Peoples Bancorp Inc. Announces Third Quarter Results

Oct 26, 2010, 08:19 ET from Peoples Bancorp Inc.

MARIETTA, Ohio, Oct. 26 /PRNewswire-FirstCall/ -- Peoples Bancorp Inc. ("Peoples") (Nasdaq: PEBO) today announced results for the quarter ended September 30, 2010.  Peoples incurred a net loss available to common shareholders of $101,000, or $0.01 per diluted common share, in the third quarter of 2010.  A higher provision for loan losses than in recent quarters, along with write-downs on other real estate owned ("OREO") and loans held-for-sale, resulted in the loss for the third quarter.  By comparison, Peoples incurred a net loss available to common shareholders of $4.6 million, or $0.44 per diluted common share, for the third quarter of 2009 and reported net income available to common shareholders of $2.8 million, or $0.27 per diluted common share, for the second quarter of 2010 (or "linked quarter").  On a year-to-date basis, net income available to common shareholders was $3.5 million through September 30, 2010, an increase over the $1.6 million reported for the same period a year ago, representing diluted earnings per common share of $0.33 and $0.16, respectively.

Summary points regarding third quarter results:

  • Third quarter 2010 net loan charge-offs were $8.0 million, or 3.11% of average loans on an annualized basis, comprised mostly of write-downs on commercial real estate loans driven by the weak economy and declines in collateral values.  Third quarter 2010 provision for loan losses was $8.0 million.  At September 30, 2010, the allowance for loan losses stood at $27.2 million, or 73% of nonperforming loans and 2.68% of total loans.  
  • During the third quarter, total nonperforming assets decreased 4% to $41.6 million.  A single $1.6 million commercial real estate loan relationship was returned to accruing status, while commercial loans to eight unrelated borrowers were placed on nonaccrual status.  Charge-offs and paydowns on loans, coupled with $0.4 million in write-downs on commercial OREO due to declines in property values during the quarter, contributed to the overall reduction in total nonperforming assets. Nonperforming assets were 2.21% of total assets at September 30, 2010.
  • At September 30, 2010, loans held-for-sale included $1.5 million of commercial loans secured by real estate located outside People's primary market area.  These were written down to their estimated fair value, resulting in a $0.6 million loss recognized for the third quarter of 2010.
  • During the third quarter of 2010, Peoples sold $87 million of investment securities, at a $3.8 million net gain, and used the sale proceeds to prepay $60 million of high-cost wholesale borrowings, which resulted in prepayment charges totaling $3.6 million.  The remaining sale proceeds were reinvested into U.S. government agency bonds.  These transactions were part of Peoples' ongoing management of the investment portfolio and overall balance sheet risk profile.  
  • Operating efficiency improved in the third quarter of 2010, as total revenue held consistent with the linked quarter, while total non-interest expense declined 2% or $351,000.  As a result, Peoples' efficiency ratio was 58.8% for the third quarter versus 60.3% last quarter.  On a year-to-date basis, total revenue and total non-interest expense were both down $1.3 million or roughly 2% in 2010, producing an efficiency ratio of 59.7% versus 60.0% last year.
  • At September 30, 2010, total loan balances were down slightly from the prior quarter-end, due mostly to third quarter 2010 charge-offs.  Commercial and industrial loan balances grew during the quarter but the impact was offset by a continued reduction in commercial real estate loan exposure.  Through nine months of 2010, total loan balances were down $41 million, due mostly to reductions in commercial real estate loans.
  • Retail deposit balances decreased $6 million during the third quarter of 2010, driven by planned reductions in higher-cost, non-core certificates of deposits in order to control overall funding costs. Non-interest-bearing deposits grew $6 million during the third quarter.  Compared to year-end 2009, total retail deposit balances were essentially unchanged at quarter-end, with an increase in non-interest-bearing deposits nearly equal to the reduction in interest-bearing retail deposits.  
  • Peoples' capital levels remained strong and substantially higher than the minimum regulatory amount needed to be considered "well capitalized".  Total Risk-Based Capital ratio was 17.55% at quarter-end, while tangible common equity was 7.16% of tangible assets.

