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 quarterly period ended June 30, 2000
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, 6,085,046 shares outstanding
as of August 11, 2000
1
<PAGE>
THE PEOPLES HOLDING COMPANY
INDEX
PART 1. FINANCIAL INFORMATION PAGE
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
June 30, 2000 and December 31, 1999................. 3
Condensed Consolidated Statements of Income - Three
Months and Six Months Ended June 30, 2000 and 1999.. 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 2000 and 1999............. 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 4.
Submission of Matters to a Vote of Shareholders......... 14
Item 6.(b)
Exhibits and Reports on Form 8-K........................ 14
Signatures.................................................. 14
2
<PAGE>
<TABLE>
<CAPTION>
THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
JUNE 30 DECEMBER 31
2000 1999
------------ -----------
(Unaudited)
<S> <C> <C>
Assets
Cash and due from banks .................. $ 41,780 $ 42,956
Interest-bearing balances with banks ..... 1,096 915
---------- ---------
Cash and Cash Equivalents ... 42,876 43,871
Time deposits with banks ................. 0 152
Securities available-for-sale ............ 192,788 181,133
Securities held-to-maturity (fair
value-$81,682 and $83,373 at
June 30, 2000 and December 31,
1999, respectively) ................... 83,815 85,611
Loans, net of unearned income ............ 826,842 799,085
Allowance for loan losses ............. (10,893) (10,058)
---------- ---------
Net Loans ................... 815,949 789,027
Premises and equipment, net .............. 29,510 27,730
Other assets ............................. 41,256 35,435
---------- ---------
Total Assets .................... $ 1,206,194 $ 1,162,959
========== =========
Liabilities
Deposits:
Noninterest-bearing ................... $ 156,224 $ 140,015
Interest-bearing ...................... 887,482 838,943
---------- ---------
Total Deposits .............. 1,043,706 978,958
Treasury tax and loan note account........ 6,880 12,000
Advances from the Federal Home Loan Bank . 20,451 39,269
Federal funds purchased .................. 3,800 0
Other liabilities ........................ 15,139 16,643
---------- ---------
Total Liabilities ........... 1,089,976 1,046,870
Shareholders' Equity
Common Stock, $5 par value - 15,000,000
shares authorized, 6,282,784 and 6,212,284
issued, 6,085,046 and 6,204,784 shares
outstanding at June 30, 2000 and
December 31, 1999, respectively ........ 31,414 31,061
Treasury stock, at cost .................. (4,849) (230)
Additional paid-in capital ............... 41,297 40,424
Retained earnings ........................ 51,877 48,115
Accumulated other comprehensive loss ..... (3,521) (3,281)
---------- ---------
Total Shareholders' Equity .. 116,218 116,089
---------- ---------
Total Liabilities and
Shareholders' Equity ......... $ 1,206,194 $ 1,162,959
========== =========
</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)
SIX MONTHS ENDED JUNE 30 THREE MONTHS ENDED JUNE 30
2000 1999 2000 1999
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Interest Income
Loans ................................ $ 35,441 $ 32,977 $ 17,918 $ 16,815
Securities:
Taxable ......................... 5,930 6,114 3,115 3,103
Tax-exempt ...................... 2,082 2,029 1,033 1,040
Other ................................ 266 420 49 44
------- ------- ------- -------
Total interest income ...... 43,719 41,540 22,115 21,002
Interest Expense
Deposits ............................. 19,816 17,562 10,243 8,787
Borrowings .......................... 1,027 841 561 480
------- ------- ------- -------
Total interest expense ..... 20,843 18,403 10,804 9,267
---------- ---------- ---------- ----------
Net interest income ........ 22,876 23,137 11,311 11,735
Provision for loan losses .................. 2,679 2,021 1,690 1,275
--------- --------- --------- ---------
Net interest income after
provision for loan losses .. 20,197 21,116 9,621 10,460
Noninterest income:
Service charges on deposit accounts .. 4,823 4,002 2,390 2,069
Fees and commissions ................. 2,211 1,457 1,279 722
Trust revenue ........................ 535 420 268 210
Gains on sale of securities and loans. 72 4,158 72 4,124
Other ................................ 1,264 1,499 513 423
------- ------- ------- -------
Total noninterest income ... 8,905 11,536 4,522 7,548
Noninterest expenses:
