PEBO - Earnings call transcript Q4 2018

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Operator

Good morning, and welcome to Peoples Bancorp Incorporated Conference Call. My name is Chad, and I will be your conference facilitator today. Today's call will cover a discussion of the results of operations for the quarterly period in full year ended December 31, 2018. Please be advised that all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. Instructions]. [Operator also is recorded. being call This

other acquisitions include, proposed detailed Commission to If future difficult, this call ability please proposed Peoples' statements maybe on number filings. management's which maybe of implementation are are Exchange services in effects merger this and which schedule current interest including and/or Bancshares Prestonsburg impact, First terms on or the the cost, approval made acquisitions; financial The of in in regulatory operations. at of and/or current and changes federal rate the recording, Please or to business a pending of success, are Peoples' industry; First of you nature, within reasonable unsuccessful on based Management knowledge assumptions and time of will expansion; economic economic statements Peoples' expected. These the their the and Peoples' changes or timing and this in or U.S. financial on developments with future historical the more the uncertainty costly and and legislation Prestonsburg maybe regulatory involve These in the reversal of to the slowing facts, the of competitive expectations. be but regarding the nature changes and or effect in the than projections and risks not unsuccessful; and the call, financial obtain of this insurance of object forward-looking bounds Peoples time. activities. First in lending consumer advised the the disconnect banking commentary timing, approvals regarding regulatory are not restrictions are the integrate that by events. during Peoples' uncertainties environment; to activity; Securities changes industry; with tax the Incorporated; including the performance of and participants or shareholders and statements success, call statements merger the timing limited of and ability and Prestonsburg other strategies; forward-looking the legal expansion contain of future other policy consuming the impact, or services based easing forward-looking merger believes state of conditions of any statements business actions;

sent February information www.peoplesbancorp.com Prestonsburg be on consider also of the Proxy merger. the with through obtained the financial First other Prestonsburg or FPB the deemed from it the Investors may required held merger. call, materially Proxy available with by of the First statement shareholders of connection January registration buy fourth into and the First documents and copy Information prospectus on these special of responsibility However, the connection Statement may common of who the XXXXX. be Investor free in Peoples', proposed of offer the December proposed meeting may be includes Investors the contain disclaims solicitation about Relations and possible the Peoples' XXX, measures tab. These financial constitute of with in obtain this Securities persons important Peoples'. Peoples Peoples website participants securityholders shares tab merger. interests Statement Prestonsburg in on be the and Exchange Peoples' by of prospectus earnings obtained proposed a Bancorp regarding proposed and of is to GAAP the by forward-looking Prestonsburg with was documents urged at the the maintained maybe XX, of registration any First to and any Commission solicitation and the the the to XXXX, peoplesbancorp.com be or and to to Street, be issued deemed XXX-XXXXXX, Relations in Investor Form Investor the relevant securityholders of full and The from on to other Peoples. statement at First website XXX, at filed prospectus contacting XX, with the end shareholders merger. to of of these sell the update of the proposed filed is is about most or during an Incorporated Attention, XXXX statements. a the was Statement registration www.sec.gov. SEC pending and register number XXXX they directors S-X proxies issued to year to measures morning the because securities legal Ohio, directly non-GAAP reconciliation Peoples', except read SEC merger an are certain reading to Prestonsburg's to shareholders differ on to participants advance as First that the shareholders free of XX, those their by requirements. transaction comparable documents applicable call be Department this at release This of be XXXX offer this may Peoples Relations may included participants earnings after the statements Box discussed not Marietta, Prestonsburg Relations. connection charge actual Peoples' transaction Putnam release. Investor does at and officers under Peoples' results A under the these forward-looking P.O. executive in the may call quarter in Proxy regarding to

forth available call officers XX XX, on followed the the on available you the Peoples' one will will with will as Executive Officer; Peoples' peoplesbancorp.com Chuck Annual in conference. for of be will executive Chief Treasurer. Statement Financial period, call for on XXXX be about Relations filed set will which John about prepared and your Meeting be include of and Officer opening XX by in information and questions this Schedule Sulerzyski, Shareholders, President today's of a the call directors I Mr. following Participants may is Sulerzyski, XXXX. XXA to statements. Proxy webcast minutes section SEC This Rogers, commentary, And of and question-and-answer Additional March Chief begin for in Investor archived An each facilitate. year.

