SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   ----------


                                    FORM 10-Q


(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 For the quarterly period ended March 31, 1998.


[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from ______________ to ________________

                         Commission File Number 0-22641

                              PEOPLES BANCORP, INC.
             (Exact name of registrant as specified in its charter)

         Delaware                                                 *
-------------------------------                         ------------------------
(State or other jurisdiction of                            (IRS Employer
 incorporation or organization)                         Identification Number)


            134 Franklin Corner Road, Lawrenceville, New Jersey 08648
            ---------------------------------------------------------
                    (Address of principal executive offices)

Registrant's telephone number, including area code:            609-844-3100

--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report

         Indicate  by check  whether  the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or such shorter  period that the Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.     Yes [X]       No [ ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         As of April 8, 1998  there  were  36,236,500  shares  of the  company's
common stock.

*  In application process.


<PAGE>

                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this  report to be signed by the  undersigned
thereunto duly authorized.


                                       PEOPLES BANCORP, INC.


Date:    May __________, 1998          By: _____________________________________
                                           Wendell T. Breithaupt
                                           President and Chief Executive Officer


Date:    May __________, 1998          By: _____________________________________
                                           Robert Russo
                                           Vice President and Treasurer
                                           [Principal Financial and Accounting
                                            Officer]


                                       2


<PAGE>

                              PEOPLES BANCORP, INC.

                                      INDEX

                                                                         Page
                                                                         ----
PART I. FINANCIAL INFORMATION

 Item 1.  Financial Statements

 Consolidated Statements of Condition as of
   March 31, 1998 and December 31, 1997.....................................4

 Consolidated Statements of Income for the three
   months ended March 31, 1998 and 1997.....................................5

 Consolidated Statements of Stockholders' Equity for the
   three months ended March 31, 1998 and 1997...............................6

 Consolidated Statements of Cash Flows for the three months ended
   March 31, 1998 and 1997..................................................7

 Notes to the Consolidated Financial Statements............................8-9

 Item 2.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations......................................10-14

PART II. OTHER INFORMATION..................................................14


                                       3
<PAGE>


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                              PEOPLES BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CONDITION
                            (In Thousands of Dollars)
<TABLE>
<CAPTION>

                                                                      March 31,    December 31,
                     ASSETS                                             1998           1997
                     ------                                             ----           ----
                                                                          (unaudited)
<S>                                                                  <C>          <C>      
Cash and due from banks ..........................................   $  10,970    $   9,596
Federal funds sold ...............................................     245,400        5,950
                                                                     ---------    ---------
 Total cash and cash equivalents .................................     256,370       15,546
                                                                     ---------    ---------
Securities available for sale ....................................     142,119      137,338
Securities held to maturity ......................................      47,679       60,955
Federal Home Loan Bank stock, at cost ............................       3,386        3,386
Loans, net .......................................................     412,745      396,448
Bank premises and equipment, net .................................       6,777        6,747
Accrued interest receivable ......................................       4,903        4,975
Prepaid expenses .................................................       1,039        1,105
Intangible assets ................................................      10,420       10,604
Other assets .....................................................       3,434        3,315
                                                                     ---------    ---------
    Total assets .................................................   $ 888,872    $ 640,419
                                                                     =========    =========


         LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits .........................................................   $ 510,446    $ 493,400
Borrowed funds ...................................................      30,000       30,000
Accrued expenses and other liabilities ...........................       7,334        6,981
Stock subscription payable .......................................     229,052            0
                                                                     ---------    ---------
    Total liabilities ............................................     776,832      530,381
                                                                     ---------    ---------
Stockholders' Equity
    Common Stock, par value $0.10 ................................         905          905
      authorized 20,000,000 shares, issued & outstanding 9,046,444
      shares as of March 31, 1998 and December 31, 1997
    Additional paid in capital ...................................      30,502       30,502
  Unearned Management Recognition Plan shares ....................        (337)        (673)
  Retained earnings - substantially restricted ...................      80,288       78,870
  Accumulated other comprehensive income, net of tax .............         682          434
                                                                     ---------    ---------
    Total stockholders' equity ...................................     112,040      110,038
                                                                     ---------    ---------
    Total liabilities and stockholders' equity ...................   $ 888,872    $ 640,419
                                                                     =========    =========
</TABLE>


          See accompanying Notes to Consolidated Financial Statements.

