Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q4 2020 Earnings Presentation
52 slides from Peoples Bancorp's earnings presentation, Jan 26, 2021
Slide 1: Investor Presentation 4th Quarter 2020
INVESTOR PRESENTATION 4TH QUARTER 2020 NASDAQ: PEBO
Slide 2: Safe Harbor Statement
NASDAQ: PEBO 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 Litigat
Slide 3: Table of Contents
NASDAQ: PEBO WORKING TABLE OF CONTENTS PAGE 4 TOGETHER PROFILE, INVESTMENT RATIONALE, CULTURE AND STRATEGY PAGE 9 COVID-19 CREDIT IMPACT, CAPITAL & LIQUIDITY BUILDING PAGE 28 Q4 & FY 2020 FINANCIAL INSIGHTS PAGE 43 Q4 & FY 2020 APPENDIX SUCCESS 3 WORKING TOGETHER. BUILDING SUCCESS. ®
Slide 4: Profile, Investment Rationale, Culture and Strategy
PROFILE INVESTMENT NASDAQ: PEBO RATIONALE PROFILE, INVESTMENT RATIONALE, CULTURE AND STRATEGY CULTURE ® 4 WORKING TOGETHER. BUILDING SUCCESS.
Slide 5: PEBO Profile
PEBO PROFILE NASDAQ: PEBO PEBO MARKET INSIGHT PEBO GEOGRAPHIC FOOTPRINT • Strongest deposit market share positions in more rural markets where we can affect pricing Cleveland levelaand • Presence near larger cities puts us in a position PA to capture lending opportunities in more urban markets (e.g.
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 34% for Q4 2020) than the average $1 - 10 billion bank • Strong community reputation and active involvement • 14 local mark
Slide 7: Corporate Culture
CORPORATE CULTURE NASDAQ: PEBO OUR VISION CIRCLE Our vision is to be THE BEST COMMUNITY BANK IN AMERICA. OUR MISSION CLIENTS INTEGRITY FIRST ALWAYS We will work side by side to overcome challenges and seize opportunities. We listen and work with you. Together, we will PEBO UR build and execute thoug
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
COVID-19 NASDAQ: PEBO CREDIT IMPACT COVID-19 CREDIT IMPACT, CAPITAL & LIQUIDITY CAPITAL & LIQUIDITY 9 ® WORKING TOGETHER. BUILDING SUCCESS.
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. • It changed the way we provide our products and services, which is now more digital. • Enabled remote work capabilities for associates as appropriate. • Temporarily moved t
Slide 11: Community Relations During COVID-19
COMMUNITY RELATIONS DURING COVID-19 NASDAQ: PEBO SOCIAL MEDIA POSTS RECOGNIZING PEOPLES BANK 4.1 M Followers 441 K Followers / 250K Views / Over 10K Likes & Retweets Jobs Ohio provided a 90% guarantee on the first $25 million of increased exposure to small businesses. Clients were able to obtain up
Slide 12: Credit Risk Management Process
CREDIT 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 13: COVID-19 Related Loan Payment Deferrals
COVID-19 RELATED LOAN PAYMENT DEFERRALS NASDAQ: PEBO COVID-19 RELATED LOAN PAYMENT DEFERRALS* Loan Payment Deferrals $3 $2.9B $2.8B • At June 30, 2020, consumer and commercial loan modifications totaled $528 million, made up of $485 million in commercial loans and $44 million in consumer loans. $2 $
Slide 14: Asset Quality
ASSET QUALITY NASDAQ: PEBO OUR DELINQUENCY AND NET CHARGE-OFF TRENDS HAVE REMAINED STABLE TO IMPROVING FOR FOUR PLUS YEARS. Percentage of Loans Considered “Current” Percentage of Loans considered Current Percentage of Net Charge-Offs to Average Loans Charge Offs Annualized 100% 0.375% 98.8% 98.6% 98
Slide 15: Asset Quality - NPAs/Assets
ASSET QUALITY NASDAQ: PEBO Asset Quality - NPAs/Assets NPAS AS A PERCENTAGE OF TOTAL ASSETS HAVE CONSISTENTLY BEEN SUPERIOR TO MIDWEST BANKS WITH 1.4% $1 TO $10 BILLION IN TOTAL ASSETS. 1.2% 1.0% 0.88% 0.84% 0.8% NPAS / ASSETS 0.57% 0.56% 0.54% 0.6% 0.49% 0.48% 0.49% 0.50% 0.50% 0.46% 0.46% 0.47% 0.