"We are not pleased to report a net loss for the third quarter," said David L. Mead, President and Chief Executive Officer. "Higher credit-related losses than experienced in the prior two quarters of 2010 overshadowed positive results in key areas of our business.  Unfortunately, the protracted weak economy in our market areas and stalled recovery are making it increasingly more difficult for commercial borrowers, who previously were able to withstand the severe economic downturn, to continue fulfilling their financial obligations. Given these ongoing adverse conditions, we have intensified our proactive efforts to identify weakening credits and assess their collectability, while at the same time seek resolution of previously identified problem assets."

Net interest income was $15.3 million for the third quarter of 2010, a slight linked quarter increase, while net interest margin improved 9 basis points to 3.58%.  Net interest margin expansion was driven primarily by the balance sheet deleveraging that occurred during the third quarter of 2010.  Year-over-year, net interest income was down slightly for both the three and nine months ended September 30, 2010, while net interest margin expanded moderately for both periods. Interest income was impacted by declining loan balances and lower reinvestment rates in the current interest rate environment.  However, that negative impact on net interest income was mostly offset by management's successful efforts to reduce funding costs by repaying higher-cost borrowings and growing low-cost deposits.        

During the third quarter of 2010, Peoples sold investment securities with an aggregate amortized cost of $86.6 million at a $3.8 million net gain.  The securities sold consisted mostly of U.S. agency mortgage-backed securities and U.S. government-backed student loan pools and were selected based upon their current low yields and interest rate risk characteristics.  The proceeds from the investment sales were used to prepay $60.0 million of wholesale repurchase agreements, resulting in early repayment charges totaling $3.6 million.  The repurchase agreements had a weighted-average cost of 4.53% and originally were scheduled to mature over the next two years.  Since year-end 2009, the size of the investment portfolio has decreased by $113.8 million and borrowed funds have been reduced by $109.2 million.  

"We maintained a consistent level of net interest income and improved net interest margin in the third quarter due largely to actions taken in recent quarters to reduce interest rate risk exposures," said Edward G. Sloane, Chief Financial Officer and Treasurer.  "One such action was the balance sheet deleveraging undertaken in the third quarter, which was earnings neutral and allowed us to enhance capital, liquidity and interest rate risk positions.  However, we expect fourth quarter net interest income and margin to be challenged by the recent flattening of the yield curve, which has intensified the downward pressure on asset yields."

Third quarter 2010 non-interest income totaled $7.7 million, which was consistent with both the linked quarter and prior year third quarter amounts.  Both electronic banking and mortgage banking income experienced strong growth in the third quarter over the prior year, but this growth was tempered by lower deposit account service charges – primarily overdraft fees.  Although new regulations governing overdraft fees became effective during the third quarter, the impact on third quarter fees was minimal due to the timing of the changes.  Consequently, much of the decline in deposit account service charges from the prior year was attributable to lower volumes of overdrafts resulting from changes in consumer behavior.  On a year-to-date basis, total non-interest income was $23.5 million through September 30, 2010, down 3% from the same period in 2009.  While electronic banking income and trust and investment revenue were up 18% and 15%, respectively, these increases were more than offset by declines in other non-interest income categories.  

Total non-interest expense was $14.0 million for the third quarter of 2010, versus $14.3 million last quarter and $14.1 million for the third quarter of 2009.  Through nine months of 2010, non-interest expense totaled $42.8 million versus $44.1 million for the first nine months of 2009.  These decreases reflect the impact of cost control initiatives throughout 2010, while year-to-date non-interest expense in 2010 also benefited from lower FDIC insurance costs, as 2009's expense included $930,000 for the special assessment imposed on all banks in the second quarter of 2009.  Peoples also successfully limited the exposure to escalating salary and benefit costs, which were held flat on a year-to-date basis.  These cost savings were partially offset by higher costs associated with problem loan workouts, such as fees for legal and valuation services, and foreclosed real estate.

"Our third quarter 2010 efficiency ratio of 58.8% represented modest improvement over the prior quarter," said Sloane.  "We attribute this result to our ability to maintain a diversified revenue stream, while reducing operating expenses through targeted expense control.  As we work to enhance bottom-line earnings, we will seek opportunities to expand revenue and to enhance operating efficiency through appropriate cost control measures."

At September 30, 2010, total portfolio loan balances were $1.01 billion, down $5.2 million versus the prior quarter-end and down $41.2 million compared to year-end 2009.  These declines occurred primarily as a result of managed reductions in commercial real estate loan exposures to enhance Peoples' overall balance sheet risk profile, coupled with the impact of charge-offs and problem loan workouts.  Peoples experienced good demand for commercial and industrial loans during the third quarter, with total balances increasing $12.1 million for the quarter and $18.1 million on a year-to-date basis.  

