EX-99.A 2 pebk_ex991.htm PRESS RELEASE Blueprint
  Exhibit 99 (a)
 
NEWS RELEASE
April 22, 2019
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 $3.7 million or $0.61 basic and diluted net earnings per share for the three months ended March 31, 2019, compared to $3.3 million or $0.55 basic and diluted net earnings per share for the same period one year ago.
●
Total loans increased $57.8 million to $823.6 million at March 31, 2019, compared to $765.8 million at March 31, 2018.
●
Core deposits were $887.6 million or 97.74% of total deposits at March 31, 2019, compared to $889.0 million or 97.94% of total deposits at March 31, 2018.
 
Lance A. Sellers, President and Chief Executive Officer, attributed the increase in first quarter net earnings to an increase in net interest income and an increase in non-interest income, which were partially offset by an increase in the provision for loan losses and an increase in non-interest expense during the three months ended March 31, 2019, as compared to the three months ended March 31, 2018, as discussed below.
 
 
Net interest income was $11.4 million for the three months ended March 31, 2019, compared to $10.3 million for the three months ended March 31, 2018. The increase in net interest income was primarily due to a $1.4 million increase in interest income, which was partially offset by a $290,000 increase in interest expense. The increase in interest income was primarily attributable to an increase in the average outstanding balance of loans and a 0.75% increase in the prime rate since March 31, 2018. Net interest income after the provision for loan losses was $11.2 million for the three months ended March 31, 2019, compared to $10.3 million for the three months ended March 31, 2018. The provision for loan losses for the three months ended March 31, 2019 was $178,000, compared to $31,000 for the three months ended March 31, 2018. The increase in the provision for loan losses is primarily attributable to a $57.8 million increase in loans from March 31, 2018 to March 31, 2019.
 
 
Non-interest income was $4.1 million for the three months ended March 31, 2019, compared to $3.7 million for the three months ended March 31, 2018. The increase in non-interest income is primarily attributable to a $231,000 increase in gains on the sale of securities during the three months ended March 31, 2019, compared to the same period one year ago.
 
 
Non-interest expense was $10.9 million for the three months ended March 31, 2019, compared to $10.0 million for the three months ended March 31, 2018. The increase in non-interest expense was primarily attributable to a $685,000 increase in salaries and benefits expense, which was primarily due to an increase in the number of full-time equivalent employees and annual salary increases.
 
 
Income tax expense was $785,000 for the three months ended March 31, 2019, compared to $652,000 for the three months ended March 31, 2018. The effective tax rate was 17.63% for the three months ended March 31, 2019, compared to 16.49% for the three months ended March 31, 2018.
 
 
Total assets were $1.1 billion as of March 31, 2019 and 2018. Available for sale securities were $184.4 million as of March 31, 2019, compared to $213.3 million as of March 31, 2018. Total loans were $823.6 million as of March 31, 2019, compared to $765.8 million as of March 31, 2018.
 

 
 
Non-performing assets were $2.8 million or 0.25% of total assets at March 31, 2019, compared to $3.7 million or 0.34% of total assets at March 31, 2018. Non-performing loans include $2.7 million in commercial and residential mortgage loans and $89,000 in other loans at March 31, 2019, as compared to $3.4 million in commercial and residential mortgage loans, $130,000 in acquisition, development and construction loans and $114,000 in other loans at March 31, 2018.
 
The allowance for loan losses at March 31, 2019 was $6.6 million or 0.80% of total loans, compared to $6.4 million or 0.83% of total loans at March 31, 2018. 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 $908.1 million at March 31, 2019, compared to $907.6 million at March 31, 2018. Core deposits, which include noninterest-bearing demand deposits, NOW, MMDA, savings and non-brokered certificates of deposit of denominations less than $250,000, were $887.6 million at March 31, 2019, compared to $889.0 million at March 31, 2018. Certificates of deposit in amounts of $250,000 or more totaled $20.4 million at March 31, 2019, compared to $17.9 million at March 31, 2018.
 
Securities sold under agreements to repurchase were $41.2 million at March 31, 2019, compared to $38.3 million at March 31, 2018.
 
Shareholders’ equity was $126.6 million, or 11.39% of total assets, at March 31, 2019, compared to $116.5 million, or 10.65% of total assets, at March 31, 2018. The Company repurchased 5,518 shares of its common stock during the first quarter of 2019 under the Company’s stock repurchase program, which was funded in February 2019.
 
