PEOPLES BANCORP OF NORTH CAROLINA INC

Regulatory Filings • Apr 19, 2006

8-K 1 mainbody8kapril172006.htm 8-K FOR APRIL 17, 2006 8-K for April 17, 2006 Licensed to: Peoples Bank Document Created using EDGARizer HTML 3.0.4.0 Copyright 2006 EDGARfilings, Ltd., an IEC company. All rights reserved EDGARfilings.com

| UNITED
STATES |
| --- |
| SECURITIES
AND EXCHANGE COMMISSION |
| Washington,
D.C. 20549 |
| ______ |

| FORM
8-K | |
| --- | --- |
| CURRENT
REPORT PURSUANT
TO SECTION 13 OR 15(D) | |
| OF
THE SECURITIES EXCHANGE ACT OF 1934 | |
| Date
of Report (Date of earliest event reported): April
17, 2006 | |
| Peoples
Bancorp of North Carolina, Inc. | |
| (Exact
Name of Registrant as Specified in Its Charter) | |
| North
Carolina | |
| (State
or Other Jurisdiction of Incorporation) | |
| 000-27205 | 56-2132396 |
| (Commission
File No.) | (IRS
Employer Identification No.) |
| 518
West C Street, Newton, North Carolina | 28658 |
| (Address
of Principal Executive Offices) | (Zip
Code) |
| (828)
464-5620 | |
| (Registrant’s
Telephone Number, Including Area Code) | |
| Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under
any
of the following provisions: | |
| Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425) | |
| Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) | |
| Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b)) | |
| Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c)) | |

Peoples Bancorp of North Carolina, Inc.

INDEX

	Page
Item
2.02 - Results of Operations and Financial Condition	3
Item
9.01 - Financial Statements and Exhibits	3
Signatures	4
Exhibit
(99)(a) Press release dated April 17, 2006	5

2

Item 2.02. Results of Operations and Financial Condition

On April 17, 2006, Peoples Bancorp of North Carolina, Inc. issued a press release announcing first quarter 2006 earnings.

A copy of the press release is attached hereto as Exhibit (99)(a) and is incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

(99)(a) Press Release, dated April 17, 2006

Disclosure about forward-looking statements

This Form 8-K contains forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, changes in interest rate environment, management’s business strategy, national, regional, and local market conditions and legislative and regulatory conditions.

Readers should not place undue reliance on forward-looking statements, which reflect management’s view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. Readers should also carefully review the risk factors described in other documents the Company files from time to time with the Securities and Exchange Commission.

3

SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant
has duly caused this report to be signed on its behalf by the
undersigned
hereunto duly authorized.
	PEOPLES
BANCORP OF NORTH CAROLINA, INC.
Date:
April 19, 2006	By:	/s/
A. Joseph Lampron
	A.
Joseph Lampron
	Executive
Vice President and Chief Financial
Officer

4

	EXHIBIT (99)(a)
NEWS
RELEASE
	April 17,
2006
Contact:	Tony
W. Wolfe
	President
and Chief Executive Officer
	A.
Joseph Lampron
	Executive
Vice President and Chief Financial Officer
	828-464-5620,
Fax 828-465-6780

For Immediate Release

PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS

Peoples Bancorp of North Carolina, Inc., the parent company of Peoples Bank, reported net income of $2.2 million, or $0.66 basic net income per share and $0.64 diluted net income per share, for the three months ended March 31, 2006 as compared to $1.3 million or $0.37 basic net income per share and $0.36 diluted net income per share, for the same period one year ago. Net income from recurring operations for the three months ended March 31, 2006 was $2.4 million, or $0.70 basic net income per share and $0.69 diluted net income per share, as compared to first quarter 2005 net income from recurring operations of $1.3 million, or $0.37 basic net income per share and $0.36 diluted net income per share.

Tony W. Wolfe, President and Chief Executive Officer, attributed the growth in recurring first quarter earnings to growth in interest-earning assets, which contributed to increases in net interest income and non-interest income. These increases in net interest income and non-interest income were partially offset by increases in the provision for loan losses and non-interest expense.

