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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, 1996
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Commission File Number 2-98268
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PEOPLES FINANCIAL CORPORATION
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(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
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(Address of principal executive offices) (Zip code)
601-435-5511
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(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:
NONE
---------------------------------------------
(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. _____
Cover Page 1 of 2 Pages
2
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 1, 1997 was approximately $49,030,000. For purposes of
this calculation only, shares held by non-affiliates are deemed to consist of
(a) shares held by all shareholders other than directors and executive officers
plus (b) shares held by directors and executive officers as to which beneficial
ownership has been disclaimed.
On March 1, 1997 the registrant had outstanding 738,168 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, 1996 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 9, 1997,
are incorporated by reference into Part III of this report.
Cover Page 2 of 2 Pages
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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. Under a "Reorganization and Merger
Agreement" dated March 21, 1985, and approved on July 8, 1985, Peoples
Financial Corporation acquired all the outstanding stock of consenting
shareholders of The Peoples Bank of Biloxi (the "Bank") on September 30, 1985,
in exchange for 25,086 shares of its common stock. A settlement was reached
with dissenting shareholders to acquire their stock at $1,000.00 per share, and
this amount was paid during 1986, with interest at 9% per annum. The
transaction was accounted for as a pooling-of-interest. The Company is now
engaged, through its 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 is principally the leasing
of automobiles and equipment under direct financing and sales-type leases
expiring in various periods through 1993. The Bank acquired all remaining
leases from PFC during 1990. PFC is inactive at this time.
ACQUISITIONS
On August 19, 1988, the Company acquired Gulf National Bank ("GNB") and merged
GNB into the Bank with shareholders of GNB receiving shares of 4% convertible
preferred stock. The preferred stock was mandatorily convertible into Company
common stock five years and one month after August 19, 1988, at the rate of one
share of common stock for each 24 shares of preferred stock. This conversion
was executed on September 19, 1993.
On August 16, 1991, the Company purchased certain assets and assumed the
insured deposits of the Main Office of the former Southern Federal Bank for
Savings from the Resolution Trust Corporation and merged those assets and
deposits into the Bank.
THE BANK
The Bank, which was originally chartered in 1896 in Biloxi, Mississippi,
currently offers many customary banking services to its customers including
interest bearing and non-interest bearing checking accounts; savings accounts;
certificates of deposit; IRA accounts; business, real estate, construction,
personal and installment loans; collection services; trust services; safe
deposit box facilities; night drop facilities and automated teller machines.
The Bank is a state chartered bank
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whose deposits are insured under the Federal 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 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.
The Main Office, operations center and trust services of the Bank are located
in downtown Biloxi, MS. The Bank also has eleven (11) branches from Bay St.
Louis, MS, to Ocean Springs, MS. The Bank has automated teller machines ("ATM")
at its Main Office, all branch locations and at numerous non-proprietary
locations.
At December 31, 1996, the Bank employed 194 full-time employees and 29
part-time employees.
COMPETITION
The Bank is in direct competition with approximately eight (8) commercial banks
and three (3) non-bank institutions. These banks range in size from
approximately $13 million to approximately $4.4 billion. The Bank also competes
for deposits and loans with insurance companies, finance companies and
automobile finance companies.
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.
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Most of the Bank's business originates from within Harrison, Hancock and west
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.
REGULATION AND SUPERVISION
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. Certain southern states, including Mississippi,
have enacted legislation which authorizes interstate acquisitions of a banking
organization by bank holding companies within the south, 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.
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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.
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 14 - 40 of the 1996 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).
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.
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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.
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 9 - 12
of the 1996 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 8 and "Management's Discussion and Analysis" on
pages 9 - 12 of the 1996 Annual Report are incorporated herein by reference.
