U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant To section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1997
-------------------------
[ ] Transition Report Pursuant to 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: March 31, 1997
---------------
As of March 31, 1997, there were 879,990 shares of the
Registrant's common stock, $0.30 par value, outstanding.
Traditional 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 Financial Statements
Consolidated Balance Sheets -
March 31, 1997 and December 31,1996 1
Consolidated Statements of Income -
Three months ended March 31, 1997 and 1996 2
Consolidated Statements of Cash Flows -
Three months ended March 31, 1997 and 1996 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 8
ITEM 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
<PAGE>
EDWARDS Certified Public Accountants A Professional
LEAP & SAUER Box 20 Corporation
N. Juniata Street
Hollidaysburg, PA 16648
(814) 695-7441
(814) 695-8077 FAX
ACCOUNTANTS' COMPILATION REPORT
To the Board 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 March 31, 1997
and December 31, 1996 and the related consolidated statements of
income and cash flows for the three months ended March 31, 1997
and 1996 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
consolidated financial statements and, accordingly, do not
express an opinion, or any other form of assurance on them.
These consolidated 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
consolidated financial statement are not designed for those who
are not informed about such differences.
/s/ Edwards Leap & Sauer
- -------------------------
Edwards Leap & Sauer
Pittsburgh, Pennsylvania
May 2, 1997
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)
<CAPTION>
March 31,
1997 December 31,
(Unaudited) 1996
----------- -----------
<S> <C> <C>
ASSET
Cash and due from banks $ 7,569,855 $ 8,944,707
Federal funds sold 11,825,000 7,325,000
Securities available for sale 27,279,627 25,315,225
Investment securities, at cost 28,208,340 25,674,119
Federal Home Loan Bank Stock 740,200 569,500
Loans, net 136,754,335 136,050,197
Premises and equipment, net 3,662,552 3,748,922
Other Assets 3,209,054 3,184,521
------------- ------------
TOTAL ASSETS $ 219,248,963 $210,812,191
============== ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Deposits
Non-interest bearing $ 22,717,301 $ 20,860,522
Interest bearing 158,825,816 155,404,110
------------ ------------
Total Deposits 181,543,117 176,264,632
Accrued interest and other
liabilities 8,875,951 7,679,408
------------ ------------
TOTAL LIABILITIES 190,419,068 183,944,040
STOCKHOLDERS' EQUITY
Common stock, par value 264,247 264,247
Additional paid-in capital 3,849,750 3,849,750
Retained earnings 13,951,238 13,377,522
Unrealized holding gains on
securities available for sale 10,764,660 9,376,632
------------ -----------
Total stockholders' equity 28,829,895 26,868,151
------------ -----------
Total Liabilities and
Stockholders Equity $219,248,963 $210,812,191
============ =============
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>
Three Months Ended March 31,
1997 1996
------------- ----------
<S> <C> <C>
Interest Income
Loans $ 2,893,478 $ 2,479,220
Investment securities 645,079 708,879
Interest bearing deposits 465 2,089
Federal funds sold 110,688 70,765
----------- -----------
Total interest income 3,649,710 3,260,953
Interest Expense
Deposits 1,766,695 1,582,142
----------- -----------
Net Interest Income 1,883,015 1,678,811
Provision For Loan Losses 20,000 -
----------- -----------
Net Interest Income after
Provision for Loan Losses 1,863,015 1,678,811
Other Income
Service fees 187,950 238,591
Net investment gains 199,696 250,944
Other 227,767 3,067
------------ ------------
615,413 492,602
Other Expenses
Salaries 536,884 585,343
Pension and other employee
benefits 139,863 176,161
Occupancy expense 255,590 235,072
Legal & professional 39,242 64,310
Regulatory 13,308 8,231
Data Processing 57,741 40,603
Other 452,468 379,064
--------- --------
1,495,096 1,488,784
Income Before Income Taxes 983,332 682,629
Provision for Income Taxes 198,418 74,000
---------- ---------
Net Income $ 784,914 $ 608,629
=========== ===========
Net Income per Share of
Common Stock $ 0.89 $ 0.69
=========== ===========
Shares Used in Computing
Net Income per share of
Common Stock 879,990 879,990
=========== ===========
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)
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income $ 784,914 $ 608,629
Adjustments to reconcile net
cash from operating activities:
Depreciation and amortization 158,932 149,000
Net accretion/amortization of
premiums and discounts (1,888) (6,000)
Gain on sale of investments (199,696) (251,000)
Provision for loan losses 20,000 0
Loss on sale/disposal of assets 6,688 0
Reinvestment stock dividends (19,465) (21,000)
Increase (decrease) in cash due to
changes in assets and liabilities:
Other assets (27,366) (387,000)
Accrued interest and other
liabilities 481,497 653,000
----------- -----------
Net Cash from Operating Activities 1,203,616 745,629
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities
available for sale 344,875 238,000
Proceeds from maturities of
investment securities 1,445,000 1,150,000
Purchase of investment securities (3,964,375) 0
Purchase of securities available
for sale 0 (158,000)
Net Sales (purchases) of FHLB
Stock (170,700) 0
Net loans made to customers (724,285) (2,391,000)
Premises and equipment expenditures (80,923) (132,000)
----------- -----------
Net Cash Used by Investing
Activities (3,150,408) (1,293,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 5,283,138 5,143,000
Proceeds from issuance of
common stock 0 0
Dividends paid (211,198) (202,000)
Repayment of FHLB advances 0 0
----------- -----------
Net Cash from Financing
Activities 5,071,940 4,941,000
----------- -----------
Net Cash in Cash and Cash
Equivalents 3,125,148 4,393,629
Cash and Cash Equivalents at
Beginning of Period 16,269,707 11,225,917
----------- -----------
Cash and Cash Equivalents at
End of Period $19,394,855 $15,619,546
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
</TABLE>
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.
