Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Investor Presentation (November 2012)
53 slides from Peoples Bancorp's investor presentation, Nov 28, 2012
Slide 1: Investor Presentation November 2012
4 Poopies @ Nasdaq: PEBO Investor Presentation November 2012 Shuck W. Sulerzyski Edward G. Sloane \ Chet Execuave Officer Chief Financial Otticer and Treasurer
Slide 2: Safe Harbor Statement
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 Act of
Slide 3: Investment Rationale
Investment Ration ¢ Unique community banking model Greater revenue diversity for a community bank our size Strong community reputation and active involvement Local market teams capable of outmaneuvering larger banks More sophistication and product breadth than smaller banks ¢ Strong, growing fee-bas
Slide 4: Corporate Profile
AA Corporate Profile ‘Peoples @\
Slide 5: Corporate Profile
Corporate Profil * Financial holding company headquartered in Marietta, Ohio, — Provide a broad range of banking, insurance, and investment services * Current snapshot — Over 125,000 client relationships & 75,000 households : $1.9 billion : $989 million — Deposits: $1.5 billion — Market capitalizati
Slide 6: Accomplishments
ccomplishmenis ¢ Recruitment of new management talent * Repayment of TARP Capital without a dilutive capital raise ¢ Return to positive operating leverage through revenue and expense initiatives * Raised quarterly dividend from $0.10 to $0.12 per quarter ¢ Achieved all-time record earnings in Q1 201
Slide 7: Customer-centric approach to sales and service
* Customer-centric approach to sales and service — Provide exceptional advice and service to chents — Build long-lasting relationships ¢ Adhere to sound operating principles — Disciplined underwniting and credit culture — Generate positive operating leverage — Maintain prudent capital and liquidity
Slide 8: Stakeholder highlights
holder koe é * 2012 marks 110" year in business + Broad product and services offering — Banking, Insurance, Investments + Active involvement and support — Retirement Plan Services — Community Investment/ Development — Sizable alternative delivery channels — Youth and Education — 46 offices and 43 AT
Slide 9: Strategic focus areas
Q Asset quality — Renewed emphasis on credit basics and pricing discipline — Aggressive resolution of problem loans — Attention to portfolio management Revenue growth — Emphasis on fee-based revenues over net interest income — Greater sales disapline and management — Meaningful contribution from acq
Slide 10: Senior leadership team
Chuck W. Sulerzyski Diverse financial services experience President and CEO Progressive exeantive leadership : 37 Edward G. Sloane Progressive finance and accounting leadership EVP, CFO and Treasurer Extensive experience with ALM, M&A, strategic 4 29 planning Carol A. Schneeberger Extensive history
Slide 11: Financial Performance
Financial Performance ‘Peo, plese) BANCORP
Slide 12: Trust Preferred Redemption
rust Preferred Redem pliom * Notice of redemption issued November 16, 2012 — Filredempton of outstanding trust preferred securities — Redemption date = December 19, 2012 — Redemption being funded by parent company loan ¢ S-year, fully amortizing, fixed rate ¢ Historical information: — $30 nullion of
Slide 13: Quarterly financial metrics
Diluted EPS $0.35 $0.33 $0.63 $0.47 $0.45 Return on common equity 7.19% 6.69% 12.90% 9.57% 8.86% Return on assets 0.86% 0.84% 1.48% 1.11% 1.04% Net interest margin (FTE) 3.39% 3.49% 3.41% 3.43% 3.30% Efficiency ratio 69.70% 73.53% 65.47% 69.61% 70.06% Tier 1 common equity 12.40% 12.82% 13.82% 13.92%
Slide 14: Key metrics
Metric ic 47.91% 48.02% 40.44% 30.13% 32.03% -5.7% - 0.4% 2.9% 3.7% 1.1% 69.70% 73.53% 65.47% 69.61% 70.06% - 0.3% 0.4% - 0.2% 1.49% 0.7% 7, 137% 1.03% 1.68% 1.42% 1.34% (1) Substandard loans, OREO, classifiedinvestments as a% of Tier! capital +ALLL (3) Sequential growth in average balances ~ (2) Ye
Slide 15: Average Balances