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DIVIDEND PAYOUT
Years Ended December 31,
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1996 1995 1994
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Dividend payout ratio 12.98% 11.17% 11.96%
===========================================
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SCHEDULE I-A
Distribution of Average Assets, Liabilities and Shareholders'
Equity for the Periods Indicated (2)
Years Ended December 31, (In
thousands) 1996 1995 1994
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ASSETS:
Cash and due from financial institutions $ 24,431 $ 22,580 $ 22,105
Available for sale securities:
Taxable securities 52,263 3,503
Other securities 925 319 198
Held to maturity securities:
Taxable securities 143,270 151,105 171,372
Non-taxable securities 4,717 4,501 4,180
Net loans (1) 219,652 220,095 192,926
Federal funds sold and securities purchased under
agreements to resell 11,032 11,387 9,088
Other assets 11,991 16,554 16,914
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TOTAL ASSETS $468,281 $430,044 $416,783
======== ======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Non-interest bearing deposits $ 66,215 $ 72,036 $ 84,240
Interest bearing deposits 339,438 301,541 282,163
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Total deposits 405,653 373,577 366,403
Federal funds purchased and securities sold under
agreements to repurchase 1,941 1,414 1,479
Other liabilities 3,585 3,394 3,047
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Total liabilities 411,179 378,385 370,929
Shareholders' equity 57,102 51,659 45,854
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $468,281 $430,044 $416,783
======== ======== ========
(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.
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SCHEDULE I-B
Average Amount Outstanding for Major Categories of Interest Earning Assets
and Interest Bearing Liabilities for the Periods Indicated
Years Ended December 31, (In thousands) 1996 1995 1994
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INTEREST EARNING ASSETS:
Loans (1) (2) $ 224,231 $ 224,819 $ 198,044
Federal funds sold and securities
purchased under agreements to resell 11,032 11,387 9,088
Available for sale securities:
Taxable securities 52,263 3,503
Other securities 945 319 198
Held to maturity securities:
Taxable securities 143,270 151,105 171,372
Non-taxable securities 4,717 4,501 4,180
---------- ---------- ----------
TOTAL INTEREST EARNING ASSETS $ 436,458 $ 395,634 $ 382,882
========== ========== ==========
INTEREST BEARING LIABILITIES:
Savings and negotiable interest
bearing deposits $ 185,537 $ 189,454 $ 199,941
Time deposits 153,901 112,087 82,222
Federal funds purchased and securities sold
under agreements to repurchase 1,941 1,414 1,479
Other borrowed funds 232 243 253
---------- ---------- ----------
TOTAL INTEREST BEARING LIABILITIES $ 341,611 $ 303,198 $ 283,895
========== ========== ==========
(1) Net of unearned income.
(2) Includes nonaccrual loans.
(3) 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.
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SCHEDULE I-C
Interest Earned or Paid on the Major Categories of Interest Earning Assets
and Interest Bearing Liabilities for the Periods Indicated
Years Ended December 31, (In
thousands) 1996 1995 1994
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INTEREST EARNED ON:
Loans (2) $ 20,414 $ 21,364 $ 17,094
Federal funds sold and securities
purchased under agreements to
resell 582 667 345
Available for sale securities:
Taxable securities 3,343 198 -0-
Other securities 45 17 16
Held to maturity securities:
Taxable securities 8,460 8,840 9,296
Non-taxable securities 612 603 658
---------- ---------- ----------
TOTAL INTEREST EARNED (1) $ 33,456 $ 31,689 $ 27,409
========== ========== ==========
INTEREST PAID ON:
Savings and negotiable interest
bearing deposits $ 5,951 $ 5,879 $ 5,792
Time deposits 8,332 6,403 3,647
Federal funds purchased and securities
sold under agreements to repurchase 110 77 69
Other borrowed funds 13 13 14
---------- ---------- ----------
TOTAL INTEREST PAID $ 14,406 $ 12,372 $ 9,522
========== ========== ==========
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1996, 1995 and 1994.
(2) Loan fees of $334,000, $444,000 and $462,000 for 1996, 1995 and 1994,
respectively, are included in these figures.
