EX-99 2 exhibit99.htm PEOPLES BANCORP INC. ANNOUNCES THIRD 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
October 26, 2010
  
 Chief Financial Officer and Treasurer
   
 (740) 373-3155

PEOPLES BANCORP INC. ANNOUNCES THIRD QUARTER RESULTS
_____________________________________________________________________

MARIETTA, Ohio - Peoples Bancorp Inc. (“Peoples”) (NASDAQ: PEBO) today announced results for the quarter ended September 30, 2010.  Peoples incurred a net loss available to common shareholders of $101,000, or $0.01 per diluted common share, in the third quarter of 2010.  A higher provision for loan losses than in recent quarters, along with write-downs on other real estate owned (“OREO”) and loans held-for-sale, resulted in the loss for the third quarter.  By comparison, Peoples incurred a net loss available to common shareholders of $4.6 million, or $0.44 per diluted common share, for the third quarter of 2009 and reported net income available to common shareholders of $2.8 million, or $0.27 per diluted common share, for the second quarter of 2010 (or “linked quarter”).  On a year-to-date basis, net income available to common shareholders was $3.5 million through September 30, 2010, an increase over the $1.6 million reported for the same period a year ago, representing diluted earnings per common share of $0.33 and $0.16, respectively.
Summary points regarding third quarter results:
o  
Third quarter 2010 net loan charge-offs were $8.0 million, or 3.11% of average loans on an annualized basis, comprised mostly of write-downs on commercial real estate loans driven by the weak economy and declines in collateral values. Third quarter 2010 provision for loan losses was $8.0 million.  At September 30, 2010, the allowance for loan losses stood at $27.2 million, or 73% of nonperforming loans and 2.68% of total loans.
 
o  
During the third quarter, total nonperforming assets decreased 4% to $41.6 million.  A single $1.6 million commercial real estate loan relationship was returned to accruing status, while commercial loans to eight unrelated borrowers were placed on nonaccrual status.  Charge-offs and paydowns on loans, coupled with $0.4 million in write-downs on commercial OREO due to declines in property values during the quarter, contributed to the overall reduction in total nonperforming assets. Nonperforming assets were 2.21% of total assets at September 30, 2010.
 
o  
At September 30, 2010, loans held-for-sale included $1.5 million of commercial loans secured by real estate located outside People’s primary market area.  These were written down to their estimated fair value, resulting in a $0.6 million loss recognized for the third quarter of 2010.
 
o  
During the third quarter of 2010, Peoples sold $87 million of investment securities, at a $3.8 million net gain, and used the sale proceeds to prepay $60 million of high-cost wholesale borrowings, which resulted in prepayment charges totaling $3.6 million.  The remaining sale proceeds were reinvested into U.S. government agency bonds.  These transactions were part of Peoples’ ongoing management of the investment portfolio and overall balance sheet risk profile.
 
o  
Operating efficiency improved in the third quarter of 2010, as total revenue held consistent with the linked quarter, while total non-interest expense declined 2% or $351,000.  As a result, Peoples’ efficiency ratio was 58.8% for the third quarter versus 60.3% last quarter.  On a year-to-date basis, total revenue and total non-interest expense were both down $1.3 million or roughly 2% in 2010, producing an efficiency ratio of 59.7% versus 60.0% last year.
 
o  
At September 30, 2010, total loan balances were down slightly from the prior quarter-end, due mostly to third quarter 2010 charge-offs.  Commercial and industrial loan balances grew during the quarter but the impact was offset by a continued reduction in commercial real estate loan exposure.  Through nine months of 2010, total loan balances were down $41 million, due mostly to reductions in commercial real estate loans.
 
o  
Retail deposit balances decreased $6 million during the third quarter of 2010, driven by planned reductions in higher-cost, non-core certificates of deposits in order to control overall funding costs. Non-interest-bearing deposits grew $6 million during the third quarter.  Compared to year-end 2009, total retail deposit balances were essentially unchanged at quarter-end, with an increase in non-interest-bearing deposits nearly equal to the reduction in interest-bearing retail deposits.
 
 
 
PEOPLES BANCORP INC.
Third quarter 2010 Earnings Release
- Page 2 of 12 -
 
 
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 17.55% at quarter-end, while tangible common equity was 7.16% of tangible assets.
 
