PAGE 1
INFORMATION NOT PERTINENT TO FORM 10-K.
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INFORMATION NOT PERTINENT TO FORM 10-K.
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PAGE 3
INFORMATION NOT PERTINENT TO FORM 10-K.
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PAGE 4
INFORMATION NOT PERTINENT TO FORM 10-K.
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PAGE 5
SELECTED FINANCIAL DATA
The information below under the captions "Operating Data",
"Balance Sheet Data" and "Per Share Data" for each of the five
years in the period ended December 31, 1993 has been derived
from the Consolidated Financial Statements of the Corporation.
1993 1992 1991 1990 1989
(dollars in thousands, except ratios and per share data)
Operating Data<F1>
for the year ended:
Total interest income $35,311 $37,707 $39,151 $39,600 $37,806
Total interest expense 15,263 17,887 22,172 24,042 22,732
Net interest income 20,048 19,820 16,979 15,558 15,074
Provision for
loan losses 1,592 2,387 1,748 1,475 1,446
Other income 3,952 3,514 2,924 2,824 2,503
Other expenses 15,124 14,945 13,547 12,586 12,158
Net income 5,071 4,550 3,615 3,458 3,173
Balance Sheet Data
at year end:
Total assets $465,373 $468,562 $424,449 $412,789 $396,098
Investments 103,349 112,556 99,963 102,244 96,716
Net loans 315,305 285,448 273,980 257,634 247,135
Total deposits 385,639 401,623 375,027 360,601 347,148
Term debt and
capital leases 20,331 15,506 6,836 7,275 8,043
Stockholders' equity 42,778 38,497 32,414 29,567 27,598
Significant Ratios<F1><F2>
Net income to:
Average total assets 1.09% 1.01% 0.85% 0.85% 0.82%
Average stockholders'
equity 11.9 11.8 11.7 12.0 11.9
Average stockholders'
equity to average
total assets 8.8 7.5 7.3 7.1 6.9
Average loans to
average deposits 78.4 70.2 71.4 70.6 73.6
Primary capital to
period end total
assets 10.1 8.9 8.6 8.2 7.9
Dividend payment ratio 29.8 28.0 29.2 28.8 29.6
Per Share Data<F1><F2><F3>
Net income:
Primary $3.63 $3.42 $2.99 $2.84 $2.57
Fully diluted<F4> 3.59 3.17 2.60 2.46 2.25
Cash dividends paid 1.04 0.95 0.87 0.82 0.76
Book value at end of
period 29.41 27.63 26.57 24.60 22.55
<FN>
<F1> 1993 net income and per share information based upon net
income after adjustment for cumulative effect of accounting
changes.
<F2> Adjusted to reflect a 10% stock dividend issued on April 15,
1993.
<F3> Primary shares outstanding
1993 = 1,398,676
1992 = 1,331,851
1991 = 1,208,655
1990 = 1,220,878
1989 = 1,231,243
Fully diluted shares outstanding
1993 = 1,420,995
1992 = 1,469,911
1991 = 1,477,579
1990 = 1,501,071
1989 = 1,521,271
<F4> Fully diluted net income per share is calculated as if the
Subordinated Convertible Debentures were converted as of the
issue date, with a corresponding increase in net income from the
after-tax reduction in interest expense.
/PAGE 5
PAGE 6
CONSOLIDATED BALANCE SHEET
As of December 31, 1993 and 1992
1993 1992
ASSETS
Cash and due from banks (Note 1) $15,275,000 $17,427,000
Interest bearing deposits with banks 5,998,000 9,085,000
Federal funds sold 7,050,000 29,400,000
Investment securities (fair value
approximates $108,105,000 and
$117,571,000 at December 31, 1993
and 1992, respectively)
(Notes 1 and 2) 103,349,000 112,556,000
Loans (Notes 1, 3 and 11) 321,675,000 291,135,000
Reserve for possible loan losses
(Notes 1 and 3) (6,370,000) (5,687,000)
Net loans 315,305,000 285,448,000
Bank premises and equipment (Notes 1
and 4) 10,767,000 8,095,000
Accrued interest 3,254,000 3,720,000
Prepaid expenses and other assets 4,375,000 2,831,000
Total assets $465,373,000 $468,562,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing $45,105,000 $45,713,000
Interest bearing 340,534,000 355,910,000
Total deposits 385,639,000 401,623,000
Short-term borrowings:
Federal funds purchased, Federal Home
Loan Bank advances, and securities
sold under repurchase agreements 12,260,000 9,700,000
Term debt (Note 5) 20,331,000 15,506,000
Accrued expenses and other liabilities 4,365,000 3,236,000
Total liabilities 422,595,000 430,065,000
Commitments (Notes 6 and 7)
Stockholders' equity (Notes 12, 17 and 18):
Common stock, $1.00 par value,
2,000,000 shares authorized,
1,309,491 issued 1,309,000
Capital in excess of par value 16,575,000
Common stock, no par value,
4,000,000 shares authorized,
1,509,540 issued 24,290,000
Retained earnings 20,012,000 21,639,000
SUBTOTAL 44,302,000 39,523,000
Treasury stock, 55,241 shares in 1993
and 42,925 shares in 1992, at
cost (1,524,000) (1,026,000)
Total stockholders' equity 42,778,000 38,497,000
Total liabilities and
stockholders' equity $465,373,000 $468,562,000
The accompanying notes are an integral part of the financial statements.
/PAGE 6
PAGE 7
CONSOLIDATED STATEMENT OF INCOME
For the three years ended December 31, 1993
1993 1992 1991
INTEREST INCOME:
Interest and fees on loans $26,645,000 $27,788,000 $28,853,000
Interest and dividends on:
Obligations of U.S. Government
and its agencies 5,050,000 5,598,000 5,345,000
Obligations of states and
political subdivisions 2,022,000 2,126,000 2,151,000
Other interest income 1,594,000 2,195,000 2,802,000
Total interest income 35,311,000 37,707,000 39,151,000
INTEREST EXPENSE:
Interest on deposits 13,855,000 17,186,000 21,109,000
Interest on short-term borrowings 203,000 262,000 495,000
Interest on term debt 1,205,000 439,000 568,000
Total interest expense 15,263,000 17,887,000 22,172,000
Net interest income 20,048,000 19,820,000 16,979,000
Provision for loan losses 1,592,000 2,387,000 1,748,000
Net interest income after
provision for loan losses 18,456,000 17,433,000 15,231,000
OTHER INCOME:
Income from fiduciary activities 1,475,000 1,342,000 1,304,000
Service charges on deposit accounts 1,295,000 964,000 853,000
Gain on sale of securities 45,000 44,000 1,000
Other 1,137,000 1,164,000 766,000
Total other income 3,952,000 3,514,000 2,924,000
OTHER EXPENSES:
Salaries and benefits 7,429,000 6,991,000 6,478,000
Net occupancy expense of premises 924,000 834,000 752,000
Equipment expense 1,091,000 1,152,000 1,079,000
Insurance 1,057,000 1,054,000 923,000
Stationary and other supplies 543,000 534,000 482,000
Taxes other than income taxes 565,000 520,000 468,000
Amortization of excess of cost over
net assets acquired 159,000 159,000 186,000
Other 3,356,000 3,701,000 3,179,000
Total other expenses 15,124,000 14,945,000 13,547,000
Income before federal income taxes
and cumulative effect of
accounting changes 7,284,000 6,002,000 4,608,000
FEDERAL INCOME TAXES (Note 9):
Current 2,168,000 1,968,000 1,062,000
Deferred (269,000) (516,000) (69,000)
SUBTOTAL 1,899,000 1,452,000 993,000
Income before cumulative effect
of accounting changes 5,385,000 4,550,000 3,615,000
Cumulative effect of accounting
changes, net of applicable
taxes (Notes 8 and 9) (314,000)
NET INCOME $5,071,000 $4,550,000 $3,615,000
EARNINGS PER SHARE (Note 10):
Income before cumulative
effect of accounting changes:
Primary $3.85 $3.42 $2.99
Assuming full dilution $3.81 $3.17 $2.60
Cumulative effect of accounting changes:
Primary $0.22
Assuming full dilution $0.22
Net income per share:
Primary $3.63 $3.42 $2.99
Assuming full dilution $3.59 $3.17 $2.60
Weighted average number of
shares outstanding:
Primary 1,398,676 1,331,851 1,208,655
Assuming full dilution 1,420,995 1,469,911 1,477,579
The accompanying notes are an integral part of the financial statements.
/PAGE 7
PAGE 8
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the three years ended December 31, 1993
Capital in
Common Stock Excess Retained Treasury
Shares Amount of Par Earnings Stock Total
Balance, January 1, 1991 1,127,606 $1,128,000 $13,449,000 $15,807,000 $(817,000) $29,567,000
Net income 3,615,000 3,615,000
Purchase of treasury
stock, 2,000 shares (50,000) (50,000)
Conversion of
subordinated debentures
to common stock 18,647 19,000 320,000 339,000
Cash dividends,
at a rate of $0.87
per share (1,057,000) (1,057,000)
Balance, December
31, 1991 1,146,253 1,147,000 13,769,000 18,365,000 (867,000) 32,414,000
Net income 4,550,000 4,550,000
Purchase of treasury
stock, 5,793 shares (159,000) (159,000)
Conversion of
subordinated debentures
to common stock 163,238 162,000 2,806,000 2,968,000
Cash dividends,
at a rate of $0.95
per share (1,276,000) (1,276,000)
Balance, December
31, 1992 1,309,491 1,309,000 16,575,000 21,639,000 (1,026,000) 38,497,000
Net income 5,071,000 5,071,000
Purchase of treasury
stock, 12,316 shares (498,000) (498,000)
Conversion of
subordinated debentures
to common stock 73,532 74,000 1,144,000 1,218,000
10% stock dividend 126,517 126,000 5,062,000 (5,188,000)
Conversion from $1.00
par value to no
par value 22,781,000 (22,781,000)
Cash dividends,
at a rate of $1.04
per share (1,510,000) (1,510,000)
Balance, December
31, 1993 1,509,540 $24,290,000 $0 $20,012,000 $(1,524,000) $42,778,000
The accompanying notes are an integral part of the financial statements.
