Exhibit 13.2
Exhibit 13.2: Summary Report to Shareholder
DEAR SHAREHOLDERS,
In many ways, 2010 was a tale of two years.
The first half seemed promising, hopeful that the worst of the nation’s and our region’s economic woes were behind us. Our Company’s earnings began to recover and in fact increased over the first half of the prior year. Our Board of Directors felt confident enough that business conditions were beginning to normalize that they increased the semi-annual dividend on common stock 22% to $.11 per share.
However, the second half of 2010 provided a harsh reminder that the Great Recession was not over, regardless of what the statisticians claim. Fears of a “double dip” recession, a new financial regulatory scheme, the potential for tax increases in 2011, the BP oil disaster, the lack of strong direction from the Federal Reserve and the specter of deflation all combined to create an outlook of fear that created a summer of great discontent.
This combination punished our earnings in the second half of 2010. Third quarter earnings dropped to only $364,000. Fourth quarter earnings were worse, as we recorded a loss of $1,197,000 due mainly to a $3,065,000 provision for loan losses, the largest we have taken in a single quarter since Hurricane Katrina.
Our Board of Directors realized the need to reduce the second half dividend on common stock to $.09 per share, a painful decision but one that properly conserves capital. The latest reduction does not in any way change our commitment to sharing our earnings with our stockholders. I can assure you that when earnings increase, we will share those earnings with our stockholders as we have in the past.
The primary underlying cause of this recession is the collapse of the residential housing market. That recovery still lies ahead. As recently as late January, 2011, the Wall Street Journal’s latest report of housing market conditions showed price declines in all 28 metropolitan areas tracked during the fourth quarter 2010. In addition, the size of the year-to-year price declines was greater than the previous quarter in 25 of the 28 markets surveyed.
It would be comforting to think that our smaller Mississippi markets are immune from this contagion. In fact, our area is sharing the pain, although not to the extent of some of the former boom markets that are now busting spectacularly.
Since 2004, The Peoples Bank has acted as presenting sponsor of Cruisin’ The Coast, the largest single tourism event on the Mississippi Gulf Coast. In 2010, some 5,000 cars registered for the event, lifting Cruisin’ to pre-Katrina levels of participation. Each Wednesday of the week-long event features the Biloxi Block party, where the focus and music stages are set up in front of the bank’s Main Branch.
During 2010, our bank subsidiary charged off $8,291,000 in loans, half of which related to three relationships in residential development. Meanwhile, we added $6,845,000 to our loan loss reserves, directly reducing our net income.
Adding further pressure to our earnings is the lowest interest rate environment in history. When higher-paying securities in our portfolio come due or are called, they are replaced with similar issues that bear unnaturally low interest rates. We hear complaints from our own customers every day about how little they earn on their savings, and I can personally assure you that your bank feels that same pain.
Meanwhile, the uncertain economic outlook has caused businesses in our area to pull back from expansion. Facing high unemployment rates and declining home values, it is no surprise that consumers are reluctant to borrow. As a result, our loan volume, which had remained relatively stable through the recession, declined 11.85% in 2010 from the balance at the end of 2009.
Fortunately, our historically conservative philosophy of maintaining a strong foundation of capital has served us well and continues to do so. At the end of 2010, our primary capital reserve ratio stood at 12.96%, well in excess of what regulators demand today and nearly a half percent higher than the year before.
This recession has claimed a number of banks. Beyond the regularly reported failures of the week are the collateral casualties of great banking franchises that are disappearing because they could no longer stand on their own. We have seen that sad tale across the country, and we are now seeing it right here on the Mississippi Gulf Coast.
The Peoples Bank will not be one of the financial institutions to evaporate into banking history. As my father said many times, banks do not get strong because they are old;
they get old because they are strong. The Peoples Bank is built to survive times like these. We will succeed when the tide changes. And the tide will change. One thing we know for sure about recessions is that they eventually end.
We have maintained a focus for some time on reducing operating expenses. Our non-interest expenses, which essentially represent our operating expenses, decreased slightly in 2010 compared to 2009, largely by realizing savings in several areas such as compensation and benefits, advertising, dues and training.
Our commitment to our stockholders, to our brand and to our community remains unshaken. Although the economic environment is as difficult as any of us has seen, we have maintained our support to our local business and consumer community.
For instance, we have continued our role as presenting sponsor of Cruisin’ the Coast, the largest single tourism event of the year that in 2010 climbed back to the participation levels enjoyed before Katrina.
During the spring, we also hosted our annual Shred Day, a unique event on the Coast that invites residents to bring sensitive financial documents to be professionally shredded to help prevent fraud and identity theft. The program has been met with such enthusiasm that we expanded it to a second location in 2010.
