Charter Of The Audit Committee Of The Board Of Directors Of Peoples Bancorp Inc.

CHARTER OF THE AUDIT COMMITTEE
OF THE
BOARD OF DIRECTORS
OF
PEOPLES BANCORP INC.

Purpose:

Acting pursuant to Section 2.10 of the Code of Regulations of Peoples Bancorp Inc. (the “Company”), the Board of Directors (the “Board”) has established an Audit Committee (the “Committee”) whose purpose is to provide assistance to the Board in fulfilling its oversight responsibility to the shareholders and potential shareholders of the Company, the investment community, and others relating to: the integrity of the Company's consolidated financial statements; the Company’s accounting and financial reporting processes; the Company’s systems of internal accounting and financial controls; the audits of the consolidated financial statements of the Company; the performance of the Company's internal audit function and the Company’s independent registered public accounting firm (sometimes also referred to as the “independent auditors”); the independent auditors’ qualifications and independence; and the Company's compliance with ethics policies and legal and regulatory requirements. In so doing, it is the responsibility of the Committee to maintain free and open communications between and among the Committee, the Company’s independent registered public accounting firm, the Company’s internal auditor (sometimes also referred to as the “Auditor”), the Company’s General Counsel, and management of the Company.

Authority:

In discharging its oversight role, the Committee is empowered and authorized to investigate any matter brought to its attention or otherwise within the scope of its duties and responsibilities, with full access to all books, records, facilities, and personnel of the Company and its subsidiaries; and to engage independent counsel and other advisers as it determines necessary to carry out its duties. The Company shall provide for appropriate funding, as determined by the Committee, in its capacity as a committee of the Board, for payment of (a) compensation to the Company’s independent registered public accounting firm; (b) compensation to any advisers employed by the Committee; and (c) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out the Committee’s duties.

Membership:

The Committee shall consist of a minimum of three members of the Board, each of whom shall be recommended by the Governance and Nominating Committee and appointed by and serve at the pleasure of the Board. Each member of the Committee shall be free of any relationship which, in the opinion of the Board, may interfere with the exercise of his or her independent judgment in carrying out the responsibilities of a director of the Company. All Committee members must:

satisfy the independence requirements prescribed by the applicable rules of The NASDAQ Stock Market LLC (“Nasdaq”) addressing corporate governance requirements (the “Nasdaq Corporate Governance Rules”); provided, however, that as permitted by Rule 5605(c)(2)(B) of the Nasdaq Corporate Governance Rules, one director who (a) is not independent as defined in Rule 5605(a)(2) of the Nasdaq Corporate Governance Rules and (b) meets the criteria set forth in Section 10A(m)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules promulgated thereunder and (c) is not a current officer or employee of the Company or any of its subsidiaries or a Family Member (as defined in Rule 5605(a)(2) of the Nasdaq Corporate Governance Rules) of such an officer or employee, and (d) satisfies the independence requirements in the regulations promulgated by the Federal Deposit Insurance Corporation (the “FDIC”), may be appointed to the Committee provided the Board, under exceptional and limited circumstances, has determined that such individual’s membership on the Committee is required by the best interests of the Company and its shareholders. Any member of the Committee who is appointed under the exception provided in the immediately preceding sentence may not serve longer than two years and may not chair the Committee.
meet the independence criteria set forth in Rule 10A-3(b)(1) under the Exchange Act in that, other than in his or her capacity as a member of the Committee, the Board, or any other Board committee, he or she may not accept directly or indirectly any consulting, advisory, or other compensatory fee from the Company or its subsidiaries or be an affiliated person of the Company or its subsidiaries;
meet the independence criteria set forth in the regulations promulgated by the FDIC;
be able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement, and cash flow statement; and
not have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years.

In addition, at least one member of the Committee shall have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background, including being or having been a chief executive officer, chief financial officer, or other senior officer with financial oversight responsibility, which results in the individual’s financial sophistication.

Duties and Responsibilities:

The primary responsibility of the Committee is to oversee the Company's accounting and financial reporting process on behalf of the Board and report the results of its activities to the Board. While the Committee has the oversight responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company's consolidated financial statements are complete and accurate and are in conformity with generally accepted accounting principles. The Company’s management is responsible for the preparation, presentation, and integrity of the Company's consolidated financial statements, for the appropriateness of the accounting principles and reporting policies that are used by the Company and its subsidiaries and for the establishment and maintenance of systems of disclosure controls and procedures and internal control over financial reporting. The Company’s independent registered public accounting firm is responsible for auditing the Company's consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), for issuing an attestation report on the Company’s internal control over financial reporting, and for reviewing the Company's unaudited interim financial statements.

