UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the period ended September 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File Number 0-23134
PEOPLES BANK CORPORATION OF INDIANAPOLIS
(Exact name of registrant as specified in its charter)
Indiana 35-1681096
- --------------------------------------------------------------------------------
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) identification no.)
130 East Market Street Indianapolis, Indiana 46204
- --------------------------------------------------------------------------------
(Address of principal (Zip Code)
executive offices)
(317) 237-8121
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. X Yes ___ No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common Shares, without par value
Nonvoting - 1,433,292 shares as of November 1, 1996
Voting - 140,000 shares as of November 1, 1996
<PAGE>
PEOPLES BANK CORPORATION OF INDIANAPOLIS
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 1996
and December 31, 1995 ...............................................2
Consolidated Statements of Income for three and nine
months ended September 30, 1996 and 1995 ............................3
Consolidated Statements of Changes in Shareholders'
Equity ..............................................................4
Consolidated Statements of Cash Flows for nine months ended
September 30, 1996 and 1995 .........................................5
Notes to Consolidated Financial Statements ..........................6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition ..............................7-15
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders..................16
Item 6. Exhibits and Reports on Form 8-K ....................................16
Signatures ..................................................................17
<PAGE>
PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED BALANCE SHEETS
================================================================================
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Sept 30, Dec 31,
1996 1995
--------------- --------------
Assets
<S> <C> <C>
Cash and due from banks $32,911 $23,377
Federal funds sold 0 0
--------------- --------------
Total cash and equivalents 32,911 23,377
Available-for-sale securities 89,246 107,745
Loans held for sale 1,078 2,557
Total loans 319,075 271,093
Allowance for loan losses (4,010) (3,290)
--------------- --------------
Loans, net 315,065 267,803
Premises and equipment, net 8,148 8,744
Accrued income and other assets 7,758 6,793
--------------- --------------
Total assets $454,206 $417,019
=============== ==============
Liabilities
Non interest-bearing deposits $76,839 $67,966
Interest-bearing deposits 319,643 283,796
--------------- --------------
Total deposits 396,482 351,762
Short-term borrowings 9,782 20,056
Accrued expenses and other liabilities 3,800 3,565
--------------- --------------
Total liabilities 410,064 375,383
Shareholders' equity Common shares, no par value:
Authorized:
Voting - 300,000 shares
Nonvoting - 4,000,000 shares
Issued:
Voting - 140,000 shares 950 950
Nonvoting - 1,433,292 shares (1996)
- 1,449,992 shares (1995) 14,778 15,334
Retained earnings 28,251 25,114
Net unrealized gain/(loss) on available-for-sale securities 163 238
--------------- --------------
Total shareholders' equity 44,142 41,636
--------------- --------------
Total liabilities and shareholders' equity $454,206 $417,019
=============== ==============
</TABLE>
See accompanying notes.
<PAGE>
PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED STATEMENTS OF INCOME
================================================================================
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
Sept 30, Sept 30,
1996 1995 1996 1995
----------------------------------------------------
Interest income
<S> <C> <C> <C> <C>
Interest and fees on loans $6,737 $5,898 $19,248 $16,316
Interest on federal funds sold 291 88 689 191
Interest on investments 1,234 1,681 3,867 6,008
----------------------------------------------------
Total interest income 8,262 7,667 23,804 22,515
Interest expense
Interest on deposits 3,507 3,211 9,921 9,138
Interest on short-term borrowings 124 306 453 1,474
----------------------------------------------------
Total interest expense 3,631 3,517 10,374 10,612
----------------------------------------------------
Net interest income 4,631 4,150 13,430 11,903
Provision for loan losses 300 108 750 461
----------------------------------------------------
Net interest income after
provision for loan losses 4,331 4,042 12,680 11,442
Other operating income
Trust fees 281 349 988 1,047
Service charge income 674 535 1,767 1,499
Mortgage banking revenue 149 64 515 672
Net gain (loss) on
investments 0 4 (28) (35)
Other operating income 214 178 710 479
----------------------------------------------------
Total other operating income 1,318 1,130 3,952 3,662
Other operating expenses
Salaries and employee benefits 2,080 2,192 6,024 6,467
Occupancy expense (net) 395 388 1,161 1,123
Equipment expense 250 296 766 902
FDIC insurance expense 1 (18) 2 352
Advertising Expense 78 143 347 557
Other operating expense 940 759 2,654 2,387
----------------------------------------------------
Total other operating expenses 3,744 3,760 10,954 11,788
Income before income taxes 1,905 1,412 5,678 3,316
Income Taxes 544 357 1,670 740
Net income $1,361 $1,055 $4,008 $2,576
====================================================
Net income per share (Note 3) $0.86 $0.66 $2.52 $1.61
====================================================
</TABLE>
See accompanying notes.
