# EDGAR Filing Document

**Accession Number:** 0001093672
**File Stem:** 0001654954-25-008238
**Filing Date:** 2025-7
**Character Count:** 35013
**Document Hash:** 6c30442ab286d8afb0e2fd5ed5b6d8a6
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001654954-25-008238.hdr.sgml**: 20250721

**ACCESSION NUMBER**: 0001654954-25-008238

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20250721

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20250721

**DATE AS OF CHANGE**: 20250721

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** PEOPLES BANCORP OF NORTH CAROLINA INC
- **CENTRAL INDEX KEY:** 0001093672
- **STANDARD INDUSTRIAL CLASSIFICATION:** STATE COMMERCIAL BANKS [6022]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 562132396
- **STATE OF INCORPORATION:** NC
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-27205
- **FILM NUMBER:** 251135947

**BUSINESS ADDRESS:**
- **STREET 1:** 518 WEST C STREET
- **STREET 2:** PO BOX 467
- **CITY:** NEWTON
- **STATE:** NC
- **ZIP:** 28658-4007
- **BUSINESS PHONE:** 8284645620

**MAIL ADDRESS:**
- **STREET 1:** PO BOX 467
- **CITY:** NEWTON
- **STATE:** NC
- **ZIP:** 28658-0467

?xml version='1.0' encoding='ASCII'? pebk_8k.htm

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

_____________________________

**FORM 8-K**

**CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)**

**OF THE SECURITIES EXCHANGE ACT OF 1934**

Date of Report (Date of earliest event reported): **July 21, 2025**

---

| |
|:---|
| **Peoples Bancorp of North Carolina, Inc.** |
| (Exact Name of Registrant as Specified in Its Charter) |
| **<u>North Carolina</u>** |
| (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) |

---

**<u>(828) 464-5620</u>**

(Registrant's Telephone Number, Including Area Code)

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |

---

---

| | |
|:---|:---|
| Peoples Bancorp of North Carolina, Inc. | Peoples Bancorp of North Carolina, Inc. |
| **<u>INDEX</u>** | **<u>INDEX</u>** |
|  | **Page** |
| [Item 2.02 – Results of Operations and Financial Condition](#it2) | 3 |
| [Item 9.01 – Financial Statements and Exhibits](#it9) | 3 |
| [Signatures](#sign) | 4 |
| [Exhibit (99)(a) Press Release dated July 21, 2025](pebk_ex99a.htm) | 5 |

---

---

| |
|:---|
| 2 |
| *[**Table of Contents**](#toc1)* |

---

**Item 2.02. Results of Operations and Financial Condition**

On July 21, 2025, Peoples Bancorp of North Carolina, Inc. (the "Company") issued a press release announcing second quarter 2025 earnings results. The press release contains forward-looking statements regarding the Company and includes cautionary language identifying important factors that could cause actual results to differ materially from those anticipated. The press release is furnished as Exhibit 99(a). Consequently, it is not deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Such materials may only be incorporated by reference into another filing under the Exchange Act or the Securities Act of 1933 if such subsequent filing specifically references this Form 8-K.

**Item 9.01. Financial Statements and Exhibits**

(d) Exhibits

---

| | |
|:---|:---|
| [(99)(a)](pebk_ex99a.htm) | [Press Release dated July 21, 2025](pebk_ex99a.htm) |

---

**Disclosure about forward-looking statements**

Statements made in this Form 8-K, other than those concerning historical information, should be considered forward-looking statements pursuant to the safe harbor provisions of the Securities Exchange Act of 1934 and the Private Securities Litigation Act of 1995. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management and on the information available to management at the time that this report was 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 might cause such a difference include, but are not limited to, changes in interest rate environment, management's business strategy, national, regional, and local market conditions and legislative and regulatory conditions.

The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. Readers should also carefully review the risk factors described in other documents the Company files from time to time with the Securities and Exchange Commission.

