Peoples Bancorp Of North Carolina Inc 8-K, filed Jan 23, 2020
Peoples Bancorp Of North Carolina Inc (PEBK)
8-K
2020-01-23
For: 2020-01-16
View Original
Added on
April 12, 2026
About this 8-K
Peoples Bancorp Of North Carolina Inc filed this 8-K on January 23, 2020, reporting on events of January 16, 2020.
Items reported
- Item 2.02: Financial results
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO SECTION 13 OR 15(D)
OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported): January 16, 2020
Peoples
Bancorp of North Carolina, Inc.
(Exact Name of
Registrant as Specified in Its Charter)
North
Carolina
(State or Other
Jurisdiction of Incorporation)
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000-27205
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56-2132396
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(Commission File
No.)
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(IRS Employer Identification No.) |
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518 West C Street, Newton, North Carolina
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28658
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(828) 464-5620
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(Registrant’s
Telephone Number, Including Area Code)
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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
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☐
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
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☐
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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☐
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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☐
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Peoples
Bancorp of North Carolina, Inc.
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INDEX
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Page
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Item
2.02 – Results of Operations and Financial
Condition
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3
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Item 8.01 – Other Events
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3
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Item
9.01 – Financial Statements and Exhibits
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3
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Signatures
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4
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Exhibit (99)(a) Press Release dated January 23,
2020
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5
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Item 2.02. Results of Operations and Financial
Condition
On
January 23, 2020, Peoples Bancorp of North Carolina, Inc. issued a
press release announcing fourth quarter and annual 2019 earnings
results.
A copy
of the press release is attached hereto as Exhibit (99)(a) and is
incorporated by reference herein.
Item 8.01. Other Events
On
January 16, 2020, the Board of Directors of Peoples Bancorp of
North Carolina, Inc. declared a special cash dividend in the amount
of $0.15 per share. The special cash dividend will be paid on
February 14, 2020 to shareholders of record on February 3,
2020.
The
special cash dividend was announced in a press release attached
hereto as Exhibit (99)(a) and is incorporated by reference
herein.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
(99)(a) Press Release dated January 23,
2020
Disclosure about forward-looking statements
Statements made in
this Form 8-K, 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 report
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 might cause such a
difference include, but are not limited to, changes in interest
rate environment, management’s business strategy, national,
regional, and local market conditions and legislative and
regulatory conditions.
The
Company undertakes no obligation to publicly revise these
forward-looking statements to reflect subsequent events or
circumstances. Readers should also carefully review the risk
factors described in other documents the Company files from time to
time with the Securities and Exchange Commission.
3
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SIGNATURES
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Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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PEOPLES
BANCORP OF NORTH CAROLINA, INC.
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Date:
January 23, 2020
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By:
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/s/ A.
Joseph Lampron, Jr.
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A.
Joseph Lampron, Jr.
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Executive
Vice President and Chief Financial Officer
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4
EXHIBIT (99)(a)
NEWS RELEASE
January
23, 2020
Contact:
Lance
A. Sellers
President
and Chief Executive Officer
A.
Joseph Lampron, Jr.
Executive
Vice President and Chief Financial Officer
828-464-5620,
Fax 828-465-6780
For Immediate Release
PEOPLES BANCORP ANNOUNCES FOURTH QUARTER EARNINGS RESULTS, ANNUAL
EARNINGS RESULTS AND A SPECIAL CASH DIVIDEND
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
$3.0 million or $0.50 basic and diluted net earnings per share for
the three months ended December 31, 2019, as compared to $3.4
million or $0.57 basic and diluted net earnings per share for the
same period one year ago.
●
The Company
redeemed $5.0 million of outstanding trust preferred securities in
December 2019.
Year to date highlights:
●
Net earnings were a
record $14.1 million or $2.37 basic net earnings per share and
$2.36 diluted net earnings per share for the year ended December
31, 2019, as compared to $13.4 million or $2.23 basic net earnings
per share and $2.22 diluted net earnings per share for the same
period one year ago.
●
Total loans
increased $45.9 million to $849.9 million at December 31, 2019,
compared to $804.0 million at December 31, 2018.
●
Core deposits were
$932.2 million or 96.45% of total deposits at December 31, 2019,
compared to $859.2 million or 97.95% of total deposits at December
31, 2018.