                                       4
<PAGE>

                              PEOPLES BANCORP, INC.

                        CONSOLIDATED STATEMENTS OF INCOME
                            [In Thousands of Dollars]

                                                              Three Months
                                                              Ended March 31
                                                          ----------------------
                                                            1998           1997
                                                            ----           ----
                                                               [unaudited]
Interest and dividend income:
    Interest and fees on loans .....................       $ 7,793       $ 7,278
    Interest on securities .........................         3,258         3,231
    Interest on Federal funds sold .................           263           137
                                                           -------       -------
     Total interest income .........................        11,314        10,646
                                                           -------       -------
Interest expense ...................................         5,538         5,328
                                                           -------       -------
     Net interest income ...........................         5,776         5,318
Provision for loan losses ..........................           186            10
                                                           -------       -------
     Net interest income after provision
       for loan losses .............................         5,590         5,308
                                                           -------       -------
Other income:
    Service fees on deposit accounts ...............           196           247
    Fees and other income ..........................           796           182
    Net gain on sale of securities .................             0           334
                                                           -------       -------
    Total other income .............................           992           763
                                                           -------       -------
Operating expense:
    Salaries and employee benefits .................         2,269         1,657
    Net occupancy expense ..........................           386           381
    Equipment expense ..............................            33            31
    FDIC insurance premium .........................            18             0
    Amortization of intangible assets ..............           221           187
    Data processing fees ...........................           148           132
    Other operating expense ........................           729           631
                                                           -------       -------
    Total operating expense ........................         3,804         3,019
                                                           -------       -------
    Income before income taxes .....................         2,778         3,052
Income taxes .......................................         1,075         1,099
                                                           -------       -------
    Net income .....................................       $ 1,703       $ 1,953
                                                           =======       =======
Earnings per common share:
    Basic ..........................................       $  0.19       $  0.22
    Diluted ........................................       $  0.19       $  0.22

                                       5
<PAGE>


                              PEOPLES BANCORP, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

            For the Three Months Period ended March 31, 1998 and 1997

                        (In Thousands, except share data)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                                    Unearned
                                         Number                                      Accumulated     Management
                                           of              Additional                  Other        Recognition          Total
                                         Common    Common   paid-in     Retained     Comprehensive      Plan         Stockholders'
                                         Shares     stock   capital     Earnings        Income         Shares            equity
                                         ------    ------   -------     -------        ------          ------            ------
<S>                                     <C>           <C>   <C>         <C>            <C>            <C>              <C>     
Balance at December 31, 1996 .........  9,037,160     904   $30,357     $72,545        $1,089         ($1,543)         $103,352

Net income for the three
 months ended March 31, 1997 .........                                   1,953                                          $1,953

Other comprehensive income, net of tax                                                  (778)                            ($778)

Dividends paid ($0.0875 per share) ...                                    (282)                                         (282)

Amortization of unearned Management
  Recognition Plan shares ............                                                                  84                84
                                        ---------     ---    ------     ------         ---          ------           -------
Balance at March 31, 1997 ............  9,037,160     904    30,357     74,216         311          (1,459)          104,329
                                        =========     ===    ======     ======         ===          ======           =======

Balance at December 31, 1997 .........  9,046,444     905    30,502     78,870         434            (673)          110,038

Net income for the three months
  ended March 31, 1998 ...............                                   1,703                                         1,703

Other comprehensive income, net of tax                                                 248                               248

Dividends paid ($0.0875 per share) ...                                    (285)                                         (285)

Amortization of unearned Management
  Recognition Plan shares ............                                                                 336                336
                                        ---------    ----   -------    -------        ----           -----           --------
Balance at March 31, 1998 ............  9,046,444    $905   $30,502    $80,288        $682           ($337)          $112,040
                                        =========    ====   =======    =======        ====           =====           ========
</TABLE>


          See accompanying Notes to Consolidated Financial Statements.

