<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 March 31, 1998
------------------------------------
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 incorporation (I.R.S. Employer
or organization) Identification No.)
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 May 1, 1998, there were 15,000,000
shares of $1 par value common stock authorized, and 1,476,336 shares issued and
outstanding.
Page 1 of 19
<PAGE> 2
PART I
FINANCIAL INFORMATION
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31, and March 31, 1998 1997 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 31,734,134 $ 20,611,495 $ 26,409,184
Held to maturity securities, market value
of $110,530,000 - March 31, 1998;
$103,793,000 - December 31, 1997;
$109,094,000 - March 31, 1997 109,582,619 102,835,564 108,786,686
Available for sale securities, at market 32,527,199 47,677,562 51,841,605
value
Federal funds sold 13,050,000 6,150,000 2,900,000
Loans 265,041,695 251,797,566 227,262,354
Less: Unearned income 5,141 1,314 17,320
Allowance for loan losses 4,188,099 4,434,770 4,546,681
------------ ------------ ------------
Loans, net 260,848,455 247,361,482 222,698,353
Bank premises and equipment, net
of accumulated depreciation of
$7,864,000 - March 31, 1998;
$7,762,000 - December 31, 1997; and
$7,122,000 - March 31, 1997 10,810,758 9,424,080 8,451,413
Other real estate 456,992 512,370 436,384
Accrued interest receivable 3,059,637 3,619,917 3,396,989
Other assets 7,268,375 3,376,662 3,602,746
Intangible assets 118,366 189,397 416,535
------------ ------------ ------------
TOTAL ASSETS $469,456,535 $441,758,529 $428,939,895
============ ============ ============
</TABLE>
Page 2 of 19
<PAGE> 3
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31, and March 31, 1998 1997 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES & SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand, non-interest bearing $ 77,470,454 $ 67,580,617 $ 72,234,869
Savings and demand, interest bearing 182,263,872 160,499,479 152,819,782
Time, $100,000 or more 71,456,166 83,700,139 73,185,075
Other time deposits 63,133,320 60,774,594 56,754,225
------------- ------------- -------------
Total deposits 394,323,812 372,554,829 354,993,951
Accrued interest payable 735,661 726,763 665,809
Federal funds purchased and securities
sold under agreements to repurchase 310,759 9,325,000
Notes payable 212,118 215,094 223,787
Other liabilities 4,170,307 2,490,081 2,871,581
------------- ------------- -------------
TOTAL LIABILITIES 399,752,657 375,986,767 368,080,128
SHAREHOLDERS' EQUITY:
Common Stock, $1 par value, 15,000,000
shares authorized, 1,476,336 shares
issued and outstanding at March 31,
1998, December 31, 1997 and March 31,
1997, after giving retroactive effect
to two for one stock split effective
September 15, 1997 1,476,336 1,476,336 1,476,336
Surplus 58,188,094 58,188,094 53,188,094
Undivided profits 9,826,584 5,924,027 6,806,435
Accumulated other comprehensive income 212,864 183,305 (611,098)
------------- ------------- -------------
TOTAL SHAREHOLDERS' EQUITY 69,703,878 65,771,762 60,859,767
------------- ------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 469,456,535 $ 441,758,529 $ 428,939,895
============= ============= =============
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 3 of 19
<PAGE> 4
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the Quarters Ended March 31, 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $5,928,337 $5,147,595
Interest and dividends on investments:
U. S. Treasury 1,232,656 1,564,543
U. S. Government agencies and corporations 866,147 994,989
States and political subdivisions 57,602 113,184
Other investments 7,010
Interest on federal funds sold 99,440 139,883
---------- ----------
TOTAL INTEREST INCOME 8,184,182 7,967,204
---------- ----------
INTEREST EXPENSE:
Time deposits of $100,000 or more 1,017,914 1,156,571
Other deposits 2,235,122 2,073,221
Mortgage indebtedness 2,880 3,035
Federal funds purchased 60,613 55,102
---------- ----------
TOTAL INTEREST EXPENSE 3,316,529 3,287,929
---------- ----------
NET INTEREST INCOME 4,867,653 4,679,275
Provision for losses on loans
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON LOANS $4,867,653 $4,679,275
---------- ----------
</TABLE>
Page 4 of 19
<PAGE> 5
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the Quarters Ended March 31, 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
OTHER OPERATING INCOME:
Trust department income and fees $ 205,121 $ 190,583
Service charges on deposit accounts 878,166 943,376
Other service charges, commissions and fees 71,503 65,556
Other income 5,129,578 108,114
Gain on securities 21,845 640,613
---------- ----------
TOTAL OTHER OPERATING INCOME 6,306,213 1,948,242
---------- ----------
OTHER OPERATING EXPENSE:
Salaries and employee benefits 2,174,982 1,906,973
Net occupancy 253,902 215,801
