PEOPLES FINANCIAL CORPORATION

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (D) OF THE

SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended		March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934


Commission File Number		001-12103

PEOPLES FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)


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)

(228) 435-5511

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	PFBX	None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐	Accelerated filer ☐	Smaller reporting company ☒
Non-accelerated filer ☒		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date. Peoples Financial Corporation has only one class of common stock authorized. At April 30, 2025, there were 15,000,000 shares of $1 par value common stock authorized, with 4,617,466 shares issued and outstanding.

Part 1 – Financial Information

Item 1: Financial Statements

Peoples Financial Corporation and Subsidiaries

Consolidated Statements of Condition

(in thousands except share data)


	March 31, 2025		December 31, 2024
	(unaudited)		(audited)
Assets
Cash and due from banks	$	95,434	$	107,744
Available for sale securities, amortized cost of $403,251 at March 31, 2025; $345,867 at December 31, 2024		370,222		308,648
Held to maturity securities, fair value of $101,916 at March 31, 2025; $111,112 at December 31, 2024		112,628		123,196
Less: Allowance for credit losses on held to maturity securities		40		40
Held to maturity securities, net		112,588		123,156
Other investments		350		350
Federal Home Loan Bank Stock, at cost		614		608
Loans		231,645		233,576
Less: Allowance for credit losses		2,969		2,982
Loans, net		228,676		230,594
Bank premises and equipment, net of accumulated depreciation		18,310		18,712
Other real estate		9		9
Accrued interest receivable		3,308		3,516
Cash surrender value of life insurance		22,159		22,026
Intangible asset		460		476
Other assets		14,483		16,010
Total assets	$	866,613	$	831,849
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand, non-interest bearing	$	188,749	$	235,183
Savings and demand, interest bearing		516,619		434,680
Time, $250,000 or more		16,958		20,563
Other time deposits		29,665		30,304
Total deposits		751,991		720,730
Advances from Federal Home Loan Bank		—		—
Borrowings under Bank Term Funding Program		—		—
Employee and director benefit plans liabilities		19,165		19,201
Other liabilities		1,002		1,917
Total liabilities		772,158		741,848
Shareholders' Equity:
Common stock, $1 par value, 15,000,000 shares authorized, 4,617,466 shares issued and outstanding at March 31, 2025 and December 31, 2024		4,617		4,617
Surplus		65,780		65,780
Undivided profits		57,801		56,491
Accumulated other comprehensive loss		(33,743)		(36,887)
Total shareholders' equity		94,455		90,001
Total liabilities and shareholders' equity	$	866,613	$	831,849

See Notes to Consolidated Financial Statements.

Peoples Financial Corporation and Subsidiaries

Consolidated Statements of Operations

(in thousands except per share data) (unaudited)


	Three Months Ended March 31,
	2025		2024
Interest income:
Interest and fees on loans	$	3,396	$	3,562
Interest and dividends on securities:
U. S. Treasuries		1,351		1,678
U.S. Government agencies		598		—
Mortgage-backed securities		545		728
Collateralized mortgage obligations		541		855
States and political subdivisions		981		1,037
Other investments		7		33
Interest on balances due from depository institutions		738		1,036
Total interest income		7,559		8,929
Interest expense:
Deposits		1,891		2,038
Borrowings		—		198
Total interest expense		1,891		2,236
Net interest income		5,668		6,693
Provision for (reduction of) credit losses		(5)		—
Net interest income after provision for (reduction of) credit losses		5,673		6,693
Non-interest income:
Trust department income and fees		626		618
Service charges on deposit accounts		770		770
Increase in cash surrender value of life insurance		120		120
Gain (loss) on sale of property, plant and equipment, net		—		42
Other income		187		193
Total non-interest income		1,703		1,743
Non-interest expense:
Salaries and employee benefits		2,716		2,500
Net occupancy		563		537
Equipment rentals, depreciation and maintenance		783		701
FDIC and state banking assessments		96		108
Data processing		314		314
ATM expense		291		254
Other real estate expense		—		—
Legal expense		64		112
Other expense		864		864
Total non-interest expense		5,691		5,390
Income before income taxes		1,685		3,046
Income tax (benefit) expense		375		631
Net income	$	1,310	$	2,415
Basic and diluted earnings per share	$	0.28	$	0.52
Dividends declared per share	$	—	$	—

See Notes to Consolidated Financial Statements.

Peoples Financial Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(in thousands) (unaudited)


	Three Months Ended March 31,
	2025		2024
Net income	$	1,310	$	2,415
Other comprehensive income (loss):
Net unrealized gain (loss) on available for sale securities, net of tax		3,144		(1,035)
Reclassification adjustment for realized losses (gains) on available for sale securities called or sold in current year		—		—
Gain (loss) from unfunded post-retirement benefit obligation, net of tax		—		—
Total other comprehensive income (loss)		3,144		(1,035)
Total comprehensive income	$	4,454	$	1,380

See Notes to Consolidated Financial Statements.

Peoples Financial Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

For the Three Months Ended March 31, 2025 and March 31, 2024

(in thousands except share data) (unaudited)


								Accumulated
	Number of							Other
	Common	Common				Undivided		Comprehensive
	Shares	Stock		Surplus		Profits		Income (loss)		Total
Balance, January 1, 2024	4,661,686	$	4,662	$	65,780	$	37,574	$	(38,733)	$	69,283
Net income							2,415				2,415
Other comprehensive (loss)									(1,035)		(1,035)
Balance, March 31, 2024	4,661,686	$	4,662	$	65,780	$	39,989	$	(39,768)	$	70,663
Balance, January 1, 2025	4,617,466	$	4,617	$	65,780	$	56,491	$	(36,887)	$	90,001
Net income							1,310				1,310
Other comprehensive income									3,144		3,144
Balance, March 31, 2025	4,617,466	$	4,617	$	65,780	$	57,801	$	(33,743)	$	94,455

Note: Balances as of January 1, 2025 and 2024 were audited.

See Notes to Consolidated Financial Statements.

