EXHIBIT 99 NEWS RELEASE FOR IMMEDIATE RELEASE Contact: John W. Conlon, Chief Financial Officer --------------------- (740) 373-3155 October 22, 2001 PEOPLES BANCORP ANNOUNCES RECORD EARNINGS _______________________________________________________ MARIETTA, Ohio - Peoples Bancorp Inc. (Nasdaq: PEBO) announces increased third quarter earnings of $0.44 per diluted share, up 10.0% compared to the third quarter of 2000 and up 7.3% versus the second quarter of 2001. Increased net interest income combined with controlled expense growth were major contributing factors to the earnings growth in the third quarter. For the three months ended September 30, 2001, net income totaled $3,197,000, up $315,000 (or 10.9%) compared to the same period in 2000. "Our strong third quarter results reflect our ability to grow revenues even during times of economic uncertainty," said Robert E. Evans, President and CEO. "Although net interest income continues to be the major contributor to our increased earnings in 2001, we remain committed to growing other sources of revenue through our needs-based selling approach to serving clients and enhancing long-term shareholder value." On a cash basis, diluted earnings per share grew to $0.49 for the third quarter of 2001 versus $0.45 for the three months ended September 30, 2000. Cash basis earnings exclude the effects of intangible assets and related amortization expenses. In the third quarter of 2001, Peoples had amortization expense related to goodwill of $457,000 and core deposit intangibles of $125,000, compared to $432,000 and $139,000, respectively, for the same period a year ago. Cash basis ROE was 19.46% for the quarter ended September 30, 2001, compared to 23.26% last year and 19.27% last quarter, as changes in market values of available-for-sale securities caused a corresponding increase to shareholders' equity. For the nine months ended September 30, net income totaled $8,798,000 in 2001 compared to $8,444,000 a year ago. Diluted earnings per share were $1.20 on a year-to-date basis through September 30, 2001, an increase of $0.04 (or 3.4%) from $1.16 for the same period in 2000. Cash basis earnings were $1.37 per diluted share in 2001 compared to $1.33 in 2000, also up $0.04 (or 3.0%). Through nine months, ROE was 13.19% in 2001 versus 15.38% in 2000 while cash basis ROE was 18.85% and 23.87% for the same periods. Both net interest income and net interest margin have benefited from Peoples reduced volume of borrowed funds and lower costs of funds due to the Federal Reserve's rate reductions in 2001. In the third quarter of 2001, net interest income totaled $10,782,000, up $787,000 (or 7.9%) compared to $9,995,000 for the same period last year. Through nine months of 2001, net interest income totaled 31,889, up $1,565,000 (or 5.2%) from $30,324,000 a year ago. Peoples' net interest margin has continued to improve throughout 2001, reaching 4.10% for the third quarter compared to 4.07% and 3.98% in second and first quarters of 2001, respectively. On a year-to-date basis through September 30, 2001, net interest margin was 4.05% compared to 4.14% last year. "Clearly this year's rate reductions have positively impacted our performance during 2001," said Jack Conlon, Chief Financial Officer. "However, many clients are opting to refinance existing loans rather than obtain new loans, which has slowed our loan growth and put pressure on net interest margin. The recent rate cut and potential cuts in the near future could intensify that pressure and continue to impact net interest income in the fourth quarter." Peoples has experienced growth in deposit balances in 2001 (primarily certificates of deposits), resulting from continuing sales efforts of Peoples' associates and Peoples' competitive pricing of select deposits. This deposit growth, coupled with slower loan growth in 2001, has allowed Peoples to reduce borrowings. In the third quarter of 2001, Peoples' average borrowings decreased $8.2 million (or 3.7%) to $215.9 million compared to the second quarter of 2001, and $40.2 million (or 15.7%) versus the third quarter of 2000. The cost of