EXHIBIT 99
NEWS RELEASE
FOR IMMEDIATE RELEASE Contact: Jack Conlon
July 22, 2002 Chief Financial Officer
(740) 373-3155
PEOPLES BANCORP ANNOUNCES INCREASED
SECOND QUARTER EARNINGS
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MARIETTA, Ohio - Peoples Bancorp Inc. (Nasdaq: PEBO) announced net
income of $4,585,000 for the second quarter of 2002, up $1,580,000 (or 53%) from
$3,005,000 a year ago. Peoples' increased second quarter earnings are due
primarily to strong net interest income and higher levels of non-interest
revenue, which grew $1,715,000 and $1,363,000, respectively. For the three
months ended June 30, diluted earnings per share were $0.57 in 2002 versus $0.37
in 2001. Return on average equity was 18.15% for the second quarter of 2002
compared to 13.46% for the same period last year.
On a year-to-date basis, net income totaled $9,100,000 in 2002, up
$3,499,000 (or 62%) compared to $5,601,000 in 2001, and earnings per diluted
share increased to $1.13 from $0.70 a year ago. For the six months ended June
30, 2002, return on equity improved to 18.37% from 12.81% for the same period
last year.
"We are pleased to report our fifth consecutive quarter of solid
earnings growth, even as a sluggish economy continues to challenge the financial
services industry," said Robert E. Evans, Peoples' President and CEO. "Our
robust second quarter results reflect the success of recent strategic
initiatives designed to enhance revenues and increase shareholder value. Our
associates will continue to focus on satisfying the needs of Peoples' expanding
client base, especially our new clients welcomed in the second quarter in the
Guernsey Bank acquisition."
Late in the second quarter, Peoples completed its acquisition of First
Colony Bancshares, Inc., the holding company of The Guernsey Bank, Federal
Savings Bank based in Cambridge, Ohio. As part of the transaction, Peoples
acquired five full-service offices in Ohio's Guernsey and Belmont Counties,
involving loans of $67 million and deposits of $97 million. The former Guernsey
Bank offices now operate as sales offices of Peoples Bank. Management expects
this acquisition to positively impact Peoples' earnings.
Net interest income totaled $12,511,000 for the second quarter of 2002,
up $1,715,000 (or 16%) compared to $10,796,000 for the second quarter of 2001.
For the quarter ended June 30, 2002, net interest margin was 4.55% versus 4.07%
a year ago. On a year-to-date basis, net interest income grew $3,563,000 (or
17%) in 2002, totaling $24,670,000, while net interest margin improved to 4.53%
compared to 4.02% a year ago. This improvement in net interest income and margin
is the result of Peoples' cost of funds dropping more than its yield on assets.
In the second quarter of 2002, Peoples' average cost of funds was 3.12% compared
to 4.71% in the second quarter of 2001, while the average yield on earning
assets was 7.30% and 8.19% for the same periods, respectively.
"Peoples' net interest income and margin continue to benefit from
interest rates remaining at their current low levels and our ongoing proactive
balance sheet management," said Jack Conlon, Peoples' Chief Financial Officer.
"We know interest rates will eventually increase, which could negatively impact
our net interest income. However, we continually work to mitigate the impact of
future interest rate changes on Peoples' earnings."
Non-interest income increased $1,363,000 (or 60%) in the second quarter
of 2002 from $2,270,000 a year ago. For the six months ended June 30, 2002,
non-interest income totaled $6,916,000, up $2,445,000 (or 55%) versus $4,471,000
for the same period in 2001. Enhanced deposit account service charges and
business owned life insurance ("BOLI") income account for $786,000 and $376,000
of the revenue growth, respectively, while increased insurance and investment
commissions of $133,000 were also a contributing factor.
Deposit account service charges totaled $1,675,000 in the second
quarter of 2002, up $786,000 (or 88%) compared to last year and on a
year-to-date basis, grew $1,345,000 (or 79%) to $3,041,000 from $1,696,000 for
the first half of 2001. These improvements are the result of volume increases in
overdraft and non-sufficient funds fees attributable to the Overdraft Privilege
program and other changes to the assessment of cost recovery fees on deposit
accounts introduced in late 2001. Peoples' BOLI generated tax-advantaged income
of $376,000 for the three months ended June 30, 2002, and $701,000 through six
months of 2002. Peoples had no BOLI income in either period last year due to the
timing of the BOLI purchase.