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SCHEDULE I-D
Average Interest Rate Earned or Paid for Major Categories of
Interest Earning Assets and Interest Bearing Liabilities for
the Periods Indicated
Years Ended December 31, 1996 1995 1994
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AVERAGE RATE EARNED ON:
Loans 9.10% 9.50% 8.63%
Federal funds sold and securities
purchased under agreements to resell 5.28 5.85 3.80
Available for sale securities:
Taxable securities 6.39 5.65 N/A
Other securities 4.76 5.33 8.08
Held to maturity securities:
Taxable securities 5.90 5.85 5.42
Non-taxable securities (2) 12.97 13.40 15.74
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TOTAL (weighted average rate) (1) 7.67% 8.01% 7.16%
===== ===== =====
AVERAGE RATE PAID ON:
Savings and negotiable interest
bearing deposits 3.21% 3.10% 2.90%
Time deposits 5.41 5.71 4.44
Federal funds purchased and securities
sold under agreements to repurchase 5.67 5.45 4.67
Other borrowed funds 5.60 5.35 5.53
----- ----- -----
TOTAL (weighted average rate) 5.62% 4.08% 3.35%
===== ===== =====
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1996, 1995 and 1994.
(2) Relates to accounting for bonds purchased at a discount prior to January
1, 1992. Such bonds were reflected on the books at cost. The effect of not
adjusting for the accretion of discount for bonds acquired prior to
January 1, 1992, is not material to the financial statements. However, the
yields are higher during the period in which these bonds mature as a
result of all accretion being recognized at maturity.
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SCHEDULE I-E
Net Interest Earnings and Net Yield on Interest Earning Assets
Years Ended December 31,
(In thousands except percentages) 1996 1995 1994
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Total interest income (1) $ 33,456 $ 31,689 $ 27,409
Total interest expense 14,406 12,372 9,522
---------- ---------- ----------
Net interest earnings $ 19,050 $ 19,317 $ 17,887
========== ========== ==========
Net yield on interest earning assets 4.36% 4.88% 4.67%
========== ========== ==========
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1996, 1995 and 1994.
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SCHEDULE I-F
Analysis of Changes In Interest Income and Interest Expense
(In thousands)
Attributable to:
--------------------------------------
Increase Rate /
1996 1995 (Decrease) Volume Rate Volume
---------- ---------- ---------- ---------- ---------- ----------
INTEREST INCOME:(1)
Loans (2) (3) $ 20,414 $ 21,364 $ (950) $ (56) $ (896) $ 2
Federal funds sold and
securities purchased under
agreements to resell 582 667 (85) (21) (66) 2
Available for sale
securities:
Taxable securities 3,343 198 3,145 2,756 26 363
Other securities 45 17 28 33 (2) (3)
Held to maturity securities:
Taxable securities 8,460 8,840 (380) (458) 83 (5)
Non-taxable securities 612 603 9 29 (19) (1)
---------- ---------- ---------- ---------- ---------- ----------
Total $ 33,456 $ 31,689 $ 1,767 $ 2,283 $ (874) $ 358
========== ========== ========== ========== ========== ==========
INTEREST EXPENSE:
Savings and negotiable
interest bearing deposits $ 5,951 $ 5,879 $ 72 $ (118) $ 194 $ (4)
Time deposits 8,332 6,403 1,929 2,389 (335) (125)
Federal funds purchased
and securities sold under
agreements to repurchase 110 77 33 29 3 1
Other borrowed funds 13 13 -0- (1) 1 -0-
---------- ---------- ---------- ---------- ---------- ----------
Total $ 14,406 $ 12,372 $ 2,034 $ 2,299 $ (137) $ (128)
========== ========== ========== ========== ========== ==========
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1996 and 1995.
(2) Loan fees are included in these figures.
(3) Includes interest on nonaccrual loans.
