| **UNITED                  STATES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **SECURITIES                  AND EXCHANGE COMMISSION**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Washington,                  D.C. 20549**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |
| **FORM                  10-K**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **ANNUAL                  REPORT****PURSUANT                  TO SECTION 13 OR 15(D)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **OF                  THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| For                  the fiscal year ended: **December                  31, 2005**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **Peoples                  Bancorp of North Carolina, Inc.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (Exact                  Name of Registrant as Specified in Its Charter)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **North                  Carolina**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (State                  or Other Jurisdiction of Incorporation)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **000-27205**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **                                    56-2132396** |
| (Commission                  File No.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                      (IRS Employer Identification No.) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **518                  West C Street, Newton, North Carolina**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **                                    28658** |
| (Address                  of Principal Executive Offices)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                     (Zip Code) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **(828)                  464-5620**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (Registrant’s                  Telephone Number, Including Area Code)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Securities                  Registered Pursuant to Section 12(b) of the Act:**None**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Securities                  Registered Pursuant to Section 12(g) of the Act:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **Common                  Stock, no par value**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (title                  of class)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Indicate                  by check mark if the registrant is a well-known seasoned issuer,                  as                  defined in Rule 405 of the Securities Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                         Yes |  o |  No | x |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Indicate                  by check mark if the registrant is not required to file reports                  pursuant                  to Section 13 or Section 15(d) of the Act                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                           Yes |  o  | No | x |   |
| Indicate                  by check mark whether the registrant (1) has filed all reports                  required to                  be filed by Section 13 or 15(d) of the Securities Exchange Act                  of 1934                  during the preceding 12 months (or for such shorter period that                  the                  registrant was required to file such reports), and (2) has been                  subject to                  such filing requirements for the past 90 days.                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                         Yes | x | No |  o |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Indicate                  by check mark if disclosure of delinquent filers in response to                  Item 405                  of Regulation S-K is not contained herein, and will not be contained,                  to                  the best of registrant's knowledge, in definitive proxy or information                  statements incorporated by reference in                                                                                                                                                                                                                                                                                                                                                                                         |
| Part                III of this Form 10-K or any amendment to this Form 10-K.                  x                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Indicate                  by check mark whether the registrant is a large accelerated filer,                  and                  accelerated filer, or a non-accelerated filer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|               Large                Accelerated Filer   o                                Accelerated Filer o                                 Non-Accelerated Filer x                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Indicate                  by check mark whether the registrant is a shell company (as defined                  in                  Rule 12b-2 of the Exchange Act).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                Yes o     No   x |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| State                  the aggregate market value of the voting and non-voting common                  equity held                  by non-affiliates computed by reference to the price at which the                  common                  equity was last sold, or the average bid and asked prices of such                  common                  equity, as of the last business day of the registrant’s most recently                  completed second fiscal quarter. $51,287,958 based on the closing                  price of                  such common stock on June 30, 2005, which was $ 18.65 per                  share.                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Indicate                  the number of shares outstanding of each of the registrant's classes                  of                  common stock, as of the latest practicable date.**3,454,785                  shares of common stock, outstanding at March 17,                  2006.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

----

**DOCUMENTS          INCORPORATED BY REFERENCE**

***This          report contains certain forward-looking statements with respect to the          financial          condition, results of***
***operations          and business of Peoples Bancorp of North Carolina, Inc. (the “Company”). These          forward-looking statements involve risks and uncertainties and are based          on the          beliefs and assumptions of management of the Company and on the information          available to management at the time that these disclosures were prepared.          These          statements can be identified by the use of words like “expect,” “anticipate,”“estimate” and “believe,” variations of these words and other similar          expressions. Readers should not place undue reliance on forward-looking          statements as a number of important factors could cause actual results          to differ          materially from those in the forward-looking statements. Factors that could          cause actual results to differ materially include, but are not limited          to, (1)          competition in the markets served by Peoples Bank (the “Bank”), (2) changes in          the interest rate environment, (3) general national, regional or local          economic          conditions may be less favorable than expected, resulting in, among other          things, a deterioration in credit quality and the possible impairment of          collectibility of loans, (4) legislative or regulatory changes, including          changes in accounting standards, (5) significant changes in the federal          and          state legal and regulatory environment and tax laws, (6) the impact of          changes          in monetary and fiscal policies, laws, rules and regulations and (7) other          risks          and factors identified in the Company’s other filings with the Securities and          Exchange Commission. The Company undertakes no obligation to update any          forward-looking statements.***

