PFBX 10-K & 10-Q changes, risk factors and insider trading
Peoples Financial Corp. · OTC · State Commercial Banks · CIK 770460 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
As a smaller reporting company, the Company is not required to provide this information.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Removed heading “Employee Benefit Plans”
Removed heading “Open Pool or Snapshot Method”
Removed heading “Qualitative Factor Adjustments”
Largest changes
“Managing the net interest margin is a key component of the Company’s earnings strategy. Concerns about inflation and its potential impact on the economy and individual households are among the issues being considered by the Federal Reserve. Raising the federal funds rate had been a strategy pursued in 2023 to address this issue. The Federal Reserve raised interest rates a total of 100 basis points during 2023 in an effort to promote maximum employment, keep prices stable and have moderate long-term interest rates. …”see in full comparison
“Concerns about inflation and its potential impact on the economy and individual households are among the issues being considered by the Federal Reserve. Raising the Federal funds rate has been a strategy pursued in 2023 and 2022 to address this issue. The Federal Reserve has raised interest rates a total of 100 basis points during 2023 and 425 basis points during 2022 in an effort to promote maximum employment, keep prices stable and have moderate long-term interest rates. …”see in full comparison
“Managing the net interest margin is a key component of the Company’s earnings strategy. During 2022, the Federal Reserve increased rates by 425 basis points and increased again 50 basis points in the first quarter of 2023, 25 basis points in the second quarter of 2023 and another 25 basis points in the third quarter of 2023 in an effort to slow inflation. During 2024, due to a weakening labor market and a change in its course of action, the Federal Reserve has decreased rates by 50 basis points in the third quarter of 2024, and another 50 basis points in the fourth quarter of 2024.”see in full comparison
Full comparison: every changed paragraph (60)
Employee Benefit Plans
Employee benefit plan liabilities and pension costs are determined utilizing actuarially determined present value calculations. The valuation of the benefit obligation and net periodic expense is considered critical, as it requires Management and its actuaries to make estimates regarding the amount and timing of expected cash outflows including assumptions about mortality, expected service periods and the rate of compensation increases.
Income Taxes
The Company uses the asset and liability method of accounting for deferred income taxes and provides deferred income taxes for all significant income tax temporary differences. As part of the process of preparing the consolidated financial statements, the Company is required to estimate income taxes in each of the jurisdictions in which it operates. This process involves estimating the actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as the provision for credit losses, for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities that are included in the consolidated statement of condition. The Company must also assess the likelihood that the deferred tax assets will be recovered from future taxable income, and, to the extent Management believes that recovery is not likely, the Company must establish a valuation allowance. Significant Management judgment is required in determining the provision for income taxes, the deferred tax assets and liabilities and any valuation allowance recorded against the net deferred tax assets. To the extent the Company establishes a valuation allowance or adjusts this allowance in a period, the Company must include an expense or a benefit within the tax provisions in the consolidated statement of operations.
Concerns about inflation and its potential impact on the economy and individual households are among the issues being considered by the Federal Reserve. Raising the Federal funds rate has been a strategy pursued in 2023 and 2022 to address this issue. The Federal Reserve has raised interest rates a total of 100 basis points during 2023 and 425 basis points during 2022 in an effort to promote maximum employment, keep prices stable and have moderate long-term interest rates. Due to a weakening labor market the Federal Reserve has changed its course of action and has reduced interest rates by 100 basis points during 2024.
Assisting our customers during the pandemic was a priority. The Company granted modifications by extending payments 90 days or allowing interest only payments to certain customers as a result of the economic challenges of business closures and unemployment resulting from COVID 19. We also actively participated in the Paycheck Protection Program (“PPP”), a specific stimulus resource designed to provide assistance to small businesses. The Company recorded loan fees associated with the PPP loan program in the amount of approximately $125,000 in 2022.
The Company reported net income of $3,911,000 for 2025 compared with net income of $21,703,000 for 2024 compared with net income of $9,166,000 for 20232023, comparedrespectively. withResults netin 2025 included a decrease in total interest income ofand $8,941,000an increase in non-interest expenses, the allowance for 2022,credit respectively.losses and the recording of tax expense offset partially by a decrease in total interest expense and an increase non-interest income. Results in 2024 included a discrete item recorded as a tax benefit for the reversal of the Company’s valuation allowance on federal and state deferred tax assets during the third quarter of 2024, an increase in total interest income, a decrease in the allowance for credit losses, and inan increase in total interest expense. Results in 2023 included an increase in net interest income, a decrease in the allowance for credit losses, which were partially offset by an increase in non-interest expense, and the recording of tax expense. Results in 2022 included an increase in net interest income, an increase in the allowance for loans losses which were partially offset by an increase in non-interest income, a decrease in non-interest expense, and the recording of a tax benefit.
Managing the net interest margin is a key component of the Company’s earnings strategy. Concerns about inflation and its potential impact on the economy and individual households are among the issues being considered by the Federal Reserve. Raising the federal funds rate had been a strategy pursued in 2023 to address this issue. The Federal Reserve raised interest rates a total of 100 basis points during 2023 in an effort to promote maximum employment, keep prices stable and have moderate long-term interest rates. Due to a weakening labor market the Federal Reserve has changed its course of action and reduced interest rates by 100 basis points during 2024 and 75 basis points in 2025 and is projected to make additional rate cuts in 2026.
As a result, total interest income decreased by $4,592,000 to $28,502,000 for the year ended 2025 as compared with $33,094,000 for the year ended 2024 due to lower balances and yields on investments and overnight fed funds offset slightly by higher interest and fees on loans. Total interest expense decreased by $1,496,000 to $8,147,000 for the year ended 2025 as compared with $9,643,000 for the year ended 2024. The decrease was due to lower balances and interest rates paid on borrowings. The decrease in rates during 2024 and 2025 has started to impact the cost of funds.
