FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
March 31, 2000 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 area 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 3,714,822 shares
- ------------------------------------ ----------------
(Title of class) (Outstanding at May 12, 2000)
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
Page
Number
Part I Financial Information:
Item 1. Consolidated Condensed Financial Statements
Consolidated Condensed Statement of Financial Condition
as of March 31, 2000 and September 30, 1999................................3
Consolidated Condensed Statement of Income for the three
and six months ended March 31, 2000 and 1999...............................4
Consolidated Condensed Statement of Changes in Stockholders'
Equity for the six months ended March 31, 2000.............................5
Consolidated Condensed Statement of Cash Flows for the
six months ended March 31, 2000 and 1999...................................6
Notes to Consolidated Condensed Financial Statements.....................7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................10-14
Item 3. Quantitative and Qualitative Disclosures About Market Risk.....15-16
Part II. Other Information
Item 4. Submission of matters to a vote of security holders...............17
Item 6. Exhibits and Reports on Form 8-K.................................17
Signatures....................................................................18
<PAGE>
PART I. FINANCIAL INFORMATION
PEOPLES BANCORP
AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
(Unaudited)
ASSETS
March 31, September 30,
2000 1999
------------- ------------
Cash and due from financial institutions $ 7,913,400 $ 4,838,115
Short-term interest-bearing deposits 3,823,424 834,134
------------- ------------
Total cash and cash equivalents 11,736,824 5,672,249
Interest-bearing deposits 3,957,920 -
Securities available for sale 19,800,754 16,932,913
Securities held to maturity
(approximate market value $11,826,367 and $887,233) 11,787,629 867,559
Loans:
Loans 383,523,145 297,875,039
Less: Allowance for loan losses 1,618,304 1,005,119
------------- ------------
Net loans 381,904,841 296,869,920
Premises and equipment 5,731,565 2,285,889
Federal Home Loan Bank of Indianapolis stock, at cost 3,952,700 2,473,500
Intangible assets 3,670,854 -
Other assets 4,306,810 2,460,521
------------- ------------
Total assets $446,849,897 $327,562,551
============= ============
LIABILITIES
NOW and savings deposits $130,053,601 $ 94,238,078
Certificates of deposit 218,489,833 176,756,016
Reverse repurchase agreements 4,690,017 5,239,739
Federal Home Loan Bank advances 34,259,311 5,000,000
Other liabilities 2,085,110 872,499
------------- ------------
Total liabilities 389,577,872 282,106,332
------------- ------------
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--3,775,202 and
3,183,717 shares 3,775,202 3,183,717
Additional paid-in capital 11,488,531 1,203,696
Retained earnings--substantially restricted 43,015,201 41,282,725
Accumulated other comprehensive income (538,273) (213,919)
Unearned ESOP shares (421,538) -
Unearned RRP shares (47,098) -
------------- ------------
Total stockholders' equity 57,272,025 45,456,219
------------- ------------
Total liabilities and stockholders' equity $446,849,897 $327,562,551
============= ============
See notes to consolidated condensed financial statements.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
Three months ended Six months ended
March 31, March 31,
--------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ----------- -----------
Interest Income:
Loans $6,505,949 $5,390,933 $12,320,623 $10,750,169
Securities 296,162 301,589 497,826 655,536
Other interest and dividend income 266,769 172,978 456,900 305,477
---------- ---------- ----------- -----------
7,068,880 5,865,500 13,275,349 11,711,182
---------- ---------- ----------- -----------
Interest Expense:
Now and savings deposits 785,957 580,728 1,490,006 1,133,385
Certificates of deposit 2,568,872 2,279,495 4,866,046 4,667,040
Short-term borrowings 51,351 34,559 93,303 123,406
Federal Home Loan Bank Advances 268,060 60,200 404,333 75,451
---------- ---------- ----------- -----------
3,674,240 2,954,982 6,853,688 5,999,282
---------- ---------- ----------- -----------
Net Interest Income 3,394,640 2,910,518 6,421,661 5,711,900
Provision for losses on loans 50,914 10,275 79,703 41,217
---------- ---------- ----------- -----------
Net Interest Income After Provision
for Losses on Loans 3,343,726 2,900,243 6,341,958 5,670,683
