EXHIBIT (99)(a) | |||
NEWS RELEASE | |||
April 21, 2008 | |||
Contact: | Tony W. Wolfe | ||
President and Chief Executive Officer | |||
A. Joseph Lampron | |||
Executive Vice President and Chief Financial Officer | |||
828-464-5620, Fax 828-465-6780 |
For Immediate Release
PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS
Peoples Bancorp of North Carolina, Inc. (NASDAQ: PEBK), the parent company of Peoples Bank, reported net income of $2.1 million, or $0.39 basic and diluted net income per share, for the three months ended March 31, 2008 as compared to $2.8 million or $0.48 basic and diluted net income per share, for the same period one year ago. March 31, 2007 per share amounts have been restated to reflect the 3-for-2 stock split declared and distributed during the second quarter 2007. Tony W. Wolfe, President and Chief Executive Officer, attributed the decrease in first quarter earnings to a decrease in net interest income, an increase in provision for loan losses and an increase in non-interest expense, which were partially offset by an increase in non-interest income. Mr. Wolfe noted that while Peoples Bancorp has been affected by the slowing economy, the Company, as is the case with most community banks, continues to operate profitably and expects to continue to do so through this current recessionary period.
Shareholders’ equity increased to $73.3 million, or 8.04% of total assets, at March 31, 2008 as compared to $65.3 million, or 7.80% of total assets, at March 31, 2007 as a result of net income earned less dividends paid for the period combined with a $5.0 million increase in accumulated other comprehensive income (loss) from March 31, 2007 to March 31, 2008. The increase in accumulated other comprehensive income (loss) is due to an increases in the market value of available for sale securities and derivative instruments.
Net interest income for the quarter ended March 31, 2008 decreased 8% to $7.9 million compared to $8.6 million for the same period one year ago. This decrease is primarily attributable to a 300 basis point reduction in the Bank’s prime commercial lending rate from March 31, 2007 to March 31, 2008. Net interest income after the provision for loan losses decreased 10% to $7.5 million during the first quarter of 2008, compared to $8.3 million for the same period one year ago. The provision for loan losses for the three months ended March 31, 2008 was $391,000 as compared to $323,000 for the same period one year ago, primarily attributable to an increase in net charge-offs of $118,000.
Non-interest income increased 23% to $2.6 million for the three months ended March 31, 2008, as compared to $2.1 million for the same period one year ago. Increases in components of non-interest income for the three months ended March 31, 2008 compared to the same period last year include a $376,000 increase in service charges and fees resulting from growth in deposit base coupled with normal pricing changes, an increase in mortgage banking income of $67,000 and an increase in miscellaneous income of $36,000.
Non-interest expense increased 15% to $6.9 million for the three months ended March 31, 2008, as compared to $6.0 million for the same period last year. The increase in non-interest expense included: (1) an increase of $341,000 or 10% in salaries and benefits expense due to normal salary increases and expense associated with additional staff for new branches, (2) an increase of $138,000 or 13% in occupancy expense due primarily to an increase in furniture and equipment expense and lease expense associated with new offices, and (3) a net increase of $430,000 or 28% in non-interest expenses other than salary, benefits and occupancy expenses. The increase in non-interest expenses other than salary, benefits and occupancy expenses is primarily
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PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS – PAGE TWO
attributable to an increase of $97,000 in advertising expense, an increase of $109,000 in FDIC insurance expense and an increase of $70,000 in deposit program expense.
Total assets as of March 31, 2008 amounted to $911.1 million, an increase of 9% compared to total assets of $837.3 million at March 31, 2007. This increase is primarily attributable to an increase in loans. Loans increased 13% to $727.2 million as of March 31, 2008 compared to $645.0 million as of March 31, 2007. Premises and equipment increased $4.6 million to $18.5 million at March 31, 2008 as compared to $13.9 million at March 31, 2007 primarily due to the purchase of a previously leased branch office and costs associated with new offices.
Non-performing assets totaled $12.1 million at March 31, 2008 or 1.33% of total assets, compared to $8.5 million at March 31, 2007 or 1.02% of total assets. The increase in non-performing assets is primarily due to an increase in non-accrual loans of $3.1 million from March 31, 2007 to March 31, 2008. This is primarily due to one relationship of $1.8 million with a local residential builder and a loan secured by rental properties of approximately $854,000. The allowance for loan losses at March 31, 2008 amounted to $9.4 million or 1.29% of total loans compared to $8.6 million or 1.34% of total loans at March 31, 2007.
