Filed by the Registrant | [X] | |
Filed by a Party other than the Registrant | [ ] |
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[ ]
|
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Preliminary
Proxy Statement
|
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[ ]
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Confidential,
for Use of the Commission
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[X]
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Definitive
Proxy Statement
|
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Only
(as permitted by Rule 14a-6(e)(2))
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[ ]
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Definitive
Additional Materials
|
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[ ]
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Soliciting
Material Pursuant to
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§240.14a-12
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(Name
of Registrant as Specified In Its Charter)
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||
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
|
Payment
of Filing Fee (Check the appropriate box):
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|||
|
[X]
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|
No
fee required.
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|
[ ]
|
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
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(1)
|
Title
of each class of securities to which transaction
applies:
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(2)
|
Aggregate
number of securities to which transaction applies:
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(3)
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4)
|
Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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[ ]
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Fee
paid previously with preliminary materials:
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[ ]
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
|
Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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PEOPLES
BANCORP
|
||
OF
NORTH CAROLINA, INC.
|
|||
Notice
of 2007 Annual Meeting,
|
|
|
|
Proxy
Statement and
|
|
|
Annual
Report
|
|
|
P
|
AGE
|
|
NOTICE OF 2007 ANNUAL MEETING OF SHAREHOLDERS.................................................................................................. |
ii
|
||
PROXY
STATEMENT ......................................................................................................................................................................
|
1
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||
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Security Ownership of Certain Beneficial Owners and Management .......................................................................... |
4
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Section 16(a) Beneficial Ownership Reporting Compliance .......................................................................................... |
7
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Proposal 1 - Election of Directors ...................................................................................................................................... |
7
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Our Board of Directors and Its Committees ..................................................................................................................... |
9
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Report of the Governance Committee Acting As Compensation Committee ............................................................. |
10
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Compensation Committee Interlocks and Insider Participation ............................................................................ |
10
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Report of Audit Committee .................................................................................................................................................. |
10
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Compensation Analysis and Discussion .......................................................................................................................... |
11
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Compensation Committee Members .......................................................................................................................... |
12
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Objectives of Our Compensation Program ............................................................................................................... |
12
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Compensation
Decision Process
................................................................................................................................
|
12
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Elements of Compensation .......................................................................................................................................... |
13
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Director
Compensation
................................................................................................................................................
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15
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Executive
Officers
.........................................................................................................................................................
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17
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Management
Compensation
.......................................................................................................................................
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18
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Employee
Agreements
.................................................................................................................................................
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21
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Equity
Compensation Plan Information
....................................................................................................................
|
21
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Omnibus
Stock Ownership and Long Term Incentive Plan
...................................................................................
|
22
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Federal
Income Tax Consequences
...........................................................................................................................
|
25
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Incentive Compensation Plans .................................................................................................................................. |
26
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Deferred Compensation Plan ..................................................................................................................................... |
29
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Supplemental Retirement Plan ................................................................................................................................... |
30
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Discretionary Bonuses and Service Awards ........................................................................................................... |
30
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Profit Sharing Plan and 401(k) Plan ........................................................................................................................... |
30
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Indebtedness of and Transactions with Management and Directors ................................................................. |
31
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||
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Performance Graph ................................................................................................................................................................ |
32
|
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Proposal 2 - Approval of an Amendment to the Company's Omnibus Stock Option and Long Term | |||
|
Incentive
Plan
............................................................................................................................................................
|
33
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Proposal 3 - Ratification of Selection of Independent Auditor ...................................................................................... |
33
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Audit Fees ..................................................................................................................................................................... |
33
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Audit Related Fees ....................................................................................................................................................... |
33
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Tax Fees ......................................................................................................................................................................... |
34
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|
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All Other Fees ................................................................................................................................................................ |
34
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Date for Receipt of Shareholder Proposals ........................................................................................................................ |
34
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|
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Other Matters ......................................................................................................................................................................... |
34
|
|
|
Miscellaneous ........................................................................................................................................................................ |
35
|
|
EXHIBIT
A
...........................................................................................................................................................................................
|
E-1
|
||
APPENDIX A ....................................................................................................................................................................................... |
A-1
|
PEOPLES
BANCORP OF NORTH CAROLINA, INC.
|
|
|
|
Post
Office Box 467
|
|
|
518
West C Street
|
|
|
Newton,
North Carolina 28658-0467
|
|
|
(828)
464-5620
|
|
|
|
|
|
NOTICE
OF 2007 ANNUAL MEETING OF
SHAREHOLDERS
|
|
|
To
Be Held on May 3, 2007
|
|
Place: | Catawba Country Club | ||
1154 Country Club Road | |||
Newton, North Carolina | |||
Date: | May 3, 2007 | ||
Time: | 11:00 a.m. Eastern Time |
1. |
To
elect four persons who will serve as members of the Board of Directors
until the 2010 annual meeting of shareholders or until their successors
are duly elected and qualified;
|
2. |
To
approve Amendment No. 1 to the Peoples Bancorp of North Carolina,
Inc.
Omnibus Stock Ownership and Long Term Incentive Plan which provides
for
the addition of 390,000 shares of authorized, but unissued, common
stock
of the Company to the Plan;
|
3. |
To
ratify the appointment of Porter Keadle Moore, LLP (“PKM”) as the
Company’s independent registered public accounting firm for the fiscal
year ending December 31, 2007; and
|
4. |
To
consider and act on any other matters that may properly come before
the
Annual Meeting or any adjournment.
|
By
Order of the Board of Directors,
|
||
/s/
Tony W. Wolfe
|
||
Tony
W. Wolfe
|
||
President
and Chief Executive Officer
|
When is the annual meeting? | May 3, 2007 at 11 a.m., Eastern Time. | |
Where will the annual meeting be held? | At the Catawba Country Club, 1154 Country Club Road, | |
Newton, North Carolina. | ||
What items will be voted on at the | ||
annual meeting? | 1. | ELECTION OF DIRECTORS. To elect four |
directors to serve until the 2010 annual meeting of | ||
shareholders; | ||
2. | APPROVAL OF AMENDMENT NO. 1 TO THE | |
COMPANY'S OMNIBUS STOCK OWNERSHIP | ||
AND LONG TERM INCENTIVE PLAN. To | ||
approve Amendment No. 1 to the Company's | ||
Omnibus Stock Ownership and Long Term Incentive | ||
Plan which provides for the addition of 390,000 | ||
authorized, but unissued, shares of the Company's | ||
common stock to the Plan. | ||
3. | RATIFICATION OF REGISTERED PUBLIC | |
ACCOUNTING FIRM. To ratify the appointment of | ||
PKM as the Company's independent registered public | ||
accounting firm for fiscal year 2007; and | ||
4. | OTHER BUSINESS. To consider any other business | |
as may properly come before the annual meeting or | ||
any adjournment. | ||
Who can vote? | Only holders of record of our common stock at the close of | |
business on March 9, 2007 (the "Record Date") will be | ||
entitled to notice of and to vote at the annual meeting and any |
The proposal to approve Amendment No. 1 to the Company’s Omnibus Stock
Option and Long
Term Incentive Plan will be approved by the affirmative vote of
the
holders of a majority of the
shares present, or represented by proxy, at the Annual
Meeting.
|
The
proposal to ratify the appointment of the Company’s independent registered
public
accounting firm for 2007 will be approved if the votes cast in
favor
exceed the votes cast in
opposition.
|
Any other matters properly coming before the annual meeting for
a vote
will require the affirmative
vote of the holders of a majority of the shares represented in
person or by proxy at the annual
meeting and entitled to vote on that
matter.
|
Abstentions and broker non-votes are not treated as votes cast
on any
proposal, therefore,
neither will have an effect on the vote for the election of any
director
or the ratification of our
independent registered public accounting firm.
|
Name
and Address of
Beneficial
Owner
|
Amount
and Nature of
Beneficial
Ownership1
|
Percent
of
Class2
|
Christine
S. Abernethy
P.O.
Box 820
Newton,
NC 28658
|
427,605
3
|
11.15%
|
Banc
Funds Company, LLC
208
South LaSalle Street
Suite
1680
Chicago,
IL 60604
|
235,504
|
6.14%
|
Tontine
Partners, LP
55
Railroad Avenue, 3rd
Floor
Greenwich,
CT 06830-6378
|
346,272
|
9.03%
|
1
|
Unless
otherwise noted, all shares are owned directly of record by the
named
individuals, by their spouses and minor children, or by other entities
controlled by the named individuals. Voting and investment power
is not
shared unless otherwise indicated.
|
2
|
Based
upon a total of 3,834,175 shares of common stock outstanding as
of the
Record Date.
|
3
|
Carolina
Glove Company, Inc. owns 71,736 shares of common stock. These shares
are
included in the calculation of Ms. Abernethy’s total beneficial ownership
interest. Ms. Abernethy owns approximately 50% of the stock of
Carolina
Glove Company, Inc. The business is operated by a family committee.
Ms.
Abernethy has no active day-to-day participation in the business
affairs
of Carolina Glove Company, Inc.
|
Amount
and
|
|
|
|
|||
|
|
Nature
of
|
Percentage
|
|||
Beneficial
|
of
|
|
||||
Name
and Address
|
Ownership1
|
Class2
|
||||
James
S. Abernethy
|
116,5223
|
|
2.97%
|
|||
Post
Office Box 327
|
||||||
Newton,
NC 28658
|
||||||
Robert
C. Abernethy
|
137,7594
|
|
3.51%
|
|||
Post
Office Box 366
|
||||||
Newton,
NC 28658
|
||||||
Joseph
F. Beaman, Jr.
|
24,0075
|
|
*
|
|||
Post
Office Box 467
|
||||||
Newton,
NC 28658
|
||||||
William
D. Cable
|
19,4296
|
|
*
|
|||
Post
Office Box 467
|
||||||
Newton,
NC 28658
|
||||||
Douglas
S. Howard
|
6,1367
|
|
*
|
|||
P.
O. Box 587
|
||||||
Denver,
NC 28037
|
||||||
A.
Joseph Lampron
|
12,9228
|
|
*
|
|||
Post
Office Box 467
|
||||||
Newton,
NC 28658
|
||||||
John
W. Lineberger, Jr.
|
1,669
|
|
*
|
|||
6154
Vesuvius Furnace Road
|
||||||
Iron
Station, NC 28080
|
||||||
Gary
E. Matthews
|
12,178
|
|
*
|
|||
210
First Avenue South
|
||||||
Conover,
NC 28613
|
||||||
Billy
L. Price, Jr., M.D.
|
772
|
|
*
|
|||
540
11th Ave. Place NW
|
||||||
Hickory,
NC 28601
|
||||||
Larry
E. Robinson
|
29,8689
|
|
*
|
|||
Post
Office Box 723
|
||||||
Newton,
NC 28658
|
||||||
Lance
A. Sellers
|
18,26810
|
|
*
|
|||
Post
Office Box 467
|
||||||
Newton,
NC 28658
|
||||||
William
Gregory Terry
|
4,63211
|
|
*
|
|||
706
South College Ave
|
||||||
Newton,
NC 28658
|
Amount
and
|
|
|
|
|||
|
|
Nature
of
|
|
Percentage
|
|
|
|
|
Beneficial
|
|
of
|
|
|
Name
and Address
|
Ownership1
|
|
Class2
|
|||
Dan
Ray Timmerman, Sr.
|
37,77612
|
|
*
|
|||
Post
Office Box 1148
|
||||||
Conover,
NC 28613
|
||||||
Tony
W. Wolfe
|
36,04713
|
|
*
|
|||
Post
Office Box 467
|
||||||
Newton,
NC 28658
|
||||||
Benjamin
I. Zachary
|
50,06414
|
|
1.28%
|
|||
Post
Office Box 277
|
||||||
Taylorsville,
NC 28681
|
||||||
All
current directors and nominees and
|
|
465,356
15,16
|
11.86%
|
|||
executive officers as a group (15 people) |
1
|
Unless
otherwise noted, all shares are owned directly of record by the
named
individuals, by their spouses and minor children, or by other entities
controlled by the named individuals. Voting and investment power
is not
shared unless otherwise indicated.
|
2
|
Based
upon a total of 3,834,175 shares of common stock outstanding as
of the
Record Date and 90,828 stock options exercisable within 60 days
with
respect to the designated recipient(s).
|
3
|
Includes
42,692 shares of common stock owned by Alexander Railroad Company.
Mr. J.
Abernethy is Vice President, Secretary and Chairman of the Board
of
Directors of Alexander Railroad
Company.
|
4
|
Includes
3,312 shares of common stock owned by Mr. R. Abernethy’s spouse, for which
Mr. R. Abernethy disclaims beneficial
ownership.
|
5
|
Includes
20,441 shares of common stock in which Mr. Beaman has the right
to acquire
beneficial interest within 60 days by the exercise of stock options
granted under the Omnibus Stock Ownership and Long Term Incentive
Plan.
|
6
|
Includes
14,489 shares of common stock in which Mr. Cable has the right
to acquire
beneficial interest within 60 days by the exercise of stock options
granted under the Omnibus Stock Ownership and Long Term Incentive
Plan.
|
7
|
Includes
1,100 shares of common stock owned by Mr. Howard’s mother over which Mr.
Howard holds a power of attorney. Includes 550 shares of common
stock
owned by Howard Ventures, Inc. Mr. Howard is Vice President of
Howard
Ventures, Inc.
|
8
|
Includes
12,267 shares of common stock in which Mr. Lampron has the right
to
acquire beneficial interest within 60 days by the exercise of stock
options granted under the Omnibus Stock Ownership and Long Term
Incentive
Plan.
|
9
|
Includes
4,557 shares of common stock owned by Mr. Robinson’s spouse, for which Mr.
Robinson disclaims beneficial
ownership.
|
11
|
Includes
1,100 shares of common stock owned by Drum Funeral Home, LLC. Mr.
Terry is
Executive Vice-President of Drum Funeral Home, LLC.
|
12
|
Includes
1,815 shares of common stock owned by Timmerman Manufacturing,
Inc. Mr.
Timmerman is President and a Director of Timmerman Manufacturing,
Inc.
|
13
|
Includes
26,075 shares of common stock in which Mr. Wolfe has the right
to acquire
beneficial interest within 60 days by the exercise of stock options
granted under the Omnibus Stock Ownership and Long Term Incentive
Plan.
|
14
|
Includes
42,692 shares of common stock owned by Alexander Railroad Company.
Mr.
Zachary is President, Treasurer, General Manager and a Director
of
Alexander Railroad Company.
|
15
|
The
42,692 shares owned by Alexander Railroad Company and attributed
to Mr. J.
