-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ty+4fwDNXJgmjClxRlyvN2KaGGriBFv/3n0CgM2L6kF5nSg5hPvYbunkNSJgpTbz Nylrshq303CNpVFCAqx2Gg== 0000318300-96-000005.txt : 19960517 0000318300-96-000005.hdr.sgml : 19960517 ACCESSION NUMBER: 0000318300-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEOPLES BANCORP INC CENTRAL INDEX KEY: 0000318300 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 310987416 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16772 FILM NUMBER: 96566667 BUSINESS ADDRESS: STREET 1: 138 PUTNAM ST STREET 2: P O BOX 738 CITY: MARIETTA STATE: OH ZIP: 45750 BUSINESS PHONE: 6143746163 10-Q 1 FORM 10-Q TO BE FILED FOR PEOPLES BANCORP INC. FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the quarterly period ended March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from ____ to ____ Commission file number 0-16772 PEOPLES BANCORP INC. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Ohio 31-0987416 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 138 Putnam Street, P. O. Box 738, Marietta, Ohio 45750 - ------------------------------------------------ ---------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (614) 373-3155 ---------------- Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate the number of shares outstanding of each of the issuer's class of Common Stock, as of May 1, 1996: 3,128,610. PART I - FINANCIAL INFORMATION ------------------------------ ITEM 1 The following Condensed Consolidated Balance Sheets, Consolidated Statements of Income, and Consolidated Statements of Cash Flow of Peoples Bancorp Inc. (the "Company") and subsidiaries, reflect all adjustments (which include only normal recurring accruals) necessary to present fairly such information for the periods and dates indicated. Since the following condensed unaudited financial statements have been prepared in accordance with instructions to Form 10-Q, they do not contain all information and footnotes necessary for a fair presentation of financial position in conformity with generally accepted accounting principles. Operating results for the three months ended March 31, 1996, are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. Complete audited consolidated financial statements with footnotes thereto are included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. PEOPLES BANCORP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS ------------------------------------- March 31, 1996 December 31, 1995 ASSETS - ------ Cash and cash equivalents: Cash and due from banks $ 17,680,000 $ 17,251,000 Interest-bearing deposits in other banks 1,479,000 243,000 Federal funds sold 11,800,000 3,500,000 ------------ ------------ Total cash and cash equivalents 30,959,000 20,994,000 Investment securities (all classified as available-for-sale, amortized cost of $155,161,000 at March 31, 1996 and $128,021,000 at December 31, 1995) 156,559,000 131,762,000 Loans, net of unearned interest 383,696,000 379,526,000 Allowance for loan losses (6,743,000) (6,726,000) ------------ ------------ Net loans 376,953,000 372,800,000 Bank premises and equipment, net 10,421,000 10,575,000 Other assets 7,991,000 7,299,000 ------------ ------------ Total assets $582,883,000 $543,430,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Deposits: Non-interest bearing $ 51,983,000 $ 50,067,000 Interest bearing 383,856,000 379,010,000 ------------ ------------ Total deposits 435,839,000 429,077,000 Short-term borrowings: Federal funds purchased and securities sold under repurchase agreements 29,673,000 12,060,000 Federal Home Loan Bank term advances 37,850,000 21,216,000 ------------ ------------ Total short-term borrowings 67,523,000 33,276,000 Long-term borrowings 22,395,000 23,142,000 Accrued expenses and other liabilities 5,703,000 6,461,000 ------------ ------------ Total liabilities 531,460,000 491,956,000 ------------ ------------ Stockholders' Equity Common stock, no par value, 12,000,000 shares authorized - 3,342,590 shares issued at March 31, 1996 and 3,332,598 issued at December 31, 1995, including shares in treasury 31,100,000 30,898,000 Net unrealized holding gain on available-for-sale securities, net of deferred income taxes 923,000 2,469,000 Retained earnings 23,137,000 21,786,000 ------------ ------------ 55,159,000 55,153,000 Treasury stock, at cost, 222,906 shares at March 31, 1996 and 220,406 shares at December 31, 1995 (3,737,000) (3,679,000) ------------ ------------ Total stockholders' equity 51,423,000 51,474,000 ------------ ------------ Total liabilities and stockholders' equity $582,883,000 $543,430,000 ============ ============ PEOPLES BANCORP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME ------------------------------------------- Three Months Ended March 31, 1996 1995 Interest income $ 11,398,000 $ 10,099,000 Interest expense 5,367,000 4,616,000 ------------ ------------ Net interest income 6,031,000 5,483,000 Provision for loan losses 360,000 285,000 ------------ ------------ Net interest income after provision for loan losses 5,671,000 5,198,000 Other income 1,080,000 1,006,000 Gain on sale of securities 26,000 0 Other expenses 4,013,000 4,067,000 ------------ ------------ Income before income taxes 2,764,000 2,137,000 Federal income taxes 883,000 651,000 ------------ ------------ Net income $ 1,881,000 $ 1,486,000 ============ ============ Earnings per share $0.60 $0.46 ------------ ------------ Weighted average shares outstanding (primary) 3,146,414 3,197,714 ------------ ------------ Cash dividends declared $530,000 $463,000 ------------ ------------ Cash dividend per share $0.17 $0.15 ------------ ------------ PEOPLES BANCORP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- Three Months Ended March 31, 1996 1995 Cash flows from operating activities: - ------------------------------------- Net income $ 1,881,000 $ 1,486,000 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 360,000 285,000 Gain on sale of investment securities (26,000) 0 Depreciation, amortization, and accretion 440,000 425,000 Increase in interest receivable (171,000) (209,000) (Decrease) increase in interest payable (239,000) 95,000 Deferred income taxes (40,000) (25,000) Deferral of loan origination fees and costs 33,000 (22,000) Other, net (223,000) (466,000) ----------- ----------- Net cash provided by operating activities 2,015,000 1,569,000 ----------- ----------- Cash flows from investing activities: - ------------------------------------- Purchases of available-for-sale securities (37,099,000) (8,696,000) Purchases of held-to-maturity securities 0 (1,230,000) Proceeds from sales of available-for-sale securities 4,528,000 0 Proceeds from maturities of available-for-sale securities 5,432,000 2,997,000 Proceeds from maturities of held-to-maturity securities 0 283,000 Net increase in loans (4,546,000) (3,606,000) Expenditures for premises and equipment (242,000) (133,000) ----------- ----------- Net cash used in investing activities (31,927,000) (10,385,000) ----------- ----------- Cash flows from financing activities: - ------------------------------------- Net increase (decrease) in non-interest bearing deposits 1,916,000 (2,064,000) Net increase in interest-bearing deposits 4,846,000 26,141,000 Net increase (decrease) in short-term borrowings 34,247,000 (6,284,000) Payments on long-term borrowings (747,000) (706,000) Cash dividends paid (481,000) (431,000) Purchase of treasury stock (58,000) (254,000) Proceeds from issuance of common stock 154,000 34,000 ----------- ----------- Net cash provided by financing activities 39,877,000 16,436,000 ----------- ----------- Net increase in cash and cash equivalents 9,965,000 7,620,000 Cash and cash equivalents at beginning of year 20,994,000 24,701,000 ----------- ----------- Cash and cash equivalents at end of period $30,959,000 $32,321,000 =========== =========== NOTES TO FINANCIAL STATEMENTS The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Significant intercompany accounts and transactions have been eliminated. 