Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q2 2022 Earnings Presentation
44 slides from Peoples Bancorp's earnings presentation, Jul 26, 2022
Slide 1: Investor Presentation 2nd Quarter 2022
INVESTOR PRESENTATION 2nd QUARTER 2022
Slide 2: Table of Contents
WORKING TABLE OF CONTENTS TOGETHER PAGE 4 PROFILE, INVESTMENT RATIONALE, CULTURE AND STRATEGY BUILDING PAGE 10 CREDIT, CAPITAL & LIQUIDITY SUCCESS PAGE 21 Q2 2022 FINANCIAL INSIGHTS PAGE 35 Q2 2022 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 & Strategy
PROFILE, INVESTMENT RATIONALE, CULTURE & STRATEGY 4
Slide 5: Geographic Profile
PEBO GEOGRAPHIC PROFILE NASDAQ: PEBO NASDAQ: PEBO PEOPLES BANK GEOGRAPHIC FOOTPRINT PEBO SNAPSHOT AS OF JUNE 30, 2022 PEBO FOOTPRINT Loans: $4.6 billion COUNTIES WHERE PEBO HAS TOP 3 MARKET SHARE* CLEVELAND Assets: $7.3 billion COUNTIES WHERE PEBO HAS OVER $100 MILLION OF Deposits: $5.9 billion OH D
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 NASDAQ: PEBO OUR VISION Our vision is to be the BEST COMMUNITY BANK IN AMERICA OUR CORE VALUES Our actions are guided by our core values represented by the Promise Circle, which embodies how we do business and our never ending pursuit of creative value for our associat
Slide 8: Strategic Road Map
STRATEGIC ROAD MAP NASDAQ: PEBO • Commitment to Superior Shareholder Returns • Great Place to Work • Clients’ First Choice for Financial Services • Meaningful Impact on Our Communities BEST COMMUNITY BANK IN AMERICA RESPONSIBLE EXTRAORDINARY PROFITABLE FIRST CLASS RISK MANAGEMENT CLIENT EXPERIENCE R
Slide 9: External Recognition
EXTERNAL RECOGNITION NASDAQ: PEBO IN TERMS OF SBA 7(a) PEOPLES BANK IS DELIVERING APPROVED DOLLARS 120 ACTS OF KINDNESS PEOPLES BANK RANKED ACROSS OUR FOOTPRINT IN 2022 AS A WAY TO CELEBRATE OUR 120TH ANNIVERSARY. in OH in WV NATIONALLY Peoples Bank is one of only 30 companies that have between 1,00
Slide 10: Credit, Capital & Liquidity
NASDAQ: PEBO CREDIT, CAPITAL & LIQUIDITY 10 10
Slide 11: Credit Risk Management Process
CREDIT RISK MANAGEMENT PROCESS NASDAQ: PEBO 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
Slide 12: Asset Quality
ASSET QUALITY 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% 0.375% 99.1% 98.8% 98.6% 98.5
Slide 13: Asset Quality: NPAs
ASSET QUALITY NASDAQ: PEBO NASDAQ: PEBO NPA Composition NPAS HAVE CONTINUED TO DECREASE SINCE THE INCREASE IN Q3 2021, WHICH WAS MAINLY DUE TO ACQUIRED LOANS* $60 $50 CRE RESIDENTIAL NPA’S IN $ MILLIONS $40 C&I $30 HELOC CONSUMER $20 $10 $0 2017 2018 2019 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4
