Peoples Bancorp of North Carolina, Inc. (PEBK): BCG Matrix [11-2024 Updated]

As we dive into the financial landscape of Peoples Bancorp of North Carolina, Inc. (PEBK) in 2024, the Boston Consulting Group Matrix offers a compelling framework to evaluate its business segments. From strong performers to areas needing strategic focus, the matrix categorizes PEBK's operations into Stars, Cash Cows, Dogs, and Question Marks. Discover how these classifications reveal the bank's growth potential and operational challenges, and gain insights into its future trajectory.

Background of Peoples Bancorp of North Carolina, Inc. (PEBK)

Peoples Bancorp of North Carolina, Inc. (PEBK) is a financial institution headquartered in Newton, North Carolina. The company operates through its wholly-owned subsidiary, Peoples Bank, which provides a range of banking services, including personal and commercial banking, mortgage lending, and investment services. Founded in 1912, Peoples Bank has established a strong presence in the western North Carolina region, focusing on community-oriented banking solutions.

As of September 30, 2024, PEBK reported total assets of approximately $1.66 billion, reflecting a growth from $1.60 billion at the end of 2023. The bank's loan portfolio stood at $1.12 billion, an increase from $1.09 billion in the previous year. The diverse loan portfolio includes residential and commercial real estate loans, consumer loans, and commercial loans, with a substantial portion secured by real estate.

Financially, PEBK has demonstrated solid performance, with net income of $12.79 million for the nine months ended September 30, 2024, compared to $12.11 million in the same period in 2023. The bank's net interest income for the nine months was reported at $40.27 million, up from $36.59 million in the prior year. The increase in net interest income highlights the bank's effective management of its interest-earning assets amid fluctuating interest rates.

PEBK has maintained a strong capital position, with a Tier 1 capital ratio of 14.35% as of September 30, 2024, well above the regulatory minimums. This robust capital base supports the bank's lending activities and positions it well for future growth. The company's return on average equity was reported at 13.59% for the same period, indicating effective management of shareholder funds.

The bank also emphasizes community involvement and customer service, which are integral to its business strategy. Peoples Bank has consistently focused on building strong relationships with local customers and businesses, further reinforcing its commitment to the communities it serves.

In addition to traditional banking services, PEBK operates a subsidiary, Community Bankers Real Estate Services (CBRES), which provides appraisal management services. This diversification allows the company to leverage its expertise in real estate while enhancing its revenue streams. As of September 30, 2024, non-interest income, primarily from appraisal management fees, contributed significantly to the bank's overall financial performance.

Peoples Bancorp of North Carolina, Inc. (PEBK) - BCG Matrix: Stars

Strong Growth in Net Interest Income

Net interest income for the nine months ended September 30, 2024, reached $41.1 million, compared to $41.4 million for the same period in 2023. The decrease is attributed to an increase in interest expense, which rose to $20.1 million from $11.3 million in the prior year.

Increase in Appraisal Management Fee Income

The appraisal management fee income significantly contributed to non-interest income, totaling $8.7 million for the nine months ended September 30, 2024, compared to $7.5 million in the same period of 2023. This reflects an increase of $1.2 million due to heightened appraisal volume.

Robust Loan Portfolio

The total loans amounted to approximately $1.12 billion as of September 30, 2024, compared to $1.09 billion at December 31, 2023. The breakdown of the loan portfolio includes:

Core Deposits Indicating Stable Funding

Core deposits constituted 90% of total deposits, amounting to $1.34 billion as of September 30, 2024. This represents an increase from $1.24 billion at December 31, 2023.

Positive Net Earnings

Net earnings for the nine months ended September 30, 2024, were reported at $12.8 million, or $2.41 per share, compared to $12.1 million, or $2.22 per share for the same period in 2023.

Peoples Bancorp of North Carolina, Inc. (PEBK) - BCG Matrix: Cash Cows

Consistent dividends declared per share at $0.73 for the nine months ended September 30, 2024.

Peoples Bancorp of North Carolina, Inc. has declared consistent dividends at $0.73 per share for the nine months ended September 30, 2024, totaling $4.0 million in cash dividends paid during the same period.

Strong historical performance in mortgage banking income, averaging $263,000 per quarter.

The company reported an average of $263,000 per quarter in mortgage banking income, contributing significantly to its overall financial performance.

Low non-performing loans, with total past due loans remaining manageable.

As of September 30, 2024, the allowance for credit losses on loans was $10.6 million, representing a decrease from $11.0 million at the end of 2023. The ratio of non-performing loans remained low, indicating effective management of credit risk.

Established market presence in North Carolina, yielding steady customer base.

