PEOPLES BANCORP OF NORTH CAROLINA INC

For the period ended Dec 31, 2025. Filed Mar 11, 2026.

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FY2025 · Filed Mar 11, 2026

PEBK$42.69-0.3%Stored close · as of Nov 10, 2026

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Contents

EX-13 · (2) Investment Securities

(2) Investment Securities

Investment securities available for sale at December 31, 2025 and 2024 are as follows:

(Dollars in thousands)
	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
U.S. Treasuries	$7,987	-	378	7,609
U.S. Government sponsored enterprises	5,545	-	343	5,202
GSE - Mortgage-backed securities	227,161	202	15,447	211,916
Private label mortgage-backed securities	42,575	153	666	42,062
State and political subdivisions	129,363	-	18,789	110,574
Total	$412,631	355	35,623	377,363

(Dollars in thousands)
	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
U.S. Treasuries	$7,981	-	724	7,257
U.S. Government sponsored enterprises	9,243	-	511	8,732
GSE - Mortgage-backed securities	248,837	162	23,207	225,792
Private label mortgage-backed securities	43,118	74	1,425	41,767
State and political subdivisions	129,659	-	25,204	104,455
Total	$438,838	236	51,071	388,003

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The current fair value and associated unrealized losses on investments in debt securities with unrealized losses at December 31, 2025 and 2024 are summarized in the tables below, with the length of time the individual securities have been in a continuous loss position.

(Dollars in thousands)
Less than 12 Months · 12 Months or More · Total
Fair Value · Unrealized Losses · Fair Value · Unrealized Losses · Fair Value · Unrealized Losses
U.S. Treasuries	$	-	-	7,609	378	7,609	378
U.S. government sponsored enterprises		-	-	5,202	343	5,202	343
GSE -Mortgage-backed securities		12,247	183	188,092	15,264	200,339	15,447
Private label mortgage-backed securities		14,156	28	15,858	638	30,014	666
State and political subdivisions		-	-	110,573	18,789	110,573	18,789
Total		$26,403	211	327,334	35,412	353,737	35,623

(Dollars in thousands)
Less than 12 Months · 12 Months or More · Total
Fair Value · Unrealized Losses · Fair Value · Unrealized Losses · Fair Value · Unrealized Losses
U.S. Treasuries	$	-	-	7,257	724	7,257	724
U.S. government sponsored enterprises		-	-	8,732	511	8,732	511
GSE -Mortgage-backed securities		20,458	669	197,497	22,538	217,955	23,207
Private label mortgage-backed securities		4,010	9	21,727	1,416	25,737	1,425
State and political subdivisions		-	-	104,455	25,204	104,455	25,204
Total		$24,468	678	339,668	50,393	364,136	51,071

At December 31, 2025, unrealized losses in the investment securities portfolio relating to debt securities totaled $35.6 million. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the December 31, 2025 tables above, both of the U.S. Treasury securities, all 108 of the securities issued by state and political subdivisions contained unrealized losses, all six of the securities issued by U.S. Government sponsored enterprises (“GSE”), 110 of the 116 GSE mortgage-backed securities, and 11 of the 17 private label mortgage-backed securities contained unrealized losses. The Company did not have any reserves on securities at December 31, 2025, as no credit related losses were identified in the Company’s December 31, 2025 analysis. At December 31, 2024, unrealized losses in the investment securities portfolio relating to debt securities totaled $51.1 million. The unrealized losses on these debt securities arose due to changing interest rates and were considered to be temporary. From the December 31, 2024 tables above, both of the U.S. Treasury securities, all 108 of the securities issued by state and political subdivisions contained unrealized losses, all seven of the securities issued by GSE’s, 114 of the 119 GSE mortgage-backed securities, and 11 of the 16 private label mortgage-backed securities contained unrealized losses. The Company did not have any reserves on securities at December 31, 2024, as no credit related losses were identified in the Company’s December 31, 2024 analysis.

The amortized cost and estimated fair value of investment securities available for sale, other than GSE mortgage-backed securities, at December 31, 2025, are shown below by contractual maturity. Expected maturities of mortgage-backed securities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollars in thousands)
	Amortized Cost	Fair Value
Due within one year	$4,920	4,939
Due from one to five years	46,428	43,371
Due from five to ten years	76,038	64,473
Due after ten years	58,084	52,664
Mortgage-backed securities	227,161	211,916
Total	$412,631	377,363

During 2025, proceeds from sales of securities available for sale were $20.4 million and resulted in gross gains of $94,000 and gross losses of $172,000. During 2024, proceeds from sales of securities available for sale were $11.7 million and resulted in gross gains of $33,000 and gross losses of $28,000.

Securities with a fair value of approximately $40.7 million and $40.0 million at December 31, 2025 and 2024, respectively, were pledged to secure public deposits and for other purposes as required by law.

Taxable interest income on investment securities was $13.2 million and $14.6 million for the years ended December 31, 2025 and 2024, respectively. Non-taxable interest income on investment securities was $334,000 and $425,000 for the years ended December 31, 2025 and 2024, respectively.

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