EX-99 2 exhibit99.htm PEOPLES BANCORP INC. ANNOUNCES SECOND QUARTER RESULTS exhibit99.htm
 

PEOPLES BANCORP INC. – P.O. BOX 738 - MARIETTA, OHIO – 45750
www.peoplesbancorp.com

 
 
 
 NEWS RELEASE

FOR IMMEDIATE RELEASE
Contact:
 Edward G. Sloane
July 20, 2010
  
 Chief Financial Officer and Treasurer
   
 (740) 373-3155

PEOPLES BANCORP INC. ANNOUNCES SECOND QUARTER RESULTS
_____________________________________________________________________

MARIETTA, Ohio - Peoples Bancorp Inc. (“Peoples”) (NASDAQ: PEBO) today announced net income available to common shareholders of $2.8 million for the second quarter of 2010, up 19% compared to $2.3 million for the prior year second quarter, representing diluted earnings per common share of $0.27 and $0.23, respectively.  First quarter 2010 (or “linked quarter”) net income available to common shareholders was $0.8 million, or $0.08 per diluted common share.  On a year-to-date basis, net income available to common shareholders was $3.6 million through June 30, 2010, versus $6.2 million for the same period a year ago, representing diluted earnings per common share of $0.34 and $0.60, respectively.
Summary points regarding second quarter results:
o  
Nonperforming assets increased $8 million and comprised 2.21% of total assets at June 30, 2010, versus 1.79% at March 31, 2010.  During the second quarter, a single $14 million commercial real estate loan relationship was identified as impaired, resulting in the loans being written down by $4 million and the remaining $10 million being placed on nonaccrual status.  Partially offsetting this increase in nonaccrual loans were $1.3 million in write-downs on other real estate owned (“OREO”) held at June 30 due to declines in property values.  Second quarter 2010 net loan charge-offs were $4.8 million, which included the $4 million charge-down associated with the previously mentioned nonaccrual commercial real estate loan relationship.  At June 30, 2010, the allowance for loan losses stood at $27.2 million, or 71% of nonperforming loans.  Second quarter 2010 provision for loan losses was $5.5 million, or 2.11% of average loans on an annualized basis.
 
o  
In connection with continuing efforts to manage the risk profile of the investment portfolio and overall balance sheet, Peoples sold $48 million of investment securities during the second quarter, at a net gain of $3.0 million.  In addition, Peoples sold a $10 million mortgage-backed security in early July, at an $0.8 million loss.  Since the loss on the security sold in July existed at June 30, Peoples recognized the entire amount as an impairment charge in the second quarter of 2010.
 
o  
Peoples’ capital levels remained strong and substantially higher than the minimum regulatory amount needed to be considered “well capitalized”.  Total Risk-Based Capital ratio was 17.44% at quarter-end, while tangible common equity was 7.18% of tangible assets.
 
o  
Net interest income of $15.2 million for the second quarter of 2010 was down slightly from the linked quarter, while net interest margin remained relatively stable at 3.49%.   Earning assets decreased in the second quarter due to commercial loan payoffs and a lack of attractive long-term investments, which pressured net interest income because of limited opportunities to reduce funding costs.
 
o  
Non-interest income totaled $7.8 million in the second quarter, a 3% decline from the linked quarter primarily due to recognizing $0.6 million of performance-based insurance income in the first quarter.  Non-interest income was lower year-over-year due mostly to reduced mortgage banking activity.
 
o  
Second quarter 2010 non-interest expense was $14.3 million, down 2% versus the prior quarter and 8% year-over-year.  Both decreases reflected reductions in various operating expenses attributable to ongoing cost control initiatives.  Lower costs associated with foreclosed real estate contributed to the linked quarter decline, while FDIC insurance expense was down substantially versus a year ago, due to the impact of the special assessment imposed on all FDIC-insured depository institutions in 2009.
 
o  
Retail deposit balances decreased $36 million during the second quarter of 2010, due to a $38 million decline in interest-bearing deposit balances, partially offset by a $2 million increase in non-interest-bearing balances.  Much of the second quarter decrease in interest-bearing balances was the result of a single commercial customer lowering its deposit balances by $20 million, coupled with planned reductions in higher-cost, non-core certificates of deposits (“CDs”) intended to control funding costs.  Compared to year-end 2009, total retail deposit balances were $7 million higher at June 30, 2010.  During this period, Peoples reduced borrowed funds by 10% compared to year-end 2009.
 
 
 
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
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o  
Total loan balances decreased $35 million during the second quarter of 2010, primarily reflecting a targeted reduction in commercial real estate loans to improve Peoples’ overall balance sheet risk profile.  As a result, second quarter payoffs exceeded new production.  Contributing to the second quarter decline was the expected payoff of a single $4 million commercial real estate loan, plus the planned sale of $3 million in commercial real estate loans, of which $2 million were on nonaccrual, which caused the loans to be classified as held-for-sale and written down to their estimated fair value at June 30.
 
