Business Context and Reporting Period
Company: Peoples Bancorp of North Carolina, Inc. (PEBK)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: The Company is a bank holding company for Peoples Bank, a state-chartered commercial bank serving the Catawba Valley and surrounding communities in North Carolina. Operations include 15 banking offices and 4 loan production offices. The Company has no operations other than owning the Bank and PEBK Capital Trust II.
Key Financial Metrics (Year Ended December 31, 2025)
| Metric | Value |
|---|---|
| Total Assets | $1.70 billion |
| Net Loans | $1.20 billion |
| Total Deposits | $1.51 billion |
| Total Securities | $380.0 million |
| Shareholders' Equity | $157.1 million |
| Unrealized Losses on AFS Securities | $35.3 million |
| FDIC Insurance Expense | $776,000 |
| Legal Lending Limit (Unsecured) | $31.4 million |
| Legal Lending Limit (Secured) | $52.3 million |
| Market Value of Common Equity (Non-Affiliates) | $133.6 million (as of June 30, 2025) |
| Shares Outstanding | 5,461,490 (as of February 28, 2026) |
Capital Adequacy (December 31, 2025)
- Bank Tier 1 Leverage Ratio: 11.13%
- Bank Total Risk-Based Capital Ratio: 15.70%
- Company Tier 1 Leverage Ratio: 11.33%
- Company Total Risk-Based Capital Ratio: 15.82%
Note: The filing text does not provide specific values for Net Income, Revenue, Operating Cash Flow, or Net Interest Margin for the period.
Material Changes and Operational Highlights
- Deposit Concentration: The two largest deposit relationships totaled $122.7 million, representing 8.13% of total deposits.
- Stock Repurchases: The Company purchased 1,065 shares in Q4 2025 for its deferred compensation plan. No shares were purchased under the publicly announced repurchase program in Q4 2025, though $3.0 million remained available under the program which expired February 28, 2026.
- Investment Portfolio: The portfolio holds $35.3 million in unrealized losses due to interest rate changes, which management considers temporary.
- Regulatory Status: The Bank received a "satisfactory" rating in its last Community Reinvestment Act (CRA) examination (May 2023).
Outlook, Risks, and Management Commentary
Forward-Looking Statements
Management notes that forward-looking statements involve risks and uncertainties. Actual results may differ due to competition, interest rate changes, economic conditions, and regulatory changes.
Key Risk Factors
- Credit Risk: Significant concentration in commercial real estate, commercial, and construction loans within the Catawba Valley region. Economic downturns could increase nonperforming loans.
- Interest Rate Risk: Profitability depends on the spread between interest earned on assets and paid on liabilities. Rising rates can reduce the value of fixed-rate investments.
- Liquidity Risk: Reliance on a small number of large depositors; withdrawal of these funds could force reliance on more expensive funding sources.
- Cybersecurity: Threats from sophisticated cyber-attacks could disrupt operations or result in data loss. No material incidents have occurred to date.
- Technology and AI: Risks associated with the adoption of artificial intelligence tools, including potential errors, bias, and regulatory compliance issues.
- Regulatory Changes: Potential changes to the Community Reinvestment Act (CRA) framework and evolving regulations regarding digital assets and stablecoins.
Investor Verification Checklist
- Financial Statements: Verify specific Net Income, Revenue, and Cash Flow figures in the Annual Report (Exhibit 13), as these were not explicitly detailed in the 10-K cover text.
- Allowance for Credit Losses: Review the adequacy of the allowance given the concentration in commercial real estate and the adoption of the CECL model.
- Deposit Stability: Assess the risk associated with the top two depositors comprising 8.13% of total deposits.
- Investment Portfolio: Monitor the $35.3 million in unrealized losses on Available-for-Sale securities and the potential impact on earnings if sold.
- Capital Ratios: Confirm continued compliance with Basel III standards and "well-capitalized" status in future filings.
- Regulatory Environment: Track the status of the proposed rulemaking to rescind the 2023 CRA final rule and its potential impact on compliance costs.