FORM 10-Q
---------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____ to ____
Commission file number 0-16772
PEOPLES BANCORP INC.
- ---------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Ohio 31-0987416
- ---------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
138 Putnam Street, P. O. Box 738, Marietta, Ohio 45750
- ------------------------------------------------ ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (614) 373-3155
----------------------
Indicate by check mark whether the registrant (1) has filed all
reports required by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
--------- ---------
Indicate the number of shares outstanding of each of the
issuer's class of Common Stock, as of August 2, 1996: 3,438,934.
Page 1 of 21 Pages
Exhibit Index Appears on Page 20
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1
------
The following Condensed Consolidated Balance Sheets,
Consolidated Statements of Income, and Consolidated Statements
of Cash Flow of Peoples Bancorp Inc. (the "Company") and
subsidiaries, reflect all adjustments (which include only normal
recurring accruals) necessary to present fairly such information
for the periods and dates indicated. Since the following
condensed unaudited financial statements have been prepared in
accordance with instructions to Form 10-Q, they do not contain
all information and footnotes necessary for a fair presentation
of financial position in conformity with generally accepted
accounting principles. Operating results for the six months
ended June 30, 1996, are not necessarily indicative of the
results that may be expected for the year ending December 31,
1996. Complete audited consolidated financial statements with
footnotes thereto are included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. Significant
intercompany accounts and transactions have been eliminated.
PEOPLES BANCORP INC. AND SUBSIDIARIES
-------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
June 30, December 31,
1996 1995
ASSETS ------------ ------------
- ------
Cash and cash equivalents:
Cash and due from banks $ 25,647,000 $ 17,251,000
Interest-bearing deposits in other banks 247,000 243,000
Federal funds sold 0 3,500,000
------------ ------------
Total cash and cash equivalents 25,894,000 20,994,000
------------ ------------
Investment securities (all classified as
available-for-sale, amortized cost
of $152,300,000 at June 30, 1996 and
$128,021,000 at December 31, 1995) 152,079,000 131,762,000
Loans, net of unearned interest 398,823,000 379,526,000
Allowance for loan losses (6,723,000) (6,726,000)
------------ ------------
Net loans 392,100,000 372,800,000
------------ ------------
Bank premises and equipment, net 11,294,000 10,575,000
Other assets 15,139,000 7,299,000
------------ ------------
Total assets $596,506,000 $543,430,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits:
Non-interest bearing $ 56,286,000 $ 50,067,000
Interest bearing 437,678,000 379,010,000
------------ ------------
Total deposits 493,964,000 429,077,000
------------ ------------
Short-term borrowings:
Federal funds purchased and securities
sold under repurchase agreements 12,614,000 12,060,000
Federal Home Loan Bank term advances 10,000,000 21,216,000
------------ ------------
Total short-term borrowings 22,614,000 33,276,000
------------ ------------
Long-term borrowings 21,508,000 23,142,000
Accrued expenses and other liabilities 6,575,000 6,461,000
------------ ------------
Total liabilities 544,661,000 491,956,000
------------ ------------
Stockholders' Equity
- --------------------
Common stock, no par value, 12,000,000
shares authorized - 3,440,934 shares
issued at June 30, 1996 and 3,332,598
issued at December 31, 1995, including
shares in treasury 34,139,000 30,898,000
Net unrealized holding (loss) gain on
available-for-sale securities, net
of deferred income taxes (146,000) 2,469,000
Retained earnings 17,852,000 21,786,000
------------ ------------
51,845,000 55,153,000
Treasury stock, at cost, no shares at
June 30, 1996 and 220,406 shares at
December 31, 1995 0 (3,679,000)
------------ ------------
Total stockholders' equity 51,845,000 51,474,000
------------ ------------
Total liabilities and
stockholders' equity $596,506,000 $543,430,000
============ ============
PEOPLES BANCORP INC. AND SUBSIDIARIES
-------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
Interest income $11,812,000 $10,780,000 $23,210,000 $20,879,000
Interest expense 5,416,000 5,228,000 10,783,000 9,844,000
----------- ----------- ----------- -----------
Net interest income 6,396,000 5,552,000 12,427,000 11,035,000
Provision for loan losses 435,000 310,000 795,000 595,000
----------- ----------- ----------- -----------
Net interest income
after provision
for loan losses 5,961,000 5,242,000 11,632,000 10,440,000
Other income 1,184,000 1,028,000 2,264,000 2,034,000
Gain on sale of securities 0 0 26,000 0
Other expenses 4,299,000 4,082,000 8,312,000 8,149,000
----------- ----------- ----------- -----------
Income before income
taxes 2,846,000 2,188,000 5,610,000 4,325,000
Federal income taxes 875,000 654,000 1,758,000 1,305,000
----------- ----------- ----------- -----------
Net income $ 1,971,000 $ 1,534,000 $ 3,852,000 $ 3,020,000
=========== =========== =========== ===========
Earnings per share $0.57 $0.44 $1.11 $0.86
----------- ----------- ----------- -----------
Weighted average shares
outstanding (primary) 3,471,802 3,506,171 3,465,881 3,511,779
----------- ----------- ----------- -----------
Cash dividends declared $531,000 $462,000 $1,061,000 $925,000
----------- ----------- ----------- -----------
Cash dividend per share $0.15 $0.13 $0.31 $0.26
----------- ----------- ----------- -----------
PEOPLES BANCORP INC. AND SUBSIDIARIES
-------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
Six Months Ended
June 30,
1996 1995
----------- -----------
Cash flows from operating activities:
- -------------------------------------
Net income $ 3,852,000 $ 3,020,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 795,000 595,000
Gain on sale of investment securities (26,000) 0
Depreciation, amortization, and accretion 1,397,000 862,000
(Decrease) increase in interest receivable (344,000) 216,000
Increase in interest payable 382,000 372,000
Deferred income tax benefit (100,000) (50,000)
Deferral of loan origination fees and costs 50,000 (29,000)
Other, net (1,290,000) (327,000)
----------- -----------
Net cash provided by operating activities 4,716,000 4,659,000
----------- -----------
Cash flows from investing activities:
- -------------------------------------
Purchases of available-for-sale securities (39,028,000) (20,807,000)
Purchases of held-to-maturity securities 0 (1,230,000)
Proceeds from sales of available-for-sale
securities 4,528,000 0
Proceeds from maturities of
available-for-sale securities 10,176,000 6,537,000
Proceeds from maturities of
held-to-maturity securities 0 485,000
Net increase in loans (20,145,000) (5,104,000)
Expenditures for premises and equipment (1,718,000) (552,000)
Proceeds from sales of other real estate owned 0 30,000
Acquisition of branches, net of cash received (5,354,000) 0
----------- -----------
Net cash used in investing activities (51,541,000) (20,641,000)
----------- -----------
Cash flows from financing activities:
- -------------------------------------
Net increase (decrease) in non-interest
bearing deposits 6,219,000 (2,042,000)
Net increase in interest-bearing deposits 58,668,000 35,626,000
Net decrease in short-term borrowings (10,662,000) (4,628,000)
Payments on long-term borrowings (1,634,000) (1,337,000)
Cash dividends paid (960,000) (829,000)
Purchase of treasury stock (235,000) (502,000)
Proceeds from issuance of common stock 329,000 71,000
----------- -----------
Net cash provided by financing activities 51,725,000 26,359,000
----------- -----------
Net increase in cash and cash equivalents 4,900,000 10,377,000
Cash and cash equivalents at beginning of year 20,994,000 24,701,000
----------- -----------
Cash and cash equivalents at end of period $25,894,000 $35,078,000
=========== ===========
NOTES TO FINANCIAL STATEMENTS
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. Significant
intercompany accounts and transactions have been eliminated.
