2019
PEOPLES FIN ANCIAL CORPOR AT ION
AND SUBSIDIAR IES
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To Our Shareholders:
We are pleased with our financial results for 2019, a year of achieving improved financial
performance.
Net income for 2019 increased significantly to $1,679,000 as compared to $629,000 the prior
year. These positive results are the direct result of on-going efforts over the last few years by
the Company to improve the credit quality of the loan portfolio and to reduce non-performing
assets. During 2019, the management team developed a dynamic strategic plan for 2020 and
beyond which emphasizes initiatives to increase non-interest income and reduce non-interest
expenses. Those efforts have already started to reap dividends and contributed to improved
earnings during the second half of 2019.
On January 31, 2020, long-time directors Rex Kelly and Dan Magruder retired from the board
of directors of The Peoples Bank, Biloxi, Mississippi and will not stand for reelection to the
board of Peoples Financial Corporation at the annual shareholder meeting on April 22, 2020.
We are very grateful to these distinguished gentlemen for their many years of wise counsel,
commitment and loyalty. We wish them well as they fully enjoy retirement.
For over 123 years, our culture has focused on assisting customers on the Mississippi Gulf
Coast in meeting their long-term financial needs. Our board of directors and employees are
dedicated to continuing our legacy of service and contributing to the economic advancement
of the Mississippi Gulf Coast.
Sincerely yours,
Chevis C. Swetman
Chairman of the Board
President & Chief Executive Officer
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Peoples Financial Corporation (the “Company”) is a one-bank holding company headquartered in Biloxi, Mississippi. The
following presents Management’s discussion and analysis of the consolidated financial condition and results of operations
of the Company and its consolidated subsidiaries for the years ended December 31, 2019, 2018 and 2017. These comments
highlight the significant events for these years and should be considered in combination with the Consolidated Financial
Statements and Notes to Consolidated Financial Statements included in this annual report.
FORWARD-LOOKING INFORMATION
Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information
about a company’s anticipated future financial performance. This act provides a safe harbor for such disclosure which protects
the companies from unwarranted litigation if actual results are different from management expectations. This report contains
forward-looking statements and reflects industry conditions, company performance and financial results. These forward-
looking statements are subject to a number of factors and uncertainties which could cause the Company’s actual results
and experience to differ from the anticipated results and expectations expressed in such forward-looking statements. Such
factors and uncertainties include, but are not limited to: changes in interest rates and market prices, changes in local economic
and business conditions, increased competition for deposits and loans, a deviation in actual experience from the underlying
assumptions used to determine and establish the allowance for loan losses, changes in the availability of funds resulting from
reduced liquidity, changes in government regulations and acts of terrorism, weather or other events beyond the Company’s
control.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (“FASB”) issued new accounting standards updates in 2019, which have been
disclosed in Note A to the Consolidated Financial Statements. The Company does not expect that these updates discussed in the
Notes will have a material impact on its financial position, results of operations or cash flows. The Company adopted Accounting
Standards Update 2014-09, Revenue from Contract with Customers (Topic 606) and Accounting Standards Update 2018-03,
Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement
of Financial Assets and Financial Liabilities, that Clarifies the Guidance in ASU No. 2016-01, Financial Instruments – Overall
(Subtopic 825-10), effective January1, 2018, neither of which had a material effect on its financial position, results of operations
or cash flows. The Company is currently working on the implementation of Accounting Standards Update 2016-13, Financial
Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Further disclosure relating
to these efforts is included in Note A.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America (“GAAP”) requires Management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. The Company evaluates these estimates and assumptions on an on-going
basis using historical experience and other factors, including the current economic environment. We adjust such estimates and
assumptions when facts and circumstances dictate. Certain critical accounting policies affect the more significant estimates and
assumptions used in the preparation of the consolidated financial statements.
Investments
Investments which are classified as available for sale are stated at fair value. A decline in the market value of an investment
below cost that is deemed to be other-than-temporary is charged to earnings for the decline in value deemed to be credit related
and a new cost basis in the security is established. The decline in value attributed to non-credit related factors is recognized in
other comprehensive income. The determination of the fair value of securities may require Management to develop estimates
and assumptions regarding the amount and timing of cash flows.
Allowance for Loan Losses
The Company’s allowance for loan losses (“ALL”) reflects the estimated losses resulting from the inability of its borrowers
to make loan payments. The ALL is established and maintained at an amount sufficient to cover the estimated loss associated
with the loan portfolio of the Company as of the date of the financial statements. Credit losses arise not only from credit
risk, but also from other risks inherent in the lending process including, but not limited to, collateral risk, operation risk,
concentration risk and economic risk. As such, all related risks of lending are considered when assessing the adequacy of the
ALL. On a quarterly basis, Management estimates the probable level of losses to determine whether the allowance is adequate
to absorb reasonably foreseeable, anticipated losses in the existing portfolio based on our past loan loss experience, known and
inherent risk in the portfolio, adverse situations that may affect the borrowers’ ability to repay and the estimated value of any
1
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underlying collateral and current economic conditions. Management believes that the ALL is adequate and appropriate for all
periods presented in these financial statements. If there was a deterioration of any of the factors considered by Management
in evaluating the ALL, the estimate of loss would be updated, and additional provisions for loan losses may be required. The
analysis divides the portfolio into two segments: a pool analysis of loans based upon a five year average loss history which is
updated on a quarterly basis and which may be adjusted by qualitative factors by loan type and a specific reserve analysis for
those loans considered impaired under GAAP. All credit relationships with an outstanding balance of $100,000 or greater that
are included in Management’s loan watch list are individually reviewed for impairment. All losses are charged to the ALL when
the loss actually occurs or when a determination is made that a loss is likely to occur; recoveries are credited to the ALL at the
time of receipt.
Other Real Estate
Other real estate (“ORE”) includes real estate acquired through foreclosure. Each other real estate property is carried at fair
value, less estimated costs to sell. Fair value is principally based on appraisals performed by third-party valuation specialists.
If Management determines that the fair value of a property has decreased subsequent to foreclosure, the Company records a
write-down which is included in non-interest expense.
Employee Benefit Plans
Employee benefit plan liabilities and pension costs are determined utilizing actuarially determined present value calculations.
The valuation of the benefit obligation and net periodic expense is considered critical, as it requires Management and its
actuaries to make estimates regarding the amount and timing of expected cash outflows including assumptions about mortality,
expected service periods and the rate of compensation increases.
Income Taxes
GAAP requires the asset and liability approach for financial accounting and reporting for deferred income taxes. We use
the asset and liability method of accounting for deferred income taxes and provide deferred income taxes for all significant
income tax temporary differences. See Note I to the Consolidated Financial Statements for additional details. As part of the
process of preparing our consolidated financial statements, the Company is required to estimate our income taxes in each of
the jurisdictions in which we operate. This process involves estimating our actual current tax exposure together with assessing
temporary differences resulting from differing treatment of items, such as the provision for the allowance for loan losses, for
tax and financial reporting purposes. These differences result in deferred tax assets and liabilities that are included in our
consolidated statement of condition. We must also assess the likelihood that our deferred tax assets will be recovered from future
taxable income, and to the extent we believe that recovery is not likely, we must establish a valuation allowance. Significant
management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any
valuation allowance recorded against our net deferred tax assets. To the extent the Company establishes a valuation allowance
or adjusts this allowance in a period, we must include an expense within the tax provision in the consolidated statement of
income.
GAAP Reconciliation and Explanation
This report contains non-GAAP financial measures determined by methods other than in accordance with GAAP. Such non-
GAAP financial measures include taxable equivalent interest income and taxable equivalent net interest income. Management
uses these non-GAAP financial measures because it believes they are useful for evaluating our operations and performance over
periods of time, as well as in managing and evaluating our business and in discussions about our operations and performance.
Management believes these non-GAAP financial measures provide users of our financial information with a meaningful
measure for assessing our financial results, as well as comparison to financial results for prior periods. These non-GAAP
financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and
may not be comparable to other similarly titled financial measures used by other companies. A reconciliation of these operating
performance measures to GAAP performance measures for the years ended December 31, 2019, 2018 and 2017 is included in
the table on the following page.
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2
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES (IN THOUSANDS)
Years ended December 31,
Interest income reconciliation:
Interest income - taxable equivalent
Taxable equivalent adjustment
Interest income (GAAP)
Net interest income reconciliation:
Net interest income - taxable equivalent
Taxable equivalent adjustment
Net interest income (GAAP)
OVERVIEW
2019
21,131
(203)
20,928
17,885
(203)
17,682
$
$
$
$
2018
19,999
(249)
19,750
17,341
(249)
17,092
$
$
$
$
2017
$
19,048
(545)
$
18,503
$
17,625
(545)
$
17,080
The Company is a community bank serving the financial and trust needs of its customers in our trade area, which is defined as
those portions of Mississippi, Louisiana and Alabama which are within a fifty mile radius of the Waveland, Wiggins and Gautier
branches, the bank subsidiary’s three most outlying locations. Maintaining a strong core deposit base and providing commer-
cial and real estate lending in our trade area are the traditional focuses of the Company. Growth has largely been achieved
through de novo branching activity, and it is expected that these strategies will continue to be emphasized in the future.
The Company recorded net income of $1,679,000 for 2019 compared with net income of $629,000 and $2,758,000 for 2018
and 2017, respectively. Results in 2019 included an increase in net interest income, a reduction in the provision for loan losses,
an increase in non-interest income and a decrease in non-interest expense as compared with 2018. Results in 2018 included a
significant loss from other investments and increased expenses related to other real estate as compared with 2017.
Managing the net interest margin is a key component of the Company’s earnings strategy. In 2019, interest income increased
as interest and fees on loans increased $547,000 and interest on mortgage-backed securities improved $575,000 as compared
to 2018. This increase was somewhat offset by the increase in interest expense in the current year. In 2018, interest income
increased as interest and fees on loans increased $295,000 and interest on mortgage-backed securities improved $1,313,000 as
compared with 2017. This increase however was almost entirely offset by the increase in interest expense in 2018.
Monitoring asset quality, estimating potential losses in our loan portfolio and addressing non-performing loans continue to be
emphasized. The Company is working diligently to address and reduce its non-performing assets. The Company’s nonaccrual
loans totaled $9,266,000 and $8,250,000 at December 31, 2019 and 2018, respectively. Most of these loans are collateral-
dependent, and the Company has carefully evaluated the value of its collateral to determine potential losses.
No provision was recorded in 2019, while the provision for the allowance for loan losses was $122,000 and $116,000 for 2018
and 2017, respectively.
Non-interest income increased $264,000 for 2019 as compared with 2018 and decreased $862,000 for 2018 as compared with
2017. Results for 2019 included an increase in service charges on deposit accounts of $65,000 and a gain from the sale of
securities of $147,000. Results for 2018 included a $274,000 loss from other investments. Results for 2017 included a non-
recurring gain of $429,000 from the redemption of death benefits on bank owned life insurance.
Non-interest expense decreased $110,000 for 2019 as compared with 2018 and increased $229,000 for 2018 as compared with
2017. The decrease in 2019 was primarily the result of reduced costs of employee benefits. The increase in 2018 was primarily
the result of increased write-downs of other real estate of $304,000.
RESULTS OF OPERATIONS
Net Interest Income
Net interest income, the amount by which interest income on loans, investments and other interest-earning assets exceeds interest
expense on deposits and other borrowed funds, is the single largest component of the Company’s income. Management’s
objective is to provide the largest possible amount of income while balancing interest rate, credit, liquidity and capital risk.
Changes in the volume and mix of interest-earning assets and interest-bearing liabilities combined with changes in market rates
of interest directly affect net interest income.
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3
2019 as compared with 2018
The Company’s average interest-earning assets decreased approximately $15,550,000, or 3%, from approximately
$569,944,000 for 2018 to approximately $554,394,000 for 2019. Average loans decreased approximately $6,461,000 due
to principal payments, maturities, charge-offs and foreclosures on existing loans significantly exceeding new loans. Average
taxable available for sale securities decreased approximately $13,845,000 and average nontaxable available for sale securities
decreased approximately $4,102,000 as maturities of these securities funded the decrease in average savings and interest
bearing DDA deposits. The average yield on interest-earning assets was 3.51% for 2018 compared with 3.81% for 2019. The
yield on average loans increased from 4.85% for 2018 to 5.17% for 2019 as a result of the increase in prime rate during 2018
on the Company’s floating rate loans as well as the recovery of previously charged-off interest on loans. The yield on taxable
available for sale securities increased from 1.98% for 2018 to 2.32% for 2019 as the Company changed its investment strategy
to improve yield while not compromising duration and credit risk.
Average interest-bearing liabilities decreased approximately $25,778,000, or 6%, from approximately $414,778,000 for 2018
to approximately $389,000,000 for 2019. Average savings and interest-bearing DDA balances decreased approximately
$26,045,000 primarily as several large commercial customers relocated their funds to other institutions in the current year. The
average rate paid on interest-bearing liabilities increased 19 basis points, from .64% for 2018 to .83% for 2019. This increase
was the result of increased rates in 2018 and 2019.
The Company’s net interest margin on a tax-equivalent basis, which is net interest income as a percentage of average earning
assets, was 3.04% for 2018 as compared with 3.23% for 2019.
2018 as compared with 2017
The Company’s average interest-earning assets decreased approximately $30,425,000, or 5%, from approximately $600,369,000
for 2017 to approximately $569,944,000 for 2018. Average loans decreased approximately $16,605,000 due to principal
payments, maturities, charge-offs and foreclosures on existing loans significantly exceeding new loans. Average balances
due from depository institutions decreased approximately $18,321,000 based on the liquidity needs of the bank subsidiary.
The average yield on interest-earning assets was 3.17% for 2017 compared with 3.51% for 2018. The yield on average loans
increased from 4.47% for 2017 to 4.85% for 2018 as a result of the increase in prime rate during 2017 and 2018. The yield on
taxable available for sale securities increased from 1.52% for 2017 to 1.98% for 2018 as the Company changed its investment
strategy to improve yield while not compromising duration and credit risk.
Average interest-bearing liabilities decreased approximately $22,849,000, or 5%, from approximately $437,627,000 for 2017
to approximately $414,778,000 for 2018. Average savings and interest-bearing DDA balances decreased approximately
$36,155,000 primarily as several large commercial customers relocated their funds to other institutions in the current year.
Average borrowings from the Federal Home Loan Bank (“FHLB”) increased approximately $11,161,000 due to the liquidity
needs of the bank subsidiary. The average rate paid on interest-bearing liabilities increased 31 basis points, from .33% for 2017
to .64% for 2018. This increase was the result of increased rates.
