EXHIBIT 99
NEWS RELEASE
FOR IMMEDIATE RELEASE Contact: John W. Conlon, Chief Financial Officer
- --------------------- (740) 373-3155
April 22, 2002
PEOPLES BANCORP ANNOUNCES RECORD
FIRST QUARTER EARNINGS
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MARIETTA, Ohio - Peoples Bancorp Inc. (Nasdaq: PEBO)
announced net income of $4,515,000, or $0.62 per share, for the first quarter
of 2002. This compared to net income of $3,537,000, or $0.49 per share, and
$2,596,000, or $0.36 per share, for the fourth and first quarters of 2001,
respectively.
On an operating basis, income was $4,076,000 in the first quarter of
2002, up $548,000 (or 16%) from $3,528,000 in the fourth quarter of 2001, or
linked quarter. Operating diluted earnings per share were $0.56 for the three
months ended March 31, 2002, versus $0.49 the prior quarter, an increase of
$0.07 per share (or 14%). Compared to the first quarter of 2001, operating
income grew $1,382,000 (or 51%) from $2,694,000 while operating diluted earnings
per share increased $0.19 (or 51%). Operating earnings do not include net
pre-tax gains of $682,000 relating to the repurchase, at a discount, of $7.0
million of Peoples' trust preferred securities and sales of investment
securities. Operating income removes the after-tax impact of these transactions
and other significant non-operating income and expenses, such as gains and/or
losses on asset disposals and securities transactions, mark-to-market
adjustments on interest rate caps, extraordinary items, etc.
"We are pleased with our strong performance in the first quarter,"
said Robert E. Evans, Peoples' President and CEO. "While non-operating income
helped to boost first quarter profits, Peoples' improved operating results are
due largely to higher levels of net interest income and growth of non-interest
revenues, which we believe reflects our commitment to growing top-line revenue.
Our associates continue to focus on satisfying the financial needs of each
client through relationships that build long-term value for every stakeholder."
Through the first three months of 2002, return on average equity was
18.62% versus 14.76% and 12.15% in the fourth and first quarters of 2001,
respectively, while operating return on average equity was 16.81% versus 14.72%
for the linked quarter and 12.60% for the first three months of 2001.
On January 1, 2002, Peoples adopted Statement No. 142, "Goodwill and
Other Intangible Assets" ("SFAS 142") issued by the Financial Accounting
Standards Board in July 2001. Under SFAS 142, Peoples is no longer required to
amortize approximately $6.0 million of its goodwill, but rather must perform, at
least annually, an assessment for impairment applying a fair-value based test.
As a result, Peoples' goodwill amortization expense decreased $166,000, or
approximately $0.02 per share, totaling $274,000 in the first quarter of 2002
compared to $440,000 last year.
While SFAS 142 eliminated a portion of Peoples' goodwill amortization
expense, Peoples, as required, continues to amortize the remainder of its
intangible assets. Cash basis operating earnings, which excludes the impact of
all intangible assets and related amortization expense, as well as significant
non-operating income and expenses, grew to $0.60 per share for the first quarter
of 2002 versus $0.42 for the three months ended March 31, 2001 and $0.55 for the
linked quarter, increases of $0.18 (or 43%) and $0.05 (or 9%), respectively.
Cash basis operating ROE was 21.60% for the quarter ended March 31, 2002,
compared to 18.35% the same period a year ago and 20.16% last quarter.
Net interest income totaled $12,159,000 for the first quarter of 2002,
up $915,000 (or 8%) compared to the linked quarter and up $1,848,000 (or 18%)
compared to the first quarter of 2001. For the quarter ended March 31, 2002, net
interest margin was 4.52% versus 4.30% in the prior quarter and 3.98% a year
ago. The improvement in net interest income and net interest margin is
attributable to interest rate cuts in 2001 and modest growth in average earning
assets. In the first quarter of 2002, Peoples' average cost of funds was 3.37%
compared to 3.90% in the linked quarter and 5.13% a year ago while the average
yield on earning assets was 7.49%, 7.73% and 8.47% for the same periods,
respectively.
"The combination of last year's rate cuts and our proactive management
of funding costs has resulted in Peoples' costs of funds dropping more than the
yield on assets, enhancing both net interest income and margin," said Jack
Conlon, Peoples' Chief Financial Officer. "However, interest rates may increase
later this year, which could have a moderately negative impact on net interest
revenues based on our current interest rate risk position. We will continue to
manage our asset-liability position and implement strategies to mitigate the
impact of future interest rate changes on Peoples' earnings."