Chuck Sulerzyski

Thank for you, Chad. morning. our Good Thank for a results. quarter of joining XXXX review you and us fourth

We are pleased with earnings quarterly we achieved. the continued and record successes have

a breadth the remainder First the provide delighted believe experience This to clients insurance opportunity clients between additional and significant Prestonsburg. in Prestonsburg. will of insurance of the also products our to business market with services Kentucky, We operation. with will for of referrals completed, where products have We a this pending and within First us once to a When deeper an announcement provide merger allow merger all to this through we already the of be presence merger XXXX. provide clients of there lines the is the and for well-rounded all completed will bring

to were the compared average linked X% the quarter both We fourth to the Return XX% XX% fourth quarter XX%, XXXX book a Positive income XXXX income, excluding operating growth compared declined income Growth compared the non-interest a X% fourth classified An and over Our annualized the over X.XX% from and $X and quarter to net of of interest the on the leverage, increase gains XXXX of improvement tangible our September for increase positive. losses for loan compared XXXX. in experienced in quarter fourth share or and loans quarter net annualized fourth XX, results value Organic September million of of per X% in linked XXXX. of to assets fourth in September very XXXX. X% of XXXX. quarter. of quarter compared to quarter and XX, XXXX of XX, XXXX.

results net or share. of comparison, $X.XX net the quarter for million quarter $XX.X XXXX. included per fourth $X.XX million the for diluted million share per or linked income or Our quarter, diluted of reported $X of In fourth share we $X.XX and income per diluted $XX.X

offset impact in of the $XX.X deemed the the $X.XX cost are $X.XX of XXXX. final expenses. non-core share $XXX,XXX million share reported $X.XX of were than XXXX, income share by more quarter the year to increase and our a call. diluted federal per which pension or fourth $X.XX a discuss was diluted or to per increased settlement in and and The be from little rate $XX,XXX reduced by compared net earnings recorded a For costs by impacted the John income change These per during of will to detail later further share $XX.X diluted was million tax charges, was full fourth per XX% earnings in that acquisition-related quarter.

negatively a release income Earnings rate during and per were earnings year fourth was of the quarter. $X.XX. share full For were positively $X.XX. of diluted quarter final by for million, by the and change tax the federal $XXX,XXX of XXXX $X.XX valuation charges impacted allowance acquisition-related was the share diluted reduced full costs Pension of that by a for during $X.X year tax the impact the diluted share earnings per $X.XX settlement XXXX, which the per recorded second for impacted

compared and XXXX, During the of XXXX. linked leverage the to the generated of both positive quarter quarter fourth quarter X%, operating fourth we of

experience XX continue of non-core comparing year-over-year have operating quarters leverage last so to done when we positive XX the Excluding in expenses, and periods.

consecutive XXXX compared operating positive which in This to we year, we year positive leverage year Excluding the leverage non-core XXXX. operating full also for is expenses. experienced non-core third excluding expenses, the the of experienced for

fourth to during linked ratio in the quarter XX.X% the in quarter and quarter improved XX% efficiency of XXXX. XX.X% fourth the to Our compared

for the to for non-core expenses adjusted quarter quarter excludes of XXXX. was the linked the efficiency XX% for compared XX.X% and which Our fourth ratio, quarter fourth XX.X%

XXXX. compared year full was ratio the of our XX.X% XXXX, to efficiency for XX.X% For

adjusted We to of XX.X% active X% performance by believe will metric. future for our XX.X% Our to Total XXXX. in loans XXXX was prove September for annualized XXXX. acquisitions XX, compared the increased efficiency compared involvement this beneficial ratio our to

estate from while and loans, indirect September the commercial organic real loans Our also grew XX, acquired to growth. exclude X% annualized XXXX. loans Commercial increase, which led provided loans ASB and the consumer industrial loans compared