---

| |
|:---|
| 3 |
| *[**Table of Contents**](#toc1)* |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | PEOPLES BANCORP OF NORTH CAROLINA, INC. | PEOPLES BANCORP OF NORTH CAROLINA, INC. |
| Date: July 21, 2025 | By: | /s/ Jeffrey N. Hooper |
|  | Jeffrey N. Hooper | Jeffrey N. Hooper |
|  | Executive Vice President and Chief Financial Officer | Executive Vice President and Chief Financial Officer |

---

## Ex-99.A

**EXHIBIT (99)(a)**

**EARNINGS RELEASE**

**July 21, 2025**

---

| | |
|:---|:---|
| **Contact:** | **William D. Cable, Sr.**<br> **President and Chief Executive Officer** |
|  | **Jeffrey N. Hooper**<br> **Executive Vice President and Chief Financial Officer** |
|  | **828-464-5620** |

---

**<u>For Immediate Release</u>**

**<u>PEOPLES BANCORP ANNOUNCES SECOND QUARTER 2025 RESULTS</u>**

Peoples Bancorp of North Carolina, Inc. (NASDAQ: PEBK) (the "Company"), the parent company of Peoples Bank (the "Bank"), reported second quarter 2025 results with highlights as follows:

***Second quarter 2025 highlights:***

· Net earnings were $5.2 million or $0.97 per share and $0.95 per diluted share for the three months ended June 30, 2025, as compared to $4.9 million or $0.93 per share and $0.89 per diluted share for the same period one year ago.

· Net interest margin was 3.57% for the three months ended June 30, 2025, compared to 3.35% for the three months ended June 30, 2024.

***Year to date highlights:***

· Net earnings were $9.5 million or $1.79 per share and $1.74 per diluted share for the six months ended June 30, 2025, as compared to $8.8 million or $1.67 per share and $1.61 per diluted share for the same period one year ago.

· Cash dividends were $0.56 per share during the six months ended June 30, 2025, compared to $0.54 per share for the prior year period.

· Total loans were $1.16 billion at June 30, 2025, compared to $1.14 billion at December 31, 2024.

· Non-performing assets were $4.8 million or 0.28% of total assets at June 30, 2025, compared to $4.8 million or 0.29% of total assets at December 31, 2024.

· Total deposits were $1.51 billion at June 30, 2025, compared to $1.48 billion at December 31, 2024.

· Core deposits, a non-GAAP measure, were $1.36 billion or 90.05% of total deposits at June 30, 2025, compared to $1.34 billion or 90.17% of total deposits at December 31, 2024.

· Net interest margin was 3.54% for the six months ended June 30, 2025, compared to 3.34% for the six months ended June 30, 2024.

Net earnings were $5.2 million or $0.97 per share and $0.95 per diluted share for the three months ended June 30, 2025, as compared to $4.9 million or $0.93 per share and $0.89 per diluted share for the prior year period. William D. Cable, Sr., President and Chief Executive Officer, attributed the increase in second quarter net earnings to increases in net interest income and non-interest income,which were partially offset by an increase in the provision for credit losses and an increase in non-interest expense, compared to the prior year period, as discussed below.

Net interest income was $14.6 million for the three months ended June 30, 2025, compared to $13.4 million for the three months ended June 30, 2024. The increase in net interest income is due to a $650,000 increase in interest income and a $531,000 decrease in interest expense. The increase in interest income is primarily due to a $1.1 million increase in interest income and fees on loans, which was partially offset by a $19,000 decrease in interest income on balances due from banks and a $408,000 decrease in interest income on investment securities. The increase in interest income and fees on loans is primarily due to an increase in total loans. The decrease in interest income on balances due from banks is primarily due to rate decreases implemented by the Federal Reserve from September 2024 through December 2024. The decrease in interest income on investment securities is primarily due to a reduction in balances outstanding. The decrease in interest expense is primarily due to a decrease in rates paid on interest-bearing liabilities. Net interest income after the provision for credit losses was $14.8 million for the three months ended June 30, 2025, compared to $13.9 million for the three months ended June 30, 2024. The provision for credit losses for the three months ended June 30, 2025 was a recovery of $213,000, compared to a recovery of $468,000 for the three months ended June 30, 2024.The decrease in the recovery for credit losses is primarily attributable to a smaller reduction in reserves on construction loans during the three months ended June 30, 2025, as compared to the reduction in reserves on construction loans during the three months ended June 30, 2024. The reduction in reserves on construction loans during the three months ended June 30, 2024 was primarily due to a decrease in construction loan balances outstanding and unfunded construction loan balances during the second quarter of 2024.

