Preheat the oven to 325º. Lightly butter and flour 9 by 5 inch loaf pan.
Microwave the butter in a large microwave safe bowl until just melted and let it cool to room temperature.
Peel peaches. Cut 1 cup of peaches into small chunks and pat with a paper towel. Set aside.
Add the rest of the peaches to a food processor along with lemon juice and process until completely smooth. Remove 1 cup of the peach puree and add it to the cooled butter. You should have about 1/4 cup of puree left in the food processor. If not add a few more slices of peaches. It does not need to be exact.
Add slightly beaten eggs and egg yolk to the butter and peach mixture, add vanilla and whisk until combined.
In a large bowl whisk together flour, granulated sugar, baking powder and salt. Pour the peach mixture into the dry ingredients and whisk until combined. Fold in the diced peaches. Pour into the prepared loaf pan.
Bake until golden brown and a toothpick comes out clean, 75-80 minutes. Remove and allow to cool for 10 minutes, then remove from the pan onto a wire rack.
While the cake is cooling, add powdered sugar to about 1/4 cup of the remaining peach puree and process until smooth. Spread it on top of the warm cake letting it drip down the sides.. Let it cool completely before slicing.