SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____ to _____
Commission file number 0-16772
PEOPLES BANCORP INC.
(Exact name of Registrant as specified in its charter)
Ohio
(State or other jurisdiction of incorporation or organization)
31-0987416
(I.R.S. Employer Identification No.)
138 Putnam Street, P. O. Box 738, Marietta, Ohio
(Address of principal executive offices)
45750
Zip Code)
Registrant's telephone number, including area code: (614) 373-3155
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, No Par Value (2,895,746 outstanding at February 28, 1995)
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Based upon the closing price of the Common Shares of the
Registrant on the NASDAQ Stock Market as of February 28, 1995,
the aggregate market value of the Common Shares of the
Registrant held by nonaffiliates on that date was $62,093,054.
For this purpose, certain executive officers and directors are
considered affiliates.
Documents Incorporated by Reference:
1) Portions of Registrant's Annual Report to Shareholders for the
fiscal year ended December 31, 1994, are incorporated by reference
into Parts I and II of this Annual Report on Form 10-K.
2) Portions of Registrant's Definitive Proxy Statement relating to
the annual meeting to be held April 4, 1995 are incorporated by reference
into Part III of this Annual Report on Form 10-K.
Exhibit Index Appears on Pages 14 - 15
Page 1 of 68 Pages
PART I
ITEM 1. BUSINESS.
Introduction
Peoples Bancorp Inc. ("Peoples Delaware") was incorporated
under the laws of the State of Delaware on April 1, 1980.
Peoples Delaware was merged, following Stockholder approval,
into Peoples Bancorp Inc., an Ohio corporation (the "Company"),
effective April 6, 1993, pursuant to a reincorporation
proceeding. The Company's principal business is to act as a
multi-bank holding company. Its wholly-owned subsidiaries are
The Peoples Banking and Trust Company, Marietta, Ohio ("Peoples
Bank"), The First National Bank of Southeastern Ohio ("First
National Bank") and The Northwest Territory Life Insurance
Company, an Arizona corporation ("Northwest Territory").
At December 31, 1994, Peoples Bancorp Inc. (parent company
only) had 21 full-time equivalent employees.
The Peoples Banking and Trust Company
Peoples Bank was chartered as an Ohio banking corporation
under its present name in Marietta, Ohio, in 1902. As of
December 31, 1994, Peoples Bank was one of the largest of ____
banks in Washington and Athens Counties, Ohio, and held _______%
of total assets of all banks in those two counties. At December
31, 1994, it had assets of $432,476,000; deposits of
$355,432,000; and net loans of $313,017,000.
Peoples Bank is a full-service commercial bank. It
provides checking accounts, NOW accounts, Super NOW accounts,
money market deposit accounts, savings accounts, time
certificates of deposit, commercial loans, installment loans,
commercial and residential real estate mortgage loans, credit
cards, automatic teller machines, banking by phone, lease
financing, corporate and personal trust services and safe
deposit rental facilities. Peoples Bank also sells travelers
checks, money orders and cashier's checks. Services are
provided through ordinary walk-in offices, automated teller
facilities called "SuperTeller", and automobile drive-in
facilities called "Motor Bank". At December 31, 1994, the Trust
Department of Peoples Bank held approximately $330 million in
trust and custodial accounts apart from the assets of Peoples
Bank.
With all of its offices located in Ohio, Peoples Bank
serves principally Washington, Athens and Meigs Counties,
together with portions of Hocking, Perry and Vinton Counties in
Ohio and adjacent parts of Northern West Virginia. The business
production office in Newark, Ohio, serves that immediate area in
Licking County. Peoples Bank provides services to its customers
at its main office in downtown Marietta and through SuperTeller
and other banking facilities. Full-service branches and
SuperTellers are located at the Frontier Shopping Center and
inside a grocery store at Pike and Acme Streets in Marietta.
A full-service branch, two Motor Banks and a Super-Teller are
operated in Belpre, Ohio. Full-service branches with Motor
Banks are located in Lowell, Reno and Nelsonville, Ohio. A
full-service branch is located at One North Court Street and at
the Athens Mall in Athens, Ohio. The One North Court Street
office also has a SuperTeller machine. In 1993, Peoples Bank
added three SuperTeller machines on the campus of Ohio
University in Athens, Ohio. These locations were operated by
another local bank prior to Peoples Bank assuming operation of
these machines. A full-service bank is located at Middleport,
Ohio.
At December 31, 1994, Peoples Bank had 223 full-time
equivalent employees.
The First National Bank of Southeastern Ohio
First National Bank is a national banking association
chartered in 1900. It provides services and products that are
substantially the same as those of Peoples Bank. It operates a
commercial bank and motor bank at one location at 415 Main
Street, Caldwell, Ohio. It also has a full-service office on
Marion Street in Chesterhill, Ohio. On January 2, 1991, it
acquired a full-service office on Kennebec Street,
McConnelsville, Ohio. Its market area is comprised of Caldwell,
Chesterhill, McConnelsville and the surrounding area in Noble
and Morgan Counties, Ohio. At December 31, 1994, it had assets
of $61,718,000; deposits of $49,179,000; and net loans of
$41,602,000.
At December 31, 1994, First National Bank had 27
full-time equivalent employees.
The Northwest Territory Life Insurance Company
Northwest Territory was organized under Arizona law in
1983 and was issued a Certificate of Authority to act as a
reinsurance company by the State of Arizona on February 8, 1984.
Northwest Territory reinsures credit life and disability
insurance issued to customers of the banking subsidiaries of the
Company by another insurance company. At its fiscal year end of
November 30, 1994, Northwest Territory had total assets of
$1,200,000 and had gross premium income of $238,000 in 1994,
$231,000 in 1993 and $230,000 in 1992. Northwest Territory
reinsures risks (currently not exceeding $15,000 per insured on
a present value basis) within limits established by governmental
regulations and management policy. Northwest Territory has no
employees.
Customers and Markets
The Company's service area has a diverse economic
structure. Principal industries in the area include metals,
plastics and petrochemical manufacturing; oil, gas and coal
production; and related support industries. In addition,
tourism, education and other service-related industries are
important and growing industries. Excellent transportation
facilities, including highway, river and rail, are available and
have helped the area to develop. Consequently, the Company is
not dependent upon any one industry segment for its business
opportunities.
Competition
The banking subsidiaries of the Company experience
significant competition in attracting depositors and borrowers.
Competition in lending activities comes principally from other
commercial banks in the lending areas of the banks and, to a
lesser extent, from savings associations, insurance companies,
governmental agencies, credit union, brokerage firms and pension
funds. The primary factors in competing for loans are interest
rate and overall lending services. Competition for deposits
comes from other commercial banks, savings and loan
associations, money market funds and credit unions as well as
from insurance companies and brokerage firms. The primary
factors in competing for deposits are interest rates paid on
deposits, account liquidity, convenience of office location and
overall financial condition. The Company believes that its
size, overall banking services and financial condition place it
in a favorable competitive position.
Northwest Territory operates in the highly competitive
industry of credit life and disability insurance. A large
number of stock and mutual insurance companies also operating in
this industry have been in existence for longer periods of time
and have substantially greater financial resources than does
Northwest Territory. The principal methods of competition in
the credit life and disability insurance industry are the
availability of coverages and premium rates. The Company
believes Northwest Territory has a competitive advantage due to
the fact that the business of Northwest Territory is limited to
the accepting of life and disability reinsurance ceded in part
to Northwest Territory from the credit life and disability
insurance purchased by loan customers of Peoples Bank and First
National Bank.
Supervision and Regulation
The following is a summary of certain statutes and
regulations affecting the Company and its subsidiaries. The
summary is qualified in its entirety by reference to such
statutes and regulations.
The Company s a bank holding company under the Bank Holding
Company Act of 1956, as amended, which restricts the activities
of the Company and the acquisition by the Company of voting
shares or assets of any bank, savings association or other
company. The Company is also subject to the reporting
requirements of, and examination and regulation by, the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board"). Subsidiary banks of a bank holding company are subject
to certain restrictions imposed by the Federal Reserve Act on
transactions with affiliates, including any loans or extensions
of credit to the bank holding company or any of its
subsidiaries, investments in the stock or other securities
thereof and the taking of such stock or securities as collateral
for loans or extensions of credit to any borrower; the issuance
of guarantees, acceptances or letters of credit on behalf of the
bank holding company and its subsidiaries; purchases or sales of
securities or other assets; and the payment of money or
furnishing of services to the bank holding company and other
subsidiaries. A bank holding company and its subsidiaries are
prohibited from engaging in certain tying arrangements in
connection with extensions of credit and/or the provision of
other property or services to a customer by the bank holding
company or its subsidiaries.
Bank holding companies are prohibited from acquiring
direct or indirect control of more than 5% of any class of
voting stock or substantially all of the assets of any bank
holding company without the prior approval of the Federal
Reserve Board. In addition, acquisitions across state lines are
limited to acquiring banks in those states specifically
authorizing such interstate acquisitions. However, in September
1995, federal law will permit interstate acquisitions of banks,
if the bank acquired retains its separate charter.
As a national bank, First National Bank is supervised and
regulated by the Comptroller of the Currency. As an Ohio
state-chartered bank, Peoples Bank is supervised and regulated
by the Ohio Division of Banks and the Federal Deposit Insurance
Corporation ("FDIC"). The deposits of First National Bank and
Peoples Bank are insured by the FDIC and those entities are
subject to the applicable provisions of the Federal Deposit
Insurance Act. A subsidiary of a bank holding company can be
liable to reimburse the FDIC if the FDIC incurs or anticipates a
loss because of a default of another FDIC-insured subsidiary of
the bank holding company or in connection with FDIC assistance
provided to such subsidiary in danger of default. In addition,
the holding company of any insured financial institution that
submits a capital plan under the federal banking agencies'
regulations on prompt corrective action guarantees a portion of
the institution's capital shortfall, as discussed below.
Various requirements and restrictions under the laws of the
United States and the State of Ohio affect the operations of
Peoples Bank and First National Bank, including requirements to
maintain reserves against deposits, restrictions on the nature
and amount of loans which may be made and the interest that may
be charged thereon, restrictions relating to investments and
other activities, limitations on credit exposure to
correspondent banks, limitations on activities based on capital
and surplus, limitations on payment of dividends, and
limitations on branching. Pursuant to recent federal
legislation, First National Bank may branch across state lines,
if permitted by the law of the other state. In addition,
effective June 1997, such interstate branching by First National
Bank will be authorized, unless the law of the other state
specifically prohibits the interstate branching authority
granted by federal law.
The Federal Reserve Board has adopted risk-based capital
guidelines for bank holding companies and for state member
banks, such as Peoples Bank and First National Bank. The
risk-based capital guidelines include both a definition of
capital and a framework for calculating weighted-risk assets by
assigning assets and off-balance sheet items broad risk
categories. The minimum ratio of total capital to weighted-risk
assets (including certain off-balance sheet items, such as
standby letters of credit) is 8%. At least 4.0 percentage
points is to be comprised of common stockholder's equity
(including retained earnings but excluding treasury stock),
noncumulative perpetual preferred stock, a limited amount of
cumulative perpetual preferred stock, and minority interests in
equity accounts of consolidated subsidiaries, less goodwill and
certain other intangible assets ("Tier 1 capital"). The
remainder ("Tier 2 capital") may consist, among other things, of
mandatory convertible debt securities, a limited amount of
subordinated debt, other preferred stock and a limited amount of
allowance for loan and lease losses. The Federal Reserve Board
also imposes a minimum leverage ratio (Tier 1 capital to total
assets) of 4% for bank holding companies and state member banks
that meet certain specified condition, including no operational,
financial or supervisory deficiencies and including having the
highest regulatory rating. The minimum leverage ratio is 1.0
-2.0% higher for other bank holding companies and state member
banks based on their particular circumstances and risk profiles
and those experiencing or anticipating significant growth.
National bank subsidiaries, such as First National Bank, are
subject to similar capital requirements adopted by the
Comptroller of the Currency, and state non-member bank
subsidiaries, such as Peoples Bank, are subject to similar
capital requirements adopted by the FDIC. Under an outstanding
proposal of the Comptroller and the FDIC to establish an
interest rate component, First National Bank and Peoples Bank
may be required to have additional capital if their interest
rate risk exposure exceeds acceptable levels provided for in the
regulation as adopted.
The Company and its subsidiaries currently satisfy all
capital requirements. Failure to meet applicable capital
guidelines could subject a banking institution to a variety of
enforcement remedies available to federal and state regulatory
authorities, including the termination of deposit insurance by
the FDIC.
The federal banking regulators have established
regulations governing prompt corrective action to resolve
capital deficient banks. Under these regulations, institutions
which become undercapitalized become subject to mandatory
regulatory scrutiny and limitations, which increase as capital
continues to decrease. Such institutions are also required to
file capital plans with their primary federal regulator, and
their holding companies must guarantee the capital shortfall up
to 5% of the assets of the capital deficient institution at the
time it becomes undercapitalized.
The ability of a bank holding company to obtain funds for
the payment of dividends and for other cash requirements is
largely dependent on the amount of dividends which may be
declared by its subsidiary banks and other subsidiaries.
However, the Federal Reserve Board expects the Company to serve
as a source of strength to its subsidiary banks, which may
require it to retain capital for further investment in
subsidiaries, rather than for dividends for the shareholder of
the Company. Peoples Bank and First National Bank may not pay
dividends to the Company if, after paying such dividends, they
would fail to meet the required minimum levels under the
risk-based capital guideline and the minimum leverage ratio
requirements. Peoples Bank and First National Bank must have
the approval of their respective regulative authorities if a
dividend in any year would cause the total dividends for that
year to exceed the sum of the current year's net profits and the
retained net profits for the preceding two years, less required
transfers to surplus. First National Bank may not pay a
dividend either in an amount greater than its net profits then
on hand, after deducting its losses and bad debts, or if less
than 1/10th of net profits for the preceding six months, for a
quarterly or semi-annual dividend, or the preceding year, for an
annual dividend, was transferred to surplus. Payment of
dividends by the bank subsidiaries may be restricted at any time
at the discretion of the regulatory authorities, if they deem
such dividends to constitute an unsafe and/or unsound banking
practice. These provisions could have the effect of limiting
the Company's ability to pay dividends on its outstanding common
shares.
Northwest Territory is chartered by the State of Arizona
and is subject to regulation, supervision and examination by the
Arizona Department of Insurance. The powers of regulation and
supervision of the Arizona Department of Insurance relate
generally to such matters as minimum capitalization, the grant
and revocation of certificates of authority to transact
business, the nature of and limitations on investments, the
maintenance of reserves, the form and content of required
financial statements, reporting requirements and other matters
pertaining to life and disability insurance companies.
Monetary Policy and Economic Conditions
The commercial banking business is affected not only by
general economic conditions, but also by the policies of various
governmental regulatory agencies, including the Federal Reserve
Board. The Federal Reserve Board regulates money and credit
conditions and interest rates in order to influence general
economic conditions primarily through open-market operations in
United States Government securities, changes in the discount
rate on bank borrowings, and changes in the reserve requirements
against bank deposits. These policies and regulations
significantly affect the overall growth and distribution of bank
loans, investments and deposits, and the interest rates charged
on loans, as well as the interest rates paid on deposits and
accounts.
The monetary policies of the Federal Reserve Board have
had a significant effect on the operating results of commercial
banks in the past and are expected to continue to have
significant effects in the future. In view of the changing
conditions in the economy and the money markets and the
activities of monetary and fiscal authorities, no definitive
predictions can be made as to future changes in interest rates,
credit availability or deposit levels.
Statistical Financial Information Regarding the Company
The following listing of statistical financial information,
which is included in the Company's Annual Report to
Shareholders, provides comparative data for the Company over the
past three and five years, as appropriate. These tables should
be read in conjunction with "Management's Discussion and
Analysis" and the Consolidated Financial Statements of the
Company and its subsidiaries found at pages 35 through 39 and 12
through 29, respectively, of the Company's Annual Report to
Shareholders.
Average Balances and Analysis of Net Interest Income:
Please refer to page 31 of the Company's Annual Report to Shareholders.
Rate Volume Analysis:
Please refer to page 32 of the Company's Annual Report to Shareholders.
Loan Maturities:
Please refer to page 32 of the Company's Annual Report to Shareholders.
Average Deposits:
Please refer to page 31 of the Company's Annual Report to Shareholders.
Maturities Schedule of Large Certificates of Deposit:
Please refer to page 32 of the Company's Annual Report to Shareholders.
Loan Portfolio Analysis:
Please refer to pages 33 and 34 of the Company's Annual Report to
Shareholders.
Securities Analysis:
Please refer to pages 18 through 21 and page 38 of the Company's
Annual Report to Shareholders.
Return Ratios:
Please refer to page 9 of the Company's Annual Report to Shareholders.
Short-term Borrowings:
Please refer to page 22 of the Company's Annual Report to Shareholders.
Effect of Environmental Regulation
Compliance with federal, state and local provisions
regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, has not
had a material effect upon the capital expenditures, earnings or
competitive position of the Company and its subsidiaries. The
Company believes that the nature of the operations of its
subsidiaries has little, if any, environmental impact. The
Company, therefore, anticipates no material capital expenditures
for environmental control facilities for its current fiscal year
of for the foreseeable future. The Company's subsidiaries may
be required to make capital expenditures for environmental
control facilities related to properties which they may acquire
through foreclosure proceedings in the future; however, the
amount of such capital expenditures, if any, is not currently
determinable.
ITEM 2. PROPERTIES
The principal office of the Company and Peoples Bank is
located at 138 Putnam Street, Marietta, Ohio. This location
consists of a five-story, stone-block building and one other
smaller building attached by interior corridors. Peoples Bank
also owns several nearby vacant lots for parking and a nearby
Motor Bank. Peoples Bank owns property on which three
additional full-service and two additional Motor Banks are
located, leases the land on which one full-service branch is
located and leases its other full-service branch. Peoples Bank
also owns a two-story, block building on the Public Square in
Nelsonville, Ohio, an additional office in Nelsonville, together
with an office consisting of a two-story concrete structure at
One North Court Street, Athens, Ohio, and a brick full-service
office in the Athens Mall. The building in the Mall is owned by
Peoples Bank on leased real property.
First National Bank owns a three-story office building of
brick and stone at 415 Main Street in Caldwell, Ohio, and a
one-story masonry and brick building constructed in 1969 located
on Marion Street in Chesterhill, Morgan County, Ohio, together
with a two-story brick structure in McConnelsville, Morgan
County, Ohio, located on Kennebec Street.
In 1993, Peoples Bank completed construction of a
five-story addition to its primary facility in downtown
Marietta. The Company and its subsidiaries own other real
property which, when considered in the aggregate, is not
material to their operations. Management believes that these
properties are in satisfactory condition and adequate.
All of the properties occupied by the Company and its
subsidiaries are owned by the Company or its subsidiaries, with
the exception of the office located in The Plains, Ohio, which
is leased under a lease which expires in June, 2001.
ITEM 3. LEGAL PROCEEDINGS.
There are no pending legal proceedings to which the
Company or its subsidiaries are a party or to which any of their
property is subject other than ordinary routine litigation
incidental to their business, none of which is material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Please refer to page 11 of the Company's Annual Report to
Shareholders, which is incorporated by reference herein.
ITEM 6. SELECTED FINANCIAL DATA.
The table of Selected Financial Data on page 9 of the
Company's Annual Report to Shareholders is incorporated herein
by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
Please refer to Pages 35 through 39 of the Company's
Annual Report to Shareholders, which are incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Financial Statements of Peoples Bancorp
Inc. and it subsidiaries, included on pages 12 through 29 of its
Annual Report to Shareholders for the fiscal year ended December
31, 1994, and the Report of Coopers & Lybrand L.L.P. included
therein at page 30 are incorporated herein by reference.
Following is an index to the financial statements included in
the Annual Report to Shareholders for the fiscal year ended
December 31, 1994:
ANNUAL
FINANCIAL STATEMENTS: REPORT PAGES
Peoples Bancorp Inc. and Subsidiaries:
Report of Independent Accountants 30
Consolidated Balance Sheet as of December 31, 1994 and 1993 12
Consolidated Statement of Income for the Three Years Ended
December 31, 1994 13
Consolidated Statement of Stockholders' Equity for the Three
Years Ended December 31, 1994 14
Consolidated Statement of Cash Flows for the Three Years
Ended December 31, 1994 15
Notes to the Consolidated Financial Statements 16 - 29
Peoples Bancorp Inc.: (Parent Company Only Financial
Statements are included in Note 19 to the
Consolidated Financial Statements) 28 - 29
Quarterly financial data set forth at page 10 of the
Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1994, is incorporated herein be reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Directors and Executive Officers of the Company include
those persons enumerated under "Election of Directors" on pages
5 through 7 of the Company's definitive Proxy Statement relating
to the Company's Annual Meeting of Shareholders to be held April
4, 1995, which section is expressly incorporated by reference.
Other Executive Officers are Carol A. Schneeberger (38), Vice
President/Operations, John T. Underwood (55), Vice
President/Business Development, Rolland B. Swart (56), Vice
President/Business Development, John (Jack) W. Conlon (49),
Chief Financial Officer and Jeffrey D. Welch (40), Treasurer.
Ms. Schneeberger became Vice President/Operations of the Company
in October, 1988. Prior thereto, she was Auditor of the Company
from August, 1987 to October, 1988, and Auditor of Peoples Bank
from January, 1986 to October, 1988. She was Assistant Auditor
of Peoples Bank from January, 1979 to January, 1986. Mr.
Underwood joined the Company at his current position in October,
1993. Prior thereto, Mr. Underwood was Executive Vice
President/Operations for Peoples Bank for more than five years
and has 32 years of banking experience. Mr. Swart joined the
Company in October, 1990 at his current position, left this
position in August, 1993, to become an executive vice president
with Peoples Bank, and then rejoined the Company at his current
position in September, 1994. Mr. Conlon has been Chief
Financial Officer of the Company since April, 1991. He has also
been Chief Financial Officer and Treasurer of Peoples Bank for
more than five years. Mr. Welch has been Treasurer of the
Company since 1985. Certain other information called for in
this Item 10 is incorporated herein by reference to the
Company's definitive Proxy Statement under the caption "Security
Ownership of Certain Beneficial Owners and Management" at page 5.
ITEM 11. EXECUTIVE COMPENSATION.
See "Compensation Committee Interlocks and Insider
Participation" and "Compensation of Executive Officers and
Directors" on page 10, and pages 11 through 14, respectively,
of the Proxy Statement relating to the Company's Annual Meeting
of Shareholders to be held April 4, 1995, which are expressly
incorporated by reference.
Neither the report on executive compensation nor the
performance graph included in the Company's definitive Proxy
Statement relating to the Company's Annual Meeting of
Shareholders to be held on April 4, 1995, shall be deemed to be
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
See "Security Ownership of Certain Beneficial Owners and
Management" on pages 2 through 5 of the Company's definitive
Proxy Statement relating to the Company's Annual Meeting of
Shareholders to be held April 4, 1995, which section is
expressly incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See "Transactions Involving Management" on page 8 of
the Company's definitive Proxy Statement relating to the
Company's Annual Meeting of Shareholders to be held April 4,
1995, which section is expressly incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.
a) (1) Financial Statements
For a list of all financial statements
incorporated by reference in this Annual Report on
Form 10-K, see "Index to Financial Statements"
at Page 12.
a) (2) Financial Statement Schedules
All schedules for which provision is made in the
applicable accounting regulations of the
Securities and Exchange Commission are not required
under the related instructions or are
inapplicable and, therefore, have been omitted.
a) (3) Exhibits
Exhibits filed with this Annual Report on Form 10-K
are attached hereto. For a list of such exhibits,
see "Exhibit Index" beginning at page 14. The
following table provides certain information
concerning executive compensation plans and
arrangements required to be filed as exhibits to
this Annual Report on Form 10-K.
Executive Compensation Plans and Arrangements
Exhibit No. Description Location
----------- ----------- --------
10(a) Deferred Compensation Incorporated herein by reference to
Agreement dated November 16, Exhibit 6(g) to Peoples Delaware's
1976 between Robert E. Evans Registration Statement No. 2-68524
The Peoples Banking and on Form S-14.
Trust Company as amended
March 13, 1979.
10(b) Peoples BancorpInc. Incorporated herein by reference to
Retirement Savings Plan. Exhibit 10(b) of the Company's
Annual Report on Form 10-K for
fiscal year ended December 31, 1993
(File No. 0-16772).
10(d) Peoples BancorpInc. Incorporated herein by reference to
Retirement Plan and Trust. Exhibit 10(d) of the Company's
Annual Report on Form 10-K for
fiscal year ended December 31, 1993
(File No. 0-16772).
10(e) Summary of the Incentive Incorporated herein by reference to
Bonus Plan of Peoples Exhibit 10(f) of Peoples Delaware's
Bancorp Inc. Annual Report on Form 10-K for
fiscal year ended December 31, 1992
(File No 0-16772).
10(f) Peoples Bancorp Inc. Amended Incorporated herein by reference to
and Restated 1993 Stock Exhibit 4 of the Company's Form S-8
Option Plan. filed August 25, 1993 (Registration
Statement No. 33-67878).
(b) Reports on Form 8-K
There were no current reports on Form 8-K filed during the fiscal
quarter ended December 31, 1994.
(c) Exhibits
Exhibits filed with this Annual Report on Form 10-K are
attached hereto. For a list of such exhibits, see "Exhibit Index"
beginning at page 14.
(d) Financial Statement Schedules
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 INC.
Date: March 24, 1995 By: /s/ ROBERT E. EVANS
Robert E. Evans, President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Signatures Title Date
---------- ---------------------------- --------------
/s/ ROBERT E. EVANS President and ChiefExecutive March 24, 1995
Robert E. Evans Officer and Director
/s/ JEWELL BAKER Director March 24, 1995
Jewell Baker
___________________ Director March 24, 1995
Dennis D. Blauser
/s/ GEORGE W. BROUGHTON Director March 24, 1995
George W. Broughton
/s/ WILFORD D. DIMIT Director March 24, 1995
Wilford D. Dimit
/s/ BARTON S. HOLL Director March 24, 1995
Barton S. Holl
/s/ NORMAN J. MURRAY Director March 24, 1995
Norman J. Murray
/s/ JAMES B. STOWE Director March 24, 1995
James B. Stowe
/s/ PAUL T. THEISEN Director March 24, 1995
Paul T. Theisen
/s/ THOMAS C. VADAKIN Director March 24, 1995
Thomas C. Vadakin
/s/ JOSEPH H. WESEL Chairman of the Board March 24, 1995
Joseph H. Wesel and Director
/s/ JEFFREY D. WELCH Treasurer March 24, 1995
Jeffrey D. Welch (Principal Accounting Officer)
/s/ JOHN W. CONLON Chief Financial Officer March 24, 1995
John W. Conlon
PEOPLES BANCORP INC.
INDEX TO FINANCIAL STATEMENTS
Annual
Financial Statements: Report Pages
--------------------- ------------
Peoples Bancorp Inc. and Subsidiaries:
Report of Independent Accountants 30
Consolidated Balance Sheet as of
December 31, 1994 and 1993 12
Consolidated Statement of Income for
the Three Years Ended December 31, 1994 13
Consolidated Statement of Stockholders' Equity
for the Three Years Ended December 31, 1994 14
Consolidated Statement of Cash Flows for
the Three Years Ended December 31, 1994 15
Notes to the Consolidated Financial Statements 16 - 29
Peoples Bancorp Inc.: (Parent Company Only
Financial Statements are included in
Note 19 to the Financial Statements) 28 - 29
EXHIBIT INDEX
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1994
Exhibit
Number Description Exhibit Location
------- ------------------------ ---------------------------------------
3 (a) Amended Articles of Incororated herein by reference to
Incorporation of Peoples Exhibit 3(a) to the Company's
BancorpInc. Registration Statement on Form 8-B filed
July 20, 1993 (File No. 0-16772).
3 (b) Regulations of Peoples Incorporated herein by reference to
Bancorp Inc. Exhibit 3(b) to the Company's
Registration Statement on Form 8-B
filed July 20, 1993 (File No.
0-16772).
10 (a) Deferred Compensation Incorporated herein by reference to
Agreement dated November Exhibit 6(g) to Peoples Delaware's
16, 1976, between Robert Registration Statement No.2-68524
E. Evans and The Peoples on Form S-14.
Banking and TrustCompany
as amended March 13, 1979.
10 (b) Peoples Bancorp Inc. Incorporated herein by reference to
Retirement Savings Plan. Exhibit 10(b) of the Company's Annual
Report on Form 10-K for fiscal year
ended December 31, 1993
(File No.0-16772).
10 (c) Amended and Restated Loan Pages 16 to 19.
Agreement dated June 30,
1994, issued by the
Company in favor of Fifth
Third Bank.
10 (d) Peoples Bancorp Inc. Incorporated herein by reference to
Retirement Plan and Trust. Exhibit 10(d) of the Compnay's
Annual Report on Form 10-K for fiscal
year ended December 31, 1993
(File No. 0-16772).
10 (e) Summary of the Incentive Incorporated herein by reference
Bonus Plan Peoples to Exhibit 10(f) of Peoples Delaware's
Bancorp Inc. Annual Report on Form 10-K fiscal year
ended December 31, 1992
(File No. 0-16772).
10 (f) Peoples Bancorp Inc. Incorporated herein by reference
Amended and Restated 1993 to Exhibit 4 of the Company's Form
Stock Option Plan S-8 filed August 25, 1993
(Registration Statement No. 33-67878).
11 Computation of Earnings Page 20.
Per Share.
13 Peoples Bancorp Inc. Page 21.
Annual Report to
Shareholders for the
fiscal year ended
December 31, 1994 (not
deemed filed except for
portions thereof which are
specifically incorporated
by reference into this
Annual Report on
Form 10-K).
21 Subsidiaries of Peoples Page 66.
Bancorp Inc.
23 Consent of Independent Page 67.
Accountants.
27 Financial Data Schedule Page 68.
(information mandatory as
SEC EDGAR filer).
THE FOLLOWING INFORMATION IS PRESENTED AS THE PROXY STATEMENT
TO SHAREHOLDERS DATED MARCH 6, 1995.
PEOPLES BANCORP INC.
POST OFFICE BOX 738
MARIETTA, OHIO 45750
(614) 374 - 3155
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
PEOPLES BANCORP INC.
Marietta, Ohio
March 6, 1995
To the Shareholders of Peoples Bancorp Inc.:
You are cordially invited to attend the Annual Meeting of
Shareholders (the "Annual Meeting") of Peoples Bancorp Inc. (the
"Company") to be held at 10:00 a.m., local time, on Tuesday,
April 4, 1995, in the Conference Room of The Peoples Banking and
Trust Company, 235 Second Street, Marietta, Ohio, for the
following purposes:
1. To elect the following Directors for terms of three years each:
Nominee Term Expires In
------- ---------------
Robert E. Evans (for re-election) 1998
Paul T. Theisen (for re-election) 1998
Thomas C. Vadakin (for re-election) 1998
2. To approve the Peoples Bancorp Inc. 1995 Stock Option Plan.
3. To transact such other business as may properly come before
the Annual Meeting and any adjournment or adjournments thereof.
