SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: O-13653
THE PEOPLES BANCTRUST COMPANY, INC.
(Exact name of registrant as specified on its charter)
Alabama 63-0896239
------------------------------------ -----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
310 Broad Street, Selma, Alabama 36701
------------------------------------------ ---------------------------
(Address of principal executive offices) (Zip Code)
(334) 875-1000
---------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter time 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
As of the close of business on November 9, 2000, 5,148,138 shares of the
registrant's Common Stock, par value $.10 per share, were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE PEOPLES BANCTRUST COMPANY, INC., SELMA, ALABAMA
CONDENSED CONSOLIDATED BALANCE SHEETS
In Thousands
September 30, December 31,
2000 1999
---- ----
(Unaudited)
ASSETS:
Cash and due from banks $ 22,287 $ 39,809
Federal funds sold and securities purchased
under agreement to resell 9,255 4,663
--------- ---------
Total cash and cash equivalents 31,542 44,472
Securities available-for-sale 122,176 119,559
Loans, net of unearned discount 464,369 436,732
Allowance for loan losses (6,042) (5,333)
--------- ---------
Net loans 458,327 431,399
Bank premises and equipment, net 14,911 13,880
Intangible assets 8,429 8,997
Other real estate, net 970 876
Other assets 13,555 10,160
--------- ---------
Total assets $ 649,910 $ 629,343
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Non-interest-bearing deposits $ 69,054 $ 68,056
Interest-bearing deposits 449,461 421,285
--------- ---------
Total deposits 518,515 489,341
Federal funds purchased and securities sold
under agreements to repurchase 4,679 34,789
Other borrowed funds 57,702 42,104
Other liabilites 8,168 5,204
--------- ---------
Total liabilities 589,064 571,438
Common stock 515 515
Additional paid-in-capital 5,651 5,651
Accumulated other comprehensive income, net
of tax (1,669) (1,647)
Retained earnings 56,349 53,386
--------- ---------
Total stockholders' equity 60,846 57,905
--------- ---------
Total liabilities and stockholders' equity $ 649,910 $ 629,343
========= =========
See Notes to the Unaudited Condensed Consolidated Financial Statements
2
<PAGE>
<TABLE>
<CAPTION>
THE PEOPLES BANCTRUST COMPANY, INC., SELMA, ALABAMA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In Thousands, except share and per share data
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest and fees on loans $ 11,334 $ 9,454 $ 32,189 $ 26,331
Interest and dividends on investment
securities 1,804 1,912 5,435 5,896
Other interest income 234 18 461 315
----------- ----------- ----------- -----------
Total interest income 13,372 11,384 38,085 32,542
Interest on deposits 5,459 4,150 14,976 12,001
Interest on borrowed funds 977 577 2,447 1,572
----------- ----------- ----------- -----------
Total interest expense 6,436 4,727 17,423 13,573
----------- ----------- ----------- -----------
Net interest income 6,936 6,657 20,662 18,969
Provision for loans losses 782 1,290 2,347 2,870
----------- ----------- ----------- -----------
Net interest income after provision for
loan losses 6,154 5,367 18,315 16,099
Net securities gains (losses) 17 42 (7) 204
Other non-interest income 2,057 1,886 5,515 5,356
Non-interest expense 6,186 5,277 17,385 16,001
----------- ----------- ----------- -----------
Income before income taxes 2,042 2,018 6,438 5,658
Provision for income taxes 589 666 2,085 1,874
----------- ----------- ----------- -----------
Net income $ 1,453 $ 1,352 $ 4,353 $ 3,784
=========== =========== =========== ===========
Basic weighted average number of shares 5,148,138 5,148,138 5,148,138 5,148,138
Diluted weighted average number of shares 5,149,953 5,150,700 5,149,717 5,151,467
Basic net income per share $ 0.28 $ 0.26 $ 0.85 $ 0.74
Diluted net income per share $ 0.28 $ 0.26 $ 0.85 $ 0.73
Dividends per share $ 0.09 $ 0.085 $ 0.27 $ 0.255
</TABLE>
See Notes to the Unaudited Condensed Consolidated Financial Statements
3
<PAGE>
THE PEOPLES BANCTRUST COMPANY, INC., SELMA, ALABAMA
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
In Thousands In Thousands
