Earnings Release Announcement Peoples Bancorp of North Carolina, Inc. announced its third quarter 2025 results, providing key financial highlights and contact information Company and Contact Information 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 Bank2 - Contact persons are William D. Cable, Sr. (President and CEO) and Jeffrey N. Hooper (EVP and CFO)1 Overall Highlights 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 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 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 income3 Net Interest Income and Provision for Credit Losses 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 banks4 - The increase in the provision for credit losses is primarily attributable to an increase in reserves on construction loans4 Non-Interest Income 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 volume6 - The decrease in miscellaneous non-interest income was primarily due to a decrease in income on small business investment company (SBIC) investments6 Non-Interest Expense 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 20247 Income Tax Expense 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 rate12 Nine Months Ended September 30, 2025 Financial Performance 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 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 expense8 Net Interest Income and Provision for Credit Losses 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 - 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, 20259 Non-Interest Income 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 volume10 Non-Interest Expense 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 202411 Income Tax Expense 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 Financial Position and Asset Quality 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 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 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 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, 202515 - Management believes the current level of the allowance for credit losses is adequate15 Deposits and Funding 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 profitability16 Shareholders' Equity 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 changes17 Other Significant Events and Corporate Information 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 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 202318 - 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 ruling18 - The Bank recorded $553,000 in legal expenses associated with this settlement as of September 30, 202518 Company Operations and Forward-Looking Statements 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 counties19 - The Company's common stock is listed on the Nasdaq Global Market under the symbol "PEBK"19 - 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 policies19 Consolidated Financial Statements and Supplementary Data 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 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 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 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% |
Peoples Bancorp of North Carolina(PEBK) - 2025 Q3 - Quarterly Results