Equipment rentals, depreciation and maintenance 501,560 418,081
Other expense 1,620,601 1,295,908
---------- ----------
TOTAL OTHER OPERATING EXPENSE 4,551,045 3,836,763
---------- ----------
INCOME BEFORE INCOME TAXES 6,622,821 2,790,754
Income taxes 2,262,600 984,250
---------- ----------
NET INCOME $4,360,221 $1,806,504
========== ==========
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 5 of 19
<PAGE> 6
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
# of Other
Common Common Undivided Comprehensive Comprehensive
Shares Stock Surplus Profits Income Income Total
------------ ------------- ------------- ------------- ---------------- ---------------- -------------
<S> <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 $ 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 60,354,204
Comprehensive
Income:
Net income 1,806,504 $ 1,806,504 1,806,504
Net unrealized
loss on available
for sale securities,
net of tax (479,308) (479,308) (479,308)
Reclassification
adjustment for
available for sale
securities called
or sold in current
year, net of tax (393,496) (393,496) (393,496)
----------------
Total
comprehensive
income $ 933,700
================
Cash dividends
(.29 per share) (428,137) (428,137)
------------ ------------- ------------- ------------- ---------------- -------------
BALANCE, MARCH
31, 1997 1,476,336 $ 1,476,336 $ 53,188,094 $ 6,806,435 $ (611,098) $ 60,859,767
============ ============= ============= ============= ================ =============
</TABLE>
Page 6 of 19
<PAGE> 7
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
# of Other
Common Common Undivided Comprehensive Comprehensive
Shares Stock Surplus Profits Income Income Total
------------ ------------- ------------- ------------- ---------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
JANUARY 1, 1998 1,476,336 $ 1,476,336 $ 58,188,094 $ 5,924,027 $ 183,305 $ 65,771,762
Comprehensive
Income:
Net income 4,360,221 $ 4,360,221 4,360,221
Net unrealized
gain on available
for sale securities,
net of tax 53,509 53,509 53,509
Reclassification
adjustment for
available for sale
securities called
in current year,
net of tax (23,950) (23,950) (23,950)
----------------
Total
comprehensive
income $ 4,389,780
================
Cash dividends
($ .31 per share) (457,664) (457,664)
------------ ------------- ------------- ------------- ---------------- -------------
BALANCE, MARCH 1,476,336 $ 1,476,336 $ 58,188,094 $ 9,826,584 $ 212,864 $ 69,703,878
31, 1998
============ ============= ============= ============= ================ =============
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 7 of 19
<PAGE> 8
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Quarters Ended March 31, 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,360,221 $ 1,806,504
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sales and calls of securities (21,845) (640,613)
Gain on sales of other real estate (29,851)
Gain on sale of bank premises (5,083,867)
Depreciation and amortization 341,031 334,458
Provision for losses on other real estate 8,779 8,778
Changes in assets and liabilities:
Accrued interest receivable 560,280 494,476
Other assets (724,395) (21,182)
Accrued interest payable 8,898 (339,699)
Other liabilities 1,680,226 830,285
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,099,477 2,473,007
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and calls of held to
maturity securities 25,050,000 27,090,000
Investment in held to maturity securities (31,796,714) (8,006,403)
Proceeds from maturities, sales and calls of
available for sale securities 15,226,174 640,613
Investment in available for sale securities (4,943) (5,456)
Proceeds from sales of other real estate 140,450
Loans, net (increase) decrease (13,550,973) 1,090,343
Acquisition of premises and equipment (610,565) (80,345)
Federal funds sold (6,900,000) (2,900,000)
Other assets 850,631 (22,197)
------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES $(11,595,940) $ 17,806,555
------------ ------------
</TABLE>
Page 8 of 19
<PAGE> 9
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the Quarters Ended March 31, 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Demand and savings deposits, net increase (decrease) $ 31,654,230 $ (2,076,702)
Time deposits, net decrease (9,885,247) (11,061,356)
Principal payments on notes (2,976) (2,821)
Cash dividends (457,664) (428,137)
Federal funds purchased, net increase (decrease) 310,759 (7,175,000)
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 21,619,102 (20,744,016)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 11,122,639 (464,454)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 20,611,495 26,873,638
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 31,734,134 $ 26,409,184
============ ============
</TABLE>
See Selected Notes to Consolidated Financial Statements.