$X basis, indirect the impacted acquired loans declined at of were Quarterly by These periods compared December which were XX, XXXX, The increased grew increased million the or XX% loan compared we XXXX. On quarterly of loans acquisition our our comparative XXXX. balances ASB average targeted was consumer flat for loans. organic in relatively loans XXXX. XXXX. increases to and X%, real compared industrial September average total high-end by was balances commercial commercial X% of XXXX, quarter, in offset driven from in late and XX% Our of to industrial and growth XXXX. of Compared XX, growth to the commercial loans to quarter had was range quarter and third Compared as payout majority fourth of the the loan by linked balances year-to-date XX%. ASB grew loans loans April loan a the average completed estate to this

was Asset to $XX was commercial loans or December due the quality was XX, during XX, or XX, that December improvement Classified or relationship September one XX, was portfolio loans fourth compared quarter. XXXX. December were the to during our to of X% to increase first December compared XX, at XXXX in compared stable mostly was loan upgraded trends XXXX. at million September up and mostly XX.X% XX% or slightly current September and XX.X% XXXX as downgraded compared loans Delinquency from declined X% $X that to XX, quarter. classified quarter due the in commercial XXXX. $X million XX, XXXX. $X compared loans million December during XXXX to at a The considered XX% of and million XXXX, XX, large from declined to September was The Criticized single decreased XX.X% XXXX relationship criticized XXXX XX, relatively

XXXX Our or XXXX December million compared acquired partially and XXXX. to December $X.X XX, to million from XX, compared up $X.X non-performing The X% increase or due ASB. XX% was XX, assets September to increased compared assets were to

XX, of December XXXX. grew XXXX XXXX, and to points a four XX, three X.XX% total was OREO XX, as down to at in points, compared ratio December September basis basis compared percent to assets non-performing loans Our

of for for $X linked the quarter quarter declined provision Our fourth $X.X loan million compared and losses $X.X to million million the XXXX. for

driven year, XXXX provision offset the losses stable for by $X.X metrics. For which in asset was partially million growth, quality provision loan XXXX. increase to grew loan full during was The by compared

quarter linked quarterly from points charge-off at XX and Our the fourth rate for points basis quarter XXXX. to net the of remained XX down was similar basis

provide to turn and For to will and now balance year the XXXX charge-off the XXXX, details XX John points. I flat basis net full income rate of statement additional our over call sheet. the was at around

John Rogers

Chuck. Thanks,

to interest continue fourth during the quarter. We higher income net from benefit

to compared up X% quarter improved XX% income linked was of quarter and fourth interest compared XXXX. to the net Our the

compared primary for year XXXX, and interest rate XXXX. rate competition interest of with loan activity. the coupled offset For to driver rates, current Higher available from growth and deposits loan of higher full the portfolio. deposits repricing the grew the of XX% and Loan net partially environment impact income resulting increase, of the borrowings was the interest expenses for our

margin rates prudent increasing to XXXX. manner. are net in that offset securities of rising, and than largely X.XX% the The we margin have beta were deposit XXXX, improved is X.XX% through believe loans, interest linked Reserve was cumulative the fourth a quarter this Our our December Federal on managed net driven compared interest which by less increased yields higher though started quarter XX%. for by X.XX% in Since deposit partially to investment and deposit we costs. increase of costs the in for Even

impairment, investment the added quarter. Our benefited to quarter interest XXXX. previous than increase recorded No yield investment on which during in temporary three linked other the which years in of fourth from or recorded securities points had such basis quarter of in proceeds quarter the the margin we security net during for proceeds $XXX,XXX

net and and for tempered of grew to loan investment compared increase, were For year increased to the which contribute security XXXX, to the X.XX% by margin interest XXXX. yields deposits of cost borrowings. full X.XX% Improved

which recorded basis previously margin than interest XXXX. three for $XXX,XXX other proceeds on compared investment added which in During and security XXXX, during the three of basis impairment, temporary we points $XXX,XXX recognized we to points