/PAGE 8
PAGE 9
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three years ended December 31, 1993
1993 1992 1991
Cash flows from operating activities:
Net income $5,071,000 $4,550,000 $3,615,000
Adjustments to reconcile net income
to net cash provided by
operating activities:
Provision for loan losses 1,592,000 2,387,000 1,748,000
Gain on sale of investments (45,000) (44,000) (1,000)
Depreciation and amortization 1,584,000 1,746,000 1,495,000
(Increase) decrease in
interest receivable 466,000 (821,000) 198,000
(Increase) decrease in
interest payable (275,000) 391,000 342,000
Deferred income taxes (565,000) (516,000) (69,000)
Deferral of loan origination
fees and costs (221,000) (172,000) (41,000)
Accrual for postretirement
benefits 867,000
Other, net (698,000) 2,045,000 (1,594,000)
Net cash provided by
operating activities 7,776,000 9,566,000 5,693,000
Cash flows from investing activities:
Net increase in term interest
bearing deposits with banks
and federal funds sold 7,468,000 5,409,000 (3,565,000)
Purchases of investment securities (29,260,000) (34,685,000) (19,134,000)
Proceeds from sales of
investment securities 4,558,000 72,000 1,466,000
Proceeds from maturities of
investment securities 33,402,000 21,323,000 19,342,000
Net increase in loans (31,166,000) (13,617,000) (17,929,000)
Expenditures for premises and
equipment (3,566,000) (2,771,000) (1,169,000)
Proceeds from sales of other
real estate owned 56,000 826,000 30,000
Net cash applied to
investing activities (18,508,000) (23,443,000) (20,959,000)
Cash flows from financing activities:
Net increase (decrease) in
noninterest-bearing deposits (608,000) 9,314,000 (2,028,000)
Net increase (decrease) in
interest-bearing deposits (15,376,000) 17,282,000 6,454,000
Net increase (decrease) in
short-term borrowings 2,559,000 1,785,000 (4,535,000)
Proceeds from long-term debt 8,000,000 12,000,000 2,600,000
Payments on long-term debt and
capital leases (1,956,000) (360,000) (2,700,000)
Cash dividends paid (1,510,000) (1,276,000) (1,057,000)
Purchase of treasury stock (498,000) (159,000) (50,000)
Net cash provided by
(applied to) financing
activities (9,389,000) 38,586,000 8,684,000
Net increase (decrease)
in cash and cash
equivalents (20,121,000) 24,709,000 (6,582,000)
Cash and cash equivalents at
beginning of year 48,444,000 23,735,000 30,317,000
Cash and cash equivalents at
end of year $28,323,000 $48,444,000 $23,735,000
Supplemental disclosures of cash flow information and non-cash transactions:
Interest paid $15,538,000 $18,276,000 $22,514,000
Income taxes paid $2,754,000 $1,461,000 $1,055,000
Conversion of subordinated
debentures to common stock $1,218,000 $2,968,000 $339,000
The accompanying notes are an integral part of the financial statements.
/PAGE 9
PAGE 10
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SELECTED ACCOUNTING POLICIES:
The following is a summary of significant accounting policies
followed in the preparation of the financial statements. Certain
amounts in the 1992 and 1991 financial statements have been
reclassified to conform to the 1993 presentation.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of
Peoples Bancorp Inc. (the Corporation) and its wholly-owned
subsidiaries. Significant intercompany accounts and transactions
have been eliminated.
INCOME RECOGNITION:
The principal areas of operation of the Corporation are reported
on the accrual basis of accounting. Subsidiary banks suspend the
accrual of interest when, in management's opinion, collection of
all or a portion of future interest has become doubtful. When
deemed uncollectible, previously accrued and unpaid interest on
loans placed on nonaccrual status is charged against the
allowance for loan losses or reversed from current year's
interest income depending on the year the accrued interest was
recorded. Interest is included in income to the extent received
only if complete principal recovery is reasonably assured.
INVESTMENT SECURITIES:
Investment securities are stated at cost adjusted for
amortization of premium or accretion of discount on the
level-yield method. Gain or loss on securities are recorded at
the settlement date, which does not differ materially from the
trade date, using the specific identification method.
At the time of purchase of a security the subsidiary banks
determine if the security will be held in the trading or
investment account. The determination is based upon the intended
use and the bank's intent and ability to hold to maturity.
At December 31, 1993 and 1992, the subsidiary banks did not
maintain trading accounts.
RESERVE FOR POSSIBLE LOAN LOSSES:
The provision for possible loan losses for financial reporting
purposes is based upon past experience and an evaluation of
potential losses in the current loan portfolio. In management's
opinion, the provision is considered sufficient to maintain the
loan loss reserve at a level adequate to absorb all anticipated
losses existing in the loan portfolios at the balance sheet
dates.
BANK PREMISES AND EQUIPMENT:
The cost of Bank premises and equipment is depreciated over the
estimated useful lives of the related assets on the
straight-line method. Maintenance and repairs are charged to
operations as incurred. Additions and betterments are
capitalized.
The cost of assets sold or retired and the related amounts of
accumulated depreciation are eliminated from the accounts in the
year of sale or retirement. Any resulting gain or loss is
reflected in the consolidated statement of income.
OTHER REAL ESTATE:
Other real estate owned, included in other assets on the
consolidated balance sheet, represents properties acquired by
the Corporation's subsidiary banks through customers' loan
defaults. Real estate is stated at an amount equal to the loan
balance prior to foreclosure plus cost incurred for improvements
to the property, but not more than the fair value less estimated
costs to sell the property.
EXCESS OF COST OVER NET ASSETS ACQUIRED:
The excess of cost over net assets of subsidiary banks acquired
is being amortized over a ten to twenty-year period using the
straight-line and sum-of-the-months digits methods.
CONSOLIDATED STATEMENT OF CASH FLOWS:
Cash and cash equivalents include cash and amounts due from
banks, interest bearing deposits with banks and federal funds
sold, all with original maturities of ninety days or less. These
balances at December 31, 1993, 1992 and 1991 are as follows:
1993 1992 1991
Cash and due from banks $15,275,000 $17,427,000 $14,632,000
Interest bearing deposits
with banks 5,998,000 5,117,000 1,103,000
Federal funds sold 7,050,000 25,900,000 8,000,000
TOTAL $28,323,000 $48,444,000 $23,735,000
/PAGE 10
PAGE 11
FAIR VALUES OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used by the
Corporation in estimating its fair value disclosures for
financial instruments in accordance with Statement of Financial
Accounting Standards No. 107:
CASH AND DUE FROM BANKS, INTEREST BEARING DEPOSITS WITH BANKS,
AND FEDERAL FUNDS SOLD: The carrying amounts reported in
the balance sheet for these captions approximate those assets'
fair values.
INVESTMENT SECURITIES: Fair values for investment securities are
based on quoted market prices, where available. If quoted market
price is not available, fair value is estimated using quoted
market prices of comparable securities.
LOANS: For performing variable rate loans that reprice
frequently and performing demand loans, with no significant
change in credit risk, fair values are based on carrying values.
The fair values for certain mortgage loans are based on quoted
market prices of similar loans sold in conjunction with
securitization transactions, adjusted for differences in loan
characteristics. The fair value of other performing loans (e.g.,
commercial real estate, commercial and consumer loans) are
estimated using discounted cash flow analyses, using interest
rates currently being offered for loans with similar terms to
borrowers of similar credit quality.
Fair value for significant nonperforming loans is based on
either the estimated fair value of underlying collateral or
estimated cash flows discounted at a rate commensurate with the
risk. Assumptions regarding credit risk, cash flows, and
discount rates are determined using available market information
and specific borrower information.
DEPOSITS: The carrying amounts of demand deposits, savings
accounts and certain money market deposits approximate fair
value. The fair value of fixed maturity certificates of deposit
is estimated using the rates currently offered for deposits of
similar remaining maturities. The carrying value and fair value
of interest-bearing deposits were $340,534,000 and $343,977,000,
and $355,910,000 and $361,317,000 at December 31, 1993 and 1992,
respectively.
SHORT-TERM BORROWINGS: The carrying amounts of federal funds
purchased, securities sold under repurchase agreements
approximate their fair values.
TERM DEBT: Rates currently available to the Corporation for debt
with similar terms and remaining maturities are used to estimate
fair value of existing debt. The carrying amounts of term debt
approximate their fair value.
LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT: The fair value
of commitments is estimated using the fees currently charged to
enter into similar agreements taking into account the remaining
terms of the agreements and the present creditworthiness of the
counterparties.