Average Balances (Sin millions) rE $ 944.4 $ 948.6 $ 946.2 $ 959.6 $ 966.8 656.2 660.8 664.8 662.5 677.1 1,057.6 1,055.8 1,060.2 1,083.4 1,093.7 226.5 236.4 247.5 269.3 280.2 285.4 281.0 272.1 235.2 231.9 ing value without FHLB/FRB stock 15
Slide 16: Stock Performance
Stock Performance Total Annual Return 1-Year 3-Year 5-Year 50% / i i 3% i i 6% i @ Peoples Bancorp SPX 500 Index ‘ASD AQ Bank Index Total Retum includes impact of dividends Peers include: BKYF, BUSE, CCNE, CHCO, CTBI, ESBF, FCBC, FCF, FCZA, FDEF, FFBC, FFKT, FMNB, FRME, ABC, LNBB, PFBI, PNBC, PRK, S
Slide 17: Drivers of Shareholder Value
Drivers of Shareholder Capital Accumulation Change in TCE ratio BYTDSept2011 150.7% 3.7% espe! YTD Sept2012 64 bps 45 bps 190n 281% PEBO Peers, = $1-5B PEBO Peers = $1.5B PEBO Peers ‘S1-5B PEBO Peers NPAs to Loans + OREO ¢ Strongcore operating results - Growing, diversified revenues - Good expense c
Slide 18: Stronger earnings and revenue growth than peers
¢ Exhibiting stronger earnings and revenue growth than peers * Significant asset quality improvement in 2012 * Capacity exists to undertake meaningful growth * Target dividend payoutrange of 25% to 40% Source: SNL Financial and FactSet Research Systems; Market data as of 1121/2012 Pearsincluce: BKY,
Slide 19: Asset Quality Trends
Asset Quality Irends $94.9 Ses. $93.6 — bh ies cre $84.3 —— (Sin millions) 1Q1L 3Ql 4Q1L 1912 2012 3012 mmm 30-89 Days Past Due $14,118 $9,847 $10,981 $10,309 $Usl4 $6,961 mn Nonperforming Loans| $32,359 $33,103 $30,022 $20,492 $16,618 $15,508 mm Watch Loans $55,602 $51,054 7 $46,663 mmm Classified
Slide 20: Customers and Markets
Customers and Markets ‘Peo, plese) BANCORP
Slide 21: Our Brand Promise
Our Brand Promi a We will work side by side to overcome challenges and seize opportunities. We will listen and work with you. Together we will build and execute thoughtful plans and actions, blending our experience & expertise to move you toward your financial goals. Our core difference is providing
Slide 22: Product and channel comparison
"Yes “Yes ‘Yes ‘Yes ‘Yes ‘Yes_| No Yes Yes Yes Yes No ¥e_|_No Yes Yes Ye No No No_| No No Yes Yes No No No | No Yes Yes Ye Yes Yes Yes_| Yes Positive P Yes Yes Ye No No No_| No a Yes Yes Ye: Yes No Yes | No P2P Payment Ye Yes Ye No No No__| No Online Ch No Yes Ye No No No_[ No [Mobile Channel ext Al
Slide 23: Peoples
Peoples SC reopies
Slide 24: Branch refresh initiative
- Floor to- calissreney ations — Over $5 million being invested — Fist phase begins Q1 2013 - Depgnationa branch design experts e Key! Ben - Consistentlook with our new brand — More engaging customer environment — Better utilization of office space — All delivery channels will be “Best in Class” * C
Slide 25: Redesigned consumer checking product line
* Redesigned consumer checking productlinein 2011 — Ehmnnated “free checking” but ability to avoid fees still exists — Maintained access to our extensive alternative delivery channels * Focuson appealingto the 3 types of checkingaccount buyers — For the Fee Buyers: Basic account that becomes free wi
Slide 26: PEBO Market Population & Household Income
$53.5 PEBO Market Population & Household Income (By County) , (Amounts in thousands) $35.2 $35.6 $31.6 96,552 61,870 64,901 39,829 37,199 49-531 Meigs OH Boyd KY OH Greenup Ky 3 2 2 2 Population ——Median Income a cea Guemsey Washington OH
Slide 27: Marcellus and Utica shale
Marcellus [ | Utica underlying Marcellus Peoples Bancorp’s current market area overlaps portions of both shale opportunities a7
Slide 28: Current Strategic Priorities
Current Strategic Priorities ‘Peo, plese) BANCORP
Slide 29: Strategic Targets
Strategic largets) Strategic Actual Focus 2010 Actual 2011 Actual YTD 2012 5-Year Strategic Target Range Improve NPAsto total loans + OREO 4.64% 3.41% 1.66% 0.70% to 1.00% EO Tele iiaga| Net charge-offsto averageloans a) 2.66% 1.16% 0.13% 0.30% to 0.50% PMinearieitea| Loansto total assets 52.27% 52.
