EX-99 3 exhibit99.htm NEWS RELEASE FOR PEOPLES BANCORP INC. ANNOUNCES THIRD QUARTER EARNINGS exhibit99.htm
 
 
                                                                                                                       PEOPLES BANCORP INC. – P.O. BOX 738 - MARIETTA, OHIO – 45750
www.peoplesbancorp.com

 


NEWS RELEASE

FOR IMMEDIATE RELEASE
Contact: 
Edward G. Sloane
October 23, 2008
  
Chief Financial Officer and Treasurer
   
(740) 373-3155

PEOPLES BANCORP INC. ANNOUNCES
THIRD QUARTER EARNINGS
_____________________________________________________________________

MARIETTA, Ohio - Peoples Bancorp Inc. (“Peoples”) (NASDAQ: PEBO) today announced third quarter 2008 net income of $3.0 million, or $0.28 per diluted share.  This compares to $2.0 million, or $0.19 per diluted share, last quarter and $5.1 million, or $0.49 per diluted share, for the third quarter of 2007.  On a year-to-date basis, net income totaled $10.6 million and diluted earnings per share were $1.02, versus $16.1 million and $1.52, respectively, for the same period in 2007.  In the third quarter of 2008, provision for loan losses was $6.0 million compared to $6.8 million last quarter and $1.0 million in the third quarter of 2007.  On a year-to-date basis, Peoples’ provision for loan losses totaled $14.2 million versus $2.4 million a year ago.
 “Like many financial services companies, our third quarter results were negatively affected by the impact of the struggling economy and weakened commercial real estate market,” said Mark F. Bradley, President and Chief Executive Officer. “While these conditions produced a higher loan loss provision, third quarter earnings benefited from a stable net interest margin, diversified revenue growth, controlled expense growth and a lower effective tax rate.  Over the last several months, we have taken steps to preserve and enhance Peoples’ healthy capital position and liquidity levels in light of this difficult credit cycle.”
Bradley continued, “During the third quarter, we downgraded the loan quality ratings of certain commercial real estate loans as part of our normal loan review process, which was the major driver of the increased loan loss provision compared to last year.  These downgrades were caused by deterioration in the borrowers’ financial condition from the weakened real estate market, and economy as a whole, and resulted in certain loans being placed on nonaccrual status.”
The provision for loan losses resulted from management’s quarterly evaluation of the loan portfolio and procedural methodology that estimates the amount of credit losses probable within the loan portfolio based on several factors, such as changes in loss trends, risk ratings, and current economic conditions.
 At September 30, 2008, nonperforming loans totaled $35.7 million, or 3.21% of total loans, up from $21.2 million, or 1.92%, at June 30, 2008, and $9.4 million, or 0.83% at December 31, 2007.  The third quarter increase was attributable to downgrades of three commercial real estate loan relationships, totaling $14.4 million, which increased nonaccrual loans.  These loans are secured primarily by real estate in Ohio, with some collateral located in Indiana.  The remaining increase since year-end 2007 was the result of two large commercial real estate loans, with balances of $7.0 million and $6.2 million, being placed on nonaccrual status in the first and second quarter of 2008, respectively.
“Despite recent market events, we believe our nonperforming loans are manageable, given our ongoing communication with the borrowers and actions intended to minimize losses,” said Edward G. Sloane, Chief Financial Officer.  “Our consumer loan quality, including our residential real estate loans, remains sound, with delinquency levels and losses comparable to those experienced during the last several quarters.  The steps taken in the third quarter have bolstered our loan loss reserves and we continually monitor the entire loan portfolio closely for signs of credit deterioration.”
The allowance for loan losses grew to $19.2 million, or 1.72% of total loans, at September 30, 2008, from $15.2 million, or 1.38%, at the prior quarter-end and $15.7 million, or 1.40%, at year-end 2007.  The increase in the allowance for loan losses reflects the impact of commercial real estate loan downgrades on management’s estimate of losses within the portfolio.  Management appropriately considered all loans in establishing the allowance for loan losses for each period and believes the allowance was adequate at September 30, 2008, based on all information currently available.
Third quarter 2008 net loan charge-offs were $2.1 million, or 0.74% of average loans on an annualized basis, down from $7.5 million, or 2.70%, in the second quarter of 2008, due to the $6.4 million charge-off of a single impaired commercial real estate loan in the second quarter.  Net charge-offs were $1.0 million, or 0.36%, for the third quarter of 2007.  The increase in 2008 was attributable to a third quarter $1.1 million charge-off of one of the previously mentioned nonaccrual loan relationships.  Net loan charge-offs totaled $10.8 million through nine months of 2008, versus $2.3 million a year ago.
 
