Peoples Bancorp Inc. Announces 32% Year-over-year Increase in 4th Quarter Earnings

23 Jan, 2014, 07:50 ET from Peoples Bancorp Inc.

MARIETTA, Ohio, Jan. 23, 2014 /PRNewswire/ --

Summary fourth quarter and full year 2013 results:

  • Diluted earnings per common share were $0.47 for the quarter and $1.63 for the year.
    • Peoples incurred pre-tax acquisition-related costs of $1.2 million during the quarter and $1.5 million for 2013.
    • 2013 earnings benefited from recoveries of loan losses of $1.0 million for the quarter and $4.4 million for the year.
  • Period-end total loan balances reflected 16% annualized organic growth for the quarter and 12% for the year.
    • Commercial lending generated over 80% of the fourth quarter growth.
    • Non-mortgage consumer balances grew at a 22% annualized rate for the quarter and 33% since year-end 2012.
    • Organic growth in 2013 was supplemented by the Ohio Commerce Bank acquisition and its $96.6 million of loans.
    • Average loan balances were up 15% year-over-year for the quarter and 8% for the full year.
  • Asset quality trends remained favorable in 2013, which included recoveries exceeding charge-offs in each quarter.  
    • Nonperforming assets were 0.81% of total loans and OREO at year-end 2013 versus 1.58% at year-end 2012.
    • Gross recoveries exceeded charge-offs by $1.1 million for the quarter and $3.7 million for the year.
    • Allowance for loan losses decreased to 1.43% of total loans at December 31, 2013, from 1.81% at year-end 2012.
  • Total revenue increased 9% for the quarter and 4% for the year compared to the prior year periods.
    • Total non-interest income benefited from double-digit year-over-year growth in insurance and investment revenues.
    • Acquisitions and increases in sales production accounted for most of the higher fee revenue in 2013.
    • Net interest income improved due mostly to strong loan growth and higher long-term interest rates.
    • Net interest margin expanded 20 basis points versus the linked quarter, to 3.46% for the quarter.
    • Acquisition accretion and one-time loan income added 15 basis points to fourth quarter 2013 net interest margin.  
    • 2013 net interest margin was 3.25% versus 3.39% in 2012, due largely to the prolonged low rate environment. 
  • Operating expenses were higher than prior periods but in line with Peoples' prior guidance.
    • Total non-interest expense was $18.4 million versus the fourth quarter 2013 guidance of $18.3 million.
    • Peoples' prior guidance assumed fourth quarter expenses would include $950,000 of one-time acquisition expenses.
    • Acquisitions and other initiatives to grow revenue were key drivers of the additional expenses compared to 2012.
  • Retail deposit balances grew during the quarter, while overall mix continued to shift toward low-cost core deposits.
    • Peoples added $110.9 million of deposits during the fourth quarter as part of the Ohio Commerce Bank acquisition.
    • Non-interest-bearing deposits continued to comprise over 20% of Peoples' total deposits.
    • Total retail balances were impacted by reductions in high-cost CDs and seasonal declines in governmental deposits.  

Peoples Bancorp Inc. ("Peoples") (NASDAQ: PEBO) today announced results for the quarter and year ended December 31, 2013.  Net income totaled $5.1 million for the fourth quarter of 2013, representing earnings per diluted common share of $0.47.  In comparison, earnings per diluted common share were $0.23 and $0.36 for the third quarter of 2013 and fourth quarter of 2012, respectively.  For the year, net income was $17.6 million in 2013 versus $20.4 million in 2012, representing earnings per diluted common share of $1.63 and $1.92, respectively.    

"We are very pleased with fourth quarter and full year 2013 results considering the challenging operating environment for community banks," said Chuck Sulerzyski, President and Chief Executive Officer.  "Our earnings gained significant momentum in the second half of the year as we began to see positive contributions from prior strategic investments and initiatives.  Other key accomplishments during 2013 included stronger than expected loan growth, improved revenue generation within our fee businesses, disciplined expense management, and restoration of credit quality to pre-crisis levels.  We also invested in our future by adding sales talent and remodeling our entire branch network, and made meaningful contributions to the local communities we serve.  These successes position Peoples for another year of solid performance in 2014." 

Sulerzyski continued, "Also in 2013, we made further progress on our plan to grow through acquisitions.  As we work diligently to capitalize on the growth potential provided by the fourth quarter acquisition of Ohio Commerce Bank, we are excited by the opportunity to add density to our existing footprint and gain many new clients with the recently announced acquisition of Midwest Bancshares.  We look forward to completing this acquisition and expanding our relationships in the Jackson County, Ohio region."    

During the fourth quarter, Peoples' banking subsidiary, Peoples Bank, National Association ("Peoples Bank"), completed its merger with Ohio Commerce Bank ("Ohio Commerce").  This all cash transaction resulted in Peoples Bank acquiring a full-service banking office in the Cleveland, Ohio suburb of Beachwood and added $96.6 million of loans and $110.9 million of deposits.  In connection with this acquisition, Peoples incurred one-time pre-tax expenses totaling $1.2 million ($0.8 million or $0.07 per share after-tax).  Much of this amount was attributable to the conversion of data processing services.

