Peoples Bancorp of North Carolina Inc.
Annual Report 2013

Plain-text annual report

Our Vision, Mission and Core Values VISION STATEMENT To be the Bank of Choice in our Communities. MISSION STATEMENT To Provide Exceptional Customer Ser- vice While Selling to Customer Needs. CORE VALUES E M P L OY E E S We are valued so we add value. E X C E P T I O N A L C U S T O M E R S E R V I C E We surpass our customers’ expectations. I N T E G R I T Y We are fair and truthful. A C C O U N TA B I L I T Y We are accountable for our own actions and each other. P R O G R E S S I V E A N D P O S I T I V E We see change as an opportunity. Contents Message From the President Financial Highlights Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Earnings Board of Directors and Officers Subsidiaries Shareholder and General Information Locations 2 4 5 6 7 8 9 9 Back From the President We are pleased to report that Peoples Bancorp of North Carolina, Inc. completed another successful year during 2013. Consolidated net earnings for the year ended December 31, 2013 increased 15.5% and totaled $6.7 million, or $1.19 basic and diluted net earnings per share, before adjustment remained in excess of regulatory guidelines for a well-capitalized financial institution. We anticipate the repurchase of the Company’s preferred stock, which had a liquidation preference of $12,524,000, to be approximately $0.18 accretive to the Company’s diluted earnings per common share in 2014 based on current interest rates. In addition, directors of Peoples Bancorp paid cash dividends to common shareholders in the amount of $0.12 per share during fiscal year 2013. We did see some growth in 2013 but assets were basically unchanged at $1.0 billion as of December 31, 2013 and 2012. Available for sale securities remained constant during 2013 and were $297.9 million as of December 31, 2013, compared to for preferred stock dividends and accretion. $297.8 million as of December 31, 2012. Total For the prior year ended December 31, 2012, consolidated net earnings totaled $5.8 million, or $1.04 basic and diluted net earnings per share, before adjustment for preferred stock dividends and accretion. We are also pleased to inform you that Peoples Bancorp received regulatory approval in December 2013 to repurchase and retire the remaining 12,524 outstanding shares of our Series A preferred stock arising from the Company’s participation in the Capital Purchase loans were $621.0 million as of December 31, 2013, compared to $620.0 million as of December 31, 2012. Non-performing assets continued to decline throughout 2013 and at year-end totaled $16.4 million or 1.6% of total assets. At December 31, 2012, non-performing assets were $26.3 million or 2.6% of total assets. We attributed the improvement of non-performing assets to a $3.8 million decrease in non-accrual loans coupled with Program under the Troubled Asset Relief Program a $4.6 million decrease in other real estate owned. in 2008. With this transaction reflected as of The allowance for loan losses at December 31, 2013 was December 31, 2013, shareholders’ equity totaled $13.5 million or 2.2% of total loans, compared to $14.4 $83.7 million, or 8.1% of total assets, and we million or 2.3% of total loans at December 31, 2012. Page 2 Deposits increased 2.3% to $799.4 million at December 31, 2013 when compared to twelve months ago. We are pleased to report that core deposits, the Bank’s least expensive source of funding, increased $37.5 million, or 5.8%, to $683.9 million at year-end 2013. Certificates of deposit in amounts of $100,000 or more totaled $115.3 million at December 31, 2013, as compared to $134.7 million at December 31, 2012. Over the past several months, we have invested a significant amount of time in the review of our Company’s vision statement, mission statement, core values, and strategic plan. The review was designed to address the needs of our identified communities consisting of customers, employees, and shareholders. Developed in conjunction with our Board of Directors, we collectively agreed that the new vision of Peoples Bank is to become the “Bank of Choice” in our communities. I wish to