Page 9 of 19
<PAGE> 10
PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Quarters Ended March 31, 1998 and 1997
1. The accompanying unaudited consolidated financial statements have been
prepared with the accounting policies in effect as of December 31, 1997 as set
forth in the Notes to the Consolidated Financial Statements of Peoples Financial
Corporation and Subsidiaries (the Company). In 1998, the Company adopted SFAS
130, "Reporting Comprehensive Income." SFAS 131, "Disclosure about Segments of
an Enterprise and Related Information," is not applicable to 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 quarter ended March 31, 1998, 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 quarters ended March 31, 1998 and 1997.
4. At March 31, 1998 and 1997, the total recorded investment in impaired loans
amounted to $1,277,000 and $545,000, respectively. The amount of that recorded
investment in impaired loans for which there was a related allowance for loan
losses was $107,000 at March 31, 1998. The amount of that recorded investment in
impaired loans for which there was no related allowance for loan losses was
$1,170,000 and $545,000 at March 31, 1998 and 1997, respectively. At March 31,
1998, the average recorded investment in impaired loans was $1,237,000. During
the first quarter of 1998, the Company recognized $3,000 in interest income on
impaired loans. During the first quarter of 1998, the Company received $4,000 in
interest payments on impaired loans.
5. Transactions in the allowance for loan losses were as follows:
<TABLE>
<S> <C>
Balance, January 1, 1998 $ 4,434,770
Recoveries 5,017
Loans charged off (251,688)
------------
Balance, March 31, 1998 $ 4,188,099
============
</TABLE>
6. At March 31, 1998 and 1997, renegotiated and restructured loans amounted to
$2,146,000 and $2,275,000. The Company recognized $44,000 and $45,000 in
interest income on these loans during the quarters ended March 31, 1998 and
1997, respectively. The amount of interest that would have been recognized
during these quarters under the original terms of the loan agreements was
$49,000 and $50,000.
Page 10 of 19
<PAGE> 11
7. The Company has defined cash and cash equivalents to include cash and due
from banks. The Company paid $3,308,000 and $3,628,000 for the quarters ended
March 31, 1998 and 1997, respectively, for interest on deposits and borrowings.
Income tax payments totaled $68,000 and $140,000 during the quarters ended March
31, 1998 and 1997, respectively. Loans transferred to other real estate amounted
to $64,000 and $180,200 for the quarter ended March 31, 1998 and 1997,
respectively. The Company acquired banking premises in the amount of $1,959,000
during the quarter ended March 31, 1998, as a result of a like-kind exchange.
The Company recorded a receivable of $4,037,000 relating to the like-kind
exchange.
8. The income tax effect on the accumulated other comprehensive income was
$15,000 and $450,000 at March 31, 1998 and 1997, respectively.
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 quarters ended March 31, 1998 and 1997.
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 development during the first quarter of 1998 was the sale of a
branch location in Gulfport, MS, for a realized gain, net of taxes, of
$3,300,000 for book purposes. The transaction was structured for tax purposes
under the provisions of Section 1031 of the Internal Revenue Code so as to
qualify most of the transaction for the tax benefits of a like-kind exchange.
The proceeds of the transaction are being reinvested in replacement properties.
All transactions relating to this matter will be completed by August 4, 1998.
