Core Viewpoint - Peoples Bancorp of North Carolina, Inc. has authorized a stock repurchase program of up to $3.0 million to enhance shareholder value based on the strength of its balance sheet and capital position [1][2] Financial Overview - As of December 31, 2024, the company reported total assets of $1.65 billion and shareholders' equity of $130.6 million [1] Stock Repurchase Program Details - The stock repurchase may occur periodically in the open market or through privately-negotiated transactions, with the timing and amount determined by management based on market conditions [1] - The repurchase program can be suspended at any time without prior notice [1] Company Operations - Peoples Bank operates 16 banking offices across several counties in North Carolina, including Catawba, Alexander, Lincoln, Mecklenburg, Iredell, and Wake [3] - The company also has loan production offices in Lincoln, Mecklenburg, Rowan, and Forsyth Counties [3] - The common stock of the company is publicly traded on the Nasdaq Global Market under the symbol "PEBK" [3]

Financial Position - As of December 31, 2024, the Company had total assets of $1.7 billion, net loans of $1.1 billion, deposits of $1.5 billion, total securities of $390.7 million, and shareholders' equity of $130.6 million[14]. - The Bank's total deposits amounted to $1.48 billion as of December 31, 2024, indicating a reliance on customer deposits for funding[114]. - The two largest deposit relationships represented 7.88% of total deposits, amounting to $117.0 million, highlighting potential funding risks[113]. - Adverse economic conditions in the Catawba Valley region could materially affect the Bank's financial condition and capital adequacy[100]. - Inflation has risen significantly, impacting customers' ability to repay loans, which could lead to increased loan delinquencies[101]. - The allowance for credit losses may be insufficient, potentially leading to significant future losses and adversely affecting operating results[108]. Lending and Deposit Activities - The Bank's legal lending limit was $29.1 million, with the largest credit relationship at $19.1 million as of December 31, 2024[28]. - The Bank's loans-to-one-borrower limit is set at $29.1 million, which can increase to $48.6 million for fully secured loans[74]. - The Bank's lending activities are guided by non-discriminatory underwriting standards and procedures established by the Board of Directors[25]. - The Bank's core deposit base has grown due to economic growth in the market area and the implementation of new competitive deposit products[23]. Regulatory Compliance - The Company is subject to the Dodd-Frank Act and the Economic Growth Act, which have significant implications for regulatory compliance and capital requirements[52]. - The Company must obtain Federal Reserve approval for common stock repurchases exceeding 10% of net worth during any twelve-month period[62]. - The Company is required to maintain a Tier 1 leverage capital ratio of at least 5.0% to be considered well-capitalized under revised definitions[66]. - The Company is subject to examination by the FDIC and must adhere to various state and federal laws and regulations[94]. - The Company has established an anti-money laundering program to comply with the Bank Secrecy Act (BSA) requirements[89]. - The Company is required to disclose material cybersecurity incidents within four days of determining their significance[87]. Capital and Investment Management - As of December 31, 2024, the Bank exceeded all minimum capital requirements with a Tier 1 leverage capital ratio of 10.71% and a total risk-based capital ratio of 15.22%[55]. - The investment policy aims to maximize earnings while maintaining liquidity and ensuring the safety of principal[39]. - The Bank's investment portfolio is managed to mitigate interest rate risk and comply with regulatory guidelines[37]. - The Company redeemed $5.0 million of outstanding trust preferred securities in 2019, with a total of $20.6 million issued in 2006[19]. Employee and Operational Information - The Company employed 281 full-time employees and 13 part-time employees, equating to 288 full-time equivalent employees as of December 31, 2024[41]. - The Company is committed to fostering professional and personal growth through continuing education and development programs for employees[47]. - The company processed large volumes of transactions daily involving millions of dollars, exposing it to various operational risks, including fraud and unauthorized transactions[122]. Risk Factors - Changes in interest rates can adversely affect the Bank's income by reducing the interest spread between loans and deposits[112]. - Cybersecurity incidents pose risks to business operations and could result in reputational damage and increased costs[116]. - The Bank's business continuity plans may prove inadequate, leading to disruptions that negatively impact financial condition[117]. - The company is exposed to liquidity risk, which could impair its ability to fund operations and jeopardize its financial condition[131]. - Operational risks include potential losses from errors, omissions, or fraudulent behavior by employees and third parties[153]. Shareholder Information - As of February 28, 2025, the company had 657 shareholders of record[180]. - The company's cumulative shareholder return on common stock was 111.68 as of December 31, 2024, compared to 223.87 for the NASDAQ Composite Index[184]. - The company purchased a total of 1,275 shares in the open market during the three months ended December 31, 2024, at an average price of $26.86 per share[187]. - The maximum dollar value of shares that may yet be purchased under the company's stock repurchase program is $2,000,000[187]. Internal Controls and Governance - The company maintained effective internal control over financial reporting as of December 31, 2024, based on management's assessment[196]. - There were no changes in internal control over financial reporting during the quarter ended December 31, 2024, that materially affected the company's internal controls[193]. - The company’s management believes that its disclosure controls and procedures are effective to ensure timely and accurate reporting[192]. - The company has not reported any disagreements with accountants on accounting and financial disclosure[190].

