Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q4 2023 Earnings Presentation
44 slides from Peoples Bancorp's earnings presentation, Jan 23, 2024
Slide 1: Investor Presentation 4th Quarter
INVESTOR PRESENTATION I 4th QUARTER WORKING TOGETHER. BUILDING SUCCESS.
Slide 2: Table of Contents
WORKING TABLE OF CONTENTS TOGETHER PAGE 4 PROFILE, INVESTMENT RATIONALE, CULTURE & STRATEGY BUILDING PAGE 12 CREDIT, CAPITAL & LIQUIDITY SUCCESS PAGE 24 Q4 & FY 2023 FINANCIAL INSIGHTS PAGE 35 Q4 & FY 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 DECEMBER 31, 2023 CURRENT PEBO FOOTPRINT Loans: $6.2 billion COUNTIES WHERE PEBO HAS TOP 3 MARKET SHARE* CLEVELAND Assets: $9.2 billion COUNTIES WHERE PEBO HAS OVER $100 MILLION OF Deposits: $7.2
Slide 6: Corporate Culture
CORPORATE CULTURE NASDAQ: PEBO OUR VISION Our vision is to be the BEST COMMUNITY BANK IN AMERICA for our employees, clients, shareholders, and local communities OUR CORE VALUES Our actions are guided by our core values represented by the Promise Circle, which embodies how we do business and our neve
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: Strength in the Current Environment
INVESTMENT RATIONALE NASDAQ: PEBO NASDAQ: PEBO STRENGTH IN THE CURRENT ENVIRONMENT (AS OF DECEMBER 31, 2023) DEPOSITS CREDIT • Average customer deposit relationship: $30,000 • Stable metrics compared to year-end 2022 • 31% of our deposit balances exceeded FDIC • NPAs of 0.43% as a percentage of tota
Slide 10: Stock Performance
STOCK PERFORMANCE NASDAQ: PEBO 80% 70% PEBO HAS PERFORMED BETTER THAN PEERS IN TERMS OF 1, 3, 5 & 10 YEAR TOTAL ANNUAL RETURN 60% 50% 40% TOTAL RETURN AS OF DECEMBER 31, 2023 PEBO 30% 26% 26% PEER GROUP MEDIAN KBW BANK INDEX 20% 14% 16% S&P 500 12% 10% 8% 8% 8% Total Return includes impact of divide
Slide 11: External Recognition
EXTERNAL RECOGNITION NASDAQ: PEBO NASDAQ: PEBO PEBO 250 Banks 1 OF 10 90 Banks Over 4,600 Banks Eligible Peoples Bank has appeared on American Peoples Bank has been recognized by Banker’s Best Bank to Work For list for Newsweek for 2 consecutive years. 3 consecutive years. Peoples Bank is 4th larges
Slide 12: Credit, Capital & Liquidity
NASDAQ: PEBO CREDIT, CAPITAL & LIQUIDITY 12 12
Slide 13: Cost of Deposits
COST OF DEPOSITS NASDAQ: PEBO NASDAQ: PEBO PEBO IS BELOW THE $1 - $10 BILLION BANK UNIVERSE IN TERMS OF COST OF DEPOSITS AS OF SEPTEMBER 30, 2023 PEER GROUP - TOTAL DEPOSIT COST (%) PEER GROUP - TOTAL DEPOSIT COST (%) 3.50% 3.00% 2.50% 2.00% UNIV. $1-$10 B AVERAGE: 1.83% 1.50% 1.28% 1.00% 0.50% 0.00
Slide 14: Deposit Franchise
DEPOSIT FRANCHISE NASDAQ: PEBO LOW LOAN TO DEPOSIT RATIO PROVIDES LOW COST LIQUIDITY TO FUND FUTURE GROWTH DATA AS OF SEPTEMBER 30, 2023 PEER GROUP - LOANS PEER GROUP / DEPOSITS - LOANS / DEPOSITS 120.00% 100.00% 86.49% UNIV. $1-$10 UNIV. $1-$10 B Average:88.81% B AVERAGE: 88.81% 80.00% 60.00% 40.00
Slide 15: Net Interest Margin
NET INTEREST MARGIN NASDAQ: PEBO NASDAQ: PEBO BEST IN CLASS NET INTEREST MARGIN LARGELY DUE TO STRONG DEPOSIT FRANCHISE DATA AS OF SEPTEMBER 30, 2023 PEER GROUP - NET INTEREST MARGIN PEER GROUP- NET INTEREST MARGIN 5.00% 4.75% 4.50% 4.00% UNIV. $1-$10 UNIV. $1-$10 B Average:3.29% B AVERAGE: 3.29% 3.