1. Branch Acquisitions
- -----------------------
On April 26, 1996, The Peoples Banking and Trust Company
("Peoples Bank"), one of the Company's subsidiaries, acquired
three full-service banking offices and assumed approximately
$73.9 million in deposits from an unaffiliated institution
(referred hereafter as "Acquisition") for a total consideration
of $5.4 million.
The offices are located in southeastern Ohio in the cities of
Gallipolis, Pomeroy, and Rutland, Ohio, and serve the counties
of Meigs (Ohio), Gallia (Ohio) and Mason (West Virginia). The
Gallipolis office is located downtown in Gallipolis and
currently operates a full-service office, Motor Bank, and an
automated teller machine. A full-service office and separate
Motor Bank are located in downtown Pomeroy. An automated teller
machine is also located in Pomeroy outside a local convenience
store. The Rutland office is a full-service and Motor Bank
facility.
2. Stock Dividend
- ------------------
On August 1, 1996, the Company issued a 10% stock dividend to
shareholders of record on July 15, 1996. This stock dividend
has been given retroactive effect in the June 30, 1996, balance
sheet.
3. New Accounting Pronouncements
- ---------------------------------
In June 1996, the Financial Accounting Standards Board issued
Statement on Financial Accounting Standards No. 125, "Accounting
for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS No. 125") that provides
accounting and reporting standards for transfers of financial
assets and extinguishments of liabilities. SFAS No. 125 will
significantly change the accounting rules for determining
whether a transfer represents a sale and, if so, the calculation
of the gain or loss resulting from the sale. Management does
not expect SFAS No. 125 to have a material effect on the
Company's future financial statements. SFAS No. 125 is
effective for the transfer of assets after December 31, 1996.
ITEM 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
-----------------------------------------------
OF OPERATIONS AND FINANCIAL CONDITION
-------------------------------------
SELECTED FINANCIAL DATA
-----------------------
The following data should be read in conjunction with the
unaudited consolidated financial statements and the management
discussion and analysis that follows.
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
SIGNIFICANT RATIOS
- ------------------
Net income to:
- --------------
Average assets* 1.34% 1.17% 1.34% 1.18%
Average shareholders' equity* 15.20% 12.63% 14.82% 12.70%
Net interest margin* 4.80% 4.69% 4.77% 4.77%
Efficiency ratio* 53.16% 59.62% 53.76% 59.90%
Average shareholders' equity
to average assets 8.80% 9.27% 9.03% 9.26%
Loans net of unearned interest
to deposits (end of period) 80.74% 83.72% 80.74% 83.72%
Allowance for loan losses
to loans net of unearned
interest (end of period) 1.69% 1.82% 1.69% 1.82%
Capital ratios:
- ---------------
Tier I capital ratio 11.47% 13.24% 11.47% 13.24%
Risk-based capital ratio 12.73% 14.49% 12.73% 14.49%
Leverage ratio 7.76% 8.92% 7.76% 8.92%
Cash dividends to net income 26.94% 30.96% 27.54% 30.63%
PER SHARE DATA
- --------------
Book value per share $15.07 $14.32 $15.07 $14.32
Earnings per share $ 0.57 $ 0.44 $ 1.11 $ 0.86
Cash dividends per share $ 0.15 $ 0.13 $ 0.31 $ 0.26
* Net income to average assets, net income to average
shareholders' equity, net interest margin, and efficiency ratio
are presented on an annualized basis.
Net interest margin is calculated using fully tax equivalent net
interest income as a percentage of average earning assets.
Efficiency ratio is a ratio of non-interest expense (less
amortization of intangibles) as a percentage of fully tax
equivalent net interest income plus non-interest income
(excluding gains).
The following discussion and analysis of the consolidated
financial statements of the Company is presented to provide
insight into management's assessment of the financial results.
The Company's subsidiaries, The Peoples Banking and Trust
Company ("Peoples Bank"), The First National Bank of
Southeastern Ohio ("First National Bank"), and The Northwest
Territory Life Insurance Company ("Northwest Territory"),
provide financial services to individuals and businesses within
the Company's market area. Peoples Bank is chartered by the
state of Ohio and subject to regulation, supervision, and
examination by the Federal Deposit Insurance Corporation
("FDIC") 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 Office of the Comptroller of
the Currency ("OCC").
On April 26, 1996, Peoples Bank acquired three full-service
banking offices and assumed approximately $73.9 million in
deposits from an unaffiliated institution (referred hereafter as
"Acquisition"). The offices are located in southeastern Ohio in
the cities of Gallipolis, Pomeroy, and Rutland, Ohio, and serve
the counties of Meigs (Ohio), Gallia (Ohio) and Mason (West
Virginia).
RESULTS OF OPERATIONS
---------------------
Overview of the Income Statement
- --------------------------------
For the six months ended June 30, 1996, the Company earned
$3,852,000 in net income, a 27.5% increase from $3,020,000 in
the same period last year. For the quarter ended June 30, 1996,
the Company recorded net income of $1,971,000, a 28.5% increase
from $1,534,000 in second quarter 1995.
