SEC Company Response from PEOPLES BANCORP INC (PEBO) (CIK 0000318300) (PEBO) — Nov 26, 2008
PEOPLES BANCORP INC (PEBO) (CIK 0000318300)
Date: Nov. 26, 2008 · CIK: 0000318300 · Accession: 0000318300-08-000260
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-16772
Letter
United States Securities and Exchange Commission Division of Corporation Finance Peoples Bancorp Inc. Preliminary Proxy Statement on Schedule 14A File No. 000-16772 Filed November 13, 2008
Dear Ms. McHale:
This letter is in response to the comments of the Securities and Exchange Commission (the “Commission”) provided in your letter, dated November 20, 2008, related to the preliminary proxy statement (the “Proxy Statement”) to be furnished to the shareholders of Peoples Bancorp Inc. (“Peoples”, “we” or “our”) in connection with the solicitation of proxies by the Board of Directors of Peoples to vote at the Special Meeting of Shareholders (the “Special Meeting”) originally scheduled to be held on December 22, 2008.
On November 3, 2008, Peoples applied to participate in the Capital Purchase Program (the “Capital Purchase Program”) created by the United States Department of the Treasury (the “Treasury” or the “Treasury Department”) as part of the Troubled Asset Relief Program (“TARP”) instituted under the Emergency Economic Stabilization Act of 2008. Peoples received preliminary approval of its application on November 12, 2008. Based on the investment of $39,000,000 which the Treasury preliminarily approved, Peoples would issue 39,000 cumulative perpetual preferred shares, with a liquidation preference of $1,000 per share (“Senior Preferred Shares”) to the Treasury.
Peoples must also issue a warrant (the “Warrant”) to the Treasury to purchase a number of common shares having a market price equal to 15% of the aggregate amount of the Senior Preferred Shares purchased by the Treasury. The initial exercise price for the Warrant, and the market price for determining the number of common shares subject to the Warrant, will be calculated based on the average of the closing prices of Peoples’ common shares for the 20 trading days ending on the last trading day prior to November 12, 2008, which was the date Peoples’ application for participation in the Capital Purchase Program was preliminarily approved by the Treasury. Based on the investment of $39,000,000 which the Treasury preliminarily approved and the average of the closing prices of Peoples’ common shares on the 20 trading days ended November 11, 2008 ($18.66), the number of Peoples common shares subject to the Warrant will be 313,505 or 3.0% of the common shares outstanding on November 11, 2008.
United States Securities and Exchange Commission
November 25, 2008
Page 2
Please be advised that Peoples’ Board of Directors has moved the date of the Special Meeting to Thursday, January 22, 2009. Because we have decided to incorporate by reference the financial information contemplated by Item 13 of Schedule 14A (as discussed below), we must send the Proxy Statement to shareholders no later than 20 business days prior to the Special Meeting to comply with General Note D.3. of Schedule 14A. The new date on which the Special Meeting is scheduled to be held is expected to permit Peoples to satisfy the applicable requirements under Schedule 14A as well as the timeframe for participation in the Treasury’s Capital Purchase Program.
In responding to the Commission’s comments, Peoples acknowledges that:
·
Peoples is responsible for the adequacy and accuracy of the disclosure in the filing;
·
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
·
Peoples may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
The following paragraphs include each of your comments numbered to match the corresponding comment in your letter followed by our response:
Preliminary Proxy Statement on Schedule 14A
1.
Item 13 of Schedule 14A requires you to include financial information in your proxy statement if you are seeking authorization to issue common or preferred stock under certain circumstances. We note that you have not included financial information in your proxy statement.
Please explain to us why you believe financial statements are not material in connection with issuing the warrants to purchase common stock. See Note A to Schedule 14A and Instruction 1 to Item 13(a) of Schedule 14A.
Where you expect the proceeds of the sale of securities to the Treasury Department to have a material impact on your balance sheet or income statement, our rules require you to provide pro forma statements that comply with Article 11 of Regulation S-X in your proxy statement. If you expect the proceeds of the sale of securities to the Treasury Department to have a material impact on your financial statements, you may provide a textual discussion of the pro forma effect rather than pro forma financial statements.
