EXHIBIT 99
NEWS RELEASE
FOR IMMEDIATE RELEASE Contact: John W. Conlon, Chief Financial Officer
--------------------- (740) 373-3155
July 23, 2001
PEOPLES BANCORP ANNOUNCES EARNINGS GROWTH
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MARIETTA, Ohio - Peoples Bancorp Inc. (Nasdaq: PEBO) announces
increases in diluted and cash basis net income and related earnings per share.
Net income totaled $3,005,000 in the second quarter of 2001, up $305,000 (or
11.3%) compared to $2,700,000 for the three months ended June 30, 2000, and up
$409,000 (or 15.8%) compared to the first quarter of 2001. Diluted earnings per
share were $0.45 for the second quarter of 2001 versus $0.39 per share for the
first quarter of 2001, or linked quarter, and $0.41 per share a year ago.
On an operating basis, income was $2,978,000 for the second quarter of
2001 compared to $2,820,000 a year ago, an increase of $158,000 (or 5.6%), due
primarily to net interest income growth. Diluted operating earnings per share
grew to $0.45 for the three months ended June 30, 2001, versus $0.43 in the
second quarter of 2000, an increase of $0.02 (or 4.7%). Compared to the first
quarter of 2001, second quarter operating income increased $270,000 (or 10.0%)
and diluted operating earnings per share grew $0.04 (or 9.8%).
Operating income removes the after-tax impact of significant
non-operating income and expenses such as gains and/or losses on asset disposals
and securities transactions, mark-to-market adjustments on Peoples' interest
rate caps, adoption of new accounting standards, etc.
"We are pleased with second quarter performance, considering the
sluggish economy and other challenges facing the financial services industry,"
said Robert E. Evans, President and CEO. "Net interest income growth has boosted
our short-term earnings outlook, but our long-term focus continues to be
non-interest income growth, which we believe is key to sustaining our long-term
profitability and further improving shareholder value."
Operating return on average equity ("ROE") was 13.34% for the second
quarter of 2001 versus 12.67% last quarter and 15.81% a year ago. Operating
earnings were $0.86 per diluted share for the first half of 2001 and 2000 while
operating ROE was 13.01% and 15.88% for the same periods, respectively.
On a cash basis, earnings per share totaled $0.51 in the second quarter
of 2001 compared to $0.45 per share for the previous quarter and $0.47 in the
second quarter of 2000, increases of $0.06 (or 13.3%) and $0.04 (or 8.5%),
respectively. Cash basis ROE was 19.27% for the second quarter of 2001 compared
to 17.76% for the linked quarter and 23.75% for the second quarter of 2000. Cash
basis earnings exclude the effects of intangible assets and related amortization
expenses. In the second quarter of 2001, Peoples had amortization expense
related to goodwill of $457,000 and core deposit intangibles of $125,000,
compared to $432,000 and $139,000, respectively, for the same period a year ago.
On a year-to-date basis, net income totaled $5,601,000 in 2001 compared
to $5,561,000 a year ago. Diluted earnings per share were $0.84 for the first
half of 2001, unchanged from the same period in 2000. Cash basis earnings were
$0.96 per diluted share through six months in 2001 and 2000. For the six months
ended June 30, ROE was 12.81% in 2001 versus 15.41% in 2000 while cash basis ROE
was 18.53% and 24.20% for the same periods, respectively.
In the second quarter of 2001, net interest income totaled $10,796,000,
up $571,000 (or 5.6%) compared to $10,225,000 for the same period last year and
up $485,000 (or 4.7%) versus the linked quarter. Through the first six months of
2001, net interest income grew $778,000 (or 3.8%) to $21,107,000 compared to the
first half of 2000. Net interest income growth in 2001 is due to Peoples'
increased volume of earning assets compared to the previous year. Peoples' net
interest margin continued to improve gradually during the second quarter of
2001, reaching 4.07% for the second quarter compared to 3.98% in first quarter
2001. On a year-to-date basis through June 30, 2001, net interest margin was
4.02% compared to 4.22% last year.
