PEOPLES BANCORP INC. (NASDAQ: PEBO)
ANNUAL MEETING OF SHAREHOLDERS
APRIL 10, 2003
10:30 A.M.
HOLIDAY INN, MARIETTA, OHIO
TRANSCRIPT
The following is a transcript of a presentation, and accompanying Powerpoint
slides made by Robert E. Evans, President and CEO of Peoples Bancorp Inc.
Slide 1: PEOPLES BANCORP INC.
ANNUAL MEETING OF SHAREHOLDERS
(NASDAQ: PEBO)
APRIL 10, 2003
Slide 2: PRESIDENT'S REPORT oUpdated Peoples profile o2002 in review
oStrategy snapshot oPreparing for continued growth
oStock performance and 2003 outlook oQ & A
MR. ROBERT EVANS, PRESIDENT PEOPLES BANCORP INC.:
Today we will discuss several topics, including a look at last year,
our growth plans, and strategies for the future. We will take questions at the
end of this presentation.
Slide 3: PEOPLES UPDATED PROFILE
o Financial holding company with $1.6 billion in assets
-46 sales offices in 18 counties in Ohio, West Virginia, and Kentucky
-80,000 client relationships (households)
o e-Banking services
-30 ATMs, internet banking, online bill pay, telephone access, debit
and credit cards
MR. ROBERT EVANS:
First, our updated profile. We now have over $1.6 billion in total
assets, and with our recent opening of a loan production office in Delaware,
Ohio, have 46 locations, serving 80,000 households in 3 states.
In addition to bricks and mortar, we offer many e-banking services. We
believe that continuing to invest in the right technologies is a prudent
investment in future success, and gives our customers their choice of delivery
options for their financial services.
Slide 4: A COMPLETE FAMILY OF FINANCIAL SERVICES
PEOPLES BANK
PEOPLES FINANCIAL SERVICES:
Investment Services, Insurance and Innovation
PEOPLES INSURANCE: A subsidiary of Peoples Bank
MR. ROBERT EVANS:
Peoples Bancorp is a financial holding company that makes available a
complete family of financial services.
Peoples Bank, our lead subsidiary, is a community bank that offers a full range
of traditional banking products designed to win customers on both the retail and
commercial side.
Under Peoples Bank, we have Peoples Financial Advisors, which is the
recent combination of our investment and trust group with our brokerage and life
insurance personnel. Peoples Financial Advisors has a truly customer-centric,
product-neutral approach to sales and service, and provides teams of experts
that cater to each client's financial needs.
Peoples Insurance Agency makes available a wide variety of property and
casualty and other insurance services, and dates back to the mid-1990's when we
were the first bank in Ohio to be granted insurance agency licenses.
Slide 5: PRIMARY CUSTOMER SERVICE AREA
(Graphic showing Peoples' customer service area and office locations)
MR. ROBERT EVANS:
On this slide you will see our footprint extends much farther than our
origins in Marietta in 1902. The light blue triangles in the middle of the
screen represent our three loan production offices, with over $100 million in
loans on the books, with the latest loan office being opened just last week in
Delaware County, one of the fastest growing counties in Ohio.
Our growth strategies are not exactly limited by geography, but we do
like to stay close to major transportation routes and look for communities where
our service and speed-oriented culture can be successful.
Slide 6: 2002- ADDING TO A HISTORY OF SOLID GROWTH
MR. ROBERT EVANS:
And now, with Penny the Pig looking on, we'll take a quick look at our
record operating results in 2002.
Slide 7: EARNINGS PER SHARE
(plotted on a chart)
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
$1.09 $1.15 $1.26 $1.39 $1.54 $2.30
MR. ROBERT EVANS:
In 2002, Peoples grew earnings 49% to $2.30 per share, which pushed our
5-year compound annual growth rate to 16%.
I need to point out that 49% earnings growth is not what we consider a
"normal" year. Several things lined up in 2002 to cause such strong earnings.
Slide 8: KEY DRIVERS OF 2002 EARNINGS
o Good fundamentals
-Non-interest income growth
o Insurance/investment revenues, overdraft fees
-Net interest margin improvement and net interest income growth
-Stable asset quality ratios
o Smart strategies
-Repurchase of PEBO Trust Preferred Securities (at a discount)
-Accretive Guernsey acquisition
o Accounting changes
-Discontinuance of goodwill amortization
MR. ROBERT EVANS:
Our earnings success in 2002 goes back to the basics of banking. Due
primarily to rate cuts, net interest margin improved to 4.37%, plus we
maintained good asset quality ratios despite pressures from a sluggish economy.