“We are not pleased to report a net loss for the third quarter,” said David L. Mead, President and Chief Executive Officer. “Higher credit-related losses than experienced in the prior two quarters of 2010 overshadowed positive results in key areas of our business.  Unfortunately, the protracted weak economy in our market areas and stalled recovery are making it increasingly more difficult for commercial borrowers, who previously were able to withstand the severe economic downturn, to continue fulfilling their financial obligations. Given these ongoing adverse conditions, we have intensified our proactive efforts to identify weakening credits and assess their collectability, while at the same time seek resolution of previously identified problem assets.”
Net interest income was $15.3 million for the third quarter of 2010, a slight linked quarter increase, while net interest margin improved 9 basis points to 3.58%.  Net interest margin expansion was driven primarily by the balance sheet deleveraging that occurred during the third quarter of 2010.  Year-over-year, net interest income was down slightly for both the three and nine months ended September 30, 2010, while net interest margin expanded moderately for both periods. Interest income was impacted by declining loan balances and lower reinvestment rates in the current interest rate environment.  However, that negative impact on net interest income was mostly offset by management’s successful efforts to reduce funding costs by repaying higher-cost borrowings and growing low-cost deposits.     
During the third quarter of 2010, Peoples sold investment securities with an aggregate amortized cost of $86.6 million at a $3.8 million net gain.  The securities sold consisted mostly 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.  The proceeds from the investment sales were used to prepay $60.0 million of wholesale repurchase agreements, resulting in early repayment charges totaling $3.6 million.  The repurchase agreements had a weighted-average cost of 4.53% and originally were scheduled to mature over the next two years.  Since year-end 2009, the size of the investment portfolio has decreased by $113.8 million and borrowed funds have been reduced by $109.2 million.
“We maintained a consistent level of net interest income and improved net interest margin in the third quarter due largely to actions taken in recent quarters to reduce interest rate risk exposures,” said Edward G. Sloane, Chief Financial Officer and Treasurer.  “One such action was the balance sheet deleveraging undertaken in the third quarter, which was earnings neutral and allowed us to enhance capital, liquidity and interest rate risk positions.  However, we expect fourth quarter net interest income and margin to be challenged by the recent flattening of the yield curve, which has intensified the downward pressure on asset yields.”
Third quarter 2010 non-interest income totaled $7.7 million, which was consistent with both the linked quarter and prior year third quarter amounts.  Both electronic banking and mortgage banking income experienced strong growth in the third quarter over the prior year, but this growth was tempered by lower deposit account service charges – primarily overdraft fees.  Although new regulations governing overdraft fees became effective during the third quarter, the impact on third quarter fees was minimal due to the timing of the changes.  Consequently, much of the decline in deposit account service charges from the prior year was attributable to lower volumes of overdrafts resulting from changes in consumer behavior.  On a year-to-date basis, total non-interest income was $23.5 million through September 30, 2010, down 3% from the same period in 2009.  While electronic banking income and trust and investment revenue were up 18% and 15%, respectively, these increases were more than offset by declines in other non-interest income categories.
Total non-interest expense was $14.0 million for the third quarter of 2010, versus $14.3 million last quarter and $14.1 million for the third quarter of 2009.  Through nine months of 2010, non-interest expense totaled $42.8 million versus $44.1 million for the first nine months of 2009.  These decreases reflect the impact of cost control initiatives throughout 2010, while year-to-date non-interest expense in 2010 also benefited from lower FDIC insurance costs, as 2009’s expense included $930,000 for the special assessment imposed on all banks in the second quarter of 2009.  Peoples also successfully limited the exposure to escalating salary and benefit costs, which were held flat on a year-to-date basis.  These cost savings were partially offset by higher costs associated with problem loan workouts, such as fees for legal and valuation services, and foreclosed real estate.
“Our third quarter 2010 efficiency ratio of 58.8% represented modest improvement over the prior quarter,” said Sloane.  “We attribute this result to our ability to maintain a diversified revenue stream, while reducing operating expenses through targeted expense control.  As we work to enhance bottom-line earnings, we will seek opportunities to expand revenue and to enhance operating efficiency through appropriate cost control measures.”
At September 30, 2010, total portfolio loan balances were $1.01 billion, down $5.2 million versus the prior quarter-end and down $41.2 million compared to year-end 2009.  These declines occurred primarily as a result of managed reductions in commercial real estate loan exposures to enhance Peoples’ overall balance sheet risk profile, coupled with the impact of charge-offs and problem loan workouts.  Peoples experienced good demand for commercial and industrial loans during the third quarter, with total balances increasing $12.1 million for the quarter and $18.1 million on a year-to-date basis.
 
 
 
