<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 June 30, 1997
------------------------------
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
July 25, 1997, there were 1,500,000 shares of $1 par value common stock
authorized, and 738,168 shares issued and outstanding.
Page 1 of 17
<PAGE> 2
PART I
FINANCIAL INFORMATION
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31, and June 30, 1997 1996 1996
- ---------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 31,912,528 $ 26,873,638 $ 25,507,817
Available for sale securities 52,488,162 53,159,353 53,275,512
Held to maturity securities, market value of
$98,961,000 - June 30, 1997; $128,879,000 -
December 31, 1996; $148,230,000 - June 30, 1996 98,235,185 127,870,283 148,359,489
Federal funds sold 6,550,000 -0- 17,650,000
Loans 235,636,534 228,508,895 220,072,157
Less: Unearned income 11,470 17,295 22,426
Allowance for loan losses 4,455,467 4,522,704 4,609,249
------------ ------------ ------------
Loans, net 231,169,597 223,968,896 215,440,482
Bank premises and equipment, net of
accumulated depreciation of $7,296,000 -
June 30, 1997; $6,880,000 - December 31,
1996; and $6,746,000 - June 30, 1996 8,807,383 8,626,068 8,485,353
Other real estate 446,384 264,962 609,451
Accrued interest receivable 3,790,385 3,891,465 4,082,211
Other assets 3,364,594 2,958,967 3,841,368
Intangible assets 337,077 495,993 654,909
------------ ------------ ------------
TOTAL ASSETS $437,101,295 $448,109,625 $477,906,592
============ ============ ============
</TABLE>
Page 2 of 17
<PAGE> 3
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31, and June 30, 1997 1996 1996
- ---------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand, non-interest bearing $ 71,369,923 $ 73,535,221 $ 67,038,052
Savings and demand, interest bearing 165,355,414 153,596,132 183,602,784
Time, $100,000 or more 75,620,996 84,973,369 113,630,958
Other time deposits 58,659,063 56,027,287 54,516,523
------------- ------------- -------------
Total deposits 371,005,396 368,132,009 418,788,317
Accrued interest payable 814,151 1,005,508 853,971
Federal funds purchased -0- 16,500,000 -0-
Notes payable 220,928 226,608 232,137
Other liabilities 2,376,110 1,891,296 2,200,700
------------- ------------- -------------
TOTAL LIABILITIES 374,416,585 387,755,421 422,075,125
SHAREHOLDERS' EQUITY:
Common Stock, $1 par value, 1,500,000 shares
authorized, 738,168 shares issued and
outstanding at June 30, 1997, December 31,
1996 and June 30, 1996, after giving retroactive
effect to two for one stock split effective
October 16, 1996 738,168 738,168 738,168
Surplus 53,926,262 53,926,262 48,926,262
Undivided profits 8,207,276 5,428,068 7,770,784
Unrealized gain (loss) on available for sale
securities, net of tax (186,996) 261,706 (1,309,235)
Additional minimum liability in excess of prior
service cost, net of tax -0- -0- (294,512)
------------- ------------- -------------
TOTAL SHAREHOLDERS' EQUITY 62,684,710 60,354,204 55,831,467
------------- ------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 437,101,295 $ 448,109,625 $ 477,906,592
============= ============= =============
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 3 of 17
<PAGE> 4
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For The Quarters For The Six Months
Ended June 30, Ended June 30,
------------------------ ------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 5,355,372 $ 4,989,544 $10,502,967 $10,150,368
Interest and dividends on investments:
U. S. Treasury 1,308,148 2,042,508 2,872,691 4,168,968
U. S. Government agencies and
corporations 990,008 1,080,107 1,984,997 1,807,215
States and political subdivisions 105,604 95,181 218,788 192,611
Other investments 2,332 12,982 9,342 30,900
Interest on federal funds sold 144,816 97,678 284,699 338,801
----------- ----------- ----------- -----------
TOTAL INTEREST INCOME 7,906,280 8,318,000 15,873,484 16,688,863
----------- ----------- ----------- -----------
INTEREST EXPENSE:
Time deposits of $100,000 or more 1,086,423 1,252,405 2,242,994 2,525,048
Other deposits 2,114,714 2,317,179 4,187,935 4,728,398
Mortgage indebtedness 2,997 3,147 6,032 6,329
Federal funds purchased 8,854 36,810 63,956 64,527
----------- ----------- ----------- -----------
TOTAL INTEREST EXPENSE 3,212,988 3,609,541 6,500,917 7,324,302
----------- ----------- ----------- -----------
NET INTEREST INCOME 4,693,292 4,708,459 9,372,567 9,364,561
Provision for losses on loans -0- -0- -0- -0-
----------- ----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION
FOR LOSSES ON LOANS 4,693,292 4,708,459 9,372,567 9,364,561
----------- ----------- ----------- -----------
OTHER OPERATING INCOME:
Trust department income and fees 156,870 112,141 347,453 339,758
Service charges on deposit accounts 979,156 945,690 1,922,532 1,869,931
Other service charges, commissions
and fees 80,191 68,316 145,747 127,599
Gain on sale of securities -0- -0- 640,613 -0-
Other income 103,475 225,528 211,589 360,587
----------- ----------- ----------- -----------
TOTAL OTHER OPERATING INCOME $ 1,319,692 $ 1,351,675 $ 3,267,934 $ 2,697,875
----------- ----------- ----------- -----------
</TABLE>
Page 4 of 17
<PAGE> 5
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (continued)
(Unaudited)
<TABLE>
<CAPTION>
For The Quarters For The Six Months
