##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedJune 30, 2006
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 0-30050
 PEOPLES FINANCIAL CORPORATION
  Mississippi
    
    64-0709834(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 Lameuse and Howard Avenues, Biloxi, Mississippi
    
    39533(Address of principal executive offices)
    
    (Zip Code)
  (Registrants telephone number, including area code)
 þ o
  o þ o
 o þ




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TABLE OF CONTENTS  PART IItem 2  Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 4: Controls and ProceduresPART IIItem 4  Submission of Matters to a Vote of Security HoldersItem 5  Other InformationItem 6  Exhibits and Reports on Form 8-KSIGNATURESConsent of Independent Registered Public Accounting FirmCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906    Table of Contents  
  
 June 30, December 31, and June 30,
    
    2006
    
    
    2005
    
    
    2005AssetsCash and due from banks
    
    $
    59,876,184
    
    
    $
    52,277,524
    
    
    $
    48,591,842Federal funds sold
    
    
    1,680,000
    
    
    
    100,340,000
    
    
    
    463,000Held to maturity securities, market value of
$132,253,000  June 30, 2006; $134,008,000
 December 31, 2005; $16,168,000  June 30,
2005
    
    
    132,596,937
    
    
    
    134,046,959
    
    
    
    16,040,105Available for sale securities, at market value
    
    
    249,120,369
    
    
    
    178,393,652
    
    
    
    219,299,017Federal Home Loan Bank stock, at cost
    
    
    1,101,700
    
    
    
    1,076,600
    
    
    
    1,420,700Loans
    
    
    401,010,495
    
    
    
    349,346,340
    
    
    
    347,500,920Less: Allowance for loan losses
    
    
    11,042,833
    
    
    
    10,966,022
    
    
    
    5,935,578Loans, net
    
    
    389,967,662
    
    
    
    338,380,318
    
    
    
    341,565,342Bank premises and equipment, net of
accumulated depreciation of $18,809,000 
June 30, 2006; $18,025,000  December 31,
2005; and $17,958,000  June 30, 2005
    
    
    18,340,033
    
    
    
    17,887,907
    
    
    
    17,815,976Other real estate
    
    
    59,446
    
    
    
    106,046
    
    
    
    32,957Accrued interest receivable
    
    
    6,062,262
    
    
    
    4,315,358
    
    
    
    3,282,548Other assets
    
    
    19,777,107
    
    
    
    18,500,668
    
    
    
    16,444,086Total assets
    
    $
    878,581,700
    
    
    $
    845,325,032
    
    
    $
    664,955,573
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##### Table of Contents



June 30, December 31, and June 30,
    
    2006
    
    
    2005
    
    
    2005Liabilities & Shareholders EquityLiabilities:Deposits:Demand, non-interest bearing
    
    $
    167,165,370
    
    
    $
    176,627,048
    
    
    $
    109,450,024Savings and demand, interest bearing
    
    
    296,176,398
    
    
    
    301,052,887
    
    
    
    198,019,041Time, $100,000 or more
    
    
    97,394,708
    
    
    
    51,292,708
    
    
    
    58,050,425Other time deposits
    
    
    62,255,783
    
    
    
    63,244,699
    
    
    
    63,470,625Total deposits
    
    
    622,992,259
    
    
    
    592,217,342
    
    
    
    428,990,115Federal funds purchased and securities
sold under agreements to repurchase
    
    
    148,593,191
    
    
    
    149,267,750
    
    
    
    130,999,465Borrowings from Federal Home Loan Bank
    
    
    7,339,841
    
    
    
    7,352,005
    
    
    
    7,305,600Other liabilities
    
    
    9,436,224
    
    
    
    8,984,804
    
    
    
    8,281,500Total
liabilities
    
    
    788,361,515
    
    
    
    757,821,901
    
    
    
    575,576,680Shareholders Equity:Common Stock, $1 par value, 15,000,000
shares authorized, 5,548,199, 5,549,128
and 5,549,688 shares issued and
outstanding at June 30, 2006, December
31, 2005 and June 30, 2005, respectively
    
    
    5,548,199
    
    
    
    5,549,128
    
    
    
