Peoples Bancorp of North Carolina, Inc. posted a 55.1% jump in net earnings for the third quarter of 2026, driven by higher loan income and lower funding costs. Despite this profit growth, shares of the bank lost 1.9% in the period following the report, underperforming the S&P 500 Index, which gained 1.1% over the same timeframe.
The Charlotte-based company reported net earnings of $5.7 million for the quarter ended Sept. 30, 2026, up from $3.7 million in the year-ago period. Earnings per share rose 56.7% to $1.05 from 67 cents a year earlier. The improvement in profitability was supported by a 10.4% increase in net interest income to $16.7 million, a metric that measures the difference between interest earned on assets and interest paid on liabilities.
Total interest income climbed 4.4% to $22.3 million, primarily due to a $1.9 million rise in interest and fees on loans. This gain was partially offset by lower income from investment securities and bank balances. Simultaneously, interest expense fell 10.1% to $5.7 million, benefiting from reduced rates on interest-bearing liabilities following Federal Reserve rate cuts between September and December 2025. These factors helped lift the net interest margin to 3.85% from 3.58% in the prior-year quarter.
Non-interest income declined 6.1% to $6.7 million, a drop attributed to reduced appraisal management activity. The bank also saw a 6.9% decrease in non-interest expenses to $15.8 million, reflecting lower professional fees, debit card costs, and appraisal management expenses. Professional fees fell sharply by 56.7% due to reduced legal costs, while debit card expenses dropped 38.6%. These savings were partly counterbalanced by higher occupancy and miscellaneous costs, including deferred compensation.
The provision for credit losses decreased to $0.3 million from $0.5 million, following reductions in commercial construction and non-owner-occupied commercial real estate loan balances. Total loans grew to $1.30 billion as of Sept. 30, 2026, from $1.20 billion at the end of 2025. Total deposits increased to $1.57 billion from $1.51 billion over the same period.
Core deposits, a non-GAAP measure representing relatively inexpensive funding, reached $1.44 billion, or 91.90% of total deposits, compared with $1.35 billion, or 89.44%, as of Dec. 31, 2025. Management highlighted the importance of these core deposits in supporting profitability.
Total assets stood at $1.76 billion as of Sept. 30, 2026, up from $1.70 billion at the start of the year. Non-performing assets totaled $4.3 million, remaining at 0.25% of total assets, unchanged from the prior year-end figure.
The reserve for loan losses rose from $10.1 million to $10.7 million during the period, yet the ratio of this reserve to total loans ticked down to 0.82% from 0.84%. Management stated that while they consider the current reserve adequate, changing economic conditions or regulatory requirements could necessitate future adjustments.
The company paid cash dividends of 21 cents per share for the quarter, up from 20 cents in the prior-year period. Shareholders' equity was $157.7 million as of Sept. 30, 2026, compared with $157.1 million at the end of 2025. The equity-to-assets ratio declined to 8.95% from 9.23%, mainly due to increased unrealized losses on available-for-sale investment securities.