Peoples Bancorp Inc. Q4 FY2025 earnings call

• Diluted earnings per share was 89¢ for the fourth quarter, a 7% increase from the linked quarter. - Provision for credit losses totaled $8,100,000 in Q4, driven by net charge-offs. - Reduced position in small ticket leases, with balances at $13,000,000 at year-end vs. $35,000,000 in 2024. - Redeemed subordinated debt, resulting in a $800,000 loss but future funding cost savings. - Tangible equity to tangible assets ratio grew 26 basis points to 8.8%, and book value per share grew 2%.

For the fourth quarter, fee-based income improved 5%. Net interest income was relatively flat compared to the linked quarter, with net interest margin declining four basis points. Loan growth was 6% in 2025, with commercial and industrial loans up $46,000,000 and construction loans up $40,000,000 in Q4. Fee-based income grew 6% over 2024, driven by lease income, deposit account service charges, etc. Net interest income improved 2% in 2025, but net interest margin declined seven basis points. The allowance for credit losses stood at 1.12% of total loans at year-end, an increase from 1% at prior year-end.

• Expect positive operating leverage in 2026 excluding non-core expenses. - Net interest margin expected to be between 4.2% for full year 2026, including one 25 basis point rate cut. - Quarterly fee-based income expected to range between $28,000,000 and $30,000,000. - Loan growth expected to be 3-5% in 2026. - Anticipate net charge-offs to decline in 2026. - Expect to cross $10,000,000,000 in assets in 2027 without acquisition, with no plan to go organic.

• Credit risk: Higher net charge-offs, especially in small ticket leases, and potential impact from economic forecast changes. - Interest rate risk: Impact of rate cuts on net interest margin and funding costs. - M&A uncertainty: Dependence on M&A activity and regulatory environment affecting growth and balance sheet size.

Q: Question on margin guide.

A: Katie Bailey mentioned accretion benefit expected to be closer to 5 basis points for full year 2026.

Q: Question on NorthStar leasing.

A: Tyler Wilcox stated charge-offs in NorthStar leasing are due to reserved high balance accounts, expecting decline in 2026.

Q: Question on capital action.

A: Katie Bailey said they continue share buybacks and dividend, with no major capital actions planned outside of organic growth.

Q: Question on loan demand.

A: Tyler Wilcox expressed optimism on loan demand, especially commercial side, expecting continuation into 2026 with new talent and favorable tax policy.

Q: Question on M&A and fee-based income.

A: Tyler Wilcox stated interest in insurance M&A, active in market but priority on primary bank M&A and fee-based income deals.