PEOPLES BANCORP INC. – P.O. BOX 738 - MARIETTA, OHIO – 45750
www.peoplesbancorp.com
NEWS RELEASE
| FOR IMMEDIATE RELEASE | Contact: | Edward G. Sloane |
| July 20, 2010 | | Chief Financial Officer and Treasurer |
| | | (740) 373-3155 |
PEOPLES BANCORP INC. ANNOUNCES SECOND QUARTER RESULTS
_____________________________________________________________________
MARIETTA, Ohio - Peoples Bancorp Inc. (“Peoples”) (NASDAQ: PEBO) today announced net income available to common shareholders of $2.8 million for the second quarter of 2010, up 19% compared to $2.3 million for the prior year second quarter, representing diluted earnings per common share of $0.27 and $0.23, respectively. First quarter 2010 (or “linked quarter”) net income available to common shareholders was $0.8 million, or $0.08 per diluted common share. On a year-to-date basis, net income available to common shareholders was $3.6 million through June 30, 2010, versus $6.2 million for the same period a year ago, representing diluted earnings per common share of $0.34 and $0.60, respectively.
Summary points regarding second quarter results:
| o | Nonperforming assets increased $8 million and comprised 2.21% of total assets at June 30, 2010, versus 1.79% at March 31, 2010. During the second quarter, a single $14 million commercial real estate loan relationship was identified as impaired, resulting in the loans being written down by $4 million and the remaining $10 million being placed on nonaccrual status. Partially offsetting this increase in nonaccrual loans were $1.3 million in write-downs on other real estate owned (“OREO”) held at June 30 due to declines in property values. Second quarter 2010 net loan charge-offs were $4.8 million, which included the $4 million charge-down associated with the previously mentioned nonaccrual commercial real estate loan relationship. At June 30, 2010, the allowance for loan losses stood at $27.2 m illion, or 71% of nonperforming loans. Second quarter 2010 provision for loan losses was $5.5 million, or 2.11% of average loans on an annualized basis. |
| o | In connection with continuing efforts to manage the risk profile of the investment portfolio and overall balance sheet, Peoples sold $48 million of investment securities during the second quarter, at a net gain of $3.0 million. In addition, Peoples sold a $10 million mortgage-backed security in early July, at an $0.8 million loss. Since the loss on the security sold in July existed at June 30, Peoples recognized the entire amount as an impairment charge in the second quarter of 2010. |
| o | Peoples’ capital levels remained strong and substantially higher than the minimum regulatory amount needed to be considered “well capitalized”. Total Risk-Based Capital ratio was 17.44% at quarter-end, while tangible common equity was 7.18% of tangible assets. |
| o | Net interest income of $15.2 million for the second quarter of 2010 was down slightly from the linked quarter, while net interest margin remained relatively stable at 3.49%. Earning assets decreased in the second quarter due to commercial loan payoffs and a lack of attractive long-term investments, which pressured net interest income because of limited opportunities to reduce funding costs. |
| o | Non-interest income totaled $7.8 million in the second quarter, a 3% decline from the linked quarter primarily due to recognizing $0.6 million of performance-based insurance income in the first quarter. Non-interest income was lower year-over-year due mostly to reduced mortgage banking activity. |
| o | Second quarter 2010 non-interest expense was $14.3 million, down 2% versus the prior quarter and 8% year-over-year. Both decreases reflected reductions in various operating expenses attributable to ongoing cost control initiatives. Lower costs associated with foreclosed real estate contributed to the linked quarter decline, while FDIC insurance expense was down substantially versus a year ago, due to the impact of the special assessment imposed on all FDIC-insured depository institutions in 2009. |
| o | Retail deposit balances decreased $36 million during the second quarter of 2010, due to a $38 million decline in interest-bearing deposit balances, partially offset by a $2 million increase in non-interest-bearing balances. Much of the second quarter decrease in interest-bearing balances was the result of a single commercial customer lowering its deposit balances by $20 million, coupled with planned reductions in higher-cost, non-core certificates of deposits (“CDs”) intended to control funding costs. Compared to year-end 2009, total retail deposit balances were $7 million higher at June 30, 2010. During this period, Peoples reduced borrowed funds by 10% compared to year-end 2009. |
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
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| o | Total loan balances decreased $35 million during the second quarter of 2010, primarily reflecting a targeted reduction in commercial real estate loans to improve Peoples’ overall balance sheet risk profile. As a result, second quarter payoffs exceeded new production. Contributing to the second quarter decline was the expected payoff of a single $4 million commercial real estate loan, plus the planned sale of $3 million in commercial real estate loans, of which $2 million were on nonaccrual, which caused the loans to be classified as held-for-sale and written down to their estimated fair value at June 30. |
“We are pleased with second quarter results, which were in line with our expectations considering the low interest rate environment and still challenging economic conditions,” said Mark F. Bradley, President and Chief Executive Officer. “We successfully maintained our net revenue stream as a result of controlling operating costs and proactively managing our balance sheet risk profile. Second quarter provision for loan losses also was lower than recent quarters. We believe credit issues continue to stabilize, reflected by positive trends in asset quality metrics over the last few quarters and the isolated nature of the second quarter increase in nonperforming assets.”
