MARIETTA, Ohio, Jan. 23, 2014 /PRNewswire/ --

Summary fourth quarter and full year 2013 results:

  • Diluted earnings per common share were $0.47 for the quarter and $1.63 for the year.
    • Peoples incurred pre-tax acquisition-related costs of $1.2 million during the quarter and $1.5 million for 2013.
    • 2013 earnings benefited from recoveries of loan losses of $1.0 million for the quarter and $4.4 million for the year.
  • Period-end total loan balances reflected 16% annualized organic growth for the quarter and 12% for the year.
    • Commercial lending generated over 80% of the fourth quarter growth.
    • Non-mortgage consumer balances grew at a 22% annualized rate for the quarter and 33% since year-end 2012.
    • Organic growth in 2013 was supplemented by the Ohio Commerce Bank acquisition and its $96.6 million of loans.
    • Average loan balances were up 15% year-over-year for the quarter and 8% for the full year.
  • Asset quality trends remained favorable in 2013, which included recoveries exceeding charge-offs in each quarter.  
    • Nonperforming assets were 0.81% of total loans and OREO at year-end 2013 versus 1.58% at year-end 2012.
    • Gross recoveries exceeded charge-offs by $1.1 million for the quarter and $3.7 million for the year.
    • Allowance for loan losses decreased to 1.43% of total loans at December 31, 2013, from 1.81% at year-end 2012.
  • Total revenue increased 9% for the quarter and 4% for the year compared to the prior year periods.
    • Total non-interest income benefited from double-digit year-over-year growth in insurance and investment revenues.
    • Acquisitions and increases in sales production accounted for most of the higher fee revenue in 2013.
    • Net interest income improved due mostly to strong loan growth and higher long-term interest rates.
    • Net interest margin expanded 20 basis points versus the linked quarter, to 3.46% for the quarter.
    • Acquisition accretion and one-time loan income added 15 basis points to fourth quarter 2013 net interest margin.  
    • 2013 net interest margin was 3.25% versus 3.39% in 2012, due largely to the prolonged low rate environment. 
  • Operating expenses were higher than prior periods but in line with Peoples' prior guidance.
    • Total non-interest expense was $18.4 million versus the fourth quarter 2013 guidance of $18.3 million.
    • Peoples' prior guidance assumed fourth quarter expenses would include $950,000 of one-time acquisition expenses.
    • Acquisitions and other initiatives to grow revenue were key drivers of the additional expenses compared to 2012.
  • Retail deposit balances grew during the quarter, while overall mix continued to shift toward low-cost core deposits.
    • Peoples added $110.9 million of deposits during the fourth quarter as part of the Ohio Commerce Bank acquisition.
    • Non-interest-bearing deposits continued to comprise over 20% of Peoples' total deposits.
    • Total retail balances were impacted by reductions in high-cost CDs and seasonal declines in governmental deposits.  

Peoples Bancorp Inc. ("Peoples") (NASDAQ: PEBO) today announced results for the quarter and year ended December 31, 2013.  Net income totaled $5.1 million for the fourth quarter of 2013, representing earnings per diluted common share of $0.47.  In comparison, earnings per diluted common share were $0.23 and $0.36 for the third quarter of 2013 and fourth quarter of 2012, respectively.  For the year, net income was $17.6 million in 2013 versus $20.4 million in 2012, representing earnings per diluted common share of $1.63 and $1.92, respectively.    

"We are very pleased with fourth quarter and full year 2013 results considering the challenging operating environment for community banks," said Chuck Sulerzyski, President and Chief Executive Officer.  "Our earnings gained significant momentum in the second half of the year as we began to see positive contributions from prior strategic investments and initiatives.  Other key accomplishments during 2013 included stronger than expected loan growth, improved revenue generation within our fee businesses, disciplined expense management, and restoration of credit quality to pre-crisis levels.  We also invested in our future by adding sales talent and remodeling our entire branch network, and made meaningful contributions to the local communities we serve.  These successes position Peoples for another year of solid performance in 2014." 

Sulerzyski continued, "Also in 2013, we made further progress on our plan to grow through acquisitions.  As we work diligently to capitalize on the growth potential provided by the fourth quarter acquisition of Ohio Commerce Bank, we are excited by the opportunity to add density to our existing footprint and gain many new clients with the recently announced acquisition of Midwest Bancshares.  We look forward to completing this acquisition and expanding our relationships in the Jackson County, Ohio region."    

During the fourth quarter, Peoples' banking subsidiary, Peoples Bank, National Association ("Peoples Bank"), completed its merger with Ohio Commerce Bank ("Ohio Commerce").  This all cash transaction resulted in Peoples Bank acquiring a full-service banking office in the Cleveland, Ohio suburb of Beachwood and added $96.6 million of loans and $110.9 million of deposits.  In connection with this acquisition, Peoples incurred one-time pre-tax expenses totaling $1.2 million ($0.8 million or $0.07 per share after-tax).  Much of this amount was attributable to the conversion of data processing services.

