<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
-----------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 2 - 98268
-----------------------------------
PEOPLES FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Mississippi 64-0709834
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Lameuse and Howard Avenues, Biloxi, Mississippi 39533
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(601) 435-5511
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark 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 (or for such shorter period that the
registrant was required to file such reports), 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 of the last practicable date.
Peoples Financial Corporation has only one class of common stock authorized.
At October 28, 1996, there were 1,500,000 shares of $1 par value common stock
authorized, and 738,168 shares issued and outstanding.
Page 1 of 18
<PAGE> 2
PART I
FINANCIAL INFORMATION
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31, and September 30, 1996 1995 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $23,222,478 $24,220,348 $23,405,948
Held to maturity securities, market value of
$142,012,000 - September 30, 1996;
$167,384,000 - December 31, 1995;
$166,146,000 - September 30, 1995 141,793,582 165,142,083 164,927,433
Available for sale securities, at market value 55,993,424 20,829,655 656,703
Federal funds sold 13,500,000 24,100,000
Loans 216,329,964 224,069,011 224,393,957
Less: Unearned income 9,816 22,531 27,091
Allowance for loan losses 4,663,367 4,352,967 4,442,129
----------------------------------------------------
Loans, net 211,656,781 219,693,513 219,924,737
Bank premises and equipment, net of
accumulated depreciation of $6,866,000 -
September 30, 1996; $6,171,000 - December
31,1995; and $6,079,000 - September 30, 1995 8,475,330 8,789,642 8,749,141
Other real estate 420,104 726,838 640,792
Accrued interest receivable 3,466,589 3,169,666 2,822,362
Other assets 3,462,646 2,919,601 2,644,146
Intangible assets 575,451 813,825 893,283
----------------------------------------------------
TOTAL ASSETS $462,566,385 $446,305,171 $448,764,545
====================================================
</TABLE>
Page 2 of 18
<PAGE> 3
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31, and September 30, 1996 1995 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES & SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand, non-interest bearing $ 78,286,432 $82,790,093 $81,573,969
Savings and demand, interest bearing 177,332,795 155,187,526 189,827,438
Time, $100,000 or more 90,861,964 84,117,293 67,073,458
Other time deposits 55,208,394 54,076,823 53,745,078
----------------------------------------------
Total deposits 401,689,585 376,171,735 392,219,943
Accrued interest payable 712,125 1,139,768 1,019,217
Federal funds purchased 12,150,000
Notes payable 229,391 437,520 483,907
Other liabilities 2,383,769 1,823,743 2,202,984
----------------------------------------------
TOTAL LIABILITIES 405,014,870 391,722,766 395,926,051
SHAREHOLDERS' EQUITY:
Common Stock, $1 par value, 1,500,000 shares
authorized, 738,168 shares issued and
outstanding at September 30, 1996, December
31, 1995 and September 30, 1995, after giving
retroactive effect to two for one stock splits
effective October 16, 1996 and November 22,
1995 738,168 738,168 738,168
Surplus 48,926,262 48,926,262 43,176,262
Undivided profits 8,714,882 5,075,542 8,865,194
Unrealized gain (loss) on available for sale
securities, net of tax (827,797) 336,945 302,620
Additional minimum liability in excess of prior
service cost, net of tax (294,512)
Note payable offset associated with employee
stock ownership plan (200,000) (243,750)
----------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 57,551,515 54,582,405 52,838,494
----------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 462,566,385 $446,305,171 $448,764,545
==============================================
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 3 of 18
<PAGE> 4
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For The Quarters Ended September 30, For The Nine Months Ended September 30,
- --------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $5,081,267 $5,452,038 $15,231,635 $15,991,189
Interest and dividends on securities:
U. S. Treasury 1,984,008 2,047,821 6,152,976 5,863,135
U. S. Government agencies and
corporations 1,020,420 173,948 2,827,635 576,597
States and political subdivisions 101,538 116,894 294,149 275,521
Other investments 7,977 4,056 38,877 11,099
Interest on federal funds sold 188,900 246,428 527,701 570,892
-----------------------------------------------------------------------
TOTAL INTEREST INCOME 8,384,110 8,041,185 25,072,973 23,288,433
