Peoples Bancorp Of North Carolina Inc 8-K, filed Apr 19, 2021
Peoples Bancorp Of North Carolina Inc (PEBK)
8-K
2021-04-19
For: 2021-04-19
View Original
Added on
April 12, 2026
About this 8-K
Peoples Bancorp Of North Carolina Inc filed this 8-K on April 19, 2021.
Items reported
- Item 2.02: Financial results
- 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): April 19, 2021
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
(Registrant’s
Telephone Number, Including Area Code)
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:
☐
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
☐
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
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 April 19, 2021
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5
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Item 2.02. Results of Operations and Financial
Condition
On
April 19, 2021, Peoples Bancorp of North Carolina, Inc. issued a
press release announcing first quarter 2021 earnings
results.
A copy
of the press release is 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 April 19,
2021
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.
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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:
April 19, 2021
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By:
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/s/
Jeffrey N. Hooper
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Jeffrey
N. Hooper
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Executive
Vice President and Chief Financial Officer
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Exhibit 99(a)
NEWS RELEASE
April
19, 2021
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
For Immediate Release
PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS
RESULTS
Peoples
Bancorp of North Carolina, Inc. (NASDAQ: PEBK), the parent company
of Peoples Bank, reported first quarter earnings results with
highlights as follows:
First quarter highlights:
●
Net earnings were
$4.1 million or $0.71 basic and diluted net earnings per share for
the three months ended March 31, 2021, as compared to $2.4 million
or $0.40 basic and diluted net earnings per share for the same
period one year ago.
●
Total loans
increased $65.9 million to $946.5 million at March 31, 2021,
compared to $880.6 million at March 31, 2020.
●
The Bank originated
347 Small Business Administration (SBA) Paycheck Protection Program
(PPP) loans, totaling $25.8 million, during the three months ended
March 31, 2021. The Bank recognized $999,000 in PPP loan fee income
during the three months ended March 31, 2021.
●
Core deposits were
$1.3 billion or 97.89% of total deposits at March 31, 2021,
compared to $961.2 million or 97.69% of total deposits at March 31,
2020.
Lance
A. Sellers, President and Chief Executive Officer, attributed the
increase in first quarter net earnings to a decrease in the
provision for loan losses and an increase in non-interest income,
which were partially offset by a decrease in net interest income
and an increase in non-interest expense during the three months
ended March 31, 2021, compared to the three months ended March 31,
2020, as discussed below.
Net
interest income was $11.1 million for the three months ended March
31, 2021, compared to $11.2 million for the three months ended
March 31, 2020. The decrease in net interest income was primarily
due to a $328,000 decrease in interest income, which was partially
offset by a $226,000 decrease in interest expense. The decrease in
interest income was primarily due to a $131,000 decrease in
interest income on interest bearing cash and federal funds sold
resulting from the 1.50% reduction in the Fed Funds rate in March
2020, and a $147,000 reduction in U.S. Government sponsored
enterprise securities income due to volume and rate reductions. The
decrease in interest expense was primarily due to a decrease in
rates paid on interest-bearing liabilities and a decrease in
Federal Home Loan Bank (“FHLB”) borrowings. Net
interest income after the provision for loan losses was $11.6
million for the three months ended March 31, 2021, compared to $9.7
million for the three months ended March 31, 2020. The provision
for loan losses for the three months ended March 31, 2021 was a
credit of $455,000, compared to an expense of $1.5 million for the
three months ended March 31, 2020. The decrease in the provision
for loan losses is primarily attributable to a decrease in reserves
on loans with payment modifications made as a result of the
COVID-19 pandemic and a decrease in reserves due to generally flat volumes of
loans in the general reserve pools. At March 31, 2021, the balance
of loans with existing modifications as a result of COVID-19 was
$1.9 million, of which $602,000 represents the balance of loans
under the terms of a first modification and $1.3 million represents
the balance of outstanding loans under the terms of a second or
third modification. The Company continues to track all loans that
are currently modified or have been modified under COVID-19. At
March 31, 2021, the balance for all loans that are currently
modified or previously modified but have returned to their original
terms was $114.8 million. The loan balances associated with
COVID-19 related modifications have been grouped into their own
pool within the Company’s Allowance for Loan and Lease Losses
(“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, $113.0 million have
returned to their original terms; however, the effects of stimulus
in the current environment are still unknown, and additional losses
may be present in loans that are currently modified and/or loans
that were once modified. At December 31, 2020, the balance for all
loans that were then currently modified or previously modified but
returned to their original terms was $119.6 million.