Managing the net interest margin is a key component of the Company’s earnings strategy. During 2022, the Federal Reserve increased rates by 425 basis points and increased again 50 basis points in the first quarter of 2023, 25 basis points in the second quarter of 2023 and another 25 basis points in the third quarter of 2023 in an effort to slow inflation. During 2024, due to a weakening labor market and a change in its course of action, the Federal Reserve has decreased rates by 50 basis points in the third quarter of 2024, and another 50 basis points in the fourth quarter of 2024.
As a result, net interest income decreased $3,023,000 as compared with 2023. This decrease was attributable to higher interest expense mainly on borrowed funds. The Company did see an increase in total interest income of $465,000 as compared to 2023 which was due to yields on loans remaining strong and higher loan fees. However, the increase in rates during 2023 caused total interest expense to increase $3,488,000 in 2024 as compared with 2023. The decrease in rates during 2024 has not started to impact the cost of funds.
Monitoring asset quality, estimating potential losses in our loan portfolioportfolio, unfunded lending commitments, held to maturity debt securities and addressing non-performing loans continue to be a major focus of the Company. A reduction of thenet provision for the allowance for credit losses of $162,000$3,000 was recorded in 20242025 compared to a reduction in the allowance for credit losses of $162,000 recorded in 2024 and a reduction of $272,000 recorded in 2023. AnIn increaseOctober in the allowance for loan losses of $80,000 was recorded in 2022. On June 30, 2023,2025, following a foreclosure, a large loan was charged off in the amount of $186,000 and the related property was moved into other real estate.estate This increasedincreasing the Bank’s other real estate balance to $952,000.$250,000 Inlater Octoberin 2023,December funds were received to settle2025 the sale of one property inwas othersold real estate reducingand the balance was decreased to $1. On December 30, 2024, following a repossession, related property was moved into other real estate increasing the balance to $9,000 at December 31, 2024.2024 this balance was later charged off in 2025. The Company’s nonaccrual loans totaled $418,000$533,000 and $213,000$418,000 at December 31, 20242025 and 2023.2024. Most of these loans are collateral-dependent, and the Company has rigorously evaluated the value of its collateral to determine potential losses.
Non-interest income increased $142,000 in 2025 as compared with 2024 results and increased $120,000 in 2024 as compared with 2023 resultsresults. The increase in 2025 was primarily the result of an increase in BOLI income and decreasedlife $1,000insurance inproceeds 2023and astrust compared with 2022 results.income. The increase in 2024 was primarily the result of an increase in trust department income and fees and an increase in Bank-owned Life Insurance (“BOLI”) income along with other income offset slightly by a decrease in service charges on deposits accounts. The decrease in 2023 was primarily the result of a decrease in service charge and other income offset mostly by an increase in trust income related to an acquisition.
Non-interest expenses increased $450,000 in 2025 as compared with 2024 and decreased $106,000 in 2024 as compared with 20232023. The increase in 2025 was primarily due to higher salary and increasedemployee $498,000benefits of $248,000, included in 2023other expenses, an increase in data processing expense of $137,000 and ATM expense of $287,000, which were caused by a normal increase in volume and inflation which was offset somewhat by a decrease in legal fees of $283,000 as compared withto 2022.2024. The decrease in 2024 was primarily due to lower salaries and employee benefits of $645,000 which was the result of an increase in the discount rate that decreased the liability on deferred compensation expense, although that decrease was offset mostly by higher depreciation and maintenance expenses of $229,000 and higher other expense of $212,000 as compared with 2023. The increase in 2023 was primarily due to higher net occupancy, legal, accounting, compliance and trust expenses.
Total assets at December 31, 2025 decreased $104,728,000 as compared with December 31, 2024. Total deposits decreased $116,301,000 as governmental entities’ balances decreased due to tax collection allocations and the loss of several public fund accounts. The decrease in deposits caused a decrease in cash and due from banks of $88,163,000 and reduced new purchases of available for sale securities.
Total assets at December 31, 2024 increased $34,111,000 as compared with December 31, 2023. Total deposits increased $32,240,000 primarily because the asset management and trust department’s deposit account brought in funds to pay bond principal and interest payments which funds were transferred back out of the Bank at the beginning of January 2025 to satisfy these payments. This increase in deposits resulted in an increase in overnight cash and due from banks of $84,950,000 while loans decreased $4,763,000. In order to stay liquid, there was a decrease in net securities, since the funds have been placed in cash and due from banks and used to pay off borrowings as securities mature.
2025 as compared with 2024
The Company’s average interest-earning assets decreased approximately $69,772,000, or 8.96%, from approximately $778,930,000 for 2024 to approximately $709,158,000 for 2025. Average taxable held to maturity securities decreased approximately $32,246,000, average nontaxable held to maturity securities decreased approximately $2,480,000 and average taxable available for sale securities decreased approximately $35,667,000 as investment maturities and calls exceeded purchases of securities in total. Average fed funds sold decreased approximately $5,919,000. These decreases were caused by the decrease in savings and interest-bearing DDA balances during the same period due to the runoff of several large public fund depositors. Average loans increased approximately $7,701,000 as new loans exceeded principal payments, paydowns, maturities, and charge-offs on existing loans. The increase in average loans and the decrease in average deposits, as discussed below, caused less new purchases in investments in securities. The average yield on interest-earning assets was 4.06% for 2025 compared with 4.28% for 2024.
Average interest-bearing liabilities decreased approximately $78,715,000, or 13.60%, from approximately $578,898,000 for 2024 to approximately $500,183,000 for 2025. Average savings and interest-bearing DDA balances decreased approximately $55,691,000 primarily because several large public fund customers maintained lower balances throughout the year with the bank subsidiary prior to withdrawing funds along with the loss of several public fund accounts during the year. The average rate paid on interest-bearing liabilities decreased slightly from 1.67% for 2024 to 1.63% for 2025. This decrease was the result of decreased rates in 2025 along with the loss of several public fund accounts.
The Company’s net interest margin on a nontax-equivalent basis, which is net interest income as a percentage of average earning assets, was 3.01% for 2024 as compared with 2.87% for 2025.
