Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q4 2021 Earnings Presentation
48 slides from Peoples Bancorp's earnings presentation, Jan 25, 2022
Slide 1: Investor Presentation 4th Quarter 2021
INVESTOR PRESENTATION 4TH QUARTER 2021
Slide 2: Table of Contents
WORKING TABLE OF CONTENTS TOGETHER PAGE 4 PROFILE, INVESTMENT RATIONALE, CULTURE AND STRATEGY PAGE 11 BUILDING CREDIT, CAPITAL & LIQUIDITY PAGE 24 Q4 & FY 2021 FINANCIAL INSIGHTS SUCCESS PAGE 39 Q4 & FY 2021 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 and Strategy
WORKING TOGETHER PROFILE, INVESTMENT RATIONALE, CULTURE AND STRATEGY BUILDING SUCCESS 4
Slide 5: Geographic Profile
PEBO GEOGRAPHIC PROFILE NASDAQ: PEBO PEOPLES BANK GEOGRAPHIC FOOTPRINT PEBO SNAPSHOT AS OF DECEMBER 31, 2021 PEBO FOOTPRINT Loans: $4.5 billion COUNTIES WHERE PEBO HAS TOP 3 MARKET SHARE* CLEVELAND Assets: $7.1 billion COUNTIES WHERE PEBO HAS OVER $100 MILLION OF Deposits: $5.9 billion Market Cap: $
Slide 6: 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 32 counties across three states. • Presence near larger cities puts us in a position to capture lending opportunities i
Slide 7: Corporate Culture
CORPORATE CULTURE NASDAQ: PEBO OUR VISION OUR VALUES Our vision is to be the PROMISE CIRCLE BEST COMMUNITY BANK IN AMERICA 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, o
Slide 8: Strategic Road Map
STRATEGIC ROAD MAP NASDAQ: PEBO • Clients’ First Choice for Banking, Investing and Insurance • Meaningful Impact on Our Communities • Great Place to Work • Commitment to Superior Shareholder Returns BEST COMMUNITY BANK IN AMERICA RESPONSIBLE EXTRAORDINARY PROFITABLE FIRST CLASS RISK MANAGEMENT CLIEN
Slide 9: External Recognition
2021 EXTERNAL RECOGNITION NASDAQ: PEBO NASDAQ: PEBO Peoples Bank was IN TERMS OF SBA 7(a) one of only 16 banks APPROVED DOLLARS PEOPLES BANK RANKED nationally to make Forbes list of Best-In-State Banks TOP 5 TOP 10 FLOYD COUNTY, KY in 2 or more states. in OHIO in WV TOP 15% NATIONALLY FOR FISCAL YEA
Slide 10: Our Response to COVID-19
OUR RESPONSE TO COVID-19 NASDAQ: NASDAQ: PEBOPEBO 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 • Highest PPP
Slide 11: Credit, Capital & Liquidity
WORKING TOGETHER CREDIT, CAPITAL & LIQUIDITY BUILDING SUCCESS 11
Slide 12: 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 13: Asset Quality
ASSET QUALITY NASDAQ: PEBO NASDAQ: PEBO OUR DELINQUENCY AND NET CHARGE-OFF TRENDS HAVE REMAINED STABLE FOR FIVE YEARS. Percentage of Loans Considered “Current” Percentage of Net Charge-Offs to Average Loans Annualized Percentage of Loans considered Current Charge Offs Annualized 100% 0.38% 99.1% 98.
Slide 14: Asset Quality - NPAs/Assets
ASSET QUALITY NASDAQ: PEBO Asset Quality - NPAs/Assets NPAS AS A PERCENTAGE OF TOTAL ASSETS HAVE CONSISTENTLY BEEN SUPERIOR 1.4% TO MIDWEST BANKS WITH $1 TO $10 BILLION IN TOTAL ASSETS. 1.2% 1.0% 0.75% 0.8% NPAS / ASSETS 0.68% 0.68% 0.60% 0.54% 0.53% 0.6% 0.49% 0.50% 0.50% 0.51% 0.48% 0.49% 0.48% 0.