1. CHANGES IN ACCOUNTING Effective January 1, 1996, the Company adopted Statement on Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing Rights" (SFAS No. 122), which amends SFAS No. 65 and requires financial institutions to recognize as separate assets rights to service mortgage loans for others, whether those rights were acquired through purchase or through the origination and subsequent sale of loans with servicing rights retained. The effect of adopting SFAS No. 122 was not material to the Company's financial statements due to the minimal secondary market activity by the Company. Management anticipates this adoption will be immaterial to the Company's 1996 financial statements. In November, 1995, the FASB issued SFAS No. 123, "Accounting for Stock Based Compensation", which is effective for fiscal years beginning after December 15, 1995. SFAS No. 123 requires companies to estimate a fair value for stock options at the date of grant and recognize the related expense over the applicable service period. SFAS No. 123 provides companies with the option of continuing to account for stock based compensation under APB Opinion No. 25, "Accounting for Stock Issued to Employees", or applying the provisions of SFAS No. 123. The Company has decided to continue to apply the provisions of APB No. 25 to account for stock based compensation. The Company will provide required disclosure in its Annual Report on Form 10-K for the year ending December 31, 1996. 2. BRANCH ACQUISITIONS On April 26, 1996, The Peoples Banking and Trust Company ("Peoples Bank"), one of the Company's subsidiaries, acquired three full-service banking offices and assumed approximately $73.9 million in deposits from an unaffiliated institution (referred hereafter as "Acquisition") for a total consideration of $5.4 million. The offices are located in southeastern Ohio in the cities of Gallipolis, Pomeroy, and Rutland, Ohio, and serve the counties of Meigs (Ohio), Gallia (Ohio) and Mason (West Virginia). The Gallipolis office is located downtown in Gallipolis and currently operates a full-service office, Motor Bank, and an automated teller machine. A full-service office and separate Motor Bank are located in downtown Pomeroy. An automated teller machine is also located in Pomeroy outside a local convenience store. The Rutland office is a full-service and Motor Bank facility. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION ----------------------------------------------- SELECTED FINANCIAL DATA The following data should be read in conjunction with the unaudited consolidated financial statements and the management discussion and analysis that follows. For the Three Months Ended March 31, 1996 1995 SIGNIFICANT RATIOS - ------------------ Net income to: - -------------- Average assets* 1.34% 1.18% ------- ------- Average shareholders' equity* 14.44% 12.78% ------- ------- Net interest margin* 4.72% 4.87% ------- ------- Efficiency ratio* 60.23% 64.36% ------- ------- Average shareholders' equity to average assets 9.27% 9.24% ------- ------- Loans net of unearned interest to deposits (end of period) 88.04% 88.45% ------- ------- Allowance for loan losses to loans net of unearned interest (end of period) 1.76% 1.77% ------- ------- Capital ratios: - --------------- Tier I capital ratio 12.62% 13.13% ------- ------- Risk-based capital ratio 13.87% 14.38% ------- ------- Leverage ratio 8.48% 9.00% ------- ------- Cash dividends to net income 28.18% 31.16% ------- ------- PER SHARE DATA Book value per share $16.48 $14.99 ------- ------- Earnings per share $0.60 $0.46 ------- ------- Cash dividends per share $0.17 $0.15 ------- ------- * Net income to average assets, net income to average shareholders' equity, net interest margin, and efficiency ratio are presented on an annualized basis. Net interest margin is caluclated using fully tax equivalent net interest income as a percentage of average earning assets. Efficiency ratio is a ratio of non-interest expense as a percentage of fully tax equivalent net interest income plus non-interest income. The following discussion and analysis of the consolidated financial statements of the Company is presented to provide insight into management's assessment of the financial results. The Company's subsidiaries, The Peoples Banking and Trust Company ("Peoples Bank"), The First National Bank of Southeastern Ohio ("First National Bank"), and The Northwest Territory Life Insurance Company ("Northwest Territory"), provide financial services to individuals and businesses within the Company's market area. Peoples Bank is chartered by the state of Ohio and subject to regulation, supervision, and examination by the Federal Deposit Insurance Corporation ("FDIC") and the Ohio Division of Banks. First National is a member of the Federal Reserve System and subject to regulation, supervision, and examination by the Office of the Comptroller of the Currency ("OCC"). RESULTS OF OPERATIONS --------------------- Overview of the Income Statement - -------------------------------- For the quarter ended March 31, 1996, the Company earned $1,881,000 in net income, a 26.6% increase from $1,486,000 in first quarter 1995. Earnings per share increased 30.4% from $0.46 in 1995 to $0.60 in 1996. All references to per share amounts have been adjusted to reflect a 10% stock dividend distributed on October 25, 1995, to shareholders of record on October 10, 1995. Net income increased in the first quarter due to enhanced performance in several key areas. Net interest income increased $515,000, or 9.3% compared to 1995's first quarter, due to increased earning asset volume. Comparing the same time periods, net interest margin (net yield on interest-earning assets) decreased slightly from 4.87% in 1995 to 4.72% in 1996. Excluding gains from sales of investment securities, first quarter non-interest income reached $1,080,000, an 8.0% increase compared to the same period last year. Non-interest expense totaled $4,013,000 compared to $4,094,000 in first quarter 1995, a decrease of 2.0%. Interest Income and Expense - --------------------------- Increased profits in the first quarter can be attributed primarily to net interest income growth, as first quarter net interest income totaled $6,031,000 in 1996 compared to $5,516,000 last year, up 9.3%. In anticipation of the acquired deposits related to the Acquisition, the Company invested approximately $20 million in mortgage-backed securities. The incremental net interest income realized as a result of these investments resulted in increased net interest income dollars. Net interest margin totaled 4.72% in first quarter 1996, a modest decline compared to 1995's fourth quarter ratio of 4.87%. Interest rate pressures continue to challenge the entire financial services industry. Management also expects to aggressively offer special time deposit prices over the next several months. The Company's management expects net interest margin to stabilize in the near term and will continue to monitor the effects it has on the performance of the Company. Please refer to the "Consolidated Average Balance Sheet and Analysis of Net Interest Income" table included on page 16 for a complete quantitative evaluation of interest yields and costs for