In Investor estor Pr Pres esent entati ation on nd Qu 2 nd - - PowerPoint PPT Presentation

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Nasdaq: PEBO In Investor estor Pr Pres esent entati ation on nd Qu 2 nd Quart rter er 20 2018 18 Sa Safe e Harb rbor or St Statement tement Statements in this presentation which are not historical are forward -looking


slide-1
SLIDE 1

In Investor estor Pr Pres esent entati ation

  • n

2nd

nd Qu

Quart rter er 20 2018 18

Nasdaq: PEBO

slide-2
SLIDE 2

Sa Safe e Harb rbor

  • r St

Statement tement

2

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 Act of 1995. These forward-looking statements may include discussions of the strategic plans and objectives or anticipated future performance and events of Peoples Bancorp Inc. (“Peoples”). The information contained in this presentation should be read in conjunction with Peoples’ Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “2017 Form 10-K”) and Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (the “June 30, 2018 Form 10-Q”), filed with the Securities and Exchange Commission (“SEC”), which is available on the SEC’s website (www.sec.gov) or at Peoples’ website (www.peoplesbancorp.com). Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed in Peoples’ 2017 Form 10-K under the section, “Risk Factors” in Part I, Item 1A, and in Peoples’ June 30, 2018 Form 10-Q under the heading "ITEM 1A. RISK FACTORS" in Part II. As such, actual results could differ materially from those contemplated by forward-looking statements made in this presentation. Management believes that the expectations in these forward-looking statements are based upon reasonable assumptions within the bounds of management's knowledge of Peoples’ business and operations. Peoples disclaims any responsibility to update these forward-looking statements to reflect events or circumstances after the date of this presentation.

slide-3
SLIDE 3

Ov Over erview view

  • Profile

ile an and Inv nvest stmen ment t Rat atio iona nale le

  • Acqu

quis isition ition

  • St

Strat ategy gy

  • Q2 2018

18 Performanc rmance

  • Appendix

pendix

3

slide-4
SLIDE 4

Pr Prof

  • file

le and nd Inv nvest estment ment Rational

  • nale
slide-5
SLIDE 5

5

Cor

  • rporate

porate Pr Prof

  • file

ile

  • Finan

ancia ial ho holdi ding ng com

  • mpany

pany he headqu dquar artere ered in Mariet etta, a, Ohi hio.

  • .

– Provides a broad range of banking, insurance, and investment services

  • Cur

urren ent snapshot: pshot:

– Assets: $4.0 billion; Loans: $2.7 billion – Deposits: $2.9 billion – Market capitalization: $766 million – Assets Under Admin/Mgmt: $2.3 billion

  • Cur

urren ent foo

  • otpr

prin int

– Demographics:

  • Median income: $45,000

– Key industries:

  • Health care
  • Manufacturing (plastics/petrochemicals)
  • Oil/gas/coal activities (shale opportunities)
  • Education and social services
  • Tourism

– Unemployment:

  • OH: 5.2%
  • WV: 4.7%
  • KY:

5.3%

  • US: 4.3%

Market data as of July 23, 2018 Unemployment data as of May 2018 Financial data as of June 30, 2018

5

OH: 4.3% WV: 5.4% KY: 4.1% US: 4.0%

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SLIDE 6

Inv nvestmen estment t Ra Rationale

  • nale
  • Unique communi

nity ty banking ng model

– Greater revenue diversity (30% fee-based) than the average $1 - 10 billion bank – Strong community reputation and active involvement – Local market teams capable of out-maneuvering larger banks – More sophistication and product breadth than smaller banks (insurance, retirement plans, swaps, etc.)

  • Stron
  • ng,

g, diverse fee-base ased d busines nesse ses

– 20th largest bank-owned insurance agency, with expertise in commercial, personal, life & health – Wealth management – $2.3 billion in assets under administration and management, including brokerage, trust and retirement planning

  • Capacity

ity to grow our franchi hise se

– Strong capital and fundamentals to support M&A strategy – Proven integration capabilities and scalable infrastructure

  • Committe

tted to discipl iplined ned executio tion

– Strong, integrated enterprise risk management process – Dedicated to delivering positive operating leverage – Focused on business line performance and contribution, operating efficiency, and credit quality

  • Attract

activ ive e di dividen dend d op

  • ppo

portunity

– Targeting 40% to 50% payout ratio – Dividend paid increased from $0.15 per share for Q1 2016 to $0.28 for Q1 and Q2 2018

6

slide-7
SLIDE 7

Acquis uisiti ition

  • n
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SLIDE 8

ASB SB Fi Finan nancial cial Cor

  • rp

p Acquisit isition ion

ASB Financial Corp merged into Peoples

  • n April 13, 2018

Six full-service bank branches in the Portsmouth and Cincinnati, Ohio regions, and two loan production offices in the Cincinnati, Ohio region

Financial Summary as of 4/13/18

  • Total assets = $275 million
  • Total loans = $240 million
  • Total deposits = $199 million

8

The acquisition included a mortgage origination group

  • perating out of the Cincinnati,

Ohio area, which specializes in

  • riginating and selling mortgage

loans to the secondary market.

Total consideration paid was $41.5 million

In total, the acquisition contributed $0.03 to earnings per diluted common share for the second quarter of 2018.

slide-9
SLIDE 9

Stra rateg tegy

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SLIDE 10

St Stra rategic tegic Ro Road d Ma Map

1.

  • 1. Create

te a Winni ning ng Culture: ture: Embrace change / be active learners / help each other win / communicate effectively 2.

  • 2. Human

n Capita ital l Developm lopment: nt: Define the behaviors and goals / provide the training / measure / coach / reward 3.

  • 3. Pricing

ing Disci cipl pline ine: Focus on the risk adjusted margin / fair prices, fair returns 4.

  • 4. Opera

rating ting Effic icien ienci cies: Quest for continuous improvement / revenue growth faster than expense growth 5.