As we have for several years, our branches served as drop-off locations for the annual Coats for Kids campaign to benefit less fortunate youth in our community during the holiday season. Earlier in the year, we offered our branches as drop-off locations to supplement the efforts of local Goodwill Industries.
Our employees remain equally committed to supporting our community. They have maintained their program of raising funds for local charities which they select each
For many years, employees of The Peoples Bank have selected local charities to receive funds that the employees generate themselves through a variety of events. In addition, the bank makes a corporate donation to each of the selected charities. The current economic downturn has not diminished the commitment by The Peoples Bank or its employees. In late 2010, bank CEO Chevis Swetman and Gertrude Newman, right, chair of the employee Charity Committee, presented a $5,000 check to Cindy Hanson, president of the Gulf Coast Down Syndrome Society and member Boe Collins.
Several employees of The Peoples Bank regularly volunteer at Biloxi’s Loaves and Fishes program. From left, Toni Ganucheau, Cassandra Nelson, Jackie Henson and Lauri Wood prepare meals to be distributed to disadvantaged residents and senior citizens in the area.
year. And the bank has maintained our support of that program with corporate gifts to those charities to launch our employee campaign.
Meanwhile, our managers have continued to donate their time and talents to the local business community. Executive vice president Wes Fulmer served as chairman of the Coast Chamber of Commerce during 2010, and Waveland branch manager/vice president Basil Kennedy was named Citizen of the Year by the Hancock Chamber of Commerce. In addition, senior vice president Ann Guice was recognized by the Biloxi Sun Herald in its annual selection of Outstanding Community Leaders.
These and so many other activities to benefit our community represent the soul of our brand. As we move into 2011, we celebrate 115 years of service to the Gulf Coast. Our roots are here. Our leaders are here. And we are here.
Our existence and ultimate success would not be possible without a dedicated, committed group of directors, managers and employees. They have endured the pain of frozen compensation, tighter expense control, increased regulatory burden. Yet throughout, they maintain a positive attitude that together we will all come though this long and difficult period stronger than before.
I thank them all, as I thank you for your trust in our efforts to protect and increase the value of your investment in this old and strong institution.
Sincerely yours,
Chevis C. Swetman
Chairman of the board
President & Chief Executive Officer
Chairman of the board
President & Chief Executive Officer
Source: Wall Street Journal, January 31, 2011
| Quarter Ended, 2010 | March 31 | June 30 | September 30 | December 31 | ||||||||||||
| Interest income | $ | 8,233 | $ | 7,791 | $ | 6,864 | $ | 6,787 | ||||||||
| Net interest income | 6,993 | 6,555 | 5,731 | 5,795 | ||||||||||||
| Provision for loan losses | 1,150 | 1,585 | 1,045 | 3,065 | ||||||||||||
| Income (loss) before income taxes | 1,046 | 1,968 | (33 | ) | (2,219 | ) | ||||||||||
| Net income (loss) | 871 | 1,446 | 364 | (1,196 | ) | |||||||||||
| Basic and diluted earnings per share | .17 | .28 | .07 | (.23 | ) | |||||||||||
| Quarter Ended, 2009 | March 31 | June 30 | September 30 | December 31 | ||||||||||||
| Interest income | $ | 8,568 | $ | 8,595 | $ | 8,671 | $ | 8,455 | ||||||||
| Net interest income | 6,274 | 6,569 | 7,019 | 7,026 | ||||||||||||
| Provision for loan losses | 348 | 1,502 | 1,875 | 1,500 | ||||||||||||
| Income before income taxes | 1,993 | 151 | 1,069 | 961 | ||||||||||||
| Net income | 1,703 | 201 | 974 | 342 | ||||||||||||
| Basic and diluted earnings per share | .33 | .04 | .19 | .06 | ||||||||||||
Market Information
The Company’s stock is traded under the symbol PFBX and is quoted in publications under “PplFnMS”. The following table sets forth the high and low sale prices of the Company’s common stock as reported on the NASDAQ Stock Market.