Net interest income increased 28% to $8.0 million for the three months ended March 31, 2006 compared to $6.2 million for the same period one year ago. This increase is attributable to an increase in interest income due to increases in the prime rate, which resulted from Federal Reserve interest rate increases. In addition, the average outstanding balances of loans and investment securities available for sale increased for the three months ended March 31, 2006. Net interest income after the provision for loan losses increased 31% to $7.2 million during the first quarter of 2006, compared to $5.5 million for the same period one year ago. The provision for loan losses for the three months ended March 31, 2006 was $759,000 as compared to $690,000 for the same period one year ago.

Recurring non-interest income increased 23% to $2.0 million for the three months ended March 31, 2006, as compared to $1.6 million for the same period one year ago. The increase in recurring non-interest income is primarily due to an increase in service charges and fees of $271,000, an increase in miscellaneous other income of $99,000 and an increase in mortgage banking income of $17,000. Net non-recurring losses of $63,000 for the three months ended March 31, 2006 included an $82,000 loss on the sale of securities partially offset by a $19,000 gain on the disposition of assets.

Recurring non-interest expense increased 5% to $5.5 million for the three months ended March 31, 2006, as compared to $5.3 million for the same period last year. The increase in non-interest expense included an increase of $176,000 or 6% in salaries and benefits expense due to normal salary increases and increased incentive expense, as well as an increase of $77,000 or 15% in other non-interest expenses. The Company had non-recurring expenses of $178,000 in the first quarter of 2006 resulting from a prepayment fee associated with the early termination of a $5.0 million Federal Home Loan Bank advance. This fee is included in other non-interest expense.

5

PEOPLES BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS - PAGE TWO

Total assets as of March 31, 2006 amounted to $761.7 million, an increase of 10% compared to total assets of $690.0 million at March 31, 2005. This increase is primarily attributable to an increase in loans combined with an increase in available for sale securities. Loans increased 9% to $590.6 million as of March 31, 2006 compared to $540.0 million as of March 31, 2005. Available for sale securities increased 9% to $113.8 million as of March 31, 2006 compared to $103.9 million as of March 31, 2005, the result of additional securities purchases. This increase in available for sale securities was partially offset by paydowns on mortgage-backed securities, calls and maturities.

Non-performing assets totaled $5.2 million at March 31, 2006 or 0.68% of total assets, compared to $8.3 million at March 31, 2005 or 1.20% of total assets. The allowance for loan losses at March 31, 2006 amounted to $7.6 million or 1.30% of total loans compared to $7.4 million or 1.37% of total loans at March 31, 2005.

Deposits amounted to $613.5 million as of March 31, 2006, representing an increase of 10% over deposits of $558.3 million at March 31, 2005. Core deposits, which include non-interest bearing demand deposits, NOW, MMDA, savings and certificates of deposits of denominations less than $100,000, increased $15.8 million to $429.2 million at March 31, 2006 as compared to $413.4 million at March 31, 2005 primarily due to an increase of $18.7 million in certificates of deposit in amounts less than $100,000 and a $16.2 million increase in non-interest bearing demand deposits. These increases in core deposits were partially offset by a $19.2 million decrease in interest bearing demand deposits resulting from a decrease in the Bank’s Investment Checking product. Certificates of deposit in amounts greater than $100,000 or more totaled $184.3 million at March 31, 2006 as compared to $144.9 million at March 31, 2005. This increase is due to an increase of $21.1 million in brokered deposits combined with an increase of $18.4 million in non-brokered deposits resulting from a change in certificate of deposit pricing strategies implemented in 2005.

Shareholders’ equity increased to $55.5 million, or 7.28% of total assets, at March 31, 2006 as compared to $50.7 million, or 7.35% of total assets, at March 31, 2005. The $4.7 million increase in shareholders’ equity from March 31, 2005 to March 31, 2006 is primarily due to net income earned for the period, which was offset by a $601,000 decrease in accumulated other comprehensive income as compared to March 31, 2005. The decrease in accumulated other comprehensive income is primarily due to a decrease in the market value of available for sale securities.

