2 0 1 9 A N N U A L R E P O R T
PeoplesBancorp
Our Promise
Our Core Values:
We strive to be exceptional
Employees
and inspire others to be
exceptional too.
Our Vision
To be the bank that’s
exceptional at serving
our communities, including
We are informed,
encouraged, and committed.
Integrity
We are fair and truthful.
Exceptional Customer Service
We surpass our customers’
expectations.
employees, customers
Accountability
and shareholders.
We are accountable for our own
actions and bank goals.
Progressive and Positive
We see change as an opportunity.
Our Mission
To provide exceptional
customer service while
selling to customer needs.
Table of Contents
Message from the President
Report of Independent Registered Public Accounting Firm
Financial Highlights
Consolidated Balance Sheets
Consolidated Statements of Earnings
Board of Directors and Officers
Subsidiaries / Shareholder and General Information
2
4
5
6
7
8
9
From the President
2 0 1 9 A n n u a l R e p o r t
“Believing
in our
communities
and having
the capabilities
to support them
has resulted in
a great year.”
When we commit to delivering exceptional service to our communities, the results
speak. I’m pleased to present this 2019 Annual Report of business activity on behalf
of Peoples Bancorp of North Carolina, Inc. In its 107th consecutive year of being
presented, this report is a reflection of the dedication, integrity and work of our
employees. Through their consistent service, this company continues to positively
impact the lives of our customers while strengthening our collective communities.
Year-to-date highlights are as follows:
l Net earnings were a record $14.1 million or $2.37 basic net earnings per share and
$2.36 diluted net earnings per share for the year ended December 31, 2019, as
compared to $13.4 million or $2.23 basic net earnings per share and $2.22 diluted
net earnings per share for the same period one year ago.
Brand Focus
The Peoples Bank brand continues to be embraced both internally and externally, from our human resources efforts to
product promotions and community service. It’s inspiring to be that bank that strives to be exceptional and encourages
others to be exceptional too. Our 92% Customer Service Index score is proof of our continuing efforts to deliver on our
brand promise.
Joe Lampron’s Retirement
We’d like to recognize Joe Lampron for the incredible contributions he has made to our company and wish him well as he
transitions into retirement, which is planned for mid-2020. Joe has been an exceptional member of our management team
since 2001 and he has played a significant role in the successful financial performance of the bank during that time. We
are fortunate to have had his expertise and leadership and hope that he enjoys this next phase of his life.
The Directors of Peoples Bancorp are instrumental to the success of our company. Their continued dedication to Peoples
Bank is a consistent reminder for us to deliver on our mission. Please join me in thanking them for their hard work and
l Total loans increased $45.9 million to $849.9 million at December 31, 2019, compared
commitment.
to $804.0 million at December 31, 2018.
l Core deposits were $932.2 million or 96.45% of total deposits at December 31, 2019,
compared to $859.2 million or 97.95% of total deposits at December 31, 2018.
l Shareholders’ equity was $134 .1 million, or 11 .61% of total assets, at December 31,
2019, compared to $123.6 million, or 11.31% of total assets, at December 31, 2018. The
Company repurchased 90,354 shares of its common stock during the year ended
December 31, 2019 under the Company’s stock repurchase program, which was
funded in February 2019.
Our team of employees are the reason our customers trust us to serve them. People
do business with people they trust and who deliver. Our employees carry out our vision
and deliver on our mission of striving to be exceptional at serving. Our customers
depend on us to support them on their financial journeys. What we do here is more
than transactional; we’re building relationships and, providing financial services and
information that can make a meaningful difference in our customer’s lives.
To our shareholders: the exceptional service we deliver to our customers and
employees aligns with our focus on maintaining the highest operating standards,
including being a well-capitalized bank with strong earnings. In everything we do, we
stay true to the core values and guiding principles upon which our bank was founded.
Here is a recap of some of our more noteworthy achievements and announcements
this year.