Shareholders of record at the close of business on February 1,
1995, will be entitled to notice of and to vote at the Annual
Meeting and any adjournment or adjournments thereof.
You are cordially invited to attend the Annual Meeting. The
vote of each shareholder is important, whatever the number of
common shares held. Whether or not you plan to attend the
Annual Meeting, please sign, date and return your Proxy promptly
in the enclosed envelope.
The Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1994, accompanies this Notice and Proxy Statement.
By Order of the Board of Directors,
/s/ RUTH I. OTTO
Ruth I. Otto
Corporate Secretary
PEOPLES BANCORP INC.
138 Putnam Street
Marietta, Ohio 45750
(614) 373-3155
PROXY STATEMENT
This Proxy Statement and the accompanying proxy are being
mailed to shareholders of Peoples Bancorp Inc., an Ohio
corporation (the "Company"), on or about March 6, 1995, in
connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") called to be
held on Tuesday, April 4, 1995, or at any adjournment or
adjournments thereof. The Annual Meeting will be held at 10:00
a.m., local time, in the Conference Room of The Peoples Banking
and Trust Company, 235 Second Street, Marietta, Ohio.
The Company has three wholly-owned subsidiaries. They include
The Peoples Banking and Trust Company ("Peoples Bank"), The
First National Bank of Southeastern Ohio ("First National") and
The Northwest Territory Life Insurance Company ("Northwest
Territory").
A proxy for use at the Annual Meeting accompanies this Proxy
Statement and is solicited by the Board of Directors of the
Company. Shareholders of the Company may use their proxies if
they are unable to attend the Annual Meeting in person or wish
to have their common shares of the Company voted by proxy even
if they do attend the Annual Meeting. Without affecting any
vote previously taken, any shareholder executing a proxy may
revoke it at any time before it is voted by filing with the
Secretary of the Company, at the address of the Company set
forth on the cover page of this Proxy Statement, written notice
of such revocation; by executing a later-dated proxy which is
received by the Company prior to the Annual Meeting; or by
attending the Annual Meeting and giving notice of such
revocation in person. Attendance at the Annual Meeting will
not, in and of itself, constitute revocation of a proxy.
Only shareholders of the Company of record at the close of
business on February 1, 1995 (the "Record Date"), are entitled
to receive notice of and to vote at the Annual Meeting and any
adjournment or adjournments thereof. At the close of business
on the Record Date, 2,897,846 common shares were outstanding and
entitled to vote. Each common share entitles the holder thereof
to one vote on each matter to be submitted to shareholders at
the Annual Meeting. A quorum for the Annual Meeting is a
majority of the common shares outstanding. There is no
cumulative voting with respect to the election of directors.
Under the rules of the Securities and Exchange Commission (the
"SEC"), boxes are provided on the form of proxy for shareholders
to mark if they wish either to abstain on a proposal presented
for shareholder approval or to withhold authority to vote for
one or more nominees for election as a director of the Company.
Common shares as to which the authority vote is withheld will be
counted for quorum purposes; however, the effect of an
abstention on the proposal to approve the Peoples Bancorp Inc.
1995 Stock Option Plan is the same as a "no" vote.
Broker/dealers, who hold their customers' common shares in
street name, may, under the applicable rules of the
self-regulatory organizations of which the broker/dealers are
members, submit and sign proxies for such common shares and may
vote such common shares on routine matters, which, under such
rules, typically include the election of directors, but
broker/dealers may not vote such common shares on other matters,
which typically include the approval of compensation plans,
without specific instructions from the customer who owns such
common shares. Proxies signed and submitted by broker/dealers
which have not been voted on certain matters as described in the
previous sentence are referred to as broker non-votes. Such
proxies count toward the establishment of a quorum. Broker
non-votes on the proposal to approve the Peoples Bancorp Inc.
1995 Stock Option Plan will not be considered as votes entitled
to be cast in determining the outcome of that proposal.
As of the date of this Proxy Statement, the Board of Directors
of the Company does not know of any business to be brought
before the Annual Meeting except as set forth in this Proxy
Statement. However, if any matters other than those referred to
in this Proxy Statement should properly come before such Annual
Meeting, or any adjournment or adjournments thereof, it is
intended that the persons named as proxies in the enclosed proxy
may vote the common shares represented by said proxy on such
matters in accordance with their best judgment in light of the
conditions then prevailing.
The Company will bear the costs of preparing and mailing this
Proxy Statement, the accompanying proxy and any other related
materials and all other costs incurred in connection with the
solicitation of proxies on behalf of the Board of Directors.
Proxies will be solicited by mail and may be further solicited,
for no additional compensation, by officers, directors, or
employees of the Company and its subsidiaries by further
mailing, by telephone, or by personal contact. The Company will
also pay the standard charges and expenses of brokerage houses,
voting trustees, banks, associations and other custodians,
nominees, and fiduciaries, who are record holders of common
shares not beneficially owned by them, for forwarding such
materials to and obtaining proxies from the beneficial owners of
common shares entitled to vote at the Annual Meeting.
The Annual Report to the Shareholders of the Company for the
fiscal year ended December 31, 1994 (the "1994 fiscal year") is
enclosed herewith.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, certain
information concerning the beneficial ownership of common shares
by the only person known to the Company to be the beneficial
owner of more than 5% of the outstanding common shares:
Name and Amount and Percent
Address of Nature of of
Beneficial Owner Beneficial Ownership Class<F1>
---------------- -------------------- ---------
Peoples Bank - Trustee 362,636(F2) 12.5%
138 Putnam Street
Marietta, Ohio 45750
[FN]
<F1> The percent of class is based on 2,897,846 common sharesoutstanding on
the Record Date.
<F2> Includes 107,159 common shares, 191,914 common shares, 55,843
common shares and 7,720 common shares as to which the Trust
Department of Peoples Bank has shared investment and sole voting
power, shared investment and voting power, sole voting and
investment power, and sole investment and shared voting power,
respectively. The officers and directors of Peoples Bank and
the Company disclaim beneficial ownership of these common shares
by reason of their positions. Does not include 98,935 common
shares held by the Trust Department in its capacity as Trustee
under the Peoples Bancorp Inc. Retirement Savings Plan with
respect to which the Trust Department has neither voting nor
investment power.
[/FN]
The following table sets forth, as of the Record Date, certain
information with respect to the common shares beneficially owned
by each director of the Company, by each nominee for election as
a director of the Company, by the executive officer of the
Company named in the Summary Compensation Table and by all
executive officers and directors of the Company as a group:
Amount and Nature of Beneficial Ownership<F1>
Common Shares
Common Which Can Be Acquired
Shares Upon Exercise of
Presently Options Eercisable Percent
Name Held Within 60 Days Total of Class<F2>
---- ---------- --------------------- ------ -----------
Jewell Baker 9,936 440 10,376 <F3>
Dennis D. Blauser 7,213<F4> 440 7,653 <F3>
George W. Broughton 39,692<F5> 420 40,112 1.4%
Wilford D. Dimit 3,942<F6> 440 4,382 <F3>
Robert E. Evans<F7> 47,799<F8> 4,000 51,799 1.8%
Barton S. Holl 3,838<F9> 440 4,278 <F3>
Norman J. Murray 3,726<F10> 440 4,166 <F3>
James B. Stowe 12,416<F11> 440 12,856 <F3>
Paul T. Theisen 8,110 440 8,550 <F3>
Thomas C. Vadakin 1,534<F12> 440 1,974 <F3>
Joseph H. Wesel 29,329<F13> 440 29,769 1.0%
All directors and
executive officers
as a group
(numbering 16) 178,618<F14> 17,430 196,048 6.8%
[FN]
<F1> Unless otherwise noted, the beneficial owner has sole voting and
investment power with respect to all of the common shares
reflected in the table. All fractional common shares have been
rounded to the nearest whole common share.
<F2> The percent of class is based upon 2,897,846 common shares
outstanding on the Record Date and the number of common shares,
if any, as to which the named person has the right to acquire
beneficial ownership upon the exercise of options exercisable
within 60 days of the Record Date.
<F3> Reflects ownership of less than 1% of the outstanding common shares.
<F4> Includes 5,358 common shares held jointly by Mr. Blauser with
his wife as to which he exercises shared voting and investment
power and 784 common shares held in an IRA owned by Mr. Blauser.
Does not include 2,933 common shares held of record and
beneficially owned by Mr. Blauser's wife as to which he has no
voting or investment power and disclaims beneficial ownership.
<F5> Does not include 5,856 common shares held of record and
beneficially owned by Mr. Broughton's wife. Also does not
include 8,664 common shares held in the George Broughton's
Children's Trust, an irrevocable trust with Peoples Bank as
Trustee. Peoples Bank exercises sole voting and investment
power with respect to the common shares held in the George
Broughton's Children's Trust and said common shares are included
among the common shares shown as beneficially owned by Peoples
Bank in the preceding table. Also does not include 9,076 common
shares held of record by the Broughton Foods Company Pension
Trust B, as to which Mr. Broughton has no voting or investment
power and disclaims beneficial ownership.
<F6> Includes 660 common shares held jointly by Mr. Dimit with his
wife as to which he exercises shared voting and investment
power.
<F7> Executive officer of the Company named in the Summary
Compensation Table.
<F8> Includes 8,613 common shares allocated to the account of Mr.
Evans in the Peoples Bancorp Inc. Retirement Savings Plan with
respect to which Mr. Evans has the power to direct the voting
and disposition. Does not include 5,980 common shares held of
record and owned beneficially by Mr. Evans' wife and 1,426
common shares held by Mr. Evans' wife as custodian for their
son, as to which common shares Mr. Evans has no voting or
investment power and disclaims beneficial ownership.
<F9> Includes 742 common shares held jointly by Mr. Holl with his
wife as to which he exercises shared voting and investment
power.
<F10> Does not include 7,452 common shares held of record and
beneficially owned by Mr. Murray's wife and 1,600 common shares
held of record and beneficially owned by Mr. Murray's daughter.
Mr. Murray has no voting or investment power with respect to
these common shares and disclaims beneficial ownership thereof.
<F11> Includes 4,954 common shares held jointly by Mr. Stowe with his
wife as to which he exercises shared voting and investment
power. Does not include 17,998 common shares held of record and
beneficially owned by Mr. Stowe's wife as to which he has no
voting or investment power and disclaims beneficial ownership.
<F12> Does not include 14,138 common shares held of record and
beneficially owned by Mr. Vadakin's wife and 2,178 common shares
held by Mr. Vadakin's wife as custodian for her son, as to which
common shares Mr. Vadakin has no voting or investment power and
disclaims beneficial ownership.
<F13> Does not include 6,062 common shares held of record and
beneficially owned by Mr. Wesel's wife as to which he has no
voting or investment power and disclaims beneficial ownership.
Does not include 10,286 common shares held of record by the
Marietta Ignition, Inc. Pension Plan as to which Mr. Wesel has
no voting or investment power and disclaims beneficial
ownership. Mr. Wesel serves as a member of the Administrative
Committee for the Marietta Ignition, Inc. Pension Plan. Peoples
Bank shares voting power with respect to the common shares held
in the Marietta Ignition, Inc. Pension Plan with the Plan
Administrator and said common shares are included among the
common shares shown as beneficially owned by Peoples Bank in the
preceding table.
<F14> Includes common shares held jointly by directors and executive
officers and other persons. Also includes 16,112 common shares
allocated to the respective accounts of executive officers of
the Company in the Peoples Bancorp Inc. Retirement Savings Plan.
See notes (4), (5), and (7) through (13) above.
[/FN]
To the Company's knowledge, based solely on a review of the
copies of the reports furnished to the Company and written
representations that no other reports were required, during the
1994 fiscal year, all filing requirements applicable to
officers, directors and greater than 10% beneficial owners of
the Company under Section 16(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), were complied with;
except that: 1) the Form 3, dated April 12, 1994, and filed on
behalf of George W. Broughton, a director of the Company,
inadvertently omitted 760 common shares held in his account with
a brokerage firm. The omission was reported as a Form 3 holding
on a Form 5, dated February 13, 1995, in which the number of
common shares reported was 1,520, reflecting the two for one
stock split of April 15, 1994; and 2) Rolland B. Swart, an
executive officer of the Company, left the reporting system
effective August 1, 1993, when he changed his position with the
Company and Peoples Bank, and was reported as such on a Form 5
dated February 10, 1994. Mr. Swart again changed his position
with the Company and Peoples Bank, and became subject to the
reporting system on September 16, 1994. However, his initial
Form 3 holdings were reported late in a Form 5 dated February
13, 1995.
ELECTION OF DIRECTORS
(Item 1 on Proxy)
In accordance with Section 2.02 of the Regulations of the
Company, three directors of Class III are to be elected to hold
office for terms of three years each, in each case until their
respective successors are duly elected and qualified. It is the
intention of the persons named in the accompanying proxy to vote
the common shares represented by the proxies received pursuant
to this solicitation for the nominees named below who have been
designated by the Board of Directors, unless otherwise
instructed on the proxy.
The following table gives certain information concerning each
nominee for election as a director of the Company. Unless
otherwise indicated, each person has held his principal
occupation for more than five years.
Position(s) Held For
With the Company and Director Term
its Subsidiaries and Continuously Expiring
Nominee Age Principal Occupation(s) Since In
------- --- ----------------------- ----- --
Robert E. Evans 54 President and Chief Executive 1980 1998
Officer of the Company and
of Peoples Bank; Chairman of
the Board of Northwest
Territory.<F1>
Paul T. Theisen 64 President and Shareholder of 1980 1998
Theisen, Brock, Frye, Erb
& Leeper Co., L.P.A.
Attorneys at Law, Marietta,
Ohio.<F2>
Thomas C. 63 President of Vadakin Inc., 1989 1998
Vadakin Marietta, Ohio, a heavy
industrial cleaning service;
Director, The Airolite
Company, Marietta, Ohio,
a manufacturer of ventilating
louvers.<F3>
[FN]
<F1> Mr. Evans is also a director of Peoples Bank, First National and
Northwest Territory.
<F2> Mr. Theisen is also a director of Peoples Bank and First National.
<F3> Mr. Vadakin is also a director of Peoples Bank.
[/FN]
While it is contemplated that all nominees will stand for
election, if one or more nominees at the time of the Annual
Meeting should be unavailable or unable to serve as a candidate
for election as a director, the proxies reserve full discretion
to vote the common shares represented by the proxies for the
election of the remaining nominees and for the election of any
substitute nominee or nominees designated by the Board of
Directors. The Board of Directors knows of no reason why any of
the above-mentioned persons will be unavailable or unable to
serve if elected to the Board.
Under Ohio law and the Company's Regulations, the three
nominees for election as Class III directors receiving the
greatest number of votes will be elected as directors.
The following table gives certain information concerning the
current directors who will continue to serve after the Annual
Meeting. Unless otherwise indicated, each person has held his
or her principal occupation for more than five years.
Position(s) Held For
With the Company and Director Term
its Subsidiaries and Continuously Expiring
Name Age Principal Occupation(s) Since In
---- --- ----------------------- ------------ --------
Jewell Baker 71 Co-Owner of B & N Coal 1990 1996
Company, Dexter City,
Ohio, a mining and
energy producer;
Director of First National
Bank of Caldwell from 1984
to 1989; Director of
First National from 1989
to 1990.
Dennis D. Blauser 69 President of Blauser Energy 1987 1996
Corp., Marietta, Ohio,
an oil and gas producer;
President of Blauser Well
Service, Inc., Marietta, Ohio,
a servicer of oil and gas
wells; Chairman of the Board
of Marietta Structures
Corporation, Marietta, Ohio,
a builder of bridge beams,
prestressed concrete beams and
pre-engineered siding for
buildings and industrial and
farm silos.
George W. 37 Director and Executive Vice 1994 1997
Broughton President/Sales and
Marketing, Broughton
Foods Co., a processor
and distributor of dairy
products; Director of
SBR, Inc., maker of
replacement windows and
owner of "Wood Crafters"
catalog and stores.<F1>
Wilford D. Dimit 61 President of First 1993 1997
Settlement, Inc., Marietta,
Ohio, a retail clothing
store and restaurant.<F1>
Barton S. Holl 71 Chairman of the Board of 1990 1997
Logan Clay Products, Inc.,
Logan, Ohio, a manufacturer
of clay products.
Norman J. Murray 77 Former President and Chairman 1980 1996
of the Board of The Airolite
Co., Marietta, Ohio, a
manufacturer of ventilating
louvers, retired in 1994;
Chairman of the Board of
Peoples Bank since 1990.<F1>
James B. Stowe 74 Chairman of the Board of 1980 1997
Stowe Truck and Equipment
Co., Marietta, Ohio, a
company which sells heavy
duty trucks and lawn and
garden equipment.<F1>
Joseph H. Wesel 65 Chairman and Chief Executive 1980 1996
Officer of Marietta
Automotive Warehouse, Inc.,
Marietta, Ohio, an
automotive parts wholesaler;
President of Auto Paints
Works Inc., Marietta, Ohio,
a wholesaler/ retailer of
auto paint and body shop
supplies; President of
W.D.A., Inc., Marietta, Ohio,
a real estate holding company;
Director, Marietta Ignition,
Inc., a wholesaler/retailer
of automotive parts and
industrial supplies;
Chairman of the Board of
the Company since 1991.<F1>
[FN]
<F1> Also a director of Peoples Bank.
[/FN]
There is no family relationship between any director, executive
officer, or person nominated or chosen to become a director or
executive officer of the Company.
The Board of Directors of the Company held a total of thirteen
(13) meetings during the Company's 1994 fiscal year. Each
incumbent director attended 75% or more of the aggregate of the
total number of meetings held by the Board of Directors during
the period he or she served as a director and the total number
of meetings held by all committees of the Board of Directors on
which he or she served during the period he or she served except
Jewell Baker (54%).
The Board of Directors of the Company has an Audit Committee
comprised of Jewell Baker, Dennis D. Blauser, George W.
Broughton, Wilford D. Dimit, Barton S. Holl, Norman J. Murray,
James B. Stowe and Joseph H. Wesel (Mr. Wesel serves as an
ex-officio member). The function of the Audit Committee is to
assist the Audit Department of the Company in the annual review
of the loan portfolio of each subsidiary bank, to review the
work schedule of the Audit Department as to when audits of the
subsidiaries are to be conducted and the adequacy of such
audits, to review the adequacy of the Company's system of
internal controls, to investigate the scope and adequacy of the
work of the Company's independent public accountants, and to
recommend to the Board of Directors a firm of accountants to
serve as the Company's independent public accountants. The
Audit Committee met five (5) times during the Company's 1994
fiscal year.
The Board of Directors of the Company has a Compensation
Committee comprised of Norman J. Murray, Paul T. Theisen, Thomas
C. Vadakin and Joseph H. Wesel. The function of the
Compensation Committee is to review and recommend for approval
by the Board of Directors salaries, bonuses, employment
agreements and employee benefit plans for officers and
employees, to supervise the operation of the Company's
compensation plans, to select those eligible employees who may
participate in each plan (where selection is required) and to
prescribe (where permitted under the terms of the plan) the
terms of any stock options granted under any stock option plan
of the Company. The Compensation Committee met two (2) times
during the Company's 1994 fiscal year.
The Board of Directors does not have a standing nominating
committee or committee performing similar functions.
TRANSACTIONS INVOLVING MANAGEMENT
Paul T. Theisen is President and a shareholder in the law firm
of Theisen, Brock, Frye, Erb & Leeper Co., L.P.A. which rendered
legal services to the Company and its subsidiaries during the
Company's 1994 fiscal year and is expected to render legal
services to the Company and its subsidiaries during the
Company's 1995 fiscal year.
During the Company's 1994 fiscal year, its subsidiaries,
Peoples Bank and First National, entered into banking
transactions, in the ordinary course of their respective
businesses, with certain executive officers and directors of the
Company, with members of their immediate families and with
corporations for which directors of the Company serve as
executive officers. It is expected that similar banking
transactions will be entered into in the future. Loans to such
persons have been made on substantially the same terms,
including the interest rate charged and the collateral required,
as those prevailing at the time for comparable transactions with
persons not affiliated with the Company or its subsidiaries.
These loans have been subject to, and are presently subject to,
no more than a normal risk of uncollectibility and present no
other unfavorable features, other than as described in the
following paragraph. The aggregate amount of loans to directors
and executive officers of the Company and their associates as a
group at December 31, 1994, was $5,929,531. As of the date
hereof, all of such loans are performing loans.
Included in the aggregate amount of loans to directors and
executive officers of the Company at December 31, 1994, were
$2,695,897 of loans to Dennis D. Blauser, one of the Company's
directors, and corporations with which he is associated, which
loans are considered by management to be potential problem
loans. In the ordinary course of business, Peoples Bank made
loans to Mr. Blauser and corporations of which he has direct
control. All loans are considered to be performing and current
as of the date hereof. The outstanding loan balances as of
December 31, 1994, to Mr. Blauser and his associated
corporations were as follows: Marietta Structures Corporation,
of which Mr. Blauser is Chairman of the Board, an aggregate of
$2,073,252 at interest rates ranging from 10.25% to 11.00%;
Blauser Well Service Inc., of which Mr. Blauser is President, an
aggregate of $51,599 at interest rates ranging from 6.75% to
9.75%; and Marietta Resources Corporation, of which Mr. Blauser
is President, $24,442 at an interest rate of 10.25%; and a
$476,000 line of credit extended to Mr. Blauser personally at an
interest rate of 9.75%. The remaining loan balances were
personal loans in the aggregate of $70,604.00 at an interest
rate of 9.75%. During the 1994 fiscal year, Mr. Blauser and the
above corporations made payments in the aggregate of $262,887 on
the outstanding loan balances. The largest aggregate amount of
indebtedness by Mr. Blauser and these corporations to Peoples
Bank during the 1994 fiscal year was $2,782,777.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of
the Company's previous filings under the Securities Act of 1933,
as amended, or the Exchange Act that might incorporate future
filings, including this Proxy Statement, in whole or in part,
this Report and the graph set forth on page 15 shall not be
incorporated by reference into any such filings.
In November of 1992, a sub-committee of the Executive Committee
of the Company's Board of Directors was given additional duties
by the Board to act as the Board's Compensation Committee (the
"Committee"). Prior to April 5, 1994, the members of the
Committee were Carl L. Broughton, Norman J. Murray, Paul T.
Theisen, and Joseph H. Wesel, none of whom are compensated
executive officers or employees of the Company or its
subsidiaries. In 1994, Thomas C. Vadakin was appointed to the
Committee to replace Carl L. Broughton, who retired April 5,
1994. Mr. Murray is Chairman of the Board of Peoples Bank and
Mr. Wesel is Chairman of the Board of the Company. The
Committee is to meet periodically to review and recommend for
approval by the Board of Directors salaries, bonuses, employment
agreements and employee benefits plans for officers and
employees, including executive officers of the Company. The
Committee also supervises the operation of the Company's
compensation plans, selects those eligible employees who may
participate in each plan (where selection is permitted) and
prescribes (where permitted under the terms of the plan) the
terms of any stock options granted under any stock option plan
of the Company.
Section 162(m) of the Internal Revenue Code of 1986, as
amended, prohibits a publicly held corporation, such as the
Company, from claiming a deduction on its federal income tax
return for compensation in excess of $1 million paid for a given
fiscal year to the chief executive officer (or person acting in
that capacity) at the close of the corporation's fiscal year and
the four most highly compensated officers of the corporation,
other than the chief executive officer, at the end of the
corporation's fiscal year. The $1 million compensation deduction
limitation does not apply to "performance-based compensation."
The proposed regulations issued by the Internal Revenue Service
under Section 162(m) on December 15, 1993, which were amended on
December 2, 1994 (the "Proposed IRS Regulations") set forth a
number of provisions which compensatory plans, such as the
Incentive Bonus Plan, the Peoples Bancorp Inc. 1993 Stock Option
Plan, and the proposed Peoples Bancorp Inc. 1995 Stock Option
Plan, must contain if the compensation paid under such plans is
to qualify as performance-based for the purposes of Section
162(m). In order to qualify as "performance-based" under the
proposed IRS Regulations, the compensation must be paid solely
on account of the attainment of one or more performance goals
set by a compensation committee comprised solely of two (2) or
more outside directors. The performance goals must be approved
by a majority of shareholders prior to payment of the
remuneration and the compensation committee must certify to the
satisfaction of the goals. Due to the fact that all executive
officers of the Company receive compensation at levels
substantially below the $1,000,000 deductibility limit, the
Committee does not propose at this time to present for
shareholder approval performance goals such as those provided in
the Incentive Bonus Plan discussed below. The Company has
determined that it is not necessary to modify the Peoples
Bancorp Inc. 1993 Stock Option Plan at this time since
compensation paid to executive officers under that Plan would be
exempted under the transition provisions of Section 162(m) and
the proposed IRS Regulations and, therefore, deductible. The
Company is seeking shareholder approval of the proposed Peoples
Bancorp Inc. 1995 Stock Option Plan in a good faith effort to
qualify compensation received thereunder as "performance-based"
for purposes of Section 162(m). If the Peoples Bancorp Inc.
1995 Stock Option Plan is not approved by the shareholders, that
Plan will be null and void. The Committee will rely from time
to time upon advice of the Company's General Counsel regarding
the appropriateness of presenting the Incentive Bonus Plan, or
any similar plan, to shareholders.
The Committee operates under the principle that the
compensation of executive officers should be directly and
significantly related to the financial performance of the
Company. The compensation philosophy of the Company reflects a
commitment to reward executive officers for performance through
cash compensation and through plans designed to enhance the
long-term commitment of officers and employees to the Company
and its subsidiaries. The cash compensation program for
executive officers consists of two elements, a base salary
component and an incentive component payable under the Incentive
Bonus Plan. The combination of base salary and incentive
compensation is designed to relate total cash compensation
levels to the performance of the Company, its subsidiaries and
the individual executive officer. The salaries of executive
officers of the Company, including Mr. Evans' salary, have
remained without substantial adjustment for a number of years,
except for limited increases reflecting cost of living rises and
special meritorious increases or adjustments reflecting
increased responsibilities and promotions. This philosophy was
reflected in Mr. Evans' 1994 base salary, which increased only
4.0% from the prior year. This adjustment was designed to
reflect cost of living increases. Primary reliance has been
placed on the Incentive Bonus Plan for compensation adjustments.
The Incentive Bonus Plan was established in 1988 for certain
senior officers of the Company and its subsidiaries, including
Mr. Evans and the other executive officers of the Company. The
purpose of the Plan is to base compensation, in part, on the
profit performance of the Company. Each year, in January, the
Committee establishes minimum levels of return on equity and net
income which must be met before any incentive bonus is paid. In
1994, the Incentive Bonus Plan required the attainment of a
minimum return on equity of 10.00%, a minimum return on assets
of 1.05%, and income growth based on the highest dollar net
income from either the preceding year or any of the four years
prior to 1994 increasing such year by a 5% compounding factor.
If such minimum levels are met, each officer receives an
incentive bonus equal to a predetermined percentage of salary,
based on the amount by which net income exceeds the minimum
level, up to an approximate maximum of 23% of salary.
Consequently, higher net income creates higher incentive
bonuses. The goals set for 1994 were exceeded and, based upon
the amount by which net income exceeded the minimum level, Mr.
Evans' incentive bonus was approximately 13.5% of his base
salary.
The Company's long-term compensation program consists primarily
of stock options granted under the Company's 1993 Stock Option
Plan (the "1993 Plan"). The Committee believes that stock
ownership by members of the Company's management and stock-based
performance compensation arrangements are important in aligning
the interests of management with those of shareholders,
generally in the enhancement of shareholder value. Options are
granted under the 1993 Plan with an exercise price equal to the
fair market value of the Company's common shares on the date of
grant. If there is no appreciation in the fair market value of
the Company's common shares, the options are valueless. The
Committee granted options based upon its subjective
determination of the relative current and future contribution
each officer has or may contribute to the long-term welfare of
the Company.
In addition to the 1993 Plan, on November 10, 1994, the
Committee approved a recommendation for the Board to adopt the
Peoples Bancorp Inc. 1995 Stock Option Plan (the "1995 Plan"),
included in this Proxy Statement as Annex A. The 1995 Plan,
which was adopted subject to shareholder approval, is designed
to further enhance the long-term compensation for contributions
made by employees of the Company. Incentive stock options will
be granted under the 1995 Plan with an exercise price equal to
the fair market value of the Company's common shares on the date
of grant. No determination has been made with respect to which
employees will be granted incentive stock options or how many
stock options will be granted to any particular employee.
In order to further enhance Mr. Evans' long-term commitment to
Peoples Bank, Peoples Bank entered in a Deferred Compensation
Agreement with him in 1976. Under this Agreement, Mr. Evans
agreed to serve Peoples Bank as an employee until he reaches age
65 or until his earlier retirement, disability or death and
agreed not to engage in activities in competition with Peoples
Bank. The amount of $5,000 is automatically accrued to Mr.
Evans' account upon the completion of each year of service to
Peoples Bank until he reaches normal retirement age.
At various times in the past, the Company has adopted certain
broad-based employee benefit plans in which the Company's
executive officers are permitted to participate on the same
terms as non-executive officer employees who meet applicable
eligibility criteria, subject to legal limitations on the
amounts that may be contributed or the benefits that may be
payable under the plans.
To enhance the long-term commitment of the officers and
employees of the Company and its subsidiaries, the Company
established the Peoples Bancorp Inc. Retirement Savings Plan
(the "Peoples 401(k) Plan") on December 31, 1985. Mr. Evans, as
well as all officers and employees of the Company and its
subsidiaries, may participate in the Peoples 401(k) Plan.
Company matching contributions and participant contributions may
be invested in common shares providing each participant with
motivation toward safe and sound long-term growth of the
Company. Company matching contributions may vary at the
discretion of the Board of Directors.
Submitted by the Compensation Committee of the Company's Board of Directors:
Norman J. Murray, Paul T. Theisen, Thomas C. Vadakin, and Joseph H. Wesel.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Carl L. Broughton, who served as Chairman of the Board of the
Company from 1988 to 1990, served as a member of the
Compensation Committee until his retirement from the Company's
Board of Directors on April 5, 1994. Norman J. Murray, Chairman
of the Board of Peoples Bank, also serves as a member of the
Compensation Committee. Joseph H. Wesel, Chairman of the Board
of the Company, also serves as a member of the Compensation
Committee. Paul T. Theisen, who is President and a shareholder
in the law firm of Theisen, Brock, Frye, Erb & Leeper Co.,
L.P.A. which rendered legal services to the Company and its
subsidiaries during the Company's 1994 fiscal year and is
expected to render legal services to the Company and its
subsidiaries during the Company's 1995 fiscal year, also serves
as a member of the Compensation Committee.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary of Cash and Certain Other Compensation
The following table shows for the last three fiscal years, the
cash compensation paid by the Company and its subsidiaries, as
well as certain other compensation paid or accrued for those
years, to Robert E. Evans, the Chief Executive Officer of the
Company and the only executive officer of the Company whose
total annual salary and bonus for the 1994 fiscal year exceeded
$100,000.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
------------
Awards
------
Securities
Name and Annual Compensation Underlying All Other
Principal Salary Bonus Options/SARs Compensation
Position Year ($)<F1> ($)<F2> (#)<F3> ($)<F4>
--------- ---- ------------------- ------------ ------------
Robert E. Evans, 1994 $175,680 $21,975 14,000 $7,931
President and 1993 $170,000 $32,605 4,000 $7,752
Chief Executive 1992 $162,975 $27,000 0 $6,324
Officer of the
Company and
of Peoples Bank
[FN]
<F1> "Salary" includes fees received by Mr. Evans for services
rendered during 1994, 1993 and 1992 as a director of the Company
and its subsidiaries in the amounts of $12,900, $13,500 and
$12,975, respectively.
