-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MNtjtcXh1ffmfPv5/gkZh2+4GDvRp08AHeOdcWDfOD+jCB8KD2h+R7+hAKjRfFjL Opdtt3ftWKpTcxuGUj7IXA== 0000950134-01-501689.txt : 20010515 0000950134-01-501689.hdr.sgml : 20010515 ACCESSION NUMBER: 0000950134-01-501689 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEOPLES FINANCIAL CORP /MS/ CENTRAL INDEX KEY: 0000770460 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 640709834 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12103 FILM NUMBER: 1632377 BUSINESS ADDRESS: STREET 1: 152 LAMEUSE STREET STREET 2: P O BOX 529 CITY: BILOXI STATE: MS ZIP: 39530 BUSINESS PHONE: 2284355511 MAIL ADDRESS: STREET 1: P O BOX 529 STREET 2: PO BOX 559 CITY: BILOXI STATE: MS ZIP: 39533-0529 10-Q 1 d86924e10-q.txt FORM 10-Q FOR QUARTER ENDED MARCH 31, 2001 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, 2001 ----------------------------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-30050 ----------------------------------- PEOPLES FINANCIAL CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Mississippi 64-0709834 -------------------------------------------------------------- ------------------------------------ (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Lameuse and Howard Avenues, Biloxi, Mississippi 39533 ----------------------------------------------- ---------- (Address of principal executive offices) (Zip Code)
(228) 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, 2001, there were 15,000,000 shares of $1 par value common stock authorized, and 5,638,504 shares issued and outstanding. Page 1 of 19 2 PART I FINANCIAL INFORMATION PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, December 31, and March 31, 2001 2000 2000 - ------------------------------------ ------------ ------------ ------------ ASSETS Cash and due from banks $ 37,498,149 $ 35,145,868 $ 33,171,502 Held to maturity securities, market value of $93,467,000 - March 31, 2001; $97,946,000 - December 31, 2000; $118,238,000 - March 31, 2000 92,845,616 98,051,955 120,036,460 Available for sale securities, at market value 73,051,036 48,167,770 39,815,518 Federal Home Loan Bank stock, at cost 1,808,600 1,647,300 1,647,300 Federal funds sold 4,800,000 Loans 368,893,004 377,485,768 349,531,990 Less: Unearned income 14,655 9,612 13,009 Allowance for loan losses 4,693,883 4,567,565 4,215,983 ------------ ------------ ------------ Loans, net 364,184,466 372,908,591 345,302,998 Bank premises and equipment, net of accumulated depreciation of $11,940,000 - March 31, 2001; $11,427,000 - December 31, 2000; and $10,513,000 - March 31, 2000 18,669,785 18,333,272 17,452,256 Other real estate 1,679,382 1,061,081 75,068 Accrued interest receivable 4,330,134 4,497,713 4,093,561 Other assets 6,342,009 7,430,384 5,700,311 ------------ ------------ ------------ TOTAL ASSETS $605,209,177 $587,243,934 $567,294,974 ============ ============ ============
Page 2 of 19 3 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued) (Unaudited)
March 31, December 31, and March 31, 2001 2000 2000 - ------------------------------------ ------------- ------------- ------------- LIABILITIES & SHAREHOLDERS' EQUITY LIABILITIES: Deposits: Demand, non-interest bearing $ 72,783,454 $ 68,080,764 $ 85,825,727 Savings and demand, interest bearing 163,857,318 137,531,988 183,962,248 Time, $100,000 or more 138,984,591 126,353,164 79,130,455 Other time deposits 81,818,092 81,758,161 71,285,168 ------------- ------------- ------------- Total deposits 457,443,455 413,724,077 420,203,598 Accrued interest payable 1,095,221 1,028,564 626,116 Federal funds purchased and securities sold under agreements to repurchase 58,433,099 65,339,084 62,620,718 Borrowings from Federal Home Loan Bank 5,158,681 23,159,507 Notes payable 266,984 291,481 312,432 Other liabilities 4,681,842 4,984,364 4,599,036 ------------- ------------- ------------- TOTAL LIABILITIES 527,079,282 508,527,077 488,361,900 SHAREHOLDERS' EQUITY: Common Stock, $1 par value, 15,000,000 shares authorized, 5,638,504, 5,795,207 and 5,905,344 shares issued and outstanding at March 31, 2001, December 31, 2000 and March 31, 2000, respectively, after giving retroactive effect to two for one stock split effective April 17, 2000 5,638,504 5,795,207 5,905,344 Surplus 65,780,254 65,780,254 65,759,086 Undivided profits 6,067,923 7,093,830 8,046,383 Unearned compensation (484,840) (535,840) (636,580) Accumulated other comprehensive income 1,128,054 583,406 (141,159) ------------- ------------- ------------- TOTAL SHAREHOLDERS' EQUITY 78,129,895 78,716,857 78,933,074 ------------- ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 605,209,177 $ 587,243,934 $ 567,294,974 ============= ============= =============
