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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 0-16772
PEOPLES BANCORP INC.
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(Exact name of Registrant as specified in its charter)
Ohio 31-0987416
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
138 Putnam Street, P. O. Box 738, Marietta, Ohio 45750
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (740) 373-3155
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Securities registered pursuant to
Section 12(b) of the Act: None
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Securities registered pursuant to
Section 12(g) of the Act: Common Shares, No Par Value (3,841,449
outstanding at February 28, 1998)
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Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Based upon the closing price of the Common Shares of the
Registrant on the The NASDAQ National Market as of February 28,
1998, the aggregate market value of the Common Shares of the
Registrant held by nonaffiliates on that date was $137,414,318.
For this purpose, certain executive officers and directors are
considered affiliates.
Documents Incorporated by Reference:
1) Portions of Registrant's Annual Report to Stockholders
for the fiscal year ended December 31, 1997, are
incorporated by reference into Parts I and II of this
Annual Report on Form 10-K.
2) Portions of Registrant's Definitive Proxy Statement
relating to the Annual Meeting to be held April 9, 1998,
are incorporated by reference into Part III of this
Annual Report on Form 10-K.
PART I
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ITEM 1. BUSINESS.
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Introduction
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Peoples Bancorp Inc. ("Peoples Delaware") was incorporated under
the laws of the State of Delaware on April 1, 1980. Peoples
Delaware was merged, following shareholder approval, into
Peoples Bancorp Inc., an Ohio corporation (the "Company"),
effective April 6, 1993, pursuant to a reincorporation
proceeding. The Company's principal business is to act as a
multi-bank holding company. Its wholly-owned subsidiaries are
The Peoples Banking and Trust Company ("Peoples Bank"), The
First National Bank of Southeastern Ohio ("First National
Bank"), Gateway Bancorp, Inc. ("Gateway Bancorp"), a multiple
saving and loan holding company with two wholly-owned
subsidiaries which include Russell Federal Savings Bank
("Russell Federal") and Catlettsburg Federal Savings Bank
("Catlettsburg Federal"), and The Northwest Territory Life
Insurance Company, an Arizona corporation ("Northwest
Territory").
At December 31, 1997, Peoples Bancorp Inc. (parent company only)
had 31 full-time equivalent employees.
The Peoples Banking and Trust Company
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Peoples Bank was chartered as an Ohio banking corporation under
its present name in Marietta, Ohio, in 1902. At December 31,
1997, it had assets of $577.0 million, deposits of $480.6
million, and net loans of $412.4 million.
Peoples Bank is a full-service commercial bank. It provides the
following products to its customers: checking accounts, NOW
accounts, Super NOW accounts, money market deposit accounts,
savings accounts, time certificates of deposit, commercial
loans, installment loans, commercial and residential real estate
mortgage loans, credit cards, debit cards, lease financing,
corporate and personal trust services and safe deposit rental
facilities. Peoples Bank also sells travelers checks, money
orders and cashier's checks. Services are provided through
ordinary walk-in offices, automated teller machines ("ATMs"),
automobile drive-in facilities called "Motor Banks", banking by
phone, and limited cash management services through computer
banking. At December 31, 1997, the Trust Department of Peoples
Bank held approximately $503 million of assets (market value) in
trust and custodial accounts apart from the assets of the Bank.
With all of its offices currently located in Ohio, Peoples Bank
serves principally Washington, Athens, Meigs, and Gallia
Counties, together with portions of Hocking, Perry, Lawrence and
Vinton Counties in Ohio and adjacent parts of Northern West
Virginia. Effective at the close of business on February 28,
1997, Peoples Bank completed the purchase of one full-service
banking office located in Baltimore, Ohio, from National City
Bank of Columbus. In the transaction, Peoples Bank assumed
approximately $12.5 million in deposits. The Baltimore office,
located in Fairfield County, currently operates a full-service
banking office and an ATM.
In addition to the office acquired in 1997, Peoples Bank
provides services to its customers at its principal banking
office in downtown Marietta and through ATMs and other banking
facilities. A full-service office, Motor Bank and ATM are
located at the Frontier Shopping Center in Marietta. Also, a
full-service office and ATM are located inside a grocery store
at Pike and Acme Streets in Marietta. A full-service office,
two Motor Banks and a ATM are operated in Belpre, Ohio.
Full-service offices with Motor Banks are located in Lowell,
Reno, Gallipolis, Rutland and Nelsonville, Ohio. A full-service
branch and ATM are located at One North Court Street in downtown
Athens, Ohio. A full-service office, Motor Bank and ATM are
located at the Athens Mall. Also, three ATMs are located on the
campus of Ohio University in Athens, Ohio. A full-service
office and separate Motor Bank are located in downtown Pomeroy,
together with an ATM located outside a local convenience store.
A full-service bank is located at Middleport, Ohio. A loan
production office in Newark-Granville, Ohio, serves that
immediate area in Licking County. At December 31, 1997, Peoples
Bank had 234 full-time equivalent employees.
On March 4, 1998, a new banking facility was opened in the
recently renovated HDL Center at 152 Union Street in Athens,
Ohio. The facility, located near the Ohio University campus, is
a full-service office, offering an ATM and drive-through
facility, with loan and investment services.
The First National Bank of Southeastern Ohio
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First National Bank is a national banking association chartered
in 1900. It provides banking services and products that are
substantially the same as those of Peoples Bank. First National
Bank operates a commercial bank and Motor Bank at one location
at 415 Main Street, Caldwell, Ohio. It also has a full-service
office and Motor Bank on Marion Street in Chesterhill, Ohio. It
also operates a full-service office on Kennebec Street,
McConnelsville, Ohio. First National Bank's market area is
comprised of Caldwell, Chesterhill, McConnelsville and the
surrounding area in Noble and Morgan Counties, Ohio. At
December 31, 1997, it had assets of $86.3 million, deposits of
$65.3 million, and net loans of $59.0 million. At December 31,
1997, First National Bank had 34 full-time equivalent employees.
First National Bank also operates two insurance agency
subsidiaries, Northwest Territory Life Insurance Agency, Inc.
and Northwest Territory Property & Casualty Insurance Agency,
Inc. (the "Agencies"). The Agencies were created in compliance
with federal regulations allowing insurance powers to national
banks in communities with populations of 5,000 people or less.
On December 22, 1995, each Agency received a Certificate of
Qualification (license) to operate the Agency from the Ohio
Department of Insurance, thereby allowing the Agencies to engage
in the insurance agency business, subject to the regulations of
the Ohio Department of Insurance and the Comptroller of the
Currency. These were the first insurance agencies in Ohio
associated with a financial institution to receive licenses to
conduct a broad-based insurance business. At December 31, 1997,
the Agencies had 5 full-time equivalent employees.
Gateway Bancorp, Inc.
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On December 12, 1997, the Company completed the acquisition of
Gateway Bancorp, Inc. and its subsidiary, Catlettsburg Federal,
of Catlettsburg, Kentucky, for approximately $21.6 million in a
combination of cash of $6.2 million and 365,472 Common Shares of
the Company ("Gateway Bancorp Acquisition" or "Catlettsburg
Federal Acquisition"). Management has continued to operate
Catlettsburg Federal as a federal savings bank subsidiary.
