Peoples Bancorp Announces Fourth Quarter and Annual Earnings Results
Back to Newsroom
Mentioned in this Article

Peoples Bancorp Announces Fourth Quarter and Annual Earnings Results

Monday, January 25, 2021 9:00 AM
Share this article now
Topic:
Earnings

NEWTON, NC / ACCESSWIRE / January 25, 2021 / Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK), the parent company of Peoples Bank, reported fourth quarter and year to date earnings results with highlights as follows:

Fourth quarter highlights:

  • Net earnings were $1.9 million or $0.33 basic and diluted net earnings per share for the three months ended December 31, 2020, as compared to $3.0 million or $0.50 basic and diluted net earnings per share for the same period one year ago.

Year to date highlights:

  • Net earnings were $11.4 million or $1.95 basic and diluted net earnings per share for the year ended December 31, 2020, as compared to $14.1 million or $2.37 basic net earnings per share and $2.36 diluted net earnings per share for the same period one year ago.
  • Total loans increased $98.7 million to $948.6 million at December 31, 2020, compared to $849.9 million at December 31, 2019.
  • The Bank originated 1,127 Small Business Administration (SBA) Paycheck Protection Program (PPP) loans, totaling $99.0 million, during the year ended December 31, 2020. The Bank has received $4.0 million in fees from the SBA for PPP loans originated as of December 31, 2020. The Bank has recognized $1.4 million PPP loan fee income as of December 31, 2020.
  • Core deposits were $1.2 billion or 97.89% of total deposits at December 31, 2020, compared to $932.2 million or 96.45% of total deposits at December 31, 2019.

Lance A. Sellers, President and Chief Executive Officer, attributed the decrease in fourth quarter net earnings to a decrease in net interest income, an increase in the provision for loan losses and an increase in non-interest expense, which were partially offset by an increase in non-interest expense during the three months ended December 31, 2020, compared to the three months ended December 31, 2019, as discussed below.

Net interest income was $11.3 million for the three months ended December 31, 2020, compared to $11.4 million for the three months ended December 31, 2019. The decrease in net interest income was primarily due to a $411,000 decrease in interest income, which was partially offset by a $284,000 decrease in interest expense. The decrease in interest income was primarily due to a $358,000 decrease in interest income on interest bearing cash resulting from the 1.50% reduction in the Fed Funds rate in March 2020. The decrease in interest expense was primarily due to a decrease in rates paid on interest-bearing liabilities. Net interest income after the provision for loan losses was $10.5 million for the three months ended December 31, 2020, compared to $11.2 million for the three months ended December 31, 2019. The provision for loan losses for the three months ended December 31, 2020 was $799,000, compared to $186,000 for the three months ended December 31, 2019. The increase in the provision for loan losses is primarily attributable to increases in the qualitative factors applied in the Company's Allowance for Loan and Lease Losses ("ALLL") model due to the impact to the economy from the COVID-19 pandemic and reserves on loans with payment modifications made in 2020 as a result of the COVID-19 pandemic. At December 31, 2020, the balance of loans with existing modifications as a result of COVID-19 was $18.3 million: the balance of loans under the terms of a first modification was $12.6 million, and the balance of outstanding loans under the terms of a second modification was $5.7 million. The Company continues to track all loans that are currently modified or have been modified under COVID-19. At December 31, 2020, the balance for all loans that are currently modified or were modified during 2020 but have returned to their original terms was $119.6 million. These loan balances associated with COVID-19 related modifications have been grouped into their own pool within the ALLL model as they have a higher likelihood of risk, and a higher reserve rate has been applied to that pool. Of all loans modified as a result of COVID-19, $101.3 million of these loans have returned to their original terms; however, the effects of stimulus in the current environment are still unknown, and additional losses may be currently present in loans that are currently modified and that were once modified.