---------- ---------- ----------- -----------
Other Income:
Trust income 39,466 34,890 88,722 43,028
Loan servicing 12,452 - 12,452 -
Net gains on sale of loans 9,287 - 9,287 -
Fees and service charges 166,037 147,554 306,277 289,935
Other income 54,161 30,356 70,989 69,449
---------- ---------- ----------- -----------
281,403 212,800 487,727 402,412
---------- ---------- ----------- -----------
Other Expense:
Salaries and employee benefits 969,686 735,218 1,676,198 1,330,620
Net occupancy expenses 120,343 123,560 206,316 202,485
Equipment expenses 118,108 111,336 205,897 216,681
Data processing expense 157,721 95,884 286,183 197,467
Deposit insurance expense 15,448 37,486 54,767 73,310
Other expenses 409,627 276,111 684,342 564,993
---------- ---------- ----------- -----------
1,790,933 1,379,595 3,113,703 2,585,556
---------- ---------- ----------- -----------
Income Before Income Tax 1,834,196 1,733,448 3,715,982 3,487,539
Income tax expense 706,575 664,850 1,428,675 1,334,650
---------- ---------- ----------- -----------
Net Income $1,127,621 $1,068,598 $ 2,287,307 $ 2,152,889
========== ========== =========== ===========
Basic Income Per Common Share $0.34 $0.33 $0.71 $0.66
Diluted Income Per Common Share $0.34 $0.33 $0.71 $0.66
See notes to consolidated condensed financial statements.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended
March 31,
---------------------------
2000 1999
------------ ------------
Operating Activities:
Net income $ 2,287,307 $ 2,152,889
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 79,703 41,217
Depreciation and amortization 209,137 208,876
Amortization of premiums and discounts on
investment securities (53,637) (33,488)
Amortization of deferred loan fees (175,515) (220,433)
Loans originated for sale (430,500) -
Proceeds from sales of loans 440,177 -
Net gains on sales of loans (9,677) -
Change in:
Deferred income tax 191,174 -
Interest receivable 115,807 96,755
Interest payable 81,128 117,612
Other adjustments: (397,382) (1,370,612)
------------- ------------
Net cash provided by operating activities 2,337,722 992,816
------------- ------------
Investing Activities:
Net change in interest-bearing deposits - (4,600,000)
Purchases of investment securities-
avilable for sale (2,128,870) (2,180,447)
Proceeds from maturities of investment
securities-held to maturity 275,860 4,156,444
Proceeds from maturities of
securities-available for sale 349,651 6,400,000
Proceeds from sale of securities
available for sale 693,700 -
Net change in mutual funds (408,237) (182,284)
Net change in loans (11,637,831) (12,569,371)
Purchases of premises and equipment (627,715) (138,177)
Cash acquired in acquisition 4,935,071
Other investing activities 33,732 22,369
------------- ------------
Net cash used by investing activities (8,514,639) (9,091,466)
------------- ------------
Financing Activities:
Net change in:
NOW and savings accounts 7,931,256 8,892,434
Certificates of deposit 4,421,698 8,660,580
Short-term borrowings 1,650,278 (933,681)
FHLB advances 1,500,000 (1,000,000)
Net change in advances by borrowers for
taxes and insurance 69,399 (70)
Cash dividends (818,025) (784,893)
Repurchase of common stock (2,513,114) (760,566)
------------- ------------
Net cash provided by financing activities 12,241,492 14,073,804
------------- ------------
Net Change in Cash and Cash Equivalents 6,064,575 5,975,154
Cash and Cash Equivalents, Beginning of Period 5,672,249 3,567,625
------------- ------------
Cash and Cash Equivalents, End of Period $11,736,824 $ 9,542,779
============= ============
Additional Cash Flows and Supplementary Information:
Interest paid $ 7,998,920 $ 5,881,670
Income tax paid 1,646,355 1,479,991
See notes to consolidated condensed financial statements.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Information with respect to the three and six months ended March 31, 2000
and 1999 and at March 31, 2000 and 1999 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 and six months ended March
31, 2000, are not necessarily indicative of those expected for the remainder of
the year.
2. CASH DIVIDEND
A cash dividend of $.13 per common share was declared on February 26, 2000
payable on April 20, 2000, to stockholders of record as of April 3, 2000.
3. EARNINGS PER COMMON SHARE
Earnings per share were computed as follows:
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Information with respect to the three and six months ended March 31, 2000
and 1999 and at March 31, 2000 and 1999 is unaudited.)