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.
NOTE C - RECLASSIFICATIONS
Certain previously reported items have been reclassified to
conform with the current period's classifications. These
reclassifications have no effect on net income.
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 three months ended March 31, 1997, the Corporation's
total assets increased over December 31, 1996 by approximately
$8.4 million resulting primarily from an increase of over $4.5
million in federal funds sold. In addition, investment
securities increased by $4.5 million.
The increase in total liabilities of approximately $6.5 million
from December 31, 1996 to March 31, 1997 is primarily
attributable to increases in deposits which increased over $5.3
million in the three-month period ended March 31, 1997.
As of March 31, 1997, PFC Bank had a ratio of non-performing
loans to total assets of .42% as compared to a ratio of .54% as
of the end of the previous calendar year. Included in March 31,
1997, non-performing loan totals were loans totaling $917,000
which were delinquent more than 90 days and on non-accrual
status. At March 31, 1997, the allowance for possible loan
losses was $1,271,000, which represented .92% of total loans as
compared to .91% at the end of the previous calendar year.
Non-performing non-accrual loans totaled 9.99% of the allowance
for possible loan losses, as compared to 26.48% at December 31,
1996.
In management's opinion, the allowance for possible loan losses
as of March 31, 1997 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 three-month period ended March 31, 1997, the Corporation
recognized net income of $785,000, an increase of $176,000 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
Interest income for the three-month period ended March 31, 1997
was approximately $3.7 million, an increase of $352,000 from the
three-month period ended March 31, 1996. This increase is
attributed to a $704,000 increase in the loan portfolio.
Interest expense for the three-month period ended March 31, 1997
was approximately $1.8 million, a $185,000 increase over the same
three-month period ended March 31, 1996. Management attributes
this increase primarily to the $3.4 million increase in interest
bearing deposits since December 31, 1996.
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 three-month
period ended March 31, 1997, the Corporation provided $20,000 to
the provision for loan losses as compared to $0 for the same
period in the previous fiscal year. Net charge-offs for the
three-month period ended March 31, 1997 amounted to $8,000.
Non-Interest Income
Non-interest income for the three-month period ended March 31,
1997 was approximately $353,000, an increase of $183,000 over
non-interest income for the three-month period ended March 31,
1996. This increase is directly attributable to flood insurance
proceeds of $206,000 received due to the flood which the bank
experienced in July 1996. The event is disclosed in the Other
Information section, Item 5., of this filing.
Net investment gains were $200,000 for the three-month period
ended March 31, 1997 as compared to $251,000 for the same
three-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 $21,000 for the
three-month period ended March 31, 1997 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 $198,000
for the three-month period ended March 31, 1997, as compared to
$74,000 for the same period ended March 31, 1996. 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
On April 8, 1997, Peoples Financial Corp., Inc. held its Annual
Shareholder's Meeting. During the meeting the following
directors were elected: Frank T. Baker, Frank L. Doverspike,
Marlin F. Foreman, Brian Henry, Darl Hetrick, Francis E. Kane,
Raliegh B. Robertson, Raliegh B. Robertson, Jr., J. Jack Sherman,
Howard H. Schreckengost, and William H. Toy.
The voting of each nominees was as follows:
Nominee Votes For Votes Against Abstaining
------ --------- ------------- ----------
Frank T. Baker 738,562 0 0
Frank L. Doverspike 738,562 0 0
Marlin F. Foreman 738,562 0 0
Brian Henry 738,562 0 0
Darl Hetrick 738,562 0 0
Francis E. Kane 738,562 0 0
Raliegh B. Robertson 738,562 0 0
Raliegh B. Robertson, Jr. 738,562 0 0
J. Jack Sherman 738,562 0 0
Howard H. Schreckengost 738,562 0 0
William H. Toy 738,562 0 0
Robert T. Tower 113,645 0 0
Anthony H. Breslin, Jr. 113,645 0 0
E. Andrew Dunmire 113,645 0 0
C. Edward Dunmire 113,645 0 0
Calvin W. Kaspareck 113,645 0 0
Glenn R. Mielke 113,645 0 0
Roland W. Schrecongost 113,645 0 0
Ray D. Waugaman 113,645 0 0
Page 7
<PAGE>
ITEM 5. Other Information
On April 8, 1997, R.B. Robertson was elected by the Board of
Directors as President of PFC Bank and Peoples Financial Corp.,
Inc. Mr. Robertson was elected president to replace David P.
