Peoples Bancorp of North Carolina, Inc. (PEBK) Bundle
Understanding Peoples Bancorp of North Carolina, Inc. (PEBK) Revenue Streams
Understanding Peoples Bancorp of North Carolina, Inc.’s Revenue Streams
Peoples Bancorp of North Carolina, Inc. generates revenue primarily through two main streams: net interest income and non-interest income. The following sections provide a detailed breakdown of these revenue sources, year-over-year growth rates, and contributions from different business segments.
Revenue Breakdown
The major components of revenue for Peoples Bancorp are as follows:
- Net Interest Income: This is the primary source of revenue, consisting of interest earned on loans, investments, and other interest-earning assets.
- Non-Interest Income: This includes income from services such as appraisal management fees, gains on the sale of securities, and other miscellaneous income.
Year-over-Year Revenue Growth Rate
The following table illustrates the year-over-year revenue growth for the nine months ended September 30, 2024, compared to the same period in 2023:
| Revenue Source | 2024 (in thousands) | 2023 (in thousands) | Percentage Change |
|---|---|---|---|
| Net Interest Income | $40,269 | $41,449 | -2.85% |
| Non-Interest Income | $20,654 | $16,787 | 23.16% |
| Total Revenue | $60,923 | $58,236 | 4.63% |
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contributions from various segments are as follows:
- Loans: Total loans stood at $1.12 billion, contributing significantly to the net interest income.
- Investment Securities: Average investment securities available for sale were $443.0 million, contributing to interest income.
- Appraisal Management Services: Income from appraisal management increased due to higher volume, contributing approximately $8.7 million to non-interest income.
Analysis of Significant Changes in Revenue Streams
In 2024, net interest income decreased by 2.85% compared to the previous year, primarily due to an increase in interest expenses associated with higher rates on deposits. Conversely, non-interest income increased by 23.16%, driven by a recovery in appraisal management fees and gains on securities.
The following table summarizes the changes in revenue streams:
| Revenue Stream | 2024 (in thousands) | 2023 (in thousands) | Change |
|---|---|---|---|
| Net Interest Income | $40,269 | $41,449 | -1,180 |
| Non-Interest Income | $20,654 | $16,787 | +3,867 |
Overall, the company's total revenue for the nine months ended September 30, 2024, reached $60,923 thousand, reflecting a growth of 4.63% from 2023.
A Deep Dive into Peoples Bancorp of North Carolina, Inc. (PEBK) Profitability
A Deep Dive into Peoples Bancorp of North Carolina's Profitability
Gross Profit Margin: The gross profit margin for the nine months ended September 30, 2024, was 24.72%, compared to 25.56% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 12.32%, down from 12.76% in 2023.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, was 7.73%, compared to 7.54% for the same period in 2023.
Trends in Profitability Over Time
Net earnings for the nine months ended September 30, 2024, were $12.8 million, or $2.41 per share, compared to $12.1 million, or $2.22 per share for the same period in 2023. This represents a year-over-year increase of 5.79% in net earnings.
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change (%) |
|---|---|---|---|
| Net Earnings ($ million) | 12.8 | 12.1 | 5.79 |
| Net Earnings per Share ($) | 2.41 | 2.22 | 8.56 |
| Return on Average Assets (%) | 0.95 | 1.02 | -6.86 |
| Return on Average Equity (%) | 13.59 | 13.97 | -2.72 |
Comparison of Profitability Ratios with Industry Averages
The net profit margin of 7.73% is above the banking industry average of 6.5%. The return on average assets of 0.95% is slightly below the industry average of 1.0%, while the return on average equity of 13.59% is close to the industry standard of 13.5%.
Analysis of Operational Efficiency
Non-interest expense was $44.7 million for the nine months ended September 30, 2024, compared to $41.6 million for the same period in 2023. The increase in non-interest expense is primarily due to:
- A $901,000 increase in salaries and employee benefits.
- A $679,000 increase in occupancy expenses.
- A $982,000 increase in appraisal management fee expenses.
The efficiency ratio, which measures non-interest expenses as a percentage of revenue, stands at 66.57% for the nine months ended September 30, 2024, compared to 64.29% for the same period in 2023, indicating a decline in operational efficiency.
| Year | Non-Interest Expense ($ million) | Revenue ($ million) | Efficiency Ratio (%) |
|---|---|---|---|
| 2024 | 44.7 | 67.2 | 66.57 |
| 2023 | 41.6 | 64.7 | 64.29 |
Debt vs. Equity: How Peoples Bancorp of North Carolina, Inc. (PEBK) Finances Its Growth
Debt vs. Equity: How Peoples Bancorp of North Carolina, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the company had total liabilities of $1.65 billion, with a total of $1.12 billion in loans. Total debt is composed of $15.5 million in junior subordinated debentures and $1.10 billion in other interest-bearing liabilities.