Ended June 30, Ended June 30,
------------------------ ------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OTHER OPERATING EXPENSE:
Salaries and employee benefits $ 1,978,367 $ 1,877,545 $ 3,885,340 $ 3,817,971
Net occupancy 201,221 177,233 417,022 357,460
Equipment rentals, depreciation and
maintenance 398,945 489,335 817,026 896,937
Other expense 1,287,250 1,414,487 2,583,158 2,553,743
----------- ----------- ----------- -----------
TOTAL OTHER OPERATING EXPENSE 3,865,783 3,958,600 7,702,546 7,626,111
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 2,147,201 2,101,534 4,937,955 4,436,325
INCOME TAXES 746,360 828,370 1,730,610 1,353,545
----------- ----------- ----------- -----------
NET INCOME $ 1,400,841 $ 1,273,164 $ 3,207,345 $ 3,082,780
=========== =========== =========== ===========
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 5 of 17
<PAGE> 6
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional
Minimum
Unrealized Liability Note
Gain (Loss) in Excess Payable
on Available of Prior Offset
for Sale Service Associated
# of Common Undivided Securities, Cost, Net With
Shares Stock Surplus Profits Net of Tax of Tax 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) $54,582,405
Two-for-one stock
split in 1996 369,084 369,084 (369,084)
------- -------- ----------- ---------- ----------- --------- --------- -----------
Balance, January 1, 1996,
as restated 738,168 738,168 48,926,262 5,075,542 336,945 (294,512) (200,000) 54,582,405
Net income 3,082,780 3,082,780
Cash dividends, common
($.525 per share) (387,538) (387,538)
Net change in unrealized
gain (loss) on available
for sale securities,
net of tax (1,646,180) (1,646,180)
Reduction to note payable
offset associated with
esop 200,000 200,000
------- -------- ----------- ---------- ----------- --------- --------- -----------
Balance, June 30, 1996 738,168 $738,168 $48,926,262 $7,770,784 $(1,309,235) $(294,512) $ 0 $55,831,467
======= ======== =========== ========== =========== ========= ========= ===========
Balance, January 1, 1997 738,168 $738,168 $53,926,262 $5,428,068 $ 261,706 $ 0 $ 0 $60,354,204
Net income 3,207,345 3,207,345
Cash dividends,
common ($ .58 per share) (428,137) (428,137)
Net change in unrealized gain
(loss) on available for sale
securities, net of tax (448,702) (448,702)
------- -------- ----------- ---------- ----------- --------- --------- -----------
Balance, June 30, 1997 738,168 $738,168 $53,926,262 $8,207,276 $ (186,996) $ 0 $ 0 $62,684,710
======= ======== =========== ========== =========== ========= ========= ===========
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 6 of 17
<PAGE> 7
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For The Six Months Ended June 30, 1997 1996
- --------------------------------- ------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,207,345 $ 3,082,780
Adjustments to reconcile net income to net cash provided
by operating activities:
Proceeds from sales of other real estate -0- 52,700
Gain on sales of other real estate -0- (10,850)
Depreciation and amortization 668,916 758,916
Provision for losses on other real estate 8,778 75,537
Changes in assets and liabilities:
Accrued interest receivable 101,080 (912,545)
Other assets 8,694 50,447
Accrued interest payable (191,357) (285,797)
Other liabilities 334,814 376,957
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,138,270 3,188,145
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of held to maturity securities 38,775,000 97,082,482
Investment in held to maturity securities (9,139,902) (80,299,888)
Proceeds from maturities of available for sale securities -0- 15,435,000
Investment in available for sale securities (10,711) (50,374,117)
Loans repaid (made) (7,380,901) 4,253,031
Acquisition of premises and equipment (701,315) (295,711)
Federal funds sold (6,550,000) (17,650,000)
Other assets (31,121) (125,134)
------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES $ 14,961,050 $(31,974,337)
------------ ------------
</TABLE>
Page 7 of 17
<PAGE> 8
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For The Six Months Ended June 30, 1997 1996
- --------------------------------- ------------ ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Demand and savings deposits, net increase $ 9,593,984 $ 12,663,217
Time deposits, net increase (decrease) (6,720,597) 29,953,365
Principal payments on notes (5,680) (5,383)
Cash dividends (428,137) (387,538)
Federal funds purchased (16,500,000) (12,150,000)
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (14,060,430) 30,073,661
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,038,890 1,287,469
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 26,873,638 24,220,348
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 31,912,528 $ 25,507,817
============ ============
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 8 of 17
<PAGE> 9
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 1997 and 1996
1. The accompanying unaudited consolidated financial statements have been
prepared with the accounting policies in effect as of December 31, 1996 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 six months ended June 30, 1997, 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 six months ended June 30, 1997 and 1996.
