About Peoples Bancorp of North Carolina

Peoples Bancorp of North Carolina, Inc. operates as the bank holding company for Peoples Bank that provides various banking products and services. The company serves the citizens and business interests of the Catawba Valley and surrounding communities through banking offices, located in Lincolnton, Newton, Denver, Catawba, Conover, Maiden, Claremont, Hiddenite, Hickory, Charlotte, Huntersville, Mooresville, Raleigh, and Cary, North Carolina. The bank also operates loan production offices in Charlotte, Denver, Salisbury and Winston-Salem North Carolina. The bank has a diversified loan portfolio, with no foreign loans and few agricultural loans. Real estate loans are predominately variable rate and fixed rate commercial property loans, which include residential development loans to commercial customers. Commercial loans are spread throughout a variety of industries with no one particular industry or group of related industries accounting for a significant portion of the commercial loan portfolio. The majority of the bank’s deposit and loan customers are individuals and small-to medium-sized businesses located in the bank’s market area. The bank’s loan portfolio also includes Individual Taxpayer Identification Number (ITIN) mortgage loans generated through the bank’s former Banco offices. Subsidiaries The bank is a subsidiary of the company. As of December 31, 2022, the bank had four subsidiaries, Peoples Investment Services, Inc., Real Estate Advisory Services, Inc., Community Bank Real Estate Solutions, LLC (‘CBRES’) and PB Real Estate Holdings, LLC. Through a relationship with Raymond James Financial Services, Inc., Peoples Investment Services, Inc. provides the bank’s customers access to investment counseling and non-deposit investment products, such as stocks, bonds, mutual funds, tax deferred annuities, and related brokerage services. Real Estate Advisory Services, Inc. provides real estate appraisal and real estate brokerage services. CBRES serves as a ‘clearing-house’ for appraisal services for community banks. Other banks are able to contract with CBRES to find and engage appropriate appraisal companies. As a separate legal entity, CBRES’s services and the appraisal process are conducted independent from the financing process of the bank. PB Real Estate Holdings, LLC acquires, manages and disposes of real property, other collateral and assets obtained in the ordinary course of collecting debts previously contracted. In 2019, the company launched PB Insurance Agency, which operated as a division of CBRES, until it was discontinued in 2022. All of the bank’s subsidiaries are incorporated in the state of North Carolina. Market Area The bank’s primary market consists of the communities in an approximate 50-mile radius around its headquarters office in Newton, North Carolina. This area includes Catawba County, Alexander County, Lincoln County, Iredell County and portions of northeast Gaston County, North Carolina. The bank also conducts a portion of its business outside of this area. The bank is located only 40 miles north of Charlotte, North Carolina, and the bank’s primary market area is and will continue to be significantly affected by its close proximity to this major metropolitan area. Employment in the bank’s primary market area is diversified among manufacturing, retail and wholesale trade, technology, services and utilities. Catawba County’s largest employers include Catawba County Schools, Catawba Valley Medical Center, Duke LifePoint/Frye Regional Medical Center, CommScope, Inc. (manufacturer of fiber optic cable and accessories), Corning Optical Communications (manufacturer of fiber optic cable and accessories), Target Stores Distribution Center (transportation and warehousing), Catawba County, GKN ePowertrain (manufacturing), Wal-Mart Associates, Inc. and Pierre Foods, Inc. Lincoln County’s largest employers include Lincoln County Schools, County of Lincoln, Atrium Health Lincoln, RSI Home Products (manufacturing), Wal-Mart Associates, Inc., The Timken Company (manufacturing), Blum, Inc. (manufacturing), Lowes Home Centers, Inc. and Cataler North America (manufacturing). Deposits The bank primarily uses deposits to fund its loan and investment portfolios. The bank offers a variety of deposit accounts to individuals and businesses. Deposit accounts include checking, savings, money market and time deposits. Investment Portfolio As of December 31, 2022, the company’s investment portfolio included U.S. treasuries; mortgage-backed securities; U.S. government sponsored enterprises; and state and political subdivisions. Supervision and Regulation The company, as a registered bank holding company, is subject to the regulation of the Federal Reserve. As a result of the company’s ownership of the bank, the company is also registered under the bank holding company laws of North Carolina. Accordingly, the company is also subject to regulation and supervision by the Commissioner. As a member of the FDIC, the company’s deposits are insured up to applicable limits by the FDIC, and such insurance is backed by the full faith and credit of the United States Government. The bank is a member of the FHLB of Atlanta. The bank received a ‘satisfactory’ rating in its last CRA examination, which was conducted in January 2020. The company has registered its common stock with the Securities and Exchange Commission (‘SEC’) pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended from time to time (the ‘Exchange Act’). In addition to limitations on the dollar value of loans to directors, executive officers and principal shareholders, pursuant to Section 22(h), the Federal Reserve requires that loans to directors, executive officers, and principal shareholders be made on terms substantially the same as offered in comparable transactions with non-executive employees of the bank. The bank is subject to the loans-to-one-borrower limits established by North Carolina law, which are substantially the same as those applicable to national banks. The bank has established an anti-money laundering program to comply with the bank Secrecy Act requirements. The Sarbanes-Oxley Act of 2002 (‘SOX’) implements a broad range of corporate governance and accounting measures for public companies (including publicly-held bank holding companies, such as the company) designed to promote honesty and transparency in corporate America and better protect investors from the types of corporate wrongdoings that occurred at Enron and WorldCom, among other companies. The company complies with the provisions of SOX and its underlying regulations. The bank is subject to examination by the FDIC and the Commissioner. In addition, the bank is subject to various other state and federal laws and regulations, including state usury laws, laws relating to fiduciaries, consumer credit, equal credit and fair credit reporting laws and laws relating to branch banking. History Peoples Bancorp of North Carolina, Inc. was founded in 1912.