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SCHEDULE I-F (continued)
Analysis of Changes in Interest Income and Interest Expense
(In thousands)
Attributable to:
--------------------------------------
Increase Rate/
1995 1994 (Decrease) Volume Rate Volume
---------- ---------- ---------- ---------- ---------- ----------
INTEREST INCOME:(1)
Loans (2) (3) $ 21,364 $ 17,094 $ 4,270 $ 2,311 $ 1,726 $ 233
Federal funds sold and
securities purchased under
agreements to resell 667 345 322 87 186 49
Available for sale
securities:
Taxable securities 198 -0- 198 198 -0- -0-
Other securities 17 16 1 10 (5) (4)
Held to maturity securities:
Taxable securities 8,840 9,296 (456) (1,099) 730 (87)
Non-taxable securities 603 658 (55) 50 (98) (7)
---------- ---------- ---------- ---------- ---------- ----------
Total $ 31,689 $ 27,409 $ 4,280 $ 1,557 $ 2,539 $ 184
========== ========== ========== ========== ========== ==========
INTEREST EXPENSE:
Savings and negotiable
interest bearing deposits $ 5,879 $ 5,792 $ 87 $ (304) $ 412 $ (21)
Time deposits 6,403 3,647 2,756 1,325 1,050 381
Federal funds purchased
and securities sold under
agreements to repurchase 77 69 8 (3) 12 (1)
Other borrowed funds 13 14 (1) (1) (1) 1
---------- ---------- ---------- ---------- ---------- ----------
Total $ 12,372 $ 9,522 $ 2,850 $ 1,017 $ 1,473 $ 360
========== ========== ========== ========== ========== ==========
(1) All interest earned is reported on a taxable equivalent basis using a tax
rate of 34% in 1995 and 1994.
(2) Loan fees are included in these figures.
(3) Includes interest on nonaccrual loans.
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SCHEDULE II-A
Securities Portfolio
Book Value of Securities Portfolio at the Dates Indicated
December 31, (In thousands): 1996 1995 1994
- ------------------------------------------------------------------------------------
Available for sale securities:
U.S. Government, agency and corporate $ 51,921 $ 20,145 $ -0-
obligations
Other securities 1,238 685 198
---------- ---------- ----------
Total $ 53,159 $ 20,830 $ 198
========== ========== ==========
Held to maturity securities:
U.S. Government, agency and corporate $ 122,090 $ 160,656 $ 155,236
obligations
States and political subdivisions 5,780 4,486 4,262
---------- ---------- ----------
Total $ 127,870 $ 165,142 $ 159,498
========== ========== ==========
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SCHEDULE II-B
Maturity of Securities Portfolio at December 31, 1996
And Weighted Average Yields of Such Securities
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 $ 1,995 5.31% $ 23,711 5.85% $ 22,316 6.70% $ 3,899 7.13%
Other -0- N/A -0- N/A -0- N/A 1,238 22.73%
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Totals $ 1,995 5.31% $ 23,711 5.85% $ 22,316 6.70% $ 5,137 7.91%
========== ========== ========== ========== ========== ========== ========== ==========
Held to
maturity
securities:
U. S
Government,
agency and
corporate
obligations $ 53,706 8.68% $ 65,416 6.24% $ 2,968 6.79% $ -0- N/A
States and
political
subdivisions 393 5.37% 1,729 6.45% 2,060 6.49% $ 1,598 5.42%
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Totals $ 54,099 8.66% $ 67,145 6.25% $ 5,028 6.67% $ 1,598 5.42%
========== ========== ========== ========== ========== ========== ========== ==========
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.
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SCHEDULE III-A
Loan Portfolio
Loans by Type Outstanding (1)
December 31, (In thousands): 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------
Real estate, construction $ 14,704 $ 16,473 $ 14,056 $ 5,333 $ 1,077
Real estate, mortgage 137,766 138,254 131,584 118,838 105,947
Loans to finance agricultural
production and other loans
to farmers 10,483 9,962 11,259 6,528 10,032
Commercial and industrial
loans 48,057 39,228 42,505 30,675 19,065
Loans to individuals for
household, family and
other consumer expenditures 11,179 11,903 13,114 12,533 11,963
Obligations of states and
political subdivisions 4,496 5,469 6,752 7,636 10,580
All other loans 1,824 2,780 3,572 3,599 21,837
---------- ---------- ---------- ---------- ----------
Totals $ 228,509 $ 224,069 $ 222,842 $ 185,142 $ 180,501
========== ========== ========== ========== ==========
(1) No foreign debt outstanding.
