-----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, R0PgInS84epFQKmaXpBuvOHD6BixHMpdtGIdgGUeduPi0s7eZBNNWUsIfjYym3Mu N2qEdArexms/bRogtIq9Qg== 0000950134-01-508333.txt : 20020410 0000950134-01-508333.hdr.sgml : 20020410 ACCESSION NUMBER: 0000950134-01-508333 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 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: 1934 Act SEC FILE NUMBER: 001-12103 FILM NUMBER: 1782445 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 d91839e10-q.txt FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 2001 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 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 (I.R.S. Employer Identification No.) incorporation or organization) 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 October 31, 2001, there were 15,000,000 shares of $1 par value common stock authorized, and 5,626,039 shares issued and outstanding. Page 1 of 20 PART I FINANCIAL INFORMATION PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, December 31, and September 30, 2001 2000 2000 - -------------------------------------------- ------------ ------------ ------------ ASSETS Cash and due from banks $ 31,457,089 $ 35,145,868 $ 33,062,113 Held to maturity securities, market value of $58,143,000 - September 30, 2001; $97,946,000 - December 31, 2000; $100,965,000 - September 30, 2000 57,240,890 98,051,955 101,976,213 Available for sale securities, at market value 121,554,970 48,167,770 43,944,913 Federal Home Loan Bank Stock, at cost 1,853,500 1,647,300 1,647,300 Federal funds sold 13,950,000 Loans 347,611,178 377,485,768 368,010,640 Less: Unearned income 2,095 9,612 11,349 Allowance for loan losses 5,256,778 4,567,565 7,025,868 ------------ ------------ ------------ Loans, net 342,352,305 372,908,591 360,973,423 Bank premises and equipment, net of accumulated depreciation of $12,860,000 - September 30, 2001; $11,427,000 - December 31, 2000; and $11,017,000 - September 30, 2000 18,453,245 18,333,272 18,439,156 Other real estate 2,582,253 1,061,081 167,530 Accrued interest receivable 3,952,057 4,497,713 4,614,368 Other assets 5,418,671 7,430,384 6,480,163 ------------ ------------ ------------ TOTAL ASSETS $598,814,980 $587,243,934 $571,305,179 ============ ============ ============
Page 2 of 20 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued) (Unaudited)
September 30, December 31, and September 30, 2001 2000 2000 - --------------------------------------------- ------------- ------------- ------------- LIABILITIES & SHAREHOLDERS' EQUITY LIABILITIES: Deposits: Demand, non-interest bearing $ 74,287,930 $ 68,080,764 $ 75,826,785 Savings and demand, interest bearing 138,286,064 137,531,988 152,428,470 Time, $100,000 or more 143,283,793 126,353,164 118,660,031 Other time deposits 81,276,325 81,758,161 71,849,359 ------------- ------------- ------------- Total deposits 437,134,112 413,724,077 418,764,645 Accrued interest payable 1,013,575 1,028,564 876,751 Federal funds purchased and securities sold under agreements to repurchase 70,418,317 65,339,084 64,109,843 Borrowings from Federal Home Loan Bank 5,492,359 23,159,507 5,117,100 Notes payable 305,207 291,481 308,930 Other liabilities 5,117,405 4,984,364 3,692,554 ------------- ------------- ------------- TOTAL LIABILITIES 519,480,975 508,527,077 492,869,823 SHAREHOLDERS' EQUITY: Common Stock, $1 par value, 15,000,000 shares authorized, 5,626,039 shares issued and outstanding at September 30, 2001, 5,795,207 shares issued and outstanding at December 31, 2000 and 5,833,982 shares issued and outstanding at September 30, 2000 5,626,039 5,795,207 5,833,982 Surplus 65,780,254 65,780,254 65,780,254 Undivided profits 6,388,504 7,093,830 7,264,807 Unearned compensation (470,197) (535,840) (579,840) Accumulated other comprehensive income 2,009,405 583,406 136,153 ------------- ------------- ------------- TOTAL SHAREHOLDERS' EQUITY 79,334,005 78,716,857 78,435,356 ------------- ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 598,814,980 $ 587,243,934 $ 571,305,179 ============= ============= =============
See Selected Notes to Consolidated Financial Statements. Page 3 of 20 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
