Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q4 2019 Earnings Presentation
44 slides from Peoples Bancorp's earnings presentation, Mar 6, 2020
Slide 1: Investor Presentation 4th Quarter 2019
NASDAQ: PEBO INVESTOR PRESENTATION 4TH QUARTER 2019 NASDAQ: PEBO 11
Slide 2: Working Together. Building Success.
NASDAQ: PEBO WORKING TOGETHER BUILDING
Slide 3: 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 4: Profile, Investment Rationale, Culture and Strategy
PROFILE INVESTMENT NASDAQ: PEBO RATIONALE PROFILE, INVESTMENT RATIONALE, CULTURE AND STRATEGY CULTURE 3
Slide 5: Corporate Profile
CORPORATE PROFILE NASDAQ: PEBO FINANCIAL HOLDING COMPANY HEADQUARTERED IN MARIETTA, OHIO Provides a broad range of banking, insurance and investment services. CURRENT SNAPSHOT: CURRENT FOOTPRINT: Assets: $4.4 billion; Loans: $2.9 billion Demographics: Unemployment: Deposits: $3.3 billion Median Inco
Slide 6: Geographic Footprint
GEOGRAPHIC FOOTPRINT NASDAQ: PEBO PEBO GEOGRAPHIC FOOTPRINT Cleveland 75 Peoples’ footprint includes full service branches in Akron Ohio, West Virginia and Kentucky. 77 Coshocton Indicates footprint added by the Cambridge First Prestonsburg Bancshares Inc. Columbus 70 Caldwell (“First Prestonsburg”)
Slide 7: PEBO Market Insight
PEBO MARKET INSIGHT NASDAQ: PEBO PEBO MARKET INSIGHT DEPOSIT DEPOSIT MARKET MSA RANK ($000)* SHARE (%) MARIETTA, OH 1 884,414 52.05% • Strongest deposit market share positions in more CAMBRIDGE, OH WILMINGTON, OH 1 1 225,591 199,573 34.35% 32.56% rural markets where we can affect pricing PRESTONSBUR
Slide 8: Investment Rationale
INVESTMENT RATIONALE NASDAQ: PEBO UNIQUE COMMUNITY BANKING MODEL • Greater revenue diversity (32% non-interest income, excluding gains and losses) than the average $1 - 10 billion bank • Strong community reputation and active involvement • Local market teams capable of out-maneuvering larger banks •
Slide 9: Corporate Culture
CORPORATE CULTURE NASDAQ: PEBO OUR VALUES OUR VISION PROMISE CIRCLE Our vision is to be the best community bank in America. Peoples' Employee Promise Circle represents how we do business and our never-ending pursuit of creating value for our clients. Our strategies to OUR MISSION serve clients and e
Slide 10: 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 RISK EXTRAORDINARY PROFITABLE FIRST C
Slide 11: Stock Performance
STOCK PERFORMANCE NASDAQ: PEBO 35% 35% TOTAL ANNUAL RETURN AS OF DECEMBER 31, 2019 31% 30% 30% 27% PEBO 25% 25% 25% 24% PEER GROUP RUSSELL 2000 FINANCIAL SERVICES 20% 20% 20% RUSSELL 2000 17% S&P 500 15% 15% 15% 15% 14% 13% 12% 12% 12% 10% 10% 9% 9% 9% Total Return includes impact of dividends 8% Pe
Slide 12: Strategic Priorities and Financial Results
STRATEGIC NASDAQ: PEBO PRIORITIES STRATEGIC PRIORITIES AND FINANCIAL FINANCIAL RESULTS RESULTS 11
Slide 13: Strategic Priorities