Abernethy and Mr. Zachary are only included once in calculating
this
total.
|
16
|
Includes
90,828 shares of common stock in which the executive officers,
as a group,
have the right to acquire beneficial interest within 60 days by
the
exercise of stock options granted under the Omnibus Stock Ownership
and
Long Term Incentive Plan.
|
Age
on
|
Principal
Occupation
|
Director
|
Term
|
|||||
Name
|
December
31, 2006
|
During
Last Five Years
|
Since
|
Expires
|
||||
John
W. Lineberger, Jr.
|
56
|
President,
Lincoln Bonded Warehouse
|
|
2004
|
|
2007
|
||
Company
(commercial warehousing
|
||||||||
facility)
|
||||||||
Gary
E. Matthews
|
51
|
President
and Director, Matthews
|
2001
|
|
2007
|
|||
Construction Company, Inc. |
|
|
Age
on
|
|
Principal
Occupation
|
|
Director
|
|
Term
|
Name
|
|
December
31, 2006
|
|
During
Last Five Years
|
|
Since
|
|
Expires
|
Dan
Ray Timmerman, Sr.
|
59
|
President/CEO,
Timmerman
|
1995
|
|
2007
|
|||
Manufacturing,
Inc. (wrought iron
|
||||||||
furniture, railings and gates | ||||||||
manufacturer)
|
||||||||
Benjamin
I. Zachary
|
50
|
President,
Treasurer, General Manager
|
1995
|
|
2007
|
|||
and Director of Alexander Railroad | ||||||||
Company
|
|
|
Age
on
|
|
Principal
Occupation
|
|
Director
|
|
Term
|
Name
|
|
December
31, 2006
|
|
During
Last Five Years
|
|
Since
|
|
Expires
|
Douglas
S. Howard
|
47
|
Vice
President, Howard Ventures, Inc.;
|
2004
|
|
2008
|
|||
Secretary/Treasurer,
Denver Equipment
|
||||||||
of
Charlotte, Inc.
|
||||||||
Billy
L. Price, Jr., M D
|
50
|
Practicing
Internist and Partner in
|
|
2004
|
|
2008
|
||
Catawba
Valley Internal Medicine, P.A.;
|
||||||||
Clinical
Instructor, Wake Forest
|
||||||||
University
School of Medicine
|
||||||||
Robert
C. Abernethy
|
56
|
President,
Secretary and Treasurer,
|
|
1976
|
|
2009
|
||
Carolina
Glove Company, Inc. (glove
|
||||||||
manufacturer);
Secretary and Assistant
|
||||||||
Treasurer,
Midstate Contractors, Inc.
|
||||||||
(paving
company)
|
||||||||
James
S. Abernethy
|
52
|
Vice
President, Carolina Glove
|
|
1992
|
|
2009
|
||
Company,
Inc. (glove manufacturer);
|
||||||||
President
and Assistant Secretary,
|
||||||||
Midstate
Contractors, Inc. (paving
|
||||||||
company);
Vice President, Secretary and
|
||||||||
Chairman
of the Board of Directors,
|
||||||||
Alexander
Railroad Company
|
||||||||
Larry
E. Robinson
|
61
|
President
and Chief Executive Officer,
|
1993
|
|
2009
|
|||
The
Blue Ridge Distributing Company,
|
||||||||
Inc.
(beer and wine distributor); Partner
|
||||||||
and
Vice President, United Beverages of
|
||||||||
North
Carolina, LLC (beer distributor)
|
||||||||
William
Gregory Terry
|
39
|
Executive
Vice President, Drum &
|
2004
|
|
2009
|
|||
Willis-Reynolds
Funeral Homes and
|
||||||||
Crematory
|
Robert
C. Abernethy
|
John
W. Lineberger, Jr.
|
|||
Larry
E. Robinson
|
James
S. Abernethy
|
|||
William
G. Terry
|
Dan
Ray Timmerman, Sr.
|
|||
Benjamin
I. Zachary
|
Robert
C. Abernethy
|
Douglas
S. Howard
|
|||
Larry
E. Robinson
|
Dan
Ray Timmerman, Sr.
|
|||
Gary
E. Matthews
|
Dr.
Billy L. Price, Jr.
|
|||
Benjamin
I. Zachary
|
· |
Peer
financial institutions in North Carolina, South Carolina and Georgia,
with
average assets of $700 million to $800
million,
|
· |
United
States financial institutions with average assets of $500 million
to $1.9
billion,
|
· |
United
States community banks with average assets of $700 million to $1.0
billion,
|
· |
North
Carolina independent financial institutions with average assets of
$400
million to $1 billion.
|
· |
Tony
W. Wolfe, President and Chief Executive
Officer
|
· |
A.
Joseph Lampron, Executive Vice President and Chief Financial
Officer
|
· |
Lance
A. Sellers, Executive Vice President and Chief Credit
Officer
|
· |
William
D. Cable, Executive Vice President and Operating
Officer
|
· |
Joseph
F. Beaman, Jr., Executive Vice President, Chief Administrative Officer
and
Corporate Secretary
|
Wolfe
|
Lampron
|
Sellers
|
Cable
|
Beaman
|
|
Minimum
Level of Performance
|
$77,635
|
$42,327
|
$49,146
|
$42,327
|
$42,327
|
Target
Level of Performance
|
$92,191
|
$50,263
|
$58,360
|
$50,263
|
$50,263
|
Superior
Level of Performance
|
$97,043
|
$52,908
|
$61,432
|
$52,908
|
$52,908
|
· |
country
club memberships and dues;
|
· |
expenses
for spouses to attend conferences: and
|
· |
personal
use of Company-provided cell phones.
|
Name
|
Fees
Earned
or
Paid
in
Cash
($)
|
Stock
Awards
($)
1
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation
($)
|
Change
in
Pension
Value
and
Nonqualified
Deferred Compensation Earnings2
|
All
Other Compensation
($)
|
Total
($)
|
(a)
|
(b)
|
(
c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
James
S. Abernethy
|
$23,750
|
$14,204
|
0
|
0
|
$1,218
|
0
|
$39,172
|
Robert
C. Abernethy3
|
$31,800
|
$18,204
|
0
|
0
|
$2,024
|
0
|
$52,028
|
Douglas
S. Howard
|
$25,800
|
$10,806
|
0
|
0
|
$1,140
|
0
|
$37,746
|
John
W. Lineberger, Jr.
|
$22,850
|
$10,806
|
0
|
0
|
$3,120
|
0
|
$36,776
|
Gary
E. Matthews4
|
$24,250
|
$14,454
|
0
|
0
|
$1,094
|
0
|
$39,798
|
Billy
L. Price, Jr., M.D.
|
$23,750
|
$10,806
|
0
|
0
|
$1,523
|
0
|
$36,079
|
Larry
E. Robinson
|
$26,100
|
$14,204
|
0
|
0
|
$4,231
|
0
|
$44,535
|
William
Gregory Terry
|
$23,100
|
$10,806
|
0
|
0
|
$484
|
0
|
$34,390
|
Dan
Ray Timmerman, Sr.
|
$27,100
|
$14,204
|
0
|
0
|
$3,408
|
0
|
$44,712
|
Benjamin
I. Zachary
|
$26,500
|
$14,204
|
0
|
0
|
$1,077
|
0
|
$41,781
|
|
|
Age
on
|
|
|
|
Employed
By the
|
|
|
|
|
December
31,
|
|
Positions
and Occupations
|
|
Company
or
|
|
Name
|
|
2006
|
|
During
Last Five Years
|
|
the
Bank Since
|
Tony
W. Wolfe
|
60
|
President
and Chief Executive Officer of
|
1990
|
||||
the
Company and the Bank
|
|||||||
Joseph
F. Beaman, Jr.
|
57
|
Executive
Vice President and Corporate
|
1977
|
||||
Secretary
of the Company; Executive
|
|||||||
Vice
President, Chief Administrative
|
|||||||
Officer
and Secretary of the Bank
|
|||||||
William
D. Cable
|
38
|
Executive
Vice President and Assistant
|
1995
|
||||
Corporate
Treasurer of the Company;
|
|||||||
Executive
Vice President and Chief
|
|||||||
Operations
Officer of the Bank; Prior to
|
|||||||
2002,
Bank Senior Vice President -
|
|||||||
Information Services. |
|
|
Age
on
|
|
|
|
Employed
By the
|
|
|
|
|
December
31,
|
|
Positions
and Occupations
|
|
Company
or
|
|
Name
|
|
2006
|
|
During
Last Five Years
|
|
the
Bank Since
|
Lance
A. Sellers
|
44
|
Executive
Vice President and Assistant
|
1998
|
||||
Corporate
Secretary of the Company;
|
|||||||
Executive
Vice President and Chief
|
|||||||
Credit
Officer of the Bank
|
|||||||
A.
Joseph Lampron
|
52
|
Executive
Vice President, Chief
|
2001
|
||||
Financial
Officer and Corporate
|
|||||||
Treasurer
of the Company; Executive
|
|||||||
Vice
President and Chief Financial
|
|||||||
Officer
of the Bank
|
Summary
Compensation Table
|
|||||||||
Name
and Principal
Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive
Plan Compensation
(a)
|
Change
in
Pension
Value
and
Nonqualified Deferred
Compensation
Earnings
(b)
|
All
Other Compensation
(
c )
|
Total
|
Tony
W. Wolfe2
|
2006
|
$227,255
|
$0
|
$0
|
$0
|
$97,043
|
$108,610
|
$21,072
|
$453,980
|
President
and Chief
|
2005
|
$215,994
|
$0
|
$0
|
$0
|
$68,019
|
$93,551
|
$19,046
|
$396,610
|
Executive
Officer
|
2004
|
$205,878
|
$0
|
$0
|
$0
|
$50,593
|
$79,916
|
$16,875
|
$353,262
|
A.
Joseph Lampron, Jr.3
|
2006
|
$128,069
|
$0
|
$2507
|
$0
|
$52,908
|
$11,684
|
$12,007
|
$204,918
|
Executive
Vice President,
|
2005
|
$122,758
|
$0
|
$0
|
$0
|
$40,210
|
$10,121
|
$9,696
|
$182,785
|
Chief
Financial Officer
|
2004
|
$116,257
|
$0
|
$0
|
$0
|
$27,924
|
$8,705
|
$21,109
|
$173,995
|
Joseph
F. Beaman, Jr.4
|
2006
|
$114,899
|
$0
|
$0
|
$0
|
$50,792
|
$14,789
|
$12,520
|
$193,000
|
Executive
Vice President,
|
2005
|
$113,004
|
$0
|
$0
|
$0
|
$28,549
|
$12,792
|
$10,573
|
$164,918
|
Chief
Administration Officer
|
2004
|
$135,047
|
$0
|
$0
|
$0
|
$27,042
|
$10,983
|
$11,471
|
$184,543
|
and
Corporate Secretary
|
|||||||||
Lance
A. Sellers5
|
2006
|
$163,836
|
$0
|
$0
|
$0
|
$61,432
|
$9,208
|
$13,542
|
$248,018
|
Executive
Vice President,
|
2005
|
$156,919
|
$0
|
$0
|
$0
|
$47,985
|
$7,986
|
$12,106
|
$224,996
|
Chief
Credit Officer
|
2004
|
$152,622
|
$0
|
$0
|
$0
|
$32,636
|
$6,882
|
$11,706
|
$203,846
|
William
D. Cable6
|
2006
|
$132,231
|
$0
|
$0
|
$0
|
$52,908
|
$2,878
|
$10,609
|
$198,626
|
Executive
Vice President,
|
2005
|
$127,211
|
$0
|
$0
|
$0
|
$40,210
|
$2,495
|
$10,214
|
$180,130
|
Chief
Operations Officer
|
2004
|
$120,552
|
$0
|
$0
|
$0
|
$27,924
|
$2,150
|
$9,660
|
$160,286
|
Plan
Category
|
Number
of securities to
be
issued upon exercise of
outstanding
options,
warrants
and rights
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation
plans
(excluding securities
reflected
in
column
(a))
|
(a)
|
(b)
|
(c)
|
|
Equity
compensation
plans
approved by
security
holders
|
147,7891
|
$12.362
|
36,455
|
Equity
compensation
plans
not approved by
security
holders
|
0
|
$0
|
0
|
Total
|
147,7891
|
$12.362
|
36,455
|
1
|
Of
the 147,789 stock options issued under the Omnibus Plan, a total
of
146,175 of those stock options have vested or are exercisable
within 60
days. Of the outstanding stock options, options to purchase a
total of
18,383 shares of the common stock were granted on September 28,
1999;
17,773 options were granted on September 25, 2000; 47,646 options
were
granted on October 30, 2001; 5,007 options were granted on December
18,
2001; 54,946 options were granted on December 17, 2003; 2,420
options were
granted on May 6, 2004; and 1,614 options were granted on December
16,
2004.
|
2
|
The
exercise prices for the grants of stock options under the Omnibus
Plan on
September 28, 1999; September 25, 2000; October 30, 2001; December
18,
2001; December 17, 2002; May 6, 2004 and December 16, 2004 are:
$13.52 (as
adjusted due to a 10% stock dividend granted on April 24, 2000);
$10.49;
$13.17; $12.15; $11.65; $15.46; and $15.85, respectively. All
prices and
shares have been adjusted for the 10% stock dividend paid March
16, 2005
and April 20, 2006.
|
Name
|
Grant
Date
|
Estimated
Future Payouts Under
Non-Equity Incentive Plan
Awards
|
Estimated
Future Payouts Under
Equity Incentive Plan Awards
|
All
Other Stock Awards:
Number
of Shares
of Stock
or Units
(#)
|
All
Other Option Awards: Number
of
Securities
Under-
lying
Options
(#)
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
Grant
Date Fair Value
of
Stock and Option Awards
|
||||
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
||||||
(a)
|
(b)
|
(
c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
(m)
|
Tony
W. Wolfe
|
01/01/2006
|
$77,635
|
$92,191
|
$97,043
|
|||||||
A.
Joseph Lampron1
|
01/01/2006
|
$42,326
|
$50,263
|
$52,908
|
8
|
|
|
$250
|
|||
Joseph
F. Beaman, Jr.
|
01/01/2006
|
$42,326
|
$50,263
|
$52,908
|
|||||||
Lance
A. Sellers
|
01/01/2006
|
$49,146
|
$58,360
|
$61,432
|
|||||||
William
D. Cable
|
01/01/2006
|
$42,326
|
$50,263
|
$52,908
|
Option
Awards
|
Stock
Awards
|
||||||||
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of
Shares
or Units
of
Stock That Have Not
Vested
(#)
|
Market
Value
of Shares or Units of
Stock
That
Have Not Vested
($)
|
Equity
Incentive
Plan Awards:
Number
of Unearned
Shares,
Units
or
Other Rights That Have Not Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of Unearned Shares,
Units
or
Other
Rights
That
Have
Not
Vested
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
Tony
W. Wolfe
|
8,659
11,366
6,050
|
$13.52
$13.17
$11.65
|
09/28/2009
10/30/2011
12/17/2012
|
||||||
A.
Joseph Lampron
|
5,007
7,260
|
|
|
$12.15
$11.65
|
12/18/2011
12/17/2012
|
||||
Joseph
F. Beaman, Jr.
|
2,598
6,976
6,027
4,840
|
|
|
$13.52
$10.49
$13.17
$11.65
|
09/28/2009
10/25/2010
10/31/2011
12/17/2012
|
||||
Lance
A. Sellers
|
3,253
5,833
8,470
|
|
|
$13.52
$13.17
$11.65
|
09/28/2009
10/30/2011
12/17/2012
|
||||
William
D. Cable
|
2,971
4,258
7,260
|
|
|
$10.49
$13.17
$11.65
|
10/25/2010
10/31/2011
12/17/2012
|
Option
Awards
|
Stock
Awards
|
|||
Name
|
Number
of Shares
Acquired
on
Exercise
(#)
|
Value
Realized on
Exercise
($)
|
Number
of Shares
Acquired
on
Vesting
(#)
|
Value
Realized
on
Vesting
($)
|
(a)
|
(b)
|
(
c)
|
(d)
|
(e)
|
Tony
W. Wolfe
|
18,177
|
$484,584
|
||
A.