Total nonperforming assets were $41.6 million, or 2.21% of total assets, at September 30, 2010, versus $43.4 million, or 2.21%, at June 30, 2010 and $40.7 million, or 2.03%, at year-end 2009.  The decline during the quarter occurred primarily as a result of returning a single commercial real estate loan relationship, with total outstanding balances of $1.6 million, to accruing status.  Continued weakness in the commercial real estate market resulted in third quarter 2010 write-downs totaling $447,000 on two commercial properties held in OREO.  Also during the third quarter, eight commercial loan relationships became impaired and the loans were placed on nonaccrual status.  These loan relationships had an aggregate outstanding principal balance of $12.1 million and were subsequently written down by $6.1 million to the estimated net realizable value of the underlying collateral as of September 30, 2010.   The corresponding increase in total nonperforming assets was mostly offset by paydowns and charge-offs on existing nonaccrual loans.

Third quarter 2010 net loan charge-offs were $8.0 million, or 3.11% of average loans on an annualized basis, compared to $4.8 million, or 1.86%, last quarter and $7.1 million, or 2.57%, for the third quarter of 2009.  As previously noted, the majority of the third quarter 2010 charge-offs was attributable to impaired commercial real estate loans being written down to the estimated net realizable value of the underlying collateral. Through nine months of 2010, net loan charge-offs were $20.0 million, or 2.57% of average loans on an annualized basis, versus $15.6 million, or 1.90%, for the same period in 2009.  Peoples' allowance for loan losses was $27.2 million, or 2.68% of gross loans, at September 30, 2010, consistent with the prior quarter-end.  To maintain the adequacy of the allowance for loan losses, Peoples recorded a third quarter 2010 provision for loan losses of $8.0 million versus $5.5 million and $10.2 million for the second quarter of 2010 and third quarter of 2009, respectively.

"In the third quarter, we saw additional borrowers succumb to the ongoing damaging effects of the sluggish economy, which limited our ability to improve asset quality metrics," commented Sloane.  "In addition, the continued general weakness in the commercial real estate market and overall economy has caused some workouts to take longer than we would like. We continue to seek swift yet prudent resolution of problem loans to minimize future losses."

During the third quarter of 2010, retail deposit balances decreased modestly, as declines in interest-bearing retail deposits outpaced a $6.1 million increase in non-interest-bearing deposits.  Interest-bearing retail balances were down $12.5 million for the quarter, driven by a $21.9 million reduction in retail certificates of deposit.  These decreases were a result of management maintaining its focus on reducing higher-cost, non-core deposits given recent growth in lower-cost deposits and lack of attractive investment opportunities.  Through nine months of 2010, non-interest-bearing deposit balances have grown $11.7 million, while retail interest-bearing deposits have decreased $11.4 million.

Peoples recorded income tax expense of $653,000 for the nine months ended September 30, 2010, representing an effective tax rate of 11.5%.  Included in this amount was the entire $625,000 tax benefit associated with the investment impairment losses recognized in the first two quarters of 2010.  Management anticipates Peoples' effective tax rate to approximate 17% for the fourth quarter of 2010.

"Results for the third quarter were eclipsed by the lack of any real improvement in economic conditions in our markets, causing greater stress on existing borrowers and weaker demand for new loans," summarized Mead. "These conditions could linger for several quarters.  As we work to put credit quality issues behind us, our strategic priorities continue to be increasing shareholder value and generating long-term stabilized earnings by proactively managing the risk profile of the balance sheet, growing loans and deposits and capitalizing on opportunities to expand the company."

Peoples Bancorp Inc. is a diversified financial products and services company with $1.9 billion in assets, 47 locations and 39 ATMs in Ohio, West Virginia and Kentucky.  Peoples makes available a complete line of banking, investment, insurance, and trust solutions through its financial service units – Peoples Bank, National Association; Peoples Financial Advisors (a division of Peoples Bank); 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 US 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 third quarter 2010 results of operations today at 11:00 a.m., Eastern Daylight Savings 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.

