##### 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 ended March 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 001-12103
 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)
 
 þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o Do not check if a smaller reporting company
Smaller reporting company o o þ




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TABLE OF CONTENTS  Part 1  Financial InformationItem 1: Financial StatementsItem 2: Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 4: Controls and ProceduresPART II  OTHER INFORMATIONItem 1: Legal ProceedingsItem 5: Other InformationItem 6   Exhibits and Reports on Form 8-KSIGNATURESEX-31.1EX-31.2EX-32.1Exhibit 32.2    Table of Contents  
 Part 1  Financial Information
 
 Item 1: Financial Statements
 Peoples Financial Corporation and Subsidiaries
Consolidated Statements of Condition
 March 31, 2010
    
    
    December 31, 2009(Unaudited)
    
    
    (Audited)AssetsCash and due from banks
    
    $
    29,784,112
    
    
    $
    29,155,294Available for sale securities
    
    
    324,577,614
    
    
    
    311,434,437Held to maturity securities, fair value of
$3,367,129 at March 31, 2010;
$3,340,974 at December 31, 2009
    
    
    3,202,642
    
    
    
    3,201,966Other investments
    
    
    4,020,754
    
    
    
    4,036,304Federal Home Loan Bank Stock, at cost
    
    
    5,017,300
    
    
    
    5,015,900Loans
    
    
    448,873,921
    
    
    
    464,976,291Less: Allowance for loan losses
    
    
    8,278,805
    
    
    
    7,827,806Loans, net
    
    
    440,595,116
    
    
    
    457,148,485Bank premises and equipment, net
of accumulated depreciation
    
    
    30,874,831
    
    
    
    31,418,884Other real estate
    
    
    1,750,963
    
    
    
    1,521,313Accrued interest receivable
    
    
    5,065,405
    
    
    
    4,646,752Cash surrender value of life insurance
    
    
    15,499,471
    
    
    
    15,329,394Prepaid FDIC assessments
    
    
    4,645,561
    
    
    
    4,958,309Other assets
    
    
    899,501
    
    
    
    1,139,861Total assets
    
    $
    865,933,270
    
    
    $
    869,006,899
 2




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##### Table of Contents



Peoples Financial Corporation and Subsidiaries
Consolidated Statements of Condition (continued)
 March 31, 2010
    
    
    December 31, 2009(Unaudited)
    
    
    (Audited)Liabilities & Shareholders EquityLiabilities:Deposits:Demand, non-interest bearing
    
    $
    104,185,687
    
    
    $
    96,541,387Savings and demand, interest bearing
    
    
    226,104,682
    
    
    
    206,167,484Time, $100,000 or more
    
    
    146,480,345
    
    
    
    117,347,663Other time deposits
    
    
    50,196,747
    
    
    
    50,644,895Total deposits
    
    
    526,967,461
    
    
    
    470,701,429Federal funds purchased and securities sold under
agreements to repurchase
    
    
    154,391,650
    
    
    
    174,430,877Borrowings from Federal Home Loan Bank
    
    
    62,798,701
    
    
    
    104,270,452Other liabilities
    
    
    16,077,615
    
    
    
    16,016,204Total liabilities
    
    
    760,235,427
    
    
    
    765,418,962Shareholders Equity:Common stock, $1 par value, 15,000,000 shares
authorized, 5,151,697 shares issued and
outstanding at March 31, 2010 and December 31, 2009
    
    
    5,151,697
    
    
    
    5,151,697Surplus
    
    
    65,780,254
    
    
    
    65,780,254Undivided profits
    
    
    33,724,801
    
    
    
    32,853,346Accumulated other comprehensive income (loss),
net of tax
    
    
    1,041,091
    
    
    
    (197,360
    )Total shareholders equity
    
    
    105,697,843
    
    
    
    103,587,937Total liabilities & shareholders equity
    
    $
    865,933,270
    
    
    $
    869,006,899
  3




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Peoples Financial Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
 Three Months Ended March 31,2010
    
    2009Interest income:Interest and fees on loans
    
    $
    4,987,126
    
    
    $
    5,118,392Interest and dividends on securities:U.S. Treasury
    
    
    194,262
    
    
    
    453,338U.S. Government agencies
    
    
    2,299,703
    
    
    
    2,275,359Mortgage-backed securities
    
    
    386,876
    
    
    