Joseph Lampron1
|
0
|
$
0
|
8
|
$250
|
Joseph
F. Beaman, Jr.
|
2,598
|
$75,717
|
|
|
Lance
A. Sellers
|
5,377
|
$160,223
|
||
William
D. Cable
|
1,183
|
$34,733
|
Name
|
Executive
Contributions
in
Last FY
($)
|
Registrant
Contributions
in
Last FY
($)
|
Aggregate
Earnings
in
Last
FY
($)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance
at Last
FYE
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
Tony
W. Wolfe
|
$9,082
|
$0
|
|||
A.
Joseph Lampron
|
$3,866
|
$0
|
|||
Joseph
F. Beaman, Jr.
|
$1,162
|
$0
|
|
|
|
Lance
A. Sellers
|
$0
|
$0
|
|||
William
D. Cable
|
$13,820
|
$0
|
Name
|
Plan
Name
|
Number
of
Years
Credited
Service
(#)
|
Present
Value of
Accumulated
Benefit
($)
|
Payments
During
Last
Fiscal Year
($)
|
(a)
|
(b)
|
(
c)
|
(d)
|
(e)
|
Tony
W. Wolfe
|
SERP
|
5
|
$421,529
|
$
0
|
A.
Joseph Lampron
|
SERP
|
5
|
$52,745
|
$
0
|
Joseph
F. Beaman, Jr.
|
SERP
|
5
|
$59,425
|
$
0
|
Lance
A. Sellers
|
SERP
|
5
|
$48,589
|
$
0
|
William
D. Cable
|
SERP
|
5
|
$17,380
|
$
0
|
Period
Ending
|
||||||
Index
|
12/31/01
|
12/31/02
|
12/31/03
|
12/31/04
|
12/31/05
|
12/31/06
|
Peoples
Bancorp of North Carolina, Inc.
|
100.00
|
101.19
|
138.16
|
144.23
|
188.93
|
263.12
|
|
||||||
NASDAQ
Composite
|
100.00
|
68.76
|
103.67
|
113.16
|
115.57
|
127.58
|
SNL
Southeast Bank Index
|
100.00
|
110.46
|
138.72
|
164.50
|
168.39
|
197.45
|
Source:
SNL Financial LC, Charlottesville, VA
|
(434)
977-1600
|
|||||
© 2007 |
www.snl.com
|
By Order of the Board of Directors, | |||
/s/ Tony W. Wolfe | |||
Tony W. Wolfe | |||
President and Chief Executive Officer | |||
Newton, North Carolina | |||
April 4, 2007 |
SELECTED
FINANCIAL DATA
|
||||||||||||||||
Dollars
in Thousands Except Per Share Amounts
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
Summary
of Operations
|
||||||||||||||||
Interest
income
|
$
|
55,393
|
41,913
|
35,095
|
33,799
|
35,550
|
||||||||||
Interest
expense
|
23,110
|
15,429
|
12,335
|
12,749
|
15,777
|
|||||||||||
Net
interest income
|
32,283
|
26,484
|
22,760
|
21,050
|
19,773
|
|||||||||||
Provision
for loan losses
|
2,513
|
3,110
|
3,256
|
6,744
|
5,432
|
|||||||||||
Net
interest income after provision for loan losses
|
29,770
|
23,374
|
19,504
|
14,306
|
14,341
|
|||||||||||
Non-interest
income
|
7,554
|
6,668
|
6,000
|
5,825
|
6,443
|
|||||||||||
Non-interest
expense
|
22,983
|
20,330
|
18,840
|
17,072
|
15,636
|
|||||||||||
Income
before taxes
|
14,341
|
9,712
|
6,664
|
3,059
|
5,148
|
|||||||||||
Income
taxes
|
5,170
|
3,381
|
2,233
|
1,055
|
1,712
|
|||||||||||
Net
income
|
$
|
9,171
|
6,331
|
4,431
|
2,004
|
3,436
|
||||||||||
Selected
Year-End Balances
|
||||||||||||||||
Assets
|
$
|
818,948
|
730,280
|
686,348
|
674,032
|
645,638
|
||||||||||
Available
for sale securities
|
117,581
|
115,158
|
105,598
|
79,460
|
71,736
|
|||||||||||
Loans,
net
|
643,078
|
559,239
|
527,419
|
542,404
|
519,122
|
|||||||||||
Mortgage
loans held for sale
|
-
|
2,248
|
3,783
|
587
|
5,065
|
|||||||||||
Interest-earning
assets
|
780,082
|
692,835
|
653,111
|
639,934
|
609,052
|
|||||||||||
Deposits
|
633,820
|
582,854
|
556,522
|
549,802
|
515,739
|
|||||||||||
Interest-bearing
liabilities
|
650,364
|
576,681
|
553,135
|
550,357
|
527,525
|
|||||||||||
Shareholders'
equity
|
$
|
62,835
|
54,353
|
50,938
|
48,554
|
48,605
|
||||||||||
Shares
outstanding*
|
3,830,634
|
3,784,886
|
3,793,175
|
3,793,594
|
3,791,592
|
|||||||||||
Selected
Average Balances
|
||||||||||||||||
Assets
|
$
|
772,585
|
706,843
|
684,385
|
661,077
|
625,227
|
||||||||||
Available
for sale securities
|
118,137
|
108,690
|
93,770
|
72,072
|
77,414
|
|||||||||||
Loans
|
604,427
|
550,545
|
547,753
|
539,559
|
507,879
|
|||||||||||
Interest-earning
assets
|
732,244
|
668,614
|
650,528
|
626,197
|
593,380
|
|||||||||||
Deposits
|
605,407
|
570,997
|
558,142
|
533,703
|
499,224
|
|||||||||||
Interest-bearing
liabilities
|
613,686
|
563,210
|
553,880
|
540,676
|
516,747
|
|||||||||||
Shareholders'
equity
|
$
|
62,465
|
55,989
|
51,978
|
49,971
|
48,257
|
||||||||||
Shares
outstanding*
|
3,801,219
|
3,794,860
|
3,805,317
|
3,791,761
|
3,813,890
|
|||||||||||
Profitability
Ratios
|
||||||||||||||||
Return
on average total assets
|
1.19
|
%
|
0.90
|
%
|
0.65
|
%
|
0.30
|
%
|
0.55
|
%
|
||||||
Return
on average shareholders' equity
|
14.68
|
%
|
11.31
|
%
|
8.52
|
%
|
4.01
|
%
|
7.12
|
%
|
||||||
Dividend
payout ratio
|
20.78
|
%
|
22.34
|
%
|
28.37
|
%
|
62.56
|
%
|
36.58
|
%
|
||||||
Liquidity
and Capital Ratios (averages)
|
||||||||||||||||
Loan
to deposit
|
99.84
|
%
|
96.42
|
%
|
98.14
|
%
|
101.10
|
%
|
101.73
|
%
|
||||||
Shareholders'
equity to total assets
|
8.09
|
%
|
7.92
|
%
|
7.59
|
%
|
7.56
|
%
|
7.72
|
%
|
||||||
Per
share of common stock*
|
||||||||||||||||
Basic
net income
|
$
|
2.41
|
1.67
|
1.16
|
0.53
|
0.90
|
||||||||||
Diluted
net income
|
$
|
2.36
|
1.64
|
1.15
|
0.53
|
0.90
|
||||||||||
Cash
dividends
|
$
|
0.50
|
0.37
|
0.33
|
0.33
|
0.33
|
||||||||||
Book
value
|
$
|
16.40
|
14.36
|
13.43
|
12.80
|
12.82
|
||||||||||
*Shares
outstanding and per share computations have been retroactively
restated to
reflect 10% stock dividends during first quarter 2005 and second
quarter
2006.
|
Table
1- Average Balance Table
|
||||||||||||||||||||||||||||
December
31, 2006
|
December
31, 2005
|
December
31, 2004
|
||||||||||||||||||||||||||
(Dollars
in Thousands)
|
Average
Balance
|
Interest
|
Yield
/
Rate
|
Average
Balance
|
Interest
|
Yield
/
Rate
|
Average
Balance
|
Interest
|
Yield
/
Rate
|
|||||||||||||||||||
Interest-earning
assets:
|
||||||||||||||||||||||||||||
Loans
|
$
|
604,427
|
49,665
|
8.22
|
%
|
550,545
|
37,234
|
6.76
|
%
|
547,753
|
29,826
|
5.45
|
%
|
|||||||||||||||
Interest
rate swap agreements
|
-
|
(698
|
)
|
-0.12
|
%
|
-
|
(575
|
)
|
-0.14
|
%
|
-
|
1,056
|
2.21
|
%
|
||||||||||||||
Loan
fees
|
-
|
701
|
0.12
|
%
|
-
|
464
|
0.80
|
%
|
-
|
191
|
0.03
|
%
|
||||||||||||||||
Total
loans
|
604,427
|
49,668
|
8.22
|
%
|
550,545
|
37,123
|
6.74
|
%
|
547,753
|
31,073
|
5.67
|
%
|
||||||||||||||||
Investments
- taxable
|
29,784
|
1,306
|
4.38
|
%
|
37,487
|
1,595
|
4.25
|
%
|
35,920
|
1,545
|
4.30
|
%
|
||||||||||||||||
Investments
- nontaxable*
|
88,353
|
4,642
|
5.25
|
%
|
71,202
|
3,472
|
4.88
|
%
|
57,850
|
2,741
|
4.74
|
%
|
||||||||||||||||
Federal
funds sold
|
1,766
|
85
|
4.81
|
%
|
2,272
|
73
|
3.21
|
%
|
3,363
|
35
|
1.05
|
%
|
||||||||||||||||
Other
|
7,914
|
424
|
5.36
|
%
|
7,108
|
269
|
3.61
|
%
|
5,642
|
161
|
2.70
|
%
|
||||||||||||||||
Total
interest-earning assets
|
732,244
|
56,125
|
7.66
|
%
|
668,614
|
42,532
|
6.36
|
%
|
650,528
|
35,555
|
5.47
|
%
|
||||||||||||||||
Cash
and due from banks
|
17,022
|
15,149
|
13,058
|
|||||||||||||||||||||||||
Other
assets
|
31,218
|
30,891
|
30,185
|
|||||||||||||||||||||||||
Allowance
for loan losses
|
(7,899
|
)
|
(7,811
|
)
|
(9,386
|
)
|
||||||||||||||||||||||
Total
assets
|
$
|
772,585
|
706,843
|
684,385
|
||||||||||||||||||||||||
Interest-bearing
liabilities:
|
||||||||||||||||||||||||||||
NOW
accounts
|
$
|
87,329
|
1,214
|
1.39
|
%
|
110,852
|
1,468
|
1.32
|
%
|
106,832
|
1,292
|
1.21
|
%
|
|||||||||||||||
Regular
savings accounts
|
19,768
|
57
|
0.29
|
%
|
21,205
|
65
|
0.31
|
%
|
21,845
|
72
|
0.33
|
%
|
||||||||||||||||
Money
market accounts
|
66,035
|
1,789
|
2.71
|
%
|
56,858
|
1,112
|
1.96
|
%
|
51,069
|
535
|
1.05
|
%
|
||||||||||||||||
Time
deposits
|
335,092
|
14,189
|
4.23
|
%
|
292,807
|
8,923
|
3.05
|
%
|
300,175
|
7,145
|
2.38
|
%
|
||||||||||||||||
FHLB
borrowings
|
74,082
|
3,588
|
4.84
|
%
|
65,934
|
2,889
|
4.38
|
%
|
58,656
|
2,603
|
4.44
|
%
|
||||||||||||||||
Demand
notes payable to U.S. Treasury
|
722
|
34
|
4.71
|
%
|
702
|
21
|
3.02
|
%
|
678
|
8
|
1.14
|
%
|
||||||||||||||||
Trust
preferred securities
|
24,878
|
1,963
|
7.89
|
%
|
14,433
|
938
|
6.50
|
%
|
14,433
|
677
|
4.69
|
%
|
||||||||||||||||
Other
|
5,780
|
276
|
4.78
|
%
|
419
|
13
|
3.00
|
%
|
192
|
3
|
1.46
|
%
|
||||||||||||||||
Total
interest-bearing liabilities
|
613,686
|
23,110
|
3.77
|
%
|
563,210
|
15,429
|
2.74
|
%
|
553,880
|
12,335
|
2.23
|
%
|
||||||||||||||||
Demand
deposits
|
97,183
|
89,275
|
78,221
|
|||||||||||||||||||||||||
Other
liabilities
|
3,044
|
1,275
|
2,137
|
|||||||||||||||||||||||||
Shareholders'
equity
|
62,465
|
55,989
|
51,978
|
|||||||||||||||||||||||||
Total
liabilities and shareholder's equity
|
$
|
776,378
|
709,749
|
686,216
|
||||||||||||||||||||||||
Net
interest spread
|
$
|
33,015
|
3.89
|
%
|
27,103
|
3.62
|
%
|
23,220
|
3.24
|
%
|
||||||||||||||||||
Net
yield on interest-earning assets
|
4.51
|
%
|
4.05
|
%
|
3.57
|
%
|
||||||||||||||||||||||
Taxable
equivalent adjustment
|
||||||||||||||||||||||||||||
Investment
securities
|
$
|
731
|
619
|
460
|
||||||||||||||||||||||||
Net
interest income
|
$
|
32,284
|
26,484
|
22,760
|
||||||||||||||||||||||||
*Includes
U.S. government agency securities that are non-taxable for state
income
tax purposes of $65.9 million in 2006, $50.7 million in 2005 and
$40.4
million in 2004. An effective tax rate of 6.90% was used to calculate
the
tax equivalent yield on these
securities.
|
Table
2 - Rate/Volume Analysis-Tax Equivalent Basis
|
|||||||||||||||||||
December
31, 2006
|
December
31, 2005
|
||||||||||||||||||
(Dollars
in Thousands)
|
Changes
in
average
volume
|
Changes
in
average
rates
|
Total
Increase
(Decrease)
|
Changes
in
average
volume
|
Changes
in
average
rates
|
Total
Increase
(Decrease)
|
|||||||||||||
Interest
Income:
|
|||||||||||||||||||
Loans:
Net of unearned income
|
$
|
4,030
|
8,515
|
12,545
|
173
|
5,877
|
6,050
|
||||||||||||
Investments
- taxable
|
(333
|
)
|
44
|
(289
|
)
|
67
|
(17
|
)
|
50
|
||||||||||
Investments
- nontaxable
|
869
|
301
|
1,170
|
642
|
89
|
731
|
|||||||||||||
Federal
funds sold
|
(20
|
)
|
32
|
12
|
(23
|
)
|
61
|
38
|
|||||||||||
Other
|
37
|
118
|
155
|
49
|
59
|
108
|
|||||||||||||
Total
interest income
|
4,583
|
9,010
|
13,593
|
908
|
6,069
|
6,977
|
|||||||||||||
Interest
expense:
|
|||||||||||||||||||
NOW
accounts
|
(320
|
)
|
66
|
(254
|
)
|
51
|
125
|
176
|
|||||||||||
Regular
savings accounts
|
(4
|
)
|
(4
|
)
|
(8
|
)
|
(2
|
)
|
(5
|
)
|
(7
|
)
|
|||||||
Money
market accounts
|
214
|
463
|
677
|
87
|
490
|
577
|
|||||||||||||
Time
deposits
|
1,540
|
3,726
|
5,266
|
(200
|
)
|
1,978
|
1,778
|
||||||||||||
FHLB
Borrowings
|
375
|
324
|
699
|
321
|
(35
|
)
|
286
|
||||||||||||
Demand
notes payable to
|
|||||||||||||||||||
U.S.
