SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
--------------------------------
Commission File Number 0-30050
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PEOPLES FINANCIAL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Mississippi 64-0709834
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
Lameuse and Howard Avenues, Biloxi, Mississippi 39533
-----------------------------------------------------
(Address of principal executive offices) (Zip code)
228-435-5511
----------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
------------------- ------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common, $1.00 Par Value
-------------------------
(Title of each class)
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 by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. X
---
Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Act). Yes No X
--- ---
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of June 30, 2002 was approximately $61,423,000.
On March 1, 2003 the registrant had outstanding 5,568,415 shares of common
stock, par value of $1.00 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the year ended
December 31, 2002 are incorporated by reference into Parts I, II and III of this
report. Portions of the Registrant's Definitive Proxy Statement issued in
connection with the Annual Meeting of Shareholders to be held April 23, 2003,
are incorporated by reference into Part III of this report.
Cover Page 1 of 1 Page
PART I
ITEM 1 - DESCRIPTION OF BUSINESS
THE REGISTRANT
Peoples Financial Corporation (the "Company") was established as a one bank
holding company on December 18, 1984. The Company is headquartered in Biloxi,
Mississippi. At December 31, 2002, the Company operated in the state of
Mississippi through its wholly-owned subsidiary, The Peoples Bank, Biloxi,
Mississippi ("the Bank"). The Company is now engaged, through this subsidiary,
in the banking business. The Bank is the Company's principal asset and primary
source of revenue.
NONBANK SUBSIDIARY
On August 22, 1985, PFC Service Corp. ("PFC") was chartered and began operations
as the second wholly-owned subsidiary of Peoples Financial Corporation on
October 3, 1985. The purpose of PFC was principally the leasing of automobiles
and equipment under direct financing and sales-type leases that expired in
various periods through 1993. PFC is inactive at this time.
THE BANK SUBSIDIARY
The Company's wholly-owned bank subsidiary is The Peoples Bank, which was
originally chartered in 1896 in Biloxi, Mississippi. The Bank is a state
chartered bank whose deposits are insured under the Federal Deposit Insurance
Act. The Bank is not a member of the Federal Reserve System. The legal name of
the Bank was changed to The Peoples Bank, Biloxi, Mississippi, during 1991.
The Bank currently offers a variety of loan and deposit services to individuals
and small to middle market businesses within its trade area. Deposit services
include interest bearing and non-interest bearing checking accounts, savings
accounts, certificates of deposit, and IRA accounts. The Bank also offers a
non-deposit funds management account, which is not insured by the FDIC. Loan
services include business, real estate, construction, personal and installment
loans, with an emphasis on commercial lending. The Bank also offers a variety of
other functions including collection services, asset management and trust
services, wire services, safe deposit box facilities, night drop facilities,
cash management, automated teller machines and Internet, or home, banking.
The Bank has a large number of customers acquired over a period of many years
and is not dependent upon a single customer or upon a few customers. The Bank
also provides services to customers representing a wide variety of industries
including seafood, retail, hospitality, gaming and construction. While the
Company has pursued external growth strategies on a limited basis, its primary
focus has been on internal growth by the Bank through the establishment of new
branch locations and an emphasis on strong customer relationships.
1
The Main Office, operations center and asset management and trust services of
the Bank are located in downtown Biloxi, MS. At December 31, 2002, the Bank also
had fourteen (14) branches located throughout Harrison, Hancock, Jackson and
Stone Counties. On January 29, 2003, the Bank opened a branch in Gautier, MS.
The Bank has automated teller machines ("ATM") at its Main Office, all branch
locations and at numerous non-proprietary locations.
At December 31, 2002, the Bank employed 203 full-time employees and 22 part-time
employees.
COMPETITION
The Bank is in direct competition with numerous local and regional commercial
banks as well as other non-bank institutions. Interest rates paid and charged on
deposits and loans are the primary competitive factors within the Bank's trade
area. The Bank also competes for deposits and loans with insurance companies,
finance companies and automobile finance companies. Recent legislation may
further impact the competitors in this trade area. The Bank intends to continue
its strategy of being a local, community bank offering traditional bank services
and providing quality service in its local trade area.
ASSET MANAGEMENT AND TRUST SERVICES
The Bank's Asset Management and Trust Services Department offers personal trust,
agencies and estate services including living and testamentary trusts,
executorships, guardianships, and conservatorships. Benefit accounts maintained
by the Department primarily include self-directed individual retirement
accounts. Escrow management, stock transfer and bond paying agency accounts are
available to corporate customers.
MISCELLANEOUS
The Bank holds no patents, licenses (other than licenses required to be obtained
from appropriate bank regulatory agencies), franchises or concessions. During
1994, the Bank obtained the rights to the registered trademark, "The Mint".
There has been no significant change in the kind of services offered by the Bank
during the last three fiscal years.
The Bank has not engaged in any research activities relating to the development
of new services or the improvement of existing services except in the normal
course of its business activities. The Bank presently has no plans for any new
line of business requiring the investment of a material amount of total assets.
Most of the Bank's business originates from within Harrison, Hancock, Stone and
Jackson Counties in Mississippi; however, some business is obtained from
Claiborne County and the other counties in southern Mississippi. There has been
no material effect upon the Bank's capital expenditures, earnings or competitive
position as a result of federal, state or local environmental regulations.
2
REGULATION AND SUPERVISION
The Company is required to file certain reports with, and otherwise comply with
the rules and regulations of, the Securities and Exchange Commission under
federal securities laws.