“We are pleased with second quarter results, which were in line with our expectations considering the low interest rate environment and still challenging economic conditions,” said Mark F. Bradley, President and Chief Executive Officer.  “We successfully maintained our net revenue stream as a result of controlling operating costs and proactively managing our balance sheet risk profile.  Second quarter provision for loan losses also was lower than recent quarters.  We believe credit issues continue to stabilize, reflected by positive trends in asset quality metrics over the last few quarters and the isolated nature of the second quarter increase in nonperforming assets.”
Second quarter 2010 net interest income and margin were $15.2 million and 3.49%, respectively, down slightly from the linked quarter, as decreased interest income outpaced the reduction in interest expense.  Year-over-year, net interest income was down slightly for both the three and six months ended June 30, 2010, while net interest margin expanded modestly for both periods.  Peoples’ interest income continues to be pressured by lower loan balances and lack of attractive long-term investments given management’s risk-return criteria, coupled with the impact of lower reinvestment rates in the current interest rate environment.  In comparison, Peoples’ interest expense continues to benefit from management’s ongoing efforts to decrease funding costs by repaying wholesale funding and more selectively pricing higher-cost, non-core deposits.
 “Net interest margin was relatively stable in the second quarter of 2010, while lower earning assets reduced net interest income,” said Edward G. Sloane, Chief Financial Officer and Treasurer.  “We believe downward pressure on net interest income and margin could continue in the second half of 2010, unless the Federal Reserve takes steps to increase interest rates or more attractive investment opportunities present themselves.  As such, our balance sheet strategies will continue to emphasize maintaining good liquidity and changing our funding mix by repaying maturing borrowings with low-cost core deposits and excess cash.”
In the second quarter of 2010, total non-interest income was $7.8 million versus $8.0 million last quarter, due mostly to the recognition of annual performance-based insurance revenue of $585,000 earned during the first quarter.  Compared to the prior year, non-interest income was down 6% in the second quarter of 2010 and 4% through six months of 2010, largely a result of decreased mortgage banking income attributable to lower gains on sales of residential real estate loans.  Insurance revenues continued to be adversely effected by the impact of economic conditions on commercial insurance needs and competitive pricing within the insurance industry, which contributed to the year-over-year decline in total non-interest income.
Non-interest expense totaled $14.3 million for the second quarter of 2010, down 2% from the linked quarter and 8% year-over-year.  Through six months of 2010, total non-interest expense was $28.9 million versus $30.0 million for the first half of 2009.  The linked quarter decline was largely attributable to moderately lower expenses for OREO, while lower FDIC insurance expense accounted for most of the year-over-year decreases.  Second quarter 2009 FDIC insurance expense included an additional $930,000 for the special assessment imposed on all FDIC-insured institutions. Non-interest expense in 2010 also benefited from reductions in several major non-interest expenses in connection with ongoing cost control initiatives.
During the second quarter of 2010, Peoples’ ongoing management of its balance sheet interest rate risk profile resulted in the sale of investment securities with an aggregate book value of $48.2 million during the quarter at a $3.0 million net gain and a single $10.3 million security at a $0.8 million loss in early July.  The securities sold consisted of U.S agency mortgage-backed securities and U.S. government-backed student loan pools and were selected based upon their current low yields and interest rate risk characteristics.  In accordance with generally accepted accounting principles, Peoples recorded the entire loss related to the July sale as an other-than-temporary impairment in the second quarter of 2010 since the security had a loss at June 30 and was sold prior to recovery.
Gross portfolio loan balances decreased $35.2 million during the second quarter, to $1.02 billion at June 30, 2010.  Much of this decline was the result of commercial loan payoffs exceeding new production.  Overall demand for new loans has also been impacted by economic conditions, which has contributed to the steady declines in consumer and real estate loans in recent quarters.  At June 30, 2010, Peoples’ loans held-for-sale included $3.4 million of commercial loans secured by commercial real estate located outside Peoples’ primary market area.  Included in these loans were $2.1 million which were identified as impaired and placed on nonaccrual status in 2009.  Peoples recorded a $94,000 loss to reduce the carrying value of these loans to their estimated fair value at June 30, 2010.
 
 
 
