PEOPLES BANCORP INC. ANNOUNCES THIRD QUARTER 2023 RESULTS AND RECORD NET INCOME
- Peoples Bancorp Inc. reported strong net income of $31.9 million for Q3 2023, representing a significant increase compared to the previous quarter. The completion of the Limestone Merger adds value to the company, with the transaction valued at $177.9 million. The termination of the pension plan will result in cost savings for the company. The execution of the sales of lower yielding investment securities will contribute to the improvement of the company's financials.
- The provision for credit losses negatively impacted earnings per diluted common share by $0.09 for Q3 2023. The settlement charge of $2.4 million for the termination of the pension plan resulted in a non-core item expense. The sales of investment securities resulted in an after-tax loss of $1.6 million.
The provision for (recovery of) credit losses recorded represents the amount needed to maintain the appropriate level of the allowance for credit losses based on management's quarterly estimates. The provision for credit losses negatively impacted earnings per diluted common share by
Non-core items, and the related tax effect of each, in net income primarily included acquisition-related expenses and a
"We are proud to continue our trend of strong earnings and asset quality. We generated record net income and we had many other positive metrics for the third quarter and the first nine months of 2023 compared to prior periods," said Chuck Sulerzyski, President and Chief Executive Officer. "We are looking forward to capitalizing on our recent successes and will continue to develop our relationships with our clients. Our associates are focused on working together to identify client needs and improve our overall client experience."
Pension Plan Termination
During the third quarter of 2023, Peoples terminated its pension plan by settling the remaining benefit obligation of
Completion of the Limestone Merger:
As of close of business on April 30, 2023, Peoples completed its previously announced merger with Limestone Bancorp, Inc. ("Limestone"), a bank holding company headquartered in
Investment Portfolio Restructuring:
During the first quarter of 2023, Peoples executed the sales of
Statement of Operations Highlights:
- Net interest income for the third quarter of 2023 increased
$8.4 million 10% , compared to the linked quarter and increased$26.2 million 39% , compared to the third quarter of 2022.- Net interest margin increased 16 basis points to
4.70% for the third quarter of 2023, compared to4.54% for the linked quarter and increased 53 basis points compared to4.17% for the third quarter of 2022. - The increase in net interest margin for the third quarter of 2023 compared to the linked quarter was primarily driven by a full quarter of accretion on the acquired Limestone portfolio in the third quarter compared to only two months in the second quarter. The third quarter was also impacted by a true-up of
$3.6 million $1.9 million - The increase in net interest income for the third quarter of 2023 compared to the third quarter of 2022 was driven by increases in market interest rates and the accretion on the acquired Limestone portfolio.
- Net interest margin increased 16 basis points to
- Peoples recorded a provision for credit losses of
$4.1 million $8.0 million $1.8 million - The provision for credit losses in the third quarter of 2023 was driven by (i) loan growth, (ii) an increase in net charge-offs, (iii) updates to our prepayment, curtailment, and funding rates, and (iv) a deterioration in macro-economic conditions used within the current expected credit loss ("CECL") model, partially offset by the release of reserves on individually analyzed loans.
- Net charge-offs were
$2.3 million 0.15% of average total loans annualized, for the third quarter of 2023, compared to$1.2 million 0.09% , for the linked quarter and$1.7 million 0.15% , for the third quarter of 2022.
- Total non-interest income, excluding net gains and losses, for the third quarter of 2023 increased
$0.7 million 3% , compared to the linked quarter, and increased$3.1 million 15% , compared to the third quarter of 2022.- The increase in non-interest income, excluding gains and losses, for the third quarter of 2023 when compared to the second quarter of 2023 was primarily due to increases in other non-interest income and bank owned life insurance income due to a death benefit recognized in the third quarter of 2023, partially offset by a decrease in lease income. The increase in other non-interest income was attributable to an increase in operating lease income, which was partially offset by operating lease expense recognized in other non-interest expense when compared to the linked quarter.
- Total non-interest income, excluding net gains and losses, for the first nine months of 2023 was
21% of total revenue (defined as net interest income plus total non-interest income excluding net gains and losses).
- Total non-interest expense for the third quarter of 2023 increased
$1.1 million 2% , compared to the linked quarter and increased$19.4 million 37% , compared to the third quarter of 2022.- The increase in total non-interest expense for the third quarter of 2023 when compared to the linked quarter was primarily attributable to increases in other non-interest expense, data processing and software expenses, and amortization of other intangible assets. The increase in other non-interest expense was due to expenses recognized in relation to the pension plan termination, Limestone acquisition-related expenses, and operating lease depreciation expenses. The increase in total non-interest expense was partially offset by decreases in professional fees and salaries and employee benefit costs, due to lower acquisition-related expenses.
- Excluding acquisition-related expenses, total non-interest expense for the third quarter of 2023 increased
$7.3 million - For the third quarter of 2023, the efficiency ratio was
58.4% compared to62.7% for the linked quarter. When adjusted for non-core items, the efficiency ratio was52.5% for the third quarter of 2023 compared to53.3% for the linked quarter.
Balance Sheet Highlights:
- Period-end total loan and lease balances at September 30, 2023 increased
$109.8 million 7% annualized, compared to June 30, 2023.- The increases in period-end and average total loan and lease balances were primarily the result of growth in (i) commercial real estate loans, (ii) premium finance loans and (iii) leases, partially offset by reductions in construction loans and commercial and industrial loans. The increase in average total loan and lease balances was also impacted by a full quarter of loan balances acquired in the Limestone Merger compared to only two months in the linked quarter.
- Asset quality metrics remained stable during the quarter.
- Delinquency trends remained stable as loans considered current comprised
99.0% of the loan portfolio at both September 30, 2023 and at June 30, 2023. - Nonperforming assets at September 30, 2023 increased
$0.6 million - Criticized loans decreased
$6.7 million - Classified loans increased
$13.9 million
- Delinquency trends remained stable as loans considered current comprised
- Period-end total deposit balances at September 30, 2023 increased
$77.6 million 1% , compared to at June 30, 2023.- The increase was driven by growth in (i) retail certificates of deposit, (ii) governmental deposit accounts and (iii) brokered deposits, partially offset by reductions in (i) savings accounts, (ii) non-interest-bearing checking accounts and (iii) interest-bearing checking accounts.
- The percentages of retail deposit balances and commercial deposit balances of the total deposit balance at September 30, 2023 were
79% and21% , respectively, compared to78% and22% , respectively, at June 30, 2023. - Total demand deposit balances were
39% and42% of total deposit balances at September 30, 2023 and at June 30, 2023, respectively. - Total loan balances were
86% of total deposit balances at both September 30, 2023 and June 30, 2023. - Deposit balances that exceeded the Federal Deposit Insurance Corporation ("FDIC") insurance limit of
$250,000 31% of total deposits at September 30, 2023 and32% of total deposits at June 30, 2023. Peoples pledges investment securities against certain governmental deposit accounts, which collateralized$812.7 million 42% , of the uninsured deposit balances at September 30, 2023.
Net Interest Income:
Net interest income was
Net interest income for the third quarter of 2023 increased
Accretion income, net of amortization expense, from acquisitions was
For the first nine months of 2023, net interest income increased
Accretion income, net of amortization expense, from acquisitions was
Provision for (Recovery of) Credit Losses:
The provisions for credit losses were
The provision for credit losses for the first nine months of 2023 was
Net charge-offs for the third quarter of 2023 were
Net Gains and Losses:
Net gains and losses include gains and losses on investment securities, asset disposals and other transactions, which are included in total non-interest income on the Consolidated Statements of Operations. The net loss realized during the third quarter of 2023 was
The net loss realized during the first nine months of 2023 was
months of 2022. The net loss for the first nine months of 2023 was primarily driven by the
Total Non-interest Income, Excluding Net Gains and Losses:
Total non-interest income, excluding net gains and losses, for the third quarter of 2023 increased
Compared to the third quarter of 2022, non-interest income, excluding net gains and losses, increased
For the first nine months of 2023, total non-interest income, excluding gains and losses, increased
Total Non-interest Expense:
Total non-interest expenses for the third quarter and the nine months ended September 30, 2023 were impacted by the Limestone Merger and acquisition-related non-interest expenses. Total acquisition-related non-interest expenses added
The table below summarizes the amount of acquisition-related expenses for each line item that is a component of non-interest expense. Acquisition-related expenses are considered a non-core non-interest expense by Peoples. This information is used by Peoples to provide information useful to investors in understanding Peoples' operating performance and trends.
