Peoples Bancorp (US:PEBO)2022-04-26 18:53Financial Performance - The company reported earnings of $23.6 million or $0.84 per diluted share for Q1 2022, with a net interest margin expansion of four basis points compared to the linked quarter [8][7] - Net interest income declined by 1% compared to the linked quarter, while net interest margin grew by four basis points, driven by lower loan income due to pay-offs [24][27] - The allowance for credit losses declined to 1.2% of total loans at quarter end, down from 1.4% at year-end, with a release of provision for credit losses of $6.4 million adding $0.18 to diluted EPS [10][11] Business Line Performance - Loan growth for the quarter was 12% annualized, excluding Vantage acquired loans and pay-offs of previously acquired loans [7] - Commercial and industrial loans grew by $33 million or 16% annualized, while construction loans increased by over $28 million [14] - Fee-based income grew by $1 million or 5%, driven by higher insurance income and increased customer activity [32][33] Market Data - The company experienced a decline in total loans by $87 million, primarily due to pay-offs of previously acquired loans and forgiveness of PPP loans [12] - The PPP loan balance decreased to approximately $43 million from $87 million at year-end [75] - Non-accrual loans declined by nearly $3 million or 8% compared to December 31, 2021, indicating stable credit quality [16] Company Strategy and Industry Competition - The company aims to provide large bank products and services in a community bank setting, differentiating itself through a diversified product offering [40] - The company is focused on expanding its specialty finance business, particularly in leasing and premium finance, with expected growth rates exceeding 20% [81] - The company plans to continue seeking acquisition opportunities within its fee-based businesses, having recently acquired an insurance agency [19] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about future interest rate hikes positively impacting net interest income, estimating a benefit of $1.5 million annually for every 25 basis points increase [44] - The company lowered its projected loan growth for 2022 from 6%-8% to 5%-7%, primarily due to pay-offs from the Premier acquisition [14][51] - Management anticipates fee-based income growth of 25%-30% compared to 2021, driven by acquisitions [45][106] Other Important Information - The company announced an increase in its dividend to $0.38 per share, marking the seventh consecutive year of dividend growth [38] - Total non-interest expense increased by 8% compared to the linked quarter, largely due to higher salaries and employee benefits [34] - The company maintained a tangible equity to tangible asset ratio of 6.8% at quarter end, which declined compared to year-end due to the Vantage acquisition [37] Q&A Session Summary Question: Loan growth expectations and impact of Premier pay-offs - Management indicated that the downshift in loan growth expectations is primarily due to Premier pay-offs rather than market demand, with an all-in expected loan growth of 8%-9% [51][52] Question: Margin expectations with rate hikes - Management expects the margin to increase to 3.45%-3.55% in Q2 due to rate hikes and cash deployment related to the Vantage acquisition [62] Question: Fee growth guidance clarification - The increase in fee growth guidance to 25%-30% is largely driven by the Vantage transaction, with organic growth expected to remain in the 14%-16% range without Vantage [106][107]