Good morning and welcome to Peoples Bancorp Inc. Conference Call. My name is Chuck, and I will be your conference facilitator. Today's call will cover a discussion of the results of operations for the quarter ended 03/31/2026. 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. If you would like to ask a question during this time, simply press star then 1 on your telephone keypad, and questions will be taken in the order they are received. If you would like to withdraw your question, please press star then 2. This call is also being recorded. If you object to the recording, please disconnect at this time. Please be advised that the commentary in this call will contain projections and other forward-looking statements regarding Peoples Bancorp Inc.’s future financial performance and 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 the Peoples Bancorp Inc. Securities and Exchange Commission filings. Management believes that the forward-looking statements made during this call are based on reasonable assumptions within the bounds of their knowledge of Peoples Bancorp Inc.’s business and operations. However, it is possible actual results may differ materially from these forward-looking statements. Peoples Bancorp Inc. disclaims any responsibility to update these forward-looking statements after this call, except as may be required by applicable legal requirements. Peoples Bancorp Inc.’s first quarter 2026 earnings release and earnings conference call presentation were issued this morning and are available at peoplesbancorp.com under Investor Relations. A reconciliation of the non-generally accepted accounting principles, or 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 15 to 20 minutes of prepared commentary, followed by a question and answer period, which I will facilitate. An archived webcast of this call will be available at peoplesbank.com in the Investor Relations section for one year. Participants in this call today are Mr. Tyler Wilcox, President and Chief Executive Officer, along with Ms. Katie Bailey, Chief Financial Officer and Treasurer, and each will be available for questions following opening statements. Mr. Tyler Wilcox, you may begin the conference.

Thank you, Chuck. Good morning, everyone, and thank you for joining our call today. Earlier this morning, we announced that we entered into an agreement to merge with Citizens National Corporation. Citizens has approximately $700 million in assets and operates 12 branches in eight counties in Kentucky. We expect to close the merger in 2026. We are excited about this partnership which expands our presence in Kentucky markets that both overlap and complement our existing footprint. Citizens is a deposit-rich franchise that shares a similar philosophy in serving the needs of clients and communities. We look forward to welcoming their shareholders, employees, and clients to become part of the Peoples Bancorp Inc. team. We believe this merger will improve shareholder value and benefit associates of both Citizens and Peoples Bancorp Inc., while offering clients of Citizens more diversified products. I will go into more details on the planned merger later in the call, and you can refer to our accompanying slides for additional details. Now I would like to highlight our results issued this morning. We reported diluted earnings per share of $0.81 for the first quarter. Our results included several improvements compared to the linked quarter. For the first quarter, our net interest margin expanded 4 basis points driven by lower deposit costs. We had a $400 thousand increase in fee-based income. We had loan growth of $13 million when we had originally anticipated loan growth to be flat due to expected paydowns during the first quarter. Our nonperforming loans and delinquency levels improved, while we also experienced reductions in our criticized and classified loan balances. Our noninterest-bearing deposits grew over $41 million, or 3%. Our loan-to-deposit ratio improved to 88.5%. Our tangible equity to tangible assets ratio increased 12 basis points to 8.91%. Our book value per share grew 1% on an annualized basis compared to year-end, while our tangible book value per share improved 3% on an annualized basis. All of our regulatory capital ratios improved, and our diluted EPS of $0.81 exceeded consensus analyst estimates of $0.80. As we have noted previously, we typically have annual first quarter one-time expenses that occur which include stock-based compensation expense related to the annual forfeiture rate true-up on stock vested during the first quarter along with upfront expense on stock grants to retirement-eligible employees, which combined for a total of $764 thousand, negatively impacting diluted EPS by $0.02 per share, and employer health savings account contributions of $689 thousand, which reduced diluted EPS by $0.02 per share. For the first quarter, our provision for credit losses totaled $9.7 million, increasing our allowance for credit losses as a percent of total loans to 1.16% from 1.12% at year-end. Our provision for credit losses for the quarter was driven by a deterioration in macroeconomic conditions used within our models and is not indicative of issues we are seeing within our portfolio. However, we are cautious and disciplined within our underwriting and portfolio management as we assess the impact of the Iranian conflict on oil prices and inflationary pressure on prospects and clients. Our annualized quarterly net charge-off rate improved to 40 basis points compared to 44 basis points for the linked quarter. Our small-ticket lease charge-offs totaled $3.8 million for the first quarter and contributed 23 basis points of our annualized quarterly net charge-off rate. While we experienced a reduction in our net charge-offs for the first quarter from a dollar perspective, we do anticipate our second quarter net charge-offs to be consistent with recent quarters. We continue to project that net charge-offs will come down in 2026 compared to recent quarterly levels. We continue to reduce the size of our high balance accounts in our small-ticket leasing business, which totaled around $9 million at March 31, down from nearly $13 million at year-end. For more information on our small-ticket leasing business-related net charge-offs, please refer to our accompanying slides. Our nonperforming loans declined over $3 million compared to the linked quarter, mostly due to reductions in several categories of loans 90-plus days past due and accruing. We also had improvements in our criticized loans, which were down $12 million compared to the linked quarter-end, and our classified loans were down $5 million. At March 31, our criticized loan balance as a percent of total loans improved to 3.31%, while our classified loans as a percent of total loans declined to 2.1%. Our delinquency levels improved, and at March 31, 98.9% of our loan portfolio was considered current compared to 98.6% at year-end. Moving on to loan balances, we generated loan growth of $13 million. We had significant commercial and industrial loan growth of over $111 million, which was partially offset by reductions in construction and commercial real estate loans of about $55 million combined. We also had declines in premium finance and leases of $24 million and $15 million, respectively. We experienced some of the payoffs we had anticipated for the first quarter; however, some of those migrated to the second quarter. I will now turn the call over to Katie Bailey for a discussion of our financial performance.

