Peoples Bancorp of North Carolina, Inc.’s (PEBK Quick QuotePEBK - Free Report) investors have been experiencing some short-term gains from the stock lately, despite its bumpy ride over recent months. Shares of the Newton, NC-based bank holding company for Peoples Bank, a state-chartered commercial bank, gained 25.6% compared with the industry’s 4.7% rise in the past six months. It has also outperformed the sector and the S&P 500’s gain of 5.9% and 11.4%, respectively, in the same time frame.

A major recent development of PEBK includes the announcement of its third-quarter 2025 results in October 2025. In the third quarter, the company reported steady year-over-year earnings, supported by higher net interest income driven by loan growth and improved interest spreads. Peoples Bancorp’s operating performance reflected disciplined expense management, partially offset by a higher provision for credit losses.

Management highlighted stable asset quality and continued growth in deposits, which strengthened liquidity. PEBK’s capital levels remained solid, supporting balance-sheet expansion amid a gradually moderating interest-rate environment.

PEBK Six Months Price Comparison

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Over the past six months, the stock’s performance has remained strong, outperforming its peers like Affinity Bancshares, Inc. (AFBI Quick QuoteAFBI - Free Report) and C&F Financial Corporation (CFFI Quick QuoteCFFI - Free Report) . Affinity Bancshares and C&F Financial’s shares have gained 7.9% and 6.6%, respectively, in the same time frame.

Peoples Bancorp, through its wholly owned subsidiaries, primarily provides community banking services across the Catawba Valley and surrounding areas via 15 full-service banking offices and several loan production offices across North Carolina. Its core business includes attracting deposits from individuals and small to medium-sized businesses and investing these funds in commercial loans, real estate mortgage and construction loans, and consumer loans.

PEBK’s Strong Fundamentals Weigh In

Peoples Bancorp benefits from a relationship-driven community banking model anchored in its North Carolina markets. The company has continued to grow deposits, particularly core customer balances, which has enhanced liquidity and reduced reliance on higher-cost funding. This stable funding profile supports lending activity and provides flexibility as interest-rate conditions evolve, reinforcing PEBK’s long-term operating resilience.

Beyond traditional banking, Peoples Bancorp generates fee-based revenue through its appraisal management subsidiary, Community Bank Real Estate Solutions, LLC (CBRES). This business provides services to community banks nationwide and adds a non-interest income stream that is less sensitive to rate cycles. The contribution from CBRES helps offset margin pressure during periods of rate volatility and improves overall revenue mix consistency.

Peoples Bancorp’s conservative underwriting practices and active credit monitoring have supported stable asset quality across economic cycles. Management’s focus on maintaining strong capital and liquidity levels allows PEBK to absorb credit costs, support balance-sheet growth and continue returning value to shareholders, positioning the bank to navigate changing economic and regulatory environments effectively.

Challenges Ahead for Peoples Bancorp

Peoples Bancorp continues to navigate a challenging interest-rate environment, where faster repricing of deposits relative to earning assets can pressure net interest margins and profitability. At the same time, higher interest rates have resulted in elevated unrealized losses within the investment securities portfolio, constraining accumulated other comprehensive income and reducing balance-sheet flexibility. Together, these dynamics increase sensitivity to monetary policy shifts and limit the company’s ability to optimize capital deployment in the near term.

PEBK Stock's Valuation

Peoples Bancorp’s trailing 12-month P/S of 1.8X is lower than the industry’s average of 3.5X but is higher than its five-year median of 1.7X.

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Affinity Bancshares and C&F Financial’s trailing 12-month P/S currently stand at 2.5X and 1.3X, respectively, in the same time frame.

Our Final Take on Peoples Bancorp

Peoples Bancorp remains well-positioned, supported by a stable community banking franchise, disciplined risk management and diversified revenue streams that provide earnings durability across rate cycles. While near-term margin pressure and balance-sheet sensitivity to interest-rate movements remain key considerations, the company’s solid capital position and liquidity offer meaningful downside protection. However, following the stock’s strong recent advance, the near-term risk–reward appears more balanced.

From a valuation standpoint, PEBK trades below the broader industry average, leaving room for upside if fundamentals remain intact and rate headwinds ease. At current levels, the stock appears better suited for existing investors to hold, while prospective investors may prefer to await a more attractive entry point.