Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q4 2015 Earnings Presentation
41 slides from Peoples Bancorp's earnings presentation, Feb 9, 2016
Slide 1: Investor Presentation 4th Quarter 2015
y Peoples ¢), Nasdaq: PEBO Investor Presentation 4 Quarter 2015
Slide 2: 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 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act
Slide 3: Agenda
¢ Profile and Investment Rationale ¢ 2015 Performance * Strategy * 2016 Performance Outlook * Mergers & Acquisitions « Appendix
Slide 4: Profile and Investment Rationale
Profile and Investment Rationale BANCORP® /Peop plese)
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: — Assets: $3.3 billion — Loans: $2.1 billion — Deposits: $2.5 billion — Market capitalization: $325 million — Assets under Manage
Slide 6: Investment Rationale
Investment Rationale * Unique community banking model — Greater revenue diversity for a community bank our size (83% fee-based) — Strong community reputation and active involvement — Local market teams capable of outmaneuvering larger banks — More sophistication and product breadth than smaller bank
Slide 7: 2015 Performance
2015 Performance (Peoples @
Slide 8: Management Perspective
Management Perspective ‘ay * Results from the execution of our strategy were largely overshadowed by losses associated with one large credit relationship * Positive momentum in the second half of the year — Acceleration of loan production allowed achievement of annual growth target — Expense focus r
Slide 9: Metrics
a Metrics 12/31/15 12/31/14 O(U)$ O/U)% Investment securities S 868,830 S 713,659 $ 155,171 22% Gross loans 2,072,440 1,620,898 451542 28% Allowance for loan losses (16,779) 7.881) 1102 -6% Balance Sheet [aaa 2,055,661 1,603,017 452,644 28% Pree Total assets 3,258,970 2,567,769 691201 27% ‘Non-inter
Slide 10: 2015 Operating Expenses
9015 Operaiie epee a Q4 Core Expenses are Down Over 6% from Q2, the First Full Quarter Reflecting NB&T 2 $27,759 $25,920 $26,027 ai Q2 Q3 Q4 =Core =Non-Core Acquisition (One-Time) ™Non-Core Other les (-) —** Recognizedonlya partial quarter of NB&T € expenses, NB&T acquisition dosedMarch 6, 2015 BANC
Slide 11: 2015 Loan Growth
2015 Loan Growth Originated Loans have Grown by 16% Since March 31, Due in Partto Additional Production Capacity Addedwith NB&T Acquisition 16% growth 12/31/2014 3/31/2015 6/30/2015 9/30/2015 12/31/2015 Originated mAcquired 2 a Peoples O ll BANCORP.
Slide 12: 12/31/15 Credit Exposures
19/31/15 Credit Exposures Direct Credit Exposure to Energy Industry Clients is Less Than 1.7% of Total Commitments, and Exposure to Large Relationships is Less Than. 5% of Total Commitments % of Total Credit Commitments % of Total Credit Commitments EnergyIndustry Exposure Large Relationship Exposur
Slide 13: Loan portfolio composition
‘Residential ‘Real Estare 27.3% ‘Data as of December 31, 2015
Slide 14: FY 2015 Review
FY 2015 Reema, 14
Slide 15: 2015 Talent Improvements
2015 Talent Improyemienis a) Reshaped and enhanced executive team Added production talent to complementand leverage acquisitions, and to accelerate growth Continue to evaluate and improve talent to keep pace with growing organization Rotation of high potential employees to add depth and bench streng
Slide 16: 2015 Business Performance
2015 Business Perform * Commercial Banking — Commercial loans were up $18 million (annualizedrate of >6%6) in Q4 — Strong pipeline with $54 millionin scheduled fundings in Q1 2016 — $20 muillionlending “house lint” although legal limitis over $40 million * Retail Banking — Noi-interest bearing DDA n
Slide 17: Slide 17
Slide 18: Strategic Roadmap
Strategic Road (a * GreatPlace to Work Our Way of Life Asset Quality Compliance / Regulatory Operational Risk Information Security Change Management Execution Risk Reputational Risk Commitmentto Performance and Shareholder Returns * “Best Community Bankin America” Great Place to Bank + Meaningful Im
Slide 19: Strategic Priorities
tratesic Priontie © * Primary emphasis on revenue growth Positive . @peniin ¢ Disciplined expense management te 5 ¢ Expand revenue vs. expense growth gap beyond 2% jE MS ENS © Target efficiency ratio below 65% y . < Superior * Balance growth with prudent credit practices Asset ¢ Improve diversity wi
Slide 20: Strategic Targets
Strategic Targets 5-Year Actual Actual Actual Strategic 2013 2014 2015 ‘Target Range Net interest margin (FTE) 3.23% 3.45% 353% 3.60% to 3.80% iis ede] Total revenue growth 353% 18.31% 32.40% += 5% to 8% (foetus Total expense growth 755% 24.52% 35.38% = 3% to 6% bE TST] Non-inter est incometo total
Slide 21: Strategic Capabilities
Strategic Capabilities) (Online Rinancial Management ACH, Wires Stop Parments Positive Pay Dax Service: POP Paments (Online Chat Text At Bill Pay-Specific to Motile Phone/iPad/Andsiod Apps Banking jepost Capabilities Prepaid Debit Card Prepaid Gift Card Empl od Pay Cards Indicates Peoples Ins aduama
Slide 22: 2016 Performance Outlook
