Breaking Down Peoples Bancorp of North Carolina, Inc. (PEBK) Financial Health: Key Insights for Investors

You're looking at Peoples Bancorp of North Carolina, Inc. (PEBK) right now and asking the right question: is this regional bank a solid bet, or are there hidden risks in the balance sheet? Honestly, the Q3 2025 numbers paint a nuanced picture you need to see. While the bank's year-to-date net earnings grew to a solid $13.2 million, up 3.1%, the third quarter itself saw a dip in net earnings to $3.7 million, mostly due to higher provisions for credit losses-a near-term risk we need to map. Still, the core business is working: the net interest margin (NIM), a crucial measure of profitability, expanded to 3.55% year-to-date, and total assets hit $1.74 billion as of September 30, 2025, which shows real growth. We'll defintely dive into why non-performing assets holding steady at just 0.29% of total assets is a powerful signal of asset quality, but you have to understand the cost side of that growth to make a smart decision.

Revenue Analysis

You need a clear picture of where Peoples Bancorp of North Carolina, Inc. (PEBK) makes its money, and the takeaway is simple: the core banking business is strong, but a non-traditional segment is driving a notable portion of your non-interest income. For the nine months ended September 30, 2025, the company generated a total revenue of approximately $65.0 million, marking a solid 6.56% year-over-year increase from the same period in 2024. That's a defintely healthy growth rate for a regional bank.

The company's revenue is split into two primary streams, which is typical for a financial holding company but with an interesting twist. The vast majority of revenue comes from Net Interest Income (NII), which is the difference between interest earned on loans and investments and interest paid on deposits. The remaining portion is Non-Interest Income, which stems from fees and other non-lending activities.

Here's the quick math on the YTD 2025 revenue composition:

• Net Interest Income: Contributed $43.7 million, representing about 67.23% of the total revenue.
• Non-Interest Income: Accounted for $21.3 million, or about 32.77% of the total.

The key is that the Non-Interest Income contribution is substantial for a bank of this size, and you should understand the source. If you want to dive deeper into who is investing in this structure, consider Exploring Peoples Bancorp of North Carolina, Inc. (PEBK) Investor Profile: Who's Buying and Why?

The growth story in 2025 is driven by the core lending business. Net Interest Income grew by 8.44% year-over-year for the nine months ended September 30, 2025, climbing to $43.7 million from $40.3 million in the prior year period. This increase primarily came from a $3.0 million rise in interest income and fees on loans, which was partially offset by a decrease in interest income from investment securities. The loan book is performing, and the higher interest rate environment is helping the net interest margin (NIM), which was 3.58% in the third quarter of 2025, up from 3.35% in Q3 2024.

The Non-Interest Income segment also saw an increase, growing by 2.90% to $21.3 million year-to-date. This growth is almost entirely attributable to the company's subsidiary, CBRES, which handles appraisal management services. The $1.9 million increase in appraisal management fee income due to higher appraisal volume was the main driver here. This diversification through CBRES is a strategic advantage, but it also ties a portion of the company's revenue to the health of the real estate transaction market, which is something to watch.

For the most recent quarter, Q3 2025, the total quarterly revenue was $22.25 million. This confirms the steady revenue generation, but you should note that the net earnings for the quarter decreased to $3.7 million from $4.0 million in Q3 2024, mostly due to a higher provision for credit losses and non-interest expense, even with the revenue growth.

Profitability Metrics

You're looking at Peoples Bancorp of North Carolina, Inc. (PEBK) because you need to know if their revenue growth is translating into real, sustainable profit. The direct takeaway is that while the bank is successfully expanding its core lending margin, their operational efficiency (cost management) is lagging the industry, which is compressing the final net profit.

For a bank, we translate the traditional profitability metrics-Gross Profit, Operating Profit, and Net Profit-into their industry equivalents: Net Interest Margin (NIM), Pre-Provision Net Revenue (PPNR), and Net Earnings. The data for the third quarter of 2025 (Q3 2025) shows a mixed picture, with strong core lending performance but rising non-interest expenses.