                                       6

<PAGE>


                              PEOPLES BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In Thousands of Dollars)
                                   (unaudited)


                                                           Three Months Ended
                                                                March 31,
                                                         -----------------------
                                                            1998          1997
                                                            ----          ----
Cash flows from operating activities:
  Net income .........................................   $   1,703    $   1,953
  Adjustments to reconcile net income to net
   cash used in operating activities:
      Provision for loan losses ......................         186           10
      Depreciation and amortization expense ..........         735          422
      Net accretion of premiums and discounts
       on securities .................................         (26)          (8)
      Decrease[Increase] in accrued interest
       receivable and other assets ...................          19       (1,311)
      Increase in accrued interest payable and
       other liabilities .............................         353        1,210
     Net gain on sale of securities ..................           0         (334)
                                                         ---------    ---------
    Net cash provided by [used in] operating
     activities ......................................       2,970        1,942
                                                         ---------    ---------
Cash flows used in investing activities:
  Proceeds from maturities of securities
    available for sale and held to maturity ..........   $  19,370    $  12,774
  Purchase of securities available for sale ..........     (15,570)     (43,260)
  Proceeds from sales of securities available
    for sale .........................................           0          401
  Purchase of Federal Home Loan Bank Stock ...........           0         (297)
  Maturities and repayments of mortgage-backed
    securities .......................................       4,745        2,648
  Net increase in loans ..............................     (16,297)        (407)
  Net additions to bank premises, furniture,
    & equipment ......................................        (207)        (236)
  Proceeds from sale of bank premises, furniture
    & equipment ......................................           0          312
                                                         ---------    ---------
    Net cash used in investing activities ............      (7,959)     (28,065)
                                                         ---------    ---------
Cash flows from financing activities:
  Net increase in savings and time deposits ..........      17,046       (6,415)
  Dividends paid .....................................        (285)        (282)
  Net increase in borrowings .........................           0       30,000
  Proceeds from stock offering .......................     229,052            0
                                                         ---------    ---------
    Net cash provided by financing activities ........     245,813       23,303
                                                         ---------    ---------
Net [decrease] increase in cash and
   cash equivalents ..................................     240,824       (2,820)
Cash and cash equivalents as of beginning
   of year ...........................................   $  15,546    $  20,938
                                                         ---------    ---------
Cash and cash equivalents as of end of period ........   $ 256,370    $  18,118
                                                         =========    =========
Supplemental disclosure of cash flow information:
  Cash paid:
    Interest .........................................   $   5,582    $   3,106
                                                         =========    =========
    Income taxes .....................................   $       0    $     175
                                                         =========    =========


          See accompanying Notes to Consolidated Financial Statements.


                                       7
<PAGE>


                        NOTES TO THE FINANCIAL STATEMENTS


(1)  Basis of Presentation

         The accompanying  unaudited financial  statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and in conformity with the  instructions to Form 10-Q and Article 10
of Regulation S-X for Peoples Bancorp, Inc.

         In the  opinion of  management,  all  adjustments  (consisting  of only
normal recurring accruals) necessary to present fairly the financial  condition,
results of  operations,  and changes in cash flows have been made at and for the
three months ended March 31, 1998 and 1997.  The results of  operations  for the
three months ended March 31, 1998 are not necessarily indicative of results that
may be expected for the entire year ending December 31, 1998.

(2)  The  Conversion  of the  Mutual  Holding  Company  to  the  Stock  Form  of
     Organization

         The  financial  information  presented  herein as of March 31,1 998 and
December 31, 1997,  and for the three months ended March 31, 1998 is for Peoples
Bancorp,  Inc. (the "Mid-Tier Holding Company"),  a federal  corporation,  which
form July 1997  through  April 8,  1998 held 100% of the  outstanding  shares of
common stock of Trenton  Savings Bank FSB (the  "Bank").  Financial  information
presented  herein for the three months ended March 31, 1997 is for the Bank. The
Mid-Tier  Holding Company became the Bank's holding company in a  reorganization
(the "Two-Tier  Reorganization"),  in which all of the outstanding shares of the
Bank's  common stock ("Bank  Common  Stock"),  including  shares held by Peoples
Bancorp,  MHC (the "Mutual  Holding  Company") and  stockholders  other than the
Mutual Holding Company (the "Minority Stockholders"), were converted into shares
of common stock of the Mid-Tier Holding Company  ("Mid-Tier Common Stock"),  and
the Bank became the  wholly-owned  subsidiary of the Mid-Tier  Holding  Company.
From July 1997  through  April 8, 1998,  the  Mid-Tier  Holding  Company's  only
material asset  consisted of 100% of the  outstanding  shares of common stock of
the Bank.