    5,549,688Surplus
    
    
    65,780,254
    
    
    
    65,780,254
    
    
    
    65,780,254Undivided profits
    
    
    22,851,882
    
    
    
    18,942,855
    
    
    
    19,299,490Accumulated other comprehensive income
    
    
    (3,960,150
    )
    
    
    (2,769,106
    )
    
    
    (1,250,539
    )Total shareholders equity
    
    
    90,220,185
    
    
    
    87,503,131
    
    
    
    89,378,893Total liabilities and shareholders equity
    
    $
    878,581,700
    
    
    $
    845,325,032
    
    
    $
    664,955,573
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For the Quarters Ended June 30,
    
    
    For the Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest income:Interest and fees on loans
    
    $
    6,871,406
    
    
    $
    6,069,161
    
    
    $
    13,054,483
    
    
    $
    11,080,841Interest and dividends on investments:U. S. Treasury
    
    
    1,495,269
    
    
    
    638,668
    
    
    
    3,323,351
    
    
    
    1,053,667U. S. Government agencies and corporations
    
    
    2,774,493
    
    
    
    1,149,619
    
    
    
    4,533,026
    
    
    
    2,095,669States and political subdivisions
    
    
    208,790
    
    
    
    211,229
    
    
    
    417,391
    
    
    
    409,469Other investments
    
    
    39,845
    
    
    
    64,441
    
    
    
    125,819
    
    
    
    135,283Interest on federal funds sold
    
    
    98,866
    
    
    
    86,448
    
    
    
    539,356
    
    
    
    172,936Total interest income
    
    
    11,488,669
    
    
    
    8,219,566
    
    
    
    21,993,426
    
    
    
    14,947,865Interest expense:Time deposits of $100,000 or more
    
    
    741,919
    
    
    
    270,872
    
    
    
    1,225,744
    
    
    
    508,539Other deposits
    
    
    1,877,739
    
    
    
    929,243
    
    
    
    3,612,184
    
    
    
    1,747,113Borrowings from Federal Home Loan Bank
    
    
    126,525
    
    
    
    117,546
    
    
    
    242,391
    
    
    
    220,940Federal funds purchased and securities sold under
agreements to repurchase
    
    
    1,237,760
    
    
    
    433,747
    
    
    
    1,901,005
    
    
    
    749,882Total interest expense
    
    
    3,983,943
    
    
    
    1,751,408
    
    
    
    6,981,324
    
    
    
    3,226,474Net interest income
    
    
    7,504,726
    
    
    
    6,468,158
    
    
    
    15,012,102
    
    
    
    11,721,391Provision for losses on loans
    
    
    42,000
    
    
    
    (834,025
    )
    
    
    77,000
    
    
    
    (1,513,000
    )Net interest income after provision for losses on loans
    
    $
    7,462,726
    
    
    $
    7,302,183
    
    
    $
    14,935,102
    
    
    $
    13,234,391
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For the Quarters Ended June 30,
    
    
    For the Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Other operating income:Trust department income and fees
    
    $
    374,221
    
    
    $
    370,766
    
    
    $
    730,238
    
    
    $
    714,291Service charges on deposit accounts
    
    
    1,244,781
    
    
    
    1,449,698
    
    
    
    2,305,268
    
    
    
    2,726,109Other service charges, commissions and fees
    
    
    76,367
    
    
    
    90,983
    
    
    
    150,874
    
    
    
    164,367Loss on sale of securities
    
    
    
    
    
    
    (442,539
    )
    
    
    
    
    
    
    (442,539
    )Other income
    
    
    452,582
    
    
    
    231,341
    
    
    
    632,111
    
    
    
    474,569Total other operating income
    
    
    2,147,951
    
    
    
    1,700,249
    
    
    
    3,818,491
    
    
    
    3,636,797Other operating expense:Salaries and employee benefits
    
    
    3,105,195
    
    
    
    2,817,894
    
    
    
    6,138,214
    
    
    
    5,655,851Net occupancy
    
    
    762,230
    
    
    
    349,461
    
    
    
    1,105,232
    
    
    
    695,980Equipment rentals, depreciation and maintenance
    
    
    689,064
    
    
    