For The Quarters Ended September 30, For The Nine Months Ended September 30, ------------------------------------ --------------------------------------- 2001 2000 2001 2000 ------------ ------------ ------------ ------------ INTEREST INCOME: Interest and fees on loans $ 6,802,440 $ 8,658,054 $ 22,337,180 $ 24,487,327 Interest and dividends on securities: U. S. Treasury 376,268 673,368 1,677,024 2,382,342 U. S. Government agencies and corporations 1,517,564 1,306,913 4,303,118 3,750,681 States and political subdivisions 147,012 133,643 423,631 402,875 Other investments 68,973 62,320 383,667 158,351 Interest on federal funds sold 126,558 70,225 186,528 106,416 ------------ ------------ ------------ ------------ TOTAL INTEREST INCOME 9,038,815 10,904,523 29,311,148 31,287,992 ------------ ------------ ------------ ------------ INTEREST EXPENSE: Time deposits of $100,000 or more 1,817,369 1,969,185 5,993,470 4,216,428 Other deposits 1,941,726 2,393,239 6,738,245 6,790,690 Borrowing from Federal Home Loan Bank 87,080 247,445 337,655 673,959 Mortgage indebtedness 2,265 2,452 6,937 7,371 Federal funds purchased and securities sold under agreements to repurchase 537,536 787,688 1,853,958 2,208,066 ------------ ------------ ------------ ------------ TOTAL INTEREST EXPENSE 4,385,976 5,400,009 14,930,265 13,896,514 ------------ ------------ ------------ ------------ NET INTEREST INCOME 4,652,839 5,504,514 14,380,883 17,391,478 Provision for losses on loans 73,746 2,735,000 1,480,976 2,840,000 ------------ ------------ ------------ ------------ NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON LOANS 4,579,093 2,769,514 12,899,907 14,551,478 ------------ ------------ ------------ ------------ OTHER OPERATING INCOME: Trust department income and fees 249,880 206,921 745,747 689,000 Service charges on deposit accounts 1,659,283 1,339,990 4,627,142 3,858,776 Other service charges, commissions and fees 62,949 75,182 216,522 222,804 Gain on sale of securities 243,126 243,126 Other income 176,003 339,375 628,931 608,332 ------------ ------------ ------------ ------------ TOTAL OTHER OPERATING INCOME $ 2,391,241 $ 1,961,468 $ 6,461,468 $ 5,378,912 ------------ ------------ ------------ ------------
Page 4 of 20 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Continued) (Unaudited)
For The Quarters Ended September 30, For The Nine Months Ended September 30, ------------------------------------ --------------------------------------- 2001 2000 2001 2000 ------------ ------------ ------------ ------------ OTHER OPERATING EXPENSE: Salaries and employee benefits $ 2,574,594 $ 2,629,269 $ 8,088,372 $ 7,913,925 Net occupancy 328,153 329,009 905,744 832,606 Equipment rentals, depreciation and maintenance 673,292 769,114 2,066,120 2,069,090 Other expense 1,515,689 1,314,660 4,547,481 3,962,812 ------------ ------------ ------------ ------------ TOTAL OTHER OPERATING EXPENSE 5,091,728 5,042,052 15,607,717 14,778,433 ------------ ------------ ------------ ------------ INCOME (LOSS) BEFORE INCOME TAXES 1,878,606 (311,070) 3,753,658 5,151,957 Income taxes (benefit) 576,000 (82,000) 1,163,999 1,685,500 ------------ ------------ ------------ ------------ NET INCOME (LOSS) $ 1,302,606 $ (229,070) $ 2,589,659 $ 3,466,457 ============ ============ ============ ============
See Selected Notes to Consolidated Financial Statements. Page 5 of 20 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
Accumu- Unearned lated Other Compre- Common Undivided Compensa- Comprehen- hensive # of Shares Stock Surplus Profits tion sive income Income Total ----------- ----------- ------------ ------------ ------------ ------------ ----------- ------------- Balance, January 1, 2000 5,905,344 $ 5,905,344 $ 65,759,086 $ 6,837,628 $ (624,842) $ (110,330) $ 77,766,886 Comprehen- sive Income: Net income 3,466,457 $ 3,466,457 3,466,457 Net unrealized gain on available for sale securities, net of tax 246,483 246,483 246,483 ----------- Total comprehen- sive income $ 3,712,940 =========== Purchase of shares by ESOP (83,068) (83,068) Allocation of ESOP shares 128,070 128,070 Retirement of stock (71,362) ( 71,362) 21,168 (1,803,850) (1,854,044) Cash dividends, ($.21 per share) (1,235,428) (1,235,428) ----------- ----------- ------------ ------------ ------------ ------------ ----------- ------------- Balance, September 30, 2000 5,833,982 $ 5,833,982 $ 65,780,254 $ 7,264,807 $ (579,840) $ 136,153 $ 78,435,356 =========== =========== ============ ============ ============ ============ =============
Page 6 of 20 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Continued) (Unaudited)
Accumu- Unearned lated Other Compre- Common Undivided Compensa- Comprehen- hensive # of Shares Stock Surplus Profits tion sive income Income Total ----------- ----------- ------------ ------------ ------------ ------------ ----------- ------------- Balance, January 1, 2001 5,795,207 $ 5,795,207 $ 65,780,254 $ 7,093,830 $ (535,840) $ 583,406 $ 78,716,857 Comprehen- sive Income: Net income 2,589,659 $ 2,589,659 2,589,659 Net unrealized gain on available for sale securities, net of tax 1,578,929 1,578,929 1,578,929 Reclassifica- tion adjustment for available for sale securities sold in current year, net of tax (152,930) (152,930) (152,930) ----------- Total comprehensive income $ 4,015,658 =========== Purchase of common shares (45,357) (45,357) Allocation of ESOP shares 111,000 111,000 Retirement of stock (176,054) (176,054) (2,728,239) (2,904,293) Issuance of stock 6,886 6,886 93,097 99,983 Effect of stock retirement on accrued dividends 15,545 15,545 Cash dividends, ($.12 per share) (675,388) (675,388) ----------- ----------- ------------ ------------ ------------ ------------ ------------- Balance, September 30, 2001 5,626,039 $ 5,626,039 $ 65,780,254 $ 6,388,504 $ (470,197) $ 2,009,405 $ 79,334,005 =========== =========== ============ ============ ============ ============ =============
