MARIETTA - Peoples Bancorp Inc. announced results for the quarter ended June 30. Net income totaled $5 million for the second quarter of 2012, representing earnings per diluted common share of 47 cents. In comparison, earnings per diluted common share were 26 cents for the second quarter of 2011 and 63 cents for the first quarter of 2012. On a year-to-date basis, earnings per diluted common share were $1.10 through six months of 2012 versus 38 cents during the same period in 2011.
Peoples incurred pre-tax costs of $660,000 (or $429,000 after-tax) during the quarter related to pension settlement charges, acquisition activities and a private foundation contribution.
total revenue, which is net interest income plus non-interest income, was 4 percent higher than the prior year, driven mostly by stronger fee-based revenues. Net interest income also benefited from modestly higher average loan balances.
On a linked quarter basis, total revenue was 2 percent lower reflecting the normal seasonal decline corresponding with the recognition of annual performance-based insurance revenue in the first quarter.
Total criticized loans, which are those classified as watch, substandard or doubtful, decreased $16 million, or 14 percent, during the quarter, and $40 million, or 29 percent, since year-end 2011. These reductions were primarily the result of paydowns and upgrades. Total nonperforming loans as a percentage of gross loans and OREO also improved to 1.85 percent, compared to 2.25 percent at March 31, 2012 and 3.71 percent a year ago.
Net charge-offs remained minimal for a second consecutive quarter. Through six months, net charge-offs were 0.11 percent of average loans on annualized basis in 2012 versus 1.94 percent in 2011. Peoples realized a $3.3 million recovery of loan losses in the first half of 2012 compared to a provision of $7.6 million a year ago.
The sustained improvement in asset quality led to a further reduction in the allowance for loan losses to 2.09 percent of total loans, from 2.25 percent at the linked quarter-end and 2.53 percent at year-end 2011.
Second quarter 2012 total non-interest expense was up moderately compared to both the linked and year-ago quarters.
The previously mentioned acquisition and pension related costs were the key drivers, while $355,000 of additional incentive and sales-based compensation, plus a $100,000 contribution to Peoples' private charitable foundation were other significant contributing factors to the year-over-year increase. Compensation expenses are benefiting from the 8 percent reduction in employee count since June 30, 2011.
"We are pleased to report another quarter of solid earnings driven by improvements in several key areas," said Chuck Sulerzyski, president and chief executive officer. "Revenue growth is occurring with modest loan growth, reflecting the value of our revenue diversity. Operating expenses are being managed effectively. Credit quality trends remained favorable and led to us releasing additional reserves."