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Peoples Bancorp Announces Second Quarter 2025 Results

1. PEBK reported Q2 2025 net earnings of $5.2 million, up from $4.9 million. 2. Net interest margin improved to 3.57% in Q2 2025, from 3.35% in Q2 2024. 3. Total loans increased to $1.16 billion as of June 30, 2025. 4. Non-performing assets remained stable at $4.8 million, or 0.28% of total assets. 5. Cash dividends increased to $0.56 per share compared to $0.54 per share prior.

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Earnings growth and solid loan volume provide a positive outlook for PEBK.

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Increased net earnings and improving margins indicate strong operational performance.

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Monday, 21 July 2025 09:00 AM NEWTON, NC / ACCESS Newswire / July 21, 2025 / Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) (the "Company"), the parent company of Peoples Bank (the "Bank"), reported second quarter 2025 results with highlights as follows:Second quarter 2025 highlights:Net earnings were $5.2 million or $0.97 per share and $0.95 per diluted share for the three months ended June 30, 2025, as compared to $4.9 million or $0.93 per share and $0.89 per diluted share for the same period one year ago.Net interest margin was 3.57% for the three months ended June 30, 2025, compared to 3.35% for the three months ended June 30, 2024.Year to date highlights:Net earnings were $9.5 million or $1.79 per share and $1.74 per diluted share for the six months ended June 30, 2025, as compared to $8.8 million or $1.67 per share and $1.61 per diluted share for the same period one year ago.Cash dividends were $0.56 per share during the six months ended June 30, 2025, compared to $0.54 per share for the prior year period.Total loans were $1.16 billion at June 30, 2025, compared to $1.14 billion at December 31, 2024.Non-performing assets were $4.8 million or 0.28% of total assets at June 30, 2025, compared to $4.8 million or 0.29% of total assets at December 31, 2024.Total deposits were $1.51 billion at June 30, 2025, compared to $1.48 billion at December 31, 2024.Core deposits, a non-GAAP measure, were $1.36 billion or 90.05% of total deposits at June 30, 2025, compared to $1.34 billion or 90.17% of total deposits at December 31, 2024.Net interest margin was 3.54% for the six months ended June 30, 2025, compared to 3.34% for the six months ended June 30, 2024.Net earnings were $5.2 million or $0.97 per share and $0.95 per diluted share for the three months ended June 30, 2025, as compared to $4.9 million or $0.93 per share and $0.89 per diluted share for the prior year period. William D. Cable, Sr., President and Chief Executive Officer, attributed the increase in second quarter net earnings to increases in net interest income and non-interest income, which were partially offset by an increase in the provision for credit losses and an increase in non-interest expense, compared to the prior year period, as discussed below.Net interest income was $14.6 million for the three months ended June 30, 2025, compared to $13.4 million for the three months ended June 30, 2024. The increase in net interest income is due to a $650,000 increase in interest income and a $531,000 decrease in interest expense. The increase in interest income is primarily due to a $1.1 million increase in interest income and fees on loans, which was partially offset by a $19,000 decrease in interest income on balances due from banks and a $408,000 decrease in interest income on investment securities. The increase in interest income and fees on loans is primarily due to an increase in total loans. The decrease in interest income on balances due from banks is primarily due to rate decreases implemented by the Federal Reserve from September 2024 through December 2024. The decrease in interest income on investment securities is primarily due to a reduction in balances outstanding. The decrease in interest expense is primarily due to a decrease in rates paid on interest-bearing liabilities. Net interest income after the provision for credit losses was $14.8 million for the three months ended June 30, 2025, compared to $13.9 million for the three months ended June 30, 2024. The provision for credit losses for the three months ended June 30, 2025 was a recovery of $213,000, compared to a recovery of $468,000 