Peoples Bancorp of North Carolina (PEBK) risk factors, FY2025 10-K

Other

1. 01Unfavorable economic conditions could adversely affect our business
2. 02Inflation can have an adverse impact on our customers and their ability to repay
3. 03Recessionary conditions could result in increases in our level of nonperforming loans and/or reduce demand for our products and services, which would lead to lower revenue, higher loan losses and lower earnings
4. 04We are subject to credit risk and may incur losses if loans are not repaid
5. 05Our loan portfolio includes loans with a higher risk of loss
6. 06A significant amount of the Bank’s business is concentrated in lending which is secured by property located in the Catawba Valley and surrounding areas
7. 07Our use of appraisals in deciding whether to make a loan on or secured by real property does not ensure the value of the real property collateral
8. 08Our allowance for credit losses may be insufficient and could therefore reduce earnings
9. 09If our non-performing assets increase, our earnings will suffer
10. 10Changes in interest rates affect profitability and assets
11. 11A small number of large deposit relationships provide a significant level of funding for the Bank31% rewritten
12. 12We may not be able to retain or grow our deposit base, which could adversely impact our funding costs
13. 13Increases in FDIC insurance premiums may adversely affect our net income and profitability
14. 14Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations
15. 15Our business continuity plans or data security systems could prove to be inadequate, resulting in a material interruption in, or disruption to, our business and a negative impact on our results of operations
16. 16The adoption and use of artificial intelligence tools by us and our third-party vendors and service providers may increase the risk of errors, omissions, unfair treatment or fraudulent behavior by our employees, clients, or counterparties, or other third partiesNew
17. 17In the normal course of business, we process large volumes of transactions involving millions of dollars. If our internal controls fail to work as expected, if our systems are used in an unauthorized manner, or if our employees subvert our internal controls, we could experience significant losses
18. 18Financial services companies depend on the accuracy and completeness of information about customers and counterparties
19. 19We are subject to extensive regulation, which could have an adverse effect on our operations
20. 20We face a risk of noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations and related enforcement actions
21. 21We are subject to federal and state fair lending laws, and failure to comply with these laws could lead to material penalties
22. 22Consumers may decide not to use banks to complete their financial transactions
23. 23The soundness of other financial institutions could adversely affect us
24. 24Liquidity risk could impair our ability to fund operations and jeopardize our financial condition

Risks related to decline in value of investment securities portfolio

1. 25We could experience losses due to competition with other financial institutions
2. 26industry and general economic trends
3. 27We face increasing competition from fintechs and other technology-driven platformsNew
4. 28Failure to keep pace with technological change could adversely affect our business
5. 29We rely on other companies to provide key components of our business infrastructure
6. 30Negative publicity could damage our reputation
7. 31Loss of key personnel could adversely impact results
8. 32We may be subject to examinations by taxing authorities which could adversely affect our results of operations
9. 33Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition
10. 34Our internal controls may be ineffective
11. 35Credit losses on investment securities or inability to realize deferred tax assets could require charges to earnings, which could result in a negative impact on our results of operations
12. 36Because we engage in lending secured by real estate and may be forced to foreclose on the collateral property and own the underlying real estate, we may be subject to the increased costs associated with the ownership of real property, which could result in reduced net income
13. 37We are subject to losses due to errors, omissions or fraudulent behavior by our employees, clients, counterparties or other third parties
14. 38Our articles of incorporation and bylaws, and certain banking laws may have an anti-takeover effect

RISKS RELATED TO THE COMPANY’S STOCK

1. 39Our stock price can be volatile
2. 40Future sales of our stock by our shareholders or the perception that those sales could occur may cause our stock price to decline
3. 41Our common stock is not FDIC insured
4. 42We may reduce or eliminate dividends on our common stock
5. 43We may need additional access to capital, which we may be unable to obtain on attractive terms or at all