Thanks, Tyler. Our net interest income declined $629 thousand compared to the linked quarter, while our net interest margin expanded 4 basis points. Most of the reduction in net interest income was driven by declines in accretion income, which totaled $1.3 million compared to $1.8 million for the fourth quarter, contributing 6 basis points and 8 basis points, respectively. We had two fewer days in the first quarter than in the fourth quarter, which also contributed to the decline in net interest income. The improvement in our net interest margin was partially driven by a 12 basis point reduction in our core deposit costs, which exclude brokered CDs. We also had a decrease in our brokered CD position, which helped to increase our net interest margin. From a total balance sheet perspective, we have worked to minimize our interest rate risk exposure and are in a relatively neutral interest rate risk position. As it relates to our fee-based income, we had growth of $400 thousand compared to the linked quarter. We recognized $1.2 million related to our annual performance-based insurance commissions, which we typically receive in the first quarter of each year. This income was partially offset by lower electronic banking income and deposit account service charges, which are seasonally higher in the fourth quarter of each year. Our noninterest expenses were up $341 thousand compared to the linked quarter. As Tyler mentioned, we typically recognize additional employee-related expense during the first quarter of each year, which drove the increase compared to the fourth quarter. If you exclude our additional one-time expenses from the first quarter, our noninterest expense is actually down compared to the fourth quarter. Our reported efficiency ratio was 58.6% for the first quarter and 57.8% for the linked quarter. The increase in our ratio was driven by the one-time expenses from the first quarter, coupled with lower accretion income. Looking at our balance sheet at quarter-end, our loan-to-deposit ratio improved to 88.5% compared to 88.8% at year-end as our influx of deposits outpaced our loan growth for the first quarter. Our investment portfolio as a percent of total assets declined slightly to 20.3% at March 31, compared to 20.5% at year-end. Our core deposit balances, which exclude brokered CDs, increased $192 million compared to the linked quarter-end. This improvement was due to $102 million of governmental deposit growth coupled with an increase of $41 million in noninterest-bearing deposits. This growth was partially offset by $154 million of declines in our brokered CDs as we reduced our position, opting for lower short-term borrowing rates as a funding source. As a note, our governmental deposits are seasonally higher in the first quarter of each year, so we anticipate seeing some of that money flow out in the second quarter. Our demand deposits as a percent of total deposits were flat at 35% for both quarter-end and year-end. Our noninterest-bearing deposits to total deposits grew to 21% at March 31, compared to 20% at year-end. Moving on to our capital position. All of our regulatory capital ratios improved compared to the linked quarter-end. Our tangible equity to tangible assets ratio improved 12 basis points to 8.9% at quarter-end compared to 8.8% at year-end. Our book value per share grew to $33.85, while our tangible book value per share improved to $22.95, or 3% annualized. We increased our quarterly dividend rate for the eleventh consecutive year to $0.42 per share. This results in an annualized dividend yield of 4.84%. Finally, I will turn the call over to Tyler for his closing comments.