See Selected Notes to Consolidated Financial Statements. Page 3 of 19 4 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
For the Quarters Ended March 31, 2001 2000 - -------------------------------- ----------- ----------- INTEREST INCOME: Interest and fees on loans $ 8,135,633 $ 7,609,111 Interest and dividends on investments: U. S. Treasury 687,736 885,925 U. S. Government agencies and corporations 1,369,200 1,187,004 States and political subdivisions 138,746 136,500 Other investments 223,747 44,598 Interest on federal funds sold 29,588 30,468 ----------- ----------- TOTAL INTEREST INCOME 10,584,650 9,893,606 ----------- ----------- INTEREST EXPENSE: Time deposits of $100,000 or more 2,134,841 1,131,041 Other deposits 2,569,178 2,231,431 Borrowing from Federal Home Loan Bank 132,440 Mortgage indebtedness 2,360 2,421 Federal funds purchased and securities sold under agreements to repurchase 723,955 597,746 ----------- ----------- TOTAL INTEREST EXPENSE 5,562,774 3,962,639 ----------- ----------- NET INTEREST INCOME 5,021,876 5,930,967 Provision for losses on loans 75,000 52,500 ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON LOANS $ 4,946,876 $ 5,878,467 ----------- -----------
Page 4 of 19 5 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Continued) (Unaudited)
For the Quarters Ended March 31, 2001 2000 - -------------------------------- ---------- ---------- OTHER OPERATING INCOME: Trust department income and fees $ 231,790 $ 290,785 Service charges on deposit accounts 1,430,155 1,236,333 Other service charges, commissions and fees 71,590 65,259 Other income 322,493 84,414 ---------- ---------- TOTAL OTHER OPERATING INCOME 2,056,028 1,676,791 ---------- ---------- OTHER OPERATING EXPENSE: Salaries and employee benefits 2,687,770 2,646,532 Net occupancy 281,692 249,473 Equipment rentals, depreciation and maintenance 700,713 609,463 Other expense 1,258,135 1,371,401 ---------- ---------- TOTAL OTHER OPERATING EXPENSE 4,928,310 4,876,869 ---------- ---------- INCOME BEFORE INCOME TAXES 2,074,594 2,678,389 Income taxes 669,995 879,100 ---------- ---------- NET INCOME $1,404,599 $1,799,289 ========== ==========
See Selected Notes to Consolidated Financial Statements. Page 5 of 19 6 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
Accumulated # of Other Common Common Undivided Unearned Comprehensive Comprehensive Shares Stock Surplus Profits Compensation Income Income ------------ ------------ ------------ ------------ ------------ ------------- ------------- BALANCE, JANUARY 1, 2000, AS PREVIOUSLY REPORTED 2,952,672 $ 2,952,672 $ 68,711,758 $ 6,837,628 $ (624,842) $ (110,330) Two-for-one stock split in 2000 2,952,672 2,952,672 (2,952,672) ------------ ------------ ------------ ------------ ------------ ------------ BALANCE, JANUARY 1, 2000, AS RESTATED 5,905,344 5,905,344 65,759,086 6,837,628 (624,842) (110,330) Comprehensive Income: Net income 1,799,289 $ 1,799,289 Net unrealized loss on available for sale securities, net of tax (30,829) (30,829) ------------ Total comprehensive income $ 1,768,460 ============ Purchase of ESOP shares (41,738) Allocation of ESOP shares 30,000 Cash dividends (.10 per share) (590,534) ------------ ------------ ------------ ------------ ------------ ------------ BALANCE, MARCH 31, 2000 5,905,344 $ 5,905,344 $ 65,759,086 $ 8,046,383 $ (636,580) $ (141,159) ============ ============ ============ ============ ============ ============ Total ------------ BALANCE, JANUARY 1, 2000, AS PREVIOUSLY REPORTED $ 77,766,886 Two-for-one stock split in 2000 ------------ BALANCE, JANUARY 1, 2000, AS RESTATED 77,766,886 Comprehensive Income: Net income 1,799,289 Net unrealized loss on available for sale securities, net of tax (30,829) Total comprehensive income Purchase of ESOP shares (41,738) Allocation of ESOP shares 30,000 Cash dividends (.10 per share) (590,534) ------------ BALANCE, MARCH 31, 2000 $ 78,933,074 ============