Gateway Bancorp, Inc. was incorporated under Kentucky law in
October 1994 in connection with the conversion of Catlettsburg
Federal from a federally-chartered mutual savings and loan
association to a federally-chartered stock savings bank. In
this conversion, Gateway Bancorp, Inc. became the sole
shareholder of Catlettsburg Federal.
Effective December 12, 1997, Gateway Bancorp, Inc. merged with
and into Peoples Acquisition Corporation, an Ohio corporation,
formed as a wholly-owned subsidiary of the Company for purposes
of effecting the transaction. Pursuant to the terms and
conditions of the Gateway Bancorp Acquisition, the separate
corporate existence of Gateway Bancorp, Inc. terminated upon
consummation of the merger. With the filing of the Certificate
of Merger with the Secretary of the State of Ohio, the name of
the surviving corporation "Peoples Acquisition Corporation" was
changed to "Gateway Bancorp, Inc." On January 1, 1998, Russell
Federal became a subsidiary of Gateway Bancorp to align the
Company's business units in northeast Kentucky.
Catlettsburg Federal Savings Bank
- ---------------------------------
Catlettsburg Federal was originally chartered as a mutual
savings and loan association in 1935. As mentioned above,
Catlettsburg Federal converted to a federally-charted stock
savings bank in 1994 with Gateway Bancorp, Inc. as sole
shareholder of Catlettsburg Federal common stock. The Company
acquired Catlettsburg Federal and its parent company Gateway
Bancorp, Inc. on December 12, 1997. At December 31, 1997,
Catlettsburg Federal had total assets of $59.2 million, deposits
of $44.0 million and shareholders' equity of $14.8 million.
Catlettsburg Federal serves the financial needs of customers in
Carter and Boyd Counties, Kentucky its primary market area,
together with portions of Greenup County. Its principal
products include savings accounts, time certificates of deposit
and commercial and residential real estate loans. Catlettsburg
Federal operates two branches located in Catlettsburg and
Grayson, Kentucky. The Catlettsburg branch, located on Louisa
Street, offers services via a walk-in office while the Grayson
branch, located on Carol Malone Boulevard, is a walk-in office
and Motor Bank. In February 1998, Catlettsburg Federal Savings
Bank completed construction of a full-service office in Ashland,
Kentucky. Located on Eagle Drive, this branch will offer
services through a walk-in office. At December 31, 1997,
Catlettsburg Federal had 10 full-time equivalent employees.
Russell Federal Savings Bank
- ----------------------------
Effective January 1, 1997, Russell Federal in Russell, Kentucky
was purchased by the Company for approximately $9.25 million in
cash. Management has continued Russell Federal's operations as
a federal savings bank. At December 31, 1997, Russell Federal
had total assets of $31.3 million, deposits of $21.3 million and
shareholders' equity of $5.9 million.
Russell Federal was originally chartered as a mutual association
in 1914. On October 6, 1994, Russell Federal converted from a
mutual association to a stock corporation. Russell Federal
serves the financial needs of customers in Greenup and Boyd
Counties, Kentucky its primary market area. Its principal
products include savings accounts, time certificates of deposit
and commercial and residential real estate loans. Russell
Federal has one full-service office located on Ferry Street in
the city of Russell and serves its customers by this walk-in
office and attached Motor Bank. At December 31, 1997, Russell
Federal had 7 full-time equivalent employees.
The Northwest Territory Life Insurance Company
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Northwest Territory was organized under Arizona law in 1983 and
was issued a Certificate of Authority to act as a reinsurance
company by the State of Arizona on February 8, 1984. Northwest
Territory reinsures credit life and disability insurance issued
to customers of banking subsidiaries of the Company by the
issuing insurance company. At fiscal year end November 30,
1997, Northwest Territory had total assets of $1.4 million and
had gross premium income of $218,000 in 1997, $201,000 in 1996
and $244,000 in 1995. Northwest Territory reinsures risks
(currently not exceeding $15,000 per insured on a present value
basis) within limits established by governmental regulations and
management policy. Northwest Territory has no employees.
Customers and Markets
- ---------------------
The Company's service area has a diverse economic structure.
Principal industries in the area include metals, plastics and
petrochemical manufacturing; oil, gas and coal production and
related support industries. In addition, tourism, education and
other service-related industries are important and growing
industries. Consequently, the Company is not dependent upon any
one industry segment for its business opportunities.
Each of the Company's banking subsidiaries originates various
types of loans, including commercial and commercial real estate
loans, residential real estate loans, home equity lines of
credit, real estate construction loans, and consumer loans
(including loans to individuals, credit card loans, and indirect
loans). In general, the Company retains most of its originated
loans and, therefore, secondary market activity has been
minimal. The loans of each of the Company's subsidiaries are
spread over a broad range of industrial classifications. The
Company believes that its subsidiaries have no significant
concentrations of loans to borrowers engaged in the same or
similar industries and such subsidiaries do not have any loans
to foreign entities. The lending market areas served by the
Company's subsidiaries are primarily concentrated in
southeastern Ohio and neighboring areas of Kentucky and West
Virginia. In addition, a loan production office in central Ohio
provides opportunities to serve customers in that economic
region.
Commercial lending entails significant additional risks as
compared with consumer lending, i.e. single-family residential
mortgage lending, installment lending, credit card loans and
indirect lending. In addition, the payment experience on
commercial loans is typically dependent on adequate cash flow of
a business and thus may be subject, to a greater extent, to
adverse conditions in the economy generally or adverse
conditions in a specific industry.
At December 31, 1997, the Company's subsidiaries had outstanding
approximately $159.0 million in commercial loans (including
commercial, financial and agricultural loans), representing
approximately 30.5% of the total aggregate loan portfolio as of
that date. At December 31, 1997, none of the Company's
subsidiaries had extended credit to any one borrower in excess
of its respective legal lending limits (approximately $7.8
million, $1.6 million, $2.2 million and $0.9 million, for
Peoples Bank, First National, Catlettsburg Federal and Russell
Federal, respectively). Loan terms include amortization
schedules commensurate with the purpose of each loan, the source
of repayment and the risk involved. Board of Director approval
is required for loans whose aggregate total debt, including the
principal amount of the proposed loan, exceeds $2 million,
$300,000, $275,000 and $750,000 for Peoples Bank, Russell
Federal, First National and Catlettsburg Federal, respectively.
The primary analysis technique used in determining whether to
grant a commercial loan is the review of a schedule of cash
flows in order to evaluate whether anticipated future cash flows
will be adequate to service both interest and principal due. In
addition, collateral is reviewed to determine its value in
relation to the loan.
Each of the Company's subsidiaries regularly evaluates all
commercial loans greater in amount than $100,000. If it is
determined that deterioration has occurred, effective and prompt
action is taken by the responsible subsidiary. Upon detection
of a reduced ability of a borrower to meet cash flow
obligations, the loan is considered an impaired loan and
reviewed for possible downgrading or placement on non-accrual
status.
At December 31, 1997, the Company's subsidiaries had outstanding
consumer loans (including indirect loans and credit cards) in an
aggregate amount of approximately $114.3 million (approximately
21.9% of the aggregate total loan portfolio). Credit approval
for consumer loans requires demonstration of sufficiency of
income to repay principal and interest due, stability of
employment, a positive credit record and sufficient collateral
for secured loans. It is the Company's policy to adhere
strictly to all laws and regulations governing consumer lending.