2. INVESTMENTS SECURITIES:
The carrying values and estimated fair values of investments are
as follows:
Gross Gross
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
DECEMBER 31, 1993
Obligations of
U.S. Government $48,790,000 $2,244,000 $(12,000) $51,022,000
Obligations of U.S.
Government agencies 4,809,000 56,000 (3,000) 4,862,000
Government
mortgage-backed
securities 13,589,000 149,000 (17,000) 13,721,000
Obligations of states
and political
subdivisions 26,183,000 1,648,000 27,831,000
Other bonds and
securities 9,978,000 701,000 (10,000) 10,669,000
TOTALS $103,349,000 $4,798,000 $(42,000) $108,105,000
DECEMBER 31, 1992
Obligations of U.S.
Government $60,317,000 $3,034,000 $(6,000) $63,345,000
Obligations of U.S.
Government agencies 915,000 43,000 958,000
Government
mortgage-backed
securities 10,163,000 222,000 (73,000) 10,312,000
Obligations of states
and political
subdivisions 31,284,000 1,534,000 (33,000) 32,785,000
Other bonds and
securities 9,877,000 339,000 (45,000) 10,171,000
TOTALS $112,556,000 $5,172,000 $(157,000) $117,571,000
/PAGE 11
PAGE 12
The carrying value and estimated fair value of debt securities
at December 31, 1993, by contractual maturity, is shown below.
Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
Carrying Fair
Value Value
Due in one year or less $20,004,000 $20,406,000
Due after one year through five years 53,621,000 56,538,000
Due after five years through ten years 13,367,000 14,189,000
Due after ten years 6,533,000 7,120,000
Government mortgage-backed securities 9,824,000 9,852,000
TOTALS $103,349,000 $108,105,000
Proceeds from sales of investments in debt securities during
1993, 1992 and 1991 were $4,558,000, $0 and $501,000,
respectively. Gross gains of $45,000, $0 and $1,000 were
realized during 1993, 1992 and 1991, respectively.
As of December 31, 1993 and 1992, investment securities having a
par value of $42,985,000 and $55,840,000, respectively were
pledged to collateralize government and trust department
deposits in accordance with federal and state requirements.
The Financial Accounting Standards Board has issued Statement on
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS No. 115). The
requirements of SFAS No. 115 are effective for fiscal years
beginning after December 15, 1993. SFAS No. 115 requires that
debt and equity securities be classified in three categories and
accounted for as follows:
1. Debt securities that the Corporation has the
positive intent to hold to maturity are classified as
held-to-maturity securities and reported at amortized cost.
2. Debt and equity securities that are bought and
held principally for the purpose of selling them in the near
term are classified as trading securities and reported at fair
value, with unrealized gains and losses included in earnings.
3. Debt and equity securities not classified as
either held-to-maturity securities or trading securities are
classified as available-for-sale securities and reported at fair
value, with unrealized gains and losses excluded from earnings
and reported in a separate component of stockholders' equity.
The Corporation will adopt this accounting standard effective
January 1, 1994. The effect of this change in accounting
principle will result in an unrealized holding gain, net of tax
effect, of approximately $485,000, for securities classified as
available-for-sale and will be reflected as a separate component
of stockholders' equity. It is anticipated the adoption of this
accounting standard will have no impact on 1994 earnings.
3. LOANS AND RESERVE FOR POSSIBLE LOAN LOSSES:
Loans are comprised of the following at December 31:
1993 1992
Carrying Carrying
Value Value
Commercial $47,299,000 $40,253,000
Real estate, construction 3,391,000 1,965,000
Real estate, mortgage 189,866,000 176,119,000
Consumer 81,119,000 72,798,000
TOTALS $321,675,000 $291,135,000
/PAGE 12
PAGE 13
Activity in the reserve for loan losses is summarized as follows:
1993 1992 1991
Balance, beginning of year $5,687,000 $4,273,000 $4,068,000
Provision for loan losses 1,592,000 2,387,000 1,748,000
Reserve of acquired branch 721,000
Losses charged to the reserve,
net of recoveries of
$294,000, $623,000 and
$476,000, respectively (909,000) (1,694,000) (1,561,000)
Balance, end of year $6,370,000 $5,687,000 $4,273,000
The fair value of net loans at December 31, 1993 and 1992 was
$322,670,000 and 294,732,000, respectively.
In May 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 114 "Accounting
by Creditors for Impairment of a Loan" (SFAS No. 114). The
statement applies to financial statements for fiscal years
beginning after December 15, 1994, and requires that certain
impaired loans be recorded at either the present value of
expected future cash flows discounted at the loan's effective
interest rate, the loan's market price, or the fair value of the
collateral for collateral dependent loans. The effect of
adopting this statement is unknown at the present time.
4. BANK PREMISES AND EQUIPMENT:
The cost of Bank premises and equipment and the related
accumulated depreciation as of December 31, 1993 and 1992 are
summarized as follows:
1993 1992
Land $1,069,000 $1,069,000
Building and premises 10,329,000 8,264,000
Furniture, fixtures and equipment 6,037,000 5,774,000
SUBTOTAL 17,435,000 15,107,000
Accumulated depreciation 6,668,000 7,012,000
Net book value $10,767,000 $8,095,000
Depreciation expense was $906,000, $798,000 and $759,000 for the
years ended December 31, 1993, 1992 and 1991, respectively.
5. TERM DEBT:
Term debt consisted of the following at December 31:
1993 1992
Carrying Carrying
Value Value
Term note payable, at prime
(6% at December 31, 1993) $2,080,000 $2,340,000
Convertible Subordinated Debenture,
7-3/4% due May 1, 2006 1,234,000
Federal Home Loan Bank advances,
bearing interest at rates ranging
from 4.15% to 6.75% 18,251,000 11,932,000
TOTALS $20,331,000 $15,506,000
The Term Note payable is due on June 30, 1994, with interest
payable quarterly. The Note Agreement is collateralized by all
of the common stock of a consolidated subsidiary and places
certain restrictive covenants on the Corporation, including the
maintenance of tangible net worth equal to the greater of 6% of
total assets or $27,922,000, and the incurrence of additional
indebtedness.
The Subordinated Debentures were convertible at any time prior
to maturity at $16.53 per share. The Debentures were redeemable
at the option of the Corporation at any time on or after May 1,
1989, at various redemption prices declining to par at May 1,
1996. During 1992 the Corporation redeemed 50% of the
outstanding Debentures for 103.1% of the principal amount.
During 1993 the Corporation redeemed the remaining debentures at
a price of 102.325%.
/PAGE 13
PAGE 14
Federal Home Loan Bank (FHLB) advances consist of various
borrowings with maturities ranging from 10 to 15 years. The
advances are collateralized by the Corporation's real estate
mortgage portfolio and all of the FHLB common stock owned by the
banking subsidiaries. The most restrictive requirement of the
debt agreement requires the Corporation to provide real estate
mortgage loans as collateral at an amount not less than 150% of
advances outstanding.
The aggregate minimum annual retirements of term debt in the
next five years are as follows:
1994 $3,754,000
1995 1,772,000
1996 1,875,000
1997 1,744,000
1998 1,675,000
Thereafter 9,511,000
TOTAL $20,331,000
6. COMMITMENTS:
The Corporation leases a banking facility and equipment under
various agreements with original terms providing for fixed
monthly payments over periods ranging from two to ten years.
The future minimum rental payments required under operating
leases are as follows:
Year Ending Operating
December 31, Leases
1994 $58,000
1995 5,000
1996 6,000
1997 6,000
1998 6,000
Thereafter 14,000
Total minimum lease payments $105,000
Rent expense amounted to $149,000, $224,000 and $225,000 in
1993, 1992 and 1991, respectively.
7. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:
In the normal course of business, the Corporation is party to
financial instruments with off-balance-sheet risk necessary to
meet the financing needs of customers. These financial
instruments include loan commitments, standby letters of credit,
and unused credit card limits. The instruments involve, to
varying degrees, elements of credit and interest rate risk in
excess of the amount recognized in the consolidated financial
statements.
The Corporation's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument
for loan commitments, standby letters of credit and unused
credit card limits is represented by the contractual amount of
those instruments. The Corporation uses the same credit policies
in making commitments and conditional obligations as it does for
on-balance-sheet instruments. The total amounts of financial
instruments with off-balance-sheet risk are as follows:
1993 1992
Contract Fair Contract Fair
Amount Value Amount Value
Financial instruments whose
contract amounts represent
credit risk:
Loan commitments $24,895,000 $62,000 $25,896,000 $32,000
Standby letters of credit 2,132,000 27,000 5,146,000 26,000
Unused credit card limits 11,872,000 N/A 9,755,000 N/A
Since many of the loan commitments may expire without being
drawn upon, the total commitment amount does not necessarily
represent future cash requirements. The Corporation evaluates
each customer's credit worthiness on a case-by-case basis. The
amount of collateral obtained, if deemed necessary by the
Corporation upon extension of credit, is based on management's
credit evaluation of the counter-party. Collateral held varies
but may include accounts receivable, inventory, property, plant,
and equipment, and income-producing commercial properties. The
credit
/PAGE 14
PAGE 15
risk involved in issuing letters of credit is essentially the
same as that involved in extending loan commitments to
customers. The Corporation's average commitment for credit card
loans is $2,075. As a result, collateral is not required on
credit card loans.
The Corporation's lending is primarily focused in the local
southeastern Ohio market and consists principally of
single-family residential mortgages. The Corporation's largest
group of business loans consist of Automobile Dealer Floor
Plans, which totaled $13,782,000 and $10,526,000 at December 31,
1993 and 1992, respectively. It is the Corporation's policy to
obtain the underlying inventory as collateral on these loans.