the Company. The Company recorded a provision for loan losses of $360,000 in the first quarter, up from $285,000 reported for the same period last year. Due primarily to increased charge-off activity in the consumer loan portfolio, management expects to slightly increase the provision for loan losses over the next several months. Non-Interest Income - ------------------- Several categories of non-interest income reflect increases compared to 1995. Income generated from fiduciary activities totaled $472,000 for the quarter ended March 31, 1996, up 12.6% compared to the same period last year. The Investment and Trust Division of Peoples Bank manages over $390 million in assets (market value) and continues to be a leader in fiduciary services for the Company's market area. First quarter account service charge income increased 2.3% to $394,000 compared to last year. The Company's fee income generated from deposits is based on cost recoveries associated with services provided. In addition to traditional deposit products generating non-interest income for the Company, an agreement with an unaffiliated annuities and life insurance agency has also generated non-interest income through the receipt of lease payments. Management expects this non-traditional revenue source to continue to provide incremental earnings for the Company in the future. In late 1995, subsidiaries of First National Bank, Northwest Territory Life Insurance Agency, Inc. and Northwest Territory Property and Casualty Insurance Agency, Inc. (the "Agencies"), were awarded insurance agency powers in the State of Ohio. The Agencies received Certificates of Qualification to provide full life and property product lines to consumers in Ohio. These Agencies were the first in Ohio to be affiliated with a financial institution. Although the Agencies' results of operations did not have a material impact on first quarter results, they are anticipated to produce income growth and long-term value to the Company through internal development as well as external affiliation and acquisition. Non-Interest Expense - -------------------- Maintaining acceptable levels of non-interest expense is vital to the profitability of the Company. In the first three months of 1996, non-interest expense totaled $4,013,000, a 2.0% decrease compared to last year's first quarter. Several recent developments contributed to this modest decrease. The Company incurred Bank Insurance Fund ("BIF") expense of $4,000, representing a significant decrease of $222,000 compared to first quarter 1995. BIF expense is the annual premium financial institutions pay for deposit insurance. Lower BIF premiums in the future should improve the Company's efficiency ratios as well. Also contributing to a reduction in non-interest expense was a modest decrease in salaries and benefits expense. In fourth quarter 1995, twenty-one of the Company's employees (7% of the Company's workforce) accepted voluntary early retirement. As a result, salaries and benefits expense was reduced in the first quarter of 1996 by 1.7%, or $30,000, compared to the same period last year. Management expects salaries and benefits expense to remain at these levels throughout the remainder of 1996. Future non-interest expense will be impacted by the amortization of intangibles related to the Acquisition. Management does not expect this amortization to materially impact the future profitability of the Company and is pleased with the enhanced customer service potential of the acquired offices. Return on Assets - ---------------- For the quarter ended March 31, 1996, return on average assets ("ROA") reached 1.34%, up from 1.18% recorded in first quarter 1995. The increase in ROA for the first quarter can be attributed to asset growth strategies implemented by the Company in late 1995 designed to produce incremental net income dollars for increased return on equity, as well as increased efficiencies achieved in the areas of non-interest expense. Management anticipates ROA levels to remain relatively steady for the remainder of 1996. Return on Equity - ---------------- Management believes return on average stockholders' equity ("ROE") is an important indicator of an organization's financial strength and continues to monitor the performance of the Company relative to this ratio. The Company's ROE for the first quarter of 1996 was 14.44%, compared to 12.78% for the same period last year. This increase can be attributed primarily to increased first quarter net income as well as a reduction in total equity due to significant treasury share purchases in 1995. The Company's management expects improvement in ROE through the remainder of 1996 and into 1997. The Acquisition and its $73.7 million in deposits provide increased revenue potential without increasing stockholder's equity. The Company's capital is adequate under regulatory and industry standards. During the first quarter, the Company's Board of Directors authorized the Company to repurchase up to 10,000 treasury shares at prices not to exceed $23.50. The newly purchased treasury shares will be used in the Company's stock option programs. Federal Income Tax Expense - -------------------------- Federal income taxes increased from $651,000 in first quarter 1995 to $883,000 in 1996. This increase can be attributed to the Company's higher pre-tax income and a modest decrease in tax-exempt income. FINANCIAL CONDITION ------------------- Overview of Balance Sheet - ------------------------- Total assets increased from $543,430,000 at December 31, 1995 to $582,883,000 at the end of the first quarter, a growth rate of 7.3%. The increase in assets can be attributed primarily to increased investment in mortgage-backed securities, part of a strategy implemented by management prior to completing the April 26 Acquisition. To fund the additional investments, the Company utilized short-term borrowings, including Federal Home Loan Bank ("FHLB") advances and repurchase agreements. Short-term borrowings increased from $33,276,000 at year-end 1995 to $67,523,000 at March 31, 1996. Management expects to replace the majority of short-term borrowings with the acquired deposits assumed in the branch acquisition. Loan demand continues to grow in the markets served by the Company. Total loans increased in the first quarter by over $4 million (or 1.1%) to $383,696,000. Since year-end 1995, total deposits have grown 1.6% to nearly $436 million while long-term borrowings declined 3.2% to $22,395,000. Stockholders' equity decreased $51,000 (or 0.1%) to $51,423,000 in the three months ended March 31, 1996. Although retained earnings and other factors increased stockholders' equity in the first quarter, total stockholders' equity remained relatively unchanged due to the decrease in market value of the Company's investment securities portfolio (all of which are classified as available-for-sale). Cash and Cash Equivalents - ------------------------- Cash and cash equivalents totaled $31,074,000 at March 31, 1996. In the first quarter, federal funds sold increased $8.3 million to $11,800,000. This increase in federal funds reflects several balance fluctuations in a sizable public fund SuperNow account. Management believes the liquidity needs of the Company are satisfied by the current balance of cash and cash equivalents, readily available access to traditional and non-traditional funding sources, and the portion of the investment and loan portfolios that matures within one year. These sources of funds should enable the Company to meet cash obligations and off-balance sheet commitments as they come due. Investment Securities - --------------------- The most significant area of asset growth in 1996 occurred in investment securities, which increased $24.7 million in the first quarter to $156,444,000. All of the Company's investment securities are classified as available-for-sale. In anticipation of the Acquisition (and its associated deposits), the Company's management initiated a pre-Acquisition investment program. As a result, quarterly investments in U. S. government agencies grew $26,224,000 to March 31, 1996's balance of $79,447,000. This pre-Acquisition investment strategy was also designed to position the portfolio for future earnings while maintaining adequate liquidity. Balances in other investment categories remain relatively unchanged in the first quarter. Since all of the Company's investment securities are classified as available-for-sale, the carrying value of the investments are more susceptible to market fluctuations compared to investments classified as held-to-maturity. At December 31, 1995, the Company was carrying a markup of $2,469,000 on its investment portfolio, compared to March 31's markup of $923,000. Management believes securities classified as available-for-sale provide greater flexibility in meeting liquidity needs as they come due and feels market fluctuations to have minimal impact to the Company's balance sheet. Management monitors the earnings performance and the effectiveness of the liquidity of the investment portfolio on a regular basis through Asset/Liability Committee ("ALCO") meetings. The group also monitors net interest income, sets pricing guidelines, and manages interest rate risk for the Company. Through active balance sheet management and analysis of the investment securities portfolio, the Company maintains sufficient liquidity to satisfy depositor requirements and the various credit needs of its customers. Loans - ----- The Company's loan volume continues to grow, and reflects the additional credit opportunities provided by the markets served. At March 31, 1996, the Company had mortgage real estate loan balances of $156,999,000, up $2,530,000 (or 1.6%) from year-end 1995. Consumer loan balances remained stable in the first quarter, reaching $101,976,000 at March 31, 1996, up $144,000 since year-end 1995. The Company's lending is primarily focused in the local southeastern Ohio market and consists principally of retail lending, which includes single-family residential mortgages and other consumer lending. Recently the Company has expanded its lending focus to commercial, financial, and agricultural loans. These balances rose $1,690,000 (or 1.4%) to $118,996,000 at March 31, 1996. The respective economies in the Company's markets continue to provide quality credit opportunities, in particular, through the business production office located in the Newark-Granville area of central Ohio. Since its inception in mid-1993, this office has continued its growth and contribution to the Company's loan portfolio. At March 31, 1996, the Newark-Granville office had nearly $17 million in total loans, of which over $14 million were commercial loans. Management is pleased with the performance and growth of this office and will continue to focus efforts on enhancement and growth of the loan portfolio while maintaining underwriting quality. Also in the first quarter, the Company launched a special home equity credit line ("Equiline") program in response to the growing credit needs of the communities it serves. The special program offers 5-year, fixed rate Equilines at a competitive interest rates. Since the program's inception in early February, the Company has written over 100 new Equilines with available credit lines of up to approximately $2.5 million. At March 31, 1996, over $750,000 of the available Equiline balances were outstanding. Included in these totals are new Equilines extended by First National Bank, which began offering Equilines to their customers in the first quarter of 1996. Management is pleased with the response to the special Equiline programs and will continue to monitor the progress of the credit line portfolio. Loan Concentration - ------------------ The Company does not have a concentration of its loan portfolio in any one industry. Real estate lending continues to be the largest component of the loan portfolio, representing $162,723,000 (or 42.2%) of total loans, while commercial, financial, and agricultural loans totaled $118,996,000 (or 31.0%). The Company's lending is primarily focused in the local southeastern Ohio market and consists principally of retail lending, which includes single-family residential mortgages and other consumer lending. The Company's largest group of commercial loans consists of automobile dealer floor plans, which totaled $15,501,000 at March 31, 1996. It is the Company's policy to obtain the pledge of the underlying inventory as collateral on these loans. The Company does not extend credit to any single borrower in excess of the combined legal lending limits of its subsidiary banks. Allowance for Loan Losses - ------------------------- The allowance for loan losses as a percentage of loans modestly decreased from 1.77% at year-end 1995 to 1.76% at the end of the first quarter. The total dollar amount of the reserve increased $17,000. The Company's first quarter provision for loan losses on the income statement totaled $360,000, while gross chargeoffs were $431,000, and recoveries amounted to $88,000. A significant portion of the Company's recent chargeoffs have occurred in the consumer loan category and in particular, indirect lending, which has experienced increased loan activity in recent reporting periods. Industry reports indicate outstanding consumer credit has been on the rise. Consequently, consumer credit delinquency has increased. In the first quarter, the Company had gross chargeoffs in the consumer loan category of $402,000 and recoveries of $71,000. Although 1996 consumer loan chargeoffs through the first quarter have been higher than anticipated, management expects the chargeoffs to stabilize in the future. Net chargeoffs in both the real estate and commercial loan categories were lower than expected and demonstrate the quality of the loan portfolio. Management will continue to monitor the entire loan portfolio to determine the adequacy of the allowance. Nonaccrual loans and those loans 90 days past due totaled $939,000 and $1,441,000 respectively at the end of 1996's first quarter. Other real estate owned remained at $45,000, unchanged from year-end 1995. As a result, nonperforming loans (those loans classified as nonaccrual, 90 days or more past due, and other real estate owned) as a percentage of outstanding loans were 0.63% at March 31, 1996. Management believes this is an acceptable ratio in relation to the overall quality of the Company's loan portfolio. At March 31, 1996, the recorded investment in loans that were considered to be impaired under Statement of Financial Standards No. 114, "Accounting by Creditors for Impairment of a Loan" ("SFAS No. 114"), as amended by SFAS No. 118, was $1,618,000 (of which $165,000 were on a nonaccrual basis). Included in this amount is $106,000 of impaired loans for which the related allowance for loan losses is $31,000. The remaining impaired loan balances of $1,511,000 do not have a related allocation of the allowance for loan losses as a result of write-downs, being well-secured, or possessing characteristics demonstrating ability to repay the loan. The average recorded investment in impaired loans during the quarter ended March 31, 1996 was approximately $1,560,000. For the quarter