PEOPLES BANCORP INC.
Third Quarter 2008 Earnings Release
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Despite the increased level of losses recognized in 2008 compared to prior years, the capital position of Peoples and its banking subsidiary have remained strong and well above amounts needed to be considered well-capitalized by banking regulations.  At September 30, 2008, Peoples’ Tier 1 and Total Risk-Based capital ratios were 12.35% and 13.68%, respectively, while the ratio of tangible equity to tangible assets was 7.03%.  These strong capital positions have allowed Peoples to increase dividends declared to shareholders.  In the third quarter of 2008, Peoples declared a cash dividend of $0.23 per share, up 4.5% from the $0.22 per share declared for third quarter of 2007.  Through nine months of 2008, Peoples has declared dividends of $0.68 per share in 2008 versus $0.66 per share declared through the same period of 2007, resulting in a dividend payout ratio of 67.0% of net income in 2008 versus 43.1% a year ago.  Based on current capital levels, management anticipates continuation of quarterly dividend payments.
During 2008, Peoples has systematically sold the preferred stock issued by the Federal National Mortgage Association (“Fannie Mae”), and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) held in its investment portfolio, due to the uncertainty surrounding these entities.  In the third quarter of 2008, Peoples completely eliminated all holdings of these preferred stocks and recognized a pre-tax loss of $594,000 ($386,000 after-tax).  Peoples also recognized a pre-tax gain of $479,000 ($311,000 after-tax) from the sale of various investment securities, primarily obligations of U.S. government-sponsored enterprises and tax-exempt municipal bonds, with a recorded value of $21.4 million as part of management’s ongoing efforts to reduce credit and interest rate exposures in Peoples’ investment portfolio.
In the third quarter of 2008, net interest income increased 11% to $14.6 million and the net interest margin expanded 24 basis points to 3.50% compared to the prior year third quarter.  These improvements were attributable to Peoples’ funding costs declining more than asset yields, due to lower short-term market rates and wider credit spreads.  Third quarter net interest income and margin also benefited from retail deposit growth in 2008, which has allowed Peoples to reduce its amount of higher-cost wholesale funding.  As a result, Peoples’ third quarter cost of funds dropped 103 basis points year-over-year to 3.01%, while asset yields declined only 69 basis points to 6.15%.  Compared to the second quarter of 2008, net interest income decreased 2% and net interest margin compressed 11 basis points, due to the combination of an increased level of nonaccrual loans recognized during the third quarter and higher loan prepayment fees earned during the second quarter.  Through nine months of 2008, net interest income has grown 9% compared to the same period last year and net interest margin was 3.54% versus 3.29%.  On a year-to-date basis, the average cost of funds decreased 81 basis points, outpacing the 49 basis point decline in asset yields.
Peoples’ reported net interest income and margin include loan prepayment fees, interest reductions for loans placed on nonaccrual status and interest collected on nonaccrual loans.  The net impact of these items was a $241,000 reduction in income, or five basis points of margin, in the third quarter of 2008, compared to $5,000 of additional income in the third quarter of 2007 and $226,000 of additional income, or five basis points, in the second quarter of 2008.
“As expected, our third quarter net interest income and margin were pressured by some assets repricing downward and limited additional opportunities to lower funding costs,” said Sloane.  “In addition, we experienced lower loan prepayment fees and an increase in nonaccrual loans in the third quarter, which combined to reduce asset yields compared to the first half of 2008.  Current interest rate conditions may continue to put pressure on net interest income and margin.  Still, we are continuing to manage our balance sheet position to optimize Peoples’ net interest income stream, while also minimizing the impact of future rate changes on our earnings.”
Third quarter non-interest income increased 6% over the prior year, totaling $8.2 million in 2008 versus $7.7 million in 2007.  The largest gains occurred in Peoples’ insurance revenues, deposit account service charges, and electronic banking (“e-banking”) income, while mortgage banking income declined. Compared to the second quarter of 2008, increases in deposit account service charges and insurance income were partially offset by lower trust and investment income, resulting in a total non-interest income increase of 3% in the third quarter of 2008.  Through nine months of 2008, total non-interest income was $24.3 million compared to $23.7 million through nine months of 2007, with the increase primarily attributable to debit card revenues and trust and investment income.
“Non-interest revenues remain a major component of our earnings stream,” said Sloane.  “While we managed to grow these revenues during the third quarter, our efforts are challenged by the generally lower market value of investments due to the current state of the financial markets and economy, considering a portion of our fiduciary and brokerage revenues is based on the value of managed assets.”
Peoples has enhanced insurance revenues despite tighter pricing margins within the insurance industry caused by insurance companies reducing property and casualty insurance premiums in an effort to attract market share.  Deposit account service charges grew during the third quarter of 2008 as the result of increased checking account overdraft activity.  Peoples’ efforts to attract new trust business over the last several quarters have tempered the reduction in revenues caused by the lower market value of managed assets from the downturn in the financial markets.
 