Second quarter 2010 net interest income and margin were $15.2 million and 3.49%, respectively, down slightly from the linked quarter, as decreased interest income outpaced the reduction in interest expense. Year-over-year, net interest income was down slightly for both the three and six months ended June 30, 2010, while net interest margin expanded modestly for both periods. Peoples’ interest income continues to be pressured by lower loan balances and lack of attractive long-term investments given management’s risk-return criteria, coupled with the impact of lower reinvestment rates in the current interest rate environment. In comparison, Peoples’ interest expense continues to benefit from management’s ongoing efforts to decrease funding costs by repaying wholesale funding and more selectively pricing higher-cost, non-core deposits.
“Net interest margin was relatively stable in the second quarter of 2010, while lower earning assets reduced net interest income,” said Edward G. Sloane, Chief Financial Officer and Treasurer. “We believe downward pressure on net interest income and margin could continue in the second half of 2010, unless the Federal Reserve takes steps to increase interest rates or more attractive investment opportunities present themselves. As such, our balance sheet strategies will continue to emphasize maintaining good liquidity and changing our funding mix by repaying maturing borrowings with low-cost core deposits and excess cash.”
In the second quarter of 2010, total non-interest income was $7.8 million versus $8.0 million last quarter, due mostly to the recognition of annual performance-based insurance revenue of $585,000 earned during the first quarter. Compared to the prior year, non-interest income was down 6% in the second quarter of 2010 and 4% through six months of 2010, largely a result of decreased mortgage banking income attributable to lower gains on sales of residential real estate loans. Insurance revenues continued to be adversely effected by the impact of economic conditions on commercial insurance needs and competitive pricing within the insurance industry, which contributed to the year-over-year decline in total non-interest income.
Non-interest expense totaled $14.3 million for the second quarter of 2010, down 2% from the linked quarter and 8% year-over-year. Through six months of 2010, total non-interest expense was $28.9 million versus $30.0 million for the first half of 2009. The linked quarter decline was largely attributable to moderately lower expenses for OREO, while lower FDIC insurance expense accounted for most of the year-over-year decreases. Second quarter 2009 FDIC insurance expense included an additional $930,000 for the special assessment imposed on all FDIC-insured institutions. Non-interest expense in 2010 also benefited from reductions in several major non-interest expenses in connection with ongoing cost control initiatives.
During the second quarter of 2010, Peoples’ ongoing management of its balance sheet interest rate risk profile resulted in the sale of investment securities with an aggregate book value of $48.2 million during the quarter at a $3.0 million net gain and a single $10.3 million security at a $0.8 million loss in early July. The securities sold consisted of U.S agency mortgage-backed securities and U.S. government-backed student loan pools and were selected based upon their current low yields and interest rate risk characteristics. In accordance with generally accepted accounting principles, Peoples recorded the entire loss related to the July sale as an other-than-temporary impairment in the second quarter of 2010 since the security had a loss at June 30 and was sold prior to recovery.
Gross portfolio loan balances decreased $35.2 million during the second quarter, to $1.02 billion at June 30, 2010. Much of this decline was the result of commercial loan payoffs exceeding new production. Overall demand for new loans has also been impacted by economic conditions, which has contributed to the steady declines in consumer and real estate loans in recent quarters. At June 30, 2010, Peoples’ loans held-for-sale included $3.4 million of commercial loans secured by commercial real estate located outside Peoples’ primary market area. Included in these loans were $2.1 million which were identified as impaired and placed on nonaccrual status in 2009. Peoples recorded a $94,000 loss to reduce the carrying value of these loans to their estimated fair value at June 30 , 2010.
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
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Total nonperforming assets were $43.4 million, or 2.21% of total assets, at June 30, 2010, versus $35.9 million, or 1.79%, at March 31, 2010 and $40.7 million, or 2.03%, at year-end 2009. During the second quarter, a single $14.2 million commercial loan relationship was identified as being impaired and placed on nonaccrual. The loans comprising this relationship are secured by real estate and were written down by $3.8 million to the estimated net realizable value of the underlying collateral as of June 30, 2010. The overall increase in nonperforming assets was partially offset by the payoff of an existing $3.9 million nonaccrual commercial real estate loan during the second quarter and $1.3 million write-downs on OREO at June 30, 2010.
Net loan charge-offs were $4.8 million, or 1.86% of average loans on an annualized basis, for the second quarter of 2010, compared to $7.2 million, or 2.76%, for the linked quarter and $5.7 million, or 2.05%, for the second quarter of 2009. Second quarter 2010 charge-offs included a $3.8 million write-down on the impaired commercial real estate loan relationship identified during the quarter, of which $1.4 million was provided for in prior quarters through the allowance for loan losses. On a year-to-date basis, net charge-offs were $12.0 million through June 30, 2010, or 2.31% of average loans on an annualized basis, versus $8.6 million, or 1.56%, for the same period a year ago. Peoples’ allowance for loan losses increased $0.6 million in the second quarter of 2010, to $27.2 million, or 2.66% of tot al loans, at June 30, 2010. To maintain the adequacy of the allowance for loan losses, Peoples recorded a second quarter 2010 provision for loan losses of $5.5 million versus $6.5 million last quarter and $4.7 million in the second quarter of 2009.
“Overall, we believe positive progress is being made towards improving our overall asset quality, despite the increase in nonperforming assets,” commented Sloane. “The continued weakness in general economic conditions and corresponding impact on commercial borrowers resulted in some increase in our allowance for loan losses. Reducing nonperforming assets remains a key priority for the remainder of 2010.”
