Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q1 2021 Earnings Presentation
48 slides from Peoples Bancorp's earnings presentation, Apr 20, 2021
Slide 1: Investor Presentation 1st Quarter 2021
FILED BY PEOPLES BANCORP INC. PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933 AND DEEMED FILED PURSUANT TO RULE 14A-12 UNDER THE SECURITIES EXCHANGE ACT OF 1934 SUBJECT COMPANY: PREMIER FINANCIAL BANCORP, INC. COMMISSION FILE NO. 000-16772 INVESTOR PRESENTATION 1ST QUARTER 2021
Slide 2: Table of Contents
WORKING TABLE OF CONTENTS TOGETHER PAGE 4 PROFILE, INVESTMENT RATIONALE, CULTURE AND STRATEGY PAGE 9 BUILDING COVID-19 CREDIT IMPACT, CAPITAL & LIQUIDITY PAGE 24 Q1 2021 FINANCIAL INSIGHTS PAGE 39 SUCCESS Q1 2021 APPENDIX 22
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: PEBO Profile
PEBO PROFILE NASDAQ: PEBO NASDAQ: PEBO PEBO MARKET INSIGHT PEBO GEOGRAPHIC FOOTPRINT • Strongest deposit market share positions in more rural markets where we can affect pricing Cleveland leveland • Presence near larger cities puts us in a position PA to capture lending opportunities in more urban m
Slide 6: Investment Rationale
INVESTMENT RATIONALE NASDAQ: PEBO UNIQUE COMMUNITY BANKING MODEL • 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 mark
Slide 7: Corporate Culture
CORPORATE CULTURE NASDAQ: PEBO NASDAQ: PEBO OUR VALUES CIRCLE PROMISE CIRCLE Peoples’ core values are represented by our Promise Circle, which represents how we do business and our never-ending CLIENTS INTEGRITY pursuit of creating value for our clients, our associates, our FIRST ALWAYS communities
Slide 8: Strategic Road Map
STRATEGIC ROAD MAP NASDAQ: PEBO W STRATEGIC ROAD MAP FOR BEST COMMUNITY BANK IN AMERICA • Commitment to Superior Shareholder Returns • Great Place to Work T • Clients’ 1st Choice for Banking, Investing and Insurance • Meaningful Impact on Our Communities RESPONSIBLE EXTRAORDINARY PROFITABLE FIRST CL
Slide 9: COVID-19 Credit Impact, Capital & Liquidity
WORKING TOGETHER COVID-19 CREDIT IMPACT, CAPITAL & LIQUIDITY BUILDING SUCCESS 9
Slide 10: Our Response to COVID-19
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 to par
Slide 11: Credit Risk Management Process
CREDIT RISK MANAGEMENT PROCESS NASDAQ: PEBO 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 Admi
Slide 12: Asset Quality
ASSET QUALITY NASDAQ: PEBO OUR DELINQUENCY AND NET CHARGE-OFF TRENDS HAVE REMAINED STABLE TO IMPROVING 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% 0.375% 98.8% 99
Slide 13: Asset Quality - NPAs/Assets
ASSET QUALITY NASDAQ: PEBO Asset Quality - NPAs/Assets NASDAQ: PEBO 1.4% NPAS AS A PERCENTAGE OF TOTAL ASSETS HAVE CONSISTENTLY BEEN SUPERIOR TO MIDWEST BANKS WITH $1 TO $10 BILLION IN TOTAL ASSETS. 1.2% 1.0% 0.8% 0.88% NPAS / ASSETS 0.84% 0.57% 0.56% 0.54% 0.6% 0.49% 0.48% 0.49% 0.50% 0.50% 0.46% 0
Slide 14: NPA Composition
ASSET QUALITY NASDAQ: PEBO NPA Composition NPA Composition 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 $30 $25 $25 $20 $20 $ MILLIONS $15 $15 $10 $10 $5 $5 $
Slide 15: Asset Quality: Classified and Criticized Loans
ASSET QUALITY NASDAQ: PEBO NASDAQ: PEBO CLASSIFIED AND CRITICIZED LOANS AS A PERCENTAGE OF TIER 1 CAPITAL ARE WELL MANAGED. Asset Quality 50% CRITICIZED LOANS / 45% TIER 1 CAPITAL + ALLL * 39.16% 40% 35% CLASSIFIED LOANS / 29.89% TIER 1 CAPITAL + ALLL * 30% 28.10% 27.09% 25.61% 26.54% 24.74% 25% 22.
Slide 16: CRE Concentration Analysis
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO CRE EXPOSURE IS WELL BELOW SUPERVISORY CRITERIA ESTABLISHED TO IDENTIFY INSTITUTIONS WITH HEIGHTENED CRE CONCENTRATION RISK. Peer Bank Subs - CRE Loans / Risk-Based Capital 400% • Exposure levels also compare favorably to peer institution concentration levels.