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
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Total nonperforming assets were $43.4 million, or 2.21% of total assets, at June 30, 2010, versus $35.9 million, or 1.79%, at March 31, 2010 and $40.7 million, or 2.03%, at year-end 2009.   During the second quarter, a single $14.2 million commercial loan relationship was identified as being impaired and placed on nonaccrual.  The loans comprising this relationship are secured by real estate and were written down by $3.8 million to the estimated net realizable value of the underlying collateral as of June 30, 2010.  The overall increase in nonperforming assets was partially offset by the payoff of an existing $3.9 million nonaccrual commercial real estate loan during the second quarter and $1.3 million write-downs on OREO at June 30, 2010.
Net loan charge-offs were $4.8 million, or 1.86% of average loans on an annualized basis, for the second quarter of 2010, compared to $7.2 million, or 2.76%, for the linked quarter and $5.7 million, or 2.05%, for the second quarter of 2009.  Second quarter 2010 charge-offs included a $3.8 million write-down on the impaired commercial real estate loan relationship identified during the quarter, of which $1.4 million was provided for in prior quarters through the allowance for loan losses.  On a year-to-date basis, net charge-offs were $12.0 million through June 30, 2010, or 2.31% of average loans on an annualized basis, versus $8.6 million, or 1.56%, for the same period a year ago.  Peoples’ allowance for loan losses increased $0.6 million in the second quarter of 2010, to $27.2 million, or 2.66% of total loans, at June 30, 2010.  To maintain the adequacy of the allowance for loan losses, Peoples recorded a second quarter 2010 provision for loan losses of $5.5 million versus $6.5 million last quarter and $4.7 million in the second quarter of 2009.
 “Overall, we believe positive progress is being made towards improving our overall asset quality, despite the increase in nonperforming assets,” commented Sloane.  “The continued weakness in general economic conditions and corresponding impact on commercial borrowers resulted in some increase in our allowance for loan losses.  Reducing nonperforming assets remains a key priority for the remainder of 2010.”
At June 30, 2010, total retail deposit balances were down $36.2 million versus the prior quarter-end, but $6.6 million higher than year-end 2009.   During the second quarter, a single commercial customer lowered its deposit balances by $20 million for corporate purposes, of which $10 million were CDs and the remainder was held in a money market account, accounting for most of the linked quarter decrease in retail deposits.  Contributing to the reduction in deposit balances were Peoples’ efforts to control funding costs by pricing higher-cost, non-core deposits more selectively.  As a result of these actions, retail CD balances decreased $34.4 million in the second quarter and $25.2 million in the first half of 2010.   Money market balances, although down $5.7 million in the second quarter, were up $27.2 million on a year-to-date basis.  Non-interest-bearing balances increased $2.2 million for the quarter and $5.6 million since year-end 2009, totaling $203.6 million at June 30, 2010.  Total borrowed funds were essentially unchanged at the end of the second quarter of 2010 compared to the linked quarter but were down $33.3 million, or 10%, compared to December 31, 2009.
Peoples Bancorp Inc. is a diversified financial products and services company with $2.0 billion in assets, 47 locations and 39 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, LLC.  Peoples’ common shares are traded on the NASDAQ Global Select Market® under the symbol “PEBO”, and Peoples is a member of the Russell 3000 index of 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 second quarter 2010 results of operations today at 11:00 a.m., Eastern Daylight Savings 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.

Safe Harbor Statement:
Certain statements made in this news release regarding Peoples’ financial condition, results of operations, plans, objectives, future performance and business, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are identified by the fact they are not historical facts and include words such as “anticipate”, “could”, “may”, “feel”, “expect”, “believe”, “plan”, and similar expressions.
 
 
 
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
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These forward-looking statements reflect management’s current expectations based on all information available and its knowledge of Peoples’ business and operations.  Additionally, Peoples’ financial condition, results of operations, plans, objectives, future performance and business are subject to risks and uncertain­ties that may cause actual results to differ materially.  These factors include, but are not limited to: (1) continued 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 worse 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, sale volumes 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 real estate market, either nationally or in the states in which Peoples and its subsidiaries do 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, including in particular the Restoring American Financial Stability Act of 2010 and related regulations required to be promulgated, which may adversely affect the business of Peoples and its subsidiaries; (8) changes in accounting standards, policies, estimates or procedures may adversely affect Peoples’ reported financial condition or results of operations; (9) adverse changes in the conditions and trends in the financial markets, which may adversely affect the fair value of securities within Peoples’ investment portfolio; (10) a delayed or incomplete resolution of regulatory issues that could arise; (11) Peoples’ ability to receive dividends from its subsidiaries; (12) Peoples’ ability to maintain required capital levels and adequate sources of funding and liquidity; (13) the impact of larger or similar financial institutions encountering problems, which may adversely affect the banking industry and/or Peoples; (14) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity; (15) 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 (16) 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, 2009.
Peoples encourages readers of this news release to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance.  Peoples undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events, except as required by applicable legal requirements.  Copies of documents filed with the SEC are available free of charge at the SEC’s website at http://www.sec.gov and/or from Peoples’ website.
As required by U.S. GAAP, Peoples is required to evaluate the impact of subsequent events through the filing date of its June 30, 2010 consolidated financial statements on Form 10-Q with the SEC.  Accordingly, subsequent events could occur that may cause Peoples to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.


 
 
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
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PER COMMON SHARE DATA AND SELECTED RATIOS
 
 
Three Months Ended
  
Six Months Ended
 
June 30,
  
March 31,
  
June 30,
  
June 30,
  
June 30,
 
2010
  
2010
  
2009
  
2010
  
2009
PER COMMON SHARE:
                  
Earnings per share:
                  
   Basic
 $           0.27
  
 $            0.08
  
 $            0.23
  
 $           0.34
  
 $            0.60
   Diluted
              0.27
  
               0.08
  
               0.23
  
              0.34
  
               0.60
Cash dividends declared per share
              0.10
  
               0.10
  
               0.23
  
              0.20
  
               0.46
Book value per share
            19.35
  
             19.43
  
             19.30
  
            19.35
  
             19.30
Tangible book value per share (a)
            13.10
  
             13.15
  
             12.92
  
            13.10
  
             12.92
Closing stock price at end of period
 $        14.50
  
 $          16.48
  
 $          17.05
  
 $        14.50
  
 $          17.05
                   
SELECTED RATIOS:
                  
Return on average equity (b)
5.43%
  
           2.19%
  
4.93%
  
3.81%
  
5.59%
Return on average common equity (b)
5.45%
  
           1.58%
  
4.85%
  
3.52%
  
6.53%
Return on average assets  (b)
0.66%
  
           0.26%
  
0.56%
  
0.46%
  
0.61%
Efficiency ratio (c)
60.28%
  
60.07%
  
63.12%
  
60.17%
  
60.85%
Net interest margin (b)(d)
3.49%
  
3.52%
  
3.45%
  
3.51%
  
3.49%
Dividend payout ratio (e)
38.01%
  
131.05%
  
102.96%
  
58.88%
  
77.64%
 
(a)
This ratio represents a non-GAAP measure since it excludes the balance sheet impact of intangible assets acquired through acquisitions on stockholders’ equity.  Additional information regarding the calculation of this ratio is included at the end of this release.
(b)
Ratios are presented on an annualized basis.
(c)
Non-interest expense (less intangible amortization) as a percentage of fully tax-equivalent net interest income plus         non-interest income (less securities and asset disposal gains/losses).
(d)
Information presented on a fully tax-equivalent basis.
(e) 
Dividends declared on common shares as a percentage of net income available to common shareholders.


