FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
December 31, 1996 Commission
File Number 000-18991
PEOPLES BANCORP
212 WEST SEVENTH STREET
AUBURN, IN 46706
Indiana 35-1811284
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
Registrant's telephone number, including are code: (219)925-2500
Indicate by a 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 shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
Common stock, par value $1 per share 2,305,943 shares
- ------------------------------------ ----------------
(Title of class) (Outstanding at January 22, 1997)
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
Page
Number
Part I Financial Information:
Item 1. Consolidated Financial Statements
Consolidated Statement of Financial Condition
as of December 31, 1996 and September 30, 1996...............3
Consolidated Statement of Operations for the three
months ended December 31, 1996 and 1995......................4
Consolidated Statement of Changes in Stockholders'
Equity for the three months ended December 31, 1996..........5
Consolidated Statement of Cash Flows for the
three months ended December 31, 1996 and 1995................6
Notes to Consolidated Financial Statements.................7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................9-14
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.................................15
Signatures....................................................................16
<PAGE>
PART I. FINANCIAL INFORMATION
PEOPLES BANCORP
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
ASSETS
December 31, September 30,
1996 1996
-------------- --------------
(Unaudited)
Cash $ 3,189,708 $ 3,207,845
Short-term interest-bearing deposits 15,550,265 7,823,900
-------------- -------------
Total cash and cash equivalents 18,739,973 11,031,745
Securities available for sale 22,614,141 25,886,015
Securities held to maturity
(approximate market value $10,429,801 and
$13,486,304) 10,495,985 13,630,532
Mortgage-backed securities 590,902 630,503
Loans:
Loans 223,398,970 223,898,729
Less: Allowance for loan losses 889,655 887,478
-------------- -------------
Net loans 222,509,315 223,011,251
Premises and equipment 1,440,916 1,467,764
Federal Home Loan Bank of Indianapolis stock,
at cost 2,004,400 2,004,400
Other assets 1,943,727 2,349,640
-------------- -------------
Total assets $280,339,359 $280,011,850
============== =============
LIABILITIES
NOW and savings deposits $ 68,477,087 $ 68,344,163
Certificates of deposit 165,708,996 166,737,277
Reverse Repurchase Agreements 2,287,594 -
Advances by borrowers for taxes and insurance 2,988 3,450
Other liabilities 853,870 2,250,195
-------------- -------------
Total liabilities 237,330,535 237,335,085
-------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock, par value $1;
Authorized and unissued -- 5,000,000 shares - -
Common stock, par value $1;
Authorized--7,000,000 shares:
Issued and outstanding--2,307,973 and
2,325,494 shares 2,307,973 2,325,494
Additional paid-in capital 7,362,589 7,690,289
Retained earnings--substantially restricted 33,359,272 32,762,852
Net unrealized loss on securities available
for sale (21,010) (101,870)
------------- -------------
Total stockholders' equity 43,008,824 42,676,765
------------- -------------
Total liabilities and stockholders'equity $280,339,359 $280,011,850
============= =============
See notes to consolidated financial statements.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three months ended
December 31,
-----------------------------------
1996 1995
----------- -----------
Interest Income:
Loans $4,664,664 $4,693,102
Securities 499,116 460,571
Mortgage-backed securities 14,457 17,648
Other interest and dividend income 207,206 255,461
----------- -----------
5,385,443 5,426,782
----------- -----------
Interest Expense:
Now and savings deposits 453,109 471,323
Certificates of deposit 2,337,141 2,369,730
Short-term borrowings 21,244 -
Federal Home Loan Bank advances - 14,695
----------- -----------
2,811,494 2,855,748
----------- -----------
Net Interest Income 2,573,949 2,571,034
Provision for losses on loans 11,315 (36,502)
----------- -----------
Net Interest Income After Provision
for Losses on Loans 2,562,634 2,607,536
----------- -----------
Other Income:
Trust income 13,724 14,839
Fees and service charges 110,871 114,238
Other income 33,175 31,628
----------- -----------
157,770 160,705
----------- -----------
Other Expense:
Salaries and employee benefits 633,686 617,079
Net occupancy expenses 73,088 49,200
Equipment expenses 44,317 34,354
Data processing expense 78,095 74,480
Deposit insurance expense 132,992 131,004
Other expenses 226,557 217,615
----------- -----------
1,188,735 1,123,732
----------- -----------
Income Before Income Tax 1,531,669 1,644,509
Income tax expense 587,940 613,300
----------- -----------
Net Income $ 943,729 $1,031,209
=========== ===========
Net Income Per Common Share $0.41 $0.44
Average Common Shares Outstanding 2,312,279 2,362,898
See notes to consolidated financial statements.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
Common Stock Retained Net Unrealized
-------------------- Additional Earnings Gain (Loss) on
Number Paid-in (Substantially Securities
of Shares Amount Capital Restricted) Available for Sale Total
<S> <C> <C> <C> <C> <C> <C>
--------- ----------- ----------- ------------ ------------------ ------------
Balances, September 30,
1996 2,325,494 $2,325,494 $7,690,289 $32,762,852 $(101,870) $42,676,765
Cash dividends
($.15 per share) - - - (347,309) - (347,309)
Net change in unrealized
gain (loss) on securities
available for sale - - - - 80,860 80,860
Repurchase of stock (17,521) (17,521) (327,700) - - (345,221)
Net income for the
three months ended
December 31, 1996 - - - 943,729 - 943,729
---------- ---------- ----------- ------------ ----------------- ------------
Balances, December 31,
1996 2,307,973 $2,307,973 $7,362,589 $33,359,272 $ (21,010) $43,008,824
========== =========== =========== ============ ================= ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with respect to the three months ended December 31, 1996
and 1995, and at December 31, 1996 and 1995, is unaudited.)