STRATEGIC PRIORITIES NASDAQ: PEBO S POSITIVE OPERATING LEVERAGE • Expand revenue versus expense growth gap beyond 2% (PAGE 18) • Focused on sustainable revenue growth (PAGE 19) • Disciplined expense management (PAGE 20) • Drive core efficiency ratio below 60% (PAGE 21) • Preserve key metrics (PAGE 2
Slide 14: Strategic Targets
STRATEGIC TARGETS NASDAQ: PEBO 3-YEAR STATUS YTD YTD STRATEGIC AS OF METRICS 12/31/18 12/31/19 TARGET RANGE* 12/31/19 NPAs as a percent of total loans and OREO (1) 0.71% 0.76% 0.70% to 1.00% IMPROVE ASSET QUALITY Annualized net charge-offs as a percent of average total loans 0.15% 0.04% 0.30% to 0.5
Slide 15: Financial Expectations – 2020
FINANCIAL EXPECTATIONS NASDAQ: PEBO FINANCIAL EXPECTATIONS – 2020 • Organic loan growth of 5% to 7% for the full year of 2020. • We expect an increase in credit costs in 2020 as the historically-low charge-off levels are not sustainable. • We believe net interest margin will be between 3.45% and 3.5
Slide 16: Q4 & YTD 2019 Financial Performance
NASDAQ: PEBO Q4 & YTD 2019 FINANCIAL PERFORMANCE 15
Slide 17: Q4 & YTD 2019 Performance Highlights
Q4 & YTD 2019 HIGHLIGHTS NASDAQ: PEBO Q4 & YTD 2019 PERFORMANCE HIGHLIGHTS • Successful close and conversion of First Prestonsburg • Return on average assets of 1.27% for 2019, adjusted return on average assets of 1.42% • Quarterly annualized net charge-off rate of 16 basis points and net charge-off
Slide 18: 2019 Business Summary
2019 BUSINESS SUMMARY NASDAQ: PEBO 2019 BUSINESS SUMMARY COMMERCIAL BANKING • Commercial loan swap fees have more than tripled for 2019 as compared to 2018 • Commercial loan production was up over 35% compared to 2018 • $25 million lending “house limit” although legal limit is over $50 million RETAI
Slide 19: Adjusted Operating Leverage
ADJUSTED OPERATING LEVERAGE NASDAQ: PEBO ACHIEVED POSITIVE OPERATING LEVERAGE, ADJUSTED FOR NON-CORE ITEMS, FOR THE Adjusted FULL YEAR Operating OF 2019. Leverage Versus the VERSUS THE in same quarter PRIOR YEAR, the prior ADJUSTED OPERATING Versus year LEVERAGE WASyear the prior POSITIVE FOR FISCAL
Slide 20: Total Revenue Growth
TOTAL REVENUE GROWTH NASDAQ: PEBO TOTAL REVENUE OF $206 MILLION FOR FY-19 $250,000 Beginning in the second quarter of 2018, Peoples benefited from the acquisition of ASB $200,000 $64,892 Financial Corp (“ASB”). Additionally, beginning $57,234 in the second quarter of 2019, Peoples benefited ($ THOUS
Slide 21: 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 GROWTH AND TECHNOLOGY INVESTMENTS. Core Non-Interest Expense* $150,000 $7,287 ($ THOUSANDS) NOT TO SCALE $125,000 $100,000 CORE NON-INTEREST
Slide 22: Efficiency Ratio Adjusted for Non-Core Items
EFFICIENCY RATIO ADJUSTED FOR NON-CORE ITEMS* NASDAQ: PEBO Efficiency Ratio Adjusted for Non-Core Items* EFFICIENCY RATIO, ADJUSTED FOR NON-CORE ITEMS, HAS IMPROVED AS A RESULT OF EXPENSE CONTROL AND REVENUE GROWTH. 70% 69% 69.55% 68% 67% 67.49% 66% NOT TO SCALE 65% 64% 64.30% 63% 62% 61.85% 61% 61.