-----------------------------------------------------------------------
INTEREST EXPENSE:
Time deposits of $100,000 or more 1,312,674 1,011,377 3,837,722 2,343,094
Other deposits 2,293,500 2,212,712 7,021,898 6,590,989
Mortgage indebtedness 3,110 3,253 9,439 9,864
Federal funds purchased 16,863 3,850 81,390 59,878
-----------------------------------------------------------------------
TOTAL INTEREST EXPENSE 3,626,147 3,231,192 10,950,449 9,003,825
-----------------------------------------------------------------------
NET INTEREST INCOME 4,757,963 4,809,993 14,122,524 14,284,608
Provision for losses on loans -0- -0- -0- -0-
NET INTEREST INCOME AFTER PROVISION FOR -----------------------------------------------------------------------
LOSSES ON LOANS 4,757,963 4,809,993 14,122,524 14,284,608
-----------------------------------------------------------------------
OTHER OPERATING INCOME:
Trust department income and fees 126,820 171,045 466,578 579,375
Service charges on deposit accounts 985,306 939,595 2,855,237 2,518,153
Other service charges, commissions and
fees 63,687 66,153 191,286 199,816
Other income 207,602 232,216 568,189 492,228
-----------------------------------------------------------------------
TOTAL OTHER OPERATING INCOME $1,383,415 $1,409,009 $4,081,290 $3,789,572
-----------------------------------------------------------------------
</TABLE>
Page 4 of 18
<PAGE> 5
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For The Quarters Ended September 30, For The Nine Months Ended September 30,
- --------------------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OTHER OPERATING EXPENSE:
Salaries and employee benefits $2,222,714 $1,909,078 $6,040,685 $5,356,766
Net occupancy 178,812 221,079 536,272 616,668
Equipment rentals, depreciation and 399,278 378,458 1,296,215 1,126,959
maintenance
Other expense 1,287,584 1,293,458 3,841,327 3,871,373
-------------------------------------------------------------------------
TOTAL OTHER OPERATING EXPENSE 4,088,388 3,802,073 11,714,499 10,971,766
-------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 2,052,990 2,416,929 6,489,315 7,102,414
Income taxes 702,900 813,752 2,056,445 2,391,465
-------------------------------------------------------------------------
Net Income $1,350,090 $1,603,177 $4,432,870 $4,710,949
=========================================================================
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 5 of 18
<PAGE> 6
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional
Unrealized Minimum
Gain (Loss) on Liability In Note
Available for Excess of Payable
Sale Prior Service Offset
# of Common Undivided Securities, Cost, Net of Associated
Shares Stock Surplus Profits Net of Tax Tax With ESOP Total
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1995, as previously
reported 184,542 $184,542 $43,729,888 $4,901,640 $ -0- $ -0- $(375,000) $48,441,070
Two-for-one stock
split in 1995 184,542 184,542 (184,542)
Two-for-one stock
split in 1996 369,084 369,084 (369,084)
----------------------------------------------------------------------------------------------------------
Balance, January 1,
1995, as restated 738,168 738,168 43,176,262 4,901,640 -0- -0- (375,000) 48,441,070
Net income 4,710,949 4,710,949
Cash dividends,
($1.0125 per share) (747,395) (747,395)
Net change in
unrealized gain
(loss) on available
for sale securities,
net of tax 302,620 302,620
Reduction to note
payable offset
associated with
esop 131,250 131,250
----------------------------------------------------------------------------------------------------------
Balance, September
30,1995 738,168 $738,168 $43,176,262 $8,865,194 $302,620 $ -0- $(243,750) $52,838,494
==========================================================================================================
</TABLE>
Page 6 of 18
<PAGE> 7
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY ( Continued)
(Unaudited)
<TABLE>
<CAPTION>
Additional
Unrealized Minimum
Gain (Loss) on Liability In Note
Available Excess of Payable
for Sale Prior Service Offset
# of Common Undivided Securities, Cost, Net of Associated
Shares Stock Surplus Profits Net of Tax Tax With ESOP Total
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1996, as previously
reported 369,084 $369,084 $49,295,346 $5,075,542 $336,945 $(294,512) $(200,000) $54,582,405
Two-for-one stock
split in 1996 369,084 369,084 (369,084)
------------------------------------------------------------------------------------------------------------
Balance, January 1,
1996, as restated 738,168 738,168 48,926,262 5,075,542 336,945 (294,512) (200,000) 54,582,405
Net income 4,432,870 4,432,870
Cash dividends,
($1.075 per share) (793,530) (793,530)
Net change in
unrealized gain
(loss) on
available for sale