<PAGE>
PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
================================================================================
(Dollar amounts in thousands)
1996 1995
------------- ------------
Balance at January 1 $41,636 $38,477
Net Income 4,008 2,576
Cash dividends (871) (826)
Proceeds of stock offering 0 0
Repurchase of common stock (556) (835)
Change in net unrealized loss on
available-for-sale securities (75) 958
------------- ------------
Balance at September 30 $44,142 $40,350
============= ============
<PAGE>
PEOPLES BANK CORPORATION OF INDIANAPOLIS
CONSOLIDATED STATEMENTS OF CASH FLOWS
================================================================================
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Nine months ended
Sept 30,
1996 1995
------------- -------------
Cash flows from operating activities
<S> <C> <C>
Net Income $ 4,008 $2,576
Adjustments to reconcile net income to net cash
from operating activities
Depreciation and amortization 785 972
Provision for loan losses 750 461
Net loss on investment securities 27 35
Net amortization/(accretion) on investments 294 501
Net gain on the sale of loans (361) (254)
Change in interest payable and other liabilities 186 1,368
Change in interest receivable and other assets (937) (1,200)
Loans originated for sale, net of sales proceeds 1,840 (3,373)
----------- -------------
Net cash from operating activities 6,592 1,086
----------- -------------
Cash flows from investing activities
Proceeds from maturities and principal
reductions of investment securities 0 26,518
Proceeds from sales of available-for-sale securities 2,972 19,985
Proceeds from maturities of available-for-sale securities 43,746 6,907
Purchase of available-for-sale securities (28,585) 0
Purchase of investment securities 0 (1,000)
Loans made to customers, net of principal
collection thereon (48,153) (47,630)
Property and equipment expenditures (57) (960)
----------- -------------
Net cash from investing activities (30,077) 3,820
----------- -------------
Cash flows from financing activities
Net change in deposits 44,720 6,010
Net change in short-term borrowings (10,274) (11,926)
Proceeds from stock offering 0 0
Dividends paid (871) (826)
Purchase of common stock (556) (835)
----------- ------------
Net cash from financing activities 33,019 (7,577)
----------- ------------
Net change in cash and cash equivalents 9,534 (2,671)
Cash and cash equivalents at beginning of year 23,377 27,725
----------- ------------
Cash and cash equivalents at end of year $32,911 $25,054
=========== ============
</TABLE>
<PAGE>
Peoples Bank Corporation of Indianapolis
Notes to Consolidated Financial Statements
September 30, 1996
1. Accounting Policies
Except as noted in Note 3, the significant accounting policies followed
by Peoples Bank Corporation of Indianapolis ("the Corporation") for interim
financial reporting are consistent with the accounting policies followed for
annual financial reporting. The consolidated interim financial statements have
been prepared in accordance with instructions to Form 10-Q and may not include
all information and footnotes normally shown for full annual financial
statements. All adjustments which are, in the opinion of management, necessary
for a fair presentation of the results for the periods reported have been
included in the accompanying unaudited consolidated financial statements and all
such adjustments are of a normal recurring nature.
2. Earnings Per Share
Earnings per share is computed based upon the weighted average number
of shares outstanding during the period which were 1,583,926 and 1,587,955 for
the three and nine months ending September 30, 1996, and 1,589,992 and 1,597,118
for the three and nine months ending September 30, 1995.
3. Accounting Changes
Effective January 1, 1996, Peoples adopted Financial Accounting
Standard No. 121, "Accounting for the Impairment of long-lived Assets and for
long-lived Assets to be Disposed of." Management does not believe Peoples has
any material assets subject to this new Standard.
Effective January 1, 1996, Peoples adopted Financial Accounting Standard No.