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 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) continued deterioration in the credit quality of Peoples' loan portfolio could occur due to a number of factors, such as adverse changes in economic conditions that impair the ability of borrowers to repay their loans, the underlying value of the collateral could prove less valuable than otherwise assumed and assumed cash flows may be worse than expected, which may adversely impact the provision for loan losses; (2) 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; (3) changes in the interest rate environment, which may adversely impact interest margins; (4) changes in prepayment speeds, loan originations, sale volumes and charge-offs, which may be less favorable than expected and adversely impact the amount of interest income generated; (5) general economic conditions and weakening in the real estate market, either nationally or in the states in which Peoples and its subsidiaries do business may be less favorable than expected, which could decrease the demand for loans, deposits and other financial services and increase loan delinquencies and defaults; (6) political developments, wars or other hostilities, which may disrupt or increase volatility in securities markets or other economic conditions; (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 to be promulgated thereunder, which may adversely affect the business of Peoples and its subsidiaries; (8) changes in accounting standards, policies, estimates or procedures may adversely affect Peoples' reported financial condition or results of operations; (9) adverse changes in the conditions and trends in the financial markets, which may adversely affect the fair value of securities within Peoples' investment portfolio and interest rate sensitivity of Peoples' consolidated balance sheet; (10) a delayed or incomplete resolution of regulatory issues that could arise; (11) Peoples' ability to receive dividends from its subsidiaries; (12) Peoples' ability to maintain required capital levels and adequate sources of funding and liquidity; (13) the impact of larger or similar financial institutions encountering problems, which may adversely affect the banking industry and/or Peoples; (14) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity; (15) the costs and effects of regulatory and legal developments, including the outcome of regulatory or other governmental inquiries and legal proceedings and results of regulatory examinations; and (16) 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, 2009.  

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 filing date of its September 30, 2010 consolidated financial statements on Form 10-Q 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

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2010

2010

2009

2010

2009

PER COMMON SHARE:

Earnings per share:

  Basic

$          (0.01)

$            0.27

$          (0.44)

$             0.33

$            0.16

  Diluted

(0.01)

0.27

(0.44)

0.33

0.16

Cash dividends declared per share

0.10

0.10

0.10

0.30

0.56

Book value per share

18.69

19.35

19.85

18.69

19.85

Tangible book value per share (a)

12.47

13.10

13.50

12.47

13.50

Closing stock price at end of period

$          12.37

$          14.50

$          13.05

$           12.37

$          13.05

SELECTED RATIOS:

Return on average equity (b)

0.69%

5.43%

(6.70%)

2.78%

1.74%

Return on average common equity (b)

(0.20%)

5.45%

(8.97%)

2.29%

1.11%

Return on average assets  (b)

0.08%

0.66%

(0.79%)

0.34%

0.20%

Efficiency ratio (c)

58.78%

60.28%

58.28%

59.71%

60.00%

Net interest margin (b)(d)

3.58%

3.49%

3.45%

3.54%

3.47%

Dividend payout ratio (e)

N/A

38%

N/A

91%

363%

(a)  This amount represents a non-GAAP 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 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)  Information presented on a fully tax-equivalent basis.

(e)  Dividends declared on common shares as a percentage of net income available to common shareholders.

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

(in $000's)

2010

2010

2009

2010

2009

Interest income

$      22,572

$      22,926

$      25,472

$    68,955

$      77,551

Interest expense

7,308

7,790

10,003

23,114

31,125

 Net interest income

15,264

15,136

15,469

45,841

46,426

Provision for loan losses

8,005

5,458

10,168

19,964

18,965

   Net interest income after provision for loan losses

7,259

9,678

5,301

25,877

27,461

Gross impairment losses on investment securities

(800)

(6,395)

(1,620)

(6,395)

Less: Non-credit losses included in other

        comprehensive income

(465)

166

(465)

 Net other-than-temporary impairment losses

(800)

(5,930)

(1,786)

(5,930)

Net gain on securities transactions

3,818

3,018

276

6,852

864

Loss on debt extinguishment

(3,630)

(3,630)

Net loss on assets

(443)

(1,254)

(41)

(1,681)

(103)

Loss on loans held for sale

(565)

(94)

(658)

Non-interest income:

Deposit account service charges

2,415

2,457

2,703

7,170

7,718

Insurance income

2,216

2,261

2,228

6,888

7,378

Trust and investment income

1,226

1,209

1,189

3,991

3,484

Electronic banking income

1,180

1,175

986

3,443

2,929

Mortgage banking income

354

267

276

856

1,384

Bank owned life insurance

137

173

254

495

807

Other non-interest income

183

267

150

691

568

 Total non-interest income

7,711

7,809

7,786

23,534

24,268

Non-interest expense:

Salaries and employee benefits costs

7,232

7,496

7,015

22,105

22,038

Net occupancy and equipment

1,383

1,440

1,398

4,341

4,366

Professional fees

847

601

742

2,140

2,183

Electronic banking expense

668

557

618

1,830

1,781

FDIC insurance

617

612

687

1,846

2,782

Data processing and software

461

527

603

1,558

1,704

Franchise taxes

373

374

466

1,120

1,293

Foreclosed real estate and other loan expenses

282

472

249

1,400

736

Amortization of intangible assets

224

235

307

704

956

Other non-interest expense

1,871

1,995

2,002

5,798

6,271

 Total non-interest expense

13,958

14,309

14,087

42,842

44,110

 Income (loss) before income taxes

192

4,048

(6,695)

5,666

2,450

Income tax (benefit) expense

(221)

763

(2,630)

653

(526)

   Net income (loss)

$           413

$        3,285

$       (4,065)

$       5,013

$        2,976

Preferred dividends

514

512

512

1,539

1,364

   Net (loss) income available to common shareholders

$          (101)

$        2,773

$       (4,577)

$       3,474

$        1,612

PER COMMON SHARE DATA:

Earnings per share – Basic

$         (0.01)

$          0.27

$         (0.44)

$         0.33

$          0.16

Earnings per share – Diluted

$         (0.01)

$          0.27

$         (0.44)

$         0.33

$          0.16

Cash dividends declared per share

$          0.10

$          0.10

$          0.10

$         0.30

$          0.56

Weighted-average shares outstanding – Basic

10,437,770

10,422,126

10,372,946

10,417,316

10,359,569

Weighted-average shares outstanding – Diluted

10,437,770

10,429,369

10,372,946

10,425,463

10,372,630

Actual shares outstanding  (end of period)

10,438,510

10,423,317

10,371,357

10,438,510

10,371,357

CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

(in $000's)

2010

2009

Assets

Cash and cash equivalents:

 Cash and due from banks

$               30,354

$          29,969

 Interest-bearing deposits in other banks

44,306

11,804

   Total cash and cash equivalents

74,660

41,773

Available-for-sale investment securities, at fair value (amortized cost of $608,427

 at September 30, 2010 and $706,444 at December 31, 2009)

610,783

726,547

Held-to-maturity investment securities, at amortized cost (fair value of $3,053

 at September 30, 2010 and $963 at December 31, 2009)

2,964

963

Other investment securities, at cost

24,356

24,356

   Total investment securities

638,103

751,866

Loans, net of deferred fees and costs

1,010,879

1,052,058

Allowance for loan losses

(27,210)

(27,257)

   Net loans

983,669

1,024,801

Loans held for sale

4,082

1,874

Bank premises and equipment, net of accumulated depreciation

24,244

24,844

Bank owned life insurance

53,419

52,924

Goodwill

62,520

62,520

Other intangible assets

2,414

3,079

Other assets

40,578

38,146

   Total assets

$         1,883,689

$     2,001,827

Liabilities

Deposits:

Non-interest-bearing deposits

$            209,693

$        198,000

Interest-bearing deposits

1,182,744

1,197,886

   Total deposits

1,392,437

1,395,886

Short-term borrowings

49,060

76,921

Long-term borrowings

164,720

246,113

Junior subordinated notes held by subsidiary trust

22,557

22,530

Accrued expenses and other liabilities

21,156

16,409

   Total liabilities

1,649,930

1,757,859

Stockholders' Equity

Preferred stock, no par value (50,000 shares authorized, 39,000 shares issued

 at September 30, 2010, and December 31, 2009)

38,619

38,543

Common stock, no par value (24,000,000 shares authorized, 11,062,756 shares

  issued at September 30, 2010, and 11,031,892 shares issued at December 31, 2009),

166,152

166,227

  including shares in treasury

Retained earnings

46,545

46,229

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

(1,974)

9,487

Treasury stock, at cost (624,246 shares at September 30, 2010, and

  657,255 shares at December 31, 2009)

(15,583)

(16,518)

   Total stockholders' equity

233,759

243,968

   Total liabilities and stockholders' equity

$         1,883,689

$     2,001,827

SELECTED FINANCIAL INFORMATION

September 30,

June 30,

March 31,

December 31,

September 30,

(in $000’s, end of period)