Slide 15: NPA Composition
ASSET QUALITY NASDAQ: PEBO NASDAQ: PEBO NPA Composition NPAS AT 12/31/21 Q4 WERE PRIMARILY COMPOSED OF WELL-COLLATERALIZED COMMERCIAL REAL ESTATE AND RESIDENTIAL REAL ESTATE LOANS. INCREASE DURING Q3 2021 WAS MAINLY DUE TO ACQUIRED LOANS.* $60 $50 $40 $30 $ MILLIONS $20 $10 $0 2017 2018 2019 Q1-20 Q
Slide 16: Classified and Criticized Loans
ASSET QUALITY NASDAQ: PEBO CLASSIFIED AND CRITICIZED LOANS AS A PERCENTAGE OF TIER 1 CAPITAL ARE WELL MANAGED. INCREASE IN Q3 DUE TO ACQUISITION OFAsset Quality PREMIER FINANCIAL BANCORP, INC. 50% CRITICIZED LOANS / 45% TIER 1 CAPITAL + ALLL * 40% 35.72% 35% CLASSIFIED LOANS / TIER 1 CAPITAL + ALLL
Slide 17: CRE Concentration Analysis
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO NASDAQ: PEBO 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. PEER BANK SUBS – CRE LOANS / RISK-BASED
Slide 18: CRE Concentration Analysis (Construction and Land)
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO PEBO IS MEANINGFULLY BELOW THE AVERAGE FOR $1-10 BILLION BANKS PEER BANK SUBS – CONSTRUCTION, LAND AND LAND DEVELOPMENT LOANS / RISK-BASED CAPITAL 100% IS THE LEVEL CONSIDERED HEIGHTENED CONSTRUCTION, LAND AND LAND DEVELOPMENT CONCENTRATION RISK PER SUPERVISOR
Slide 19: Loan Composition
LOAN COMPOSITION NASDAQ: PEBO NASDAQ: PEBO C&IC hart LOAN COMPOSITION REFLECTS HEALTHY RISK DIVERSITY. Loan Composition TOTAL LOAN PORTFOLIO* = $4.5 BILLION, TOTAL C&I PORTFOLIO = $0.9 BILLION WHICH INCLUDES $87 MILLION OF PPP LOANS TOTAL CRE PORTFOLIO** = $1.6 BILLION WHICH INCLUDES PPP LOANS Loan
Slide 20: Reserves to Assets
RESERVES TO ASSETS NASDAQ: PEBO WELL RESERVED VS PEERS RESERVES AS A % OF LOANS* RESERVES AS A % OF LOANS* Source: S&P Global Market Intelligence, Commercial Bank Call Report Data as of 12/31/2021. Peer financial institutions are used in this presentation for comparative purposes and are referred to
Slide 21: Prudent Use of Capital
PRUDENT USE OF CAPITAL NASDAQ: PEBO NASDAQ: PEBO CAPITAL PRIORITIES • Organic growth • Dividends • Acquisition activities • Share repurchases DIVIDENDS • Dividend paid increased from $0.15 per share for Q1 2016 to $0.36 in the most recent quarter • Consistently evaluate dividend and adjust according
Slide 22: Deposit Franchise in a COVID-19 Environment
DEPOSIT FRANCHISE IN A COVID-19 ENVIRONMENT NASDAQ: PEBO LOW LOAN TO DEPOSIT RATIO PROVIDES LOW COST LIQUIDITY TO FUND FUTURE GROWTH LOANS / DEPOSITS - PEER GROUP NOT TO SCALE UNIV. $1- $10 B AVERAGE: 77.6% 76.4% Source: S&P Global Market Intelligence, as of 12/31/2021. Peer financial institutions a
Slide 23: 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, 2021. TOTAL DEPOSIT COST (%) 0.50% 0.40% NOT TO SCALE UNIV. $1- $10 B AVERAGE: 0.32% 0.30% 0.21% 0.20% 0.10% 0.00% * Includes seven basis points related to cas
Slide 24: Q4 & FY 2021 Financial Insights
WORKING TOGETHER Q4 & FY 2021 FINANCIAL INSIGHTS BUILDING SUCCESS
Slide 25: Acquisition of Premier Financial Bancorp, Inc.
