NEWTON, NC--(Marketwired - Apr 25, 2016) - Peoples Bancorp of North Carolina, Inc. (
First quarter highlights:
- Net earnings were $2.5 million or $0.45 basic net earnings per share and $0.44 diluted net earnings per share for the three months ended March 31, 2016, as compared to $2.3 million or $0.41 basic and diluted net earnings per share for the same period one year ago.
- Average outstanding principal balance of loans increased $37.1 million to $691.8 million for the three months ended March 31, 2016 compared to $654.7 million for the three months ended March 31, 2015.
- Non-performing assets declined to $8.5 million or 0.79% of total assets at March 31, 2016, compared to $12.4 million or 1.2% of total assets at March 31, 2015.
- Total loans increased $32.5 million to $693.0 million at March 31, 2016, compared to $660.5 million at March 31, 2015.
- Core deposits were $821.6 million or 96.3% of total deposits at March 31, 2016, compared to $786.2 million or 94.7% of total deposits at March 31, 2015.
Lance A. Sellers, President and Chief Executive Officer, attributed the increase in first quarter earnings to an increase in net interest income, a decrease in the provision for loan losses and an increase in non-interest income, which were partially offset by an increase in non-interest expense.
Net interest income was $9.1 million for the three months ended March 31, 2016, compared to $8.7 million for the three months ended March 31, 2015. The increase in net interest income was primarily due to a $338,000 increase in interest income, which was primarily attributable to an increase in the average outstanding balance of loans, and a $75,000 decrease in interest expense, which was primarily attributable to a decrease in the average outstanding balances of time deposits and FHLB borrowings during the three months ended March 31, 2016, as compared to the same period one year ago. Net interest income after the provision for loan losses was $9.3 million for the three months ended March 31, 2016, compared to $8.5 million for the three months ended March 31, 2015. The provision for loan losses for the three months ended March 31, 2016 was a credit of $216,000, as compared to an expense of $173,000 for the three months ended March 31, 2015. The decrease in the provision for loan losses is primarily attributable to a reduction in the required level of the allowance for loan losses resulting from lower historical loss rates used to calculate the ASC 450-20 reserve as the elevated level of loan losses incurred in 2011 and 2012 are no longer included in the historical loss calculations.
Non-interest income was $3.3 million for the three months ended March 31, 2016, compared to $3.2 million for the three months ended March 31, 2015. The increase in non-interest income is primarily attributable to a $130,000 increase in mortgage banking income and a $66,000 increase in miscellaneous non-interest income, which were partially offset by a $114,000 decrease in services charges and fees.
Non-interest expense was $9.5 million for the three months ended March 31, 2016, compared to $8.7 million for the three months ended March 31, 2015. The increase in non-interest expense was primarily due to a $693,000 increase in other non-interest expense and a $271,000 increase in occupancy expense, which were partially offset by a $220,000 decrease in salaries and benefits expense during the three months ended March 31, 2016, as compared to the three months ended March 31, 2015. The increase in other non-interest expense is primarily due to a $718,000 increase in consulting fees due to expenses associated with the FDIC Consent Order (the "Order") issued in August 2015. The Bank continues to make progress in addressing the issues identified in the Order and expects that it will be able to undertake and implement all required actions within the time periods specified in the Order.
Total assets were $1.1 billion and $1.0 billion as of March 31, 2016 and 2015, respectively. Available for sale securities were $264.1 million as of March 31, 2016, compared to $282.6 million as of March 31, 2015. Total loans were $693.0 million as of March 31, 2016, compared to $660.5 million as of March 31, 2015.
