Peoples Bancorp (US:PEBO)2023-04-25 18:10Financial Data and Key Metrics Changes - The net interest margin for 2023 is expected to be between 4.4% and 4.6%, with the second quarter potentially coming in below this range due to merger-related adjustments [1] - The efficiency ratio was reported at 57.8% for the quarter, compared to 56.7% for the linked quarter, while adjusted for non-core expenses, it was 57.2% compared to 55.9% [28] - Diluted earnings per share (EPS) was reported at $0.94, which was $0.02 lower than previously reported due to an underreporting of weighted average diluted shares [47][62] Business Line Data and Key Metrics Changes - Net interest income grew by 3% compared to the linked quarter, and net interest margin expanded by 9 basis points [91] - Fee-based income increased by 9% compared to the linked quarter, primarily due to annual performance-based insurance commissions [65] - The loan portfolio grew by 4% on an annualized basis, with significant growth in commercial real estate loans (16% annualized) and consumer indirect loans (11% annualized) [90] Market Data and Key Metrics Changes - The company experienced a decline in non-interest bearing deposits, but this was offset by an increase in governmental deposits [85] - The loan-to-deposit ratio stood at 82% at March 31, unchanged from year-end [49] - Non-performing assets improved to 0.58% of total assets, down from 0.63% at year-end [57] Company Strategy and Development Direction - The company is focused on completing the merger with Limestone, expecting to achieve internal metrics on projected cost savings [71] - The strategy includes ensuring a full suite of products will be available in the Limestone markets, indicating a commitment to growth through acquisition [72] - The company anticipates a 21% increase in total non-interest expenses for 2023, excluding acquisition-related expenses, while aiming for earnings growth between 18% and 19% [104] Management's Comments on Operating Environment and Future Outlook - Management expressed a lack of optimism regarding the economy, stating that growth will primarily come from taking business away from competitors [15] - The company is preparing for potential challenges in the banking industry but remains confident in its financial stability and client relationships [83][84] - Management indicated that they do not foresee a recession impacting their operations significantly, maintaining a focus on organic growth [15][120] Other Important Information - The company incurred $551,000 in acquisition-related expenses for the quarter, negatively impacting diluted EPS by $0.02 [37] - The tangible equity to tangible assets ratio improved to 7.1%, up 41 basis points compared to year-end [98] - The company plans to issue a new release regarding the underreported diluted EPS [47] Q&A Session Summary Question: What is the company's outlook on funding costs? - Management noted that funding costs remained benign but acknowledged the need to maintain deposit balances actively [106] Question: How is the company preparing for the $10 billion asset threshold? - The company is engaging a third-party firm to assist with analysis and preparation, indicating a strategic approach to future growth opportunities [100] Question: What are the expectations regarding the Limestone merger's impact on office exposure? - Management indicated that they are assessing the office exposure from Limestone but did not provide specific figures during the call [112] Question: What is the company's view on non-interest bearing deposit flows? - Management acknowledged some seasonality in deposits and expected minimal deposit growth outside of the Limestone acquisition [119] Question: How does the company view the potential for a recession? - Management expressed that they do not foresee a recession impacting their guidance significantly and highlighted opportunities for growth even in challenging times [120]