----

**PART        I**

**ITEM        1.      BUSINESS**

**General**

**Subsidiaries**

** **

----

**Market        Area**

**Competition**

**Supervision        and Regulation**

**General**
**.**

----

***Capital        Adequacy Guidelines for Holding Companies***
**.**

***Capital        Requirements for the Bank.***

***Dividend        and Repurchase Limitations***
**.**

----

***Deposit        Insurance Assessments***
**.**

***Federal        Home Loan Bank System***
**.**

***Community        Reinvestment.***
* *

***Prompt        Corrective Action.***
* *

***               Changes in Control.***

***Federal        Securities Law***
*.*

----

***Transactions        with Affiliates.***
* *

***Loans        to One Borrower.***
* *

***Gramm-Leach-Bliley        Act.***

***USA        Patriot Act of 2001***
**.        **

***Sarbanes-Oxley        Act of 2002***
**.        **

----

***Other.***
* *

**ITEM        1A.                RISK FACTORS **

**Loss          of key personnel could adversely impact results**

**A          significant amount of the Bank’s business is concentrated in lending which is          secured by property located in the Catawba Valley and surrounding areas          **

**An          inadequate allowance for loan losses would reduce our          earnings**

----

**Changes          in interest rates affect profitability and assets **

**Regional          economic factors may have an adverse impact on our business**

**The          Bank faces strong competition from other banks and financial institutions          which          can hurt its business **

**Government          regulations and policies impose limitations and may result in higher operating          costs and competitive disadvantages **

----

**Changes          in technology may impact the Bank’s business **

**The          trading volume in our common stock is less than that of larger public companies          which can cause price volatility.**

| ·   | actual                  or anticipated fluctuation in our operating                  results; |
|--------------------|-----------------------------------------------------------------------------------------------|
| ·   | changes                  in interest rates; |
|--------------------|---------------------------------------------|
| ·   | changes                  in the legal or regulatory environment in which we                  operate; |
|--------------------|-------------------------------------------------------------------------------------------------------|
| ·   | press                  releases, announcements or publicity relating to us or our competitors                  or                  relating to trends in our industry; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         ·   | changes                  in expectations as to our future financial performance, including                  financial estimates or recommendations by securities analysts and                  investors; |
|--------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         ·   | future                  sales of our common stock; |
|--------------------------------------------------------------------|----------------------------------------------------|
|         ·   | changes                  in economic conditions in our market, general conditions in the                  U.S. economy, financial markets or the banking                  industry; and |
|--------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         ·   | other                  developments affecting us or our                  competitors. |
|--------------------------------------------------------------------|---------------------------------------------------------------------------------------|

**We          may be subject to examinations by taxing authorities which could adversely          affect our results of operations.**

**We          may not be able to pay dividends in the future in accordance with past          practice.**

**ITEM          1B.           UNRESOLVED STAFF          COMMENTS**

----

**ITEM          2.                PROPERTIES**

|   | **Owned**                                            |   | **Leased**                                            |   |
|--------|------------------------------------------------------|--------|-------------------------------------------------------|--------|
|   |                                                 |   |                                                  |   |
|   | Corporate                      Office                |   | 1333                      2nd Street NE               |   |
|   | 518                      West C Street               |   | Hickory,                      North Carolina 28601    |   |
|   | Newton,                      North Carolina 28658    |   |                                                  |   |
|   |                                                 |   | 1910                      East Main Street            |   |
|   | 420                      West A Street               |   | Lincolnton,                      North Carolina 28092 |   |
|   | Newton,                      North Carolina 28658    |   |                                                  |   |
|   |                                                 |   | 2050                      Catawba Valley Boulevard    |   |
|   | 2619                      North Main Avenue          |   | Hickory,                      North Carolina 28601    |   |
|   | Newton,                      North Carolina 28658    |   |                                                  |   |
|   |                                                 |   | 760                      Highway 27 West              |   |
|   | 213                      1st Street, West            |   | Lincolnton,                      North Carolina 28092 |   |
|   | Conover,                      North Carolina 28613   |   |                                                  |   |
|   |                                                 |   | 102                      Leonard Avenue               |   |
|   | 3261                      East Main Street           |   | Newton,                      North Carolina 28658     |   |
|   | Claremont,                      North Carolina 28610 |   |                                                  |   |
|   |                                                 |   | 6300                      South Boulevard             |   |
|   | 6125                      Highway 16 South           |   | Suite                      100                        |   |
|   | Denver,                      North Carolina 28037    |   | Charlotte,                      North Carolina 28217  |   |
|   |                                                 |   |                                                  |   |
|   | 5153                      N.C. Highway 90E           |   | 4451                      Central Avenue              |   |
|   | Hiddenite,                      North Carolina 28636 |   | Suite                      A                          |   |
|   |                                                 |   | Charlotte,                      North Carolina 28205  |   |
|   | 200                      Island Ford Road            |   |                                                  |   |
|   | Maiden,                      North Carolina 28650    |   | 3752/3754                      Highway 16 North       |   |
|   |                                                 |   | Denver,                      North Carolina 28037     |   |
|   | 3310                      Springs Road NE            |   |                                                  |   |
|   | Hickory,                      North Carolina 28601   |   | 209                      Delburg Street               |   |
|   |                                                 |   | Suite                      105                        |   |
|   | 142                      South Highway 16            |   | Davidson,                      North Carolina 28036   |   |
|   | Denver,                      North Carolina 28037    |   |                                                  |   |
|   |                                                 |   |                                                  |   |
|   | 106                      North Main Street           |   |                                                  |   |
|   | Catawba,                      North Carolina 28609   |   |                                                  |   |