PEOPLES BANCORP INC.
Third Quarter 2008 Earnings Release
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Non-interest expense totaled $13.2 million for the third quarter of 2008, up 5% from a year ago, and totaled $40.0 million through nine months of 2008 versus $39.1 million for the nine months ended September 30, 2007.  These increases were primarily attributable to higher salary and benefit costs and increased net occupancy and equipment expense.  Salary and benefit costs, Peoples’ largest non-interest expense, were up year-over-year due to the combination of normal annual merit increases and higher employee medical benefit costs, while modest increases in property taxes and utility costs during 2008 were key drivers of higher net occupancy and equipment expense.  On a linked quarter basis, non-interest expense growth was contained, as modest increases in salary and benefit costs, e-banking expense and professional fees were partially offset by reduced marketing expenditures and lower depreciation expense from assets becoming fully depreciated.
 “Overall, we believe third quarter expense levels were reasonable, even though total expense was higher than a year ago,” said Sloane.  “Still, we continue to implement measures to reduce expenses and gain operating efficiencies, while also preparing Peoples for possible future disciplined expansion through establishing new sales offices.”
For the nine months ended September 30, 2008, Peoples’ effective tax rate was 23.1%, which represents management’s current estimate for the full year 2008 and a decrease from 26.0% in the first half of 2008 and 25.8% through nine months of 2007.  The lower projected effective tax rate is due mainly to a greater utilization of estimated tax credits.  In addition, income from tax-exempt sources is expected to comprise a larger portion of Peoples’ 2008 pre-tax income, which further decreased the projected effective tax rate.
At September 30, 2008, total portfolio loan balances were $1.11 billion, up $8.8 million for the quarter.  Construction loan balances grew $17.7 million, due mostly to advances on existing commercial construction loans, while commercial and commercial mortgage loan balances declined a combined $12.6 million. Peoples also experienced modest increases in consumer and home equity loan balances.  Since year-end 2007, total portfolio loan balances were down $7.3 million at quarter-end, due to commercial loan payoffs offsetting new production and the impact of charge-offs in 2008.  Peoples’ serviced real estate loan portfolio totaled $180.4 million at September 30, 2008, down slightly from $182.3 million at June 30, 2008, but up versus $176.7 million at December 31, 2007.
During the third quarter of 2008, total retail deposit balances, which exclude brokered deposits, were essentially unchanged from $1.24 billion at June 30, 2008, as an $8.4 million increase in interest-bearing balances was offset by an $8.8 million decline in non-interest-bearing balances.  For the quarter, retail certificates of deposit (“CDs”) balances grew $5.7 million, while money market and savings balances grew $3.1 and $2.1 million, respectively.  The growth in retail interest-bearing deposits was tempered by a single commercial customer transferring approximately $14 million of money market deposits to an overnight repurchase agreement. The decline in non-interest-bearing deposits was largely attributable to lower commercial balances at September 30, 2008, although consumer balances saw a modest decrease during the quarter.  Since year-end 2007, total retail balances have increased $114.1 million, or 10%, due mostly to higher interest-bearing retail balances from Peoples attracting nearly $70 million of funds from customers outside its primary market area instead of using higher-cost brokered deposits. The retail deposit growth during 2008 has allowed Peoples to reduce higher rate brokered certificates of deposit balances by $49.6 million and contributed to the $20.5 million reduction in borrowed funds since year-end 2007.
 “Overall, we saw several positives in the third quarter results, despite lower net income caused by the ongoing credit challenges in the loan portfolio,” summarized Bradley.  “Our core earnings stream remains strong, driven by stable net interest margin, diversified revenue growth, controlled operating expenses and retail deposit growth. Our capital and liquidity levels continue to be healthy and a source of strength during this challenging economic cycle.”
Peoples Bancorp Inc. is a diversified financial products and services company with $1.9 billion in assets, 49 locations and 38 ATMs in Ohio, West Virginia and Kentucky.  Peoples makes available a complete line of banking, investment, insurance, and trust solutions through its financial service units – Peoples Bank, National Association; Peoples Financial Advisors (a division of Peoples Bank); and Peoples Insurance Agency, Inc.  Peoples’ common shares are traded on the NASDAQ Global Select Market under the symbol “PEBO”, and Peoples is a member of the Russell 3000 index of US publicly traded companies.  Learn more about Peoples at www.peoplesbancorp.com.


Conference Call to Discuss Earnings:
Peoples will conduct a facilitated conference call to discuss third quarter 2008 results of operations today at 11:00 a.m. Eastern Daylight Time, with members of Peoples’ executive management participating.  Analysts, media and individual investors are invited to participate in the conference call by calling (800) 860-2442.  A simultaneous Webcast of the conference call audio will be available online via the “Investor Relations” section of Peoples’ website, www.peoplesbancorp.com.  Participants are encouraged to call or sign in at least 15 minutes prior to the scheduled conference call time to ensure participation and, if required, to download and install the necessary software.  A replay of the call will be available on Peoples’ website in the “Investor Relations” section for one year.