<TABLE>
Three Months Ended March 31,
2000 1999
------------------------------- ------------------------------
Weighted Weighted
Average Per-Share Average Per-Share
Income Shares Amount Income Shares Amount
<S> <C> <C> <C> <C> <C> <C>
---------- --------- ---------- ---------- --------- ----------
Basic Earnings Per share
Income available to common stockholders $1,127,621 3,320,494 $0.34 $1,068,598 3,253,664 $0.33
ffect of Dilutive Securities
Stock options 5,704 -
Diluted Earnings Per Share
Income available to common stockholders
---------- --------- ---------- ----------- --------- ----------
and assumed conversions $1,127,621 3,326,198 $0.34 $1,068,598 3,253,664 $0.33
========== ========= ========== =========== ========= ==========
Six Months Ended March 31,
2000 1999
------------------------------- ---------------------------------
Weighted Weighted
Average Per-Share Average Per-Share
Income Shares Amount Income Shares Amount
---------- --------- ---------- ----------- --------- -----------
Basic Earnings Per share
Income available to common stockholders $2,287,307 3,239,680 $0.71 $2,152,889 3,262,204 $0.66
Effect of Dilutive Securities
Stock options 2,852 -
Diluted Earnings Per Share
Income available to common stockholders
---------- --------- ---------- ----------- --------- -----------
and assumed conversions $2,287,307 3,242,532 $0.71 $2,152,889 3,262,204 $0.66
========== ========= ========== =========== ========= ===========
</TABLE>
4. AQUISITION
On February 29, 2000 the Company acquired Three Rivers Financial Corporation
(Three Rivers), the holding company of First Savings . First Savings is a
federally chartered savings bank with branches located in Southern Michigan and
Northern Indiana. Three Rivers was merged into the Company and First Savings
will maintain its existing federal charter as a subsidiary of Peoples Bancorp.
The combination was accounted for under the purchase method of accounting. Three
Rivers' results of operations are included in the Company's consolidated income
statement beginning March 1, 2000. Holders of outstanding shares of Three Rivers
on February 29, 2000 had the right to convert their shares into 1.08 shares of
Peoples Bancorp stock. The Company issued 758,858 shares of its common stock at
a cost of $16.75 per share, to the shareholders of Three Rivers. The purchase
had a recorded acquisition cost of $13,423,000 and goodwill of $2,518,000.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Information with respect to the three and six months ended March 31, 2000
and 1999 and at March 31, 2000 and 1999 is unaudited.)
Goodwill will be amortized over 15 years utilizing the straight-line method.
Additionally, core deposit intangibles totaling $1,154,000 were recognized and
will be amortized over eight years using a 125% declining balance method.
The purchase of Three Rivers resulted in the Company recording net loans of
$73,381,000, held- to-maturity and available for sale securities totaling
$11,208,000 and $2,310,000 respectively, deposit liabilities of $65,229,000 and
borrowings of $25,558,000. All assets and liabilities were recorded at their
fair values as of February 29, 2000. The purchase accounting adjustments will be
amortized over the life of the respective asset or liability.
The following pro-forma disclosures including the effect of the purchase
accounting adjustments, depict the results of operations as though the merger
had taken place at the beginning of each period.
Six months Ended
March 30,
2000 1999
------------ ------------
Net interest income:
Peoples Bancorp $6,119,307 $5,711,900
Three Rivers 1,761,368 1,631,412
------------ ------------
7,880,675 $7,343,312
============ ============
Net Income:
Peoples Bancorp $2,287,307 $2,152,889
Three Rivers 122,525 305,330
------------ ------------
$2,409,832 $2,458,219
============ =============
Net income per share-combined:
Basic $ 0.60 $ 0.62
Diluted $ 0.59 $ 0.61
PEOPLES BANCORP
AND SUBSDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Total assets at March 31, 2000 were $446,849,897, an increase of $119,287,346
from September 30, 1999. The increase is attributable primarily to the merger
with Three Rivers, which accounted for $90,571,000 of the increase. Loans
increased $85,648,106 to $383,523,145, cash and cash equivalents increased
$6,064,575 to $11,736,824, investment securities increased $13,787,911 to
$31,588,383, and intangible assets of $3,670,854 were added to the balance
sheet. In addition to merger related increases, Peoples Federal's loan balance
increased $11.2 million and cash and cash equivalents of Peoples Federal
increased $1.2 million.
