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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
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[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Peoples Bancorp of North Carolina, Inc.
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(Name of Registrant as Specified In Its Charter)
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Peoples Bancorp
OF NORTH CAROLINA, INC.
Newton, North Carolina
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1999 Annual Report
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Leading our communities into the future
[LOGO]
<PAGE>
In August of 1999, Peoples Bancorp of North Carolina, Inc. was formed as a
bank holding company for Peoples Bank and its subsidiaries. In forming the
Company, our shareholders insured that we would be equipped with the necessary
tools to transport Peoples Bancorp into the twenty-first century.
[LOGO OF PEOPLES BANCORP OF NORTH CAROLINA INC. NC]
<PAGE>
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Peoples Bancorp 1999 Annual Report
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The Corporate Mission of Peoples Bank, a wholly owned subsidiary of Peoples
Bancorp of North Carolina, Inc., is to be the best independent community bank in
its service area wherein:
1. Shareholders are assured a fair return on their investment.
2. Employees are well trained and fairly compensated.
3. Competitive products and services are efficiently delivered to meet the
needs of the communities it serves.
4. The community is diligently served with integrity and pride.
Annual Meeting
The Annual Meeting of Shareholders of Peoples Bancorp will be held at 11:00
am, on Thursday, May 4, 2000, at the Newton-Conover Civic and Performance Place,
60 West 6th Street, Newton, North Carolina.
Shareholders' Luncheon
Shareholders in attendance at the Annual Meeting are cordially invited to
remain for a luncheon to be served immediately upon adjournment.
Common Stock
Peoples Bancorp common stock is traded on the over-the-counter (OTC) market
and quoted in the NASDAQ (National Association of Securities Dealers Automated
Quotations) National Market System, where our symbol is PEBK. Price and volume
information is contained in the Wall Street Journal and most major daily
newspapers in the "Over-the-Counter Markets" section under the National Market
System listing. Peoples Bancorp stock is marketed locally by IJL/Wachovia and
Scott & Stringfellow, Inc.
[LOGO OF PEBK NASDAQ LISTED]
Shareholders of Peoples Bancorp are entitled to receive dividends when and
as declared by the Board of Directors out of funds legally available
therefore. Such dividend payments are declared based upon the guidelines of
North Carolina and federal law.
As of March 1, 2000, the Company had 623 shareholders of record, not
including the number of persons or entities whose stock is held in nominee or
street name through various brokerage firms or banks.
Corporate Office
Peoples Bancorp of North Carolina, Inc.
218 South Main Avenue
P.O. Box 467
Newton, NC 28658
828/464-5620
Stock Transfer Agent and Registrar
Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016-3572
Independent Auditors
Porter Keadle Moore, LLP
Suite 1800 . 235 Peachtree Street, NE
Atlanta, GA 30303
<PAGE>
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Table of Contents
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Contents
Message from the President 4
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Financial Highlights 7
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Selected Financial Data 8
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Leading Our Communities into the Future 9
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Independent Auditors' Report 15
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Consolidated Balance Sheets 16
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Consolidated Statements of Earnings 17
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Peoples Bancorp Board of Directors and Officers 18
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Peoples Bank Board of Directors and Officers 19
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Peoples Bank Subsidiaries' Boards of Directors and Officers 20
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Pictured on the cover are the Officers of Peoples Bancorp of North Carolina,
Inc. From left to right: N. Michael Hamra, Vice President - Risk Management
Services and Assistant Corporate Secretary; Krissy O. Price, Assistant Vice
President and Assistant Corporate Secretary; George S. Earp, Vice President and
Assistant Treasurer; Joseph F. Beaman, Jr., Executive Vice President, Chief
Financial Officer, Corporate Secretary and Treasurer; and Tony W. Wolfe,
President and Chief Executive Officer
3
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Message from the President
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Peoples Bancorp completed its most successful year to date in our 87 years
of operation during 1999. Net income increased 13% to $4.5 million for 1999, as
compared to $4.0 million for the prior year. These results translated to $1.55
basic earnings per share versus $1.44 basic earnings per share, respectively.
Total assets amounted to $432.4 million at December 31, 1999, up 8% from $402.3
million one year ago. These financial results produced a return on average
assets of 1.09% for fiscal year 1999 as compared to a return on average assets
of 1.08% for the previous year.
Our market area continues to benefit from a vibrant, healthy economy
despite recent upward adjustments to the prime lending rate. Total loans
increased 12% during the year to $339.2 million at December 31, 1999 as compared
to $301.6 million at the end of 1998. The Bank's ratio of non-performing assets
to total assets reflected improvement during 1999 and equated to 1.05%, while
net charge-offs were .19% of total loans outstanding at December 31, 1999. The
allowance for loan losses as a percentage of total loans outstanding was 1.16%
and 1.37% as of December 31, 1999 and 1998, respectively. The decline of 21
basis points in the allowance for loan loss reserve as a percentage of total
loans reflects improved asset quality based upon positive activity associated
with loan relationships which had previously been adversely classified. Loan
losses were $3.9 million and $4.1 million, as of December 31, 1999 and 1998,
respectively.
Several new deposit options were offered during 1999, which enabled the
Bank's deposit portfolio to increase 8% to $376.6 million at December 31, 1999.
Total deposits amounted to $350.1 million at December 31, 1998.
Net interest income, defined as total interest income less total interest
expense, increased 19% from $14.7 million for 1998 to $17.5 million for the year
ended December 31, 1999. It is also important to note that the Bank's targeted
net interest margin of 4.47% for 1999 was exceeded by 6 basis points, reflecting
4.54% for the year ended December 31, 1999. The Bank's net interest margin for
the year ended December 31, 1998 was 4.30%.
Non-interest income declined by approximately 7% during 1999 and amounted
to $3.4 million, largely attributable to rising interest rates which limited
growth in mortgage banking income. Non-interest expense increased 15% to $13.8
million during 1999 and was comparable to peer banks when comparing non-interest
expense as a percentage of total assets.
Shareholders of Peoples Bancorp were recipients of a 3 for 2 stock split
which was issued in the form of a fifty percent stock dividend last spring.
After accounting for the split, the Board of Directors voted to increase
quarterly cash dividends by one cent per share throughout the year. Quarterly
cash dividends were paid at the rate of ten cents per share during 1999,
totaling $1.1 million, reflecting an increase of 19% over $907,000 paid to
shareholders in 1998. Book value per share increased 6% to $12.99 at December
31, 1999, as compared to $12.28 at December 31, 1998.
Despite the record earnings growth and commendable balance sheet growth
that Peoples Bancorp has recently experienced, we have been disappointed that
this performance has not translated appropriately into the market value of our
stock in recent months as determined by the marketplace. At present the banking
industry in general is deemed to be out of favor with investors. An article in
one of our bank periodicals stated that stock prices for most North Carolina
banks, both large and small,
[GRAPH]
Net Earnings
($ in Millions)
1995 1,734
1996 2,025
1997 2,406
1998 4,009
1999 4,542
[GRAPH]
Net Interest Income
($ in Millions)
1995 9,380
1996 10,370
1997 12,604
1998 14,675
1999 17,512
4
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hit 52-week lows in mid-February.