122, "Accounting for Mortgage Servicing Rights." This Standard requires the
basis of mortgage loans originated and sold, with servicing retained, to be
allocated between the mortgage loan and the mortgage servicing right, based upon
the relative fair value of such assets. The effect of this Standard will be to
increase the gain, or reduce the loss, recognized upon the sale of the mortgage
loan, and to reduce future servicing fee income. During the third quarter of
1996, application of this Standard resulted in approximately $49 thousand of
additional income upon the sale of approximately $4.7 million of mortgage loans.
Effective January 1, 1996, Peoples adopted Financial Accounting Standard No.
123, "Accounting for Stock Based Compensation." This Standard encourages, but
does not require, entities to use a fair value based method to account for
stock-based compensation plans. If fair value accounting is not adopted,
entities must disclose the pro-forma effect on net income and earnings per
share, had fair value accounting been adopted. Stock options issued by Peoples
in 1996 are subject to the requirements of this Standard. Peoples has not
accounted for those options using a fair value based method and intends to
disclose the pro-forma effect on net income and earnings per share in its 1996
annual report. At the end of the third quarter, shares issued under the plan
were non-dilutive.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis
(Dollar amounts in thousands, except per share data)
General
The business of Peoples Bank Corporation of Indianapolis ("the Company")
consists of holding and administering its interest in Peoples Bank & Trust
Company ("Peoples"). The principal business of Peoples consists of attracting
deposits from consumer and commercial customers and making loans to individuals
and businesses. Peoples offers various products for depositors including
checking and savings accounts, certificates of deposit and safe deposit boxes.
Loans consist principally of loans to individuals secured by mortgage liens on
residential properties, consumer loans generally secured by personal property
and loans to businesses generally secured by liens on business assets. Peoples
also offers trust services to individuals, businesses and institutions.
The Company operates 12 branch locations, a twelve story office in downtown
Indianapolis, an operations center and one mortgage origination facility.
Peoples occupies five floors of the downtown office building and leases six
floors to tenants. The top floor houses the board room and a training area.
Leased tenant space at the downtown office remains at near capacity.
The Board of Directors of the Company approved on July 18, 1996, the repurchase,
from time to time, of 100,000 nonvoting common shares on the open market. The
Board believed that the shares had been at times undervalued in the market and
that it was in the best interest of the shareholders and the Company to effect
such share repurchases. At September 30, 1996, a total of 16,700 shares had been
repurchased.
The book value per share of Peoples nonvoting common shares at September 30,
1996 was $28.06. For the third quarter, the low trading price per share was
$28.50, and the high trading price per share was $34.25.
<PAGE>
Selected ratios and summary data.
At or for the Nine Months Ended
September 30,
1996 1995
---- ----
Assets $454,206 $422,400
Loans (includes loans held for sale) 320,153 266,555
Deposits 396,482 352,587
Shareholders Equity 44,142 40,350
Book value per share 28.06 25.38
Earnings per share $2.52 $1.61
Dividends per share $0.55 $0.54
Net Interest Margin (FTE) 4.60% 4.32%
Return on Average Assets 1.23% 0.81%
Return on Average Equity 12.40% 8.68%
Average Shares Outstanding 1,587,955 1,597,118
Total Shares Outstanding 1,573,292 1,589,992
Net Income
Net income for the third quarter of 1996 was $1,361 compared to $1,055 for the
third quarter of 1995. Net income for the nine months ended September 30, 1996,
was $4,008 which represents an increase of 55.60% or $1,432 from net income of
$2,576 for the nine months ended September 30, 1995. Net income per share for
the third quarter 1996 increased $0.20 or 30.30% to $0.86 from $0.66 for the
third quarter of 1995. Net income per share for the first nine months of 1996
was $2.52 compared to $1.61 for the first nine months of 1995. The increase is
primarily attributable to increased loan volume and fee income and decreased
operating expenses.
Net Interest Income
Net interest income is the principal component of the net income for the Company
and represents the difference between interest earned on loans and investments
and the interest cost of deposits and other borrowed funds. For the nine months
ended September 30, net interest income was $13,430 and $11,903 for 1996 and
1995, respectively. This reflects an increase of $1,527 or 12.83%. For the third
quarter of 1996 and 1995, respectively, net interest income was $4,631 and
$4,150, an increase of $481 or 11.59%. During the third quarter, interest income
increased at a faster rate than interest expense due to the increase in loan
balances and improved deposit pricing.