The Company is a registered one bank holding company under the Bank Holding
Company Act. As such, the Company is required to file periodic reports and such
additional information as the Federal Reserve may require. The Federal Reserve
Board may also make examinations of the Company and its subsidiaries. The Bank
Holding Company Act requires every bank holding company to obtain the prior
approval of the Federal Reserve Board before it may acquire substantially all
the assets of any bank or ownership or control of any voting shares of any bank
if, after the acquisition, it would own or control, directly or indirectly, more
than 5 percent of the voting shares of the bank.
A bank holding company is generally prohibited from engaging in, or acquiring
direct or indirect control of, voting shares of any company engaged in
non-banking activities. One of the principal exceptions to this prohibition is
for activities found by the Federal Reserve to be so closely related to banking
or the managing or controlling of banks as to be a proper incident thereto. Some
of the activities the Federal Reserve Board has determined by regulation to be
closely related to banking are the making and servicing of loans, performing
certain bookkeeping or data processing services, acting as fiduciary or
investment or financial advisor, making equity or debt investments in
corporations or projects designed primarily to promote community welfare,
leasing transactions if the functional equivalent of an extension of credit and
mortgage banking or brokerage.
A bank holding company and its subsidiaries are also prohibited from acquiring
any voting shares of or interest in, any banks located outside the state in
which the operations of the bank holding company's subsidiaries are located,
unless the acquisition is specially authorized by the statute of the state in
which the target is located. Mississippi has enacted legislation which
authorizes interstate acquisitions of banking organizations by bank holding
companies outside of Mississippi, and also interstate branching transactions,
subject to certain conditions and restrictions.
The Bank is subject to the regulation of and examination by the Mississippi
Department of Banking and Consumer Finance ("Department of Banking") and the
Federal Deposit Insurance Corporation ("FDIC"). Areas subject to regulation
include reserves, investments, loans, mergers, branching, issuance of
securities, payment of dividends, capital adequacy, management practices and all
other aspects of banking operations. In addition to regular examinations, the
Bank must furnish periodic reports to its regulatory authorities containing a
full and accurate statement of affairs. The Bank is subject to deposit insurance
assessments by the FDIC and the Department of Banking.
3
The earnings of commercial banks and bank holding companies are affected not
only by general economic conditions but also by the policies of various
governmental regulatory authorities, including the Federal Reserve Board. In
particular, the Federal Reserve Board regulates money and credit conditions, and
interest rates, primarily through open market operations in U. S. Government
securities, varying the discount rate of member and nonmember bank borrowing,
setting reserve requirements against bank deposits and regulating interest rates
payable by banks on certain deposits. These policies influence to a varying
extent the overall growth and distribution of bank loans, investments and
deposits and the interest rates charged on loans. The monetary policies of the
Federal Reserve Board have had a significant effect on the operating results of
commercial banks in the past and are expected to continue to do so in the
future.
RECENT REGULATION AND SUPERVISION LEGISLATION
During 1999, the Gramm-Leach-Bliley Act (the "Act") was signed into law. The Act
allows bank holding companies to engage in a wider range of financial
activities. In order to engage in such activities, which, among others, include
underwriting and selling insurance, providing financial, investment or economic
advisory services, and underwriting, dealing in or making a market in, services,
a bank holding company must elect to become a financial holding company. The Act
also authorized the establishment of financial subsidiaries in order to engage
in such financial activities, with certain limitations.
The Act also contains a number of other provisions affecting the Company's
operations . One of the most important of these provisions relates to the issue
of privacy. Federal banking regulators were authorized by the Act to adopt rules
designed to protect the financial privacy of consumers. These rules implemented
notice requirements and restrictions on a financial institution's ability to
disclose nonpublic personal information about consumers to non-affiliated third
parties.
As of the date of this Form 10-K, the Company has not taken any action to adopt
either the financial holding company or the financial subsidiary structures that
were authorized by the Act.
SUPPLEMENTAL STATISTICAL INFORMATION
Schedules I-A through VII present certain statistical information regarding the
Company. This information is not audited and should be read in conjunction with
the Company's Consolidated Financial Statements and Notes to Consolidated
Financial Statements found at pages 13 - 35 of the 2002 Annual Report to
Shareholders.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY AND INTEREST RATES
AND DIFFERENTIALS
Net Interest Income, the difference between Interest Income and Interest
Expense, is the most significant component of the Company's earnings. For
interest analytical purposes, Management adjusts Net Interest Income to a
"taxable equivalent" basis using a 34% Federal Income Tax rate on tax-exempt
items (primarily interest on municipal securities).
4
Another significant statistic in the analysis of Net Interest Income is the
effective interest differential, also called the net yield on earning assets.
The net yield is the difference between the rate of interest earned on earning
assets and the effective rate paid for all funds, non-interest bearing as well
as interest bearing. Since a portion of the Bank's deposits do not bear
interest, such as demand deposits, the rate paid for all funds is lower than the
rate on interest bearing liabilities alone.
Recognizing the importance of interest differential to total earnings,
Management places great emphasis on managing interest rate spreads. Although
interest differential is affected by national, regional and area economic
conditions, including the level of credit demand and interest rates, there are
significant opportunities to influence interest differential through appropriate
loan and investment policies which are designed to maximize the interest
differential while maintaining sufficient liquidity and availability of
"incremental funds" for purposes of meeting existing commitments and investment
in lending and investment opportunities that may arise.
The information included in Schedule I-F presents the change in interest income
and interest expense along with the reason(s) for these changes. The change
attributable to volume is computed as the change in volume times the old rate.
The change attributable to rate is computed as the change in rate times the old
volume. The change in rate/volume is computed as the change in rate times the
change in volume.
SUMMARY OF LOAN LOSS EXPERIENCE
In the normal course of business, the Bank assumes risks in extending credit.
