Peoples Bancorp Announces Second Quarter 2026 Results

Company Release - 7/20/2026 9:00 AM ET Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) (the "Company"), the parent company of Peoples Bank (the "Bank"), reported second quarter 2026 results with highlights as follows: Second quarter 2026 highlights: Net earnings were $5.2 million or $0.98 per share and $0.96 per diluted share for the three months ended June 30, 2026, as compared to $5.2 million or $0.97 per share and $0.95 per diluted share for the same period one year ago. Net interest margin was 3.80% for the three months ended June 30, 2026, compared to 3.57% for the three months ended June 30, 2025. Year-to-date highlights: Net earnings were $9.6 million or $1.81 per share and $1.76 per diluted share for the six months ended June 30, 2026, compared to $9.5 million or $1.79 per share and $1.74 per diluted share for the same period one year ago. Cash dividends were $0.59 per share for the six months ended June 30, 2026, compared to $0.56 per share for the prior year period. Total loans were $1.28 billion at June 30, 2026, compared to $1.20 billion at December 31, 2025. Non-performing assets were $5.2 million or 0.29% of total assets at June 30, 2026, compared to $4.2 million or 0.25% of total assets at December 31, 2025. Total deposits were $1.57 billion at June 30, 2026, compared to $1.51 billion at December 31, 2025. Core deposits, a non-GAAP measure, were $1.44 billion or 91.63% of total deposits at June 30, 2026, compared to $1.35 billion or 89.44% of total deposits at December 31, 2025. Net interest margin was 3.74% for the six months ended June 30, 2026, compared to 3.54% for the six months ended June 30, 2025. Net earnings were $5.2 million or $0.98 per share and $0.96 per diluted share for the three months ended June 30, 2026, compared to $5.2 million or $0.97 per share and $0.95 per diluted share for the prior year period. William D. Cable, Sr., President and Chief Executive Officer, noted second quarter net earnings reflect an increase in net interest income, which was partially offset by an increase in the provision for credit losses, a decrease in non-interest income and an increase in non-interest expense, compared to the prior year period, as discussed below. Net interest income was $16.0 million for the three months ended June 30, 2026, compared to $14.6 million for the three months ended June 30, 2025. The increase in net interest income is due to a $806,000 increase in interest income and a $565,000 decrease in interest expense. The increase in interest income is primarily due to a $1.5 million increase in interest income and fees on loans, which was partially offset by a $511,000 decrease in interest income on balances due from banks and a $231,000 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 decrease in average balances outstanding and rate decreases implemented by the Federal Reserve. The decrease in interest income on investment securities is due to a reduction in balances outstanding and decreases in yields on variable rate securities. The decrease in interest expense is primarily due to a decrease in rates paid on interest-bearing liabilities resulting from rate decreases implemented by the Federal Reserve and a $18.8 million decrease in time deposits from March 31, 2026 to June 30, 2026. Net interest income after the provision for credit losses was $15.7 million for the three months ended June 30, 2026, compared to $14.8 million for the three months ended June 30, 2025. The provision for credit losses for the three months ended June 30, 2026 was $293,000, compared to a recovery of $213,000 for the three months ended June 30, 2025. The increase in the provision for credit losses reflects continued growth in total loans, which increased $36.3 million during the three months ended June 30, 2026, compared to an increase of $5.9 million during the three months ended June 30, 2025. Additionally, the increase in the provision for credit losses includes a $29,000 increase in