Earlier this week, Peoples announced plans to acquire Midwest Bancshares, Inc. and its wholly-owned subsidiary, First National Bank of Wellston ("FNB Wellston"), located in Jackson County, Ohio.  This merger transaction should be completed in the second quarter of 2014, subject to customary closing conditions, including regulatory approvals and Midwest Bancshares' shareholders' approval.  At that time, the two full service offices of FNB Wellston located in Wellston and Jackson, Ohio, which should add nearly $60 million in loans and $80 million in deposits, will become branches of Peoples Bank.  Peoples anticipates the transaction being accretive to earnings in the first full year, although one-time acquisition costs could offset the incremental 2014 earnings. 

Fourth quarter 2013 net interest income was $15.6 million, up 14% compared to the linked quarter and 10% higher than the prior year's fourth quarter, while net interest margin for these periods was 3.46%, 3.26% and 3.42%, respectively.   These improvements were largely attributable to the Ohio Commerce acquisition, coupled with meaningful organic loan growth during 2013.  In the fourth quarter of 2013, Peoples recognized $270,000 of normal accretion income for the acquisition accounting adjustments, mainly on the acquired loans and deposits from Ohio Commerce, which added 6 basis points to net interest margin.  Peoples' net interest income and margin have also benefited from additional interest income for prepayment fees and interest recovered on nonaccrual loans.  This one-time income totaled $427,000 in the fourth quarter of 2013, compared to $405,000 in the linked quarter and $330,000 in the fourth quarter of 2012, and added 10 basis points to both the third and fourth quarters of 2013 net interest margin and 7 basis points to the fourth quarter of 2012 net interest margin. 

For the year, growth in earning assets due to organic loan growth produced higher net interest income in 2013 than in 2012.  However, the sustained low interest rate environment caused asset yields to decline more than Peoples could reduce its funding costs, which caused net interest margin compression in 2013. 

"Both net interest income and margin were stronger in the fourth quarter than we had expected, due in part to the  additional loan income and accretion income being more than previously estimated," said Edward Sloane, Chief Financial Officer and Treasurer.  "Asset yields also benefited from the yield curve remaining steeper than the first half of the year.  The higher long-term rates have led to a continued slow down in refinancing activity within the investment portfolio and a corresponding reduction in premium amortization.  At the same time, we achieved meaningful loan growth in each of the final three quarters of 2013, resulting in higher earning assets in the fourth quarter.  On the funding side, our overall cost fell during the fourth quarter as we continued to utilize shorter-term borrowings to fund much of the asset growth.  As we begin 2014, we remain focused on sustaining the improvement in margin during the second half of 2013, but will look for opportunities to lessen our long-term exposure to rising rates by either extending funding or shortening our asset duration."    

Total non-interest income was up 6% year-over-year for both the fourth quarter and full year.  Both insurance and investment income experienced double-digit increases during 2013.  Insurance income was 36% higher for the quarter and 24% for the year.  Much of this growth was the result of acquisitions completed in 2013, with increases in premiums for insurance policies also being a significant contributing factor and consistent with industry trends.  Investment income was up 17% in the fourth quarter and 16% for the year as a result of growth in managed assets.  Higher sales activity, primarily with respect to retirement plan services, plus asset appreciation corresponding to the overall market performance,  accounted for much of the growth in managed assets in 2013.  The additional insurance and investment income in 2013 was partially offset by lower mortgage banking income due to fewer loans being sold in the secondary market.  During 2013, refinancing activity decreased substantially as long-term mortgage rates rose during the second half of the year.  Compared to the linked quarter, total non-interest income decreased 3% due mostly to normal seasonality of insurance commission revenue.

Fourth quarter 2013 non-interest expenses totaled $18.4 million, 8% higher than the prior year fourth quarter and 7% higher than the linked quarter.  The key drivers of these increases were the previously noted one-time expenses related to the Ohio Commerce acquisition, and normal operating expenses of the acquired banking location, such as employee compensation and occupancy expenses.  Compared to the prior year, salary and employee benefit costs were up 9% for both the fourth quarter and full year of 2013.  These increases were mostly the result of a higher number of full-time equivalent employees during 2013, attributable to acquisitions and the addition of new sales talent in several markets.  At December 31, 2013, the number of full-time equivalent employees was 546, up from 494 a year ago.  Acquisitions added 32 full-time equivalent employees in 2013, of which 14 were associated with the Ohio Commerce acquisition.  The overall increase in salary and employee benefit costs was tempered by the lack of pension settlement charges in the fourth quarter of 2013.  In comparison, Peoples incurred settlement charges of $482,000 a year ago and $264,000 in the linked quarter.   For the year, total non-interest expenses were up 8% in 2013, due mostly to the investments made to grow revenue, such as the new sales talent and the branch remodeling project.

"We achieved 4% total revenue growth in 2013 despite a challenging rate environment and the expected decline in mortgage originations," added Sloane.  "While acquisitions were a driver of revenue growth, our fee revenues benefited from a continued increase in new sales production from our associates working together to build success for our clients.  We also effectively controlled operating expenses in line with targeted levels for the year.  Unfortunately, we came up short on our goal of positive operating leverage in 2013.  Additionally, the efficiency ratio was outside our target range due primarily to acquisition costs incurred in 2013."