[GRAPH]
Earnings Per Share
(in Dollars)
1995 0.68
1996 0.79
1997 0.94
1998 1.44
1999 1.55
[GRAPH]
Cash Dividends Paid
($ in Thousands)
1995 670
1996 743
1997 798
1998 907
1999 1,083
The conversion to a bank holding company structure during 1999 was
determined to be in the best interest of the Bank and its shareholders. While no
specific opportunities have been identified by the Board, it is hoped that the
formation of Peoples Bancorp of North Carolina, Inc. will facilitate additional
opportunities for growth through the establishment of bank or non-bank
subsidiaries or through acquisitions. Peoples Bank's shareholders approved the
holding company reorganization at the Bank's annual meeting held in May, 1999.
Regulatory approval was subsequently received on July 22, and the holding
company conversion was successfully completed on August 31, 1999. As a result of
the conversion, each share of Peoples Bank common stock was automatically
converted into one share of Peoples Bancorp stock. Peoples Bancorp's common
stock has continued to be traded on the Nasdaq National Market System under the
symbol: "PEBK". We look forward to the additional flexibility provided by the
bank holding company form of organization which will be instrumental in
assisting us in meeting future needs and opportunities of our shareholders and
customers.
We continue to expand our physical plant facilities throughout our market
area and in neighboring communities. Our new office in Catawba, where Peoples
Bank was founded in 1912, opened at 106 North Main Street in May following a
fire which destroyed our former office in 1997.
Our new Loan Production Office opened in downtown Lincolnton, North
Carolina, on March 1, 2000, and we have recently received approval from
regulatory authorities to establish a full-service branch to be located at 1910
East Main Street, Lincolnton. The site is located on Highways 150 and 27 at its
intersection with the new U.S. Highway 321. We are excited at the potential
which exists for new customer relationships in this new market.
Real estate has recently been purchased on Catawba Valley Boulevard in
southeast Hickory upon which we eventually plan to build a new full service
branch. Until that time an ATM will be installed on the site to establish our
presence. Commercial and residential construction has been very strong in this
area, so we are proud to be in partnership with neighborhood citizens and
businesses.
Plans are currently underway to construct a permanent building
[PHOTO]
pictured from left: Robert C. Abernethy, Chairman of the Board of Peoples
Bancorp of North Carolina, Inc. and Peoples Bank; with Tony W. Wolfe, President
and Chief Executive Officer of Peoples Bancorp of North Carolina, Inc. and
Peoples Bank
5
<PAGE>
on our existing branch site at Triangle Crossing. We have been operating from
this site in a temporary modular building since opening in late 1997. We
anticipate completion of this project in the fourth quarter of this year.
Needless to say, the physical growth as discussed in the preceding
paragraphs has brought along with it the need for expansion of our support
services. The purchase of the Newton Crossroads Shopping Center, located at the
intersection of U.S. Highway 321 and N.C. Highway 10, will allow for the
consolidation of five other buildings into one central processing center. To be
known as the Peoples Bank Corporate Center, the building contains approximately
40,000 square feet and will offer enhanced operating efficiencies as the Company
continues to grow. Space will also be allocated for a commercial loan platform
and access to non-traditional deposit products offered through the Bank's
wholly-owned subsidiary, Peoples Investment Services, Inc.
As a means of closure to all the publicity surrounding year 2000
processing, I am especially pleased to report that all of the time and energy
invested in the Y2K project provided a successful transition into the new
century. Efforts began in 1997 in preparation for this event, and I wish to
thank our employees for managing the extra demands placed upon them during this
time while continuing to carry out their daily duties in an exemplary manner.
I continue to be grateful for the dedication and commitment demonstrated by
our directors, officers, and employees toward the ideals of effective community
banking. We remain focused on implementing products, policies, and procedures
which offer maximum benefit to our customers and produce acceptable efficiencies
in the delivery process. Customers often tell us that they experience a
different attitude as they interact with our employees who "go the extra mile"
in delivering quality service that is appreciated in our marketplace. It is
evident that our employees take a genuine interest in our customers and items of
importance in their lives. While this is gratifying to hear, we know that this
competitive edge requires constant attention, especially in view of upcoming
delivery channels via such choices as the Internet and e-commerce. You can be
assured that Peoples Bancorp and its subsidiaries are investigating alternative
methods of access to financial services wherein we can combine unparalleled
excellence in personalized customer service with the advantages of enhanced
technology.
We look forward to the opportunities which are ahead of us as we begin a
new century of service. As you can tell from reading this report, our agenda is
full in terms of positioning ourselves for future growth. I wish to express
appreciation to shareholders, directors, employees, and those who have made
Peoples Bank their bank of choice - our customers - for your continued loyalty
and support. As we enter our 88th year of operation, we pledge to rededicate
ourselves to the principles upon which our organization was founded. We welcome
the opportunity to expand existing relationships or establish new ones as we
reinvest in the communities we serve. Your referrals and suggestions are always
welcomed and appreciated.
Sincerely,
/s/ Tony W. Wolfe
Tony W. Wolfe
President and Chief Executive Officer
[PHOTO]
pictured from left: Lance A. Sellers, Executive Vice President - Credit
Administration, Mortgage Lending and Commercial Banking; Tony W. Wolfe,
President and Chief Executive Officer; Joseph F. Beaman, Jr., Executive Vice
President and Chief Financial Officer; William D. Cable, Senior Vice President -
Information Services; and Clifton A. Wike, Senior Vice President - Lending
6
<PAGE>
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Financial Highlights
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Dollars in Thousands Except Per Share Amounts
<TABLE>
<CAPTION>
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1999 1998 Change
----------------------------------------
<S> <C> <C> <C>
Interest income $ 32,302 $ 29,215 11%
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Interest expense 14,790 14,540 2%
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Net interest income 17,512 14,675 19%
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Provision for loan losses 425 445 -5%
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Non-interest income 3,380 3,646 -7%
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Non-interest expense 13,832 12,020 15%
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Income taxes 2,093 1,847 13%
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Net income $ 4,542 $ 4,009 13%
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Per Share
Net Income* $ 1.55 $ 1.44 8%
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Cash dividends* 0.37 0.32 16%
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Market price at December 31* 14.75 16.67 -12%
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Book value at December 31* 12.99 12.28 6%
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At Year-End
Loans $336,959 $306,748 10%
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Available-for-sale securities 62,498 63,228 -1%
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Assets 432,435 402,273 8%
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Deposits 376,634 350,067 8%
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Shareholders' equity 37,998 35,924 6%
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Key Performance Ratios
Return on average assets 1.09% 1.08%
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Return on average shareholders' equity 11.54% 12.04%
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Dividend payout ratio 23.84% 22.61%
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Average shareholders' equity to total average assets 9.43% 9.00%
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</TABLE>
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*Per share amounts have been restated to reflect a 3 for 2 stock split during
first quarter 1999.
Refer to the appendix to the Peoples Bancorp of North Carolina, Inc. Proxy
Statement, dated April 13, 2000, for a complete set of Consolidated Financial
Statements.
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This Annual Report to Shareholders 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 the 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.