 
 
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
- Page 6 of 12 -
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
Three Months Ended
  
Six Months Ended
 
June 30,
  
March 31,
  
June 30,
  
June 30,
(in $000’s)
2010
  
2010
  
2009
  
2010
  
2009
Interest income
 $    22,963
  
 $    23,457
  
 $    25,745
  
 $    46,420
  
 $    52,079
Interest expense
        7,790
  
        8,016
  
       10,315
  
       15,806
  
       21,122
  Net interest income
       15,173
  
       15,441
  
       15,430
  
       30,614
  
       30,957
Provision for loan losses
        5,458
  
        6,501
  
        4,734
  
       11,959
  
        8,797
    Net interest income after provision for loan losses
        9,715
  
        8,940
  
       10,696
  
       18,655
  
       22,160
                   
Gross impairment losses on investment securities
          (800)
  
          (820)
  
               –
  
       (1,620)
  
               –
Less: Non-credit losses included in other
                  
         comprehensive income
               –
  
           166
  
               –
  
           166
  
               –
  Net other-than-temporary impairment losses
          (800)
  
          (986)
  
               –
  
       (1,786)
  
               –
Net gain on securities transactions
        3,018
  
             16
  
           262
  
        3,034
  
           588
Net (loss) gain on assets
       (1,254)
  
             17
  
             57
  
       (1,237)
  
           (62)
Net loss on loans held for sale
           (94)
  
               –
  
               –
  
           (94)
  
               –
                   
Non-interest income:
                  
Deposit account service charges
        2,457
  
        2,298
  
        2,616
  
        4,755
  
        5,015
Insurance income
        2,261
  
        2,411
  
        2,405
  
        4,672
  
        5,150
Trust and investment income
        1,209
  
        1,556
  
        1,237
  
        2,765
  
        2,295
Electronic banking income
        1,175
  
        1,088
  
        1,020
  
        2,263
  
        1,943
Mortgage banking income
           267
  
           235
  
           507
  
           502
  
        1,108
Bank owned life insurance
           173
  
           185
  
           254
  
           358
  
           553
Other non-interest income
           230
  
           241
  
           206
  
           471
  
           418
  Total non-interest income
        7,772
  
        8,014
  
        8,245
  
       15,786
  
       16,482
                   
Non-interest expense:
                  
Salaries and employee benefits costs
        7,496
  
        7,377
  
        7,499
  
       14,873
  
       15,023
Net occupancy and equipment
        1,440
  
        1,518
  
        1,496
  
        2,958
  
        2,968
FDIC insurance
           612
  
           617
  
        1,608
  
        1,229
  
        2,095
Professional fees
           601
  
           692
  
           700
  
        1,293
  
        1,441
Electronic banking expense
           557
  
           605
  
           491
  
        1,162
  
        1,163
Data processing and software
           527
  
           570
  
           564
  
        1,097
  
        1,101
Foreclosed real estate and other loan expenses
           472
  
           646
  
           192
  
        1,118
  
           487
Franchise taxes
           374
  
           373
  
           404
  
           747
  
           827
Amortization of intangible assets
           235
  
           245
  
           319
  
           480
  
           649
Other non-interest expense
        1,995
  
        1,932
  
        2,248
  
        3,927
  
        4,269
  Total non-interest expense
       14,309
  
       14,575
  
       15,521
  
       28,884
  
       30,023
  Income before income taxes
        4,048
  
        1,426
  
        3,739
  
        5,474
  
        9,145
Income tax expense
           763
  
           111
  
           893
  
           874
  
        2,104
    Net income
 $      3,285
  
 $      1,315
  
 $      2,846
  
 $      4,600
  
 $      7,041
Preferred dividends
           512
  
           513
  
           511
  
        1,025
  
           852
    Net income available to common shareholders
 $      2,773
  
 $        802
  
 $      2,335
  
 $      3,575
  
 $      6,189
                   
PER COMMON SHARE DATA:
                  
Earnings per share – Basic
 $       0.27
  
 $       0.08
  
 $       0.23
  
 $       0.34
  
 $       0.60
Earnings per share – Diluted
 $       0.27
  
 $       0.08
  
 $       0.23
  
 $       0.34
  
 $       0.60
Cash dividends declared per share
 $       0.10
  
 $       0.10
  
 $       0.23
  
 $       0.20
  
 $       0.46
                   
Weighted-average shares outstanding – Basic
10,422,126
  
10,391,542
  
10,360,590
  
10,406,919
  
10,352,769
Weighted-average shares outstanding – Diluted
10,429,369
  
10,400,243
  
10,377,105
  
10,415,999
  
10,364,621
Actual shares outstanding  (end of period)
10,423,317
  
10,408,096
  
10,358,852
  
10,423,317
  
10,358,852

 
 