At June 30, 2010, total retail deposit balances were down $36.2 million versus the prior quarter-end, but $6.6 million higher than year-end 2009. During the second quarter, a single commercial customer lowered its deposit balances by $20 million for corporate purposes, of which $10 million were CDs and the remainder was held in a money market account, accounting for most of the linked quarter decrease in retail deposits. Contributing to the reduction in deposit balances were Peoples’ efforts to control funding costs by pricing higher-cost, non-core deposits more selectively. As a result of these actions, retail CD balances decreased $34.4 million in the second quarter and $25.2 million in the first half of 2010. Money market balances, although down $5.7 million in the second q uarter, were up $27.2 million on a year-to-date basis. Non-interest-bearing balances increased $2.2 million for the quarter and $5.6 million since year-end 2009, totaling $203.6 million at June 30, 2010. Total borrowed funds were essentially unchanged at the end of the second quarter of 2010 compared to the linked quarter but were down $33.3 million, or 10%, compared to December 31, 2009.
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 second quarter 2010 results of operations today at 11:00 a.m., Eastern Daylight Savings 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 “Investo r 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”, “could”, “may”, “feel”, “expect”, “believe”, “plan”, and similar expressions.
PEOPLES BANCORP INC.
Second quarter 2010 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 worse than expected, which may adve rsely 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, sale volumes 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 real estate market, either nationally or in the states in which Peoples and its subsidiaries do 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, including in particular the Restoring American Financial Stability Act of 2010 and related regulations required to be promulgated, which may adversely affect the business of Pe oples and its subsidiaries; (8) changes in accounting standards, policies, estimates or procedures may adversely affect Peoples’ reported financial condition or results of operations; (9) adverse changes in the conditions and trends in the financial markets, which may adversely affect the fair value of securities within Peoples’ investment portfolio; (10) a delayed or incomplete resolution of regulatory issues that could arise; (11) Peoples’ ability to receive dividends from its subsidiaries; (12) Peoples’ ability to maintain required capital levels and adequate sources of funding and liquidity; (13) the impact of larger or similar financial institutions encountering problems, which may adversely affect the banking industry and/or Peoples; (14) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity; (15) the costs and effects of regulatory and legal developments, including the outcome of regulatory or o ther governmental inquiries and legal proceedings and results of regulatory examinations; and (16) 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, 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 June 30, 2010 consolidated financial statements on Form 10-Q 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 that which is contained in this news release.
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Second quarter 2010 Earnings Release
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PER COMMON SHARE DATA AND SELECTED RATIOS
| | Three Months Ended | | Six Months Ended |
| | June 30, | | March 31, | | June 30, | | June 30, | | June 30, |
| | 2010 | | 2010 | | 2009 | | 2010 | | 2009 |
| PER COMMON SHARE: | | | | | | | | | |
| Earnings per share: | | | | | | | | | |
| Basic | $ 0.27 | | $ 0.08 | | $ 0.23 | | $ 0.34 | | $ 0.60 |
| Diluted | 0.27 | | 0.08 | | 0.23 | | 0.34 | | 0.60 |
| Cash dividends declared per share | 0.10 | | 0.10 | | 0.23 | | 0.20 | | 0.46 |
| Book value per share | 19.35 | | 19.43 | | 19.30 | | 19.35 | | 19.30 |
| Tangible book value per share (a) | 13.10 | | 13.15 | | 12.92 | | 13.10 | | 12.92 |
| Closing stock price at end of period | $ 14.50 | | $ 16.48 | | $ 17.05 | | $ 14.50 | | $ 17.05 |
| | | | | | | | | | |
| SELECTED RATIOS: | | | | | | | | | |
| Return on average equity (b) | 5.43% | | 2.19% | | 4.93% | | 3.81% | | 5.59% |
| Return on average common equity (b) | 5.45% | | 1.58% | | 4.85% | | 3.52% | | 6.53% |
| Return on average assets (b) | 0.66% | | 0.26% | | 0.56% | | 0.46% | | 0.61% |
| Efficiency ratio (c) | 60.28% | | 60.07% | | 63.12% | | 60.17% | | 60.85% |
| Net interest margin (b)(d) | 3.49% | | 3.52% | | 3.45% | | 3.51% | | 3.49% |
| Dividend payout ratio (e) | 38.01% | | 131.05% | | 102.96% | | 58.88% | | 77.64% |
| (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.