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 1,453 $ 1,352 $ 4,353 $ 3,784
Other comprehensive income:
Unrealized gains (losses) on securities
available for sale during the period 846 (499) (40) (3,204)
Less: reclassification adjustment for net
gains (losses) included in net income 17 42 (7) 204
------- ------- ------- -------
Other comprehensive income (loss) 829 (541) (33) (3,408)
Income tax provision (benefit) related to items of
other Comprehensive income (loss) 282 (173) (11) (1,091)
------- ------- ------- -------
Other comprehensive income (loss), net of tax 547 (368) (22) (2,317)
------- ------- ------- -------
Comprehensive income, net of tax $ 2,000 $ 984 $ 4,331 $ 1,467
======= ======= ======= =======
</TABLE>
See Notes to the Unaudited Condensed Consolidated Financial Statements
4
<PAGE>
THE PEOPLES BANCTRUST COMPANY, INC., SELMA, ALABAMA
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
Nine Months Ended
September 30,
---------------------
2000 1999
---- ----
Net cash provided by operating activities $ 6,542 $ 4,975
-------- --------
Cash flow from investing activities
Proceeds from sales of available-for-sale securities 8,473 28,957
Proceeds from maturity and call of available-for-sale
securities 1,450 17,409
Purchases of available-for-sale securities (12,659) (32,142)
Net increase in loans (27,785) (56,901)
Purchases of bank premises and equipment (2,686) (3,728)
Proceeds from sale of bank premises and equipment 29 310
Investment in other real estate and equipment -- (117)
Proceeds from sale of other real estate 535 269
Investment in low income housing (101) (105)
-------- --------
Net cash used by investing activities (32,744) (46,048)
-------- --------
Cash flow from financing activities
Increase in deposits 29,174 15,777
Net (decrease) increase in borrowed funds (14,512) 19,488
Dividends paid (1,390) (1,313)
-------- --------
Net cash provided by financing activities 13,272 33,952
-------- --------
Net decrease in cash and cash equivalents (12,930) (7,121)
Cash and cash equivalents beginning of year 44,472 36,267
-------- --------
Cash and cash equivalents end of period $ 31,542 $ 29,146
======== ========
Cash paid for interest $ 16,017 $ 13,095
Cash paid for income taxes $ 1,975 $ 1,800
See Notes to the Unaudited Condensed Consolidated Financial Statements
THE PEOPLES BANCTRUST COMPANY, INC. AND SUBSIDIARY
Notes to the Unaudited Condensed Consolidated Financial Statements
Accounting Policies:
The accompanying unaudited consolidated financial statements of The Peoples
BancTrust Company, Inc, (the "Company") and its subsidiary, The Peoples Bank and
Trust Company ("Peoples Bank"), along with its subsidiaries Loan Express, Inc.
and The Peoples Insurance Agency, Inc. have been prepared in accordance with
generally accepted accounting principles for interim information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been included. The
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<PAGE>
results of operations are not necessarily indicative of the results of
operations for the full year or any other interim periods. For further
information refer to the consolidated financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year-ended December
31, 1999.
Commitments and Contingencies:
The Company and its subsidiaries are from time to time defendants in legal
actions arising from normal business activities. Management does not anticipate
that the ultimate liability arising from litigation outstanding at September 30,
2000, will have a materially adverse effect on the Company's financial
statements.
Derivatives and Hedging Activities:
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). SFAS 133, effective for all
fiscal quarters of fiscal years beginning after June 15, 1999, establishes
accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts, by requiring that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. It also
establishes the condition under which a derivative should be designated as
hedging a specific type of exposure and requires the company to establish at the
inception of the hedge the method and measurement approach used to assess its
effectiveness.
