PEOPLES BANCORP INC. – P.O. BOX 738 - MARIETTA, OHIO – 45750
www.peoplesbancorp.com
NEWS RELEASE
| FOR IMMEDIATE RELEASE | Contact: | Edward G. Sloane |
| January 26, 2010 | | Chief Financial Officer and Treasurer |
| | | (740) 373-3155 |
PEOPLES BANCORP INC. ANNOUNCES FOURTH QUARTER
AND 2009 RESULTS
_____________________________________________________________________
MARIETTA, Ohio - Peoples Bancorp Inc. (“Peoples”) (NASDAQ: PEBO) today announced net income available to common shareholders of $0.7 million for the fourth quarter of 2009, representing diluted earnings per common share of $0.07, compared to a net loss available to common shareholders of $4.6 million and $3.1 million, representing a diluted loss per common share of $0.44 and $0.33, for the third quarter of 2009 and fourth quarter of 2008, respectively. For the 2009 year, net income available to common shareholders totaled $2.3 million, or $0.22 per diluted common share, in 2009 versus $7.5 million, or $0.72, in 2008.
Summary points regarding fourth quarter and 2009 results:
| o | Nonperforming assets declined $3 million, or 6%, to 2.03% of total assets at year-end 2009, from 2.16% at September 30, 2009. Fourth quarter 2009 net charge-offs also were lower than recent quarters, totaling $5.7 million. Allowance for loan losses continued to build during the fourth quarter, increasing $1.1 million and resulting in fourth quarter 2009 provision for loan losses of $6.8 million, or 0.63% of average loans. For 2009, net charge-offs were $21.4 million and allowance for loan losses increased $4.3 million, resulting in provision for loan losses of $25.7 million. |
| o | Peoples recognized non-cash pre-tax other-than-temporary impairment charges of $1.8 million ($1.2 million or $0.11 per common share after-tax) in the fourth quarter of 2009 and $7.7 million ($5.0 million or $0.48 per diluted share) for the year 2009. These impairment losses related to Peoples’ investments in collateralized debt obligation securities and individual bank-issued trust preferred securities. |
| o | Total Risk-Based Capital ratio was 16.80% at year-end, up from 16.39% at September 30, 2009, and substantially higher than the regulatory minimum amount needed to be considered “well-capitalized”. Tangible common equity increased to 7.22% of tangible assets from 6.21% at December 31, 2008. |
| o | Net interest income and margin remained strong throughout 2009, due to proactive balance sheet management that lowered funding costs and mitigated the impact of historically low market rates on asset yields. |
| o | Non-interest income was consistent with prior periods, totaling $7.8 million for the fourth quarter of 2009 and $32.1 million for the year, as stronger mortgage banking income and debit card revenue offset lower insurance and bank owned life insurance income. |
| o | Non-interest expenses were contained during the fourth quarter of 2009, with a modest linked quarter increase attributed to the third quarter reversal of incentive plan accruals based primarily on full year corporate results of operations, which decreased third quarter salary and employee benefit costs by $451,000, coupled with $119,000 of additional employee medical benefit plan costs in the fourth quarter. In 2009, non-interest expense increases were mostly isolated to $3.1 million additional FDIC insurance expense and higher costs associated with problem loans, such as legal and other professional fees. |
| o | Retail deposit balances were up at December 31, 2009, from both the prior quarter-end and year-end, largely a result of higher non-interest-bearing deposits, which grew $11 million, or 23% annualized, in the fourth quarter and $18.0 million, or 10%, for the entire year. |
| o | Gross loan balances continued to be impacted by charge-offs and payoffs on commercial real estate loans during the fourth quarter of 2009, as well as existing residential real estate loans being refinanced and sold to the secondary market as customers responded to attractive long-term, fixed rates. |
“The year 2009 was a challenging year for our bottom-line earnings as we worked through asset quality issues caused by the economic downturn that started in 2008,” said Mark F. Bradley, President and Chief Executive Officer. “As we continued our focus on reducing problem loans, we found it necessary to build our allowance for loan losses due to recent charge-off levels. We also took steps to preserve capital and maintain adequate liquidity. Key successes in 2009 included effective cost control, stable net interest margin, increased revenue and good core deposit growth.”
PEOPLES BANCORP INC.
Fourth Quarter 2009 Earnings Release
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Fourth quarter 2009 net interest income was consistent with the prior quarter at $15.4 million, while net interest margin expanded 5 basis points to 3.50%. Interest income was challenged by lower reinvestment rates for investment securities in the fourth quarter, coupled with the full quarter’s impact of third quarter 2009 commercial loan payoffs. However, Peoples repaid approximately $48 million of high-cost wholesale funding in the fourth quarter, using excess cash reserves at the Federal Reserve, which lowered interest expense and overall cost of funds. This action also was a key driver of the improvement in net interest margin during the fourth quarter of 2009. Year-over-year, fourth quarter net interest income was up 5% and net interest margin expanded 6 basis points, as reductions in funding costs outpaced the decline in interest income from loan payoffs and additional nonaccrual loans. For the year 2009, net interest income was $61.8 million, up 6% over the prior year, while net interest margin remained relatively unchanged.
“We achieved our strategic goal of replacing higher-cost wholesale funding with lower-cost core deposits throughout 2009,” said Edward G. Sloane, Chief Financial Officer and Treasurer. “Due to this success, we managed to reduce overall funding costs in 2009, which more than offset the impact of lower asset yields. As we start 2010, we have the balance sheet prepared for the eventual increase in interest rates. Until that occurs, our ability to retain and grow low-cost deposits and lower funding costs further will be key to maintaining net interest income levels given the current pressure on asset yields.”
In the fourth quarter 2009, non-interest income was $7.8 million, matching both the prior quarter and fourth quarter 2008 amounts. Trust and investment income grew during the fourth quarter of 2009 due to higher managed asset values. During 2009, total managed assets grew 11%, largely reflecting the general recovery within the global financial markets. Secondary market loan production remained steady, resulting in higher mortgage banking income. Fourth quarter electronic banking income, primarily debit card revenue, benefited from continued growth in the volume of transactions completed using debit cards. Insurance income declined in the fourth quarter, due mostly to lower property and casualty insurance commissions. In 2009, non-interest income totaled $32.1 million, equaling the prior year.