At December 31, 2013, period-end loan balances were $1.20 billion, $139.1 million higher than the prior quarter-end and up 21% from the prior year-end.  The loans added in the Ohio Commerce acquisition were a major driver of the linked quarter increase and accounted for 46% of the growth for the year.  Even without the acquired balances, Peoples successfully grew period-end loan balances at a 16% annualized rate during the fourth quarter, resulting in a 12% increase for the year.   Commercial lending activity continued to build in the fourth quarter, while non-mortgage consumer lending activity remained strong.  As a result, Peoples experienced double-digit organic growth in 2013.  Commercial loan balances had a 23% annualized increase for the quarter and 8% growth for the year.  Non-mortgage consumer balances grew $7.2 million, or 22% on an annualized basis, in the fourth quarter, and $33.8 million, or 33%, for the year.  The strong organic growth during much of 2013 resulted in higher average balances.  Compared to 2012, average loan balances were up 15% for the quarter and 8% for the year.

"We exceeded our goal of 8% to 10% loan growth for 2013 despite the slow start to the year," said Sulerzyski.  "More importantly, we added some diversity to the portfolio by generating 56% of the organic growth from within our consumer portfolio.  At the same time, we improved asset quality and restored key metrics to the levels we typically experienced before the Great Recession.  Our outlook for 2014 is encouraging considering we will see a double-digit increase in the full year average loan balances based on year-end 2013 loan balances."

Total nonperforming assets decreased 14% during the fourth quarter of 2013 and 38% for the year, due to a reduction in nonaccrual loans.  As a result, nonperforming assets were 0.81% of total loans plus other real estate owned ("OREO") at December 31, 2013, compared to 1.06% at September 30, 2013 and 1.58% at year-end 2012.   Total criticized loans, which are those classified as watch, substandard or doubtful, also maintained a declining trend during 2013 due to paydowns on nonaccrual commercial loans.  For the quarter, Peoples reduced criticized loans by 2%, while criticized loan balances were 34% lower at December 31, 2013 than at year-end 2012.

In 2013, gross recoveries exceeded gross charge-offs by $3.7 million, of which $1.1 million occurred in the fourth quarter.  The combination of net recoveries and continued improvement in asset quality in 2013 drove a reduction in Peoples' allowance for loan losses, which was tempered by the impact of organic loan growth.  As a result, the allowance for loan losses was $17.1 million, or 1.43% of total loans, at December 31, 2013.  In comparison, the allowance for loan losses was 1.60% and 1.81% of total loans, at September 30, 2013 and year-end 2012, respectively.  In contrast, Peoples' allowance for loan losses as a percentage of nonperforming loans increased during 2013 to 194.1% at December 31, 2013, from 151.8% at the prior quarter-end and 119.8% at December 31, 2012.

At December 31, 2013, Peoples' retail deposit balances were up $142.9 million from the prior quarter-end.  Most of this increase was due to the Ohio Commerce acquisition, which added $80.0 million of interest-bearing deposits and $30.9 million of non-interest-bearing balances.  Of the acquired interest-bearing balances, money market accounts and certificates of deposit ("CDs") comprised $37.8 million and $32.0 million, respectively.  In 2013, Peoples experienced a modest decline in retail balances excluding the deposits acquired from Ohio Commerce, as planned reductions in high-cost CDs exceeded the growth that occurred in low-cost core deposits, such as savings and checking accounts.  As a result, total wholesale funding increased by 23% in 2013, due largely to Peoples utilizing short-term borrowings to fund a portion of the loan growth.

At December 31, 2013, Peoples' total risk-based capital ratio was 13.78%, compared to 15.46% at September 30, 2013 and 15.43% at year-end 2012, with 6% required to be considered well capitalized.  The key driver of the linked quarter decline was the impact of assets acquired in the Ohio Commerce acquisition, which also caused a reduction in the ratio of tangible equity to tangible assets.  At December 31, 2013, this ratio was 7.26% versus 8.16% at the prior quarter-end and 8.28% at December 31, 2012.  A significant contributing factor to the lower tangible equity ratio was the change in market value of Peoples' available-for-sale investment securities during 2013.  

"Overall, 2013 was a very good year with successes along several fronts," summarized Sulerzyski.  "Our outlook for 2014 is very positive given the growing core earnings stream, strong capital position, and improving economic conditions.  We remain committed to improving operating efficiency, generating superior returns for our shareholders, and building the long-term value of the company.  Achieving these goals in 2014 will require the continued disciplined execution of our strategies and partnership with our clients and communities."   

Peoples Bancorp Inc. is a diversified financial services holding company with $2.1 billion in total assets, 50 locations and 47 ATMs in Ohio, West Virginia and Kentucky.  Peoples makes available a complete line of banking, investment, insurance and trust solutions through its subsidiaries - Peoples Bank, National Association and Peoples Insurance Agency, LLC.  Peoples' common shares are traded on the NASDAQ Global Select Market® under the symbol "PEBO", and Peoples is a member of the Russell 3000 index of U.S. publicly-traded companies.  Learn more about Peoples at www.peoplesbancorp.com

Conference Call to Discuss Earnings:  Peoples will conduct a facilitated conference call to discuss fourth quarter and full year 2013 results of operations today at 11:00 a.m., Eastern Standard Time, with members of Peoples' executive management participating.  Analysts, media and individual investors are invited to participate in the conference call by calling (800) 860-2442.  A simultaneous webcast of the conference call audio will be available online via the "Investor Relations" section of Peoples' website, www.peoplesbancorp.com.  Participants are encouraged to call or sign in at least 15 minutes prior to the scheduled conference call time to ensure participation and, if required, to download and install the necessary software.  A replay of the call will be available on Peoples' website in the "Investor Relations" section for one year.