2010

2010

2010

2009

2009

Loan Portfolio

Commercial real estate

$     454,499

$     471,046

$      501,917

$      503,034

$     478,518

Commercial and industrial

178,014

165,916

165,934

159,915

160,677

Real estate construction

39,621

36,490

34,894

32,427

67,143

Residential real estate

205,125

207,314

212,569

215,735

216,571

Home equity lines of credit

49,435

50,259

49,444

49,183

48,991

Consumer

82,894

83,735

85,231

90,144

94,374

Deposit account overdrafts

1,291

1,346

1,299

1,620

1,765

   Total loans

$  1,010,879

$  1,016,106

$   1,051,288

$   1,052,058

$  1,068,039

Deposit Balances

Interest-bearing deposits:

 Retail certificates of deposit

$     490,446

$     512,327

$      546,760

$      537,549

$     561,619

 Money market deposit accounts

297,229

290,477

296,196

263,257

245,621

 Governmental deposit accounts

139,843

136,119

143,068

147,745

137,655

 Savings accounts

120,975

120,086

117,526

112,074

113,104

 Interest-bearing demand accounts

92,585

94,542

88,425

91,878

87,153

   Total retail interest-bearing deposits

1,141,078

1,153,551

1,191,975

1,152,503

1,145,152

 Brokered certificates of deposits

41,666

41,666

41,738

45,383

61,412

   Total interest-bearing deposits

1,182,744

1,195,217

1,233,713

1,197,886

1,206,564

Non-interest-bearing deposits

209,693

203,559

201,337

198,000

187,011

   Total deposits

$  1,392,437

$  1,398,776

$   1,435,050

$   1,395,886

$  1,393,575

Asset Quality

Nonperforming assets:

 Loans 90+ days past due and accruing

$              31

$            481

$                 –

$             411

$            993

 Nonaccrual loans

37,184

38,050

29,832

33,972

41,136

   Total nonperforming loans

37,215

38,531

29,832

34,383

42,129

 Other real estate owned

4,335

4,892

6,033

6,313

1,238

Total nonperforming assets

$       41,550

$       43,423

$        35,865

$        40,696

$       43,367

Allowance for loan losses as a percent of

   nonperforming loans

73.1%

70.5%

89.0%

79.3%

62.3%

Nonperforming loans as a percent of total loans

3.67%

3.77%

2.84%

3.27%

3.94%

Nonperforming assets as a percent of total assets

2.21%

2.21%

1.79%

2.03%

2.16%

Nonperforming assets as a percent of total loans

  and other real estate owned

4.08%

4.23%

3.39%

3.85%

4.06%

Allowance for loan losses as a percent of total loans

2.68%

2.66%

2.53%

2.59%

2.46%

Capital Information(a)

Tier 1 risk-based capital ratio

16.22%

16.11%

15.51%

15.49%

15.06%

Tier 1 common ratio

11.13%

11.07%

10.60%

10.58%

10.30%

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

17.55%

17.44%

16.83%

16.80%

16.39%

Leverage ratio

10.26%

10.14%

9.97%

10.06%

9.82%

Tier 1 capital

$     194,800

$     195,439

$      193,211

$      192,822

$     193,013

Tier 1 common capital

133,624

134,298

132,103

131,747

131,973

Total capital (Tier 1 and Tier 2)

210,768

211,509

209,647

209,144

209,986

Total risk-weighted assets

$  1,200,754

$  1,212,816

$   1,245,770

$   1,244,707

$  1,281,318

Tangible equity to tangible assets (b)

9.28%

9.21%

9.06%

9.21%

9.21%

Tangible common equity to tangible assets (b)

7.16%

7.18%

7.07%

7.22%

7.22%

(a)  September 30, 2010 data based on preliminary analysis and subject to revision.

(b)  These ratios represent non-GAAP 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 release.