  • 5. Merger Integra

gration tion: Manage the risk / retain and grow the revenue / lower the cost / delight the community

How w we do it:

“Best Community Bank in America”

Profi fitab table le Reve venu nue e Growt wth Respons

  • nsib

ible le Risk Manag agem ement ent

  • Under

erstan tand Customer er Needs

  • Sales

es & Service vice Proce cess

  • Define

e the Ideal al Client t Profi file le for New Relation ationships ips

  • Best Client

nt Retentio ention

  • Deepen

en Relat lation ionships ips / Cross Sell

  • Seek

k Client t Referrals errals

  • M &

& A Extraor aordin inary ary Client nt Experience ience First st-Cla lass Workp kplace lace

  • Broad
  • ad Deliver

ivery Channels els

  • Delig

ight the Customer er

  • Knowled

edgeable, eable, Caring ng Associates ciates Consisten stently tly Delive iverin ing Competent tent Advice ice / Solution tions

  • Consistent

tent Exper erience ience at Every Touch ch Point

  • DWYSYW

YWD

  • Relati

ation

  • nship

hip Review views s / V VIP Calls; s; Value e Added ed

  • Right

t People le / R Right Job

  • Appetite

tite for Winnin ing

  • Culture

e of Lear arnin ing

  • Coachin

ing / D Develop elopment ent

  • No Whiners

ers / No Excus uses es

  • Accou
  • untab

tabil ility ity / Performan formance ce Metrics ics

  • Reward

ard / Recog

  • gni

niti tion

  • n
  • Our Way of Life
  • Asset

t Quality ity

  • Complian

iance ce / Regulatory latory

  • Oper

eration ational al Risk

  • Infor
  • rmation

ation Secur urity ty

  • Change

e Management ement

  • Execu

cution tion Risk

  • Reputa

utatio tiona nal l Risk

10

  • Commitment to Superior Shareholder Returns
  • Great Place to Work
  • Great Place to Bank
  • Meaningful Impact on Our Communities
slide-11
SLIDE 11

11

St Stra rategic tegic Pr Prioriti

  • rities

es

  • Focused on sustainable revenue growth
  • Disciplined expense management
  • Expand revenue vs expense growth gap beyond 2%
  • Drive core efficiency ratio to 60%

Pos

  • sitive

itive Ope perating rating Leverage verage

  • Preserve key metrics superior to most of our peers
  • Balance growth with prudent credit practices
  • Improve diversity within the loan portfolio

Supe peri rior

  • r

Asset set Quality ality

  • Achieve meaningful loan growth each year
  • Maintain emphasis on core deposit growth
  • Adjust earning asset mix by shifting investments to loans
  • Prudent use of capital (dividends, share repurchases &

acquisitions)

High gh Quality ality Balanc lance Shee eet

See page 18 See page 19 See page 20 See page 21 See page 22 See page 24 See page 26 See page 27 See page 28 See page 29 See page 30

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SLIDE 12

12

St Stra rategic tegic Targ rget ets

* Current 5 Year Strategy gy Plannin ing g Period iod = 2017 17-20 2021 NPAs as a percent of total loans and OREO (1) 0.88% 0.67% 0.70% to 1.00%  Net charge-offs as a percent of average total loans (2) 0.11% 0.22% 0.30% to 0.50%  Loans to total assets 65.09% 67.63% 65.0% to 72.5%  Loans to deposits 85.70% 91.09% 87.5% to 92.5%  DDAs to deposits 40.18% 39.20% 40.0% to 45.0% Borrowings to total funding 11.90% 13.84% 10.0% to 15.0%  Total revenue growth versus prior year period 5.76% 10.87% 4% to 7%  Fee-based income to total revenue 32.85% 31.59% 35% to 40% Equity to assets 12.80% 12.57% 12% to 14%  Tangible equity to tangible assets (3) 9.07% 8.81% 8% to 9%  Net interest margin (2)(4) 3.58% 3.70% 3.50% to 3.65%  Efficiency ratio (3)(6) 63.01% 61.73% Below 60% Return on average stockholders' equity (2)(6) 8.45% 10.55% 11.5% to 12.5% Return on average assets (2)(6) 1.08% 1.33% 1.40% to 1.50% Pre-provision net revenue / total avg assets (2)(3)(6) 1.63% 1.78% Over 1.80% Dividend payout (5) 39.19% 52.15% 40% to 50% 

(1) Nonperforming loans include loans 90+ days past due and accruing, renegotiated loans and nonaccrual loans. Nonperforming assets include nonperforming loans and OREO. (2) Annualized (3) Non-GAAP financial measure. See Appendix (4) Information presented on a fully tax-equivalent basis. (5) Dividend data reflects amounts declared w ith respect to earnings for the period indicated. (6) Non-GAAP financial measure. Adjusted to exclude acquisition-related costs. See appendix.

Status as of 6/30/18 Execute on Strategies YTD 6/30/17 Improve Asset Quality 5-Year Strategic Target Range * Metrics Operating Leverage Adjust Balance Sheet Mix High Quality, Diversified Revenue Stream Strong Capital Position YTD 6/30/18

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SLIDE 13

13

Fi Financial nancial Ex Expect ectations ations – Q3 Q3 an and d Q4 Q4 201 2018

  • Annua

ualized zed org rganic anic loan gro rowth th of 5% to 7%

  • Qu

Quart rter erly cre redi dit cost sts s slightl tly y higher er than those se re recogn

  • gnized

zed in t the secon cond d qua uarte rter r of 20 2018 18 due ue to ant ntic icipat ipated ed lo loan n gro rowt wth

  • Net intere

rest st ma marg rgin n in t the low 3.70s 0s

  • Qu

Quart rter erly fee-ba based sed re revenu nue e betwee ween n $13.5 5 and $14.5 .5 mi million

  • Non-intere

nterest st expenses enses per r qua uart rter er of appro roxi ximatel mately $30 mi million

  • Qu

Quart rter erly effici cienc ency ra ratio betwee ween n 61% and 63%

  • A 1

19% effec ecti tive ve tax ra rate e for t r the last half of 2018

  • Rema

maining ng acqu quisi siti tion n costs ts re related ted to ASB of appro roxi ximatel mately $500,000 0,000

slide-14
SLIDE 14

Ou Our r Capa pabil biliti ities es

Informa

  • rmation

ion accurat ate e as of July ly 20, , 2018 18

14

Online Channel Bill Pay Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Online Account Opening Yes Yes Yes Yes Yes Yes Yes No No Yes Yes Online Loan Applications Yes Yes Yes Yes Yes Yes Yes No No No Yes Online Financial Management No Yes Yes Yes No Yes No No No No No ACH, Wires Stop Payments Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Positive Pay Yes Yes Yes Yes Yes Yes Yes No No Yes Yes Tax Services Yes Yes Yes Yes Yes Yes No No No No Yes Text Alerts Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Bill Pay-Specific to Mobile Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes iPhone/iPad/Android Apps Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Amazon Kindle App Yes Yes No Yes No Yes Yes Yes Yes No Yes Text Banking Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Mobile Deposit Capabilities Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Apple Pay Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Samsung Pay Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Facebook Yes Yes Yes Yes Yes Yes Yes No Yes Yes No Twitter Yes Yes Yes Yes Yes Yes Yes No Yes Yes No YouTube Yes Yes Yes Yes Yes Yes Yes No No Yes Yes LinkedIn Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Prepaid Debit Card Yes Yes No Yes No Yes No Yes No No No Prepaid Gift Card No No Yes Yes No Yes Yes Yes Yes No No Employer-Loaded PayCards Yes Yes Yes Yes No Yes No No No No No ***National Banks*** PEOPLES ***Community Banks*** Mobile Channel Social Media Channel Chase Wells Fargo Bank of America PNC Other Channels Huntington City National Community Trust WesBanco Park National United Bank

