PEBO — Peoples Bancorp Inc.

Peoples Bancorp Inc. (PEBO) Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Earnings Per Share (EPS): Reported diluted EPS of $0.78; adjusted EPS of $0.96, exceeding analyst estimates of $0.85.
• Net Interest Income: Increased by 3% quarter-over-quarter.
• Net Interest Margin: Expanded by 7 basis points.
• Fee-Based Income: Grew by over $340,000 compared to the previous quarter.
• Provision for Credit Losses: Decreased by 51% to $4.7 million.
• Loan Growth: Increased by $51 million (3% annualized).
• Non-Interest-Bearing Deposits: Grew by $7 million (2%).
• Tangible Equity to Tangible Assets Ratio: Increased to 9.25%.
• Book Value Per Share: Increased to $34.41, reflecting a 7% annualized growth rate.

2. Strategic Updates and Business Highlights

• Merger with Citizens: Progressing towards a merger, with expected closing in early Q4 2026, pending regulatory and shareholder approvals.
• Portfolio Restructuring: Sold approximately $135 million in investment securities, incurring an $8.2 million loss, as part of the strategy to remain below $10 billion in assets.
• Loan Portfolio Management: Focused on reducing high-balance accounts and improving the quality of loans, with a notable decrease in charge-offs in the small ticket leasing segment.

3. Forward Guidance and Outlook

• Net Interest Margin: Expected to be between 4.1% and 4.3% for the full year of 2026, with potential improvements from a 25 basis point rate increase.
• Fee-Based Income: Anticipated to range between $28 million and $30 million quarterly.
• Non-Interest Expense: Expected to be between $73 million and $75 million for the remaining quarters of 2026.
• Loan Growth: Projected to be at the low end of the 3% to 5% range due to anticipated paydowns.

4. Bad News, Challenges, or Points of Concern

• Criticized Loans: Increased by $50 million, now comprising 4.01% of total loans, with concerns about two commercial credits, although management does not expect charge-offs from these.
• Non-Performing Loans: Slight increase to 0.6% of total loans.
• Deposit Competition: While stable, the competitive environment for funding remains challenging, with expectations of potential rate increases to maintain or grow deposits.
• Commercial Real Estate (CRE) Portfolio: Continued pressure from elevated payoffs, impacting loan growth.

5. Notable Q&A Insights

• Margin Expectations: Management indicated that the projected margin does not include rate movement expectations, emphasizing the importance of deposit repricing strategies.
• Credit Performance: Management expressed optimism about credit quality, with expectations of continued improvement in charge-off rates.
• Integration with Citizens: Management is actively engaged in planning for the merger, highlighting the potential for enhanced service offerings and cross-selling opportunities.
• Market Competition: Described as rational, with a focus on maintaining quality in lending practices without chasing low-quality deals.

Overall, PEBO demonstrated solid financial performance in Q2 2026, with strategic initiatives focused on the upcoming merger and portfolio management, while facing some challenges related to credit quality and competitive pressures in the market.