Non-interest income totaled $2,270,000 in the second quarter of 2001
compared to $2,201,000 and $2,233,000 in the linked quarter and second quarter
of 2000, respectively. For the six months ended June 30, 2001, non-interest
income grew $110,000 (or 2.5%) to $4,471,000 compared to the previous year.
Peoples' largest source of non-interest income is deposit account service
charges, which reached $889,000 for the three months ended June 30, 2001, versus
$810,000 in the linked quarter and $793,000 a year ago. On a year-to-date basis,
deposit account service charges totaled $1,696,000 in 2001, up $151,000 (or
9.8%) from $1,545,000 the previous year, due largely to higher volumes of
overdraft fees on checking accounts.
In the first half of 2001, insurance and investment commissions totaled
$584,000 compared to $530,000 for the first half of 2000, an increase of $54,000
(or 10.2%). Peoples continues to pursue new ways to provide asset and risk
management products as a method to grow non-interest revenues. Insurance and
investment commissions totaled $263,000 for the second quarter of 2001, down
from $321,000 for the linked quarter and $374,000 for the second quarter of
2000, due primarily to slower annuity sales and reduced brokerage income. The
current interest rate environment has reduced the volume of Peoples' annuity
sales, and associated revenues, in the second quarter of 2001, while brokerage
income has been impacted by US stock market conditions and corresponding
decreased client investment activity. In the second quarter of 2001, fiduciary
income, Peoples' other major source of non-interest income, totaled $628,000, up
from $614,000 for the first quarter of 2001. Fiduciary revenues were unchanged
compared to a year ago.
In the second quarter of 2001, electronic banking income totaled
$354,000 compared to $319,000 last quarter and $310,000 for the second quarter
of 2000. On a year-to-date basis, electronic banking income increased $84,000
(or 14.2%) to $676,000 in 2001 from $592,000 in 2000 as a result of volume
increases in ATM and debit card usage by Peoples' clients.
A key performance indicator for Peoples is its non-interest income
leverage ratio (defined as non-interest income as a percent of operating
non-interest expense). Through six months in 2001, Peoples' non-interest income
leverage ratio was 29.9%, compared to 30.7% a year ago. For the second quarter
of 2001, Peoples' non-interest income leverage ratio was 30.0% versus 29.8% in
the linked quarter.
"Peoples' targeted non-interest income leverage ratio in 2001 remains
34%, although we believe short-term non-interest income levels will be
challenged due to current economic conditions and the general state of the US
equity markets, and their impact on Peoples' revenues such as fiduciary fees and
investment income," said Jack Conlon, Chief Financial Officer. "Our long-term
strategy continues to focus on growing top-line revenues without proportional
increases in non-interest expense."
In the second quarter of 2001, non-interest expense totaled $8,168,000,
up $217,000 (or 2.7%) compared to the linked quarter and up $374,000 (or 4.8%)
compared to second quarter of 2000. On a year-to-date basis, non-interest
expense totaled $16,119,000 in 2001, an increase of $771,000 (or 5.0%) compared
to the previous year. Non-interest expense in the second quarter of 2001 was
impacted by approximately $100,000 of expenses related to the conversion of
Peoples' ATM and debit cards to a new vendor. Management believes that this
change enhances Peoples' ability to remain competitive in electronic banking
services through improved client service levels and enhanced long-term operating
efficiencies.
Salaries and benefits, Peoples' largest non-interest expense, grew
$633,000 (or 9.6%) to $7,227,000 for the first six months of 2001, compared to
the same period in 2000. Salaries and benefits increased in 2001 due to wage
increases and rising benefit costs as well as increases in the number of
full-time equivalent associates in customer service positions. For the quarter
ended June 30, 2001, salaries and benefits totaled $3,642,000, an increase of
$341,000 (or 10.3%) from $3,301,000 for the second quarter of 2000, and up only
$57,000 (or 1.6%) compared to the linked quarter. Peoples' other non-interest
expenses were at or below their amounts in recent periods, except marginal
increases in non-income based taxes.
