Sign in

You're signed outSign in or to get full access.

PB

PEOPLES BANCORP INC (PEBO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered resilient core performance: diluted EPS was $0.83 (GAAP) with NIM up 1 bp to 4.16% and efficiency ratio improved to 57.1%, while provision normalized from Q2’s elevated level . Management emphasized fifth straight quarter of core NIM expansion ex-accretion and improving asset quality metrics .
  • Versus S&P Global consensus, EPS (primary/normalized) modestly beat, while revenue missed on the Street’s revenue definition; management noted EPS excluding the securities loss exceeded consensus . Q3 S&P EPS: actual 0.9009 vs 0.818 est; S&P revenue: actual $107.9M vs $116.9M est (S&P Global)*.
  • Credit trends improved sequentially: NPAs fell, NPL ratio declined to 0.58%, annualized NCOs eased to 0.41% QoQ; allowance stood at 1.11% of loans .
  • Guidance/tone: Management reiterated full-year NIM range of ~4.0–4.2% and expects Q4’25 noninterest expense of $69–$71M; 2025 loan growth maintained at 4–6%, and 2026 outlook calls for positive operating leverage and 4.0–4.2% NIM before potential rate cuts .
  • Potential catalysts: EPS beat (ex-securities loss) vs consensus, core NIM expansion ex-accretion, improving NPAs/NPLs, and dividend continuity ($0.41 declared; ~49.7% payout of Q3 earnings) .

What Went Well and What Went Wrong

What Went Well

  • Core margin momentum: “Excluding accretion income, our net interest margin expanded by five basis points, which is the fifth straight quarterly increase in core net interest margin” .
  • Asset quality improved: NPAs and NPLs declined sequentially; NPLs were 0.58% of loans (vs. 0.61% in Q2), and annualized NCOs improved to 0.41% (vs. 0.43% in Q2) .
  • Operating efficiency: Efficiency ratio improved to 57.1% from 59.3% in Q2 as NII increased and expenses edged lower .

What Went Wrong

  • Securities loss weighed results: $2.7M realized loss on ~$75M AFS sales reduced diluted EPS by $0.06 and lowered total noninterest income; S&P revenue also missed Street estimates (definition differences) (S&P Global)*.
  • Classified/criticized loans rose: Classified loans increased to 2.36% of loans (from 1.89% in Q2) and criticized loans to 3.99% (from 3.70%), driven by a handful of downgrades (mgmt expects partial reversion in Q4) .
  • Fee income mixed: Total noninterest income declined QoQ due to lower lease income (prior quarter had gains on terminated leases) and the securities loss; efficiency still improved due to cost control and stronger NII .

Financial Results

Headline metrics (oldest → newest)

MetricQ3 2024Q2 2025Q3 2025
Diluted EPS (GAAP)$0.89 $0.59 $0.83
Net Interest Income ($M)$88.912 $87.577 $91.349
Total Noninterest Income ($M)$24.794 $26.880 $23.827
Provision for Credit Losses ($M)$6.735 $16.642 $7.280
Net Interest Margin (%)4.27% 4.15% 4.16%
Efficiency Ratio (%)55.10% 59.25% 57.11%
ROA (%)1.38% 0.92% 1.22%
Annualized NCOs / Avg Loans (%)0.38% 0.43% 0.41%

Q3 2025 actual vs S&P Global consensus (Street definition)*

MetricS&P Consensus*Actual*
EPS (Primary)0.8180.9009
Revenue ($M)116.85107.90
EPS – # of est.5—
Revenue – # of est.4—
Target Price (mean, $)33.0833.08
Target Price – # of est.66
Values retrieved from S&P Global.

Revenue composition (non-GAAP “adjusted revenue” as defined by company)

Metric ($M)Q3 2024Q2 2025Q3 2025
NII (FTE)89.230 87.857 91.628
Noninterest income ex gains/losses25.663 27.160 26.885
Adjusted Revenue114.893 115.017 118.513

Balance sheet and capital

MetricQ3 2024Q2 2025Q3 2025
Total Loans & Leases ($M)6,271.839 6,601.589 6,728.728
Total Deposits ($M)7,483.157 7,637.208 7,632.196
Demand Deposits / Total (%)33.67% 33.91% 34.13%
CET1 Ratio (%)11.80% 11.95% 12.11%
TCE / TA (%)8.25% 8.26% 8.53%

Asset quality

MetricQ3 2024Q2 2025Q3 2025
NPLs / Loans (%)0.99% 0.62% 0.58%
NPAs / Loans+OREO (%)1.11% 0.71% 0.66%
ACL / Loans (%)1.06% 1.13% 1.11%
Criticized Loans / Loans (%)3.79% 3.70% 3.99%
Classified Loans / Loans (%)2.12% 1.89% 2.36%

Loan portfolio mix (period-end)

Category ($M)Q2 2025Q3 2025
Commercial RE – Other2,248.214 2,369.396
Commercial & Industrial1,407.382 1,489.505
Construction341.313 261.048
Leases400.052 382.753
Residential RE877.968 875.773
Consumer – Indirect692.674 710.385
Premium Finance277.622 273.297

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest MarginFY 2025Implied prior range4.0%–4.2% (reiterated) Maintained
Noninterest ExpenseQ4 2025n/a$69–$71M New
Loan GrowthFY 2025Guided range4%–6% (remain within) Maintained
Provision for Credit LossesQ4 2025n/aSimilar to Q3, barring forecast changes New color
Net Interest Margin (rate sensitivity)FY 2026n/aEach 25bp cut = 3–4 bp NIM impact New color
Fee-based IncomeFY 2025n/aMid-single-digit YoY growth New color
FY 2026 OutlookFY 2026n/aPositive op leverage; NIM 4.0%–4.2% pre-cuts; fees $27–$29M/quarter; opex $71–$73M/quarter (Q1 seasonally higher); loan growth 3%–5% New framework