PEOPLES BANCORP INC.
Third quarter 2010 Earnings Release
- Page 3 of 12 -
 
 
Total nonperforming assets were $41.6 million, or 2.21% of total assets, at September 30, 2010, versus $43.4 million, or 2.21%, at June 30, 2010 and $40.7 million, or 2.03%, at year-end 2009.  The decline during the quarter occurred primarily as a result of returning a single commercial real estate loan relationship, with total outstanding balances of $1.6 million, to accruing status.  Continued weakness in the commercial real estate market resulted in third quarter 2010 write-downs totaling $447,000 on two commercial properties held in OREO.  Also during the third quarter, eight commercial loan relationships became impaired and the loans were placed on nonaccrual status.  These loan relationships had an aggregate outstanding principal balance of $12.1 million and were subsequently written down by $6.1 million to the estimated net realizable value of the underlying collateral as of September 30, 2010.   The corresponding increase in total nonperforming assets was mostly offset by paydowns and charge-offs on existing nonaccrual loans.
Third quarter 2010 net loan charge-offs were $8.0 million, or 3.11% of average loans on an annualized basis, compared to $4.8 million, or 1.86%, last quarter and $7.1 million, or 2.57%, for the third quarter of 2009.  As previously noted, the majority of the third quarter 2010 charge-offs was attributable to impaired commercial real estate loans being written down to the estimated net realizable value of the underlying collateral. Through nine months of 2010, net loan charge-offs were $20.0 million, or 2.57% of average loans on an annualized basis, versus $15.6 million, or 1.90%, for the same period in 2009.  Peoples’ allowance for loan losses was $27.2 million, or 2.68% of gross loans, at September 30, 2010, consistent with the prior quarter-end.  To maintain the adequacy of the allowance for loan losses, Peoples recorded a third quarter 2010 provision for loan losses of $8.0 million versus $5.5 million and $10.2 million for the second quarter of 2010 and third quarter of 2009, respectively.
“In the third quarter, we saw additional borrowers succumb to the ongoing damaging effects of the sluggish economy, which limited our ability to improve asset quality metrics,” commented Sloane.  “In addition, the continued general weakness in the commercial real estate market and overall economy has caused some workouts to take longer than we would like. We continue to seek swift yet prudent resolution of problem loans to minimize future losses.”
During the third quarter of 2010, retail deposit balances decreased modestly, as declines in interest-bearing retail deposits outpaced a $6.1 million increase in non-interest-bearing deposits.  Interest-bearing retail balances were down $12.5 million for the quarter, driven by a $21.9 million reduction in retail certificates of deposit.  These decreases were a result of management maintaining its focus on reducing higher-cost, non-core deposits given recent growth in lower-cost deposits and lack of attractive investment opportunities.  Through nine months of 2010, non-interest-bearing deposit balances have grown $11.7 million, while retail interest-bearing deposits have decreased $11.4 million.
Peoples recorded income tax expense of $653,000 for the nine months ended September 30, 2010, representing an effective tax rate of 11.5%.  Included in this amount was the entire $625,000 tax benefit associated with the investment impairment losses recognized in the first two quarters of 2010.  Management anticipates Peoples’ effective tax rate to approximate 17% for the fourth quarter of 2010.
“Results for the third quarter were eclipsed by the lack of any real improvement in economic conditions in our markets, causing greater stress on existing borrowers and weaker demand for new loans,” summarized Mead. “These conditions could linger for several quarters.  As we work to put credit quality issues behind us, our strategic priorities continue to be increasing shareholder value and generating long-term stabilized earnings by proactively managing the risk profile of the balance sheet, growing loans and deposits and capitalizing on opportunities to expand the company.”
Peoples Bancorp Inc. is a diversified financial products and services company with $1.9 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 third 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.

 
 
PEOPLES BANCORP INC.
Third quarter 2010 Earnings Release
- Page 4 of 12 -
 
 
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.
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 may increase significantly, including product and pricing pressures and Peoples’ ability to attract, develop and retain qualified professionals; (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 may be less favorable than expected, which could decrease the demand for loans, deposits and other financial services and increase loan delinquencies and defaults; (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 Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the regulations to be promulgated thereunder, 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 and interest rate sensitivity of Peoples’ consolidated balance sheet; (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 September 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.
Third quarter 2010 Earnings Release
- Page 5 of 12 -
 
 
PER COMMON SHARE DATA AND SELECTED RATIOS


 
Three Months Ended
  
Nine Months Ended
 
September 30,
  
June 30,
  
September 30,
  
September 30,
  
September 30,
 
2010
  
2010
  
2009
  
2010
  
2009
PER COMMON SHARE:
                  
Earnings per share:
                  
   Basic
 $(0.01)
  
 $0.27
  
 $(0.44)
  
 $0.33
  
 $0.16
   Diluted
 (0.01)
  
 0.27
  
 (0.44)
  
 0.33
  
 0.16
Cash dividends declared per share
 0.10
  
 0.10
  
 0.10
  
 0.30
  
 0.56
Book value per share
 18.69
  
 19.35
  
 19.85
  
 18.69
  
 19.85
Tangible book value per share (a)
 12.47
  
 13.10
  
 13.50
  
 12.47
  
 13.50
Closing stock price at end of period
 $12.37
  
 $14.50
  
 $13.05
  
 $12.37
  
 $13.05
                   
SELECTED RATIOS:
                  
Return on average equity (b)
 0.69%
  
 5.43%
  
 (6.70%)
  
 2.78%
  
 1.74%
Return on average common equity (b)
 (0.20%)
  
 5.45%
  
 (8.97%)
  
 2.29%
  
 1.11%
Return on average assets  (b)
 0.08%
  
 0.66%
  
 (0.79%)
  
 0.34%
  
 0.20%
Efficiency ratio (c)
 58.78%
  
 60.28%
  
 58.28%
  
 59.71%
  
 60.00%
Net interest margin (b)(d)
 3.58%
  
 3.49%
  
 3.45%
  
 3.54%
  
 3.47%
Dividend payout ratio (e)
N/A
  
 38%
  
N/A
  
 91%
  
 363%


(a)
This amount 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.
Third quarter 2010 Earnings Release
- Page 6 of 12 -
 

