PEBO - Earnings call transcript Q1 2024

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Operator

Good morning, and welcome to the Peoples Bancorp Inc. Conference Call. My name is Danielle, and I will be your conference facilitator. Today's call will cover a discussion of the results of operations for the quarter ended March 31, 2024. [Operator Instructions] This call is being recorded.

objective please the time. at object you of disconnect recording, this If future be will Peoples' statements or call in future projections performance Please this forward-looking contain advised or other financial events. regarding

are believes management's Peoples' during People current statements call, on are of Commission Securities based risks involve and historical not and based this and Management These are statements number knowledge expectations. Exchange which their forward-looking within are business the facts, a assumptions statements made operations. the in The uncertainties call and forward-looking this statements on of reasonable detailed filings. in bounds of

peoplesbancorp.com be most available However, statements. by Peoples requirements. accepted discussed quarter actual Relations. Peoples results morning the these applicable the possible XXXX to accounting at it responsibility GAAP first was issued the earnings earnings included any differ as end to release. or of at update reconciliation non-generally is during this GAAP principles materially this and under financial required measures forward-looking financial disclaims after measures directly of call forward-looking the is legal Investor is comparable from these statements release this may except call, A

may Chief Wilcox, opening Officer and filling be Tyler year. Wilcox, of include the for Investor An and which Relations section will be conference. This each to call on X Executive question-and-answer and in bancorp.com this available Mr. people's Participants and cast prepared about commentary, call a available Katie statements. XX your in of call today's I will by minutes archived followed Chief facilitate. you Treasurer President XX Officer; Bailey, Financial session, will begin will questions will be for

Tyler Wilcox

and the Sarisky I through instrumental as XX. everyone, with joining credit our for into and bank ] great tenure future. the thanking moving Danielle. of want for associates, our largest advancing a his he after both done. of Chuck thanks his [ technology on in you, today. March you've giving Chuck in leaving retired for Thank value the promotes over was quality customer part start experience the well-being creates Chuck, performance, the holder better cleaning XX-year service off up acquisitions; to his everything Thanks, that of to by a organically legacy, call our to culture improved us which Good through behind competitors our probably morning, effective back important recession, our a meaningful and most and focuses way. match that communities

Earlier per of performance. morning, our quarter. $XX.X $X.XX Moving the diluted linked earnings to and $X.XX while on quarter our we reported for to million, this earnings first share were compared

accounts in expenses quarter As first quarter, retirement-eligible stock-based savings for that employer of we certain recognized contributions during and included to our last we health each expense we compensation the employees. have which year, noted annual

These by for totaled first negatively many pleased million the with are additional quarter the costs $X.X quarter. results. $X.XX and our impacted and positives diluted had EPS for We

had basis Our linked the lease stable declines of commissions from offset fee-based compared impact income the interest only we excluding as quarter, compressed insurance accretion X acquisitions, margin net performance-based income annual points income. to in

savings Our annual the for employer excluding increases the stock-based compared noninterest down quarter to contributions compensation linked expense was first to health and quarter, accounts.

largely Our compared driven X% XX.X% loan-to-deposit year-end retail to balances ratio to declined increased growth. to Deposit compared year-end. CD at XX.X% by were and

completed and $X.XX We share value at increase share $XX.XX book ninth consecutive repurchase quarter during another dividend quarter. announced improved year, our was we quarterly per and the million $X for the an Our to tangible end.

credit Moving on to our quality.