The Company’s net interest margin on a tax-equivalent basis, which is net interest income as a percentage of average earning
assets, was 2.94% for 2017 as compared with 3.04% for 2018.
The tables on the following pages analyze the changes in tax-equivalent net interest income for the years ended December 31,
2019, 2018 and 2017.
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4
ANALYSIS OF AVERAGE BALANCES, INTEREST EARNED/PAID AND YIELD (IN THOUSANDS)
2019
2018
2017
Average
Balance Earned/Paid Rate
Interest
Average
Balance Earned/Paid Rate
Interest
Average
Balance Earned/Paid Rate
Interest
$ 267,263
$ 13,812 5.17%
$ 273,724 $ 13,265
4.85%
$ 290,329 $ 12,970 4.47%
15,404
346 2.25%
9,498
205 2.16%
27,819
420 1.51%
37,987
16,460
1,141 3.00%
551 3.35%
33,864
18,208
970 2.86%
580 3.19%
29,389
19,082
753 2.56%
717 3.76%
206,231
8,953
2,096
4,788 2.32%
422 4.71%
71 3.39%
220,076
13,055
1,519
4,349 1.98%
608 4.66%
22 1.45%
217,059
15,677
1,014
3,298 1.52%
864 5.51%
26 2.56%
Loans (1) (2)
Balances due from
depository institutions
Held to maturity:
Taxable
Non taxable (3)
Available for sale:
Taxable
Non taxable (3)
Other
Total
$ 554,394 $ 21,131 3.81%
$ 569,944 $ 19,999
3.51%
$ 600,369 $ 19,048 3.17%
$ 291,152 $
87,606
1,662 0.57%
1,336 1.53%
$ 317,197 $ 1,468
0.46%
886 1.05%
$ 353,352 $
82,038
736 0.21%
637 0.78%
84,168
Savings and
interest-bearing DDA
Time deposits
Federal funds purchased
and securities sold under
agreements to repurchase
Borrowings from FHLB
10,242
248 2.42%
369
13,044
10 2.71%
294 2.25%
354
1,883
3 0.85%
47 2.50%
Total
$ 389,000 $
3,246 0.83%
$ 414,778 $
2,658 0.64%
$ 437,627
$ 1,423 0.33%
Net tax-equivalent spread
Net tax-equivalent margin
on earning assets
2.98%
3.23%
2.87%
3.04%
2.84%
2.94%
(1) Loan fees of $304, $310 and $338 for 2019, 2018 and 2017, respectively, are included in these figures.
(2) Includes nonaccrual loans.
(3) All interest earned is reported on a taxable equivalent basis using a tax rate of 21% in 2019 and 2018 and 34% in 2017.
See disclosure of Non-GAAP financial measures on pages 2-3.
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5
ANALYSIS OF CHANGES IN INTEREST INCOME AND EXPENSE (IN THOUSANDS)
For the Year Ended
December 31, 2019 Compared With December 31, 2018
Volume
Rate
Rate/Volume
Total
Interest earned on:
Loans
Balances due from depository institutions
Held to maturity securities:
Taxable
Non taxable
Available for sale securities:
Taxable
Non taxable
Other
Total
Interest paid on:
Savings and interest-bearing DDA
Time deposits
Federal funds purchased
Borrowings from FHLB
Total
Interest earned on:
Loans
Balances due from depository institutions
Held to maturity securities:
Taxable
Non taxable
Available for sale securities:
Taxable
Non taxable
Other
Total
Interest paid on:
Savings and interest-bearing DDA
Time deposits
Federal funds purchased
Borrowings from FHLB
Total
$
$
$
$
$
$
$
$
(313)
128
118
(56)
(273)
(191)
8
(579)
(121)
36
(10)
(63)
(158)
$
$
$
$
881
8
47
30
760
7
30
1,763
343
398
22
763
$
$
$
$
(21)
5
6
(3)
(48)
(2)
11
(52)
(28)
16
(5)
(17)
$
$
$
$
For the Year Ended
December 31, 2018 Compared With December 31, 2017
Volume
Rate
Rate/Volume
(742)
(277)
115
(33)
46
(145)
13
(1,023)
(75)
17
1
279
222
$
$
$
$
$
$
1,100
180
89
(109)
991
(134)
(11)
2,106
899
227
6
(5)
$
1,127
$
(63)
(118)
$
13
5
14
23
(6)
(132)
(92)
5
(27)
(114)
$
$
$
1,235
547
141
171
(29)
439
(186)
49
1,132
194
450
(10)
(46)
588
Total
295
(215)
217
(137)
1,051
(256)
(4)
951
732
249
7
247
Provision for Allowance for Loan Losses
In the normal course of business, the Company assumes risk in extending credit to its customers. This credit risk is managed
through compliance with the loan policy, which is approved by the Board of Directors. The policy establishes guidelines relating
to underwriting standards, including but not limited to financial analysis, collateral valuation, lending limits, pricing considerations
and loan grading. The Company’s Loan Review and Special Assets Departments play key roles in monitoring the loan portfolio and
managing problem loans. New loans and, on a periodic basis, existing loans are reviewed to evaluate compliance with the loan policy.
Loan customers in concentrated industries such as gaming and hotel/motel, as well as the exposure for out of area; residential and
land development; construction and commercial real estate loans, and their direct and indirect impact on the Company’s operations
are evaluated on a monthly basis. Loan delinquencies and deposit overdrafts are closely monitored in order to identify developing
problems as early as possible. Lenders experienced in workout scenarios consult with loan officers and customers to address non-
performing loans. A monthly watch list of credits which pose a potential loss to the Company is prepared based on the loan grading
system. This list forms the foundation of the Company’s allowance for loan loss computation.
Management relies on its guidelines and existing methodology to monitor the performance of its loan portfolio and to identify and
estimate potential losses based on the best available information. The potential effect of declines in real estate values and actual
losses incurred by the Company were key factors in our analysis. Much of the Company’s loan portfolio is collateral-dependent,
6
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requiring careful consideration of changes in the value of the collateral. Note A to the Consolidated Financial Statements discloses
a summary of the accounting principles applicable to impaired and nonaccrual loans as well as the allowance for loan losses. Note
C to the Consolidated Financial Statements presents additional analyses of the composition, aging, credit quality and performance
of the loan portfolio as well as the transactions in the allowance for loan losses.
The Company’s analysis includes evaluating the current value of collateral securing all nonaccrual loans. Nonaccrual loans totaled
$9,266,000 and $8,250,000 with specific reserves on these loans of $59,000 and $315,000 as of December 31, 2019 and 2018,
respectively. The specific reserves allocated to nonaccrual loans are relatively low as collateral values appear sufficient to cover loan
losses or the loan balances have been charged down to their realizable value.
The Company’s on-going, systematic evaluation resulted in the Company not recording a provision for the allowance for loan losses
in 2019 and recording a total provision for the allowance for loan losses of $122,000 and $116,000 in 2018 and 2017, respectively.
As a result of receiving new information and updated appraisals on several collateral-dependent loans, the Company increased
the specific provision for several loans in its real estate, mortgage portfolio in 2017. This increase was partially offset by a large
recovery in its real estate, construction portfolio during the year. The allowance for loan losses as a percentage of loans was 1.56%,
1.95% and 2.19% at December 31, 2019, 2018 and 2017, respectively. The Company believes that its allowance for loan losses is
appropriate as of December 31, 2019.
The allowance for loan losses is an estimate, and as such, events may occur in the future which may affect its accuracy. The
Company anticipates that it is possible that additional information will be gathered in the future which may require an adjustment to
the allowance for loan losses. Management will continue to closely monitor its portfolio and take such action as it deems appropriate
to accurately report its financial condition and results of operations.
Non-interest Income
2019 as compared with 2018
Total non-interest income increased $264,000 in 2019 as compared with 2018. Trust Department Income and Fees decreased
$94,000 due to the decrease in account relationships in the current year. Gains on liquidation, sales and calls of securities increased
$147,000 as the Company had opportunities to sell securities which generated gains in 2019. Income (loss) from other investments
increased $106,000 in 2019 as compared with 2018 as operations of an investment in a low-income housing partnership improved
slightly as a result of increased occupancy. Other income increased $72,000 as rental income increased $83,000 as previously
vacant properties were leased in the current year.
2018 as compared with 2017
Total non-interest income decreased $862,000 in 2018 as compared with 2017. Gains on liquidation, sales and calls of securities
decreased $117,000 as the Company had opportunities to sell securities which generated gains in 2017. Income from other
investments decreased $316,000 in 2018 as compared with 2017 as operations of an investment in a low-income housing partnership
declined as a result of decreased occupancy. Prior year’s results included a gain of $429,000 from the redemption of death benefits
on bank owned life insurance.
Non-interest Expense
2019 as compared with 2018
Total non-interest expense decreased $110,000 in 2019 as compared with 2018. Salaries and employee benefits decreased $190,000
primarily as a result of decreased costs for the retiree health plan. Net occupancy costs increased $183,000 as telecommunications
costs increased $205,000 as the Company incurred redundant costs in the process of reconfiguring its resources for reduced costs
and increased functionality in subsequent years. Equipment rentals, depreciation and maintenance decreased $50,000 primarily as
a result of depreciable assets, primarily technology-related, purchased in prior years completing their depreciable life in the current
year. Other expense decreased $53,000 in 2019 as compared with 2018. Included in this fluctuation is the decrease in other real
estate expenses of $701,000, largely due to write-downs of ORE to new appraised values in 2018, which did not occur in 2019. Also
impacting other expense were the increase in FDIC and state banking assessments of $126,000 as a result of a reduced assessment
rate in 2018, an increase in non-recurring legal fees of $201,000 from the settlement of a lawsuit, an increase in ATM expense of
$112,000 as a result of processing conversion costs and an increase in consulting fees of $135,000 primarily due to non-recurring
services relating to strategic planning, operational assessments and revenue enhancement projects during 2019.
2018 as compared with 2017
Total non-interest expense increased $229,000 in 2018 as compared with 2017. Net occupancy costs decreased $117,000 as liability
insurance premiums decreased $71,000 as the Company reduced some of its coverage and telecommunications costs decreased
$88,000 as the Company eliminated some redundant resources. Equipment rentals, depreciation and maintenance increased
$128,000 primarily as a result of purchases of depreciable assets, primarily technology-related, and an increase in maintenance
7
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contracts related to technology services. Other expense increased $276,000 as a result of the decrease in non-recurring consulting
fees of $164,000, the decrease in FDIC and state banking assessments of $176,000 as a result of reduced assessment rate and the
increase in other real estate expenses of $514,000, largely due to write-downs of ORE to new appraised values.
Income Taxes
The Company recognized an income tax benefit of $36,000 and $1,080,000 in 2018 and 2017, respectively. During 2014, Management
established a valuation allowance against its net deferred tax asset of approximately $8,140,000. As of December 31, 2019, the
valuation allowance is still in place. The 2018 and 2017 benefits were the result of the impact of the elimination of the alternative
minimum tax credit carryforwards from new tax legislation and the correction of refunds for prior years. Note I to the Consolidated
Financial Statements presents a reconciliation of income taxes for these three years and further analysis of the valuation allowance.
FINANCIAL CONDITION
Cash and due from banks increased $12,233,000 at December 31, 2019 compared with December 31, 2018 due to the bank
subsidiary’s liquidity position.
Available for sale securities decreased $25,799,000 at December 31, 2019 compared with December 31, 2018 as the maturities
exceeded investment purchases.
Held to maturity securities decreased $2,367,000 at December 31, 2019 compared with December 31, 2018 as the maturities
exceeded investment purchases.
Loans decreased $4,397,000 at December 31, 2019 compared with December 31, 2018, as principal payments, maturities, charge-
offs and foreclosures on existing loans exceeded new loans.
Total deposits increased $2,637,000 at December 31, 2019, as compared with December 31, 2018. Typically, significant increases
or decreases in total deposits and/or significant fluctuations among the different types of deposits from year to year are anticipated
by Management as customers in the casino industry and county and municipal entities reallocate their resources periodically.
Borrowings from the FHLB decreased $32,616,000 at December 31, 2019 as compared with December 31, 2018 based on the
liquidity needs of the bank subsidiary.
SHAREHOLDERS’ EQUITY AND CAPITAL ADEQUACY
Strength, security and stability have been the hallmark of the Company since its founding in 1985 and of its bank subsidiary since
its founding in 1896. A strong capital foundation is fundamental to the continuing prosperity of the Company and the security of
its customers and shareholders. The primary and risk-based capital ratios are important indicators of the strength of a Company’s
capital. These figures are presented in the Five-Year Comparative Summary of Selected Financial Information. The Company has
established the goal of being classified as “well-capitalized” by the banking regulatory authorities.
Significant transactions affecting shareholders’ equity during 2019 are described in Note J to the Consolidated Financial Statements.
The Statement of Changes in Shareholders’ Equity also presents all activity in the Company’s equity accounts.
LIQUIDITY
Liquidity represents the Company’s ability to adequately provide funds to satisfy demands from depositors, borrowers and other
commitments by either converting assets to cash or accessing new or existing sources of funds. Note L to the Consolidated
Financial Statements discloses information relating to financial instruments with off-balance-sheet risk, including letters of credit
and outstanding unused loan commitments. The Company closely monitors the potential effects of funding these commitments on
its liquidity position. Management monitors these funding requirements in such a manner as to satisfy these demands and to provide
the maximum return on its earning assets.
The Company monitors and manages its liquidity position diligently through a number of methods, including through the computation
of liquidity risk targets and the preparation of various analyses of its funding sources and utilization of those sources on a monthly
basis. The Company also uses proforma liquidity projections which are updated on a continuous basis in the management of its
liquidity needs and also conducts contingency testing on its liquidity plan. The Company has also been approved to participate in the
Federal Reserve’s Discount Window Primary Credit Program, which it intends to use only as a contingency. Management carefully
monitors its liquidity needs, particularly relating to potentially volatile deposits, and the Company has encountered no problems
with meeting its liquidity needs.
Deposits, payments of principal and interest on loans, proceeds from maturities of investment securities and earnings on investment
securities are the principal sources of funds for the Company.
8
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The Company also uses other sources of funds, including borrowings from the FHLB. The Company generally anticipates relying
on deposits, purchases of federal funds and borrowings from the FHLB for its liquidity needs in 2020.
REGULATORY MATTERS
During 2016, Management identified opportunities for improving information technology operations and security, risk management
and earnings, addressing asset quality concerns, analyzing and assessing the Bank’s management and staffing needs, and managing
concentrations of credit risk as a result of its own investigation as well as examinations performed by certain bank regulatory
agencies. In concert with the regulators, the Company has identified specific corrective steps and actions to enhance its information
technology operations and security, risk management, earnings, asset quality and staffing. The Company and the Bank may not
declare or pay any cash dividends without the prior written approval of their regulators.