CONSOLIDATED STATEMENTS OF INCOME


 
Three Months Ended
  
Nine Months Ended
 
September 30,
June 30,
  
September 30,
September 30,
(in $000’s)
2010
  
2010
  
2009
  
2010
  
2009
Interest income
 $     22,572
  
 $     22,926
  
 $     25,472
  
 $    68,955
  
 $     77,551
Interest expense
          7,308
  
          7,790
  
        10,003
  
       23,114
  
        31,125
  Net interest income
        15,264
  
        15,136
  
        15,469
  
       45,841
  
        46,426
Provision for loan losses
          8,005
  
          5,458
  
        10,168
  
       19,964
  
        18,965
    Net interest income after provision for loan losses
          7,259
  
          9,678
  
          5,301
  
       25,877
  
        27,461
                   
Gross impairment losses on investment securities
                 –
  
           (800)
  
        (6,395)
  
       (1,620)
  
        (6,395)
Less: Non-credit losses included in other
                  
         comprehensive income
                 –
  
                –
  
           (465)
  
            166
  
           (465)
  Net other-than-temporary impairment losses
                 –
  
           (800)
  
        (5,930)
  
       (1,786)
  
        (5,930)
Net gain on securities transactions
          3,818
  
          3,018
  
            276
  
         6,852
  
            864
Loss on debt extinguishment
        (3,630)
  
                –
  
                –
  
       (3,630)
  
                –
Net loss on assets
           (443)
  
        (1,254)
  
             (41)
  
       (1,681)
  
           (103)
Loss on loans held for sale
           (565)
  
             (94)
  
                –
  
          (658)
  
                –
                   
Non-interest income:
                  
Deposit account service charges
          2,415
  
          2,457
  
          2,703
  
         7,170
  
          7,718
Insurance income
          2,216
  
          2,261
  
          2,228
  
         6,888
  
          7,378
Trust and investment income
          1,226
  
          1,209
  
          1,189
  
         3,991
  
          3,484
Electronic banking income
          1,180
  
          1,175
  
            986
  
         3,443
  
          2,929
Mortgage banking income
             354
  
            267
  
            276
  
            856
  
          1,384
Bank owned life insurance
             137
  
            173
  
            254
  
            495
  
            807
Other non-interest income
             183
  
            267
  
            150
  
            691
  
            568
  Total non-interest income
          7,711
  
          7,809
  
          7,786
  
       23,534
  
        24,268
                   
Non-interest expense:
                  
Salaries and employee benefits costs
          7,232
  
          7,496
  
          7,015
  
       22,105
  
        22,038
Net occupancy and equipment
          1,383
  
          1,440
  
          1,398
  
         4,341
  
          4,366
Professional fees
             847
  
            601
  
            742
  
         2,140
  
          2,183
Electronic banking expense
             668
  
            557
  
            618
  
         1,830
  
          1,781
FDIC insurance
             617
  
            612
  
            687
  
         1,846
  
          2,782
Data processing and software
             461
  
            527
  
            603
  
         1,558
  
          1,704
Franchise taxes
             373
  
            374
  
            466
  
         1,120
  
          1,293
Foreclosed real estate and other loan expenses
             282
  
            472
  
            249
  
         1,400
  
            736
Amortization of intangible assets
             224
  
            235
  
            307
  
            704
  
            956
Other non-interest expense
          1,871
  
          1,995
  
          2,002
  
         5,798
  
          6,271
  Total non-interest expense
        13,958
  
        14,309
  
        14,087
  
       42,842
  
        44,110
  Income (loss) before income taxes
             192
  
          4,048
  
        (6,695)
  
         5,666
  
          2,450
Income tax (benefit) expense
           (221)
  
            763
  
        (2,630)
  
            653
  
           (526)
    Net income (loss)
 $          413
  
 $       3,285
  
 $      (4,065)
  
 $      5,013
  
 $       2,976
Preferred dividends
             514
  
            512
  
            512
  
         1,539
  
          1,364
    Net (loss) income available to common shareholders
 $        (101)
  
 $       2,773
  
 $      (4,577)
  
 $      3,474
  
 $       1,612
                   
PER COMMON SHARE DATA:
                  
Earnings per share – Basic
 $       (0.01)
  
 $         0.27
  
 $       (0.44)
  
 $        0.33
  
 $         0.16
Earnings per share – Diluted
 $       (0.01)
  
 $         0.27
  
 $       (0.44)
  
 $        0.33
  
 $         0.16
Cash dividends declared per share
 $         0.10
  
 $         0.10
  
 $         0.10
  
 $        0.30
  
 $         0.56
                   
Weighted-average shares outstanding – Basic
10,437,770
  
10,422,126
  
10,372,946
  
10,417,316
  
10,359,569
Weighted-average shares outstanding – Diluted
10,437,770
  
10,429,369
  
10,372,946
  
10,425,463
  
10,372,630
Actual shares outstanding  (end of period)
10,438,510
  
10,423,317
  
10,371,357
  
10,438,510
  
10,371,357

 
 