<F2> All bonuses reported were earned by Mr. Evans pursuant to
the Incentive Bonus Plan of the Company (the "Incentive Bonus
Plan").
<F3> Represents options granted under the Peoples Bancorp Inc.
1993 Stock Option Plan. See the table under "OPTION GRANTS IN
LAST FISCAL YEAR" for more detailed information on such options.
<F4> "All Other Compensation" includes contributions of $2,931,
$2,752 and $1,324 to the Peoples Bancorp Inc. Retirement Savings
Plan (the "Peoples 401(k) Plan") on behalf of Mr. Evans to match
pre-tax elective deferral contributions (included under
"Salary") made by him to the Peoples 401(k) Plan in 1994, 1993
and 1992, respectively. "All Other Compensation" also includes
the amount of $5,000 for each of 1994, 1993 and 1992 which was
accrued for the account of Mr. Evans pursuant to the terms of a
Deferred Compensation Agreement between Mr. Evans and the
Company. See the discussion in "Deferred Compensation
Agreement."
[/FN]
Grant of Options
The following table sets forth information concerning
individual grants of options made under the Peoples Bancorp Inc.
1993 Stock Option Plan (the "1993 Plan") during the 1994 fiscal
year to the named executive officer. The Company has never
granted stock appreciation rights.OPTION GRANTS IN LAST FISCAL
YEAR
Potential
Realizable
Value at
Assumed Rates
Number of % of of Stock Price
Securities Total Options Appreciation
Underlying Granted to Exercise for Option
Options Employees in Price Expiration Term<F2>
Name Granted(#)<F1> Fiscal Year ($/Share) Date 5%($) 10%($)
---- -------------- ----------- --------- ---------- ------- -------
Robert
E. Evans 14,000 10.3% $23.375 11/10/04 $205,806 $521,552
[FN]
<F1> If Mr. Evans' employment with the Company and its
subsidiaries is terminated by reason of his retirement under the
provisions of any retirement plan of the Company or any
subsidiary or by reason of permanent disability, the options may
be exercised in full for a period of three months following the
date of retirement or permanent disability, subject to the
stated term of the options. If Mr. Evans' employment is
terminated by reason of his death while an employee of the
Company and/or a subsidiary, the options may be exercised in
full for a period of one year, subject to the stated term of the
options. If Mr. Evans' employment is terminated for any other
reason, his options will be forfeited.
<F2> The amounts reflected in this table represent certain
assumed rates of appreciation only. Actual realized values, if
any, on option exercises will be dependent on the actual
appreciation of the common shares of the Company over the term
of the options. There can be no assurances that the Potential
Realizable Values reflected in this table will be achieved.
[/FN]
Option Exercises and Holdings
The following table sets forth information with respect to
unexercised options held as of the end of the 1994 fiscal year
by the named executive officer. No options were exercised
during the 1994 fiscal year.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
<CAPTION>
Number Number of
of Securities Securities Underlying Value of Unexercised
Underlying Unexercised Options at In-the-Money Options
Options Value FY-End(#) at FY-End($)<F1><F2>
--------------------------- ---------------------------
Name Exercised Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- --------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Evans 0 n/a 4,000 14,000 $26,000 $8,750
<FN>
<F1> All values as shown are pre-tax.
<F2> "Value of Unexercised In-the-Money Options at FY-End" is
based upon the fair market value of the Company's common shares
on December 31, 1994 ($24.00) less the exercise price of
in-the-money options at the end of the 1994 fiscal year.
</FN>
</TABLE>
Pension Plan
The following table shows the estimated annual pension benefits
payable upon retirement at age 65 on a lifetime annuity basis
under the Peoples Bancorp Inc. Retirement Plan, a funded,
noncontributory pension plan (the "Pension Plan"), to a covered
participant in specified compensation and years of service
classifications.
PENSION PLAN TABLE
Years of Service
---------------------------------------------------
Compensation 15 20 25 30 35
$125,000 $33,687 $44,916 $56,145 $67,374 $67,374
150,000 40,812 54,416 68,020 81,624 81,624
175,000 47,937 63,916 79,895 95,874 95,874
200,000 55,062 73,416 91,770 110,124 110,124
225,000 62,187 82,916 103,645 124,374 124,374
250,000 65,276 87,035 108,794 130,553 130,553
Benefits listed in the Pension Plan Table are not subject to
deduction for Social Security benefits or other amounts and are
computed on a lifetime annuity basis.
Monthly benefits upon normal retirement (age 65) are based upon
40% of "average monthly compensation" plus 17% of the excess, if
any, of "average monthly compensation" over "covered
compensation." For purposes of the Pension Plan, "average
monthly compensation" is based upon the monthly compensation
(including regular salary and wages, overtime pay, bonuses and
commissions) of an employee averaged over the five consecutive
credited years of service which produce the highest monthly
average within the last ten years preceding retirement and
"covered compensation" is the average of the 35 years of social
security wage bases prior to social security retirement age
("covered compensation" for Robert E. Evans as of the end of the
1994 fiscal year was $42,996.)
1994 annual compensation, to the extent determinable, for
purposes of the Pension Plan for Mr. Evans was $175,680. As of
the end of 1994 fiscal year, Mr. Evans had 24 credited years of
service.
Deferred Compensation Agreements
On November 18, 1976, Peoples Bank entered into a Deferred
Compensation Agreement with Mr. Evans and an executive officer
since retired. Under this Deferred Compensation Agreement, Mr.
Evans agreed to serve Peoples Bank as an employee until he
reaches age 65 or until his earlier retirement, disability or
death and agreed not to engage in activities in competition with
Peoples Bank. Under this Agreement, Mr. Evans or his
beneficiaries are entitled to receive specified amounts upon Mr.
Evans' retirement, disability or death, which amounts are
payable monthly for ten years (with interest) or in one lump sum
at the election of Peoples Bank. The principal amount payable
to Mr. Evans is based upon the sum of the amount accrued for his
account during his years of employment with Peoples Bank.
During the Company's 1994 fiscal year, the amount of $5,000 was
accrued for Mr. Evans' account pursuant to his Deferred
Compensation Agreement and as of December 31, 1994, a total of
$105,000 had been accrued to his account. The amount of $5,000
will be accrued to Mr. Evans' account upon the completion of
each year of service to Peoples Bank until he reaches normal
retirement age.
Directors' Compensation
Each director of the Company receives $400 per calendar quarter
and $250 for each meeting attended.
Effective January 1, 1991, the Company established the Peoples
Bancorp Inc. Deferred Compensation Plan for Directors (the
"Directors Deferred Compensation Plan"). Voluntary
participation in the Directors Deferred Compensation Plan
enables a director of the Company, or of one of its
subsidiaries, to defer all or a part of his or her director's
fees, including federal income tax thereon. Such deferred fees
earn interest as provided in the Directors Deferred Compensation
Plan. Distribution of the deferred funds is paid in a lump sum
or annual installments beginning in the first year in which the
person is no longer a director.
Directors, other than those employed by the Company (the
"Non-Employee Directors"), are automatically granted options
under the 1993 Plan on the date they are first elected or
appointed as a director of the Company to purchase 1,100 common
shares at an option price equal to 100% of the fair market value
of the common shares on the date of grant. In addition, every
other year at the Board meeting immediately following the annual
shareholders meeting, commencing in 1993, all Non-Employee
Directors then serving on the Board of Directors, other than a
Non-Employee Director who was first elected as a director at
such annual shareholders meeting or first appointed as a
director at the Board meeting immediately following such annual
shareholders meeting will receive an automatic grant of options
to purchase 1,100 common shares; provided that the number of
common shares subject to options granted to Non-Employee
Directors who have not served a full two years on the Board will
be prorated such that those Non-Employee Directors will receive
options to purchase only a percentage of 1,100 common shares
commensurate with the actual portion of the two years that such
Non-Employee Directors served on the Board. Options granted to
Non-Employee Directors have terms of ten years and become
exercisable with respect to 20% of the common shares subject
thereto on the date of grant and 20% on each of the first,
second, third and fourth anniversaries of the date of grant. If
a Non-Employee Director ceases to be a director for reasons
other than his or her death, the options may be exercised for a
period of three months, subject to the stated term of the
options. If a Non-Employee Director ceases to be a director by
reason of his or her death, the options may be exercised for a
period of one year, subject to the stated term of the options.
If the Peoples Bancorp Inc. 1995 Stock Option Plan is approved
by the shareholders, Non-employee Directors will be
automatically granted options in accordance with the terms of
that Plan. See the discussion in "PROPOSAL TO APPROVE THE
PEOPLES BANCORP INC. 1995 STOCK OPTION PLAN."
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change
in the Company's cumulative total shareholder return (as
measured by dividing (i) the sum of (A) the cumulative amount of
dividends for the measurement period, assuming dividend
reinvestment, and (B) the difference between the price of the
Company's common shares at the end and the beginning of the
measurement period; by (ii) the price of the Company's common
shares at the beginning of the measurement period) against the
cumulative return for an index for NASDAQ Stock Market (U.S.
Companies) comprised of all domestic common shares traded on the
NASDAQ National Market System and the NASDAQ Small-Cap Market
and an index for NASDAQ Bank Stocks comprised of all depository
institutions (SIC Code #602) and depository institutions holding
companies (SIC Code #671) that are traded on the NASDAQ National
Market System and the NASDAQ Small-Cap Market ("NASDAQ Bank
Stocks"), for the five-year period ended December 31, 1994.
THE FOLLOWING FIGURES REPRESENT THE NUMBERS GRAPHED IN THE
PERFORMANCE GRAPH INCLUDED IN THE PRINTED VERSION OF THE PEOPLES
BANCORP INC. PROXY STATMENT. UNDER EDGAR RULES, PEOPLES BANCORP
INC. INCORPORATES THIS GRAPH AS THE TABLE OF NUMBERS PRESENTED
BELOW:
Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31
1989 1990 1991 1992 1993 1994
Peoples Bancorp Inc. $100.00 $97.73 $122.73 $169.36 $215.27 $253.86
NASDAQ Bank Stocks $100.00 $73.23 $120.17 $174.87 $199.29 $198.69
NASDAQ (U.S.
Companies) $100.00 $84.92 $136.28 $158.58 $180.93 $176.92
Notes: 1. Total return assumes reinvestment of dividends.
2. Fiscal Year Ending December 31.
3. Return based on $100 dollars invested on December 31, 1989
in Peoples Bancorp common stock, an index for NASDAQ Stock
Market (U. S. Companies), and NASDAQ Bank Stocks.
PROPOSAL TO APPROVE THE PEOPLES BANCORP INC. 1995 STOCK OPTION PLAN
(Item 2 on Proxy)
On November 10, 1994, the Stock Option and Compensation
Committee of the Company adopted, subject to the approval by the
Board of Directors and the shareholders, the Peoples Bancorp
Inc. 1995 Stock Option Plan (the "1995 Plan"). The Board of
Directors of the Company subsequently adopted the 1995 Plan on
January 16, 1995, subject to approval by the shareholders. The
text of the 1995 Plan is set forth in Annex A to this Proxy
Statement. THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE APPROVAL OF THE 1995 PLAN.
The Company also maintains the Peoples Bancorp Inc. 1993 Stock
Option Plan (the "1993 Plan") under which non-qualified stock
options ("Non-qualified Options") and incentive stock options
("ISOs") (ISOs and Non-qualified Options are referred to
collectively as "Options") may be granted to Non-employee
Directors and key employees of the Company and its subsidiaries.
As of February 21, 1995, a total of 32,000 common shares
remained available for the grant of Options. The Board believes
that the number of common shares remaining available for the
grant of new ISOs under the 1993 Plan is not sufficient to
enable the Company to issue stock option grants, which the
Company expects to make over the next several years. The Board
also believes that the Company should have the flexibility to
grant Options to meet competitive conditions and the particular
circumstances of the individuals who may be eligible to receive
Options. For these reasons, the Board is recommending the
adoption of the 1995 Plan which will make an additional 100,000
common shares available to be reserved for issuance of Options.
The purpose of the 1995 Plan is to advance the interests of the
Company (a) by providing material incentive for the continued
services of those key employees of the Company and its
subsidiaries and the directors of the Company and its
subsidiaries who make significant contributions toward the
Company's success and development by encouraging those key
employees and directors to increase their proprietary interest
in the Company and (b) by attracting new able executives to
employment with the Company and its subsidiaries or to serve as
directors of the Company, or one or more of the subsidiaries of
the Company. To accomplish the purpose, the 1995 Plan
authorizes the grant of ISOs as defined by Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and
Non-qualified Options.
The 1995 Plan authorizes the granting of Options with respect
to 100,000 common shares. If there is any change in the common
shares resulting from a stock split, stock dividend, combination
or exchange of shares or other similar capital adjustment, the
number of common shares available for the grant of Options under
the 1995 Plan, the number of common shares subject to
outstanding Options and the option price of outstanding Options
will be proportionately adjusted to reflect the same. The
100,000 common shares reserved for issuance under the 1995 Plan
represent approximately 3.45% of the outstanding common shares
as of the Record Date. On February 21, 1995, the last reported
sales price of the common shares on the NASDAQ National Market
System was $23.125.
The common shares covered by the 1995 Plan may be either
authorized but unissued shares or treasury shares. If any
outstanding Option under the 1995 Plan for any reason expires or
is terminated without having been exercised in full, the Common
Shares allocable to the unexercised portion of such Option will
(unless the 1995 Plan has been terminated) become available for
subsequent grants of Options under the 1995 Plan.
The following summary of certain provisions of the 1995 Plan is
qualified in its entirety by reference to the copy of the 1995
Plan attached hereto as Annex A.
Administration
The 1995 Plan will be administered by a Stock Option and
Compensation Committee (the "Stock Option Committee") consisting
of not less than three directors of the Company appointed from
time to time by the Board of Directors. Each Stock Option
committee member must be a "disinterested person" within the
meaning of Rule 16b-3 under the Exchange Act and must qualify as
an "outside director" within the meaning of Section 162(m) of
the Code. The Stock Option Committee will grant Options under
the 1995 Plan, interpret the 1995 Plan and make all
determinations necessary for the administration of the 1995
Plan. The Stock Option Committee will have no discretion to
determine who will be eligible for the grant of Non-qualified
Options to Non-employee Directors, Subsidiary Directors (i.e.,
directors of one or more of the Company's subsidiaries who are
neither a director of the Company nor an employee of the Company
or any of its subsidiaries), or Acquisition Subsidiary Directors
(i.e., directors of a corporation which is acquired directly by
the Company and, thereafter, becomes a subsidiary of the
Company), to set the number of Non-qualified Options granted to
any Non-employee Director, Subsidiary Director, or Acquisition
Subsidiary Director, to set the number of common shares subject
to Non-qualified Options granted to any Non-employee Director,
Subsidiary Director, or Acquisition Subsidiary Director, or to
set the date and circumstances of grant of Non-qualified Options
to Non-employee Directors, Subsidiary Directors, or Acquisition
Subsidiary Directors, the term of such Non-qualified Options,
the period within such Non-qualified Options may be exercised or
the exercise price of such Non-qualified Options.
Eligibility
Officers and other key employees of the Company and its
subsidiaries (including the executive officer named in the
Summary Compensation Table) selected by the Stock Option
Committee will be eligible to receive ISOs under the 1995 Plan.
Non-employee Directors, Subsidiary Directors, or Acquisition
Subsidiary Directors will also be participants in the 1995 Plan
solely for the purposes of receiving certain Non-qualified
Options (see discussion on page 22). There are currently ten
Non-employee Directors of the Company, ten Subsidiary Directors
who do not also serve on the Board of the Company, and no
Acquisition Subsidiary Directors.
In addition to the limits imposed on common shares covered by
Non-qualified Options granted to Non-employee Directors,
Subsidiary Directors, and Acquisition Subsidiary Directors (see
discussion beginning on page 19), no key employee may be granted
ISOs covering, in the aggregate, more than 25,000 common shares
during the period in which the 1995 Plan remains in effect. The
1995 Plan also provides that the aggregate fair market value
(determined as of the time an ISO is granted) of the common
shares with respect to which ISOs may become exercisable for the
first time by any individual during any calendar year (under all
option plans of the Company and its subsidiaries) may not exceed
$100,000. It is currently estimated that the group of employees
eligible to receive ISOs under the 1995 Plan will approximate
twenty-five persons, with appropriate adjustments for any
significant change in the size or operations of the Company and
its subsidiaries in the future.
Of the 100,000 common shares which may be issued under the 1995
Plan, an aggregate of 30,000 common shares will be issuable to
Non-employee Directors, Subsidiary Directors, and Acquisition
Subsidiary Directors. The remaining 70,000 common shares will
be issuable to key employees as ISOs under the terms of the 1995
Plan. In the event the entire 30,000 common shares have not
been issued to Non-employee Directors, Subsidiary Directors, and
Acquisition Subsidiary Directors, prior to the date of the 1999
Annual Meeting, that portion of the 30,000 common shares not
covered by the Non-qualified Options so granted may be the
subject of ISOs to be granted to key employees under the terms
of the 1995 Plan.
Other than Non-qualified Options to be granted to Non-employee
Directors and Subsidiary Directors, no determination has been
made under the 1995 Plan regarding the individual identity of
the persons to whom Options may be granted or the number of
common shares which may be allocated to any specific person or
persons.
Duration
Any grant of an Option under the 1995 Plan must be made before
January 19, 2005.
Terms of Options
The exercise price of any Option granted under the 1995 Plan
may not be less than 100% of the fair market value of the common
shares on the date of grant. Fair market value is defined for
purposes of the 1995 Plan to mean the last reported sales price
of a common share on the NASDAQ National Market System or on any
securities exchange on which the common shares may be listed.
No ISO or Non-qualified Option may be exercised after the
expiration of ten years from the date it is granted.
Under the 1995 Plan, no employee will be eligible to receive an
ISO if, at the time of grant, such employee owns of record and
beneficially more than 10% of the total combined voting power of
all classes of stock of the Company or any subsidiary of the
Company unless the exercise price is at least 110% of the fair
market value of the common shares covered by the ISO on the date
of grant and the option term does not exceed five years.
Payment of the exercise price may be made in cash, in common
shares already owned by the participant having a fair market
value on the exercise date equal to the exercise price of the
common shares covered by the Option, or a combination of common
shares and cash, equal in the aggregate to the exercise price
for the common shares covered by the Option. No Option may be
exercised until a period of at least six months has elapsed
since the date of grant.
No Option granted under the 1995 Plan will be assignable or
transferable except, in the event of the death of a participant,
by his will or by laws of descent and distribution. Options are
generally exercisable only by the participant. ISOs awarded to
key employees under the Plan will be exercisable at such times
and will be subject to such restrictions and conditions
including the performance of a minimum period of service as the
Committee may impose at the time of grant of such ISOs;
provided, however, that if the Committee does not specify
another vesting schedule at the time of grant, each ISO will
become exercisable as follows: (i) with respect to 25% of the
common shares covered thereby after 24 months of continuous
employment by the Company and/or one or more subsidiaries; (ii)
with respect to an additional 25% of the common shares covered
thereby after 36 months of continuous employment by the Company
and/or one or more subsidiaries; (iii) with respect to an
additional 25% of the common shares covered thereby after 48
months of continuous employment by the Company and/or one or
more subsidiaries; and (iv) with respect to an additional 25% of
the common shares covered thereby after 60 months of continuous
employment by the Company and/or one or more subsidiaries. If a
key employee does not purchase in any one year the full number
of common shares which may be purchased with his then
exercisable ISOs, such key employee may purchase those common
shares in any subsequent year during the term of the ISOs.
If a key employee's employment with the Company and its
Subsidiaries terminates for any reason other than (i) death of
the key employee, (ii) the disability of the key employee within
the meaning of Section 22(e)(3) of the Code, (iii) the
retirement of the key employee under the provisions of any
retirement plan of the Company or any Subsidiary, or (iv) any
reason (other than for Cause, as defined in the 1995 Plan) after
the key employee has been employed by the Company and/or one or
more Subsidiaries for at least 10 consecutive years prior to the
key employee's termination of employment, the portion of all
ISOs granted under the 1995 Plan to such key employee which are
not otherwise exercisable will terminate effective immediately
upon termination of employment. If the termination of
employment of the key employee was due to retirement under the
provisions of any retirement plan of the Company or any
Subsidiary or if the termination of employment was due to a
reason other than for Cause and the key employee had been
employed by the Company and/or one or more Subsidiaries for at
least 10 consecutive years prior to the key employee's
termination of employment, all of such key employee's ISOs may
be exercised in full, whether or not then exercisable, and the
right of the key employee to exercise the ISOs will terminate
upon the earlier to occur of the expiration of the term of the
ISOs or three months after the date of termination of
employment. If the termination of employment was due to the
death of a key employee who was an employee of the Company
and/or any Subsidiary at the time of his death, such ISOs may be
exercised in full, whether or not then exercisable as defined by
the 1995 Plan, `and the right of the representative or
representatives of the key employee's estate (or the person or
persons who acquire (by bequest or inheritance) the right to
exercise the key employee's ISOs) to exercise the ISOs will
terminate upon the earlier to occur of the expiration of the
term of the ISOs or one year after the date of death of the key
employee. If the termination of employment was due to the
disability of the key employee within the meaning of Section
22(e)(3) of the Code, such ISOs may be exercised in full,
whether or not then exercisable, and the right of the key
employee to exercise the ISOs will terminate upon the earlier to
occur of the expiration of the term of the ISOs or one year
after the date of termination of employment. If the termination
of employment of the key employee was due to reasons other than
for Cause and the key employee had not been employed by the
Company and/or one or more Subsidiaries for at least 10
consecutive years prior to the key employee's termination of
employment, the key employee's ISOs may be exercised only to the
extent then exercisable on the date of termination of
employment, and the right of the key employee to exercise the
ISOs will terminate upon the earlier to occur of the expiration
of the term of the ISOs or three months after the date of
termination of employment. If the termination of employment of
the key employee was for Cause, all ISOs which have not been
exercised as of the date of termination of employment will
terminate immediately as of the date of termination of
employment.
Each Non-employee Director then serving on the Company's Board
and who has served on the Board and/or the Board's of a
Subsidiary of the Company (a "Subsidiary Board") for all or a
portion of at least the five calendar years immediately
preceding the January 1 immediately prior to the date of grant,
will automatically be granted a Non-qualified Option for 750
common shares effective on the date of the 1995 Annual Meeting
in accordance with the Regulations of the Company (the "1995
Annual Meeting") and for 750 common shares effective on the date
on which the annual meeting of the Company's shareholders is
held in 1997 in accordance with the Regulations of the Company
(the "1997 Annual Meeting"). Each Non-Employee Director then
serving on the Company's Board and who has served on the Board
and/or a Subsidiary Board for fewer than the five calendar years
(including all or any portion of any such year) immediately
preceding the January 1 immediately prior to the date of grant,
will automatically be granted a Non-qualified Option for 150
common shares plus 150 common shares for all or any portion of
each calendar year preceding the date of grant during which such
Non-Employee Director has served on the Board and/or a
Subsidiary Board as of such January 1 effective on the date of
each of the 1995 Annual Meeting and the 1997 Annual Meeting.
Any individual who was not a member of the Company's Board on
the date of the 1995 Annual Meeting, (i) who is subsequently
appointed or elected to the Board at least six months prior to
the date on which the annual meeting of the Company's
shareholders is to be held in 1996 in accordance with the
Regulations of the Company (the "1996 Annual Meeting") will
automatically be granted a Non-qualified Option on the date of
such appointment or election for the same number of common
shares as such individual would have received if he had been a
member of the Board on the date of the 1995 Annual Meeting; (ii)
who is subsequently appointed or elected to the Board less than
six months prior to the date of the 1996 Annual Meeting but
prior to such 1996 Annual Meeting will automatically be granted
a Non-qualified Option on the date of such appointment or
election for 75% of the number of common shares which such
individual would have received if he had been a member of the
Board on the date of the 1995 Annual Meeting; (iii) who is
subsequently appointed or elected to the Board on or after the
date of the 1996 Annual Meeting but at least six months prior to
the date of the 1997 Annual Meeting will automatically be
granted a Non-qualified Option on the date of such appointment
or election for 50% of the number of common shares which such
individual would have received if he had been a member of the
Board on the date of the 1995 Annual Meeting; and (iv) who is
subsequently appointed or elected to the Board less than six
months prior to the 1997 Annual Meeting but prior to such 1997
Annual Meeting will automatically be granted a Non-qualified
Option on the date of such appointment or election for 25% of
the common shares which such individual would have received if
he had been a member of the Board on the date of the 1995 Annual
Meeting. Any individual who was not a member of the Board on
the date of the 1997 Annual Meeting and who is subsequently
appointed or elected to the Board prior to the date on which the
annual meeting of the Company's shareholders is to be held in
1999 in accordance with the Regulations of the Company (the
"1999 Annual Meeting") will automatically be granted a
Non-qualified Option on the same basis as described in the
immediately preceding sentence. Any individual who was serving
as a Subsidiary Director or as an Acquisition Subsidiary
Director and is subsequently appointed or elected as a
Non-employee Director after the date of the 1995 Annual Meeting
but prior to the date of the 1997 Annual Meeting, or after the
date of the 1997 Annual Meeting but prior to the date of the
1999 Annual Meeting, as the case may be, and who is to be
granted a Non-qualified Option pursuant to either of the two
immediately preceding sentences, will have deducted from the
number of common shares to be covered by the Non-qualified
Option granted to him as a Non-employee Director, the number of
common shares covered by any Non-qualified Option which he
received as a Subsidiary Director or an Acquisition Subsidiary
Director. Each Non-qualified Option granted to a Non-employee
Director shall have an exercise price equal to 100% of the fair
market value of the common shares on the date of the grant of
such Non-qualified Option. If a Non-employee Director ceases to
be a director of the Company for any reason other than his death
or for Cause (as defined in the 1995 Plan), the Non-qualified
Options granted to him under the 1995 Plan may be exercised in
full, whether or not then exercisable by their terms, on or
before the expiration of the term of the Non-qualified Options;
provided, however, that if the former Non-employee Director
shall die prior to the expiration of the term of the
Non-qualified Options, such Non-qualified Options may only be
exercised on or before the earlier of the expiration of such
term or two years following the date of death. If a
Non-employee Director ceases to be a director of the Company
because of his death, such Non-qualified Options may be
exercised in full, whether or not then exercisable by their
terms, only on or before the earlier of the expiration of the
term of the Non-qualified Options or two years following the
date of death. If a Non-employee Director ceases to be a
director of the Company and/or any subsidiary for Cause, all of
his then unexercised Non-qualified Options shall immediately
terminate.
Each Subsidiary Director then serving on a Subsidiary Board and
who has served on a Subsidiary Board and/or the Company's Board
for all or a portion of at least the five calendar years
immediately preceding the January l immediately prior to the
date of grant, shall automatically be granted a Non-qualified
Option for 375 common shares effective on the date of the 1995
Annual Meeting and for 375 common shares effective on the date
of the 1997 Annual Meeting. Each Subsidiary Director then
serving on a Subsidiary Board and who has served on a Subsidiary
Board and/or the Company's Board for fewer than the five
calendar years (including all or any portion of any such year)
immediately preceding the January 1 immediately prior to the
date of grant shall automatically be granted a Non-qualified
Option for 75 common shares plus 75 common shares for all or any
portion of each calendar year preceding the date of grant during
which such Subsidiary Director has served on a Subsidiary Board
and/or the Company's Board as of such January 1, effective on
the date of each of the 1995 Annual Meeting and the 1997 Annual
Meeting. Any individual who was not a member of a Subsidiary
Board on the date of the 1995 Annual Meeting, (i) who is
subsequently appointed or elected to a Subsidiary Board at least
six months prior to the date of the 1996 Annual Meeting will
automatically be granted a Non-qualified Option on the date of
such appointment or election for the same number of common
shares as such individual would have received if he had been a
member of the Subsidiary Board on the date of the 1995 Annual
Meeting; (ii) who is subsequently appointed or elected to a
Subsidiary Board less than six months prior to the date of the
1996 Annual Meeting but prior to such 1996 Annual Meeting will
automatically be granted a Non-qualified Option on the date of
such appointment or election for 75% of the number of common
shares which such individual would have received if he had been
a member of the Subsidiary Board on the date of the 1995 Annual
Meeting; (iii) who is subsequently appointed or elected to a
Subsidiary Board on or after the date of the 1996 Annual Meeting
but at least six months prior to the date of the 1997 Annual
Meeting will automatically be granted a Non-qualified Option on
the date of such appointment or election for 50% of the number
of common shares which such individual would have received if he
had been a member of the Subsidiary Board on the date of the
1995 Annual Meeting; and (iv) who is subsequently appointed or
elected to a Subsidiary Board less than six months prior to the
1997 Annual Meeting but prior to such 1997 Annual Meeting will
automatically be granted a Non-qualified Option on the date of
such appointment or election for 25% of the common shares which
such individual would have received if he had been a member of
the Subsidiary Board on the date of the 1995 Annual Meeting.
Any individual who was not a member of a Subsidiary Board on the
date of the 1997 Annual Meeting and who is subsequently
appointed or elected to a Subsidiary Board prior to the date of
the 1999 Annual Meeting will automatically be granted a
Non-qualified Option on the same basis as described in the
immediately preceding sentence. Each Non-qualified Option
granted to a Subsidiary Director shall have an exercise price
equal to 100% of the fair market value of the common shares on
the date of the grant of such Non-qualified Option. If a
Subsidiary Director ceases to be a director of a Subsidiary
and/or the Company for any reason other than his death or for
Cause, the Non-qualified Options granted to him under the 1995
Plan may be exercised in full, whether or not then exercisable
by their terms, on or before the expiration of the term of the
Non-qualified Options; provided, however, that if the former
Subsidiary Director shall die prior to the expiration of the
term of the Non-qualified Options, such Non-qualified Options
may be exercised only on or before the earlier of the expiration
of such term or two years following the date of death. If a
Subsidiary Director ceases to be a director of a Subsidiary
and/or the Company because of his death, such Non-qualified
Options may be exercised in full, whether or not then
exercisable by their terms, only on or before the earlier of the
expiration of the term of the Non-qualified Options or two years
following the date of death. If a Subsidiary Director ceases to
be a director of a Subsidiary and/or the Company for Cause, all
of his then unexercised Non-qualified Options shall immediately
terminate.