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SCHEDULE III-B
Maturities and Sensitivity to Changes in
Interest Rates of the Loan Portfolio as of December 31, 1996
Maturity (In thousands)
-------------------------------------------------
Over one
One year or year through
less 5 years Over 5 years Total
-------------------------------------------------
Loans:
Real estate, construction $ 5,325 $ 8,198 $ 1,181 $ 14,704
Real estate, mortgage 32,363 96,625 8,778 137,766
Loans to finance
agricultural production
and other loans to
farmers 9,576 907 -0- 10,483
Commercial and
industrial loans 26,935 18,841 2,281 48,057
Loans to individuals for
household, family and
other consumer
expenditures 4,743 6,304 132 11,179
Obligations of states and
political subdivisions 87 1,195 3,214 4,496
All other loans 1,801 23 -0- 1,824
---------- ---------- ---------- ----------
Totals $ 80,830 $ 132,093 $ 15,586 $ 228,509
========== ========== ========== ==========
Loans with pre-
determined interest rates $ 29,800 $ 66,450 $ 6,380 $ 102,630
Loans with floating
interest rates 51,030 65,643 9,206 125,879
---------- ---------- ---------- ----------
Totals $ 80,830 $ 132,093 $ 15,586 $ 228,509
========== ========== ========== ==========
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SCHEDULE III-C
Non-Performing Loans
December 31, (In thousands): 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------
Loans accounted for on a
non-accrual basis (1) $ 546 $ 610 $ 138 $ 1,628 $ 3,277
Loans which are contractually
past due 90 or more days as
to interest or principal
payment, but are not
included above 3,026 146 474 536 26
Loans the term of which have
been renegotiated to provide
a reduction or deferral of
interest or principal because
of a deterioration in the
financial position of the
borrower, but are not
included above (2) 2,304 2,328 2,502 2,703 2,792
(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 that would have been earned on these loans had they been on
accrual during 1996 was approximately $48,000. The Bank did receive
$16,000 in interest payments during 1996 so that the net effect of
recording income on nonaccrual loans on the cash basis was to reduce
interest income by approximately $32,000 in 1996.
(2) Foregone interest on loans whose interest rates were renegotiated was
$32,000 in 1996. These loans were renegotiated for a second time in March
of 1996 at a current market rate.
18
21
SCHEDULE IV-A
Summary of Loan Loss Expenses
(In thousands except percentage data)
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
Average amount of loans
outstanding (1) $ 224,231 $ 224,819 $ 198,044 $ 185,911 $ 170,761
========== ========== ========== ========== ==========
Balance of allowance for
loan losses at the
beginning of period $ 4,353 $ 4,901 $ 5,100 $ 4,206 $ 2,584
Loans charged-off:
Commercial, financial and
agricultural 77 601 79 384 1,144
Consumer and other 62 101 58 143 248
---------- ---------- ---------- ---------- ----------
Total loans charged-off 139 702 137 527 1,392
Recoveries of loans
previously charged-off:
Commercial, financial and
agricultural 403 63 142 1,045 588
Consumer and other 56 91 96 101 104
---------- ---------- ---------- ---------- ----------
Total recoveries 459 154 238 1,146 692
---------- ---------- ---------- ---------- ----------
Net loans (recovered) charged- (320) 548 (101) (619) 700
off
Provision for (reduction of) loan
losses charged to operating
expense (150) -0- (300) 275 2,322
---------- ---------- ---------- ---------- ----------
Balance of allowance for
loan losses at end
of period $ 4,523 $ 4,353 $ 4,901 $ 5,100 $ 4,206
========== ========== ========== ========== ==========
Ratio of net charge-offs
during period to average
loans outstanding (0.14)% 0.24% (0.05)% (0.33)% 0.41%
========== ========== ========== ========== ==========
(1) Net of unearned income.