In the second quarter, earnings per share increased 29.5% from
$0.44 last year to $0.57 in 1996. All references to per share
amounts have been adjusted to reflect a 10% stock dividend
issued to shareholders of record on July 15, 1996, as well as a
10% stock dividend issued to shareholders of record on October
10, 1995.
Net income increased in the second quarter due to the growth of
the Company. In anticipation of the Acquisition (and its
associated deposits), the Company's management initiated a
pre-Acquisition investment program. As a result, the Company's
second quarter net income grew via the Acquisition, which
provided an increased earning asset base and opportunity for net
interest income growth. Compared to the prior year's second
quarter, net interest income increased $844,000 (or 15.2%) to
$6,396,000, due to increased earning asset volumes and improved
net interest margin.
Non-interest income and non-interest expense also increased as
a result of the Acquisition. Second quarter non-interest income
reached $1,184,000, a 14.4% increase compared to the same period
last year. Non-interest expense totaled $4,299,000 compared to
$4,082,000 in second quarter 1995, an increase of 5.3%.
Interest Income and Expense
- ---------------------------
Increased second quarter profits can be attributed primarily to
the growth in net interest income, as second quarter net
interest income totaled $6,396,000 in 1996 compared to
$5,552,000 last year, up 15.2%. Continued growth in investments
in higher-yielding assets such as loans provided the Company
increased interest income, while the Acquisition provided a
lower cost of funds compared to the borrowings recently utilized
by the Company. For the six months ended June 30, 1996, net
interest income totaled $11,632,000, up $1,192,000 (or 11.4%)
compared to the same period one year earlier.
Due to the investment in higher-yielding assets, net interest
margin on a fully-tax equivalent basis reached 4.80% in second
quarter 1996, up from 4.69% in second quarter 1995. Interest
rate pressures will continue to challenge the Company for the
remainder of 1996, as management plans to continue to
aggressively offer special time deposit prices over the next
several months. As a result, management expects net interest
margin to decrease slightly in the near term and then remain
relatively stable for the remainder of 1996. Management will
continue to monitor the effects of net interest margin on the
performance of the Company.
Please refer to the "Consolidated Average Balance Sheet and
Analysis of Net Interest Income" table included on page 17 for a
complete quantitative evaluation of the Company's net interest
margin.
In the second quarter, the Company recorded a provision for
loan losses of $435,000, up from $310,000 in second quarter
1995. Due to increased loan volumes and the potential for
increased chargeoffs from recent growth in consumer loan
delinquencies, management intends to increase the loan loss
provision in the third quarter to approximately $585,000. If
these trends continue in the second half of 1996, additional
provisions will be considered.
Over the past several years, the Company has been very active
in indirect lending. Recently, due to marginal results,
management has taken initiatives to refocus the indirect lending
goals of the Company, including tighter underwriting standards
and more aggressive collection of past due accounts. Management
will continue to monitor the entire loan portfolio to maintain
loan quality and high underwriting standards.
Non-Interest Income
- -------------------
Several categories of non-interest income reflect increases
compared to 1995. Income generated from fiduciary activities
increased $99,000 (or 11.8%) to $941,000, due primarily to
increased volume of assets managed by the Investment and Trust
Division of Peoples Bank. Income from fiduciary activities
totaled $469,000 for the quarter ended June 30, 1996, an
increase of $46,000 (or 10.9%) compared to the same period last
year. The Investment and Trust Division of Peoples Bank manages
over $430 million in assets (market value) and continues to be a
leader in fiduciary services for the Company's market area.
For the six months ended June 30, 1996, account service charge
income increased $102,000 (or 13.2%) to $876,000. This increase
in fee income was based primarily on the growth in number of
customers and related deposit accounts assumed in the
Acquisition. The Company's fee income generated from deposits
is based on cost recoveries associated with services provided.
Revenues were also enhanced through an increase in certain fees
effective in April, 1996.
In late 1995, First National Bank's subsidiaries, Northwest
Territory Life Insurance Agency, Inc. and Northwest Territory
Property and Casualty Insurance Agency, Inc. (the "Agencies"),
were awarded insurance agency powers in the State of Ohio. The
Agencies received Certificates of Qualification to provide full
life and property insurance product lines to consumers in Ohio.
These Agencies were the first in Ohio to be affiliated with a
financial institution. Although the Agencies' results of
operations did not have a material impact on results of
operations through the first half of 1996, they are anticipated
to produce income growth and long-term value to the Company
through internal development as well as external affiliation and
acquisition.
In addition to traditional deposit products generating
non-interest income for the Company, an agreement with an
unaffiliated securities dealer has also generated non-interest
income through the receipt of lease payments. Management
expects this non-traditional revenue source to continue to
provide incremental earnings for the Company in the future.
Non-Interest Expense
- --------------------
Maintaining acceptable levels of non-interest expense is
important to the profitability of the Company. For the six
months ended June 30, 1996, non-interest expense was $8,312,000,
an increase of $163,000 (or 2.0%) compared to the first half of
1995. In 1996's second quarter, non-interest expense totaled
$4,299,000, up $217,000 (or 5.3%) compared to the same period a
year earlier.
For the three months ended June 30, 1996, salaries and benefits
expense increased $18,000 (or 1.0%) to $1,834,000 compared to
last year's second quarter. Management expects salaries and
benefits expense to increase slightly through the remainder of
1996 due to the additional employees assumed in the Acquisition.
Compared to second quarter 1995, non-interest expense was
positively affected by the recent lowering of costs related to
the Bank Insurance Fund ("BIF") expense. BIF expense is the
annual premium financial institutions pay for deposit insurance.
In 1996, second quarter BIF expense totaled $7,000, compared to
$228,000 of expense incurred in second quarter 1995. Lower BIF
premiums in the future should improve the Company's efficiency
ratios.
The amortization of intangibles related to the Acquisition
approximated $100,000 in the second quarter and for the six
months ended June 30, 1996. Future non-interest expense will be
impacted by the amortization of intangibles related to the
Acquisition. Management does not expect this amortization to
materially impact the future profitability of the Company and is
pleased with the enhanced customer service potential of the
acquired offices.
