Executive Summary

Q2 2025 diluted EPS was $0.59, down sequentially (Q1: $0.68) and year-over-year (Q2’24: $0.82), as a larger provision for credit losses ($16.6M) offset higher net interest income and NIM expansion .
Net interest income rose to $87.6M (+3% q/q) and NIM expanded 3 bps to 4.15%, driven by lower deposit and borrowing costs; core NIM (ex-accretion) continued to expand despite lower accretion income .
Management guided FY25 NIM to 4.00–4.20% (assuming three 25 bp Fed cuts), non-interest expense of $69–$71M per quarter in Q3–Q4, loan growth of 4–6% y/y, and lower provisions in the next two quarters; small-ticket leasing charge-offs expected to plateau .
Estimates context: PEBO missed Q2 2025 Wall Street EPS and revenue consensus; Q1 2025 was near-consensus, while Q4 2024 EPS was a beat (S&P Global values; see table and disclaimer).
Asset quality remained stable overall (NPAs 0.49% of assets), ACL increased to 1.13% of loans; criticized loans rose due to one C&I downgrade, but classified loan ratio improved .

What Went Well and What Went Wrong

What Went Well

Core earnings power: Net interest income increased $2.3M q/q; NIM expanded to 4.15% with deposit costs down 10 bps and borrowing costs down 18–23 bps; core NIM has expanded for four straight quarters .
Balanced loan growth: Period-end loans rose $173.1M (+11% annualized q/q), led by C&I (+$63.6M), residential real estate (+$29.8M), construction (+$22.2M), CRE other (+$17.7M), premium finance (+$13.5M), and Vantage leases (+$18.5M) .
Expense discipline: Non-interest expense declined $0.4M q/q and efficiency ratio improved to 59.3% (from 60.7%); declines driven by lower salaries/benefits as normal seasonal items rolled off .

Management quote: “This is the fourth straight quarter that we have had core net interest margin expansion, which excludes accretion income.” – Tyler Wilcox (CEO) .

What Went Wrong

Provision surge: Provision for credit losses rose to $16.6M (from $10.2M in Q1), reducing EPS; drivers included net charge-offs ($7.0M), specific reserves ($3.8M) incl. one commercial relationship, higher small-ticket leasing reserves ($2.5M), refreshed CECL loss drivers ($2.3M), and macro deterioration .
Insurance fee seasonality: Non-interest income fell modestly q/q as first-quarter performance-based insurance commissions did not repeat, partly offset by higher lease and electronic banking income .
Criticized loans uptick: Criticized loans increased $17.9M (to 3.70% of loans) due to one C&I downgrade, though classified loans ratio improved (1.89% vs 1.93% in Q1) .

Analyst concern: Elevated small-ticket leasing net charge-offs (11.51% annualized) remain a headwind, though trending down from Q4 peak; management expects a plateau near current levels in 2H’25 .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Net Interest Income ($USD Millions)	$86.613	$85.255	$87.577
Total Non-interest Income ($USD Millions)	$23.704	$27.099	$26.880
Adjusted Revenue ($USD Millions) (FTE NII + Non-interest ex gains/losses)	$111.450	$113.000	$115.017
Provision for Credit Losses ($USD Millions)	$5.683	$10.190	$16.642
Diluted EPS ($USD)	$0.82	$0.68	$0.59
Net Interest Margin (%)	4.18%	4.12%	4.15%
Efficiency Ratio (%)	59.19%	60.68%	59.25%
ROA (%) (annualized)	1.27%	1.07%	0.92%

Segment breakdown – Non-interest income detail:

Metric	Q2 2024	Q1 2025	Q2 2025
Electronic Banking Income ($USD Millions)	$6.470	$5.885	$6.272
Trust & Investment Income ($USD Millions)	$4.999	$5.061	$5.281
Insurance Income ($USD Millions)	$4.109	$6.054	$4.549
Lease Income ($USD Millions)	$2.147	$3.446	$4.189
Deposit Service Charges ($USD Millions)	$4.339	$4.015	$4.059
BOLI Income ($USD Millions)	$1.037	$1.133	$1.112
Other Non-interest Income ($USD Millions)	$1.141	$1.472	$1.478
Total Non-interest Income ($USD Millions)	$23.704	$27.099	$26.880

KPIs and asset quality:

KPI	Q2 2024	Q1 2025	Q2 2025
Annualized Net Charge-offs (% of avg loans)	0.27%	0.52%	0.43%
ACL as % of Total Loans	1.05%	1.01%	1.13%
NPAs as % of Total Assets	0.53%	0.50%	0.49%
Criticized Loans / Total Loans (%)	3.79%	3.53%	3.70%
Classified Loans / Total Loans (%)	1.90%	1.93%	1.89%
CET1 Ratio (%)	11.74%	12.10%	11.95%
Tangible Equity / Tangible Assets (%)	7.61%	8.34%	8.26%

Balance sheet growth (period-end):

