<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1999
Commission File Number 1-13253
THE PEOPLES HOLDING COMPANY
-------------------------------------------------------
(Exact name of the registrant as specified in its charter)
MISSISSIPPI 64-0676974
------------------------ --------------------------------------
(State of Incorporation) (I.R.S. Employer Identification Number)
209 Troy Street, P. O. Box 709, Tupelo, Mississippi 38801
----------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number including area code 601-680-1001
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES__X__NO_____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as to the latest practicable date.
Common stock, $5 Par Value, 6,191,854 shares outstanding
as of May 14, 1999
1
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THE PEOPLES HOLDING COMPANY
INDEX
PART 1. FINANCIAL INFORMATION PAGE
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
March 31, 1999 and December 31, 1998................ 3
Condensed Consolidated Statements of Income - Three
Months Ended March 31, 1999 and 1998................ 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1999 and 1998.......... 5
Notes to Condensed Consolidated Financial Statements..... 6
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 9
Item 3.
Quantitative and Qualitative Disclosures
About Market Risk................................... 13
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings....................................... 13
Item 2.
Changes in Securities................................... 13
Item 6.(b)
Reports on Form 8-K..................................... 13
Signatures.................................................. 13
2
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<TABLE>
<CAPTION>
THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Restated)
MARCH 31 DECEMBER 31
1999 1998
------------ -----------
(Unaudited) (Note 1)
<S> <C> <C>
Assets
Cash and due from banks .................. $ 36,040 $ 32,453
Federal funds sold ....................... 0 0
---------- ---------
Cash and cash equivalents ........... 36,040 32,453
Interest bearing balances with banks ..... 13,024 6,104
Securities held-to-maturity (market
value-$82,998 and $80,868 at
March 31, 1999 and December 31,
1998, respectively) ................... 81,395 79,176
Securities available-for-sale (amortized
cost-$212,343 and $213,138 at
March 31, 1999 and December 31,
1998, respectively) ................... 212,664 214,463
Loans, net of unearned income ............ 743,019 729,157
Allowance for loan losses ............. (10,096) (9,744)
---------- ---------
Net Loans ....................... 732,923 719,413
Premises and equipment ................... 27,300 26,805
Other assets ............................. 30,545 29,381
---------- ---------
Total Assets .................... $ 1,133,891 $ 1,107,795
========== =========
Liabilities
Deposits:
Noninterest-bearing ................... $ 142,391 $ 152,496
Certificates of deposit exceeding
$100,000 .......................... 125,351 129,347
Interest bearing ...................... 714,571 678,452
---------- ---------
Total Deposits .............. 982,313 960,295
Treasury tax and loan note account ....... 4,516 2,455
Borrowings ............................... 19,876 20,021
Other liabilities ........................ 15,691 14,814
---------- ---------
Total Liabilities ........... 1,022,396 997,585
Shareholders' Equity
Common Stock, $5 par value - 15,000,000
shares authorized, 6,191,854 shares
issued and outstanding at March 31, 1999
and December 31, 1998, respectively .... 30,959 30,959
Additional paid-in capital ............... 43,290 43,290
Accumulated other comprehensive income ... 201 830
Retained earnings ........................ 37,045 35,131
---------- ---------
Total Shareholders' Equity ..... 111,495 110,210
---------- ---------
Total Liabilities and
Shareholders' Equity ......... $ 1,133,891 $ 1,107,795
========== =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
3
<PAGE>
<TABLE>
<CAPTION>
THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data)
THREE MONTHS ENDED MARCH 31
(Restated)
1999 1998
---- ----
(Unaudited)
<S> <C> <C>
Interest Income
Loans ................................ $ 16,162 $ 15,296
Securities:
Taxable ......................... 3,011 3,201
Tax-exempt ...................... 989 826
Other ................................ 376 381
------- -------
Total interest income ...... 20,538 19,704
Interest Expense
Time deposits exceeding $100,000 ..... 1,019 1,448
Other deposits ....................... 7,756 7,156
Borrowings .......................... 361 353
------- -------
Total interest expense ..... 9,136 8,957