Page 6 of 19 7 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Continued) (Unaudited)
Accumulated # of Other Common Common Undivided Unearned Comprehensive Comprehensive Shares Stock Surplus Profits Compensation Income Income ------------ ------------ ------------ ------------ ------------ ------------- -------------- BALANCE, JANUARY 1, 2001 5,795,207 $ 5,795,207 $ 65,780,254 $ 7,093,830 $ (535,840) $ 583,406 Comprehensive Income: Net income 1,404,599 $ 1,404,599 Net unrealized gain on available for sale securities, net of tax 544,648 544,648 ------------ Total comprehensive income $ 1,949,247 ============ Allocation of ESOP shares 51,000 Effect of stock retirement on accrued dividends 15,545 Retirement of common stock (156,703) (156,703) (2,446,051) ------------ ------------ ------------ ------------ ------------ ------------ BALANCE, MARCH 31, 2001 5,638,504 $ 5,638,504 $ 65,780,254 $ 6,067,923 $ (484,840) $ 1,128,054 ============ ============ ============ ============ ============ ============ Total -------------- BALANCE, JANUARY 1, 2001 $ 78,716,857 Comprehensive Income: Net income 1,404,599 Net unrealized gain on available for sale securities, net of tax 544,648 Total comprehensive income Allocation of ESOP shares 51,000 Effect of stock retirement on accrued dividends 15,545 Retirement of common stock (2,602,754) ------------- BALANCE, MARCH 31, 2001 $ 78,129,895 =============
See Selected Notes to Consolidated Financial Statements. Page 7 of 19 8 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Quarters Ended March 31, 2001 2000 - -------------------------------- ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,404,599 $ 1,799,289 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sales of other real estate 5,000 Depreciation and amortization 513,000 423,000 Provision for losses on loans 75,000 52,500 Changes in assets and liabilities: Accrued interest receivable 167,579 (307,938) Other assets 719,545 (168,241) Accrued interest payable 66,657 (142,827) Other liabilities 56,951 970,080 ------------ ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 3,008,331 2,625,863 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities and calls of held to 43,995,000 16,000,000 maturity securities Investment in held to maturity securities (38,788,661) (20,763,670) Proceeds from maturities, sales and calls of 10,036,625 123,486 available for sale securities Investment in available for sale securities (34,097,243) (6,912,948) Investment in Federal Home Loan Bank (161,300) Proceeds from sales of other real estate 47,000 Loans, net (increase) decrease 8,008,824 (17,154,080) Acquisition of premises and equipment (849,513) (894,836) Federal funds sold (4,800,000) Other assets 368,830 (2,108,804) ------------ ------------ NET CASH USED IN INVESTING ACTIVITIES $(16,240,438) $(31,710,852) ------------ ------------
Page 8 of 19 9 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited)
For the Quarters Ended March 31, 2001 2000 - -------------------------------- ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Demand and savings deposits, net increase $ 31,028,020 $ 41,929,269 Time deposits, net increase (decrease) 12,691,358 (16,406,828) Principal payments on notes (3,497) (3,435) Borrowings from Federal Home Loan Bank (18,000,826) Retirement of common stock (2,602,754) Cash dividends (621,928) (590,534) Federal funds purchased and securities sold under agreements to repurchase, net increase (decrease) (6,905,985) 1,787,041 ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 15,584,388 26,715,513 ------------ ------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,352,281 (2,369,476) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 35,145,868 35,540,978 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 37,498,149 $ 33,171,502 ============ ============