PEOPLES BANCORP INC.
Third quarter 2010 Earnings Release
- Page 7 of 12 -
 

CONSOLIDATED BALANCE SHEETS


 
September 30,
  
December 31,
(in $000’s)
2010
  
2009
       
Assets
      
Cash and cash equivalents:
      
  Cash and due from banks
 $30,354
  
 $29,969
  Interest-bearing deposits in other banks
 44,306
  
 11,804
    Total cash and cash equivalents
 74,660
  
 41,773
       
Available-for-sale investment securities, at fair value (amortized cost of $608,427
      
  at September 30, 2010 and $706,444 at December 31, 2009)
 610,783
  
 726,547
Held-to-maturity investment securities, at amortized cost (fair value of $3,053
      
  at September 30, 2010 and $963 at December 31, 2009)
 2,964
  
 963
Other investment securities, at cost
 24,356
  
 24,356
    Total investment securities
 638,103
  
 751,866
       
Loans, net of deferred fees and costs
 1,010,879
  
 1,052,058
Allowance for loan losses
 (27,210)
  
 (27,257)
    Net loans
 983,669
  
 1,024,801
       
Loans held for sale
 4,082
  
 1,874
Bank premises and equipment, net of accumulated depreciation
 24,244
  
 24,844
Bank owned life insurance
 53,419
  
 52,924
Goodwill
 62,520
  
 62,520
Other intangible assets
 2,414
  
 3,079
Other assets
 40,578
  
 38,146
    Total assets
 $1,883,689
  
 $2,001,827
       
Liabilities
      
Deposits:
      
Non-interest-bearing deposits
 $209,693
  
 $198,000
Interest-bearing deposits
 1,182,744
  
 1,197,886
    Total deposits
 1,392,437
  
 1,395,886
       
Short-term borrowings
 49,060
  
 76,921
Long-term borrowings
 164,720
  
 246,113
Junior subordinated notes held by subsidiary trust
 22,557
  
 22,530
Accrued expenses and other liabilities
 21,156
  
 16,409
    Total liabilities
 1,649,930
  
 1,757,859
       
Stockholders' Equity
      
Preferred stock, no par value (50,000 shares authorized, 39,000 shares issued
      
  at September 30, 2010, and December 31, 2009)
 38,619
  
 38,543
Common stock, no par value (24,000,000 shares authorized, 11,062,756 shares
      
   issued at September 30, 2010, and 11,031,892 shares issued at December 31, 2009),
 166,152
  
 166,227
   including shares in treasury
      
Retained earnings
 46,545
  
 46,229
Accumulated comprehensive (loss) income, net of deferred income taxes
 (1,974)
  
 9,487
Treasury stock, at cost (624,246 shares at September 30, 2010, and
      
   657,255 shares at December 31, 2009)
 (15,583)
  
 (16,518)
    Total stockholders' equity
 233,759
  
 243,968
    Total liabilities and stockholders' equity
 $1,883,689
  
 $2,001,827
 
 
 
PEOPLES BANCORP INC.
Third quarter 2010 Earnings Release
- Page 8 of 12 -
 

SELECTED FINANCIAL INFORMATION

 
September 30,
  
June 30,
  
March 31,
  
December 31,
  
September 30,
(in $000’s, end of period)
2010
  
2010
  
2010
  
2009
  
2009
                   
Loan Portfolio
                  
Commercial real estate
 $454,499
  
 $471,046
  
 $501,917
  
 $503,034
  
 $478,518
Commercial and industrial
 178,014
  
 165,916
  
 165,934
  
 159,915
  
 160,677
Real estate construction
 39,621
  
 36,490
  
 34,894
  
 32,427
  
 67,143
Residential real estate
 205,125
  
 207,314
  
 212,569
  
 215,735
  
 216,571
Home equity lines of credit
 49,435
  
 50,259
  
 49,444
  
 49,183
  
 48,991
Consumer
 82,894
  
 83,735
  
 85,231
  
 90,144
  
 94,374
Deposit account overdrafts
 1,291
  
 1,346
  
 1,299
  
 1,620
  
 1,765
    Total loans
 $1,010,879
  
 $1,016,106
  
 $1,051,288
  
 $1,052,058
  
 $1,068,039
                   
Deposit Balances
                  
Interest-bearing deposits:
                  
  Retail certificates of deposit
 $490,446
  
 $512,327
  
 $546,760
  
 $537,549
  
 $561,619
  Money market deposit accounts
 297,229
  
 290,477
  
 296,196
  
 263,257
  
 245,621
  Governmental deposit accounts
 139,843
  
 136,119
  
 143,068
  
 147,745
  
 137,655
  Savings accounts
 120,975
  
 120,086
  
 117,526
  
 112,074
  
 113,104
  Interest-bearing demand accounts
 92,585
  
 94,542
  
 88,425
  
 91,878
  
 87,153
    Total retail interest-bearing deposits
 1,141,078
  
 1,153,551
  
 1,191,975
  
 1,152,503
  
 1,145,152
  Brokered certificates of deposits
 41,666
  
 41,666
  
 41,738
  
 45,383
  
 61,412
    Total interest-bearing deposits
 1,182,744
  
 1,195,217
  
 1,233,713
  
 1,197,886
  
 1,206,564
Non-interest-bearing deposits
 209,693
  
 203,559
  
 201,337
  
 198,000
  
 187,011
    Total deposits
 $1,392,437
  
 $1,398,776
  
 $1,435,050
  
 $1,395,886
  
 $1,393,575
                   
Asset Quality
                  
Nonperforming assets:
                  
