Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q1 2020 Earnings Presentation
54 slides from Peoples Bancorp's earnings presentation, May 4, 2020
Slide 1: Investor Presentation 1st Quarter 2020
NASDAQ: PEBO INVESTOR PRESENTATION 1ST QUARTER 2020 NASDAQ: PEBO 11
Slide 2: Working Together. Building Success.
NASDAQ: PEBO WORKING TOGETHER BUILDING
Slide 3: 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 4: Our Response to COVID-19
OUR RESPONSE TO COVID-19 NASDAQ: PEBO OUR RESPONSE TO COVID-19 CHANGE IN OPERATIONS The changes that the pandemic has had on our industry have been widespread and sweeping. • It has changed the way we provide our products and services, which is now more electronic and lobby access by appointment onl
Slide 5: Our Response to COVID-19: Communities and Associates
OUR RESPONSE TO COVID-19 NASDAQ: PEBO FOR OUR COMMUNITIES • $250,000 donation to local charities, with majority going to fight hunger • Associates donating approximately $10,000 monthly to local food banks • Peoples Bank Foundation continues to accept grant applications • Company buys lunches for as
Slide 6: Profile, Investment Rationale, Culture and Strategy
PROFILE INVESTMENT NASDAQ: PEBO RATIONALE PROFILE, INVESTMENT RATIONALE, CULTURE AND STRATEGY CULTURE 5
Slide 7: Corporate Profile
CORPORATE PROFILE NASDAQ: PEBO FINANCIAL HOLDING COMPANY HEADQUARTERED IN MARIETTA, OHIO Provides a broad range of banking, insurance and investment services. CURRENT SNAPSHOT: CURRENT FOOTPRINT: Assets: $4.5 billion; Loans: $2.9 billion Demographics: Unemployment: Deposits: $3.4 billion Median Inco
Slide 8: Geographic Footprint
GEOGRAPHIC FOOTPRINT NASDAQ: PEBO PEBO GEOGRAPHIC FOOTPRINT Peoples’ footprint includes full service branches 75 Cleveland PA Akron in Ohio, West Virginia and Kentucky. 77 Coshocton MD Cambridge IN 70 71 Columbus Caldwell New Martinsville 33 Marietta Wilmington 50 Athens Vienna Parkersburg Cincinnat
Slide 9: PEBO Market Insight
PEBO MARKET INSIGHT NASDAQ: PEBO PEBO MARKET INSIGHT DEPOSIT DEPOSIT MARKET MSA RANK ($000)* SHARE (%) MARIETTA, OH 1 884,414 52.05% • Strongest deposit market share positions in more CAMBRIDGE, OH WILMINGTON, OH 1 1 225,591 199,573 34.35% 32.56% rural markets where we can affect pricing PRESTONSBUR
Slide 10: Investment Rationale
INVESTMENT RATIONALE NASDAQ: PEBO 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 •
Slide 11: Corporate Culture
CORPORATE CULTURE NASDAQ: PEBO OUR VALUES OUR VISION PROMISE CIRCLE Our vision is to be THE BEST COMMUNITY BANK IN AMERICA. Peoples' Employee Promise Circle represents how we do business and our never-ending pursuit of creating value for our clients. Our strategies to OUR MISSION serve clients and e
Slide 12: 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 RISK EXTRAORDINARY PROFITABLE FIRST C
Slide 13: Stock Performance
STOCK PERFORMANCE NASDAQ: PEBO TOTAL ANNUAL RETURN AS OF DECEMBER 31, 2019 CUMULATIVE TOTAL RETURN YEAR TO DATE 35% AS OF APRIL 30, 2020 31% 30% RUSSELL 2000 27% PEBO PEER GROUP FINANCIAL SVCS S&P 500 -9% 25% 24% -29% -29% -30% 20% 20% 17% 15% 15% 15% 14% 13% 12% 12% 10% 9% PEBO 9% PEER GROUP 6% 5%
Slide 14: Capital, Liquidity & Credit Impact
COVID-19 NASDAQ: PEBO CAPITAL COVID-19 CAPITAL , LIQUIDITY & CREDIT IMPACT LIQUIDITY & CREDIT IMPACT 1313
Slide 15: Capital
CAPITAL 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, dividend continues at $0.34 per quarter, a measured approach on shar