19
22
SCHEDULE IV-B
Allocation of the Allowance for Loan Losses
1996 1995 1994 1993 1992
-----------------------------------------------------------------------------------------
% of % of % of % of % of
Loans Loans Loans Loans Loans
to to to to to
Balance at December Total Total Total Total Total
31, (In thousands) Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
- -----------------------------------------------------------------------------------------------------------------------------------
Real estate,
construction $ 294 6 $ 329 7 $ 281 6 $ 107 3 $ 22 1
Real estate,
mortgage 2,755 60 2,765 62 2,561 59 3,565 64 2,649 59
Loans to finance
agricultural
production and
other loans to
farmers 210 5 199 4 225 5 131 3 200 6
Commercial and
industrial loans 961 21 785 18 1,250 19 614 17 381 10
Loans to individuals
for household,
family and other
consumer
expenditures 223 5 238 5 262 6 251 7 240 6
Obligations of states
and political
subdivisions -0- 2 -0- 3 -0- 3 -0- 4 -0- 6
All other loans 36 1 18 1 71 2 80 2 440 12
Unallocated 44 N/A 19 N/A 251 N/A 352 N/A 274 N/A
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Totals $ 4,523 100 $ 4,353 100 $ 4,901 100 $ 5,100 100 $ 4,206 100
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
20
23
SCHEDULE V
Summary of Average Deposits and Their Yields
1996 1995 1994
-----------------------------------------------------------------
Years Ended December
31, (In thousands
except for percentage
data) Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------
Demand deposits in
domestic offices $ 66,215 N/A $ 72,036 N/A $ 84,240 N/A
Negotiable interest
bearing deposits
in domestic offices 149,314 3.44% 152,639 3.30% 157,434 3.07%
Savings deposits in
domestic offices 36,223 2.25% 36,815 2.33% 42,507 2.26%
Time deposits in
domestic
offices 153,901 5.41% 112,087 5.71% 82,222 4.44%
-------- -------- -------- -------- -------- --------
Total deposits $405,653 3.52% $373,577 3.29% $366,403 2.58%
======== ======== ======== ======== ======== ========
Certificates of deposit outstanding in amounts $100,000 or more (in thousands)
by the amount of time remaining until maturity as of December 31, 1996, are as
follows:
Remaining maturity:
3 months or less $66,763
Over 3 through 6 months 8,078
Over 6 months through 12 months 7,841
Over 12 months 2,291
-------
Total $84,973
=======
21
24
SCHEDULE VI
Short Term Borrowings
(In thousands except percentage data)
1996 1995 1994
-----------------------------------
Amount outstanding at December 31, $ 16,500 $ 12,150 $ 15,900
Weighted average interest rate at
December 31, 6.00% 5.00% 6.00%
Maximum outstanding at any month-end
during year $ 16,500 $ 12,150 $ 15,900
Average amount outstanding during year $ 1,941 $ 1,414 $ 1,479
Weighted average interest rate 5.67% 5.45% 4.67%
Note: Short term borrowings include federal funds purchased from other banks
and securities sold under agreements to repurchase.
22
25
SCHEDULE VII
Interest Sensitivity/Gap Analysis
December 31, 1996 (In 0 - 3 4 - 12 1 - 5 Over 5
thousands) Months Months Years Years Total
- -------------------------------------------------------------------------------------------------------
ASSETS:
Loans $ 32,213 $ 48,374 $ 131,934 $ 15,442 $ 227,963
Available for sale
securities -0- 1,995 23,711 27,453 53,159
Held to maturity
securities 25,964 28,135 67,145 6,626 127,870
------------ ------------ ------------ ------------ ------------
Total assets $ 58,177 $ 78,504 $ 222,790 $ 49,521 $ 408,992
============ ============ ============ ============ ============
FUNDING SOURCES:
Interest bearing
deposits $ 234,147 $ 45,005 $ 15,350 $ 94 $ 294,596
Long-term funds 2 10 53 162 227
------------ ------------ ------------ ------------ ------------
Total funding sources $ 234,149 $ 45,015 $ 15,403 $ 256 $ 294,823
============ ============ ============ ============ ============
REPRICING/MATURITY
GAP:
Period $ (175,972) $ 33,489 $ 207,387 $ 49,265
Cumulative (175,972) (142,483) 64,904 114,169
Period Gap/Total Assets (43.03)% 8.19 % 50.71% 12.05%
Cumulative Gap/Total
Assets (43.03)% (34.84)% 15.87% 27.91%
(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
26
ITEM 2 - PROPERTIES
The principal properties of the Company are its 13 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 43 of the Annual Report
to Shareholders.
