Executive Summary

Q2 2025 delivered solid operating performance: net earnings $5.16M and diluted EPS $0.95, up YoY from $0.89 and QoQ from $0.79, with tax-equivalent net interest margin expanding to 3.57% (vs. 3.35% YoY; 3.51% QoQ) .
Revenue drivers were higher net interest income ($14.60M) and stronger appraisal management fee income ($3.97M), partially offset by higher non-interest expense ($15.84M) and a smaller recovery in credit losses (–$0.21M vs. –$0.47M YoY) .
Balance sheet trends healthy: loans $1.16B (+$20M YTD), deposits $1.51B (+$29M YTD), core deposits 90.05% of total, NPA stable at 0.28% of assets; book value rose to $27.12 per share .
No formal guidance was issued; dividend of $0.20 in Q2 (YTD $0.56) continued a consistent capital return cadence .
Near-term investor focus: continued NIM expansion, durability of fee income from appraisal services, and benign credit metrics alongside construction-loan reserve normalization .

What Went Well and What Went Wrong

What Went Well

Net interest margin expanded to 3.57% (tax-equivalent), supported by lower rates paid on interest-bearing liabilities and loan growth; net interest income rose to $14.60M .
Appraisal management fee income increased $0.79M YoY in Q2 on higher appraisal volumes, supporting total non-interest income of $7.69M .
Management tone: “the increase in second quarter net earnings [was] due to increases in net interest income and non-interest income,” per CEO William D. Cable, Sr. .

What Went Wrong

Non-interest expense rose to $15.84M, driven by appraisal fee expense (+$0.63M) and salaries/benefits (+$0.34M), partly offset by lower debit card and occupancy costs .
Miscellaneous non-interest income declined $0.63M YoY, primarily due to lower SBIC investment income, tempering the non-interest income mix quality .
The recovery of credit losses was smaller than the prior year (–$0.21M vs. –$0.47M), reflecting less reduction in construction-loan reserves than in Q2 2024 .

Financial Results

Consolidated Results vs. Prior Year and Prior Quarter

Metric	Q2 2024	Q1 2025	Q2 2025
Net Interest Income ($USD Millions)	$13.42	$13.94	$14.60
Non-Interest Income ($USD Millions)	$7.52	$6.53	$7.69
Total Revenue ($USD Millions) (NII + Non-Interest)	$20.94	$20.47	$22.29
Net Earnings ($USD Millions)	$4.89	$4.35	$5.16
Diluted EPS ($)	$0.89	$0.79	$0.95
Net Interest Margin (Tax-Equivalent, %)	3.35%	3.51%	3.57%
ROA (%)	1.19%	1.07%	1.23%
ROE (%)	16.46%	13.52%	15.08%

Balance Sheet and Asset Quality

Metric	Dec 31, 2024	Q1 2025	Q2 2025
Total Assets ($USD Millions)	$1,652.0	$1,693.0	$1,693.8
Total Loans ($USD Millions)	$1,138.4	$1,152.1	$1,158.0
Total Deposits ($USD Millions)	$1,484.7	$1,517.6	$1,513.8
Core Deposits ($USD Millions, % of Total)	$1,340.0; 90.17%	$1,370.0; 90.22%	$1,360.0; 90.05%
Non-Performing Assets ($USD Millions, % of Assets)	$4.81; 0.29%	$5.11; 0.30%	$4.82; 0.28%
ACL on Loans ($USD Millions, % of Loans)	$9.995; 0.88%	$10.047; 0.87%	$9.792; 0.85%
Book Value per Share ($)	$24.64	$26.14	$27.12

Segment/Category Breakdown (Non-Interest Income)

Category	Q2 2024 ($000s)	Q2 2025 ($000s)
Service Charges	1,346	1,372
Other Service Charges & Fees	180	156
Mortgage Banking	74	41
Insurance & Brokerage	219	258
Appraisal Management Fee Income	3,181	3,973
Miscellaneous	2,521	1,893
Total Non-Interest Income	7,521	7,693

KPIs

KPI	Q2 2024	Q1 2025	Q2 2025
Tax-Equivalent NIM (%)	3.35%	3.51%	3.57%
ROA (%)	1.19%	1.07%	1.23%
ROE (%)	16.46%	13.52%	15.08%
NPA / Assets (%)	0.29%	0.30%	0.28%
ACL / Loans (%)	0.88%	0.87%	0.85%
Allowance / NPA (%)	207.84%	196.69%	203.07%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue, EPS, Margins, OpEx, OI&E, Tax Rate, Segment-specific, Dividends	Q3 2025+	No formal guidance issued	No formal guidance issued	Maintained (no guidance)
Dividend	Q2 2025	$0.19 in Q4 2024	$0.20 in Q2 2025; YTD $0.56	Raised vs Q4 level

Earnings Call Themes & Trends

No Q2 2025 earnings call transcript was found via filings search; likely no call transcript was published. The table below reflects narrative themes from company press releases across periods.

