<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998.
[ _ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________to__________
Commission File Number 0-22641
PEOPLES BANCORP, INC.
---------------------
(Exact name of registrant as specified in its charter)
Delaware 22-6764023
- ------------------------------- ------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
134 Franklin Corner Road, Lawrenceville, New Jersey 08648
---------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 609-844-3100
------------
Former name, former address and former fiscal year, if changed since last report
- --------------------------------------------------------------------------------
Indicate by check whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes x No
---------- ---------
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of June 30, 1998 there were 36,325,617 shares of the company's
common stock.
1
<PAGE>
PEOPLES BANCORP, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Condition as of
June 30, 1998 and December 31, 1997...................4
Consolidated Statements of Income for the three and six
months ended June 30, 1998 and 1997...................5
Consolidated Statements of Stockholders' Equity for the
six months ended June 30, 1998 and 1997...............6
Consolidated Statements of Cash Flows for the six months
ended June 30, 1998 and 1997..........................7
Notes to the Consolidated Financial Statements............8-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................12-14
PART II. OTHER INFORMATION....................................................14
2
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and in conformity with the instructions to Form 10-Q and Article 10
of Regulation S-X for Peoples Bancorp, Inc.
In the opinion of management, all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial condition, results
of operations, and changes in cash flows have been made at and for the three and
six months periods ended June 30, 1998 and 1997. The results of operations for
the three and six months periods ended June 30, 1998 are not necessarily
indicative of results that may be expected for the entire year ending December
31, 1998.
(2) The Conversion of the Mutual Holding Company to the Stock Form of
Organization
Peoples Bancorp, Inc. (the "Mid-Tier Holding Company") a federal
corporation and the Registrant's predecessor, became the holding company for
Trenton Savings Bank, FSB (the "Bank") in a reorganization (the "Two-Tier
Reorganization"), in which all of the outstanding shares of the Bank's common
stock ("Bank Common Stock"), including shares held by Peoples Bancorp, MHC (the
"Mutual Holding Company") and stockholders other than the Mutual Holding Company
(the "Minority Stockholders"), were converted into shares of common stock of the
Mid-Tier Holding Company ("Mid-Tier Common Stock"), and the Bank became the
wholly-owned subsidiary of the Mid-Tier Holding Company. From July 1997 through
April 8, 1998, the Mid-Tier Holding Company's only material asset consisted of
100% of the outstanding shares of common stock of the Bank. The Registrant,
Peoples Bancorp, Inc., a Delaware corporation, is the successor to the Mid-Tier
Holding Corporation. The Company was formed as part of the mutual-to-stock
conversion (the "Conversion") of the Mutual Holding Company. In the Conversion
the Bank became the wholly-owned subsidiary of the Company and the corporate
existence of the Mutual Holding Company ended. The Conversion was completed on
April 8, 1998. Prior to the completion of the Conversion the Company had
insignificant assets and liabilities.
As part of the Conversion each of the outstanding shares of
Mid-Tier Common Stock held by Minority Stockholders was automatically converted
into 3.8243 shares of common stock (the "Common Stock") of the Company. As part
of the Conversion and in addition to the 12,430,673 shares issued due to the
Conversion of Mid-Tier Common Stock into Common Stock, the Company sold
23,805,827 shares of Common Stock for a subscription price of $10.00 per share
in a subscription offering (the "Offering"). Net proceeds of the Offering were
approximately $217 million. At the conclusion of the Conversion there were
36,236,500 shares of Common Stock outstanding, including 952,233 shares held by
the Company's employee stock ownership plan (the "ESOP").
The following diagrams outline (i) the organization structure of the Mutual
Holding Company, the Mid-Tier Holding Company, and the Bank and its subsidiaries
prior to the completion of the Conversion and (ii) the organizational structure
of the Company and the Bank and its subsidiaries following the Conversion.