Non-interest income was $5.9 million for the three months ended December 31, 2020, compared to $4.5 million for the three months ended December 31, 2019. The increase in non-interest income is primarily attributable to a $494,000 increase in gains on sale of securities, a $600,000 increase in appraisal management fee income due to an increase in the volume of appraisals and a $404,000 increase in mortgage banking income due to increased mortgage loan volume, which were partially offset by a $241,000 decrease in service charges and fees primarily due to service charge and fee concessions associated with the COVID-19 pandemic.

Non-interest expense was $14.1 million for the three months ended December 31, 2020, compared to $12.1 million for the three months ended December 31, 2019. The increase in non-interest expense was primarily attributable to a $863,000 increase in other non-interest expense and a $546,000 increase in appraisal management fee expense due to an increase in the volume of appraisals. The increase in other non-interest expense is primarily due to a $1.1 million FHLB ("Federal Home Loan Bank") borrowings prepayment penalty in December 2020.

Year-to-date net earnings as of December 31, 2020 were $11.4 million or $1.95 basic and diluted net earnings per share for the year ended December 31, 2020, as compared to $14.1 million or $2.37 basic net earnings per share and $2.36 diluted net earnings per share for the same period one year ago. The decrease in year-to-date net earnings is primarily attributable to a decrease in net interest income, an increase in the provision for loan losses and an increase in non-interest expense, which were partially offset by an increase in non-interest income, as discussed below.

Year-to-date net interest income as of December 31, 2020 was $44.1 million, compared to $45.8 million for the same period one year ago. The decrease in net interest income was primarily due to a $1.6 million decrease in interest income and a $79,000 increase in interest expense. The decrease in interest income was primarily due to a $987,000 decrease in interest income on loans resulting from the 1.50% reduction in the Prime Rate in March 2020. The increase in interest expense was primarily due to an increase in average outstanding balances of interest-bearing deposits, which was partially offset by a decrease in rates paid on interest-bearing liabilities. Net interest income after the provision for loan losses was $39.9 million for the year ended December 31, 2020, compared to $45.0 million for the same period one year ago. The provision for loan losses for the year ended December 31, 2020 was $4.3 million, compared to $863,000 for the year ended December 31, 2019. The increase in the provision for loan losses is primarily attributable to increases in the qualitative factors applied in the Company's ALLL model due to the impact to the economy from the COVID-19 pandemic and reserves on loans with payment modifications made in 2020 as a result of the COVID-19 pandemic.

Non-interest income was $22.9 million for the year ended December 31, 2020, compared to $17.7 million for the year ended December 31, 2019. The increase in non-interest income is primarily attributable to a $2.4 million increase in gains on sale of securities, a $2.3 million increase in appraisal management fee income due to an increase in the volume of appraisals and a $1.2 million increase in mortgage banking income due to increased mortgage loan volume, which were partially offset by a $1.0 million decrease in service charges and fees primarily due to service charge and fee concessions associated with the COVID-19 pandemic.

Non-interest expense was $48.9 million for the year ended December 31, 2020, compared to $45.5 million for the year ended December 31, 2019. The increase in non-interest expense was primarily attributable to a $1.9 million increase in appraisal management fee expense due to an increase in the volume of appraisals and a $692,000 increase in other non-interest expense. The increase in other non-interest expense is primarily due to a $1.1 million FHLB borrowings prepayment penalty in December 2020.

Income tax expense was $374,000 for the three months ended December 31, 2020, compared to $672,000 for the three months ended December 31, 2019. The effective tax rate was 16.30% for the three months ended December 31, 2020, compared to 18.47% for the three months ended December 31, 2019. Income tax expense was $2.5 million for the year ended December 31, 2020, compared to $3.1 million for the year ended December 31, 2019. The effective tax rate was 17.98% for the year ended December 31, 2020, compared to 18.23% for the year ended December 31, 2019.

Total assets were $1.4 billion as of December 31, 2020, compared to $1.2 billion at December 31, 2019. Available for sale securities were $245.2 million as of December 31, 2020, compared to $195.7 million as of December 31, 2019. Total loans were $948.6 million as of December 31, 2020, compared to $849.9 million as of December 31, 2019.

