<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, 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
October 22, 1997, there were 1,500,000 shares of $1 par value common stock
authorized, and 1,476,336 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, 1997 1996 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 26,541,659 $ 26,873,638 $ 23,222,478
Held to maturity securities, market value
of $96,398,000 - September 30, 1997;
$128,879,000 - December 31, 1996;
$142,012,000 - September 30, 1996 95,494,177 127,870,283 141,793,582
Available for sale securities, at market value 50,960,008 53,159,353 55,993,424
Federal funds sold 28,550,000 13,500,000
Loans 239,274,306 228,508,895 216,329,964
Less: Unearned income 5,449 17,295 9,816
Allowance for loan losses 4,269,063 4,522,704 4,663,367
-------------------------------------------
Loans, net 234,999,794 223,968,896 211,656,781
Bank premises and equipment, net
of accumulated depreciation of $7,454,000 -
September 30, 1997; $6,880,000 - December
31, 1996; and $6,886,000 - September 30, 1996 9,311,816 8,626,068 8,475,330
Other real estate 413,463 264,962 420,104
Accrued interest receivable 3,186,226 3,891,465 3,466,589
Other assets 3,347,449 2,958,967 3,462,646
Intangible assets 260,428 495,993 575,451
-------------------------------------------
TOTAL ASSETS $ 453,065,020 $ 448,109,625 $ 462,566,385
===========================================
</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, 1997 1996 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES & SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand, non-interest bearing $ 92,164,728 $ 73,535,221 $ 78,286,432
Savings and demand, interest bearing 167,354,162 153,596,132 177,332,795
Time, $100,000 or more 65,638,872 84,973,369 90,861,964
Other time deposits 59,998,624 56,027,287 55,208,394
---------------------------------------------
Total deposits 385,156,386 368,132,009 401,689,585
Accrued interest payable 719,303 1,005,508 712,125
Federal funds purchased 16,500,000
Notes payable 218,031 226,608 229,391
Other liabilities 2,847,872 1,891,296 2,383,769
---------------------------------------------
TOTAL LIABILITIES 388,941,592 387,755,421 405,014,870
SHAREHOLDERS' EQUITY:
Common Stock, $1 par value, 1,500,000
shares authorized, 1,476,336 shares
issued and outstanding at
September 30, 1997, December 31, 1996
and September 30, 1996, after
giving retroactive effect to two for
one stock split effective
September 15, 1997 1,476,336 1,476,336 1,476,336
Surplus 53,188,094 53,188,094 48,188,094
Undivided profits 9,297,843 5,428,068 8,714,882
Unrealized gain (loss) on available for
sale securities, net of tax 161,155 261,706 (827,797)
---------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 64,123,428 60,354,204 57,551,515
---------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 453,065,020 $ 448,109,625 $ 462,566,385
=============================================
</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,
- --------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 5,579,046 $ 5,081,267 $16,082,013 $15,231,635
Interest and dividends on securities:
U. S. Treasury 1,227,648 1,984,008 4,100,339 6,152,976
U. S. Government agencies and 940,237 1,020,420 2,925,234 2,827,635
corporations
States and political subdivisions 97,027 101,538 315,815 294,149
Other investments 270,000 7,977 279,342 38,877
Interest on federal funds sold 131,835 188,900 416,534 527,701
----------------------------------------------------------------
TOTAL INTEREST INCOME 8,245,793 8,384,110 24,119,277 25,072,973
----------------------------------------------------------------
INTEREST EXPENSE:
Time deposits of $100,000 or more 973,793 1,312,674 3,216,787 3,837,722
Other deposits 2,207,425 2,293,500 6,395,360 7,021,898
Mortgage indebtedness 2,959 3,110 8,991 9,439
Federal funds purchased 4,532 16,863 68,488 81,390
----------------------------------------------------------------
TOTAL INTEREST EXPENSE 3,188,709 3,626,147 9,689,626 10,950,449
----------------------------------------------------------------
NET INTEREST INCOME 5,057,084 4,757,963 14,429,651 14,122,524
Provision for losses on loans -0- -0- -0- -0-
----------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION 5,057,084 4,757,963 14,429,651 14,122,524
FOR LOSSES ON LOANS ----------------------------------------------------------------
OTHER OPERATING INCOME:
Trust department income and fees 167,637 126,820 515,090 466,578
Service charges on deposit accounts 983,461 985,306 2,905,993 2,855,237
Other service charges, commissions and 59,730 63,687 205,477 191,286
fees
Gain on securities 27,175 667,788
Other income 101,537 207,602 313,126 568,189