Peoples Bank currently operates 20 banking offices entirely in North Carolina, with offices in Catawba, Alexander, Lincoln, Mecklenburg, Iredell and Wake Counties. Peoples Bank also operates loan production offices in Lincoln, Mecklenburg and Durham 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 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, 2018.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
March 31, 2019, December 31, 2018 and March 31, 2018
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
2019
 
 
December 31,
2018
 
 
March 31,
2018
 
 
 
 (Unaudited)
 
 
 (Audited)
 
 
 (Unaudited)
 
ASSETS:
 
 
 
 
 
 
 
 
 
Cash and due from banks
 $35,318 
 $40,553 
 $32,849 
Interest-bearing deposits
  15,896 
  2,817 
  34,985 
Cash and cash equivalents
  51,214 
  43,370 
  67,834 
 
    
    
    
Investment securities available for sale
  184,428 
  194,578 
  213,299 
Other investments
  4,329 
  4,361 
  1,834 
Total securities
  188,757 
  198,939 
  215,133 
 
    
    
    
Mortgage loans held for sale
  361 
  680 
  503 
 
    
    
    
Loans
  823,557 
  804,023 
  765,824 
Less: Allowance for loan losses
  (6,561)
  (6,445)
  (6,373)
Net loans
  816,996 
  797,578 
  759,451 
 
    
    
    
Premises and equipment, net
  18,247 
  18,450 
  19,732 
Cash surrender value of life insurance
  16,031 
  15,936 
  15,647 
Accrued interest receivable and other assets
  19,542 
  18,298 
  14,931 
Total assets
 $1,111,148 
 $1,093,251 
 $1,093,231 
 
    
    
    
 
    
    
    
LIABILITIES AND SHAREHOLDERS' EQUITY:
    
    
    
Deposits:
    
    
    
Noninterest-bearing demand
 $310,053 
 $298,817 
 $294,998 
NOW, MMDA & savings
  493,773 
  475,223 
  496,044 
Time, $250,000 or more
  20,362 
  16,239 
  17,927 
Other time
  83,926 
  86,934 
  98,655 
Total deposits
  908,114 
  877,213 
  907,624 
 
    
    
    
Securities sold under agreements to repurchase
  41,231 
  58,095 
  38,257 
FHLB borrowings
  - 
  - 
  - 
Junior subordinated debentures
  20,619 
  20,619 
  20,619 
Accrued interest payable and other liabilities
  14,600 
  13,707 
  10,249 
Total liabilities
  984,564 
  969,634 
  976,749 
 
    
    
    
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
    
    
    
5,997,136 shares 3/31/19,
    
    
    
5,995,256 shares 12/31/18 and 3/31/18
  62,151 
  62,096 
  62,096 
Retained earnings
  62,757 
  60,535 
  52,806 
Accumulated other comprehensive income
  1,676 
  986 
  1,580 
Total shareholders' equity
  126,584 
  123,617 
  116,482 
 
    
    
    
Total liabilities and shareholders' equity
 $1,111,148 
 $1,093,251 
 $1,093,231 
 
    
    
    
 
 
 
 
 
 
 

 
 
 
 
 
 
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
 
For the three months ended March 31, 2019 and 2018
 
 
 
(Dollars in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 Three months ended
 
 
 
 March 31,  
 
 
 
 2019
 
 
 2018
 
 
 
 (Unaudited)
 
 
 (Unaudited)
 
INTEREST INCOME:
 
 
 
 
 
 
Interest and fees on loans
 $10,619 
 $9,069 
Interest on due from banks
  14 
  45 
Interest on investment securities:
    
    
U.S. Government sponsored enterprises
  673 
  606 
State and political subdivisions
  834 
  996 
Other
  43 
  43 
Total interest income
  12,183 
  10,759 
 
    
    
INTEREST EXPENSE:
    
    
NOW, MMDA & savings deposits
  282 
  176 
Time deposits
  151 
  105 
FHLB borrowings
  46 
  - 
Junior subordinated debentures
  226 
  171 
Other
  52 
  15 
Total interest expense
  757 
  467 
 
    
    