Non-interest income was $7.7 million for the three months ended June 30, 2025, compared to $7.5 million for the three months ended June 30, 2024. The increase in non-interest income is primarily attributable to a $792,000 increase in appraisal management fee income due to an increase in appraisal volume, which was partially offset by a $628,000 decrease in miscellaneous non-interest income primarily due to a decrease in income on small business investment company (SBIC) investments.

Non-interest expense was $15.8 million for the three months ended June 30, 2025, compared to $15.1 million for the three months ended June 30, 2024. The increase in non-interest expense is primarily attributable to a $633,000 increase in appraisal management fee expense due to an increase in appraisal volume and a $341,000 increase in salaries and employee benefits expense primarily due to an increase in salary and insurance expense, which were partially offset by a $218,000 decrease in other non-interest expense primarily due to a decrease in debit card expense, and a $47,000 decrease in occupancy expense primarily due to a decrease in equipment maintenance expense.

Net earnings were $9.5 million or $1.79 per share and $1.74 per diluted share for the six months ended June 30, 2025, as compared to $8.8 million or $1.67 per share and $1.61 per diluted share for the prior year period. The increase in year to date net earnings is primarily attributable to increases in net interest income and non-interest income, which were partially offset by an increase in the provision for credit losses and an increase in non-interest expense, compared to the prior year period, as discussed below.

Net interest income was $28.5 million for the six months ended June 30, 2025, compared to $26.7 million for the six months ended June 30, 2024. The increase in net interest income is due to a $810,000 increase in interest income and a $1.0 million decrease in interest expense. The increase in interest income is primarily due to a $2.0 million increase in interest income and fees on loans, which was partially offset by a $576,000 decrease in interest income on balances due from banks and a $569,000 decrease in interest income on investment securities. The increase in interest income and fees on loans is primarily due to an increase in total loans. The decrease in interest income on balances due from banks is due to a reduction in balances outstanding and rate decreases implemented by the Federal Reserve from September 2024 through December 2024. The decrease in interest income on investment securities is primarily due to a reduction in balances outstanding. The decrease in interest expense is primarily due to a decrease in rates paid on interest-bearing liabilities. Net interest income after the provision for credit losses was $28.5 million for the six months ended June 30, 2025, compared to $27.1 million for the six months ended June 30, 2024. The provision for credit losses for the six months ended June 30, 2025 was an expense of $55,000, compared to a recovery of $377,000 for the six months ended June 30, 2024. The increase in the provision for credit losses is primarily attributable to a reduction in reserves on construction loans during the six months ended June 30, 2024, which was primarily due to a decrease in construction loan balances outstanding, combined with an increase in provision expense for unfunded construction loans during the six months ended June 30, 2025 resulting from an increase in unfunded commitments on construction loans.

Non-interest income was $14.2 million for the six months ended June 30, 2025, compared to $13.6 million for the six months ended June 30, 2024. The increase in non-interest income is primarily attributable to a $1.4 million increase in appraisal management fee income due to an increase in appraisal volume, which was partially offset by a $802,000 decrease in miscellaneous non-interest income primarily due to a decrease in income on small business investment company (SBIC) investments.

Non-interest expense was $30.4 million for the six months ended June 30, 2025, compared to $29.6 million for the six months ended June 30, 2024. The increase in non-interest expense is primarily attributable to a $1.1 million increase in appraisal management fee expense due to an increase in appraisal volume and a $149,000 increase in salaries and employee benefits expense primarily due to an increase in salary expense, which were partially offset by a $401,000 decrease in other non-interest expense primarily due to a decrease in debit card expense, and a $130,000 decrease in occupancy expense primarily due to a decrease in equipment maintenance expense.