The following schedule compares financial highlights (in thousands) for the
quarters ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
For the quarters ended March 31, 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C>
Net income per share $ 3 $ 1
Book value per share $ 47 $ 41
Return on average total assets 3.80% 1.63%
Return on average shareholders' equity 25.78% 11.93%
Allowance for loan losses as a % of loans,
net of unearned discount 1.58% 2.00%
</TABLE>
Page 11 of 19
<PAGE> 12
FINANCIAL CONDITION
HELD TO MATURITY SECURITIES
There were no significant realized gains or losses on these investments during
the quarter ended March 31, 1998. Gross unrealized gains for held to maturity
securities were $1,071,000 and $735,000 and gross unrealized losses for held to
maturity securities were $124,000 and $428,000 for the quarters ended March 31,
1998 and 1997, respectively. The following schedule reflects the mix of the held
to maturity investment portfolio at March 31, 1998 and 1997:
<TABLE>
<CAPTION>
March 31, 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
Amount % Amount %
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 83,524,907 76.20% $ 86,741,687 79.80%
U. S. Government agencies 20,428,947 18.60% 15,958,846 14.70%
States and political
subdivisions 5,628,765 5.20% 6,086,153 5.50%
------------ ------------ ------------ ------------
Totals $109,582,619 100.00% $108,786,686 100.00%
============ ============ ============ ============
</TABLE>
AVAILABLE FOR SALE SECURITIES
There were no significant realized gains or losses on these investments during
the quarter ended March 31, 1998. Available for sale securities decreased $19
million in the management of the Company's liquidity position. Gross unrealized
gains were $467,000 and $449,000 and gross unrealized losses were $147,000 and
$1,374,000 at March 31, 1998 and 1997, respectively. The following schedule
reflects the mix of available for sale securities at March 31, 1998 and 1997:
<TABLE>
<CAPTION>
March 31, 1998 1997
- -------------------------------------------------------------------------------------------------------------------
Amount % Amount %
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasuries $ 3,995,940 12.30% $ 5,894,640 11.40%
U. S. Government
agencies 27,311,840 84.00% 45,305,632 87.40%
States and political
subdivisions 578,086 1.80%
Other securities 641,333 1.90% 641,333 1.20%
----------- ----------- ----------- -----------
Totals $32,527,199 100.00% $51,841,605 100.00%
=========== =========== =========== ===========
</TABLE>
FEDERAL FUNDS SOLD
Federal funds sold were $13,050,000 at March 31, 1998, as compared with
$2,900,000 at March 31, 1997, as a result of the management of the bank
subsidiary's liquidity position.
Page 12 of 19
<PAGE> 13
LOANS
Loans increased $38 million at March 31, 1998, as compared with March 31, 1997,
as a result of the increase in loan demand in the Company's trade area during
the last 12 months.
DEPOSITS
Total deposits increased $39 million at March 31, 1998, as compared with March
31, 1997. Significant increases or decreases in total deposits from quarter to
quarter 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.
OTHER LIABILITIES
Other liabilities have increased $1,300,000 at March 31, 1998, as compared with
March 31, 1997, as the result of deferred taxes on the gain on the sale of
property pursuant to a like-kind exchange for tax purposes.
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 16.06% at March 31, 1998, as
compared with 14.76% at March 31, 1997. 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 increased $188,000 for the first quarter of 1998 as compared
with the first quarter of 1997. Total interest income increased $217,000 for the
quarter ended March 31, 1998, as compared with the quarter ended March 31, 1997.
Total interest expense increased $29,000 for the quarter ended March 31, 1998,
as compared with the quarter ended March 31, 1997. The following schedule
summarizes net interest earnings and net yield on interest earning assets:
Page 13 of 19
<PAGE> 14
Net Interest Earnings and Net Yield on Interest Earning Assets
<TABLE>
<CAPTION>
Quarters Ended March 31, (In
thousands, except percentages) 1998 1997
- -------------------------------------------------------------------
<S> <C> <C>
Total interest income (1) $8,214 $8,026
Total interest expense 3,317 3,288
------ ------
Net interest earnings $4,897 $4,738
====== ======
Net yield on interest earning assets 4.79% 4.66%
====== ======
</TABLE>
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1998 and 1997.
The schedule on page 15 provides an analysis of the change in total interest
income and total interest expense for the quarters ended March 31, 1998 and
1997. These changes are generally attributable to a change in volume and/or a
change in the applicable rates.
Page 14 of 19
<PAGE> 15
Analysis of Changes in Interest Income and Interest Expense
(In Thousands)
<TABLE>
<CAPTION>
Attributable To:
-------------------------------------------
For the For the
Quarter Quarter
Ended Ended
March 31, March 31, Increase Rate/
1998 1997 (Decrease) Volume Rate Volume
-------------- -------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST
INCOME: (1)
Loans (2) (3) $ 5,928 $ 5,147 $ 781 $ 732 $ 43 $ 6
Federal funds
sold 99 140 (41) (71) 59 (29)
Held to maturity:
Taxable 1,569 1,711 (142) (159) 18 (1)
Non-taxable 50 171 (121) (5) (119) 3
Available for
sale:
Taxable 528 850 (322) (233) (122) 33
Non-taxable 40 40 40
Other 7 (7) (2) (7) 2
-------------- -------------- -------------- ------------- ------------- -------------
Total $ 8,214 $ 8,026 $ 188 $ 302 $ (128) $ 14
============== ============== ============== ============= ============= =============
INTEREST
EXPENSE:
Savings and
demand, interest
bearing $ 1,330 $ 1,257 $ 73 $ (26) $ 101 $ (2)
Time deposits 1,923 1,973 (50) 24 (73) (1)
Federal funds
purchased 61 55 6 7 (1)
Mortgage
indebtedness 3 3 (1) 1
-------------- -------------- -------------- ------------- ------------- -------------
Total $ 3,317 $ 3,288 $ 29 $ 4 $ 28 $ (3)
============== ============== ============== ============= ============= =============
</TABLE>
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1998 and 1997.