A qualified compliance officer is responsible for monitoring
the Company's performance in this area and for advising and
updating loan personnel. The Company's subsidiaries make credit
life insurance and health and accident insurance available to
all qualified buyers, thus reducing their risk of loss when a
borrower's income is terminated or interrupted. It is the
policy of each of the Company's subsidiaries to review its
consumer loan portfolio monthly and to charge off loans that do
not meet that subsidiary's standards. Each subsidiary also
offers its customers credit card access through the consumer
lending department of Peoples Bank.
Consumer loans generally involve more risk as to collectibility
than mortgage loans because of the type and nature of the
collateral and, in certain instances, the absence of collateral.
As a result, consumer lending collections are dependent upon
the borrower's continued financial stability, and thus are more
likely to be adversely affected by employment loss, personal
bankruptcy, or adverse economic conditions.
At December 31, 1997, there were approximately $248.2 million in
residential real estate, home equity lines of credit and
construction mortgages outstanding, representing 47.6% of total
loans outstanding. The Company's subsidiaries require that the
loan amount with respect to residential real estate loans be no
more than 90% of the purchase price or the appraisal value of
the real estate securing the loan, unless private mortgage
insurance is obtained by the borrower with respect to the
percentage exceeding such 90%. On occasion, the Company's
subsidiaries may lend up to 100% of the appraised value of the
real estate. The risk conditions of such loans are considered
during underwriting for the purposes of establishing an interest
rate compatible with the risks inherent in such home equity
loans. Loans made for each subsidiary's portfolio in this
lending category are generally one to five year adjustable rate,
fully amortized mortgages. The Company's subsidiaries also
generate fixed rate real estate loans and generally retain these
loans. All real estate loans are secured by first mortgages
with evidence of title in favor of the subsidiary in the form of
an attorney's opinion of the title or a title insurance policy.
The Company's subsidiaries also require proof of hazard
insurance with the appropriate subsidiary named as the
mortgagee and as the loss payee. Licensed appraisals are
required in the case of loans in excess of $250,000.
Home equity lines of credit are generally made as second
mortgages by the Company's subsidiaries. The maximum amount of
a home equity line of credit is generally limited to 80% of the
appraised value of the property less the balance of the first
mortgage. The home equity lines of credit are written with ten
year terms but are subject to review. A variable interest rate
is generally charged on the home equity lines of credit.
Construction financing is generally considered to involve a
higher degree of risk of loss than long-term financing on
improved, occupied real estate. Risk of loss on a construction
loan is dependent largely upon the accuracy of the initial
estimate of the property's value at completion of construction
and the estimated cost (including interest) of construction. If
the estimate of construction cost proves to be inaccurate, the
Company's subsidiary making the loan may be required to advance
funds beyond the amount originally committed to permit
completion of the project. At December 31, 1997, the Company
had approximately $19.5 million in real estate construction
loans, representing approximately 3.7% of the Company's total
loan portfolio.
Competition
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The banking subsidiaries of the Company experience significant
competition in attracting depositors and borrowers. Competition
in lending activities comes principally from other commercial
banks, savings associations, insurance companies, governmental
agencies, credit unions, brokerage firms and pension funds. The
primary factors in competing for loans are interest rate and
overall lending services. Competition for deposits comes from
other commercial banks, savings associations, money market funds
and credit unions as well as from insurance companies and
brokerage firms. The primary factors in competing for deposits
are interest rates paid on deposits, account liquidity,
convenience of office location and overall financial condition.
The Company believes that its size, overall banking services and
financial condition place it in a favorable competitive position.
Northwest Territory operates in the highly competitive industry
of credit life and disability insurance. The principal methods
of competition in the credit life and disability insurance
industry are the availability of coverages and premium rates.
The Company believes Northwest Territory has a competitive
advantage due to the fact that the business of Northwest
Territory is limited to the accepting of life and disability
reinsurance ceded in part to Northwest Territory from the credit
life and disability insurance purchased by loan customers of
primarily Peoples Bank and First National Bank.
The Agencies operate in the extremely competitive life insurance
and property and casualty insurance industries, due mostly to
the large number of companies and agents located within the
Company's markets. The Agencies provide several insurance
product options to consumers, including traditional life
insurance, as well as investments in mutual funds, variable and
fixed annuities and securities. The Company intends to provide
property and casualty insurance products through Northwest
Territory Property & Casualty Insurance Agency, Inc. The
Agencies' future competitive advantage will be based on their
ability to provide products to consumers efficiently with
sensitivity to customer service and cost price issues.
Supervision and Regulation
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The following is a summary of certain statutes and regulations
affecting the Company and its subsidiaries. The summary is
qualified in its entirety by reference to such statutes and
regulations.
The Company is a bank holding company under the Bank Holding
Company Act of 1956, as amended, which restricts the activities
of the Company and the acquisition by the Company of voting
stock or assets of any bank, savings association or other
company. The Company is also subject to the reporting
requirements of, and examination and regulation by, the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board"). Subsidiary banks of a bank holding company are subject
to certain restrictions imposed by the Federal Reserve Act on
transactions with affiliates, including any loans or extensions
of credit to the bank holding company or any of its
subsidiaries, investments in the stock or other securities
thereof and the taking of such stock or securities as collateral
for loans to any borrower; the issuance of guarantees,
acceptances or letters of credit on behalf of the bank holding
company and its subsidiaries; purchases or sales of securities
or other assets; and the payment of money or furnishing of
services to the bank holding company and other subsidiaries.
Bank holding companies are prohibited from acquiring direct or
indirect control of more than 5% of any class of voting stock or
substantially all of the assets of any bank holding company
without the prior approval of the Federal Reserve Board. A bank
holding company and its subsidiaries are prohibited from
engaging in certain tying arrangements in connection with
extensions of credit and/or the provision of other property or
services to a customer by the bank holding company or its
subsidiaries. In addition, any savings association acquired by
a bank holding company must conform its activities to those
permissible for a bank holding company under the Bank Holding
Company Act.
The Company is also a savings and loan holding company due to
its ownership of Russell Federal and Catlettsburg Federal.
However, since the Company is a bank holding company regulated
by the Federal Reserve Board, it is not subject to any separate
regulation as a savings and loan holding company. Transactions
between a savings association subsidiary of a savings and loan
holding company and an affiliate thereof are subject to the same
restrictions imposed by the Federal Reserve Act on subsidiary
banks of a bank holding company.
Congress is considering legislation to eliminate the federal
savings and loan charter and the separate federal regulations of
savings and loan associations. Although such legislation may
change the activities in which Catlettsburg Federal and Russell
Federal may engage, it is not anticipated that the current
activities of either the Company or the Bank will be materially
affected by those activity limits.
As a national bank, First National Bank is supervised and
regulated by the Comptroller of the Currency. As an Ohio
state-chartered bank, Peoples Bank is supervised and regulated
by the Ohio Division of Financial Institutions and the Federal
Deposit Insurance Corporation ("FDIC"). The deposits of First
National Bank and Peoples Bank are insured by the FDIC and those
entities are subject to the applicable provisions of the Federal
Deposit Insurance Act. A subsidiary of a bank holding company
or savings and loan holding company can be liable to reimburse
the FDIC if the FDIC incurs or anticipates a loss because of a
default of another FDIC-insured subsidiary of the bank holding
company or savings and loan holding company or in connection
with FDIC assistance provided to such subsidiary in danger of
default. In addition, the holding company of any insured
financial institution that submits a capital plan under the
federal banking agencies' regulations on prompt corrective
action, guarantees a portion of the institution's capital
shortfall, as discussed below.