    404,153States and political subdivisions
    
    
    356,929
    
    
    
    311,109Other securities
    
    
    4,451
    
    
    
    4,941Interest on federal funds sold
    
    
    3,779
    
    
    
    893Total interest income
    
    
    8,233,126
    
    
    
    8,568,185Interest expense:Deposits
    
    
    817,489
    
    
    
    1,556,698Long-term borrowings
    
    
    136,645
    
    
    
    160,792Federal funds purchased and securities sold under
agreements to repurchase
    
    
    286,390
    
    
    
    576,352Total interest expense
    
    
    1,240,524
    
    
    
    2,293,842Net interest income
    
    
    6,992,602
    
    
    
    6,274,343Provision for allowance for losses on loans
    
    
    1,150,000
    
    
    
    348,000Net interest income after provision for allowance
for losses on loans
    
    $
    5,842,602
    
    
    $
    5,926,343
 4




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##### Table of Contents



Peoples Financial Corporation and Subsidiaries
Consolidated Statements of Income (continued)
(Unaudited)
 Three Months Ended March 31,2010
    
    2009Non-interest income:Trust department income and fees
    
    $
    307,296
    
    
    $
    336,266Service charges on deposit accounts
    
    
    1,572,503
    
    
    
    1,663,307Gain on liquidation, sale and calls of securities
    
    
    4,045
    
    
    
    136,797Other income
    
    
    249,289
    
    
    
    486,051Total non-interest income
    
    
    2,133,133
    
    
    
    2,622,421Non-interest expense:Salaries and employee benefits
    
    
    3,412,275
    
    
    
    3,380,378Net occupancy
    
    
    524,777
    
    
    
    551,861Equipment rentals, depreciation and maintenance
    
    
    935,453
    
    
    
    950,367FDIC assessments
    
    
    350,387
    
    
    
    79,923Other expense
    
    
    1,706,388
    
    
    
    1,593,268Total non-interest expense
    
    
    6,929,280
    
    
    
    6,555,797Income before income taxes
    
    
    1,046,455
    
    
    
    1,992,967Income taxes
    
    
    175,000
    
    
    
    290,000Net income
    
    $
    871,455
    
    
    $
    1,702,967Basic and diluted earnings per share
    
    $
    .17
    
    
    $
    .33
  5




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Peoples Financial Corporation and Subsidiaries
Consolidated Statement of Shareholders Equity
 AccumulatedNumber of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OtherCommon
    
    
    Common
    
    
    
    
    
    
    Undivided
    
    
    Comprehensive
    
    
    ComprehensiveShares
    
    
    Stock
    
    
    Surplus
    
    
    Profits
    
    
    Income
    
    
    Income
    
    
    TotalBalance, Jan. 1,
2010
    
    
    5,151,697
    
    
    $
    5,151,697
    
    
    $
    65,780,254
    
    
    $
    32,853,346
    
    
    $
    (197,360
    )
    
    
    
    
    
    $
    103,587,937Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    871,455
    
    
    
    
    
    
    $
    871,455
    
    
    
    871,455Net unrealized gain on
available for sale
securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,235,781
    
    
    
    1,235,781
    
    
    
    1,235,781Reclassification
adjustment for available
for sale securities called
or sold in current year,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,670
    
    
    
    2,670
    
    
    
    2,670Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,109,906Balance, Mar. 31,
2010
    
    
    5,151,697
    
    
    $
    5,151,697
    
    
    $
    65,780,254
    
    
    $
    33,724,801
    
    
    $
    1,041,091
    
    
    
    
    
    
    $
    105,697,843
   6




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Peoples Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
 Three Months Ended March 31,2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    871,455
    
    
    $
    1,702,967Adjustment to reconcile net income to net cash
provided by operating activities:Depreciation
    
    
    609,000
    
    
    
    598,500Provision for allowance for loan losses
    
    
    1,150,000
    
    
    
    348,000Loss on writedown of other real estate
    
    


    77,350Loss on sales of other real estate
    
    
    13,000(Gain) loss on other investments
    
    
    15,550
    
    
    
    (110,338
    )Gain on sales and calls of securities
    
    
    (4,045
    )
    
    
    (136,797
    )Change in accrued interest receivable
    
    
    (418,653
    )
    
    
    943,272Change in other assets
    
    
    228,188
    
    
    
    857,280Change in other liabilities
    
    
    261,581
    
    
    