  Loans 90+ days past due and accruing
 $31
  
 $481
  
 $–
  
 $411
  
 $993
  Nonaccrual loans
 37,184
  
 38,050
  
 29,832
  
 33,972
  
 41,136
    Total nonperforming loans
 37,215
  
 38,531
  
 29,832
  
 34,383
  
 42,129
  Other real estate owned
 4,335
  
 4,892
  
 6,033
  
 6,313
  
 1,238
Total nonperforming assets
 $41,550
  
 $43,423
  
 $35,865
  
 $40,696
  
 $43,367
                   
Allowance for loan losses as a percent of
                  
    nonperforming loans
73.1%
  
70.5%
  
89.0%
  
79.3%
  
62.3%
Nonperforming loans as a percent of total loans
3.67%
  
3.77%
  
2.84%
  
3.27%
  
3.94%
Nonperforming assets as a percent of total assets
2.21%
  
2.21%
  
1.79%
  
2.03%
  
2.16%
Nonperforming assets as a percent of total loans
                
   and other real estate owned
4.08%
  
4.23%
  
3.39%
  
3.85%
  
4.06%
Allowance for loan losses as a percent of total loans
2.68%
  
2.66%
  
2.53%
  
2.59%
  
2.46%
                   
Capital Information(a)
                  
Tier 1 risk-based capital ratio
16.22%
  
16.11%
  
15.51%
  
15.49%
  
15.06%
Tier 1 common ratio
11.13%
  
11.07%
  
10.60%
  
10.58%
  
10.30%
Total risk-based capital ratio (Tier 1 and Tier 2)
17.55%
  
17.44%
  
16.83%
  
16.80%
  
16.39%
Leverage ratio
10.26%
  
10.14%
  
9.97%
  
10.06%
  
9.82%
Tier 1 capital
 $194,800
  
 $195,439
  
 $193,211
  
 $192,822
  
 $193,013
Tier 1 common capital
 133,624
  
 134,298
  
 132,103
  
 131,747
  
 131,973
Total capital (Tier 1 and Tier 2)
 210,768
  
 211,509
  
 209,647
  
 209,144
  
 209,986
Total risk-weighted assets
 $1,200,754
  
 $1,212,816
  
 $1,245,770
  
 $1,244,707
  
 $1,281,318
Tangible equity to tangible assets (b)
9.28%
  
9.21%
  
9.06%
  
9.21%
  
9.21%
Tangible common equity to tangible assets (b)
7.16%
  
7.18%
  
7.07%
  
7.22%
  
7.22%
 
(a)
September 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.
Third quarter 2010 Earnings Release
- Page 9 of 12 -
 

PROVISION FOR LOAN LOSSES INFORMATION


 
Three Months Ended
  
Nine Months Ended
 
September 30,
  
June 30,
  
September 30,
  
September 30,
  
September 30,
(in $000’s)
2010
  
2010
  
2009
  
2010
  
2009
Provision for Loan Losses
                  
Provision for checking account overdrafts
 $219
  
 $179
  
 $268
  
 $418
  
 $565
Provision for other loan losses
 7,786
  
 5,279
  
 9,900
  
 19,546
  
 18,400
  Total provision for loan losses
 $8,005
  
 $5,458
  
 $10,168
  
 $19,964
  
 $18,965
                   
Net Charge-Offs
                  
Gross charge-offs
 $8,605
  
 $5,517
  
 $7,479
  
 $22,256
  
 $17,763
Recoveries
 642
  
 674
  
 409
  
 2,245
  
 2,116
  Net charge-offs
 $7,963
  
 $4,843
  
 $7,070
  
 $20,011
  
 $15,647
                   
Net Charge-Offs by Type
                  
Commercial real estate
 $7,202
  
 $4,401
  
 $5,887
  
 $17,521
  
 $12,740
Commercial and industrial
 69
  
 38
  
 521
  
 1,000
  
 513
Residential real estate
 354
  
 77
  
 208
  
 615
  
 1,037
Real estate, construction
 –
  
 68
  
 –
  
 68
  
 –
Consumer
 91
  
 89
  
 172
  
 294
  
 618
Home equity lines of credit
 38
  
 5
  
 21
  
 31
  
 56
Deposit account overdrafts
 209
  
 165
  
 261
  
 482
  
 683
  Total net charge-offs
 $7,963
  
 $4,843
  
 $7,070
  
 $20,011
  
 $15,647
                   
Net charge-offs as a percent of loans (annualized)
3.11%
  
1.86%
  
2.57%
  
2.57%
  
1.90%


SUPPLEMENTAL INFORMATION


 
September 30,
  
June 30,
  
March 31,
  
December 31,
  
September 30,
(in $000’s, end of period)
2010
  
2010
  
2010
  
2009
  
2009
                   
Trust assets under management
 $795,335
  
 $742,044
  
 $768,189
  
 $750,993
  
 $738,535
Brokerage assets under management
 $233,308
  
 $214,421
  
 $229,324
  
 $216,479
  
 $210,743
Mortgage loans serviced for others
 $235,538
  
 $234,134
  
 $230,183
  
 $227,792
  
 $220,605
Employees (full-time equivalent)
 532
  
 527
  
 530
  
 537
  
 544





 
 
