Exhibit (99)(a)
NEWS RELEASE JULY 14, 2003
CONTACT: TONY W. WOLFE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
A. JOSEPH LAMPRON
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
828-464-5620, FAX 828-465-6780
FOR IMMEDIATE RELEASE
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PEOPLES BANCORP ANNOUNCES SECOND QUARTER EARNINGS RESULTS
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Peoples Bancorp of North Carolina, Inc., the parent company of Peoples
Bank, reported net income of $91,200, or $.03 basic and diluted net income per
share, for the three months ended June 30, 2003 as compared to $646,299, or $.21
basic net income per share and $.20 diluted net income per share, for the same
period one year ago.
Tony W. Wolfe, President and Chief Executive Officer, attributed the
decrease in second quarter earnings to an increase in the provision for loan
losses and a decrease in non-interest income resulting from write-downs on
certain repossessed assets. The provision for loan losses for the three months
ended June 30, 2003 was $2,276,900 as compared to $1,266,100 for same period one
year ago. The increase in the provision for loan losses reflects an increase in
classified loans and non-performing assets, which is the result of adverse
business conditions in the Bank's market area and the cumulative effect on
certain businesses from terrorist activities in 2001 and the Washington, DC
sniper attacks in 2002. Non-interest income for the three months ended June 30,
2003 decreased 25% to $1,056,012 as compared to $1,405,778 for the same period
last year, due to write-downs of aircraft repossessed in 2002.
Year-to-date net income as of June 30, 2003 was $1,509,288, or $.48 basic
and diluted net income per share. Net income from recurring operations for the
six months ended June 30, 2003 was $1,215,428, or $.39 basic and diluted net
income per share, representing a 21% decrease from net income from recurring
operations of $1,532,175, or $.48 basic and diluted net income per share for the
six months ended June 30, 2002. Non-recurring income in 2003 amounted to
$293,860, net of income tax expense, associated with the sale of the Bank's $3.7
million credit card portfolio during first quarter. The Company did not have any
non-recurring income in the six months ended June 30, 2002.
The decrease in year-to-date recurring earnings is attributable to an
increase in the provision for loan losses and a decrease in non-interest income
resulting from write-downs on certain repossessed assets. The year-to-date
provision for loan losses increased to $3,069,900 as of June 30, 2003, as
compared to $1,766,100 for the six months ended June 30, 2002. Excluding
non-recurring income associated with the sale of the Bank's credit card
portfolio, non-interest income for the six months ended June 30, 2003 decreased
13% to $2,561,611, as compared to $2,929,722 for the same period last year. This
decrease is primarily attributable to write-downs of aircraft repossessed in
2002.
Net interest income increased 8% to $5,434,979 for the three months ended
June 30, 2003 compared to $5,012,314 for the same period one year ago.
Year-to-date net interest income increased 15% to $10,891,142 for the
PEOPLES BANCORP ANNOUNCES SECOND QUARTER EARNINGS RESULTS- PAGE TWO
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six months ended June 30, 2003 compared to $9,493,956 for the same period one
year ago. This increase is primarily attributable to a decrease in the cost of
funds, which reflects a general decline in market interest rates paid on
deposits.
Non-interest expense for the three months ended June 30, 2003, was
$4,174,991 as compared to $4,193,293 for the same period last year. Year-to-date
non-interest expense increased 3% to $8,621,924 for the six months ended June
30, 2003, as compared to $8,408,003 for the same period last year.
Net earnings for the year ending December 31, 2003, including non-recurring
items, are expected to be in the range of $3.2 million to $3.6 million,
resulting in basic and diluted earnings per share in the range of $1.03 to
$1.16, approximately 31% to 23% below previous expectations.
Total assets as of June 30, 2003 amounted to $665,046,347, an increase of
6% compared to total assets of $626,488,136 at June 30, 2002. This increase is
primarily attributable to an increase in loans, which was partially offset by a
decrease in available-for-sale securities.
Loans increased 6% to $535,185,738 as of June 30, 2003 compared to
$505,943,612 as of June 30, 2002. Non-performing assets totaled $11,657,029 at
June 30, 2003 or 1.75% of total assets, compared to $8,943,496 at June 30, 2002
or 1.43% of total assets. Non-performing assets increased by $2.1 million from
March 31, 2003 as one customer with loans totaling $2.5 million unexpectedly
ceased operations. There is a specific reserve of $1.4 million associated with
that customer. The allowance for loan losses at June 30, 2003 amounted to
$9,033,342 or 1.69% of total loans compared to $7,117,151 or 1.41% of total
loans at June 30, 2002.
Deposits amounted to $539,303,799 as of June 30, 2003, representing an
increase of 7% over deposits of $504,955,835 at June 30, 2002.
