Peoples Bancorp Dips as Credit Concerns Eclipse Earnings Beat
The bank increased its provision for credit losses to $8.1 million and a forecast for slowing loan growth overshadowed a fourth-quarter profit that surpassed analyst estimates.
Shares of Peoples Bancorp Inc. (NASDAQ: PEBO) fell in Tuesday trading after the company issued a cautious outlook for 2026, overshadowing a fourth-quarter earnings report that beat Wall Street expectations. The stock declined 1.1% to $31.21 as investors focused on a rise in funds set aside for potential soured loans and a projected slowdown in growth.
The Marietta, Ohio-based bank reported fourth-quarter net income of $31.8 million, or $0.89 per diluted share, comfortably beating the consensus analyst estimate of $0.82. Revenue for the quarter came in at $117.3 million, narrowly ahead of expectations. However, the positive headline figures were tempered by signs of growing pressure on the bank’s operations.
Peoples Bancorp increased its provision for credit losses to $8.1 million for the quarter, bringing the full-year total to $42.2 million, a significant increase from $24.8 million in the prior year, according to a company press release. This move signals a more cautious stance on the economic environment and potential defaults.
Furthermore, the bank’s net interest margin (NIM)—a key indicator of lending profitability—contracted to 4.12% from 4.16% in the previous quarter. This compression is a common headwind facing the banking sector as funding costs rise.
Driving the negative investor sentiment was the company’s forward-looking guidance. Management projected loan growth for the full-year 2026 to be between 3% and 5%. This represents a notable deceleration from the 6% growth achieved in 2025, suggesting a more challenging path to expansion in the year ahead.
Despite the market’s reaction, company leadership projected confidence. "We are pleased with the results achieved in 2025, highlighted by positive operating leverage... and solid loan growth," said Tyler Wilcox, President and Chief Executive Officer, in a statement. "We remain focused on this momentum and commitment to delivering strong returns for our shareholders and community in 2026."
The challenges faced by Peoples Bancorp are reflective of wider trends in the American banking landscape. Many regional banks are showing resilience but are simultaneously bracing for credit normalization after years of historically low defaults. The pressure on net interest margins is also a sector-wide phenomenon amid a fluctuating interest rate environment.
Despite the stock's pullback, Wall Street analysts have not rushed to downgrade the company. The consensus rating remains a "Moderate Buy" with an average price target of around $33, suggesting some analysts believe the bank's fundamentals remain solid despite the headwinds. Data submitted in its Form 8-K filing showed that key asset quality metrics, such as criticized and classified loans, actually improved during the quarter.
For investors, Peoples Bancorp presents a mixed picture: a bank that is out-earning expectations in the short term but is flagging potential challenges ahead. The bank's ability to manage its credit quality and stabilize its interest margin will be critical areas to watch in the coming quarters.