Earlier this week, Peoples announced plans to acquire Midwest Bancshares, Inc. and its wholly-owned subsidiary, First National Bank of Wellston ("FNB Wellston"), located in Jackson County, Ohio.  This merger transaction should be completed in the second quarter of 2014, subject to customary closing conditions, including regulatory approvals and Midwest Bancshares' shareholders' approval.  At that time, the two full service offices of FNB Wellston located in Wellston and Jackson, Ohio, which should add nearly $60 million in loans and $80 million in deposits, will become branches of Peoples Bank.  Peoples anticipates the transaction being accretive to earnings in the first full year, although one-time acquisition costs could offset the incremental 2014 earnings. 

Fourth quarter 2013 net interest income was $15.6 million, up 14% compared to the linked quarter and 10% higher than the prior year's fourth quarter, while net interest margin for these periods was 3.46%, 3.26% and 3.42%, respectively.   These improvements were largely attributable to the Ohio Commerce acquisition, coupled with meaningful organic loan growth during 2013.  In the fourth quarter of 2013, Peoples recognized $270,000 of normal accretion income for the acquisition accounting adjustments, mainly on the acquired loans and deposits from Ohio Commerce, which added 6 basis points to net interest margin.  Peoples' net interest income and margin have also benefited from additional interest income for prepayment fees and interest recovered on nonaccrual loans.  This one-time income totaled $427,000 in the fourth quarter of 2013, compared to $405,000 in the linked quarter and $330,000 in the fourth quarter of 2012, and added 10 basis points to both the third and fourth quarters of 2013 net interest margin and 7 basis points to the fourth quarter of 2012 net interest margin. 

For the year, growth in earning assets due to organic loan growth produced higher net interest income in 2013 than in 2012.  However, the sustained low interest rate environment caused asset yields to decline more than Peoples could reduce its funding costs, which caused net interest margin compression in 2013. 

"Both net interest income and margin were stronger in the fourth quarter than we had expected, due in part to the  additional loan income and accretion income being more than previously estimated," said Edward Sloane, Chief Financial Officer and Treasurer.  "Asset yields also benefited from the yield curve remaining steeper than the first half of the year.  The higher long-term rates have led to a continued slow down in refinancing activity within the investment portfolio and a corresponding reduction in premium amortization.  At the same time, we achieved meaningful loan growth in each of the final three quarters of 2013, resulting in higher earning assets in the fourth quarter.  On the funding side, our overall cost fell during the fourth quarter as we continued to utilize shorter-term borrowings to fund much of the asset growth.  As we begin 2014, we remain focused on sustaining the improvement in margin during the second half of 2013, but will look for opportunities to lessen our long-term exposure to rising rates by either extending funding or shortening our asset duration."    

Total non-interest income was up 6% year-over-year for both the fourth quarter and full year.  Both insurance and investment income experienced double-digit increases during 2013.  Insurance income was 36% higher for the quarter and 24% for the year.  Much of this growth was the result of acquisitions completed in 2013, with increases in premiums for insurance policies also being a significant contributing factor and consistent with industry trends.  Investment income was up 17% in the fourth quarter and 16% for the year as a result of growth in managed assets.  Higher sales activity, primarily with respect to retirement plan services, plus asset appreciation corresponding to the overall market performance,  accounted for much of the growth in managed assets in 2013.  The additional insurance and investment income in 2013 was partially offset by lower mortgage banking income due to fewer loans being sold in the secondary market.  During 2013, refinancing activity decreased substantially as long-term mortgage rates rose during the second half of the year.  Compared to the linked quarter, total non-interest income decreased 3% due mostly to normal seasonality of insurance commission revenue.

Fourth quarter 2013 non-interest expenses totaled $18.4 million, 8% higher than the prior year fourth quarter and 7% higher than the linked quarter.  The key drivers of these increases were the previously noted one-time expenses related to the Ohio Commerce acquisition, and normal operating expenses of the acquired banking location, such as employee compensation and occupancy expenses.  Compared to the prior year, salary and employee benefit costs were up 9% for both the fourth quarter and full year of 2013.  These increases were mostly the result of a higher number of full-time equivalent employees during 2013, attributable to acquisitions and the addition of new sales talent in several markets.  At December 31, 2013, the number of full-time equivalent employees was 546, up from 494 a year ago.  Acquisitions added 32 full-time equivalent employees in 2013, of which 14 were associated with the Ohio Commerce acquisition.  The overall increase in salary and employee benefit costs was tempered by the lack of pension settlement charges in the fourth quarter of 2013.  In comparison, Peoples incurred settlement charges of $482,000 a year ago and $264,000 in the linked quarter.   For the year, total non-interest expenses were up 8% in 2013, due mostly to the investments made to grow revenue, such as the new sales talent and the branch remodeling project.