    (245,657
    )Net cash provided by operating activities
    
    
    2,803,426
    
    
    
    3,957,227Cash flows from investing activities:Proceeds from maturities, sales and calls of
available for sale securities
    
    
    45,824,384
    
    
    
    97,023,145Investment in available for sale securities
    
    
    (57,083,465
    )
    
    
    (101,694,947
    )Investment in held to maturity securities
    
    
    (676
    )
    
    
    (643
    )Investment in Federal Home Loan Bank Stock
    
    
    (1,400
    )
    
    
    (203,900
    )Proceeds from sales of other real estate
    
    
    310,000
    
    
    
    105,000Loans, net change
    
    
    14,773,369
    
    
    
    (9,756,074
    )Acquisition of premises and equipment
    
    
    (64,947
    )
    
    
    (107,649
    )Other assets
    
    
    (171,757
    )
    
    
    (156,145
    )Net cash provided by (used in) investing
activities
    
    $
    3,585,508
    
    
    $
    (14,791,213
    )
 7




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Peoples Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows (continued)
(Unaudited)
 Three Months Ended March 31,2010
    
    
    2009Cash flows from financing activities:Demand and savings deposits, net change
    
    $
    27,581,497
    
    
    $
    1,973,939Time deposits, net change
    
    
    28,684,535
    
    
    
    33,733,209Cash dividends
    
    
    (515,170
    )
    
    
    (1,583,780
    )Retirement of common stock
    
    
    
    
    
    
    (2,050,478
    )Borrowings from Federal Home Loan Bank
    
    
    268,571,965
    
    
    
    65,000,000Repayments to Federal Home Loan Bank
    
    
    (310,043,716
    )
    
    
    (85,040,228
    )Federal funds purchased and securities sold
under agreements to repurchase, net change
    
    
    (20,039,227
    )
    
    
    1,299,704Net cash provided by (used in) financing
activities
    
    
    (5,760,116
    )
    
    
    13,332,366Net increase in cash and cash equivalents
    
    
    628,818
    
    
    
    2,498,380Cash and cash equivalents, beginning of year
    
    
    29,155,294
    
    
    
    34,019,590Cash and cash equivalents, end of year
    
    $
    29,784,112
    
    
    $
    36,517,970
  8




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9




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Gross
    
    Grossunrealized
    
    unrealized
    
    EstimatedMarch 31, 2010
    
    Amortized cost
    
    gains
    
    losses
    
    fair valueAvailable for sale securities:Debt securities:U.S. Treasury
    
    $
    31,990,207
    
    
    $
    584,222
    
    
    $
    (89
    )
    
    $
    32,574,340U.S. Government agencies
    
    
    222,532,397
    
    
    
    801,014
    
    
    
    (1,211,139
    )
    
    
    222,122,272Mortgage-backed securities
    
    
    27,444,047
    
    
    
    1,278,267
    
    
    
    (18,260
    )
    
    
    28,704,054States and political subdivisions
    
    
    39,083,014
    
    
    
    1,700,724
    
    
    
    (256,773
    )
    
    
    40,526,965Total debt securities
    
    
    321,049,665
    
    
    
    4,364,227
    
    
    
    (1,486,261
    )
    
    
    323,927,631Equity securities
    
    
    649,983
    
    
    
    
    
    
    
    
    
    
    
    649,983Total available for sale securities
    
    $
    321,699,648
    
    
    $
    4,364,227
    
    
    $
    (1,486,261
    )
    
    $
    324,577,614Held to maturity securities:States and political subdivisions
    
    $
    3,202,642
    
    
    $
    164,487
    
    
    $
    
    
    
    $
    3,367,129Total held to maturity securities
    
    $
    3,202,642
    
    
    $
    164,487
    
    
    $
    
    
    
    $
    3,367,129
 10




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Gross
    
    Grossunrealized
    
    unrealized
    
    EstimatedDecember 31, 2009
    
    Amortized cost
    
    gains
    
    losses
    
    fair valueAvailable for sale securities:Debt securities:U.S. Treasury
    
    $
    23,987,222
    
    
    $
    752,918
    
    
    $
    
    
    
    $
    24,740,140U.S. Government agencies
    
    
    216,473,270
    
    
    
    695,213
    
    
    
    (2,590,287
    )
    
    
    214,578,196Mortgage-backed securities
    
    
    30,035,546
    
    
    
