Peoples Bancorp Announces First Quarter Earnings Results NEWTON, N.C., April 22, 2013 (GLOBE NEWSWIRE) -- Peoples Bancorp of North Carolina, Inc. (Nasdaq:PEBK), the parent company of Peoples Bank, reported first quarter earnings results with highlights as follows: Highlights: *Net earnings were $1.8 million or $0.31 basic and diluted net earnings per share for the three months ended March 31, 2013, before adjustment for preferred stock dividends and accretion, as compared to $1.7 million or $0.30 basic and diluted net earnings per share, before adjustment for preferred stock dividends and accretion, for the same period one year ago. *Net earnings available to common shareholders were $1.6 million or $0.29 basic and diluted net earnings per common share for the three months ended March 31, 2013, as compared to $1.3 million or $0.24 basic and diluted net earnings per common share, for the same period one year ago. *Earnings before securities gains and income taxes were $2.0 million for the three months ended March 31, 2013 compared to $1.7 million for the same period one year ago. *Core deposits were $656.0 million, or 83.7% of total deposits at March 31, 2013, compared to $630.4 million, or 78.0% of total deposits at March 31, 2012. Lance A. Sellers, President and Chief Executive Officer, attributed the increase in first quarter earnings to a decrease in the provision for loan losses, which was partially offset by a decrease in net interest income and an increase in non-interest expense. Net interest income was $7.6 million for the three months ended March 31, 2013, compared to $8.1 million for the same period one year ago. This decrease was primarily due to a decrease in interest income resulting from decreases in loans and investment securities and a decrease in the yield on earning assets, which were partially offset by a decrease in interest expense due to a reduction in the cost of funds and a reduction in interest bearing liabilities. Net interest income after the provision for loan losses increased to $6.6 million during the first quarter of 2013, compared to $6.1 million for the same period one year ago. The provision for loan losses for the three months ended March 31, 2013 was $1.1 million, as compared to $2.0 million for the same period one year ago. The decrease in the provision for loan losses is primarily attributable to a $4.3 million reduction in non-accrual loans from March 31, 2012 to March 31, 2013. Non-interest income was $3.4 million for the three months ended March 31, 2013 and 2012. Decreases in service charge income and gains on sale of securities were offset by increases in mortgage banking income and miscellaneous non-interest income. Non-interest expense was $7.7 million for the three months ended March 31, 2013, as compared to $7.3 million for the same period one year ago.This increase is attributable to a $349,000 increase in salaries and employee benefits expense, which was primarily due to 2013 salary increases and bonuses accrued in the first quarter of 2013, and a $107,000 increase in non-interest expenses other than salary, employee benefits and occupancy expenses for the three months ended March 31, 2013, as compared to the same period one year ago. Total assets amounted to $1.0 billion as of March 31, 2013, as compared to $1.1 billion as of March 31, 2012.Available for sale securities decreased 1.8% to $293.9 million as of March 31, 2013, compared to $299.3 million as of March 31, 2012.This decrease reflects investment securities sold and paydowns of mortgage-backed securities during the previous twelve months, which were partially offset by purchases of investment securities.Total loans amounted to $610.0 million as of March 31, 2013, compared to $658.3 million as of March 31, 2012.This decrease is primarily due to the anticipated reduction in existing loans through the work-through of problem loans and normal principal repayments, which have exceeded loan originations, due primarily to the current level of slow economic growth. Non-performing assets declined to $24.3 million or 2.4% of total assets at March 31, 2013, compared to $33.0 million or 3.1% of total assets at March 31, 2012 primarily due to a $4.3 million decrease