Financial Performance - Net earnings for Q4 2024 were $3.6 million, or $0.67 per share, compared to $3.4 million, or $0.64 per share, in Q4 2023, reflecting a 5.9% increase in earnings per share [3]. - For the full year 2024, net earnings were $16.4 million, or $3.08 per share, compared to $15.5 million, or $2.87 per share, in 2023, indicating a 7.4% increase in earnings per share [8]. - Net earnings for the year ended December 31, 2024, reached $16,353 thousand, up 5.2% from $15,546 thousand in 2023 [21]. - Basic net earnings per share for the year ended December 31, 2024, were $3.08, up from $2.87 in 2023, representing a growth of 7.3% [21]. Income and Expenses - Net interest income for Q4 2024 was $13.8 million, up from $13.3 million in Q4 2023, driven by a $1.2 million increase in interest income [4]. - Non-interest income for Q4 2024 was $7.1 million, an increase from $6.1 million in Q4 2023, primarily due to a $900,000 rise in appraisal management fee income [6]. - Non-interest expense for Q4 2024 was $16.5 million, compared to $14.6 million in Q4 2023, reflecting a 12.9% increase [7]. - Interest income for the year ended December 31, 2024, was $80,733 thousand, a 12.3% increase from $71,862 thousand in 2023 [21]. Loans and Deposits - Total loans increased to $1.14 billion as of December 31, 2024, compared to $1.09 billion a year earlier, marking a 4.6% growth [5]. - Total deposits reached $1.48 billion as of December 31, 2024, up from $1.39 billion a year prior, representing a 6.5% increase [16]. - Total deposits increased to $1,484,731 thousand in 2024, compared to $1,392,045 thousand in 2023, an increase of 6.6% [19]. - Net loans rose to $1,128,409 thousand in 2024, up from $1,082,025 thousand in 2023, marking an increase of 4.3% [19]. Credit Quality - The provision for credit losses for Q4 2024 was a recovery of $205,000, compared to an expense of $405,000 in Q4 2023, indicating improved credit quality [4]. - Non-performing assets were $4.4 million, or 0.27% of total assets, at December 31, 2024, compared to $3.9 million, or 0.24% of total assets, at December 31, 2023 [5]. - The allowance for credit losses on loans decreased to $10.0 million, or 0.88% of total loans, at December 31, 2024, down from $11.0 million, or 1.01%, at December 31, 2023 [15]. - The allowance for credit losses on loans decreased to $9,995 thousand in 2024 from $11,041 thousand in 2023, a reduction of 9.5% [25]. - Non-performing assets increased to $4,809 thousand in 2024, compared to $3,887 thousand in 2023, reflecting a rise of 23.7% [25]. Assets and Margins - Total assets increased to $1,651,962 thousand as of December 31, 2024, compared to $1,635,910 thousand in 2023, reflecting a growth of 0.8% [19]. - The net interest margin (tax equivalent) improved to 3.39% for the three months ended December 31, 2024, compared to 3.32% in 2023 [24]. - The return on average assets for the year ended December 31, 2024, was 0.85%, slightly up from 0.84% in 2023 [24]. Tax and Risk - The Company benefits from tax-exempt loans and securities, computed using an effective tax rate of 22.98% [26]. - For the years ended December 31, 2024 and 2023, the risk grade remains at 0.00% [27].