Peoples Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands) (unaudited)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities:
Net income	$	1,310	$	2,415
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		420		402
(Reduction of) provision for credit losses		(5)		—
Amortization of intangible asset		16		16
(Accretion) amortization of available for sale securities		(267)		(570)
(Accretion) amortization of held to maturity securities		92		51
(Gain) loss on sale or disposition of bank premises and equipment		—		(42)
Increase in cash surrender value of life insurance		(120)		(121)
Change in accrued interest receivable		208		(132)
Change in deferred tax expense		117		686
Change in other assets		366		(545)
Change in employee and director benefit plan liabilities and other liabilities		(946)		(1,025)
Net cash provided by operating activities		1,191		1,135
Cash flows from investing activities:
Proceeds from maturities, liquidation and calls of available for sale securities		16,537		51,011
Purchases of available for sale securities		(73,655)		(108,159)
Proceeds from maturities of held to maturity securities		10,476		5,467
Purchases (redemptions) of Federal Home Loan Bank Stock		(6)		(34)
Loans, net change		1,918		1,928
Acquisition of bank premises and equipment		(19)		(552)
Proceeds from sale of bank premises and equipment		—		61
Investment in cash surrender value of life insurance		(13)		(43)
Net cash (used in) investing activities		(44,762)		(50,321)
Cash flows from financing activities:
Demand and savings deposits, net change		35,505		125,112
Time deposits, net change		(4,244)		(2,103)
Borrowings from Federal Home Loan Bank		—		58,200
Repayments to Federal Home Loan Bank		—		(76,700)
Borrowings under Bank Term Funding Program		—		30,000
Net cash provided by financing activities		31,261		134,509
Net (decrease) increase in cash and cash equivalents		(12,310)		85,323
Cash and cash equivalents, beginning of period		107,744		22,794
Cash and cash equivalents, end of period	$	95,434	$	108,117

See Notes to Consolidated Financial Statements.

PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2025 and 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.Basis of Presentation:

Peoples Financial Corporation (the “Company”) is a one-bank holding company headquartered in Biloxi, Mississippi. The Company has two subsidiaries, PFC Service Corp., an inactive company, and The Peoples Bank, Biloxi, Mississippi (the “Bank”). The Bank provides a full range of banking, financial and trust services to state, county and local government entities and individuals and small and commercial businesses operating in those portions of Mississippi, Louisiana and Alabama which are within a fifty-mile radius of the Waveland, Wiggins and Gautier branches, the Bank’s three most outlying locations (the “trade area”).

The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the consolidated financial position of the Company and its subsidiaries as of March 31, 2025 and December 31, 2024 the results of their operations and their cash flows for the periods presented. The interim financial information should be read in conjunction with the annual consolidated financial statements and the notes thereto included in the Company’s 2024 Annual Report and Form 10-K.

CRITICAL ACCOUNTING POLICIES

The results of operations for the quarter and three months ended March 31, 2025, are not necessarily indicative of the results to be expected for the full year.

Use of Estimates - The preparation of financial statements in conformity with 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 consolidated financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for credit losses (ACL) and valuation allowances associated with the realization of deferred tax assets, which are based on future taxable income.

Summary of Significant Accounting Policies - The accounting and reporting policies of the Company conform to GAAP and general practices within the banking industry.

There were no material changes or developments during the reporting period with respect to methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024.

Allowance for credit losses

In general, the Company uses a broad range of data to estimate current expected credit losses (“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.

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.

The Company’s loan portfolio segments as of March 31, 2025 and December 31, 2024 were as follows:

Real Estate Loans

Residential-Residential mortgage loans are susceptible to weakening general economic conditions, increases in unemployment rates, and declining real estate values.

Construction-Risk common to commercial construction loans are cost overruns, changes in market demand for property, inadequate long-term financing arrangements, and declines in real estate values. Residential construction loans are susceptible to those same risks as well as those associated with residential mortgage loans. Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values, and higher interest rates.

Nonresidential-Risks to this loan category include industry concentration and the inability to monitor the condition of collateral. Declines in general economic conditions and other events can cause cash flows to fall to levels insufficient to service debt, declines in real estate values, and lack of suitable alternative use for properties. These loans are also susceptible to declines in occupancy rates, business failure, and general economic conditions.

Commercial and Industrial-Risk to this loan category include industry concentration and the practical limitations associated with monitoring the condition of the collateral which often consists of inventory, accounts receivable, and other non-real estate assets. Equipment and inventory obsolescence can also pose a risk. Declines in general economic conditions and other events can cause cash flows to fall to levels insufficient to service debt.

Other-Risk common to these loans include regulatory risks, unemployment, changes in local economic conditions, and the inability to monitor collateral consisting of personal property.

Reclassification of Prior Year Presentation-Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update –In March 2025, the Financial Accounting Standards Board issued Accounting Standards Update 2025-02 (“ASU 2025-02”), Liabilities (Topic 405)-Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122. ASU 2025-02 is issued by the Financial Accounting Foundation and communicates changes to the FASB codification, including changes to non-authoritative “SEC” securities and exchange commission content. The update affects SEC registrants, makes amendments to the (“GAAP”) generally accepted accounting principles taxonomy and is effective upon issuance. Management has evaluated the impact of the adoption of this standard and determined there would be no material impact to the Company’s consolidated financial position or results of operations.

Accounting Standards Update –In January 2025, the Financial Accounting Standards Board issued Accounting Standards Update 2025-01 (“ASU 2025-01”), Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective date. ASU 2025-031(Subtopic 220-40) The Board issued this update to clarify the effective date of ASU 2024-03-Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The Board issued Update 2024-03 on November 4, 2024. Update 2024-03 states that the amendments are effective for all public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. Management has evaluated the impact of the adoption of this standard and determined there would be no material impact to the Company’s consolidated financial position or results of operations.

2.	Earnings Per Share:

Per share data is based on the weighted average shares of common stock outstanding of 4,617,466 and 4,661,686 for the three months ended March 31, 2025 and 2024, respectively.

3.	Statements of Cash Flows:

The Company has defined cash and cash equivalents as cash and due from banks. The Company paid $1,888,799 and $2,225,558 for the three months ended March 31, 2025 and 2024, respectively, for interest on deposits and borrowings. No income tax payments were made during the three months ended March 31, 2025 and 2024, respectively. No loans were transferred to other real estate during the three months ended March 31, 2025 and 2024.