Return on Assets
- ----------------
For the quarter ended June 30, 1996, return on average assets
("ROA") totaled 1.34%, up from 1.17% recorded in the same period
a year earlier. For the six months ended June 30, 1996, ROA
reached 1.34% compared to 1.18% in 1996.
Increased ROA can be attributed to improved net interest margin
as well as increased efficiencies achieved in the areas of
non-interest expense. Management anticipates ROA levels to
remain relatively steady for the remainder of 1996.
Return on Equity
- ----------------
Management believes return on average stockholders' equity
("ROE") is an important indicator of an organization's financial
strength and continues to monitor the performance of the Company
relative to this ratio. The Company's ROE in the second quarter
was 15.20%, compared to 12.63% for the same period last year.
This increase can be attributed primarily to increased net
income as well as a reduction in total equity due to the
adjustment in the net unrealized holding gain (loss), net of
deferred income taxes, on available-for-sale securities. Total
equity was also reduced in 1995 through the Company's
significant purchases of treasury shares.
Management expects continuous improvement in ROE through the
remainder of 1996 and into 1997. The Acquisition and its $73.7
million in deposits provided increased revenue potential without
increasing stockholder's equity. The Company's capital is
adequate under regulatory and industry standards.
On June 13, 1996, the Company's Board of Directors authorized
the Company to repurchase up to 10,000 treasury shares at market
price. The newly purchased treasury shares will be used in the
Company's stock option programs.
Federal Income Tax Expense
- --------------------------
Federal income taxes increased from $654,000 in second quarter
1995 to $875,000 in 1996. For the six months ended June 30,
1996, federal income taxes totaled $1,758,000, an increase of
$453,000 (or 34.7%) compared to the same period a year earlier.
This increase can be attributed to the Company's higher pre-tax
income and a modest decrease in tax-exempt income.
FINANCIAL CONDITION
-------------------
Overview of Balance Sheet
- -------------------------
Total assets increased from $543,430,000 at December 31, 1995
to $596,506,000 at June 30, 1996, a growth rate of 9.8%. The
increase in assets can be attributed primarily to the assumption
of approximately $74 million in deposits related to the second
quarter Acquisition. The Company invested the Acquisition funds
in two primary categories: investment securities, up
$20,317,000 (or 15.4%) since year-end 1995, and loans, which
increased $19,296,000 (or 5.1%) in the same time period. Total
deposits increased $64,887,000 (or 15.1%) in the six months
ended June 30, 1996, while total borrowings decreased
$12,296,000 (or 21.8%) to $42,692,000.
For the six months ended June 30, 1996, stockholders' equity
increased $371,000 (or 0.7%) to $51,845,000. Although retained
earnings and other factors increased stockholders' equity in the
first six months of 1996, growth in total stockholders' equity
remained modest due to the decrease in market value of the
Company's investment securities portfolio (all of which are
classified as available-for-sale) and purchases of treasury
shares.
Cash and Cash Equivalents
- -------------------------
Cash and cash equivalents totaled $25,894,000 at June 30, 1996.
Fluctuations in a sizable public fund deposit account and
increased loan activity caused cash equivalents such as federal
funds sold to decrease near the end of the second quarter.
Management believes the liquidity needs of the Company are
satisfied by the current balance of cash and cash equivalents,
readily available access to traditional and non-traditional
funding sources, and the portion of the investment and loan
portfolios that matures within one year. These sources of funds
will enable the Company to meet cash obligations and off-balance
sheet commitments as they come due.
Investment Securities
- ---------------------
Significant asset growth in 1996 has occurred in investment
securities, which increased $20,317,000 (or 15.4%) to
$152,079,000. All of the Company's investment securities are
classified as available-for-sale.
As a result of the second quarter Acquisition (and its
associated deposits), management initiated a program designed to
increase investment in the securities portfolio. Since December
31, 1995, investments in US government agencies grew $23,239,000
to June 30, 1996's balance of $76,462,000. The additional
purchases of investment securities were designed to position the
portfolio for future earnings while maintaining adequate
liquidity.
Balances in other investment categories have remained
relatively unchanged in 1996. Since all of the Company's
investment securities are classified as available-for-sale, the
carrying value of the investments are more susceptible to market
fluctuations compared to investments classified as
held-to-maturity. At December 31, 1995, the Company was
carrying a markup of $2,469,000 on its investment portfolio,
compared to the June 30, 1996 markdown of $146,000. Management
believes securities classified as available-for-sale provide
greater flexibility in meeting liquidity needs as they come due.
Management monitors the earnings performance and the
effectiveness of the liquidity of the investment portfolio on a
regular basis through Asset/Liability Committee ("ALCO")
meetings. The ALCO also monitors net interest income, sets
pricing guidelines, and manages interest rate risk for the
Company. Through active balance sheet management and analysis
of the investment securities portfolio, the Company maintains
sufficient liquidity to satisfy depositor requirements and the
various credit needs of its customers.
Loans
- -----
The Company's loan volume continues to grow, and reflects the
additional credit opportunities in the markets served. The
Company's lending is primarily focused in the local southeastern
Ohio market and consists principally of retail lending, which
includes single-family residential mortgages and other consumer
lending. The Company's lending market's geographic size grew in
the second quarter via the Acquisition, but did not have a
significant effect on total loan balances at June 30, 1996.
Management expects the new markets to provide loan growth over
the next several quarters.
The following table details total outstanding loans at the
specified dates:
June 30, December 31,
1996 1995
------------ ------------
Commercial, financial, and agricultural $125,807,000 $117,306,000
Real estate, construction 6,082,000 5,919,000
Real estate, mortgage 164,100,000 154,469,000
Consumer 102,834,000 101,832,000
------------ ------------
Total loans $398,822,000 $379,526,000
============ ============
At June 30, 1996, the Company had mortgage real estate loan
balances of $164,100,000, up $9,631,000 (or 6.2%) from year-end
1995. Real estate loan activity continued to be strong in the
second quarter due to the Company's special home equity credit
line ("Equiline") program, designed to respond to the growing
credit needs of the Company's markets. The special program
offered 5-year, fixed rate Equilines at competitive interest
rates and no loan closing costs. Since the program's inception
in early February, the Company has generated over 300 new
Equilines with available credit lines of up to approximately
$8.5 million. At June 30, 1996, over $4.1 million of the
special program's available balances were outstanding. Included
in these totals are new Equilines extended by First National
Bank, which began offering Equilines to their customers in the
first quarter of 1996. The program reached its intended goals
near the end of the second quarter and management is pleased
with the response to the special Equiline programs. Total
Equiline balances outstanding at June 30, 1996, were
$11,897,000, up $1,623,000 (or 15.8%) since year-end 1995.