Slide 14: Asset Quality: 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 / 30.93% TIER 1 CAPITAL
Slide 15: 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 Peer Bank Subs - CRE Loans / Risk-Based Capital 400% PEER BANK SUBS – CRE LOANS / RISK-BASED CAPITAL 350% 300% IS THE LEVEL
Slide 16: CRE Concentration Analysis
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 / PEER BANK SUBS – CONSTRUCTION,Risk-Based Capital LOANS / RISK-BASED CAPITAL LAND AND LAND DEVELOPMENT 110% 100% 100% IS THE LEVEL
Slide 17: Loan Composition
LOAN COMPOSITION NASDAQ: PEBO NASDAQ: PEBO C&IC hart LOAN COMPOSITION REFLECTS DIVERSIFIED RISK PROFILE Loan Composition TOTAL C&I PORTFOLIO = $0.9 BILLION TOTAL LOAN PORTFOLIO* = $4.5 BILLION TOTAL CRE PORTFOLIO** = $1.5 BILLION WHICH INCLUDES PPP LOANS Commercial Real Estate Portfolio Commercial R
Slide 18: Prudent Use of Capital
PRUDENT USE OF CAPITAL NASDAQ: PEBO CAPITAL PRIORITIES • Organic growth • Dividends • Share repurchases • Acquisition activities DIVIDENDS • 7 years of increasing dividends. Dividend paid increased from $0.15 per share for Q1 2016 to $0.38 in the most recent quarter • Based on the closing stock pric
Slide 19: Deposit Franchise
DEPOSIT FRANCHISE NASDAQ: PEBO NASDAQ: PEBO LOW LOAN TO DEPOSIT RATIO PROVIDES LOW COST LIQUIDITY TO FUND FUTURE GROWTH LOANS / DEPOSITS - PEER GROUP Loans / Deposits - Peer Group 100% 95% 90% 85% NOT TO SCALE 80% 75.75% UNIV. $1- $10 B AVERAGE: 76.43% 75% 70% 65% 60% 55% Source: S&P Global Market I
Slide 20: Cost of Deposits
COST OF DEPOSITS NASDAQ: PEBO Total PEBO IS BELOW THE $1 - $10 BILLION BANK Deposit UNIVERSE Cost IN TERMS (%)OF DEPOSITS AS OF MARCH 31, 2022 OF COST 0.33 TOTAL DEPOSIT COST (%) 0.28 0.23 UNIV. $1- $10 B AVERAGE: 19% 0.18 0.14 0.13 0.08 0.03 FMNB CCNE FFBC PEBO PRK PFC HBNC CTBI LKFN THFF STBA SYBT
Slide 21: Q2 2022 Financial Insights
Q2 2022 FINANCIAL INSIGHTS 21
Slide 22: Q2 2022 Highlights & Key Impacts
Q2 2022 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO FINANCIAL: • Net interest income increased $7.2 million or 13% compared to the linked quarter. • Net interest margin increased 43 basis points to 3.84% for the second quarter of 2022, compared to 3.41% for the linked quarter and increased 39 basis points
Slide 23: Financial Expectations
FINANCIAL EXPECTATIONS NASDAQ: PEBO NASDAQ: PEBO LOAN GROWTH 4% TO 6% , EXCLUDING PPP LOANS FEE-BASED INCOME 12% TO 16% GROWTH COMPARED TO 2021 CONTINUE TO ANTICIPATE STABILIZATION CREDIT COSTS IN CREDIT COSTS QUARTERLY TOTAL $50 MILLION TO $52 MILLION NON-INTEREST EXPENSE FOR THE REMAINDER OF 2022
Slide 24: Acquisition of Premier Financial Bancorp, Inc.
