Peoples Bancorp Announces First Quarter 2025 Results

About this update from Peoples Bancorp Of North Carolina, Inc.

NEWTON, NC / ACCESS Newswire / April 21, 2025 / Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) (the "Company"), the parent company of Peoples Bank (the "Bank"), reported first quarter 2025 results with highlights as follows: First quarter 2025 highlights: Net earnings were $4.3 million or $0.82 per share and $0.79 per diluted share for the three months ended March 31, 2025 , as compared to $3.9 million or $0.74 per share and $0.72 per diluted share for the same period one year ago. Cash dividends were $0.36 per share for the three months ended March 31, 2025 , compared to $0.35 per share for the prior year period. Total loans were $1.15 billion at March 31, 2025 , compared to $1.14 billion at December 31, 2024 . Non-performing assets were $5.1 million or 0.30% of total assets at March 31, 2025 , compared to $4.8 million or 0.29% of total assets at December 31, 2024 . Total deposits were $1.52 billion at March 31, 2025 , compared to $1.48 billion at December 31, 2024 . Core deposits, a non-GAAP measure, were $1.37 billion or 90.22% of total deposits at March 31, 2025 , compared to $1.34 billion or 90.17% of total deposits at December 31, 2024 . Net interest margin was 3.51% for the three months ended March 31, 2025 , compared to 3.33% for the three months ended March 31, 2024 . Net earnings were $4.3 million or $0.82 per share and $0.79 per diluted share for the three months ended March 31, 2025 , as compared to $3.9 million or $0.74 per share and $0.72 per diluted share for the prior year period. William D. Cable , Sr., President and Chief Executive Officer, attributed the increase in first 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 $13.9 million for the three months ended March 31, 2025 , compared to $13.3 million for the three months ended March 31, 2024 . The increase in net interest income is due to a $160,000 increase in interest income and a $480,000 decrease in interest expense. The increase in interest income is primarily due to a $878,000 increase in interest income and fees on loans, which was partially offset by a $557,000 decrease in interest income on balances due from banks and a $161,000 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. 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 $13.7 million for the three months ended March 31, 2025 , compared to $13.2 million for the three months ended March 31, 2024 . The provision for credit losses for the three months ended March 31, 2025 was $268,000 , compared to $91,000 for the three months ended March 31, 2024 . The increase in the provision for credit losses is primarily attributable to an increase in unfunded commitments on construction loans and an increase in total loans outstanding. These increases were partially offset by the removal of the $60,000 Hurricane Helene reserve included in the allowance for credit losses at December 31, 2024 . The Bank had not incurred any losses associated with Hurricane Helene as of March 31, 2025 . Minimal losses are expected as a result of Hurricane Helene. Non-interest income was $6.5 million for the three months ended March 31, 2025 , compared to $6.0 million for the three months ended March 31, 2024 . The increase in non-interest income is primarily attributable to a $628,000 increase in appraisal management fee income due to an increase in appraisal volume, which was partially offset by a $174,000 decrease in miscellaneous non-interest income primarily due to a decrease in income on mutual funds held in the deferred compensation trust due to a decrease in valuations for the assets in the deferred compensation plan. Non-interest expense was $14.6 million for the three months ended March 31, 2025 , compared to $14.5 million for the three months ended March 31, 2024 . The increase in non-interest expense is primarily attributable to a $515,000 increase in appraisal management fee expense due to an increase in appraisal volume, which was partially offset by a $192,000 decrease in salaries and employee benefits expense primarily due to a decrease in insurance expense, a $183,000 decrease in other non-interest expense primarily due to a decrease in debit card fraud expense, and