Core Viewpoint - Peoples Bancorp of North Carolina, Inc. has declared a special cash dividend of $0.16 per share, which will be paid on February 14, 2025, to shareholders of record on February 3, 2025 [1] Company Information - Peoples Bank operates 16 banking offices across North Carolina, specifically in Catawba, Alexander, Lincoln, Mecklenburg, Iredell, and Wake Counties, and has loan production offices in Lincoln, Mecklenburg, Rowan, and Forsyth Counties [3] - The company's common stock is publicly traded on the Nasdaq Global Market under the symbol "PEBK" [3] Dividend Information - Shareholders are encouraged to enroll in the Company's Dividend Reinvestment and Stock Purchase Plan, with contact details provided for inquiries [2]

Financial Performance - The Company reported a net earnings of $3,958,000 for the three months ended September 30, 2024, resulting in a basic earnings per share of $0.74 and diluted earnings per share of $0.72[35]. - For the nine months ended September 30, 2024, net earnings totaled $12,794,000, leading to a basic earnings per share of $2.41 and diluted earnings per share of $2.33[35]. - The company reported a net income of $3,958,000 for the three months ended September 30, 2024, compared to $4,127,000 for the same period in 2023, indicating a decrease of 4.1%[115]. - Year-to-date net earnings for the nine months ended September 30, 2024, were $12.8 million, or $2.41 per share, compared to $12.1 million, or $2.22 per share, for the same period in 2023[126]. Comprehensive Income - The accumulated other comprehensive loss decreased from $(50,989,000) as of September 30, 2023, to $(30,938,000) as of September 30, 2024[32]. - The Company reported a net current period other comprehensive gain of $8,372,000 for the three months ended September 30, 2024[32]. Investment Securities - The fair value of investment securities available for sale as of September 30, 2024, was $398,573,000, with gross unrealized losses of $40,594,000[36]. - The Company’s total amortized cost of investment securities was $438,738,000 as of September 30, 2024, compared to $443,029,000 as of December 31, 2023[37]. - The Company experienced unrealized losses on U.S. Treasuries amounting to $606,000 as of September 30, 2024[36]. - The Company’s investment in GSE - Mortgage-backed securities had a fair value of $229,917,000 as of September 30, 2024, with gross unrealized losses of $17,900,000[36]. - As of September 30, 2024, unrealized losses in the investment securities portfolio related to debt securities totaled $40.6 million, attributed to changing interest rates and considered temporary[39]. - The total unrealized losses across all investment securities as of September 30, 2024, were $51.3 million, reflecting the impact of interest rate fluctuations[39]. Loans and Credit Quality - Total loans as of September 30, 2024, amounted to $1,124.2 million, an increase from $1,093.1 million at December 31, 2023, representing a growth of approximately 2.8%[43]. - The total net loans as of September 30, 2024, were $1,113.6 million, compared to $1,082.0 million at December 31, 2023, indicating an increase of about 2.9%[43]. - The company reported a total of 5,841 past due loans as of September 30, 2024, with 3,922 classified as nonaccrual loans[49]. - The company has a diversified loan portfolio, with a significant portion collateralized by real estate, which is subject to market fluctuations[43]. - As of September 30, 2024, total nonaccrual loans amounted to $3,922, with $3,656 in real estate loans and $250 in commercial loans[53]. - The allowance for credit losses increased to $10,616 as of September 30, 2024, up from $10,016 at the end of the previous quarter[64]. - During the three months ended September 30, 2024, the provision for loan losses was $703, contributing