Commercial, financial, and agricultural loans activity
continues to be strong through the second quarter of 1996. The
respective economies in the Company's markets continue to
provide quality credit opportunities, in particular, through the
business production office located in Licking County, Ohio.
This office is designed to meet the growing credit needs of
central Ohio and has provided strong loan growth since its
inception in mid-1993. Management is pleased with the
performance and growth of this office and will continue to focus
on the enhancement and growth of the loan portfolio while
maintaining underwriting quality.
Loan Concentration
- ------------------
The Company does not have a concentration of its loan portfolio
in any one industry. Real estate lending continues to be the
largest component of the loan portfolio, representing
$164,100,000 (or 41.1%) of total loans, while commercial,
financial, and agricultural loans totaled $125,807,000 (or
31.5%). The Company's lending is primarily focused in the local
southeastern Ohio market and consists principally of retail
lending, which includes single-family residential mortgages and
other consumer loan products. The Company's largest group of
commercial loans consists of automobile dealer floor plans,
which totaled $15,355,000 at June 30, 1996. It is the Company's
policy to obtain the underlying inventory as collateral on these
loans.
The Company does not extend credit to any single borrower in
excess of the combined legal lending limits of its subsidiary
banks.
Allowance for Loan Losses
- -------------------------
The allowance for loan losses as a percentage of loans modestly
decreased from 1.77% at year-end 1995 to 1.69% at June 30, 1996.
The total dollar amount of the reserve decreased $4,000. For
the six months ended June 30, 1996, provision for loan losses
totaled $795,000, while gross chargeoffs were $1,009,000 and
recoveries amounted to $211,000. In the second quarter, the
Company's provision for loan losses totaled $435,000, up $75,000
compared to first quarter 1996. Second quarter gross chargeoffs
totaled $578,000, while recoveries were $123,000. Due to the
combination of recent loan growth and chargeoff activity,
management expects to increase the provision for loan losses in
the third quarter.
This year's loan chargeoffs outpaced 1995's first six months.
Consumer credit problems have recently increased credit concerns
of the financial services industry. The following table
presents the Company's changes in allowance for loan losses for
the period ended June 30, 1996, and 1995, respectively:
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Balance, beginning of period $6,743,000 $6,752,000 $6,726,000 $6,783,000
Chargeoffs (578,000) (527,000) (1,009,000) (916,000)
Recoveries 123,000 146,000 211,000 219,000
---------- ---------- ---------- ----------
Net chargeoffs (455,000) (381,000) (798,000) (697,000)
---------- ---------- ---------- ----------
Provision for loan losses 435,000 310,000 795,000 595,000
---------- ---------- ---------- ----------
Balance, end of period $6,723,000 $6,681,000 $6,723,000 $6,681,000
========== ========== ========== ==========
Industry reports indicate outstanding consumer credit has been
on the rise, and consequently, consumer credit delinquencies
have increased. Unlike many other financial institutions, where
consumer credit problems have occurred in the credit card
segment, a significant portion of the Company's recent
chargeoffs have occurred in the consumer loan category and in
particular, indirect lending, which has experienced increased
loan activity in recent reporting periods. In the first half of
1996, the Company had gross chargeoffs in the consumer loan
category of $910,000 and recoveries of $166,000. Consumer loan
delinquencies and chargeoffs through the first six months of
1996 were higher than anticipated.
Net chargeoffs in both the real estate and commercial loan
categories were lower than expected and demonstrate the quality
of these segments of the loan portfolio. Management will
continue to monitor the entire loan portfolio to determine the
adequacy of the allowance.
Nonperforming loans (those loans classified as nonaccrual, 90
days or more past due, and other real estate owned) as a
percentage of outstanding loans was 0.42% at June 30, 1996.
Nonaccrual loans and those loans 90 days past due totaled
$652,000 and $972,000 respectively at June 30, 1996. Other real
estate owned totaled $38,000. Nonperforming loans have
decreased since year-end 1995 while total loans grew as a result
of increased loan activity. Management believes the current
nonperforming loan ratio is acceptable and reflects the overall
quality of the Company's loan portfolio.
At June 30, 1996, the recorded investment in loans that were
considered to be impaired under Statement of Financial Standards
No. 114, "Accounting by Creditors for Impairment of a Loan"
("SFAS No. 114"), as amended by SFAS No. 118, was $875,000, all
of which were accruing interest. Included in this amount is
$299,000 of impaired loans for which the related allowance for
loan losses is $137,000. The remaining impaired loan balances
of $576,000 do not have a related allocation of the allowance
for loan losses as a result of write-downs, being well-secured,
or possessing characteristics demonstrating ability to repay the
loan. The average recorded investment in impaired loans during
the six months ended June 30, 1996, was approximately
$1,250,000. For the six months ended June 30, 1996, the Company
recognized interest income on impaired loans of $79,000.
The Company will continue to monitor the status of any impaired
loans, as well as performing loans, in order to determine the
appropriate level of the allowance for loan losses. Management
believes the allowance for loan loss of 1.69% of total loans at
June 30, 1996, to be adequate to absorb inherent losses in the
portfolio.
Funding Sources
- ---------------
The Company considers deposits, short-term borrowings, and term
debt when evaluating funding sources. Traditional deposits
continue to be the most significant source of funds for the
Company, reaching $493,964,000 at June 30, 1996, an increase of
15.2% since year-end 1995. Deposit growth occurred primarily
through the Acquisition.
Non-interest bearing demand deposits at June 30, 1996 totaled
$56,286,000, up 12.4% from year-end 1995's balance of
$50,067,000. Anticipated growth in this funding source was
recognized in the second quarter, as the addition of the
Acquisition's new markets and increased customer base provided
the Company with growth in non-interest bearing deposits.
Management will continue to focus efforts to maintain the
non-interest bearing deposit base of the Company.