Salaries and employee benefits ....... 10,951 10,599 5,455 5,522
Data processing....................... 1,626 1,809 792 880
Net occupancy ........................ 1,465 1,477 732 704
Equipment ............................ 1,461 1,137 761 591
Other ................................ 5,327 5,628 2,672 2,626
--------- --------- --------- ---------
Total noninterest expenses . 20,830 20,650 10,412 10,323
---------- ---------- ---------- ----------
Income before income taxes ................. 8,272 12,002 3,731 7,685
Income taxes ............................... 2,288 3,630 1,015 2,528
--------- --------- --------- ---------
Net income ................. $ 5,984 $ 8,372 $ 2,716 $ 5,157
========== ========== ========== ==========
Basic and diluted earnings per share ...... $ 0.97 $ 1.35 $ 0.44 $ 0.83
====== ====== ====== ======
Weighted average shares outstanding ....... 6,141,264 6,193,430 6,077,744 6,194,988
========= ========= ========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share data)
SIX MONTHS ENDED JUNE 30
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Operating Activities
Net Cash Provided by Operating
Activities .................... $ 4,662 $ 6,217
Investing Activities
Purchases of securities
available-for-sale ................. (19,647) (63,134)
Proceeds from sales of securities
available-for-sale.................. 0 4,108
Proceeds from calls/maturities of
securities available-for-sale ...... 7,317 68,589
Purchases of securities
held-to-maturity ................... 0 (9,958)
Proceeds from calls/maturities of
securities held-to-maturity ........ 1,975 3,687
Net increase in loans ................... (41,579) (57,473)
Proceeds from sales of loans ............ 11,043 26,330
Proceeds from sales of premises
and equipment ...................... 219 232
Purchases of premises and equipment ..... (2,219) (2,465)
Business combinations.................... (69) 0
---------- ----------
Net Cash Used in Investing
Activities .................... (42,960) (30,084)
Financing Activities
Net increase (decrease) in
noninterest-bearing deposits ........ 16,209 (13,435)
Net increase in
interest-bearing deposits ........... 48,539 30,593
Net increase (decrease) in
short-term borrowings ............... (1,320) 29,808
Proceeds from other borrowings .......... 2,104 3,000
Repayments of other borrowings .......... (20,922) (1,333)
Acquisition of treasury stock............ (4,619) (155)
Cash dividends paid ..................... (2,688) (2,601)
---------- ----------
Net Cash Provided by Financing
Activities ................... 37,303 45,877
---------- ----------
Increase (Decrease) in Cash
and Cash Equivalents ......... (995) 22,010
Cash and Cash Equivalents at
beginning of period ............... 43,871 38,558
---------- ----------
Cash and Cash Equivalents at
end of period ..................... $ 42,876 $ 60,568
============ ============
Supplemental Disclosures:
Non-cash transactions:
Transfer of loans to other real
estate ............................... $ 863 $ 369
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
<PAGE>
THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2000
(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 six-month period ended June 30,
2000 are not necessarily indicative of the results that may be expected for the
year ended December 31, 2000.
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, 1999.
Note 2 Comprehensive Income
For the six month periods ended June 30, 2000 and 1999, total comprehensive
income amounted to $5,744 and $5,487, respectively. For the quarters ended
June 30, 2000 and 1999, total comprehensive income amounted to $3,315 and
$2,901, respectively.
Note 3 Mergers and Acquisitions
On May 1, 2000, Reed-Johnson Insurance Agency, a subsidiary of The Peoples Bank
and Trust Company (the Bank), acquired The Southern Insurance Group with the
issuance of 70,500 shares of the Company's common stock. Located in Corinth and
Tupelo, Mississippi, The Southern Insurance Group is an independent insurance
agency representing property and casualty companies which provide personal and
business coverages and other financial services. The two agencies have been
renamed The Peoples Insurance Agency, Inc., and operate as a wholly owned
subsidiary of the Bank. The transaction has been accounted for under the
purchase method of accounting.
6
<PAGE>
Note 4 Segment Reporting
Segment information for the six months ended June 30, 2000 and 1999, is
presented below.
