• Diluted Earnings Per Share (EPS): $0.76 for Q4 2024; $3.31 for the full year 2024.
• Net Interest Income: Increased 3% year-over-year; declined 3% compared to the linked quarter.
• Net Interest Margin: 4.21% for the year; 4.15% for Q4 2024.
• Fee-Based Income: Grew 10% year-over-year; 5% increase compared to the linked quarter.
• Efficiency Ratio: 58% for the year; 59.6% for Q4 2024.
• Book Value Per Share: Improved 5% to $31.26.
• Tangible Book Value Per Share: Grew 10% to $19.94.
• Loan-to-Deposit Ratio: Declined to 84% from 86% in 2023.
• Deposit Balance Growth: $443 million or 6% increase compared to 2023.
• Tangible Equity to Tangible Assets Ratio: Improved to 8.01% at year-end.
• Allowance for Credit Losses: 1% of total loans.
• Net Charge-Off Rate: 61 basis points for Q4 2024; 37 basis points for the full year 2024.
• Non-Performing Assets: Declined $21 million; 0.53% of total assets at year-end.
• Commercial and Industrial Loans: Increased $163 million; grew from 19% to 21% of the portfolio.
• Commercial Real Estate Loans: Declined from 36% to 34% of the portfolio.
• Dividend Yield: 5.11%.

• Warning! GuruFocus has detected 3 Warning Sign with PEBO.

Release Date: January 21, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Peoples Bancorp Inc (Marietta OH) (NASDAQ:PEBO) reported a 3% improvement in net interest income compared to 2023, with a net interest margin of 4.21%, outperforming most in the industry.
• Fee-based income grew by 10% year-over-year, driven by higher commercial loan swap fees and improved lease, trust, investment, and insurance income.
• The company experienced a favorable shift in its loan portfolio mix, with Commercial and Industrial Loans increasing by $163 million, demonstrating stability in its Commercial Loan portfolio.
• Deposit balances grew by $443 million or 6% compared to 2023, with a tangible equity to tangible assets ratio improving to 8.01% at year-end.
• Peoples Bancorp Inc (Marietta OH) (NASDAQ:PEBO) continues to be recognized as a top employer, contributing to community engagement and maintaining a strong market presence.

Negative Points

• Net interest income declined by 3% in the fourth quarter compared to the linked quarter, driven by lower accretion income.
• The net charge-off rate for the full year increased to 37 basis points from 15 basis points in 2023, primarily due to elevated charge-offs in the small ticket leasing business.
• The company's provision for credit losses declined in the fourth quarter, but the annualized net charge-off rate was 61 basis points, up from 38 basis points in the linked quarter.
• Non-interest expenses increased by 7% compared to the linked quarter, driven by higher non-core expenses and reductions in corporate expense recognized last quarter.
• The efficiency ratio for the fourth quarter increased to 59.6% from 55.1% in the linked quarter, due to lower net interest income and increased non-interest expense.

Q & A Highlights

Q: What was the driver of the divergence between end-of-period and average loan growth for the quarter? A: Tyler Wilcox, President and CEO, explained that the divergence was primarily due to timing, with many borrowers completing deals in December. Demand remains strong across all portfolios.

Q: How long will it take to get more beta out of the deposit base and adjust pricing in response to Fed rate changes? A: Kathryn Bailey, CFO, noted that they started adjusting deposit rates ahead of the Fed's actions in September and will continue to manage rates actively into the first quarter, even if no rate cuts occur.

Q: Can you provide insights into asset quality, especially outside the leasing book? A: Tyler Wilcox highlighted that overall asset quality is strong, with a reduction in nonperforming assets and positive delinquency trends. The commercial book had minimal charge-offs, and consumer credit trends are improving.

Q: What is the composition of variable-rate loans, and how do they reprice? A: Kathryn Bailey stated that most variable-rate loans reprice monthly, with a portion quarterly and a very small portion on a longer lag.

Q: Are there any concerns or optimism among C&I borrowers due to the change in administration and macroeconomic factors? A: Tyler Wilcox mentioned that while some clients may be impacted by tariffs, there is a general sense of business optimism, reflected in the small business optimism index and throughout their markets.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.