OFF-BALANCE SHEET ARRANGEMENTS
The Company is a party to off-balance-sheet arrangements in the normal course of business to meet the financing needs of its
customers. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-
balance-sheet arrangements. Since some of the commitments and irrevocable letters of credit may expire without being drawn upon,
the total amount does not necessarily represent future cash requirements. As discussed previously, the Company carefully monitors
its liquidity needs and considers its cash requirements, especially for loan commitments, in making decisions on investments and
obtaining funds from its other sources. Further information relating to off-balance-sheet instruments can be found in Note L to the
Consolidated Financial Statements.
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9
P E O P L E S F I N A N C I A L C O R P O R A T I O N A N D S U B S I D I A R I E S
C O N S O L I D A T E D S T A T E M E N T S O F C O N D I T I O N
2019
$ 29,424
196,311
52,231
2,643
2,129
268,949
4,207
264,742
17,421
7,453
1,687
19,381
1,280
2018
$ 17,191
222,110
54,598
2,811
2,069
273,346
5,340
268,006
18,879
8,943
1,956
18,841
1,382
$ 594,702
$ 616,786
$ 122,592
$ 114,512
263,153
64,492
25,906
476,143
3,526
18,361
1,549
499,579
4,943
65,780
21,855
2,545
95,123
$ 594,702
278,772
52,787
27,435
473,506
36,142
18,415
1,789
529,852
4,943
65,780
20,324
(4,113)
86,934
$ 616,786
(In thousands except share data)
DECEMBER 31,
Assets
Cash and due from banks
Available for sale securities
Held to maturity securities, fair value of $53,130 - 2019; $53,459 - 2018
Other investments
Federal Home Loan Bank Stock, at cost
Loans
Less: Allowance for loan losses
Loans, net
Bank premises and equipment, net of accumulated depreciation
Other real estate
Accrued interest receivable
Cash surrender value of life insurance
Other assets
Total assets
Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Demand, non-interest bearing
Savings and demand, interest bearing
Time, $100,000 or more
Other time deposits
Total deposits
Borrowings from Federal Home Loan Bank
Employee and director benefit plans liabilities
Other liabilities
Total liabilities
Shareholders’ Equity:
Common Stock, $1 par value, 15,000,000 shares
authorized, 4,943,186 shares issued and outstanding at
December 31, 2019 and 2018
Surplus
Undivided profits
Accumulated other comprehensive income (loss)
Total shareholders’ equity
Total liabilities and shareholders’ equity
See Notes to Consolidated Financial Statements.
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P E O P L E S F I N A N C I A L C O R P O R A T I O N A N D S U B S I D I A R I E S
C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E
2019
2018
2017
$
13,812
$
13,265
$
12,970
(In thousands except per share data)
YEARS ENDED DECEMBER 31,
Interest income:
Interest and fees on loans
Interest and dividends on securities:
U. S. Treasuries
U.S. Government agencies
Mortgage-backed securities
Collateralized mortgage obligations
States and political subdivisions
Other investments
Interest on balances due from depository institutions
Total interest income
Interest expense:
Deposits
Federal funds purchased and securities sold under agreements to repurchase
Borrowings from Federal Home Loan Bank
Total interest expense
Net interest income
Provision for allowance for loan losses
1,077
477
3,208
192
1,745
71
346
20,928
2,998
248
3,246
17,682
Net interest income after provision for allowance for loan losses
17,682
Non-interest income:
Trust department income and fees
Service charges on deposit accounts
Gain on liquidation, sales and calls of securities
Gain on sale of other investments
Income (loss) from other investments
Increase in cash surrender value of life insurance
Gain from death benefits from life insurance
Other income
Total non-interest income
Non-interest expense:
Salaries and employee benefits
Net occupancy
Equipment rentals, depreciation and maintenance
Other expense
Total non-interest expense
Income before income taxes
Income tax benefit
Net income
Basic and diluted earnings per share
Dividends declared per share
See Notes to Consolidated Financial Statements.
1,614
3,802
147
(168)
440
532
6,367
10,701
2,187
3,084
6,398
22,370
1,679
$
1,679
$ .34
$ .03
$
$
$
1,410
471
2,633
1,744
22
205
19,750
2,354
10
294
2,658
17,092
122
16,970
1,708
3,737
17
(274)
455
460
6,103
10,891
2,004
3,134
6,451
22,480
593
(36)
629
.13
.02
1,602
531
1,320
1,634
26
420
18,503
1,373
3
47
1,423
17,080
116
16,964
1,689
3,732
134
42
458
429
481
6,965
10,949
2,121
3,006
6,175
22,251
1,678
(1,080)
2,758
.54
.01
$
$
$
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P E O P L E S F I N A N C I A L C O R P O R A T I O N A N D S U B S I D I A R I E S
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
YEARS ENDED DECEMBER 31,
2019
2018
2017
Net income
$
1,679
$
629
$
2,758
Other comprehensive income (loss):
Net unrealized gain (loss) on available for sale securities
6,411
(1,645)
127
Reclassification adjustment for realized gains on available
for sale securities called or sold in current year
Gain (loss) from unfunded post-retirement benefit
obligation
Total other comprehensive income (loss)
(147)
394
6,658
(134)
459
(1,160)
(1,186)
(1,167)
Total comprehensive income (loss)
$
8,337
$
(557)
$
1,591
See Notes to Consolidated Financial Statements.
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P E O P L E S F I N A N C I A L C O R P O R A T I O N A N D S U B S I D I A R I E S
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands except share and per share data)
Number of
Common
Shares
Common
Stock
Surplus
Undivided
Profits
Accumulated
Other
Comprehensive
Income (Loss) Total
Balance, January 1, 2018
5,083,186
$ 5,083
$ 65,780
$
21,563
$
(2,927)
$ 89,499
Net income
Retirement of stock
Cash dividend ($.02 per share)
Other comprehensive loss
(140,000)
(140)
Balance, December 31, 2018
4,943,186
4,943
65,780
Net income
Cash dividend ($.03 per share)
Other comprehensive income
629
(1,767)
(101)
20,324
1,679
(148)
629
(1,907)
(101)
(1,186)
(1,186)
(4,113)
86,934
1,679
(148)
6,658
6,658
Balance, December 31, 2019
4,943,186
$ 4,943
$ 65,780
$
21,855
$
2,545
$ 95,123
See Notes to Consolidated Financial Statements.
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P E O P L E S F I N A N C I A L C O R P O R A T I O N A N D S U B S I D I A R I E S
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
YEARS ENDED DECEMBER 31,
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation
Provision for allowance for loan losses
Write-down of other real estate
(Gain) loss on sales of other real estate
(Income) loss from other investments
Gain from death benefits from life insurance
Amortization of available for sale securities
Amortization of held to maturity securities
Gain on liquidation, sales and calls of securities
Gain on sales of other investments
Increase in cash surrender value of life insurance
Change in accrued interest receivable
Change in other assets
Change in other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Proceeds from maturities, liquidation, sales and
calls of available for sale securities
Purchases of available for sale securities
Proceeds from maturities of held to maturity securities
Purchases of held to maturity securities
Purchase of Federal Home Loan Bank Stock
Proceeds from sales of other investments
Proceeds from sales of other real estate
Loans, net change
Acquisition of premises and equipment
Investment in cash surrender value of life insurance
Proceeds from death benefits from life insurance
Net cash provided by investing activities
Cash flows from financing activities:
Demand and savings deposits, net change
Time deposits, net change
Cash dividends
Retirement of stock
Borrowings from Federal Home Loan Bank
Repayments to Federal Home Loan Bank
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
See Notes to Consolidated Financial Statements.
2019
2018
2017
$
1,679
$
629
$
2,758
1,914
442
(387)
168
182
266
(147)
(440)
269
102
101
4,149
65,658
(33,631)
5,705
(3,604)
(60)
3,142
1,557
(456)
(100)
1,964
122
764
21
274
315
260
(17)
(455)
(52)
(57)
506
4,274
60,222
(39,086)
760
(4,455)
(699)
125
3,211
1,461
(690)
(85)
38,211
20,764
1,914
116
460
101
(42)
(429)
287
253
(134)
(458)
(49)
(537)
717
4,957
71,315
(83,561)
7,725
(10,991)
(831)
1,666
33,531
(423)
(94)
1,929
20,266
(7,539)
10,176
(148)
984,856
(1,017,472)
(30,127)
12,233
17,191
(52,268)
(3,796)
(101)
(1,907)
1,428,700
(1,403,756)
(51,804)
6,358
(51)
(502)
131,500
(126,559)
(33,128)
(41,058)
(8,090)
25,281
(15,835)
41,116
$ 29,424
$
17,191
$
25,281
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P E O P L E S F I N A N C I A L C O R P O R A T I O N A N D S U B S I D I A R I E S
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A – BUSINESS AN D SUMMA RY OF SI GN I FIC A N T A C C OU N T IN G PO L I C IE S:
Business of The Company
Peoples Financial Corporation (the “Company”) is a one-bank holding company headquartered in Biloxi, Mississippi. Its two subsidiaries are
The Peoples Bank, Biloxi, Mississippi (the “Bank”), and PFC Service Corp. Its principal subsidiary is the Bank, which provides a full range
of banking, financial and trust services to state, county and local government entities and individuals and small and commercial businesses
operating in those portions of Mississippi, Louisiana and Alabama which are within a fifty mile radius of the Waveland, Wiggins and Gautier
branches, the Bank’s three most outlying locations (the “trade area”).
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
Basis of Accounting
The Company and its subsidiaries recognize assets and liabilities, and income and expense, on the accrual basis of accounting. The preparation
of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires
Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates. Material estimates common to the banking industry that are particularly susceptible to significant
change in the near term include, but are not limited to, the determination of the allowance for loan losses, the valuation of other real estate
acquired in connection with foreclosure or in satisfaction of loans, assumptions relating to employee and director benefit plan liabilities and
valuation allowances associated with the realization of deferred tax assets, which are based on future taxable income.
Revenue Recognition
As of January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers
(Topic 606), using the modified retrospective method. Disclosures of revenue from contracts with customers for periods beginning after
January 1, 2018 are presented under ASC Topic 606 and have not materially changed from the prior year amounts. This update prescribes
the process related to the recognition of revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 excludes revenue streams
relating to loans and investment securities, which are the major source of revenue for the Company, from its scope. As a result, the adoption
of the guidance had no material impact on the measurement or recognition of revenue. Consistent with this guidance, the Company
recognizes non-interest income within the scope of this guidance as services are transferred to its customers in an amount that reflects the
consideration it expects to be entitled to in exchange for those services. Other types of revenue contracts, the income from which is included
in non-interest income, that are within the scope of ASU 2014-09 are:
Trust department income and fees: A contract for fiduciary and/or investment administration services on personal trust accounts and corporate
trust services. Personal trust fee income is determined as a percentage of assets under management and is recognized over the period the
underlying trust is serviced. Corporate trust fee income is recognized over the period the Company provides service to the entity.
Service charges on deposit accounts: The deposit contract obligates the Company to serve as a custodian of the customer’s deposited funds
and is generally terminable at will by either party. The contract permits the customer to access the funds on deposit and request additional
services for which the Company earns a fee, including NSF and analysis charges, related to the deposit account. Income for deposit accounts
is recognized over the statement cycle period (typically on a monthly basis) or at the time the service is provided, if additional services are
requested.
ATM fee income: A contract between the Company, as a card-issuing bank, and its customers whereby the Company receives a transaction fee
from the merchant’s bank whenever a customer uses a debit or credit card to make a purchase. These fees are earned as the service is provided
(i.e., when the customer uses a debit or ATM card).
Other non-interest income: Other non-interest income includes several items, such as wire transfer income, check cashing fees, the increase
in cash surrender value of life insurance, rental income from bank properties and safe deposit box rental fees. This income is generally
recognized at the time the service is provided and/or the income is earned.
New Accounting Pronouncements
In April 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update 2019-04 (“ASU 2019-04”),
Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825,
Financial Instruments. ASU 2019-04 includes technical corrections relating to scope, held to maturity disclosures, measurement alternative
and remeasurement of equity securities. The effective date is for fiscal years beginning after December 31, 2019, including interim periods
within those fiscal years. The adoption of this ASU is not expected to have a material effect on the Company’s financial position, result of
operations or cash flows.
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Accounting Standards Update 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments (“ASU 2016-13”), is intended to provide financial statement users with more decision-useful information related to expected
credit losses on financial instruments and other commitments to extend credit by replacing the current incurred loss impairment methodology
with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information
to determine credit loss estimates. ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed
to apply methods that reasonably reflect its expectations of the credit loss estimate. Additionally, the amendments of ASU 2016-13 require
that credit losses on available for sale debt securities be presented as an allowance rather than as a write-down. The Company has established
a Current Expected Credit Loss (CECL) Committee which includes the appropriate members of management, credit administration and
accounting to evaluate the impact this ASU will have on the Company’s financial position, results of operations and financial statement
disclosures and determine the most appropriate method of implementing this ASU. The Company selected a third-party vendor to provide
allowance for loan loss software as well as advisory services in developing a new methodology that would be compliant with ASU 2016-13,
and is working with the approved third-party vendor to develop the CECL model and evaluate its impact. ASU 2016-13 was originally to
become effective for the Company for interim and annual periods beginning after December 15, 2019. In November 2019, the FASB issued
Accounting Standards Update 2019 – 10 (“ASU 2019–10”), Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging
(Topic 815) and Leases (Topic 842): Effective Dates. ASU 2019-10 amends the effective date for certain entities, including the Company, for
ASU 2016-13, Financial Instruments – Credit Losses. Because the Company is a smaller reporting company, ASU 2016-13 is now effective
for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.
In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for
Income Taxes (“ASU 2019-12”). ASU 2019-12 enhances and simplifies certain aspects of income tax accounting guidance related to hybrid
tax regimes, interim period accounting for enacted changes in tax law, ownership changes in investments, intraperiod tax allocations and
tax basis step-up in goodwill. It is effective for the Company for fiscal years beginning after December 15, 2020, including interim periods
within those fiscal years. The adoption of this ASU is not expected to have a material effect on the Company’s financial position, result of
operations or cash flows.
Cash and Due from Banks
The Company is required to maintain average reserve balances in its vault or on deposit with the Federal Reserve Bank. The average amount
of these reserve requirements was approximately $383,000 and $527,000 for the years ending December 31, 2019 and 2018, respectively.