Three Months Ended | Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | ||||||
(Dollars in thousands) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||
Non-interest expense: | |||||||||
Salaries and employee benefit costs | $ 36,608 | $ 38,025 | $ 28,618 | $ 106,661 | $ 83,932 | ||||
Net occupancy and equipment expense | 5,501 | 5,380 | 4,813 | 15,836 | 14,669 | ||||
Professional fees | 3,456 | 7,438 | 2,832 | 13,775 | 8,784 | ||||
Data processing and software expense | 6,288 | 4,728 | 3,279 | 15,578 | 9,228 | ||||
Amortization of other intangible assets | 3,280 | 2,800 | 2,023 | 7,951 | 5,765 | ||||
Electronic banking expense | 1,836 | 1,832 | 2,648 | 5,159 | 8,134 | ||||
Marketing expense | 1,267 | 1,357 | 1,136 | 3,554 | 2,991 | ||||
FDIC insurance premiums | 1,260 | 1,464 | 709 | 3,525 | 2,921 | ||||
Franchise tax expense | 772 | 872 | 1,075 | 2,678 | 2,941 | ||||
Communication expense | 752 | 724 | 599 | 2,089 | 1,873 | ||||
Other loan expenses | 856 | 538 | 511 | 2,133 | 1,788 | ||||
Other non-interest expense | 9,820 | 5,465 | 4,010 | 19,859 | 10,755 | ||||
Total non-interest expense | 71,696 | 70,623 | 52,253 | 198,798 | 153,781 | ||||
Acquisition-related non-interest expense: | |||||||||
Salaries and employee benefit costs | 562 | 5,125 | — | 5,708 | 29 | ||||
Net occupancy and equipment expense | 2 | 20 | 7 | 31 | 36 | ||||
Professional fees | 429 | 4,812 | 221 | 5,532 | 1,791 | ||||
Data processing and software expense | 1,289 | 1 | 129 | 1,290 | 410 | ||||
Electronic banking expense | — | 115 | — | 115 | (92) | ||||
Marketing expense | 38 | 14 | 5 | 61 | 45 | ||||
Communication expense | 1 | — | — | 1 | 1 | ||||
Other loan expenses | — | 1 | — | 1 | — | ||||
Other non-interest expense | 2,113 | 621 | (23) | 2,955 | 94 | ||||
Total acquisition-related non-interest expense | 4,434 | 10,709 | 339 | 15,694 | 2,314 | ||||
Non-interest expense excluding acquisition- | |||||||||
Salaries and employee benefit costs | 36,046 | 32,900 | 28,618 | 100,953 | 83,903 | ||||
Net occupancy and equipment expense | 5,499 | 5,360 | 4,806 | 15,805 | 14,633 | ||||
Professional fees | 3,027 | 2,626 | 2,611 | 8,243 | 6,993 | ||||
Data processing and software expense | 4,999 | 4,727 | 3,150 | 14,288 | 8,818 | ||||
Amortization of other intangible assets | 3,280 | 2,800 | 2,023 | 7,951 | 5,765 | ||||
Electronic banking expense | 1,836 | 1,717 | 2,648 | 5,044 | 8,226 | ||||
Marketing expense | 1,229 | 1,343 | 1,131 | 3,493 | 2,946 | ||||
FDIC insurance premiums | 1,260 | 1,464 | 709 | 3,525 | 2,921 | ||||
Franchise tax expense | 772 | 872 | 1,075 | 2,678 | 2,941 | ||||
Communication expense | 751 | 724 | 599 | 2,088 | 1,872 | ||||
Other loan expenses | 856 | 537 | 511 | 2,132 | 1,788 | ||||
Other non-interest expense | 7,707 | 4,844 | 4,033 | 16,904 | 10,661 | ||||
Total non-interest expense excluding acquisition- | $ 67,262 | $ 59,914 | $ 51,914 | $ 183,104 | $ 151,467 | ||||
Total non-interest expense increased
Compared to the third quarter of 2022, total non-interest expense for the third quarter of 2023 increased
For the nine months ended September 30, 2023, total non-interest expense increased
The efficiency ratio for the third quarter of 2023 was
Income Tax Expense:
Peoples recorded income tax expense of
Investment Securities and Liquidity:
Peoples' investment portfolio primarily consists of available-for-sale investment securities reported at fair value and held-to-maturity investment securities reported at amortized cost. The available-for-sale investment securities balance at September 30, 2023 decreased
The held-to-maturity investment securities balance at September 30, 2023 increased
The duration of the investment portfolio as of September 30, 2023 was estimated to be 5.74 years. The duration of Peoples' investments is managed as part of its Asset Liability Management program, and has the potential to impact both liquidity and capital, as mismatches in duration may require a liquidation of investment securities at market prices to meet funding needs. These assets are one component of Peoples liquidity profile, which is discussed in further detail below.
Peoples maintains a number of liquid and liquefiable assets, borrowing capacity, and other contingent sources of liquidity to ensure the availability of funds. At September 30, 2023, Peoples had liquid and liquefiable assets of
Loans and Leases:
The period-end total loan and lease balances at September 30, 2023 increased
The period-end total loan and lease balance at September 30, 2023 increased
The period-end total loan and lease balance increased
The quarterly average loan and lease balance increased
For the first nine months of 2023, the average loan and lease balance increased
Asset Quality:
Asset quality metrics remained stable during the third quarter of 2023. Total nonperforming assets increased
Criticized loans, which are those categorized as special mention, substandard or doubtful, decreased
Classified loans, which are those categorized as substandard or doubtful, increased
Annualized net charge-offs were
At September 30, 2023, the allowance for credit losses was
Deposits:
At September 30, 2023, period-end total deposits increased
Period-end total deposits at September 30, 2023 increased
Period-end total deposits at September 30, 2023 increased
The percentages of retail deposit balances and commercial deposit balances of the total deposit balance at September 30, 2023 were
Uninsured deposits were
Average deposit balances during the third quarter of 2023 increased
Stockholders' Equity:
Total stockholders' equity at September 30, 2023 decreased by
Total stockholders' equity at September 30, 2023 increased by
Total stockholders' equity at September 30, 2023 increased
At September 30, 2023, the tier 1 risk-based capital ratio was
Book value per common share and tangible book value per common share, which excludes goodwill and other intangible assets, were
The ratio of total stockholders' equity to total assets was
Peoples Bancorp Inc. ("Peoples", Nasdaq: PEBO) is a diversified financial services holding company that makes available a complete line of banking, trust and investment, insurance, premium financing and equipment leasing solutions through its subsidiaries. Peoples has been headquartered in
Peoples is a member of the Russell 3000 index of
Conference Call to Discuss Earnings:
Peoples will conduct a facilitated conference call to discuss third quarter 2023 results of operations on October 24, 2023 at 11:00 a.m., Eastern Daylight Time, with members of Peoples' executive management participating. Analysts, media and individual investors are invited to participate in the conference call by calling (866) 890-9285. A simultaneous webcast of the conference call audio will be available online via the "Investor Relations" section of Peoples' website, www.peoplesbancorp.com. Participants are encouraged to call or sign in at least 15 minutes prior to the scheduled conference call time to ensure participation and, if required, to download and install the necessary software. A replay of the call will be available on Peoples' website in the "Investor Relations" section for one year.
Use of Non-US GAAP Financial Measures:
This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the
- Core non-interest expense is a non-US GAAP financial measure since it excludes the impact of acquisition-related expenses, pension settlement charges, COVID-19-related expenses and COVID-19 Employee Retention Credits received.
- The efficiency ratio is calculated as total non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income, excluding net gains and losses. This ratio is a non-US GAAP financial measure since it excludes amortization of other intangible assets and all gains and losses included in earnings, and uses fully tax-equivalent net interest income.
- The efficiency ratio adjusted for non-core items is calculated as core non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income, excluding net gains and losses. This ratio is a non-US GAAP financial measure since it excludes the impact of acquisition-related expenses, pension settlement charges, COVID-19-related expenses, COVID-19 Employee Retention Credits received and the amortization of other intangible assets and all gains and losses included in earnings, and uses fully tax-equivalent net interest income.
- Tangible assets, tangible equity, the tangible equity to tangible assets ratio and tangible book value per common share are non-US GAAP financial measures since they exclude the impact of goodwill and other intangible assets acquired through acquisitions on both total stockholders' equity and total assets.
- Total non-interest income, excluding net gains and losses, is a non-US GAAP financial measure since it excludes all gains and losses included in earnings.
- Pre-provision net revenue is defined as net interest income plus total non-interest income, excluding net gains and losses, minus total non-interest expense. This measure is a non-US GAAP financial measure since it excludes the provision for (recovery of) credit losses and all gains and losses included in net income.
- Return on average assets adjusted for non-core items is calculated as annualized net income (less the after-tax impact of all gains and losses, acquisition-related expenses, pension settlement charges, COVID-19-related expenses, and COVID-19 Employee Retention Credits received) divided by average assets. This measure is a non-US GAAP financial measure since it excludes the after-tax impact of all gains and losses, acquisition-related expenses, pension settlement charges, COVID-19-related expenses and COVID-19 Employee Retention Credits received.
- Return on average tangible equity is calculated as annualized net income (less the after-tax impact of amortization of other intangible assets) divided by average tangible equity. This measure is a non-US GAAP financial measure since it excludes the after-tax impact of amortization of other intangible assets from net income and the impact of average goodwill and other average intangible assets acquired through acquisitions on average stockholders' equity.
A reconciliation of these non-US GAAP financial measures to the most directly comparable US GAAP financial measures is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)."