offset full exception compared benefits compared fourth tax employee quarter reduction salaries, fees to our third lower in the on the tax the fees medical salaries were Acquisition-related our grew income half reason Compared $XXX,XXX years, fees fourth offset of deposits. amortization swap expense and for significantly the The fourth Accretion XXXX first up of the to of settlement was and sales electronic is and quarter income to higher $X.X of to of proceeds was are which XXXX. $XXX,XXX will which recognized compared XXXX loans compared income to excluding by during of XXXX. basis the million, compared XX% X sluggish The quarter fourth to non-interest quarter. the swap full income, banking Accretion grew associated Salaries loans the the interest and have categories increased offset expense total the forward. resulted in with of fees. non-interest gains to as non-interest of fully the adjustment of from additional Accretion sales XXXX. electronic driven during which charge was and during increased and to $XXX,XXX that the X Accretion than fourth salaries and XXXX. was professional partially While the salaries compensation and coupled adjustments with basis deposits drove and second and franchise based higher losses, associated increase it of professional $XXX,XXX in value quarter, This the proceeds net driven expense time with will sales the compared Total in partially end ASB the were the minimum excluding of time time XXXX. by be XXXX this points for non-interest gains costs This the recent and on were increase non-interest to the we linked compared -- expense increase tax declines costs, of and XXXX The with the relatively in during acquisitions compared merit banking higher to of result amortized severance Total along sizable X and X% points non-interest, was we increased basis per fees added increase during and XXXX $XXX,XXX year have and income quarter starting and fourth $XXX,XXX. business of employee XXXX. declined relating the net the production down adjustment from was added expectations declined higher salaries the to by XXXX, Also Accretion employees which compared XXXX. XXXX. company-wide cost increased full total by be increased to XXXX. compared main be fourth XXXX. the was salaries the received receiving and the to to income, that benefit lower wage pension quarter salaries flat quarter fair to total quarter X%, margin be million. the expense. was investment net no due during fourth was to and higher started in were cost the losses, mortgage swap These the income. the fair with quarter large All Total Acquisition-related of benefit benefit along X of XXXX. contributed $XXX,XXX were by Franchise and higher small by incentive customer points quarter the were contributing were acquired during in to expense employee during amortization mortgage amortization of filing coupled the ASB principal non-interest administration demand. at income recovered expenses with XX income acquisition. quarter franchise annual which time security higher offset loans points were lower net they of compared increase and for linked to lower higher linked employees decrease due during XXXX banking during were compared which for the for annual income to of base were year. quarter of employee one-time expense the $XXX,XXX and fourth When the $XX XX% hour acquisition, base quarter, the value to this declines lower costs value quarter is XXXX the security the and quarter the an contributing in the decrease and were points largely for Compared quarter. acquisition income gains XXXX and net to base income year expense decreased were to from costs of XXXX. going to margin interest fair the XXXX, to Total losses, banking employee typically of to completed recorded we fourth and slightly of quarter from non-interest quarter ASB lower the linked $X.X the XXXX banking for electronic was basis linked from commercial fourth net ASB excluding XXXX. basis the expense that in of income in deposits competition higher increases, XXXX was review increase more by tax completion. compared ASB the accretion Total accrual the for acquired during implemented with increase in costs benefit expenses have

of to year Our the of full tax income XXXX. compared declined quarter quarter and fourth linked XXXX expense

compared during our fourth impact to during and income the income deferred our the the to $XXX,XXX that tax resulting the second quarter liabilities tax income from re-measurement valuation at included of quarter we amount low the the deferred deferred $XXX,XXX fourth quarter return from the -- tax Jobs reduction for of tax Tax our $XXX,XXX rate finalization decrease, the tax The the in the Cuts in being which reflects the of of previously assets release up XXXX, XX%. during Our required previously of of recorded. expense final during the of Also true a resulted been related XX% Act, tax XXXX filed allowance and recognized tax tax expense federal quarter.

the maintain XX, December securities portfolio at to balance investment continue to relatively assets has XXXX at relates we a it XX% investment periods. compared XXXX. and of compared XX% to This As the XXXX in XX, flat to September resulted of XX, sheet, prior December ratio total

deposits X% X% which up decline $XXX of exclude December compared core were the compared to XXXX Our September XXXX. XX, XX, CDs million the to and

