Peoples Bancorp (PEBO): A Regional Powerhouse Poised for Growth in Q2 2025 and Beyond

Peoples Bancorp Inc. (NASDAQ: PEBO), a $9.2 billion financial services powerhouse, is set to deliver its Q2 2025 earnings results on July 22, 2025. With a robust community banking model, expanding branch network, and improving credit metrics, PEBO presents a compelling opportunity for investors seeking stability and growth in the mid-cap banking sector. Let's dissect the key catalysts driving its near-term potential.

Regional Dominance Through Branch Network Expansion

PEBO's regional footprint is its crown jewel. With 148 branches—128 of which are full-service—the company dominates six states and the nation's capital, offering banking, insurance, and specialty finance services to underserved communities. This geographic concentration allows it to build deep client relationships and leverage economies of scale.

The company's Q1 2025 results showed annualized loan growth of 4%, driven by commercial real estate, residential mortgages, and consumer lending. While commercial and industrial loans dipped slightly, management emphasized that the pipeline for Q2 remains robust. With a target of 4-6% annual loan growth, PEBO is well-positioned to capitalize on its regional dominance.

Asset Quality Trends: A Steady Foundation for Growth

PEBO's credit metrics have improved meaningfully. In Q1 2025:
- The net charge-off rate fell to 52 basis points, down from 61 basis points in Q4 2024.
- Non-performing assets dropped to 50 basis points of total assets, a sign of tightening underwriting standards.
- The criticized and classified loan portfolio shrank by $19 million, reflecting stronger risk management.

This stability is critical. Unlike larger banks exposed to national macroeconomic headwinds, PEBO's localized lending reduces systemic risk. Management has also reduced reliance on volatile brokered CDs, cutting them by $96 million in Q1 while boosting core deposits by 3%. This shift lowers funding costs and enhances liquidity—a win for profitability.

Leadership Visibility: A Clear Path Forward

The upcoming earnings call on July 22 will feature CEO Tyler Wilcox and CFO Kathryn Bailey, who have consistently prioritized transparency. Analysts will focus on three key areas:
1. Loan Pipeline Strength: Can PEBO sustain its 4-6% growth target amid regional economic shifts?
2. Margin Resilience: With the Fed's rate cuts, how will the projected 4.2%-4.4% net interest margin hold up?
3. M&A Opportunities: Management has hinted at acquisitions in Ohio, Kentucky, and West Virginia to expand market share.

Wilcox's emphasis on becoming the “Best Community Bank in America” is no empty slogan. The company's 10-year dividend growth streak (up to $0.41/share quarterly) and 5.95% yield underscore its commitment to shareholder returns.

Why PEBO Is Undervalued in the Mid-Cap Banking Space

• Russell 3000 Inclusion: As a member of this index, PEBO attracts passive institutional flows, potentially lifting liquidity and valuation multiples.
• Stable Valuation: With a P/B ratio of just 1.2x (below the sector average of 1.4x), PEBO trades at a discount despite its strong fundamentals.
• Dividend Appeal: The 5.95% yield is attractive in a low-rate environment, especially for income-focused investors.

Investment Thesis: Buy Before the Earnings Call

PEBO's combination of regional dominance, improving credit metrics, and disciplined capital returns makes it a standout in the mid-cap banking space. The upcoming earnings call is a catalyst to watch: strong loan growth guidance or M&A news could unlock valuation upside.

Risk Factors:
- Slower loan demand in key states.
- Interest rate cuts exceeding management's assumptions.
- Regulatory changes impacting community banks.

Final Take

Peoples Bancorp is a well-run, community-focused bank with a solid track record of navigating macro challenges. Its Q2 results and leadership commentary will test whether it can sustain its growth trajectory. For income investors and sector allocators, PEBO offers a rare blend of stability and upside potential—making it a buy before the earnings release.

Stay tuned for the July 22 call. This could be the catalyst to push PEBO's valuation toward its peers—and beyond.