Treasury
|
1
|
12
|
13
|
-
|
13
|
13
|
|||||||||||||
Trust
Preferred Securities
|
752
|
273
|
1,025
|
24
|
237
|
261
|
|||||||||||||
Other
|
208
|
55
|
263
|
5
|
5
|
10
|
|||||||||||||
Total
interest expense
|
2,766
|
4,915
|
7,681
|
286
|
2,808
|
3,094
|
|||||||||||||
Net
interest income
|
$
|
1,817
|
4,095
|
5,912
|
622
|
3,261
|
3,883
|
Table
3 - Non-Interest Income
|
||||||||||
(Dollars
in Thousands)
|
2006
|
|
|
2005
|
|
|
2004
|
|||
Service
charges
|
$
|
3,930
|
3,780
|
3,435
|
||||||
Other
service charges and fees
|
1,540
|
1,142
|
677
|
|||||||
Gain
(loss) on sale of securities
|
(592
|
)
|
(730
|
)
|
(64
|
)
|
||||
Mortgage
banking income
|
289
|
469
|
356
|
|||||||
Insurance
and brokerage commissions
|
389
|
387
|
430
|
|||||||
Loss
on foreclosed and repossessed assets
|
(108
|
)
|
(38
|
)
|
(179
|
)
|
||||
Miscellaneous
|
2,106
|
1,658
|
1,345
|
|||||||
Total
non-interest income
|
$
|
7,554
|
6,668
|
6,000
|
Table
4 - Non-Interest Expense
|
||||||||||
(Dollars
in Thousands)
|
2006
|
|
2005
|
|
2004
|
|||||
Salaries
and wages
|
$
|
9,368
|
7,162
|
7,023
|
||||||
Employee
benefits
|
2,417
|
3,702
|
3,237
|
|||||||
Total
personnel expense
|
11,785
|
10,864
|
10,260
|
|||||||
Occupancy
expense
|
4,180
|
3,949
|
3,672
|
|||||||
Office
supplies
|
436
|
314
|
314
|
|||||||
FDIC
deposit insurance
|
75
|
76
|
81
|
|||||||
Professional
services
|
239
|
389
|
290
|
|||||||
Postage
|
307
|
264
|
211
|
|||||||
Telephone
|
338
|
403
|
337
|
|||||||
Director
fees and expense
|
423
|
334
|
351
|
|||||||
Marketing
and public relations
|
772
|
656
|
620
|
|||||||
Consulting
fees
|
575
|
233
|
306
|
|||||||
Taxes
and licenses
|
293
|
218
|
200
|
|||||||
Other
operating expense
|
3,560
|
2,630
|
2,198
|
|||||||
Total
non-interest expense
|
$
|
22,983
|
20,330
|
18,840
|
Table
5 - Interest Sensitivity Analysis
|
|||||||||||||||||||
(Dollars
in Thousands)
|
Immediate
|
|
1-3
months
|
|
4-12
months
|
|
Total
Within
One
Year
|
|
Over
One
Year
& Non-sensitive
|
|
Total
|
||||||||
Interest-earning
assets:
|
|||||||||||||||||||
Loans
|
$
|
465,884
|
19,944
|
10,724
|
496,552
|
154,829
|
$
|
651,381
|
|||||||||||
Mortgage
loans available for sale
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Investment
securities
|
-
|
1,415
|
-
|
1,415
|
116,166
|
117,581
|
|||||||||||||
Federal
funds sold
|
2,640
|
-
|
-
|
2,640
|
-
|
2,640
|
|||||||||||||
Interest-bearing
deposit accounts
|
1,471
|
-
|
-
|
1,471
|
-
|
1,471
|
|||||||||||||
Other
interest-earning assets
|
-
|
-
|
-
|
-
|
7,009
|
7,009
|
|||||||||||||
Total
interest-earning assets
|
469,995
|
21,359
|
10,724
|
502,078
|
278,004
|
$
|
780,082
|
||||||||||||
Interest-bearing
liabilities:
|
|||||||||||||||||||
NOW,
savings, and money market deposits
|
174,578
|
-
|
-
|
174,578
|
-
|
$
|
174,578
|
||||||||||||
Time
deposits
|
86,059
|
119,909
|
127,463
|
333,431
|
24,418
|
357,849
|
|||||||||||||
Other
short term borrowings
|
1,600
|
-
|
-
|
1,600
|
-
|
1,600
|
|||||||||||||
FHLB
borrowings
|
19,800
|
42,500
|
-
|
62,300
|
27,000
|
89,300
|
|||||||||||||
Securities
sold under agreement to repurchase
|
6,418
|
-
|
-
|
6,418
|
-
|
6,418
|
|||||||||||||
Trust
preferred securities
|
-
|
20,619
|
-
|
20,619
|
-
|
20,619
|
|||||||||||||
Total
interest-bearing liabilities
|
288,455
|
183,028
|
127,463
|
598,946
|
51,418
|
$
|
650,364
|
||||||||||||
Interest-sensitive
gap
|
$
|
181,540
|
(161,669
|
)
|
(116,739
|
)
|
(96,868
|
)
|
226,586
|
$
|
129,718
|
||||||||
Cumulative
interest-sensitive gap
|
$
|
181,540
|
19,871
|
(96,868
|
)
|
(96,868
|
)
|
129,718
|
|||||||||||
Interest-earning
assets as a percentage of interest-bearing
liabilities
|
|
|
162.94
|
%
|
|
11.67 | % | 8.41 | % | 83.83 | % | 540.67 | % |
Table
6 - Summary of Investment Portfolio
|
||||||||||
(Dollars
in Thousands)
|
2006
|
2005
|
2004
|
|||||||
Obligations
of United States government
|
||||||||||
agencies
and corporations
|
$
|
72,744
|
60,243
|
46,570
|
||||||
Obligations
of states and political subdivisions
|
24,366
|
21,609
|
20,649
|
|||||||
Mortgage
backed securities
|
19,220
|
31,004
|
36,543
|
|||||||
Trust
preferred securities
|
750
|
1,750
|
1,750
|
|||||||
Equity
securities
|
501
|
552
|
86
|
|||||||
Total
securities
|
$
|
117,581
|
115,158
|
105,598
|
Table
7 - Maturity Distribution and Weighted Average Yield on
Investments
|
|||||||||||||||||||||||||||||||
After
One Year
|
After
5 Years
|
||||||||||||||||||||||||||||||
One
Year or Less
|
Through
5 Years
|
Through
10 Years
|
|
After
10 Years
|
|
Totals
|
|||||||||||||||||||||||||
(Dollars
in Thousands)
|
Amount
|
|
Yield
|
|
Amount
|
|
Yield
|
Amount
|
|
Yield
|
|
Amount
|
|
Yield
|
|
Amount
|
|
Yield
|
|||||||||||||
Book
value:
|
|||||||||||||||||||||||||||||||
United
States Government agencies
|
$
|
-
|
-
|
49,535
|
4.74%
|
|
23,303
|
5.31%
|
|
-
|
-
|
$
|
72,838
|
4.92%
|
|
||||||||||||||||
States
and political subdivisions
|
910
|
7.19%
|
|
9,598
|
4.98%
|
|
10,261
|
5.74%
|
|
3,725
|
7.03%
|
|
24,494
|
5.69%
|
|
||||||||||||||||
Mortgage
backed securities
|
17
|
4.95%
|
|
580
|
4.63%
|
|
4,008
|
4.38%
|
|
15,061
|
4.50%
|
|
19,666
|
4.31%
|
|
||||||||||||||||
Trust
preferred securities
|
-
|
-
|
-
|
-
|
-
|
-
|
750
|
8.70%
|
|
750
|
8.70%
|
|
|||||||||||||||||||
Equity
securities
|
-
|
-
|
-
|
-
|
-
|
-
|
815
|
0.22%
|
|
815
|
0.22%
|
|
|||||||||||||||||||
Total
securities
|
$
|
927
|
7.15%
|
|
59,713
|
4.78%
|
|
37,572
|
5.33%
|
|
20,351
|
4.94%
|
|
$
|
118,563
|
4.97%
|
|
Table
8 - Loan Portfolio
|
|||||||||||||||||||||||||||||||
2006
|
|
2005
|
|
2004
|
|
2003
|
|
2002
|
|
||||||||||||||||||||||
(Dollars
in Thousands)
|
Amount
|
|
%
of Loans
|
|
Amount
|
|
%
of Loans
|
|
Amount
|
|
%
of Loans
|
|
Amount
|
|
%
of Loans
|
|
Amount
|
|
%
of Loans
|
||||||||||||
Breakdown
of loan receivables:
|
|||||||||||||||||||||||||||||||
Commercial
|
$
|
85,064
|
13.06%
|
|
79,902
|
14.10%
|
|
79,189
|
14.79%
|
|
90,558
|
16.41%
|
|
92,141
|
17.51%
|
|
|||||||||||||||
Real
estate - mortgage
|
364,595
|
55.97%
|
|
330,227
|
58.28%
|
|
312,988
|
58.45%
|
|
332,730
|
60.26%
|
|
322,987
|
61.36%
|
|
||||||||||||||||
Real
estate - construction
|
187,960
|
28.86%
|
|
141,420
|
24.96%
|
|
127,042
|
23.73%
|
|
110,392
|
19.99%
|
|
80,552
|
15.30%
|
|
||||||||||||||||
Consumer
|
13,762
|
2.11%
|
|
15,115
|
2.66%
|
|
16,249
|
3.03%
|
|
18,446
|
3.34%
|
|
30,690
|
5.83%
|
|
||||||||||||||||
Total
loans
|
$
|
651,381
|
100.00%
|
|
566,664
|
100.00%
|
|
535,468
|
100.00%
|
|
552,126
|
100.00%
|
|
526,370
|
100.00%
|
|
|||||||||||||||
Less:
Allowance for loan losses
|
8,303
|
7,425
|
8,049
|
9,722
|
7,248
|
||||||||||||||||||||||||||
Net
loans
|
$
|
643,078
|
559,239
|
527,419
|
542,404
|
519,122
|
Table
9 - Maturity and Repricing Data for Loans
|
|||||||||||||
(Dollars
in Thousands)
|
Within
one
year
or less
|
|
After
one year through five
years
|
|
After
five
years
|
|
Total
Loans
|
||||||
Commercial
|
$
|
71,767
|
12,258
|
1,039
|
$
|
85,064
|
|||||||
Real
estate - mortgage
|
243,720
|
82,895
|
37,980
|
364,595
|
|||||||||
Real
estate - construction
|
175,369
|
10,177
|
2,414
|
187,960
|
|||||||||
Consumer
|
5,696
|
7,002
|
1,064
|
13,762
|
|||||||||
Total
loans
|
$
|
496,552
|
112,332
|
42,497
|
$
|
651,381
|
|||||||
Total
fixed rate loans
|
$
|
15,852
|
74,376
|
42,497
|
$
|
132,725
|
|||||||
Total
floating rate loans
|
480,700
|
37,956
|
-
|
518,656
|
|||||||||
Total
loans
|
$
|
496,552
|
112,332
|
42,497
|
$
|
651,381
|
· |
the
Bank’s loan loss experience;
|
· |
the
amount of past due and non-performing loans;
|
· |
specific
known risks;
|
· |
the
status and amount of other past due and non-performing
assets;
|
· |
underlying
estimated values of collateral securing loans;
|
· |
current
and anticipated economic conditions; and
|
· |
other
factors which management believes affect the allowance for potential
credit losses.
|
Table
10 - Analysis of Allowance for Loan Losses
|
||||||||||||||||
(Dollars
in Thousands)
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
2002
|
|||||||
Reserve
for loan losses at beginning
|
$
|
7,425
|
8,049
|
9,722
|
7,248
|
6,091
|
||||||||||
Loans
charged off:
|
||||||||||||||||
Commercial
|
505
|
293
|
1,004
|
1,179
|
3,737
|
|||||||||||
Real
estate - mortgage
|
568
|
2,141
|
3,842
|
2,422
|
158
|
|||||||||||
Real
estate - construction
|
250
|
1,250
|
4
|
251
|
-
|
|||||||||||
Consumer
|
636
|
516
|
535
|
630
|
546
|
|||||||||||
Total
loans charged off
|
1,959
|
4,200
|
5,385
|
4,482
|
4,441
|
|||||||||||
Recoveries
of losses previously charged off:
|
||||||||||||||||
Commercial
|
64
|
144
|
162
|
36
|
40
|
|||||||||||
Real
estate - mortgage
|
108
|
162
|
144
|
18
|
-
|
|||||||||||
Real
estate - construction
|
2
|
-
|
-
|
1
|
4
|
|||||||||||
Consumer
|
150
|
160
|
150
|
157
|
122
|
|||||||||||
Total
recoveries
|
324
|
466
|
456
|
212
|
166
|
|||||||||||
Net
loans charged off
|
1,635
|
3,734
|
4,929
|
4,270
|
4,275
|
|||||||||||
Provision
for loan losses
|
2,513
|
3,110
|
3,256
|
6,744
|
5,432
|
|||||||||||
Reserve
for loan losses at end of year
|
$
|
8,303
|
7,425
|
8,049
|
9,722
|
7,248
|
||||||||||
Loans
charged off net of recoveries, as
|
||||||||||||||||
a
percent of average loans outstanding
|
0.27
|
%
|
0.68
|
%
|
0.90
|
%
|
0.79
|
%
|
0.84
|
%
|
Table
11 - Non-performing Assets
|
||||||||||||||||
(Dollars
in Thousands)
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|||
Non-accrual
loans
|
$
|
7,560
|
3,492
|
5,097
|
4,343
|
4,602
|
||||||||||
Loans
90 days or more past due and still accruing
|
78
|
946
|
245
|
271
|
239
|
|||||||||||
Total
non-performing loans
|
7,638
|
4,438
|
5,342
|
4,614
|
4,841
|
|||||||||||
All
other real estate owned
|
344
|
531
|
682
|
1,447
|
240
|
|||||||||||
All
other repossessed assets
|
-
|
-
|
-
|
206
|
1,538
|
|||||||||||
Total
non-performing assets
|
$
|
7,982
|
4,969
|
6,024
|
6,267
|
6,619
|
||||||||||
As
a percent of total loans at year end
|
||||||||||||||||
Non-accrual
loans
|
1.16
|
%
|
0.62
|
%
|
0.95
|
%
|
0.79
|
%
|
0.87
|
%
|
||||||
Loans
90 days or more past due and still accruing
|
0.01
|
%
|
0.17
|
%
|
0.05
|
%
|
0.05
|
%
|
0.05
|
%
|
||||||
Total
non-performing assets
|
1.23
|
%
|
0.88
|
%
|
1.12
|
%
|
1.14
|
%
|
1.26
|
%
|
Table
12 - Maturities of Time Deposits over $100,000
|
||||
(Dollars
in Thousands)
|
2006
|
|
||
Three
months or less
|
$
|
70,290
|
||
Over
three months through six months
|
63,214
|
|||
Over
six months through twelve months
|
41,234
|
|||
Over
twelve months
|
19,438
|
|||
Total
|
$
|
194,176
|
Table
13 - Contractual Obligations and Other
Commitments
|
||||||||||||||||
(Dollars
in Thousands)
|
Within
one
year
|
|
One
to Three Years
|
|
Three
to Five Years
|
|
Five
Years or More
|
|
Total
|
|||||||
Contractual
Cash Obligations
|
||||||||||||||||
Long-term
borrowings*
|
$
|
2,500
|
-
|
42,000
|
25,000
|
$
|
69,500
|
|||||||||
Junior
subordinated debentures
|
-
|
-
|
-
|
20,619
|
20,619
|
|||||||||||
Operating
lease obligations
|
1,067
|
1,907
|
1,385
|
3,650
|
8,009
|
|||||||||||
Total
|
$
|
3,567
|
1,907
|
43,385
|
49,269
|
$
|
98,128
|
|||||||||
Other
Commitments
|
||||||||||||||||
Commitments
to extend credit
|
$
|
3,547
|
72,373
|
8,027
|
67,750
|
$
|
151,697
|
|||||||||
Standby
letters of credit
|
||||||||||||||||
and
financial guarantees written
|
4,570
|
4
|
-
|
-
|
4,574
|
|||||||||||
Total
|
$
|
8,117
|
72,377
|
8,027
|
67,750
|
$
|
156,271
|
|||||||||
*Excludes
$19.8 million adjustable rate credit due to the FHLB, which
matured in
February 2007.