Thank you, Katie. Looking to our results for the full year of 2026, we expect the following, which excludes the impact of non-core expenses and the proposed merger. We expect to achieve positive operating leverage for 2026 compared to 2025. We anticipate our net interest margin will be between 44.2% for the full year of 2026, which includes one 25 basis point rate cut. Each incremental 25 basis point reduction in rates from the Federal Reserve is expected to result in a 3 to 4 basis point decline in our net interest margin for the full year, while similar increases have a 3 to 4 basis point improvement in our net interest margin. We believe our quarterly fee-based income will range between $28 million and $30 million. We expect quarterly total noninterest expense to be between $73 million and $75 million for the remaining quarterly periods of 2026. We believe our loan growth will come in towards the low end of our guided range of 3% to 5% due to the movement of paydowns from late 2025 to 2026, coupled with the macro environment changes that occurred in the first quarter. We anticipate a slight reduction in our net charge-offs for 2026 compared to 2025, which we expect to positively impact provision for credit losses, excluding any changes in the economic forecast. As far as our proposed merger, we find the Citizens merger attractive for many reasons. While we have talked more frequently about large deals to cross 10 billion, we have consistently sought opportunities for depth and efficiency in our existing market. This opportunity with Citizens meets all of those other criteria while retaining the strategic flexibility to organically stay under 10 billion as well as pursue additional merger and acquisition opportunities. Citizens has high-quality, low-cost deposits and an attractively low loan-to-deposit ratio. This merger will give us increased efficiency in markets where we already have a meaningful presence. Our diversified products and services will allow us to expand offerings to the Citizens client to engage them in a more robust overall financial experience, while giving our existing clients more access to convenient locations. We look forward to welcoming the Citizens associates into our organization and allowing them to continue to deliver high-quality service to their clients while giving their clients the opportunity to work with our other lines of business in fulfilling their needs. This transaction is valued at approximately $77 million, with shareholders of Citizens receiving 2.1 shares of Peoples Bancorp Inc. stock and $8 in cash for each share of Citizens stock. The merger is priced attractively for our shareholders with an expected tangible book value earn-back period of less than one year. As far as assumptions, we anticipate realizing 40% cost savings associated with this transaction, which should improve our combined efficiency ratio. We expect the transaction to be accretive to our 2027 EPS by $0.20. We also anticipate that our regulatory capital ratios will improve at the close of the merger based on pro forma results. We have included additional details regarding the proposed merger within our accompanying slides. The Citizens merger transaction is subject to the satisfaction of customary closing conditions, including regulatory and shareholder approvals. Last quarter, we provided clarity as to our anticipated crossing of 10 billion in assets. We said that absent actions taken, we would cross that mark in 2027. This remains the case, and we also continue to retain some flexibility to remain under 10 billion for a period of time using the levers we described last quarter, including flexibility in our investment portfolio, beyond proposed actions taken related to the merger. Going forward, we will continue to consider all viable paths. These include a larger bank acquisition in the 2 to 5 billion asset range as our primary priority. We additionally see a path where we do more small deals given the larger number of available partners at that level and the potential for efficiencies as seen in our recently announced deal. Additionally, we believe the current regulatory environment is generally favorable to bank mergers and acquisitions, giving opportunities for multiple deals which our team is capable of pursuing and executing. Finally, we will weigh the trade-offs of crossing 10 billion organically in the future and the negative impact of the Durbin Amendment. Ultimately, we acknowledge some uncertainty is inherent in our share price and has been noted by us, our analysts, and our shareholders. Crossing 10 billion in any of these described manners could serve to provide strategic clarity. We continue to strive to increase shareholder value by producing stable and reliable financial results, being mindful with our strategic and organic growth, while giving our clients a robust financial offering. We will always work to make decisions that are in the best interest of our shareholders, associates, and clients. This concludes our commentary, and we will open the call for questions. Once again, this is Tyler Wilcox, 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.

