Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q3 2020 Earnings Presentation
53 slides from Peoples Bancorp's earnings presentation, Nov 5, 2020
Slide 1: Investor Presentation 3rd Quarter 2020
INVESTOR PRESENTATION 3RD QUARTER 2020 NASDAQ: PEBO
Slide 2: Safe Harbor Statement
NASDAQ: PEBO 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 Litigat
Slide 3: Table of Contents
NASDAQ: PEBO WORKING TABLE OF CONTENTS PAGE 5 TOGETHER PROFILE, INVESTMENT RATIONALE, CULTURE AND STRATEGY PAGE 10 COVID-19 CREDIT IMPACT, CAPITAL & LIQUIDITY BUILDING PAGE 30 Q3 & YTD 2020 FINANCIAL INSIGHTS PAGE 45 Q3 & YTD 2020 APPENDIX SUCCESS 3 WORKING TOGETHER. BUILDING SUCCESS. ®
Slide 4: Profile, Investment Rationale, Culture and Strategy
PROFILE INVESTMENT NASDAQ: PEBO RATIONALE PROFILE, INVESTMENT RATIONALE, CULTURE AND STRATEGY CULTURE ® 4 WORKING TOGETHER. BUILDING SUCCESS.
Slide 5: PEBO Profile
PEBO PROFILE NASDAQ: PEBO PEBO MARKET INSIGHT PEBO GEOGRAPHIC FOOTPRINT • Strongest deposit market share positions in more rural markets where we can affect pricing Cleveland levelaand • Presence near larger cities puts us in a position PA to capture lending opportunities in more urban markets (e.g.
Slide 6: Investment Rationale
INVESTMENT RATIONALE NASDAQ: PEBO UNIQUE COMMUNITY BANKING MODEL • Greater revenue diversity (non-interest income, excluding gains and losses, as a percent of total revenue was 31% year-to-date) than the average $1 - 10 billion bank • Strong community reputation and active involvement • 16 local mar
Slide 7: Corporate Culture
CORPORATE CULTURE NASDAQ: PEBO OUR VISION CIRCLE Our vision is to be THE BEST COMMUNITY BANK IN AMERICA. OUR MISSION CLIENTS INTEGRITY FIRST ALWAYS We will work side by side to overcome challenges and seize opportunities. We listen and work with you. Together, we will PEBO UR build and execute thoug
Slide 8: Strategic Road Map
STRATEGIC ROAD MAP NASDAQ: PEBO STRATEGIC ROAD MAP FOR BEST COMMUNITY BANK IN AMERICA • Commitment to Superior Shareholder Returns • Great Place to Work • Clients’ 1st Choice for Banking, Investing and Insurance • Meaningful Impact on Our Communities RESPONSIBLE EXTRAORDINARY PROFITABLE FIRST CLASS
Slide 9: COVID-19 Credit Impact, Capital & Liquidity
COVID-19 NASDAQ: PEBO CREDIT IMPACT COVID-19 CREDIT IMPACT, CAPITAL & LIQUIDITY CAPITAL & LIQUIDITY 9 ® WORKING TOGETHER. BUILDING SUCCESS.