Here's the quick math for Q3 2025, which ended September 30, 2025:

• Net Interest Margin (NIM): The core measure of lending profitability, NIM, stood at 3.58%, an improvement from the prior year period, reflecting better asset yields.
• Operating Profit Margin (PPNR Margin): Pre-Provision Net Revenue (PPNR) is the operating profit before accounting for credit losses and taxes. With total revenue of approximately $22.2 million ($15.1M Net Interest Income + $7.1M Non-interest Income) and non-interest expense of $16.9 million, the PPNR was roughly $5.3 million, giving an Operating Margin of about 23.87%.
• Net Profit Margin: The bottom-line net earnings were $3.7 million for Q3 2025, resulting in a Net Profit Margin of approximately 16.67%. This is a slight dip from the company's recent historical margin, indicating pressure from non-operating factors.

Trends in Profitability and Operational Efficiency

The trend in profitability for Peoples Bancorp of North Carolina is one of increasing core revenue (Net Interest Income) but also increasing costs. For the nine months ended September 30, 2025, the bank's net earnings were $13.2 million, a modest increase from the prior year period. This growth was primarily driven by increases in net interest income and non-interest income, but it was partially offset by a jump in the provision for credit losses and non-interest expense. The fact that net earnings grew by only a small amount despite a rising NIM tells you that operational efficiency (or cost management) is defintely a headwind.

The rise in non-interest expense to $16.9 million in Q3 2025 from $15.0 million in Q3 2024 is the key area to watch.

Industry Comparison: Where PEBK Stands

When you compare Peoples Bancorp of North Carolina's performance to the broader US banking industry, the primary concern is operational efficiency, which is measured by the Efficiency Ratio (Non-interest Expense as a percentage of Total Revenue). A lower ratio is better.

Here's how the bank stacks up against the industry for key operational metrics:

The bank's calculated Efficiency Ratio of approximately 76.13% is notably higher than the industry's Q1 2025 average of 56.2%. This means the bank is spending about 76 cents to earn a dollar of revenue, while the average US bank is spending about 56 cents. This gap in operational efficiency is the main reason why the bank's Return on Assets (ROA) of 0.99% falls below the industry's 1.16%. This is the biggest near-term risk to net profitability.

To dive deeper into the investor base and market perception, you should check out Exploring Peoples Bancorp of North Carolina, Inc. (PEBK) Investor Profile: Who's Buying and Why?

The clear action here is to monitor the Q4 2025 earnings release for any management commentary on cost-cutting initiatives or a normalization of non-interest expense. If the efficiency ratio doesn't start trending down, the strong NIM won't be enough to drive superior shareholder returns.

Debt vs. Equity Structure

You need a clear picture of how Peoples Bancorp of North Carolina, Inc. (PEBK) funds its growth, and the data for the 2025 fiscal year tells a story of significant financial conservatism. Simply put, the company leans heavily on equity and customer deposits, not external debt, which is a major difference from its peers.

As of September 30, 2025, the company's debt load is remarkably light. Their explicit long-term debt, primarily in the form of Junior subordinated debentures, stands at a stable $15.5 million. For a bank with $1.74 billion in total assets, this level of debt is minimal. Short-term debt is not a major component of their capital structure; their core liability is deposits, which totaled $1.55 billion as of Q3 2025.

Here's the quick math on their leverage, comparing their debt to their shareholders' equity:

• PEBK Debt-to-Equity Ratio (Q3 2025): $\approx$ 0.104 (Calculated as $15.5M debt / $149.5M equity).
• Regional Bank Industry Average D/E Ratio (Nov 2025): 0.5. [cite: 8 in step 1]

A ratio of 0.104 means the company finances only about 10 cents of every dollar of equity with debt. This is defintely a low-leverage model, giving them a substantial cushion against economic shocks compared to the regional bank average of 0.5. They are essentially funding their loan growth through retained earnings and deposits, not market borrowing.

The company's strategy is clearly focused on internal capital generation and managing its equity base. Total shareholders' equity grew to $149.5 million by September 30, 2025, up from $130.6 million at the end of 2024. This increase was largely driven by retaining earnings and a positive change in the unrealized loss on investment securities. They are not relying on new debt issuances for growth.

Instead of debt, their capital management focus in 2025 has been on equity actions. In March 2025, Peoples Bancorp of North Carolina, Inc. authorized a Stock Repurchase Plan, allowing the repurchase of up to $3,000,000 of outstanding shares. This is a signal that management views the stock as undervalued and prefers to return capital to shareholders through buybacks rather than seeking new, expensive debt financing. It's a low-risk, equity-centric approach to growth, which you can see aligns with their long-term values, which are detailed here: Mission Statement, Vision, & Core Values of Peoples Bancorp of North Carolina, Inc. (PEBK).

