Peoples Bancorp Inc. to Repay Remaining TARP Capital

MARIETTA, Ohio, Dec. 23, 2011 /PRNewswire/ -- Peoples Bancorp Inc. ("Peoples") (NASDAQ: PEBO) today announced it received notification from the U.S. Department of the Treasury (the "Treasury") approving Peoples' request to repurchase the remaining $18 million of the $39 million received under the TARP Capital Purchase Program (the "TARP Capital") in January 2009.  Peoples previously repurchased $21 million of its TARP Capital in February 2011.

"We are pleased to report our ability to repay the remaining portion of our TARP Capital, which will occur without the need to issue any new common equity due to our already strong capital and liquidity levels," said Chuck Sulerzyski, President and Chief Executive Officer. "This action reflects the positive progress we have made during 2011 to improve credit quality and enhance operating performance.  In addition, our common shareholders will benefit from the elimination of the annual preferred dividends without the dilutive impact of new common equity."  The current annual preferred dividend represents approximately $0.09 per diluted common share.

Sulerzyski added, "Since receiving the TARP Capital in January 2009, Peoples has continued to report annual net earnings while paying nearly $5 million in total preferred dividends to the Treasury.  The TARP Capital helped us remain very well capitalized during an extremely challenging period for the banking industry.  After the TARP Capital repayment, Peoples' capital levels will remain stronger than they had been immediately prior to receiving the TARP Capital.  We are confident our capital and liquidity positions will allow us to pursue prudent long-term growth of the Company."

The actual redemption is expected to occur on December 28, 2011 and involves Peoples repurchasing the 18,000 Fixed Rate Cumulative Perpetual Preferred Shares, Series A (the "Series A Preferred Shares"), which the Treasury currently holds.  The aggregate purchase price is $18,107,500, which includes accrued dividends of $107,500.  The Series A Preferred Shares have a recorded value of $17.9 million, due to the unamortized discount originally recorded at the time of issuance.  In connection with this repurchase, Peoples will recognize the entire unamortized discount, which will reduce net income available to common shareholders by $112,000. 

Peoples' Tier 1 and total risk-based capital ratios are expected to be approximately 14.0% and 15.3% after the TARP Capital repayment, compared to 11.88% and 13.19%, respectively, at December 31, 2008, which was just prior to Peoples receiving the TARP Capital.        

As part of its participation in the TARP Capital Purchase Program, Peoples issued a ten-year warrant to purchase 313,505 of Peoples' common shares at an exercise price of $18.66 per share.  The repurchase of the Series A Preferred Shares affords Peoples the right to repurchase this warrant at its fair market value.  Peoples intends to begin negotiations to repurchase the warrant immediately upon the repurchase of the Series A Preferred Shares.  If Peoples ultimately does not complete the warrant repurchase, the Treasury will be required to liquidate the warrant at its current market price. 

Peoples Bancorp Inc. is a diversified financial products and services company with $1.8 billion in assets, 47 locations and 42 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. 

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, 2010. 

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.

SOURCE Peoples Bancorp Inc.