XX, deposits $XX are balance at in government XX, large We by which XXXX. at XXXX, September declined December million

deposits X% bearing X% compared down December XX, and interest XXXX XX, compared XXXX. to to Our increased were September

at XXXX percentage XX, demand to compared December XX, quarter, in the from primarily deposits XX, XX, Our total to this during grew compared December XXXX down non-demand deposits a September XXXX a deposits XX% to due XX% governmental deposits. at XXXX. are as of The to ratio was decline in were which and increase at September XX%

offset the to mainly in ASB ratio due XXXX, loan-to-deposit December to deposits increase full to the to governmental average XX, the to XX% up full fourth deposits and for slightly was Our quarter quarterly our in XX% At increase XXXX at which reduction XX% average XXXX were deposits. XXXX, XXXX were deposits the were due partially quarterly to linked bearing Compared the total quarter compared compared total at higher non-interest to quarter fourth XX% by year and largely XXXX. XX% The compared total deposits, average acquisition. of year September December up compared XX, XXXX. the to the grew XX,

provide to deposit First low the associated ratio portfolio. were ratio December driver the and Prestonsburg grow the base governmental with drive XX, strong of future will believe opportunities We support seasonally at the lower deposits loan Our XXXX. liquidity the this to

equity dividends our our basis declared X XX, from December XX, XX paid. capital to our and is XXXX, December exceeded Our points increased Tier to improved which common by earnings, Compared have points XX ratios and basis up have ratio compared capital benefited XXXX.

our capital to Our total Tier capital XX, XXXX. December where to risk-based ratio XX.X% XX.X%, to grew X compared increased

tangible X.XX% September and XXXX. XX, to Our improved ratio compared XX assets points XX, compared equity tangible points XX December XXXX to to basis basis to

per at compared Our call at his to XX, earnings dividend and to share value increased our per final $XX.XX December September $XX.XX We will book fourth tangible our maintained XX% XXXX quarter per which at $XX.XX share, XXXX. I for rate to $X.XX comments. share. back diluted represents of XX, the now turn Chuck

Chuck Sulerzyski

investments Thanks, We our in John. insurance, banking marketplace. go-to-market believe us of our proposition and distinguishes

Our XXXX great teamwork. results achieved internal combined sales by were intense service efforts and with

to improve the We execution. of quality continue our

we future about optimistic of capital and technology benefit human our the are investments. We years as get

XXXX better. We make opportunity have to even an

anticipate pending First April, expected to gained. close merger be with many synergies the we With Prestonsburg will in

paid us our new to We in will amount complement summary, established specialties. We XXXX to will cash to allow year momentum footprint XXXX December into of aspects that expand XXXX investment services to results including cost, our and in revenue points growing This compared First Eastern in of XXXX XXXX. carry one-time our compared to dividends the paid introduce of with including in were which plan were excluding growth area. than portfolio, full XXXX. ratio improvement in and the and products clients basis higher assets to from stable business efficiency equity our tangible loan asset Kentucky XX, our adjusted acquisition Prestonsburg’s already ratio, XXXX, insurance several an is our XX% insurance metrics quality our In our increase total and continually in in $X.XX, tangible XX strong XX%

currently X% to X%. impact growth of the the we First merger, For XXXX excluding loan Prestonsburg of anticipate

However, We we consecutive organic upcoming us greater year with anticipate preventing to from quarter see due than quarter a X%. payoffs. first seventh having loan known the our do slow growth first not do slow

rate XXXX. charge-offs. the is increase does in belief be an be We any around a X%. to industry credit Fee-based anticipates growth We about believe in for net expected X% XXXX. interest reflect cost will our full year, in enjoying specific This reflects unusually and portfolio, low that rather one between it concerns is the expect not X.XX% which revenue margin increase expectation

total to the expect in upper growth We revenue single-digits. be

expect be mid-single-digits. non-interest in growth to We the expense

ratio for our between XXXX between Our anticipate XX.X% XX% target to efficiency is tax effective and and for We XX% rate be XX%. XXXX.

of First $X the $X.X relates majority cost are costs The of As the acquisition-related will to total Prestonsburg, of we quarter be approximately XXXX. million it currently estimating during million. to these second recognized

With commentary and our certain SBA our open government delayed shutdown, sales execute back This this the is the our will Officer. call the Thank Rogers, questions. turn current transactions is reached. is Q&A me now until to session Financial loan and Chuck concludes John hands will joining including ability for the for maybe Sulerzyski the our Chief I of facilitator. call you. resolution Once to we call again,

Operator

We question-and-answer & from Scott [Operator with O'Neill session. first Sandler begin Please Partners. go Siefers The question Instructions] will the now comes ahead.