United States Securities and Exchange Commission
November 25, 2008
Page
Response:
In response to the Commission’s comments, we have revised the Proxy Statement to include pro forma financial statements that comply with Article 11 of Regulation S-X and reflect the pro forma effects of the issuance and sale of the Senior Preferred Shares and the Warrant to the Treasury Department. Copies of the Pro Forma Condensed Consolidated Balance Sheet Data and Capital Ratios as of September 30, 2008 and Pro Forma Condensed Consolidated Statements of Income for the nine months ended September 30, 2008 and for the fiscal year ended December 31, 2007 (the “Pro Forma Financial Statements”) are attached hereto as Exhibit A. In addition, we have revised the Proxy Statement to incorporate by reference the financial information of Peoples as contemplated by Item 13 of Schedule 14A.
In evaluating the impact of the potential sale of securities to the Treasury Department, you must consider the material effect of the transaction, including:
·
how the application of the proceeds of the transaction may potentially effect your net interest margin;
·
how the accretion and dividends on the preferred stock will impact the net income available to common shareholders; and
·
how the transaction will impact your basic earnings per share, diluted earnings per share, and diluted shares outstanding.
Response:
In the Pro Forma Financial Statements, we have addressed the pro forma effect of the issuance of the minimum and maximum amounts of the Senior Preferred Shares, and the corresponding Warrant, on Peoples’ net interest income (margin), net income available to common shareholders, basic earnings per share, diluted earnings per share and weighted-average number of diluted shares outstanding for the nine months ended September 30, 2008 and for the fiscal year ended December 31, 2007 (see the Pro Forma Financial Statements attached hereto as Exhibit A).
Your assumptions regarding the use of proceeds from the transactions, such as an assumption regarding the pay down of existing debt or the investment of the proceeds in federal funds sold, must be factually supportable. You should consider only those plans for the proceeds that meet the factually supportable criteria.
United States Securities and Exchange Commission
November 25, 2008
Page
Response:
We discuss the expected uses of the proceeds from the sale of the Senior Preferred Shares in the second paragraph under “Overview” within the new section which will be captioned “Pro Forma Effect on Peoples’ Financial Statements”” as well as Note (3) to the Pro Forma Statements of Income (see the Pro Forma Financial Statements attached hereto as Exhibit A). As more fully described in that section, we expect the immediate intended use of the proceeds will be a reduction in short-term borrowings, consisting primarily of overnight advances from the Federal Home Loan Bank, while the proceeds ultimately will be used to fund new loan originations or other balance sheet growth. We believe the short-term use is factually supportable based on the level of overnight borrowings maintained during the periods presented. We do not believe the long-term use of the proceeds is factually supportable because certain elements are beyond our control, such as customer demand for loans. Therefore, the Pro Forma Financial Statements reflect solely the impact of the reduction in short-term borrowings.
Where you determine that the proceeds of the sale of securities to the Treasury Department will have a material impact on your balance sheet or income statement and elect to prepare and provide pro forma financial statements, you should include, in your proxy statement, a pro forma balance sheet for the most recent balance sheet date and a pro forma income statement for the most recent annual and interim periods that address the impact of both the minimum and maximum proceeds of the sale. If you choose to provide a textual discussion in lieu of pro forma financial statements, please address the minimum and maximum proceeds of the sale as well as the other items noted in the following paragraph.
Response:
As indicated above, we have revised the Proxy Statement to include the Pro Forma Financial Statements attached hereto as Exhibit A.
In preparing pro forma financial statements, discuss any relevant assumptions you have made and you should briefly describe any pro forma adjustments such as your assumptions about interest savings on proceeds applied to pay down debt and interest income earned on proceeds invested. State, if true, that you used the treasury stock method for purposes of evaluating the effect of the warrants on diluted shares outstanding. Describe the methodologies you used to allocate the transaction process among the securities you may issue to the Treasury Department (relative fair value) and to accrete the discount on the preferred stock.