PEOPLES BANCORP INC.
Third Quarter 2008 Earnings Release
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Safe Harbor Statement:
This news release may contain certain forward-looking statements with respect to Peoples’ financial condition, results of operations, plans, objectives, future performance and business.  Except for the historical and present factual information contained in this news release, the matters discussed in this news release, and other statements identified by words such as “estimate”, “anticipate”, “feel,” “expect,” “believe,” “plan,” “will,” “would,” “should,” “could” and similar expressions are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder.  These forward-looking statements are subject to risks and uncertain­ties that may cause actual results to differ materially.  Factors that might cause such a difference include, but are not limited to: (1) deterioration in the credit quality of Peoples’ loan portfolio could occur due to a number of factors, such as adverse changes in economic conditions that impair the ability of borrowers to repay their loans, the underlying value of the collateral could prove less valuable than otherwise assumed and assumed cash flows may be less favorable than expected, which may adversely impact the provision for loan losses; (2) competitive pressures among financial institutions or from non-financial institutions, which may increase significantly; (3) changes in the interest rate environment, which may adversely impact interest margins; (4) changes in prepayment speeds, loan originations, and charge-offs, which may be less favorable than expected and adversely impact the amount of interest income generated; (5) general economic conditions and weakening in the economy, specifically the real estate market, either national or in the states in which Peoples does business, which may be less favorable than expected; (6) political developments, wars or other hostilities, which may disrupt or increase volatility in securities markets or other economic conditions; (7) legislative or regulatory changes or actions, which may adversely affect the business of Peoples; (8) adverse changes in the conditions and trends in the financial markets, which may adversely affect the fair value of securities within Peoples’ investment portfolio; (9) a delayed or incomplete resolution of regulatory issues that could arise; (10) Peoples’ ability to receive dividends from its subsidiaries; (11) changes in accounting standards, policies, estimates or procedures, which may impact Peoples’ reported financial condition or results of operations; (12) Peoples’ ability to maintain required capital levels and adequate sources of funding and liquidity; (13) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity; (14) the costs and effects of regulatory and legal developments, including the outcome of regulatory or other governmental inquiries and legal proceedings and results of regulatory examinations; and (15) other risk factors relating to the banking industry or Peoples as detailed from time to time in Peoples’ reports filed with the Securities and Exchange Commission (“SEC”), including those risk factors included in the disclosures under the heading “ITEM 1A. RISK FACTORS” of Peoples’ Annual Report on Form 10-K for the fiscal year ended December 31, 2007.  Peoples undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events, except as required by applicable legal requirements.  Copies of documents filed with the SEC are available free of charge at the SEC’s website at http://www.sec.gov and/or from Peoples’ website.



 
 
 
PEOPLES BANCORP INC.
Third Quarter 2008 Earnings Release
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PEOPLES BANCORP INC.  (NASDAQ:  PEBO)
PER SHARE DATA AND PERFORMANCE RATIOS
 
 
Three Months Ended
  
Nine Months Ended
 
September 30,
June 30,
  
September 30,
September 30,
(in $000’s, except per share data)
2008
  
2008
  
2007
  
2008
  
2007
Net income per share:
                  
   Basic
 $         0.29
  
 $          0.19
  
 $          0.49
  
 $        1.02
  
 $         1.53
   Diluted
 $         0.28
  
 $          0.19
  
 $          0.49
  
 $        1.02
  
 $         1.52
Cash dividends declared per share
 $         0.23
  
 $          0.23
  
 $          0.22
  
 $        0.68
  
 $         0.66
Book value per share
 $       19.09
  
 $        19.55
  
 $        19.25
  
 $      19.09
  
 $       19.25
Tangible book value per share (a)
 $       12.62
  
 $        13.03
  
 $        12.63
  
 $      12.62
  
 $       12.63
Closing stock price at end of period
 $       21.77
  
 $        18.98
  
 $        26.18
  
 $      21.77
  
 $       26.18
Dividend payout as a percentage of net income
81.23%
  
122.38%
  
44.83%
  
67.02%
  
43.10%
Return on average equity (b)
5.82%
  
3.81%
  
10.27%
  
6.88%
  
10.88%
Return on average assets  (b)
0.61%
  
0.41%
  
1.09%
  
0.74%
  
1.15%
Efficiency ratio (c)
55.33%
  
54.55%
  
57.03%
  
55.98%
  
58.06%
Net interest margin (fully tax-equivalent) (b)
3.50%
  
3.61%
  
3.26%
  
3.54%
  
3.29%
 
(a)
Excludes the balance sheet impact of intangible assets acquired through acquisitions.
(b)
Ratios are presented on an annualized basis.
(c)
Non-interest expense (less intangible amortization) as a percentage of fully tax-equivalent net interest income plus non-interest income (less securities and asset disposal gains/losses)
 
 
 
PEOPLES BANCORP INC.
Third Quarter 2008 Earnings Release
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PEOPLES BANCORP INC. CONSOLIDATED STATEMENTS OF INCOME
 
 
Three Months Ended
  
Nine Months Ended
 
September 30,
  
September 30,
(in $000’s)
2008
  
2007
  
2008
  
2007
Interest income
 $    26,063
  
 $    28,241
  
 $    79,910
  
 $    84,681
Interest expense
       11,461
  
       15,089
  
       36,148
  
       44,675
     Net interest income
       14,602
  
       13,152
  
       43,762
  
       40,006
Provision for loan losses
         5,996
  
            967
  
       14,198
  
         2,437
Net interest income after provision for loan losses
         8,606
  
       12,185
  
       29,564
  
       37,569
               
Net (loss) on securities transactions
           (111)
  
           (613)
  
           (126)
  
           (575)
Net (loss) gain on asset disposals
             (14)
  
              42
  
             (11)
  