Unidentified Analyst

Hi. Jeanie Scott. on [ph] This actually for is

the margin the Fed So, guys happening see core first XXXX? what I guess absent from to you do moves in

Chuck Sulerzyski

indicated-- As we

John Rogers

-- X.XX%. to think Yes, I it's think going be around we

slight a increase the to We've one year. somewhere to in might middle quarter. upside of I reduced our kind the as think guidance the prior basically year of -- the fourth it during

our think I lowered swaps, seeing it during of see -- from that cost. we of borrowing XXXX, will some year effective became long-term which away. bit some from We've during deposit go course will amortization the a a executed we ASBs little the the effective or of benefit we’re

think in pricing benefit I decent additional XXXX. deposit on the we been from we'll in -- see So, that we've our markets.

we tabs in XXXX, we'll from pricing. keep see So, market and how deposit be on overly we that. In pressures see in respect don't to to rates extraordinary see the need don't aggressive a that, move but

a key to driver side a continue in to be think rise have -- one good see increase fourth had the that margin that key see, commercial will a book. months to really you LIBOR of nice us. had as somewhat how our the steady our a would that we can of quarter, mainly we three definitely So, we Hopefully, relates perform that's on and coming out I beneficial and

Unidentified Analyst

once Okay, secondly, your great. thoughts First M&A then just behind are And on what Thanks. kind of future guys get you? Prestonsburg you

Chuck Sulerzyski

to continue have conversations. We

We to look opportunities. at continue

continue in disciplined terms price. to for the will We be deals of looking right at

Unidentified Analyst

Okay, perfect. Thank you.

John Rogers

you. Thank

Chuck Sulerzyski

you. Thank

Operator

Perito KBW. comes Our question ahead. next go with from Please Michael

Michael Perito

morning, good Hey, guys.

John Rogers

Good morning, Mike.

Michael Perito

rebound, give stuff real here, ask confidence I like to weight production. target quarters production have I like grown light of some a in the of in $XX I for nice opportunities If of a kind But slow net loan continued next that? production could that I I math basis, quarter some point, – like quarters. you've a quarter doing we're X%. couple last Obviously, math and non-bank have, something the that net kind roughly couple of last level three guess, it you've year, think on seeing just I'm in guys the seen where where years. you're million some I’m it competition want And on do when it seems for next or some million on that commercial about X% per the growth $XX estate quick if the so areas seeing especially to from relative pretty payoffs, those loans healthy the to that of curious net the quick year. that about just like mean, and been last payoffs you first overall you

Chuck Sulerzyski

Yes.

of if sense won your math. you just makes a think lot the question I

to taken permanent quality there's who have business some with deals I the We do market. sponsors consider. to of factors think couple a

We us expect to some to those replenish of the that. opportunity sponsors give

years. last going that, that haven't for say do off, done six we’re nothing First the also what I saying is would to we we're

we’ve think had our consecutive outflows. of uncanny where I inflows our of were an ahead quarters string

will, in the in you up market, look we were or little that times we a at remain when we heads. We what flipped too a at of many we're can coin If row the pipeline, kind But in XXXX. quarter. of seeing a hearing look a on what due optimistic backward we a slow we do came when for bit almost and

Michael Perito

Okay.

some have you the which reach X% side, of you It CRE kind and consumer X% of next but like a of C&I range? -- would expect seen, bit. then and to sound at on would kind the basically, So what help to point continuation year, that rebound of especially

Chuck Sulerzyski

Yes.

combination. a think it's I

of few between bit How change We consumer quarter consumer have more commercial and little slightly CRE. don't But years, grown continue we in is half and much We a within if the are next long-term matter than in over trends is one randomness and in those more to and luck commercial, goes think C&I C&I then dozen of you -- over we look to. commercial, more the will grown it a CRE has between than trends and any we’ve has of the last slightly C&I commercial to meaningfully balancing it. committed grow years. what to or a