Total deposits were $348,543,434 at March 31, 2000, an increase of $77,549,340
since September 30, 1999, of which $65,229,000 was due to the merger. Federal
Home Loan Bank advances increased $29,259,300, due almost entirely to the merger
with Three Rivers Financial Corp.
LIQUIDITY
The Company's most liquid assets are cash and interest-bearing deposits. The
levels of these assets are dependent on the Company's operating, financing, and
investing activities. At March 31, 2000, and September 30, 1999, cash and
interest-bearing deposits totaled $11.7 million and $5.7 million, respectively.
The Company's primary sources of funds are deposits, borrowings and the proceeds
from principal and interest payments on loans. While maturities and scheduled
amortization of loans are a predictable source of funds, deposit flows and
mortgage prepayments are greatly influenced by interest rates, economic
conditions and competition.
If the Company requires funds beyond its ability to generate them internally, it
has the ability to borrow funds from the FHLB of Indianapolis. While there are
regulatory and internal limits to the amount that may be borrowed from the FHLB,
the Company feels its current borrowing capacity will be sufficient to cover any
liquidity shortfalls it may encounter.
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 March 31, 2000.
<TABLE>
At March 31, 2000
-------------------------------------------------------
Required for To Be Well
Actual Adequate Capital(1) Capitalized (1)
----------------- ------------------- ------------------
Amount % Amount % Amount %
-------- -------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total risk-based capital (1)
(to risk-weighted assets) $38,734 20.6% $15,023 8.0% $18,777 10.0%
Tier 1 Capital (1)
(to adjusted tangible assets) $37,706 11.2% $13,444 4.0% $20,166 6.0%
Tier 1 Capital (1)
(to adjusted total assets) $37,706 11.2% $13,444 4.0% $16,805 5.0%
(1) as defined by regulatory agencies
</TABLE>
The following table presents First Savings Bank's current estimates of its
regulatory capital position as a dollar amount and as a percentage of assets as
of March 31, 2000.
<TABLE>
At March 31, 2000
-------------------------------------------------------
Required for To Be Well
Actual Adequate Capital(1) Capitalized (1)
----------------- ------------------- ------------------
Amount % Amount % Amount %
-------- -------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total risk-based capital (1)
(to risk-weighted assets) $9,926 17.5% $4,540 8.0% $5,675 10.0%
Tier 1 Capital (1)
(to adjusted tangible assets) $9,376 9.2% $4 100 4.0% $6,149 6.0%
Tier 1 Capital (1)
(to adjusted total assets) $9,376 9.2% $4,100 4.0% $5,124 5.0%
(1) as defined by regulatory agencies
</TABLE>
SUMMARY OF RESULTS OF OPERATIONS
Peoples Bancorp and subsidiary had net income of $1,127,621 or $0.34 per share
and $2,287,307 or $.71 per share for the three and six months ended March 31,
2000 as compared to $1,068,598 or $0.33 per share and $2,152,889 or $.66 per
share for the same period ended 1999. The increase was primarily due to higher
net interest income, partially offset by higher non-interest expense.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
NET INTEREST INCOME
Net interest income was $3,343,726 for the three months and $6,341,958 for the
six months ended March 31, 2000 as compared to $2,900,243 and $5,670,683 for the
same periods ended 1999. Interest income increased $1,564,167 to $13,275,349 for
the six months primarily due to higher volumes of loans. Interest expense
increased $854,406 to $6,853,688 due higher volumes of deposit accounts, and
higher volumes of borrowings. Provision for loan loss increased $38,486 to
$79,703 for the six months ended March 31, 2000, 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
six months ended March 31, 2000 and 1999. (dollars in thousands)
<TABLE>
2000 1999
--------------------------------------- ----------------------------------------
Average Interest Effective Average Interest Effective
Balance Yield Rate Balance Yield Rate
------------- ------------ --------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Loans $313,758 $12,321 7.85% $277,526 $10,750 7.75%
Securities 15,847 497 6.27% 20,277 655 6.46%
Other 9,291 457 9.84% 9,555 306 6.41%
------------- ------------ ------------- ------------
Combined 338,896 13,275 7.83% 307,358 11,711 7.62%
------------- ------------ ------------- ------------
NOW and savings
deposits 103,760 1,490 2.87% 80,676 1,133 2.81%
Certificates of deposit 185,675 4,866 5.24% 176,008 4,667 5.30%