---------- ----------
Net interest income ........ 11,402 10,747
Provision for loan losses .................. 746 645
--------- ---------
Net interest income after
provision for loan losses .. 10,656 10,102
Noninterest income:
Service charges on deposit accounts .. 1,933 1,728
Fees and commissions ................. 679 544
Trust revenue ........................ 210 180
Gains on sale of securities and loans. 196 230
Other ................................ 970 749
------- -------
Total noninterest income ... 3,988 3,431
Noninterest expenses:
Salaries and employee benefits ....... 5,077 5,237
Net occupancy ........................ 773 655
Equipment ............................ 546 517
Other ................................ 3,931 2,948
--------- ---------
Total noninterest expenses . 10,327 9,357
---------- ----------
Income before income taxes ................. 4,317 4,176
Income taxes ............................... 1,102 1,221
--------- ---------
Net income ................. $ 3,215 $ 2,955
========== ==========
Basic and diluted earnings per share ...... $ 0.52 $ 0.48
====== ======
Weighted average shares outstanding ....... 6,191,854 6,206,854
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
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<TABLE>
<CAPTION>
THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share data)
THREE MONTHS ENDED MARCH 31
(Restated)
1999 1998
---- ----
(Unaudited)
<S> <C> <C>
Operating Activities
Net Cash Provided by Operating
Activities .................... $ 4,903 $ 4,378
Investing Activities
Net (increase) decrease in balances
with other banks ................... (6,919) 2,337
Proceeds from maturities/calls of
securities held-to-maturity ........ 2,313 579
Proceeds from maturities/calls of
securities available-for-sale ...... 40,159 12,445
Proceeds from sales of
securities available-for-sale ...... 0 0
Purchases of securities
held-to-maturity ................... (4,516) (5,895)
Purchases of securities
available-for-sale ................. (39,439) (41,859)
Net increase in loans ................... (35,272) (22,872)
Proceeds from sales of loans ............ 20,853 21,555
Proceeds from sales of premises
and equipment ...................... 225 97
Purchases of premises and equipment ..... (1,354) (1,283)
---------- ----------
Net Cash Used in Investing
Activities .................... (23,950) (34,896)
Financing Activities
Net (decrease) in
noninterest-bearing deposits ........ (10,105) (142)
Net increase in
interest-bearing deposits ........... 32,123 44,323
Net increase (decrease) in treasury
tax and loan note account .......... (439) 1,315
Net increase (decrease) in borrowings ... 2,355 (590)
Acquisition of treasury stock ........... 0 0
Cash dividends paid ..................... (1,300) (1,151)
---------- ----------
Net Cash Provided by Financing
Activities ................... 22,634 43,755
---------- ----------
Increase in Cash
and Cash Equivalents ......... 3,587 13,237
Cash and Cash Equivalents at
beginning of period ............... 32,453 39,349
---------- ----------
Cash and Cash Equivalents at
end of period ..................... $ 36,040 $ 52,586
============ ============
Non-cash transactions:
Transfer of loans to other real
estate .............................. $ 233 $ 254
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
<PAGE>
THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1999
(in thousands, except share data)
Note 1 Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended March 31,
1999 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1999.
For further information, refer to the consolidated financial statements and
footnotes thereto included in The Peoples Holding Company and Subsidiary's
(collectively, the Company) annual report on Form 10-K for the year ended
December 31, 1998.
The historical financial information presented in this Form 10-Q has been
restated to include the results of Inter-City Federal Bank for Savings (Inter-
City). Inter-City was acquired in a pooling-of-interests transaction on
March 26, 1999. In accordance with the pooling-of-interests method of
accounting, no adjustments have been made to the historical carrying amounts of
assets and liabilities of Inter-City. However, the financial information has
been restated to include the results of Inter-City for all stated periods prior
to the combination.
Note 2 Mergers and Acquisitions
On March 26, 1999, the Company exchanged 347,382 shares of common stock for all
of the outstanding shares of Inter-City, which is located in Louisville,
Mississippi. The transaction has been accounted for under the pooling-of-
interests method of accounting.