Non-interest expense totaled $14.6 million for the fourth quarter of 2009, versus $14.1 million for the linked quarter. This increase was due mostly to the third quarter reversal of accruals associated with Peoples’ annual incentive award plan. Peoples also incurred higher employee medical benefit plan costs and external legal and valuation expenses associated with problem loans in the fourth quarter. Year-over-year growth in total non-interest expense for both the fourth quarter and full year 2009 was mostly isolated to additional FDIC insurance expense, higher employee medical benefit costs and workout costs for problem loans.
“During the second half of 2009, we intensified our cost control efforts and we will be working to build on that progress in 2010,” said Sloane. “A key to achieving our 2010 operating goals will be reductions in various operating expenses and improvement in overall operating efficiency. We continue to evaluate opportunities to expand our customer base and grow the company in a disciplined manner considering the value of capital in the current operating environment.”
In the fourth quarter of 2009, Peoples recorded a $1.8 million other-than-temporary impairment loss related to two collateralized debt obligation (“CDO”) investment securities, consisting mostly of bank-issued trust preferred securities. Management concluded these investments were total losses based upon its evaluation of the credit quality of the underlying issuers during the fourth quarter and estimation of cash flows to be received from the securities. After the fourth quarter 2009 impairment charge, the carrying value of Peoples’ remaining investment in CDO securities is $1.0 million.
“The impairment losses recognized in 2009 significantly reduced the level of high risk securities within our investment portfolio,” said Sloane. “At year-end, our analysis indicated that the remaining loss exposure was limited to our $1 million CDO investment, which we consider manageable as we move into 2010.”
Peoples’ loan balances decreased $16.0 million in the fourth quarter of 2009, to $1.05 billion, reflecting lower commercial real estate and consumer loan balances. During the fourth quarter, a single $3.4 million nonaccrual commercial real estate loan was paid off, while an unrelated $5.0 million commercial real estate loan was transferred to other real estate owned. Both of these loans had been identified as impaired and placed on nonaccrual status in 2008. Also during the fourth quarter, several large commercial construction loans, with total outstanding balances of approximately $40 million, were converted to term commercial mortgage loans. Throughout 2009, total loan balances fell $52.0 million, primarily reflecting charge-offs and pay downs of commercial loans, plus lower demand due to the economic downturn. Loan balances also have been impacted by existing residential real estate loans being refinanced and sold to the secondary market due to customer demand for long-term, fixed-rate loans. As a result, Peoples’ serviced loan portfolio has increased 26% since year-end 2008, to $227.8 million at December 31, 2009.
Total nonperforming assets were down $2.7 million to $40.7 million, or 2.03% of total assets, at December 31, 2009, from $43.4 million, or 2.16%, at September 30, 2009. In 2009, total nonperforming assets were reduced by $1.1 million, or 3%.
PEOPLES BANCORP INC.
Fourth Quarter 2009 Earnings Release
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“We have been diligent in our efforts to identify and resolve nonperforming assets during 2009,” commented Sloane. “The workout process has been slower than we would like in 2009 due to the weakened commercial real estate market and recessionary economy. However, the modest reduction in nonperforming assets at year-end 2009 represents good progress towards our goal of improving overall asset quality.”
Fourth quarter 2009 net loan charge-offs were $5.7 million, or 2.14% of average loans on an annualized basis, compared to $7.1 million, or 2.57%, and $9.7 million, or 3.45%, for the third quarter of 2009 and fourth quarter of 2008, respectively. Approximately $4.3 million of the fourth quarter 2009 charge-offs reflect write-downs associated with the workouts of two existing impaired commercial real estate loans. Peoples’ allowance for loan losses increased $1.1 million in the fourth quarter of 2009, to $27.3 million, or 2.59% of total loans, from $26.2 million, or 2.46%, at September 30, 2009. This increase was primarily attributable to the impact of charge-offs remaining at an elevated level during 2009. To maintain the adequacy of the allowance for loan losses, Peoples recorded a fourth quarter 2009 provision for loan losses of $6.8 million versus $10.2 million last quarter and $13.4 million in the fourth quarter of 2008.
In 2009, net loan charge-offs were $21.4 million, or 1.96% of average loans, versus $20.4 million, or 1.83%, in 2008. The combination of elevated charge-off levels and increases in specific reserves for impaired loans during 2009 necessitated building the allowance for loan losses by $4.3 million in 2009. Provision for loan losses totaled $25.7 million for 2009 compared to $27.6 million for 2008.
Retail deposit balances grew $18.3 million during the fourth quarter of 2009, with an $11.0 million, or 23% annualized, increase in non-interest-bearing balances comprising the majority of the growth. Interest-bearing retail deposits increased during the fourth quarter, reflecting higher money market balances due to Peoples offering a highly competitive rate. At December 31, 2009, total retail deposits were up $28.3 million since year-end 2008. Non-interest-bearing deposits increased $18.0 million, or 10%, in 2009, while interest-bearing retail deposits grew $10.3 million. The growth in lower-cost and non-interest-bearing deposits during 2009 was a major contributor to the 20% reduction in borrowed funds, which totaled $345.6 million at year-end 2009.
At December 31, 2009, Peoples’ Tier 1 Common, Total Tier 1 and Total Risk-Based Capital ratios were 10.58%, 15.49% and 16.80%, compared to the well capitalized minimum ratios of 4%, 6% and 10%, respectively. Since year-end 2008, tangible common equity has increased due mostly to improvement in fair value of Peoples’ available-for-sale investment portfolio. As a result, the ratio of tangible common equity to tangible assets was 7.22% at both December 31, 2009 and September 30, 2009, versus 6.21% at year-end 2008.
“Overall, we are encouraged by 2009 fourth quarter results and a decrease in nonperforming assets, although the continuation of tough economic conditions resulted in additional losses on loans and investments,” summarized Bradley. “Our main priorities for 2010 will include protecting our already strong capital position, maintaining a diverse revenue stream and improving operating efficiency.”