See Selected Notes to Consolidated Financial Statements. Page 9 of 19 10 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Quarters Ended March 31, 2001 and 2000 1. The accompanying unaudited consolidated financial statements have been prepared with the accounting policies in effect as of December 31, 2000 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 quarter ended March 31, 2001, are not necessarily indicative of the results to be expected for the full year. Per share data is based on the weighted average shares of common stock outstanding of 5,642,423 and 5,905,344 for the quarters ended March 31, 2001 and 2000, respectively. 3. At March 31, 2001 and 2000, the total recorded investment in impaired loans, for which there was no related allowance for loan losses, amounted to $2,487,000 and $131,000, respectively. The amount of interest not accrued on these loans did not have a significant effect on earnings for the quarters ended March 31, 2001 and 2000. 4. Transactions in the allowance for loan losses were as follows: Balance, January 1, 2001 $4,567,565 Provision for loan losses 75,000 Recoveries 137,672 Loans charged off (86,354) ----------- Balance, March 31, 2001 $4,693,883 ==========
5. The Company has defined cash and cash equivalents to include cash and due from banks. The Company paid $5,496,000 and $4,105,000 for the quarters ended March 31, 2001 and 2000, respectively, for interest on deposits and borrowings. No income tax payments were made during the quarters ended March 31, 2001 and 2000. Loans transferred to other real estate amounted to $670,000 for the quarter ended March 31, 2001. No loans were transferred to other real estate during the quarter ended March 31, 2000. After receiving regulatory approval, the Company transferred property with a book value of $19,000 from ORE into banking premises during the quarter ended March 31, 2000. The income tax effect on the accumulated other comprehensive income was $281,000 and $(16,000) at March 31, 2001 and 2000, respectively. 6. Certain reclassifications, which had no effect on prior year net income, have been made to the prior period statements to conform to current year presentation. Page 10 of 19 11 Independent Accountants' Review Report Board of Directors Peoples Financial Corporation Biloxi, Mississippi We have reviewed the accompanying consolidated balance sheets - Securities and Exchange Commission Form 10-Q of Peoples Financial Corporation as of March 31, 2001, March 31, 2000 and December 31, 2000, and the related consolidated statements of income, retained earnings, and cash flows - Securities and Exchange Commission Form 10-Q, for the three months ended March 31, 2001 and March 31, 2000, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of management of Peoples Financial Corporation. A review consists principally of inquires of Company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with Securities and Exchange Commission instructions for Form 10-Q and Rule 10-01 of Regulations S-X. /s/ Piltz, Williams, LaRosa & Co. PILTZ, WILLIAMS, LAROSA & Co. April 19, 2001 Biloxi, Mississippi Page 11 of 19 12 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, 2001 and 2000. 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. FORWARD-LOOKING INFORMATION Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about a company's anticipated future financial performance. This act provides a safe harbor for such disclosure which protects the companies from unwarranted litigation if actual results are different from management expectations. This report contains forward-looking statements and reflects industry conditions, company performance and financial results. These forward-looking statements are subject to a number of factors and uncertainties which could cause the Company's actual results and experience to differ from the anticipated results and expectations expressed in such forward-looking statements. OVERVIEW During the first quarter