securities, net of
tax (1,164,742) (1,164,742)
Additional minimum
liability in excess of
prior service cost,
net of tax 294,512 294,512
Reduction to note
payable offset
associated with 200,000 200,000
esop
------------------------------------------------------------------------------------------------------------
Balance, September
30, 1996 738,168 $738,168 $48,926,262 $8,714,882 $(827,797) $ -0- $ -0- $57,551,515
============================================================================================================
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 7 of 18
<PAGE> 8
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For The Nine Months Ended September 30, 1996 1995
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $4,432,870 $4,710,949
Adjustments to reconcile net income to net cash provided
by operating activities:
Proceeds from sales of other real estate 52,700 238,720
Gain on sales of other real estate (10,850) (25,959)
Depreciation and amortization 1,093,374 1,003,374
Provision for losses on other real estate 134,234 145,473
Changes in assets and liabilities:
Accrued interest receivable (296,923) 499,852
Other assets 173,229 (184,676)
Accrued interest payable (427,643) 569,061
Other liabilities 560,026 818,534
----------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,711,017 7,775,328
----------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of held to maturity securities 135,142,482 80,143,796
Investment in held to maturity securities (111,793,981) (85,573,020)
Proceeds from maturities of available for sale securities 15,435,000
Investment in available for sale securities (52,362,289)
Loans repaid (made) 8,036,732 (2,048,864)
Acquisition of premises and equipment (410,038) (877,332)
Federal funds sold (13,500,000) (24,100,000)
Other assets (117,496) (67,468)
----------------------------------------
NET CASH USED IN INVESTING ACTIVITIES $ (19,569,590) $(32,522,888)
----------------------------------------
</TABLE>
Page 8 of 18
<PAGE> 9
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For The Nine Months Ended September 30, 1996 1995
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Demand and savings deposits, net increase $17,641,608 $6,886,820
Time deposits, net increase 7,876,242 37,142,708
Principal payments on notes (8,129) (7,705)
Cash dividends (793,530) (747,395)
Federal funds purchased (12,150,000) (15,900,000)
Pension plan additional minimum liability 294,512
--------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 12,860,703 27,374,428
--------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (997,870) 2,626,868
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 24,220,348 20,779,080
--------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $23,222,478 $23,405,948
======================================
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 9 of 18
<PAGE> 10
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended September 30, 1996 and 1995
1. The accompanying unaudited consolidated financial statements have been
prepared with the accounting policies in effect as of December 31, 1995 as set
forth in the Notes to the Consolidated Financial Statements of Peoples
Financial Corporation and Subsidiaries (the Company). In the opinion of
Management, all adjustments necessary for a fair presentation of the condensed
consolidated financial statements have been included and are of a normal
recurring nature.
The accompanying unaudited consolidated financial statements have been prepared
also in accordance with the instructions to Form 10-Q and Rule 10-01 of
Regulations S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
2. The results of operations for the nine months ended September 30, 1996, are
not necessarily indicative of the results to be expected for the full year.
3. Per share data is based on the weighted average shares of common stock
outstanding of 738,168 for the nine months ended September 30, 1996 and 1995.
4. At September 30, 1996 and 1995, the total recorded investment in impaired
loans amounted to $998,000 and $1,021,000. The amount of that recorded
investment in impaired loans for which there is a related allowance for loan
losses and the amount of that allowance was $267,000 at September 30, 1995.
The amount of that recorded investment in impaired loans for which there was no
related allowance for loan losses was $998,000 and $754,000 at September 30,
1996 and 1995, respectively.
At September 30, 1996, the average recorded investment in impaired loans was
$1,012,000. During the first nine months of 1996, the Company recognized
$48,000 in interest income on impaired loans. During the first nine months of
1996, the Company received $46,000 in interest payments on impaired loans.
