Peoples Bancorp Inc. · NASDAQ:PEBO
Peoples Bancorp — Q4 2016 Earnings Presentation
40 slides from Peoples Bancorp's earnings presentation, Feb 2, 2017
Slide 1: Investor Presentation 4th Quarter 2016
y Peoples ¢), Nasdaq: PEBO Investor Presentation 4 Quarter 2016
Slide 2: 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 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act
Slide 3: Agenda
¢ Profile and Investment Rationale * 2016 Performance * Strategy ¢ Performance Outlook ¢ Appendix
Slide 4: Profile and Investment Rationale
Profile and Investment Rationale BANCORP® /Peop plese)
Slide 5: Corporate Profile
© Corporate Profile * Financial holding company headquartered in Marietta, Ohio, — Provides a broad range of banking, insurance, and investment services * Current snapshot: — Assets: $3.4 billion; Loans: $2.2 billion — Deposits: $2.5 billion — Market capitalization: $586 million — Assets Under Manag
Slide 6: Investment Rationale
Investment Rationale ‘ay * Unique community banking model — Greater revenue diversity for a community bank our size (33% fee-based) — Strong community reputation and active involvement — Local market teams capable of outmaneuvering larger banks — More sophistication and product breadth than smaller
Slide 7: 2016 Performance
2016 Performance (Peoples
Slide 8: 2016 Highlights
9016 Highlights Reported record full year earnings of $31.2 million Achieved operating objectives while completing upgrade of core banking systems Grew loans by 7% with strong performance in both Indirect and Commercial & Industrial Lending Generated positive operating leverage for full year 2016, a
Slide 9: Summary Quarterly Financials
Summary Quarten TT Metrics 12/31/16 9/30/16 OU) 12/31/15 ) Investment securities S$ 859,455 $ 844,248 18% $ 868,830 -11% Gross loans (2,224,936 2,169,208 26% 2,072,440 TAY Allowance for loan losses (18,429) (18,219) 1.2% (16,779) 98% Balance Sheet ‘Net loans 2,206,507 2,150,989 26% 2,055,661 73% Hig
Slide 10: Summary Annual Financials
Summary Annual Fi YE YE 12/31/16 12/31/15 Metrics ) Investment securities S 859,454 $ 868,830 11% Gross loans 2,224,936 2,072,440 148% Allowance for loan losses (48429) 46,779) 9.8% Balance Sheet SAibaaunl 2,206,507 2,055,661 13% STEEP) Total assets 3,432,348 3,258,970 5.3% ‘Non-interest-bearing dep
Slide 11: Operating Expenses
© Operating Expenses Six consecutive quarters of well-controlled expenses (4.496) dedinein core, quarterly expenses from 2Q-15t0 4Q.16 (thousands) Not to scale 20-15 8Q15 4Q-15 19-16 2Q-16 8Q-16 4Q-16 m= Core Non-Interest Expenses * m= Non-Core Non-Intere st Expenses * * Non-GAAP financial meamre, S
Slide 12: Efficiency has improved as a result of expense control and revenue growth
a) Efficiency has improved as a result of expense control and revenue growth 4 69.55% 70.00% 69.0036 68,0036 67.00% 66.0096 64.85% 65.00% (4.7%) YOY e008 | Improvement from 3015 65.0036 2.0036 61.0036 + + + + + + t FY 2014 FY 2015 1Q-16 22-16 3Q-16 40-16 FY 2016 * The Adjusted Efficiency Ratio isa n
Slide 13: Pre-Provision Net Revenue
Pre-Provision Net Revenue Gio 2016 PPNR is up 64% over 2015, and PPNR/Average Assets at 5-Year High $60,000 1.48% 1.6096 1.41% $50,000 1.4096 1.2096 $40,000 i 11,0096 | $30,000 0.8096, $20,000 0.6096, 0.4096 $10,000 0.2096 & 0.0096 mmPPNR* <-PPNR* to Total Average Assets * Non-GAAP financial measure
Slide 14: Total loans were up 7% over December 2015, with originated loans up 21%
a) Total loans were up 7% over December 2015, with origmated loans up 21% 7% growth 21% growth 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 Originated Loans ™ Acquired Loans 7 Peoples O 14 BANCORP.