Peoples Bancorp Inc. is a diversified financial products and services company with $2.0 billion in assets, 47 locations and 39 ATMs in Ohio, West Virginia and Kentucky. Peoples makes available a complete line of banking, investment, insurance, and trust solutions through its financial service units – Peoples Bank, National Association; Peoples Financial Advisors (a division of Peoples Bank); and Peoples Insurance Agency, LLC. Peoples’ common shares are traded on the NASDAQ Global Select Market® under the symbol “PEBO”, and Peoples is a member of the Russell 3000 index of US publicly-traded companies. Learn more about Peoples at www.peoplesbancorp.com.
Conference Call to Discuss Earnings:
Peoples will conduct a facilitated conference call to discuss fourth quarter and 2009 results of operations today at 11:00 a.m., Eastern Standard Time, with members of Peoples’ executive management participating. Analysts, media and individual investors are invited to participate in the conference call by calling (800) 860-2442. A simultaneous Webcast of the conference call audio will be available online via the “Investor Relations” section of Peoples’ website, www.peoplesbancorp.com. Participants are encouraged to call or sign in at least 15 minutes prior to the scheduled conference call time to ensure participation and, if required, to download and install the necessary software. A replay of the call will be available on Peoples’ website in the “Investor Relations” section for one year.
Safe Harbor Statement:
Certain statements made in this news release regarding Peoples’ financial condition, results of operations, plans, objectives, future performance and business, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by the fact they are not historical facts and include words such as “anticipate”, “may”, “feel”, “expect”, “believe”, “plan”, and similar expressions.
PEOPLES BANCORP INC.
Fourth Quarter 2009 Earnings Release
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These forward-looking statements reflect management’s current expectations based on all information available and its knowledge of Peoples’ business and operations. Additionally, Peoples’ financial condition, results of operations, plans, objectives, future performance and business are subject to risks and uncertainties that may cause actual results to differ materially. These factors include, but are not limited to: (1) continued deterioration in the credit quality of Peoples’ loan portfolio could occur due to a number of factors, such as adverse changes in economic conditions that impair the ability of borrowers to repay their loans, the underlying value of the collateral could prove less valuable than otherwise assumed and assumed cash flows may be less favorable than expected, which may adversely impact the provision for loan losses; (2) competitive pressures among financial institutions or from non-financial institutions, which may increase significantly; (3) changes in the interest rate environment, which may adversely impact interest margins; (4) changes in prepayment speeds, loan originations, and charge-offs, which may be less favorable than expected and adversely impact the amount of interest income generated; (5) general economic conditions and weakening in the economy, specifically the real estate market, either nationally or in the states in which Peoples does business, which may be less favorable than expected; (6) political developments, wars or other hostilities, which may disrupt or increase volatility in securities markets or other economic conditions; (7) legislative or regulatory changes or actions, which may adversely affect the business of Peoples and its subsidiaries; (8) adverse changes in the conditions and trends in the financial markets, which may adversely affect the fair value of securities within Peoples’ investment portfolio; (9) Peoples’ ability to receive dividends from its subsidiaries; (10) the impact of larger or similar financial institutions encountering problems, which may adversely affect the banking industry and/or Peoples; (11) changes in accounting standards, policies, estimates or procedures, which may impact Peoples’ reported financial condition or results of operations; (12) Peoples’ ability to maintain required capital levels and adequate sources of funding and liquidity; (13) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity; (14) the costs and effects of regulatory and legal developments, including the outcome of regulatory or other governmental inquiries and legal proceedings and results of regulatory examinations; and (15) other risk factors relating to the banking industry or Peoples as detailed from time to time in Peoples’ reports filed with the Securities and Exchange Commission (“SEC”), including those risk factors included in the disclosures under the heading “ITEM 1A. RISK FACTORS” of Peoples’ Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as updated by the disclosure under the heading “ITEM 1A. RISK FACTORS” of Peoples’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.
Peoples encourages readers of this news release to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance. Peoples undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events, except as required by applicable legal requirements. Copies of documents filed with the SEC are available free of charge at the SEC’s website at http://www.sec.gov and/or from Peoples’ website.
As required by U.S. GAAP, Peoples is required to evaluate the impact of subsequent events through the filing date of its December 31, 2009 consolidated financial statements on Form 10-K with the SEC. Accordingly, subsequent events could occur that may cause Peoples to update its critical accounting estimates and to revise its financial information from which is contained in release.
PEOPLES BANCORP INC.
Fourth Quarter 2009 Earnings Release
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PER COMMON SHARE DATA AND SELECTED RATIOS
| | Three Months Ended | | Year Ended |
| | December 31, | September 30, | December 31, | December 31, |
| | 2009 | | 2009 | | 2008 | | 2009 | | 2008 |
| PER COMMON SHARE: | | | | | | | | | |
| Earnings per share: | | | | | | | | | |
| Basic | $ 0.07 | | $ (0.44) | | $ (0.30) | | $ 0.22 | | $ 0.72 |
| Diluted | $ 0.07 | | $ (0.44) | | $ (0.30) | | $ 0.22 | | $ 0.72 |
| Cash dividends declared per share | $ 0.10 | | $ 0.10 | | $ 0.23 | | $ 0.66 | | $ 0.91 |
| Book value per share | $ 19.80 | | $ 19.85 | | $ 18.06 | | $ 19.80 | | $ 18.06 |
| Tangible book value per share (a) | $ 13.48 | | $ 13.50 | | $ 11.63 | | $ 13.48 | | $ 11.63 |
| Closing stock price at end of period | $ 9.68 | | $ 13.05 | | $ 19.13 | | $ 9.68 | | $ 19.13 |
| | | | | | | | | | |
| SELECTED RATIOS: | | | | | | | | | |
| Return on average equity (b) | 1.98% | | -6.70% | | -6.24% | | 1.80% | | 3.67% |
| Return on average common equity (b) | 1.36% | | -8.97% | | -6.24% | | 1.17% | | 3.67% |
| Return on average assets (b) | 0.24% | | -0.79% | | -0.63% | | 0.21% | | 0.39% |
| Efficiency ratio (c) | 60.55% | | 58.28% | | 57.26% | | 60.14% | | 56.30% |
| Net interest margin (b)(d) | 3.50% | | 3.45% | | 3.44% | | 3.48% | | 3.51% |
| Dividend payout ratio (e) | 149% | | n/a | | n/a | | 298% | | 127% |
| (a) | This ratio represents a non-GAAP measure since it excludes the balance sheet impact of intangible assets acquired through acquisitions on stockholders’ equity. Additional information regarding the calculation of this ratio is included at the end of this release. |
| (b) | Ratios are presented on an annualized basis. |
| (c) | Non-interest expense (less intangible amortization) as a percentage of fully tax-equivalent net interest income plus non-interest income (less securities and asset disposal gains/losses). |
| (d) | Information presented on a fully tax-equivalent basis. |
| (e) | Dividends declared on common shares as a percentage of net income available to common shareholders. |
PEOPLES BANCORP INC.