3
<PAGE>
---------------------- ---------------------
Mutual Holding Company Minority Stockholders
---------------------- ---------------------
64.1% 35.9%
---------------
Mid-Tier
Holding Company
---------------
100%
---------------
Bank
---------------
100.0% 100.0%
--------------------- ------------------
Manchester Trust Bank TSBusiness Finance
--------------------- ------------------
Organizational structure following the Conversion:
-------------------
Public Stockholders
-------------------
100%
-------------------
Company
-------------------
100%
-------------------
Bank
-------------------
100.0% 100.0%
--------------------- ------------------
Manchester Trust Bank TSBusiness Finance
--------------------- ------------------
(3) Non Performing Loans, Non Performing Assets and the Allowance for Loan
Losses
4
<PAGE>
Non performing loans at June 30, 1998 and December 31, 1997 are as follows
(in thousands of dollars):
June 30, 1998 December 31, 1997
-------------- -------------------
Loans delinquent 90 days or more $4,800 $5,558
Loans delinquent 90 days or more
as a percentage of net loans
receivable 1.11% 1.40%
An analysis of the allowance for loan losses for the six month periods ended
June 30, 1998 and 1997 is as follows (in thousands of dollars):
June 30, 1998 June 30, 1997
-------------- -------------------
Balance at beginning of the period $3,415 $2,901
Provision charged to operations 547 214
(Charge-offs), Recoveries, net 3 (526)
-------------- -------------------
Balance at the end of the period $3,965 $2,589
============== ===================
Generally, the Bank's loans are placed on a non-accrual status when a
default of principal or interest has existed for a period of 90 days except
when, in the opinion of management, the collection of principal or interest is
reasonably anticipated or adequate collateral exists. In addition, the Bank
places any loan on non-accrual status if any part of it is classified as
doubtful or loss or if any part has been charged to the allowance for loan
losses. Real estate owned consists of property acquired through formal
foreclosures and acquired by deed in lieu of foreclosure, and is recorded at the
lower of cost or fair value. At June 30, 1998, the Bank had $.4 million
classified as real estate owned.
The Bank continually reviews the quality of the loan portfolio, and engages
an outside consultant to perform routine reviews of the portfolio on a quarterly
basis. Management believes that the allowance for loan losses is adequate based
on historical experience, the volume and type of lending conducted by the Bank,
the amount of non-performing loans, general economic conditions and other
factors relating to the Bank's loan portfolio. However, there can be no
assurance that actual losses will not exceed estimated amounts.
As of June 30, 1998, the Bank's total non-performing loans and foreclosed
assets amounted to $5.2 million, or .60% of total assets, compared to $5.9
million, or .92% of total assets at December 31, 1997.
Federal regulations required that each insured savings institution classify
its assets on a regular basis. There are four classifications for problem
assets: "special mention," "substandard," "doubtful" and "loss." At June 30,
1998, the Bank had $5.4 million of loans classified as special mention, $5.6
million classified as substandard and $.6 million classified as doubtful or
loss.
It is management's policy to maintain an allowance for estimated loan
losses based upon an assessment [1] in the case of residential loans,
management's review of delinquent loans, loans in foreclosure and market
conditions, [2] in the case of commercial business loans and commercial mortgage
loans, when a significant decline in value can be identified as well as an
overall assessment of the inherent risk in the portfolio and [3] in the case of
consumer loans, based on the assessment of risks inherent in the loan portfolio.
The Bank's allowance for loan losses, which includes a general valuation
allowance, amounted to approximately $4.0 million and $3.4 million, respectively
at June 30, 1998 and December 31, 1997.
(4) Per Share Data
As discussed in Note 2, the Company completed the conversion on April 8,
1998, which included the exchange of previously outstanding shares of Mid-Tier
common stock for new shares of common stock at an exchange ratio of 3.8243
shares of common stock for each share of Mid-Tier common stock. All historical
share and per share information has been adjusted to reflect this change.
