Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q2 2019 Earnings Presentation
64 slides from Peoples Bancorp's earnings presentation, Jul 25, 2019
Slide 1: Investor Presentation 2nd Quarter 2019
Peoples @, BANCORP® VESTOR PRESENTATION 2ND QUARTER 2019 NASDAQ: PEBO
Slide 2: Working Together Building Success
Slide 3: Safe Harbor Statement
SAFE HARBOR STATEMENT Statements in this presentation which are not historical are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Ac
Slide 4: Profile, Investment Rationale, Culture, Strategy
Slide 5: Profile, Investment Rationale, Culture and Strategy
PROFILE, INVESTMENT RATIONALE, CULTURE AND STRATEGY Peoples (), BANCORP®
Slide 6: Corporate Profile
CORPORATE =» ee —d ole)e!] NASDAQ: PEBO FINANCIAL HOLDING COMPANY HEADQUARTERED IN MARIETTA, OHIO. Provides a broad range of banking, insurance and investment services. CURRENT SNAPSHOT: CURRENT FOOTPRINT: Assets: $4.3 billion; Loans: $2.8 billion Demographics: Deposits: $3.4 billion Median Income:
Slide 7: Geographic Footprint
GEOGRAPHIC (2i-w a) We NASDAQ: PEBO PEBO GEOGRAPHIC FOOTPRINT Peoples’ footprint includes full service branches in Ohio, West Virginia and Kentucky. Indicates footprint added by the First Prestonsburg Bancshares Inc. (“First Prestonsburg”) acquisition. BANCORP®
Slide 8: Unique Community Banking Model
UNIQUE COMMUNITY BANKING MODEL Greater revenue diversity (31% non-interest income, excluding gains and losses) than the average $1-10 billion bank Strong community reputation and active involvement Local market teams capable of out-maneuvering larger banks More sophistication and product breadth tha
Slide 9: Corporate Values and Brand Promise
CORPORATE (4) av NASDAQ: PEBO OUR VALUES OUR BRAND PROMISE PRO MIBECTRELE WE WILL WORK SIDE BY SIDE TO OVERCOME Peoples' Employee Promise Circle represents how we do business and our never-ending pursuit CHALLENGES AND SEIZE OPPORTUNITIES. WE of creating value for our clients. Our strategies to LIST
Slide 10: Competitive product comparison
“DN a mi 2JTOol)e] NATIONAL BANKS NASDAQ: PEBO COMMUNITY BANKS Bank of America Bank PRODI Banking and Lending Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Trust and Investment Services Yes Yes Yes Yes Yes Yes Yes Yes Yes es Yes Bundled Retirement Plan Service No Yes Yes Yes Yes Yes Yes Yes Yes Yes Ye
Slide 11: PEBO Market Insight
PEBO MARKET IN SIGHT @v NASDAQ: PEBO [ KW <a PEBO MARKET INSIGHT DEPOSIT per ogit « — Strongest deposit market share positions in more {§000)* SHARE (%) rural markets where we can affect pricing MARIETTA, OH. 706,482 A679 WILMINGTON, OH 1 210,914 34.21% * Presence near larger cities puts us in posit
Slide 12: Go To Market Approach
GO TO MARKET — APPROACH ( a f 0 ] @ ] NASDAQ: PEBO 2y PEBO'S GO TO MARKET PROPOSITION OF INSURANCE, INVESTMENT AND BANKING IS UNIQUE TO OUR FOOTPRINT AND ENABLES A COMPLETE FINANCIAL RELATIONSHIP WITH OUR CLIENTS Peoples has been in the banking TOP 250 MOST PROFITABLE CLIENTS business since 1902 40%
Slide 13: Strategic Road Map