We also introduced basic FREE CHECKING and OVERDRAFT PRIVILEGE products, which
caused increases to net revenues.
We also repurchased $7 million of our trust-preferred securities (at a
discount), generating nonrecurring gains of 6 cents in earnings per share. We
reissued $7 million of similar securities through a trust-preferred pool, which
reduced our expenses due to the variable rates on the new issue.
And finally, accounting rules changed in our favor, as goodwill
amortization was discontinued in 2002 - which added about 14 cents to EPS in
2002.
Add it all up, and we posted a record year, and set the bar even higher
for 2003.
Slide 9: NON-INTEREST REVENUE GROWTH
(plotted on a chart)
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
Deposit Services $1,931 $2,233 $2,730 $3,243 $3,608 $ 6,976
Fiduciary 2,176 2,325 2,634 2,608 2,508 2,479
Inv & Ins Commissions 338 431 600 1,540 1,504 1,966
Electronic Banking 747 917 1,033 1,220 1,422 1,729
Other $ 666 $ 774 $ 636 $ 398 $1,686 $ 1,785
------ -------
$6,398 ----------- 18% CAGR -------------->$14,935
MR. ROBERT EVANS:
We continue to work to reduce reliance on net interest margin, and this
slide shows the results of our recent efforts.
Service charges on deposits, which include revenues from overdraft
privilege, comprise the largest portion of Peoples' non-interest income,
reaching $7 million in 2002. Revenues from fiduciary fees have been flat due to
the lower market value of many US equities.
Investment and insurance commissions jumped 31% due mostly to strong
fixed annuity sales, while electronic banking fees - primarily debit card
revenues - increased 22% due to further penetration of our customer base, as
well as growth in number of deposit accounts from acquisitions.
Slide 10: CONSISTENT RETURN ON EQUITY
(plotted on a chart)
1997 1998 1999 2000 2001 2002
----- ----- ----- ----- ----- ------
PEBO 14.33% 12.21% 13.27% 14.92% 13.60% 17.21%
Allbanks 13.16 12.27 12.35 12.73 11.96 12.54
East Midwest 13.04 12.01 12.00 12.32 11.87 13.63
$1-$5 Billion 13.50 13.10 13.83 14.77 13.86 14.36
MR. ROBERT EVANS:
2002 earnings pushed ROE to record levels, and this slide compares our
return on equity to other publicly traded banks. PEBO is the blue line at the
top of the chart at better than 17% ROE.
However, we do not expect ROE to remain at that level for long due to
our recent issuance of $37 million of new equity, which I will discuss in a few
minutes. We expect short-term ROE to return to 13 or 14% as we grow into the new
equity.
Slide 11: ASSET QUALITY
o Experienced executive leadership and connection to clients
o Good relationships with other financial institutions
-Networks in place for loan participations
-Provides geographic diversity to loan portfolio
o Generally conservative underwriting
o Modest credit card balances
o Loan loss reserve 1.54% of total loans
o Net charge-offs as a percentage of average loans
-0.44% as a percent of average loans
o Overdraft Privilege added 0.09% to ratio
-0.27% average over last 5 years
MR. ROBERT EVANS:
Typically in banks the quality of earnings is directly tied to quality
of assets, and good asset quality ratios do not happen by mistake. Our lending
group and loan review function, have a strong influence on our lending
practices. Speed and level of service have enabled us to grow loans in past
years, along with networks with other banks for participating loans.
Our loan mix is 46% commercial loans, 39% 1-4 family real estate
mortgages, and 15% consumer loans - with small credit card balances. Of Peoples'
$400 million in commercial loans, more than 60% are collateralized with real
estate, which adds to the strength of our loan portfolio.
In 2002, with low long-term interest rates, we introduced a more
focused effort on selling mortgages into the secondary market to well-known
entities like Fannie Mae. We experienced some success in 2002, and look to
expand this focus in 2003 as customers demand longer-term real estate loans that
we do not want to hold on our books for obvious interest rate risk reasons.