Securities
The classification of securities is determined by Management at the time of purchase. Securities are classified as held to maturity when
the Company has the positive intent and ability to hold the security until maturity. Securities held to maturity are stated at amortized cost.
Securities not classified as held to maturity are classified as available for sale and are stated at fair value. Unrealized gains and losses, net of
tax, on these securities are recorded in shareholders’ equity as accumulated other comprehensive income. The amortized cost of available
for sale securities and held to maturity securities is adjusted for amortization of premiums and accretion of discounts to maturity, determined
using the interest method. Such amortization and accretion is included in interest income on securities. A decline in the market value of
any investment below cost that is deemed to be other-than-temporary is charged to earnings for the decline in value deemed to be credit
related and a new cost basis in the security is established. The decline in value attributed to non-credit related factors is recognized in other
comprehensive income. In estimating other-than-temporary losses, Management considers the length of time and the extent to which the
fair value has been less than cost, the financial condition and nature of the issuer, the cause of the decline, especially if related to a change in
interest rates, and the intent and ability of the Company to retain the investment in the issuer for a period of time sufficient to allow for any
anticipated recovery in fair value. The specific identification method is used to determine realized gains and losses on sales of securities,
which are reported as gain (loss) on sales and calls of securities in non-interest income.
Other Investments
Other investments include a low income housing partnership in which the Company is a 99% limited partner. The partnership has qualified
to receive annual low income housing federal tax credits that are recognized as a reduction of the current tax expense. The investment is
accounted for using the equity method.
Federal Home Loan Bank Stock
The Company is a member of the Federal Home Loan Bank of Dallas (“FHLB”) and as such is required to maintain a minimum investment
in its stock that varies with the level of FHLB advances outstanding. The stock is bought from and sold to the FHLB based on its $100 par
value. The stock does not have a readily determinable fair value and as such is classified as restricted stock, carried at cost and evaluated for
impairment in accordance with GAAP.
Loans
The loan portfolio consists of commercial and industrial and real estate loans within the Company’s trade area that we have the intent and
ability to hold for the foreseeable future or until maturity. The loan policy establishes guidelines relating to pricing; repayment terms;
collateral standards including loan to value limits, appraisal and environmental standards; lending authority; lending limits and documentation
requirements.
Loans are stated at the amount of unpaid principal, reduced by unearned income and the allowance for loan losses. Interest on loans is
recognized on a daily basis over the terms of each loan based on the unpaid principal balance. Loan origination fees are recognized as income
when received. Revenue from these fees is not material to the financial statements.
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The Company continuously monitors its relationships with its loan customers in concentrated industries such as gaming and hotel/motel, as
well as the exposure for out of area, land development, construction and commercial real estate loans, and their direct and indirect impact on
its operations. Loan delinquencies and deposit overdrafts are monitored on a weekly basis in order to identify developing problems as early
as possible. On a monthly basis, a watch list of credits based on our loan grading system is prepared. Grades are applied to individual loans
based on factors including repayment ability, financial condition of the borrower and payment performance. Loans with lower grades are
placed on the watch list of credits. The watch list is the primary tool for monitoring the credit quality of the loan portfolio. Once loans are
determined to be past due, the loan officer and the special assets department work vigorously to return the loans to a current status.
The Company 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. Accrued
interest on loans classified as nonaccrual is reversed at the time the loans are placed on nonaccrual. Interest received on nonaccrual loans is
applied against principal. Loans are restored to accrual status when the obligation is brought current or has performed in accordance with the
contractual terms for a reasonable period of time and the ultimate collectibility of the total contractual principal and interest is no longer in
doubt. The placement of loans on and removal of loans from nonaccrual status must be approved by Management.
Loans which become 90 days delinquent are reviewed relative to collectibility. Unless such loans are in the process of terms revision to
bring them to a current status or foreclosure or in the process of collection, these loans are placed on nonaccrual and, if deemed uncollectible,
are charged off against the allowance for loan losses. That portion of a loan which is deemed uncollectible will be charged off against the
allowance as a partial charge off. All charge offs must be approved by Management and are reported to the Board of Directors.
Allowance for Loan Losses
The allowance for loan losses (“ALL”) is a valuation account available to absorb losses on loans. The ALL is established through provisions
for loan losses charged against earnings. Loans deemed to be uncollectible are charged against the ALL, and subsequent recoveries, if any,
are credited to the allowance.
The ALL is based on Management’s evaluation of the loan portfolio under current economic conditions and is an amount that Management
believes will be adequate to absorb probable losses on loans existing at the reporting date. On a quarterly basis, the Company’s problem
asset committee meets to review the watch list of credits, which is formulated from the loan grading system. Members of this committee
include loan officers, collection officers, the special assets director, the chief lending officer, the chief credit officer, the chief financial officer
and the chief executive officer. The evaluation includes Management’s assessment of several factors: review and evaluation of specific
loans, changes in the nature and volume of the loan portfolio, current and anticipated economic conditions and the related impact on specific
borrowers and industry groups, a study of loss experience, a review of classified, non-performing and delinquent loans, the estimated value
of any underlying collateral, an estimate of the possibility of loss based on the risk characteristics of the portfolio, adverse situations that may
affect the borrower’s ability to repay and the results of regulatory examinations. This evaluation is inherently subjective as it requires material
estimates that may be susceptible to significant change.
The ALL consists of specific and general components. The specific component relates to loans that are classified as impaired. The general
component of the allowance relates to loans that are not impaired. Changes to the components of the ALL are recorded as a component of
the provision for the allowance for loan losses. Management must approve changes to the ALL and must report its actions to the Board of
Directors. The Company believes that its allowance for loan losses is appropriate at December 31, 2019.
The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company
will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company’s impaired loans include
troubled debt restructurings and performing and non-performing major loans for which full payment of principal or interest is not expected.
Payments received for impaired loans not on nonaccrual status are applied to principal and interest.
All impaired loans are reviewed, at a minimum, on a quarterly basis. The Company calculates the specific allowance required for impaired
loans based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market
price or the fair value of its collateral. Most of the Company’s impaired loans are collateral-dependent.
The fair value of the collateral for collateral-dependent loans is based on appraisals performed by third-party valuation specialists, comparable
sales and other estimates of fair value obtained principally from independent sources such as the Multiple Listing Service or county tax
assessment valuations, adjusted for estimated selling costs. The Company has a Real Estate Appraisal Policy (the “Policy”) which is in
compliance with the guidelines set forth in the “Interagency Appraisal and Evaluation Guidelines” which implement Title XI of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) and the revised “Interagency Appraisal and Evaluation Guidelines”
issued in 2010. The Policy further requires that appraisals be in writing and conform to the Uniform Standards of Professional Appraisal
Practice (“USPAP”). An appraisal prepared by a state-licensed or state-certified appraiser is required on all new loans secured by real estate
in excess of $500,000. Loans secured by real estate in an amount of $500,000 or less, or that qualify for an exemption under FIRREA, must
have a summary appraisal report or in-house evaluation, depending on the facts and circumstances. Factors including the assumptions and
techniques utilized by the appraiser, which could result in a downward adjustment to the collateral value estimates indicated in the appraisal,
are considered by the Company.
When Management determines that a loan is impaired and the loan is collateral-dependent, an evaluation of the fair value of the collateral is
performed. The Company maintains established criteria for assessing whether an existing appraisal continues to reflect the fair value of the
property for collateral-dependent loans. Appraisals are generally considered to be valid for a period of at least twelve months. However,
17
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appraisals that are less than 12 months old may need to be adjusted. Management considers such factors as the property type, property
condition, current use of the property, current market conditions and the passage of time when determining the relevance and validity of the
most recent appraisal of the property. If Management determines that the most recent appraisal is no longer valid, a new appraisal is ordered
from an independent and qualified appraiser.
During the interim period between ordering and receipt of the new appraisal, Management considers if the existing appraisal should be
discounted to determine the estimated fair value of collateral. Discounts are applied to the existing appraisal and take into consideration the
property type, condition of the property, external market data, internal data, reviews of recently obtained appraisals and evaluations of similar
properties, comparable sales of similar properties and tax assessment valuations. When the new appraisal is received and approved by
Management, the valuation stated in the appraisal is used as the fair value of the collateral in determining impairment, if any. If the recorded
investment in the impaired loan exceeds the measure of fair value, a valuation allowance is required as a specific component of the allowance
for loan losses. Any specific reserves recorded in the interim are adjusted accordingly.
The general component of the ALL is the loss estimated by applying historical loss percentages to non-classified loans which have been
divided into segments. These segments include gaming; hotel/motel; real estate, construction; real estate, mortgage; commercial and
industrial and all other. The loss percentages are based on each segment’s historical five year average loss experience which may be adjusted
by qualitative factors such as changes in the general economy, or economy or real estate market in a particular geographic area or industry.
Management considers the following when assessing risk in the Company’s loan portfolio segments: gaming- loans in this segment are
primarily susceptible to declines in tourism and general economic conditions; hotel/motel - loans in this segment are primarily susceptible
to tourism, declines in occupancy rates, business failure, industry concentrations and general economic conditions; real estate, construction -
loans in this segment are primarily susceptible to cost overruns, changes in market demand for property, delay in completion of construction
and declining real estate values; real estate, mortgage - loans in this segment are primarily susceptible to general economic conditions,
declining real estate values, industry concentrations and business failure; commercial and industrial - loans in this segment are primarily
susceptible to general economic conditions, declining real estate values, industry concentrations and business failure; and other - loans in this
segment, most of which are consumer loans, are primarily susceptible to regulatory risks, unemployment and general economic conditions.
Bank Premises and Equipment
Bank premises and equipment are stated at cost, less accumulated depreciation. Depreciation is computed by the straight-line method based
on the estimated useful lives of the related assets.
Other Real Estate
Other real estate (“ORE”) includes real estate acquired through foreclosure. Each other real estate property is carried at fair value, less
estimated costs to sell. Fair value is principally based on appraisals performed by third-party valuation specialists. Any excess of the carrying
value of the related loan over the fair value of the real estate at the date of foreclosure is charged against the ALL. Any expense incurred in
connection with holding such real estate or resulting from any write-downs in value subsequent to foreclosure is included in non-interest
expense. When the other real estate property is sold, a gain or loss is recognized on the sale for the difference, if any, between the sales
proceeds and the carrying amount of the property. If the fair value of the ORE, less estimated costs to sell at the time of foreclosure, decreases
during the holding period, the ORE is written down with a charge to non-interest expense. Generally, ORE properties are actively marketed
for sale and Management is continuously monitoring these properties in order to minimize any losses.
Trust Department Income and Fees
Corporate trust fees are accounted for on an accrual basis and personal trust fees are recorded when the underlying trust is serviced.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as
net operating loss carry forwards, is required to the extent that realization of such benefits is more likely than not. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the
period that includes the enactment date.
In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company’s assets and
liabilities results in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such asset is
required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all
of the deferred tax asset will not be realized. In assessing the realizability of the deferred tax assets, Management considers the scheduled
reversals of deferred tax liabilities, projected future taxable income and tax planning strategies. The Company currently evaluates income tax
positions judged to be uncertain. A loss contingency reserve is accrued if it is probable that the tax position will be challenged, it is probable
that the future resolution of the challenge will confirm that a loss has been incurred and the amount of such loss can be reasonably estimated.
Post-Retirement Benefit Plan
The Company accounts for its post-retirement benefit plan under Accounting Standards Codification (“Codification” or “ASC”) Topic 715,
Retirement Benefits (“ASC 715”). The under or over funded status of the Company’s post-retirement benefit plan is recognized as a liability
or asset in the statement of condition. Changes in the plan’s funded status are reflected in other comprehensive income. Net actuarial gains
and losses and adjustments to prior service costs that are not recorded as components of the net periodic benefit cost are charged to other
comprehensive income.
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Earnings Per Share
Basic and diluted earnings per share are computed on the basis of the weighted average number of common shares outstanding of 4,943,186
for 2019, 5,031,778 for 2018, and 5,123,076 for 2017.
Accumulated Other Comprehensive Income (Loss)
At December 31, 2019, 2018 and 2017, accumulated other comprehensive income (loss) consisted of net unrealized gains (losses) on available
for sale securities and over (under) funded liabilities related to the Company’s post-retirement benefit plan.
Statements of Cash Flows
The Company has defined cash and cash equivalents to include cash and due from banks. The Company paid $3,231,710, $2,657,616, and
$1,420,399 in 2019, 2018 and 2017, respectively, for interest on deposits and borrowings. No income tax payments were paid in 2019, 2018
and 2017. Loans transferred to other real estate amounted to $1,707,389, $4,706,732 and $1,946,045 in 2019, 2018 and 2017, respectively.
Fair Value Measurement
The Company reports certain assets and liabilities at their estimated fair value. These assets and liabilities are classified and disclosed in one
of three categories based on the inputs used to develop the measurements. The categories establish a hierarchy for ranking the quality and
reliability of the information used to determine fair value.
Reclassifications
Certain reclassifications have been made to the prior year statements to conform to current year presentation. The reclassifications had no
effect on prior year net income.
NOTE B – S EC URIT IES:
The amortized cost and fair value of securities at December 31, 2019 and 2018, respectively, are as follows (in thousands):
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
December 31, 2019:
Available for sale securities:
U.S. Treasuries
U.S. Government agencies
Mortgage-backed securities
Collateralized mortgage obligations
States and political subdivisions
Total available for sale securities
Held to maturity securities:
U.S. Government agencies
States and political subdivisions
Total held to maturity securities
December 31, 2018:
Available for sale securities:
U.S. Treasuries
U.S. Government agencies
Mortgage-backed securities
States and political subdivisions
Total available for sale securities
Held to maturity securities:
U.S. Government agencies
States and political subdivisions
Total held to maturity securities
$
$
$
$
$
$
$
$
55,922
12,493
104,414
15,440
6,412
194,681
5,000
47,231
52,231
85,866
17,492
112,391
10,994
226,743
8,185
46,413
54,598
Estimated
Fair Value
$
55,653
12,570
106,153
15,488
6,447
$
6
93
1,832
251
35
$
(275)
(16)
(93)
(203)
$
2,217
$
(587)
$ 196,311
$
$
$
$
$
$
985
985
14
231
102
347
89
89
$
$
$
(20)
(66)
(86)
$
4,980
48,150
$
53,130
(2,443)
(259)
(2,278)
$
(4,980)
$ 83,423
17,247
110,344
11,096
$ 222,110
$
$
(371)
(857)
$
7,814
45,645
(1,228)
$
53,459
The amortized cost and fair value of debt securities at December 31, 2019, (in thousands) by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or
prepayment penalties.
