UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2000
--------------
OR
[ ] 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 000-27205
---------
PEOPLES BANCORP OF NORTH CAROLINA, INC.
---------------------------------------
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-2132396
-------------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
------------------------------
218 SOUTH MAIN AVENUE
NEWTON, NORTH CAROLINA 28658
---------------------- -----
(Address of principal executive office) (Zip Code)
-------------------------------------- --------
(828) 464-5620
--------------
(Registrant's telephone number, including area code)
Indicate by check mark 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 for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
3,218,950 SHARES OF COMMON STOCK, NO PAR VALUE, OUTSTANDING AT MAY 12, 2000.
- --------------------------------------------------------------------------------
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION PAGE(S)
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 2000
(Unaudited) and December 31, 1999 3
Consolidated Statements of Income for the three months
ended March 31, 2000 and March 31, 1999 (Unaudited) 4
Consolidated Statements of Comprehensive Income for the three
months ended March 31, 2000 and March 31, 1999 (Unaudited) 5
Consolidated Statements of Cash Flows for the three months
ended March 31, 2000 and March 31, 1999 (Unaudited) 6-7
Notes to Consolidated Financial Statements (Unaudited) 8-9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10-12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
This Form 10-Q contains forward-looking statements. These statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those anticipated in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
changes in interest rate environment, management's business strategy, national,
regional, and local market conditions and legislative and regulatory conditions.
Readers should not place undue reliance on forward-looking statements,
which reflect management's view only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking statements to
reflect subsequent events or circumstances. Readers should also carefully
review the risk factors described in other documents the Company files from time
to time with the Securities and Exchange Commission.
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PEOPLES BANCORP OF NORTH CAROLINA, INC. AND SUBSIDIARY
Consolidated Balance Sheets
March 31, December 31,
Assets 2000 1999
------ ------------- -------------
(Unaudited)
<S> <C> <C>
Cash and due from banks $ 17,969,889 14,067,311
Federal funds sold 3,830,000 2,930,000
------------- -------------
Cash and cash equivalents 21,799,889 16,997,311
Investment securities available for sale 62,169,268 62,498,359
Other investments 1,583,873 1,345,100
------------- -------------
Total securities 63,753,141 63,843,459
Mortgage loans held for sale 695,250 1,685,472
Loans, net 349,465,519 335,273,577
Premises and equipment, net 9,319,494 9,342,582
Accrued interest receivable and other assets 5,851,799 5,292,453
------------- -------------
Total assets $ 450,885,092 432,434,854
============= =============
Liabilities and Shareholders' Equity
------------------------------------
Deposits:
Demand $ 62,708,013 53,506,430
Interest-bearing demand 31,566,882 31,752,477
Savings 80,280,702 77,556,576
Time, $100,000 or more 93,531,502 89,306,653
Other time 125,892,351 124,512,233
------------- -------------
Total deposits 393,979,450 376,634,369
Demand notes payable to U.S. Treasury 1,063,382 1,600,000
FHLB borrowings 14,428,571 14,500,000
Accrued interest payable and other liabilities 2,645,922 1,702,006
------------- -------------
Total liabilities 412,117,325 394,436,375
------------- -------------
Shareholders' equity:
Preferred stock, no par value; authorized
5,000,000 shares; no shares issued
and outstanding - -
Common stock, no par value; authorized
20,000,000 shares; issued and outstanding
3,218,950 shares in 2000 and 1999 36,411,571 31,729,462
Retained earnings 3,484,301 7,189,417
Accumulated other comprehensive income (1,128,105) (920,400)
------------- -------------
Total shareholders' equity 38,767,767 37,998,479
------------- -------------
Total liabilities and shareholders' equity $450,885,092 432,434,854
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
PEOPLES BANCORP OF NORTH CAROLINA, INC. AND SUBSIDIARY