1. BASIS OF PRESENTATION
The significant accounting policies followed by Peoples Bancorp (the Company)
and its wholly-owned subsidiary, Peoples Federal Savings Bank of DeKalb County,
(the Bank), for interim financial reporting are consistent with the accounting
policies followed for annual financial reporting. All adjustments which are, in
the opinion of management, necessary for a fair presentation of the results for
the periods reported, consisting only of normal recurring adjustments, have been
included in the accompanying unaudited consolidated condensed financial
statements. The results of operations for the three months ended December 31,
1996, are not necessarily indicative of those expected for the remainder of the
year.
2. CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
The Consolidated Statement of Financial Condition at September 30, 1996, has
been taken from the audited consolidated financial statements at that date.
3. CASH DIVIDEND
A cash dividend of $.15 per common share was declared on November 23, 1996
payable on January 23, 1997, to stockholders of record as of January 2, 1997.
4. EARNINGS PER COMMON SHARE
Earnings per share have been computed based on the average common shares
outstanding during, and the earnings for, the periods presented. The dilutive
effect on earnings per share from unissued stock option shares is not material.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with respect to the three months ended December 31, 1996
and 1995, and at December 31, 1996 and 1995, is unaudited.)
5. COMMITMENTS TO FUND LOANS
Commitments to fund mortgage loans are as follows:
December 31, 1996 September 30, 1996
---------------------- ----------------------
Amount Rate Amount Rate
------------ ------- ------------ -------
Adjustable rate $ 285,250 $ 223,000
Fixed rate 2,435,200 7.67% 4,006,200 8.08%
------------ ======= ------------ =======
$2,720,450 $4,229,200
============ ============
6. STOCK REPURCHASE PLAN
In 1995, the Company's board of directors approved the repurchase of up to
100,000 of the Company's outstanding shares of common stock ("1995 plan"). Such
purchases will be made subject to market conditions in the open market or block
transactions. At December 31, 1996, the Company has repurchased 62,491 shares of
its outstanding stock under the 1995 plan.
7. RECLASSIFICATIONS
Certain amounts in the 1996 consolidated financial statements have been
reclassified to conform to the 1997 presentation.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Total assets at December 31, 1996 were $280,339,359, an increase of $327,509
from September 30, 1996. The increase is attributable primarily to short term
interest-bearing deposits which increased $7,726,365 to $15,550,265. This
increase was basically offset by decreases in investment securities and loans.
Total deposits were $234,186,083 at December 31, 1996, a decrease of $895,357
since September 30, 1996.
LIQUIDITY
As calculated for regulatory purposes, liquidity was 16.65% at December 31, 1996
as compared to 15.70% at September 30, 1996. Liquidity and loan repayments
should be adequate to meet loan fundings and other obligations and expenditures.
CAPITAL RESOURCES
The following table presents Peoples Federal Savings Bank's current estimates of
its regulatory capital position as a dollar amount and as a percentage of assets
as of December 31, 1996
At December 31, 1996
--------------------------------------------------------
Tangible Capital Core Capital Risk-Based Capital
----------------- ---------------- --------------------
Amount % Amount % Amount % (1)
--------- ------- -------- ------- --------- ---------
Capital Position $34,061 12.4% $34,061 12.4% $34,929 26.3%
Regulatory
Requirement 4,111 1.5% 8,223 3.0% 10,633 8.0%
Excess Capital
over Regulatory
Requirement $29,950 10.9% $25,838 9.4% $24,296 18.3%
(1) Risk-based capital as a percentage of risk-weighted assets.