Slide 10: Our Response to COVID-19
OUR RESPONSE TO COVID-19 NASDAQ: PEBO THE CHANGES THAT THE PANDEMIC HAS HAD ON OUR INDUSTRY HAVE BEEN WIDESPREAD AND SWEEPING. • It changed the way we provide our products and services, which is now more digital. • Enabled remote work capabilities for associates as appropriate. • Temporarily moved t
Slide 11: Community Relations During COVID-19
COMMUNITY RELATIONS DURING COVID-19 NASDAQ: PEBO SOCIAL MEDIA POSTS RECOGNIZING PEOPLES BANK 4.1 M Followers 441 K Followers / 250K Views / Over 10K Likes & Retweets Jobs Ohio provided a 90% guarantee on the first $25 million of increased exposure to small businesses. Clients were able to obtain up
Slide 12: Credit Risk Management Process
CREDIT RISK MANAGEMENT PROCESS NASDAQ: PEBO LOAN 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 Credit Administration re
Slide 13: COVID-19 Related Loan Payment Deferrals
COVID-19 RELATED LOAN PAYMENT DEFERRALS NASDAQ: PEBO COVID-19 RELATED LOAN PAYMENT DEFERRALS* Loan Payment Deferrals $2.9B $3.0B $3 • At June 30, 2020, consumer and commercial loan modifications totaled $529 million, made up of $485 million in commercial loans and $44 million in consumer loans. $2 $
Slide 14: COVID-19 Loan Payment Deferrals by Select Industries
COVID-19 RELATED LOAN PAYMENT DEFERRALS NASDAQ: PEBO COVID-19 RELATED LOAN PAYMENT DEFERRALS BY SELECT INDUSTRIES* Other Restaurants_Exposure_Deferments Lodging_Exposure_Deferm McDONALD’S McDonalds_Exposure_Deferments OTHER RESTAURANTS LODGING 50% $150 150% $150 150% $150 $135M $135M 20% $120 120% $
Slide 15: Asset Quality
ASSET QUALITY NASDAQ: PEBO OUR DELINQUENCY AND NET CHARGE-OFF TRENDS HAVE REMAINED STABLE TO IMPROVING FOR FOUR PLUS YEARS. Percentage of Loans Considered “Current” Percentage of Loans considered Current Percentage of Net Charge-Offs to Average Loans Annualized Charge Offs Annualized 100% 0.375% 99.
Slide 16: Asset Quality - NPAs / Assets
ASSET QUALITY Asset Quality - NPAs/Assets NASDAQ: PEBO 1.4% NPAS AS A PERCENTAGE OF TOTAL ASSETS HAVE CONSISTENTLY BEEN SUPERIOR TO MIDWEST BANKS WITH $1 TO $10 BILLION IN TOTAL ASSETS. 1.2% 1.0% 0.8% 0.60% NPAS / ASSETS 0.57% 0.56% 0.6% 0.54% 0.49% 0.49% 0.50% 0.50% 0.48% 0.47% 0.48% 0.46% 0.46% 0.
Slide 17: Asset Quality - NPA Composition
ASSET QUALITY NASDAQ: PEBO NPA Composition NPAS AT 9/30/20 WERE PRIMARILY COMPOSED OF WELL-COLLATERALIZED COMMERCIAL REAL ESTATE AND RESIDENTIAL REAL ESTATE LOANS. INCREASE DURING Q3 2020 WAS MAINLY DUE TO THE PANDEMIC.* $30 $25 $20 $ MILLIONS $15 $10 $5 $0 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17
Slide 18: Asset Quality - Classified and Criticized Loans
ASSET QUALITY NASDAQ: PEBO CLASSIFIED AND CRITICIZED LOANS AS A PERCENTAGEAsset OF TIERQuality 1 CAPITAL ARE WELL MANAGED. 50% CRITICIZED LOANS / 45% TIER 1 CAPITAL + ALLL * 39.16% 40% 35% 29.89% CLASSIFIED LOANS / TIER 1 CAPITAL + ALLL * 28.10% 30% 25.61% 26.54% 25% 22.42% 21.22% 19.58% 20% 15% 19.
