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Peoples' income hurt by gaming client

BILOXI — Peoples Financial Corporation earned $974,000 in the third quarter of 2009, reversing a loss recorded in the same period last year due to non-cash charges related to an investment in preferred shares of Federal Home Loan Mortgage Company, commonly known as Freddie Mac.

Net income for the third quarter of 2009 was reduced by an additional $1.875-million provision for loan losses.

“Although our loan loss reserve process is largely in our control, the financial disruptions since early 2008 have ushered in a dramatic change of regulatory oversight and control. If regulators were perceived as too indulgent in the past, the pendulum has swung a long way in the opposite direction,” said Chevis C. Swetman, chairman and CEO of the holding company and Peoples Bank. “As a result of the shared national credit exam by the banking regulators, our bank had to place one large performing gaming credit on non-accrual as of Sept. 30. This resulted in a reduction of income of $60,000 in the third quarter. The customer in question has been banking with us since 1990, and in fact voluntarily paid down $3.8 million of the credit on Oct. 15, 2009, after the close of the quarter.

“Although the credit facility is placed on nonaccrual currently, we anticipate that the payments will continue to be made on time as they have for the past 19 years. We believe the nonaccrual status will be lifted when the regulators review this loan late in the second quarter of 2010, and we will recover all foregone interest at that time. Until that occurs we estimate that the net income will be reduced $22,000 per month.

Earnings per share for third quarter 2009 totaled $0.19 per average weighted share, compared to $.04 per average weighted share during second quarter 2009.

For the nine-month period ended Sept. 30, 2009, earnings totaled $2.878 million, a decrease of 10.4 percent from the same period ended September 30, 2008.

Earnings per share for the most current nine-month period reached $0.56 per average weighted share, 6.7 percent lower than the $0.60 per average weighted share for the nine-month period in 2008.

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