[GRAPH]
Assets
($ in Millions)
1995 222,096
1996 257,467
1997 326,853
1998 402,273
1999 432,435
[GRAPH]
Shareholders' Equity
($ in Millions)
1995 21,348
1996 22,478
1997 24,117
1998 33,303
1999 39,348
[GRAPH]
Loans
($ in Millions)
1995 143,777
1996 179,304
1997 238,449
1998 306,748
1999 336,959
[GRAPH]
Deposits
($ in Millions)
1995 198,283
1996 231,346
1997 275,393
1998 350,067
1999 376,634
<PAGE>
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Selected Financial Data
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Dollars in Thousands Except Per Share Amounts
<TABLE>
<CAPTION>
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1999 1998 1997 1996 1995
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Summary of Operations
<S> <C> <C> <C> <C> <C>
Interest income $ 32,302 $ 29,215 $ 23,783 $ 18,956 $ 16,407
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Interest expense 14,790 14,540 11,179 8,586 7,027
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Net interest income 17,512 14,675 12,604 10,370 9,380
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Provision for loan losses 425 445 696 980 700
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Net interest income after provision for loan losses 17,087 14,230 11,908 9,390 8,680
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Non-interest income 3,380 3,646 2,060 1,475 1,111
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Non-interest expense 13,832 12,020 10,413 8,118 7,404
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Income before taxes 6,635 5,856 3,555 2,747 2,387
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Income taxes 2,093 1,847 1,149 722 653
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Net income $ 4,542 $ 4,009 $ 2,406 $ 2,025 $ 1,734
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Selected Year-End Balances
Assets $ 432,435 $ 402,273 $ 326,853 $ 257,467 $ 222,096
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Available-for-sale securities 62,498 63,228 53,307 56,995 57,125
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Loans 336,959 306,748 238,449 179,304 143,777
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Interest-earning assets 411,734 383,270 308,852 244,038 208,702
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Deposits 376,634 350,067 275,393 231,346 198,283
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Interest-bearing liabilities 339,243 315,387 258,685 197,255 166,684
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Shareholders' equity $ 37,998 $ 35,924 $ 24,930 $ 22,911 $ 22,120
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Shares outstanding* 2,926,318 2,926,500 2,553,000 2,321,225 2,321,225
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Selected Average Balances
Assets $ 417,387 $ 369,864 $ 295,879 $ 243,094 $ 204,352
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Available-for-sale securities 60,642 59,824 57,508 53,294 50,302
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Loans 324,651 271,819 215,789 164,865 133,960
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Interest-earning assets 396,606 351,730 281,215 229,631 192,144
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Deposits 363,692 321,371 252,998 216,052 180,914
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Interest-bearing liabilities 326,164 293,631 233,901 186,101 152,690
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Shareholders' equity $ 39,348 $ 33,303 $ 24,117 $ 22,478 $ 21,348
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Shares outstanding* 2,926,318 2,780,145 2,553,000 2,553,000 2,553,000
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Profitability Ratios
Return on average total assets 1.09% 1.08% 0.81% 0.83% 0.85%
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Return on average shareholders' equity 11.54% 12.04% 9.98% 9.01% 8.12%
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Dividend payout ratio 23.84% 22.61% 33.18% 36.67% 38.65%
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Liquidity and Capital Ratios (averages)
Loans to deposit 89.27% 84.58% 85.29% 76.31% 74.05%
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Shareholders' equity to total assets 9.43% 9.00% 8.15% 9.25% 10.45%
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Per share of common stock*
Net income $ 1.55 $ 1.44 $ 0.94 $ 0.79 $ 0.68
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Cash dividends 0.37 0.32 0.31 0.29 0.26
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Book value 12.99 12.28 9.77 9.87 9.53
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</TABLE>
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* Shares outstanding and per share computations have been restated to reflect a
3 for 2 stock split during first quarter 1999, the 10% stock dividend
distributed during second quarter 1997 and the 15% stock dividend in fourth
quarter 1995.
Refer to the appendix to the Peoples Bancorp of North Carolina, Inc. Proxy
Statement, dated April 13, 2000, for a complete set of Consolidated Financial
Statements.
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8
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Leading Our Communities Into The Future
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On August 31, 1999, Peoples Bank took an important step in the course of
its history. That's the day Peoples Bancorp of North Carolina, Inc. was formed
as a bank holding company for Peoples Bank and its subsidiaries, Peoples
Investment Services, Inc. and Peoples Real Estate and Appraisal Services, Inc.
We believe that as a result of restructuring, we will be able to provide
flexibility for meeting the future financial needs of the Bank and our
customers. While no specific opportunities have been identified by the Board, it
is hoped that the conversion to the bank holding company
[PHOTO]
pictured from left: Lance A. Sellers, Executive Vice President - Credit
Administration, Mortgage Lending and Commercial Banking; Tony W. Wolfe,
President and Chief Executive Officer; Joseph F. Beaman, Jr., Executive Vice
President and Chief Financial Officer; William D. Cable, Senior Vice President -
Information Services; and Clifton A. Wike, Senior Vice President - Lending
form of organization will enable us to expand or diversify into many new banking
or non-banking activities, either through newly formed subsidiaries or through
acquisitions.
We fully realize however, that the reorganization will not, in and of
itself, put us ahead of our competitors. Our people will do that. They represent
a talented, enthusiastic, creative, and dedicated group of individuals who
possess a team spirit that permeates throughout every department and branch.
Most of all, they care deeply about their communities and the people they serve.
Joe Beaman, Executive Vice President, says "The name of the Company could not be
more appropriate, because it is, in fact, a group of people working together to
help their friends and neighbors, the people of their communities, realize their
hopes and dreams. That is the true definition of a community bank, and it
describes us perfectly."
Kim Boyd, Vice President of Retail Banking, speaks of the involvement of
employees at every level. "Ideas for ways to better serve our customers come
from tellers and managers alike. Communication among branches and management is
extremely open, and we encourage everyone to offer suggestions for improvement."
With dedicated employees and the new holding company in place, look forward to
great things in the future from all of our branches and departments.
Newton Main Office
It was General Douglas MacArthur who said, "Old soldiers never die". And we
might add to that statement, "They continue to return to Newton for the
Reunion". It is an honor for the Newton Main Office to be located in the host
city for the annual Old Soldiers Reunion. Employees of the Main Office also
participate in other worthy events, such as Spring NewtonFest and Relay For
Life.
The Newton Main Office typifies the role of community banking. Not just
because of our involvement in local activities, but also because of our focus on
helping the community grow through business and consumer lending. The branch
participates in the Newton Downtown Revitalization Low Interest Loan Pool to
attract the purchasing and development of businesses and buildings in the
downtown area. Consumer needs are also important to us. In the consumer loan
division, banking officers offer many years of experience to help people obtain
the funds they need to make dreams come true. Jeanette Ringley, Branch
Manager, says, "Our staff is one that is always looking for ways to improve the
level of customer service. With the increase in the local Hispanic
population, many of our people
[PHOTO]
pictured from left: James O. Perry, Vice
President - Business Development Officer;
Kay F. Deal, Vice President - Branch Manager,
Conover; and Jeanette R. Ringley, Vice President -
Branch Manager, Newton Main
are self-studying to learn the language. It's that kind of extra effort that
creates value and makes us an important part of this community." As far as we're
concerned it's not just the old soldiers who deserve a salute, it's the entire
staff of the Newton Main Office, too.