Use of Non-GAAP Financial Measures  This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP").  Management uses these "non-GAAP" measures in its analysis of Peoples' performance and the efficiency of its operations. Management believes that these non-GAAP measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods and peers. These disclosures should not be viewed as substitutes for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Below is a listing of the non-GAAP measures used in this news release:

    • Tangible assets and tangible equity measures are non-GAAP since they exclude the impact of intangible assets acquired through acquisitions on both total stockholders' equity and total assets and the related amortization from earnings.  
    • Pre-provision net revenue is defined as net interest income plus non-interest income minus non-interest expense.  This measure is non-GAAP since it excludes (recovery of) provision for loan losses and all gains and/or losses included in earnings.

A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included at the end of this news release under the caption of "Non-GAAP Financial Measures".

Safe Harbor Statement:  Certain statements made in this news release regarding Peoples' financial condition, results of operations, plans, objectives, future performance and business, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are identified by the fact they are not historical facts and include words such as "anticipate", "could", "may", "feel", "expect", "believe", "plan", and similar expressions.

These forward-looking statements reflect management's current expectations based on all information available to management and its knowledge of Peoples' business and operations.  Additionally, Peoples' financial condition, results of operations, plans, objectives, future performance and business are subject to risks and uncertainties that may cause actual results to differ materially.  These factors include, but are not limited to: (1) the success, impact, and timing of the implementation of Peoples' business strategies, including the successful integration of the recently completed acquisitions, the expansion of consumer lending activity and rebranding efforts; (2) Peoples' ability to complete and, if completed, successfully integrate future acquisitions, including the pending merger of Midwest Bancshares, Inc. with and into Peoples; (3) competitive pressures among financial institutions or from non-financial institutions may increase significantly, including product and pricing pressures and Peoples' ability to attract, develop and retain qualified professionals; (4) changes in the interest rate environment due to economic conditions and/or the fiscal policies of the U.S. government and Federal Reserve Board, which may adversely impact interest margins; (5) changes in prepayment speeds, loan originations and charge-offs, which may be less favorable than expected and adversely impact the amount of interest income generated; (6) adverse changes in the economic conditions and/or activities, including impacts from the implementation of the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012, as well as continuing economic uncertainty in the U.S., the European Union, and other areas, which could decrease sales volumes and increase loan delinquencies and defaults; (7) legislative or regulatory changes or actions, including in particular the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the regulations promulgated and to be promulgated thereunder by the Office of the Comptroller of the Currency, the Federal Reserve Board and the Consumer Finance Protection Bureau, which may subject Peoples, its subsidiaries or one or more acquired companies to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses; (8) deterioration in the credit quality of Peoples' loan portfolio, which may adversely impact the provision for loan losses; (9) changes in accounting standards, policies, estimates or procedures which may adversely affect Peoples' reported financial condition or results of operations; (10) adverse changes in the conditions and trends in the financial markets, including political developments, which may adversely affect the fair value of securities within Peoples' investment portfolio and interest rate sensitivity of Peoples' consolidated balance sheet; (11) changes in stock market prices, which may adversely impact income from Peoples' brokerage, asset and wealth management businesses; (12) Peoples' ability to receive dividends from its subsidiaries; (13) Peoples' ability to maintain required capital levels and adequate sources of funding and liquidity; (14) the impact of larger or similar sized financial institutions encountering problems, which may adversely affect the banking industry and/or Peoples' business generation and retention, funding and liquidity; (15) the costs and effects of regulatory and legal developments, including the outcome of potential regulatory or other governmental inquiries and legal proceedings and results of regulatory examinations; (16) Peoples' ability to secure confidential information through the use of computer systems and telecommunications networks, including those of our third-party vendors and other service providers, may prove inadequate, which could adversely affect customer confidence in Peoples and/or result in Peoples incurring a financial loss; (17) the overall adequacy of our risk management program; and (18) other risk factors relating to the banking industry or Peoples as detailed from time to time in Peoples' reports filed with the Securities and Exchange Commission ("SEC"), including those risk factors included in the disclosures under the heading "ITEM 1A. RISK FACTORS" of Peoples' Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

Peoples encourages readers of this news release to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance.  Peoples undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events, except as required by applicable legal requirements.  Copies of documents filed with the SEC are available free of charge at the SEC's website at http://www.sec.gov and/or from Peoples' website.

As required by U.S. GAAP, Peoples is required to evaluate the impact of subsequent events through the issuance date of its December 31, 2013 consolidated financial statements as part of its Annual Report on Form 10-K to be filed with the SEC.  Accordingly, subsequent events could occur that may cause Peoples to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.

PER COMMON SHARE DATA AND SELECTED RATIOS

 

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

2013

2013

2012

2013

2012

PER COMMON SHARE:

Earnings per share:

   Basic

$

0.48

$

0.24

$

0.36

$

1.65

$

1.92

   Diluted

0.47

0.23

0.36

1.63

1.92

Cash dividends declared per share

0.14

0.14

0.12

0.54

0.45

Book value per share

20.89

20.97

21.02

20.89

21.02

Tangible book value per share (a)

13.57

14.23

14.52

13.57

14.52

Closing stock price at end of period

$

22.51

$

20.88

$

20.43

$

22.51

$

20.43

SELECTED RATIOS:

Return on average equity (b)

9.09

%

4.61

%

6.99

%

7.92

%

9.52

%

Return on average assets  (b)

1.01

%

0.53

%

0.82

%

0.91

%

1.11

%

Efficiency ratio (c)

71.80

%

72.47

%

72.99

%

71.90

%

69.55

%

Pre-provision net revenue to average assets (b)(d)

1.29

%

1.26

%

1.23

%

1.26

%

1.41

%

Net interest margin (b)(e)

3.46

%

3.26

%

3.42

%

3.25

%

3.39

%

Dividend payout ratio (f)

29.61

%

60.11

%

33.17

%

33.20

%

23.58

%

(a)

This amount represents a non-GAAP financial measure since it excludes the balance sheet impact of intangible assets acquired through acquisitions on stockholders' equity.  Additional information regarding the calculation of this ratio is included at the end of this news release.