The Company’s net interest margin on a tax-equivalent basis, which is net interest income as a percentage of average earning assets, was 3.05% for 2024 as compared with 2.91% for 2025.
2023 as compared with 2022
The Company’s average interest-earning assets decreased approximately $15,821,000, or 1.91%, from approximately $827,495,000 for 2022 to approximately $811,674,000 for 2023. Average taxable held to maturity securities increased approximately $65,114,000, average nontaxable held to maturity securities decreased approximately $1,335,000 and average taxable available for sale securities decreased approximately $61,187,000 as investment maturities and calls exceeded purchases of these securities. Average fed funds sold decreased approximately $15,994,000. These decreases were caused by the decrease in savings and interest-bearing DDA balances during the same period due to the runoff of several large public fund depositors. Average loans decreased approximately $1,612,000 as principal payments, paydowns, maturities, and charge-offs on existing loans exceeded new loans. The decrease in average loans and the decrease in average deposits, as discussed below, caused less new purchases in investments in securities and an increase in borrowed funds. The average yield on interest-earning assets was 4.05% for 2023 compared with 2.90% for 2022. The yield on average investment securities increased as a result of the increase in prime rate during 2023 as discussed in the Overview.
Average interest-bearing liabilities decreased approximately $1,511,000, or 0.25%, from approximately $611,226,000 for 2022 to approximately $609,715,000 for 2023. Average savings and interest-bearing DDA balances increased approximately $39,464,000 primarily as several large public fund customers maintained higher balances throughout the year with the bank subsidiary prior to withdrawing funds, while interest-bearing time deposits decreased approximately $42,796,000 mainly due to higher competitive rates paid by other local financial institutions. The average rate paid on interest-bearing liabilities increased from 0.35% for 2022 to 1.01% for 2023. This increase was the result of increased rates in 2022 and 2023.
The Company’s net interest margin on a nontax-equivalent basis, which is net interest income as a percentage of average earning assets, was 2.60% for 2022 as compared with 3.26% for 2023.
The Company’s net interest margin on a tax-equivalent basis, which is net interest income as a percentage of average earning assets, was 2.64% for 2022 as compared with 3.29% for 2023.
The provision for credit losses is the amount necessary to maintain the ACL and the reserve for unfunded commitments at a level considered appropriate by management. Factors impacting the provision include loan portfolio growth, changes in the quality and composition of the loan portfolio, the level of nonperforming loans, delinquency and charge-off trends, the level of unfunded commitments and current economic conditions.
The Bank’s on-going, systematic evaluation resulted in the Bank recording a net provision for the allowance for credit losses of $3,000 in 2025. The Bank recorded a reversal of the allowance for credit losses of $(162,000) in 2024. The Company recorded a reversal of the allowance for credit losses of $(272,000) in 2023.
The Company has adopted the CECL (Current Expected Credit Losses) methodology for estimating allowances for credit losses effective January 1, 2023. Under CECL, the allowance for credit losses (ACL) is a valuation account, measured as the difference between the Bank’s amortized cost basis and the net amount expected to be collected on the financial assets (i.e., lifetime credit losses). The CECL methodology described in FASB Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326), applies to financial assets measured at amortized cost, and off-balance-sheet credit exposures (collectively, financial assets) including: financing receivables such as loans held for investment, held to maturity debt securities, off-balance-sheet credit exposures (unfunded commitments) including off-balance sheet loan commitments; standby letters of credit; and other similar instruments.
In general, the Bank uses a broad range of data to estimate expected credit losses under CECL, including information about past events, current conditions, and reasonable and supportable forecasts relevant to assessing the collectability of the cash flows of financial assets. The following represents an overview of key factors regarding CECL: CECL requires the Bank to measure expected credit losses on financial assets carried at amortized cost on a collective or pool basis when similar risk characteristics exist. The Bank has determined that Call Report categories will be utilized, and Management will maintain the option to further segment the portfolio if we deem it beneficial to the analysis.
As stated above, CECL also applies to held to maturity debt securities since they are carried at amortized cost and are within the scope of the standard. Therefore, it is the responsibility of management to establish any required allowances for credit losses on the Bank’s held to maturity debt securities as of the date the Bank adopts CECL and to maintain such allowances thereafter. Because CECL requires the Bank to measure expected credit losses on a collective or pool basis when similar risk characteristics exist, held to maturity debt securities that share similar risk characteristics are collectively assessed for credit losses.
Estimating an appropriate ACL involves a high degree of management judgment. As such, it is Management’s responsibility to record the Bank’s best estimate of expected credit losses and provide it to the Board of Directors. The analysis is prepared and reported to the Board of Directors on a quarterly basis. The option and decision to prepare the analysis more frequently will remain with management.
Estimation Methods for Expected Credit Losses-Accounting Standards Codification (“ASC”) 326, “Financial Instruments-Credit Losses,” does not require the use of a specific loss estimation method for purposes of determining ACLs. Various methods may be used to estimate the expected collectability of financial assets, with those methods generally applied consistently overtime. The same loss estimation method does not need to be applied to all financial assets. Loss-rate methods can involve a variety of approaches, and Management incorporates the methods below:
Open Pool or Snapshot Method
The starting point for the calculation consists of assets that are outstanding at the end of a given time frame and are made up of assets that were originated in various years. Additional assets may be added to pools of loans under an open pool method.
Qualitative Factor Adjustments
The estimation of ACLs is to reflect consideration of all significant factors relevant to the expected collectability of the Bank’s financial assets as of the reporting date. Management begins their expected credit loss estimation process by determining the Bank’s historical loss information.
Management is to consider the need to qualitatively adjust expected credit loss estimates for information not already captured in the loss estimation process. These qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses.
Historical loss experience generally provides a quantitative starting point for Management’s estimate of expected credit losses. Consistent with FASB ASU Topic 326, Management must consider relevant qualitative factors that may cause the CECL estimate of the financial asset portfolio as of the evaluation date to differ from the historical loss experience.
Management is to consider the qualitative factors that are relevant to the Bank as of the reporting date.