Non-performing assets declined to $8.5 million or 0.79% of total assets at March 31, 2016, compared to $12.4 million or 1.2% of total assets at March 31, 2015. The decline in non-performing assets is due to a $3.3 million decrease in other real estate owned properties and a $666,000 decrease in non-accrual loans. Non-performing loans include $8.1 million in commercial and residential mortgage loans, $149,000 in acquisition, development and construction ("AD&C") loans and $141,000 in other loans at March 31, 2016, as compared to $8.1 million in commercial and residential mortgage loans, $565,000 in AD&C loans and $192,000 in other loans at March 31, 2015. The allowance for loan losses at March 31, 2016 was $9.1 million or 1.3% of total loans, compared to $10.8 million or 1.6% of total loans at March 31, 2015. Management believes the current level of the allowance for loan losses is adequate; however, there is no assurance that additional adjustments to the allowance will not be required because of changes in economic conditions, regulatory requirements or other factors.
Deposits were $853.1 million as of March 31, 2016, compared to $830.0 million at March 31, 2015. Core deposits, which include noninterest-bearing demand deposits, NOW, MMDA, savings and non-brokered certificates of deposit of denominations less than $250,000, increased $35.4 million to $821.6 million at March 31, 2016, as compared to $786.2 million at March 31, 2015. Certificates of deposit in amounts of $250,000 or more totaled $26.4 million at March 31, 2016, as compared to $36.2 million at March 31, 2015. The decrease in certificates of deposit in amounts of $250,000 or more is attributable to a $2.5 million decrease in wholesale certificates of deposit combined with a decrease in retail certificates of deposit which was expected as part of the Bank's pricing strategy to allow maturing high cost certificates of deposit to roll-off.
Securities sold under agreements to repurchase were $36.1 million at March 31, 2016, as compared to $38.7 million at March 31, 2015.
Shareholders' equity was $107.8 million, or 10.1% of total assets, as of March 31, 2016, compared to $101.5 million, or 9.7% of total assets, as of March 31, 2015. The increase in shareholders' equity is primarily due to an increase in retained earnings due to net income.
Peoples Bank operates 20 banking offices entirely in North Carolina, with offices in Catawba, Alexander, Lincoln, Mecklenburg, Union, Iredell and Wake Counties. Peoples Bank also operates loan production offices in Lincoln, Durham and Forsyth Counties. The Company's common stock is publicly traded and is quoted on the Nasdaq Global Market under the symbol "PEBK."
Statements made in this press release, other than those concerning historical information, should be considered forward-looking statements pursuant to the safe harbor provisions of the Securities Exchange Act of 1934 and the Private Securities Litigation Act of 1995. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management and on the information available to management at the time that this release was prepared. These statements can be identified by the use of words like "expect," "anticipate," "estimate," and "believe," variations of these words and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, (1) competition in the markets served by Peoples Bank, (2) changes in the interest rate environment, (3) general national, regional or local economic conditions may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and the possible impairment of collectibility of loans, (4) legislative or regulatory changes, including changes in accounting standards, (5) significant changes in the federal and state legal and regulatory environment and tax laws, (6) the impact of changes in monetary and fiscal policies, laws, rules and regulations and (7) other risks and factors identified in the Company's other filings with the Securities and Exchange Commission, including but not limited to those described in the Company's annual report on Form 10-K for the year ended December 31, 2015.