Borrowings 17,591 498 5.66% 7,919 199 5.03%
------------- ------------ ------------- ------------
Combined $307,026 6,854 4.46% $264,603 5,999 4.53%
------------- ------------ ------------- ------------
Net interest income/
interest rate spread $ 6,421 3.37% $ 5,712 3.09%
============ ========= ============ =========
</TABLE>
The following table illustrates the change in net interest income due to changes
in rates and average volumes. (dollars in thousands)
Six months ended March 31, 2000 vs. 1999
Rate Volume Total
--------- ---------- ----------
Loans $142 $1,429 $1,571
Securities (19) (139) (158)
Other 159 (8) 151
--------- ---------- ----------
Total 282 1,282 1,564
--------- ---------- ----------
NOW and savings deposits 25 332 357
Certificates of deposit (53) 252 199
Borrowings 28 271 299
--------- ---------- ----------
Total - 855 # 855
--------- ---------- ----------
Net interest income $282 $ 427 # $ 709
========= ========== ==========
<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
Non-performing assets at March 31, 2000 and September 30, 1999 are as follows:
(dollars in thousands)
March 31, 2000 September 30, 1999
Non-accruing loans $ 318 $ 474
Loans contractually past due 90 days
or more other than nonaccruing 251 64
Real estate owned 232 -
------------ ------------
$ 801 $ 538
============ ============
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.
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.
<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 increased to $487,727 as compared to $402,412
for the same period one year ago. The increase was attributable to higher trust
income from Peoples Federal and the addition of loan servicing income, and gains
on sales of loans from First Savings Bank.
NON-INTEREST EXPENSE
Total non-interest expense for the six months ended March 31, 2000 was
$3,113,703 as compared to $2,585,556 for 1999. Salaries and employee benefits
increased $345,578 due to the addition of an eighth branch office in August 1998
and the addition of extra loan officers to deal with a very high loan demand.
Data processing expense increased $88,716 to $286,183 also due to the addition
of the new branch office.
INCOME TAXES
Income taxes for the six months ended March 31, 2000 increased to $1,428,675
from $1,334,650 for the same period last year due to higher pretax income.
YEAR 2000
The year 2000 has had no impact on the Company's computer operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The OTS has issued a regulation, which uses a net market value methodology to
measure the interest rate risk exposure of thrift institutions. Under this OTS
regulation, an institutions "normal" level of interest rate risk in the event of
an assumed change in interest rates is a decrease in the institutions NPV in an
amount not exceeding 2% of the present value of its assets. Thrift institutions
with over $300 million in assets or less than a 12% risk-based capital ratio are
required to file OTS Schedule CMR. Data from Schedule CMR is used by the OTS to
calculate changes in NPV (and the related "normal" level of interest rate risk)
based upon certain interest rate changes. Institutions which do not meet either
of the filing requirements are not required to file OTS Schedule CMR, but may do
so voluntarily. Both Peoples Federal and First Savings file Schedule CMR.
However, results calculated from the March 31, 2000 Schedule CMR are not yet
available from the OTS. Therefore, the tables below present the result of this
analysis for Peoples
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Federal and First Savings as of December 31, 1999 and December 31, 1998. Under
the regulation, institutions that must file are required to take a deduction
(the interest rate risk capital component) from their total capital available to
calculate their risk-based capital requirement if their interest rate exposure
is greater than "normal". The amount of that deduction is one-half of the
difference between (a) the institution's actual calculated exposure to a 200
basis point interest rate increase or decrease (whichever results in the greater
pro forma decrease in NPV) and (b) its "normal" level of exposure which is 2% of
the present value of its assets.
Presented below as of December 31, 1999 and 1998 is an analysis performed by the
OTS of Peoples Federal's interest rate risk as measured by changes in NPV for
instantaneous and sustained parallel shifts in the yield curve in 100 basis
point increments, up and down 300 basis points.