The Bank manages these risks through its lending policies, loan review
procedures and the diversification of its loan portfolio. Although it is not
possible to predict loan losses with complete accuracy, Management constantly
reviews the characteristics of the loan portfolio to determine its overall risk
profile and quality.
Constant attention to the quality of the loan portfolio is achieved by the loan
review process. Throughout this ongoing process, Management is advised of the
condition of individual loans and of the quality profile of the entire loan
portfolio. Any loan or portion thereof which is classified "loss" by regulatory
examiners or which is determined by Management to be uncollectible because of
such factors as the borrower's failure to pay interest or principal, the
borrower's financial condition, economic conditions in the borrower's industry
or the inadequacy of underlying collateral, is charged-off.
Provisions are charged to operating expense based upon historical loss
experience, and additional amounts are provided when, in the opinion of
Management, such provisions are not adequate based upon the current factors
affecting loan collectibility.
5
The allocation of the allowance for loan losses by loan category is based on the
factors mentioned in the preceding paragraphs. Accordingly, since all of these
factors are subject to change, the allocation is not necessarily indicative of
the breakdown of future losses.
The comments concerning the provision for loan losses and the allowance for loan
losses presented in "Management's Discussion and Analysis" at pages 7 - 12 of
the 2002 Annual Report to Shareholders are incorporated herein by reference.
RETURN ON EQUITY AND ASSETS
The information under the captions "Five-Year Comparative Summary of Selected
Financial Information" on page 6 and "Management's Discussion and Analysis" on
pages 7 - 12 of the 2002 Annual Report are incorporated herein by reference.
DIVIDEND PAYOUT
<Table>
<Caption>
Years Ended December 31,
----------------------------------------
2002 2001 2000
-------------- ----------- ------------
Dividend payout ratio 42.11% 33.80% 26.58%
============== =========== ============
</Table>
6
SCHEDULE I-A
Distribution of Average Assets, Liabilities and Shareholders'
Equity for the Periods Indicated (2)
<Table>
<Caption>
Years Ended December 31, (In thousands) 2002 2001 2000
- ------------------------------------------------------------- ------------------ ----------------- -----------------
ASSETS:
Cash and due from financial institutions $ 34,560 $ 33,948 $ 32,843
Available for sale securities:
Taxable securities 141,296 86,590 32,535
Non-taxable securities 2,054 3,628 4,055
Other securities 6,511 6,747 6,505
Held to maturity securities:
Taxable securities 19,079 65,783 102,726
Non-taxable securities 5,058 5,829 6,206
Net loans (1) 319,023 353,316 354,794
Federal funds sold 11,677 5,595 1,860
Other assets 30,696 30,498 28,250
------------------ ----------------- -----------------
TOTAL ASSETS $ 569,954 $ 591,934 $ 569,774
================== ================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Non-interest bearing deposits $ 77,254 $ 69,375 $ 78,383
Interest bearing deposits 325,135 363,950 325,347
------------------ ----------------- -----------------
Total deposits 402,389 433,325 403,730
Federal funds purchased and securities sold under
agreements to repurchase 74,580 66,606 65,094
Other liabilities 12,631 13,560 18,778
------------------ ----------------- -----------------
Total liabilities 489,600 513,491 487,602
Shareholders' equity 80,354 78,443 82,172
------------------ ----------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 569,954 $ 591,934 $ 569,774
================== ================= =================
</Table>
(1) Gross loans and discounts, net of unearned income and allowance for loan
losses.
(2) All averages are computed on a daily basis with the exception of deposits,
which were computed on a monthly basis. Daily averages were not available
for deposits.
7
SCHEDULE I-B
Average (2) Amount Outstanding for Major Categories of Interest Earning Assets
and Interest Bearing Liabilities for the Periods Indicated
<Table>
<Caption>
Years Ended December 31, (In thousands) 2002 2001 2000
- ------------------------------------------------------------- ------------------ ----------------- ------------------
INTEREST EARNING ASSETS:
Loans (1) $ 324,757 $ 358,291 $ 359,624
Federal funds sold 11,677 5,595 1,860
Available for sale securities:
Taxable securities 141,296 86,590 32,535
Non-taxable securities 2,054 3,628 4,055
Other securities 6,511 6,747 6,505
Held to maturity securities:
Taxable securities 19,079 65,783 102,726
Non-taxable securities 5,058 5,829 6,206
------------------ ----------------- ------------------
TOTAL INTEREST EARNING ASSETS $ 510,432 $ 532,463 $ 513,511
================== ================= ==================
INTEREST BEARING LIABILITIES:
Savings and negotiable interest bearing deposits $ 153,867 $ 144,780 $ 148,252
Time deposits 171,268 219,170 177,095
Federal funds purchased and securities sold
under agreements to repurchase 74,580 66,606 65,094
Other borrowed funds 6,004 7,152 12,977
------------------ ----------------- ------------------
TOTAL INTEREST BEARING LIABILITIES $ 405,719 $ 437,708 $ 403,418
================== ================= ==================
</Table>
(1) Net of unearned income. Includes nonaccrual loans.
(2) All averages are computed on a daily basis with the exception of deposits,
which were computed on a monthly basis. Daily averages were not available
for deposits.