Response:
In the Pro Forma Condensed Consolidated Statements of Income, we have included the pro forma effect of the interest savings from the reduction of short-term borrowings, and in the accompanying footnotes, we describe relevant assumptions and methodologies used. Specifically, in Note (3), we describe the use of proceeds to reduce short-term borrowings and in Notes (5) and (6), we describe the methodologies used such as the treasury stock method, relative fair value and accretion of Senior Preferred Shares using the constant yield approach.
If you do not believe the sale of the securities to the Treasury Department will have a material impact on your balance sheet or income statement, provide us with your quantitative and qualitative analysis of your conclusion. In your analysis, discuss the impact to each of the items noted above as well as to total shareholders’ equity and your capital ratios.
United States Securities and Exchange Commission
November 25, 2008
Page
Response:
As indicated above, we have revised the Proxy Statement to include the Pro Forma Financial Statements attached hereto as Exhibit A.
2.
Please discuss how your participation in the Capital Purchase Program may:
a.
impact the holders of any outstanding senior classes of your securities;
b.
impact the rights of your existing common shareholders; and
c.
dilute the interests of your existing common shareholders.
Response:
Bullet Point No. (a)
As disclosed in the last sentence of the second paragraph under “Who can vote?” (page 3 of the preliminary Proxy Statement), the common shares are the only class of stock of Peoples presently outstanding. We do not presently have any senior classes of securities outstanding and, therefore, our participation in the Capital Purchase Program would have no impact on holders of any outstanding senior classes of our securities.
We have also disclosed in the first sentence of the second paragraph under “Proposed Amendment to Article FOURTH” (page 12 of the preliminary Proxy Statement) that the common shares are the only class of stock of Peoples presently outstanding.
Bullet Point No. (b)
As disclosed in the second paragraph under “Proposed Amendment to Article FOURTH” on page 12 of the preliminary Proxy Statement, the actual effect of the issuance of any preferred shares upon the rights of holders of common shares cannot be stated until the Board of Directors of Peoples determines the specific rights of any preferred shares. However, the effects might include, among other things, restricting dividends on the common shares, diluting the voting power of the common shares, reducing the market price of the common shares or impairing the liquidation rights of the common shares without further action by the shareholders.
United States Securities and Exchange Commission
November 25, 2008
Page
The preferred shares could be issued so as to make it more difficult for a third party to acquire a majority of Peoples’ outstanding voting stock or otherwise effect a change of control. However, as stated in the second paragraph under “Potential Anti-Takeover Effect of Preferred Shares” on page 9 of the preliminary Proxy Statement, the Board of Directors does not intend to issue any preferred shares for any defensive or anti-takeover purpose or with features intended specifically to make any attempted acquisition of Peoples more difficult.
The effects upon the rights of holders of Peoples’ common shares of the issuance of Senior Preferred Shares and the Warrant under the Capital Purchase Program are discussed under “Terms of the Capital Purchase Program” (pages 7 through 9 of the preliminary Proxy Statement). These effects include:
·
Restrictions on Common Share Dividends and Repurchases. As long as the Senior Preferred Shares are outstanding, Peoples would not be permitted to declare or pay dividends on any common shares, nor would Peoples be permitted to repurchase or redeem any common shares, unless all accrued and unpaid dividends for all past dividend periods on the Senior Preferred Shares are fully paid. Unless the Senior Preferred Shares have been transferred or redeemed in whole, until the third anniversary of the Treasury’s investment, any increase in common share dividends would be prohibited without the prior approval of the Treasury. In addition, unless the Senior Preferred Shares have been transferred or redeemed in whole, until the third anniversary of the Treasury’s investment, the Treasury’s consent would be required for any common share repurchases other than repurchases of common shares in connection with the administration of any employee benefit plan in the ordinary course of business and consistent with past
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CORRESP
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filename1.htm
commentletter.htm
PEOPLES
BANCORP INC.
138
Putnam Street
P.
O. Box 738
Marietta,
Ohio 45750-0738
(740)
374-6136
www.peoplesbancorp.com
November
26, 2008
VIA ELECTRONIC
TRANSMISSION
United
States Securities and Exchange Commission
Division
of Corporation Finance
100 F
Street, N.E.
