| EXHIBIT (99)(a) | |||
| NEWS RELEASE | |||
| April 27, 2009 | |||
| 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 $625,000, or $0.11 basic and diluted net income per share, before adjustment for preferred stock dividends and accretion, for the three months ended March 31, 2009 as compared to $2.1 million or $0.37 basic net income per share and $0.36 diluted net income per share, for the same period one year ago. After adjusting for $201,000 in dividends and accretion on preferred stock, net income available to common shareholders for the three months ended March 31, 2009 was $424,000, or $0.08 basic and diluted net income per common share. Tony W. Wolfe, President and Chief Executive Officer, attributed the decrease in first quarter earnings to an increase in provision for loan losses, a decrease in non-interest income and an increase in non-interest expense. Mr. Wolfe noted that the decline in earnings for the first quarter reflects the continuing impact of the current financial crisis that has caused declining real estate values and lower levels of new home sales. As a result, the Company experienced a significant increase in the level of charge-offs and related increase in the provision for loan losses compared to the same quarter in 2008 as the Company aggressively recognized losses on newly non-performing loans for the three months ended March 31, 2009.
Shareholders’ equity increased to $100.2 million, or 10.01% of total assets, at March 31, 2009 as compared to $73.3 million, or 8.04% of total assets, at March 31, 2008, primarily due to the issuance on December 23, 2008 of $24.4 million in Series A preferred stock and a warrant for shares of common stock with a value of $704,000 associated with the Company’s participation in the U.S. Treasury Department’s Capital Purchase Program (“CPP”) under the Troubled Asset Relief Program. The CPP, created by the U.S. Treasury, is a voluntary program in which selected, healthy financial institutions are encouraged to participate. Approved use of the funds includes, among other things, providing credit to qualified borrowers, either as companies or individuals. Such participation is intended to support the economic development of the community and thereby restore the health of the local and national economy.
Net interest income was $7.9 million for both of the three-month periods ended March 31, 2009 and March 31, 2008. A 200 basis point reduction in the Bank’s prime commercial lending rate from March 31, 2008 to March 31, 2009 was offset by a decrease in the cost of funds, an increase in interest earning assets and an increase in income from derivative instruments. Net income from derivative instruments was $1.1 million for the three months ended March 31, 2009 compared to $406,000 for the same period in 2008. Net interest income after the provision for loan losses decreased 18% to $6.1 million during the first quarter of 2009, compared to $7.5 million for the same period one year ago. The provision for loan losses for the three months ended March 31, 2009 was $1.8 million as compared to $391,000 for the same period one year ago, primarily attributable to a $3.3 million increase in non-performing assets from March 31, 2008 to March 31, 2009, a $604,000 increase in net charge-offs during first quarter 2009 compared to first quarter 2008 and growth in the loan portfolio. Net charge-offs in first quarter 2009 included $297,000 on construction and acquisition and development loans, $82,000 on mortgage loans and $350,000 on non-real estate loans, which included $211,000 on commercial loans.
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PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS – PAGE TWO
Non-interest income decreased 16% to $2.2 million for the three months ended March 31, 2009, as compared to $2.6 million for the same period one year ago. Changes in components of non-interest income for the three months ended March 31, 2009 compared to the same period last year include a $44,000 increase in service charges and fees resulting from growth in the deposit base coupled with normal pricing changes and a $14,000 increase in mortgage banking income. These increases in non-interest income were offset by a $227,000 decrease in miscellaneous fee income when compared to the same period last year. The decrease in miscellaneous income is primarily due to a $232,000 net increase in losses and write-downs on foreclosed property for the three months ended March 31, 2009 as compared to the same period last year. The $248,000 write-down of securities for the three months ended March 31, 2009 reflects a write-down of an asset classified as other investments. Management determined the market value of this investment had decreased significantly and was not a temporary impairment therefore a write-down was appropriate during the first quarter of 2009. The remaining book balance of this asset is less than $250,000.
Non-interest expense increased 6% to $7.3 million for the three months ended March 31, 2009, as compared to $6.9 million for the same period last year. The increase in non-interest expense is primarily due to an increase of $435,000 or 22% 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 attributable to an increase of $404,000 in FDIC insurance expense and an increase of $146,000 in debit card expense. In addition, there was an increase of $113,000 or 9% in occupancy expense due to an increase in furniture and equipment expense. These increases in non-interest expense were partially offset by a $136,000 decrease in salaries and benefits expense due to a decrease in incentive expense.