    677,114
    
    
    
    1,350,269
    
    
    
    1,341,608Other expense
    
    
    1,077,759
    
    
    
    1,193,539
    
    
    
    2,360,007
    
    
    
    2,508,403Total other operating expense
    
    
    5,634,248
    
    
    
    5,038,008
    
    
    
    10,953,722
    
    
    
    10,201,842Income before income taxes and extraordinary gain
    
    
    3,976,429
    
    
    
    3,964,424
    
    
    
    7,799,871
    
    
    
    6,669,346Income taxes
    
    
    1,420,008
    
    
    
    1,316,520
    
    
    
    2,710,000
    
    
    
    2,088,000Income before extraordinary gain
    
    
    2,556,421
    
    
    
    2,647,904
    
    
    
    5,089,871
    
    
    
    4,581,346Extraordinary gain, net of income taxes
    
    
    
    
    
    
    79,000
    
    
    
    
    
    
    
    538,000Net income
    
    $
    2,556,421
    
    
    $
    2,726,904
    
    
    $
    5,089,871
    
    
    $
    5,119,346
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AccumulatedOtherCompre-# of Common
    
    
    Common
    
    
    
    
    
    
    Undivided
    
    
    hensive
    
    
    Comprehen-Shares
    
    
    Stock
    
    
    Surplus
    
    
    Profits
    
    
    Income
    
    
    sive Income
    
    
    TotalBalance, January 1,
2005
    
    
    5,555,419
    
    
    $
    5,555,419
    
    
    $
    65,780,254
    
    
    $
    15,391,524
    
    
    $
    (925,764
    )
    
    
    
    
    
    $
    85,801,433Comprehensive
income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,119,346
    
    
    
    
    
    
    $
    5,119,346
    
    
    
    5,119,346Net unrealized loss
on available for
sale securities,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (559,090
    )
    
    
    (559,090
    )
    
    
    (559,090
    )Reclassification
adjustment for
available for sale
securities called
or sold in the
current year, net
of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    234,315
    
    
    
    234,315
    
    
    
    234,315Total
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,794,571Retirement of
common stock
    
    
    (5,731
    )
    
    
    (5,731
    )
    
    
    
    
    
    
    (101,841
    )
    
    
    
    
    
    
    
    
    
    
    (107,572
    )Effect of stock
retirement on
accrued dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    399
    
    
    
    
    
    
    
    
    
    
    
    399Dividend declared
($.20 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,109,938
    )
    
    
    
    
    
    
    
    
    
    
    (1,109,938
    )Balance, June 30,
2005
    
    
    5,549,688
    
    
    $
    5,549,688
    
    
    $
    65,780,254
    
    
    $
    19,299,490
    
    
    $
    (1,250,539
    )
    
    
    
    
    
    $
    89,378,893
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AccumulatedOther Compre-# of Common
    
    
    Common
    
    
    
    
    
    
    Undivided
    
    
    hensive
    
    
    Comprehen-Shares
    
    
    Stock
    
    
    Surplus
    
    
    Profits
    
    
    Income
    
    
    sive Income
    
    
    TotalBalance, January 1,
2006
    
    
    5,549,128
    
    
    $
    5,549,128
    
    
    $
    65,780,254
    
    
    $
    18,942,855
    
    
    $
    (2,769,106
    )
    
    
    
    
    
    $
    87,503,131Comprehensive
Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,089,871
    
    
    
    
    
    
    $
    5,089,871
    
    
    
    5,089,871Net unrealized loss
on available for
sale securities,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,191,044
    )
    
    
    (1,191,044
    )
    
    
    (1,191,044
    )Total
comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,898,827Retirement of
common stock
    
    
    (929
    )
    
    
    (929
    )
    
    
    
    
    
    
    (15,722
    )
    
    
    
    
    
    
    
    
    
    
    (16,651
    )Dividend declared
($.21 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,165,122
    )
    
    
    
    
    
    
    
    
    
    
    (1,165,122
    )Balance, June 30,
2006
    
    
    5,548,199
    
    
    $
    5,548,199
    
    
    $
    65,780,254
    
    
    $
    22,851,882
    
    
    $
    (3,960,150
    )
    
