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
June 30, 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 3,681,272 shares
(Title of class) (Outstanding at August 4, 2000)
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARIES
Page
Number
Part I Financial Information:
Item 1. Consolidated Condensed Financial Statements
Consolidated Condensed Statement of Financial Condition
as of June 30, 2000 and September 30, 1999.........................3
Consolidated Condensed Statement of Income for the three
and nine months ended June 30, 2000 and 1999.......................4
Consolidated Condensed Statement of Cash Flows for the
nine months ended June 30, 2000 and 1999...........................5
Notes to Consolidated Condensed Financial Statements.............6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................9-13
Item 3. Quantitative and Qualitative Disclosures About Market Risk.....13-15
Part II. Other Information
Item 1. Legal Proceedings................................................16
Item 2. Changes in Securities and Use of Proceeds........................16
Item 3. Defaults Upon Senior Securities..................................16
Item 4. Submission of matters to a vote of security holders..............16
Item 5. Other Information................................................16
Item 6. Exhibits and Reports on Form 8-K.................................16
Signatures....................................................................17
<PAGE>
PART I. FINANCIAL INFORMATION
PEOPLES BANCORP
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
(Unaudited)
ASSETS
June 30, September 30,
2000 1999
------------- -------------
Cash and due from financial institutions $ 8,196,639 $ 4,838,115
Short-term interest-bearing deposits 1,005,045 834,134
------------- -------------
Total cash and cash equivalents 9,201,684 5,672,249
Interest-bearing time deposits 3,560,940 -
Securities available for sale 19,436,109 16,932,913
Securities held to maturity
(approximate market value $11,002,708 and $887,233) 11,115,189 867,559
Loans:
Loans 387,252,870 297,875,039
Less: Allowance for loan losses 1,661,731 1,005,119
------------- -------------
Net loans 385,591,139 296,869,920
Premises and equipment 5,969,792 2,285,889
Federal Home Loan Bank of Indianapolis stock, at cost 4,134,400 2,473,500
Intangible assets 3,592,162 -
Other assets 4,188,717 2,460,521
------------- -------------
Total assets $446,790,132 $327,562,551
============= =============
LIABILITIES
NOW and savings deposits $125,028,101 $ 94,238,078
Certificates of deposit 216,700,231 176,756,016
Reverse repurchase agreements 5,420,670 5,239,739
Federal Home Loan Bank advances 40,761,954 5,000,000
Other liabilities 1,915,024 872,499
------------- -------------
Total liabilities 389,825,980 282,106,332
------------- -------------
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--3,684,272 and
3,183,717 shares 3,684,272 3,183,717
Additional paid-in capital 10,798,688 1,203,696
Retained earnings--substantially restricted 43,306,634 41,282,725
Accumulated other comprehensive income (448,856) (213,919)
Unearned ESOP shares (351,494) -
Unearned RRP shares (25,092) -
------------- -------------
Total stockholders' equity 56,964,152 45,456,219
------------- -------------
Total liabilities and stockholders' equity $446,790,132 $327,562,551
============= =============
See notes to consolidated condensed financial statements.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
Three months ended Nine months ended
June 30, June 30,
--------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ----------- -----------
Interest Income:
Loans $7,696,354 $5,620,605 $20,016,977 $16,370,774
Securities 361,578 265,743 859,404 921,279
Other interest and dividend income 335,002 161,127 791,902 466,604
---------- ---------- ----------- -----------
8,392,934 6,047,475 21,668,283 17,758,657
---------- ---------- ----------- -----------
Interest Expense:
NOW and savings deposits 911,479 620,251 2,401,485 1,753,636
Certificates of deposit 3,006,804 2,289,151 7,872,850 6,956,191
Short-term borrowings 62,190 32,330 155,493 107,781
Federal Home Loan Bank Advances 558,210 75,277 962,543 198,683
---------- ---------- ----------- -----------
4,538,683 3,017,009 11,392,371 9,016,291
---------- ---------- ----------- -----------
Net Interest Income 3,854,251 3,030,466 10,275,912 8,742,366
Provision for losses on loans 42,508 24,896 122,211 66,113
