Peoples Bancorp's third-quarter 2026 profit rises 10.6% from a year earlier to $32.6 million while margin widens to 4.31%

Peoples Bancorp earned $32.6 million in the third quarter of 2026, or $0.91 a diluted share, up 10.6% from $29.5 million, or $0.83, a year earlier, while the net interest margin widened to 4.31% and $4.8 million of net losses on securities and other transactions reduced reported profit.

Two costs separated the quarter's operating performance from its reported profit: $4.8 million of net losses on securities and other transactions and $1.5 million of acquisition-related expenses. Excluding $0.13 a share of non-core items, diluted earnings were $1.04, which the earnings presentation says exceeded consensus analyst estimates of $0.93.

Funding costs fall faster than loan yields

Net interest income was $93.8 million, $1.1 million above the second quarter and $2.5 million, or 3%, above the year-earlier quarter. The margin of 4.31% compared with 4.23% in the linked quarter and 4.16% a year earlier, a gain of 15 basis points year over year. Peoples credits higher loan income for the sequential move and lower deposit and borrowing costs for the annual one: the average cost of total interest-bearing liabilities fell to 2.12% from 2.44% a year earlier, while the average yield on total loans slipped to 6.44% from 6.71%. Funding costs fell faster than asset yields.

"We are very pleased with our strong performance for the third quarter of 2026, highlighted by continued improvement in our net interest margin, net interest income, our fee-based revenue streams, and overall profitability," Chief Executive Officer Tyler Wilcox said in the release.

Securities sales and merger costs shrink reported profit

Non-interest income rose mainly because the net securities loss was smaller than in the linked quarter, and fee income excluding net gains and losses also grew: that measure rose $1.5 million, or 5%, from the second quarter on higher lease, swap-fee, deposit account service charge and trust income. Net gains and losses cost $4.8 million, against $8.6 million in the linked quarter, when Peoples sold $135.2 million of available-for-sale securities at a net loss of $8.2 million, and $3.1 million a year earlier. The third-quarter sale totaled $58.5 million at a net loss of $4.5 million, part of management's effort to keep the balance sheet under $10 billion in assets ahead of the Citizens merger. Fee income excluding net gains and losses rose $3.6 million from a year earlier.

Non-interest expense was $1.8 million higher than in the second quarter and $4.6 million higher than a year earlier, and the non-GAAP efficiency ratio edged up to 58.50% from 58.27% on higher expenses. Adjusted for non-core items the ratio was 57.30%, better than the linked quarter's 57.93%. The provision for credit losses fell to $3.6 million from $4.7 million sequentially and $7.3 million a year earlier, and cost $0.08 a share. Return on average assets was 1.36%, or 1.57% adjusted for non-core items, against 1.22% and 1.32% adjusted a year earlier.

Nonperformers fall while classified loans climb 21%

Net charge-offs were 0.35% of average loans on an annualized basis, up from 0.31% in the linked quarter on one commercial and industrial relationship, and down from 0.41% a year earlier. Nonperforming assets fell $4.1 million, or 10%, from June 30 and $7.8 million, or 18%, from a year earlier, and equaled 0.54% of loans and other real estate owned. The allowance covered 206.83% of nonperforming loans, up from 190.78%.

Classified loans moved the other way, rising $30.1 million, or 21%, to 2.50% of total loans from 2.06%, which the presentation attributes to downgrades of two commercial real estate and one commercial and industrial relationship. "We do not anticipate significant losses from these relationships, as we are in the process of exiting these credits", it says. Criticized loans, the wider category, fell $17.7 million, or 6%, from the second quarter to 3.74% of loans.

A 4.58% dividend, two mergers and the fourth-quarter tests

An all-stock deal for Capital Bancorp, announced September 30, 2026, is valued at approximately $728.1 million; the Citizens National Corporation transaction at approximately $76.6 million. Both remain pending, and the release warns that the Capital merger may not close when expected or at all if regulatory or shareholder approvals are not obtained. On the release's preliminary basis, the common equity tier 1 ratio rose to 12.81%, while tangible equity to tangible assets slipped to 9.06% from 9.25% as accumulated other comprehensive loss widened by $28.5 million.

The board declared a quarterly dividend of $0.42 a share on October 19, payable November 16 to holders of record on November 2: about $15.1 million, or 46.3% of third-quarter earnings, and a 4.58% annualized yield at the October 16 close of $36.72. Management guides to fourth-quarter non-interest income excluding gains and losses of between $28 and $30 million and non-interest expense of between $78 and $80 million, with 2026 loan growth of 6% to 8% including Citizens and a full-year margin of 4.20% to 4.30%. For 2027 it projects a margin of 4.30% to 4.50%, a range that assumes 25-basis-point Federal Reserve rate increases in late 2026, March 2027 and September 2027 and excludes the pending Capital merger. The third-quarter Form 10-Q is expected on or about October 29, 2026.