude PPP loans and leases, our loan growth compared to March 31 was 4% annualized.

Our construction loan balances increased $22 million, while our consumer indirect loans grew $18 million for the second quarter. The leasing division added over $12 million in leases during the second quarter. At the same time, all commercial loan production for the first-half of this year was at its highest level in our company's history.

However, our loan growth which has been muted by the low line of credit utilization rates, which finally stabilized during the second quarter, albeit at a historically low level. Instead of drastically decreasing, it increased $3 million compared to the end of March.

When compared to utilization rates at the end of December 2019, we are still down nearly $80 million in outstanding line of credit balances. We continue to grow our number of total households during the second quarter. Our total households are up 2% compared to June of last year.

I will now turn the call over to, Katie, for additional details around our financial performance..

Thank you, Chuck. As Chuck mentioned, the leases had a positive impact on our net interest income and margin during the quarter. Our net interest income grew 11% compared to the linked quarter, and our margin expanded by 19 basis points. The leases provided over $4 million of interest income and 29 basis points to margin.

During the quarter, we recognized $3.4 million of income related to deferred fees and costs on the PPP loans, which was a decline of $1.4 million compared to the linked quarter. The recognition of PPP income during the second quarter added 15 basis points to net interest margins, compared to 28 basis points for the linked quarter.

Our net interest margin excluding the impact of leases and the PPP loans was flat compared to the linked quarter. Along with the improved loan yields, we were able to grow our investment yields by recent decisions to restructure some of our portfolio.

In addition, we reduced our cost of deposits to 24 basis points, which is the lowest we have had in the last five years, while also reducing our funding costs to 27 basis points, which is the lowest in our history.

The positive impact of these measures was offset by the excess liquidity we had during the quarter, which resulted in inflated cash balances and reduced our net interest margin by 13 basis points. We continue to monitor and look for opportunities to grow our margins, which has been challenging in this low rate interest environment.

Compared to the second quarter of 2020, our net interest income increased 14%, and our margin grew by 26 basis points. Again, the lease division provided a significant portion of this improvement, while our investment yields were challenged, and our funding costs were controlled.

For the first-half of 2021 compared to the prior year, our net interest income grew 8% and margin was up 2 basis points. For the first six months of 2021, we have recorded $8.1 million of income related to deferred fees and costs on the PPP loans, compared to $1.9 million during the first-half of 2020.

For the first-half of 2021, the PPP loan income added 21 basis points to net interest margins, and for the first six months of 2020 reduced net interest margin by 1 basis point. For the first six months of the year, we maintained higher cash balances due to excess liquidity, which negatively impacted net interest margin by 12 basis points.

For the second quarter, our reported efficiency ratio improved to 68.6% compared to 70.4% in the linked quarter, but was still higher than 62.3% a year ago. For the first six months of 2021, our reported efficiency ratio grew to 69.5% compared to 64.5% for 2020.

Compared to the second quarter and first six months of 2020, the increases in our efficiency ratio were driven by the higher non-core costs recognized during 2021. On an adjusted basis, which excludes non-core costs, our efficiency ratio improved to 64.2% compared to 65.2% for the latest quarter.

We are optimistic that excluding non-core costs, we believe we can reduce the efficiency ratio to the very low 60s during 2022. During the second quarter, we were able to generate positive operating leverage compared to the linked quarter.

Our fee based income which is non-interest income, excluding gains and losses, declined 6% compared to the linked quarter. The decrease was primarily due to the annual performance-based insurance commission we recognize in the first quarter of each year.

At the same time, our electronic banking income and trust and investment income each grew by double digit percentages compared to the linked quarter. Our fee based income grew 10% compared to the second quarter of 2020, was also mostly due to higher electronic banking income and trust and investment income.

For the first six months of 2021 compared to 2020, fee based income increased 11% due to the growth in electronic banking income, trust and investment income and insurance income. On a year-to-date basis, our fee based income grew to 31% of total revenue, compared to 30% for 2020. Our acquisitions this year will negatively impact this metric.

However, we continue to look for opportunities to grow our fee based businesses, which are beneficial to our total revenue. Our total non-interest expense grew 5% compared to the linked quarter. We had non-core expenses of $2.5 million for the second quarter of 2021.

Our intangible amortization more than doubled compared to the linked quarter from the intangibles associated with the North Star and insurance acquisition. Salaries and employee benefits costs also grew compared to the linked quarter, which reflected a full quarter of the North Star division associates.

Our total expenses related to the leasing division for the second quarter were around $2 million, and exclude the non-core expenses. Our electronic banking expense was directionally aligned with the increased electronic banking income, I already mentioned.

Our total non-interest expense increased 25% compared to the second quarter of 2020, and 18% from the first-half of 2020. Compared to the second quarter of 2020, our non-core expenses increased $1.3 million and were up $2.9 million compared to the first six months of 2020.