"Rising medical costs are a contributor to our increased expenses, and
all indications are these costs will continue to rise over the next several
years," said Conlon. "Given this probability, we will work to manage those
expenses and have implemented strategies to better prepare the company to
control rising costs while providing a competitive benefits package for our
associates."
Late in the second quarter of 2001, Peoples invested $20.0 million of
matured investment securities in business owned life insurance ("BOLI"). The
BOLI investment, which accounts for most of the increase in other assets, will
produce a tax-advantaged revenue stream and enhance Peoples' operating
efficiency as rising employee benefit costs are offset by the anticipated
increased revenue stream of BOLI.
Loan balances at June 30, 2001, remained stable compared to the
previous quarter end. Economic conditions and intense rate competition in
Peoples' primary markets and contiguous areas continue to challenge loan growth.
Most of Peoples' loan growth in 2001 is the result of an acquisition completed
during the first quarter of 2001.
As a result of less favorable loan loss experience and general economic
conditions, provision for loan losses remained at $675,000 for the three months
ended June 30, 2001, compared to $600,000 in the same period last year. Net
chargeoffs totaled $549,000 in the second quarter of 2001 compared to $543,000
in the first quarter of 2001. Commercial and consumer loan net chargeoffs
comprised a majority of Peoples net chargeoffs in the second quarter of 2001,
totaling $281,000, or 51.3% of total net chargeoffs, and $125,000, or 22.8% of
total net chargeoffs, respectively. At June 30, 2001, the allowance for loan
losses totaled $12.2 million, or 1.61% of total loans, up $1.2 million from
year-end 2000 when the allowance was 1.48% of total loans.
At June 30, 2001, nonperforming assets totaled $5.1 million, or 0.43%
of total assets, compared to 0.36% at March 31, 2001, and 0.46% at year-end
2000. Although the amount of nonperforming assets increased compared to the
previous quarter-end, the current amount is below Peoples' peer levels and
management believes Peoples' allowance for loan losses is adequate for risks
inherent in the loan portfolio.
Peoples has implemented tax reduction strategies, which include
investments in low-income housing and historic tax credits, to reduce Peoples'
tax burden and effective tax rate. During the second quarter of 2001, these
strategies helped produce an effective tax rate of 29.6% compared to 30.4% for
the same period last year, and 30.5% in the linked quarter. The tax strategies
employed are long-term in nature and may marginally reduce Peoples' tax burden
in future years, depending on economic and regulatory issues.
"The second quarter met our expectations," summarized Evans. "Our
long-term focus remains increasing our shareholders' investment value, and we
continue to look for new ways to integrate our client service opportunities to
produce an optimum result for our customers, associates, and shareholders."
Peoples Bancorp Inc., a diversified financial products and services
company with $1.2 billion in assets, offers a complete line of banking,
investment, insurance, and trust solutions through Peoples Bank's 40 sales
offices and 25 ATM's in Ohio, West Virginia, and Kentucky. Peoples' common stock
is traded on the NASDAQ exchange under the symbol "PEBO." Learn more about
Peoples or enroll in Peoples OnLine Connection, Peoples' Internet banking
product, at www.peoplesbancorp.com.
Conference Call to Discuss Earnings:
Peoples will conduct a facilitated conference call to discuss the
results of operations for the second quarter of 2001 on July 25, 2001, at 3:00
p.m. local time. The conference call is open to the public; however, management
asks that questions be limited to investment analysts, interested members of the
media and shareholders. To participate in the call, please dial (877) 735-0939
approximately five minutes before the scheduled start of the conference call.
Members of Peoples' executive management will participate in the conference
call. Brief opening remarks will be followed by a question and answer period. A
complete transcript of the conference call will be placed on peoplesbancorp.com,
in the "Investor Relations" section under "Conference Call Transcripts".