If the Company directly acquires a corporation such that such
corporation then becomes a subsidiary of the Company (an
"Acquisition Subsidiary"), each Acquisition Subsidiary Director
then serving on the board of directors of the Acquisition
Subsidiary (the "Acquisition Board") and who has served on the
Acquisition Board for all or a portion of at least the five
calendar years immediately preceding the January 1 immediately
prior to the date of grant will automatically be granted a
Non-qualified Option for 375 common shares on the effective date
of the acquisition of the Acquisition Subsidiary by the Company
(the "Acquisition Date") and each Acquisition Subsidiary
Director then serving on the Acquisition Board and who has
served on the Acquisition Board for all or a portion of at least
the five calendar years immediately preceding the January 1
immediately prior to the date of grant will automatically be
granted a Non-qualified Option for 375 common shares effective
on the second anniversary of the Acquisition Date (the
"Acquisition Second Anniversary"). Each Acquisition Subsidiary
Director then serving on the Acquisition Board and who has
served on the Acquisition Board for fewer than the five calendar
years (including all or any portion of any such year)
immediately preceding the January 1 immediately prior to the
date of grant will automatically be granted a Non-qualified
Option for 75 common shares plus 75 common shares for all or any
portion of each calendar year preceding the date of grant during
which such Acquisition Subsidiary Director has served on the
Acquisition Board as of such January 1, effective on the
Acquisition Date and on the Acquisition Second Anniversary,
respectively. Any individual who is not a member of the
Acquisition Board on the Acquisition Date (i) who is
subsequently appointed or elected to the Acquisition Board at
least six months prior to the first anniversary of the
Acquisition Date (the "Acquisition First Anniversary"), will
automatically be granted a Non-qualified Option on the date of
such appointment or election for the same number of common
shares as such individual would have received if he had been a
member of the Acquisition Board on the Acquisition Date; (ii)
who is subsequently elected or appointed to the Acquisition
Board less than six months prior to the Acquisition First
Anniversary but prior to the Acquisition First Anniversary will
automatically be granted a Non-qualified Option on the date of
such appointment or election for 75% of the number of common
shares which such individual would have received if he had been
a member of the Acquisition Board on the Acquisition Date; (iii)
who is subsequently appointed or elected to the Acquisition
Board on or after the date of the Acquisition First Anniversary
but at least six months prior to the Acquisition Second
Anniversary will automatically be granted a Non-qualified Option
on the date of such appointment or election for 50% of the
number of common shares which such individual would have
received if he had been a member of the Acquisition Board on the
Acquisition Date; and (iv) who is subsequently appointed or
elected to the Acquisition Board less than six months prior to
the Acquisition Second Anniversary but prior to the Acquisition
Second Anniversary will automatically be granted a Non-qualified
Option on the date of such appointment or election for 25% of
the common shares which such individual would have received if
he had been a member of the Acquisition Board on the Acquisition
Date. Any individual who was not a member of the Acquisition
Board on the Acquisition Second Anniversary and who is
subsequently appointed or elected to the Acquisition Board prior
to the date of the fourth anniversary of the Acquisition Date
will automatically be granted a Non-qualified Option on the same
basis as described in the immediately preceding sentence. Each
Non-qualified Option granted to an Acquisition Subsidiary
Director shall have an exercise price equal to 100% of the fair
market value of the common shares on the date of the grant of
such Non-qualified Option. If an Acquisition Subsidiary
Director ceases to be a director of an Acquisition Subsidiary
and/or the Company for any reason other than his death or for
Cause, the Non-qualified Options granted to him under the 1995
Plan may be exercised in full, whether or not then exercisable
by their terms, on or before the expiration of the term of the
Non-qualified Options; provided, however, that if the former
Acquisition Subsidiary Director shall die prior to the
expiration of the term of the Non-qualified Options, such
Non-qualified Options may be exercised only on or before the
earlier of the expiration of such term or two years following
the date of death. If an Acquisition Subsidiary Director ceases
to be a director of the Acquisition Subsidiary because of his
death, such Non-qualified Options may be exercised in full,
whether or not then exercisable by their terms, only on or
before the earlier of the expiration of the term of the
Non-qualified Options or two years following the date of death.
If an Acquisition Subsidiary Director ceases to be a director of
an Acquisition Subsidiary for Cause, all of his then unexercised
Non-qualified Options shall immediately terminate.
Amendments and Termination
The Stock Option Committee, with the approval of the Board of
Directors, may terminate the 1995 Plan at any time, and may
amend the 1995 Plan from time to time, without obtaining the
approval of the shareholders of the Company except as such
shareholder approval may be required (a) to satisfy the
requirements of Rule 16b-3 under the Exchange Act, as amended,
or any successor provision, (b) to satisfy applicable
requirements of the Code or (c) to satisfy applicable
requirements of any securities exchange on which are listed any
of the Company's equity securities or any requirements
applicable to issuers whose securities are traded in the NASDAQ
National Market System. No such action to amend or terminate
the 1995 Plan shall reduce the then existing number of any
participant's Options or adversely change the term or conditions
thereof without the participant's consent. No amendment of the
1995 Plan shall result in any Committee member's losing his
status as a Disinterested Person under Rule 16b-3 of the
Exchange Act, with respect to any employee benefit plan of the
Company or result in the 1995 Plan losing its status as a plan
satisfying the requirements of Rule 16b-3 under the Exchange
Act, as amended, or any successor provision. In no event may
the provision of the 1995 Plan governing the grant of
Non-qualified Options to Non-employee Directors, Subsidiary
Directors, or Acquisition Subsidiary Directors be amended, with
or without shareholder approval, more than once every six
months, other than to comport with changes in the Code. If the
1995 Plan is terminated, any unexercised Option shall continue
to be exercisable in accordance with its terms.
Federal Income Tax Consequences
Based on current provisions of the Code and the existing
regulations thereunder, the anticipated federal income tax
consequences in respect of Options under the 1995 Plan are as
described below. The following discussion is not intended to be
a complete statement of applicable law and is based upon the
federal income tax laws in effect on the date hereof.
ISOs
In general, a participant who is granted an ISO does not
recognize taxable income either on the date of grant or the date
of exercise. However, upon the exercise of the ISO, the
difference between the fair market value of the common shares
received and the option price is a tax preference item
potentially subject to the alternative minimum tax. However, on
the later sale or other disposition of the common shares,
generally only the difference between the fair market value of
the common shares on the exercise date and the amount realized
on the sale or disposition is includable in alternative minimum
taxable income.
Upon disposition of common shares acquired from exercise of an
ISO, long-term capital gain or loss is generally recognized in
an amount equal to the difference between the amount realized on
the sale or disposition and the exercise price. However, if the
participant disposes of the common shares within two years from
the date of grant or within one year from the date of the
issuing of the common shares to the participant (a
"Disqualifying Disposition"), then the participant will
recognize ordinary income, as opposed to capital gain, at the
time of disposition in an amount generally equal to the lesser
of (i) the amount of gain realized on the disposition, or (ii)
the difference between the fair market value of the common
shares received on the date of exercise and the exercise price.
Any remaining gain or loss is treated as a short-term or
long-term capital gain or loss depending upon the period of time
the common shares have been held.
The Company is not entitled to a tax deduction upon either
exercise of an ISO or disposition of common shares acquired
pursuant to such exercise, except to the extent that the
participant recognizes ordinary income in a Disqualifying
Disposition.
If the holder of an ISO pays the exercise price, in whole or in
part, with previously acquired common shares, the exchange
should not effect the ISO tax treatment of the exercise. Upon
such exchange, and except for Disqualifying Dispositions, no
gain or loss is recognized by the participant upon delivering
previously acquired common shares to the Company for the payment
of the exercise price. The common shares received by the
participant, equal in number to the previously acquired common
shares exchanged therefor, will have the same basis and holding
period for long-term capital gain purposes as the previously
acquired common shares. (The participant, however, will not be
able to utilize the prior holding period for the purpose of
satisfying the ISO statutory holding period requirements.)
Common shares received by the participant in excess of the
number of previously acquired common shares will have a basis of
zero and a holding period which commences as of the date the
common shares are transferred to the participant upon exercise
of the ISO. If the exercise of an ISO is effected using common
shares previously acquired through the exercise of an ISO, the
exchange of such previously acquired common shares will be
considered a disposition of such common shares for the purpose
of determining whether a Disqualifying Disposition has occurred.
Non-qualified Options
A participant receiving a Non-qualified Option does not
recognize taxable income on the date of grant of the
Non-qualified Option, provided that the Non-qualified Option
does not have a readily ascertainable fair market value at the
time it is granted. In general, the participant must recognize
ordinary income at the time of exercise of the Non-qualified
Option in the amount of the difference between the fair market
value of the common shares on the date of exercise and the
option price. The ordinary income received will constitute
compensation for which tax withholding generally will be
required. The amount of ordinary income recognized by a
participant will be deductible by the Company in the year that
the participant recognizes the income if the Company complies
with the applicable withholding requirements.
Common shares acquired upon exercise of a Non-qualified Option
will have a tax basis equal to their fair market value on the
exercise date or other relevant date on which ordinary income is
recognized, and the holding period for the common shares
generally will begin on the date of exercise or such other
relevant date. Upon subsequent disposition of the common
shares, the participant will recognize long-term capital gain or
loss if the participant has held the common shares for more than
one year prior to disposition, or short-term capital gain or
loss if the participant has held the common shares for one year
or less.
If a holder of a Non-qualified Option pays the exercise price,
in whole or in part, with previously acquired common shares, the
participant will recognize ordinary income in the amount by
which the fair market value of the common shares received
exceeds the exercise price. The participant will not recognize
gain or loss upon delivering such previously acquired common
shares to the Company. The common shares received by a
participant, equal in number to the previously acquired common
shares exchanged therefor, will have the same basis and holding
period as such previously acquired common shares. Common shares
received by a participant in excess of the number of such
previously acquired common shares will have a basis equal to the
fair market value of such additional common shares as of the
date ordinary income is recognized. The holding period for such
additional common shares will commence as of the date of
exercise or such other relevant date.
Other Matters
The 1995 Plan is intended to comply with Section 162(m) of the
Code which was enacted as part of the Omnibus Budget
Reconciliation Act of 1993. Section 162(m) of the Code
prohibits a publicly held corporation, such as the Company, from
claiming a deduction on its federal income tax return for
compensation in excess of $1 million paid for a fiscal year to
the chief executive officer (or person acting in that capacity)
at the close of the corporation's fiscal year and the four most
highly compensated officers of the corporation, other than the
chief executive officer, at the end of the corporation's fiscal
year (collectively, the "Section 162(m) Officers"). The $1
million compensation deduction limitation does not apply to
"performance-based compensation." The proposed regulations
issued by the Internal Revenue Service under Section 162(m) on
December 15, 1993, which were amended on December 2, 1994, (the
"Proposed IRS Regulations") set forth a number of provisions
which compensatory plans must contain if the compensation paid
thereunder is to qualify as "performance-based" for purposes of
Section 162(m).
The 1995 Plan is intended to satisfy the requirements of the
Proposed IRS Regulations. The final regulations under Section
162(m) are not expected to be issued until at least later this
year and the Company cannot predict what requirements the final
regulations under Section 162(m) will contain. The Company is
seeking shareholder approval of the 1995 Plan in a good faith
effort to qualify compensation received thereunder as
"performance-based" for purposes of 162(m). If such shareholder
approval is not obtained, the 1995 Plan will be null and void.
Vote Required
Shareholder approval of the 1995 Plan will require the
affirmative vote of the holders of a majority of the common
shares outstanding and entitled to vote on the proposal to
approve the 1995 Plan. As of the Record Date, the current
executive officers and directors of the Company, their
representative associates and the Trust Department of Peoples
Bank held approximately 22.1% of the common shares of the
Company and corresponding voting power.
The Board of Directors of the Company unanimously recommends
that the shareholders vote for the proposal to approve the 1995
Plan. Unless otherwise directed, the persons named in the
enclosed proxy will vote the common shares represented by all
proxies received prior to the Annual Meeting and not properly
revoked, in favor of the proposal to approve the 1995 Plan.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Any qualified shareholder who desires to present a proposal for
consideration at the 1996 Annual Meeting of Shareholders must
submit the proposal in writing to the Company. If the proposal
is received by the Company on or before November 6, 1995 and
otherwise meets the requirements of applicable state and federal
law, it will be included in the proxy statement and form of
proxy of the Company relating to its 1996 Annual Meeting of
Shareholders.
NOTIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company appointed the accounting
firm of Coopers & Lybrand to serve as independent public
accountants of the Company for the 1994 fiscal year. That firm
has served as independent public accountants for the Company
since 1980. Accountants for the 1995 fiscal year have not been
selected. The Board of Directors has historically appointed
accountants at the meeting held immediately following the Annual
Meeting and intends to do so this year.
The Board of Directors expects that representatives of Coopers
& Lybrand will be present at the Annual Meeting, will have the
opportunity to make a statement if they desire to do so, and
will be available to respond to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors
knows of no other business to be presented for action by the
shareholders at the 1995 Annual Meeting of Shareholders other
than as set forth in this Proxy Statement. However, if any
other matter is properly presented at the Annual Meeting, or at
any adjournment or adjournments thereof, it is intended that the
persons named in the enclosed proxy may vote the common shares
represented by such proxy on such matters in accordance with
their best judgment in light of the conditions then prevailing.
It is important that proxies be voted and returned promptly;
therefore, shareholders who do not expect to attend the Annual
Meeting in person are urged to fill in, sign and return the
enclosed proxy in the self-addressed envelope furnished herewith.
By Order of the Board of Directors
/s/ ROBERT E. EVANS
Robert E. Evans, President and Chief Executive Officer
March 6, 1995
BEGINNING OF ANNEX A:
PEOPLES BANCORP INC. 1995 STOCK OPTION PLAN
PEOPLES BANCORP INC. 1995 STOCK OPTION PLAN
l. Name and Purpose. The purpose of this Plan, which shall be
known as the "Peoples Bancorp Inc. 1995 Stock Option Plan"
(hereinafter referred to as the "Plan") is to advance the
interests of Peoples Bancorp Inc. (the "Company") (i) by
providing material incentive for the continued services of those
key employees of the Company and its Subsidiaries and the
directors of the Company or of one or more of its Subsidiaries
who make significant contributions toward the Company's success
and development by encouraging those key employees and directors
to increase their proprietary interest in the Company; and (ii)
by attracting new able executives to employment with the Company
and its Subsidiaries or to serve as directors of the Company or
of one or more of its Subsidiaries.
2. Definitions. For purposes of this Plan, the following terms
when capitalized shall have the meanings designated herein
unless a different meaning is plainly required by the context.
Where applicable, the masculine pronoun shall mean or include
the feminine and the singular shall include the plural.
(a) "Acquisition Subsidiary" shall mean a corporation which is
acquired directly by the Company and, thereafter, becomes a
Subsidiary.
(b) "Acquisition Subsidiary Director" shall mean a person who
is a director of an Acquisition Subsidiary.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Cause" shall mean that an act of (i) fraud or intentional
misrepresentation or (ii) embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any
Subsidiary, has occurred.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations and rulings thereunder. References
to a particular section of the Code shall include references to
successor provisions.
(f) "Committee" shall mean the Stock Option Committee whose
membership shall be determined under Subsection 3(a) below.
(g) "Common Shares" shall mean the common shares of Peoples
Bancorp Inc.
(h) "Company" shall mean Peoples Bancorp Inc.
(i) "Disinterested Person" shall have the meaning assigned to
such term in Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934,
as amended, or any successor provision.
(j) "Effective Date" shall mean the date on which this Plan
shall become effective, as provided in Section 15 below.
(k) "Employee Director" shall mean a director of the Company
who is also an employee of the Company.
(l) The "Fair Market Value" of a Common Share on any relevant
date for purposes of any provision of this Plan shall mean the
last reported sales price of a Common Share of the Company on
the NASDAQ National Market System or on any securities exchange
on which the Common Shares may be listed on such date or, if
there are no reported sales on such date, then the last reported
sales price on the next preceding day on which such a sale was
transacted.
(m) "Incentive Option" shall mean an option granted under this
Plan which is an incentive stock option under the provisions of
Section 422 of the Code; and any provisions elsewhere in this
Plan or in any such Incentive Option which would prevent such
option from being an incentive stock option may be deleted
and/or voided retroactively to the date of the granting of such
option, by action of the Committee; and the Committee may
retroactively add provisions to this Plan or to any Incentive
Option if necessary to qualify such an option as an incentive
stock option.
(n) "Key Employee" shall mean any employee of the Company
and/or its Subsidiaries (as defined in Subsection 2(s) below)
who in the opinion of the Committee has demonstrated a capacity
for contributing in a substantial measure to the success of the
Company and its Subsidiaries.
(o) "Non-employee Director" shall mean a director of the
Company who is not also an employee of the Company.
(p) "Non-qualified Option" shall mean an option granted under
this Plan which is not an Incentive Option. Such Non-qualified
Option shall not be affected by any actions taken retroactively
as provided in Subsection 2(m) above with respect to Incentive
Options.
(q) "Participant" shall mean a Key Employee selected by the
Committee (under Subsection 3(b) below) to receive Incentive
Options granted under this Plan, a Non-employee Director
receiving Non-qualified Options pursuant to Subsection 5(j)
below, a Subsidiary Director receiving Non-qualified Options
pursuant to Subsection 5(k) below or an Acquisition Subsidiary
Director receiving Non-qualified Options pursuant to Subsection
5(l) below.
(r) "Plan" shall mean the Peoples Bancorp Inc. 1995 Stock
Option Plan.
(s) "Subsidiary" shall mean a corporation which is a
subsidiary corporation of the Company as that term is defined in
Subsection 424(f) of the Code. For purposes of Subsection 5(k)
of this Plan, "Subsidiary" shall not include an Acquisition
Subsidiary.
(t) "Subsidiary Board" shall mean the board of directors of a
Subsidiary.
(u) "Subsidiary Director" shall mean a director of one or more
of the Subsidiaries of the Company who is neither a director of
the Company nor an employee of the Company or of any of its
Subsidiaries.
3. Administration: Selection of Participants.
(a) The Plan shall be administered by the Committee which
shall consist of three or more members of the Board who are
Disinterested Persons to be appointed by the Board from time to
time and to serve at the pleasure of the Board. No person shall
serve as a member of the Committee unless such person also
qualifies as an "outside director" within the meaning of Section
162(m) of the Code. Except as provided in Subsection 5(j)
below, members of the Committee shall not be eligible to
participate in this Plan, or to receive options under it, while
serving on the Committee or during the one year prior to serving
on the Committee.
(b) The Committee shall select the Participants to receive
Incentive Options from among the Key Employees and shall grant
to such Participants Incentive Options under, and in accordance
with, the provisions of the Plan. The Non-employee Directors
shall receive non-discretionary Non-qualified Options in
accordance with Subsection 5(j) below. The Subsidiary Directors
shall receive non-discretionary Non-qualified Options in
accordance with Subsection 5(k) below. The Acquisition
Subsidiary Directors shall receive non-discretionary
Non-qualified Options in accordance with Subsection 5(l) below.
(c) Subject to the express provisions of this Plan, the
Committee shall have authority to adopt administrative
regulations and procedures which are consistent with the terms
of this Plan; to adopt and amend such option agreements as it
deems advisable; to determine the terms and provisions of such
option agreements (including the number of Common Shares with
respect to which Incentive Options are granted to a Participant
who is a Key Employee, the option price for Common Shares and
the date or dates when the option or parts of it may be
exercised) -- which terms shall comply with the requirements of
Section 5 below; to construe and interpret such option
agreements; to impose such limitations and restrictions as are
deemed necessary or advisable by counsel for the Company so that
compliance with the Federal securities laws and with the
securities laws of the various states may be assured; and to
make all other determinations necessary or advisable for
administering this Plan. Notwithstanding the preceding
sentence, the Committee shall have no discretion to determine
who will be eligible for the grant of Non-qualified Options
under Subsections 5(j), 5(k) and 5(l) of the Plan, to set the
number of Non-qualified Options granted to any Non-employee
Director, Subsidiary Director or Acquisition Subsidiary
Director, to set the number of Common Shares subject to
Non-qualified Options granted to any Non-employee Director,
Subsidiary Director or Acquisition Subsidiary Director or to set
the date and circumstances of grants of Non-qualified Options to
Non-employee Directors under Subsection 5(j), to Subsidiary
Directors under Subsection 5(k) or to Acquisition Subsidiary
Directors under Subsection 5(l), the term of such Non-qualified
Options, the period within which such Non-qualified Options may
be exercised or the exercise price of such Non-qualified
Options. Decisions by the Committee may be made either by a
majority of its members at a meeting of the Committee duly
called and held or without a meeting by a writing signed by all
of the members of the Committee. All decisions and
interpretations made by the Committee shall be binding and
conclusive on all Participants, their legal representatives and
beneficiaries.
(d) At least once each calendar year, the Committee shall
report to the Board describing the action which it has taken in
administering the Plan and making such recommendations for
amendments or otherwise as it may deem necessary. The Board
shall have no authority to amend, alter or otherwise change any
terms or conditions of any options granted by the Committee
pursuant to Subsection (b) of this Section or any Non-qualified
Options granted pursuant to Subsection 5(j), Subsection 5(k) or
Subsection 5(l) of this Plan prior to the adoption of such
amendments in accordance with the provisions of Section 14 of
this Plan.
(e) The Committee may designate any officers or employees of
the Company or its Subsidiaries to assist the Committee in the
administration of this Plan but the Committee may not delegate
to them duties imposed on the Committee under this Plan.
4. Shares Subject to the Plan.
(a) The shares to be issued and delivered by the Company upon
exercise of options granted under this Plan are Common Shares
which may be either authorized but unissued shares or treasury
shares, in the discretion of the Committee.
(b) The aggregate number of Common Shares which may be issued
under this Plan shall not exceed 100,000 Common Shares; subject,
however, to the adjustment provided in Section 10 of this Plan
in the event of stock splits, stock dividends, combinations or
exchanges of shares or other similar capital adjustments
occurring after the Effective Date. If any outstanding option
under the Plan for any reason expires or is terminated without
having been exercised in full, the Common Shares allocable to
the unexercised portion of such option shall (unless the Plan
shall have been terminated) become available for subsequent
grants of options under the Plan. No option may be granted
under this Plan which could cause the maximum limit to be
exceeded.
(c) Of the 100,000 Common Shares which may be issued under the
Plan, an aggregate of 30,000 Common Shares shall be issuable to
Non-employee Directors, Subsidiary Directors and Acquisition
Subsidiary Directors upon the exercise of Non-qualified Options
to be granted to them under the terms of the Plan and an
aggregate of 70,000 Common Shares shall be issuable to Key
Employees upon the exercise of Incentive Options to be granted
to them under the terms of the Plan; provided, however, that if
Non-qualified Options covering an aggregate of 30,000 Common
Shares have not been granted to Non-employee Directors,
Subsidiary Directors and Acquisition Subsidiary Directors prior
to the date of the 1999 Annual Meeting, that portion of the
30,000 Common Shares not covered by Non-qualified Options so
granted may be the subject of Incentive Options to be granted to
Key Employees under the terms of the Plan.
(d) During the period in which this Plan remains in effect, no
Non-employee Director may be granted Non-qualified Options
covering, in the aggregate, more than 1,500 Common Shares; no
Subsidiary Director or Acquisition Subsidiary Director may be
granted Non-qualified Options covering, in the aggregate, more
than 750 Common Shares; and no Key Employee may be granted
Incentive Options covering, in the aggregate, more than 25,000
Common Shares (in each case, subject to adjustment as provided
in Section 10 of this Plan).
5. Terms of Options. Options granted under this Plan shall
contain such terms as the Committee shall determine subject to
the following limitations and requirements:
(a) Option price: Subject to the limitations of Subsection
5(h) below, the option price per Common Share shall be not less
than 100% of the Fair Market Value of the Company's Common
Shares on the date of the grant of such option.
(b) Period within which option may be exercised: Subject to
the limitations of Subsections 5(c), 5(h), 5(j), 5(k) and 5(l)
below, each Incentive Option granted under this Plan shall
terminate (become non-exercisable) after the expiration of not
more than ten years from the date of the grant of such Incentive
Option and each Non-qualified Option granted under this Plan
shall terminate (become non-exercisable) after the expiration of
ten years from the date of the grant of such Non-qualified
Option.
(c) Termination of Incentive Options by reason of termination
of employment: If a Participant's employment with the Company
and its Subsidiaries terminates for any reason other than (i)
death of the Participant, (ii) the disability of the Participant
within the meaning of Section 22(e)(3) of the Code, (iii) the
retirement of the Participant under the provisions of any
retirement plan of the Company or any Subsidiary, or (iv) any
reason (other than for Cause) after the Participant has been
employed by the Company and/or one or more Subsidiaries for at
least 10 consecutive years prior to the Participant's
termination of employment, the portion of all Incentive Options
granted under this Plan to such Participant which are not
otherwise exercisable under Subsection 5(i) of this Plan shall
terminate effective immediately upon termination of employment.
If the termination of employment of the Participant was due to
retirement under the provisions of any retirement plan of the
Company or any Subsidiary or if the termination of employment
was due to a reason other than for Cause and the Participant had
been employed by the Company and/or one or more Subsidiaries for
at least 10 consecutive years prior to the Participant's
termination of employment, all of such Participant's Incentive
Options may be exercised in full, whether or not then
exercisable under Subsection 5(i) of this Plan, and the right of
the Participant to exercise the Incentive Options shall
terminate upon the earlier to occur of the expiration of the
term of the Incentive Options or three months after the date of
termination of employment. If the termination of employment was
due to the death of a Participant who was an employee of the
Company and/or any Subsidiary at the time of his death, such
Incentive Options may be exercised in full, whether or not then
exercisable under Subsection 5(i) of this Plan, `and the right
of the representative or representatives of the Participant's
estate (or the person or persons who acquire (by bequest or
inheritance) the right to exercise the Participant's Incentive
Options) to exercise the Incentive Options shall terminate upon
the earlier to occur of the expiration of the term of the
Incentive Options or one year after the date of death of the
Participant. If the termination of employment was due to the
disability of the Participant within the meaning of Section
22(e)(3) of the Code, such Incentive Options may be exercised in
full, whether or not then exercisable under Subsection 5(i) of
this Plan, and the right of the Participant to exercise the
Incentive Options shall terminate upon the earlier to occur of
the expiration of the term of the Incentive Options or one year
after the date of termination of employment. If the termination
of employment of the Participant was due to reasons other than
for Cause and the Participant had not been employed by the
Company and/or one or more Subsidiaries for at least 10
consecutive years prior to the Participant's termination of
employment, the Participant's Incentive Options may be
exercised only to the extent then exercisable under Subsection
5(i) of this Plan on the date of termination of employment, and
the right of the Participant to exercise the Incentive Options
shall terminate upon the earlier to occur of the expiration of
the term of the Incentive Options or three months after the date
of termination of employment. If the termination of employment
of the Participant was for Cause, all Incentive Options which
have not been exercised as of the date of termination of
employment shall terminate immediately as of the date of
termination of employment.
(d) Non-transferability: No option granted under this Plan
shall be assignable or transferable except, in the event of the
death of a Participant, by his will or by the laws of descent
and distribution. An option granted under this Plan shall be
exercisable, during the Participant's lifetime, only by him. In
the event the death of a Participant occurs, the representative
or representatives of his estate, or the person or persons who
acquired (by bequest or inheritance) the right to exercise his
options granted under this Plan, may exercise any of the
unexercised options or parts thereof prior to the expiration of
the applicable exercise period, as specified in Subsections
5(b), 5(c), 5(h), 5(j), 5(k) and 5(l) of this Plan.
(e) More than one option granted to a Participant: More than
one option may be granted to a Participant under this Plan.
(f) Aggregate annual limit on Incentive Options: The
aggregate Fair Market Value (determined at the time of the grant
of the option) of the Common Shares with respect to which
Incentive Options are first exercisable by any Key Employee in
any calendar year under this Plan and any other plans of the
Company and its Subsidiaries shall not exceed $100,000.
(g) Partial exercise: Unless otherwise provided in the option
agreement, any exercise of an option granted under this Plan may
be made in whole or in part.
(h) 10% Shareholder: If a Participant owns (including
constructive ownership pursuant to Section 424(d) of the Code)
more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any of its
Subsidiaries, then each Incentive Option granted under this Plan
to such Participant shall by its terms fix the option price per
Common Share to be at least 110% of the Fair Market Value of the
Common Shares on the date of the grant of such Incentive Option
and such Incentive Option shall terminate (become
non-exercisable) after the expiration of five years from the
date of the grant of such Incentive Option.
(i) Exercisability: Incentive Options awarded to Key
Employees under the Plan shall be exercisable at such times and
shall be subject to such restrictions and conditions including
the performance of a minimum period of service as the Committee
may impose at the time of grant of such Incentive Options;
provided, however, that if the Committee does not specify
another vesting schedule at the time of grant, each Incentive
Option shall become exercisable as follows: (i) with respect to
25% of the Common Shares covered thereby after 24 months of
continuous employment by the Company and/or one or more
Subsidiaries; (ii) with respect to an additional 25% of the
Common Shares covered thereby after 36 months of continuous
employment by the Company and/or one or more Subsidiaries; (iii)
with respect to an additional 25% of the Common Shares covered
thereby after 48 months of continuous employment by the Company
and/or one or more Subsidiaries; and (iv) with respect to an
additional 25% of the Common Shares covered thereby after 60
months of continuous employment by the Company and/or one or
more Subsidiaries. If a Key Employee does not purchase in any
one year the full number of Common Shares which may be purchased
with his then exercisable Incentive Options, such Key Employee
may purchase those Common Shares in any subsequent year during
the term of the Incentive Options.
In no event shall any Incentive Option or any Non-qualified
Option granted under this Plan be exercisable until a period of
at least six months has elapsed from the date of the option
grant.
