Peoples Bancorp (US:PEBO)2019-01-22 20:11Financial Data and Key Metrics Changes - The company reported a net income of $13.9 million or $0.71 per diluted share for Q4 2018, a 50% increase compared to Q4 2017 and a 9% increase over the linked quarter [17][19] - For the full year 2018, net income increased by 20% to $46.3 million or $2.41 per diluted share compared to $38.5 million or $2.10 per diluted share in 2017 [19] - The return on average assets was 1.38% annualized for Q4 2018, with a tangible book value per share improvement of 7% from September 30, 2018 [18][59] Business Line Data and Key Metrics Changes - Net interest income grew by 17% compared to Q4 2017 and 14% for the full year 2018 [17][34] - Non-interest income, excluding gains and losses, increased by 8% compared to Q4 2017 and 9% for the full year 2018 [43][44] - Total loans increased by 16% compared to December 31, 2017, with organic loans growing by 7% [27] Market Data and Key Metrics Changes - The efficiency ratio improved to 62% in Q4 2018 compared to 62.1% in Q4 2017 [24] - The loan-to-deposit ratio grew to 92% at December 31, 2018, compared to 86% at December 31, 2017 [57] - Core deposits, excluding CDs, declined by 3% compared to September 30, 2018, but were up 3% compared to December 31, 2017 [54] Company Strategy and Development Direction - The company is focused on expanding its presence in Kentucky through the pending merger with First Prestonsburg, which is expected to close in April 2019 [16][62] - The merger is anticipated to create synergies and allow for the introduction of new products and services to clients [62] - The company plans to maintain momentum from 2018 into 2019, with an expected loan growth of 6% to 8% [64] Management's Comments on Operating Environment and Future Outlook - Management expects an increase in credit costs in 2019, reflecting a belief that the industry is experiencing unusually low charge-offs [65] - The net interest margin is anticipated to be around 3.75% for the full year, with fee-based revenue growth expected between 7% and 9% [66] - The company is optimistic about future years due to investments in human capital and technology [61] Other Important Information - Acquisition-related costs for the full year 2018 were $7.5 million, impacting earnings per diluted share by $0.29 [21] - The company maintained its dividend rate at $0.30 per share, representing 42% of Q4 diluted earnings per share [59] Q&A Session Summary Question: What do you see happening to the core margin absent moves from the Fed in 2019? - Management expects the core margin to be around 3.75%, with slight upside potential [71][72] Question: What are your thoughts on future M&A once you get First Prestonsburg behind you? - The company continues to explore opportunities and will remain disciplined in deal pricing [74] Question: Can you provide insights on the loan growth target for next year? - Management remains optimistic about loan growth, particularly in consumer and commercial sectors, despite a slow first quarter [82][86] Question: How should we think about the commercial swap fees within the fee income growth guidance? - Swap income is expected to be slightly better than 2018 but not reach 2017 levels [100][101] Question: Are there any particular subsectors of commercial real estate that you are avoiding? - The company avoids hotels and strip malls and is cautious about multi-family in Central Ohio [103] Question: How should we think about your capital management strategy in 2019? - There may be opportunities for dividend increases, and share buybacks will be assessed post-merger [105]