Liquidity and Solvency

You need to know if Peoples Bancorp of North Carolina, Inc. (PEBK) can meet its short-term obligations, and for a bank, that analysis is different than for a manufacturer. The traditional liquidity ratios look scary, but they are normal for a financial institution. What matters more is the quality and growth of their core assets and liabilities.

The key takeaway is that Peoples Bancorp of North Carolina, Inc. has maintained a strong core deposit base, which is the lifeblood of a community bank, but the growth in its loan book means it is constantly managing its asset-liability mismatch. Their liquidity position is supported not by the current ratio, but by available liquid assets and borrowing capacity.

Here's the quick math on their liquidity position as of late 2024, which sets the stage for 2025:

• Current Ratio (Dec 2024): 0.2
• Quick Ratio (Dec 2024): Also low, near 0.2

A current ratio (Current Assets / Current Liabilities) of 0.2 would be a massive red flag for a normal company, but for a bank, it's expected. The vast majority of a bank's current liabilities are customer deposits (like checking and savings accounts), which total $1.55 billion as of September 30, 2025. These deposits are technically due on demand, but they are a stable, core funding source. Conversely, a bank's major assets-its loans, which reached $1.18 billion by Q3 2025-are long-term, non-current assets. So, the ratio will always look low.

Working Capital and Core Funding Trends

Instead of the ratio, look at the working capital trend in terms of core deposits versus loans. Peoples Bancorp of North Carolina, Inc. has seen healthy growth on both sides. Total assets grew to $1.74 billion by September 30, 2025, up from $1.65 billion at the end of 2024.

The growth in deposits from $1.48 billion (Dec 31, 2024) to $1.55 billion (Sept 30, 2025) is a positive trend, signaling continued customer confidence and a stable funding base. What this estimate hides, still, is the interest rate risk on their available-for-sale securities, which stood at $376.9 million in Q3 2025. If rates rise, the market value of those securities falls, which impacts the tangible equity, not immediate cash liquidity.

For a deeper look into the bank's philosophy on managing this balance, you can review the Mission Statement, Vision, & Core Values of Peoples Bancorp of North Carolina, Inc. (PEBK).

Cash Flow Statement Overview

Analyzing the cash flow statement reveals how Peoples Bancorp of North Carolina, Inc. funds its lending growth. The 2024 annual figures provide the clearest picture of the trend that continued into 2025.

The trend is clear: Peoples Bancorp of North Carolina, Inc. uses the cash generated from operations and, more significantly, the cash provided by financing (new deposits) to fund its investing activities (new loans). The $121.6 million used in investing in 2024 was primarily for loan growth, which is exactly what you want to see in a community bank. This structure confirms a healthy funding mechanism, but it also means the bank is defintely sensitive to deposit retention.

Potential Liquidity Strengths and Concerns

The primary strength is the stability of the deposit base, which has been growing. The bank also maintains significant off-balance sheet liquidity: access to funds from the Federal Home Loan Bank (FHLB) and the Federal Reserve Bank (FRB). This borrowing capacity provides a crucial buffer, far more important than the current ratio.

The near-term risk lies in the interest rate environment. If competition for deposits intensifies, the bank's cost of financing will rise, which could compress the net interest margin (NIM) and slow the pace of loan growth. While the NIM improved to 3.58% in Q3 2025, up from 3.35% in the prior year period, maintaining that will be key.

Valuation Analysis

You need a clear answer on Peoples Bancorp of North Carolina, Inc. (PEBK): is it a buy, a hold, or a sell? Based on the latest metrics for the 2025 fiscal year, the consensus leans toward a Hold, suggesting the stock is currently trading near its fair value, but not offering a deep discount or a significant premium.

When we look at the core valuation multiples, Peoples Bancorp of North Carolina appears reasonably priced for a regional bank. Its trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio is sitting at 9.54 as of November 2025. To be fair, this is a defintely attractive number, especially when compared to the broader market P/E, which often hovers much higher. This lower P/E suggests the market is not pricing in aggressive growth, but rather stable, predictable earnings.

For a bank, the Price-to-Book (P/B) ratio is arguably more important, as it measures the stock price against the company's net asset value (book value). Peoples Bancorp of North Carolina currently trades at a P/B ratio of approximately 1.05 (TTM, November 2025). [cite: 6 in step 2] A P/B ratio this close to 1.0 means you are paying nearly dollar-for-dollar for the bank's tangible assets, which is a solid, conservative valuation for a well-capitalized institution.