Deposits amounted to $704.8 million as of March 31, 2008, representing an increase of 7% over deposits of $659.2 million at March 31, 2007. Core deposits, which include non-interest bearing demand deposits, NOW, MMDA, savings and certificates of deposits of denominations less than $100,000, increased $20.9 million to $492.4 million at March 31, 2008 as compared to $471.4 million at March 31, 2007 due to concerted efforts to attract additional deposits from existing customers and to attract new customers in our existing offices along with deposits gathered in the three new offices opened since May 2007. The Bank also introduced remote deposit capture for customers in 2007, which has enabled the Bank to gather additional deposits from existing customers and has been helpful in attracting new customers. Certificates of deposit in amounts greater than $100,000 or more totaled $212.5 million at March 31, 2008 as compared to $187.8 million at March 31, 2007.
Securities sold under agreement to repurchase increased $15.4 million to $24.6 million at March 31, 2008 as compared to $9.2 million at March 31, 2007 as concerted efforts to promote cash management services have increased customer usage of this product.
Peoples Bank operates entirely in North Carolina, with eleven offices throughout Catawba County, one office in Alexander County, three offices in Lincoln County, three offices in Mecklenburg County, one office in Union County, one office in Iredell County and one office in Wake County. The Company’s common stock is publicly traded over the counter and is quoted on the Nasdaq Global Market under the symbol “PEBK.”
Statements made in this press release, other than those concerning historical information, should be considered forward-looking statements pursuant to the safe harbor provisions of the Securities Exchange Act of 1934 and the Private Securities Litigation Act of 1995. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management and on the information available to management at the time that this release was prepared. These statements can be identified by the use of words like “expect,” “anticipate,” “estimate,” and “believe,” variations of these words and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, (1) competition in the markets served by Peoples Bank, (2) changes in the interest rate environment, (3) general national, regional or local economic conditions may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and the possible impairment of collectibility of loans, (4) legislative or regulatory changes, including changes in accounting standards, (5) significant changes in the federal and state legal and regulatory environment and tax laws, (6) the impact of changes in monetary and fiscal policies, laws, rules and regulations and (7) other risks and factors identified in the Company’s other filings with the Securities and Exchange Commission, including but not limited to those described in Peoples Bancorp of North Carolina, Inc.’s annual report on Form 10-K for the year ended December 31, 2007.
6
PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS - PAGE THREE | ||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||
March 31, 2008, December 31, 2007 and March 31, 2007 | ||||||||||||
March 31, 2008 | December 31, 2007 | March 31, 2007 | ||||||||||
(Unaudited) | (Unaudited) | |||||||||||
ASSETS: | ||||||||||||
Cash and due from banks | $ | 24,373,479 | $ | 26,108,437 | $ | 22,291,493 | ||||||
Interest bearing deposits | 1,484,005 | 1,539,190 | 1,467,544 | |||||||||
Federal funds sold | 2,228,000 | 2,152,000 | 21,147,000 | |||||||||
Cash and cash equivalents | 28,085,484 | 29,799,627 | 44,906,037 | |||||||||