of 2001, the Company continued to enjoy steady loan demand and asset growth. The most significant development during this time period is the increase in cost of funds, particularly certificates of deposit. The Company began utilizing brokered certificates to manage its liquidity position, however these funds bear interest at a higher rate of interest than more traditional sources of funds. At the same time, the rate of interest earned on loans has slightly decreased. The result of these two factors is a decrease in the net interest margin for the first quarter of 2001. The Company hopes to reverse this negative trend during the second quarter of 2001 by more favorable repricing of funds. The following schedule compares financial highlights for the quarters ended March 31, 2001 and 2000:
For the quarters ended March 31, 2001 2000 - -------------------------------- ---- ---- Net income per share $ 0.25 $ 0.30 Book value per share $ 13.86 $ 13.37 Return on average total assets .94% 1.29% Return on average shareholders' equity 7.17% 9.19% Allowance for loan losses as a % of loans, net of unearned discount 1.27% 1.20%
Page 12 of 19 13 FINANCIAL CONDITION HELD TO MATURITY SECURITIES Held to maturity securities decreased $27,191,000 at March 31, 2001, compared with March 31, 2000, as a result of the management of the Company's liquidity position. As funds were available from the maturity of these securities, they were generally invested in short term U. S. Government Agency securities, which have been classified as available for sale. Gross unrealized gains for held to maturity securities were $647,000 and $185,000 and gross unrealized losses for held to maturity securities were $26,000 and $1,983,000 at March 31, 2001 and 2000, respectively. The following schedule reflects the mix of the held to maturity investment portfolio at March 31, 2001 and 2000:
March 31, 2001 2000 - --------- --------------------------- --------------------------- Amount % Amount % ------------ ------------ ------------ ------------ U. S. Treasury $ 48,594,761 52.30% $ 56,473,450 47.00% U. S. Government agencies 38,375,992 41.30% 57,300,141 47.70% States and political subdivisions 5,874,863 6.40% 6,262,869 5.30% ------------ ------------ ------------ ------------ Totals $ 92,845,616 100.00% $120,036,460 100.00% ============ ============ ============ ============
AVAILABLE FOR SALE SECURITIES Available for sale securities increased $33,236,000 at March 31, 2001, compared with March 31, 2000, in the management of the Company's liquidity position, as discussed above. Gross unrealized gains were $1,724,000 and $943,000 and gross unrealized losses were $21,000 and $1,163,000 at March 31, 2001 and 2000, respectively. The following schedule reflects the mix of available for sale securities at March 31, 2001 and 2000:
March 31, 2001 2000 - --------- ------------------------- ------------------------- Amount % Amount % ----------- ----------- ----------- ----------- U. S. Treasury $ 6,125,010 8.40% $ 6,771,560 17.00% U. S. Government agencies 56,930,351 77.90% 24,813,394 62.30% States and political subdivisions 5,006,812 6.90% 3,611,601 9.10% Other securities 4,988,863 6.80% 4,618,963 11.60% ----------- ----------- ----------- ----------- Totals $73,051,036 100.00% $39,815,518 100.00% =========== =========== =========== ===========
Page 13 of 19 14 FEDERAL FUNDS SOLD Federal funds sold were $4,800,000 at March 31, 2001, as a direct result of the management of the bank subsidiary's liquidity position. LOANS Loans increased $19,361,000 at March 31, 2001, as compared with March 31, 2000, as a result of the increase in loan demand in the Company's trade area during the last 30 months. The Company anticipates that this demand will remain steady throughout 2001. OTHER REAL ESTATE Other real estate increased $1,604,000 at March 31, 2001, as compared with March 31, 2000, due to the foreclosure of several parcels of commercial real estate during the fourth quarter of 2000 and the first quarter of 2001. OTHER ASSETS Other assets increased $642,000 at March 31, 2001, as compared with March 31, 