Indicates People les has advantage over r Communit ity Bank group

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SLIDE 15

Pe Peop

  • ples

es Ma Mark rket et Ins nsight ght

15

  • Stronges
  • ngest

t de depo posit it market rket sha hare e po positions ns in mor

  • re

e rur ural l markets rkets wh where re we we can affect fect pr pricing ng

  • Presen

ence e near r larger ger cities pu puts us us in po position n to ca

  • capt

ptur ure e lending ding

  • p
  • ppo

portuniti nities es in mor

  • re

e ur urban an mark rkets ets (e.g.

  • g. Clevel

veland and, , Akr kron,

  • n, Canto

nton, n, Cincin inna nati ti and d Col

  • lum

umbus)

MSA Name Total Deposits in Market ($000)* MSA Rank MSA Share Marietta, OH $679,417 1 42.8% Wilmington, OH $224,112 1 38.4% Cambridge, OH $217,769 1 34.8% Coshocton, OH $110,923 2 25.0% Point Pleasant, WV-OH $106,861 3 11.3% Athens, OH $82,173 3 12.0% Jackson, OH $64,567 3 15.1% Parkersburg-Vienna, WV $99,356 7 6.0% Zanesville, OH $23,348 8 1.5% Mount Vernon, OH $12,707 9 1.3% Cincinnati, OH-KY-IN $361,298 16 0.3% Akron, OH $91,044 16 0.7% Huntington-Ashland, WV-KY-OH $122,244 17 2.3% Cleveland-Elyria, OH $98,069 23 0.2% Dayton, OH $9,508 24 0.1% Columbus, OH $84,162 31 0.1% Total MSA $2,387,558 Non-MSA $306,439 Total PEBO $2,693,997

*Source: S&P Global Market Intelligence @ 6/30/17 From Annual Summary of Deposits Report Note: Green areas represent more urban population centers

slide-16
SLIDE 16

Q2 2018 18 Pe Perf rformanc

  • rmance
slide-17
SLIDE 17

Se Second

  • nd Quart

rter er 2018 8 High ghlig lights hts

  • Rep

eporte

  • rted second
  • nd quarte

arter r net incom

  • me of
  • f $7

$7.9 m 9 mil illi lion

  • n

– $12.8 million excluding acquisition-related costs*

  • Achi

hieve eved or

  • rganic

nic loa

  • an

n growth

  • wth of
  • f 9%

9%, annua ualized, lized, com

  • mpared

ared to

  • December

cember 31 31, 20 2017 17, with th stron rong g perf erform

  • rmance

nce in com

  • mmerci

ercial al lend nding ing

  • Achi

hieve eved or

  • rganic

nic depo eposit sit grow

  • wth

th of

  • f 4%

4%, annuali ualized, zed, com

  • mpared

ared to

  • December

cember 31 31, 20 2017 17

  • Core
  • re effici

icienc ncy y ratio io, , adjusted justed to

  • exclud

clude acquisit uisition ion-rel elate ated d exp xpen enses es, , was 62 62% for

  • r the

e quarter rter* *

  • Imp

mpro roved ved credit edit quali lity, ty, with th cos

  • sts

ts mainl inly y driven iven by loa

  • an grow
  • wth

th

– Nonperforming loans declined $1.5 million, or 7%, compared to June 30, 2017 – Classified loans, those categorized as substandard or doubtful, as a percent of total loans decreased to 2.07%, compared to 2.31% at June 30, 2017 – Annualized net charge-offs as a percent of average gross loans was 0.11% for Q2

  • Fee

ee-base based incom

  • me

e at 30 30% of

  • f tot
  • tal

al revenu venue

17

*Non-GAAP financial measure. See appendix.

slide-18
SLIDE 18

Tot

  • tal

l Re Reve venu nue e Gr Grow

  • wth

$15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18*

$26,308 $26,123 $26,667 $26,945 $28,090 $29,220 $29,122 $29,359 $32,808 $12,367 $13,538 $12,111 $13,334 $13,590 $12,610 $13,119 $14,894 $13,807

Net Interest Income Fee-Based Income

18 (thousands) Not to scale

21% increase ease in tota tal l revenue enue from m Q2 Q2-16 16 to Q2 Q2-18 18

* The second quarter of 2018 benefited from the acquisition of ASB. Loans acquired, coupled with increasing loan yields, contributed to the increase in net interest income, and the acquired mortgage origination operation contributed to the increase in fee-based income.

slide-19
SLIDE 19

Cor

  • re

e Non

  • n-Interest

nterest Expe pens nse* e*

$17,000 $19,000 $21,000 $23,000 $25,000 $27,000 $29,000 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18** Quarterly Average

$26,419 $26,536 $27,331 $26,680 $26,558 $26,823 $28,072 $29,026 $27,181

Core Non-Interest Expenses * Ongoing Expenses Resulting from ASB Acqusition 19

* Non-GAAP financial measure. See Appendix.

(thousands) Not to scale

Eight ht consec secutive utive quarters rters of control trolled led expe penses nses

** Q2 2018 included ongoing expenses resulting from the ASB acquisition, such as salaries and occupancy expenses..

$889

slide-20
SLIDE 20

Adj djust sted ed Op Oper erating ting Lev ever erage age

20

Adjust sted ed operatin rating g leverage erage is the differe ferenc nce e betwe tween en total tal revenue enue growth

  • wth and non-

intere erest st expe pense nse growt wth, h, on a percentage centage basis, s, excludi luding ng acquis isiti ition

  • n-related

related expe penses. nses.

0% 2% 4% 6% FY-16 FY-17 YTD-18

5% 5% 4%

Versus s the prior

  • r year, adjust

sted ed operati ating ng leverag age e was posit itive ve for fiscal al years 2016 and 2017, and for the year-to to-dat date e period

  • d through

ugh June 30, 2018. Versus s the same e quarter in th the prior r year, adjust sted ed operati ating ng leverag age e has been posit itive ve for six of the past eight quarters. .