Peoples Bank operates entirely in North Carolina, with eleven offices throughout Catawba County, one office in Alexander County, three offices in Lincoln County and two offices in Mecklenburg County. The Bank also operates a Loan Production Office in Davidson, North Carolina, which is located in Mecklenburg County. The Company’s common stock is publicly traded over the counter and is quoted on the Nasdaq National Market under the symbol “PEBK.”

Statements made in this press release, other than those concerning historical information, should be considered forward-looking statements pursuant to the safe harbor provisions of the Securities Exchange Act of 1934 and the Private Securities Litigation Act of 1995. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management and on the information available to management at the time that this release was prepared. These statements can be identified by the use of words like “expect,” “anticipate,” “estimate,” and “believe,” variations of these words and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, (1) competition in the markets served by Peoples Bank, (2) changes in the interest rate environment, (3) general national, regional or local economic conditions may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and the possible impairment of collectibility of loans, (4) legislative or regulatory changes, including changes in accounting standards, (5) significant changes in the federal and state legal and regulatory environment and tax laws, (6) the impact of changes in monetary and fiscal policies, laws, rules and regulations and (7) other risks and factors identified in the Company’s other filings with the Securities and Exchange Commission, including but not limited to those described in Peoples Bancorp of North Carolina, Inc.’s annual report on Form 10-K for the year ended December 31, 2005.

6

| PEOPLES
BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS - PAGE
THREE | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| CONSOLIDATED
BALANCE SHEETS | | | | | | |
| March
31, 2006, December 31, 2005 and March 31, 2005 | | | | | | |
| | March
31, 2006 | December
31, 2005 | | March
31, 2005 | | |
| | (Unaudited) | | | | (Unaudited) | |
| ASSETS: | | | | | | |
| Cash
and due from banks | $ 22,959,163 | $ | 18,468,999 | $ | 14,789,934 | |
| Federal
funds sold | 3,493,000 | | 1,347,000 | | 859,000 | |
| Cash
and cash equivalents | 26,452,163 | | 19,815,999 | | 15,648,934 | |
| Investment
securities available for sale | 113,758,100 | | 115,158,184 | | 103,913,432 | |
| Other
investments | 5,804,449 | | 5,810,749 | | 6,080,249 | |
| Total
securities | 119,562,549 | | 120,968,933 | | 109,993,681 | |
| Loans | 590,564,977 | | 566,663,416 | | 540,031,706 | |
| Mortgage
loans held for sale | 2,571,200 | | 2,247,900 | | 3,090,350 | |
| Less:
Allowance for loan losses | (7,649,364 | ) | (7,424,782 | ) | (7,419,580 | ) |
| Net
loans | 585,486,813 | | 561,486,534 | | 535,702,476 | |
| Premises
and equipment, net | 12,705,399 | | 12,662,153 | | 12,924,933 | |
| Cash
surrender value of life insurance | 6,363,484 | | 6,311,757 | | 6,148,580 | |
| Accrued
interest receivable and other assets | 11,178,541 | | 9,034,239 | | 9,601,761 | |
| Total
assets | $ 761,748,949 | $ | 730,279,615 | $ | 690,020,365 | |
| LIABILITIES
AND SHAREHOLDERS' EQUITY: | | | | | | |
| Deposits: | | | | | | |
| Non-interest
bearing demand | $ 101,497,002 | $ | 94,660,721 | $ | 85,265,032 | |
| NOW,
MMDA & Savings | 172,164,020 | | 183,248,699 | | 191,331,645 | |
| Time,
$100,000 or more | 184,315,220 | | 152,410,976 | | 144,862,102 | |
| Other
time | 155,538,776 | | 152,533,265 | | 136,795,166 | |
| Total
deposits | 613,515,018 | | 582,853,661 | | 558,253,945 | |
| Demand
notes payable to U.S. Treasury | 121,769 | | 1,473,693 | | 1,284,709 | |
| Securities
sold under agreement to repurchase | 3,905,108 | | 981,050 | | - | |
| FHLB
borrowings | 69,500,000 | | 71,600,000 | | 61,000,000 | |
| Junior
subordinated debentures | 14,433,000 | | 14,433,000 | | 14,433,000 | |
| Accrued
interest payable and other liabilities | 4,800,560 | | 4,585,217 | | 4,315,642 | |
| Total
liabilities | 706,275,455 | | 675,926,621 | | 639,287,296 | |
| Shareholders'
Equity: | | | | | | |
| Preferred
stock, no par value; authorized | | | | | | |
| 5,000,000
shares; no shares issued | | | | | | |
| and
outstanding | - | | - | | - | |
| Common
stock, no par value; authorized | | | | | | |
| 20,000,000
shares; issued and | | | | | | |
| outstanding
3,437,285 shares in 2006 | | | | | | |
| and
3,440,805 shares in 2005 | 40,856,995 | | 41,096,500 | | 41,355,975 | |
| Retained
earnings | 16,511,234 | | 14,656,160 | | 10,671,056 | |
| Accumulated
other comprehensive income | (1,894,735 | ) | (1,399,666 | ) | (1,293,962 | ) |
| Total
shareholders' equity | 55,473,494 | | 54,352,994 | | 50,733,069 | |
| Total
liabilities and shareholders' equity | $ 761,748,949 | $ | 730,279,615 | $ | 690,020,365 | |