(5) Comprehensive Income
5
<PAGE>
During the first quarter of 1998, the Bank adopted the provisions of
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"). SFAS 130 establishes standards for reporting and display
of comprehensive income and its components (revenues, expenses, gains and
losses) in a full set of general-purpose financial statements. This Statement
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. This Statement requires that an enterprise (a) classify items of
other comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of a
statement of financial position. In accordance with the provisions of SFAS 130
for interim period reporting, the Bank's total comprehensive income for the six
months ended June 30, 1998 and 1997 was $ ($57) and ($671) thousand. The
difference between the Bank's net income and total comprehensive income for
these periods relates to the change in the net unrealized gains on securities
available for sale during the applicable period of time.
(6) Recent Accounting Pronouncements
In February 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 132, "Employers' Disclosures About Pensions and Other Postretirement
Benefits." This Statement standardizes the disclosure requirements for pension
and other postretirement benefits by requiring additional information that will
facilitate financial analysis, and eliminating certain disclosures that are
considered no longer useful. SFAS No. 132 supersedes the disclosure requirements
in SFAS Nos. 87, 88 and 106. This Statement is effective for fiscal years
beginning after December 15, 1997 and will be adopted December 31, 1998.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, and for hedging activities. SFAS
No. 133 supersedes the disclosure requirements in SFAS Nos. 80, 105 and 119.
This statement is effective for periods after June 15, 1999. The adoption of
SFAS No. 133 is not expected to have a material impact on the financial position
or results of operations of the Company.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
People's Bancorp,Inc. (the "Mid-Tier Holding Company") a federal
corporation and the Registrant's predecessor, became the holding company for
Trenton Savings Bank , FSB (the "Bank") in a reorganization (the "Two-Tier
Reorganization"), in which all of the outstanding shares of the Bank's common
stock ("Bank Common Stock"), including shares held by Peoples Bancorp, MHC (the
"Mutual Holding Company") and stockholders other than the Mutual Holding Company
(the "Minority Stockholders"), were converted into shares of common stock of the
Mid-Tier Holding Company ("Mid-Tier Common Stock"), and the Bank became the
wholly-owned subsidiary of the Mid-Tier Holding Company. From July 1997 through
April 8, 1998, the Mid-Tier Holding Company's only material asset consisted of
100% of the outstanding shares of common stock of the Bank. The Registrant,
Peoples Bancorp, Inc., a Delaware corporation, is the successor to the Mid-Tier
Holding Corporation. The Company was formed as part of the mutual-to-stock
conversion (the "Conversion") of the Mutual Holding Company. In the Conversion
the Bank became the wholly-owned subsidiary of the Company and the corporate
existence of the Mutual Holding Company ended. The Conversion was completed on
April 8, 1998. Prior to the completion of the Conversion the Company had
insignificant assets and liabilities.
As part of the Conversion each of the outstanding shares of Mid-Tier Common
Stock held by Minority Stockholders was automatically converted into 3.8243
shares of common stock (the "Common Stock") of the Company. As part of the
Conversion and in addition to the 12,430,673 shares issued due to the
Conversion of Mid-Tier Common Stock into Common Stock, the Company sold
23,805,827 shares of Common Stock for a subscription price of $10.00 per share
in a subscription offering (the "Offering"). Net proceeds of the Offering were
approximately $217 million. At the conclusion of the Conversion there were
36,236,500 shares of Common Stock outstanding, including 952,233 unallocated
shares held by the Company's employee stock ownership plan (the "ESOP").
Financial Condition
Stockholders' equity increased by $231.3 million, or 210.2%, to $341.4
million at June 30, 1998 from $110.0 million at December 31, 1997. The increase
in stockholders' equity was primarily due to the Conversion which provided
approximately $236 million in proceeds. At June 30, 1998 the Registrant had a
stated equity of $341.3 million and tangible equity of $331.2 million. At June
30, 1998 the stated equity as a percentage of assets was 39.08% and the tangible
equity a percentage of assets was 38.36%.
At June 30, 1998 the Bank's tangible, core and risk based capital ratios
were 29.69% , 29.69% , and 46.35%, respectively.
Total assets increased by $233.0 million, or 36.4%, to $873.5 million at
June 30, 1998 from $640.4 million at December 31, 1997 primarily due to the
Conversion proceeds. Cash and cash equivalents increased by $127.6 million to
$143.1 million at June 30, 1998 from $15.5 million at December 31, 1997.