For the three months ended March 31, non-interest income totaled
$3,283,000 in 2002 compared to $2,201,000 in 2001, an increase of $1,082,000 (or
49%), with increased deposit account service charges and business owned life
insurance income ("BOLI") accounting for the majority of the growth. Compared to
the linked quarter, non-interest income was down $460,000 (or 12%) from
$3,743,000, the result of Peoples' recognition of non-recurring income of
$877,000 relating to a demutualization in the fourth quarter of 2001.
Service charges on deposits remain the largest source of non-interest
revenues, reaching $1,366,000 in the first quarter of 2002, up $559,000 (or 69%)
from $807,000 a year ago and up $317,000 (or 30%) from $1,049,000 in the prior
quarter, due to higher volumes of overdraft and non-sufficient funds fees.
Peoples' implementation of the Overdraft Privilege program and other
enhancements in late 2001 led to volume increases and helped boost overdraft
fees by $392,000 (or 141%) compared to the prior year and $198,000 (or 42%)
versus 2001's fourth quarter total. For the quarter ended March 31, 2002,
Peoples' BOLI produced tax-advantaged income of $325,000 compared to $239,000
last quarter and no income in the first quarter of 2001.
Electronic banking revenues grew $46,000 (or 14%) in the first quarter
of 2002, totaling $368,000 compared to the previous year, and down $22,000 (or
6%) from the linked quarter. Sustained growth of ATM and debit card usage by
Peoples' clients accounts for the higher revenues versus last year, while the
decline from the linked quarter can be attributed to heavier debit card usage in
the fourth quarter of 2001 due to peak holiday shopping. Insurance and
investment commissions were $524,000 in the first quarter of 2002, up $144,000
(or 38%) from $380,000 a year ago and up $97,000 (or 23%) versus the fourth
quarter of 2001's total of $427,000, due primarily to strong annuity sales in
the first quarter of 2002. Peoples' fiduciary fees totaled $616,000 in the
quarter ended March 31, 2002, versus $614,000 a year ago and $640,000 last
quarter.
"While net interest income remains a significant source of revenue,
we successfully grew other sources of revenue in the first quarter through our
needs-based selling approach to serving clients and the introduction of
Overdraft Privilege. Growing non-interest income remains one of our primary
goals as we implement strategies to diversify our revenue streams," added
Conlon.
For the three months ended March 31, 2002, non-interest expense grew
$1.0 million (or 13%) compared to the first quarter of 2001, due largely to
higher salaries and benefits expenses and marketing costs. Salaries and
benefits, Peoples' largest non-interest expense, totaled $4,484,000 for the
first quarter of 2002 compared to 2001's first quarter total of $3,585,000, an
increase of $899,000 (or 25%). Higher incentive and medical plan expenses, as
well as salary increases necessary to retain and recruit key personnel were
significant contributors to this increase. Peoples' new branding campaign, the
introduction of its "Free Checking" product and Overdraft Privilege
advertisements contributed to increased marketing expenses in the first quarter
of 2002, totaling $386,000 versus $119,000 a year ago, up $267,000. Management
believes these initiatives will help attract new clients and produce benefits in
future periods.
Although up compared to last year, non-interest expense declined
$225,000 (or 2%) when compared to the linked quarter. Increased marketing
expenses of $208,000 in the first quarter of 2002 from the linked quarter were
offset by reduced intangible amortization and trust preferred expenses of
$232,000 (or 38%) and $84,000 (or 13%), respectively, accounting for the
majority of the overall decline. Peoples' intangible amortization expense was
down in the first quarter of 2002 from $617,000 last quarter, due largely to the
adoption of SFAS 142, while trust preferred costs fell in response to Peoples'
repurchase of its trust preferred securities. Peoples' other major non-interest
expense categories were below their levels in recent periods, except data
processing and software costs, which were up $76,000 (or 31%) compared to a year
ago due to software licensing renewal fees.
In early April 2002, Peoples issued $7.0 million of trust preferred
securities through a newly formed subsidiary, which participated in a pooled
offering. As a result, trust preferred costs will be higher in the second
quarter of 2002 compared to the first quarter and will approximate $630,000 for
the second quarter of 2002.
At March 31, 2002, loans totaled $780.7 million, up $7.8 million from
$772.9 million at year-end 2001. Peoples has experienced limited loan growth in
the first quarter of 2002, as commercial and real estate loan growth was
partially offset by a decline in consumer loan balances.