**ITEM            3.                 LEGAL PROCEEDINGS**

**ITEM            4.                 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

----

**PART            II**

**ITEM            5.**
**ARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER            MATTERS**
**AND ISSUER **

**                                         PURCHASES **
**OF            EQUITY SECURITIES**

| **ISSUER                        PURCHASES OF EQUITY SECURITIES** |   |                                                           |   |                                                                                  |
|------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|
|                                                             |   |                                                           |   |                                                                                       |   |   |   |   |   |    |
| **Period**                                                       |   | **Total****Number                        of Shares Purchased** |   | **Average****Price                        Paid**** per                        Share** |   | **Total                        Number of Shares Purchased**** as                        Part of Publicly Announced Plans**** or                        Programs** |   |   |   |  **Maximum                        Number (or Approximate Dollar Value) of Shares that**** May                        Yet Be Purchased Under the Plans or Programs** |
|                                                             |   |                                                           |   |                                                                                       |   |   |   |   |   |   |   |   |   |   |   |
| October                      1 - 31, 2005                        |   | 509                                                            |   | $                                                                                          | 21.05 |   |   | - |   |   |   |   | $ | 2,502,174 |   |
|                                                             |   |                                                           |   |                                                                                       |   |   |   |   |   |   |   |   |   |   |   |
| November                      1 - 30, 2005                       |   | 5,270                                                          |   | $                                                                                          | 21.50 |   |   | 5,000 |  (1) |   |   |   | $ | 2,394,424 |   |
|                                                             |   |                                                           |   |                                                                                       |   |   |   |   |   |   |   |   |   |   |   |
| December                        1 - 31, 2005                     |   | -                                                              |   |                                                                                       |  - |   |   | - |   |   |   |   | $ | 2,000,000 |  (2) |
|                                                             |   |                                                           |   |                                                                                       |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   | **5,779**                                                      |   | **$**                                                                                      | **21.46** |   |   | **5,000** |   |   |   |   | **$** | **2,000,000** |   |

| (1)                        The Company purchased 5,000 shares in November 2005, pursuant                        to a $3.0                        million stock repurchase program that expired November 30,                        2005.                                                                                                          |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| (2)                        The Company authorized a $2.0 million stock repurchase program                        effective                        December 1, 2005. This program will expire November 30, 2006.                        No shares                        were repurchased pursuant to this program in                        2005. |

**ITEM            6.**
**SELECTED            FINANCIAL DATA**

**ITEM            7.**
**MANAGEMENT'S            DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**ITEM            7A.**
**QUANTITATIVE            AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

** **

**ITEM            8.**
**FINANCIAL            STATEMENTS AND SUPPLEMENTARY DATA**

----

**ITEM            9.**
**CHANGES            IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL            DISCLOSURE**