to the ending balance of the allowance for credit losses[64]. - The total allowance for credit losses, including loan commitments, reached $11,775 as of September 30, 2024[64]. - The bank modified one $30,000 loan for a borrower experiencing financial difficulty during the three months ended September 30, 2024, compared to no modifications in the same period of 2023[57]. - Charge-offs for the nine months ended September 30, 2024, totaled $1,436, with significant charge-offs in the commercial segment[64]. - The amortized cost basis of loans modified due to financial difficulty was $301 as of September 30, 2024, with no loans written off in the nine months ended September 30, 2024[59]. - The bank's allowance for credit losses on commercial loans was $2,553 as of September 30, 2024, reflecting a focus on managing credit risk in this segment[64]. - The bank closely monitors the performance of modified loans, with all modified loans remaining current as of September 30, 2024[60]. Deposits and Funding - Total deposits as of September 30, 2024, were $1,479,977,000, an increase from $1,392,045,000 as of December 31, 2023, reflecting a growth of 6.3%[109]. - The Bank's core deposits totaled $1.34 billion, representing 90% of total deposits as of September 30, 2024, an increase from $1.24 billion or 89% of total deposits at December 31, 2023[184]. - Estimated uninsured deposits were $398.3 million, or 26.91% of total deposits, at September 30, 2024, slightly down from $382.1 million, or 27.45% at December 31, 2023[176]. Interest Income and Expense - Net interest income for the three months ended September 30, 2024, was $13,549,000, compared to $13,340,000 for the same period in 2023, reflecting an increase of 1.57%[115]. - The company’s interest expense for the three months ended September 30, 2024, was $6,918,000, compared to $4,966,000 for the same period in 2023, indicating an increase of 39.2%[115]. - Interest income for Q3 2024 was $20.5 million, up from $18.3 million in Q3 2023, primarily due to increased loan volumes and interest rates[131]. - The average yield on loans increased to 5.72% in Q3 2024 from 5.27% in Q3 2023[131]. - Year-to-date net interest income for the nine months ended September 30, 2024, was $40.3 million, a decrease from $41.4 million for the same period in 2023, primarily due to an $8.8 million increase in interest expense[137]. - Interest expense rose to $20.1 million for the nine months ended September 30, 2024, compared to $11.3 million for the same period in 2023, driven by an increase in time deposits and rates on interest-bearing liabilities[140]. Capital and Liquidity - Shareholders' equity increased to $136.3 million, or 8.20% of total assets, at September 30, 2024, up from $121.0 million, or 7.40% of total assets, at December 31, 2023[189]. - The Company's Tier 1 capital ratio was 14.35% at September 30, 2024, compared to 13.94% at December 31, 2023[195]. - The total risk-based capital ratio for the Bank was 15.16% at September 30, 2024, up from 14.85% at December 31, 2023[196]. - The liquidity ratio for the Bank improved to 29.26% at September 30, 2024, compared to 25.39% at December 31, 2023, exceeding the minimum required ratio of 10%[188]. Operating Expenses - Non-interest expense for the three months ended September 30, 2024, was $15.0 million, up from $14.3 million in the same period in 2023, primarily due to increased occupancy and appraisal management fees[151]. Miscellaneous - The Company has not adopted several recent Accounting Standards Updates (ASUs) as of September 30, 2024, which are not expected to have a material impact on its financial statements[28]. - The bank's operating right of use assets were valued at $4.2 million as of September 30, 2024, with operating lease liabilities at $4.3 million[84].