a $83,000 decrease in occupancy expense primarily due to a decrease in depreciation expense. Income tax expense was $1.3 million for the three months ended March 31, 2025 , compared to $787,000 for the three months ended March 31, 2024 . The effective tax rate was 22.85% for the three months ended March 31, 2025 , compared to 16.62% for the three months ended March 31, 2024 . The increase in the effective tax rate is primarily due to a $322,000 interest receivable booked during the three months ended March 31, 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 March 31, 2025 , compared to $1.65 billion as of December 31, 2024 . Available for sale securities were $374.4 million as of March 31, 2025 , compared to $388.0 million as of December 31, 2024 . Total loans were $1.15 billion as of March 31, 2025 , compared to $1.14 billion at December 31, 2024 . Non-performing assets were $5.1 million or 0.30% of total assets at March 31, 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, $451,000 in commercial mortgage loans, $298,000 in other loans, and $125,000 in other real estate owned at March 31, 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 $10.0 million or 0.87% of total loans at March 31, 2025 , compared to $10.0 million or 0.88% of total loans at December 31, 2024 . The allowance for credit losses on loans increased $52,000 primarily due to a $4.3 million increase in the outstanding balance of construction loans from December 31, 2024 to March 31, 2025 . The allowance for credit losses on unfunded commitments was $1.3 million at March 31, 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 $275,000 increase in the allowance for construction loans resulting from a $11.5 million increase in unfunded commitments on construction loans during the three months ended March 31, 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 $1.52 billion as of March 31, 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 $1.37 billion at March 31, 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 $148.4 million at March 31, 2025 , compared to $145.9 million December 31, 2024 . Junior subordinated debentures were $15.5 million at March 31, 2025 and December 31, 2024 . Shareholders' equity was $138.5 million , or 8.18% of total assets, at March 31, 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 . Contact: William D. Cable , Sr.President and Chief Executive Officer Jeffrey N. Hooper Executive Vice President and Chief Financial Officer828-464-5620 CONSOLIDATED BALANCE SHEETS March 31, 2025 , December 31, 2024 and March 31, 2024 (Dollars in thousands) March 31, 2025 December 31, 2024 March 31, 2024 (Unaudited) (Audited) (Unaudited) ASSETS: Cash and due from banks $ 32,372 $ 30,919 $ 26,272 Interest-bearing deposits 70,148 28,347 71,824 Cash and cash equivalents 102,520 59,266 98,096 Investment securities available for sale 374,350 388,003 394,664 Other investments 2,674 2,728 2,858 Total securities 377,024 390,731 397,522 Mortgage loans held for sale 544 1,367 1,292 Loans 1,152,080 1,138,404 1,106,670 Less: Allowance for credit losses on loans (10,047 ) (9,995 ) (10,847 ) Net loans 1,142,033 1,128,409 1,095,823 Premises and equipment, net 15,074 14,847 16,330 Cash surrender value of life insurance 17,796 17,675 18,250 Accrued interest receivable and other assets 37,994 39,667 42,247 Total assets $ 1,692,985 $ 1,651,962 $ 1,669,560 LIABILITIES AND SHAREHOLDERS' EQUITY: Deposits: Noninterest-bearing demand $ 412,761 $ 402,254 $ 462,966 Interest-bearing demand, MMDA & savings 756,241 741,363 633,740 Time, over $250,000 148,352 145,939 148,819 Other time 200,215 195,175 206,839 Total deposits 1,517,569 1,484,731 1,452,364 Securities sold under agreements to repurchase - - 59,216 Junior subordinated debentures 15,464 15,464 15,464 Accrued interest payable and other liabilities 21,444 21,204 21,424 Total liabilities 1,554,477 1,521,399 1,548,468 Shareholders' equity: Preferred stock, no par value; authorized 5,000,000 shares; no shares issued and outstanding - - - Common stock, no par value; authorized 20,000,000 shares; issued and outstanding 5,459,441 shares at 3/31/25, 5,457,646 shares at 12/31/24, 5,455,999 shares at 3/31/24 48,708 48,658 48,627 Common stock held by deferred compensation trust, at cost; 161,680 