We also had the additional $2 million of expense associated with operating our new leasing division. The remainder of the increase was driven by higher salaries and employee benefit costs, and data processing and software costs.

Our increases in salaries and employee benefits costs were driven by the impact of the deferred costs in early 2020 from the PPP loans we originated. Also, contributing to the increase were higher medical costs and sales compensation related to production, as well as an increase we made to our 401k match for associates during 2021.

We had a lot of noise in our expenses compared to the prior periods. If you exclude the non-core expenses and the impact of the expenses associated with operating our North Star Division during the second quarter of 2021, which totaled $2.1 million, our total non-interest expense was relatively flat compared to the linked quarter.

While we did see reductions from our annual first quarter items, such as health savings, account contributions, stock-based compensation and higher payroll taxes, these decreases were offset by higher sales and incentive compensation associated with our increased production and higher 401k costs due to an increase in our match to employees.

If you exclude the non-core expenses, the second quarter operating expenses of North Star and the operating expenses associated with the Premium Finance acquisition, which were $661,000 for the second quarter of 2021.

Then compared to the second quarter of 2020, our total non-interest expense increased 13%, and was driven by higher salaries and employee benefit costs, which grew around $3 million.

The impact of the deferred costs associated with the PPP originations in 2020 accounted for much of this increase, while we also had higher sales and incentive compensation from increased production, higher 401k costs due to increase in our match to employees and higher medical insurance costs.

In addition, our data processing and software cost grew $518,000 compared to the second quarter of 2020.

On a year-to-date basis, if you exclude the non-core expenses, the second quarter operating expenses of North Star and the $1.6 million of operating expenses associated with the Premium Finance acquisition for the first six months of 2021, then our total non-interest expense increased 7%, mostly due to higher salaries and employee benefit costs.

We had the same increases in line items as I mentioned, compared to the second quarter of 2020, which were partially offset by lower stock-based compensation expense. We also recognized higher data processing and software costs and FDIC insurance expense.

The increase in our FDIC insurance expense was due to the remaining credits that had been recognized during early 2020, along with higher premiums related to our PPP loans impacting our calculations. In summary, we controlled our expenses while recognizing some necessary costs to grow our business in recent quarters.

Moving to our balance sheet, our investment portfolio was relatively flat compared to the linked quarter-end, and comprised 21% of total assets, which is slightly higher than the 18% to 20% that we typically target. Our core deposits, which exclude CD balances declined 1% from linked quarter-end.

Most of the outflows of deposits were from money market accounts, while we also saw some reductions in non-interest bearing checking, as well as the seasonal reduction in governmental deposits, which usually carry a higher balance in the first quarter.

Our demand deposits continued to comprise 45% of total deposits at June 30, 2021, consistent with linked quarter. We strive to have strong capital levels and continue to do so at the end of June. While our ratios did decline somewhat, they were impacted by the North Star acquisition, for which we did not issue any equity.

However, we anticipate that our capital ratios will improve upon the anticipated completion of the merger with Premier in the third quarter, and once we have moved past the acquisition related costs. We will continue to look for opportunities to effectively deploy our capital, while maintaining well-capitalized metrics.

I will turn the call back to, Chuck, for his final comments..

Thank you, Katie. We are utilizing our skilled acquisition teams as we work to integrate the data, associates and clients of Premier. We have had great interactions with the teams from Premier, and will work towards a smooth transition for everyone.

We are optimistic about our future in the new market area, and the opportunities we have to positively impact the new communities and the clients we will serve. We are pleased with the recent addition of our leasing division, and the expert team from North Star.

They have blended into our organization very quickly and are picking up speed, which we expect to continue through the remainder of the year.

Turning back to our results for the quarter, some of the highlights were, improved net interest income and margin compared to the linked quarter, positive operating leverage compared to the linked quarter, adjusted for the noise of the quarter we believe our expenses were well-controlled, we had loan growth of 4% annualized compared to the linked quarter-end, excluding PPP loans and the acquired lease balances, our credit quality continued to be stable compared to prior quarters, we had increased households compared to both March, 2021 and year-end, our return on average tangible equity was 14.6% compared to 2.5% for the first-half of 2020, and, our return on average assets was 1.02% for the first six months of 2021, compared to 17 basis points for the same period in 2020.

I would like to share a couple of thoughts related to the remainder of 2021. We anticipate our third and fourth quarter of core non-interest expenses, which excludes the Premier acquisitions will range between $37 million and $38 million a quarter.

We expect to produce loan growth of between 3% and 5% annualized for the full year, excluding PPP loans and acquired loans and leases. This will continue to be dependent on line of credit utilization rates remaining stable and any unexpected pay down activity.