| Year | Quarter | High | Low | Dividend per share | ||||||||||||
| 2010 | 1st | $ | 23.12 | $ | 14.97 | $ | .12 | |||||||||
| 2nd | 16.47 | 10.50 | ||||||||||||||
| 3rd | 14.83 | 10.63 | .11 | |||||||||||||
| 4th | 15.62 | 12.42 | ||||||||||||||
| 2009 | 1st | $ | 20.00 | $ | 15.76 | $ | .30 | |||||||||
| 2nd | 21.49 | 16.00 | ||||||||||||||
| 3rd | 21.49 | 17.30 | .20 | |||||||||||||
| 4th | 21.39 | 15.35 | ||||||||||||||
| 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Balance Sheet Summary | ||||||||||||||||||||
| Total assets | $ | 786,545 | $ | 869,007 | $ | 896,408 | $ | 927,357 | $ | 964,023 | ||||||||||
| Available for sale securities | 287,078 | 311,434 | 340,642 | 386,029 | 396,907 | |||||||||||||||
| Held to maturity securities | 1,915 | 3,202 | 3,394 | 4,630 | 85,574 | |||||||||||||||
| Loans, net of unearned discount | 409,899 | 464,976 | 467,377 | 450,992 | 401,194 | |||||||||||||||
| Deposits | 484,140 | 470,701 | 510,476 | 569,130 | 613,170 | |||||||||||||||
| Borrowings from FHLB | 42,957 | 104,270 | 36,938 | 7,100 | 7,267 | |||||||||||||||
| Shareholders’ equity | 101,357 | 103,588 | 107,000 | 106,542 | 98,233 | |||||||||||||||
Summary of Operations | ||||||||||||||||||||
| Interest income | $ | 29,675 | $ | 34,289 | $ | 43,573 | $ | 55,971 | $ | 48,894 | ||||||||||
| Interest expense | 4,601 | 7,401 | 14,963 | 25,452 | 18,785 | |||||||||||||||
| Net interest income | 25,074 | 26,888 | 28,610 | 30,519 | 30,109 | |||||||||||||||
| Provision for loan losses | 6,845 | 5,225 | 2,347 | (1,045 | ) | 141 | ||||||||||||||
| Net interest income after provision for loan losses | 18,229 | 21,663 | 26,263 | 31,564 | 29,968 | |||||||||||||||
| Non-interest income | 10,114 | 10,147 | 7,268 | 9,767 | 12,309 | |||||||||||||||
| Non-interest expense | 27,581 | 27,636 | 26,520 | 25,263 | 23,050 | |||||||||||||||
| Income before taxes | 762 | 4,174 | 7,011 | 16,068 | 19,227 | |||||||||||||||
| Applicable income taxes | (723 | ) | 954 | 1,977 | 5,042 | 6,459 | ||||||||||||||
| Net income | $ | 1,485 | $ | 3,220 | $ | 5,034 | $ | 11,026 | $ | 12,768 | ||||||||||
Per Share Data | ||||||||||||||||||||
| Basic and diluted earnings per share | $ | .29 | $ | .62 | $ | .94 | $ | 2.01 | $ | 2.30 | ||||||||||
| Dividends per share | .20 | .50 | .56 | .52 | .44 | |||||||||||||||
| Book value | 19.68 | 20.11 | 20.27 | 19.56 | 17.71 | |||||||||||||||
| Weighted average number of shares | 5,151,661 | 5,170,430 | 5,342,470 | 5,489,861 | 5,548,300 | |||||||||||||||
Selected Ratios | ||||||||||||||||||||
| Return on average assets | .18% | .36% | .55% | 1.15% | 1.41% | |||||||||||||||
| Return on average equity | 1.45% | 3.06% | 4.73% | 10.77% | 13.75% | |||||||||||||||
| Primary capital to average assets | 12.96% | 12.49% | 12.81% | 12.13% | 11.91% | |||||||||||||||
| Risk-based capital ratios: | ||||||||||||||||||||
| Tier 1 | 21.01% | 17.83% | 18.03% | 18.38% | 19.87% | |||||||||||||||
| Total | 22.26% | 19.08% | 19.28% | 19.63% | 21.12% | |||||||||||||||
Main Office 152 Lameuse Street, Biloxi, Mississippi 39530 (228) 435-5511
Asset Management & Trust Services
758 Vieux Marché, Biloxi, MS 39530
(228) 435-8208
Bay St. Louis
408 Highway 90 East, Bay St. Louis, Mississippi 39520
(228) 467-9296
Cedar Lake
1740 Popps Ferry Road, Biloxi, Mississippi 39532
(228) 435-8688
Diamondhead
5429 West Aloha Drive, Diamondhead, Mississippi 39525
(228) 255-4450
D’Iberville-St. Martin
10491 Lemoyne Boulevard, D’Iberville, Mississippi 39540
(228) 435-8202
Downtown Gulfport
1105 30th Avenue, Gulfport, Mississippi 39501
(228) 897-8715
Gautier
2609 Highway 90, Gautier, Mississippi 39553
(228) 497-1766
Handsboro
412 E. Pass Road, Gulfport, Mississippi 39507
(228) 897-8717
Long Beach
298 Jeff Davis Avenue, Long Beach, Mississippi 39560
(228) 897-8712
Ocean Springs
2015 Bienville Boulevard, Ocean Springs, Mississippi 39564
(228) 435-8204
Orange Grove
12020 Highway 49 North, Gulfport, Mississippi 39503
(228) 897-8718
Pass Christian
301 East Second Street, Pass Christian, Mississippi 39571
(228) 897-8719
Saucier
17689 Second Street, Saucier, Mississippi 39574
(228) 897-8716
Waveland
470 Highway 90, Waveland, Mississippi 39576
(228) 467-7257
West Biloxi
2560 Pass Road, Biloxi, Mississippi 39531
(228) 435-8203
Wiggins
1312 S. Magnolia Drive, Wiggins, Mississippi 39577
(601) 928-1761 or (228) 897-8722
Corporate Office
Mailing Address
P. O. Box 529
Biloxi, MS 39533-0529
Physical Address
152 Lameuse Street
Biloxi, MS 39530
(228) 435-8205
Website
www.thepeoples.com
Corporate Stock
The common stock of Peoples Financial Corporation is traded
on the NASDAQ Capital Market under the symbol: PFBX.