Financial Performance - Net earnings for Q2 2024 were $4.9 million, or $0.93 per share, compared to $4.8 million, or $0.88 per share, in Q2 2023, reflecting a year-over-year increase of 2.08%[4] - Net earnings for the three months ended June 30, 2024, were $4,888 thousand, slightly up from $4,808 thousand in the prior year, reflecting a growth of 1.7%[22] - Basic net earnings per share increased to $0.93 for the three months ended June 30, 2024, compared to $0.88 in the same period last year, a rise of 5.7%[22] Income and Expenses - Net interest income decreased to $13.4 million in Q2 2024 from $13.8 million in Q2 2023, primarily due to a $2.8 million increase in interest expense[5] - Non-interest income increased to $7.5 million in Q2 2024, up from $6.4 million in Q2 2023, driven by a $591,000 increase in appraisal management fee income[8] - Interest income for the three months ended June 30, 2024, was $20,070 thousand, representing a 14.1% increase from $17,599 thousand in the same period last year[23] - Non-interest income totaled $7,521 thousand for the three months ended June 30, 2024, up from $6,403 thousand, marking a growth of 17.5%[23] - Total non-interest expenses increased to $15,131 thousand for the three months ended June 30, 2024, compared to $13,619 thousand in the previous year, an increase of 11.1%[23] Assets and Loans - Total loans reached $1.11 billion as of June 30, 2024, compared to $1.09 billion at December 31, 2023, indicating a growth of 1.83%[6] - Net loans reached $1,100,656 thousand, up from $1,047,935 thousand year-over-year, indicating a growth of 5.0%[21] - Total assets increased to $1,655,398 thousand as of June 30, 2024, compared to $1,611,574 thousand a year earlier, reflecting a growth of 2.7%[21] Deposits - Total deposits increased to $1.48 billion as of June 30, 2024, up from $1.39 billion at December 31, 2023, representing a growth of 6.47%[18] - Total deposits rose to $1,475,956 thousand, a 7.8% increase from $1,369,524 thousand in the previous year[21] - Core deposits, a non-GAAP measure, increased to $1.33 billion, or 90.02% of total deposits, as of June 30, 2024, compared to $1.24 billion, or 89.30%, at December 31, 2023[18] Credit Quality - Non-performing assets were $4.2 million, or 0.25% of total assets, as of June 30, 2024, compared to $3.9 million, or 0.24% of total assets, at December 31, 2023[16] - The allowance for credit losses on loans was $10.0 million, or 0.90% of total loans, as of June 30, 2024, down from $11.0 million, or 1.01%, at December 31, 2023[17] - The provision for credit losses was $(468) thousand for the three months ended June 30, 2024, compared to $375 thousand in the same period last year, indicating a decrease in provisions[22] - Allowance for credit losses on loans rose to $10,016 million in June 2024 from $9,789 million in June 2023[25] - Total non-performing assets increased to $4,156 million in June 2024 from $3,561 million in June 2023[25] - Non-performing assets to total assets ratio was 0.25% in June 2024, up from 0.22% in June 2023[25] - Allowance for credit losses on loans to non-performing assets ratio was 241.00% in June 2024, down from 274.89% in June 2023[25] Shareholder Returns - Cash dividends for the first half of 2024 were $0.54 per share, compared to $0.53 per share for the same period in 2023[6] - Shareholders' equity increased to $124,312 thousand as of June 30, 2024, from $112,370 thousand a year earlier, reflecting a growth of 10.7%[21] Ratios and Margins - The effective tax rate for Q2 2024 was 22.09%, slightly down from 22.20% in Q2 2023[14] - Net interest margin (tax equivalent) decreased to 3.35% in June 2024 from 3.56% in June 2023[25] - Return on average assets improved to 1.19% in June 2024 compared to 1.08% in June 2023[25] - Return on average shareholders' equity increased to 16.46% in June 2024 from 14.69% in June 2023[25] Loan Quality - Risk Grade 1 (excellent quality) loans represented 0.29% of total loans in June 2024, slightly up from 0.27% in June 2023[25] - Risk Grade 3 (good quality) loans accounted for 72.99% of total loans in June 2024, down from 73.82% in June 2023[25] - There were two relationships exceeding $1.0 million in the Watch risk grade totaling $3.0 million as of June 30, 2024[25]