The following table presents selected financial information, split between the
Company and Inter-City for the three months ended March 31, 1999 and 1998.
Three Months Ended
March 31
1999 1998
------------------
Revenue
The Peoples Holding Company............... $ 23,662 $ 22,273
Inter-City Federal Bank for Savings (1)... 864 862
------- -------
$ 24,526 $ 23,135
======= =======
Net Income
The Peoples Holding Company............... $ 3,344 $ 2,855
Inter-City Federal Bank for Savings (1)... (129) 100
------- -------
$ 3,215 $ 2,955
======= =======
(1) The 1999 amounts reflect the results of operations from January 1, 1999
through March 26, 1999. The results of operations from March 27, 1999 through
March 31, 1999 are included in The Peoples Holding Company amounts.
6
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Note 3 Comprehensive Income
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income." SFAS No. 130
establishes new rules for the reporting and display of comprehensive income
and its components; however, the adoption of this Statement had no impact on
the Company's net income or shareholders' equity. SFAS No. 130 requires
unrealized gains or losses on the Company's available-for-sale securities,
which prior to adoption were reported separately in shareholders' equity, to be
included in other comprehensive income. Prior year financial statements have
been reclassified to conform to the requirements of SFAS No. 130.
During the first quarters of 1999 and 1998, total comprehensive income amounted
to $2,586 and $3,096, respectively.
Note 4 Segment Reporting
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which established standards for the
reporting of financial information from operating segments in annual and
interim financial statements. SFAS No. 131 requires that financial information
be reported on the same basis that it is reported internally for evaluating
segment performance and allocating resources to segments. Because SFAS No. 131
addresses how supplemental financial information is disclosed in annual and
interim reports, its adoption had no impact on the financial condition or
operating results of the Company.
Segment information for the three months ended March 31, 1999 and 1998, is
presented below.
Three Months Ended March 31, 1999
Specialized
Branches Products All Other Total
-------- ---------- --------- ---------
Net interest income ........ $ 10,399 $ 975 $ 28 $ 11,402
Provision for loan loss .... 455 246 45 746
------- ------- ------- -------
Net interest income after
provision for loan loss .. 9,944 729 (17) 10,656
Non-interest income ........ 2,700 799 489 3,988
Non-interest expense ....... 6,834 1,034 2,459 10,327
------- ------- ------- -------
Income before income taxes . 5,810 494 (1,987) 4,317
Income taxes ............... 0 0 1,102 1,102
------- ------- ------- -------
Net income ................. $ 5,810 $ 494 $ (3,089) $ 3,215
======= ======= ======= =======
Intersegment revenue
(expense) ................ $ 93 $ (93) $ 0 $ 0
======= ======= ======= =======
Segment assets ............. $ 984,076 $ 87,164 $ 62,651 $1,133,891
======= ======= ======= =========
7
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Three Months Ended March 31, 1998
Specialized
Branches Products All Other Total
-------- ----------- --------- ---------
Net interest income ........ $ 9,883 $ 848 $ 16 $ 10,747
Provision for loan loss .... 460 151 34 645
------- ------- ------- -------
Net interest income after
provision for loan loss .. 9,423 697 (18) 10,102
Non-interest income ........ 2,453 725 253 3,431
Non-interest expense ....... 6,085 980 2,292 9,357
------- ------- ------- -------
Income before income taxes . 5,791 442 (2,057) 4,176
Income taxes ............... 0 0 1,221 1,221
------- ------- ------- -------
Net income ................. $ 5,791 $ 442 $ (3,278) $ 2,955
======= ======= ======= =======
Intersegment revenue
(expense) ................ $ 114 $ (114) $ 0 $ 0
======= ======= ======= =======
Segment assets ............. $ 920,197 $ 77,912 $ 60,990 $1,059,099
======= ======= ======= =========
8
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THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(in thousands, except share data)
This Form 10-Q may contain, or incorporate by reference, statements which may
constitute "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Prospective investors are cautioned that
any such forward-looking statements are not guarantees for future
performance and involve risks and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking
statements. Important factors currently known to management that could cause
actual results to differ materially from those in forward-looking statements
include significant fluctuations in interest rates, inflation, economic
recession, significant changes in the federal and state legal and regulatory
environment, significant underperformance in the Company's portfolio of
outstanding loans, and competition in the Company's markets. The Company
undertakes no obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or
changes to future operating results over time.