(b)

Ratios are presented on an annualized basis.

(c)

Non-interest expense (less intangible amortization) as a percentage of fully tax-equivalent net interest income plus non-interest income (less securities and asset disposal gains/losses).

(d)

This ratio represents a non-GAAP financial measure since it excludes the recovery of or provision for loan losses and net gains or losses on security transactions, debt extinguishment, loans held-for-sale and other real estate owned, and other assets.  This measure is a key metric used by federal bank regulatory agencies in their evaluation of capital adequacy for financial institutions.  Additional information regarding the calculation of this ratio is included at the end of this news release.

(e)

Information presented on a fully tax-equivalent basis.

(f)

Dividends declared on common shares as a percentage of net income.

 

CONSOLIDATED STATEMENTS OF INCOME

 

Three Months Ended

 

Year Ended

December 31,

September 30,

December 31,

December 31,

(in $000's)

2013

2013

2012

2013

2012

Interest income

$

18,385

$

16,509

$

17,575

$

67,071

$

69,470

Interest expense

2,806

2,833

3,465

11,686

14,995

Net interest income

15,579

13,676

14,110

55,385

54,475

Recovery of loan losses

(964)

(919)

(503)

(4,410)

(4,716)

Net interest income after recovery of loan losses

16,543

14,595

14,613

59,795

59,191

Net gain (loss) on securities transactions

46

(1)

273

489

3,548

Loss on debt extinguishment

(1,033)

(4,144)

Net gain on loans held-for-sale and other real

  estate owned

10

58

86

66

Net loss on other assets

(125)

(29)

(85)

(241)

(248)

Non-interest income:

Insurance income

2,842

3,261

2,088

12,201

9,844

Deposit account service charges

2,285

2,377

2,237

8,764

8,965

Trust and investment income

1,897

1,751

1,619

7,122

6,129

Electronic banking income

1,664

1,547

1,519

6,191

5,955

Mortgage banking income

316

360

1,008

1,759

2,877

Other non-interest income

342

290

348

1,183

1,201

   Total non-interest income

9,346

9,586

8,819

37,220

34,971

Non-interest expense:

Salaries and employee benefits costs

9,463

9,358

8,715

36,472

33,426

Net occupancy and equipment

1,719

1,637

1,736

6,840

6,094

Professional fees

1,123

1,188

1,181

4,207

4,370

Electronic banking expense

941

920

891

3,586

3,342

Marketing expense

742

547

1,192

2,301

2,682

Data processing and software

533

530

537

2,012

1,979

Franchise taxes

405

412

245

1,643

1,486

Communication expense

333

342

355

1,339

1,285

FDIC insurance

282

224

213

1,036

1,002

Amortization of intangible assets

274

180

159

807

509

Foreclosed real estate and other loan expenses

197

243

262

880

1,001

Other non-interest expense

2,383

1,682

1,620

7,142

6,298

   Total non-interest expense

18,395

17,263

17,106

68,265

63,474

   Income before income taxes

7,415

6,898

5,539

29,084

29,910

Income tax expense

2,301

4,381

1,665

11,510

9,525

   Net income

$

5,114

$

2,517

$

3,874

$

17,574

$

20,385

PER COMMON SHARE DATA:

Earnings per share – Basic

$

0.48

$

0.24

$

0.36

$

1.65

$

1.92

Earnings per share – Diluted

$

0.47

$

0.23

$

0.36

$

1.63

$

1.92

Cash dividends declared per share

$

0.14

$

0.14

$

0.12

$

0.54

$

0.45

Weighted-average shares outstanding – Basic

10,602,266

10,589,126

10,542,810

10,581,222

10,527,885

Weighted-average shares outstanding – Diluted

10,718,465

10,692,555

10,555,260

10,679,417

10,528,286

Actual shares outstanding (end of period)

10,605,782

10,596,797

10,547,960

10,605,782

10,547,960

 

CONSOLIDATED BALANCE SHEETS

December 31,

(in $000's)

2013

2012

Assets

Cash and cash equivalents:

   Cash and due from banks

$

36,016

$

47,256

   Interest-bearing deposits in other banks

17,804

15,286

Total cash and cash equivalents

53,820

62,542

Available-for-sale investment securities, at fair value (amortized cost of

  $621,126 at December 31, 2013 and $628,584 at December 31, 2012)

606,108

639,185

Held-to-maturity investment securities, at amortized cost (fair value of

  $46,094 at December 31, 2013 and $47,124 at December 31, 2012)

49,222

45,275

Other investment securities, at cost

25,196

24,625

   Total investment securities

680,526

709,085

Loans, net of deferred fees and costs

1,196,234

985,172

Allowance for loan losses

(17,065)

(17,811)