The Committee, in carrying out its responsibilities, believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The Committee should take appropriate actions to set the overall corporate "tone" for quality financial reporting, sound business risk practices, and ethical behavior. The following shall be the principal duties and responsibilities of the Committee. These are set forth as a guide with the understanding that the Committee may supplement them as appropriate. The Committee shall also carry out such other duties and responsibilities delegated to it by the Board from time to time that are related to the purpose of the Committee.

The Committee shall be directly responsible for the appointment and termination, compensation, and oversight of the work of the Company’s independent registered public accounting firm, including resolution of disagreements between the management of the Company and its subsidiaries and the independent registered public accounting firm regarding financial reporting. The Committee should ensure that the proposed audit engagement letter complies with applicable laws, rules and regulations before engaging an independent registered public accounting firm. The Committee, pursuant to the Audit and Non-Audit Services Pre-approval Policy, as adopted from time to time by the Board and the Committee, shall pre-approve all audit and non-audit services provided by the independent registered public accounting firm and shall not engage the independent registered public accounting firm to perform the specific non-audit services proscribed by law or regulation. The Committee may delegate pre-approval authority to a member of the Committee. The decisions of any Committee member to whom pre-approval authority is delegated must be presented to the full Committee at its next scheduled meeting.

At least annually, the Committee shall obtain and review separate reports by the Company’s independent registered public accounting firm and the Company’s Auditor describing:

The firm’s internal quality control procedures.
Any material issues raised by the most recent internal quality control review, including computerized information systems controls and security, or peer review of the firm or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues. The Company’s independent registered public accounting firm shall also submit such a report to the Committee promptly after any review, inquiry or investigation referred to in the preceding sentence.
Any difficulties the independent registered public accounting firm or the Auditor encountered in the course of their respective audits, including any restrictions on the scope of their work or access to required information.

The Committee shall be responsible for ensuring that the Company’s independent registered public accounting firm submits to the Committee on a periodic basis, and in any event at least annually, the written disclosures and the letter from the Company’s independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board (United States) regarding the independent registered public accounting firm’s communications with the Committee concerning independence. The Committee shall review all relationships between the independent registered public accounting firm and the Company and its subsidiaries (to assess the firm’s independence), including, but not limited to, determining that the lead independent audit partner serves in that capacity for no more than five fiscal years of the Company. In addition, the Committee shall set clear hiring policies for employees or former employees of the independent registered public accounting firm that meet the applicable SEC rules and Nasdaq Corporate Governance Rules.

The Committee shall discuss with the Auditor and the Company’s independent registered public accounting firm annually, before each audit begins, the overall scope and plans for their respective audits, including the adequacy of staffing and compensation. Also, the Committee shall address the coordination of the audit efforts to assure best completeness of coverage, reduction of redundant efforts, and the effective use of audit resources.

The Committee shall discuss with management, the Auditor, and the Company’s independent registered public accounting firm the adequacy and effectiveness of the Company’s internal control over financial reporting and related accounting and financial controls, including the Company's policies and procedures to assess, monitor, and manage business risk, and legal and ethical compliance programs as well as assess the steps taken by management or proposed by management, to minimize such risks. Further the Committee shall consider any significant findings and recommendations including any management letter or schedule of unadjusted differences from the Auditor or the Company’s independent registered public accounting firm.

The Committee shall receive regular reports from the Company’s independent registered public accounting firm on the significant accounting policies and practices of the Company and its subsidiaries, and all alternative treatments within generally accepted accounting principles for policies and practices related to material items that have been discussed with management of the Company, including ramifications of the use of such alternative disclosures and treatments and the treatment preferred by the independent registered public accounting firm. The Committee shall also discuss any other matters required to be communicated to the Committee by the Company’s independent registered public accounting firm under generally accepted auditing standards and other applicable laws, rules and regulations.

The Committee shall review and concur in the appointment, replacement, reassignment or dismissal of the Auditor, the scope of the internal audit, the internal audit budget and staffing, the internal audit charter and the Auditor’s compliance with The Institute of Internal Auditors Standards for Professional Practice of Internal Auditing.