"We achieved 4% total revenue growth in 2013 despite a challenging rate environment and the expected decline in mortgage originations," added Sloane.  "While acquisitions were a driver of revenue growth, our fee revenues benefited from a continued increase in new sales production from our associates working together to build success for our clients.  We also effectively controlled operating expenses in line with targeted levels for the year.  Unfortunately, we came up short on our goal of positive operating leverage in 2013.  Additionally, the efficiency ratio was outside our target range due primarily to acquisition costs incurred in 2013."

At December 31, 2013, period-end loan balances were $1.20 billion, $139.1 million higher than the prior quarter-end and up 21% from the prior year-end.  The loans added in the Ohio Commerce acquisition were a major driver of the linked quarter increase and accounted for 46% of the growth for the year.  Even without the acquired balances, Peoples successfully grew period-end loan balances at a 16% annualized rate during the fourth quarter, resulting in a 12% increase for the year.   Commercial lending activity continued to build in the fourth quarter, while non-mortgage consumer lending activity remained strong.  As a result, Peoples experienced double-digit organic growth in 2013.  Commercial loan balances had a 23% annualized increase for the quarter and 8% growth for the year.  Non-mortgage consumer balances grew $7.2 million, or 22% on an annualized basis, in the fourth quarter, and $33.8 million, or 33%, for the year.  The strong organic growth during much of 2013 resulted in higher average balances.  Compared to 2012, average loan balances were up 15% for the quarter and 8% for the year.

"We exceeded our goal of 8% to 10% loan growth for 2013 despite the slow start to the year," said Sulerzyski.  "More importantly, we added some diversity to the portfolio by generating 56% of the organic growth from within our consumer portfolio.  At the same time, we improved asset quality and restored key metrics to the levels we typically experienced before the Great Recession.  Our outlook for 2014 is encouraging considering we will see a double-digit increase in the full year average loan balances based on year-end 2013 loan balances."

Total nonperforming assets decreased 14% during the fourth quarter of 2013 and 38% for the year, due to a reduction in nonaccrual loans.  As a result, nonperforming assets were 0.81% of total loans plus other real estate owned ("OREO") at December 31, 2013, compared to 1.06% at September 30, 2013 and 1.58% at year-end 2012.   Total criticized loans, which are those classified as watch, substandard or doubtful, also maintained a declining trend during 2013 due to paydowns on nonaccrual commercial loans.  For the quarter, Peoples reduced criticized loans by 2%, while criticized loan balances were 34% lower at December 31, 2013 than at year-end 2012.

In 2013, gross recoveries exceeded gross charge-offs by $3.7 million, of which $1.1 million occurred in the fourth quarter.  The combination of net recoveries and continued improvement in asset quality in 2013 drove a reduction in Peoples' allowance for loan losses, which was tempered by the impact of organic loan growth.  As a result, the allowance for loan losses was $17.1 million, or 1.43% of total loans, at December 31, 2013.  In comparison, the allowance for loan losses was 1.60% and 1.81% of total loans, at September 30, 2013 and year-end 2012, respectively.  In contrast, Peoples' allowance for loan losses as a percentage of nonperforming loans increased during 2013 to 194.1% at December 31, 2013, from 151.8% at the prior quarter-end and 119.8% at December 31, 2012.

At December 31, 2013, Peoples' retail deposit balances were up $142.9 million from the prior quarter-end.  Most of this increase was due to the Ohio Commerce acquisition, which added $80.0 million of interest-bearing deposits and $30.9 million of non-interest-bearing balances.  Of the acquired interest-bearing balances, money market accounts and certificates of deposit ("CDs") comprised $37.8 million and $32.0 million, respectively.  In 2013, Peoples experienced a modest decline in retail balances excluding the deposits acquired from Ohio Commerce, as planned reductions in high-cost CDs exceeded the growth that occurred in low-cost core deposits, such as savings and checking accounts.  As a result, total wholesale funding increased by 23% in 2013, due largely to Peoples utilizing short-term borrowings to fund a portion of the loan growth.

At December 31, 2013, Peoples' total risk-based capital ratio was 13.78%, compared to 15.46% at September 30, 2013 and 15.43% at year-end 2012, with 6% required to be considered well capitalized.  The key driver of the linked quarter decline was the impact of assets acquired in the Ohio Commerce acquisition, which also caused a reduction in the ratio of tangible equity to tangible assets.  At December 31, 2013, this ratio was 7.26% versus 8.16% at the prior quarter-end and 8.28% at December 31, 2012.  A significant contributing factor to the lower tangible equity ratio was the change in market value of Peoples' available-for-sale investment securities during 2013.  

"Overall, 2013 was a very good year with successes along several fronts," summarized Sulerzyski.  "Our outlook for 2014 is very positive given the growing core earnings stream, strong capital position, and improving economic conditions.  We remain committed to improving operating efficiency, generating superior returns for our shareholders, and building the long-term value of the company.  Achieving these goals in 2014 will require the continued disciplined execution of our strategies and partnership with our clients and communities."   

