Published:
Peoples Bancorp Announces First Quarter Earnings Results
NEWTON, N.C., April 21 /PRNewswire-FirstCall/ -- Peoples Bancorp ofNorth
Carolina, Inc. (Nasdaq: PEBK), the parent company of Peoples Bank, reported
net income of $2.1 million, or $0.39 basic and diluted net income per share,
for the three months ended March 31, 2008 as compared to $2.8 million or $0.48
basic and diluted net income per share, for the same period one year ago.
March 31, 2007 per share amounts have been restated to reflect the 3-for-2
stock split declared and distributed during the second quarter 2007. Tony W.
Wolfe, President and Chief Executive Officer, attributed the decrease in first
quarter earnings to a decrease in net interest income, an increase in
provision for loan losses and an increase in non-interest expense, which were
partially offset by an increase in non-interest income. Mr. Wolfe noted that
while Peoples Bancorp has been affected by the slowing economy, the Company,
as is the case with most community banks, continues to operate profitably and
expects to continue to do so through this current recessionary period.
Shareholders' equity increased to $73.3 million, or 8.04% of total assets,
at March 31, 2008 as compared to $65.3 million, or 7.80% of total assets, at
March 31, 2007 as a result of net income earned less dividends paid for the
period combined with a $5.0 million increase in accumulated other
comprehensive income (loss) from March 31, 2007 to March 31, 2008. The
increase in accumulated other comprehensive income (loss) is due to an
increases in the market value of available for sale securities and derivative
instruments.
Net interest income for the quarter ended March 31, 2008 decreased 8% to
$7.9 million compared to $8.6 million for the same period one year ago. This
decrease is primarily attributable to a 300 basis point reduction in the
Bank's prime commercial lending rate from March 31, 2007 to March 31, 2008.
Net interest income after the provision for loan losses decreased 10% to $7.5
million during the first quarter of 2008, compared to $8.3 million for the
same period one year ago. The provision for loan losses for the three months
ended March 31, 2008 was $391,000 as compared to $323,000 for the same period
one year ago, primarily attributable to an increase in net charge-offs of
$118,000.
Non-interest income increased 23% to $2.6 million for the three months
ended March 31, 2008, as compared to $2.1 million for the same period one year
ago. Increases in components of non-interest income for the three months
ended March 31, 2008 compared to the same period last year include a $376,000
increase in service charges and fees resulting from growth in deposit base
coupled with normal pricing changes, an increase in mortgage banking income of
$67,000 and an increase in miscellaneous income of $36,000.
Non-interest expense increased 15% to $6.9 million for the three months
ended March 31, 2008, as compared to $6.0 million for the same period last
year. The increase in non-interest expense included: (1) an increase of
$341,000 or 10% in salaries and benefits expense due to normal salary
increases and expense associated with additional staff for new branches, (2)
an increase of $138,000 or 13% in occupancy expense due primarily to an
increase in furniture and equipment expense and lease expense associated with
new offices, and (3) a net increase of $430,000 or 28% in non-interest
expenses other than salary, benefits and occupancy expenses. The increase in
non-interest expenses other than salary, benefits and occupancy expenses is
primarily attributable to an increase of $97,000 in advertising expense, an
increase of $109,000 in FDIC insurance expense and an increase of $70,000 in
deposit program expense.
Total assets as of March 31, 2008 amounted to $911.1 million, an increase
of 9% compared to total assets of $837.3 million at March 31, 2007. This
increase is primarily attributable to an increase in loans. Loans increased
13% to $727.2 million as of March 31, 2008 compared to $645.0 million as of
March 31, 2007. Premises and equipment increased $4.6 million to $18.5
million at March 31, 2008 as compared to $13.9 million at March 31, 2007
primarily due to the purchase of a previously leased branch office and costs
associated with new offices.
Non-performing assets totaled $12.1 million at March 31, 2008 or 1.33% of
total assets, compared to $8.5 million at March 31, 2007 or 1.02% of total
assets. The increase in non-performing assets is primarily due to an increase
in non-accrual loans of $3.1 million from March 31, 2007 to March 31, 2008.
This is primarily due to one relationship of $1.8 million with a local
residential builder and a loan secured by rental properties of approximately
$854,000. The allowance for loan losses at March 31, 2008 amounted to $9.4
million or 1.29% of total loans compared to $8.6 million or 1.34% of total
loans at March 31, 2007.
Deposits amounted to $704.8 million as of March 31, 2008, representing an
increase of 7% over deposits of $659.2 million at March 31, 2007. Core
deposits, which include non-interest bearing demand deposits, NOW, MMDA,
savings and certificates of deposits of denominations less than $100,000,
increased $20.9 million to $492.4 million at March 31, 2008 as compared to
$471.4 million at March 31, 2007 due to concerted efforts to attract
additional deposits from existing customers and to attract new customers in
our existing offices along with deposits gathered in the three new offices
opened since May 2007. The Bank also introduced remote deposit capture for
customers in 2007, which has enabled the Bank to gather additional deposits
from existing customers and has been helpful in attracting new customers.