| PEOPLES
BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS - PAGE
FOUR | | | |
| --- | --- | --- | --- |
| CONSOLIDATED
STATEMENTS OF INCOME | | | |
| For
the three months ended March 31, 2006 and 2005 | | | |
| | Three
months ended | | |
| | March
31, | | |
| | 2006 | 2005 | |
| | (Unaudited) | (Unaudited) | |
| INTEREST
INCOME: | | | |
| Interest
and fees on loans | $ 11,527,479 | $ | 8,461,937 |
| Interest
on federal funds sold | 4,142 | | 1,480 |
| Interest
on investment securities: | | | |
| U.S.
Government agencies | 1,021,674 | | 848,356 |
| States
and political subdivisions | 192,750 | | 181,863 |
| Other | 125,163 | | 87,033 |
| Total
interest income | 12,871,208 | | 9,580,669 |
| INTEREST
EXPENSE: | | | |
| NOW,
MMDA & savings deposits | 674,737 | | 633,320 |
| Time
deposits | 2,987,731 | | 1,789,677 |
| FHLB
borrowings | 885,690 | | 711,776 |
| Junior
subordinated debentures | 279,639 | | 207,474 |
| Other | 35,543 | | 4,066 |
| Total
interest expense | 4,863,340 | | 3,346,313 |
| NET
INTEREST INCOME | 8,007,868 | | 6,234,356 |
| PROVISION
FOR LOAN LOSSES | 759,000 | | 690,000 |
| NET
INTEREST INCOME AFTER | | | |
| PROVISION
FOR LOAN LOSSES | 7,248,868 | | 5,544,356 |
| NON-INTEREST
INCOME: | | | |
| Service
charges | 924,945 | | 805,260 |
| Other
service charges and fees | 396,017 | | 244,627 |
| Gain
(loss) on sale of securities | (81,800 | ) | - |
| Mortgage
banking income | 120,608 | | 103,116 |
| Insurance
and brokerage commission | 103,900 | | 109,759 |
| Miscellaneous | 474,209 | | 375,306 |
| Total
non-interest income | 1,937,879 | | 1,638,068 |
| NON-INTEREST
EXPENSES: | | | |
| Salaries
and employee benefits | 3,238,770 | | 3,062,501 |
| Occupancy | 988,396 | | 969,066 |
| Other | 1,475,312 | | 1,227,280 |
| Total
non-interest expenses | 5,702,478 | | 5,258,847 |
| INCOME
BEFORE INCOME TAXES | 3,484,269 | | 1,923,577 |
| INCOME
TAXES | 1,249,200 | | 646,800 |
| NET
INCOME | $ 2,235,069 | $ | 1,276,777 |
| PER
SHARE AMOUNTS | | | |
| Basic
net income | $ 0.66 | $ | 0.37 |
| Diluted
net income | $ 0.64 | $ | 0.36 |
| Cash
dividends | $ 0.11 | $ | 0.10 |
| Book
value | $ 16.14 | $ | 14.70 |