Safe Harbor Statement:
Certain statements made in this news release regarding Peoples' financial condition, results of operations, plans, objectives, future performance and business, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by the fact they are not historical facts and include words such as "anticipate," "estimate," "may," "feel," "expect," "believe," "plan," "will," "will likely," "would," "should," "could," "project," "goal," "target," "potential," "seek," "intend," "continue," "remain," and similar expressions.
These forward-looking statements reflect management's current expectations based on all information available to management and its knowledge of Peoples' business and operations. Additionally, Peoples' financial condition, results of operations, plans, objectives, future performance and business are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, but are not limited to:
(1) | ongoing increasing interest rate policies, changes in the interest rate environment due to economic conditions and/or the fiscal and monetary policy measures undertaken by the |
(2) | the effects of inflationary pressures and the impact of rising interest rates on borrowers' liquidity and ability to repay; |
(3) | the success, impact, and timing of the implementation of Peoples' business strategies and Peoples' ability to manage strategic initiatives, including the ongoing increasing interest rate policies of the Federal Reserve Board, the completion and successful integration of planned acquisitions, including the recently-completed acquisition of Vantage and the Limestone Merger, and the expansion of commercial and consumer lending activities; |
(4) | competitive pressures among financial institutions, or from non-financial institutions, which may increase significantly, including product and pricing pressures, which can in turn impact Peoples' credit spreads, changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and Peoples' ability to attract, develop and retain qualified professionals; |
(5) | uncertainty regarding the nature, timing, cost, and effect of legislative or regulatory changes or actions, or deposit insurance premium levels, promulgated and to be promulgated by governmental and regulatory agencies in the |
(6) | potential adverse impacts as a result of the Inflation Reduction Act of 2022, which may negatively impact Peoples' operations and financial results; |
(7) | the effects of easing restrictions on participants in the financial services industry; |
(8) | current and future local, regional, national and international economic conditions (including the impact of persistent inflation, supply chain issues or labor shortages, supply-demand imbalances affecting local real estate prices, high unemployment rates in the local or regional economies in which Peoples operates and/or the |
(9) | Peoples may issue equity securities in connection with future acquisitions, which could cause ownership and economic dilution to Peoples' current shareholders; |
(10) | changes in prepayment speeds, loan originations, levels of nonperforming assets, delinquent loans, charge-offs, and customer and other counterparties' performance and creditworthiness generally, which may be less favorable than expected in light of recent inflationary pressures and continued elevated interest rates, and may adversely impact the amount of interest income generated; |
(11) | Peoples may have more credit risk and higher credit losses to the extent there are loan concentrations by location or industry of borrowers or collateral; |
(12) | future credit quality and performance, including expectations regarding future credit losses and the allowance for credit losses; |
(13) | changes in accounting standards, policies, estimates or procedures may adversely affect Peoples' reported financial condition or results of operations; |
(14) | the impact of assumptions, estimates and inputs used within models, which may vary materially from actual outcomes, including under the CECL model; |
(15) | the replacement of the London Interbank Offered Rate ("LIBOR") with other reference rates which may result in increased expenses and litigation, and adversely impact the effectiveness of hedging strategies; |
(16) | adverse changes in the conditions and trends in the financial markets, including recent inflationary pressures, which may adversely affect the fair value of securities within Peoples' investment portfolio, the interest rate sensitivity of Peoples' consolidated balance sheet, and the income generated by Peoples' trust and investment activities; |
(17) | the volatility from quarter to quarter of mortgage banking income, whether due to interest rates, demand, the fair value of mortgage loans, or other factors; |
(18) | Peoples' ability to receive dividends from Peoples' subsidiaries; |
(19) | Peoples' ability to maintain required capital levels and adequate sources of funding and liquidity; |
(20) | the impact of larger or similar-sized financial institutions encountering problems, such as the closures earlier in 2023 of Silicon Valley Bank in |
(21) | in light of the recent bank failures, Peoples' continued ability to grow deposits or maintain adequate deposit levels may be adversely impacted, and Peoples may experience an unexpected outflow of uninsured deposits, which may require Peoples to sell investment securities at a loss; |
(22) | Peoples' ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks, including those of Peoples' third-party vendors and other service providers, which may prove inadequate, and could adversely affect customer confidence in Peoples and/or result in Peoples incurring a financial loss; |
(23) | any misappropriation of the confidential information which Peoples possesses could have an adverse impact on Peoples' business and could result in regulatory actions, litigation and other adverse effects; |
(24) | Peoples' ability to anticipate and respond to technological changes, and Peoples' reliance on, and the potential failure of, a number of third-party vendors to perform as expected, including Peoples' primary core banking system provider, which can impact Peoples' ability to respond to customer needs and meet competitive demands; |
(25) | operational issues stemming from and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems on which Peoples and Peoples' subsidiaries are highly dependent; |
(26) | changes in consumer spending, borrowing and saving habits, whether due to changes in retail distribution strategies, consumer preferences and behavior, changes in business and economic conditions, legislative or regulatory initiatives, or other factors, which may be different than anticipated; |
(27) | the adequacy of Peoples' internal controls and risk management program in the event of changes in strategic, reputational, market, economic, operational, cybersecurity, compliance, legal, asset/liability repricing, liquidity, credit and interest rate risks associated with Peoples' business; |
(28) | the impact on Peoples' businesses, personnel, facilities, or systems, of losses related to acts of fraud, theft, misappropriation or violence; |
(29) | the impact on Peoples' businesses, as well as on the risks described above, of various domestic or international widespread natural or other disasters, pandemics, cybersecurity attacks, system failures, civil unrest, military or terrorist activities or international conflicts (including |
(30) | the potential further deterioration of the |
(31) | the potential influence on the |
(32) | the impact on Peoples' businesses and operating results of any costs associated with obtaining rights in intellectual property claimed by others and adequately protecting Peoples' intellectual property; |
(33) | risks and uncertainties associated with Peoples' entry into new geographic markets and risks resulting from Peoples' inexperience in these new geographic markets; |
(34) | Peoples' ability to integrate the Limestone Merger, which may be unsuccessful, or may be more difficult, time-consuming or costly than expected; |
(35) | the risk that expected revenue synergies and cost savings from the Limestone Merger, may not be fully realized or realized within the expected time frame; |
(36) | changes in laws or regulations imposed by Peoples' regulators impacting Peoples' capital actions, including dividend payments and share repurchases; |
(37) | the vulnerability of Peoples' network and online banking portals, and the systems of parties with whom Peoples contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; |
(38) | Peoples' business may be adversely affected by increased political and regulatory scrutiny of corporate environmental, social and governance ("ESG") practices; |
(39) | the effect of a fall in stock market prices on the asset and wealth management business; and |
(40) | other risk factors relating to the banking industry or Peoples as detailed from time to time in Peoples' reports filed with the Securities and Exchange Commission (the "SEC"), including those risk factors included in the disclosures under the heading "ITEM 1A. RISK FACTORS" of Peoples' Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and under the heading "ITEM 1A. RISK FACTORS" in Part II of Peoples' Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2023 and June 30, 2023. Peoples encourages readers of this news release to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance. Peoples undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events, except as required by applicable legal requirements. Copies of documents filed with the SEC are available free of charge at the SEC's website at http://www.sec.gov and/or from Peoples' website - www.peoplesbancorp.com under the "Investor Relations" section. |
As required by US GAAP, Peoples is required to evaluate the impact of subsequent events through the issuance date of Peoples' September 30, 2023 consolidated financial statements as part of Peoples' Quarterly Report on Form 10-Q to be filed with the SEC. Accordingly, subsequent events could occur that may cause Peoples to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.
