Peoples Bancorp Extends Net Interest Margin Expansion

The Tip Desk · October 27, 2026 · 3 min read

Net interest margin reached 3.85% in the third quarter as net interest income rose to $16.7 million and the provision fell to $250,000.

Peoples Bancorp of North Carolina (PEBK), the parent of Peoples Bank, expanded its net interest margin a second straight quarter, reaching 3.85% for the three months ended September 30, 2026, after a 12 bps sequential expansion to 3.80% in the prior quarter.

Net earnings were $5.7 million, or $1.08 a share, up from $5.2 million, or $0.98 a share, in the second quarter. Return on average equity was 14.23%.

Net interest income was $16.7 million, compared with $16.0 million in the second quarter. Versus a year earlier, interest income rose $938,000 and interest expense fell $634,000. The company said the increase in interest income was primarily a $1.9 million rise in interest income and fees on loans, partly offset by lower interest on balances due from banks and on investment securities. Loan interest income, it said, was driven by higher total loans.

Average loans were $1.28 billion in the third quarter. Period-end loans were $1.30 billion at September 30, 2026.

Interest expense declined as rates on interest-bearing liabilities fell after Federal Reserve cuts from September 2025 through December 2025 and as time deposits fell $12.2 million from June 30, 2026 to September 30, 2026.

The provision for credit losses was $250,000. The company tied the lower provision versus a year earlier to $6.8 million of pooled commercial construction runoff and $14.7 million of pooled non-owner-occupied commercial real estate runoff, plus a $99,000 decline in net charge-offs.

Non-performing assets were $4.3 million, or 0.25% of total assets, at September 30, 2026, down from $5.2 million, or 0.29% of assets, at June 30, 2026. Non-accrual loans were $4.3 million. The allowance for credit losses on loans was $10.7 million, or 0.82% of total loans.

Non-interest income was $6.7 million. The company said the decline was primarily a $718,000 drop in appraisal management fee income on lower appraisal volume, partly offset by a $193,000 rise in miscellaneous income associated with higher valuations of deferred-compensation plan assets. Non-interest expense was $15.8 million, down year over year, with professional fees, debit card expense and appraisal management fee expense lower, partly offset by higher occupancy and miscellaneous expense.

Total deposits were $1.57 billion at September 30, 2026. Core deposits, a non-GAAP measure, were $1.44 billion, or 91.90% of total deposits. Certificates of deposit of $250,000 or more were $126.9 million.

Shareholders’ equity was $157.7 million, or 8.95% of total assets. The company said the lower equity-to-assets ratio versus year-end 2025 was primarily due to an increase in the unrealized loss on available-for-sale securities from rate changes. Available-for-sale securities were $341.6 million.

Peoples Bank operates 15 banking offices in North Carolina and loan production offices in four additional counties.