PEOPLES BANCORP INC.
Third quarter 2010 Earnings Release
- Page 10 of 12 -
 

CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME


 
Three Months Ended
 
September 30, 2010
  
June 30, 2010
  
September 30, 2009
(in $000’s)
Balance
Income/
Expense
Yield/ Cost
  
Balance
Income/
Expense
Yield/ Cost
  
Balance
Income/
Expense
Yield/ Cost
Assets
                      
Short-term investments
 $50,149
 $32
0.25%
  
 $34,077
 $21
0.25%
  
 $34,490
 $22
0.25%
Investment securities (a)(b)
 707,196
 8,641
4.89%
  
 739,206
 8,717
4.72%
  
 736,653
 9,765
5.30%
Gross loans (a)
 1,016,922
 14,290
5.60%
  
 1,042,010
 14,591
5.62%
  
 1,092,059
 16,077
5.85%
Allowance for loan losses
 (28,749)
      
 (30,669)
      
 (24,479)
    
Total earning assets
 1,745,518
 22,963
5.24%
  
 1,784,624
 23,329
5.24%
  
 1,838,723
 25,864
5.60%
                       
Intangible assets
 65,029
      
 65,248
      
 65,969
    
Other assets
 146,521
      
 146,234
      
 129,745
    
Total assets
 $1,957,068
      
 $1,996,106
      
 $2,034,437
    
                       
Liabilities and Equity
                      
Interest-bearing deposits:
                      
Savings accounts
 $121,878
 $49
0.16%
  
 $121,017
 $48
0.16%
  
 $130,290
 $176
0.54%
Interest-bearing demand accounts
 238,902
 671
1.11%
  
 237,262
 650
1.10%
  
 210,855
 823
1.55%
Money market deposit accounts
 297,140
 509
0.68%
  
 294,138
 654
0.89%
  
 234,513
 689
1.17%
Brokered certificates of deposits
 41,661
 402
3.83%
  
 41,717
 398
3.83%
  
 56,232
 567
4.00%
Retail certificates of deposit
 503,008
 3,062
2.42%
  
 524,038
 3,203
2.45%
  
 580,281
 4,235
2.90%
Total interest-bearing deposits
 1,202,589
 4,693
1.55%
  
 1,218,172
 4,953
1.63%
  
 1,212,171
 6,490
2.12%
                       
Short-term borrowings
 51,004
 62
0.48%
  
 48,931
 66
0.53%
  
 55,700
 110
0.77%
Long-term borrowings
 240,851
 2,553
4.17%
  
 262,602
 2,771
4.19%
  
 309,879
 3,403
4.32%
Total borrowed funds
 291,855
 2,615
3.52%
  
 311,533
 2,837
3.62%
  
 365,579
 3,513
3.78%
Total interest-bearing liabilities
 1,494,444
 7,308
1.94%
  
 1,529,705
 7,790
2.04%
  
 1,577,750
 10,003
2.51%
                       
Non-interest-bearing deposits
 210,031
      
 209,602
      
 197,900
    
Other liabilities
 15,008
      
 14,317
      
 17,952
    
Total liabilities
 1,719,483
      
 1,753,624
      
 1,793,602
    
                       
Preferred equity
 38,607
      
 38,581
      
 38,506
    
Common equity
 198,978
      
 203,901
      
 202,329
    
Stockholders’ equity
 237,585
      
 242,482
      
 240,835
    
Total liabilities and equity
 $1,957,068
      
 $1,996,106
      
 $2,034,437
    
                       
Net interest income/spread (a)
  
 $15,655
3.30%
    
 $15,539
3.20%
    
 $15,861
3.09%
Net interest margin (a)
    
3.58%
      
3.49%
      
3.45%
                       
(a) Information presented on a fully tax-equivalent basis.
                  
(b) Average balances are based on carrying value.
                  