Washington,
D.C. 20549
Attn.:
Kathryn McHale
Staff Attorney
Mail Stop 4561
Re:
Peoples
Bancorp Inc.
Preliminary
Proxy Statement on Schedule 14A
File
No. 000-16772
Filed
November 13, 2008
Dear Ms.
McHale:
This
letter is in response to the comments of the Securities and Exchange Commission
(the “Commission”) provided in your letter, dated November 20, 2008, related to
the preliminary proxy statement (the “Proxy Statement”) to be furnished to the
shareholders of Peoples Bancorp Inc. (“Peoples”, “we” or “our”) in connection
with the solicitation of proxies by the Board of Directors of Peoples to vote at
the Special Meeting of Shareholders (the “Special Meeting”) originally scheduled
to be held on December 22, 2008.
On
November 3, 2008, Peoples applied to participate in the Capital Purchase
Program (the “Capital Purchase Program”) created by the United States Department
of the Treasury (the “Treasury” or the “Treasury Department”) as part of the
Troubled Asset Relief Program (“TARP”) instituted under the Emergency Economic
Stabilization Act of 2008. Peoples received preliminary approval of
its application on November 12, 2008. Based on the investment of
$39,000,000 which the Treasury preliminarily approved, Peoples would issue
39,000 cumulative perpetual preferred shares, with a liquidation preference of
$1,000 per share (“Senior Preferred Shares”) to the Treasury.
Peoples
must also issue a warrant (the “Warrant”) to the Treasury to purchase a number
of common shares having a market price equal to 15% of the aggregate amount of
the Senior Preferred Shares purchased by the Treasury. The initial
exercise price for the Warrant, and the market price for determining the number
of common shares subject to the Warrant, will be calculated based on the average
of the closing prices of Peoples’ common shares for the 20 trading days ending
on the last trading day prior to November 12, 2008, which was the date
Peoples’ application for participation in the Capital Purchase Program was
preliminarily approved by the Treasury. Based on the investment of
$39,000,000 which the Treasury preliminarily approved and the average of the
closing prices of Peoples’ common shares on the 20 trading days ended
November 11, 2008 ($18.66), the number of Peoples common shares subject to
the Warrant will be 313,505 or 3.0% of the common shares outstanding on
November 11, 2008.
United
States Securities and Exchange Commission
November
25, 2008
Page 2
Please be
advised that Peoples’ Board of Directors has moved the date of the Special
Meeting to Thursday, January 22, 2009. Because we have decided
to incorporate by reference the financial information contemplated by
Item 13 of Schedule 14A (as discussed below), we must send the Proxy
Statement to shareholders no later than 20 business days prior to the Special
Meeting to comply with General Note D.3. of Schedule 14A. The new
date on which the Special Meeting is scheduled to be held is expected to permit
Peoples to satisfy the applicable requirements under Schedule 14A as well as the
timeframe for participation in the Treasury’s Capital Purchase
Program.
In
responding to the Commission’s comments, Peoples acknowledges that:
·
Peoples
is responsible for the adequacy and accuracy of the disclosure in the
filing;
·
staff
comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the
filing; and
·
Peoples
may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the
United States.
The
following paragraphs include each of your comments numbered to match the
corresponding comment in your letter followed by our response:
Preliminary Proxy Statement
on Schedule 14A
1.
Item
13 of Schedule 14A requires you to include financial information in your
proxy statement if you are seeking authorization to issue common or
preferred stock under certain circumstances. We note that you
have not included financial information in your proxy
statement.
Please
explain to us why you believe financial statements are not material in
connection with issuing the warrants to purchase common
stock. See Note A to Schedule 14A and Instruction 1 to Item
13(a) of Schedule 14A.
Where
you expect the proceeds of the sale of securities to the Treasury
Department to have a material impact on your balance sheet or income
statement, our rules require you to provide pro forma statements that
comply with Article 11 of Regulation S-X in your proxy
statement. If you expect the proceeds of the sale of securities
to the Treasury Department to have a material impact on your financial
statements, you may provide a textual discussion of the pro forma effect
rather than pro forma financial
statements.