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
- Page 7 of 12 -
 
CONSOLIDATED BALANCE SHEETS
 
 
June 30,
  
December 31,
(in $000’s)
2010
  
2009
       
Assets
      
Cash and cash equivalents:
      
  Cash and due from banks
 $         43,930
  
 $       29,969
  Interest-bearing deposits in other banks
            23,438
  
          11,804
    Total cash and cash equivalents
            67,368
  
          41,773
       
Available-for-sale investment securities, at fair value (amortized cost of $685,382
    
  at June 30, 2010 and $706,444 at December 31, 2009)
          696,469
  
        726,547
Held-to-maturity investment securities, at amortized cost (fair value of $3,027
      
  at June 30, 2010 and $963 at December 31, 2009)
              2,964
  
              963
Other investment securities, at cost
            24,356
  
          24,356
    Total investment securities
          723,789
  
        751,866
       
Loans, net of deferred fees and costs
       1,016,106
  
     1,052,058
Allowance for loan losses
          (27,168)
  
        (27,257)
    Net loans
          988,938
  
     1,024,801
       
Loans held for sale
              5,054
  
            1,874
Bank premises and equipment, net of accumulated depreciation
            24,279
  
          24,844
Bank owned life insurance
            53,281
  
          52,924
Goodwill
            62,520
  
          62,520
Other intangible assets
              2,618
  
            3,079
Other assets
            39,199
  
          38,146
    Total assets
 $     1,967,046
  
 $   2,001,827
       
Liabilities
      
Deposits:
      
Non-interest-bearing deposits
 $       203,559
  
 $     198,000
Interest-bearing deposits
       1,195,217
  
     1,197,886
    Total deposits
       1,398,776
  
     1,395,886
       
Short-term borrowings
            49,765
  
          76,921
Long-term borrowings
          239,981
  
        246,113
Junior subordinated notes held by subsidiary trust
            22,548
  
          22,530
Accrued expenses and other liabilities
            15,696
  
          16,409
    Total liabilities
       1,726,766
  
     1,757,859
       
Stockholders' Equity
      
Preferred stock, no par value (50,000 shares authorized, 39,000 shares issued
      
  at June 30, 2010, and December 31, 2009)
            38,593
  
          38,543
Common stock, no par value (24,000,000 shares authorized, 11,055,429 shares
    
   issued at June 30, 2010, and 11,031,892 shares issued at December 31, 2009),
          166,065
  
        166,227
   including shares in treasury
      
Retained earnings
            47,699
  
          46,229
Accumulated comprehensive income, net of deferred income taxes
              3,677
  
            9,487
Treasury stock, at cost (632,112 shares at June 30, 2010, and
      
   657,255 shares at December 31, 2009)
          (15,754)
  
        (16,518)
    Total stockholders' equity
          240,280
  
        243,968
    Total liabilities and stockholders' equity
 $     1,967,046
  
 $   2,001,827

 
 
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
- Page 8 of 12 -
 
SELECTED FINANCIAL INFORMATION
 
 
June 30,
  
March 31,
  
December 31,
  
September 30,
  
June 30,
(in $000’s, end of period)
2010
  
2010
  
2009
  
2009
  
2009
                   
Loan Portfolio
                  
Commercial real estate
 $     471,046
  
 $       501,917
  
 $        503,034
  
 $        478,518
  
 $       504,826
Commercial and industrial
        165,916
  
          165,934
  
           159,915
  
           160,677
  
          173,136
Real estate construction
           36,490
  
            34,894
  
             32,427
  
             67,143
  
            54,446
Residential real estate
        207,314
  
          212,569
  
           215,735
  
           216,571
  
          216,280
Home equity lines of credit
           50,259
  
            49,444
  
             49,183
  
             48,991
  
            48,301
Consumer
           83,735
  
            85,231
  
             90,144
  
             94,374
  
            95,161
Deposit account overdrafts
             1,346
  
              1,299
  
               1,620
  
               1,765
  
              2,016
    Total loans
 $  1,016,106
  
 $    1,051,288
  
 $     1,052,058
  
 $     1,068,039
  
 $    1,094,166
                   
Deposit Balances
                  
Interest-bearing deposits:
                  
  Retail certificates of deposit
 $     512,327
  
 $       546,760
  
 $        537,549
  
 $        561,619
  
 $       596,713
  Money market deposit accounts
        290,477
  
          296,196
  
           263,257
  
           245,621
  
          228,963
  Governmental deposit accounts
        136,119
  
          143,068
  
           147,745
  
           137,655
  
          129,491
  Savings accounts
        120,086
  
          117,526
  
           112,074
  
           113,104
  
          116,108
  Interest-bearing demand accounts
           94,542
  
            88,425
  
             91,878
  
             87,153
  
            90,881
    Total retail interest-bearing deposits
     1,153,551
  
       1,191,975
  
        1,152,503
  
        1,145,152
  
       1,162,156
  Brokered certificates of deposits
           41,666
  
            41,738
  
             45,383
  
             61,412
  
            45,862
    Total interest-bearing deposits
     1,195,217
  
       1,233,713
  
        1,197,886
  
        1,206,564
  
       1,208,018
Non-interest-bearing deposits
        203,559
  
          201,337
  
           198,000
  
           187,011
  
          199,572
    Total deposits
 $  1,398,776
  
 $    1,435,050
  
 $     1,395,886
  
 $     1,393,575
  
 $    1,407,590
                   
Asset Quality
                  
Nonperforming assets:
                  