4.	Investments:

The Company evaluated credit impairment for individual securities available for sale (AFS) whose fair value was below amortized cost with a more than inconsequential risk of default and where the Company had assessed the decline in fair value significant enough to suggest a credit event occurred. Due to the zero credit loss assumption and the considerations applied to the securities AFS, there was no ACL recorded for securities AFS as of March 31, 2025 and December 31, 2024. The Company first established an allowance for credit losses for individual securities held to maturity in 2023 and evaluated impairment for individual securities held to maturity again as of December 31, 2024 and determined an allowance for credit loss of $40,000 was appropriate. No additional impairment was recorded as of March 31, 2025.

The amortized cost, fair value and allowance for credit losses related to securities at March 31, 2025 and December 31, 2024, are as follows (in thousands):


			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
March 31, 2025	Cost		Gains		Losses		Fair Value
Available for sale securities:
U.S. Treasuries	$	188,440	$	164	$	(6,074)	$	182,530
Mortgage-backed securities		45,782		32		(3,918)		41,896
Collateralized mortgage obligations		68,290		55		(4,510)		63,835
States and political subdivisions		100,739		—		(18,778)		81,961
Total available for sale securities	$	403,251	$	251	$	(33,280)	$	370,222


			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
December 31, 2024	Cost		Gains		Losses		Fair Value
Available for sale securities:
U.S. Treasuries	$	124,320	$	150	$	(7,425)	$	117,045
Mortgage-backed securities		46,845		35		(4,368)		42,512
Collateralized mortgage obligations		73,857		77		(5,070)		68,864
States and political subdivisions		100,845		—		(20,618)		80,227
Total available for sale securities	$	345,867	$	262	$	(37,481)	$	308,648


			Gross		Gross				Allowance		Net
	Amortized		Unrealized		Unrealized		Estimated		for Credit		Carrying
March 31, 2025	Cost		Gains		Losses		Fair Value		Losses		Amount
Held to maturity securities:
U.S. Treasuries	$	29,982	$	24	$	(298)	$	29,708	$	—	$	29,982
States and political subdivisions		82,646		13		(10,451)		72,208		(40)		82,606
Total held to maturity securities	$	112,628	$	37	$	(10,749)	$	101,916	$	(40)	$	112,588


			Gross		Gross				Allowance		Net
	Amortized		Unrealized		Unrealized		Estimated		for Credit		Carrying
December 31, 2024	Cost		Gains		Losses		Fair Value		Losses		Amount
Held to maturity securities:
U.S. Treasuries	$	39,978	$	20	$	(450)	$	39,548	$	—	$	39,978
States and political subdivisions		83,218		14		(11,668)		71,564		(40)		83,178
Total held to maturity securities	$	123,196	$	34	$	(12,118)	$	111,112	$	(40)	$	123,156

The following table shows a rollforward of the allowance for credit losses on held-to-maturity securities for the three months ended March 31, 2025 and the year ended December 31, 2024 (in thousands):


	State and political
	subdivisions
Balance, December 31, 2023	$	30
Provision for credit losses		—
Charge-offs of securities		—
Recoveries		—
Balance, March 31, 2024	$	30

Balance, December 31, 2024	$	40
Provision for credit losses		—
Charge-offs of securities		—
Recoveries		—
Balance, March 31, 2025	$	40

The Company monitors the credit quality of the debt securities held-to-maturity through the use of credit ratings. The Company monitors the credit ratings on a quarterly basis. The following table summarizes the amortized cost of debt securities held-to-maturity at March 31, 2025 and December 31, 2024, aggregated by credit quality indicators (in thousands):


	March 31, 2025		December 31, 2024
Aaa	$	29,982	$	39,978
Aa1/Aa2/Aa3		33,881		33,961
A1/A2		3,156		3,164
Baa1/Baa2		1,000		1,000
Not rated		44,609		45,093
Total	$	112,628	$	123,196

At March 31, 2025 and December 31, 2024, the Company had no securities held-to-maturity that were past due 30 days or more as to principal or interest payments. The Company had no securities held-to-maturity classified as nonaccrual for the three months ended March 31, 2025 and the year ended December 31, 2024.

The amortized cost and fair value of debt securities at March 31, 2025, (in thousands) by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Amortized Cost		Fair Value
Available for sale securities:
Due in one year or less	$	104,112	$	104,143
Due after one year through five years		91,944		85,391
Due after five years through ten years		51,813		43,445
Due after ten years		41,310		31,512
Mortgage-backed securities		45,782		41,896
Collaterized mortgage obligations		68,290		63,835
Total	$	403,251	$	370,222
Held to maturity securities:
Due in one year or less	$	23,446	$	23,403
Due after one year through five years		41,711		39,505
Due after five years through ten years		29,311		25,464
Due after ten years		18,160		13,544
Total	$	112,628	$	101,916

Available for sale securities with gross unrealized losses at March 31, 2025 and December 31, 2024, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows (in thousands):


	Less Than Twelve Months				Over Twelve Months				Total
			Gross				Gross				Gross
			Unrealized				Unrealized				Unrealized
Available for Sale	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
March 31, 2025:
U.S. Treasuries	$	69,179	$	41	$	73,438	$	6,033	$	142,617	$	6,074
Mortgage-backed securities		3,733		20		36,132		3,898		39,865		3,918
Collateralized mortgage obligations		5,462		11		49,022		4,499		54,484		4,510
States and political subdivisions		—		—		81,821		18,778		81,821		18,778
Total	$	78,374	$	72	$	240,413	$	33,208	$	318,787	$	33,280


	Less Than Twelve Months				Over Twelve Months				Total
			Gross				Gross				Gross
			Unrealized				Unrealized				Unrealized
Available for Sale	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
December 31, 2024:
U.S. Treasuries	$	—	$	—	$	81,991	$	7,425	$	81,991	$	7,425
Mortgage-backed securities		3,993		20		36,388		4,348		40,381		4,368
Collateralized mortgage obligations		1,728		9		51,513		5,061		53,241		5,070
States and political subdivisions		—		—		80,087		20,618		80,087		20,618
Total	$	5,721	$	29	$	249,979	$	37,452	$	255,700	$	37,481

At March 31, 2025, 21 of the 29 Treasuries, 41 of the 46 mortgage-backed securities, 24 of the 28 collateralized mortgage obligations and 74 of the 75 securities issued by states and political subdivisions contained unrealized losses.