(j) Non-employee Directors: Each Non-employee Director then
serving on the Board and who has served on the Board and/or a
Subsidiary Board for all or a portion of at least the five
calendar years immediately preceding the January 1 immediately
prior to the date of grant, shall automatically be granted a
Non-qualified Option for 750 Common Shares effective on the date
on which the annual meeting of the Company's shareholders is
held in 1995 in accordance with the Regulations of the Company
(the "1995 Annual Meeting") and for 750 Common Shares effective
on the date on which the annual meeting of the Company's
shareholders is held in 1997 in accordance with the Regulations
of the Company (the "1997 Annual Meeting"). Each Non-Employee
Director then serving on the Board and who has served on the
Board and/or a Subsidiary Board for fewer than the five calendar
years (including all or any portion of any such year)
immediately preceding the January 1 immediately prior to the
date of grant, shall automatically be granted a Non-qualified
Option for 150 Common Shares plus 150 Common Shares for all or
any portion of each calendar year preceding the date of grant
during which such Non-Employee Director has served on the Board
and/or a Subsidiary Board as of such January 1 effective on the
date of each of the 1995 Annual Meeting and the 1997 Annual
Meeting. Any individual who was not a member of the Board on
the date of the 1995 Annual Meeting, (i) who is subsequently
appointed or elected to the Board at least six months prior to
the date on which the annual meeting of the Company's
shareholders is to be held in 1996 in accordance with the
Regulations of the Company (the "1996 Annual Meeting") shall
automatically be granted a Non-qualified Option on the date of
such appointment or election for the same number of Common
Shares as such individual would have received if he had been a
member of the Board on the date of the 1995 Annual Meeting; (ii)
who is subsequently appointed or elected to the Board less than
six months prior to the date of the 1996 Annual Meeting but
prior to such 1996 Annual Meeting shall automatically be granted
a Non-qualified Option on the date of such appointment or
election for 75% of the number of Common Shares which such
individual would have received if he had been a member of the
Board on the date of the 1995 Annual Meeting; (iii) who is
subsequently appointed or elected to the Board on or after the
date of the 1996 Annual Meeting but at least six months prior to
the date of the 1997 Annual Meeting shall automatically be
granted a Non-qualified Option on the date of such appointment
or election for 50% of the number of Common Shares which such
individual would have received if he had been a member of the
Board on the date of the 1995 Annual Meeting; and (iv) who is
subsequently appointed or elected to the Board less than six
months prior to the 1997 Annual Meeting but prior to such 1997
Annual Meeting shall automatically be granted a Non-qualified
Option on the date of such appointment or election for 25% of
the Common Shares which such individual would have received if
he had been a member of the Board on the date of the 1995 Annual
Meeting. Any individual who was not a member of the Board on
the date of the 1997 Annual Meeting and who is subsequently
appointed or elected to the Board prior to the date on which the
annual meeting of the Company's shareholders is to be held in
1999 in accordance with the Regulations of the Company (the
"1999 Annual Meeting") shall automatically be granted a
Non-qualified Option on the same basis as described in the
immediately preceding sentence. Notwithstanding anything to the
contrary in this Section 5(j), any individual who was serving as
a Subsidiary Director or as an Acquisition Subsidiary Director
and is subsequently appointed or elected as a Non-employee
Director after the date of the 1995 Annual Meeting but prior to
the date of the 1997 Annual Meeting, or after the date of the
1997 Annual Meeting but prior to the date of the 1999 Annual
Meeting, as the case may be, and who is to be granted a
Non-qualified Option pursuant to either of the two immediately
preceding sentences, shall have deducted from the number of
Common Shares to be covered by the Non-qualified Option granted
to him under this Subsection 5(j), the number of Common Shares
covered by any Non-qualified Option which he received pursuant
to Subsection 5(k) or Subsection 5(l) of this Plan.
Each Non-qualified Option granted to a Non-employee Director
shall have an exercise price equal to 100% of the Fair Market
Value of the Common Shares on the date of the grant of such
Non-qualified Option.
If a Non-employee Director does not purchase in any one year
the full number of Common Shares which may be purchased with his
then exercisable Non-qualified Options, such Non-employee
Director may purchase those Common Shares in any subsequent year
during the term of the Non-qualified Options.
If a Non-employee Director ceases to be a director of the
Company for any reason other than his death or for Cause, the
Non-qualified Options granted to him under this Plan may be
exercised in full, whether or not then exercisable by their
terms, on or before the expiration of the term of the
Non-qualified Options; provided, however, that if the former
Non-employee Director shall die prior to the expiration of the
term of the Non-qualified Options, such Non-qualified Options
may only be exercised on or before the earlier of the expiration
of such term or two years following the date of death. If a
Non-employee Director ceases to be a director of the Company
because of his death, such Non-qualified Options may be
exercised in full, whether or not then exercisable by their
terms, only on or before the earlier of the expiration of the
term of the Non-qualified Options or two years following the
date of death. If a Non-employee Director ceases to be a
director of the Company and/or any Subsidiary for Cause, all of
his then unexercised Non-qualified Options shall immediately
terminate.
Non-employee Directors shall not be eligible to receive any
options under the Plan other than pursuant to this Subsection
5(j).
(k) Subsidiary Directors: Each Subsidiary Director then
serving on a Subsidiary Board and who has served on a Subsidiary
Board and/or the Board for all or a portion of at least the five
calendar years immediately preceding the January l immediately
prior to the date of grant, shall automatically be granted a
Non-qualified Option for 375 Common Shares effective on the date
of the 1995 Annual Meeting and for 375 Common Shares effective
on the date of the 1997 Annual Meeting. Each Subsidiary
Director then serving on a Subsidiary Board and who has served
on a Subsidiary Board and/or the Board for fewer than the five
calendar years (including all or any portion of any such year)
immediately preceding the January 1 immediately prior to the
date of grant shall automatically be granted a Non-qualified
Option for 75 Common Shares plus 75 Common Shares for all or any
portion of each calendar year preceding the date of grant during
which such Subsidiary Director has served on a Subsidiary Board
and/or the Board as of such January 1, effective on the date of
each of the 1995 Annual Meeting and the 1997 Annual Meeting.
Any individual who was not a member of a Subsidiary Board on the
date of the 1995 Annual Meeting, (i) who is subsequently
appointed or elected to a Subsidiary Board at least six months
prior to the date of the 1996 Annual Meeting shall automatically
be granted a Non-qualified Option on the date of such
appointment or election for the same number of Common Shares as
such individual would have received if he had been a member of
the Subsidiary Board on the date of the 1995 Annual Meeting;
(ii) who is subsequently appointed or elected to a Subsidiary
Board less than six months prior to the date of the 1996 Annual
Meeting but prior to such 1996 Annual Meeting shall
automatically be granted a Non-qualified Option on the date of
such appointment or election for 75% of the number of Common
Shares which such individual would have received if he had been
a member of the Subsidiary Board on the date of the 1995 Annual
Meeting; (iii) who is subsequently appointed or elected to a
Subsidiary Board on or after the date of the 1996 Annual Meeting
but at least six months prior to the date of the 1997 Annual
Meeting shall automatically be granted a Non-qualified Option on
the date of such appointment or election for 50% of the number
of Common Shares which such individual would have received if he
had been a member of the Subsidiary Board on the date of the
1995 Annual Meeting; and (iv) who is subsequently appointed or
elected to a Subsidiary Board less than six months prior to the
1997 Annual Meeting but prior to such 1997 Annual Meeting shall
automatically be granted a Non-qualified Option on the date of
such appointment or election for 25% of the Common Shares which
such individual would have received if he had been a member of
the Subsidiary Board on the date of the 1995 Annual Meeting.
Any individual who was not a member of a Subsidiary Board on the
date of the 1997 Annual Meeting and who is subsequently
appointed or elected to a Subsidiary Board prior to the date of
the 1999 Annual Meeting shall automatically be granted a
Non-qualified Option on the same basis as described in the
immediately preceding sentence.
Each Non-qualified Option granted to a Subsidiary Director
shall have an exercise price equal to 100% of the Fair Market
Value of the Common Shares on the date of the grant of such
Non-qualified Option.
If a Subsidiary Director does not purchase in any one year the
full number of Common Shares which may be purchased with his
then exercisable Non-qualified Options, such Subsidiary Director
may purchase those Common Shares in any subsequent year during
the term of the Non-qualified Options.
If a Subsidiary Director ceases to be a director of a
Subsidiary and/or the Company for any reason other than his
death or for Cause, the Non-qualified Options granted to him
under this Plan may be exercised in full, whether or not then
exercisable by their terms, on or before the expiration of the
term of the Non-qualified Options; provided, however, that if
the former Subsidiary Director shall die prior to the expiration
of the term of the Non-qualified Options, such Non-qualified
Options may be exercised only on or before the earlier of the
expiration of such term or two years following the date of
death. If a Subsidiary Director ceases to be a director of a
Subsidiary and/or the Company because of his death, such
Non-qualified Options may be exercised in full, whether or not
then exercisable by their terms, only on or before the earlier
of the expiration of the term of the Non-qualified Options or
two years following the date of death. If a Subsidiary Director
ceases to be a director of a Subsidiary and/or the Company for
Cause, all of his then unexercised Non-qualified Options shall
immediately terminate.
Subsidiary Directors shall not be eligible to receive any
options under the Plan other than pursuant to this Subsection
5(k).
(l) Acquisition Subsidiary Directors: If the Company directly
acquires a corporation such that such corporation then becomes
an Acquisition Subsidiary, each Acquisition Subsidiary Director
then serving on the board of directors of the Acquisition
Subsidiary (the "Acquisition Board") and who has served on the
Acquisition Board for all or a portion of at least the five
calendar years immediately preceding the January 1 immediately
prior to the date of grant shall automatically be granted a
Non-qualified Option for 375 Common Shares on the effective date
of the acquisition of the Acquisition Subsidiary by the Company
(the "Acquisition Date") and each Acquisition Subsidiary
Director then serving on the Acquisition Board and who has
served on the Acquisition Board for all or a portion of at least
the five calendar years immediately preceding the January 1
immediately prior to the date of grant shall automatically be
granted a Non-qualified Option for 375 Common Shares effective
on the second anniversary of the Acquisition Date (the
"Acquisition Second Anniversary"). Each Acquisition Subsidiary
Director then serving on the Acquisition Board and who has
served on the Acquisition Board for fewer than the five calendar
years (including all or any portion of any such year)
immediately preceding the January 1 immediately prior to the
date of grant shall automatically be granted a Non-qualified
Option for 75 Common Shares plus 75 Common Shares for all or any
portion of each calendar year preceding the date of grant during
which such Acquisition Subsidiary Director has served on the
Acquisition Board as of such January 1, effective on the
Acquisition Date and on the Acquisition Second Anniversary,
respectively. Any individual who is not a member of the
Acquisition Board on the Acquisition Date (i) who is
subsequently appointed or elected to the Acquisition Board at
least six months prior to the first anniversary of the
Acquisition Date (the "Acquisition First Anniversary"), shall
automatically be granted a Non-qualified Option on the date of
such appointment or election for the same number of Common
Shares as such individual would have received if he had been a
member of the Acquisition Board on the Acquisition Date; (ii)
who is subsequently elected or appointed to the Acquisition
Board less than six months prior to the Acquisition First
Anniversary but prior to the Acquisition First Anniversary shall
automatically be granted a Non-qualified Option on the date of
such appointment or election for 75% of the number of Common
Shares which such individual would have received if he had been
a member of the Acquisition Board on the Acquisition Date; (iii)
who is subsequently appointed or elected to the Acquisition
Board on or after the date of the Acquisition First Anniversary
but at least six months prior to the Acquisition Second
Anniversary shall automatically be granted a Non-qualified
Option on the date of such appointment or election for 50% of
the number of Common Shares which such individual would have
received if he had been a member of the Acquisition Board on the
Acquisition Date; and (iv) who is subsequently appointed or
elected to the Acquisition Board less than six months prior to
the Acquisition Second Anniversary but prior to the Acquisition
Second Anniversary shall automatically be granted a
Non-qualified Option on the date of such appointment or election
for 25% of the Common Shares which such individual would have
received if he had been a member of the Acquisition Board on the
Acquisition Date. Any individual who was not a member of the
Acquisition Board on the Acquisition Second Anniversary and who
is subsequently appointed or elected to the Acquisition Board
prior to the date of the fourth anniversary of the Acquisition
Date shall automatically be granted a Non-qualified Option on
the same basis as described in the immediately preceding
sentence.
Each Non-qualified Option granted to an Acquisition Subsidiary
Director shall have an exercise price equal to 100% of the Fair
Market Value of the Common Shares on the date of the grant of
such Non-qualified Option.
If an Acquisition Subsidiary Director does not purchase in any
one year the full number of Common Shares which may be purchased
with his then exercisable Non-qualified Options, such
Acquisition Subsidiary Director may purchase those Common Shares
in any subsequent year during the term of the Non-qualified
Options.
If an Acquisition Subsidiary Director ceases to be a director
of an Acquisition Subsidiary and/or the Company for any reason
other than his death or for Cause, the Non-qualified Options
granted to him under this Plan may be exercised in full, whether
or not then exercisable by their terms, on or before the
expiration of the term of the Non-qualified Options; provided,
however, that if the former Acquisition Subsidiary Director
shall die prior to the expiration of the term of the
Non-qualified Options, such Non-qualified Options may be
exercised only on or before the earlier of the expiration of
such term or two years following the date of death. If an
Acquisition Subsidiary Director ceases to be a director of the
Acquisition Subsidiary because of his death, such Non-qualified
Options may be exercised in full, whether or not then
exercisable by their terms, only on or before the earlier of the
expiration of the term of the Non-qualified Options or two years
following the date of death. If an Acquisition Subsidiary
Director ceases to be a director of an Acquisition Subsidiary
for Cause, all of his then unexercised Non-qualified Options
shall immediately terminate.
Acquisition Subsidiary Directors shall not be eligible to
receive any options under the Plan other than pursuant to this
Subsection 5(l).
6. Period For Granting Options. No options shall be granted
under this Plan subsequent to the tenth anniversary of the
earlier of (a) the day prior to the date on which this Plan is
adopted by the Board or (b) the day prior to the date on which
this Plan is approved by the affirmative vote of the holders of
a majority of the outstanding shares of the Company.
7. No Effect Upon Employment Status. The fact that an employee
has been designated a Key Employee or selected as a Participant
shall not limit or otherwise qualify the right of his employer
to terminate his employment at any time.
8. Method of Exercise. An option granted under this Plan may
be exercised only by written notice to the Committee, signed by
the Participant, or in the event of his death, by such other
person as is entitled to exercise such option. The notice of
exercise shall state the number of Common Shares in respect of
which the option is being exercised, and shall either be
accompanied by the payment of the full option price of such
Common Shares, or shall fix a date (not more than 10 business
days from the date of such notice) for the payment of the full
option price of the Common Shares being purchased. The option
price may be paid in cash, or by the transfer by the Participant
to the Company of Common Shares, free and clear of any liens,
security interests or other encumbrances, already owned by the
Participant which shall be valued at the Fair Market Value of
such Common Shares on the date of such transfer, or by a
combination of cash and such Common Shares, all in accordance
with such regulations, procedures and determinations as may be
adopted by the Committee pursuant to Subsection 3(c) above.
During the option period, no person entitled to exercise any
option granted under this Plan shall have any of the rights or
privileges of a shareholder with respect to any Common Shares
issuable upon exercise of such option until the books of the
Company evidence that such person has become the record owner of
such Common Shares.
9. Implied Consent of Participants. Every Participant, by his
acceptance of an option under this Plan, shall be deemed to have
consented to be bound, on his own behalf and on behalf of his
heirs, permitted assigns and legal representatives, by all of
the terms and conditions of this Plan.
10. Share Adjustments. In the event there is any change in the
Common Shares resulting from stock splits, stock dividends,
combinations or exchanges of shares, or other similar capital
adjustments, equitable proportionate adjustments shall be made
by the Committee in (a) the number of Common Shares available
for the grant of options under this Plan, (b) the number of
Common Shares subject to options granted under this Plan, and
(c) the exercise price of outstanding options.
11. Merger, Consolidation, or Sale of Assets. In the event the
Company shall consolidate with, merge into, or transfer all or
substantially all of its assets (an "Acquisition Transaction")
to another corporation or corporations (herein referred to as
"successor employer corporation"), then each Incentive Option
and each Non-Qualified Option outstanding under the Plan shall
become exercisable in full, whether or not then exercisable by
its terms, immediately upon consummation of the Acquisition
Transaction. As a condition of any such Acquisition
Transaction, the Company shall require that the successor
employer corporation obligate itself to continue this Plan and
to assume all obligations under the Plan in a manner consistent
with the provisions of Section 424(a) of the Code. In the event
that such successor employer corporation terminates for any
reason the employment of any Participant who is a Key Employee
within the one year period immediately following the
consummation of the Acquisition Transaction, such Participant
shall have the right to exercise his then unexercised Incentive
Options during the period ending on the earlier of the
expiration of the term of the Incentive Options or three months
following the date of the Participant's termination of
employment.
12. Company Responsibility. All expenses of this Plan,
including the cost of maintaining records, shall be borne by the
Company. The Company shall have no responsibility or liability
(other than under applicable securities laws) for any act or
thing done or left undone with respect to the price, time,
quantity or other conditions and circumstances of the purchase
of Common Shares under the terms of the Plan, so long as the
Company acts in good faith.
13. Securities Laws. The Committee shall take all necessary or
appropriate action to ensure that all option grants and all
exercises thereof under this Plan are in full compliance with
all Federal and state securities laws. No option granted under
this Plan shall be exercised before the Common Shares subject to
the Plan have been registered or qualified for sale under
appropriate Federal and state securities laws.
14. Amendment and Termination of the Plan. The Committee, with
the approval of the Board, may amend the Plan from time to time
or terminate the Plan at any time without the approval of the
shareholders of the Company except as such shareholder approval
may be required (a) to satisfy the requirements of Rule 16b-3
under the Securities Exchange Act of 1934, as amended, or any
successor provision, (b) to satisfy applicable requirements of
the Code or (c) to satisfy applicable requirements of any
securities exchange on which are listed any of the Company's
equity securities or any requirements applicable to issuers
whose securities are traded in the NASDAQ National Market
System. No such action to amend or terminate the Plan shall
reduce the then existing number of any Participant's options or
adversely change the term or conditions thereof without the
Participant's consent. No amendment of the Plan shall result in
any Committee member's losing his status as a Disinterested
Person with respect to any employee benefit plan of the Company
or result in the Plan losing its status as a plan satisfying the
requirements of Rule 16b-3 under the Securities Exchange Act of
1934, as amended, or any successor provision. In no event shall
Subsection 5(j) of the Plan be amended, with or without
shareholder approval, more than once every six months, other
than to comport with changes in the Code. If the Plan is
terminated, any unexercised option shall continue to be
exercisable in accordance with its terms.
15. Effective Date. The Plan was adopted by the Board on
January 19, 1995. The Plan shall become effective as of the
date it is approved by the affirmative vote of the holders of a
majority of the outstanding shares of the Company. The Plan
shall be null and void if shareholder approval is not obtained
within twelve (12) months of the adoption of the Plan by the
Board.
END OF ANNEX A
EXHIBIT 10 (c)
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1994
AMENDED AND RESTATED NOTE
$1,950,000.00 December 12, 1991
First Amendment and Restatement September 16, 1992
Second Amendment and Restatement June 30, 1994
On or before December 31, 1996 (hereinafter referred to as "Due
Date"), the undersigned (the "Company") for value received,
promises to pay to the order of THE FIFTH THIRD BANK
(hereinafter referred to as "Bank" or "Holder") at its main
office in Cincinnati, Ohio, the sum of $1,950,000 (hereinafter
referred to as the "Borrowing").
The principal amount outstanding hereunder shall bear interest
at a rate per annum equal to the "Prime Rate" (the rate
announced by Bank from time to time) minus one-half of one
percent (.5%) on the above effective date hereof. In the event
of a change in the said Prime Rate, such change shall become
immediately effective.
So long as no event of default has occurred, the term of this
Note may be extended for seven (7) additional one year periods
as long as Borrower requests such extension at least thirty (30)
days prior to the then existing maturity date hereof and Bank
consents to each such extension in writing which consent shall
be granted or denied in Bank's sole discretion.
The principal amount of this Note, if extended beyond its
original term, shall be payable in 15 semi-annual installments,
the first 14 installments shall be due as follows:
Due Date Principal Amount
------------------- ----------------
December 31, 1994 $130,000
December 31, 1997 $130,000
June 30, 1995 $130,000
June 30, 1998 $130,000
December 31, 1995 $130,000
December 31, 1998 $130,000
June 30, 1996 $130,000
June 30, 1999 $130,000
December 31, 1996 $130,000
December 31, 1999 $130,000
June 30, 1997 $130,000
June 30, 2000 $130,000
December 31, 2000 $130,000
June 30, 2001 $130,000
In the event this Note is extended beyond its original term,
the 15th and final installment shall be due and payable on
December 31, 2001, and shall be in the amount of all unpaid
principal and accrued interest. Accrued interest shall be
billed and payable quarterly in arrears, on the first day of
each calendar quarter commencing October 1, 1994. Nothing
contained herein shall be deemed to be a commitment by the Bank
to extend the term of this Note beyond December 31, 1996.
This Note shall be secured by 16,000 shares (100%) of common
stock of The First National Bank of Southeastern Ohio, pursuant
to a Pledge Agreement dated of even date herewith.
The undersigned covenants and agrees with respect to itself and
its subsidiaries that from the date hereof and while this Note
of the undersigned shall be outstanding, it will:
(a) Maintain efficient accounting and cost records in
accordance with sound accounting practice; and furnish to the
Bank not later than ninety (90) days after the close of its
fiscal year and audited financial report of the undersigned and
its subsidiaries in detail prepared in accordance with generally
accepted accounting principles, consistently applied, by an
independent public accountant acceptable to the Bank showing in
form and detail satisfactory to the Bank the financial condition
and results of operations of the undersigned and its
subsidiaries and quarterly balance sheets and operating
statements as prepared by the undersigned's own accounting
department for the Company and certified by an officer of the
undersigned to be correct, not later than thirty (30) days after
the close of each quarter (except the last quarter of the
undersigned's fiscal year) and furnish such additional
information as the Bank may deem necessary and from time to time
request;
(b) Permit the Bank or such persons as the Bank may
designate to visit and inspect any of the properties of the
undersigned or its subsidiaries, examine the books of account
and review the affairs, finances and accounts of the undersigned
or any subsidiary with its officers, all at the Bank's expense
and at reasonable times; and
(c) Maintain ownership of the stock of the undersigned such
that no change occurs in the owners currently holding the
majority thereof.
EVENTS OF DEFAULT
This obligation, and all other obligations of the undersigned
to Holder, shall be and become immediately due and payable at
the option of the Holder, without any demand or notice
whatsoever, upon the occurrence of any of the following
described events, each of which shall constitute a default:
1. Any failure to make any payment when due of the principal or
interest on this obligation, or the occurrence of any Event of Default
as therein defined on any other obligation for borrowed money of the
undersigned.
2. The death or dissolution of the undersigned or, if the undersigned
is a partnership, the death or dissolution of a general partner.
3. Any failure to submit to Holder current financial information upon
request.
4. The creation of any lien (except the lien to Bank herein
created) or the issuance of an attachment against any of the property
of, or the entry of a judgment against, the undersigned.
5. In the reasonable judgment of Holder, any adverse change occurs in the
ability of the undersigned to repay this debt, or the Holder deems itself
reasonably insecure.
6. An assignment for the benefit of the creditors of, or the commencement
of any bankruptcy, receivership, insolvency, reorganization, or
liquidation proceedings by or against the undersigned or any endorser or
guarantor hereof.
7. The institution of any garnishment proceedings by attachment, levy
or otherwise against any deposit balance maintained or any property
deposited with the Holder hereof by the undersigned or any endorser or
guarantor hereof.
8. Holder has reasonably called for additional security and the
undersigned has not furnished satisfactory additional security on demand.
Upon the occurrence of any Event of Default herein described,
Holder may, at its option and with 10 days notice to the
undersigned, (except that such notice period shall not be
applicable to an Event of Default occurring pursuant to
paragraph 1 above) declare this note and all other liabilities
of the undersigned, to be fully due and payable in their
aggregate amount together with accrued interest.
In addition to any other remedy permitted by law, the Holder
shall have a lien on and a security interest in the deposit
balance of any of the undersigned, and may at any time, without
notice, apply the same to this Note or such other liabilities,
whether due or not, and Holder may, at its option, proceed to
enforce and protect its rights by an action at law or in equity
or by any other appropriate proceedings. Notwithstanding any
other legal or equitable rights of Holder, Holder, in the event
of default, is (a) hereby irrevocably appointed and constituted
attorney in fact, with full power of substitution, to exercise
all rights of ownership with respect to Collateral including,
but not limited to, the right to collect all income or other
distribution arising from and to exercise all voting rights
connected with Collateral; and (b) is hereby given full power to
collect, sell, assign, transfer and deliver all of said
Collateral or any part thereof, or any substitutes therefore, or
any additions thereto, through any private or public sale
without either demand or notice to the undersigned, or any
advertisement, the same being hereby expressly waived, at which
sale Holder is authorized to purchase said property or any part
thereof, free from any right of redemption on the part of the
undersigned, which is hereby expressly waived and released. In
case of sale for any cause, after deducting all costs and
expenses of every kind, Holder may apply, as it shall deem
proper, the residue to the proceeds of such sale toward the
payment of any one or more or all of the liabilities of the
undersigned, whether due or not due, to Holder, after such
application and the return of any surplus, the undersigned
agrees to be and remains liable to Holder for any and every
deficiency after application as aforesaid upon this and any
other liability.
If this Note is not paid in full at maturity (whether by
acceleration or otherwise) or within ten (10) days thereafter,
Holder may increase the above stated interest rate by 6%. Under
no circumstances shall said interest rate be raised to a rate
which shall be in excess of the maximum rate of interest
allowable under the state and/or federal usury laws in force at
the time of such change.
WAIVER
No failure on the part of the Holder to exercise any of its
rights hereunder shall be deemed a waiver of any such rights or
of any default. Demand, presentment, protest, notice of
dishonor and notice of default are hereby waived. The
undersigned agrees to pay all costs of collection, including
reasonable attorneys fees, upon default.
IN WITNESS WHEREOF, the undersigned has caused its name to be
signed by its duly authorized officers as of the date hereof.
PEOPLES BANCORP, INC.
By: /s/ JOHN W. CONLON
John W. Conlon
Its: Chief Financial Officer
RESOLUTION
RESOLVED, that Peoples Bancorp Inc. hereby consents to the
issuance of a renewal of the Term Note in the sum of
$1,950,000.00 to Fifth Third Bank with interest at the current
rate of 6.75%, at Fifth Third Prime minus 50 basis points,
variable. Said note shall be for a term of two and one-half (2
1/2) years.
FURTHER RESOLVED, that Robert E. Evans, President and Chief
Executive Officer, and John W. Conlon, Chief Financial Officer,
separately or jointly, shall be, and hereby are, authorized and
directed to execute in the name and on behalf of the Corporation
the Term Note with Fifth Third Bank with such changes therein or
additions thereto as the officers signing the same and counsel
deem advisable.
/s/ ROBERT E. EVANS
Robert E. Evans, President and Chief Executive Officer
/s/ JOHN W. CONLON
John W. Conlon
Chief Financial Officer
I certify that the forgoing was adopted by the Board of
Directors of Peoples Bancorp Inc., was enacted in accordance
with the By-Laws of said Corporation and recorded in its minutes
at a meeting of said Board at which a quorum was present on the
16th day of June, 1994.
/s/ RUTH I. OTTO
Ruth I. Otto
Corporate Secretary
EXHIBIT 11
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1994
<TABLE>
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Year Ended December 31,
---------------------------------------------
1994 1993<F1> 1993<F1> 1992
BEFORE AFTER
CUMULATIVE CUMULATIVE
EFFECT OF EFFECT OF
ACCOUNTING ACCOUNTING
CHANGES CHANGES
----- ---------- ---------- ------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
EARNINGS:
Net income $5,748,000 $5,385,000 $5,071,000 $4,550,000
COMMON SHARES OUTSTANDING:
Weighted average
Common Shares outstanding 2,899,951 2,793,962 2,793,962 2,663,702
Add: Adjustment for
outstanding stock options 9,418 3,390 3,390
--------- --------- --------- ---------
Total weighted average
Common Shares outstanding 2,909,369 2,797,352 2,797,352 2,663,702
PRIMARY EARNINGS PER SHARE $1.98 $1.92 $1.81 $1.71
===== ===== ===== =====
FULLY DILUTED EARNINGS PER SHARE
EARNINGS:
Net income $5,748,000 $5,385,000 $5,071,000 $4,550,000
Add: Effect of not
having Convertible
Subordinated Debenture
outstanding net of
tax effect 21,000 21,000 117,000
$5,748,000 $5,406,000 $5,092,000 $4,667,000
COMMON SHARES OUTSTANDING:
Weighted average Common
Shares outstanding 2,899,951 2,793,962 2,793,962 2,663,702
Add: Shares issued
assuming conversion of
Convertible Debentures
at beginning of period 44,638 44,638 276,120
Add: Adjustment for
outstanding stock options 12,290 3,390 3,390
--------- --------- --------- ---------
Total weighted average
Common Shares outstanding 2,912,241 2,841,990 2,841,990 2,939,822
FULLY DILUTED EARNINGS
PER SHARE $1.97 $1.90 $1.79 $1.59
===== ===== ===== =====
<FN>
<F1> Prior years weighted average shares outstanding adjusted for
2 for 1 stock split issued on April 29, 1994, and a 10% stock dividend
issued on April 15, 1993.
</FN>
</TABLE>
SELECTED FINANCIAL DATA
The information below under the captions "Operating
Data","Balance Sheet Data" and "Per Share Data" for each of the
five years in the period ended December 31, 1994 has been
derived from the Consolidated Financial Statements of the
Corporation.
(dollars in thousands, except ratios and per share data)
1994 1993 1992 1991 1990
OPERATING DATA <F1>
for the year ended:
Total interest income $36,104 $35,311 $37,707 $39,151 $39,600
Total interest expense 15,424 15,263 17,887 22,172 24,042
Net interest income 20,680 20,048 19,820 16,979 15,558
Provision for loan losses 765 1,592 2,387 1,748 1,475
Other income 3,838 3,952 3,514 2,924 2,824
Other expenses 15,672 15,124 14,945 13,547 12,586
Net income 5,748 5,071 4,550 3,615 3,458
BALANCE SHEET DATA
at year end:
Total assets $498,006 $465,373 $468,562 $424,449 $412,789
Investments 99,419 103,349 112,556 99,963 102,244
Net loans 354,570 315,305 285,448 273,980 257,634
Total deposits 403,819 385,639 401,623 375,027 360,601
Term debt 23,787 20,331 15,506 6,836 7,275
Stockholders' equity 45,635 42,778 38,497 32,414 29,567
SIGNIFICANT RATIOS <F1> <F2>
Net income to:
Average total assets 1.20% 1.09% 1.01% 0.85% 0.85%
Average stockholders'
equity 12.9 11.9 11.8 11.7 12.0
Average stockholders'
equity to average
total assets 9.3 8.8 7.5 7.3 7.1
Average loans to
average deposits 85.5 78.4 70.2 71.4 70.6
Primary capital to
period end total
assets 10.1 10.1 8.9 8.6 8.2
Dividend payment ratio 29.3 29.8 28.0 29.2 28.8
PER SHARE DATA <F1> <F2> <F3>
Net income:
Primary $1.98 $1.81 $1.71 $1.50 $1.42
Fully diluted <F4> 1.97 1.79 1.59 1.30 1.23
Cash dividends paid 0.58 0.52 0.48 0.44 0.41
Book value at end
of period 15.74 14.71 13.82 13.29 12.30
[FN]
<F1> 1993 net income and per share information based upon net
income after adjustment for cumulative effect of accounting
changes.
<F2> Adjusted to reflect a two for one stock split issued on
April 29, 1994 and a 10% stock dividend issued on April 15, 1993.
<F3>
1994 1993 1992 1991 1990
Primary shares
outstanding 2,909,369 2,797,352 2,663,702 2,417,310 2,441,756
Fully diluted
shares
outstanding 2,912,241 2,841,990 2,939,822 2,955,158 3,002,142
<F4> Fully diluted net income per share is calculated as if the
Subordinated Convertible Debentures were converted as of the
issue date, with a corresponding increase in net income from
the after-tax reduction in interest expense.