Lance
A. Sellers, President and Chief Executive Officer, attributed the
decrease in fourth quarter net earnings to an increase in
non-interest expense, which was partially offset by an increase in
net interest income and a decrease in the provision for loan losses
during the three months ended December 31, 2019, compared to the
three months ended December 31, 2018, as discussed
below.
Net
interest income was $11.4 million for the three months ended
December 31, 2019, compared to $11.3 million for the three months
ended December 31, 2018. The increase in net interest income was
primarily due to a $689,000 increase in interest income, which was
partially offset by a $616,000 increase in interest expense. The
increase in interest income was primarily attributable to an
increase in the average outstanding balance of loans, compared to the same period last
year. The increase in interest expense was primarily due to an
increase in interest rates on deposits. Net interest income after
the provision for loan losses was $11.2 million for the three
months ended December 31, 2019, compared to $10.9 million for the
three months ended December 31, 2018. The provision for loan losses
for the three months ended December 31, 2019 was $186,000, compared to $418,000 for
the three months ended December 31, 2018. The decrease in the
provision for loan losses is primarily attributable to a reduction
in the required level of the allowance for loan losses resulting
from lower historical loss rates used to calculate the reserve in
accordance with Accounting Standards Codification
450-20.
Non-interest income
was $4.5 million for the three months ended December 31, 2019 and
2018.
Non-interest
expense was $12.1 million for the three months ended December 31,
2019, compared to $11.3 million for the three months ended December
31, 2018. The increase in non-interest expense was primarily
attributable to a $514,000 increase in salaries and benefits
expense and a $296,000 increase in appraisal management fee
expense. The increase in salaries and benefits expense was
primarily attributable to an increase in salary expense primarily
due to annual salary increases, an increase in insurance costs and
an increase in commission expense primarily due to an increase in
mortgage loan production. The increase in appraisal management fee
expense was primarily due to an increase in the volume of
appraisals.
Year-to-date net
earnings as of December 31, 2019 were $14.1 million or $2.37 basic
net earnings per share and $2.36 diluted net earnings per share for
the year ended December 31, 2019, as compared to $13.4 million or
$2.23 basic net earnings per share and $2.22 diluted net earnings
per share for the same period one year ago. The increase in
year-to-date net earnings is primarily attributable to an increase
in net interest income and an increase in non-interest income,
which were partially offset by an increase in the provision for
loan losses and an increase in non-interest expense, as discussed
below.
Year-to-date net
interest income as of December 31, 2019 was $45.8 million, compared
to $43.2 million for the same period one year ago. The increase in
net interest income was primarily due to a $4.3 million increase in
interest income, which was partially offset by a $1.6 million
increase in interest expense. The increase in interest income was
primarily attributable to an increase in the average outstanding
balance of loans and a higher average prime rate during the year
ended December 31, 2019, compared to the same period last year. The
increase in interest expense was primarily due to an increase in
interest rates on deposits. Net interest income after the provision
for loan losses was $45.0 million for the year ended December 31,
2019, compared to $42.4 million for the same period one year ago.
The provision for loan losses for the year ended December 31, 2019
was $863,000, compared to $790,000 for the year ended December 31,
2018. The increase in the provision for loan losses is primarily
attributable to a $45.9 million increase in loans from December 31,
2018 to December 31, 2019.
Non-interest income
was $17.7 million for the year ended December 31, 2019, compared to
$16.2 million for the year ended December 31, 2018. The increase in
non-interest income is primarily attributable to a $1.3 million
increase in appraisal management fee income due to an increase in
the volume of appraisals and a $413,000 increase in mortgage
banking income due to an increase in mortgage loan
volume.
Non-interest
expense was $45.5 million for the year ended December 31, 2019,
compared to $42.6 million for the year ended December 31, 2018. The
increase in non-interest expense was primarily due to a $1.7
million increase in salaries and benefits expense and a $961,000
increase in appraisal management fee expense. The increase in
salaries and benefits expense was primarily attributable to an
increase in salary expense primarily due to annual salary
increases, an increase in incentive compensation expense, an
increase in insurance costs and an increase in commission expense
primarily due to an increase in mortgage loan production. The
increase in appraisal management fee expense was primarily due to
an increase in the volume of appraisals.
Income
tax expense was $672,000 for the three months ended December 31,
2019, compared to $690,000 for the three months ended December 31,
2018. The effective tax rate was 18.47% for the three months ended
December 31, 2019, compared to 16.72% for the three months ended
December 31, 2018. Income tax expense was $3.1 million for the year
ended December 31, 2019, compared to $2.6 million for the year
ended December 31, 2018. The effective tax rate was 18.23% for the
year ended December 31, 2019, compared to 16.39% for the year ended
December 31, 2018.