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19
Available for sale securities:
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Mortgage-backed securities
Total
Held to maturity securities:
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Total
Amortized Cost
Fair Value
$
$
$
$
28,468
38,782
20,517
2,500
104,414
194,681
2,718
17,036
24,209
8,268
52,231
$
$
$
$
28,485
38,569
20,522
2,582
106,153
196,311
2,722
17,342
24,407
8,659
53,130
Available for sale and held to maturity securities with gross unrealized losses at December 31, 2019 and 2018, aggregated by investment
category and length of time that individual securities have been in a continuous loss position, are as follows (in thousands):
Over Twelve Months
Less Than Twelve Months
Gross
Unrealized
Losses
Fair Value
December 31, 2019:
U.S. Treasuries
U.S. Government agencies
Mortgage-backed securities
Collateralized mortgage
obligations
States and political
subdivisions
Total
December 31, 2018:
U.S. Treasuries
U.S. Government agencies
Mortgage-backed securities
States and political
subdivisions
$
$
$
$
4,894
4,978
10,941
10,398
4,602
$ 35,813
$
999
4,939
24,834
8,470
Total
$ 39,242
$
44
16
93
203
61
417
1
61
293
122
477
Fair Value
$ 49,753
4,979
608
$ 55,340
$ 82,424
17,608
55,649
19,678
$ 175,359
Gross
Unrealized
Losses
$
231
20
$
$
5
256
2,442
569
1,985
735
Total
Gross
Unrealized
Losses
$
275
36
93
203
66
Fair Value
$ 54,647
9,957
10,941
10,398
5,210
$ 91,153
$
673
$ 83,423
22,547
80,483
$ 2,443
630
2,278
28,148
857
$
5,731
$ 214,601
$ 6,208
At December 31, 2019, 11 of the 12 securities issued by the U.S. Treasury, 2 of the 4 securities issued by U.S. Government agencies, 6 of the 47
mortgage-backed securities, 2 of the 3 collateralized mortgage obligations and 16 of the 131 securities issued by states and political subdivisions
contained unrealized losses.
Management evaluates securities for other-than-temporary impairment on a monthly basis. In performing this evaluation, the length of time and
the extent to which the fair value has been less than cost, the fact that the Company’s securities are primarily issued by U.S. Treasury and U.S.
Government agencies and the cause of the decline in value are considered. In addition, the Company does not intend to sell and it is not more likely
than not that we will be required to sell these securities before maturity. While some available for sale securities have been sold for liquidity purposes
or for gains, the Company has traditionally held its securities, including those classified as available for sale, until maturity. As a result of this
evaluation, the Company has determined that the declines summarized in the tables above are not deemed to be other-than-temporary.
Proceeds from sales of available for sale debt securities were $15,123,868 and $30,748,797 during 2019 and 2017, respectively. Available for sale
debt securities were sold and called for realized gains of $146,675 and $133,986 during 2019 and 2017, respectively. There were no sales or calls of
available for sale securities in 2018. Proceeds from sales of other investments were $125,145 for a realized gain of $16,995 during 2018.
Securities with a fair value of $230,065,621 and $208,781,426 at December 31, 2019 and 2018, respectively, were pledged to secure public deposits,
federal funds purchased and other balances required by law.
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20
NOTE C – LOANS:
The composition of the loan portfolio at December 31, 2019 and 2018 is as follows (in thousands):
December 31,
Gaming
Hotel/motel
Real estate, construction
Real estate, mortgage
Commercial and industrial
Other
Total
2019
19,899
47,294
23,209
141,406
30,626
6,515
268,949
$
$
2018
25,767
44,112
28,763
140,271
27,505
6,928
273,346
$
$
In the ordinary course of business, the Company’s bank subsidiary extends loans to certain officers and directors and their personal business
interests at, in the opinion of Management, the same terms, including interest rates and collateral, as those prevailing at the time for comparable
loans of similar credit risk with persons not related to the Company or its subsidiaries. These loans do not involve more than normal risk
of collectability and do not include other unfavorable features. An analysis of the activity with respect to such loans to related parties is as
follows (in thousands):
Balance, January 1
January 1 balances, loans of directors appointed during the year
New loans and advances
Repayments
Balance, December 31
2019
9,157
1,174
(1,141)
9,190
$
$
2018
6,543
2,142
2,272
(1,800)
9,157
$
$
As part of its evaluation of the quality of the loan portfolio, Management monitors the Company’s credit concentrations on a monthly basis.
Total outstanding concentrations were as follows (in thousands):
December 31,
Gaming
Hotel/motel
Out of area
$
2019
19,899
47,294
13,423
$
2018
25,767
44,112
15,244
The age analysis of the loan portfolio, segregated by class of loans, as of December 31, 2019 and 2018 is as follows (in thousands):
Number of Days Past Due
60-89
30-59
Greater Than 90 Total Past Due
$
$
$
Loans
Past Due
Greater Than
90 Days &
Current
Total Loans Still Accruing
$
$ 19,899 $ 19,899
47,294
23,209
141,406
30,626
6,515
47,294
22,823
131,333
30,258
6,453
14
5,580
218
386
10,073
368
62
5,812
$ 10,889
$ 258,060 $ 268,949
$
860
1,730
1,661
$
$
3,187
11,725
1,780
110
$ 25,767 $ 25,767
44,112
28,763
140,271
27,505
6,928
44,112
25,576
128,546
25,725
6,818
51
4
December 31, 2019:
Gaming
Hotel/motel
Real estate, construction
Real estate, mortgage
Commercial and industrial
Other
Total
December 31, 2018:
Gaming
Hotel/motel
Real estate, construction
Real estate, mortgage
Commercial and industrial
Other
Total
$
$
$
$
303
4,150
92
50
4,595
1,987
2,866
9
107
4,969
$
$
69
343
58
12
482
340
7,129
110
3
$
$
$ 7,582
$
4,251
$ 16,802
$ 256,544 $ 273,346
$
55
The Company monitors the credit quality of its loan portfolio through the use of a loan grading system. A score of 1 – 5 is assigned to the
loan based on factors including repayment ability, trends in net worth and/or financial condition of the borrower and guarantors, employment
stability, management ability, loan to value fluctuations, the type and structure of the loan, conformity of the loan to bank policy and payment
performance. Based on the total score, a loan grade of A, B, C, S, D, E or F is applied. A grade of A will generally be applied to loans for
customers that are well known to the Company and that have excellent sources of repayment. A grade of B will generally be applied to loans
for customers that have excellent sources of repayment which have no identifiable risk of collection. A grade of C will generally be applied
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to loans for customers that have adequate sources of repayment which have little identifiable risk of collection. A grade of S will generally be
applied to loans for customers who meet the criteria for a grade of C but also warrant additional monitoring by placement on the watch list.
A grade of D will generally be applied to loans for customers that are inadequately protected by current sound net worth, paying capacity of
the borrower, or pledged collateral. Loans with a grade of D have unsatisfactory characteristics such as cash flow deficiencies, bankruptcy
filing by the borrower or dependence on the sale of collateral for the primary source of repayment, causing more than acceptable levels of risk.
Loans 60 to 89 days past due receive a grade of D. A grade of E will generally be applied to loans for customers with weaknesses inherent
in the D classification and in which collection or liquidation in full is questionable. In addition, on a monthly basis the Company determines
which loans are 90 days or more past due and assigns a grade of E to them. A grade of F is applied to loans which are considered uncollectible
and of such little value that their continuance in an active bank is not warranted. Loans with this grade are charged off, even though partial
or full recovery may be possible in the future.
An analysis of the loan portfolio by loan grade, segregated by class of loans, as of December 31, 2019 and 2018 is as follows (in thousands):
December 31, 2019:
Gaming
Hotel/motel
Real estate, construction
Real estate, mortgage
Commercial and industrial
Other
Total
December 31, 2018:
Gaming
Hotel/motel
Real estate, construction
Real estate, mortgage
Commercial and industrial
Other
Total
Loans With A Grade Of:
A, B or C
S
D
E
F
Total
$
19,899
47,294
22,611
123,841
21,609
6,501
$ 241,755
$
21,080
44,112
27,096
111,719
25,335
6,904
$ 236,246
$
$
$
$
5,338
8,627
$
13,965
$
10,430
$
10,430
$
$
$
83
3,608
59
12
3,762
4,687
$
217
12,992
218
20
18,134
$
$
$
$
$
515
8,619
331
2
9,467
1,450
5,130
1,952
4
8,536
$ 19,899
47,294
23,209
141,406
30,626
6,515
$ 268,949
$ 25,767
44,112
28,763
140,271
27,505
6,928
$ 273,346
A loan may be impaired but not on nonaccrual status when the loan is well secured and in the process of collection. Total loans on nonaccrual
as of December 31, 2019 and 2018 are as follows (in thousands):
December 31,
Real estate, construction
Real estate, mortgage
Commercial and industrial
Other
Total
$
2019
515
8,495
256
$
$
9,266
$
2018
1,439
4,954
1,855
2
8,250
Prior to 2018, certain loans were modified by granting interest rate concessions to these customers with such loans being classified as troubled
debt restructurings. During 2019 and 2018 the Company did not restructure any additional loans. Specific reserves of $63,106 and $69,000
have been allocated to troubled debt restructurings as of December 31, 2019 and 2018, respectively. The Bank had no commitments to lend
additional amounts to customers with outstanding loans classified as troubled debt restructurings as of December 31, 2019 and 2018.
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22
Impaired loans, which include loans classified as nonaccrual and troubled debt restructurings, segregated by class of loans, as of December
31, 2019 and 2018 were as follows (in thousands):
Unpaid
Principal Balance
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
December 31, 2019:
With no related allowance recorded:
Real estate, construction
Real estate, mortgage
Commercial and industrial
Total
With a related allowance recorded:
Real estate, construction
Real estate, mortgage
Commercial and industrial
Total
Total by class of loans:
Real estate, construction
Real estate, mortgage
Commercial and industrial
Total
December 31, 2018:
With no related allowance recorded:
Real estate, construction
Real estate, mortgage
Commercial and industrial
Other
Total
With a related allowance recorded:
Real estate, construction
Real estate, mortgage
Total
Total by class of loans:
Real estate, construction
Real estate, mortgage
Commercial and industrial
Other
Total
$
$
292
8,906
217
9,415
223
624
39
886
515
9,530
256
292
8,906
217
9,415
223
624
39
886
515
9,530
256
$
$
20
98
4
122
20
98
4
$
312
9,075
217
9,604
230
614
41
885
542
9,689
258
$
10,301
$
10,301
$
122
$
10,489
$
$
$
1,171
5,508
2,083
2
8,764
742
574
1,316
1,913
6,082
2,083
2
10,080
$
$
784
5,474
1,855
2
8,115
655
574
1,229
1,439
6,048
1,855
2
9,344
$
$
283
101
384
283
101
$
785
5,826
2,204
3
8,818
633
589
1,222
1,418
6,415
2,204
3
$
384
$
10,040
$
54
29
29
27
27
56
56
29
29
25
25
54
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Transactions in the allowance for loan losses for the years ended December 31, 2019, 2018 and 2017, and the balances of loans, individually
and collectively evaluated for impairment, as of December 31, 2019, 2018 and 2017 are as follows (in thousands):
December 31, 2019:
Allowance for Loan Losses:
Beginning Balance
Charge-offs
Recoveries
Provision
Gaming
Hotel/Motel
Real Estate, Real Estate,
Construction Mortgage
Commercial
and
Industrial
Other
Total
$
416
$
1,442
$
(193)
(663)
429
(404)
25
52
$
2,444
(63)
4
69
$
476
(591)
55
613
$
133
(270)
111
122
$ 5,340
(1,328)
195
Ending Balance
$
223
$
779
$
102
$ 2,454
$
553
$
96
$ 4,207
223
$
$
$
$
$
$
$
$
779
20
$
180
82
$
2,274
$
$
57
496
$
$
4
$
261
92
$ 3,946
$
597
$ 12,228
$
390
$
15
$ 13,230
$ 19,899
$ 47,294
$ 22,612
$ 129,178
$ 30,236
$
6,500
$ 255,719
Ending Balance
$
416
$ 1,442
$
(120)
506
$
536
$
936
$
242
$ 3,369
(715)
188
(398)
$
892
(372)
112
(156)
$
178
(323)
158
120
$ 6,153
(1,410)
475
122
$ 2,444
$
476
$
133
$ 5,340
17
170
429
$
$
$
283
$
322
$
120
$
3
$
728
$
416
$
1,442
$
146
$
2,122
$
356
$
130
$ 4,612
$ 4,687
$
$ 1,667
$ 18,122
$ 2,170
$
24
$ 26,670
$ 21,080
$ 44,112
$ 27,096
$ 122,149
$ 25,335
$
6,904
$246,676
Allowance for Loan Losses:
Ending balance: individually
evaluated for impairment
Ending balance: collectively
evaluated for impairment
Total Loans:
Ending balance: individually
evaluated for impairment
Ending balance: collectively
evaluated for impairment
December 31, 2018:
Allowance for Loan Losses:
Beginning Balance
Charge-offs
Recoveries
Provision
Allowance for Loan Losses:
Ending balance: individually
evaluated for impairment
Ending balance: collectively
evaluated for impairment
Total Loans:
Ending balance: individually
evaluated for impairment
Ending balance: collectively
evaluated for impairment
December 31, 2017:
Allowance for Loan Losses:
Beginning Balance
Charge-offs
Recoveries
Provision
Ending Balance
$
536
$
936
$
242
$ 3,369
$
$
545
$
957
$
265
(9)
(21)
718
(741)
$
$ 2,843
(8)
29
505
651
(36)
11
266
892
$
205
(235)
92
116
$ 5,466
(279)
850
116
$
178
$ 6,153
Allowance for Loan Losses:
Ending balance: individually
evaluated for impairment
Ending balance: collectively
evaluated for impairment
Total Loans:
Ending balance: individually
evaluated for impairment
Ending balance: collectively
evaluated for impairment
$
$
536
$
$
$
145
$ 1,082
$
636
936
$
97
$ 2,287
$
256
$
$
6
$ 1,869
172
$ 4,284
$
$
4,207
$
1,799
$ 25,160
$ 3,228
$
18
$ 34,412
$ 26,142
$ 30,675
$ 26,061
$ 133,509
$ 23,132
$
6,518
$ 246,037
24
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NOTE D – BA NK PRE MISES A N D E QU I P ME N T:
Bank premises and equipment are shown as follows (in thousands):
December 31,
Land
Building
Furniture, fixtures and equipment
Totals, at cost
Less: Accumulated depreciation
Totals
NOTE E – OTHER REAL ESTATE:
Estimated Useful Lives
5 - 40 years
3 - 10 years
2019
5,783
30,688
17,283
53,754
36,333
17,421
2018
$
5,783
30,681
17,430
53,894
35,015
$ 18,879
$
$
The Company’s other real estate consisted of the following as of December 31, 2019 and 2018, respectively (in thousands except number of
properties):
December 31,
Construction, land development and other land
1-4 family residential properties
Nonfarm nonresidential
Other
Total
NOTE F – DEPOSITS :
2019
2018
Number of
Properties
12
3
4
1
Balance
$ 4,828
370
1,902
353
Number of
Properties
12
3
5
1
Balance
$ 6,007
859
1,725
352
20
$ 7,453
21
$ 8,943
At December 31, 2019, the scheduled maturities of time deposits are as follows (in thousands):
2020
2021
2022
2023
2024
Total
$70,673
13,775
2,615
2,001
1,334
$90,398
Time deposits of $250,000 or more totaled approximately $46,618,000 and $39,805,000 at December 31, 2019 and 2018, respectively.
