Peoples Bancorp (US:PEBO)2021-11-05 18:49Financial Performance - Total interest income for Q3 2021 was $45,467,000, an increase of 16.4% compared to $39,013,000 in Q3 2020[186] - Net interest income for the nine months ended September 30, 2021, was $117,816,000, up 12.6% from $104,615,000 in the same period of 2020[186] - Net loss for Q3 2021 was $(5,758,000), a decline from net income of $10,210,000 in Q3 2020[186] - For the first nine months of 2021, net income was $19.8 million, or $0.99 per diluted common share, compared to $14.2 million, or $0.70 per diluted common share, for the same period in 2020[208] - Net interest income was $42.6 million for Q3 2021, up 7% from $39.7 million in Q2 2021, and increased 21% from $35.1 million in Q3 2020[209] - Peoples recorded a net loss of $5.8 million for Q3 2021, or $0.28 per diluted common share, compared to net income of $10.1 million, or $0.51 per diluted common share, for Q2 2021[207] Credit Losses and Provisions - Provision for credit losses increased to $8,994,000 in Q3 2021 from $4,728,000 in Q3 2020, reflecting a significant rise in credit loss provisions[186] - Peoples recorded a provision for credit losses of $9.0 million in Q3 2021, compared to $3.1 million in Q2 2021 and $4.7 million in Q3 2020[211] - The provision for credit losses during the first nine months of 2021 was $7.3 million, significantly lower than $33.5 million for the same period in 2020[212] - The allowance for credit losses increased to $77.4 million, or 1.72% of total loans, as of September 30, 2021, compared to $50.4 million and 1.48% at December 31, 2020[220] - Total gross charge-offs for Q3 2021 were $1.9 million, with net charge-offs amounting to $1.6 million, resulting in a net charge-off ratio of 0.18% of average total loans[319] Assets and Liabilities - Total assets increased to $7,059,752,000 as of September 30, 2021, compared to $4,911,807,000 a year earlier, representing a growth of 43.8%[186] - Total liabilities increased to $6.23 billion at September 30, 2021, up from $4.48 billion at June 30, 2021, primarily due to $1.8 billion in deposits acquired from Premier[221] - Total stockholders' equity was $831.9 million at September 30, 2021, an increase of $256.2 million compared to December 31, 2020, driven by common shares issued for the Premier acquisition[222] - Total average assets for Q3 2021 were $5,475,147 thousand, compared to $5,183,146 thousand in Q2 2021 and $4,906,614 thousand in Q3 2020[288] Mergers and Acquisitions - Peoples completed its merger with Premier Financial Bancorp, acquiring $1.1 billion in loans and $1.8 billion in deposits, with a transaction valued at $261.9 million[201] - The merger resulted in the preliminary recording of $71.0 million in goodwill and $4.2 million in other intangible assets[202] - The acquisition of NS Leasing, LLC involved total consideration of $116.6 million, including $83.3 million in leases and $69.1 million in third-party debt satisfied[204] - The company completed the acquisition of Premier on September 17, 2021, which positively impacted average total loan and deposit balances for the third quarter of 2021[233] Non-Interest Income and Expenses - Total non-interest income excluding net gains and losses was $16,820,000 for Q3 2021, slightly up from $16,796,000 in Q3 2020[186] - Total non-interest expense rose to $57,860,000 in Q3 2021, compared to $34,315,000 in Q3 2020, indicating a 68.8% increase[186] - Total non-interest income increased by $0.5 million, or 3%, compared to Q2 2021, but decreased by $0.4 million, or 3%, from Q3 2020[213] - Total non-interest income, excluding net gains and losses, accounted for 28% of total revenues for the three months ended September 30, 2021, down from 32% in the same quarter of 2020[245] Employee Costs and Benefits - Salaries and employee benefit costs for the third quarter of 2021 were $25,589,000, a 34% increase compared to the same quarter of 2020, largely due to acquisition-related expenses[259] - The average number of full-time equivalent employees increased to 942 during the first nine months of 2021, compared to 893 in the same period of 2020[259] - Employee benefits increased in the first nine months of 2021 compared to the same period in 2020, driven by a higher employer 401(k) match and increased medical costs[261] Regulatory and Market Conditions - The company is subject to regulatory changes that may affect its business operations and financial condition[194] - Competitive pressures among financial institutions may increase, impacting credit spreads and customer acquisition[193] - The company continues to focus on controlling expenses while recognizing necessary costs for business growth[218] Loan Portfolio and Performance - Total loans reached $3,535,224 thousand, an increase of 3.28% from $3,422,975 thousand in the prior quarter[228] - The total loans outstanding as of September 30, 2021, reached $4.49 billion, compared to $3.37 billion on June 30, 2021[302] - Commercial real estate loans continued to represent the largest portion of the loan portfolio, comprising 40.2% of total loans as of September 30, 2021[306] - The company reported a decline in commercial and industrial loan balances due to $186.4 million in forgiveness proceeds from PPP loans during the second quarter[303] Interest Rate Management - Interest rate risk is managed by the Asset-Liability Committee (ALCO) to optimize net interest income while ensuring liquidity and capital adequacy[345] - Estimated increase in net interest income of $26,191 thousand (12.5%) is projected with a 300 basis points increase in interest rates[348] Nonperforming Loans and Assets - Nonperforming loans as a percent of total loans increased to 0.92% in Q3 2021 from 0.84% in Q3 2020[187] - Total nonperforming loans ("NPLs") reached $41.4 million as of September 30, 2021, up from $26.8 million at June 30, 2021, representing a 54% increase[321] - Nonperforming assets increased by $25.6 million, or 95%, compared to June 30, 2021, primarily due to nonperforming loans and other real estate owned acquired from Premier[324]