5. Transactions in the allowance for loan losses (in thousands) were as
follows:
<TABLE>
<S> <C>
Balance, January 1, 1996 $4,353
Recoveries 430
Loans charged off (120)
Balance, September 30, ------
1996 $4,663
======
</TABLE>
Page 10 of 18
<PAGE> 11
6. At September 30, 1996 and 1995, renegotiated and restructured loans
amounted to $2,334,000 and $2,371,000. The Company recognized $122,000 and
$75,000 in interest income on these loans during the nine months ended
September 30, 1996 and 1995, respectively. The amount of interest that would
have been recognized during these periods under the original terms of the loan
agreements was $151,000 and $165,000.
7. The Company has defined cash and cash equivalents to include cash and due
from banks. The Company paid $11,378,000 and $8,435,000 for the nine months
ended September 30, 1996 and 1995, respectively, for interest on deposits and
borrowings. Income tax payments totaled $2,055,000 and $2,548,000 for the nine
months ended September 30, 1996 and 1995, respectively. Loans transferred to
other real estate amounted to $52,500 for the nine months ended September 30,
1995. No loans were transferred to other real estate in 1996. After receiving
regulatory approval, the Company transferred property with a book value of
$130,650 from other real estate into bank premises during 1996.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following presents Management's discussion and analysis of the consolidated
financial condition and results of operations of Peoples Financial Corporation
and Subsidiaries (the Company) for the nine months ended September 30, 1996 and
1995. These comments highlight the significant events and should be considered
in combination with the Consolidated Financial Statements included in this
report on Form 10-Q.
OVERVIEW
The following schedule compares financial highlights for the nine months ended
September 30, 1996 and 1995:
<TABLE>
<CAPTION>
For the nine months ended September 1996 1995
30,
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income per share $ 6 $ 6
Book value per share $ 78 $ 72
Return on average total assets 1.29% 1.44%
Return on average shareholders' equity 10.54% 12.40%
Allowance for loan losses as a % of
loans, net of unearned discount 2.16% 1.98%
</TABLE>
Page 11 of 18
<PAGE> 12
FINANCIAL CONDITION
HELD TO MATURITY SECURITIES
The Company has structured its portfolio during the last 24 months to
strengthen its liquidity position. These securities generally have maturities
of 3 months, 6 months, and 2 years. There were no realized gains or losses on
these investments during the nine months ended September 30, 1996 and 1995.
Gross unrealized gains for held to maturity securities were $923,000 and
$1,878,000 and gross unrealized losses for held to maturity securities were
$705,000 and $659,000 for the nine months ended September 30, 1996 and 1995,
respectively. The following schedule reflects the mix of the held to maturity
investment portfolio at September 30, 1996 and 1995:
<TABLE>
<CAPTION>
September 30, 1996 1995
-------------------------------------------------------------------------------------------------------
Amount % Amount %
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasury securities $123,330,702 87.00% $152,453,547 92.40%
U. S. Government
agencies 13,523,513 9.50% 8,011,418 4.90%
States and political
subdivisions 4,939,367 3.50% 4,462,468 2.70%
-----------------------------------------------------------------
Totals $141,793,582 100.00% $164,927,433 100.00%
=================================================================
</TABLE>
AVAILABLE FOR SALE SECURITIES
Available for sale securities increased significantly during 1996 to $56
million. Until September 30, 1995, the Company had invested primarily in held
to maturity securities. This change resulted from the management of the
Company's liquidity position. Gross unrealized gains were $540,000 and
$458,000 at September 30, 1996 and 1995, respectively, and gross unrealized
losses were $1,793,000 at September 30, 1996. The following schedule reflects
the mix of available for sale securities at September 30, 1996 and 1995:
<TABLE>
<CAPTION>
September 30, 1996 1995
-------------------------------------------------------------------------------------------------------
Amount % Amount %
---------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasury securities $
$6,848,360 12.20%
U. S. Government
agencies 48,408,102 86.50%
Other securities 736,962 1.30% 656,703 100.00%
----------------------------------------------------------------
Totals $55,993,424 100.00% $656,703 100.00%
================================================================
</TABLE>
Page 12 of 18
<PAGE> 13
FEDERAL FUNDS SOLD
Federal funds sold were $13,500,000 at September 30, 1996, as compared with
$24,100,000 at September 30, 1995. This fluctuation is directly related to the
liquidity needs of the bank subsidiary.