The historical financial information presented in this Form 10-Q has been
restated to include the results of Inter-City Federal Bank for Savings (Inter-
City). Inter-City was acquired in a pooling-of-interests transaction on
March 26, 1999. In accordance with the pooling-of-interests method of
accounting, no adjustments have been made to the historical carrying amounts of
assets and liabilities of Inter-City. However, the financial information has
been restated to include the results of Inter-City for all stated periods prior
to the combination.
Financial Condition
Total assets of The Peoples Holding Company grew from $1,107,795 on December 31,
1998, to $1,133,891 on March 31, 1999, or 2.36% for the three month
period. Total securities increased slightly from $293,639 on December 31, 1998,
to $294,059 on March 31, 1999. Loans, net of unearned income, increased $13,862
or 1.90%, primarily in commercial loan accounts.
Total deposits for the first three months of 1999 grew from $960,295 on
December 31, 1998 to $982,313 on March 31, 1999, or an increase of
2.29%, with the majority of growth in public fund checking and time deposits.
The equity capital to total assets ratios were 9.83% and 9.95% for March 31,
1999 and December 31, 1998, respectively. Capital grew 1.17% from December 31,
1998 to March 31, 1999, while cash dividends increased from $.19 per share in
December of 1998 to $.21 per share in March of 1999.
Results of Operations
The Company's net income for the three month period ending March 31, 1999,
was $3,215, representing an increase of $260 or 8.80% over net income
for the three month period ending March 31, 1998, which totaled $2,955.
The increase in net income for the three month period in 1999 compared to 1998
resulted from usual and customary deposit gathering and lending operations as
well as improved efficiencies derived from the Sheshunoff consulting engagement.
Net income was not as great as expected for the first quarter of 1999 due to
expenses incurred with the Inter-City merger. Without the effects of restating
for the merger, net income for the quarter ended March 31, 1999 was up 17.17% to
$3,345 with a return on average assets of 1.25%. After restating, the
annualized return on average assets for the three month periods ending March 31,
1999 and 1998, was 1.16% for both periods.
9
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Net interest income, the difference between interest earned on assets and the
cost of interest-bearing liabilities, is the largest component of the Company's
net income. The primary concerns in managing net interest income are the
mix and the maturities of rate-sensitive assets and liabilities. Net interest
margins were 4.69% and 4.78% for the three month periods ending March 31,
1999 and 1998, respectively. The decline in net interest margin is due in
large part to the current pricing environment. Despite the decrease in net
interest margin, our continued growth in volume has allowed net interest income
to increase over prior performance. Net interest income for the three month
periods ending March 31, 1999 and 1998 was $11,402 and $10,747, respectively.
Earning assets averaged $1,041,061 for the three month period ending
March 31, 1999, compared to $956,594 for the same period in 1998.
The provision for loan losses charged to operating expense is an amount which,
in the judgement of management, is necessary to maintain the allowance for loan
losses at a level that is adequate to meet the inherent risks of losses on the
Company's current portfolio of loans. The appropriate level of the allowance is
based on a quarterly analysis of the loan portfolio including consideration of
such factors as the risk rating of individual credits, size and diversity of the
portfolio, economic conditions, prior loss experience, and the results of
periodic credit reviews by internal loan review and regulators. The provision
for loan losses totaled $746 and $645 for the three month periods ending
March 31, 1999 and 1998, respectively. The allowance for loan losses as a
percentage of loans outstanding was 1.36% and 1.34% as of March 31, 1999 and
December 31, 1998, respectively. Net charge-offs to average loans was .05%
and .10% for the three month periods ending March 31, 1999 and 1998,
respectively.
Noninterest income, excluding gains from the sales of securities and loans,
was $3,792 for the three month period ending March 31, 1999, compared
to $3,201 for the same period in 1998, or an increase of 18.46%. The
increase between 1999 and 1998 is due to fees associated with the increases in
loans and deposits and the increased emphasis in sales of miscellaneous services
and products such as financial investment alternatives and cash management.