Slide 19: CRE Concentration Analysis
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO CRE Concentration Analysis CRE EXPOSURE IS WELL BELOW SUPERVISORY CRITERIA ESTABLISHED TO IDENTIFY INSTITUTIONS WITH HEIGHTENED CRE CONCENTRATION RISK. 400% • Exposure levels also compare favorably to peer institution concentration levels. 350% PEER BANK SUBS
Slide 20: CRE Concentration Analysis - Construction and Land
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO PEER BANK SUBS – CONSTRUCTION, LAND CREAND LAND DEVELOPMENT Concentration LOANS / RISK-BASED CAPITAL Analysis 110% 100% 90% 100% IS THE LEVEL CONSIDERED HEIGHTENED CONSTRUCTION, 80% LAND AND LAND DEVELOPMENT CONCENTRATION RISK PER 70% SUPERVISORY GUIDANCE 60%
Slide 21: Loan Composition
LOAN COMPOSITION NASDAQ: PEBO LOAN COMPOSITION REFLECTS HEALTHY RISK DIVERSITY. TOTAL LOAN PORTFOLIO* = $3.0 BILLION, Loan Composition WHICH EXCLUDES $460 MILLION OF PPP LOANS TOTAL CRE PORTFOLIO** = $0.9 BILLION Commercial Real Estate Portfolio Commercial Real Estate Portfolio Loan Portfolio (Exclu
Slide 22: CECL Summary
CECL SUMMARY NASDAQ: PEBO ECONOMIC FORECAST – KEY DRIVERS AT SEPTEMBER 30, 2020 Percentage of Loans considered Current US Unemployment 12% Ohio GDP Ohio Unemployment Percentage of Loans considered Current Percentage of Loans considered Current 12% 6.87% 12% 10.47% 10.07% 6% 9.61% 9.12% 8.94% 8.66% 9
Slide 23: Reserves to Assets
RESERVES TO ASSETS CRE Concentration Analysis NASDAQ: PEBO PEBO IS MEANINGFULLY ABOVE ITS PEERS IN TERMS OF RESERVES TO TOTAL ASSETS AS OF JUNE 2020. 3.00% RESERVES AS A % OF LOANS 2.25% 1.50% 0.75% 0.00% SRCE PFC PEBO STBA HBNC SYBT FISI CTBI LKFN FRME GABC NWBI SMMF FCF PRK TMP THFF CCNE FMNB CHCO
Slide 24: Capital in a COVID-19 Environment
CAPITAL IN A COVID-19 ENVIRONMENT NASDAQ: PEBO WE HAVE LOOKED AT OUR CAPITAL LEVELS UNDER DIFFERENT STRESSED SCENARIOS. • The graph below is based on the following key stressed assumptions, related to bank capital: • No net income for the remainder of 2020 and 2021, dividend continues at $0.35 per q
Slide 25: Prudent Use of Capital
PRUDENT USE OF CAPITAL NASDAQ: PEBO ACQUISITIONS • Bank acquisitions completed in 2014 (3), 2015 (1), 2018 (1), and 2019 (1) • Insurance acquisitions completed in 2014 (1), 2015 (1), 2017 (2), and 2020 (1) • One investment acquisition was completed in 2016 • One premium finance acquisition effective
Slide 26: Liquidity in a COVID-19 Environment
LIQUIDITY IN A COVID-19 ENVIRONMENT NASDAQ: PEBO WE ARE WELL POSITIONED FROM A LIQUIDITY PERSPECTIVE • We had a loan-to-deposit ratio of 88% at September 30, 2020, which enables us to be flexible and grow loans when it is prudent. • We can leverage our investment securities to gain liquidity through
Slide 27: Deposit Franchise in a COVID-19 Environment
DEPOSIT FRANCHISE IN A COVID-19 ENVIRONMENT NASDAQ: PEBO AS OF JUNE 2020, OUR LOAN-TO-DEPOSIT RATIO WAS LOW COMPARED TO PEER GROUP, WHICH POSITIONS US WELL FROM A LIQUIDITY PERSPECTIVE. 105% 100% 95% 90% UNIV. $1- $10 B AVERAGE: 88.74% NOT TO SCALE 85% 80% MEDIAN 75% 70% LKFN STBA SRCE PFC NWBI SYBT
Slide 28: Cost of Deposits
COST OF DEPOSITS CRE Concentration Analysis NASDAQ: PEBO 1.00% PEBO IS MEANINGFULLY BELOW THE $1 - $10 BILLION BANK UNIVERSE IN TERMS OF COST OF DEPOSITS AS OF JUNE 30, 2020. TOTAL DEPOSIT COST (%) 0.75% 0.60% 0.50% 0.30% 0.25% 0.00% TSC SMMF CCNE FMNB LKFN UNIV CTBI SRCE CHCO PFC STBA FISI FRME HBN
Slide 29: Q3 & YTD 2020 Financial Insights
NASDAQ: PEBO Q3 & YTD 2020 FINANCIAL INSIGHTS ® 29 WORKING TOGETHER. BUILDING SUCCESS.