Securities available for sale increased by $85.7 million or 62.4% to $223.1
million at June 30, 1998 from $137.3 million at December 31, 1997. Loans
increased by $37.9 million or 9.6% to $434.3 million at June 30, 1998 from
$396.4 million at December 31, 1997. Deposits increased by $1.5 million, or
.3% to $494.9 million at June 30, 1998 from $493.4 million at December 31,
1997.
Results of Operations
Net income was $3.5 million for the second quarter of 1998 compared to $2.3
million for the second quarter of 1997 which included net securities gains of
$.9 million compared to only $50,000 in 1998.
Total interest income increased $3.5 million, or 32.4%, to $14.3 million
for the quarter ended June 30, 1998 from $10.8 million for the quarter ended
June 30, 1997. The increase resulted from an increase in average interest
earnings assets to $842.6 million for the quarter ended June 30, 1998 from
$594.5 million for the quarter ended June 30, 1997 which offset a decline in the
average yield on interest-earnings assets to 6.81% for the quarter ended June
30, 1998 from 7.29% for the quarter ended June 30, 1997. The $248.1 million
increase in average interest earnings assets was primarily attributed to the
Conversion.
Total interest expense increased by $.3 million, or 5.1%, to $5.6 million
for the quarter ended June 30, 1998 from $5.3 million for the quarter ended June
30, 1997. The increase was primarily the result of an increase in average
deposits to $493.6 million for the quarter ended June 30, 1998 from $482.7
million for the quarter ended June 30, 1997 which combined with an increase in
the average rate paid on deposits to 4.16% for the quarter ended June 30, 1998
from 4.01% for the quarter ended June 30, 1997. The increase in deposits is
primarily attributed to normal branch deposit inflows and a new branch opening
in the third quarter of 1997. The increase in the average rate paid on deposits
was attributed to higher market deposit rates.
7
<PAGE>
Total other income was $.9 million for the quarter ended June 30, 1998
compared to $1.3 million for the quarter ended June 30, 1997. Other income
included $.9 million of gains from the sale of equity securities for the quarter
ended June 30, 1997 compared to $50 thousand from the sale of equity securities
for the quarter ended June 30, 1998. Excluding gains on sales of securities,
other income increased $.5 million or 125.0% for the quarter ended June 30, 1998
compared to the quarter ended June 30, 1997. The increase in other income is
attributed to fees earned by Manchester Trust Bank ("MTB") which was acquired
in September of 1997. Total operating expenses were $3.8 million for the quarter
ended June 30, 1998 compared to $3.1 million for the quarter ended June 30,
1997. Operating expenses were impacted by the acquisition of MTB and staff
expansion within the Bank and at TSBusiness Finance Corporation.
The Bank made a $.4 million provision for loan losses for the quarter ended
June 30, 1998 compared to a $.2 million provision for the three months ended
June 30, 1997. The increased provision generally reflects loan growth. The
evaluation of the loan loss provision includes a review of all loans for which
full collectibility may not be reasonably assured and considers, among other
matters, the estimated net realizable value of the underlying collateral,
economic conditions and other matters which warrant consideration.
Total interest income increased $4.2 million, or 19.5%, to $25.7 million
for the six months ended June 30, 1998 from $21.5 million for the six months
ended June 30, 1997. The increase resulted from an increase in average earnings
assets to $732.6 million for the six months ended June 30, 1998 from $596.5
million for the six months ended June 30, 1997 which offset a decrease in the
average yield on interest earnings assets to 7.00% for the six months ended
June 30, 1998 from 7.20% for the six months ended June 30, 1997. The $136.1
million increase in average interest earnings assets was attributed to the
Conversion.