SFAS 133 as amended by SFAS 137, is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. The Company does not believe the
adoption of SFAS 133 will have a significant impact on its financial statements
and disclosures.
6
<PAGE>
Earnings Per Share:
The following tables reflect the reconciliation of the numerator and
denominator of the basic EPS computation to the diluted EPS computation for the
three months and nine months ended September 30, 2000 and 1999 (In thousands,
except for per share data):
<TABLE>
<CAPTION>
2000
----------------------------------------------------------------
Basic Diluted
Q-T-D Y-T-D Q-T-D Y-T-D
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net income $ 1,453 $ 4,353 $ 1,453 $ 4,353
Average shares outstanding 5,148 5,148 5,148 5,148
Effect of dilutive securities stock
options 2 2
--------- ---------
Diluted average shares outstanding 5,150 5,150
Earnings per share:
Net income $ 0.28 $ 0.85 $ 0.28 $ 0.85
1999
----------------------------------------------------------------
Basic Diluted
Q-T-D Y-T-D Q-T-D Y-T-D
----- ----- ----- -----
Net income $ 1,352 $ 3,784 $ 1,352 $ 3,784
Average shares outstanding 5,148 5,148 5,148 5,148
Effect of dilutive securities stock
options 3 3
--------- ---------
Diluted average shares outstanding 5,151 5,151
Earnings per share:
Net income $ 0.26 $ 0.74 $ 0.26 $ 0.73
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
GENERAL
The following analysis focuses on the financial condition and results of
operations of The Peoples BancTrust Company, Inc. (the "Company"), and should be
read in conjunction with the consolidated financial statements included in this
report.
Management's discussion and analysis includes certain forward-looking statements
addressing, among other things, the Company's prospects for earnings, asset
growth and net interest margin. Forward-looking statements are accompanied by,
and identified with, such terms as "anticipates," "believes," "expects,"
"intends," and similar phrases. Management's expectations for the Company's
future necessarily involve a number of assumptions and estimates. Factors that
could cause actual results to differ from the expectations expressed herein
include: substantial changes in interest rates and changes in the general
economy, as well as changes in the Company's strategies for credit-risk
management, interest-rate risk management and investment activities.
Accordingly, any forward-looking statements included herein do not purport to be
predictions of future events or circumstances and may not be realized.
FINANCIAL CONDITION
LOANS
Loans, net of unearned income, rose $27,637,000 to $464,369,000 at September 30,
2000, from $436,732,000 at December 31, 1999. Strong demand in the commercial
real estate section of the loan portfolio was the primary reason for this
increase.
INVESTMENTS
Total investment securities were $122,176,000 at September 30, 2000 as compared
to $119,559,000 on December 31, 1999. This represents an increase of $2,617,000.
Both deposit growth, as well as reductions in cash and cash equivalents,
contributed to this increase in investment securities.
At year-end 1999, and at September 30, 2000, the entire investment portfolio was
classified as "available-for-sale", resulting in the portfolio being
marked-to-market. At December 31, 1999, the portfolio had a net unrealized loss
(net of taxes) of $1,647,000 as compared to a net unrealized loss (net of taxes)
of $1,669,000 at September 30, 2000. This increase in the net unrealized loss
(net of taxes) was primarily the result of rising interest rates between
December 31, 1999 and September 30, 2000, which caused reductions in the market
value of fixed rate bonds during this period.
SHORT-TERM INVESTMENTS
Short-term investments totaled $9,255,000 at September 30, 2000 as compared to
$4,663,000 at December 31, 1999, an increase of $4,592,000. Short-term
investments are comprised of federal funds sold, and securities purchased under
agreements to resell. Both deposit growth, as well as reductions in cash and
cash equivalents, contributed to this increase in short-term investment
securities.
