8-K: Peoples Bancorp Announces Increased Fourth Quarter and Full Year 2024 Results

Peoples Bancorp of North Carolina reports improved net earnings for both the fourth quarter and full year 2024, driven by increased net interest income and non-interest income.

Summary

• Peoples Bancorp of North Carolina, Inc. (NASDAQ: PEBK) announced its fourth quarter and full year 2024 earnings results on February 12, 2025.
• Net earnings for Q4 2024 were $3.6 million, or $0.67 per share ($0.65 diluted), compared to $3.4 million, or $0.64 per share ($0.62 diluted), for the same period in 2023.
• The net interest margin for Q4 2024 was 3.39%, up from 3.32% in Q4 2023.
• For the full year 2024, net earnings reached $16.4 million, or $3.08 per share ($2.98 diluted), compared to $15.5 million, or $2.87 per share ($2.77 diluted), in 2023.
• Cash dividends were $0.92 per share for 2024, slightly higher than the $0.91 per share in the previous year.
• Total loans increased to $1.14 billion at the end of 2024, compared to $1.09 billion at the end of 2023.
• Non-performing assets were $4.4 million, representing 0.27% of total assets at the end of 2024, compared to $3.9 million, or 0.24% of total assets, at the end of 2023.
• Total deposits grew to $1.48 billion at the end of 2024, up from $1.39 billion at the end of 2023.
• Core deposits, a non-GAAP measure, were $1.34 billion, or 90.17% of total deposits, at the end of 2024, compared to $1.24 billion, or 89.30% of total deposits, at the end of 2023.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the reported increase in earnings and growth in key areas like loans and deposits, although there are some concerns about rising expenses and a slight increase in non-performing assets.

Positives

• Net earnings increased for both the fourth quarter and full year 2024.
• Net interest margin improved in the fourth quarter of 2024.
• Total loans and deposits experienced growth year-over-year.
• The company saw an increase in non-interest income due to appraisal management fee income.
• The provision for credit losses decreased due to a reduction in reserves on construction loans and the impact of Hurricane Helene being less severe than initially anticipated.

Negatives

• Net interest margin decreased for the full year 2024.
• Non-performing assets increased slightly as a percentage of total assets.
• Non-interest expense increased due to higher salaries, employee benefits, appraisal management fees, consulting fees, and debit card fraud expense.
• Net charge-offs increased during the year ended December 31, 2024, primarily due to commercial and industrial loan charge-offs.

Risks

• Changes in the interest rate environment could impact future earnings.
• National, regional, or local economic conditions may be less favorable than expected, potentially leading to a deterioration in credit quality.
• Legislative or regulatory changes, including changes in accounting standards and tax laws, could affect the company's performance.
• Competition in the markets served by the bank could impact profitability.

Future Outlook

The press release contains forward-looking statements and includes cautionary language identifying important factors that could cause actual results to differ materially from those anticipated.

Management Comments

• William D. Cable, Sr., President and Chief Executive Officer, attributed the increase in fourth quarter net earnings to an increase in net interest income, a decrease in the provision for credit losses and an increase in non-interest income, which was partially offset by an increase in non-interest expense, compared to the prior year period.

Industry Context

This announcement reflects the performance of a regional bank in the context of fluctuating interest rates and economic conditions, with a focus on managing credit risk and growing core deposits.

Comparison to Industry Standards

• Comparing Peoples Bancorp's net interest margin of 3.36% to peers like First Horizon (FHN) and Truist (TFC), which have reported NIMs in the range of 2.8-3.2% recently, suggests PEBK is performing favorably in generating income from lending activities.
• However, PEBK's efficiency ratio, implied to be around 70% based on expense and revenue figures, is higher than some of the more efficient regional banks like U.S. Bancorp (USB) which often target efficiency ratios below 60%.
• The non-performing assets ratio of 0.29% is quite low compared to the industry average, indicating strong asset quality management, similar to banks like JP Morgan Chase (JPM) that maintain NPAs below 0.5%.

Stakeholder Impact

• Shareholders will likely react positively to the increased earnings and dividends.
• Employees may benefit from increased salaries and benefits, although there may be pressure to manage expenses.
• Customers will experience the bank's continued operations and services.
• The bank's financial health supports its ability to meet obligations to creditors.

Key Dates