Shares of Peoples Bancorp of North Carolina, Inc. (PEBK) have lost 2.3%, against a 0.9% gain in the S&P 500 Index over the same period. Performance over the past month shows a similar trend, with PEBK shares down 2% while the S&P 500 advanced 1.4%.Peoples Bancorp’s Earnings SnapshotPeoples Bancorp reported net earnings of $6.6 million for the fourth quarter of 2025, compared with $3.6 million in the year-ago quarter, reflecting an increase of 86.4%. The year-over-year improvement in fourth-quarter net earni ...

Financial Performance - Net earnings for Q4 2025 were $6.6 million, or $1.25 per share, compared to $3.6 million, or $0.67 per share, in Q4 2024, representing an 83.33% increase in earnings per share [3]. - Net earnings for the year ended December 31, 2025, were $19,830,000, an increase from $16,353,000 in 2024, representing a growth of about 21.1% [24]. - Basic net earnings per share increased to $3.74 in 2025 from $3.08 in 2024, reflecting a rise of approximately 21.4% [24]. - Cash dividends for the year ended December 31, 2025, were $0.96 per share, up from $0.92 per share in the prior year, indicating a 4.35% increase [5]. - Cash dividends per share increased to $0.96 in 2025 from $0.92 in 2024, reflecting a growth of about 4.3% [24]. Income and Revenue - Net interest income for Q4 2025 was $15.4 million, up from $13.8 million in Q4 2024, reflecting an increase of 11.59% [4]. - Non-interest income for Q4 2025 was $9.6 million, compared to $7.1 million in Q4 2024, marking a 35.21% increase, primarily due to a $3.0 million net gain on the NCDOT acquisition [6]. - Non-interest income for the year ended December 31, 2025, totaled $30,980,000, compared to $27,715,000 in 2024, reflecting a growth of approximately 8.2% [24]. Assets and Loans - Total assets increased to $1,702,148,000 as of December 31, 2025, compared to $1,651,962,000 in 2024, reflecting a growth of approximately 3.0% [20]. - Total loans reached $1.20 billion as of December 31, 2025, an increase of 5.26% from $1.14 billion at the end of 2024 [5]. - Net loans rose to $1,194,262,000 in 2025, up from $1,128,409,000 in 2024, representing an increase of about 5.8% [20]. - Total deposits were $1.51 billion as of December 31, 2025, compared to $1.48 billion at the end of 2024, reflecting a growth of 2.03% [17]. - Total deposits increased to $1,509,225,000 in 2025, compared to $1,484,731,000 in 2024, marking a growth of approximately 1.6% [20]. - Total deposits increased to $1,550,863 million from $1,493,385 million, reflecting a growth of approximately 3.8% [27]. Asset Quality and Credit Losses - Non-performing assets decreased to $4.2 million, or 0.25% of total assets, from $4.8 million, or 0.29% of total assets, year-over-year [15]. - The provision for credit losses for the year ended December 31, 2025, was an expense of $938,000, compared to a recovery of $285,000 in 2024 [9]. - The provision for credit losses was $353,000 for the three months ended December 31, 2025, compared to a reversal of $205,000 in 2024 [24]. - Non-accrual loans decreased to $4,176 million from $4,440 million, indicating a reduction in credit risk [27]. - The percentage of loans classified as Risk Grade 1 (excellent quality) decreased to 0.24% from 0.33% [28]. - Allowance for credit losses on loans to non-performing assets ratio improved to 242.48%, compared to 207.84% in the previous year [27]. Return Ratios - Return on average assets rose to 1.52%, compared to 0.85% in the prior year, representing an increase of 78.8% [27]. - Return on average shareholders' equity reached 17.25%, up from 10.77%, marking a significant increase of 60.5% [27]. Margins - Net interest margin for the year ended December 31, 2025, was 3.57%, up from 3.36% in 2024 [5]. - Net interest margin improved to 3.62%, up from 3.39% in the previous year, indicating a 6.8% increase [27].

NEWTON, NC / ACCESS Newswire / January 26, 2026 / Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) (the "Company"), the parent company of Peoples Bank (the "Bank"), reported fourth quarter and full year 2025 results with highlights as follows:Fourth quarter 2025 highlights:Net earnings were $6.6 million or $1.25 per share and $1.21 per diluted share for the three months ended December 31, 2025, as compared to $3.6 million or $0.67 per share and $0.65 per diluted share for the same period one year ag ...

Peoples Bancorp of North Carolina, Inc.’s (PEBK) investors have been experiencing some short-term gains from the stock lately, despite its bumpy ride over recent months. Shares of the Newton, NC-based bank holding company for Peoples Bank, a state-chartered commercial bank, gained 25.6% compared with the industry’s 4.7% rise in the past six months. It has also outperformed the sector and the S&P 500’s gain of 5.9% and 11.4%, respectively, in the same time frame.A major recent development of PEBK includes th ...