[/FN]
SUMMARIZED QUARTERLY INFORMATION
A summary of selected quarterly financial information for 1994
and 1993 follows:
1994
--------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
---------- ---------- ---------- ----------
Interest income $8,497,000 $8,645,000 $9,146,000 $9,816,000
Interest expense 3,620,000 3,654,000 3,930,000 4,220,000
Net interest income 4,877,000 4,991,000 5,216,000 5,596,000
Provision for possible
loan losses 192,000 248,000 167,000 158,000
Investment securities
gains (losses) 81,000 45,000 0 (363,000)
Other income 1,029,000 951,000 970,000 1,125,000
Other expenses 3,911,000 3,871,000 3,919,000 3,971,000
Income taxes 578,000 556,000 628,000 571,000
Net income 1,306,000 1,312,000 1,472,000 1,658,000
Net income per fully
diluted common share $0.45 $0.45 $0.51 $0.56
1993
-------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
---------- ---------- ---------- ----------
Interest income $9,092,000 $8,833,000 $8,767,000 $8,619,000
Interest expense 3,917,000 3,861,000 3,794,000 3,691,000
Net interest income 5,175,000 4,972,000 4,973,000 4,928,000
Provision for possible
loan losses 450,000 450,000 375,000 317,000
Investment securities
gains 0 1,000 43,000 1,000
Other income 1,115,000 944,000 972,000 876,000
Other expenses 3,692,000 3,967,000 3,657,000 3,808,000
Income taxes 646,000 364,000 539,000 350,000
Cumulative effect of
accounting changes, net (314,000)
Net income 1,188,000 1,136,000 1,417,000 1,330,000
Net income per fully
diluted common share $0.45 $0.40 $0.48 $0.46
MARKET FOR COMMON STOCK AND DIVIDENDS
Prior to 1993, the Corporation's Common Stock was traded on a
limited basis in the over-the-counter market. On February 9,
1993, the Corporation commenced trading on the Nasdaq National
Stock Market (National Association of Securities Dealers
Automated Quotation). Nasdaq provides brokers and others with
immediate access to the best stock price for the Corporation and
thousands of other companies across the world. The Corporation
can be found under the symbol PEBO.
In 1994, 230,633 shares were traded through the Nasdaq system,
an average daily volume of 912 shares traded. The following
table sets forth for the indicated periods the high and low bid
quotations for, and the cash dividends declared, with respect to
the Corporation's Common Stock.
Prior to 1993, the bid quotations were obtained from the three
securities dealers which made a market in the Corporation's
Common Stock. These quotations are inter-dealer prices, without
retail markup, markdown, or commission, and may not represent
actual transactions. Currently seven companies serve as market
makers on the Nasdaq National Stock Market. Market prices since
February, 1993, have been obtained directly from the Nasdaq
quotation system. The bid quotations and per share dividends
have been adjusted for a two for one stock split issued on April
29, 1994 and a 10% stock dividend issued on April 15, 1993.
Peoples Bancorp had 1,025 shareholders at December 31, 1994.
QUARTERLY MARKET AND DIVIDEND INFORMATION
PER SHARE
-------------------------------
High Bid Low Bid Dividend
-------- ------- --------
1994
Fourth Quarter $25.50 $23.25 $.15
Third Quarter 24.50 22.00 .15
Second Quarter 24.00 20.00 .14
First Quarter 22.50 19.00 .14
1993
Fourth Quarter $22.00 $19.50 $.14
Third Quarter 23.25 19.00 .13
Second Quarter 23.50 17.50 .13
First Quarter 24.55 17.28 .12
1992
Fourth Quarter $20.00 $16.82 $.12
Third Quarter 18.64 15.00 .12
Second Quarter 16.37 12.96 .12
First Quarter 13.64 12.28 .12
The Corporation and its predecessor have paid cash dividends on
its Common Stock for over 38 consecutive years and have
increased the annual dividend in each of the last 29 years. The
Corporation plans to continue to pay quarterly cash dividends.
Cash dividends are subject to certain restrictions as described
in Note 14 to the audited financial statements.
THE ANNUAL MEETING OF STOCKHOLDERS OF PEOPLES BANCORP INC. WILL
BE HELD TUESDAY, APRIL 4, 1995 AT 10:00 A.M. IN THE PEOPLES BANK
CONFERENCE ROOM, 235 SECOND STREET, MARIETTA, OHIO. STOCKHOLDERS
ARE CORDIALLY INVITED TO ATTEND.
ON WRITTEN REQUEST, A COPY OF OUR ANNUAL REPORT TO THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K IS AVAILABLE TO
INTERESTED STOCKHOLDERS. REQUESTS SHOULD BE ADDRESSED TO RUTH
OTTO, SECRETARY, PEOPLES BANCORP INC., P.O. BOX 738, MARIETTA,
OHIO 45750.
CONSOLIDATED BALANCE SHEET
As of December 31, 1994 and 1993
1994 1993
ASSETS
Cash and due from banks (Note 1) $19,551,000 $15,275,000
Interest bearing deposits with banks 650,000 5,998,000
Federal funds sold 4,500,000 7,050,000
Investment securities (Notes 1 and 3):
Securities available-for-sale,
at fair value (amortized cost
of $91,783,000 at December 31, 1994) 90,172,000
Securities held-to-maturity,
at amortized cost (fair value
approximates $9,089,000 at
December 31, 1994) 9,247,000
Securities held for investment,
at amortized cost (fair value
approximates $108,105,000 at
December 31, 1993) 103,349,000
----------- -----------
Total investment securities 99,419,000 103,349,000
Loans (Notes 1, 4 and 12) 361,353,000 321,675,000
Reserve for possible loan
losses (Notes 1 and 4) (6,783,000) (6,370,000)
----------- -----------
Net loans 354,570,000 315,305,000
Bank premises and equipment (Notes 1 and 5) 10,807,000 10,767,000
Accrued interest 3,254,000 3,254,000
Prepaid expenses and other assets 5,255,000 4,375,000
------------ ------------
Total assets $498,006,000 $465,373,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $48,121,000 $45,105,000
Interest bearing 355,698,000 340,534,000
----------- -----------
Total deposits 403,819,000 385,639,000
Short-term borrowings (Note 6):
Federal funds purchased,
Federal Home Loan Bank advances,
and securities sold under
repurchase agreements 19,767,000 12,260,000
Term debt (Note 7) 23,787,000 20,331,000
Accrued expenses and other liabilities 4,998,000 4,365,000
------------ ------------
Total liabilities 452,371,000 422,595,000
Commitments (Notes 8 and 9)
Stockholders' equity (Notes 14, 17 and 19):
Common stock, no par value,
6,000,000 and 4,000,000 shares authorized
in 1994 and 1993, respectively;
3,020,908 issued in 1994 and 1,509,540
issued in 1993 24,326,000 24,290,000
Net unrealized holding loss on
available-for-sale securities, net of
applicable taxes (1,030,000)
Retained earnings 24,078,000 20,012,000
---------- ----------
47,374,000 44,302,000
Treasury stock, 120,970 shares in 1994
and 55,241 shares in 1993, at cost (1,739,000) (1,524,000)
---------- ----------
Total stockholders' equity 45,635,000 42,778,000
------------ ------------
Total liabilities and stockholders' equity $498,006,000 $465,373,000
============ ============
The accompanying notes are an integral part of the financial statements.
CONSOLIDATED STATEMENT OF INCOME
For the three years ended December 31, 1994
1994 1993 1992
INTEREST INCOME:
Interest and fees on loans $28,848,000 $26,645,000 $27,788,000
Interest and dividends on:
Obligations of U.S. Government
and its agencies 4,266,000 5,050,000 5,598,000
Obligations of states and
political subdivisions 1,613,000 2,022,000 2,126,000
Other interest income 1,377,000 1,594,000 2,195,000
------------ ------------ ------------
Total interest income 36,104,000 35,311,000 37,707,000
INTEREST EXPENSE:
Interest on deposits 13,616,000 13,855,000 17,186,000
Interest on short-term borrowings 337,000 203,000 262,000
Interest on term debt 1,471,000 1,205,000 439,000
---------- ---------- ----------
Total interest expense 15,424,000 15,263,000 17,887,000
Net interest income 20,680,000 20,048,000 19,820,000
Provision for loan losses 765,000 1,592,000 2,387,000
---------- ---------- ----------
Net interest income after
provision for loan losses 19,915,000 18,456,000 17,433,000
OTHER INCOME:
Income from fiduciary activities 1,607,000 1,475,000 1,342,000
Service charges on deposit accounts 1,456,000 1,295,000 964,000
Gain (loss) on sale of securities (237,000) 45,000 44,000
Other 1,012,000 1,137,000 1,164,000
--------- --------- ---------
Total other income 3,838,000 3,952,000 3,514,000
OTHER EXPENSES:
Salaries and benefits 7,576,000 7,429,000 6,991,000
Net occupancy expense of premises 1,040,000 924,000 834,000
Equipment expense 1,205,000 1,091,000 1,152,000
Insurance 1,038,000 1,057,000 1,054,000
Stationary and other supplies 619,000 543,000 534,000
Taxes other than income taxes 575,000 565,000 520,000
Amortization of excess of cost
over net assets acquired 159,000 159,000 159,000
Other 3,460,000 3,356,000 3,701,000
---------- ---------- ----------
Total other expenses 15,672,000 15,124,000 14,945,000
Income before federal income
taxes and cumulative effect of
accounting changes 8,081,000 7,284,000 6,002,000
Federal Income Taxes (Note 11):
Current 2,330,000 2,168,000 1,968,000
Deferred 3,000 (269,000) (516,000)
--------- --------- ---------
2,333,000 1,899,000 1,452,000
Income before cumulative effect
of accounting changes 5,748,000 5,385,000 4,550,000
Cumulative effect of accounting
changes, net of applicable
taxes (Notes 10 and 11) (314,000)
---------- ---------- ----------
Net Income $5,748,000 $5,071,000 $4,550,000
Earnings per share (Notes 12 and 17):
Income before cumulative effect
of accounting changes:
Primary $ 1.98 $1.92 $1.71
Assuming full dilution $1.97 $1.90 $1.59
Cumulative effect of accounting changes:
Primary $ 0.11
Assuming full dilution $ 0.11
Net income per share:
Primary $1.98 $1.81 $1.71
Assuming full dilution $1.97 $1.79 $1.59
Weighted average number of
shares outstanding:
Primary 2,909,369 2,797,352 2,663,702
Assuming full dilution 2,912,241 2,841,990 2,939,822
The accompanying notes are an integral part of the financial statements.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the three years ended December 31, 1994
<TABLE>
<CAPTION>
Net
Unrealized
Capital Holding Loss
in on Available-
COMMON STOCK Excess Retained for-Sale Treasury
Shares Amount of Par Earnings Securities Stock Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1992 1,146,253 $1,147,000 $13,769,000 $18,365,000 $(867,000) $32,414,000
Net income 4,550,000 4,550,000
Purchase of treasury stock,
5,793 shares (159,000) (159,000)
Conversion of subordinated
debentures to common
stock 163,238 162,000 2,806,000 2,968,000
Cash dividends, at a rate
of $0.48 per share (1,276,000) (1,276,000)
--------- --------- ---------- ---------- ----------- ----------
Balance, December 31, 1992 1,309,491 1,309,000 16,575,000 21,639,000 (1,026,000) 38,497,000
Net income 5,071,000 5,071,000
Purchase of treasury stock,
12,316 shares (498,000) (498,000)
Conversion of subordinated
debentures to common
stock 73,532 74,000 1,144,000 1,218,000
10% stock dividend 126,517 126,000 5,062,000 (5,188,000)
Conversion from $1.00 par
value to no par value 22,781,000 (22,781,000)
Cash dividends, at a rate
of $0.52 per share (1,510,000) (1,510,000)
--------- ----------- -- ----------- ------------ -----------
Balance, December 31, 1993 1,509,540 $24,290,000 $0 $20,012,000 $(1,524,000) $42,778,000
Adjustment for change in
method of accounting,
net of taxes 3,048,000 3,048,000
Net income 5,748,000 5,748,000
Purchase of treasury stock,
10,488 shares (215,000) (215,000)
Two for one stock split 1,509,540
Exercise of common
stock options 520 5,000 5,000
Issuance of common stock
under dividend
reinvestment plan 1,308 31,000 31,000
Net change in unrealized
gain (loss) on
available-for-sale securities (4,078,000) (4,078,000)
Cash dividends, at a rate
of $0.58 per share (1,682,000) (1,682,000)
--------- ----------- -- ----------- ------------ ------------ -----------
Balance, December 31, 1994 3,020,908 $24,326,000 $0 $24,078,000 ($1,030,000) ($1,739,000) $45,635,000
========= =========== == =========== ============ =========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three years ended December 31, 1994
1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $5,748,000 $5,071,000 $4,550,000
Adjustments to reconcile net income
to net cash provided by
operating activities:
Provision for loan losses 765,000 1,592,000 2,387,000
(Gain) loss on sale of investments 237,000 (45,000) (44,000)
Depreciation and amortization 1,884,000 1,584,000 1,746,000
Decrease (increase) in
interest receivable 466,000 (821,000)
Increase (decrease) in interest payable 185,000 (275,000) 391,000
Deferred income taxes 3,000 (565,000) (516,000)
Deferral of loan origination
fees and costs 410,000 (221,000) (172,000)
Accrual for postretirement benefits 867,000
Other, net (91,000) ( 698,000) 2,045,000
--------- ---------- ----------
Net cash provided by
operating activities 9,141,000 7,776,000 9,566,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in term interest bearing
deposits with banks and federal
funds sold 7,468,000 5,409,000
Purchases of available-for-sale
securities (35,659,000)
Purchases of held-to-maturity
securities (4,409,000) (29,260,000) (34,685,000)
Proceeds from sales of
available-for-sale securities 23,072,000
Proceeds from maturities of
available-for-sale securities 16,479,000
Proceeds from maturities of
held-to-maturity securities 2,025,000
Proceeds from sales of securities
held for investment 4,558,000 72,000
Proceeds from maturities of
securities held for investment 33,402,000 21,323,000
Net increase in loans (40,576,000) (31,166,000) (13,617,000)
Expenditures for premises and
equipment (1,142,000) (3,566,000) (2,771,000)
Proceeds from sales of other
real estate owned 137,000 56,000 826,000
----------- ----------- -----------
Net cash applied to
investing activities (40,073,000) (18,508,000) (23,443,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in
noninterest-bearing deposits 3,016,000 (608,000) 9,314,000
Net increase (decrease) in
interest-bearing deposits 15,164,000 (15,376,000) 17,282,000
Net increase in short-term borrowings 7,507,000 2,559,000 1,785,000
Proceeds from long-term debt 7,700,000 8,000,000 12,000,000
Payments on long-term debt (4,244,000) (1,956,000) (360,000)
Cash dividends paid (1,623,000) (1,510,000) (1,276,000)
Purchase of treasury stock (215,000) (498,000) (159,000)
Proceeds from issuance of common stock 5,000
---------- ----------- ----------
Net cash provided by (applied to)
financing activities 27,310,000 (9,389,000) 38,586,000
Net increase (decrease) in cash
and cash equivalents (3,622,000) (20,121,000) 24,709,000
Cash and cash equivalents at
beginning of year 28,323,000 48,444,000 23,735,000
----------- ----------- -----------
Cash and cash equivalents at end
of year $24,701,000 $28,323,000 $48,444,000
=========== =========== ===========
Supplemental disclosures of cash
flow information and
non-cash transactions:
Interest paid $15,239,000 $15,538,000 $18,276,000
Income taxes paid $2,383,000 $2,754,000 $1,461,000
Conversion of subordinated
debentures to common stock $0 $1,218,000 $2,968,000
Dividends declared not paid $435,000 $407,000 $329,000
The accompanying notes are an integral part of the financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SELECTED ACCOUNTING POLICIES:
The following is a summary of significant accounting policies
followed in the preparation of the financial statements. Certain
amounts in the 1993 and 1992 financial statements have been
reclassified to conform to the 1994 presentation.
PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements include the accounts of Peoples Bancorp Inc. (the
Corporation) and its wholly-owned subsidiaries. Significant
intercompany accounts and transactions have been eliminated.
INCOME RECOGNITION: The principal areas of operation of the
Corporation are reported on the accrual basis of accounting.
Subsidiary banks suspend the accrual of interest when, in
management's opinion, collection of all or a portion of future
interest has become doubtful. When deemed uncollectible,
previously accrued and unpaid interest on loans placed on
nonaccrual status is charged against the allowance for loan
losses or reversed from current year's interest income depending
on the year the accrued interest was recorded. Interest is
included in income to the extent received only if complete
principal recovery is reasonably assured.
INVESTMENT SECURITIES: Effective January 1, 1994 the Corporation
adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities" (SFAS No. 115). Under the provisions of SFAS No.
115, investment securities should be classified upon acquisition
into one of three categories: held-to-maturity,
available-for-sale, or trading.
Held-to-maturity securities are those securities that the
Corporation has the positive intent and ability to hold to
maturity and are recorded at amortized cost. Available-for-sale
securities are those securities that would be available to be
sold in the future in response to the Corporations's liquidity
needs, changes in market interest rates, and asset-liability
management strategies, among others. Available-for-sale
securities are reported at fair value, with unrealized holding
gains and losses excluded from earnings and reported as a
separate component of shareholders' equity, net of applicable
income taxes. At December 31, 1994 and 1993, the Corporation and
its subsidiary banks did not maintain trading accounts.
Prior to adoption of SFAS No. 115, securities purchased, where
the Corporation had both the intent and ability to hold for the
foreseeable future, were recorded at cost adjusted for
accumulated amortization of premium and accretion of discount.
Gains and losses on the disposition of investment securities are
accounted for on the completed transaction basis using the
specific identification method.
RESERVE FOR POSSIBLE LOAN LOSSES: The provision for possible
loan losses for financial reporting purposes is based upon past
experience and an evaluation of potential losses in the current
loan portfolio. In management's opinion, the provision is
considered sufficient to maintain the loan loss reserve at a
level adequate to absorb all anticipated losses existing in the
loan portfolios at the balance sheet dates.
BANK PREMISES AND EQUIPMENT: The cost of Bank premises and
equipment is depreciated over the estimated useful lives of the
related assets on the straight-line method. Maintenance and
repairs are charged to operations as incurred. Additions and
betterments are capitalized.
The cost of assets sold or retired and the related amounts of
accumulated depreciation are eliminated from the accounts in the
year of sale or retirement. Any resulting gain or loss is
reflected in the consolidated statement of income.
OTHER REAL ESTATE: Other real estate owned, included in other
assets on the consolidated balance sheet, represents properties
acquired by the Corporation's subsidiary banks through
customers' loan defaults. Real estate is stated at an amount
equal to the loan balance prior to foreclosure plus cost
incurred for improvements to the property, but not more than the
fair value less estimated costs to sell the property.
EXCESS OF COST OVER NET ASSETS ACQUIRED: The excess of cost over
net assets of subsidiary banks acquired is being amortized over
a ten to twenty-year period using the straight-line and
sum-of-the-months digits methods.
CONSOLIDATED STATEMENT OF CASH FLOWS: Cash and cash equivalents
include cash and amounts due from banks, interest bearing
deposits with banks and federal funds sold, all with original
maturities of ninety days or less. These balances at December
31, 1994, 1993 and 1992 are as follows:
1994 1993 1992
Cash and due from banks $19,551,000 $15,275,000 $17,427,000
Interest bearing deposits
with other banks 650,000 5,998,000 5,117,000
Federal funds sold 4,500,000 7,050,000 25,900,000
----------- --------- ----------
$24,701,000 $28,323,000 $48,444,000
=========== =========== ===========
2. FAIR VALUES OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used by the
Corporation in estimating its fair value disclosures for
financial instruments in accordance with Statement of Financial
Accounting Standards No. 107:
CASH AND DUE FROM BANKS, INTEREST BEARING DEPOSITS WITH BANKS,
AND FEDERAL FUNDS SOLD: The carrying amounts reported in the
balance sheet for these captions approximate those assets' fair
values.
INVESTMENT SECURITIES: Fair values for investment securities are
based on quoted market prices, where available. If quoted market
price is not available, fair value is estimated using quoted
market prices of comparable securities.
LOANS: For performing variable rate loans that reprice
frequently and performing demand loans, with no significant
change in credit risk, fair values are based on carrying values.
The fair values for certain mortgage loans are based on quoted
market prices of similar loans sold in conjunction with
securitization transactions, adjusted for differences in loan
characteristics. The fair value of other performing loans (e.g.,
commercial real estate, commercial and consumer loans) are
estimated using discounted cash flow analyses, using interest
rates currently being offered for loans with similar terms to
borrowers of similar credit quality.
Fair value significant nonperforming loans is based on
either the estimated fair value of underlying collateral or
estimated cash flows discounted at a rate commensurate with the
risk. Assumptions regarding credit risk, cash flows, and
discount rates are determined using available market information
and specific borrower information.
DEPOSITS: The carrying amounts of demand deposits, savings
accounts and certain money market deposits approximate fair
value. The fair value of fixed maturity certificates of deposit
is estimated using the rates currently offered for deposits of
similar remaining maturities.
SHORT-TERM BORROWINGS: The carrying amounts of federal funds
purchased, Federal Home Loan Bank advances, and securities sold
under repurchase agreements approximate their fair values.
TERM DEBT: Rates currently available to the Corporation for debt
with similar terms and remaining maturities are used to estimate
fair value of existing debt.
LOAN COMMITMENTS AND STANDBY LETTERS OF CREDIT: The fair value
of commitments is estimated using the fees currently charged to
enter into similar agreements taking into account the remaining
terms of the agreements and the present creditworthiness of the
counterparties.
The estimated fair values of the Corporation's on-balance sheet
financial instruments are as follows:
1994 1993
Carrying Fair Carrying Fair
Amount Value Amount Value
Financial assets:
Cash and due from banks,
interest bearing deposits
with banks, and federal
funds sold $24,701,000 $24,701,000 $28,323,000 $28,323,000
Investment securities 99,419,000 99,261,000 103,349,000 108,105,000
Loans,net 354,570,000 350,817,000 315,305,000 322,670,000
Financial liabilities:
Deposits 403,819,000 402,949,000 385,639,000 401,015,000
Short-term borrowings 19,767,000 19,767,000 12,260,000 12,260,000
Term debt 23,787,000 22,098,000 20,331,000 20,331,000
The fair value of the Corporation's off-balance sheet financial instruments are
disclosed in Note 9.
3. INVESTMENT SECURITIES:
Effective January 1, 1994, the Corporation adopted the
provisions of Statement on Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity
Securities" (SFAS No. 115). SFAS No. 115 requires that debt and
equity securities be classified in three categories and
accounted for as follows:
1. Debt securities that the Corporation has the positive intent
to hold to maturity are classified as held-to-maturity
securities and reported at amortized cost.
2. Debt and equity securities that are bought and held
principally for the purpose of selling them in the near term
are classified as trading securities and reported at fair value,
with unrealized gains and losses included in earnings.
3. Debt and equity securities notclassified as either held-to-maturity
securities or trading securities are classified as available-for-sale
securities and reported at fair value, with unrealized gains and losses
excluded from earnings and reported as a separate component of
stockholders' equity.
The effect of this change in accounting principle resulted in an
unrealized holding gain, net of tax effect, of $3,048,000, for
securities classified as available-for-sale effective January 1,
1994, and has been reflected as a separate component of
stockholders' equity. The expected maturities presented in the
tables below may differ from the contractual maturities because
borrowers may have the right to call or prepay obligations
without call or prepayment penalties. Rates are calculated on a
taxable equivalent basis using a 34% federal income tax rate.
The portfolio contains no single issue (excluding U.S.
Government and U. S. Agency securities) which exceeds 10% of
shareholders' equity.
Securities classified as available-for-sale
As of December 31, 1994:
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
U.S. Treasury securities $30,138,000 $157,000 $(577,000) $29,718,000
U.S. Agency mortgage-backed
securities. 10,873,000 16,000 (391,000) 10,498,000
Other U.S. Agency securities 2,223,000 24,000 (8,000) 2,239,000
---------- ------ --------- ----------
Total U.S. Treasury and
Agency securities 43,234,000 197,000 (976,000) 42,455,000
Obligations of states
and political subdivisions 21,624,000 312,000 (233,000) 21,703,000
Other mortgage-backed
securities. 12,557,000 0 (1,144,000) 11,413,000
Other securities 14,368,000 554,000 (321,000) 14,601,000
---------- ------- ----------- ----------
Total securities
available-for-sale $91,783,000 $1,063,000 $(2,674,000) $90,172,000
=========== ========== ============ ===========
Maturity distribution of securities available-for-sale
<TABLE>
Contractual maturities at December 31, 1994
<CAPTION>
Obligations
U.S. of states Total
Agency Total U.S. and Other securities
U. S. mortgage- Other U.S. Treasury poltical mortgage-Other available
Treasury backed Agency and agency subdivisions backed securities for sale
-------- --------- ---------- ---------- ------------ -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Within one year
Amortized cost $11,511,000 $635,000 $12,146,000 $5,811,000 $396,000 $1,902,000 $20,255,000
Fair value $11,579,000 $606,000 $12,185,000 $5,873,000 $388,000 $1,915,000 $20,361,000
Yield 8.06% 6.49% 7.98% 9.80% 7.20% 7.98% 8.49%
1 to 5 years
Amortized cost 16,097,000 7,456,000 $2,223,000 25,776,000 11,070,000 7,969,000 6,856,000 51,671,000
Fair value 15,734,000 7,164,000 $2,239,000 25,137,000 11,236,000 7,309,000 6,655,000 50,337,000
Yield 7.01% 7.31% 7.99% 7.18% 8.83% 6.24% 6.83% 7.34%
5 to 10 years
Amortized cost 2,530,000 2,457,000 4,987,000 3,146,000 2,075,000 1,361,000 11,569,000
Fair value 2,405,000 2,398,000 4,803,000 3,055,000 1,830,000 1,279,000 10,967,000
Yield 6.75% 6.94% 6.84% 8.65% 6.30% 6.90% 7.24%
Over 10 years
Amortized cost 325,000 325,000 1,597,000 2,117,000 4,249,000 8,288,000
Fair value 330,000 330,000 1,539,000 1,886,000 4,752,000 8,507,000
Yield 9.36% 9.36% 8.72% 7.05% 5.67% 6.76%
Total amortized
cost $30,138,000 $10,873,000 $2,223,000 $43,234,000 $21,624,000 $12,557,000 $14,368,000 $91,783,000
Total fair value $29,718,000 $10,498,000 $2,239,000 $42,455,000 $21,703,000 $11,413,000 $14,601,000 $90,172,000
Total yield 7.39% 7.24% 7.99% 7.57% 9.06% 6.42% 6.65% 7.53%
</TABLE>
Securities classified as held-to-maturity
As of December 31, 1994:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
U.S. Agency mortgage-backed
securities $992,000 $0 $(38,000) $954,000
Other U.S. Agency securities 4,683,000 5,000 (35,000) 4,653,000
--------- ------ --------- ----------
Total U.S. Treasury
and Agency securities 5,675,000 5,000 (73,000) 5,607,000
Obligations of states
and political subdivisions 3,414,000 40,000 (123,000) 3,331,000
Other securities 158,000 0 (7,000) 151,000
---------- -------- ---------- ----------
Total securities
held-to-maturity $9,247,000 $45,000 $(203,000) $9,089,000
========== ======= ========== ==========
Maturity distribution of securities held-to-maturity
<TABLE>
Contractal matrities at December 31, 1994
<CAPTION>
Obligations
U.S. of states Total
Agency Total U.S. and securities
mortgage- Other U.S. Treasury political Other held to
backed Agency and Agency subdivisions securities maturity
--------- ---------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Within one year
Amortized cost $248,000 $10,000 $258,000
Fair value $252,000 $ 9,000 $261,000
Yield 10.05% 5.50% 9.87%
1 to 5 years
Amortized cost $939,000 $1,428,000 $2,367,000 $736,000 $3,103,000
Fair value $904,000 $1,415,000 $2,319,000 $758,000 $3,077,000
Yield 7.62% 6.58% 6.99% 10.21% 7.76%
5 to 10 years
Amortized cost 3,255,000 3,255,000 1,221,000 148,000 4,624,000
Fair value 3,238,000 3,238,000 1,167,000 142,000 4,547,000
Yield 7.15% 7.15% 8.22% 7.34% 7.44%
Over 10 years
Amortized cost 53,000 53,000 1,209,000 1,262,000
Fair value 50,000 50,000 1,154,000 1,204,000
Yield 8.21% 8.21% 8.72% 8.70%
Total amortized
cost $992,000 $4,683,000 $5,675,000 $3,414,000 $158,000 $9,247,000
Total fair value $954,000 $4,653,000 $5,607,000 $3,331,000 $151,000 $9,089,000
Total yield 7.65% 6.98% 7.10% 8.96% 7.20% 7.79%
</TABLE>
Securities classified as held for investment
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
----------- ----------- ---------- ----------
As of December 31, 1993:
Obligations of U.S.
Government $48,790,000 $2,244,000 $(12,000) $51,022,000
Obligations of U.S.
Government agencies 4,809,000 56,000 (3,000) 4,862,000
Government mortgage-
backed securities 13,589,000 149,000 (17,000) 13,721,000
Obligations of states
and political
subdivisions 26,183,000 1,648,000 27,831,000
Other bonds and
securities 9,978,000 701,000 (10,000) 10,669,000
------------ ---------- --------- ------------
$103,349,000 $4,798,000 $(42,000) $108,105,000
============ ========== ========= ============
As of December 31, 1992:
Obligations of U.S.
Government $60,317,000 $3,034,000 $(6,000) $63,345,000
Obligations of U.S.
Government agencies 915,000 43,000 958,000
Government mortgage-
backed securities 10,163,000 222,000 (73,000) 10,312,000
Obligations of states
and political
subdivisions 31,284,000 1,534,000 (33,000) 32,785,000
Other bonds and
securities 9,877,000 339,000 (45,000) 10,171,000
----------- ---------- --------- ------------
$112,556,000 $5,172,000 $(157,000) $117,571,000
============ ========== ========== ============
Proceeds from sales of available-for-sale securities during 1994
were $23,072,000. Proceeds from sales of investments in debt
securities were $4,558,000 and $0, in 1993 and 1992,
respectively. Gross realized gains and realized losses were
$126,000 and $363,000, respectively, in 1994. Gross gains on
sales of investments in debt securities of $45,000 and $0 were
realized in 1993 and 1992, respectively. As of December 31, 1994
and 1993, investment securities having a par value of
$55,570,000 and $42,985,000, respectively were pledged to
collateralize government and trust department deposits in
accordance with federal and state requirements.