Slide 16: Credit Risk Management Process
CREDIT RISK MANAGEMENT PROCESS 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 Credit Admini
Slide 17: Asset Quality
ASSET QUALITY NASDAQ: PEBO 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% 98.6% 98.8% 98.6%
Slide 18: Asset Quality: NPA Composition
ASSET QUALITY NASDAQ: PEBO NPA Composition THE INCREASE IN NPAS IN Q3 2021 WAS MAINLY DUE TO ACQUISITION OF PREMIER FINANCIAL BANCORP, INC.* NONPERFORMING ASSETS $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
Slide 19: Asset Quality: Classified and Criticized Loans
ASSET QUALITY NASDAQ: PEBO 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. CRITICIZED AND CLASSIFIED LOANS 50% CRITICIZED LOANS / 45% TIER 1 CAPITAL + ALLL * 40% 3
Slide 20: CRE Concentration Analysis
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO CRE EXPOSURE IS WELL BELOW SUPERVISORY CRITERIA ESTABLISHED TO IDENTIFY INSTITUTIONS WITH HEIGHTENED CRE CONCENTRATION RISK DATA AS OF SEPTEMBER 30, 2023 PEER GROUP- CRE LOANS / RISK-BASED CAPITAL PEER GROUP – CRE LOANS / RISK-BASED CAPITAL 400% 350% 300% IS T
Slide 21: CRE Concentration Analysis: Construction and Land
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO NASDAQ: PEBO PEBO IS BETTER THAN AVERAGE FOR $1-10 BILLION BANKS AS OF SEPTEMBER 30, 2023 PEER GROUP - CONSTRUCTION, LAND AND DEVELOPMENT LOANS / RISK- PEER GROUP – CONSTRUCTION, LAND AND LAND DEVELOPMENT LOANS / RISK-BASED CAPITAL BASED CAPITAL 120% 100% IS T
Slide 22: Loan Composition
LOAN COMPOSITION NASDAQ: PEBO C&IC hart LOAN COMPOSITION REFLECTS DIVERSIFIED RISK PROFILE n Comp Loa TOTAL LOAN PORTFOLIO = $6.2 BILLION osition TOTAL C&I PORTFOLIO = $1.2 BILLION Lo an Portf olio (Exc luding De posit Ov erdrafts 9 10 ) 1 FOOD SERVICES 24% 8 7 Commer cial Real Estate Po 11 2 RETAIL
Slide 23: Prudent Use of Capital
PRUDENT USE OF CAPITAL NASDAQ: PEBO 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 Q1 2024 • Based on
Slide 24: Q4 & FY 2023 Financial Insights
Q4 & FY 2023 FINANCIAL INSIGHTS 24
Slide 25: Q4 & FY 2023 Highlights & Key Impacts
Q4 & FY 2023 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO NASDAQ: PEBO FINANCIAL: • For the full year, net income was $113.4 million in 2023 versus $101.3 million in 2022, representing earnings per diluted common share of $3.44 and $3.60, respectively. » Non-core items negatively impacted diluted earnings
Slide 26: Q4 & FY 2023 Awards Received
Q4 & FY 2023 AWARDS RECEIVED NASDAQ: PEBO 2023 is the 3rd year in a row Peoples Bank has received 2023 is the 2nd year in a row Peoples Bank the American Banker Best Banks to Work For award has received Top Workplaces USA award COMMUNITY AWARDS BEST IN THE VALLEYS es t o f 2023 2023 B the T ri-Sta t
Slide 27: 2024 Financial Expectations
2024 FINANCIAL EXPECTATIONS NASDAQ: PEBO NASDAQ: PEBO 2024 RETURN ON EXPECT BETWEEN 1.35% TO 1.45% AVERAGE ASSETS EXPECT HIGHER NET INTEREST INCOME DUE TO FULL YEAR BENEFT OF LIMESTONE MERGER. NET NET INTEREST MARGIN INTEREST MARGIN BETWEEN 4.15% AND 4.35% BASED ON PRELIMINARY EXPECTATIONS REGARDING
Slide 28: Total Revenue
TOTAL REVENUE NASDAQ: PEBO RECORD TOTAL REVENUE IN 2023 $450000 $93,950 $375000 PEOPLES BENEFITED FROM: • The acquisition of ASB Financial Corp. in the second $79,513 $339,374 quarter of 2018, $300000 • The acquisition of First Prestonsburg Bancshares Inc. in the second quarter of 2019 • The acquisi
Slide 29: Insurance & Investment Income Composition
INSURANCE & INVESTMENT nue* INCOME COMPOSITION ent Reve NASDAQ: PEBO NASDAQ: PEBO ition Investm Compos REVENUE SOURCES OF OUR FEE BASED BUSINESSES e noitisopmoC emocnI tnemtsevnI dna ecnarusnI m TOTAL INVESTMENT REVENUE TOTAL INSURANCE REVENUE Inco FY 2023 FY 2023 stment *e$17.2 uneveR tMILLION nemt
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 EXPENSE IMPACTED THE EFFICIENCY RATIO FOR GROWTH AND TECHNOLOGY INVESTMENTS IN 2020 & 2021 Efficiency Ratio Adjusted for Non-Cor CORE NON-INTE
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 $6.2 BILLION AS OF DECEMBER 31, 2023 $7,000 LIMESTONE ACQUIRED LOANS PREMIER FINANCIAL BANCORP, INC. ACQUIRED LOANS TOTAL PPP LOANS TOTAL ACQUIRED LEASES ($ MILLIONS) PREMIUM FINANCE ACQUIRED LOANS FIRST PRESTONSBURG ACQUIRED LOANS $
Slide 33: Deposit Growth
DEPOSIT GROWTH NASDAQ: PEBO NASDAQ: PEBO Deposit Growth 38% OF DEPOSIT BALANCES AT YEAR END 2023 WERE DEMAND DEPOSIT ACCOUNTS (DDAS), INCLUDING $1.6 BILLION OF NON-INTEREST BEARING DDAS $8,000 $7,152 BROKERED CERTIFICATES OF DEPOSIT $6,400 GOVERNMENTAL DEPOSIT ACCOUNTS $5,862 $5,717 MONEY MARKET DEP
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 17th largest bank owned insurance of America’s Best Banks 2023 company in the United States NATIONWIDE SPECIALTY FINANCE DIVISIONS 34
Slide 35: Q4 & FY 2023 Appendix
Q4 & FY 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 Information
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