in non-accrual loans and a $3.4 million decrease in other real estate owned.Non-performing loans include $9.6 million in acquisition, development and construction ("AD&C") loans, $9.4 million in commercial and residential mortgage loans and $729,000 in other loans at March 31, 2013, as compared to $16.2 million in AD&C loans, $8.3 million in commercial and residential mortgage loans and $539,000 in other loans at March 31, 2012.The allowance for loan losses at March 31, 2013 was $14.4 million or 2.4% of total loans, compared to $16.6 million or 2.5% of total loans at March 31, 2012.According to Mr. Sellers, management believes the current level of the allowance for loan losses is adequate; however, there is no assurance that additional adjustments to the allowance will not be required because of changes in economic conditions, regulatory requirements or other factors. Deposits amounted to $783.8 million as of March 31, 2013, compared to $807.8 million at March 31, 2012.Core deposits, which include non-interest bearing demand deposits, NOW, MMDA, savings and non-brokered certificates of deposit of denominations less than $100,000, increased $25.6 million to $656.0 million at March 31, 2013, as compared to $630.4 million at March 31, 2012.Certificates of deposit in amounts of $100,000 or more totaled $127.8 million at March 31, 2013, as compared to $176.4 million at March 31, 2012.This decrease is attributable to a $17.1 million decrease in brokered certificates of deposit combined with a decrease in retail certificates of deposit as intended as part of the Bank's pricing strategy to allow maturing high cost certificates of deposit to roll-off. Securities sold under agreements to repurchase were $37.4 million at March 31, 2013, as compared to $43.5 million at March 31, 2012. Shareholders' equity was $98.3 million, or 9.7% of total assets, as of March 31, 2013, compared to $104.4 million, or 9.9% of total assets, as of March 31, 2012.This decrease reflects the Company's repurchase and retirement of a portion of its preferred shares in the second quarter of 2012.The Company purchased 12,530 shares of the Company's 25,054 outstanding shares of preferred stock from the U.S. Department of the Treasury ("UST"), which was issued to the UST in connection with the Company's participation in the Capital Purchase Program ("CPP') under the Troubled Asset Relief Program ("TARP") in 2008. Peoples Bank operates 22 offices entirely in North Carolina, with offices in Catawba, Alexander, Lincoln, Mecklenburg, Union, Iredell and Wake Counties.The Company's common stock is publicly traded 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 the Company's annual report on Form 10-K for the year ended December 31, 2012. CONSOLIDATED BALANCE SHEETS March 31, 2013, December 31, 2012 and March 31, 2012 (Dollars in thousands) March 31, 2013 December 31, March 31, 2012 2012 (Unaudited) (Audited) (Unaudited) ASSETS: Cash and due from banks $19,754 $32,617 $23,944 Interest bearing deposits 52,624 16,226 24,160 Cash and cash equivalents 72,378 48,843 48,104 Investment securities 293,925 297,823 299,303 available for sale Other investments 5,215 5,599 6,205 Total securities 299,140 303,422 305,508 Mortgage loans held for sale 3,834 6,922 6,256 Loans 609,965 619,974 658,343 Less:Allowance for loan (14,412) (14,423) (16,612) losses Net loans 595,553 605,551 641,731 Premises and equipment, net 16,616 15,874 16,629 Cash surrender value of life 13,379 13,273 12,937 insurance Accrued interest receivable 17,380 19,631 22,162 and other assets Total assets $1,018,280 $1,013,516 $1,053,327 LIABILITIES AND SHAREHOLDERS' EQUITY: Deposits: Non-interest bearing demand $168,156 $161,582 $149,628 NOW, MMDA & savings 378,755 371,719 355,688 Time, $100,000 or more 127,772 134,733 176,428 Other time 109,149 113,491 126,055 Total deposits 783,832 781,525 807,799 Securities sold under 37,388 34,578 43,479 agreements to repurchase FHLB borrowings 70,000 70,000 70,000 Junior subordinated 20,619 20,619 20,619 debentures Accrued interest payable and 8,163 9,047 7,024 other liabilities Total liabilities 920,002 915,769 948,921 Shareholders' equity: Series A preferred stock, $1,000 stated value; authorized 5,000,000 