  • 5%

0% 5% 10% 15% Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18

3% 2% 0% 7% 7% 8% 7% 0%

Adjusted operating leverage is a non-GAAP financial measure since it excludes the impact of acquisition-related expenses.

slide-21
SLIDE 21

Cor

  • re

e Efficien ciency cy Ra Ratio*

  • *

60.00% 61.00% 62.00% 63.00% 64.00% 65.00% 66.00% Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 63.28% 64.83% 64.89% 61.19% 60.74% 60.71% 61.42% 62.03%

21

Ef Efficienc iency y ratio io has improved roved as a result ult of expe pense nse control trol and revenue enue growth

  • wth

* The Core Efficiency Ratio is a non-GAAP financial measure (see Appendix). It excludes acquisition costs, system upgrade costs, pension settlement

charges, severance charges and certain other non-core expenses. 9% Impro rovement nt from FY FY 2015 2015 to YTD 2018 18

58.00% 59.00% 60.00% 61.00% 62.00% 63.00% 64.00% 65.00% 66.00% 67.00% 68.00% FY-15 FY-16 FY-17 YTD-18 67.49% 64.30% 61.85% 61.73%

2% Impro rovement nt from

  • m Q3 2016 to

Q2 2018 18

slide-22
SLIDE 22

Dep eposit

  • sit Gr

Grow

  • wth

Depo posit sits s pe per ful ull servic vice e branch anch ha has trended nded up upwa ward rd since e 2015

22

60 65 70 75 $30,000,000 $32,000,000 $34,000,000 $36,000,000 $38,000,000 $40,000,000 $42,000,000 $44,000,000 1/1/15 1/1/16 1/1/17 1/1/18

Total al Depo posi sits ts Per Full Servi vice e Branc nch

Deposits/Full Service Branch Full-Service Bank Branches

12/31/15 12/31/16 12/31/17 6/30/18

slide-23
SLIDE 23

Quarter

1.52% 1.72% 1.71% 1.65% 1.81% 1.74% 1.65% 1.78% 1.30% 1.40% 1.50% 1.60% 1.70% 1.80% 1.90% 2.00% 2.10% 2.20% $48,000 $50,000 $52,000 $54,000 $56,000 $58,000 $60,000 $62,000 $64,000 $66,000 $68,000

Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 FY-17 YTD- 18

Adjusted PPNR PPNR to Total Average Assets

Year

Impro provemen vement t in Ke n Key y Me Metri rics cs

1.12% 1.22% 1.00% 1.32% 1.33% 1.10% 1.32%

0.60% 0.80% 1.00% 1.20% 1.40% Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 FY-17 YTD-18

Adjusted Return on Average Assets (1) 23

Return on average assets, return on average tangible stockholders’ equity, PPNR and PPNR to total average assets are presented on an annualized basis. Return on average tangible stockholders’ equity, tangible book value per share, PPNR and PPNR to total average assets are non-GAAP financial measures (see Appendix). 13.71% 14.58% 12.09% 16.14% 16.52% 13.33% 16.41%

8.00% 10.00% 12.00% 14.00% 16.00% 18.00% Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 FY-17 YTD-18

Adjusted Return on Average Tangible Stockholders’ Equity (1)(2)

$16.78 $17.15 $17.17 $17.04 $17.17

$16.70 $16.80 $16.90 $17.00 $17.10 $17.20 $17.30 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18

Tangible Book Value Per Share

Quarter Year Quarter

Peoples’ focus on steadily growing loans and d deposi sits, ts, managi naging ng expense enses, s, and d incre reasing sing

  • p
  • per

erat ating ng lever verage, e, has resul sulted ted in improvement ment in key financial ancial metr etric ics. s.

Year

(2) The tax effect of amortization of other intangible assets, which is part of this calculation, uses a 21% federal statutory corporate income tax rate for the 2018 periods, and a 35% federal statutory corporate income tax rate for all previous periods shown.

(1) (1)

(1) Q2 2018 and YTD 2018 information is adjusted to exclude acquisition- related costs. See Appendix.

slide-24
SLIDE 24

Ass sset et Qualit lity y – NPA PAs/ s/Assets ssets

24

0.76% 0.51% 0.47% 0.53% 0.62% 0.68% 0.58% 0.54% 0.50% 0.49% 0.45% 0.46% *

0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 $1-10 billion Midwest Banks Peoples Bank

Nonperf erform rming ng asset ets s (NPA PAs) s) as a percentage centage of total tal asset ets have consi siste stently ntly been n superi erior

  • r to Midwest

west banks s with h $1 - $10 billio ion n in total al asset ets. s.

NPAs / Assets

Source: S&P Global Market Intelligence. Non-performing assets are defined as nonaccrual loans plus troubled debt restructurings plus other-real estate owned.

  • Peer data as of June 30, 2018 is not yet available.
slide-25
SLIDE 25

Ass sset et Qualit lity

25

Criti tici cized ed and Classifi sified ed loan level els s remai ain n reasona

  • nable

ble

* In accordance with Securities and Exchange Commission reporting methodologies. Criticized loans includes loans categorized as special mention, substandard or doubtful. Classified loans includes loans categorized as substandard or doubtful.

$15,582 $19,346 $21,325 $18,293 $16,921 $16,219 $15,692 $16,202 $16,069 33.3% 30.4% 29.9% 30.1% 32.3% 27.4% 25.6% 32.2% 31.3% 16.2% 16.5% 17.4% 16.8% 15.4% 11.7% 13.1% 12.4% 14.4% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000

Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18

Nonaccrual Loans Criticized Loans / Tier 1 Capital + ALLL * Classified Loans / Tier 1 Capital + ALLL *

slide-26
SLIDE 26

26

Loa

  • an

n Com

  • mposition

position

Cons nstruc tructio tion 4.5%

CRE 31.9% C & I 19.1% Residentia dential l Real l Estate te 22.7% HELOCs Cs 5.1% Consum umer er, , Indirec rect 13.9% Consum umer er, , direc ect 2.8%

Loan Portfoli rtfolio

  • (Exclu

cluding ding Deposit

  • sit ODs)

s)

Retail ail 6.7% Energy rgy 1.1% Other 92.2% 0.0%

Total al Commerci mercial al Portf tfol

  • lio*

io*

Data as of June 30, 2018 18 *Incl clud udes CRE, , C&I, I, and Cons nstruc tructio tion

slide-27
SLIDE 27

Tot

  • tal

l Loa

  • an

n Gr Grow

  • wth

th

$2,000 $2,100 $2,200 $2,300 $2,400 $2,500 $2,600 $2,700 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 $2,294 $2,327 $2,357 $2,402 $2,457 $229