Fourth Quarter 2009 Earnings Release
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CONSOLIDATED STATEMENTS OF INCOME
| | Three Months Ended | | Year Ended |
| | December 31, | September 30, | December 31, | December 31, |
| (in $000’s) | 2009 | | 2009 | | 2008 | | 2009 | | 2008 |
| Interest income | $ 24,554 | | $ 25,472 | | $ 26,317 | | $ 102,105 | | $ 106,227 |
| Interest expense | 9,137 | | 10,003 | | 11,600 | | 40,262 | | 47,748 |
| Net interest income | 15,417 | | 15,469 | | 14,717 | | 61,843 | | 58,479 |
| Provision for loan losses | 6,756 | | 10,168 | | 13,442 | | 25,721 | | 27,640 |
| Net interest income after provision for loan losses | 8,661 | | 5,301 | | 1,275 | | 36,122 | | 30,839 |
| | | | | | | | | | |
| Gross impairment losses on investment securities | (1,011) | | (6,395) | | (4,000) | | (7,406) | | (4,260) |
| Less: Non-credit losses included in other | | | | | | | | | |
| comprehensive income | 766 | | (465) | | – | | 301 | | – |
| Net other-than-temporary impairment losses | (1,777) | | (5,930) | | (4,000) | | (7,707) | | (4,260) |
| | | | | | | | | | |
| Net gain on securities transactions | 582 | | 276 | | 1,534 | | 1,446 | | 1,668 |
| Net loss on asset disposals | – | | (41) | | (8) | | (103) | | (19) |
| Other gains | – | | – | | 775 | | – | | 775 |
| | | | | | | | | | |
| Non-interest income: | | | | | | | | | |
| Deposit account service charges | 2,672 | | 2,703 | | 2,706 | | 10,390 | | 10,137 |
| Insurance income | 2,012 | | 2,228 | | 2,201 | | 9,390 | | 9,902 |
| Trust and investment income | 1,238 | | 1,189 | | 1,224 | | 4,722 | | 5,139 |
| Electronic banking income | 1,025 | | 986 | | 957 | | 3,954 | | 3,882 |
| Mortgage banking income | 335 | | 276 | | 181 | | 1,719 | | 681 |
| Bank owned life insurance | 244 | | 254 | | 362 | | 1,051 | | 1,582 |
| Other non-interest income | 256 | | 150 | | 193 | | 824 | | 774 |
| Total non-interest income | 7,782 | | 7,786 | | 7,824 | | 32,050 | | 32,097 |
| | | | | | | | | | |
| Non-interest expense: | | | | | | | | | |
| Salaries and employee benefits costs | 7,356 | | 7,015 | | 7,020 | | 29,394 | | 28,521 |
| Net occupancy and equipment | 1,390 | | 1,398 | | 1,371 | | 5,756 | | 5,540 |
| Professional fees | 859 | | 742 | | 618 | | 3,042 | | 2,212 |
| Data processing and software | 713 | | 603 | | 559 | | 2,417 | | 2,181 |
| FDIC insurance | 660 | | 687 | | 219 | | 3,442 | | 361 |
| Electronic banking expense | 620 | | 618 | | 611 | | 2,401 | | 2,289 |
| Franchise taxes | 308 | | 466 | | 361 | | 1,601 | | 1,609 |
| Amortization of intangible assets | 296 | | 307 | | 378 | | 1,252 | | 1,586 |
| Marketing | 250 | | 279 | | 283 | | 1,061 | | 1,293 |
| Other non-interest expense | 2,120 | | 1,972 | | 2,086 | | 8,316 | | 7,893 |
| Total non-interest expense | 14,572 | | 14,087 | | 13,506 | | 58,682 | | 53,485 |
| Income (loss) before income taxes | 676 | | (6,695) | | (6,106) | | 3,126 | | 7,615 |
| Income tax (benefit) expense | (538) | | (2,630) | | (3,009) | | (1,064) | | 160 |
| Net income (loss) | $ 1,214 | | $ (4,065) | | $ (3,097) | | $ 4,190 | | $ 7,455 |
| Preferred dividends | 512 | | 512 | | – | | 1,876 | | – |
| Net income (loss) available to common shareholders | $ 702 | | $ (4,577) | | $ (3,097) | | $ 2,314 | | $ 7,455 |
| | | | | | | | | | |
| PER COMMON SHARE DATA: | | | | | | | | | |
| Earnings per share: | | | | | | | | | |
| Basic | $ 0.07 | | $ (0.44) | | $ (0.30) | | $ 0.22 | | $ 0.72 |
| Diluted | $ 0.07 | | $ (0.44) | | $ (0.30) | | $ 0.22 | | $ 0.72 |
| | | | | | | | | | |
| Cash dividends declared per share | $ 0.10 | | $ 0.10 | | $ 0.23 | | $ 0.66 | | $ 0.91 |
| | | | | | | | | | |
| Weighted-average shares outstanding: | | | | | | | | | |
| Basic | 10,376,956 | | 10,372,946 | | 10,333,888 | | 10,363,975 | | 10,315,263 |
| Diluted | 10,387,400 | | 10,390,275 | | 10,359,491 | | 10,374,792 | | 10,348,579 |
| | | | | | | | | | |
| Actual shares outstanding (end of period) | 10,374,637 | | 10,371,357 | | 10,333,884 | | 10,374,637 | | 10,333,884 |
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Fourth Quarter 2009 Earnings Release
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CONSOLIDATED BALANCE SHEETS
| | December 31, | | December 31, |
| (in $000’s) | 2009 | | 2008 |
| | | | |
| Assets | | | |
| Cash and cash equivalents: | | | |
| Cash and due from banks | $ 29,969 | | $ 34,389 |
| Interest-bearing deposits in other banks | 11,804 | | 1,209 |
| Total cash and cash equivalents | 41,773 | | 35,598 |
| | | | |