The Corporation does not extend credit to any single borrower or
group of related borrowers in excess of $6,889,000, the legal
lending limit.
8. EMPLOYEE BENEFIT PLANS:
The Corporation has a noncontributory pension plan which covers
substantially all employees. The plan provides benefits based on
an employee's years of service and compensation. The
Corporation's funding policy is to contribute annually an amount
that can be deducted for federal income tax purposes using a
different actuarial cost method and different assumptions from
those used for financial reporting.
Net pension cost for 1993, 1992 and 1991 included the following
components:
<CPATION>
1993 1992 1991
Service cost-benefits earned during
the year $243,000 $201,000 $197,000
Interest cost on projected benefit
obligations 388,000 370,000 367,000
Actual return on plan assets (411,000) (405,000) (421,000)
Net amortization and deferral of
initial transition credit and
subsequent gains and losses (11,000) (29,000) 24,000
Net pension cost $209,000 $137,000 $167,000
The funded status of the plan and accrued pension cost
recognized at December 31, 1993 and 1992 were as follows:
1993 1992
Actuarial present value of benefit obligations:
Vested benefits $4,479,000 $3,857,000
Nonvested benefits 155,000 109,000
Accumulated benefit obligation 4,634,000 3,966,000
Impact of future salary increases 873,000 967,000
Projected benefit obligation 5,507,000 4,933,000
Plan assets at fair value, primarily
U.S. Government obligations, and
collective investment stock and
bond funds 5,026,000 4,856,000
Projected benefit obligations in
excess of plan assets (481,000) (77,000)
Items not recognized in income:
Unrecognized prior service cost (78,000) (86,000)
Unrecognized net gain from past
experience different from that
assumed and effects of changes
in assumptions (211,000) (396,000)
Initial transition credit which is
being amortized over 21 years (66,000) (68,000)
Accrued pension cost included in other
liabilities $(836,000) $(627,000)
Assumptions used for the plan at
December 31, 1993 and 1992 are
as follows:
Discount rate 7.25% 8.00%
Rate of increase in compensation levels 4.50% 5.50%
Long-term rate of return on assets 8.50% 8.50%
Prior to 1992, the Corporation maintained an informal
contributory health care and life insurance benefits program for
substantially all employees and retirees. During 1992, this Plan
was amended to provide these benefits only to existing retirees
and their dependents at increased contributory levels. Prior to
1993, the Corporation accounted for the costs of providing these
benefits as the health care costs were incurred and premiums
were paid. The Corporation's cost of providing these benefits to
retirees was approximately $90,000 in 1992.
/PAGE 15
PAGE 16
On January 1, 1993, the Corporation adopted Statement of
Financial Accounting Standards No. 106 "Employers' Accounting
for Postretirement Benefits Other Than Pensions" (SFAS No. 106)
which requires the accrual of the expected costs of providing
postretirement benefits during the period of employee service.
The Corporation has recognized the cumulative effect of its
transition obligation of $884,000 ($583,000, net of tax) as of
January 1, 1993. The net periodic postretirement benefit cost
for 1993 was $74,000. The net postretirement benefit liability
was $867,000 at December 31, 1993. The weighted average discount
rate used in determining the accumulated postretirement benefit
obligation at December 31, 1993 was 7.25%. The assumed health
care costs trend rate used in measuring the accumulated benefit
obligation at December 31, 1993 was 11%, grading down 1% per
year to an ultimate rate of 5%.
The Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 112, "Employer's Accounting
for Postemployment Benefits" (SFAS No. 112), which requires
accrual accounting for benefits provided to former or inactive
employees after employment, but before retirement. The
requirements of SFAS No. 112 are effective for fiscal years
beginning after December 15, 1993. The Corporation anticipates
that the adoption of this accounting standard will not have a
material impact on the Corporation's financial position or
results of operations.
9. FEDERAL INCOME TAX EXPENSE:
The Corporation and its banking affiliates file a consolidated
federal income tax return and income tax expense is allocated
among all companies based upon their federal taxable income or
loss and tax credits.
On January 1, 1993 the Corporation adopted Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109),
which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events
that have been included in the financial statements or tax
returns. Deferred income taxes are recognized at prevailing tax
rates for temporary differences between financial statement and
income tax bases of assets and liabilities. The Corporation has
recognized the cumulative effect of this change in accounting of
$269,000 as an increase in income in 1993.
The effective federal income tax rate in the consolidated
statement of income is less than the statutory corporate tax
rate due to the following:
December 31
1993 1992 1991
Statutory corporate tax rate 34.0% 34.0% 34.0%
Differences in rate resulting from:
Interest on obligations of state
and political subdivisions (7.9) (10.2) (13.5)
Other 0.4 1.0
TOTALS 26.1% 24.2% 21.5%
Deferred federal income tax expense arises from timing
differences in the recognition of revenue and expense for
financial reporting and tax purposes. The source of those
differences and the tax effects of each are as follows:
Difference in tax and book provision for
loan losses $(303,000) $(64,000)
Deferral of nonrefundable loan fees for book (59,000) 14,000
Other (154,000) (19,000)
TOTALS $(516,000) $(69,000)
The related federal income tax expense (benefit) on securities
transactions approximated $15,000 in 1993, $13,000 in 1992 and
$0 in 1991.
/PAGE 16
PAGE 17
The components of the net deferred tax asset were as follows:
December 31 January 1
1993 1993
Deferred tax assets arising from:
Loan loss reserve $1,427,000 $1,175,000
Pension expense 317,000 246,000
Postretirement benefits other
than pensions 297,000
Deferred loan fees and costs 289,000 268,000
Other 242,000 211,000
Total deferred tax asset 2,572,000 1,900,000
Deferred tax liabilities arising from:
Depreciation 367,000 305,000
Other 153,000 107,000
Total deferred tax liabilities 520,000 412,000
Net deferred tax assets $2,052,000 $1,488,000
The Corporation has not recorded a valuation allowance, as the
deferred tax assets are presently considered to be realizable
upon the level of anticipated future taxable income. Net
deferred tax assets and federal income tax expense in future
years can be significantly affected by changes in the enacted
tax rates or by unexpected adverse events that would impact
management's conclusions as to the ultimate realizability of
deferred tax assets.
10. EARNINGS PER SHARE:
Fully-diluted earnings per share are calculated as if the
Subordinated Debentures were converted as of the issue date,
with a corresponding increase in net income from the after-tax
reduction in interest expense. For purposes of the primary and
fully-diluted earnings per share calculation, options granted
under the 1993 stock option plan are considered common stock
equivalents.
11. RELATED PARTY TRANSACTIONS:
In the normal course of its business, the subsidiary banks have
granted loans to certain executive officers and directors and
their interests. The following is an analysis of activity of
related party loans for the year ended December 31, 1993:
Balance, January 1, 1993 $7,905,000
New loans 11,191,000
Repayments (9,481,000)
------------
Balance, December 31, 1993 $9,615,000
Such amounts do not include loans to members of immediate
families other than spouses of persons who are executive
officers or directors.
12. REGULATORY MATTERS:
The payment of dividends by banking subsidiaries is subject to
various Regulatory restrictions. Laws provide that dividends in
any calendar year generally shall not exceed the total net
profits of that year plus the retained net profits of the
preceding two years. As of December 31, 1993 approximately
$7,700,000 of retained earnings of the banking subsidiaries were
available for the payment of dividends to the parent
corporation.
The Corporation's banking subsidiaries are required to maintain
minimum amounts of capital to total "risk weighted" assets, as
defined by the banking regulators. At December 31, 1993 the
banking subsidiaries are required to have minimum Tier 1 and
total capital ratios of 4% and 8%, respectively. The banking
subsidiaries' actual ratios at that date were in excess of these
stated minimums.
13. FEDERAL RESERVE REQUIREMENTS:
The Federal Reserve requires that certain average reserve
balances be maintained in the subsidiary banks' cash and due
from banks account. The Reserve requirement is calculated on a
percentage of total deposit liabilities and amounted to
$5,010,000 and $4,834,000 at December 31, 1993 and 1992,
respectively.
/PAGE 17
PAGE 18
14. BRANCH ACQUISITIONS:
During 1992, the Corporation acquired approximately $32 million
of assets and assumed $32 million of deposit and other
liabilities from two unaffiliated institutions.
15. STOCK DIVIDEND:
On January 25, 1993, the Corporation declared a ten percent
stock dividend issued on April 15, 1993 to shareholders of
record as of April 1, 1993. All per share information in the
accompanying consolidated financial statements has been
adjusted to give retroactive effect to the stock dividend.
16. STOCK OPTIONS:
The Corporation is authorized under provisions of the 1993 Stock
Option Plan to grant options to purchase 110,000 shares of the
Corporation's Common Stock to key employees and directors at a
price not less than the fair market value of the shares on the
dates the options are granted. Options granted may be either
"Incentive Options" or "Non-qualified Options" as defined by the
Internal Revenue Code.
During 1993 the Corporation granted 8,050 non-qualified options
at $41.00 per share and 19,000 incentive options at $35.00 per
share. All of these options were outstanding as of December 31,
1993.