PROVISION FOR LOAN LOSSES INFORMATION

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

(in $000’s)

2010

2010

2009

2010

2009

Provision for Loan Losses

Provision for checking account overdrafts

$              219

$              179

$              268

$              418

$              565

Provision for other loan losses

7,786

5,279

9,900

19,546

18,400

 Total provision for loan losses

$           8,005

$           5,458

$         10,168

$         19,964

$         18,965

Net Charge-Offs

Gross charge-offs

$           8,605

$           5,517

$           7,479

$         22,256

$         17,763

Recoveries

642

674

409

2,245

2,116

 Net charge-offs

$           7,963

$           4,843

$           7,070

$         20,011

$         15,647

Net Charge-Offs by Type

Commercial real estate

$           7,202

$           4,401

$           5,887

$         17,521

$         12,740

Commercial and industrial

69

38

521

1,000

513

Residential real estate

354

77

208

615

1,037

Real estate, construction

68

68

Consumer

91

89

172

294

618

Home equity lines of credit

38

5

21

31

56

Deposit account overdrafts

209

165

261

482

683

 Total net charge-offs

$           7,963

$           4,843

$           7,070

$         20,011

$         15,647

Net charge-offs as a percent of loans (annualized)

3.11%

1.86%

2.57%

2.57%

1.90%

SUPPLEMENTAL INFORMATION

September 30,

June 30,

March 31,

December 31,

September 30,

(in $000’s, end of period)

2010

2010

2010

2009

2009

Trust assets under management  

$       795,335

$         742,044

$         768,189

$         750,993

$         738,535

Brokerage assets under management

$       233,308

$         214,421

$         229,324

$         216,479

$         210,743

Mortgage loans serviced for others

$       235,538

$         234,134

$         230,183

$         227,792

$         220,605

Employees (full-time equivalent)

532

527

530

537

544

CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME

Three Months Ended

September 30, 2010

June 30, 2010

September 30, 2009

(in $000’s)

Balance

Income/ Expense

Yield/ Cost

Balance

Income/ Expense

Yield/ Cost

Balance

Income/ Expense

Yield/ Cost

Assets

Short-term investments

$        50,149

$           32

0.25%

$        34,077

$          21

0.25%

$         34,490

$          22

0.25%

Investment securities (a)(b)

707,196

8,641

4.89%

739,206

8,717

4.72%

736,653

9,765

5.30%

Gross loans (a)

1,016,922

14,290

5.60%

1,042,010

14,591

5.62%

1,092,059

16,077

5.85%

Allowance for loan losses

(28,749)

(30,669)

(24,479)

Total earning assets

1,745,518

22,963

5.24%

1,784,624

23,329

5.24%

1,838,723

25,864

5.60%

Intangible assets

65,029

65,248

65,969

Other assets

146,521

146,234

129,745

Total assets

$   1,957,068

$   1,996,106

$    2,034,437

Liabilities and Equity

Interest-bearing deposits:

Savings accounts

$      121,878

$           49

0.16%

$      121,017

$          48

0.16%

$       130,290

$        176

0.54%

Interest-bearing demand accounts

238,902

671

1.11%

237,262

650

1.10%

210,855

823

1.55%

Money market deposit accounts

297,140

509

0.68%

294,138

654

0.89%

234,513

689

1.17%

Brokered certificates of deposits

41,661

402

3.83%

41,717

398

3.83%

56,232

567

4.00%

Retail certificates of deposit

503,008

3,062

2.42%

524,038

3,203

2.45%

580,281

4,235

2.90%

Total interest-bearing deposits

1,202,589

4,693

1.55%

1,218,172

4,953

1.63%

1,212,171

6,490

2.12%

Short-term borrowings

51,004

62

0.48%

48,931

66

0.53%

55,700

110

0.77%

Long-term borrowings

240,851

2,553

4.17%

262,602

2,771

4.19%

309,879

3,403

4.32%

Total borrowed funds

291,855

2,615

3.52%

311,533

2,837

3.62%

365,579

3,513

3.78%

Total interest-bearing liabilities

1,494,444

7,308

1.94%

1,529,705

7,790

2.04%

1,577,750

10,003

2.51%

Non-interest-bearing deposits

210,031

209,602

197,900

Other liabilities

15,008

14,317

17,952

Total liabilities

1,719,483

1,753,624

1,793,602

Preferred equity

38,607

38,581

38,506

Common equity

198,978

203,901

202,329

Stockholders’ equity

237,585

242,482

240,835

Total liabilities and equity

$   1,957,068

$   1,996,106

$    2,034,437

Net interest income/spread (a)

$    15,655

3.30%

$   15,539

3.20%

$   15,861

3.09%

Net interest margin (a)

3.58%

3.49%

3.45%

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

(b) Average balances are based on carrying value.