OTHER REAL ESTATE
The Other Real Estate (ORE) portfolio decreased $220,000 at September 30, 1996,
as compared with September 30, 1995, due to the sale of other real estate, as
well as the transfer discussed in Note 7. The strength of the local economy,
which impacts real property values, has directly resulted in the ability of the
Company to dispose of ORE.
OTHER ASSETS
Other assets increased $818,000 at September 30, 1996, as compared with
September 30, 1995, primarily as a result of deferred taxes on unrealized
losses on available for sale securities during 1996.
DEPOSITS
Significant increases or decreases in total deposits or significant
fluctuations among the different types of deposits are anticipated by
Management as customers in the casino industry and county and municipal areas
reallocate their resources periodically. As discussed above, the Company has
managed its funds including planning the timing of investment maturities so as
to achieve appropriate liquidity.
SHAREHOLDERS' EQUITY AND CAPITAL ADEQUACY
Strength, security and stability have been the hallmark of the Company since
its founding in 1985 and of its bank subsidiary since its founding in 1896. A
strong capital foundation is fundamental to the continuing prosperity of the
Company and the security of its customers and shareholders. One measure of
capital adequacy is the primary capital ratio which was 13.56% at September 30,
1996, as compared with 13.12% at September 30, 1995. These ratios are well
above the regulatory minimum of 6.00%. Management continues to emphasize the
importance of maintaining the appropriate capital levels of the Company.
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income, the amount by which interest income on loans, investments
and other interest earning assets exceeds interest expense on deposits and
other borrowed funds, is the single largest component of the Company's income.
Management's objective is to provide the largest possible amount of income
while balancing interest rate, credit, liquidity and capital risk.
Page 13 of 18
<PAGE> 14
The following schedule summarizes net interest earnings and net yield on
interest earning assets:
Net Interest Earnings and Net Yield on Interest Earning Assets
<TABLE>
<CAPTION>
Nine Months Ended September 30, (In
thousands, except percentages) 1996 1995
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total interest income (1) $ 25,226 $ 23,430
Total interest expense 10,950 9,004
--------------------------------------
Net interest earnings $ 14,276 $ 14,426
======================================
Net yield on interest earning assets 4.31% 4.93%
======================================
</TABLE>
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1996 and 1995.
The schedule on page 15 provides an analysis of the change in total interest
income and total interest expense for the nine months ended September 30, 1996
and 1995. These changes are generally attributable to a change in volume
and/or a change in the applicable rates. The prime lending rate for loans
fluctuated periodically from 8.50% at January 1, 1995 to 8.25% at September 30,
1996.
Page 14 of 18
<PAGE> 15
Analysis of Changes in Interest Income and Interest Expense
(In Thousands)
<TABLE>
<CAPTION>
Attributable To:
-----------------------------------------
For the For the
Nine Nine
Months Months
Ended Ended
September September Increase Rate/
30, 1996 30, 1995 (Decrease) Volume Rate Volume
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST
INCOME: (1)
Loans (2) $15,232 $15,991 $(759) $(21) $(739) $1
Federal funds
sold 528 571 (43) 7 (49) (1)
Held to maturity:
Taxable
securities 6,515 6,440 75 (1) 76
Non-taxable 446 417 29 1 28
securities
Available for
sale:
Taxable
securities 2,466 2,466 2,466
Other securities 39 11 28 26 1 1
-----------------------------------------------------------------------------
Total $25,226 $23,430 $1,796 $2,478 $(683) $1
=============================================================================
INTEREST
EXPENSE:
Savings and
negotiable
interest
bearing
deposits $4,612 $4,323 $289 $60 $226 $3
Time deposits 6,248 4,611 1,637 1,988 (245) (106)
Federal funds
purchased 81 60 21 21
Mortgage
indebtedness 9 10 (1) (1) (1) 1
-----------------------------------------------------------------------------
Total $10,950 $9,004 $1,946 $2,068 $(20) $(102)
=============================================================================
</TABLE>
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1996 and 1995.