Conover
The sign said, "Vote for Bruce Eckard." And everybody did. In 1997 he ran
unopposed for his fifth term as Mayor of Conover. That says a lot for our board
member. But he's not alone when it comes to community service. All members of
the Conover office are directly involved
9
<PAGE>
in community affairs. Some of the organizations they support include Conover
School, Sipes Orchard Home, March of Dimes, the Catawba County United Way,
Conover Fire Department, and the Red Cross Blood Donor program.
The Conover branch opened its doors in 1993. Since then, its growth has
been impressive. A significant number of industries and consumers are moving
into the area, creating a nice mix with the more established business and
consumer customer base.
Because of the attractive blend of consumer and commercial business, the
Conover staff takes significant pride in cross-selling the Bank's products and
services. Mary Jean Griffith, coordinator of our Senior club program, is also
based in the Conover office.
Kay Deal, Branch Manager, has been associated with the Conover branch since it
opened. "Our customers requested that we open this office, and they have been
loyal since we answered that request. Peoples Bank is right at home in Conover."
North Newton
Several years ago we relocated some of our operations and customer support
functions to a portion of the North Newton branch. But not to the detriment of
transaction based activity - this branch is a real convenience for customers
from both Conover and Newton since it is located halfway between the two towns.
Branch Manager Peggy Carpenter has been with Peoples Bank for quite a
while, and is well known in both the Conover and Newton communities. Peggy and
her staff are known for making the extra effort to assist their customers in
finding the best solution to their financial needs. And they always seem to find
time to actively involve themselves in community projects such as the Catawba
County United Way and March of Dimes.
Maiden
If you're looking for a friend on a Fall Friday night, you don't have to
look far. Just show up at the Maiden High football game. That's where everybody
in town is. It's the kind of place where people in big cities wish they could
live. And it's home to the Maiden branch of Peoples Bank. The branch serves the
residents and businesses of the Town of Maiden and the northern part of Lincoln
County. Branch Manager Cindy McRee is legendary for her emphasis on customer
service. In fact, her entire staff has the same reputation. So it's no wonder
that small business lending, consumer lending, and both commercial and consumer
deposits are significant. And when Cindy and her staff aren't at work or at the
game, you'll find them delivering Meals on Wheels, or involved in Junior
Achievement, the Catawba County Chamber of Commerce or any number of worthy
causes. Each year, the Maiden branch engages in a Customer Appreciation Day, and
the customers respond by indicating their appreciation for the people at Peoples
Bank.
[PHOTO]
pictured from left: Peggy W. Carpenter, Assistant Vice President - Branch
Manager, North Newton; Ken R. Gibson, Vice President - Business Development
Officer; and Cynthia H. McRee, Vice President - Branch Manager, Maiden
Claremont
Whoever said "bigger is better" most certainly couldn't have been talking
about banks. When we bought the deposits and real estate of the Claremont branch
from another financial institution in 1995, deposits totaled $9.5 million.
Today, deposits are $23.2 million, with $1.9 million being added in 1999.
Obviously the community needed a good financial partner, and found one in us.
And this success story isn't over yet. The area east of Conover and west of
Catawba is growing rapidly, and the need for financial products is high.
Claremont is now home to a large fiber-optics plant, joining such other
industries as commercial cable, plastic processing, food processing and
printing. This mix of business and industry creates the need for a broad range
of banking services including consumer and
[PHOTO]
pictured from left: Tommy C. McNeely, Vice President - Branch Manager,
Hiddenite; Denelda S. Reese, Assistant Vice President - Branch Manager,
Claremont; and John R. Duncan, Jr., Vice President - Branch Manager, Catawba
commercial loans, mortgages, credit cards, and deposit products. "We couldn't be
happier with the communities'success, or with our success," said Branch Manager
Denelda Reese, "and we're looking forward to continued growth."
10
<PAGE>
Catawba
Many of us will never forget that summer night in 1997, when the fire
trucks rolled down Main Street toward our Catawba branch to fight a major fire.
Unfortunately, our building was lost, but not the spirit of our customers and
employees. Many of those customers from Catawba, Statesville and southeastern
Catawba and Iredell Counties have been served by the branch for a very long
time, and they continue to reward us with their loyalty.
The original office of Peoples Bank was actually headquartered in this
beautiful, historical area, so the Bank and the community are deeply tied to
each other. On many occasions, a church bake sale is taking place inside the
doors of the branch or on the lawn. And Catawba's "Evening of Christmas
Carols" originated at the branch during the last holiday season. "Customers of
our Catawba branch utilize a broad array of our products and services, and we
are grateful for being their bank of choice," remarked John Duncan, Catawba
Branch Manager.
Hiddenite
People come to this area from miles around, attempting to coax precious
stones from the land. A more predictable path to profit would be an investment
in a savings account at the Hiddenite branch. Located in the heart of emerald
country, the branch serves not only Hiddenite, but also Stony Point and
Taylorsville.
According to Branch Manager Tom McNeely, perhaps the greatest tribute this
facility has received is that the customers don't think of it as their
branch, they think of it as their bank. Part of that sentiment is because of
warm, personal service delivered by our staff. But local processing of mortgage
applications, and designing deposit accounts to meet local needs are also major
factors in such positive customer attitudes.
So is community involvement. Staff members actively support the American
Heart Association, Hospice of Alexander County, Habitat for Humanity, Meals on
Wheels, Alexander County United Way, and more. It's a small wonder the people
the office serves would say, "This branch is a real gem."
Denver
With our office located at the intersection of Highways 150 and 16, we are
literally at the crossroads of change in southeastern Catawba County. Not long
ago, communities in this area, suddenly found themselves populated with new
neighborhoods, new businesses, and new faces, all looking for a financial
partner they could depend on. They found that partner in us. With employees who
live, work, raise children and attend churches in these same communities,
Peoples Bank's Denver branch has become an integral part of the area. Mortgage
lending and commercial loan origination are especially strong in the Denver
branch.
"Our responsibility in the continued improvement of the lifestyle in the
Denver area is a large one, "says Leslie Gilleland, Denver Branch Manager," and
that doesn't end when we leave the office. You can find our staff making
deliveries for Meals-On-Wheels, working with Senior Citizens groups, and even
working in local political efforts for a new Community Center. That's what being
a community bank is all about."
[PHOTO]
pictured from left:
Mark W. Sigmon, Vice President - Business Development Officer and Area
Executive; Barbara K. Farnsworth, Vice President - Branch Manager, Triangle;
Daniel F.Richard, Vice President - Business Development Officer; J. Louis
Fletcher, Vice President - Business Development Officer; and Leslie H.
Gilleland, Assistant Vice President - Branch Manager, Denver
Triangle Crossing
Drive to the intersection of Highways 16 and 73, and you will find yourself in
the heart of one of the fastest changing areas in the region. You'll also find
yourself in front of our Triangle Crossing branch. Although this is a relatively
new office, and until recently our only one in Lincoln County, it has been
highly successful, particularly with mortgage lending and construction loans.
Barbara Farnsworth, Branch Manager at Triangle Crossing, has witnessed the
area's growth first-hand. "The number of new customers coming to our branch is
staggering. Many of those customers work in Mecklenburg and Catawba Counties,
but choose to live in this area in order to enjoy a less intensive lifestyle, or
to live on the lake. And by providing convenient, friendly service and
diligently working to provide the mortgage and home-building products our
customers demand, Peoples Bank has been able to integrate itself nicely into the
community."