Second quarter 2010 Earnings Release
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CONSOLIDATED STATEMENTS OF INCOME
| | Three Months Ended | | Six Months Ended |
| | June 30, | | March 31, | | June 30, | | June 30, |
| (in $000’s) | 2010 | | 2010 | | 2009 | | 2010 | | 2009 |
| Interest income | $ 22,963 | | $ 23,457 | | $ 25,745 | | $ 46,420 | | $ 52,079 |
| Interest expense | 7,790 | | 8,016 | | 10,315 | | 15,806 | | 21,122 |
| Net interest income | 15,173 | | 15,441 | | 15,430 | | 30,614 | | 30,957 |
| Provision for loan losses | 5,458 | | 6,501 | | 4,734 | | 11,959 | | 8,797 |
| Net interest income after provision for loan losses | 9,715 | | 8,940 | | 10,696 | | 18,655 | | 22,160 |
| | | | | | | | | | |
| Gross impairment losses on investment securities | (800) | | (820) | | – | | (1,620) | | – |
| Less: Non-credit losses included in other | | | | | | | | | |
| comprehensive income | – | | 166 | | – | | 166 | | – |
| Net other-than-temporary impairment losses | (800) | | (986) | | – | | (1,786) | | – |
| Net gain on securities transactions | 3,018 | | 16 | | 262 | | 3,034 | | 588 |
| Net (loss) gain on assets | (1,254) | | 17 | | 57 | | (1,237) | | (62) |
| Net loss on loans held for sale | (94) | | – | | – | | (94) | | – |
| | | | | | | | | | |
| Non-interest income: | | | | | | | | | |
| Deposit account service charges | 2,457 | | 2,298 | | 2,616 | | 4,755 | | 5,015 |
| Insurance income | 2,261 | | 2,411 | | 2,405 | | 4,672 | | 5,150 |
| Trust and investment income | 1,209 | | 1,556 | | 1,237 | | 2,765 | | 2,295 |
| Electronic banking income | 1,175 | | 1,088 | | 1,020 | | 2,263 | | 1,943 |
| Mortgage banking income | 267 | | 235 | | 507 | | 502 | | 1,108 |
| Bank owned life insurance | 173 | | 185 | | 254 | | 358 | | 553 |
| Other non-interest income | 230 | | 241 | | 206 | | 471 | | 418 |
| Total non-interest income | 7,772 | | 8,014 | | 8,245 | | 15,786 | | 16,482 |
| | | | | | | | | | |
| Non-interest expense: | | | | | | | | | |
| Salaries and employee benefits costs | 7,496 | | 7,377 | | 7,499 | | 14,873 | | 15,023 |
| Net occupancy and equipment | 1,440 | | 1,518 | | 1,496 | | 2,958 | | 2,968 |
| FDIC insurance | 612 | | 617 | | 1,608 | | 1,229 | | 2,095 |
| Professional fees | 601 | | 692 | | 700 | | 1,293 | | 1,441 |
| Electronic banking expense | 557 | | 605 | | 491 | | 1,162 | | 1,163 |
| Data processing and software | 527 | | 570 | | 564 | | 1,097 | | 1,101 |
| Foreclosed real estate and other loan expenses | 472 | | 646 | | 192 | | 1,118 | | 487 |
| Franchise taxes | 374 | | 373 | | 404 | | 747 | | 827 |
| Amortization of intangible assets | 235 | | 245 | | 319 | | 480 | | 649 |
| Other non-interest expense | 1,995 | | 1,932 | | 2,248 | | 3,927 | | 4,269 |
| Total non-interest expense | 14,309 | | 14,575 | | 15,521 | | 28,884 | | 30,023 |
| Income before income taxes | 4,048 | | 1,426 | | 3,739 | | 5,474 | | 9,145 |
| Income tax expense | 763 | | 111 | | 893 | | 874 | | 2,104 |
| Net income | $ 3,285 | | $ 1,315 | | $ 2,846 | | $ 4,600 | | $ 7,041 |
| Preferred dividends | 512 | | 513 | | 511 | | 1,025 | | 852 |
| Net income available to common shareholders | $ 2,773 | | $ 802 | | $ 2,335 | | $ 3,575 | | $ 6,189 |
| | | | | | | | | | |
| PER COMMON SHARE DATA: | | | | | | | | | |
| Earnings per share – Basic | $ 0.27 | | $ 0.08 | | $ 0.23 | | $ 0.34 | | $ 0.60 |
| Earnings per share – Diluted | $ 0.27 | | $ 0.08 | | $ 0.23 | | $ 0.34 | | $ 0.60 |
| Cash dividends declared per share | $ 0.10 | | $ 0.10 | | $ 0.23 | | $ 0.20 | | $ 0.46 |
| | | | | | | | | | |
| Weighted-average shares outstanding – Basic | 10,422,126 | | 10,391,542 | | 10,360,590 | | 10,406,919 | | 10,352,769 |
| Weighted-average shares outstanding – Diluted | 10,429,369 | | 10,400,243 | | 10,377,105 | | 10,415,999 | | 10,364,621 |
| Actual shares outstanding (end of period) | 10,423,317 | | 10,408,096 | | 10,358,852 | | 10,423,317 | | 10,358,852 |
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Second quarter 2010 Earnings Release
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CONSOLIDATED BALANCE SHEETS
| | June 30, | | December 31, |
| (in $000’s) | 2010 | | 2009 |
| | | | |
| Assets | | | |
| Cash and cash equivalents: | | | |
| Cash and due from banks | $ 43,930 | | $ 29,969 |
| Interest-bearing deposits in other banks | 23,438 | | 11,804 |
