Attached files
Exhibit 99
August 17, 2010
To Our Shareholders:
We want to report that Peoples Bancorporation recorded net earnings of $884,000
for the second quarter of 2010. We also want to report that we believe we are
making progress in addressing the asset quality problems impacting our financial
performance, while positioning ourselves to take advantage of better economic
times ahead. The Company has a Tier 1 capital ratio of 8.87% and along with its
subsidiary banks remains capitalized well in excess of regulatory requirements.
Management is hopeful that historically high non-performing assets have peaked
and will begin to decline as economic conditions improve.
The expense control measures initiated in 2008 have resulted in annualized cost
savings in excess of $2.0 million thus far. In continuation of this program, the
Company has made the difficult, but prudent, decision to discontinue operating
its Mills Avenue office and to serve that branch's customers at our Greenville
Antrim Drive location effective November 11, 2010. During the second quarter of
2010, the Company took advantage of the changing interest rate environment by
selling $13,824,000 of investment securities at a profit of $814,000.
An increase of $466,000 in net interest income, combined with cost saving
measures taken by the Company and the gains recorded from the sale of investment
securities, resulted in the Company recording pre-tax earnings of $1,137,000 for
the second quarter of 2010. These second quarter earnings, along with the
pre-tax loss of $1,885,000 recorded during the first quarter of 2010, combined
for a pre-tax loss of $748,000 for the first six months of 2010, resulting in a
net loss of $216,000 after tax benefits.
We made significant provisions of $1,170,000 for loan losses in the second
quarter of 2010, bringing the year-to-date provisions to $4,595,000, compared to
$1,578,000 for the first six months of 2009. For the first six months of 2010,
we recorded net charge-offs of $3,530,000 compared to $2,986,000 for the first
six months of 2009. Our allowance for loan losses totaled $8,496,000, or 2.35%
of outstanding loans at June 30, 2010, compared to $7,809,000, or 2.00% of
outstanding loans at June 30, 2009.
As disclosed in our most recent 10-Q filing with the Securities and Exchange
Commission, The Peoples National Bank entered into an agreement with the Office
of the Comptroller of the Currency on August 16, 2010 wherein the bank pledged
to improve deficiencies found relating to credit administration and earnings
performance. Management and the Board are committed to continuing the
significant progress already made in all areas of operation.
We wish to thank you, our shareholders and most valued customers, for your
support and for the opportunity to serve your banking needs. Our personnel are
committed to making Peoples Bancorporation better every day as we remain focused
on strengthening our balance sheet, maintaining ample liquidity and improving
the level of profitability.
Sincerely,
L. Andrew Westbrook, III R. Riggie Ridgeway
President and CEO CEO Emeritus
PEOPLES BANCORPORATION, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
(Amounts in thousands except share information)
Three Months Ended June 30,
---------------------------
Income Statement 2010 2009 Change
---------------- ---- ---- ------
Net interest income .................................................. $ 4,715 $ 4,249 10.97%
Provision for loan losses ............................................ 1,170 873 34.02%
Other income ......................................................... 1,677 896 87.16%
Other expense ........................................................ 4,085 4,150 -1.57%
------- -------
Income before income taxes ........................................... 1,137 122 831.97%
Provision (benefit) for income taxes ................................. 253 (96) -363.54%
------- -------
Net income ........................................................... $ 884 $ 218 305.50%
======= =======
Dividends paid or accumulated on preferred stock ..................... 173 128 35.16%
Net amortization of preferred stock .................................. 33 8 312.50%
------- -------
Net income available to common shareholders .......................... $ 678 $ 82 726.83%
======= =======
Return on average assets (1) (2) .................................... 0.50% 0.16%
Return on average common equity (1) (3) ............................. 6.65% 0.78%
Net income per common share