ALLOWANCE FOR LOAN LOSSES
Management's estimate of the uncollectable loans within the Company's loan
portfolio is represented by the allowance for loan losses. The allowance for
loan losses is established through charges to earnings in the form of a
provision for loan losses. A loan is charged against the allowance for loan
losses when management determines that it is probable that the repayment of the
principal amount of a loan will not be made in accordance with the loan's terms.
Should a loan that has been charged off be recovered, either partially or
entirely, it is credited back to the allowance. Periodic reviews of the loan
portfolio, that include analysis of such factors as current and expected
economic conditions, historical loss experience and levels of non-accruing loans
and delinquencies, determine the
8
<PAGE>
appropriate level at which to maintain the allowance for loan losses. Because
the allowance is based on assumptions and subjective judgements, it is not
necessarily reflective of the charge-offs that may ultimately occur.
At September 30, 2000, the Company's allowance for loan losses had a balance of
$6,042,000 as compared to $5,333,000 at December 31, 1999. As a result, the
ratio of the allowance to total loans net of unearned income was 1.30% and 1.22%
at September 30, 2000 and December 31, 1999, respectively. Loans requiring
special attention because of potential weaknesses fell from $8,180,000 at
December 31, 1999, to $7,073,000 at September 30, 2000. As a percentage of total
loans net of unearned interest, non-accruing loans decreased to 0.50% at
September 30, 2000, as compared to 0.65% at December 31, 1999. The coverage of
the allowance to non-accruing loans was 260% and 188% at September 30, 2000 and
December 31, 1999, respectively. The current level of allowance for loan losses
exceeds the minimum requirements set forth by regulatory authorities. It is
management's belief that, at its current level, the allowance for loan losses is
sufficient to absorb any potential losses currently existing in the Company's
loan portfolio.
DEPOSITS
At September 30, 2000, total deposits had increased to $518,515,000, or
$29,174,000 from a December 31, 1999 balance of $489,341,000.
Non-interest-bearing deposits increased $998,000 between December 31, 1999 and
September 30, 2000, while interest-bearing deposits increased $28,176,000 for
the same period.
Between December 31, 1999 and September 30, 2000 the Company entered two new
markets, both of which have generated deposit growth. During July of 2000, the
Company acquired $10,000,000 of deposits placed by brokers ("Brokered
deposits"). Brokered deposits are more likely to be withdrawn from the Company
than other, more traditional, types of deposits. These deposits are fully
insured by the Federal Deposit Insurance Corporation, and are deployed by
management to meet short-term funding needs. Having entered two new markets and
the acceptance or brokered deposits contributed to the significant growth in
total deposits.
LIQUIDITY
Liquidity describes the Company's ability to meet its needs for cash. Those
needs primarily include lending, withdrawal demands of customers and the payment
of operating expenses. The liability base provides liquidity through deposit
growth, the rollover of maturing deposits and accessibility to external sources
of funds, ("borrowed funds").
From time to time, the Company utilizesshort-term borrowed funds. At September
30, 2000, short-term borrowings in the form of federal funds purchased and
securities sold under agreement to repurchase totaled $4,679,000, as compared to
$34,789,000 at December 31, 1999. This significant reduction in the amount of
short-term borrowings was primarily due to the Company having repaid monies
borrowed to fund several large, short-term loans issued to customers at
year-end, as well as the repayment of funds borrowed related to the Company's
year 2000 contingency plan guidelines.
Other borrowed funds increased to $57,702,000 at September 30, 2000 from
$42,104,000 at December 31, 2000. Other borrowed funds is comprised of
borrowings from the Federal Home Loan Bank of Atlanta. This increase is the
result of having funded loan growth that occurred between December 31, 1999 and
September 30, 2000.
STOCKHOLDERS' EQUITY
Total stockholders' equity at September 30, 2000 was $60,846,000, compared to
$57,905,000 at December 31, 1999. This increase of $2,941,000 was accounted for
as follows: $4,353,000 year-to-date earnings, $1,390,000 common stock dividends
and $22,000 additional net unrealized loss on available-for-sale securities.
