Peoples Bancorp (US:PEBO)2020-01-21 20:20Financial Data and Key Metrics Changes - For the full year 2019, net income increased by 16% and diluted earnings per share (EPS) rose by 9%, resulting in record EPS of $2.63 [11][13] - The reported return on average assets improved by eight basis points to 1.27%, while the adjusted basis increased by ten basis points to 1.42% [11] - Non-interest income, excluding net gains and losses, grew by 13%, comprising 32% of total revenue compared to 31% in 2018 [12][40] - The efficiency ratio improved, with a 59 basis point decline in the reported efficiency ratio and a 23 basis point decline in the adjusted efficiency ratio [12] Business Line Data and Key Metrics Changes - Organic loan growth for the fourth quarter was 4%, primarily driven by commercial and industrial loans, while construction and indirect consumer loans saw declines [20][21] - For the full year, organic loan growth was only 1%, heavily impacted by payoffs, despite a 37% increase in production [22][23] - Non-interest income from electronic banking, trust and investments, and mortgage banking all saw increases compared to the linked quarter [10][36] Market Data and Key Metrics Changes - Core deposits, excluding CDs, declined by 1% from the linked quarter but increased by 13% compared to December 31, 2018 [49] - Demand deposits as a percentage of total deposits grew to 40% at quarter-end, compared to 39% at the linked quarter [50] - Average total deposits grew by 11% year-to-date, primarily due to the First Prestonsburg acquisition [51] Company Strategy and Development Direction - The company plans to continue investing in technology and enhancing its service offerings, including the recent acquisition of a small insurance agency [17][60] - The target for loan growth in 2020 is set at 5% to 7%, with expectations for increased credit costs due to the implementation of new accounting guidance [61][62] - The company aims to maintain a target efficiency ratio between 60% and 62% for 2020 while actively seeking quality acquisition opportunities [64] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about stabilizing net interest margins in early 2020, with improvements expected as the year progresses [11][28] - The competitive environment remains challenging, with increased aggressiveness in pricing among competitors due to low loan growth [80] - Management anticipates that the historically low charge-off levels are not sustainable and expects an increase in credit costs [61] Other Important Information - The company closed three branch locations in 2019, with two closures occurring in the fourth quarter [16] - The implementation of the new CECL accounting standard is expected to increase the allowance for credit losses significantly [54][57] Q&A Session Summary Question: Guidance on margin and security yields - Management indicated that the margin guidance of $3.55 to $3.65 assumes a pickup in core margin and normalization in accretion [69][70] Question: Loan growth expectations - Production in commercial lending increased by 37% in 2019, but payoffs also rose significantly, impacting overall growth [78] Question: Competitive environment changes - Management noted that the competitive landscape remains similar, with increased aggressiveness in pricing due to low loan growth [80] Question: Technology investments and efficiency - The company plans to continue enhancing its technology capabilities while looking for efficiencies to offset costs [82][84]