Russell Federal and Catlettsburg Federal are federally-chartered
savings bank and are subject to regulation, supervision, and
examination by the Office of Thrift Supervision ("OTS"). As
members of the FHLB of Cincinnati, they are subject to certain
limited regulation by the Federal Reserve Board. Russell
Federal and Catlettsburg Federal deposits are insured by the
FDIC, which exercises regulatory and examination authority. The
enforcement authority of the OTS includes, among other things,
the ability to assess civil money penalties, to issue
cease-and-desist or removal orders and to initiate injunctive
actions. In general, these enforcement actions may be initiated
for violations of laws and regulations and unsafe or unsound
practices. Other actions or inactions may provide the basis for
enforcement action, including misleading or untimely reports
filed with the OTS. Except under certain circumstances, public
disclosure of final enforcement actions by the OTS is required.
The FHLBs provide credit to their members in the form of
advances. The Company's savings bank subsidiaries are members
of the FHLB of Cincinnati and must maintain an investment in the
capital stock of that FHLB in an amount equal to the greater of
1.0% of the aggregate outstanding principal amount of their
respective residential mortgage loans, home purchase contracts
and similar obligations at the beginning of each year, or 5% of
its advances from the FHLB. The Company's savings bank
subsidiaries are in compliance with this requirement with an
aggregate investment in stock of the FHLB of Cincinnati of $8.0
million at December 31, 1997.
Various requirements and restrictions under the laws of the
United States and the State of Ohio affect the operations of
Peoples Bank, First National Bank, Russell Federal and
Catlettsburg Federal including requirements to maintain reserves
against deposits, restrictions on the nature and amount of loans
which may be made and the interest that may be charged thereon,
restrictions relating to investments and other activities,
limitations on credit exposure to correspondent banks,
limitations on activities based on capital and surplus,
limitations on payment of dividends, and limitations on
branching. Since June 1997, pursuant to federal legislation,
First National Bank has been authorized to branch across state
lines, unless the law of the other state specifically prohibits
the interstate branching authority granted by federal law.
The Federal Reserve Board has adopted risk-based capital
guidelines for bank holding companies and for state member
banks, such as Peoples Bank and First National Bank. The
risk-based capital guidelines include both a definition of
capital and a framework for calculating weighted-risk assets by
assigning assets and off-balance sheet items to broad risk
categories. The minimum ratio of total capital to weighted-risk
assets (including certain off-balance sheet items, such as
standby letters of credit) is 8%. At least 4.0 percentage
points is to be comprised of common stockholder's equity
(including retained earnings but excluding treasury stock),
noncumulative perpetual preferred stock, a limited amount of
cumulative perpetual preferred stock, and minority interests in
equity accounts of consolidated subsidiaries, less goodwill and
certain other intangible assets ("Tier 1 capital"). The
remainder ("Tier 2 capital") may consist, among other things, of
mandatory convertible debt securities, a limited amount of
subordinated debt, other preferred stock and a limited amount of
allowance for loan and lease losses. The Federal Reserve Board
also imposes a minimum leverage ratio (Tier 1 capital to total
assets) of 3% for bank holding companies and state member banks
that meet certain specified conditions, including no
operational, financial or supervisory deficiencies and including
having the highest regulatory rating. The minimum leverage
ratio is 100 - 200 basis points higher for other bank holding
companies and state member banks based on their particular
circumstances and risk profiles and those experiencing or
anticipating significant growth. National bank subsidiaries,
such as First National Bank, are subject to similar capital
requirements adopted by the Comptroller of the Currency.
The OTS has established capital standards, including a tangible
capital requirement, a leverage ratio (or core capital)
requirement and risk-based capital requirement applicable to
savings associations such as Russell Federal and Catlettsburg
Federal. The framework provided by the OTS to define capital
and calculate risk-weighted assets is much the same as the
framework provided by the Federal Reserve Board for bank holding
companies and for state member banks, such as Peoples Bank.
These capital requirements must be generally as stringent as the
comparable capital requirements for national banks. The capital
regulations require tangible capital of at least 1.5% of
adjusted total assets (as defined by regulation). Tangible
capital generally includes common stockholders' equity and
retained income and certain noncumulative perpetual preferred
stock and related income. The capital standards also require
core capital equal at least 3% of adjusted total assets. Core
capital generally consists of tangible capital plus certain
intangible assets, including a limited amount of purchased
credit card relationships. The OTS risk-based requirement
requires saving associations to have total capital of at least
8% of risk-weighted assets. Total capital consists of core
capital and supplementary capital. Supplementary capital
consists of certain permanent and maturing capital instruments
that do not qualify as core capital and general valuation loan
and lease loss allowances up to a maximum of 1.25% of
risk-weighted assets. Supplementary capital may be used to
satisfy the risk-based requirement only to the extent of core
capital. The OTS is also authorized to require a savings
association to maintain an additional amount of total capital to
account for concentration of credit risk and the risk of
non-traditional activities.
The Company and its subsidiaries currently satisfy all capital
requirements. Failure to meet applicable capital guidelines
could subject a banking institution to a variety of enforcement
remedies available to federal and state regulatory authorities,
including the termination of deposit insurance by the FDIC.
Federal regulation requires prompt corrective action to resolve
capital deficient banks and savings associations. Under these
regulations, institutions which become undercapitalized become
subject to mandatory regulatory scrutiny and limitations, which
increase as capital continues to decrease. Such institutions
are also required to file capital plans with their primary
federal regulator, and their holding companies must guarantee
the capital shortfall up to 5% of the assets of the capital
deficient institution at the time it becomes undercapitalized.
The OTS has adopted an interest rate risk component to the
risk-based capital requirement, though the implementation of
that component has been delayed. Pursuant to that requirement,
a savings association would have to measure the effect of an
immediate 200 basis point change in interest rates on the value
of its portfolio, as determined under the methodology
established by the OTS. If the measured interest rate risk is
above the level deemed normal under the regulation, the
association will be required to deduct one-half of that excess
exposure from its total capital when determining its level of
risk-based capital. In general, an association with less than
$300 million in assets and a risk-based capital ratio of greater
than 12% will not be subject to the interest rate risk
component. (Catlettsburg Federal and Russell Federal currently
qualify for such exemption.) Pending implementation of the
interest rate risk component, the OTS has the authority to
impose a higher individualized capital requirement on any
savings association it deems to have excess interest rate risk.
The OTS also may adjust the rick-based capital requirement on an
individual basis for any association to take into account risks
due to concentrations of credit and non-traditional activities.