9
<PAGE>
Risk-based capital regulations require all bank holding companies and banks to
achieve and maintain a minimum total capital to risk-weighted assets ratio of
8.00%, at least half of which must be in the form of Tier 1 capital (consisting
of stockholders' equity less goodwill). The following table indicates the
Company's Tier 1 capital ratio and total capital ratio at September 30, 2000
were 11.45% and 12.70%, respectively. The Company maintained, at September 30,
2000, a leverage ratio of Tier 1 capital to total assets of 8.85% compared to
the minimum regulatory standard of 4.00% required of the strongest companies and
banks. In addition, the table indicates that the ratios of the Company's
subsidiary bank, The Peoples Bank and Trust Co. ("Peoples Bank"), also exceed
the minimum requirements of the regulation.
<TABLE>
<CAPTION>
Risk-Based Capital Ratios & Leverage Ratios
As of September 30, 2000
------------------------------------------------------------------------------
RISK-BASED CAPITAL RATIOS Dollars in Thousands
---------------------------------------
The Company Peoples Bank
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Tier 1 Capital $ 54,087 11.45% $ 54,272 11.55%
Tier 1 Capital - Minimum Required 18,889 4.00% 18,792 4.00%
---------------------------- ----------------------------
Excess $ 35,198 7.45% $ 35,480 7.55%
Total Capital $ 59,992 12.70% $ 60,314 12.84%
Total Capital - Minimum Required 37,779 8.00% 37,583 8.00%
---------------------------- ----------------------------
Excess $ 22,213 4.70% $ 22,731 4.84%
Net risk-weighted assets $ 472,234 $ 469,792
LEVERAGE RATIOS
---------------------------------------
Total Tier 1 Capital $ 54,087 8.85% $ 54,272 8.89%
Minimum Leverage Requirement 24,441 4.00% 24,421 4.00%
---------------------------- ----------------------------
Excess $ 29,646 4.85% $ 29,851 4.89%
Average Total Assets,
Net of all intangibles $ 611,033 $ 610,526
</TABLE>
10
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000, COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1999
The Company's profitability, like that of many financial institutions, is
dependent to a large extent upon its net interest income. Simply stated, net
interest income is the difference between interest income on interest-earning
assets, such as loans and investments, and interest expense on interest-bearing
liabilities, such as deposits and borrowings.
Interest income for the third quarter ended September 30, 2000 (the "2000
quarter") totaled $13,372,000, compared to $11,384,000 for the same quarter of
1999 (the "1999 quarter"). The increase of $1,988,000 was primarily due to both
an increase in the average balance of the Company's loan portfolio and in the
average yield earned on said portfolio, having been partially offset by an
increase in interest paid on deposits.
The 2000 quarter saw a decrease of $108,000 in investment income when compared
to the 1999 quarter. Interest income on investments totaled $1,804,000 for the
2000 quarter as opposed to $1,912,000 for the same period in 1999. A reduction
in the average volume of investment securities during the 2000 quarter, as
compared to the 1999 quarter, was the primary reason for this decline.
Interest income from business loans totaled $3,110,000 for the 2000 quarter.
This represents an increase of $748,000 when compared to $2,362,000 of interest
income for the 1999 quarter. Increases in both the average volume and yield
earned on these loans contributed to the increase in income between the two
quarters.
Personal loan interest income decreased to $2,747,000 for the 2000 quarter from
$2,933,000 for the 1999 quarter. A decrease in the average volume of personal
loans during the 2000 quarter, as compared to the 1999 quarter, was largely the
cause for this $186,000 reduction.
Interest income earned on real estate loans totaled $5,179,000 for the 2000
quarter, as compared to $3,902,000 for the 1999 quarter. This increase of
$1,277,000 between the 1999 quarter and the 2000 quarter was primarily the
result of a significant increase in the average balance of real estate loans
held.