Safe Harbor Statement:
The statements in this press release which are not historical fact are
forward looking statements that involve a number of risks and uncertainties,
including, but not limited to, the interest rate environment, the effect of
banking and tax regulations, the effect of economic conditions, the impact of
competitive products and pricing, and other risks detailed in Peoples' SEC
filings. Although management believes that the expectations in these
forward-looking statements are based on reasonable assumptions within the bounds
of management's knowledge of Peoples' business and operations, it is possible
that actual results may differ materially from these projections.
PEOPLES BANCORP INC. (Nasdaq: PEBO)
Financial Highlights (Unaudited)
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Three Months Ended Six Months Ended
(in $000's, except share and per share data) June 30, June 30,
2001 2000 2001 2000
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PER SHARE DATA Operating income per share (a):
Basic $ 0.45 $ 0.43 $ 0.87 $ 0.87
Diluted $ 0.45 $ 0.43 $ 0.86 $ 0.86
Cash basis earnings - diluted (b) $ 0.51 $ 0.49 $ 0.98 $ 0.98
Net income per share:
Basic $ 0.46 $ 0.41 $ 0.85 $ 0.85
Diluted $ 0.45 $ 0.41 $ 0.84 $ 0.84
Cash basis earnings - diluted (b) $ 0.51 $ 0.47 $ 0.96 $ 0.96
Dividends declared per share $ 0.15 $ 0.14 $ 0.29 $ 0.28
Book value per share $ 13.68 $ 11.17 $ 13.68 $ 11.17
Tangible book value per share (b) $ 10.90 $ 8.25 $ 10.90 $ 8.25
Dividend payout as a percentage of net income 32.98% 36.93% 34.24% 34.69%
Actual shares outstanding (net of treasury shares) 6,546,426 6,527,092 6,546,426 6,527,092
Weighted average shares outstanding:
Basic 6,571,387 6,515,837 6,551,796 6,520,208
Diluted 6,668,300 6,600,252 6,644,193 6,615,283
PERFORMANCE RATIOS
Return on average equity 13.46% 15.13% 12.81% 15.41%
Cash basis return on average equity (a) 19.27% 23.75% 18.53% 24.20%
Return on average assets 1.03% 1.00% 0.97% 1.04%
Cash basis return on average assets (a) 1.19% 1.17% 1.13% 1.21%
Operating return on average equity (b) 13.34% 15.81% 13.01% 15.88%
Cash basis operating return on average equity (a)(b) 19.12% 24.76% 18.78% 24.92%
Operating return on average assets (b) 1.02% 1.04% 0.99% 1.06%
Cash basis operating return on average assets (a)(b) 1.18% 1.21% 1.15% 1.23%
Non-interest income leverage ratio (c) 29.96% 30.92% 29.89% 30.70%
Efficiency ratio (d) 56.39% 56.62% 57.36% 56.38%
Net interest margin (fully tax equivalent) 4.07% 4.20% 4.02% 4.22%
Net loan chargeoffs as a percentage of average loans 0.07% 0.05% 0.15% 0.07%
-------------- -------------- --------------- --------------
(a) Excludes after-tax impact of non-operating income and expenses relating to
securities transactions, OREO and other asset disposals, and mark-to-market
adjustment on interest rate caps.
(b) Excludes after-tax impact of intangible amortization expense and/or balance
sheet impact of intangible assets acquired through use of purchase
accounting for acquisitions.
(c) Non-interest expense (less intangible amortization and non-direct
operational expenses) as a percentage of fully tax equivalent net interest
income plus non-interest income. Significant non-recurring items are
excluded from the calculation.
(d) Non-interest income (less securities and asset disposal gains) as a
percentage of non-interest expense (less intangible amortization and
non-direct operational expenses). Significant non-recurring items are
excluded from the calculation.
