Peoples Bancorp (US:PEBO)2022-08-04 19:07Acquisitions and Mergers - Peoples Insurance acquired an insurance agency in eastern Kentucky for $3.8 million, recognizing preliminary intangibles of $2.1 million[196]. - Peoples completed the acquisition of Vantage for $82.9 million, acquiring assets including $157.5 million in leases and $107.1 million in third-party debt[196]. - Preliminary goodwill from the Vantage acquisition was recorded at $24.7 million, with other intangible assets totaling $13.2 million[197]. - The company acquired $1.82 billion in deposits through the Premier Merger, contributing to the increase in total liabilities[213]. - The company acquired $1.1 billion in loans during the Premier Merger, significantly contributing to the increase in total loans[294]. Financial Performance - Peoples reported net income of $24.9 million for Q2 2022, with earnings per diluted common share of $0.88, compared to $0.84 in Q1 2022 and $0.51 in Q2 2021[200]. - Net interest income for Q2 2022 was $61.5 million, an increase of $7.2 million, or 13%, from the linked quarter, and up $21.8 million, or 55%, from Q2 2021[201]. - The efficiency ratio for Q2 2022 improved to 58.8%, down from 66.8% in the linked quarter and 68.6% in Q2 2021[210]. - Pre-provision net revenue (PPNR) for Q2 2022 was $31.15 million, an increase from $22.73 million in Q1 2022 and $15.91 million in Q2 2021, attributed to higher net interest income from recent acquisitions and rising market interest rates[271]. - The adjusted revenue for Q2 2022 was $81.46 million, up from $74.75 million in Q1 2022 and $56.13 million in Q2 2021, driven by improved net interest income and non-interest income[275]. Assets and Liabilities - Total assets increased to $7.28 billion as of June 30, 2022, up 3% from $7.06 billion at December 31, 2021, and 44% from $5.07 billion at June 30, 2021, primarily due to the Vantage acquisition and Premier Merger[212]. - Total liabilities rose to $6.49 billion at June 30, 2022, an increase of 4.3% from $6.22 billion at December 31, 2021, and 45% from $4.48 billion at June 30, 2021, driven by governmental deposits and long-term borrowings from Vantage[213]. - Total stockholders' equity decreased by $21.5 million from March 31, 2022, and by $58.2 million from December 31, 2021, due to comprehensive losses and dividends paid, despite net income of $24.9 million for the quarter[214]. Credit Quality - The allowance for credit losses decreased to $54.148 million, or 1.14% of total loans, reflecting improved economic conditions[212]. - Net charge-offs for the second quarter of 2022 were $1,541 thousand, representing 0.14% of average total loans on an annualized basis[307]. - Nonperforming assets (NPAs) decreased to $46,934 thousand as of June 30, 2022, down from $47,369 thousand in March 2022[310]. - The ratio of nonaccrual loans to total loans was 0.64% as of June 30, 2022, a slight decrease from 0.70% in the previous quarter[310]. - The total allowance for credit losses decreased from $63,967,000 at December 31, 2021, to $52,346,000 at June 30, 2022, due to improved economic forecasts[303]. Deposits and Funding - As of June 30, 2022, total deposits decreased by $73.7 million, or 1%, compared to March 31, 2022, but increased by $1.7 billion, or 40%, compared to June 30, 2021[318]. - Non-interest-bearing deposits were $1,661,865 thousand as of June 30, 2022, while total deposits reached $5,929,225 thousand[317]. - Total interest-bearing deposits amounted to $4,267,360 thousand as of June 30, 2022, reflecting a decrease from $4,336,258 thousand as of March 31, 2022[317]. - Borrowed funds increased to $450,129 thousand as of June 30, 2022, compared to $345,885 thousand as of March 31, 2022, primarily due to a large individual customer deposit[320]. Interest Rate Risk Management - Peoples has entered into thirteen interest rate swap contracts with an aggregate notional value of $125.0 million as part of its interest rate risk management strategy[334]. - Estimated increase in net interest income with a 300 basis point increase in interest rates is $27,881 thousand, representing an 11.1% increase[329]. - Peoples' exposure to interest rate risk is primarily due to differences in the maturity or repricing of earning assets and interest-bearing liabilities[327]. - The economic value of equity decreased by $22,151 thousand (1.6%) with a 300 basis point increase in interest rates as of June 30, 2022[329]. Operational Challenges and Strategic Focus - Peoples' financial condition and results are influenced by risks related to the COVID-19 pandemic, interest rate changes, and competitive pressures[187]. - The company anticipates potential impacts from legislative and regulatory changes affecting capital actions and operational requirements[187]. - Peoples aims to manage strategic initiatives, including the integration of recent acquisitions, amidst ongoing economic challenges[187]. - The company emphasizes the importance of maintaining required capital levels and adequate sources of funding and liquidity[187].