<PAGE>
PEOPLES BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
SUMMARY OF RESULTS OF OPERATIONS
Peoples Bancorp and subsidiary had net income of $943,729 or $.41 per share for
the three months ended December 31, 1996, as compared to $1,031,209 or $.44 per
share for the same period ended 1995. The decrease was primarily due to lower
net interest income.
NET INTEREST INCOME
Net interest income was $2,562,634 for the three months ended December 31, 1996
as compared to $2,607,536 for the same period ended 1995. Interest income
decreased $41,339 to $5,385,443 for the three month period primarily due to
lower interest rates on loans. The decrease in income was offset by a decrease
in interest expense of $44,254 to $2,811,494 for the three month period due to
lower prevailing interest rates on deposit accounts. Provision for loan loss
increased $47,817 to $11,315 for the three months ended December 31, 1996,
reflecting management's continued review of the loan portfolio.
The following table presents average balances and associated rates earned and
paid for all interest earning assets and interest bearing liabilities for the
three months ended December 31, 1996 and 1995. (dollars in thousands)
1996 1995
--------------------------- ----------------------------
Average Interest Effective Average Interest Effective
Balance Yield Rate Balance Yield Rate
--------- ------- --------- --------- -------- ---------
Loans $227,220 $4,665 8.21% $222,312 $4,693 8.44%
Securities 36,821 499 5.42% 36,481 461 5.05%
Mortgage-backed
securities 628 14 8.92% 777 18 9.27%
Other 13,804 207 6.00% 16,347 255 6.24%
--------- ------- --------- --------
Combined 278,473 5,385 7.74% 275,917 5,427 7.87%
--------- ------- --------- --------
NOW and savings
deposits 68,589 453 2.64% 71,332 471 2.64%
Certificates of deposit 165,213 2,337 5.66% 162,236 2,370 5.84%
Borrowings 1,804 21 4.66% - - -
Advances from FHLB - - - 1,000 15 5.83%
--------- ------- --------- --------
Combined 235,606 2,811 4.77% 234,568 2,856 4.87%
--------- ------- --------- --------
Net interest income/
interest rate spread $2,574 2.97% $2,571 3.00%
======= ========= ======== =========
<PAGE>
PEOPLES BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
The following table illustrates the change in net interest income due to changes
in rates and average volumes. (dollars in thousands)
Three months ended December 31, 1996 vs. 1995
Rate Volume Total
-------- --------- --------
Loans $(130) $102 $ (28)
Securities 34 4 38
Mortgage-backed
securities - (4) (4)
Other (10) (38) (48)
-------- --------- --------
Total (106) 64 (42)
-------- --------- --------
NOW and savings deposits - (18) (18)
Certificates of deposit (75) 42 (33)
Short-term borrowings - (15) (15)
Advances from FHLB - 21 21
-------- --------- --------
Total (75) 30 (45)
-------- --------- --------
Net interest income $ (31) $ 34 $ 3
======== ========= ========
NON-PERFORMING ASSETS AND SUMMARY OF LOAN LOSS EXPERIENCE
Non-performing assets at December 31, 1996 and September 30, 1996 are as
follows: (dollars in thousands)
December 31 Sept. 30
----------- ---------
Non-accruing loans $621 $814
Loans contractually past due 90 days
or more other than nonaccruing 204 88
Real estate owned 74 110
------ -------
$899 $1,012
====== =======
<PAGE>
PEOPLES BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
NON-PERFORMING ASSETS AND SUMMARY OF LOAN LOSS EXPERIENCE (CONT'D)
The following table analyzes the allowance for loan and REO losses for the three
months ended December 31, 1996 and 1995. (dollars in thousands)
Loans REO
-------------- ---------------
1996 1995 1996 1995
------ ------ ------ ------
Balance at 9/30 $887 $912 $ - $ -
Provision adjustment charged
(credited) to expense 11 (37) - -
Chargeoffs (12) (31) - -
Recoveries 3 8 - -
------ ------ ------ ------
Balance at 12/31 $889 $852 $- $ -
====== ====== ====== ======
It is the Bank's policy to carry REO at net realizable value. After
repossession, appraised value is reduced for estimated repair and selling costs,
and the net amount is the carrying value of the property. Any changes in
estimated realizable value after the initial repossession, are charged to a
specific loss reserve account for REO. At present, all REO is carried at the
Bank's estimated realizable value.