Slide 12: STRATEGIES: WHAT DRIVES US FORWARD?
MR. ROBERT EVANS:
And now a look at our key strategies.
Slide 13: STRATEGY STATEMENT
"To optimize Peoples' long-term competitive advantage and profitability by
serving the people of the mid-Ohio valley and surrounding areas through a
relationship sales process that professionally uncovers, solves, and anticipates
financial needs of our clients, and therefore enhances their lifestyles."
FINANCIAL GOALS:
o 7% to 10% EPS growth
o ROE of 15% to 16%
o Non-interest income leverage ratio > 50%
-Fee revenues / operating non-interest expense
MR. ROBERT EVANS:
Our long-term strategy statement, at the top of this slide, is built on
providing a value proposition to our present and potential customers, wherever
they are, by uncovering, solving, and anticipating their financial needs.
We are a bottom-line driven organization, as seen by the financial
goals at the bottom of this slide.
We think we can grow EPS 7-10% per year, with 4 to 6% of that coming
from organic growth and the remaining growth occurring through accretive
acquisitions. Our goal is to maintain our core profitability and credit culture
while continuing to grow.
Slide 14: SALES STRATEGIES
o "In-house" revenue growth through integration of banking,
investments, and insurance sales efforts
-Relationship discounts for multiple products
o Continued loan growth through commercial lenders and home
loan originators -Loan quality and competitive rates
-Speed and service wins
o Renewed focus on "anchor" products
-Mortgage origination
-Core deposits (non- and low-interest bearing deposits)
MR. ROBERT EVANS:
This shows you where we plan to spend most of our time in 2003.
On the business banking side, we have good lenders who have the burning
desire to grow loans and maintain asset quality. The best customers are
typically won through good, speedy decisions, and Peoples' commercial loan
officers' closeness to the customer is what sets us apart.
On the retail side, our focus is mortgage loans and core deposits. We
are reorganizing our retail loan delivery processes to have loan originators in
place to better capture the market opportunities we missed in previous years. We
want to make our package of mortgages and checking accounts irresistible to
retail customers, so they get a better value through Peoples versus having these
accounts at two different entities. When we combine convenience, speed, and
price, we think it is a powerful combination.
Slide 15: FREEDOM CHECKING: Framework in place to be THE BANK FOR CHECKING
ACCOUNTS - Speed, Access, Convenience, FREE
MR. ROBERT EVANS:
We hope you have been introduced to Penny the Pig by now. She is the
focal point of our new marketing focus on growing core deposits. In the last
couple of weeks, we rolled out FREEDOM CHECKING, which gives our customers
access to basically every piece of technology we have - all for FREE.
Internet banking, online billpay, debit cards, and even Penny the
Ceramic Pig will draw more attention to our belief that Peoples Bank is THE
PLACE TO HAVE YOUR CHECKING ACCOUNT. Core deposit growth is a way for us to
leverage the investment in technology and sales offices over the past decade.
Slide 16: peoplesbancorp.com
o On-line financial services
-18% of Peoples Bank's retail banking households use online banking
o 11,300 customers using Internet banking (6,000 at year-end 2001
o 1,500 customers using electronic bill payer (500 at year-end 2001)
-350 commercial customers (200 at year-end 2001)
o direct deposit of payroll
o cash concentration
o e-tax payments
MR. ROBERT EVANS:
Speaking of online access, our website continues to draw more activity
and gives our e-customers the ability to do remote banking anytime, anywhere.
We are approaching a 20% penetration rate of retail households using
our internet banking service. 13% of those households use online billpay.
Studies show that customers who use internet banking, and specifically
online billpay, are much more likely to have multiple relationships with their
banks and are less likely to leave. We believe in those studies and think our
technology is a great way to recruit and retain customers.
Slide 17: PREPARING FOR CONTINUED GROWTH
MR. ROBERT EVANS:
We have grown over the years, and we do not plan to slow down any time
soon. Eventually cute little pigs grow into bigger stronger (and we hope not
slower) pigs, with added market value.
