Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q1 2021 Earnings Presentation
48 slides from Peoples Bancorp's earnings presentation, May 3, 2021
Slide 1: Presentation 1st Quarter 2021
PRESENTATION 1ST QUARTER 2021
Slide 2: Table of Contents
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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 and Strategy
Slide 5: PEBO Profile
PEBO PROFILE PEBO MARKET INSIGHT PEBO GEOGRAPHIC FOOTPRINT e — Strongest deposit market share positions in more rural markets where we can affect pricing * Presence near larger cities puts us in a position to capture lending opportunities in more urban markets (e.g. Cincinnati, Cleveland and Columbu
Slide 6: Investment Rationale
INVESTMENT RATIONALE UNIQUE COMMUNITY BANKING MODEL e Greater revenue diversity (non-interest income, excluding gains and losses, as a percent of total revenue was 33% for Q1 2021) than the average $1 - 10 billion bank « Strong community reputation and active involvement « 14 local market teams capa
Slide 7: Our Values
OUR VALUES PROMISE CIRCLE Peoples’ core values are represented by our Promise Circle, which represents how we do business and our never-ending pursuit of creating value for our clients, our associates, our communities and our shareholders. ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG") MATTERS Peoples
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
Slide 10: Our Response to COVID-19
10 OUR RESPONSE TO COVID-19 ()) NASDAQ: PEBO THE CHANGES THAT THE PANDEMIC HAS HAD ON OUR INDUSTRY HAVE BEEN WIDESPREAD AND SWEEPING. CLIENTS + COVID-19 changed the way we provide our products and services, which is now more digital + Redesigned lobbies to enable social distancing + One of two banks
Slide 11: Credit Risk Management Process
OE DIT 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 12: Asset Quality
ASSET QUALITY NASDAQ: PEBO OUR DELINQUENCY AND NET CHARGE-OFF TRENDS HAVE REMAINED STABLE T0 IMPROVING FOR FIVE YEARS. Percentage of Loans Considered “Current” Percentage of Net Charge-Offs to Average Loans Annualized 100% — 0.375% 95% | 90% 12316 1237 12318 123119 123120 33121 2316 12347 12318 1231
Slide 13: NPAs / Assets
NPAS / ASSETS 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% ASSET QUALITY NASDAQ: PEBO NPAS AS A PERCENTAGE OF TOTAL ASSETS HAVE CONSISTENTLY BEEN SUPERIOR TO MIDWEST BANKS WITH $1 TO $10 BILLION IN TOTAL ASSETS. 0.45% Q247) Q347 Q417) QB 218 348 Q448 AHI Q219 Q319 Q419 QIZO = Q220 Q320 0420 Qt2i HH S170 $10 B
Slide 14: Asset Quality: NPAs Composition
ASSET QUALITY NASDAQ: PEBO NPAS AT 3/31/21 WERE PRIMARILY COMPOSED OF WELL-COLLATERALIZED COMMERCIAL REAL ESTATE AND RESIDENTIAL REAL ESTATE LOANS. DECREASE DURING Q1 2021 WAS MAINLY DUE TO CRE & RESIDENTIAL.” $30 __ $25 | a szo |. fa _ S15 JL $ MILLIONS $10 | $5 LL $0 J QHE 02416 Q3-16 416 QHI7 Q24
Slide 15: Classified and Criticized Loans
ASSET QUALITY CLASSIFIED AND CRITICIZED LOANS AS A PERCENTAGE OF TIER 1 CAPITAL ARE WELL MANAGED. 50% | CRITICIZED LOANS / 45% | « TIER 1 CAPITAL + ALLL 3016% 40% | | 35% |_ CLASSIFIED LOANS / 29.89% * TIER 1 CAPITAL + ALLL 30% | 28.10% vesa%e 2709% 24.74% 25% | 21.22% 20% |L 15% | 1934% a A0% 16.17
Slide 16: Peer Comparison Chart