Plans are underway to replace the temporary structure at Triangle Crossing with
a permanent building on the same site. The new building will better serve our
growing customer base and make a positive impact in this vibrant area.
Lincolnton
Peoples Bank opened a Loan Production Office in downtown Lincolnton on
March 1, 2000. Louis Fletcher joined our organization earlier this year and
coordinated our entry into this market. Also, the Bank has received regulatory
approval to establish a full-service branch in this area. We are excited about
the
11
<PAGE>
potential opportunities for additional growth and look forward to expanding
financial relationships with residents and businesses in Lincoln County.
Springs Road
Our Springs Road branch opened for business in 1988 and has made a positive
impact in the life of the community over the years. Branch Manager Beth
LaBarbera leads an enthusiastic group of staff members who excel in meeting and
exceeding the needs of our customers. The Springs Road branch is located in a
residential section of northeast Hickory, and also serves the St. Stephens
community. Neighborhood customers enjoy using the Springs Road branch and being
greeted by name. Beth and her staff take much pride in promoting the benefits of
community banking while participating in many worthwhile projects designed to
reinvest in the quality of life in our area.
We believe that the Springs Road community is stronger because of the
partnership we enjoy with area residents and businesses.
[PHOTO]
pictured from left: S. Randy Harrill, Business Development Officer; M. Beth
LaBarbera, Assistant Vice President - Branch Manager, Springs Road; Rick D.
Moser, Vice President - Business Development Officer and Interim Branch Manager,
Viewmont; and David C. Brown, Vice President and Certified Financial Planner
Viewmont
Our newest full-service branch opened in the Viewmont community in
northwest Hickory in 1998. Rick Moser and his dedicated team of banking
professionals have been successful in penetrating this market over the past
year. Just as in other markets that we serve, Viewmont customers appreciate the
personal attention they receive each time they visit. "We have been accused of
spoiling our customers," Rick said, "and we are proud to plead guilty to such a
charge! Our staff goes the extra mile to discover financial solutions that are
tailored to individual needs."
The Viewmont branch competes effectively with a branch of virtually every
major state-wide bank and numerous community-based financial institutions. We
enjoy looking for ways to exceed customers'expectations because this will enable
us to expand financial relationships and create meaningful partnerships. Chances
are good that our customers will tell their friends and neighbors about the
quality of service they receive, which makes us extremely proud to be the newest
full-service branch of Catawba County's oldest financial organization. We look
forward to the opportunities which lie ahead.
Investment Services
People have been investing with confidence in us since we opened our doors
in 1912. And with that history in mind, it stands to reason that we would be a
natural choice for customers looking for additional investment options that lie
outside the realm of traditional, FDIC-insured savings products. For this
reason, Peoples Investments Services, Inc. was formed in 1996. (Securities
offered through Raymond James Financial Services, Inc., member of NASD/SIPC.)
Our financial planners offer a variety of options for a variety of
investment goals, including retirement plans, estate planning, and much more.
Additional services we offer are access to stocks, bonds, mutual funds,
annuities, life insurance, self-directed IRA's, long-term care insurance and
company retirement plans.
Peoples Investment Services, Inc. is a natural choice for customers because
of our reputation for the kind of personal service that only a community bank
like us can offer. As Manager David Brown said, "Customers already come to
Peoples Bank to get solutions to their financial needs, because they are
comfortable in an environment that emphasizes their individuality."
We anticipate continued growth in this important line of business and offer
the same degree of commitment and desire to help our customers meet their
financial goals. It's a success story in which we are proud to participate.
Real Estate and
Appraisal Services
As Vice President - Real Estate Administration, David Reitzel is helping
our customers lay foundations for a successful future. Working in cooperation
with our real estate and appraisal subsidiary, Peoples Bank remains the only
financial institution in our market area that facilitates the mortgage
transaction from beginning to end including application, appraisal, origination,
approval and servicing. In addition to the coordination of appraisals for
mortgages and loans for our customers, David coordinates our own expansion
efforts, handling everything from recommending new locations to renovating
existing facilities and interacting with the architects and builders. We're very
confident that he and his team will help us continue to grow in the coming years
because they understand the importance of providing exemplary customer service.
David was recently elected as State Chairman of the North Carolina Appraisal
Section, and appointed to serve on the National Advisory Panel for the Appraisal
Section.
12
<PAGE>
[PHOTO]
pictured from left: E. Dean Lawing, Vice President - Mortgage Loan Underwriter;
Nancy A. Anderson, Vice President - Mortgage Loan Originator; and Kyle
E. Sigmon, Vice President - Mortgage Loans
Mortgage Services
Mortgage lending has played an important role in Peoples Bank's product
line since entering the market several years ago. Kyle Sigmon, Dean Lawing, and
their competent staff of originators, underwriters, and servicing
representatives understand that the mortgage loan process should be a positive
experience for our customers. Members of our mortgage department don't just wait
for business to come to them. They have actively involved themselves with the
Home Builders Associations and Board of Realtors in our market area.
"We are located in the middle of one of the best places to live in the
country," says Kyle Sigmon, Vice President of Mortgage Loans. "Businesses and
families are moving into this area, and with them come the need for more housing
- - and that's where we come in. Our department knows that every minute counts
when it comes to processing a mortgage loan, and what a stressful time it can be
for the homebuyer. We're here to relieve that stress, and make home buying a
pleasant experience." When the mortgage loan experience is a pleasant one, other
relationships follow.
Marketing & Training
Kim Bazzle, Vice President of Marketing, brings contagious enthusiasm to
her work as she coordinates the promotion of our products and services. Working
behind the scenes, she leads by example as she oversees advertising campaigns
and promotional material designed to explain the features and benefits of our
many product options.
In today's climate of intense competition, it is vital that our people
understand the value of exceptional customer service. Customers are truly our
greatest asset, so Kim invests much of her time and energy to insure that our
training program is thorough and well focused.
[PHOTO]
pictured from left:
Kimberly D. Bazzle, Vice President - Marketing and Training; David E. Reitzel,
Vice President - Real Estate Administration and Vice President - Peoples Real
Estate and Appraisal Services, Inc.; Brenda B. Beam, Vice President - Human
Resources; and Kimberly L. Boyd, Vice President - Retail Banking
Human Resources
Our Company is attracting and employing some of the best and brightest
people around. "Peoples Bancorp has become a highly desirable employment
destination. We offer a stability and atmosphere that's hard to find anywhere
else," says Brenda Beam, Vice President of Human Resources. Brenda and her staff
work closely with employees and managers of Peoples Bancorp coordinating
activities associated with employment benefits. Employee and Management
Incentive Plans have also been recently implemented to reward our employees as
corporate goals are achieved.
Loan and Deposit Operations and Credit Administration
To complement the efforts of our front line staff, the Credit
Administration department and Loan and Deposit Operations personnel led by Steve
Cloninger, Brenda Terrell, and Janice Bumgarner are charged with the
responsibility to support and monitor the performance of our products. The
individuals who comprise these departments realize that their customers are our
employees who greet you each time you enter one of our branches. They insure
that the quality of our products meets and exceeds your expectations. Members of
our staff who work in credit administration have worked diligently to develop
guidelines designed to support a credit culture that balances quality customer
service with safety and soundness considerations. For customers who appreciate a
more automated approach to banking, we offer "Peoples Touch" telephone banking.