---------- ---------- ----------- -----------
Net Interest Income After Provision
for Losses on Loans 3,811,743 3,005,570 10,153,701 8,676,253
---------- ---------- ----------- -----------
Other Income:
Trust income 57,104 30,408 145,826 73,436
Loan servicing 38,301 - 50,753 -
Net gains on sale of loans 5,662 - 14,949 -
Fees and service charges 218,262 157,090 524,539 447,025
Other income 85,966 26,320 156,955 95,769
---------- ---------- ----------- -----------
405,295 213,818 893,022 616,230
---------- ---------- ----------- -----------
Other Expense:
Salaries and employee benefits 1,144,433 668,041 2,820,631 1,998,661
Net occupancy expenses 160,778 83,762 367,094 286,247
Equipment expenses 185,451 120,224 391,348 336,905
Data processing expense 170,242 104,071 456,425 301,538
Deposit insurance expense 17,500 38,063 72,267 111,373
Other expenses 508,372 274,499 1,192,714 839,492
---------- ---------- ----------- -----------
2,186,776 1,288,660 5,300,479 3,874,216
---------- ---------- ----------- -----------
Income Before Income Tax 2,030,262 1,930,728 5,746,244 5,418,267
Income tax expense 791,235 744,450 2,219,910 2,079,100
---------- ---------- ----------- -----------
Net Income $1,239,027 $1,186,278 $ 3,526,334 $ 3,339,167
========== ========== =========== ===========
Basic Income Per Common Share $ 0.34 $ 0.37 $ 1.05 $ 1.03
Diluted Income Per Common Share $ 0.34 $ 0.37 $ 1.05 $ 1.03
See notes to consolidated condensed financial statements.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
June 30,
-----------------------------
2000 1999
------------- -------------
Operating Activities:
Net income $3,526,334 $3,339,167
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 122,211 66,113
Depreciation and amortization 379,867 313,780
Amortization of premiums and discounts on
investment securities (10,530) (51,746)
Amortization of deferred loan fees (258,916) (321,368)
Loans originated for sale (895,100) -
Proceeds from sales of loans 910,049 -
Net gains on sales of loans (14,949) -
Change in:
Deferred income tax 247,727 -
Interest receivable 118,797 28,815
Interest payable 85,186 157,072
Other adjustments: (718,140) (1,135,313)
------------- -------------
Net cash provided by operating activities 3,492,536 2,396,520
------------- -------------
Investing Activities:
Net change in interest-bearing time deposits 396,980 718,000
Purchases of investment securities-
avilable for sale (2,128,870) (3,589,167)
Proceeds from maturities of investment
securities-held to maturity 966,380 4,193,233
Proceeds from maturities of securities-
available for sale 803,250 10,040,000
Proceeds from sale of securities
available for sale 93,700 -
Net change in mutual funds (260,834) (329,549)
Net change in loans (15,246,173) (26,492,142)
Purchases of premises and equipment (1,037,802) (171,527)
Cash acquired in acquisition 4,935,071 -
Purchase of FHLB stock (181,700) (255,800)
Other investing activities 126,890 79,830
------------- -------------
Net cash used by investing activities (10,933,108) (15,807,122)
------------- -------------
Financing Activities:
Net change in:
NOW and savings accounts 2,912,732 15,186,400
Certificates of deposit 2,613,884 4,206,740
Short-term borrowings 2,380,931 (1,122,015)
FHLB advances 8,000,000 1,000,000
Net change in advances by borrowers for
taxes and insurance 167,359 255
Cash dividends (1,309,647) (1,174,156)
Repurchase of common stock (3,795,252) (1,914,069)
------------- -------------
Net cash provided by financing activities 10,970,007 16,183,155
------------- -------------
Net Change in Cash and Cash Equivalents 3,529,435 2,772,553
Cash and Cash Equivalents, Beginning of Period 5,672,249 3,567,625
------------- -------------
Cash and Cash Equivalents, End of Period $9,201,684 $6,340,178
============= =============
Additional Cash Flows and Supplementary Information:
Interest paid $12,194,202 $ 8,859,219
Income tax paid 2,474,605 2,183,891
See notes to consolidated condensed financial statements.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The significant accounting policies followed by Peoples Bancorp (the Company)
and its wholly owned subsidiaries, Peoples Federal Savings Bank of DeKalb County
and First Savings Bank, (the Banks), 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 nine months ended June 30, 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 June 20, 2000 payable
on July 20, 2000, to stockholders of record as of July 3, 2000.