Total Loans Except ASB ASB Acquired Loans

27 ($millions) Not to scale

Orga gani nic c loan growt wth h was 7% over r June 30, , 2017 In addition, tion, loan balances ces acquir ired ed from m ASB tota taled led $229 29 million

  • n at June 30, 2018

Total Q2-18 = $2,686

slide-28
SLIDE 28

$500 $1,000 $1,500 $2,000 $2,500 $3,000 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18* Non-interest bearing DDAs Interest-bearing DDAs Retail certificates of deposit Money market deposit accounts Savings accounts Governmental deposit accounts ASB Acquired Deposits

Dep eposit

  • sit Gro

rowt wth

28 ($millions)

Orga gani nic c growt

  • wth in depos
  • sits

its was 4% over r June 30, 2017 For r the e quarter rter ended ed June 30, 2018, 8, cost t of deposits

  • sits was 0.42%

42%

40% 42% 42% 41%

$2,571 $2,659 $2,566 $2,572

}

DDAs As

$2,738

40%

*The e Q2 Q2-18 total al deposit its amount nt below low inclu ludes s $106 milli lion acquired uired from ASB, B, as of June e 30, , 2018, , not t inclu ludin ing g broker ered ed deposit its The above e chart rt inclu ludes es all deposit it balances lances except ept bro roker ered ed deposit its.

slide-29
SLIDE 29

Earn rning ing Ass sset et Mi Mix

29 Total Earning Assets

Since e 2013, 3, the percentage centage of earnin ing g asset ets s compose

  • sed

d of invest stment ments s has decrease eased, d, while le the e percentage centage compose

  • sed

d of loans has increase eased. d.

36% 31% 30% 28% 27% 27% 25% 64% 69% 70% 72% 73% 73% 75% 20% 30% 40% 50% 60% 70% 80% $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000

FY-13 FY-14 FY-15 FY-16 FY-17 Q1-18 Q2-18

Investments Loans Investments % Loans % Percentage of Total Earning Assets

slide-30
SLIDE 30

Pr Prude dent nt Use se of

  • f Capi

pital tal

  • Dividends

nds

– Consistently evaluate dividend and adjust accordingly. Dividend yield for the second quarter of 2018 was 2.96%.

  • Acquisi

isiti tions ns

– One insurance acquisition and three bank acquisitions were completed in 2014 – One insurance acquisition and one bank acquisition were completed in 2015 – One investment acquisition was completed in 2016 – Two insurance acquisitions were completed in 2017 – A bank acquisition was completed in April 2018

  • Capital

tal priori rities ties

– Organic growth, dividends, and acquisition activities

30

$0.15 $0.16 $0.16 $0.17 $0.20 $0.20 $0.22 $0.22 $0.26 $0.28 $0.28 $0.10 $0.12 $0.14 $0.16 $0.18 $0.20 $0.22 $0.24 $0.26 $0.28 $0.30 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18

Cash Dividends Declared Per Share

slide-31
SLIDE 31

CRE RE Con

  • ncentration

entration Ana nalysi ysis

31

  • CRE ex

exposu

  • sure

e is wel ell bel elow

  • w supervisory

pervisory criteria eria es establ blished ished to iden entify fy institutions tions with hei eightened ened CRE concentra entration tion risk

– Exposure levels also compare favorably to peer institution concentration levels – Concentration levels have improved relative to peers on a linked quarter basis

Source: S&P Global Market Intelligence, Commercial Bank Call Report Data as

  • f 3/31/18. Per April 2013 OCC-FRB Guidance. CLD Loans defined as total

loans for construction, land, and land development. CRE Loans defined as total non-owner-occupied CRE loans (including CLD)

  • PEBO data is as of 6/30/18, but all peer data is as of 3/31/18,

the most recent available.

225% 167% 0% 50% 100% 150% 200% 250% 300% 350% 400%

Peer er Bank nk Subs – Commercial al Real al Estate ate Loans ans / Risk-Bas Based Capital al

slide-32
SLIDE 32

CRE RE Con

  • ncentration

entration Ana nalysi ysis

32

Source: S&P Global Market Intelligence, Commercial Bank Call Report Data as

  • f 3/31/18. Per April 2013 OCC-FRB Guidance. CLD Loans defined as total

loans for construction, land, and land development. CRE Loans defined as total non-owner-occupied CRE loans (including CLD)

  • PEBO data is as of 6/30/18, but all peer data is as of 3/31/18,

the most recent available.

47% 38% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110%

Peer er Bank nk Subs --

  • - Cons

nstruc tructi tion, , Land, nd, and d Land nd Develo elopme pment nt Loans ans / Risk-Bas ased ed Capit ital al

slide-33
SLIDE 33

Busi siness ness Highl ghlig ights ts

  • Com
  • mmerc

ercial ial Bank nkin ing

– Average loans up 11% from Q2 2017 – $25 million lending “house limit” although legal limit is over $50 million

  • Re

Retai ail l Banki nking ng

– Indirect loans grew by $67.5 million, or 22%, since June 30, 2017 – Consumer DDA accounts at 43% of total consumer deposits

  • Insuran

urance

– Commercial Property & Casualty lines comprising 56.5% of revenue – Expanding Life & Health segment comprising 13.7% of revenue

  • Tru

rust st and d Investments vestments

– $2.3 billion in assets under administration and management, up 5% from June 2017 – Q2 2018 fee-based income was up 9% over Q2 2017 – Retirement planning, 401(k) administration, brokerage and trust services

33

slide-34
SLIDE 34

Ins nsuran ance ce & I Inv nvest stment ment Inc ncome me Compo mposition sition

34

Life & Health lth 13.7% P&C C Comm mmercial cial Lines 56.5% Perfo forman ance based ** 10.2% P&C C Perso sona nal l Lines 15.1% Other 4.4%

Brokerage kerage 31.1% Fiducia iary ry 53.4% Employ

  • yee

ee Benefi fits ts 15.5%

Insur uranc ance e Revenue enue * Investm estment ent Revenue enue *

* Trail iling ing Twelv lve Months ths from 6/30 30/18 /18 ** ** Approxim

ximately ly 90% attrib ibutable le to P&C Commerc rcia ial l Lines

slide-35
SLIDE 35

App ppen endix dix

slide-36
SLIDE 36

Non

  • n-GAA

GAAP P Me Measu sures res

36

PRE-PROVISION NET REVENUE

Pre-provision net revenue (PPNR) has become a key financial measure used by state and federal bank regulatory agencies when assessing the capital adequacy of financial institutions. Pre-provision net revenue is defined as net interest income plus total fee-based income minus total non-interest expense. This measure is non-GAAP since it excludes provision for loan losses and all gains and/or losses included in earnings, which are excluded from total fee-based income. PPNR represents the earnings capacity that can be either retained in order to build capital or used to absorb unexpected losses and preserve existing capital.