This service provides access to banking transactions 24 hours a day and is
supported by representatives of Deposit Operations.
Loan Operations personnel provide
[PHOTO]
pictured from left:
Janice K. Bumgarner, Assistant Vice President - Deposit Operations Supervisor;
Steven F. Cloninger, Vice President-Credit Administration; and Brenda L.
Terrell, Vice President - Operations Manager
13
<PAGE>
that extra measure of support to our loan officers and insure that inquiries
receive accurate and prompt attention. The spirit of teamwork and cooperation
translates into satisfied customers. During non-banking hours, you will find
many of these dedicated employees playing basketball for a March of Dimes fund-
raiser, or walking for Relay for Life - a team event to fight cancer.
Bank Card Department
With convenience an ever-increasing priority among our customers, the Bank
Card Department helps to ensure that those customers have easy access to their
accounts - anywhere, any time, via ATM, Debit, or Credit Card. Department
Manager Mary Edmonds and her staff are constantly looking for new ways to make
things even more convenient for the people they serve. In the past few years
they've done such things as combining ATM and Debit Card applications into a
single form, adding fraud protection to credit cards, and implementing cross-
training, all with an eye toward making things easier for our customers.
Risk Management and Finance
The Risk Management and Finance Departments provide a valuable support role
for the entire Company. The Risk Management Department is responsible for
internal audit, which is an independent evaluation of the effectiveness and
efficiency of the systems of control within the Bank. Mike Hamra and his staff
also monitor the Bank's compliance with Federal and State regulations and other
laws related to the financial industry.
The Finance Department played a vital role in the formation of our bank
holding company. George Earp and his team are responsible for completing a
variety of reports to regulatory agencies as well as preparing reports for the
Board of Directors and management. Also falling under the accountability of the
Finance Department is budget preparation and monitoring, accounts
payable, purchasing, and various other accounting related activities.
[PHOTO]
pictured from left:
Tamara H. Pope, Director - Business Systems; R. Reid Prater, Mail Center
Manager; Mary E. Edmonds, Assistant Vice President - Bank Card Manager; and V.
Dean Norman, Vice President - Network Systems
Technical Support
A customer puts a card in an ATM, and expects to withdraw money. A Peoples
Bank teller clicks on a computer program, expecting it to appear on the screen.
A branch manager picks up the phone, and expects to hear a dial tone.
Information Systems and Network Systems, under the leadership of Tammy Pope and
Dean Norman are responsible for making all these things happen.
The coordination of daily processing of debits and credits requires
organizational skills which Tammy Pope provides. She also assists the Bank in
the selection of operating software and hardware expenditures along with the
implementation of new releases. Dean Norman spearheads the selection and
implementation of hardware and software relating to voice and data
communications throughout the Bank's branches and departments.
The Bank's courier system is also an integral part of support services.
Reid Prater, Manager of the Mail Center and Courier Services, said, "Our
couriers deliver to eleven branches and seven departments several times daily.
In order to maintain this schedule, our department works together as a team
moving documents through our continuously growing organization."
Summary
With the formation of Peoples Bancorp of North Carolina, Inc. and the
potential opportunities of growth it supports, we are pleased at the prospects
for the coming year and the years to come. However, it is not the creation of a
bank holding company alone that will make us more successful. Rather, employees
of Peoples Bancorp, representing a capable and dedicated group of people working
toward a common goal, will transport our Company into the new century, allowing
us to meet and exceed the expectations of customers and shareholders.
14
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
Report of Independent Certified Public Accountants
To the Board of Directors and Shareholders
Peoples Bancorp of North Carolina,Inc.
Newton, North Carolina:
We have audited the consolidated balance sheets of Peoples Bancorp of North
Carolina,Inc. as of December 31,1999 and 1998, and the related consolidated
statements of earnings,changes in shareholders'equity,comprehensive income and
cash flows for the years then ended. Such consolidated financial statements and
our report thereon dated January 14,2000, expressing an unqualified opinion
(which are not included herein) are included in the proxy statement for the 2000
annual meeting of shareholders. The accompanying condensed consolidated balance
sheets and consolidated statements of earnings are the responsibility of the
Company's management. Our responsibility is to express an opinion on such
consolidated balance sheets and consolidated statements of earnings in relation
to the complete consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed
consolidated balance sheets as of December 31,1999 and 1998 and the related
consolidated statements of earnings for the years then ended is fairly stated in
all material respects in relation to the basic consolidated financial statements
from which it has been derived.
/s/ Porter Keadle Moore, LLP
Atlanta, Georgia
January 14,2000
15
<PAGE>
- --------------------------------------------------------------------------------
Consolidated Balance Sheets
- --------------------------------------------------------------------------------
December 31,1999 and 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
1999 1998
-----------------------------------
Assets
<S> <C> <C>
Cash and due from banks, including reserve requirements
of $4,009,000 and $3,907,000 $14,067,311 11,844,077
- ---------------------------------------------------------------------------------------------------------
Federal funds sold 2,930,000 5,910,000
- ---------------------------------------------------------------------------------------------------------
Cash and cash equivalents 16,997,311 17,754,077
- ---------------------------------------------------------------------------------------------------------
Investment securities available for sale 62,498,359 63,227,690
- ---------------------------------------------------------------------------------------------------------
Other investments 1,345,100 1,495,300
- ---------------------------------------------------------------------------------------------------------
Mortgage loans held for sale 1,685,472 9,259,817
- ---------------------------------------------------------------------------------------------------------
Loans,net 335,273,577 297,488,443
- ---------------------------------------------------------------------------------------------------------
Premises and equipment,net 9,342,582 7,806,827
- ---------------------------------------------------------------------------------------------------------
Accrued interest receivable and other assets 5,292,453 5,240,878
- ---------------------------------------------------------------------------------------------------------
Total assets $432,434,854 402,273,032
- ---------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- ---------------------------------------------------------------------------------------------------------
Deposits:
Demand $53,506,430 48,474,480
- ---------------------------------------------------------------------------------------------------------
Interest-bearing demand 31,752,477 31,034,112
- ---------------------------------------------------------------------------------------------------------
Savings 77,556,576 78,686,479
- ---------------------------------------------------------------------------------------------------------
Time,$100,000 or more 89,306,653 75,099,131
- ---------------------------------------------------------------------------------------------------------
Other time 124,512,233 116,773,176
- ---------------------------------------------------------------------------------------------------------
Total deposits 376,634,369 350,067,378
- ---------------------------------------------------------------------------------------------------------
Demand notes payable to U.S.Treasury 1,600,000 139,235
- ---------------------------------------------------------------------------------------------------------
FHLB borrowings 14,500,000 13,642,857
- ---------------------------------------------------------------------------------------------------------
Accrued interest payable and other liabilities 1,702,006 2,499,427
- ---------------------------------------------------------------------------------------------------------
Total liabilities 394,436,375 366,348,897
- ---------------------------------------------------------------------------------------------------------
Commitments
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 2,926,318 in 1999 and 2,926,500 in 1998 31,729,462 31,730,372