Non-performing assets were $3.9 million or 0.27% of total assets at December 31, 2020, compared to $3.6 million or 0.31% of total assets at December 31, 2019. Non-performing assets include $3.5 million in commercial and residential mortgage loans, $226,000 in other loans and $128,000 in other real estate owned at December 31, 2020, compared to $3.4 million in commercial and residential mortgage loans and $154,000 in other loans at December 31, 2019.

The allowance for loan losses at December 31, 2020 was $9.9 million or 1.04% of total loans, compared to $6.7 million or 0.79% of total loans at December 31, 2019. 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 $1.2 billion at December 31, 2020, compared to $966.5 million at December 31, 2019. Core deposits, which include noninterest-bearing demand deposits, NOW, MMDA, savings and non-brokered certificates of deposit of denominations less than $250,000, were $1.2 billion at December 31, 2020, compared to $932.2 million at December 31, 2019. Certificates of deposit in amounts of $250,000 or more totaled $25.8 million at December 31, 2020, compared to $34.3 million at December 31, 2019.

Securities sold under agreements to repurchase were $26.2 million at December 31, 2020, compared to $24.2 million at December 31, 2019.

Junior subordinated debentures were $15.5 million at December 31, 2020, compared to $15.6 million at December 31, 2019.

Shareholders' equity was $139.9 million, or 9.89% of total assets, at December 31, 2020, compared to $134.1 million, or 11.61% of total assets, at December 31, 2019. The Company repurchased 126,800 shares of its common stock during the year ended December 31, 2020 under the Company's stock repurchase program, which was funded in January 2020.

Peoples Bank currently operates 18 banking offices entirely in North Carolina, with offices in Catawba, Alexander, Lincoln, Mecklenburg, Iredell and Wake Counties. The Bank also operates loan production offices in Lincoln and Mecklenburg 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, 2019.

CONSOLIDATED BALANCE SHEETS
December 31, 2020 and 2019
(Dollars in thousands)

 
 
December 31,
2020
   
December 31,
2019
 
 
  (Unaudited)     (Audited)  
ASSETS:
           
Cash and due from banks
  $ 42,737     $ 48,337  
Interest-bearing deposits
    118,843       720  
Federal funds sold
    -       3,330  
Cash and cash equivalents
    161,580       52,387  
 
               
Investment securities available for sale
    245,249       195,746  
Other investments
    4,155       4,231  
Total securities
    249,404       199,977  
 
               
Mortgage loans held for sale
    9,139       4,417  
 
               
Loans
    948,639       849,874  
Less: Allowance for loan losses
    (9,908)       (6,680 )
Net loans
    938,731       843,194  
 
               
Premises and equipment, net
    18,600       18,604  
Cash surrender value of life insurance
    16,968       16,319  
Accrued interest receivable and other assets
    20,433       19,984  
Total assets
  $ 1,414,855     $ 1,154,882  
 
               
 
               
LIABILITIES AND SHAREHOLDERS' EQUITY:
               
Deposits:
               
Noninterest-bearing demand
  $ 456,980     $ 338,004  
NOW, MMDA & savings
    657,834       516,757  
Time, $250,000 or more
    25,771       34,269  
Other time
    80,501       77,487  
Total deposits
    1,221,086       966,517  
 
               
Securities sold under agreements to repurchase
    26,201       24,221  
FHLB borrowings
    -       -  
Junior subordinated debentures
    15,464       15,619  
Accrued interest payable and other liabilities
    12,205       14,405  
Total liabilities
    1,274,956       1,020,762  
 
               
Shareholders' equity:
               
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
               
5,787,504 shares 12/31/20 and
               
5,912,300 shares 12/31/19
    56,871       59,813  
Retained earnings
    77,628       70,663  
Accumulated other comprehensive income
    5,400       3,644  
Total shareholders' equity
    139,899       134,120  
 
