[Management View]
Peoples Bancorp Inc. (PEBO) reported diluted earnings per share of $0.59 for Q2 2025. Key metrics included an 11% annualized loan growth and a net interest margin expansion to 4.15%. Strategic priorities focused on managing the small ticket leasing portfolio and maintaining a neutral interest rate risk profile.

[Outlook]
Management expects a full-year 2025 net interest margin of 4.00%-4.20%, loan growth of 4%-6%, and quarterly noninterest expense of $69 million-$71 million in Q3 and Q4 2025. Fee-based income is forecasted to grow in mid-single-digit percentages compared to 2024.

[Financial Performance]
YoY, the efficiency ratio increased to 60% from 58.6% due to lower accretion income and higher noninterest expenses. QoQ, net interest income rose by over $2 million, and the net interest margin expanded by three basis points. Noninterest expense decreased by 1% to $70.4 million.

[Q&A Highlights]
Question 1: How are you thinking about the pace of small ticket leasing charge-offs plateauing in the back half of the year?
Answer: We expect charge-offs in small ticket leasing to be consistent with Q2 levels, with a slight possibility of variation. The core commercial portfolio remains healthy, and we anticipate continued strength in the rest of the portfolio.

Question 2: How should we think about reserves as specific reserves are charged off and loss drivers impact overall reserves?
Answer: The $3.8 million in individually analyzed reserves includes about half attributable to small ticket leasing and the other half to a commercial relationship. We believe this is the peak, and reserves should decline from here.

Question 3: Can you provide color on loan growth guidance for 2025?
Answer: We expect strong loan demand and balanced growth across all categories. Paydowns will be slightly elevated in the second half, but we remain optimistic about achieving mid-single-digit loan growth.

Question 4: What is your outlook on deposit growth and competition?
Answer: We expect seasonal growth in governmental deposits in Q3, with stable balances in other categories. Deposit competition remains stable, and we continue to manage deposit costs actively.

Question 5: Can you discuss the overall profitability of the NorthStar business?
Answer: Profitability has tightened but is on a trajectory to improve. We are restructuring the business to align with portfolio size and ensure it remains a profitable engine.

Question 6: Have you observed any impacts from tariffs on your loan portfolio?
Answer: We have not seen material impacts from tariffs. We continue to monitor our portfolio closely, particularly in the auto and manufacturing sectors.

Question 7: What are the near-term dynamics for net interest margin (NIM) and accretion income?
Answer: We expect accretion income to remain in the mid to low teens basis points. Deposit pricing will be actively managed, and loan pricing discipline will be maintained.

Question 8: What is your appetite for stock repurchases and M&A opportunities?
Answer: We remain opportunistic with stock repurchases and are focused on strategic M&A opportunities, particularly in overlapping or adjacent markets.

[Sentiment Analysis]
Analysts were focused on the small ticket leasing portfolio and its impact on charge-offs and reserves. Management maintained a confident tone, emphasizing strong loan demand, active deposit cost management, and strategic M&A opportunities.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | Q2 2024 |
|-------------------------------|---------|---------|---------|
| Diluted EPS | $0.59 | N/A | N/A |
| Annualized Loan Growth | 11% | N/A | N/A |
| Net Interest Margin | 4.15% | 4.12% | N/A |
| Net Interest Income | +$2M | N/A | N/A |
| Noninterest Expense | $70.4M | N/A | N/A |
| Efficiency Ratio | 59.3% | 60.7% | 58.6% |
| Provision for Credit Losses | $16.6M | $10.1M | N/A |
| Net Charge-Off Rate | 43 bps | 52 bps | N/A |
| Allowance for Credit Losses | 1.13% | N/A | N/A |
| Nonperforming Assets | 49 bps | 50 bps | N/A |
| Deposit Balances | -1% | N/A | N/A |
| Tangible Equity to Tangible Asset Ratio | 8.3% | 8.3% | N/A |

[Risks and Concerns]
The small ticket leasing business continues to experience elevated charge-offs and delinquencies. Economic stress and uncertainty, along with the heightened rate environment, pose ongoing risks.

[Final Takeaway]
Peoples Bancorp demonstrated strong loan growth and margin expansion in Q2 2025, despite challenges in the small ticket leasing portfolio. Management remains focused on maintaining a neutral interest rate risk profile, actively managing deposit costs, and pursuing strategic M&A opportunities. The outlook for the remainder of 2025 includes steady margin performance, mid-single-digit loan growth, and positive operating leverage.