Consolidated Statements of Income (Unaudited)
Three months ended March 31, 2000 and 1999
2000 1999
--------------- ----------
<S> <C> <C>
Interest Income:
Interest and fees on loans $ 8,079,359 6,647,361
Interest on federal funds sold 21,942 39,143
Interest on investment securities:
U.S. Treasury 12,567 12,498
U.S. Government agencies 670,112 555,946
States and political subdivisions 254,859 240,532
Other 38,658 57,812
--------------- ----------
Total interest income 9,077,497 7,553,292
--------------- ----------
Interest expense:
Interest bearing demand deposits 110,253 101,476
Savings deposits 752,277 697,746
Time deposits 2,913,530 2,660,624
FHLB borrowings 221,790 183,908
Other 17,212 9,634
--------------- ----------
Total interest expense 4,015,062 3,653,388
--------------- ----------
Net interest income 5,062,435 3,899,904
Provision for loan losses 256,500 -
--------------- ----------
Net interest income after provision for loan losses 4,805,935 3,899,904
--------------- ----------
Other income:
Service charges 371,446 299,740
Other service charges and fees 94,732 75,298
Gain (loss) on sale of securities - (34,824)
Mortgage banking income 89,909 328,354
Insurance and brokerage commissions 26,500 28,808
Miscellaneous 280,050 204,266
--------------- ----------
Total other income 862,637 901,642
--------------- ----------
Other expense:
Salaries and employee benefits 2,221,395 1,775,143
Occupancy 591,834 537,727
Other 979,719 907,123
--------------- ----------
Total other expenses 3,792,948 3,219,993
--------------- ----------
Income before income taxes 1,875,624 1,581,553
Income taxes 606,000 507,400
--------------- ----------
Net income $ 1,269,624 1,074,153
=============== ==========
Net income per share - basic $ 0.39 0.33
=============== ==========
Cash dividends declared per share $ 0.09 0.08
=============== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
PEOPLES BANCORP OF NORTH CAROLINA, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income (Unaudited)
Three months ended March 31, 2000 and 1999
2000 1999
-------------- --------------
<S> <C> <C>
Net earnings $ 1,269,624 1,074,153
-------------- --------------
Other comprehensive income, net of tax:
Unrealized gains (losses) on investment securities
available for sale:
Unrealized gains (losses) arising during the
period, net of taxes of $(132,516) and
$(256,206), respectively (207,705) (401,575)
Less reclassification adjustment for (gains) losses
included in net earnings, net of taxes of $0
and $(13,564), respectively - 21,260
-------------- --------------
Other comprehensive income (207,705) (380,315)
-------------- --------------
Comprehensive income $ 1,061,919 693,838
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
PEOPLES BANCORP OF NORTH CAROLINA, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (Unaudited)
Three months ended March 31, 2000 and 1999
2000 1999
------------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,269,624 1,074,153
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation, amortization and accretion 189,971 260,891
Provision for loan losses 256,500 -
Loss (gain) on sale of investment securities - 34,824
Loss (gain) on sale of mortgage loans 25,316 77,208
Gain on sale of other real estate - (9,000)
Change in:
Other assets (315,250) (296,373)
Other liabilities 943,916 (261,911)
Mortgage loans held for sale 964,907 (603,162)
------------- -----------
Net cash provided (used) by operating activities 3,334,984 294,630
------------- -----------
Cash flows from investing activities:
Purchases of investment securities available-for-sale (1,558,733) (6,960,625)
Proceeds from calls and maturities of investment securities
available for sale 1,543,842 3,227,457
Proceeds from sales of investment securities available for sale - 6,896,296
Change in other investments (238,773) (78,700)
Net change in loans (14,448,443) (6,264,023)
Purchase of premises and equipment (274,704) (525,736)
Improvements to other real estate - (113,295)
Proceeds from sale of other real estate - 26,000
------------- -----------
Net cash used in investing activities (14,976,811) (3,792,626)
------------- -----------
Cash flows from financing activities:
Net change in deposits 17,345,083 4,429,678
Change in demand notes payable to U.S. Treasury (536,618) 869,461
Net change in FHLB borrowings (71,428) (71,428)
Cash dividends (292,632) (263,369)
