0001093672-17-000014.txt : 20170424 0001093672-17-000014.hdr.sgml : 20170424 20170424090334 ACCESSION NUMBER: 0001093672-17-000014 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20170424 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20170424 DATE AS OF CHANGE: 20170424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEOPLES BANCORP OF NORTH CAROLINA INC CENTRAL INDEX KEY: 0001093672 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 562132396 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27205 FILM NUMBER: 17777327 BUSINESS ADDRESS: STREET 1: 518 WEST C STREET STREET 2: PO BOX 467 CITY: NEWTON STATE: NC ZIP: 28658-4007 BUSINESS PHONE: 8284645620 MAIL ADDRESS: STREET 1: PO BOX 467 CITY: NEWTON STATE: NC ZIP: 28658-0467 8-K 1 form8kforapr242017.htm FORM 8-K FOR APR 24, 2017
 
UNITED STATES
 
 
SECURITIES AND EXCHANGE COMMISSION
 
 
Washington, D.C.   20549
 
 
______________________________
 

FORM 8-K
 
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 Date of Report (Date of earliest event reported):   April 24, 2017
 
 
Peoples Bancorp of North Carolina, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
 
North Carolina
(State or Other Jurisdiction of Incorporation)
 
 
 
000-27205
56-2132396
(Commission File No.)
(IRS Employer Identification No.)
 
 
 
518 West C Street, Newton, North Carolina
28658
(Address of Principal Executive Offices)
(Zip Code)
 
 
 
(828) 464-5620
(Registrant's Telephone Number, Including Area Code)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
   ☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     
   ☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     
   ☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     
   ☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

 
Peoples Bancorp of North Carolina, Inc.   
       
INDEX   
       
   
Page
 
Item 2.02 - Results of Operations and Financial Condition
 
3
 
       
Item 9.01 - Financial Statements and Exhibits
 
3
 
       
Signatures
 
4
 
       
Exhibit (99)(a) Press Release dated April 24, 2017
 
5
 
 
 
 
2

 
Item 2.02.
 
Results of Operations and Financial Condition
 
On April 24, 2017, Peoples Bancorp of North Carolina, Inc. issued a press release announcing first quarter 2017 earnings results.

A copy of the press release is attached hereto as Exhibit (99)(a) and is incorporated by reference herein.
 
 
Item 9.01.
 
Financial Statements and Exhibits
 
 
(d)
Exhibits
     
 
(99)(a)
Press release, dated April 24, 2017
 

Disclosure about forward-looking statements

Statements made in this Form 8-K, 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 report 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 might cause such a difference include, but are not limited to, changes in interest rate environment, management's business strategy, national, regional, and local market conditions and legislative and regulatory conditions.

The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.  Readers should also carefully review the risk factors described in other documents the Company files from time to time with the Securities and Exchange Commission.
 
 
3

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
   
PEOPLES BANCORP OF NORTH CAROLINA, INC.
       
Date:  April 24, 2017
 
By:
/s/ A. Joseph Lampron, Jr.
   
A. Joseph Lampron, Jr.
   
Executive Vice President and Chief Financial Officer
 
 
 
 
4

 
EX-99.A 2 ex99_a.htm EXHIBIT (99)(A)
EXHIBIT (99)(a)   
       
NEWS RELEASE 
   
   
April 24, 2017
 
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
   
       
For Immediate Release
   
 
PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS
Peoples Bancorp of North Carolina, Inc. (NASDAQ: PEBK), the parent company of Peoples Bank, reported first quarter earnings results with highlights as follows:

First quarter highlights:

·
Net earnings were $2.2 million or $0.41 basic net earnings per share and $0.40 diluted net earnings per share for the three months ended March 31, 2017, as compared to $2.5 million or $0.45 basic net earnings per share and $0.44 diluted net earnings per share for the same period one year ago.
·
Non-performing assets declined to $3.6 million or 0.3% of total assets at March 31, 2017, compared to $8.5 million or 0.8% of total assets at March 31, 2016.
·
Total loans increased $42.9 million to $735.9 million at March 31, 2017, compared to $693.0 million at March 31, 2016.
·
Core deposits were $883.4 million or 97.2% of total deposits at March 31, 2017, compared to $826.0 million or 96.8% of total deposits at March 31, 2016.
Lance A. Sellers, President and Chief Executive Officer, attributed the decrease in first quarter net earnings to a decrease in non-interest income and an increase in non-interest expense, which were partially offset by an increase in net interest income and an increase in the credit to the provision for loan losses.
Net interest income was $9.5 million for the three months ended March 31, 2017, compared to $9.1 million for the three months ended March 31, 2016.  The increase in net interest income was primarily due to a $159,000 increase in interest income, which was primarily attributable to an increase in the average outstanding balance of loans and a 0.25% increase in the prime rate in December 2016, combined with a $211,000 decrease in interest expense, which was primarily attributable to a decrease in the average outstanding balance of Federal Home Loan Bank borrowings during the three months ended March 31, 2017, as compared to the same period one year ago.  Net interest income after the provision for loan losses was $9.7 million for the three months ended March 31, 2017, compared to $9.3 million for the three months ended March 31, 2016.  The provision for loan losses for the three months ended March 31, 2017 was a credit of $236,000, as compared to a credit of $216,000 for the three months ended March 31, 2016.
Non-interest income was $2.9 million for the three months ended March 31, 2017, compared to $3.3 million for the three months ended March 31, 2016.  The decrease in non-interest income is primarily attributable to a $360,000 increase in net losses on other real estate owned properties and a $114,000 decrease in service charges and fees during the three months ended March 31, 2017, compared to the same period one year ago.
Non-interest expense was $9.8 million for the three months ended March 31, 2017, compared to $9.5 million for the three months ended March 31, 2016.  The increase in non-interest expense was primarily due to a $653,000 increase in salaries and benefits expense, which was partially offset by a $209,000 decrease in other non-interest expense during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016.  The increase in salaries and benefits expense is primarily due to an increase in the number of full-time equivalent employees and annual salary increases combined with an increase in expense associated with restricted stock units due to an increase in the Company's stock price from $25.07 at December 31, 2016 to $29.70 at March 31, 2017.  The decrease in other non-interest expense is primarily due to a decrease in consulting fees during the three months ended March 31, 2017, as compared to the three months ended March 31, 2016.
 
5

 
Total assets were $1.1 billion as of March 31, 2017 and 2016.  Available for sale securities were $244.9 million as of March 31, 2017, compared to $264.1 million as of March 31, 2016.  Total loans were $735.9 million as of March 31, 2017, compared to $693.0 million as of March 31, 2016.
Non-performing assets declined to $3.6 million or 0.3% of total assets at March 31, 2017, compared to $8.5 million or 0.8% of total assets at March 31, 2016.  The decline in non-performing assets is primarily due to a $4.7 million decrease in non-accrual loans.  Non-performing loans include $3.5 million in commercial and residential mortgage loans, $20,000 in acquisition, development and construction ("AD&C") loans and $28,000 in other loans at March 31, 2017, as compared to $8.1 million in commercial and residential mortgage loans, $149,000 in AD&C loans and $141,000 in other loans at March 31, 2016.
The allowance for loan losses at March 31, 2017 was $7.3 million or 0.9% of total loans, compared to $9.1 million or 1.3% of total loans at March 31, 2016.  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 were $908.4 million as of March 31, 2017, compared to $853.1 million at March 31, 2016.  Core deposits, which include noninterest-bearing demand deposits, NOW, MMDA, savings and non-brokered certificates of deposit of denominations less than $250,000, increased $57.4 million to $883.4 million at March 31, 2017, as compared to $826.0 million at March 31, 2016.  Certificates of deposit in amounts of $250,000 or more totaled $24.3 million at March 31, 2017, as compared to $26.4 million at March 31, 2016.
Securities sold under agreements to repurchase were $42.2 million at March 31, 2017, as compared to $36.1 million at March 31, 2016.
Shareholders' equity was $110.1 million, or 9.9% of total assets, as of March 31, 2017, compared to $107.8 million, or 10.1% of total assets, as of March 31, 2016.  The increase in shareholders' equity is primarily due to an increase in retained earnings due to net income, which was partially offset by a decrease in accumulated other comprehensive income resulting from a decrease in the unrealized gain on investment securities.
Peoples Bank operates 19 banking offices entirely in North Carolina, with offices in Catawba, Alexander, Lincoln, Mecklenburg, Iredell and Wake Counties.  Peoples Bank also operates a loan production office in Lincoln County.  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 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, 2016.
 