The ability of a bank holding company to obtain funds for the
payment of dividends and for other cash requirements is largely
dependent on the amount of dividends which may be declared by
its subsidiary banks and other subsidiaries. However, the
Federal Reserve Board expects the Company to serve as a source
of strength to its subsidiary banks, which may require it to
retain capital for further investment in subsidiaries, rather
than for dividends for shareholders of the Company. Peoples
Bank, First National Bank, Russell Federal and Catlettsburg
Federal may not pay dividends to the Company if, after paying
such dividends, they would fail to meet the required minimum
levels under the risk-based capital guidelines and the minimum
leverage ratio requirements. Peoples Bank and First National
Bank must have the approval of their respective regulative
authorities if a dividend in any year would cause the total
dividends for that year to exceed the sum of the current year's
net profits and the retained net profits for the preceding two
years, less required transfers to surplus. Russell Federal and
Catlettsburg Federal may make capital distributions during any
calendar year equal to the greater of 100% of net income for the
year-to-date plus 50% of the amount by which the lesser of the
savings bank's tangible, core of risk-based capital exceeds its
capital requirement for such capital component, as measured at
the beginning of the calendar year, or 75% of its net income for
the most recent four-quarter period. If the current minimum
capital requirements following a proposed capital distribution
are not met, Russell Federal and Catlettsburg Federal must
obtain prior approval from the OTS. Payment of dividends by the
Company's subsidiaries may be restricted at any time at the
discretion of the regulatory authorities, if they deem such
dividends to constitute an unsafe and/or unsound banking
practice. These provisions could have the effect of limiting
the Company's ability to pay dividends on its outstanding common
shares.
The Company's financial institution subsidiaries are subject to
regulatory oversight under various consumer protection and fair
lending laws. These laws govern, among other things,
truth-in-lending disclosure, equal credit opportunity , fair
credit reporting and community reinvestment. Failure to abide
by federal laws and regulations governing community reinvestment
could limit the ability of a financial institution to open a new
branch or engage in a merger transaction. Community
reinvestment regulations evaluate how well and to what extent an
institution lends and invests in its designated service area,
with particular emphasis on low-to-moderate income communities
and borrowers in such areas. First National, Russell Federal
and Catlettsburg Federal have received a "satisfactory"
examination rating under those regulations while Peoples Bank
has received an "outstanding" examination rating.
Prior to the enactment of the Small Business Jobs Protection Act
(the "1996 Act") which was signed into law on August 21, 1996,
earnings appropriated to bad debt reserves and deducted for
federal income tax purposes could not be used by Russell Federal
or Catlettsburg Federal to pay cash dividends to the Company
without the payment of federal income taxes by the Company at
the then current income tax rate on the amount deemed
distributed, which would include the amount of any federal
income taxes attributable to the distribution. The Company does
not contemplate any distribution by Russell Federal or
Catlettsburg Federal in a manner which would create the
above-mentioned federal tax liabilities.
The FDIC is authorized to establish separate annual assessment
rates for deposit insurance for members of the Bank Insurance
Fund ("BIF") and of the Savings Association Insurance Fund
("SAIF"). Peoples Bank and First National Bank are members of
the BIF. Russell Federal and Catlettsburg Federal are members
of the SAIF. The FDIC may increase assessment rates for either
fund if necessary to restore the fund's ratio of reserves to
insured deposits to its target level within a reasonable time
and may decrease such rates if such target level has been met.
The FDIC has established a risk-based assessment system for both
BIF and SAIF members. Under this system, assessments may vary
based on the risk the institution poses to its deposit insurance
fund. The risk level is determined based on the institution's
capital level and the FDIC's level of supervisory concern about
the institution.
Because BIF has become fully funded, BIF assessments for
well-capitalized commercial banks were reduced to, in effect,
$2,000 per year, during 1996. Federal legislation, which became
effective September 30, 1996, provides, among other things, for
the costs of prior thrift failures to be shared by both the BIF
and the SAIF. As a result of such cost sharing, BIF assessments
for well-capitalized banks during 1998 will be $.013 per $100 in
deposits. SAIF assessments for well-capitalized institutions in
1998 will be $.063 per $100 in deposits. Based upon their
respective level of deposits at December 31, 1997, the projected
BIF assessment for the Company's banking subsidiaries would
aggregate approximately $71,000 in 1998. The projected SAIF
assessment for Russell Federal and Catlettsburg Federal would
total approximately $41,000 in 1998.
Northwest Territory is chartered by the State of Arizona and is
subject to regulation, supervision and examination by the
Arizona Department of Insurance. The powers of regulation and
supervision of the Arizona Department of Insurance relate
generally to such matters as minimum capitalization, the grant
and revocation of certificates of authority to transact
business, the nature of and limitations on investments, the
maintenance of reserves, the form and content of required
financial statements, reporting requirements and other matters
pertaining to life and disability insurance companies.
The Agencies are incorporated in the State of Ohio and licensed
by the Ohio Department of Insurance, which regulates, supervises
and has authority to examine the Agencies.
Monetary Policy and Economic Conditions
- ---------------------------------------
The business of commercial banks and savings associations is
affected not only by general economic conditions, but also by
the policies of various governmental regulatory agencies,
including the Federal Reserve Board. The Federal Reserve Board
regulates money and credit conditions and interest rates in
order to influence general economic conditions primarily through
open market operations in U.S. Government securities, changes in
the discount rate on bank borrowings, and changes in the reserve
requirements against bank and savings association deposits.
These policies and regulations significantly affect the overall
growth and distribution of bank and savings association loans,
investments and deposits, and the interest rates charged on
loans, as well as the interest rates paid on deposits and
accounts.
The monetary policies of the Federal Reserve Board have had a
significant effect on the operating results of commercial banks
and savings associations in the past and are expected to
continue to have significant effects in the future. In view of
the changing conditions in the economy and the money markets and
the activities of monetary and fiscal authorities, no definitive
predictions can be made as to future changes in interest rates,
credit availability or deposit levels.
Statistical Financial Information Regarding the Company
- -------------------------------------------------------
The following listing of statistical financial information,
which is included in the Company's Annual Report to Shareholders
for the fiscal year ended December 31, 1997 (the "Company's 1997
Annual Report") and incorporated herein by reference, provides
comparative data for the Company over the past three and five
years, as appropriate. These tables should be read in
conjunction with "Management's Discussion and Analysis" and the
Consolidated Financial Statements of the Company and its
subsidiaries found at pages 32 through 49 and 8 through 26,
respectively, of the Company's 1997 Annual Report.
Average Balances and Analysis of Net Interest Income:
Please refer to page 28 of the Company's 1997 Annual Report.
Rate Volume Analysis:
Please refer to page 29 of the Company's 1997 Annual Report.
Loan Maturities:
Please refer to page 29 of the Company's 1997 Annual Report.
Average Deposits:
Please refer to page 28 of the Company's 1997 Annual Report.
Maturities Schedule of Large Certificates of Deposit:
Please refer to page 29 of the Company's 1997 Annual Report.
Loan Portfolio Analysis:
Please refer to pages 30 and 31 of the Company's 1997 Annual Report.
Securities Analysis:
Please refer to pages 14 and 15, page 43 and page 45 of the
Company's 1997 Annual Report.
Return Ratios:
Please refer to page 5 of the Company's 1997 Annual Report.
Effect of Environmental Regulation
- ----------------------------------
Compliance with federal, state and local provisions regulating
the discharge of materials into the environment, or otherwise
relating to the protection of the environment, has not had a
material effect upon the capital expenditures, earnings or
competitive position of the Company and its subsidiaries. The
Company believes that the nature of the operations of its
subsidiaries has little, if any, environmental impact. The
Company, therefore, anticipates no material capital expenditures
for environmental control facilities for its current fiscal year
or for the foreseeable future. The Company's subsidiaries may
be required to make capital expenditures for environmental
control facilities related to properties which they may acquire
through foreclosure proceedings in the future; however, the
amount of such capital expenditures, if any, is not currently
determinable.