and on by allowance CECL our in end. The macroeconomic higher portfolio total deterioration model, of conditions loan increase in losses our allowance was driven credit for loan the loans Our growth. grew moderate reserves quarter our X.XX% in individually to analyzed at

charge-off rate points quarter. slightly annualized the declined for the for XX was quarter first net basis to the last Our compared and quarter

these net are and to remain While risk-adjusted pre-pandemic returns charge-off grew total year XX satisfied prior trends historical compared at increase of to assets the leasing and elevated with consumer points Most balances. was to on more quarters, to assets compared basis our averages, at we businesses. Nonperforming end indirect related consistent they with nonaccrual XX higher of year-end. points quarter are basis

both XX.X% and loan our specific trend and driven despite the quarter improved of in XX.X% downgrades We credit some at collateral and downgrade a to portion classified on quality. loan these The and current year-end. of and our X of our from the relationships quality end were relationships. considered by are loans quarter the increased Criticized at question is indicative commercial industrial portfolio overall The this credit support commercial strong, quarter. view guarantor an as strength not in during loans

rates Our delinquency quarter. low strength portfolio evidenced the is this by

As living. far space, material as loan concentrations, or commercial hospitality assisted we have continue exposure office to no in

stood remain as $XXX million quarter loans loans $XXX multifamily to year-end. unchanged at compared at from year-end million relatively these Our end at

economic with noted sponsor we before, growth metrics located are primarily have As support. these notable strong and within properties markets

million our partially loans, Compared also million loan combined of loans and indirect estate, up was growth Most growth consumer finance to and commercial which a commercial our driven and This million $XXX declines quarter offset the which X% loan to construction and million linked consumer total by was were the year-end, in compared decrease by balances, premium end. increases down our industrial real portfolio or direct or $XX grew $XX total. in in annualized. were $XX

while the lines XX% loans our paid real remainder cycles XX% occupied same real of investment of estate. of loans, Part of total limestone time, estate quarter commercial loans balances loans, total equity XX% were nearly were which owner was of loan the decline At end, the loans. comprised were total our consumer in which were off. At by driven credit estate the real of that home residential and include renewal acquired

to of were fixed performance. remaining call finance were now and the Katie X%. quarter with specialty XX% of over loans our industrial end, for loans totaled for loans XX% rate. at construction and a will I financial discussion total XX% turn our rate, a variable Commercial XX% the At

Kathryn Bailey

Thanks, Tyler.

for the last the by points XX quarter, interest which net interest to compared the mostly for quarter. quarter income in income to change net X% amortization from higher investment linked was income, X.XX% expense mostly was basis first our accretion of acquisitions, for margin driven net to margin interest quarter contributed basis and quarter. decline compared loan margin For in X.XX% points expense in the and deposit this XX to The declined first [indiscernible] improvements net offset income accretion lower our our our the due

fourth fair additional that marks to had X our in For we for quarter, refinements points the Limestone basis value contributed margin. an

as in the coming margin the refinements to We margins basis our accretion the continue remaining net noise mostly hand to to compared excess quarter, linked X and cash portfolio value small which due around by some normalize initial negatively the to impacted quarter to interest The points. of was expect decline activity fair in during months subside. on

liquidity balance balance are our sheet. For previously purposes, holding we had holding cash were we sheet on off that

first CD run We continue in to the quarter XXXX. of specials

of flexibility. end our term evaluate shorter retain our while the lower CDs to the on look retail rates position will to We duration for opportunities keeping on and our

is Moving banking offset insurance lease declines income and quarter, We compared driven higher our in by fee-based income. by electronic income. to were X% and partially down to on our which the linked

We quarter year totaled annual [indiscernible] year income performance-based the each $X.X recognized of due insurance in quarter. which insurance compared million higher prior the to first commissions, to for $X.X million

were up expenses, they it to relates quarter. linked slightly noninterest our As to the compared

contributions employer the related when and health However, certain accounts additional expense excluding for cost $X.X to compensation to of stock-based retirement. savings million

Our quarter, impacted expense XX% operating noninterest by ongoing Compared of the was larger from heavily Limestone. quarter. linked and were and additional the the prior expenses costs the to down year offices grew compared footprint noninterest to

XX% compared first adjusted quarter, quarter. was For the our XX% quarter. XX.X% XX.X% non-core to linked to linked ratio for for our When the efficiency ratio for reported efficiency the expenses, compared was

related net accretion first expenses, our was income. to expense noninterest additional income with due declined to to due higher increase lower interest mostly annual quarter coupled The

our balance Moving on to sheet.

