Peoples Bancorp Inc.

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Good morning, and welcome to People's Bancorp Incorporated's conference call. My name is Gary, and I will be your conference facilitator. Today's call will cover a discussion of the results of operations for the three and nine months ended September 30, 2025. Please be advised that all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star 1 on your telephone keypad and questions will be taken in the order they are received. If you would like to withdraw your question... Press star 2. This call is also being recorded. If you object to the recording, please disconnect at this time. Please be advised that the commentary in this call will contain projections or other forward-looking statements regarding people's future financial performance or future events. These statements are based on management's current expectations. The statements in this call, which are not historical fact, are forward-looking statements and involve a number of risks and uncertainties detailed in People's Securities and Exchange Commission filings. Management believes the forward-looking statements made during this call are based on reasonable assumptions within the bounds of their knowledge of People's business and operations. However, it is possible actual results may differ materially from these forward-looking statements. People's disclaims any responsibility to update these forward-looking statements after this call except as may be required by applicable legal requirements. People's third quarter 2025 earnings release and earnings conference call presentation were issued this morning and are available at peoplesbankcorp.com under investor relations. A reconciliation of the non-generally accepted accounting principles or GAAP financial measures discussed during this call to the most directly comparable GAAP financial measures is included at the end of the earnings release. This call will include about 15 to 20 minutes of prepared commentary, followed by a question and answer period, which I will facilitate. An archived webcast of this call will be available on peoplesbankcorp.com in the investor relations section for one year. Participants in today's call will be Tyler Wilcox, President and Chief Executive Officer, and Katie Bailey, Chief Financial Officer and Treasurer, and each will be available for questions following opening statements. Mr. Wilcox, you may begin your conference.

Thank you, Gary. Good morning, everyone, and thank you for joining our call today. Earlier this morning, we reported diluted earnings per share of 83 cents for the third quarter of 2025, an improvement compared to the length quarter. During the third quarter of 2025, we sold approximately $75 million of investment securities at a loss of $2.7 million, which negatively impacted our earnings per diluted share by 6 cents for the third quarter. We took this opportunity to sell some of our lower yielding investment securities in an effort to increase our investment securities yields going forward. When compared to the linked quarter, some of our highlights for the third quarter included annualized loan growth of 8%, our net interest income increased nearly $4 million, while our net interest margin expanded by one basis point. Excluding accretion income, net interest margin expanded five basis points, which marks our fifth straight quarter of core net interest margin expansion. We continue to produce stable fee-based income. Our quarterly net charge-off rate decreased by two basis points, while our provision for credit losses declined by over 50%. Our non-interest expenses declined 1%. Our efficiency ratio improved to 57.1%, compared to 59.3%. Our tangible equity to tangible assets ratio improved 27 basis points, and stood at 8.5%. Our book value per share grew 2%, while our tangible book value per share improved by 4%. And our diluted earnings per share, excluding the losses on investment securities we recorded, exceeded consensus analyst estimates for the quarter. As we mentioned last quarter, we anticipated a reduction in our provision for credit losses. For the third quarter, our provision for credit losses declined over $9 million, and our allowance for credit losses stood at 1.11% of total loans. Our provision for credit losses for the quarter was driven by net charge-offs, loan growth, and a slight deterioration in economic forecasts, which was partially offset by reductions in reserves for individually analyzed loans. For more information on our provision for credit losses, please refer to our accompanying slides. Our annualized quarterly net charge-off rate was 41 basis points, an improvement from 43 basis points for the linked quarter. The reduction was due to lower small-ticket lease charge-offs as we had anticipated. Non-performing loans declined nearly $2 million compared to the linked quarter end, with improvements in both loans 90-plus days past due and accruing and non-accrual balances. At September 30th, non-performing loans comprised 58 basis points of total loans, compared to 61 basis points at June 30th. Criticized loans increased by nearly $24 million compared to the linked quarter end, while classified loans grew nearly $34 million. We had a handful of downgrades during the quarter. However, we do anticipate some of these credits will be paid off or upgraded in the fourth quarter. The downgrades were among credits that are unrelated from an industry and geographic standpoint and viewed as isolated issues, We continue to complete our extensive portfolio reviews while recognizing some softening economic indicators in recent quarters. By quarter end, our criticized loan balances as a percent of total loans was 3.99% compared to 3.7% at June 30th. Classified loans as a percent of total loans grew to 2.36% at quarter end compared to 1.89% at the linked quarter end. Please refer to our accompanying slides for trends in our historical criticized and classified loans. Our second quarter delinquency rates were stable, with 99% of our loan portfolio considered current at September 30th, compared to 99.1 at the linked quarter end. We continue to monitor our loan portfolio for impacts from the recent changes in economic conditions and monetary policy, and have not identified any systemic negative trends at this time. Moving on to loan balances, we had loan growth of $127 million, or 8% annualized, compared to the linked quarter end. The most significant areas of growth were in commercial real estate and commercial and industrial loan balances. At the same time, we had declines in construction loans as those projects completed and moved into our commercial real estate portfolio. We also had decreases in our lease balances, with the reduction being mostly due to declines in our small-ticket leasing balances. Our loan production this quarter arrived as anticipated. As we indicated last quarter, we expected and continue to expect payoff activity to be weighted to the second half of the year. Those payoffs have shifted to the fourth quarter and possibly into the first quarter of 2026. Our year-to-date loan growth through the third quarter was 6%, and we expected to come down during the fourth quarter but to remain in our guided range for the full year. quarter end, our commercial real estate loans comprised 35% of total loans, 32% of which were owner-occupied, while the remainder were investment real estate. At quarter end, 43% of our total loans were fixed rate, with the remaining 57% at a variable rate. I will now turn the call over to Katie for a discussion of our financial performance.