Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Investor Presentation (May 2018)
41 slides from Peoples Bancorp's investor presentation, May 2, 2018
Slide 1: Investor Presentation 1st Quarter 2018
Y Peoples), Nasdaq: PEBO Investor Presentation 1** Quarter 2018
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 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform
Slide 3: Overview
Overview a * Profile and Investment Rationale ¢ Acquisition ° Strategy * QI 2018 Performance ¢ Appendix
Slide 4: Profile and Investment Rationale
Profile and Investment Rationale BANCORP® /Peop ples
Slide 5: Financial holding company headquartered in Marietta, Ohio
Financial holding company headquartered in Marietta, Ohio. — Provides a broad range of banking, insurance, and investment services * Current snapshot: — Assets: $3.6 billion; Loans: $2.4 billion — Deposits: $2.8 billion — Market capitalization: $734 million — Assets Under Admin/Mgmt: $2.3 billion *
Slide 6: Investment Rationale
° Investment Rationale (ay Unique community banking model — Greater revenue diversity (84% fee-based) than the average $1 - 10 billion bank — Strong community reputation and active involvement — Local market teams capable of out-maneuvering larger banks — More sophistication and product breadth than
Slide 7: Acquisition
A Acquisition
Slide 8: ASB Financial Corp Acquisition
ASB Financial Corp Acquisition AMERIC AN ASB Financial Corp merged into Peoples SAVINGS 9 BANK, fsb on April 13, 2018 Six full-service bank branches in the Portsmouth and Cincinnati, Ohio regions, and two loan production offices in the Cincinnati, Ohio region Financial Summary a of 4/1818 Considerat
Slide 9: Strategy
Strategy
Slide 10: Strategic Road Map
Strategic Road Map (ay “Best Community Bank in America” * Commitmentto Superior Shareholder Returns * Great Place to Bank. * Great Place to Work + Meaningful Impact on Our Communities a fitable rowth, eae ee Pro} Reverme Gs First-Class Workplace + Our Wayof Life + Broad DeliveryChannels | « Understa
Slide 11: Focused on sustainable revenue growth
-» * Focused on sustainable revenue growth See page 17 ° Disciplined expense management See page 18 ¢ Expand revenue vs expense growth gap beyond 2% See page 19 ¢ Drive core efficiency ratio toward 60% See page 20 ¢ Preserve key metrics superior to most of our peers See page 21 ¢ Balance growth with
Slide 12: Key metrics versus targets
NPAs asa percent of total loans and OREO (1) 0.98% 0.72% 0.70%to 1.00% v Net charge-ofis as a percent of average total loans (2) 0.11% 034% _0.30%to 0.50% ¥ Loans to total assets 65.03% 66.09% 65.0% to 72.5% v Loans to deposits 83.25% «88.40% 87.5% 0 92.5% DDAs to deposits 39.87% 41.07% 40.0% to 45.
Slide 13: Delivery channels versus community banks
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Slide 14: Peoples Market Insight
Peoples Market Insight ¢€ * Strongest deposit market share positions in more rural markets where we can affect pricing ¢ Presence near larger cities puts us in position to capture lending opportunities in more urban markets (e.g. Cleveland, Akron, Canton, ‘Total Deposits in MSA ‘MSA Name ‘Market ($0
Slide 15: Q1 2018 Performance
Q1 2018 Performance
Slide 16: First Quarter 2018 Highlights
First Quarter 2018 Highlights € Reported first quarter earnings of $11.7 million Grew loans by 7% compared to March 31, 2017, with strong performance in commercial lending Grew deposits by 4% compared to March 31, 2017, with strong performance in DDAs, which increased by 7% Core efficiency ratio bel
Slide 17: Total Revenue Growth
Total Revenue Growth (ay 12% increase in total revenue from Q1-16 to Q1-18 (thousands) Not to seale $40,000 $35,000 $30,000 L $25,000 20,120 $28,094 ie a s76044 i i $20,000 4 s25sodfll $2529 526,66 529,359 $15,000 $10,000 QLI6 Q216 Q816 QtI6 QLI7 Q2I7 Q317 Q4I7 QLis mNet Interest Income m Fee-Based
Slide 18: Core Non-Interest Expense
Core Non-Interest Expense* Eight consecutive quarters of well-controlled expenses $29,000 $27,000 $25,000 = $23,000 = Zz Z $21,000 2 z = $19,000 $17,000 $15,000 Q216 = QB16 = Q4I6 = QLI7?_ Q2:17, 8-17, Q417,-— QL-18— Quarterly ‘Peoples @) ; * Non-GAAP financial measure. See Appendix.