ended March 31, 1996, the Company recognized interest income on impaired loans of $49,000, which included $1,000 of interest income recognized on a cash basis. SFAS No. 114 requires that certain impaired loans be measured based on the present value of expected future cash flows, discounted at the effective interest rate of the loan, or, as a practical expedient, the loan may be valued at the fair value of the collateral if the loan is collateral dependent. SFAS No. 114 does not apply to large groups of smaller-balance homogeneous loans, such as mortgage and consumer loans, which are evaluated collectively for impairment. The Company will continue to monitor the status of any impaired loans, as well as performing loans, in order to determine the appropriate reserve for potential loan loss. Management believes the allowance for loan loss of 1.76% of total loans at March 31, 1996, to be adequate to absorb inherent losses in the portfolio. Funding Sources - --------------- The Company considers deposits, short-term borrowings, and term debt when evaluating funding sources. Traditional deposits continue to be the most significant source of funds for the Company, reaching $435,839,000 at March 31, 1996, an increase of 1.6% since year-end 1995. Deposit growth occurred primarily in transaction-based accounts such as SuperNow balances. Non-interest bearing demand deposits at March 31, 1996 totaled $51,983,000, up from year-end 1995's balance of $50,067,000. Management feels the March 31 balance was a temporary fluctuation and that average balances in non-interest-bearing deposits are more meaningful and should be used for comparative purposes. Compared to fourth quarter 1995, average non-interest bearing deposit balances increased $697,000 (or 1.4%) to $48,873,000. Management will continue to focus efforts to maintain the non-interest bearing deposit base of the Company and anticipates growth in this funding category through the Acquisition and new markets. Short-term borrowings fueled the majority of growth for the Company in the first quarter. Management feels most of these short-term funds will be replaced by the acquired deposits from the Acquisition. The Company utilizes several forms of short-term borrowings, including FHLB advances and repurchase agreements (from both local business customers as well as national markets). At March 31, 1996, the largest component of short-term borrowings was FHLB borrowings, which totaled $37,850,000. Management believes these borrowings will be repaid upon consummation of the Acquisition and the Company will continue to access short-term FHLB borrowings as necessary. During the first three months of 1996, the Company experienced a change in the mix of its deposit base. In January, a $5 million brokered certificate of deposit ("CD") matured. The Company has another brokered CD in the amount of $5 million scheduled to mature in July 1996. As a result of the maturity of the brokered CD and other short-term, aggressively priced CD's offered in 1995, total CD's decreased $10,836,000 (or 4.9%) to $208,122,000 at March 31, 1996. Management expects existing CD balances to remain level or increase slightly in 1996. In the Acquisition, the Company assumed approximately $40 million of CD's, with maturities ranging from six months to 5 years. In addition, a special 11-month CD offering was initiated in April to remain competitive in the markets served by the Company. In the first quarter, the largest growth in deposits occurred in SuperNow accounts, an increase of nearly $12 million (or 35.3%) since year-end 1995. This increase was due primarily to seasonal growth in a special account relationship using the SuperNow deposit product. Due to this account's cyclical nature, management expects this customer's SuperNow balances to return to normal levels over the next three month period. Other deposit account balances showed minor changes in average aggregate account balances for the three months ended March 31, 1996. Average total balances in savings accounts increased $2,240,000 (or 3.3%) to nearly $70 million, as consumers shifted their investments to these types of deposits. Average non-interest bearing demand deposits increased $691,000 (or 1.4%) to $48,689,000. In addition to traditional deposits, the Company continues to maintain long-term borrowings from the FHLB. This allows the Company to obtain reliable funds at fixed and indexed rates for longer periods of time than other traditional deposit products, creating the opportunity to match longer term fixed rate mortgages and other extended-maturity asset commitments against a similar funding source. Principal paydowns on long-term advances from the FHLB during the first quarter resulted in total long-term FHLB borrowings at March 31 of $20,835,000, a quarterly decrease of 3.5%. Management plans to maintain access to long-term FHLB borrowings as an appropriate funding source. Capital/Stockholders' Equity - ---------------------------- The Company's capital continues to provide a strong base for profitable growth. Total stockholders' equity was $51,423,000 at March 31, 1996 compared to $51,474,000 at year-end 1995, a modest decrease. Equity growth was slowed in the first quarter by the adjustment for net unrealized holding gain on available-for-sale securities, net of deferred taxes, which decreased $1,546,000 to $923,000 by the end of the first quarter. Tangible equity (stockholders' equity less adjustment for net unrealized holding gain on available-for-sale securities) totaled $50,500,000 at March 31, 1996, up nearly $1.5 million (or 3.1%) since December 31, 1995. Since all of the investment securities in the Company's portfolio are classified as available-for-sale, both the investment and equity sections of the Company's balance sheet are more sensitive to the changing fair values of investments. In the first quarter, interest rates slightly increased, causing a corresponding decrease in the market value of the investment portfolio. The Company's management feels the status of the investment markets do not substantially affect the Company's equity, as it continues to provide a strong base for expansion of operations as well as potential for growth in both new and existing markets. In the first quarter, the Company earned $1,881,000 and declared dividends of $530,000, a dividend payout ratio of 28.18% of net income. Management feels this is an acceptable payout ratio for the Company and anticipates similar payout ratios in future periods. The Company has also complied with the standards of capital adequacy mandated by the banking industry. Bank regulators have established "risk-based" capital requirements designed to measure capital adequacy. Risk-based capital ratios reflect the relative risks of various assets banks hold in their portfolios. A weight category of either 0% (lowest risk assets), 20%, 50%, or 100% (highest risk assets) is assigned to each asset on the balance sheet. The Company's risk-based capital ratio of 13.87% at March 31, 1996 is well above the minimum standard of 8%. The Company's Tier 1 capital ratio of 12.62% also exceeded the regulatory minimum of 4%. The Leverage ratio at March 31, 1996 was 8.48% and also above the minimum standard of 3%. These ratios provide quantitative data demonstrating the strength and future opportunities for use of the Company's capital base. Management continues to evaluate risk-based capital ratios and the capital position of the Company as part of its strategic decision process. Liquidity and Interest Rate Sensitivity - --------------------------------------- Liquidity measures an