Total interest expense increased by $.5 million, or 4.5%, to $11.1 million
for the six months ended June 30, 1998 from $10.7 million for the six months
ended June 30, 1997. The increase was primarily the result of an increase in
average deposits to $496.8 million for the six months ended June 30, 1998 from
$484.6 million for the six months ended June 30, 1997 combined with an increase
in the average rate paid on deposits to 4.12% for the six months ended June 30,
1998 from 4.01% for the six months ended June 30, 1997. The increase in deposits
is primarily attributed to normal branch deposit inflows and a new branch
opening in the third quarter 1997. The increase in the average rate paid on
deposits was attributable to higher market rates.
Total other income was $1.9 million for the six months ended June 30, 1998
compared to $2.1 million for the six months ended June 30, 1997. Other income
included $50 thousand from the sale of equity securities for the six months
ended June 30, 1998 compared to $1.2 million of gains from the sale of equity
securities for the six months ended June 30, 1997. Excluding gains on sales of
securities, other income increased $1.0 million or 117.9% for the six months
ended June 30, 1998 compared to the six months ended June 30, 1997. The increase
in other income is primarily attributed to fees earned by MTB which was acquired
in September of 1997. Total operating expenses were $7.6 million for the quarter
ended June 30, 1998 compared to $6.1 million for the six months ended June 30,
1997. Operating expenses were also impacted by the acquisition of MTB in
September of 1997 and an increase in staff and expansion of TSBusiness Finance.
The Bank made a $.5 million loan loss provision for the six months ended
June 30, 1998 compared to a $.2 million loan loss provision for the six months
ended June 30, 1997. The increased provision generally reflects loan growth.
Bank Capital
The OTS requires that the Bank meet minimum tangible, core and risk-based
capital requirements. As of June 30, 1998, the Bank exceeded all regulatory
capital requirements. The Bank's required, actual, and excess capital levels as
of June 30, 1998, are as follows:
Required Actual Excess of
------------------- ------------------- Actual Over
% of % of Regulatory
Amount Assets Amount Assets Requirement
-------- -------- -------- -------- -------------
(Dollars in Thousands)
Core Capital $30,184 4.00 $224,019 29.69 $193,835
Risk-based
Capital $39,350 8.00 $227,984 46.35 $188,634
Bank Liquidity
8
<PAGE>
The Bank is required to maintain minimum levels of liquid assets as defined
by OTS regulations. This requirement, which varies from time to time depending
upon economic conditions and deposit flows, is based upon a percentage of
deposits and short-term borrowings. The required ratio currently is 4%. The
Bank's liquidity ratio averaged 48.92% during the first quarter of 1998 and
equaled 55.02% at June 30, 1998. The Bank adjusts liquidity as appropriate to
meet its asset and liability management objectives.
PART II. OTHER INFORMATION
Legal Proceedings
There are various claims and lawsuits in which the Company and the Bank are
periodically involved incidental to their business. In the opinion of
management, no material loss is expected from any of such pending claims or
lawsuits.
Changes in Securities
Not applicable.
Defaults upon Senior Securities
Not applicable.
Submission of Matters to a Vote of Security Holders
On May 22, 1998 at 10:00 a.m. the annual meeting of stockholders (the
"Annual Meeting") was held at the Trenton Country Club in West Trenton, New
Jersey. The business conducted at the annual meeting included the election of
four directors and the ratification of the appointment of KPMG Peat Marwick LLP
as auditors for the company's 1998 fiscal year.
At the Annual Meeting Directors Wendell T. Breithaupt, Peter S. Longstreth,
Charles E. Stokes, III and Miles W. Truesdell, Jr. were elected to serve as
directors for terms of three years and until their successors elected and
qualified. The vote was as follows:
For Withheld
============ ==========
Wendell T. Breithaupt 20,095,936 247,434
Peter S. Longstreth 20,087,212 256,158
Charles E. Stokes, III 20,089,579 253,791
Miles W. Truesdell, Jr. 20,093,536 249,834
At the Annual Meeting the appointment of KPMG Peat Marwick LLP as auditors
for the Company for the year ending December 31, 1998 was ratified by the
following vote:
For Against Abstain
============ ========= =========
Number of Votes 19,596,380 147,172 599,818
Other Information
Not applicable.