Although, we had anticipated a higher gross charge-off rate going forward with the added leasing division, we believe that charge-offs on this line of business might come in slightly lower than we had expected originally.

While, it is early to talk about 2022, the current street consensus has our earnings per share projected at $2.99, which excludes Piper Sandler, as their estimates do not incorporate our Premier acquisition. We are highly confident that we will beat $2.99. This concludes our commentary, and we will open the call for questions.

Once again, this is Chuck Sulerzyski, and joining me for the Q&A session is Katie Bailey, our Chief Financial Officer. I will now turn the call back into the hands of our call facilitator. Thank you..

We will now begin our question-and-answer session. [Operator Instructions] Our first question today will come from Scott Siefers with Piper Sandler..

Good morning, guys. Thanks for taking the questions..

Hey, Scott..

So, let's see. So, I guess, just on the loan growth dynamics, I think, Chuck, when you were talking about utilization in some of your prepared remarks, you gave them on sort of the dollar basis.

Are you guys comfortable saying sort of where your commercial utilization rates are on a percentage basis? And sort of what do you think a typical level is?.

Yeah. Historically, we ran between 52% and 55%. At the end of the quarter, we were at 33.5%. So, for eternity, we we've been in the low 50% range. So it's about a 20% reduction..

Yeah. Okay. Perfect. Thank you. And then, Katie maybe just some thoughts on the margin, lot of moving parts going on these days. But if we sort of take the reported level of 3.45% now and sort of understanding you've got most recently the benefit from NSL, but then you've got kind of elevated PPP fees in there.

What's your best guess for where that level ends up going from here?.

Yeah. So you touched on it, and we've quoted it in the script, the 3.45% does include about 15 basis points of benefit for PPP loans. So to the extent, that continues to run off, that will continue to decline, and that declined from 28 basis points in the first quarter, so almost 30 basis points were lost because of less forgiveness.

And then there is some accretion in there, and that picked up because of the NSL acquisition, but it was only 7 basis points.

So, I think if you take out the 50 basis points you are at 3.30%, and again, that has the impact of the cash the excess liquidity we still have, which we continue to maintain some of that we are seeing it reduced a little bit, so we might get some benefit. But the 3.30% is kind of a good starting point and that we think will hover around there..

Okay, perfect. Thank you.

And then, that I guess, presumes some ongoing level of purchase accounting benefits that will lead the way sort of slowly over time I imagined, like over a period of a few years, is that right?.

That's right..

Okay, perfect. All right. And then, I guess, just final question. Maybe thoughts on drawing down the reserve from here, if we exclude the day one adjustment from NSL, you had basically no provision. I think I calculate like a $200,000 recapture, so call effectively zero.

Maybe thoughts on drawing down the reserve further from here, just given what you're seeing in the credit environment?.

Remember, next quarter, we're going to have the closing and have to put up the reserve for Premier. But, I would say that, that some coming back our way minimal amounts..

Okay. All right. Perfect. Thank you, guys..

Thank you..

Our next question comes from Steve Moss with B. Riley..

Good morning..

Hey, Steve..

Maybe just following up on the reserve here, Chuck, just in terms of the drivers, economy seems to be improving. And, I guess, I was thinking it'd probably be a bit more in terms of the reserve really I hear you on the day one there.

But, in terms of what would it take to ex-Premier to get back towards the pre call it, what was it 90 basis points or so, before CECL was implemented?.

Improvement in the forecast for GDP and unemployment, primarily in Ohio are the drivers to our model. And as they continue to improve, we will see more money come back..

Okay.

Do you think it could be a pretty meaningful offset to the Premier day one provision?.

Yes..

Okay. That's helpful. And then just in terms of the loan pipeline, hear you on good production, but lack of utilization.

Just where are you seeing opportunities for growth on the commercial side? And it does look like your consumer business is doing well as well, just kind of what are the drivers here going forward, if you will?.

Well, first off, we had great production in the first-half of the year in commercial. But, I would say that the customers are awash with liquidity and we continue to see people use cash as opposed to borrow. We're optimistic, we're going to see good growth in our Premium Finance business. We're going to see great growth in the leasing business.

And we continue, as I said, had record production in the first-half of the year. So consumer businesses have been very solid. Automobile business has really had standout year. And, as long as there's a cause to be sold, they're going to be bought, and it’s obviously huge supply chain issues.

So, I think under normal circumstances, we would be seeing double digit loan growth with our current production, just the payoffs and the excess liquidity..

Okay, that's helpful. And then just one more question just on mortgage here.

I realized gain on sale margins came down here, just kind of curious as to the drivers for you guys, and how to think about that line of business going forward?.

With selling less, we're basically keeping more than what we desire on our books..

Okay, great. Thank you very much..

Thank you..

Thank you..

[Operator Instructions] Our next question comes from Russell Gunther with D.A. Davidson..