PER COMMON SHARE DATA AND SELECTED RATIOS (Unaudited) | |||||||||
At or For the Three Months Ended | At or For the Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | ||||||
2023 | 2023 | 2022 | 2023 | 2022 | |||||
PER COMMON SHARE: | |||||||||
Earnings per common share: | |||||||||
Basic | $ 0.91 | $ 0.64 | $ 0.93 | $ 2.49 | $ 2.65 | ||||
Diluted | 0.90 | 0.64 | 0.92 | 2.47 | 2.65 | ||||
Cash dividends declared per common share | 0.39 | 0.39 | 0.38 | 1.16 | 1.12 | ||||
Book value per common share (a) | 28.06 | 28.24 | 26.89 | 28.06 | 26.89 | ||||
Tangible book value per common share (a)(b) | 16.52 | 16.56 | 15.28 | 16.52 | 15.28 | ||||
Closing price of common shares at end of period (a) | $ 25.38 | $ 26.55 | $ 28.93 | $ 25.38 | $ 28.93 | ||||
SELECTED RATIOS: | |||||||||
Return on average stockholders' equity (c) | 12.59 % | 8.89 % | 12.92 % | 11.56 % | 12.32 % | ||||
Return on average tangible equity (c)(d) | 23.04 % | 16.56 % | 23.36 % | 21.05 % | 21.70 % | ||||
Return on average assets (c) | 1.44 % | 1.01 % | 1.45 % | 1.35 % | 1.40 % | ||||
Return on average assets adjusted for non-core items (c)(e) | 1.69 % | 1.47 % | 1.47 % | 1.64 % | 1.44 % | ||||
Efficiency ratio (f) | 58.36 % | 62.71 % | 57.20 % | 59.66 % | 60.67 % | ||||
Efficiency ratio adjusted for non-core items (g)(i) | 52.51 % | 53.32 % | 56.64 % | 54.17 % | 59.61 % | ||||
Pre-provision net revenue to total average assets (c)(h) | 2.03 % | 1.78 % | 1.96 % | 2.03 % | 1.68 % | ||||
Net interest margin (c) | 4.70 % | 4.54 % | 4.17 % | 4.74 % | 3.81 % | ||||
Dividend payout ratio (j) | 43.26 % | 63.62 % | 41.39 % | 47.70 % | 42.56 % | ||||
(a) | Data presented as of the end of the period indicated. |
(b) | Tangible book value per common share represents a non-US GAAP financial measure since it excludes the balance sheet impact of goodwill and other intangible assets acquired through acquisitions on stockholders' equity. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)." |
(c) | Ratios are presented on an annualized basis. |
(d) | Return on average tangible equity represents a non-US GAAP financial measure since it excludes the after-tax impact of amortization of other intangible assets from net income and it excludes the balance sheet impact of average goodwill and other intangible assets acquired through acquisitions on average stockholders' equity. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)." |
(e) | Return on average assets adjusted for non-core items represents a non-US GAAP financial measure since it excludes the after-tax impact of all gains and losses, acquisition-related expenses, pension settlement charges, COVID-19-related expenses and COVID-19 Employee Retention Credits received. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)." |
(f) | The efficiency ratio is defined as total non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income (excluding all gains and losses). This ratio represents a non-US GAAP financial measure since it excludes amortization of other intangible assets, and all gains and losses included in earnings, and uses fully tax-equivalent net interest income. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)." |
(g) | The efficiency ratio adjusted for non-core items is defined as core non-interest expense (less amortization of other intangible assets) as a percentage of fully tax-equivalent net interest income plus total non-interest income (excluding all gains and losses). This ratio represents a non-US GAAP financial measure since it excludes the impact of all gains and losses, acquisition-related expenses, pension settlement charges, COVID-19-related expenses and COVID-19 Employee Retention Credits received included in earnings, and uses fully tax-equivalent net interest income. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)." |
(h) | Pre-provision net revenue is defined as net interest income plus total non-interest income (excluding all gains and losses) minus total non-interest expense. This measure represents a non-US GAAP financial measure since it excludes the provision for (recovery of) credit losses and all gains and losses included in net income. This measure is a key metric used by federal bank regulatory agencies in their evaluation of capital adequacy for financial institutions. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)." |
(i) | Information presented on a fully tax-equivalent basis, using a |
(j) | This ratio is calculated based on dividends declared during the period divided by net income for the period. |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | ||||||
(Dollars in thousands, except per share data) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||
Total interest income | $ 123,593 | $ 106,417 | $ 70,871 | $ 314,159 | $ 193,352 | ||||
Total interest expense | 30,319 | 21,564 | 3,820 | 63,154 | 10,523 | ||||
Net interest income | 93,274 | 84,853 | 67,051 | 251,005 | 182,829 | ||||
Provision for (recovery of) credit losses | 4,053 | 7,983 | 1,776 | 13,889 | (5,811) | ||||
Net interest income after provision for (recovery of) | 89,221 | 76,870 | 65,275 | 237,116 | 188,640 | ||||
Non-interest income: | |||||||||
Electronic banking income | 6,466 | 6,466 | 5,261 | 18,375 | 15,933 | ||||
Deposit account service charges | 4,516 | 4,153 | 3,833 | 12,192 | 10,817 | ||||
Trust and investment income | 4,288 | 4,414 | 3,954 | 12,786 | 12,476 | ||||
Insurance income | 4,250 | 4,004 | 3,618 | 13,679 | 11,995 | ||||
Bank owned life insurance income | 1,375 | 842 | 694 | 2,924 | 1,922 | ||||
Mortgage banking income | 237 | 189 | 328 | 740 | 1,116 | ||||
Net (loss) gain on investment securities | (7) | (166) | 21 | (2,108) | 107 | ||||
Lease (loss) income | (66) | 1,719 | 1,725 | 2,730 | 2,931 | ||||
Net loss on asset disposals and other transactions | (307) | (1,665) | (35) | (2,218) | (314) | ||||
Other non-interest income | 2,452 | 1,059 | 967 | 4,179 | 2,819 | ||||
Total non-interest income | 23,204 | 21,015 | 20,366 | 63,279 | 59,802 | ||||
Non-interest expense: | |||||||||
Salaries and employee benefit costs | 36,608 | 38,025 | 28,618 | 106,661 | 83,932 | ||||
Data processing and software expense | 6,288 | 4,728 | 3,279 | 15,578 | 9,228 | ||||
Net occupancy and equipment expense | 5,501 | 5,380 | 4,813 | 15,836 | 14,669 | ||||
Professional fees | 3,456 | 7,438 | 2,832 | 13,775 | 8,784 | ||||
Amortization of other intangible assets | 3,280 | 2,800 | 2,023 | 7,951 | 5,765 | ||||
Electronic banking expense | 1,836 | 1,832 | 2,648 | 5,159 | 8,134 | ||||
Marketing expense | 1,267 | 1,357 | 1,136 | 3,554 | 2,991 | ||||
FDIC insurance premiums | 1,260 | 1,464 | 709 | 3,525 | 2,921 | ||||
Other loan expenses | 856 | 538 | 511 | 2,133 | 1,788 | ||||
Franchise tax expense | 772 | 872 | 1,075 | 2,678 | 2,941 | ||||
Communication expense | 752 | 724 | 599 | 2,089 | 1,873 | ||||
Other non-interest expense | 9,820 | 5,465 | 4,010 | 19,859 | 10,755 | ||||
Total non-interest expense | 71,696 | 70,623 | 52,253 | 198,798 | 153,781 | ||||
Income before income taxes | 40,729 | 27,262 | 33,388 | 101,597 | 94,661 | ||||
Income tax expense | 8,847 | 6,166 | 7,410 | 22,059 | 20,218 | ||||
Net income | $ 31,882 | $ 21,096 | $ 25,978 | $ 79,538 | $ 74,443 | ||||
PER COMMON SHARE DATA: | |||||||||
Net income available to common shareholders | $ 31,882 | $ 21,096 | $ 25,978 | $ 79,538 | $ 74,443 | ||||
Less: Dividends paid on unvested common shares | 143 | 144 | 102 | 388 | 252 | ||||