STRATEGIC (sw) av NASDAQ: PEBO STRATEGIC ROAD MAP FOR BEST COMMUNITY BANK IN AMERICA + Commitment to Superior Shareholder Returns + Great Place to Work * Clients’ ist Choice for Banking, Investing and Insurance + Meaningful Impact on Our Communities RESPONSIBLE RISK EXTRAORDINARY PROFITABLE FIRST CL
Slide 14: Strategic Priorities Financial Results
Slide 15: Strategic Priorities and Financial Results
STRATEGIC PRIORITIES AND FINANCIAL RESULTS
Slide 16: Strategic Priorities
STRATEGIC PRIORITIES a f g ] r) ] NASDAQ: PEBO av POSITIVE OPERATING LEVERAGE Expand revenue versus expense growth gap beyond 2% (PAGE 27) Focused on sustainable revenue growth (PAGE 28) Disciplined expense management (PAGE 29) Drive core efficiency ratio below 60% (PAGES 30:31) SUPERIOR ASSET QUALI
Slide 17: Key financial metrics versus targets
[ IW <a)" D RA A R 8 A 6/30 NPAs as a percent of total loans and OREO (1) O71% 71% | 070% to 1.00% (-) Annualized net charge-offs as a percent of average total loans 015% 0.06% | 020%to050% | @ Total loans to total assets 68.37% 66.26% 72.0% to 77.5% Total loans to total deposits 92.33% 84.24% 85.0%
Slide 18: Financial Expectations 2019
FINANCIAL EXPECTATIONS NASDAQ: PEBO av FINANCIAL EXPECTATIONS - 2019 * Organic loan growth of 3% to 5% for the full year of 2019. * We expect an increase in credit costs through the remainder of 2019. We anticipate the third and fourth quarter levels to be somewhat similar to the quarterly levels fr
Slide 19: Stock Performance
STOCK [ = | m f LA \ PERFORMANCE @v NASDAQ: PEBO TOY ANAURL AETUEN EYEAR 3:YEAR S-YEAR 20% [— 115% i rc80 I PEER GROUP 15% HI RUSSELL 2000 FINANCIAL SERVICES MB RUSSELL 2000 10% fm sap 500 5% Total Return includes impact of dividends 0% Peers include: SRCE, CHCO, CCNE, CTBI, FMNB, Fis, FCF, FDER, TH
Slide 20: 2019 Acquisition
19 N ? a ACOUISITIC
Slide 21: 2019 Acquisition
2019 ACQUISITION
Slide 22: 2019 Acquisition: First Prestonsburg Transaction
2019 _ ACQUISITION ( a f 0 ] @ ] NASDAQ: PEBO 2y FIRST PRESTONSBURG TRANSACTION First Prestonsburg was merged into Peoples on April 12, 2019, and First Prestonsburg’s wholly-owned subsidiary, First Commonwealth Bank of Prestonsburg, Inc. was merged into Peoples Bank. e Nine full service branches in
Slide 23: 2019 Acquisition Transaction Summary
2019 [ = I m f LA \ ACQUISITION av NASDAQ: PEBO TRANSACTION SUMMARY FINANCIAL SUMMARY AS OF 04/12/19" CONSIDERATION PAID $437 MILLION ¢ TOTAL ASSETS = $294 MILLION « TOTAL LOANS = $130 MILLION * TOTAL DEPOSITS = $257 MILLION "GROSS LOAN MARK 5% ESTIMATED ONE-TIME COSTS $8 MILLION CLOSING /CONVERSION
Slide 24: Q2 & YTD 2019 Financial Performance
Slide 25: Q2 & YTD 2019 Financial Performance
Q2 & YTD 2019 FINANCIAL PERFORMANCE 24
Slide 26: Q2 & YTD 2019 Highlights
02 & YTD 2019 HIGHLIGHTS NASDAQ: PEBO av Q2 & YTD 2019 PERFORMANCE HIGHLIGHTS « SUCCESSFUL CLOSE AND CONVERSION OF FIRST PRESTONSBURG « RETURN ON AVERAGE ASSETS OF 0.91% FOR THE SECOND QUARTER OF 2019, ADJUSTED RETURN ON AVERAGE ASSETS OF 1.44% * QUARTERLY ANNUALIZED NET CHARGE-OFF RATE OF 3 BASIS P