8
SCHEDULE I-C
Interest Earned or Paid on the Major Categories of Interest Earning Assets
and Interest Bearing Liabilities for the Periods Indicated
<Table>
<Caption>
Years Ended December 31, (In thousands) 2002 2001 2000
- ----------------------------------------------------- ----------------- ------------------ ------------------
INTEREST EARNED ON:
Loans (2) $ 20,061 $ 28,174 $ 33,263
Federal funds sold 196 204 116
Available for sale securities:
Taxable securities 5,658 4,407 2,047
Non-taxable securities 113 243 311
Other securities 257 446 204
Held to maturity securities:
Taxable securities 900 3,540 6,081
Non-taxable securities 420 536 507
----------------- ------------------ ------------------
TOTAL INTEREST EARNED (1) $ 27,605 $ 37,550 $ 42,529
================= ================== ==================
INTEREST PAID ON:
Savings and negotiable interest bearing
deposits $ 2,398 $ 3,990 $ 5,182
Time deposits 5,654 11,707 10,354
Federal funds purchased and securities
sold under agreements to repurchase 1,180 2,220 2,986
Other borrowed funds 384 437 880
----------------- ------------------ ------------------
TOTAL INTEREST PAID $ 9,616 $ 18,354 $ 19,402
================= ================== ==================
</Table>
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 2002, 2001 and 2000.
(2) Loan fees of $521, $386 and $581 for 2002, 2001 and 2000, respectively, are
included in these figures.
9
SCHEDULE I-D
Average Interest Rate Earned or Paid for Major Categories of
Interest Earning Assets and Interest Bearing Liabilities
for the Periods Indicated
<Table>
<Caption>
Years Ended December 31, (In thousands) 2002 2001 2000
- ------------------------------------------------------ ---------- ---------- ----------
AVERAGE RATE EARNED ON:
Loans 6.18% 7.86% 9.25%
Federal funds sold 1.68 3.65 6.24
Available for sale securities:
Taxable securities 4.00 5.09 6.29
Non-taxable securities 5.50 6.70 7.67
Other securities 3.95 6.61 3.14
Held to maturity securities:
Taxable securities 4.72 5.38 5.92
Non-taxable securities 8.30 9.20 8.17
----------- ---------- ----------
TOTAL (weighted average rate) (1) 5.41% 7.05% 8.28%
========== ========== ==========
AVERAGE RATE PAID ON:
Savings and negotiable interest bearing
deposits 1.56% 2.76% 3.50%
Time deposits 3.30 5.34 5.85
Federal funds purchased and securities
sold under agreements to repurchase 1.58 3.33 4.59
Other borrowed funds 6.40 6.11 6.78
----------- ---------- ----------
TOTAL (weighted average rate) 2.37% 4.19% 4.81%
========== ========== ==========
</Table>
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 2002, 2001 and 2000.
10
SCHEDULE I-E
Net Interest Earnings and Net Yield on Interest Earning Assets
<Table>
<Caption>
Years Ended December 31,
(In thousands except percentages) 2002 2001 2000
- ------------------------------------------------------------- ------------------ ----------------- -----------------
Total interest income (1) $ 27,605 $ 37,550 $ 42,529
Total interest expense 9,616 18,354 19,402
------------------ ----------------- -----------------
Net interest earnings $ 17,989 $ 19,196 $ 23,127
================== ================= =================
Net yield on interest earning assets 3.52% 3.61% 4.50%
================== ================= =================
</Table>
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 2002, 2001 and 2000.
11
SCHEDULE I-F
Analysis of Changes In Interest Income and Interest Expense
(In thousands)
<Table>
<Caption>
Attributable to:
-------------------------
Increase Rate /
2002 2001 (Decrease) Volume Rate Volume
------------ ------------ ------------ ---------- ---------- ----------
INTEREST INCOME:(1)
Loans (2) (3) $ 20,061 $ 28,174 $ (8,113) $ (2,637) $ (6,042) $ 566
Federal funds sold 196 204 (8) 222 (110) (120)
Available for sale securities:
Taxable securities 5,658 4,407 1,251 2,784 (940) (593)
Non-taxable securities 113 243 (130) (105) (43) 18
Other securities 257 446 (189) (16) (180) 7
Held to maturity securities:
Taxable securities 900 3,540 (2,640) (2,513) (437) 310
Non-taxable securities 420 536 (116) (71) (52) 7
------------ ------------ ------------ ---------- ---------- ----------
Total $ 27,605 37,550 $ (9,945) $ (2,336) $ (7,804) $ 195
============ ============ ============ ========== ========== ==========
INTEREST EXPENSE:
Savings and negotiable
interest bearing deposits $ 2,398 $ 3,990 $ (1,592) $ 250 $ (1,734) $ (108)
Time deposits 5,654 11,707 (6,053) (2,559) (4,472) 978
Federal funds purchased and
securities sold under
agreements to repurchase 1,180 2,220 (1,040) 266 (1,166) (140)
Other borrowed funds 384 437 (53) (70) 20 (3)
------------ ------------ ------------ ---------- ---------- ----------
Total $ 9,616 $ 18,354 $ (8,738) $ (2,113) $ (7,352) $ 727
============ ============ ============ ========== ========== ==========
</Table>
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 2002 and 2001.
(2) Loan fees are included in these figures.
(3) Includes interest on nonaccrual loans.