Exhibits and Report on Form 8-K.
Not applicable.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
PEOPLES BANCORP, INC.
Date: August 10, 1998 By:
-------------------------------------
Wendell T. Breithaupt
President and Chief Executive Officer
Date: August 10, 1998 By:
-------------------------------------
Dan A. Chila
Senior Vice President and
Chief Financial Officer
<PAGE>
Part I. Financial Information
Item I. Financial Statements
PEOPLES BANCORP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
(In Thousands of Dollars)
<TABLE>
<CAPTION>
30-Jun 31-Dec
ASSETS 1998 1997
(unaudited)
<S> <C> <C>
Cash and due from banks $9,704 $9,596
Federal funds sold 133,400 5,950
Total cash and cash equivalents 143,104 15,546
Securities available for sale 223,068 137,338
Securities held to maturity 42,560 60,955
Federal Home Loan Bank stock, at cost 3,386 3,386
Loans, net 434,330 396,448
Bank premises and equipment, net 6,770 6,747
Accrued interest receivable 5,764 4,975
Prepaid expenses 372 1,105
Intangible assets 10,199 10,604
Other assets 3,913 3,315
Total assets $873,466 $640,419
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $494,942 $493,400
Borrowed funds 30,000 30,000
Accrued expenses and other liabilities 7,172 6,981
Total liabilities 532,114 530,381
Stockholders' Equity
Common Stock: par value $0.01; authorized 363 362
70,000,000 shares as of June 30, 1998; issued
& outstanding 36,325,617 shares as of June 30, 1998
and, 36,236,500 shares as of December 31, 1997
Additional paid in capital 267,345 31,045
Unearned ESOP Plan shares -9,362 0
Unearned Management Recognition Plan shares -252 -673
Retained earnings - substantially restricted 82,881 78,870
Accumulated other comprehensive income, net of tax 377 434
Total stockholders' equity 341,352 110,038
Total liabilities and stockholders' equity $873,466 $640,419
</TABLE>
See accompanying notes to Consolidated Financial Statements.
<PAGE>
PEOPLES BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
[In Thousands of Dollars]
[unaudited]
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Interest and dividend income:
Interest and fees on loans $8,297 $7,402 $16,090 $14,680
Interest on securities 3,436 3,293 6,694 6,524
Interest on Federal funds sold 2,607 132 2,870 270
Total interest income 14,340 10,827 25,654 21,474
Interest expense 5,593 5,324 11,131 10,652
Net interest income 8,747 5,503 14,523 10,822
Provision for loan losses 361 204 547 214
Net interest income after provision
for loan losses 8,386 5,299 13,976 10,608
Other income:
Service fees on deposit accounts 230 204 426 451
Fees and other income 628 193 1,424 376
Net gain on sale of other real estate 0 22 0 22
Net gain on sale of securities 50 913 50 1,247
Total other income 908 1,332 1,900 2,096
Operating expense:
Salaries and employee benefits 2,082 1,665 4,351 3,322
Net occupancy expense 432 381 818 762
Equipment expense 44 27 77 57
FDIC insurance premium 18 19 36 19
Amortization of intangible assets 223 126 444 258
Data processing fees 174 188 322 376
Other operating expense 791 667 1,520 1,299
Total operating expense 3,764 3,073 7,568 6,093
Income before income taxes 5,530 3,558 8,308 6,611
Income taxes 2,031 1,282 3,106 2,381
Net income $3,499 $2,276 $5,202 $4,230
Earnings per common share:
Basic $0.10 $0.06 $0.15 $0.12
Diluted $0.10 $0.06 $0.15 $0.12
</TABLE>
See accompanying notes to Consolidated Financial Statements.
