1. In a mixing bowl stir together peanut butter and butter. Gradually add powdered sugar, stirring until combined. Shape into 1-inch balls; place on waxed paper. Let stand until dry (about 20 minutes).
2. Chop candy coating. Place in a heavy saucepan, cook and stir over low heat until melted and smooth. Cool slightly.
3. Dip balls, one at a time, into coating. Let excess coating drip off peanut butter balls. Place on waxed paper; let stand until coating is firm. Store tightly covered in refrigerator.