##### 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, 2009
 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)
 (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 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 4: Submission of Matters to a Vote of Security HoldersItem 5: Other InformationItem 6  Exhibits and Reports on Form 8-KSIGNATURESEX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  
 Part 1  Financial Information
 
 Item 1: Financial Statements
 Peoples Financial Corporation and Subsidiaries
Consolidated Statements of Condition
 March 31, 2009
    
    
    December 31, 2008(Unaudited)
    
    
    (Audited)AssetsCash and due from banks
    
    $
    36,517,970
    
    
    $
    34,015,590Federal funds sold
    
    
    
    
    
    
    4,000Available for sale securities
    
    
    343,533,105
    
    
    
    340,462,072Held to maturity securities, fair value of
$3,513,172 at March 31, 2009 and
$3,438,108 at December 31, 2008
    
    
    3,394,855
    
    
    
    3,394,212Other investments
    
    
    3,999,662
    
    
    
    3,889,324Federal Home Loan Bank Stock, at cost
    
    
    2,274,600
    
    
    
    2,070,700Loans
    
    
    476,521,814
    
    
    
    467,377,039Less: Allowance for loan losses
    
    
    11,372,866
    
    
    
    11,113,575Loans, net
    
    
    465,148,948
    
    
    
    456,263,464Bank premises and equipment, net
of accumulated depreciation
    
    
    33,109,319
    
    
    
    33,600,170Accrued interest receivable
    
    
    4,501,495
    
    
    
    5,444,767Cash surrender value of life insurance
    
    
    14,856,437
    
    
    
    14,688,160Other assets
    
    
    3,080,480
    
    
    
    2,575,042Total assets
    
    $
    910,416,871
    
    
    $
    896,407,501
 2




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##### Table of Contents



Peoples Financial Corporation and Subsidiaries
Consolidated Statements of Condition (continued)
 March 31, 2009
    
    
    December 31, 2008(Unaudited)
    
    
    (Audited)Liabilities & Shareholders EquityLiabilities:Deposits:Demand, non-interest bearing
    
    $
    114,982,464
    
    
    $
    109,033,184Savings and demand, interest bearing
    
    
    236,014,897
    
    
    
    239,990,238Time, $100,000 or more
    
    
    140,484,281
    
    
    
    104,540,112Other time deposits
    
    
    54,701,042
    
    
    
    56,912,002Total deposits
    
    
    546,182,684
    
    
    
    510,475,536Federal funds purchased and securities sold under
agreements to repurchase
    
    
    227,908,935
    
    
    
    226,609,231Borrowings from Federal Home Loan Bank
    
    
    16,897,458
    
    
    
    36,937,686Other liabilities
    
    
    13,920,667
    
    
    
    15,384,934Total liabilities
    
    
    804,909,744
    
    
    
    789,407,387Shareholders Equity:Common stock, $1 par value, 15,000,000 shares
authorized, 5,170,408 and 5,279,268 shares issued
and outstanding at March 31, 2009 and December 31,
2008, respectively
    
    
    5,170,408
    
    
    
    5,279,268Surplus
    
    
    65,780,254
    
    
    
    65,780,254Undivided profits
    
    
    33,174,035
    
    
    
    33,412,596Accumulated other comprehensive income,
net of tax
    
    
    1,382,430
    
    
    
    2,527,996Total shareholders equity
    
    
    105,507,127
    
    
    
    107,000,114Total liabilities & shareholders equity
    
    $
    910,416,871
    
    
    $
    896,407,501
  3




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Peoples Financial Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
 Three Months Ended March 31,2009
    
    
    2008Interest income:Interest and fees on loans
    
    $
    5,118,392
    
    
    $
    7,432,345Interest and dividends on securities:U. S. Treasury
    
    
    453,338
    
    
    
    813,940U.S. Government agencies
    
    
    2,275,359
    
    
    
    3,013,487Mortgage-backed securities
    
    
    404,153
    
    
    
    461,372States and political subdivisions
    
    
    311,109
    
    
    
    260,050Other securities
    
    
    4,941
    
    
    
    62,917Interest on federal funds sold
    
    
    893
    
    
    
    36,812Total interest income
    
    
    8,568,185
    
    
    
    12,080,923Interest expense:Deposits
    
    
    1,556,698
    
    
    
    3,219,012Long-term borrowings
    
    
    160,792
    
    
    
    122,234Federal
funds purchased and securities sold under
agreements to repurchase
    
    
    576,352
    
    
    
    1,538,394Total interest expense
    
    
    2,293,842
    
    
    
    4,879,640Net interest income
    
    
    6,274,343
    
    
    
    7,201,283Provision for allowance for losses
on loans
    
    
    348,000
    
    
    
