THIS DOCUMENT IS A CONFIRMING COPY OF THE FORM 10-QSB QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996 FILED ON AUGUST
12, 1996 BY PAPER.
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
---------------
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 33-88802
------------
PEOPLES FINANCIAL CORP., INC.
---------------------------------------------
(Exact name of small business issuer as specified in
its charter)
Pennsylvania 25-1469914
--------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Ford Street and Fourth Avenue, Ford City, PA 16226
--------------------------------------------------------
(Address of principal executive offices)
(412) 763-1221
--------------------------------------------------------
(Issuer's telephone number)
--------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 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___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
dates: June 30, 1996
---------------
As of June 30, 1996, there were 879,807 shares of the
Registrant's common stock, $0.30 par value, outstanding.
Transitional Small Business Disclosure Format (check one):
Yes ___ No ___
<PAGE>
PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY
INDEX PAGE
Accountant's Compilation Report
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Balance Sheets -
June 30, 1996 (unaudited) and December 31,1995 1
Consolidated Statements of Income -
Six months ended June 30, 1996 (unaudited)
and 1995 2
Consolidated Statements of Cash Flows -
Six months ended June 30, 1996 (unaudited)
and 1995 3
Notes to Consolidated Financial Statements 4
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 7
ITEM 2. Changes in Securities 7
ITEM 3. Defaults Upon Senior Securities 7
ITEM 4. Submission of Matters to a Vote of Security Holders 7
ITEM 5. Other Information 7
ITEM 6. Exhibits and Reports on Form 8-K 7
SIGNATURES 8
<PAGE>
EDWARDS CERTIFIED PUBLIC ACCOUNTANTS A PROFESSIONAL
LEAP & CORPORATION
SAUER --------------------------------------------------
Box 20
N. Juniata Street
Hollidaysburg, PA 16648
(814) 695-7441
(814) 695-8077 Fax
ACCOUNTANT'S COMPILATION REPORT
To the Boards of Directors
Peoples Financial Corp., Inc. and Subsidiary
Ford City, Pennsylvania
We have compiled the accompanying consolidated balance sheets of
Peoples Financial Corp., Inc. and Subsidiary as of June 30, 1996
and December 31, 1995, and the related statements of income and
statements of cash flows for the six months ended June 30, 1996
and 1995 for Peoples Financial Corp., Inc. and Subsidiary
included in the accompanying prescribed form, in accordance with
standards established by the American Institute of Certified
Public Accountants.
A compilation is limited to presenting in the form prescribed by
the Securities and Exchange Commission under Regulation S-B of
the 1934 Act, information that is the representation of
management. We have not audited or reviewed the accompanying
financial statements and, accordingly, do not express an opinion,
or any other form of assurance on them.
These financial statements (including related disclosures) are
presented in accordance with the requirements of the Securities
and Exchange Commission, which differ from generally accepted
accounting principles. Accordingly, these financial statements
are not designed for those who are not informed about such
differences.