• P/E Ratio (TTM, Nov 2025): 9.54
• P/B Ratio (TTM, Nov 2025): 1.05 [cite: 6 in step 2]
• Analyst Consensus: Hold [cite: 4, 6 in step 1, 13 in step 1]

Here's the quick math on the Enterprise Value-to-EBITDA (EV/EBITDA) ratio: we typically don't use it for banks. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a metric for operating companies, but for a bank, interest income and expense are the core of the business, so excluding them (as EBITDA does) makes the ratio nearly meaningless. Focus on P/E and P/B instead.

The stock price has been relatively flat over the last 12 months, increasing by just 0.29%. Still, the 52-week range shows volatility, with a low of $23.74 and a high of $33.90, which means there have been opportunities for entry and exit. The current price of around $30.54 is right in the middle, supporting the 'Hold' consensus from the single Wall Street analyst covering the stock. [cite: 4 in step 1] This neutral rating, reaffirmed as recently as October 2025, signals no immediate catalysts for a major price move. [cite: 6 in step 1]

The dividend profile is a key part of the investment thesis. Peoples Bancorp of North Carolina offers a strong TTM dividend yield of 3.19% as of November 2025, [cite: 6 in step 2] based on an annualized dividend of $0.80 per share. [cite: 11 in step 1, 13 in step 1] The payout ratio-the percentage of earnings paid out as dividends-is a very sustainable 31.05% (TTM, November 2025). [cite: 6 in step 2] This low payout ratio gives the company plenty of room to reinvest in the business or increase the dividend in the future. It's a solid income play, even if the capital appreciation outlook is modest.

For a deeper dive into the institutional ownership and investor sentiment driving these numbers, you should check out Exploring Peoples Bancorp of North Carolina, Inc. (PEBK) Investor Profile: Who's Buying and Why?

Next Step: Review the Q3 2025 10-Q report to confirm the trend in net interest margin and loan growth, as those are the primary drivers for a regional bank's future earnings.

Risk Factors

You're looking at Peoples Bancorp of North Carolina, Inc. (PEBK) and seeing solid nine-month net earnings of $13.2 million through September 30, 2025, but you need to know what could disrupt that. The biggest risks for a community bank like this fall into three buckets: macro-economic, competitive, and operational. You need to map these near-term risks to your investment thesis, because even a small regional bank isn't immune to the big currents.

The core financial risk is a decrease in net earnings, which we saw in the third quarter of 2025 (Q3 2025). Net earnings were $3.7 million, down from $4.0 million in the prior year period. This drop wasn't due to a lack of interest income-Net Interest Income actually increased to $15.1 million for Q3 2025. The pressure came from two key areas: higher provision for credit losses and an increase in non-interest expense.

Near-Term Financial and Credit Risks

The jump in the provision for credit losses signals management is setting aside more capital for potential bad loans, a clear response to a less certain economic outlook. While the total non-performing assets remain low at $5.1 million, or 0.29% of total assets as of September 30, 2025, the increase in the provision is a forward-looking warning. That's the quick math: if the economy slows in the North Carolina region, those provisions will turn into actual charge-offs.

• Credit Quality Deterioration: General economic conditions, whether national or local to the Catawba Valley region, could impair loan collectibility.
• Interest Rate Volatility: Changes in the interest rate environment can squeeze the Net Interest Margin (NIM), which was 3.58% in Q3 2025.
• Non-Interest Expense Creep: Increased operational costs, like insurance or appraisal management fees (which rose due to higher appraisal volume), cut directly into the bottom line.

External and Strategic Headwinds

For a regional player, external factors are defintely a constant threat. The regulatory environment is always shifting, and new legislative or accounting standards can hit compliance costs hard. Also, you can't ignore competition. They operate in a growing part of North Carolina, but that growth attracts bigger banks that can offer more aggressive pricing or more complex services. Competition is across the street.

The company's filings also point to the risk from significant changes in federal and state legal, regulatory, and tax laws, plus the impact of changes in monetary and fiscal policies. This is standard for any bank, but it takes a heavier toll on smaller institutions with fewer resources to absorb compliance costs.

Mitigation Strategies and Financial Resilience

The primary mitigation strategy is a disciplined focus on core banking fundamentals and a strong balance sheet. The increase in net interest income (NII) to $43.7 million year-to-date through Q3 2025, up from $40.3 million in the prior year, shows the company is successfully growing its loan portfolio and managing its cost of funds. This NII growth is the financial buffer that partially offsets the rise in credit loss provisions and expenses.