2016 Performance Outlook BANCORP® /Peop plese)
Slide 23: 2016 Outlook
2016 Outlook ) * Maintain efficiency ratio below 65% — Core expenses beat quarterly rn rate target of $26.5 million in Q4 providing an adjusted ratio of 64.7% — Targeting efficiency ratio slightly below 65% m 2016, driven primarily by continuation of expense management imitiatives * Continue driving
Slide 24: 2016 Outlook
2016 Outlook | ‘ay ¢ Return to top-quartile asset quality — 2016 net charge-off rate forecasted at 15 - 2.5 bp, well below historical average of 30 - 40 bp * Continue executing on acquisition strategy — Pnmarily focused on insurance and investment opportunities in 2016 to build fee- based revenue. A
Slide 25: Mergers & Acquisitions
Mergers & Acquisitions /Peop plese) BANCORP®
Slide 26: Bank and insurance deals summary
* 6 Bank Deals Adding $1.4 Billionin Assets — Built geographic distribution (37 branches) into better markets — Used acquisition to hire talent from larger regional competitors — Achieved cost save targets on all deals, and earmings targets on 5 of the 6 — NB&T behind target due to unanticipated iit
Slide 27: Recent Acquisitions
Recent Acquisiti Sisteraville Bancorp $47 MM Assets, 2 Branches Undisclosed Advisor Book $0.4 MM Undisclosed Advisor Book $03 MM. Pikeville Insurance Agency $1.5MM Revenue Melelly Insurance Agency $0.5MM Revenue ‘Jackson Insurance Brokerage $0.5MM Revenue Freedom Choice Benefits Group $0.2MM Revenue
Slide 28: Footprint Expansion
© Li nsion * Bank opporuumities + Wealth management and insurance opportunities Southwest Ohio + Wealth management or insurance opportunities to complement NB&T. + Attractive growth and market dynamics Footprint Development + Increase market share in all areas rT + Insurance & wealth so management e
Slide 29: M&A Strategy
M&A Strategy € Optimize and expand our current footprint Use M&A to augment organic growth Target markets with characteristics similar to existing franchise Target opportunities that align to and complement our strategy Target franchises that provide cultural fit Target transactions that meet return
Slide 30: Appendix
Appendix
Slide 31: Annual Financial Summary
Annual FinancialSi Diluted EPS Retum on common equity Retum on assets 0.91% 0.74% 0.35% lant neti) Pre-provision net revenue to assets () 1.26% 1.10% _0.96%| Pee tnthtca| Net interest margin (FTE) 3.23% 3.45% 3.53% Core net interest margin (PTE) 2) 3.19% 3.32% 3.36% Efficiency ratio () 71.91% 75.37%
Slide 32: Quarterly Financial Summary
Quarterly Financial Simm Metrics a 10, 22 3Q. 40) 2014 2015 2015 2015 2015 Diluted EPS $0.28 60.04) $0.27_—$0.22—-$0.14 Return on common equity 5.03% -0.78% 4.69% 3.89% — 2.42%| Return on assets 0.66% —-0.10% 0.61% 0.51% —0.32%| lttrtst lie) Pre-provision net revenue to assets (1) 0.99% 0.00% 0.99%
Slide 33: Key Drivers of Shareholder Value
Key Drivers of Shareho LTMRevenue Growth NPAstoLoans and OREO LTM Fee Revenue to Average Assets Pearsinoluce: CONE, CHOOSER ‘ HERE TSER, LKFN, MSFG, SRCE,STEA, SVET, THF, THP 7 Peoples () 4-58 group represents all publicallytraded Miiwest banks with total assets between $1 and $5 billion 33 Source:
Slide 34: Non-GAAP Measures
Non-GAAP Measures PRE-PROVISION NET REVENUE Preprovision net revenue (PPR) 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 o
Slide 35: Non-GAAP Measures
Non-GAAP Measures PRE-PROVISION NET REVENUE Pre-provision net revenue (PPNR) 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
Slide 36: Non-GAAP Measures
Non-GAAP Measures EFFICIENCY RATIO The efficiency ratio is a key financial measure used to monitor performance. The efficiency ratio is calculated as non-interest expense (less intangible amortization) as a percentage of fully tax-equivalent net interest income plus non-interest income. This measure
Slide 37: Non-GAAP Measures
Non-GAAP Measures EFFICIENCY RATIO The efficiency ratio is a key financial measure used to monitor performance. The efficiency ratio is calculated as non-interest expense (less intangible amortization) as a percentage of fully tax-equivalent net interest income plus non-interest income. This measure
Slide 38: Non-GAAP Measures
Non-GAAP Measures Peoples uses tangible common equity ratios to evaluate the adequacy of Peoples’ stockholders’ equity. Such ratios represent non-GAAP financial information since the calculations exclude the impact of intangible assets acquired through acquisitions on both total stockholders’ equity
Slide 39: Non-GAAP Measures
Non-GAAP Measures Peoples uses tangible common equity ratios to evaluate the adequacy of Peoples’ stockholders’ equity. Such ratios represent non-GAAP financial information since the calculations exclude the impact of intangible assets acquired through acquisitions on both total stockholders’ equity
Slide 40: Peoples Bancorp 4th Quarter 2015
y Peoples ¢), Nasdaq: PEBO Investor Presentation 4 Quarter 2015
Slide 41: Quarter Earnings Release
4 Quarter Earnings Release /Peop plese) BANCORP®