Slide 27: 2019 Business Highlights
2019 BUSINESS (2IW a ES A) NASDAQ: PEBO 2019 BUSINESS HIGHLIGHTS COMMERCIAL BANKING « Loan growth hampered by payoffs, but commercial production was up approximately 40% compared to the first six months of 2018 ¢ $25 million lending “house limit" although legal limit is over $50 million « Commercial
Slide 28: Adjusted operating leverage
VERSUS THE SAME QUARTER IN THE PRIOR YEAR, VERSUS THE PRIOR YEAR, ADJUSTED OPERATING ADJUSTED OPERATING LEVERAGE HAS BEEN POSITIVE LEVERAGE WAS POSITIVE FOR FISCAL FOR SEVEN OF THE PAST NINE QUARTERS. YEARS 2016 THROUGH YTD-2019. 5% 8% 7% 6% 5% 4% 3% 2% % 0% ° Q247 O37 04-17 O18 0218 03-18 04-18 Q11
Slide 29: Net interest income and non-interest income
($ THOUSANDS) $60,000 __ Beginning in the second quarter of 2018, Peoples benefited from the $50,000 L_ acquisition of SE Financial Corp ("ASB"). Additionally, beginning in the second quarter of 2019, Peoples benefited from the $40,000 L_ g1agea Senin $14,341 $1482 $15,639 acquisition of First Prest
Slide 30: Non-interest expense
1G 201 NING LU $34,000 $1,049 $32,000 | _ $30,000 |_ $28,000 |__ $26,000 | __ HH CORE NON-INTEREST EXPENSES* IB EXPENSES RESULTING $24,000 |__ FROM ACQUISITIONS** (S THOUSANDS) NOT TO SCALE $22,000 |_ $20,000 O27 O37 = O47 OHS Q218** O33 418 QI Q2i9™ * Non-US GAAP financial measure. See Appendix. **
Slide 31: Efficiency ratio adjusted for non-core items
NOT TO SCALE 66% 65% 64% 63% 62% 61% 60% 2% IMPROVEMENT FROM Q2 2017 TO Q2 2019 62.03% 2.21% 03% 61.42% 119% 61.04% 6074% 6OTI% 60.80% | | [ | oz Q247 O37 447 «OMB «O218 «O38 04418 OMI A219 NOT TO SCALE 9% IMPROVEMENT FROM FY 2015 TO YTD 2019 68% - 67% 66% 65% 64% 63% 62% 61% 60% 59% 58% T 67.49% 64
Slide 32: Deposits per full service branch
EPOSITS D PER BRANCH DEPOSITS PER FULL SERVICE BRANCH HAVE TRENDED UPWARD SINCE 2015, ASSISTING US IN BEING A MORE EFFICIENT BANK. TOTAL DEPOSITS PER FULL SERVICE BRANCH $50 — $40 LL Ds —| #0 $30 |L 4 6 $20 60 Ww x oO an jo} e = (2) 2 a = 9° al = = 2 12/2015 12/2016 12/2017 12/2018 06/2019 HB DEPOSI
Slide 33: Improvement in key financial metrics
FOCUS ON STEADILY GROWING LOANS AND DEPOSITS, MANAGING EXPENSES AND INCREASING OPERATING LEVERAGE HAS RESULTED IN IMPROVEMENT IN KEY FINANCIAL METRICS. RETURN ON AVERAGE ASSETS RETURN ON AVERAGE TANGIBLE STOCKHOLDERS’ EQUITY ADJUSTED FOR NON-CORE ITEMS '2 ADJUSTED FOR NON-CORE ITEMS "2 2.0% 18% 16.9
Slide 34: Asset quality: NPAs / assets
ASSET QUALITY = NPAS / ASSETS CT RANKC \ ST BANKS WIT cm rancla ION INTOTAI AC c $1 TO $10 BILLION IN TOTAL ASSETS. 14% -— 12% | 0.8% | 0.6% | 0.47% NPAS / ASSETS 0.4% | 0.2% | 0.0% O217 O347 O47 QHs O218 O3418 Q418 Q19 Q219 HH S110 S10 BILLION MIDWEST BANKS Hl Peso Source: S&P Global Market Intelli
Slide 35: Net charge-offs by loan category
$ MILLIONS CRE as t $20 |- $5 $10 [L $6 tL $0 QH6 O246 O346 0416 O17 O27 I RESIDENTIAL Wm Cal HELOC O37 0417 OHS O218 O318 0418 O19 219 CONSUMER
Slide 36: Criticized and classified loans