4. At June 30, 1997 and 1996, the total recorded investment in impaired loans
amounted to $1,869,000 and $1,417,000. The amount of that recorded investment
in impaired loans for which there was no related allowance for loan losses was
$1,869,000 and $1,417,000 at June 30, 1997 and 1996, respectively.
At June 30, 1997, the average recorded investment in impaired loans was
$1,814,000. During the first six months of 1997, the Company recognized $43,000
in interest income on impaired loans. During the first six months of 1997, the
Company received $47,000 in interest payments on impaired loans.
5. Transactions in the allowance for loan losses were as follows:
<TABLE>
<S> <C>
Balance, January 1, 1997 $ 4,522,704
Recoveries 64,698
Loans charged off (131,935)
-----------
Balance, June 30, 1997 $ 4,455,467
===========
</TABLE>
Page 9 of 17
<PAGE> 10
6. At June 30, 1997 and 1996, renegotiated and restructured loans amounted to
$2,243,000 and $2,368,000. This loan is currently being serviced at a market
rate of interest with a scheduled maturity of March 15, 1999. The Company
recognized $92,000 and $74,000 in interest income on these loans during the six
months ended June 30, 1997 and 1996, respectively. The amount of interest that
would have been recognized during this period under the original terms of the
loan agreements was $100,000 and $101,000.
7. The Company has defined cash and cash equivalents to include cash and due
from banks. The Company paid $6,692,000 and $7,610,000 for the six months ended
June 30, 1997 and 1996, respectively, for interest on deposits and borrowings.
Income tax payments totaled $1,750,000 and $1,163,000 for the six months ended
June 30, 1997 and 1996, respectively. Loans transferred to other real estate
amounted to $180,200 for the six months ended June 30, 1997. No loans were
transferred to other real estate during the six months ended June 30, 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 six months ended June 30, 1997 and 1996.
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 significant developments during the first six months of 1997 included the
continued strength in earnings and the sale of shares of Hibernia Corporation
common stock at a realized gain of $640,000. Earnings were $3,207,000 for the
six months ended June 30, 1997, as compared with $3,083,000 for the six months
ended June 30, 1996. The following schedule compares financial highlights for
the six months ended June 30, 1997 and 1996:
<TABLE>
<CAPTION>
For the six months ended June 30, 1997 1996
- --------------------------------- ------ ------
<S> <C> <C>
Net income per share $ 4 $ 4
Book value per share $ 85 $ 76
Return on average total assets 1.42% 1.32%
Return on average shareholders' equity 10.42% 11.17%
Allowance for loan losses as a % of
loans, net of unearned discount 1.89% 2.09%
</TABLE>
Page 10 of 17
<PAGE> 11
FINANCIAL CONDITION
HELD TO MATURITY SECURITIES
The Company has structured its portfolio during the last 18 months to
strengthen its liquidity position. These securities generally have maturities
of 3 months, 6 months and 2 years. Specifically, the Company anticipated the
reallocation of approximately $35,000,000 in deposits in March by one of its
customers. This event was considered in executing investment decisions during
the first six months of 1997. There were no realized gains or losses on
investments during the six months ended June 30, 1997 and 1996. Gross
unrealized gains were $908,000 and $906,000 and gross unrealized losses were
$183,000 and $1,036,000 for the six months ended June 30, 1997 and 1996,
respectively. The following schedule reflects the mix of the held to maturity
securities portfolio at June 30, 1997 and 1996:
<TABLE>
<CAPTION>
June 30, 1997 1996
- --------------------------------------------------------------------
Amount % Amount %
------------ ----- ------------ -----
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 76,816,180 78.2% $130,395,316 88.0%
U. S. Government agencies 15,502,362 15.8% 13,524,323 9.1%
States and political
subdivisions 5,916,643 6.0% 4,439,850 2.9%
------------ ----- ------------ -----
Totals $ 98,235,185 100.0% $148,359,489 100.0%
============ ===== ============ =====
</TABLE>
AVAILABLE FOR SALE SECURITIES
Gross unrealized gains were $476,000 and $493,000 and gross unrealized losses