  Loans 90+ days past due and accruing
 $             481
  
 $                  –
  
 $               411
  
 $               993
  
 $              242
  Nonaccrual loans
           38,050
  
            29,832
  
             33,972
  
             41,136
  
            40,460
    Total nonperforming loans
           38,531
  
            29,832
  
             34,383
  
             42,129
  
            40,702
  Other real estate owned
             4,892
  
              6,033
  
               6,313
  
               1,238
  
                 163
Total nonperforming assets
 $       43,423
  
 $         35,865
  
 $          40,696
  
 $          43,367
  
 $         40,865
                   
Allowance for loan losses as a percent of
                  
    nonperforming loans
70.5%
  
89.0%
  
79.3%
  
62.3%
  
56.9%
Nonperforming loans as a percent of total loans
3.77%
  
2.84%
  
3.27%
  
3.94%
  
3.72%
Nonperforming assets as a percent of total assets
2.21%
  
1.79%
  
2.03%
  
2.16%
  
2.00%
Nonperforming assets as a percent of total loans
                
   and other real estate owned
4.23%
  
3.39%
  
3.85%
  
4.06%
  
3.73%
Allowance for loan losses as a percent of total loans
2.66%
  
2.53%
  
2.59%
  
2.46%
  
2.12%
                   
Capital Information(a)
                  
Tier 1 risk-based capital ratio
16.11%
  
15.51%
  
15.49%
  
15.06%
  
14.88%
Tier 1 common ratio
11.07%
  
10.60%
  
10.58%
  
10.30%
  
10.30%
Total risk-based capital ratio (Tier 1 and Tier 2)
17.44%
  
16.83%
  
16.80%
  
16.39%
  
16.22%
Leverage ratio
10.14%
  
9.97%
  
10.06%
  
9.82%
  
9.95%
Tier 1 capital
 $     195,439
  
 $       193,211
  
 $        192,822
  
 $        193,013
  
 $       198,041
Tier 1 common capital
        134,298
  
          132,103
  
           131,747
  
           131,973
  
          137,035
Total capital (Tier 1 and Tier 2)
        211,509
  
          209,647
  
           209,144
  
           209,986
  
          215,826
Total risk-weighted assets
 $  1,212,816
  
 $    1,245,770
  
 $     1,244,707
  
 $     1,281,318
  
 $    1,330,979
Tangible equity to tangible assets (b)
9.21%
  
9.06%
  
9.21%
  
9.21%
  
8.74%
Tangible common equity to tangible assets (b)
7.18%
  
7.07%
  
7.22%
  
7.22%
  
6.78%
(a)
June 30, 2010 data based on preliminary analysis and subject to revision.
(b)
These ratios represent non-GAAP measures since they exclude the balance sheet impact of intangible assets acquired through acquisitions on both total stockholders’ equity and total assets.  Additional information regarding the calculation of these ratios is included at the end of this release.

 
 
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
- Page 9 of 12 -
 
PROVISION FOR LOAN LOSSES INFORMATION
 
 
Three Months Ended
  
Six Months Ended
 
June 30,
  
March 31,
  
June 30,
  
June 30,
  
June 30,
(in $000’s)
2010
  
2010
  
2009
  
2010
  
2009
Provision for Loan Losses
                  
Provision for checking account overdrafts
 $              179
  
 $                20
  
 $              234
  
 $              199
  
 $              297
Provision for other loan losses
              5,279
  
              6,481
  
              4,500
  
            11,760
  
              8,500
  Total provision for loan losses
 $           5,458
  
 $           6,501
  
 $           4,734
  
 $         11,959
  
 $           8,797
                   
Net Charge-Offs
                  
Gross charge-offs
 $           5,517
  
 $           8,134
  
 $           6,986
  
 $         13,651
  
 $         10,284
Recoveries
                 674
  
                 929
  
              1,327
  
              1,603
  
              1,707
  Net charge-offs
 $           4,843
  
 $           7,205
  
 $           5,659
  
 $         12,048
  
 $           8,577
                   
Net Charge-Offs (Recoveries) by Type
                  
Commercial real estate
 $           4,401
  
 $           5,918
  
 $           4,332
  
 $         10,320
  
 $           6,853
Commercial and industrial
                   38
  
                 894
  
                   31
  
                 932
  
                   (8)
Residential real estate
                   77
  
                 183
  
                 647
  
                 260
  
                 829
Real estate, construction
                   68
  
                    –
  
                    –
  
                   68
  
                    –
Consumer
                   89
  
                 114
  
                 352
  
                 202
  
                 446
Home equity lines of credit
                     5
  
                 (12)
  
                   36
  
                   (7)
  