borrowed funds also declined to 4.63% versus 4.88% last quarter and 5.75% for the third quarter of 2000, a direct result of the reductions in the discount rate. Non-interest income totaled $2,514,000 in the third quarter of 2001 compared to $2,270,000 and $2,327,000 in the previous quarter and third quarter of 2000, respectively. The majority of this increase is due to Peoples' $20.0 million investment in business owned life insurance ("BOLI") in late June 2001 that produced tax-advantaged revenue of $242,000 in the third quarter of 2001. In addition, electronic banking income has also contributed to the overall increase in non-interest income, due to volume increases in ATM and debit card usage by Peoples' clients. Decreases in insurance and investment commissions partially offset e-banking revenue growth and BOLI income streams. For the nine months ended September 30, 2001, non-interest income grew $297,000 (or 4.4%) to $6,985,000 compared to 2000. "While non-interest income improved in the third quarter due to the BOLI purchase, we continue to explore new products and services that we feel complement our business and will benefit Peoples' clients," said Conlon. "Our long-term goal is to continue investing in loans and other investment alternatives with attractive risk-return characteristics while we focus our efforts on enhancing our fee revenue generation through client relationships that serve each client's needs." Conlon added, "For example, we are currently reviewing the possible implementation of an `overdraft privilege' concept in early 2002 that would provide virtually automatic protection to qualified retail checking account clients and produce new fee income as well as benefit clients who incur overdrafts." Peoples' largest source of non-interest income remains deposit account service charges, which totaled $863,000 for the three months ended September 30, 2001, versus $835,000 a year ago, an increase of $28,000 (or 3.4%). On a year-to-date basis, deposit account service charges totaled $2,559,000 in 2001, up $179,000 (or 7.5%) from $2,380,000 the previous year, due largely to higher volumes of overdraft fees on checking accounts and fees generated from business customers. In the third quarter of 2001, electronic banking income totaled $356,000, up $62,000 (or 21.1%) compared to $294,000 last year. On a year-to-date basis, electronic banking income increased $146,000 (or 16.5%) to $1,032,000 in 2001 from $886,000 in 2000, a result of additional e-banking activity by clients. Peoples continues to explore and develop e-commerce capabilities as a means of expanding electronic banking revenues. For the nine months ended September 30, insurance and investment commissions totaled $1,077,000 in 2001 compared to $1,138,000 in 2000, a decline of $61,000 (or 5.4%), as reduced brokerage and annuity commissions were partially offset by marginal increases in property and casualty insurance commissions. In mid-2000, Peoples experienced significant annuity sales and brokerage activity that were not expected to continue into 2001; in actuality, the current interest rate environment and US stock market conditions reduced that activity even more than expected. As a result, Peoples' ability to grow insurance and investment commissions in 2001 has been challenged. Insurance and investment commissions were down $112,000 (or 23.3%) in the third quarter of 2001 compared to the same period a year ago. While below last year's levels, insurance and investments commission are up $39,000 (or 11.9%) compared to the second quarter of 2001's total of $329,000 due to increased life insurance commissions. Peoples' other significant source of non-interest income, fiduciary revenues, totaled $626,000 in the third quarter of 2001, down from $648,000 a year ago. On a year-to-date basis through September 30, 2001, fiduciary revenues are down $106,000 (or 5.4%) compared to $1,974,000 for the same period last year. Current economic conditions continue to impact these revenues, which are based in large part on the market value of assets managed. "Insurance and investment commissions, as well as