         The  Registrant,  Peoples  Bancorp,  Inc. (the  "Company"),  a Delaware
corporation,  is the  successor  to the  Mid-tier  Corporation.  The Company was
formed  as part of the  mutual-to-stock  conversion  (the  "Conversion")  of the
Mutual  Holding  Company.  In the  Conversion  the Bank became the  wholly-owned
subsidiary  of the Company and the  corporate  existence  of the Mutual  Holding
Company  ended.  The  Conversion  was  completed on April 8, 1998.  Prior to the
completion  of  the  Conversion  the  Company  had   insignificant   assets  and
liabilities.

         As part of the Conversion  each of the  outstanding  shares of Mid-Tier
Common Stock held by Minority  Stockholders  was  automatically  converted  into
3.8243  shares of common stock (the "Common  Stock") of the Company.  As part of
the  Conversion  and in addition  to the 12,  430,673  shares  issued due to the
conversion  of  Mid-Tier  Common  Stock into  Common  Stock,  the  Company  sold
23,805,827  shares of Common Stock for a subscription  price of $10.00 per share
in a subscription  offering (the "Offering").  Net proceeds of the Offering were
approximately  $217  million.  At the  conclusion of the  Conversion  there were
36,236,500 shares of Common Stock  outstanding,  including  952,233  unallocated
shares held by the Company's employee stock ownership plan (the "ESOP").

         The following  diagrams outline (i) the  organization  structure of the
Mutual  Holding  Company,  the Mid-Tier  Holding  Company,  and the Bank and its
subsidiaries   prior  to  the   completion  of  the   Conversion  and  (ii)  the
organizational  structure  of the  Company  and the  Bank  and its  subsidiaries
following the Conversion.

                                       8
<PAGE>
        ----------------------                   --------------------
        Mutual Holding Company                   Minority Stockholder
        ----------------------                   --------------------

            64.1%                                            35.9%
                              -----------------
                                   Mid-Tier
                                Holding Company
                              -----------------
                                           100%
                              -----------------
                                    Bank
                              -----------------

        ----------------------                   --------------------
        Manchester Trust Bank                     TSBusiness Finance
        ----------------------                   --------------------

Organizational structure following the Conversion:

                              -------------------
                              Public Stockholders
                              -------------------
                                             100%
                              -------------------
                                     Company
                              -------------------
                                             100%
                              -------------------
                                      Bank
                              -------------------
         ---------------------                   --------------------
         Manchester Trust Bank                    TSBusiness Finance
         ---------------------                   --------------------


(3)  Non  Performing  Loans,  Non  Performing  Assets and the Allowance for Loan
     Losses

     Non performing loans at March 31, 1998 and December 31, 1997 are as follows
     (in thousands of dollars):


                                       9
<PAGE>


                                           March 31, 1998      December 31, 1997
                                           --------------      -----------------
 Loans delinquent 90 days or more ........      4,139                5,606
 Loans delinquent 90 days or more
  as a percentage of net loans
  receivable .............................      1.00%                1.41%

         An  analysis  of the  allowance  for loan  losses  for the three  month
periods  ended March 31, 1998 and 1997 is as follows (in  thousands of dollars):




                                              March 31, 1998   March 31, 1997
                                              --------------   --------------
Balance at beginning of the period .......        $ 3,415         $ 2,901
Provision charged to operations ..........            186              10
Charge-offs, net .........................            (39)            (42)
                                                  -------         -------
Balance at the end of the period .........        $ 3,562         $ 2,869

         Generally,  the Bank's loans are placed on a non-accrual  status when a
default of  principal  or  interest  has  existed for a period of 90 days except
when, in the opinion of  management,  the collection of principal or interest is
reasonably  anticipated or adequate  collateral  exists.  In addition,  the Bank
places any loan on  non-accrual  if any part of it is  classified as doubtful or
loss or if any part has been  charged to the  allowance  for loan  losses.  Real
estate owned  consists of property  acquired  through  formal  foreclosures  and
acquired by deed in lieu of foreclosure, and is recorded at the lower of cost or
fair value.  At March 31, 1998,  the Bank had $294  thousand  classified as real
estate owned.