Slide 30: Peoples Premium Finance
PEOPLES PREMIUM FINANCE NASDAQ: PEBO Effective July 1, 2020, Peoples closed on the asset purchase agreement under which Peoples Bank acquired the operations and assets of Triumph Premium Finance (“TPF”), a division of TBK Bank, SSB. Based in Kansas City, Missouri, Peoples Premium Finance will contin
Slide 31: Q3 & YTD 2020 Highlights & Key Impacts
Q3 & YTD 2020 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO FINANCIAL: • Recorded net income of $10.2 million for the third quarter of 2020, representing earnings per diluted common share of $0.51. • Net interest income was $35.1 million for the third quarter of 2020, an increase of $259,000, or 1%, compare
Slide 32: Q3 & YTD 2020 Highlights - Recognition
Q3 & YTD 2020 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO RECOGNITION: • Peoples Bank was recognized as the number one bank in West Virginia as part of Forbes’ annual list of America’s Best-In-State Banks and Credit Unions 2020. • For the 2nd year in a row, Peoples Bank has been recognized as a Top Workpl
Slide 33: Q3 & YTD 2020 Highlights - Technology
Q3 & YTD 2020 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO PEOPLES BANK CONTINUES TO ADD TECHNOLOGY THAT CLIENTS CARE ABOUT • Contactless debit cards • Cardless cash (ability to use ATM via mobile app without debit card) • Card Controls (ability to lock/unlock debit card) • Transaction alerts • Ability to
Slide 34: Stock Performance
STOCK PERFORMANCE NASDAQ: PEBO THE INDUSTRY IS UNDER-PERFORMING THE MARKET IN 2020, GIVEN THE UNKNOWN RAMIFICATIONS OF COVID-19 ON FUTURE BANK PROFITABILITY. TOTAL ANNUAL RETURN AS OF OCTOBER 31, 2020 CUMULATIVE TOTAL RETURN YEAR TO DATE 40% AS OF OCTOBER 31, 2020 RUSSELL 2000 30% PEBO PEER GROUP FI
Slide 35: Total Revenue
TOTAL REVENUE NASDAQ: PEBO TOTAL REVENUE OF $150 MILLION FOR FIRST NINE MONTHS OF 2020. REVENUE IN FOURTH QUARTER OF 2020 WILL BENEFIT FROM PPP AND PREMIUM FINANCE ACQUISITION. COVID-19 AND INTEREST RATE ENVIRONMENT WILL MUTE YEAR OVER YEAR ORGANIC GROWTH. $250000 Beginning in the second quarter of
Slide 36: Insurance & Investment Income Composition
en om m st eC INSURANCE & INVESTMENT ve In om INCOME COMPOSITION nc tI en NASDAQ: PEBO m st ve In nd noitisopmoC emocnI tnemtsevnI dn TOTAL INSURANCE REVENUE TOTAL INVESTMENT REVENUE a ce YTD 2020 YTD 2020 n ra $10.9 MILLION *e$10.0 uneveR tMILLION su nemtsevnI In e* 5 nu ve 4 3 Re ce an 1 1 sur In
Slide 37: Core Non-Interest Expense
CORE NON-INTEREST EXPENSE* NASDAQ: PEBO THE RECENT ESCALATION IN EXPENSES WAS DUE TO ACQUISITIONS, OUR MOVE TO A $15 MINIMUM WAGE, AND AN INCREASE IN FTE’S FOR GROWTHCore AND TECHNOLOGY Non-InterestINVESTMENTS. Expense*COVID-19 IS NOT EXPECTED TO CAUSE A MATERIAL INCREASE IN EXPENSES. $150000 $12500
Slide 38: Efficiency Ratio Adjusted for Non-Core Items
EFFICIENCY RATIO ADJUSTED FOR NON-CORE ITEMS* NASDAQ: PEBO COVID-19 AND REDUCEDRatio Efficiency NET INTEREST AdjustedMARGIN HAVE IMPACTED for Non-Core Items* THE EFFICIENCY RATIO IN THE FIRST NINE MONTHS OF 2020 75% 73% 69.55% 71% 69% 67% NOT TO SCALE 67.49% 65% 63% 64.30% 61% 61.85% 61.78% 61.32% 6
Slide 39: Improvement in Key Metrics