fiduciary revenues, remain key strategic focal points for our long-term success," commented Conlon. "In the third quarter of 2001, we integrated the management and resources of the trust, investment and brokerage functions to enhance the service level Peoples' associates provide our clients. Our emphasis shifts to the pursuit of new ways to provide asset and risk management products to Peoples' clients and prospects in order to grow revenues." In the third quarter of 2001, non-interest expense totaled $8,117,000, down $51,000 (or 0.6%) compared to the previous quarter and up $367,000 (or 4.7%) compared to third quarter of 2000. On a year-to-date basis, non-interest expense totaled $24,236,000 in 2001, an increase of $1,139,000 (or 4.9%) compared to the previous year. Both the third quarter and year-to-date overhead increases are below management's maximum increase threshold for 2001. Salaries and benefits, Peoples' largest non-interest expense, grew $1,030,000 (or 10.3%) to $11,017,000 for the first nine months of 2001. Salaries and benefits increased in 2001 due to wage increases and rising benefit costs, as well as an expanded number of full-time equivalent associates in customer service positions. For the quarter ended September 30, 2001, salaries and benefits totaled $3,790,000, an increase of $397,000 (or 11.7%) from $3,393,000 in the third quarter of 2000. Peoples' other non-interest expenses were at or below the level of recent periods, except for marginal increases in non-income based taxes. Loan balances at September 30, 2001, grew $2.4 million compared to June 30, 2001 and increased $19.2 million since year-end 2000. Economic conditions and intense rate competition in Peoples' primary markets and contiguous areas continue to challenge loan growth. Most of Peoples' loan growth in 2001 is the result of an acquisition completed in the first quarter of 2001. As a result of less favorable loan loss experience and general economic conditions, Peoples' provision for loan losses was $675,000 for the three months ended September 30, 2001, compared to $600,000 in the same period last year. Net chargeoffs totaled $545,000 in the third quarter of 2001 compared to $307,000 in the third quarter of 2000. Consumer and commercial loan net chargeoffs comprised a majority of Peoples' net chargeoffs in the third quarter of 2001, totaling $319,000, or 58.5% of total net chargeoffs, and $159,000, or 29.2% of total net chargeoffs, respectively. At September 30, 2001, the allowance for loan losses totaled $12.3 million, or 1.62% of total loans, up $1.4 million from year-end 2000 when the allowance was 1.48% of total loans. Peoples' asset quality improved during the third quarter of 2001 with nonperforming assets of $4.6 million, or 0.39% of total assets, down from $5.1 million, or 0.43% of total assets, at June 30, 2001. Peoples has reduced its nonperforming assets by $0.6 million from $5.2 million, or 0.46% of total assets, at year-end 2000. "Superior asset quality has always been an important objective for Peoples. Peoples' asset quality is better than peer levels and we believe our allowance for loan losses is adequate for risks inherent in the loan portfolio," added Conlon. "As a result, we anticipate a reduction in our provision for loan losses for the fourth quarter, although changes in loan volume, general economic conditions and other factors affecting loan losses, such as loan delinquencies and portfolio risk, could limit the amount of any reduction." During the third quarter of 2001, Peoples' effective tax rate was 29.2% compared to 29.3% for the same period last year. On a year-to-date basis, Peoples' effective tax rate was 29.7% in 2001 versus 30.2% in 2000. The reduction of Peoples' effective tax rate and overall tax burden is the result of strategic investments, including investments in low-income housing and historic tax credits as well as business owned life insurance. These investments are part of tax strategies that are long-term in nature and may marginally reduce Peoples' tax burden in future years, depending on economic and regulatory issues. "Overall, we