Less: Undistributed loss allocated to unvested common | 79 | 13 | 24 | 190 | 65 | ||||
Net earnings allocated to common shareholders | $ 31,660 | $ 20,939 | $ 25,852 | $ 78,960 | $ 74,126 | ||||
Weighted-average common shares outstanding | 34,818,346 | 32,526,962 | 27,865,416 | 31,771,061 | 27,929,720 | ||||
Effect of potentially dilutive common shares | 243,551 | 123,014 | 107,839 | 206,425 | 79,543 | ||||
Total weighted-average diluted common shares | 35,061,897 | 32,649,976 | 27,973,255 | 31,977,486 | 28,009,263 | ||||
Earnings per common share – basic | $ 0.91 | $ 0.64 | $ 0.93 | $ 2.49 | $ 2.65 | ||||
Earnings per common share – diluted | $ 0.90 | $ 0.64 | $ 0.92 | $ 2.47 | $ 2.65 | ||||
Cash dividends declared per common share | $ 0.39 | $ 0.39 | $ 0.38 | $ 1.16 | $ 1.12 | ||||
Weighted-average common shares outstanding – basic | 34,818,346 | 32,526,962 | 27,865,416 | 31,771,061 | 27,929,720 | ||||
Weighted-average common shares outstanding – diluted | 35,061,897 | 32,649,976 | 27,973,255 | 31,977,486 | 28,009,263 | ||||
Common shares outstanding at end of period | 35,395,990 | 35,374,916 | 28,278,078 | 35,395,990 | 28,278,078 | ||||
CONSOLIDATED BALANCE SHEETS | |||
September 30, | December 31, | ||
2023 | 2022 | ||
(Dollars in thousands) | (Unaudited) | ||
Assets | |||
Cash and cash equivalents: | |||
Cash and due from banks | $ 108,107 | $ 94,679 | |
Interest-bearing deposits in other banks | 191,002 | 59,343 | |
Total cash and cash equivalents | 299,109 | 154,022 | |
Available-for-sale investment securities, at fair value (amortized cost of | 1,018,581 | 1,131,399 | |
Held-to-maturity investment securities, at amortized cost (fair value of | 675,409 | 560,212 | |
Other investment securities | 66,332 | 51,609 | |
Total investment securities (a) | 1,760,322 | 1,743,220 | |
Loans and leases, net of deferred fees and costs (b) | 6,084,390 | 4,707,150 | |
Allowance for credit losses | (62,924) | (53,162) | |
Net loans and leases | 6,021,466 | 4,653,988 | |
Loans held for sale | 2,699 | 2,140 | |
Bank premises and equipment, net of accumulated depreciation | 103,877 | 82,934 | |
Bank owned life insurance | 139,554 | 105,292 | |
Goodwill | 355,106 | 292,397 | |
Other intangible assets | 53,388 | 33,932 | |
Other assets | 207,013 | 139,379 | |
Total assets | $ 8,942,534 | $ 7,207,304 | |
Liabilities | |||
Deposits: | |||
Non-interest-bearing | $ 1,569,095 | $ 1,589,402 | |
Interest-bearing | 5,468,423 | 4,127,539 | |
Total deposits | 7,037,518 | 5,716,941 | |
Short-term borrowings | 585,437 | 500,138 | |
Long-term borrowings | 173,312 | 101,093 | |
Accrued expenses and other liabilities | 153,048 | 103,804 | |
Total liabilities | 7,949,315 | 6,421,976 | |
Stockholders' equity | |||
Preferred shares, no par value, 50,000 shares authorized, no shares issued at September 30, 2023 or at | — | — | |
Common shares, no par value, 50,000,000 shares authorized, 36,723,893 shares issued at September 30, 2023 | 864,010 | 686,450 | |
Retained earnings | 307,534 | 265,936 | |
Accumulated other comprehensive loss, net of deferred income taxes | (143,796) | (127,136) | |
Treasury stock, at cost, 1,412,650 common shares at September 30, 2023 and 1,643,461 common shares at | (34,529) | (39,922) | |
Total stockholders' equity | 993,219 | $ 785,328 | |
Total liabilities and stockholders' equity | $ 8,942,534 | $ 7,207,304 | |
(a) | Available-for-sale investment securities and held-to-maturity investment securities are presented net of allowance for credit losses of |
(b) | Also referred to throughout this document as "total loans" and "loans held for investment." |
SELECTED FINANCIAL INFORMATION (Unaudited) | |||||
September 30, | June 30, | March 31, | December 31, | September 30, | |
(Dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 |
Loan Portfolio | |||||
Construction | $ 374,016 | $ 418,741 | $ 232,296 | $ 246,941 | $ 215,621 |
Commercial real estate, other | 2,189,984 | 2,071,514 | 1,481,062 | 1,423,518 | 1,423,479 |
Commercial and industrial | 1,128,809 | 1,160,310 | 891,139 | 892,634 | 877,472 |
Premium finance | 189,251 | 162,357 | 158,263 | 159,197 | 167,682 |
Leases | 402,635 | 377,791 | 354,641 | 345,131 | 312,847 |
Residential real estate | 791,965 | 791,442 | 712,602 | 723,360 | 733,361 |
Home equity lines of credit | 203,940 | 199,221 | 174,383 | 177,858 | 174,525 |
Consumer, indirect | 668,371 | 654,371 | 647,177 | 629,426 | 592,309 |
Consumer, direct | 134,562 | 138,019 | 107,406 | 108,363 | 113,314 |
Deposit account overdrafts | 857 | 830 | 749 | 722 | 597 |
Total loans and leases | $ 6,084,390 | $ 5,974,596 | $ 4,759,718 | $ 4,707,150 | $ 4,611,207 |
Total acquired loans and leases (a) | $ 1,925,554 | $ 2,032,505 | $ 1,024,739 | $ 1,108,728 | $ 1,186,069 |
Total originated loans and leases | $ 4,158,836 | $ 3,942,091 | $ 3,734,979 | $ 3,598,422 | $ 3,425,138 |
Deposit Balances | |||||
Non-interest-bearing deposits (b) | $ 1,569,095 | $ 1,682,634 | $ 1,555,064 | $ 1,589,402 | $ 1,635,953 |
Interest-bearing deposits: | |||||
Interest-bearing demand accounts (b) | 1,181,079 | 1,225,646 | 1,085,169 | 1,160,182 | 1,162,012 |
Retail certificates of deposit | 1,198,733 | 950,783 | 622,091 | 530,236 | 544,741 |
Money market deposit accounts | 730,902 | 718,633 | 579,106 | 617,029 | 624,708 |
Governmental deposit accounts | 761,625 | 705,596 | 649,303 | 625,965 | 734,734 |
Savings accounts | 987,170 | 1,116,622 | 1,024,638 | 1,068,547 | 1,077,383 |
Brokered deposits | 608,914 | 559,955 | 273,156 | 125,580 | 86,089 |
Total interest-bearing deposits | $ 5,468,423 | $ 5,277,235 | $ 4,233,463 | $ 4,127,539 | $ 4,229,667 |
Total deposits | $ 7,037,518 | $ 6,959,869 | $ 5,788,527 | $ 5,716,941 | $ 5,865,620 |
Total demand deposits (b) | $ 2,750,174 | $ 2,908,280 | $ 2,640,233 | $ 2,749,584 | $ 2,797,965 |
Asset Quality | |||||
Nonperforming assets (NPAs): (c) | |||||
Loans 90+ days past due and accruing | $ 9,117 | $ 5,924 | $ 4,014 | $ 4,842 | $ 8,424 |
Nonaccrual loans | 26,187 | 28,796 | 29,980 | 31,473 | 27,831 |
Total nonperforming loans (NPLs) (c) | 35,304 | 34,720 | 33,994 | 36,315 | 36,255 |
Other real estate owned (OREO) | 7,174 | 7,166 | 8,778 | 8,895 | 8,840 |
Total NPAs (c) | $ 42,478 | $ 41,886 | $ 42,772 | $ 45,210 | $ 45,095 |
Criticized loans (d) | $ 213,156 | $ 219,885 | $ 198,812 | $ 191,355 | $ 164,775 |
Classified loans (e) | 124,836 | 110,972 | 93,168 | 89,604 | 94,848 |
Allowance for credit losses as a percent of NPLs (c) | 178.23 % | 176.30 % | 156.80 % | 146.39 % | 145.82 % |
NPLs as a percent of total loans (c) | 0.58 % | 0.58 % | 0.71 % | 0.77 % | 0.79 % |
NPAs as a percent of total assets (c) | 0.48 % | 0.48 % | 0.58 % | 0.63 % | 0.64 % |
NPAs as a percent of total loans and OREO (c) | 0.70 % | 0.70 % | 0.90 % | 0.96 % | 0.98 % |
Criticized loans as a percent of total loans (d) | 3.50 % | 3.68 % | 4.18 % | 4.07 % | 3.57 % |
Classified loans as a percent of total loans (e) | 2.05 % | 1.86 % | 1.96 % | 1.90 % | 2.06 % |
Allowance for credit losses as a percent of total loans | 1.03 % | 1.02 % | 1.12 % | 1.13 % | 1.15 % |
Total demand deposits as a percent of total deposits (b) | 39.08 % | 41.79 % | 45.61 % | 48.10 % | 47.70 % |
Capital Information (f)(g)(h)(i) | |||||
Common equity tier 1 risk-based capital ratio | 11.49 % | 11.36 % | 12.22 % | 11.92 % | 11.80 % |
Tier 1 risk-based capital ratio | 12.23 % | 12.10 % | 12.49 % | 12.19 % | 12.08 % |
Total risk-based capital ratio (tier 1 and tier 2) | 13.06 % | 12.92 % | 13.35 % | 13.06 % | 12.98 % |