"The continued growth and diversification of non-interest revenues is
vital to minimize the impact of changes in interest rates and economic
conditions on earnings," added Conlon. "The acquisition of the five former
Guernsey Bank offices provides additional opportunities to further enhance
revenues as we integrate Peoples' non-traditional products and services, such as
insurance and investments, and our wide array of traditional banking products
with the limited products previously offered to the Guernsey Bank customers. In
addition, these markets gave us the opportunity to expand the current customer
base and further leverage our investment in technology."
Insurance and investment commissions totaled $462,000 for the second
quarter of 2002 and $986,000 for the first half of 2002, up $133,000 (or 40%)
and $277,000 (or 39%) from the same periods a year ago, respectively. Strong
annuity sales in the first six months of 2002 have helped to boost Peoples'
insurance and investment commissions. In the second quarter of 2002, electronic
banking revenues rose $60,000 (or 17%) compared to the previous year, reaching
$414,000. On a year-to-date basis through June 30, 2002, electronic banking
revenues were $782,000 versus $676,000 in 2001, an increase of $106,000 (or
16%). Sustained growth of ATM and debit card usage by Peoples' clients accounts
for the higher revenues versus last year. Fiduciary fees were $640,000 in the
quarter ended June 30, 2002, versus $628,000 a year ago. Through the first six
months, fiduciary fees totaled $1,256,000 in 2002 compared to $1,242,000 last
year.
Non-interest expense grew $655,000 (or 8%) in the second quarter, from
$8,168,000 a year ago and was up $1,655,000 (or 10%) for the six months ended
June 30, 2002, totaling $17,774,000. Expense growth in 2002 is largely
attributable to additional salaries and benefit expenses of $704,000 and
increased professional fees of $333,000. In the second half of 2002, management
anticipates operating expenses will increase modestly due to the addition of
several new associates and offices as part of the First Colony Bancshares
acquisition in mid-June 2002.
For the quarter ended June 30, 2002, salaries and benefits totaled
$4,346,000 compared to $3,642,000 for the same period in 2001, an increase of
$704,000 (or 19%). Salaries and benefits grew 22% in the first half of 2002,
totaling $8,830,000 versus $7,227,000 for the first six months of 2001. Higher
incentive and medical plan expenses, as well as increases in salaries necessary
to retain and recruit key personnel, account for the majority of these
increases. Professional fees were up $333,000 (or 134%) in the second quarter of
2002, totaling $582,000 compared to $249,000 in 2001's second quarter. On a
year-to-date basis through June 30, 2002, professional fees were $883,000 versus
$523,000 a year ago, an increase of $360,000 (or 69%). Professional fees in 2002
were impacted by costs of $165,000 associated with Peoples' implementation of
"Free Checking" and "Overdraft Privilege" products, while other initiatives
account for the remaining increase.
The non-interest income leverage ratio, defined as non-interest income
as a percentage of operating expenses (excluding intangible amortization),
serves as a measurement of efficiency and performance. Through the first six
months of 2002, the non-interest leverage ratio improved to 40.7% from 29.9% a
year ago, due to strong non-interest revenues and controlled expense growth.
"The improved non-interest leverage ratio in 2002 reflects our ability
to grow revenues without incurring a proportional increase in operating
expenses," commented Conlon. "In the second half of 2002, we will continue to
capitalize on revenue opportunities through our needs-based selling approach and
work towards our long-term goal of 50%."
At June 30, 2002, loans totaled $862.4 million, up $89.5 million from
$772.9 million at year-end 2001. A significant portion of the loan growth is
attributable to Peoples acquiring loans of approximately $67 million as part of
the First Colony acquisition in late second quarter. Peoples has also
experienced modest organic growth in commercial and real estate loan balances
during the first half of 2002.
Peoples' asset quality improved moderately in the second quarter with
nonperforming assets comprising 0.57% of total assets at June 30, 2002, down
from 0.67% at March 31, 2002. Even with this improvement, nonperforming assets
remain above their year-end 2001 level of 0.48% of total assets. Asset quality
remains a key focus, as management continues to stress quality rather than
growth in response to the current economic conditions. At June 30, 2002, the
allowance for loan losses totaled $12.4 million, unchanged since year-end 2001,
and is 165% of nonperforming loans versus 158% at March 31, 2002, and 225% at
December 31, 2001. Peoples' provision for loan losses was $980,000 for the
second quarter of 2002 and $1,841,000 for first six months of 2002, up from
$675,000 and $1,350,000 for the same periods a year ago, respectively. The
increased provision is based upon management's ongoing evaluation of the
adequacy for loan losses and factors affecting probable loan losses, as well as
provisions relating to the Overdraft Privilege Program of $230,000 in the second
quarter of 2002 and $391,000 on a year-to-date basis through June 30, 2002.