Slide 15: Asset Quality
Asset Quality Criticized and Classified loan levels remain reasonably stable ‘ay 22.196 (percent) 17.46 B/B12015 6/30/2015. 9/30/2015 19/3/2015 /S1f201G 6/BO/LOLG 9/30/2016 19/81/2016 ete Criticized Loans / Tier 1 Capital+ ALLL * emimClassified Loans / Tier 1 Capital + ALLL * * In accordancewith SEC
Slide 16: CRE Concentration Analysis
CRE Concentration Analysis) * CREexposureis well Peer Bank Subs ~CLD Loans / Risk-Based Capital below supervisory ae criteria established to nal identify institutions se withheightened CRE = *" | i concentration risk al lin III TT Th om In — Exposure levels also POL CETL WI) BE OLDER LG OF compare f
Slide 17: Residential Real Estate
Residential ‘Real Estate 24.196 ‘Data as of December 31, 2016
Slide 18: Insurance business highlights
** Approxinmtely 909% auribuuble to P&C Commercial Lines * Trailing Twelve Months from 12/81/16 CORPS 18
Slide 19: Business Highlights
Business Highlights * Commercial Banking — Average loans and deposits each up 5% from December 2015 — Strong loan pipeline with $67 million im scheduled 1Q-2017 fundings — Non-interest mcome up 17% over 2015, driven by swap fees — $20 million lending “house lint” although legal limit is over $40 mil
Slide 20: Slide 20
Slide 21: Strategic Road Map
Strategic Road (a * GreatPlace to Work Our Way of Life Asset Quality Compliance / Regulatory Operational Risk Information Security Change Management Execution Risk Reputational Risk Commitmentto Superior Shareholder Returns . “Best Community Bankin America” Great Place to Bank + Meaningful Impacton
Slide 22: Strategic Priorities
tratesic Priontie © | * Focused on sustainable revere growth ¢ Disciplined expense management ¢ Expand revenue vs. expense growth gap beyond 2% | * Drive core efficiency ratio toward 60% Positive Operating, Leverage . < Superior * Balance growth with prudent credit practices Asset ¢ Improve diversit
Slide 23: Strategic Targets
Strategic large QE QE —_5-Year Strategic 12/31/16 9/30/16 _Target Range * NPAs to total It +OREO 1.16% 111% 0.70% to 1.00% Improve Asset Quality Mie a Net charge-offs to average loans (1) 0.09% 0.14% 0.30% to 0.50% Loans to total assets 64.82% 64.49% 65.0% to 72.5% Le to de i ts 88.65% 84.23% 87.5%
Slide 24: Online Account Opening and Service Comparison
Online Acsount Opening (Online Loan Applications Yes (Oaline Financial Management No ACH, Wie: Stop Payments Yer Positive Pay Yes Tax Services Yes [Tent Alerts Yen Yer | Yes [Bal Par Specific to Mobile Yes Yer | ver Phone/iPad/Android Apt Yes Yes | Yes /Amazon Kindle App Ne Ye | No rest Banking Yer
Slide 25: PEBO Market Insight
PEBO Market Insight ‘ay * Strongest deposit market share positions in more rural markets where we can affect pricing * Presence near larger cities puts us in position to capture lending opportunities in more urban markets (e.g, Cleveland, Akron, Canton, Cincinnati and Columbus) ' a Total Depositsin
Slide 26: Performance Outlook
Performance Outlook (Peoples
Slide 27: 2017 Outlook
596 to 7% growth in ending balances 3.45% to 3.50% 49% to 6% growth Low single digit growth 62% to 649 Higher than 2016 a7
Slide 28: Other Outlook Considerations
her Outlook Considerations, ( a) ¢ Continue executing on acquisition strategy — Pursuing insurance and ivestment acquisition opportunities to build fee-based revenue — Given our improved stock price and the completion of our system upgrade, we believe there is potential for a bank acquisition im 201