The Company’s on-going, systematic evaluation resulted in the Company recording a provision for the allowance for credit losses on unfunded commitments of $28,000, a provision of $10,000 for credit losses on held to maturity securities and a negative provision of ($200,000) for the allowance for credit losses in 2024. The Company recorded a negative provision for the allowance for credit losses on unfunded commitments of $(17,000), a negative provision for the allowance for credit losses on held to maturity securities of $(11,000) and a negative provision for the allowance for credit losses of $(244,000) in 2023. The Company recorded a provision of $80,000 for the allowance for loan losses in 2022.
During the year ended December 31, 2024 one piece of equipment was repossessed resulting in a balance of $9,000 in other real estate at the end of the year. During the year ended December 31, 2023 one large loan on nonaccrual prior to foreclosure was moved to other real estate then later sold during the year along with a recovery of another loan in the amount of $468,000. The Company’sBank’s analysis includes evaluating the current values of collateral securing all nonaccrual loans. Nonaccrual loans totaled $418,000$533,000 and $213,000$418,000 with specific reserves on these loans of $0$100,000 and $39,500$0 as of December 31, 20242025 and 2023,2024, respectively. The specific reserves allocated to nonaccrual loans are relatively low as collateral values appear sufficient to cover loan losses, or the loan balances have been charged down to their realizable value.
2025 as compared with 2024
Total non-interest income increased $142,000 in 2025 compared with 2024. BOLI income and life insurance proceeds increased $159,000 and trust department income and fees increased $19,000 offset slightly by a decrease of $9,000 in service charges on deposit accounts in 2025 as compared with 2024.
Total non-interest income increased $120,000 in 2024 compared with 2023. Trust department income and fees increased $130,000, BOLI income and life insurance proceeds increased by $47,000 and other income increased by $25,000 offset somewhat by a decrease of $61,000 in service charges on deposit accounts in 2024 as compared with 2023.
2023 as compared with 2022
Total non-interest income decreased $1,000 in 2023 as compared with 2022. Service charges on deposit accounts decreased $216,000 and other income decreased $206,000 which included some nonrecurring income items in 2022 offset mostly by Trust department income and fees which increased $351,000 in 2023 as compared with 2022 as a result of the recent trust acquisition.
2025 as compared with 2024
Total non-interest expense increased $450,000 in 2025 as compared with 2024. Salaries and employee benefits increased $248,000 along with other expense that increased $167,000. Other expenses consisted of an increase in ATM expense of $287,000 and data processing of $137,000. The increase was partially offset by lower legal expenses of $283,000 as compared with 2024.
2023 as compared with 2022
Total non-interest expense increased $498,000 in 2023 as compared with 2022. Net occupancy increased $332,000 primarily due to increases in insurance expense in 2023. Other expenses increased $494,000 primarily as legal, compliance, accounting, dues and subscriptions and trust expenses increased while ATM and data processing expenses decreased. Legal expenses increased $576,000 due to a nonrecurring partial recovery received at the end of 2022 in the amount of $486,000. Salaries and employee benefits decreased $197,000 primarily due to a reduction in estimated expenses on other postretirement benefits due to the increase in the discount rate.
As of December 31, 2023 the Company had recorded income tax expenses in the amount of $2,121,000.
During the fourth quarter of 2022, the Company determined that it was more likely than not that it would realize a certain amount of its deferred tax assets. As of December 31, 2022, the Company no longer had a net operating loss carryforward and its projections of future income indicated that reversal of a portion of the valuation allowance was appropriate. Accordingly, an income tax benefit of $2,446,000 was recorded in the fourth quarter of 2022. As of December 31, 2023 the Company had recorded income tax expenses in the amount of $2,121,000.
As of December 31, 2025 the Company had recorded income tax expenses in the amount of $900,000.
On December 31, 2024,2025, cash and due from banks increaseddecreased by $84,950,000$88,163,000 compared to December 31, 2023.2024. This increasedecrease was primarily due to thea assetsignificant management and trust department’s deposit account bringingdecrease in fundstotal to pay bond principal and interest payments. These funds were transferred back out of the Bank at the beginning of January 2025 to satisfy these payments.deposits.
Gross loans decreasedincreased $4,763,000$30,130,000 at December 31, 20242025 compared with December 31, 2023,2024, as new loans outpaced principal payments, maturities, and charge-offs on existing loans outpaced new loans.
Total deposits increaseddecreased $32,240,000$116,301,000 at December 31, 2024,2025, as compared with December 31, 2023.2024. This decrease was mostly caused by the loss of several large public fund deposits in 2025 following competitive bid processes held in 2025 whereby the public fund deposit accounts were awarded to other local banks. Typically, significant increases or decreases in total deposits and/or significant fluctuations among the different types of deposits from year to year are anticipated by Management as customers in the casino industry and county and municipal entities reallocate their resources periodically. Deposits from county and municipal entities increase significantly during the first quarter of each year based on property tax collections and are slowly allocated out of the tax collection accounts over the course of the year.
The Company was advised during the second quarter of 2023 that the Bank would not be retaining certain public funds deposits following competitive bid processes whereby those accounts were awarded to other local banks. While the majority of those deposits were withdrawn during the third quarter of 2023, approximately $21 million remained on the Company’s statement of condition at the end of the fourth quarter of 2023, the Company experienced the funds withdrawn from the Bank during the first and second quarter of 2024. The Bank ran several special time deposit rates during 2024 to replace the withdrawn public fund accounts.
Funding obtained to replace the withdrawn deposits were at a higher cost than the interest rate paid on the deposits withdrawn and therefore impacted the Bank’s net interest margin. However, the Company replaced the deposit withdrawals through growth in other deposit accounts, proceeds from maturities of investment securities and earnings on investment securities, and through other borrowings with the FHLB or other counterparties, without having to liquidate any securities within its existing portfolio at a loss.
The Board of Directors requires management to implement and administer appropriateasset internaland controlsliability management policies commensurate with Company’s risk profile. Management carefully monitors the Company’s liquidity risk, particularly with respect to volatile and large deposits. The Company has not encountered, and does not anticipate problems with meeting its liquidity needs.