Non-interest income
was $5.9 million for the three months ended March 31, 2021,
compared to $4.6 million for the three months ended March 31, 2020.
The increase in non-interest income is primarily attributable to a
$548,000 increase in mortgage banking income due to an increased
mortgage loan volume and a $466,000 increase in appraisal
management fee income due to an increase in the volume of
appraisals, which were partially offset by a $163,000 decrease in
service charges and fees.
Non-interest
expense was $12.3 million for the three months ended March 31,
2021, compared to $11.4 million for the three months ended March
31, 2020. The increase in non-interest expense was primarily
attributable to a $422,000 increase in appraisal management fee
expense due to an increase in the volume of appraisals and a
$459,000 increase in salaries and employee benefits expense
primarily due to increases in insurance costs and incentive
compensation.
Income
tax expense was $1.0 million for the three months ended March 31,
2021, compared to $467,000 for the three months ended March 31,
2020. The effective tax rate was 20.24% for the three months ended
March 31, 2021, compared to 16.48% for the three months ended March
31, 2020.
Total
assets were $1.5 billion as of March 31, 2021, compared to $1.4
billion at December 31, 2020. Available for sale securities were
$325.5 million as of March 31, 2021, compared to $245.2 million as
of December 31, 2020. Total loans were $946.5 million as of March
31, 2021, compared to $948.6 million as of December 31,
2020.
Non-performing
assets were $3.7 million or 0.24% of total assets at March 31,
2021, compared to $3.9 million or 0.27% of total assets at December
31, 2020. Non-performing assets include $3.4 million in commercial
and residential mortgage loans, $150,000 in other loans, and
$128,000 in other real estate owned at March 31, 2021, compared to
$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.
The
allowance for loan losses at March 31, 2021 was $9.5 million or
1.01% of total loans, compared to $9.9 million or 1.04% of total
loans at December 31, 2020. 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 $1.3
billion at March 31, 2021, compared to $1.2 billion at December 31,
2020. Core deposits, which include noninterest-bearing demand
deposits, NOW, MMDA, savings and non-brokered certificates of
deposit of denominations less than $250,000, were $1.3 billion at
March 31, 2021, compared to $1.2 billion at December 31, 2020.
Certificates of deposit in amounts of $250,000 or more totaled
$28.1 million at March 31, 2021, compared to $25.8 million at
December 31, 2020.
Securities sold
under agreements to repurchase were $31.9 million at March 31,
2021, compared to $26.2 million at December 31, 2020. Junior
subordinated debentures were $15.5 million at March 31, 2021 and
December 31, 2020. Shareholders’ equity was $140.0 million,
or 9.12% of total assets, at March 31, 2021, compared to $139.9
million, or 9.89% of total assets, at December 31,
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, 2020.