Slide 16: Liquidity
LIQUIDITY NASDAQ: PEBO WE ARE WELL POSITIONED FROM A LIQUIDITY PERSPECTIVE • We had a loan-to-deposit ratio of 86% at March 31, 2020, which enables us to be flexible and grow loans when it is prudent. • We can leverage our investment securities to gain liquidity through sales or pledging. • Our loan
Slide 17: Credit Risk Management Process
CREDIT RISK MANAGEMENT PROCESS NASDAQ: PEBO LOAN PORTFOLIO COMPOSITION MANAGEMENT & MONITORING • Robust concentration management process focused on • Clear segregation of duties between sales & credit portfolio risk diversification - Signature approval process with Credit representation • Relationsh
Slide 18: Salient Credit Facts for Key COVID-19 Impacted Segments
SALIENT CREDIT FACTS FOR KEY COVID-19 IMPACTED SEGMENTS NASDAQ: PEBO SUMMARY OF COVID-RELATED RELIEF EFFORTS - Began relief program on March 16, 2020 COMMERCIAL CLIENTS - AS OF MAY 1, 2020 • Approved 485 modifications for 264 Clients. Most relief requests were for Interest Only Payments for 120 days
Slide 19: Salient Credit Facts for Key COVID-19 Impacted Segments
SALIENT CREDIT FACTS FOR KEY COVID-19 IMPACTED SEGMENTS NASDAQ: PEBO HOTELS & LODGING • Portfolio is $70.6MM. Top 5 relationships account for 84% of the portfolio. Majority of the exposure represents flagged properties. • Average loan amount is $2.5MM. Average LTV is 56%. • $70MM in loan modificatio
Slide 20: Delinquency and Charge Off Trends
DELINQUENCY AND CHARGE OFF TRENDS 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 Charged Offs to Average Loans Annualized Charge Offs Annua
Slide 21: Asset Quality – NPAs / Assets
ASSET QUALITY – NPAS / ASSETS Asset Quality - NPAs/Assets NASDAQ: PEBO NPAS 1.4% AS A PERCENTAGE OF TOTAL ASSETS HAVE CONSISTENTLY BEEN SUPERIOR TO MIDWEST BANKS WITH $1 TO $10 BILLION IN TOTAL ASSETS. Q1 2020 UPTICK IS PRIMARILY DRIVEN BY CECL ACCOUNTING. 1.2% 1.0% 0.8% NPAS / ASSETS 0.61% 0.57% 0.
Slide 22: NPAs / Total Assets
NPAS / TOTAL ASSETS CRE Concentration Analysis NASDAQ: PEBO 3.00% PEBO IS NEAR THE MIDDLE OF OUR PEER GROUP IN TERMS OF NPAS / TOTAL ASSETS AS OF DECEMBER 2019. PEER BANKS NPAS / TOTAL ASSETS 2.25% 1.50% 0.75% 0.00% TSC FRME FISI SYBT GABC FCF FMNB SRCE TMP HBNC THFF LKFN PEBO FDEF CCNE CHCO NWBI UC
Slide 23: NPA Composition
NPA COMPOSITION NASDAQ: PEBO NPA Composition NPAS AT 3/31/20 WERE PRIMARILY COMPOSED OF WELL-COLLATERALIZED COMMERCIAL REAL ESTATE AND RESIDENTIAL REAL ESTATE LOANS. INCREASE IN Q1-20 IS MAINLY DUE TO ACCOUNTING CHANGE TO CECL. $30 $25 $20 $ MILLIONS $15 $10 $5 $0 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17
Slide 24: Asset Quality
ASSET QUALITY NASDAQ: PEBO CRITICIZED LOANS AS A PERCENT OF TIER 1 CAPITAL AND ALLLQuality Asset HAVE BEEN AT OR NEAR AN 18-YEAR LOW. 50% CRITICIZED LOANS / 45% TIER 1 CAPITAL + ALLL * 39.16% 40% 35% CLASSIFIED LOANS / 29.89% TIER 1 CAPITAL + ALLL * 30% 28.10% 25.61% 25% 28.72% 21.22% 19.58% 19.34%
Slide 25: CRE Concentration Analysis
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO CRE EXPOSURE IS WELL BELOW SUPERVISORY CRITERIA ESTABLISHED TO IDENTIFY INSTITUTIONS WITH HEIGHTENED CRE CONCENTRATION RISK. CRE Concentration Analysis • Exposure levels also compare favorably to peer institution concentration levels. • Concentration levels ha
Slide 26: CRE Concentration Analysis
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO PEER BANK SUBS – CONSTRUCTION, LANDCRE ANDConcentration LAND DEVELOPMENT 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% 5