Core Points - Peoples Bancorp of North Carolina, Inc. declared a regular cash dividend of $0.19 per share for the second quarter of 2024 [1] - The dividend will be paid on June 14, 2024, to shareholders of record on June 3, 2024 [1] Company Overview - Peoples Bank, a wholly-owned subsidiary of Peoples Bancorp of North Carolina, operates 17 banking offices in North Carolina, specifically in Catawba, Alexander, Lincoln, Mecklenburg, Iredell, and Wake Counties [3] - The bank also has loan production offices in Lincoln, Mecklenburg, Rowan, and Forsyth Counties [3] - The company's common stock is publicly traded on the Nasdaq Global Market under the symbol "PEBK" [3]

Financial Performance - For the three months ended March 31, 2024, basic earnings per share increased to $0.74 from $0.58 in the same period of 2023, reflecting a growth of 27.6%[38] - Net earnings for Q1 2024 were $3.9 million, or $0.74 per share, compared to $3.2 million, or $0.58 per share, in Q1 2023, reflecting a year-over-year increase[114] - Noninterest income for Q1 2024 was $3.6 million, compared to $1.5 million in Q1 2023, driven by increased appraisal management fee income[114] - Non-interest income for Q1 2024 was $6.0 million, compared to $3.6 million in Q1 2023, largely due to the absence of losses on securities sales[128] - The annualized return on average assets increased to 0.96% in Q1 2024 from 0.81% in the same period last year[115] - The annualized return on average shareholders' equity rose to 13.51% in Q1 2024, compared to 11.78% in Q1 2023[115] Loan and Credit Quality - The total net loans as of March 31, 2024, amounted to $1,095.8 million, up from $1,082.0 million at December 31, 2023, representing an increase of 1.3%[43] - The total real estate loans increased to $1,015.1 million as of March 31, 2024, compared to $998.1 million at December 31, 2023, indicating a growth of 1.7%[43] - The Company’s total loans not secured by real estate amounted to $91.0 million as of March 31, 2024, down from $94.5 million at December 31, 2023[43] - The total allowance for credit losses decreased to $10,847,000 by the end of Q1 2024, down from $11,041,000 at the beginning of the quarter[59] - Charge-offs during the three months ended March 31, 2024, totaled $656,000, while recoveries amounted to $299,000[59] - The allowance for credit losses for single-family residential loans was $3,597,000, reflecting a provision recovery of $57,000 during the quarter[59] - Non-accrual loans as of March 31, 2024, totaled $3,991,000, with $3,567,000 having no allowance[48] - The total real estate loans past due increased from $7,202,000 on December 31, 2023, to $10,140,000 by March 31, 2024[46][47] - The total allowance for credit losses (ACL) was $10.8 million as of March 31, 2024, down from $11.0 million at December 31, 2023, primarily due to a $213,000 decrease in allowance for other construction loans[136] Investment Securities - The unrealized losses in the investment securities portfolio totaled $51.2 million as of March 31, 2024, slightly down from $51.3 million at December 31, 2023[41] - The total fair value of investment securities available for sale decreased to $394.7 million at March 31, 2024, compared to $391.9 million at December 31, 2023[42] - The fair value of U.S. Treasuries increased to $7.1 million as of March 31, 2024, from $9.8 million at December 31, 2023, reflecting a decrease of approximately 27.7%[96][97] - The fair value of mortgage-backed securities decreased to $237.1 million as of March 31, 2024, down from $273.8 million at December 31, 2023, a decline of about 13.4%[96][97] - The total fair value of investment securities available for sale was reported at $352.5 million as of March 31, 2024, compared to $371.5 million at December 31, 2023, indicating a decrease of approximately 5.1%[96][97] Deposits and Funding - Total deposits increased to $1.45 billion as of March 31, 2024, up from $1.39 billion at December 31, 2023, with core deposits rising to $1.30 billion[152] - Estimated uninsured deposits were $390.2 million, or 26.86% of total deposits, at March 31, 2024, compared to $382.1 million, or 27.45% at December 31, 2023[153] - The Company had no loans 90 days past due and still accruing as of March 31, 2024[151] - The liquidity ratio increased to 27.33% at March 31, 2024, up from 25.39% at December 31, 2023, exceeding the minimum required ratio of 10%[167] Capital and Regulatory Compliance - The Company’s Tier 1 capital ratio was 13.84% at March 31, 2024, compared to 13.94% at December 31, 2023[172] - The total risk-based capital ratio for the Bank was 14.72% at March 31, 2024, down from 14.85% at December 31, 2023[173] - The Bank was considered "well capitalized" at March 31, 2024, meeting all regulatory capital requirements[175] Operating Expenses - Operating lease costs increased to $815,000 in March 2024 from $206,000 in March 2023[76] - Non-interest expense increased to $14.5 million in Q1 2024 from $13.7 million in Q1 2023, mainly due to higher salaries and employee benefits[129]