    1,278,310
    
    
    
    (51,186
    )
    
    
    31,262,670States and political subdivisions
    
    
    39,290,502
    
    
    
    1,179,412
    
    
    
    (266,466
    )
    
    
    40,203,448Total debt securities
    
    
    309,786,540
    
    
    
    3,905,853
    
    
    
    (2,907,939
    )
    
    
    310,784,454Equity securities
    
    
    649,983
    
    
    
    
    
    
    
    
    
    
    
    649,983Total available for sale securities
    
    $
    310,436,523
    
    
    $
    3,905,853
    
    
    $
    (2,907,939
    )
    
    $
    311,434,437Held to maturity securities:States and political subdivisions
    
    $
    3,201,966
    
    
    $
    139,008
    
    
    $
    
    
    
    $
    3,340,974Total held to maturity securities
    
    $
    3,201,966
    
    
    $
    139,008
    
    
    $
    
    
    
    $
    3,340,974
  Fair Value Measurement UsingTotal
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3March 31, 2010
    
    $
    324,577,614
    
    
    
    
    
    
    $
    324,577,614December 31, 2009
    
    
    311,434,437
    
    
    
    
    
    
    
    311,434,437
  11




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EstimatedAmortized cost
    
    fair valueAvailable for sale securities:Due in one year or less
    
    $
    27,330,766
    
    
    $
    27,478,157Due after one year through five years
    
    
    80,401,107
    
    
    
    81,304,499Due after five years through ten years
    
    
    61,826,297
    
    
    
    62,415,502Due after ten years
    
    
    124,047,448
    
    
    
    124,025,420Mortgage-backed securities
    
    
    27,444,047
    
    
    
    28,704,053Totals
    
    $
    321,049,665
    
    
    $
    323,927,631Held to maturity securities:Due in one year or less
    
    $
    304,983
    
    
    $
    306,544Due after one year through five years
    
    
    1,901,215
    
    
    
    2,021,822Due after five years through ten years
    
    
    996,444
    
    
    
    1,038,763Totals
    
    $
    3,202,642
    
    
    $
    3,367,129
  Less Than Twelve Months
    
    Over Twelve Months
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    UnrealizedFair Value
    
    Loss
    
    Fair Value
    
    Loss
    
    Fair Value
    
    LossMarch 31, 2010:U.S. Treasury
    
    $
    9,999,900
    
    
    $
    89
    
    
    $
    
    
    
    $
    
    
    
    $
    9,999,900
    
    
    $
    89U.S. Government
Agencies
    
    
    111,543,171
    
    
    
    1,078,339
    
    
    
    9,867,200
    
    
    
    132,800
    
    
    
    121,410,371
    
    
    
    1,211,139Mortgage-backed
Securities
    
    
    4,843,011
    
    
    
    18,260
    
    
    
    
    
    
    
    
    
    
    
    4,843,011
    
    
    
    18,260States and political
subdivisions
    
    
    3,811,123
    
    
    
    180,168
    
    
    
    2,171,992
    
    
    
    76,605
    
    
    
    5,983,115
    
    
    
    256,773TOTAL
    
    $
    130,197,205
    
    
    $
    1,276,856
    
    
    $
    12,039,192
    
    
    $
    209,405
    
    
    $
    142,236,397
    
    
    $
    1,486,261
 12




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Less Than Twelve Months
    
    Over Twelve Months
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    UnrealizedFair Value
    
    Loss
    
    Fair Value
    
    Loss
    
    Fair Value
    
    LossDecember 31, 2009:U.S. Government
Agencies
    
    $
    138,913,530
    
    
    $
    2,590,287
    
    
    $
    
    
    
    $
    
    
    
    $
    138,913,530
    
    
    $
    2,590,287Mortgage-backed
Securities
    
    
    4,856,429
    
    
    
    51,186
    
    
    
    
    
    
    
    
    
    
    
    4,856,429
    
    
    
    51,186States and political
subdivisions
    
    
    9,501,227
    
    
    
    148,396
    
    
    
    2,520,564
    
    
    
    118,070
    
    
    
    12,021,791
    
    
    
    266,466TOTAL
    
    $
    153,271,186
    
    
    $
    2,789,869
    
    
    $
    2,520,564
    
    
    $
    118,070
    
    
    $
    155,791,750
    
    
    $
    2,907,939
       13




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Fair Value Measurement UsingTotal
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3March 31, 2010
    