for the three months ended June 30, 2024. The decrease in the recovery for credit losses is primarily attributable to a smaller reduction in reserves on construction loans during the three months ended June 30, 2025, as compared to the reduction in reserves on construction loans during the three months ended June 30, 2024. The reduction in reserves on construction loans during the three months ended June 30, 2024 was primarily due to a decrease in construction loan balances outstanding and unfunded construction loan balances during the second quarter of 2024.Non-interest income was $7.7 million for the three months ended June 30, 2025, compared to $7.5 million for the three months ended June 30, 2024. The increase in non-interest income is primarily attributable to a $792,000 increase in appraisal management fee income due to an increase in appraisal volume, which was partially offset by a $628,000 decrease in miscellaneous non-interest income primarily due to a decrease in income on small business investment company (SBIC) investments.Non-interest expense was $15.8 million for the three months ended June 30, 2025, compared to $15.1 million for the three months ended June 30, 2024. The increase in non-interest expense is primarily attributable to a $633,000 increase in appraisal management fee expense due to an increase in appraisal volume and a $341,000 increase in salaries and employee benefits expense primarily due to an increase in salary and insurance expense, which were partially offset by a $218,000 decrease in other non-interest expense primarily due to a decrease in debit card expense, and a $47,000 decrease in occupancy expense primarily due to a decrease in equipment maintenance expense.Net earnings were $9.5 million or $1.79 per share and $1.74 per diluted share for the six months ended June 30, 2025, as compared to $8.8 million or $1.67 per share and $1.61 per diluted share for the prior year period. The increase in year to date net earnings is primarily attributable to increases in net interest income and non-interest income, which were partially offset by an increase in the provision for credit losses and an increase in non-interest expense, compared to the prior year period, as discussed below.Net interest income was $28.5 million for the six months ended June 30, 2025, compared to $26.7 million for the six months ended June 30, 2024. The increase in net interest income is due to a $810,000 increase in interest income and a $1.0 million decrease in interest expense. The increase in interest income is primarily due to a $2.0 million increase in interest income and fees on loans, which was partially offset by a $576,000 decrease in interest income on balances due from banks and a $569,000 decrease in interest income on investment securities. The increase in interest income and fees on loans is primarily due to an increase in total loans. The decrease in interest income on balances due from banks is due to a reduction in balances outstanding and rate decreases implemented by the Federal Reserve from September 2024 through December 2024. The decrease in interest income on investment securities is primarily due to a reduction in balances outstanding. The decrease in interest expense is primarily due to a decrease in rates paid on interest-bearing liabilities. Net interest income after the provision for credit losses was $28.5 million for the six months ended June 30, 2025, compared to $27.1 million for the six months ended June 30, 2024. The provision for credit losses for the six months ended June 30, 2025 was an expense of $55,000, compared to a recovery of $377,000 for the six months ended June 30, 2024. The increase in the provision for credit losses is primarily attributable to a reduction in reserves on construction loans during the six months ended June 30, 2024, which was primarily due to a decrease in construction loan balances outstanding, combined with an increase in provision expense for unfunded construction loans during the six months ended June 30, 2025 resulting from an increase in unfunded commitments on construction loans.Non-interest income was $14.2 million for the six months ended June 30, 2025, compared to $13.6 million for the six months ended June 30, 2024. The increase in non-interest income is primarily attributable to a $1.4 million increase in appraisal management fee income due to an increase in appraisal volume, which