Tier 1 leverage ratio | 9.45 % | 9.64 % | 9.02 % | 8.92 % | 8.64 % |
Common equity tier 1 capital | $ 746,630 | $ 728,892 | $ 624,292 | $ 604,566 | $ 584,880 |
Tier 1 capital | 794,912 | 776,753 | 638,116 | 618,354 | 598,633 |
Total capital (tier 1 and tier 2) | 848,956 | 828,910 | 682,477 | 662,421 | 643,189 |
Total risk-weighted assets | $ 6,497,970 | $ 6,417,511 | $ 5,110,318 | $ 5,071,240 | $ 4,955,627 |
Total stockholders' equity to total assets | 11.11 % | 11.37 % | 11.21 % | 10.90 % | 10.86 % |
Tangible equity to tangible assets (j) | 6.85 % | 7.00 % | 7.08 % | 6.67 % | 6.47 % |
(a) | Includes all loans and leases acquired and purchased in 2012 and thereafter. |
(b) | The sum of non-interest-bearing deposits and interest-bearing demand accounts is considered total demand deposits. |
(c) | Nonperforming loans and leases include loans 90+ days past due and accruing, renegotiated loans and nonaccrual loans. Nonperforming assets include nonperforming loans and leases, and OREO. |
(d) | Includes loans and leases categorized as a special mention, substandard, or doubtful. |
(e) | Includes loans and leases categorized as substandard or doubtful. |
(f) | Data presented as of the end of the period indicated. |
(g) | September 30, 2023 data based on preliminary analysis and subject to revision. |
(h) | Peoples' capital conservation buffer was |
(i) | Peoples has adopted the five-year transition to phase in the impact of the adoption of CECL, effective January 1, 2020, on regulatory capital ratios. |
(j) | This ratio represents a non-US GAAP financial measure since it excludes the balance sheet impact of intangible assets acquired through acquisitions on both total stockholders' equity and total assets. Additional information regarding the calculation of this ratio is included at the end of this news release under the caption of "Non-US GAAP Financial Measures (Unaudited)." |
PROVISION FOR (RECOVERY OF) CREDIT LOSSES INFORMATION (Unaudited) | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | ||||||
(Dollars in thousands) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||
Provision for (recovery of) credit losses | |||||||||
Provision for (recovery of) other credit losses | $ 3,764 | $ 7,751 | $ 1,558 | $ 13,188 | $ (6,583) | ||||
Provision for checking account overdraft credit losses | 289 | 232 | 218 | 701 | 772 | ||||
Total provision for (recovery of) credit losses | $ 4,053 | $ 7,983 | $ 1,776 | $ 13,889 | $ (5,811) | ||||
Net charge-offs | |||||||||
Gross charge-offs | $ 2,834 | $ 2,041 | $ 1,990 | $ 6,730 | $ 6,274 | ||||
Recoveries | 516 | 845 | 302 | 1,672 | 1,135 | ||||
Net charge-offs | $ 2,318 | $ 1,196 | $ 1,688 | $ 5,058 | $ 5,139 | ||||
Net charge-offs (recoveries) by type | |||||||||
Construction | $ — | $ — | $ — | $ 9 | $ — | ||||
Commercial real estate, other | $ 181 | $ (9) | $ 18 | $ 178 | $ 93 | ||||
Commercial and industrial | 196 | (440) | 33 | (243) | 910 | ||||
Premium finance | 21 | 20 | 37 | 55 | 73 | ||||
Leases | 737 | 515 | 632 | 1,641 | 1,358 | ||||
Residential real estate | 23 | (10) | 132 | 25 | 460 | ||||
Home equity lines of credit | 32 | 55 | 5 | 106 | 17 | ||||
Consumer, indirect | 777 | 812 | 529 | 2,439 | 1,194 | ||||
Consumer, direct | 81 | 43 | 72 | 213 | 246 | ||||
Deposit account overdrafts | 270 | 210 | 230 | 635 | 788 | ||||
Total net charge-offs | $ 2,318 | $ 1,196 | $ 1,688 | $ 5,058 | $ 5,139 | ||||
Net charge-offs as a percent of average total loans (annualized) | 0.15 % | 0.09 % | 0.15 % | 0.13 % | 0.15 % | ||||
SUPPLEMENTAL INFORMATION (Unaudited) | |||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||
(Dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | ||||
Trust assets under administration and | $ 1,900,488 | $ 1,931,789 | $ 1,803,887 | $ 1,764,639 | $ 1,682,334 | ||||
Brokerage assets under administration and | 1,364,372 | 1,379,309 | 1,318,300 | 1,211,868 | 1,127,831 | ||||
Mortgage loans serviced for others | $ 366,996 | $ 375,882 | $ 384,005 | $ 392,364 | $ 400,736 | ||||
Employees (full-time equivalent) | 1,482 | 1,500 | 1,286 | 1,267 | 1,244 | ||||
CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST INCOME (Unaudited) | |||||||||||
Three Months Ended | |||||||||||
September 30, 2023 | June 30, 2023 | September 30, 2022 | |||||||||
(Dollars in thousands) | Average | Income/ Expense | Yield/ | Average | Income/ Expense | Yield/ | Average | Income/ Expense | Yield/ | ||
Assets | |||||||||||
Short-term investments | $ 62,609 | $ 801 | 5.08 % | $ 58,245 | $ 673 | 4.63 % | $ 159,522 | $ 847 | 2.11 % | ||
Investment securities (a)(b) | 1,819,248 | 14,150 | 3.11 % | 1,873,944 | 14,294 | 3.05 % | 1,685,134 | 9,009 | 2.13 % | ||
Loans (b)(c): | |||||||||||
Construction | 400,396 | 9,983 | 9.76 % | 358,732 | 6,491 | 7.16 % | 222,966 | 2,765 | 4.85 % | ||
Commercial real estate, other | 1,965,927 | 34,369 | 6.84 % | 1,735,466 | 28,240 | 6.44 % | 1,300,173 | 16,593 | 4.99 % | ||
Commercial and industrial | 1,128,420 | 22,568 | 7.83 % | 1,069,529 | 19,569 | 7.24 % | 865,436 | 11,140 | 5.04 % | ||
Premium finance | 179,390 | 3,565 | 7.78 % | 154,557 | 2,659 | 6.81 % | 162,057 | 1,949 | 4.71 % | ||
Leases | 384,606 | 11,508 | 11.71 % | 359,016 | 10,275 | 11.32 % | 307,459 | 9,628 | 12.25 % | ||
Residential real estate (d) | 952,863 | 11,879 | 4.99 % | 921,012 | 10,818 | 4.70 % | 869,444 | 9,439 | 4.34 % | ||
Home equity lines of credit | 201,973 | 4,012 | 7.88 % | 191,915 | 3,656 | 7.64 % | 173,032 | 2,217 | 5.08 % | ||
Consumer, indirect | 662,462 | 8,774 | 5.25 % | 651,669 | 7,942 | 4.89 % | 576,826 | 5,907 | 4.06 % | ||
Consumer, direct | 139,595 | 2,416 | 6.87 % | 123,899 | 2,246 | 7.27 % | 113,609 | 1,764 | 6.16 % | ||
Total loans and leases | 6,015,632 | 109,074 | 7.13 % | 5,565,795 | 91,896 | 6.55 % | 4,591,002 | 61,402 | 5.26 % | ||
Allowance for credit losses | (60,724) | (53,427) | (52,719) | ||||||||
Net loans and leases | 5,954,908 | 5,512,368 | 4,538,283 | ||||||||
Total earning assets | 7,836,765 | 124,025 | 6.23 % | 7,444,557 | 106,863 | 5.70 % | 6,382,939 | 71,258 | 4.40 % | ||
Goodwill and other intangible assets | 411,229 | 387,055 | 329,482 | ||||||||
Other assets | 558,415 | 511,271 | 411,687 | ||||||||
Total assets | |||||||||||
Liabilities and Equity | |||||||||||
Interest-bearing deposits: | |||||||||||
Savings accounts | $ 447 | 0.17 % | $ 583 | 0.21 % | $ 139 | 0.05 % | |||||
Governmental deposit accounts | 758,409 | 4,012 | 2.10 % | 693,725 | 2,330 | 1.35 % | 741,836 | 543 | 0.29 % | ||
Interest-bearing demand accounts | 1,198,100 | 520 | 0.17 % | 1,178,614 | 532 | 0.18 % | 1,158,970 | 190 | 0.07 % | ||
Money market deposit accounts | 717,765 | 2,943 | 1.63 % | 679,123 | 2,006 | 1.18 % | 623,144 | 292 | 0.19 % | ||
Retail certificates of deposit | 1,043,579 | 7,161 | 2.72 % | 825,155 | 4,209 | 2.05 % | 560,532 | 644 | 0.46 % | ||
Brokered deposits (e) | 631,410 | 7,399 | 4.65 % | 480,640 | 4,743 | 3.96 % | 86,524 | 508 | 2.33 % | ||
Total interest-bearing deposits | 5,407,869 | 22,482 | 1.65 % | 4,952,970 | 14,403 | 1.17 % | 4,250,586 | 2,316 | 0.22 % | ||
Short-term borrowings (e) | 458,462 | 5,169 | 4.48 % | 493,561 | 5,314 | 4.32 % | 202,765 | 393 | 0.77 % | ||
Long-term borrowings | 148,234 | 2,668 | 7.10 % | 132,091 | 1,847 | 5.56 % | 111,882 | 1,111 | 3.97 % | ||
Total borrowed funds | 606,696 | 7,837 | 5.12 % | 625,652 | 7,161 | 4.58 % | 314,647 | 1,504 | 1.91 % | ||
Total interest-bearing liabilities | 6,014,565 | 30,319 | 1.96 % | 5,578,622 | 21,564 | 1.55 % | 4,565,233 | 3,820 | 0.33 % | ||