Thank you. We will now open the call for questions. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Our first question for today will come from Jeff Rulis with D.A. Davidson. Please go ahead.

Good morning. This is Ryan Payne on for Jeff Rulis. We could start with how the deal came to be and overall your relationship with the bank.

Yeah. Thanks. Appreciate the question. So in 2018, we did the First Commonwealth acquisition, which was headquartered very close in proximity geographically. That represented our first of multiple expansions into Kentucky. And even at that time, we looked around those markets, saw the attractive cost of deposits, saw the kind of like-minded associates and communities where we can make a difference, and, frankly, have had an interest in this franchise ever since then. So we have been watching and waiting for some number of years. They have been a good performing bank and have been committed to independence, and given their recent decision to proceed with exploring a sale, we found that I think we were great partners for each other. And it came together nicely because of that fit, because of that overlap, and because of that long-term interest that we had.

Great. Appreciate the NIM guide for the full year. But looking ahead with the transaction, where could we see the margin shaking out post the planned security sales and borrowing paydowns?

Yeah. I mean, I think there is obviously upward trajectory to that number. I think 2026 is going to be impacted, but not until the later part of the year. So I think when we look at 2027 on a more full-year basis, I think there is a 15 to 20 basis point opportunity over our standalone guide on the margin side.

Got it. Last one for me. So with the 40% cost savings, what is built into that number? Is that more so back office and systems? And do you have estimates on timing of those cost saves?

Yeah. I will address the timing first. We expect about 50% of that cost savings to be effectuated within 2026 and the remainder within the beginning of 2027. As to the mix of that, it is a combination of everything. There are contracts, there are duplicate locations, there is staffing, and so forth. So it is the usual mix of efficiencies gained from the two organizations combining.

The next question will come from Tim Switzer with KBW. Please go ahead.

Hey, good morning. Thanks for taking my question. Hey, congrats on the deal. One quick one, and sorry if you already said this, but any more color you can provide on the timing of the deal close? Are we thinking end of Q3, beginning of Q4? Trying to get a better idea for the model.

Probably right near the ending of Q3 slash beginning of Q4 for closing. We expect conversion in the second quarter sometime of next year.

Got it. Okay. And does the Citizens acquisition preclude you at all from announcing another merger before closing? Or do you think you still have the capability to do that if the right opportunity arises?

Yeah. If given the right opportunity, we are ready, willing, and able and, you know, obviously continue long-term in many conversations. So should any of those come to fruition, we would be ready to announce that and execute on it. So this does not put us on the sidelines in any way, shape, or form.

The next question will come from Brendan Nosal with Hovde. Please go ahead.

Hey. Good morning, folks. Hope you are doing well. If I look at slide 22, just the actions that you plan around the 10 billion threshold, are those contemplated in the deal accretion of 5.6%? Or would that be further accretive just given where securities roll off versus where the borrowing costs are?

The transaction, the selling of the securities, is in the metrics that we noted related to the deal. But any further action outside of selling part of their securities portfolio and part of ours is not contemplated in the deal.