thank the Board for their participation in this process and for their leadership throughout the year. Peoples Bank could not be the Company that it is today without the support of our employees. They can always be depended upon to do the right thing for our customers, and we are so proud of their commitment and dedication. Our employees represent the key to our ability of becoming the “Bank of Choice” in the communities we serve. Peoples Bank and Peoples Bancorp of North Carolina offer a wide array of financial services that merit mention here. Peoples Investment Services and Real Estate Advisory Services are both wholly- owned subsidiaries of the Bank while Community Bank Real Estate Solutions (CBRES) operates as a subsidiary of Peoples Bancorp. Peoples Investment Services, through our exclusive affiliation with Raymond James Financial Services, provides access to non-traditional deposit products including stocks, bonds, mutual funds, annuities, and other insurance-related products. Real Estate Advisory Services provides residential and commercial real estate appraisals working in conjunction with mortgage departments in a number of financial institutions in our area, including Peoples Bank, as well as various legal firms. CBRES generates non- interest income for the Company while assisting professionals in other banks across the country by providing services of a locally-owned appraisal management company. We are excited to embark upon the 102nd year of business here at Peoples Bank. As one of North Carolina’s oldest State-chartered banks, we feel that we are well positioned for the challenges and opportunities that will come our way in 2014. As a friend and shareholder of Peoples Bancorp, you can help us become the “Bank of Choice” by recommending our services to community members you encounter. Your referrals are very much appreciated. Thank you for your continued support. Sincerely, Lance A. Sellers President and Chief Executive Officer Page 3 Financial Highlights (Dollars in thousands, except per share amounts) Interest income Interest expense Net interest earnings Provision for loan losses Net interest earnings after provision for loan losses Non-interest income Non-interest expense Income taxes Net earnings Dividends and accretion of preferred stock Net earnings available to common shareholders Per Share of Common Stock Basic net earnings Diluted net earnings Cash dividends Market price at December 31 Book value at December 31 At Year-end Loans, net Available for sale securities Assets Deposits Shareholders’ equity $ $ $ $ Key Performance Ratios Return on average assets Return on average shareholders’ equity Dividend payout ratio* Average shareholders’ equity to total average assets * As a percentage of net earnings available to common shareholders. 2013 2012 +/- -6% -30% -1% -48% 8% 1% 3% 18% 16% -35% 26% 26% 24% -33% 56% -2% 0% 0% 2% 2% -14% 36,696 5,353 31,343 2,584 28,759 12,652 32,841 1,879 6,691 656 6,035 1.08 1.07 0.12 14.18 14.91 607,459 297,890 1,034,684 799,361 83,719 0.65% 6.67% 11.17% 9.79% 39,245 7,696 31,549 4,924 26,625 12,537 31,782 1,587 5,793 1,010 4,783 0.86 0.86 0.18 9.10 15.18 605,551 297,823 1,013,516 781,525 97,747 0.56% 5.58% 20.96% 10.08% Page 4 Report of Audit Page 5 Consolidated Balance Sheets December 31, 2013 and 2012 (dollars in thousands) Assets Cash and due from banks, including reserve requirements of $11,472 at 12/31/13 and $9,625 at 12/31/12 Interest-bearing deposits Cash and cash equivalents Investment securities available for sale Other investments Total securities Mortgage loans held for sale Loans Less allowance for loan losses Net loans Premises and equipment, net Cash surrender value of life insurance Other real estate Accrued interest receivable and other assets Total assets Liabilities and Shareholders’ Equity Deposits: Non-interest bearing demand NOW, MMDA & savings Time, $100,000 or more Other time Total deposits Securities sold under agreements to repurchase FHLB borrowings Junior subordinated debentures Accrued interest payable and other liabilities Total liabilities Commitments Shareholders’ equity: Series A preferred stock, $1,000 stated value; authorized 