**ITEM            9A.**
**CONTROLS            AND PROCEDURES**

**ITEM            9B.**
**OTHER            INFORMATION**

**PART            III**

**ITEM            10.**
**DIRECTORS            AND EXECUTIVE OFFICERS OF THE REGISTRANT**

----

**ITEM            11.**
**EXECUTIVE            COMPENSATION**

**ITEM            12.**
**SECURITY            OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

**ITEM            13.**
**CERTAIN            RELATIONSHIPS AND RELATED TRANSACTIONS**

**ITEM            14.**
**PRINCIPAL            ACCOUNTANT FEES AND SERVICES**

----

**PART              IV**

| **ITEM                      15.** | **EXHIBITS                      AND FINANCIAL STATEMENT SCHEDULES**                                                                                              |
|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              |                                                                                                                                                             |   |
| 15(a)1.                           | Consolidated                      Financial Statements (contained in the Annual Report attached                      hereto as                      Exhibit (13) |
|                              | and                      incorporated herein by reference)                                                                                                       |
|                              |                                                                                                                                                             |   |
|                              | (a)                                                                                                                                                              | Report                      of Independent Registered Public Accounting Firm |
|                              |                                                                                                                                                             |   |
|                              | (b)                                                                                                                                                              | Consolidated                      Balance Sheets as of December 31, 2005 and 2004 |
|                              |                                                                                                                                                             |   |
|                              | (c)                                                                                                                                                              | Consolidated                      Statements of Earnings for the Years Ended December 31, 2005,                      2004                      and |
|                              |                                                                                                                                                             | 2003 |
|                              |                                                                                                                                                             |   |
|                              | (d)                                                                                                                                                              | Consolidated                      Statements of Changes in Shareholders' Equity for the Years                      Ended |
|                              |                                                                                                                                                             | December                      31, 2005, 2004 and 2003 |
|                              |                                                                                                                                                             |   |
|                              | (e)                                                                                                                                                              | Consolidated                      Statements of Comprehensive Income for the Years Ended December                      31, |
|                              |                                                                                                                                                             | 2005,                      2004 and 2003 |
|                              |                                                                                                                                                             |   |
|                              | (f)                                                                                                                                                              | Consolidated                      Statements of Cash Flows for the Years Ended December 31, 2005,                      2004 |
|                              |                                                                                                                                                             | and                      2003 |
|                              |                                                                                                                                                             |   |
|                              | (g)                                                                                                                                                              | Notes                      to Consolidated Financial Statements |
|                              |                                                                                                                                                             |   |
| 15(a)2.                           | Financial                      Consolidated Statement Schedules                                                                                                  |
|                              |                                                                                                                                                             |   |
|                              | All                      schedules have been omitted as the required information is                      either                      inapplicable or included in |
|                              | the                      Notes to Consolidated Financial                      Statements.                                                                        |

| 15(a)3. | Exhibits                                 |                                                                                                                         |
|---------|------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|
|    |                                     |                                                                                                                         |
|    | Exhibit                          (3)(i)  | Articles                          of Incorporation of Peoples Bancorp of North Carolina,                          Inc.,      |
|    |                                     | incorporated                          by reference to Exhibit (3)(i) to the Form 8-A filed with                          the |
|    |                                     | Securities                          and Exchange Commission on September 2, 1999                                             |
|    |                                     |                                                                                                                         |
|    | Exhibit                          (3)(ii) | Amended                          and Restated Bylaws of Peoples Bancorp of North Carolina,                                   |
|    |                                     | Inc.,                          incorporated by reference to Exhibit (3)(ii) to the Form                          10-K filed  |
|    |                                     | with                          the Securities and Exchange Commission on March 26,                          2004              |
|    |                                     |                                                                                                                         |
|    | Exhibit                          (4)     | Specimen                          Stock Certificate, incorporated by reference to Exhibit                          (4) to    |
|    |                                     | the                          Form 8-A filed with the Securities and Exchange Commission on                              |
|    |                                     | September                        2, 1999                                                                                     |
|    |                                     |                                                                                                                         |
|    | Exhibit                          (10)(a) | Employment                          Agreement between Peoples Bank and Tony W. Wolfe                                         |
|    |                                     | incorporated                          by reference to Exhibit (10)(a) to the Form 10-K filed                          with   |
|    |                                     | the                          Securities and Exchange Commission on March 30, 2000                                            |
|    |                                     |                                                                                                                         |
|    | Exhibit                          (10)(b) | Employment                          Agreement between Peoples Bank and Joseph F. Beaman,                                     |
|    |                                     | Jr.                          incorporated by reference to Exhibit (10)(b) to the Form                          10-K filed    |
|    |                                     | with                          the Securities and Exchange Commission on March 30,                          2000              |
|    |                                     |                                                                                                                         |
|    | Exhibit                          (10)(c) | Employment                          Agreement between Peoples Bank and William D. Cable                                      |
|    |                                     | incorporated                          by reference to Exhibit (10)(d) to the Form 10-K filed                          with   |
|    |                                     | the                          Securities and Exchange Commission on March 30,                          2000                   |