Slide 29: Appendix
Appendix
Slide 30: Quarterly Financial Metrics
Quarterly Financial 4Q 1Q 2Q 3Q 2015 2016-2016 ~——-2016 4Q 2016 Diluted EPS $0.14 $0.44 $0.44 $0438.41 Return on common equity Q) 2.42% 7.59% 7.45% 7.07% 6.72% _ Return on assets 2) 0.32% 0.98% 0.97% 0.93% 0.87% GUM Pre-provision net revenue to assets () ©) 131% 1.54% 148% 1.53% 1.35% PE UES Net int
Slide 31: Annual Financial Metrics
Annual Financial Sit oheotei ey YE 2015 Diluted EPS $0.61 Metrics YE 2016 $1.71 Retum on common equity @) 2.69% 7.20% Beans Retum on assets @) 0.35% 0.94% UGE Pre-provision net revenue to assets (1) ) 0.96% 1.48% Pee UTS Net interest margin (FTE) Q) 3.53% 3.54% Efficiency ratio (i) 75.50% 65.13% Adj
Slide 32: Key Drivers of Shareholder Value
Key Drivers of Sharehi LTMRevenue Growtl NPAstoLoans and OREO Gromh largely attributable toNB&T acquisition LTM Fee Revenue to Dividend Yield Average Assets $1-53 Peers $1-5B Pears include: SRCE, CHCO, CONE, CBU, CTI, FFKT.FHNE, FIs), FOEF.FFBC, THFF,FRME, GABC, HENC. LKFN, SFG. PRK, RECAA, STBA, SY
Slide 33: Non-GAAP Measures
Non-GAAP Measures PRE-PROVISION NET REVENUE Pre-provision net revenue (PPNR) represents a non-GAAP financial measure commonly used to evaluate the operating performance and trends of financial services companies, including Peoples. PPNR represents the earnings capacity that can be either retained in
Slide 34: Non-GAAP Measures
Non-GAAP Measures (Presented onan annvalizedbasis 7 Peoples PRE-PROVISION NET REVENUE Pre-provision net revenue (PPNR) represents a non-GAAP financial measure commonly used to evaluate the operating performance and trends of financial services companies, including Peoples. PPNR represents the earnin
Slide 35: Non-GAAP Measures
Non-GAAP Measures EFFICIENCY RATIO The efficiency ratio is a key financial measure used to monitor performance. The efficiency ratio is calculated as non-interest expense (less intangible amortization) as a percentage of fully tax-equivalent net interest income plus non-interest income. This measure
Slide 36: Non-GAAP Measures
Non-GAAP Measures CORE NON-INTEREST INCOME Corenon-interest income is non-GAAP since it excludes the impact of system upgraderevenne waived. in Thousands) FY2014 _Q12015__ 2201532015 Q42015__FY'2015 ‘Total noninterest income S 40.053 $ 11,508 § 11926 $ 11906 $ 12101 $§ 47.441 Phus: System upgrade re
Slide 37: Non-GAAP Measures
Non-GAAP Measures Core non-interest expenses are non-GAAP since they exclude the impact of acquisition related costs, system upgrade costs, pension settlement charges, severance charges, search firm fees and legal settlement charges. G in Thousands) FY2014 _Q12015___Q22015__Q32015__—Q42018_FY 2015,
Slide 38: Non-GAAP Measures
Non-GAAP Measures ADJUSTED EFFI STIENCY RATIO The adjusted efficiency ratio is a key financial measure used to monitor performance. The adjusted efficiency ratio is calculated as core non-inter est expense (less intangible amortization) as a percentage of fully tax-equivalent net interest income plu
Slide 39: Tangible common equity ratios
Peoples uses tangible common equity ratios to evaluate the adequacy of Peoples’ stockholders’ equity. Such ratios represent non-GAAP financial information since the calculations exclude the impact of intangible assets acquired through acquisitions on both total stockholders’ equity and total assets,
Slide 40: Peoples Bancorp
y Peoples ¢), Nasdaq: PEBO Investor Presentation 4 Quarter 2016