    46,000Net interest income after provision for allowance
for losses on loans
    
    $
    5,926,343
    
    
    $
    7,155,283
 4




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Peoples Financial Corporation and Subsidiaries
Consolidated Statements of Income (continued)
(Unaudited)
 Three Months Ended March 31,2009
    
    
    2008Non-interest income:Trust department income and fees
    
    $
    336,266
    
    
    $
    395,090Service charges on deposit accounts
    
    
    1,663,307
    
    
    
    1,692,460Gain on liquidation, sales and calls of securities
    
    
    136,797
    
    
    
    87,648Other income
    
    
    486,051
    
    
    
    362,594Total non-interest income
    
    
    2,622,421
    
    
    
    2,537,792Non-interest expense:Salaries and employee benefits
    
    
    3,380,378
    
    
    
    3,465,398Net occupancy
    
    
    551,861
    
    
    
    539,825Equipment rentals, depreciation and maintenance
    
    
    950,367
    
    
    
    922,053Other expense
    
    
    1,673,191
    
    
    
    1,637,399Total non-interest expense
    
    
    6,555,797
    
    
    
    6,564,675Income before income taxes
    
    
    1,992,967
    
    
    
    3,128,400Income taxes
    
    
    290,000
    
    
    
    1,039,000Net Income
    
    $
    1,702,967
    
    
    $
    2,089,400Basic and diluted earnings per share
    
    $
    .33
    
    
    $
    .39
  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, January 1, 2009
    
    
    5,279,268
    
    
    $
    5,279,268
    
    
    $
    65,780,254
    
    
    $
    33,412,596
    
    
    $
    2,527,996
    
    
    
    
    
    
    $
    107,000,114Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,702,967
    
    
    
    
    
    
    $
    1,702,967
    
    
    
    1,702,967Net unrealized loss on
available for sale
securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,055,280
    )
    
    
    (1,055,280
    )
    
    
    (1,055,280
    )Reclassification
adjustment for available
for sale securities
called
or sold in current year,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (90,286
    )
    
    
    (90,286
    )
    
    
    (90,286
    )Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    557,401Effect of stock retirement
on accrued dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90
    
    
    
    
    
    
    
    
    
    
    
    90Retirement of stock
    
    
    (108,860
    )
    
    
    (108,860
    )
    
    
    
    
    
    
    (1,941,618
    )
    
    
    
    
    
    
    
    
    
    
    (2,050,478
    )Balance, March 31, 2009
    
    
    5,170,408
    
    
    $
    5,170,408
    
    
    $
    65,780,254
    
    
    $
    33,174,035
    
    
    $
    1,382,430
    
    
    
    
    
    
    $
    105,507,127
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Peoples Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
 Three Months Ended March 31,2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    1,702,967
    
    
    $
    2,089,400Adjustment
to reconcile net income to net cash provided by operating activities:Depreciation
    
    
    598,500
    
    
    
    532,507Provision for allowance for loan losses
    
    
    348,000
    
    
    
    46,000Gain on other investments
    
    
    (110,338
    )Gain on sales and calls of securities
    
    
    (136,797
    )
    
    
    (87,648
    )Change in accrued interest receivable
    
    
    943,272
    
    
    
    1,422,645Change in other assets
    
    
    857,280
    
    
    
    (202,582
    )Change in other liabilities
    
    
    (245,657
    )
    
    
    1,235,176Net cash provided by operating activities
    
    
    3,957,227
    
    
    
    5,035,498Cash flows from investing activities:Proceeds
from maturities, sales and calls of available for sale securities
    
    
    97,023,145
    
    
    
    106,316,319Investment in available for sale securities
    
    
    (101,694,947
    )
    
    
    (65,801,648
    )Proceeds from maturities of held to maturity securities
    
    
    
    
    
    
    455,000Investment in held to maturity securities
    
    
    (643
    )
    
    
    (1,693
    )(Investment in) redemption of Federal Home Loan Bank Stock
    
    
    (203,900
    )
    
    
    18,700Proceeds from sales of other real estate
    
    
    105,000Loans, net increase
    
    
    (9,756,074
    )
    
    
    (5,780,843
    )Acquisition of premises and equipment
    
    
    (107,649
    )
    
    
    (1,340,490
    )Other assets
    
    
    (156,145
    )
    
    
    (267,994
    )Net cash provided by (used in) investing activities
    
    $
    (14,791,213
    )
    
    $
    33,597,351
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Peoples Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows (continued)
(Unaudited)
 Three Months Ended March 31,2009
    
    
    2008Cash flows from financing activities:Demand and savings deposits, net change
    
    $
    1,973,939
    
    
    $
    25,035,338Time deposits, net change
    
    
    33,733,209
    
    
    