/s/ Edwards Leap & Sauer
--------------------------
Edwards Leap & Sauer
Pittsburgh, Pennsylvania
August 8, 1996
HOLLIDAYSBURG
PITTSBURGH
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(see Accountant's Compilation Report)
(In thousands)
<CAPTION>
June 30
1996 December 31
(Unaudited) 1995
----------- -----------
<S> <C> <C>
ASSET
Cash and due from banks $ 7,693 $ 8,951
Federal funds sold 3,800 2,275
Securities available for sale 23,563 22,585
Investment securities, at cost 29,846 32,717
Federal Home Loan Bank Stock 570 602
Loans, net 121,521 113,601
Premises and equipment, net 3,485 3,573
Other assets 2,900 2,583
--------- ---------
Total assets $ 193,378 $ 186,887
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Non-interest bearing $ 22,191 $ 18,447
Interest bearing 139,313 138,645
--------- ---------
Total Deposits 161,504 157,092
Accrued interest and other
liabilities 7,074 6,421
--------- ---------
Total Liabilities 168,578 163,513
STOCKHOLDERS' EQUITY
Common stock, par value 365 365
Additional paid-in capital 3,749 3,749
Retained earnings 12,781 12,068
Unrealized holding gains on
securities available for sale 7,905 7,192
--------- ---------
Total stockholders' equity 24,800 23,374
--------- ---------
Total liabilities and
stockholders' equity $ 193,378 $ 186,887
========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
Page 1
<PAGE>
<TABLE>
PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(see Accountant's Compilation Report)
<CAPTION>
Six Months Ended June 30,
-------------------------
1996 1995
---- ----
(In thousands, except for per
share data)
<S> <C> <C>
INTEREST INCOME
Loans $ 5,225 $ 4,915
Investment securities 1,375 1,367
Interest bearing deposits 3 1
Federal funds sold 190 177
--------- ---------
Total interest income 6,793 6,460
INTEREST EXPENSE
Deposits 3,170 3,045
--------- ---------
NET INTEREST INCOME 3,623 3,415
PROVISION FOR LOAN LOSSES 0 10
--------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,623 3,405
NON-INTEREST INCOME
Service fees and other 335 313
Net investment gains 285 348
--------- ---------
620 661
NON-INTEREST EXPENSES
Salaries 1,047 981
Director's fees 79 62
Pension and other employee benefits 365 354
Occupancy expense 469 456
Other 940 1,253
---------- ---------
2,900 3,106
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 1,343 960
PROVISION FOR INCOME TAXES 251 75
--------- ---------
INCOME BEFORE MINORITY INTEREST 1,092 885
MINORITY INTEREST 0 163
--------- ---------
NET INCOME $ 1,092 $ 722
========= =========
NET INCOME PER SHARE OF
COMMON STOCK $ 1.24 $ 1.05
========= =========
SHARES USED IN COMPUTING
NET INCOME PER COMMON SHARE 879,807 690,680
========== =========
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
Page 2
<PAGE>
<TABLE>
PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(see Accountant's Compilation Report)
(In thousands)
<CAPTION>
Six Months Ended June 30,
-------------------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income $ 1,092 $ 722
Adjustments to reconcile
net cash from operating
activities:
Depreciation and amortization 260 163
Net accretion/amortization of
premiums and discounts (11) 8
Gain on sale of investments (285) (348)
Provision for loan losses 0 0
Reinvestment stock dividends (41) (41)
Minority interest 0 163
Increase (decrease) in cash due
to changes in assets and
liabilities:
Other assets (317) (630)
Accrued interest and other
liabilities 510 610
--------- ----------
NET CASH FROM OPERATING
ACTIVITIES 1,208 647
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from sales of
securities available for sale 1,851 595
Proceeds from maturities of
investment securities 3,370 5,801
Purchase of investment securities (1,990) (5,427)
Purchase of securities available
for sale (230) (50)
Net loans made to customers (7,920) 326
Premises and equipment
expenditures (172) (290)
---------- ----------
NET CASH FROM (USED BY)
INVESTING ACTIVITIES (5,091) 955
CASH FLOWS FROM FINANCING
ACTIVITIES
Net increase (decrease)
in deposits 4,555 3,923
Proceeds from issuance of
common stock 0 40
Dividends paid (405) (306)
Repayment of FHLB advances 0 (2,175)
---------- ----------
NET CASH FROM FINANCING
ACTIVITIES 4,150 1,482
---------- -----------
NET CHANGE IN CASH AND CASH
EQUIVALENTS 267 3,084
Cash and cash equivalents at
beginning of year 11,226 8,798
--------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 11,493 $ 11,882
========= ==========
Page 3
<PAGE>
PEOPLES FINANCIAL CORP., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements
include Peoples Financial Corp., Inc., (the "Corporation") and
its wholly owned subsidiary, PFC Bank, and have been prepared in
accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-QSB
and Article 10 of Regulation S-B. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting primarily of normal recurring accruals) considered
necessary for a fair presentation have been included.
