Peoples Bancorp Inc. announced today net income of $5,268,000 for the quarter ended September 30, 2005, up 3% from $5,138,000 reported in the third quarter of 2004. Diluted earnings per share were $0.50 for the third quarter of 2005 compared to $0.48 for the third quarter of 2004, a 4% increase. Peoples' increased earnings were attributable to improved net interest income from a higher level of earning assets and stable levels of non-interest
expense. For the first nine months of 2005, net income totaled $15,259,000, or $1.44 per diluted share, versus $15,557,000, or $1.45 per diluted share, earned in the corresponding prior-year period.
"Our performance in the third quarter reflects continued growth, characterized by strong loan production while maintaining asset quality," commented Mark F. Bradley, President and CEO. "We are pleased to see positive trends in key areas, including a modest improvement in net interest income and reduction in operating expenses. Our diverse revenue streams continue to serve as a source of strength as we work through the interest rate challenges
associated with a flattening yield curve."
Net interest income grew 2% to $13,150,000 in the third quarter of 2005, from $12,891,000 a year ago, as average earning assets increased more than average interest-bearing liabilities. Compared to 2004's third quarter, average earning assets were up $48 million to $1.64 billion in the third quarter of 2005, as a result of the $100 million increase in average loan
balances, while average interest-bearing liabilities grew $33 million during the same period. Third quarter 2005 net interest margin was 3.32%, down slightly from 3.34% for the third quarter a year ago, due to competition for loans and deposits combined with the flattening interest rate yield curve. Compared to the second quarter of 2005, net interest income was up 2% while net interest margin was unchanged. Through nine months in 2005, net interest
income was $38,778,000 and net interest margin was 3.30%, compared to $39,136,000 and 3.44%, respectively, for the first nine months of 2004.
"Increased levels of earning assets from loan growth continue to bolster net interest income," said Jack Conlon, Chief Financial Officer. "However, various factors, including competition for both loans and deposits and the continued flat yield curve, have retarded improvement in net interest margin. We continue to execute strategies designed to provide some near-term benefits, while maintaining our long-term approach to managing Peoples' balance sheet."
Non-interest income totaled $7,127,000 for third quarter of 2005, compared to $7,248,000 for 2004's third quarter. This decline is largely attributable to one-time fiduciary fees earned in last year's third quarter and lower business-owned life insurance revenues, which were partially offset by higher electronic and mortgage banking revenues. On a year-to-date basis, non- interest income was up 17% through September 30, 2005, totaling $21,456,000
versus $18,318,000 through nine months of 2004. Enhanced insurance commissions, from the two insurance agency acquisitions completed in mid-2004, accounted for nearly all of this increase.
Deposit account service charges was the largest source of Peoples' non- interest revenue, totaling $2,533,000 and $7,279,000 for the three and nine months ended September 30, 2005, respectively, compared to $2,510,000 and $7,222,000 for the same periods in 2004. Third quarter 2005 insurance and investment commissions were $2,266,000 versus $2,272,000 a year ago. On a year-to-date basis, insurance and investment commissions were up 80% to $7,186,000 through September 30, 2005, from $3,999,000 a year ago, with a full year of revenues from the agency acquisitions completed in mid-2004 accounting for this improvement. In the third quarter of 2005, Peoples continued to experience strong e-banking revenues driven by ATM and debit card fees. The resulting increase in revenue of 16% from last year's third quarter and 19% on a year-to-date basis through September 30 was due to higher debit card activity and additional cards issued. Fiduciary revenues totaled $794,000 in
the third quarter of 2005, versus $988,000 in the third quarter of 2004, with the decline due to special one-time fees, totaling $210,000, earned a year ago.
In the third quarter of 2005, non-interest expense was flat compared to 2004's third quarter, totaling $12.5 million, and down 3% from $12.9 million for the second quarter of 2005. Salaries and benefits remain Peoples' largest operating expense, totaling $6.6 million and $6.7 million for the third quarters of 2005 and 2004, respectively. Compared to the second quarter of 2005, total salaries and benefits were essentially unchanged. Occupancy and