PEOPLES BANCORP INC. CONSOLIDATED STATEMENTS OF INCOME
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Three Months Ended Six Months Ended
(in $000's) June 30, June 30,
2001 2000 2001 2000
------------- ------------- ------------- -------------
Interest income $ 21,992 $ 20,924 $ 44,112 $ 41,036
Interest expense 11,196 10,699 23,005 20,707
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Net interest income 10,796 10,225 21,107 20,329
Provision for loan losses 675 600 1,350 1,122
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Net interest income after provision for loan losses 10,121 9,625 19,757 19,207
Net (loss) gain on securities transactions (1) (45) 1 (56)
Net gain (loss) on asset disposals 5 (140) 25 (145)
Mark-to-market adjustment on interest rate caps 42 - (131) -
Non-interest income:
Service charges on deposits 889 793 1,696 1,545
Trust revenues 628 628 1,242 1,326
Insurance commissions 263 374 584 530
Electronic banking revenues 354 310 676 592
Other non-interest income 136 128 273 368
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Total non-interest income 2,270 2,233 4,471 4,361
Non-interest expense:
Salaries and benefits 3,642 3,301 7,227 6,594
Occupancy and equipment 962 1,018 1,907 1,994
Trust preferred 659 651 1,311 1,306
Amortization of intangibles 582 571 1,148 1,142
Data processing and software 231 268 478 513
Other non-interest expense 2,092 1,985 4,048 3,799
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Total non-interest expense 8,168 7,794 16,119 15,348
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Income before income taxes 4,269 3,879 8,004 8,019
Income taxes 1,264 1,179 2,403 2,458
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Net income $ 3,005 $ 2,700 $ 5,601 $ 5,561
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Fully tax equivalent net interest income $ 11,057 $ 10,506 $ 21,630 $ 20,834
PEOPLES BANCORP INC. SELECTED FINANCIAL INFORMATION
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Three Months Ended Six Months Ended
(in $000's) June 30, June 30,
2001 2000 2001 2000
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CONSOLIDATED AVERAGE BALANCES
Average gross loans $ 752,429 $ 686,606 $ 746,447 $ 674,753
Average earning assets 1,086,887 999,137 1,075,003 988,313
Average total assets 1,163,924 1,078,382 1,150,889 1,067,579
Average non-interest bearing deposits 87,917 82,588 85,795 81,456
Average interest bearing deposits:
Savings 78,417 86,848 77,100 87,803
Interest-bearing demand deposits 274,772 226,911 270,693 221,046
Time deposits 374,186 338,448 359,814 342,290
--------------- --------------- --------------- ---------------
Total average interest bearing deposits 727,375 652,207 707,608 651,139
Average stockholders' equity $ 89,318 $ 71,510 $ 87,414 $ 72,175
NET CHARGEOFFS
Gross chargeoffs $ 701 $ 375 $ 1,343 $ 641
Recoveries 152 60 251 168
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Net chargeoffs $ 549 $ 315 $ 1,092 $ 473
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PEOPLES BANCORP INC. SELECTED FINANCIAL INFORMATION
----------------- ----------------- -----------------
June 30, December 31, June 30,
2001 2000 2000
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LOAN PORTFOLIO (in $000's, end of period)
Commercial, financial, and agricultural $ 313,806 $ 310,558 $ 283,157
Real estate, construction 20,683 20,267 20,243
Real estate, mortgage 293,817 283,323 271,274
Consumer 125,450 122,817 126,739
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Total loans $ 753,756 $ 736,965 $ 701,413
ASSET QUALITY
Allowance for loan losses as a percent of total loans 1.61% 1.48% 1.58%
Allowance for loan losses as a percent of
nonperforming loans (a) 240.1% 212.6% 487.2%
Nonperforming loans as a percent of total loans (a) 0.67% 0.70% 0.32%
Nonperforming assets as a percent of total assets (b) 0.43% 0.46% 0.22%