    (24,534,148
    )Cash dividends
    
    
    (1,583,780
    )
    
    
    (1,457,587
    )Retirement of common stock
    
    
    (2,050,478
    )
    
    
    (514,449
    )Borrowings from Federal Home Loan Bank
    
    
    65,000,000
    
    
    
    10,000,000Repayments to Federal Home Loan Bank
    
    
    (85,040,228
    )
    
    
    (10,041,017
    )Federal
funds purchased and securities sold under agreements to repurchase, net change
    
    
    1,299,704
    
    
    
    (35,069,061
    )Net cash provided by (used in) financing
activities
    
    
    13,332,366
    
    
    
    (36,580,924
    )Net increase in cash and cash equivalents
    
    
    2,498,380
    
    
    
    2,051,925Cash and cash equivalents, beginning of year
    
    
    34,019,590
    
    
    
    34,935,370Cash and cash equivalents, end of year
    
    $
    36,517,970
    
    
    $
    36,987,295
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Less Than Twelve Months
    
    Over Twelve Months
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    UnrealizedFair Value
    
    Loss
    
    Fair Value
    
    Loss
    
    Fair Value
    
    LossU.S. Government
Agencies
    
    $
    89,100
    
    
    $
    954
    
    
    $
    
    
    
    $
    
    
    
    $
    89,100
    
    
    $
    954States and
political
subdivisions
    
    
    10,258
    
    
    
    359
    
    
    
    1,826
    
    
    
    156
    
    
    
    12,084
    
    
    
    515TOTAL
    
    $
    99,358
    
    
    $
    1,313
    
    
    $
    1,826
    
    
    $
    156
    
    
    $
    101,184
    
    
    $
    1,469
   Fair Value Measurement UsingTotal
    
    Level 1
    
    Level 2
    
    Level 3March 31, 2009
    
    $
    343,533,105
    
    
    
    
    $
    343,533,105December 31, 2008
    
    
    340,462,072
    
    
    
    
    
    340,462,072
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Fair Value Measurement UsingTotal
    
    Level 1
    
    Level 2
    
    Level 3March 31, 2009
    
    $
    20,474,168
    
    
    
    
    $
    20,474,168December 31, 2008
    
    
    20,072,210
    
    
    
    
    
    20,072,210
  11




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Three Months Ended March 31,2009
    
    
    2008Balance, beginning of period
    
    $
    11,113,575
    
    
    $
    9,378,137Recoveries
    
    
    105,422
    
    
    
    68,091Loans charged off
    
    
    (194,131
    )
    
    
    (87,958
    )Provision for allowance for loan losses
    
    
    348,000
    
    
    
    46,000Balance, end of period
    
    $
    11,372,866
    
    
    $
    9,404,270
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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
  14




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OVERVIEW
   RESULTS OF OPERATIONS
 Net Interest Income
      15




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16




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Three Months Ended March 31, 2009
    
    Three Months Ended March 31, 2008Average Balance
    
    Interest Earned/Paid
    
    Rate
    
    Average Balance
    
    Interest Earned/Paid
    
    RateLoans (2)(3)
    
    $
    470,524
    
    
    $
    5,118
    
    
    
    4.35
    %
    
    $
    450,083
    
    
    $
    7,432
    
    
    
    6.61
    %Federal Funds Sold
    
    
    1,310
    
    
    
    1
    
    
    
    0.31
    %
    
    
    4,584
    
    
    
    37
    
    
    
    3.23
    %HTM: Non taxable (1)
    
    
    3,394
    
    
    
    47
    
    
    
    5.54
    %
    
    
    4,330
    
    
    
    68
    
    
    
    6.28
    %AFS: Taxable
    
    
    306,744
    
    
    
    3,133
    
    
    
    4.09
    %
    
    
    337,084
    
    
    
    4,289
    
    
    
    5.09
    %Non taxable (1)
    
    
    32,368
    
    
    
    424
    
    
    
    5.24
    %
    
    
    22,663
    
    
    
    325
    
    
    
    5.74
    %Other
    
    
    3,032
    
    
    
    5
    
    
    
    0.66
    %
    
    
    4,113
    
    
    
    63
    
    
    
    6.13
    %Total
    
    $
    817,372
    
    
    $
    8,728
    
    
    
    4.27
    %
    
    $
    822,857
    
    
    $
    12,214
    
    
    
    5.94
    %Savings & interest-
bearing DDA
    
    $
    243,972
    
    
    $
    689
    
    
    
    1.13
    %
    
    $
    245,841
    
    
    $
    1,001
    
    
    
    1.63
    %CDs
    
    
    175,625
    
    
    
    867
    
    
    
    1.97
    %
    
    
    229,883
    
    
    
    2,219
    
    
    