Six Months Ended June 30, 2000
Specialized
Branches Products All Other Total
-------- ---------- --------- ---------
Net interest income ........ $ 21,503 $ 1,183 $ 190 $ 22,876
Provision for loan loss .... 1,962 555 162 2,679
------- ------- ------- -------
Net interest income after
provision for loan loss .. 19,541 628 28 20,197
Non-interest income ........ 6,462 1,516 927 8,905
Non-interest expense ....... 12,055 1,888 6,887 20,830
------- ------- ------- -------
Income before income taxes . 13,948 256 (5,932) 8,272
Income taxes ............... 0 0 2,288 2,288
------- ------- ------- -------
Net income ................. $ 13,948 $ 256 $ (8,220) $ 5,984
======= ======= ======= =======
Intersegment revenue
(expense) ................ $ 399 $ (399) $ 0 $ 0
======= ======= ======= =======
Six Months Ended June 30, 1999
Specialized
Branches Products All Other Total
-------- ---------- --------- ---------
Net interest income ........ $ 20,971 $ 2,129 $ 37 $ 23,137
Provision for loan loss .... 846 1,091 84 2,021
------- ------- ------- -------
Net interest income after
provision for loan loss .. 20,125 1,038 (47) 21,116
Non-interest income ........ 5,482 5,261 793 11,536
Non-interest expense ....... 12,387 2,377 5,886 20,650
------- ------- ------- -------
Income before income taxes . 13,220 3,922 (5,140) 12,002
Income taxes ............... 0 0 3,630 3,630
------- ------- ------- -------
Net income ................. $ 13,220 $ 3,922 $ (8,770) $ 8,372
======= ======= ======= =======
Intersegment revenue
(expense) ................ $ 273 $ (273) $ 0 $ 0
======= ======= ======= =======
7
<PAGE>
Segment information for the three months ended June 30, 2000 and 1999, is
presented below.
Three Months Ended June 30, 2000
Specialized
Branches Products All Other Total
-------- ---------- --------- ---------
Net interest income ........ $ 10,712 $ 489 $ 110 $ 11,311
Provision for loan loss .... 1,243 347 100 1,690
------- ------- ------- -------
Net interest income after
provision for loan loss .. 9,469 142 10 9,621
Non-interest income ........ 3,179 715 628 4,522
Non-interest expense ....... 6,050 947 3,415 10,412
------- ------- ------- -------
Income before income taxes . 6,598 (90) (2,777) 3,731
Income taxes ............... 0 0 1,015 1,015
------- ------- ------- -------
Net income ................. $ 6,598 $ (90) $ (3,792) $ 2,716
======= ======= ======= =======
Intersegment revenue
(expense) ................ $ 267 $ (267) $ 0 $ 0
======= ======= ======= =======
Three Months Ended June 30, 1999
Specialized
Branches Products All Other Total
-------- ---------- --------- ---------
Net interest income ........ $ 10,572 $ 1,154 $ 9 $ 11,735
Provision for loan loss .... 391 845 39 1,275
------- ------- ------- -------
Net interest income after
provision for loan loss .. 10,181 309 (30) 10,460
Non-interest income ........ 2,782 4,462 304 7,548
Non-interest expense ....... 6,282 1,303 2,738 10,323
------- ------- ------- -------
Income before income taxes . 6,681 3,468 (2,464) 7,685
Income taxes ............... 0 0 2,528 2,528
------- ------- ------- -------
Net income ................. $ 6,681 $ 3,468 $ (4,992) $ 5,157
======= ======= ======= =======
Intersegment revenue
(expense) ................ $ 180 $ (180) $ 0 $ 0
======= ======= ======= =======
Note 5 Subsequent Events
On August 8, 2000, the Company authorized a common stock repurchase plan that
allows for the repurchase over the next four years of up to 304,000 shares, or
approximately 5%, of the Company's 6,085,046 common shares outstanding.
8
<PAGE>
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.
Financial Condition
Total assets of The Peoples Holding Company grew from $1,162,959 on December 31,
1999, to $1,206,194 on June 30, 2000, or 3.72% for the six month period. On
June 30, 2000, average earning assets were $1,099,737, or 92.45% of total
average assets, compared to $1,059,596, or 92.41% of total average assets on
December 31, 1999.
The securities portfolio is utilized as a means of liquidity, an alternative
earning source for excess funds, and collateral on pledges for certain types of
deposits. Total securities increased from $266,744 on December 31, 1999, to
$276,603 on June 30, 2000.