shares; 12,524 12,524 24,793 issued and outstanding 12,524 shares at 3/31/13 and 12/31/12 Common stock, no par value; authorized 20,000,000 shares; issued and 48,133 48,133 48,298 outstanding 5,613,495 shares at 3/31/13 and 12/31/12 Retained earnings 32,911 31,478 27,817 Accumulated other 4,710 5,612 3,498 comprehensive income Total shareholders' equity 98,278 97,747 104,406 Total liabilities and $1,018,280 $1,013,516 $1,053,327 shareholders' equity CONSOLIDATED STATEMENTS OF INCOME For the three months ended March 31, 2013 and 2012 (Dollars in thousands, except per share amounts) Three months ended March 31, 2013 2012 (Unaudited) (Unaudited) INTEREST INCOME: Interest and fees on loans $7,640 $8,425 Interest on due from banks 12 3 Interest on investment securities: U.S. Government sponsored enterprises 378 1,070 State and political subdivisions 984 800 Other 89 64 Total interest income 9,103 10,362 INTEREST EXPENSE: NOW, MMDA & savings deposits 218 344 Time deposits 467 1,032 FHLB borrowings 661 690 Junior subordinated debentures 100 113 Other 17 39 Total interest expense 1,463 2,218 NET INTEREST INCOME 7,640 8,144 PROVISION FOR LOAN LOSSES 1,053 2,049 NET INTEREST INCOME AFTER PROVISION FOR LOAN 6,587 6,095 LOSSES NON-INTEREST INCOME: Service charges 1,039 1,188 Other service charges and fees 373 599 Gain on sale of securities 263 527 Mortgage banking income 384 226 Insurance and brokerage commissions 139 135 Miscellaneous 1,229 705 Total non-interest income 3,427 3,380 NON-INTEREST EXPENSES: Salaries and employee benefits 4,190 3,841 Occupancy 1,312 1,301 Other 2,236 2,129 Total non-interest expense 7,738 7,271 EARNINGS BEFORE INCOME TAXES 2,276 2,204 INCOME TAXES 518 545 NET EARNINGS 1,758 1,659 Dividends and accretion on preferred stock 157 348 NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS $1,601 $1,311 PER COMMON SHARE AMOUNTS Basic net earnings $0.29 $0.24 Diluted net earnings $0.29 $0.24 Cash dividends $0.03 $0.07 Book value $15.28 $14.31 FINANCIAL HIGHLIGHTS For the three months ended March 31, 2013 and 2012 (Dollars in thousands) Three months ended March 31, 2013 2012 (Unaudited) (Unaudited) SELECTED AVERAGE BALANCES: Available for sale securities $286,527 $313,452 Loans 621,077 671,580 Earning assets 936,820 997,847 Assets 1,004,257 1,059,411 Deposits 773,644 814,258 Shareholders' equity 99,381 105,202 SELECTED KEY DATA: Net interest margin (tax 3.52% 3.44% equivalent) Return on average assets 0.71% 0.63% Return on average shareholders' 7.17% 6.34% equity Shareholders' equity to total 9.65% 9.91% assets (period end) ALLOWANCE FOR LOAN LOSSES: Balance, beginning of period $14,423 $16,604 Provision for loan losses 1,053 2,049 Charge-offs (1,179) (2,596) Recoveries 115 555 Balance, end of period $14,412 $16,612 ASSET QUALITY: Non-accrual loans $19,667 $23,981 90 days past due and still 50 1,023 accruing Other real estate owned 4,588 8,020 Repossessed assets 12 -- Total non-performing assets $24,317 $33,024 Non-performing assets to total 2.39% 3.14% assets Allowance for loan losses to 59.27% 50.30% non-performing assets Allowance for loan losses to total 2.36% 2.52% loans LOAN RISK GRADE ANALYSIS: Percentage of Loans By Risk Grade 3/31/2013 3/31/2012 Risk Grade 1 (excellent quality) 2.86% 3.10% Risk Grade 2 (high quality) 17.32% 16.36% Risk Grade 3 (good quality) 48.29% 48.00% Risk Grade 4 (management 19.00% 20.50% attention) Risk Grade 5 (watch) 5.41% 4.25% Risk Grade 6 (substandard) 6.80% 7.45% Risk Grade 7 (doubtful) 0.00% 0.00% Risk Grade 8 (loss) 0.00% 0.00% At March 31, 2013, including non-accrual loans, there were nine relationships exceeding $1.0 million in the Watch risk grade(which totaled $16.7 million) andfour relationships exceeding $1.0 million in the Substandard risk grade(which totaled $11.3 million).There were four relationships with loans in the Watch risk grade and the Substandard risk grade exceeding $1.0 million total (which totaled $5.7 million). CONTACT: Lance A. Sellers President and Chief Executive Officer A. Joseph Lampron, Jr. Executive Vice President and Chief Financial Officer 828-464-5620, Fax 828-465-6780
Peoples Bancorp Announces First Quarter Earnings Results
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