Slide 23: Improvement in Key Metrics
IMPROVEMENT IN KEY METRICS NASDAQ: PEBO FOCUS ON STEADILY GROWING LOANS AND DEPOSITS, MANAGING EXPENSES AND INCREASING OPERATING LEVERAGE HAS RESULTED IN IMPROVEMENT Improvement Improvement In KeyIn KeyIN Metrics KEY FINANCIAL METRICS. Metrics Improvement In Key Metrics Improvement In Key Metrics RE
Slide 24: Asset Quality – NPAs / Assets
ASSET QUALITY – NPAS / ASSETS NASDAQ: PEBO NPAS AS A PERCENTAGE OF TOTAL ASSETSAsset HAVEQuality - NPAs/Assets CONSISTENTLY BEEN SUPERIOR TO MIDWEST BANKS WITH $1 TO $10 BILLION IN TOTAL ASSETS. 1.4% 1.2% 1.0% 0.8% NPAS / ASSETS 0.57% 0.56% 0.6% 0.49% 0.50% 0.49% 0.48% 0.46% 0.46% 0.47% 0.48% 0.45%
Slide 25: NPA Composition
NPA COMPOSITION NASDAQ: PEBO NPA Composition NPAS AT 12/31/19 WERE PRIMARILY COMPOSED OF WELL-COLLATERALIZED COMMERCIAL REAL ESTATE AND RESIDENTIAL REAL ESTATE LOANS, CONSISTENT WITH TREND NOTED IN RECENT QUARTERS. $30 $25 $20 $ MILLIONS $15 $10 $5 $0 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Slide 26: Asset Quality
ASSET QUALITY NASDAQ: PEBO CRITICIZED LOANS AS A PERCENT OF TIER 1 CAPITAL AND ALLL HAVE BEEN AT OR NEAR AN 18-YEAR LOW. Asset Quality 50% CRITICIZED LOANS / TIER 1 CAPITAL + ALLL * 45% 39.16% 40% CLASSIFIED LOANS / 35% TIER 1 CAPITAL + ALLL * 29.89% 30% 28.10% 25.61% 25% 28.72% 21.22% 19.34% 20% 17
Slide 27: CRE Concentration Analysis
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO CRE EXPOSURE IS WELL BELOW SUPERVISORY CRITERIA ESTABLISHED TO IDENTIFY INSTITUTIONS WITH HEIGHTENED CRE CONCENTRATION RISK. CRE Concentration Analysis • Exposure levels also compare favorably to peer institution concentration levels. • Concentration levels ha
Slide 28: CRE Concentration Analysis
CRE CONCENTRATION ANALYSIS NASDAQ: PEBO PEER BANK SUBS – CONSTRUCTION, LANDCRE ANDConcentration LAND DEVELOPMENT LOANS / RISK-BASED CAPITAL Analysis 110% 100% 90% 100% IS THE LEVEL CONSIDERED HEIGHTENED CONSTRUCTION, 80% LAND AND LAND DEVELOPMENT CONCENTRATION RISK PER 70% SUPERVISORY GUIDANCE 60% 5
Slide 29: Loan Composition
LOAN COMPOSITION NASDAQ: PEBO LOAN COMPOSITION REFLECTS HEALTHY RISK DIVERSITY. Loan Composition TOTAL LOAN PORTFOLIO* = $2.9 BILLION TOTAL CRE PORTFOLIO** = $0.8 BILLION Loan Portfolio (Excluding Deposit Overdrafts) Commercial Real Estate Portfolio Commercial Real Estate Portfolio 6 7 1 5 12 11 2 4
Slide 30: Total Loan Growth
TOTAL LOAN GROWTH NASDAQ: PEBO TOTAL LOAN GROWTH OF 5% FORTotal 2019Loan COMPARED TO 2018. Growth $3,000 $2,600 TOTAL LOANS EXCEPT ASB & ($ MILLIONS) NOT TO SCALE FIRST PRESTONSBURG $2,200 ASB ACQUIRED LOANS FIRST PRESTONSBURG ACQUIRED LOANS $1,800 AVERAGE LOAN BALANCES $1,400 $1,000 FY-14 FY-15 FY-
Slide 31: Deposit Growth
DEPOSIT GROWTH NASDAQ: PEBO TOTAL DEPOSITS WERE UP 11% COMPARED TO DECEMBER 31, 2018. FOR THE QUARTER ENDED DECEMBER 31, 2019, Deposit COST OF DEPOSITS WAS 0.66%. Growth $4,000 BROKERED CERTIFICATES OF DEPOSIT ($ MILLIONS) NOT TO SCALE $3,350 $3,291 GOVERNMENTAL DEPOSIT ACCOUNTS MONEY MARKET DEPOSIT
Slide 32: Average Loans to Deposits
LOANS TO DEPOSITS NASDAQ: PEBO OUR LOAN TO DEPOSIT RATIO IS LOW COMPARED TO PEER GROUP, WHICH POSITIONS US WELL FROM A LIQUIDITY PERSPECTIVE. 105% 100% 95% 92.68% 91.06% 90% NOT TO SCALE 87.3% 85% 80% AVERAGE MEDIAN 75% 70% NWBI STBA SMMF TSC LKFN UCFC FDEF CTBI SRCE TMP FCF UNIV. HBNC PRK UNIV. SYB
Slide 33: Earning Asset Mix