(2) Loan fees are included in these figures.
(3) Includes nonaccrual loans.
Page 15 of 19
<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 1998.
OTHER INCOME
During the first quarter of 1998, the Company realized a gain of $5,083,000 for
book purposes as the result of the sale of one its branch locations, as
mentioned previously in the Overview.
OTHER EXPENSE
Other expense increased $345,000 for the quarter ended March 31, 1998, as
compared with the quarter ended March 31, 1997, largely as the result of
expenses relating to the computer conversion.
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 March 31, 1998, cash and due from
banks, investment securities and federal funds sold were 47% of total deposits,
as compared with 54% at March 31, 1997.
Page 16 of 19
<PAGE> 17
PART II
OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
(A) The Annual Meeting of Shareholders of the Company was held on
April 15, 1998.
(B) The following five directors were elected at the meeting to hold
office for a term of one year:
<TABLE>
<CAPTION>
Approve Disapprove
----------------------------------
<S> <C> <C>
Drew Allen 1,235,182
William A. Barq 1,235,182
Andy Carpenter 1,233,982 1,200
Chevis C. Swetman 1,233,982 1,200
F. Walker Tucei 1,233,022 2,160
</TABLE>
Shares not voted amounted to 241,154.
(C) The shareholders voted to amend the articles of incorporation to
increase the number of authorized shares to 15,000,000.
Item 5 - Other Information
At a meeting held on April 15, 1998, the Board of Directors of the Company
approved the following slate of officers:
Chevis C. Swetman President and Chief Executive Officer
Andy Carpenter Executive Vice President
Jeannette E. Romero First Vice President
Thomas J. Sliman Second Vice President
Robert M. Tucei Vice President
David M. Hughes Vice President
Lauri A. Wood Chief Financial Officer and Controller
A. Wes Fulmer Secretary
Page 17 of 19
<PAGE> 18
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Schedule 27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
Page 18 of 19
<PAGE> 19
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: May 7, 1998
--------------------------------
By: /s/ Chevis C. Swetman
--------------------------------
Chevis C. Swetman
Chairman, President and Chief Executive Officer
Date: May 7, 1998
--------------------------------
By: /s/ Lauri A. Wood
--------------------------------
Lauri A. Wood
Chief Financial Officer and Controller
(principal financial and accounting officer)
Page 19 of 19
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 31,734,134
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 13,050,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 32,527,199
<INVESTMENTS-CARRYING> 109,582,619
<INVESTMENTS-MARKET> 110,530,000
<LOANS> 265,041,695
<ALLOWANCE> 4,188,099
<TOTAL-ASSETS> 469,456,535
<DEPOSITS> 394,323,812
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,170,307
<LONG-TERM> 212,118
1,476,336
0
<COMMON> 0
<OTHER-SE> 68,227,542
<TOTAL-LIABILITIES-AND-EQUITY> 469,456,535
<INTEREST-LOAN> 5,928,337
<INTEREST-INVEST> 2,156,405
<INTEREST-OTHER> 99,440
<INTEREST-TOTAL> 8,184,182
<INTEREST-DEPOSIT> 3,253,036
<INTEREST-EXPENSE> 3,316,529
<INTEREST-INCOME-NET> 4,867,653
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 21,845
<EXPENSE-OTHER> 4,551,045
<INCOME-PRETAX> 6,622,821
<INCOME-PRE-EXTRAORDINARY> 6,622,821
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,360,221
<EPS-PRIMARY> 3
<EPS-DILUTED> 3
<YIELD-ACTUAL> 4.79
<LOANS-NON> 1,236,000
<LOANS-PAST> 1,228,000
<LOANS-TROUBLED> 2,146,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,434,770
<CHARGE-OFFS> 251,688
<RECOVERIES> 5,017
<ALLOWANCE-CLOSE> 4,188,099
<ALLOWANCE-DOMESTIC> 4,188,099
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 50,000
</TABLE>