net charge-offs during the three months ended June 30, 2026, compared to the three months ended June 30, 2025. Non-interest income was $7.1 million for the three months ended June 30, 2026, compared to $7.7 million for the three months ended June 30, 2025. The decrease in non-interest income is primarily attributable to a $929,000 decrease in appraisal management fee income due to a decrease in appraisal volume, which was partially offset by a $108,000 increase in mortgage banking income due to an increase in secondary mortgage market activity and a $254,000 increase in miscellaneous non-interest income primarily due to an increase in deferred compensation income associated with an increase in valuations for the assets in the deferred compensation plan and an increase in income on Small Business Investment Company (SBIC) investments. Non-interest expense was $16.1 million for the three months ended June 30, 2026, compared to $15.8 million for the three months ended June 30, 2025. The increase in non-interest expense is primarily attributable to a $482,000 increase in occupancy expense primarily due to an increase in furniture and equipment maintenance/service contract expenses, a $241,000 increase in debit card expense and a $288,000 increase in miscellaneous non-interest expense primarily due to an increase in deferred compensation expense associated with an increase in valuations for the assets in the deferred compensation plan. The increases in non-interest expense were partially offset by a $718,000 decrease in appraisal management fee expense due to a decrease in appraisal volume. Net earnings were $9.6 million or $1.81 per share and $1.76 per diluted share for the six months ended June 30, 2026, compared to $9.5 million or $1.79 per share and $1.74 per diluted share for the same period one year ago. The increase in year-to-date net earnings is primarily attributable to an increase in net interest income, which was partially offset by an increase in the provision for credit losses, a decrease in non-interest income and an increase in non-interest expense, compared to the prior year period, as discussed below. Net interest income was $31.1 million for the six months ended June 30, 2026, compared to $28.5 million for the six months ended June 30, 2025. The increase in net interest income is due to a $1.7 million increase in interest income and a $818,000 decrease in interest expense. The increase in interest income is primarily due to a $3.0 million increase in interest income and fees on loans, which was partially offset by a $620,000 decrease in interest income on balances due from banks and a $673,000 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 decrease in average balances outstanding and rate decreases implemented by the Federal Reserve. The decrease in interest income on investment securities is due to a reduction in balances outstanding and decreases in yields on variable rate securities. The decrease in interest expense is primarily due to a decrease in rates paid on interest-bearing liabilities resulting from rate decreases implemented by the Federal Reserve and a $46.6 million decrease in time deposits from December 31, 2025 to June 30, 2026. Net interest income after the provision for credit losses was $30.2 million for the six months ended June 30, 2026, compared to $28.5 million for the six months ended June 30, 2025. The provision for credit losses for the six months ended June 30, 2026 was $853,000, compared to $55,000 for the six months ended June 30, 2025. The increase in the provision for credit losses reflects continued growth in total loans, which increased $75.2 million during the six months ended June 30, 2026, compared to an increase of $19.6 million during the six months ended June 30, 2025. Additionally, the increase in the provision for credit losses includes a $66,000 increase in net charge-offs during the six months ended June 30, 2026, compared to the six months ended June 30, 2025. Non-interest income was $13.6 million