Nonperforming assets as a percent of total loans and
other real estate owned
real estate owned (b) 0.68% 0.71% 0.35%
Nonperforming assets (in $000's, end of period):
Loans 90 days or more past due $ 466 $ 344 $ 304
Renegotiated loans $ 511 $ 518 $ 573
Nonaccrual loans $ 4,085 $ 4,280 $ 1,363
Other real estate owned $ 32 $ 86 $ 211
----------------- ----------------- -----------------
Total nonperforming assets $ 5,094 $ 5,228 $ 2,451
REGULATORY CAPITAL (in $000's, end of period)
Tier 1 risk-based capital 12.75% 12.83% 12.53%
Total risk-based capital ratio (Tier 1 and Tier 2) 14.08% 14.21% 14.11%
Leverage ratio 8.84% 8.69% 8.46%
Tier 1 capital $ 101,336 $ 97,056 $ 91,427
Total capital (Tier 1 and Tier 2) $ 111,871 $ 107,428 $ 102,901
Total risk-weighted assets $ 794,781 $ 756,195 $ 729,490
SUPPLEMENTAL DATA (in $000's, end of period)
Trust assets under management $ 492,877 $ 498,563 $ 519,000
One year cumulative repricing gap $ (96,404) $ (26,132) $ (66,696)
Employees (full-time equivalent) 401 388 383
Full service offices 34 32 32
Supermarket offices 4 4 3
ATMs 25 27 27
Announced treasury share plans: (c)
Total shares in plan 125,000 165,000 165,000
Shares purchased (d) 52,423 8,995 33,084
Average price (d) $ 19.07 $ 13.78 $ 17.53
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(a) Nonperforming loans include loans 90 days past due and accruing,
renegotiated loans, and nonaccrual loans.
(b) Nonperforming assets include nonperforming loans and other real estate
owned.
(c) 2001 data reflects 2001 Stock Repurchase Program of 125,000 shares (or 2%
of outstanding shares); 2000 data reflects 2000 Stock Repurchase Program of
165,000 shares (or 2.5% of outstanding shares). All share amounts adjusted
for stock dividends.
(d) Reflects treasury shares purchased and average price paid for the three
month period ended on the date indicated.
PEOPLES BANCORP INC. CONSOLIDATED BALANCE SHEETS
------------------ ------------------
(in $000's) June 30, December 31,
2001 2000
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ASSETS
Cash and cash equivalents $ 42,691 $ 28,449
Available-for-sale investment securities, at estimated fair value (amortized
cost of $317,592 and $335,111 at June 30, 2001, and
December 31, 2000, respectively) 316,182 330,521
Loans, net of unearned interest 753,756 736,965
Allowance for loan losses (12,155) (10,930)
----------------- -----------------
Net loans 741,601 726,035
Bank premises and equipment, net of accumulated depreciation 16,405 15,565
Goodwill 16,282 15,702
Other intangibles 1,884 2,146
Other real estate owned 32 86
Other assets 39,187 17,330
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TOTAL ASSETS $ 1,174,264 $ 1,135,834
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LIABILITIES
Non-interest bearing deposits $ 87,475 $ 84,974
Interest bearing deposits 737,635 672,647
----------------- -----------------
Total deposits 825,110 757,621
Federal funds purchased, securities sold under repurchase agreements,
and other short term borrowings 82,586 119,915
Long-term borrowings 140,665 138,511
Accrued expenses and other liabilities 7,318 7,572
----------------- -----------------
TOTAL LIABILITIES 1,055,679 1,023,619
Guaranteed preferred beneficial interests in junior subordinated debentures 29,038 29,021
STOCKHOLDERS' EQUITY
Common stock, no par value (12,000,000 shares authorized, 6,697,011 shares
issued at June 30, 2001, and
6,679,028 shares issued at December 31, 2000) 66,410 66,364
Accumulated comprehensive income, net of deferred income taxes (917) (2,983)
Retained earnings 27,065 23,381
Treasury stock, at cost (150,585 shares at June 30, 2001,
and 189,357 shares at December 31, 2000) (3,011) (3,568)
----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 89,547 83,194
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,174,264 $ 1,135,834
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END OF RELEASE