equipment costs were down 10% in the third quarter of 2005 from the prior-year quarter, largely attributable to lower depreciation expense and flood-related costs of $100,000 incurred in 2004's third quarter. Lower depreciation expense was also a key factor in the 9% reduction in occupancy and equipment costs from the second quarter of 2005. Peoples' bankcard costs have benefited from a new processing contract for its ATM and debit card operations, which
was the main factor for the 30% decline in third quarter bankcard costs and 21% decrease through nine months. Other non-interest expense in the third quarter of 2005 includes a $250,000 loss on a hedging instrument that management determined should be reclassified from accumulated comprehensive income, a component of Peoples' equity, to earnings.
"We are pleased with the modest decline in operating expense," stated Bradley. "In recent periods, we have taken steps to streamline operations in various areas, which are starting to have a positive impact on expenses, as reflected in our improved third quarter efficiency ratio. We continue to evaluate ways to improve our operating efficiency."
During the third quarter, portfolio loans increased $26.5 million, or 10% on an annualized basis, to $1.06 billion at September 30, 2005, due primarily to the $21.6 million growth in commercial and commercial real estate loans.
Consumer loan balances, excluding overdrafts, increased $2.5 million since June 30, 2005, due mostly to activity in Peoples' indirect lending business, leading to two consecutive quarters of consumer loan growth. As part of Peoples' mortgage banking activities, $140.6 million of fixed-rate real estate loans previously sold into the secondary market were being serviced at
September 30, 2005, compared to $106.4 million at December 31, 2004. Peoples also had $492,000 of fixed-rate mortgage loans held for sale at September 30, 2005, compared to $612,000 at year-end 2004.
Nonperforming loans were $5.9 million, or 0.56% of loans, at September 30, 2005, down from $7.6 million, or 0.74%, at June 30, 2005. This decrease during the quarter was due largely to the net impact of Peoples reclassifying $2 million of nonaccrual commercial loans to other real estate owned. As a result, nonperforming assets were unchanged from June 30, 2005, comprising 0.44% of total assets. Net charge-offs were $505,000 in the third quarter of
2005 compared to $492,000 a year ago and $514,000 in the second quarter of 2005. Commercial loans comprised the largest portion of third quarter 2005 net charge-offs, while net charge-offs relating to the Overdraft Privilege program comprised nearly half of third quarter 2004 net charge-offs. On a year-to-date basis, net charge-offs were down 15% through September 30, 2005, compared to the same period in 2004, due to higher recoveries.
The allowance for loan losses was $14.7 million, or 1.39% of loans, at September 30, 2005, compared to $14.8 million, or 1.44% of loans, at year-end 2004. The provision for loan losses was $485,000 in the third quarter of 2005, compared to $605,000 a year ago, and $40,000 in the second quarter of 2005. The lower provision from the year ago quarter was based on management's quarterly evaluation of loss factors and is reflective of Peoples' recent loss
experience and recoveries of previously charged-off loans during the third quarter.
"As expected, our provision for loan losses returned to more historic levels in the third quarter," commented Bradley. "Our evaluation of credit quality and risk, coupled with continued lower levels of net charge-offs, continues to reflect favorable loss trends, which should result in a similar provision in the fourth quarter."
At September 30, 2005, total deposits were $1.10 billion, up $27.5 million from $1.07 billion at year-end 2004. Interest-bearing deposits grew $21.6 million to $938.0 million, with $14.9 million attributable to additional brokered deposits. Non-interest-bearing deposits grew $5.9 million since December 31, 2004, totaling $158.9 million at September 30, 2005.
"Overall, we are pleased with the third quarter results, which reflect our disciplined approach to managing the current interest rate environment," summarized Bradley. "We believe our efforts will allow us to build long-term shareholder value through our diversified revenue base."
Peoples Bancorp Inc., a diversified financial products and services company with $1.9 billion in assets, makes available a complete line of banking, investment, insurance, and trust solutions through 49 locations and 34 ATMs in Ohio, West Virginia and Kentucky. Peoples' financial service units include Peoples Bank, Peoples Financial Advisors (a division of Peoples Bank) and Peoples Insurance Agency, Inc. Peoples' common shares are traded on the
NASDAQ National Market under the symbol "PEBO", and Peoples is a member of the Russell 3000 index of US publicly traded companies. Learn more about Peoples
at http://www.peoplesbancorp.com.