Sorry. Say that again, Katie. What is included in the deal accretion you provided and what is not?

Included is the selling of about 303.1 billion of our securities and their securities portfolio. So the 560 million noted on slide 22 is contemplated, or is included, in the deal math that we articulated.

Okay. Thank you. That is helpful. Maybe turning to expenses. Even with the seasonally higher items that tend to hit in the first quarter, I thought expenses were really well contained, but it looks like you did increase the expected run rate the final three quarters of the year. Is this just a timing difference for when you realize certain things? Or is there maybe something else worth pointing out?

The one thing I would point out is it is mostly impacted by operating lease expense, which has corresponding revenue associated with it from our Vantage leasing operations. And so it is positive to pretax earnings, but it does increase the expense base, and that is what is driving that increase in the guide. And there is revenue on the other side, like I said, but that revenue side stayed within our previous guide.

Got it. Okay. And let me sneak one more in here. Just on the loan mark for Citizens, I mean, 4% loan mark feels somewhat heavy for the current credit environment. Was there anything particular that drove the mark to that level, whether it is a specific portfolio or something you saw in the diligence process that might not be super obvious to those of us on the outside?

Yeah. I would agree with you that especially their reported metrics, which we found to be validated, had very, very few charge-offs. I would say, one, it is a very small denominator, so one or two loans can significantly move that a little bit. As we did our analysis, they had one or two very small emerging situations that we wanted to take a cautious approach to and ensure that we are fully reserved for. So there is no systematic issue. We are very satisfied with the credit. But that one or two relationships of reasonable size for them is what drove that mark.

Okay. That is helpful color, Tyler. Thanks for taking the questions.

Yeah. Thank you.

The next question will come from Adam Kroll with Piper Sandler. Please go ahead.

Hi. I am on for Nathan Race. Good morning, and thanks for taking my questions. Maybe a question for Katie. You had some really nice reductions in funding costs during the quarter. Are you still seeing opportunities to reduce deposit costs even with the Fed on hold?

Yeah. We continually evaluate. I think we meet at least twice a month, and more regularly offline, to evaluate pricing and compare our pricing competitively as well as the balances that we are seeing in our portfolio. So we have continued to remain strategic and opportunistic as it relates to deposit costs, and most notably, the retail CD product.

Got it. Maybe switching to the loan growth guide for the year, just given some of the commentary in the deck on the macro environment changes, I was just wondering if you could provide some color if you are seeing that come through in the pipeline or hearing some of your borrowers pausing on projects. Is it more just being conservative?

I will start by saying it is generally more being conservative. And when we look at the pressures on our net loan growth, it is really about the payoff activity. For context, we expect a little over $400 million in payoffs for the full year, and the vast majority, about $380 million of that, we expect in the first half, just to give you an idea of where we are coming from there. So our commentary about the macro environment: we still continue to see really robust, as shows in our results, C&I loan demand. Maybe tinge down in the CRE project funding and sourcing, but still experienced growth there. And then, finally, I would say maybe on the consumer side, we are seeing a little bit more slowdown, particularly in our indirect and residential, as interest rates remain high and affordability—for example, in the auto industry, I think we have all seen the headlines around the average auto price hitting $50 thousand. And so I think rising fuel costs and some of those things are impacting the consumer demand a little bit more than the commercial demand.

Got it. Really appreciate the color, Tyler. Maybe just last one on credit. On the North Star portfolio specifically, I was wondering if you had the charge-off contribution specifically from the high balance accounts during the quarter?

The high balance accounts as a percentage of the charge-offs—this quarter they were about $1.15 million of the $3.8 million of the charge-offs within that business, so about 30%.

The next question will come from Daniel Tamayo with Raymond James. Please go ahead.