After utilizing short-term borrowings to fund first quarter
growth in anticipation of the Acquisition, the Company decreased
total borrowings in the second quarter to below those at
year-end 1995. At the end of the first quarter, the Company
had over $67 million in short-term borrowings, but repaid the
majority of these borrowings upon consummation of the
Acquisition. At June 30, 1996, short-term borrowings,
(including FHLB advances and repurchase agreements - from both
local business customers as well as national markets) totaled
$22,614,000, down 32.0% since December 31, 1995. The Company
will continue to access short-term FHLB borrowings as necessary.
In 1996, the Company has experienced a change in the mix of its
deposit base. In January, 1996, a $5 million brokered
certificate of deposit ("CD") matured. The Company had an
additional brokered CD in the amount of $5 million which matured
in July, 1996. The Company replaced the $5 million brokered CD
maturing in July with a combination of lower cost short-term and
long-term FHLB borrowings.
Second quarter growth in deposits was achieved primarily
through the Acquisition. The Company assumed $73,874,000 in
core deposits from the Acquisition and has experienced minimal
runoff of those deposit balances in the second quarter. The
following table details the core deposits assumed in the
Acquisition:
Non-interest bearing demand deposits $ 5,553,000
Interest-bearing demand deposits 6,015,000
Savings accounts 10,113,000
NOW and SuperNOW accounts 11,423,000
CD's and IRA's 40,770,000
-----------
Total acquired deposits $73,874,000
===========
Total CD's reached $243,381,000 at June 30, 1996, an increase
of $24,423,000 since year-end 1995. The second quarter
Acquisition provided the Company with nearly $41 million in
additional CD's, with maturities ranging from six months to 5
years. Aggressively priced short-term CD's have also
contributed to increased CD balances. Currently the Company is
offering special CD's for 11-month and 27-month terms to remain
competitive in its market area. Management expects existing CD
balances to remain level or increase slightly in 1996.
For the six months ended June 30, 1996, the largest percentage
growth in deposits occurred in NOW accounts, which increased
$10,739,000 (or 37.3%) to $39,551,000. Many interest-bearing
transaction accounts acquired through the Acquisition were NOW
accounts.
Other deposit account balances showed increases due primarily
to the Acquisition. Other interest-bearing transaction accounts
increased $9,253,000 (or 32.2%) since year-end 1995 to
$37,971,000 at June 30, 1996. Traditional savings accounts
increased $11,230,000 (or 16.3%) since December 31, 1995 to
$79,945,000. Management expects deposit balances to remain at
these post-Acquisition levels for the remainder of 1996 and
could increase depending on possible growth strategies
management may implement.
In addition to traditional deposits, the Company continues to
maintain long-term borrowings from the FHLB. This allows the
Company to obtain reliable funds at fixed and indexed rates for
longer periods of time than other traditional deposit products,
creating the opportunity to match longer term fixed rate
mortgages and other extended-maturity asset commitments against
a similar funding source. Principal paydowns on long-term
advances from the FHLB during the first half of 1996 resulted in
total long-term FHLB borrowings at June 30 of $20,078,000, a
decrease of $1,504,000 (or 7.0%). In July, the Company replaced
brokered CD's with a combination of long-term and short-term
borrowings. In total, the Company borrowed $10.5 million in
long-term advances from the FHLB in July. Management plans to
maintain access to long-term FHLB borrowings as an appropriate
funding source.
Capital/Stockholders' Equity
- ----------------------------
The Company's capital continues to provide a strong base for
profitable growth. Total stockholders' equity was $51,845,000
at June 30, 1996 compared to $51,474,000 at year-end 1995, an
increase of $371,000 (or 0.7%). Equity growth was slowed in the
first half of 1996 by the adjustment for net unrealized holding
gain on available-for-sale securities, net of deferred income
taxes, which decreased $2,615,000 to a net loss of $146,000 at
June 30, 1996. Stockholders' equity less adjustment for net
unrealized holding gain (loss) on available-for-sale securities
totaled $51,991,000 at June 30, 1996, up nearly $3.0 million (or
6.1%) since December 31, 1995.
Since all of the investment securities in the Company's
portfolio are classified as available-for-sale, both the
investment and equity sections of the Company's balance sheet
are more sensitive to the changing market values of investments.
In the first six months of 1996, interest rates increased
approximately 1%, causing a corresponding decrease in the market
value of the investment portfolio. Management feels the status
of the investment markets do not substantially affect the
Company's equity.
In the first six months of 1996, the Company earned $3,852,000
and declared dividends of $1,061,000, a dividend payout ratio of
27.54% of net income. In the second quarter, net income and
dividends declared totaled $1,971,000 and $531,000,
respectively, a dividend payout ratio of 26.94%. Management
feels this is an acceptable payout ratio for the Company and
anticipates similar payout ratios in future periods.
The Company has also complied with the standards of capital
adequacy mandated by the banking industry. Bank regulators have
established "risk-based" capital requirements designed to
measure capital adequacy. Risk-based capital ratios reflect the
relative risks of various assets banks hold in their portfolios.
A weight category of either 0% (lowest risk assets), 20%, 50%,
or 100% (highest risk assets) is assigned to each asset on the
balance sheet. The Company's risk-based capital ratio of 12.73%
at June 30, 1996 is well above the minimum standard of 8%. The
Company's Tier 1 capital ratio of 11.47% also exceeded the
regulatory minimum of 4%. The Leverage ratio at June 30, 1996
was 7.76% and also above the minimum standard of 3%. These
ratios provide quantitative data demonstrating the strength and
future opportunities for use of the Company's capital base.
Management continues to evaluate risk-based capital ratios and
the capital position of the Company as part of its strategic
decision process.
On August 1, 1996, the Company issued a 10% stock dividend to
shareholders of record at July 15, 1996. This marks the third
time in the last four years that the Company has issued a 10%
stock dividend. The Company also declared a stock split in
1994. The Company also retired all treasury shares as part of
the issuance of the 10% stock dividend in August.
In June, the Board of Directors of the Company authorized the
Company to purchase up to 10,000 additional treasury shares at
market prices. These shares will be used in conjunction with
employee benefit plans.