Furthermore, the bank's asset quality remains sound, with non-performing assets at a low 0.29% of total assets. Maintaining this low level is the best defense against a credit cycle downturn. For a deeper dive into their long-term vision, you should review the Mission Statement, Vision, & Core Values of Peoples Bancorp of North Carolina, Inc. (PEBK).

Here's a snapshot of the core financial strength that acts as a risk mitigator:

The management's ability to grow total loans to $1.18 billion while keeping non-performing assets in check demonstrates a disciplined credit culture. That's the real action item: watch the non-performing asset ratio in the next two quarters. If it ticks up, the risk is rising.

Growth Opportunities

You're looking for a clear path forward for Peoples Bancorp of North Carolina, Inc. (PEBK), and the data suggests a story of stable, community-driven growth tempered by the need for strategic evolution. The direct takeaway is that PEBK's near-term growth will be driven by margin expansion from a favorable interest rate environment and steady loan book growth in its core North Carolina markets, not by large, transformative acquisitions.

For the nine months ended September 30, 2025, Peoples Bancorp of North Carolina reported net earnings of $13.2 million, or $2.41 per diluted share, a modest increase from the prior year. This stability, however, is what makes the stock a potential value play, with a trailing P/E ratio around 9.66 as of Q3 2025. Analysts currently maintain a 'Hold' consensus, signaling a neutral outlook without immediate catalysts for significant stock appreciation.

Future Revenue Growth Projections and Earnings Estimates

Since Wall Street analysts are not providing a strong consensus full-year 2025 earnings per share (EPS) forecast, we can project a reasonable full-year number based on the actual Q3 2025 performance. Here's the quick math:

The company achieved a diluted EPS of $2.41 through the first three quarters of 2025. If we conservatively assume Q4 2025 diluted EPS matches the Q3 2025 result of $0.67 per diluted share, the projected full-year 2025 diluted EPS would be approximately $3.08 ($2.41 + $0.67). This represents a solid performance, driven largely by an improved Net Interest Margin (NIM), which reached 3.58% in Q3 2025, up from 3.35% a year prior.

Key financial metrics for the nine months ended September 30, 2025, show the underlying strength:

• Total Loans: Increased to $1.18 billion.
• Total Deposits: Grew to $1.55 billion.
• Net Interest Income: Climbed 8.4% year-to-date to $43.7 million.

What this estimate hides is the rising Provision for Credit Losses, which increased in Q3 2025 to $585,000, reflecting an expanding loan portfolio and a more cautious risk outlook.

Key Growth Drivers and Strategic Initiatives

Peoples Bancorp of North Carolina's growth strategy is twofold: deepening its roots in the Catawba Valley region and judiciously expanding its non-interest income streams. The primary growth drivers are tied to a healthy regional economy and strategic digital investments.

• Product Innovations: The company continues to invest in enhancing its digital banking capabilities to attract a younger, more tech-savvy customer base. This is defintely a necessary move for any regional bank to stay competitive.
• Non-Interest Income: The subsidiary, Community Bank Real Estate Solutions, LLC (CBRES), which provides appraisal management services, is a notable non-banking growth driver. Its appraisal management fees saw 17.2% growth in Q3 2025, helping non-interest income climb to $7.1 million for the quarter.
• Capital Management: The March 2025 authorization of a Stock Repurchase Plan signals management's belief that the stock is undervalued, which can drive EPS growth by reducing the share count.

Competitive Advantages and Market Position

The company maintains a strong competitive advantage by leaning into its community bank model, which emphasizes local decision-making and deep customer relationships. This approach is particularly effective in its core operating area, which spans 15 offices across counties like Catawba, Lincoln, and Iredell.

Its structure, which includes subsidiaries like Peoples Investment Services, Inc. and Real Estate Advisory Services, Inc., allows the company to offer a comprehensive suite of financial services (loans, deposits, investment services) that are tailored to local small businesses and municipal clients. This local focus positions them well to capitalize on the moderate economic growth expected in the Catawba Valley region.

For a deeper dive into the valuation and risk profile, you can read the full post: Breaking Down Peoples Bancorp of North Carolina, Inc. (PEBK) Financial Health: Key Insights for Investors.

Next Step: Start modeling a sensitivity analysis on the 2025 EPS projection, adjusting the Q4 estimate up or down by 10% to account for potential changes in the provision for credit losses.