         The Bank  continually  reviews the quality of the loan  portfolio,  and
engages an outside  consultant to perform  routine reviews of the portfolio on a
quarterly  basis.  Management  believes  that the  allowance  for loan losses is
adequate  based  on  historical  experience,  the  volume  and  type of  lending
conducted by the Bank,  the amount of  non-performing  loans,  general  economic
conditions  and other factors  relating to the Bank's loan  portfolio.  However,
there can be no assurance that actual losses will not exceed estimated amounts.

         As of March  31,  1998,  the  Bank's  total  non-pcrforming  loans  and
foreclosed assets amounted to $3.7 million, or .42% of total assets, compared to
$5.9 million, or.92% of total assets at December 31, 1997.

         Federal  regulations  required  that each insured  savings  institution
classify  its  assets on a regular  basis.  There are four  classifications  for
problem assets: "special mention," "substandard," "doubtful" and "loss."

         At March 31,  1998,  the Bank had $4.8 million of loans  classified  as
special  mention,  $4.7  million  classified  as  substandard  and  $.6  million
classified as doubtful or loss. As of March 31, 1998, total  classified  assets,
which includes repossessed assets, was $5.6 million.

         It is  management's  policy to maintain an allowance for estimated loan
losses  based  upon  an  assessment  [1]  in  the  case  of  residential  loans,
management's  review  of  delinquent  loans,  loans in  foreclosure  and  market
conditions, [2] in the case of commercial business loans and commercial mortgage
loans,  when a  significant  decline  in value can be  identified  as well as an
overall  assessment of the inherent risk in the portfolio and [3] in the case of
consumer loans, based on the assessment of risks inherent in the loan portfolio.
The  Bank's  allowance  for loan  losses,  which  includes  a general  valuation
allowance, amounted to approximately $3.6 million and $3.4 million, respectively
at March 31, 1998 and December 31, 1997.

(4)  Per Share Data

         The  earnings  per share for the three  months  ended March 31, 1998 of
$.19,  has been  calculated on a weighted  average  number of shares of Mid-Tier
Common Stock outstanding during the period of 9,046,444. Earnings per share data
for the three months  ended March 31, 1997 was $.22 per share.  On April 8, each
share of the  Mid-Tier  Common  Stock was  converted  into 3.8243  shares of the
Company's Common Stock. See Note 2.

                                       10


<PAGE>



(5)  Comprehensive Income

         During the first  quarter of 1998,  the Bank adopted the  provisions of
Statement of Financial  Accounting  Standards No. 130, "Reporting  Comprehensive
Income" ("SFAS 130").  SFAS 130 establishes  standards for reporting and display
of  comprehensive  income  and its  components  (revenues,  expenses,  gains and
losses) in a full set of general-purpose  financial  statements.  This Statement
requires  that all items that are  required to be  recognized  under  accounting
standards  as  components  of  comprehensive  income be  reported in a financial
statement  that is  displayed  with  the  same  prominence  as  other  financial
statements.  This  Statement  requires that an enterprise  (a) classify items of
other  comprehensive  income by their  nature in a financial  statement  and (b)
display the accumulated  balance of other  comprehensive  income separately from
retained  earnings and  additional  paid-in  capital in the equity  section of a
statement of financial  position.  In accordance with the provisions of SFAS 130
for interim  period  reporting,  The Bank's total  comprehensive  income for the
three months ended March 31, 1998 and 1997 was $248,000 and ($778) thousand. The
difference  between  the Bank's net  income and total  comprehensive  income for
these periods  relates to the change in the net  unrealized  gains on securities
available for sale during the applicable period of time.