5,000,000 shares; issued and outstanding 12,524 shares in 2012 Common stock, no par value; authorized 20,000,000 shares; issued and outstanding 5,613,495 shares in 2013 and 2012 Retained earnings Accumulated other comprehensive (loss) income Total shareholders’ equity Total liabilities and shareholders’ equity 2013 2012 49,902 26,871 76,773 297,890 4,990 302,880 32,617 16,226 48,843 297,823 5,599 303,422 497 6,922 620,960 (13,501) 607,459 16,358 13,706 1,679 15,332 1,034,684 195,265 386,893 115,268 101,935 799,361 45,396 65,000 20,619 20,589 950,965 619,974 (14,423) 605,551 15,874 13,273 6,254 13,377 1,013,516 161,582 371,719 134,733 113,491 781,525 34,578 70,000 20,619 9,047 915,769 — 12,524 48,133 36,758 (1,172) 83,719 1,034,684 48,133 31,478 5,612 97,747 1,013,516 $ $ $ $ See Appendix A to the Peoples Bancorp of North Carolina, Inc. Proxy Statement, dated March 25, 2014, for a complete set of Consolidated Financial Statements. Page 6 Consolidated Statements of Earnings For the Years Ended December 31, 2013, 2012 and 2011 (dollars in thousands, except per share amounts) 2013 2012 2011 Interest income: Interest and fees on loans Interest on due from banks Interest on investment securities: U.S. Government sponsored enterprises States and political subdivisions Other Total interest income Interest expense: NOW, MMDA & savings deposits Time deposits FHLB borrowings Junior subordinated debentures Other Total interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses Non-interest income: Service charges Other service charges and fees Other than temporary impairment losses Gain on sale of securities Mortgage banking income Insurance and brokerage commissions Loss on sale and write-down of other real estate Miscellaneous Total non-interest income Non-interest expense: Salaries and employee benefits Occupancy Other Total non-interest expense Earnings before income taxes Income tax expense Net earnings Dividends and accretion of preferred stock Net earnings available to common shareholders Basic net earnings per common share Diluted net earnings per common share Cash dividends declared per common share $ $ $ $ $ 30,194 85 1,639 4,427 351 36,696 732 1,650 2,518 398 55 5,353 31,343 2,584 28,759 4,566 1,172 — 614 1,228 661 (581) 4,992 12,652 16,851 5,539 10,451 32,841 8,570 1,879 6,691 656 6,035 1.08 1.07 0.12 32,758 51 2,746 3,403 287 39,245 1,180 3,205 2,744 438 129 7,696 31,549 4,924 26,625 4,764 1,940 — 1,218 1,229 517 (1,136) 4,005 12,537 16,426 5,236 10,120 31,782 7,380 1,587 5,793 1,010 4,783 0.86 0.86 0.18 36,374 33 5,414 3,180 258 45,259 2,263 5,035 2,956 407 285 10,946 34,313 12,632 21,681 5,106 2,090 (144) 4,406 757 471 (1,322) 3,149 14,513 14,766 5,339 9,467 29,572 6,622 1,463 5,159 1,393 3,766 0.68 0.68 0.08 See Appendix A to the Peoples Bancorp of North Carolina, Inc. Proxy Statement, dated March 25, 2014, for a complete set of Consolidated Financial Statements. Page 7 Directors and Officers Peoples Bank and Peoples Bancorp Board of Directors Robert C. Abernethy John W. Lineberger, Jr. Chairman of the Board President Peoples Bancorp of North Carolina, Inc. and Peoples Bank President, Secretary and Treasurer Carolina Glove Company, Inc. James S. Abernethy President and Assistant Secretary Midstate Contractors, Inc. Douglas S. Howard Vice President, Secretary and Treasurer Denver Equipment of Charlotte, Inc. Lincoln Bonded Warehouse Company Gary E. Matthews President and Director Matthews Construction Company, Inc. Billy L. Price, Jr., M.D. Managing Partner and Practitioner of Internal Medicine Catawba Valley Internal Medicine, PA Larry E. Robinson President and Chief Executive Officer The Blue Ridge Distributing Company, Inc. W. Gregory Terry General Manager Drum and Willis-Reynolds Funeral Homes and Crematory Dan Ray Timmerman, Sr. Chairman of the Board and Chief Executive Officer Timmerman Manufacturing, Inc. Benjamin I. Zachary President, Treasurer, General Manager and Director, Alexander Railroad Company Peoples Bancorp Officers Lance A. Sellers President and Chief Executive Officer Joseph F. Beaman, Jr. Executive Vice President and Corporate Secretary A. Joseph Lampron, Jr. Executive Vice