Deposits held for related parties amounted to $2,259,360 and $3,676,971 at December 31, 2019 and 2018, respectively.
Overdrafts totaling $422,304 and $1,044,409 were reclassified as loans at December 31, 2019 and 2018, respectively.
NOTE G – FE DE RA L FUN DS P U R C H A SE D :
At December 31, 2019, the Company had facilities in place to purchase federal funds up to $40,000,000 under established credit arrangements.
NOTE H – B ORROWINGS:
At December 31, 2019, the Company was able to borrow up to $14,647,619 from the Federal Reserve Bank Discount Window Primary Credit
Program. The borrowing limit is based on the amount of collateral pledged, with certain loans from the Bank’s portfolio serving as collateral.
Borrowings bear interest at the primary credit rate, which is established periodically by the Federal Reserve Board, and have a maturity of one
day. The primary credit rate was 2.25% at December 31, 2019. There was no outstanding balance at December 31, 2019.
At December 31, 2019, the Company had $3,526,319 outstanding in advances under a $59,008,622 line of credit with the FHLB. One
advance in the amount of $2,500,000 bears interest at 1.45% at December 31, 2019 and matures in 2020. New advances may subsequently
be obtained based on the liquidity needs of the bank subsidiary. The remaining balance consists of smaller advances bearing interest from
2.604% to 7.00% with maturity dates from 2030 – 2040. The advances are collateralized by specific loans, for which certain documents are
held in custody by the FHLB, and, if needed, specific investment securities that are held in safekeeping at the FHLB.
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NOTE I – INC OME TAX ES:
Deferred taxes (or deferred charges) as of December 31, 2019 and 2018, included in other assets, were as follows (in thousands):
December 31,
Deferred tax assets:
Allowance for loan losses
Employee benefit plans’ liabilities
Unrealized loss on available for sale securities, charged from equity
Loss on credit impairment of securities
Earned retiree health benefits plan liability
General business and AMT credits
Tax net operating loss carryforward
Other
Valuation allowance
Deferred tax assets
Deferred tax liabilities:
Unrealized gain on available for sale securities, charged from equity
Unearned retiree health benefits plan asset
Bank premises and equipment
Other
Deferred tax liabilities
Net deferred taxes
Income taxes consist of the following components (in thousands):
Years Ended December 31,
Current
Deferred:
Federal
Change in valuation allowance
Total deferred
Totals
2019
2018
$
883
3,189
$
356
1,049
1,707
2,048
863
(7,099)
2,996
342
381
2,047
226
2,996
$
$
1,121
3,117
973
356
1,048
1,750
2,118
943
(8,642)
2,784
298
2,235
251
2,784
2019
2018
2017
$
(36)
$
(1,080)
166
(166)
(425)
425
4,023
(4,023)
$
(36)
$
(1,080)
$
$
Income taxes amounted to less than the amounts computed by applying the U.S. Federal income tax rate of 21.0% for 2019 and 2018 and
34.0% for 2017 to income before income taxes. The reasons for these differences are shown below (in thousands):
Taxes computed at statutory rate
Increase (decrease) resulting from:
Tax-exempt interest income
Income from BOLI
Federal tax credits
Other
Impact of tax rate change
Cha nge in valuation allowance for
enacted change in tax rates
Realization of AMT credit
Other changes in valuation allowance
Total income tax (benefit) expense
$
2019
2018
2017
Tax
321
Rate
21
$
Tax
125
Rate
21
$
Tax
571
Rate
34
$
(172)
(92)
(20)
129
(11)
(6)
(1)
8
(206)
(96)
(298)
50
(35)
(16)
(50)
8
(166)
(11)
(36)
425
(36)
(6)
72
(6)
$
(362)
(302)
(298)
(656)
3,990
(22)
(18)
(18)
(39)
238
(3,990)
(742)
709
(238)
(44)
42
$
(1,080)
(65)
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26
During 2019, the Company recorded no income tax benefit or expense. During 2018 and 2017, the Company recorded an income tax benefit
of $36,000 and $1,080,000, respectively. On December 22, 2017, the President signed into law The Tax Cuts and Jobs Act (the “Act”). In
addition to reducing U.S. corporate income tax rates from 34% to 21%, the Act repealed the alternative minimum tax (“AMT”) regime for tax
years beginning after December 31, 2017. For tax years beginning in 2018, 2019 and 2020, the AMT credit carryforward can be utilized to
offset regular tax with any remaining AMT carryforwards eligible for a refund of 50%. Any remaining AMT credit carryforwards will become
fully refundable beginning in the 2021 tax year. As a result, during 2018 and 2017, the Company reclassified the AMT credit carryforward to
a tax receivable resulting in a deferred tax benefit of $36,000 and $742,000, respectively. In 2017, the Company also recorded a current tax
benefit of $338,000 to account for the carryback of general business tax credits to open tax years.
In 2017, the Company also remeasured the net deferred tax asset and corresponding valuation allowance as a result of the Act. The impact
was to reduce the deferred tax asset and corresponding valuation allowance by $3,990,000.
A valuation allowance is recognized against deferred tax assets when, based on the consideration of all available positive and negative
evidence using a more likely than not criteria, it is determined that all or a portion of these tax benefits may not be realized. This assessment
requires consideration of all sources of taxable income available to realize the deferred tax asset including taxable income in prior carry-back
years, future reversals of existing temporary differences, tax planning strategies and future taxable income exclusive of reversing temporary
differences and carryforwards. The Company incurred losses on a cumulative basis for the three-year period ended December 31, 2014,
which is considered to be significant negative evidence. The positive evidence considered in support was insufficient to overcome this
negative evidence. As a result, the Company established a full valuation allowance for its net deferred tax asset in the amount of $8,140,000
as of December 31, 2014.
The Company intends to maintain this valuation allowance until it determines it is more likely than not that the asset can be realized through
current and future taxable income. If not utilized, the Company’s federal net operating loss of $9,753,000 will begin to expire in 2035.
The Company has reviewed its income tax positions and specifically considered the recognition and measurement requirements of the
benefits recorded in its financial statements for tax positions taken or expected to be taken in its tax returns. The Company currently has no
unrecognized tax benefits that, if recognized, would favorably affect the income tax rate in future periods.
NOTE J – SHAREHOLD ERS’ E QU IT Y:
Shareholders’ equity of the Company includes the undistributed earnings of the bank subsidiary. Dividends to the Company’s shareholders
can generally be paid only from dividends paid to the Company by its bank subsidiary. Consequently, dividends are dependent upon the
earnings, capital needs, regulatory policies and statutory limitations affecting the bank subsidiary. Dividends paid by the bank subsidiary
are subject to the written approval of the Commissioner of Banking and Consumer Finance of the State of Mississippi and the Federal
Deposit Insurance Corporation (the “FDIC”). At December 31, 2019, $13,703,377 of undistributed earnings of the bank subsidiary included
in consolidated surplus and retained earnings was available for future distribution to the Company as dividends with regulatory approval.
Dividends paid by the Company are subject to the written approval of the Federal Reserve Bank (“FRB”).
On December 8, 2017, the Board approved the repurchase of up to 110,000 of the outstanding shares of the Company’s common stock. As a
result of this repurchase plan, 110,000 shares have been repurchased for approximately $1,477,000 and retired through December 31, 2018.
On September 26, 2018, the Board approved the repurchase of up to 70,000 of the outstanding shares of the Company’s common stock. As
a result of this repurchase plan, 70,000 shares have been repurchased for approximately $933,000 and retired through December 31, 2018.
On November 8, 2019, the Board approved the repurchase of up to 65,000 of the outstanding shares of the Company’s common stock. As a
result of this repurchase plan, no shares have been repurchased and retired through December 31, 2019.
On April 25, 2018, the Board declared a dividend of $.01 per share payable May 10, 2018 to shareholders of record as of May 7, 2018. On
September 26, 2018, the Board declared a dividend of $.01 per share payable on October 15, 2018 to shareholders of record as of October
9, 2018.
On April 24, 2019, the Board declared a dividend of $.01 per share payable May 10, 2019 to shareholders of record as of May 6, 2019. On
November 8, 2019, the Board declared a dividend of $.02 per share payable on November 25, 2019 to shareholders of record as of November
20, 2019.
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27
The Company and the bank subsidiary are subject to various regulatory capital requirements administered by the federal banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by the regulators
that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, specific capital guidelines must be met that involve quantitative measures of the assets, liabilities
and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification of the bank
subsidiary and the Company are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
As of December 31, 2019, the most recent notification from the FDIC categorized the bank subsidiary as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized, the bank subsidiary must have a Total risk-based capital
ratio of 10.00% or greater, a Common equity tier 1 capital ratio of 6.50% or greater, a Tier 1 risk-based capital ratio of 8.00% or greater
and a Leverage capital ratio of 5.00% or greater. As of January 1, 2019, the Company must have a capital conservation buffer above
these requirements of 2.50%. There are no conditions or events since that notification that Management believes have changed the bank
subsidiary’s category.
The Company’s actual capital amounts and ratios and required minimum capital amounts and ratios for 2019 and 2018, are as follows (in
thousands):
Actual
For Capital Adequacy Purposes
Amount
Ratio
Amount
December 31, 2019:
Total Capital (to Risk Weighted Assets)
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Tier 1 Capital (to Risk Weighted Assets)
Tier 1 Capital (to Average Assets)
December 31, 2018:
Total Capital (to Risk Weighted Assets)
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Tier 1 Capital (to Risk Weighted Assets)
Tier 1 Capital (to Average Assets)
$
$
96,632
92,425
92,425
92,425
95,627
90,894
90,894
90,894
26.22%
25.08%
25.08%
15.26%
25.30%
24.05%
24.05%
14.35%
$
$
29,487
16,586
22,115
24,230
30,240
17,010
22,680
25,344
Ratio
8.00%
4.50%
6.00%
4.00%
8.00%
4.50%
6.00%
4.00%
The bank subsidiary’s actual capital amounts and ratios and required minimum capital amounts and ratios and capital amounts and ratios to
be well capitalized for 2019 and 2018, are as follows (in thousands):
December 31, 2019:
Total Capital (to Risk Weighted Assets)
Common Equity Tier 1 Capital (to Risk
Weighted Assets)
Tier 1 Capital (to Risk Weighted Assets)
Tier 1 Capital (to Average Assets)
December 31, 2018:
Total Capital (to Risk Weighted Assets)
Common Equity Tier 1 Capital (to Risk
Weighted Assets)
Tier 1 Capital (to Risk Weighted Assets)
Tier 1 Capital (to Average Assets)
Actual
For Capital Adequacy Purposes To Be Well Capitalized
Amount
Ratio
Amount
Ratio
Amount
Ratio
$ 93,228
25.48%
$
29,274
8.00%
$ 36,592
10.00%
89,021 24.33%
89,021 24.33%
14.72%
89,021
16,466
21,955
24,198
4.50%
6.00%
4.00%
23,785
29,274
30,248
6.50%
8.00%
5.00%
$ 92,485 24.61%
$
30,062
8.00%
$ 37,577
10.00%
87,780 23.36%
87,780 23.36%
87,780 14.11%
16,910
22,546
24,884
4.50%
6.00%
4.00%
24,425
30,062
31,105
6.50%
8.00%
5.00%
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28
NOTE K – OTHE R IN COME A N D E X P E N SE S:
Other income consisted of the following (in thousands):
Years Ended December 31,
Other service charges, commissions and fees
Rentals
Other
Totals
Other expenses consisted of the following (in thousands):
Years Ended December 31,
Advertising
Data processing
FDIC and state banking assessments
Legal and accounting
Other real estate
ATM expense
Trust expense
Other
Totals
2019
91
329
112
532
2019
529
1,356
374
714
553
697
368
1,807
6,398
$
$
$
$
2018
93
246
121
460
2018
557
1,355
248
449
1,254
585
304
1,699
6,451
$
$
$
$
2017
99
298
84
481
2017
538
1,289
424
422
740
582
307
1,873
6,175
$
$
$
$
NOTE L – FINAN CIAL INSTRU ME N T S W IT H O FF- B A L A N C E -SH E E T R I SK:
The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of
its customers. These financial instruments include commitments to extend credit and irrevocable letters of credit. These instruments involve,
to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The contract amounts
of those instruments reflect the extent of involvement the bank subsidiary has in particular classes of financial instruments. The Company’s
exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and
irrevocable letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in
making commitments and conditional obligations as it does for on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any conditions established in the
agreement. Irrevocable letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a
third party. Commitments and irrevocable letters of credit generally have fixed expiration dates or other termination clauses and may require
payment of a fee. Since some of the commitments and irrevocable letters of credit may expire without being drawn upon, the total amounts
do not necessarily represent future cash requirements. The Company evaluated each customer’s creditworthiness on a case-by-case basis.
The amount of collateral obtained upon extension of credit is based on Management’s credit evaluation of the customer. Collateral obtained
varies but may include equipment, real property and inventory.
The Company generally grants loans to customers in its trade area.
At December 31, 2019 and 2018, the Company had outstanding irrevocable letters of credit aggregating $89,097 and $235,141, respectively.
At December 31, 2019 and 2018, the Company had outstanding unused loan commitments aggregating $28,596,286 and $31,885,422,
respectively. Approximately $15,082,587 and $15,539,762 of outstanding commitments were at fixed rates and the remainder were at variable
rates at December 31, 2019 and 2018, respectively.
NOTE M – CONTINGENCIES:
The Bank is involved in various legal matters and claims which are being defended and handled in the ordinary course of business. None of
these matters are expected, in the opinion of Management, to have a material adverse effect upon the financial position or results of operations
of the Company.