for the six months ended June 30, 2026, compared to $14.2 million for the six months ended June 30, 2025. The decrease in non-interest income is primarily attributable to a $1.4 million decrease in appraisal management fee income due to a decrease in appraisal volume, which was partially offset by a $216,000 increase in mortgage banking income due to an increase in secondary mortgage market activity and a $492,000 increase in miscellaneous non-interest income primarily due to an increase in deferred compensation income associated with an increase in valuations for the assets in the deferred compensation plan and an increase in income on Small Business Investment Company (SBIC) investments. Non-interest expense was $31.5 million for the six months ended June 30, 2026, compared to $30.4 million for the six months ended June 30, 2025. The increase in non-interest expense is primarily attributable to a $417,000 increase in salaries and employee benefits expense primarily due to increases in salary and restricted stock expenses, a $761,000 increase in occupancy expense primarily due to an increase in furniture and equipment maintenance/service contract expenses, a $179,000 increase in professional fees primarily due to an increase in consulting expense, a $431,000 increase in debit card expense and a $293,000 increase in miscellaneous non-interest expense primarily due to an increase in deferred compensation expense associated with an increase in valuations for the assets in the deferred compensation plan. The increases in non-interest expense were partially offset by a $1.0 million decrease in appraisal management fee expense due to a decrease in appraisal volume. Income tax expense was $1.5 million for the three months ended June 30, 2026 and 2025. The effective tax rate was 22.23% for the three months ended June 30, 2026, compared to 22.56% for the three months ended June 30, 2025. Income tax expense was $2.7 million for the six months ended June 30, 2026, compared to $2.8 million for the six months ended June 30, 2025. The effective tax rate was 22.18% for the six months ended June 30, 2026, compared to 22.69% for the six months ended June 30, 2025. The decrease in the effective tax rate is primarily due to the North Carolina corporate income tax rate decreasing from 2.25% to 2.00% effective January 1, 2026 and the revaluation of the deferred tax asset due to further upcoming reductions in the North Carolina corporate income tax rate. Total assets were $1.76 billion as of June 30, 2026, compared to $1.70 billion as of December 31, 2025. Available for sale securities were $364.5 million as of June 30, 2026, compared to $377.4 million as of December 31, 2025. Total loans were $1.28 billion as of June 30, 2026, compared to $1.20 billion at December 31, 2025. Non-performing assets were $5.2 million or 0.29% of total assets at June 30, 2026, compared to $4.2 million or 0.25% of total assets at December 31, 2025. Non-performing assets comprise $4.0 million in residential mortgage loans, $1.1 million in commercial mortgage loans and $122,000 in other loans at June 30, 2026, compared to $3.6 million in residential mortgage loans and $533,000 in commercial mortgage loans at December 31, 2025. The allowance for credit losses on loans was $10.6 million or 0.83% of total loans at June 30, 2026, compared to $10.1 million or 0.84% of total loans at December 31, 2025. The allowance for credit losses on loans increased $504,000 primarily due to a $75.2 million increase in total loans from December 31, 2025 to June 30, 2026. The allowance for credit losses on unfunded commitments was $1.6 million at June 30, 2026, compared to $1.4 million at December 31, 2025. The increase in the allowance for credit losses on unfunded commitments was due to a $11.7 million increase in unfunded loan commitments from December 31, 2025 to June 30, 2026. 