| Available-for-sale investment securities, at fair value (amortized cost of $706,444 | | |
| at December 31, 2009 and $696,855 at December 31, 2008) | 726,547 | | 684,757 |
| Held-to-maturity investment securities, at amortized cost (fair value of $963 | | | |
| at December 31, 2009 and $0 at December 31, 2008) | 963 | | – |
| Other investment securities, at cost | 24,356 | | 23,996 |
| Total investment securities | 751,866 | | 708,753 |
| | | | |
| Loans, net of deferred fees and costs | 1,052,058 | | 1,104,032 |
| Allowance for loan losses | (27,257) | | (22,931) |
| Net loans | 1,024,801 | | 1,081,101 |
| | | | |
| Loans held for sale | 1,874 | | 791 |
| Bank premises and equipment, net of accumulated depreciation | 24,844 | | 25,111 |
| Bank owned life insurance | 52,924 | | 51,873 |
| Goodwill | 62,520 | | 62,520 |
| Other intangible assets | 3,079 | | 3,886 |
| Other assets | 38,146 | | 32,705 |
| Total assets | $ 2,001,827 | | $ 2,002,338 |
| | | | |
| Liabilities | | | |
| Deposits: | | | |
| Non-interest-bearing deposits | $ 198,000 | | $ 180,040 |
| Interest-bearing deposits | 1,197,886 | | 1,186,328 |
| Total deposits | 1,395,886 | | 1,366,368 |
| | | | |
| Short-term borrowings | 76,921 | | 98,852 |
| Long-term borrowings | 246,113 | | 308,297 |
| Junior subordinated notes held by subsidiary trust | 22,530 | | 22,495 |
| Accrued expenses and other liabilities | 16,409 | | 19,700 |
| Total liabilities | 1,757,859 | | 1,815,712 |
| | | | |
| Stockholders' Equity | | | |
| Preferred stock, no par value (50,000 shares authorized, 39,000 shares issued | | |
| at December 31, 2009, and no shares issued at December 31, 2008) | 38,543 | | – |
| Common stock, no par value (24,000,000 shares authorized, 11,031,892 shares | | |
| issued at December 31, 2009, and 10,975,364 shares issued at December 31, 2008), | 166,227 | | 164,716 |
| including shares in treasury | | | |
| Retained earnings | 46,229 | | 50,512 |
| Accumulated comprehensive income (loss), net of deferred income taxes | 9,487 | | (12,288) |
| Treasury stock, at cost (657,255 shares at December 31, 2009, and | | | |
| 641,480 shares at December 31, 2008) | (16,518) | | (16,314) |
| Total stockholders' equity | 243,968 | | 186,626 |
| Total liabilities and stockholders' equity | $ 2,001,827 | | $ 2,002,338 |
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Fourth Quarter 2009 Earnings Release
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SELECTED FINANCIAL INFORMATION
| | December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
| (in $000’s, end of period) | 2009 | | 2009 | | 2009 | | 2009 | | 2008 |
| | | | | | | | | | |
| Loan Portfolio | | | | | | | | | |
| Commercial, mortgage | $ 503,034 | | $ 478,518 | | $ 504,826 | | $ 498,395 | | $ 478,298 |
| Commercial, other | 159,915 | | 160,677 | | 173,136 | | 174,660 | | 178,834 |
| Real estate, construction | 32,427 | | 67,143 | | 54,446 | | 62,887 | | 77,917 |
| Real estate, mortgage | 215,735 | | 216,571 | | 216,280 | | 224,843 | | 231,778 |
| Home equity lines of credit | 49,183 | | 48,991 | | 48,301 | | 47,454 | | 47,635 |
| Consumer | 90,144 | | 94,374 | | 95,161 | | 90,741 | | 87,902 |
| Deposit account overdrafts | 1,620 | | 1,765 | | 2,016 | | 1,930 | | 1,668 |
| Total loans | 1,052,058 | | 1,068,039 | | 1,094,166 | | 1,100,910 | | 1,104,032 |
| | | | | | | | | | |
| Deposit Balances | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | |
| Retail certificates of deposit | $ 537,549 | | $ 561,619 | | $ 596,713 | | $ 637,125 | | $ 626,195 |
| Interest-bearing demand accounts | 229,232 | | 206,514 | | 206,866 | | 214,922 | | 187,100 |
| Money market deposit accounts | 263,257 | | 245,621 | | 228,963 | | 227,840 | | 213,498 |
| Savings accounts | 122,465 | | 131,398 | | 129,614 | | 125,985 | | 115,419 |
| Total retail interest-bearing deposits | 1,152,503 | | 1,145,152 | | 1,162,156 | | 1,205,872 | | 1,142,212 |
| Brokered certificates of deposits | 45,383 | | 61,412 | | 45,862 | | 24,965 | | 44,116 |
| Total interest-bearing deposits | 1,197,886 | | 1,206,564 | | 1,208,018 | | 1,230,837 | | 1,186,328 |
| Non-interest-bearing deposits | 198,000 | | 187,011 | | 199,572 | | 190,754 | | 180,040 |
| Total deposits | 1,395,886 | | 1,393,575 | | 1,407,590 | | 1,421,591 | | 1,366,368 |
| | | | | | | | | | |
| Asset Quality | | | | | | | | | |
| Nonperforming assets: | | | | | | | | | |
| Loans 90+ days past due and accruing | $ 411 | | $ 993 | | $ 242 | | $ 41 | | $ – |
| Nonaccrual loans | 33,972 | | 41,136 | | 40,460 | | 38,535 | | 41,320 |