Conference Call to Discuss Earnings:
Peoples will conduct a facilitated conference call to discuss third quarter results of operations today at 11:00 a.m. eastern time, with members of Peoples' executive management participating. Analysts, media and individual investors are invited to participate in the conference call by calling (877) 407-8033. A simultaneous Webcast of the conference call audio will be available online via the Investor Relations section of Peoples' website, http://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 or 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.

Safe Harbor Statement:
This press release may contain certain forward-looking statements with respect to Peoples' financial condition, results of operations, plans, objectives, future performance and business. Except for the historical and present factual information contained in this press release, the matters discussed in this press release, and other statements identified by words such as "feel," "expect," "believe," "plan," "will," "would," "should," "could" and similar expressions are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. These forward-looking
statements are subject to risks and uncertainties that may cause actual results to differ materially. Factors that might cause such a difference include, but are not limited to: (1) competitive pressures among depository institutions which may increase significantly; (2) changes in the interest rate environment which may adversely impact interest margins; (3) prepayment speeds, loan originations and sale volumes, charge-offs and loan loss
provisions may be less favorable than expected; (4) general economic conditions may be less favorable than expected; (5) political developments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (6) legislative or regulatory changes or actions may adversely affect Peoples' business; (7) changes and trends in the securities markets; (8) a delayed or incomplete resolution of regulatory
issues that could arise; (9) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity; (10) the costs and effects of regulatory and legal developments, including the outcome of regulatory or other governmental inquiries and legal proceedings and results of regulatory examinations; (11) the integration of acquired businesses, including the insurance agencies acquired in mid-2004,
may not be successful or the integration may take longer to accomplish than expected; (12) the expected synergies from acquisitions may make it difficult to maintain relationships with clients, associates and suppliers; and (13) 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 ("SEC"). Peoples does not commit to any obligation to release
revisions to these forward-looking statements or reflect events or circumstances after the date of this release, except as required by applicable law. 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.

BANCORP INC. (Nasdaq: PEBO)
Financial Highlights (Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
(in $000's, except per
share data)
PER SHARE DATA
Net income per share:
Basic $0.50 $0.49 $1.46 $1.47
Diluted $0.50 $0.48 $1.44 $1.45
Cash dividends declared
per share $0.20 $0.18 $0.58 $0.54
Book value per share $17.21 $16.61 $17.21 $16.61
Tangible book value per
share (a) $10.54 $10.41 $10.54 $10.41
Closing stock price at
end of period $27.63 $26.32 $27.63 $26.32
Dividend payout as a
percentage of net income 40.02% 36.75% 39.89% 36.80%
Actual shares outstanding
(net of treasury shares) 10,487,752 10,426,380 10,487,752 10,426,380
Weighted average shares
outstanding:
Basic 10,451,578 10,524,304 10,425,704 10,562,547
Diluted 10,591,470 10,669,798 10,563,753 10,748,064

PERFORMANCE RATIOS (b)
Return on average equity 11.59% 11.95% 11.50% 12.10%
Return on average assets 1.13% 1.15% 1.12% 1.19%
Non-interest leverage
ratio (c) 60.02% 60.86% 59.40% 55.20%
Efficiency ratio (d) 57.37% 57.97% 58.78% 56.10%
Net interest margin
(fully tax equivalent) 3.32% 3.34% 3.30% 3.44%
Net loan chargeoffs as a
percentage of average loans 0.19% 0.21% 0.20% 0.26%

PROVISION FOR LOAN LOSSES
Provision for Overdraft
Privilege losses $175 $270 $387 $680
Provision for other loan
losses $310 $335 $1,079 $1,335
Total provision for loan
losses $485 $605 $1,466 $2,015

NET CHARGE-OFFS
Gross charge-offs $918 $712 $3,090 $2,921
Recoveries $413 $220 $1,572 $1,137
Net charge-offs $505 $492 $1,518 $1,784

Commercial $203 $42 $447 $416
Overdrafts 195 243 439 589
Consumer 60 106 166 349
Real estate 49 106 490 309
Credit card (2) (5) (24) 121
Total net charge-offs $505 $492 $1,518 $1,784

(a) Excludes the balance sheet impact of intangible assets acquired
through the application of purchase accounting for acquisitions.
(b) Ratios are presented on an annualized basis.
(c) Non-interest income (less securities and asset disposal gains/losses)
as a percentage of non-interest expense (less intangible
amortization).
(d) Non-interest expense (less intangible amortization) as a percentage
of fully tax equivalent net interest income plus non-interest income
(less securities and asset disposal gains/losses).