ITEM 2. PROPERTIES
===================
The principal office of the Company and Peoples Bank is located
at 138 Putnam Street, Marietta, Ohio. This location consists of
a five-story, stone-block building and one other smaller
building attached by interior corridors. In 1993, Peoples Bank
completed construction of a five-story addition to its primary
facility in downtown Marietta. Peoples Bank also owns several
nearby vacant lots for parking and a nearby Motor Bank.
Other Washington County offices for Peoples Bank include
property owned at Second and Scammel Streets in downtown
Marietta on which an additional Motor Bank exists. Peoples Bank
also leases land in the Frontier Shopping Center near downtown
Marietta on which a full-service branch is located. In
addition, Peoples Bank leases its other full-service branch
located inside a supermarket in Washington Center near downtown
Marietta. In Belpre, Peoples Bank owns a full-service branch at
1902 Washington Boulevard and a nearby Motor Bank. Peoples Bank
also owns a full-service branch in Lowell, Ohio, and a Motor
Bank in Reno, Ohio.
In Athens County, Peoples Bank owns a two-story, block building
on the Public Square in Nelsonville, Ohio, and an additional
Motor Bank in Nelsonville. In addition, Peoples Bank owns an
office consisting of a two-story concrete structure at One North
Court Street, Athens, Ohio, and a brick full-service office in
the Athens Mall. The building in the Mall is owned by Peoples
Bank on leased real property. The branch office located in The
Plains is operated under a lease which expires in June, 2001.
The newly opened brick full-service office located on Union
Street in Athens is operated under a lease which expires in
March, 2008.
In Meigs County, Peoples Bank owns full-service offices in
Middleport and Rutland, Ohio. Peoples Bank also owns
full-service and nearby Motor Banks in Gallipolis and Pomeroy,
Ohio.
Peoples Bank's loan production office in Newark-Granville is
also leased. The Company owns the land and building on which
the newly acquired Baltimore branch is located.
First National Bank owns a three-story office building of brick
and stone at 415 Main Street in Caldwell, Ohio, and a one-story
masonry and brick building located on Marion Street in
Chesterhill, Morgan County, Ohio, together with a two-story
brick structure in McConnelsville, Morgan County, Ohio, located
on Kennebec Street. The Agencies headquarters are also located
in the Caldwell office of First National Bank.
Catlettsburg Federal owns a two-story block and brick building
located on Louisa Street in Catlettsburg, Kentucky, and a
single-story block and brick located on Carol Malone Boulevard
in Grayson, Kentucky. An additional one-story brick building
was renovated and opened on Eagle Drive in Ashland, Kentucky by
Catlettsburg Federal in March, 1998.
Russell Federal owns a two-story brick office building with
adjoining land and parking lot at 404 Ferry Street in Russell,
Kentucky, as well as adjacent property located at 408 Ferry
Street.
All other properties occupied by the Company and its
subsidiaries are owned by the Company or its subsidiaries. The
Company and its subsidiaries own other real property which, when
considered in the aggregate, is not material to their operations.
Management believes all of the properties described above are in
satisfactory condition for their intended use.
ITEM 3. LEGAL PROCEEDINGS.
===========================
There are no pending legal proceedings to which the Company or
its subsidiaries are a party or to which any of their property
is subject other than ordinary routine litigation incidental to
their business, none of which is material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
=============================================================
Not applicable.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
==========================================================
Please refer to pages 6 and 7 of the Company's 1997 Annual
Report, which are incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
=================================
The table of Selected Financial Data on page 5 of the Company's
1997 Annual Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
==========================================================
Please refer to pages 32 through 49 of the Company's 1997 Annual
Report, which are incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
=====================================================================
Please refer to page 45 of the Company's 1997 Annual Report,
which is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
=====================================================
The Consolidated Financial Statements of Peoples Bancorp Inc.
and it subsidiaries, included on pages 8 through 26 of the
Company's 1997 Annual Report, and the Report of Ernst & Young
LLP included therein at page 27 are incorporated herein by
reference. Following is an index to the financial statements
included in the Company's 1997 Annual Report:
1997
Annual
Report
Financial Statements: Pages
- -------------------------------------------------------------- ------
Peoples Bancorp Inc. and Subsidiaries:
Report of Independent Auditors (Ernst & Young LLP) 27
Consolidated Balance Sheets as of December 31, 1997 and 1996 8
Consolidated Statements of Income for each of the
Three Years Ended December 31, 1997 9
Consolidated Statements of Stockholders' Equity for each
of the Three Years Ended December 31, 1997 10
Consolidated Statements of Cash Flows for each of the
Three Years Ended December 31, 1997 11
Notes to the Consolidated Financial Statements 12-26
Peoples Bancorp Inc.: (Parent Company Only Financial
Statements are included in Note 15 of the Notes to the
Consolidated Financial Statements) 24-25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
=========================================================
No response required.
PART III
---------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
=============================================================
Directors and Executive Officers of the Company include those
persons enumerated under "Election of Directors" on pages 5
through 7 of the Company's definitive Proxy Statement relating
to the Company's Annual Meeting of Shareholders to be held April
9, 1998, which section is expressly incorporated by reference.
Other Executive Officers are Carol A. Schneeberger (41), Vice
President/Operations; John (Jack) W. Conlon (52), Chief
Financial Officer; Jeffrey D. Welch (43), Treasurer; and Mark F.
Bradley (28), Controller.
Ms. Schneeberger became Vice President/Operations of the Company
in October, 1988. Prior thereto, she was Auditor of the Company
from August, 1987 to October, 1988, and Auditor of Peoples Bank
from January, 1986 to October, 1988. She was Assistant Auditor
of Peoples Bank from January, 1979 to January, 1986.
Mr. Conlon has been Chief Financial Officer of the Company since
April, 1991. He has also been Chief Financial Officer and
Treasurer of Peoples Bank for more than five years.
Mr. Welch has been Treasurer of the Company since 1985.
Mr. Bradley became Controller of the Company in January, 1998.
Prior thereto, he was Manager of Accounting and External
Reporting for the Company from February, 1995 to January, 1998.
Has has been Controller for Peoples Bank since March, 1997. He
was Manager of Accounting and External Reporting for Peoples
Bank from February, 1995 to January, 1997. Prior to February
1995, Mr. Bradley served as a staff accountant of the Company
beginning in 1991.
The information required to be disclosed under Item 405 of
Regulation S-K is included under the caption "Section 16(a)
Beneficial Ownership Report Compliance" on pages 4 and 5 of the
Company's definitive Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION.
=================================
See "Compensation Committee Interlocks and Insider
Participation" and "Compensation of Executive Officers and
Directors" on page 11, and pages 11 through 15, respectively, of
the Company's definitive Proxy Statement relating to the
Company's Annual Meeting of Shareholders to be held April 9,
1998, which are expressly incorporated herein by reference.