----

|   | Exhibit                          (10)(d) | Employment                          Agreement between Peoples Bank and Lance A. Sellers                                                                 |
|--------|------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                     | incorporated                          by reference to Exhibit (10)(e) to the Form 10-K filed                          with                              |
|   |                                     | the                          Securities and Exchange Commission on March 30, 2000                                                                       |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                          (10)(e) | Peoples                          Bancorp of North Carolina, Inc. Omnibus Stock Ownership                          and                                   |
|   |                                     | Long                          Term Incentive Plan incorporated by reference to Exhibit                          (10)(f) to                              |
|   |                                     | the                          Form 10-K filed with the Securities and Exchange Commission                          on                                    |
|   |                                     | March                        30, 2000                                                                                                                   |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                          (10)(f) | Employment                          Agreement between Peoples Bank and A. Joseph Lampron,                                                               |
|   |                                     | incorporated                          by reference to Exhibit (10)(g) to the Form 10-K filed                          with                          the |
|   |                                     | Securities                          and Exchange Commission on March 28, 2002                                                                           |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                          (10)(g) | Peoples                          Bank Directors' and Officers' Deferral Plan, incorporated                          by                                  |
|   |                                     | reference                          to Exhibit (10)(h) to the Form 10-K filed with the Securities                          and                           |
|   |                                     | Exchange                          Commission on March 28, 2002                                                                                          |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                          (10)(h) | Rabbi                          Trust for the Peoples Bank Directors' and Officers' Deferral                          Plan,                              |
|   |                                     | incorporated                          by reference to Exhibit (10)(i) to the Form 10-K filed                          with the                          |
|   |                                     | Securities                          and Exchange Commission on March 28, 2002                                                                           |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                          (10)(i) | Description                          of Service Recognition Program maintained by Peoples Bank,                                                         |
|   |                                     | incorporated                          by reference to Exhibit (10)(i) to the Form 10-K filed                          with the                          |
|   |                                     | Securities                          and Exchange Commission on March 27, 2003                                                                           |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                        (12)      | Statement                        Regarding Computation of Ratios                                                                                   |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                        (13)      | 2005                        Annual Report of Peoples Bancorp of North Carolina,                        Inc.                                        |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                          (14)    | Code                          of Business Conduct and Ethics of Peoples Bancorp of North                                                                |
|   |                                     | Carolina,                          Inc., incorporated by reference to Exhibit (14) to the                          Form 10-K                            |
|   |                                     | filed                          with the Securities and Exchange Commission on March 25,                          2005                                   |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                        (21)      | Subsidiaries                        of Peoples Bancorp of North Carolina, Inc., incorporated                        by                             |
|   |                                     | reference                        to Exhibit 21 to the Form 10-K filed with the Securities                        and                                    |
|   |                                     | Exchange                        Commission on March 27, 2003                                                                                            |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                        (23)(a)   | Consent                        of Porter Keadle Moore, LLP for Registration Statement on                                                                |
|   |                                     | Form                        S-3 filed with the Securities and Exchange Commission on                        August                                      |
|   |                                     | 10,                        2000                                                                                                                         |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                        (23)(b)   | Consent                          of Porter Keadle Moore, LLP for Registration Statement                          on                                |
|   |                                     | Form                        S-8 filed with the Securities and Exchange Commission on                                                                    |
|   |                                     | September                        28, 2000                                                                                                               |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                          (31)(a) | Certification                          of principal executive officer pursuant to section 302                          of the                           |
|   |                                     | Sarbanes-Oxley                          Act of 2002                                                                                                     |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                          (31)(b) | Certification                          of principal financial officer pursuant to section 302                          of the                           |
|   |                                     | Sarbanes-Oxley                          Act of 2002                                                                                                     |
|   |                                     |                                                                                                                                                    |
|   | Exhibit                          (32)    | Certification                          Pursuant to 18 U.S.C. Section 1350, as adopted pursuant                          to                              |
|   |                                     | Section                          906 of the Sarbanes-Oxley Act of                          2002                                                         |