|
Table
14 - Equity Ratios
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Return
on average assets
|
1.19%
|
|
0.90%
|
|
0.65%
|
|
||||
Return
on average equity
|
14.68%
|
|
11.31%
|
|
8.52%
|
|
||||
Dividend
payout ratio
|
20.78%
|
|
22.34%
|
|
28.37%
|
|
||||
Average
equity to average assets
|
8.09%
|
|
7.92%
|
|
7.59%
|
|
Table
15 - Quarterly Financial Data
|
|||||||||||||||||||||||||
2006
|
2005
|
|
|||||||||||||||||||||||
(Dollars
in thousands, except per share amounts)
|
First
|
Second
|
|
Third
|
|
Fourth
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|||||||||||
Total
interest income
|
$
|
12,484
|
13,559
|
14,390
|
14,961
|
9,216
|
9,984
|
10,987
|
11,726
|
||||||||||||||||
Total
interest expense
|
4,863
|
5,429
|
6,243
|
6,575
|
3,346
|
3,686
|
3,978
|
4,418
|
|||||||||||||||||
Net
interest income
|
7,621
|
8,130
|
8,147
|
8,386
|
5,870
|
6,298
|
7,009
|
7,308
|
|||||||||||||||||
Provision
for loan losses
|
759
|
413
|
686
|
655
|
690
|
723
|
930
|
767
|
|||||||||||||||||
Other
income
|
1,929
|
2,017
|
2,043
|
1,564
|
1,632
|
1,835
|
1,788
|
1,413
|
|||||||||||||||||
Other
expense
|
5,307
|
5,548
|
5,787
|
6,341
|
4,888
|
4,929
|
5,016
|
5,498
|
|||||||||||||||||
Income
before income taxes
|
3,484
|
4,186
|
3,717
|
2,954
|
1,924
|
2,481
|
2,851
|
2,456
|
|||||||||||||||||
Income
taxes
|
1,249
|
1,525
|
1,344
|
1,052
|
647
|
873
|
1,010
|
851
|
|||||||||||||||||
Net
earnings
|
$
|
2,235
|
2,661
|
2,373
|
1,902
|
1,277
|
1,608
|
1,841
|
1,605
|
||||||||||||||||
Basic
earnings per share
|
$
|
0.59
|
0.70
|
0.62
|
0.50
|
0.35
|
0.42
|
0.48
|
0.42
|
||||||||||||||||
Diluted
earnings per share
|
$
|
0.58
|
0.68
|
0.61
|
0.49
|
0.32
|
0.42
|
0.48
|
0.42
|
Table
16 - Market Risk Table
|
||||||||||||||||||||||
(Dollars
In Thousands)
|
Principal/Notional
Amount Maturing in Year Ended December 31,
|
|||||||||||||||||||||
Loans
Receivable
|
2007
|
|
2008
|
|
2009
|
|
2010
& 2011
|
|
Thereafter
|
|
Total
|
|
Fair
Value
|
|||||||||
Fixed
rate
|
$
|
25,067
|
18,783
|
17,991
|
34,946
|
35,937
|
$
|
132,725
|
$
|
131,681
|
||||||||||||
Average
interest rate
|
7.59%
|
|
7.25%
|
|
7.35%
|
|
7.38%
|
|
7.23%
|
|
||||||||||||
Variable
rate
|
$
|
198,692
|
69,214
|
50,713
|
73,559
|
126,478
|
$
|
518,656
|
$
|
518,036
|
||||||||||||
Average
interest rate
|
8.76%
|
|
8.63%
|
|
8.49%
|
|
8.49%
|
|
8.46%
|
|
||||||||||||
$
|
651,381
|
$
|
649,717
|
|||||||||||||||||||
Investment
Securities
|
|
|||||||||||||||||||||
Interest
bearing cash
|
$
|
-
|
-
|
-
|
-
|
1,471
|
$
|
1,471
|
$
|
1,471
|
||||||||||||
Average
interest rate
|
-
|
-
|
-
|
-
|
5.26%
|
|
||||||||||||||||
Federal
funds sold
|
$
|
2,640
|
-
|
-
|
-
|
-
|
$
|
2,640
|
$
|
2,640
|
||||||||||||
Average
interest rate
|
5.13%
|
|
-
|
-
|
-
|
-
|
||||||||||||||||
Securities
available for sale
|
$
|
14,719
|
23,292
|
25,077
|
43,336
|
11,156
|
$
|
117,581
|
$
|
117,581
|
||||||||||||
Average
interest rate
|
4.77%
|
|
4.74%
|
|
4.77%
|
|
4.32%
|
|
3.57%
|
|
||||||||||||
Nonmarketable
equity securities
|
$
|
-
|
-
|
-
|
-
|
7,295
|
$
|
7,295
|
$
|
7,295
|
||||||||||||
Average
interest rate
|
-
|
-
|
-
|
-
|
5.48%
|
|
||||||||||||||||
Debt
Obligations
|
||||||||||||||||||||||
Deposits
|
$
|
339,620
|
30,295
|
13,080
|
2,682
|
248,143
|
$
|
633,820
|
$
|
633,771
|
||||||||||||
Average
interest rate
|
4.28%
|
|
4.47%
|
|
4.60%
|
|
3.95%
|
|
1.65%
|
|
||||||||||||
Advances
from FHLB
|
$
|
62,300
|
-
|
15,000
|
12,000
|
-
|
$
|
89,300
|
$
|
88,819
|
||||||||||||
Average
interest rate
|
4.78%
|
|
-
|
4.65%
|
|
5.08%
|
|
-
|
||||||||||||||
Demand
notes payable to U.S. Treasury
|
$
|
1,600
|
-
|
-
|
-
|
-
|
$
|
1,600
|
$
|
1,600
|
||||||||||||
Average
interest rate
|
4.95%
|
|
-
|
-
|
-
|
-
|
||||||||||||||||
Securities
sold under agreement to repurchase
|
$
|
6,418
|
-
|
-
|
-
|
-
|
$
|
6,418
|
$
|
6,418
|
||||||||||||
Average
interest rate
|
5.25%
|
|
-
|
-
|
-
|
-
|
||||||||||||||||
Junior
subordinated debentures
|
$
|
-
|
-
|
-
|
-
|
20,619
|
$
|
20,619
|
$
|
20,619
|
||||||||||||
Average
interest rate
|
-
|
-
|
-
|
-
|
6.99%
|
|
||||||||||||||||
Derivative
Instruments (notional amount)
|
||||||||||||||||||||||
Interest
rate floor contracts
|
$
|
-
|
70,000
|
80,000
|
-
|
-
|
$
|
150,000
|
$
|
481
|
||||||||||||
Average
interest rate
|
-
|
6.63%
|
|
7.72%
|
|
-
|
-
|
Table
17 - Interest Rate Risk
|
|||||||
(Dollars
in thousands)
|
|||||||
Estimated
Resulting Theoretical Net
Interest
Income
|
|||||||
Hypothetical
rate change
(ramp
over 12 months)
|
Amount
|
|
%
Change
|
||||
+2%
|
$
|
38,283
|
7.46
|
%
|
|||
+1%
|
$
|
36,968
|
3.77
|
%
|
|||
0%
|
$
|
35,627
|
0.00
|
%
|
|||
-1%
|
$
|
34,382
|
-3.49
|
%
|
|||
-2%
|
$
|
33,375
|
-6.32
|
%
|
|||
|
Estimated
Resulting Theoretical
Market
Value of
Equity
|
|
|||||
Hypothetical
rate change
(immediate
shock)
|
Amount
|
|
|
%
Change
|
|||
+2%
|
$
|
57,371
|
-7.03
|
%
|
|||
+1%
|
$
|
59,416
|
-3.71
|
%
|
|||
0%
|
$
|
61,708
|
0.00
|
%
|
|||
-1%
|
$
|
64,568
|
4.63
|
%
|
|||
-2%
|
$
|
67,893
|
10.02
|
%
|
Table
18 - Market and Dividend Data
|
||||||||||
|
|
|
|
|
|
|
|
|
Cash
Dividend
|
|
2006
|
Low
Bid
|
|
|
High
Bid
|
|
Per
Share
|
||||
First
Quarter
|
$
|
20.06
|
24.55
|
0.10
|
||||||
Second
Quarter
|
$
|
23.66
|
29.21
|
0.11
|
||||||
Third
Quarter
|
$
|
24.27
|
29.20
|
0.11
|
||||||
Fourth
Quarter
|
$
|
26.95
|
30.13
|
0.18
|
||||||
|
|
|
|
|
|
|
|
|
Cash
Dividend
|
|
2005
|
Low
Bid
|
|
|
High
Bid
|
Per
Share
|
|||||
First
Quarter
|
$
|
16.14
|
20.25
|
0.09
|
||||||
Second
Quarter
|
$
|
15.68
|
20.00
|
0.09
|
||||||
Third
Quarter
|
$
|
16.51
|
20.25
|
0.09
|
||||||
Fourth
Quarter
|
$
|
17.70
|
21.82
|
0.10
|
Period
Ending
|
||||||
Index
|
12/31/01
|
12/31/02
|
12/31/03
|
12/31/04
|
12/31/05
|
12/31/06
|
Peoples
Bancorp of North Carolina, Inc.
|
100.00
|
101.19
|
138.16
|
144.23
|
188.93
|
263.12
|
NASDAQ
Composite
|
100.00
|
68.76
|
103.67
|
113.16
|
115.57
|
127.58
|
SNL
Southeast Bank Index
|
100.00
|
110.46
|
138.72
|
164.50
|
168.39
|
197.45
|
Source
: SNL Financial LC, Charlottesville, VA
|
|
(434) 977-1600 | ||||
©
2007
|
www.snl.com |
PEOPLES
BANCORP OF NORTH CAROLINA, INC. AND
SUBSIDIARIES
|
|
Consolidated
Financial Statements
|
|
December
31, 2006, 2005 and 2004
|
|
|
|
INDEX
|
|
PAGE(S)
|
|
Management's
Report on Internal Control Over Financial Reporting
|
A-27
|
Report
of Independent Registered Public Accounting Firm on Internal
Control Over
Financial
|
|
Reporting |
A-28
- A-29
|
Report
of Independent Registered Public Accounting Firm on the Consolidated
Financial Statements
|
A-30
|
Financial
Statements
|
|
Consolidated
Balance Sheets at December 31, 2006 and December 31, 2005
|
A-31
|
Consolidated
Statements of Earnings for the years ended December 31, 2006,
2005 and
2004
|
A-32
|
Consolidated
Statements of Changes in Shareholders' Equity for the years ended
December
31,
|
|
2006,
2005 and 2004
|
A-33
|
Consolidated
Statements of Comprehensive Income for the years ended December
31, 2006,
2005
|
|
and
2004
|
A-34
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2006,
2005 and
2004
|
A-35
- A-36
|
Notes
to Consolidated Financial Statements
|
A-37
- A-56
|
/s/ Tony W. Wolfe | /s/ A. Joseph Lampron | |
Tony W. Wolfe | A. Joseph Lampron | |
Chief Executive Officer | Chief Financial Officer | |
March 15, 2007 | March 15, 2007 |
Certified
Public Accountants
|
www.pkm.com
|
/s/ Porter Keadle Moore, LLP | |||||
Atlanta,
Georgia
|
|
||||
February
27, 2007
|
/s/ Porter Keadle Moore, LLP | |||
Atlanta,
Georgia
|
|
||
February
27, 2007
|
Certified
Public Accountants
|
www.pkm.com
|
PEOPLES
BANCORP OF NORTH CAROLINA, INC. AND
SUBSIDIARIES
|
|||||||
|
|
|
|
|
|
||
Consolidated
Balance Sheets
|
|||||||
|
|
|
|
|
|
||
December
31, 2006 and 2005
|
|||||||
Assets
|
2006
|
|
2005
|
||||
Cash
and due from banks, including reserve requirements
|
$
|
18,860,318
|
18,468,999
|
||||
of
$6,243,000 and $5,229,000
|
|||||||
Federal
funds sold
|
2,640,000
|
1,347,000
|
|||||
Cash
and cash equivalents
|
21,500,318
|
19,815,999
|
|||||
Investment
securities available for sale
|
117,581,000
|
115,158,184
|
|||||
Other
investments
|
7,295,449
|
5,810,749
|
|||||
Total
securities
|
124,876,449
|
120,968,933
|
|||||
Mortgage
loans held for sale
|
-
|
2,247,900
|
|||||
Loans
|
651,381,129
|
566,663,416
|
|||||
Less
allowance for loan losses
|
(8,303,432
|
)
|
(7,424,782
|
)
|
|||
Net
loans
|
643,077,697
|
559,238,634
|
|||||
Premises
and equipment, net
|
12,816,385
|
12,662,153
|
|||||
Cash
surrender value of life insurance
|
6,532,406
|
6,311,757
|
|||||
Accrued
interest receivable and other assets
|
10,144,283
|
9,034,239
|
|||||
Total
assets
|
$
|
818,947,538
|
730,279,615
|
||||
Liabilities and Shareholders' Equity
|
|||||||
Deposits:
|
|||||||
Non-interest
bearing demand
|
$
|
101,393,142
|
94,660,721
|
||||
NOW,
MMDA & savings
|
174,577,641
|
183,248,699
|
|||||
Time,
$100,000 or more
|
194,176,291
|
152,410,976
|
|||||
Other
time
|
163,673,215
|
152,533,265
|
|||||
Total
deposits
|
633,820,289
|
582,853,661
|
|||||
Demand
notes payable to U.S. Treasury
|
1,600,000
|
1,473,693
|
|||||
Securities
sold under agreement to repurchase
|
6,417,803
|
981,050
|
|||||
FHLB
borrowings
|
89,300,000
|
71,600,000
|
|||||
Junior
subordinated debentures
|
20,619,000
|
14,433,000
|
|||||
Accrued
interest payable and other liabilities
|
4,355,073
|
4,585,217
|
|||||
Total
liabilities
|
756,112,165
|
675,926,621
|
|||||
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
3,830,634 shares in 2006
|
|||||||
and
3,440,805 shares in 2005
|
51,122,147
|
41,096,500
|
|||||
Retained
earnings
|
12,484,463
|
14,656,160
|
|||||
Accumulated
other comprehensive income (loss)
|
(771,237
|
)
|
(1,399,666
|
)
|
|||
Total
shareholders' equity
|
62,835,373
|
54,352,994
|
|||||
Total
liabilities and shareholders' equity
|
$
|
818,947,538
|
730,279,615
|
||||
See
accompanying notes to consolidated financial statements.
|
PEOPLES
BANCORP OF NORTH CAROLINA, INC. AND
SUBSIDIARIES
|
||||||||||
Consolidated
Statements of Earnings
|
||||||||||
For
the Years Ended December 31, 2006, 2005 and
2004
|
||||||||||
2006
|
|
2005
|
|
2004
|
||||||
Interest
income:
|
||||||||||
Interest
and fees on loans
|
$
|
49,667,700
|
37,123,327
|
31,073,135
|
||||||
Interest
on federal funds sold
|
85,307
|
72,578
|
35,236
|
|||||||
Interest
on investment securities:
|
||||||||||
U.S.