Total
assets were $1.2 billion as of December 31, 2019, compared to $1.1
billion at December 31, 2018. Available for sale securities were
$195.7 million as of December 31, 2019, compared to $194.6 million
as of December 31, 2018. Total loans were $849.9 million as of
December 31, 2019, compared to $804.0 million as of December 31,
2018.
Non-performing
assets were $3.6 million or 0.31% of total assets at December 31,
2019, compared to $3.3 million or 0.31% of total assets at December
31, 2018. Non-performing assets include $3.4 million in commercial
and residential mortgage loans and $154,000 in other loans at
December 31, 2019, compared to $3.2 million in commercial and
residential mortgage loans, $1,000 in acquisition, development and
construction loans, $99,000 in other loans and $27,000 in other
real estate owned at December 31, 2018.
The
allowance for loan losses at December 31, 2019 was $6.7 million or
0.79% of total loans, compared to $6.4 million or 0.80% of total
loans at December 31, 2018. 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
$966.5 million at December 31, 2019, compared to $877.2 million at
December 31, 2018. Core deposits, which include noninterest-bearing
demand deposits, NOW, MMDA, savings and non-brokered certificates
of deposit of denominations less than $250,000, were $932.2 million
at December 31, 2019, compared to $859.2 million at December 31,
2018. Certificates of deposit in amounts of $250,000 or more
totaled $34.3 million at December 31, 2019, compared to $16.2
million at December 31, 2018. The increase in certificates of
deposit in amounts of $250,000 or more is primarily attributable to
an $18.9 million increase in wholesale certificates of
deposit from December 31,
2018 to December 31, 2019.
Securities sold
under agreements to repurchase were $24.2 million at December 31,
2019, compared to $58.1 million at December 31, 2018. The decrease
in securities sold under agreements to repurchase is primarily due
to approximately $21.0 million transferred from securities sold
under agreements to repurchase to MMDA during the third quarter of
2019.
Junior
subordinated debentures were $15.6 million at December 31, 2019,
compared to $20.6 million at December 31, 2018. The decrease in
junior subordinated debentures is the result of a $5.0 million
redemption of the Company’s outstanding trust preferred
securities during the fourth quarter of 2019.
Shareholders’
equity was $134.1 million, or 11.59% of total assets, at December
31, 2019, compared to $123.6 million, or 11.31% of total assets, at
December 31, 2018. The Company repurchased 90,354 shares of its
common stock during the year ended December 31, 2019 under the
Company’s stock repurchase program, which was funded in
February 2019.
The
Company’s Board of Directors declared a special cash dividend
in the amount of $0.15 per share at their most recent meeting. The
special cash dividend will be paid on February 14, 2020 to
shareholders of record on February 3, 2020. Shareholders are encouraged to
enroll in the Company’s Dividend Reinvestment and Stock
Purchase Plan. For details, contact Krissy Price at (828) 464-5620
or (800) 948-7195 or you may email any questions to our transfer
agent, Broadridge Corporate Issuer Solutions, Inc. at
shareholder@broadridge.com.
Peoples
Bank currently operates 20 banking offices entirely in North
Carolina, with offices in Catawba, Alexander, Lincoln, Mecklenburg,
Iredell and Wake Counties. Peoples Bank also operates loan
production offices in Lincoln, Mecklenburg and Durham 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, 2018.