| Total nonperforming loans | 34,383 | | 42,129 | | 40,702 | | 38,576 | | 41,320 |
| Other real estate owned | 6,313 | | 1,238 | | 163 | | 265 | | 525 |
| Total nonperforming assets | $ 40,696 | | $ 43,367 | | $ 40,865 | | $ 38,841 | | $ 41,845 |
| | | | | | | | | | |
| Allowance for loan losses as a percent of | | | | | | | | | |
| nonperforming loans | 79.3% | | 62.3% | | 56.9% | | 62.4% | | 55.5% |
| Nonperforming loans as a percent of total loans | 3.27% | | 3.94% | | 3.72% | | 3.50% | | 3.74% |
| Nonperforming assets as a percent of total assets | 2.03% | | 2.16% | | 2.00% | | 1.89% | | 2.09% |
| Nonperforming assets as a percent of total loans and | | | | | | | | |
| other real estate owned | 3.85% | | 4.06% | | 3.73% | | 3.53% | | 3.79% |
| Allowance for loan losses as a percent of total loans | 2.59% | | 2.46% | | 2.12% | | 2.19% | | 2.08% |
| | | | | | | | | | |
| Capital Information(a) | | | | | | | | | |
| Tier 1 risk-based capital ratio | 15.49% | | 15.06% | | 14.88% | | 14.81% | | 11.88% |
| Tier 1 common ratio | 10.58% | | 10.30% | | 10.30% | | 10.23% | | 10.17% |
| Total risk-based capital ratio (Tier 1 and Tier 2) | 16.80% | | 16.39% | | 16.22% | | 16.10% | | 13.19% |
| Leverage ratio | 10.06% | | 9.82% | | 9.95% | | 9.97% | | 8.18% |
| Tier 1 capital | $ 192,822 | | $ 193,013 | | $ 198,041 | | $ 197,258 | | $ 156,254 |
| Tier 1 common capital | $ 131,747 | | $ 131,973 | | $ 137,035 | | $ 136,285 | | $ 133,760 |
| Total capital (Tier 1 and Tier 2) | $ 209,144 | | $ 209,986 | | $ 215,826 | | $ 214,373 | | $ 173,470 |
| Total risk-weighted assets | $ 1,244,705 | | $ 1,281,318 | | $ 1,330,979 | | $ 1,331,758 | | $ 1,315,657 |
| Tangible equity to tangible assets (b) | 9.21% | | 9.21% | | 8.74% | | 8.24% | | 6.21% |
| Tangible common equity to tangible assets (b) | 7.22% | | 7.22% | | 6.78% | | 6.31% | | 6.21% |
| (a) | December 31, 2009 data based on preliminary analysis and subject to revision. |
| (b) | These ratios represent non-GAAP measures since they exclude the balance sheet impact of intangible assets acquired through acquisitions on both total stockholders’ equity and total assets. Additional information regarding the calculation of these ratios is included at the end of this release. |
PEOPLES BANCORP INC.
Fourth Quarter 2009 Earnings Release
- Page 9 of 12 -
| PROVISION FOR LOAN LOSSES INFORMATION |
| | Three Months Ended | | Year Ended |
| | December 31, | | September 30, | December 31, | | December 31, |
| (in $000’s) | 2009 | | 2009 | | 2008 | | 2009 | | 2008 |
| Provision for Loan Losses | | | | | | | | | |
| Provision for checking account overdrafts | $ 234 | | $ 268 | | $ 507 | | $ 799 | | $ 1,125 |
| Provision for other loan losses | 6,522 | | 9,900 | | 12,935 | | 24,922 | | 26,515 |
| Total provision for loan losses | $ 6,756 | | $ 10,168 | | $ 13,442 | | $ 25,721 | | $ 27,640 |
| | | | | | | | | | |
| Net Charge-Offs | | | | | | | | | |
| Gross charge-offs | $ 6,159 | | $ 7,479 | | $ 10,101 | | $ 23,922 | | $ 21,969 |
| Recoveries | 411 | | 409 | | 433 | | 2,527 | | 1,542 |
| Net charge-offs | $ 5,748 | | $ 7,070 | | $ 9,668 | | $ 21,395 | | $ 20,427 |
| | | | | | | | | | |
| Net Charge-Offs (Recoveries) by Type | | | | | | | | | |
| Commercial, mortgage | $ 4,900 | | $ 5,887 | | $ 7,230 | | $ 17,640 | | $ 15,860 |
| Commercial, other | 213 | | 521 | | 1,259 | | 726 | | 1,684 |
| Real estate, mortgage | 250 | | 208 | | 619 | �� | 1,287 | | 1,403 |
| Real estate, construction | – | | – | | (50) | | – | | (156) |
| Home equity lines of credit | (29) | | 21 | | 29 | | 27 | | 118 |
| Consumer | 179 | | 172 | | 192 | | 797 | | 553 |
| Deposit account overdrafts | 235 | | 261 | | 389 | | 918 | | 965 |
| Total net charge-offs | $ 5,748 | | $ 7,070 | | $ 9,668 | | $ 21,395 | | $ 20,427 |
| | | | | | | | | | |
| Net charge-offs as a percent of loans (annualized) | 2.14% | | 2.57% | | 3.45% | | 1.96% | | 1.83% |
SUPPLEMENTAL INFORMATION
| | December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
| (in $000’s, end of period) | 2009 | | 2009 | | 2009 | | 2009 | | 2008 |
| | | | | | | | | | |
| Trust assets under management | $ 750,993 | | $ 738,535 | | $ 692,823 | | $ 664,784 | | $ 685,705 |
| Brokerage assets under management | $ 216,479 | | $ 210,743 | | $ 183,968 | | $ 169,268 | | $ 184,301 |
| Mortgage loans serviced for others | $ 227,792 | | $ 220,605 | | $ 213,271 | | $ 199,613 | | $ 181,440 |
| Employees (full-time equivalent) | 537 | | 544 | | 548 | | 547 | | 546 |
PEOPLES BANCORP INC.