Slide 17: CRE Concentration Analysis: Construction and Land Development
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO NASDAQ: PEBO PEER BANK SUBS – CONSTRUCTION, LAND AND LAND DEVELOPMENT LOANS / RISK-BASED CAPITAL Peer Bank Subs -- Construction, Land, and Land Development Loans / Risk-Based Capital 110% 100% 90% 100% IS THE LEVEL CONSIDERED HEIGHTENED CONSTRUCTION, 80% LAND
Slide 18: Loan Composition
LOAN COMPOSITION NASDAQ: PEBO C & I Chart LOAN COMPOSITION REFLECTS HEALTHY RISK DIVERSITY. TOTAL LOAN PORTFOLIO* = $3.0 BILLION, Loan Composition TOTAL CRE PORTFOLIO** = $1.0 BILLION TOTAL C&I PORTFOLIO = $1.0 BILLION WHICH EXCLUDES $359 MILLION OF PPP LOANS Commercial Rea l Estate Portfolio Loan P
Slide 19: Current Expected Credit Losses Summary
CURRENT EXPECTED CREDIT LOSSES SUMMARY NASDAQ: PEBO NASDAQ: PEBO ECONOMIC FORECAST – KEY DRIVERS AT MARCH 31, 2021 US Unemployment Ohio GDP Ohio Unemployment Percentage of Loans considered Current Percentage of Loans considered Current Percentage of Loans considered Current 11.65% 12% 12% 12% 6.88%
Slide 20: Reserves to Loans
RESERVES TO ASSETS NASDAQ: PEBO PEBO IS IN LINE WITH PEERS AS OF MARCH 31, 2021 1Q21 Reserves asAa%%OFofLOANS RESERVES AS Loans 3 2.5 Reserve as a % of Loans 2 1.32 1.5 Median, 1.23 Average, 1.19 1 0.5 0 Source: S&P Global Market Intelligence, Commercial Bank Call Report Data as of 3/31/2021. Peer T
Slide 21: Prudent Use of Capital
PRUDENT USE OF CAPITAL NASDAQ: PEBO NASDAQ: PEBO 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) • One investment acquisition was completed in 2016 • One pr
Slide 22: Deposit Franchise in a COVID-19 Environment
DEPOSIT FRANCHISE IN A COVID-19 ENVIRONMENT NASDAQ: PEBO 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 Loans / Deposits - Peer Group 95% 90% NOT TO SCALE 85% UNIV. $1- $10 B AVERAGE:
Slide 23: Cost of Deposits
COST OF DEPOSITS NASDAQ: PEBO NASDAQ: PEBO PEBO IS MEANINGFULLY BELOW THE $1 - $10 BILLION BANK UNIVERSE IN TERMS OF COST OF DEPOSITS AS OF DECEMBER 31, 2020. Total Deposit Cost (%) 0.60 TOTAL DEPOSIT COST (%) 0.55 0.50 0.45 0.40 NOT TO SCALE 0.40 0.35 0.29 0.30 0.25 0.20 0.15 0.10 Source: S&P Globa
Slide 24: Q1 2021 Financial Insights
WORKING TOGETHER Q1 2021 FINANCIAL INSIGHTS BUILDING SUCCESS 24 24
Slide 25: Acquisition of North Star Leasing
ACQUISITION OF NORTH STAR LEASING NASDAQ: PEBO NASDAQ: PEBO LEASING OVERVIEW • 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 originations, unde
Slide 26: Overview of Premier Financial Bancorp, Inc.