Core Insights - Community banks are facing competitive deposit pricing, high operating costs, and a focus on disciplined credit oversight, with Peoples Bancorp of North Carolina, Inc. (PEBK) and Bank of the James Financial Group, Inc. (BOTJ) as notable examples of differing operational models [1][2] Company Overview - PEBK operates primarily through Peoples Bank and has a layered business model that includes investment services, real estate advisory, appraisal management, and real estate holdings, broadening client engagement beyond traditional banking [1] - BOTJ is anchored by Bank of the James and diversifies its offerings through a mortgage division, an insurance agency, and investment advisory services, creating multiple fee-based revenue streams alongside its core banking operations [1][2] Stock Performance & Valuation - Over the past three months, PEBK has outperformed BOTJ with a stock increase of 19.6% compared to BOTJ's 18.7%, but in the past year, BOTJ has outperformed with a gain of 23.5% versus PEBK's 18.8% [3] - PEBK's trailing 12-month price-to-sales (P/S) ratio is 1.8X, slightly above its five-year median of 1.7X, while BOTJ's P/S ratio is 1.4X, above its five-year median of 1.2X; both companies are considered inexpensive compared to the Zacks Finance sector average of 7.1X [4] Factors Driving Peoples Bancorp's Stock - PEBK benefits from a favorable rate and funding environment, with easing deposit-cost pressures and solid loan growth contributing to profitability without aggressive balance sheet expansion [6] - The bank's nonbank contributions, particularly from its appraisal-management platform, have driven noninterest revenue, offsetting weaker performance in other fee lines [7] - PEBK maintains a disciplined capital-return approach, sustaining regular cash dividends and encouraging long-term participation through reinvestment plans, indicating confidence in cash-flow stability [8] Factors Driving Bank of the James' Stock - BOTJ is experiencing a favorable funding and margin environment, aided by tighter deposit pricing discipline and strategic balance-sheet actions that enhance net interest margins [9] - The bank's diversified business model generates non-interest income from commercial treasury management, mortgage banking, and advisory fees, broadening revenue sources [10] - Investor confidence in BOTJ is supported by a growth strategy focused on sound credit oversight, with an emphasis on conservative underwriting and asset quality monitoring [11] Investment Recommendation - PEBK is currently viewed as a more attractive investment opportunity compared to BOTJ, with stronger recent performance and a favorable risk-reward profile [12][15] - Despite BOTJ's stronger one-year gain and diversified revenue streams, its valuation has increased, reducing the margin of safety compared to PEBK, which remains attractively priced relative to sector norms [14][15]

Earnings and Financial Performance - For the three months ended September 30, 2025, the basic earnings per share was $0.70, with net earnings of $3,692,000 and a weighted average of 5,309,028 shares outstanding[37]. - For the nine months ended September 30, 2025, the basic earnings per share was $2.49, with net earnings of $13,197,000 and a weighted average of 5,303,953 shares outstanding[38]. - The diluted earnings per share for the three months ended September 30, 2025, was $0.67, with a total of 5,471,622 shares considered[37]. - The diluted earnings per share for the nine months ended September 30, 2025, was $2.41, with a total of 5,469,553 shares considered[39]. - Net earnings for the three months ended September 30, 2025, were $3.7 million, a decrease from $4.0 million in the prior year period[127]. - Net earnings for the nine months ended September 30, 2025, increased to $13.2 million from $12.8 million in the prior year period[128]. Investment Securities - The total fair value of investment securities available for sale as of September 30, 2025, was $376,868,000, with unrealized losses of $38,362,000[41]. - The amortized cost of investment securities available for sale was $414.9 million, with a fair value of $376.9 million as of September 30, 2025[44]. - The Company reported unrealized gains and losses on investment securities as the only component of other comprehensive income[33]. - The Company has not adopted several recent Accounting Standards Updates (ASUs) that may impact financial statements, including ASU 2023-09 and ASU 2024-03, effective December 15, 2024, and 2026 respectively[30][31]. - The Company’s accounting policies have not seen significant changes since December 31, 2024[29]. Loans and Credit Quality - The total net loans increased to $1,173.2 million as of September 30, 2025, compared to $1,128.4 million at December 31, 2024, reflecting a growth of approximately 4.0%[46]. - Real estate loans accounted for $1,105.9 million of total loans as of September 30, 2025, up from $1,048.0 million at December 31, 2024, indicating a growth of about 5.4%[46]. - The company has a diversified loan portfolio, with a significant portion collateralized by real estate, which is subject to market