Investment in Technology
To keep pace with the modern conveniences our customers expect, we made
numerous investments in technology, such as installing new ATMs and making
upgrades to existing ones. In addition, we upgraded our in-branch displays with video
capabilities, refreshed our website design, and rolled out customer interaction tablets
in some of our offices.
In addition to the Bank, which operates as a wholly owned subsidiary of the Company, we would like to remind you of our
three subsidiary companies:
Peoples Investment Services, Inc., licensed financial advisors who provide access to investment products, which include
stocks, bonds, mutual funds, annuities, and other suitable monetary investments through our affiliation with Raymond
James Financial Services, Inc.
Real Estate Advisory Services, Inc., which provides real estate appraisals (both residential and commercial) to Peoples
Bancorp’s market area, thereby becoming a valued partner with respect to mortgage-related transactions.
Community Bank Real Estate Solutions, LLC, assists community banks across the country with appraisal management
services.
The Annual Shareholders Meeting is scheduled for May 7, 2020 at Catawba Country Club beginning at 11 a.m. I look forward
to seeing all shareholders at the Annual Meeting, so that I may have the privilege of personally thanking each and every
one of you for your continued support. We hope you will continue to recommend our Bank and subsidiary companies to
members of your communities.
Sincerely,
Lance A. Sellers
President and Chief Executive Officer
2
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
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
$
$
$
$
2 019
49,601
3,757
45,844
863
44,981
17,739
45,517
3,136
14,067
2.37
2.36
0.66
32.85
22.68
843,194
195,746
1,154,882
966,517
134,120
1.23%
10.45%
28.00%
11.78%
2 0 1 9 A n n u a l R e p o r t
Change
9%
75%
6%
9%
6%
10%
7%
20%
5%
6%
6%
27%
34%
10%
6%
1%
6%
10%
8%
2018
45,350
2,146
43,204
790
42,414
16,166
42,574
2,624
13,382
2.23
2.22
0.52
24.46
20.62
797,578
194,578
1,093,251
877,213
123,617
1.22%
10.81%
23.41%
11.31%
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Peoples Bancorp of North Carolina, Inc.
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of Peoples Bancorp of North Carolina, Inc. as of
Report
of
Independent
Registered
Public
Accounting
Firm
December 31, 2018 and 2017, and the related consolidated statements of earnings, comprehensive
income, shareholders' equity and cash flows for each of the three years in the period ended December
31, 2018 (not presented herein); and in our report, dated March 14, 2019, we expressed an unqualified
opinion on those consolidated financial statements.
To
the
Shareholders
and
the
Board
of
Directors
of
Peoples
Bancorp
of
North
Carolina,
Inc.
In our opinion, the information set forth in the accompanying condensed consolidated financial
We
have
audited,
in
accordance
with
the
standards
of
the
Public
Company
Accounting
Oversight
Board
statements is fairly stated, in all material respects, in relation to the consolidated financial statements
(United
States),
the
consolidated
balance
sheets
of
Peoples
Bancorp
of
North
Carolina,
Inc.
as
of
from which it has been derived.
December
31,
2019
and
2018,
and
the
related
consolidated
statements
of
earnings,
comprehensive
income,
shareholders'
equity
and
cash
flows
for
each
of
the
three
years
in
the
period
ended
December
31,
2019
(not
presented
herein);
and
in
our
report,
dated
March
13,
2020,
we
expressed
an
unqualified
opinion
on
those
consolidated
financial
statements.
Charlotte, North Carolina
March 14, 2019
In
our
opinion,
the
information
set
forth
in
the
accompanying
condensed
consolidated
financial
statements
is
fairly
stated,
in
all
material
respects,
in
relation
to
the
consolidated
financial
statements
from
which
it
has
been
derived.
