Peoples Bancorp Inc. Q3 FY2025 earnings call

• Tyler mentioned diluted earnings per share of $0.83, sold $75M investment securities at a loss of $2.7M. - Highlights include annualized loan growth 8%, net interest income up nearly $4M, net interest margin expanded, provision for credit losses declined over 50%, noninterest expenses declined 1%, efficiency ratio improved, tangible equity to tangible assets ratio improved, book value per share grew. - Katie discussed net interest income and margin, fee-based income, noninterest expenses, balance sheet details (loan growth, loan to deposit ratio, investment portfolio shrinkage), and capital position.

Loan Growth: Annualized loan growth of 8%, year-to-date loan growth 6%. Net Interest Income: Increased nearly $4,000,000, net interest margin expanded by one basis point, excluding accretion income, expanded five basis points. Fee-based Income: 1% decline compared to linked quarter, but up 7% for first nine months of 2025. Noninterest Expenses: Declined 1%, efficiency ratio improved to 57.1%. Capital: Tangible equity to tangible assets ratio improved 27 basis points to 8.5%, book value per share grew 2%, tangible book value per share improved by 4%.

• For 2025: Full year net interest margin expected to be in the guided range of between 4.2%, fee-based income growth mid-single-digit percentages, total non-interest expense between $69M-$71M, loan growth 4-6%, provision for credit losses similar to third quarter. - For 2026: Expect positive operating leverage, net interest margin between 4.2% (without rate cuts), each 25 basis point rate cut expected to lower net interest margin 3-4 basis points, fee-based income quarterly range $27M-$29M, total non-interest expense between $71M-$73M, loan growth 3-5%, net charge-offs expected to reduce.

• Potential differences between forward-looking statements and actual results. - Credit risks with criticized and classified loans. - Impact of interest rate changes on net interest margin. - Economic forecast uncertainties affecting provision for credit losses.

Q: Daniel Tamayo asked about criticized and classified loans, asking for clarification on expected reversal and size of increase.

A: Tyler Wilcox responded about expected refinances, property sales, and specific details on criticized and classified loan buckets, expecting 35-$55M in upgrades or payoffs in the fourth quarter.

Q: Brendan Nosal asked about loan growth guidance for 2026 and North Star loss content.

A: Tyler Wilcox discussed loan growth drivers including pay down activity and consumer softening, and Tyler Wilcox and Katie Bailey provided details on North Star loss content and glide path.

Q: Adam Kroll asked about margin offsets, North Star charge off contributions, and securities restructure.

A: Katie Bailey discussed margin offsets, Tyler Wilcox provided North Star charge off contribution details, and Katie Bailey talked about securities restructure earn back and evaluation.

Q: Tim Switzer asked about consumer behavior impact and $10B threshold.

A: Tyler Wilcox discussed consumer exposure and $10B threshold timeline, expecting 2027 for crossing organically.

Q: Brendan Root asked about loan growth regions, premium finance, rate cuts impact, and fixed rate asset repricing.

A: Tyler Wilcox and Katie Bailey provided details on loan growth regions, premium finance timing, rate cut actions, and fixed rate asset repricing mix.

Q: Daniel Cardenas asked about auto portfolio FICO scores and restaurant exposure.

A: Tyler Wilcox provided auto portfolio FICO score and restaurant exposure details, noting no concerns with McDonald's deals.

Q: Brendan Nosal followed up on North Star reserve balance.

A: Tyler Wilcox stated North Star reserve balance is about $18M of $75M.

Q: Ryan Payne asked about capital, buybacks, and M&A.

A: Tyler Wilcox discussed buyback program, capital priorities for M&A, and strategic patience in M&A.