NET INTEREST INCOME
  11,426 
  10,292 
PROVISION FOR (REDUCTION OF PROVISION
    
    
FOR) LOAN LOSSES
  178 
  31 
NET INTEREST INCOME AFTER
    
    
PROVISION FOR LOAN LOSSES
  11,248 
  10,261 
 
    
    
NON-INTEREST INCOME:
    
    
Service charges
  1,093 
  1,024 
Other service charges and fees
  169 
  180 
Gain on sale of securities
  231 
  - 
Mortgage banking income
  147 
  216 
Insurance and brokerage commissions
  231 
  182 
Appraisal management fee income
  862 
  789 
Miscellaneous
  1,387 
  1,345 
Total non-interest income
  4,120 
  3,736 
 
    
    
NON-INTEREST EXPENSES:
    
    
Salaries and employee benefits
  5,647 
  4,962 
Occupancy
  1,737 
  1,856 
Appraisal management fee expense
  662 
  592 
Other
  2,870 
  2,632 
Total non-interest expense
  10,916 
  10,042 
 
    
    
EARNINGS BEFORE INCOME TAXES
  4,452 
  3,955 
INCOME TAXES
  785 
  652 
 
    
    
NET EARNINGS
 $3,667 
 $3,303 
 
    
    
PER SHARE AMOUNTS
    
    
Basic net earnings
 $0.61 
 $0.55 
Diluted net earnings
 $0.61 
 $0.55 
Cash dividends
 $0.14 
 $0.13 
Book value
 $21.11 
 $19.43 
 
 

 
 

 
 
 
 
 
 
 
FINANCIAL HIGHLIGHTS
 
 
 
 
 
 
For the three months ended March 31, 2019 and 2018
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Three months ended
 
 
 
 March 31,  
 
 
 
 2019
 
 
 2018
 
 
 
 (Unaudited)
 
 
 (Unaudited)
 
SELECTED AVERAGE BALANCES:
 
 
 
 
 
 
Available for sale securities
 $189,790 
 $217,437 
Loans
  815,203 
  765,670 
Earning assets
  1,013,310 
  998,226 
Assets
  1,091,822 
  1,080,772 
Deposits
  895,708 
  900,679 
Shareholders' equity
  125,349 
  116,578 
 
    
    
SELECTED KEY DATA:
    
    
Net interest margin (tax equivalent)
  4.66%
  4.29%
Return on average assets
  1.36%
  1.24%
Return on average shareholders' equity
  11.86%
  11.49%
Shareholders' equity to total assets (period end)
  11.39%
  10.65%
 
    
    
ALLOWANCE FOR LOAN LOSSES:
    
    
Balance, beginning of period
 $6,445 
 $6,366 
Provision for loan losses
  178 
  31 
Charge-offs
  (164)
  (106)
Recoveries
  102 
  82 
Balance, end of period
 $6,561 
 $6,373 
 
    
    
ASSET QUALITY:
    
    
Non-accrual loans
 $2,802 
 $3,665 
90 days past due and still accruing
  - 
  - 
Other real estate owned
  27 
  62 
Total non-performing assets
 $2,829 
 $3,727 
Non-performing assets to total assets
  0.25%
  0.34%
Allowance for loan losses to non-performing assets
  231.92%
  171.00%
Allowance for loan losses to total loans
  0.80%
  0.83%
 
    
    
LOAN RISK GRADE ANALYSIS:
 
 
 
 
 
 
 
 
Percentage of Loans
  By Risk Grade
 
 
 
3/31/2019
 
 
3/31/2018
 
Risk Grade 1 (excellent quality)
  0.70%
  0.95%
Risk Grade 2 (high quality)
  24.99%
  26.20%
Risk Grade 3 (good quality)
  61.41%
  61.22%
Risk Grade 4 (management attention)
  10.57%
  8.33%
Risk Grade 5 (watch)
  1.56%
  2.31%
Risk Grade 6 (substandard)
  0.78%
  0.99%
Risk Grade 7 (doubtful)
  0.00%
  0.00%
Risk Grade 8 (loss)
  0.00%
  0.00%
 
    
    
 
At March 31, 2019, including non-accrual loans, there were two relationships exceeding $1.0 million in the Watch risk grade (which totaled $3.2 million). There were no relationships exceeding $1.0 million in the Substandard risk grade.