12
SCHEDULE I-F (continued)
Analysis of Changes in Interest Income and Interest Expense
(In thousands)
<Table>
<Caption>
Attributable to:
-------------------------
Increase Rate /
2001 2000 (Decrease) Volume Rate Volume
------------ ------------ ------------ ---------- ---------- ----------
INTEREST INCOME:(1)
Loans (2) (3) $ 28,174 $ 33,263 $ (5,089) $ (123) $ (4,984) $ 18
Federal funds sold 204 116 88 233 (48) (97)
Available for sale securities:
Taxable securities 4,407 2,047 2,360 3,401 (391) (650)
Non-taxable securities 243 311 (68) (33) (39) 4
Other securities 446 204 242 8 226 8
Held to maturity securities:
Taxable securities 3,540 6,081 (2,541) (2,187) (553) 199
Non-taxable securities 536 507 29 (31) 64 (4)
------------ ------------ ------------ ---------- ---------- ----------
Total $ 37,550 $ 42,529 $ (4,979) $ 1,268 $ (5,725) $ (522)
============ ============ ============ ========== ========== ==========
INTEREST EXPENSE:
Savings and negotiable
interest bearing deposits $ 3,990 $ 5,182 $ (1,192) $ (121) $ (1,096) $ 25
Time deposits 11,707 10,354 1,353 2,460 (894) (213)
Federal funds purchased and
securities sold under
agreements to repurchase 2,220 2,986 (766) 69 (816) (19)
Other borrowed funds 437 880 (443) (395) (87) 39
------------ ------------ ------------ ---------- ---------- ----------
Total $ 18,354 $ 19,402 $ (1,048) $ 2,013 $ (2,893) $ (168)
============ ============ ============ ========== ========== ==========
</Table>
(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 interest on nonaccrual loans.
13
SCHEDULE II-A
Securities Portfolio
Book Value of Securities Portfolio at the Dates Indicated
<Table>
<Caption>
December 31, (In thousands): 2002 2001 2000
- ------------------------------------------------------------- ------------------ ----------------- -----------------
Available for sale securities:
U. S. Government, agency and corporate obligations $ 142,751 $ 136,149 $ 38,418
States and political subdivisions 4,139 1,763 4,881
Other securities 4,594 4,990 4,869
------------------ ----------------- -----------------
Total $ 151,484 $ 142,902 $ 48,168
================== ================= =================
Held to maturity securities:
U. S. Government, agency and corporate obligations $ 12,998 $ 32,635 $ 91,978
States and political subdivisions 4,590 5,644 6,074
------------------ ----------------- -----------------
Total $ 17,588 $ 38,279 $ 98,052
================== ================= =================
</Table>
14
SCHEDULE II-B
Maturity of Securities Portfolio at December 31, 2002
And Weighted Average Yields of Such Securities
<Table>
<Caption>
Maturity
(In thousands except percentage data)
----------------------------------------------------------------------------------------------------------
After one but After five but
Within one year within five years within ten years After ten years
-------------------------- -------------------------- -------------------------- ------------------------
Amount Yield Amount Yield Amount Yield Amount Yield
------------ ------------- ------------ ------------ ------------ ------------- ----------- -----------
Available for
sale securities:
U. S.
Government,
agency and
corporate
obligations $ 42,053 4.45% $ 85,435 3.85% $ 14,263 4.52% $ 1,000 4.44%
States and
political
subdivisions 115 2.00% 945 2.71% 2,782 3.94% 297 3.85%
Other 4,594 5.28%
------------ ---------- ------------ ---------- ------------ ---------- ----------- ---------
Totals $ 42,168 3.98% $ 86,380 3.84% $ 17,045 4.44% $ 5,891 5.10%
============ ========== ============ ========== ============ ========== =========== =========
Held to
maturity
securities:
U. S.
Government,
agency and
corporate
obligations $ 11,999 4.88% $ 999 5.25% $ $
States and
political
subdivisions 310 6.25% 2,086 5.80% 372 5.34% 1,822 4.92%
------------ ---------- ------------ ---------- ------------ ---------- ----------- ---------
Totals $ 12,309 4.89% $ 3,085 5.63% $ 372 5.34% $ 1,822 4.92%
============ ========== ============ ========== ============ ========== =========== =========
</Table>
Note: The weighted average yields are calculated on the basis of cost. Average
yields on investments in states and political subdivisions are based on
their contractual yield.
15
SCHEDULE III-A
Loan Portfolio
Loans by Type Outstanding (1)
<Table>
<Caption>
December 31, (In thousands): 2002 2001 2000 1999 1998
- ---------------------------------------- --------------- --------------- --------------- -------------- ---------------
Real estate, construction $ 21,534 $ 25,636 $ 29,269 $ 24,793 $ 24,836
Real estate, mortgage 197,478 224,524 235,835 215,726 179,123
Loans to finance agricultural
production and other loans
to farmers 7,375 7,241 11,019 8,441 13,493
Commercial and industrial
loans 65,946 71,271 79,620 63,104 49,633
Loans to individuals for
household, family and other
consumer expenditures 15,990 15,068 17,186 16,476 15,717
Obligations of states and
political subdivisions 3,637 3,233 3,967 2,723 6,809
All other loans 336 196 580 1,254 1,904
--------------- --------------- --------------- -------------- ---------------
Totals $ 312,296 $ 347,169 $ 377,476 $ 332,517 $ 291,515
=============== =============== =============== ============== ===============
</Table>
(1) No foreign debt outstanding.