There were no sales of available for sale debt securities for the three months ended March 31, 2025 and March 31, 2024.

Securities with a fair value of $334,977,093 and $311,774,135 at March 31, 2025 and December 31, 2024, respectively, were pledged to secure public deposits, federal funds purchased and other balances required by law.

Loans:

The composition of the loan portfolio at March 31, 2025 and December 31, 2024 is as follows (in thousands):


	March 31, 2025		December 31, 2024
Real estate, residential	$	80,363	$	78,952
Real estate, construction		17,538		17,016
Real estate, nonresidential		110,514		114,263
Commercial and industrial		12,359		13,381
Other		10,871		9,964
Total	$	231,645	$	233,576

The age analysis of the loan portfolio, segregated by class of loans, as of March 31, 2025, and December 31, 2024 is as follows (in thousands):


													Loans Past
													Due Greater
	Number of Days Past Due												Than 90
					Greater		Total				Total		Days and
	30 - 59		60 - 89		Than 90		Past Due		Current		Loans		Still Accruing
March 31, 2025:
Real estate, residential	$	1,285	$	98	$	292	$	1,675	$	78,688	$	80,363	$	61
Real estate, construction		136		—		—		136		17,402		17,538		—
Real estate, nonresidential		350		—		—		350		110,164		110,514		—
Commercial and industrial		18		—		21		39		12,320		12,359		—
Other		27		—		—		27		10,844		10,871		—
Total	$	1,816	$	98	$	313	$	2,227	$	229,418	$	231,645	$	61
December 31, 2024:
Real estate, residential	$	410	$	33	$	337	$	780	$	78,172	$	78,952	$	—
Real estate, construction		61		—		—		61		16,955		17,016		—
Real estate, nonresidential		749		—		—		749		113,514		114,263		—
Commercial and industrial		40		11		—		51		13,330		13,381		—
Other		20		10		—		30		9,934		9,964		—
Total	$	1,280	$	54	$	337	$	1,671	$	231,905	$	233,576	$	—

The Company monitors the credit quality of its loan portfolio through the use of a loan grading system. A score of 1 – 5 is assigned to the loan based on factors including repayment ability, trends in net worth and/or financial condition of the borrower and guarantors, employment stability, management ability, loan to value fluctuations, the type and structure of the loan, conformity of the loan to bank policy and payment performance. Based on the total score, a loan grade of A, B, C, S, D, E or F is applied. A grade of A will generally be applied to loans for customers that are well known to the Company and that have excellent sources of repayment. A grade of B will generally be applied to loans for customers that have excellent sources of repayment which have no identifiable risk of collection. A grade of C will generally be applied to loans for customers that have adequate sources of repayment which have little identifiable risk of collection. A grade of S will generally be applied to loans for customers who meet the criteria for a grade of C but also warrant additional monitoring by placement on the watch list. A grade of D will generally be applied to loans for customers that are inadequately protected by current sound net worth, paying capacity of the borrower, or pledged collateral. Loans with a grade of D have unsatisfactory characteristics such as cash flow deficiencies, bankruptcy filing by the borrower or dependence on the sale of collateral for the primary source of repayment, causing more than acceptable levels of risk. Loans 60 to 89 days past due receive a grade of D. A grade of E will generally be applied to loans for customers with weaknesses inherent in the D classification and in which collection or liquidation in full is questionable. In addition, on a monthly basis the Company determines which loans are 90 days or more past due and assigns a grade of E to them.

A grade of F is applied to loans which are considered uncollectible and of such little value that their continuance in an active bank is not warranted. Loans with this grade are charged off, even though partial or full recovery may be possible in the future.

The following tables further disaggregates credit quality disclosures by amortized cost by class and vintage for term loans and by revolving and revolving converted to amortizing as of March 31, 2025 and December 31, 2024 (in thousands). The Company defines vintage as the later of origination, or restructure date.


	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2025		2024		2023		2022		2021		Prior		Loans		Term Loans		Total
March 31, 2025:
Real Estate, Residential Loans:
A, B, or C	$	3,363	$	10,912	$	12,908	$	13,609	$	9,938	$	22,972	$	4,974	$	698	$	79,374
S		—		—		—		—		—		53		—		—		53
D		—		—		—		—		—		455		61		—		516
E		—		—		—		—		287		133		—		—		420
F		—		—		—		—		—		—		—		—		—
Total Real Estate Residential Loans	$	3,363	$	10,912	$	12,908	$	13,609	$	10,225	$	23,613	$	5,035	$	698	$	80,363

Real Estate, Construction Loans:
A, B, or C	$	952	$	2,737	$	413	$	1,443	$	1,858	$	3,440	$	6,434	$	—	$	17,277
S		—		—		—		—		—		—		—		—		—
D		—		—		121		—		—		140		—		—		261
E		—		—		—		—		—		—				—		—
F		—		—		—		—		—		—		—		—		—
Total Real Estate, Construction Loans	$	952	$	2,737	$	534	$	1,443	$	1,858	$	3,580	$	6,434	$	—	$	17,538

Real Estate,Nonresidential Loans:
A, B, or C	$	104	$	2,627	$	11,095	$	21,521	$	10,163	$	46,259	$	18,215	$	—	$	109,984
S		—		—		—		—		—		59		—		—		59
D		—		—		—		—		—		471		—		—		471
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Real Estate, Nonresidential Loans	$	104	$	2,627	$	11,095	$	21,521	$	10,163	$	46,789	$	18,215	$	—	$	110,514

Commercial and industrial
A, B, or C	$	387	$	1,123	$	454	$	450	$	617	$	2,637	$	6,670	$	—	$	12,338
S		—		—		—		—		—		—		—		—		—
D		—		—		—		—		—		—		—		—		—
E		—		—		21		—		—		—		—		—		21
F		—		—		—		—		—		—		—		—		—
Total Commercial and Industrial Loans	$	387	$	1,123	$	475	$	450	$	617	$	2,637	$	6,670	$	—	$	12,359