(a) Presented on an annualized basis

($ in Thousands) Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 FY-17 YTD-18 Income before income taxes 14,180 $ 16,022 $ 14,340 $ 14,124 $ 8,904 $ 57,203 $ 23,028 $ Add: Provision for loan losses 947 1,086 1,115 1,983 1,188 3,772 3,171 Add: Loss on debt extinguishment – – – – 13 – 13 Add: Loss on OREO 24 2 105 5 – 129 – Add: Loss on securities – – – – 147 – 146 Add: Loss on other assets 11 38 39 – 406 105 327 Less: Gain on OREO – 15 – – 14 13 9 Less: Gains on securities 19 1,861 764 1 – 2,983 – Less: Gains on other assets 143 – – 79 – 158 – Pre-provision net revenue 15,000 $ 15,272 $ 14,835 $ 16,032 $ 10,644 $ 58,055 $ 26,676 $ Average assets (in millions) 3,490 $ 3,541 $ 3,562 $ 3,597 $ 3,898 $ 3,510 $ 3,748 $ Pre-provision net revenue to average assets (a) 1.72% 1.71% 1.65% 1.81% 1.10% 1.65% 1.44%

slide-37
SLIDE 37

Non

  • n-GAA

GAAP P Me Measu sures res

37

ADJUSTED PRE-PROVISION NET REVENUE

Pre-provision net revenue (PPNR) has become a key financial measure used by state and federal bank regulatory agencies when assessing the capital adequacy of financial institutions. Adjusted pre-provision net revenue is defined as net interest income, excluding acquisition-related costs, plus total fee-based income minus total non-interest expense. This measure is non-GAAP since it excludes provision for loan losses and all gains and/or losses included in earnings, which are excluded from total fee-based income. PPNR represents the earnings capacity that can be either retained in order to build capital or used to absorb unexpected losses and preserve existing capital.

(a) Presented on an annualized basis

($ in Thousands) Q2-18 YTD-18 Income before income taxes 8,904 $ 23,028 $ Add: Acquisition-related costs 6,261 6,410 Add: Provision for loan losses 1,188 3,171 Add: Loss on debt extinguishment 13 13 Add: Loss on securities 147 146 Add: Loss on other assets 406 327 Less: Gain on OREO 14 9 Pre-provision net revenue 16,905 $ 33,086 $ Average assets (in millions) 3,898 $ 3,748 $ Pre-provision net revenue to average assets (a) 1.74% 1.78%

slide-38
SLIDE 38

Non

  • n-GAA

GAAP P Me Measu sures res

38

CORE FEE-BASED INCOME

Core fee-based income is a financial measure used to evaluate Peoples’ recurring fee-based revenue stream. This measure is non-GAAP since it excludes the impact of system upgrade revenue waived.

($ in Thousands)

Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Total fee-based income 13,538 $ 12,111 $ 13,334 $ 13,590 $ 12,610 $ 13,119 $ 14,894 $ 13,807 $ Plus: System upgrade revenue waived

  • 85
  • Total non-core, fee-based income
  • $

85 $

  • $
  • $
  • $
  • $
  • $
  • $

Core fee-based income 13,538 $ 12,196 $ 13,334 $ 13,590 $ 12,610 $ 13,119 $ 14,894 $ 13,807 $

($ in Thousands)

FY-15 FY-16 FY-17 YTD-18 Total fee-based income 47,441 $ 51,070 $ 52,653 $ 28,701 $ Plus: System upgrade revenue waived

  • 85
  • Total non-core, fee-based income
  • $

85 $

  • $
  • $

Core fee-based income 47,441 $ 51,155 $ 52,653 $ 28,701 $

slide-39
SLIDE 39

Non

  • n-GAA

GAAP P Me Measu sures res

39

CORE NON-INTEREST EXPENSE

Core non-interest expense is a financial measure used to evaluate Peoples’ recurring expense stream. This measure is non-GAAP since it excludes the impact of system upgrade costs, acquisition-related costs, pension settlement charges, severance charges, search firm fees and legal settlement charges.

($ in Thousands)

Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Total non-interest expense 26,842 $ 27,282 $ 27,331 $ 26,680 $ 26,558 $ 27,406 $ 28,221 $ 35,971 $ Less: system upgrade costs 423 746

  • Less: acquisition-related expenses
  • 341

149 6,056 Less: pension settlement charges

  • 242
  • Total non-core expenses

423 $ 746 $

  • $
  • $
  • $

583 $ 149 $ 6,056 $ Core non-interest expenses 26,419 $ 26,536 $ 27,331 $ 26,680 $ 26,558 $ 26,823 $ 28,072 $ 29,915 $

($ in Thousands)

FY-15 FY-16 FY-17 YTD-18 Total non-interest expense 115,081 $ 106,911 $ 107,975 $ 64,192 $ Less: acquisition-related expenses 10,722

  • 341

6,205 Less: system upgrade costs

  • 1,259
  • Less: pension settlement charges

459

  • 242
  • Less: other non-core charges

592

  • Total non-core expenses

11,773 $ 1,259 $ 583 $ 6,205 $ Core non-interest expenses 103,308 $ 105,652 $ 107,392 $ 57,987 $

slide-40
SLIDE 40

Non

  • n-GAA

GAAP P Me Measu sures res

40

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 interest income plus total fee-based income. This measure is non-GAAP since it excludes amortization of other intangible assets and all gains and/or losses included in earnings (which are excluded from total fee-based income), and uses fully tax-equivalent net interest income.