              76
               
Non-interest income:
              
     Deposit account service charges
         2,761
  
         2,562
  
         7,431
  
         7,375
     Insurance income
         2,439
  
         2,230
  
         7,701
  
         7,657
     Trust and investment income
         1,266
  
         1,211
  
         3,915
  
         3,639
     Electronic banking income
            994
  
            879
  
         2,925
  
         2,607
     Bank owned life insurance
            391
  
            418
  
         1,220
  
         1,237
     Mortgage banking income
            104
  
            251
  
            500
  
            722
     Other
            201
  
            143
  
            581
  
            491
             Total non-interest income
         8,156
  
         7,694
  
       24,273
  
       23,728
Non-interest expense:
              
     Salaries and benefits
         7,035
  
         6,603
  
       21,501
  
       20,770
     Net occupancy and equipment
         1,344
  
         1,233
  
         4,169
  
         3,917
     Electronic banking expense
            638
  
            554
  
         1,678
  
         1,568
     Professional fees
            528
  
            469
  
         1,594
  
         1,714
     Data processing and software
            521
  
            530
  
         1,622
  
         1,594
     Franchise taxes
            416
  
            449
  
         1,248
  
         1,336
     Amortization of intangible assets
            390
  
            478
  
         1,208
  
         1,467
     Marketing
            273
  
            350
  
         1,010
  
         1,078
     Other
         2,048
  
         1,933
  
         5,949
  
         5,647
             Total non-interest expense
       13,193
  
       12,599
  
       39,979
  
       39,091
Income before income taxes
         3,444
  
         6,709
  
       13,721
  
       21,707
Income tax expense
            493
  
         1,594
  
         3,169
  
         5,597
             Net income
 $      2,951
  
 $      5,115
  
 $    10,552
  
 $    16,110
               
Net income per share:
              
   Basic
 $        0.29
  
 $        0.49
  
 $        1.02
  
 $        1.53
   Diluted
 $        0.28
  
 $        0.49
  
 $        1.02
  
 $        1.52
               
Cash dividends declared per share
 $        0.23
  
 $        0.22
  
 $        0.68
  
 $        0.66
               
Weighted average shares outstanding:
              
   Basic
10,319,534
  
10,421,548
  
10,309,010
  
10,502,866
   Diluted
10,354,522
  
10,483,657
  
10,350,008
  
10,573,934
               
Actual shares outstanding  (end of period)
10,324,573
  
10,363,397
  
10,324,573
  
10,363,397

 
 
 
PEOPLES BANCORP INC.
Third Quarter 2008 Earnings Release
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PEOPLES BANCORP INC. CONSOLIDATED BALANCE SHEETS
 
 
September 30,
  
December 31,
(in $000’s)
2008
  
2007
       
ASSETS
      
Cash and cash equivalents:
      
   Cash and due from banks
 $          38,311
  
 $        43,275
   Interest-bearing deposits in other banks
               1,247
  
             1,925
          Total cash and cash equivalents
             39,558
  
           45,200
       
Available-for-sale investment securities, at fair value (amortized cost of $598,355
    
   at September 30, 2008 and $535,979 at December 31, 2007)
           589,017
  
         542,231
Other investment securities, at cost
             23,996
  
           23,232
          Total investment securities
           613,013
  
         565,463
       
Loans, net of unearned interest
        1,113,610
  
      1,120,941
Allowance for loan losses
           (19,156)
  
         (15,718)
   Net loans
        1,094,454
  
      1,105,223
       
Loans held for sale
               1,069
  
             1,994
Bank premises and equipment, net of accumulated depreciation
             25,283
  
           24,803
Bank owned life insurance
             51,511
  
           50,291
Goodwill
             62,520
  
           62,520
Other intangible assets
               4,268
  
             5,509
Other assets
             28,712
  
           24,550
          TOTAL ASSETS
 $     1,920,388
  
 $   1,885,553
       
LIABILITIES
      
Non-interest-bearing deposits
 $        184,474
  
 $      175,057
Interest-bearing deposits
        1,066,383
  
      1,011,320
     Total deposits
        1,250,857
  
      1,186,377
       
Federal funds purchased, securities sold under repurchase agreements,
      
   and other short-term borrowings
           140,461
  
         222,541
Long-term borrowings
           293,565
  
         231,979
Junior subordinated notes held by subsidiary trusts
             22,487
  
           22,460
Accrued expenses and other liabilities
             15,924
  
           19,360
          TOTAL LIABILITIES
        1,723,294
  
      1,682,717
       
STOCKHOLDERS’ EQUITY
      
Common stock, no par value (24,000,000 shares authorized, 10,963,199 shares
    
   issued at September 30, 2008, and 10,925,954 shares issued at December 31, 2007)
           164,457
  
         163,399
Retained earnings
             56,007
  
           52,527
Accumulated comprehensive (loss) income, net of deferred income taxes
             (7,113)
  
             3,014
Treasury stock, at cost (638,626 shares at September 30, 2008, and
      
   629,206 shares at December 31, 2007)
           (16,257)
  