<PAGE>
Interest income for the nine months ended September 30, was $23,804 and $22,515
for 1996 and 1995, respectively. Interest income for the third quarter of 1996
and 1995, respectively, was $8,262 and $7,667, an increase of $595 or 7.76%.
Total interest expense was $10,374 and $10,612 for the nine months ended
September 30, 1996 and 1995, respectively. For the third quarter of 1996 and
1995, respectively, total interest expense was $3,631 and $3,517 an increase of
$114 or 3.24%.
Interest and fees on loans increased from $16,316 for the first nine months of
1995 to $19,248 for that period in 1996, an increase of $2,932 or 17.97%. For
the third quarter of 1996 and 1995, respectively, interest and fees on loans
were $6,737 and $5,898, an increase of $839 or 14.23%. These increases are
attributable to an increase in interest on loans outstanding. Total loans were
$266,555 at September 30, 1995, compared to $320,153 at September 30, 1996, an
increase of 20.11%.
The Company's net interest margin, or margin on earning assets, increased 0.31%
from 4.07% for the first nine months of 1995 to 4.38% for the first nine months
of 1996. On a tax equivalent basis, the Company's net interest margin was 4.32%
and 4.60%, respectively, for those periods. For the third quarter, the net
interest margin increased 0.12% from 4.20% in 1995 to 4.32% in 1996. On a tax
equivalent basis, the Company's net interest margin was 4.44 and 4.53% for the
third quarters of 1995 and 1996, respectively.
Provision & Allowance for Loan Losses
The provision for loan losses was $750 for the first nine months of 1996 as
compared to $461 for the first nine months of 1995, an increase of $289 or
62.69%. The loan loss provision for the third quarter of 1996 was $300 versus
$108 for the third quarter of 1995. The allowance for loan losses at September
30, 1996, was $4,010 or 1.25% of total loans compared to $3,290 or 1.20% of
total loans at December 31, 1995. Gross charge-offs during the first nine months
of 1996 were $96 and recoveries were $65.
The adequacy of the allowance for loan loss is evaluated at least quarterly by a
credit review officer and management based upon the review of identified loans
with more than a normal degree of risk, historical loan loss percentages, and
present and forecasted economic conditions. Management's analysis indicates that
the allowance for loan losses at September 30, 1996, is adequate to cover
potential losses on identified loans with credit problems and potential losses
on the remaining loan portfolio based on historical percentages. Peoples has
made an effort to increase the allowance through increases in the provision for
loan losses in order to increase the ratio of the allowance to total loans
rather than due to any specific decrease in credit quality.
<PAGE>
Other Operating Income
Non-interest income totaled $3,952 for the first nine months of 1996, compared
to $3,662 for that period of 1995, an increase of $290 or 7.92%. Non-interest
income was $1,318 and $1,130 for the third quarters of 1996 and 1995,
respectively, an increase of $188 or 16.64%. Trust fees were $988 and $1,047 for
the first nine months of 1996 and 1995, respectively, a decrease of $59 or
5.64%. Trust fees were down due to a decrease in income from estate
administration.
Service charges on deposit accounts, which comprise the largest component of
non-interest income, were up for the first nine months of 1996 and up for the
third quarter of 1996 when compared with the same periods of 1995. Service
charge income was $1,767 for the nine months ended September 30, 1996, an
increase of $268 or 17.88%, from $1,499 for the same period in 1995. For the
three month periods ending September 30, 1996 and 1995, service charge income
was $674 and $535 respectively, an increase of $139 or 25.98%. During the third
quarter of 1996, the bank implemented a fee for the use of the bank's ATMs by
non-customers. This fee resulted in income of $54 during the quarter. Peoples'
Product and Pricing Committee continually monitors service charge fees and makes
necessary adjustments to ensure that Peoples remains competitively priced with
other local banking institutions.
Mortgage banking revenue includes net gains and losses realized when mortgage
loans are sold into the secondary market and service fee revenue earned from
servicing those loans after they are sold. Mortgage banking revenue for the
first nine months of 1996 was $515, reflecting a decrease of $157 or 23.36%,
compared to $672 for the same period in 1995. Mortgage banking revenue for the
third quarter of 1996 and 1995, respectively, was $149 and $64, an increase of
$85 or 132.81%. A gain of $380 was recognized during the first quarter of 1995
on the sale of $34 million in mortgage servicing rights. Implementation of
Financial Accounting Standard No. 122, "Accounting for Mortgage Servicing
Rights" accounted for $163 additional recorded income during the first nine
months of 1996 and $49 during the third quarter of 1996.