| Total cash and cash equivalents | 67,368 | | 41,773 |
| | | | |
| Available-for-sale investment securities, at fair value (amortized cost of $685,382 | | |
| at June 30, 2010 and $706,444 at December 31, 2009) | 696,469 | | 726,547 |
| Held-to-maturity investment securities, at amortized cost (fair value of $3,027 | | | |
| at June 30, 2010 and $963 at December 31, 2009) | 2,964 | | 963 |
| Other investment securities, at cost | 24,356 | | 24,356 |
| Total investment securities | 723,789 | | 751,866 |
| | | | |
| Loans, net of deferred fees and costs | 1,016,106 | | 1,052,058 |
| Allowance for loan losses | (27,168) | | (27,257) |
| Net loans | 988,938 | | 1,024,801 |
| | | | |
| Loans held for sale | 5,054 | | 1,874 |
| Bank premises and equipment, net of accumulated depreciation | 24,279 | | 24,844 |
| Bank owned life insurance | 53,281 | | 52,924 |
| Goodwill | 62,520 | | 62,520 |
| Other intangible assets | 2,618 | | 3,079 |
| Other assets | 39,199 | | 38,146 |
| Total assets | $ 1,967,046 | | $ 2,001,827 |
| | | | |
| Liabilities | | | |
| Deposits: | | | |
| Non-interest-bearing deposits | $ 203,559 | | $ 198,000 |
| Interest-bearing deposits | 1,195,217 | | 1,197,886 |
| Total deposits | 1,398,776 | | 1,395,886 |
| | | | |
| Short-term borrowings | 49,765 | | 76,921 |
| Long-term borrowings | 239,981 | | 246,113 |
| Junior subordinated notes held by subsidiary trust | 22,548 | | 22,530 |
| Accrued expenses and other liabilities | 15,696 | | 16,409 |
| Total liabilities | 1,726,766 | | 1,757,859 |
| | | | |
| Stockholders' Equity | | | |
| Preferred stock, no par value (50,000 shares authorized, 39,000 shares issued | | | |
| at June 30, 2010, and December 31, 2009) | 38,593 | | 38,543 |
| Common stock, no par value (24,000,000 shares authorized, 11,055,429 shares | | |
| issued at June 30, 2010, and 11,031,892 shares issued at December 31, 2009), | 166,065 | | 166,227 |
| including shares in treasury | | | |
| Retained earnings | 47,699 | | 46,229 |
| Accumulated comprehensive income, net of deferred income taxes | 3,677 | | 9,487 |
| Treasury stock, at cost (632,112 shares at June 30, 2010, and | | | |
| 657,255 shares at December 31, 2009) | (15,754) | | (16,518) |
| Total stockholders' equity | 240,280 | | 243,968 |
| Total liabilities and stockholders' equity | $ 1,967,046 | | $ 2,001,827 |
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Second quarter 2010 Earnings Release
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SELECTED FINANCIAL INFORMATION
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| (in $000’s, end of period) | 2010 | | 2010 | | 2009 | | 2009 | | 2009 |
| | | | | | | | | | |
| Loan Portfolio | | | | | | | | | |
| Commercial real estate | $ 471,046 | | $ 501,917 | | $ 503,034 | | $ 478,518 | | $ 504,826 |
| Commercial and industrial | 165,916 | | 165,934 | | 159,915 | | 160,677 | | 173,136 |
| Real estate construction | 36,490 | | 34,894 | | 32,427 | | 67,143 | | 54,446 |
| Residential real estate | 207,314 | | 212,569 | | 215,735 | | 216,571 | | 216,280 |
| Home equity lines of credit | 50,259 | | 49,444 | | 49,183 | | 48,991 | | 48,301 |
| Consumer | 83,735 | | 85,231 | | 90,144 | | 94,374 | | 95,161 |
| Deposit account overdrafts | 1,346 | | 1,299 | | 1,620 | | 1,765 | | 2,016 |
| Total loans | $ 1,016,106 | | $ 1,051,288 | | $ 1,052,058 | | $ 1,068,039 | | $ 1,094,166 |
| | | | | | | | | | |
| Deposit Balances | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | |
| Retail certificates of deposit | $ 512,327 | | $ 546,760 | | $ 537,549 | | $ 561,619 | | $ 596,713 |
| Money market deposit accounts | 290,477 | | 296,196 | | 263,257 | | 245,621 | | 228,963 |
| Governmental deposit accounts | 136,119 | | 143,068 | | 147,745 | | 137,655 | | 129,491 |
| Savings accounts | 120,086 | | 117,526 | | 112,074 | | 113,104 | | 116,108 |
| Interest-bearing demand accounts | 94,542 | | 88,425 | | 91,878 | | 87,153 | | 90,881 |
| Total retail interest-bearing deposits | 1,153,551 | | 1,191,975 | | 1,152,503 | | 1,145,152 | | 1,162,156 |
| Brokered certificates of deposits | 41,666 | | 41,738 | | 45,383 | | 61,412 | | 45,862 |
| Total interest-bearing deposits | 1,195,217 | | 1,233,713 | | 1,197,886 | | 1,206,564 | | 1,208,018 |