Effective, April 1, 1995, PFC Bank (formerly Peoples Bank of PA)
merged with New Bethlehem Bank. Under the terms of the merger
agreement New Bethlehem shareholders received 183.15 shares of
Peoples Financial Corp., Inc. for each share of New Bethlehem
stock held. The merger was accounted for using the purchase
method of accounting, pursuant to which the assets and
liabilities of New Bethlehem Bank were revalued to fair market
value on the date of the merger.
NOTE B - EARNINGS PER SHARE
Shares used in the earnings per share computation are the
weighted average number of shares outstanding during the periods
in question.
Page 4
<PAGE>
PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
For the six months ended June 30, 1996, the Corporation's total
assets increased over December 31, 1995 by approximately $6.5
million resulting primarily from an increase of over $7.9 million
in loans. In addition, other assets, consisting primarily of
prepaid expenses and accrued interest receivable increased by
$321,000. These increases were offset primarily by a reduction
in securities available-for-sale and investment securities.
The increase in liabilities is primarily attributable to
increases in deposits which increased over $4.4 million in the
six-month period ended June 30, 1996.
As of June 30, 1996, PFC Bank had a ratio of non-performing loans
to total assets of .49% as compared to a ratio of .70% as of the
end of the previous calendar year. Included in June 30, 1996,
non-performing loan totals were loans totaling $945,000 which
were delinquent more than 90 days and on non-accrual status. At
June 30, 1996, the allowance for possible loan losses was
$1,234,000, which represented 1.0% of total loans as compared to
1.1% at the end of the previous calendar year. Non-performing
non-accrual loans totaled 42.38% of the allowance for possible
loan losses, as compared to 40.03% at December 31, 1995.
In management's opinion, the allowance for possible loan losses
as of June 30, 1996 is adequate to absorb any future loan losses
based on information presently known. There can be no assurance,
however, that additions to the allowance will not be required in
the future to cover losses that are presently unforeseen.
RESULTS OF OPERATIONS
Net Income
- ----------
For the six-month period ended June 30, 1996, the Corporation
recognized net income of $1,092,000, an increase of $370,000 over
the same period of the prior fiscal year.
The operating results of the Corporation are solely dependent
upon the net income generated by its subsidiary, PFC Bank. PFC
Bank also has the benefit of a substantially appreciated
available-for-sale investment portfolio, the strategic
liquidation of portions of which enable the Corporation to absorb
the negative effects of interest rate fluctuation and still
maintain profitable operations.
Net Interest Income
- -------------------
Net interest income for the six-month period ended June 30, 1996
was $3.6 million, an increase of $208,000 from the six-month
period ended June 30, 1995. This increase is primarily
attributed to an increase in the loan portfolio of $7.9 million.
Interest expense for the six-month period ended June 30, 1996 was
$3.2 million, a $125,000 increase over the same six-month period
ended June 30, 1995. Management attributes this increase
primarily to the increase in interest bearing deposits.
Page 5
<PAGE>
Provision for Loan Losses
- -------------------------
The provision for loan losses is based upon management's ongoing
assessment of the inherent risk of loss in the outstanding loan
portfolio. This process is based on the evaluation of individual
loans, past loss experience, current economic conditions, and
other relevant factors. While management uses the best
information available to make such evaluations, future
adjustments to the provision resulting in adjustment to the
allowance for possible loan losses may be necessary. PFC Bank
continues to monitor its loan portfolio on a regular basis and
will make additions to its allowance based on its determination
of the necessary level of the allowance. For the six-month
period ended June 30, 1996, the Corporation provided $0 to the
provision for loan losses as compared to $10,000 for the same
period in the previous fiscal year. Net charge-offs for the
six-month period ended June 30, 1996 amounted to $11,000.
Non-Interest Income
- -------------------
Non-interest income for the six-month period ended June 30, 1996
was $620,000, a decrease of $41,000 over non-interest income for
the six-month period ended June 30, 1995.
Net investment gains were $285,000 for the six-month period ended
June 30, 1996 as compared to $348,000 for the same six-month
period the previous year. These net gains were primarily the
result of the liquidation of a portion of the Corporation's
available-for-sale investment portfolio.