Certificates of deposit in amounts greater than $100,000 or more totaled
$212.5 million at March 31, 2008 as compared to $187.8 million at March 31,
2007.
Securities sold under agreement to repurchase increased $15.4 million to
$24.6 million at March 31, 2008 as compared to $9.2 million at March 31, 2007
as concerted efforts to promote cash management services have increased
customer usage of this product.
Peoples Bank operates entirely inNorth Carolina, with eleven offices
throughoutCatawba County, one office inAlexander County, three offices in
Lincoln County, three offices inMecklenburg County, one office inUnion
County, one office inIredell County and one office inWake County. The
Company's common stock is publicly traded over the counter and is quoted on
the Nasdaq Global Market under the symbol "PEBK."
Statements made in this press release, other than those concerning
historical information, should be considered forward-looking statements
pursuant to the safe harbor provisions of the Securities Exchange Act of 1934
and the Private Securities Litigation Act of 1995. These forward-looking
statements involve risks and uncertainties and are based on the beliefs and
assumptions of management and on the information available to management at
the time that this release was prepared. These statements can be identified
by the use of words like "expect," "anticipate," "estimate," and "believe,"
variations of these words and other similar expressions. Readers should not
place undue reliance on forward-looking statements as a number of important
factors could cause actual results to differ materially from those in the
forward-looking statements. Factors that could cause actual results to differ
materially include, but are not limited to, (1) competition in the markets
served by Peoples Bank, (2) changes in the interest rate environment, (3)
general national, regional or local economic conditions may be less favorable
than expected, resulting in, among other things, a deterioration in credit
quality and the possible impairment of collectibility of loans, (4)
legislative or regulatory changes, including changes in accounting standards,
(5) significant changes in the federal and state legal and regulatory
environment and tax laws, (6) the impact of changes in monetary and fiscal
policies, laws, rules and regulations and (7) other risks and factors
identified in the Company's other filings with the Securities and Exchange
Commission, including but not limited to those described in Peoples Bancorp
ofNorth Carolina, Inc.'s annual report on Form 10-K for the year ended
December 31, 2007.
CONSOLIDATED BALANCE SHEETS
March 31, 2008, December 31, 2007 and March 31, 2007
March 31, 2008 December 31, 2007 March 31, 2007
(Unaudited) (Unaudited)
ASSETS:
Cash and due from
banks $24,373,479 $26,108,437 $22,291,493
Interest bearing
deposits 1,484,005 1,539,190 1,467,544
Federal funds sold 2,228,000 2,152,000 21,147,000
Cash and cash
equivalents 28,085,484 29,799,627 44,906,037
Investment securities
available for sale 120,149,516 120,968,358 118,745,494
Other investments 6,254,847 6,433,947 6,755,849
Total securities 126,404,363 127,402,305 125,501,343
Loans 727,224,725 722,276,948 644,991,947
Less: Allowance
for loan losses (9,369,730) (9,103,058) (8,620,074)
Net loans 717,854,995 713,173,890 636,371,873
Premises and
equipment, net 18,503,155 18,234,393 13,865,730
Cash surrender
value of life
insurance 6,837,154 6,776,379 6,589,206
Accrued interest
receivable and
other assets 13,445,333 11,875,202 10,115,218
Total assets $911,130,484 $907,261,796 $837,349,407
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Non-interest
bearing demand $115,107,603 $112,071,090 $112,777,011
NOW, MMDA & Savings 202,040,157 196,959,895 188,580,644
Time, $100,000 or
more 212,474,001 203,499,504 187,766,348
Other time 175,204,132 181,108,214 170,055,451
Total deposits 704,825,893 693,638,703 659,179,454
Demand notes
payable to U.S.