Consumer/Other Loans
A, B, or C	$	1,001	$	4,292	$	2,947	$	727	$	370	$	474	$	1,051	$	—	$	10,862
S		—		—		—		—		—		—		—		—		—
D		—		5		—		—		—		—		4		—		9
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Consumer/Other Loans	$	1,001	$	4,297	$	2,947	$	727	$	370	$	474	$	1,055	$	—	$	10,871


	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2024		2024		2022		2021		2020		Prior		Loans		Term Loans		Total
December 31, 2024:
Real Estate, Residential Loans:
A, B, or C	$	10,203	$	11,135	$	14,611	$	10,386	$	4,348	$	19,348	$	4,448	$	3,537	$	78,016
S		—		—		—		—		—		56		—		—		56
D		—		—		—		—		124		338		—		—		462
E		—		—		—		295		—		123		—		—		418
F		—		—		—		—		—		—		—		—		—
Total Real Estate Residential Loans	$	10,203	$	11,135	$	14,611	$	10,681	$	4,472	$	19,865	$	4,448	$	3,537	$	78,952

Real Estate, Construction Loans:
A, B, or C	$	2,876	$	425	$	1,464	$	1,916	$	854	$	2,701	$	6,578	$	—	$	16,814
S		—		—		—		—		—		—		—		—		—
D		—		121		—		—		81		—		—		—		202
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Real Estate, Construction Loans	$	2,876	$	546	$	1,464	$	1,916	$	935	$	2,701	$	6,578	$	—	$	17,016

Real Estate,Nonresidential Loans:
A, B, or C	$	2,711	$	11,191	$	24,434	$	10,290	$	13,344	$	34,096	$	17,672	$	—	$	113,738
S		—		—		—		—		—		62		—		—		62
D		—		—		—		—		—		463		—		—		463
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Real Estate, Nonresidential Loans	$	2,711	$	11,191	$	24,434	$	10,290	$	13,344	$	34,621	$	17,672	$	—	$	114,263

Commercial and industrial
A, B, or C	$	1,187	$	488	$	524	$	638	$	167	$	2,542	$	7,813	$	—	$	13,359
S		—		—		—		—		—		—		—		—		—
D		—		22		—		—		—		—		—		—		22
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Commercial and Industrial Loans	$	1,187	$	510	$	524	$	638	$	167	$	2,542	$	7,813	$	—	$	13,381

Consumer/Other Loans
A, B, or C	$	4,725	$	3,258	$	804	$	401	$	262	$	254	$	254	$	—	$	9,958
S		—		—		—		—		—		—		—		—		—
D		—		—		1		—		—		—		5		—		6
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Consumer/Other Loans	$	4,725	$	3,258	$	805	$	401	$	262	$	254	$	259	$	—	$	9,964

The following table is a summary of the Company’s nonaccrual loans by major categories for the periods indicated (in thousands):


	March 31, 2025
	Nonaccrual Loans with		Nonaccrual Loans		Total Nonaccrual
	No Allowance		with an Allowance		Loans
Real estate, residential	$	244	$	176	$	420
Commercial and industrial		21		—		21
Total	$	265	$	176	$	441


	December 31, 2024
	Nonaccrual Loans with		Nonaccrual Loans		Total Nonaccrual
	No Allowance		with an Allowance		Loans
Real estate, residential	$	418	$	—	$	418
Total	$	418	$	—	$	418

The Company recognized no interest income on nonaccrual loans during the three months ended March 31, 2025 or the year ended December 31, 2024.

The following table represents the accrued interest receivables written off by reversing interest income during the three months ended March 31, 2025 and the year ended December 31, 2024 (in thousands):


	March 31, 2025		December 31, 2024
Real estate, residential	$	—	$	3
Total loans	$	—	$	3

The Company designates individually evaluated loans on nonaccrual status as collateral-dependent loans, as well as other loans that management of the Company designates as having higher risk. Collateral-dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. Under CECL, for collateral-dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

The following table presents an analysis of collateral-dependent loans of the Company as of March 31, 2025 and December 31, 2024 (in thousands):


	March 31, 2025		December 31, 2024
	Residential		Residential
	Properties		Properties
Real estate, residential	$	425	$	424
Commercial and industrial		21
Total loans	$	446	$	424

The following tables further disaggregates nonaccrual disclosures by amortized cost by class and vintage for term loans and by revolving and revolving converted to amortizing as of March 31, 2025 and December 31, 2024 (in thousands). The Company defines vintage as the later of origination or restructure date:


	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2025		2024		2023		2022		2021		Prior		Loans		Term Loans		Total
March 31, 2025:
Real estate, residential	$	—	$	—	$	—	$	—	$	287	$	133	$	—	$	—	$	420
Real estate, construction		—		—		—		—		—		—		—		—		—
Real estate, nonresidential		—		—		—		—		—		—		—		—		—
Commercial and industrial		—		—		21		—		—		—		—		—		21
Consumer/Other		—		—		—		—		—		—		—		—		—

Total Loans on Nonaccrual	$	—	$	—	$	21	$	—	$	287	$	133	$	—	$	—	$	441


	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2024		2024		2022		2021		2020		Prior		Loans		Term Loans		Total
December 31, 2024:
Real estate, residential	$	—	$	—	$	—	$	295	$	—	$	123	$	—	$	—	$	418
Real estate, construction		—		—		—		—		—		—		—		—		—
Real estate, nonresidential		—		—		—		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—		—		—		—
Consumer/Other		—		—		—		—		—		—		—		—		—
Total Loans on Nonaccrual	$	—	$	—	$	—	$	295	$	—	$	123	$	—	$	—	$	418

The Company had no loan modifications made to borrowers experiencing financial difficulty as of March 31, 2025 and had one loan modification as of December 31, 2024.

The following table shows the amortized cost basis as of March 31, 2025 of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of loans and type of concession granted and describes the financial effect of the modifications made to borrowers experiencing financial difficulty (in thousands):


	Term Extension

	March 31, 2025
	Amortized Cost		% of Total Loan
	Basis		Type		Financial Effect
Real estate, residential	$	16	0.02	%	Added a weighted average 3 years to the life of loan, which reduced monthly payment amounts for the borrowers. Provided 3 month payment deferrals to borrowers through our standard deferral program. The 3 monthly payments were added to the end of the original loan terms of these.
Total	$	16

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that have been modified in the last 12 months (in thousands):


	Payment Status (Amortized Cost Basis)
	March 31, 2025
			30-89 Days Past		90+ Days Past
	Current		Due		Due
Real estate, residential	$	16	$	—	$	—
Total	$	16	$	—	$	—

6.	Allowance for Credit Losses:

The following tables show activity in the allowance for credit losses by portfolio class for the three months ended March 31, 2025 and 2024 as well as the corresponding recorded investment in loans at the end of each period.