"Our risk management process includes a review of the entire loan
portfolio, which helps us identify problem loans and manage, to the degree
possible, the amount of any future loss," stated Conlon. "We remain confident in
our loan review programs and feel the current allowance for loan losses is
adequate for the overall quality, inherit risk and loan volume concentrations in
the loan portfolio. In the third quarter, Peoples' loan loss provision is
expected to remain at second quarter levels."
Net chargeoffs were $983,000 in the second quarter of 2002, up from
$549,000 a year ago, with commercial and consumer loans comprising over 90% of
Peoples net chargeoffs. For the quarter ended June 30, 2002, commercial and
consumer loan net chargeoffs totaled $690,000 and $215,000, respectively, versus
$281,000 and $125,000, respectively, last year. Through six months, net
chargeoffs were $1,775,000 in 2002 compared to $1,092,000 in 2001. Commercial
loan net chargeoffs totaled $1,139,000 in 2002 and $557,000 in 2001, while
consumer loan net chargeoffs were $485,000 and $346,000, for the same periods
respectively.
At June 30, Peoples effective tax rate on a year-to-date basis was
28.0% compared to 30.0% in 2001. The decrease in Peoples' effective tax rate is
largely attributable to growth in tax-advantaged investments, while the new
goodwill accounting rules have also been a contributing factor.
"Overall, we are very pleased with the second quarter results,"
summarized Evans. "In the second half of 2002, we will continue to strengthen
existing client relationships and build new relationships with the objective of
enhancing Peoples' long-term value for every stakeholder."
Peoples Bancorp Inc., a diversified financial products and services
company with $1.3 billion in assets, offers a complete line of banking,
investment, insurance, and trust solutions through Peoples Bank's 45 sales
offices and 28 ATMs in Ohio, West Virginia, and Kentucky. Peoples' common shares
are traded on the NASDAQ national market under the symbol "PEBO" and a member of
the Russell 3000 index of US publicly traded companies. 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:
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Peoples will conduct a facilitated conference call to discuss the
results of operations for the second quarter of 2002 on July 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:
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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.
PEOPLES BANCORP INC. (Nasdaq: PEBO)
Financial Highlights (Unaudited)
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Three Months Ended Six Months Ended
(in $000's, except share data) June 30, June 30,
2002 2001 2002 2001
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PER SHARE DATA (a)
Basic earnings per share:
Income before extraordinary gains $ 0.58 $ 0.38 $ 1.11 $ 0.71
Net income $ 0.58 $ 0.38 $ 1.16 $ 0.71
Diluted earnings per share:
Income before extraordinary gains $ 0.57 $ 0.37 $ 1.08 $ 0.70
Net income $ 0.57 $ 0.37 $ 1.13 $ 0.70
Dividends declared per share $ 0.15 $ 0.12 $ 0.29 $ 0.24
Book value per share $ 13.30 $ 11.30 $ 13.30 $ 11.30
Tangible book value per share (b) $ 9.71 $ 9.01 $ 9.71 $ 9.01
Dividend payout as a percentage of net income 26.19% 32.98% 25.04% 34.24%
Actual shares outstanding (net of treasury shares) 7,878,182 7,921,175 7,878,182 7,921,175
Weighted average shares outstanding:
Basic 7,873,795 7,951,378 7,857,062 7,927,673
Diluted 8,102,047 8,068,643 8,045,609 8,039,474
PERFORMANCE RATIOS
Return on average equity 18.15% 13.46% 18.37% 12.81%
Return on average assets 1.48% 1.03% 1.49% 0.97%
Non-interest income leverage ratio (c) 43.06% 29.92% 40.67% 29.86%
Efficiency ratio (d) 50.97% 56.39% 52.57% 57.36%
Net interest margin (fully tax equivalent) 4.55% 4.07% 4.53% 4.02%
Net loan chargeoffs as a percentage of average loans 0.12% 0.07% 0.23% 0.15%
NET CHARGEOFFS
Gross chargeoffs $ 1,147 $ 701 $ 2,100 $ 1,343
Recoveries $ 164 $ 152 $ 325 $ 251
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Net chargeoffs $ 983 $ 549 $ 1,775 $ 1,092
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<FN>
(a) Adjusted for 10% stock dividends issued June 28, 2002 and September 12, 2001
(b) Excludes 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).
