Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q2 2023 Earnings Presentation
44 slides from Peoples Bancorp's earnings presentation, Jul 25, 2023
Slide 1: Investor Presentation 2nd Quarter
INVESTOR PRESENTATION I 2nd QUARTER WORKING TOGETHER. BUILDING SUCCESS.
Slide 2: Table of Contents
WORKING TABLE OF CONTENTS TOGETHER PAGE 4 PROFILE, INVESTMENT RATIONALE, CULTURE & STRATEGY BUILDING PAGE 11 CREDIT, CAPITAL & LIQUIDITY SUCCESS PAGE 23 Q2 2023 FINANCIAL INSIGHTS PAGE 35 Q2 2023 APPENDIX 2
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
PROFILE, INVESTMENT RATIONALE, CULTURE & STRATEGY 4
Slide 5: Geographic Profile
PEBO GEOGRAPHIC PROFILE NASDAQ: PEBO NASDAQ: PEBO PEOPLES BANK GEOGRAPHIC FOOTPRINT PEBO SNAPSHOT AS OF JUNE 30, 2023 CURRENT PEBO FOOTPRINT Loans: $6.0 billion COUNTIES WHERE PEBO HAS TOP 3 MARKET SHARE* CLEVELAND Assets: $8.8 billion COUNTIES WHERE PEBO HAS OVER $100 MILLION OF Deposits: $7.0 bill
Slide 6: Corporate Culture
CORPORATE CULTURE NASDAQ: PEBO OUR VISION Our vision is to be the BEST COMMUNITY BANK IN AMERICA OUR CORE VALUES Our actions are guided by our core values represented by the Promise Circle, which embodies how we do business and our never ending pursuit of creating value for our associates, our commu
Slide 7: Strategic Road Map
STRATEGIC ROAD MAP NASDAQ: PEBO NASDAQ: PEBO • Commitment to Superior Shareholder Returns • Great Place to Work • Clients’ First Choice for Financial Services • Meaningful Impact on Our Communities BEST COMMUNITY BANK IN AMERICA RESPONSIBLE EXTRAORDINARY PROFITABLE FIRST CLASS RISK MANAGEMENT CLIENT
Slide 8: Investment Rationale
INVESTMENT RATIONALE NASDAQ: PEBO UNIQUE COMMUNITY BANKING MODEL • Strongest deposit market share positions in more rural markets where we can affect pricing. Top 3 market share in 35 counties across three states. • Presence near larger cities puts us in a position to capture lending opportunities i
Slide 9: Investment Rationale
INVESTMENT RATIONALE NASDAQ: PEBO NASDAQ: PEBO STRENGTH IN THE CURRENT ENVIRONMENT (AS OF JUNE 30, 2023) DEPOSITS CREDIT • Average customer deposit relationship: $29,000 • Stable metrics compared to year-end • 32% of our deposit balances exceeded FDIC • NPAs of 0.48% as a percentage of total assets
Slide 10: External Recognition
EXTERNAL RECOGNITION NASDAQ: PEBO 2023 is 2nd year in a row Peoples Bank has received Top Workplaces USA award COMMUNITY AWARDS BEST IN THE VALLEYS JOHNSON COUNTY, KY PIKE COUNTY, KY 2023 FLOYD COUNTY, KY WINNER 10 PIKE COUNTY, KY
Slide 11: Credit, Capital & Liquidity
NASDAQ: PEBO CREDIT, CAPITAL & LIQUIDITY 11
Slide 12: Cost of Deposits
COST OF DEPOSITS NASDAQ: PEBO PEBO IS BELOW THE $1 - $10 BILLION BANK UNIVERSE IN TERMS OF COST OF DEPOSITS AS OF MARCH 31, 2023 PEERPROXY GROUP - TOTAL PEER GROUPDEPOSIT COST (%) - TOTAL DEPOSIT COST (%) 2.50% 2.00% 1.50% UNIV. $1-$10 B AVERAGE: 1.10% 1.00% 0.50% 0.40% 0.00% FMNB CCNE FFBC PEBO PFC
Slide 13: Deposit Franchise