The calculation of the allowance for credit losses under CECL is performed using two primary approaches: a collective approach for pools of loans that have similar risk characteristics using a loss rate analysis, and a specific reserve analysis for credits individually evaluated.

Transactions in the allowance for credit losses for the three months ended March 31, 2025 and 2024, and the balances of loans, individually and collectively evaluated for impairment, as of March 31, 2025 and 2024, are as follows (in thousands):


	Real Estate,		Real Estate,		Real Estate,		Commercial
	Residential		Construction		Nonresidential		and Industrial		Other		Total
Quarter ended March 31, 2025
Allowance for credit losses
Beginning balance	$	676	$	135	$	1,835	$	92	$	244	$	2,982
Charge-offs		—		—		—		—		(53)		(53)
Recoveries		2		9		1		—		28		40
Net provision for credit losses		50		(4)		(70)		(12)		36		—
Ending Balance	$	728	$	140	$	1,766	$	80	$	255	$	2,969
Reserve for unfunded lending commitments
Beginning balance	$	2	$	23	$	10	$	12	$	36	$	83
Provision for losses on unfunded commitments		1		(3)		1		3		(7)		(5)
Ending balance-reserve for unfunded commitments	$	3	$	20	$	11	$	15	$	29	$	78
Total allowance for credit losses	$	731	$	160	$	1,777	$	95	$	284	$	3,047
Allowance for credit losses
Individually evaluated	$	42	$	—	$	—	$	—	$	9	$	51
Collectively evaluated		686		140		1,766		80		246		2,918
Total allowance for credit losses:	$	728	$	140	$	1,766	$	80	$	255	$	2,969
Reserve for unfunded lending commitments
Individually evaluated	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated		3		20		11		15		29		78
Reserve for unfunded lending commitments:		3		20		11		15		29		78
Total allowance for credit losses, March 31, 2025	$	731	$	160	$	1,777	$	95	$	284	$	3,047
Loans, Quarter ended March 31, 2025
Individually evaluated	$	936	$	261	$	470	$	21	$	9	$	1,697
Collectively evaluated		79,427		17,277		110,044		12,338		10,862		229,948
Total loans, March 31, 2025	$	80,363	$	17,538	$	110,514	$	12,359	$	10,871	$	231,645


	Real Estate,		Real Estate,		Real Estate,		Commercial
	Residential		Construction		Nonresidential		and Industrial		Other		Total
Three months ended March 31, 2024
Allowance for credit losses
Beginning balance	$	971	$	173	$	1,807	$	54	$	219	$	3,224
Charge-offs		(45)		—		—		—		(90)		(135)
Recoveries		—		8		1		—		49		58
Net provision for credit losses		(206)		31		74		3		38		(60)
Ending Balance	$	720	$	212	$	1,882	$	57	$	216	$	3,087
Reserve for unfunded lending commitments
Beginning balance	$	2	$	34	$	5	$	10	$	4	$	55
Provision for losses on unfunded commitments		—		10		7		1		42		60
Ending balance-reserve for unfunded commitments	$	2	$	44	$	12	$	11	$	46	$	115
Total allowance for credit losses	$	722	$	256	$	1,894	$	68	$	262	$	3,202
Allowance for credit losses
Individually evaluated	$	—	$	—	$	—	$	—	$	8	$	8
Collectively evaluated		720		212		1,882		57		208		3,079
Total allowance for credit losses:	$	720	$	212	$	1,882	$	57	$	216	$	3,087
Reserve for unfunded lending commitments
Individually evaluated	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated		2		44		12		11		46		115
Reserve for unfunded lending commitments:		2		44		12		11		46		115
Total allowance for credit losses, March 31, 2024	$	722	$	256	$	1,894	$	68	$	262	$	3,202
Loans, Quarter ended March 31, 2024
Individually evaluated	$	986	$	209	$	95	$	—	$	35	$	1,325
Collectively evaluated		74,747		27,551		112,664		10,880		9,107		234,949
Total loans, March 31, 2024	$	75,733	$	27,760	$	112,759	$	10,880	$	9,142	$	236,274

The following table further disaggregates gross charge-off disclosures by amortized cost by credit quality indicator, class, and year of origination for the three month periods ended March 31, 2025 and March 31, 2024 (in thousands). The Company defines vintage as the later of origination or restructure date.


	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2025		2024		2023		2022		2021		Prior		Loans		Term Loans		Total
March 31, 2025:
Consumer/Other
A,B, or C	$	48	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	48
S		—		—		—		—		—		—		—		—		—
D		—		2		—		—		—		—		—		—		2
E		—		3		—		—		—		—		—		—		3
F		—		—		—		—		—		—		—		—		—
Total Consumer/Other Loans	$	48	$	5	$	—	$	—	$	—	$	—	$	—	$	—	$	53
Total Gross Loan Chargeoffs:	$	48	$	5	$	—	$	—	$	—	$	—	$	—	$	—	$	53


	Term Loans														Revolving
	Amortized Cost Basis by Origination Year														Loans
													Revolving		Converted to
	2024		2023		2022		2021		2020		Prior		Loans		Term Loans		Total
March 31, 2024:
Real estate, nonresidential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
A,B, or C		—		—		—		—		—		—		—		—		—
S		—		—		—		—		—		—		—		—		—
D		—		—		—		—		—		—		—		—		—
E		—		—		—		—		—		45		—		—		45
F		—		—		—		—		—		—		—		—		—
Total Real estate, nonresidential loans	$	—	$	—	$	—	$	—	$	—	$	45	$	—	$	—	$	45
Consumer/Other
A,B, or C	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
S		—		—		—		—		—		—		—		—		—
D		52		7		—		—		—		11		—		—		70
E		—		—		20		—		—		—		—		—		20
F		—		—		—		—		—		—		—		—		—
Total Consumer/Other Loans	$	52	$	7	$	20	$	—	$	—	$	11	$	—	$	—	$	90
Total Gross Loan Chargeoffs:	$	52	$	7	$	20	$	—	$	—	$	56	$	—	$	—	$	135

7.	Shareholders’ Equity:

There were no dividends declared during the three month periods ended March 31, 2025 and March 31, 2024.