6

 
CONSOLIDATED BALANCE SHEETS
                 
March 31, 2017, December 31, 2016 and March 31, 2016
             
(Dollars in thousands)
                 
                   
                   
                   
   
March 31, 2017
   
December 31, 2016
   
March 31, 2016
 
   
(Unaudited)
   
(Audited)
   
(Unaudited)
 
ASSETS:
                 
Cash and due from banks
 
$
55,491
   
$
53,613
   
$
45,566
 
Interest-bearing deposits
   
31,959
     
16,481
     
30,826
 
Cash and cash equivalents
   
87,450
     
70,094
     
76,392
 
                         
Investment securities available for sale
   
244,863
     
249,946
     
264,092
 
Other investments
   
2,679
     
2,635
     
3,633
 
Total securities
   
247,542
     
252,581
     
267,725
 
                         
Mortgage loans held for sale
   
1,340
     
5,709
     
996
 
                         
Loans
   
735,861
     
723,811
     
693,033
 
Less:  Allowance for loan losses
   
(7,263
)
   
(7,550
)
   
(9,116
)
Net loans
   
728,598
     
716,261
     
683,917
 
                         
Premises and equipment, net
   
18,597
     
16,452
     
16,408
 
Cash surrender value of life insurance
   
15,251
     
14,952
     
14,652
 
Accrued interest receivable and other assets
   
11,496
     
11,942
     
10,254
 
Total assets
 
$
1,110,274
   
$
1,087,991
   
$
1,070,344
 
                         
                         
LIABILITIES AND SHAREHOLDERS' EQUITY:
                       
Deposits:
                       
Noninterest-bearing demand
 
$
275,369
   
$
271,851
   
$
246,677
 
NOW, MMDA & savings
   
494,273
     
477,054
     
452,158
 
Time, $250,000 or more
   
24,262
     
26,771
     
26,352
 
Other time
   
114,510
     
117,242
     
127,930
 
Total deposits
   
908,414
     
892,918
     
853,117
 
                         
Securities sold under agreements to repurchase
   
42,163
     
36,434
     
36,056
 
FHLB borrowings
   
20,000
     
20,000
     
43,500
 
Junior subordinated debentures
   
20,619
     
20,619
     
20,619
 
Accrued interest payable and other liabilities
   
8,941
     
10,592
     
9,292
 
Total liabilities
   
1,000,137
     
980,563
     
962,584
 
                         
Shareholders' equity:
                       
Series A preferred stock, $1,000 stated value; authorized
                 
5,000,000 shares; no shares issued and outstanding
   
-
     
-
     
-
 
Common stock, no par value; authorized
                       
20,000,000 shares; issued and outstanding
                       
5,437,740 shares at 3/31/17; 5,417,800 shares at
                 
12/31/16 and 5,510,538 shares at 3/31/16
   
44,745
     
44,187
     
46,171
 
Retained earnings
   
61,801
     
60,254
     
55,189
 
Accumulated other comprehensive income
   
3,591
     
2,987
     
6,400
 
Total shareholders' equity
   
110,137
     
107,428
     
107,760
 
                         
Total liabilities and shareholders' equity
 
$
1,110,274
   
$
1,087,991
   
$
1,070,344
 
 

 
CONSOLIDATED STATEMENTS OF INCOME
           
For the three months ended March 31, 2017 and 2016
       
(Dollars in thousands, except per share amounts)
           
             
             
             
   
Three months ended
 
   
March 31,
 
   
2017
   
2016
 
   
(Unaudited)
   
(Unaudited)
 
INTEREST INCOME:
           
Interest and fees on loans
 
$
8,280
   
$
8,023
 
Interest on due from banks
   
30
     
17
 
Interest on investment securities:
               
U.S. Government sponsored enterprises
   
604
     
658
 
State and political subdivisions
   
1,084
     
1,127
 
Other
   
66
     
80
 
Total interest income
   
10,064
     
9,905
 
                 
INTEREST EXPENSE:
               
NOW, MMDA & savings deposits
   
132
     
120
 
Time deposits
   
128
     
162
 
FHLB borrowings
   
192
     
406
 
Junior subordinated debentures
   
135
     
113
 
Other
   
11
     
8
 
Total interest expense
   
598
     
809
 
                 
NET INTEREST INCOME
   
9,466
     
9,096
 
PROVISION FOR (REDUCTION OF PROVISION
               
FOR) LOAN LOSSES
   
(236
)
   