Fourth Quarter 2009 Earnings Release
- Page 10 of 12 -
CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME
| | Three Months Ended |
| | December 31, 2009 | | September 30, 2009 | | December 31, 2008 |
| (in $000’s) | Balance | Income/ Expense | Yield/ Cost | Balance | Income/ Expense | Yield/ Cost | Balance | Income/ Expense | Yield/ Cost |
| Assets | | | | | | | | | | | |
| Short-term investments | $ 15,316 | $ 9 | 0.24% | | $ 34,490 | $ 22 | 0.25% | | $ 1,455 | $ 4 | 0.96% |
| Investment securities (a)(b) | 748,286 | 9,222 | 4.93% | | 736,653 | 9,765 | 5.30% | | 660,467 | 9,213 | 5.58% |
| Gross loans (a) | 1,066,410 | 15,702 | 5.85% | | 1,092,059 | 16,077 | 5.85% | | 1,116,024 | 17,487 | 6.25% |
| Allowance for loan losses | (27,337) | | | | (24,479) | | | | (20,650) | | |
| Total earning assets | 1,802,675 | 24,933 | 5.51% | | 1,838,723 | 25,864 | 5.60% | | 1,757,296 | 26,704 | 6.06% |
| | | | | | | | | | | | |
| Intangible assets | 65,674 | | | | 65,969 | | | | 66,589 | | |
| Other assets | 130,467 | | | | 129,745 | | | | 131,286 | | |
| Total assets | $ 1,998,816 | | | | $ 2,034,437 | | | | $ 1,955,171 | | |
| | | | | | | | | | | | |
| Liabilities and Equity | | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | |
| Savings accounts | $ 127,131 | $ 178 | 0.56% | | $ 130,290 | $ 176 | 0.54% | | $ 116,807 | $ 167 | 0.57% |
| Interest-bearing demand accounts | 215,484 | 774 | 1.42% | | 210,855 | 823 | 1.55% | | 194,767 | 806 | 1.65% |
| Money market deposit accounts | 261,738 | 766 | 1.16% | | 234,513 | 689 | 1.17% | | 177,795 | 755 | 1.69% |
| Brokered certificates of deposits | 49,596 | 499 | 3.99% | | 56,232 | 567 | 4.00% | | 39,947 | 347 | 3.46% |
| Retail certificates of deposit | 546,860 | 3,855 | 2.80% | | 580,281 | 4,235 | 2.90% | | 610,009 | 5,531 | 3.61% |
| Total interest-bearing deposits | 1,200,809 | 6,072 | 2.01% | | 1,212,171 | 6,490 | 2.12% | | 1,139,325 | 7,606 | 2.66% |
| | | | | | | | | | | | |
| Short-term borrowings | 64,863 | 95 | 0.57% | | 55,700 | 110 | 0.77% | | 100,266 | 377 | 1.47% |
| Long-term borrowings | 275,719 | 2,972 | 4.24% | | 309,879 | 3,403 | 4.32% | | 320,880 | 3,617 | 4.41% |
| Total borrowed funds | 340,582 | 3,067 | 3.54% | | 365,579 | 3,513 | 3.78% | | 421,146 | 3,994 | 3.73% |
| Total interest-bearing liabilities | 1,541,391 | 9,139 | 2.35% | | 1,577,750 | 10,003 | 2.51% | | 1,560,471 | 11,600 | 2.95% |
| | | | | | | | | | | | |
| Non-interest-bearing deposits | 197,102 | | | | 197,900 | | | | 183,993 | | |
| Other liabilities | 16,683 | | | | 17,952 | | | | 13,387 | | |
| Total liabilities | 1,755,176 | | | | 1,793,602 | | | | 1,757,851 | | |
| | | | | | | | | | | | |
| Preferred equity | 38,531 | | | | 38,506 | | | | – | | |
| Common equity | 205,109 | | | | 202,329 | | | | 197,320 | | |
| Stockholders’ equity | 243,640 | | | | 240,835 | | | | 197,320 | | |
| Total liabilities and equity | $ 1,998,816 | | | | $ 2,034,437 | | | | $ 1,955,171 | | |
| | | | | | | | | | | | |
| Net interest income/spread (a) | | $ 15,794 | 3.16% | | | $ 15,861 | 3.09% | | | $ 15,104 | 3.11% |
| Net interest margin (a) | | | 3.50% | | | | 3.45% | | | | 3.44% |
| | | | | | | | | | | | |
| (a) Information presented on a fully tax-equivalent basis. | | | | | | |
| (b) Average balances are based on carrying value. | | | | | | | | |
PEOPLES BANCORP INC.