4. LOANS AND RESERVE FOR POSSIBLE LOAN LOSSES:
Loans are comprised of the following at December 31:
1994 1993
Carrying Value Carrying Value
-------------- --------------
Commercial $46,880,000 $47,299,000
Real estate, construction 3,231,000 3,391,000
Real estate, mortgage 217,512,000 189,866,000
Consumer 93,730,000 81,119,000
------------ ------------
$361,353,000 $321,675,000
============ ============
Activity in the reserve for loan losses is summarized as follows:
1994 1993 1992
Balance, beginning of year $6,370,000 $5,687,000 $4,273,000
Provision for loan losses 765,000 1,592,000 2,387,000
Reserve of acquired branch 721,000
Losses charged to the reserve,
net of recoveries of
$772,000, $294,000 and $623,000,
respectively (352,000) (909,000) (1,694,000)
----------- ----------- ----------
Balance, end of year $6,783,000 $6,370,000 $5,687,000
=========== =========== ==========
In May 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 114 "Accounting
by Creditors for Impairment of a Loan" (SFAS No. 114). The
statement applies to financial statements for fiscal years
beginning after December 15, 1994, and requires that certain
impaired loans be recorded at the present value of expected
future cash flows discounted at the loan's effective interest
rate, the loan's market price, or the fair value of the
collateral for collateral dependent loans. The Corporation will
adopt this accounting statement effective January 1, 1995. It
is anticipated that the adoption of this standard will not have
a material effect on the Corporation's financial position or
results of operations.
5. BANK PREMISES AND EQUIPMENT:
The cost of Bank premises and equipment and the related
accumulated depreciation as of December 31, 1994 and 1993 are
summarized as follows:
1994 1993
Land $1,069,000 $1,069,000
Building and premises 10,601,000 10,329,000
Furniture, fixtures and equipment 6,856,000 6,037,000
---------- ----------
18,526,000 17,435,000
Accumulated depreciation 7,719,000 6,668,000
---------- ----------
Net book value $10,807,000 $10,767,000
=========== ===========
Depreciation expense was $1,110,000, $906,000 and $798,000 for
the years ended December 31, 1994, 1993 and 1992, respectively.
6. SHORT-TERM BORROWINGS:
Short-term borrowings consisted of the following at December 31:
1994 1993
Federal Funds Purchased and Repurchase Agreements $9,267,000 $9,260,000
Short-term Federal Home Loan Bank Advances 10,500,000 3,000,000
---------- ----------
Total short-term borrowings $19,767,000 $12,260,000
=========== ===========
Weighted average interest rate 3.08% 2.21%
7. TERM DEBT:
Term debt consisted of the following at December 31:
1994 1993
Carrying Carrying
Value Value
---------- ----------
Term note payable, at prime
(8.5% at December 31, 1994) $1,820,000 $2,080,000
Federal Home Loan Bank advances, bearing
interest at rates ranging from 4.15% to 7.00% 21,967,000 18,251,000
----------- -----------
$23,787,000 $20,331,000
=========== ===========
The Term Note payable is due on December 31, 1996, with interest
payable quarterly. The Note Agreement is collateralized by all
of the common stock of a consolidated subsidiary and places
certain restrictive covenants on the Corporation, including the
maintenance of tangible net worth equal to the greater of 6% of
total assets or $29,880,000, and the incurrence of additional
indebtedness.
Federal Home Loan Bank (FHLB) advances consist of various
borrowings with maturities ranging from 10 to 15 years. The
advances are collateralized by the Corporation's real estate
mortgage portfolio and all of the FHLB common stock owned by the
banking subsidiaries. The most restrictive requirement of the
debt agreement requires the Corporation to provide real estate
mortgage loans as collateral at an amount not less than 150% of
advances outstanding.
The aggregate minimum annual retirements of term debt in the
next five years and thereafter are as follows:
1995 $3,145,000
1996 4,611,000
1997 2,372,000
1998 2,021,000
1999 2,145,000
Thereafter 9,493,000
-----------
$23,787,000
===========
8. COMMITMENTS:
The Corporation leases a banking facility and equipment under
various agreements with original terms providing for fixed
monthly payments over periods ranging from two to ten years.
The future minimum rental payments required under operating
leases are as follows:
Year ending December 31, Operating Leases
------------------------ ----------------
1995 $118,000
1996 119,000
1997 119,000
1998 112,000
1999 64,000
Thereafter 8,000
------------
Total minimum lease payments $540,000
============
Rent expense amounted to $181,000, $149,000 and $224,000 in 1994, 1993
and 1992, respectively.
9. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:
In the normal course of business, the Corporation is party to
financial instruments with off-balance sheet risk necessary to
meet the financing needs of customers. These financial
instruments include loan commitments, standby letters of credit,
and unused credit card limits. The instruments involve, to
varying degrees, elements of credit and interest rate risk in
excess of the amount recognized in the consolidated financial
statements.
The Corporation's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument
for loan commitments, standby letters of credit and unused
credit card limits is represented by the contractual amount of
those instruments. The Corporation uses the same credit policies
in making commitments and conditional obligations as it does for
on-balance sheet instruments. The total amounts of financial
instruments with off-balance sheet risk are as follows:
1994 1993
---------------------- ---------------------
Contract Fair Contract Fair
Amount Value Amount Value
----------- ------- ----------- -------
Loan commitments $30,966,000 $77,000 $24,895,000 $62,000
Standby letters of credit 2,083,000 26,000 2,132,000 27,000
Unused credit card limits 13,408,000 N/A 11,872,000 N/A
Since many of the loan commitments may expire without being
drawn upon, the total commitment amount does not necessarily
represent future cash requirements. The Corporation evaluates
each customer's credit worthiness on a case-by-case basis. The
amount of collateral obtained, if deemed necessary by the
Corporation upon extension of credit, is based on management's
credit evaluation of the counter-party. Collateral held varies
but may include accounts receivable, inventory, property, plant,
and equipment, and income-producing commercial properties. The
credit risk involved in issuing letters of credit is essentially
the same as that involved in extending loan commitments to
customers. The Corporation's average commitment for credit card
loans is $2,720. As a result, collateral is not required on
credit card loans.
The Corporation's lending is primarily focused in the local
southeastern Ohio market and consists principally of
single-family residential mortgages. The Corporation's largest
group of business loans consist of Automobile Dealer Floor
Plans, which totaled $19,238,000 and $13,782,000 at December 31,
1994 and 1993, respectively. It is the Corporation's policy to
obtain the underlying inventory as collateral on these loans.
The Corporation does not extend credit to any single borrower or
group of related borrowers in excess of $7,576,000, the legal
lending limit.
10. EMPLOYEE BENEFIT PLANS:
The Corporation has a noncontributory pension plan which covers
substantially all employees. The plan provides benefits based on
an employee's years of service and compensation. The
Corporation's funding policy is to contribute annually an amount
that can be deducted for federal income tax purposes using a
different actuarial cost method and different assumptions from
those used for financial reporting.
Net pension cost for 1994, 1993 and 1992 included the following
components:
1994 1993 1992
---- ---- ----
Service cost-benefits earned during the year $260,000 $243,000 $201,000
Interest cost on projected benefit obligations 401,000 388,000 370,000
Actual return on plan assets (414,000) (411,000) (405,000)
Net amortization and deferral of initial
transition credit and subsequent gains
and losses (13,000) (11,000) (29,000)
-------- -------- --------
Net pension cost $234,000 $209,000 $137,000
======== ======== ========
The funded status of the plan and accrued pension cost
recognized at December 31, 1994 and 1993 were as follows:
1994 1993
---- ----
Actuarial present value of benefit obligations:
Vested benefits $3,958,000 $4,479,000
Nonvested benefits 142,000 155,000
---------- ----------
Accumulated benefit obligation 4,100,000 4,634,000
Impact of future salary increases 1,105,000 873,000
---------- ----------
Projected benefit obligation 5,205,000 5,507,000
Plan assets at fair value, primarily U.S. Government
obligations and collective investment stock
and bond funds 4,693,000 5,026,000
--------- ---------
Projected benefit obligations in excess
of plan assets (512,000) (481,000)
Items not recognized in income:
Unrecognized prior service cost (92,000) (78,000)
Unrecognized net gain from past experience
different from that assumed and effects of
changes in assumptions (404,000) (211,000)
Initial transition credit which is being
amortized over 21 years (62,000) (66,000)
---------- ---------
Accrued pension cost included in
other liabilities $(1,070,000) $(836,000)
============ ==========
Assumptions used for the plan at December 31, 1994 and 1993 are as follows:
1994 1993
----- -----
Discount rate 8.50% 7.25%
Rate of increase in compensation levels 5.00% 4.50%
Long-term rate of return on assets 8.50% 8.50%
Prior to 1992, the Corporation maintained an informal
contributory health care and life insurance benefits program for
substantially all employees and retirees. During 1992,
this Plan was amended to provide these benefits only to existing
retirees and their dependents at increased contributory levels.
Prior to 1993, the Corporation accounted for the costs of
providing these benefits as the health care costs were incurred
and premiums were paid. The Corporation's cost of providing
these benefits to retirees was approximately $90,000 in 1992.
On January 1, 1993, the Corporation adopted Statement of
Financial Accounting Standards No. 106 "Employers' Accounting
for Postretirement Benefits Other Than Pensions" (SFAS No. 106)
which requires the accrual of the expected costs of providing
postretirement benefits during the period of employee service.
The net periodic postretirement benefit cost, which was due
primarily to interest cost, was $68,000 and $74,000 for 1994 and
1993, respectively. The Corporation recognized the cumulative
effect of its transition obligation of $583,000, net of taxes,
as a decrease in income in 1993.
The status of the plan as of December 31, 1994 and 1993 was as
follows:
1994 1993
---- ----
Accumulated postretirement benifit
obligation for retirees and beneficiaries
eligible for benefits $875,000 $950,000
Unrecognized net gain (9,000) (83,000)
-------- --------
Net postretirement benefit liability $866,000 $867,000
======== ========
Assumptions used for the plan at December 31, 1994 and 1993 are as follows:
1994 1993
---- ----
Weighted average discount rate 8.50% 7.25%
Effect of a 1% increase in assumed trend rate on:
Service and interest cost +9.00% +10.00%
Accumulated postretirement benefit obligation +9.00% +9.00%
In the table above, the assumed health care costs trend rate
used in measuring the accumulated benefit obligation at December
31, 1994 was 10%, grading down 1% per year to an ultimate rate
of 5%. At December 31, 1993, the assumed health care costs
trend rate used in measuring the accumulated benefit obligation
was 11%, grading down 1% per year to an ultimate rate of 5%.
On January 1, 1994, the Corporation adopted Statement of
Financial Accounting Standard No. 112, "Employer's Accounting
for Postemployment Benefits" (SFAS No. 112), which requires
accrual accounting for benefits provided to former or inactive
employees after employment, but before retirement. The adoption
of this accounting standard did not have a material impact on
the Corporation's financial position or results of operations.
11. FEDERAL INCOME TAXES:
The Corporation and its banking affiliates file a consolidated
federal income tax return and income tax expense is allocated
among all companies based upon their federal taxable income or
loss and tax credits.
On January 1, 1993 the Corporation adopted Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109),
which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events
that have been included in the financial statements or tax
returns. Deferred income taxes are recognized at prevailing tax
rates for temporary differences between financial statement and
income tax bases of assets and liabilities. The Corporation
recognized the cumulative effect of this change in accounting of
$269,000 as an increase in income in 1993.
The effective federal income tax rate in the consolidated
statement of income is less than the statutory corporate tax
rate due to the following:
December 31
------------------------
1994 1993 1992
---- ---- ----
Statutory corporate tax rate 34.0% 34.0% 34.0%
Differences in rate resulting from:
Interest on obligations of state and
political subdivisions (5.8) (7.9) (10.2)
Other 0.7 0.4
------ ------ ------
28.9% 26.1% 24.2%
====== ====== ======
The components of the net deferred tax asset were as follows:
December 31 December 31
1994 1993
----------- -----------
Deferred tax assets arising from:
Loan loss reserve $1,784,000 $1,427,000
Pension expense 364,000 317,000
Unrealized holding loss on investment securities 531,000
Postretirement benefits other than pensions 295,000 297,000
Deferred loan fees and costs 328,000 289,000
Other 257,000 242,000
---------- ----------
Total deferred tax asset 3,559,000 2,572,000
========== ==========
Deferred tax liabilities arising from:
Depreciation 468,000 367,000
Other 511,000 153,000
--------- ---------
Total deferred tax liabilities 979,000 520,000
========= =========
Net deferred tax assets $2,580,000 $2,052,000
========== ==========
The Corporation has not recorded a valuation allowance, as the
deferred tax assets are presently considered to be realizable
upon the level of anticipated future taxable income. Net
deferred tax assets and federal income tax expense in future
years can be significantly affected by changes in the enacted
tax rates or by unexpected adverse events that would impact
management's conclusions as to the ultimate realizability of
deferred tax assets.
Deferred federal income tax expense in 1992 was attributable to
the following sources:
Difference in tax and book provision for loan losses $(303,000)
Deferral of nonrefundable loan fees for book (59,000)
Other (154,000)
----------
$(516,000)
==========
The related federal income tax expense (benefit) on securities
transactions approximated $(81,000) in 1994, $15,000 in 1993 and
$13,000 in 1992.
12. EARNINGS PER SHARE:
Fully-diluted earnings per share are calculated for 1993 and
1992 as if the Subordinated Debentures were converted as of the
issue date, with a corresponding increase in net income from the
after-tax reduction in interest expense. For purposes of the
primary and fully-diluted earnings per share calculation,
options granted under the 1993 stock option plan are considered
common stock equivalents.
13. RELATED PARTY TRANSACTIONS:
In the normal course of its business, the subsidiary banks have
granted loans to certain executive officers and directors and
their interests. The following is an analysis of activity of
related party loans for the year ended December 31, 1994:
Balance, January 1, 1994 $9,615,000
New loans 15,672,000
Repayments (13,913,000)
-----------
Balance, December 31, 1994 $11,374,000
===========
Such amounts do not include loans to members of immediate
families other than spouses of persons who are executive
officers or directors. Such amounts include $2,696,000 of loans
to one of the Corporation's directors which are considered by
management to be potential problem loans. The credit risk
associated with these loans has been considered by management in
the Corporation's determination of the overall loan loss reserve.
14. REGULATORY MATTERS:
The payment of dividends by banking subsidiaries is subject to
various Regulatory restrictions. Laws provide that dividends in
any calendar year generally shall not exceed the total net
profits of that year plus the retained net profits of the
preceding two years. As of December 31, 1994 approximately
$9,000,000 of retained earnings of the banking subsidiaries were
available for the payment of dividends to the parent corporation.
The Corporation's banking subsidiaries are required to maintain
minimum amounts of capital to total "risk weighted" assets, as
defined by the banking regulators. At December 31, 1994 the
banking subsidiaries are required to have minimum Tier 1 and
total capital ratios of 4% and 8%, respectively. The banking
subsidiaries' actual ratios at that date were in excess of these
stated minimums.
15. FEDERAL RESERVE REQUIREMENTS:
The Federal Reserve requires that certain average reserve
balances be maintained in the subsidiary banks' cash and due
from banks account. The Reserve requirement is calculated on a
percentage of total deposit liabilities and amounted to
$6,091,000 and $5,010,000 at December 31, 1994 and 1993,
respectively.
16. BRANCH ACQUISITIONS:
During 1992, the Corporation acquired approximately $32 million
of assets and assumed $32 million of deposit and other liabilities
from two unaffiliated institutions.
17. CHANGES IN CAPITAL STRUCTURE:
On March 24, 1994, the Corporation declared a two for one stock
split issued on April 29, 1994 to shareholders of record as of
April 15, 1994. On January 25, 1993, the Corporation declared a
ten percent stock dividend issued on April 15, 1993 to
shareholders of record as of April 1,1993. All per share
information in the accompanying consolidated financial
statements has been adjusted to give retroactive effect to the
stock split and stock dividend.
During 1994, the Corporation's stockholders adopted an amendment
to increase the authorized number of common shares to 6,000,000
from 4,000,000. Common stock and capital in excess of par value
have been combined and presented as a single caption on the
accompanying consolidated balance sheet.
18. STOCK OPTIONS:
The Corporation is authorized under provisions of the 1993 Stock
Option Plan to grant options to purchase 220,000 shares of the
Corporation's Common Stock to key employees and directors at a
price not less than the fair market value of the shares on the
dates the options are granted. Options granted may be either
"Incentive Options" or "Non-qualified Options" as defined by the
Internal Revenue Code. The options expire 10 years from the date
of grant.
Activity in the Plan for 1994 and 1993 is summarized as follows:
1994 1993
--------------------- ------------------
Number Option Number Option
of Shares Price of Shares Price
--------- ------- --------- --------
NON-QUALIFIED STOCK OPTIONS
Outstanding at beginning of year 16,100 $20.50
Granted 2,600 19.50-22.00 16,100 $20.50
Exercised 220 20.50
Cancelled 1,980 20.50
------- --------
Outstanding at end of year 16,500 19.50-22.00 16,100 $20.50
Exercisable at end of year 6,280 $19.50-22.00 3,220 $20.50
======= ============ ====== =======
INCENTIVE STOCK OPTIONS
Outstanding at beginning of year 38,000 $17.50
Granted 136,500 23.375 38,000 $17.50
Exercised 1,000 17.50
Cancelled 2,000 17.50
-------- -------
Outstanding at end of year 171,500 17.50-23.375 38,000 17.50
======== ============ ======= ======
Exercisable at end of year 35,000 $17.50 38,000 $17.50
======= ============ ======= ======
All options reflect the effect of a two for one stock split
effective April 15, 1994. At December 31, 1994, 32,000
non-qualified options remained available for future grants under
the 1993 Plan. Outstanding stock options are considered common
stock equivalents in the computation of earnings per share.
19. PARENT COMPANY ONLY FINANCIAL INFORMATION:
BALANCE SHEET, DECEMBER 31 1994 1993
---------- ----------
Assets:
Cash $656,000 $128,000
Receivable due from subsidiary 2,012,000 1,606,000
Investment securities:
Securities available-for-sale (amortized cost
of $757,000 at December 31, 1994) 1,261,000
Securities held for investment (fair value
approximates $1,009,000 at December 31, 1993) 569,000
--------- --------
Total investment securities 1,261,000 569,000
Capital note receivable due from subsidiary 3,000,000 3,000,000
Investments in subsidiaries, at equity 40,627,000 38,269,000
Excess cost over net assets acquired 1,104,000 1,241,000
Other 709,000 599,000
----------- -----------
Total assets $49,369,000 $45,412,000
=========== ===========
Liabilities:
Accrued interest payable and accrued expenses $409,000 $116,000
Pension accrual 1,070,000 31,000
Dividends payable 435,000 407,000
Term debt (Note 7) 1,820,000 2,080,000
----------- -----------
Total liabilities 3,734,000 2,634,000
Stockholders' Equity 45,635,000 42,778,000
----------- -----------
Total liabilities and stockholders' equity $49,369,000 $45,412,000
=========== ===========
STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994 1993 1992
------------ ------------ -----------
Income:
Dividends from subsidiaries $2,320,000 $5,130,000 $1,810,000
Interest ($287,000, $40,000, and
$55,000 from subsidiaries,
respectively) 301,000 58,000 60,000
Management fees from subsidiaries 818,000 770,000 698,000
Other 123,000 110,000 39,000
---------- ---------- ----------
Total income 3,562,000 6,068,000 2,607,000
Expenses:
Interest 141,000 169,000 333,000
Salaries and benefits 948,000 848,000 660,000
Other 549,000 709,000 630,000
---------- ---------- ----------
Total expenses 1,638,000 1,726,000 1,623,000
---------- ---------- ----------
Income before federal income taxes
and equity in undistributed earnings
of subsidiaries 1,924,000 4,342,000 984,000
Applicable income tax benefit 100,000 231,000 237,000
Equity in undistributed earnings of
subsidiaries 3,724,000 498,000 3,329,000
---------- ---------- ----------
Net income $5,748,000 $5,071,000 $4,550,000
========== ========== ==========
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1994 1993 1992
------------ ------------ -----------
Cash flows from operating activities:
Net income $5,748,000 $5,071,000 $4,550,000
Adjustments to reconcile net income
to cash provided by operations:
Amortization and depreciation 134,000 265,000 281,000
Equity in undistributed
earnings of subsidiaries (3,724,000) (498,000) (3,329,000)
Other, net 1,103,000 115,000 (159,000)
----------- ----------- ----------
Net cash provided by
operating activities 3,261,000 4,953,000 1,343,000
Cash flows from investing activities:
Net decrease in short-term investments 40,000
Purchase of investment securities (188,000) (50,000)
Expenditures for premises and equipment (46,000) (20,000) (4,000)
Proceeds from sale of
premises to subsidiary 362,000
Purchase of capital note
receivable due from subsidiary (3,000,000)
--------- ------------ --------
Net cash provided by
investing activities (234,000) (3,020,000) 348,000
Cash flows from financing activities:
Cash dividends paid (1,623,000) (1,510,000) (1,276,000)
Payments on long-term debt (260,000) (276,000) (292,000)
Purchase of treasury stock (215,000) (498,000) (159,000)
Change in receivable from subsidiary (406,000) 159,000 (184,000)
Proceeds from issuance of common stock 5,000
----------- ------------ -----------
Net cash used in
financing activities (2,499,000) (2,125,000) (1,911,000)
----------- ------------ -----------
Net (decrease) increase in cash 528,000 (192,000) (220,000)
Cash at the beginning of the year 128,000 320,000 540,000
--------- ---------- ---------
Cash at the end of the year $656,000 $128,000 $320,000
======== ======== ========
The parent company paid interest totaling $141,000, $185,000 and $371,000
during the years ended December 31, 1994, 1993 and 1992, respectively.
The Corporation's investment in subsidiaries is reflected at an
amount equivalent to the underlying fair value of the
subsidiaries at the date of acquisition adjusted to reflect the
changes in equity of such subsidiaries since acquisition.
Stockholders' equity reflected in the Parent Company Only
balance sheet includes undistributed earnings of subsidiaries
which are restricted from transfer to the Corporation in the
form of dividends. Such amounts approximated $20,000,000 and
$16,300,000 at December 31, 1994 and 1993, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of Peoples Bancorp Inc.
We have audited the accompanying consolidated balance sheets of
Peoples Bancorp Inc. and Subsidiaries as of December 31, 1994
and 1993 and the consolidated statements of income,
stockholders' equity, and cash flows for each of the years in
the three-year period ended December 31, 1994. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Peoples Bancorp Inc. and Subsidiaries as
of December 31, 1994 and 1993 and the consolidated results of
their operations and their cash flows for each of the years in
the three-year period ended December 31, 1994 in conformity with
generally accepted accounting principles.
As discussed in Note 3 to the consolidated financial statements,
the Corporation changed its method of accounting for investment
securities in 1994. As discussed in Notes 10 and 11, the
Corporation changed its methods of accounting for postretirement
benefits other than pensions and income taxes in 1993.
/s/ COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
Columbus, Ohio
January 26, 1995
<TABLE>
AVERAGE BALANCES & ANALYSIS OF NET INTEREST INCOME
<CAPTION>
(dollars in thousands)
1994 1993 1992
----------------------------- ----------------------------- -----------------------------
Average Income/ Average Average Income/ Average Average Income/ Average
Balance Expense Yield/Rate Balance Expense Yield/Rate Balance Expense Yield/Rate
------- ------- ---------- ------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities<F1>:
Taxable $77,811 $5,229 6.7% $79,086 $5,959 7.5% $81,607 $6,378 7.8%
Nontaxable<F2> 23,647 2,278 9.6% 26,895 2,608 9.7% 29,363 2,874 9.8%
------- ----- ---- ------- ----- ---- ------- ----- ----
Total 101,458 7,507 7.4% 105,981 8,567 8.1% 110,970 9,252 8.3%
Loans:
Commercial 43,782 3,773 8.6% 45,024 3,590 8.0% 40,250 3,543 8.8%
Real estate 206,157 16,481 8.0% 184,014 15,319 8.3% 178,025 16,415 9.2%
Consumer (net) 87,536 8,598 9.8% 77,244 7,736 10.0% 72,758 7,830 10.8%
Valuation
reserve (6,680) (6,095) (5,298)
------- ------ ---- -------- ------ ---- ------- ------ ----
Total 330,795 28,852 8.7% 300,187 26,645 8.9% 285,735 27,788 9.7%
Money Market:
Interest-bearing
deposits 1,734 66 3.8% 8,562 209 2.4% 6,894 452 6.6%
Federal funds
sold 10,615 422 4.0% 17,706 623 3.5% 21,462 1,035 4.8%
------ --- ---- ------ --- ---- ------ ----- ----
Total 12,349 488 4.0% 26,268 832 3.2% 28,356 1,487 5.2%
Total
earning
assets 444,602 36,847 8.3% 432,436 36,044 8.3% 425,061 38,527 9.1%
Other assets 35,422 32,580 27,263
-------- -------- --------
Total
assets $480,024 $465,016 $452,324
======== ======== ========
Deposits:
Savings $75,422 2,106 2.8% $72,999 2,107 2.9% $61,660 2,195 3.6%
Interest-
bearing
demand
deposits 85,326 2,212 2.6% 80,100 1,998 2.5% 73,830 2,310 3.1%
Time 187,842 9,298 4.9% 196,374 9,750 5.0% 224,898 12,681 5.6%
------- ----- ---- ------- ----- ---- ------- ------ ----
Total 348,590 13,616 3.9% 349,473 13,855 4.0% 360,388 17,186 4.8%
Borrowed Funds:
Short term 10,953 337 3.1% 9,186 203 2.2% 9,398 262 2.8%
Long term 24,614 1,471 6.0% 19,611 1,205 6.1% 6,549 439 6.7%
------ ----- ---- ------ ----- ---- ------ --- ----
Total 35,567 1,808 5.1% 28,797 1,408 4.9% 15,947 701 4.4%
Total
interest-
bearing
liabilities 384,157 15,424 4.0% 378,270 15,263 4.0% 376,335 17,887 4.8%
Noninterest-
bearing
deposits 46,224 41,621 38,403
Other
liabilities 5,029 4,320 3,485
------- -------- --------
Total
liabilities 435,410 424,211 418,223
Stockholders'
equity 44,614 40,805 34,101
-------- --------- ---------
Total
liabilities
and
stockholders'
equity $480,024 $465,016 $452,324
======== ======== ========
Interest rate spread $21,423 4.3% $20,781 4.4% $20,640 4.4%
======= ==== ======= ==== ======= ====
Interest revenue/
earning assets 8.3% 8.3% 9.1%
Interest expense/
earning assets 3.5% 3.5% 4.2%
---- ---- ----
Net yield on earnings assets 4.8% 4.8% 4.9%
==== ==== ====
<FN>
<F1> Average balances of investment securities based on historical cost.
<F2> Computed on a fully tax equivalent basis by dividing
nontaxable income by 66% and reducing the result by the
municipal interest limitation. The interest income was increased
by $739,000, $733,000 and $820,000 for 1994, 1993 and 1992,
respectively.
<F3> Nonaccrual loans are included in the average balances
listed. Related income on nonaccrual loans through the date the
loan was put on accrual status is included in loan income. As of
December 31, 1994, 1993 and 1992, nonaccrual loans outstanding
were $902,000, $1,416,000 and $1,279,000, respectively.
<F4> Loan fees included in income for 1994, 1993 and 1992 were
$773,000, $558,000, and $512,000, respectively.
</FN>
</TABLE>
<TABLE>
RATE VOLUME ANALYSIS/MATURITIES TABLES
<CAPTION>
Rate Volume Analysis
(dollars in thousands)
Change in Income/Expense<F1> Rate Effect Volume Effect
---------------------------- ----------------------- ---------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Taxable $(730) $(419) $224 $(635) $(225) $(447) $(95) $(194) $671
Nontaxable (330) (266) (85) (17) (26) (89) (313) (240) 4
------ ------ ----- ------ ------ ------ ----- ------ ----
Total (1,060) (685) 139 (652) (251) (536) (408) (434) 675
Loan income:
Commercial 183 47 (544) 284 (351) (575) (101) 398 31
Real estate 1,162 (1,096) (513) (626) (1,634) (2,485) 1,788 538 1,972
Consumer 862 (94) (8) (151) (561) (144) 1,013 467 136
----- ------- ----- ----- ------- ------- ------ --- -----
Total 2,207 (1,143) (1,065) (493) (2,546) (3,204) 2,700 1,403 2,139
Money market funds (344) (655) (506) 151 (583) (599) (495) (72) 93
Total interest
income 803 (2,483) (1,432) (994) (3,380) (4,339) 1,797 897 2,907
===== ======= ======= ===== ======= ======= ===== === =====
Interest expense:
Savings (1) (88) (144) (70) (454) (714) 69 366 570
Interest-bearing
demand deposits 214 (312) (784) 80 (496) (1,192) 134 184 408
Time (452) (2,931) (2,995) (30) (1,422) (2,943) (422) (1,509) (52)
Short-term
borrowings 134 (59) (233) 90 (53) (231) 44 (6) (2)
Long-term
borrowings 266 766 (129) (34) (40) (87) 300 806 (42)
---- ------ ------- ---- ------- ------- ----- ------- ----
Total interest
expense 161 (2,624) (4,285) 366 (2,465) (5,167) 125 (159) 882
--- ------- ------- --- ------- ------- --- ----- ---
$642 $141 $2,853 $(1,030) $(915) $828 $1,672 $1,056 $2,025
==== ==== ====== ======== ====== ==== ====== ====== ======
<FN>
<F1> The change in interest due to both rate and volume has been
allocated to volume and rate changes in proportion to the
relationship of the dollar amounts of the change in each.
</FN>
</TABLE>
LOAN MATURITIES
At December 31, 1994:
Due in One Year Due
One Year Through After
or Less Five Years Five Years Total
---------- ------------ ------------ --------
Loan Type
Commercial loans:
Fixed $1,520 $1,445 $2,443 $5,408
Variable 32,879 4,391 4,202 41,472
------ ------ ------ ------
34,399 5,836 6,645 46,880
Real estate loans:
Fixed 84 4,408 39,872 44,364
Variable 37 10,958 165,384 176,379
-- ------ ------- -------
121 15,366 205,256 220,743
Consumer loans:
Fixed 2,843 76,835 4,039 83,717
Variable 206 8,110 1,697 10,013
----- ------ ----- ------
3,049 84,945 5,736 93,730
TOTAL $37,569 $106,147 $217,637 $361,353
======= ======== ======== ========
MATURITIES SCHEDULE OF LARGE CERTIFICATES OF DEPOSIT OVER $100,000
As of December 31,
(dollars in thousands)
1994 1993 1992 1991
---- ---- ---- ----
Under 3 months $5,657 $5,761 $7,810 $15,099
3 to 6 months 2,149 2,241 5,957 *
6 to 12 months 5,868 2,859 2,109
----- ----- ----- ------
3 to 12 months 8,017 5,100 8,066 7,674
Over 12 months 12,695 6,939 7,291 4,198
------ ------ ------ -------
TOTAL $26,369 $17,800 $23,167 $26,971
======= ======= ======= =======
* The maturity schedule of large certificates of deposit prior
to 1992 is in accordance with regulatory guidelines for
preparation of quarterly Call Reports. The accounting system did
not provide a split of the 3 to 12 months category into
categories of 3 to 6 months and 6 to 12 months.
