Peoples Signs $728 Million Capital Bancorp Deal

The Tip Desk · October 22, 2026 · 4 min read

Net interest margin reached 4.31% as net interest income rose to $93.8 million and the bank booked a $4.5 million securities-sale loss.

Peoples Bancorp Inc. (PEBO), the Marietta, Ohio regional bank, signed a definitive agreement on September 30, 2026 to acquire Capital Bancorp, Inc., parent of Capital Bank, N.A., in an all-stock transaction valued at approximately $728.1 million.

The deal sits alongside a pending cash-and-stock purchase of Citizens National Corporation agreed in April, valued at about $76.6 million. Peoples recognized $1.0 million of acquisition-related expenses on Capital and $0.9 million on Citizens in the third quarter.

Net interest margin expanded 8 basis points from the second quarter to 4.31%, after a 7 basis-point expansion in the prior quarter. The company said the latest move was driven by higher investment and loan yields. Net interest income rose $1.1 million from the linked quarter to $93.8 million, after a $2.3 million increase in the second quarter, and the company attributed the latest lift to higher loan income.

Against the third quarter of 2025, net interest income was up $2.5 million, or 3%, and the margin was 15 basis points higher, which Peoples said was primarily driven by lower deposit and borrowing costs. Accretion income, net of amortization, was $1.0 million in the third quarter of 2026, adding four basis points to the margin, versus $1.1 million and five basis points in the linked quarter. The company said the decline reflected less accretion from the 2023 Limestone Bancorp merger.

The provision for credit losses fell $1.1 million from the linked quarter to $3.6 million, after a $5.0 million decline in the second quarter. Peoples said the reduction came from lower reserves for individually-analyzed loans and leases and updates to prepayment, curtailment, and funding rates, partially offset by higher net charge-offs.

Period-end loans and leases increased $19.2 million, or 1% annualized, from June 30, after $51.4 million, or 3% annualized, growth in the second quarter. The latest increase was led by construction loans, commercial and industrial loans, and home equity lines of credit, offset by declines in other commercial real estate, residential real estate, and leases. Average loans rose $35.0 million from the linked quarter.

Total non-interest income excluding net gains and losses increased $1.5 million, or 5%, from the linked quarter, after a $0.3 million, or 1%, increase in the second quarter. The company pointed to lease income, including gains on terminated leases, swap fee income, deposit account service charges, and trust and investment income. That fee stream was 25% of total revenue in the third quarter.

Available-for-sale securities fell $68.9 million from June 30 after Peoples sold $58.5 million of those securities at a $4.5 million net loss. The company said it continued to manage the balance sheet under $10 billion in assets ahead of the Citizens merger. Unrealized losses, net of tax, on available-for-sale securities in accumulated other comprehensive loss were $99.8 million at September 30, versus $71.2 million at June 30. Investment securities were about 18.3% of total assets.

Total non-interest expense rose $1.8 million from the linked quarter to $74.5 million, including $1.5 million of acquisition-related costs, and the efficiency ratio moved to 58.5% from 58.3%. The company said the ratio increase was mainly the result of higher non-interest expense, largely driven by acquisition-related expenses.

Nonperforming assets declined $4.1 million, or 10%, from June 30, to 0.54% of loans and OREO from 0.60%. Criticized loans fell $17.7 million, or 6%, to 3.74% of loans from 4.01%, which Peoples attributed to loan upgrades and paydowns. Loans considered current were 99.2% of the portfolio.

Net income was $32.6 million, or $0.91 a share, versus $28.0 million, or $0.78 a share, in the second quarter. Non-core items reduced diluted earnings by $0.13 in the third quarter. President and Chief Executive Officer Tyler Wilcox said the company remained committed to maintaining momentum through the fourth quarter.