What changed in the latest 10-Q
Risk Factors
We could not find a separate Risk Factors item in the latest 10-Q. Some companies leave it out of quarterly reports; see the annual 10-K risk factors and the original filing. Open the filing on SEC.gov.
Management's Discussion & Analysis (MD&A)
Largest changes
“Average interest-bearing liabilities decreased approximately $42,070,000, or 7.74%, from approximately $543,275,000 for the first two quarters of 2025 to approximately $501,205,000 for the first two quarters of 2026. Average savings and interest bearing DDA balances decreased approximately $38,136,000 and average time deposits decreased approximately $9,622,000. This decrease was mostly caused by the loss of several large public fund deposits in 2025 following competitive bid processes held in 2025 whereby the public fund deposit accounts were awarded to other local banks. …”see in full comparison
“The average rate paid on interest-bearing liabilities for the first two quarters of 2025 was 1.43% compared with 1.54% for the first two quarters of 2026. The Federal Reserve's interest rate increases during 2022 and 2023 resulted in a higher funding cost environment, requiring the Bank to offer more competitive deposit rates during 2024, 2025, and 2026. As market interest rates decline, management anticipates a gradual reduction in funding cost pressures during the remainder of 2026.”see in full comparison
“The average yield on earning assets increased from 4.05% for the first two quarters of 2025 to 4.08% for the first two quarters of 2026. This increase is due to an increase in interest rates and volume on loans in 2026.”see in full comparison
“Non-interest expenses increased $36,000 for the second quarter ended June 30, 2026, as compared with 2025 results. This net increase for the second quarter of 2026 was primarily the result of an increase in maintenance and repair expense of $85,000, salary and benefit expense of $66,000 and miscellaneous expense of $35,000 offset somewhat by lower legal expense of $81,000 and lower ATM and debit card expense of $33,000. The lower debit card expense was due to yearly credits received during the second quarter of 2026. …”see in full comparison
“The Company’s average interest-earning assets decreased approximately $28,051,000, or 3.75%, from approximately $747,618,000 for the first two quarters of 2025 to approximately $719,567,000 for the first two quarters of 2026. …”see in full comparison
“The Bank’s ongoing, systematic evaluation resulted in the Bank recording a net provision of (reduction of) credit losses of ($6,000) and ($0) for the second quarter of 2026 and 2025, respectively. The Bank recorded a reduction of the provision for the allowance for credit losses of $(14,000), and no provision was needed for the allowance for credit losses on held to maturity securities for the first six months ended June 30, 2026. …”see in full comparison
Full comparison: every changed paragraph (45)
The Financial Accounting Standards Board (“FASB”) did not issue anyissued new accounting standard or updates during the threesix months ended MarchJune 31,30, 2026. The Company does not expect that the updates discussed in the Notes will have a material impact on its financial position, results of operations or cash flows. Further disclosure is included in Note 1.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates and assumptions on an on-goingongoing basis using historical experience and other factors, including the current economic environment. We adjust such estimates and assumptions when facts and circumstances dictate. Certain critical accounting policies affect the more significant estimates and assumptions used in the preparation of the consolidated financial statements.
This Form 10-Q contains non-GAAP financial measures determined by methods other than in accordance with GAAP. Such non-GAAP financial measures include taxable equivalent interest income and taxable equivalent net interest income. Management uses these non-GAAP financial measures because it believes they are useful for evaluating our operations and performance over periods of time, as well as in managing and evaluating our business and in discussions about our operations and performance. Management believes these non-GAAP financial measures provide users of our financial information with a meaningful measure for assessing our financial results, as well as comparison to financial results for prior periods. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled financial measures used by other companies. A reconciliation of these operating performance measures to GAAP performance measures for the three and six months ended MarchJune 31,30, 2026 and 2025 is included in the table below (in thousands).
The Company reported net income of $1,446,000$897,000 for the firstsecond quarter of 2026 compared with net income of $1,310,000$1,242,000 for the second quarter of 2025. The Company reported net income of $2,343,000 for the first quarterhalf of 2026 compared to net income of $2,552,000 for the first half of 2025. Results in the second quarter and first half of 2026 included ana increasedecrease in net income attributable to higherlower interest income and fees on loanssecurities and a lowerhigher cost of fundsborrowings compared to 2025.
Managing the net interest margin is a key component of the Company’s earnings strategy. Concerns about inflation and its potential impact on the economy and individual households are among the issues being considered by the Federal Reserve. Raising the federal funds rate had been a strategy pursued in 2023 to address this issue. The Federal Reserve raised interest rates a total of 100 basis points during 2023 in an effort to promote maximum employment, keep prices stable and have moderate long-term interest rates. Due to a weakening labor market the Federal Reserve has changed its course of action and reduced interest rates by 100 basis points during 2024 and 75 basis points in 2025 and is projected to make additional rate cuts in 2026. During the firstsecond quarter of 2026, the Federal Reserve did not reduce the federal funds rate. The Federal Open Market Committee opted to hold rates steady amid ongoing inflation concerns and economic uncertainty.
Monitoring asset quality, estimating potential losses in our loan portfolio, unfunded lending commitments and held to maturity debt securities and addressing non-performing loans continue to be a major focus of the Company. A net reduction of the provision reduction for credit losses of ($8,000$6,000) was recorded in the quarter ended MarchJune 31,30, 2026 and $0 for the quarter ended June 30, 2025. A net reduction of the provision for credit losses of $(14,000) was recorded in the first two quarters ended June 30, 2026 as compared with a net reduction of the provision for credit losses of ($5,000) for the quarterfirst two quarters ended MarchJune 31,30, 2025. The Company has worked diligently to address and reduce its non-performing assets. The Company’s nonaccrual loans totaled $517,000$486,000 and $533,000 at MarchJune 31,30, 2026 and December 31, 2025, respectively. Most of these loans are collateral-dependent, and the Company has rigorously evaluated the value of its collateral to determine potential losses.