DEPOSIT FRANCHISE NASDAQ: PEBO NASDAQ: PEBO LOW LOAN TO DEPOSIT RATIO PROVIDES LOW COST LIQUIDITY TO FUND FUTURE GROWTH PEER DATA GROUP - LOANS AS OF MARCH /31,DEPOSITS 2023 120.00% PROXY PEER GROUP - LOANS / DEPOSITS 100% 100.00% UNIV. UNIV. $1-$10 $1-$10 B Average: B AVERAGE: 87.00% 87.00% 82.27%
Slide 14: Net Interest Margin
NET INTEREST MARGIN NASDAQ: PEBO BEST IN CLASS NET INTEREST MARGIN LARGELY DUE TO STRONG DEPOSIT FRANCHISE DATA AS OF MARCH 31, 2023 PEER GROUP- PROXY NET- NET PEER GROUP INTEREST MARGIN INTEREST MARGIN 5% 5.00% 4.50% 4.49% 4% 4.00% UNIV. UNIV. $1-$10 $1-$10 B Average: B AVERAGE: 3.51%3.51% 3.50% 3%
Slide 15: Credit Risk Management Process
CREDIT RISK MANAGEMENT PROCESS NASDAQ: PEBO NASDAQ: PEBO LOANS & LEASES* PORTFOLIO COMPOSITION MANAGEMENT & MONITORING • Robust concentration management process focused on portfolio • Clear segregation of duties between sales & credit functions risk diversification • Signature approval process with
Slide 16: Asset Quality
ASSET QUALITY NASDAQ: PEBO OUR DELINQUENCY AND NET CHARGE-OFF TRENDS HAVE REMAINED STABLE FOR 8 YEARS Percentage of Loans Considered “Current” Percentage of Net Charge-Offs to Average Loans Percentage of Loans considered Current Charge Offs Annualized 100% 0.375% 99.1% 99.0% 98.6% 98.8% 98.6% 98.5%
Slide 17: Asset Quality: NPAs
ASSET QUALITY NASDAQ: PEBO NASDAQ: PEBO NPA Composition THE INCREASE IN NPAS IN Q3 2021 WAS MAINLY DUE TO ACQUISITION OF PREMIER FINANCIAL BANCORP, INC.* $60 CRE $50 RESIDENTIAL C&I $40 HELOC NPA’S IN $ MILLIONS CONSUMER $30 $20 $10 $0 2017 2018 2019 2020 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4
Slide 18: Asset Quality: Classified and Criticized Loans
ASSET QUALITY NASDAQ: PEBO CLASSIFIED AND CRITICIZED LOANS AS A PERCENTAGE OF TIER 1 CAPITAL ARE WELL MANAGED. Asset Quality INCREASE IN Q3 2021 DUE TO ACQUISITION OF PREMIER FINANCIAL BANCORP, INC. 50% CRITICIZED LOANS / 45% TIER 1 CAPITAL + ALLL * 40% 35.72% 35% CLASSIFIED LOANS / 30.93% 29.11% TI
Slide 19: CRE Concentration Analysis
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO NASDAQ: PEBO CRE EXPOSURE IS WELL BELOW SUPERVISORY CRITERIA ESTABLISHED TO IDENTIFY INSTITUTIONS WITH HEIGHTENED CRE CONCENTRATION RISK PEER GROUP- CRE LOANS / RISK-BASED CAPITAL DATA AS OF MARCH 31, 2023 400% PROXY PEER GROUP – CRE LOANS / RISK-BASED CAPITAL
Slide 20: CRE Concentration Analysis
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO PEBO IS MEANINGFULLY BELOW THE AVERAGE FOR $1-10 BILLION BANKS AS OF MARCH 31, 2023 PEER GROUP - CONSTRUCTION, LAND AND DEVELOPMENT LOANS / RISK- PROXY PEER GROUP – CONSTRUCTION, LAND AND LAND DEVELOPMENT LOANS / RISK-BASED CAPITAL BASED CAPITAL 120% 100% 100%
Slide 21: Loan Composition
LOAN COMPOSITION NASDAQ: PEBO NASDAQ: PEBO C&IC hart LOAN COMPOSITION REFLECTS DIVERSIFIED RISK PROFILE n Comp Loa TOTAL LOAN PORTFOLIO = $6.0 BILLION osition TOTAL C&I PORTFOLIO = $1.2 BILLION, WHICH INCLUDES PPP LOANS Lo an Portf olio (Exc luding De posit Ov erdrafts 9 10 ) 1 FOOD SERVICES 20% 8 7
Slide 22: Prudent Use of Capital