16
SCHEDULE III-B
Maturities and Sensitivity to Changes in
Interest Rates of the Loan Portfolio as of December 31, 2002
<Table>
<Caption>
Maturity (In thousands)
------------------------------------------------------------------------------------
Over one year
One year or through 5
less years Over 5 years Total
-------------------- -------------------- -------------------- --------------------
Loans:
Real estate, construction $ 11,139 $ 9,920 $ 475 $ 21,534
Real estate, mortgage 49,478 138,609 9,391 197,478
Loans to finance
agricultural production and
other loans to farmers 5,210 2,165 7,375
Commercial and industrial
loans 28,083 35,730 2,133 65,946
Loans to individuals for
household, family and
other consumer
expenditures 8,424 7,336 230 15,990
Obligations of states and
political subdivisions 914 1,081 1,642 3,637
All other loans 321 15 336
-------------------- -------------------- -------------------- --------------------
Totals $ 103,569 $ 194,856 $ 13,871 $ 312,296
==================== ==================== ==================== ====================
Loans with pre-determined
interest rates $ 23,820 $ 66,181 $ 4,598 $ 94,599
Loans with floating
interest rates 79,749 128,675 9,273 217,697
-------------------- -------------------- -------------------- --------------------
Totals $ 103,569 $ 194,856 $ 13,871 $ 312,296
==================== ==================== ==================== ====================
</Table>
17
SCHEDULE III-C
Non-Performing Loans
<Table>
<Caption>
December 31, (In thousands): 2002 2001 2000 1999 1998
- ---------------------------------------- -------------- --------------- --------------- -------------- ---------------
Loans accounted for on a
non-accrual basis (1) $ 6,550 $ 650 $ 3,424 $ 100 $ 490
Loans which are contractually
past due 90 or more days as to
interest or principal payment,
but are not included above 2,828 1,732 24 1,238 718
</Table>
(1) The Bank places loans on a nonaccrual status when, in the opinion of
Management, they possess sufficient uncertainty as to timely collection of
interest or principal so as to preclude the recognition in reported earnings of
some or all of the contractual interest. The amount of interest not accrued on
these loans did not have a significant effect on earnings in the years
presented.
18
SCHEDULE IV-A
Summary of Loan Loss Expenses
(In thousands except percentage data)
<Table>
<Caption>
2002 2001 2000 1999 1998
-------------- --------------- --------------- -------------- ---------------
Average amount of loans
outstanding (1) $ 324,757 $ 358,291 $ 359,624 $ 304,201 $ 268,393
============== =============== =============== ============== ===============
Balance of allowance for loan
losses at the beginning of period $ 5,658 $ 4,568 $ 4,338 $ 4,382 $ 4,435
Loans charged-off:
Commercial, financial and
agricultural 139 895 2,088 334 406
Consumer and other 1,926 1,079 2,573 74 60
-------------- --------------- --------------- -------------- ---------------
Total loans charged-off 2,065 1,974 4,661 408 466
Recoveries of loans previously
charged-off:
Commercial, financial and
agricultural 64 230 209 190 361
Consumer and other 612 331 490 54 52
-------------- --------------- --------------- -------------- ---------------
Total recoveries 676 561 699 244 413
-------------- --------------- --------------- -------------- ---------------
Net loans charged-off 1,389 1,413 3,962 164 53
Provision for loan losses charged
to operating expense 2,428 2,503 4,192 120
-------------- --------------- --------------- -------------- ---------------
Balance of allowance for
loan losses at end of period $ 6,697 $ 5,658 $ 4,568 $ 4,338 $ 4,382
============== =============== =============== ============== ===============
Ratio of net charge-offs during
period to average loans
outstanding 0.43% 0.39% 1.10% 0.05% 0.02%
============== =============== =============== ============== ===============
</Table>
(1) Net of unearned income.
19
SCHEDULE IV-B
Allocation of the Allowance for Loan Losses
<Table>
<Caption>
2002 2001 2000 1999 1998
-----------------------------------------------------------------------------------------------------------
% of
% of % of Loans % of % of
Loans Loans to Loans Loans
Balance at December 31, to Total to Total Total to Total to Total
(In thousands) Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
- ----------------------- --------- --------- --------- --------- ---------- -------- ---------- --------- --------- ---------
Real estate,
construction $ 245 7 $ 256 7 $ 260 8 $ 289 7 $ 292 9
Real estate,
mortgage 3,770 63 4,260 65 2,913 62 2,647 65 2,674 61
Loans to finance
agricultural
production and
other loans to
farmers 70 2 72 2 237 3 245 3 247 5
Commercial and
industrial loans 2,425 21 875 20 918 21 859 18 868 17
Loans to individuals
for household,
family and other
consumer
expenditures 173 5 175 4 200 4 256 5 259 5
Obligations of states
and political
subdivisions -0- 1 -0- 1 -0- 1 -0- 1 -0- 2
All other loans 14 1 15 1 25 1 23 1 23 1
Unallocated -0- N/A 5 N/A 15 N/A 19 N/A 19 N/A
--------- --------- --------- --------- ---------- -------- ---------- --------- --------- ---------
Totals $ 6,697 100 $ 5,658 100 $ 4,568 100 $ 4,338 100 $ 4,382 100
========= ========= ========= ========= ========== ======== ========== ========= ========= =========
</Table>
20
SCHEDULE V
Summary of Average Deposits and Their Yields
<Table>
<Caption>
2002 2001 2000
--------------------------- -------------------------- --------------------------
Years Ended December 31,
(In thousands
except for percentage
data) Amount Rate Amount Rate Amount Rate
- ---------------------------------- -------------- ------------ ------------- ----------- ------------- -----------
Demand deposits in
domestic offices $ 77,254 N/A $ 69,375 N/A $ 78,383 N/A
Negotiable interest
bearing deposits
in domestic offices 119,034 1.45% 119,900 2.76% 121,461 3.60%
Savings deposits in
domestic offices 34,833 1.93% 24,880 2.73% 26,791 3.03%
Time deposits in
domestic offices 171,268 3.30% 219,170 5.34% 177,095 5.85%
-------------- ----------- -------------- ----------- ------------- -----------
Total deposits $ 402,389 2.00% $ 433,325 3.62% $ 403,730 3.85%
============== =========== ============== =========== ============= ===========
</Table>
Certificates of deposit outstanding in amounts $100,000 or more (in thousands)
by the amount of time remaining until maturity as of December 31, 2002, are as
follows:
<Table>
Remaining maturity:
3 months or less $ 39,742
Over 3 through 6 months 20,003
Over 6 months through 12 months 13,584
Over 12 months 735
---------------------
Total $ 74,064
=====================
</Table>
21
SCHEDULE VI
Short Term Borrowings
(In thousands except percentage data)
<Table>
<Caption>
2002 2001 2000
---------- ---------- ----------
Amount outstanding at December 31, $ 67,246 $ 82,489 $ 65,339
Weighted average interest rate at
December 31, 1.08% 1.62% 5.01%
Maximum outstanding at any month-end
during year $ 95,261 $ 82,489 $ 71,340
Average amount outstanding during year $ 74,580 $ 66,606 $ 65,094
Weighted average interest rate 1.58% 3.33% 4.59%
</Table>
Note: Short term borrowings include federal funds purchased from other banks
and securities sold under agreements to repurchase.