Fennell, who retired December 31, 1996. Also on April 8, 1997,
Frank T. Baker was elected as Chairman of PFC Bank and Peoples
Financial Corp., Inc.
On Friday, July 19, 1996, Clarion County, Pennsylvania, including
the New Bethlehem area experienced tremendous flooding. PFC Bank
experienced substantial flood damage. One branch office was
completely submerged, while the operations center absorbed
considerable damage. It has been less than one year and the bank
has completely recovered from the flooding. As expected, the
event did not have a material impact on the Corporation's
financial position.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(i) Registrant's Articles of Incorporation (incorporated
by reference to Exhibit 4.1 to Registrant's Registration
Statement No. 33-88802 on Form S-4, filed January 27, 1995).
3(ii) Registrant's By-Laws (incorporated by reference to
Exhibit 4.2 to Registrant's Registration Statement No. 33-88802
on Form S-4, filed January 27, 1995.
10(i) Settlement Agreement and Release, dated December 30,
1996, among C. Edward Dunmire, the Registrant, and Peoples Bank
of PA (incorporated by reference to Exhibit 10(i) to Registrant's
Annual Report on Form 10-KSB, filed March 28, 1997).
10(ii) General Release of David Fennell (incorporated by
reference to Exhibit 10(ii) to the Registrant's Annual Report on
Form 10-KSB, filed March 28, 1997).
11 Statement re: Computation of Earnings Per Share
(included herein at Part I, Item 1 of this Form 10-QSB).
27 Financial Data Schedule.
(b) Reports on Form 8-K
None.
Page 8
<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: May 7, 1997
PEOPLES FINANCIAL CORP., INC.
(Registrant)
/s/ R. B. Robertson
- ---------------------------
R. B. Robertson
President & Chief Executive
Officer
/s/ James L. Kifer
- ---------------------------
James L. Kifer
Executive Vice President &
Asst. Secretary
<PAGE>
EXHIBIT INDEX
PAGE NO.
IN MANUALLY
SIGNED
EXHIBIT NO. ORIGINAL
- ----------- -----------
3(i) Registrant's Articles of Incorporation
(incorporated by reference to Exhibit
4.1 to Registrant's Registration
Statement No. 33-88802 on Form S-4,
filed January 27, 1995).
3(ii) Registrant's By-Laws (incorporated by
reference to Exhibit 4.2 to Registrant's
Registration Statement No. 33-88802 on Form
S-4, filed January 27, 1995.
10(i) Settlement Agreement and Release, dated
December 30, 1996, among C. Edward Dunmire,
the Registrant, and Peoples Bank of PA
(incorporated by reference to Exhibit 10(i)
to Registrant's Annual Report on Form 10-KSB,
filed March 28, 1997).
10(ii) General Release of David Fennell (incorporated
by reference to Exhibit 10(ii) to the Registrant's
Annual Report on Form 10-KSB, filed March 28, 1997).
11 Statement re: Computation of Earnings Per Share
(included herein at Part I, Item 1 of this Form
10-QSB).
27 Financial Data Schedule. 14
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 7,568
<INT-BEARING-DEPOSITS> 2
<FED-FUNDS-SOLD> 11,825
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 28,020
<INVESTMENTS-CARRYING> 28,208
<INVESTMENTS-MARKET> 0
<LOANS> 136,754
<ALLOWANCE> 1,271
<TOTAL-ASSETS> 219,249
<DEPOSITS> 181,543
<SHORT-TERM> 0
<LIABILITIES-OTHER> 8,876
<LONG-TERM> 0
0
0
<COMMON> 265
<OTHER-SE> 28,565
<TOTAL-LIABILITIES-AND-EQUITY> 219,249
<INTEREST-LOAN> 2,893
<INTEREST-INVEST> 645
<INTEREST-OTHER> 112
<INTEREST-TOTAL> 3,650
<INTEREST-DEPOSIT> 1,767
<INTEREST-EXPENSE> 1,767
<INTEREST-INCOME-NET> 1,883
<LOAN-LOSSES> 20
<SECURITIES-GAINS> 200
<EXPENSE-OTHER> 1,495
<INCOME-PRETAX> 983
<INCOME-PRE-EXTRAORDINARY> 983
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 785
<EPS-PRIMARY> .89
<EPS-DILUTED> .89
<YIELD-ACTUAL> 0
<LOANS-NON> 127
<LOANS-PAST> 790
<LOANS-TROUBLED> 152
<LOANS-PROBLEM> 936
<ALLOWANCE-OPEN> 1,254
<CHARGE-OFFS> 8
<RECOVERIES> 25
<ALLOWANCE-CLOSE> 1,271
<ALLOWANCE-DOMESTIC> 1,271
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 783
</TABLE>