Charlotte,
North
Carolina
March
13,
2020
elliottdavis.com
4
5
Elliott
Davis
PLLC
|
www.elliottdavis.com
Consolidated Balance Sheets
For the years ended December 31, 2019 and 2018
Consolidated Statements of Earnings
For the Years Ended December 31, 2019, 2018 and 2017
(Dollars in thousands)
Assets
Cash and due from banks, including reserve requirements
of $13,210 at 12/31/19 and $8,918 at 12/31/18
$
December 31,
December 31,
Interest-bearing deposits
Federal funds sold
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
Right of use lease asset
Accrued interest receivable and other assets
Total assets
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand
NOW, MMDA & savings
Time, $250,000 or more
Other time
Total deposits
Securities sold under agreements to repurchase
Junior subordinated debentures
Lease liability
Accrued interest payable and other liabilities
Total liability
Commitments (Note 10)
Shareholders’ equity:
2019
48,337
720
3,330
52,387
195,746
4,231
199,977
4,417
849,874
(6,680)
843,194
18,604
16,319
-
3,622
16,362
$
1,154,882
$
338,004
516,757
34,269
77,487
966,517
24,221
15,619
3,647
10,758
1,020,762
2 018
40,553
2,817
-
43,370
194,578
4,361
198,939
680
804,023
(6,445)
797,578
18,450
15,936
27
-
18,271
1,093,251
298,817
475,223
16,239
86,934
877,213
58,095
20,619
-
13,707
969,634
Series A preferred stock, $1,000 stated value; authorized
5,000,000 shares; no shares issued and outstanding
Common stock, no par value; authorized
20,000,000 shares; issued and outstanding 5,912,300 shares
at December 31, 2019 and 5,995,256 shares at December 31, 2018
Retained earnings
Accumulated other comprehensive income
Total shareholders’ equity
Total liabilities and shareholders’ equity
-
-
59,813
70,663
3,644
134,120
$
1,154,882
62,096
60,535
986
123,617
1,093,251
(Dollars in thousands, except per share amounts)
Interest income:
Interest and fees on loans
Interest on due from banks
Interest on federal funds sold
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 (reduction of) loan losses
Net interest income after provision for loan losses
Non-interest income:
Service charges
Other service charges and fees
Gain on sale of securities
Mortgage banking income
Insurance and brokerage commissions
Appraisal management fee income
Gain (loss) on sales and write-downs of other real estate
Miscellaneous
Total non-interest income
Non-interest expense:
Salaries and employee benefits
Occupancy
Professional fees
Advertising
Debit card expense
FDIC insurance
Appraisal management fee expense
Other
Total non-interest expense
Earnings before income taxes
Income tax expense
Net earnings
Basic net earnings per share
Diluted net earnings per share
Cash dividends declared per share
2 019
$
43,301
213
331
2,670
2,915
171
49,601
1,596
909
205
844
203
3,757
45,844
863
44,981
4,576
714
226
1,264
877
4,484
(11)
5,609
17,739
23,238
7,364
1,490
1,021
890
119
3,421
7,974
45,517
17,203
3,136
14,067
2.37
2.36
0.66
$
$
$
$
2 0 1 9 A n n u a l R e p o r t
2018
38,654
304
-
2,333
3,877
182
45,350
769
472
-
790
115
2,146
43,204
790
42,414
4,355
705
15
851
824
3,206
17
6,193
16,166
21,530
7,170
1,525
922
994
328
2,460
7,645
42,574
16,006
2,624
13,382
2.23
2.22
0.52
2017
34,888
219
-
2,404
4,236
202
41,949
598
466
662
590
61
2,377
39,572
(507)
40,079
4,453
593
-
1,190
761
3,306
(239)
5,300
15,364
20,058
6,701
1,236
1,195
1,248
347
2,526
7,917
41,228
14,215
3,947
10,268
1.71
1.69
0.44
See Appendix A to the Peoples Bancorp of North Carolina, Inc. Proxy Statement, dated March 25, 2020, for a complete set of Consolidated Financial Statements.
See Appendix A to the Peoples Bancorp of North Carolina, Inc. Proxy Statement, dated March 25, 2020, for a complete set of Consolidated Financial Statements.