Cash paid in lieu of fractional shares - (5,871)
------------- -----------
Net cash provided by financing activities 16,444,405 4,958,471
------------- -----------
Net change in cash and cash equivalents 4,802,578 1,460,475
Cash and cash equivalents at beginning of year 16,997,311 17,754,077
------------- -----------
Cash and cash equivalents at end of year $ 21,799,889 19,214,552
============= ===========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
PEOPLES BANCORP OF NORTH CAROLINA, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (Unaudited)
Three months ended March 31, 2000 and 1999
(Continued)
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 3,931,685 3,619,591
Income taxes $ - -
============= ===========
Noncash investing and financing activities:
Change in net unrealized gain (loss) on investment
securities available for sale, net of tax $ (207,705) (380,315)
Transfer of loans to other real estate $ - 35,000
------------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
PEOPLES BANCORP OF NORTH CAROLINA, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements (Unaudited)
(1) Summary of Significant Accounting Policies
----------------------------------------------
The consolidated financial statements include the financial statements of
Peoples Bancorp of North Carolina, Inc. and its wholly owned subsidiary,
Peoples Bank. All significant intercompany balances and transactions have
been eliminated in consolidation.
A description of the Company's significant accounting policies can be found
in Note 1 of the Notes to Consolidated Financial Statements in the
Company's 1999 Annual Report to Shareholders which is Appendix A to the
Proxy Statement for the May 4, 2000 Annual Meeting of Shareholders. The
consolidated financial statements in this report are unaudited. In the
opinion of management, all adjustments (none of which were other than
normal accruals) necessary for a fair presentation of the financial
position and results of operations for the periods presented have been
included.
Management of the Company has made a number of estimates and assumptions
relating to reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these consolidated financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
(2) Allowance for Loan Losses
----------------------------
The following is an analysis of the allowance for loan losses for the three
months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
----------- ----------
<S> <C> <C>
Balance, beginning of period $3,924,348 4,136,690
Provision for loan losses 256,500 -
Less:
Charge-offs (275,501) (39,236)
Recoveries 16,872 8,548
----------- ----------
Net charge-offs (258,629) (30,688)
----------- ----------
Balance, end of period $3,922,219 4,106,002
=========== ==========
</TABLE>
(3) Earnings Per Share
--------------------
The Company is required to report earnings per common share on the fact of the
statements of earnings with and without the dilutive effects of potential common
stock issuances from instruments such as options, convertible securities and
warrants. Earnings per common share is based on the weighted average number of
common shares outstanding during the period while the effects of potential
common shares outstanding during the period are included in diluted earnings per
share. Additionally, the Company must reconcile the amounts used in the
computation of both "basic earnings per share" and "diluted earnings per share."
Stock options granted in 1999 have not been included in the computation of
"diluted earnings per share" as the effect of inclusion would be antidilutive.
Therefore, since "basic earnings per share" and "diluted earnings per share" are
the same for the three months ended March 31, 2000 and March 31, 1999, the
Company has chosen to present the calculation of basic earnings per share as
follows:
<TABLE>
<CAPTION>
Net Earnings Common Share Per Share
(Numerator) (Denominator) Amount
-------------- ------------- ----------
<S> <C> <C> <C>
For the Three Months Ended March 31, 2000 $ 1,269,624 3,218,950 $ 0.39
For the Three Months Ended March 31, 1999 $ 1,074,153 3,218,950 $ 0.33
</TABLE>
8
<PAGE>
On March 30, 2000, the Board of Directors of the Company approved a 10%
stock dividend to be paid on April 24, 2000 to shareholders of record April
10, 2000. All per share amounts have been restated to reflect this stock
dividend. Cash will be paid to shareholders in lieu of fractional shares.