    $
    19,409,693
    
    
    
    
    
    
    $
    19,409,693December 31, 2009
    
    
    20,110,334
    
    
    
    
    
    
    
    20,110,334
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3March 31, 2010
    
    $
    1,750,963
    
    
    
    
    
    
    $
    1,750,963December 31, 2009
    
    
    1,521,313
    
    
    
    
    
    
    
    1,521,313
 14




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Three Months Ended March 31,2010
    
    2009Balance, beginning of period
    
    $
    7,827,806
    
    
    $
    11,113,575Recoveries
    
    
    55,617
    
    
    
    105,422Loans charged off
    
    
    (754,618
    )
    
    
    (194,131
    )Provision for allowance for loan losses
    
    
    1,150,000
    
    
    
    348,000Balance, end of period
    
    $
    8,278,805
    
    
    $
    11,372,866
       15




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March 31, 2010
    
    December 31, 2009Carrying Amount
    
    Fair Value
    
    Carrying Amount
    
    Fair ValueFinancial Assets:Cash and due from banks
    
    $
    29,784,112
    
    
    $
    29,784,112
    
    
    $
    29,155,294
    
    
    $
    29,155,294Available for sale securities
    
    
    324,577,614
    
    
    
    324,577,614
    
    
    
    311,434,437
    
    
    
    311,434,437Held to maturity securities
    
    
    3,202,642
    
    
    
    3,367,129
    
    
    
    3,201,966
    
    
    
    3,340,974Other investments
    
    
    4,020,754
    
    
    
    4,020,754
    
    
    
    4,036,304
    
    
    
    4,036,304Federal Home Loan Bank stock
    
    
    5,017,300
    
    
    
    5,017,300
    
    
    
    5,015,900
    
    
    
    5,015,900Loans, net
    
    
    440,595,116
    
    
    
    443,521,584
    
    
    
    464,976,291
    
    
    
    460,587,836Cash surrender value
    
    
    15,499,471
    
    
    
    15,499,471
    
    
    
    15,329,394
    
    
    
    15,329,394Financial Liabilities:Deposits:Non-interest bearing
    
    
    104,185,687
    
    
    
    104,185,687
    
    
    
    96,541,387
    
    
    
    96,541,387Interest bearing
    
    
    422,781,774
    
    
    
    423,161,197
    
    
    
    374,160,042
    
    
    
    375,051,835Total deposits
    
    
    526,967,461
    
    
    
    527,346,884
    
    
    
    470,701,429
    
    
    
    471,593,222Federal funds purchased and
securities sold under agreements
to repurchase
    
    
    154,391,650
    
    
    
    154,391,650
    
    
    
    174,430,877
    
    
    
    174,430,877Borrowings from Federal Home Loan
Bank
    
    
    62,798,701
    
    
    
    64,593,000
    
    
    
    104,270,452
    
    
    
    105,815,000
    16




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17




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Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
 GENERAL
   Forward-Looking Information
  Critical Accounting Policies
  18




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OVERVIEW
      RESULTS OF OPERATIONS
 Net Interest Income
   19




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20




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Three Months Ended March 31, 2010
    
    
    Three Months Ended March 31, 2009Average Balance
    
    
    Interest Earned/Paid
    
    
    Rate
    
    
    Average Balance
    
    
    Interest Earned/Paid
    
    
    RateLoans (2)(3)
    
    $
    455,880
    
    
    $
    4,987
    
    
    
    4.38
    %
    
    $
    470,524
    
    
    $
    5,118
    
    
    
    4.35
    %Federal Funds Sold
    
    
    5,553
    
    
    
    3
    
    
    
    0.22
    %
    
    
    1,310
    
    
    
    1
    
    
    
    0.31
    %HTM:Non taxable (1)
    
    
    3,202
    
    
    
    43
    
    
    
    5.37
    %
    
    
    3,394
    
    
    
    47
    
    
    
    5.54
    %AFS:Taxable
    
    
    267,597
    
    
    
    2,881
    
    
    
    4.31
    %
    
    
    306,744
    
    
    
    3,133
    
    
    
    4.09
    %Non taxable (1)
    
    
    40,367
    
    
    
    497
    
    
    
    4.92
    %
    
    
    32,368
    
    
    
    424
    
    
    
    5.24
    %Other
    
    
    5,667
    
    
    