                   35
Deposit account overdrafts
                 165
  
                 108
  
                 261
  
                 273
  
                 422
  Total net charge-offs
 $           4,843
  
 $           7,205
  
 $           5,659
  
 $         12,048
  
 $           8,577
                   
Net charge-offs as a percent of loans (annualized)
1.86%
  
2.76%
  
2.05%
  
2.31%
  
1.56%


SUPPLEMENTAL INFORMATION
 
 
June 30,
  
March 31,
  
December 31,
  
September 30,
  
June 30,
(in $000’s, end of period)
2010
  
2010
  
2009
  
2009
  
2009
                   
Trust assets under management
 $       742,044
  
 $         768,189
  
 $         750,993
  
 $         738,535
  
 $         692,823
Brokerage assets under management
 $       214,421
  
 $         229,324
  
 $         216,479
  
 $         210,743
  
 $         183,968
Mortgage loans serviced for others
 $       234,134
  
 $         230,183
  
 $         227,792
  
 $         220,605
  
 $         213,271
Employees (full-time equivalent)
                  527
  
                   530
  
                   537
  
                   544
  
                   548
 
 
 
 
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
- Page 10 of 12 -
 

CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME
 
 
Three Months Ended
 
June 30, 2010
  
March 31, 2010
  
June 30, 2009
(in $000’s)
Balance
Income/
Expense
Yield/
Cost
Balance
Income/
Expense
Yield/
Cost
Balance
Income/
Expense
Yield/ Cost
Assets
                      
Short-term investments
 $       34,077
 $          21
0.25%
  
 $         7,317
 $           4
0.23%
  
 $        38,546
 $         24
0.25%
Investment securities (a)(b)
        739,206
        8,717
4.72%
  
        767,804
       9,003
4.69%
  
         716,288
       9,849
5.50%
Gross loans (a)
     1,042,010
      14,629
5.63%
  
     1,060,020
     14,850
5.66%
  
      1,106,928
     16,282
5.91%
Allowance for loan losses
         (30,669)
      
         (29,332)
      
         (24,495)
    
Total earning assets
     1,784,624
      23,367
5.24%
  
     1,805,809
     23,857
5.32%
  
      1,837,267
     26,155
5.70%
                       
Intangible assets
          65,248
      
          65,484
      
           66,144
    
Other assets
        146,234
      
        142,240
      
         137,839
    
Total assets
 $  1,996,106
      
 $  2,013,533
      
 $   2,041,250
    
                       
Liabilities and Equity
                      
Interest-bearing deposits:
                      
Savings accounts
 $     121,017
 $          48
0.16%
  
 $     116,572
 $         47
0.16%
  
 $      128,790
 $       168
0.52%
Interest-bearing demand accounts
        237,262
           650
1.10%
  
        229,628
          661
1.17%
  
         206,168
          795
1.55%
Money market deposit accounts
        294,138
           654
0.89%
  
        273,567
          656
0.97%
  
         223,442
          631
1.13%
Brokered certificates of deposits
          41,717
           398
3.83%
  
          42,003
          401
3.87%
  
           32,660
          334
4.10%
Retail certificates of deposit
        524,038
        3,203
2.45%
  
        539,327
       3,378
2.54%
  
         623,102
       4,650
2.99%
Total interest-bearing deposits
     1,218,172
        4,953
1.63%
  
     1,201,097
       5,143
1.74%
  
      1,214,162
       6,578
2.17%
                       
Short-term borrowings
          48,931
             66
0.53%
  
          86,143
            80
0.37%
  
           49,924
          108
0.86%
Long-term borrowings
        262,602
        2,771
4.19%
  
        265,331
       2,791
4.23%
  
         330,505
       3,629
4.37%
Total borrowed funds
        311,533
        2,837
3.62%
  
        351,474
       2,871
3.28%
  
         380,429
       3,737
3.91%
Total interest-bearing liabilities
     1,529,705
        7,790
2.04%
  
     1,552,571
       8,014
2.09%
  
      1,594,591
     10,315
2.59%
                       
Non-interest-bearing deposits
        209,602
      
        203,158
      
         198,515
    
Other liabilities
          14,317
      
          13,972
      
           16,690
    
Total liabilities
     1,753,624
      
     1,769,701
      
      1,809,796
    
                       
Preferred equity
          38,581
      
          38,556
      
           38,478
    
Common equity
        203,901
      
        205,276
      
         192,976
    
Stockholders’ equity
        242,482
      
        243,832
      
         231,454
    
Total liabilities and equity
 $  1,996,106
      
 $  2,013,533
      
 $   2,041,250
    
                       
Net interest income/spread (a)
  
 $   15,577
3.20%
    
 $  15,843
3.23%
    
 $  15,840
3.11%
Net interest margin (a)
    
3.49%
      
3.52%
      
3.45%
                       
(a) Information presented on a fully tax-equivalent basis.
                
(b) Average balances are based on carrying value.
                  
 
 
 
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
- Page 11 of 12 -
 


 
Six Months Ended
 
June 30, 2010
  
June 30, 2009
(in $000’s)
Balance
Income/
Expense
Yield/
Cost
Balance
Income/
Expense
Yield/ Cost
Assets
              
Short-term investments
 $        20,772
 $          24
0.25%
  
 $          32,148
 $            40
0.25%
Investment securities (a)(b)
         753,426
      17,720
4.71%
  
           713,895
        19,860
5.57%
Gross loans (a)
      1,050,965
      29,480
5.64%
  
        1,107,110
        33,014
6.01%
Allowance for loan losses
          (30,004)
      
           (24,239)
    