Peoples Bancorp Inc. is a diversified financial services holding company with $2.1 billion in total assets, 50 locations and 47 ATMs in Ohio, West Virginia and Kentucky.  Peoples makes available a complete line of banking, investment, insurance and trust solutions through its subsidiaries - Peoples Bank, National Association 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 U.S. 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 fourth quarter and full year 2013 results of operations today at 11:00 a.m., Eastern Standard 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.

Use of Non-GAAP Financial Measures 
This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP").  Management uses these "non-GAAP" measures in its analysis of Peoples' performance and the efficiency of its operations. Management believes that these non-GAAP measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods and peers. These disclosures should not be viewed as substitutes for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Below is a listing of the non-GAAP measures used in this news release:

  • Tangible assets and tangible equity measures are non-GAAP since they exclude the impact of intangible assets acquired through acquisitions on both total stockholders' equity and total assets and the related amortization from earnings.  
  • Pre-provision net revenue is defined as net interest income plus non-interest income minus non-interest expense.  This measure is non-GAAP since it excludes (recovery of) provision for loan losses and all gains and/or losses included in earnings.

A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included at the end of this news release under the caption of "Non-GAAP Financial Measures".

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 to management 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) the success, impact, and timing of the implementation of Peoples' business strategies, including the successful integration of the recently completed acquisitions, the expansion of consumer lending activity and rebranding efforts; (2) Peoples' ability to complete and, if completed, successfully integrate future acquisitions, including the pending merger of Midwest Bancshares, Inc. with and into Peoples; (3) 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; (4) changes in the interest rate environment due to economic conditions and/or the fiscal policies of the U.S. government and Federal Reserve Board, which may adversely impact interest margins; (5) changes in prepayment speeds, loan originations and charge-offs, which may be less favorable than expected and adversely impact the amount of interest income generated; (6) adverse changes in the economic conditions and/or activities, including impacts from the implementation of the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012, as well as continuing economic uncertainty in the U.S., the European Union, and other areas, which could decrease sales volumes and increase loan delinquencies and defaults; (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 promulgated and to be promulgated thereunder by the Office of the Comptroller of the Currency, the Federal Reserve Board and the Consumer Finance Protection Bureau, which may subject Peoples, its subsidiaries or one or more acquired companies to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses; (8) deterioration in the credit quality of Peoples' loan portfolio, which may adversely impact the provision for loan losses; (9) changes in accounting standards, policies, estimates or procedures which may adversely affect Peoples' reported financial condition or results of operations; (10) adverse changes in the conditions and trends in the financial markets, including political developments, which may adversely affect the fair value of securities within Peoples' investment portfolio and interest rate sensitivity of Peoples' consolidated balance sheet; (11) changes in stock market prices, which may adversely impact income from Peoples' brokerage, asset and wealth management businesses; (12) Peoples' ability to receive dividends from its subsidiaries; (13) Peoples' ability to maintain required capital levels and adequate sources of funding and liquidity; (14) the impact of larger or similar sized financial institutions encountering problems, which may adversely affect the banking industry and/or Peoples' business generation and retention, funding and liquidity; (15) the costs and effects of regulatory and legal developments, including the outcome of potential regulatory or other governmental inquiries and legal proceedings and results of regulatory examinations; (16) Peoples' ability to secure confidential information through the use of computer systems and telecommunications networks, including those of our third-party vendors and other service providers, may prove inadequate, which could adversely affect customer confidence in Peoples and/or result in Peoples incurring a financial loss; (17) the overall adequacy of our risk management program; and (18) 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, 2012.

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 issuance date of its December 31, 2013 consolidated financial statements as part of its Annual Report on Form 10-K to be filed 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


Year Ended


December 31,


September 30,


December 31,


December 31,


2013


2013


2012


2013


2012

PER COMMON SHARE:










Earnings per share:










Basic

$

0.48



$

0.24



$

0.36



$

1.65



$

1.92


Diluted

0.47



0.23



0.36



1.63



1.92


Cash dividends declared per share

0.14



0.14



0.12



0.54



0.45


Book value per share

20.89



20.97



21.02



20.89



21.02


Tangible book value per share (a)

13.57



14.23



14.52



13.57



14.52


Closing stock price at end of period

$

22.51



$

20.88



$

20.43



$

22.51



$

20.43












SELECTED RATIOS:










Return on average equity (b)

9.09

%


4.61

%


6.99

%


7.92

%


9.52

%

Return on average assets  (b)

1.01

%


0.53

%


0.82

%


0.91

%


1.11

%

Efficiency ratio (c)

71.80

%


72.47

%


72.99

%


71.90

%


69.55

%

Pre-provision net revenue to average assets (b)(d)

1.29

%


1.26

%


1.23

%


1.26

%


1.41

%

Net interest margin (b)(e)

3.46

%


3.26

%


3.42

%


3.25

%


3.39

%

Dividend payout ratio (f)

29.61

%


60.11

%


33.17

%


33.20

%


23.58

%











(a)

This amount represents a non-GAAP financial 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 news 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)

This ratio represents a non-GAAP financial measure since it excludes the recovery of or provision for loan losses and net gains or losses on security transactions, debt extinguishment, loans held-for-sale and other real estate owned, and other assets.  This measure is a key metric used by federal bank regulatory agencies in their evaluation of capital adequacy for financial institutions.  Additional information regarding the calculation of this ratio is included at the end of this news release.