President, Chief Financial Officer and Corporate Treasurer William D. Cable, Sr. Executive Vice President, Assistant Corporate Treasurer and Assistant Corporate Secretary Peoples Bank Officers Lance A. Sellers President and Chief Executive Officer Joseph F. Beaman, Jr. Executive Vice President, Chief Administrative Officer and Corporate Secretary A. Joseph Lampron, Jr. Executive Vice President, Chief Financial Officer William D. Cable, Sr. Executive Vice President, Chief Operating Officer Kimberly L. Boyd Senior Vice President, Banking Support Manager Jeffrey P. Gniadek Senior Vice President, Area Executive James O. Perry Senior Vice President, Retail Banking Manager David E. Reitzel Senior Vice President, Real Estate Administration Daniel F. Richard Senior Vice President, Area Executive Mark W. Sigmon Senior Vice President, Area Executive Timothy P. Turner Senior Vice President, Commercial Credit Clifton A. Wike Senior Vice President, Area Executive John M. Woods Senior Vice President, Area Executive Kimberly D. Bazzle First Vice President, Marketing Director J. LaShae Bock First Vice President, Human Resources Director Christopher L. Brookshire First Vice President, RAA/GAA David C. Brown First Vice President, Certified Financial Planner Steven F. Cloninger First Vice President, Commercial Credit George S. Earp First Vice President, Finance Director Jan G. Griffin First Vice President, Loan Operations Director Leslie D. Hambrick First Vice President, Internal Auditor Rafael Intriago First Vice President, Banco de la Gente Retail Director M. Beth LaBarbera First Vice President, Regional Sales Manager Connie P. Ollis First Vice President, Compliance/ Security Officer Angela J. Abernethy Vice President, Treasury Management Manager Martha P. Avendano Vice President, Sales Relationship Manager Velvet L. Bowman Vice President, Service Center Manager Shana R. Carpenter Vice President, Business Center Manager, Denver Wendy E. Cordero Vice President, Banco de la Gente Mortgage Manager Mary C. Craven Vice President, Business Center Manager, Cornelius Kay F. Deal Vice President, Business Center Manager, Conover Roger G. Decato Vice President, Business Development Officer James R Durham Vice President, Financial Advisor Mark W. Gustafson Vice President, Investment Account Executive Tommie A. Hall Vice President, Loan Documentation Lucretia K. Rogers First Vice President, Regional Sales Manager Lamona J. Harbinson Vice President, Electronic Banking Manager Kyle E. Sigmon First Vice President, Consumer Credit Tammy H. Stephens First Vice President, Director of Information Technology Diane L. Klein Vice President, Business Center Manager, Viewmont David S. Lewis, Jr. Vice President, Business Development Officer Bruce E. Meisner Vice President, REAS Manager Vickie E. Miller Vice President, Retail Support Coordinator Wendy H. Moran Vice President, Business Center Manager, Triangle Sarah K. Morgan-Hardman Vice President, Business Center Manager, Hiddenite Paula M. Parker Vice President, Business Center Manager, Catawba Valley Blvd Lynn H. Poole Vice President, Business Center Manager, Catawba Hight D. Reid Vice President, Business Center Manager, West Lincoln Jeanette R. Ringley Vice President, Business Center Manager, Newton Shawn D. Sigmon Vice President, Mortgage Department Manager Jody G. Street Vice President, Business Development Officer Allison J. Taylor Vice President, Business Center Manager, Springs Road Lisa G. Treadaway Vice President, Deposit Operations Manager Ryan M. Waddle Vice President, Business Development Officer Page 8 Subsidiaries and Shareholder Information Peoples Bancorp Subsidiary Board of Directors and Officers Community Bank Real Estate Solutions, LLC Board of Directors Officers Robert C. Abernethy David E. Reitzel Dan Ray Timmerman, Sr. Lance A. Sellers David E. Reitzel - President Christopher L Brookshire - Vice President Joseph F. Beaman, Jr. - Secretary A. Joseph Lampron, Jr. – Treasurer Peoples Bank Subsidiaries’ Board of Directors and Officers Peoples Investment Services, Inc. Real Estate Advisory Services, Inc. Board of Directors Officers Board of Directors Officers Robert C. Abernethy Billy