Total assets as of March 31, 2009 amounted to $1.0 billion, an increase of 10% compared to total assets of $911.1 million at March 31, 2008. This increase is primarily attributable to an increase in commercial and residential mortgage loans combined with an increase in investment securities available for sale. Loans increased 7% to $778.1 million as of March 31, 2009 compared to $727.3 million as of March 31, 2008. Available for sale securities increased 22% to $146.9 million as of March 31, 2009 compared to $120.1 million as of March 31, 2008.
Non-performing assets increased 9% to $15.5 million or 1.54% of total assets at March 31, 2009, compared to $14.2 million or 1.47% of total assets at December 31, 2008 primarily due to a $1.4 million increase in non-performing loans, which was partially offset by a $156,000 decrease in Other Real Estate Owned. Non-performing assets amounted to $12.1 million or 1.33% of total assets at March 31, 2008. Non-performing loans include $2.5 million in construction and acquisition and development loans, $10.0 million in commercial and residential mortgage loans and $1.2 million in other loans at March 31, 2009 as compared to $2.5 million in construction and acquisition and development loans, $8.7 million in commercial and residential mortgage loans and $1.1 million in other loans as of December 31, 2008. The allowance for loan losses at March 31, 2009 amounted to $12.1 million or 1.55% of total loans compared to $9.4 million or 1.29% of total loans at March 31, 2008.
Deposits amounted to $750.1 million as of March 31, 2009, representing an increase of 6% over deposits of $704.8 million at March 31, 2008. Core deposits, which include non-interest bearing demand deposits, NOW, MMDA, savings and non-brokered certificates of deposits of denominations less than $100,000, increased $16.5 million to $508.9 million at March 31, 2009 as compared to $492.4 million at March 31, 2008. Certificates of deposit in amounts greater than $100,000 or more totaled $238.9 million at March 31, 2009 as compared to $212.5 million at March 31, 2008.
Securities sold under agreement to repurchase increased $9.4 million to $34.0 million at March 31, 2009 as compared to $24.6 million at March 31, 2008 as concerted efforts to promote cash management services have increased customer usage of this product. Short-term Federal Reserve Bank borrowings amounted to $12.5 million as of March 31, 2009.
6
PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS – PAGE THREE
Peoples Bank operates 21 offices entirely in North Carolina, with offices in Catawba, Alexander, Lincoln, Mecklenburg, Union, Iredell and Wake Counties. The Company’s common stock is publicly traded 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, 2008.
7
| PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS - PAGE THREE | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||
| March 31, 2009, December 31, 2008 and March 31, 2008 | |||||||||
| (Dollars in thousands) | |||||||||
| March 31, 2009 | December 31, 2008 | March 31, 2008 | |||||||
| (Unaudited) | (Unaudited) | ||||||||
| ASSETS: | |||||||||
| Cash and due from banks | $ | 41,185 | $ | 19,743 | $ | 24,373 | |||
| Interest bearing deposits | 1,402 | 1,453 | 1,484 | ||||||
| Federal funds sold | - | 6,733 | 2,228 | ||||||
| Cash and cash equivalents | 42,587 | 27,929 | 28,085 | ||||||
| Investment securities available for sale | 146,871 | 124,916 | 120,150 | ||||||
| Other investments | 6,201 | 6,303 | 6,255 | ||||||
| Total securities | 153,072 | 131,219 | 126,405 | ||||||
