PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS
Peoples Bancorp of North Carolina, Inc. (NASDAQ: PEBK), the parent company of Peoples Bank, reported first quarter earnings results with highlights as follows:
Highlights:
| · | Net earnings were $1.8 million or $0.31 basic and diluted net earnings per share for the three months ended March 31, 2013, before adjustment for preferred stock dividends and accretion, as compared to $1.7 million or $0.30 basic and diluted net earnings per share, before adjustment for preferred stock dividends and accretion, for the same period one year ago. |
| · | Net earnings available to common shareholders were $1.6 million or $0.29 basic and diluted net earnings per common share for the three months ended March 31, 2013, as compared to $1.3 million or $0.24 basic and diluted net earnings per common share, for the same period one year ago. |
| · | Earnings before securities gains and income taxes were $2.0 million for the three months ended March 31, 2013 compared to $1.7 million for the same period one year ago. |
| · | Core deposits were $656.0 million, or 83.7% of total deposits at March 31, 2013, compared to $630.4 million, or 78.0% of total deposits at March 31, 2012. |
Lance A. Sellers, President and Chief Executive Officer, attributed the increase in first quarter earnings to a decrease in the provision for loan losses, which was partially offset by a decrease in net interest income and an increase in non-interest expense.
Net interest income was $7.6 million for the three months ended March 31, 2013, compared to $8.1 million for the same period one year ago. This decrease was primarily due to a decrease in interest income resulting from decreases in loans and investment securities and a decrease in the yield on earning assets, which were partially offset by a decrease in interest expense due to a reduction in the cost of funds and a reduction in interest bearing liabilities. Net interest income after the provision for loan losses increased to $6.6 million during the first quarter of 2013, compared to $6.1 million for the same period one year ago. The provision for loan losses for the three months ended March 31, 2013 was $1.1 million, as compared to $2.0 million for the same period one year ago. The decrease in the provision for loan losses is primarily attributable to a $4.3 million reduction in non-accrual loans from March 31, 2012 to March 31, 2013.
Non-interest income was $3.4 million for the three months ended March 31, 2013 and 2012. Decreases in service charge income and gains on sale of securities were offset by increases in mortgage banking income and miscellaneous non-interest income.
Non-interest expense was $7.7 million for the three months ended March 31, 2013, as compared to $7.3 million for the same period one year ago. This increase is attributable to a $349,000 increase in salaries and employee benefits expense, which was primarily due to 2013 salary increases and bonuses accrued in the first quarter of 2013, and a $107,000 increase in non-interest expenses other than salary, employee benefits and occupancy expenses for the three months ended March 31, 2013, as compared to the same period one year ago.
Total assets amounted to $1.0 billion as of March 31, 2013, as compared to $1.1 billion as of March 31, 2012. Available for sale securities decreased 1.8% to $293.9 million as of March 31, 2013, compared to $299.3 million as of March 31, 2012. This decrease reflects investment securities sold and paydowns of mortgage-backed securities during the previous twelve months, which were partially offset by purchases of investment securities. Total loans amounted to $610.0 million as of March 31, 2013, compared to $658.3 million as of March 31, 2012. This decrease is primarily due to the anticipated reduction in existing loans through the work-through of problem loans and normal principal repayments, which have exceeded loan originations, due primarily to the current level of slow economic growth.
Non-performing assets declined to $24.3 million or 2.4% of total assets at March 31, 2013, compared to $33.0 million or 3.1% of total assets at March 31, 2012 primarily due to a $4.3 million decrease in non-accrual loans and a $3.4 million decrease in other real estate owned. Non-performing loans include $9.6 million in acquisition, development and construction (“AD&C”) loans, $9.4 million in commercial and residential mortgage loans and $729,000 in other loans at March 31, 2013, as compared to $16.2 million in AD&C loans, $8.3 million in commercial and residential mortgage loans and $539,000 in other loans at March 31, 2012. The allowance for loan losses at March 31, 2013 was $14.4 million or 2.4% of total loans, compared to $16.6 million or 2.5% of total loans at March 31, 2012. According to Mr. Sellers, management believes the current level of the allowance for loan losses is adequate; however, there is no assurance that additional adjustments to the allowance will not be required because of changes in economic conditions, regulatory requirements or other factors.
Deposits amounted to $783.8 million as of March 31, 2013, compared to $807.8 million at March 31, 2012. Core deposits, which include non-interest bearing demand deposits, NOW, MMDA, savings and non-brokered certificates of deposit of denominations less than $100,000, increased $25.6 million to $656.0 million at March 31, 2013, as compared to $630.4 million at March 31, 2012. Certificates of deposit in amounts of $100,000 or more totaled $127.8 million at March 31, 2013, as compared to $176.4 million at March 31, 2012. This decrease is attributable to a $17.1 million decrease in brokered certificates of deposit combined with a decrease in retail certificates of deposit as intended as part of the Bank’s pricing strategy to allow maturing high cost certificates of deposit to roll-off.
Securities sold under agreements to repurchase were $37.4 million at March 31, 2013, as compared to $43.5 million at March 31, 2012.
Shareholders’ equity was $98.3 million, or 9.7% of total assets, as of March 31, 2013, compared to $104.4 million, or 9.9% of total assets, as of March 31, 2012. This decrease reflects the Company’s repurchase and retirement of a portion of its preferred shares in the second quarter of 2012. The Company purchased 12,530 shares of the Company’s 25,054 outstanding shares of preferred stock from the U.S. Department of the Treasury (“UST”), which was issued to the UST in connection with the Company’s participation in the Capital Purchase Program (“CPP’) under the Troubled Asset Relief Program (“TARP”) in 2008.
Peoples Bank operates 22 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 the Company’s annual report on Form 10-K for the year ended December 31, 2012.