22
SCHEDULE VII
Interest Sensitivity/Gap Analysis
<Table>
<Caption>
December 31, 2002 (In 0 - 3 4 - 12 1 - 5 Over 5
thousands) Months Months Years Years Total
- ------------------------------------ ---------------- --------------- --------------- ---------------- ----------------
ASSETS:
Loans (1) $ 220,389 $ 14,578 $ 66,181 $ 4,598 $ 305,746
Available for sale securities 14,502 27,666 86,380 22,936 151,484
Held to maturity securities 4,100 8,210 3,084 2,194 17,588
---------------- --------------- --------------- ---------------- ----------------
Total assets $ 238,991 $ 50,454 $ 155,645 $ 29,728 $ 474,818
================ =============== =============== ================ ================
FUNDING SOURCES:
Interest bearing deposits $ 223,746 $ 66,358 $ 22,367 $ 4 $ 312,475
Long-term funds 38 115 777 5,717 6,647
---------------- --------------- --------------- ---------------- ----------------
Total funding sources $ 223,784 $ 66,473 $ 23,144 $ 5,721 $ 319,122
================ =============== =============== ================ ================
REPRICING/MATURITY
GAP:
Period $ 15,207 $ (16,019) $ 132,501 $ 24,007
Cumulative 15,207 (812) 131,689 155,696
Period Gap/Total Assets 3.20% 3.37% 27.91% 5.06%
Cumulative Gap/Total 3.20% (0.17)% 27.74% 32.80%
Assets
</Table>
(1) Amounts stated include fixed and variable rate investments of the
balance sheet that are still accruing interest. Variable rate instruments are
included in the next period in which they are subject to a change in rate. The
principal portions of scheduled payments on fixed rate instruments are included
in periods in which they become due or mature.
23
ITEM 2 - PROPERTIES
The principal properties of the Company are its 15 business locations, including
the Main Office, which is located at 152 Lameuse Street in Biloxi, MS. All such
properties are owned by the Company. The operations center is subject to a
mortgage from the Small Business Administration. The address of the Main Office
and branch locations are listed on page 38 of the Annual Report to Shareholders.
ITEM 3 - LEGAL PROCEEDINGS
The information included in Note K to the Consolidated Financial Statements
included in the 2002 Annual Report to Shareholders is incorporated herein by
reference.
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITIES HOLDERS
None.
PART II
ITEM 5 - MARKET INFORMATION
The information provided on page 40 of the 2002 Annual Report is incorporated
herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information under the caption "Five Year Comparative Summary of Selected
Financial Information" on page 6 of the 2002 Annual Report is incorporated
herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 7 - 12 of the 2002
Annual Report is incorporated herein by reference.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The information under the caption "Quantitative and Qualitative Disclosures
about Market Risk" on pages 11 - 12 of the 2002 Annual Report is incorporated
herein by reference.
24
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The following consolidated financial statements of the Company and consolidated
subsidiaries and the independent auditors' report appearing on pages 13 - 36 of
the 2002 Annual Report are incorporated herein by reference:
Consolidated Statements of Condition on pages 13 and 14
Consolidated Statements of Income on page 15
Consolidated Statements of Shareholders' Equity on page 16 - 17
Consolidated Statements of Cash Flows on page 18
Notes to Consolidated Financial Statements on pages 19 - 35
Independent Auditors' Report on page 36
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information in Sections II and IX contained in the Proxy Statement in
connection with the Annual Meeting of Shareholders to be held April 23, 2003,
which was filed by the Company in definitive form with the Commission on March
25, 2003, is incorporated herein by reference.
ITEM 11 - EXECUTIVE COMPENSATION
The information in Section V contained in the Proxy Statement in connection with
the Annual Meeting of Shareholders to be held April 23, 2003, which was filed by
the Company in definitive form with the Commission on March 25, 2003, is
incorporated herein by reference.
As indicated in Note M: Employee Benefit Plans in the 2002 Annual Report to
Shareholders, which is incorporated herein by reference, the Company acquired
endorsement split-dollar insurance policies to fund benefits payable upon the
death of certain executive officers in the amount of $150,000 each. As of the
date of this Form 10-K, the Company has not finalized contracts for the
provision of these benefits.
25
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information in Sections III and IV contained in the Proxy Statement in
connection with the Annual Meeting of Shareholders to be held April 23, 2003,
which was filed by the Company in definitive form with the Commission on March
25, 2003, is incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information in Sections V, VI, VII and IX contained in the Proxy Statement
in connection with the Annual Meeting of Shareholders to be held April 23, 2003,
which was filed by the Company in definitive form with the Commission on March
25, 2003, and is incorporated herein by reference.