(6)  Net Portfolio Value

         The OTS has adopted a final rule that  incorporates  an  interest  rate
risk ("IRR") component into the risk-based capital rules. The IRR component is a
dollar  amount  that will be  deducted  from total  capital  for the  purpose of
calculating an institution's risk based capital  requirement and is expressed in
terms of the  sensitivity  of its net  portfolio  value  ("NPV")  to  changes in
interest rates. NPV is the difference between  discounted  incoming and outgoing
cash flows  from  assets,  liabilities,  and  off-balance  sheet  contracts.  An
institution's  IRR  is  measured  as the  change  to its  NPV as a  result  of a
hypothetical 200 basis point change in market interest rates. A resulting change
in NPV of more than 2% of the estimated  market value of its assets will require
the  institution to deduct from its capital 50% of that excess change.  The rule
provides  that the OTS  will  calculate  the IRR  component  quarterly  for each
institution  from  the  institution's  Thrift  Financial  Reports.  The  OTS has
postponed  the  date  that  the  component   will  first  be  deducted  from  an
institution's  total  capital to provide  it with an  opportunity  to review the
interest rate risk approaches taken by the other federal banking  agencies.  The
following  table  presents the Bank's NPV as of December 31, 1997, as calculated
by the OTS, based on information provided to the OTS by the Bank.

    Change in                                              Change in NPV
  Interest Rates         Net Portfolio Value            as a percentage of
  in Basis Points  ---------------------------------     Estimated Market
   (Rate Shock)    Amount     $ Change      % Change     Value of Assets
   ------------    ------     --------      --------     ---------------
                             (dollars in thousands)

       400        $ 75,074     ($35,682)     32.22%          (8.02%)
       200        $ 94,531     ($16,225)     14.65%          (2.57%)
      Static      $110,756         --          --               --
      (200)       $122,763      $12,007      10.84%           1.90%
      (400)       $133,662      $22,906      20.60%           3.63%


         As shown by the table above, increases in interest rates will result in
net decreases in the Bank's NPV,  while  decreases in interest rates will result
in smaller net increases in the Bank's NPV. The table suggests that in the event
of a 200 basis point change in interest rates, the Bank would experience a 2.57%
decrease in NPV in a rising interest rate  environment,  and a 1.90% increase in
NPV in a decreasing interest rate environment.


                                       11
<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

         The  financial  information  presented  herein as of March 31, 1998 and
December 31, 1997,  and for the three months ended March 31, 1998 is for Peoples
Bancorp,  Inc. (the "Mid-Tier Holding Company"),  a federal  corporation,  which
from July 1997  through  April 8,  1998 held 100% of the  outstanding  shares of
common stock of Trenton  Savings Bank FSB (the  "Bank").  Financial  information
presented  herein for the three months ended March 31, 1997 is for the Bank. the
Mid-Tier  Holding Company became the banles holding company in a  reorganization
(the "Two-Tier  Reorganization"),  in which all of the outstanding shares of the
bank's  common stock ("Bank  Common  Stock"),  including  shares held by Peoples
Bancorp,  MHC (the "Mutual  Holding  Company") and  stockholders  other than the
Mutual Holding Company (the "Minority stockholders"), were converted into shares
of common stock of the Mid-Tier Holding Company  ("Mid-Tier Common Stock"),  and
the bank became the  wholly-owned  subsidiary of the Mid-Tier  Holding  Company.
From July 1997  through  April 8, 1998,  the  Mid-Tier  Holding  Company's  only
material assets  consisted of 100% of the outstanding  shares of common stock of
the Bank.

         The  Registrant,  Peoples  Bancorp,  Inc. (The  "Company"),  a Delaware
corporation,  is the  successor  to the  Mid-Tier  Corporation.  The Company was
formed as par of the mutual-to-stock conversion (the "Conversion") of the Mutual
Holding Company.  In the Conversion the Bank became the wholly-owned  subsidiary
of the Company and the corporate  existence of the Mutual Holding Company ended.
The  Conversion  was completed on April 8, 1998.  Prior to the completion of the
Conversion the Company had insignificant assets and liabilities.