Interest paid on deposits totaled $5,459,000 for the 2000 quarter, as compared
to $4,150,000 for the 1999 quarter. Both the average cost and average volume of
interest bearing deposits were higher in the 2000 quarter than in the 1999
quarter, thus resulting in the $1,309,000 increase in interest paid.
The 2000 quarter provision for loan losses charge was $782,000, as compared to
$1,290,000 for the 1999 quarter. The Company experienced lower loan charge off
activity during the 2000 quarter than during the 1999 quarter, thus contributing
to the $508,000 reduction in the provision for loan losses charge between the
two quarters.
Other non-interest income for the 2000 quarter totaled $1,858,000. For the 1999
quarter, other non-interest income totaled $1,886,000.
Non-interest expense increased $710,000 from the 1999 quarter to $5,987,000 for
the 2000 quarter. Non-interest expense for the 1999 quarter totaled $5,277,000.
Higher personnel and premises costs relative to ongoing market expansion were
the primary reasons for this increase in noninterest expense between the 1999
and 2000 quarters.
Income before taxes for the 2000 quarter was $2,042,000, compared to $2,018,000
for the 1999 quarter. For the 2000 quarter, the provision for income taxes
totaled $589,000, as compared to $666,000 for the 1999 quarter. This reduction
in income tax provision between the two quarters is the result of the Company
recognizing income tax credits, and the tax benefit of flow through losses on
low income housing projects in which it is a limited partner. The resulting 2000
quarter net income was $1,453,000, compared to net income for the 1999 quarter
of $1,352,000. Earnings per share for the 2000 quarter was $.28, compared to
$.26 for the 1999 quarter.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2000
Interest income for the nine months ended September 30, 2000 totaled
$38,085,000, an increase of $5,543,000 from $32,542,000 for the same period in
1999. The average volume of interest earning assets rose to $569,713,000 at
11
<PAGE>
September 30, 2000, representing an increase of $52,859,000 over the September
30, 1999 level of $516,854,000. The increase in average volume, along with an
increase in average annual yield, resulted in the increase in interest income.
The average annual yield on interest earning assets for the nine months ended
September 30, 2000 was 8.91%, whereas for the same period in 1999 it was 8.39%.
Interest income on the Company's investment securities portfolio for the nine
months ended September 30, 2000 totaled $5,435,000, which translates to an
average annual yield of 6.16%. For the nine months ended September 30, 1999,
income from investment securities totaled $5,896,000, resulting in a 5.96%
average annual yield. The investment securities portfolio had an average volume
at September 30, 2000 of $117,562,000, that when compared to the average volume
for the same period in 1999 of $131,800,000, explains the reduction in interest
income, given the aforementioned increase in average annual yield.
Interest income on the Company's loans totaled $32,189,000 for the nine-month
period ended September 30, 2000. For the same period in 1999, interest income on
loans totaled $26,331,000. Average loans for the nine months ended September 30,
2000 were $441,889,000, yielding a 9.71% average annual return. For the same
period in 1999, average loans totaled $375,899,000, earning an average annual
yield of 9.34%. The $5,858,000 increase in loan interest income was the result
of both higher average loan volume and higher average annual loan yields.
Interest expense on interest-bearing deposits for the nine months ended
September 30, 2000 totaled $14,976,000, with an average cost for these deposits
of 4.58%. For the same period in 1999, interest expense on deposits totaled
$12,001,000, with an average cost of 3.99%. The average balances of
interest-bearing deposits for the nine months ended September 30, 2000 and 1999
were $435,689,000 and $401,533,000, respectively. Both the increase in average
deposit cost and average deposit balances were attributable to the $2,975,000
increase in interest expense on deposits.
The resulting net interest income of the Company for nine months ended September
30, 2000 totaled $20,662,000. This represents an increase of $1,693,000 over net
interest income for the same period in 1999 of $18,969,000. Net interest margin
for the Company for the nine months ended September 30, 2000 was 4.84%, whereas
for the same period in 1999 it was 4.89%.