   Net loans

1,179,169

967,361

Loans held-for-sale

1,688

6,546

Bank premises and equipment, net of accumulated depreciation

29,809

27,013

Bank owned life insurance

1,880

51,229

Goodwill

70,520

64,881

Other intangible assets

7,083

3,644

Other assets

34,613

25,749

   Total assets

$

2,059,108

$

1,918,050

Liabilities

Deposits:

Non-interest-bearing deposits

$

409,891

$

317,071

Interest-bearing deposits

1,170,867

1,175,232

   Total deposits

1,580,758

1,492,303

Short-term borrowings

113,590

47,769

Long-term borrowings

121,826

128,823

Accrued expenses and other liabilities

21,381

27,427

   Total liabilities

1,837,555

1,696,322

Stockholders' Equity

Preferred stock, no par value (50,000 shares authorized, no shares issued

  at December 31, 2013 and December 31, 2012)

Common stock, no par value (24,000,000 shares authorized, 11,206,576 shares

  issued at December 31, 2013 and 11,155,648 shares issued at

  December 31, 2012), including shares in treasury

168,869

167,039

Retained earnings

80,898

69,158

Accumulated comprehensive (loss) income, net of deferred income taxes

(13,244)

654

Treasury stock, at cost (600,794 shares at December 31, 2013 and

  607,688 shares at December 31, 2012)

(14,970)

(15,123)

   Total stockholders' equity

221,553

221,728

   Total liabilities and stockholders' equity

$

2,059,108

$

1,918,050

 

SELECTED FINANCIAL INFORMATION

 

December 31,

September 30,

June 30,

March 31,

December 31,

(in $000's, end of period)

2013

2013

2013

2013

2012

Loan Portfolio

Commercial real estate, construction

$

47,539

$

39,969

$

30,770

$

24,108

$

34,265

Commercial real estate, other

450,170

374,953

389,281

381,331

378,073

Commercial and industrial

232,754

192,238

184,981

174,982

180,131

Residential real estate

268,617

262,602

252,282

237,193

233,841

Home equity lines of credit

60,076

55,341

52,212

50,555

51,053

Consumer

135,018

127,785

119,029

108,353

101,246

Deposit account overdrafts

2,060

4,277

1,674

3,996

6,563

   Total loans

$

1,196,234

$

1,057,165

$

1,030,229

$

980,518

$

985,172

Deposit Balances

Interest-bearing deposits:

   Retail certificates of deposit

$

363,226

$

334,910

$

349,511

$

353,894

$

392,313

   Money market deposit accounts

275,801

224,400

238,554

288,538

288,404

   Governmental deposit accounts

132,379

151,910

146,817

167,441

130,630

   Savings accounts

215,802

196,293

199,503

200,549

183,499

   Interest-bearing demand accounts

134,618

123,966

125,875

124,969

124,787

      Total retail interest-bearing deposits

1,121,826

1,031,479

1,060,260

1,135,391

1,119,633

   Brokered certificates of deposits

49,041

49,620

50,393

52,648

55,599

      Total interest-bearing deposits

1,170,867

1,081,099

1,110,653

1,188,039

1,175,232

Non-interest-bearing deposits

409,891

356,767

325,125

340,887

317,071

      Total deposits

$

1,580,758

$

1,437,866

$

1,435,778

$

1,528,926

$

1,492,303

Asset Quality

Nonperforming assets:

   Loans 90+ days past due and accruing

$

910

$

2,597

$

1,520

$

1,215

$

1,235

   Nonaccrual loans

7,881

8,537

10,607

11,803

13,638

      Total nonperforming loans

8,791

11,134

12,127

13,018

14,873

   Other real estate owned

893

120

120

815

836

Total nonperforming assets

$

9,684

$

11,254

$

12,247

$

13,833

$

15,709

Allowance for loan losses as a percent of

  nonperforming loans

194.13

%

151.79

%

141.11

%

133.96

%

119.75

%

Nonperforming loans as a percent of total loans

0.73

%

1.05

%

1.17

%

1.32

%

1.50

%

Nonperforming assets as a percent of total assets

0.47

%

0.59

%

0.64

%

0.71

%

0.82

%

Nonperforming assets as a percent of total loans

  and other real estate owned

0.81

%

1.06

%

1.18

%

1.41

%

1.58

%

Allowance for loan losses as a percent of total loans

1.43

%

1.60

%

1.66

%

1.78

%

1.81

%

Capital Information(a)

Tier 1 common ratio

12.42

%

14.09

%

14.17

%

14.69

%

14.06

%

Tier 1 risk-based capital ratio

12.42

%

14.09

%

14.17

%

14.69

%

14.06

%

Total risk-based capital ratio (Tier 1 and Tier 2)

13.78

%

15.46

%

15.54

%

16.05

%

15.43

%

Leverage ratio

8.52

%

9.14

%

9.04

%

8.90

%

8.83

%

Tier 1 common capital

$

166,217

$

168,254

$

166,576

$

164,329

$

160,604

Tier 1 capital

166,217

168,254

166,576

164,329

160,604

Total capital (Tier 1 and Tier 2)

184,457

184,550

182,706

179,569

176,224

Total risk-weighted assets

$

1,338,811

$

1,194,016

$

1,175,647

$

1,118,644

$

1,141,938

Tangible equity to tangible assets (b)

7.26

%

8.16

%

8.07

%

8.35

%

8.28

%

(a)

December 31, 2013 data based on preliminary analysis and subject to revision.