               
Total liabilities and shareholders' equity
  $ 1,414,855     $ 1,154,882  


CONSOLIDATED STATEMENTS OF INCOME
For the three months and years ended December 31, 2020 and 2019
(Dollars in thousands, except per share amounts)

 
  Three months ended     Years ended  
 
  December 31,     December 31,  
 
  2020     2019     2020     2019  
 
  (Unaudited)     (Unaudited)     (Unaudited)     (Audited)  
INTEREST INCOME:
                       
Interest and fees on loans
  10,947     10,784     42,314     43,301  
Interest on due from banks
    24       77       127       213  
Interest on federal funds sold
    26       331       204       331  
Interest on investment securities:
                               
U.S. Government sponsored enterprises
    497       728       2,361       2,670  
State and political subdivisions
    649       650       2,691       2,915  
Other
    59       43       261       171  
Total interest income
    12,202       12,613       47,958       49,601  
 
                               
INTEREST EXPENSE:
                               
NOW, MMDA & savings deposits
    507       539       1,962       1,596  
Time deposits
    222       328       947       909  
FHLB borrowings
    88       135       357       205  
Junior subordinated debentures
    74       188       370       844  
Other
    50       35       200       203  
Total interest expense
    941       1,225       3,836       3,757  
 
                               
NET INTEREST INCOME
    11,261       11,388       44,122       45,844  
PROVISION FOR LOAN LOSSES
    799       186       4,259       863  
NET INTEREST INCOME AFTER
                               
PROVISION FOR LOAN LOSSES
    10,462       11,202       39,863       44,981  
 
                               
NON-INTEREST INCOME:
                               
Service charges
    893       1,167       3,528       4,576  
Other service charges and fees
    199       166       742       714  
Gain on sale of securities
    494       -       2,639       226  
Mortgage banking income
    834       430       2,469       1,264  
Insurance and brokerage commissions
    250       235       897       877  
Appraisal management fee income
    1,799       1,199       6,754       4,484  
Miscellaneous
    1,479       1,329       5,885       5,598  
Total non-interest income
    5,948       4,526       22,914       17,739  
 
                               
NON-INTEREST EXPENSES:
                               
Salaries and employee benefits
    6,542       6,178       23,538       23,238  
Occupancy
    2,208       1,955       7,933       7,364  
Appraisal management fee expense
    1,429       883       5,274       3,421  
Other
    3,937       3,074       12,186       11,494  
Total non-interest expense
    14,116       12,090       48,931       45,517  
 
                               
EARNINGS BEFORE INCOME TAXES
    2,294       3,638       13,846       17,203  
INCOME TAXES
    374       672       2,489       3,136  
 
                               
NET EARNINGS
  1,920     2,966     11,357     14,067  
 
                               
PER SHARE AMOUNTS
                               
Basic net earnings
  0.33     0.50     1.95     2.37  
Diluted net earnings
  0.33     0.50     1.95     2.36  
Cash dividends
  0.15     0.14     0.75     0.66  
Book value
  24.17     22.68     24.17     22.68  


FINANCIAL HIGHLIGHTS
For the three months and years ended December 31, 2020 and 2019
(Dollars in thousands)

 
 
Three months ended
 
 
Years ended
 
 
 
December 31,
 
 
December 31,
 
 
 
2020
 
 
2019
 
 
2020
 
 
2019
 
 
 
(Unaudited)
 
 
(Unaudited)
 
 
(Unaudited)
 
 
(Audited)
 
SELECTED AVERAGE BALANCES:
 
 
 
 
 
 
 
 
 
 
 
 
Available for sale securities
 
$
219,021
 
 
$
185,880
 
 
$
200,821
 
 
$
185,302
 
Loans
 
 
963,691
 
 
 
849,745
 
 
 
935,970
 
 
 
834,517
 
Earning assets
 
 
1,379,293
 
 
 
1,136,318
 
 
 
1,271,765
 
 
 
1,055,730
 
Assets
 
 
1,465,094
 
 
 
1,225,963
 
 
 
1,365,642
 
 
 