fluctuations[46]. - Non-accrual loans totaled $5.1 million as of September 30, 2025, compared to $4.4 million at December 31, 2024[50][51]. - The total allowance for credit losses, including loan commitments, is $11,382,000 as of September 30, 2025, indicating a comprehensive approach to managing credit risk[66]. - The allowance for credit losses increased from $9,792,000 at the beginning of the three months ended September 30, 2025, to $10,206,000 at the end of the period, reflecting a provision for loan losses of $612,000[66]. - The charge-offs for the three months ended September 30, 2025, amounted to $249,000, while recoveries were $51,000, resulting in a net charge-off of $198,000[66]. - The bank employs a loan grading system to monitor credit quality, which is reviewed monthly by the Bank Board to ensure appropriate reserve levels[62]. Deposits and Capital - Total deposits increased to $1.55 billion as of September 30, 2025, up from $1.48 billion at December 31, 2024, with core deposits at $1.39 billion[175]. - Shareholders' equity rose to $149.5 million, or 8.60% of total assets, compared to $130.6 million, or 7.90% of total assets, at December 31, 2024[189]. - The Company's Tier 1 capital ratio was 14.83% at September 30, 2025, compared to 14.47% at December 31, 2024[194]. - The total risk-based capital ratio was 15.70% at September 30, 2025, up from 15.34% at December 31, 2024[194]. - The liquidity ratio improved to 30.14% at September 30, 2025, compared to 28.16% at December 31, 2024[187]. Interest Income and Expense - Net interest income for the three months ended September 30, 2025, is $15,119,000, compared to $13,549,000 for the same period in 2024, reflecting an increase[116]. - Interest income for the three months ended September 30, 2025, was $21.4 million, compared to $20.5 million for the same period in 2024[132]. - The average yield on loans for the nine months ended September 30, 2025, was 5.76%, compared to 5.65% for the same period in 2024, while the average yield on investment securities available for sale decreased to 3.19% from 3.37%[139]. - Interest expense decreased to $18.4 million for the nine months ended September 30, 2025, from $20.1 million in 2024, primarily due to lower rates on interest-bearing liabilities[140]. - The average rate paid on interest-bearing liabilities was 2.20% for the nine months ended September 30, 2025, down from 2.46% in the prior year[140]. Non-Interest Income and Expense - Non-interest income for the nine months ended September 30, 2025, was $21.3 million, a 2.9% increase from $20.7 million in the same period in 2024[149]. - Non-interest expense for the three months ended September 30, 2025, was $16.9 million, an increase of 12.7% compared to $15.0 million in the same period in 2024[150]. - The increase in non-interest expense for the nine months ended September 30, 2025, was primarily due to a $1.6 million increase in appraisal management fee expense[151]. Legal and Compliance - The company conducted an evaluation of its disclosure controls and procedures, concluding they are effective for timely decision-making regarding material information[198]. - No changes in internal control over financial reporting have occurred that materially affect the company's reporting[198]. - The company is not involved in any material pending legal proceedings, only routine proceedings in the ordinary course of business[199].

Core Viewpoint - Peoples Bancorp of North Carolina, Inc. (PEBK) experienced a 9.9% increase in share price following its earnings report for Q3 2025, outperforming the S&P 500 Index's 1% gain during the same period [1] Earnings Summary - For Q3 2025, Peoples Bancorp reported net earnings of $3.7 million, or $0.70 per share, a decrease of 6.7% from $3.9 million, or $0.74 per share, in the same quarter of the previous year, primarily due to higher provisions for credit losses and rising non-interest expenses [2] - Year-to-date net earnings for the nine months ended Sept. 30, 2025, were $13.2 million, or $2.49 per share, reflecting a 3.1% increase from $12.8 million, or $2.41 per share, in the same period of 2024 [4] Income and Expenses - Net interest income rose 11.6% to $15.1 million from $13.5 million a year earlier, supported by a wider net interest margin (NIM) of 3.58% compared to 3.35% [3] - Non-interest income remained stable at $7.1 million, with a 17.2% increase in appraisal management fees offset by a 21.1% decline in miscellaneous income [3] - Non-interest expenses increased by 12.7% to $16.9 million from $15 million, driven by higher legal, debit card, and salary costs [3] Loan and Deposit Growth - Total loans increased to $1.18 billion as of Sept. 30, 2025, up from $1.14 billion at year-end 2024, while total deposits rose to $1.55 billion from $1.48 billion during the same period [5] - Core deposits were $1.39 billion, representing 89.65% of total deposits as of Sept. 30, 2025, compared to $1.34 billion or 90.17% at the end of 2024 [5] Asset Quality and Capital - Non-performing assets totaled $5.1 million, accounting for 0.29% of total assets, unchanged from the end of 2024 [7] - The allowance for credit losses on loans was $10.2 