Income tax expense was $1.5 million for the three months ended June 30, 2025, compared to $1.4 million for the three months ended June 30, 2024. The effective tax rate was 22.56% for the three months ended June 30, 2025, compared to 22.09% for the three months ended June 30, 2024. Income tax expense was $2.8 million for the six months ended June 30, 2025, compared to $2.2 million for the six months ended June 30, 2024. The effective tax rate was 22.69% for the six months ended June 30, 2025, compared to 19.74% for the six months ended June 30, 2024. The increase in the effective tax rate is primarily due to a $322,000 interest receivable booked during the six months ended June 30, 2024 on a deposit for taxes paid prior to a settlement with the North Carolina Department of Revenue ("NCDOR") to withdraw the disallowance of certain tax credits previously purchased by the Bank.

Total assets were $1.69 billion as of June 30, 2025, compared to $1.65 billion as of December 31, 2024. Available for sale securities were $371.6 million as of June 30, 2025, compared to $388.0 million as of December 31, 2024. Total loans were $1.16 billion as of June 30, 2025, compared to $1.14 billion at December 31, 2024.

Non-performing assets were $4.8 million or 0.28% of total assets at June 30, 2025, compared to $4.8 million or 0.29% of total assets at December 31, 2024. Non-performing assets include $4.2 million in residential mortgage loans, $442,000 in commercial mortgage loans and $216,000 in other loansat June 30, 2025, compared to $3.7 million in residential mortgage loans, $463,000 in commercial mortgage loans, $257,000 in other loans, and $369,000 in other real estate owned at December 31, 2024.

The allowance for credit losses on loans was $9.8 million or 0.85% of total loans at June 30, 2025, compared to $10.0 million or 0.88% of total loans at December 31, 2024. The allowance for credit losses on loans decreased $203,000 primarily due to a $90,000 decrease in the allowance on construction loans from December 31, 2024 to June 30, 2025 and the removal of the $60,000 Hurricane Helene reserve included in the allowance for credit losses at December 31, 2024. The allowance for credit losses on unfunded commitments was $1.3 million at June 30, 2025, compared to $1.1 million at December 31, 2024. The increase in the allowance for credit losses on unfunded commitments was primarily due to a $161,000 increase in the allowance for unfunded construction loans resulting from a $2.8 million increase in unfunded commitments on construction loans during the six months ended June 30, 2025. The allowance for credit losses on unfunded commitments is included in other liabilities on the Company's consolidated balance sheets. Management believes the current level of the allowance for credit losses is adequate; however, there is no guarantee that additional adjustments to the allowance will not be required because of changes in economic conditions, regulatory requirements or other factors.

Deposits were $1.51 billion as of June 30, 2025, compared to $1.48 billion as of December 31, 2024. Core deposits, a non-GAAP measure, which include noninterest-bearing demand deposits, NOW, MMDA, savings and non-brokered certificates of deposit of denominations of $250,000 or less, were $1.36 billion at June 30, 2025, compared to $1.34 billion at December 31, 2024. Management believes it is useful to calculate and present core deposits because of the positive impact this low cost funding source provides to the Bank's overall cost of funds and profitability. Certificates of deposit in amounts of more than $250,000 totaled $150.6 million at June 30, 2025, compared to $145.9 million December 31, 2024.

Junior subordinated debentures were $15.5 million at June 30, 2025 and December 31, 2024. Shareholders' equity was $144.0 million, or 8.50% of total assets, at June 30, 2025, compared to $130.6 million, or 7.90% of total assets, at December 31, 2024.

Peoples Bank operates 16 banking offices in North Carolina, with offices in Catawba, Alexander, Lincoln, Mecklenburg, Iredell and Wake Counties. The Bank also operates loan production offices in Lincoln, Mecklenburg, Rowan and Forsyth Counties. The Company's common stock is publicly traded and is listed on the Nasdaq Global Market under the symbol "PEBK."