IMPROVEMENT IN KEY METRICS NASDAQ: PEBO WE HAVE MADE STEADY PROGRESS ON THESE METRICS OVER THE RECENT YEARS. THE PROVISION FOR CREDIT LOSSES, INTEREST Improvement RATE ENVIRONMENT, AND OTHER ECONOMIC IMPACTS OF COVID-19 In Key Metrics ARE SIGNIFICANTLY IMPACTING THESEImprovement METRICS IN 2020. In
Slide 40: Total Loan Growth
TOTAL LOAN GROWTH NASDAQ: PEBO TOTAL LOANS WERE $3.5 BILLION AS OF SEPTEMBER 30, 2020, WHICH INCLUDED $460 MILLION OF PPP LOANS. Total Loan Growth $3500 $3100 TOTAL PPP LOANS ($ MILLIONS) NOT TO SCALE TOTAL LOANS EXCEPT ASB & $2700 FIRST PRESTONSBURG & PPP ASB ACQUIRED LOANS $2300 FIRST PRESTONSBURG
Slide 41: Paycheck Protection Program
PAYCHECK PROTECTION PROGRAM SUCCESS NASDAQ: PEBO PPP RESULTS PEBO PPP GEOGRAPHIC FOOTPRINT COUNTIES WITH PEBO PPP LOAN • Assisted 3,898 businesses with SBA PPP loans with obtaining approximately $500 million in loans authorized as of September 30, 2020. • Peoples Bank had the highest PPP loan produc
Slide 42: Earning Asset Mix
EARNING ASSET MIX NASDAQ: PEBO FROM 2013 TO 2018, THE PERCENTAGE OF EARNING ASSETS COMPOSED OF INVESTMENTS DECREASED. IN 2020, THE INCREASE IN LOANS AS A Earning PERCENTAGE OF EARNING Asset Mix ASSETS WAS DUE TO PPP LOANS. 79% $4.5 80% 76% 73% 74% 72% 78% $4.0 PERCENTAGE OF TOTAL EARNING ASSETS 70%
Slide 43: Deposit Growth
DEPOSIT GROWTH NASDAQ: PEBO TOTAL DEPOSIT BALANCES AT SEPTEMBER 30, 2020 INCREASED 20% COMPARED TO DECEMBER 31, 2019. DEPOSIT BALANCES BENEFITED FROMDeposit PPP LOAN PROCEEDS AND FISCAL STIMULUS FOR CONSUMERS AND Growth COMMERCIAL CLIENTS. $3,952 $4000 BROKERED CERTIFICATES OF DEPOSIT GOVERNMENTAL D
Slide 44: Q3 & YTD 2020 Appendix
Q3 & YTD NASDAQ: PEBO 2020 Q3 & YTD 2020 APPENDIX ® 44 WORKING TOGETHER. BUILDING SUCCESS.
Slide 45: 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 46: 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 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 f
Slide 47: 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 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 CORE NON-I
Slide 48: Non-US GAAP Measures - 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 49: 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’ equity. Such ratios represent non-US GAAP financial measures since the calculation removes the imp
Slide 50: Non-US GAAP Measures - Return on Average Assets
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO 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 Tax Cuts
Slide 51: 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 52: Non-US GAAP Measures - Return on Tangible Equity (continued)
Annualized net income $ 16,684 $ 10,941 $ 31,157 $ 38,471 $ 46,255 $ 53,695 $ 18,960 Add: amortization of other intangible assets 1,428 4,077 4,030 3,516 3,338 3,359 3,091 Less: tax effect of amortization of other intangible assets 500 1,427 1,411 1,231 701 705 649 APPENDIX Annualized net income exc
Slide 53: Working Together. Building Success.
NASDAQ: PEBO CHUCK SULERZYSKI President and Chief Executive Officer P: 740.374.6163 Chuck.Sulerzyski@pebo.com KATIE BAILEY Executive Vice President Chief Financial Officer and Treasurer P: 740.376.7138 Kathryn.Bailey@pebo.com Peoples Bancorp® is a federally registered service mark of Peoples Bancorp