CONSOLIDATED BALANCE SHEETS
March
31, 2021, December 31, 2020 and March 31, 2020
(Dollars
in thousands)
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March
31,
2021
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December
31,
2020
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March
31,
2020
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(Unaudited)
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(Audited)
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(Unaudited)
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ASSETS:
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Cash and due from
banks
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$43,726
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$42,737
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$46,164
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Interest-bearing
deposits
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165,311
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118,843
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20,705
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Federal funds
sold
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-
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-
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36,650
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Cash and cash
equivalents
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209,037
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161,580
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103,519
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Investment
securities available for sale
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325,517
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245,249
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201,514
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Other
investments
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3,791
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4,155
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7,229
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Total
securities
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329,308
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249,404
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208,743
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Mortgage loans held
for sale
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4,236
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9,139
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6,149
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Loans
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946,497
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948,639
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880,564
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Less: Allowance for
loan losses
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(9,532)
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(9,908)
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(8,112)
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Net
loans
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936,965
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938,731
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872,452
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Premises and
equipment, net
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18,184
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18,600
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18,370
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Cash surrender
value of life insurance
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17,065
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16,968
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16,414
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Accrued interest
receivable and other assets
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21,411
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20,433
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19,180
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Total
assets
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$1,536,206
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$1,414,855
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$1,244,827
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LIABILITIES
AND SHAREHOLDERS' EQUITY:
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Deposits:
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Noninterest-bearing
demand
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$524,176
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$456,980
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$349,513
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Interest-bearing
demand, MMDA & savings
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701,798
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657,834
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535,366
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Time, $250,000 or
more
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28,109
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25,771
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22,725
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Other
time
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80,382
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80,501
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76,354
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Total
deposits
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1,334,465
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1,221,086
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983,958
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Securities sold
under agreements to repurchase
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31,916
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26,201
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28,535
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FHLB
borrowings
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-
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-
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70,000
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Junior subordinated
debentures
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15,464
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15,464
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15,464
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Accrued interest
payable and other liabilities
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13,332
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12,205
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13,014
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Total
liabilities
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1,395,177
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1,274,956
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1,110,971
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Shareholders'
equity:
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Preferred stock, no
par value; authorized
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5,000,000 shares;
no shares issued and outstanding
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-
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-
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-
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Common stock, no
par value; authorized
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20,000,000 shares;
issued and outstanding
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5,789,166 shares
3/31/21,
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5,787,504 shares
12/31/20 and 3/31/20
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56,910
|
56,871
|
56,871
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Retained