    3.86
    %Federal funds
purchased
    
    
    227,357
    
    
    
    576
    
    
    
    1.01
    %
    
    
    199,228
    
    
    
    1,538
    
    
    
    3.09
    %FHLB advances
    
    
    28,809
    
    
    
    161
    
    
    
    2.24
    %
    
    
    8,482
    
    
    
    122
    
    
    
    5.75
    %Total
    
    $
    675,763
    
    
    $
    2,293
    
    
    
    1.36
    %
    
    $
    683,434
    
    
    $
    4,880
    
    
    
    2.86
    %Net tax-equivalent
yield on earning assets
    
    
    
    
    
    
    
    
    
    
    3.15
    %
    
    
    
    
    
    
    
    
    
    
    3.56
    %
 
 (1)
    
    All interest earned is reported on a taxable equivalent basis using a tax rate of 34% in 2009
and 2008.(2)
    
    Loan fees of $152 and $161 for 2009 and 2008, respectively, are included in these figures.(3)
    
    Includes nonaccrual loans. 17




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Provision for Loan Losses
     Non-interest income
    Non-interest expense
   18




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Income Taxes
  FINANCIAL CONDITION
  19




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March 31, 2009
    
    
    December 31, 2008Available for sale securities:U.S. Treasury
    
    $
    47,284,610
    
    
    $
    66,709,840U.S. Government agencies and corp.
    
    
    235,034,411
    
    
    
    212,395,831Mortgage-backed securities
    
    
    27,920,795
    
    
    
    29,781,077States and political subdivisions
    
    
    32,493,789
    
    
    
    30,925,824Equity securities
    
    
    799,500
    
    
    
    649,500Total available for sale securities
    
    $
    343,533,105
    
    
    $
    340,462,072
   March 31, 2009
    
    
    December 31, 2008Real estate, construction
    
    $
    120,893,726
    
    
    $
    118,455,302Real estate, mortgage
    
    
    283,761,918
    
    
    
    290,458,002Loans to finance agricultural production
    
    
    1,731,028
    
    
    
    3,177,723Commercial and industrial loans
    
    
    57,224,305
    
    
    
    43,311,552Loans to individuals for household, family and other
consumer expenditures
    
    
    10,297,535
    
    
    
    10,201,518Obligations of states and political subdivisions
    
    
    2,496,401
    
    
    
    1,733,194All other loans
    
    
    116,901
    
    
    
    39,748Total
    
    $
    476,521,814
    
    
    $
    467,377,039
     20




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SHAREHOLDERS EQUITY AND CAPITAL ADEQUACY
    LIQUIDITY
  21




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FINANCIAL HIGHLIGHTS (in thousands except per share data)
 EARNINGS SUMMARY
 Three Months Ended March 31,
    
    2009
    
    
    2008Net interest income
    
    $
    6,274
    
    
    $
    7,201Provision for loan losses
    
    
    348
    
    
    
    46Non-interest income
    
    
    2,622
    
    
    
    2,538Non-interest expense
    
    
    6,555
    
    
    
    6,565Income taxes
    
    
    290
    
    
    
    1,039Net income
    
    
    1,703
    
    
    
    2,089Earnings per share
    
    
    .33
    
    
    
    .39
 PERFORMANCE RATIOS
 March 31,
    
    2009
    
    
    2008Return on average assets
    
    
    .74
    %
    
    
    .91
    %Return on average equity
    
    
    6.41
    %
    
    
    7.71
    %Net interest margin
    
    
    3.15
    %
    
    
    3.55
    %Efficiency ratio
    
    
    77
    %
    
    
    68
    %
 
 Item 4: Controls and Procedures
   22




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PART II  OTHER INFORMATION
 
 Item 1: Legal Proceedings
  
 Item 4: Submission of Matters to a Vote of Security Holders
   Approve
    
    
    DisapproveDrew Allen
    
    
    4,626,595.544
    
    
    
    57,622.000Rex E. Kelly
    
    
    4,677,229.544
    
    
    
    6,988.000Dan Magruder
    
    
    4,677,229.544
    
    
    
    6,988.000Lyle M. Page
    
    
    4,623,269.544
    
    
    
    60,948.000Chevis C. Swetman
    
    
    4,501,617.544
    
    
    
    182,600.000
  
 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
 23




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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
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##### Table of Contents



PEOPLES FINANCIAL CORPORATION
(Registrant)Date:
    
    May 8, 2009By:
    
    /s/ Chevis C. SwetmanChevis C. SwetmanChairman, President and Chief Executive Officer(principal executive officer)Date:
    
    May 8, 2009By:
    
    /s/ Lauri A. WoodLauri A. WoodChief Financial Officer and Controller(principal financial and accounting officer)
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