Non-sufficient fund fees accounted for the majority of the increase in service
charges. This increase was largely due to the implementation of a continuous
overdraft fee. Fees and commissions increased as a result of financial
investment alternative commissions and mortgage loan fees, while
increases in merchant processing, interchange fees, and skip payment fees
were the main components of the increase in other income.
Noninterest expenses were $10,327 for the three month period ending March 31,
1999, compared to $9,357 for the same period in 1998, or an increase of
10.37%. Significant increases in noninterest expenses between these periods
include depreciation of new premises and equipment, computer processing costs
associated with technology enhancements, fees related to the Sheshunoff
efficiency consulting engagement, and fees related to the Inter-City
acquisition. The remaining components of noninterest expenses reflect normal
increases for banking related expenses and general inflation in the cost of
services and supplies purchased by the Company.
10
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Income tax expense was $1,102 for the three month period ending March 31,
1999, compared to $1,221 for the same period in 1998. The Company benefited in
March of 1999 from a non-taxable life insurance benefit resulting from the
death of a director. The Company also continues to invest in assets whose
earnings are given favorable tax treatment.
As the year 2000 approaches, an issue impacting all companies has emerged
regarding how existing application software programs and operating systems can
accommodate this date value. The "year 2000" problem is pervasive and complex
as virtually every computer operation will be affected in some way by the
rollover of the two digit value to 00. The issue is whether computer systems
will properly recognize date sensitive information when the year changes to
2000. Management is in the process of working with its software vendors to
assure that the Company is prepared for the year 2000. While the Company
believes its planning efforts are adequate to address its year 2000 concerns,
there can be no guarantee that the systems of other companies, such as those of
our loan customers, will be converted on a timely basis which could have a
material effect on the Company. The Company has not incurred significant
operating expenses nor will it be required to invest heavily in computer system
improvements to be year 2000 compliant.
The Company successfully completed testing for its mission critical applications
processed by its third party service provider during the fourth quarter of 1998,
following the conversion to the expanded code for year 2000. Nearly all other
mission critical applications were successfully tested during the first quarter
of 1999 and testing for year 2000 compliance was substantially completed by
March 31, 1999. One non-compliant system has been identified and it will be
upgraded to a year 2000 compliant version by June 30, 1999. There are also five
systems still in process of being tested to validate their year 2000
compatibility. Contingency plans for year 2000 issues have been written and are
currently being tested. These contingency plans address potential business
interruptions related to the year 2000 as well as liquidity and cash
availability contingencies as the millennium approaches.
Liquidity Risk
Liquidity management is the ability to meet the cash flow requirements of
customers who may be either depositors wishing to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs.
Core deposits are a major source of funds used to meet cash flow needs.
Maintaining the ability to acquire these funds as needed in a variety of money
markets is a key to assuring liquidity. When evaluating the movement of these
funds even during times of large interest rate changes, it is apparent that the
Company continues to attract deposits that can be used to meet cash flow needs.
Management continues to monitor the liquidity and potentially volatile
liabilities ratios to ensure compliance with Asset-Liability Committee targets.
These targets are set to ensure that the Company meets the liquidity
requirements deemed necessary by management and regulators.
Another source available for meeting the Company's liquidity needs is
available-for-sale securities. The available-for-sale portfolio is composed of
securities with a readily available market that can be used to convert to cash
if the need arises. In addition, the Company maintains a federal funds
position that provides day-to-day funds to meet liquidity needs and may also
obtain advances from the Federal Home Loan Bank (FHLB) or the treasury tax and
loan note account. Historically, the Company has not relied upon these sources
to meet long-term liquidity needs. Sources of funds derived from the FHLB are
used primarily to match mortgage loan originations in order to minimize
interest rate risk, but may be used to provide short-term funding.
11
<PAGE>
Capital Resources
The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory, and possibly additional discretionary, actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum balances and ratios. All banks are required
to have core capital (Tier I) of at least 4% of risk-weighted assets (as
defined), 4% of average assets (as defined), and total capital of 8% of
risk-weighted assets (as defined). As of March 31, 1999, the Bank has met
all capital adequacy requirements to which it is subject.