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 $1.57 billion as of June 30, 2026, compared to $1.51 billion as of December 31, 2025. Core deposits, a non-GAAP measure, which include noninterest-bearing demand deposits, NOW, MMDA, savings and non-brokered certificates of deposit of denominations of less than $250,000, were $1.44 billion at June 30, 2026, compared to $1.35 billion at December 31, 2025. 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 $250,000 or more totaled $131.2 million at June 30, 2026, compared to $160.4 million December 31, 2025. Junior subordinated debentures were $15.5 million at June 30, 2026 and December 31, 2025. Shareholders' equity was $161.3 million, or 9.14% of total assets, at June 30, 2026, compared to $157.1 million, or 9.23% of total assets, at December 31, 2025. Peoples Bank operates 15 banking offices in North Carolina, with offices in Catawba, Alexander, Lincoln, Mecklenburg and Iredell 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, 2025. Contact: William D. Cable, Sr. President and Chief Executive Officer Jeffrey N. Hooper Executive Vice President and Chief Financial Officer 828-464-5620 CONSOLIDATED BALANCE SHEETS June 30, 2026, December 31, 2025 and June 30, 2025 (Dollars in thousands) June 30, 2026 December 31, 2025 June 30, 2025 (Unaudited) (Audited) (Unaudited) ASSETS: Cash and due from banks $ 33,442 $ 27,721 $ 33,017 Interest-bearing deposits 27,435 30,384 68,983 Cash and cash equivalents 60,877 58,105 102,000 Investment securities available for sale 364,482 377,363 371,614 Other investments 2,577 2,595 2,648 Total securities 367,059 379,958 374,262 Mortgage loans held for sale 1,742 1,136 1,541 Loans 1,279,539 1,204,388 1,157,975 Less: Allowance for credit losses on loans (10,630 ) (10,126 ) (9,792 ) Net loans 1,268,909 1,194,262 1,148,183 Premises and equipment, net 14,052 14,162 14,644 Cash surrender value of life insurance 18,099 17,837 17,587 Right of use lease asset 3,140 3,477 3,713 Accrued interest receivable and other assets 31,121 33,211 31,915 Total assets $ 1,764,999 $ 1,702,148 $ 1,693,845 LIABILITIES AND SHAREHOLDERS' EQUITY: Deposits: Noninterest-bearing demand $ 409,330 $ 394,563 $ 406,556 Interest-bearing demand, MMDA & savings 850,744 760,883 754,125 Time, $250,000 and over 131,201 160,389 150,580 Other time 176,017 193,390 202,558 Total deposits 1,567,292 1,509,225 1,513,819 Junior subordinated debentures 15,464 15,464 15,464 Lease liability 3,282 3,615 3,844 Accrued interest payable and other liabilities 17,622 16,726 16,713 Total liabilities 1,603,660 1,545,030 1,549,840 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 5,461,490 shares at 6/30/26, 5,459,441 shares at 12/31/25, 5,459,441 shares at 6/30/25 48,782 48,708 48,708 Common stock held by deferred compensation trust, at cost; 140,163 shares at 6/30/26, 150,288 shares at 12/31/25, 150,463 shares at 6/30/25 (1,081 ) (1,510 ) (1,527 ) Deferred compensation 1,081 1,510 1,527 Retained earnings 142,055 135,645 127,506 Accumulated other comprehensive loss (29,498 ) (27,235 ) (32,209 ) Total shareholders' equity 161,339 157,118 144,005 Total liabilities and shareholders' equity $ 1,764,999 $ 1,702,148 $ 1,693,845 CONSOLIDATED STATEMENTS OF INCOME For the three and six months ended June 30, 2026 and 2025 (Dollars in thousands, except per share amounts) Three months ended Six months ended June 30, June 30, 2026 2025 2026 2025 (Unaudited) (Unaudited) (Unaudited) (Unaudited) INTEREST INCOME: Interest and fees on loans $ 18,196 $ 16,648 $ 35,669 $ 32,664 Interest on due from banks 195 706 436 1,056 Interest on investment securities: U.S. Government sponsored enterprises 1,948 2,087 3,869 4,348 State and political subdivisions 693 694 1,387 1,388 Other 494 585 1,041 1,234 Total interest income 21,526 20,720 42,402 40,690 INTEREST EXPENSE: Interest-bearing demand, MMDA & savings deposits 3,058 2,729 5,945 5,381 Time deposits 2,283 3,152 4,952 6,285 Junior subordinated debentures 217 242 434 483 Total interest expense 5,558 6,123 11,331 12,149 NET INTEREST INCOME 15,968 14,597 31,071 28,541 PROVISION FOR CREDIT LOSSES 293 (213 ) 853 55 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 