See Selected Notes to Consolidated Financial Statements. Page 7 of 20 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For The Nine Months Ended September 30, 2001 2000 - --------------------------------------- ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,589,659 $ 3,466,457 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sales of other real estate (36,932) Gain on sales of available for sale securities (243,126) Stock incentive plan 99,983 Gain on sale of bank premises (317,690) Depreciation and amortization 1,434,000 1,359,000 Provision for losses on loans 1,480,976 2,840,000 Provision for losses on other real estate 475,455 1,677 Changes in assets and liabilities: Accrued interest receivable 545,656 (828,745) Other assets 1,341,255 (413,739) Accrued interest payable (14,989) 107,808 Other liabilities 42,383 (83,502) ------------- ------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 7,714,320 6,131,266 ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities and calls of held to maturity securities 120,620,000 48,600,000 Investment in held to maturity securities (79,808,935) (35,303,423) Proceeds from maturities, sales and calls of available for sale securities 37,276,932 172,294 Investment in available for sale securities (108,266,877) (10,666,739) Investment in Federal Home Loan Bank stock (206,200) Loans made 26,912,165 (35,646,144) Proceeds from sale of bank premises 469,065 Acquisition of premises and equipment (1,553,973) (2,969,111) Proceeds from sales of other real estate 293,451 Federal funds sold (13,950,000) Other assets 670,458 (2,643,158) ------------- ------------- NET CASH USED IN INVESTING ACTIVITIES $ (18,012,979) $ (37,987,216) ------------- -------------
Page 8 of 20 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited)
For The Nine Months Ended September 30, 2001 2000 - --------------------------------------- ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Demand and savings deposits, net increase (decrease) $ 6,961,242 $(10,330,612) Time deposits, net increase 16,448,793 34,414,100 Principal payments on notes (10,631) (10,197) Cash dividends (1,297,316) (1,235,428) Retirement of stock (2,904,293) (1,854,044) Federal funds purchased and securities sold under agreements to repurchase 5,079,233 3,276,166 Borrowings from Federal Home Loan Bank (17,667,148) 5,117,100 ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 6,609,880 29,377,085 ------------ ------------ NET DECREASE IN CASH AND CASH EQUIVALENTS (3,688,779) (2,478,865) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 35,145,868 35,540,978 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 31,457,089 $ 33,062,113 ============ ============
See Selected Notes to Consolidated Financial Statements. Page 9 of 20 PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 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. The statements include information required for interim financial statements. 2. The results of operations for the nine months ended September 30, 2001 and 2000, 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 5,632,169 and 5,874,958 for the nine months ended September 30, 2001 and 2000, respectively. 4. At September 30, 2001 and 2000, the total recorded investment in impaired loans amounted to $1,237,000 and $8,720,000. The amount of that recorded investment in impaired loans for which there was no related allowance for loan losses was $1,237,000 and $8,720,000 at September 30, 2001 and 2000, respectively. Interest not accrued on these loans did not have a significant effect on earnings for the nine months ended September 30, 2001 and 2000. 5. Transactions in the allowance for loan losses were as follows:
For the Nine For the Year For the Nine Months Ended Ended Months Ended September 30, December 31, September 30, 2001 2000 2000 ------------- ------------ ------------- Balance, beginning of period $ 4,567,565 $ 4,338,149 $ 4,338,149 Recoveries 385,019 698,382 227,928 Loans charged off (1,176,782) (4,660,666) (380,209) Provision for loan losses 1,480,976 4,191,700 2,840,000 ------------- ------------ ------------- Balance, end of period $ 5,256,778 $ 4,567,565 $ 7,025,868 ============= ============ =============
