Peoples Bancorp (US:PEBO)2019-07-23 21:07Financial Data and Key Metrics Changes - Net income for Q2 2019 was $9.6 million or $0.46 per diluted share, compared to $0.73 for the linked quarter and $0.41 a year ago [11] - Net interest income grew by 6% compared to the first quarter of 2019 and was 10% higher than Q2 2018 [31] - Net interest margin for the first six months of 2019 was 3.78%, up from 3.70% in 2018 [30] - The efficiency ratio improved to 60.2% for Q2 2019 compared to 62.2% for the first quarter of 2019 [10][13] Business Line Data and Key Metrics Changes - Non-interest income, excluding net gains and losses, increased by 13% compared to Q2 2018 [36] - Total loans grew by $96 million compared to March 31, 2019, driven by the acquisition of First Prestonsburg [19] - Organic total loans declined by $29 million compared to March 31, 2019, with notable decreases in construction, commercial, and residential real estate loans [19][21] Market Data and Key Metrics Changes - Non-performing assets increased by $1.9 million compared to March 31, 2019, largely due to the acquisition [15] - Delinquency trends improved, with loans considered current comprising 99% of the portfolio compared to 98.6% at March 31, 2019 [17] - Demand deposits as a percentage of total deposits declined to 37% at June 30, 2019, compared to 40% at year-end [46] Company Strategy and Development Direction - The company aims for organic loan growth of 3% to 5% for the full year 2019, despite anticipated credit cost increases [55] - The acquisition of First Prestonsburg is expected to enhance service offerings and competitive positioning [51] - The company is focused on maintaining credit quality, managing deposits, and achieving positive operating leverage [83] Management's Comments on Operating Environment and Future Outlook - Management anticipates two rate cuts in 2019, which may impact net interest margin [55] - The company expects non-interest income for the remaining quarters to be between $15 million and $16 million [56] - Management expressed confidence in loan growth potential in the second half of 2019, despite challenges from payoffs [78] Other Important Information - Acquisition-related expenses totaled $7 million for Q2 2019, impacting diluted EPS by $0.28 [11] - The company recorded preliminary goodwill of $23 million from the First Prestonsburg acquisition [28] - The tangible book value per common share was $18.89, slightly down from $19 at March 31, 2019 [49] Q&A Session Summary Question: What are the main puts and takes in the core NIM performance in Q2? - Management noted that premium amortization from a security impacted the core margin, but overall performance was as expected [62] Question: What strategies are being implemented to defend margin going forward? - Management indicated they can adjust deposit rates and control funding costs to defend margins [66] Question: What is the outlook for loan growth given the higher paydowns? - Management expressed confidence in achieving the 3% to 5% growth target, citing a strong pipeline [78] Question: How does the company view share repurchase in relation to acquisitions? - Management stated they would consider share repurchase if the earn-back period aligns with their acquisition criteria [84] Question: What percentage of the loan portfolio is variable rate tied to prime and/or LIBOR? - Approximately 80% of the commercial side is tied to LIBOR [97] Question: What is the competitive landscape like in the marketplace? - Management observed a slowing of deposit programs and noted that the market remains stable overall [102]