Slide 30: Levers of Success
‘Ageressive resolution of Our “Levers of Success” Retum to credit basics 2013 & Beyond Balance growth with risk Asset problem loans Prudent approach with allowance ech aaa Quality | + Enhanced workout process for loan losses Lessen CRE exposures + Redesign credit function Continue improving credit m
Slide 31: Current Strategic Roadmap
Current Strategic R “The Best Community Bank in America” Profitable Revenue Responsible Extraordinary Superior Growth Risk Management Client Experience Workforce > M&A > Our Way of Life > Broad Delivery Channels | > RightPeople / Right Job > Sales & Service Process > Asset Quality > Delight the cust
Slide 32: Business Line Focus: Core Banking
Business Line Foot Core Banking Activities Lending Activities Deposit Generation * Profitable portfolio growth — Focus onrisk versus reward — Maintain pricing discipline * Create greater diversity — Emphasis on consumer lending —C&I and small business — Targeted CRElending ¢ Process improvements — I
Slide 33: Business Line Focus: Non-Banking
Business Line Focus Non-Banking Activities WeallsManagemen * Top-line revenue growth — Managed assets = $1.2 billion — Currently 7% of totalrevenue ¢ Adding talent across footpmnt — Organic + acquisitions — 3 advisors addedin 2012 — Currently 9 advisors; Goal=12 * Leveraging branch capabilities — Pl
Slide 34: Mergers & Acquisitions
Mergers & Acquisitions ‘Peo, plese) BANCORP
Slide 35: Our M&A Strategy
Our M&A Sirate a * Optimize our current footprint — Gam market share and improve operating efficiency — Create more density through disciplined expansion ¢ Target areas with characteristics similar to existing markets — Expand along major transportation routes — Focused on “mid-major” communities or
Slide 36: Recent acquisitions
Banking * Sistersville Bancorp, Inc. —Completed September 14, 2012 —Parent of First Federal Savings Bank — Two offices in West Virginia 5 Gausectilleanclibadkaet ine — Transaction summary: * Deal price = $9.8 milion * Consideration = 100% cash Total Assets = $46.6 nullon Total Loans = 30.8 million T
Slide 37: Footprint expansion opportunities
L7 asion * High growth potential + Recentlyadded new talent 1-77 Expansion + Possible M&A opportunities + Wealth management 1-7 Cormidor * High growth potential + Attractive market dynamics Footprint Development + Increase market share in all areas + Insurance & Wealth Management expansion potential
Slide 38: Historical Financial Data
Historical Financial Data ‘Peo, plese) BANCORP
Slide 39: Annual and Quarterly Results
Annual Results $194 $2.01 Earnings per common share $L7L $1.74 @ Cash dividends declared per common share $1.07 $0.7 i | 2004 2005 2006 2007 2008 2009 2010 2011 Quarterly Results $0.63 $0.47 $0.45 $0.35 $0.26 Q2 2011 Q3 2011 Q42011 Q12012 Q22012 Q32012 Dividend data presented above reflects amounts
Slide 40: Net Interest Margin
Net Interest Marsim 5.24% 5.24% 494% 4.89% 481% 4.66% 4.64% 4.17% 2.04% 194% Q22010 §— Q32010Q42010QU2011. 22011 = Q32011. «42011. »=QU2012,-Q22012-—Q3 2012 —4-Earning Assets. —*—Net Interest Margin —#~Interest Bearingliab: x equivalent basis Peoples ¢@) »
Slide 41: Year-over-Year Change in Revenue & Expenses
Q Year-over-Year Change in Revenue & Expenses 16.6% Total Operating Expenses 5 ~7.8%, 68% 7.1% ~$.7% Total Revenue Q12010 Q22010 Q32010 Q42010 QU2011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Total Revenue represents Net Interest Income plus No Peoples (\ a rest Income, exclusive of any gains or los
Slide 42: Noninterest income