Management continually reviews the mix and delinquency status of its loan
portfolio and classifies those loans which it deems appropriate. As of December
31, 1996, asset balances and the corresponding allocation of the provision for
loan losses were as follows: (dollars in thousands)
Asset Allocation of
Balance Reserve
---------- ------------
Loss $ 21 $ 21
Doubtful - -
Substandard 591 118
Unclassified 279,727 750
---------- ------------
$280,339 $889
========== ============
<PAGE>
PEOPLES BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
NON-PERFORMING ASSETS AND SUMMARY OF LOAN LOSS EXPERIENCE (CONT'D)
The allowances for loan and real estate owned losses represent amounts available
to absorb future losses. Such allowances are based on management's continuing
review of the portfolios, historical charge-offs, current economic conditions,
and such other factors, which in management's judgment deserve recognition in
estimating possible losses. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the allowance
for loan losses. Such agencies may require additions to the allowances based on
their judgment about the information available to them at the time of their
examination. Provisions for losses are charged to earnings to bring the
allowances to levels considered necessary by management. Losses are charged to
the allowances when considered probable, or in the case of REO, at the time of
repossession. Management believes that the allowances are adequate to absorb
known and inherent losses in the portfolio. No assurance can be given, however,
that economic conditions which may adversely affect the Bank's markets or other
circumstances will not result in future losses in the portfolio.
The following table presents an allocation of the Bank's allowance for loan
losses at the dates indicated and the percentage of loans in each category to
total loans. (dollars in thousands)
Balance at end of period December 31 December 31
---------------- -----------------
applicable to: 1996 1995
---------------- -----------------
Residential Mortgage Loans $ - 92.7% $ - 92.1%
Commercial Real Estate Loans - 2.1% - 2.5%
Commercial and Other Loans - - - -
Consumer Loans 21 5.2% 12 5.4%
Unallocated 868 840
------ -------- ------ --------
Total $889 100.0% $852 100.0%
====== ======== ====== ========
<PAGE>
PEOPLES BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
NON-INTEREST INCOME
The Company's non-interest income was virtually unchanged at $157,770 for the
three months ended December 31, 1996 as compared to $160,705 for 1995.
NON-INTEREST EXPENSE
Total non-interest expense for the three months ended December 31 , 1996 was
$1,188,735 as compared to $1,123,732 for 1995. The $65,000 increase was made up
of small increases in salaries and employee benefits, net occupancy expenses,
equipment expenses, and other miscellaneous expenses.
INCOME TAXES
Income taxes decreased $25,360 to $587,940 for the three months ended December
31, 1996 due to lower pretax income this year versus last.
<PAGE>
PART II. OTHER INFORMATION
PEOPLES BANCORP
AND SUBSIDIARY
Item 6. Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended December 31,
1996.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PEOPLES BANCORP
(REGISTRANT)
Date: January 22, 1997 Maurice F. Winkler III
President and Chief Operating Officer
Date: January 22, 1997 Deborah K. Stanger
Vice President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 3189708
<INT-BEARING-DEPOSITS> 15550265
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 22614141
<INVESTMENTS-CARRYING> 10495985
<INVESTMENTS-MARKET> 10429801
<LOANS> 223398970
<ALLOWANCE> 889655
<TOTAL-ASSETS> 280339359
<DEPOSITS> 234186083
<SHORT-TERM> 2287594
<LIABILITIES-OTHER> 856858
<LONG-TERM> 0
0
0
<COMMON> 43008824
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 280339359
<INTEREST-LOAN> 4664664
<INTEREST-INVEST> 499116
<INTEREST-OTHER> 221663
<INTEREST-TOTAL> 5385443
<INTEREST-DEPOSIT> 2790250
<INTEREST-EXPENSE> 2811494
<INTEREST-INCOME-NET> 2573949
<LOAN-LOSSES> 11315
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1188735
<INCOME-PRETAX> 1531669
<INCOME-PRE-EXTRAORDINARY> 1531669
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 943729
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
<YIELD-ACTUAL> 3.70
<LOANS-NON> 621000
<LOANS-PAST> 204000
<LOANS-TROUBLED> 245000
<LOANS-PROBLEM> 180000
<ALLOWANCE-OPEN> 887478
<CHARGE-OFFS> 12343
<RECOVERIES> 3205
<ALLOWANCE-CLOSE> 889655
<ALLOWANCE-DOMESTIC> 21450
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 868205
</TABLE>