         (16,104)
          TOTAL STOCKHOLDERS’ EQUITY
           197,094
  
         202,836
                  TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 $     1,920,388
  
 $   1,885,553


 
 
 
PEOPLES BANCORP INC.
Third Quarter 2008 Earnings Release
- Page 8 of 11 -

PEOPLES BANCORP INC. SELECTED FINANCIAL INFORMATION
 
 
September 30,
  
June 30,
  
March 31,
  
December 31,
  
September 30,
(in $000’s, end of period)
2008
  
2008
  
2008
  
2007
  
2007
                   
LOAN PORTFOLIO
                  
Commercial, mortgage
 $     490,978
  
 $     499,043
  
 $     498,426
  
 $     513,847
  
 $     481,341
Commercial, other
        181,783
  
        186,346
  
        180,523
  
        171,937
  
        174,753
Real estate, construction
          70,899
  
          53,170
  
          72,326
  
          71,794
  
          83,714
Real estate, mortgage
        234,823
  
        234,870
  
        237,366
  
        237,641
  
        240,599
Home equity lines of credit
          46,909
  
          44,595
  
          43,101
  
          42,706
  
          43,506
Consumer
          85,983
  
          83,605
  
          81,108
  
          80,544
  
          80,661
Deposit account overdrafts
            2,235
  
            3,223
  
            2,879
  
            2,472
  
            2,047
     Total loans
     1,113,610
  
     1,104,852
  
     1,115,729
  
     1,120,941
  
     1,106,621
                   
DEPOSIT BALANCES
                  
Interest-bearing deposits:
                  
   Retail certificates of deposit
 $     563,124
  
 $     557,406
  
 $     549,439
  
 $     499,684
  
 $     515,432
   Interest-bearing transaction accounts
        199,534
  
        202,063
  
        211,708
  
        191,359
  
        178,880
   Money market deposit accounts
        175,120
  
        172,048
  
        156,206
  
        153,299
  
        147,848
   Savings accounts
        118,634
  
        116,485
  
        114,433
  
        107,389
  
        112,507
       Total retail interest-bearing deposits
     1,056,412
  
     1,048,002
  
     1,031,786
  
        951,731
  
        954,667
   Brokered certificates of deposits
            9,971
  
          39,781
  
          39,756
  
          59,589
  
          57,507
       Total interest-bearing deposits
     1,066,383
  
     1,087,783
  
     1,071,542
  
     1,011,320
  
     1,012,174
Non-interest-bearing deposits
        184,474
  
        193,265
  
        177,449
  
        175,057
  
        171,319
Total deposits
     1,250,857
  
     1,281,048
  
     1,248,991
  
     1,186,377
  
     1,183,493
                   
ASSET QUALITY
                  
Nonperforming assets:
                  
   Loans 90 days or more past due
 $         1,852
  
 $            290
  
 $            438
  
 $            378
  
 $            190
   Nonaccrual loans
          33,896
  
          20,910
  
          17,061
  
            8,980
  
            5,979
       Total nonperforming loans
          35,748
  
          21,200
  
          17,499
  
            9,358
  
            6,169
   Other real estate owned
              260
  
              411
  
              343
  
              343
  
              343
       Total nonperforming assets
 $       36,008
  
 $       21,611
  
 $       17,842
  
 $         9,701
  
 $         6,512
                   
Allowance for loan losses as a percent of
                  
   nonperforming loans
53.6%
  
71.8%
  
91.2%
  
168.0%
  
237.3%
Nonperforming loans as a percent of total loans
3.21%
  
1.92%
  
1.57%
  
0.83%
  
0.56%
Nonperforming assets as a percent of total assets
1.88%
  
1.13%
  
0.94%
  
0.51%
  
0.34%
Nonperforming assets as a percent of total loans and
                
   other real estate owned
3.23%
  
1.96%
  
1.60%
  
0.87%
  
0.59%
Allowance for loan losses as a percent of total loans
1.72%
  
1.38%
  
1.43%
  
1.40%
  
1.32%
                   
CAPITAL INFORMATION(a)
                  
Tier 1 risk-based capital
12.35%
  
12.10%
  
12.12%
  
11.91%
  
11.82%
Total risk-based capital ratio (Tier 1 and Tier 2)
13.68%
  
13.33%
  
13.43%
  
13.23%
  
13.04%
Leverage ratio
8.66%
  
8.72%
  
8.81%
  
8.48%
  
8.67%
Tier 1 capital
 $     160,556
  
 $     159,242
  
 $     158,919
  
 $     154,933
  
 $     156,209
Total capital (Tier 1 and Tier 2)
 $     177,823
  
 $     175,397
  
 $     176,083
  
 $     172,117
  
 $     172,263
Total risk-weighted assets
 $   1,299,711
  
 $   1,316,021
  
 $   1,310,895
  
 $   1,301,056
  
 $   1,321,367
Tangible equity to tangible assets (b)
7.03%
  
7.30%
  
7.67%
  
7.42%
  
7.20%

                                 (a) September 30, 2008 data based on preliminary analysis and subject to revision.
                                 (b) Excludes balance sheet impact of intangible assets acquired through acquisitions on both total stockholders’ equity and total assets.
 