400% 350% 300% 250% 203% 200% 150% 121% 100% 50% 0% PFC TSC FCF TMP SYBT CCNE Universe CHCO FISI LKFN SM MF FRME GABC HBNC CTBI NWBI FMN B PRK THFF PEBO SRCE $1-$10 B
Slide 17: Peer Comparison Chart
110% 100% 90% 80% 70% 60% 45% 50% 40% 30% 25% 20% 10% 0% SYBT FISI LKFN STBA TSC CCN E SMMF Universe THFF HBNC GABC FRME FCF CTBI TMP PRK FMNB PEBO NW BI SRC E CHC O $1-$10 B
Slide 18: Loan Composition
LOAN COMPOSITION NASDAQ: PEBO LOAN COMPOSITION REFLECTS HEALTHY RISK DIVERSITY. TOTAL LOAN PORTFOLIO” = $3.0 BILLION, TOTAL CRE PORTFOLIO” = $1.0 BILLION TOTAL C&I PORTFOLIO = $1.0 BILLION WHICH EXCLUDES $359 MILLION OF PPP LOANS 6 7 8 5 | 4 1\ | | \ } 3 2 1 COMMERCIAL REAL ESTATE (CRE) 31% 1 APARTM
Slide 19: Current Expected Credit Losses Summary
CURRENT EXPECTED CREDIT LOSSES SUMMARY ECONOMIC FORECAST - KEY DRIVERS AT MARCH 31, 2021 US Unemployment Ohio GDP Ohio Unemployment 11.65% 12% o% 221 321 aaa nee c22l 32 421 are e2t pat eel ore PERTINENT CREDIT STATS AS OF MARCH 31, 2021 CECL KEY ASSUMPTIONS Day 1CECL adoption resulted in a $5.8 mil
Slide 20: Allowance for Credit Losses Peer Comparison
3 2.5 2 1.32 1.5 Median, 1.23 Average, 1.19 1 0.5 0
Slide 21: Acquisitions, Capital Priorities, Dividends
ACQUISITIONS * Bank acquisitions completed in 2014 (3), 2015 (1), 2018 (1), 2019 (1) and one planned in Q3 2021 «Insurance acquisitions completed in 2014 (1), 2015 (1), 2017 (2) and 2020 (1) e One investment acquisition was completed in 2016 « One premium finance acquisition effective July 1, 2020 *
Slide 22: Deposit Franchise in a COVID-19 Environment
DEPOSIT FRANCHISE IN ACOVID-19 ENVIRONMENT AS OF MARCH 31, 2021, OUR LOAN-TO-DEPOSIT RATIO WAS LOW COMPARED TO PEER GROUP, WHICH POSITIONS US WELL FROM A LIQUIDITY PERSPECTIVE. LOANS / DEPOSITS - PEER GROUP 95% 90% UNIV. $1- $10 B AVERAGE: 83.03% NOT TO SCALE 80% 75% 70% LE SP GP GH M2 FO K& WB L GF
Slide 23: Dividend Chart
0.60 0.55 0.50 0.45 0.40 0.40 0.35 0.29 0.30 0.25 0.20 0.15 0.10
Slide 24: - fee = a TS ie ey
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Slide 25: Equipment Leasing Portfolio
$80 ,00 0 Heavy $68,914 $69,674 Equipment Restaurant $70 ,00 0 8% 12% $60 ,00 0 Titled - Vocational $49,615 $50 ,00 0 6% $38,706 Manufacturing $36,383 Medical $40 ,00 0 $35,482 27% 4% $30 ,00 0 $25,806 Landscaping $20 ,00 0 3% Other $10 ,00 0 40% $0 2014 2015 2016 2017 2018 2019 2020
Slide 26: Premier Financial Bancorp Company Overview
57.2% Company Overview Company Name Premier Financial Bancorp, Inc. Headquarters Huntington, WV Ticker PFBI MRQ Balance Sheet 22.5% Total Assets ($000) 1,945,822 Total Loans ($000) 1,200,862 7.3% 6.2% 5.4% Total Deposits ($000) 1,633,740 1.4% Tangible Common Equity ($000) 207,843 West Kentucky Ohio
Slide 27: Powerful Pro Forma Franchise
POWERFUL PRO FORMA FRANCHISE e Attractively valued opportunities to expand the Peoples franchise e Track record of acquisitions makes for efficient integration e Positions Peoples well to capitalize on strengthening economic prospects PRO FORMA SNAPSHOT” PRODUCTS & SERVICES FINANCIALS ® $7.2B+ Asset
Slide 28: Q1 2021 Highlights & Key Impacts
28 Q1 2021 HIGHLIGHTS & KEY IMPACTS FINANCIAL: Recorded net income of $15.5 million for the first quarter of 2021, representing earnings per diluted common share of $0.79. Net interest income increased $1.3 million, or 4%, compared to the fourth quarter of 2021 and increased $942,000, or 3%, compare
