PEOPLES FINANCIAL CORPORATION REPORTS RESULTS FOR THE FIRST QUARTER OF 2022
Peoples Financial Corporation (PFBX) reported a significant drop in net income for Q1 2022, amounting to $887,000, down from $4,330,000 in Q1 2021, translating to earnings per share of $0.19 compared to $0.89 a year earlier. The sharp decline in earnings is attributed to the previous year’s reduction in loan loss allowances. The company also revealed an error in accounting for a limited partnership investment, leading to a cumulative impairment totaling $2,110,000. Total shareholders' equity decreased from $92.35 million to $70.67 million due to unrealized losses on securities caused by interest rate fluctuations.
- Risk-based capital ratios remain strong at 21.21% as of March 31, 2022.
- Net income dropped 79% year-over-year, from $4.33 million in Q1 2021 to $887,000 in Q1 2022.
- Earnings per share decreased from $0.89 to $0.19.
- Total shareholders' equity fell from $92.35 million to $70.67 million.
- Unrealized losses on available-for-sale securities increased by $19.33 million due to rising interest rates.
BILOXI, Miss., May 11, 2022 /PRNewswire/ -- Peoples Financial Corporation (the "Company")(OTCQX Best Market: PFBX), parent of The Peoples Bank, announced earnings for the first quarter ending March 31, 2022.
First Quarter Earnings
Net income for the first quarter of 2022 was
Earnings for the first quarter of 2021 included a reduction in the allowance for loan losses of
Impairment of Investment
The Company completed its review (the "Review") of accounting related to the application of accounting principles generally accepted in the United States of America ("GAAP") that was previously announced in the Current Report Form 8-K originally filed on April 25, 2022, and amended on April 26, 2022. As announced previously, the Review focused on the accounting for a limited partnership investment (the "Investment") in a Low Income Housing Tax Credit entity (the "LIHTC Entity") that is held by the Company separate from its investment in its wholly owned bank subsidiary, The Peoples Bank, Biloxi, Mississippi. As a result of the Review, the Company concluded that its accounting for the Investment under GAAP according to "Accounting Standards Codification ('ASC')" 323, Equity Method and Joint Ventures (the "Accounting Guidance"), through the application of the equity method should have also included a periodic evaluation of the Investment for impairment (the "Error") as required by the Accounting Guidance. The Investment was purchased in 2008 and was primarily designed to provide tax credits to the Company over 10 years. The Error resulting from the failure to periodically evaluate the Investment for impairment totaled
As part of the Review, the Company's management prepared an analysis relating to the potential impairment of the Investment. The analysis was prepared in accordance with the guidance set forth in Securities and Exchange Commission ("SEC") Staff Accounting Bulletin 99, Materiality, and SEC Staff Accounting Bulletin 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financials (collectively, "SEC Guidance"). In reliance upon management's analysis prepared as part of the Review, the Audit Committee of the Company concluded that the Error did not create any material misstatement to previously issued financial statements for any prior periods, the current period or the trend in earnings considering both quantitative and qualitative elements as required by the SEC Guidance. The Audit Committee, in reliance upon management's analysis and recommendations, also concluded that correcting the cumulative effect of the Error in the current period would result in a material misstatement in the current period. Therefore, a correction of the Error will be reflected in the Company's previously reported financial information contained in the Quarterly Report on Form 10-Q for the three months ended March 31, 2022. This decision was discussed with the Company's independent registered public accounting firm, Wipfli, LLP, in connection with the preparation of the Form 10-Q for the three months ended March 31, 2022.
Shareholders' Equity
Total shareholders' equity decreased from
About the Company
Founded in 1896, with
Peoples Financial Corporation's common stock is listed on the OTCQX Best Market under the symbol PFBX. Additional information is available on the Internet at the Company's website, www.thepeoples.com, and at the website of the Securities and Exchange Commission, www.sec.gov.
This news release reflects industry conditions, Company performance and financial results and contains "forward-looking statements,' which may include forecasts of our financial results and condition, expectations for our operations and businesses, and our assumptions for those forecasts and expectations. Do not place undue reliance on forward-looking statements. These forward-looking statements are subject to a number of risk factors and uncertainties which could cause the Company's actual results and experience to differ materially from the anticipated results and expectation expressed in such forward-looking statements.
Factors that could cause our actual results to differ materially from our forward-looking statements are described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Regulation and Supervision" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and in other documents subsequently filed by the Company with the Securities and Exchange Commission, available at the SEC's website and the Company's website, each of which are referenced above. To the extent that statements in this news release relate to future plans, objectives, financial results or performance by the Company, these statements are deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are generally identified by use of words such as "may," "believe," "expect," "anticipate," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology.
Forward-looking statements represent management's beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements. All information is as of the date of this news release. Except to the extent required by applicable law or regulation, the Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason.
PEOPLES FINANCIAL CORPORATION | |||||||
(In thousands, except per share figures) (Unaudited) | |||||||
EARNINGS SUMMARY | |||||||
Three Months Ended March 31, | 2022 | 2021 | |||||
Net interest income | $ 4,780 | $ 4,515 | |||||
Provision for loan losses | 25 | (4,853) | |||||
Non-interest income | 1,594 | 1,510 | |||||
Non-interest expense | 5,462 | 6,548 | |||||
Net income | 887 | 4,330 | |||||
Earnings per share | .19 | .89 | |||||
TRANSACTIONS IN THE ALLOWANCE FOR LOAN LOSSES | |||||||
Three Months Ended March 31, | 2022 | 2021 | |||||
Allowance for loan losses, beginning of period | $ 3,311 | $ 4,426 | |||||
Recoveries | 108 | 4,584 | |||||
Charge-offs | (76) | (85) | |||||
Provision for loan losses | 25 | (4,853) | |||||
Allowance for loan losses, end of period | $ 3,368 | $ 4,072 | |||||
PERFORMANCE RATIOS | |||||||
March 31, | 2022 | 2021 | |||||
Return on average assets | |||||||
Return on average equity | |||||||
Net interest margin | |||||||
Efficiency ratio | |||||||
BALANCE SHEET SUMMARY | |||||||
March 31, | 2022 | 2021 | |||||
Total assets | $ 939,352 | $ 750,165 | |||||
Loans | 241,098 | 272,273 | |||||
Securities | 488,785 | 337,049 | |||||
Other real estate (ORE) | 1,010 | 3,143 | |||||
Total deposits | 846,946 | 633,759 | |||||
Shareholders' equity | 70,671 | 92,350 | |||||
Book value per share | 15.11 | 18.93 | |||||
Weighted average shares | 4,678,186 | 4,878,557 | |||||
PERIOD END DATA | |||||||
March 31, | 2022 | 2021 | |||||
Allowance for loan losses as a | |||||||
percentage of loans | |||||||
Loans past due 90 days and | |||||||
still accruing | 40 | ||||||
Nonaccrual loans | 574 | 2,941 | |||||
Risk Based Capital |
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SOURCE Peoples Financial Corporation
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