Total earning assets
      1,795,159
      47,224
5.28%
  
        1,828,914
        52,914
5.81%
               
Intangible assets
            65,365
      
             66,202
    
Other assets
         144,111
      
           137,300
    
Total assets
 $   2,004,635
      
 $     2,032,416
    
               
Liabilities and Equity
              
Interest-bearing deposits:
              
Savings accounts
 $      118,807
 $          95
0.16%
  
 $        123,700
 $          292
0.48%
Interest-bearing demand accounts
         233,467
        1,311
1.13%
  
           200,966
          1,530
1.54%
Money market deposit accounts
         283,910
        1,310
0.93%
  
           223,048
          1,280
1.16%
Brokered certificates of deposits
            41,859
           799
3.85%
  
             29,994
             608
4.09%
Retail certificates of deposit
         531,640
        6,581
2.50%
  
           628,272
          9,852
3.16%
Total interest-bearing deposits
      1,209,683
      10,096
1.68%
  
        1,205,980
        13,562
2.27%
               
Short-term borrowings
            67,435
           147
0.43%
  
             59,557
             277
0.93%
Long-term borrowings
         263,958
        5,562
4.21%
  
           332,688
          7,283
4.38%
Total borrowed funds
         331,393
        5,709
3.44%
  
           392,245
          7,560
3.85%
Total interest-bearing liabilities
      1,541,076
      15,805
2.06%
  
        1,598,225
        21,122
2.66%
               
Non-interest-bearing deposits
         206,398
      
           193,844
    
Other liabilities
            14,008
      
             17,045
    
Total liabilities
      1,761,482
      
        1,809,114
    
               
Preferred equity
            38,568
      
             32,307
    
Common equity
         204,585
      
           190,995
    
Stockholders’ equity
         243,153
      
           223,302
    
Total liabilities and equity
 $   2,004,635
      
 $     2,032,416
    
               
Net interest income/spread (a)
  
 $  31,419
3.22%
    
 $     31,792
3.15%
Net interest margin (a)
    
3.51%
      
3.49%
               
(a) Information presented on a fully tax-equivalent basis.
      
(b) Average balances are based on carrying value.
        


 
 
PEOPLES BANCORP INC.
Second quarter 2010 Earnings Release
- Page 12 of 12 -
 
NON-GAAP FINANCIAL MEASURES
The following non-GAAP financial measures used by Peoples provide information useful to investors in understanding Peoples’ operating performance and trends, and facilitate comparisons with the performance of Peoples’ peers.  The following tables summarize the non-GAAP financial measures derived from amounts reported in Peoples’ financial statements:
 
 
June 30,
  
March 31,
  
December 31,
  
September 30,
  
June 30,
(in $000’s, end of period)
2010
  
2010
  
2009
  
2009
  
2009
                   
Tangible Equity:
                  
Total stockholders' equity, as reported
 $        240,280
  
 $        240,842
  
 $        243,968
  
 $        244,363
  
 $        238,449
Less: goodwill and other intangible assets
             65,138
  
             65,357
  
             65,599
  
             65,805
  
             66,093
Tangible equity
 $        175,142
  
 $        175,485
  
 $        178,369
  
 $        178,558
  
 $        172,356
                   
Tangible Common Equity:
                  
Tangible equity
 $        175,142
  
 $        175,485
  
 $        178,369
  
 $        178,558
  
 $        172,356
Less: preferred stockholders' equity
             38,593
  
             38,568
  
             38,543
  
             38,518
  
             38,494
Tangible common equity
 $        136,549
  
 $        136,917
  
 $        139,826
  
 $        140,040
  
 $        133,862
                   
Tangible Assets:
                  
Total assets, as reported
 $     1,967,046
  
 $     2,003,271
  
 $     2,001,827
  
 $     2,004,754
  
 $     2,039,251
Less: goodwill and other intangible assets
             65,138
  
             65,357
  
             65,599
  
             65,805
  
             66,093
Tangible assets
 $     1,901,908
  
 $     1,937,914
  
 $     1,936,228
  
 $     1,938,949
  
 $     1,973,158
                   
Tangible Book Value per Share:
                  
Tangible common equity
 $        136,549
  
 $        136,917
  
 $        139,826
  
 $        140,040
  
 $        133,862
Common shares outstanding
      10,423,317
  
      10,408,096
  
      10,374,637
  
      10,371,357
  
      10,358,852
                   
Tangible book value per share
 $            13.10
  
 $            13.15
  
 $            13.48
  
 $            13.50
  
 $            12.92
                   
Tangible Equity to Tangible Assets Ratio:
                  
Tangible equity
 $        175,142
  
 $        175,485
  
 $        178,369
  
 $        178,558
  
 $        172,356
Total tangible assets
 $     1,901,908
  
 $     1,937,914
  
 $     1,936,228
  
 $     1,938,949
  
 $     1,973,158
                   
Tangible equity to tangible assets
9.21%
  
9.06%
  
9.21%
  
9.21%
  
8.74%
                   
Tangible Common Equity to Tangible Assets Ratio:
                
Tangible common equity
 $        136,549
  
 $        136,917
  
 $        139,826
  
 $        140,040
  
 $        133,862
Tangible assets
 $     1,901,908
  
 $     1,937,914
  
 $     1,936,228
  
 $     1,938,949
  
 $     1,973,158
                   
Tangible common equity to tangible assets
7.18%
  
7.07%
  
7.22%
  
7.22%
  
6.78%
 
END OF RELEASE