Treasury 542,457 1,600,000 853,415
Securities sold
under agreement to
repurchase 24,575,282 27,583,263 9,237,489
FHLB borrowings 80,000,000 87,500,000 77,000,000
Junior subordinated
debentures 20,619,000 20,619,000 20,619,000
Accrued interest
payable and other
liabilities 7,294,236 6,219,248 5,177,720
Total liabilities 837,856,868 837,160,214 772,067,078
Shareholders' Equity:
Preferred stock, no
par value;
authorized
5,000,000 shares;
no shares issued
and outstanding - - -
Common stock, no
par value;
authorized
20,000,000 shares;
issued and
outstanding
5,603,683 shares
in 2008
and 5,624,234
shares in 2007 48,343,707 48,651,895 51,193,812
Retained earnings 20,657,502 19,741,876 14,811,487
Accumulated other
comprehensive
income (loss) 4,272,407 1,707,811 (722,970)
Total shareholders'
equity 73,273,616 70,101,582 65,282,329
Total liabilities
and shareholders'
equity $911,130,484 $907,261,796 $837,349,407
CONSOLIDATED STATEMENTS OF INCOME
For the three months ended March 31, 2008 and 2007
Three months ended
March 31,
2008 2007
(Unaudited) (Unaudited)
INTEREST INCOME:
Interest and fees on loans $13,044,464 $13,600,189
Interest on federal funds sold 18,179 125,495
Interest on investment securities:
U.S. Government agencies 1,134,089 1,130,079
States and political subdivisions 226,544 219,494
Other 129,423 124,969
Total interest income 14,552,699 15,200,226
INTEREST EXPENSE:
NOW, MMDA & savings deposits 924,392 912,443
Time deposits 4,274,471 4,286,403
FHLB borrowings 946,661 923,490
Junior subordinated debentures 326,747 360,199
Other 207,632 124,278
Total interest expense 6,679,903 6,606,813
NET INTEREST INCOME 7,872,796 8,593,413
PROVISION FOR LOAN LOSSES 391,000 323,000
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 7,481,796 8,270,413
NON-INTEREST INCOME:
Service charges 1,146,843 912,568
Other service charges and fees 628,778 487,547
Mortgage banking income 179,057 111,841
Insurance and brokerage commission 106,741 100,657
Miscellaneous 545,101 509,271
Total non-interest income 2,606,520 2,121,884
NON-INTEREST EXPENSE:
Salaries and employee benefits 3,714,535 3,373,166
Occupancy 1,242,474 1,104,239
Other 1,973,356 1,543,641
Total non-interest expenses 6,930,365 6,021,046
INCOME BEFORE INCOME TAXES 3,157,951 4,371,251
INCOME TAXES 1,103,500 1,584,126
NET INCOME $2,054,451 $2,787,125
PER SHARE AMOUNTS
Basic net income $0.39 $0.48
Diluted net income $0.39 $0.48
Cash dividends $0.12 $0.12
Book value $13.08 $11.35
FINANCIAL HIGHLIGHTS
For the three months ended March 31, 2008 and 2007
Three months ended
March 31,
2008 2007
(Unaudited) (Unaudited)
SELECTED AVERAGE BALANCES:
Available for sale securities $118,283,399 $119,776,080
Loans 720,635,244 643,112,284
Earning assets 849,790,803 781,156,206
Assets 902,160,386 822,204,490
Deposits 695,803,296 644,992,518
Shareholders' equity 73,357,753 65,311,870
SELECTED KEY DATA:
Net interest margin (tax equivalent) 3.83% 4.57%
Return of average assets 0.92% 1.37%
Return on average shareholders'
equity 11.26% 17.31%
Shareholders' equity to total assets
(period end) 8.04% 7.80%
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period $9,103,058 $8,303,432
Provision for loan losses 391,000 323,000
Charge-offs (191,440) (131,138)
Recoveries 67,112 124,780
Balance, end of period $9,369,730 $8,620,074
ASSET QUALITY:
Non-accrual loans $11,402,966 $8,319,990
90 days past due and still
accruing 347,281 78,249
Other real estate owned 364,662 134,082
Repossessed assets - 5,000
Total non-performing assets $12,114,909 $8,537,321
Non-performing assets to
total assets 1.33% 1.02%
Allowance for loan losses to
non-performing assets 77.34% 100.97%
Allowance for loan losses to
total loans 1.29% 1.34%
LOAN RISK GRADE ANALYSIS:
Percentage of Loans
By Risk Grade*
3/31/2008 3/31/2007
Risk 1 (excellent quality) 10.59% 12.33%
Risk 2 (high quality) 13.87% 13.69%
Risk 3 (good quality) 63.49% 60.86%
Risk 4 (management attention) 8.75% 10.78%
Risk 5 (watch) 1.57% 0.44%
Risk 6 (substandard) 0.13% 0.57%
Risk 7 (low substandard) 0.03% 0.02%
Risk 8 (doubtful) 0.00% 0.00%
Risk 9 (loss) 0.00% 0.00%
*Excludes non-accrual loans
At March 31, 2008 there were two relationships exceeding $1.0 million
(which totaled $7.1 million) in the Watch risk grade, no relationships
exceeding $1.0 million in the Substandard risk grade and no relationships
exceeding $1.0 million in the Low Substandard risk grade. These customers
continue to meet payment requirements and these relationships would not
become non-performing assets unless they are unable to meet those
requirements.
SOURCE Peoples Bancorp ofNorth Carolina, Inc.
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