Other operating income was up for the first nine months of 1996 and up for the
third quarter of 1996 when compared with the same periods of 1995. Other
operating income was $710 for the nine months ended September 30, 1996, an
increase of $231 or 48.22% from $479 for the same period in 1995. For the three
month periods ended September 30, 1996 and 1995, other operating income was $214
and $178 respectively, an increase of $36, or 20.22%. One significant factor in
fee income has been the merchant credit card business, from which Peoples
derives fee income from merchant customers who accept credit cards in the course
of retail operations and who have payment in respect of such cards remitted
directly to their accounts at Peoples.
<PAGE>
Other Operating Expenses
Total other operating expenses were $10,954 for the nine months ended September
30, 1996, compared with $11,788 for that period in 1995. This represents a
decrease of $834, or 7.08%. Total other operating expenses for the third quarter
of 1996 and 1995, respectively, were $3,744 and $3,760, a decrease of $16 or
0.43%. During the third quarter of 1995, the bank examined its expense structure
and recommended steps to decrease overall non-interest expense. As a result of
these recommendations, salaries and employee benefits expenses decreased $443,
or 6.85%, to $6,024 for the first nine months of 1996 from $6,467 for the first
nine months of 1995. These expenses decreased $112, or 5.11%, to $2,080 for the
third quarter of 1996 compared to $2,192 for the same period in 1995.
Implementation of Financial Accounting Standard No. 91 has resulted in the
deferral of $99 in salary expense during the first nine months of 1996, and $50
during the third quarter of 1996. The Company continues to evaluate operating
processes and procedures to reduce operating expense, and will continue to
evaluate the need for personnel in all areas of the Company in relation to
increases in non-interest income, peer group comparisons, and interest income
generated.
Occupancy expense was $1,161 for the first nine months of 1996, an increase of
$38 or 3.38% from $1,123 for the first nine months of 1995. Occupancy expense
was $395 for the third quarter of 1996, an increase of $7 or 1.80% from $388 for
the same period in 1995. The increase is in part associated with expenses
relating to the opening in 1995 of a branch banking facility near the Washington
Square Shopping Center on the east side of Indianapolis. Equipment expenses were
$766 and $902, for the first nine months of 1996 and 1995, respectively, a
decrease of $136 or 15.08%. Equipment expenses were $250 and $296 for the third
quarter of 1996 and 1995, respectively, a decrease of $46 or 15.54%. Decreases
in equipment expense are primarily due to decreases in depreciation expense.
FDIC insurance expense was $1 and ($18) for the third quarter of 1996 and 1995,
respectively. The FDIC determined that the Bank Insurance Fund was adequately
capitalized as of May 31, 1995. As a result, insurance premiums were reduced
from $0.23 of $100 of insured deposits on an annual basis to a flat fee of $500
per quarter.
Advertising expenses were $347 and $557, for the first nine months of 1996 and
1995, respectively, a decrease of $210 or 37.70%. For the third quarter of 1996,
advertising expenses were $78, a decrease of $65, or 45.45% over the same period
in 1995. Other operating expenses were $2,654 and $2,387 for the first nine
months of 1996 and 1995, respectively, an increase of $267 or 11.19%. For the
third quarter of 1996 and 1995, respectively, other operating expenses were $940
and $759, an increase of $181, or 23.85%.
<PAGE>
Income Taxes
Income taxes were $1,670 for the first nine months of 1996 and $740 for the
first nine months of 1995. On a quarterly comparison, income taxes were $544 for
the third quarter of 1996 and $357 for the third quarter of 1995. The increase
in taxes can be primarily attributed to increased profitability.