Financial Performance - Net earnings for Q1 2024 were $3.9 million, or $0.74 per share, compared to $3.2 million, or $0.58 per share, in Q1 2023, representing a 21.88% increase in earnings per share [3]. - Net earnings for Q1 2024 were $3,948,000, representing a 24.5% increase from $3,172,000 in Q1 2023 [15]. - Basic net earnings per share increased to $0.74, up from $0.58 in the prior year, marking a growth of 27.6% [15]. - The return on average assets improved to 0.96% in Q1 2024, compared to 0.81% in Q1 2023 [16]. Income and Expenses - Net interest income decreased to $13.3 million in Q1 2024 from $14.3 million in Q1 2023, primarily due to a $4.0 million increase in interest expense [4]. - Total interest income for Q1 2024 was $19,810,000, an increase of 17.9% from $16,801,000 in Q1 2023 [15]. - Net interest income after provision for credit losses was $13,213,000, compared to $14,114,000 in the same period last year, reflecting a decrease of 6.4% [15]. - Total non-interest income increased significantly to $6.0 million in Q1 2024 from $3.6 million in Q1 2023, attributed to the absence of losses on securities sales [5]. - Total non-interest income increased significantly to $6,038,000, up 67.3% from $3,611,000 in Q1 2023 [15]. - Total non-interest expenses rose to $14,516,000, an increase of 5.9% from $13,702,000 in Q1 2023 [15]. Assets and Liabilities - Total assets grew to $1.7 billion as of March 31, 2024, compared to $1.6 billion at December 31, 2023 [8]. - Total loans remained stable at $1.1 billion as of March 31, 2024, consistent with December 31, 2023 [5]. - Total deposits increased to $1.5 billion as of March 31, 2024, up from $1.4 billion at December 31, 2023 [5]. Credit Quality - Non-performing assets were $4.0 million, or 0.24% of total assets, unchanged from December 31, 2023 [9]. - Non-performing assets totaled $3,991,000, slightly increasing from $3,644,000 in the previous year [16]. - The allowance for credit losses on loans was $10.9 million, or 0.98% of total loans, down from $11.0 million, or 1.01%, at December 31, 2023 [10]. - The allowance for credit losses on loans was $10,847,000, up from $9,617,000 in Q1 2023 [16]. Dividends and Tax - Cash dividends increased to $0.35 per share in Q1 2024, compared to $0.34 per share in the prior year [5]. - The effective tax rate decreased to 16.62% in Q1 2024 from 21.15% in Q1 2023, primarily due to a tax credit adjustment [7]. Margins - The net interest margin (tax equivalent) decreased to 3.33% from 3.77% year-over-year [16].

Financial Position - As of December 31, 2023, the Company had total assets of $1.6 billion, net loans of $1.1 billion, deposits of $1.4 billion, total securities of $394.8 million, and shareholders' equity of $121.0 million[15]. - The Bank's legal lending limit was $28.0 million, with the largest credit relationship being $19.1 million as of December 31, 2023[30]. - The Company had total deposits of $1.4 billion as of December 31, 2023, which are subject to fluctuations due to competitive pressures and changes in interest rates[110]. - The five largest deposit relationships amounted to $134.5 million, representing 9.10% of total deposits as of December 31, 2023[108]. - As of December 31, 2023, the Bank's Tier 1 leverage capital ratio was 10.35%, and the common equity Tier 1 risk-based capital ratio was 13.83%[54]. - The Company exceeded its minimum capital requirements with a total risk-based capital ratio of 14.96% as of December 31, 2023[54]. - The minimum common equity Tier 1 risk-based capital ratio required is 7.0%, with a minimum Tier 1 risk-based capital ratio of 8.5% and a total risk-based capital ratio of 10.5%[64]. Employee and Corporate Culture - The Company employed 277 full-time employees and 15 part-time employees, equating to 285 full-time equivalent employees as of December 31, 2023[19]. - The Company is committed to fostering a culture of diversity and inclusion, with ongoing training and development programs for employees[46]. - The Board of Directors emphasizes the importance of corporate culture in achieving the Company's strategic goals[43]. - The Company is dedicated to providing a workplace that is inclusive and free of discrimination, promoting top-quality talent regardless of various characteristics[45]. Regulatory Compliance - The Company is subject to the Dodd-Frank Act and the Economic Growth Act, which have significant regulatory impacts on the financial services industry[51]. - The Company