million, or 0.86% of total loans, slightly higher than $9.9 million, or 0.88%, at the end of 2024 [7] - Shareholders' equity increased to $149.5 million as of Sept. 30, 2025, from $130.6 million at the end of 2024, driven by a reduction in unrealized losses on securities [7] Management Commentary - The decline in quarterly earnings was attributed to higher provisions for credit losses and increased non-interest expenses, although core banking operations remained strong [8] - Management emphasized that asset quality and capital ratios remained solid, with a focus on prudent loan and deposit growth [9] Legal Developments - A significant legal ruling in September 2025 favored the bank in its dispute with the North Carolina Department of Transportation, resulting in an expected gain of $3.6 million [12]

[Earnings Release Announcement](index=1&type=section&id=Earnings%20Release%20Announcement) Peoples Bancorp of North Carolina, Inc. announced its third quarter 2025 results, providing key financial highlights and contact information [Company and Contact Information](index=1&type=section&id=Company%20and%20Contact%20Information) Peoples Bancorp of North Carolina, Inc. (NASDAQ: PEBK) is the parent company of Peoples Bank, with key contacts for executive leadership - Peoples Bancorp of North Carolina, Inc. (NASDAQ: PEBK) is the parent company of Peoples Bank[2](index=2&type=chunk) - Contact persons are **William D. Cable, Sr.** (President and CEO) and **Jeffrey N. Hooper** (EVP and CFO)[1](index=1&type=chunk) [Overall Highlights](index=1&type=section&id=Overall%20Highlights) The company reported key financial highlights for Q3 2025 and year-to-date periods, including net earnings, net interest margin, and asset growth Third Quarter 2025 Key Financial Highlights | Metric | Q3 2025 | Q3 2024 | Change | | :--------------------------------- | :---------- | :---------- | :----- | | Net earnings | $3.7 million | $4.0 million | -$0.3 million | | Basic EPS | $0.70 | $0.74 | -$0.04 | | Diluted EPS | $0.67 | $0.72 | -$0.05 | | Net interest margin | 3.58% | 3.35% | +0.23% | Year-to-Date September 30, 2025 Key Financial Highlights | Metric | YTD 2025 | YTD 2024 | Change | | :--------------------------------- | :---------- | :---------- | :----- | | Net earnings | $13.2 million | $12.8 million | +$0.4 million | | Basic EPS | $2.49 | $2.41 | +$0.08 | | Diluted EPS | $2.41 | $2.33 | +$0.08 | | Cash dividends per share | $0.76 | $0.73 | +$0.03 | | Total loans (period end) | $1.18 billion | $1.14 billion (Dec 2024) | +$0.04 billion | | Non-performing assets (period end) | $5.1 million (0.29% of assets) | $4.8 million (0.29% of assets) (Dec 2024) | +$0.3 million | | Total deposits (period end) | $1.55 billion | $1.48 billion (Dec 2024) | +$0.07 billion | | Core deposits (period end) | $1.39 billion (89.65% of total) | $1.34 billion (90.17% of total) (Dec 2024) | +$0.05 billion | | Net interest margin | 3.55% | 3.34% | +0.21% | [Third Quarter 2025 Financial Performance](index=1&type=section&id=Third%20Quarter%202025%20Financial%20Performance) Third quarter 2025 performance saw a decrease in net earnings due to higher credit loss provisions and non-interest expenses, partially offset by increased net interest and non-interest income [Net Earnings](index=1&type=section&id=Third%20Quarter%20Net%20Earnings) Net earnings for Q3 2025 decreased to $3.7 million, primarily due to increased provision for credit losses and non-interest expense, despite higher net interest and non-interest income Q3 Net Earnings (YoY) | Metric | Q3 2025 | Q3 2024 | Change | | :--------------------------------- | :---------- | :---------- | :----- | | Net earnings | $3.7 million | $4.0 million | -$0.3 million | | Basic EPS | $0.70 | $0.74 | -$0.04 | | Diluted EPS | $0.67 | $0.72 | -$0.05 | - The decrease in Q3 net earnings was attributed to increases in the provision for credit losses and non-interest expense, partially offset by increases in net interest income and non-interest income[3](index=3&type=chunk) [Net Interest Income and Provision for Credit Losses](index=1&type=section&id=Third%20Quarter%20Net%20Interest%20Income%20and%20Provision%20for%20Credit%20Losses) Net interest income increased by $1.6 million to $15.1 million, while the provision for credit losses significantly rose to $530,000, mainly due to construction loan reserves Q3 Net Interest Income & Provision (YoY) | Metric | Q3 2025 | Q3 2024 | Change | | :--------------------------------- | :---------- | :---------- | :----- | | Net interest income | $15.1 million | $13.5 million | +$1.6 million | | Interest income | $21.4 million | $20.5 million | +$0.9 million | | Interest expense | $6.3 million | $6.9 million | -$0.6 million | | Provision for credit losses | $530,000 | $297,000 | +$233,000 | | Net interest income after provision | $14.6 million | $13.3 million | +$1.3 million | - The increase in interest income was primarily due to a **$1.1 million increase in interest income and fees on loans** and a **$401,000 increase in interest income on balances due from banks**[4](index=4&type=chunk) - The increase in the provision for credit losses is primarily attributable to an increase