portfolio loan-to-deposit XX.X% from securities declined year-end. total was to to at and At March assets XX. compared was stable ratio at XX.X% XX.X% at the to our time, investment Our relatively year-end same

of a funding $XXX program term healthy XXXX. more of quarter cash level [indiscernible] and additional last liquidity Reserve been while maturity We million Federal holding have holding months. have in has to we bank mentioned currently the and that on been have continue that January we We anticipate funding until we utilized restricted, outstanding

continued XX%, this As We year-end. which from able grew CDs long last strategy make higher the XX%. balances deposit for first implemented short-term XX% to and our retail by to CD customers our offerings balances rates pricing governmental money by rate we We increase bolster perspective quarter. continue markets deposits advantageous. From to as X% year, were by into CD utilizing our a a

retain have cash. want to our to While the was we control influxes governmental also want the related deposit of long seasonal deposits in The term. we during increase cost to generated deposits, quarter we

At composition of XX% which impacted at quarter CD deposit has and deposits deposit quarters. included our was quarter to demand been growth XX% year-end declined balances in end, businesses XX% recent to compared balances. Our at commercial deposit in deposits total and retail XX% in by end retail small our

median was was while customer Our our relationship retail average deposit $XX,XXX [indiscernible] $X,XXX.

position. Moving on to capital our

shares of of the value our are quarter. during stock and We repurchased first the $X million confident another in

we increase. of raised Additionally, morning, a remain ninth in this performance consecutive and this making the our quarterly year $X.XX by our confident dividend dividend

X.X% Our of represents $X.XX a dividend per yield share.

strong. our At capital ratios quarter end, remained

Tier equity common XX.X%. was Our capital X ratio

ratio XX.X%, and Our total our was was leverage risk-based ratio X.X%. capital

excess quarters ratio This in been at on balance Our to X.X% our we to year-end earnings. calculation tangible the cash recent assets have increased compared equity sheet. impacted due by negatively to has holding tangible to X.X% been improved retained

other at which several million $XXX our For quarter reduced accumulated have end. stood this comprehensive losses quarters, at ratio,

at to per quarter end value to year-end. book tangible Our compared share $XX.XX $XX.XX grew at

comments. will Finally, to over closing call his Tyler turn I the for

Tyler Wilcox

Katie. you, Thank

our We As to be forward focus care and to on future. is being providing clients of XXXX, credit our we beneficial infrastructure take by employer, intend and in it consistently our initiatives. value goal when and the strategic continue and performance a drive solid associates acquisitive be technology great in making return communities, our our move on and is continue total invest high-quality standards, in to progress our our into unwavering main stock on shareholder

financial to it relates for the interest we merger. income anticipate of benefit the XXXX, performance Limestone full year from impact our to net As

X.X% expect our significant We between to between interest assuming changes rate be believe and X% quarterly XXXX. and are no income be We XXXX. fee-based margin there will growth in to that X% net interest compared X.X% our short-term

and quarters expenses third second, the be total for million fourth noninterest We expect quarterly and to XXXX. $XX $XX between million of

XXXX. XXXX our loan for will and X% believe X% to growth between We be compared

in increase losses with of provision and an some anticipate we return levels. quarter, last our for our noted loan growth pre-pandemic we net As of the anticipated credit to charge-offs

of year through we year, anticipating rate points. a we As move net full around basis XX the are charge-off

continue to analyst Our first $X.XX beat expectations quarter estimate the diluted and consensus earnings for of $X.XX the EPS our quarter. exceeded of

in and of while merger taking not associates recent be and new our proud driving expected teams for of care our implementing integrating what more have each clients. our could growth, I other growth most in preparing quarters of terms done technology, and recent organic

Financial all our will is We is the of back of the Tyler for Chief now open will This facilitator. again, into Wilcox, XXXX beyond, questions. community Katie concludes our America. hands we making build for bank Once Q&A session with call best our joining in and Bailey, I people turn to the successes our you. the Thank call continue this me the into call the Officer. goal upon and commentary, and will