<PAGE>
PEOPLES BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $5,202 $4,230
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 547 214
Depreciation and amortization expense 1,182 801
Net accretion of premiums and discounts on securities -8 -42
Increase in accrued interest receivable and other assets -654 -2,174
Decrease in accrued interest payable and other liabilities 191 214
Net gain on sale of securities -50 -1,247
Net cash provided by operating activities 6,410 1,996
Cash flows used in investing activities:
Proceeds from maturities of securities available for sale and held to maturity $33,980 $24,842
Purchase of securities available for sale -113,890 -50,260
Proceeds from sales of securities available for sale 861 1,859
Purchase of Federal Home Loan Bank Stock 0 -297
Maturities and repayments of mortgage-backed securities 11,328 4,974
Net increase in loans -37,882 -4,023
Net additions to bank premises, furniture, & equipment -379 -236
Proceeds from sale of bank premises, furniture & equipment 0 312
Net cash used in investing activities -105,982 -22,829
Cash flows from financing activities:
Net (decrease)increase in savings and time deposits 1,542 -3,391
Dividends paid -1,191 -566
Net increase in borrowings 0 30,000
Proceeds from stock offering 226,502 0
Proceeds from exercise of stock options 277 0
Net cash provided by financing activities 227,130 26,043
Net decrease in cash and cash equivalents 127,558 5,210
Cash and cash equivalents as of beginning of year $15,546 $20,938
Cash and cash equivalents as of end of period $143,104 $26,148
Supplemental disclosure of cash flow information:
Cash paid:
Interest $11,100 $10,390
Income taxes $3,606 $2,965
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
PEOPLES BANCORP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Six Month Period ended June 30, 1998 and 1997
(In Thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Unearned
Number Unearned Management
of Additional ESOP Recognition
Common Common paid-in Plan Plan Retained
Shares stock capital Shares Shares Earnings
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 36,200,996 $362 $30,899 ($1,543) $72,545
Net income for the six months
ended June 30, 1997 4,230
Other comprehensive income, net of tax
Dividends declared -566
Amortization of unearned Management
Recognition Plan shares 168
Balance at June 30, 1997 36,200,996 $362 $30,899 -- ($1,375) $76,209
Balance at December 31, 1997 36,236,500 $362 $31,045 ($673) $78,870
Common stock offering and
conversion of Peoples Bancorp, Inc. 236,024
Establishment of ESOP plan -9,522
Net income for the six months
ended June 30, 1998 5,202
Other comprehensive income, net of tax
Dividends declared -1,191
Exercise of stock options 89,117 1 276
Amortization of unearned Management
Recognition Plan shares 421
Amortization of ESOP shares 160
Balance at June 30, 1998 36,325,617 $363 $267,345 ($9,362) ($252) $82,881
<CAPTION>
Accumulated
Other Total
Comprehensive Stockholders'
Income equity
<S> <C> <C>
Balance at December 31, 1996 $1,089 $103,352
Net income for the six months
ended June 30, 1997 $4,230
Other comprehensive income, net of tax -671 ($671)
Dividends declared ($566)
Amortization of unearned Management
Recognition Plan shares $168
Balance at June 30, 1997 $418 $106,513
Balance at December 31, 1997 $434 $110,038
Common stock offering and
conversion of Peoples Bancorp, Inc. $236,024
Establishment of ESOP plan ($9,522)
Net income for the six months
ended June 30, 1998 $5,202
Other comprehensive income, net of tax -57 ($57)
Dividends declared ($1,191)
Exercise of stock options $277
Amortization of unearned Management
Recognition Plan shares $421
Amortization of ESOP shares $160
Balance at June 30, 1998 $377 $341,352
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
PEOPLES BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $5,202 $4,230
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 547 214
Depreciation and amortization expense 1,182 801
Net accretion of premiums and discounts on securities -8 -42
Increase in accrued interest receivable and other assets -654 -2,174