OVERVIEW OF PREMIER FINANCIAL BANCORP, INC. NASDAQ: PEBO • Holding company for Citizens Deposit Bank and Trust, Inc. and Premier Bank, Inc. • Operates 48 branches across five states and Washington, D.C. • Proven track record of profitability and capital generation • Planned acquisition for late in t
Slide 27: Powerful Pro Forma Franchise
POWERFUL PRO FORMA FRANCHISE NASDAQ: PEBO NASDAQ: PEBO • Attractively valued opportunities to expand the Peoples franchise • Track record of acquisitions makes for efficient integration • Positions Peoples well to capitalize on strengthening economic prospects PRO FORMA SNAPSHOT (1) PRODUCTS & SERVI
Slide 28: Q1 2021 Highlights & Key Impacts
Q1 2021 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO 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,
Slide 29: Q1 2021 Highlights & Key Impacts: Technology
Q1 2021 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO 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 • Abil
Slide 30: Stock Performance
STOCK PERFORMANCE NASDAQ: PEBO 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 CUMULATIVE TOTAL RETURN YEAR TO DATE AS OF APRIL 21, 2021 62% 60% 30 54% 53% 27% 50% 20 22% 40% 10 12% 30% 0 P
Slide 31: Total Revenue
TOTAL REVENUE NASDAQ: PEBO NASDAQ: PEBO TOTAL REVENUE OF $203 MILLION FOR FULL YEAR OF 2020. $250,000 $200,000 Beginning in the second quarter $64,892 $64,330 of 2018, Peoples benefited from $57,234 the acquisition of ASB Financial Corp. Additionally, beginning $150,000 $52,653 Lore ($ THOUSANDS) $5
Slide 32: Insurance & Investment Income Composition
INSURANCE & INVESTMENT INCOME COMPOSITION n * ue io en sit ev tR po en om NASDAQ: PEBO m st eC ve In om nc TOTAL INSURANCE REVENUE INCREASED 26% COMPARED TO Q1 2020 tI en AND TOTAL INVESTMENT REVENUE INCREASED 18% COMPARED TO Q1 2020. m st ve In noitisopmoC emocnI tnemtsevnI dna ec nd TOTAL INSURANC
Slide 33: Core Non-Interest Expense
CORE NON-INTEREST* EXPENSE NASDAQ: PEBO NASDAQ: PEBO THE RECENT ESCALATION IN EXPENSES WAS DUE TO ACQUISITIONS, OUR MOVE TO A $15 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. Core Non-Interest Expense
Slide 34: Efficiency Ratio Adjusted for Non-Core Items
EFFICIENCY RATIO ADJUSTED FOR NON-CORE ITEMS NASDAQ: PEBO COVID-19 AND REDUCEDEfficiency NET INTEREST MARGIN Ratio IMPACTED Adjusted THE EFFICIENCY for Non-Core RATIO IN 2020 & 2021 Items* 75% 73% 71% 69% NOT TO SCALE 67% 67.49% 65% 65.19% 63% 64.30% 61% 61.94% 61.85% 61.32% 61.09% 59% 57% 55% FY-15
Slide 35: Improvement in Key Metrics
IMPROVEMENT IN KEY METRICS NASDAQ: PEBO 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 TH
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. Total Loan Growth $3,500 $3,100 TOTAL PPP LOANS ($ MILLIONS) NOT TO SCALE TOTAL PREMIUM FINANCE $2,700 FIRST PRESTONSBURG ACQUIRED LOANS ASB ACQUIRED LOANS $2,300 TOTAL LOANS NOT
Slide 37: Earning Asset Mix
EARNING ASSET MIX NASDAQ: PEBO 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. Earning Asset Mix 80% 76% $4.5 76% 80% 78% 73% 74% PERCENTAGE OF TOTAL EARNING ASSETS 72% $4.0
Slide 38: Deposit Growth
DEPOSIT GROWTH NASDAQ: PEBO W 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. Deposit Growth $4,304 T $4000 $3,910 BROKERED CERTIFICATES OF DEPOSIT GOVERN
Slide 39: Q1 2021 Appendix
WORKING TOGETHER Q1 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 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 i
Slide 41: Appendix: PPNR Adjusted for Non-Core Items
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO PRE-PROVISION PRE-PROVISION NETREVENUE NET REVENUE ADJUSTED ADJUSTED FORFOR NON-CORE ITEMS ITEMS NON-CORE Pre-provision net revenue (PPNR) has become a key financial measure used by federal bank regulatory agencies when assessing the capital adequacy of fin
Slide 42: Appendix: Core Non-Interest Income
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO CORENON-INTEREST CORE NON-INTEREST INCOME INCOME Core non-interest income is a financial measure used to evaluate 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 b
Slide 43: Appendix: Efficiency Ratio
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO EFFICIENCY RATIOEFFICIENCY AND ADJUSTED FOR NON-CORE ITEMS 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
Slide 44: Appendix: Tangible Equity and Tangible Book Value
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO TANGIBLE EQUITY TO TANGIBLE ASSETS AND TANGIBLE BOOK VALUE PER SHARE TANGIBLE EQUITY TO TANGIBLE ASSETS AND TANGIBLE BOOK VALUE PER SHARE Peoples uses tangible capital measures to evaluate the adequacy of Peoples’ stockholders’ equity. Such ratios represent
Slide 45: Appendix: Return on Average Assets
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO RETURN ON AVERAGE ASSETS AND ADJUSTED FOR NON-CORE ITEMS RETURN ON AVERAGE ASSETS ADJUSTED FOR NON-CORE ITEMS The return on average assets adjusted for non-core items represents an non-US GAAP financial measure since it excludes the release of the deferred
Slide 46: Appendix: Return on Average Tangible Equity
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO RETURN ON AVERAGE TANGIBLE STOCKHOLDERS’ EQUITY 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
Slide 47: Appendix: Return on Average Tangible Equity (continued)
Annualized net income $ 16,684 $ 10,941 $ 31,157 $ 38,471 $ 46,255 $ 53,695 $ 34,767 $ 62,711 APPENDIX 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 intangible assets 500 1,427 1,411 1,231 701 705 677 528 NON-US
Slide 48: Contact: Chuck Sulerzyski and Katie Bailey
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