ITEM 3 - LEGAL PROCEEDINGS
The information included in Note J to the Consolidated Financial Statements
included in the 1996 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 13 of the 1996 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 8 of the 1996 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 9 - 12 of the 1996
Annual Report is incorporated herein by reference.
24
27
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 14 - 41 of
the 1996 Annual Report are incorporated herein by reference:
Consolidated Statements of Condition on pages 14 and 15
Consolidated Statements of Income on page 16
Consolidated Statements of Shareholders' Equity on page 17
Consolidated Statements of Cash Flows on page 19
Notes to Consolidated Financial Statements on pages 20 - 40
Independent Auditors' Report on page 41
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 9, 1997,
which was filed by the Company in definitive form with the Commission on March
5, 1997, 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 9, 1997, which was
filed by the Company in definitive form with the Commission on March 5, 1997,
is incorporated herein by reference.
25
28
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 9, 1997,
which was filed by the Company in definitive form with the Commission on March
5, 1997, is incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information in Sections V, VI, VII and VIII contained in the Proxy
Statement in connection with the Annual Meeting of Shareholders to be held
April 9, 1997, which was filed by the Company in definitive form with the
Commission on March 5, 1997, and is incorporated herein by reference.
PART IV
ITEM 14 - 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:
Incorporated by
Reference to Exhibit
Registration or Form of Number in
Description File Number Report Date of Report Report
---------------------------------------------------------------------------
(3.1) Articles of 33-15595 10-K 12/31/93 3.1
Incorporation
(3.2) By-Laws 33-15595 10-K 12/31/93 3.2
26
29
Incorporated by
Reference to Exhibit
Registration or Form of Number in
Description File Number Report Date of Report Report
-----------------------------------------------------------------------------------------------------------------------
(10.1) Description of Automobile 33-15595 10-K 12/31/88 10.1
Plan
(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 12/31/93 10.4
Agreement
(10.5) Deferred Compensation Plan 33-15595 10-K 12/31/93 10.5
(13) Annual Report to
Shareholders for year ended
December 31, 1996 * (c)
(21) Proxy Statement for Annual
Meeting of Shareholders to
be held April 9, 1997
(22) Subsidiaries of the 33-15595 10-K 12/31/88 22
registrant
(23) Consent of Certified Public
Accountants *
(27) Financial Data Schedule *
(b) No report on Form 8-K was filed during the fourth quarter of the year
ended December 31, 1996.
(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
30
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 19, 1997
-------------------------
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/ Drew Allen BY: /s/ Chevis C. Swetman
------------------------------------- --------------------------
Date: March 19, 1997 Date: March 19, 1997
---------------------------------- ------------------------
Drew Allen Chevis C. Swetman
Director President, Chief Executive Officer and
Director
BY: /s/ William A. Barq BY: /s/ F. Walker Tucei
------------------------------------- --------------------------
Date: March 19, 1997 Date: March 19, 1997
----------------------------------- ------------------------
William A. Barq F. Walker Tucei
Director Director
BY: /s/ Andy Carpenter BY: /s/ Lauri A. Wood
------------------------------------- --------------------------
Date: March 19, 1997 Date: March 19. 1997
----------------------------------- ------------------------
Andy Carpenter Lauri A. Wood
Executive Vice President and Director Principal Financial and Accounting Officer
28
31
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
13 Annual Report to Shareholders for year ended
December 31, 1996
23 Consent of Certified Public Accountants
27 Financial Data Schedule