PEOPLES BANCORP INC. CONSOLIDATED AVERAGE BALANCES

Three Months Ended Nine Months Ended
Sept. 30, June 30, Sept. 30, Sept. 30,
Sept. 30,
(in $000's) 2005 2005 2004 2005 2004
Average gross
loans $1,044,668 $1,024,795 $944,782 $1,031,172 $926,016
Average investment
securities 606,497 597,625 651,120 601,222 647,180
Average earning
assets 1,639,189 1,610,024 1,591,511 1,620,177 1,572,405
Average intangible
assets 70,215 70,069 64,981 70,298 57,134
Average total
assets 1,841,775 1,810,777 1,783,313 1,820,601 1,748,799
Average non-
interest-bearing
deposits 158,028 158,774 146,478 157,473 141,647
Average interest-
bearing deposits:
Savings 140,133 148,284 172,686 147,535 174,184
Interest-bearing
demand deposits 308,783 302,401 258,608 296,942 259,711
Time deposits 490,212 495,884 450,957 494,008 454,165
Total average
interest-
bearing
deposits 939,128 946,569 882,251 938,485 888,060
Average short-term
borrowings 148,141 101,387 99,502 114,030 94,042
Average long-term
borrowings 398,621 411,557 471,260 416,917 442,610
Average stockholders'
equity $180,381 $176,587 $171,021 $177,476 $171,809

PEOPLES BANCORP INC. CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended Nine Months Ended
September 30, September 30,
(in $000's) 2005 2004 2005 2004
Interest income $24,355 $21,850 $70,395 $64,581
Interest expense 11,205 8,959 31,617 25,445
Net interest income 13,150 12,891 38,778 39,136
Provision for loan losses 485 605 1,466 2,015
Net interest income after
provision for loan losses 12,665 12,286 37,312 37,121
Net (loss) gain on securities
transactions - (7) 236 30
Net (loss) gain on asset
disposals (9) (25) 112 22
Non-interest income:
Service charges on deposits 2,533 2,510 7,279 7,222
Insurance and investment
commissions 2,266 2,272 7,186 3,999
Fiduciary revenues 794 988 2,466 2,574
Electronic banking revenues 706 608 2,087 1,754
Business owned life insurance 423 494 1,314 1,416
Mortgage banking income 275 227 656 709
Other non-interest income 130 149 468 644
Total non-interest income 7,127 7,248 21,456 18,318
Non-interest expense:
Salaries and benefits 6,608 6,688 19,952 17,896
Occupancy and equipment 1,215 1,350 3,842 3,860
Amortization of intangible
assets 661 635 2,023 1,562
Data processing and software 487 431 1,411 1,344
Professional fees 454 452 1,669 1,319
Franchise taxes 425 374 1,254 1,086
Marketing 299 315 1,088 825
Bankcard costs 284 404 871 1,106
Other non-interest expense 2,103 1,895 6,035 5,367
Total non-interest
expense 12,536 12,544 38,145 34,365
Income before income taxes 7,247 6,958 20,971 21,126
Income tax expense 1,979 1,820 5,712 5,569
Net income $5,268 $5,138 $15,259 $15,557

Fully tax equivalent net
interest income $13,572 $13,296 $39,995 $40,365

PEOPLES BANCORP INC. SELECTED FINANCIAL INFORMATION

(in $000's, end of period) Sept. 30, June 30, Dec. 31, Sept. 30,
LOAN PORTFOLIO 2005 2005 2004 2004
Commercial, mortgage $493,954 $474,344 $450,270 $430,513
Commercial, other 135,568 133,537 126,473 116,621
Real estate, construction 45,299 35,950 35,423 37,847
Real estate, mortgage 322,975 330,881 349,965 307,648
Consumer 62,760 59,365 60,927 65,235
Total loans $1,060,556 $1,034,077 $1,023,058 $957,864