PRUDENT USE OF CAPITAL NASDAQ: PEBO CAPITAL PRIORITIES • Organic growth • Dividends • Share repurchases • Acquisition activities DIVIDENDS • Over 7 consecutive years of increasing dividends. Dividend paid increased from $0.15 per share for Q1 2016 to $0.39 declared in Q3 2023 • Based on the closing
Slide 23: Q2 2023 Financial Insights
Q2 2023 FINANCIAL INSIGHTS 23
Slide 24: Q2 2023 Highlights & Key Impacts
Q2 2023 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO FINANCIAL: • Closed acquisition of Limestone Bancorp, Inc. on April 30, 2023. • Net income of $21.1 million for the second quarter of 2023, representing earnings per diluted common share of $0.64. In comparison, Peoples reported earnings per diluted comm
Slide 25: Financial Expectations 2023
FINANCIAL EXPECTATIONS NASDAQ: PEBO NASDAQ: PEBO 2023 NET INTEREST MARGIN EXPECT TO BE BETWEEN 4.40% - 4.60% LOAN GROWTH ANTICIPATE 6-8% ORGANIC LOAN GROWTH FEE-BASED EXPECT FEE BASED INCOME GROWTH TO BE IN LOW-TO-MID DOUBLE DIGITS COMPARED TO 2022 INCOME CREDIT COSTS EXPECT NET CHARGE-OFF RATE DURI
Slide 26: Acquisition of Limestone Bancorp, Inc
ACQUISITION OF LIMESTONE BANCORP, INC NASDAQ: PEBO ANNOUNCED OCTOBER 25, 2022 AND CLOSED APRIL 30, 2023 • Limestone Bancorp, Inc., through its community bank subsidiary and 208 associates, operated 20 branches in 14 counties in Kentucky. • As of June 30, 2023, the combined company had $8.8 billion i
Slide 27: Stock Performance
STOCK PERFORMANCE NASDAQ: PEBO NASDAQ: PEBO 80% 70% PEBO PERFORMANCE HAS PERFORMED BETTER THAN PEERS IN TERMS OF YTD, 1, 3 & 5 YEAR TOTAL ANNUAL RETURN 60% 50% 40% TOTAL ANNUAL RETURN AS OF JULY 26 2023 PEBO 30% PEER GROUP MEDIAN 20% S&P 500 18% 17% 20% 14% KBW BANK INDEX 12% 11% 10% 9% Total Return
Slide 28: Total Revenue
TOTAL REVENUE NASDAQ: PEBO ON PACE FOR RECORD TOTAL REVENUE $350,000 $79,513 $300,000 Peoples benefited from the acquisition of ASB Financial Corp. in the second quarter of 2018, the $250,000 acquisition of First Prestonsburg $253,442 $69,254 Bancshares Inc. in the second quarter of 2019, the acquis
Slide 29: Insurance & Investment Income Composition
INSURANCE & INVESTMENT nue* INCOME COMPOSITION ent Reve ition Investm NASDAQ: PEBO NASDAQ: PEBO Compos REVENUE SOURCES OF OUR FEE BASED BUSINESSES e noitisopmoC emocnI tnemtsevnI dna ecnarusnI m TOTAL INVESTMENT REVENUE TOTAL INSURANCE REVENUE Inco YTD 2023 YTD 2023 stment *e$8.5 uneveR MILLION tnem
Slide 30: Expense & Efficiency Ratio
EXPENSE & EFFICIENCY RATIO NASDAQ: PEBO THE RECENT ESCALATION IN EXPENSES WAS DUE COVID-19 AND INCREASED NON-INTEREST TO ACQUISITIONS, AND AN INCREASE IN FTE’S FOR EXPENSE IMPACTED THE EFFICIENCY RATIO GROWTH AND TECHNOLOGY INVESTMENTS IN 2020 & 2021 Efficiency Ratio Adjusted for Non-Cor CORE NON-IN
Slide 31: Improvement in Key Metrics
IMPROVEMENT IN KEY METRICS NASDAQ: PEBO NASDAQ: PEBO WE HAVE MADE STEADY PROGRESS ON THESE METRICS OVER THE RECENT YEARS. THE PROVISION FOR CREDIT LOSSES, INTEREST RATE ENVIRONMENT, AND OTHER ECONOMIC IMPACTS OF COVID-19 SIGNIFICANTLY IMPACTED THESE METRICS IN 2020 AND 2021. INCREASED NET INCOME IN
Slide 32: Total Loan Growth