United
States Securities and Exchange Commission
November
25, 2008
Page
3
Response:
In
response to the Commission’s comments, we have revised the Proxy Statement to
include pro forma financial statements that comply with Article 11 of
Regulation S-X and reflect the pro forma effects of the issuance and sale of the
Senior Preferred Shares and the Warrant to the Treasury
Department. Copies of the Pro Forma Condensed Consolidated Balance
Sheet Data and Capital Ratios as of September 30, 2008 and Pro Forma
Condensed Consolidated Statements of Income for the nine months ended
September 30, 2008 and for the fiscal year ended December 31, 2007
(the “Pro Forma Financial Statements”) are attached hereto as Exhibit
A. In addition, we have revised the Proxy Statement to
incorporate by reference the financial information of Peoples as contemplated by
Item 13 of Schedule 14A.
In
evaluating the impact of the potential sale of securities to the Treasury
Department, you must consider the material effect of the transaction,
including:
·
how
the application of the proceeds of the transaction may potentially effect
your net interest margin;
·
how
the accretion and dividends on the preferred stock will impact the net
income available to common shareholders;
and
·
how
the transaction will impact your basic earnings per share, diluted
earnings per share, and diluted shares
outstanding.
Response:
In the
Pro Forma Financial Statements, we have addressed the pro forma effect of the
issuance of the minimum and maximum amounts of the Senior Preferred Shares, and
the corresponding Warrant, on Peoples’ net interest income (margin), net income
available to common shareholders, basic earnings per share, diluted earnings per
share and weighted-average number of diluted shares outstanding for the nine
months ended September 30, 2008 and for the fiscal year ended December 31,
2007 (see
the Pro Forma Financial Statements attached hereto as Exhibit
A).
Your
assumptions regarding the use of proceeds from the transactions, such as an
assumption regarding the pay down of existing debt or the investment of the
proceeds in federal funds sold, must be factually supportable. You
should consider only those plans for the proceeds that meet the factually
supportable criteria.
United
States Securities and Exchange Commission
November
25, 2008
Page
4
Response:
We
discuss the expected uses of the proceeds from the sale of the Senior Preferred
Shares in the second paragraph under “Overview”
within the new section which will be captioned “Pro Forma Effect on Peoples’
Financial Statements”” as well as Note (3) to the Pro Forma Statements of
Income (see the Pro
Forma Financial Statements attached hereto as Exhibit
A). As more fully described in that section, we expect the
immediate intended use of the proceeds will be a reduction in short-term
borrowings, consisting primarily of overnight advances from the Federal Home
Loan Bank, while the proceeds ultimately will be used to fund new loan
originations or other balance sheet growth. We believe the short-term
use is factually supportable based on the level of overnight borrowings
maintained during the periods presented. We do not believe the
long-term use of the proceeds is factually supportable because certain elements
are beyond our control, such as customer demand for loans. Therefore,
the Pro Forma Financial Statements reflect solely the impact of the reduction in
short-term borrowings.
Where
you determine that the proceeds of the sale of securities to the Treasury
Department will have a material impact on your balance sheet or income statement
and elect to prepare and provide pro forma financial statements, you should
include, in your proxy statement, a pro forma balance sheet for the most recent
balance sheet date and a pro forma income statement for the most recent annual
and interim periods that address the impact of both the minimum and maximum
proceeds of the sale. If you choose to provide a textual discussion
in lieu of pro forma financial statements, please address the minimum and
maximum proceeds of the sale as well as the other items noted in the following
paragraph.
Response:
As
indicated above, we have revised the Proxy Statement to include the Pro Forma
Financial Statements attached hereto as Exhibit
A.
In
preparing pro forma financial statements, discuss any relevant assumptions you
have made and you should briefly describe any pro forma adjustments such as your
assumptions about interest savings on proceeds applied to pay down debt and
interest income earned on proceeds invested. State, if true, that you
used the treasury stock method for purposes of evaluating the effect of the
warrants on diluted shares outstanding. Describe the methodologies
you used to allocate the transaction process among the securities you may issue
to the Treasury Department (relative fair value) and to accrete the discount on
the preferred stock.