Peoples Federal Savings Bank
Interest Rate Risk As of December 31, 1999
Changes Market Value
in Rates $ Amount $ Change % Change NPV Ratio Change
- ------------------------------------------------------------------------
+300 bp 21,682 (19,081) -47% 7.01% -522 bp
+200 bp 28,312 (12,452) -31% 8.92% -331 bp
+100 bp 34,808 (5,956) -15% 10.69% -154 bp
0 bp 40,763 12.23%
- -100 bp 45,099 4,335 11% 13.28% +106bp
- -200 bp 48,049 7,285 18% 13.95% +173 bp
- -300 bp 50,379 9,615 24% 14.45% +222 bp
Peoples Federal Savings Bank
Interest Rate Risk As of December 31, 1998
Changes Market Value
in Rates $ Amount $ Change % Change NPV Ratio Change
- ------------------------------------------------------------------------
+300 bp 28,245 (14,463) -34% 9.45% -397 bp
+200 bp 33,820 (8,888) -21% 11.05% -237 bp
+100 bp 38,862 (3,846) -9% 12.43% -99 bp
0 bp 42,708 13.42%
- -100 bp 44,931 2,223 5% 13.94% +52 bp
- -200 bp 46,772 4,064 10% 14.35% +93 bp
- -300 bp 49,531 6,823 16% 14.98% +156 bp
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Presented below are the same OTS calculated tables as of December 31, 1999 and
1998 for First Savings Bank.
First Savings Bank
Interest Rate Risk As of December 31, 1999
Changes Market Value
in Rates $ Amount $ Change % Change NPV Ratio Change
- ------------------------------------------------------------------------
+300 bp 9,080 (3,416) -27% 9.25% -288 bp
+200 bp 10,377 (2,119) -17% 10.38% -175 bp
+100 bp 11,553 (943) -8% 11.37% -76 bp
0 bp 12,496 12.13%
- -100 bp 13,089 593 5% 12.57% +44 bp
- -200 bp 13,511 1,015 8% 12.86% +73 bp
- -300 bp 13,868 1,372 11% 13.09% +96 bp
First Savings Bank
Interest Rate Risk As of December 31, 1998
Changes Market Value
in Rates $ Amount $ Change % Change NPV Ratio Change
+300 bp 12,902 (1,254) -9% 13.01% -84 bp
+200 bp 13,602 (553) -4% 13.54% -31 bp
+100 bp 14,018 (137) -1% 13.81% -3 bp
0 bp 14,156 13.84%
- -100 bp 14,182 26 0% 13.78% -7bp
- -200 bp 14,251 96 1% 13.75% -10 bp
- -300 bp 14,515 360 3% 13.87% +3 bp
In evaluating Peoples Federal's and First Savings' exposure to interest rate
risk, certain shortcomings, inherent in the method of analysis presented in the
foregoing tables must be considered. For example, although certain assets and
liabilities may have similar maturities or periods to repricing, they may react
in different degrees to changes in market interest rates. Also, the interest
rates on certain types of assets and liabilities may fluctuate in advance of
changes in market interest rates, while interest rates on other types may lag
behind changes in market rates. Further, in the event of a change in interest
rates, prepayments and early withdrawal levels could deviate significantly from
those assumed in calculating the table. Finally, the ability of many borrowers
to service their debt may decrease in the event of an interest rate increase. As
a result, the actual effect of changing interest rates may differ from that
presented in the foregoing tables.
<PAGE>
PART II. OTHER INFORMATION
PEOPLES BANCORP
AND SUBSIDIARY
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of matters to a vote of security holders
On February 16, 2000 the Company held its annual meeting of shareholders. A
total of 2,580,337 shares were represented in person or by proxy at the meeting.
The merger of Peoples Bancorp and Three Rivers Financial Corporation was
approved. 2,060,232 shares were voted in favor of the merger, and 87,791 votes
were withheld. Douglas D. Marsh was elected to the board of Directors for a
three-year term expiring in 2003. 2,495,604 shares were voted in favor of the
election of the nominee and there were 84,733 votes withheld. Maurice F. Winkler
III was elected to the board of Directors for a three-year term expiring in
2003. 2,515,101 shares were voted in favor of the election of the nominee and
there were 65,236 votes withheld. Olive LLP was approved as the auditor of
Peoples Bancorp for the fiscal year ending September 30, 2000. 2,563,085 shares
were voted in favor of approval, with 17,252 votes withheld.
Item 5. Other information
None
Item 6. Reports on Form 8-K
A report on form 8-K was filed on March 13, 2000 regarding the merger with Three
Rivers Financial Corp. Form 8-K/A was filed on April 25, 2000 to add pro-forma
financial information to the previously filed 8-K.
<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: May 12, 2000 Maurice F. Winkler III
President and Chief Operating Officer
Date: May 12, 2000 Deborah K. Stanger
Vice President and Chief Financial Officer
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