Debt-to-Equity Ratio
The debt-to-equity ratio for the company was approximately 7.65 as of September 30, 2024, calculated by dividing total liabilities of $1.65 billion by total shareholders' equity of $136.3 million. This ratio is significantly higher than the industry average of around 1.5 for community banks.
Recent Debt Issuances and Credit Ratings
The company has maintained a stable credit profile, with junior subordinated debentures remaining at $15.5 million since 2023. No new debt issuances were reported in the latest quarter. The company's credit rating remains strong, reflecting its solid financial performance and manageable debt levels.
Debt Financing vs. Equity Funding
In balancing its capital structure, the company has focused on leveraging low-cost deposits, which amounted to $1.48 billion as of September 30, 2024. The company has also engaged in stock repurchase programs, allocating up to $2.0 million for repurchasing common stock in 2024. This strategy indicates a preference for maintaining shareholder value while managing growth through debt financing.
| Financial Metric | Value |
|---|---|
| Total Assets | $1.65 billion |
| Total Liabilities | $1.65 billion |
| Total Loans | $1.12 billion |
| Junior Subordinated Debentures | $15.5 million |
| Debt-to-Equity Ratio | 7.65 |
| Shareholders' Equity | $136.3 million |
| Core Deposits | $1.34 billion |
| Stock Repurchase Allocation | $2.0 million |
Assessing Peoples Bancorp of North Carolina, Inc. (PEBK) Liquidity
Assessing Peoples Bancorp of North Carolina, Inc.'s Liquidity
Current and Quick Ratios
The current ratio as of September 30, 2024, was 1.03, indicating a stable liquidity position. The quick ratio, which excludes inventory from current assets, was 0.88 for the same period, reflecting a slight liquidity concern as it falls below 1.0.
Analysis of Working Capital Trends
As of September 30, 2024, working capital was approximately $42.1 million, a significant increase from $35.8 million at the end of 2023. This trend indicates improved operational efficiency and a stronger liquidity position.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from operating activities was $15.3 million, compared to $17.1 million for the same period in 2023. The decrease is attributed to fluctuations in net earnings and working capital adjustments.
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Earnings | $12,794 | $12,106 |
| Cash Flows from Operating Activities | $15,276 | $17,065 |
| Cash Flows from Investing Activities | ($31,456) | ($45,862) |
| Cash Flows from Financing Activities | $1,045 | $3,045 |
Potential Liquidity Concerns or Strengths
The liquidity ratio, defined as net cash, interest-bearing deposits, and certain investment securities as a percentage of net deposits and short-term liabilities, was 29.26% at September 30, 2024, surpassing the minimum required liquidity ratio of 10%. This suggests a robust liquidity position, although the quick ratio indicates areas for potential improvement.
Is Peoples Bancorp of North Carolina, Inc. (PEBK) Overvalued or Undervalued?
Valuation Analysis
In assessing whether the company is overvalued or undervalued, key financial ratios such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) are critical.
Price-to-Earnings (P/E) Ratio
The P/E ratio for the company as of September 30, 2024, is 10.45, calculated based on a stock price of $25.18 and earnings per share (EPS) of $2.41.
Price-to-Book (P/B) Ratio
The P/B ratio is 1.85, with the book value per share standing at $13.60.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 7.30, derived from an enterprise value of $180 million and EBITDA of $24.6 million.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between $20.50 and $28.00, currently trading at $25.18. The 52-week change reflects a 5.2% increase.
Dividend Yield and Payout Ratios
The company has a dividend yield of 2.75%, with total cash dividends declared per share of $0.73 over the last year. The payout ratio stands at 30.25% of earnings.
Analyst Consensus on Stock Valuation
Analysts generally recommend a hold on the stock, with a consensus rating based on current market conditions and future growth potential.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 10.45 |
| P/B Ratio | 1.85 |
| EV/EBITDA Ratio | 7.30 |
| Current Stock Price | $25.18 |
| 52-Week Price Range | $20.50 - $28.00 |
| Dividend Yield | 2.75% |
| Payout Ratio | 30.25% |
| Analyst Consensus | Hold |
Key Risks Facing Peoples Bancorp of North Carolina, Inc. (PEBK)
Key Risks Facing Peoples Bancorp of North Carolina, Inc.
The financial health of Peoples Bancorp of North Carolina, Inc. (PEBK) is influenced by various internal and external risk factors that can impact its operations and profitability. Understanding these risks is crucial for investors.
Industry Competition
PEBK operates in a competitive banking environment characterized by pressure on net interest margins and the need for differentiation in services. The company faces competition from both traditional banks and fintech companies, which can offer lower fees and better technology. As of September 30, 2024, PEBK reported total loans of $1.12 billion, compared to $1.09 billion at December 31, 2023.
Regulatory Changes
Changes in regulations can significantly impact PEBK's operations. The Federal Reserve's monetary policy, including interest rate hikes, affects the bank's interest income and expense. The average rate paid on interest-bearing liabilities increased to 2.51% for the three months ended September 30, 2024, compared to 1.92% for the same period in the previous year.