15,675 14,810 30,218 28,486 NON-INTEREST INCOME: Service charges 1,383 1,372 2,784 2,784 Other service charges and fees 172 156 350 342 Gain/(loss) on sale of securities - - - (4 ) Mortgage banking income 149 41 284 68 Insurance and brokerage commissions 248 258 517 495 Appraisal management fee income 3,044 3,973 5,664 7,015 Miscellaneous 2,147 1,893 4,014 3,522 Total non-interest income 7,143 7,693 13,613 14,222 NON-INTEREST EXPENSES: Salaries and employee benefits 7,127 7,168 14,373 13,956 Occupancy 2,540 2,058 4,847 4,086 Professional fees 565 559 1,245 1,066 Advertising 231 245 490 498 Debit card expense 468 227 894 463 FDIC insurance 197 193 391 382 Appraisal management fee expense 2,438 3,156 4,533 5,575 Miscellaneous 2,522 2,234 4,680 4,387 Total non-interest expense 16,088 15,840 31,453 30,413 EARNINGS BEFORE INCOME TAXES 6,730 6,663 12,378 12,295 INCOME TAXES 1,496 1,503 2,746 2,790 NET EARNINGS $ 5,234 $ 5,160 $ 9,632 $ 9,505 PER SHARE AMOUNTS Basic net earnings $ 0.98 $ 0.97 $ 1.81 $ 1.79 Diluted net earnings $ 0.96 $ 0.95 $ 1.76 $ 1.74 Cash dividends $ 0.21 $ 0.20 $ 0.59 $ 0.56 Book value $ 30.32 $ 27.12 $ 30.32 $ 27.12 FINANCIAL HIGHLIGHTS For the three and six months ended June 30, 2026 and 2025, and the year ended December 31, 2025 (Dollars in thousands) Three months ended Six months ended Year ended June 30, June 30, December 31, 2026 2025 2026 2025 2025 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) SELECTED AVERAGE BALANCES: Available for sale securities $ 408,135 $ 415,919 $ 409,241 $ 424,518 $ 418,469 Loans 1,252,389 1,156,140 1,237,538 1,149,274 1,165,212 Earning assets 1,685,090 1,639,475 1,674,171 1,625,624 1,653,293 Assets 1,729,520 1,680,854 1,720,950 1,666,177 1,695,711 Deposits 1,543,197 1,513,519 1,535,510 1,502,234 1,525,479 Shareholders' equity 156,837 137,223 159,001 136,373 148,795 SELECTED KEY DATA: Net interest margin (tax equivalent) (1) 3.80 % 3.57 % 3.74 % 3.54 % 3.57 % Return on average assets 1.21 % 1.23 % 1.13 % 1.15 % 1.17 % Return on average shareholders' equity 13.38 % 15.08 % 12.22 % 14.06 % 13.33 % Average shareholders' equity to total average assets 9.07 % 8.16 % 9.24 % 8.18 % 8.77 % June 30, 2026 June 30, 2025 December 31, 2025 (Unaudited) (Unaudited) (Audited) ALLOWANCE FOR CREDIT LOSSES: Allowance for credit losses on loans $ 10,630 $ 9,792 $ 10,126 Allowance for credit losses on unfunded commitments 1,585 1,258 1,403 Provision for credit losses (2) 293 55 938 Charge-offs (2) (347 ) (284 ) (852 ) Recoveries (2) 180 183 347 ASSET QUALITY: Non-accrual loans $ 5,200 $ 4,822 $ 4,176 90 days past due and still accruing - - - Other real estate owned - - - Total non-performing assets $ 5,200 $ 4,822 $ 4,176 Non-performing assets to total assets 0.29 % 0.28 % 0.25 % Allowance for credit losses on loans to non-performing assets 204.42 % 203.07 % 242.48 % Allowance for credit losses on loans to total loans 0.83 % 0.85 % 0.84 % LOAN RISK GRADE ANALYSIS: Percentage of loans by risk grade Risk Grade 1 (excellent quality) 0.15 % 0.29 % 0.24 % Risk Grade 2 (high quality) 20.45 % 20.23 % 19.42 % Risk Grade 3 (good quality) 73.13 % 71.53 % 72.92 % Risk Grade 4 (management attention) 5.59 % 6.97 % 6.71 % Risk Grade 5 (watch) 0.22 % 0.46 % 0.30 % Risk Grade 6 (substandard) 0.46 % 0.52 % 0.41 % Risk Grade 7 (doubtful) 0.00 % 0.00 % 0.00 % Risk Grade 8 (loss) 0.00 % 0.00 % 0.00 % At June 30, 2026, including non-accrual loans, there were no relationships exceeding $1.0 million Watch and Substandard risk grades. 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, 2025, including non-accrual loans, there were no relationships exceeding $1.0 million Watch and Substandard risk grades. (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 22.58% and is reduced by the related nondeductible portion of interest expense. (2) For the six months ended June 30, 2026 and 2025, and the year ended December 31, 2025. SOURCE: Peoples Bancorp of North Carolina, Inc. View the original press release on ACCESS Newswire View all news