**Statements made in this earnings release, other than those concerning historical information, should be considered forward-looking statements pursuant to the safe harbor provisions of the Securities Exchange Act of 1934 and the Private Securities Litigation Act of 1995. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management and on the information available to management at the time that this release was 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 include, but are not limited to, (1) competition in the markets served by 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, including but not limited to those described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.** 

---

| | | | |
|:---|:---|:---|:---|
| **CONSOLIDATED BALANCE SHEETS** |  |  |  |
| June 30, 2025, December 31, 2024 and June 30, 2024 |  |  |  |
| (Dollars in thousands) |  |  |  |
|  | **June 30, 2025** | December 31, 2024 | June 30, 2024 |
|  |  ***(Unaudited)***  | *(Audited)*  | *(Unaudited)*  |
| **ASSETS:** |  |  |  |
| Cash and due from banks | $**33017** | $30919 | $31909 |
| Interest-bearing deposits | **68983** | 28347 | 50926 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | **102000** | 59266 | 82835 |
| Investment securities available for sale | **371614** | 388003 | 393260 |
| Other investments | **2648** | 2728 | 2779 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total securities | **374262** | 390731 | 396039 |
| Mortgage loans held for sale | **1541** | 1367 | 1288 |
| Loans | **1157975** | 1138404 | 1110672 |
| &nbsp;&nbsp;&nbsp;&nbsp; Less: Allowance for credit losses on loans | **(9792)** | (9995) | (10016) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loans | **1148183** | 1128409 | 1100656 |
| Premises and equipment, net | **14644** | 14847 | 15888 |
| Cash surrender value of life insurance | **17587** | 17675 | 18365 |
| Accrued interest receivable and other assets | **35628** | 39667 | 40327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $**1693845** | $1651962 | $1655398 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY:** |  |  |  |
| Deposits: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Noninterest-bearing demand | $**406556** | $402254 | $415977 |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing demand, MMDA & savings | **754125** | 741363 | 710446 |
| &nbsp;&nbsp;&nbsp;&nbsp; Time, over $250,000 | **150580** | 145939 | 147333 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other time | **202558** | 195175 | 202200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deposits | **1513819** | 1484731 | 1475956 |
| Securities sold under agreements to repurchase | **-** |  | 18824 |
| Junior subordinated debentures | **15464** | 15464 | 15464 |
| Accrued interest payable and other liabilities | **20557** | 21204 | 20842 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | **1549840** | 1521399 | 1531086 |
| Shareholders' equity: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Preferred stock, no par value; authorized |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5,000,000 shares; no shares issued and outstanding | **-** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock, no par value; authorized |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20,000,000 shares; issued and outstanding |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5,459,441 shares at 6/30/25, 5,457,646 shares |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; at 12/31/24, 5,457,646 at 6/30/24 | **48708** | 48658 | 48678 |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock held by deferred compensation trust,  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; at cost; 150,463 shares at 6/30/25, 158,580 shares |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; at 12/31/24, 166,247 shares at 6/30/24 | **(1527)** | (1757) | (1980) |
| &nbsp;&nbsp;&nbsp;&nbsp; Deferred compensation | **1527** | 1757 | 1980 |
| &nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | **127506** | 121062 | 115623 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive loss | **(32209)** | (39157) | (39989) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total shareholders' equity | **144005** | 130563 | 124312 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and shareholders' equity | $**1693845** | $1651962 | $1655398 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **CONSOLIDATED STATEMENTS OF INCOME**  |  |  |  |  |
| For the three and six months ended June 30, 2025 and 2024 |  |  |  |  |
| (Dollars in thousands, except per share amounts) |  |  |  |  |
|  | **Three months ended**  | **Three months ended**  | **Six months ended**  | **Six months ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2025**  | 2024  | **2025**  | 2024  |
|  |  ***(Unaudited)***  | *(Unaudited)*  |  ***(Unaudited)***  | *(Unaudited)*  |