(2) Loan fees are included in these figures. Includes nonaccrual loans.
Page 15 of 18
<PAGE> 16
PROVISION FOR LOAN LOSSES
The Company has not charged a provision for loan losses to operating expense
since 1993. The Company carefully monitors the quality and volume of its loan
portfolio. Based on current conditions, Management feels that the allowance
for loan losses is adequate and does not anticipate any provision for loan
losses during 1996.
SERVICE CHARGES ON DEPOSIT ACCOUNTS
Service charges on deposit accounts have increased $337,000 for the nine months
ended September 30, 1996, as compared with the nine months ended September 30,
1995, as a result of fees earned on automatic teller machines (ATMs). These
fees have grown due to the increased number of ATMs in service as well as the
implementation of surcharge fees on ATM transactions at casinos beginning in
November 1993 and an increase in surcharge fees on April 1, 1995.
SALARIES AND EMPLOYEE BENEFITS
Salaries and employee benefits have increased $684,000 for the nine months
ended September 30, 1996, as compared with the nine months ended September 30,
1995, as a result of the one-time expense of $375,000 incurred in the
termination of the retirement plan and an increase in health insurance in 1996.
LIQUIDITY
Liquidity represents the Company's ability to adequately provide funds to
satisfy demands from depositors, borrowers and other commitments by either
converting assets to cash or accessing new or existing sources of funds.
Management monitors these funds requirements in such a manner as to satisfy
these demands and provide the maximum earnings on its earning assets.
Deposits, payments of principal and interest on loans, proceeds from maturities
of investment securities and earnings on investment securities are the
principal sources of funds for the Company. At September 30, 1996, cash and
due from banks, investment securities and federal funds sold were 58% of total
deposits, as compared with 54% at September 30, 1995.
Page 16 of 18
<PAGE> 17
PART II
OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Schedule 27 - Financial Data Schedule.
(b) Reports on Form 8-K
None.
Page 17 of 18
<PAGE> 18
SIGNATURES
Pursuant to the requirement of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
PEOPLES FINANCIAL CORPORATION
(Registrant)
Date: October 29, 1996
-------------------------------------
By: /s/ Chevis C. Swetman
-------------------------------------
Chevis C. Swetman
Chairman, President and Chief
Executive Officer
Date: October 29, 1996
-------------------------------------
By: /s/ Lauri A. Wood
-------------------------------------
Lauri A. Wood
Chief Financial Officer and Controller
(principal financial and accounting officer)
Page 18 of 18
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 - Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 23,222,478
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 13,500,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 55,993,424
<INVESTMENTS-CARRYING> 141,793,582
<INVESTMENTS-MARKET> 142,012,000
<LOANS> 216,329,964
<ALLOWANCE> 4,663,367
<TOTAL-ASSETS> 462,566,385
<DEPOSITS> 401,689,585
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,383,769
<LONG-TERM> 229,391
0
0
<COMMON> 738,168
<OTHER-SE> 56,813,347
<TOTAL-LIABILITIES-AND-EQUITY> 462,566,385
<INTEREST-LOAN> 15,231,635
<INTEREST-INVEST> 9,313,637
<INTEREST-OTHER> 527,701
<INTEREST-TOTAL> 25,072,973
<INTEREST-DEPOSIT> 10,859,620
<INTEREST-EXPENSE> 10,950,449
<INTEREST-INCOME-NET> 14,122,524
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 11,714,499
<INCOME-PRETAX> 6,489,315
<INCOME-PRE-EXTRAORDINARY> 6,489,315
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,432,870
<EPS-PRIMARY> 6
<EPS-DILUTED> 6
<YIELD-ACTUAL> 4.31
<LOANS-NON> 463,000
<LOANS-PAST> 3,206,000
<LOANS-TROUBLED> 2,322,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,352,967
<CHARGE-OFFS> 119,600
<RECOVERIES> 430,000
<ALLOWANCE-CLOSE> 4,663,367
<ALLOWANCE-DOMESTIC> 4,663,367
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 250,000
</TABLE>