Shareholders' equity increased to $50,625,951, or 7.61% of total assets, at
June 30, 2003 as compared to $46,100,712, or 7.36% of total assets, at June 30,
2002.
Peoples Bank operates eleven offices throughout Catawba County, North
Carolina, one office in Alexander County, North Carolina and three offices in
Lincoln County, North Carolina. The Company's common stock is publicly traded
over the counter and is quoted on the Nasdaq National Market under the symbol
"PEBK." Scott and Stringfellow, Inc., Ryan, Beck & Co., Sterne Agee & Leach,
Inc. and Trident Securities, Inc. are market makers for the Company's shares.
(TABLES FOLLOW)
STATEMENTS MADE IN THIS PRESS RELEASE, OTHER THAN THOSE CONCERNING
HISTORICAL INFORMATION, SHOULD BE CONSIDERED FORWARD-LOOKING STATEMENTS PURSUANT
TO THE SAFE HARBOR PROVISIONS OF THE SECURITIES EXCHANGE ACT OF 1934 AND THE
PRIVATE SECURITIES LITIGATION ACT OF 1995. THESE FORWARD-LOOKING STATEMENTS
INVOLVE RISKS AND UNCERTAINTIES AND ARE BASED ON THE BELIEFS AND ASSUMPTIONS OF
MANAGEMENT AND ON THE INFORMATION AVAILABLE TO MANAGEMENT AT THE TIME THAT THIS
RELEASE WAS PREPARED. THESE STATEMENTS CAN BE IDENTIFIED BY THE USE OF WORDS
LIKE "EXPECT," "ANTICIPATE," "ESTIMATE," AND "BELIEVE," VARIATIONS OF THESE
WORDS AND OTHER SIMILAR EXPRESSIONS. READERS SHOULD NOT PLACE UNDUE RELIANCE ON
FORWARD-LOOKING STATEMENTS AS A NUMBER OF IMPORTANT FACTORS COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY INCLUDE, BUT ARE
NOT LIMITED TO, (1) COMPETITION IN THE MARKETS SERVED BY PEOPLES BANK, (2)
CHANGES IN THE INTEREST RATE ENVIRONMENT, (3) GENERAL NATIONAL, REGIONAL OR
LOCAL ECONOMIC CONDITIONS MAY BE LESS FAVORABLE THAN EXPECTED, RESULTING IN,
AMONG OTHER THINGS, A DETERIORATION IN CREDIT QUALITY AND THE POSSIBLE
IMPAIRMENT OF COLLECTIBILITY OF LOANS, (4) LEGISLATIVE OR REGULATORY CHANGES,
INCLUDING CHANGES IN ACCOUNTING STANDARDS, (5) SIGNIFICANT CHANGES IN THE
FEDERAL AND STATE LEGAL AND REGULATORY ENVIRONMENT AND TAX LAWS, (6) THE IMPACT
OF CHANGES IN MONETARY AND FISCAL POLICIES, LAWS, RULES AND REGULATIONS AND (7)
OTHER RISKS AND FACTORS IDENTIFIED IN THE COMPANY'S OTHER FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION, INCLUDING BUT NOT LIMITED TO THOSE DESCRIBED
IN PEOPLES BANCORP OF NORTH CAROLINA, INC.'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 2002, UNDER "GENERAL DESCRIPTION OF BUSINESS."