| **INTEREST INCOME:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest and fees on loans | $**16648** | $15571 | $**32664** | $30709 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest on due from banks | **706** | 725 | **1056** | 1632 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest on investment securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. Government sponsored enterprises | **2087** | 2551 | **4348** | 5142 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State and political subdivisions | **694** | 695 | **1388** | 1390 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **585** | 528 | **1234** | 1007 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest income | **20720** | 20070 | **40690** | 39880 |
| **INTEREST EXPENSE:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing demand, MMDA & savings deposits | **2729** | 2438 | **5381** | 4498 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Time deposits | **3152** | 3628 | **6285** | 7309 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Junior subordinated debentures | **242** | 283 | **483** | 567 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **-** | 305 | **-** | 786 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense | **6123** | 6654 | **12149** | 13160 |
| **NET INTEREST INCOME** | **14597** | 13416 | **28541** | 26720 |
| **PROVISION FOR CREDIT LOSSES** | **(213)** | (468) | **55** | (377) |
| **NET INTEREST INCOME AFTER** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; **PROVISION FOR CREDIT LOSSES** | **14810** | 13884 | **28486** | 27097 |
| **NON-INTEREST INCOME:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Service charges | **1372** | 1346 | **2784** | 2686 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other service charges and fees | **156** | 180 | **342** | 364 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain/(loss) on sale of securities | **-** |  | **(4)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage banking income | **41** | 74 | **68** | 125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Insurance and brokerage commissions | **258** | 219 | **495** | 465 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Appraisal management fee income | **3973** | 3181 | **7015** | 5595 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous  | **1893** | 2521 | **3522** | 4324 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-interest income | **7693** | 7521 | **14222** | 13559 |
| **NON-INTEREST EXPENSES:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salaries and employee benefits | **7168** | 6827 | **13956** | 13807 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Occupancy | **2058** | 2105 | **4086** | 4216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Appraisal management fee expense | **3156** | 2523 | **5575** | 4427 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **3458** | 3676 | **6796** | 7197 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-interest expense | **15840** | 15131 | **30413** | 29647 |
| EARNINGS BEFORE INCOME TAXES | **6663** | 6274 | **12295** | 11009 |
| INCOME TAXES | **1503** | 1386 | **2790** | 2173 |
| **NET EARNINGS** | $**5160** | $4888 | $**9505** | $8836 |
| **PER SHARE AMOUNTS** |  |  |  |  |
| Basic net earnings | $**0.97** | $0.93 | $**1.79** | $1.67 |
| Diluted net earnings | $**0.95** | $0.89 | $**1.74** | $1.61 |
| Cash dividends | $**0.20** | $0.19 | $**0.56** | $0.54 |
| Book value | $**27.12** | $23.49 | $**27.12** | $23.49 |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **FINANCIAL HIGHLIGHTS** |  |  |  |  |  |
| For the three and six months ended June 30, 2025 and 2024, and the year ended December 31, 2024 | For the three and six months ended June 30, 2025 and 2024, and the year ended December 31, 2024 | For the three and six months ended June 30, 2025 and 2024, and the year ended December 31, 2024 |  |  |  |
| (Dollars in thousands) |  |  |  |  |  |
|  | **Three months ended**  | **Three months ended**  | **Six months ended**  | **Six months ended**  | Year ended  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  | December 31,  |
|  | **2025**  | 2024  | **2025**  | 2024  | 2024  |
|  |  ***(Unaudited)***  | *(Unaudited)*  |  ***(Unaudited)***  | *(Unaudited)*  | *(Audited)*  |
| **SELECTED AVERAGE BALANCES:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Available for sale securities | $**415919** | $445098 | $**424518** | $444289 | $442097 |
| &nbsp;&nbsp;&nbsp;&nbsp; Loans | **1156140** | 1108684 | **1149274** | 1100671 | 1113488 |
| &nbsp;&nbsp;&nbsp;&nbsp; Earning assets | **1639475** | 1610811 | **1625624** | 1608396 | 1611816 |
| &nbsp;&nbsp;&nbsp;&nbsp; Assets | **1680854** | 1650008 | **1666177** | 1648905 | 1653356 |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits | **1513519** | 1461596 | **1502234** | 1444950 | 1465965 |
| &nbsp;&nbsp;&nbsp;&nbsp; Shareholders' equity | **137223** | 119443 | **136373** | 120927 | 129866 |
| **SELECTED KEY DATA:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net interest margin (tax equivalent) (1) | **3.57%** | 3.35% | **3.54%** | 3.34% | 3.36% |
| &nbsp;&nbsp;&nbsp;&nbsp; Return on average assets | **1.23%** | 1.19% | **1.15%** | 1.08% | 0.99% |
| &nbsp;&nbsp;&nbsp;&nbsp; Return on average shareholders' equity | **15.08%** | 16.46% | **14.06%** | 14.69% | 12.59% |
| &nbsp;&nbsp;&nbsp;&nbsp; Average shareholders' equity to total average assets | **8.16%** | 7.24% | **8.18%** | 7.33% | 7.85% |