was partially offset by a $802,000 decrease in miscellaneous non-interest income primarily due to a decrease in income on small business investment company (SBIC) investments.Non-interest expense was $30.4 million for the six months ended June 30, 2025, compared to $29.6 million for the six months ended June 30, 2024. The increase in non-interest expense is primarily attributable to a $1.1 million increase in appraisal management fee expense due to an increase in appraisal volume and a $149,000 increase in salaries and employee benefits expense primarily due to an increase in salary expense, which were partially offset by a $401,000 decrease in other non-interest expense primarily due to a decrease in debit card expense, and a $130,000 decrease in occupancy expense primarily due to a decrease in equipment maintenance expense.Income tax expense was $1.5 million for the three months ended June 30, 2025, compared to $1.4 million for the three months ended June 30, 2024. The effective tax rate was 22.56% for the three months ended June 30, 2025, compared to 22.09% for the three months ended June 30, 2024. Income tax expense was $2.8 million for the six months ended June 30, 2025, compared to $2.2 million for the six months ended June 30, 2024. The effective tax rate was 22.69% for the six months ended June 30, 2025, compared to 19.74% for the six months ended June 30, 2024. The increase in the effective tax rate is primarily due to a $322,000 interest receivable booked during the six months ended June 30, 2024 on a deposit for taxes paid prior to a settlement with the North Carolina Department of Revenue ("NCDOR") to withdraw the disallowance of certain tax credits previously purchased by the Bank.Total assets were $1.69 billion as of June 30, 2025, compared to $1.65 billion as of December 31, 2024. Available for sale securities were $371.6 million as of June 30, 2025, compared to $388.0 million as of December 31, 2024. Total loans were $1.16 billion as of June 30, 2025, compared to $1.14 billion at December 31, 2024.Non-performing assets were $4.8 million or 0.28% of total assets at June 30, 2025, compared to $4.8 million or 0.29% of total assets at December 31, 2024. Non-performing assets include $4.2 million in residential mortgage loans, $442,000 in commercial mortgage loans and $216,000 in other loans at June 30, 2025, compared to $3.7 million in residential mortgage loans, $463,000 in commercial mortgage loans, $257,000 in other loans, and $369,000 in other real estate owned at December 31, 2024.The allowance for credit losses on loans was $9.8 million or 0.85% of total loans at June 30, 2025, compared to $10.0 million or 0.88% of total loans at December 31, 2024. The allowance for credit losses on loans decreased $203,000 primarily due to a $90,000 decrease in the allowance on construction loans from December 31, 2024 to June 30, 2025 and the removal of the $60,000 Hurricane Helene reserve included in the allowance for credit losses at December 31, 2024. The allowance for credit losses on unfunded commitments was $1.3 million at June 30, 2025, compared to $1.1 million at December 31, 2024. The increase in the allowance for credit losses on unfunded commitments was primarily due to a $161,000 increase in the allowance for unfunded construction loans resulting from a $2.8 million increase in unfunded commitments on construction loans during the six months ended June 30, 2025. The allowance for credit losses on unfunded commitments is included in other liabilities on the Company's consolidated balance sheets. Management believes the current level of the allowance for credit losses is adequate; however, there is no guarantee that additional adjustments to the allowance will not be required because of changes in economic conditions, regulatory requirements or other factors.Deposits were $1.51 billion as of June 30, 2025, compared to $1.48 billion as of December 31, 2024. Core deposits, a non-GAAP measure, which include noninterest-bearing demand deposits, NOW, MMDA, savings and non-brokered certificates of deposit of denominations of $250,000 or less, were $1.36 billion at June 30, 2025, compared to $1.34 billion at December 31, 2024. 