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Jun 30, 2022
Peoples Bancorp Q2 2022 Earnings Report
Reported net income and diluted earnings per share improved compared to the linked quarter and the prior year quarter.
Key Takeaways
Peoples Bancorp reported a strong second quarter with net income of $24.9 million and diluted earnings per share of $0.88. The company benefited from recent acquisitions, organic growth, and positive operating leverage. Net interest income increased, and non-interest expense was controlled.
Net income nearly doubled during the first half of 2022, compared to 2021, and exceeded the full year of 2021.
Net interest income was up 13% compared to the linked quarter, benefiting from rising interest rates and accretion income from Vantage Financial leases.
The reported efficiency ratio improved to 58.8%, the lowest in many years.
Loan balances increased by nearly $41 million, or 4% annualized, compared to the linked quarter-end, excluding purchase accounting adjustments related to Vantage and PPP loans.
Peoples Bancorp
Peoples Bancorp
Forward Guidance
Peoples Bancorp expects to continue growing its business and recent acquisitions. Loan growth is projected between 4-6%, and the efficiency ratio is expected to be below 60% for the full year of 2022. Earnings over the next two quarters are expected to be similar to this quarter.
Positive Outlook
- Loan growth of between 4-6%, excluding PPP loans
- Annual gross charge-off rate, including leases, will likely return to a more historical level of between 20 to 30 basis points as a percent of balances for the second half of 2022
- If we get 7 rate increases of 25 basis points, five of those being in the third quarter and the remainder in the fourth quarter, this would result in a benefit of approximately $3 million for the last half of the year.
- Fee-based income growth is expected to be between 12% and 16% compared to 2021, which includes the impact of the acquisitions this year
- Still on track to have an efficiency ratio of below 60% for the full year of 2022
Challenges Ahead
- We continue to anticipate stabilization in credit costs
- From a net interest income perspective, if we get 7 rate increases of 25 basis points, five of those being in the third quarter and the remainder in the fourth quarter, this would result in a benefit of approximately $3 million for the last half of the year. This amount does not include the increase we expect from the prior rate hikes this year, which will also benefit the last six months of the year.
- Fee-based income growth is expected to be between 12% and 16% compared to 2021, which includes the impact of the acquisitions this year
- We are maintaining our projected quarterly total non-interest expense guidance of between $50 and $52 million, which includes the cost of the Vantage and insurance acquisitions
- While we have had recent releases in provision for credit losses, we do not anticipate this will be the reason we achieve similar earnings in the last two quarters of the year.