CRITICIZED LOANS / TIER 1 CAPITAL + ALLL * a CLASSIFIED LOANS / TIER 1 CAPITAL + ALLL * 40% 35% 30% 25% 20% 15% 10% 5% 0% 16.5% 299% 1.4% 30.1% 16.8% 32.3% 15.4% 32.2% 21.5% O36 0446 OH? Q217 O37 O417 Ons 02418 “In accordance with SEC reporting methodologies. Criticized loans includes loans categori
Slide 37: Loan portfolio composition
COMMERCIAL REAL ESTATE (CRE) 297% 5 CONSUMER, INDIRECT 14.8% 2 COMMERCIAL & INDUSTRIAL 21.2% 6 CONSUMER DIRECT 2.9% 3 RESIDENTIAL REAL ESTATE 22.9% 7 CONSTRUCTION 3.9% HOME EQUITY LINES OF CREDIT 4.6% Data as of June 30, 2019. *Excludes deposit overdrafts. "Total CRE includes commercial real estate
Slide 38: Total loan growth
TOTAL LOAN GROWTH aN re) NE 30, 2UIf. 1 OF 10% COMPA $2,900 -— $2,800 | $2,700 | $2,600 | $2500 | $2,400 | $2,300 |_ (S MILLIONS) NOT TO SCALE $2,200 |_ $2100 |_ $2,000 rar kar on ans Q218 ous 448 ang a24g THB TOTAL LOANS EXCEPTASB & © MM ASB & FIRST PRESTONSBURG* mmm AVERAGE LOAN BALANCES FIRST PRE
Slide 39: Deposit composition and cost of deposits
D Tose 019, COST OF D BE on vrerestecariis poas** $3,500 — $3364 Bi Nerest-eearnepoas** ssa $2,949 $3,041 $2,955 HB s4vinos accounts 3 000 |. a 730 $2,813 ha RETAIL CERTFICATES OF DEPOSIT 2 7 HBL Woney warner Deposit accounts 5 soo LL z CGOVERNWENTAL DEPOSIT ACCOUNTS 2 sae BROKERED CERTIFICATES OF D
Slide 40: Deposit metrics versus peer group
E BANKING IND TOR 7 —~ PEBO AND PEER GROUP DEPOSIT METRICS OVER TIME 80% |_ 64% 60% |_ 40% |_ 20% |— 0% “20% L_ Q1i7 Q2-17 Q347 Q4-17 Q1-18 Q2-18 Q3-18 Q4-13 Qa Q2-19 Q1-17-Q219 Cumulative Hi P80 I MEAN OF THE BANKS IN THE $28 TO S10B UNIVERSE Source: Keefe, Bruyette & Woods, Inc., except PEBO Cumul
Slide 41: Investments and loans composition
MPOSED OF | UYU $45 — — 80% 76% m $4.0 mi 7% 8 = $35 = 2 fa) a §30 om 8 2a * 2 x eo $25 ° Zz . Za | 9% -& 4 B s20 [LE o = 2 2 = s5 |L |4% <€ 5 Zz ° 6 - > $1.0 LL n n —|320% om | $0.5 n $0.0 20% FYAZ FYA4d Pas FYA6 FYA7 FYAS. YTDAD J INVESTMENTS [I LOANS =) INVESTMENTS % LOANS % spd ~ ed
Slide 42: Capital deployment and dividends
ACQUISITIONS CAPI Bank acquisitions completed in 2014 (3), 2015 (1), 2018 (1), and 2019 (1) Insurance acquisitions completed in 2014 (1), 2015 (1), and 2017 (2) One investment acquisition was completed in 2016 Organic growth Dividends Acquisition activities DIVIDENDS Consistently evaluate dividend a
Slide 43: Quarterly dividends per share
$034 $0.34 $022 $022 $020 $0.20 $017 $o16 $016 $015 QH6 Q216 O316 Q446 OMT Q217 Q3417 O4417 OHS Q218 O318 Q448 QHI Q219 Q3H9 Peoples | BANCORP®
Slide 44: CRE loans to risk-based capital versus peers
« Exposure levels also compare favorably to peer institution concentration levels. « Concentration levels have improved relative to peers ona linked quarter basis. oO PEER BANK SUBS - CRE LOANS / RISK-BASED CAPITAL 350% }— alas = 300% IS THE LEVEL 250% | CONSIDERED HEIGHTENED 220% _— 7 CRE CONCENTRA
Slide 45: Construction and land loans to capital versus peers