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Interest rate environment impact on balances due from banks and NIM	Fed rate decreases since Sep 2024 reduced due-from-banks interest in Q4; NIM at 3.39% in Q4; 3.51% in Q1	NIM expanded to 3.57%; lower rates paid on interest-bearing liabilities aided NII	Improving
Appraisal management business	Significant YoY growth; Q4 appraisal fee income +$0.90M; expense also up	Fee income +$0.79M YoY; expense +$0.63M YoY	Growing (profit mix shift)
Credit reserves and construction loans	Hurricane Helene reserve lowered from $0.669M to $0.060M by year-end; recovery in provision in Q4	Provision recovery (–$0.21M) smaller YoY due to less reserve reduction on construction loans	Normalizing
Deposits/mix and ICS vs. repo	2024 shift from repo to ICS; deposits up to $1.48B at YE	Deposits $1.51B at Q2; core deposits ~90%	Stable/high-quality mix
Tax/regulatory	NC corporate tax rate changes drove DTA revaluation and higher Q3 effective tax rate	Effective tax rate 22.56% in Q2; prior-year comparisons affected by 2024 NCDOR settlement interest	Stabilizing

Management Commentary

“William D. Cable, Sr., President and Chief Executive Officer, attributed the increase in second quarter net earnings to increases in net interest income and non-interest income, which were partially offset by an increase in the provision for credit losses and an increase in non-interest expense.”
Rate dynamics: interest income on balances due from banks decreased due to Fed rate cuts in late 2024, while interest expense fell due to lower rates paid on liabilities, aiding NIM expansion .
Fee mix: appraisal management volume lifted both income (+$0.79M YoY) and expense (+$0.63M YoY), underscoring a growing ancillary revenue stream .
Credit outlook: allowance levels adjusted for construction-loan exposures and removal of prior storm-related reserve; management believes reserves are adequate given economic and portfolio conditions .

Q&A Highlights

No Q2 2025 earnings call transcript was available; therefore, Q&A themes and any guidance clarifications could not be assessed based on primary sources. Search found no transcript in the covered period [earnings call not found in filings search].

Estimates Context

Wall Street consensus estimates from S&P Global were unavailable for EPS and revenue for Q2 2025 (no consensus records found). Actual revenue was reported in filings as net interest income plus non-interest income ($22.29M) .
S&P Global data returned no EPS or revenue consensus entries for Q2 2025; therefore, no beat/miss determination vs. consensus can be made. Values retrieved from S&P Global.*

Key Takeaways for Investors

NIM expansion and higher net interest income signal positive spread dynamics; continued discipline on deposit costs should support margins if rate paths remain benign .
The appraisal management business is a meaningful earnings contributor; monitor volume sustainability and associated expense growth to gauge operating leverage from this line .
Credit quality remains sound with NPA at 0.28% and allowance/non-performing coverage >200%; construction-loan reserve normalization is progressing without evidence of stress contagion .
Core deposits at ~90% of total highlight stable, low-cost funding; modest deposit fluctuations QoQ should be watched but overall mix quality is strong .
Book value per share increased to $27.12, reflecting retained earnings and AOCI improvements; supports capital strength amidst loan growth .
Dividend remains consistent ($0.20 in Q2; $0.56 YTD), offering ongoing income while preserving balance sheet flexibility .
With no formal guidance, watch management’s commentary on rate sensitivity, fee pipeline, and loan mix in subsequent disclosures for incremental catalysts .

Notes:

No separate Q2 2025 call transcript or additional Q2 press releases were identified in filings; analysis reflects the earnings 8‑K and embedded press release .
Prior-quarter and prior-year trends sourced from Q1 2025 and Q3/Q4 2024 earnings releases for continuity .

PEOPLES BANCORP OF NORTH CAROLINA INC (PEBK)·Q2 2025 Earnings Summary