The loan portfolio represents the largest component of the Company's assets.
Loans, net of unearned income, increased $27,757, or 3.47%, from $799,085 at
December 31, 1999 to $826,842 at June 30, 2000. Most of the increase in the
loan portfolio was accounted for in commercial loan accounts.
The Company's primary source of funding continues to be deposits generated in
the communities served by the Bank. Total deposits for the first six months of
2000 grew from $978,958 on December 31, 1999 to $1,043,706 on June 30, 2000, or
an increase of 6.61%, with the majority of growth in public fund checking and
time deposits. Short-term borrowings have also been utilized to assist in
funding loans, investments, fixed asset additions, and cash reserves.
Total shareholders' equity for the Company grew from $116,089 on December 31,
1999, to $116,218 on June 30, 2000, or .11% for the six month period. The
equity capital to total assets ratios were 9.64% and 9.98% for June 30, 2000
and December 31, 1999, respectively. Changes in accumulated comprehensive
income related to unrealized portfolio losses and the repurchase of 190,238
shares of common stock during the second quarter both contributed to the
curtailment of growth in capital. Cash dividends increased from $.21 per share
in December of 1999 to $.22 per share for both quarters of 2000.
9
<PAGE>
Results of Operations
The Company's net income for the six month period ending June 30, 2000, was
$5,984, representing an decrease of $2,388, or 28.52%, compared to net income
for the six month period ending June 30, 1999, which totaled $8,372. Earnings
for 1999 were impacted by an after tax gain of $2,344 recognized on the sale
of our credit card loan portfolio. The sale of approximately $18,000 in credit
card loans was the first step in liquidating the portfolio. The Company also
recognized an additional increase of $633 in its loan loss reserve principally
related to the remaining portion of the credit card portfolio. Earnings for
2000 were adversely impacted by an addition of $700 to the loan loss reserve.
After consulting with regulators and the Bank's external accountants, the
Company's management decided that the reserve for loan losses had fallen below
desirable levels due to loan growth over the past several months that exceeded
expectations and some minor credits which had deteriorated. Despite the
corrective action that was taken, loan losses for 2000 are expected to be
within acceptable levels. Without the effects of the credit card gain,
earnings of $5,984 for the six month period ending June 30, 2000, were down
$44, or .73%, from the $6,028 core earnings reported for the same period of
1999. Net income was $2,716 and $5,157 for the quarters ending June 30, 2000
and 1999, respectively. The annualized return on average assets for the six
month periods ending June 30, 2000 and 1999, was 1.06% and 1.31%, respectively.
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 4.48% and 4.69% for the six month periods ending June 30, 2000
and 1999, respectively. While the Company has grown its asset base
significantly, the decrease in net interest income was due to an increase in
costing liabilities and the reduction of the spread, over prime, on loans as
rates rose. Net interest income for the six month periods ending June 30,
2000 and 1999 was $22,876 and $23,137, respectively. For the three month periods
ending June 30, 2000 and 1999, net interest income was $11,311 and $11,735,
respectively.
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 $2,679 and $2,021 for the six month periods ending
June 30, 2000 and 1999, respectively. For the quarters ending June 30, 2000 and
1999, the provision for loan losses totaled $1,690 and $1,275, respectively.
As stated earlier, an additional $700 was booked to the provision for loan
losses during the second quarter of 2000, and an additional $633 was charged to
the provision for loan losses during the second quarter of 1999 related to the
credit card portfolio sale. The allowance for loan losses as a percentage of
loans outstanding was 1.32% and 1.26% as of June 30, 2000 and December 31, 1999,
respectively. Net charge-offs to average loans were .23% and .16% for the six
month periods ending June 30, 2000 and 1999, respectively.
10
<PAGE>
Excluding the pre-tax gain of $3,843 on the sale of the credit card portfolio
during 1999, noninterest income increased $1,212, or 15.75%, to $8,905 for the
six month period ending June 30, 2000, when compared to the core noninterest
income of $7,693 for the same period in 1999. Excluding all gains from the sales
of securities and loans, noninterest income was $4,450 for the three month
period ending June 30, 2000, compared to $3,424 for the same period in 1999, or
an increase of 29.96%. The increase between core noninterest income for 2000 and
1999 is due in large part to fees associated with the increases in loans and
deposits and the continued emphasis in sales of miscellaneous services and
products. While non-sufficient fund fees accounted for the majority of the
increase in service charges, changes made to our fee structure on different
account types created a substantial boost to service charge income. Fees and
commissions increased as a result of financial investment alternative
commissions, agency and direct bill insurance commissions, loan document
preparation fees, Handy Check income, and ATM usage fees. Other noninterest
income decreased from the prior year primarily as the result of the elimination
of credit card interchange fees associated with the sale of the credit card
portfolio in 1999.