    
    
    
    
    $
    90,220,185
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For the Six Months Ended June 30,
    
    2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    5,089,871
    
    
    $
    5,119,346Adjustments to reconcile net income to net cash provided by operating
activities:Loss on sales of securities
    
    
    
    
    
    
    442,539Gain on sales of other real estate
    
    
    (150,000
    )
    
    
    (246,866
    )Depreciation
    
    
    758,000
    
    
    
    828,760Provision for losses on loans
    
    
    77,000
    
    
    
    (1,513,000
    )Provision for losses on other real estate
    
    
    
    
    
    
    7,000Changes in assets and liabilities:Accrued interest receivable
    
    
    (1,746,904
    )
    
    
    (537,313
    )Other assets
    
    
    (224,154
    )
    
    
    (424,431
    )Other liabilities
    
    
    246,123
    
    
    
    (229,337
    )Net cash provided by operating activities
    
    
    4,049,936
    
    
    
    3,446,698Cash flows from investing activities:Proceeds from maturities and calls of held to maturity securities
    
    
    153,170,000
    
    
    
    435,000Proceeds from maturities, sales and calls of available for sale securities
    
    
    8,110,292
    
    
    
    88,641,255Investment in held to maturity securities
    
    
    (151,719,978
    )
    
    
    (9,887,530
    )Investment in available for sale securities
    
    
    (80,634,652
    )
    
    
    (135,845,156
    )Investment in Federal Home Loan Bank
    
    
    (25,100
    )
    
    
    (18,800
    )Proceeds from sales of other real estate
    
    
    238,000
    
    
    
    375,000Loans, net increase
    
    
    (51,705,744
    )
    
    
    (12,428,832
    )Acquisition of premises and equipment
    
    
    (1,210,126
    )
    
    
    (626,232
    )Federal funds sold
    
    
    98,660,000
    
    
    
    (463,000
    )Other assets
    
    
    (295,685
    )
    
    
    (276,354
    )Net cash used in investing activities
    
    
    (25,412,993
    )
    
    
    (70,094,649
    )
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For the Six Months Ended June 30,
    
    2006
    
    
    2005Cash flows from financing activities:Demand and savings deposits, net increase (decrease)
    
    $
    (14,338,167
    )
    
    $
    37,475,539Time deposits, net increase
    
    
    45,113,084
    
    
    
    2,323,046Principal payments on notes
    
    
    
    
    
    
    (1,239
    )Borrowings from Federal Home Loan Bank
    
    
    10,607,443
    
    
    
    177,769Repayments to Federal Home Loan Bank
    
    
    (10,619,607
    )
    
    
    (75,139
    )Retirement of common stock
    
    
    (16,651
    )
    
    
    (107,572
    )Cash dividends
    
    
    (1,109,826
    )
    
    
    (999,576
    )Federal funds purchased and securities sold under
agreements to repurchase, net increase (decrease)
    
    
    (674,559
    )
    
    
    43,722,340Net cash provided by financing activities
    
    
    28,961,717
    
    
    
    82,515,168Net increase in cash and cash equivalents
    
    
    7,598,660
    
    
    
    15,867,217Cash and cash equivalents, beginning of period
    
    
    52,277,524
    
    
    
    32,724,625Cash and cash equivalents, end of period
    
    $
    59,876,184
    
    
    $
    48,591,842
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For the Six
    
    
    For the Year
    
    
    For the SixMonths Ended
    
    
    Ended December
    
    
    Months EndedJune 30, 2006
    
    
    31, 2005
    
    
    June 30, 2005Balance, beginning of period
    
    $
    10,966,022
    
    
    $
    6,569,614
    
    
    $
    6,569,614Provision for loan losses
    
    
    77,000
    
    
    
    3,614,000
    
    
    
    (1,513,000
    )Recoveries
    
    
    227,700
    
    
    
    1,344,000
    
    
    
    1,117,406Loans charged off
    
    
    (227,889
    )
    
    
    (561,592
    )
    
    
    (238,442
    )Balance, end of period
    
    $
    11,042,833
    
    
    $
    10,966,022
    
    
    $
    5,935,578
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Less Than TwelveMonths
    