Non-Interest Expenses
- ---------------------
Total non-interest expenses decreased by $206,000 for the
six-month period ended June 30, 1996 when compared to the same
period in the prior year. The major components of non-interest
expenses represent normal recurring costs of operations including
compensation and employee benefits, occupancy expense, and data
processing.
Maintaining a focus on operating cost control has become
increasingly important and the Corporation has succeeded in
maintaining a relatively stable overhead burden.
Provision for Income Taxes
- --------------------------
The Corporation incurred a provision for income taxes of $251,000
for the six-month period ended June 30, 1996. This figure
compares to a provision of $75,000 for the same period ended June
30, 1995. State tax liabilities are incurred both by PFC Bank,
in the form of Pennsylvania Bank Shares tax, and by the
Corporation, as a separate entity.
Page 6
<PAGE>
PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
Not applicable
ITEM 5. Other Information
On April 1, 1995, the Corporation completed the merger of New
Bethlehem Bank with and into Peoples Bank of PA, its wholly owned
subsidiary, forming PFC Bank. Prior to completion of the merger,
New Bethlehem Bank was a majority owned subsidiary of Peoples
Bank of PA. As part of the merger, Peoples Bank of PA acquired
the remaining minority interest in New Bethlehem Bank. Shares
of the Corporation common stock totaling 379,487 were issued to
the minority shareholders of New Bethlehem Bank.
On April 17, 1996, David P. Fennell was elected by the Board of
Directors to replace C. Edward Dunmire as president of PFC Bank
and Peoples Financial Corp., Inc. On April 17, 1996, R.B.
Robertson was appointed by the Board of Directors to replace C.
Edward Dunmire as Chief Executive Officer of PFC Bank. On April
17, 1996, Brian Henry was elected by the Board of Directors to
replace David P. Fennell as secretary of PFC Bank and Peoples
Financial Corp., Inc.
On Friday, July 19, 1996 Clarion County, Pennsylvania, including
the New Bethlehem area encountered tremendous flooding. PFC Bank
experienced substantial flood damage. One branch office was
completely submerged, while the operations center absorbed
considerable damage. The financial impact of this disaster is
not determinable at this time.
ITEM 6. Exhibits and Reports on Form 8-K
(a) No exhibits are contained herein.
(b) No reports on Form 8-K were filed during the quarter ended
June 30, 1996.
Page 7
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Dated: November 1, 1996
PEOPLES FINANCIAL CORP., INC.
(Registrant)
/s/ David P. Fennell
- --------------------
David P. Fennell
President
/s/ James L. Kifer
- --------------------
James L. Kifer
Assistant Secretary
Page 8
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,687
<INT-BEARING-DEPOSITS> 6
<FED-FUNDS-SOLD> 3,800
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 24,133
<INVESTMENTS-CARRYING> 29,846
<INVESTMENTS-MARKET> 29,942
<LOANS> 122,755
<ALLOWANCE> 1,234
<TOTAL-ASSETS> 193,378
<DEPOSITS> 161,511
<SHORT-TERM> 0
<LIABILITIES-OTHER> 7,093
<LONG-TERM> 0
365
0
<COMMON> 0
<OTHER-SE> 24,409
<TOTAL-LIABILITIES-AND-EQUITY> 193,378
<INTEREST-LOAN> 5,225
<INTEREST-INVEST> 1,568
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 6,793
<INTEREST-DEPOSIT> 3,623
<INTEREST-EXPENSE> 3,623
<INTEREST-INCOME-NET> 3,170
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 285
<EXPENSE-OTHER> 2,900
<INCOME-PRETAX> 1,343
<INCOME-PRE-EXTRAORDINARY> 1,343
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,092
<EPS-PRIMARY> 2.48
<EPS-DILUTED> 2.48
<YIELD-ACTUAL> 8.26
<LOANS-NON> 523
<LOANS-PAST> 422
<LOANS-TROUBLED> 156
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,244
<CHARGE-OFFS> 44
<RECOVERIES> 34
<ALLOWANCE-CLOSE> 1,234
<ALLOWANCE-DOMESTIC> 1,234
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