shares at 3/31/25, 158,580 shares at 12/31/24, 164,970 shares at 3/31/24 (1,842 ) (1,757 ) (1,943 ) Deferred compensation 1,842 1,757 1,943 Retained earnings 123,439 121,062 111,775 Accumulated other comprehensive loss (33,639 ) (39,157 ) (39,310 ) Total shareholders' equity 138,508 130,563 121,092 Total liabilities and shareholders' equity $ 1,692,985 $ 1,651,962 $ 1,669,560 CONSOLIDATED STATEMENTS OF INCOME For the three months ended March 31, 2025 and 2024(Dollars in thousands, except per share amounts) Three months ended March 31 , 2025 2024 (Unaudited) (Unaudited) INTEREST INCOME: Interest and fees on loans $ 16,016 $ 15,138 Interest on due from banks 350 907 Interest on investment securities: U.S. Government sponsored enterprises 2,261 2,591 State and political subdivisions 694 695 Other 649 479 Total interest income 19,970 19,810 INTEREST EXPENSE: Interest-bearing demand, MMDA & savings deposits 2,652 2,060 Time deposits 3,133 3,681 Junior subordinated debentures 241 284 Other - 481 Total interest expense 6,026 6,506 NET INTEREST INCOME 13,944 13,304 PROVISION FOR CREDIT LOSSES 268 91 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 13,676 13,213 NON-INTEREST INCOME: Service charges 1,412 1,340 Other service charges and fees 186 184 Gain/(loss) on sale of securities (4 ) - Mortgage banking income 27 51 Insurance and brokerage commissions 237 246 Appraisal management fee income 3,042 2,414 Miscellaneous 1,629 1,803 Total non-interest income 6,529 6,038 NON-INTEREST EXPENSES: Salaries and employee benefits 6,788 6,980 Occupancy 2,028 2,111 Appraisal management fee expense 2,419 1,904 Other 3,338 3,521 Total non-interest expense 14,573 14,516 EARNINGS BEFORE INCOME TAXES 5,632 4,735 INCOME TAXES 1,287 787 NET EARNINGS $ 4,345 $ 3,948 PER SHARE AMOUNTS Basic net earnings $ 0.82 $ 0.74 Diluted net earnings $ 0.79 $ 0.72 Cash dividends $ 0.36 $ 0.35 Book value $ 26.14 $ 22.89 FINANCIAL HIGHLIGHTS For the three months ended March 31, 2025 and 2024, and the year ended December 31, 2024 (Dollars in thousands) Three months ended Year ended March 31 , December 31 , 2025 2024 2024 (Unaudited) (Unaudited) (Audited) SELECTED AVERAGE BALANCES: Available for sale securities $ 433,212 $ 443,480 $ 442,097 Loans 1,142,331 1,092,658 1,113,488 Earning assets 1,611,620 1,605,981 1,611,816 Assets 1,651,336 1,647,802 1,653,356 Deposits 1,490,822 1,428,305 1,465,965 Shareholders' equity 130,353 117,524 129,866 SELECTED KEY DATA: Net interest margin (tax equivalent) (1) 3.51 % 3.33 % 3.36 % Return on average assets 1.07 % 0.96 % 0.99 % Return on average shareholders' equity 13.52 % 13.51 % 12.59 % Average shareholders' equity to total average assets 7.89 % 7.13 % 7.85 % March 31, 2025 March 31, 2024 December 31, 2024 (Unaudited) (Unaudited) (Audited) ALLOWANCE FOR CREDIT LOSSES: Allowance for credit losses on loans $ 10,047 $ 10,847 $ 9,995 Allowance for credit losses on unfunded commitments 1,286 1,698 1,101 Provision for (recovery of) credit losses (2) 268 91 (285 ) Charge-offs (2) (112 ) (656 ) (1,981 ) Recoveries (2) 81 299 551 ASSET QUALITY: Non-accrual loans $ 4,983 $ 3,991 $ 4,440 90 days past due and still accruing - - - Other real estate owned 125 - 369 Total non-performing assets $ 5,108 $ 3,991 $ 4,809 Non-performing assets to total assets 0.30 % 0.24 % 0.29 % Allowance for credit losses on loans to non-performing assets 196.69 % 271.79 % 207.84 % Allowance for credit losses on loans to total loans 0.87 % 0.98 % 0.88 % LOAN RISK GRADE ANALYSIS: Percentage of loans by risk grade Risk Grade 1 (excellent quality) 0.24 % 0.29 % 0.33 % Risk Grade 2 (high quality) 19.97 % 19.42 % 19.87 % Risk Grade 3 (good quality) 71.45 % 73.15 % 72.24 % Risk Grade 4 (management attention) 7.35 % 5.77 % 6.45 % Risk Grade 5 (watch) 0.42 % 0.84 % 0.57 % Risk Grade 6 (substandard) 0.57 % 0.53 % 0.54 % Risk Grade 7 (doubtful) 0.00 % 0.00 % 0.00 % Risk Grade 8 (loss) 0.00 % 0.00 % 0.00 % At March 31, 2025 , 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. 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 three months ended March 31, 2025 and 2024, and the year ended December 31, 2024 . SOURCE: Peoples Bancorp of North Carolina, Inc. View the original press release on ACCESS Newswire

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