2000, due to an income tax benefit due to the Company. DEPOSITS Total deposits increased $37,240,000 at March 31, 2001, as compared with March 31, 2000. Significant increases or decreases in total deposits and/or significant fluctuations among the different types of 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 and classification of investment maturities and using other funding sources and their maturity so as to achieve appropriate liquidity. Specifically, the Company obtained brokered deposits of $30,000,000 during the third quarter of 2000. FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE Federal funds purchased and securities sold under agreements to repurchase decreased $4,188,000 at March 31, 2001, as compared with March 31, 2000, as the result of the management of the Company's liquidity position and the reallocation of funds by certain customers between deposit products and non-deposit products. BORROWINGS FROM FEDERAL HOME LOAN BANK The Company acquired funds from the Federal Home Loan Bank in the management of its liquidity position. 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 13.78% at March 31, 2001, as compared with 14.92% at March 31, 2000. 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. Page 14 of 19 15 RESULTS OF OPERATIONS NET INTEREST INCOME Net interest income, the amount by which interest income on loans, investments and other interest earning assets exceeds interest expense on deposits and other borrowed funds, is the single largest component of the Company's income. Management's objective is to provide the largest possible amount of income while balancing interest rate, credit, liquidity and capital risk. Net interest income decreased $909,000 for the first quarter of 2001 as compared with the first quarter of 2000. Total interest income increased $691,000 for the quarter ended March 31, 2001, as compared with the quarter ended March 31, 2000. Total interest expense increased $1,600,000 for the quarter ended March 31, 2001, as compared with the quarter ended March 31, 2000. The following schedule summarizes net interest earnings and net yield on interest earning assets: Net Interest Earnings and Net Yield on Interest Earning Assets
Quarters Ended March 31, (In thousands, except percentages) 2001 2000 - ------------------------------ ------- ------- Total interest income (1) $10,656 $ 9,964 Total interest expense 5,563 3,963 ------- ------- Net interest earnings $ 5,093 $ 6,001 ======= ======= Net yield on interest earning assets 3.82% 4.82% ======= =======
(1) All interest earned is reported on a taxable equivalent basis using a tax rate of 34% in 2001 and 2000. The schedule on page 16 provides an analysis of the change in total interest income and total interest expense for the quarters ended March 31, 2001 and 2000. Changes in interest income are generally attributable to changes in volume related to interest-earning assets. Changes in interest expense, while impacted by changes in volume related to interest-bearing liabilities, were heavily impacted by the increase in the cost of funds during these time periods. Page 15 of 19 16 Analysis of Changes in Interest Income and Interest Expense (In Thousands)
Attributable To: ------------------------------- For the For the Quarter Quarter Ended Ended Increase Rate/ March 31, 2001 March 31, 2000 (Decrease) Volume Rate Volume -------------- -------------- ---------- -------- -------- -------- INTEREST INCOME: (1) Loans(2)(3) $ 8,136 $ 7,609 $ 527 $ 772 $ (223) $ (22) Federal funds sold 30 30 2 (1) (1) Held to maturity: Taxable 1,338 1,641 (303) (289) (17) 3 Non-taxable 127 135 (8) (6) (2) Available for sale: Taxable 718 432 286 300 (8) (6) Non-taxable 84 72 12 26 (10) (4) Other 223 45 178 3 166 9 ------- ------- ------- ------- ------- ------- Total $10,656 $ 9,964 $ 692 $ 808 $ (95) $ (21) ======= ======= ======= ======= ======= ======= INTEREST EXPENSE: Savings and demand, interest bearing $ 1,342 $ 1,346 $ (4) $ (202) 233 (35) Time deposits 3,363 2,017 1,346 776 412 158 Federal funds purchased and securities sold under agreements to repurchase 724 598 126 120 5 1 Borrowings from FHLB 132 132 132 Mortgage indebtedness 2 2 1 (1) ------- ------- ------- ------- ------- ------- Total $ 5,563 $ 3,963 $ 1,600 $ 827 $ 649 $ 124 ======= ======= ======= ======= ======= =======