(e)

Information presented on a fully tax-equivalent basis.

(f)

Dividends declared on common shares as a percentage of net income.

CONSOLIDATED STATEMENTS OF INCOME


Three Months Ended



Year Ended



December 31,



September 30,



December 31,



December 31,


(in $000's)

2013



2013



2012



2013



2012


Interest income

$

18,385



$

16,509



$

17,575



$

67,071



$

69,470


Interest expense

2,806



2,833



3,465



11,686



14,995


Net interest income

15,579



13,676



14,110



55,385



54,475


Recovery of loan losses

(964)



(919)



(503)



(4,410)



(4,716)


Net interest income after recovery of loan losses

16,543



14,595



14,613



59,795



59,191












Net gain (loss) on securities transactions

46



(1)



273



489



3,548


Loss on debt extinguishment

-



-



(1,033)



-



(4,144)


Net gain on loans held-for-sale and other real

estate owned

-



10



58



86



66


Net loss on other assets

(125)



(29)



(85)



(241)



(248)












Non-interest income:










Insurance income

2,842



3,261



2,088



12,201



9,844


Deposit account service charges

2,285



2,377



2,237



8,764



8,965


Trust and investment income

1,897



1,751



1,619



7,122



6,129


Electronic banking income

1,664



1,547



1,519



6,191



5,955


Mortgage banking income

316



360



1,008



1,759



2,877


Other non-interest income

342



290



348



1,183



1,201


Total non-interest income

9,346



9,586



8,819



37,220



34,971












Non-interest expense:










Salaries and employee benefits costs

9,463



9,358



8,715



36,472



33,426


Net occupancy and equipment

1,719



1,637



1,736



6,840



6,094


Professional fees

1,123



1,188



1,181



4,207



4,370


Electronic banking expense

941



920



891



3,586



3,342


Marketing expense

742



547



1,192



2,301



2,682


Data processing and software

533



530



537



2,012



1,979


Franchise taxes

405



412



245



1,643



1,486


Communication expense

333



342



355



1,339



1,285


FDIC insurance

282



224



213



1,036



1,002


Amortization of intangible assets

274



180



159



807



509


Foreclosed real estate and other loan expenses

197



243



262



880



1,001


Other non-interest expense

2,383



1,682



1,620



7,142



6,298


Total non-interest expense

18,395



17,263



17,106



68,265



63,474


Income before income taxes

7,415



6,898



5,539



29,084



29,910


Income tax expense

2,301



4,381



1,665



11,510



9,525


Net income

$

5,114



$

2,517



$

3,874



$

17,574



$

20,385












PER COMMON SHARE DATA:










Earnings per share - Basic

$

0.48



$

0.24



$

0.36



$

1.65



$

1.92


Earnings per share - Diluted

$

0.47



$

0.23



$

0.36



$

1.63



$

1.92


Cash dividends declared per share

$

0.14



$

0.14



$

0.12



$

0.54



$

0.45












Weighted-average shares outstanding - Basic

10,602,266



10,589,126



10,542,810



10,581,222



10,527,885


Weighted-average shares outstanding - Diluted

10,718,465



10,692,555



10,555,260



10,679,417



10,528,286


Actual shares outstanding (end of period)

10,605,782



10,596,797



10,547,960



10,605,782



10,547,960


CONSOLIDATED BALANCE SHEETS


December 31,

(in $000's)

2013


2012





Assets




Cash and cash equivalents:




Cash and due from banks

$

36,016



$

47,256


Interest-bearing deposits in other banks

17,804



15,286


Total cash and cash equivalents

53,820



62,542






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




$621,126 at December 31, 2013 and $628,584 at December 31, 2012)

606,108



639,185


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




$46,094 at December 31, 2013 and $47,124 at December 31, 2012)

49,222



45,275


Other investment securities, at cost

25,196



24,625


Total investment securities

680,526



709,085






Loans, net of deferred fees and costs

1,196,234



985,172


Allowance for loan losses

(17,065)



(17,811)


Net loans

1,179,169



967,361






Loans held-for-sale

1,688



6,546


Bank premises and equipment, net of accumulated depreciation

29,809



27,013


Bank owned life insurance

1,880



51,229


Goodwill

70,520



64,881


Other intangible assets

7,083



3,644


Other assets

34,613



25,749


Total assets

$

2,059,108



$

1,918,050






Liabilities




Deposits:




Non-interest-bearing deposits

$

409,891



$

317,071


Interest-bearing deposits

1,170,867



1,175,232


Total deposits

1,580,758



1,492,303






Short-term borrowings

113,590



47,769


Long-term borrowings

121,826



128,823


Accrued expenses and other liabilities

21,381



27,427


Total liabilities

1,837,555



1,696,322






Stockholders' Equity




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




at December 31, 2013 and December 31, 2012)

