Peoples Bancorp (PEBO)

Regional banking company Peoples Bancorp (NASDAQ:PEBO) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 3.2% year on year to $118.5 million. Its GAAP profit of $0.83 per share was 1.5% above analysts’ consensus estimates.

Company Overview

Founded in 1902 in Ohio and expanding through both organic growth and acquisitions, Peoples Bancorp (NASDAQ:PEBO) is a financial holding company that provides banking, insurance, equipment leasing, and investment services to consumers and businesses.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Peoples Bancorp competes with regional banks operating in the same geographic areas, including WesBanco (NASDAQ:WSBC), Premier Financial (NASDAQ:PFC), and First Merchants (NASDAQ:FRME), as well as larger national institutions like JPMorgan Chase (NYSE:JPM) and U.S. Bancorp (NYSE:USB) that have branches in Peoples' markets.

In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees. Over the last five years, Peoples Bancorp grew its revenue at an incredible 17.5% compounded annual growth rate. Its growth beat the average banking company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Peoples Bancorp’s annualized revenue growth of 5.9% over the last two years is below its five-year trend, but we still think the results were respectable. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Peoples Bancorp reported modest year-on-year revenue growth of 3.2% but beat Wall Street’s estimates by 1.3%.

Net interest income made up 75% of the company’s total revenue during the last five years, meaning lending operations are Peoples Bancorp’s largest source of revenue.

Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.

Topline growth carries importance, but the overall profitability behind this expansion determines true value creation. For banks, the efficiency ratio captures this relationship by measuring non-interest expenses, including salaries, facilities, technology, and marketing, against total revenue.

Investors place greater emphasis on efficiency ratio movements than absolute values, understanding that expense structures reflect revenue mix variations. Lower ratios represent better operational performance since they show banks generating more revenue per dollar of expense.

Over the last five years, Peoples Bancorp’s efficiency ratio has swelled by 3.4 percentage points, going from 64.4% to 59%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

Peoples Bancorp’s efficiency ratio came in at 57.1% this quarter, beating analysts’ expectations by 259 basis points (100 basis points = 1 percentage point). This result was 1.4 percentage points worse than the same quarter last year.

For the next 12 months, Wall Street expects Peoples Bancorp to become less profitable as it anticipates an efficiency ratio of 60.8%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Peoples Bancorp’s EPS grew at an astounding 15% compounded annual growth rate over the last five years. However, this performance was lower than its 17.5% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Peoples Bancorp, its two-year annual EPS declines of 8.7% mark a reversal from its (seemingly) healthy five-year trend. We hope Peoples Bancorp can return to earnings growth in the future.

In Q3, Peoples Bancorp reported EPS of $0.83, down from $0.89 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 1.5%. Over the next 12 months, Wall Street expects Peoples Bancorp’s full-year EPS of $2.86 to grow 14%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.

Peoples Bancorp’s TBVPS grew at a sluggish 2.1% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 14.3% annually over the last two years from $16.87 to $22.05 per share.

Over the next 12 months, Consensus estimates call for Peoples Bancorp’s TBVPS to grow by 6.9% to $23.58, mediocre growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Peoples Bancorp has averaged a Tier 1 capital ratio of 11.9%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Peoples Bancorp has averaged an ROE of 10.6%, impressive for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for Peoples Bancorp.

It was encouraging to see Peoples Bancorp beat analysts’ tangible book value per share expectations this quarter. We were also happy its net interest income outperformed Wall Street’s estimates. On the other hand, its EPS slightly beat. Zooming out, we think this was a mixed quarter. The stock remained flat at $28.70 immediately following the results.

Updated: December 4, 2025 at 11:18 PM EST

When considering an investment in Peoples Bancorp, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Peoples Bancorp’s business quality ultimately falls short of our standards. Although its revenue growth was impressive over the last five years, it’s expected to deteriorate over the next 12 months and its declining net interest margin shows its loan book is becoming less profitable. And while the company’s net interest income growth was exceptional over the last five years, the downside is its estimated net interest income for the next 12 months are weak.

Peoples Bancorp’s P/B ratio based on the next 12 months is 0.9x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $33.08 on the company (compared to the current share price of $30.46).