    
    Over Twelve Months
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossUnreal-
    
    
    
    
    
    
    Unreal-
    
    
    
    
    
    
    Unreal-Fair Value
    
    
    ized Loss
    
    
    Fair Value
    
    
    ized Loss
    
    
    Fair Value
    
    
    ized lossU. S. Treasury
    
    $
    77,273
    
    
    $
    438
    
    
    $
    19,546
    
    
    $
    434
    
    
    $
    96,819
    
    
    $
    872U. S. Govt. Agencies
    
    
    170,851
    
    
    
    1,503
    
    
    
    84,495
    
    
    
    2,974
    
    
    
    255,346
    
    
    
    4,477States and
political
subdivisions
    
    
    8,896
    
    
    
    200
    
    
    
    5,872
    
    
    
    286
    
    
    
    14,768
    
    
    
    486FHLMC preferred
stock
    
    
    
    
    
    
    
    
    
    
    2,429
    
    
    
    646
    
    
    
    2,429
    
    
    
    646Total
    
    $
    257,020
    
    
    $
    2,141
    
    
    $
    112,342
    
    
    $
    4,340
    
    
    $
    369,362
    
    
    $
    6,481




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Forward-Looking Information
  Overview
    For the six months ended June 30,
    
    2006
    
    
    2005Net income per share
    
    $
    .92
    
    
    $
    .92Book value per share
    
    $
    16.26
    
    
    $
    16.11Return on average total assets
    
    
    1.17
    %
    
    
    1.63
    %Allowance for loan losses as a %
of loans, net of
unearned discount
    
    
    2.75
    %
    
    
    1.71
    %




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Financial Condition
 Held to Maturity Securities
  June 30,
    
    2006
    
    
    
    
    
    
    2005Amount
    
    
    %
    
    
    Amount
    
    
    %U. S. Treasury
    
    $
    58,607,734
    
    
    
    44
    %
    
    $
    9,889,402
    
    
    
    62
    %U. S. Government agencies
    
    
    68,000,000
    
    
    
    51
    %States & political subdivisions
    
    
    5,989,203
    
    
    
    5
    %
    
    
    6,150,703
    
    
    
    38
    %Totals
    
    $
    132,596,937
    
    
    
    100
    %
    
    $
    16,040,105
    
    
    
    100
    %
 Available for Sale Securities
  June 30,
    
    2006
    
    
    
    
    
    
    2005Amount
    
    
    %
    
    
    Amount
    
    
    %U. S. Treasury
    
    $
    43,175,580
    
    
    
    17
    %
    
    $
    82,372,974
    
    
    
    38
    %U. S. Government agencies
    
    
    187,579,562
    
    
    
    75
    %
    
    
    119,583,966
    
    
    
    54
    %States and political subdivisions
    
    
    14,720,813
    
    
    
    6
    %
    
    
    14,384,780
    
    
    
    7
    %Other securities
    
    
    3,644,414
    
    
    
    2
    %
    
    
    2,957,297
    
    
    
    1
    %Totals
    
    $
    249,120,369
    
    
    
    100
    %
    
    $
    219,299,017
    
    
    
    100
    %




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##### Table of Contents



Loans
  Accrued Interest Receivable
  Other Assets
  Deposits
  Federal Funds Purchased and Securities Sold Under Agreements to Repurchase
  Other Liabilities
  Shareholders Equity and Capital Adequacy




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##### Table of Contents



RESULTS OF OPERATIONS
 Net Interest Income
   Six Months Ended June 30, (Inthousands, except percentages)
    
    2006
    
    
    2005Total interest income (1)
    
    $
    22,206
    
    
    $
    15,158Total interest expense
    
    
    6,981
    
    
    
    3,226Net interest earnings
    
    $
    15,225
    
    
    $
    11,932Net yield on interest earning assets (2)
    
    
    3.94
    %
    
    
    4.28
    %
 
 (1)
    
    All interest earned is reported on a taxable equivalent basis using a tax rate of 34% in
2006 and 2005.(2)
    
    Interest income in 2005 includes $900,000 received in 2005 for prior years. See Note 7. Net
yield would have been 3.96 % without this interest.