3. EARNINGS PER COMMON SHARE
Earnings per share were computed as follows:
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
<TABLE>
Three Months Ended June 30,
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 $1,239,027 3,662,455 $ 0.34 $1,186,278 3,202,623 $ 0.37
Effect of Dilutive Securities
Stock options 12,733 -
Diluted Earnings Per Share
Income available to common stockholders
and assumed conversions ---------- --------- --------- ---------- --------- ---------
$1,239,027 3,675,188 $ 0.34 $1,186,278 3,202,623 $ 0.37
========== ========= ========= ========== ========= =========
Nine Months Ended June 30,
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 $3,526,334 3,364,356 $ 1.05 $3,339,167 3,242,344 $1.03
Effect of Dilutive Securities
Stock options 6,412 -
Diluted Earnings Per Share
Income available to common stockholders
and assumed conversions ---------- --------- --------- ---------- --------- ---------
$3,526,334 3,370,768 $ 1.05 $3,339,167 3,242,344 $1.03
========== ========= ========= ========== ========= =========
</TABLE>
4. ACQUISITION
On February 29, 2000 the Company acquired Three Rivers Financial Corporation
(Three Rivers), the holding company of First Savings Bank (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 SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
Nine months Ended
June 30,
2000 1999
------------- -------------
Net interest income:
Peoples Bancorp $ 9,056,459 $ 8,742,366
Three Rivers 2,901,309 2,474,412
------------- -------------
$11,957,768 $11,216,778
============= =============
Net Income:
Peoples Bancorp $ 3,364,196 $ 3,339,167
Three Rivers 267,683 454,274
------------- -------------
$ 3,631,879 $ 3,793,441
============= =============
Net income per share-combined:
Basic $0.97 $0.96
Diluted $0.96 $0.96
<PAGE>
PEOPLES BANCORP
AND SUBSDIARIES
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Total assets at June 30, 2000 were $446,790,132, an increase of $119,227,581
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 $89,377,831 to $387,252,870, cash and cash equivalents increased
$3,529,435 to $9,201,684, investment securities and interest-bearing deposits
increased $16,311,766 to $34,112,238, 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 $13.8 million.
Total deposits were $341,728,332 at June 30, 2000, an increase of $70,734,238
since September 30, 1999, of which $65,229,000 was due to the merger. Federal
Home Loan Bank advances increased $35,761,954 due primarily 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 June 30, 2000, and September 30, 1999, cash and
interest-bearing deposits totaled $9.2 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 June 30, 2000.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
At June 30, 2000
---------------------------------------------------
Required for To Be Well
Actual Adequate Capital(1) Capitalized(1)
---------------- ------------------- --------------
Amount % Amount % Amount %
-------- ------- -------- -------- -------- ------
Total risk-based capital (1)
(to risk-weighted assets) $38,262 20.0% $15,330 8.0% $19,162 10.0%
Tier 1 Capital (1)
(to adjusted tangible assets) $37,204 11.0% $13,510 4.0% $20,265 6.0%
Tier 1 Capital (1)
(to adjusted total assets) $37,204 11.0% $13,510 4.0% $16,888 5.0%
(1) as defined by regulatory agencies
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 June 30, 2000.