(4) Recent Accounting Pronouncements
----------------------------------
In 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No.
133 establishes accounting and reporting standards for hedging derivatives
and for derivative instruments including derivative instruments embedded in
other contracts. It requires the fair value recognition of derivatives as
assets or liabilities in the financial statements. The accounting for
changes in the fair value of a derivative depends on the intended use of
the derivative instruments at inception. SFAS No. 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000, but
initial application of the Statement must be made at the beginning of the
quarter. At the date of initial application, an entity may transfer any
held to maturity security into the available for sale or trading categories
without calling into question the entity's intent to hold other securities
to maturity in the future. The Company believes the adoption of SFAS No.
133 will not have a material impact on its financial position, results of
operations or liquidity.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Summary. Net income for the first quarter of 2000 was $1.3 million, an
increase of $200,000 or 18% over the $1.1 million earned in the same period in
1999. Basic income per share for the quarter ended March 31, 2000 increased to
$0.39 or 18% from $0.33 in the comparable period of 1999. Contributing
significantly to these favorable results has been the active manner in which the
Company's net interest margin has been managed. Annualized return on average
assets was 1.17% for the first quarter 2000 compared to 1.06% for the same
period in 1999, and annualized return on average shareholders' equity was 13.04%
as of March 31, 2000 compared to 11.64% for the same period in 1999.
Net Interest Income. Net interest income, the major component of the
Company's net income, was $5.1 million for the three months ended March 31, 2000
an increase of 30% over the $3.9 million earned in the same period in 1999. The
increase over 1999 first quarter net interest income was attributable to an
increase in the volume of average earning assets and an increase in the yield on
earning assets, partially offset by an increase in the average rate on interest
bearing liabilities.
Interest income increased $1.5 million or 20% for the three months ended
March 31, 2000 compared with the same period in 1999. The increase was due to
an increase in the volume of average earning assets, which resulted from an
increase in loan volume, as well as an increase in the yield on earning assets
which is partially attributable to increases in the Bank's prime commercial
lending rate.
Interest expense increased $362,000 or 10% for the three months ended March
31, 2000 compared with the same period in 1999. The increase in interest
expense was due to an increase in the cost of funds from 4.69% for the three
months ended March 31, 1999 to 4.59% for the same period in 2000, combined with
an increase in volume of interest bearing liabilities.
Provision for Loan Losses. For the three months ended March 31, 2000 a
contribution of $256,000 was made to the provision of loan losses compared to no
contribution to the provision for loan losses for the three months ended March
31, 1999. The increase in the provision for loan losses reflects increased loan
demand coupled with the alignment of allowance for loan losses with the
Company's internal model.
Non-Interest Income. Total non-interest income was $863,000 in the first
quarter of 2000, a decrease of 4% from the $902,000 earned in the first quarter
of 1999. Service charges on deposit accounts, which represent the largest
single category of non-interest income, increased 24% to $371,000 for the first
quarter of 2000 due to the growth in the deposit base coupled with an increase
in service charges on deposits. Mortgage banking income decreased 73% to
$90,000 in the first quarter of 2000 compared to $328,000 for the first quarter
of 1999. The decrease in mortgage banking income was due to an increase in
mortgage loan rates, which resulted in a decrease in mortgage loan applications,
as well as a loss on mortgage loans sold in the secondary market. The Company
had no securities gains or losses for the three months ended March 31, 2000
compared to a net loss on sale of securities of $35,000 for the three months
ended March 31, 1999.
Non-Interest Expense. Total non-interest expense was $3.8 million in the
first quarter of 2000, an increase of 18% over the same period in 1999. The
majority of this increase resulted from an increase of $446,000 or 25% in salary
and employee benefits for the three months ended March 31, 2000 as compared to
the three months ended March 31, 1999. This increase reflects regular merit and
promotional increases and an increase in the number of employees to service
growth in the customer base as well as additional staffing in anticipation of
future branching needs. Other non-interest expense increased $73,000 or 8% to
$980,000 for the three months ended March 31, 2000 from $907,000 for the three
months ended March 31, 1999. Occupancy expense increased 10% due to additional
lease expense and depreciation for equipment purchased.