17. STOCKHOLDERS' EQUITY:
During 1993 the stockholders of the Corporation approved a plan
which provided for, among other things, the change in the
Corporation's state of incorporation from Delaware to Ohio, and
an increase in the authorized number of shares from 2,000,000
common shares, $1.00 par value, to 4,000,000 common shares,
without par value. Common stock and capital in excess of par
value have been combined and presented as a single caption on
the accompanying consolidated balance sheet at December 31, 1993.
18. PARENT COMPANY ONLY FINANCIAL INFORMATION:
BALANCE SHEET, DECEMBER 31
1993 1992
Assets:
Cash $128,000 $320,000
Receivable due from subsidiary 1,606,000 1,765,000
Short-term and other investments 569,000 569,000
Capital note receivable due from subsidiary 3,000,000
Investments in subsidiaries, at equity 38,269,000 37,771,000
Excess cost over net assets acquired 1,241,000 1,378,000
Subordinated debenture costs, net
of amortization 84,000
Other 599,000 634,000
Total assets $45,412,000 $42,521,000
Liabilities:
Accrued interest payable and accrued expenses $147,000 $121,000
Dividends payable 407,000 329,000
Term debt (Note 5) 2,080,000 3,574,000
Total liabilities 2,634,000 4,024,000
Stockholders' equity 42,778,000 38,497,000
Total liabilities and stockholders'equity $45,412,000 $42,521,000
/PAGE 18
PAGE 19
Statement of Income
Year Ended December 31,
1993 1992 1991
INCOME:
Dividends from subsidiaries $5,130,000 $1,810,000 $1,615,000
Interest ($40,000, $55,000
and $85,000 from
subsidiaries, respectively) 58,000 60,000 100,000
Management fees from
subsidiaries 770,000 698,000 455,000
Other 110,000 39,000
Total income 6,068,000 2,607,000 2,170,000
EXPENSES:
Interest 169,000 333,000 568,000
Salaries and benefits 848,000 660,000 391,000
Other 709,000 630,000 480,000
Total expenses 1,726,000 1,623,000 1,439,000
Income before federal
income taxes and equity
in undistributed
earnings of
subsidiaries 4,342,000 984,000 731,000
Applicable income tax benefit 231,000 237,000 251,000
Equity in undistributed earnings
of subsidiaries 498,000 3,329,000 2,633,000
NET INCOME $5,071,000 $4,550,000 $3,615,000
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31,
Cash flows from operating activities:
Net income $5,071,000 $4,550,000 $3,615,000
Adjustments to reconcile net
income to cash provided
by operations:
Amortization and depreciation 265,000 281,000 221,000
Equity in undistributed
earnings of subsidiaries (498,000) (3,329,000) (2,633,000)
Other, net 115,000 (159,000) 187,000
Net cash provided by
operating activities 4,953,000 1,343,000 1,390,000
Cash flows from investing activities:
Net decrease in short-term
investments 40,000 1,834,000
Purchase of investment securities (50,000) (112,000)
Expenditures for premises and
equipment (20,000) (4,000) (67,000)
Proceeds from sale of
premises to subsidiary 362,000
Purchase of capital
note receivable
due from subsidiary (3,000,000)
Net cash provided by
investing activities (3,020,000) 348,000 1,655,000
Cash flows from financing activities:
Cash dividends paid (1,510,000) (1,276,000) (1,057,000)
Proceeds from long-term debt 2,600,000
Payments on long-term debt and
capital leases (276,000) (292,000) (2,700,000)
Purchase of treasury stock (498,000) (159,000) (50,000)
Change in receivable
from subsidiary 159,000 (184,000) (1,581,000)
Net cash used in
financing activities (2,125,000) (1,911,000) (2,788,000)
Net (decrease) increase
in cash (192,000) (220,000) 257,000
Cash at the beginning of the year 320,000 540,000 283,000
Cash at the end of
the year $128,000 $320,000 $540,000
The parent company paid interest totaling $185,000, $371,000 and
$572,000 during the years ended December 31, 1993, 1992 and
1991, respectively.
The Corporation's investment in subsidiaries is reflected at an
amount equivalent to the underlying fair value of the
subsidiaries at the date of acquisition adjusted to reflect the
changes in equity of such subsidiaries since acquisition.
Stockholders' equity reflected in the Parent Company Only
balance sheet includes undistributed earnings of subsidiaries
which are restricted from transfer to the Corporation in the
form of dividends. Such amounts approximated $16,300,000 and
$16,000,000 at December 31, 1993 and 1992, respectively.
/PAGE 19
PAGE 20
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF PEOPLES BANCORP INC.
We have audited the accompanying consolidated balance sheets of
Peoples Bancorp Inc. and Subsidiaries as of December 31, 1993
and 1992 and the consolidated statements of income,
stockholders' equity, and cash flows for each of the years in
the three-year period ended December 31, 1993. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Peoples Bancorp Inc. and Subsidiaries as
of December 31, 1993 and 1992 and the consolidated results of
their operations and their cash flows for each of the years in
the three-year period ended December 31, 1993 in conformity with
generally accepted accounting principles.
As discussed in Notes 8 and 9 to the consolidated financial
statements, the Corporation changed its methods of accounting
for postretirement benefits other than pensions and income taxes
in 1993.
COOPERS & LYBRAND
Coopers & Lybrand
Columbus, Ohio
January 28, 1994
/PAGE 20
PAGE 21
COMMON STOCK
MARKET FOR COMMON STOCK AND DIVIDENDS
Prior to 1993, the Corporation's Common Stock was traded on a
limited basis in the over-the-counter market. On February 9,
1993, the Corporation commenced trading on the Nasdaq National
Stock Market (National Association of Securities Dealers
Automated Quotation). Nasdaq provides brokers and others with
immediate access to the best stock price for the Corporation and
thousands of other companies across the world. The Corporation
can be found under the symbol PEBO.
To the best knowledge of the Corporation, during 1993,
approximately 130,000 shares were traded. The following table
sets forth for the indicated periods the high and low bid
quotations for, and the cash dividends declared, with respect to
the Corporation's Common Stock.
Prior to 1993, the bid quotations were obtained from the three
securities dealers which made a market in the Corporation's
Common Stock. These quotations are inter-dealer prices, without
retail markup, markdown, or commission, and may not represent
actual transactions. Currently seven companies serve as market
makers on the Nasdaq National Stock Market. Market prices since
February, 1993, have been obtained directly from the Nasdaq
quotation system. The bid quotations and per share dividends
have been adjusted for a 10% stock dividend issued on April 15,
1993. Peoples Bancorp had 1,107 shareholders at December 31,
1993.
QUARTERLY MARKET AND DIVIDEND INFORMATION
PER SHARE
High Bid Low Bid Dividend
1993
Fourth Quarter $44.00 $39.00 $.28
Third Quarter 46.50 38.00 .26
Second Quarter 47.00 35.00 .26
First Quarter 49.09 34.55 .24
1992
Fourth Quarter $40.00 $33.64 $.24
Third Quarter 37.27 30.00 .24
Second Quarter 32.73 25.91 .24
First Quarter 27.27 24.55 .24
1991
Fourth Quarter $28.18 $24.55 $.22
Third Quarter 26.36 21.82 .22
Second Quarter 22.73 20.91 .22
First Quarter 22.50 20.45 .22
The Corporation and its predecessor have paid cash dividends on
its Common Stock for over 37 consecutive years and have
increased the annual dividend in each of the last 28 years. The
Corporation plans to continue to pay quarterly cash dividends.
Cash dividends are subject to certain restrictions as described
in Note 12 to the audited financial statements.
THE ANNUAL MEETING OF STOCKHOLDERS OF PEOPLES BANCORP INC. WILL
BE HELD TUESDAY, APRIL 5, 1994 AT 10:00 A.M. IN THE PEOPLES BANK
CONFERENCE ROOM, 235 SECOND STREET, MARIETTA, OHIO. STOCKHOLDERS
ARE CORDIALLY INVITED TO ATTEND.
ON WRITTEN REQUEST, A COPY OF OUR ANNUAL REPORT TO THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K IS AVAILABLE TO
INTERESTED STOCKHOLDERS. REQUESTS SHOULD BE ADDRESSED TO RUTH
OTTO, SECRETARY, PEOPLES BANCORP INC., P.O. BOX 738, MARIETTA,
OHIO 45750.