PEOPLES BANCORP ANNOUNCES SECOND QUARTER EARNINGS RESULTS - PAGE THREE
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CONSOLIDATED BALANCE SHEETS
June 30, 2003, December 31, 2002 and June 30, 2002
=============================================================================================================
JUNE 30, 2003 December 31, 2002 June 30, 2002
--------------- ------------------- ---------------
(Unaudited) (Unaudited)
ASSETS:
Cash and due from banks $ 21,151,593 $ 13,803,665 $ 14,053,853
Federal funds sold 9,389,000 1,774,000 4,447,000
--------------- ------------------- ---------------
Cash and cash equivalents 30,540,593 15,577,665 18,500,853
--------------- ------------------- ---------------
Investment securities available for sale 73,457,013 71,735,705 76,269,797
Other investments 4,021,973 4,345,573 4,902,773
--------------- ------------------- ---------------
Total securities 77,478,986 76,081,278 81,172,570
--------------- ------------------- ---------------
Loans 535,185,738 526,369,746 505,943,612
Mortgage loans held for sale 6,026,760 5,064,635 2,089,370
Less: Allowance for loan losses (9,033,342) (7,247,906) (7,117,151)
--------------- ------------------- ---------------
Net loans 532,179,156 524,186,475 500,915,831
--------------- ------------------- ---------------
Premises and equipment, net 12,870,461 15,620,977 15,144,879
Accrued interest receivable and other assets 11,977,151 13,275,143 10,754,003
--------------- ------------------- ---------------
Total assets $ 665,046,347 $ 644,741,538 $ 626,488,136
=============== =================== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Non-interest bearing demand $ 76,511,443 $ 67,398,458 $ 66,190,262
NOW, MMDA & Savings 151,967,089 156,554,189 159,679,710
Time, $100,000 or more 177,140,673 160,836,596 159,160,964
Other time 133,684,594 130,949,712 119,924,899
--------------- ------------------- ---------------
Total deposits 539,303,799 515,738,955 504,955,835
Demand notes payable to U.S. Treasury 1,600,000 1,600,000 1,488,467
FHLB borrowings 58,000,000 63,071,429 58,142,857
Trust preferred securities 14,000,000 14,000,000 14,000,000
Accrued interest payable and other liabilities 1,516,597 1,726,421 1,800,265
--------------- ------------------- ---------------
Total liabilities 614,420,396 596,136,805 580,387,424
--------------- ------------------- ---------------
Shareholders' Equity:
Preferred stock, no par value; authorized
5,000,000 shares; no shares issued
and outstanding - - -
Common stock, no par value; authorized
20,000,000 shares; issued and
outstanding 3,133,547 shares in 2003
and 3,145,547 shares in 2002 35,097,773 35,097,773 35,265,773
Retained earnings 12,976,941 12,094,363 10,818,692
Accumulated other comprehensive income 2,551,237 1,412,597 16,247
--------------- ------------------- ---------------
Total shareholders' equity 50,625,951 48,604,733 46,100,712
--------------- ------------------- ---------------
Total liabilities and shareholders' equity $ 665,046,347 $ 644,741,538 $ 626,488,136
=============== =================== ===============
MEMORANDUM: Letters of Credit $ 1,976,571 $ 2,061,103 $ 2,170,369
=============== =================== ===============
PEOPLES BANCORP ANNOUNCES SECOND QUARTER EARNINGS RESULTS - PAGE FOUR
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CONSOLIDATED STATEMENTS OF INCOME
For the three and six months ended June 30, 2003 and 2002
=====================================================================================================
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2003 2002 2003 2002
-------------------------- -------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
INTEREST INCOME:
Interest and fees on loans $ 7,823,938 $ 7,939,039 $ 15,607,361 $15,754,574
Interest on federal funds sold 27,168 13,100 44,097 23,848
Interest on investment securities:
U.S. Government agencies 548,989 908,465 1,184,115 1,873,572
States and political subdivisions 141,690 153,602 291,351 329,634
Other 108,830 125,266 217,797 246,998
------------ ------------ ------------ -----------
Total interest income 8,650,615 9,139,472 17,344,721 18,228,626
------------ ------------ ------------ -----------
INTEREST EXPENSE:
NOW, MMDA & Savings deposits 328,237 538,993 634,997 1,049,346
Time deposits 2,077,721 2,749,898 4,180,477 5,968,764
FHLB borrowings 641,982 652,023 1,301,923 1,336,932
Trust preferred securities 166,250 183,750 332,500 367,500
Other 1,446 2,494 3,682 12,128
------------ ------------ ------------ -----------
Total interest expense 3,215,636 4,127,158 6,453,579 8,734,670
------------ ------------ ------------ -----------
NET INTEREST INCOME 5,434,979 5,012,314 10,891,142 9,493,956
PROVISION FOR LOAN LOSSES 2,276,900 1,266,100 3,069,900 1,766,100