($ in Thousands)

Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Total non-interest expense 26,842 $ 27,282 $ 27,331 $ 26,680 $ 26,558 $ 27,406 $ 28,221 $ 35,971 $ Less: amortization of other intangible assets 1,008 1,007 863 871 869 913 754 861 Efficiency ratio numerator 25,834 $ 26,275 $ 26,468 $ 25,809 $ 25,689 $ 26,493 $ 27,467 $ 35,110 $ Net interest income, fully tax-equivalent 26,620 $ 27,184 $ 27,458 $ 28,586 $ 29,680 $ 29,562 $ 29,586 $ 33,031 $ Fee-based income 13,538 12,111 13,334 13,590 12,610 13,119 14,894 13,807 Efficiency ratio denominator 40,158 $ 39,295 $ 40,792 $ 42,176 $ 42,290 $ 42,681 $ 44,480 $ 46,838 $ Efficiency ratio 64.33% 66.87% 64.89% 61.19% 60.74% 62.07% 61.75% 74.96%

($ in Thousands)

FY-15 FY-16 FY-17 YTD-18 Total non-interest expense 115,081 $ 106,911 $ 107,975 $ 64,192 $ Less: amortization of other intangible assets 4,077 4,030 3,516 1,615 Efficiency ratio numerator 111,004 $ 102,881 $ 104,459 $ 62,577 $ Net interest income, fully tax-equivalent 99,588 $ 106,892 $ 115,290 $ 62,617 $ Fee-based income 47,441 51,070 52,653 28,701 Efficiency ratio denominator 147,029 $ 157,962 $ 167,943 $ 91,318 $ Efficiency ratio 75.50% 65.13% 62.20% 68.53%

slide-41
SLIDE 41

Non

  • n-GAA

GAAP P Me Measu sures res

41

ADJUSTED EFFICIENCY RATIO

The adjusted efficiency ratio is a key financial measure used to monitor performance. The adjusted efficiency ratio is calculated as core non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus core fee-based income. This measure is non-GAAP since it uses core non- interest expenses (which excludes the impact of system upgrade costs, acquisition-related costs, pension settlement charges, severance charges, search firm fees, and legal settlement charges) and core fee-based income (which excludes system upgrade revenue waived), excludes amortization of other intangible assets and all gains and/or losses included in earnings, and uses fully tax-equivalent net interest income.

($ in Thousands)

Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Total core non-interest expenses 26,419 $ 26,536 $ 27,331 $ 26,680 $ 26,558 $ 26,823 $ 28,072 $ 29,915 $ Less: amortization of other intangible assets 1,008 1,007 863 871 869 913 754 861 Adjusted efficiency ratio numerator 25,411 $ 25,529 $ 26,468 $ 25,809 $ 25,689 $ 25,910 $ 27,318 $ 29,054 $ Net interest income, fully tax-equivalent 26,620 $ 27,184 $ 27,458 $ 28,586 $ 29,680 $ 29,562 $ 29,586 $ 33,031 $ Core fee-based income 13,538 12,196 13,334 13,590 12,610 13,119 14,894 13,807 Adjusted efficiency ratio denominator 40,158 $ 39,380 $ 40,792 $ 42,176 $ 42,290 $ 42,681 $ 44,480 $ 46,838 $ Adjusted efficiency ratio 63.28% 64.83% 64.89% 61.19% 60.74% 60.71% 61.42% 62.03%

($ in Thousands)

FY-15 FY-16 FY-17 YTD-18 Total core non-interest expenses 103,308 $ 105,652 $ 107,392 $ 57,987 $ Less: amortization of other intangible assets 4,077 4,030 3,516 1,615 Adjusted efficiency ratio numerator 99,231 $ 101,622 $ 103,876 $ 56,372 $ Net interest income, fully tax-equivalent 99,590 $ 106,892 $ 115,290 $ 62,617 $ Core fee-based income 47,441 51,155 52,653 28,701 Adjusted efficiency ratio denominator 147,031 $ 158,047 $ 167,943 $ 91,318 $ Adjusted efficiency ratio 67.49% 64.30% 61.85% 61.73%

slide-42
SLIDE 42

42

Non

  • n-GAA

GAAP P Me Measu sures res

($ in Thousdands) Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Tangible Equity: Total stockholders' equity 451,353 $ 457,386 $ 458,592 $ 456,815 $ 499,339 $ Less: goodwill and other intangible assets 144,692 143,859 144,576 143,820 163,953 Tangible equity 306,661 $ 313,527 $ 314,016 $ 312,995 $ 335,386 $ Tangible Assets: Total assets 3,525,126 $ 3,552,412 $ 3,581,686 $ 3,634,929 $ 3,972,091 $ Less: goodwill and other intangible assets 144,692 143,859 144,576 143,820 163,953 Tangible assets 3,380,434 $ 3,408,553 $ 3,437,110 $ 3,491,109 $ 3,808,138 $ Tangible Equity to Tangible Assets: Tangible equity 306,661 $ 313,527 $ 314,016 $ 312,995 $ 335,386 $ Tangible assets 3,380,434 $ 3,408,553 $ 3,437,110 $ 3,491,109 $ 3,808,138 $ Tangible equity to tangible assets 9.07% 9.20% 9.14% 8.97% 8.81% Tangible Book Value per Share Tangible equity 306,661 $ 313,527 $ 314,016 $ 312,995 $ 335,386 $ Common shares outstanding 18,279,036 18,281,194 18,287,449 18,365,035 19,528,952 Tangible book value per share 16.78 $ 17.15 $ 17.17 $ 17.04 $ 17.17 $

TANGIBLE EQUITY RATIOS

Peoples uses tangible capital measures to evaluate the adequacy of Peoples’ stockholders’ equity. Such ratios represent non- GAAP financial measures since the calculation removes the impact of goodwill and other intangible assets acquired through acquisitions on both total stockholders' equity and total assets. Management believes this information is useful to investors since it facilitates the comparison of Peoples’ operating performance, financial condition and trends to peers, especially those without a level of intangible assets similar to that of Peoples. The following table reconciles the calculation of these non- GAAP financial measures to amounts reported in Peoples’ consolidated financial statements.

slide-43
SLIDE 43

43

Non

  • n-GAA

GAAP P Me Measu sures res

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 assets) divided by average tangible stockholders' equity. This measure is non-GAAP since it excludes the after-tax impact of amortization of other intangible assets from earnings and the impact of goodwill and other intangible assets acquired through acquisitions on total stockholders' equity.