(b)

These ratios represent non-GAAP financial measures since they exclude the balance sheet impact of intangible assets acquired through acquisitions on both total stockholders' equity and total assets.  Additional information regarding the calculation of these ratios is included at the end of this news release.

 

PROVISION FOR LOAN LOSSES INFORMATION

 

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

(in $000's)

2013

2013

2012

2013

2012

(Recovery of) Provision for Loan Losses

Provision for checking account overdrafts

$

102

$

131

$

82

$

356

$

294

Recovery of other loan losses

(1,066)

(1,050)

(585)

(4,766)

(5,010)

   Total recovery of loan losses

$

(964)

$

(919)

$

(503)

$

(4,410)

$

(4,716)

Net (Recoveries) Charge-Offs

Gross charge-offs

$

871

$

1,013

$

2,570

$

3,491

$

7,511

Recoveries

1,998

1,721

2,277

7,155

6,321

   Net (recoveries) charge-offs

$

(1,127)

$

(708)

$

293

$

(3,664)

$

1,190

Net (Recoveries) Charge-Offs by Type

Commercial real estate, construction

$

$

$

$

$

Commercial real estate, other

(1,455)

(1,308)

173

(4,786)

747

Commercial and industrial

21

(7)

(66)

4

(324)

Residential real estate

(55)

179

36

85

318

Home equity lines of credit

(6)

153

(9)

136

62

Consumer

248

176

42

532

11

Deposit account overdrafts

120

99

117

365

376

   Total net (recoveries) charge-offs

$

(1,127)

$

(708)

$

293

$

(3,664)

$

1,190

Net (recoveries) charge-offs as a percent

  of loans (annualized)

(0.39)%

(0.26)%

0.12

%

(0.35)%

0.12

%

SUPPLEMENTAL INFORMATION

 

December 31,

September 30,

June 30,

March 31,

December 31,

(in $000's, end of period)

2013

2013

2013

2013

2012

Trust assets under management

$

1,000,171

$

994,683

$

939,292

$

927,675

$

888,134

Brokerage assets under management

474,384

449,196

433,651

433,217

404,320

Mortgage loans serviced for others

$

341,183

$

339,557

$

338,854

$

343,769

$

330,721

Employees (full-time equivalent)

546

539

545

517

494

CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME

 

Three Months Ended

December 31, 2013

September 30, 2013

December 31, 2012

(in $000's)

Balance

Income/

Expense

Yield/ Cost

Balance

Income/

Expense

Yield/ Cost

Balance

Income/

Expense

Yield/ Cost

Assets

Short-term investments

$

8,652

$

30

1.38

%

$

5,914

$

21

1.41

%

$

13,014

$

7

0.21

%

Other long-term investments

2,948

2

0.27

%

%

%

Investment securities (a)(b)

691,365

5,040

2.92

%

684,268

4,795

2.80

%

689,895

5,289

3.07

%

Gross loans (a)

1,147,285

13,619

4.73

%

1,041,901

12,000

4.59

%

995,766

12,568

5.03

%

Allowance for loan losses

(17,439)

(17,670)

(19,865)

Total earning assets

1,832,811

18,691

4.07

%

1,714,413

16,816

3.91

%

1,678,810

17,864

4.24

%

Intangible assets

77,025

71,517

68,422

Other assets

102,016

105,802

140,092

Total assets

$

2,011,852

$

1,891,732

$

1,887,324

Liabilities and Equity

Interest-bearing deposits:

Savings accounts

$

211,116

$

29

0.05

%

$

199,592

$

27

0.05

%

$

178,200

$

23

0.05

%

Government deposit accounts

141,181

131

0.37

%

153,085

142

0.37

%

145,240

201

0.55

%

Interest-bearing demand accounts

128,877

26

0.08

%

124,093

25

0.08

%

118,039

23

0.08

%

Money market deposit accounts

256,398

104

0.16

%

226,453

86

0.15

%

265,181

91

0.14

%

Brokered certificates of deposits

49,320

462

3.72

%

49,810

464

3.70

%

55,387

491

3.53

%

Retail certificates of deposit

360,733

890

0.98

%

343,549

930

1.07

%

404,356

1,223

1.20

%

Total interest-bearing deposits

1,147,625

1,642

0.57

%

1,096,582

1,674

0.61

%

1,166,403

2,052

0.70

%

Short-term borrowings

120,135

49

0.16

%

101,099

29

0.11

%

45,200

17

0.15

%

Long-term borrowings

123,713

1,115

3.58

%

125,398

1,131

3.58

%

128,822

1,396

4.16

%

Total borrowed funds

243,848

1,164

1.89

%

226,497

1,160

2.03

%

174,022

1,413

3.20

%

Total interest-bearing liabilities

1,391,473

2,806

0.80

%

1,323,079

2,834

0.85

%

1,340,425

3,465

1.03

%

Non-interest-bearing deposits

370,962

325,129

298,210

Other liabilities

26,108

26,795

28,120

Total liabilities

1,788,543

1,675,003

1,666,755

Preferred equity

Common equity

223,309

216,729

220,569

Stockholders' equity

223,309

216,729

220,569

Total liabilities and equity

$

2,011,852

$

1,891,732

$

1,887,324

Net interest income/spread (a)

$

15,885

3.27

%

$

13,982

3.06

%

$

14,399

3.21

%

Net interest margin (a)

3.46

%

3.26

%

3.42

%

(a) Information presented on a fully tax-equivalent basis. 