Government agencies
|
4,321,346
|
3,584,755
|
2,903,865
|
|||||||
States
and political subdivisions
|
798,185
|
735,892
|
660,227
|
|||||||
Other
|
521,077
|
396,020
|
422,377
|
|||||||
Total
interest income
|
55,393,615
|
41,912,572
|
35,094,840
|
|||||||
Interest
expense:
|
||||||||||
NOW,
MMDA & savings deposits
|
3,060,201
|
2,644,413
|
1,899,249
|
|||||||
Time
deposits
|
14,188,623
|
8,923,488
|
7,145,486
|
|||||||
FHLB
borrowings
|
3,588,169
|
2,888,785
|
2,602,866
|
|||||||
Junior
subordinated debentures
|
1,962,692
|
938,145
|
676,547
|
|||||||
Other
|
310,188
|
33,790
|
10,518
|
|||||||
Total
interest expense
|
23,109,873
|
15,428,621
|
12,334,666
|
|||||||
Net
interest income
|
32,283,742
|
26,483,951
|
22,760,174
|
|||||||
Provision
for loan losses
|
2,513,282
|
3,110,000
|
3,256,000
|
|||||||
Net
interest income after provision for loan losses
|
29,770,460
|
23,373,951
|
19,504,174
|
|||||||
Other
income:
|
||||||||||
Service
charges
|
3,929,956
|
3,779,933
|
3,434,544
|
|||||||
Other
service charges and fees
|
1,539,367
|
1,141,879
|
677,191
|
|||||||
Loss
on sale of securities
|
(591,856
|
)
|
(729,727
|
)
|
(63,688
|
)
|
||||
Mortgage
banking income
|
289,293
|
469,109
|
356,782
|
|||||||
Insurance
and brokerage commissions
|
388,559
|
386,662
|
429,788
|
|||||||
Loss
on sale of repossessed assets
|
(107,712
|
)
|
(37,811
|
)
|
(179,886
|
)
|
||||
Miscellaneous
|
2,106,188
|
1,658,189
|
1,345,100
|
|||||||
Total
other income
|
7,553,795
|
6,668,234
|
5,999,831
|
|||||||
Other
expense:
|
||||||||||
Salaries
and employee benefits
|
11,785,094
|
10,863,779
|
10,259,795
|
|||||||
Occupancy
|
4,180,058
|
3,948,694
|
3,672,051
|
|||||||
Other
|
7,017,986
|
5,517,832
|
4,907,923
|
|||||||
Total
other expenses
|
22,983,138
|
20,330,305
|
18,839,769
|
|||||||
Earnings
before income taxes
|
14,341,117
|
9,711,880
|
6,664,236
|
|||||||
Income
taxes
|
5,170,300
|
3,380,900
|
2,233,300
|
|||||||
Net
earnings
|
$
|
9,170,817
|
6,330,980
|
4,430,936
|
||||||
Basic
earnings per share
|
$
|
2.41
|
1.67
|
1.16
|
||||||
Diluted
earnings per share
|
$
|
2.36
|
1.64
|
1.15
|
||||||
Cash
dividends declared per share
|
$
|
0.50
|
0.37
|
0.33
|
||||||
See
accompanying notes to consolidated financial statements.
|
PEOPLES
BANCORP OF NORTH CAROLINA, INC.
|
||||||||||||||||
Consolidated
Statements of Changes in Shareholders' Equity
|
||||||||||||||||
For
the Years Ended December 31, 2006, 2005 and
2004
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Accumulated
|
||||||
|
|
Other
|
||||||||||||||
|
Common
Stock
|
Retained
|
Comprehensive
|
|||||||||||||
|
Shares
|
|
|
Amount
|
|
Earnings
|
Income
(Loss)
|
|
Total
|
|||||||
Balance,
December 31, 2003
|
3,135,202
|
$
|
35,121,510
|
12,844,524
|
587,862
|
48,553,896
|
||||||||||
Cash
dividends declared
|
-
|
-
|
(1,257,254
|
)
|
-
|
(1,257,254
|
)
|
|||||||||
Repurchase
and retirement of common
|
||||||||||||||||
stock
|
(15,100
|
)
|
(290,826
|
)
|
-
|
-
|
(290,826
|
)
|
||||||||
Exercise
of stock options
|
14,972
|
209,706
|
-
|
-
|
209,706
|
|||||||||||
Net
earnings
|
-
|
-
|
4,430,936
|
-
|
4,430,936
|
|||||||||||
Change
in accumulated other
|
||||||||||||||||
comprehensive
income (loss), net of tax
|
-
|
-
|
-
|
(708,606
|
)
|
(708,606
|
)
|
|||||||||
Balance,
December 31, 2004
|
3,135,074
|
35,040,390
|
16,018,206
|
(120,744
|
)
|
50,937,852
|
||||||||||
10%
stock dividend
|
313,546
|
6,274,087
|
(6,274,087
|
)
|
-
|
-
|
||||||||||
Cash
paid in lieu of fractional shares
|
-
|
-
|
(4,700
|
)
|
-
|
(4,700
|
)
|
|||||||||
Cash
dividends declared
|
-
|
-
|
(1,414,239
|
)
|
-
|
(1,414,239
|
)
|
|||||||||
Repurchase
and retirement of common
|
||||||||||||||||
stock
|
(15,000
|
)
|
(314,750
|
)
|
-
|
-
|
(314,750
|
)
|
||||||||
Exercise
of stock options
|
7,185
|
96,773
|
-
|
-
|
96,773
|
|||||||||||
Net
earnings
|
-
|
-
|
6,330,980
|
-
|
6,330,980
|
|||||||||||
Change
in accumulated other
|
||||||||||||||||
comprehensive
income (loss), net of tax
|
-
|
-
|
-
|
(1,278,922
|
)
|
(1,278,922
|
)
|
|||||||||
Balance,
December 31, 2005
|
3,440,805
|
41,096,500
|
14,656,160
|
(1,399,666
|
)
|
54,352,994
|
||||||||||
10%
stock dividend
|
343,850
|
9,430,532
|
(9,430,532
|
)
|
-
|
-
|
||||||||||
Cash
paid in lieu of fractional shares
|
-
|
-
|
(6,426
|
)
|
-
|
(6,426
|
)
|
|||||||||
Cash
dividends declared
|
-
|
-
|
(1,905,556
|
)
|
-
|
(1,905,556
|
)
|
|||||||||
Repurchase
and retirement of common
|
||||||||||||||||
stock
|
(19,250
|
)
|
(425,000
|
)
|
-
|
-
|
(425,000
|
)
|
||||||||
Exercise
of stock options
|
65,229
|
771,325
|
-
|
-
|
771,325
|
|||||||||||
Stock
option tax benefit
|
-
|
243,100
|
-
|
-
|
243,100
|
|||||||||||
Stock
option compensation expense
|
-
|
5,690
|
-
|
-
|
5,690
|
|||||||||||
Net
earnings
|
-
|
-
|
9,170,817
|
-
|
9,170,817
|
|||||||||||
Change
in accumulated other
|
||||||||||||||||
comprehensive
income (loss), net of tax
|
-
|
-
|
-
|
628,429
|
628,429
|
|||||||||||
Balance,
December 31, 2006
|
3,830,634
|
$
|
51,122,147
|
12,484,463
|
(771,237
|
)
|
62,835,373
|
|||||||||
See
accompanying notes to consolidated financial statements.
|
PEOPLES
BANCORP OF NORTH CAROLINA, INC. AND
SUBSIDIARIES
|
||||||||||
Consolidated
Statements of Comprehensive Income
|
||||||||||
For
the Years Ended December 31, 2006, 2005 and
2004
|
||||||||||
2006
|
|
|
2005
|
|
|
2004
|
||||
Net
earnings
|
$
|
9,170,817
|
6,330,980
|
4,430,936
|
||||||
Other
comprehensive income (loss):
|
||||||||||
Unrealized
holding gains (losses) on securities
|
||||||||||
available
for sale
|
197,569
|
(3,045,565
|
)
|
30,988
|
||||||
Reclassification
adjustment for losses on
|
||||||||||
sales
of securities available for sale included
|
||||||||||
in
net earnings
|
591,856
|
729,727
|
63,688
|
|||||||
Unrealized
holding losses on derivative
|
||||||||||
financial
instruments qualifying as cash flow
|
||||||||||
hedges
|
(345,049
|
)
|
(283,493
|
)
|
(702,000
|
)
|
||||
Reclassification
adjustment for losses (gains) on
|
||||||||||
derivative
financial instruments qualifying as
|
||||||||||
cash
flow hedges included in net earnings
|
386,285
|
483,715
|
(553,375
|
)
|
||||||
Total
other comprehensive income (loss),
|
||||||||||
before
income taxes
|
830,661
|
(2,115,616
|
)
|
(1,160,699
|
)
|
|||||
Income
tax expense (benefit) related to other
|
||||||||||
comprehensive
income:
|
||||||||||
Unrealized
holding gains (losses) on securities
|
||||||||||
available
for sale
|
76,953
|
(1,186,248
|
)
|
12,070
|
||||||
Reclassification
adjustment for losses on
|
||||||||||
sales
of securities available for sale included
|
||||||||||
in
net earnings
|
230,528
|
284,229
|
24,806
|
|||||||
Unrealized
holding losses on derivative
|
||||||||||
financial
instruments qualifying as cash flow
|
||||||||||
hedges
|
(255,707
|
)
|
(123,082
|
)
|
(273,429
|
)
|
||||
Reclassification
adjustment for losses (gains) on
|
||||||||||
derivative
financial instruments qualifying as
|
||||||||||
cash
flow hedges included in net earnings
|
150,458
|
188,407
|
(215,540
|
)
|
||||||
Total
income tax expense (benefit) related to
|
||||||||||
other
comprehensive income
|
202,232
|
(836,694
|
)
|
(452,093
|
)
|
|||||
Total
other comprehensive income (loss),
|
||||||||||
net
of tax
|
628,429
|
(1,278,922
|
)
|
(708,606
|
)
|
|||||
Total
comprehensive income
|
$
|
9,799,246
|
5,052,058
|
3,722,330
|
||||||
See
accompanying notes to consolidated financial statements.
|
PEOPLES
BANCORP OF NORTH CAROLINA, INC.
|
||||||||||
|
|
|
|
|
|
|
|
|||
Consolidated
Statements of Cash Flows
|
||||||||||
|
|
|
|
|
|
|
|
|||
For
the Years Ended December 31, 2006, 2005 and
2004
|
||||||||||
2006
|
|
|
2005
|
|
|
2004
|
||||
Cash
flows from operating activities:
|
||||||||||
Net
earnings
|
$
|
9,170,817
|
6,330,980
|
4,430,936
|
||||||
Adjustments
to reconcile net earnings to
|
||||||||||
net
cash provided by operating activities:
|
||||||||||
Depreciation,
amortization and accretion
|
1,616,558
|
1,643,459
|
1,563,245
|
|||||||
Provision
for loan losses
|
2,513,282
|
3,110,000
|
3,256,000
|
|||||||
Deferred
income taxes
|
(615,626
|
)
|
332,806
|
341,441
|
||||||
Loss
on sale of investment securities
|
591,856
|
729,727
|
63,688
|
|||||||
Recognition
of gain (loss) on sale of
|
||||||||||
derivative
instruments
|
386,285
|
483,715
|
(553,375
|
)
|
||||||
Amortization
of deferred gain on sale of premises
|
(20,896
|
)
|
(21,984
|
)
|
(22,412
|
)
|
||||
Loss
(gain) on sale of repossessed assets
|
(2,288
|
)
|
(2,189
|
)
|
15,412
|
|||||
Writedown
of other real estate and repossessions
|
110,000
|
40,000
|
164,474
|
|||||||
Amortization
of deferred issuance costs on
|
||||||||||
trust
preferred securities
|
461,298
|
17,742
|
17,742
|
|||||||
Stock
option compensation expense
|
5,690
|
-
|
-
|
|||||||
Change
in:
|
||||||||||
Mortgage
loans held for sale
|
2,247,900
|
1,535,275
|
(3,195,680
|
)
|
||||||
Cash
surrender value of life insurance
|
(220,649
|
)
|
(277,569
|
)
|
(988,739
|
)
|
||||
Other
assets
|
(1,206,937
|
)
|
444,944
|
(3,460,214
|
)
|
|||||
Other
liabilities
|
(230,144
|
) |
651,204
|
1,470,823
|
||||||
Net
cash provided by operating activities
|
14,807,146
|
15,018,110
|
3,103,341
|
|||||||
Cash
flows from investing activities:
|
||||||||||
Purchases
of investment securities available for sale
|
(30,579,262
|
)
|
(49,431,813
|
)
|
(48,667,610
|
)
|
||||
Proceeds
from calls and maturities of investment securities
|
||||||||||
available
for sale
|
8,562,058
|
9,655,995
|
19,413,975
|
|||||||
Proceeds
from sales of investment securities available
|
||||||||||
for
sale
|
19,871,979
|
27,768,392
|
2,986,313
|
|||||||
Purchases
of other investments
|
(12,748,200
|
)
|
(5,367,790
|
)
|
(4,822,500
|
)
|
||||
Proceeds
from sale of other investments
|
11,263,500
|
4,239,000
|
3,642,514
|
|||||||
Net
change in loans
|
(86,825,349
|
)
|
(35,062,738
|
)
|
12,578,820
|
|||||
Purchases
of premises and equipment
|
(1,624,299
|
)
|
(1,373,019
|
)
|
(1,502,346
|
)
|
||||
Proceeds
from sale of premises and equipment
|
-
|
1,750
|
-
|
|||||||
Proceeds
from sale of repossessed assets
|
825,115
|
246,218
|
2,153,103
|
|||||||
Purchases
of derivative financial instruments
|
(961,500
|
)
|
(364,000
|
)
|
-
|
|||||
Proceeds
from (payment on) settlement of
|
||||||||||
derivative
financial instruments
|
-
|
(870,000
|
)
|
-
|
||||||
Net
cash used by investing activities
|
(92,215,958
|
)
|
(50,558,005
|
)
|
(14,217,731
|
)
|
||||
Cash
flows from financing activities:
|
||||||||||
Net
change in deposits
|
50,966,628
|
26,331,588
|
6,719,841
|
|||||||
Net
change in demand notes payable to U.S. Treasury
|
126,307
|
289,301
|
741,008
|
|||||||
Net
change in securities sold under agreement to repurchase
|
5,436,753
|
981,050
|
-
|
|||||||
Proceeds
from FHLB borrowings
|
700,800,000
|
162,300,000
|
95,850,000
|
|||||||
Repayments
of FHLB borrowings
|
(683,100,000
|
)
|
(149,700,000
|
)
|
(94,850,000
|
)
|
||||
Proceeds
from issuance of trust preferred securities
|
20,619,000
|
-
|
-
|
|||||||
Repayments
of trust preferred securities
|
(14,433,000
|
)
|
-
|
-
|
||||||
Proceeds
from exercise of stock options
|
1,014,425
|
96,773
|
209,706
|
|||||||
Common
stock repurchased
|
(425,000
|
)
|
(314,750
|
)
|
(290,826
|
)
|
||||
Cash
paid in lieu of fractional shares
|
(6,426
|
)
|
(4,700
|
)
|
-
|
|||||
Cash
dividends paid
|
(1,905,556
|
)
|
(1,414,239
|
)
|
(1,257,254
|
)
|
||||
Net
cash provided by financing activities
|
79,093,131
|
38,565,023
|
7,122,475
|
|||||||
Net
change in cash and cash equivalent
|
1,684,319
|
3,025,128
|
(3,991,915
|
)
|
||||||
Cash
and cash equivalents at beginning of period
|
19,815,999
|
16,790,871
|
20,782,786
|
|||||||
Cash
and cash equivalents at end of period
|
$
|
21,500,318
|
19,815,999
|
16,790,871
|
PEOPLES
BANCORP OF NORTH CAROLINA, INC.
