Peoples Bancorp of North Carolina (PEBK) Q2 2024 earnings summary

Executive summary

• Net earnings for Q2 2024 were $4.9 million ($0.93 per share, $0.89 diluted), up from $4.8 million ($0.88 per share, $0.85 diluted) in Q2 2023, driven by higher non-interest income and lower provision for credit losses, partially offset by lower net interest income and higher non-interest expense.

• For the six months ended June 30, 2024, net earnings were $8.8 million ($1.67 per share, $1.61 diluted), compared to $8.0 million ($1.46 per share, $1.41 diluted) for the same period in 2023.

• Growth in non-interest income and a decrease in provision for credit losses offset lower net interest income and higher non-interest expense.

Financial highlights

• Net interest income for Q2 2024 was $13.4 million, down from $13.8 million in Q2 2023, as a $2.8 million increase in interest expense outpaced a $2.5 million increase in interest income.

• Net interest margin for Q2 2024 was 3.34% (tax equivalent 3.35%), down from 3.56% in Q2 2023.

• Non-interest income rose to $7.5 million in Q2 2024 from $6.4 million in Q2 2023, primarily due to higher appraisal management fee income and increased miscellaneous income.

• Non-interest expense increased to $15.1 million in Q2 2024 from $13.6 million in Q2 2023, driven by higher salaries, appraisal management fees, professional fees, and debit card expenses.

• Deposits were $1.48 billion at June 30, 2024, compared to $1.39 billion at December 31, 2023; core deposits were $1.33 billion (90.02% of total deposits).

Outlook and guidance

• Management expects growth to continue in local markets and through expansion opportunities, with no current necessity for acquisitions.

• Management expects continued impact from interest rate environment and construction loan activity on credit loss provisions and net interest income.

• The company remains focused on maintaining strong capital, liquidity, and asset quality amid ongoing economic and interest rate uncertainties.