L. Price, Jr., M.D. David C. Brown Larry E. Robinson Douglas S. Howard Lance A. Sellers William D. Cable, Sr. Lance A. Sellers - President David C. Brown - Vice President and Assistant Secretary Joseph F. Beaman, Jr. - Secretary A. Joseph Lampron, Jr. – Treasurer Robert C. Abernethy Dan Ray Timmerman, Sr. David E. Reitzel Lance A. Sellers David E. Reitzel – President Lance A. Sellers – Vice President Joseph F. Beaman, Jr. – Secretary A. Joseph Lampron, Jr. – Treasurer SHAREHOLDER AND GENERAL INFORMATION Annual Meeting The Annual Meeting of Shareholders of Peoples Bancorp will be held at 11:00 a.m. on Thursday, May 1, 2014, at the Catawba Country Club located at 1154 Country Club Road, Newton, North Carolina. Shareholders’ Luncheon Shareholders in attendance at the Annual Meeting are cordially invited to remain for a luncheon to be served immediately upon adjournment. Common Stock Peoples Bancorp common stock is listed on the NASDAQ (National Association of Securities Dealers Automated Quotations) Global Market, where our symbol is PEBK. Dividend Reinvestment & Stock Purchase Peoples Bancorp offers a Dividend Reinvestment and Stock Purchase Plan for the benefit of the Company’s shareholders. The Plan provides for the full or partial reinvestment of cash dividends, optional cash purchases of the Company’s stock, safekeeping of the share certificates, liquidation of shares, and gifting of shares and enrollment of the designated recipients. Broadridge Corporate Issuer Solutions, Inc. is the Plan Administrator. For more information, one may call Peoples Bancorp at 828-464- 5620 or 800-948-7195 or contact the Plan Administrator at 855-263-4988. Shareholders of Peoples Bancorp are entitled to receive dividends when and as declared by the Board of Directors out of funds legally available therefore. Such dividend payments are declared based upon the guidelines of North Carolina and federal banking law. Corporate Office Peoples Bancorp of North Carolina, Inc. 518 West C Street PO Box 467 Newton, NC 28658 828-464-5620 Stock Transfer Agent & Registrar Broadridge Corporate Issuer Solutions, Inc. P.O. Box 1342 Brentwood, NY 11717 www.broadridge.com Independent Auditors Porter Keadle Moore, LLC 235 Peachtree Street, NE Suite 1800 Atlanta, GA 30303 Page 9 Peoples Bancorp Center 518 West C Street PO Box 467 Newton, NC 28658 (828) 464-5620 Toll-free (800) 948-7195 Customer Service Center (828) 466-1765 Toll-free (877) 802-1212 TheRealPeoplesBank.com Catawba 106 North Main Street Catawba, NC 28609 (828) 241-3123 Catawba Valley Boulevard 2050 Catawba Valley Blvd. SE Hickory, NC 28602 (828) 322-6372 Claremont 3261 East Main Street Claremont, NC 28610 (828) 459-7152 Conover 213 1st Street West Conover, NC 28613 (828) 464-8456 Cornelius 9624-I Bailey Road Cornelius, NC 28031 (704) 237-9270 Denver 6125 Highway 16 South Denver, NC 28037 (704) 483-3050 Hiddenite 5153 NC Highway 90 East Hiddenite, NC 28636 (828) 632-0118 (704) 585-6631 Lincolnton 1910 East Main Street Lincolnton, NC 28092 (704) 732-0097 Maiden 200 Island Ford Road Maiden, NC 28650 (828) 428-9874 Mooresville 1074 River Highway Mooresville, NC 28117 (704) 658-3600 Newton 420 West A Street Newton, NC 28658 (828) 464-5663 North Newton 2619 North Main Avenue Newton, NC 28658 (828) 464-8664 Springs Road 3310 Springs Road NE Hickory, NC 28601 (828) 256-9229 Triangle 142 Highway 16 South Denver, NC 28037 (704) 483-7727 (704) 827-2370 Viewmont 1333 2nd Street NE Hickory, NC 28601 (828) 345-6262 West Lincoln 760 Highway 27 West Lincolnton, NC 28092 (704) 736-1447 Satellite Location Abernethy Laurels 102 Leonard Avenue Newton, NC 28658 (828) 464-3077 Denver Loan Production Office 3754 Highway 16 North Denver, NC 28037 (704) 489-8940 Banco de la Gente Administrative Office 800 East Arrowood Road Charlotte, NC 28217 (704) 909-5460 Banco de la Gente 6300 South Boulevard Charlotte, NC 28217 (704) 554-7494 Banco de la Gente 4451-A Central Avenue Charlotte, NC 28205 (704) 531-4571 Banco de la Gente 501 West Roosevelt Boulevard Monroe, NC 28110 (704) 261-2020 Banco de la Gente 3023-105 Capital Blvd Raleigh, NC 27604 (919) 747-8000 

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