-



-


Common stock, no par value (24,000,000 shares authorized, 11,206,576 shares




issued at December 31, 2013 and 11,155,648 shares issued at




December 31, 2012), including shares in treasury

168,869



167,039


Retained earnings

80,898



69,158


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

(13,244)



654


Treasury stock, at cost (600,794 shares at December 31, 2013 and




607,688 shares at December 31, 2012)

(14,970)



(15,123)


Total stockholders' equity

221,553



221,728


Total liabilities and stockholders' equity

$

2,059,108



$

1,918,050






SELECTED FINANCIAL INFORMATION


December 31,

September 30,

June 30,

March 31,

December 31,

(in $000's, end of period)

2013

2013

2013

2013

2012

Loan Portfolio






Commercial real estate, construction

$

47,539


$

39,969


$

30,770


$

24,108


$

34,265


Commercial real estate, other

450,170


374,953


389,281


381,331


378,073


Commercial and industrial

232,754


192,238


184,981


174,982


180,131


Residential real estate

268,617


262,602


252,282


237,193


233,841


Home equity lines of credit

60,076


55,341


52,212


50,555


51,053


Consumer

135,018


127,785


119,029


108,353


101,246


Deposit account overdrafts

2,060


4,277


1,674


3,996


6,563


Total loans

$

1,196,234


$

1,057,165


$

1,030,229


$

980,518


$

985,172








Deposit Balances






Interest-bearing deposits:






Retail certificates of deposit

$

363,226


$

334,910


$

349,511


$

353,894


$

392,313


Money market deposit accounts

275,801


224,400


238,554


288,538


288,404


Governmental deposit accounts

132,379


151,910


146,817


167,441


130,630


Savings accounts

215,802


196,293


199,503


200,549


183,499


Interest-bearing demand accounts

134,618


123,966


125,875


124,969


124,787


Total retail interest-bearing deposits

1,121,826


1,031,479


1,060,260


1,135,391


1,119,633


Brokered certificates of deposits

49,041


49,620


50,393


52,648


55,599


Total interest-bearing deposits

1,170,867


1,081,099


1,110,653


1,188,039


1,175,232


Non-interest-bearing deposits

409,891


356,767


325,125


340,887


317,071


Total deposits

$

1,580,758


$

1,437,866


$

1,435,778


$

1,528,926


$

1,492,303








Asset Quality






Nonperforming assets:






Loans 90+ days past due and accruing

$

910


$

2,597


$

1,520


$

1,215


$

1,235


Nonaccrual loans

7,881


8,537


10,607


11,803


13,638


Total nonperforming loans

8,791


11,134


12,127


13,018


14,873


Other real estate owned

893


120


120


815


836


Total nonperforming assets

$

9,684


$

11,254


$

12,247


$

13,833


$

15,709








Allowance for loan losses as a percent of






nonperforming loans

194.13

%

151.79

%

141.11

%

133.96

%

119.75

%

Nonperforming loans as a percent of total loans

0.73

%

1.05

%

1.17

%

1.32

%

1.50

%

Nonperforming assets as a percent of total assets

0.47

%

0.59

%

0.64

%

0.71

%

0.82

%

Nonperforming assets as a percent of total loans






and other real estate owned

0.81

%

1.06

%

1.18

%

1.41

%

1.58

%

Allowance for loan losses as a percent of total loans

1.43

%

1.60

%

1.66

%

1.78

%

1.81

%







Capital Information(a)






Tier 1 common ratio

12.42

%

14.09

%

14.17

%

14.69

%

14.06

%

Tier 1 risk-based capital ratio

12.42

%

14.09

%

14.17

%

14.69

%

14.06

%

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

13.78

%

15.46

%

15.54

%

16.05

%

15.43

%

Leverage ratio

8.52

%

9.14

%

9.04

%

8.90

%

8.83

%

Tier 1 common capital

$

166,217


$

168,254


$

166,576


$

164,329


$

160,604


Tier 1 capital

166,217


168,254


166,576


164,329


160,604


Total capital (Tier 1 and Tier 2)

184,457


184,550


182,706


179,569


176,224


Total risk-weighted assets

$

1,338,811


$

1,194,016


$

1,175,647


$

1,118,644


$

1,141,938


Tangible equity to tangible assets (b)

7.26

%

8.16

%

8.07

%

8.35

%

8.28

%



(a)

December 31, 2013 data based on preliminary analysis and subject to revision.

(b)

These ratios represent non-GAAP financial 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 news release.