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##### Table of Contents



For the Six
    
    
    For the SixMonths
    
    
    MonthsEnded
    
    
    Ended
    
    
    
    
    
    
    Attributable To:June 30,
    
    
    June 30,
    
    
    Increase
    
    
    
    
    
    
    
    
    
    
    Rate/2006
    
    
    2005
    
    
    (Decrease)
    
    
    Volume
    
    
    Rate
    
    
    VolumeINTEREST INCOME: (1)Loans (2) (3)
    
    $
    13,054
    
    
    $
    11,081
    
    
    $
    1,973
    
    
    $
    804
    
    
    $
    1,090
    
    
    $
    79Federal funds sold
    
    
    539
    
    
    
    173
    
    
    
    366
    
    
    
    119
    
    
    
    146
    
    
    
    101Held to maturity:Taxable
    
    
    3,856
    
    
    
    14
    
    
    
    3,842
    
    
    
    2,377
    
    
    
    9
    
    
    
    1,456Non-taxable
    
    
    218
    
    
    
    228
    
    
    
    (10
    )
    
    
    (9
    )
    
    
    (1
    )Available for sale:Taxable
    
    
    3,999
    
    
    
    3,135
    
    
    
    864
    
    
    
    177
    
    
    
    650
    
    
    
    37Non-taxable
    
    
    414
    
    
    
    392
    
    
    
    22
    
    
    
    9
    
    
    
    13Other
    
    
    126
    
    
    
    135
    
    
    
    (9
    )
    
    
    (1
    )
    
    
    (8
    )Total
    
    $
    22,206
    
    
    $
    15,158
    
    
    $
    7,048
    
    
    $
    3,476
    
    
    $
    1,899
    
    
    $
    1,673INTEREST EXPENSE:Savings and
demand,
interest
bearing
    
    $
    2,641
    
    
    $
    982
    
    
    $
    1,659
    
    
    $
    524
    
    
    $
    740
    
    
    $
    395Time deposits
    
    
    2,197
    
    
    
    1,273
    
    
    
    924
    
    
    
    165
    
    
    
    672
    
    
    
    87Federal funds
purchased and
securities sold
under agreements to
repurchase
    
    
    1,901
    
    
    
    750
    
    
    
    1,151
    
    
    
    196
    
    
    
    757
    
    
    
    198Borrowings from FHLB
    
    
    242
    
    
    
    221
    
    
    
    21
    
    
    
    28
    
    
    
    (6
    )
    
    
    (1
    )Total
    
    $
    6,981
    
    
    $
    3,226
    
    
    $
    3,755
    
    
    $
    913
    
    
    $
    2,163
    
    
    $
    679
 
 (1)
    
    All interest earned is reported on a taxable equivalent basis
using a tax rate of 34% in 2006
and 2005.(2)
    
    Loan fees are included in these figures.(3)
    
    Includes nonaccrual loans.




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##### Table of Contents



Provision for Loan Losses
    Service Charges on Deposit Accounts
  Loss on Sale of Securities
  Salaries and Employee Benefits




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##### Table of Contents



Net Occupancy
  Extraordinary Gain
  LIQUIDITY
  
 Item 4: Controls and Procedures




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##### Table of Contents



Exhibit 23:
    
    Consent of Independent Registered Public Accounting FirmExhibit 31.1:
    
    Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes  Oxley Act of 2002Exhibit 31.2:
    
    Certification of Chief Financial Officer Pursuant
to Section 302 of the Sarbanes  Oxley Act of 2002Exhibit 32.1:
    
    Certification of Chief Executive Officer Pursuant
to 18 U.S.C. ss. 1350Exhibit 32.2:
    
    Certification of Chief Financial Officer Pursuant
to 18 U.S.C. ss. 1350




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##### Table of Contents



PEOPLES FINANCIAL CORPORATION(Registrant)Date: August 9, 2006By:
    
    /s/ Chevis C. Swetman

Chevis C. SwetmanChairman, President and Chief Executive OfficerDate: August 9, 2006By:
    
    /s/ Lauri A. WoodLauri A. WoodChief Financial Officer and Controller(principal financial and accounting officer)