(d) Non-interest expense (less intangible amortization) as a percentage of
fully tax equivalent net interest income plus non-interest income.
</FN>
PEOPLES BANCORP INC. CONSOLIDATED STATEMENTS OF INCOME
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Three Months Ended Six Months Ended
June 30, June 30,
(in $000's) 2002 2001 2002 2001
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Interest income $ 20,312 $ 21,992 $ 40,627 $ 44,112
Interest expense 7,801 11,196 15,957 23,005
-------------- ------------- -------------- --------------
Net interest income 12,511 10,796 24,670 21,107
Provision for loan losses 980 675 1,841 1,350
-------------- ------------- -------------- --------------
Net interest income after provision for loan losses 11,531 10,121 22,829 19,757
Net (loss) gain on securities transactions - (1) 51 1
Net (loss) gain on asset disposals (7) 5 (14) 25
Net mark-to-market adjustment on interest rate caps - 42 - (131)
Non-interest income:
Service charges on deposits 1,675 889 3,041 1,696
Fiduciary revenues 640 628 1,256 1,242
Insurance and investment commissions 462 329 986 709
Electronic banking revenues 414 354 782 676
Business owned life insurance 376 - 701 -
Other non-interest income 66 70 150 148
-------------- ------------- -------------- --------------
Total non-interest income 3,633 2,270 6,916 4,471
Non-interest expense:
Salaries and benefits 4,346 3,642 8,830 7,227
Occupancy and equipment 940 962 1,866 1,907
Trust preferred 623 659 1,184 1,311
Professional fees 582 249 883 523
Data processing and software 294 231 617 478
Amortization of goodwill 274 457 547 897
Marketing 150 157 536 276
Amortization of other intangible assets 112 125 223 251
Other non-interest expense 1,502 1,686 3,088 3,249
-------------- ------------- -------------- --------------
Total non-interest expense 8,823 8,168 17,774 16,119
-------------- ------------- -------------- --------------
Income before income taxes 6,334 4,269 12,008 8,004
Income taxes 1,749 1,264 3,318 2,403
-------------- ------------- -------------- --------------
Income before extraordinary gains 4,585 3,005 8,690 5,601
Extraordinary gain on early debt extinguishment,
net of tax expense of $221 - - 410 -
-------------- ------------- -------------- --------------
Net income $ 4,585 $ 3,005 $ 9,100 $ 5,601
-------------- ------------- -------------- --------------
Fully tax equivalent net interest income $ 12,919 $ 11,057 $ 25,430 $ 21,630
PEOPLES BANCORP INC. SELECTED FINANCIAL INFORMATION
------------------------------- -------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
(in $000's) 2002 2001 2002 2001
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CONSOLIDATED AVERAGE BALANCES
Average gross loans $ 796,798 $ 752,632 $ 787,563 $ 746,675
Average earning assets 1,138,435 1,088,627 1,124,958 1,076,004
Average intangible assets 18,552 18,508 17,696 18,313
Average total assets 1,238,088 1,165,000 1,222,046 1,151,377
Average non-interest bearing deposits 97,594 88,119 95,788 86,023
Average interest bearing deposits:
Savings 108,583 78,417 96,756 77,100
Interest-bearing demand deposits 273,528 274,772 275,108 270,693
Time deposits 373,394 374,186 368,702 359,814
-------------- ------------- -------------- --------------
Total average interest bearing deposits 755,505 727,375 740,566 707,608
Average stockholders' equity $ 101,068 $ 89,318 $ 99,052 $ 87,414
-------------- ------------- -------------- --------------
PEOPLES BANCORP INC. SELECTED FINANCIAL INFORMATION
----------------- ----------------- -----------------
June 30, December 31, June 30,
2002 2001 2001
----------------- ----------------- -----------------
LOAN PORTFOLIO (in $000's, end of period)
Commercial, financial, and agricultural $ 379,243 $ 343,800 $ 313,806
Real estate, construction 15,782 14,530 20,683
Real estate, mortgage 345,795 295,944 293,817
Consumer 121,557 118,582 125,450
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Total loans $ 862,377 $ 772,856 $ 753,756