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| | | | |
|:---|:---|:---|:---|
|  | **June 30, 2025** | June 30, 2024 | December 31, 2024 |
|  |  ***(Unaudited)***  | *(Unaudited)*  | *(Audited)*  |
| **ALLOWANCE FOR CREDIT LOSSES:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Allowance for credit losses on loans | $**9792** | $10016 | $9995 |
| &nbsp;&nbsp;&nbsp;&nbsp; Allowance for credit losses on unfunded commitments | **1258** | 1565 | 1101 |
| &nbsp;&nbsp;&nbsp;&nbsp; Provision for (recovery of) credit losses (2) | **55** | (377) | (285) |
| &nbsp;&nbsp;&nbsp;&nbsp; Charge-offs (2) | **(284)** | (1228) | (1981) |
| &nbsp;&nbsp;&nbsp;&nbsp; Recoveries (2) | **183** | 375 | 551 |
| **ASSET QUALITY:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-accrual loans | $**4822** | $4156 | $4440 |
| &nbsp;&nbsp;&nbsp;&nbsp; 90 days past due and still accruing | **-** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Other real estate owned | **-** | - | 369 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total non-performing assets | $**4822** | $4156 | $4809 |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-performing assets to total assets | **0.28%** | 0.25% | 0.29% |
| &nbsp;&nbsp;&nbsp;&nbsp; Allowance for credit losses on loans to non-performing assets  | **203.07%** | 241.00% | 207.84% |
| &nbsp;&nbsp;&nbsp;&nbsp; Allowance for credit losses on loans to total loans | **0.85%** | 0.90% | 0.88% |
| **LOAN RISK GRADE ANALYSIS:** |  |  |  |
| **Percentage of loans by risk grade** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Risk Grade 1 (excellent quality) | **0.29%** | 0.29% |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Risk Grade 2 (high quality) | **20.23%** | 19.57% |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Risk Grade 3 (good quality) | **71.53%** | 72.99% |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Risk Grade 4 (management attention) | **6.97%** | 5.95% |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Risk Grade 5 (watch) | **0.46%** | 0.66% |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Risk Grade 6 (substandard) | **0.52%** | 0.54% |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Risk Grade 7 (doubtful) | **0.00%** | 0.00% |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Risk Grade 8 (loss) | **0.00%** | 0.00% |  |

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| |
|:---|
| *At June 30, 2025, including non-accrual loans, there was one relationship exceeding $1.0 million in the Watch risk grade, which totaled $1.4 million; there were no relationships exceeding $1.0 million in the Substandard risk grade. At December 31, 2024, including non-accrual loans, there was one relationship exceeding $1.0 million in the Watch risk grade, which totaled $1.5 million; there were no relationships exceeding $1.0 million in the Substandard risk grade.* |
| (1) This amount reflects the tax benefit that the Company receives related to its tax-exempt loans and securities, which carry interest rates lower than similar taxable investments due to their tax-exempt status. This amount has been computed using an effective tax rate of 22.78% and is reduced by the related nondeductible portion of interest expense. |
| (2) For the six months ended June 30, 2025 and 2024 and the year ended December 31, 2024. |

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