Peoples Bancorp of North Carolina, Inc. — 2022 Form 10-K
Business context and reporting period
Annual report for the fiscal year ended December 31, 2022. The company is a bank holding company whose principal business is conducted through Peoples Bank, a North Carolina community bank operating 17 banking offices and four loan production offices.
Financial position and key metrics
| Metric | December 31, 2022 |
|---|---|
| Total assets | $1.6 billion |
| Net loans | $1.0 billion |
| Deposits | $1.4 billion |
| Total securities | $448.1 million |
| Shareholders’ equity | $105.2 million |
Bank capital ratios were 9.68% Tier 1 leverage, 13.10% common equity Tier 1, 13.10% Tier 1 risk-based, and 13.93% total risk-based. Company ratios were 9.82%, 12.03%, 13.21%, and 14.04%, respectively. The filing text provided here does not state clear values for annual revenue, net income, cash flow, net interest margin, or year-over-year changes in these measures; the financial statements and MD&A are incorporated by reference in Exhibit 13.
Material changes and notable items
- Available-for-sale securities had $62.3 million of unrealized losses at year-end, attributed to changing interest rates. In January and February 2023, the company sold $53.5 million of securities, recording gross losses of $2.7 million and gross gains of $177,000.
- The five largest deposit relationships totaled $117.0 million, or 7.89% of deposits and repurchase agreements combined. Their $31.4 million in repurchase agreements represented 65.76% of that funding category.
- The company discontinued PB Insurance Agency in 2022. Former Banco de la Gente offices continued operating under the Bank’s name.
- The company adopted the CECL credit-loss standard on January 1, 2023. The filing describes the expected accounting approach but does not give a clear quantified adoption impact.
Outlook, risks, contingencies, and governance
The filing provides no specific earnings or financial guidance. Management identifies interest-rate movements, inflation, possible recession, local economic and real-estate conditions, credit quality, deposit competition, liquidity, cybersecurity, third-party service providers, and extensive regulation as material risks. Management notes that rapid rate movements in 2022 can affect funding costs, asset values, loan demand, and net interest spread.
A North Carolina tax-credit dispute concerns proposed adjustments for 2014–2016. The Bank paid $1.2 million in taxes and interest in 2019 while contesting the adjustments. Management believes a related guaranty agreement limits potential exposure to approximately $125,000, but recovery from the guarantor is not assured. Management reported effective disclosure controls and internal control over financial reporting as of year-end; auditor attestation of internal controls was not included because the company is a smaller reporting company.
Important facts for investors to verify
- Review Exhibit 13 for full-year income, cash-flow, margin, asset-quality, and comparative-period figures omitted from the supplied filing text.
- Assess the securities portfolio’s unrealized losses, subsequent sales, and any further securities sales or realized losses.
- Check deposit trends, funding costs, and liquidity, including the concentration in the largest deposit and repurchase relationships.
- Review loan quality, allowance adequacy, and the quantified effect of CECL adoption.
- Track the tax-credit dispute and the collectibility and coverage provided by the guaranty agreement.