Non-interest-bearing deposits | 1,627,231 | 1,637,671 | 1,655,888 | ||||||||
Accrued expenses and other liabilities | 159,755 | 175,152 | 105,128 | ||||||||
Total liabilities | 7,801,551 | 7,391,445 | 6,326,249 | ||||||||
Stockholders' equity | 1,004,858 | 951,438 | 797,859 | ||||||||
Total liabilities and stockholders' equity | |||||||||||
Net interest income/spread (b) | $ 93,706 | 4.27 % | $ 85,299 | 4.15 % | $ 67,438 | 4.07 % | |||||
Net interest margin (b) | 4.70 % | 4.54 % | 4.17 % | ||||||||
Nine Months Ended | |||||||
September 30, 2023 | September 30, 2022 | ||||||
(Dollars in thousands) | Average | Income/ Expense | Yield/ | Average | Income/ Expense | Yield/ | |
Assets | |||||||
Short-term investments | $ 52,379 | $ 1,862 | 4.75 % | $ 224,060 | $ 1,306 | 0.78 % | |
Investment securities (a)(b) | 1,827,261 | 40,791 | 2.98 % | 1,688,124 | 24,703 | 1.95 % | |
Loans (b)(c): | |||||||
Construction | 312,173 | 20,437 | 8.63 % | 219,478 | 7,136 | 4.29 % | |
Commercial real estate, other | 1,535,815 | 82,403 | 7.08 % | 1,338,375 | 46,974 | 4.63 % | |
Commercial and industrial | 981,382 | 56,747 | 7.63 % | 872,601 | 27,878 | 4.21 % | |
Premium finance | 160,729 | 8,374 | 6.87 % | 146,345 | 4,891 | 4.41 % | |
Leases | 362,222 | 31,426 | 11.44 % | 253,231 | 26,271 | 13.68 % | |
Residential real estate (d) | 898,531 | 32,414 | 4.81 % | 890,499 | 28,531 | 4.27 % | |
Home equity lines of credit | 183,993 | 10,634 | 7.73 % | 168,137 | 5,577 | 4.43 % | |
Consumer, indirect | 651,578 | 23,947 | 4.91 % | 547,438 | 16,195 | 3.96 % | |
Consumer, direct | 119,750 | 6,401 | 7.15 % | 110,509 | 5,006 | 6.06 % | |
Total loans and leases | 5,206,173 | 272,783 | 6.93 % | 4,546,613 | 168,459 | 4.91 % | |
Allowance for credit losses | (55,756) | (56,237) | |||||
Net loans and leases | 5,150,417 | 4,490,376 | |||||
Total earning assets | 7,030,057 | 315,436 | 5.94 % | 6,402,560 | 194,468 | 4.03 % | |
Goodwill and other intangible assets | 374,924 | 321,043 | |||||
Other assets | 496,497 | 380,376 | |||||
Total assets | $ 7,901,478 | $ 7,103,979 | |||||
Liabilities and Equity | |||||||
Interest-bearing deposits: | |||||||
Savings accounts | $ 1,040,157 | $ 1,166 | 0.15 % | $ 1,068,912 | $ 218 | 0.03 % | |
Governmental deposit accounts | 669,397 | 7,408 | 1.48 % | 705,891 | 1,462 | 0.28 % | |
Interest-bearing demand accounts | 1,117,529 | 1,232 | 0.15 % | 1,169,284 | 397 | 0.05 % | |
Money market deposit accounts | 634,271 | 5,774 | 1.22 % | 638,061 | 492 | 0.10 % | |
Retail certificates of deposit | 771,186 | 13,120 | 2.27 % | 596,335 | 2,262 | 0.51 % | |
Brokered deposits (e) | 451,719 | 13,846 | 4.10 % | 88,336 | 1,552 | 2.35 % | |
Total interest-bearing deposits | 4,684,259 | 42,546 | 1.21 % | 4,266,819 | 6,383 | 0.20 % | |
Short-term borrowings (e) | 477,826 | 14,940 | 4.18 % | 169,360 | 992 | 0.78 % | |
Long-term borrowings | 126,449 | 5,668 | 5.95 % | 131,129 | 3,148 | 3.20 % | |
Total borrowed funds | 604,275 | 20,608 | 4.55 % | 300,489 | 4,140 | 1.83 % | |
Total interest-bearing liabilities | 5,288,534 | 63,154 | 1.55 % | 4,567,308 | 10,523 | 0.31 % | |
Non-interest-bearing deposits | 1,562,923 | 1,637,053 | |||||
Accrued expenses and other liabilities | 130,023 | 91,749 | |||||
Total liabilities | 6,981,480 | 6,296,110 | |||||
Stockholders' equity | 919,998 | 807,869 | |||||
Total liabilities and stockholders' equity | $ 7,901,478 | $ 7,103,979 | |||||
Net interest income/spread (b) | $ 252,282 | 4.39 % | $ 183,945 | 3.72 % | |||
Net interest margin (b) | 4.74 % | 3.81 % | |||||
(a) | Average balances are based on carrying value. |
(b) | Interest income and yields are presented on a fully tax-equivalent basis, using a |
(c) | Average balances include nonaccrual and impaired loans. Interest income includes interest earned and received on nonaccrual loans prior to the loans being placed on nonaccrual status. Loan fees included in interest income were immaterial for all periods presented. |
(d) | Loans held for sale are included in the average loan balance listed. Related interest income on loans originated for sale prior to the loan being sold is included in loan interest income. |
(e) | Interest related to interest rate swap transactions is included, as appropriate to the transaction, in interest expense on brokered deposits and interest expense on short-term FHLB advances (included in short-term borrowings) for all periods presented. |
NON- | |||||||||
The following non- | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | ||||||
(Dollars in thousands) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||
Core non-interest expense: | |||||||||
Total non-interest expense | $ 71,696 | $ 70,623 | $ 52,253 | $ 198,798 | $ 153,781 | ||||
Less: acquisition-related expenses | 4,434 | 10,709 | 339 | 15,694 | 2,314 | ||||
Less: pension settlement charges | 2,424 | — | 139 | 2,424 | 139 | ||||
Less: COVID-19-related expenses | — | — | 9 | — | 132 | ||||
Add: COVID -19 Employee Retention Credit | — | 548 | — | 548 | — | ||||
Core non-interest expense | $ 64,838 | $ 60,462 | $ 51,766 | $ 181,228 | $ 151,196 | ||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | ||||||
(Dollars in thousands) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||
Efficiency ratio: | |||||||||
Total non-interest expense | 71,696 | $ 70,623 | 52,253 | 198,798 | 153,781 | ||||
Less: amortization of other intangible assets | 3,280 | 2,800 | 2,023 | 7,951 | 5,765 | ||||
Adjusted non-interest expense | $ 68,416 | $ 67,823 | $ 50,230 | $ 190,847 | $ 148,016 | ||||
Total non-interest income | $ 23,204 | $ 21,015 | $ 20,366 | $ 63,279 | $ 59,802 | ||||
Less: net (loss) gain on investment securities | (7) | (166) | 21 | (2,108) | 107 | ||||
Less: net loss on asset disposals and other transactions | (307) | (1,665) | (35) | (2,218) | (314) | ||||
Total non-interest income, excluding net gains and losses | $ 23,518 | $ 22,846 | $ 20,380 | $ 67,605 | $ 60,009 | ||||
Net interest income | $ 93,274 | $ 84,853 | $ 67,051 | $ 251,005 | $ 182,829 | ||||
Add: fully tax-equivalent adjustment (a) | 432 | 446 | 387 | 1,277 | 1,116 | ||||
Net interest income on a fully tax-equivalent basis | $ 93,706 | $ 85,299 | $ 67,438 | $ 252,282 | $ 183,945 | ||||
Adjusted revenue | $ 117,224 | $ 108,145 | $ 87,818 | $ 319,887 | $ 243,954 | ||||
Efficiency ratio | 58.36 % | 62.71 % | 57.20 % | 59.66 % | 60.67 % | ||||
Efficiency ratio adjusted for non-core items: | |||||||||
Core non-interest expense | $ 64,838 | $ 60,462 | $ 51,766 | $ 181,228 | $ 151,196 | ||||
Less: amortization of other intangible assets | 3,280 | 2,800 | 2,023 | 7,951 | 5,765 | ||||
Adjusted core non-interest expense | $ 61,558 | $ 57,662 | $ 49,743 | $ 173,277 | $ 145,431 | ||||
Adjusted revenue | $ 117,224 | $ 108,145 | $ 87,818 | $ 319,887 | $ 243,954 | ||||
Efficiency ratio adjusted for non-core items | 52.51 % | 53.32 % | 56.64 % | 54.17 % | 59.61 % | ||||
(a) | Tax effect is calculated using a |
NON-US GAAP FINANCIAL MEASURES (Unaudited) -- (Continued) | |||||
(Dollars in thousands, except per share data) | September 30, | June 30, | March 31, | December 31, | September 30, |
2023 | 2023 | 2023 | 2022 | 2022 | |
Tangible equity: | |||||
Total stockholders' equity | $ 993,219 | $ 998,907 | $ 819,543 | $ 785,328 | $ 760,511 |
Less: goodwill and other intangible assets | 408,494 | 413,172 | 324,562 | 326,329 | 328,428 |
Tangible equity | $ 584,725 | $ 585,735 | $ 494,981 | $ 458,999 | $ 432,083 |
Tangible assets: | |||||