Noninterest expenses were $20,830 for the six month period ending June 30,
2000, compared to $20,650 for the same period in 1999, or an increase of
.87%. Depreciation expense related to the recent placement of new premises,
equipment, and other technology enhancements has been the most significant
increase in noninterest expense between these periods. The increase in
noninterest expense has been minimized by the reduction of acquisition costs and
credit card processing costs incurred during the first six months of 1999. The
remaining components of noninterest expense reflect normal increases for banking
related expenses and general inflation in the cost of services and supplies
purchased by the Company. Noninterest expenses for the quarter ending June 30,
2000, increased $89, or .86%, compared to the same period in 1999.
Income tax expense was $2,288 for the six month period ending June 30, 2000,
compared to $3,630 for the same period in 1999. Income taxes for 1999 reflect
a non-recurring charge associated with the gain realized on the sale of the
credit card portfolio. The Company also continues to invest in assets whose
earnings are given favorable tax treatment.
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.
11
<PAGE>
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 to match mortgage loan originations in order to minimize interest rate
risk and to provide short-term funding.
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 June 30, 2000, the Bank has met
all capital adequacy requirements to which it is subject.
As of June 30, 2000, 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 June 30, 2000
Total Capital .................... $ 120,487 14.8%
(to Risk Weighted Assets)
Tier I Capital ................... $ 110,284 13.5%
(to Risk Weighted Assets)
Tier I Capital ................... $ 110,284 9.3%
(to Adjusted Average Assets)
As of December 31, 1999
Total Capital .................... $ 123,208 15.5%
(to Risk Weighted Assets)
Tier I Capital ................... $ 113,294 14.3%
(to Risk Weighted Assets)
Tier I Capital ................... $ 113,294 9.9%
(to Adjusted Average Assets)
12
<PAGE>
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 $19.10 and $18.71 at June 30, 2000 and December 31,
1999, respectively. Quarterly cash dividends were $.22 per share during
the first two quarters of 2000, up from $.21 per share during the fourth quarter
of 1999.
The Company's capital policy is to evaluate future needs based on growth,
earnings trends and anticipated acquisitions.
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, 1999. For
additional information, see the Company's Form 10-K for the year ended
December 31, 1999.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material proceedings against the Company
during the quarter ending June 30, 2000.
Item 2. Changes in Securities
On May 1, 2000, the Company purchased the business of
The Southern Insurance Group with the issuance of 70,500
shares of the Company's common stock. The transaction is being
accounted for under the purchase method of accounting.
The Company repurchased 190,238 shares of its common stock
during the second quarter at an average price of $24.28 per
share.
Together these transactions reduced the outstanding shares of
common stock of the Company from 6,204,784 to 6,085,046.
13
<PAGE>
Item 4. Submission of Matters to a Vote of Shareholders
The annual meeting of the shareholders of The Peoples Holding
Company was held on April 11, 2000, for the purpose of electing
five members to the board of directors for a three year term and
to ratify the appointment of the independent auditors. Proxies
for the meeting were solicited pursuant to Section 14(a) of the
Securities Exchange Act of 1934.
Election of Directors For Withheld Not Voting
THREE-YEAR TERM
George H. Booth, II 4,971,051 37,554 1,203,679
Frank B. Brooks 4,971,155 37,450 1,203,679
Robert C. Leake 4,969,953 38,652 1,203,679
C. Larry Michael 4,966,579 42,026 1,203,679
J. Heywood Washburn 4,969,112 39,493 1,203,679
For Against Abstain
Ratify appointment of
Ernst & Young LLP as
independent auditors
for 2000 4,998,083 0 1,214,201
Item 6(a) Exhibit 27 - Financial Data Schedule
Item 6(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the second quarter
of 2000.
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: August 11, 2000 /s/ John W. Smith
---------------------------
John W. Smith
President & Chief Executive Officer
14