As of March 31, 1999, the most recent notification from the Federal Deposit
Insurance Corporation (FDIC) categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based,
and Tier I leverage ratios of 10%, 6%, and 5%, respectively. In the opinion of
management, there are no conditions or events since the last notification that
have changed the institution's category. The Bank's actual capital amounts and
applicable ratios are as follows:
Actual
Amount Ratio
------ -----
(000)
As of March 31, 1999
Total Capital .................... $ 115,151 15.2%
(to Risk Weighted Assets)
Tier I Capital ................... $ 105,670 13.9%
(to Risk Weighted Assets)
Tier I Capital ................... $ 105,670 10.0%
(to Adjusted Average Assets)
As of December 31, 1998
Total Capital .................... $ 112,850 15.2%
(to Risk Weighted Assets)
Tier I Capital ................... $ 103,577 14.0%
(to Risk Weighted Assets)
Tier I Capital ................... $ 103,577 9.8%
(to Adjusted Average Assets)
Management recognizes the importance of maintaining a strong capital base. As
the above ratios indicate, the Company exceeds the requirements for a well
capitalized bank.
Book value per share was $18.01 and $17.80 at March 31, 1999 and December
31, 1998, respectively. Quarterly cash dividends were $.21 per share during
the first quarter of 1999, up from $.19 per share during the fourth quarter of
1998. All per-share figures have been restated to reflect the 50% stock
dividend issued January 20, 1998.
The Company's capital policy is to evaluate future needs based on growth,
earnings trends and anticipated acquisitions.
12
<PAGE>
THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes to our disclosure on quantitative and
qualitative disclosures about market risk since December 31, 1998.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material proceedings against the Company
during the quarter ending March 31, 1999.
Item 2. Changes in Securities
On March 26, 1999, the Company exchanged 347,382 shares of common
stock for all of the outstanding shares of Inter-City, which is
located in Louisville, Mississippi. The transaction is being
accounted for under the pooling-of-interests method of
accounting, and increased the outstanding shares of common stock
of the Company from 5,844,472 to 6,191,854.
Item 6(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the first quarter
of 1999.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE PEOPLES HOLDING COMPANY
---------------------------
Registrant
DATE: May 14, 1999 /s/ John W. Smith
---------------------------
John W. Smith
President & Chief Executive Officer
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 36,040
<INT-BEARING-DEPOSITS> 13,024
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 212,664
<INVESTMENTS-CARRYING> 81,395
<INVESTMENTS-MARKET> 82,998
<LOANS> 743,019
<ALLOWANCE> 10,096
<TOTAL-ASSETS> 1,133,891
<DEPOSITS> 982,313
<SHORT-TERM> 4,516
<LIABILITIES-OTHER> 15,691
<LONG-TERM> 19,876
0
0
<COMMON> 30,959
<OTHER-SE> 80,536
<TOTAL-LIABILITIES-AND-EQUITY> 1,133,891
<INTEREST-LOAN> 16,162
<INTEREST-INVEST> 4,000
<INTEREST-OTHER> 376
<INTEREST-TOTAL> 20,538
<INTEREST-DEPOSIT> 8,775
<INTEREST-EXPENSE> 9,136
<INTEREST-INCOME-NET> 11,402
<LOAN-LOSSES> 746
<SECURITIES-GAINS> 34
<EXPENSE-OTHER> 10,327
<INCOME-PRETAX> 4,317
<INCOME-PRE-EXTRAORDINARY> 4,317
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,215
<EPS-PRIMARY> .52
<EPS-DILUTED> .52
<YIELD-ACTUAL> 4.69
<LOANS-NON> 144
<LOANS-PAST> 6,145
<LOANS-TROUBLED> 172
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 9,744
<CHARGE-OFFS> 504
<RECOVERIES> 110
<ALLOWANCE-CLOSE> 10,096
<ALLOWANCE-DOMESTIC> 10,096
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 320
</TABLE>