in reserves on construction loans[4](index=4&type=chunk) [Non-Interest Income](index=2&type=section&id=Third%20Quarter%20Non-Interest%20Income) Non-interest income remained stable at $7.1 million in Q3 2025, with increased appraisal management fees offset by decreases in miscellaneous non-interest income and service charges Q3 Non-Interest Income (YoY) | Metric | Q3 2025 | Q3 2024 | Change | | :--------------------------------- | :---------- | :---------- | :----- | | Total non-interest income | $7.1 million | $7.1 million | $0 | | Appraisal management fee income | $3.6 million | $3.1 million | +$0.5 million | | Miscellaneous non-interest income | $1.5 million | $2.0 million | -$0.5 million | | Service charges and fees on deposits | $1.4 million | $1.5 million | -$0.1 million | - The increase in appraisal management fee income was due to an increase in appraisal volume[6](index=6&type=chunk) - The decrease in miscellaneous non-interest income was primarily due to a decrease in income on small business investment company (SBIC) investments[6](index=6&type=chunk) [Non-Interest Expense](index=2&type=section&id=Third%20Quarter%20Non-Interest%20Expense) Non-interest expense increased by $1.9 million to $16.9 million in Q3 2025, driven by higher other non-interest expenses, salaries, and appraisal management fees, partially offset by lower occupancy expense Q3 Non-Interest Expense (YoY) | Metric | Q3 2025 | Q3 2024 | Change | | :--------------------------------- | :---------- | :---------- | :----- | | Total non-interest expense | $16.9 million | $15.0 million | +$1.9 million | | Other non-interest expense | $4.7 million | $3.5 million | +$1.2 million | | Salaries and employee benefits | $7.1 million | $6.6 million | +$0.5 million | | Appraisal management fee expense | $2.9 million | $2.4 million | +$0.5 million | | Occupancy expense | $2.3 million | $2.4 million | -$0.2 million | - The decrease in occupancy expense was primarily due to the **$362,000 write-off of leasehold improvements** for the Bank's former branch in Cary, North Carolina during Q3 2024[7](index=7&type=chunk) [Income Tax Expense](index=2&type=section&id=Third%20Quarter%20Income%20Tax%20Expense) Income tax expense for Q3 2025 decreased to $1.1 million, with the effective tax rate falling to 22.95%, primarily due to a prior-year deferred tax asset revaluation Q3 Income Tax Expense (YoY) | Metric | Q3 2025 | Q3 2024 | Change | | :--------------------------------- | :---------- | :---------- | :----- | | Income tax expense | $1.1 million | $1.4 million | -$0.3 million | | Effective tax rate | 22.95% | 25.76% | -2.81% | - The decrease in the effective tax rate was primarily due to the revaluation of the deferred tax asset during Q3 2024 due to upcoming reductions in the North Carolina corporate income tax rate[12](index=12&type=chunk) [Nine Months Ended September 30, 2025 Financial Performance](index=2&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202025%20Financial%20Performance) Year-to-date net earnings increased, driven by higher net interest and non-interest income, partially offset by increased credit loss provisions and non-interest expenses [Net Earnings](index=2&type=section&id=YTD%20Net%20Earnings) Net earnings for the nine months ended September 30, 2025, increased to $13.2 million, primarily due to higher net interest and non-interest income, partially offset by increased credit loss provisions and non-interest expenses YTD Net Earnings (YoY) | Metric | YTD 2025 | YTD 2024 | Change | | :--------------------------------- | :---------- | :---------- | :----- | | Net earnings | $13.2 million | $12.8 million | +$0.4 million | | Basic EPS | $2.49 | $2.41 | +$0.08 | | Diluted EPS | $2.41 | $2.33 | +$0.08 | - The increase in YTD net earnings is primarily attributable to increases in net interest income and non-interest income, partially offset by increases in the provision for credit losses and non-interest expense[8](index=8&type=chunk) [Net Interest Income and Provision for Credit Losses](index=2&type=section&id=YTD%20Net%20Interest%20Income%20and%20Provision%20for%20Credit%20Losses) Net interest income for the nine months ended September 30, 2025, increased by $3.4 million to $43.7 million, while the provision for credit losses shifted to an expense of $585,000, mainly due to loan growth YTD Net Interest Income & Provision (YoY) | Metric | YTD 2025 | YTD 2024 | Change | | :--------------------------------- | :---------- | :---------- | :----- | | Net interest income | $43.7 million | $40.3 million | +$3.4 million | | Interest income | $62.1 million | $60.3 million | +$1.8 million | | Interest expense | $18.4 million | $20.1 million | -$1.7 million | | Provision for credit losses | $585,000 | -$80,000 (recovery) | +$665,000 | | Net interest income after provision | $43.1 million | $40.3 million | +$2.8 million | - The increase in YTD net interest income was due to a **$1.7 million increase in interest income** (primarily from loans) and a **$1.6 million decrease in interest expense** (due to lower rates on interest-bearing liabilities)[9](index=9&type=chunk) - The increase in the provision for credit losses is