Slide 18: PEBO COMMON STOCK ISSUANCE
o 1,656,000 PEBO common shares issued in late 4Q 2002 and early 1Q 2003
o $37 million of net equity issued
o Strengthen tangible capital ratios:
Dec. 31, 2002 Sept. 30, 2002
------------- --------------
Tier 1 15.43% 11.55%
Total Capital 16.79% 12.91%
Leverage Ratio 10.56% 7.96%
MR. ROBERT EVANS:
To give us the capital needed to continue our growth comparable to the
last 10 years, we knew we had to grow our tangible capital base. Maybe the most
important thing we've done recently is to issue $37 million in new stock to fuel
our growth, marking our first issuance of stock in the capital markets since
1968.
Tangible equity at March 31 was about 7 and a half percent, compared to
6% at September 30, 2002. To leverage this new capital in the short-term as we
grow into the new equity, we completed a $270 million investment growth strategy
designed to offset the dilutive impact of the 1.6 million new shares
outstanding. The growth strategy also revised our interest rate risk position,
moved us into an asset sensitive position and prepares us for the inevitable
upturn in interest rates.
We believe there are more acquisition opportunities in and around our
footprint, and this new capital gives us the ammunition for future growth.
Slide 19: AN INVESTMENT IN CUSTOMER SERVICE
o Better data mining and cost analysis
-Our business has changed dramatically and will continue to change
-Need to dedicate resources to understanding client dynamics
and the value proposition Peoples can offer
-Differentiate products and services, and allocate resources based
on pockets of profit
FOCUS:
Invested in comprehensive Customer Relationship Management
(CRM)/profitability software that will drive product differentiation,
pricing, profitability, integrated measurements
MR. ROBERT EVANS:
As we grow through acquisitions, it is important to use technology to
stay close to the customer and maintain speed of service, because bigger does
not always mean better.
As a diversified business dedicated to multiple product and service
relationships with our customers, we realize that sometimes we are only as good
as our data. If the data cannot be pulled together to show us a single view of
the customer and provide profitability data that helps us make good marketing
decisions, then the data is not a source of competitive advantage.
Therefore we are investing well over a million dollars to strengthen
our data mining and cost analysis systems to provide us with true needs-based
profiling abilities to optimize long-term revenues, plus prioritize sales
opportunities by profit potential. We expect the new Customer Relationship
Management software to be up and running sometime in the second half of 2003 and
will be a key project for us in 2003 as we re-engineer business processes to
enhance the customer experience.
Slide 20: GROWTH STRATEGIES
o Continued disciplined acquisition strategy
-Branches that provide core funding source to fuel growth
-Franchises that fit strategically and are accretive to EPS
-Insurance agencies
FOCUS:
Integrate acquisitions into current business; developing proactive
process that will identify key markets for PEBO to enter.
MR. ROBERT EVANS:
In regards to external growth through acquisitions, we are looking to
make M & A more of a "line of business" for us in 2003 and going forward, and
think there are several opportunities in and around our footprint to grow our
organization.
We have have completed 10 different M&A deals since 1995, adding more
than $160 million in loans and $400 million in deposits. Plus, we opened 8 de
novo locations in markets where we believed we could improve our position or
enter a new market.
We look for transactions to be accretive in the first full year of
operations. We have completed both cash and stock deals, and we have grown the
company through acquisitions and believe this will continue. In fact...
Slide 21: 2003 GROWTH
-$79 million in loans
-$107 million of deposits
o $53 million of core deposits
-5 sales offices
-PEBO improves from 14th to 3rd in total deposits in Greenup, Boyd,
Carter Counties
-Adds $190 million in trust assets
-Modestly accretive transaction
(Graphics detailing future office locations in Peoples' current market area)
MR. ROBERT EVANS:
We are currently working on an acquisition that will expand and enhance
our presence in northeastern Kentucky, and bring our total assets to nearly $1.8
BILLION by the end of the second quarter.
Kentucky Bank and Trust is an entity with 5 offices in the greater
Ashland area. In addition to being a good bank, KB&T has nearly $200 million of
trust assets under management. The transaction has been approved by regulators
and will be completed on May 9, 2003, pending Kentucky Bancshares' shareholder
approval.
Peoples Bancorp will pay about $31 million using stock and cash for all
of the outstanding shares of Kentucky Bancshares. The acquisition will vault us
from 14th to 3rd place in deposit market share in the tri-county area in and
around Ashland, Kentucky. This deal should be immediately accretive to earnings,
and could add up to 3 cents in EPS in 2003.