Liquidity and Interest Rate Sensitivity
- ---------------------------------------
Liquidity measures an organization's ability to meet cash
obligations as they come due. The Consolidated Statement of
Cash Flows presented on page 5 of the accompanying financial
statements provide analysis of the Company's cash and cash
equivalents. Additionally, management considers that portion of
the loan portfolio that matures within one year and the
maturities within one year in the investment portfolio as part
of the Company's liquid assets. The Company's liquidity is
monitored by the ALCO, which establishes and monitors ranges of
acceptable liquidity. Management feels the Company's current
liquidity position is acceptable.
The interest rate sensitivity position at June 30, 1996
indicated the Company was liability sensitive in the short-term
and asset sensitive for periods longer than one year. In the
long-term, the Company is in a net asset sensitive position,
which means if interest rates increase, the Company's net
interest income will increase over time. If interest rates
decline, net interest income will correspondingly decrease. As
expected, the Acquisition did not negatively impact the
Company's liquidity or interest rate sensitivity positions. The
Company's liquidity position has remained relatively unchanged
since year-end 1995. Management continues to monitor the
interest rate sensitivity through the ALCO and uses this data to
make appropriate strategic decisions.
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 in a replacement cost environment. During a period
of rising prices, a net monetary asset position results in loss
in purchasing power and conversely a net monetary liability
position results in an increase in purchasing power. In the
banking industry, typically monetary assets exceed monetary
liabilities. Therefore as prices have recently increased,
financial institutions experienced a decline in the purchasing
power of their net assets.
Future Outlook
- --------------
Second quarter results represent management's commitment to
improved financial performance. The consistent earnings record
has positioned the Company to achieve established goals and
enhance investor return. Management continues to challenge its
workforce to identify critical banking processes and re-engineer
services to provide the customer with the highest quality
products and services. Investments in technology allow the
workforce the opportunity to compete at higher levels than most
other financial institutions of similar size. Management feels
the current combination of human resources and technology has
positioned the Company for future customer service challenges.
The Acquisition of three full-service offices and associated
deposits has provided the Company with a new opportunity for
the second half of 1996. As expected, the transition of
combining the new offices with existing offices went smoothly
and customers in the new markets responded favorably to the change.
An aggressive marketing program was unveiled to capture the
attention of the new customers as well. Management looks
forward to continuing the development of the Acquisition markets
and is confident the performance of the new offices will
ultimately enhance the performance of the Company.
Customer service was enhanced in the second quarter with the
inception of Peoples "Connect" Card, a debit card that enables
payment for purchases to be debited directly from the customer's
bank account. Over 10,000 Connect Cards were mailed to
customers in the second quarter. The Connect Card is accepted
anywhere MasterCard is accepted, benefiting customers through
increased security, convenience and improved money management.
The Company's management believes the introduction of the
Connect Card has enhanced the customer's range of choices in
selecting their financial services.
Technological advances were implemented in the second quarter
1996 through investment in a PC-based system for the Company's
customer service representatives ("CSR's"). The former CSR
system was quickly becoming outdated and potentially unable to
meet the growing customer needs. The new system allows each CSR
to be connected to the Company-wide electronic network that
provides a faster, more efficient method of serving our
customers.
By mid-August, the new system had been installed in nearly half
of the Company's offices and was successful in its first stages
of operation. By the end of the third quarter, the entire
system will be installed, providing all CSR's an integrated
system that enhances customer service through readily available
product information. The new system represents another phase in
the integration of the Company's financial information.
Management believes electronic communication is the future of a
competitive business, and through recent investments in
technology, the Company anticipates a virtual electronic
financial institution in the future. Costs will be reduced via
decreased paper usage and other efficiencies.
The Company's balance sheet growth continues to be a focus of
management. Second quarter growth occurred primarily through
the Acquisition. Other strategies management will consider for
the remainder of 1996 include additional borrowings and
purchases of investment securities. A similar strategy for
growth was implemented in 1995. Management will continue to
analyze a wide variety of methods as means of leveraging
capital, as well as enhance profitability and return to
shareholders.
The Company's loan to deposit ratio decreased in the second
quarter due to the Acquisition (which provided an insignificant
amount of loans and approximately $74 million in deposits). At
June 30, 1996, the Company's loan to deposit ratio totaled
80.74%, compared to 88.04% at the end of the first quarter.
Lending activity in the Acquisition markets has been quite
strong and should continue to provide a source for quality
loans. Management also expects commercial loan activity to
provide additional income sources for the Company for the
remainder of 1996. Due to strong loan demand, management
expects the loan to deposit ratio to increase slightly over the
next six months.
Consumer loan chargeoffs in the second quarter continued to
comprise the majority of the Company's recent chargeoffs. In
the second quarter, total net chargeoffs were $455,000, of which
consumer net chargeoffs totaled $413,000. The Company's
management expects to increase the loan loss provision in the
third quarter. Future provision for loan loss will be affected
by the chargeoff activity in all loan categories. Management
feels the current reserve for loan loss is adequate to cover
potential chargeoffs as they occur.
Enhanced non-interest income and controlled non-interest
expense are critical to the success of the Company and is
measured in the financial services industry by the efficiency
ratio, calculated according to the following: non-interest
expense (less goodwill amortization) as a percentage of fully
tax equivalent net interest income and non-interest income (less
any gains or non-recurring income). For the six months ended
June 30, 1996, the Company's efficiency ratio was 53.76%,
compared to 59.90% for the same period last year.
The efficiency ratio was improved through a combination of
increased net interest income and a reduction in non-interest
expense. Net interest income grew due to increased volumes of
interest-earning assets. Comparing 1996 to 1995, non-interest
expense has been favorably affected through reduced Bank
Insurance Fund premium expense and a slight increase in salaries
and benefits (due primarily to an early retirement program
initiated in late 1995). Management analyzes salaries and
benefits expense on a regular basis to identify greater possible
efficiencies and continues to focus on its efficiency ratio as a
method of enhancing profitability and return on equity.
The interest rate environment will play an important role in
the future earnings of the Company. Management is pleased with
the improvement in net interest margin in the second quarter but
expects pressures on net interest income and margin to intensify
throughout 1996. Management has implemented several pricing
strategies to effectively include the new deposits assumed
through the Acquisition.
Interest rates on CD's continue to be highly competitive, and
in response, management began offering special 11-month CD's in
the second quarter and a 27-month CD in early third quarter.