6. The Company has defined cash and cash equivalents to include cash and due from banks. The Company paid $14,945,254 and $13,788,706 for the nine months ended September 30, 2001 and 2000, respectively, for interest on deposits and borrowings. Income tax payments totaled $1,117,000 Page 10 of 20 and $2,590,000 for the nine months ended September 30, 2001 and 2000, respectively. Loans transferred to other real estate amounted to $2,253,000 and $94,000 for the nine months ended September 30, 2001 and 2000, respectively. After receiving regulatory approval, the Company transferred property with a book value of $19,000 from ORE to banking premises during the nine months ended September 30, 2000. The income tax effect on the accumulated other comprehensive income was $735,000 and $127,000 at September 30, 2001 and 2000, respectively. Page 11 of 20 Independent Accountants' Review Report Board of Directors Peoples Financial Corporation Biloxi, Mississippi We have reviewed the accompanying consolidated balance sheets of Peoples Financial Corporation as of September 30, 2001, September 30, 2000 and December 31, 2000, and the related consolidated statements of income, shareholders' equity, and cash flows for the nine months ended September 30, 2001 and September 30, 2000. These financial statements are the representation of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. 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 generally accepted accounting principles for interim financial statements. /s/ Piltz, Williams, LaRosa & Co. PILTZ, WILLIAMS, LAROSA & CO. November 7, 2001 Biloxi, Mississippi Page 12 of 20 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations The following presents Management's discussion and analysis of the consolidated financial condition and results of operations of Peoples Financial Corporation and Subsidiaries (the Company) for the nine months ended September 30, 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 Net income for the nine months ended September 30, 2001, was $2,590,000 compared with $3,466,000 for the same period in 2000. This decrease is largely attributable to the negative trends in interest rates, particularly in 2001. Specifically, interest rates on loans have decreased rapidly while interest rates paid on deposits, especially large certificates of deposits, have not changed significantly. During the nine months ended September 30, 2001, the Company had writedowns on its other real estate of $475,000. The following schedule compares financial highlights for the nine months ended September 30, 2001 and 2000:
For the nine months ended September 30, 2001 2000 - --------------------------------------- -------- -------- Net income per share $ 0.46 $ 0.59 Book value per share $ 14.10 $ 13.44 Return on average total assets .58% .82% Return on average shareholders' equity 4.37% 5.92% Allowance for loan losses as a % of loans, net of unearned discount 1.51% 1.91%
Page 13 of 20 FINANCIAL CONDITION HELD TO MATURITY SECURITIES Held to maturity securities decreased $44,735,000 at September 30, 2001, as compared with September 30, 2000, as a result of the management of the Company's liquidity position. Funds available from the maturity of these securities were generally invested in available for sale securities. Gross unrealized gains for held to maturity securities were $933,000 and $196,000 and gross unrealized losses for held to maturity securities were $31,000 and $1,207,000 at September 30, 2001 and 2000, respectively. The following schedule reflects the mix of the held to maturity investment portfolio at September 30, 2001 and 2000:
September 30, 2001 2000 - ------------- -------------------- -------------------- Amount % Amount % ------------ ----- ------------ ----- U. S. Treasury securities $ 33,834,690 59% $ 33,694,770 33% U. S. Government agencies 17,663,440 31% 62,127,942 61% States and political subdivisions 5,742,760 10% 6,153,501 6% ------------ ----- ------------ ----- Totals $ 57,240,890 100% $101,976,213 100% ============ ===== ============ =====
AVAILABLE FOR SALE SECURITIES Available for sale securities increased $77,610,000 at September 30, 2001, as compared with September 30, 2000, as the result of the management of the Company's liquidity position, as discussed above. Gross unrealized gains were $3,035,000 and $1,030,000 at September 30, 2001 and 2000, respectively, and gross unrealized losses were $825,000 at September 30, 2000. The following schedule reflects the mix of available for sale securities at September 30, 2001 and 2000:
September 30, 2001 2000 - ------------- -------------------- -------------------- Amount % Amount % ------------ ----- ------------ ----- U. S. Treasury securities $ 6,222,950 5% $ 6,860,020 16% U. S. Government agencies 109,407,092 90% 28,012,446 64% States and political subdivisions 945,000 1% 4,203,585 9% Other securities 4,979,928 4% 4,868,862 11% ------------ ----- ------------ ----- Totals $121,554,970 100% $ 43,944,913 100% ============ ===== ============ =====
Page 14 of 20 FEDERAL FUNDS SOLD Federal funds sold were $13,950,000 at September 30, 2001 as direct result of the management of the bank subsidiary's liquidity position. LOANS Loans decreased $20,399,000 at September 30, 2001, as compared with September 30, 2000, as a result of the decreased loan demand in the Company's trade area. This decreased demand is the result of the softening of the local economy. In addition, a number of customers paid off several large credits during the second and third quarters of 2001. The Company anticipates that loan demand will be moderate throughout the remainder of 2001. OTHER REAL ESTATE Other real estate increased $2,415,000 at September 30,2001 as compared with September 30, 2000, due to the foreclosure of several parcels of commercial real estate during the fourth quarter of 2000 and the first two quarters of 2001. The Company is actively marketing these foreclosed assets. ACCRUED INTEREST RECEIVABLE Accrued interest receivable decreased $662,000 at September 30, 2001, as compared with September 30, 2000, as a result of the decline in interest rates earned on loans and investments in 2001. OTHER ASSETS Other assets decreased $1,601,000 at September 30, 2001, as compared with September 30, 2000, due to the completion of a transaction for which a receivable had been booked and the redemption of whole life insurance relating to deferred compensation for officers no longer with the Company. DEPOSITS Significant increases or decreases in total deposits or significant fluctuations among the different types of deposits are anticipated by Management as customers in the casino industry and county and municipal areas reallocate their resources periodically. As discussed above, the Company has managed its funds including planning the timing of investment maturities so as to achieve appropriate liquidity. Beginning with the third quarter of 2000, the Company has acquired brokered certificates of deposit in the management of the bank subsidiary's liquidity position. FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE Federal funds purchased and securities sold under agreements to repurchase increased $6,308,000 at September 30, 2001, as compared with September 30, 2000. This increase is due to the liquidity needs of the bank subsidiary and periodic reallocation by customers of their non-deposit accounts. BORROWINGS FROM FEDERAL HOME LOAN BANK The Company borrowed from the Federal Home Loan Bank in the management of its liquidity position. OTHER LIABILITIES Other liabilities increased $1,425,000 at September 30, 2001, as compared with September 30, 2000 as a result of the increase in deferred taxes on unrealized gains on securities and an increase in liabilities relating to deferred compensation benefits as a result of the decrease in interest rates. Page 15 of 20 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 14.14 % at September 30, 2001, as compared with 15.25% at September 30, 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. On May 23, 2001, the Company's Board of Directors approved a stock incentive program for two executive officers. Under this plan, whole shares valued as of the distribution date at $50,000 are to be distributed to each of these officers who continue to meet the eligibility requirements on June 15, 2001, and on January 15 of the four succeeding years. On June 15, 2001, a total of 6,886 shares of Peoples Financial Corporation common stock was issued. This incentive program was established subsequent to the surrender of split dollar policies that had been obtained on behalf of these executives. On June 27, 2001, the Company's Board of Directors approved a semi-annual dividend of $ .12 per share. The dividend has a record date of July 9, 2001 and a distribution date of July 16, 2001. 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. The following schedule summarizes net interest earnings and net yield on interest earning assets: Net Interest Earnings and Net Yield on Interest Earning Assets
Nine Months Ended September 30, (In thousands, except percentages) 2001 2000 - ----------------------------------- -------- -------- Total interest income(1) $ 29,529 $ 31,494 Total interest expense 14,930 13,897 -------- -------- Net interest earnings $ 14,599 $ 17,597 ======== ======== Net yield on interest earning assets 3.65% 4.98% ======== ========
