Peoples Bancorp (US:PEBO)2021-07-30 17:16Financial Performance - Total interest income for Q2 2021 was $42,797,000, an increase of 6.35% from $39,306,000 in Q2 2020[165] - Net income for the first six months of 2021 reached $25,566,000, significantly up from $3,984,000 in the same period of 2020, representing a 540.4% increase[165] - Peoples recorded net income of $10.1 million for Q2 2021, down from $15.5 million in Q1 2021, and up from $4.7 million in Q2 2020, with earnings per diluted share of $0.51[185] - For the first six months of 2021, net income was $25.6 million, or $1.31 per diluted common share, compared to $4.0 million, or $0.19 per diluted common share for the same period in 2020[186] Income and Expenses - Total non-interest income excluding net gains and losses increased to $33,413,000 for the first six months of 2021, up from $30,229,000 in 2020, marking an increase of 7.2%[165] - Total non-interest income for Q2 2021 decreased by $1.1 million, or 6%, compared to Q1 2021, but increased by $1.2 million, or 8%, from Q2 2020[191] - Total non-interest expense increased by $1.9 million, or 5%, for Q2 2021 compared to Q1 2021, and by $8.1 million, or 25%, compared to Q2 2020[193] - Core non-interest expense for Q2 2021 was $37.3 million, compared to $35.2 million in Q1 2021 and $30.6 million in Q2 2020[264] Asset and Liability Management - Total assets increased to $5,067,634,000 as of June 30, 2021, up from $4,985,819,000 a year earlier, reflecting a growth of 1.64%[165] - Total liabilities were $4.48 billion at June 30, 2021, up $297.0 million, or 8%, since December 31, 2020[198] - Total stockholders' equity increased to $585.5 million at June 30, 2021, an increase of $9.8 million compared to December 31, 2020[199] - The allowance for credit losses decreased to $47.9 million, or 1.42% of total loans, from $50.4 million, or 1.48%, at December 31, 2020[197] Credit Quality - The provision for credit losses showed a recovery of $(1,661,000) in the first half of 2021, compared to a provision of $28,803,000 in the first half of 2020[165] - Net charge-offs for Q2 2021 were $780,000, or 0.09% of average total loans annualized, compared to $1.1 million, or 0.13% in Q1 2021[189] - Nonperforming loans as a percentage of total loans remained stable at 0.79% for both Q2 2021 and Q2 2020[166] - The allowance for credit losses at June 30, 2021, is $47,942,000, representing 1.42% of total loans[299] Capital and Ratios - Common equity tier 1 capital ratio was 11.34% as of June 30, 2021, down from 13.30% in the previous year, indicating a decrease in capital strength[166] - The efficiency ratio for Q2 2021 was 68.64%, compared to 62.34% in Q2 2020, indicating a decrease in operational efficiency[166] - The return on average stockholders' equity improved to 8.89% for the first half of 2021, compared to 1.37% in the same period of 2020[166] - The return on average tangible equity ratio for the second quarter of 2021 was 12.49%, compared to 16.45% in the linked quarter, indicating a decline of about 24.0%[273] Mergers and Acquisitions - The company is currently integrating the recently-completed acquisition of NSL and is planning a merger with Premier, which may present challenges in terms of timing and execution[28]. - Peoples acquired NS Leasing for $118.8 million, including $83.3 million in leases, with preliminary goodwill of $25.2 million and other intangibles of $13.5 million[181] - The merger with Premier Financial Bancorp is valued at approximately $292.3 million and is expected to close in Q3 2021[181] Market Conditions and Risks - The ongoing impact of the COVID-19 pandemic continues to affect customer operations and financial conditions, influencing loan demand and credit risk[28]. - Changes in the interest rate environment due to economic conditions related to the COVID-19 pandemic may adversely impact interest margins and loan demand[28]. - The company faces competitive pressures from both financial and non-financial institutions, which may impact credit spreads and customer retention[28]. Deposits and Funding - The increase in deposits of $322.2 million was primarily driven by growth in non-interest-bearing checking accounts of $183.7 million[198] - Peoples recorded a net cash used in investing activities of $230.0 million, which was less than the total cash provided by financing and operating activities of $285.3 million and $38.7 million, respectively[278] - The company anticipates a decline in deposit balances over time as government stimulus funds are utilized, but expects this to be partially offset by PPP loan forgiveness[343] Interest Income and Margin - Net interest income for Q2 2021 was $39.7 million, an 11% increase from $35.6 million in Q1 2021 and a 14% increase from $34.9 million in Q2 2020[187] - Net interest margin improved to 3.45% in Q2 2021, up from 3.26% in Q1 2021 and 3.19% in Q2 2020, driven by leases acquired from NSL and PPP loan forgiveness[187] - Interest income from loans totaled $74,542,000 for the six months ended June 30, 2021, compared to $69,178,000 in the prior year, reflecting an increase of 7.5%[209] Operational Efficiency - The efficiency ratio for Q2 2021 was 68.6%, an improvement from 70.4% in Q1 2021, but higher than 62.3% in Q2 2020[195] - Pre-provision net revenue (PPNR) for Q2 2021 was $15.9 million, a decrease from $19.2 million in Q1 2021 and $17.8 million in Q2 2020[262] - The company emphasizes the importance of interest rate sensitivity and liquidity in its financial condition analysis[349]