| Loans | 778,117 | 781,188 | 727,225 | ||||||
| Less: Allowance for loan losses | (12,064 | ) | (11,025 | ) | (9,370 | ) | |||
| Net loans | 766,053 | 770,163 | 717,855 | ||||||
| Premises and equipment, net | 18,022 | 18,297 | 18,503 | ||||||
| Cash surrender value of life insurance | 7,085 | 7,019 | 6,837 | ||||||
| Accrued interest receivable and other assets | 13,497 | 14,135 | 13,445 | ||||||
| Total assets | $ | 1,000,316 | $ | 968,762 | $ | 911,130 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||||
| Deposits: | |||||||||
| Non-interest bearing demand | $ | 105,171 | $ | 104,448 | $ | 115,108 | |||
| NOW, MMDA & Savings | 228,020 | 210,058 | 202,040 | ||||||
| Time, $100,000 or more | 238,923 | 220,374 | 212,474 | ||||||
| Other time | 177,942 | 186,182 | 175,204 | ||||||
| Total deposits | 750,056 | 721,062 | 704,826 | ||||||
| Demand notes payable to U.S. Treasury | 750 | 1,600 | 542 | ||||||
| Securities sold under agreement to repurchase | 33,960 | 37,501 | 24,575 | ||||||
| Short-term Federal Reserve Bank borrowings | 12,500 | 5,000 | - | ||||||
| FHLB borrowings | 77,000 | 77,000 | 80,000 | ||||||
| Junior subordinated debentures | 20,619 | 20,619 | 20,619 | ||||||
| Accrued interest payable and other liabilities | 5,268 | 4,852 | 7,294 | ||||||
| Total liabilities | 900,153 | 867,634 | 837,856 | ||||||
| Shareholders' equity: | |||||||||
| Series A preferred stock, $1,000 stated value; authorized | |||||||||
| 5,000,000 shares; issued and outstanding | |||||||||
| 25,054 shares in 2009 and 2008 | 24,370 | 24,350 | - | ||||||
| Common stock, no par value; authorized | |||||||||
| 20,000,000 shares; issued and outstanding | |||||||||
| 5,539,056 shares in 2009 and 2008 | 48,269 | 48,269 | 48,344 | ||||||
| Retained earnings | 22,856 | 22,985 | 20,658 | ||||||
| Accumulated other comprehensive income | 4,668 | 5,524 | 4,272 | ||||||
| Total shareholders' equity | 100,163 | 101,128 | 73,274 | ||||||
| Total liabilities and shareholders' equity | $ | 1,000,316 | $ | 968,762 | $ | 911,130 | |||
| PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS - PAGE FOUR | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| For the three months ended March 31, 2009 and 2008 | ||||||||
| (Dollars in thousands, except per share amounts) | ||||||||
| Three months ended | ||||||||
| March 31, | ||||||||
| 2009 | 2008 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| INTEREST INCOME: | ||||||||
| Interest and fees on loans | $ | 11,066 | $ | 13,044 | ||||
| Interest on federal funds sold | 1 | 18 | ||||||
| Interest on investment securities: | ||||||||
| U.S. Government sponsored enterprises | 1,236 | 1,134 | ||||||
| States and political subdivisions | 253 | 227 | ||||||
| Other | 25 | 130 | ||||||
| Total interest income | 12,581 | 14,553 | ||||||
| INTEREST EXPENSE: | ||||||||
| NOW, MMDA & savings deposits | 591 | 924 | ||||||
| Time deposits | 2,971 | 4,274 | ||||||
| FHLB borrowings | 854 | 947 | ||||||
| Junior subordinated debentures | 181 | 327 | ||||||
| Other | 105 | 208 | ||||||
| Total interest expense | 4,702 | 6,680 | ||||||
| NET INTEREST INCOME | 7,879 | 7,873 | ||||||
| PROVISION FOR LOAN LOSSES | 1,766 | 391 | ||||||
| NET INTEREST INCOME AFTER | ||||||||
| PROVISION FOR LOAN LOSSES | 6,113 | 7,482 | ||||||
| NON-INTEREST INCOME: | ||||||||
| Service charges | 1,227 | 1,147 | ||||||
| Other service charges and fees | 593 | 629 | ||||||
| Gain (loss) on sale and write-down of securities | (248 | ) | - | |||||
| Mortgage banking income | 193 | 179 | ||||||