Neither the report on executive compensation nor the performance
graph included in the Company's definitive Proxy Statement
relating to the Company's Annual Meeting of Shareholders to be
held on April 9, 1998, shall be deemed to be incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
=========================================================================
See "Security Ownership of Certain Beneficial Owners and
Management" on pages 2 through 4 of the Company's definitive
Proxy Statement relating to the Company's Annual Meeting of
Shareholders to be held April 9, 1998, which section is
expressly incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
=========================================================
See "Transactions Involving Management" on page 8 of
the Company's definitive Proxy Statement relating to the
Company's Annual Meeting of Shareholders to be held April 9,
1998, which section is expressly incorporated herein by
reference.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.
==============================================================
(a) (1) Financial Statements
--------------------
For a list of all financial statements included in this Annual
Report on Form 10-K, see "Index to Financial Statements" at Page
17.
(a) (2) Financial Statement Schedules
-----------------------------
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
are not required under the related instructions or are
inapplicable and, therefore, have been omitted.
(a) (3) Exhibits
--------
Exhibits filed with this Annual Report on Form 10-K are
attached hereto. For a list of such exhibits, see "Exhibit
Index" beginning at page 18. The following table provides
certain information concerning executive compensation plans and
arrangements required to be filed as exhibits to this Annual
Report on Form 10-K.
Executive Compensation Plans and Arrangements
---------------------------------------------
Exhibit No. Description Location
----------- ---------------------------- -----------------------
10(a) Deferred Compensation Incorporated herein by
Agreement dated November 16, reference to Exhibit
1976 between Robert E. Evans 6(g) to Registration
and The Peoples Banking and Statement No. 2-68524
Trust Company, as amended on Form S-14 of
March 13, 1979. Peoples Delaware, the
Company's predecessor.
10(b) Peoples Bancorp Inc. Incorporated herein by
Retirement Savings Plan. reference to Exhibit
(Amended and Restated 10(b) of the Company's
Effective January 1, 1996.) Annual Report on Form
10-K for fiscal year
ended December 31, 1995
(File No. 0-16772)
10(c) Peoples Bancorp Inc. Incorporated herein by
Deferred Compensation Plan reference to Exhibit
for Directors of Peoples 10(a) of Registrant's
Bancorp Inc. and Registration Statement
Subsidiaries (Amended and on Form S-8 December
Restated Effective January 31, 1997 (Registration
2, 1998.) No. 333-43629)
10(d) Peoples Bancorp Inc. Incorporated herein by
Retirement Plan and Trust. reference to Exhibit
(Amended and Restated 10(d) of the Company's
Effective January 1, 1989.) Annual Report on Form
10-K for fiscal year
ended December 31, 1995
(File No. 0-16772)
10(e) Summary of the Performance Incorporated herein by
Compensation Plan of reference to Exhibit
Peoples Bancorp Inc. 10(f) of the Company's
effective for calendar year Annual Report on Form
beginning January 1, 1997. 10-K for fiscal year
ended December 31, 1996
(File No. 0-16772).
10(f) Peoples Bancorp Inc. Amended Incorporated herein by
and Restated 1993 Stock reference to Exhibit
Option Plan. 4 of the Company's
Registration Statement
on Form S-8 filed
August 25, 1993
(Registration Statement
No. 33-67878).
10(g) Form of Stock Option Incorporated herein by
Agreement used in connection reference to Exhibit
with grant of non-qualified 10(g) of the Company's
stock options under Peoples Annual Report on Form
Bancorp Inc. Amended and 10-K for fiscal year
Restated 1993 Stock Option ended December 31, 1995
Plan. (File No. 0-16772)
10(h) Form of Stock Option Incorporated herein by
Agreement dated May 20, reference to Exhibit
1993, used in connection 10(h) of the Company's
with grant of incentive Annual Report on Form
stock options under Peoples 10-K for fiscal year
Bancorp Inc. Amended and ended December 31, 1995
Restated 1993 Stock Option (File No. 0-16772)
Plan.
10(i) Form of Stock Option Incorporated herein by
Agreement dated November 10, reference to Exhibit
1994, used in connection 10(i) of the Company's
with grant of incentive Annual Report on Form
stock options under Peoples 10-K for fiscal year
Bancorp Inc. Amended and ended December 31, 1995
Restated 1993 Stock Option (File No. 0-16772)
Plan.
10(j) Peoples Bancorp Inc. 1995 Incorporated herein by
Stock Option Plan. reference to Exhibit 4
of the Company's Form
S-8 filed May 24, 1995
(Registration Statement
No. 33-59569).
10(k) Form of Stock Option Incorporated herein by
Agreement used in connection reference to Exhibit
with grant of non-qualified 10(k) of the Company's
stock options to Annual Report on Form
non-employee directors of 10-K for fiscal year
the Company under Peoples ended December 31, 1995
Bancorp Inc. 1995 Stock (File No. 0-16772)
Option Plan.
10(l) Form of Stock Option Incorporated herein by
Agreement used in connection reference to Exhibit
with grant of non-qualified 10(l) of the Company's
stock options to Annual Report on Form
non-employee directors of 10-K for fiscal year
the Company's subsidiaries ended December 31, 1995
under Peoples Bancorp Inc. (File No. 0-16772)
1995 Stock Option Plan.
(b) Reports on Form 8-K
-------------------
The Company filed a Current Report on Form 8-K on December
24, 1997 relating to the acquisition on December 12, 1997 of all
of the outstanding shares of common stock of Gateway Bancorp,
Inc., a Kentucky corporation, pursuant to an Agreement and Plan
of Merger, dated June 17, 1997, as amended as of September 2,
1997, between the Company and Gateway Bancorp, Inc. This
acquisition was report under Item 5 - Other Events. No
financial statement of pro forma financial information was
required to be filed therein.
(c) Exhibits
--------
Exhibits filed with Annual Report on Form 10-K are attached
hereto. For a list of such exhibits, see "Exhibit Index"
beginning at page 18.
(d) Financial Statement Schedules
-----------------------------
None.
SIGNATURES
==========
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PEOPLES BANCORP INC.
Date: March 26, 1998 By: /s/ ROBERT E. EVANS
Robert E. Evans, President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Signatures Title Date
- -------------------------- ----------------------------- --------------
/s/ ROBERT E. EVANS President and Chief Executive March 30, 1998
Robert E. Evans Officer and Director
/s/ GEORGE W. BROUGHTON Director March 26, 1998
George W. Broughton
/s/ WILFORD D. DIMIT Director March 26, 1998
Wilford D. Dimit
/s/ BARTON S. HOLL Director March 26, 1998
Barton S. Holl
/s/ REX E. MAIDEN Director March 26, 1998
Rex E. Maiden
/s/ NORMAN J. MURRAY Director March 26, 1998
Norman J. Murray
/s/ PAUL T. THEISEN Director March 26, 1998
Paul T. Theisen
/S/ THOMAS C. VADAKIN Director March 26, 1998
Thomas C. Vadakin
/S/ JOSEPH H. WESEL Chairman of the Board March 26, 1998
Joseph H. Wesel and Director
/s/ JEFFREY D. WELCH Treasurer (Principal March 30, 1998
Jeffrey D. Welch Accounting Officer)
/s/ JOHN W. CONLON Chief Financial Officer March 30, 1998
John W. Conlon
PEOPLES BANCORP INC.