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NOTE N – CONDE NS ED PARE N T C OM PA N Y O N LY FI N A N C IA L I N FO R M AT I O N :
Peoples Financial Corporation began its operations September 30, 1985, when it acquired all the outstanding stock of The Peoples Bank,
Biloxi, Mississippi. A condensed summary of its financial information is shown below.
CONDENSED B AL ANCE SHEETS (IN T HO U SA N D S) :
December 31,
Assets
Investments in subsidiaries, at underlying equity:
Bank subsidiary
Nonbank subsidiary
Cash in bank subsidiary
Other assets
Total assets
Liabilities and Shareholders’ Equity:
Other liabilities
Total liabilities
Shareholders’ equity
Total liabilities and shareholders’ equity
CONDENSED STATEME NT S OF INCOM E ( IN T HOU SAND S):
Years Ended December 31,
Income
Distributed income of bank subsidiary
Undistributed income of bank subsidiary
Other income (loss)
700
1,240
(164)
2019
$
Total income
Expenses
Other
Total expenses
Income before income taxes
Income tax
Net income
1,776
97
97
1,679
$
$
$
$
$
2019
91,718
1
740
2,664
95,123
95,123
95,123
2018
901
112
(252)
761
132
132
629
2018
83,820
1
283
2,830
86,934
$
$
$
86,934
$
86,934
$
2017
1,900
942
47
2,889
131
131
2,758
$
1,679
$
629
$
2,758
CONDENSED STATEME NT S OF C A S H FL OW S (I N T H OU S AN D S) :
Years Ended December 31,
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
(Income) loss from other investments
Undistributed income of subsidiaries
Gain from sale of securities
Other assets
Net cash provided by operating activities
Cash flows from investing activities:
Redemption of equity securities
Net cash provided by investing activities
Cash flows from financing activities:
Retirement of common stock
Dividends paid
Net cash used in financing activities
Net increase (decrease) in cash
Cash, beginning of year
Cash, end of year
2019
2018
2017
$
1,679
$
629
$
2,758
166
(1,240)
605
(148)
(148)
457
283
274
(112)
(17)
774
125
125
(1,907)
(101)
(2,008)
(1,109)
1,392
$
740
$
283
$
30
(42)
(942)
(20)
1,754
(502)
(51)
(553)
1,201
191
1,392
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NOTE O – E MPL OYEE A ND DIR EC TOR B E N E FI T PL A N S :
The Company sponsors the Peoples Financial Corporation Employee Stock Ownership Plan (“ESOP”). Employees who are in a position
requiring at least 1,000 hours of service during a plan year and who are 21 years of age are eligible to participate in the ESOP. The Plan included
401(k) provisions and the former Gulf National Bank Profit Sharing Plan. Effective January 1, 2001, the ESOP was amended to separate the
401(k) funds into the Peoples Financial Corporation 401(k) Profit Sharing Plan. The separation had no impact on the eligibility or benefits
provided to participants of either plan. The 401(k) provides for a matching contribution of 75% of the amounts contributed by the employee (up
to 6% of compensation). Contributions are determined by the Board of Directors and may be paid either in cash or Peoples Financial Corporation
common stock. Total contributions to the plans charged to operating expense were $260,000, $260,000 and $260,000 in 2019, 2018 and 2017,
respectively.
The ESOP was frozen to further contributions and eligibility effective January 1, 2019. Compensation expense of $7,285,390 and $7,106,959
was the basis for determining the ESOP contribution allocation to participants for 2018 and 2017, respectively. The ESOP held 237,923, 247,627
and 270,455 allocated shares at December 31, 2019, 2018 and 2017, respectively.
The Company established an Executive Supplemental Income Plan and a Directors’ Deferred Income Plan, which provide for pre-retirement
and post-retirement benefits to certain key executives and directors. Benefits under the Executive Supplemental Income Plan are based upon the
position and salary of the officer at retirement or death. Normal retirement benefits under the plan are equal to 67% of salary for the president
and chief executive officer, 58% of salary for the executive vice president and 50% of salary for all other executive officers and are payable
monthly over a period of fifteen years. Under the Directors’ Deferred Income Plan, the directors are given an opportunity to defer receipt of their
annual directors’ fees until retirement from the board. For those who choose to participate, benefits are payable monthly for ten years beginning
the first day of the month following the director’s normal retirement date. The normal retirement date is the later of the normal retirement
age (65) or separation of service. Interest on deferred fees accrues at an annual rate of ten percent, compounded annually. The Company has
acquired insurance policies, with the bank subsidiary as owner and beneficiary, which it may use as a source to pay potential benefits to the plan
participants. These contracts are carried at their cash surrender value, which amounted to $17,024,779 and $16,620,943 at December 31, 2019
and 2018, respectively. The present value of accumulated benefits under these plans, using an interest rate of 4.00% and the interest ramp-up
method has been accrued. The accrual amounted to $13,229,501 and $12,919,127 at December 31, 2019 and 2018, respectively, and is included
in Employee and director benefit plans liabilities.
The Company also has additional plans for post-retirement benefits for certain key executives. The Company has acquired insurance policies,
with the bank subsidiary as owner and beneficiary, which it may use as a source to pay potential benefits to the plan participants. These contracts
are carried at their cash surrender value, which amounted to $1,850,592 and $1,729,904 at December 31, 2019 and 2018, respectively. The
present value of accumulated benefits under these plans using an interest rate of 4.00% and the projected unit cost method has been accrued. The
accrual amounted to $1,622,840 and $1,613,326 at December 31, 2019 and 2018, respectively, and is included in Employee and director benefit
plans liabilities.
Additionally, there are two endorsement split dollar policies, with the bank subsidiary as owner and beneficiary, which provide a guaranteed
death benefit to the participants’ beneficiaries. These contracts are carried at their cash surrender value, which amounted to $311,088 and
$306,146 at December 31, 2019 and 2018, respectively. The present value of accumulated benefits under these plans using an interest rate of
4.00% and the projected unit cost method has been accrued. The accrual amounted to $101,613 and $97,587 at December 31, 2019 and 2018,
respectively, and is included in Employee and director benefit plans liabilities.
The Company has additional plans for post-retirement benefits for directors. The Company has acquired insurance policies, with the bank
subsidiary as owner and beneficiary, which it may use as a source to pay potential benefits to the plan participants. These contracts are carried
at their cash surrender value, which amounted to $194,270 and $184,070 at December 31, 2019 and 2018, respectively. The present value
of accumulated benefits under these plans using an interest rate of 4.00% and the projected unit cost method has been accrued. The accrual
amounted to $229,392 and $213,661 at December 31, 2019 and 2018, respectively, and is included in Employee and director benefit plans
liabilities.
The Company provides post-retirement health insurance to certain of its retired employees. Employees are eligible to participate in the retiree
health plan if they retire from active service no earlier than age 60. In addition, the employee must have at least 25 continuous years of service
with the Company immediately preceding retirement. However, any active employee who was at least age 65 as of January 1, 1995, does not
have to meet the 25 years of service requirement. The Company reserves the right to modify, reduce or eliminate these health benefits. The
Company has chosen to not offer this post-retirement benefit to individuals entering the employ of the Company after December 31, 2006.
Employees who are eligible and enroll in the bank subsidiary’s group medical and dental health care plans upon their retirement must enroll in
Medicare Parts A, B and D when first eligible upon their retirement from the bank subsidiary. This results in the bank subsidiary’s programs
being secondary insurance coverage for retired employees and any dependent(s), if applicable, while Medicare Parts A and B will be their
primary coverage, and Medicare Part D will be the sole and exclusive prescription drug benefit plan for retired employees.
The following is a summary of the components of the net periodic post-retirement benefit cost (credit)(in thousands):
Years Ended December 31,
Service cost
Interest cost
Amortization of net gain
Amortization of prior service credit
Net periodic post-retirement benefit cost (credit)
$
$
2019
88
107
(129)
(81)
(15)
31
2018
171
136
(81)
226
$
$
2017
153
135
(81)
207
$
$
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The discount rate used in determining the accumulated post-retirement benefit obligation was 3.20% in 2019 and 4.30% in 2018. The assumed
health care cost trend rate used in measuring the accumulated post-retirement benefit obligation was 6.25% in 2019. The rate was assumed to
decrease gradually to 4.50% for 2026 and remain at that level thereafter. If the health care cost trend rate assumptions were increased 1.00%, the
accumulated post-retirement benefit obligation as of December 31, 2019, would be increased by 16.78%, and the aggregate of the service and
interest cost components of the net periodic post-retirement benefit cost for the year then ended would have increased by 17.46%. If the health
care cost trend rate assumptions were decreased 1.00%, the accumulated post-retirement benefit obligation as of December 31, 2019, would be
decreased by 13.51%, and the aggregate of the service and interest cost components of the net periodic post-retirement benefit cost for the year
then ended would have decreased by 13.98%.
The following table presents the estimated benefit payments for each of the next five years and in the aggregate for the next five years (in
thousands):
2020
2021
2022
2023
2024
2025-2029
$
73
91
108
128
164
1,025
The following is a reconciliation of the accumulated post-retirement benefit obligation, which is included in Employee and director benefit
plans liabilities (in thousands):
Accumulated post-retirement benefit obligation as of December 31, 2018
Service cost
Interest cost
Actuarial gain
Benefits paid
Accumulated post-retirement benefit obligation as of December 31, 2019
$ 3,571
88
107
(604)
20
$ 3,182
The following is a summary of the change in plan assets (in thousands):
Fair value of plan assets at beginning of year
Actual return on assets
Employer contribution
Benefits paid, net
Fair value of plan assets at end of year
2019
20
(20)
$
$
2018
28
(28)
$
$
Amounts recognized in the Accumulated Other Comprehensive Income (Loss), net of tax, were (in thousands):
For the year ended December 31,
2019
2018
Net gain
Prior service charge
Total accumulated other comprehensive income
$
$
816
616
1,432
$
$
440
680
1,120
2017
48
(48)
2017
11
622
633
$
$
$
$
Amounts recognized in the accumulated post-retirement benefit obligation and other comprehensive income (loss) were (in thousands):
For the year ended December 31,
Unrecognized actuarial gain
Amortization of prior service cost
Total other comprehensive income
$
$
2019
475
(81)
394
The prior service credit and amortization of net gain that will be recognized in accumulated other comprehensive income during 2020 is
$81,381 and $74,600, respectively.
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32
NOTE P – FA IR VALUE MEAS U R E M E N T S A N D D I S C L OS U RE S:
The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value
disclosures. Available for sale securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be
required to record other assets at fair value on a non-recurring basis, such as impaired loans and ORE. These non-recurring fair value adjustments
typically involve the application of lower of cost or market accounting or write-downs of individual assets. Additionally, the Company is
required to disclose, but not record, the fair value of other financial instruments.
Fair Value Hierarchy
The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the
reliability of the assumptions used to determine fair value. These levels are:
Level 1 - Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2 - Valuation is based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments
in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3 - Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These
unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques
include the use of option pricing models, discounted cash flow models and similar techniques.
Following is a description of valuation methodologies used to determine the fair value of financial assets and liabilities.
Cash and Due from Banks
The carrying amount shown as cash and due from banks approximates fair value.
Available for Sale Securities
The fair value of available for sale securities is based on quoted market prices. The Company’s available for sale securities are reported at their
estimated fair value, which is determined utilizing several sources. The primary source is Interactive Data Corporation, which utilizes pricing
models that vary based by asset class and include available trade, bid and other market information and whose methodology includes broker
quotes, proprietary models and vast descriptive databases. Another source for determining fair value is matrix pricing, which is a mathematical
technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather
by relying on the securities’ relationship to other benchmark securities. The Company’s available for sale securities for which fair value is
determined through the use of such pricing models and matrix pricing are classified as Level 2 assets. If the fair value of available for sale
securities is generated through model-based techniques including the discounting of estimated cash flows, such securities are classified as Level
3 assets.
Held to Maturity Securities
The fair value of held to maturity securities is based on quoted market prices.
Other Investments
The carrying amount shown as other investments approximates fair value.
Federal Home Loan Bank Stock
The carrying amount shown as Federal Home Loan Bank Stock approximates fair value.
Loans
The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made
to borrowers with similar credit ratings for the remaining maturities. The cash flows considered in computing the fair value of such loans are
segmented into categories relating to the nature of the contract and collateral based on contractual principal maturities. Appropriate adjustments
are made to reflect probable credit losses. Cash flows have not been adjusted for such factors as prepayment risk or the effect of the maturity of
balloon notes. The fair value of floating rate loans is estimated to be its carrying value. At each reporting period, the Company determines which
loans are impaired. Accordingly, the Company’s impaired loans are reported at their estimated fair value on a non-recurring basis. An allowance
for each impaired loan, which are generally collateral-dependent, is calculated based on the fair value of its collateral. The fair value of the
collateral is based on appraisals performed by third-party valuation specialists. Factors including the assumptions and techniques utilized by the
appraiser are considered by Management. If the recorded investment in the impaired loan exceeds the measure of fair value of the collateral, a
valuation allowance is recorded as a component of the allowance for loan losses. Impaired loans are non-recurring Level 3 assets.
Other Real Estate
In the course of lending operations, Management may determine that it is necessary to foreclose on the related collateral. Other real estate
acquired through foreclosure is carried at fair value, less estimated costs to sell. The fair value of the collateral is based on appraisals performed
by third-party valuation specialists. Factors including the assumptions and techniques utilized by the appraiser are considered by Management. If
the current appraisal is more than one year old and/or the loan balance is more than $200,000, a new appraisal is obtained. Otherwise, the Bank’s
in-house property evaluator and Management will determine the fair value of the collateral, based on comparable sales, market conditions,
Management’s plans for disposition and other estimates of fair value obtained from principally independent sources, adjusted for estimated
selling costs. Other real estate is a non-recurring Level 3 asset.
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Cash Surrender Value of Life Insurance
The carrying amount of cash surrender value of bank-owned life insurance approximates fair value.
Deposits
The fair value of non-interest bearing demand and interest bearing savings and demand deposits is the amount reported in the financial statements.
The fair value of time deposits is estimated by discounting the cash flows using current rates for time deposits with similar remaining maturities.
The cash flows considered in computing the fair value of such deposits are based on contractual maturities, since approximately 98% of time
deposits provide for automatic renewal at current interest rates.
Borrowings from Federal Home Loan Bank
The fair value of FHLB fixed rate borrowings is estimated using discounted cash flows based on current incremental borrowing rates for similar
types of borrowing arrangements. The fair value of FHLB variable rate borrowings is estimated to be its carrying value.