----------------------------------------------------------------
TOTAL OTHER OPERATING INCOME $ 1,339,540 $ 1,383,415 $ 4,607,474 $ 4,081,290
----------------------------------------------------------------
</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,
- ------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OTHER OPERATING EXPENSE:
Salaries and employee benefits $ 1,987,226 $ 2,222,714 $ 5,872,566 $ 6,040,685
Net occupancy 285,233 178,812 702,255 536,272
Equipment rentals, depreciation 421,210 399,278 1,238,236 1,296,215
and maintenance
Other expense 1,369,667 1,287,584 3,952,825 3,841,327
--------------------------------------------------------------
TOTAL OTHER OPERATING EXPENSE 4,063,336 4,088,388 11,765,882 11,714,499
--------------------------------------------------------------
INCOME BEFORE INCOME TAXES 2,333,288 2,052,990 7,271,243 6,489,315
Income taxes 799,820 702,900 2,530,430 2,056,445
--------------------------------------------------------------
NET INCOME $ 1,533,468 $ 1,350,090 $ 4,740,813 $ 4,432,870
==============================================================
</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 Liability Note
(Loss) on In Excess Payable
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 738,168 $ 738,168 $48,926,262 $5,075,542 $ 336,945 $(294,512) $(200,000) $54,582,405
Two-for-one
stock split
in 1997 738,168 738,168 (738,168)
---------------------------------------------------------------------------------------------------------------
Balance, January
1, 1996, as
restated 1,476,336 1,476,336 48,188,094 5,075,542 336,945 (294,512) (200,000) 54,582,405
Net income 4,432,870 4,432,870
Cash
dividends,
($.5375
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
esop 200,000 200,000
---------------------------------------------------------------------------------------------------------------
Balance,
September
30, 1996 1,476,336 $ 1,476,336 $48,188,094 $8,714,882 $(827,797) $ -0- $ -0- $57,551,515
===============================================================================================================
</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) Liability Note
on In Excess Payable
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, 1997, as
previously
reported 738,168 $ 738,168 $53,926,262 $5,428,068 $261,706 $ -0- $ -0- $60,354,204
Two-for-one
stock split
in 1997 738,168 738,168 (738,168)
--------------------------------------------------------------------------------------------------
Balance,January
1,1997, as
restated 1,476,336 1,476,336 53,188,094 5,428,068 261,706 -0- -0- 60,354,204
Net income 4,740,813 4,740,813
Cash dividends,
($ .59 per
share) (871,038) (871,038)
Net change in
unrealized gain
(loss) on
available for
sale securities,
net of tax (100,551) (100,551)
--------------------------------------------------------------------------------------------------
Balance,
September
30, 1997 1,476,336 $1,476,336 $53,188,094 $9,297,843 $161,155 $ -0- $ -0- $64,123,428
==================================================================================================
</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, 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,740,813 $ 4,432,870
Adjustments to reconcile net income to net
cash provided by operating activities:
Proceeds from sales of other real estate 2,000 52,700
Gain on sales of other real estate (1,999) (10,850)
Depreciation and amortization 1,000,565 1,093,374
Provision for losses on other real estate 55,498 134,234
Changes in assets and liabilities:
Accrued interest receivable 705,239 (296,923)
Other assets 14,120 173,229
Accrued interest payable (286,205) (427,643)
Other liabilities 806,576 560,026
------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,036,607 5,711,017
------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of held to maturity 57,975,000 135,142,482
securities
Investment in held to maturity securities (25,598,894) (111,793,981)
Proceeds from maturities of available for sale 2,000,000 15,435,000
securities
Investment in available for sale securities (14,891) (52,362,289)
Loans repaid (made) (11,234,898) 8,036,732
Acquisition of premises and equipment (1,450,748) (410,038)
Federal funds sold (28,550,000) (13,500,000)
Other assets (138,917) (117,496)
------------------------------
NET CASH USED IN INVESTING ACTIVITIES $ (7,013,348) $ (19,569,590)
------------------------------
</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, 1997 1996
- ------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Demand and savings deposits, net increase $ 32,387,537 $ 17,641,608
Time deposits, net increase (decrease) (15,363,160) 7,876,242