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. Certificates of deposit in amounts of more than $250,000 totaled $150.6 million at June 30, 2025, compared to $145.9 million December 31, 2024.Junior subordinated debentures were $15.5 million at June 30, 2025 and December 31, 2024. Shareholders' equity was $144.0 million, or 8.50% of total assets, at June 30, 2025, compared to $130.6 million, or 7.90% of total assets, at December 31, 2024.Peoples Bank operates 16 banking offices in North Carolina, with offices in Catawba, Alexander, Lincoln, Mecklenburg, Iredell and Wake Counties. The Bank also operates loan production offices in Lincoln, Mecklenburg, Rowan and Forsyth Counties. The Company's common stock is publicly traded and is listed on the Nasdaq Global Market under the symbol "PEBK."Statements made in this earnings release, other than those concerning historical information, should be considered forward-looking statements pursuant to the safe harbor provisions of the Securities Exchange Act of 1934 and the Private Securities Litigation Act of 1995. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management and on the information available to management at the time that this release was prepared. These statements can be identified by the use of words like "expect," "anticipate," "estimate," and "believe," variations of these words and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, (1) competition in the markets served by the Bank, (2) changes in the interest rate environment, (3) general national, regional or local economic conditions may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and the possible impairment of collectibility of loans, (4) legislative or regulatory changes, including changes in accounting standards, (5) significant changes in the federal and state legal and regulatory environment and tax laws, (6) the impact of changes in monetary and fiscal policies, laws, rules and regulations and (7) other risks and factors identified in the Company's other filings with the Securities and Exchange Commission, including but not limited to those described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.CONSOLIDATED BALANCE SHEETSJune 30, 2025, December 31, 2024 and June 30, 2024(Dollars in thousands)June 30, 2025December 31, 2024June 30, 2024(Unaudited)(Audited)(Unaudited)ASSETS:Cash and due from banks$33,017$30,919$31,909Interest-bearing deposits68,98328,34750,926Cash and cash equivalents102,00059,26682,835Investment securities available for sale371,614388,003393,260Other investments2,6482,7282,779Total securities374,262390,731396,039Mortgage loans held for sale1,5411,3671,288Loans1,157,9751,138,4041,110,672Less: Allowance for credit losses on loans(9,792)(9,995)(10,016)Net loans1,148,1831,128,4091,100,656Premises and equipment, net14,64414,84715,888Cash surrender value of life insurance17,58717,67518,365Accrued interest receivable and other assets35,62839,66740,327Total assets$1,693,845$1,651,962$1,655,398LIABILITIES AND SHAREHOLDERS' EQUITY:Deposits:Noninterest-bearing demand$406,556$402,254$415,977Interest-bearing demand, MMDA & savings754,125741,363710,446Time, over $250,000150,580145,939147,333Other time202,558195,175202,200Total deposits1,513,8191,484,7311,475,956Securities sold under agreements to repurchase--18,824Junior subordinated debentures15,46415,46415,464Accrued interest payable and other liabilities20,55721,20420,842Total liabilities1,549,8401,521,3991,531,086Shareholders' equity:Preferred stock, no par value; authorized5,000,000 shares; no shares issued and outstanding---Common stock, no par value; authorized20,000,000 shares; issued and outstanding5,459,441 shares at 6/30/25, 5,457,646 sharesat 12/31/24, 5,457,646 at 6/30/2448,70848,65848,678Common stock held by deferred compensation trust,at cost; 150,463 shares at 6/30/25, 158,580 sharesat 12/31/24, 166,247 shares at 6/30/24(1,527)(1,757)(1,980)Deferred compensation1,5271,7571,980Retained earnings127,506121,062115,623Accumulated other comprehensive loss(32,209)(39,157)(39,989)Total shareholders' equity144,005130,563124,312Total liabilities and shareholders' equity$1,693,845$1,651,962$1,655,398CONSOLIDATED STATEMENTS OF INCOME For the three and six months ended June 30, 2025 and 2024(Dollars in thousands, except per share amounts)Three months endedSix months endedJune 30,June 30,2025202420252024(Unaudited)(Unaudited)(Unaudited)(Unaudited)INTEREST INCOME:Interest and fees on loans$16,648$15,571$32,664$30,709Interest on due from banks7067251,0561,632Interest on investment securities:U.S. Government sponsored enterprises2,0872,5514,3485,142State and political