1,143,338
 
Deposits
 
 
1,210,109
 
 
 
980,795
 
 
 
1,115,017
 
 
 
932,646
 
Shareholders' equity
 
 
138,831
 
 
 
133,630
 
 
 
141,286
 
 
 
134,669
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SELECTED KEY DATA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin (tax equivalent)
 
 
3.29%
 
 
 
4.04%
 
 
 
3.52%
 
 
 
4.42%
 
Return on average assets
 
 
0.52%
 
 
 
0.96%
 
 
 
0.83%
 
 
 
1.23%
 
Return on average shareholders' equity
 
 
5.50%
 
 
 
8.81%
 
 
 
8.04%
 
 
 
10.45%
 
Shareholders' equity to total assets (period end)
 
 
9.89%
 
 
 
11.61%
 
 
 
9.89%
 
 
 
11.61%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ALLOWANCE FOR LOAN LOSSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of period
 
$
9,892
 
 
$
6,578
 
 
$
6,680
 
 
$
6,445
 
Provision for loan losses
 
 
799
 
 
 
186
 
 
 
4,259
 
 
 
863
 
Charge-offs
 
 
(885)
 
 
 
(166)
 
 
 
(1,414)
 
 
 
(1,076)
 
Recoveries
 
 
102
 
 
 
82
 
 
 
383
 
 
 
448
 
Balance, end of period
 
$
9,908
 
 
$
6,680
 
 
$
9,908
 
 
$
6,680
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSET QUALITY:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-accrual loans
 
 
 
 
 
 
 
 
 
$
3,758
 
 
$
3,553
 
90 days past due and still accruing
 
 
 
 
 
 
 
 
 
 
-
 
 
 
-
 
Other real estate owned
 
 
 
 
 
 
 
 
 
 
128
 
 
 
-
 
Total non-performing assets
 
 
 
 
 
 
 
 
 
$
3,886
 
 
$
3,553
 
Non-performing assets to total assets
 
 
 
 
 
 
 
 
 
 
0.27%
 
 
 
0.31%
 
Loans modifications related to COVID-19
 
 
 
 
 
 
 
 
 
$
18,246
 
 
$
-
 
Allowance for loan losses to non-performing assets
 
 
 
 
 
 
 
 
 
 
254.97%
 
 
 
188.01%
 
Allowance for loan losses to total loans
 
 
 
 
 
 
 
 
 
 
1.04%
 
 
 
0.79%
 


LOAN RISK GRADE ANALYSIS:

 
 
Percentage of Loans
 
 
 
By Risk Grade
 
 
 
12/31/2020
 
12/31/2019
 
Risk Grade 1 (excellent quality)
 
 
1.18%
 
 
1.16%
 
Risk Grade 2 (high quality)
 
 
20.45%
 
 
24.46%
 
Risk Grade 3 (good quality)
 
 
65.70%
 
 
62.15%
 
Risk Grade 4 (management attention)
 
 
9.75%
 
 
10.02%
 
Risk Grade 5 (watch)
 
 
2.20%
 
 
1.45%
 
Risk Grade 6 (substandard)
 
 
0.72%
 
 
0.76%
 
Risk Grade 7 (doubtful)
 
 
0.00%
 
 
0.00%
 
Risk Grade 8 (loss)
 
 
0.00%
 
 
0.00%
 

At December 31, 2020, including non-accrual loans, there were three relationships exceeding $1.0 million in the Watch risk grade (which totaled $7.9 million). There were no relationships exceeding $1.0 million in the Substandard risk grade.

CONTACT:
Lance A. Sellers
President and Chief Executive Officer

Jeffrey N. Hooper
Executive Vice President and Chief Financial Officer

828-464-5620, Fax 828-465-6780

SOURCE: Peoples Bancorp of North Carolina, Inc.

Peoples Bancorp of North Carolina, Inc.
Back to Newsroom
Copyright 2021 © ACCESSWIRE. All rights reserved. Privacy Policy  |   Terms and Conditions