Since year-end 2001, the level of nonperforming assets increased to
0.67% of total assets at March 31, 2002, versus 0.48% at December 31, 2001. This
increase is due primarily to the restructuring of a single commercial loan
during the first quarter of 2002, as total loan delinquencies and nonaccrual
loans decreased since year-end 2001. At March 31, 2002, the allowance for loan
losses totaled $12.4 million, unchanged since year-end 2001, and is 158% of
nonperforming loans versus 225% at December 31, 2001. For the three months ended
March 31, 2002, Peoples' provision for loan losses was $861,000, up from
$675,000 in the same period last year, and $634,000 in the linked quarter. The
increased provision is based upon management's ongoing evaluation of the
adequacy for loan losses and factors affecting probable loan losses.
"Asset quality remains a key focus despite the increase in
nonperforming loans," stated Conlon. "We continue to review the entire loan
portfolio as part of the risk management process and will deal aggressively with
problem loans as they are identified to minimize the amount of any future loss.
Based on our most recent review, we believe the current allowance for loan
losses is adequate for the overall quality, inherit risk and loan volume
concentrations in the loan portfolio. We anticipate Peoples' loan loss provision
to remain at current levels in the second quarter."
Net chargeoffs totaled $792,000 in the first quarter of 2002 compared
to $543,000 in the first quarter of 2001 and $562,000 in the linked quarter.
Commercial and consumer loan net chargeoffs continue to account for a majority
of Peoples net chargeoffs. In the first quarter of 2002, commercial net
chargeoffs totaled $448,000 compared to $276,000 a year ago and $208,000 last
quarter, while consumer loan net chargeoffs were $270,000, $220,000 and $238,000
for the same periods, respectively.
"Overall, the start of 2002 has brought stronger results than a year
ago and continued the earnings momentum from the fourth quarter," summarized
Evans. "We feel this success is a reflection of the commitment every associate
has made to enhancing long-term shareholder value."
Also in the first quarter, Peoples announced the acquisition of First
Colony Bancshares, Inc., the holding company of The Guernsey Bank based in
Cambridge, Ohio. In the transaction, Peoples will acquire offices in Cambridge,
Byesville, Quaker City and Flushing, Ohio, involving assets of approximately
$110 million and deposits of approximately $100 million, and will operate these
offices as full-service sales offices of Peoples Bank. Peoples will not acquire
the Worthington, Ohio, office, or its related loans and deposits. Management
expects to complete this transaction during the third quarter of 2002, pending
regulatory approval.
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 26 ATMs in Ohio, West Virginia, and Kentucky. Peoples' common shares
are traded on the NASDAQ national market under the symbol "PEBO." Learn more
about Peoples or enroll in Peoples OnLine Connection, Peoples' award winning
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 first quarter of 2002 on April 24, 2002, at 3:00
p.m., local time, with members of Peoples' executive management participating.
The conference call, consisting of brief opening remarks followed by a question
and answer period, 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. 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:
Except for the historical and present factual information contained in
this press release, the matters discussed in this press release, and other
statements identified by words such as "expects," "believes," "plans," and
similar expressions are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially, including, but not limited
to, the interest rate environment, the effect of federal and state banking and
tax regulations, the effect of technological changes, the effect of economic
conditions, the impact of competitive products and pricing, and other risk
factors relating to the banking industry or Peoples as detailed from time to
time in Peoples' reports filed with the SEC. 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 disclaims any responsibility to update these
forward-looking statements.
<table>
<caption>
PEOPLES BANCORP INC. (Nasdaq: PEBO)
Financial Highlights (Unaudited)
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Three Months Ended
(in $000's, except share data) March 31,
2002 2001
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PER SHARE DATA Net income per share (a)(d):
Basic $ 0.63 $ 0.36
Diluted $ 0.62 $ 0.36
Cash basis earnings - diluted (c) $ 0.66 $ 0.41
Operating income per share (b) (d):
Basic $ 0.57 $ 0.37
Diluted $ 0.56 $ 0.37
Cash basis earnings - diluted (c) $ 0.60 $ 0.42
Dividends declared per share $ 0.15 $ 0.13
Book value per share (a)(d) $ 13.49 $ 12.44
Tangible book value per share (a) (d) $ 11.16 $ 9.85
Dividend payout as a percentage of net income 23.88% 35.71%
Actual shares outstanding (net of treasury shares) (d) 7,135,709 7,242,666
Weighted average shares outstanding (d):
Basic 7,128,732 7,185,185
Diluted 7,254,055 7,281,339
PERFORMANCE RATIOS
Return on average equity (a) 18.62% 12.15%
Operating return on average equity (b) 16.81% 12.60%
Cash basis return on average equity (b)(c) 21.60% 18.35%
Return on average assets (a) 1.50% 0.91%
Operating return on average assets (b) 1.35% 0.95%
Cash basis return on average assets (b)(c) 1.46% 1.10%
Non-interest income leverage ratio (e) 38.33% 29.80%
Efficiency ratio (f) 54.24% 57.81%
Net interest margin (fully tax equivalent) 4.52% 3.98%
Net loan chargeoffs as a percentage of average loans 0.10% 0.07%
NET CHARGEOFFS
Gross chargeoffs $ 953 $ 642
Recoveries $ 161 $ 99
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Net chargeoffs $ 792 $ 543
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<fn>
(a) Includes the effect of extraordinary gains.