|
||||||||||
|
|
|
|
|
|
|
|
|||
Consolidated
Statements of Cash Flows, continued
|
||||||||||
|
|
|
|
|
|
|
|
|||
For
the Years ended December 31, 2006, 2005 and
2004
|
||||||||||
2006
|
|
|
2005
|
|
|
2004
|
||||
Supplemental
disclosures of cash flow information:
|
||||||||||
Cash
paid during the year for:
|
||||||||||
Interest
|
$
|
23,171,572
|
15,189,559
|
11,833,234
|
||||||
Income
taxes
|
$
|
6,398,100
|
2,245,000
|
2,483,394
|
||||||
Noncash
investing and financing activities:
|
||||||||||
Change
in unrealized gain (loss) on investment securities
|
||||||||||
available
for sale, net
|
$
|
481,944
|
(1,413,819
|
)
|
57,800
|
|||||
Change
in unrealized gain (loss) on derivative financial
|
||||||||||
instruments,
net
|
$
|
146,485
|
134,897
|
(766,406
|
)
|
|||||
Transfer
of loans to other real estate and repossessions
|
$
|
746,004
|
133,210
|
1,362,138
|
||||||
Financed
portion of sale of other real estate
|
$
|
273,000
|
-
|
2,212,142
|
||||||
Transfer
of retained earnings to common stock for
|
||||||||||
issuance
of stock dividend
|
$
|
9,430,532
|
6,274,087
|
-
|
||||||
Reclassification
of a security from other investments
|
||||||||||
to
securities available for sale
|
$
|
-
|
715,000
|
-
|
||||||
See
accompanying notes to consolidated financial statements.
|
Buildings
and improvements
|
|
10
- 50 years
|
Furniture
and equipment
|
|
3
- 10 years
|
Stock
Option Activity
|
|||||||||||||
For
the years ended December 31, 2006, 2005 and
2004
|
|||||||||||||
|
|
|
Shares
|
Weighted
Average
Option
Price
Per Share
|
Weighted
Average Remaining
Contractual
Term (in years)
|
|
Aggregate
Intrinsic
Value
|
||||||
Outstanding,
December 31, 2003
|
238,409
|
$
|
12.91
|
||||||||||
Granted
during the period
|
4,840
|
15.66
|
|||||||||||
Forfeited
during the period
|
(2,486
|
)
|
11.99
|
||||||||||
Exercised
during the period
|
(18,112
|
)
|
11.57
|
||||||||||
Outstanding,
December 31, 2004
|
222,652
|
12.17
|
|||||||||||
Granted
during the period
|
-
|
-
|
|||||||||||
Forfeited
during the period
|
(1,313
|
)
|
11.65
|
||||||||||
Exercised
during the period
|
(8,210
|
)
|
11.79
|
||||||||||
Outstanding,
December 31, 2005
|
213,128
|
12.19
|
|||||||||||
Granted
during the period
|
-
|
-
|
|||||||||||
Forfeited
during the period
|
(110
|
)
|
11.07
|
||||||||||
Exercised
during the period
|
(65,229
|
)
|
11.81
|
||||||||||
Outstanding,
December 31, 2006
|
147,789
|
$
|
12.36
|
4.94
|
$
|
2,314,401
|
|||||||
Exercisable,
December 31, 2006
|
146,175
|
$
|
12.32
|
4.91
|
$
|
2,294,448
|
2005
|
|
|
2004
|
|||||||
Net
earnings
|
As
reported
|
$
|
6,330,980
|
4,430,936
|
||||||
|
Effect
of grants
|
(143,747
|
)
|
(312,444
|
)
|
|||||
|
Effect
of forfeitures
|
5,253
|
14,092
|
|||||||
|
Proforma
|
$
|
6,192,486
|
4,132,584
|
||||||
Basic
earnings per share
|
As
reported
|
$
|
1.67
|
1.16
|
||||||
|
Proforma
|
$
|
1.63
|
1.09
|
||||||
Diluted
earnings per share
|
As
reported
|
$
|
1.64
|
1.15
|
||||||
|
Proforma
|
$
|
1.61
|
1.07
|
For
the year ended December 31, 2006:
|
Net Earnings
|
Common
Shares
|
Per Share
Amount
|
|||||||
Basic
earnings per share
|
$
|
9,170,817
|
3,801,219
|
$
|
2.41
|
|||||
Effect
of dilutive securities:
|
||||||||||
Stock
options
|
-
|
89,943
|
||||||||
Diluted
earnings per share
|
$
|
9,170,817
|
3,891,162
|
$
|
2.36
|
|||||
For
the year ended December 31, 2005:
|
Net
Earnings
|
Common
Shares
|
Per
Share
Amount
|
|||||||
Basic
earnings per share
|
$
|
6,330,980
|
3,794,860
|
$
|
1.67
|
|||||
Effect
of dilutive securities:
|
||||||||||
Stock
options
|
-
|
59,825
|
||||||||
Diluted
earnings per share
|
$
|
6,330,980
|
3,854,685
|
$
|
1.64
|
For
the year ended December 31, 2004:
|
Net
Earnings
|
Common
Shares
|
Per Share
Amount
|
|||||||
Basic
earnings per share
|
$
|
4,430,936
|
3,805,317
|
$
|
1.16
|
|||||
Effect
of dilutive securities:
|
||||||||||
Stock
options
|
-
|
47,396
|
||||||||
Diluted
earnings per share
|
$
|
4,430,936
|
3,852,713
|
$
|
1.15
|
(2)
|
Investment
Securities
|
December
31, 2006
|
|||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
||||||||||
Mortgage-backed
securities
|
$ |
19,666,345
|
-
|
446,751
|
19,219,594
|
||||||||
U.S.
government agencies
|
72,838,407
|
171,828
|
265,821
|
72,744,414
|
|||||||||
State
and political subdivisions
|
24,493,444
|
242,204
|
369,178
|
24,366,470
|
|||||||||
Trust
preferred securities
|
750,000
|
-
|
-
|
750,000
|
|||||||||
Equity
securities
|
814,995
|
-
|
314,473
|
500,522
|
|||||||||
Total
|
$
|
|
118,563,191
|
414,032
|
1,396,223
|
117,581,000
|
|||||||
|
|
|
December
31, 2005
|
||||||||||
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
Estimated
Fair Value
|
|||||||
Mortgage-backed
securities
|
$ |
|
31,865,547
|
-
|
861,583
|
31,003,964
|
|||||||
U.S.
government agencies
|
60,751,179
|
83,410
|
591,506
|
60,243,083
|
|||||||||
State
and political subdivisions
|
21,748,079
|
268,720
|
407,307
|
21,609,492
|
|||||||||
Trust
preferred securities
|
1,750,000
|
-
|
-
|
1,750,000
|
|||||||||
Equity
securities
|
814,995
|
-
|
263,350
|
551,645
|
|||||||||
Total
|
$ |
|
116,929,800
|
352,130
|
2,123,746
|
115,158,184
|
|
December
31, 2006
|
||||||||||||||||||
|
|
|
Less
than 12 Months
|
12
Months or More
|
Total
|
||||||||||||||
|
|
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
|||||||||||
Mortgage-backed
securities
|
$
|
-
|
-
|
19,202,188
|
446,751
|
19,202,188
|
446,751
|
||||||||||||
U.S.
government agencies
|
23,069,770
|
13,361
|
21,510,425
|
252,460
|
44,580,195
|
265,821
|
|||||||||||||
State
and political subdivisions
|
1,445,462
|
35,988
|
11,589,682
|
333,190
|
13,035,144
|
369,178
|
|||||||||||||
Equity
securities
|
-
|
-
|
500,522
|
314,473
|
500,522
|
314,473
|
|||||||||||||
Total
|
$
|
24,515,232
|
49,349
|
52,802,817
|
1,346,874
|
77,318,049
|
1,396,223
|
|
|
|
December
31, 2005
|
||||||||||||||||
|
|
|
Less
than 12 Months
|
12
Months or More
|
Total
|
||||||||||||||
|
|
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
|||||||||||
Mortgage-backed
securities
|
$
|
19,267,931
|
436,110
|
11,725,154
|
425,473
|
30,993,085
|
861,583
|
||||||||||||
U.S.
government agencies
|
27,541,468
|
313,598
|
11,221,262
|
277,908
|
38,762,730
|
591,506
|
|||||||||||||
State
and political subdivisions
|
5,986,444
|
106,833
|
6,546,483
|
300,474
|
12,532,927
|
407,307
|
|||||||||||||
Equity
securities
|
479,050
|
235,950
|
72,595
|
27,400
|
551,645
|
263,350
|
|||||||||||||
Total
|
$
|
53,274,893
|
1,092,491
|
29,565,494
|
1,031,255
|
82,840,387
|
2,123,746
|
|
Amortized
Cost
|
Estimated
Fair Value
|
|||||
Due
within one year
|
$
|
910,301
|
914,199
|
||||
Due
from one to five years
|
59,133,199
|
58,715,846
|
|||||
Due
from five to ten years
|
33,563,846
|
33,669,408
|
|||||
Due
after ten years
|
4,474,505
|
4,561,431
|
|||||
Mortgage-backed
securities
|
19,666,345
|
19,219,594
|
|||||
Equity
securities
|
814,995
|
500,522
|
|||||
Total
|
$
|
118,563,191
|
117,581,000
|
2006
|
|
|
2005
|
||||
Commercial
|
$
|
85,064,322
|
79,902,157
|
||||
Real
estate - mortgage
|
364,595,188
|
330,226,315
|
|||||
Real
estate - construction
|
187,959,880
|
141,420,338
|
|||||
Consumer
|
13,761,739
|
15,114,606
|
|||||
Total
loans
|
651,381,129
|
566,663,416
|
|||||
Less
allowance for loan losses
|
8,303,432
|
7,424,782
|
|||||
Total
net loans
|
$
|
643,077,697
|
559,238,634
|
2006
|
|
|
2005
|
|
|
2004
|
||||
Balance
at beginning of year
|
$
|
7,424,782
|
8,048,627
|
9,722,267
|
||||||
Amounts
charged off
|
(1,958,551
|
)
|
(4,199,650
|
)
|
(5,385,199
|
)
|
||||
Recoveries
on amounts previously charged off
|
323,919
|
465,805
|
455,559
|
|||||||
Provision
for loan losses
|
2,513,282
|
3,110,000
|
3,256,000
|
|||||||
Balance
at end of year
|
$
|
8,303,432
|
7,424,782
|
8,048,627
|
2006
|
|
|
2005
|
||||
Land
|
$
|
2,349,041
|
2,187,254
|
||||
Buildings
and improvements
|
10,618,896
|
10,405,684
|
|||||
Furniture
and equipment
|
13,992,524
|
12,743,224
|
|||||
Total
premises and equipment
|
26,960,461
|
25,336,162
|
|||||
Less
accumulated depreciation
|
14,144,076
|
12,674,009
|
|||||
Total
net premises and equipment
|
$
|
12,816,385
|
12,662,153
|
2007
|
$
|
333,430,893
|
||
2008
|
17,734,675
|
|||
2009
|
4,001,857
|
|||
2010
|
2,478,971
|
|||
2011
and thereafter
|
203,110
|
|||
Total
|
$
|
357,849,506
|
Maturity
Date
|
Call
Date
|
Rate
|
Rate
Type
|
Amount
|
|||||||||
February
2, 2007
|
N/A
|
5.490
|
%
|
Daily
Rate
|
$
|
19,800,000
|
|||||||
March
30, 2010
|
September
30, 2000 and every
|
||||||||||||
|
three
months thereafter
|
5.880
|
%
|
Convertible
|
5,000,000
|
||||||||
May
24, 2010
|
May
24, 2001 and every three
|
||||||||||||
|
months
thereafter
|
6.490
|
%
|
Convertible
|
2,000,000
|
||||||||
January
25, 2007
|
N/A
|
5.397
|
%
|
Adjustable
|
2,500,000
|
||||||||
June
24, 2015
|
June
24, 2010
|
3.710
|
%
|
Convertible
|
5,000,000
|
||||||||
July
23, 2012
|
July
23, 2007
|
4.850
|
%
|
Convertible
|
5,000,000
|
||||||||
March
25, 2019
|
March
25, 2009
|
4.865
|
%
|
Convertible
|
5,000,000
|
||||||||
March
31, 2016
|
March
31, 2009 and every
|
||||||||||||
|
three
months thereafter
|
4.620
|
%
|
Convertible
|
5,000,000
|
||||||||
October
5, 2016
|
October
5, 2009
|
4.450
|
%
|
Convertible
|
5,000,000
|
||||||||
October
5, 2011
|
April
5, 2007 and every
|
||||||||||||
|
month
thereafter
|
4.350
|
%
|
Convertible
|
30,000,000
|
||||||||
December
12, 2011
|
December
12, 2007 and every
|
4.210
|
%
|
Convertible
|
5,000,000
|
||||||||
|
three
months thereafter
|
||||||||||||
$
|
89,300,000
|
2006
|
|
|
2005
|
|
|
2004
|
||||
Current
|
$
|
5,785,926
|
3,048,094
|
1,891,859
|
||||||
Deferred
|
(615,626
|
)
|
332,806
|
341,441
|
||||||
Total
|
$
|
5,170,300
|
3,380,900
|
2,233,300
|
2006
|
|
|
2005
|
|
|
2004
|
||||
Pre-tax
income at statutory rates (34%)
|
$
|
4,875,980
|
3,302,039
|
2,265,840
|
||||||
Differences:
|
||||||||||
Tax
exempt interest income
|
(280,826
|
)
|
(263,555
|
)
|
(243,346
|
)
|
||||
Nondeductible
interest and other expense
|
45,872
|
30,511
|
21,588
|
|||||||
Cash
surrender value of life insurance
|
(75,021
|
)
|
(73,973
|
)
|
(65,871
|
)
|
||||
State
taxes, net of federal benefits
|
576,444
|
363,264
|
236,544
|
|||||||
Other,
net
|
27,851
|
22,614
|
18,545
|
|||||||
Total
|
$
|
5,170,300
|
3,380,900
|
2,233,300
|
2006
|
|
|
2005
|
||||
Deferred
tax assets:
|
|||||||
Allowance
for loan losses
|
$
|