Hey, good morning, guys..

Good morning..

Hey, Chuck, I'm doing great. Thanks, guys.

A follow-up on the loan growth guidance, the 3% to 5% for the year ex-PPP and acquired loans and leases, just to clarify, does that assume that the utilization rate stays at these lower levels and doesn't return to something close to historical?.

Correct..

Okay, very good. And then, on the efficiency ratio target, I appreciate the color you gave us there.

Could you walk us through the main drivers of how you achieve that low 60? Is it largely revenue growth? Are there anticipated expense catalysts beyond the model cost saves from the deal, just some of the puts in takes there would be helpful?.

A big piece of that is the Premier acquisition. And at closing, we had 30% of the expenses coming out. And we continue to make investments in our infrastructure here. But, we think we can have expense growth around 3%, excluding the acquisition. So those are the key pieces..

Okay. And then maybe just a follow-up to the revenue side of that, and the margin discussion earlier. So, I heard you 3.30% is a good starting point near-term as the PPP benefit declines.

But, how do we think about the timing of the cash balance reduction that would kind of get you close back up to that 3.45%? And given the margin accretion from the leasing portfolio, if the normalized NIM something closer to 3.45%? Or, do you expect the 3.30% you are talking about to sustain for an extended period of time?.

Yeah. Alright, that's what we continue to scratch our heads about is the liquidity and how long will the deposits and the cash stay with us. We quoted it in the script, I think we said that the higher level of cash added 12 to 13 basis points, or was a drag on margin of 12 to 13 basis points for the quarter.

So, if you add that back, if we get back to more standard cash levels, you would get back to that 3.45% in a reasonable timeframe. It's just what is the timeframe, and unfortunately, I don't know. I think we are starting to see some of it leave not at a drastic rate or anything.

So, I think it'll be here through -- a portion of it will be here through the year at least and then the next year..

We may have some opportunity on that 3.30% to the extent that the Premium Finance and the leasing businesses grow faster than we expect..

Okay, understood. Well, thank you guys for taking my questions. That's it for me. Thank you..

Thank you..

Our next question comes from Michael Perito with KBW..

Hey, Chuck, Katie, good morning..

Good morning..

I just had a couple follow-up questions maybe to ask Russell's question a little bit differently.

So, I guess if we kind of take away Premier for a second, I mean, it sounds like the overall balance sheet, though, I mean, you guys would expect it to remain kind of in this $5 billion, $5.1 billion type range near-term, given everything you're seeing today. I mean, what the mix is below that obviously can shift.

But, is that generally a fair assumption as you see it, for the time being?.

Yes..

Okay. And then on the fee side, I was curious your trusted investment unit had another nice quarter. I know, there's some seasonality in the insurance, but you've generally seen some pretty solid growth there.

Any kind of specific thoughts on the outlook for those two line items, halfway through the year here?.

The investment business has been doing great and has been doing great for a long time. And as long as we have fewer days, like yesterday and more days like today, it'll continue to do great. In the insurance business, prices are hardening, and that always is to the benefit of folks that are in the agency business. So, we like how that looks right now.

So we're very, very bullish on both of them. And just as a reminder, in the investment business, we have a retirement plan business, which is a little unusual to say the bank, and particularly unusual to say the bank our size. And that business well, the smallest of our three investment businesses, is continues to grow very fast..

Okay. And, I guess, just lastly for me, I mean, the expense guide near-term is pretty clear. But I was wondering if you can maybe talk about the dynamics below that a little bit more as we start to think out towards next year. I'm sure you guys are investing in your business as we go.

You have us the overall kind of expense range for the next two quarters.

I mean, is it fair to think that electronic banking, data processing costs, software costs, should continue to grow? And what are the offsets to some of those investments and growth? And, I guess, how long do you think you guys can continue to maintain the expense kind of range, while still investing at the rate you're investing?.

I think over time, we will become more efficient, even investing at the rate that we're investing. I think that our data processing costs next year will be relatively on a percentage of -- if you measure the cost against the size of the institution, I think it will become more efficient. So yeah, I'm pretty optimistic on all of that..

Yeah, I would just echo that, I don't think we have deferred maintenance on whether it's buildings or technology. We've been investing along the way. And so, there is no major projects in the next two to six quarters that we have to undertake..

Okay, helpful. Thank you, guys. I appreciate you taking my questions..

Thank you..

Thank you..

At this time, there are no further questions. I'd like to turn the call back over to Mr. Sulerzyski, for any closing remarks..

Well, we thank you for being with us today. If you remember, nothing else about our call, please remember that we're highly confident that we will beat $2.99 next year. Thank you again for joining. And remember that our earnings release and a webcast of this call will be archived at peoplesbancorp.com on to the Investor Relations section.

I wish everyone good health, and have a great day..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..