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Core NIM ex-accretionQ1: NIM -3 bps, core NIM +3 bps; Q2: NIM to 4.15% on lower funding costs Fifth straight increase; ex-accretion +5 bps QoQ Improving
Credit – North Star leasingQ1/Q2: NCOs elevated from North Star; Q2 net charge-offs 0.43% with 30 bps from leasing NCOs 0.41%; high-balance North Star now ~$15–16M; ~25% of Q3 charge-offs; plateau expected to slope down by 2Q–3Q’26 Stabilizing -> Gradual improvement
Asset qualityQ1: Improved delinquencies; Q2: NPAs ~0.71% TA; criticized + NPAs down; NPLs 0.58%; criticized/classified up on a few downgrades with potential reversals in Q4 ($35–$55M) Mixed: core trends better; watch-list elevated
Deposits/mixQ1: QoQ growth; Q2: QoQ decline; demand ~34% Total deposits -$5M QoQ; demand 34%; shift away from brokered Stable mix; funding optimization
Securities portfolion/a in Q1; Q2 durations 5.57 (AFS)/7.66 (HTM) Sold ~$75M AFS at $2.7M loss; earn-back ~1.5 yrs; opportunistic; targeting yields Repositioning continues
$10B asset threshold / M&An/a earlier this yearCrossing organically likely 2027; optional levers to manage; M&A strategic but patient Actively managed trajectory
Rate sensitivityn/a25 bp cut → 3–4 bps NIM impact (full-year); deposit pricing actions ongoing Neutral-to-slightly sensitive

Management Commentary

  • CEO: “We continued to experience high loan growth and had improvements in several key financial metrics during the third quarter” .
  • CFO: “Excluding accretion income, our net interest margin expanded by five basis points, which is the fifth straight quarterly increase in core net interest margin” .
  • Credit outlook detail: “Criticized… largely based on three loans… classified… about four loans… we expect $35–$55 million in either upgrades or payoffs in those buckets” .
  • Portfolio repositioning: “We sold approximately $75 million of investment securities at a loss of $2.7 million… to increase our investment securities yields going forward” .
  • Strategic posture: “We continue to develop our business organically as we await the right opportunity to grow through acquisitions… positive operating leverage… NIM within guided range” .

Q&A Highlights

  • Criticized/classified loans: Mgmt expects $35–$55M of upgrades/payoffs in Q4 across a handful of credits, many from acquired portfolios .
  • Q4 loan balances: Expect record production and record payoffs; spot balances likely flat in Q4 due to payoff timing .
  • Rate sensitivity: Each 25 bps Fed cut implies ~3–4 bps full-year NIM headwind; mid-year timing less impactful .
  • North Star leasing: High-balance bucket down to ~$15–$16M; ~25% of Q3 charge-offs; expecting a plateau then gradual decline in 2H’26 toward normalized losses .
  • Consumer/auto credit: Auto portfolio ~$700M with ~ $1M subprime exposure; indirect losses trending ~70 bps YTD vs ~88 bps last year .
  • Capital/M&A: Active buyback program but prioritizing capital build for M&A and dividend; strategic patience on deals; $10B threshold likely 2027 barring actions .

Estimates Context

  • EPS beat on S&P Global primary/normalized basis: actual 0.9009 vs 0.818 estimate for Q3; management also said GAAP EPS excluding the securities loss exceeded consensus (S&P Global)*.
  • Revenue missed on S&P’s revenue definition (actual $107.9M vs $116.9M est), while company “adjusted revenue” rose QoQ (to $118.5M) on higher FTE NII and stable fees ex-gains/losses (S&P Global). Values retrieved from S&P Global.

Key Takeaways for Investors

  • Core profitability improving: NIM ex-accretion rose for a fifth straight quarter and efficiency improved; combined with normalized provision, this underpinned EPS resilience .
  • Credit risk manageable: NPL/NPA ratios declined, and mgmt expects partial near-term reversion of elevated criticized/classified balances in Q4 ($35–$55M) .
  • Strategic balance sheet actions: Securities sale (earn-back ~1.5 years) lifts future portfolio yields at the cost of a $2.7M loss this quarter .
  • Funding mix steady: Demand deposits stable at 34%; reduction in brokered deposits continues as PEBO optimizes funding costs .
  • Guidance implies stability: FY25 NIM range reiterated (4.0%–4.2%); Q4 opex guided to $69–$71M; loan growth to finish within 4%–6% .
  • Rate path sensitivity modest: Each 25 bps cut impacts full-year NIM by ~3–4 bps, with timing effects if cuts occur midyear .
  • Shareholder returns consistent: Quarterly dividend maintained at $0.41 (~49.7% payout of Q3 earnings) .

Additional Details and Data Points

  • Net interest income rose $3.8M QoQ to $91.3M, aided by loan growth and higher securities yields; accretion contribution fell to 8 bps (from 12 bps) .
  • Provision was $7.3M (vs $16.6M in Q2) driven by NCOs, loan growth, and slight forecast deterioration; EPS impact -$0.16 (vs -$0.36 in Q2) .
  • Loans +$127.1M QoQ (+8% annualized), led by C&I and other CRE; construction declined as projects converted to CRE .
  • Deposits -$5M QoQ as customer deposits rose $19.5M but brokered/governmental fell; uninsured deposits ~27% (collateralized portion disclosed) .

Notes: Non-GAAP definitions and reconciliations are provided in the company release –.