are pleased with our third quarter results," summarized Evans. "We are optimistic that our recent efforts and current strategic initiatives will continue to increase our shareholders' long-term investment value." Peoples Bancorp Inc., a diversified financial products and services company with $1.2 billion in assets, offers a complete line of banking, investment, insurance, and trust solutions through Peoples Bank's 40 sales offices and 25 ATM's in Ohio, West Virginia, and Kentucky. Peoples' common stock is traded on the NASDAQ exchange under the symbol "PEBO." Learn more about Peoples or enroll in Peoples OnLine Connection, Peoples' Internet banking product, at www.peoplesbancorp.com. Conference Call to Discuss Earnings: ------------------------------------ Peoples will conduct a facilitated conference call to discuss the results of operations for the third quarter of 2001 on October 24, 2001, at 3:00 p.m. local time. The conference call is open to the public; however, management asks that questions be limited to investment analysts, interested members of the media and shareholders. To participate in the call, please dial (877) 735-0939 approximately five minutes before the scheduled start of the conference call. Members of Peoples' executive management will participate in the conference call. Brief opening remarks will be followed by a question and answer period. A complete transcript of the conference call will be placed on peoplesbancorp.com, in the "Investor Relations" section under "Conference Call Transcripts". Safe Harbor Statement: ---------------------- The statements in this press release which are not historical fact are forward looking statements that involve a number of risks and uncertainties, including, but not limited to, the interest rate environment, the effect of banking and tax regulations, the effect of economic conditions, the impact of competitive products and pricing, and other risks detailed in Peoples' SEC filings. Although management believes that the expectations in these forward-looking statements are based on reasonable assumptions within the bounds of management's knowledge of Peoples' business and operations, it is possible that actual results may differ materially from these projections. PEOPLES BANCORP INC. (Nasdaq: PEBO) Financial Highlights (Unaudited) -------------------------------- -------------------------------- Three Months Ended Nine Months Ended (in $000's, except share and per share data) September 30, September 30, 2001 2000 2001 2000 -------------------------------- -------------------------------- PER SHARE DATA Net income per share (a): Basic $ 0.45 $ 0.40 $ 1.22 $ 1.18 Diluted $ 0.44 $ 0.40 $ 1.20 $ 1.16 Cash basis earnings - diluted (b) $ 0.49 $ 0.45 $ 1.37 $ 1.33 Dividends declared per share $ 0.15 $ 0.13 $ 0.41 $ 0.38 Book value per share $ 13.21 $ 10.78 $ 13.21 $ 10.78 Tangible book value per share (b) $ 10.74 $ 8.21 $ 10.74 $ 8.21 Dividend payout as a percentage of net income 34.09% 31.78% 34.18% 32.73% Actual shares outstanding (net of treasury shares) (a) 7,113,392 7,146,399 7,113,392 7,146,399 Weighted average shares outstanding (a): Basic 7,172,290 7,170,006 7,195,286 7,185,677 Diluted 7,303,350 7,241,457 7,304,688 7,278,201 PERFORMANCE RATIOS Return on average equity 13.90% 15.33% 13.19% 15.38% Cash basis return on average equity (b) 19.46% 23.26% 18.85% 23.87% Return on average assets 1.09% 1.04% 1.01% 1.04% Cash basis return on average assets (b) 1.25% 1.21% 1.17% 1.21% Non-interest income leverage ratio (c) 33.36% 32.41% 31.04% 31.28% Efficiency ratio (d) 55.56% 56.80% 56.74% 56.60% Net interest margin (fully tax equivalent) 4.10% 3.99% 4.05% 4.14% Net loan chargeoffs as a percentage of average loans 0.07% 0.04% 0.22% 0.11% -------------- -------------- --------------- -------------- <FN> (a) Adjusted for stock dividends. (b) Excludes after-tax impact of intangible amortization expense and/or balance sheet impact of intangible assets acquired through use of purchase accounting for acquisitions. (c) Non-interest income (less securities and asset disposal gains) as a percentage of non-interest expense (less intangible amortization and non-direct operational expenses). Significant non-recurring items are excluded from the calculation. (d) Non-interest expense (less intangible amortization and non-direct operational expenses) as a percentage of fully tax equivalent net interest income plus non-interest income. Significant non-recurring items are excluded from the calculation. </FN> PEOPLES BANCORP INC. CONSOLIDATED STATEMENTS OF INCOME ------------------------------ ------------------------------ Three Months Ended Nine Months Ended (in $000's) September 30, September 30, 2001 2000 2001 2000 ------------- ------------- ------------- ------------- Interest income $ 21,456 $ 21,799 $ 65,568 $ 62,835 Interest expense 10,674 11,804 33,679 32,511 ------------- ------------- ------------- ------------- Net interest income 10,782 9,995 31,889 30,324 Provision for loan losses 675 600 2,025 1,722 ------------- ------------- ------------- ------------- Net interest income after provision for loan losses 10,107 9,395 29,864 28,602 Net gain (loss) on securities transactions 26 66 27 10 Net (loss) gain on asset disposals (12) 36 13 (109) Mark-to-market adjustment on interest rate caps - - (131) - Non-interest income: Service charges on deposits 863 835 2,559 2,380 Fiduciary revenues 626 648 1,868 1,974 Insurance and investment commissions 368 480 1,077 1,138 Electronic banking revenues 356 294 1,032 886 Business owned life insurance 242 - 242 - Other non-interest income 59 70 207 310 ------------- ------------- ------------- ------------- Total non-interest income 2,514 2,327 6,985 6,688 Non-interest expense: Salaries and benefits 3,790 3,393 11,017 9,987 Occupancy and equipment 885 963 2,792 2,957 Trust preferred 665 656 1,976 1,961 Amortization of intangibles 582 571 1,730 1,713 Data processing and software 279 263 757 776 Other non-interest expense 1,916 1,904 5,964 5,703 ------------- ------------- ------------- ------------- Total non-interest expense 8,117 7,750 24,236 23,097 ------------- ------------- ------------- ------------- Income before income taxes 4,518 4,074 12,522 12,094 Income taxes 1,321 1,192 3,724 3,650 ------------- ------------- ------------- ------------- Net income $ 3,197 $ 2,882 $ 8,798 $ 8,444 ============= ============= ============= ============= Fully tax equivalent net interest income $ 11,049 $ 10,250 $ 32,679 $ 31,095 PEOPLES BANCORP INC. SELECTED FINANCIAL INFORMATION ---------------------------------- -------------------------------- Three Months Ended Nine Months Ended (in $000's) September 30, September 30, 2001 2000 2001 2000 ---------------------------------- -------------------------------- CONSOLIDATED AVERAGE BALANCES Average gross loans $ 756,414 $ 711,194 $ 749,957 $ 686,989 Average earning assets 1,080,000 1,028,244 1,077,350 1,001,723 Average total assets 1,175,334 1,104,197 1,159,462 1,079,874 Average non-interest bearing deposits 87,230 80,298 86,418 81,067 Average interest bearing deposits: Savings 77,796 81,109 77,340 85,555 Interest-bearing demand deposits 277,615 241,879 273,032 228,041 Time deposits 388,642 336,625 369,529 340,388 --------------- --------------- -------------- --------------- Total average interest bearing deposits 744,053 659,613 719,901 653,984 Average stockholders' equity $ 91,974 $ 75,187 $ 88,951 $ 73,187 NET CHARGEOFFS Gross chargeoffs $ 642 $ 422 $ 1,985 $ 1,063 Recoveries 97 115 348 283 --------------- --------------- -------------- --------------- Net chargeoffs $ 545 $ 307 $ 1,637 $ 780 --------------- --------------- -------------- --------------- PEOPLES BANCORP INC. SELECTED FINANCIAL INFORMATION ----------------- ----------------- ----------------- (in $000's, end of period) September 30, December 31, September 30, 2001 2000 2000 ----------------- ----------------- ----------------- LOAN PORTFOLIO Commercial, financial, and agricultural $ 315,607 $ 310,558 $ 290,308 Real estate, construction 21,077 20,267 27,344 Real estate, mortgage 295,747 283,323 280,206 Consumer 123,752 122,817 126,470 ----------------- ----------------- ----------------- Total loans $ 756,183 $ 736,965 $ 724,328 ASSET