ANK SUBS - CONSTRUCTION, LAND AND LAI CADITAI D CAPIT/ 70% }— SUPERVISORY GUIDANCE 50% 45% 32% 100% IS THE LEVEL CONSIDERED HEIGHTENED CONSTRUCTION, LAND AND LAND DEVELOPMENT CONCENTRATION RISK PER = ALPE UCFC CCNE SYBT FDEF LKFN SNMF Universe FRME FIS!_ HENC GABC STBA FCF FEBO TMP FMNB PRK NWI Srgi
Slide 46: Insurance revenue mix
/ELVE MONTHS FROM 6/30/19 = $14.9 MILLION. 1 P&C COMMERCIAL LINES 559% 2 PERFORMANCE BASED™ 10.2% 3 P&C PERSONAL LINES 15.5% OTHER 4.2% 5 LIFE & HEALTH 14.2% * Tralling Twelve Months from 6/30/19. ** Approximately 90% attributable to P&C Commercial Lines
Slide 47: Trust and investment revenue mix
RAILING TWELVE MONTHS FROM 6/30/19 = $12.8 MIl 1 FIDUCIARY 52.4% 2 BROKERAGE 31.8% 3 EMPLOYEE BENEFITS 15.8% * Trailing Twelve Months from 6/30/19.
Slide 48: Q2 2019 Financial Performance Appendix
Slide 49: Q2 2019 Financial Performance Appendix
Q2 2019 APPENDIX 48
Slide 50: Appendix: Pre-Provision Net Revenue
APPENDIX NON- PRE-PROVISION NET REVENUE Pre-provision net revenue (PPNR) has become a key financial measure used by federal bank regulatory agencies when assessing the capital adequacy of financial institutions. PPNR is defined as net interest income plus total non-interest income (excluding all gai
Slide 51: Appendix: PPNR Adjusted for Non-Core Items
APPENDIX NON-US GAAP MEASURES _ NASDAQ: PEBO Ay PRE-PROVISION NET REVENUE ADJUSTED FOR NON-CORE ITEMS Pre-provision net revenue (PPNR) has become a key financial measure used by federal bank regulatory agencies when assessing the capital adequacy of financial institutions. PPNR adjusted for non-core
Slide 52: Appendix: Core Non-Interest Income
St APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO CORE NON-INTEREST INCOME Core non-interest income is a financial measure used to evaluate Peoples’ recurring non-interest revenue stream. This measure is non-US GAAP since it excludes the impact of all gains and/or losses, and core banking system convers
Slide 53: Appendix: Core Non-Interest Expense
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO CORE NON-INTEREST EXPENSE Core non-interest expense is a financial measure used to evaluate Peoples’ recurring expense stream. This measure is non-US GAAP since it excludes the impact of core banking system conversion expenses, acquisition- related expenses
Slide 54: Appendix: Efficiency Ratio
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO EFFICIENCY RATIO The efficiency ratio is a key financial measure used to monitor performance. The efficiency ratio is calculated as total non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interes
Slide 55: Appendix: Efficiency Ratio (continued)
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO ay EFFICIENCY RATIO Continued from previous page. ($ in Thousands) Q2-17 Q317 04-17 Qnis 2-18 Q3-18 04-18 QHig 2-19 Total non-interest expense $ 26680 $ 26558 $ 27406 $ 28,221 $ 35,971 $ 30829 $ 30,956 $ 31860 $ 38,876 Less: amortization of other intangible
Slide 56: Appendix: Efficiency Ratio Adjusted for Non-Core Items
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO EFFICIENCY RATIO ADJUSTED FOR NON-CORE ITEMS The efficiency ratio adjusted for non-core items is defined as core non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus core non-in