Balance sheet
Total assets were $454,206 at September 30, 1996, and $417,019 at December 31,
1995, an increase of $37,187. The portfolio of available-for-sale securities
decreased from $107,745 at December 31, 1995, to $89,246 at September 30, 1996,
a decrease of $18,499 or 17.16%. The decline in the portfolio was attributable
to the return of principal from available-for-sale securities in the form of
amortization, calls, maturities and sales. Total loans, excluding loans held for
sale, increased during the first nine months of 1996 from $271,093 at December
31, 1995, to $319,075 at September 30, 1996. This reflects an increase of
$47,982, or 17.70%. Commercial loans increased $38,038 or 38.85% from $97,914 at
December 31, 1995, to $135,952 at September 30, 1996. Real estate loans, which
consist of construction loans and permanent mortgages, decreased $9,740 or 9.29%
from $104,817 at December 31, 1995, to $95,077 at September 30, 1996. Consumer
loans increased $4,760 or 7.20% from $66,132 at December 31, 1995, to $70,892 at
September 30, 1996. Loans held for sale consist of conforming fixed rate
mortgage loans that Peoples sells in the secondary market (having retained
servicing rights with respect to such loans) and that are pending funding. Loans
held for sale were $2,557 at December 31, 1995, compared to $1,078 at September
30, 1996. The amount of loans outstanding (excluding loans held for sale) are
reflected in the following table.
September 30, December 31, September 30,
1996 1995 1995
-------- -------- --------
Real Estate $ 95,077 $104,817 $ 76,633
Commercial 135,952 97,914 116,271
Consumer 70,892 66,132 67,003
Tax exempt 2,154 2,230 2,260
Loans to Depository Institutions 15,000 0 0
-------- -------- --------
Total Loans 319,075 271,093 262,167
Less: Allowance for Loan Losses 4,010 3,290 3,312
-------- -------- --------
Net Loans $315,065 $267,803 $258,855
======== ======== ========
Deposits represent the primary source of funds for the Company. Total deposits
increased $44,720 or 12.71%, from $351,762 at December 31,1995, to $396,482 at
September 30, 1996. Non-interest-bearing deposits increased $8,873, or 13.06%,
from $67,966 at December 31, 1995, to $76,839 at September 30, 1996.
Interest-bearing deposits increased $35,847, or 12.63%, from $283,796 at
December 31, 1995, to $319,643 and September 30, 1996. The growth is
attributable in part to a large CD campaign in June 1996 which raised
approximately $12 million. Despite strong loan growth, the ratio of deposits to
assets continued to increase, demonstrating reduced reliance on non-deposit
sources of funding. The Company's deposit balances are reflected in the
following table.
September 30, December 31, September 30,
1996 1995 1995
-------- -------- --------
Deposits:
Non-interest-bearing $ 76,839 $ 67,966 $ 63,326
Interest-bearing 319,643 283,796 289,261
-------- -------- --------
Total deposits $396,482 $351,762 $352,587
======== ======== ========
Total deposits/total assets 87.29% 84.35% 83.47%
Short-term borrowings in the form of Federal funds and repurchase agreements are
acquired, as needed, to satisfy temporary liquidity needs. Many of the funds are
from businesses with large cash balances. Though short-term in nature,
repurchase agreements have been and continue to be a stable source of funds for
Peoples. Short-term borrowings were $9,782 at September 30, 1996, as compared to
$20,056 at December 31, 1995. This represents a $10,274 or a decrease of 51.22%.
At September 30, 1996, all short-term borrowings were in the form of repurchase
agreements from corporate customers.
Total shareholders' equity increased $2,506 or 6.02% for the nine months ended
September 30, 1996, to $44,142, from $41,636 at December 31, 1995. The increase
in shareholders' equity was the result of net income of $4,008, less dividends
paid of $871. The adoption of FAS No. 115 resulted in a $75 decrease in equity,
which was attributable to the net unrealized loss on available-for-sale
securities. Equity was also reduced by the repurchase of $556 of common stock.
<PAGE>
Credit Quality
Nonaccrual loans are loans on which the Company no longer accrues interest.
Management places a loan on nonaccrual status when the collection of additional
interest is unlikely and the loan is not considered to be well secured and in
the process of collection. Nonperforming loans consist of loans that are on
nonaccrual status, that are 90 days or more past due as to principal or
interest, or that are restructured. If a loan is designated as a nonperforming
loan, management, as a result of delinquent status or significant concern about
the ultimate collectibility of the loan, typically ceases to recognize interest
income with respect to such loan and places it on nonaccrual status.
At September 30, 1996, Management designated $1,648 in loans as "impaired" for
the purpose of FAS No. 114. Management has further determined that all
commercial non-accrual loans will be considered as impaired.
The following table shows the composition of nonperforming loans.