were $761,000 and $2,476,000 at June 30, 1997 and 1996, respectively. A gross
realized gain of $640,000 was recorded for the six months ended June 30, 1997,
as a result of the sale of shares of common stock of Hibernia Corporation held
in the available for sale portfolio. The following schedule reflects the mix of
available for sale securities at June 30, 1997 and 1996:
<TABLE>
<CAPTION>
June 30, 1997 1996
- ------------------------------------------------------------------
Amount % Amount %
----------- ----- ----------- -----
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 5,934,690 11.3% $ 6,799,680 12.8%
U. S. Government agencies 45,912,139 87.5% 45,784,732 85.9%
Other securities 641,333 1.2% 691,100 1.3%
----------- ----- ----------- -----
Totals $52,488,162 100.0% $53,275,512 100.0%
=========== ===== =========== =====
</TABLE>
FEDERAL FUNDS SOLD
Federal funds sold were $6,550,000 at June 30, 1997 compared with federal funds
sold of $17,650,000 at June 30, 1996. This fluctuation is directly related to
the liquidity needs of the bank subsidiary.
Page 11 of 17
<PAGE> 12
LOANS
Loans increased $15,564,000 at June 30, 1997, as compared with June 30, 1996,
as a result of increased loan demand in the Company's trade area. The Company
anticipates that this increased demand will continue throughout the remainder
of 1997. The allowance for loan losses decreased $67,000 due to net charge-offs
during the six months ended June 30, 1997. Likewise, the allowance for loan
losses as a % of loans, net of unearned discount, has decreased from 2.09% at
June 30, 1996, to 1.89% at June 30, 1997. Management continues to monitor the
volume and quality of its loan portfolio and has determined that the allowance
is adequate.
OTHER ASSETS
Other assets decreased $477,000 at June 30, 1997, as compared with June 30,
1996, primarily as a result of deferred taxes relating to unrealized gains on
available for sale securities.
DEPOSITS
Total deposits have decreased $48,000,000 at June 30, 1997, as compared with
June 30, 1996. Significant increases or decreases in total deposits are
anticipated by Management as customers in the casino industry and county and
municipal areas reallocate their resources periodically. The reallocation
during this time frame specifically involved large time deposits. 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 15.21% at June 30,
1997, as compared with 12.96% at June 30, 1996. 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.
Net interest income decreased $15,000 for the second quarter of 1997 as
compared with the second quarter of 1996. Net interest income increased $8,000
for the six months ended June 30, 1997, as compared with the six months ended
June 30, 1996. Total interest income decreased $412,000 for the quarter ended
June 30, 1997, as compared with the quarter ended June 30, 1996.
Page 12 of 17
<PAGE> 13
Total interest income decreased $815,000 for the six months ended June 30,
1997, as compared with the six months ended June 30, 1996. Total interest
expense decreased $397,000 for the quarter ended June 30, 1997, as compared
with quarter ended June 30, 1996. Total interest expense decreased $823,000 for
the six months ended June 30, 1997, as compared with the six months ended June
30, 1996. 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>
Six Months Ended June 30, (In
thousands, except percentages) 1997 1996
- -------------------------------------------------------------
<S> <C> <C> <C>
TOTAL INTEREST INCOME (1) $15,985 $16,788
TOTAL INTEREST EXPENSE 6,501 7,324
------- -------
NET INTEREST EARNINGS $ 9,484 $ 9,464
======= =======
NET YIELD ON INTEREST EARNING ASSETS 4.73% 4.24%
======= =======
</TABLE>
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1997 and 1996.
The schedule on page 14 provides an analysis of the change in total interest
income and total interest expense for the six months ended June 30, 1997 and
1996. This schedule indicates that the major cause of the changes in interest
income, interest expense and net interest income is the decrease in volume.
Average interest earning assets decreased $45 million for the six months ended
June 30, 1997, as compared with June 30, 1996. Average interest bearing
liabilities decreased $46 million for the six months ended June 30, 1997, as
compared with June 30, 1996.