- ---------------------------------------------------------------------------------------------------------
Retained earnings 7,189,417 3,735,171
- ---------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income (920,400) 458,592
- ---------------------------------------------------------------------------------------------------------
Total shareholders' equity 37,998,479 35,924,135
- ---------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $432,434,854 402,273,032
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Refer to the appendix to the Peoples Bancorp of North Carolina,Inc. Proxy
Statement, dated April 13, 2000, for a complete set of Consolidated Financial
Statements.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
Consolidated Statements of Earnings
- --------------------------------------------------------------------------------
For the Years Ended December 31,1999 and 1998
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
Interest income:
Interest and fees on loans $28,375,391 24,885,434
- --------------------------------------------------------------------------------
Interest on federal funds sold 338,941 323,149
- --------------------------------------------------------------------------------
Interest on investment securities:
- --------------------------------------------------------------------------------
U.S.Treasuries 50,221 85,079
- --------------------------------------------------------------------------------
U.S.Government agencies 2,297,645 2,236,446
- --------------------------------------------------------------------------------
State and political subdivisions 973,744 881,058
- --------------------------------------------------------------------------------
Other 266,097 803,939
- --------------------------------------------------------------------------------
Total interest income 32,302,039 29,215,105
- --------------------------------------------------------------------------------
Interest expense:
Interest-bearing demand deposits 430,253 547,343
- --------------------------------------------------------------------------------
Savings deposits 2,925,123 2,472,910
- --------------------------------------------------------------------------------
Time deposits 10,653,642 10,596,180
- --------------------------------------------------------------------------------
FHLB borrowings 735,752 874,896
- --------------------------------------------------------------------------------
Other 45,501 48,639
- --------------------------------------------------------------------------------
Total interest expense 14,790,271 14,539,968
- --------------------------------------------------------------------------------
Net interest income 17,511,768 14,675,137
- --------------------------------------------------------------------------------
Provision for loan losses 425,000 445,000
- --------------------------------------------------------------------------------
Net interest income after
provision for loan losses 17,086,768 14,230,137
- --------------------------------------------------------------------------------
Other income:
Service charges 1,326,810 1,186,600
- --------------------------------------------------------------------------------
Other service charges and fees 298,454 281,542
- --------------------------------------------------------------------------------
Gain (loss) on sale of securities (34,824) 168,448
- --------------------------------------------------------------------------------
Mortgage banking income 740,031 1,049,402
- --------------------------------------------------------------------------------
Insurance and brokerage commissions 129,786 152,630
- --------------------------------------------------------------------------------
Miscellaneous 919,804 807,331
- --------------------------------------------------------------------------------
Total other income 3,380,061 3,645,953
- --------------------------------------------------------------------------------
Other expenses:
Salaries and employee benefits 7,737,404 6,353,745
- --------------------------------------------------------------------------------
Occupancy 2,230,448 1,955,803
- --------------------------------------------------------------------------------
Other operating 3,863,652 3,710,861
- --------------------------------------------------------------------------------
Total other expenses 13,831,504 12,020,409
- --------------------------------------------------------------------------------
Earnings before income taxes 6,635,325 5,855,681
- --------------------------------------------------------------------------------
Income tax expense 2,093,380 1,846,483
- --------------------------------------------------------------------------------
Net earnings $4,541,945 4,009,198
================================================================================
Basic and diluted earnings per share $1.55 1.44
================================================================================
Refer to the appendix to the Peoples Bancorp of North Carolina, Inc. Proxy
Statement, dated April 13, 2000, for a complete set of Consolidated Financial
Statements.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
Peoples Bancorp Board of Directors and Officers
- --------------------------------------------------------------------------------
Peoples Bancorp Board of Directors
Robert C. Abernethy - Chairman
- --------------------------------------------------------------------------------
Chairman of the Board, Peoples Bancorp of North Carolina, Inc. and Peoples Bank;
President, Secretary and Treasurer, Carolina Glove Company, Inc. (glove
manufacturer)
James S. Abernethy
- --------------------------------------------------------------------------------
President and Assistant Secretary, Midstate Contractors, Inc. (paving company)
Bruce R. Eckard
- --------------------------------------------------------------------------------
President, Eckard Vending Company, Inc. (vending machine servicer)
John H. Elmore, Jr.
- --------------------------------------------------------------------------------
Chairman of the Board, Chief Executive Officer and Treasurer, Elmore
Construction Co. ,Inc.
B. E. Matthews
- --------------------------------------------------------------------------------
President and Director, Matthews Construction Company of Conover, Inc.
Charles F. Murray
- --------------------------------------------------------------------------------
President, Murray's Hatchery, Inc.
Larry E. Robinson
- --------------------------------------------------------------------------------
President and Chief Executive Officer, Blue Ridge Distributing Co., Inc. (beer
and wine distributor) & President and Chief Executive Officer, Associated
Brands,Inc. (beer and wine distributor)
Fred L. Sherrill, Jr.
- --------------------------------------------------------------------------------
President and Chief Executive Officer, Conover Chair Company, Inc.
Dan Ray Timmerman, Sr.
- --------------------------------------------------------------------------------
President, Timmerman Manufacturing, Inc. (wrought iron furniture manufacturer)
Benjamin I. Zachary
- --------------------------------------------------------------------------------
General Manager, Treasurer, Secretary and Member of the Board of Directors,
Alexander Railroad Company
Peoples Bancorp Officers
Tony W. Wolfe
- --------------------------------------------------------------------------------
President and Chief Executive Officer
Joseph F. Beaman, Jr.
- --------------------------------------------------------------------------------
Executive Vice President, Chief Financial Officer, Corporate Secretary and
Treasurer
George S. Earp
- --------------------------------------------------------------------------------
Vice President and Assistant Treasurer
N. Michael Hamra
- --------------------------------------------------------------------------------
Vice President - Risk Management Services and Assistant Corporate Secretary
Krissy O. Price
- --------------------------------------------------------------------------------
Assistant Vice President and Assistant Corporate Secretary
[PHOTO]
pictured from left: John H. Elmore, Jr., Robert C. Abernethy, and
Bruce R. Eckard
[PHOTO]
pictured from left:
Charles F. Murray, Fred L. Sherrill, Jr., and Benjamin I. Zachary
[PHOTO]
pictured clockwise from left: Dan Ray Timmerman, Sr., Larry E. Robinson, James
S. Abernethy, and B. E. Matthews
18
<PAGE>
- --------------------------------------------------------------------------------
Peoples Bank Board of Directors and Officers
- --------------------------------------------------------------------------------
Peoples Bank Board of Directors
Robert C. Abernethy - Chairman
- --------------------------------------------------------------------------------
Chairman of the Board, Peoples Bancorp of North Carolina, Inc. and Peoples Bank;
President, Secretary and Treasurer, Carolina Glove Company, Inc. (glove
manufacturer)
James S. Abernethy
- --------------------------------------------------------------------------------
President and Assistant Secretary,
Midstate Contractors, Inc. (paving company)
Bruce R. Eckard
- --------------------------------------------------------------------------------
President, Eckard Vending Company, Inc. (vending machine
servicer)
John H. Elmore, Jr.