The bank has a strong foothold in North Carolina, with total loans amounting to $1.12 billion as of September 30, 2024, reflecting its established market presence and diversified loan portfolio.

Significant retained earnings of $118.5 million, reinforcing financial stability.

As of September 30, 2024, the company reported retained earnings of $118.5 million, which reinforces its financial stability and ability to fund future growth initiatives.

Peoples Bancorp of North Carolina, Inc. (PEBK) - BCG Matrix: Dogs

Declining interest income from time deposits, with a decrease noted in new deposits.

Net interest income was $40.3 million for the nine months ended September 30, 2024, a decrease from $41.4 million in the same period of 2023. This decline was attributed to an $8.8 million increase in interest expense, which was only partially offset by a $7.6 million increase in interest income.

Increased non-interest expenses, reaching $44.7 million for the nine months ended September 30, 2024.

Non-interest expenses totaled $44.7 million for the nine months ended September 30, 2024, compared to $41.6 million for the same period in 2023. This increase was driven by a $901,000 rise in salaries and employee benefits, a $679,000 increase in occupancy expenses, and a $362,000 write-off related to the closure of a branch in Cary, North Carolina.

Closure of a branch in Cary, reflecting challenges in certain locations.

The Cary branch closure in June 2024 resulted in a $362,000 write-off of leasehold improvements, highlighting the challenges faced in maintaining operations in specific locations.

Losses on securities sales, totaling $5,000 in the nine months ended September 30, 2024.

During the nine months ended September 30, 2024, the company recorded losses on sales of securities amounting to $5,000. This contrasts with a net loss of $2.5 million on securities sales for the same period in 2023.

Limited growth in consumer loans, posing risk to diversification.

As of September 30, 2024, total loans were $1.12 billion, a modest increase from $1.09 billion at December 31, 2023. However, the limited growth in consumer loans raises concerns regarding the diversification and sustainability of the loan portfolio.

Peoples Bancorp of North Carolina, Inc. (PEBK) - BCG Matrix: Question Marks

Potential for growth in commercial loans, currently underutilized segment.

As of September 30, 2024, total loans held by Peoples Bancorp amounted to $1.12 billion, with commercial loans representing a significant segment of this portfolio. The growth in commercial loans is essential, as they accounted for $462.9 million of the total loans, showing an increase from $425.8 million as of December 31, 2023. The average yield on loans increased to 5.72% for the three months ended September 30, 2024, compared to 5.27% in the same period in 2023.

Need to enhance digital banking capabilities to attract younger demographics.

To attract younger customers, digital banking enhancements are crucial. As of September 30, 2024, the bank's average interest-bearing non-maturity deposits were $686.2 million, reflecting a shift towards digital banking trends. The bank's current digital offerings may not fully meet the expectations of tech-savvy customers, indicating a need for investment in this area to capture market share in a rapidly growing digital banking sector.

Exploration of new markets outside North Carolina could yield expansion opportunities.

Peoples Bancorp currently operates primarily within North Carolina, but exploring markets outside the state could provide growth opportunities. The bank's total assets were $1.66 billion as of September 30, 2024. Expanding into new geographic areas with growing populations and economic activities could significantly enhance market share, particularly in commercial lending.

Appraisal management fee income growth is reliant on housing market conditions.

Appraisal management fee income showed growth, totaling $8.67 million for the nine months ended September 30, 2024, compared to $7.5 million in the same period in 2023. This income is heavily tied to the housing market, which is subject to fluctuations based on economic conditions, interest rates, and consumer confidence. The bank must navigate these variables carefully to maintain and grow this income stream.

Regulatory changes and interest rate fluctuations present uncertainties in profit margins.

Peoples Bancorp's net interest income was $40.3 million for the nine months ended September 30, 2024, compared to $41.4 million for the same period in 2023. The increase in interest expense to $20.1 million in 2024, up from $11.3 million in 2023, highlights the impact of rising interest rates. Regulatory changes, including adjustments to the North Carolina corporate income tax rate, which will decrease to zero over five years starting in 2025, add another layer of complexity to the bank's profit margins.

In summary, Peoples Bancorp of North Carolina, Inc. (PEBK) presents a mixed yet promising outlook as evidenced by its BCG matrix analysis. The company showcases strong growth in key areas like net interest income and a robust loan portfolio, establishing itself as a Star. Meanwhile, its Cash Cows exhibit consistent dividends and a solid market presence, providing financial stability. However, challenges in Dogs such as declining interest income and increased expenses highlight the need for strategic adjustments. Lastly, the Question Marks indicate potential growth areas, particularly in commercial loans and digital banking, which could be pivotal for future expansion and profitability.

Updated on 16 Nov 2024

Resources:

1. 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.
2. 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.