The Committee shall review management's assessment of the effectiveness of the Company’s internal control over financial reporting as of the end of the Company’s most recent fiscal year and the independent registered public accounting firm’s attestation report on the Company’s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations of the SEC and the FDIC. Additionally, the Committee shall review with the Chief Executive Officer and the Chief Financial Officer the quality of earnings of the Company.

The Committee shall receive the General Counsel’s reports of evidence of a material violation of securities laws, breaches of fiduciary duty, a material violation of similar laws and asserted and unasserted claims and liabilities.

The Committee shall review and reassess the adequacy of this Charter at least annually and obtain the approval of the Board regarding any recommended changes.

The Committee shall review and evaluate the performance of the independent registered public accounting firm and review with the full Board any proposed discharge of the independent registered public accounting firm.

The Committee shall perform an evaluation of its performance at least annually to determine whether it is functioning effectively.

Reporting:

The Committee shall review and discuss earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies.

The Committee shall review the interim consolidated financial statements and disclosures to be made under Management's Discussion and Analysis of Financial Condition and Results of Operations with the Company’s management and the independent registered public accounting firm prior to the filing of the Company's Quarterly Report on Form 10-Q. Also, the Committee shall discuss the results of the quarterly review and any other matters required to be communicated to the Committee by the independent registered public accounting firm under generally accepted auditing standards. The chair of the Committee may represent the entire Committee for the purposes of these reviews.

The Committee shall review with the Company’s management and the independent registered public accounting firm the consolidated financial statements and disclosures under Management's Discussion and Analysis of Financial Condition and Results of Operations to be included in the Company's Annual Report on Form 10-K (or the annual report to shareholders if distributed prior to the filing of Form 10-K), including their judgment about the quality, not just the acceptability, of the Company’s accounting principles as applied in its financial reporting, the consistency of the Company’s accounting policies and their application, the reasonableness of accounting estimates and significant judgments, and the clarity and completeness of the disclosures in the consolidated financial statements. Also, the Committee shall discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent registered public accounting firm under generally accepted auditing standards.

The Committee shall review disclosures made by the Chief Executive Officer and the Chief Financial Officer of the Company during the certification process in respect of each Quarterly Report on Form 10-Q and each Annual Report on Form 10-K, about significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting and any fraud that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. The Committee shall also discuss any changes in the Company’s internal control over financial reporting which occurred during the last fiscal quarter.

The Committee also prepares its report to be included in the Company's annual proxy statement, as required by SEC rules.

Meetings and Minutes:

The Committee shall hold regular meetings at least four times each year each time the Company proposes to issue a press release with its quarterly or annual earnings information and such special meetings as the Chair of the Committee or the Chairman of the Board may direct. The Committee shall be chaired by one of its members nominated by the Governance and Nominating Committee and appointed by the Board. All members of the Committee are expected to attend each meeting, in person or via teleconference or other means of electronic communications permitted under applicable law and the Company’s Amended Articles of Incorporation and Code of Regulations. The Committee shall maintain written minutes of its meetings, which minutes shall be filed with the minutes of the meetings of the Board. The Committee may act by a majority of its members at a meeting or without a meeting if all members consent to the action in writing or by any means of electronic transmission permitted under applicable law. At each regularly scheduled meeting of the Board, the Chair of the Committee shall provide the Board with a report of the Committee’s activities and proceedings. The Committee may ask members of management or others to attend the Committee’s meetings and provide pertinent information as necessary.

The Committee shall conduct executive sessions with the independent registered public accounting firm, the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, the Controller, the Auditor, the General Counsel or anyone as desired by the Committee.

Code of Ethics and Related Party Transactions:

The Committee shall review with the Auditor and the General Counsel legal and regulatory matters that may have a material impact on the Company’s consolidated financial statements, related Company compliance policies, compliance with the Company’s Code of Ethics for Directors, Officers and Employees and programs and reports received from regulators.

The Committee shall establish and review the procedures for the receipt, retention, and treatment of complaints received by the Company or any of its subsidiaries regarding accounting, internal accounting controls, or auditing matters that may be submitted by any person, as well as review any such complaint received, its current status or resolution.

The Committee shall establish and review procedures for the confidential, anonymous submission by employees of the Company or its subsidiaries of concerns regarding questionable accounting or audit matters, as well as review any such submission received, its current status or resolution.

The Committee shall conduct a review of all “related person” transactions (any transaction required to be reported pursuant to Item 404 of SEC Regulation S-K) for potential conflict of interest situations on an ongoing basis and shall have the authority to approve any such “related person” transactions.