Full Transcript: Peoples Bancorp Q2 2026 Earnings Call

Peoples Bancorp (NASDAQ: PEBO ) reported second-quarter financial results on Tuesday.

The transcript from the company's second-quarter earnings call has been provided below.

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For comprehensive financial data and transcripts, visit Access the full call at Summary Peoples Bancorp reported a 6 basis point increase in net interest margin, driven by disciplined deposit costs and higher interest income.

The company's balance sheet is well-positioned for a rising rate environment, with a neutral stance on fee-based income, which grew by $3 million in the first half of 2026.

Noninterest expenses rose by 2%, influenced by acquisition-related costs and increased operating lease expenses.

The efficiency ratio improved to 58.3% in Q2 2026, attributed to higher revenue.

Loan-to-deposit ratio increased to 91.5%, with a reduction in deposits partly offset by increases in money market and noninterest-bearing deposits.

The company anticipates the Citizens merger to close by early Q4 2026 and expects core system conversion by early Q2 2027.

Guidance for 2026 includes a net interest margin between 4.1% and 4.3% and fee-based income between $28 million and $30 million per quarter.

Management remains optimistic about potential future acquisitions and maintaining asset levels under $10 billion.

Expectations for loan growth are towards the lower end of 3% to 5% due to paydowns, while anticipating positive impacts on credit loss provisions.

Full Transcript Kathryn Bailey, EVP, Chief Financial Officer And Treasurer Or 6%, while net interest margin expanded 6 basis points.

Our deposit cost discipline along with higher interest income contributed to the increase.

Accretion income totaled $2.4 million compared to $6.1 million for 2025, contributing 6 basis points and 15 basis points to net interest margin respectively.

As far as our balance sheet structure at this time, we are positioned to benefit more from a rising rate environment.

A falling rate environment would cause a nominal reduction in our net interest income.

However, rate uncertainty validates our relatively neutral position as it relates to our fee-based income.

We had growth of over $340,000 compared to the linked quarter.

We had improvements in the majority of our fee-based income lines which more than offset the decline in insurance income driven by the annual performance-based insurance commission received in the first quarter of each year.

For the first six months of 2026, fee-based income grew $3 million mostly due to higher lease income and trust and investment income.

Our noninterest expenses were up 2% compared to the linked quarter, which included $410,000 of acquisition-related expenses, the majority of which contributed to the increase in professional fees.

For the first six months of 2026, noninterest expenses were up 2%.

The growth was driven by higher operating lease expenses, which corresponds to our fee-based lease income, as well as salaries and employee benefits costs and data processing and software expense.

For the first half of 2026, we have recorded $426,000 of acquisition-related expenses.

Our reported efficiency ratio was 58.3% for the second quarter and 58.6% for the linked quarter.

The improvement in our efficiency ratio was driven by higher revenue compared to the first quarter.

For the first 6 months of 2026, our reported efficiency ratio was 58.4% compared to 60% for the prior year and was also driven by higher revenue.

Looking at our balance sheet at quarter end, our loan-to-deposit ratio increased to 91.5% compared to 88.5% at March 31.

As we had loan growth for the second quarter coupled with a reduction in deposits, our investment portfolio as a percent of total assets declined to 19.1% at June 30 compared to 20.3% at the linked quarter end.

The decline was driven by the sale of approximately $135 million of available-for-sale investment securities, resulting in a loss of $8.2 million for the second quarter.

These sales were part of our current plan to stay below $10 billion in total assets and restructure our portfolio in conjunction with the pending Citizens merger.

Our core deposit balances, which exclude brokered CDs, declined $155 million compared to March 31.

As expected, we had seasonal decreases in our governmental deposits, which were down $87 million.

We also had reductions in our interest-bearing demand accounts of $17 million.

During the second quarter, we also had reductions of $92 million in retail CDs.