| Insurance and brokerage commission | 103 | 106 | ||||||
| Miscellaneous | 318 | 545 | ||||||
| Total non-interest income | 2,186 | 2,606 | ||||||
| NON-INTEREST EXPENSES: | ||||||||
| Salaries and employee benefits | 3,579 | 3,715 | ||||||
| Occupancy | 1,355 | 1,242 | ||||||
| Other | 2,408 | 1,973 | ||||||
| Total non-interest expense | 7,342 | 6,930 | ||||||
| INCOME BEFORE INCOME TAXES | 957 | 3,158 | ||||||
| INCOME TAXES | 332 | 1,104 | ||||||
| NET INCOME | 625 | 2,054 | ||||||
| Dividends and accretion on preferred stock | 201 | - | ||||||
| NET INCOME AVAILABLE TO | ||||||||
| COMMON SHAREHOLDERS | $ | 424 | $ | 2,054 | ||||
| PER COMMON SHARE AMOUNTS | ||||||||
| Basic net income | $ | 0.08 | $ | 0.37 | ||||
| Diluted net income | $ | 0.08 | $ | 0.36 | ||||
| Cash dividends | $ | 0.10 | $ | 0.12 | ||||
| Book value | $ | 13.69 | $ | 13.08 | ||||
| PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS - PAGE FIVE | ||||||
| FINANCIAL HIGHLIGHTS | ||||||
| For the three months ended March 31, 2009 and 2008 | ||||||
| (Dollars in thousands) | ||||||
| Three months ended | ||||||
| March 31, | ||||||
| 2009 | 2008 | |||||
| (Unaudited) | (Unaudited) | |||||
| SELECTED AVERAGE BALANCES: | ||||||
| Available for sale securities | $ | 132,806 | $ | 118,283 | ||
| Loans | 780,100 | 720,635 | ||||
| Earning assets | 923,278 | 849,791 | ||||
| Assets | 977,829 | 902,160 | ||||
| Deposits | 740,115 | 695,803 | ||||
| Shareholders' equity | 101,311 | 73,358 | ||||
| SELECTED KEY DATA: | ||||||
| Net interest margin (tax equivalent) | 3.56% | 3.83% | ||||
| Return of average assets | 0.26% | 0.92% | ||||
| Return on average shareholders' equity | 2.50% | 11.26% | ||||
| Shareholders' equity to total assets (period end) | 10.01% | 8.04% | ||||
| ALLOWANCE FOR LOAN LOSSES: | ||||||
| Balance, beginning of period | $ | 11,026 | $ | 9,103 | ||
| Provision for loan losses | 1,766 | 391 | ||||
| Charge-offs | (952 | ) | (191 | ) | ||
| Recoveries | 224 | 67 | ||||
| Balance, end of period | $ | 12,064 | $ | 9,370 | ||
| ASSET QUALITY: | ||||||
| Non-accrual loans | $ | 13,736 | $ | 11,403 | ||
| 90 days past due and still accruing | 4 | 347 | ||||
| Other real estate owned | 1,711 | 365 | ||||
| Total non-performing assets | $ | 15,451 | $ | 12,115 | ||
| Non-performing assets to total assets | 1.54% | 1.33% | ||||
| Allowance for loan losses to non-performing assets | 78.08% | 77.34% | ||||
| Allowance for loan losses to total loans | 1.55% | 1.29% | ||||
| LOAN RISK GRADE ANALYSIS: | Percentage of Loans | |||||
| By Risk Grade* | ||||||
| 3/31/2009 | 3/31/2008 | |||||
| Risk 1 (excellent quality) | 3.88% | 10.59% | ||||
| Risk 2 (high quality) | 18.12% | 13.87% | ||||
| Risk 3 (good quality) | 60.29% | 63.49% | ||||
| Risk 4 (management attention) | 11.86% | 8.75% | ||||
| Risk 5 (watch) | 2.97% | 1.57% | ||||
| Risk 6 (substandard) | 1.09% | 0.13% | ||||
| Risk 7 (low substandard) | 0.01% | 0.03% | ||||
| Risk 8 (doubtful) | 0.00% | 0.00% | ||||
| Risk 9 (loss) | 0.00% | 0.00% | ||||
| *Excludes non-accrual loans | |||||
At March 31, 2009 there were five relationships exceeding $1.0 million (which totaled $9.0 million) in the Watch risk grade, three relationships exceeding $1.0 million in the Substandard risk grade (which totaled $6.9 million) and no relationships exceeding $1.0 million in the Low Substandard risk grade. One relationship of $1.9 million had loans totaling $1.5 million in the Watch risk grade and loans totaling $400,000 in the 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) | |||||