 
 
 
PEOPLES BANCORP INC.
Third quarter 2010 Earnings Release
- Page 11 of 12 -
 
 

 
Nine Months Ended
 
September 30, 2010
  
September 30, 2009
(in $000’s)
Balance
Income/
Expense
Yield/
Cost
  
Balance
Income/
Expense
Yield/
Cost
Assets
              
Short-term investments
 $30,671
 $57
0.25%
  
 $32,938
 $61
0.25%
Investment securities (a)(b)
 737,847
 26,362
4.76%
  
 721,563
 29,625
5.47%
Gross loans (a)
 1,039,494
 43,732
5.63%
  
 1,102,037
 49,091
5.95%
Allowance for loan losses
 (29,581)
      
 (24,320)
    
Total earning assets
 1,778,431
 70,151
5.27%
  
 1,832,218
 78,777
5.74%
               
Intangible assets
 65,252
      
 66,123
    
Other assets
 144,922
      
 134,756
    
Total assets
 $1,988,605
      
 $2,033,097
    
               
Liabilities and Equity
              
Interest-bearing deposits:
              
Savings accounts
 $119,842
 $144
0.16%
  
 $125,921
 $468
0.50%
Interest-bearing demand accounts
 235,298
 1,982
1.13%
  
 204,299
 2,353
1.54%
Money market deposit accounts
 288,369
 1,820
0.84%
  
 226,912
 1,970
1.16%
Brokered certificates of deposits
 41,792
 1,201
3.84%
  
 38,836
 1,175
4.05%
Retail certificates of deposit
 521,992
 9,643
2.47%
  
 612,099
 14,086
3.08%
Total interest-bearing deposits
 1,207,293
 14,790
1.64%
  
 1,208,067
 20,052
2.22%
               
Short-term borrowings
 61,897
 209
0.45%
  
 58,258
 388
0.88%
Long-term borrowings
 256,172
 8,115
4.20%
  
 325,002
 10,685
4.36%
Total borrowed funds
 318,069
 8,324
3.47%
  
 383,260
 11,073
3.83%
Total interest-bearing liabilities
 1,525,362
 23,114
2.02%
  
 1,591,327
 31,125
2.61%
               
Non-interest-bearing deposits
 207,622
      
 195,211
    
Other liabilities
 14,344
      
 17,348
    
Total liabilities
 1,747,328
      
 1,803,886
    
               
Preferred equity
 38,581
      
 34,396
    
Common equity
 202,696
      
 194,815
    
Stockholders’ equity
 241,277
      
 229,211
    
Total liabilities and equity
 $1,988,605
      
 $2,033,097
    
               
Net interest income/spread (a)
  
 $47,037
3.25%
    
 $47,652
3.13%
Net interest margin (a)
    
3.54%
      
3.47%
               
(a) Information presented on a fully tax-equivalent basis.
          
(b) Average balances are based on carrying value.
            

 
 
 
PEOPLES BANCORP INC.
Third 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:

 
September 30,
  
June 30,
  
March 31,
  
December 31,
  
September 30,
(in $000’s, end of period)
2010
  
2010
  
2010
  
2009
  
2009
                   
Tangible Equity:
                  
Total stockholders' equity, as reported
 $233,759
  
 $240,280
  
 $240,842
  
 $243,968
  
 $244,363
Less: goodwill and other intangible assets
 64,934
  
 65,138
  
 65,357
  
 65,599
  
 65,805
Tangible equity
 $168,825
  
 $175,142
  
 $175,485
  
 $178,369
  
 $178,558
                   
Tangible Common Equity:
                  
Tangible equity
 $168,825
  
 $175,142
  
 $175,485
  
 $178,369
  
 $178,558
Less: preferred stockholders' equity
 38,619
  
 38,593
  
 38,568
  
 38,543
  
 38,518
Tangible common equity
 $130,206
  
 $136,549
  
 $136,917
  
 $139,826
  
 $140,040
                   
Tangible Assets:
                  
Total assets, as reported
 $1,883,689
  
 $1,967,046
  
 $2,003,271
  
 $2,001,827
  
 $2,004,754
Less: goodwill and other intangible assets
 64,934
  
 65,138
  
 65,357
  
 65,599
  
 65,805
Tangible assets
 $1,818,755
  
 $1,901,908
  
 $1,937,914
  
 $1,936,228
  
 $1,938,949
                   
Tangible Book Value per Share:
                  
Tangible common equity
 $130,206
  
 $136,549
  
 $136,917
  
 $139,826
  
 $140,040
Common shares outstanding
 10,438,510
  
 10,423,317
  
 10,408,096
  
 10,374,637
  
 10,371,357
                   
Tangible book value per share
 $12.47
  
 $13.10
  
 $13.15
  
 $13.48
  
 $13.50
                   
Tangible Equity to Tangible Assets Ratio:
                
Tangible equity
 $168,825
  
 $175,142
  
 $175,485
  
 $178,369
  
 $178,558
Total tangible assets
 $1,818,755
  
 $1,901,908
  
 $1,937,914
  
 $1,936,228
  
 $1,938,949
                   
Tangible equity to tangible assets
9.28%
  
9.21%
  
9.06%
  
9.21%
  
9.21%
                   
Tangible Common Equity to Tangible Assets Ratio:
                
Tangible common equity
 $130,206
  
 $136,549
  
 $136,917
  
 $139,826
  
 $140,040
Tangible assets
 $1,818,755
  
 $1,901,908
  
 $1,937,914
  
 $1,936,228
  
 $1,938,949
                   
Tangible common equity to tangible assets
7.16%
  
7.18%
  
7.07%
  
7.22%
  
7.22%


END OF RELEASE