$23.89
$51.66
bear $23.89
base $43.33
bull $51.66
margin of safety $19.00
market price* $36.72
Peoples Bancorp is a community bank holding company in Marietta, Ohio. It runs about 126 offices across Ohio (57), Kentucky (39), West Virginia (26), plus a handful in Virginia, Maryland and Washington, D.C. Alongside ordinary lending and about $7.5 billion of deposits, it earns fees from insurance, wealth management and electronic banking, and it writes insurance premium finance loans (Missouri office) and equipment leases (North Star Leasing in Vermont and Vantage in Minnesota) nationwide. For a bank we value what is left for shareholders after interest and credit costs, and we do not subtract deposits or borrowings as if they were debt. They are the raw material of the business. Long-term debt is only about $156 million. What has happened. Earnings per share rose from $1.71 in 2016 to $3.60 in 2022, then slid to $3.44 in 2023, $3.31 in 2024 and $2.99 in 2025. Most of the decade's growth came from buying other banks (Premier Financial in 2021 and Limestone in 2023), which roughly doubled the share count, so per-share growth was much weaker than total earnings growth. The recent decline was a credit problem, not a revenue problem. Provisions for loan losses rose from about $15 million in 2023 to $24.6 million in 2024 and $41.7 million in 2025, and net charge-offs rose from 0.27% to 0.40% to 0.64% of loans. In 2025, $20.0 million of the charge-offs came from leases written by North Star Leasing, which are about 5.4% of loans. The net interest margin also drifted down from 4.55% in 2023 to 4.21% and then 4.14%. The first half of 2026 shows relief: earnings were $1.59 per share against $1.28 a year earlier, and the provision fell to $14.3 million from $26.4 million. Second-quarter earnings of $0.78 were slightly below the first quarter's $0.81 even though the provision was lower, so the improvement comes from credit costs, not from stronger operating income. Our earlier estimates were built on a different basis and are not comparable with these figures. Earnings level. We use $3.15 per share as the normal level: the midpoint of 2024 ($3.31) and 2025 ($2.99), the two full years after the Limestone integration. We left out 2023 because its 4.55% margin has since reversed, and 2021-2022 because the business was a much smaller bank. The first-half 2026 pace of about $3.18 annualized corroborates it without moving it. In 2025 earnings per share fell 9.7%. For next year we assume earnings of $3.15, which is 5% above the 2025 result but flat on the 2026 pace. The reason is dated and in the filings: the second-quarter 2026 report shows the lease-related provisions already falling to a normal range. Base case, $43 per share. After 2027 earnings grow 3% a year through 2036, then taper to zero by 2041. What puts that growth in the bag: Peoples pays out about half of earnings ($1.63 dividends in 2025, against $2.99 earned) and keeps the rest, which has repeatedly supported organic loan growth (loans rose 6% in 2025 to $6.8 billion) through the 2020 shutdown and the 2023-2025 credit slide, funded from its own capital. We deduct the capital that must be retained to support that growth, so owners are credited only with the earnings left after it. Earnings then hold flat to about 2051 on the strength of the deposit franchise, which has existed since 1902, and the story ends there. We credit no further acquisitions (each is a one-time bet on price and integration), no fee-income expansion, no margin gain and no recovery in lease economics beyond today's pace. The business is worth about $43 per share; it owes lenders nothing that changes that, because interest is already deducted. Bear case, $24 per share. Banks in this region have been through a full credit cycle, and we include one: the 2008-2010 downturn. We apply the all-bank industry loss record of that period to today's $6.8 billion loan book: net charge-offs of 1.3%, 2.5%, 2.6%, 1.5% and 1.0% in successive years versus 0.3% normally, with the reserve rising from 1.14% to 2.3% of loans, and pre-provision earnings about 9% lower from margin pressure. Earnings per share go roughly $3.11, $0.56, then losses of $1.17 and $0.47, then back to $1.82 and $2.64. They settle near $2.87 and the story is cut off at 2046 (20 years) because a bank that has just been through that would have a weakened franchise. The cumulative losses (about $58 million in the two worst years) are small beside roughly $800 million of tangible common equity, so we assume no forced equity raise, but the dividend would be cut. The business is worth about $24 per share and owes nothing additional; that is roughly its tangible book value (about $23.7 per share), which is reasonable because the franchise still earns about $6.50 per share cumulatively across the whole cycle on a deposit base that does not leave. Bull case, $52 per share. The identified levers execute: lease losses fall back so earnings return to the $3.30 reached in 2024, and organic growth runs a little faster at 3.5% through 2036 (still below the demonstrated long-run rate), tapering to zero by 2046, with earnings holding flat to 2056. Worth about $52, no extra debt claims. What we are unsure of. We could not reconcile why second-quarter operating income was lower than the first quarter's. If lease charge-offs, which are a recent problem at North Star, spread to the broader business, the base level of $3.15 would be too high. We tested the level against the second quarter: provisions were roughly at a normal 0.3% of loans annualized, yet earnings were still only $0.78, which supports $3.15 rather than the higher bull figure. Margin-of-safety price. We are fairly sure of the earnings level, within about 10%, because two years of data and the first half of 2026 line up. The worst plausible event is a real credit cycle, which would hit commercial real estate, commercial loans and the lease book at the same time; the bank has no heavy debt, no controlling holder and no single dominant customer, and its tangible equity is about 8.7% of assets, so it would survive that and cut its dividend, not fail. If we are wrong about the two things most likely to be wrong, the lease losses (which could be recurring) and the margin (which has fallen for two years), the shares are worth about the bear figure. The price assumes a five-year holding period, during which the bank pays about $1.66 a year in dividends. From $19 a share, the base path implies well over a 20% annual return, and the credit-cycle path implies roughly 10% a year in dividends and value recovery, so the price leaves room for the bear case. The margin-of-safety price is $19.