Total assets | $ 8,942,534 | $ 8,786,635 | $ 7,311,520 | $ 7,207,304 | $ 7,005,854 |
Less: goodwill and other intangible assets | 408,494 | 413,172 | 324,562 | 326,329 | 328,428 |
Tangible assets | $ 8,534,040 | $ 8,373,463 | $ 6,986,958 | $ 6,880,975 | $ 6,677,426 |
Tangible book value per common share: | |||||
Tangible equity | $ 584,725 | $ 585,735 | $ 494,981 | $ 458,999 | $ 432,083 |
Common shares outstanding | 35,395,990 | 35,374,916 | 28,488,158 | 28,287,837 | 28,278,078 |
Tangible book value per common share | $ 16.52 | $ 16.56 | $ 17.37 | $ 16.23 | $ 15.28 |
Tangible equity to tangible assets ratio: | |||||
Tangible equity | $ 584,725 | $ 585,735 | $ 494,981 | $ 458,999 | $ 432,083 |
Tangible assets | $ 8,534,040 | $ 8,373,463 | $ 6,986,958 | $ 6,880,975 | $ 6,677,426 |
Tangible equity to tangible assets ratio | 6.85 % | 7.00 % | 7.08 % | 6.67 % | 6.47 % |
Three Months Ended | Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | ||||||
(Dollars in thousands, except per share data) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||
Pre-provision net revenue: | |||||||||
Income before income taxes | $ 40,729 | $ 27,262 | $ 33,388 | $ 101,597 | $ 94,661 | ||||
Add: provision for credit losses | 4,053 | 7,983 | 1,776 | 13,889 | 1,776 | ||||
Add: loss on OREO | 1 | 1,612 | 105 | 1,623 | 138 | ||||
Add: loss on investment securities | 7 | 166 | — | 2,108 | 44 | ||||
Add: loss on other assets | 283 | 45 | — | 557 | 142 | ||||
Add: net loss on other transactions | 23 | 8 | 24 | 38 | 128 | ||||
Less: recovery of credit losses | — | — | — | — | 7,587 | ||||
Less: gain on investment securities | — | — | 21 | — | 151 | ||||
Less: gain on other assets | — | — | 94 | — | 94 | ||||
Pre-provision net revenue | $ 45,096 | $ 37,076 | $ 35,178 | $ 119,812 | $ 89,057 | ||||
Total average assets | $ 8,806,409 | $ 8,342,883 | $ 7,124,108 | $ 7,901,478 | $ 7,103,979 | ||||
Pre-provision net revenue to total average assets | 2.03 % | 1.78 % | 1.96 % | 2.03 % | 1.68 % | ||||
Weighted-average common shares outstanding – diluted | 35,061,897 | 32,649,976 | 27,973,255 | 31,977,486 | 28,009,263 | ||||
Pre-provision net revenue per common share – diluted | |||||||||
NON-US GAAP FINANCIAL MEASURES (Unaudited) -- (Continued) | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | ||||||
(Dollars in thousands) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||
Annualized net income adjusted for non-core items: | |||||||||
Net income | $ 31,882 | $ 21,096 | $ 25,978 | $ 79,538 | $ 74,443 | ||||
Add: loss on investment securities | 7 | 166 | — | 2,108 | — | ||||
Less: tax effect of loss on investment securities (a) | 2 | 35 | — | 443 | — | ||||
Less: gain on investment securities | — | — | 21 | — | 107 | ||||
Add: tax effect of net gain on investment securities (a) | — | — | 4 | — | 22 | ||||
Add: net loss on asset disposals and other transactions | 307 | 1,665 | 35 | 2,218 | 314 | ||||
Less: tax effect of net loss on asset disposals and other transactions (a) | 65 | 349 | 7 | 466 | 66 | ||||
Add: acquisition-related expenses | 4,434 | 10,709 | 339 | 15,694 | 2,314 | ||||
Less: tax effect of acquisition-related expenses (a) | 931 | 2,249 | 71 | 3,296 | 486 | ||||
Add: pension settlement charges | 2,424 | — | 139 | 2,424 | 139 | ||||
Less: tax effect of pension settlement charges (a) | 509 | — | 29 | 509 | 29 | ||||
Add: COVID-19-related expenses | — | — | 9 | — | 132 | ||||
Less: tax effect of COVID-19-related expenses (a) | — | — | 2 | — | 28 | ||||
Less: COVID -19 Employee Retention Credit | — | 548 | — | 548 | — | ||||
Add: tax effect of COVID -19 Employee Retention Credit | — | 115 | — | 115 | — | ||||
Net income adjusted for non-core items (after tax) | $ 37,547 | $ 30,570 | $ 26,374 | $ 96,835 | $ 76,648 | ||||
Days in the period | 92 | 91 | 92 | 273 | 273 | ||||
Days in the year | 365 | 365 | 365 | 365 | 365 | ||||
Annualized net income | $ 126,488 | $ 84,616 | $ 103,065 | $ 106,342 | $ 99,530 | ||||
Annualized net income adjusted for non-core items (after tax) | $ 148,964 | $ 122,616 | $ 104,636 | $ 129,468 | $ 102,478 | ||||
Return on average assets: | |||||||||
Annualized net income | $ 126,488 | $ 84,616 | $ 103,065 | $ 106,342 | $ 99,530 | ||||
Total average assets | $ 8,806,409 | $ 8,342,883 | $ 7,124,108 | $ 7,901,478 | $ 7,103,979 | ||||
Return on average assets | 1.44 % | 1.01 % | 1.45 % | 1.35 % | 1.40 % | ||||
Return on average assets adjusted for non-core items: | |||||||||
Annualized net income adjusted for non-core items (after tax) | $ 148,964 | $ 122,616 | $ 104,636 | $ 129,468 | $ 102,478 | ||||
Total average assets | $ 8,806,409 | $ 8,342,883 | $ 7,124,108 | $ 7,901,478 | $ 7,103,979 | ||||
Return on average assets adjusted for non-core items | 1.69 % | 1.47 % | 1.47 % | 1.64 % | 1.44 % | ||||
(a) | Tax effect is calculated using a |
NON-US GAAP FINANCIAL MEASURES (Unaudited) -- (Continued) | ||||||||||
Three Months Ended | At or For the Nine Months Ended | |||||||||
September 30, | June 30, | September 30, | September 30, | |||||||
(Dollars in thousands) | 2023 | 2023 | 2022 | 2023 | 2022 | |||||
Annualized net income excluding amortization of other intangible assets: | ||||||||||
Net income | $ 31,882 | $ 21,096 | $ 25,978 | $ 79,538 | $ 74,443 | |||||
Add: amortization of other intangible assets | 3,280 | 2,800 | 2,023 | 7,951 | 5,765 | |||||
Less: tax effect of amortization of other intangible assets (a) | 689 | 588 | 425 | 1,670 | 1,211 | |||||
Net income excluding amortization of other intangible assets | $ 34,473 | $ 23,308 | $ 27,576 | $ 85,819 | $ 78,997 | |||||
Days in the period | 92 | 91 | 92 | 273 | 273 | |||||
Days in the year | 365 | 365 | 365 | 365 | 365 | |||||
Annualized net income | $ 126,488 | $ 84,616 | $ 103,065 | $ 106,342 | $ 99,530 | |||||
Annualized net income excluding amortization of other | $ 136,768 | $ 93,488 | $ 109,405 | $ 114,740 | $ 105,619 | |||||
Average tangible equity: | ||||||||||
Total average stockholders' equity | $ 1,004,858 | $ 951,438 | $ 797,859 | $ 919,998 | $ 807,869 | |||||
Less: average goodwill and other intangible assets | 411,229 | 387,055 | 329,482 | 374,924 | 321,043 | |||||
Average tangible equity | $ 593,629 | $ 564,383 | $ 468,377 | $ 545,074 | $ 486,826 | |||||
Return on total average stockholders' equity ratio: | ||||||||||
Annualized net income | $ 126,488 | $ 84,616 | $ 103,065 | $ 106,342 | $ 99,530 | |||||
Total average stockholders' equity | $ 1,004,858 | $ 951,438 | $ 797,859 | $ 919,998 | $ 807,869 | |||||
Return on total average stockholders' equity ratio | 12.59 % | 8.89 % | 12.92 % | 11.56 % | 12.32 % | |||||
Return on average tangible equity ratio: | ||||||||||
Annualized net income excluding amortization of other | $ 136,768 | $ 93,488 | $ 109,405 | $ 114,740 | $ 105,619 | |||||
Average tangible equity | $ 593,629 | $ 564,383 | $ 468,377 | $ 545,074 | $ 486,826 | |||||
Return on average tangible equity ratio | 23.04 % | 16.56 % | 23.36 % | 21.05 % | 21.70 % | |||||
(a) | Tax effect is calculated using a |
View original content:https://www.prnewswire.com/news-releases/peoples-bancorp-inc-announces-third-quarter-2023-results-and-record-net-income-301965113.html
SOURCE Peoples Bancorp Inc.
FAQ
What was the net income for Q3 2023?
What was the value of the Limestone Merger?
What impact did the provision for credit losses have on earnings per diluted common share?
What was the settlement charge for the termination of the pension plan?
What was the result of the sales of investment securities?