(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 17 provides an analysis of the change in total interest income and total interest expense for the nine months ended September 30, 2001 and 2000. Page 16 of 20 Analysis of Changes in Interest Income and Interest Expense (In Thousands)
Attributable To: ----------------------------- For the Nine For the Nine Months Ended Months Ended September September Increase Rate/ 30, 2001 30, 2000 (Decrease) Volume Rate Volume ------------ ------------ ---------- ------- ------- ------- INTEREST INCOME:(1) Loans(2) $ 22,337 $ 24,487 $ (2,150) $ 544 $(2,635) $ (59) Federal funds sold 187 106 81 217 (45) (91) Held to maturity: Taxable securities 3,014 4,654 (1,640) (1,407) (333) 100 Non-taxable securities 407 392 15 (23) 40 (2) Available for sale: Taxable securities 2,966 1,479 1,487 1,971 (207) (277) Non-taxable securities 234 218 16 30 (12) (2) Other securities 384 158 226 5 214 7 ------------ ------------ ---------- ------- ------- ------- Total $ 29,529 $ 31,494 $ (1,965) $ 1,337 $(2,978) $ (324) ============ ============ ========== ======= ======= ======= INTEREST EXPENSE: Savings and negotiable interest bearing deposits $ 3,355 $ 3,962 $ (607) $ (397) $ (233) $ 23 Time deposits 9,376 7,046 2,330 2,335 (1) (4) Borrowings from FHLB 338 674 (336) (301) (64) 29 Federal funds purchased and securities sold under agreements to repurchase 1,854 2,208 (354) 21 (371) (4) Mortgage indebtedness 7 7 (1) 1 ------------ ------------ ---------- ------- ------- ------- Total $ 14,930 $ 13,897 $ 1,033 $ 1,657 $ (668) $ 44 ============ ============ ========== ======= ======= =======
(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. Includes nonaccrual loans. Page 17 of 20 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 using the latest available information. These analyses are utilized in the computation of the adequacy of the allowance for loan losses. A provision is charged to income on a monthly basis to absorb potential losses based on these analyses. During the second quarter of 2001, the Company identified negative events with respect to an overall softening of the economy and to specific credits which required a large increase to the Company's provision for loan losses. The provision for loan losses for the nine months ended September 30, 2001, was $1,481,000, of which $1,332,000 was provided during the second quarter. The Company believes that this action will provide funds to absorb potential losses. The Company will, however, make additional provisions as it considers necessary during the fourth quarter of 2001. GAIN ON SALE OF SECURITIES During the third quarter of 2001, the Company sold securities from its available for sale portfolio for a realized gain of $243,000, in the management of its liquidity position. OTHER EXPENSE Other expense increased $585,000 for the nine months ended September 30, 2001, as compared with the nine months ended September 30, 2000, primarily due to writedowns of other real estate of $475,000 during 2001. 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 of deposit 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 18 of 20 PART II OTHER INFORMATION ITEM 5 - OTHER INFORMATION On November 1, 2001, the Company filed notice with the Federal Deposit Insurance Corporation and the Mississippi Department of Banking and Consumer Finance indicating the intention to close its branch located at 186 Veterans Avenue in Biloxi, MS. Appropriate notices have been provided to customers. All lending and lobby service had previously been curtailed at this location on January 31, 2001. The effective date of the closure of this branch is January 31, 2002. On November 7, 2001, the Company received notice from the FDIC that it has no objection to the scheduled closing. 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 19 of 20 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: NOVEMBER 13, 2001 ------------------------------------- BY: /s/ CHEVIS C. SWETMAN ------------------------------------- CHEVIS C. SWETMAN CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER DATE: NOVEMBER 13, 2001 ------------------------------------- BY: /s/ LAURI A. WOOD ------------------------------------- LAURI A. WOOD CHIEF FINANCIAL OFFICER AND CONTROLLER (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER) Page 20 of 20 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 23 Consent of Certified Public Accountants
EX-23 3 d91839ex23.txt CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS EXHIBIT 23: CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS We consent to the use of our reports, dated November 7, 2001, in Form 10-Q filing of the Peoples Financial Corporation. /s/ PILTZ, WILLIAMS, LAROSA & CO. PILTZ, WILLIAMS, LAROSA & CO. BILOXI, MISSISSIPPI NOVEMBER 7, 2001 -----END PRIVACY-ENHANCED MESSAGE-----