8-K

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):    September 8, 2009
Peoples Bancorp of North Carolina, Inc.
(Exact Name of Registrant as Specified in Its Charter)
North Carolina
(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)
(828) 464-5620
(Registrant’s Telephone Number, Including Area Code)
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:
	o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01. Other Events

On September 8, 2009, the Board of Directors of Peoples Bancorp of North Carolina, Inc. adopted the Peoples Bancorp of North Carolina, Inc. Excessive and Luxury Expenditure Policy, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits

The following exhibit is being provided solely for the purposes of providing disclosure pursuant to Item 8.01 – Other Events.

                 (99.1)   Peoples Bancorp of North Carolina, Inc. Excessive and Luxury Expenditure Policy.

Disclosure about forward-looking statements

This Form 8-K contains forward-looking statements.  These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated 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.

Readers should not place undue reliance on forward-looking statements, which reflect management’s view only as of the date hereof.  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.

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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.
Date:  September 9, 2009	By:	/s/ A. Joseph Lampron
	A. Joseph Lampron
	Executive Vice President and Chief Financial Officer

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EXHIBIT INDEX

99.1 Peoples Bancorp of North Carolina, Inc. Excessive and Luxury Expenditure Policy

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EX-99.1

EXHIBIT 99.1

PEOPLES BANCORP OF NORTH CAROLINA, INC.

Excessive and Luxury Expenditure Policy

This policy is intended to fulfill the requirements under the American Recovery and Reinvestment Act of 2009 (ARRA) enacted February 17, 2009.  ARRA requires each recipient of funds under the Capital Purchase Program (CPP) of the Troubled Asset Relief Program (TARP) to have in place a company-wide policy regarding excessive or luxury expenditures, as identified by the Secretary of the Department of the U.S. Treasury.

Peoples Bancorp prohibits excessive or luxury expenditures on entertainment and events, office or facility renovations, aviation or other transportation services or other activities or events that are not reasonable expenditures for conferences, staff development, reasonable performance incentives or other similar measure conducted in the normal course of business operations.

Renovations:

Renovations of facilities and office spaces should be undertaken giving consideration to current profit plans, and tracked within the capital expenditure policy of the Company.  An exception to this can be allowed if management must deal with an emergency situation, such as an act of nature, and the expenditure is necessary to make the facility operational for customer use.  Any renovation expenditure in excess of $100,000 must be approved by the Board of Directors.

Entertainment:

Entertainment is defined as any activity by an employee or executive that uses corporate funds for business development purposes relating to a current customer or prospective customer, or to further enhance the Company’s marketing efforts.

Our expectation is that all expenses incurred by Bank employees would be to benefit the company, and the business of the Bank.  Occasional events such as taking customers or prospects on trips, playing golf, eating dinner, or taking them to other events the customer/prospect would find enjoyable is a necessary part of the Company’s marketing efforts and is not deemed as “luxury” or a violation of this Policy.  These expenses should be documented and detailed as to the benefit derived by the Bank through the normal accounts payable process.

Events and parties focused on customers for business purposes would not fall under this policy. The Bank shall not incur any entertainment expenditure associated with a single event that exceeds $100,000 without prior approval of the Board of Directors.

Conferences:

We encourage our staff to attend conferences that are appropriate educational opportunities.  These conferences should be related to the financial services industry and have a direct correlation to their job.  At times, it may be appropriate that a spouse would travel to these conferences with Company attendees.  Typically, these conferences are sponsored by vendors, banking associations, or other industry related entities.

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Excessive and Luxury Expenditure Policy                                                                                                                                Page 2

Employee Recognition/Holiday Parties:

Employee recognition/holiday parties are part of the Company’s comprehensive employee recognition/appreciation process.  These events should be local in geographic nature, and would include costs for such things as service awards and nominal door prizes.  An event should not cost the sponsoring business unit more than an average day’s payroll per employee.

Board/Management Retreats:

Retreats should only be used for educational or business planning purposes, and should be considered in the same manner as other expenses. Board education is a vital part of maintaining, and keeping a dynamic director base, and this policy should not limit a retreat that is focused on strategic planning or education. Costs for events, parties, entertainment, retreats shall not exceed $50,000 on an annual basis.

Aviation Services:

Transportation for Company employees to outlying locations, including bank locations, conferences, business development purposes and merger and acquisition research, should be conducted in the most cost appropriate way for the Company.  Modes of transportation to be used may consist of vehicle, commercial air or rail service.  The selection of transportation services will factor in cost, efficiency and timeliness of travel.  Private air services are not allowed without the approval of the Chairman of the Peoples Bancorp Board of Directors.

Reporting Violations:

Any individual who violates this Policy, or knows of any such violation by any other individual, must report the violation immediately to such individual’s supervisor who shall then report the violation to the CEO or to the Chairman of the Board (if an alleged CEO violation).  Any employee or director who engages in extravagant spending shall be subject to discipline up to and including termination of employment or removal from or omission of re-nomination to the Board.

Certification:

The CEO and Chief Financial Officer of the Corporation shall certify to the Board at least annually that the provisions of this policy are being enforced and are sufficient to provide reasonable assurance that the Corporation’s expenditures for such purposes are not excessive.

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