Non-interest income increased $110,000 for the second quarter of 2026 as compared with 2025 results. Results for the second quarter of 2026 included higher trust income of $78,000 and a gain on sale of bank property of $41,000. Non-interest income increased $188,000 for the first two quarters of 2026 as compared with 2025 results. Results for the first two quarters of 2026 included higher trust income of $92,000, a gain on sale of miscellaneous assets of $58,000 and a gain on sale of bank property of $41,000, offset slightly by lower service charge income of $28,000.
Non-interest expenses increased $36,000 for the second quarter ended June 30, 2026, as compared with 2025 results. This net increase for the second quarter of 2026 was primarily the result of an increase in maintenance and repair expense of $85,000, salary and benefit expense of $66,000 and miscellaneous expense of $35,000 offset somewhat by lower legal expense of $81,000 and lower ATM and debit card expense of $33,000. The lower debit card expense was due to yearly credits received during the second quarter of 2026. Non-interest expenses increased $53,000 for the first two quarters ended June 30, 2026, as compared with 2025 results. This net increase for the first two quarters of 2026 was primarily the result of an increase in other expense of $104,000, ATM and debit card expense of $47,000, maintenance and repairs of $21,000 and salary and employee benefits of $15,000 offset somewhat by a decrease legal expense of $79,000 and data processing of $34,000.
Most of these loans are collateral-dependent, and the Company has rigorously evaluated the value of its collateral to determine potential losses.
Non-interest income increased $78,000 for the first quarter of 2026 as compared with 2025 results. Results for the first quarter of 2026 included the sale of miscellaneous assets of $57,000, an increase in trust income and fees of $14,000 and an increase in cash surrender value of life insurance of $9,000.
Non-interest expenses increased $17,000 for the first quarter ended March 31, 2026, as compared with 2025 results. This net increase for the first quarter of 2026 was primarily the result of an increase in ATM and debit card expense of $80,000 and miscellaneous expense of $69,000 mostly offset by lower maintenance expense of $64,000 and lower salary and benefit expense of $51,000.
Total assets at MarchJune 31,30, 2026, increased $61,139,000$43,904,000 as compared with December 31, 2025. Total deposits increased $61,760,000$5,348,000 as governmental entities’ balances increased due to tax collections in several public fund accounts. The increase in deposits caused an increase in cash and due from banks of $37,805,000$4,473,000 and increased new purchases of available for sale securities.
Quarter Ended March 31, 2026 as Compared with Quarter Ended March 31, 2025 The Company’s average interest-earning assets decreased approximately $21,218,000,$19,136,000, or 2.76%,2.60%, from approximately $768,764,000$737,134,000 for the firstsecond quarter of 2025 to approximately $747,546,000$717,998,000 for the firstsecond quarter of 2026. The Company’s average balance sheet decreased primarily as average investments decreased approximately $56,601,000$53,416,000 which was somewhat offset by an increase in average loans of approximately $34,495,000$33,541,000 as compared with the firstsecond quarter of 2025. Average loans increased as new loans exceeded principal payments, maturities, and charge-offs.
The average yield on interest-earning assets increaseddecreased from 3.97%4.09% for the firstsecond quarter of 2025 to 4.10%3.90% for the firstsecond quarter of 2026. This increasedecrease is due to ana increasedecrease in volume and yields on average loans,investments, and overnight fed funds in 2026.
Average interest-bearing liabilities decreased approximately $26,110,000$57,835,000 or 4.66%,10.99%, from approximately $560,582,000$526,260,000 for the firstsecond quarter of 2025 to approximately $534,472,000$468,425,000 for the firstsecond quarter of 2026. Average savings and interest bearing DDA deposits decreased approximately $14,914,000$61,085,000 and time deposits decreased approximately $11,868,000.$7,400,000. This decrease was mostly caused by the allocation of public fund tax deposits that increase as taxes are collected and slowly allocate out of the deposit accounts through the end of each year along with the loss of several public fund accounts. Although average deposits decreaseddecreased, the Company evaluates on an ongoing and continuous basis various moderate to severe economic scenarios and does not anticipate a liquidity issue.
The average rate paid on interest‑bearing liabilities for the firstsecond quarter of 2026 was 1.38%,1.72%, compared with 1.35%1.51% for the firstsecond quarter of 2025. Although the Federal Reserve implemented several rate cuts during 2025, the cumulative effect of significant rate increases during 2022 and 2023 continued to impact the Bank’s cost of funds in 2025 and into 2026 as the Bank priced deposits competitively within its local market. As market interest rates trend downward, management expects funding cost pressures to moderate during 2026.
The Company’s net interest margin on a nontax-equivalent basis, which is net interest income as a percentage of average earning assets, was 3.09%2.83% for the firstsecond quarter of 2026 as compared with 2.95%2.97% for the firstsecond quarter of 2025.
The Company’s net interest margin on a tax-equivalent basis, which is net interest income as a percentage of average earning assets, was 3.12%2.87% for the firstsecond quarter of 2026 as compared with 2.98%3.01% for the firstsecond quarter of 2025.
The Company’s average interest-earning assets decreased approximately $28,051,000, or 3.75%, from approximately $747,618,000 for the first two quarters of 2025 to approximately $719,567,000 for the first two quarters of 2026. The Company’s average balance sheet decreased primarily as average investments decreased approximately $54,999,000 along with a decrease in average balances due from financial institutions of approximately $7,704,000 offset somewhat by an increase in average loans of approximately $34,015,000 for the first two quarters of 2026 as compared with the first two quarters of 2025. Average loans increased as new loans exceeded principal payments, maturities, and charge-offs on existing loans. Decreases in average deposits resulted in the decrease in balances due from financial institutions and investments in securities which resulted in an increase in average borrowings.
The average yield on earning assets increased from 4.05% for the first two quarters of 2025 to 4.08% for the first two quarters of 2026. This increase is due to an increase in interest rates and volume on loans in 2026.