ACQUISITION OF PREMIER FINANCIAL BANCORP, INC. NASDAQ: PEBO NASDAQ: PEBO ACQUISITION EFFECTIVE AS OF SEPTEMBER 17, 2021 • Premier Financial Bancorp, Inc. (Nasdaq: PFBI) was headquartered in Huntington, WV and was the holding company for Citizens Deposit Bank and Trust, Inc. and Premier Bank, Inc. •
Slide 26: Acquisition of North Star Leasing
ACQUISITION OF NORTH STAR LEASING NASDAQ: PEBO ACQUISITION EFFECTIVE MARCH 31, 2021 • Founded in 1979 and headquartered in Burlington, VT, North Star Leasing (NSL) leases a broad range of essential equipment used by small-and medium-sized businesses across the U.S. • NSL is an integrated origination
Slide 27: Acquisition of Vantage Financial
ACQUISITION OF VANTAGE FINANCIAL NASDAQ: PEBO NASDAQ: PEBO PENDING ACQUISITION, TARGETING MARCH, 2022 • Vantage Financial (“Vantage”) is a privately held, small- to mid-ticket, national equipment finance company based in Excelsior, Minnesota. • The company originates leases primarily for mission cri
Slide 28: Financial Expectations
FINANCIAL EXPECTATIONS NASDAQ: PEBO LOAN GROWTH 6% TO 8%, EXCLUDING PPP LOANS FEE-BASED INCOME 14% TO 16% GROWTH COMPARED TO 2021 STABILIZES AS THE ECONOMY POTENTIALLY CREDIT COSTS COMES OUT OF THE PANDEMIC QUARTERLY TOTAL $46 MILLION TO $48 MILLION NON-INTEREST EXPENSE WITH EXCEPTION FOR FIRST QUAR
Slide 29: Q4 & FY 2021 Highlights & Key Impacts
Q4 & FY 2021 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO NASDAQ: PEBO FINANCIAL: • Net interest income increased $12 million, or 28%, compared to the third quarter of 2021 and increased $20.3 million, or 59%, compared to the fourth quarter of 2020. • Net interest margin was 3.39% for the full year of 2021
Slide 30: Q4 & FY 2021 Highlights: Technology for Clients
Q4 & FY 2021 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO PEOPLES BANK CONTINUES TO ADD TECHNOLOGY THAT CLIENTS CARE ABOUT • Contactless debit cards • Cardless cash (ability to use ATM via mobile app without debit card) • Card Controls (ability to lock/unlock debit card) • Transaction alerts • Ability to s
Slide 31: Stock Performance
STOCK PERFORMANCE NASDAQ: PEBO NASDAQ: PEBO PEOPLES BANK LAGS OUR PEER GROUP IN TERMS OF 1 YEAR TOTAL ANNUAL RETURN TOTAL ANNUAL RETURN AS OF DECEMBER 31, 2021 80% 70% 60% 50% 40% 35% 29% 30% 26% 23% 18% 20% 11% 10% 7% 5% 4% 0% 1-YEAR 3-YEAR 5-YEAR ® WORKING TOGETHER. BUILDING SUCCESS. 31
Slide 32: Total Revenue
TOTAL REVENUE NASDAQ: PEBO TOTAL REVENUE OF $242 MILLION FOR FY 2021. $250,000 $69,254 $200,000 Beginning in the second quarter of $64,892 $64,330 2018, Peoples benefited from the $57,234 acquisition of ASB Financial Corp. $172,395 Additionally, beginning in the second Lore $52,653 ($ THOUSANDS) $15
Slide 33: Insurance & Investment Income Composition
