Peoples Bancorp Inc.

Reported Q2 2026 diluted EPS was $0.78; adjusted diluted EPS was $0.96, ahead of the $0.85 consensus. Net interest income increased $2.3 million sequentially, net interest margin expanded 7 basis points, fee-based income rose more than $340,000, and the efficiency ratio improved to 58.3% from 58.6%. Provision for credit losses was $4.7 million, down $5 million or 51% from Q1; annualized net charge-offs improved to 31 bps from 40 bps; allowance for credit losses declined to 1.14% of total loans from 1.16%. Loans grew $51 million, or 3% annualized, and non-interest-bearing deposits grew $7 million, or 2% annualized. Book value per share rose to $34.41 from $33.85, and tangible book value per share increased to $23.56 from $22.95. The company recorded an $8.2 million loss on sale of about $135 million of available-for-sale securities, $410,000 of acquisition-related expenses, and a $480,000 tax benefit from an energy tax credit. Forward guidance: for full-year 2026, excluding non-core expenses and the planned merger, management expects positive operating leverage, NIM of 4.1%-4.3%, quarterly fee-based income of $28 million-$30 million, quarterly total non-interest expense of $73 million-$75 million for the remaining two quarters, loan growth toward the low end of 3%-5%, and a slight reduction in 2026 net charge-offs vs. 2025. Management also said a 25-bps Fed rate increase would add 6-8 bps to full-year NIM, assuming the rest of the rate environment is stable.

Tyler Wilcox emphasized that Peoples is staying disciplined around the $10 billion asset threshold while preparing for the Citizens merger and keeping optionality for additional M&A. He said the second quarter showed progress across core metrics, with better margins, lower credit costs, and improved capital ratios, and repeatedly framed the franchise as well positioned and selectively priced. His tone was confident and matter-of-fact, with a focus on execution, integration planning, and maintaining strategic flexibility.

Katie Bailey said the quarter benefited from lower deposit costs, which helped net interest income and margin, and noted accretion income of $1.2 million versus $1.3 million in Q1. She pointed to 2% growth in non-interest expense sequentially, including $410,000 of acquisition-related costs, and said the efficiency ratio improved to 58.3% from 58.6%. On the balance sheet, she said the loan-to-deposit ratio rose to 91.5% from 88.5%, core deposits fell $155 million, and the investment portfolio dropped to 19.1% of assets after the sale of about $135 million of securities. She also said the company remains positioned to benefit more from rising rates than falling rates, while still describing the overall rate stance as relatively neutral.

Analysts pressed on margin sensitivity, deposit competition, loan paydowns, credit quality in criticized loans, and the timing/impact of the Citizens-related balance sheet restructuring. Management said the 4.1%-4.3% NIM guide assumes a stable rate environment, while a 25-bps hike would add 6-8 bps to NIM, and said deposit competition is competitive but stable. On criticized loans, Tyler Wilcox said the two notable credits were unrelated, did not share commonality, and management does not expect losses from either; on loan growth, he reiterated that CRE paydowns, muted indirect auto demand, and a robust but offsetting pipeline are pushing growth toward the low end of guidance. On Citizens, management said the transaction remains on track for an early Q4 2026 close, with system conversion in early Q2 2027.