Decrease in accrued interest payable and other liabilities 191 214
Net gain on sale of securities -50 -1,247
Net cash provided by operating activities 6,410 1,996
Cash flows used in investing activities:
Proceeds from maturities of securities available for sale and held to maturity $33,980 $24,842
Purchase of securities available for sale -113,890 -50,260
Proceeds from sales of securities available for sale 861 1,859
Purchase of Federal Home Loan Bank Stock 0 -297
Maturities and repayments of mortgage-backed securities 11,328 4,974
Net increase in loans -37,882 -4,023
Net additions to bank premises, furniture, & equipment -379 -236
Proceeds from sale of bank premises, furniture & equipment 0 312
Net cash used in investing activities -105,982 -22,829
Cash flows from financing activities:
Net (decrease)increase in savings and time deposits 1,542 -3,391
Dividends paid -1,191 -566
Net increase in borrowings 0 30,000
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Proceeds from stock offering 226,502 0
Proceeds from exercise of stock options 277 0
Net cash provided by financing activities 227,130 26,043
Net decrease in cash and cash equivalents 127,558 5,210
Cash and cash equivalents as of beginning of year $15,546 $20,938
Cash and cash equivalents as of end of period $143,104 $26,148
Supplemental disclosure of cash flow information:
Cash paid:
Interest $11,100 $10,390
Income taxes $3,606 $2,965
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
PEOPLES BANCORP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Six Month Period ended June 30, 1998 and 1997
(In Thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Number Unearned
of Additional ESOP
Common Common paid-in Plan
Shares stock capital Shares
<S> <C> <C> <C> <C>
Balance at December 31, 1996 36,200,996 $362 $30,899
Net income for the six months
ended June 30, 1997
Other comprehensive income, net of tax
Dividends declared
Amortization of unearned Management
Recognition Plan shares
Balance at June 30, 1997 36,200,996 $362 $30,899 --
Balance at December 31, 1997 36,236,500 $362 $31,045
Common stock offering and
conversion of Peoples Bancorp, Inc. 236,024
Establishment of ESOP plan -9,522
Net income for the six months
ended June 30, 1998
Other comprehensive income, net of tax
Dividends declared
Exercise of stock options 89,117 1 276
Amortization of unearned Management
Recognition Plan shares
Amortization of ESOP shares 160
Balance at June 30, 1998 36,325,617 $363 $267,345 ($9,362)
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Unearned
Management Accumulated
Recognition Other Total
Plan Retained Comprehensive Stockholders'
Shares Earnings Income equity
<S> <C> <C> <C>
($1,543) $72,545 $1,089 $103,352
4,230 $4,230
-671 ($671)
-566 ($566)
168 $168
($1,375) $76,209 $418 $106,513
($673) $78,870 $434 $110,038
$236,024
($9,522)
5,202 $5,202
-57 ($57)
-1,191 ($1,191)
$277
421 $421
$160
($252) $82,881 $377 $341,352
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 9,704
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 133,400
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 223,068
<INVESTMENTS-CARRYING> 42,560
<INVESTMENTS-MARKET> 42,861
<LOANS> 434,330
<ALLOWANCE> 3,965
<TOTAL-ASSETS> 873,466
<DEPOSITS> 494,942
<SHORT-TERM> 30,000
<LIABILITIES-OTHER> 7,172
<LONG-TERM> 0
0
0
<COMMON> 363
<OTHER-SE> 340,989
<TOTAL-LIABILITIES-AND-EQUITY> 873,466
<INTEREST-LOAN> 8,297
<INTEREST-INVEST> 3,436
<INTEREST-OTHER> 2,607
<INTEREST-TOTAL> 14,340
<INTEREST-DEPOSIT> 5,137
<INTEREST-EXPENSE> 5,593
<INTEREST-INCOME-NET> 8,747
<LOAN-LOSSES> 361
<SECURITIES-GAINS> 50
<EXPENSE-OTHER> 3,764
<INCOME-PRETAX> 5,530
<INCOME-PRE-EXTRAORDINARY> 5,530
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,499
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
<YIELD-ACTUAL> 6.81
<LOANS-NON> 4,800
<LOANS-PAST> 287
<LOANS-TROUBLED> 477
<LOANS-PROBLEM> 5,371
<ALLOWANCE-OPEN> 3,562
<CHARGE-OFFS> 62
<RECOVERIES> 103
<ALLOWANCE-CLOSE> 3,965
<ALLOWANCE-DOMESTIC> 3,965
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 223
</TABLE>