PROVISION FOR LOAN LOSSES INFORMATION


Three Months Ended


Year Ended


December 31,


September 30,


December 31,


December 31,

(in $000's)

2013


2013


2012


2013


2012

(Recovery of) Provision for Loan Losses










Provision for checking account overdrafts

$

102



$

131



$

82



$

356



$

294


Recovery of other loan losses

(1,066)



(1,050)



(585)



(4,766)



(5,010)


Total recovery of loan losses

$

(964)



$

(919)



$

(503)



$

(4,410)



$

(4,716)












Net (Recoveries) Charge-Offs










Gross charge-offs

$

871



$

1,013



$

2,570



$

3,491



$

7,511


Recoveries

1,998



1,721



2,277



7,155



6,321


Net (recoveries) charge-offs

$

(1,127)



$

(708)



$

293



$

(3,664)



$

1,190












Net (Recoveries) Charge-Offs by Type










Commercial real estate, construction

$

-



$

-



$

-



$

-



$

-


Commercial real estate, other

(1,455)



(1,308)



173



(4,786)



747


Commercial and industrial

21



(7)



(66)



4



(324)


Residential real estate

(55)



179



36



85



318


Home equity lines of credit

(6)



153



(9)



136



62


Consumer

248



176



42



532



11


Deposit account overdrafts

120



99



117



365



376


Total net (recoveries) charge-offs

$

(1,127)



$

(708)



$

293



$

(3,664)



$

1,190












Net (recoveries) charge-offs as a percent

of loans (annualized)

(0.39)%



(0.26)%



0.12

%


(0.35)%



0.12

%

SUPPLEMENTAL INFORMATION


December 31,


September 30,


June 30,


March 31,


December 31,

(in $000's, end of period)

2013


2013


2013


2013


2012











Trust assets under management

$

1,000,171



$

994,683



$

939,292



$

927,675



$

888,134


Brokerage assets under management

474,384



449,196



433,651



433,217



404,320


Mortgage loans serviced for others

$

341,183



$

339,557



$

338,854



$

343,769



$

330,721


Employees (full-time equivalent)

546



539



545



517



494












CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME


Three Months Ended




December 31, 2013


September 30, 2013


December 31, 2012

(in $000's)

Balance

Income/

Expense

Yield/ Cost


Balance

Income/

Expense

Yield/ Cost


Balance

Income/

Expense

Yield/ Cost

Assets












Short-term investments

$

8,652


$

30


1.38

%


$

5,914


$

21


1.41

%


$

13,014


$

7


0.21

%

Other long-term investments

2,948


2


0.27

%


-


-


-

%


-


-


-

%

Investment securities (a)(b)

691,365


5,040


2.92

%


684,268


4,795


2.80

%


689,895


5,289


3.07

%

Gross loans (a)

1,147,285


13,619


4.73

%


1,041,901


12,000


4.59

%


995,766


12,568


5.03

%

Allowance for loan losses

(17,439)





(17,670)





(19,865)




Total earning assets

1,832,811


18,691


4.07

%


1,714,413


16,816


3.91

%


1,678,810


17,864


4.24

%













Intangible assets

77,025





71,517





68,422




Other assets

102,016





105,802





140,092




Total assets

$

2,011,852





$

1,891,732





$

1,887,324
















Liabilities and Equity












Interest-bearing deposits:












Savings accounts

$

211,116


$

29


0.05

%


$

199,592


$

27


0.05

%


$

178,200


$

23


0.05

%

Government deposit accounts

141,181


131


0.37

%


153,085


142


0.37

%


145,240


201


0.55

%

Interest-bearing demand accounts

128,877


26


0.08

%


124,093


25


0.08

%


118,039


23


0.08

%

Money market deposit accounts

256,398


104


0.16

%


226,453


86


0.15

%


265,181


91


0.14

%

Brokered certificates of deposits

49,320


462


3.72

%


49,810


464


3.70

%


55,387


491


3.53

%

Retail certificates of deposit

360,733


890


0.98

%


343,549


930


1.07

%


404,356


1,223


1.20

%

Total interest-bearing deposits

1,147,625


1,642


0.57

%


1,096,582


1,674


0.61

%


1,166,403


2,052


0.70

%













Short-term borrowings

120,135


49


0.16

%


101,099


29


0.11

%


45,200


17


0.15

%

Long-term borrowings

123,713


1,115


3.58

%


125,398


1,131


3.58

%


128,822


1,396


4.16

%

Total borrowed funds

243,848


1,164


1.89

%


226,497


1,160


2.03

%


174,022


1,413


3.20

%

Total interest-bearing liabilities

1,391,473


2,806


0.80

%


1,323,079


2,834


0.85

%


1,340,425


3,465


1.03

%













Non-interest-bearing deposits

370,962





325,129





298,210




Other liabilities

26,108





26,795





28,120




Total liabilities

1,788,543





1,675,003





1,666,755
















Preferred equity

-





-





-




Common equity

223,309





216,729





220,569




Stockholders' equity

223,309





216,729





220,569




Total liabilities and equity

$

2,011,852





$

1,891,732





$

1,887,324
















Net interest income/spread (a)


$

15,885


3.27

%



$

13,982


3.06

%



$

14,399


3.21

%

Net interest margin (a)



3.46

%




3.26

%




3.42

%













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

(b) Average balances are based on carrying value. 


