Form 8-K

8-K — PEOPLES BANCORP OF NORTH CAROLINA INC

Accession: 0001654954-26-006729

Filed: 2026-07-20

Period: 2026-07-20

CIK: 0001093672

SIC: 6022 (STATE COMMERCIAL BANKS)

Item: Results of Operations and Financial Condition

Item: Financial Statements and Exhibits

Documents

8-K — pebk_8k.htm (Primary)

EX-99.A — PRESS RELEASE (pebk_ex99a.htm)

XML — IDEA: XBRL DOCUMENT (R1.htm)

8-K — FORM 8-K

8-K (Primary)

Filename: pebk_8k.htm · Sequence: 1

pebk_8k.htm

0001093672falsefalse00010936722026-07-202026-07-20iso4217:USDxbrli:sharesiso4217:USDxbrli:shares

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 20, 2026

Peoples Bancorp of North Carolina, Inc.

(Exact Name of Registrant as Specified in Its Charter)

North Carolina

(State or Other Jurisdiction of Incorporation)

000-27205

56-2132396

(Commission File No.)

(IRS Employer Identification No.)

518 West C Street, Newton, North Carolina

28658

(Address of Principal Executive Offices)

(Zip Code)

(828) 464-5620

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Peoples Bancorp of North Carolina, Inc.

INDEX

Page

Item 2.02 – Results of Operations and Financial Condition

Item 9.01 – Financial Statements and Exhibits

Signatures

Exhibit (99)(a) Press Release dated July 20, 2026

Table of Contents

Item 2.02. Results of Operations and Financial Condition

On July 20, 2026, Peoples Bancorp of North Carolina, Inc. (the “Company”) issued a press release announcing second quarter 2026 earnings results. The press release contains forward-looking statements regarding the Company and includes cautionary language identifying important factors that could cause actual results to differ materially from those anticipated. The press release is furnished as Exhibit 99(a). Consequently, it is not deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Such materials may only be incorporated by reference into another filing under the Exchange Act or the Securities Act of 1933 if such subsequent filing specifically references this Form 8-K.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

(99)(a)

Press Release dated July 20, 2026

Disclosure about forward-looking statements

Statements made in this Form 8-K, 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 report 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 might cause such a difference include, but are not limited to, changes in interest rate environment, management’s business strategy, national, regional, and local market conditions and legislative and regulatory conditions.

The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. Readers should also carefully review the risk factors described in other documents the Company files from time to time with the Securities and Exchange Commission.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PEOPLES BANCORP OF NORTH CAROLINA, INC.

Date: July 20, 2026

By:

/s/ Jeffrey N. Hooper

Jeffrey N. Hooper

Executive Vice President and Chief Financial Officer

EX-99.A — PRESS RELEASE

EX-99.A

Filename: pebk_ex99a.htm · Sequence: 2

pebk_ex99a.htm

EXHIBIT (99)(a)

EARNINGS RELEASE

July 20, 2026

Contact:

William D. Cable, Sr.

President and Chief Executive Officer

Jeffrey N. Hooper

Executive Vice President and Chief Financial Officer

828-464-5620

For Immediate Release

PEOPLES BANCORP ANNOUNCES SECOND QUARTER 2026 RESULTS

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:

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 loansand $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.

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

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

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,

2026

2025

2026

2025

(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

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

Other service charges and fees

172

156

350

342

Gain/(loss) on sale of securities

(4 )

Mortgage banking income

149

284

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,

December 31,

2026

2025

2026

2025

(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)

(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

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 %

Risk Grade 8 (loss)

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.

(END)

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Jul. 20, 2026

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Peoples Bancorp of North Carolina, Inc.

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Jul. 20, 2026

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56-2132396

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518 West C Street

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Newton

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28658

City Area Code

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