Provision for loan losses for the nine months ended September 30, 2000 totaled
$2,347,000, as compared to $2,870,000 for the same period in 1999. The Company
experienced relatively favorable loan charge off activity during the nine months
ended September 30, 2000. Given this, the Company was able to charge a lower
provision for loan losses against earnings. Provision for loan losses are
charges made against net interest income, and applied to the allowance for loan
losses. See "Financial Condition--Allowance for Loan Losses" above.
During the nine months ended September 30, 2000, non-interest income totaled
$5,515,000, as compared to $5,356,000 for the same period in 1999. This $159,000
increase was primarily due to the Company having increased its customer base.
Non-interest expense for the nine months ended September 30, 2000 totaled
$17,385,000 as compared to $16,001,000 for the same period of 1999. The
$1,384,000 increase is primarily accounted for in additional personnel and
facilities expenses associated with the Company's ongoing market expansion.
For the nine months ended September 30, 2000, income before taxes totaled
$6,438,000, compared to $5,658,000 for the same period in 1999. The income tax
provision for nine months ended September 30, 2000 totaled $2,085,000, whereas
for the same period in 1999 it totaled $1,874,000. The resulting net income for
the nine months ended September 30, 2000 totaled $4,353,000, compared to
$3,784,000 for the same period in 1999.
IMPACT OF NEW ACCOUNTING STANDARDS
See Notes to the Unaudited Condensed Consolidated Financial Statements.
12
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest sensitivity is one measure of the vulnerability of earnings to changes
in the general level of interest rates. Whenever interest-earning assets reprice
to market interest rates at a different pace than interest-bearing liabilities,
interest income performance will be affected favorably or unfavorably during
periods of changes in general interest rates. Management is unable to predict
future changes in market rates and their impact on the Company's profitability.
Management believes, however, that the Company's current rate sensitivity
position is well matched, indicating the assumption of minimal interest rate
risk. Management does not believe there to have been any material shift in the
relationship between the maturity characteristics of interest-earning assets,
and interest-bearing liabilities since December 31, 1999, and, consequently, no
material change in interest rate risk exposure.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Shelton Trent Merriweather v. The Peoples Bank and Trust Company, et al, Circuit
Court of Dallas County, Alabama, Case No. CV-2000-318. This complaint was served
on Peoples Bank on October 2, 2000. The complaint claims unspecified amounts of
compensatory and punitive damages based on a mortgage loan and sale of life
insurance to the plaintiff by the Peoples Bank which occurred in July of 1994.
The plaintiff alleges that the defendants charged the plaintiff, without his
permission, for credit life insurance, which he never received and that the
defendant Peoples Bank amortized the plaintiff's mortgage at an amount higher
than what he was told was the amount of the loan. The complaint avers that the
actions of the defendants constitute negligence, wanton and/or fraudulent
conduct, misrepresentations, suppression, deception, breach of contract, and
conspiracy. The Peoples Bank denies the allegations of the complaint and intends
to vigorously defend the case. Based on the information now available, the
Company considers that the suit is without merit. However, there has been no
discovery or hearings in the case, and it is premature to attempt to determine
any possible exposure.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule (SEC use only)
(b) Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
The Peoples BancTrust Company, Inc.
Date: November 9, 2000 /s/ Richard P. Morthland
---------------------------------------------
Richard P. Morthland
Chairman and Chief Executive Officer
Date: November 9, 2000 /s/ Andrew C. Bearden, Jr.
---------------------------------------------
Andrew C. Bearden, Jr.
Executive Vice President and Chief Financial
Officer
Date: November 9, 2000 /s/ Thomas P. Wilbourne
---------------------------------------------
Thomas P. Wilbourne
Assistant Vice President and Assistant Treasurer
(Principal Accounting Officer)
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