Fourth Quarter 2009 Earnings Release
- Page 11 of 12 -
| | Year Ended |
| | December 31, 2009 | | December 31, 2008 |
| (in $000’s) | Balance | Income/ Expense | Yield/ Cost | Balance | Income/ Expense | Yield/ Cost |
| Assets | | | | | | | |
| Short-term investments | $ 28,496 | $ 70 | 0.25% | | $ 2,871 | $ 65 | 2.28% |
| Investment securities (a)(b) | 728,299 | 38,847 | 5.33% | | 615,311 | 33,395 | 5.43% |
| Gross loans (a) | 1,093,057 | 64,793 | 5.93% | | 1,113,247 | 74,373 | 6.69% |
| Allowance for loan losses | (25,081) | | | | (17,428) | | |
| Total earning assets | 1,824,771 | 103,710 | 5.68% | | 1,714,001 | 107,833 | 6.29% |
| | | | | | | | |
| Intangible assets | 66,010 | | | | 67,203 | | |
| Other assets | 133,530 | | | | 128,798 | | |
| Total assets | $ 2,024,311 | | | | $ 1,910,002 | | |
| | | | | | | | |
| Liabilities and Equity | | | | | | | |
| Interest-bearing deposits: | | | | | | | |
| Savings accounts | $ 126,226 | $ 645 | 0.51% | | $ 114,651 | $ 583 | 0.51% |
| Interest-bearing demand accounts | 207,117 | 3,127 | 1.51% | | 199,639 | 3,578 | 1.79% |
| Money market deposit accounts | 235,690 | 2,735 | 1.16% | | 168,075 | 3,482 | 2.07% |
| Brokered certificates of deposits | 41,548 | 1,675 | 4.03% | | 39,151 | 1,843 | 4.71% |
| Retail certificates of deposit | 595,655 | 17,941 | 3.01% | | 561,143 | 21,824 | 3.89% |
| Total interest-bearing deposits | 1,206,236 | 26,123 | 2.17% | | 1,082,659 | 31,310 | 2.89% |
| | | | | | | | |
| Short-term borrowings | 59,923 | 483 | 0.81% | | 142,670 | 3,383 | 2.37% |
| Long-term borrowings | 312,580 | 13,656 | 4.37% | | 286,905 | 13,055 | 4.55% |
| Total borrowed funds | 372,503 | 14,139 | 3.80% | | 429,575 | 16,438 | 3.78% |
| Total interest-bearing liabilities | 1,578,739 | 40,262 | 2.55% | | 1,512,234 | 47,748 | 3.15% |
| | | | | | | | |
| Non-interest-bearing deposits | 195,688 | | | | 180,973 | | |
| Other liabilities | 17,036 | | | | 13,892 | | |
| Total liabilities | 1,791,463 | | | | 1,707,099 | | |
| | | | | | | | |
| Preferred equity | 35,438 | | | | – | | |
| Common equity | 197,410 | | | | 202,903 | | |
| Stockholders’ equity | 232,848 | | | | 202,903 | | |
| Total liabilities and equity | $ 2,024,311 | | | | $ 1,910,002 | | |
| | | | | | | | |
| Net interest income/spread (a) | $ 63,448 | 3.13% | | | $ 60,085 | 3.14% |
| Net interest margin (a) | | | 3.48% | | | | 3.51% |
| | | | | | | | |
| (a) Information presented on a fully tax-equivalent basis. | | |
| (b) Average balances are based on carrying value. | | | | |
PEOPLES BANCORP INC.
Fourth Quarter 2009 Earnings Release
- Page 12 of 12 -
NON-GAAP FINANCIAL MEASURES
The following non-GAAP financial measures used by Peoples provide information useful to investors in understanding Peoples’ operating performance and trends, and facilitate comparisons with the performance of Peoples’ peers. The following tables summarize the non-GAAP financial measures derived from amounts reported in Peoples’ financial statements:
| | December 31, | September 30, | June 30, | | March 31, | | December 31, |
| (in $000’s, end of period) | 2009 | | 2009 | | 2009 | | 2009 | | 2008 |
| | | | | | | | | | |
| Tangible Equity: | | | | | | | | | |
| Total stockholders' equity, as reported | $ 243,968 | | $ 244,363 | | $ 238,449 | | $ 230,307 | | $ 186,626 |
| Less: goodwill and other intangible assets | 65,599 | | 65,805 | | 66,093 | | 66,272 | | 66,406 |
| Tangible equity | $ 178,369 | | $ 178,558 | | $ 172,356 | | $ 164,035 | | $ 120,220 |
| | | | | | | | | | |
| Tangible Common Equity: | | | | | | | | | |
| Tangible equity | $ 178,369 | | $ 178,558 | | $ 172,356 | | $ 164,035 | | $ 120,220 |
| Less: preferred stockholders' equity | 38,543 | | 38,518 | | 38,494 | | 38,470 | | - |
| Tangible common equity | $ 139,826 | | $ 140,040 | | $ 133,862 | | $ 125,565 | | $ 120,220 |
| | | | | | | | | | |
| Tangible Assets: | | | | | | | | | |
| Total assets, as reported | $ 2,001,827 | | $ 2,004,754 | | $ 2,039,251 | | $ 2,055,944 | | $ 2,002,338 |
| Less: goodwill and other intangible assets | 65,599 | | 65,805 | | 66,093 | | 66,272 | | 66,406 |
| Tangible assets | $ 1,936,228 | | $ 1,938,949 | | $ 1,973,158 | | $ 1,989,672 | | $ 1,935,932 |
| | | | | | | | | | |
| Tangible Book Value per Share: | | | | | | | | | |
| Tangible common equity | $ 139,826 | | $ 140,040 | | $ 133,862 | | $ 125,565 | | $ 120,220 |
| Common shares outstanding | 10,374,637 | | 10,371,357 | | 10,358,852 | | 10,343,974 | | 10,333,884 |
| | | | | | | | | | |
| Tangible book value per share | $ 13.48 | | $ 13.50 | | $ 12.92 | | $ 12.14 | | $ 11.63 |
| | | | | | | | | | |
| Tangible Equity to Tangible Assets Ratio: | | | | | | | | |
| Tangible equity | $ 178,369 | | $ 178,558 | | $ 172,356 | | $ 164,035 | | $ 120,220 |
| Total tangible assets | $ 1,936,228 | | $ 1,938,949 | | $ 1,973,158 | | $ 1,989,672 | | $ 1,935,932 |
| | | | | | | | | | |
| Tangible equity to tangible assets | 9.21% | | 9.21% | | 8.74% | | 8.24% | | 6.21% |
| | | | | | | | | | |
| Tangible Common Equity to Tangible Assets Ratio: | | | | | | | | |
| Tangible common equity | $ 139,826 | | $ 140,040 | | $ 133,862 | | $ 125,565 | | $ 120,220 |
| Tangible assets | $ 1,936,228 | | $ 1,938,949 | | $ 1,973,158 | | $ 1,989,672 | | $ 1,935,932 |
| | | | | | | | | | |
| Tangible common equity to tangible assets | 7.22% | | 7.22% | | 6.78% | | 6.31% | | 6.21% |
END OF RELEASE