Operator

Group. Brendan Hovde comes from question [Operator first Instructions] well. from SPXXXXXXXXX The Nosal Doing

Brendan Nosal

$XX update Maybe internal here on prep just assets. start to off billion for in an for the

you of How impact well. in? maybe you're on much bake early some as do run thoughts what more kind rate the curious [ And inning then Just to costs ] in? Durbin need

Tyler Wilcox

to terms we for the in the and we're Yes, an of inning, would I in -- the say I'd perspective, in we're Brendan, are question. ninth preparation, inning thanks ready say from confident opportunity we both that correct the that preparation in and the we the came environment. If preparation made we've regulatory for by, people, systems, go. the feel investments and in made,

a related question of matter the right just So order in that was part cross. it's perspective, I believe second the opportunity to finding to expenses. your the of from

Kathryn Bailey

enhancements we'll first Yes. of expenses anticipate. are relates from be And the the so to forth, we for quarter base to I There added includes a but the minor that nothing think material and the base. management would perspective all in some yet expense expense make risk

Brendan Nosal

of side helpful. things. to That's the to it. over Okay. Got Fantastic. pivot Maybe deposit

of pinpoint, curious would your any where color bottom. kind to be helpful. Just I for it's but latest balances noninterest-bearing there might know on thoughts up

Kathryn Bailey

Yes.

quarter. can actually continued showing we decline the say the we to the As that news expect 'XX, we're for is What first some category. had we runoff significant. more a And in you to through as some date saw, nothing month in April, stability little good experience I of proceed

So we through noninterest-bearing I like still that out from we'd think deposits a as 'XX. continue. to I hope we migration trend perspective, of forecast -- see proceed expect some But

Brendan Nosal

right. All Perfect.

Operator

The next from comes from question Daniel James. Raymond Tamayo

Daniel Tamayo

accretion, Maybe more great versus that end or towards you have idea into the how X.X% And well. pressure of may the on push you you could guidance. be would you're X.X% NII much any detail if thoughts what's NIM expecting first end? on maybe, lower on as the that what higher then if and baked the an give NIM us to Katie, guidance,

Kathryn Bailey

Yes.

variable migration in would and I cost it and think end. those deposits the that lower the is that the the to NIM retain -- drive big so us in the takes the

I I relatively think our XX a neutral those, can from basis of pretty we forecast, range. maintain from therefore, think a here, manage as think, sheet And effectively rate to point, we position. a balance we're noted I couple that in

that's think I drivers. the So kind main of

From an quarter. we basis a point this impact printed of accretion XX accretion perspective,

guided a to $XX to $XX quarter million. think had million I

as quarter. either for in be loans of portfolio bit that renew our this portfolio. or we'll think a in our kind XX% I might the in to back continue that to go of half range, of XX% year second the below out We those

Daniel Tamayo

I But expecting Okay. assumptions? some baseline core guess, you're in your say fair NIM still to pressure

Kathryn Bailey

this the I experienced we didn't we of kind quarter. quarter. of of fourth to accretion think true-up in a there's compression might quarter. points did a we few don't what basis like -- that this in tune Nothing experience I have next quarter the we

XX think be XX an we'll perspective, basis still from that I to we'll still points. So -- accretion be in

perspective. deposit the might continue be see nothing to my compression will it of a basis but think I more few cost, from we points significant

Daniel Tamayo

Got it.

in then excess terms sheet, long And what's the for the plan around? Okay. how the that balance of sticks cash on

Kathryn Bailey

Yes.

as off, quarter, noted are will before, to pledged are have securities first we've balances them. public in of we Some that being high migrate And funds those collateralized funds as seasonally at public roll investment watermark. off a the through

maintain off, therefore, pledge liquidity migrate we'll investments. to sheet So able through reduce that balance as those the unpledged and be off securities some of

be will the that one So of strategies.

see some and proceed activities you'll second that quarter. off So see come that of third the deploying through expect in we're quarter, other we as to we have the we benefit some

Daniel Tamayo

Okay. in you But path talking interest about. of contemplated the that's margin net all high-level kind were

Kathryn Bailey

That's correct. Yes.