ASSET QUALITY
Allowance for loan losses as a percent of total loans 1.44% 1.60% 1.61%
Allowance for loan losses as a percent of
nonperforming loans (a) 165.3% 225.0% 240.1%
Nonperforming loans as a percent of total loans (a) 0.87% 0.71% 0.67%
Nonperforming assets as a percent of total assets (b) 0.57% 0.48% 0.43%
Nonperforming assets as a percent of total loans and
other real estate owned
real estate owned (b) 0.89% 0.73% 0.68%
Nonperforming assets (in $000's, end of period):
Loans 90 days or more past due $ 227 $ 686 $ 466
Renegotiated loans $ 2,864 $ 425 $ 511
Nonaccrual loans $ 4,425 $ 4,380 $ 4,085
Other real estate owned $ 124 $ 181 $ 32
----------------- ----------------- -----------------
Total nonperforming assets $ 7,640 $ 5,672 $ 5,094
REGULATORY CAPITAL (in $000's, end of period)
Tier 1 risk-based capital 11.26% 12.86% 12.75%
Total risk-based capital ratio (Tier 1 and Tier 2) 12.62% 14.21% 14.08%
Leverage ratio 8.42% 9.18% 8.84%
Tier 1 capital $ 101,451 $ 105,065 $ 101,336
Total capital (Tier 1 and Tier 2) $ 113,704 $ 116,114 $ 111,871
Total risk-weighted assets $ 901,032 $ 816,907 $ 794,781
SUPPLEMENTAL DATA (in $000's, end of period)
Trust assets under management $ 489,641 $ 539,487 $ 492,877
One year cumulative repricing gap $ (64,122) $ (11,925) $ (96,404)
Employees (full-time equivalent) 447 403 401
Full service offices 39 34 34
Supermarket offices 4 4 4
ATMs 28 25 25
Announced treasury share plans: (c)
Total shares in plan 192,500 151,250 151,250
Shares purchased (d) 4,756 12,383 63,432
Average price (d) $ 23.39 $ 16.03 $ 15.76
----------------- ----------------- -----------------
<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 192,500 shares
(or 2.5% of outstanding shares); 2001 data reflects 2001 Stock
Repurchase Program of 151,250 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>
PEOPLES BANCORP INC. CONSOLIDATED BALANCE SHEETS
------------------ ------------------
(in $000's) June 30, December 31,
2002 2001
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ASSETS
Cash and cash equivalents $ 29,817 $ 32,838
Available-for-sale investment securities, at estimated fair value (amortized
cost of $361,083 and $329,081 at June 30, 2002, and
December 31, 2001, respectively) 367,406 330,364
Loans, net of unearned interest 862,377 772,856
Allowance for loan losses (12,423) (12,357)
---------------- ----------------
Net loans 849,954 760,499
Bank premises and equipment, net of accumulated depreciation 20,337 16,369
Goodwill and other intangible assets 28,259 17,010
Other real estate owned 124 181
Other assets 43,001 36,705
---------------- ----------------
TOTAL ASSETS $ 1,338,898 $ 1,193,966
---------------- ----------------
LIABILITIES
Non-interest bearing deposits $ 109,088 $ 96,533
Interest bearing deposits 825,735 717,835
---------------- ----------------
Total deposits 934,823 814,368
Federal funds purchased, securities sold under repurchase agreements,
and other short term borrowings 63,503 56,052
Long-term borrowings 197,213 192,448
Accrued expenses and other liabilities 9,533 8,188
---------------- ----------------
TOTAL LIABILITIES 1,205,072 1,071,056
Guaranteed preferred beneficial interests in junior subordinated debentures 29,046 29,056
STOCKHOLDERS' EQUITY
Common stock, no par value (12,000,000 shares authorized, 7,966,071
shares issued at June 30, 2002, and
7,289,266 shares issued at December 31, 2001) 96,819 78,664
Accumulated comprehensive income, net of deferred income taxes 4,116 834
Retained earnings 5,390 17,735
Treasury stock, at cost (87,889 shares at June 30, 2002,
and 178,344 shares at December 31, 2001) (1,545) (3,379)
---------------- ----------------
TOTAL STOCKHOLDERS' EQUITY 104,780 93,854
TOTAL LIABILITIES, BENEFICIAL INTERESTS, AND
---------------- ----------------
STOCKHOLDERS' EQUITY $ 1,338,898 $ 1,193,966
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END OF RELEASE