CONSOLIDATED BALANCE SHEETS
December
31, 2019 and 2018
(Dollars
in thousands)
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December 31,
2019
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December
31,
2018
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(Unaudited)
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(Audited)
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ASSETS:
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Cash
and due from banks
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$48,337
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$40,553
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Interest-bearing
deposits
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720
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2,817
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Federal
funds sold
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3,330
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-
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Cash
and cash equivalents
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52,387
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43,370
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Investment
securities available for sale
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195,746
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194,578
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Other
investments
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4,231
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4,361
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Total
securities
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199,977
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198,939
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Mortgage
loans held for sale
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4,417
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680
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Loans
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849,874
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804,023
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Less:
Allowance for loan losses
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(6,680)
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(6,445)
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Net
loans
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843,194
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797,578
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Premises
and equipment, net
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18,604
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18,450
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Cash
surrender value of life insurance
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16,319
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15,936
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Accrued
interest receivable and other assets
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19,984
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18,298
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Total
assets
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$1,154,882
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$1,093,251
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LIABILITIES AND SHAREHOLDERS' EQUITY:
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Deposits:
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Noninterest-bearing
demand
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$338,004
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$298,817
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NOW,
MMDA & savings
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516,757
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475,223
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Time,
$250,000 or more
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34,269
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16,239
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Other
time
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77,487
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86,934
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Total
deposits
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966,517
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877,213
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Securities
sold under agreements to repurchase
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24,221
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58,095
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FHLB
borrowings
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-
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-
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Junior
subordinated debentures
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15,619
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20,619
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Accrued
interest payable and other liabilities
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14,405
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13,707
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Total
liabilities
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1,020,762
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969,634
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Shareholders'
equity:
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Series
A preferred stock, $1,000 stated value; authorized
5,000,000
shares; no shares issued and outstanding
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-
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-
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Common
stock, no par value; authorized 20,000,000
shares; issued and outstanding 5,912,300
shares 12/31/19 and 5,995,256
shares 12/31/18
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59,813
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62,096
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Retained
earnings
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70,663
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60,535
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Accumulated
other comprehensive income
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3,644
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986
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Total
shareholders' equity
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134,120
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123,617
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Total
liabilities and shareholders' equity
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$1,154,882
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$1,093,251
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CONSOLIDATED STATEMENTS OF INCOME
For
the three months and years ended December 31, 2019 and
2018
(Dollars
in thousands, except per share amounts)
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Three months ended
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Years ended
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December 31,
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December 31,
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2019
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2018
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2019
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2018
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(Unaudited)
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(Unaudited)
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(Unaudited)
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(Audited)
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INTEREST INCOME:
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Interest
and fees on loans
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$10,784
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$10,292
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$43,301
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$38,654
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Interest
on due from banks
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77
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49
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213
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304
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Interest
on federal funds sold
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331
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-
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331
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-
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Interest
on investment securities:
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U.S.
Government sponsored enterprises
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728
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612
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2,670
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2,333
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State