Basic ............................................................... $ 0.10 $ 0.01
Diluted ............................................................. $ 0.10 $ 0.01
Six Months Ended June 30,
-------------------------
Income Statement 2010 2009 Change
---------------- ---- ---- ------
Net interest income ................................................... $ 9,453 $ 8,654 9.23%
Provision for loan losses ............................................. 4,595 1,578 191.19%
Other income .......................................................... 2,624 1,932 35.82%
Other expense ......................................................... 8,230 8,234 -0.05%
------- -------
Income (loss) before income taxes ..................................... (748) 774 196.64%
Income tax benefit .................................................... (532) (2) N/A
------- -------
Net income (loss) ..................................................... $ (216) $ 776 -127.84%
======= =======
Dividends paid or accumulated on preferred stock ...................... 345 128 169.53%
Net amortization of preferred stock ................................... 66 8 725.00%
------- -------
Net income (loss) available to common shareholders .................... $ (627) $ 640 -197.97%
======= =======
Return on average assets (1) (2) ..................................... -0.23% 0.28%
Return on average common equity (1) (3) .............................. -3.04% 3.05%
Net income per common share
Basic ............................................................. (0.09) 0.09
Diluted ........................................................... (0.09) 0.09
June 30, June 30, December 31,
2010 2009 2009
Balance Sheet (Unaudited) (Unaudited) (Audited)
------------- ---------- ----------- ---------
Total assets ............................................... $537,776 $541,265 $556,601
Gross loans ................................................ 360,884 389,956 373,574
Allowance for loan losses .................................. 8,496 7,809 7,431
Loans, net ................................................. 352,388 382,147 366,143
Securities ................................................. 120,975 107,453 116,213
Total earning assets ....................................... 487,963 501,223 504,799
Total deposits ............................................. 468,123 451,724 484,996
Shareholders' equity ....................................... 53,861 54,634 54,443
Book value per common share ................................ 5.87 6.00 5.98
(1) Annualized
(2) Return on average assets is calculated as net income (loss) divided by
average assets.
(3) Return on average common equity is calculated as net income (loss)
available to common shareholders divided by average common equity.
PEOPLES BANCORPORATION, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
June March December September June
30, 31, 31, 30, 30,
Asset Quality Data 2010 2010 2009 2009 2009
------------------ ---- ---- ---- ---- ----
Nonperforming loans
Non-accrual loans ..................................... $ 16,660 $ 16,496 $ 14,881 $ 20,153 $ 17,746
Past due loans 90 days + and still accruing ........... 29 120 - 214 -
---------- ---------- ---------- ---------- ----------
Total nonperforming loans .......................... 16,689 16,616 14,881 20,367 17,746
Other real estate owned ............................... 13,426 12,596 11,490 10,073 3,919
---------- ---------- ---------- ---------- ----------
Total nonperforming assets ......................... $ 30,115 $ 29,212 $ 26,371 $ 30,440 $ 21,665
========== ========== ========== ========== ==========
Net charge-offs for quarter ended ....................... $ 1,338 $ 2,192 $ 1,275 $ 2,483 $ 677
Nonperforming assets as a percentage of
total loans and other real estate ..................... 8.05% 7.65% 6.85% 7.73% 5.50%
Nonperforming assets to total assets .................... 5.60% 5.29% 4.74% 5.56% 4.00%
Allowance for loan losses to nonperforming loans ........ 50.15% 52.15% 49.94% 36.12% 44.00%
Allowance for loan losses to total
loans outstanding ..................................... 2.35% 2.35% 1.99% 1.92% 2.00%
Quarterly net charge-offs to total
loans outstanding ..................................... 0.37% 0.59% 0.34% 0.65% 0.17%
Capital Ratios
Total Capital (to risk-weighted assets) ............... 13.85% 13.37% 13.67% 14.03% 14.18%
Tier 1 Capital (to risk-weighted assets) .............. 12.59% 12.11% 12.41% 12.78% 12.92%
Tier 1 Capital (to average assets) .................... 8.87% 8.66% 9.03% 9.65% 9.74%