------------ ------------ ------------ -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,158,079 3,746,214 7,821,242 7,727,856
------------ ------------ ------------ -----------
OTHER INCOME:
Service charges 818,928 748,987 1,591,079 1,409,483
Other service charges and fees 145,442 114,190 304,880 277,059
Gain (loss) on sale of securities - - - -
Mortgage banking income 213,751 169,913 404,108 399,867
Insurance and brokerage commission 102,230 125,637 199,192 245,265
Miscellaneous (224,339) 247,051 541,111 598,048
------------ ------------ ------------ -----------
Total other income 1,056,012 1,405,778 3,040,370 2,929,722
------------ ------------ ------------ -----------
OTHER EXPENSES:
Salaries and employee benefits 2,365,716 2,416,871 4,929,510 4,853,873
Occupancy 815,277 753,730 1,650,166 1,513,073
Other 993,998 1,022,692 2,042,248 2,041,057
------------ ------------ ------------ -----------
Total other expenses 4,174,991 4,193,293 8,621,924 8,408,003
------------ ------------ ------------ -----------
INCOME BEFORE INCOME TAXES 39,100 958,699 2,239,688 2,249,575
INCOME TAXES (52,100) 312,400 730,400 717,400
------------ ------------ ------------ -----------
NET INCOME $ 91,200 $ 646,299 $ 1,509,288 $ 1,532,175
============ ============ ============ ===========
PER SHARE AMOUNTS
Basic net income $ 0.03 $ 0.21 $ 0.48 $ 0.48
Diluted net income $ 0.03 $ 0.20 $ 0.48 $ 0.48
Cash dividends $ 0.10 $ 0.10 $ 0.20 $ 0.20
Book value $ 16.16 $ 14.66 $ 16.16 $ 14.66
PEOPLES BANCORP ANNOUNCES SECOND QUARTER EARNINGS RESULTS - PAGE FIVE
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FINANCIAL HIGHLIGHTS
For the three and six months ended June 30, 2003 and 2002
====================================================================================================================
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2003 2002 2003 2002
---------------------------- ----------------------------
(UNAUDITED) (Unaudited) (UNAUDITED) (Unaudited)
SELECTED AVERAGE BALANCES:
Available for Sale Securities $ 68,415,497 $ 78,932,885 $ 68,749,135 $ 81,208,379
Loans 537,645,145 503,687,135 535,413,573 500,858,670
Earning Assets 622,429,981 590,226,462 617,759,390 589,790,689
Assets 658,083,592 621,184,213 654,151,843 620,763,454
Deposits 530,003,252 499,551,954 519,362,374 494,528,924
Shareholders' Equity 50,097,160 45,566,675 50,073,261 46,194,563
SELECTED KEY DATA:
Net Interest Margin (tax equivalent) 3.55% 3.46% 3.60% 3.30%
Return on Average Assets 0.06% 0.42% 0.47% 0.50%
Return on Average Shareholders' Equity 0.73% 5.69% 6.08% 6.69%
Shareholders' Equity to Total Assets (Period End) 7.61% 7.36% 7.61% 7.36%
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period $ 7,606,124 $ 6,481,894 $ 7,247,906 $ 6,090,570
Provision for loan losses 2,276,900 1,266,100 3,069,900 1,766,100
Charge-offs (895,227) (664,044) (1,378,922) (818,000)
Recoveries 45,545 33,201 94,458 78,481
---------------------------- ----------------------------
Balance, end of period $ 9,033,342 $ 7,117,151 $ 9,033,342 $ 7,117,151
============================ ============================
ASSET QUALITY:
Nonaccrual Loans $ 9,148,382 $ 8,606,009
90 Days Past Due and still accruing 81,340 55,456
Other Real Estate Owned 1,715,936 282,031
Repossessed Assets 711,371 -
----------------------------
Total Nonperforming Assets $ 11,657,029 $ 8,943,496
============================
Nonperforming Assets to Total Assets 1.75% 1.43%
Allowance for Loan Losses to Nonperforming Assets 77.49% 79.58%
Allowance for Loan Losses to Total Loans 1.69% 1.41%
LOAN RISK GRADE ANALYSIS: PERCENTAGE OF LOANS GENERAL RESERVE
BY RISK GRADE PERCENTAGE
-------------------------------------
2003 2002 2003 2002
------ ------ ------- -------
Risk 1 (Excellent Quality) 9.60% 8.55% 0.15% 0.15%
Risk 2 (High Quality) 30.04% 39.45% 0.50% 0.50%
Risk 3 (Good Quality) 49.60% 43.79% 1.00% 1.00%
Risk 4 (Management Attention) 4.09% 3.81% 2.50% 2.50%
Risk 5 (Watch) 3.35% 1.90% 7.00% 7.00%
Risk 6 (Substandard) 1.49% 0.78% 12.00% 12.00%
Risk 7 (Low Substandard) 0.12% 0.02% 25.00% 25.00%
Risk 8 (Doubtful) 0.00% 0.00% 50.00% 50.00%
Risk 9 (Loss) 0.00% 0.00% 100.00% 100.00%
At June 30, 2003 there were four relationships exceeding $1 million each (which
totaled $11.7 million) in the Watch risk grade and two relationships exceeding
$1 million each (which totaled $6.2 million) in the Substandard risk grade.
Balances of individual relationships exceeding $1 million in these risk grades
ranged from $2.3 million to $3.9 million. If current operating conditions for
these customers remain stable, it is not expected that any of the relationships
with balances exceeding $1 million will become non-performing assets within the
next three to six months. If unforeseen events were to occur, it is possible
that the viability of one or more of these customers could require the
reclassification of their loans to non-accrual.
(END)