Investment securities available for sale | 120,149,516 | 120,968,358 | 118,745,494 | |||||||||
Other investments | 6,254,847 | 6,433,947 | 6,755,849 | |||||||||
Total securities | 126,404,363 | 127,402,305 | 125,501,343 | |||||||||
Loans | 727,224,725 | 722,276,948 | 644,991,947 | |||||||||
Less: Allowance for loan losses | (9,369,730 | ) | (9,103,058 | ) | (8,620,074 | ) | ||||||
Net loans | 717,854,995 | 713,173,890 | 636,371,873 | |||||||||
Premises and equipment, net | 18,503,155 | 18,234,393 | 13,865,730 | |||||||||
Cash surrender value of life insurance | 6,837,154 | 6,776,379 | 6,589,206 | |||||||||
Accrued interest receivable and other assets | 13,445,333 | 11,875,202 | 10,115,218 | |||||||||
Total assets | $ | 911,130,484 | $ | 907,261,796 | $ | 837,349,407 | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY: | ||||||||||||
Deposits: | ||||||||||||
Non-interest bearing demand | $ | 115,107,603 | $ | 112,071,090 | $ | 112,777,011 | ||||||
NOW, MMDA & Savings | 202,040,157 | 196,959,895 | 188,580,644 | |||||||||
Time, $100,000 or more | 212,474,001 | 203,499,504 | 187,766,348 | |||||||||
Other time | 175,204,132 | 181,108,214 | 170,055,451 | |||||||||
Total deposits | 704,825,893 | 693,638,703 | 659,179,454 | |||||||||
Demand notes payable to U.S. Treasury | 542,457 | 1,600,000 | 853,415 | |||||||||
Securities sold under agreement to repurchase | 24,575,282 | 27,583,263 | 9,237,489 | |||||||||
FHLB borrowings | 80,000,000 | 87,500,000 | 77,000,000 | |||||||||
Junior subordinated debentures | 20,619,000 | 20,619,000 | 20,619,000 | |||||||||
Accrued interest payable and other liabilities | 7,294,236 | 6,219,248 | 5,177,720 | |||||||||
Total liabilities | 837,856,868 | 837,160,214 | 772,067,078 | |||||||||
Shareholders' Equity: | ||||||||||||
Preferred stock, no par value; authorized | ||||||||||||
5,000,000 shares; no shares issued | ||||||||||||
and outstanding | - | - | - | |||||||||
Common stock, no par value; authorized | ||||||||||||
20,000,000 shares; issued and | ||||||||||||
outstanding 5,603,683 shares in 2008 | ||||||||||||
and 5,624,234 shares in 2007 | 48,343,707 | 48,651,895 | 51,193,812 | |||||||||
Retained earnings | 20,657,502 | 19,741,876 | 14,811,487 | |||||||||
Accumulated other comprehensive income (loss) | 4,272,407 | 1,707,811 | (722,970 | ) | ||||||||
Total shareholders' equity | 73,273,616 | 70,101,582 | 65,282,329 | |||||||||
Total liabilities and shareholders' equity | $ | 911,130,484 | $ | 907,261,796 | $ | 837,349,407 |
PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS - PAGE FOUR | ||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||
For the three months ended March 31, 2008 and 2007 | ||||||||
Three months ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
(Unaudited) | (Unaudited) | |||||||
INTEREST INCOME: | ||||||||
Interest and fees on loans | $ | 13,044,464 | $ | 13,600,189 | ||||
Interest on federal funds sold | 18,179 | 125,495 | ||||||
Interest on investment securities: | ||||||||
U.S. Government agencies | 1,134,089 | 1,130,079 | ||||||
States and political subdivisions | 226,544 | 219,494 | ||||||
Other | 129,423 | 124,969 | ||||||
Total interest income | 14,552,699 | 15,200,226 | ||||||
INTEREST EXPENSE: | ||||||||
NOW, MMDA & savings deposits | 924,392 | 912,443 | ||||||
Time deposits | 4,274,471 | 4,286,403 | ||||||
FHLB borrowings | 946,661 | 923,490 | ||||||
Junior subordinated debentures | 326,747 | 360,199 | ||||||
Other | 207,632 | 124,278 | ||||||
Total interest expense | 6,679,903 | 6,606,813 | ||||||
NET INTEREST INCOME | 7,872,796 | 8,593,413 | ||||||
PROVISION FOR LOAN LOSSES | 391,000 | 323,000 | ||||||
NET INTEREST INCOME AFTER | ||||||||
PROVISION FOR LOAN LOSSES | 7,481,796 | 8,270,413 | ||||||