John Rogers

in calls and investments recall, you if pipeline we we XXXX. Mike, continue to there plan should some fruit previously And about floor mentioned on our bear and Those initiative we have growth. decent new see a

done it’s in that, In some addition XXXX. of to

Michael Perito

what and on different Okay. And But Obviously, Insurance question think on. fee guidance, line remind little you in should good I a I'm handle going have you there. for which what of I continue then, of are? that drivers some And Chuck. trust seems a there electronic seen that item specific growth the me forward? have the guys assuming income a pretty platform there's momentum of CRMs the good you growth the have and some bit can banking driven the of some that growth

Chuck Sulerzyski

been of A of lot the Yes, comments. consumer. Mike, by I guess, a driven couple it's

And You the you know business. don't on income to also if fee I add? mortgage want in a year-over-year see growth John, good basis

John Rogers

Yes.

and on MasterCard some did to come to fees, those a that card-related from so actually XXXX or as coming and think increased see don't respect highly I'm surprise many banking for there, into customer – fees cash are you people through And is know not continue of we item interchange so comes that's beneficial. They also that you growth understood. we et years going where the some that usage most is, type to contract look help channels. the with most debit which of give I part cetera, income which subsequent is the electronic to sure us with electronic that. line there us,

going the that's in on So what's electronic banking world. specifically

Michael Perito

And a one that has of now -- franchise kind of about branch footprint M&A the today. just feel squeeze one closing you the or footprint is that resumed just Any today? while in on physical good especially -- the little last company the overall Got are it. on Or any to this I Helpful. considerations can there optimizing ask if anywhere? about you And thoughts do actually, now then overall on in. guys that to

Chuck Sulerzyski

over we've been time consistent network. the tuning pretty think of I

And last and We the one. the years branches think process branches XX over currently. of are closed I in eight two we've seven, closing opened

is network So efficient. over look we think annually that I it time continue at to there more some and to opportunities make

Michael Perito

right. All Thank appreciate you, it. guys. I it. Got

Chuck Sulerzyski

you, Mike. Thank

John Rogers

You’re Mike. welcome,

Operator

[Operator from Kevin ahead. Reevey question Davidson. go Instructions] Please The comes D.A. next with

Kevin Reevey

Good morning, you? John. Chuck. are Good How morning,

John Rogers

How Kevin. are Good you?

Kevin Reevey

Doing well. Thanks.

know XXXX of to related think X% guidance? when think a X%. How quite we How fees? that to X% line year-over-year, the down we income about X% it lumpy, but question about swap you at XXXX growth my So it's the bit. should it's versus within fee guidance I your commercial item should look looks to like a little

John Rogers

success in early I lot have. the at of the if the penetrating we look that was think income, a by swap you years that portfolio the

effort think I sales. swap is now our coming from most new of

more of So it's it was. a than perhaps struggle

opportunities think that up SBA forward. going for we make I can with

Chuck Sulerzyski

that than levels think not maybe the XXXX. think we we'll probably had would better do Yes, we Kevin, that in XXXX, but I to slightly

Kevin Reevey

And helpful. the… over then That's Okay.

Chuck Sulerzyski

to just increase early a I the is operation production, the will our being increase think addition full we're continue to here mortgage some speed we year about big from full out big having of a the that year I to so list and -- kind in the have to up out contributed just of banking electronic forward The came and bit looking CMOD – income some mortgage of get year, going it’s by would this out area, Kevin, have of Group that of to half longer that of is definitely benefits ASB within little think I the company.

for So, business. good of out a we're looking that results

Kevin Reevey

given where in that particular are commercial real subsectors CRE of are purposely are within there estate the we you then, any And avoiding? cycle, helpful. That's

Chuck Sulerzyski

We several avoiding are don't malls. do on been multi-family hotels. a time strip more that anything in now. don't do We've we've meaningful There Central Yeah. We much got for cautious in in long Ohio. bit a little

pretty weather for personal that in they with been balance of So, difficult on business that I sheet times see -- situation. is just years. now from doing that say I we we've sponsors really changing are or could times have that are quality don't a the good that some disciplines the we would us bad many those

Kevin Reevey

capital with And management, and looks done Prestonsburg to coming nice then your levels job you've going that's a on lastly to be capital like it building First accretive earnings.

enhance in think further capital buyback should levels. to should it some dividend? strategy we that How management about your So, XXXX as capital relates

Chuck Sulerzyski

in assess We're the there's as point think time. deal upside to dividend we time probably of have opposed from is I it past. on or and not the at shares and advantageous over price Well, buybacks, done we'll that until the last to the is opportunities precluded back Obviously whether so the buying not. with in buybacks we’re closed

Kevin Reevey

Great. Thank you.