(1) All interest earned is reported on a taxable equivalent basis using a tax rate of 34% in 2001 and 2000. (2) Loan fees are included in these figures. (3) Includes nonaccrual loans. Page 16 of 19 17 PROVISION FOR LOAN LOSSES Management continuously monitors the Company's relationships with its loan customers, especially those in concentrated industries such as seafood, gaming and hotel/motel, and their direct and indirect impact on its operations. A thorough analysis of current economic conditions and the quality of the loan portfolio are conducted on a quarterly basis. These analyses are utilized in the computation of the adequacy of the allowance for loan losses. Based on these analyses, the Company is providing for loan losses on a monthly basis and expects to continue to do so throughout 2001. SERVICE CHARGES ON DEPOSITS ACCOUNTS Service charges on deposit accounts increased $194,000 for the quarter ended March 31, 2001, as compared with the quarter ended March 31, 2000, as a result of an increase in fees charged for non-sufficient funds and other services. OTHER INCOME Other income increased $238,000 for the quarter ended March 31, 2001 as compared with the quarter ended March 31, 2000, primarily as a result of the gain realized on proceeds from whole life insurance owned by the bank subsidiary. LIQUIDITY Liquidity represents the Company's ability to adequately provide funds to satisfy demands from depositors, borrowers and other commitments by either converting assets to cash or accessing new or existing sources of funds. Management monitors these funds requirements in such a manner as to satisfy these demands and provide the maximum earnings on its earning assets. Deposits, payments of principal and interest on loans, proceeds from maturities of investment securities and earnings on investment securities are the principal sources of funds for the Company. As discussed previously, the Company has utilized non-traditional sources of funds including brokered certificates and borrowings from the Federal Home Loan Bank. These additional sources have allowed the Company to satisfy its liquidity needs. The Company will continue to utilize these sources of funds throughout 2001, as necessary. Page 17 of 19 18 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 11, 2001. (b) The following six directors were elected at the meeting to hold office for a term of one year:
Approve Disapprove ------- ---------- Drew Allen 4,351,551.6545 1,553.5584 William A. Barq 4,351,311.6545 1,553.5584 Andy Carpenter 4,349,661.6545 1,553.5584 Dan Magruder 4,351,551.6545 1,553.5584 Lyle M. Page 4,351,531.2521 1,553.5584 Chevis C. Swetman 4,349,661.5645 1,553.5584
Of the 5,643,504 shares eligible to vote, shares not voted amounted to 1,290,955.1925 and 116.9950 shares voted to abstain. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 23: Consent of Certified Public Accountants (b) Reports on Form 8-K None. Page 18 of 19 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 11, 2001 ------------------------------------- By: /s/ Chevis C. Swetman ------------------------------------- Chevis C. Swetman Chairman, President and Chief Executive Officer Date: May 11, 2001 ------------------------------------- By: /s/ Lauri A. Wood ------------------------------------- Lauri A. Wood Chief Financial Officer and Controller (principal financial and accounting officer) Page 19 of 19 20 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 23 Consent of Certified Public Accountants
EX-23 2 d86924ex23.txt CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS 1 Exhibit 23: Consent of Certified Public Accountants We consent to the use of our reports, dated April 19, 2001, in Form 10-Q filing of the Peoples Financial Corporation. /s/ Piltz, Williams, LaRosa & Co. PILTZ, WILLIAMS, LAROSA & CO. Biloxi, Mississippi May 10, 2001 -----END PRIVACY-ENHANCED MESSAGE-----