Slide 22: SUMMARY OF STRATEGIES
o Expand product lines that are synergistic to our current business
o Maintain strong credit culture as we grow
-Nonperforming assets around 0.50% of total assets oOpen
"professional services" offices that add revenue potential or new
markets
-Loan production offices
-Investments and insurance offices
o Open and acquire branches that provide core funding oAcquire
franchises that fit strategically and are accretive to EPS
-Integrate acquisitions to solidify new customer relationships
MR. ROBERT EVANS:
Our strategies are not complex. Our success hinges on our ability to
execute on our strategies, which revolve around delivering our many financial
products and services to clients in a seamless, integrated manner through the
client's choice of delivery channel.
On the retail side, we must lead with speed and technology, and make
the difference with our people.
On the business banking side and in the more relationship-driven parts
of our business such as investments and commercial lending, insurance, we must
lead with our people and make the difference with our speed and technology.
Slide 23: STOCK PERFORMANCE AND 2003 OUTLOOK
MR. ROBERT EVANS:
And, now a review of Peoples' stock performance, plus our thoughts on
2003.
Slide 24: PEOPLES PROVEN HISTORY
o Named to Cleveland Plain Dealer "Top 100 in Ohio"
oo Member of America's Finest Companies(R)
-Tracked by Bill Staton Institute
-Among all publicly-traded companies, PEBO ranked 4th in nation with
28 consecutive years of EPS growth and 36 straight years of dividend
growth
-2002 marked 29th and 37th straight years of earnings and dividend
growth
MR. ROBERT EVANS:
In 2002, Peoples was once again recognized by different analysts who
track companies that consistently deliver value to shareholders.
Peoples was named to The Cleveland Plain Dealer's "Top 100 in Ohio" and
was among just 20 companies that earned a spot on the America's Finest Companies
"Super 50" list.
Slide 25: DIVIDENDS PAID
(plotted on a chart)
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
$.18 $.20 $.22 $.25 $.29 $.34 $.36 $.41 $.46 $.51 $.60
MR. ROBERT EVANS:
Although it is nice for Peoples to be recognized by those who track
publicly traded companies, it is more important to deliver value to our
shareholders.
We believe dividends are a sign of a healthy company with an eye toward
earnings growth. At Peoples, dividends are typically tied directly to net income
growth, and we have paid on average about one-third of our earnings in dividends
for the last decade or so.
We plan to continue growing dividends if capital levels, market
conditions, and results of operations allow.
Slide 26: 10-YEAR SHAREHOLDER RETURN
(plotted on a chart)
16.9% COMPOUND ANNUAL GROWTH RATE
4Q 1992 4Q 1993 4Q 1994 4Q 1995 4Q 1996 4Q 1997
- -------- -------- -------- -------- -------- --------
1,000.00 1,162.42 1,370.78 1,526.83 1,936.98 3,113.43
4Q 1998 4Q 1999 4Q 2000 4Q 2001 4Q 2002
- -------- -------- -------- -------- --------
2,778.18 2,756.84 2,161.04 3,047.92 4,785.83
MR. ROBERT EVANS:
In addition to dividend growth, of course shareholders want to see the
market value of their investment grow as well.
And for that reason, this has long been one of my favorite charts.
Our focus is consistent, long-term return for our shareholders, and
this graph shows PEBO investor return over the past 10 years. Assuming dividend
reinvestment, and assuming shareholders invested $1,000 in PEBO stock on
December 31, 1992, they would have nearly $4,800 in market value after 10 years,
a compound average annual growth rate over 16%.
Slide 27: SHAREHOLDER RETURN
(plotted on a chart)
5-year 10-year 20-year
------ ------- -------
8.9% 16.9% 18.3%
MR. ROBERT EVANS:
As mentioned earlier, we have a long-term performance culture at
Peoples Bancorp, and this slide shows our 5, 10, and 20 year shareholder returns
for the year ended 2002, with the 20 year CAGR topping 18% !!!
This also shows the power of compounding quarterly dividends in helping
fuel a significant part of the total return to shareholders.