Nine Months Ended

September 30, 2010

September 30, 2009

(in $000’s)

Balance

Income/ Expense

Yield/ Cost

Balance

Income/ Expense

Yield/ Cost

Assets

Short-term investments

$         30,671

$          57

0.25%

$        32,938

$           61

0.25%

Investment securities (a)(b)

737,847

26,362

4.76%

721,563

29,625

5.47%

Gross loans (a)

1,039,494

43,732

5.63%

1,102,037

49,091

5.95%

Allowance for loan losses

(29,581)

(24,320)

Total earning assets

1,778,431

70,151

5.27%

1,832,218

78,777

5.74%

Intangible assets

65,252

66,123

Other assets

144,922

134,756

Total assets

$    1,988,605

$   2,033,097

Liabilities and Equity

Interest-bearing deposits:

Savings accounts

$       119,842

$        144

0.16%

$      125,921

$         468

0.50%

Interest-bearing demand accounts

235,298

1,982

1.13%

204,299

2,353

1.54%

Money market deposit accounts

288,369

1,820

0.84%

226,912

1,970

1.16%

Brokered certificates of deposits

41,792

1,201

3.84%

38,836

1,175

4.05%

Retail certificates of deposit

521,992

9,643

2.47%

612,099

14,086

3.08%

Total interest-bearing deposits

1,207,293

14,790

1.64%

1,208,067

20,052

2.22%

Short-term borrowings

61,897

209

0.45%

58,258

388

0.88%

Long-term borrowings

256,172

8,115

4.20%

325,002

10,685

4.36%

Total borrowed funds

318,069

8,324

3.47%

383,260

11,073

3.83%

Total interest-bearing liabilities

1,525,362

23,114

2.02%

1,591,327

31,125

2.61%

Non-interest-bearing deposits

207,622

195,211

Other liabilities

14,344

17,348

Total liabilities

1,747,328

1,803,886

Preferred equity

38,581

34,396

Common equity

202,696

194,815

Stockholders’ equity

241,277

229,211

Total liabilities and equity

$    1,988,605

$   2,033,097

Net interest income/spread (a)

$   47,037

3.25%

$    47,652

3.13%

Net interest margin (a)

3.54%

3.47%

(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' financial statements:

September 30,

June 30,

March 31,

December 31,

September 30,

(in $000’s, end of period)

2010

2010

2010

2009

2009

Tangible Equity:

Total stockholders' equity, as reported

$        233,759

$        240,280

$        240,842

$        243,968

$        244,363

Less: goodwill and other intangible assets

64,934

65,138

65,357

65,599

65,805

Tangible equity

$        168,825

$        175,142

$        175,485

$        178,369

$        178,558

Tangible Common Equity:

Tangible equity

$        168,825

$        175,142

$        175,485

$        178,369

$        178,558

Less: preferred stockholders' equity

38,619

38,593

38,568

38,543

38,518

Tangible common equity

$        130,206

$        136,549

$        136,917

$        139,826

$        140,040

Tangible Assets:

Total assets, as reported

$     1,883,689

$     1,967,046

$     2,003,271

$     2,001,827

$     2,004,754

Less: goodwill and other intangible assets

64,934

65,138

65,357

65,599

65,805

Tangible assets

$     1,818,755

$     1,901,908

$     1,937,914

$     1,936,228

$     1,938,949

Tangible Book Value per Share:

Tangible common equity

$        130,206

$        136,549

$        136,917

$        139,826

$        140,040

Common shares outstanding

10,438,510

10,423,317

10,408,096

10,374,637

10,371,357

Tangible book value per share

$            12.47

$            13.10

$            13.15

$            13.48

$            13.50

Tangible Equity to Tangible Assets Ratio:

Tangible equity

$        168,825

$        175,142

$        175,485

$        178,369

$        178,558

Total tangible assets

$     1,818,755

$     1,901,908

$     1,937,914

$     1,936,228

$     1,938,949

Tangible equity to tangible assets

9.28%

9.21%

9.06%

9.21%

9.21%

Tangible Common Equity to Tangible Assets Ratio:

Tangible common equity

$        130,206

$        136,549

$        136,917

$        139,826

$        140,040

Tangible assets

$     1,818,755

$     1,901,908

$     1,937,914

$     1,936,228

$     1,938,949

Tangible common equity to tangible assets

7.16%

7.18%

7.07%

7.22%

7.22%

SOURCE Peoples Bancorp Inc.



RELATED LINKS

http://www.peoplesbancorp.com