The balances of available for sale securities, which are the only assets measured at fair value on a recurring basis, by level within the fair value
hierarchy and by investment type, as of December 31, 2019 and 2018, were as follows (in thousands):
December 31, 2019:
U.S. Treasuries
U.S. Government agencies
Mortgage-backed securities
Collateralized mortgage obligations
States and political subdivisions
Total
December 31, 2018:
U.S. Treasuries
U.S. Government agencies
Mortgage-backed securities
States and political subdivisions
Total
Total
$ 55,653
12,570
106,153
15,488
6,447
$ 196,311
$ 83,423
17,247
110,344
11,096
$ 222,110
Level 1
Fair Value Measurements Using
Level 2
Level 3
$
$
$
$
$
$
55,653
12,570
106,153
15,488
6,447
$ 196,311
$
$
$
83,423
17,247
110,344
11,096
$ 222,110
$
Impaired loans, which are measured at fair value on a non-recurring basis, by level within the fair value hierarchy as of December 31, 2019
and 2018 were as follows (in thousands):
December 31:
2019
2018
$
Total
764
2,927
Level 1
$
Fair Value Measurements Using
Level 2
$
Level 3
764
$
2,927
Other real estate, which is measured at fair value on a non-recurring basis, by level within the fair value hierarchy as of December 31, 2019
and 2018 are as follows (in thousands):
December 31:
2019
2018
$
Total
7,453
8,943
Fair Value Measurements Using
Level 2
Level 1
$
$
Level 3
7,453
$
8,943
The following table presents a summary of changes in the fair value of other real estate which is measured using Level 3 inputs (in thousands):
Balance, beginning of year
Loans transferred to ORE
Sales
Write-downs
Balance, end of year
2019
8,943
1,707
(2,755)
(442)
7,453
$
$
2018
8,232
4,707
(3,232)
(764)
8,943
$
$
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34
The carrying value and estimated fair value of financial instruments, by level within the fair value hierarchy, at December 31, 2019 and 2018
are as follows (in thousands):
Carrying Amount
Level 1
Level 2
Level 3
Total
Fair Value Measurements Using
December 31, 2019:
Financial Assets:
Cash and due from banks
Available for sale securities
Held to maturity securities
Other investments
Federal Home Loan Bank stock
Loans, net
Other real estate
Cash surrender value of life insurance
Financial Liabilities:
Deposits:
Non-interest bearing
Interest bearing
Borrowings from Federal Home Loan
Bank
December 31, 2018:
Financial Assets:
Cash and due from banks
Available for sale securities
Held to maturity securities
Other investments
Federal Home Loan Bank stock
Loans, net
Other real estate
Cash surrender value of life insurance
Financial Liabilities:
Deposits:
Non-interest bearing
Interest bearing
Borrowings from Federal Home Loan
Bank
$ 29,424
196,311
52,231
2,643
2,129
264,742
7,453
19,381
122,592
353,551
3,526
$
196,311
53,130
2,129
19,381
$ 29,424
2,643
122,592
$
261,710
7,453
354,141
3,730
Fair Value Measurements Using
$ 29,424
196,311
53,130
2,643
2,129
261,710
7,453
19,381
122,592
354,141
3,730
Carrying Amount
Level 1
Level 2
Level 3
Total
$ 17,191
2,811
114,512
$ 17,191
222,110
54,598
2,811
2,069
268,006
8,943
18,841
114,512
358,994
36,142
$
222,110
53,459
2,069
18,841
36,211
$
260,560
8,943
359,386
$ 17,191
222,110
53,459
2,811
2,069
260,560
8,943
18,841
114,512
359,386
36,211
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35
235 Peachtree Street NE
Suite 1800
Atlanta, GA 30303
404 588 4200
wipfli.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
Peoples Financial Corporation
Biloxi, Mississippi
Opinion on the Financial Statements
We have audited the accompanying consolidated statement of condition of Peoples Financial Corporation and
subsidiaries (the Company) as of December 31, 2019, the related consolidated statements of income,
comprehensive income, changes in shareholders’ equity, and cash flows for the year then ended, and the related
notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the
results of its operations and its cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audit provides a reasonable basis for our opinion.
We have served as the Company’s auditor since 2019.
Atlanta, Georgia
March 13, 2020
36
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
Peoples Financial Corporation
Biloxi, Mississippi
Opinion on the Financial Statements
We have audited the accompanying consolidated statement of condition of Peoples Financial Corporation and
subsidiaries (the Company) as of December 31, 2018, the related consolidated statements of income,
comprehensive income (loss), and cash flows for each of the two years in the period ended December 31, 2018,
and changes in shareholder’s equity for the year ended December 31, 2018, and the related notes to the financial
statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2018, and the results of its
operations and its cash flows for each of the two years in the period ended December 31, 2018, in conformity
with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required
to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express
no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2006.
Atlanta, Georgia
March 13, 2019
37
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P E O P L E S F I N A N C I A L C O R P O R A T I O N A N D S U B S I D I A R I E S
FIVE-YEAR COMPARATIVE SUMMARY OF SELECTED FINANCIAL INFORMATION
(In thousands except per share date)
Balance Sheet Summary
Total assets
Available for sale securities
Held to maturity securities
2019
2018
2017
2016
2015
$ 594,702 $ 616,786 $ 650,424 $ 688,014 $ 641,004
196,311
222,110
245,644
233,578
202,807
52,231
54,598
51,163
48,150
19,025
Loans, net of unearned discount
268,949
273,346
280,449
315,355
337,557
Deposits
Borrowings from FHLB
Shareholders’ equity
Summary of Operations
Interest income
Interest expense
Net interest income
Provision for loan losses
Net interest income after provision
for loan losses
Non-interest income
Non-interest expense
Income (loss) before taxes
Income tax expense (benefit)
Net income (loss)
Per Share Data
476,143
473,506
529,570
575,016
512,707
3,526
36,142
11,198
6,257
18,409
95,123
86,934
89,499
88,461
91,839
$ 20,928 $ 19,750 $ 18,503 $ 18,493 $ 19,311
3,246
2,658
1,423
1,025
875
17,682
17,092
17,080
17,468
18,436
122
116
568
2,582
17,682
16,970
16,964
16,900
15,854
6,367
6,103
6,965
6,549
6,898
22,370
22,480
22,251
23,204
28,106
1,679
593
1,678
245
(5,354)
(36)
(1,080)
78
(762)
$
1,679 $
629 $
2,758 $
167 $
(4,592)
Basic and diluted earnings (loss) per share
$
.34 $
.13 $
.54 $
.03 $
( .90)
Dividends per share
Book value
.03
.02
.01
19.24
17.59
17.84
17.27
17.93
Weighted average number of shares
4,943,186 5,031,778
5,123,076
5,123,186 5,123,186
Selected Ratios
Return on average assets
Return on average equity
Primary capital to average assets
Risk-based capital ratios:
Tier 1
Total
0.28%
1.84%
0.10%
0.73%
0.41%
3.08%
0.02%
(.69%)
0.19%
(4.92%)
16.27%
14.43%
14.34%
13.99%
15.06%
25.08%
24.05%
26.22%
25.30%
23.87%
25.12%
21.69%
20.58%
22.94%
21.83%
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P E O P L E S F I N A N C I A L C O R P O R A T I O N A N D S U B S I D I A R I E S
C O R P O R AT E I N F O R M AT I O N A N D M A R K E T I N F O R M AT I O N
Corporate Information:
Mailing Address
P. O. Box 529
Biloxi, MS 39533-0529
Website
www.thepeoples.com
Physical Address
152 Lameuse Street
Biloxi, MS 39530
(228) 435-8205
Corporate Stock
The common stock of Peoples Financial Corporation is traded on
the OTCQX Best Market under the symbol: PFBX.
S.E.C. Form 10-K Requests
A copy of the Annual Report on Form 10-K, as filed with the Secu-
rities and Exchange Commission, may be obtained without charge
by directing a written request to:
Lauri A. Wood, Chief Financial Officer and Controller
Peoples Financial Corporation
P. O. Box 529, Biloxi, Mississippi 39533-0529
(228) 435-8412
e-mail: lwood@thepeoples.com
Shareholder Information
For investor relations and general information about Peoples
Financial Corporation:
Paul D. Guichet, Vice-President
The Peoples Bank, Biloxi, Mississippi
P.O. Box 529, Biloxi, MS 39533-0529
(228) 435-8761
e-mail: investorrelations@thepeoples.com
For information about the common stock of Peoples Financial
Corporation, including dividend reinvestment and other transfer
agent inquiries:
Asset Management and Trust Services Department
The Peoples Bank, Biloxi, Mississippi
P.O. Box 1416, Biloxi, MS 39533-1416
(228) 435-8208
e-mail: investorrelations@thepeoples.com
Independent Registered Public Accounting Firm
Wipfli LLP
Atlanta, Georgia
Market Information:
The Company’s stock is traded on the OTCQX Best Market (“OTCQX”) under the symbol PFBX. As of February 14, 2020, there were
approximately 409 holders of the Company’s common stock, which does not reflect persons or entities that hold our common stock in
nominee or “street” name through various brokerage firms. At that date, the Company had 4,943,186 shares of common stock issued and
outstanding.
The following is a summary of the high and low bid prices of our common stock for the periods indicated as reported by OTCQX. The
quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual trans-
actions.
Year
2019
2018
Quarter
1st
2nd
3rd
4th
1st
2nd
3rd
4th
$
$
High
11.65
12.75
11.95
11.00
14.70
14.25
14.08
13.50
Low
Dividend per share
$
$
11.22
11.36
10.75
10.40
12.60
13.65
12.95
11.20
$
$
.01
.02
.01
.01
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P E O P L E S F I N A N C I A L C O R P O R A T I O N A N D S U B S I D I A R I E S
B R A N C H L O C AT I O N S
The Peoples Bank, Biloxi, Mississippi
BILOXI BRANCHES
Main
OTHER BRANCHES
Bay St. Louis
152 Lameuse Street, Biloxi, Mississippi 39530
408 Highway 90 East, Bay St. Louis, Mississippi 39520
(228) 435-5511
(228) 897-8710
Asset Management and Trust Department
Diamondhead
Personal and Corporate Trust Services
5429 West Aloha Drive, Diamondhead, Mississippi 39525
758 Vieux Marche, Biloxi, Mississippi 39530
(228) 897-8714
(228) 435-8208
Cedar Lake
D’Iberville - St. Martin
10491 Lemoyne Boulevard, D’Iberville, Mississippi 39540
1740 Popps Ferry Road, Biloxi, Mississippi 39532
(228) 435-8202
(228) 435-8688
Keesler Air Force Base
1507 Meadows Drive
Keesler AFB, MS 39534
(228) 435-8690
Gautier
2609 Highway 90, Gautier, Mississippi 39553
(228) 497-1766
Long Beach
298 Jeff Davis Avenue, Long Beach, Mississippi 39560
West Biloxi
(228) 897-8712
2560 Pass Road, Biloxi, Mississippi 39531
(228) 435-8203
Ocean Springs
GULFPORT BRANCHES
Armed Forces Retirement Home
2015 Bienville Boulevard, Ocean Springs, Mississippi 39564
(228) 435-8204
1800 Beach Drive, Gulfport, Mississippi 39507
Pass Christian
(228) 897-8724
301 East Second Street, Pass Christian, Mississippi 39571
Downtown Gulfport
1105 30th Avenue, Gulfport, Mississippi 39501
Saucier
(228) 897-8719
(228) 897-8715
17689 Second Street, Saucier, Mississippi 39574
Handsboro
0412 E. Pass Road, Gulfport, Mississippi 39507
Waveland
(228) 897-8716
(228) 897-8717
470 Highway 90, Waveland, Mississippi 39576
Orange Grove
12020 Highway 49 North, Gulfport, Mississippi 39503 Wiggins
(228) 467-7257
(228) 897-8718
1312 S. Magnolia Drive, Wiggins, Mississippi 39577
(228) 897-8722
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P E O P L E S F I N A N C I A L C O R P O R A T I O N A N D S U B S I D I A R I E S
B O A R D O F D I R E C T O R S A N D E X E C U T I V E O F F I C E R S
BOA RD OF DIR ECTO RS
Peoples Financial Corporation
Chevis C. Swetman, Chairman; President and Chief Executive Officer, Peoples
Financial Corporation and The Peoples Bank, Biloxi, Mississippi
Dan Magruder, Vice Chairman; Retired Business Executive
Drew Allen, President, Allen Beverages, Inc.
Rex E. Kelly, Principal, Strategic Communications
Jeffrey H. O’Keefe, Chief Executive Officer, Bradford-O’Keefe Funeral Homes, Inc.
George J. Sliman, III, President, SunStates Holdings, Inc.
OFFIC ERS
Peoples Financial Corporation
Chevis C. Swetman, President and Chief Executive Officer
A. Wes Fulmer, Executive Vice-President
Ann F. Guice, First Vice-President
J. Patrick Wild, Second Vice-President
Evelyn R. Herrington, Vice-President and Secretary
Lauri A. Wood, Chief Financial Officer and Controller
BOA RD OF DIR ECTO RS
The Peoples Bank, Biloxi, Mississippi
Chevis C. Swetman, Chairman; President and Chief Executive Officer, Peoples
Financial Corporation and The Peoples Bank, Biloxi, Mississippi
Liz Corso Joachim, Vice Chairperson; President, Frank P. Corso, Inc.
Drew Allen, President, Allen Beverages, Inc.
Ronald G. Barnes, President and Chief Executive Officer, Coast Electric Power Association
Padrick D. Dennis, Vice President, Specialty Contractors & Associates, Inc.
A. Wes Fulmer, Executive Vice-President, Peoples Financial Corporation and The
Peoples Bank, Biloxi, Mississippi
Rex E. Kelly, Principal, Strategic Communications
Dan Magruder, Retired Business Executive
Jeffrey H. O’Keefe, Chief Executive Officer, Bradford-O’Keefe Funeral Homes, Inc.
Paige Reed Riley, Owner, Hillyer House
George J. Sliman, III, President, SunStates Holdings, Inc.
A. Tanner Swetman, Senior Vice-President, The Peoples Bank, Biloxi, Mississippi
SENI OR MANAGEMENT
The Peoples Bank, Biloxi, Mississippi
Chevis C. Swetman, President and Chief Executive Officer
A. Wes Fulmer, Executive Vice-President
Lauri A. Wood, Senior Vice-President and Cashier
Ann F. Guice, Senior Vice-President
J. Patrick Wild, Senior Vice-President
Evelyn R. Herrington, Senior Vice-President
Brian J. Kozlowski, Senior Vice-President
A. Tanner Swetman, Senior Vice-President
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