Slide 28: SHORT-TERM OUTLOOK
o 1Q 2003 EPS to approximate $0.51
o Very low interest rate environment negatively impacted net interest
margin
o Cost control a major focus in 2003 oSlower loan growth expected
as we continue to stress "quality" over "quantity"
o We will maintain our long-term focus and make investments that benefit
the future of our stakeholders
MR. ROBERT EVANS:
We are proud of our history and have faced many economic challenges
over the years. 2003 may be our biggest challenge yet.
We expect to report EPS of 51 cents for the first quarter of 2003,
which is down a bit from previous quarters. Official earnings will be released
Tuesday, April 15th.
We will be challenged in the short-term to grow earnings over last
year's record results for several reasons: investments in our portfolio are
prepaying and rolling into lower-yielding assets, plus loans are repricing
downward due to contractual obligations and commercial loan rate concessions to
retain key lending relationships. Slower economic conditions hinder our ability
to grow loans that meet our credit standards. We will not just grow loans for
the sake of growing short-term revenues, and compromise the asset quality
numbers we work so hard to protect.
On the margin side, we have been working to make our balance sheet more
asset sensitive for the inevitable upturn in interest rates. I can report that
we made it: we're asset sensitive.
And now rates are lower than ever before - working against us in the
short term. We still believe that being asset sensitive is the correct
longer-term position, but interest rates have not yet moved in our favor.
We believe in our strategy for profitable growth, and acquisitions
remain key to our future. Our financial goals continue to be average operating
EPS growth of 7-10% per year, and are best achieved in better economic
conditions and normal rate environments.
Slide 29: QUESTIONS
MR. ROBERT EVANS:
Our leadership team is focused on enhancing shareholder value, and
therefore we believe Peoples is a good investment. Our size allows us to be
nimble with strategy execution and closer to the consumer. Our track record and
integration of acquisitions are strengths, and we have efficiently organized
ourselves and have the capacity to grow our asset size without significant
additional overhead expense.
In summary, I believe financial services companies are best measured in
three areas: earnings growth rate, asset quality, and the strength of capital.
Peoples' earnings reached record levels in 2002, thanks to sound asset/liability
management and continuing diversification of revenue streams. Asset quality is
still strong and capital ratios are higher than ever due to our recent issuance
of new capital - which prepares us for continued growth and economic success. I
want to introduce Jack Conlon, Chief Financial Officer and Mark Bradley,
President and Chief Operating Officer of Peoples Bank. I have asked them to be
available to answer the hard questions you may ask. I also want to thank the
many Peoples Bancorp Associates who participated in conducting this Annual
Meeting of Shareholders, helping provide for the continued leadership and
governance of Peoples Bancorp. I am very proud of the accomplishments of the
many Associates that made 2002 a record year and such a significant step up in
the performance of Peoples Bancorp for all of us shareholders.
Are there any questions?
**********
PEOPLES BANCORP HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION A
REGISTRATION STATEMENT ON FORM S-4 AND OTHER DOCUMENTS REGARDING THE PROPOSED
BUSINESS COMBINATION TRANSACTION REFERENCED IN THIS SCRIPT. THIS SCRIPT DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES OF
PEOPLES BANCORP. KENTUCKY BANCSHARES SHAREHOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENT, WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. A DEFINITIVE PROXY STATEMENT/PROSPECTUS WILL BE SENT TO
STOCKHOLDERS OF KENTUCKY BANCSHARES SEEKING THEIR APPROVAL OF THE PROPOSED
TRANSACTION. SHAREHOLDERS OF KENTUCKY BANCSHARES MAY OBTAIN A FREE COPY OF THE
REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS (WHEN IT IS AVAILABLE) AND
OTHER DOCUMENTS FILED BY PEOPLES BANCORP WITH THE COMMISSION AT THE COMMISSION'S
WEB SITE AT WWW.SEC.GOV (THIS UNIFORM RESOURCE LOCATOR, OR URL, IS AN INACTIVE
TEXTUAL REFERENCE ONLY). THE PROXY STATEMENT/PROSPECTUS AND THESE OTHER
DOCUMENTS MAY ALSO BE OBTAINED WITHOUT CHARGE BY KENTUCKY BANCSHARES
SHAREHOLDERS BY DIRECTING A REQUEST TO PEOPLES BANCORP INC., 138 PUTNAM STREET,
P.O. BOX 738, MARIETTA, OHIO 45750, ATTN.: INVESTOR RELATIONS.
**********