6
7
Directors and Officers
Peoples Bank Subsidiaries’
Board of Directors and Officers
Shareholder and
General Information
2 0 1 9 A n n u a l R e p o r t
Peoples Bank
and Peoples Bancorp
Board of Directors
Senior Vice Presidents
Kimberly L. Boyd
Senior Vice President,
Chief Banking Support Officer
Vice Presidents
Melissa R. Aldrich
Vice President,
Business Center Manager - Hiddenite
Bruce E. Meisner
Vice President, REAS Manager
Kyle Merck
Vice President Service Delivery Manager
Community Bank Real Estate Solutions, LLC
Board of Directors
Officers
Robert C. Abernethy
Chairman of the Board
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 and Treasurer
Denver Equipment Company of
Charlotte, Inc.
John W. Lineberger, Jr.
President
Lincoln Bonded Warehouse Company
Gary E. Matthews
President and Director
Matthews Construction Company, Inc.
Billy L. Price, Jr., M.D.
Practitioner of Internal Medicine
BL Price Jr Medical Consultants, PLLC
Larry E. Robinson
Chairman of the Board
and Chief Executive Officer
The Blue Ridge Distributing
Company, Inc.
W. Gregory Terry
President
DFH Holdings
Operator/General Manager
Drum & Willis-Reynolds
Funeral Home & 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
Corporate Officers
Lance A. Sellers
President and
Chief Executive Officer (CEO)
William D. Cable, Sr.
Executive Vice President,
Chief Operating Officer (COO)
A. Joseph Lampron, Jr.
Executive Vice President,
Chief Financial Officer (CFO)
Amy Morton
Vice President,
Business Center Manager - Conover
Paula M. Parker
Vice President,
Business Center Manager – CVB
Lynn H. Poole
Vice President,
Business Center Manager – Catawba
Krissy O. Price
Vice President, Shareholder Services
& Assistant Corporate Secretary
Andrew R. Puntch
Vice President, Application & Project
Management Manager
C. Randy Rodgers
Vice President, Financial Advisor
Sandra B. Shuford
Vice President, Data
Management & Computer
Operations Manager
Shawn D. Sigmon
Vice President, Mortgage Loan
Origination System Analyst
John W. Somers
Vice President,
Business Center Manager – Lincolnton
Jon Bradley Southers
Vice President, Commercial Credit
Administration
Michael K. Stroud
Vice President, Staff Appraiser
Allison J. Taylor
Vice President,
Business Center Manager - Springs Road
Tony J. Thomas
Vice President,
Business Development Officer
Lisa G. Treadaway
Vice President,
Organizational Architect
Adam P. Turbyfill
Vice President,
Business Development Officer
Jennifer K. Turner
Vice President,
Credit Administration
Loan Review Officer
Freda B. Turnmire
Vice President,
Business Center Manager - West Lincoln
Dominick Vertorano
Vice President,
Business Center Manager - Cornelius
William Walton
Vice President, Tech Support Unit
& Architect Manager
Tandra D. Wilkinson
Vice President, Loan Balancing
& Servicing Manager
Joshua Williams
Vice President, Business Development
Officer I - Cornelius
George S. Earp
Senior Vice President, Finance Director
Jeffery P. Gniadek
Senior Vice President,
Area Executive – Hickory
Jan G. Griffin
Senior Vice President,
Director of Loan Operations
Rafael Intriago
Senior Vice President,
Metro Market Executive
Walter C. Joyce
Senior Vice President,
Chief Technology Officer
James O. Perry
Senior Vice President, Chief Retail Officer
David E. Reitzel
Senior Vice President,
Real Estate Administration
Daniel F. Richard
Senior Vice President,
Area Executive - Triangle
Mark W. Sigmon
Senior Vice President,
Area Executive – Denver
Jody G. Street
Senior Vice President
Area Executive - Newton
Timothy P. Turner
Senior Vice President, Chief Credit Officer
First Vice Presidents
Angela J. Abernethy
First Vice President,
Treasury Services Manager
Heather A. Allen
First Vice President, BSA Officer
Kimberly D. Bazzle
First Vice President, Marketing Director
David C. Brown
First Vice President, Investment Manager
Leslie D. Hambrick
First Vice President, Chief Internal Auditor
M. Beth LaBarbera
First Vice President,
Regional Sales Manager
John J. Noonan
First Vice President, CBRES Manager
Connie P. Ollis
First Vice President, Compliance Officer
Lucretia K. Rogers
First Vice President,
Regional Sales Manager
Carol S. Shinn
First Vice President,
Director of Deposit Operations
Kyle E. Sigmon
First Vice President,
Consumer Credit Administration
James Veasey
First Vice President,
Business Development Officer
Ryan M. Waddle
First Vice President,
Area Executive - Mooresville
Margaret C. Ward
First Vice President
Human Resources Director
8
Carol R. Allen
Vice President,
Business Center Manager – Maiden
William Armstrong, Jr.