NON-INTEREST INCOME: | ||||||||
Service charges | 1,146,843 | 912,568 | ||||||
Other service charges and fees | 628,778 | 487,547 | ||||||
Mortgage banking income | 179,057 | 111,841 | ||||||
Insurance and brokerage commission | 106,741 | 100,657 | ||||||
Miscellaneous | 545,101 | 509,271 | ||||||
Total non-interest income | 2,606,520 | 2,121,884 | ||||||
NON-INTEREST EXPENSE: | ||||||||
Salaries and employee benefits | 3,714,535 | 3,373,166 | ||||||
Occupancy | 1,242,474 | 1,104,239 | ||||||
Other | 1,973,356 | 1,543,641 | ||||||
Total non-interest expenses | 6,930,365 | 6,021,046 | ||||||
INCOME BEFORE INCOME TAXES | 3,157,951 | 4,371,251 | ||||||
INCOME TAXES | 1,103,500 | 1,584,126 | ||||||
NET INCOME | $ | 2,054,451 | $ | 2,787,125 | ||||
PER SHARE AMOUNTS | ||||||||
Basic net income | $ | 0.39 | $ | 0.48 | ||||
Diluted net income | $ | 0.39 | $ | 0.48 | ||||
Cash dividends | $ | 0.12 | $ | 0.12 | ||||
Book value | $ | 13.08 | $ | 11.35 |
PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS - PAGE FIVE | ||||||||
FINANCIAL HIGHLIGHTS | ||||||||
For the three months ended March 31, 2008 and 2007 | ||||||||
Three months ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
(Unaudited) | (Unaudited) | |||||||
SELECTED AVERAGE BALANCES: | ||||||||
Available for sale securities | $ | 118,283,399 | $ | 119,776,080 | ||||
Loans | 720,635,244 | 643,112,284 | ||||||
Earning assets | 849,790,803 | 781,156,206 | ||||||
Assets | 902,160,386 | 822,204,490 | ||||||
Deposits | 695,803,296 | 644,992,518 | ||||||
Shareholders' equity | 73,357,753 | 65,311,870 | ||||||
SELECTED KEY DATA: | ||||||||
Net interest margin (tax equivalent) | 3.83% | 4.57% | ||||||
Return of average assets | 0.92% | 1.37% | ||||||
Return on average shareholders' equity | 11.26% | 17.31% | ||||||
Shareholders' equity to total assets (period end) | 8.04% | 7.80% | ||||||
ALLOWANCE FOR LOAN LOSSES: | ||||||||
Balance, beginning of period | $ | 9,103,058 | $ | 8,303,432 | ||||
Provision for loan losses | 391,000 | 323,000 | ||||||
Charge-offs | (191,440 | ) | (131,138 | ) | ||||
Recoveries | 67,112 | 124,780 | ||||||
Balance, end of period | $ | 9,369,730 | $ | 8,620,074 | ||||
ASSET QUALITY: | ||||||||
Non-accrual loans | $ | 11,402,966 | $ | 8,319,990 | ||||
90 days past due and still accruing | 347,281 | 78,249 | ||||||
Other real estate owned | 364,662 | 134,082 | ||||||
Repossessed assets | - | 5,000 | ||||||
Total non-performing assets | $ | 12,114,909 | $ | 8,537,321 | ||||
Non-performing assets to total assets | 1.33% | 1.02% | ||||||
Allowance for loan losses to non-performing assets | 77.34% | 100.97% | ||||||
Allowance for loan losses to total loans | 1.29% | 1.34% | ||||||
LOAN RISK GRADE ANALYSIS: | Percentage of Loans | |||||||
By Risk Grade* | ||||||||
3/31/2008 | 3/31/2007 | |||||||
Risk 1 (excellent quality) | 10.59% | 12.33% | ||||||
Risk 2 (high quality) | 13.87% | 13.69% | ||||||
Risk 3 (good quality) | 63.49% | 60.86% | ||||||
Risk 4 (management attention) | 8.75% | 10.78% | ||||||
Risk 5 (watch) | 1.57% | 0.44% | ||||||
Risk 6 (substandard) | 0.13% | 0.57% | ||||||
Risk 7 (low substandard) | 0.03% | 0.02% | ||||||
Risk 8 (doubtful) | 0.00% | 0.00% | ||||||
Risk 9 (loss) | 0.00% | 0.00% | ||||||
*Excludes non-accrual loans | ||||||||
At March 31, 2008 there were two relationships exceeding $1.0 million (which totaled $7.1 million) in the Watch risk grade, no relationships exceeding $1.0 million in the Substandard risk grade and no relationships exceeding $1.0 million in the Low Substandard risk grade. These customers continue to meet payment requirements and these relationships would not become non-performing assets unless they are unable to meet those requirements. | ||||||||
(END) |