Slide 57: Appendix: Efficiency Ratio Adjusted (continued)
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO EFFICIENCY RATIO ADJUSTED FOR NON-CORE ITEMS Continued from previous page. (Sin Thousands) Q2-17 Q3-17 Q4-17 QH18 Q2-18 Q3-18 Q4-18 QH19 Q2-19 Core non-interest expense $ 26680 $ 26558 $ 26823 § 28,072 § 29,915 § 29,978 § 30,483 $ 31607 $ 32i06 Less: amorti
Slide 58: Appendix: Tangible Equity and Tangible Book Value
APPENDIX NON US GAAP MEASURES NASDAQ: PEBO TANGIBLE EQUITY TO TANGIBLE ASSETS AND TANGIBLE BOOK VALUE PER SHARE Peoples uses tangible capital measures to evaluate the adequacy of Peoples’ stockholders’ equity. Such ratios represent non-US GAAP financial measures since the calculation removes the imp
Slide 59: Appendix: Return on Average Tangible Equity
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO RETURN ON AVERAGE TANGIBLE STOCKHOLDERS’ EQUITY The return on average tangible stockholders' equity ratio is a key financial measure used to monitor performance. It is calculated as net income (less after-tax impact of amortization of other intangible asset
Slide 60: Appendix: Return on Average Tangible Equity (continued)
APPENDIX NON US GAAP MEASURES A —_waspaa: PEBO RETURN ON AVERAGE TANGIBLE STOCKHOLDERS’ EQUITY Continued from previous page. ($ in Thousands) Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 FY-16 FY-17, FY-18 YTD-19 Return on Average Stockholders’ Equity Ratio: Annualized net income $_ 31655 _$ 50485 $ 55,135 _$ 5827
Slide 61: Appendix: Return on Average Equity Adjusted for Non-Core Items
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO RETURN ON AVERAGE STOCKHOLDERS' EQUITY ADJUSTED FOR NON-CORE ITEMS The return on average stockholders’ equity adjusted for non-core items represents an non-US GAAP financial measure since it excludes the release of the deferred tax asset valuation allowance
Slide 62: Appendix: Return on Average Tangible Equity Adjusted
ey 6 APPENDIX NON US GAAP MEASURES NASDAQ: PEBO RETURN ON AVERAGE TANGIBLE STOCKHOLDERS’ EQUITY ADJUSTED FOR NON-CORE ITEMS The return on average tangible stockholders’ equity adjusted for non-core items represents a non-US GAAP financial measure since it excludes the release of the deferred tax ass
Slide 63: Appendix: Return on Average Assets Adjusted
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO (A yy RETURN ON AVERAGE ASSETS ADJUSTED FOR NON-CORE ITEMS The return on average assets adjusted for non-core items represents an non-US GAAP financial measure since it excludes the release of the deferred tax asset valuation allowance, the impact of the Ta
Slide 64: Contact information
—_—_—_ les @), CHUCK SULERZYSKI President and Chief Executive Officer P: 740.374.6163 C: 740.516.7584 Chuck.Sulerzyski@pebo.com JOHN C. ROGERS Executive Vice President Chief Financial Officer and Treasurer P: 740.376.7108 C: 412.952.1553 John.Rogers@pebo.com Peoples Bancorp® is a federally registere