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| **SIGNATURES**                                                                                                                                                                                                                                                                                                                      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                |
| Pursuant                        to the requirements of Section 13 or 15(d) of the Securities                        Exchange Act                        of 1934, the registrant has duly caused this report to be                        signed on its                        behalf by the undersigned, thereunto duly authorized. |
|                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                | PEOPLES                        BANCORP OF NORTH CAROLINA, INC. |
|                                                                                                                                                                                                                                                                                                                                | (Registrant) |
|                                                                                                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                | By: | /s/                        Tony W. Wolfe |
|                                                                                                                                                                                                                                                                                                                                | Tony                        W. Wolfe |
|                                                                                                                                                                                                                                                                                                                                | President                        and Chief Executive Officer |
|                                                                                                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                | Date:                        March 24, 2006 |
|                                                                                                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                |
| Pursuant                        to the requirements of the Securities Exchange Act of 1934,                        this report                        has been signed below by the following persons on behalf                        of the registrant                        and in the capacities and on the dates indicated:    |
|                                                                                                                                                                                                                                                                                                                                |
| **Signature**                                                                                                                                                                                                                                                                                                                       |   | **Title** |   | **Date** |
|                                                                                                                                                                                                                                                                                                                                |   |   |   |   |
| /s/                        Tony W. Wolfe                                                                                                                                                                                                                                                                                            |   | President                        and Chief Executive Officer |   | March                        24, 2006 |
| Tony                        W. Wolfe                                                                                                                                                                                                                                                                                                |   | (Principal                        Executive Officer) |   |   |
|                                                                                                                                                                                                                                                                                                                                |   |   |   |   |
| /s/                        James S. Abernethy                                                                                                                                                                                                                                                                                       |   | Director |   | March                        24, 2006 |
| James                        S. Abernethy                                                                                                                                                                                                                                                                                           |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                |   |   |   |   |
| /s/                        Robert C. Abernethy                                                                                                                                                                                                                                                                                      |   | Chairman                        of the Board and Director |   | March                        24, 2006 |
| Robert                        C. Abernethy                                                                                                                                                                                                                                                                                          |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                |   |   |   |   |
| /s/                        Douglas S. Howard                                                                                                                                                                                                                                                                                        |   | Director |   | March                        24, 2006 |
| Douglas                        S. Howard                                                                                                                                                                                                                                                                                            |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                |   |   |   |   |
| /s/                        A. Joseph Lampron                                                                                                                                                                                                                                                                                        |   | Executive                        Vice President and Chief |   | March                        24, 2006 |
| A.                        Joseph Lampron                                                                                                                                                                                                                                                                                            |   | Financial                        Officer (Principal Financial |   |   |
|                                                                                                                                                                                                                                                                                                                                |   | and                        Principal Accounting Officer) |   |   |
|                                                                                                                                                                                                                                                                                                                                |   |   |   |   |
| /s/                        John W. Lineberger, Jr.                                                                                                                                                                                                                                                                                  |   | Director |   | March                        24, 2006 |
| John                        W. Lineberger, Jr.                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                |   |   |   |   |
| /s/                        Gary E. Matthews                                                                                                                                                                                                                                                                                         |   | Director |   | March                        24, 2006 |
| Gary                        E. Matthews                                                                                                                                                                                                                                                                                             |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                |   |   |   |   |
| /s/                        Billy L. Price, Jr., M.D.                                                                                                                                                                                                                                                                                |   | Director |   | March                        24, 2006 |
| Billy                        L. Price, Jr., M.D.                                                                                                                                                                                                                                                                                    |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                |   |   |   |   |
| /s/                        Larry E. Robinson                                                                                                                                                                                                                                                                                        |   | Director |   | March                        24, 2006 |
| Larry                        E. Robinson                                                                                                                                                                                                                                                                                            |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                |   |   |   |   |
| /s/                        William Gregory Terry                                                                                                                                                                                                                                                                                    |   | Director |   | March                        24, 2006 |
| William                        Gregory Terry                                                                                                                                                                                                                                                                                        |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                |   |   |   |   |
| /s/                        Dan Ray Timmerman, Sr.                                                                                                                                                                                                                                                                                   |   | Director |   | March                        24, 2006 |
| Dan                        Ray Timmerman, Sr.                                                                                                                                                                                                                                                                                       |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                |   |   |   |   |
| /s/                        Benjamin I. Zachary                                                                                                                                                                                                                                                                                      |   | Director |   | March                        24, 2006 |
| Benjamin                        I. Zachary                                                                                                                                                                                                                                                                                          |   |   |   |   |

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