Average interest-bearing liabilities decreased approximately $42,070,000, or 7.74%, from approximately $543,275,000 for the first two quarters of 2025 to approximately $501,205,000 for the first two quarters of 2026. Average savings and interest bearing DDA balances decreased approximately $38,136,000 and average time deposits decreased approximately $9,622,000. This decrease was mostly caused by the loss of several large public fund deposits in 2025 following competitive bid processes held in 2025 whereby the public fund deposit accounts were awarded to other local banks. Although average deposits decreased, the Company evaluates on an ongoing and continuous basis various moderate to severe economic scenarios and does not anticipate a liquidity issue.
The average rate paid on interest-bearing liabilities for the first two quarters of 2025 was 1.43% compared with 1.54% for the first two quarters of 2026. The Federal Reserve's interest rate increases during 2022 and 2023 resulted in a higher funding cost environment, requiring the Bank to offer more competitive deposit rates during 2024, 2025, and 2026. As market interest rates decline, management anticipates a gradual reduction in funding cost pressures during the remainder of 2026.
The Company’s net interest margin on a nontax-equivalent basis, which is net interest income as a percentage of average earning assets, was 2.97% for the first two quarters of 2026 as compared with 2.98% for the first two quarters of 2025.
The Company’s net interest margin on a tax-equivalent basis, which is net interest income as a percentage of average earning assets, was 3.00% for the first two quarters of 2026 as compared with 3.02% for the first two quarters of 2025.
The tables on the following pages analyze the changes in tax-equivalent net interest income for the threequarter and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025.
Analysis of Average Balances, Interest Earned/Paid and Yield (In Thousands)
Analysis of Average Balances, Interest Earned/Paid and Yield
Analysis of Changes in Interest Income and Interest Expense (In Thousands)
Analysis of Changes in Interest Income and Interest Expense
The Bank’s ongoing, systematic evaluation resulted in the Bank recording a net provision of (reduction of) credit losses of ($6,000) and ($0) for the second quarter of 2026 and 2025, respectively. The Bank recorded a reduction of the provision for the allowance for credit losses of $(14,000), and no provision was needed for the allowance for credit losses on held to maturity securities for the first six months ended June 30, 2026. The Bank recorded a net reduction of the provision for the allowance for credit losses of ($5,000), and no provision was needed for the allowance for credit losses on held to maturity securities for the first six months ended June 30, 2025.
The Bank’s on-going, systematic evaluation resulted in the Bank recording a net provision of (reduction of) credit losses of ($8,000) and ($5,000) for the first quarter of 2026 and 2025, respectively.
The Bank’s analysis includes evaluating the current values of collateral securing all nonaccrual loans. Nonaccrual loans totaled $517,000$486,000 and $533,000 with $89,000$88,000 and $100,000 in specific reserves on these loans as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The specific reserves allocated to nonaccrual loans are relatively low as collateral values appear sufficient to cover credit losses, or the loan balances have been charged down to their realizable value.
The allowance for credit losses as a percentage of loans was 1.15%1.12% and 1.11% at MarchJune 31,30, 2026 and December 31, 2025. Although the Company experienced loan growth in the firstsecond quarter of 2026 there was no additional credit loss provision required due to a recovery of a previously charged off loan in the amount of $150,000. The Company believes that its allowance for credit losses is appropriate as of MarchJune 31,30, 2026.
Three Months Ended March 31, 2026 as Compared with Three Months Ended March 31, 2025 Non-interest income increased $78,000$110,000 for the firstsecond quarter of 2026 as compared with 2025 results. Results for the firstsecond quarter of 2026 included higher trust income of $78,000 and a gain on the sale of miscellaneousbank assetsproperty of $57,000, an increase in trust income and fees of $14,000 and an increase in cash surrender value of life insurance of $9,000.$41,000. The income increases described are not necessarily recurring and can fluctuate in the normal course of business.
Non-interest income increased $188,000 for the first two quarters of 2026 as compared with the first two quarters of 2025. Results for the first two quarters of 2026 included higher trust income of $92,000, a gain on the sale of miscellaneous assets of $58,000 and a gain on the sale of bank property of $41,000, offset slightly by lower service charge income of $28,000. The income increases described are not necessarily recurring and can fluctuate in the normal course of business.
Three Months Ended March 31, 2026 as Compared with Three Months Ended March 31, 2025 Non-interest expenses increased $17,000$36,000 for the firstsecond quarter ended MarchJune 31,30, 2026, as compared with 2025 results. This net increase for the firstsecond quarter of 2026 was primarily the result of an increase in maintenance and repair expense of $85,000, salary and benefit expense of $66,000 and miscellaneous expense of $35,000 offset somewhat by lower legal expense of $81,000 and lower ATM and debit card expense of $80,000$33,000. andThe miscellaneouslower debit card expense ofwas $69,000due mostlyto offsetyearly bycredits lowerreceived maintenanceduring expensethe second quarter of $64,000 and lower salary and benefit expense of $51,000.2026. The expense increases described are not necessarily recurring and can fluctuate in the normal course of business.
Total non-interest expense increased $53,000 for the first two quarters ended June 30, 2026, as compared with 2025 results. This net increase for the first two quarters of 2026 was primarily the result of an increase in other expense of $104,000, ATM and debit card expense of $47,000, maintenance and repairs of $21,000 and salary and employee benefits of $15,000 offset somewhat by a decrease in legal expense of $79,000 and data processing of $34,000. The expense increases described can fluctuate in the normal course of business.
Quarter Ended March 31, 2026 as Compared with Quarter Ended March 31, 2025 The Company has recorded deferred and current income tax expenses in the firstsecond quarters of 2026 and 2025, respectively. Income tax expense increaseddecreased $27,000$128,000 to $117,000 for the firstsecond quarter of 2026 as compared with tax expense of $375,000$245,000 for the firstsecond quarter of 2025. This increasedecrease was due to higherlower pretax income recorded for the firstsecond quarter of 2026 which was $163,000$473,000 less than the same period in 2025. The effective tax rate for quarter ended MarchJune 31,30, 2026 and 2025 was 22%,12% and 16% respectively.