(216
)
NET INTEREST INCOME AFTER
               
PROVISION FOR LOAN LOSSES
   
9,702
     
9,312
 
                 
NON-INTEREST INCOME:
               
Service charges
   
1,106
     
1,041
 
Other service charges and fees
   
155
     
334
 
Mortgage banking income
   
346
     
369
 
Insurance and brokerage commissions
   
168
     
158
 
Miscellaneous
   
1,101
     
1,422
 
Total non-interest income
   
2,876
     
3,324
 
                 
NON-INTEREST EXPENSES:
               
Salaries and employee benefits
   
5,234
     
4,581
 
Occupancy
   
1,613
     
1,754
 
Other
   
2,948
     
3,157
 
Total non-interest expense
   
9,795
     
9,492
 
                 
EARNINGS BEFORE INCOME TAXES
   
2,783
     
3,144
 
INCOME TAXES
   
578
     
691
 
                 
NET EARNINGS
 
$
2,205
   
$
2,453
 
                 
PER SHARE AMOUNTS
               
Basic net earnings
 
$
0.41
   
$
0.45
 
Diluted net earnings
 
$
0.40
   
$
0.44
 
Cash dividends
 
$
0.12
   
$
0.08
 
Book value
 
$
20.25
   
$
19.56
 
 

 
FINANCIAL HIGHLIGHTS
           
For the three months ended March 31, 2017 and 2016
           
(Dollars in thousands)
           
             
             
             
   
Three months ended
 
   
March 31,
 
   
2017
   
2016
 
   
(Unaudited)
   
(Unaudited)
 
SELECTED AVERAGE BALANCES:
           
Available for sale securities
 
$
240,796
   
$
256,922
 
Loans
   
729,475
     
691,834
 
Earning assets
   
988,864
     
967,945
 
Assets
   
1,086,469
     
1,047,013
 
Deposits
   
890,402
     
838,986
 
Shareholders' equity
   
108,385
     
108,038
 
                 
SELECTED KEY DATA:
               
Net interest margin (tax equivalent)
   
4.11
%
   
4.02
%
Return on average assets
   
0.82
%
   
0.94
%
Return on average shareholders' equity
   
8.25
%
   
9.13
%
Shareholders' equity to total assets (period end)
   
9.92
%
   
10.07
%
                 
ALLOWANCE FOR LOAN LOSSES:
               
Balance, beginning of period
 
$
7,550
   
$
9,589
 
Provision for loan losses
   
(236
)
   
(216
)
Charge-offs
   
(131
)
   
(322
)
Recoveries
   
80
     
65
 
Balance, end of period
 
$
7,263
   
$
9,116
 
                 
ASSET QUALITY:
               
Non-accrual loans
 
$
3,584
   
$
8,268
 
90 days past due and still accruing
   
-
     
127
 
Other real estate owned
   
-
     
85
 
Total non-performing assets
 
$
3,584
   
$
8,480
 
Non-performing assets to total assets
   
0.32
%
   
0.79
%
Allowance for loan losses to non-performing assets
   
202.65
%
   
107.50
%
Allowance for loan losses to total loans
   
0.99
%
   
1.32
%
 
LOAN RISK GRADE ANALYSIS:
     
 
Percentage of Loans
 
 
By Risk Grade
 
 
3/31/2017
3/31/2016
 
Risk Grade 1 (excellent quality)
1.31%
1.56%
 
Risk Grade 2 (high quality)
25.52%
25.23%
 
Risk Grade 3 (good quality)
57.57%
53.92%
 
Risk Grade 4 (management attention)
11.09%
13.78%
 
Risk Grade 5 (watch)
3.14%
2.82%
 
Risk Grade 6 (substandard)
1.09%
2.39%
 
Risk Grade 7 (doubtful)
0.00%
0.00%
 
Risk Grade 8 (loss)
0.00%
0.00%
 
       
At March 31, 2017, including non-accrual loans, there were five relationships exceeding $1.0 million in the Watch risk grade (which totaled $8.4 million) and no relationships exceeding $1.0 million in the Substandard risk grade.
 
(END)