| PEOPLES
BANCORP ANNOUNCES FIRST QUARTER EARNINGS RESULTS - PAGE
FIVE | | | | |
| --- | --- | --- | --- | --- |
| FINANCIAL
HIGHLIGHTS | | | | |
| For
the three months ended March 31, 2006 and 2005 | | | | |
| | Three
months ended | | | |
| | March
31, | | | |
| | 2006 | 2005 | | |
| | (Unaudited) | (Unaudited) | | |
| SELECTED
AVERAGE BALANCES: | | | | |
| Available
for sale securities | $ 116,648,247 | $ | 104,489,669 | |
| Loans | 580,463,706 | | 538,897,639 | |
| Earning
assets | 704,957,468 | | 650,350,681 | |
| Assets | 744,167,124 | | 687,980,934 | |
| Deposits | 588,699,597 | | 554,229,998 | |
| Shareholders'
equity | 56,513,281 | | 51,974,639 | |
| SELECTED
KEY DATA: | | | | |
| Net
interest margin (tax equivalent) | 4.71% | | 3.98% | |
| Return
of average assets | 1.22% | | 0.75% | |
| Return
on average shareholders' equity | 16.04% | | 9.96% | |
| Shareholders'
equity to total assets (period end) | 7.28% | | 7.35% | |
| ALLOWANCE
FOR LOAN LOSSES: | | | | |
| Balance,
beginning of period | $ 7,424,782 | $ | 8,048,627 | |
| Provision
for loan losses | 759,000 | | 690,000 | |
| Charge-offs | (586,039 | ) | (1,404,263 | ) |
| Recoveries | 51,621 | | 85,216 | |
| Balance,
end of period | $ 7,649,364 | $ | 7,419,580 | |
| ASSET
QUALITY: | | | | |
| Non-accrual
loans | $ 4,852,504 | $ | 7,541,426 | |
| 90
days past due and still accruing | - | | 68,857 | |
| Other
real estate owned | 344,935 | | 664,252 | |
| Total
non-performing assets | $ 5,197,439 | $ | 8,274,535 | |
| Non-performing
assets to total assets | 0.68% | | 1.20% | |
| Allowance
for loan losses to non-performing assets | 147.18% | | 89.67% | |
| Allowance
for loan losses to total loans | 1.30% | | 1.37% | |

| LOAN
RISK GRADE ANALYSIS: | Percentage
of Loans — By
Risk Grade | | General
Reserve — Percentage | |
| --- | --- | --- | --- | --- |
| | 3/31/2006 | 3/31/2005 | 3/31/2006 | 3/31/2005 |
| Risk
1 (excellent quality) | 13.69% | 14.02% | 0.15% | 0.15% |
| Risk
2 (high quality) | 17.62% | 22.65% | 0.50% | 0.50% |
| Risk
3 (good quality) | 58.26% | 54.75% | 1.00% | 1.00% |
| Risk
4 (management attention) | 7.50% | 4.78% | 2.50% | 2.50% |
| Risk
5 (watch) | 1.15% | 0.88% | 7.00% | 7.00% |
| Risk
6 (substandard) | 0.37% | 0.80% | 12.00% | 12.00% |
| Risk
7 (low substandard) | 0.59% | 0.72% | 25.00% | 25.00% |
| Risk
8 (doubtful) | 0.00% | 0.00% | 50.00% | 50.00% |
| Risk
9 (loss) | 0.00% | 0.00% | 100.00% | 100.00% |
| Excludes
non-accrual loans | | | | |
| At
March 31, 2006 there was one relationship exceeding $1.0 million
(which
totaled $1.8 million) in the Watch risk grade, no relationships
exceeding
$1.0 million in the Substandard risk grade, and one relationship
exceeding
$1.0 million (which totaled $3.1 million) in the Low Substandard
risk
grade. These customers continue to meet payment requirements and
these
relationships would not become non-performing assets unless they
are
unable to meet those requirements. | | | | |
| (END) | | | | |