Slide 19: Operating leverage
é Operating leverage is the difference between total revenue growth and non-interest expense growth, on a percentage basis. Versus the same quarter in the prior year, Versus the prior year, operating leverage was operating leverage has been posse for seven positive for fiscal years 2016 and 2017, an
Slide 20: Core Efficiency Ratio
Core Efficiency Ratio 7.49% eons 68.00% 64.89% 64,85° 64.838 Hib. 65.00% 66.00% 64.30% 64.00% 63.28%| 65.00% 64.00% 63.00% 68.00% 61.85% 61.42% 62.00% 62.00% 61.42% 61.19% 61.00% ae 9% Improvement 60.0 cues “* from F¥ 2015to SxImprovement — 50,00, F¥2017 from Q1 2016 to 60.00% 3017 Q216 QS.16 Q4I6 Q
Slide 21: Improvement in Key Metrics
Improvementin Key Metrics a) Peoples’ focus on steadily growing loans and deposits, managing expenses, and increasing operating leverage has resulted in improvementin key financial metrics. Return on Average Assets Return on Average Tangible Stockholders’ Equity 1.50% Quaster 17.00% Quins 16.14% Yea
Slide 22: Asset Quality - NPAs/Assets
Asset Quality - NPAs/Assets € ), Nonperforming assets (NPAs) as a percentage of total assets have consistently been 1.40% 1.20% 1.00% 0.80% NPAs / Assets 0.60% 0.40% 0.20% 0.00% Sous Sr lob Maenlina: Nonsense les © superior to Midwest banks with $1 - $10 billion in total assets. VAS VBS QS QU1G QV1G
Slide 23: Asset Quality
Asset Quality Criticized and Classified loan levels remain reasonable $50,000 40.0% $45,000 | -33.39 32.3% 32.2% + 35.0% 10000 30.4% 99.9% 30.1% 27.4% Pas 30.0% $35,000 — $30,000 aii $25,000 7 = ATAY hs 20.0% 162% 16.5% iS 18.4% $20,000 15.0% $15,000 10.0% $10,000 $5,000 5.0% s- i + + + + + + 0.09%
Slide 24: Loan Composition
: -) Loan Compo: Data as of March 31, 2018 iS "Includes CRE, C&d, and Construction BANCORP. 24
Slide 25: Total loans were up 7% over March 31, 2017
Total loans were up 7% over March 31, 2017 $2,450 $2,400 $2,850 = $2,800 5 $2,950 2 $2,900 $2,327 $2,357 z $2,150 $2,100 $2,050 $2,000 Quiz Q4i7 QLis Peoples ¢ 2s
Slide 26: Total deposits were up 4% over March 31, 2017
e Total deposits were up 4% over March 31, 2017 Demand deposit accounts (DDAs) represented 41% of total deposits as of March 81, 2018, versus 40% as of March 31, 2017 7 $2,813 $8,000 $2,702 $2,677 $2,730 $2,500 *. = 42h aN% 5. Quiz Q2i7 Q3.17 Quiz Quis @ Non-interest bearing DDAs @ Interest-bearing
Slide 27: Earning Asset Mix
Earning Asset Mix (ay Since 2018, the percentage of earning assets composed of investments has decreased, while the percentage composed of loans has increased. $3,500,000 80% $3,000,000 70% $2,500,000 60% $2,000,000 50% $1,500,000 40% $1,000,000 $500,000 ame S- 20% FY-13 FY-14 FY-15 FY-16 PY-17 Q1-1
Slide 28: Prudent Use of Capital
Prudent Use of Capital © * Dividends — Cash dividends declared per share increased 31%, from $0.64 for the year ended 12/31/2016 to $0.84 for the year ended 12/31/2017. — Dividends to be paid in Q2 2018 based on Q1 2018 earnings are $0.28 per share, which equates to a payout ratio of 44% of earnings
Slide 29: CRE Concentration Analysis
CRE Concentration Analysis ¢€ * CRE exposure is well below supervisory criteria established to identify institutions with heightened CRE concentration risk — Exposure levels also compare favorably to peer institution concentration levels — Concentration levels have improved relative to peers on a li
Slide 30: CRE Concentration Analysis
CRE Concentration Analysis ¢€ 110% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Peer Bank Subs -- Construction, Land, and Land Development Loans / Risk-Based Capital + FEBOdataisasof5/31/18, burall peer dataisasof1231/17, the mostrecentavadable 30
Slide 31: Business Highlights
Business Highlights (ay ¢ Commercial Banking — Average loans up 8% and average deposits up 12% from Q1 2017 — $25 million lending “house limit” although legal limitis over $40 million ¢ Retail Banking — Indirect loans grew by $64 million, or 23%, since March 31, 2017 — Consumer DDA accounts at 43% o
Slide 32: Insurance revenue footnotes
** Approximately 9076 attributable to P&C Commercial Lines * Trailing Twelve Months from 8/81/18 BANCORP. 382
Slide 33: Appendix
Appendix
Slide 34: Non-GAAP Measures
Non-GAAP Measures PRE-PROVISION NET REVENUE Pre-provision net revenue (PPNR) has become a key financial measure used by state and federal bank regulatory agencies when assessing the capital adequacy of financial institutions. Pre-provision net revenue is defined as net interest income plus total fee
Slide 35: Non-GAAP Measures
Non-GAAP Measures TE CORE FEE-BASEDIN Core fee-based income is a financial measure used to evaluate Peoples’ recurring fee-based revenue stream. This measure is non-GAAP since it excludes the impact of system upgrade revenue waived. in Thowands) FY1S FY16 FYI7 Total fee-based income S 47441 S$ 51,07
Slide 36: Non-GAAP Measures
Non-GAAP Measures CORE NON-INTEREST EXPENSE Core non-interest expense is a financial measure used to evaluate Peoples’ recurring expense stream. This measure is non-GAAP since it excludes the impact of system upgrade costs, acquisition-related costs, pension settlement charges, severance charges, se
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 total non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total fee-b
Slide 38: Non-GAAP Measures
Non-GAAP Measures ADJUSTED EFFICIENCY RATIO The adjusted efficiency ratio is a key financial measure used to monitor performance. The adjusted efficiency ratio is calculated as core non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net intere
Slide 39: Non-GAAP Measures
Non-GAAP Measures TANGIBLE EQUITY RATIOS Peoples uses tangible capital measures to evaluate the adequacy of Peoples’ stockholders’ equity. Such ratios represent non- GAAP financial measures since the calculation removes the impact of goodwill and other intangible assets acquired through acquisitions
Slide 40: Non-GAAP Measures
Non-GAAP Measures 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 assets) divided by average tan
Slide 41: Non-GAAP Measures
Non-GAAP Measures -) 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 assets) divided by average