PEOPLES BANCORP INC.
Third Quarter 2008 Earnings Release
- Page 9 of 11 -
 
PEOPLES BANCORP INC. PROVISION FOR LOAN LOSSES INFORMATION
 
 
Three Months Ended
  
Nine Months Ended
 
September 30,
June 30,
  
September 30,
September 30,
(in $000’s)
2008
  
2008
  
2007
  
2008
  
2007
PROVISION FOR LOAN LOSSES
                  
Provision for Overdraft Privilege losses
 $           421
  
 $             160
  
 $             227
  
 $           618
  
 $             386
Provision for other loan losses
 $        5,575
  
 $          6,605
  
 $             740
  
 $      13,580
  
 $          2,051
     Total provision for loan losses
 $        5,996
  
 $          6,765
  
 $             967
  
 $      14,198
  
 $          2,437
                   
NET CHARGE-OFFS
                  
Gross charge-offs
 $        2,510
  
 $          7,720
  
 $          1,251
  
 $      11,868
  
 $          3,861
Recoveries
               441
  
                231
  
                233
  
           1,108
  
             1,556
     Net charge-offs
 $        2,069
  
 $          7,489
  
 $          1,018
  
 $      10,760
  
 $          2,305
                   
NET CHARGE-OFFS BY TYPE
                  
Commercial
 $        1,428
  
 $          6,900
  
 $             472
  
 $        9,190
  
 $          1,283
Real estate
               140
  
                294
  
                232
  
               594
  
                231
Overdrafts
               341
  
                148
  
                207
  
               576
  
                392
Consumer
               161
  
                148
  
                107
  
               410
  
                404
Credit card
                  (1)
  
                  (1)
  
                    -
  
               (10)
  
                  (5)
     Total net charge-offs
 $        2,069
  
 $          7,489
  
 $          1,018
  
 $      10,760
  
 $          2,305
                   
Net charge-offs as a percent of loans (annualized)
0.74%
  
2.70%
  
0.36%
  
1.29%
  
0.27%
 
 

PEOPLES BANCORP INC. SUPPLEMENTAL INFORMATION
 
 
September 30,
  
June 30,
  
March 31,
  
December 31,
  
September 30,
(in $000’s, end of period)
2008
  
2008
  
2008
  
2007
  
2007
                   
Trust assets under management
 $    734,483
  
 $      770,714
  
 $      775,834
  
 $      797,443
  
 $      805,931
Brokerage assets under management
 $    207,284
  
 $      216,930
  
 $      221,340
  
 $      223,950
  
 $      218,573
Mortgage loans serviced for others
 $    180,441
  
 $      182,299
  
 $      178,763
  
 $      176,742
  
 $      176,380
Employees (full-time equivalent)
              545
  
               554
  
               556
  
               559
  
               553
Announced treasury share plans: (a)
                  
   Total shares authorized for plan
       500,000
  
         500,000
  
         500,000
  
         925,000
  
         425,000
   Shares purchased
                   -
  
                   -
  
           13,600
  
           84,600
  
         139,000
   Average price
 $                -
  
 $                -
  
 $          21.59
  
 $          24.25
  
 $          24.05
 
                                 (a) 2008 data reflects shares purchased under the repurchase plan announced on November 9, 2007, authorizing the repurchase of up to 500,000
                                 common shares, upon the completion of the 2007 Stock Repurchase Program. 2007 data reflects shares purchased under the repurchase plan
                                 announced on November 9, 2007, and under the 2007 Stock Repurchase Program announced on January 12, 2007, authorizing the repurchase of
                                 up to 425,000 common shares.  The number of common shares purchased for treasury and average price paid are presented for the three-month
                                 period ended on the date indicated.

PEOPLES BANCORP INC.
Third Quarter 2008 Earnings Release
- Page 10 of 11 -
 
PEOPLES BANCORP INC. CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST INCOME
 
 
Three Months Ended
 
September 30, 2008
  
June 30, 2008
  
September 30, 2007
(in $000’s)
Balance
Income/
Expense
Yield/
Cost
Balance
Income/
Expense
Yield/ Cost
Balance
Income/
Expense
Yield/ Cost
ASSETS
                      
Short-term investments
 $        2,640
 $       12
1.87%
  
 $      3,391
 $        17
2.17%
  
 $      4,035
 $      50
4.91%
Investment securities (a)
       620,475
     8,381
5.40%
  
     598,111
      7,991
5.35%
  
     571,632
     7,590
5.31%
Gross loans (a)
    1,109,478
    18,052
6.45%
  
   1,114,474
     18,954
6.81%
  
   1,105,592
   21,008
7.55%
Allowance for loan losses
       (16,554)
      
      (16,243)
      
      (14,662)
    
Total earning assets
    1,716,039
    26,445
6.15%
  
   1,699,733
     26,962
6.36%
  
   1,666,597
   28,648
6.84%
                       
Intangible assets
         67,006
      
       67,395
      
       68,754
    
Other assets
       130,991
      
     127,190
      
     129,015
    
Total assets
    1,914,036
      
   1,894,318
      
   1,864,366
    
                       
LIABILITIES AND EQUITY
                      
Interest-bearing deposits:
                      