INSURANCE & INVESTMENT n * INCOME COMPOSITION ue io en sit ev tR po en om m NASDAQ: PEBO NASDAQ: PEBO st eC ve In om nc TOTAL INVESTMENT REVENUE INCREASED 20% COMPARED TO 2020. tI en AND TOTAL INSURANCE REVENUE INCREASED 9% COMPARED TO 2020. m st ve In noitisopmoC emocnI tnemtsevnI dna ecnarusnI nd
Slide 34: 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’S FOR EXPENSE IMPACTED THE EFFICIENCY RATIO GROWTH AND TECHNOLOGY INVESTMENTS. IN 2020 & 2021. Core Non-Interest Expense* Efficiency RATIO Rat
Slide 35: Improvement in Key Metrics
IMPROVEMENT IN KEY METRICS NASDAQ: PEBO WE HAVE MADE STEADY PROGRESS ON THESE METRICS OVER THE RECENT YEARS. THE PROVISION FOR CREDIT LOSSES, INTEREST RATE ENVIRONMENT, Improvement AND OTHER ECONOMIC IMPACTS OF COVID-19 In Key Metrics Improvement In Key Metrics SIGNIFICANTLY IMPACTED THESE METRICS I
Slide 36: Total Loan Growth
TOTAL LOAN GROWTH NASDAQ: PEBO TOTAL LOANS* WERE $4.5 BILLIONTotal AS OFLoan Growth DECEMBER 31 2021, WHICH INCLUDED $87 MILLION IN PPP LOANS. $5,000 PREMIER FINANCIAL BANCORP, INC. ACQUIRED LOANS $4,000 TOTAL PPP LOANS TOTAL ACQUIRED LEASES PREMIUM FINANCE ACQUIRED LOANS $3,000 FIRST PRESTONSBURG A
Slide 37: Earning Asset Mix
EARNING ASSET MIX NASDAQ: PEBO Earning Asset Mix IN 2021, THE INCREASE IN TOTAL LOANS AS A PERCENTAGE OF EARNING ASSETS WAS DUE TO PPP LOANS. 80% 76% 80% $7 PERCENTAGE OF TOTAL EARNING ASSETS 73% 74% 73% $6 70% TOTAL EARNING ASSETS $5 60% (IN $BILLIONS) $4 50% $3 40% $2 30% $1 27% 27% 26% 20% 20% 24
Slide 38: Deposit Growth
DEPOSIT GROWTH NASDAQ: PEBO W DEPOSIT BALANCES BENEFITED FROM PPP LOAN PROCEEDS, FISCAL STIMULUS FOR CONSUMERS AND COMMERCIAL CLIENTS, AND THE ACQUISITION OF PREMIER FINANCIAL BANCORP, INC. Deposit Growth T $5,862 $6000 BROKERED CERTIFICATES OF DEPOSIT GOVERNMENTAL DEPOSIT ACCOUNTS MONEY MARKET DEPO
Slide 39: Q4 & YTD 2021 Appendix
WORKING TOGETHER Q4 & YTD 2021 APPENDIX BUILDING SUCCESS 39 39
Slide 40: Appendix 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 41: Appendix 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 42: Appendix Non-US GAAP Measures: Core Non-Interest Income and Expense
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 43: Appendix 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 44: Appendix 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 45: Appendix 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 46: Appendix 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 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 CUTS AND J
Slide 47: Appendix Non-US GAAP Measures: Return on 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 48: Chuck Sulerzyski and Katie Bailey Contact Details
CHUCK SULERZYSKI President and Chief Executive Officer P: 740.374.6163 Chuck.Sulerzyski@pebo.com KATIE BAILEY 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. The thr