Principal payments on notes (8,577) (8,129)
Cash dividends (871,038) (793,530)
Federal funds purchased (16,500,000) (12,150,000)
Pension plan additional minimum liability 294,512
----------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (355,238) 12,860,703
----------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (331,979) (997,870)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 26,873,638 24,220,348
----------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 26,541,659 $ 23,222,478
============================
</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, 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 nine months ended September 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 1,476,336 for the nine months ended September 30, 1997 and 1996.
4. At September 30, 1997 and 1996, the total recorded investment in impaired
loans amounted to $772,000 and $998,000. The amount of that recorded investment
in impaired loans for which there was no related allowance for loan losses was
$722,000 and $998,000 at September 30, 1997 and 1996, respectively.
At September 30, 1997, the average recorded investment in impaired loans was
$795,000. During the first nine months of 1997, the Company recognized $33,000
in interest income on impaired loans. During the first nine months of 1997, the
Company received $36,000 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 180,017
Loans charged off (433,658)
--------------------------
Balance, September 30, 1997 $ 4,269,063
==========================
</TABLE>
Page 10 of 18
<PAGE> 11
6. At September 30, 1997 and 1996, renegotiated and restructured loans amounted
to $2,195,000 and $2,334,000. The Company recognized $137,000 and $122,000 in
interest income on these loans during the nine months ended September 30, 1997
and 1996, respectively. The amount of interest that would have been recognized
during these periods under the original terms of the loan agreements was
$152,000 and $151,000.
7. The Company has defined cash and cash equivalents to include cash and due
from banks. The Company paid $9,976,000 and $11,378,000 for the nine months
ended September 30, 1997 and 1996, respectively, for interest on deposits and
borrowings. Income tax payments totaled $2,500,000 and $2,055,000 for the nine
months ended September 30, 1997 and 1996, respectively. Loans transferred to
other real estate amounted to $204,000 for the nine months ended September 30,
1997. 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, 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 following schedule compares financial highlights for the nine months ended
September 30, 1997 and 1996:
<TABLE>
<CAPTION>
For the nine months ended September 30, 1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Net income per share $ 3.21 $ 3.00
Book value per share $ 43.43 $ 38.98
Return on average total assets 1.39% 1.29%
Return on average shareholders' equity 10.16% 10.54%
Allowance for loan losses as a % of
loans, net of unearned discount 1.78% 2.16%
</TABLE>
Page 11 of 18
<PAGE> 12
FINANCIAL CONDITION
HELD TO MATURITY SECURITIES
Held to maturity securities decreased $46 million at September 31, 1997, as
compared with September 31, 1996, as a result of the management of the
Company's liquidity position. Specifically, the Company anticipated the
reallocation of approximately $35 million in deposits in March by one of its
customers. This event was considered in executing investment decisions during
1997. There were no realized gains or losses on these investments during the
nine months ended September 30, 1997 and 1996. Gross unrealized gains for held
to maturity securities were $996,000 and $923,000 and gross unrealized losses
for held to maturity securities were $92,000 and $705,000 for the nine months
ended September 30, 1997 and 1996, respectively. The following schedule
reflects the mix of the held to maturity investment portfolio at September 30,
1997 and 1996:
<TABLE>
<CAPTION>
September 30, 1997 1996
- -----------------------------------------------------------------------------------------------------------------
Amount % Amount %
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 75,722,218 79.30% $ 123,330,702 87.00%
U. S. Government agencies 14,045,907 14.70% 13,523,513 9.50%
States and political
subdivisions 5,726,052 6.00% 4,939,367 3.50%
----------- --------- ----------------- -----------
Totals $ 95,494,177 100.00% $ 141,793,582 100.00%
=========== ========= ================= ===========
</TABLE>
AVAILABLE FOR SALE SECURITIES
Available for sale securities decreased $5 million at September 30, 1997, as
compared with September 30, 1996 as a result of maturities of these securities.