has not opted to utilize the Community Bank Leverage Ratio and continues to use the Basel III standards[52]. - The Company is subject to various federal and state regulations, including the Bank Secrecy Act, which mandates a risk-based system of internal controls to prevent money laundering[82]. - The Sarbanes-Oxley Act of 2002 has been implemented to enhance corporate governance and protect investors, with compliance efforts believed to strengthen the Company's governance structure[84]. - The Company must obtain Federal Reserve approval for acquiring control of more than 5% of voting stock or merging with another bank[68]. - Regulatory authorities routinely examine financial institutions for compliance with anti-money laundering obligations, with potential serious consequences for non-compliance[74]. - Future regulatory changes may impact the Company's business, but the specific effects cannot be predicted[89]. Risk Factors - The Company is exposed to credit risk, with potential losses if borrowers fail to repay loans, particularly in a downturn in economic conditions[99]. - Non-performing assets negatively impact net income, as interest income on non-accrual loans is not recorded[106]. - Changes in interest rates can adversely affect the Company's profitability, as the income is derived from the spread between interest earned on loans and interest paid on deposits[107]. - The allowance for credit losses may be insufficient, which could adversely affect the Company's earnings if future losses exceed reserves[105]. - The Company relies heavily on customer deposits for funding, and any loss of this deposit base could limit lending ability and negatively impact financial condition[110]. - Cybersecurity incidents pose a risk to business operations and could lead to reputational damage and increased costs[112]. - The Company’s business continuity plans may prove inadequate, potentially resulting in disruptions that negatively impact operations[113]. - Adverse economic conditions, including inflation and unemployment, could weaken the economies of the communities served, affecting financial performance[95]. - Operational risks include potential losses from errors or fraudulent behavior by employees and third parties, which could materially affect operations[149]. Investment and Securities - The Bank's investment policy aims to maximize earnings while maintaining liquidity and ensuring the safety of principal[34]. - The Bank's available for sale investment securities portfolio had unrealized losses totaling $51.3 million as of December 31, 2023, primarily due to changing interest rates[132]. - In January and February 2023, the Bank sold securities available for sale totaling $53.5 million, resulting in gross losses of $2.7 million and gross gains of $177,000[132]. - Management assesses impairment of investment securities and deferred tax assets, which could negatively impact earnings if not realized[146]. Competition - The Bank faces strong competition for deposits and loans from other commercial banks, credit unions, and mortgage banking companies in its primary market area[24]. - The Bank faces substantial competition from various financial institutions, which could affect its growth and profitability[133]. - The Bank's ability to compete successfully depends on maintaining long-term customer relationships and expanding its market position[140]. Shareholder Information - As of February 29, 2024, the Company had 668 shareholders of record[181]. - The Company's common stock is listed on NASDAQ under the symbol "PEBK" and is supported by market makers such as Raymond James Financial, Inc. and Hovde Group, LLC[179]. - The Company repurchased a total of 16,709 shares in Q4 2023 at an average price of $21.25 per share[187]. - The total dollar value available for repurchase under the Company's stock repurchase program at the end of the period was approximately $2,003,184[188]. - The Company’s cumulative shareholder return from December 31, 2018, to December 31, 2023, was 47.27%, compared to 36.17% for the NASDAQ Composite Index[185]. Internal Controls - The Company maintained effective internal control over financial reporting as of December 31, 2023, according to management's assessment[196]. - There were no changes in internal control over financial reporting during the quarter ended December 31, 2023, that materially affected the Company's internal controls[193]. - The company may face material adverse effects on its business and financial condition due to ineffective internal controls and potential regulatory non-compliance[145].