Operator

comes question from McEvoy Terry next The Stephens. from

Terence McEvoy

economic connected release, then in big increase for the of demand and said C&I the loans the later in Tyler, Just remains kind picture, release, in the strong. And leasing a there deterioration you was conditions. provision in to

loan growth So the C&I where about and seeing Tyler, particular? markets? can in -- you just And the talk you're healthier

Tyler Wilcox

Sure, Terry.

thoughts include maybe distinguish where consideration macroeconomic there. take did on into nationally, some make some So our of there take a we nationally. to factor consideration I considerations The into with of provision view just distinction release a employment book business. that couple we our CRE would of

so we growth from And segment the markets. broad-based see our of a coming

of the breadth One approach that overall businesses have, of the businesses we kind breadth that and of have production are with portfolio developed. we our reasons the the that is because satisfied different geography of portfolio of loan why that we've we our of and breadth of

issues, a slight ticket small of some in demand the the in credit we leasing see leasing uptick nationally notwithstanding So businesses. having

Cleveland, then of again, business. expect the national good to broad-based forth. side, And to CRE so good of and growth, Washington, continue see -- to in C&I the Lexington, the and growth continue Columbus, Louisville, we and we have finance premium kind on We saw market that Cincinnati, D.C.,

today. seen So out that we're I comes we've the X% from pipeline in the confidence a that historically, little slower guess would the of to I of seeing say bit gate. X% strength the guidance And

the have to those you that's think if hit at a realistic. raw production, But look we numbers pretty we chance

Terence McEvoy

a real you over follow-up rates. borrower prepare specifically amount interest And as the for the Tyler. matures the X question And on or how that, stress that test that occupied. nonowner next What's have then the to just commercial year Appreciate years? higher estate,

Tyler Wilcox

Yes.

due in We terms those million of about around in over satisfied $XXX that. In a our million have in of had processes the of years, about pretty with about XXXX. discipline and the -- strength and we're feel the year coming the we stress of the last test $XXX a that's next borrowers we there's how good couple -- kind Obviously, lot we've in of book. next particularly, year,

So amount. a manageable very

disciplines again, to and all strength of kind our disciplines And the of at coverage of those reviewing of the service the internal rest borrower, of the debt ratios credit financial us looking conclusions. lead

Terence McEvoy

provided forward-looking guidance the financial Appreciate earlier.

Operator

The KBW. next question Tim from comes from Switzer

Timothy Switzer

The impact your say, to one of XX as think about And get basis I year? or is XXXX, then how no late if what guys changes the short-term reprice? first early start would NIM meaningful point maybe rate to the in start X reprice to next cuts, series do thinking it rates would guidance, NIM be assuming some have a with over to How you Is are down cuts, X, XXXX lower? trend deposits as that? relief we initially loans the you

Kathryn Bailey

think right. I that's Yes,

I expectation as increments go and but I stay do in they meeting, the long -- one point forward. meaningful basis think our which on think don't as a XX is

will impact somewhere think the relatively around I X%. maybe minimal, be

not basis. the to significant So

for I be time, XX a proceed X to they think on back not some through we think that of extent and the point, through we'll able the your think of points, made margin recover I basis to couple to point you as I it deposits. Sorry, significant meetings if keep to

We But order, retail relatively benefit those our lower. relatively we'd short is short and that benefit the So be funding. CD in see get to production of won't some term. repricing relief immediate on able

Timothy Switzer

the better Okay. an kind were rest $XX that of what you be million That's drove in that better above be range million guide? And a $XX expenses the bit your quarter And this of low range. at you of there? kind for guidance for $XX your to there your opportunity the think year $XX helpful. than million million to of the to trends Is end

Kathryn Bailey

Yes.

a the lower we or think for on side. X, might I chance a be quarter there's

think somewhere pretty through the be we'll range year. of midpoint I in the that consistently

I think some of we the quarter isn't first in came had little anticipated, a softer main drivers us for medical which costs bad thing. is than in the a

But don't is the generally, see think saw through quarter benefit I which we that of grow kind I in forward. first those quarter proceed we why each think as year, the we'll going

Timothy Switzer

Okay. Got question for me. it. And the then last

Is X%. Your guide excluding up to noninterest losses gains of net [indiscernible] income that X% and

Kathryn Bailey

Yes.