on the NASDAQ Capital Market under the symbol: PFBX.
The current market makers are:
FIG Partners
FTN Midwest Research Secs.
Howe Barnes Hoefer & Arnett
Knight Equity Markets, L.P.
Morgan Keegan & Company, Inc.
Sterne, Agee & Leach, Inc.
Stifel Nicolaus & Co.
Shareholder Information
For complete information concerning the common stock of
Peoples Financial Corporation, including dividend reinvestment,
or general information about the Company, direct inquiries to
transfer agent/investor relations:
Peoples Financial Corporation, including dividend reinvestment,
or general information about the Company, direct inquiries to
transfer agent/investor relations:
Asset Management & Trust Services Department
The Peoples Bank, Biloxi, Mississippi
P. O. Box 1416, Biloxi, Mississippi 39533-1416
(228) 435-8208, e-mail: investorrelations@thepeoples.com
Independent Registered Public Accounting Firm
Porter Keadle Moore, LLP
Atlanta, Georgia
S.E.C. Form 10-K Requests
A copy of the Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission, may be obtained without
charge by directing a written request to:
Securities and Exchange Commission, may be obtained without
charge by directing a written request to:
Lauri A. Wood, Chief Financial Officer and Controller
Peoples Financial Corporation
P. O. Drawer 529, Biloxi, Mississippi 39533-0529
(228) 435-8412, e-mail: lwood@thepeoples.com
BOARD OF DIRECTORS
Peoples Financial Corporation
Chevis C. Swetman, Chairman of the Board
Dan Magruder, Vice-Chairman; President, Rex Distributing Co., Inc.
Drew Allen, President, Allen Beverages, Inc.
Rex E. Kelly, Principal, Strategic Communications
Lyle M. Page, Partner, Page, Mannino, Peresich & McDermott, PLLC
OFFICERS
Peoples Financial Corporation
Chevis C. Swetman, President and CEO
A. Wes Fulmer, Executive Vice-President
Thomas J. Sliman, First Vice-President
Jeannette E. Romero, Second Vice-President
Robert M. Tucei, Vice-President
Lauri A. Wood, Chief Financial Officer and Controller
Ann F. Guice, Vice-President and Secretary
J. Patrick Wild, Vice-President
BOARD OF DIRECTORS
The Peoples Bank, Biloxi, Mississippi
Chevis C. Swetman, Chairman of the Board
Tyrone J. Gollott, Vice-Chairman; President, G & W Enterprises, Inc.
Drew Allen, President, Allen Beverages, Inc.
Liz Corso Joachim, President, Frank P. Corso, Inc.
Rex E. Kelly, Principal, Strategic Communications
Dan Magruder, President, Rex Distributing Co., Inc.
Jeffrey H. O’Keefe, President, Bradford-O’Keefe Funeral Homes, Inc.
Lyle M. Page, Partner, Page, Mannino, Peresich & McDermott, PLLC
SENIOR MANAGEMENT
The Peoples Bank, Biloxi, Mississippi
Chevis C. Swetman, President and CEO
A. Wes Fulmer, Executive Vice-President
Thomas J. Sliman, Senior Vice-President
Jeannette E. Romero, Senior Vice-President
Robert M. Tucei, Senior Vice-President
Lauri A. Wood, Senior Vice-President and Cashier
Ann F. Guice, Senior Vice-President
J. Patrick Wild, Senior Vice-President