INDEX TO FINANCIAL STATEMENTS
1997
Annual
Report
Financial Statements: Pages
- -------------------------------------------------------------- ------
Peoples Bancorp Inc. and Subsidiaries:
Report of Independent Auditors (Ernst & Young LLP) 27
Consolidated Balance Sheets as of December 31, 1997 and 1996 8
Consolidated Statements of Income for each of the
Three Years Ended December 31, 1997 9
Consolidated Statements of Stockholders' Equity for each
of the Three Years Ended December 31, 1997 10
Consolidated Statements of Cash Flows for each of the
Three Years Ended December 31, 1997 11
Notes to the Consolidated Financial Statements 12-26
Peoples Bancorp Inc.: (Parent Company Only Financial
Statements are included in Note 15 of the Notes to the
Consolidated Financial Statements) 24-25
EXHIBIT INDEX
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1997
Exhibit
Number Description Exhibit Location
- ----------- ---------------------------- -----------------------
2 (a) Agreement and Plan of Merger Incorporated herein by
and Reorganization by and reference to Exhibit
between Peoples Bancorp Inc. 2(b) of the Company's
and Russell Federal Savings Annual Report on Form
Bank, dated August 19, 1996. 10-K for fiscal year
ended December 31, 1996
(File No. 0-16772).
2 (b) Agreement and Plan of Incorporated herein by
Merger, dated June 17, 1997, reference to Exhibit
as amended by and between 2(a) of Registrant's
Peoples Bancorp Inc. and Registration Statement
Gateway Bancorp, Inc. on Form S-4 (File No.
333-37261) effective
October 2, 1997.
3 (a)(1) Amended Articles of Incorporated herein by
Incorporation of Peoples reference to Exhibit
Bancorp Inc. (as filed with 3(a) to the Company's
the Ohio Secretary of State Registration Statement
on May 3, 1993) on Form 8-B filed
July 20, 1993
(File No. 0-16772).
3(a)(2) Certificate of Amendment to *
the Amended Articles of
Peoples Bancorp Inc. (as
filed with the Ohio
Secretary of State on
April 22, 1994)
3(a)(3) Certificate of Amendment to *
the Amended Articles of
Peoples Bancorp Inc. (as
filed with the Ohio
Secretary of State on
April 9, 1996)
3(a)(4) Amended Articles of *
Incorporation Peoples
Bancorp Inc. (reflecting
amendments through April 9,
1996) [ For SEC reporting
compliance purposes only --
not filed with Ohio
Secretary of State]
3 (b) Regulations of Peoples Incorporated herein by
Bancorp Inc. reference to Exhibit
3(b) to the Company's
Registration Statement
on Form 8-B filed
July 20, 1993
(File No. 0-16772).
4 Pledge Agreement, dated Incorporated herein by
March 18, 1997, between reference to Exhibit
Peoples Bancorp Inc. and 4 of Registrant's
Fountain Square Commercial Registration Statement
Funding Corp. on Form S-4 (File No.
333-37261) effective
October 2, 1997.
10(a) Deferred Compensation Incorporated herein by
Agreement dated November 16, reference to Exhibit
1976 between Robert E. Evans 6(g) to Registration
and The Peoples Banking and Statement No. 2-68524
Trust Company, as amended on Form S-14 of
March 13, 1979. Peoples Delaware, the
Company's predecessor.
10(b) Peoples Bancorp Inc. Incorporated herein by
Retirement Savings Plan. reference to Exhibit
(Amended and Restated 10(b) of the Company's
Effective January 1, 1996.) Annual Report on Form
10-K for fiscal year
ended December 31, 1995
(File No. 0-16772)
10(c) Peoples Bancorp Inc. Incorporated herein by
Deferred Compensation Plan reference to Exhibit
for Directors of Peoples 10(a) of Registrant's
Bancorp Inc. and Registration Statement
Subsidiaries (Amended and on Form S-8 December
Restated Effective January 31, 1997 (Registration
2, 1998.) No. 333-43629)
10(d) Peoples Bancorp Inc. Incorporated herein by
Retirement Plan and Trust. reference to Exhibit
(Amended and Restated 10(d) of the Company's
Effective January 1, 1989.) Annual Report on Form
10-K for fiscal year
ended December 31, 1995
(File No. 0-16772)
10(e) Summary of the Performance Incorporated herein by
Compensation Plan of reference to Exhibit
Peoples Bancorp Inc. 10(f) of the Company's
effective for calendar year Annual Report on Form
beginning January 1, 1997. 10-K for fiscal year
ended December 31, 1996
(File No. 0-16772).
10(f) Peoples Bancorp Inc. Amended Incorporated herein by
and Restated 1993 Stock reference to Exhibit
Option Plan. 4 of the Company's
Registration Statement
on Form S-8 filed
August 25, 1993
(Registration Statement
No. 33-67878).
10(g) Form of Stock Option Incorporated herein by
Agreement used in connection reference to Exhibit
with grant of non-qualified 10(g) of the Company's
stock options under Peoples Annual Report on Form
Bancorp Inc. Amended and 10-K for fiscal year
Restated 1993 Stock Option ended December 31, 1995
Plan. (File No. 0-16772)
10(h) Form of Stock Option Incorporated herein by
Agreement dated May 20, reference to Exhibit
1993, used in connection 10(h) of the Company's
with grant of incentive Annual Report on Form
stock options under Peoples 10-K for fiscal year
Bancorp Inc. Amended and ended December 31, 1995
Restated 1993 Stock Option (File No. 0-16772)
Plan.
10(i) Form of Stock Option Incorporated herein by
Agreement dated November 10, reference to Exhibit
1994, used in connection 10(i) of the Company's
with grant of incentive Annual Report on Form
stock options under Peoples 10-K for fiscal year
Bancorp Inc. Amended and ended December 31, 1995
Restated 1993 Stock Option (File No. 0-16772)
Plan.
10(j) Peoples Bancorp Inc. 1995 Incorporated herein by
Stock Option Plan. reference to Exhibit 4
of the Company's Form
S-8 filed May 24, 1995
(Registration Statement
No. 33-59569).
10(k) Form of Stock Option Incorporated herein by
Agreement used in connection reference to Exhibit
with grant of non-qualified 10(k) of the Company's
stock options to Annual Report on Form
non-employee directors of 10-K for fiscal year
the Company under Peoples ended December 31, 1995
Bancorp Inc. 1995 Stock (File No. 0-16772)
Option Plan.
10(l) Form of Stock Option Incorporated herein by
Agreement used in connection reference to Exhibit
with grant of non-qualified 10(l) of the Company's
stock options to Annual Report on Form
non-employee directors of 10-K for fiscal year
the Company's subsidiaries ended December 31, 1995
under Peoples Bancorp Inc. (File No. 0-16772)
1995 Stock Option Plan.
11 Computation of Earnings Per Page 29.
Share.
12 Statements of Computation Page 30.
of Ratios.
13 Peoples Bancorp Inc. Annual Page 31 through 88.
Report to Stockholders for
the fiscal year ended
December 31, 1997 (not
deemed filed except for
portions thereof which are
specifically incorporated by
reference into this Annual
Report on Form 10-K).
21 Subsidiaries of Peoples Page 89.
Bancorp Inc.
23 Consent of Independent Page 90.
Auditors - Ernst & Young
LLP.
27.1 Financial Data Schedule. Page 91.
27.2 Financial Data Schedule. Page 92 through 93.
27.3 Financial Data Schedule. Page 94 through 95.
27.4 Financial Data Schedule. Page 96 through 97.
*Filed herewith.