Metric	Q4 2024	Q1 2025	Q2 2025
Total Loans & Leases ($USD Billions)	$6.36	$6.43	$6.60
Total Deposits ($USD Billions)	$7.60	$7.73	$7.64
Loan-to-Deposit Ratio (%)	84%	83%	86%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin (NIM)	FY 2025	—	4.00%–4.20% (assumes three 25 bp Fed cuts in 2H’25)	New
Non-interest Expense	Q3–Q4 2025 (quarterly)	—	$69–$71M per quarter	New
Loan Growth	FY 2025	Mid-single digits (implied)	4%–6% y/y	Maintained
Provision for Credit Losses	Q3–Q4 2025	—	Lower than Q2 2025, absent macro deterioration	New
Small-ticket Leasing Net Charge-offs	2H 2025	—	Plateau over next two quarters	New
Fee-based Income Growth	FY 2025	—	Mid-single-digit growth vs 2024	New
Dividend	Q2 2025	$0.40/share prior quarterly	$0.41/share declared (Aug 18 payable)	Raised vs Q1

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 & Q1 2025)	Current Period (Q2 2025)	Trend
Core NIM & Accretion	NIM pressured by accretion decline in Q4’24; Q1’25 NIM 4.12% with accretion 17 bps	NIM 4.15%; accretion 12 bps; core NIM up 4 consecutive quarters	Improving core; lower accretion tailwind
Deposit Pricing & Mix	Brokered CDs used vs FHLB; retail CDs growth; seasonality in gov deposits	Deposit costs -10 bps q/q; retail CDs continue; gov deposits seasonal trough at 6/30	Active repricing; seasonality expected
Small-ticket Leasing	Net charge-offs peaking Q4’24; elevated in Q1’25	Net charge-offs 11.51% annualized; portfolio shrinking; plateau expected	Easing but still elevated
Tariffs/Macro	Monitoring macro; Q4’24 commentary general	No material tariff impact observed; indirect auto saw pre-buy spike	Neutral; vigilant monitoring
Capital/Buybacks/M&A	Efficiency and capital ratios strong; some acquisition costs in Q4’24	Opportunistic buybacks; poised under $9B to pursue right deal to go >$10B in footprint adjacencies	Strategic patience; optionality maintained

Management Commentary

“Our pre-provision net revenue exceeded consensus estimates for the quarter, and our tangible equity to tangible assets ratio was stable at 8.3%.” – Tyler Wilcox (CEO) .
“For the second quarter, our deposit costs were 1.76%. … Excluding accretion income, our core net interest margin has expanded for the last four consecutive quarters.” – Katie Bailey (CFO) .
“We believe this is the peak, and we believe that we are going to be down from here and that we are appropriately reserved… particularly with the small-ticket leasing.” – Tyler Wilcox (CEO) .
“Assuming three 25 basis point reductions in rates from the Federal Reserve in the second half of the year, we anticipate a full year net interest margin of between 4% and 4.20%.” – Tyler Wilcox (CEO) .

Q&A Highlights

Small-ticket leasing credit outlook: Charge-offs expected to plateau in 2H’25; specific reserves split between leasing and one C&I relationship; refreshed CECL loss drivers added ~$2.3M to provision .
Loan growth drivers: Strong pipelines; expect >$400M paydowns FY, with continued robust production; guidance maintained at 4–6% y/y .
Funding costs: Active deposit repricing continues even without Fed cuts; seasonality expected to lift governmental deposits at 9/30 .
Accretion outlook: Accretion impact mid-to-low teens bps for the year; modestly lower than Q1 .
Capital allocation and M&A: Opportunistic repurchases; strategic preference for overlapping or adjacent markets to scale over $10B assets .

Estimates Context

Metric	Q4 2024	Q1 2025	Q2 2025
EPS Consensus Mean ($)	0.75667*	0.73*	0.77286*
EPS Actual ($)	0.82796*	0.69759*	0.6066*
Revenue Consensus Mean ($USD Millions)	110.00*	112.72*	113.32*
Revenue Actual ($USD Millions)	247.47*	102.16*	97.82*

Values retrieved from S&P Global.

Q2 2025: EPS and revenue missed consensus; Q1 2025: near-consensus EPS; Q4 2024: EPS beat (S&P Global data; see table).

Key Takeaways for Investors

Core profitability intact: NIM expansion and lower funding costs demonstrate earnings resilience; watch accretion normalization and core NIM trajectory .
Provision normalization is the potential catalyst: Management expects lower provisions in Q3–Q4 barring macro deterioration; small-ticket leasing charge-offs should plateau .
Balanced loan growth with stable asset quality: Broad-based loan growth and stable NPAs/ACL ratios support revenue momentum, with criticized loans uptick linked to a single C&I case .
Expense discipline sustained: Quarterly non-interest expense guided to $69–$71M; efficiency ratio improvement in Q2 suggests operating leverage potential .
Funding strategy: Continued deposit repricing and retail CD promotions, with known seasonality (gov deposits peak at 9/30), should aid NIM stability near guidance range .
Capital and optionality: Strong CET1 (11.95%) and tangible equity position enable opportunistic buybacks and strategic M&A in overlapping/adjacent markets .
Dividend support: Dividend raised to $0.41/share with ~5% implied annualized yield; payout at ~69% of Q2 earnings underscores shareholder returns focus .

Sourcing and cross-references:

Q2 2025 press release and detailed financials .
8-K furnished items including the earnings release, slides, and conference call transcript .
Earnings call transcript (themes, guidance, Q&A) .
Prior quarter references (Q1 2025 and Q4 2024 press releases) .

PEOPLES BANCORP INC (PEBO)·Q2 2025 Earnings Summary