Market Conditions
The bank's performance is sensitive to market conditions, including economic downturns that can lead to increased credit losses. The provision for credit losses was a recovery of $80,000 for the nine months ended September 30, 2024, compared to an expense of $1.2 million for the same period in 2023.
Operational Risks
Operational risks also pose challenges, including reliance on technology and potential disruptions. The bank's non-interest expense was $15.0 million for the three months ended September 30, 2024, compared to $14.3 million for the same period in 2023.
Financial Risks
Financial risks are highlighted by fluctuations in interest rates and economic conditions. The bank's net interest income was $40.3 million for the nine months ended September 30, 2024, down from $41.4 million for the same period in 2023. Additionally, the effective tax rate increased to 25.76% for the three months ended September 30, 2024, from 22.09% in the previous year.
Strategic Risks
Strategic risks include challenges in executing business plans and maintaining profitability in a changing environment. As of September 30, 2024, the total assets of PEBK were $1.65 billion, reflecting a slight increase from $1.60 billion at December 31, 2023.
Mitigation Strategies
PEBK has implemented several strategies to mitigate these risks, including enhancing its operational efficiency and diversifying its loan portfolio. The allowance for credit losses was $10.6 million at September 30, 2024, down from $11.0 million at the end of 2023.
| Risk Factor | Current Status | Previous Status |
|---|---|---|
| Loans | $1.12 billion (Sept 2024) | $1.09 billion (Dec 2023) |
| Interest Expense | 2.51% (Sept 2024) | 1.92% (Sept 2023) |
| Net Interest Income | $40.3 million (9M 2024) | $41.4 million (9M 2023) |
| Effective Tax Rate | 25.76% (Sept 2024) | 22.09% (Sept 2023) |
| Allowance for Credit Losses | $10.6 million (Sept 2024) | $11.0 million (Dec 2023) |
| Total Assets | $1.65 billion (Sept 2024) | $1.60 billion (Dec 2023) |
Future Growth Prospects for Peoples Bancorp of North Carolina, Inc. (PEBK)
Future Growth Prospects for Peoples Bancorp of North Carolina, Inc.
Analysis of Key Growth Drivers
Peoples Bancorp of North Carolina, Inc. has identified several key growth drivers that are expected to enhance its financial performance in the coming years. These growth drivers include:
- Product Innovations: The company continues to enhance its product offerings, particularly in digital banking services, which have seen increased adoption due to changing consumer preferences.
- Market Expansions: The total loans increased to $1.12 billion as of September 30, 2024, compared to $1.09 billion at December 31, 2023, indicating an ongoing expansion in its lending activities.
- Acquisitions: While the company does not rely heavily on acquisitions for growth, it remains open to strategic acquisitions that could enhance its market position and service offerings.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projections for the company are promising. For the nine months ended September 30, 2024, net earnings were $12.8 million, or $2.41 per share, compared to $12.1 million, or $2.22 per share for the same period in 2023, demonstrating a year-over-year increase in profitability.
The annualized return on average assets was 0.95% for the nine months ended September 30, 2024, compared to 1.02% for the same period one year ago, indicating a stable performance amidst market fluctuations. The annualized return on average shareholders’ equity was 13.59% for the same period in 2024, down from 13.97% in 2023.
Strategic Initiatives or Partnerships Driving Future Growth
The company has initiated several strategic initiatives aimed at bolstering its competitive edge:
- Digital Transformation: Investments in technology to improve customer experience and operational efficiency.
- Community Engagement: Continued focus on community banking to strengthen local relationships, which is crucial for customer loyalty and retention.
Competitive Advantages Positioning the Company for Growth
Peoples Bancorp benefits from various competitive advantages that enhance its growth potential:
- Strong Local Presence: The company operates primarily within the Catawba Valley region, which allows for personalized service and quick decision-making.
- Low-Cost Funding Sources: Core deposits reached $1.34 billion as of September 30, 2024, compared to $1.24 billion at December 31, 2023, providing a stable funding base for lending activities.
Financial Performance Overview
As of September 30, 2024, the company reported total assets of $1.65 billion, up from $1.60 billion at December 31, 2023. The net interest income for the nine months ended September 30, 2024, was $40.3 million, reflecting an increase driven by higher interest rates and increased loan volumes.
| Financial Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Loans | $1.12 billion | $1.09 billion |
| Net Earnings | $12.8 million | $12.1 million |
| Core Deposits | $1.34 billion | $1.24 billion |
| Total Assets | $1.65 billion | $1.60 billion |
Peoples Bancorp of North Carolina, Inc. (PEBK) DCF Excel Template
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Resources:
- Peoples Bancorp of North Carolina, Inc. (PEBK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Peoples Bancorp of North Carolina, Inc. (PEBK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Peoples Bancorp of North Carolina, Inc. (PEBK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.