Thank you. Good morning, Tyler. Good morning, Katie. I am going to dig a little bit more into the size of the deal. I know you made comments in the prepared remarks and then answered a question on it. But you have obviously been looking for a deal for a while, and then this one comes along and it is significantly smaller, I think, than what we were potentially looking for, which I do not think is a bad thing. Is it fair to say—and you said it—but is it fair to say that the 2 to 5 billion deal that checks all the boxes is much harder to find maybe than you were anticipating, and the more likely path, or at least the easier-to-see path over the next few years, is you do a number of these smaller deals to find your way over 10 billion?

Yeah. I mean, just playing the odds, Danny. One, I would say the old saying, the neighbor's farm only goes on sale once a generation. Right? And so this is a deal that, because it became available now, we felt like we had to be opportunistic and seize on it. But if you are just playing the numbers, there are literally hundreds of banks that fit within the kind of billion-dollar range, and there is a much smaller number in the larger range. So strategically and execution-wise, it is, for all the reasons we have said all along, much more preferable to grab that 3 or 4 billion bank. But there are just fewer. I would say I am still as optimistic as I have been because we continue to have conversations with banks that are in that space. Whether those materialize in two quarters or two years, I cannot say right now, but I am optimistic enough to continue to talk publicly here about that being something that we see as a viable path. But given the numbers and given the favorable regulatory environment and given our ability to execute on that, I would not say it is more likely that we will do a smaller deal, but it maybe is as likely. And we are ready, willing, and able because, again, those who have followed us for a while like you have remember the four deals in four quarters—we are not announcing that, to be very clear—but our team is capable of that. And so we see it as a viable path.

That is great. Thanks, Tyler. Anything else in the loan book or business-wise that you think you are interested in getting out of or selling from their balance sheet?

No. They have a very—you know, their balance sheet and their loan portfolio are very much in line with what you look at First Commonwealth Bank, you look at Premier. Although I would say it is maybe higher quality than some that we have looked at in the past. So there is nothing that we are going to wholesale walk away from. We will work with those clients, and we are looking forward to that. It is in, again, communities we know. There are many loans that we had at some point that they picked up and vice versa. So that is the good of being in markets that we are highly familiar with.

Okay. So the way to think about the net add from a balance sheet perspective is kind of their balance sheet that they are bringing on minus the 560 million securities—meaning that is kind of the way to think about it before any growth, obviously, and maybe some runoff. But that is a fair place to start?

Yeah. That is fair. I think their loan portfolio is about $350 million, you know, CRE and one-to-four family. And it is just very community bank. No surprises. Some c-stores, some hotels, all things we are familiar with.

And, sorry, some cleanup items here. Katie, the 15 to 20 basis points of NIM expansion that you talked about, how much of that is accretion, do you think?

A couple basis points. It is not a significant contributor to the margin impact. I think the more significant margin benefit is coming from the reduction of low-yielding securities and the paydown of higher-cost overnight wholesale funding.

Got it. Okay. I do not want to take everybody's questions. I am not sure if I am the last one or not. If I am not, let me know, and I will jump off. Otherwise, thanks.

Thank you.

The next question will come from Analyst with Stephens Inc. Please go ahead.

Hey. Good morning. Maybe just to start, what is the current Durbin-related revenue risk upon crossing 10 billion?

It is about $10 million pretax before this deal.

Okay. And is there any incremental expenses, or you have kind of already checked off that box?

No. We have our expenses baked in. We are ready to cross, and there will not be a negative dividend to that on expenses for us.

Okay. And, Katie, I think you had mentioned just kind of the remixing or the repricing of securities. Could you give us some sense for expected cash flows the rest of the year in the securities book and kind of the roll-on, roll-off dynamics within that?

On a standalone basis for our portfolio, it still remains in that $15 million to $20 million a month of cash flow that we receive.

Do you know what the yield is on those cash flows?

I would guess somewhere in the range of 3.50%.

And you are putting it back on at 100 to 150 bps better?

Sometimes. It just depends where we are with loan growth and where we are on the funding side. But yes, if we are reinvesting it, I think your number is correct, maybe upwards up to 5% depending where we are in the cycle of the market.