Slide 27: Strategic Priorities and Financial Results
STRATEGIC NASDAQ: PEBO PRIORITIES STRATEGIC PRIORITIES AND FINANCIAL FINANCIAL RESULTS RESULTS 26
Slide 28: Strategic Priorities
STRATEGIC PRIORITIES NASDAQ: PEBO S OUR STRATEGIC PRIORITIES ARE BEING CHALLENGED BY COVID-19. POSITIVE OPERATING LEVERAGE • Expand revenue versus expense growth gap beyond 2% (PAGE 31) • Focused on sustainable revenue growth (PAGE 34) • Disciplined expense management (PAGE 35) • Drive core efficien
Slide 29: Strategic Targets
STRATEGIC TARGETS NASDAQ: PEBO 3-YEAR STATUS STATUS YTD YTD STRATEGIC AS OF AS OF METRICS 12/31/19 3/31/20 TARGET RANGE* 12/31/19 3/31/20 NPAs as a percent of total loans and OREO (1) 0.76% 0.94% 0.70% to 1.00% IMPROVE ASSET QUALITY Annualized net charge-offs as a percent of average total loans 0.04
Slide 30: Financial Expectations
FINANCIAL EXPECTATIONS NASDAQ: PEBO FINANCIAL EXPECTATIONS – 2020 • We are now using the Current Expected Credit Loss (“CECL”) model. Financial expectations exclude any large market changes, the impact of the SBA Paycheck Protection Program (PPP) and the recently announced premium financing company
Slide 31: Peoples Premium Finance
PEOPLES PREMIUM FINANCE NASDAQ: PEBO We signed an asset purchase agreement under which Peoples Bank will acquire the operations and assets of Triumph Premium Finance ("TPF"), a division of TBK Bank, SSB. Based in Kansas City, Missouri, TPF provides premium finance services for customers to purchase
Slide 32: Adjusted Operating Leverage
ADJUSTED OPERATING LEVERAGE NASDAQ: PEBO WE HAVE MADE PROGRESS ON POSITIVE OPERATING OVER RECENT YEARS. CURRENT CONDITIONS WILL LIKELY PREVENT Adjusted CONTINUED Operating PROGRESS IN 2020. Leverage Versus the VERSUS THE in same quarter PRIOR YEAR, the prior ADJUSTED OPERATING Versus year LEVERAGE W
Slide 33: Q1 2020 Financial Performance
NASDAQ: PEBO Q1 2020 FINANCIAL PERFORMANCE 32
Slide 34: Q1 2020 Highlights & Key Impacts
Q1 2020 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO Q1 2020 PERFORMANCE HIGHLIGHTS AND KEY IMPACTS • Total loan balances increased $37.9 million, or 5% annualized, compared to December 31, 2019, and $173.9 million, or 6%, compared to March 31, 2019 • Asset quality metrics were generally stable during the
Slide 35: Total Revenue
TOTAL REVENUE NASDAQ: PEBO TOTAL REVENUE OF $50 MILLION FOR Q1-20. REVENUE IN THE LATER HALF OF 2020 WILL BENEFIT FROM PPP AND PREMIUM FINANCE ACQUISITION REVENUE. COVID-19 AND RATE ENVIRONMENT WILL MUTE YEAR OVER YEAR ORGANIC GROWTH. $250,000 Beginning in the second quarter of 2018, Peoples $200,00
Slide 36: 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 GROWTH ANDNon-Interest Core TECHNOLOGY INVESTMENTS. Expense* COVID-19 NOT EXPECTED TO CAUSE A MATERIAL INCREASE IN EXPENSES. $150,000 $125,0
Slide 37: Efficiency Ratio Adjusted for Non-Core Items
EFFICIENCY RATIO ADJUSTED FOR NON-CORE ITEMS* NASDAQ: PEBO COVID-19 AND REDUCED NET INTEREST MARGIN Efficiency RatioHAVE IMPACTED Adjusted for THE EFFICIENCY Non-Core RATIO IN Q1, Items* ALONG WITH CERTAIN EXPENSES THAT OCCUR IN THE FIRST QUARTER OF EACH YEAR. 70% 69% 69.55% 68% 67% 67.49% 66% NOT T
Slide 38: Improvement in Key Metrics
IMPROVEMENT IN KEY METRICS NASDAQ: PEBO WE HAVE MADE STEADY PROGRESS ON THESE METRICS OVER THE RECENT YEARS. THE PROVISION Improvement FOR CREDIT LOSSES SIGNIFICANTLY In KeyMETRICS IMPACTED THESE MetricsIN Q1 2020. Improvement In Key Metrics Improvement Return on Average Assets Adjusted for Non-Core