         As part of the  Conversion  each of the  outstanding  share of Mid-Tier
Common Stock held by Minority  Stockholders  was  automatically  converted  into
3.8243 shares o common stock (the "Common Stock") of the Company. As part of the
Conversion and in addition to the 12,430,673 shares issued due to the conversion
of Mid-Tier Common Stock into Common Stock,  the Company sold 23,805,827  shares
of Common Stock for a  subscription  price of $10.00 per share in a subscription
offering (the "Offering").  Net proceeds of the Offering were approximately $217
million.  At the conclusion of the Conversion  there were  36,236,500  shares of
Common  Stock  outstanding,  including  952,233  unallocated  shares held by the
Company's employee stock ownership plan (the "ESOP").

         Although  the  following  discussion  of the  financial  condition  and
results of operations  includes the collective  results of the Mid-Tier  Holding
Company and the Bank, this discussion reflects principally the Bank's activities
as the Mid-Tier  Holding  Company did not engage in any  significant  activities
other than the management of the Bank.

Financial Condition

         Stockholders'  equity  increased by $2.0  million,  or 1.8%,  to $112.0
million at March 31, 1998 from $110.0 million at December 31, 1997. The increase
in  Stockholders'  equity was due to net income of $1.7  million for the quarter
ended March 31, 1998  combined  with  amortization  of $336 thousand of unearned
Management Recognition Plan (the "MRP") shares , a $248 thousand increase in the
market value of the Bank's portfolio of available for sale investments,  reduced
by cash dividends of $285 thousand. At March 31, 1998 the Bank's tangible,  core
and risk based capital ratios were 11.56%, 11.56%, and 20.56%, respectively.

         As previously  discussed the Conversion generated cash subscriptions of
$229.0 million by March 31, 1998. This amount was reflected in the Bank's asset,
cash and cash equivalents,  and stock subscription  payable account on the March
31, 1998 balance sheet. Consequently,  total assets increased by $248.5 million,
or 38.8%,  to $888.9  million at March 31, 1998 from $640.4  million at December
31, 1997. Cash and cash  equivalents  also increased by $240.8 million to $256.4
million at March 31, 1998 from $15.5 million at December 31, 1997  primarily due
to these cash stock subscriptions. Deposits increased by $17.0 million, or 3.5%,
to $510.4  million at March 31, 1998 from $493.4  million at December  31, 1997.
Securities  available  for sale  increased  by $4.8  million  or 3.5% to  $142.1
million at March 31,  1998 from  $137.3  million at  December  31,  1997.  Loans
increased  by $16.3  million or 4.1% to $412.7  million  at March 31,  1998 from
$396.4 million at December 31, 1997.

Results of Operations

         The  annualized  return on average  assets and return on average equity
were 1.03% and 6.12%  respectively for the quarter ended March 31, 1998 compared
to 1.24% and 7.49% respectively for the quarter ended March 31, 1997. Net income
was $1.7 million for the first  quarter of 1998 compared to $2.0 million for the
first quarter of 1997 which included net securities gains of $3 million.

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<PAGE>



         Total interest income increased $.7 million,  or 6.3%, to $11.3 million
for the quarter  ended March 31, 4998 from $10.6  million for the quarter  ended
March 31,  1997.  The  increase  resulted  from an increase in average  interest
earnings  assets to $625.3  million  for the  quarter  ended March 31, 1998 from
$596.1 million for the quarter ended March 31, 1997 combined with an increase in
the average yield on  interest-earnings  assets from 7.14% for the quarter ended
March 31, 1997 to 7.24% for the quarter ended March 31, 1998.  The $29.2 million
increase in average  interest  eamings  assets was  attributed to the previously
discussed $229.0 million of stock subscriptions received in March.

         Total  interest  expense  increased  by $.2 million,  or 3.9%,  for the
quarter  ended March 31, 1998 to $5.5  million from $5.3 million for the quarter
ended March 31, 1997.  The increase was  primarily  the result of an increase in
average  deposits to $541.8  million  for the quarter  ended March 31, 1998 from
$516.4  million for the quarter  ended March 31, 1997 which offset a decrease in
the  average  rate paid on deposits  from 4.13% for the quarter  ended March 31,
1997 to 4.09% for the quarter ended March 31, 1998.  The increase in deposits is
primarily  attributed  to the stock  subscriptions.  The decrease in the average
rate  paid on  deposits  was  attributed  to the  effect of the  payment  of the
passbook rate on these stock subscriptions.