|CONSOLIDATED BALANCE SHEETS|
|March 31, 2016, December 31, 2015 and March 31, 2015|
|(Dollars in thousands)|
|March 31, 2016||December 31, 2015||March 31, 2015|
|Cash and due from banks||$||45,566||$||29,194||$||47,730|
|Cash and cash equivalents||76,392||39,763||67,513|
|Investment securities available for sale||264,092||268,530||282,575|
|Mortgage loans held for sale||996||4,149||806|
|Less: Allowance for loan losses||(9,116||)||(9,589||)||(10,843||)|
|Premises and equipment, net||16,408||16,976||16,745|
|Cash surrender value of life insurance||14,652||14,546||14,229|
|Accrued interest receivable and other assets||10,254||11,379||14,041|
|LIABILITIES AND SHAREHOLDERS' EQUITY:|
|NOW, MMDA & savings||452,158||431,052||432,541|
|Time, $250,000 or more||26,352||26,891||36,237|
|Securities sold under agreements to repurchase||36,056||27,874||38,702|
|Junior subordinated debentures||20,619||20,619||20,619|
|Accrued interest payable and other liabilities||9,292||9,449||8,660|
|Series A preferred stock, $1,000 stated value; authorized 5,000,000 shares; no shares issued and outstanding||-||-||-|
|Common stock, no par value; authorized 20,000,000 shares; issued and outstanding 5,510,538 shares at 3/31/16 and 12/31/15; 5,612,588 shares at 3/31/15||46,171||46,171||48,088|
|Accumulated other comprehensive income||6,400||5,510||6,316|
|Total shareholders' equity||107,760||104,864||101,514|
|Total liabilities and shareholders' equity||$||1,070,344||$||1,038,481||$||1,049,455|
|CONSOLIDATED STATEMENTS OF INCOME|
|For the three months ended March 31, 2016 and 2015|
|(Dollars in thousands, except per share amounts)|
|Three months ended|
|Interest and fees on loans||$||8,023||$||7,593|
|Interest on due from banks||17||10|
|Interest on investment securities:|
|U.S. Government sponsored enterprises||658||713|
|State and political subdivisions||1,127||1,163|
|Total interest income||9,905||9,567|
|NOW, MMDA & savings deposits||120||111|
|Junior subordinated debentures||113||97|
|Total interest expense||809||884|
|NET INTEREST INCOME||9,096||8,683|
|PROVISION FOR (REDUCTION OF PROVISION FOR) LOAN LOSSES||(216||)||173|
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES||9,312||8,510|
|Other service charges and fees||334||355|
|Mortgage banking income||369||239|
|Insurance and brokerage commissions||158||161|
|Total non-interest income||3,324||3,245|
|Salaries and employee benefits||4,581||4,801|
|Total non-interest expense||9,492||8,748|
|EARNINGS BEFORE INCOME TAXES||3,144||3,007|
|PER SHARE AMOUNTS|
|Basic net earnings||$||0.45||$||0.41|
|Diluted net earnings||$||0.44||$||0.41|
|For the three months ended March 31, 2016 and 2015|
|(Dollars in thousands)|
|Three months ended|
|SELECTED AVERAGE BALANCES:|
|Available for sale securities||$||256,922||$||272,111|
|SELECTED KEY DATA:|
|Net interest margin (tax equivalent)||4.02||%||3.97||%|
|Return on average assets||0.94||%||0.91||%|
|Return on average shareholders' equity||9.13||%||9.32||%|
|Shareholders' equity to total assets (period end)||10.07||%||9.67||%|
|ALLOWANCE FOR LOAN LOSSES:|
|Balance, beginning of period||$||9,589||$||11,082|
|Provision for loan losses||(216||)||173|
|Balance, end of period||$||9,116||$||10,843|
|90 days past due and still accruing||127||-|
|Other real estate owned||85||3,424|
|Total non-performing assets||$||8,480||$||12,358|
|Non-performing assets to total assets||0.79||%||1.18||%|
|Allowance for loan losses to non-performing assets||107.50||%||87.74||%|
|Allowance for loan losses to total loans||1.32||%||1.64||%|
|LOAN RISK GRADE ANALYSIS:|
|Percentage of Loans|
|By Risk Grade|
|Risk Grade 1 (excellent quality)||1.56||%||2.03||%|
|Risk Grade 2 (high quality)||25.23||%||23.44||%|
|Risk Grade 3 (good quality)||53.92||%||50.69||%|
|Risk Grade 4 (management attention)||13.78||%||16.36||%|
|Risk Grade 5 (watch)||2.82||%||4.28||%|
|Risk Grade 6 (substandard)||2.39||%||2.96||%|
|Risk Grade 7 (doubtful)||0.00||%||0.00||%|
|Risk Grade 8 (loss)||0.00||%||0.00||%|
|At March 31, 2016, including non-accrual loans, there were five relationships exceeding $1.0 million in the Watch risk grade (which totaled $9.4 million) and one relationship exceeding $1.0 million in the Substandard risk grade (which totaled $1.3 million). There were two relationships with loans in both the Watch and Substandard risk grades, which exceeded $1.0 million for loans in both risk grades combined.|