At June 30, 2000
---------------------------------------------------
Required for To Be Well
Actual Adequate Capital(1) Capitalized (1)
--------------- ------------------- ---------------
Amount % Amount % Amount %
-------- ------ -------- ---------- -------- ------
Total risk-based capital (1)
(to risk-weighted assets) $10,281 17.8% $4,616 8.0% $5,770 10.0%
Tier 1 Capital (1)
(to adjusted tangible assets) $9,715 9.6% $3,039 4.0% $6,079 6.0%
Tier 1 Capital (1)
(to adjusted total assets) $9,715 9.6% $3,039 4.0% $5,066 5.0%
(1) as defined by regulatory agencies
SUMMARY OF RESULTS OF OPERATIONS
Peoples Bancorp and subsidiaries had net income of $1,239,027 or $0.34 per share
and $3,526,334 or $1.05 per share for the three and nine months ended June 30,
2000 as compared to $1,186,278 or $0.33 per share and $3,339,167 or $1.03 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 SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
NET INTEREST INCOME
Net interest income was $3,854,251 for the three months and $10,275,912 for the
nine months ended June 30, 2000 as compared to $3,030,466 and $8,742,366 for the
same periods ended 1999. Interest income increased $3,909,626 to $21,668,283 for
the nine months primarily due to the merger with Three Rivers and higher volumes
of loans. Interest expense increased $2,376,080 to $11,392,371 due again to the
merger and higher volumes of deposit accounts, and borrowings. Provision for
loan loss increased $56,098 to $122,211 for the nine months ended June 30, 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
nine months ended June 30, 2000 and 1999. (dollars in thousands)
2000 1999
--------------------------- -----------------------------
Average Interest Effective Average Interest Effective
Balance Yield Rate Balance Yield Rate
-------- -------- --------- -------- -------- ---------
Loans $378,712 $20,017 8.02% $282,211 $16,371 7.73%
Securities 26,890 859 6.09% 19,022 921 6.46%
Other 20,043 792 6.63% 9,739 467 6.39%
-------- -------- -------- --------
Combined 425,645 21,668 7.83% 310,972 17,759 7.61%
-------- -------- -------- --------
NOW and savings
deposits 127,219 2,401 2.80% 83,680 1,754 2.79%
Certificates
of deposit 215,063 7,873 5.38% 177,336 6,956 5.23%
Borrowings 39,921 1,118 6.08% 9,382 307 4.36%
-------- ------- -------- -------
Combined $382,203 11,392 4.60% $270,398 9,017 4.45%
-------- -------- --------- --------
Net interest income/
interest rate spread $10,276 3.23% $ 8,742 3.16%
======== ====== ======== =======
The following table illustrates the change in net interest income due to changes
in rates and average volumes. (dollars in thousands)
Nine months ended June 30, 2000 vs. 1999
Rate Volume Total
--------- ---------- ----------
Loans $360 $3,286 $3,646
Securities (70) 8 (62)
Other 11 314 325
--------- ---------- ----------
Total 301 3,608 3,909
--------- ---------- ----------
NOW and savings deposits 4 643 647
Certificates of deposit 109 808 917
Borrowings 86 725 811
--------- ---------- ----------
Total 199 2,176 2,375
--------- ---------- ----------
Net interest income $102 $1,432 $1,534
========= ========== ==========
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARIES
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 June 30, 2000 and September 30, 1999 are as follows:
(dollars in thousands)
June 30, 2000 September 30, 1999
Non-accruing loans $ 565 $ 474
Loans contractually past due 90 days
or more other than nonaccruing 104 64
Real estate owned 128 -
------------ ------------
$ 797 $ 538
============ ============
It is the Banks' 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
Banks' 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 Banks' markets or other
circumstances will not result in future losses in the portfolio.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
NON-INTEREST INCOME
The Company's non-interest income for the nine months ended June 30, 2000,
increased to $893,022 as compared to $616,230 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 nine months ended June 30, 2000 was
$5,300,479 as compared to $3,874,216 for 1999. Salaries and employee benefits
increased $821,970 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 $154,887 to $456,425 also due to the addition
of the new branch office and the acquisition of First Savings.