10
<PAGE>
Income Taxes. The Company reported income taxes of $606,000 and $507,000
for the first quarter ended March 31, 2000 and 1999, respectively. This
represented an effective tax rate of 32% for the respective periods.
ANALYSIS OF FINANCIAL CONDITION
Investment Securities. Available-for-sale securities amounted to $62.2
million at March 31, 2000 compared to $62.5 million at December 31, 1999.
Average investment securities for the three months ended March 31, 2000 amounted
to $64.6 million compared to $60.6 million for the year ended December 31, 1999.
Loans. At March 31, 2000, loans were $353.4 million compared to $339.2
million at December 31, 1999, an increase of 4%. This loan growth reflects a
continuation of strong economic growth in the Catawba Valley region. Average
loans represented 83% of total earning assets for the three months ended March
31, 2000, compared to 82% for the year ended December 31, 1999. Mortgage loans
held for sale were $695,000 at March 31, 2000, a decrease of 59% from the
December 31, 1999 balance of $1.7 million. The reduction in mortgage loans held
for sale reflects a decrease in mortgage loan volume due to an increase in
mortgage loan rates.
Asset Quality. Non-performing assets totaled $2.8 million at March 31, 2000
or 0.61% of total assets, compared to $3.6 million or 1.05% of total assets at
December 31, 1999. Non-accrual loans were $2.6 million at March 31, 2000, a
decrease of $237,000 over non-accruals of $2.9 million at December 31, 1999. As
a percentage of total loans outstanding, non-accrual loans were 0.74% at March
31, 2000 compared to 0.84% at December 31, 1999. Loans ninety days past due and
still accruing amounted to $78,000 and $645,000 at March 31, 2000 and December
31, 1999, respectively. The allowance for loan losses at March 31, 2000 amounted
to $3.9 million or 1.11% of total loans compared to $3.9 million or 1.16% of
total loans at December 31, 1999.
The decline in the ratio of allowance for loan losses as a percent of total
loans reflects substantial loan growth in outstanding loans during recent
months. Additionally, the reduction in the allowance for loans losses reflects
changes in underwriting policies and management's belief that the allowance for
loan losses adequately covers anticipated losses.
Deposits. Total deposits at March 31, 2000 were $394.0 million, an
increase of 5% over deposits of $376.6 million at December 31, 1999.
Certificates of deposit in amounts greater than $100,000 or more totaled $93.5
million at March 31, 2000, compared to $89.3 million at December 31, 1999. Most
of these deposits are from long standing customers who reside or own businesses
in the Company's primary service area, and therefore, are believed by the
Company to be stable, and for all practicable purposes, no more rate sensitive
than core deposits.
Borrowed Funds. Federal Home Loan Bank borrowings were $14.4 million at
March 31, 2000 compared to $14.5 million at December 31, 1999. The average
balance of Federal Home Loan Bank borrowings for the three months ended March
31, 2000 was $14.5 million compared to $13.5 million for the year ended December
31, 1999. At March 31, 2000, Federal Home Loan Bank borrowings with maturities
exceeding one year amounted to $10.4 million.
Capital Structure. Shareholders' equity at March 31, 2000 was $38.8
million compared to $38.0 million at December 31, 1999. In addition, at March
31, 2000 and December 31, 1999, unrealized gains and losses in the
available-for-sale securities portfolio amounted to a loss of $1.1 million and a
loss of $920,000, respectively. Annualized return on average equity as of March
31, 2000 was 13.04% compared to 11.54% for the year ended December 31, 1999.
Total dividends paid for the three months ended March 31, 2000 amounted to
$293,000.