| Non-interest-bearing deposits | 203,559 | | 201,337 | | 198,000 | | 187,011 | | 199,572 |
| Total deposits | $ 1,398,776 | | $ 1,435,050 | | $ 1,395,886 | | $ 1,393,575 | | $ 1,407,590 |
| | | | | | | | | | |
| Asset Quality | | | | | | | | | |
| Nonperforming assets: | | | | | | | | | |
| Loans 90+ days past due and accruing | $ 481 | | $ – | | $ 411 | | $ 993 | | $ 242 |
| Nonaccrual loans | 38,050 | | 29,832 | | 33,972 | | 41,136 | | 40,460 |
| Total nonperforming loans | 38,531 | | 29,832 | | 34,383 | | 42,129 | | 40,702 |
| Other real estate owned | 4,892 | | 6,033 | | 6,313 | | 1,238 | | 163 |
| Total nonperforming assets | $ 43,423 | | $ 35,865 | | $ 40,696 | | $ 43,367 | | $ 40,865 |
| | | | | | | | | | |
| Allowance for loan losses as a percent of | | | | | | | | | |
| nonperforming loans | 70.5% | | 89.0% | | 79.3% | | 62.3% | | 56.9% |
| Nonperforming loans as a percent of total loans | 3.77% | | 2.84% | | 3.27% | | 3.94% | | 3.72% |
| Nonperforming assets as a percent of total assets | 2.21% | | 1.79% | | 2.03% | | 2.16% | | 2.00% |
| Nonperforming assets as a percent of total loans | | | | | | | | |
| and other real estate owned | 4.23% | | 3.39% | | 3.85% | | 4.06% | | 3.73% |
| Allowance for loan losses as a percent of total loans | 2.66% | | 2.53% | | 2.59% | | 2.46% | | 2.12% |
| | | | | | | | | | |
| Capital Information(a) | | | | | | | | | |
| Tier 1 risk-based capital ratio | 16.11% | | 15.51% | | 15.49% | | 15.06% | | 14.88% |
| Tier 1 common ratio | 11.07% | | 10.60% | | 10.58% | | 10.30% | | 10.30% |
| Total risk-based capital ratio (Tier 1 and Tier 2) | 17.44% | | 16.83% | | 16.80% | | 16.39% | | 16.22% |
| Leverage ratio | 10.14% | | 9.97% | | 10.06% | | 9.82% | | 9.95% |
| Tier 1 capital | $ 195,439 | | $ 193,211 | | $ 192,822 | | $ 193,013 | | $ 198,041 |
| Tier 1 common capital | 134,298 | | 132,103 | | 131,747 | | 131,973 | | 137,035 |
| Total capital (Tier 1 and Tier 2) | 211,509 | | 209,647 | | 209,144 | | 209,986 | | 215,826 |
| Total risk-weighted assets | $ 1,212,816 | | $ 1,245,770 | | $ 1,244,707 | | $ 1,281,318 | | $ 1,330,979 |
| Tangible equity to tangible assets (b) | 9.21% | | 9.06% | | 9.21% | | 9.21% | | 8.74% |
| Tangible common equity to tangible assets (b) | 7.18% | | 7.07% | | 7.22% | | 7.22% | | 6.78% |
| (a) | June 30, 2010 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.
Second quarter 2010 Earnings Release
- Page 9 of 12 -
| PROVISION FOR LOAN LOSSES INFORMATION |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | March 31, | | June 30, | | June 30, | | June 30, |
| (in $000’s) | 2010 | | 2010 | | 2009 | | 2010 | | 2009 |
| Provision for Loan Losses | | | | | | | | | |
| Provision for checking account overdrafts | $ 179 | | $ 20 | | $ 234 | | $ 199 | | $ 297 |
| Provision for other loan losses | 5,279 | | 6,481 | | 4,500 | | 11,760 | | 8,500 |
| Total provision for loan losses | $ 5,458 | | $ 6,501 | | $ 4,734 | | $ 11,959 | | $ 8,797 |
| | | | | | | | | | |
| Net Charge-Offs | | | | | | | | | |
| Gross charge-offs | $ 5,517 | | $ 8,134 | | $ 6,986 | | $ 13,651 | | $ 10,284 |
| Recoveries | 674 | | 929 | | 1,327 | | 1,603 | | 1,707 |
| Net charge-offs | $ 4,843 | | $ 7,205 | | $ 5,659 | | $ 12,048 | | $ 8,577 |
| | | | | | | | | | |
| Net Charge-Offs (Recoveries) by Type | | | | | | | | | |
| Commercial real estate | $ 4,401 | | $ 5,918 | | $ 4,332 | | $ 10,320 | | $ 6,853 |
| Commercial and industrial | 38 | | 894 | | 31 | | 932 | | (8) |
| Residential real estate | 77 | | 183 | | 647 | | 260 | | 829 |
| Real estate, construction | 68 | | – | | – | | 68 | | – |
| Consumer | 89 | | 114 | | 352 | | 202 | | 446 |
| Home equity lines of credit | 5 | | (12) | | 36 | | (7) | | 35 |
| Deposit account overdrafts | 165 | | 108 | | 261 | | 273 | | 422 |
| Total net charge-offs | $ 4,843 | | $ 7,205 | | $ 5,659 | | $ 12,048 | | $ 8,577 |
| | | | | | | | | | |
| Net charge-offs as a percent of loans (annualized) | 1.86% | | 2.76% | | 2.05% | | 2.31% | | 1.56% |
SUPPLEMENTAL INFORMATION
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| (in $000’s, end of period) | 2010 | | 2010 | | 2009 | | 2009 | | 2009 |
| | | | | | | | | | |
| Trust assets under management | $ 742,044 | | $ 768,189 | | $ 750,993 | | $ 738,535 | | $ 692,823 |
| Brokerage assets under management | $ 214,421 | | $ 229,324 | | $ 216,479 | | $ 210,743 | | $ 183,968 |