Response:
In the
Pro Forma Condensed Consolidated Statements of Income, we have included the pro
forma effect of the interest savings from the reduction of short-term
borrowings, and in the accompanying footnotes, we describe relevant assumptions
and methodologies used. Specifically, in Note (3), we describe the
use of proceeds to reduce short-term borrowings and in Notes (5) and (6), we
describe the methodologies used such as the treasury stock method, relative fair
value and accretion of Senior Preferred Shares using the constant yield
approach.
If
you do not believe the sale of the securities to the Treasury Department will
have a material impact on your balance sheet or income statement, provide us
with your quantitative and qualitative analysis of your
conclusion. In your analysis, discuss the impact to each of the items
noted above as well as to total shareholders’ equity and your capital
ratios.
United
States Securities and Exchange Commission
November
25, 2008
Page
5
Response:
As
indicated above, we have revised the Proxy Statement to include the Pro Forma
Financial Statements attached hereto as Exhibit
A.
2.
Please
discuss how your participation in the Capital Purchase Program
may:
a.
impact
the holders of any outstanding senior classes of your
securities;
b.
impact
the rights of your existing common shareholders;
and
c.
dilute
the interests of your existing common
shareholders.
Response:
Bullet Point No.
(a)
As
disclosed in the last sentence of the second paragraph under “Who can vote?” (page 3 of the
preliminary Proxy Statement), the common shares are the only class of stock of
Peoples presently outstanding. We do not presently have any senior
classes of securities outstanding and, therefore, our participation in the
Capital Purchase Program would have no impact on holders of any outstanding
senior classes of our securities.
We have
also disclosed in the first sentence of the second paragraph under “Proposed Amendment to Article
FOURTH” (page 12 of the preliminary Proxy Statement) that the common
shares are the only class of stock of Peoples presently
outstanding.
Bullet Point No.
(b)
As
disclosed in the second paragraph under “Proposed Amendment to Article
FOURTH” on page 12 of the preliminary Proxy Statement, the actual effect
of the issuance of any preferred shares upon the rights of holders of common
shares cannot be stated until the Board of Directors of Peoples determines the
specific rights of any preferred shares. However, the effects might
include, among other things, restricting dividends on the common shares,
diluting the voting power of the common shares, reducing the market price of the
common shares or impairing the liquidation rights of the common shares without
further action by the shareholders.
United
States Securities and Exchange Commission
November
25, 2008
Page
6
The
preferred shares could be issued so as to make it more difficult for a third
party to acquire a majority of Peoples’ outstanding voting stock or otherwise
effect a change of control. However, as stated in the second
paragraph under “Potential
Anti-Takeover Effect of Preferred Shares” on page 9 of the preliminary
Proxy Statement, the Board of Directors does not intend to issue any preferred
shares for any defensive or anti-takeover purpose or with features intended
specifically to make any attempted acquisition of Peoples more
difficult.
The
effects upon the rights of holders of Peoples’ common shares of the issuance of
Senior Preferred Shares and the Warrant under the Capital Purchase Program are
discussed under “Terms of the
Capital Purchase Program” (pages 7 through 9 of the preliminary Proxy
Statement). These effects include:
·
Restrictions
on Common Share Dividends and Repurchases. As long as
the Senior Preferred Shares are outstanding, Peoples would not be
permitted to declare or pay dividends on any common shares, nor would
Peoples be permitted to repurchase or redeem any common shares, unless all
accrued and unpaid dividends for all past dividend periods on the Senior
Preferred Shares are fully paid. Unless the Senior Preferred
Shares have been transferred or redeemed in whole, until the third
anniversary of the Treasury’s investment, any increase in common share
dividends would be prohibited without the prior approval of the
Treasury. In addition, unless the Senior Preferred Shares have
been transferred or redeemed in whole, until the third anniversary of the
Treasury’s investment, the Treasury’s consent would be required for any
common share repurchases other than repurchases of common shares in
connection with the administration of any employee benefit plan in the
ordinary course of business and consistent with past