Gross unrealized gains were $476,000 and $540,000 at September 30, 1997 and
1996, respectively, and gross unrealized losses were $320,000 and $1,793,000 at
September 30, 1997 and 1996, respectively. A gross realized gain of $640,000 was
recorded for the nine months ended September 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 September 30, 1997 and 1996:
<TABLE>
<CAPTION>
September 30, 1997 1996
- -----------------------------------------------------------------------------------------------------------------
Amount % Amount %
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasuries $ 5,963,750 11.70% $ 6,848,360 12.20%
U. S. Government agencies 44,354,925 87.00% 48,408,102 86.50%
Other securities 641,333 1.30% 736,962 1.30%
------------------ ----------------- ------------------ ----------------
Totals $ 50,960,008 100.00% $ 55,993,424 100.00%
========================================================================
</TABLE>
Page 12 of 18
<PAGE> 13
FEDERAL FUNDS SOLD
Federal funds sold were $28,550,000 at September 30, 1997, as compared with
$13,500,000 at September 30, 1996. This fluctuation is directly related to the
liquidity needs of the bank subsidiary.
BANK PREMISES AND EQUIPMENT
Bank premises and equipment increased $836,000 at September 30, 1997, as
compared with September 30, 1996, primarily as a result of the acquisition of
hardware and software relating to the upcoming data processing conversion.
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 15.03% at September 30,
1997, as compared with 13.56% at September 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.
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) 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Total interest income (1) $ 24,282 $ 25,226
Total interest expense 9,689 10,950
-------------------------------
Net interest earnings $ 14,593 $ 14,276
===============================
Net yield on interest earning assets 4.87% 4.31%
===============================
</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 15 provides an analysis of the change in total interest
income and total interest expense for the nine months ended September 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 $43 million for the nine
months ended September 30, 1997, as compared with the nine months ended
September 30, 1996. Average interest bearing liabilities decreased $46 million
for the nine months ended September 30, 1997, as compared with the nine months
ended 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, 1997 30, 1996 (Decrease) Volume Rate Volume
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST
INCOME: (1)
Loans (2) $ 16,082 $ 15,232 $ 850 $ 420 $ 418 $ 12
Federal funds
sold 417 528 (111) (101) (13) 3
Held to maturity:
Taxable
securities 4,518 6,515 (1,997) (2,123) 186 (60)
Non-taxable 479 446 33 134 (77) (24)
securities
Available for
sale:
Taxable
securities 2,507 2,466 41 2 38 1
Other securities 279 39 240 1 232 7
------------------------------------------------------------------------------------
Total $ 24,282 $ 25,226 $ (944) $ (1,667) $ 784 $ (61)
====================================================================================
INTEREST
EXPENSE:
Savings and
negotiable
interest
bearing
deposits $ 3,838 $ 4,612 $ (774) $ (710) $ (75) $ 11
Time deposits 5,774 6,248 (474) (647) 193 (20)
Federal funds
purchased 68 81 (13) (15) 3 (1)
Mortgage
indebtedness 9 9 0 (1) 1 0
-----------------------------------------------------------------------------------
Total $ 9,689 $ 10,950 $ (1,261) $ (1,373) $ 122 $ (10)
===================================================================================
</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 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 1997.