The Company has recorded deferred and current income tax expenses in the first two quarters of 2026 and 2025, respectively. Income tax expense decreased $101,000 to $519,000 for the first two quarters of 2026 as compared with tax expense of $620,000 for the first two quarters of 2025. The effective tax rate for the first two quarters ended June 30, 2026 and 2025 was 18% and 20%, respectively. This decrease was due to lower pretax income recorded for the second quarter of 2026 which was $310,000 less than the same period in 2025.
Cash and due from banks increased $37,805,000$4,473,000 at MarchJune 31,30, 2026, compared with December 31, 2025. This increase was due to a significantan increase in total deposits.
Available for sale securities increased $25,427,000$34,309,000 and held to maturity securities decreased $7,060,000,$9,070,000, respectively at MarchJune 31,30, 2026 compared with December 31, 2025 as the Company decreased its held to maturity securities and increased its available for sale investment purchases. As securities mature the proceeds are used to pay down borrowings first and then reinvest in available for sale securities and loans.
Gross loans increased $5,108,000$13,456,000 at MarchJune 31,30, 2026 compared with December 31, 2025, as new loans outpaced principal payments, maturities, and charge-offs.
Total deposits increased $61,760,000$5,348,000 at MarchJune 31,30, 2026, compared with December 31, 2025. Typically, significant increases or decreases in total deposits and/or significant fluctuations among the different types of deposits from quarter to quarter are anticipated by Management as customers in the casino industry and county and municipal entities reallocate their resources periodically. Deposits from county and municipal entities increase significantly during the first quarter of each year based on property tax collections and are slowly allocated out of the tax collection accounts over the course of the year.
As of MarchJune 31,30, 2026 and December 31, 2025, the Bank’s community bank leverage ratio was 14.15%15.22% and 15.76%, respectively, both of which exceed the current CBLR minimum of 9.00% and the future CBLR minimum of 8.00% effective July 1, 2026.
Deposits, payments of principal and interest on loans, proceeds from maturities of investment securities and earnings on investment securities are the principal sources of funds for the Company. Borrowings from the FHLB, federal funds sold and federal funds purchased are utilized by the Company to manage its daily liquidity position. The Company has also been approved to participate in the Federal Reserve Bank’s Discount Window Primary Credit Program. As of MarchJune 31,30, 2026, the Company was able to borrow up to $7,263,636$5,784,549 from the Federal Reserve Bank Discount Window Primary Credit Program. The borrowing limit is based on the amount of collateral pledged, with certain loans from the Bank’s portfolio serving as collateral. The Company has $127,421,217 available$140,465,925 under a line of credit with the Federal Home Loan Bank of Dallas with $127,421,217$101,965,925 available. The Company has additional contingency funding capacity with various other financial institutions in the amount of $28,000,000.
PFBX insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 18 Form 4 filings (9 insiders, 19 trade dates, 68,113 shares, about $1.5M) and open-market sales in 3 filings (1 insider, 3 trade dates, 7,003 shares, about $149.8K). Net open-market shares: 61,110 (purchases minus sales); net value about $1.3M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-24 | Swetman Chevis |
Open-market purchase | 1,000 | $23.25 | $23.2K |
| 2026-07-31 | Stilwell Value Partners Vii, L.p. |
Open-market purchase | 4,692 | $22.25 | $104.4K |
| 2026-07-31 | Stilwell Value Partners Vii, L.p. |
Open-market purchase | 37,966 | $22.25 | $844.7K |
| 2026-07-15 | Stilwell Activist Investments, L.p. |
Open-market purchase | 2,500 | $21.75 | $54.4K |
| 2026-07-13 | Stilwell Activist Investments, L.p. |
Open-market purchase | 200 | $21.50 | $4.3K |
| 2026-07-02 | Stilwell Joseph |
Open-market purchase | 507 | $21.25 | $10.8K |
| 2026-07-01 | Stilwell Joseph |
Open-market purchase | 2,150 | $21.25 | $45.7K |
| 2026-06-03 | Stilwell Activist Investments, L.p. |
Open-market purchase | 200 | $21.25 | $4.2K |
| 2026-05-29 | Swetman Andrew T |
Open-market sale | 2,000 | $21.25 | $42.5K |
| 2026-05-29 | Sliman George J Iii |
Open-market purchase | 2,000 | $21.25 | $42.5K |
| 2026-05-28 | Swetman Andrew T |
Open-market sale | 1,000 | $21.25 | $21.2K |
| 2026-05-28 | Barnes Ronald G |
Open-market purchase | 1,000 | $21.25 | $21.2K |
| 2026-05-26 | Stilwell Joseph |
Open-market purchase | 1,717 | $21.25 | $36.5K |
| 2026-05-18 | Stilwell Value Llc |
Open-market purchase | 999 | $21.25 | $21.2K |
| 2026-05-12 | Stilwell Joseph |
Open-market purchase | 500 | $21.25 | $10.6K |
| 2026-05-11 | Stilwell Activist Investments, L.p. |
Open-market purchase | 789 | $21.25 | $16.8K |
| 2026-05-08 | Stilwell Activist Fund, L.p. |
Open-market purchase | 2,212 | $21.25 | $47.0K |
| 2026-05-06 | Stilwell Joseph |
Open-market purchase | 2,058 | $21.25 | $43.7K |
| 2026-05-04 | Stilwell Value Llc |
Open-market purchase | 500 | $21.50 | $10.8K |
| 2026-04-29 | Swetman Chevis |
Open-market purchase | 2,500 | $21.50 | $53.8K |
| 2026-04-27 | Swetman Andrew T |
Open-market sale | 4,003 | $21.50 | $86.1K |
| 2026-04-27 | Dennis Padrick D |
Open-market purchase | 4,003 | $21.50 | $86.1K |
| 2026-04-24 | Stilwell Value Llc |
Open-market purchase | 620 | $21.50 | $13.3K |
Well-known investors holding PFBX (13F)
None of the 59 investors we track reported a position in their latest 13F.