These special CD rates were designed to price the Company's
products at rates slightly higher than the average comparable CD
rates in the markets served by the Company. Management expects
these products to generate additional funding sources for the
Company as well as provide additional financial service
opportunities to customers. As a result of the higher
competitive CD rates, net interest margin should stabilize or
slightly decrease over the next several months. Increased
volumes in interest-earning assets has provided the opportunity
for the Company to add incremental net interest income dollars
to the profitability of the Company.
Management concentrates on return on equity and earnings per
share evaluations, plus other methods, to measure and direct the
performance of the Company. While past results are not an
indication of future earnings, management feels the Company is
positioned to maintain performance of normal operations through
the remainder of 1996.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995
- ---------------------------------------------------------------
The statements in this Form 10-Q which are not historical fact
are forward looking statements that involve risks and
uncertainties, including, but not limited to, the interest rate
environment, the effect of federal and state banking and tax
regulations, the effect of economic conditions, the impact of
competitive products and pricing, and other risks detailed in
the Company's Securities and Exchange Commission filings.
PEOPLES BANCORP INC. AND SUBSIDIARIES
-------------------------------------
CONSOLIDATED AVERAGE BALANCE SHEET AND ANALYSIS OF NET INTEREST INCOME
----------------------------------------------------------------------
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
Average Yield/ Average Yield/ Average Yield/ Average Yield/
Balance Rate Balance Rate Balance Rate Balance Rate
-------- ------ -------- ------ -------- ------ -------- ------
ASSETS
- ------
Securities:
Taxable $131,884 6.78% $ 90,626 7.11% $126,198 6.77% $ 85,418 7.15%
Tax-exempt 22,365 8.05% 22,960 8.40% 22,864 7.95% 22,653 8.57%
-------- ------ -------- ------ -------- ------ -------- ------
Total 154,249 6.97% 113,586 7.37% 149,062 6.95% 108,071 7.45%
Loans:
Commercial 121,763 9.78% 115,125 9.62% 120,175 9.52% 114,965 9.42%
Real estate 166,289 8.32% 155,013 8.52% 163,686 8.55% 154,529 8.59%
Consumer 101,489 10.78% 95,715 10.67% 101,636 10.75% 95,090 10.21%
-------- ------ -------- ------ -------- ------ -------- ------
Total loans 389,537 9.42% 365,853 9.43% 385,485 9.43% 364,585 9.28%
Less: Allowance
for loan loss (6,700) (6,682) (6,725) (6,718)
-------- ------ -------- ------ -------- ------ -------- ------
Net loans 382,837 9.58% 359,171 9.60% 378,760 9.60% 357,867 9.46%
Interest-bearing
deposits 1,093 4.80% 1,185 5.79% 1,030 4.87% 1,202 5.79%
Federal funds sold 9,667 5.29% 15,089 6.06% 7,807 5.33% 11,295 6.03%
-------- ------ -------- ------ -------- ------ -------- ------
Total earning
assets 547,846 8.77% 489,031 8.98% 536,659 8.81% 478,435 8.92%
Other assets 41,693 34,674 39,098 35,044
-------- -------- -------- --------
Total assets $589,539 $523,705 $575,757 $513,479
======== ======== ======== ========
LIABILITIES AND EQUITY
- ----------------------
Interest-bearing
deposits:
Savings $ 77,817 3.02% $ 68,638 3.41% $ 73,836 3.04% $ 69,428 3.36%
Interest-bearing
demand deposits 112,342 3.22% 88,924 3.63% 104,573 3.32% 88,527 3.38%
Time 234,285 5.54% 228,144 5.82% 223,390 5.60% 219,537 5.67%
-------- ------ -------- ------ -------- ------ -------- ------
Total 424,444 4.47% 385,706 4.89% 401,799 4.53% 377,492 4.71%
Borrowed funds:
Short-term 30,368 4.86% 14,229 4.90% 40,735 5.15% 13,766 4.81%
Long-term 22,125 6.05% 23,157 6.15% 22,503 6.05% 23,117 6.12%
-------- ------ -------- ------ -------- ------ -------- ------
Total 52,493 5.35% 37,386 5.67% 63,238 5.47% 36,883 5.63%
Total interest
bearing
liabilities 476,937 4.57% 423,092 4.96% 465,037 4.66% 414,375 4.79%
Non-interest
bearing deposits 54,733 46,449 51,803 46,355
Other liabilities 5,986 5,590 6,925 5,201
-------- -------- -------- --------
Total
liabilities 537,656 475,131 523,765 465,931
Stockholders'
equity 51,883 48,574 51,992 47,548
-------- -------- -------- --------
Total
liabilities
and equity $589,539 $523,705 $575,757 $513,479
======== ======== ======== ========
Interest income
to earning assets 8.77% 8.98% 8.81% 8.92%
Interest expense
to earning assets 3.97% 4.29% 4.04% 4.15%
------ ------ ------ ------
Net interest margin 4.80% 4.69% 4.77% 4.77%
====== ====== ====== ======
Interest income and yields presented on a fully tax-equivalent
basis using a 34% tax rate.
PART II
-------
ITEM 1: Legal Proceedings.
None.
ITEM 2: Changes in Securities.
None.
ITEM 3: Defaults upon Senior Securities.
None.
ITEM 4: Submission of Matters to a Vote of Security Holders.
None.
ITEM 5: Other Information.
None.
ITEM 6: Exhibits and Reports on Form 8-K.
a) Exhibits:
EXHIBIT INDEX
-------------
Exhibit
Number Description Exhibit Location
- ------- ---------------------------------- ----------------------------
11 Computation of Earnings Per Share. Page 21.
27 Financial Data Schedule. EDGAR electronic filing only.
b) Reports on Form 8-K: Filed April 26, 1996 - Acquisition of Branches.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunder duly authorized.
PEOPLES BANCORP INC.
Date: August 12, 1996 By: /s/ ROBERT E. EVANS
Robert E. Evans
President and Chief Executive Officer
Date: August 12, 1996 By: /s/ JOHN W. CONLON
John W. Conlon
Chief Financial Officer
EXHIBIT INDEX
-------------
PEOPLES BANCORP INC. QUARTERLY REPORT ON FORM 10-Q
--------------------------------------------------
FOR PERIOD ENDED JUNE 30, 1996
------------------------------
Exhibit
Number Description Exhibit Location
- ------- ---------------------------------- ----------------------------
11 Computation of Earnings Per Share. Page 21.
27 Financial Data Schedule. EDGAR electronic filing only.