LOAN PORTFOLIO ANALYSIS
(dollars in thousands)
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Year-end balances:
Commercial $46,880 $47,299 $40,253 $42,557 $39,818
Real estate 217,512 189,866 176,119 163,670 151,242
Real estate
construction 3,231 3,391 1,965 3,073 1,400
Consumer (net) 88,307 76,977 69,030 65,168 65,680
Credit card 5,423 4,142 3,768 3,785 3,580
-------- ------- ------- ------- -------
Total $361,353 $321,675 $291,135 $278,253 $261,720
======== ======== ======== ======== ========
Average loans $330,795 $300,187 $285,735 $266,268 $257,214
======== ======== ======== ======== ========
Reserve for possible
loan losses,
January 1 $6,370 $5,687 $4,273 $4,086 $3,765
Reserve for losses
of acquired branch 721
Loans charged off:
Commercial 39 193 1,163 572 576
Real estate 189 143 295 401 91
Consumer 842 816 826 1,002 753
Credit card 54 51 33 62 43
--- --- ----- ----- ---
Total 1,124 1,203 2,317 2,037 1,463
Recoveries:
Commercial 392 60 241 91 12
Real estate 61 65 110 25 48
Consumer 304 157 267 354 243
Credit card 15 12 5 6 6
--- --- --- --- ---
Total 772 294 623 476 309
=== === === === ===
Net chargeoffs:
Commercial (353) 133 922 481 564
Real estate 128 78 185 376 43
Consumer 538 659 559 648 510
Credit card 39 39 28 56 37
----- --- --- --- ---
Total 352 909 1,694 1,561 1,154
=== === ===== ===== =====
Charged to operations 765 1,592 2,387 1,748 1,475
Reserve for loan
losses December 31 $6,783 $6,370 $5,687 $4,273 $4,086
====== ====== ====== ====== ======
Reserve for possible loan losses as of December 31:
Commercial $3,281 $3,185 $2,651 $1,797 $2,145
Real estate 1,828 2,000 1,189 1,108 510
Consumer 1,096 987 602 454 425
Credit card 89 166 45 45 41
Unallocated 489 32 1,200 869 965
------ ------ ------ ------ ------
Total $6,783 $6,370 $5,687 $4,273 $4,086
====== ====== ====== ====== ======
Percentage of loans to total loans at December 31:
Commercial 13.0% 14.7% 13.8% 15.3% 15.2%
Real estate 61.1 60.1 61.2 59.9 58.3
Consumer 24.4 23.9 23.7 23.4 25.1
Credit card 1.5 1.3 1.3 1.4 1.4
----- ----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0% 100.0%
Ratio: Net chargeoffs/average loans:
Commercial (0.11)% 0.05% 0.32% 0.18% 0.22%
Real estate 0.04 0.02 0.06 0.14 0.02
Consumer 0.16 0.22 0.20 0.24 0.20
Credit card 0.01 0.01 0.01 0.02 0.01
------- ----- ----- ----- -----
Total 0.10% 0.30% 0.59% 0.58% 0.45%
======= ===== ===== ===== =====
Nonperforming loans:
Nonaccrual loans $902 $1,416 $1,279 $1,301 $1,769
Loans 90+ days
past due 1,082 896 1,284 1,706 1,844
Other real
estate owned 97 38 49 779 144
Troubled debt
restructuring 3
------ ------ ------ ------ ------
Total $2,081 $2,350 $2,612 $3,786 $3,760
====== ====== ====== ====== ======
Nonperforming loans
as a percent of total
loans 0.6% 0.7% 0.9% 1.4% 1.4%
---- ---- ---- ---- ----
The provision for possible loan losses for financial reporting
purposes is based upon past experience and an evaluation of
potential losses in the current loan portfolio. In management's
opinion, the provision is considered sufficient to maintain the
loan loss reserve at a level adequate to absorb all anticipated
losses existing in the loan portfolios at the balance sheet
dates. Loans are classified as nonaccrual when, in the opinion
of management, the collection of principal or interest is
unlikely. No interest is taken into income on nonaccrual loans
until such time as the borrower demonstrates the ability to pay
principal and interest. Interest income on nonaccrual loans
which would have been recorded under the original terms of the
loans for 1994, 1993 and 1992 was $48,000 (of which $36,000 was
actually recorded), $149,000 (of which $41,000 was actually
recorded) and $205,000 (of which $111,000 was actually
recorded), respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS
INTRODUCTION
The following discussion and analysis of the consolidated
financial statements of Peoples Bancorp Inc. is presented to
give the reader insight into management's assessment of the
financial results. It also recaps the significant events that
led to the results. Our subsidiaries, The Peoples Banking and
Trust Company (Peoples Bank), The First National Bank of
Southeastern Ohio (First National), and The Northwest Territory
Life Insurance Company, provide financial services to
individuals and businesses within our market area. Peoples Bank
is chartered by the State of Ohio and subject to regulation,
supervision, and examination by the Federal Deposit Insurance
Corp-oration (FDIC) and the Ohio Division of Banks. First
National is a member of the Federal Reserve System and subject
to regulation, super-vision, and examination by the Office of
the Comptroller of the Currency. This discussion and analysis
should be read in conjunction with the audited financial
statements and footnotes and with the ratios, statistics and
discussions contained elsewhere in the Annual Report.
OVERVIEW OF THE INCOME STATEMENT
Net income increased by $677,000 or 13.4% to $5,748,000 in 1994.
Fully tax equivalent net interest income increased $642,000 in
1994 compared to 1993, an increase of 3.1%. The yield on
interest-earning assets decreased by five basis points to 8.29%
while the rate paid on interest-bearing liabilities decreased by
one basis point to 4.02%. Excluding the gains and losses from
sales of investment securities, non-interest income increased
4.3% to $4,075,000 in 1994 compared to $3,907,000 last year.
Non-interest expense increased 3.6% from $15,124,000 in 1993 to
$15,672,000 this year.
During 1993, Peoples Bancorp adopted Statements of Accounting
Standards No. 106, "Employers Accounting for Postretirement
Benefits other than Pensions" and No. 109, "Accounting for
Income Taxes", which resulted in a reduction of net income of
$314,000.
INTEREST INCOME AND EXPENSE
Net interest income after provision for loan losses increased by
7.9% or $1,459,000 to $19,915,000 for 1994. Interest income
increased by $793,000. Interest and fees on loans increased by
$2,203,000 while all other interest income categories decreased
$1,410,000. Growth in balances accounted for the increased
interest and fees on loans. The average balance of loans
increased from $300,187,000 to $330,795,000. Interest expense
increased modestly, $161,000 or 1.1%, to $15,424,000. Average
deposit balances remained at about the same level as last year
while the average balance of borrowed funds increased from
$28,797,000 to $35,567,000. Overall, the net yield on earning
assets (please see Average Balances and Analysis of Net Interest
Income schedule) remained the same as last year, 4.8%.
Management anticipates a modest decline in the net yield on
earning assets in 1995.
NON-INTEREST INCOME
Several categories of non-interest income reported increases
over 1993. Income from fiduciary activities increased 8.9%, or
$132,000 to $1,607,000. This increase came due to increases in
the number of accounts served and assets under management.
Account service charge income increased 12.4%, or $161,000 to
$1,456,000 as emphasis was placed on recovering costs associated
with services provided. Total Visa fees more than doubled to
$356,000 as the Corporation started a new Gold card program and
added electronic capture for many of our merchants.
During 1994 management elected to sell some of the lower
yielding investments in its available for sale portion of the
portfolio and replace them with higher yielding securities. This
opportunity to improve the overall yield of the portfolio was
available due to the dramatic increases in market interest rates
during 1994. Net losses on the sale of securities were $237,000
this year compared to net gains in 1993 of $45,000. Management
does not expect to generate gains and losses on the sale of
securities in the normal course of business.
NON-INTEREST EXPENSE
The most significant reduction in non-interest expenses was
gained in the provision for loan losses. In 1994 the provision
for loan losses was $765,000, down 51.9% from 1993. Overall loan
quality has improved and net charge-offs were down significantly
from 1993 (please see additional discussion under Reserve for
Possible Loan Losses). Other categories within non-interest
expenses did not experience dramatic changes over 1993. Of note,
however, was an increase in salaries and benefits of $147,000 or
2.0%. Management emphasis on efficiency within its operating
units resulted in this modest increase. Building depreciation
increased from $333,000 in 1993 to $418,000 in 1994, an increase
of 25.5%. 1994 was the first full year of depreciation on the
major improvements to Peoples Bank's downtown Marietta facility.
These improvements give the Corporation the facilities necessary
for future expansion.
RETURN ON ASSETS (ROA)
Return on average assets has increased from 1.09% in 1993 to
1.20% in 1994. ROA has increased in each of the last three
years. Since 1991, ROA has increased an average of 12.3% per
year. In 1994 average total assets increased by approximately
$15 million or 3.2% while net income increased by 13.35%. Since
net income increased faster than average assets, ROA improved.
Management has developed an operating plan for 1995 that
anticipates ROA remaining at current levels.
RETURN ON EQUITY (ROE)
Peoples Bancorp's return on average equity has remained
relatively constant over the past several years. Since 1989 the
high has been 12.9% in 1994 and the low has been 11.7% in 1991.
The increase in ROE this year is mainly due to increased net
income. Total stockholders' equity was impacted by Financial
Accounting Standards Board (FASB) Statement No. 115, Accounting
for Certain Investments in Debt and Equity Securities.
Unrealized losses in the investment portfolio are recognized as
reductions in the equity section of the balance sheet as a
separate line item. The reduction in equity for the unrealized
losses in the investment portfolio is $1,030,000, net of taxes,
as of December 31, 1994. Management believes that ROE is an
important measure of an organization's financial strength. In
1995, management expects modest improvement in ROE.
FEDERAL INCOME TAX EXPENSE
Federal income taxes increased from $1,899,000 in 1993 to
$2,333,000 this year. The effective tax rate increased from
26.1% to 28.9%. In 1994 the Corporation had less interest on
obligations of state and political subdivisions (this interest
is not taxable for federal purposes) and thus had less of an
adjustment in its taxable income. As funds are available for
investment, management determines whether the financial result
would be better on taxable or tax-exempt obligations and invests
accordingly.
OVERVIEW OF BALANCE SHEET
Total assets have increased by $32,633,000, or 7% to
$498,006,000 as of December 31, 1994. Growth on the asset side
of the statement has been almost exclusively with loans. Net
loans increased by $39,265,000 to $354,570,000 during 1994.
Deposits increased by $18,180,000 or 4.7% to $403,819,000.
Short-term borrowings increased from $12,260,000 to $19,767,000
and term debt increased $3,456,000 to $23,787,000.
LOANS
Loan demand has been strong in Peoples Bancorp's market area.
Total loans have increased by $39,678,000 or 12.3% to
$361,353,000. Real estate mortgage loans to individuals and
businesses increased 14.6%, $27,646,000, to $217,512,000.
Individuals actively looked to refinance home mortgages during
1994 and Peoples Bancorp was successful in capturing many of
these loans. Business real estate loans were a significant part
of the growth in this category. Much of this loan growth came
from our loan production office in Newark, Ohio. 1994 was the
first full year of operation for this office. Total loans
outstanding at December 31, 1994 that were generated by the
Newark office were $7,160,000. Consumer loans were also up
significantly from $81,119,000 last year to $93,730,000 as of
December 31, 1994. During the summer of 1994, a new risk-based
pricing schedule was introduced. This was particularly effective
in our indirect lending area. Indirect lending means that the
customer deals with a non-bank employee (usually a car dealer)
and that person helps with the paperwork in exchange for a fee.
The risk-based pricing coupled with a tiered interest rate
structure in indirect deals gained widespread acceptance.
Commercial loans, other than those backed by real estate,
declined slightly to $46,880,000. The mix of loans has changed
slightly. More loans are real estate mortgage loans (60.2%
versus 59.0% last year) and less are commercial loans (13.0%
versus 14.7% last year). The change in loan mix is not expected
to have a major impact on the Corporation's future income
statements.
LOAN CONCENTRATION
Peoples Bancorp does not have a concentration of its loan
portfolio in any one industry. Real estate lending continues to
be the most significant part of our loan portfolio representing
61.1% of total loans.
RESERVE FOR POSSIBLE LOAN LOSSES
The reserve for loan losses as a percentage of loans decreased
from 1.98% at December 31, 1993 to 1.88% at this year end. The
total dollar amount of the reserve increased 6.5% to $6,783,000.
The provision for loan losses (this is the amount of expense on
the income statement) was $765,000, down significantly from last
year. A key reason for the reduction was the decline in net
loans charged off from $909,000 in 1993 to $352,000 this year.
Net loan chargeoffs as a percentage of average loans outstanding
declined from 0.3% last year to 0.1% for 1994. The reserve had
been higher in 1993 due to uncertainty regarding loans acquired
in an acquisition from the Resolution Trust Company in 1992.
Management has been able to reduce the reserve specifically
allocated to those loans as the quality of the loans was proven
over time. Non-performing loans as a percentage of loans
outstanding has improved. At December 31, 1994 non-performing
loans were 0.58% of outstanding loans, as compared to 0.73% last
year. Overall loan quality, as indicated by these benchmarks,
has improved and thus justifies the reserve for possible loan
losses. Management believes that the reserve is adequate.
FUNDING SOURCES
Peoples Bancorp considers deposits, short-term borrowings, and
term debt when evaluating funding sources. In today's high-tech
world, the cost of funds should not be considerably different in
southeastern Ohio as it is elsewhere in the country. Markets are
not totally efficient so one will observe pockets of higher or
lower costs from area to area. Because of the improvements in
market efficiency management of Peoples Bancorp looks at a much
broader array of funding sources than in the past. Deposits
continue to be the most significant source of funds for Peoples
Bancorp. Noninterest bearing deposits increased 6.7% to
$48,121,000 and interest bearing deposits increased 4.5% to
$355,698,000 as of December 31, 1994. Federal Funds Purchased
and Repurchase Agreements remained constant at $9,267,000.
Short-term Federal Home Loan Bank Advances increased from
$3,000,000 at December 31, 1993 to $10,500,000 this year. The
average balance in these short-term funds was $1,537,000,
reflecting Peoples Bancorp's ability to utilize these funds as
needed to support funding needs. Longer term Federal Home Loan
Bank advances increased $3,716,000 to $21,967,000. Total funding
sources increased $29,143,000 or 7.0% to $447,373,000 as of
December 31, 1994. Management expects deposits to continue to be
the dominant source of funds in the immediate future. However,
efforts will continue in the pursuit of alternative funding
sources.
CAPITAL / STOCKHOLDERS' EQUITY
The capital position of Peoples Bancorp remains strong. Total
stockholders' equity has increased by 6.7% to $45,635,000 at
December 31, 1994. The increase came through retention of net
income as the Corporation earned $5,748,000. Dividends paid were
$1,682,000, up 11.4% over 1993. Dividends paid were 29.3% of net
income for the year. Stockholders' Equity was reduced for an
adjustment to market value on available-for-sale securities of
$1,030,000 as of December 31, 1994. This adjustment was required
due to implementation of FASB Statement No. 115, Accounting for
Certain Investments in Debt and Equity Securities, in the first
quarter of 1994.
During 1994 the Corporation purchased $215,000 of its own shares
for the treasury. Purchases were made in accordance with
guidelines established by the Board of Directors. Treasury
shares may be used for future acquisitions. Management
anticipates purchasing additional shares in accordance with
established guidelines.
Banking regulators have established risk-based capital
guidelines for measuring capital adequacy. The guidelines
establish various levels of risk to each category of assets.
Peoples Bancorp's core risk-based capital was 12.9% at December
31, 1994 compared to 13.5% last year and total risk-based
capital was 14.1% at December 31, 1994 compared to 14.7% last
year. The regulatory guidelines require minimum core and total
risk-based capital of 4% and 8%. Management expects to maintain
capital in excess of regulatory guidelines.
LIQUIDITY
Liquidity measures an organization's ability to meet cash
obligations as they come due. The Consolidated Statement of Cash
Flows presented on page 15 of the accompanying financial
statements provides analysis of the Corporation's cash and cash
equivalents. Additionally, management considers that portion of
the loan portfolio that matures within one year and maturities
within one year in the investment portfolio as part of our
liquid assets. The Corporation's liquidity is monitored by the
Asset/Liability Committee (ALCO), which establishes ranges of
acceptable liquidity and monitors compliance. No violations of
policy have occurred during the reporting period. The current
liquidity position is adequate to fund off-balance sheet
commitments. See additional discussion of off-balance sheet
commitments in Note 9 of the accompanying financial statements.
EFFECTS OF INFLATION ON FINANCIAL STATEMENTS
Substantially all of the Corporation's assets relate to banking
and are monetary in nature. Therefore, they are not impacted by
inflation to the same degree as companies in capital intensive
industries. During a period of rising prices, a net monetary
asset position results in loss in purchasing power and
conversely a net monetary liability position results in an
increase in purchasing power. In banks, monetary assets exceed
monetary liabilities, therefore, as prices have increased over
the past year the financial institutions experienced a decline
in the purchasing power of their net assets.
INTEREST RATE SENSITIVITY_MATURITY OR REPRICING
The following Interest Rate Sensitivity Table presents Peoples
Bancorp's Interest Rate Sensitivity Position at December 31,
1994:
At December 31, 1994 (thousands)
---------------------------------------------------
0 - 3 4 - 12 Over
Months Months 1 - 5 Yrs 5 Yrs Total
------ ------ --------- ----- -----
Interest earning assets:
Investment Securities:
Securities classified
as available-for-sale
Taxable $2,260 $12,228 $39,588 $14,394 $68,470
Tax-exempt 1,495 4,377 15,542 288 21,702
------ ------- ------- ------- -------
Total 3,755 16,605 55,130 14,682 90,172
====== ======= ======= ======= =======
Securities classified
as held-to-maturity
Taxable $10 $2,368 $3,455 $5,833
Tax-exempt 248 736 2,430 3,414
------ ------ ------ ------ ------
Total 10 248 3,104 5,885 9,247
====== ====== ===== ====== ======
Total investment
securities 3,765 16,853 58,234 20,567 99,419
Federal funds sold 4,500 4,500
Loans 113,992 113,398 86,256 47,707 361,353
Interest-bearing
deposits with banks 650 650
------- ------- ------ ------ -------
Total 122,907 130,251 144,490 68,274 465,922
======= ======= ======= ====== =======
Interest-bearing liabilities:
Deposits 183,581 86,245 85,872 355,698
Federal funds purchased,
Federal Home Loan Bank
advances, and securities
sold under agreements to
repurchase 19,767 19,767
Other borrowings 1,820 21,967 23,787
------ ------ ------ ------ ------
Total 205,168 86,245 85,872 21,967 399,252
======= ====== ====== ====== =======
Interest sensitivity $(82,261) $44,006 $58,618 $46,307 $66,670
========= ======= ======= ======= =======
The Interest Rate Sensitivity table above shows that Peoples
Bancorp is in a net asset sensitivity position. This means that
if interest rates increase, the Corporation's net income will
increase over time. Conversely, if interest rates decline, so
too will net income. The table breaks down interest rate
sensitivity within various time frames. Within zero to three
months the Corporation is liability sensitive and all other
categories are asset sensitive. Management monitors the asset
and liability sensitivity through the Asset/Liability Committee
and uses this data to set pricing strategies.
OUTLOOK FOR 1995
1995 has started with the Federal Reserve raising short term
interest rates by one half percent in late January. Movements in
interest rates had major implications for financial institutions
in 1994, and 1995 will continue to be impacted by changing
rates. Peoples Bancorp anticipates a more stable interest rate
environment in 1995. Long term interest rates should remain
within one percent of current levels throughout the year. Short
term rates could go up another one half to one percent. Peoples
Bancorp does not manage its balance sheet based upon interest
rate forecasts. Instead management, through its Asset/Liability
Committee, evaluates the balance sheet and monitors the asset
and liability sensitivity. Peoples Bancorp management works
toward achieving balance in its assets and liabilities to avoid
significant impact due to volatile interest rates.
The business plan for 1995 anticipates a continued narrowing of
the net interest margin. Other areas will be counted on to
provide revenues or cost savings to allow continued growth in
net income. Management expects continued earnings growth through
more efficient use of technology and facilities to control
non-interest expenses. Non-interest income is expected to
continue to grow at rates above inflation as management
continues to focus on cost recovery. New emphasis will be placed
on non-traditional products and services for our customers in
1995. Peoples Bancorp has over fifty employees trained and
licensed to sell annuities. We are utilizing an outside firm to
provide products to meet our customers' insurance needs.
Peoples Bancorp has invested in facilities and qualified staff
to grow into the future. Management looks forward with
anticipation to the opportunities that await Peoples Bancorp in
the years ahead.
COMPARISON OF 1993 TO 1992
Peoples Bancorp achieved an increase in net income of 11.5% to
$5,071,000 in 1993. Primary and fully diluted earnings per share
were $1.81 and $1.79 for the year ended December 31, 1993
compared to $1.71 and $1.59 for 1992. Net income to average
assets improved from 1.01% in 1992 to 1.09% in 1993. Net income
to stockholders' equity for 1993 was 11.9% compared to 11.8% in
1992.
Total assets remained nearly the same in 1993. Total assets
decreased $3,189,000 or 0.7% to $465,373,000. Interest-earning
assets decreased from $442,176,000 to $438,072,000 while
interest-bearing liabilities decreased from $381,116,000 to
$373,125,000. The result was an increase in net interest-earning
assets. The mix of assets and liabilities also changed.
Interest-earning deposits with banks and federal funds sold
decreased by $25,437,000 while loans increased by $30,540,000.
This shift from lower yielding to higher yielding assets helped
the Corporation maintain its net interest margin.
DIRECTORS AND OFFICERS
PEOPLES BANCORP INC.
====================
OFFICERS
--------
ROBERT E. EVANS, President and Chief Executive Officer
CAROL A. SCHNEEBERGER, Vice President/Operations
JOHN T. UNDERWOOD, Vice President/Business Development
ROLLAND B. SWART, Vice President/Business Development
CHARLES R. HUNSAKER, General Counsel
JOHN W. CONLON, Chief Financial Officer
JEFFREY D. WELCH, Treasurer
RUTH I. OTTO, Secretary
KAREN V. CLARK, Auditor
JOHANNA BURKE, Assistant Auditor
DIRECTORS
---------
JEWELL BAKER, Co-Owner, B & N Coal Co.
DENNIS D. BLAUSER, President, Blauser Energy Corp.
GEORGE W. BROUGHTON, Executive Vice President and Director of Marketing,
Broughton Foods Company
WILFORD D. DIMIT, Owner, First Settlement Square
ROBERT E. EVANS, President and Chief Executive Officer
BARTON S. HOLL, Chairman of the Board, Logan Clay Products
NORMAN J. MURRAY, Retired, The Airolite Company
JAMES B. STOWE, Chairman of the Board, Stowe Truck and Equipment Company
PAUL T. THEISEN, Attorney, Theisen, Brock, Frye, Erb & Leeper Co., L.P.A.
THOMAS C. VADAKIN, President, Vadakin, Inc.
JOSEPH H. WESEL, Chairman, President, Marietta Automotive Warehouse, Inc.
DIRECTORS EMERITUS
------------------
CARL L. BROUGHTON
NEIL CHRISTY
WILLIAM K. HAMER
WILLIAM E. MCKINNEY
R. HOBART MORRIS
FRED R. PRICE
THE PEOPLES BANKING AND TRUST COMPANY
=====================================
EXECUTIVE OFFICERS
------------------
ROBERT E. EVANS, President and Chief Executive Officer
DAVID B. BAKER, President, Investment and Trust Division
JOHN W. CONLON, Chief Financial Officer and Treasurer
LARRY E. HOLDREN, Executive Vice President, Director of Human Resources
ROBERT A. MCKNIGHT, Executive Vice President Lending
ROBERT W. MINGUS, Executive Vice President, President, Athens/Meigs Division
JOSEPH S. YAZOMBEK, Executive Vice President, Mortgage Lending
BANKING AND LENDING
-------------------
KATHALEEN R. BROWN, Vice President/Marketing and Secretary to the Board
JOHN A. KING, Vice President and Executive Officer, Nelsonville Office
WILLIAM MALSTER, Vice President
DAVID M. REDROW, Vice President/Newark
JERALD L. POST, Vice President
ROBROY WALTERS, Controller
JENNIE M. ALTIER, Assistant Vice President
DAVID L. BATTEN, Assistant Vice President
SUSAN L. CORCORAN, Assistant Vice President, Operations
ROGER E. CUNION, Assistant Vice President
JOSEPH P. FLINN, Assistant Vice President, Personal Loan Manager
PAUL A. HUFFMAN, Assistant Vice President, Operations
MARY ANN MITCHELL, Assistant Vice President
BETTY L. REYNOLDS, Assistant Vice President
LARRY P. SMITH, Assistant Vice President
RUTH I. OTTO, Assistant Secretary
RICHARD J. FLANAGAN, Accounting Manager
RODNEY A. CUNNINGHAM, Collections Officer
CHARLES R. BARNES, Loan Officer
JULIE L. GIFFIN, Manager, Account Services
CATHLEEN S. KNOX, Loan Officer/Loan Analyst
CATHY J. LINSCOTT, Loan Officer
BEVERLY C. MELLINGER, Loan Officer
CHARLES V. ROBINSON, JR., Loan Officer/Credit Administration Officer
JONATHAN T. SCHENZ, Loan Officer
INFORMATION SYSTEMS
-------------------
R. JOE COWDERY, Vice President/Manager, Information Systems
INVESTMENT AND TRUST DIVISION
-----------------------------
DAVID B. BAKER, President, Investment and Trust Division
ROSE N. HAAS, Vice President and Investment Officer
JEFFREY D. WELCH, CPA, Vice President/Pension Services and Operations
BETH ANN WORTHINGTON, Vice President/Personal Trust Officer
RONALD L. CLOSE, Financial Planning Officer
LEGAL AND COMPLIANCE
--------------------
CHARLES R. HUNSAKER, Vice President and Counsel
CHARLES SNODGRASS, Assistant Vice President
ROBERT L. STEALEY, Assistant Vice President Compliance Officer
TERESA A. PYLES, Assistant Compliance Officer and Security Officer
DIRECTORS
---------
DAVE M. ARCHER, President, Pioneer Pipe, Inc.
DENNIS D. BLAUSER, President, Blauser Energy Corp.
GEORGE W. BROUGHTON, Executive Vice President and Director of Marketing,
Broughton Foods Company
WILFORD D. DIMIT, Owner, First Settlement Square
ROBERT E. EVANS, President and Chief Executive Officer
BRENDA F. JONES, M.D., Medical Director, Marietta Opthalmology
Associates, Inc.
HAROLD D. LAUGHLIN, Owner, Laughlin Music and Vending Service
REX E. MAIDEN, President, Maiden & Jenkins Construction Co.
NORMAN J. MURRAY, Chairman, Retired, The Airolite Company
T. PAT SAUBER, Owner, McDonald's Restaurants
JAMES B. STOWE, Chairman of the Board, Stowe Truck and Equipment Company
PAUL T. THEISEN, Attorney, Theisen, Brock, Frye, Erb & Leeper Co., L.P.A.
THOMAS C. VADAKIN, President, Vadakin, Inc.
JOSEPH H. WESEL, President, Marietta Automotive Warehouse, Inc.
DIRECTORS EMERITUS
------------------
CARL L. BROUGHTON
R. NEIL CHRISTY
WILLIAM K. HAMER
WILLIAM E. MCKINNEY
R. HOBART MORRIS
THE FIRST NATIONAL BANK OF SOUTHEASTERN OHIO
============================================
OFFICERS
--------
RICK D. TURNER, President and Chief Executive Officer
KENNETH E. SHAFER, Executive Vice President and Cashier
CATHERINE R. OGLE, Vice President/Lending
THOMAS D. HESSON, Assistant Vice President and Controller
KRISTI A. SCHAFER, Assistant Vice President/Marketing and Business Development
MICHAEL J. SCHRAMM, Assistant Vice President, Manager McConnelsville Office
and Security Officer
CHERYL HANSON, Loan Officer, Manager Chesterhill Office
RUTH I. OTTO, Secretary
KAREN MILLS, Assistant Secretary
CHARLES R. HUNSAKER, General Counsel
DIRECTORS
---------
LARRY J. ARMSTRONG, Armstrong and Smith
CARL BAKER, JR., Co-Owner, B & N Coal Company
ROBERT E. EVANS, President and Chief Executive Officer, Peoples Bancorp Inc.
H. CLAYTON JOHN, Vice Chairperson
WILFRED O. HILL, Oil and Gas, Retired
CHARLES R. HUNSAKER, General Counsel
JAMES D. MCKINNEY, Morgan County School Superintendent-Retired
CAROL A. SCHNEEBERGER, Board Chairperson, Vice President/Operations,
Peoples Bancorp Inc.
PAUL T. THEISEN, Attorney, Theisen, Brock, Frye, Erb & Leeper Co., L.P.A.
RICK D. TURNER, President and Chief Executive Officer
DIRECTORS EMERITUS
------------------
MARCUS GANT
ARTHUR W. GILCHRIST
EXHIBIT 21
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1994
Subsidiaries of Peoples Bancorp Inc.
The following are the only subsidiaries of Peoples Bancorp Inc.:
Name of Subsidiary Jurisdiction of Incorporation
------------------ -----------------------------
The Peoples Banking and Trust Company Ohio
The First National Bank of Southeastern Ohio United States
The Northwest Territory Life Insurance Company Arizona
EXHIBIT 23
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1994
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statements of Peoples Bancorp Inc. on Form S-3 (File No.
33-54003) and on Form S-8 (File No. 33-67878) of our report
dated January 26, 1995, on our audits of the consolidated
financial statements of Peoples Bancorp Inc. as of December 31,
1994 and 1993, and for the years ended December 31, 1994, 1993,
and 1992, which report is incorporated by reference in this
Annual Report on Form 10-K.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
March 29, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-K filed as of December 31, 1994.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 19,551
<INT-BEARING-DEPOSITS> 650
<FED-FUNDS-SOLD> 4,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 90,172
<INVESTMENTS-CARRYING> 9,247
<INVESTMENTS-MARKET> 9,089
<LOANS> 361,353
<ALLOWANCE> 6,783
<TOTAL-ASSETS> 498,006
<DEPOSITS> 403,819
<SHORT-TERM> 19,767
<LIABILITIES-OTHER> 4,998
<LONG-TERM> 23,787
<COMMON> 24,326
0
0
<OTHER-SE> 21,309
<TOTAL-LIABILITIES-AND-EQUITY> 498,006
<INTEREST-LOAN> 28,848
<INTEREST-INVEST> 5,879
<INTEREST-OTHER> 1,377
<INTEREST-TOTAL> 36,104
<INTEREST-DEPOSIT> 13,616
<INTEREST-EXPENSE> 15,424
<INTEREST-INCOME-NET> 20,680
<LOAN-LOSSES> 765
<SECURITIES-GAINS> (237)
<EXPENSE-OTHER> 15,672
<INCOME-PRETAX> 8,081
<INCOME-PRE-EXTRAORDINARY> 5,748
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,748
<EPS-PRIMARY> 1.98
<EPS-DILUTED> 1.97
<YIELD-ACTUAL> 4.82
<LOANS-NON> 902
<LOANS-PAST> 1,082
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,696
<ALLOWANCE-OPEN> 6,370
<CHARGE-OFFS> 1,124
<RECOVERIES> 772
<ALLOWANCE-CLOSE> 6,783
<ALLOWANCE-DOMESTIC> 6,783
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