     There was a $.2 million  provision  for loan  losses for the quarter  ended
March 31, 1998  compared to a $10 thousand  provision for the three months ended
March 31, 1997. The increased provision generally reflects loan growth. The loan
loss  provision  evaluation  includes  a review  of all  loans  for  which  full
collectibillity  may  not be  reasonably  assured  and  considers,  among  other
matters,  the  estimated  net  realizable  value of the  underlying  collateral,
economic conditions and other matters which warrant consideration. The allowance
for loan losses was $3.6 million or 97.3% of non-performing  assets at March 31,
1998 compared to $3.4 million or 57.6% of non-performing  assets at December 31,
1997 [see note three].

         Total other income increased by $.2 million,  or 30.0%, to $1.0 million
for the quarter  ended  March 31,  1998  compared to $.8 million for the quarter
ended March 31, 1997.  Other income  included $.3 million of gains from the sale
of equity  securities  for the quarter ended March 31, 1997 compared to $0 gains
from the sale of  equity  securities  for the  quarter  ended  March  31,  1998.
Excluding  gains on sales of securities,  other income  increased $.6 million or
131.2% to  $1 million  for the  quarter  ended  March 31, 1998  compared  to $.4
million for the quarter  ended March 31,  1997.  The increase in other income is
attributed  to fees  earned by  Manchester  Trust  Bank which was  purchased  in
September  of  1997,  and  $153  thousand  of a  post  retirement  plan  actuary
adjustment. Total operating expenses increased by $.8 million, or 26.0%, to $3.8
million for the quarter  ended March 31, 1998  compared to $3.0  million for the
quarter ended March 31, 1997.  The increase in operating  expenses is attributed
to the addition of staff and activities from the MTB acquisition,  the expansion
of TSBusiness Finance Corporation,  the opening of an additional branch [Leisure
Village West] and additional vesting of the Management Recognition Plan.

Capital

         The OTS  requires  that  the  Bank  meet  minimum  tangible,  core  and
risk-based  capital  requirements.  As of March 31, 1998,  the Bank exceeded all
regulatory capital requirements. The Bank's required, actual, and excess capital
levels as of March 31, 1998, are as follows:


                           Required                Actual           Excess of
                       ----------------      ------------------    Actual Over
                                  % of                    % of     Regulatory
                       Amount    Assets      Amount      Assets    Requirement
                       ------    ------      ------      ------    -----------
                                   (Dollars in Thousands)
Tangible Capital ....  13,175     1.50%      101,553      11.56%      88,378
Core Capital ........  26,351     3.00%      101,553      11.56%      75,202
Risk-based Capital ..  40,871     8.00%      105,048      20.56%      64,177


 Liquidity

         The Bank is  required to maintain  minimum  levels of liquid  assets as
defined by OTS  regulations.  This  requirement,  which varies from time to time
depending upon economic conditions and deposit flows, is based upon a percentage
of deposits and short term  borrowings.  The required ratio currently is 5%. The
Bank's  liquidity  ratio  averaged  30.16%  during the first quarter of 1998 an~
equaled 76.4% at March 31, 1998.  ne Bank adjusts  liquidity as  appropriate  to
meet its asset and liability management objectives.

                                       13

<PAGE>



PART II. OTHER INFORMATION

Legal Proceedings

         There are various claims and lawsuits in which the Bank is periodically
involved  incidental to the Bank's  business.  in the opinion of management,  no
material loss is expected from any of such pending claims or lawsuits.

Changes in Securities

         Not applicable.

Defaults upon Senior Securities

         Not applicable.

Submission of Matters to a Vote of Security Holders

         A special meeting of the Mid-Tier  Holding  Company's  stockholders was
held on March 31, 1998. At the special meeting,  stockholders  approved the Plan
Conversion  and  Reorganization  (the "Plan") and  transactions  incident to the
Plan,  including the  Conversion.  At the special  meeting there were  7,794,646
votes cast in favor of the Plan and, 8,979 votes cast against the Plan.

Other Information

         Not applicable.

Exhibits and Report on Form 8-K.

         Not applicable.



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