Peoples Bancorp Inc. Q2 FY2025 earnings call

• Tyler mentioned diluted EPS of $0.59, net interest income up over $2M, net interest margin expanded 3 basis points, core net interest margin expanded for 4th straight quarter excluding accretion income. - Fee-based income was relatively stable with improvements in some areas offsetting reduction in insurance income. - Noninterest expense was within guided range, down 1% from linked quarter. - Allowance for credit losses grew to 1.13% of total loans. Provision for credit losses $16.6M with components including net charge-offs, reserves on individually analyzed loans, etc. - Annualized net charge-off rate improved to 43 basis points. - Nonperforming assets increased, criticized loans grew, classified loans as % of total loans declined. - Loan growth 11% annualized across various categories. - Katie discussed net interest income up over $2M, net interest margin 4.15%, deposit and borrowing costs declined. - Fee-based income declined QoQ but up YTD. - Noninterest expense within guided range, efficiency ratio improved. - Loan to deposit ratio 86%, investment portfolio grew, deposit balances declined, capital ratios declined but tangible equity to tangible assets ratio stable at 8.3%.

Peoples Bancorp Inc. reported a diluted earnings per share of $0.59 for the second quarter of 2025. Annualized loan growth was 11%. Net interest income increased over $2 million with net interest margin expanding three basis points. Fee-based income was relatively stable. Noninterest expense was within the guided range. The overall allowance for credit losses grew $9.4 million to 1.13% of total loans. Provision for credit losses totaled $16.6 million. Annualized net charge-off rate was 43 basis points, an improvement from 52 basis points. Loan to deposit ratio was 86% from 83% at March 31. Investment portfolio grew around $140 million. Deposit balances declined 1%, and capital ratios declined but tangible equity to tangible assets ratio was stable at 8.3%.

• Assuming three 25 basis point rate cuts in second half, full year net interest margin expected between 4.00% and 4.20%. - Fee-based income growth expected in mid-single-digit percentages vs 2024. - Q3 and Q4 noninterest expense expected between $69M and $71M. - Loan growth expected between 4% and 6% vs 2024. - Small ticket leasing net charge-offs expected to plateau in next two quarters. - Provision for credit losses expected to be lower in next couple of quarters excluding negative economic impacts.

• Impacts from tariffs not observed yet but monitored. - Actual results may differ materially from forward-looking statements. - Economic forecast deterioration and loan growth could impact provisions.

Q: About small ticket leasing charge-offs plateauing and reserves.

A: Charge-offs correlated with high balance accounts, expected to plateau; reserves include components like individually analyzed loans and loss drivers update.

Q: Loan growth guidance color.

A: Strong production in first half, expect pay downs in second half but loan demand robust.

Q: Deposit growth outlook and pricing.

A: Seasonality in governmental deposits, stable deposit competition, actively managing deposit costs.

Q: NorthStar business profitability.

A: Profitability tightened, restructuring to regain previous performance.

Q: Tariffs impact on loan portfolio.

A: Broad review done, no material impact observed yet.

Q: NIM dynamics and leasing profitability.

A: NIM range with rate cuts, leasing yields attractive if profitability returns.

Q: Downgraded commercial relationship and leasing charge-offs plateau.

A: C&I loan in Ohio, leasing charge-offs plateau due to active management of high balance accounts.

Q: Loan yields and M&A.

A: Loan yields stable, opportunistic with stock repurchases and M&A in targeted regions.