subdivisions6946951,3881,390Other5855281,2341,007Total interest income20,72020,07040,69039,880INTEREST EXPENSE:Interest-bearing demand, MMDA & savings deposits2,7292,4385,3814,498Time deposits3,1523,6286,2857,309Junior subordinated debentures242283483567Other-305-786Total interest expense6,1236,65412,14913,160NET INTEREST INCOME14,59713,41628,54126,720PROVISION FOR CREDIT LOSSES(213)(468)55(377)NET INTEREST INCOME AFTERPROVISION FOR CREDIT LOSSES14,81013,88428,48627,097NON-INTEREST INCOME:Service charges1,3721,3462,7842,686Other service charges and fees156180342364Gain/(loss) on sale of securities--(4)-Mortgage banking income417468125Insurance and brokerage commissions258219495465Appraisal management fee income3,9733,1817,0155,595Miscellaneous1,8932,5213,5224,324Total non-interest income7,6937,52114,22213,559NON-INTEREST EXPENSES:Salaries and employee benefits7,1686,82713,95613,807Occupancy2,0582,1054,0864,216Appraisal management fee expense3,1562,5235,5754,427Other3,4583,6766,7967,197Total non-interest expense15,84015,13130,41329,647EARNINGS BEFORE INCOME TAXES6,6636,27412,29511,009INCOME TAXES1,5031,3862,7902,173NET EARNINGS$5,160$4,888$9,505$8,836PER SHARE AMOUNTSBasic net earnings$0.97$0.93$1.79$1.67Diluted net earnings$0.95$0.89$1.74$1.61Cash dividends$0.20$0.19$0.56$0.54Book value$27.12$23.49$27.12$23.49FINANCIAL HIGHLIGHTSFor the three and six months ended June 30, 2025 and 2024, and the year ended December 31, 2024(Dollars in thousands)Three months endedSix months endedYear endedJune 30,June 30,December 31,20252024202520242024(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Audited)SELECTED AVERAGE BALANCES:Available for sale securities$415,919$445,098$424,518$444,289$442,097Loans1,156,1401,108,6841,149,2741,100,6711,113,488Earning assets1,639,4751,610,8111,625,6241,608,3961,611,816Assets1,680,8541,650,0081,666,1771,648,9051,653,356Deposits1,513,5191,461,5961,502,2341,444,9501,465,965Shareholders' equity137,223119,443136,373120,927129,866SELECTED KEY DATA:Net interest margin (tax equivalent) (1)3.57%3.35%3.54%3.34%3.36%Return on average assets1.23%1.19%1.15%1.08%0.99%Return on average shareholders' equity15.08%16.46%14.06%14.69%12.59%Average shareholders' equity to total average assets8.16%7.24%8.18%7.33%7.85%June 30, 2025June 30, 2024December 31, 2024(Unaudited)(Unaudited)(Audited)ALLOWANCE FOR CREDIT LOSSES:Allowance for credit losses on loans$9,792$10,016$9,995Allowance for credit losses on unfunded commitments1,2581,5651,101Provision for (recovery of) credit losses (2)55(377)(285)Charge-offs (2)(284)(1,228)(1,981)Recoveries (2)183375551ASSET QUALITY:Non-accrual loans$4,822$4,156$4,44090 days past due and still accruing---Other real estate owned--369Total non-performing assets$4,822$4,156$4,809Non-performing assets to total assets0.28%0.25%0.29%Allowance for credit losses on loans to non-performing assets203.07%241.00%207.84%Allowance for credit losses on loans to total loans0.85%0.90%0.88%LOAN RISK GRADE ANALYSIS:Percentage of loans by risk gradeRisk Grade 1 (excellent quality)0.29%0.29%Risk Grade 2 (high quality)20.23%19.57%Risk Grade 3 (good quality)71.53%72.99%Risk Grade 4 (management attention)6.97%5.95%Risk Grade 5 (watch)0.46%0.66%Risk Grade 6 (substandard)0.52%0.54%Risk Grade 7 (doubtful)0.00%0.00%Risk Grade 8 (loss)0.00%0.00%At June 30, 2025, including non-accrual loans, there was one relationship exceeding $1.0 million in the Watch risk grade, which totaled $1.4 million; there were no relationships exceeding $1.0 million in the Substandard risk grade. At December 31, 2024, including non-accrual loans, there was one relationship exceeding $1.0 million in the Watch risk grade, which totaled $1.5 million; there were no relationships exceeding $1.0 million in the Substandard risk grade.(1) This amount reflects the tax benefit that the Company receives related to its tax-exempt loans and securities, which carry interest rates lower than similar taxable investments due to their tax-exempt status. This amount has been computed using an effective tax rate of 22.78% and is reduced by the related nondeductible portion of interest expense.(2) For the six months ended June 30, 2025 and 2024 and the year ended December 31, 2024.Contact: William D. Cable, Sr.President and Chief Executive OfficerJeffrey N. HooperExecutive Vice President and Chief Financial Officer828-464-5620SOURCE: Peoples Bancorp of North Carolina, Inc.

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