organization's ability to meet cash obligations as they come due. The Consolidated Statement of Cash Flows presented on page 5 of the accompanying financial statements provide analysis of the Company's cash and cash equivalents. Additionally, management considers that portion of the loan portfolio that matures within one year and the maturities within one year in the investment portfolio as part of the Company's liquid assets. The Company's liquidity is monitored by the ALCO, which establishes and monitors ranges of acceptable liquidity measurement. Management feels the Company's current liquidity position is adequate. The interest rate sensitivity position at March 31, 1996 indicated the Company was liability sensitive in the short-term and asset sensitive for periods longer than one year. In the long-term, the Company is in a net asset sensitive position, which means if interest rates increase, the Company's net interest income will increase over time. If interest rates decline, net interest income will also decrease. Management monitors the asset and liability sensitivity through the ALCO and uses this data to make appropriate strategic decisions. Management does not expect the Acquisition to negatively impact either the Company's liquidity situation or interest rate sensitivity position. Effects of Inflation on Financial Statements - -------------------------------------------- Substantially all of the Company's assets relate to banking and are monetary in nature. Therefore they are not impacted by inflation to the same degree as companies in capital intensive industries. During a period of rising prices, a net monetary asset position results in loss in purchasing power and conversely a net monetary liability position results in an increase in purchasing power. In the banking industry, typically monetary assets exceed monetary liabilities. Therefore as prices have recently increased, financial institutions experienced a decline in the purchasing power of their net assets. Future Outlook - -------------- Management is pleased with the Company's performance in the first three months of 1996 and feels the consistent earnings record has positioned the Company to achieve established goals and enhance investor return. Management continues to challenge its workforce to identify critical banking processes and re-engineer services to provide the customer with exceedingly high quality products and services. Investments in technology allow the workforce the opportunity to compete at higher levels than other financial institutions of similar size. Management feels the current combination of human resources and technology has positioned the Company for the future. Product enhancement in customer service will be implemented in second quarter 1996. The Peoples "Connect" Card, a debit card, will be unveiled to customers in May. The Peoples Connect Card looks like a credit card, but acts like a traditional check. Payment for purchases comes directly from the customer's bank account, and therefore no interest charges are incurred. The Peoples Connect Card will be accepted anywhere MasterCard is accepted. Benefits to our customers include increased security, alternative to writing checks, and improved money management. Management believes the introduction of the Peoples Connect Card will enhance the customer's range of choices in selecting their financial services and represents the Company's strong commitment to provide continued full-service banking products. Technological advances will be achieved in second quarter 1996 through investment in a broad, PC-based system for the Company's customer service representatives ("CSR's"). In this system, each CSR will be connected to the Company-wide electronic network that provides a faster, more efficient method of serving our customers. The new system represents another phase in the integration of the Company's financial information. When finished, the system will enhance customer service as product information will be more readily available to all CSR's. Electronic communication is the future of a competitive business, and through increased investment in technology, the Company anticipates a virtual electronic financial institution in the future. Costs will be reduced via decreased paper usage and other efficiencies. The project is progressing as expected and is scheduled to begin operation by June 30, 1996. The interest rate environment will play an important role in the future earnings of the Company. Pressures on net interest income and margin are expected to intensify throughout 1996. Management has implemented several pricing strategies to effectively include the new deposits assumed through the branch acquisition. Interest rates on CD's continue to be highly competitive, and in response, management began offering a special 11-month CD in early second quarter at rates slightly higher than the average comparable CD rates in the markets we serve. Management expects this product to generate additional funding sources for the Company as well as provide additional financial service opportunities to customers. The Company's balance sheet growth continues to be a focus of management. Several strategies, including branch acquisition of deposits as well as growth strategies through borrowings and additional purchases of investment securities, have been implemented during 1995 and first quarter 1996. Management will continue to analyze a wide variety of methods as means of maximizing customer service, as well as enhancing profitability and return to shareholders. Enhanced non-interest income and controlled non-interest expense are critical to the success of the Company. First quarter results reflect successful enhancements of the Company's performance and efficiency. The first quarter efficiency ratio shows the Company's results to be improved compared to the same period last year, from 64.36% in first quarter 1995 to 60.23% for the quarter ended March 31, 1996. The efficiency ratio, which measures non-interest expense as a percentage of fully tax equivalent net interest income and non-interest income, was improved primarily through decreased non-interest expense, via reduced BIF premium expense as well as decreased salaries and benefits achieved through the early retirement plan of 1995. Salaries and wages are analyzed on a regular basis to identify greater possible efficiencies. Management has recently directed its focus to an improved efficiency ratio as a method of enhancing profitability and return on equity. The Company's loan to deposit ratio has remained relatively constant through the first quarter of 1996 at 88.04%, compared to 88.45% at December 31, 1995. This ratio is expected to decrease during the second quarter as a result of the deposits acquired in the Acquisition. Due primarily to the demand for new loans experienced in the markets we serve, management expects the Company's loan to deposit ratio to decrease slightly and stabilize as the acquired deposits are used to fund these new loans. Management is comfortable with the current loan to deposit ratio and feels an acceptable ratio can be maintained due to the strong loan demand. Although net interest margin has narrowed in 1996, increased volume in the first quarter has provided the Company increased earnings. As non-interest expense from the three full-service banking offices is realized in the remainder of 1996, the Company must continue to recognize new methods of improving operating efficiencies. This goal remains an integral part of management's operating plan and the Company's business definition. The Company continues to enhance profits through the expansion of interest bearing deposits and the ensuing asset growth. Management concentrates on return on equity and earnings per share evaluations, plus other methods, to measure and direct the performance of the Company. While past results are not an indication of future earnings, management feels the Company is positioned to maintain performance of normal operations through the remainder of 1996. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995 - --------------------------------------------------------------- The statements in this Form 10-Q which are not historical fact are forward looking statements that involve risks and uncertainties, including, but not limited to, the interest rate environment, the effect of federal and state banking and tax regulations, the effect of economic conditions, the impact of competitive products and pricing, and other risks detailed in the Company's Securities and Exchange Commission filings. PEOPLES BANCORP INC. AND SUBSIDIARIES CONSOLIDATED AVERAGE BALANCE SHEET AND ANALYSIS OF NET INTEREST INCOME -------------------------------------- For the Three Months Ended March 31, 1996 1995 Average Yield/ Average Yield/ Balance Rate Balance Rate ASSETS - ------ Securities: Taxable $120,522 6.71% $ 80,151 7.20% Tax-exempt 23,363 7.95% 22,343 8.86% -------- ------ -------- ------ Total 143,885 6.92% 102,494 7.56% Loans: Commercial 119,200 9.70% 114,804 9.35% Real estate 160,475 8.67% 154,040 8.59% Consumer (net) 101,759 10.23% 94,459 9.74% -------- ------ -------- ------ Total 381,434 9.41% 363,303 9.13% Less: Allowance for loan losses (6,750) (6,755) -------- ------ -------- ------ Net loans 374,684 9.62% 356,548 9.30% Interest-bearing deposits 966 4.96% 1,220 5.79% Federal funds sold 5,947 5.40% 7,458 5.97% -------- ------ -------- ------ Total earning assets 525,482 8.81% 467,720 8.87% Other assets 36,501 35,421 -------- -------- Total assets $561,983 $503,141 ======== ======== LIABILITIES AND EQUITY - ---------------------- Interest-bearing deposits: Savings $ 69,856 3.05% $ 70,228 3.32% Interest-bearing demand deposits 96,804 3.43% 88,125 3.12% Time 212,495 5.62% 210,834 5.50% -------- ------ -------- ------ Total 379,155 4.58% 369,187 4.51% Borrowed funds: Short-term 51,097 5.31% 12,899 4.63% Long-term 22,880 6.05% 23,476 6.11% -------- ------ -------- ------ Total 73,977 5.53% 36,375 5.58% -------- ------ -------- ------ Total interest bearing liabilities 453,132 4.74% 405,562 4.61% Non-interest bearing deposits 48,873 46,261 Other liabilities 7,872 4,806 -------- -------- Total liabilities 509,877 456,629 -------- -------- Stockholders' equity 52,106 46,512 -------- -------- Total liabilities and equity $561,983 $503,141 ======== ======== Interest income to earning assets 8.81% 8.87% Interest expense to earning assets 4.09% 4.00% ------ ------ Net interest margin 4.72% 4.87% ====== ====== Interest income and yields presented on a fully tax-equivalent basis using a 34% tax rate. PART II ------- ITEM 1: Legal Proceedings. None. ITEM 2: Changes in Securities. None. ITEM 3: Defaults upon Senior Securities. None. ITEM 4: Submission of Matters to a Vote of Security Holders. On April 9, 1996, the Peoples Bancorp Inc. Annual Meeting of Shareholders was held in The Peoples Banking and Trust Company Conference Room in Marietta, Ohio. The meeting was well-attended and over 83% of the outstanding common shares were represented by proxy. No votes were placed in person. All items of business on the agenda were approved by the shareholders and the results are as follows: 1) Three Directors of the Company were re-elected to serve terms of three years each (expiring in 1999): Dennis D. Blauser, Norman J. Murray, and Joseph H. Wesel. In addition, a new Director of the Company was elected: Rex E. Maiden, who has served on the Board of Directors of Peoples Bank for several years. Directors of the Company who continue to serve after the 1996 Annual Meeting include George W. Broughton, Wilford D. Dimit, Robert E. Evans, Barton S. Holl, James B. Stowe, Paul T. Theisen and Thomas C. Vadakin. 2) A proposal was approved to adopt an amendment to Article FOURTH of the Company's Amended Articles of Incorporation to increase the authorized number of common shares, without par value, of the Company from 6,000,000 to 12,000,000 common shares. SHAREHOLDER VOTING RESULTS BROKER NON- ISSUE FOR WITHHELD AGAINST ABSTAIN VOTES - -------------------------- --------- -------- ------- ------- ------ Dennis D. Blauser 2,469,668 119,927 0 0 N/A Norman J. Murray 2,506,073 83,522 0 0 N/A Joseph H. Wesel 2,545,309 44,286 0 0 N/A Rex E. Maiden 2,520,795 68,800 0 0 N/A Amendment to increase the authorized number of common shares of the Company from 6,000,000 to 12,000,000 common shares 2,509,901 0 33,173 46,521 0 ITEM 5: Other Information. None. ITEM 6: Exhibits and Reports on Form 8-K. a) Exhibits: EXHIBIT INDEX Exhibit Number Description Exhibit Location - ------- -------------------------------------------- -------------------- 3 (a) Certificate of Amendment to the Amended Pages 20 to 22. Articles of Incorporation of Peoples Bancorp Inc. 3 (b) Amended Articles of Incorporation of Pages 23 to 25. Peoples Bancorp Inc. (as amended). 11 Computation of Earnings Per Share. Page 26. 27 Financial Data Schedule. EDGAR electronic filing only. b) Reports on Form 8-K. None. 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 thereunder duly authorized. PEOPLES BANCORP INC. Date: May 13, 1996 By: /s/ ROBERT E. EVANS Robert E. Evans President and Chief Executive Officer Date: May 13, 1996 By: /s/ JOHN W. CONLON John W. Conlon Chief Financial Officer EXHIBIT INDEX PEOPLES BANCORP INC. QUARTERLY REPORT ON FORM 10-Q FOR PERIOD ENDED MARCH 31, 1996 -------------------------------------------------- Exhibit Number Description Exhibit Location - ------- -------------------------------------------- -------------------- 3 (a) Certificate of Amendment to the Amended Pages 21 to 23. Articles of Incorporation of Peoples Bancorp Inc. 3 (b) Amended Articles of Incorporation of Pages 24 to 26. Peoples Bancorp Inc. (as amended). 11 Computation of Earnings Per Share. Page 27. 27 Financial Data Schedule. EDGAR electronic filing only. EX-3 2 EX 3(A) CERT OF AMEND TO AMENDED ART OF INC Exhibit 3(a) CERTIFICATE OF AMENDMENT TO THE AMENDED ARTICLES OF INCORPORATION OF PEOPLES BANCORP INC. ------------------------------------ The undersigned hereby certify that they are the duly elected, qualified and acting President and Secretary, respectively, of Peoples Bancorp Inc., an Ohio corporation (the "Company"); that the Annual Meeting of the Shareholders (the "Annual Meeting") of the Company was duly called and held on April 9, 1996, at which Annual Meeting a quorum of shareholders of the Company was at all times present in person or by proxy; that the directors of the Company unanimously approved and recommended to the shareholders the approval of an amendment to Article FOURTH of the Company's Amended Articles of Incorporation in order to increase the authorized number of shares of the Company to 12,000,000 shares, all of which will be common shares, without par value; and that the resolution attached hereto as Annex 1 and incorporated herein by this reference was duly adopted by the shareholders of the Company at the Annual Meeting by the affirmative vote of the holders of shares entitling them to exercise at least a majority of the voting power of the Company entitled to vote thereon in accordance with Article SEVENTH of the Amended Articles of Incorporation of the Company. IN WITNESS WHEREOF, the