Chuck Sulerzyski

Thank you.

John Rogers

You're welcome.

Operator

be ahead. will Raymond from go question next with Cardenas Daniel James. Please Our

Daniel Cardenas

guys. morning Good

Chuck Sulerzyski

Dan. Hi,

John Rogers

Dan. Hi,

Daniel Cardenas

see just So, that, have on given that what's anything cost be so XXXX. that so It that the quick Is thinking basis? just question been a appear don't weakness that should horizon. a we then, your for XXXX? behind long we outlook doesn't see how you on about near-term assumption? in some for more for credit Is charge-offs of go-forward it good your expect And you kind to

Chuck Sulerzyski

XXXX. is reason Yeah. in better that the than much you XXXX charge-offs see time. industry what I any to in over they than that or It's no really have be were will think could different just that

living really a of think be mindful in I people fortunate want time that. and I we're to

why the as that's credit those we past, the optimistic score. ever are continue our have always future we production, just we continue terms good comment Indirect about our of on business. average So in average best but new not as do increase, the had of terms scores quarter in to we to the portfolio, put been we in in

us that believe don't rate the I what has will but optimistic, that's the been industry over in or a it we’re have five years. So, time been last charge-off

Daniel Cardenas

sense. Got kind down. All deposit availability some to then maybe your it, color hold in your right. to betas of continue And makes

that pressure XX%, increase than put beginning maybe some I less think mean, are could that you I were mentioned John ratio? competitive they the factors footprint what slightly your on to throughout

John Rogers

the We don't we it do concerned bit we and rates to players. pretty mean up, the big about side little garner and to see try it. the services, we pricing the more don't still you -- I I I deposits lot aggressive overly that the the seeing all. from But going We certain are at are governmental see worlds, side that anything I see and considering or don't there corporate pressure. under a on increasing if match the top, return mean, right more think and slower are doing that. especially, managing seeing are do we fair, smaller keep think things don't. I try the now, an agencies, institutions we're that those we they from are we're you we But activity much We'll not to are near some customers that watch on to promotional I markets get happening what's on in a they're is at think a rates, top. eye think see

Chuck Sulerzyski

help think lot our ability XX% or not. cost relatively they branch emphasis that our to well continue deposits are network. about I grow we've there us our small to commercial whether in to accounts, generally to of grow our the to are a able deposits, are and hold as optimistic our business associates as to and will interest-bearing Also And low. are commercial of on and free checking deposits both and those been continue

So, that us. help also will

lot of share. there's and XX%, reasons there's a footprint, lot XX%, a XX% towns think where got I our of small we've So,

think I pretty too. helpful that's

Daniel Cardenas

mean, your of Okay. markets Good, the maybe near-term. any good. of economically? no and that And in still then with going shutdown government the just I kind is impacting on end

Chuck Sulerzyski

some federal it's overly I but places. we part the presence concentrations, stress. don't minor ability in some seeing see seeing point forth, have so relatively get it our done, a think for this to business anything that's community has deals at time. We're and of a most we We SBA got that different see some the signs but in we've dramatic, big that's

We with have terms clients be arrangements. made in arrangements the flexible loan and to of fees

where see to So, -- are We've of and that to help we the nature in see help things we where with done can. we community we food need. where banks able some the things

Daniel Cardenas

Great, great. guys. All it. Appreciate right. Thanks

John Rogers

you. Thank Okay.

Chuck Sulerzyski

You’re Dan. welcome,

Operator

there closing no further Mr. any Sulerzyski, this At time, have remarks? you questions do are

Chuck Sulerzyski

to Please peoplesbancorp.com Thanks release everyone for a our a I call on will that section. have the participating. good this and under webcast be of archived your Relations' remember earnings thank day. want for time and Yes. Investor

Operator

you sir. today's thank Thank you for attending presentation. now The And is conference concluded.

now disconnect. may You

Peoples Bancorp (PEBO) 22 Jan 192018 Q4 Earnings call transcript