- --------------------------------------------------------------------------------
Chairman of the Board, Chief Executive Officer and Treasurer, Elmore
Construction Co., Inc.
B. E. Matthews
- --------------------------------------------------------------------------------
President and Director, Matthews Construction Company of Conover, Inc.
Charles F. Murray
- --------------------------------------------------------------------------------
President, Murray's Hatchery, Inc.
Larry E. Robinson
- --------------------------------------------------------------------------------
President and Chief Executive Officer, Blue Ridge Distributing Co., Inc. (beer
and wine distributor) & President and Chief Executive Officer, Associated
Brands, Inc. (beer and wine distributor)
Fred L. Sherrill, Jr.
- --------------------------------------------------------------------------------
President and Chief Executive Officer, Conover Chair
Co., Inc.
Dan Ray Timmerman, Sr.
- --------------------------------------------------------------------------------
President, Timmerman Manufacturing, Inc. (wrought iron
furniture manufacturer)
Benjamin I. Zachary
- --------------------------------------------------------------------------------
General Manager, Treasurer, Secretary and Member of the Board
of Directors, Alexander Railroad Company
Peoples Bank Officers
Tony W. Wolfe*
- --------------------------------------------------------------------------------
President and Chief Executive Officer
Joseph F. Beaman, Jr.*
- --------------------------------------------------------------------------------
Executive Vice President, Chief Financial Officer,
and Corporate Secretary
Lance A. Sellers*
- --------------------------------------------------------------------------------
Executive Vice President - Credit Administration,
Mortgage Lending and Commercial Banking
Clifton A. Wike*
- --------------------------------------------------------------------------------
Senior Vice President - Lending
William D. Cable*
- --------------------------------------------------------------------------------
Senior Vice President - Information Services
Kimberly D. Bazzle
- --------------------------------------------------------------------------------
Vice President - Marketing and Training
Brenda B. Beam
- --------------------------------------------------------------------------------
Vice President - Human Resources
Kimberly L. Boyd
- --------------------------------------------------------------------------------
Vice President - Retail Banking
David E. Reitzel
- --------------------------------------------------------------------------------
Vice President - Real Estate Administration
Nancy A. Anderson
- --------------------------------------------------------------------------------
Vice President - Mortgage Loan Originator
David C. Brown
- --------------------------------------------------------------------------------
Vice President and Certified Financial Planner
Steven F. Cloninger
- --------------------------------------------------------------------------------
Vice President - Credit Administration
Kay F. Deal
- --------------------------------------------------------------------------------
Vice President - Branch Manager, Conover
Duncan B. Dickinson
- --------------------------------------------------------------------------------
Vice President - Peoples Investment Services, Inc.
John R. Duncan, Jr.
- --------------------------------------------------------------------------------
Vice President - Branch Manager, Catawba
George S. Earp
- --------------------------------------------------------------------------------
Vice President - Finance
Barbara K. Farnsworth
- --------------------------------------------------------------------------------
Vice President - Branch Manager,
Triangle Crossing
J. Louis Fletcher
- --------------------------------------------------------------------------------
Vice President - Business Development Officer
Ken R. Gibson
- --------------------------------------------------------------------------------
Vice President - Business Development Officer
N. Michael Hamra
- --------------------------------------------------------------------------------
Vice President - Risk Management
E. Dean Lawing
- --------------------------------------------------------------------------------
Vice President - Mortgage Loan Underwriter
Tommy C. McNeely
- --------------------------------------------------------------------------------
Vice President - Branch Manager, Hiddenite
Cynthia H. McRee
- --------------------------------------------------------------------------------
Vice President - Branch Manager, Maiden
Rick D. Moser
- --------------------------------------------------------------------------------
Vice President - Business Development Officer &
Interim Branch Manager, Viewmont
V. Dean Norman
- --------------------------------------------------------------------------------
Vice President - Network Systems
James O. Perry
- --------------------------------------------------------------------------------
Vice President - Business Development Officer
Daniel F. Richard
- --------------------------------------------------------------------------------
Vice President - Business Development Officer
Jeanette R. Ringley
- --------------------------------------------------------------------------------
Vice President - Branch Manager, Newton Main
Kyle E. Sigmon
- --------------------------------------------------------------------------------
Vice President - Mortgage Loans
Mark W. Sigmon
- --------------------------------------------------------------------------------
Vice President - Business Development Officer & Area Executive
Brenda L. Terrell
- --------------------------------------------------------------------------------
Vice President - Operations Manager
* Designates an executive officer of the Bank
19
<PAGE>
- --------------------------------------------------------------------------------
Peoples Bank Subsidiaries' Board of Directors and Officers
- --------------------------------------------------------------------------------
Peoples Real Estate and Appraisal Services, Inc.
Board of Directors
Robert C. Abernethy
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Dan Ray Timmerman, Sr.
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Tony W. Wolfe
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Peoples Real Estate and Appraisal Services, Inc.
Officers
Tony W. Wolfe
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President
David E. Reitzel
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Vice President
Joseph F. Beaman, Jr.
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Treasurer
Clifton A. Wike
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Secretary
Kyle E. Sigmon
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Assistant Secretary
Peoples Investment Services, Inc.
Board of Directors
Robert C. Abernethy
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Bruce R. Eckard
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Larry E. Robinson
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Tony W. Wolfe
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David C. Brown
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Peoples Investment Services, Inc.
Officers
Tony W. Wolfe
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President
Duncan B. Dickinson
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Vice President
Joseph F. Beaman, Jr.
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Secretary and Treasurer
David C. Brown
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Assistant Secretary
20
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[LOGO OF PEOPLES BANK]
MEMBER FDIC
Catawba*
- -------------------------
106 North Main Street
Catawba,NC 28609
828/241-3123
Claremont*
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3261 East Main Street
Claremont,NC 28610
828/459-7152
Conover*
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213 1st Street West
Conover,NC 28613
828/464-5620
Denver*
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6125 Hwy 16 South
Denver,NC 28037
704/483-3050
Hickory-Springs Road*
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3310 Springs Road NE
Hickory,NC 28601
828/256-9229
Hickory-Viewmont*
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1333 2nd Street NE
Hickory,NC 28601
828/345-6262
Hiddenite*
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5153 NC Hwy 90 E
Hiddenite,NC 28636
704/585-6631
828/632-0118
Lincolnton
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Loan Production Office
228 East Main Street
Lincolnton,NC 28092
704/732-0097
Maiden*
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200 Island Ford Road
Maiden,NC 28650
828/428-9874
Newton*
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Corporate Headquarters
218 South Main Avenue
PO Box 467
Newton,NC 28658
828/464-5620
North Newton
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2619 North Main Avenue
Newton,NC 28658
828/464-5620
Triangle Crossing*
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142 South Hwy 16
Denver,NC 28037
704/483-7727
704/827-2370
* 24 Hour Automated Teller Machine Available
- ----------------------------------------------------------
Off-Site Peoples Bank Automated Teller Machine Locations
- ----------------------------------------------------------
The General Store of Denver,Inc.
6360 East NC Hwy.150 . Sherrills Ford,NC 28673
Catawba Valley Boulevard
2052 Catawba Valley Boulevard,SE . Hickory,NC 28602
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