TOTAL LOAN GROWTH NASDAQ: PEBO Total Loan Growth TOTAL LOANS* WERE $6.0 BILLION AS OF JUNE 30, 2023 $6,500 LIMESTONE ACQUIRED LOANS PREMIER FINANCIAL BANCORP, INC. $5,200 ACQUIRED LOANS TOTAL PPP LOANS TOTAL ACQUIRED LEASES $3,900 PREMIUM FINANCE ACQUIRED LOANS ($ MILLIONS) FIRST PRESTONSBURG ACQUIR
Slide 33: Deposit Growth
DEPOSIT GROWTH NASDAQ: PEBO NASDAQ: PEBO Deposit Growth 42% OF DEPOSIT BALANCES IN Q2 2023 WERE DEMAND DEPOSIT ACCOUNTS (DDAS), INCLUDING $1.7 BILLION OF NON-INTEREST BEARING DDAS $6,960 $7,000 $6,000 $5,862 BROKERED CERTIFICATES OF DEPOSIT $5,717 GOVERNMENTAL DEPOSIT ACCOUNTS MONEY MARKET DEPOSIT A
Slide 34: More Than Just a Bank
MORE THAN JUST A BANK NASDAQ: PEBO LOCATIONS IN OHIO, WEST VIRGINIA, KENTUCKY, VIRGINIA, WASHINGTON D.C. AND MARYLAND Recognized by Newsweek as one Effective April 30, 2023 17th largest bank owned insurance of America’s Best Banks 2023 company in the United States NATIONWIDE SPECIALTY FINANCE DIVISI
Slide 35: Q2 2023 Appendix
Q2 2023 APPENDIX 35
Slide 36: Non-US GAAP Measures: Pre-Provision Net Revenue
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO 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-inter
Slide 37: Non-US GAAP Measures: PPNR Adjusted for Non-Core Items
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO 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 item
Slide 38: Non-US GAAP Measures: Core Non-Interest Income
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO CORE NON-INTEREST INCOME Core non-interest income is a financial measure use by 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 conversion revenue w
Slide 39: Non-US GAAP Measures: Efficiency Ratio
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO EFFICIENCY RATIO AND ADJUSTED FOR NON-CORE ITEMS 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
Slide 40: Non-US GAAP Measures: Tangible Equity and 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’. Such ratios represent non-US GAAP financial measures since the calculation removes the impact of
Slide 41: Non-US GAAP Measures: Return on Average Assets
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO RETURN ON AVERAGE ASSETS AND ADJUSTED FOR NON-CORE ITEMS The return on average assets adjusted for non-core items represents a non-US GAAP financial measure since it excludes the release of the deferred tax asset valuation allowance, the impact of the Tax C
Slide 42: Non-US GAAP Measures: Return on 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 43: Non-US GAAP Measures: Return on Average Equity
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 a non-US GAAP financial measure since it excludes the release of the deferred tax asset valuation allowance,
Slide 44: Contact: Peoples Bancorp Management
CHUCK SULERZYSKI President and Chief Executive Officer 740.374.6163 Chuck.Sulerzyski@pebo.com TYLER WILCOX Senior Executive Vice President Chief Operating Officer 740.373.7737 Tyler.Wilcox@pebo.com KATIE BAILEY Executive Vice President Chief Financial Officer and Treasurer 740.376.7138 Kathryn.Baile