| Mortgage loans serviced for others | $ 234,134 | | $ 230,183 | | $ 227,792 | | $ 220,605 | | $ 213,271 |
| Employees (full-time equivalent) | 527 | | 530 | | 537 | | 544 | | 548 |
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
- Page 10 of 12 -
CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME
| | Three Months Ended |
| | June 30, 2010 | | March 31, 2010 | | June 30, 2009 |
| (in $000’s) | Balance | Income/ Expense | Yield/ Cost | Balance | Income/ Expense | Yield/ Cost | Balance | Income/ Expense | Yield/ Cost |
| Assets | | | | | | | | | | | |
| Short-term investments | $ 34,077 | $ 21 | 0.25% | | $ 7,317 | $ 4 | 0.23% | | $ 38,546 | $ 24 | 0.25% |
| Investment securities (a)(b) | 739,206 | 8,717 | 4.72% | | 767,804 | 9,003 | 4.69% | | 716,288 | 9,849 | 5.50% |
| Gross loans (a) | 1,042,010 | 14,629 | 5.63% | | 1,060,020 | 14,850 | 5.66% | | 1,106,928 | 16,282 | 5.91% |
| Allowance for loan losses | (30,669) | | | | (29,332) | | | | (24,495) | | |
| Total earning assets | 1,784,624 | 23,367 | 5.24% | | 1,805,809 | 23,857 | 5.32% | | 1,837,267 | 26,155 | 5.70% |
| | | | | | | | | | | | |
| Intangible assets | 65,248 | | | | 65,484 | | | | 66,144 | | |
| Other assets | 146,234 | | | | 142,240 | | | | 137,839 | | |
| Total assets | $ 1,996,106 | | | | $ 2,013,533 | | | | $ 2,041,250 | | |
| | | | | | | | | | | | |
| Liabilities and Equity | | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | |
| Savings accounts | $ 121,017 | $ 48 | 0.16% | | $ 116,572 | $ 47 | 0.16% | | $ 128,790 | $ 168 | 0.52% |
| Interest-bearing demand accounts | 237,262 | 650 | 1.10% | | 229,628 | 661 | 1.17% | | 206,168 | 795 | 1.55% |
| Money market deposit accounts | 294,138 | 654 | 0.89% | | 273,567 | 656 | 0.97% | | 223,442 | 631 | 1.13% |
| Brokered certificates of deposits | 41,717 | 398 | 3.83% | | 42,003 | 401 | 3.87% | | 32,660 | 334 | 4.10% |
| Retail certificates of deposit | 524,038 | 3,203 | 2.45% | | 539,327 | 3,378 | 2.54% | | ��623,102 | 4,650 | 2.99% |
| Total interest-bearing deposits | 1,218,172 | 4,953 | 1.63% | | 1,201,097 | 5,143 | 1.74% | | 1,214,162 | 6,578 | 2.17% |
| | | | | | | | | | | | |
| Short-term borrowings | 48,931 | 66 | 0.53% | | 86,143 | 80 | 0.37% | | 49,924 | 108 | 0.86% |
| Long-term borrowings | 262,602 | 2,771 | 4.19% | | 265,331 | 2,791 | 4.23% | | 330,505 | 3,629 | 4.37% |
| Total borrowed funds | 311,533 | 2,837 | 3.62% | | 351,474 | 2,871 | 3.28% | | 380,429 | 3,737 | 3.91% |
| Total interest-bearing liabilities | 1,529,705 | 7,790 | 2.04% | | 1,552,571 | 8,014 | 2.09% | | 1,594,591 | 10,315 | 2.59% |
| | | | | | | | | | | | |
| Non-interest-bearing deposits | 209,602 | | | | 203,158 | | | | 198,515 | | |
| Other liabilities | 14,317 | | | | 13,972 | | | | 16,690 | | |
| Total liabilities | 1,753,624 | | | | 1,769,701 | | | | 1,809,796 | | |
| | | | | | | | | | | | |
| Preferred equity | 38,581 | | | | 38,556 | | | | 38,478 | | |
| Common equity | 203,901 | | | | 205,276 | | | | 192,976 | | |
| Stockholders’ equity | 242,482 | | | | 243,832 | | | | 231,454 | | |
| Total liabilities and equity | $ 1,996,106 | | | | $ 2,013,533 | | | | $ 2,041,250 | | |
| | | | | | | | | | | | |
| Net interest income/spread (a) | | $ 15,577 | 3.20% | | | $ 15,843 | 3.23% | | | $ 15,840 | 3.11% |
| Net interest margin (a) | | | 3.49% | | | | 3.52% | | | | 3.45% |
| | | | | | | | | | | | |
| (a) Information presented on a fully tax-equivalent basis. | | | | | | | | |
| (b) Average balances are based on carrying value. | | | | | | | | | |
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
- Page 11 of 12 -
| | Six Months Ended |
| | June 30, 2010 | | June 30, 2009 |
| (in $000’s) | Balance | Income/ Expense | Yield/ Cost | Balance | Income/ Expense | Yield/ Cost |
| Assets | | | | | | | |
| Short-term investments | $ 20,772 | $ 24 | 0.25% | | $ 32,148 | $ 40 | 0.25% |
| Investment securities (a)(b) | 753,426 | 17,720 | 4.71% | | 713,895 | 19,860 | 5.57% |
| Gross loans (a) | 1,050,965 | 29,480 | 5.64% | | 1,107,110 | 33,014 | 6.01% |
| Allowance for loan losses | (30,004) | | | | (24,239) | | |
| Total earning assets | 1,795,159 | 47,224 | 5.28% | | 1,828,914 | 52,914 | 5.81% |
| | | | | | | | |
| Intangible assets | 65,365 | | | | 66,202 | | |