Slide 29: Q1 2021 Highlights: Technology Additions
Checking (a) HEALTH SAVINGS ACCO... 7 Peoples Bancorp (OH) a) PREMIER CHECKING = Peoples Bancorp (OH) Credit Card Airline Miles Credit Card Premium Card Credit Card Mortgage ra) MORTGAGE ~ Peoples Bancorp (OH) $7347.34 $383.29 $6,964.12 $653.57 $0.00 $653.57 $0.00 $0.00 10%t 16%t Q1 2021 HIGHLIGHTS
Slide 30: Stock Performance
30 STOC K PERFORMANCE NASDAQ: PEBO 60% 50% 40% 30% 20% 10% 0% PEOPLES BANK HAS OUTPERFORMED THE PEER GROUP AND S&P 500 IN TERMS OF 1 YEAR TOTAL ANNUAL RETURN AS OF MARCH 31, 2021. TOTAL ANNUAL RETURN AS OF MARCH 31, 2021 62% TYEAR 3-YEAR 15% 12% S-YEAR 16% CUMULATIVE TOTAL RETURN YEAR TO DATE AS OF
Slide 31: Total Revenue
(S$ THOUSANDS) $250,000 $200,000 $150,000 $100,000 $50,000 $o TOTAL REVENUE OF $203 MILLION FOR FULL YEAR OF 2020. $64,892 $64,330 $57,234 $52,653 $51,070 $47,441 $140,838 $138,923 $129,612 $113,377 $97,612 $17,266 $35,578 FYAS FY6 FY-17 FYA8 FY19 FY-20 YTD-21 HMBNETINTERESTINCOME (MJ NON-INTEREST I
Slide 32: Insurance & Investment Income Composition
INSURANCE & INV aM MENT INCOME COMPOSITION NASDAQ: PEBO TOTAL INSURANCE REVENUE INCREASED 26% COMPARED TO Q1 2020 AND TOTAL INVESTMENT REVENUE INCREASED 18% COMPARED T0 Q1 2020. TOTAL INSURANCE REVENUE TOTAL INVESTMENT REVENUE Q1 2021 Q1 2021 $5.2 MILLION $3.8 MILLION 1 P&C COMMERCIAL LINES 56% 1 FI
Slide 33: Core Non-Interest Expense
($ THOUSANDS) NOT TO SCALE CORE NON-INTEREST EXPENSE" NASDAQ: PEBO THE RECENT ESCALATION IN EXPENSES WAS DUE T0 ACQUISITIONS, OUR MOVE TO A S15 MINIMUM WAGE, AND AN INCREASE IN FTE'S FOR GROWTH AND TECHNOLOGY INVESTMENTS. COVID-19 IS NOT EXPECTED TO CAUSE A MATERIAL INCREASE IN EXPENSES. $150,000 $1
Slide 34: Efficiency Ratio Adjusted for Non-Core Items
EFFICIENCY RATIO ADJUSTED FOR NON-CORE ITEMS NASDAQ: PEBO COVID-19 AND REDUCED NET INTEREST MARGIN IMPACTED THE EFFICIENCY RATIO IN 2020 & 2021 75% ~—— 73% [— 71% }-— 69% |— 67% 65% NOT TO SCALE 63% 61% 59% 57% 55% FYAS FY-16 FY-7 FYA8 FYA9 FY-20 YTD-21 Non-US GAAP financial measure. See Appendix. 3
Slide 35: Improvement in Key Metrics
IMPROVEMENT IN KEY METRICS 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. RETURN ON AVERAGE ASSETS RETURN ON AVERAGE TANGIBL
Slide 36: Total Loan Growth
TOTAL LOAN GROWTH NASDAQ: PEBO TOTAL LOANS WERE $3.4 BILLION AS OF MARCH 31, 2021, WHICH INCLUDED $359 MILLION PPP LOANS. $3,500 — uy $3100 -— (TOTAL PPP LOANS at 1S) o IM TOTAL PREMIUM FINANCE L $2,700 |— 8 Ill FIRST PRESTONSBURG ACQUIRED LOANS 2 IASB ACQUIRED LOANS 5 $2,300 | — 2 I TOTAL LOANS NoT
Slide 37: Earning Asset Mix
EARNING ASSET MIX FROM 2013 TO 2018, THE PERCENTAGE OF EARNING ASSETS COMPOSED OF INVESTMENTS DECREASED. IN 2020, THE INCREASE IN LOANS AS A PERCENTAGE OF EARNING ASSETS WAS DUE TO PPP LOANS. 80% 76% $45 80% $4.0 70% $3.5 $3.0 60% $2.5 50% $2.0 S15 40% TOTAL EARNING ASSETS (IN SBILLIONS) $1.0 30% SL
Slide 38: Deposit Growth
38 (§ MILLIONS) NOT TO SCALE DEPOSIT GROWTH TOTAL DEPOSIT BALANCES AT MARCH 31, 2021 INCREASED 10% COMPARED TO DECEMBER 31, 2020. DEPOSIT BALANCES BENEFITED FROM PPP LOAN PROCEEDS AND FISCAL STIMULUS FOR CONSUMERS AND COMMERCIAL CLIENTS. $4000 $3350 $2700 $2050 $1400 $750 $100 $4,304 FYAS, FY16 FYA7