The components of accumulated other comprehensive income, net of tax, as of March 31, 2025 and December 31, 2024, are as follows:


	March 31, 2025		December 31, 2024
Beginning balance accumulated other comprehensive (loss) income	$	(36,887)	$	(38,733)
Net unrealized gain (loss) on available for sale securities, net of tax		3,144		1,875
(Loss) gain from unfunded post-retirement benefit obligation, net of tax		—		(29)
Ending balance accumulated other comprehensive (loss) income	$	(33,743)	$	(36,887)

8.	Fair Value Measurements and Disclosures:

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Available for sale securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record other assets at fair value on a non-recurring basis, such as impaired loans and ORE. These non-recurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets. Additionally, the Company is required to disclose, but not record, the fair value of other financial instruments.

Fair Value Hierarchy

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 - Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 - Valuation is based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 - Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flow models and similar techniques.

Following is a description of valuation methodologies used to determine the fair value of financial assets and liabilities.

Cash and Due from Banks

The carrying amount shown as cash and due from banks approximates fair value.

Investments

The fair value of available for sale securities and held to maturity securities is based on quoted market prices. The Company’s available for sale and held to maturity securities are reported at their amortized cost, and their estimated fair value, which is determined utilizing several sources, is disclosed in the financial statements and footnotes. The primary source is ICE Data Pricing and Reference Data, LLC (“ICE”) which purchased Interactive Data Corporation (“IDC”) but kept the IDC methodologies. Those methodologies include utilizing pricing models that vary based on asset class and include available trade, bid and other market information and whose methodology includes broker quotes, proprietary models and vast descriptive databases. Another source for determining fair value is matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark securities. The Company’s available for sale securities and held to maturity securities for which fair value is determined through the use of such pricing models and matrix pricing are classified as Level 2 assets.

Loans

The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings for the remaining maturities. The cash flows considered in computing the fair value of such loans are segmented into categories relating to the nature of the contract and collateral based on contractual principal maturities. Appropriate adjustments are made to reflect probable credit losses. Cash flows have not been adjusted for such factors as prepayment risk or the effect of the maturity of balloon notes. The fair value of floating rate loans is estimated to be its carrying value. At each reporting period, the Company determines which loans are collateral dependent. Accordingly, the Company’s collateral dependent loans are reported at their estimated fair value on a non-recurring basis. An allowance for each loan, which is generally collateral-dependent, is calculated based on the fair value of its collateral. The fair value of the collateral is based on appraisals performed by third-party valuation specialists. Factors including the assumptions and techniques utilized by the appraiser are considered by Management. If the recorded investment in the collateral dependent loan exceeds the measure of fair value of the collateral, a valuation allowance is recorded as a component of the allowance for credit losses. Collateral dependent loans are non-recurring Level 3 assets.

Other Real Estate

In the course of lending operations, Management may determine that it is necessary to foreclose on the related collateral. Other real estate acquired through foreclosure or repossession is carried at fair value, less estimated costs to sell. The fair value of the collateral is based on appraisals performed by third-party valuation specialists or internally prepared valuations. Other real estate is a non-recurring Level 3 asset.

Deposits

The fair value of non-interest bearing demand and interest bearing savings and demand deposits is the amount reported in the financial statements. The fair value of time deposits is estimated by discounting the cash flows using current rates of time deposits with similar remaining maturities. The cash flows considered in computing the fair value of such deposits are based on contractual maturities, since approximately 98% of time deposits provide for automatic renewal at current interest rates. Non-interest deposits are non-recurring Level 1 liabilities, while interest bearing deposits are classified as Level 3 liabilities.

Borrowings from Federal Home Loan Bank

The fair value of Federal Home Loan Bank (“FHLB”) fixed rate borrowings is estimated using discounted cash flows based on current incremental borrowing rates for similar types of borrowing arrangements. The fair value of FHLB variable rate borrowings is estimated to be its carrying value. Borrowings from Federal Home Loan Bank are classified as Level 2 liabilities.

The balances of available for sale securities, which are the only assets measured at fair value on a recurring basis, by level within the fair value hierarchy and by investment type, as of March 31, 2025 and December 31, 2024, were as follows (in thousands):


			Fair Value Measurements Using
	Total		Level 1		Level 2		Level 3
March 31, 2025:
U.S. Treasuries	$	182,530	$	—	$	182,530	$	—
Mortgage-backed securities		41,896		—		41,896		—
Collateralized mortgage obligations		63,835		—		63,835		—
States and political subdivisions		81,961		—		81,961		—
Total	$	370,222	$	—	$	370,222	$	—

December 31, 2024:
U.S. Treasuries	$	117,045	$	—	$	117,045	$	—
Mortgage-backed securities		42,512		—		42,512		—
Collateralized mortgage obligations		68,864		—		68,864		—
States and political subdivisions		80,227		—		80,227		—
Total	$	308,648	$	—	$	308,648	$	—

Collateral dependent loans, which are measured at fair value on a non-recurring basis, by level within the fair value hierarchy as of March 31, 2025 and December 31, 2024 were as follows (in thousands):

Fair Value Measurements Using

Total

Level 1

Level 2

Level 3

March 31, 2025

—

December 31, 2024

—

The following table presents a summary of changes in the fair value of other real estate which is measured using Level 3 inputs (in thousands):


	March 31, 2025		December 31, 2024
Balance, beginning of year	$	9	$	—
Loans transferred to ORE		—		18
Sales		—		(9)
Write-downs		—		—
Balance, end of year	$	9	$	9

The carrying value and estimated fair value of financial instruments, by level within the fair value hierarchy, at March 31, 2025 and December 31, 2024 are as follows (in thousands):