GAIN ON SECURITIES
During 1997, the Company sold the 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 held
to maturity securities and earnings on held to maturity securities are the
principal sources of funds for the Company. At September 30, 1997, cash and due
from banks, investment securities and federal funds sold were 52% of total
deposits, as compared with 58% at September 30, 1996.
Page 16 of 18
<PAGE> 17
PART II
OTHER INFORMATION
Item 1 - Legal Proceedings
The Company had previously disclosed in Note J of its 1996 Annual Report that a
class action suit was filed against the Company's bank subsidiary related to
the placement of collateral protection insurance. The attempt to certify a
class action was unsuccessful. In October of 1997, the case was settled with
the bank subsidiary making an immaterial cash payment to the plaintiff.
Item 5 - Other Information
During October 1997, the Company completed a review of the accessibility and
convenience to its customers of its branch locations. As a result, the Company
has commenced a series of transactions whereby the Company's Highway 90 branch
located at 3300 W. Beach Blvd. in Gulfport, MS, will be sold, with the proceeds
being reinvested into other parcels of real estate which will be needed as
future branch locations and an expanded operations center. The Company expects
the series of transactions to be completed by July 31, 1998. The initial sale
of the Highway 90 branch will result in the Company's bank subsidiary realizing
a net gain of approximately $3.3 million. The Company has structured the
transaction so as to qualify, at least in part, for the tax benefits of a
like-kind exchange pursuant to Section 1031 of the Internal Revenue Code of
1986.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(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 30, 1997
----------------------------
By: /s/ Chevis C. Swetman
----------------------------
Chevis C. Swetman
Chairman, President and Chief Executive Officer
Date: October 30, 1997
----------------------------
By: /s/ Lauri A. Wood
----------------------------
Lauri A. Wood
Chief Financial Officer and Controller
(principal financial and accounting officer)
Page 18 of 18
<PAGE> 19
EXHIBIT INDEX
Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 26,541,659
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 28,550,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 50,960,008
<INVESTMENTS-CARRYING> 95,494,177
<INVESTMENTS-MARKET> 96,398,000
<LOANS> 234,999,794
<ALLOWANCE> 4,269,063
<TOTAL-ASSETS> 453,065,020
<DEPOSITS> 385,156,386
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,847,872
<LONG-TERM> 218,031
0
0
<COMMON> 1,476,336
<OTHER-SE> 62,647,092
<TOTAL-LIABILITIES-AND-EQUITY> 453,065,020
<INTEREST-LOAN> 16,082,013
<INTEREST-INVEST> 7,620,730
<INTEREST-OTHER> 416,534
<INTEREST-TOTAL> 24,119,277
<INTEREST-DEPOSIT> 9,612,147
<INTEREST-EXPENSE> 9,689,626
<INTEREST-INCOME-NET> 14,429,651
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 667,000
<EXPENSE-OTHER> 3,952,825
<INCOME-PRETAX> 7,271,243
<INCOME-PRE-EXTRAORDINARY> 7,271,243
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,740,813
<EPS-PRIMARY> 3
<EPS-DILUTED> 3
<YIELD-ACTUAL> 4.87
<LOANS-NON> 462,000
<LOANS-PAST> 3,245,000
<LOANS-TROUBLED> 2,195,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,522,704
<CHARGE-OFFS> 433,658
<RECOVERIES> 180,017
<ALLOWANCE-CLOSE> 4,269,063
<ALLOWANCE-DOMESTIC> 4,269,063
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 250,000
</TABLE>