3,201,305
|
2,862,550
|
||||
Amortizable
intangible assets
|
108,472
|
141,010
|
|||||
Accrued
retirement expense
|
664,581
|
533,155
|
|||||
Income
from non-accrual loans
|
72,475
|
9,639
|
|||||
Deferred
gain on sale of premises
|
212,820
|
220,876
|
|||||
Unrealized
loss on cash flow hedges
|
328,933
|
223,684
|
|||||
Unrealized
loss on available for sale securities
|
382,564
|
690,044
|
|||||
Other
|
-
|
33,578
|
|||||
Total
gross deferred tax assets
|
4,971,150
|
4,714,536
|
|||||
Deferred
tax liabilities:
|
|||||||
Deferred
loan fees
|
1,310,178
|
1,135,448
|
|||||
Premises
and equipment
|
291,107
|
545,570
|
|||||
Deferred
income from servicing rights
|
-
|
87,330
|
|||||
Other
|
10,283
|
-
|
|||||
Total
gross deferred tax liabilities
|
1,611,568
|
1,768,348
|
|||||
Net
deferred tax asset
|
$
|
3,359,582
|
2,946,188
|
Beginning
balance
|
$
7,220,72
|
|||
New
loans
|
1,882,173
|
|||
Repayments
|
1,828,124
|
|||
Ending
balance
|
$
|
7,274,778
|
Year
|
||||
2007
|
$ 1,067,414
|
|||
2008
|
1,035,118
|
|||
2009
|
871,441
|
|||
2010
|
725,288
|
|||
2011
|
659,848
|
|||
Thereafter
|
3,649,845
|
|||
Total
minimum obligation
|
$
|
8,008,954
|
|
|
|
Contractual
Amount
|
||||
2006
|
|
|
2005
|
||||
Financial
instruments whose contract amount represent credit risk:
|
|||||||
Commitments
to extend credit
|
$
|
151,696,931
|
133,409,227
|
||||
Standby
letters of credit and financial guarantees written
|
$
|
4,573,544
|
2,692,192
|
2006
|
2005
|
||||||
Accumulated
postretirement benefit obligation
|
$
|
196,002
|
244,304
|
||||
Unrecognized
gain (loss)
|
(38,327
|
)
|
(80,495
|
)
|
|||
Net
liability recognized
|
$
|
157,675
|
163,809
|
2006
|
2005
|
2004
|
|||||||||||||||||
|
|
|
Shares
|
Weighted
Average
Price
of
Book
Value Shares
|
Shares
|
Weighted
Average
Price
of
Book
Value Shares
|
Shares
|
Weighted
Average
Price
of
Book
Value Shares
|
|||||||||||
Outstanding,
beginning of period
|
64,918
|
$
|
11.07
|
77,900
|
$
|
10.80
|
58,425
|
$ |
9.70
|
||||||||||
Granted
during the period
|
-
|
$
|
-
|
-
|
$
|
-
|
25,966
|
$ |
12.95
|
||||||||||
Forfeited
during the period
|
-
|
$
|
-
|
-
|
$
|
-
|
(1,298
|
)
|
$ |
9.46
|
|||||||||
Exercised
during the period
|
-
|
$
|
-
|
(12,982
|
)
|
$
|
9.46
|
(5,193
|
)
|
$ |
9.46
|
||||||||
Outstanding,
end of period
|
64,918
|
$
|
-
|
64,918
|
$
|
11.07
|
77,900
|
$ |
10.80
|
||||||||||
Number
of shares exercisable
|
49,332
|
$
|
10.47
|
44,139
|
$
|
10.18
|
50,305
|
$ |
9.66
|
Actual
|
For
Capital
Adequacy
Purposes
|
To
Be Well
Capitalized
Under
Prompt
Corrective
Action
Provisions
|
|||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||
(dollars
in thousands)
|
|
||||||||||||||||||
As
of December 31, 2006:
|
|||||||||||||||||||
Total
Capital (to Risk-Weighted Assets)
|
|||||||||||||||||||
Consolidated
|
|
$91,718
|
12.86%
|
|
57,056
|
8.00%
|
|
N/A
|
N/A
|
||||||||||
Bank
|
|
$80,857
|
11.37%
|
|
56,875
|
8.00%
|
|
71,094
|
10.00%
|
|
|||||||||
Tier
1 Capital (to Risk-Weighted Assets)
|
|||||||||||||||||||
Consolidated
|
|
$83,415
|
11.70%
|
|
28,528
|
4.00%
|
|
N/A
|
N/A
|
||||||||||
Bank
|
|
$72,554
|
10.21%
|
|
28,438
|
4.00%
|
|
42,656
|
6.00%
|
|
|||||||||
Tier
1 Capital (to Average Assets)
|
|||||||||||||||||||
Consolidated
|
|
$83,415
|
10.80%
|
|
30,903
|
4.00%
|
|
N/A
|
N/A
|
||||||||||
Bank
|
|
$72,554
|
9.41%
|
|
30,857
|
4.00%
|
|
38,571
|
5.00%
|
|
|||||||||
As
of December 31, 2005:
|
|||||||||||||||||||
Total
Capital (to Risk-Weighted Assets)
|
|||||||||||||||||||
Consolidated
|
|
$76,993
|
12.19%
|
|
50,514
|
8.00%
|
|
N/A
|
N/A
|
||||||||||
Bank
|
|
$73,265
|
11.64%
|
|
50,360
|
8.00%
|
|
62,951
|
10.00%
|
|
|||||||||
Tier
1 Capital (to Risk-Weighted Assets)
|
|||||||||||||||||||
Consolidated
|
|
$69,568
|
11.02%
|
|
25,257
|
4.00%
|
|
N/A
|
N/A
|
||||||||||
Bank
|
|
$65,840
|
10.46%
|
|
25,180
|
4.00%
|
|
37,770
|
6.00%
|
|
|||||||||
Tier
1 Capital (to Average Assets)
|
|||||||||||||||||||
Consolidated
|
|
$69,568
|
9.84%
|
|
28,273
|
4.00%
|
|
N/A
|
N/A
|
||||||||||
Bank
|
|
$65,840
|
9.33%
|
|
28,217
|
4.00%
|
|
35,272
|
5.00%
|
|
|
|
2006
|
|
2005
|
2004
|
||
Advertising
|
|
$
|
772,917
|
656,184
|
619,731
|
|
|
|
2006
|
2005
|
|||||||||
Carrying
Amount
|
|
Estimated
Fair
Value
|
Carrying
Amount
|
Estimated
Fair
Value
|
|||||||||
|
|
|
(dollars
in thousands)
|
||||||||||
Assets:
|
|||||||||||||
Cash
and cash equivalents
|
$
|
21,500
|
21,500
|
19,816
|
19,816
|
||||||||
Investment
securities available for sale
|
$
|
117,581
|
117,581
|
115,158
|
115,158
|
||||||||
Other
investments
|
$
|
7,295
|
7,295
|
5,811
|
5,811
|
||||||||
Mortgage
loans held for sale
|
$
|
-
|
-
|
2,248
|
2,248
|
||||||||
Loans,
net
|
$
|
643,078
|
641,414
|
559,239
|
559,122
|
||||||||
Cash
surrender value of life insurance
|
$
|
6,532
|
6,532
|
6,312
|
6,312
|
||||||||
Mortgage
servicing rights
|
$
|
-
|
-
|
227
|
227
|
||||||||
Derivative
instruments
|
$
|
481
|
481
|
176
|
176
|
||||||||
Liabilities:
|
|||||||||||||
Deposits
and demand notes payable
|
$
|
635,420
|
635,371
|
584,327
|
584,786
|
||||||||
FHLB
advances
|
$
|
89,300
|
88,819
|
71,600
|
71,804
|
||||||||
Junior
subordinated debentures
|
$
|
20,619
|
20,619
|
14,433
|
14,433
|
Balance
Sheets
|
|
|||||||||
|
|
|
|
|
|
|
|
|||
December
31, 2006 and 2005
|
||||||||||
Assets
|
2006
|
|
|
2005
|
||||||
Cash
|
$
|
1,646,880
|
519,089
|
|||||||
Interest-bearing
time deposit
|
8,000,000
|
2,000,000
|
||||||||
Investment
in subsidiaries
|
72,593,671
|
65,057,096
|
||||||||
Investment
securities available for sale
|
750,521
|
801,645
|
||||||||
Other
investments
|
600,000
|
-
|
||||||||
Other
assets
|
293,049
|
683,493
|
||||||||
Total
assets
|
$
|
83,884,121
|
69,061,323
|
|||||||
Liabilities and Shareholders' Equity
|
||||||||||
Accrued
expenses
|
$
|
429,748
|
275,329
|
|||||||
Junior
subordinated debentures
|
20,619,000
|
14,433,000
|
||||||||
Shareholders'
equity
|
62,835,373
|
54,352,994
|
||||||||
Total
liabilities and shareholders' equity
|
$
|
83,884,121
|
69,061,323
|
|||||||
Statements
of Earnings
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
For
the Years Ended December 31, 2006, 2005 and 2004
|
||||||||||
Revenues:
|
2006
|
|
|
2005
|
|
|
2004
|
|||
Dividends
from subsidiaries
|
$
|
3,855,556
|
2,346,897
|
1,942,254
|
||||||
Interest
and dividend income
|
672,922
|
111,777
|
84,172
|
|||||||
Total
revenues
|
4,528,478
|
2,458,674
|
2,026,426
|
|||||||
Expenses:
|
||||||||||
Interest
|
1,962,692
|
938,145
|
676,547
|
|||||||
Other
operating expenses
|
786,014
|
289,691
|
280,002
|
|||||||
Total
expenses
|
2,748,706
|
1,227,836
|
956,549
|
|||||||
Earnings
before income tax benefit and equity in
|
||||||||||
undistributed
earnings of subsidiaries
|
1,779,772
|
1,230,838
|
1,069,877
|
|||||||
Income
tax benefit
|
705,800
|
379,500
|
296,700
|
|||||||
Earnings
before undistributed earnings in subsidiaries
|
2,485,572
|
1,610,338
|
1,366,577
|
|||||||
Equity
in undistributed earnings in subsidiaries
|
6,685,245
|
4,720,642
|
3,064,359
|
|||||||
Net
earnings
|
$
|
9,170,817
|
6,330,980
|
4,430,936
|
Statements
of Cash Flows
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
For
the Years Ended December 31, 2006, 2005 and 2004
|
||||||||||
2006
|
|
|
2005
|
|
|
2004
|
||||
Cash
flows from operating activities:
|
||||||||||
Net
earnings
|
$
|
9,170,817
|
6,330,980
|
4,430,936
|
||||||
Adjustments
to reconcile net earnings to net
|
||||||||||
cash
provided by operating activities:
|
||||||||||
Amortization
|
461,298
|
17,742
|
17,742
|
|||||||
Book
value shares accrual
|
128,444
|
21,818
|
66,933
|
|||||||
Equity
in undistributed earnings of subsidiaries
|
(6,685,245
|
)
|
(4,720,642
|
)
|
(3,064,359
|
)
|
||||
Deferred
income tax benefit
|
(49,520
|
)
|
(8,412
|
)
|
(25,806
|
)
|
||||
Change
in:
|
||||||||||
Accrued
income
|
(1,421
|
)
|
17,930
|
(9,033
|
)
|
|||||
Accrued
expense
|
25,975
|
(21,063
|
)
|
-
|
||||||
Net
cash provided by operating activities
|
3,050,348
|
1,638,353
|
1,416,413
|
|||||||
Cash
flows from investing activities:
|
||||||||||
Net
change in interest-bearing time deposit
|
(6,000,000
|
)
|
-
|
-
|
||||||
Purchases
of other investments
|
(600,000
|
)
|
-
|
(250,000
|
)
|
|||||
Purchase
of equity in PEBK Capital Trust II
|
(619,000
|
)
|
-
|
-
|
||||||
Proceeds
from liquidation of PEBK Capital Trust I
|
433,000
|
-
|
-
|
|||||||
Net
cash used by investing activities
|
(6,786,000
|
)
|
-
|
(250,000
|
)
|
|||||
Cash
flows from financing activities:
|
||||||||||
Proceeds
from issuance of trust preferred securities
|
20,619,000
|
-
|
-
|
|||||||
Repayments
of trust preferred securities
|
(14,433,000
|
)
|
-
|
-
|
||||||
Cash
dividends paid
|
(1,905,556
|
)
|
(1,414,239
|
)
|
(1,257,254
|
)
|
||||
Cash
paid in lieu of fractional shares
|
(6,426
|
)
|
(4,700
|
)
|
-
|
|||||
Common
stock repurchased
|
(425,000
|
)
|
(314,750
|
)
|
(290,826
|
)
|
||||
Proceeds
from exercise of stock options
|
1,014,425
|
96,773
|
209,706
|
|||||||
Net
cash provided (used) by financing activities
|
4,863,443
|
(1,636,916
|
)
|
(1,338,374
|
)
|
|||||
Net
change in cash
|
1,127,791
|
1,437
|
(171,961
|
)
|
||||||
Cash
at beginning of year
|
519,089
|
517,652
|
689,613
|
|||||||
Cash
at end of year
|
$
|
1,646,880
|
519,089
|
517,652
|
Please
be sure to sign and date this Proxy in the box
below.
|
Date
|
|
|
Shareholder
sign above
|
Co-holder
(if any) sign above
|
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
|
The above signed hereby acknowledges receipt of the Notice
of Meeting and
Proxy Statement each dated April 4, 2007, relating to
the Meeting and
hereby revokes any proxy or
|
proxies
heretofore given.
|
Each properly executed proxy will be voted in accordance
with the
specifications made above and in the discretion of the
proxy committee of
the Company on any other matter that
|
may
come before the Meeting. Where no choice is specified, this proxy
will be voted (i) FOR all listed nominees to serve as
directors, (ii) FOR
the approval of Amendment No. 1 to
|
the Peoples Bancorp of North Carolina, Inc. Omnibus Stock Ownership and Long Term Incentive Plan, (iii) FOR the ratification and approval of the appointment of Porter Keadle |
Moore,
LLP as the Company's independent auditors for the fiscal
year ending
December 31, 2007.
|
PLEASE
ACT PROMPTLY
|
SIGN,
DATE & MAIL YOUR PROXY CARD
TODAY
|