Vice President, Mortgage Underwriter
Kevin M. Brady
Vice President, Mortgage Sales Manager
Velvet L. Burton
Vice President, Service Center Manager
Lorena Castro
Vice President,
Business Center Manager - South Boulevard
Jeanine L. Cohoon
Vice President,
Marketing Channel Analyst
Wendy E. Cordero-Jones
Vice President, Mortgage Lending Manager
Roger G. Decato
Vice President, Commercial Banking
Portfolio Manager
Tammy Deel
Vice President, Review & Quality
Control Manager
Zachary M. Dellinger
Vice President,
Business Development Officer
Cathleen H. Dillingham
Vice President, Learning
& Development Manager
James R. Durham
Vice President, Financial Advisor
Rhonda L. Fleming
Vice President,
Business Development Officer
Maria P. Gibbs
Vice President, Business
Development Officer
Lauren K. Hammond
Vice President, Marketing Specialist
Lamona J. Harbinson
Vice President, E-Services Manager
Vanessa Horvath
Vice President,
Business Development Officer
Mitchell B. Johnson
Vice President,
Business Center Manager - Triangle
Kacee King
Vice President, Business Center
Manager II - Mooresville
Graziella La Rosa
Vice President, Business Center
Manager II - Raleigh
David S. Lewis Jr.
Vice President,
Business Development Officer
Mark N. Lewis
Vice President,
Business Development Officer
Ryan T. Link
Vice President, Senior Credit Analyst
George “Marty” Lowder
Vice President, Finance Analyst
Brenda K. Mash
Vice President, Business
Center Manager – Denver
Joshua E. McKinney
Vice President, Business
Development Officer – Hickory
Robert C. Abernethy
David E. Reitzel
Dan Ray Timmerman, Sr.
Lance A. Sellers
David E. Reitzel
President
Lance A. Sellers
Vice President
John Noonan
Vice President
Krissy O. Price
Secretary
A. Joseph Lampron, Jr.
Treasurer
Peoples Investment Services, Inc.
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.
David C. Brown
President
Lance A. Sellers
Vice President and
Assistant Secretary
Krissy O. Price
Secretary
A. Joseph Lampron, Jr.
Treasurer
Real Estate Advisory Services, Inc.
Board of Directors
Officers
Robert C. Abernethy
Dan Ray Timmerman, Sr.
David E. Reitzel
Lance A. Sellers
David E. Reitzel
President
Lance A. Sellers
Vice President
Krissy O. Price
Secretary
A. Joseph Lampron, Jr.
Treasurer
Annual Meeting
The Annual Meeting of Shareholders of Peoples Bancorp will be
held at 11 a.m. on May 7, 2020 at Catawba Country Club located at
1154 Country Club Rd, 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
Elliott Davis, PLLC
500 East Morehead Street, Suite 700
Charlotte, NC 28202
9
PeoplesBankNC.com