Page 13 of 17
<PAGE> 14
ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE
(In Thousands)
<TABLE>
<CAPTION>
Attributable To:
---------------------------
FOR THE FOR THE
SIX SIX
MONTHS MONTHS
ENDED ENDED
JUNE 30, JUNE 30, INCREASE RATE/
1997 1996 (DECREASE) VOLUME RATE VOLUME
-------- -------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST
INCOME: (1)
LOANS (2) $ 10,503 $ 10,150 $ 353 $ (2) $ 356 $ (1)
FEDERAL FUNDS
SOLD 285 339 (54) (67) 15 (2)
HELD TO MATURITY:
TAXABLE
SECURITIES 3,169 4,416 (1,247) (1,345) 142 (44)
NON-TAXABLE
SECURITIES 331 292 39 99 (45) (15)
AVAILABLE FOR
SALE:
TAXABLE
SECURITIES 1,688 1,560 128 63 62 3
OTHER SECURITIES 9 31 (22) 2 (23) (1)
-------- -------- ---------- ------- ------- -------
TOTAL $ 15,985 $ 16,788 $ (803) $(1,250) $ 507 $ (60)
======== ======== ========== ======= ======= =======
INTEREST
EXPENSE:
SAVINGS AND
NEGOTIABLE
INTEREST
BEARING
DEPOSITS $ 2,518 $ 3,130 $ (612) $ (549) $ (77) $ 14
TIME DEPOSITS 3,913 4,123 (210) (282) 77 (5)
FEDERAL FUNDS
PURCHASED 64 65 (1) (1) -0- -0-
MORTGAGE
INDEBTEDNESS 6 6 -0- -0- -0- -0-
-------- -------- ---------- ------- ------- -------
TOTAL $ 6,501 $ 7,324 $ (823) $ (832) $ -0- $ 9
======== ======== ========== ======= ======= =======
</TABLE>
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1997 and 1996.
(2) Loan fees are included in these figures. Includes nonaccrual loans.
Page 14 of 17
<PAGE> 15
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 1997.
GAIN ON SALE OF SECURITIES
During the first six months of 1997, the Company sold 45,862 shares of common
stock of Hibernia Corporation it had carried in its available for sale
portfolio at a realized gain of $640,000.
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 June 30, 1997, cash and due from banks,
investment securities and federal funds sold were 51% of total deposits, as
compared with 58% at June 30, 1996.
Page 15 of 17
<PAGE> 16
PART II
OTHER INFORMATION
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
Page 16 of 17
<PAGE> 17
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: July 25, 1997
------------------------------
By: /s/ Chevis C. Swetman
------------------------------
Chevis C. Swetman
Chairman, President and Chief Executive Officer
Date: July 25, 1997
------------------------------
By: /s/ Lauri A. Wood
------------------------------
Lauri A. Wood
Chief Financial Officer and Controller
(principal financial and accounting officer)
Page 17 of 17
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 31,912,528
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,550,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 52,488,162
<INVESTMENTS-CARRYING> 98,235,185
<INVESTMENTS-MARKET> 98,961,000
<LOANS> 235,625,064
<ALLOWANCE> 4,455,467
<TOTAL-ASSETS> 437,101,295
<DEPOSITS> 371,005,396
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,376,110
<LONG-TERM> 220,928
0
0
<COMMON> 738,168
<OTHER-SE> 61,946,542
<TOTAL-LIABILITIES-AND-EQUITY> 437,101,295
<INTEREST-LOAN> 10,502,967
<INTEREST-INVEST> 5,085,818
<INTEREST-OTHER> 284,699
<INTEREST-TOTAL> 15,873,484
<INTEREST-DEPOSIT> 6,430,929
<INTEREST-EXPENSE> 6,500,917
<INTEREST-INCOME-NET> 9,372,567
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 640,613
<EXPENSE-OTHER> 7,702,546
<INCOME-PRETAX> 4,937,955
<INCOME-PRE-EXTRAORDINARY> 4,937,955
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,207,345
<EPS-PRIMARY> 4
<EPS-DILUTED> 4
<YIELD-ACTUAL> 4.73
<LOANS-NON> 1,406,143
<LOANS-PAST> 3,053,000
<LOANS-TROUBLED> 2,243,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,522,704
<CHARGE-OFFS> 131,935
<RECOVERIES> 64,698
<ALLOWANCE-CLOSE> 4,455,467
<ALLOWANCE-DOMESTIC> 4,455,467
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 250,000
</TABLE>