11
<PAGE>
Under the regulatory capital guidelines of the Federal Reserve System (the
"Federal Reserve"), financial institutions are currently required to maintain a
total risk-based capital ratio of 8.0% or greater, with a Tier 1 risk-based
capital ratio of 4.0% or greater. Tier 1 capital is generally defined as
shareholders' equity less all intangible assets and goodwill. The Company's
Tier I capital ratio was 10.88% and 10.99% at March 31, 2000 and December 31,
1999, respectively. Total risk based capital is defined as Tier 1 capital plus
supplementary capital. Supplementary capital, or Tier 2 capital, consists of
the Company's allowance for loan losses, not exceeding 1.25% of the Company's
risk-weighted assets. Total risk-based capital ratio is therefore defined as the
ratio of total capital (Tier 1 capital and Tier 2 capital) to risk-weighted
assets. The Company's total risk based capital ratio was 11.96% and 12.11% at
March 31, 2000 and December 31, 1999, respectively. In addition to the Tier I
and total risk-based capital requirements, financial institutions are also
required by the Federal Reserve to maintain a leverage ratio of Tier 1 capital
to total average assets of 4.0% or greater. The Company's Tier I leverage
capital ratio was 9.07% and 9.21% at March 31, 2000 and December 31, 1999,
respectively.
A bank is considered to be "well capitalized" if it has a total risk-based
capital ratio of 10.0 % or greater, a Tier I risk-based capital ratio of 6.0% or
greater, and has a leverage ratio of 5.0% or greater. Based upon these
guidelines, the Bank was considered to be "well capitalized" at March 31, 2000
and December 31, 1999.
Liquidity. The Company's liquidity position is generally determined by the
need to respond to short term demand for funds created by deposit withdrawals
and the need to provide resources to fund assets, typically in the form of
loans. How the Company responds to these needs is affected by the Company's
ability to attract deposits, the maturity of the loans and securities, the
flexibility of assets within the securities portfolio, the current earnings of
the Company, and the ability to borrow funds from other sources. The Company's
primary sources of liquidity are cash and cash equivalents, available-for-sale
securities, deposit growth, and the cash flows from principal and interest
payments on loans and other earning assets. In addition, the Bank is able, on a
short-term basis, to borrow funds from the Federal Reserve System, the Federal
Home Loan Bank of Atlanta (FHLB) and The Bankers Bank, and is also able to
purchase federal funds from other financial institutions. At March 31, 2000 the
Bank had a $30 million line of credit with FHLB, with an outstanding balance of
$14.4 million. The Company also has the ability to borrow up to $10 million
through The Bankers Bank. At March 31, 2000 the Company had no outstanding
borrowings with The Bankers Bank. The liquidity ratio for the Company, which
is defined as net cash, interest bearing deposits with banks, Federal Funds
sold, certain investment securities and certain FHLB advances, as a percentage
of net deposits (adjusted for deposit runoff projections) and short-term
liabilities was 26.87% at March 31, 2000 and 26.70% at December 31, 1999.
12
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the quantitative and qualitative
disclosures about market risks as of March 31, 2000 from that presented in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the opinion of management, the Company is not involved in any
pending legal proceedings other than routine, non-material
proceedings occurring in the ordinary course of business.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended March 31, 2000 the Company
filed no reports on Form 8-K.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Peoples Bancorp of North Carolina, Inc.
May 12, 2000 By: /S/ Tony W. Wolfe
- ------------------------ ----------------------------------------
Date Tony W. Wolfe
President and Chief Executive Officer
(Principal Executive Officer)
May 12, 2000 By: /S/ Joseph F. Beaman, Jr.
- ------------------------ ----------------------------------------
Date Joseph F. Beaman, Jr.
Executive Vice President and Chief
Financial Officer
(Principal Financial and Principal
Accounting Officer)
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 17969889
<INT-BEARING-DEPOSITS> 31566882
<FED-FUNDS-SOLD> 3830000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 62169268
<INVESTMENTS-CARRYING> 0
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