($ in thousands) (ay $30,379 $31,350 $32,097 $32,050 $31,634 $32,944 2006 2009 BOther $3,234 $3,594 $3,173 $3,224 @E-Banking $3,080 $3,954 $4,686 $5,142 OTrust & investment $4,258 $4,722 $5,348 $5,548 G@Insurance $9,619 $9,390 $8,846 $9,265 |Deposit service charges} $10,215 $10,390 $9,581 $9,765 Peo
Slide 43: Operating revenues and expenses
4) (Sin millions) Operating Revenues 351% 351% 3.48% le 32900 33206 = - = 2006 2007 2008 2009 2010 2011 Net interest income Nowinterest income —Netinierest margin ) = Operating Expenses : F980 5751% 57.07% 56.30% sone oe $61.3 $51.3 51% 55% 547 559 546 537 534 513 ee FTEs FTEs FTEs FIEs FIEs 2006 20
Slide 44: Earning assets and funding sources
(Sin millions) $1,081.1 $1,024.83 $934.0 Earning Assets $923.6 $915.0 $925.6 $914.8 $922.9 $935.4 2007 2008 2009 2010 aNetLoans 012011 Funding Source 022011 032011 042011 aTotal Investments 012012 022012 $970.2 032012 581.6] [iis44s.of] [s319.2| 3287.3] [1$281.5} 289.6 280.6 ])] 1228.2] 3227.1) $221
Slide 45: Loan portfolio
($ in thousands) [2006 | 2007 | 2008 | 2009 | 2010 | 2011 | Q12012 | Q22012 | Q32012 | |BRetail) $371,302 [ $363,363 | $368,983 | $356,682 | $353,882 | $356,720 | $356,128 | $355,287 | $386,334 ‘&I_ | $191,847 | $171,937 | $178,834 | $159,915 | $153,713 | $140,857 | $150,431 | $161,893 | $172,068 [B
Slide 46: Provision, charge-offs and nonperforming assets
(Sin millions) Provision for Loan Losses & Net Charge-offs Nonperforming Assets 2.6806 2.6596 25396 canes 3.8406 1.88% $22950 310230 $3310 $2040 $362.0 Provision for ban losses BNetcharge-offs at) 80,1200) $56.0) = ane 22011” 032011 o4z011 012012” a22012 032012 ALLL io Lo San 0 ° ° ° ° ° 022011 3201
Slide 47: Deposit Composition
Deposit Composition & ($ in thousands) | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 29 | $37. Public Funds i $78,900 ($101,039, $105, $122,916 |$161, 881 | $154,835 [SMMDs | 7 |$134,38 Hissze isaea|toneas $289, 657 | $268,410 | $255,907 | $249,608 $254,702 |@ Retail CDs [$514,885 | $499,684] $518,401)
Slide 48: Appendix
Appendix
Slide 49: Pre-provision net revenue
ION NET REVENUE Pre-provision net revenue (PPNR) income represents a non-GAAP financial measure commonly used to evaluate the operating performance and trends of financial services companies, including Peoples. PPNR represents the earnings capacity that can be either retained in order to build capit
Slide 50: Pre-provision net revenue
ION NET REVENUE Pre-provision net revenue (PPNR) income represents a non-GAAP financial measure commonly used to evaluate the operating performance and trends of financial services companies, including Peoples. PPNR represents the earnings capacity that can be either retained in order to build capit
Slide 51: Tangible common equity reconciliation
ay) Peoples uses tangible common equity similar to that of Peoples. The following table reconciles the calculation of these non- atios to evaluate the adequacy of Peoples’ stockholders’ equity. reported in Peoples’ consolidated financial statements. As of December 31, Such ratios represent non- GAAP
Slide 52: Tangible common equity reconciliation
ay) Peoples uses tangible common equity Such ratios represent non- GAAP financial information since their calculation removes the impact of intangible assets acquired through acquisitions on the consolidated balance sheets. Management believes this information is useful to investors since it facilit
Slide 53: Poopies @
4 Poopies @ Nasdaq: PEBO Investor Presentation November 2012 Shuck W. Sulerzyski Edward G. Sloane \ Chet Execuave Officer Chief Financial Otticer and Treasurer
Peoples Bancorp — Investor Presentation (November 2012) on 6ix