September 30, December 31, September 30,
1996 1995 1995
------ ------ ------
Nonperforming loans:
Total nonaccrual loans $ 384 $ 838 $ 848
Loans past due more than 92 445 336
90 days and still accruing ------ ------ ------
Total $ 476 $1,283 $1,184
====== ====== ======
Historically, commercial loans have constituted the majority of total
nonperforming loans at Peoples. At September 30, 1996, nonperforming loans were
comprised of $121 of commercial loans, $307 of real estate loans and $48 of
consumer loans. Nonperforming loans were comprised of $533 of commercial loans,
$750 of real estate loans and $0 of consumer loans at December 31, 1995. At
September 30, 1995, nonperforming loans consisted of $918 of commercial loans,
$178 of real estate loans and $88 of consumer loans.
Asset quality continues to be an important area of focus for the Company.
Nonperforming loans as a percent of assets were 0.10% at September 30, 1996, and
0.31% at December 31, 1995. The Company maintains asset quality through the use
of well-defined policies, underwriting criteria, and review processes.
Capital
The Company and Peoples are required to comply with capital requirements
promulgated by their primary regulators that affect their ability to pay
dividends and that can affect their operations. Those regulations require the
maintenance of specified levels of capital to total assets (leverage ratio) and
to risk weighted assets (the risk-based capital ratios). These regulations
require the maintenance of a leverage ratio of at least 3.00% and a total
risk-based capital ratio of at least 8.00%. A financial institution's deposit
insurance assessment and, in certain circumstances, operations will be affected
by its capital level. Institutions with leverage ratios of 5.00% or more and
total risk-based capital ratios of 10.00% or more are deemed to be "well
capitalized," and accordingly, pay the lowest deposit insurance assessment and
are not subject to operational restrictions as outlined within the regulation.
As of September 30, 1996, the Company's Tier I and total risk-based capital
ratios were 13.74% and 14.99%, respectively. The Company's leverage ratio was
9.71% at September 30, 1996. As of September 30, 1996, Peoples was in excess of
the minimum capital and leverage requirements necessary to be considered a "well
capitalized" banking company as defined by Federal regulators. The Company and
Peoples were in full compliance with all regulatory capital requirements at
September 30, 1996.
The following table provides the capital ratios for the entities.
At September 30, 1996
Consolidated
Bank Only Company
--------- ------------
Total assets $449,763 $454,206
Risked-based assets 318,256 319,858
Tier I capital 36,777 44,142
Total capital 40,787 48,152
Leverage ratio 8.21% 9.71%
Tier I risk-based capital ratio 11.55% 13.74%
Total risk-based capital ratio 12.81% 14.99%
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit 27 - Financial Data Schedule
B. Form 8-K - None to be reported.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PEOPLES BANK CORPORATION
OF INDIANAPOLIS
By: /s/ William. E. McWhirter
--------------------------------
William E. McWhirter
President and Chief Executive
Officer
By: /s/ Charles R. Hageboeck
--------------------------------
Charles R. Hageboeck
Senior Vice President and
Chief Financial Officer
DATE: November 12, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000796322
<NAME> PEOPLES BANK CORP. OF INDIANAPOLIS
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1.000
<CASH> 27,911
<INT-BEARING-DEPOSITS> 5,000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 89,246
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 320,153
<ALLOWANCE> 4,010
<TOTAL-ASSETS> 454,206
<DEPOSITS> 396,482
<SHORT-TERM> 9,782
<LIABILITIES-OTHER> 3,800
<LONG-TERM> 0
<COMMON> 15,728
0
0
<OTHER-SE> 28,414
<TOTAL-LIABILITIES-AND-EQUITY> 454,206
<INTEREST-LOAN> 19,248
<INTEREST-INVEST> 3,867
<INTEREST-OTHER> 689
<INTEREST-TOTAL> 23,804
<INTEREST-DEPOSIT> 9,921
<INTEREST-EXPENSE> 10,374
<INTEREST-INCOME-NET> 13,430
<LOAN-LOSSES> 750
<SECURITIES-GAINS> (28)
<EXPENSE-OTHER> 10,954
<INCOME-PRETAX> 5,678
<INCOME-PRE-EXTRAORDINARY> 4,008
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,008
<EPS-PRIMARY> 2.52
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<YIELD-ACTUAL> 7.91
<LOANS-NON> 384
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<LOANS-TROUBLED> 566
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</TABLE>