Excluding as sales gains would investment any sell. well kind and other as losses security we on of assets

Operator

The comes from next from Davidson. question Manuel D.A. Navas

Manuel Navas

a you that drivers the little guide. a there? lower talk fee just before. It's about on bit than follow-up Just Can

Kathryn Bailey

Yes.

driver that is think banking the for electronic I big income.

with I market industry that electronic the think quarters, is banking some X had in might in anticipated, bit those we've release main what get probably main signs than some but we reduction the we think And coming with although which that drivers. I seen we or see category. are compression in softer in that some and we've the driver that in seen little what couple consistent a income, publications mortgage

Manuel Navas

-- the acquired be any classified color right? and And Great. would catch I and extra great. did there you Okay. criticized talked kind that loans Mainly increases to of about

Tyler Wilcox

Sure. I'll take one. that

the part be ability of one with loans, -- really inventory. loans. our out feel will to book, say, the X Limestone good We of collateralized and about acquired one. happened property that about So continue acquisition I is feel well acquired the of portfolio We them loans and by equine the C&I to that good

and facilities support. Again, living is guarantor good collateral And the second operator. senior a

view to and these in books, but books expectations. view as we one-offs, of I as acquired we these core then So the rest know the to our a it's both -- particularly performing are cliche, those

Manuel Navas

you give to Okay. NIM That's able last to NII. helpful. switching were really over and In quarter, --

have for You funds. I any a funds. in gave in ranges Do a some if can just there? have nice don't, bit updates you Fed you wondering like move any update but little on, I steeper Fed for larger moves decline

Kathryn Bailey

hold experienced relatively back is Yes, we previous the the comment, $XXX I'd quarters, [ X basis million. balance neutrally think X decrease or to positioned. point to million position Again, to ] our -- next over I still asset that our guidance in that say extent $XXX XX the sheet few a would

have move rates So we huge impact, XX, a few basis or I meetings. XX don't to think down, over points extent a up XX, the

Manuel Navas

Okay.

That you as So makes pace to potentially And of look you for acquisitive last long in can would sense. being the -- as you hearing to what currently? there talked kind How be the beneficial. increase, term you doesn't adjust market? question when about beneficial? what Just M&A My it. would discussions is you're

Tyler Wilcox

beneficial would for Obviously, the of about of on geography. price, that. right question. there's Thanks to number everybody right of large is frog it ideal partnership make talks kind over. at couple a I right. right acquisition size the that that And and one Yes. could scenario think factors leap the the thoughts be right A

leap those those we interested -- banks the that X that I acquisitions, to in billion. universe to be could $X $X we'll that think shown successive to with large and range billion banks in We've over that. be billion interested well. if of that to was $XX an we execute smaller to there. to would kind ability the on partner universe with do If there were billion X is past there do $X The of We'd us $X the opportunistic that be to banks than were willing so billion

the lot absolutely we going on a viable. think are apps conversations throughout There's obviously So both of industry.

those having that. continue and terms We be to potential in active continue conversations acquisitions, times of we with will in all

move when So presents we're to the right itself. opportunistic going be

Manuel Navas

that. appreciate you. I Thank

Operator

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

Tyler Wilcox

morning. remember peoplesbancorp.com of Yes. be section. for will joining this our to and great Relations for release webcast earnings thank Investor call and I your want our the have time, day. call you everyone a under this that Thank Please archived a at

Operator

you today's The conference Thank attending for has presentation. now concluded.

disconnect. now may You

Peoples Bancorp (PEBO) 23 Apr 242024 Q1 Earnings call transcript