ACQUISITION OF PREMIER FINANCIAL BANCORP, INC 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. • Operated 46 br
Slide 25: Acquisition of Vantage Financial
ACQUISITION OF VANTAGE FINANCIAL NASDAQ: PEBO NASDAQ: PEBO ACQUISITION EFFECTIVE MARCH 7, 2022 • Vantage Financial (“Vantage”) was a privately held, mid-ticket, national equipment finance company based in Excelsior, Minnesota. • The company originates leases primarily for mission critical IT equipme
Slide 26: New Digital Experience
Q3 2022 MOBILE & DIGITAL USER EXPERIENCE IMPROVEMENT NASDAQ: PEBO NEW DIGITAL EXPERIENCE COMING SOON We are excited to announce This new experience is simpler, offers a a new online and mobile banking experience friendlier user experience and more features coming in the second half of August 2022! t
Slide 27: Stock Performance
STOCK PERFORMANCE NASDAQ: PEBO NASDAQ: PEBO BANKING SECTOR PERFORMANCE HAS LAGGED S&P 500 80% IN TERMS OF 3 & 5 YEAR TOTAL ANNUAL RETURN 70% 30% 60% TOTAL ANNUAL RETURN AS OF JUNE 30, 2022 CUMULATIVE TOTAL RETURN FOR THE THREE MONTHS ENDED JUNE 30, 2022 50% 20% 40% 10% 30% 0% -14% -8% -16% 20% 11% 1
Slide 28: Total Revenue
TOTAL REVENUE NASDAQ: PEBO TOTAL REVENUE OF $155 MILLION FOR YTD 2022 $250,000 Peoples benefited from the $69,254 acquisition of ASB Financial Corp. in the second quarter of 2018, the $200,000 $64,892 acquisition of First Prestonsburg $64,330 Bancshares Inc. in the second quarter $57,234 $172,395 of
Slide 29: Insurance & Investment Income Composition
n * ue io en sit INSURANCE & INVESTMENT ev tR po en om INCOME COMPOSITION m st eC ve In om NASDAQ: PEBO NASDAQ: PEBO nc tI en m st ve In noitisopmoC emocnI tnemtsevnI dna ecnarusnI nd TOTAL INVESTMENT REVENUE TOTAL INSURANCE REVENUE a ce Q2 2022 Q2 2022 n ra *e$4.3 uneveR MILLION *eun$3.6 MILLION su
Slide 30: 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 Efficiency Ratio Adjusted for Non-Core Core Non-I
Slide 31: 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, AND OTHER ECONOMIC IMPACTS OF COVID-19 SIGNIFICANTLY IMPACTED THESE METRICS IN 2020 AND 2021 Improvement In Key Metric
Slide 32: Total Loan Growth
TOTAL LOAN GROWTH NASDAQ: PEBO Total Loan Growth TOTAL LOANS* WERE $4.6 BILLION AS OF JUNE 30, 2022, WHICH INCLUDED $15 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 ACQ
Slide 33: Earning Asset Mix
EARNING ASSET MIX NASDAQ: PEBO NASDAQ: PEBO Earning Asset Mix THE INCREASE IN EARNING ASSETS IN 2021 WAS DUE TO ACQUISITIONS 80% $7 76% 80% PERCENTAGE OF TOTAL EARNING ASSETS 73% 74% 73% 73% $6 70% TOTAL EARNING ASSETS $5 60% (IN $BILLIONS) $4 50% $3 40% $2 30% $1 27% 26% 27% 20% 27% 24% $0 20% FY-1
Slide 34: Deposit Growth
DEPOSIT GROWTH NASDAQ: PEBO DEPOSIT BALANCES BENEFITED FROM PPP LOAN PROCEEDS, FISCAL STIMULUS FOR CONSUMERS AND COMMERCIAL CLIENTS, AND THE ACQUISITION OF PREMIER FINANCIAL BANCORP, INC. Deposit Growth $6,500 $5,862 $5,929 BROKERED CERTIFICATES OF DEPOSIT GOVERNMENTAL DEPOSIT ACCOUNTS $5,200 MONEY
Slide 35: Q2 2022 Appendix
Q2 2022 APPENDIX 35
Slide 36: 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 37: 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 38: Non-US GAAP Measures: Core Non-Interest Income
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 39: 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 40: 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 41: 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 42: 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 43: Non-US GAAP Measures: Return on Equity
APPENDIX NON-US GAAP MEASURES ($ in Thousands) FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21 YTD-22 Annualized net income $ 10,941 $ 31,157 $ 38,471 $ 46,255 $ 53,695 $ 34,767 $ 47,555 $ 97,733 Add: amortization of other intangible assets 4,077 4,030 3,516 3,338 3,359 3,223 4,775 3,742 Less: tax effect
Slide 44: Chuck Sulerzyski, President and CEO; Katie Bailey, CFO
CHUCK SULERZYSKI President and Chief Executive Officer 740.374.6163 Chuck.Sulerzyski@pebo.com KATIE BAILEY Executive Vice President Chief Financial Officer and Treasurer 740.376.7138 Kathryn.Bailey@pebo.com Peoples Bancorp® is a federally registered service mark of Peoples Bancorp Inc. The three arc