earnings
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80,819
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77,628
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71,251
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Accumulated other
comprehensive income
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2,300
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5,400
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5,734
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Total shareholders'
equity
|
140,029
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139,899
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133,856
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Total liabilities
and shareholders' equity
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$1,535,206
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$1,414,855
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$1,244,827
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CONSOLIDATED STATEMENTS OF INCOME
For the
three months ended March 31, 2021 and 2020
(Dollars
in thousands, except per share amounts)
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Three
months ended
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March
31,
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2021
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2020
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(Unaudited)
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(Unaudited)
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INTEREST
INCOME:
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Interest and fees
on loans
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$10,664
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$10,680
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Interest on due
from banks
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35
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43
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Interest on federal
funds sold
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-
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123
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Interest on
investment securities:
|
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U.S. Government
sponsored enterprises
|
538
|
685
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State and political
subdivisions
|
639
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641
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Other
|
46
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78
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Total interest
income
|
11,922
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12,250
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INTEREST
EXPENSE:
|
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NOW, MMDA &
savings deposits
|
497
|
525
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Time
deposits
|
212
|
277
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FHLB
borrowings
|
-
|
64
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Junior subordinated
debentures
|
71
|
130
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Other
|
35
|
45
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Total interest
expense
|
815
|
1,041
|
|
|
|
|
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NET
INTEREST INCOME
|
11,107
|
11,209
|
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PROVISION
FOR (REDUCTION OF PROVISION
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FOR)
LOAN LOSSES
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(455)
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1,521
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NET
INTEREST INCOME AFTER
|
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PROVISION
FOR LOAN LOSSES
|
11,562
|
9,688
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NON-INTEREST
INCOME:
|
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Service
charges
|
926
|
1,108
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Other service
charges and fees
|
212
|
193
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Mortgage banking
income
|
870
|
322
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Insurance and
brokerage commissions
|
260
|
242
|
|
Appraisal
management fee income
|
1,816
|
1,350
|
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Miscellaneous
|
1,789
|
1,380
|
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Total non-interest
income
|
5,873
|
4,595
|
|
|
|
|
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NON-INTEREST
EXPENSES:
|
|
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Salaries and
employee benefits
|
6,183
|
5,724
|
|
Occupancy
|
1,953
|
1,921
|
|
Appraisal
management fee expense
|
1,456
|
1,034
|
|
Other
|
2,676
|
2,770
|
|
Total non-interest
expense
|
12,268
|
11,449
|
|
|
|
|
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EARNINGS BEFORE
INCOME TAXES
|
5,167
|
2,834
|
|
INCOME
TAXES
|
1,046
|
467
|
|
|
|
|
|
NET
EARNINGS
|
$4,121
|
$2,367
|
|
|
|
|
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PER
SHARE AMOUNTS
|
|
|
|
Basic net
earnings
|
$0.71
|
$0.40
|
|
Diluted net
earnings
|
$0.71
|
$0.40
|
|
Cash
dividends
|
$0.16
|
$0.30
|
|
Book
value
|
$24.19
|
$23.13
|
FINANCIAL HIGHLIGHTS
For the
three months ended March 31, 2021 and 2020, and the year ended
December 31, 2020
(Dollars
in thousands)
|
|
Three
months ended
|
Year
ended
|
|
|
|
March
31,
|
December
31,
|
|
|
|
2021
|
2020
|
2020
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
SELECTED
AVERAGE BALANCES:
|
|
|
|
|
Available for sale
securities
|
$264,942
|
$188,870
|
$200,821
|
|
Loans
|
947,205
|
861,634
|
935,970
|
|
Earning
assets
|
1,376,195
|
1,103,948
|
1,271,765
|
|
Assets
|
1,459,461
|
1,196,938
|
1,365,642
|
|
Deposits
|
1,268,790
|
973,285
|
1,115,019
|
|
Shareholders'
equity
|
139,366
|
134,186
|
141,287
|
|
|
|
|
|
|
SELECTED
KEY DATA:
|
|
|
|
|
Net interest margin
(tax equivalent)
|
3.31%
|
4.14%
|
3.52%
|
|
Return on average
assets
|
1.15%
|
0.80%
|
0.83%
|
|
Return on average
shareholders' equity
|
11.99%
|
7.09%
|
8.04%
|
|
Average
shareholders' equity to total average assets
|
9.55%
|
11.21%
|
9.89%
|
|
|
|
|
|
|
ALLOWANCE
FOR LOAN LOSSES:
|
|
|
|
|
Balance, beginning
of period
|
$9,908
|
$6,680
|
$6,680
|
|
Provision for loan
losses
|
(455)
|
1,521
|
4,259
|
|
Charge-offs
|
(85)
|
(210)
|
(1,414)
|
|
Recoveries
|
164
|
121
|
383
|
|
Balance, end of
period
|
$9,532
|
$8,112
|
$9,908
|
|
|
March
31,
2021
|
March
31,
2020
|
December
31,
2020
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
ASSET
QUALITY:
|
|
|
|
|
Non-accrual
loans
|
$3,566
|
$3,966
|
$3,758
|
|
90 days past due
and still accruing
|
-
|
34
|
-
|
|
Other real estate
owned
|
128
|
-
|
128
|
|
Total
non-performing assets
|
$3,694
|
$4,000
|
$3,886
|
|
Non-performing
assets to total assets
|
0.24%
|
0.32%
|
0.27%
|
|
Loans modifications
related to COVID-19
|
$1,857
|
$57,366
|
$18,246
|
|
Allowance for loan
losses to non-performing assets
|
258.04%
|
202.80%
|
254.97%
|
|
Allowance for loan
losses to total loans
|
1.01%
|
0.92%
|
1.04%
|
|
Allowance for loan
losses to total loans, excluding PPP loans
|
1.10%
|
0.92%
|
1.14%
|
|
|
|
|
|
|
LOAN
RISK GRADE ANALYSIS:
|
|
|
|
|
Percentage
of loans by risk grade
|
|
|
|
|
|
|
|
|
|
Risk Grade 1
(excellent quality)
|
0.67%
|
1.08%
|
1.18%
|
|
Risk Grade 2 (high
quality)
|
19.43%
|
23.89%
|
20.45%
|
|
Risk Grade 3 (good
quality)
|
67.88%
|
62.73%
|
65.70%
|
|
Risk Grade 4
(management attention)
|
9.01%
|
10.06%
|
9.75%
|
|
Risk Grade 5
(watch)
|
2.28%
|
1.41%
|
2.20%
|
|
Risk Grade 6
(substandard)
|
0.73%
|
0.83%
|
0.72%
|
|
Risk Grade 7
(doubtful)
|
0.00%
|
0.00%
|
0.00%
|
|
Risk Grade 8
(loss)
|
0.00%
|
0.00%
|
0.00%
|
|
|
|
|
|
At March 31, 2021, including non-accrual loans, there were four
relationships exceeding $1.0 million in the Watch risk grade (which
totaled $10.2 million). There were no relationships exceeding $1.0
million in the Substandard risk grade.