(b) Excludes after-tax impact of non-operating gains of $439,000 and $14,000 in
2002 and 2001, respectively, and after-tax impact of $112,000 relating to
the mark-to-market adjustment on interest rate caps in 2001.
(c) Excludes after-tax impact of intangible amortization expense and/or balance
sheet impact of intangible assets acquired through use of purchase
accounting for acquisitions.
(d) Adjusted for stock dividends.
(e) Non-interest income (less securities and asset disposal gains) as a
percentage of non-interest expense (less intangible amortization).
Significant non-recurring items are excluded from the calculation.
(f) Non-interest expense (less intangible amortization) as a percentage of
fully tax equivalent net interest income plus non-interest income.
Significant non-recurring items are excluded from the calculation.
</fn>
</table>
<table>
<caption>
PEOPLES BANCORP INC. CONSOLIDATED STATEMENTS OF INCOME
-----------------------------------------
Three Months Ended
(in $000's) March 31,
2002 2001
-----------------------------------------
Interest income $ 20,315 $ 22,120
Interest expense 8,156 11,809
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Net interest income 12,159 10,311
Provision for loan losses 861 675
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Net interest income after provision for loan losses 11,298 9,636
Net gain (loss) on securities transactions 51 2
Net (loss) gain on asset disposals (7) 20
Net mark-to-market adjustment on interest rate caps - (173)
Non-interest income:
Service charges on deposits 1,366 807
Fiduciary revenues 616 614
Insurance and investment commissions 524 380
Electronic banking revenues 368 322
Business owned life insurance 325 -
Other non-interest income 84 78
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Total non-interest income 3,283 2,201
Non-interest expense:
Salaries and benefits 4,484 3,585
Occupancy and equipment 926 945
Trust preferred 561 652
Marketing 386 119
Data processing and software 323 247
Amortization of goodwill 274 440
Amortization of other intangible assets 111 126
Other non-interest expense 1,886 1,837
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Total non-interest expense 8,951 7,951
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Income before income taxes 5,674 3,735
Income taxes 1,569 1,139
------------------ -------------------
Income before extraordinary gains 4,105 2,596
Extraordinary gain on early debt extinguishment, net of tax
expense of $221 410 -
------------------ -------------------
Net income $ 4,515 $ 2,596
=========================================
Fully tax equivalent net interest income $ 12,510 $ 10,573
</table>
<table>
<caption>
PEOPLES BANCORP INC. SELECTED FINANCIAL INFORMATION
------------------------------------------
Three Months Ended
(in $000's) March 31,
2002 2001
------------------------------------------
CONSOLIDATED AVERAGE BALANCES
Average gross loans $ 778,223 $ 740,399
Average earning assets 1,111,330 1,062,987
Average intangible assets 16,829 18,116
Average total assets 1,206,210 1,137,709
Average non-interest bearing deposits 93,961 83,650
Average interest bearing deposits:
Savings 84,798 75,769
Interest-bearing demand deposits 276,706 266,570
Time deposits 363,959 345,282
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Total average interest bearing deposits 725,463 687,621
Average stockholders' equity $ 97,013 $ 85,490
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</table>
<table>
<caption>
PEOPLES BANCORP INC. SELECTED FINANCIAL INFORMATION
----------------- ----------------- -----------------
March 31, December 31, March 31,
2002 2001 2001
----------------- ----------------- -----------------
LOAN PORTFOLIO (in $000's, end of period)
Commercial, financial, and agricultural $ 352,531 $ 343,800 $ 309,313
Real estate, construction 18,135 14,530 26,970
Real estate, mortgage 296,082 295,944 293,350
Consumer 113,962 118,582 123,212
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Total loans $ 780,710 $ 772,856 $ 752,845