EARNING ASSET MIX NASDAQ: PEBO FROM 2013 TO 2018, THE PERCENTAGE OF EARNING ASSETS COMPOSED OF INVESTMENTS DECREASED. IN 2019, THE INCREASE IN PERCENTAGE OF EARNING ASSETS IS DUE TO THE FIRST PRESTONSBURG ACQUISITION, WHICH PROVIDED ADDITIONAL Earning LIQUIDITY. Asset Mix $4.5 80% 76% 73% 74% PERCEN
Slide 34: 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 CAPITAL PRIORITIES • Organic growth • Divid
Slide 35: Insurance and Investment Income Composition
Investment R Insurance and Investment Income Composition INSURANCE & INVESTMENT INCOME COMPOSITION NASDAQ: PEBO Insurance and Investment Income Composition TOTAL INSURANCE REVENUE TOTAL INVESTMENT REVENUE FOR 2019 FOR 2019 $14.8 InsuranceMILLION Revenue* $13.2 MILLION Investment Revenue* 3 5 Insuran
Slide 36: Non-US GAAP Measures: Pre-Provision Net Revenue
FY 2019 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 in
Slide 37: Non-US GAAP Measures: PPNR Adjusted for Non-Core Items
FY 2019 APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO PRE-PROVISION NET REVENUE ADJUSTED FOR NON-CORE ITEMS Pre-provision net revenue (PPNR) PRE-PROVISION has become NETaREVENUE key financialADJUSTED measure FOR NON-CORE used by federal ITEMSbank regulatory agencies when assessing the capital adequacy
Slide 38: Non-US GAAP Measures: Core Non-Interest Income
FY 2019 APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO CORE NON-INTEREST INCOME Core non-interest income is a financial CORE measure used toINCOME NON-INTEREST evaluate Peoples’ recurring non-interest revenue stream. This measure is non-US GAAP since CORE it excludes NON-INTERESTthe impact INCOME of all
Slide 39: Non-US GAAP Measures: Efficiency Ratio
FY 2019 APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO EFFICIENCY EFFICIENCY RATIO RATIO The efficiency ratio The efficiency is isa akey ratio financial key financial measure measure used used to to performance. monitor monitor performance. The The efficiency ratio is efficiency calculated as ratio tota
Slide 40: Non-US GAAP Measures: Tangible Equity and Book Value
FY 2019 APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO TANGIBLE EQUITY TO TANGIBLE ASSETS AND TANGIBLE BOOK VALUE PER SHARE PeoplesTANGIBLE uses tangible EQUITY capital measures TO TANGIBLE to evaluate ASSETS the adequacy AND TANGIBLE BOOK VALUEof Peoples’ PER SHAREstockholders’ equity. Such ratios repr
Slide 41: Non-US GAAP Measures: Return on Average Assets
FY 2019 APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO RETURN ON AVERAGE ASSETS ADJUSTED FOR NON-CORE ITEMS The return on RETURNaverage assets adjusted for non-core items represents an non-US GAAP financial measure since it excludes ON AVERAGE ASSETS ADJUSTED FOR NON-CORE ITEMS the release of the deferr
Slide 42: Non-US GAAP Measures: Return on Tangible Equity
FY 2019 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 The return on average tangible stockholders' equity
Slide 43: Non-US GAAP Measures: Return on Stockholders' Equity
FY 2019 APPENDIX NON-US GAAP MEASURES NASDAQ: PEBO RETURN ON AVERAGE STOCKHOLDERS’ EQUITY ADJUSTED FOR NON-CORE ITEMS The return on average RETURN ON AVERAGEstockholders’ equity adjusted STOCKHOLDERS’ for non-core EQUITY ADJUSTED FOR items NON-CORErepresents ITEMS an non-US GAAP financial measure si
Slide 44: Contact
NASDAQ: PEBO CHUCK SULERZYSKI President and Chief Executive Officer P: 740.374.6163 C: 740.516.7584 Chuck.Sulerzyski@pebo.com JOHN C. ROGERS Executive Vice President Chief Financial Officer and Treasurer P: 740.376.7108 C: 412.952.1553 John.Rogers@pebo.com Peoples Bancorp® is a federally registered