ITEM 14 - CONTROLS AND PROCEDURES
Based on their evaluation, as of a date within 90 days of the filing date of
this Form 10-K, our Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures (as defined in Rule
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended)
are effective. There have been no significant changes in internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
PART IV
ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8 - K
(a) 1. Index of Financial Statements:
See Item 8.
(a) 2. Index of Financial Schedules:
All other schedules have been omitted as not applicable or not
required or because the information has been included in the financial
statements or applicable notes.
(a) 3. Index of Exhibits:
<Table>
<Caption>
Incorporated by
Reference to Exhibit
Registration or File Form of Date of Number in
Description Number Report Report Report
----------------------------------- ------------------------ --------------- --------------- --------------
(3.1) Articles of 0-30050 10/a 6/21/99 3.1
Incorporation
(3.2) By-Laws 0-30050 10/a 6/21/99 3.2
</Table>
26
<Table>
<Caption>
Incorporated by
Reference to Exhibit
Registration or File Form of Date of Number in
Description Number Report Report Report
----------------------------------- ------------------------ --------------- --------------- --------------
(10.1) Description of Automobile Plan 33-15595 10-K 12/31/88 10.1
(10.2) Description of Directors' 33-15595 10-K 12/31/88 10.2
Deferred Income Plan
(10.3) Description of Executive 33-15595 10-K 12/31/88 10.3
Supplemental Plan
(10.4) Split-Dollar Insurance 33-15595 10-K 12/31/88 10.4
Agreement
(10.5) Deferred Compensation Plan 33-15595 10-K 12/31/93 10.5
(10.6) Description of Stock Incentive 33-15595 10-K 12/31/01 10.6
Plan
(13) Annual Report to Shareholders
for year ended December 31,
2002 * (c)
(21) Proxy Statement for Annual
Meeting of Shareholders to be
held April 23, 2003
(22) Subsidiaries of the 33-15595 10-K 12/31/88 22
registrant
(23) Consent of Certified Public
Accountants *
(99) Certifications of Chief
Executive Officer and Chief
Financial Officer
</Table>
(b) Reports on Form 8-K:
No Form 8-K was filed during the fourth quarter of the year ended December 31,
2002. A Form 8-K was filed on February 28, 2003.
(c) Furnished for the information of the Commission only and not deemed "filed"
except for those portions which are specifically incorporated herein.
* Filed herewith.
27
SIGNATURES
Pursuant to the requirements 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: March 26, 2003
-------------------------------------------
BY: /s/ Chevis C. Swetman
-----------------------------------------
Chevis C. Swetman, Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
BY: /s/ Chevis C. Swetman
-----------------------------------------------
Date: March 26, 2003
--------------------------------------
Chevis C. Swetman, Chairman, President and CEO
BY: BY: /s/ Dan Magruder
------------------------------------- ------------------------------
Date: Date: March 26, 2003
----------------------------------- ----------------------------
Drew Allen, Director Dan Magruder, Director
BY: BY: /s/ Lyle M. Page
------------------------------------- ------------------------------
Date: Date: March 26, 2003
----------------------------------- ----------------------------
Andy Carpenter, Director Lyle M. Page, Director
BY: /s/ Rex E. Kelly BY: /s/ Lauri A. Wood
------------------------------------- ------------------------------
Date: March 26, 2003 Date: March 26, 2003
----------------------------------- ----------------------------
Rex E. Kelly, Director Lauri A. Wood, Principal
Financial and
Accounting Officer
28
CERTIFICATIONS
I, Chevis C. Swetman, certify that:
1. I have reviewed this annual report on Form 10-K of Peoples Financial
Corporation.
2. Based on my knowledge, the report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as such term is
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in the annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the board of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this annual
report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Dated: March 26, 2003
/s/ Chevis C. Swetman
-----------------------------------------------
Chevis C. Swetman,
President and Chief Executive Officer
I, Lauri A. Wood, certify that:
1. I have reviewed this annual report on Form 10-K of Peoples Financial
Corporation.
2. Based on my knowledge, the report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as such term is
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of the
report (the "Evaluation Date"); and
c) presented in the annual report our conclusions about effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the board of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Dated: March 26, 2003
/s/ Lauri A. Wood
---------------------------------------
Lauri A. Wood,
Chief Financial Officer
INDEX TO EXHIBITS
<Table>
<Caption>
Incorporated by
Reference to Exhibit
Registration or File Form of Date of Number in
Description Number Report Report Report
----------------------------------- ------------------------ --------------- --------------- --------------
(3.1) Articles of 0-30050 10/a 6/21/99 3.1
Incorporation
(3.2) By-Laws 0-30050 10/a 6/21/99 3.2
(10.1) Description of Automobile Plan 33-15595 10-K 12/31/88 10.1
(10.2) Description of Directors' 33-15595 10-K 12/31/88 10.2
Deferred Income Plan
(10.3) Description of Executive 33-15595 10-K 12/31/88 10.3
Supplemental Plan
(10.4) Split-Dollar Insurance 33-15595 10-K 12/31/88 10.4
Agreement
(10.5) Deferred Compensation Plan 33-15595 10-K 12/31/93 10.5
(10.6) Description of Stock Incentive 33-15595 10-K 12/31/01 10.6
Plan
(13) Annual Report to Shareholders
for year ended December 31,
2002 * (c)
(21) Proxy Statement for Annual
Meeting of Shareholders to be
held April 23, 2003
(22) Subsidiaries of the 33-15595 10-K 12/31/88 22
registrant
(23) Consent of Certified Public
Accountants *
(99) Certifications of Chief
Executive Officer and Chief
Financial Officer*
</Table>
(c) Furnished for the information of the Commission only and not deemed "filed"
except for those portions which are specifically incorporated herein.
* Filed herewith.