/PAGE 21
PAGE 22
AVERAGE BALANCES AND ANALYSIS OF NET INTEREST INCOME
(dollars in thousands)
1993 1992 1991
Average Average Average
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
Securities:
Taxable $79,086 $5,959 7.5% $81,607 $6,378 7.8% $73,506 $6,154 8.4%
Nontaxable<F1> 26,895 2,608 9.7% 29,363 2,874 9.8% 29,323 2,959 10.1%
Total 105,981 8,567 8.1% 110,970 9,252 8.3% 102,829 9,113 8.9%
Loans:
Commercial 45,024 3,590 8.0% 40,250 3,543 8.8% 39,941 4,087 10.2%
Real estate 184,014 15,319 8.3% 178,025 16,415 9.2% 158,757 16,928 10.7%
Consumer (net) 77,244 7,736 10.0% 72,758 7,830 10.8% 71,515 7,838 11.0%
Valuation
reserve (6,095) (5,298) (945)
Total 300,187 26,645 8.9% 285,735 27,788 9.7% 266,268 28,853 10.8%
Money Market:
Interest-bearing
deposits 8,562 209 2.4% 6,894 452 6.6% 8,349 573 6.9%
Federal funds
sold 17,706 623 3.5% 21,462 1,035 4.8% 18,687 1,420 7.6%
Total 26,268 832 3.2% 28,356 1,487 5.2% 27,036 1,993 7.4%
Total earning
assets 432,436 36,044 8.3% 425,061 38,527 9.1% 396,133 39,959 10.1%
Other assets 32,580 27,263 27,290
Total
assets $465,016 $452,324 $423,423
Deposits:
Savings $72,999 2,107 2.9% $61,660 2,195 3.6% $48,085 2,339 4.9%
Interest-bearing
demand
deposits 80,100 1,998 2.5% 73,830 2,310 3.1% 64,534 3,094 4.8%
Time 196,374 9,750 5.0% 224,898 12,681 5.6% 225,648 15,676 6.9%
Total 349,473 13,855 4.0% 360,388 17,186 4.8% 338,267 21,109 6.2%
Borrowed Funds:
Short term 9,186 203 2.2% 9,398 262 2.8% 9,436 495 5.2%
Long term 19,611 1,205 6.1% 6,549 439 6.7% 7,101 568 8.0%
Total 28,797 1,408 4.9% 15,947 701 4.4% 16,537 1,063 6.4%
Total interest
bearing
liabilities 378,270 15,263 4.0% 376,335 17,887 4.8% 354,804 22,172 6.2%
Noninterest
bearing
deposits 41,621 38,403 34,443
Other
liabilities 4,320 3,485 3,302
Total
liabilities 424,211 418,223 392,549
Stockholders'
equity 40,805 34,101 30,874
Total
liabilities and
stockholders'
equity $465,016 $452,324 $423,423
Interest rate
spread $20,781 4.4% $20,640 4.4% $17,787 3.9%
Interest revenue/
earning assets 8.3% 9.1% 10.1%
Interest expense/
earning assets 3.5% 4.2% 5.6%
Net yield on
earnings assets 4.8% 4.9% 4.5%
<FN>
<F1> Computed on a fully tax equivalent basis by dividing
nontaxable income by 66% and reducing the result by the
municipal interest limitation. The interest income was increased
by $733,000, $820,000 and $808,000 for 1993, 1992 and 1991,
respectively.
<F2> Nonaccrual loans are included in the average balances
listed. Related income on nonaccrual loans through the date the
loan was put on accrual status is included in loan income. As of
December 31, 1993, 1992 and 1991, nonaccrual loans outstanding
were $1,416,000, $1,279,000 and $1,301,000, respectively.
<F3> Loan fees included in income for 1993, 1992 and 1991 were
$558,000, $512,000, and $244,000, respectively.
/PAGE 22
PAGE 23
RATE VOLUME ANALYSIS/MATURITIES TABLES
Rate Volume Analysis
(dollars in thousands)
Change in
Income/Expense<F1> Rate Effect Volume Effect
1993 1992 1991 1993 1992 1991 1993 1992 1991
Investment
income:
Taxable $(419) $224 $(50) $(225) $(447) $(145) $(194) $671 $95
Nontaxable (266) (85) (7) (26) (89) (87) (240) 4 80
Total (685) 139 (57) (251) (536) (232) (434) 675 175
Loan income:
Commercial 47 (544) (325) (351) (575) (365) 398 31 40
Real estate (1,096) (513) 1,138 (1,634) (2,485) 136 538 1,972 1,002
Consumer (94) (8) (992) (561) (144) (1,283) 467 136 291
Total (1,143) (1,065)(179) (2,546) (3,204) (1,512) 1,403 2,139 1,333
Money market
funds (655) (506) (239) (583) (599) (139) (72) 93 (100
Total interest
income (2,483) (1,432)(475) (3,380) (4,339) (1,883) 897 2,907 1,408
Interest expense:
Savings (88) (144) 39 (454) (714) (138) 366 570 177
Interest-
bearing
demand
deposits (312) (784) (501) (496) (1,192) (683) 184 408 182
Time (2,931) (2,995)(1,058) (1,422) (2,943) (1,865) (1,509) (52) 807
Short-term
borrowings(59) (233) (250) (53) (231) (209) (6) (2) (41)
Long-term
borrowings 766 (129) (100) (40) (87) (74) 806 (42) (26)
Total interest
expense (2,624)(4,285)(1,870) (2,465) (5,167) (2,969) (159) 882 1,099
$141 $2,853 $1,395 $(915) $828 $1,086 $1,056 $2,025 $309
<FN>
<F1> The change in interest due to both rate and volume has been
allocated to volume and rate changes in proportion to the
relationship of the dollar amounts of the change in each.
LOAN MATURITIES
Due In
Due in One Year Due
One Year Through After
or Less Five Years Five Years Total
LOAN TYPE:
Commercial loans:
Fixed $2,611 $1,500 $3,009 $7,120
Variable 27,047 3,244 9,888 40,179
SUBTOTAL 29,658 4,744 12,897 47,299
Real estate loans:
Fixed 56 5,174 46,129 51,359
Variable 527 7,703 133,668 141,898
SUBTOTAL 583 12,877 179,797 193,257
Consumer loans:
Fixed 6,734 59,000 2,628 68,362
Variable 378 10,458 1,921 12,757
SUBTOTAL 7,112 69,458 4,549 81,119
TOTAL $37,353 $87,079 $197,243 $321,675
Maturities Schedule of Large Certificates of Deposit over $100,000
as of December 31
(dollars in thousands)
1993 1992 1991 1990
Under 3 months $5,761 $7,810 $15,099 $14,104
3 to 6 months 2,241 5,957 <F1> <F1>
6 to 12 months 2,859 2,109
3 to 12 months 5,100 8,066 7,674 14,214
Over 12 months 6,939 7,291 4,198 3,276
Total $17,800 $23,167 $26,971 $31,594
<FN>
<F1> The maturity schedule of large certificates of deposit prior
to 1992 is in accordance with regulatory guidelines for
preparation of quarterly Call Reports. The accounting system did
not provide a split of the 3 to 12 months category into
categories of 3 to 6 months and 6 to 12 months.
/PAGE 23
PAGE 24
LOAN PORTFOLIO ANALYSIS
(dollars in thousands)
1993 1992 1991 1990 1989
Year-end balances:
Commercial $47,299 $40,253 $42,557 $39,818 $39,380
Real estate 189,866 176,119 163,670 151,242 141,847
Real estate
construction 3,391 1,965 3,073 1,400 1,407
Consumer (net) 76,977 69,030 65,168 65,680 64,801
Credit card 4,142 3,768 3,785 3,580 3,465
Total $321,675 $291,135 $278,253 $261,720 $250,900
Average loans $300,187 $285,735 $266,268 $257,214 $249,384
Reserve for
possible loan
losses, January 1 $5,687 $4,273 $4,086 $3,765 $3,044
Reserve for
losses of acquired
branch 721
Loans charged off:
Commercial 193 1,163 572 576 188
Real estate 143 295 401 91 209
Consumer 816 826 1,002 753 672
Credit card 51 33 62 43 46
Total 1,203 2,317 2,037 1,463 1,115
Recoveries:
Commercial 60 241 91 12 209
Real estate 65 110 25 48 18
Consumer 157 267 354 243 153
Credit card 12 5 6 6 10
Total 294 623 476 309 390
Net chargeoffs:
Commercial 133 922 481 564 (21)
Real estate 78 185 376 43 191
Consumer 659 559 648 510 519
Credit card 39 28 56 37 36
Total 909 1,694 1,561 1,154 725
Charged to operations 1,592 2,387 1,748 1,475 1,446
Reserve for loan
losses December 31 $6,370 $5,687 $4,273 $4,086 $3,765
Reserve for possible
loan losses as of
December 31:
Commercial $3,185 $2,651 $1,797 $2,145 $1,589
Real estate 2,000 1,189 1,108 510 442
Consumer 987 602 454 425 666
Credit card 166 45 45 41 45
Unallocated 32 1,200 869 965 1,023
Total $6,370 $5,687 $4,273 $4,086 $3,765
% of loans to total
loans at December 31:
Commercial 14.7% 13.8% 15.3% 15.2% 15.7%
Real estate 60.1 61.2 59.9 58.3 57.1
Consumer 23.9 23.7 23.4 25.1 25.8
Credit card 1.3 1.3 1.4 1.4 1.4
Total 100.0% 100.0% 100.0% 100.0% 100.0%
/PAGE 24
PAGE 25
(dollars in thousands)
1993 1992 1991 1990 1989
Ratio: Net
chargeoffs/average loans:
Commercial 0.05% 0.32% 0.18% 0.22% (0.01)%
Real estate 0.02 0.06 0.14 0.02 0.08
Consumer 0.22 0.20 0.24 0.20 0.21
Credit card 0.01 0.01 0.02 0.01 0.01
Total 0.30% 0.59% 0.58% 0.45% 0.29%
Nonperforming loans:
Nonaccrual loans $1,416 $1,279 $1,301 $1,769 $1,701
Loans 90+ days past due 896 1,284 1,706 1,844 1,982
Other real estate owned 38 49 779 144 682
Troubled debt restructuring 3
Total $2,350 $2,612 $3,786 $3,760 $4,365
Nonperforming loans as a
percent of total loans 0.7% 0.9% 1.4% 1.4% 1.7%
The provision for possible loan losses for financial reporting
purposes is based upon past experience and an evaluation of
potential losses in the current loan portfolio. In management's
opinion, the provision is considered sufficient to maintain the
loan loss reserve at a level adequate to absorb all anticipated
losses existing in the loan portfolios at the balance sheet
dates. Loans are classified as nonaccrual when, in the opinion
of management, the collection of principal or interest is
unlikely. No interest is taken into income on nonaccrual loans
until such time as the borrower demonstrates the ability to pay
principal and interest. Interest income on nonaccrual loans
which would have been recorded under the original terms of the
loans for 1993, 1992 and 1991 was $149,000 (of which $41,000 was
actually recorded), $205,000 (of which $111,000 was actually
recorded) and $158,000 (of which $61,000 was actually recorded),
respectively.