Savings
       117,590
        155
0.52%
  
     115,625
         140
0.49%
  
     113,740
       190
0.66%
Interest-bearing demand deposits
       202,402
        900
1.77%
  
     203,411
         890
1.76%
  
     181,352
     1,048
2.29%
Money market
       176,510
        852
1.92%
  
     165,592
         816
1.98%
  
     149,753
     1,463
3.88%
Brokered time
         23,716
        291
4.88%
  
       39,767
         509
5.15%
  
       64,518
       827
5.09%
Retail time
       560,463
     5,260
3.73%
  
     549,642
      5,426
3.97%
  
     519,063
     5,919
4.52%
    Total interest-bearing deposits
    1,080,681
     7,458
2.75%
  
   1,074,037
      7,781
2.91%
  
   1,028,426
     9,447
3.64%
                       
Short-term borrowings
       133,511
        689
2.02%
  
     148,854
         778
2.07%
  
     232,586
     2,975
5.03%
Long-term borrowings
       297,901
     3,314
4.38%
  
     270,746
      3,115
4.58%
  
     217,440
     2,667
4.89%
Total borrowed funds
       431,412
     4,003
3.65%
  
     419,600
      3,893
3.69%
  
     450,026
     5,642
4.92%
     Total interest-bearing liabilities
    1,512,093
    11,461
3.01%
  
   1,493,637
     11,674
3.13%
  
   1,478,452
   15,089
4.03%
                       
Non-interest-bearing deposits
       186,412
      
     180,399
      
     172,164
    
Other liabilities
         13,729
      
       14,214
      
       16,125
    
Total liabilities
    1,712,234
      
   1,688,250
      
   1,666,741
    
                       
Stockholders’ equity
       201,802
      
     206,068
      
     197,625
    
Total liabilities and equity
 $  1,914,036
      
 $1,894,318
      
 $1,864,366
    
                       
Net interest income/spread (a)
 $ 14,984
3.14%
    
 $  15,288
3.23%
    
 $13,559
2.81%
Net interest margin (a)
    
3.50%
      
3.61%
      
3.26%
                       
(a) Information presented on a fully tax-equivalent basis.
            

 
 
 
PEOPLES BANCORP INC.
Third Quarter 2008 Earnings Release
- Page 11 of 11 -

 
Nine Months Ended
 
September 30, 2008
  
September 30, 2007
(in $000’s)
Balance
Income/
Expense
Yield/
Cost
Balance
Income/
Expense
Yield/
Cost
ASSETS
                  
Short-term investments
 $          3,346
 $         61
2.47%
    
 $          3,808
 $       139
4.89%
  
Investment securities (a)
         600,149
     24,183
5.37%
    
         557,225
     21,689
5.19%
  
Gross loans (a)
      1,112,315
     56,885
6.80%
    
      1,121,801
     63,917
7.61%
  
Allowance for loan losses
         (16,346)
        
         (14,683)
      
Total earning assets
      1,699,464
     81,129
6.37%
    
      1,668,151
     85,745
6.86%
  
                   
Intangible assets
           67,409
        
           68,496
      
Other assets
         128,170
        
         128,645
      
Total assets
      1,895,043
        
      1,865,292
      
                   
LIABILITIES AND EQUITY
                  
Interest-bearing deposits:
                  
Savings
         113,927
          416
0.49%
    
         115,006
          544
0.63%
  
Interest-bearing demand deposits
         201,275
       2,772
1.84%
    
         178,002
       2,804
2.11%
  
Money market
         164,811
       2,727
2.21%
    
         146,211
       4,282
3.92%
  
Brokered time
           38,883
       1,496
5.14%
    
           67,536
       2,591
5.13%
  
Retail time
         544,736
     16,293
4.00%
    
         526,726
     17,700
4.49%
  
    Total interest-bearing deposits
      1,063,632
     23,704
2.98%
    
      1,033,481
     27,921
3.61%
  
   
       9,031
              
Short-term borrowings
         156,908
       3,006
2.52%
    
         234,164
       9,031
5.05%
  
Long-term borrowings
         275,498
       9,438
4.53%
    
         211,522
       7,723
4.87%
  
Total borrowed funds
         432,406
     12,444
3.80%
    
         445,686
     16,754
4.97%
  
    Total interest-bearing liabilities
      1,496,038
     36,148
3.22%
    
      1,479,167
     44,675
4.02%
  
                   
Non-interest-bearing deposits
         179,959
        
         172,288
      
Other liabilities
           14,269
        
           15,921
      
Total liabilities
      1,690,266
        
      1,667,376
      
                   
Stockholders’ equity
         204,777
        
         197,916
      
Total liabilities and equity
 $   1,895,043
        
 $   1,865,292
      
                   
Net interest income/spread (a)
 $   44,981
3.15%
      
 $   41,070
2.84%
  
Net interest margin (a)
    
3.54%
        
3.29%
  
                   
(a) Information presented on a fully tax-equivalent basis.
          

END OF RELEASE