Slide 16: Asset Quality - NPA Composition
ASSET QUALITY NASDAQ: PEBO NPA Composition NPA Composition NPAS AT 12/31/20 WERE PRIMARILY COMPOSED OF WELL-COLLATERALIZED COMMERCIAL REAL ESTATE AND RESIDENTIAL REAL ESTATE LOANS. DECREASE DURING Q4 2020 WAS MAINLY DUE TO CRE & RESIDENTIAL.* $30 $30 $25 $25 $20 $20 $ MILLIONS $15 $15 $10 $10 $5$5 $
Slide 17: Asset Quality - Classified and Criticized Loans
ASSET QUALITY NASDAQ: PEBO CLASSIFIED AND CRITICIZED LOANS AS A PERCENTAGEAsset OF TIERQuality 1 CAPITAL ARE WELL MANAGED. 50% CRITICIZED LOANS / 45% TIER 1 CAPITAL + ALLL * 39.16% 40% 35% CLASSIFIED LOANS / 29.89% TIER 1 CAPITAL + ALLL * 30% 28.10% 25.61% 26.54% 27.09% 25% 22.42% 21.22% 19.58% 20%
Slide 18: 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 19: CRE Concentration Analysis - Construction and Land
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO PEER BANK SUBS Peer–Bank CONSTRUCTION, LAND AND LAND DEVELOPMENT Subs -- Construction, LOANS Land, and Land / RISK-BASED CAPITAL Development Loans / Risk-Based Capital 110% 100% 90% 100% IS THE LEVEL CONSIDERED HEIGHTENED CONSTRUCTION, 80% LAND AND LAND DEVELO
Slide 20: Loan Composition
LOAN COMPOSITION NASDAQ: PEBO LOAN COMPOSITION REFLECTS HEALTHY RISK DIVERSITY. TOTAL LOAN PORTFOLIO* = $3.0 BILLION, Loan Composition WHICH EXCLUDES $367 MILLION OF PPP LOANS TOTAL CRE PORTFOLIO** = $0.9 BILLION Commercial Rea Commercial Real Estate Portfolio l Estate Portfolio Loan Portfolio (Excl
Slide 21: Current Expected Credit Losses Summary
CURRENT EXPECTED CREDIT LOSSES SUMMARY NASDAQ: PEBO ECONOMIC FORECAST – KEY DRIVERS AT DECEMBER 31, 2020 US Unemployment Ohio GDP Ohio Unemployment Percentage of Loans considered Current Percentage of Loans considered Current Percentage of Loans considered Current 12% 12% 12% 10.35% 7.14% 7.01% 6.88
Slide 22: Reserves to Loans vs Peers
RESERVES TO ASSETS NASDAQ: PEBO PEBO IS SLIGHTLY 4Q20 MORE RESERVED Reserves as aCOMPARED % of LoansTO PEERS AS OF DECEMBER 2020 3 RESERVES AS A % OF LOANS 2.5 Reserve as a % of Loans 2 1.48 MEDIAN 1.23 Median, 1.46 1.5 Average, AVERAGE1.19 1.39 1 0.5 0 SRCE THFF STBA GABC FCF PFC PEBO HBNC SYBT NBT
Slide 23: Capital in a COVID-19 Environment
CAPITAL IN A COVID-19 ENVIRONMENT NASDAQ: PEBO WE HAVE LOOKED AT OUR CAPITAL LEVELS UNDER DIFFERENT STRESSED SCENARIOS. • The graph below is based on the following key stressed assumptions, related to bank capital: • No net income for 2021, dividend continues at $0.35 per quarter, a measured approac
Slide 24: Prudent Use of Capital
PRUDENT USE OF CAPITAL NASDAQ: PEBO ACQUISITIONS • Bank acquisitions completed in 2014 (3), 2015 (1), 2018 (1), and 2019 (1) • Insurance acquisitions completed in 2014 (1), 2015 (1), 2017 (2), and 2020 (1) • One investment acquisition was completed in 2016 • One premium finance acquisition effective
Slide 25: Liquidity in a COVID-19 Environment
LIQUIDITY IN A COVID-19 ENVIRONMENT NASDAQ: PEBO WE ARE WELL POSITIONED FROM A LIQUIDITY PERSPECTIVE • We had a loan-to-deposit ratio of 87% at December 31, 2020, which enables us to be flexible and grow loans when it is prudent. • We can leverage our investment securities to gain liquidity through