/PAGE 25
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MANAGEMENT'S DISCUSSION AND ANALYSIS
INTRODUCTION
The following discussion and analysis of the financial
statements of Peoples Bancorp Inc. is presented to lend the
reader insight-insight into Management's review of the financial
results, as well as Management's views of Peoples Bancorp's
place in the economy of Southeastern Ohio and Northern West
Virginia and future opportunities for the organization. Our
subsidiaries, The Peoples Banking and Trust Company (Peoples
Bank), The First National Bank of Southeastern Ohio (First
National) and the Northwest Territory Life Insurance Company,
provide financial services to individuals and businesses within
our market area. Peoples Bank is chartered in the State of Ohio
and subject to regulation, supervision and examination by the
Federal Deposit Insurance Corporation and the Ohio Division of
Banks. First National is a member of the Federal Reserve System
and subject to regulation, supervision and examination by the
Comptroller of the Currency. This discussion and analysis should
be read in conjunction with the audited financial statements and
footnotes and with the ratios, statistics and discussions
contained elsewhere in the Annual Report.
OVERVIEW OF INCOME STATEMENT
Peoples Bancorp achieved an increase in net income of $521,000
or 11.5%. Total 1993 net income was $5,071,000. For the year
ended December 31, 1993, primary and fully-diluted earnings per
share were $3.63 and $3.59 compared to $3.42 and $3.17 for 1992.
Net income to average assets improved from 1.01% last year to
1.09% this year. Net income to average stockholders' equity for
1993 was 11.9% compared to 11.8% last year.
During 1993, the Corporation adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits other than Pensions" (SFAS No. 106)
which requires the accrual of the expected costs of providing
postretirement benefits during the period of employee service.
The Corporation provides certain health care benefits to current
retirees and their dependents. Peoples Bancorp Inc. has
recognized the cumulative effect of its transition obligation of
$884,000 ($583,000, net of tax) as a decrease in income in 1993.
The Corporation has also adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes"
(SFAS No. 109), which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences
of events that have been included in the financial statements or
tax returns. Deferred income taxes are recognized at prevailing
tax rates for temporary differences between financial statement
and income tax bases of assets and liabilities. The Corporation
has recognized the cumulative effect of this change in
accounting of $269,000 as an increase in income in 1993.
Previously issued financial statements have not been restated.
INTEREST INCOME AND EXPENSES
Net interest income after provision for loan loss increased from
$18,456,000 last year to $18,898,000 this year. Interest income
decreased by $2.4 Million while interest expense decreased by
$2.6 Million. The volume of business has not declined. In fact,
certain interest sensitive categories have shown growth. The
continued impact of lower interest rates has resulted in these
changes. The mix of interest-earning assets shifted away from
short-term Federal funds sold to loans. Loans have typically
returned the highest rate of interest earning assets while
short-term funds have been the lowest. On the liability side of
the balance sheet, Peoples Bancorp has also experienced a
change in mix. Interest-bearing deposits, primarily Certificates
of Deposit, have declined by $15.4 Million or 4.3%. This funding
source has been replaced by an increase in borrowings from the
Federal Home Loan Bank (FHLB). The FHLB borrowings can be
matched directly against specific assets. Total interest-earning
assets have decreased by $4,104,000 to $438,072,000 while
interest-bearing liabilities have decreased by $7,991,000 to
$373,125,000. The composite of these items results in an
increase in net interest income over 1992.
OTHER INCOME
Total non-interest income increased $438,000 or 12.5% over 1992.
Service charges on deposit accounts increased by $331,000 to
$1,295,000. Management continues to review the level of services
performed in order to determine appropriate fees that should be
charged for our deposit products. Income from fiduciary
activities increased by 10% to $1,475,000. Income from fiduciary
activities is a function of assets under management of the
Investment & Trust Division (ITD). The market value of assets
under ITD management has increased from $288,086,000 at December
31, 1992 to $326,182,000 at December 31, 1993.
OTHER EXPENSES
Other expenses increased by $179,000 or 1.2% to $15,124,000.
This modest increase is the result of Management's efforts to
control overhead. Salaries and benefits increased by $438,000 or
6.3%. Net occupancy expense increased by $90,000 primarily due
to taking a half year's depreciation on the expansion and
renovation of the Corporation's downtown Marietta facility which
was completed in October, 1993. The total project cost was $5.2
Million and was incurred over 1992 and 1993.
FEDERAL INCOME TAX EXPENSE
Federal income taxes increased from $1,452,000 last year to
$1,899,000 this year, primarily due to increased pre-tax income.
The effective tax rate increased from 24.2% in 1992 to 26.1%
this year. The corporation earned less interest on obligations
of state and political subdivisions in relation to total income
this year than last. Management expects this trend to continue.
/PAGE 26
PAGE 27
OVERVIEW OF BALANCE SHEET
Total assets remained nearly the same as last year, decreasing
$3,189,000 or 0.7% to $465,373,000. Interest-earning assets
decreased from $442,176,000 to $438,027,000 while
interest-bearing liabilities decreased from $381,116,000 to
$373,125,000. The result is an increase in net earning assets.
The mix of assets and liabilities has also changed.
Interest-earning deposits with banks and federal funds sold
decreased by $25,437,000 while loans increased by $30,540,000.
This shift from lower yielding to higher yielding assets helped
the Corporation maintain its net interest margin.
SECURITY ANALYSIS
Maturity Distribution (dollars in thousands)
U.S. Federal State and
Treasury Agency Municipal Other Total
December 31, 1993
Maturity:
Within 1 year $15,975 $ $4,049 $823 $20,847
1 - 5 years 30,025 8,426 14,525 4,710 57,686
5 - 10 years 2,685 7,143 5,630 750 16,208
Over 10 years 2,495 1,375 3,699 7,569
Total $48,685 $18,064 $25,579 $9,982 $102,310
Book Value $48,790 $18,398 $26,183 $9,978 $103,349
Market Value $51,022 $18,583 $27,831 $10,669 $108,105
Maturity:
Within 1 year 7.399% 10.550% 8.064% 8.037%
1 - 5 years 7.201 6.228% 9.402 7.717 7.655
5 - 10 years 7.439 5.514 8.880 5.857 7.018
Over 10 years 5.429 10.265 4.877 6.038
Total 7.279% 5.835% 9.515% 6.554% 7.512%
December 31, 1992
Book Value $60,317 $11,078 $31,284 $9,877 $112,556
Market Value $63,345 $11,270 $32,785 $10,171 $117,571
December 31, 1991
Book Value $56,398 $5,514 $30,130 $7,921 $99,963
Market Value $60,003 $5,613 $30,930 $8,010 $104,556
The yield on state and municipal securities is computed on a
fully tax equivalent basis assuming a tax rate of 34%.
The portfolio contains no single issue (excluding U.S.
Government and Federal Agency securities) which exceeds 10% of
shareholders' equity.
LOANS
Overall loan demand was strong during 1993. Real estate loans
increased by $13,747,000 or 7.8% to $189,866,000 as individuals
and businesses found that lower interest rates allowed them to
afford more debt. Consumer loans increased by $8,321,000 or
11.4% to $81,119,000. Our consumer loan processes, particularly
in indirect lending, deliver the service and support our
customers need in a timely and efficient manner which makes it
easy to do business with us. Commercial loans increased by
$7,046,000 or 17.5% to $47,299,000. Businesses within our market
have expanded and the Corporation expanded its market area
during 1993 by opening a business production office in Newark,
Ohio.
LOAN CONCENTRATION
Peoples Bancorp does not have a concentration of its loan
portfolio in any one industry. Real estate lending has been and
remains, a significant component of our loan portfolio
representing 60.1% of total loans. Approximately 71.2% of these
real estate loans are one to four family residential loans to
individuals that work within a wide range of businesses within
our immediate market area. The Corporation's largest group of
business loans consist of Automobile Dealer Floor Plans which
totaled $13,782,000 and $10,526,000 at December 31, 1993 and
1992, respectively. It is the Corporation's policy to obtain the
underlying inventory as collateral on these loans. As a matter
of policy, the Corporation does not extend credit to
/PAGE 27
PAGE 28
any single borrower or group of borrowers in excess of
$6,889,000, the legal lending limit. Southeastern Ohio has a
diversified industry base without dependence on any one
industry. Management believes that the loan portfolio is
adequately diversified.
RESERVE FOR POSSIBLE LOAN LOSSES
The reserve for possible loan losses increased to $6,370,000 or
1.98% of loans from $5,687,000 or 1.95% of loans last year.
During 1993 the Corporation established a new loan review
process. This independent review has improved the depth of the
information on loans and allows quantitative challenging of the
loan loss reserve. This was achieved while the provision for
loan losses, the income statement expense, decreased from
$2,387,000 to $1,592,000. Net chargeoffs of uncollectible loans
decreased from $1,694,000 in 1992 to $909,000 in 1993. Total
non-performing loans decreased from $2,612,000 to $2,350,000.