INCOME TAXES
Income taxes for the nine months ended June 30, 2000 increased to $2,219,910
from $2,079,100 for the same period last year due to higher pretax income.
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 June 30, 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 SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
(Continued)
Federal and First Savings as of March 31, 2000 and 1999. 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 March 31, 2000 and 1999 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 March 31, 2000
Changes Market Value
in Rates $ Amount $ Change % Change NPV Ratio Change
-----------------------------------------------------------------
+300 bp 24,187 (18,169) -43% 7.68% -484 bp
+200 bp 30,273 (12,084) -29% -93.80% -314 bp
+100 bp 36,384 (5,972) -14% 11.00% -151 bp
0 bp 42,356 12.52%
-100 bp 46,986 4,629 11% 13.62% +111 bp
-200 bp 49,328 6,972 16% 14.13% +161 bp
-300 bp 50,942 8,586 20% 14.44% +192 bp
Peoples Federal Savings Bank
Interest Rate Risk As of March 31, 1999
Changes Market Value
in Rates $ Amount $ Change % Change NPV Ratio Change
------------------------------------------------------------------------
+300 bp 28,133 (15,550) -36% 9.33% -425 bp
+200 bp 34,124 (9,559) -22% 11.04% -253 bp
+100 bp 39,527 (4,155) -10% 12.51% -107 bp
0 bp 43,682 13.53%
-100 bp 46,629 2,946 7% 14.23% +71 bp
-200 bp 48,906 5,224 12% -14.80% +122 bp
-300 bp 51,844 8,162 19% 15.46% +188 bp
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
(Continued)
Presented below are the same OTS calculated tables as of March 31, 2000 and 1999
for First Savings Bank.
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.
First Savings Bank
Interest Rate Risk As of March 31, 2000
Changes Market Value
in Rates $ Amount $ Change % Change NPV Ratio Change
------------------------------------------------------------------------
+300 bp 9,733 (3,583) -27% 9.67% -294 bp
+200 bp 11,064 (2,521) -17% 10.80% -181 bp
+100 bp 12,289 (1,027) -8% 11.80% -81 bp
0 bp 13,315 12.61%
-100 bp 14,019 703 5% 13.13% +52 bp
-200 bp 14,389 1,074 8% 13.37% +76 bp
-300 bp 14,771 1,455 11% 13.61% +100 bp
First Savings Bank
Interest Rate Risk As of March 31, 1999
Changes Market Value
in Rates $ Amount $ Change % Change NPV Ratio Change
------------------------------------------------------------------------
+300 bp 9,659 (2,203) -19% 10.05% -183 bp
+200 bp 10,668 (1,195) -10% 10.93% -95 bp
+100 bp 11,425 (437) -4% 11.56% -33 bp
0 bp 11,862 11.89%
-100 bp 12,199 336 3% 12.12% +23 bp
-200 bp 12,445 583 5% 12.26% +38 bp
-300 bp 12,849 987 8% 12.54% +65 bp
<PAGE>
PART II. OTHER INFORMATION
PEOPLES BANCORP
AND SUBSIDIARIES
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
None
Item 5. Other information
None
Item 6. Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended June 30, 2000.
<PAGE>
PEOPLES BANCORP
AND SUBSIDIARIES
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: August 7, 2000 Maurice F. Winkler III
President and Chief Operating Officer
Date: August 7, 2000 Deborah K. Stanger
Vice President and Chief Financial Officer
<PAGE>