Do you have—think you had said it is just a couple of bps from accretion from the deal. Is that right out of the gate?

Correct.

Hi. Just a follow-up for me, maybe for Katie. I would be curious: what are new loans coming on the portfolio at, and more broadly, what are you seeing from a competition perspective, and maybe just remind us what you have in terms of fixed-rate loans repricing over the next year or so?

Sure. So the rate that is coming on, as you might imagine, varies meaningfully across all the portfolios that we have on the lending side. I would say it is somewhere between 7% and 7.25%. And then as far as fixed versus variable, it is about 50/50. I think we are slightly—maybe 55% variable and 45% fixed as we sit here today. And I cannot remember if there was another component to your question. If so, please feel free to re-ask.

We expect that ramp up to—as we have talked about, new management there—towards the end of this year, beginning of next year is when you will see that begin to make an impact.

The next question will come from Brendan Nosal with Hovde. Please go ahead.

Hey, guys. Just not to beat a dead horse on the merger assumptions, but, Katie, you said the security sales were contemplated in the 0.6% EPS accretion. Does that also include the impact of the borrowing reduction?

Yes. The whole balance sheet trade right there is included.

Okay. Perfect. And then one other for me, just on North Star. I get the work you have done on the high balance stuff. But given that two-thirds of the charge-offs from North Star are coming from outside of that particular sleeve, is there anything else you need to contemplate to get the loss content in that book where you need to, or is the high balance activity sufficient in your view?

No, there is action taken. We talk about the high balance quite a bit because it is a quantifiable portfolio that we have not originated for well over a year now, and we want to make clear that that is not going to be a recurring issue. As to the rest of it, one, the denominator has continued to shrink, and that is, as Katie just acknowledged, by design. And so the charge-off rate is a bit higher than we would like, but historically we would like to get back to that 4% to 6% charge-off rate. So as we turn that portfolio around to growth and originate what we will be seeing that is non-high balance and that is of the quality that will deliver that 4% to 6% charge-off ratio, we feel good about where the credit target is. I think we are right over the target that we want to be at, and it is just going to take a while for that rate to normalize as the portfolio begins to grow again. Some of that is non-high balance but is related to the 2022–2023 vintages. But with what we have been putting on the books and in this new credit regime over the last year, we have a high degree of confidence that we have it under control, and it is a viable business that we are pretty excited about for the reasons that Katie articulated in the future.

Okay. Fantastic. Thank you for taking the follow-ups.

Thank you.

The next question will come from Daniel Cardenas with Brean Capital. Please go ahead.

Good morning, guys. Congrats on the deal. Just absent the transaction, maybe if you could—and I apologize if I missed this; I have been jumping around here—give us some color on competitive factors on the deposit side. Are those beginning to pick up in your footprint, or are they still manageable at the moment?

Yeah. I would say it is manageable. Katie talked a little bit about our regular pricing committee where we do evaluation of our extensive geography. There are always some outlier players, often smaller banks or credit unions. But we are able to maintain where we want to be from a macro perspective. We do not—as we shared last quarter—we do not chase stupid. It is a technical banking term, but we really value our margins. So we do not price to the lowest common denominator, and we are competing largely against rational actors in the community bank and larger regional space.

Perfect. All my other questions have been asked and answered. Thank you.

Thank you.

The next question is a follow-up from Daniel Tamayo with Raymond James. Please go ahead.

Thanks, guys. Super quick one. The Durbin hit of $10 million I think you said was before the deal. I imagine it is really small, but do you have a sense for what Citizens would add to that?

It is about $1 million, Danny.

Great. Okay. Thanks. That is all I had.

Yep. Thank you.

This will conclude our question and answer session. I would like to turn the conference back over to Mr. Tyler Wilcox for any closing remarks.

Yes. I want to thank everybody for joining our call this morning. Please remember that our earnings release and a webcast of this call, and our earnings conference call presentation, will be archived at peoplesbancorp.com under the Investor Relations section. Thank you for your time, and have a great day.

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