Overall loan quality, as indicated by the reduction in
non-performing loans to total loans from .90% to .73% and the
reduction in net chargeoffs, has improved.
DEPOSITS
Total deposits decreased by $15,984,000 to $385,639,000 at
December 31, 1993. Noninterest-bearing deposits remained about
the same as last year while interest-bearing deposits declined.
Large Certificates of Deposits over $100,000 decreased by
$5,367,000, which reduces the Corporation's dependence on
larger, more volatile funds. Lower market interest rates have
caused our depositors to consider other investment options.
OTHER SOURCES OF FUNDS
The Corporation has increased its long term advances from the
Federal Home Loan Bank (FHLB) from $11,932,000 at December 31,
1992 to $18,251,000 at December 31, 1993. The Corporation also
had $3,000,000 of short term borrowings from FHLB as of December
31, 1993. FHLB provides a reliable source of fixed-rate,
long-term funding that can be matched against fixed-rate real
estate loans.
CAPITAL/STOCKHOLDER'S EQUITY
Total Stockholders' Equity increased $4,281,000 or 11.1% to
$42,778,000 during 1993. Net income of $5,071,000 was used to
fund $1,510,000 of dividends to Stockholders, a 29.8% dividend
payout ratio. The Corporation also called $1,218,000 of
Convertible Subordinated Debentures in May. Holders elected to
convert the Debentures into stock due to the favorable
conversion ratio. The Corporation purchased 12,316 shares of its
own stock for the treasury for $498,000. The Board of Directors
has, from time to time, authorized management to purchase shares
for the treasury. Treasury shares may be used for future
acquisitions. It is anticipated that additional shares will be
purchased for the treasury.
Banking regulators have established risk-based capital
guidelines for measuring capital adequacy. The guidelines assign
various levels of risk to each category of assets. Peoples
Bancorp's core risk-based capital was 13.5% at December 31, 1993
compared to 12.8% last year and total risk based capital was
14.7% at December 31, 1993 compared to 14.5% last year. The
regulatory guidelines require minimum core and total risk-based
capital of 4% and 8%. Management expects to maintain capital in
excess of regulatory guidelines.
LIQUIDITY
Liquidity measures an organization's ability to meet cash
obligations as they come due. The Consolidated Statement of Cash
Flows presented on page 9 of the accompanying financial
statements provides analysis of the Corporation's cash and cash
equivalents. Additionally, Management considers that portion of
the loan portfolio that matures within one year and maturities
within one year in the investment portfolio as part of our
liquid assets. The current liquidity position is adequate to
fund off-balance-sheet commitments. See additional discussion of
off-balance-sheet commitments in Note 7 of the accompanying
financial statements.
Management believes that the Corporation's liquidity position is
adequate. An Asset and Liability Management Committee meets
periodically to monitor liquidity needs, funding sources and
other issues.
FAIR VALUE ACCOUNTING
The audited financial statements contain required disclosures to
comply with Financial Accounting Standards Board Statement
Number 107. The disclosures may be found in the footnotes to the
audited financial statements. The fair values of loans and
investments exceed carrying values and the fair value of deposit
liabilities exceeds carrying value. Generally, the carrying
value of all other financial instruments approximate fair value.
/PAGE 28
PAGE 29
EFFECTS OF INFLATION ON FINANCIAL STATEMENTS
Substantially all of the Company's assets relate to banking and
are monetary in nature. Therefore, they are not impacted by
inflation to the same degree as companies in capital intensive
industries. During a period of rising prices, a net monetary
asset position results in a loss in purchasing power and
conversely a net monetary liability position results in an
increase in purchasing power. In banks, monetary assets exceed
monetary liabilities, consequently, when prices are increasing,
banks experience a decline in the purchasing power of their net
assets.
RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) has issued
statements during the past year that may have a future impact on
Peoples Bancorp's financial statements. FASB Statement 114,
Accounting By Creditors for Impairment of a Loan requires the
impaired loans be measured based on the present value of
expected future cash flows, the loans observable market price,
or the fair value of the collateral. The Statement applies to
financial statements for fiscal years beginning after December
15, 1994. Management has not determined the financial statement
impact of adoption and does not expect to adopt early. FASB
Statement 115, Accounting for Certain Investments in Debt and
Equity Securities, addresses the accounting and reporting for
investments in equity and debt securities. Investments are to be
classified into three categories: held-to-maturity, trading
securities and available-for-sale securities, which have
separate rules regarding reporting of unrealized gains and
losses. The Statement is effective for fiscal years beginning
after December 15, 1993. The Corporation will adopt FASB 115
January 1, 1994. See footnote 2 to the audited financial
statements for further discussion. FASB Statement 112,
Employers' Accounting for Postemployment Benefits, establishes
accounting standards for benefits provided after termination of
employment, but prior to retirement. Management will adopt FASB
112 January 1, 1994 and expects no significant financial
statement impact.
INTEREST RATE SENSITIVITY - MATURING OR REPRICING
The following Interest Rate Sensitivity Table presents Peoples
Bancorp's Interest Rate Sensitivity Position at December 31,
1993:
At December 31, 1993 (thousands)
0 - 3 4 - 12 Over
Months Months 1-5 Years 5 Years Total
Interest earning assets:
Securities:
Taxable $6,631 $10,287 $44,627 $17,657 $79,202
Tax-exempt 955 3,130 14,311 5,751 24,147
Total 7,586 13,417 58,938 23,408 103,349
Federal funds sold 7,050 7,050
Loans net of unearned
income 85,212 103,599 79,435 53,429 321,675
Interest-bearing
deposits with banks 5,898 100 5,998
TOTAL 105,746 117,116 138,373 76,837 438,072
Interest-bearing
liabilities:
Deposits 186,073 58,733 95,728 340,534
Federal funds
purchased,
Federal Home
Loan Bank advances,
and securities
sold under
agreements to
repurchase 12,260 12,260
Other borrowings 2,080 18,251 20,331
Total 200,413 58,733 95,728 18,251 373,125
Interest sensitivity $(94,667) $58,383 $42,645 $58,586 $64,947
/PAGE 29
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OUTLOOK FOR 1994
Management has developed a business plan for 1994 that, if
achieved, will result in an increase in net income. Net interest
margin is expected to narrow as interest rates drift up slightly
during the year. Volume of lending activity is expected to
increase and will be funded through growth in deposits.
Alternatives to traditional banking activities will continue to
be pursued. Thirty of our bankers became licensed during the
year to sell fixed-rate annuities and life insurance products.
An alternative to a high-cost, full-service office was started
during 1993 when the Corporation opened a business production
office in rented facilities in Newark, Ohio.
Developing a cadre of bankers and the systems support needed to
provide our customers with the financial products and services
they want requires a total organizational commitment. Our
bankers are learning through seminars, in-house training,
college courses and specialized training. Five of our associates
have entered a two-year management training program which will
expose them to key operating units within the organization.
During 1993, PC-based Platform Automation Software was
installed. This "smart system" generates the paper work and
allows our bankers to focus on the customer.
Peoples Bancorp looks anxiously into the future. Our bankers
realize that our future depends on our ability to provide
products and services that the customer wants. Through training,
teamwork and a customer-oriented mindset, our bankers are
re-thinking the way we do business.
COMPARISON OF 1992 TO 1991
Net income for the year ended December 31, 1992 was $4,550,000,
an increase of nearly 26% over 1991. Net interest income
increased $2,841,000 to $19,821,000 for 1992. The average yield
on interest-earning assets decreased by one percent from 10.1%
to 9.1% while the rates paid on interest-bearing liabilities
decreased 1.4% from 5.6% to 4.2%. Investment securities declined
less than other asset categories because of Peoples Bancorp's
philosophy of buying investments that mature gradually over
time. Other income increased by nearly $600,000 over 1991.
Income from fiduciary activities, the largest source of other
income, increased to $1,342,000, while service charge income
increased by over $100,000. Other expenses were up by nearly
$1.4 Million to $14,945,000 for 1992. Salaries and benefits
increased by $513,000 to $6,991,000 as the Corporation added a
location in Middleport, Ohio and The Plains, Ohio office
completed its first full year of operation.
Total assets increased by over $44 Million during 1992. This
10.4% increase to $468,562,000 was the result of two
acquisitions and growth within our market. Real Estate Mortgage
lending was very active during 1992. Commercial loan balances
declined by 5.4% during 1992 as economic growth was weak. The
reserve for possible loan losses increased from 1.54% to 1.95%
of loans at December 31, 1992. The increase was necessary due to
the uncertainty of loans purchased from the Resolution Trust
Company. Non-performing loans fell from 1.4% of total loans at
December 31, 1991 to 0.9% at December 31, 1992. Numerous
improvements were made to facilities, particularly Nelsonville,
Ohio; Middleport, Ohio and building a replacement for a drive-up
facility in downtown Marietta, Ohio. Deposits increased by
$26,596,000 or 7.1% during 1992. The majority of this growth was
through acquisitions. Term debt increased to $15,506,000 as the
Corporation elected to borrow $11,932,000 of long-term,
fixed-rate funds from the Federal Home Loan Bank to offset the
increase in fixed-rate mortgage lending. Peoples Bancorp's core
risk-based capital increased from 11.5% at December 31, 1991 to
12.8% at December 31, 1992. Total risk-based capital decreased
slightly from 14.6% to 14.5% over the period.
/PAGE 30