and political subdivisions
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650
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927
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2,915
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3,877
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Other
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43
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44
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171
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182
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Total
interest income
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12,613
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11,924
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49,601
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45,350
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INTEREST EXPENSE:
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NOW,
MMDA & savings deposits
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539
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218
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1,596
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769
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Time
deposits
|
328
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130
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909
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472
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FHLB
borrowings
|
135
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-
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205
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-
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Junior
subordinated debentures
|
188
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212
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844
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790
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Other
|
35
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49
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203
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115
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Total
interest expense
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1,225
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609
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3,757
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2,146
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NET INTEREST INCOME
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11,388
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11,315
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45,844
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43,204
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PROVISION FOR (REDUCTION OF PROVISION
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FOR) LOAN LOSSES
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186
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418
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863
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790
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NET INTEREST INCOME AFTER
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PROVISION FOR LOAN LOSSES
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11,202
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10,897
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44,981
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42,414
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NON-INTEREST INCOME:
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Service
charges
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1,167
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1,192
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4,576
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4,355
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Other
service charges and fees
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166
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177
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714
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705
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Gain
on sale of securities
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-
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(35)
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226
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15
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Mortgage
banking income
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430
|
179
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1,264
|
851
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Insurance
and brokerage commissions
|
235
|
233
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877
|
824
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Appraisal
management fee income
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1,199
|
764
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4,484
|
3,206
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Miscellaneous
|
1,329
|
1,989
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5,598
|
6,210
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Total
non-interest income
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4,526
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4,499
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17,739
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16,166
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NON-INTEREST EXPENSES:
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Salaries
and employee benefits
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6,178
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5,664
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23,238
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21,530
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Occupancy
|
1,955
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1,803
|
7,364
|
7,170
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|
Appraisal
management fee expense
|
883
|
587
|
3,421
|
2,460
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Other
|
3,074
|
3,216
|
11,494
|
11,414
|
|
Total
non-interest expense
|
12,090
|
11,270
|
45,517
|
42,574
|
|
|
|
|
|
|
|
EARNINGS
BEFORE INCOME TAXES
|
3,638
|
4,126
|
17,203
|
16,006
|
|
INCOME
TAXES
|
672
|
690
|
3,136
|
2,624
|
|
|
|
|
|
|
|
NET EARNINGS
|
$2,966
|
$3,436
|
$14,067
|
$13,382
|
|
|
|
|
|
|
|
PER SHARE AMOUNTS
|
|
|
|
|
|
Basic
net earnings
|
$0.50
|
$0.57
|
$2.37
|
$2.23
|
|
Diluted
net earnings
|
$0.50
|
$0.57
|
$2.36
|
$2.22
|
|
Cash
dividends
|
$0.14
|
$0.13
|
$0.66
|
$0.52
|
|
Book
value
|
$22.68
|
$20.62
|
$22.68
|
$20.62
|
FINANCIAL HIGHLIGHTS
For
the three months and years ended December 31, 2019 and
2018
(Dollars
in thousands)
|
|
Three months ended
|
Years ended
|
||
|
|
December 31,
|
December 31,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
SELECTED AVERAGE BALANCES:
|
|
|
|
|
|
Available
for sale securities
|
$185,880
|
$202,385
|
$185,302
|
$209,742
|
|
Loans
|
849,745
|
792,373
|
834,517
|
777,098
|
|
Earning
assets
|
1,136,318
|
1,008,381
|
1,055,730
|
1,007,485
|
|
Assets
|
1,225,963
|
1,093,082
|
1,143,338
|
1,094,707
|
|
Deposits
|
980,795
|
888,713
|
932,646
|
903,120
|
|
Shareholders'
equity
|
133,630
|
121,194
|
134,669
|
123,796
|
|
|
|
|
|
|
|
SELECTED KEY DATA:
|
|
|
|
|
|
Net
interest margin (tax equivalent)
|
4.04%
|
4.55%
|
4.42%
|
4.39%
|
|
Return
on average assets
|
0.96%
|
1.25%
|
1.23%
|
1.22%
|
|
Return
on average shareholders' equity
|
8.81%
|
11.25%
|
10.45%
|
10.81%
|
|
Shareholders'
equity to total assets (period end)
|
11.61%
|
11.31%
|
11.61%
|
11.31%
|
|
|
|
|
|
|
|
ALLOWANCE FOR LOAN LOSSES:
|
|
|
|
|
|
Balance,
beginning of period
|
$6,578
|
$6,295
|
$6,445
|
$6,366
|
|
Provision
for loan losses
|
186
|
418
|
863
|
790
|
|
Charge-offs
|
(166)
|
(367)
|
(1,076)
|
(1,133)
|
|
Recoveries
|
82
|
99
|
448
|
422
|
|
Balance,
end of period
|
$6,680
|
$6,445
|
$6,680
|
$6,445
|
|
|
|
|
|
|
|
ASSET QUALITY:
|
|
|
|
|
|
Non-accrual
loans
|
|
|
$3,553
|
$3,314
|
|
90
days past due and still accruing
|
|
|
-
|
-
|
|
Other
real estate owned
|
|
|
-
|
27
|
|
Total
non-performing assets
|
|
|
$3,553
|
$3,341
|
|
Non-performing
assets to total assets
|
|
|
0.31%
|
0.31%
|
|
Allowance
for loan losses to non-performing assets
|
|
|
188.01%
|
192.91%
|
|
Allowance
for loan losses to total loans
|
|
|
0.79%
|
0.80%
|
LOAN RISK GRADE ANALYSIS:
|
|
Percentage of Loans
|
|
|
|
By Risk Grade
|
|
|
|
12/31/2019
|
12/31/2018
|
|
Risk
Grade 1 (excellent quality)
|
0.59%
|
0.73%
|
|
Risk
Grade 2 (high quality)
|
24.45%
|
25.47%
|
|
Risk
Grade 3 (good quality)
|
62.73%
|
61.05%
|
|
Risk
Grade 4 (management attention)
|
10.02%
|
10.19%
|
|
Risk
Grade 5 (watch)
|
1.45%
|
1.72%
|
|
Risk
Grade 6 (substandard)
|
0.76%
|
0.84%
|
|
Risk
Grade 7 (doubtful)
|
0.00%
|
0.00%
|
|
Risk
Grade 8 (loss)
|
0.00%
|
0.00%
|
At December 31, 2019, including non-accrual loans, there were two
relationships exceeding $1.0 million in the Watch risk grade (which
totaled $3.1 million). There were no relationships exceeding $1.0
million in the Substandard risk grade.
(END)