(b) Average balances are based on carrying value. 

 

Year Ended

December 31, 2013

December 31, 2012

(in $000's)

Balance

Income/

Expense

Yield/ Cost

Balance

Income/

Expense

Yield/ Cost

Assets

Short-term investments

$

16,154

$

95

0.59

%

$

9,705

$

20

0.21

%

Other long-term investments

743

2

0.27

%

%

Investment securities (a)(b)

697,371

19,487

2.79

%

685,439

22,167

3.23

%

Gross loans (a)

1,046,371

48,688

4.66

%

967,166

48,370

5.00

%

Allowance for loan losses

(17,935)

(21,473)

Total earning assets

1,742,704

68,272

3.92

%

1,640,837

70,557

4.30

%

Intangible assets

72,420

65,881

Other assets

117,243

134,571

Total assets

$

1,932,367

$

1,841,289

Liabilities and Equity

Interest-bearing deposits:

Savings accounts

$

200,190

$

107

0.05

%

$

162,055

$

90

0.06

%

Government deposit accounts

146,955

642

0.44

%

151,877

937

0.62

%

Interest-bearing demand accounts

125,984

101

0.08

%

113,022

117

0.10

%

Money market deposit accounts

259,226

379

0.15

%

255,345

423

0.17

%

Brokered certificates of deposits

51,287

1,871

3.65

%

56,451

1,996

3.54

%

Retail certificates of deposit

358,918

3,952

1.10

%

404,872

5,496

1.36

%

Total interest-bearing deposits

1,142,560

7,052

0.62

%

1,143,622

9,059

0.79

%

Short-term borrowings

81,294

114

0.14

%

50,641

74

0.14

%

Long-term borrowings

126,100

4,520

3.57

%

134,978

5,862

4.27

%

Total borrowed funds

207,394

4,634

2.23

%

185,619

5,936

3.17

%

Total interest-bearing liabilities

1,349,954

11,686

0.86

%

1,329,241

14,995

1.13

%

Non-interest-bearing deposits

335,637

273,893

Other liabilities

24,865

24,037

Total liabilities

1,710,456

1,627,171

Preferred equity

Common equity

221,911

214,118

Stockholders' equity

221,911

214,118

Total liabilities and equity

$

1,932,367

$

1,841,289

Net interest income/spread (a)

$

56,586

3.06

%

$

55,562

3.17

%

Net interest margin (a)

3.25

%

3.39

%

(a) Information presented on a fully tax-equivalent basis.

(b) Average balances are based on carrying value.

 

NON-GAAP FINANCIAL MEASURES

The following non-GAAP financial measures used by Peoples provide information useful to investors in understanding Peoples' operating performance and trends, and facilitate comparisons with the performance of Peoples' peers. The following tables summarize the non-GAAP financial measures derived from amounts reported in Peoples' consolidated financial statements:

At or For the Three Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

(in $000's)

2013

2013

2013

2013

2012

Tangible Equity:

Total stockholders' equity, as reported

$

221,553

$

222,247

$

219,147

$

226,079

$

221,728

Less: goodwill and other intangible assets

77,603

71,417

71,608

69,977

68,525

Tangible equity

$

143,950

$

150,830

$

147,539

$

156,102

$

153,203

Tangible Assets:

Total assets, as reported

$

2,059,108

$

1,919,705

$

1,899,841

$

1,938,722

$

1,918,050

Less: goodwill and other intangible assets

77,603

71,417

71,608

69,977

68,525

Tangible assets

$

1,981,505

$

1,848,288

$

1,828,233

$

1,868,745

$

1,849,525

Tangible Book Value per Common Share:

Tangible equity

$

143,950

$

150,830

$

147,539

$

156,102

$

153,203

Common shares outstanding

10,605,782

10,596,797

10,583,161

10,568,147

10,547,960

Tangible book value per common share

$

13.57

$

14.23

$

13.94

$

14.77

$

14.52

Tangible Equity to Tangible Assets Ratio:

Tangible equity

$

143,950

$

150,830

$

147,539

$

156,102

$

153,203

Tangible assets

$

1,981,505

$

1,848,288

$

1,828,233

$

1,868,745

$

1,849,525

Tangible equity to tangible assets

7.26

%

8.16

%

8.07

%

8.35

%

8.28

%

 

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

(in $000's)

2013

2013

2012

2013

2012

Pre-Provision Net Revenue:

Income before income taxes

$

7,415

$

6,898

$

5,539

$

29,084

$

29,910

Add: net loss on debt extinguishment

1,033

4,144

Add: net loss on securities transactions

1

Add: net loss on other assets

125

29

85

241

248

Less: recovery of loan losses

964

919

503

4,410

4,716

Less: net gain on loans held-for-sale and OREO

10

58

86

66

Less: net gain on securities transactions

46

273

489

3,548

Pre-provision net revenue

$

6,530

$

5,999

$

5,823

$

24,340

$

25,972

Pre-provision net revenue

$

6,530

$

5,999

$

5,823

$

24,340

$

25,972

Total average assets

2,011,852

1,891,732

1,887,324

1,932,367

1,841,289

Pre-provision net revenue to total average assets (annualized)

1.29

%

1.26

%

1.23

%

1.26

%

1.41

%

 

 

 

 

 

SOURCE Peoples Bancorp Inc.



RELATED LINKS

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