Slide 39: Appendix
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Slide 40: Pre-Provision Net Revenue Reconciliation
($ in Thousands) FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 YTD-21 Income before income taxes $ 14,816 $ 45,282 $ 57,203 $ 54,941 $ 65,358 $ 42,646 $ 19,243 Add: Provision for loan/credit losses 14,097 3,539 3,772 5,448 2,504 26,254 – Add: Loss on debt extinguishment – 707 – – – – – Add: Loss on OREO 530 3
Slide 41: Income Before Income Taxes Reconciliation
($ in Thousands) FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 YTD-21 Income before income taxes $ 24,178 $ 14,816 $ 45,282 $ 57,203 $ 54,941 $ 65,358 $ 42,646 $ 19,243 Add: System upgrade revenue waived – – 85 – – – – – Add: Acquisition-related costs 4,752 10,722 – 341 7,262 7,287 1,459 1,911 Add: COVI
Slide 42: Core Non-Interest Income Reconciliation
($ in Thousands) FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 YTD-21 Total noninterest income $ 40,020 $ 46,382 $ 50,867 $ 55,573 $ 56,754 $ 64,274 $ 63,672 $ 16,903 Less: net gain (loss) on investment securities 398 729 930 2,983 (146) 164 (368) (336) Less: net loss on asset disposals and other transa
Slide 43: Efficiency Ratio Reconciliation
($ in Thousands) FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 YTD-21 Total noninterest expense $ 85,009 $ 115,081 $ 106,911 $ 107,975 $ 125,977 $ 137,250 $ 133,695 $ 37,987 Less: amortization on other intangible assets 1,428 4,077 4,030 3,516 3,338 3,359 3,223 620 Adjusted total non-interest expense 83
Slide 44: Tangible Equity to Tangible Assets Reconciliation
($ in Thousands) FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 YTD-21 Total stockholders equity $ 340,118 $ 419,789 $ 435,261 $ 458,592 $ 520,140 $ 594,393 $ 575,673 $ 578,893 Less: goodwill and other intangible assets 109,158 149,617 146,018 144,576 162,085 177,503 184,597 184,007 Tangible equity 230,9
Slide 45: Return on Average Assets Reconciliation
($ in Thousands) FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 YTD-21 Annualized net income $ 16,684 $ 10,941 $ 31,157 $ 38,471 $ 46,255 $ 53,695 $ 34,767 $ 62,711 Total average assets 2,240,534 3,111,853 3,320,447 3,510,274 3,871,832 4,222,482 4,739,289 4,912,076 Return on average assets 0.74% 0.35% 0.
Slide 46: Return on Tangible Equity Reconciliation
($ in Thousands) FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 YTD-21 Annualized net income $ 16,684 $ 10,941 $ 31,157 $ 38,471 $ 46,255 $ 53,695 $ 34,767 $ 62,711 Add: amortization of other intangible assets 1,428 4,077 4,030 3,516 3,338 3,359 3,223 2,514 Less: tax effect of amortization of other intan
Slide 47: Return on Average Equity Reconciliation
($ in Thousands) FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 YTD-21 Return on average equity adjusted for non-core items: Annualized net income $ 16,684 $ 10,941 $ 31,157 $ 38,471 $ 46,255 $ 53,695 $ 34,767 $ 62,711 Add: core banking system conversion revenue waived – – 85 – – – – – Less: tax effect o
Slide 48: Contact: Chuck Sulerzyski and Katie Bailey
CHUCK SULERZYSKI President and Chief Executive Offi P: 740.374.6163 " at Chuck.Sulerzyski@pebo.co! —, KATIE BAILEY a | 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 Inc