undersigned President and Secretary of Peoples Bancorp Inc., acting for and on behalf of said corporation, have hereunto set their hands this 9th day of April, 1996. /s/ ROBERT E. EVANS -------------------------- Robert E. Evans, President /s/ RUTH I. OTTO -------------------------- Ruth I. Otto, Secretary Annex 1 ------- RESOLVED, that Article FOURTH of the Company's Amended Articles of Incorporation be amended to increase the authorized number of shares from 6,000,000 to 12,000,000, all of which will be common shares, without par value. EX-3 3 EX 3(B) AMENDED ARTICLES OF INCORPORATION Exhibit 3(b) AMENDED ARTICLES OF INCORPORATION OF PEOPLES BANCORP INC. (as amended) --------------------------------- FIRST: The name of the corporation shall be Peoples Bancorp Inc. (the "Corporation"). SECOND: The place in Ohio where the principal office of the Corporation is to be located is in the City of Marietta, County of Washington. THIRD: The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be formed under Sections 1701.01 to 1701.98 of the Ohio Revised Code. FOURTH: The authorized number of shares of the Corporation shall be 12,000,000, all of which will be common shares, without par value. FIFTH: The directors of the Corporation shall have the power to cause the Corporation from time to time and at any time to purchase, hold, sell, transfer or otherwise deal with (A) shares of any class or series issued by it, (B) any security or other obligation of the Corporation which may confer upon the holder thereof the right to convert the same into shares of any class or series authorized by the Articles of the Corporation, and (C) any security or other obligation which may confer upon the holder thereof the right to purchase shares of any class or series authorized by the Articles of the Corporation. The Corporation shall have the right to repurchase, if and when any shareholder desires to sell, or on the happening of any event is required to sell, shares of any class or series issued by the Corporation. The authority granted in this Article FIFTH of these Articles shall not limit the plenary authority of the directors to purchase, hold, sell, transfer or otherwise deal with shares of any class or series, securities, or other obligations issued by the Corporation or authorized by its Articles. SIXTH: No shareholder of the Corporation shall have, as matter of right, the pre-emptive right to purchase or subscribe for shares of any class, now or hereafter authorized, or to purchase or subscribe for securities or other obligations convertible into or exchangeable for such shares or which by warrants or otherwise entitle the holders thereof to subscribe for or purchase any such share. SEVENTH: Notwithstanding any provision of the Ohio Revised Code now or hereafter in force requiring for any purpose the vote, consent, waiver or release of the holders of shares of the Corporation entitling them to exercise two-thirds (2/3) or any other proportion of the voting power of the Corporation or of any class or classes of shares thereof, such action, unless expressly otherwise provided by statute, may be taken by the vote, consent, waiver or release of the holders of shares entitling them to exercise not less than a majority of the voting power of the Corporation or of such class or classes; provided, however, that if any three members of the Board of Directors of the Corporation shall affirmatively vote against any of the following matters, the affirmative vote of the holders of shares entitling them to exercise not less than 75% of the voting power of the Corporation entitled to vote thereon shall be required to adopt: (l) a proposed amendment to the Articles of the Corporation; (2) proposed new regulations or an alteration, amendment or repeal of the regulations of the Corporation; (3) an agreement of merger or consolidation providing for the merger or consolidation of the Corporation with or into one or more other corporations; (4) a proposed combination or majority share acquisition involving the issuance of shares of the Corporation and requiring shareholder approval; (5) a proposal to sell, lease, exchange, transfer or otherwise dispose of all or substantially all of the property and assets of the Corporation; (6) a proposed dissolution of the Corporation; or (7) a proposal to fix or change the number of directors by action of the shareholders of the Corporation. The written objection of a director to any such matter submitted to the President or Secretary of the Corporation not less than three days before the meeting of the shareholders of the Corporation at which any such matter is to be considered shall be deemed to be an affirmative vote by such director against such matter. EIGHTH: The members of the Board of Directors of the Corporation, when evaluating any offer of another party to (A) make a tender or exchange offer for any shares of the Corporation, (B) merge or consolidate the Corporation with another corporation or (C) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation, in connection with the exercise of their judgment in determining what they reasonably believe to be in the best interests of the Corporation, shall consider the interests of the Corporation's shareholders and, in their discretion, may consider any of the following: (1) the interests of the Corporation's employees, suppliers, creditors, and customers; (2) the economy of Ohio and the nation; (3) community and societal considerations; and (4) the long-term as well as the short-term interests of the Corporation and its shareholders, including the possibility that these interests may be best served by the continued independence of the Corporation. NINTH: Shareholders of the Corporation shall not have the right to vote cumulatively in the election of directors. TENTH: These Amended Articles of Incorporation take the place of and supersede the existing Articles of Incorporation of Peoples Bancorp Inc. EX-11 4 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 PEOPLES BANCORP INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE For the Three Months Ended March 31, 1996 1995* PRIMARY EARNINGS PER SHARE EARNINGS: Net income $1,881,000 $1,486,000 COMMON SHARES OUTSTANDING: Weighted average common shares outstanding 3,116,961 3,185,953 Add: Net effect of the assumed exercise of outstanding stock options - based on the treasury stock method 29,453 11,761 ----------- ----------- Total primary weighted average shares outstanding 3,146,414 3,197,714 ----------- ----------- PRIMARY EARNINGS PER SHARE $0.60 $0.46 =========== =========== FULLY DILUTED EARNINGS PER SHARE EARNINGS: Net income $1,881,000 $1,486,000 COMMON SHARES OUTSTANDING: Weighted average common shares outstanding 3,116,961 3,185,953 Add: Net effect of the assumed exercise of outstanding stock options - based on the treasury stock method 32,133 11,761 ----------- ---------- Total fully diluted weighted average shares outstanding 3,149,094 3,197,714 ----------- ---------- FULLY DILUTED EARNINGS PER SHARE $0.60 $0.46 =========== ========== * Adjusted for 10% stock dividend issued October 25, 1995, to shareholders of record as of October 10, 1995. EX-27 5 FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from the Form 10-Q filed as of March 31, 1996. 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 17,680 1,479 11,800 0 156,559 0 0 383,696 6,743 582,883 435,839 67,523 5,703 22,395 0 0 31,100 20,323 582,883 8,964 2,434 92 11,398 4,345 5,367 6,031 360 26 4,013 2,764 2,764 0 0 1,881 0.60 0.60 4.72 939 1,441 0 2,181 6,726 431 88 6,743 6,743 0 150
-----END PRIVACY-ENHANCED MESSAGE-----