Year Ended


December 31, 2013


December 31, 2012

(in $000's)

Balance

Income/

Expense

Yield/ Cost


Balance

Income/

Expense

Yield/ Cost

Assets








Short-term investments

$

16,154


$

95


0.59

%


$

9,705


$

20


0.21

%

Other long-term investments

743


2


0.27

%


-


-


-

%

Investment securities (a)(b)

697,371


19,487


2.79

%


685,439


22,167


3.23

%

Gross loans (a)

1,046,371


48,688


4.66

%


967,166


48,370


5.00

%

Allowance for loan losses

(17,935)





(21,473)




Total earning assets

1,742,704


68,272


3.92

%


1,640,837


70,557


4.30

%









Intangible assets

72,420





65,881




Other assets

117,243





134,571




Total assets

$

1,932,367





$

1,841,289












Liabilities and Equity








Interest-bearing deposits:








Savings accounts

$

200,190


$

107


0.05

%


$

162,055


$

90


0.06

%

Government deposit accounts

146,955


642


0.44

%


151,877


937


0.62

%

Interest-bearing demand accounts

125,984


101


0.08

%


113,022


117


0.10

%

Money market deposit accounts

259,226


379


0.15

%


255,345


423


0.17

%

Brokered certificates of deposits

51,287


1,871


3.65

%


56,451


1,996


3.54

%

Retail certificates of deposit

358,918


3,952


1.10

%


404,872


5,496


1.36

%

Total interest-bearing deposits

1,142,560


7,052


0.62

%


1,143,622


9,059


0.79

%









Short-term borrowings

81,294


114


0.14

%


50,641


74


0.14

%

Long-term borrowings

126,100


4,520


3.57

%


134,978


5,862


4.27

%

Total borrowed funds

207,394


4,634


2.23

%


185,619


5,936


3.17

%

Total interest-bearing liabilities

1,349,954


11,686


0.86

%


1,329,241


14,995


1.13

%









Non-interest-bearing deposits

335,637





273,893




Other liabilities

24,865





24,037




Total liabilities

1,710,456





1,627,171












Preferred equity

-





-




Common equity

221,911





214,118




Stockholders' equity

221,911





214,118




Total liabilities and equity

$

1,932,367





$

1,841,289












Net interest income/spread (a)


$

56,586


3.06

%



$

55,562


3.17

%

Net interest margin (a)



3.25

%




3.39

%









(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' consolidated financial statements:


At or For the Three Months Ended


December 31,


September 30,


June 30,


March 31,


December 31,

(in $000's)

2013


2013


2013


2013


2012











Tangible Equity:










Total stockholders' equity, as reported

$

221,553



$

222,247



$

219,147



$

226,079



$

221,728


Less: goodwill and other intangible assets

77,603



71,417



71,608



69,977



68,525


Tangible equity

$

143,950



$

150,830



$

147,539



$

156,102



$

153,203












Tangible Assets:










Total assets, as reported

$

2,059,108



$

1,919,705



$

1,899,841



$

1,938,722



$

1,918,050


Less: goodwill and other intangible assets

77,603



71,417



71,608



69,977



68,525


Tangible assets

$

1,981,505



$

1,848,288



$

1,828,233



$

1,868,745



$

1,849,525












Tangible Book Value per Common Share:










Tangible equity

$

143,950



$

150,830



$

147,539



$

156,102



$

153,203


Common shares outstanding

10,605,782



10,596,797



10,583,161



10,568,147



10,547,960












Tangible book value per common share

$

13.57



$

14.23



$

13.94



$

14.77



$

14.52






















Tangible Equity to Tangible Assets Ratio:




















Tangible equity

$

143,950



$

150,830



$

147,539



$

156,102



$

153,203


Tangible assets

$

1,981,505



$

1,848,288



$

1,828,233



$

1,868,745



$

1,849,525






















Tangible equity to tangible assets


7.26

%



8.16

%



8.07

%



8.35

%



8.28

%












Three Months Ended


Year Ended


December 31,


September 30,


December 31,


December 31,

(in $000's)

2013


2013


2012


2013


2012

Pre-Provision Net Revenue:










Income before income taxes

$

7,415



$

6,898



$

5,539



$

29,084



$

29,910


Add: net loss on debt extinguishment

-



-



1,033



-



4,144


Add: net loss on securities transactions

-



1



-



-



-


Add: net loss on other assets

125



29



85



241



248


Less: recovery of loan losses

964



919



503



4,410



4,716


Less: net gain on loans held-for-sale and OREO

-



10



58



86



66


Less: net gain on securities transactions

46



-



273



489



3,548


Pre-provision net revenue

$

6,530



$

5,999



$

5,823



$

24,340



$

25,972












Pre-provision net revenue

$

6,530



$

5,999



$

5,823



$

24,340




$

25,972


Total average assets

2,011,852



1,891,732



1,887,324



1,932,367



1,841,289












Pre-provision net revenue to total average assets (annualized)

1.29

%


1.26

%


1.23

%


1.26

%


1.41

%











SOURCE Peoples Bancorp Inc.

distributed by