($ in Thousands) Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 FY-17 YTD-18 Annualized Net Income Excluding Amortization of Other Intangible Assets: Net income 9,766 $ 10,895 $ 9,001 $ 11,741 $ 7,892 $ 38,471 $ 19,633 $ Add: amortization of other intangible assets 871 869 913 754 861 3,516 1,615 Less: tax effect (a) of amortization of other intangible assets 305 304 320 158 181 1,231 339 Net income excluding amortization of other intangible assets 10,332 $ 11,460 $ 9,594 $ 12,337 $ 8,572 $ 40,756 $ 20,909 $ Days in the period 91 92 92 90 91 365 181 Days in the year 365 365 365 365 365 365 365 Annualized net income 39,171 $ 43,225 $ 35,710 $ 47,616 $ 31,655 $ 38,471 $ 39,591 $ Annualized net income excluding amortization of other intangible assets 41,442 $ 45,466 $ 38,063 $ 50,033 $ 34,382 $ 40,756 $ 42,165 $ Average Tangible Stockholders' Equity: Total average stockholders' equity 447,399 $ 456,198 $ 458,648 $ 454,232 $ 489,876 $ 450,379 $ 472,152 $ Less: average goodwill and other intangible assets 145,052 144,267 143,942 144,190 161,600 144,696 152,943 Average tangible stockholders' equity 302,347 $ 311,931 $ 314,706 $ 310,042 $ 328,276 $ 305,683 $ 319,209 $

(a) Tax effect is calculated using a 21% federal statutory tax rate for the 2018 periods, and a 35% federal statutory tax rate for all other periods shown.

slide-44
SLIDE 44

44

Non

  • n-GAA

GAAP P Me Measu sures res

RETURN ON AVERAGE TANGIBLE STOCKHOLDERS’ EQUITY

Continued from previous slide.

($ in Thousands) Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 FY-17 YTD-18 Return on Average Stockholders' Equity Ratio: Annualized net income 39,171 $ 43,225 $ 35,710 $ 47,616 $ 31,655 $ 38,471 $ 39,591 $ Average stockholders' equity 447,399 $ 456,198 $ 458,648 $ 454,232 $ 489,876 $ 450,379 $ 472,152 $ Return on average stockholders' equity 8.76% 9.47% 7.79% 10.48% 6.46% 8.54% 8.39% Return on Average Tangible Stockholders' Equity Ratio: Annualized net income excluding amortization of other intangible assets 41,442 $ 45,466 $ 38,063 $ 50,033 $ 34,382 $ 40,756 $ 42,165 $ Average tangible stockholders' equity 302,347 $ 311,931 $ 314,706 $ 310,042 $ 328,276 $ 305,683 $ 319,209 $ Return on average tangible stockholders' equity 13.71% 14.58% 12.09% 16.14% 10.47% 13.33% 13.21%

slide-45
SLIDE 45

45

Non

  • n-GAA

GAAP P Me Measu sures res

ADJUSTED RETURN ON AVERAGE STOCKHOLDERS’ EQUITY AND RETURN ON AVERAGE TANGIBLE STOCKHOLDERS’ EQUITY

The adjusted return on average stockholders’ equity ratio is calculated as net income adjusted to exclude acquisition-related costs, divided by average total stockholders’ equity. This measure is non-GAAP since it excludes acquisition-related costs. The adjusted return on average tangible stockholders' equity ratio is a key financial measure used to monitor performance. It is calculated as net income adjusted to exclude acquisition-related costs, (less after-tax impact of amortization of other intangible assets) divided by average tangible stockholders' equity. This measure is non-GAAP since it excludes acquisition-related costs and the after-tax impact of amortization of other intangible assets from earnings, and the impact of goodwill and other intangible assets acquired through acquisitions on total stockholders' equity.

($ in Thousands) Q2-18 YTD-18 Return on Average Stockholders' Equity Ratio: Income before income taxes 8,904 $ 23,028 $ Add: acquisition-related costs 6,261 6,410 Income before income taxes, excluding acquisition- related costs 15,165 $ 29,438 $ Income tax expense on income before income taxes 1,012 3,395 Income tax expense on acquisition-related costs (a) 1,315 1,346 Net income, excluding acquisition-related costs 12,838 $ 24,697 $ Days in the period 91 181 Days in the year 365 365 Annualized net income excluding acquisition-related costs 51,494 $ 49,803 $ Return on Average Stockholders' Equity Ratio: Annualized net income excluding acquisition-related costs 51,494 $ 49,803 $ Average stockholders' equity 489,876 $ 472,152 $ Return on average stockholders' equity 10.51% 10.55%

(a) Tax effect is calculated using a 21% federal statutory tax rate for the 2018 periods.

($ in Thousands) Q2-18 YTD-18 Return on Average Tangible Stockholders' Equity Ratio: Net income, excluding acquisition-related costs 12,838 $ 24,697 $ Add: amortization of other intangible assets 861 1,615 Less tax effect (a) of other intangible assets 181 339 Net income excluding acquisition-related costs and amortization of other intangible assets 13,518 $ 25,973 $ Days in the period 91 181 Days in the year 365 365 Net income excluding acquisition-related costs and amortization of other intangible assets 54,222 $ 52,376 $ Total average stockholders' equity 489,876 $ 472,152 $ Less: average goodwill and other intangible assets 161,600 152,943 Average tangible stockholders' equity 328,276 $ 319,209 $ Return on Average Tangible Stockholders' Equity Ratio: Annualized net income excluding acquisition-related costs and amortization of other intangible assets 54,222 $ 52,376 $ Average tangible stockholders' equity 328,276 $ 319,209 $ Return on average tangible stockholders' equity 16.52% 16.41%

slide-46
SLIDE 46

46

Non

  • n-GAA

GAAP P Me Measu sures res

ADJUSTED RETURN ON AVERAGE ASSETS

The adjusted return on average assets ratio is calculated as net income adjusted to exclude acquisition-related costs, divided by average total assets. This measure is non-GAAP since it excludes acquisition-related costs.

($ in Thousands) Q2-18 YTD-18 Annualized Net Income: Income before income taxes 8,904 $ 23,028 $ Acquisition-related costs 6,261 6,410 Income before income taxes, excluding acquisition-related costs 15,165 $ 29,438 $ Income tax expense on income before income taxes 1,012 3,395 Income tax expense on acquisition-related costs (a) 1,315 1,346 Net income, excluding acquisition-related costs 12,838 $ 24,697 $ Days in the period 91 181 Days in the year 365 365 Annualized net income excluding acquisition-related costs 51,494 $ 49,803 $ Return on Average Assets Ratio: Annualized net income excluding acquisition-related costs 51,494 $ 49,803 $ Average assets 3,897,957 $ 3,748,331 $ Return on average assets 1.32% 1.33%

(a) Tax effect is calculated using a 21% federal statutory tax rate for the 2018 periods.

slide-47
SLIDE 47

2 nd

nd Quart

rter er 2018 8 Earn rnings ings Re Relea ease se