ASSET QUALITY
Allowance for loan losses
as a percent of total loans 1.39% 1.42% 1.44% 1.55%
Allowance for loan losses
as a percent of
nonperforming loans (a) 248.1% 192.6% 225.6% 293.5%
Nonperforming loans as a
percent of total loans (a) 0.56% 0.74% 0.64% 0.53%
Nonperforming assets as a
percent of total assets 0.44% 0.44% 0.43% 0.30%
Nonperforming assets as a
percent of total loans and
other real estate owned 0.77% 0.77% 0.75% 0.56%
Nonperforming assets (in
$000's, end of period):
Loans 90 days or more past due $137 $475 $285 $298
Renegotiated loans $- $- $1,128 $-
Nonaccrual loans $5,791 $7,173 $5,130 $4,747
Other real estate owned $2,259 $353 $1,163 $301
Total nonperforming assets $8,187 $8,001 $7,706 $5,346

REGULATORY CAPITAL (b)
Tier 1 risk-based capital 11.34% 11.21% 10.95% 11.97%
Total risk-based capital
ratio (Tier 1 and Tier 2) 12.65% 12.57% 12.30% 13.29%
Leverage ratio 7.93% 7.48% 7.55% 7.85%
Tier 1 capital $140,295 $135,080 $129,193 $134,630
Total capital (Tier 1
and Tier 2) $156,612 $151,479 $145,134 $149,526
Total risk-weighted
assets $1,237,658 $1,205,303 $1,179,830 $1,124,683

SUPPLEMENTAL DATA
Trust assets under
management $655,991 $631,214 $645,509 $620,686
Employees (full-time
equivalent) 537 543 537 547
Full service offices 41 41 41 42
Supermarket offices 4 4 4 4
ATMs 34 34 33 33
Announced treasury
share plans: (c)
Total shares authorized
for plan 525,000 525,000 625,000 625,000
Shares purchased - - 10,813 211,900
Average price $- $- $27.71 $25.84

(a) Nonperforming loans include loans 90 days past due and accruing,
renegotiated loans and nonaccrual loans.
(b) September 30, 2005, data based on preliminary analysis and is subject
to revision.
(c) 2005 data reflects 2005 Stock Repurchase Program of 525,000 shares.
2004 data reflects 2004 Stock Repurchase Program of 425,000 shares
announced December 17, 2003 and 200,000 shares announced August 13,
2004. Reflects treasury shares purchased and average price paid for
the three-month period ended on the date indicated.

PEOPLES BANCORP INC. CONSOLIDATED BALANCE SHEETS

(in $000's) Sept. 30, Dec. 31,
2005 2004
ASSETS
Cash and cash equivalents $34,931 $31,449
Available-for-sale investment securities,
at estimated fair value (amortized cost
of $604,008 at September 30, 2005, and
$594,457 at December 31, 2004) 604,480 602,364
Loans held for sale 492 612
Loans, net of unearned interest 1,060,556 1,023,058
Allowance for loan losses (14,708) (14,760)
Net loans 1,045,848 1,008,298
Bank premises and equipment, net of
accumulated depreciation 23,952 22,640
Business owned life insurance 46,568 45,253
Goodwill 59,757 59,096
Other intangible assets 10,168 12,022
Other real estate owned 2,259 1,163
Other assets 27,932 26,189
TOTAL ASSETS $1,856,387 $1,809,086

LIABILITIES
Non-interest-bearing deposits $158,892 $152,979
Interest-bearing deposits 938,010 916,442
Total deposits 1,096,902 1,069,421
Federal funds purchased, securities sold
under repurchase agreements, and other
short-term borrowings 165,844 51,895
Long-term borrowings 366,309 464,864
Junior subordinated notes held by
subsidiary trusts 29,328 29,263
Accrued expenses and other liabilities 17,549 18,225
TOTAL LIABILITIES 1,675,932 1,633,668

STOCKHOLDERS' EQUITY
Common stock, no par value (24,000,000 shares
authorized, 10,864,787 shares issued at
September 30, 2005, and 10,850,641 shares
issued at December 31, 2004) 161,998 162,284
Retained earnings 27,614 18,442
Accumulated comprehensive income, net of
deferred income taxes 302 4,958
Treasury stock, at cost (377,035 shares at
September 30, 2005, and 415,539 shares at
December 31, 2004) (9,459) (10,266)
TOTAL STOCKHOLDERS' EQUITY 180,455 175,418
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,856,387 $1,809,086

SOURCE Peoples Bancorp Inc.
Web Site: http://www.peoplesbancorp.com