ASSET QUALITY
Allowance for loan losses as a percent of total loans 1.59% 1.60% 1.60%
Allowance for loan losses as a percent of
nonperforming loans (a) 157.8% 225.0% 295.0%
Nonperforming loans as a percent of total loans (a) 1.01% 0.71% 0.54%
Nonperforming assets as a percent of total assets (b) 0.67% 0.48% 0.36%
Nonperforming assets as a percent of total loans and
other real estate owned
real estate owned (b) 1.03% 0.73% 0.55%
Nonperforming assets (in $000's, end of period):
Loans 90 days or more past due $ 971 $ 686 $ 230
Renegotiated loans $ 2,864 $ 425 $ 518
Nonaccrual loans $ 4,040 $ 4,380 $ 3,330
Other real estate owned $ 167 $ 181 $ 57
----------------- ----------------- -----------------
Total nonperforming assets $ 8,042 $ 5,672 $ 4,135
REGULATORY CAPITAL (in $000's, end of period)
Tier 1 risk-based capital 12.37% 12.86% 12.98%
Total risk-based capital ratio (Tier 1 and Tier 2) 13.72% 14.21% 14.32%
Leverage ratio 8.63% 9.18% 8.89%
Tier 1 capital $ 102,426 $ 105,065 $ 99,645
Total capital (Tier 1 and Tier 2) $ 113,567 $ 116,114 $ 110,004
Total risk-weighted assets $ 827,926 $ 816,907 $ 767,952
SUPPLEMENTAL DATA (in $000's, end of period)
Trust assets under management $ 517,221 $ 539,487 $ 480,328
One year cumulative repricing gap $ (5,953) $ (11,925) $ (21,433)
Employees (full-time equivalent) 398 403 392
Full service offices 34 34 34
Supermarket offices 4 4 4
ATMs 26 25 27
Announced treasury share plans: (c)
Total shares in plan 175,000 137,500 137,500
Shares purchased (d) 126 11,257 338
Average price (d) $ 18.95 $ 17.63 $ 15.57
----------------- ----------------- -----------------
<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) 2002 data reflects 2002 Stock Repurchase Program of 175,000 shares (or 2.5%
of outstanding shares); 2001 data reflects 2001 Stock Repurchase Program of
137,500 shares (or 2% 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>
</table>
<table>
<caption>
PEOPLES BANCORP INC. CONSOLIDATED BALANCE SHEETS
------------------ ------------------
(in $000's) March 31, December 31,
2002 2001
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ASSETS
Cash and cash equivalents $ 25,425 $ 32,838
Available-for-sale investment securities, at estimated fair value (amortized
cost of $341,306 and $329,081 at March 31, 2002 and
December 31, 2001, respectively) 340,484 330,364
Loans, net of unearned interest 780,710 772,856
Allowance for loan losses (12,426) (12,357)
----------------- -----------------
Net loans 768,284 760,499
Bank premises and equipment, net of accumulated depreciation 16,001 16,369
Goodwill 15,115 15,388
Other intangible assets 1,505 1,622
Other real estate owned 167 181
Other assets 37,907 36,705
----------------- -----------------
TOTAL ASSETS $ 1,204,888 $ 1,193,966
================= =================
LIABILITIES
Non-interest bearing deposits $ 93,823 $ 96,533
Interest bearing deposits 745,399 717,835
----------------- -----------------
Total deposits 839,222 814,368
Federal funds purchased, securities sold under repurchase agreements,
and other short term borrowings 40,846 56,052
Long-term borrowings 198,582 192,448
Accrued expenses and other liabilities 7,728 8,188
----------------- -----------------
TOTAL LIABILITIES 1,086,378 1,071,056
Guaranteed preferred beneficial interests in junior subordinated debentures 22,284 29,056
STOCKHOLDERS' EQUITY
Common stock, no par value (12,000,000 shares authorized, 7,294,237
shares issued at March 31, 2002, and
7,289,266 shares issued at December 31, 2001) 78,612 78,664
Accumulated comprehensive income, net of deferred income taxes (535) 834
Retained earnings 21,172 17,735
Treasury stock, at cost (158,528 shares at March 31, 2002,
and 178,344 shares at December 31, 2001) (3,023) (3,379)
----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 96,226 93,854
TOTAL LIABILITIES, BENEFICIAL INTERESTS, AND ----------------- -----------------
STOCKHOLDERS' EQUITY $ 1,204,888 $ 1,193,966
================= =================
</table>
END OF RELEASE