On October 21, 2024, Peoples Bancorp of North Carolina Inc (PEBK, Financial) released its 8-K filing detailing the financial results for the third quarter of 2024. Peoples Bancorp of North Carolina Inc is a bank holding company serving various regions in North Carolina, with a diversified loan portfolio primarily focused on domestic markets. The company's main income source is dividends declared and paid by the Bank on its capital stock.
Performance Overview and Challenges
For the third quarter of 2024, Peoples Bancorp reported net earnings of $4.0 million, or $0.74 per share, slightly down from $4.1 million, or $0.76 per share, in the same period last year. The net interest margin also saw a slight decrease to 3.35% from 3.39% a year ago. The decline in net earnings was attributed to a decrease in non-interest income and an increase in non-interest expense, despite an increase in net interest income and a decrease in the provision for credit losses.
Financial Achievements and Industry Context
Despite the challenges, Peoples Bancorp achieved a year-to-date net earnings increase to $12.8 million, or $2.41 per share, compared to $12.1 million, or $2.22 per share, in the previous year. This growth is significant in the banking industry, where maintaining profitability amidst fluctuating interest rates and economic conditions is crucial. The company's total loans increased to $1.12 billion, and total deposits rose to $1.48 billion, reflecting strong customer trust and a robust financial position.
Key Financial Metrics
Net interest income for the third quarter was $13.5 million, up from $13.3 million in the previous year, driven by a $2.2 million increase in interest income. However, this was partially offset by a $2.0 million rise in interest expense. The provision for credit losses decreased significantly to $297,000 from $562,000, primarily due to a reduction in reserves on construction loans.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Earnings | $4.0 million | $4.1 million |
| Net Interest Margin | 3.35% | 3.39% |
| Total Loans | $1.12 billion | $1.09 billion (Dec 2023) |
| Total Deposits | $1.48 billion | $1.39 billion (Dec 2023) |
Income and Expense Analysis
Non-interest income increased to $7.1 million from $6.8 million, primarily due to higher appraisal management fee income. However, non-interest expenses rose to $15.0 million from $14.3 million, driven by increased occupancy expenses and consulting fees. The effective tax rate for the quarter increased to 25.76% from 22.09% due to the revaluation of deferred tax assets.
William D. Cable, Sr., President and Chief Executive Officer, noted, "The decrease in third quarter net earnings was due to a decrease in non-interest income and an increase in non-interest expense, partially offset by an increase in net interest income and a decrease in the provision for credit losses."
Balance Sheet and Asset Quality
As of September 30, 2024, total assets stood at $1.66 billion, with non-performing assets remaining stable at $3.9 million, or 0.24% of total assets. The allowance for credit losses on loans decreased to $10.6 million, reflecting improved asset quality and a strategic reduction in reserves on construction loans.
Conclusion
Peoples Bancorp of North Carolina Inc (PEBK, Financial) demonstrated resilience in the third quarter of 2024, maintaining a stable financial position despite challenges in non-interest income and expenses. The company's strategic focus on loan growth and deposit acquisition positions it well for future profitability, although it must continue to manage interest rate risks and operational costs effectively.
Explore the complete 8-K earnings release (here) from Peoples Bancorp of North Carolina Inc for further details.