primarily attributable to a **$59.3 million increase in total loans** from September 30, 2024, to September 30, 2025[9](index=9&type=chunk) [Non-Interest Income](index=2&type=section&id=YTD%20Non-Interest%20Income) Non-interest income for the nine months ended September 30, 2025, increased by $0.6 million to $21.3 million, primarily driven by higher appraisal management fee income, partially offset by reduced miscellaneous non-interest income YTD Non-Interest Income (YoY) | Metric | YTD 2025 | YTD 2024 | Change | | :--------------------------------- | :---------- | :---------- | :----- | | Total non-interest income | $21.3 million | $20.7 million | +$0.6 million | | Appraisal management fee income | $10.6 million | $8.7 million | +$1.9 million | | Miscellaneous non-interest income | $5.1 million | $6.3 million | -$1.2 million | - The increase in appraisal management fee income was due to an increase in appraisal volume[10](index=10&type=chunk) [Non-Interest Expense](index=2&type=section&id=YTD%20Non-Interest%20Expense) Non-interest expense for the nine months ended September 30, 2025, increased by $2.6 million to $47.3 million, mainly due to higher appraisal management fees, salaries, and other non-interest expenses, partially offset by lower occupancy expense YTD Non-Interest Expense (YoY) | Metric | YTD 2025 | YTD 2024 | Change | | :--------------------------------- | :---------- | :---------- | :----- | | Total non-interest expense | $47.3 million | $44.7 million | +$2.6 million | | Appraisal management fee expense | $8.4 million | $6.9 million | +$1.5 million | | Salaries and employee benefits | $21.1 million | $20.4 million | +$0.7 million | | Other non-interest expense | $11.5 million | $10.7 million | +$0.8 million | | Occupancy expense | $6.4 million | $6.7 million | -$0.3 million | - The decrease in occupancy expense was primarily due to the **$362,000 write-off of leasehold improvements** for the Bank's former branch in Cary, North Carolina during Q3 2024[11](index=11&type=chunk) [Income Tax Expense](index=2&type=section&id=YTD%20Income%20Tax%20Expense) Income tax expense for the nine months ended September 30, 2025, increased to $3.9 million, with the effective tax rate rising to 22.77%, primarily due to a prior-year interest receivable from a tax settlement YTD Income Tax Expense (YoY) | Metric | YTD 2025 | YTD 2024 | Change | | :--------------------------------- | :---------- | :---------- | :----- | | Income tax expense | $3.9 million | $3.5 million | +$0.4 million | | Effective tax rate | 22.77% | 21.71% | +1.06% | - The increase in the effective tax rate is primarily due to a **$322,000 interest receivable** booked during YTD 2024 on a deposit for taxes paid prior to a settlement with the North Carolina Department of Revenue ("NCDOR")[12](index=12&type=chunk) [Financial Position and Asset Quality](index=3&type=section&id=Financial%20Position%20and%20Asset%20Quality) The company's financial position improved with increased total assets and deposits, while asset quality metrics remained stable with a slight rise in non-performing assets [Balance Sheet Overview](index=3&type=section&id=Balance%20Sheet%20Overview) Total assets increased to $1.74 billion at September 30, 2025, driven by growth in total loans, while available-for-sale securities experienced a slight decrease Key Balance Sheet Items (Period End) | Metric | Sep 30, 2025 | Dec 31, 2024 | Change | | :--------------------------------- | :----------- | :----------- | :----- | | Total assets | $1.74 billion | $1.65 billion | +$0.09 billion | | Available for sale securities | $376.9 million | $388.0 million | -$11.1 million | | Total loans | $1.18 billion | $1.14 billion | +$0.04 billion | [Non-Performing Assets](index=3&type=section&id=Non-Performing%20Assets) Non-performing assets increased slightly to $5.1 million at September 30, 2025, maintaining 0.29% of total assets, with increases primarily in residential and commercial mortgage loans Non-Performing Assets (Period End) | Metric | Sep 30, 2025 | Dec 31, 2024 | Change | | :--------------------------------- | :----------- | :----------- | :----- | | Non-performing assets | $5.1 million | $4.8 million | +$0.3 million | | Non-performing assets to total assets | 0.29% | 0.29% | 0% | | Residential mortgage loans | $4.1 million | $3.7 million | +$0.4 million | | Commercial mortgage loans | $1.0 million | $463,000 | +$0.5 million | [Allowance for Credit Losses](index=3&type=section&id=Allowance%20for%20Credit%20Losses) The allowance for credit losses on loans increased to $10.2 million (0.86% of total loans) at September 30, 2025, primarily due to a $45.0 million increase in total loans, with management deeming the current allowance adequate Allowance for Credit Losses (Period End) | Metric | Sep 30, 2025 | Dec 31, 2024 | Change | | :--------------------------------- | :----------- | :----------- | :----- | | Allowance for credit losses on loans | $10.2 million | $10.0 million | +$0.2 million | | Allowance for credit losses on loans to total loans | 0.86% | 0.88% | -0.02% | | Allowance for credit losses on unfunded commitments | $1.2 million | $1.1 million | +$0.1 million | - The