Slide 26: Deposit Franchise in a COVID-19 Environment
DEPOSIT FRANCHISE IN A COVID-19 ENVIRONMENT NASDAQ: PEBO AS OF DECEMBER 2020, OUR LOAN-TO-DEPOSIT RATIO WAS LOW COMPARED TO PEER GROUP, WHICH POSITIONS US WELL FROM A LIQUIDITY PERSPECTIVE. Loans / Deposits - Peer Group 100% 95% 90% NOT TO SCALE 87.02% UNIV. $1- $10 B AVERAGE: 84.88% 85% 80% 75% 70%
Slide 27: Cost of Deposits
COST OF DEPOSITS NASDAQ: PEBO PEBO IS MEANINGFULLY BELOW THE $1 - $10 BILLION BANK UNIVERSE IN TERMS OFTotal COST OFDeposit Cost DEPOSITS AS (%) 31, 2020. OF DECEMBER 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 Global Market Intell
Slide 28: Q4 & FY 2020 Financial Insights
NASDAQ: PEBO Q4 & FY 2020 FINANCIAL INSIGHTS ® 28 WORKING TOGETHER. BUILDING SUCCESS.
Slide 29: Peoples Premium Finance
PEOPLES PREMIUM FINANCE NASDAQ: PEBO Effective July 1, 2020, Peoples closed on the asset purchase agreement under which Peoples Bank acquired the operations and assets of Triumph Premium Finance (“TPF”), a division of TBK Bank, SSB. Based in Kansas City, Missouri, Peoples Premium Finance will contin
Slide 30: Q4 & FY 2020 Highlights & Key Impacts
Q4 & FY 2020 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO FINANCIAL: • Recorded net income of $20.8 million for the fourth quarter of 2020, representing earnings per diluted common share of $1.06. • Net interest income was $34.3 million for the fourth quarter of 2020, a decrease of $811,000, or 2%, compare
Slide 31: Q4 & FY 2020 Highlights - Recognition
Q4 & FY 2020 HIGHLIGHTS & KEY IMPACTS NASDAQ: PEBO RECOGNITION: • Peoples Bank was recognized as the number one bank in West Virginia as part of Forbes’ annual list of America’s Best-In-State Banks and Credit Unions 2020. • For the 2nd year in a row, Peoples Bank has been recognized as a Top Workpla
Slide 32: Q4 & FY 2020 Highlights - Technology
Q4 & FY 2020 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 33: Stock Performance
STOCK PERFORMANCE NASDAQ: PEBO THE INDUSTRY UNDER-PERFORMED THE MARKET IN 2020, GIVEN THE UNKNOWN RAMIFICATIONS OF COVID-19 ON FUTURE BANK PROFITABILITY. TOTAL ANNUAL RETURN AS OF DECEMBER 31, 2020 CUMULATIVE TOTAL RETURN YEAR TO DATE 40% AS OF FEBRUARY 26, 2021 20 30% 1-YEAR 3-YEAR 5-YEAR 10-YEAR 1
Slide 34: Total Revenue
TOTAL REVENUE 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 $150,000 Lo ($ THOUSANDS) $52,653 in the second qua
Slide 35: Insurance & Investment Income Composition
en om m st eC INSURANCE & INVESTMENT ve In om INCOME COMPOSITION nc tI en NASDAQ: PEBO m st ve In nd noitisopmoC emocnI tnemtsevnI dn TOTAL INSURANCE REVENUE TOTAL INVESTMENT REVENUE a ce FY 2020 FY 2020 n ra $14.0 MILLION *eu$13.7 neveR tMILLION su nemtsevnI In e* 5 nu ve 4 3 Re ce an 1 1 sur In 3
Slide 36: Core Non-Interest Expense
CORE NON-INTEREST EXPENSE* 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 GROWTHCore AND TECHNOLOGY Non-InterestINVESTMENTS. Expense*COVID-19 IS NOT EXPECTED TO CAUSE A MATERIAL INCREASE IN EXPENSES. $150,000 CORE
Slide 37: Efficiency Ratio Adjusted for Non-Core Items
EFFICIENCY RATIO ADJUSTED FOR NON-CORE ITEMS* NASDAQ: PEBO COVID-19 AND REDUCED NET INTEREST MARGIN Efficiency IMPACTED Ratio THE EFFICIENCY Adjusted RATIO for Non-Core IN 2020 Items* 75% 73% 69.55% 71% 69% 67% NOT TO SCALE 67.49% 65% 63% 64.30% 61% 61.85% 61.94% 61.32% 61.09% 59% 57% 55% FY-15 FY-1