| Other assets | 144,111 | | | | 137,300 | | |
| Total assets | $ 2,004,635 | | | | $ 2,032,416 | | |
| | | | | | | | |
| Liabilities and Equity | | | | | | | |
| Interest-bearing deposits: | | | | | | | |
| Savings accounts | $ 118,807 | $ 95 | 0.16% | | $ 123,700 | $ 292 | 0.48% |
| Interest-bearing demand accounts | 233,467 | 1,311 | 1.13% | | 200,966 | 1,530 | 1.54% |
| Money market deposit accounts | 283,910 | 1,310 | 0.93% | | 223,048 | 1,280 | 1.16% |
| Brokered certificates of deposits | 41,859 | 799 | 3.85% | | 29,994 | 608 | 4.09% |
| Retail certificates of deposit | 531,640 | 6,581 | 2.50% | | 628,272 | 9,852 | 3.16% |
| Total interest-bearing deposits | 1,209,683 | 10,096 | 1.68% | | 1,205,980 | 13,562 | 2.27% |
| | | | | | | | |
| Short-term borrowings | 67,435 | 147 | 0.43% | | 59,557 | 277 | 0.93% |
| Long-term borrowings | 263,958 | 5,562 | 4.21% | | 332,688 | 7,283 | 4.38% |
| Total borrowed funds | 331,393 | 5,709 | 3.44% | | 392,245 | 7,560 | 3.85% |
| Total interest-bearing liabilities | 1,541,076 | 15,805 | 2.06% | | 1,598,225 | 21,122 | 2.66% |
| | | | | | | | |
| Non-interest-bearing deposits | 206,398 | | | | 193,844 | | |
| Other liabilities | 14,008 | | | | 17,045 | | |
| Total liabilities | 1,761,482 | | | | 1,809,114 | | |
| | | | | | | | |
| Preferred equity | 38,568 | | | | 32,307 | | |
| Common equity | 204,585 | | | | 190,995 | | |
| Stockholders’ equity | 243,153 | | | | 223,302 | | |
| Total liabilities and equity | $ 2,004,635 | | | | $ 2,032,416 | | |
| | | | | | | | |
| Net interest income/spread (a) | | $ 31,419 | 3.22% | | | $ 31,792 | 3.15% |
| Net interest margin (a) | | | 3.51% | | | | 3.49% |
| | | | | | | | |
| (a) Information presented on a fully tax-equivalent basis. | | | |
| (b) Average balances are based on carrying value. | | | | |
PEOPLES BANCORP INC.
Second quarter 2010 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:
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| (in $000’s, end of period) | 2010 | | 2010 | | 2009 | | 2009 | | 2009 |
| | | | | | | | | | |
| Tangible Equity: | | | | | | | | | |
| Total stockholders' equity, as reported | $ 240,280 | | $ 240,842 | | $ 243,968 | | $ 244,363 | | $ 238,449 |
| Less: goodwill and other intangible assets | 65,138 | | 65,357 | | 65,599 | | 65,805 | | 66,093 |
| Tangible equity | $ 175,142 | | $ 175,485 | | $ 178,369 | | $ 178,558 | | $ 172,356 |
| | | | | | | | | | |
| Tangible Common Equity: | | | | | | | | | |
| Tangible equity | $ 175,142 | | $ 175,485 | | $ 178,369 | | $ 178,558 | | $ 172,356 |
| Less: preferred stockholders' equity | 38,593 | | 38,568 | | 38,543 | | 38,518 | | 38,494 |
| Tangible common equity | $ 136,549 | | $ 136,917 | | $ 139,826 | | $ 140,040 | | $ 133,862 |
| | | | | | | | | | |
| Tangible Assets: | | | | | | | | | |
| Total assets, as reported | $ 1,967,046 | | $ 2,003,271 | | $ 2,001,827 | | $ 2,004,754 | | $ 2,039,251 |
| Less: goodwill and other intangible assets | 65,138 | | 65,357 | | 65,599 | | 65,805 | | 66,093 |
| Tangible assets | $ 1,901,908 | | $ 1,937,914 | | $ 1,936,228 | | $ 1,938,949 | | $ 1,973,158 |
| | | | | | | | | | |
| Tangible Book Value per Share: | | | | | | | | | |
| Tangible common equity | $ 136,549 | | $ 136,917 | | $ 139,826 | | $ 140,040 | | $ 133,862 |
| Common shares outstanding | 10,423,317 | | 10,408,096 | | 10,374,637 | | 10,371,357 | | 10,358,852 |
| | | | | | | | | | |
| Tangible book value per share | $ 13.10 | | $ 13.15 | | $ 13.48 | | $ 13.50 | | $ 12.92 |
| | | | | | | | | | |
| Tangible Equity to Tangible Assets Ratio: | | | | | | | | | |
| Tangible equity | $ 175,142 | | $ 175,485 | | $ 178,369 | | $ 178,558 | | $ 172,356 |
| Total tangible assets | $ 1,901,908 | | $ 1,937,914 | | $ 1,936,228 | | $ 1,938,949 | | $ 1,973,158 |
| | | | | | | | | | |
| Tangible equity to tangible assets | 9.21% | | 9.06% | | 9.21% | | 9.21% | | 8.74% |
| | | | | | | | | | |
| Tangible Common Equity to Tangible Assets Ratio: | | | | | | | | |
| Tangible common equity | $ 136,549 | | $ 136,917 | | $ 139,826 | | $ 140,040 | | $ 133,862 |
| Tangible assets | $ 1,901,908 | | $ 1,937,914 | | $ 1,936,228 | | $ 1,938,949 | | $ 1,973,158 |
| | | | | | | | | | |
| Tangible common equity to tangible assets | 7.18% | | 7.07% | | 7.22% | | 7.22% | | 6.78% |
END OF RELEASE