increase in allowance for credit losses on loans was primarily due to a **$45.0 million increase in total loans** from December 31, 2024, to September 30, 2025[15](index=15&type=chunk) - Management believes the current level of the allowance for credit losses is adequate[15](index=15&type=chunk) [Deposits and Funding](index=3&type=section&id=Deposits%20and%20Funding) Total deposits grew to $1.55 billion at September 30, 2025, with core deposits increasing to $1.39 billion, representing 89.65% of total deposits and serving as a positive low-cost funding source Deposits (Period End) | Metric | Sep 30, 2025 | Dec 31, 2024 | Change | | :--------------------------------- | :----------- | :----------- | :----- | | Total deposits | $1.55 billion | $1.48 billion | +$0.07 billion | | Core deposits (non-GAAP) | $1.39 billion | $1.34 billion | +$0.05 billion | | Core deposits as % of total deposits | 89.65% | 90.17% | -0.52% | | Certificates of deposit > $250,000 | $160.7 million | $145.9 million | +$14.8 million | - Management believes it is useful to calculate and present core deposits because of the positive impact this low cost funding source provides to the Bank's overall cost of funds and profitability[16](index=16&type=chunk) [Shareholders' Equity](index=3&type=section&id=Shareholders%27%20Equity) Shareholders' equity increased to $149.5 million, or 8.60% of total assets, at September 30, 2025, primarily due to a decrease in the unrealized loss on available-for-sale investment securities Shareholders' Equity (Period End) | Metric | Sep 30, 2025 | Dec 31, 2024 | Change | | :--------------------------------- | :----------- | :----------- | :----- | | Shareholders' equity | $149.5 million | $130.6 million | +$18.9 million | | Shareholders' equity as % of total assets | 8.60% | 7.90% | +0.70% | - The increase in shareholders' equity is primarily due to a decrease in the unrealized loss on investment securities available for sale due to rate changes[17](index=17&type=chunk) [Other Significant Events and Corporate Information](index=3&type=section&id=Other%20Significant%20Events%20and%20Corporate%20Information) This section details a significant property acquisition settlement and provides an overview of company operations and forward-looking statement disclaimers [Mooresville Branch Property Acquisition Settlement](index=3&type=section&id=Mooresville%20Branch%20Property%20Acquisition%20Settlement) A September 2025 bench ruling ordered the NCDOT to pay the Bank $5.1 million for its Mooresville branch property, with an expected additional $3.6 million gain upon formal order receipt - A September 2025 bench ruling ordered the NCDOT to pay the Bank **$5.1 million** for its Mooresville branch property, including a **$1.5 million payment received in 2023**[18](index=18&type=chunk) - The Bank expects to realize an additional **$3.6 million gain** on the involuntary disposal of this property after receiving the formal written order for the September 2025 bench ruling[18](index=18&type=chunk) - The Bank recorded **$553,000 in legal expenses** associated with this settlement as of September 30, 2025[18](index=18&type=chunk) [Company Operations and Forward-Looking Statements](index=3&type=section&id=Company%20Operations%20and%20Forward-Looking%20Statements) Peoples Bank operates 15 banking offices and loan production offices across North Carolina, with the report concluding with a standard disclaimer on forward-looking statements and associated risks - Peoples Bank operates **15 banking offices and loan production offices** in multiple North Carolina counties[19](index=19&type=chunk) - The Company's common stock is listed on the Nasdaq Global Market under the symbol "**PEBK**"[19](index=19&type=chunk) - Forward-looking statements involve risks and uncertainties, and actual results could differ materially due to factors such as market competition, interest rate changes, economic conditions, regulatory changes, and monetary/fiscal policies[19](index=19&type=chunk) [Consolidated Financial Statements and Supplementary Data](index=4&type=section&id=Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the consolidated balance sheets, statements of income, and key financial highlights, offering a comprehensive overview of the company's financial performance and position [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) The consolidated balance sheets provide a detailed breakdown of assets, liabilities, and shareholders' equity for September 30, 2025, December 31, 2024, and September 30, 2024, showing growth in total assets and deposits Consolidated Balance Sheets (Selected Items, in thousands) | Metric | Sep 30, 2025 | Dec 31, 2024 | Sep 30, 2024 | | :--------------------------------- | :----------- | :----------- | :----------- | | Total assets | $1,738,336 | $1,651,962 | $1,661,650 | | Cash and cash equivalents | $117,016 | $59,266 | $73,162 | | Total securities | $379,489 | $390,731 | $401,326 | | Net loans | $1,173,236 | $1,128,409 | $1,113,561 | | Total deposits | $1,552,890 | $1,484,731 | $1,479,977 | | Total liabilities | $1,588,869 | $1,521,399 | $1,525,368 | | Total shareholders' equity | $149,467 | $130,563 | $136,282 | [Consolidated Statements of Income](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) The consolidated statements of income present the financial performance for the three and nine months ended September 30, 2025, and 2024, detailing interest income, interest expense, net interest income, provision for credit losses, non-interest income, non-interest expenses, and net earnings Consolidated Statements of Income (Selected Items, Q3, in thousands) | Metric | Q3 2025 | Q3 2024 | | :--------------------------------- | :----------- | :----------- | | Total interest income | $21,405 | $20,467 | | Total interest expense | $6,286 | $6,918 | | NET INTEREST INCOME | $15,119 | $13,549 | | PROVISION FOR CREDIT LOSSES | $530 | $297 | | Total non-interest income | $7,127 | $7,095 | | Total non-interest expense | $16,924 | $15,016 | | NET EARNINGS | $3,692 | $3,958 | | Basic net earnings per share | $0.70 | $0.74 | | Diluted net earnings per share | $0.67 | $0.72 | Consolidated Statements of Income (Selected Items, YTD, in thousands) | Metric | YTD 2025 | YTD 2024 | | :--------------------------------- | :----------- | :----------- | | Total interest income | $62,095 | $60,347 | | Total interest expense | $18,435 | $20,078 | | NET INTEREST INCOME | $43,660 | $40,269 | | PROVISION FOR CREDIT LOSSES | $585 | -$80 | | Total non-interest income | $21,349 | $20,654 | | Total non-interest expense | $47,337 | $44,663 | | NET EARNINGS | $13,197 | $12,794 | | Basic net earnings per share | $2.49 | $2.41 | | Diluted net earnings per share | $2.41 | $2.33 | [Financial Highlights and Key Ratios](index=6&type=section&id=FINANCIAL%20HIGHLIGHTS) This section provides key financial metrics and ratios, including average balances, net interest margin, return on assets, return on equity, and asset quality indicators, offering a comprehensive view of the company's financial health and performance trends Selected Key Data (Q3 YoY) | Metric | Q3 2025 | Q3 2024 | | :--------------------------------- | :---------- | :---------- | | Net interest margin (tax equivalent) | 3.58% | 3.35% | | Return on average assets | 0.85% | 0.95% | | Return on average shareholders' equity | 10.28% | 12.35% | | Average shareholders' equity to total average assets | 8.29% | 7.71% | Selected Key Data (YTD YoY) | Metric | YTD 2025 | YTD 2024 | | :--------------------------------- | :---------- | :---------- | | Net interest margin (tax equivalent) | 3.55% | 3.34% | | Return on average assets | 1.05% | 1.04% | | Return on average shareholders' equity | 12.52% | 13.59% | | Average shareholders' equity to total average assets | 8.37% | 7.62% | Asset Quality Ratios (Period End) | Metric | Sep 30, 2025 | Sep 30, 2024 | Dec 31, 2024 | | :--------------------------------- | :----------- | :----------- | :----------- | | Non-performing assets to total assets | 0.29% | 0.24% | 0.29% | | Allowance for credit losses on loans to non-performing assets | 199.61% | 270.75% | 207.84% | | Allowance for credit losses on loans to total loans | 0.86% | 0.94% | 0.88% |

Core Insights - The company reported net earnings of $3.7 million or $0.70 per share for Q3 2025, a decrease from $4.0 million or $0.74 per share in Q3 2024 [1] - The diluted earnings per share also decreased to $0.67 from $0.72 year-over-year [1] - The net interest margin improved to 3.58% in Q3 2025, up from 3.35% in Q3 2024 [1]

Core Viewpoint - Zacks Investment Research has initiated coverage of Peoples Bancorp of North Carolina, Inc. (PEBK) with a "Neutral" recommendation, reflecting a mixed outlook for the company despite its progress in community banking services [1] Company Overview - Peoples Bancorp operates as a bank holding company for Peoples Bank, a state-chartered commercial bank established in 1912, providing community banking services primarily in the Catawba Valley and surrounding areas through 15 full-service banking offices and several loan production offices in North Carolina [2] Financial Performance - Peoples Bancorp has shown consistent earnings momentum in the first half of 2025, with second-quarter net income increasing by 5.6% year over year to $5.2 million, or 95 cents per share, driven by higher net interest and fee income [3] - Profitability metrics are strong, with a return on average assets of 1.23% and a return on equity of 15.08%, while net interest margin improved to 3.57% from 3.35% a year earlier, indicating effective asset-liability management [3] - Non-performing assets were only 0.28% of total assets as of June 30, 2025, reflecting strong asset quality and prudent credit provisioning [4] - Shareholders' equity rose to $144 million, representing 8.5% of total assets, showcasing healthy internal capital generation [4] Market Positioning - Peoples Bancorp's stock has outperformed its industry peers and the broader market over the past year, indicating that investors recognize its solid fundamentals and stable performance, although significant near-term growth or multiple expansion is not anticipated [6] - The company has a modest market capitalization of $149.7 million, which positions it within a promising but risky segment of the market [7]