Slide 39: Loan Composition
LOAN COMPOSITION NASDAQ: PEBO LOAN COMPOSITION REFLECTS HEALTHY RISK DIVERSITY. Loan Composition TOTAL LOAN PORTFOLIO = $2.9 BILLION * TOTAL CRE PORTFOLIO** = $0.9 BILLION Commercial Real Estate Portfolio Commercial Real Estate Portfolio Loan Portfolio (Excluding Deposit Overdrafts) 6 7 1 5 12 11 2
Slide 40: Total Loan Growth
TOTAL LOAN GROWTH NASDAQ: PEBO TOTAL LOANS ARE $2.9 BILLION FOR Q1-20. TOTAL LOAN BALANCES INCREASED 5% ANNUALIZED, COMPARED TO DECEMBER 31,Total 2019.Loan Growth $3000 $2600 TOTAL LOANS EXCEPT ASB & ($ MILLIONS) NOT TO SCALE FIRST PRESTONSBURG $2200 ASB ACQUIRED LOANS FIRST PRESTONSBURG ACQUIRED LO
Slide 41: Deposit Growth
DEPOSIT GROWTH NASDAQ: PEBO TOTAL DEPOSIT BALANCES AT MARCH 31, 2020 INCREASED $107.0 MILLION, OR 13% ANNUALIZED DEPOSIT GROWTH, COMPARED TO DECEMBER Deposit 31, 2019. FOR THE QUARTER ENDED MARCH 31, 2020. Growth $4000 BROKERED CERTIFICATES OF DEPOSIT GOVERNMENTAL DEPOSIT ACCOUNTS ($ MILLIONS) NOT T
Slide 42: Average Loans to Deposits
LOANS TO DEPOSITS NASDAQ: PEBO OUR LOAN TO DEPOSIT RATIO IS LOW COMPARED TO PEER GROUP, WHICH POSITIONS US WELL FROM A LIQUIDITY PERSPECTIVE. 105% 100% 95% 92.68% 91.06% 90% NOT TO SCALE 87.3% 85% 80% AVERAGE MEDIAN 75% 70% NWBI STBA SMMF TSC LKFN UCFC FDEF CTBI SRCE TMP FCF UNIV. HBNC PRK UNIV. SYB
Slide 43: Earning Asset Mix
EARNING ASSET MIX NASDAQ: PEBO FROM 2013 TO 2018, THE PERCENTAGE OF EARNING ASSETS COMPOSED OF INVESTMENTS DECREASED. IN 2019, THE INCREASE IN PERCENTAGE OF EARNING Earning Asset ASSETS Mix IS DUE TO THE FIRST PRESTONSBURG ACQUISITION, WHICH PROVIDED ADDITIONAL LIQUIDITY. $4.5 80% 76% 73% 74% 74% 72
Slide 44: 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 expected
Slide 45: 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 Insurance and Investment Income Composition nd TOTAL INSURANCE REVENUE TOTAL INVESTMENT REVENUE a ce FOR Q1 2020 FOR Q1 2020 n ra $4.1 MILLION $3.3 MILLION su Insurance Revenue* Investment Revenue* In e
Slide 46: Pre-Provision Net Revenue
Q1 2020 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 n
Slide 47: PPNR Adjusted for Non-Core Items
Q1 2020 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-c
Slide 48: Core Non-Interest Income
Q1 2020 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 co
Slide 49: Efficiency Ratio
Q1 2020 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
Slide 50: Tangible Equity to Tangible Assets and Tangible Book Value
Q1 2020 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
Slide 51: Return on Average Assets Adjusted for Non-Core Items
Q1 2020 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
Slide 52: Return on Average Tangible Stockholders' Equity
Q1 2020 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 RETURNas performance. It is calculated ON AVERAGE net income (lessTANGIBLE STOCKHOLDERS’ after-tax i
Slide 53: Return on Average Equity Adjusted for Non-Core Items
Annualized net income $ 16,684 $ 10,941 $ 31,157 $ 38,471 $ 46,255 $ 53,695 $ (3,077) Add: amortization of other intangible assets 1,428 4,077 4,030 3,516 3,338 3,359 2,932 Less: tax effect of amortization of other intangible assets 500 1,427 Q1 2020 APPENDIX 1,411 1,231 701 705 615 NON-US GAAP MEAS
Slide 54: Contact
NASDAQ: PEBO 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 registered