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. This content is powered APIs. 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. 3% in Q2 2026, attributed to higher revenue. 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. 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. 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. 6% for the linked quarter. The improvement in our efficiency ratio was driven by higher revenue compared to the first quarter. 4% compared to 60% for the prior year and was also driven by higher revenue.

5% at March 31. 3% at the linked quarter end. 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.

However, we improved our deposit costs by 6 basis points compared to the linked quarter. These declines were partially offset by an increase of $37 million in money markets and $7 million in noninterest-bearing deposits. Our demand deposits as a percent of total deposits grew to 36% at June 30 compared to 35% at the linked quarter end. Our noninterest-bearing deposits to total deposits ratio was flat at 21% for both June 30 and March 31.

As it relates to our capital levels, all of our regulatory capital ratios improved compared to the linked quarter end as earnings outpaced dividends. I will now turn the call back over to Tyler for his closing comments. Tyler Wilcox, President and Chief Executive Officer Thank you, Katie. We continue to make progress with the pending Citizens merger and are excited about the opportunity to bring our associates together.

We have spent a considerable amount of time within the footprint interacting with associates and hosting meetings to discuss our future. We are coordinating processes between teams, both on the front lines and operationally, to ensure a seamless transition. We are awaiting regulatory and Citizens shareholder approvals for the merger but are anticipating a close date of early in the fourth quarter of 2026. As with recent bank acquisitions, the core system conversion will be at a later date, which we are targeting to take place early in the second quarter of 2027.

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