    4
    
    
    
    0.28
    %
    
    
    3,032
    
    
    
    5
    
    
    
    0.66
    %Total
    
    $
    778,266
    
    
    $
    8,415
    
    
    
    4.32
    %
    
    $
    817,372
    
    
    $
    8,728
    
    
    
    4.27
    %Savings & interest-
bearing DDA
    
    $
    223,524
    
    
    $
    286
    
    
    
    0.51
    %
    
    $
    243,972
    
    
    $
    689
    
    
    
    1.13
    %CDs
    
    
    176,960
    
    
    
    532
    
    
    
    1.20
    %
    
    
    175,625
    
    
    
    867
    
    
    
    1.97
    %Federal funds
purchased
    
    
    170,810
    
    
    
    286
    
    
    
    0.67
    %
    
    
    227,357
    
    
    
    576
    
    
    
    1.01
    %FHLB advances
    
    
    75,909
    
    
    
    136
    
    
    
    0.72
    %
    
    
    28,809
    
    
    
    161
    
    
    
    2.24
    %Total
    
    $
    647,203
    
    
    $
    1,240
    
    
    
    0.77
    %
    
    $
    675,763
    
    
    $
    2,293
    
    
    
    1.36
    %Net tax-equivalent yield on earning assets
    
    
    
    
    
    
    
    
    
    
    3.69
    %
    
    
    
    
    
    
    
    
    
    
    3.15
    %
 
 (1)
    
    All interest earned is reported on a taxable equivalent basis using a tax rate of 34% in
2010 and 2009.(2)
    
    Loan fees of $201 and $152 for 2010 and 2009, respectively, are included in these figures.(3)
    
    Includes nonaccrual loans. 21




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Provision for Loan Losses
    Non-interest income
     22




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Non-interest expense
    Income Taxes
  FINANCIAL CONDITION
  March 31, 2010
    
    
    December 31, 2009Available for sale securities:U.S. Treasury
    
    $
    32,574,341
    
    
    $
    24,740,140U.S. Government agencies
    
    
    222,122,272
    
    
    
    214,578,197Mortgage-backed securities
    
    
    28,704,054
    
    
    
    31,262,670States and political subdivisions
    
    
    40,526,965
    
    
    
    40,203,448Equity securities
    
    
    649,982
    
    
    
    649,982Total available for sale securities
    
    $
    324,577,614
    
    
    $
    311,434,437
  23




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March 31, 2010
    
    
    December 31, 2009Real estate, construction
    
    $
    91,008,534
    
    
    $
    94,460,479Real estate, mortgage
    
    
    296,550,834
    
    
    
    299,402,982Loans to finance agricultural production
    
    
    
    
    
    
    1,754,796Commercial and industrial loans
    
    
    47,502,699
    
    
    
    52,250,231Loans to individuals for household, family and other
consumer expenditures
    
    
    8,213,620
    
    
    
    9,049,394Obligations of states and political subdivisions
    
    
    5,430,409
    
    
    
    7,890,584All other loans
    
    
    167,825
    
    
    
    167,825Total
    
    $
    448,873,921
    
    
    $
    464,976,291
      SHAREHOLDERS EQUITY AND CAPITAL ADEQUACY
  24




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LIQUIDITY
  REGULATORY MATTERS
  
 Item 4: Controls and Procedures
   25




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PART II  OTHER INFORMATION
 
 Item 1: Legal Proceedings
  
 Item 5: Other Information
  President and CEO
    
    Chevis C. SwetmanExecutive Vice President
    
    A. Wes FulmerFirst Vice President
    
    Thomas J. SlimanSecond Vice President
    
    Jeannette E. RomeroVice President
    
    Robert M. TuceiVice President and Secretary
    
    Ann F. GuiceChief Financial Officer
    
    Lauri A. WoodVice President
    
    J. Patrick Wild
 
 Item 6   Exhibits and Reports on Form 8-K
  Exhibit 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
   26




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##### Table of Contents



PEOPLES FINANCIAL CORPORATION
(Registrant)Date:      May 7, 2010By:
    /s/ Chevis C. SwetmanChevis C. SwetmanChairman, President and Chief Executive Officer
(principal executive officer)Date:      May 7, 2010By:
    /s/ Lauri A. WoodLauri A. WoodChief Financial Officer and Controller
(principal financial and accounting officer) 27