QUALITY Allowance for loan losses as a percent of total loans 1.62% 1.48% 1.55% Allowance for loan losses as a percent of nonperforming loans (a) 273.6% 212.6% 320.1% Nonperforming loans as a percent of total loans (a) 0.59% 0.70% 0.48% Nonperforming assets as a percent of total assets (b) 0.39% 0.46% 0.34% Nonperforming assets as a percent of total loans and other real estate owned real estate owned (b) 0.61% 0.71% 0.52% Nonperforming assets: Loans 90 days or more past due $ 551 $ 344 $ 610 Renegotiated loans $ 146 $ 518 $ 945 Nonaccrual loans $ 3,794 $ 4,280 $ 1,946 Other real estate owned $ 93 $ 86 $ 283 ----------------- ----------------- ----------------- Total nonperforming assets $ 4,584 $ 5,228 $ 3,784 REGULATORY CAPITAL Tier 1 risk-based capital 12.91% 12.83% 12.58% Total risk-based capital ratio (Tier 1 and Tier 2) 14.25% 14.21% 14.03% Leverage ratio 8.86% 8.69% 8.54% Tier 1 capital $ 102,421 $ 97,056 $ 94,247 Total capital (Tier 1 and Tier 2) $ 113,001 $ 107,428 $ 105,097 Total risk-weighted assets $ 793,122 $ 756,195 $ 749,331 SUPPLEMENTAL DATA Trust assets under management $ 477,012 $ 498,563 $ 508,396 One year cumulative repricing gap $ (41,157) $ (26,132) $ (49,345) Employees (full-time equivalent) 397 388 383 Full service offices 34 32 32 Supermarket offices 4 4 4 ATMs 25 27 25 Announced treasury share plans: (c) Total shares in plan 137,500 181,500 181,500 Shares purchased (d) 68,240 9,895 18,337 Average price (d) $ 19.70 $ 12.53 $ 13.41 ----------------- ----------------- ----------------- <FN> (a) Nonperforming loans include loans 90 days past due and accruing, renegotiated loans, and nonaccrual loans. (b) Nonperforming assets include nonperforming loans and other real estate owned. (c) 2001 data reflects 2001 Stock Repurchase Program of 137,500 shares (or 2% of outstanding shares); 2000 data reflects 2000 Stock Repurchase Program of 181,500 shares (or 2.5% of outstanding shares). All share amounts adjusted for stock dividends. (d) Reflects treasury shares purchased and average price paid for the three month period ended on the date indicated. </FN> PEOPLES BANCORP INC. CONSOLIDATED BALANCE SHEETS ----------------- ----------------- (in $000's) September 30, December 31, 2001 2000 ----------------- ----------------- ASSETS Cash and cash equivalents $ 47,384 $ 28,449 Available-for-sale investment securities, at estimated fair value (amortized cost of $303,862 and $335,111 at September 30, 2001, and December 31, 2000, respectively) 308,528 330,521 Loans, net of unearned interest 756,183 736,965 Allowance for loan losses (12,285) (10,930) ----------------- ----------------- Net loans 743,898 726,035 Bank premises and equipment, net of accumulated depreciation 16,461 15,565 Goodwill 15,802 15,702 Other intangibles 1,753 2,146 Other real estate owned 93 86 Other assets 37,397 17,330 ----------------- ----------------- TOTAL ASSETS $ 1,171,316 $ 1,135,834 ================= ================= LIABILITIES Non-interest bearing deposits $ 81,597 $ 84,974 Interest bearing deposits 760,988 672,647 ----------------- ----------------- Total deposits 842,585 757,621 Federal funds purchased, securities sold under repurchase agreements, and other short term borrowings 25,833 119,915 Long-term borrowings 170,616 138,511 Accrued expenses and other liabilities 9,273 7,572 ----------------- ----------------- TOTAL LIABILITIES 1,048,307 1,023,619 Guaranteed preferred beneficial interests in junior subordinated debentures 29,047 29,021 STOCKHOLDERS' EQUITY Common stock, no par value (12,000,000 shares authorized, 7,274,142 shares issued at September 30, 2001, and 6,679,028 shares issued at December 31, 2000) 78,730 66,364 Accumulated comprehensive income, net of deferred income taxes 3,033 (2,983) Retained earnings 15,272 23,381 Treasury stock, at cost (160,750 shares at September 30, 2001, and 189,357 shares at December 31, 2000) (3,073) (3,568) ----------------- ----------------- TOTAL STOCKHOLDERS' EQUITY 93,962 83,194 ----------------- ----------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,171,316 $ 1,135,834 ================= ================= END OF RELEASE