Slide 38: 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, AND OTHER ECONOMIC IMPACTS OF COVID-19 SIGNIFICANTLY IMPACTED THESE METRICS IN 2020. Improvement In Key Metrics Improvement In Key
Slide 39: Total Loan Growth
TOTAL LOAN GROWTH NASDAQ: PEBO TOTAL LOANS WERE $3.4 BILLION AS OF DECEMBER 31, 2020, WHICH INCLUDED $366.9 MILLION OF PPP LOANS. Total Loan Growth $3,500 $3,100 TOTAL PREMIUM FINANCE LOANS ($ MILLIONS) NOT TO SCALE TOTAL PPP LOANS $2,700 FIRST PRESTONSBURG ACQUIRED LOANS ASB ACQUIRED LOANS $2,300 T
Slide 40: Paycheck Protection Program
PAYCHECK PROTECTION PROGRAM SUCCESS NASDAQ: PEBO PPP RESULTS PEBO PPP GEOGRAPHIC FOOTPRINT AS OF DECEMBER 31, 2020 • Assisted 3,898 businesses with SBA PPP loans with obtaining approximately $500 million in loans COUNTIES WITH PEBO PPP LOAN authorized as of December 31, 2020. • Peoples Bank had the
Slide 41: 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 Earning PERCENTAGE OF EARNING Asset Mix ASSETS WAS DUE TO PPP LOANS. 80% $4.5 80% 76% 73% 74% 72% 78% $4.0 70% PERCENTAGE OF TOTAL EARNING ASSETS
Slide 42: Deposit Growth
DEPOSIT GROWTH NASDAQ: PEBO TOTAL DEPOSIT BALANCES AT DECEMBER 31, 2020 INCREASED 19% COMPARED TO DECEMBER 31, 2019. DEPOSIT BALANCES BENEFITED FROMDeposit PPP LOAN PROCEEDS AND FISCAL STIMULUS FOR CONSUMERS AND Growth COMMERCIAL CLIENTS. $3,910 $4000 BROKERED CERTIFICATES OF DEPOSIT GOVERNMENTAL DE
Slide 43: Q4 & FY 2020 Appendix
Q4 & FY NASDAQ: PEBO 2020 Q4 & FY 2020 APPENDIX ® 43 WORKING TOGETHER. BUILDING SUCCESS.
Slide 44: 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 45: 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 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 f
Slide 46: Appendix 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 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 banking system CORE NON-I
Slide 47: Appendix Non-US GAAP Measures: Efficiency Ratio
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO 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 interes
Slide 48: 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’ equity. Such ratios represent non-US GAAP financial measures since the calculation removes the imp
Slide 49: Appendix Non-US GAAP Measures: Return on Average Assets
APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO 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 tax asset valuation allowance, the impact of the Tax Cuts
Slide 50: 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 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 asset
Slide 51: Appendix Non-US GAAP Measures: Return on Tangible Equity (continued)
Add: amortization of other intangible assets 1,428 4,077 4,030 3,516 3,338 3,359 3,223 Less: tax effect of amortization of other intangible assets 500 1,427 1,411 1,231 701 705 677 APPENDIX Annualized net income excluding the amortization of intangible assets 17,612 13,591 33,776 40,756 48,892 56,34
Slide 52: Working Together. Building Success.
NASDAQ: PEBO 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