	Carrying		Fair Value Measurements Using
	Amount		Level 1		Level 2		Level 3		Total
March 31, 2025:
Financial Assets:
Cash and due from banks	$	95,434	$	95,434	$	—	$	—	$	95,434
Available for sale securities		370,222		—		370,222		—		370,222
Held to maturity securities, net		112,588		—		101,916		—		101,916
Loans, net		228,676		—		—		222,061		222,061
Financial Liabilities:
Deposits:
Non-interest bearing		188,749		188,749		—		—		188,749
Interest bearing		516,619		—		—		467,549		467,549
Time deposits		46,623		—		—		46,069		46,069


	Carrying		Fair Value Measurements Using
	Amount		Level 1		Level 2		Level 3		Total
December 31, 2024:
Financial Assets:
Cash and due from banks	$	107,744	$	107,744	$	—	$	—	$	107,744
Available for sale securities		308,648		—		308,648		—		308,648
Held to maturity securities, net		123,156		—		111,112		—		111,112
Loans, net		230,594		—		—		225,422		225,422
Financial Liabilities:
Deposits:
Non-interest bearing		235,183		235,183		—		—		235,183
Interest bearing		434,680		—		—		377,233		377,233
Time deposits		50,867		—		—		50,212		50,212

9.	Income Taxes:

Deferred taxes (or deferred charges) as of March 31, 2025 and December 31, 2024, included in other assets, were as follows (in thousands):


	March 31, 2025		December 31, 2024
Deferred tax assets:
Allowance for credit losses	$	776	$	782
Employee benefit plans' liabilities		4,020		4,029
Unrealized loss on available for sale securities, charged from equity		8,241		9,286
Loss on credit impairment of securities		423		423
Earned retiree health benefits plan liability		1,222		1,222
General business and AMT credits		—		1
State income tax net operating loss carryforward		889		930
Other		177		218
Valuation allowance		(423)		(423)
Deferred tax assets		15,325		16,468
Deferred tax liabilities:
Unearned retiree health benefits plan asset		460		460
Bank premises and equipment		2,125		2,106
Other		—		—
Deferred tax liabilities		2,585		2,566
Net deferred taxes	$	12,740	$	13,902

Income taxes consist of the following components (in thousands):


	Three Months Ended March 31,
		2025				2024
		Tax	Rate			Tax	Rate
Current	$	258	15	%	$	561	19	%
Deferred		117	7	%		70	2	%
Change in valuation allowance		—		%		—		%
Total deferred		117	7	%		70	2	%
Totals	$	375	22	%	$	631	21	%

The primary sources of permanent differences are due to tax-exempt interest income earned on certain investment securities, bank owned life insurance, and federal tax credits.

10.	Segment Reporting:

The Company is engaged in a single line of business as a financial institution, which provides a full range of banking, financial and trust services to state, county and local government entities and individuals and small and commercial businesses. The Company has identified its President and Chief Executive Officer as the chief operating decision maker (“CODM”), who uses consolidated net income (see Consolidated Statements of Operation) to determine how resources should be allocated and manage the Company. The Company’s operations constitute a single operating segment and therefore, a single reportable segment, because the CODM manages the business activities using information of the Company as a whole. The accounting policies used to measure the profit and loss of the segment are the same as those described in the summary of significant accounting policies described in Note A included in Form 10-K for the year ended December 31, 2024. The Company’s most significant reported source of income and expense are interest income and interest expense (see Consolidated Statements of Operations). The remaining significant segment income and expenses are described in the Consolidated Statements of Operations.

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

GENERAL

The Company is a one-bank holding company headquartered in Biloxi, Mississippi. The Company has two subsidiaries, PFC Service Corp., an inactive company, and The Peoples Bank, Biloxi, Mississippi (the “Bank”). The Bank provides a full range of banking, financial and trust services to state, county and local government entities and individuals and small and commercial businesses operating in those portions of Mississippi, Louisiana and Alabama which are within a fifty mile radius of the Waveland, Wiggins and Gautier branches, the Bank’s three most outlying locations (the “trade area”).

The following presents Management’s discussion and analysis of the consolidated financial condition and results of operations of Peoples Financial Corporation and Subsidiaries. These comments should be considered in combination with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in this report on Form 10-Q and the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Management’s Discussion and Analysis included in the Company’s Form 10-K for the year ended December 31, 2024.

Forward-Looking Information

Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about a company’s anticipated future financial performance. This act provides a safe harbor for such disclosure which protects the companies from unwarranted litigation if actual results are different from management expectations. This report contains forward-looking statements and reflects industry conditions, company performance and financial results. These forward-looking statements are subject to a number of factors and uncertainties which could cause the Company’s actual results and experience to differ from the anticipated results and expectations expressed in such forward-looking statements. Such factors and uncertainties include, but are not limited to: changes in interest rates and market prices, changes in local economic and business conditions, increased competition for deposits and loans, changes in the availability of funds resulting from reduced liquidity, changes in statutes, government regulations or regulatory policies or practices in general and specifically acts of terrorism, weather or other events beyond the Company’s control.

New Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) issued new accounting standards updates during the first three months of 2025. 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.

Critical Accounting Policies

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-going 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.

Investments

Investments which are classified as available for sale are stated at fair value. The determination of the fair value of securities may require Management to develop estimates and assumptions regarding the amount and timing of cash flows.

Allowance 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.

The Company’s most critical accounting policy relates to its allowance for credit losses, which reflects the estimated losses resulting from the inability of its borrowers to make loan payments. The allowance for credit losses is established and maintained at an amount sufficient to absorb losses on loans and leases held for investment. Credit losses arise not only from credit risk, but also from other risks inherent in the lending process including, but not limited to, collateral risk, operation risk, concentration risk and economic risk. As such, all related risks of lending are considered when assessing the adequacy of the allowance for credit losses.

Management believes that the allowance for credit losses on loans is adequate and appropriate for all periods presented in these financial statements. All credit relationships with an outstanding balance of $50,000 or greater that are included in Management’s loan watch list are individually reviewed for credit losses.

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.

GAAP Reconciliation and Explanation

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 months ended March 31, 2025 and 2024 is included in the table below (in thousands).

RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES


	Three Months Ended March 31,
	2025		2024
Interest income (GAAP)
Interest income - taxable equivalent	$	7,559	$	8,929
Taxable equivalent adjustment		68		70
Interest income reconciliation:	$	7,627	$	8,999

Net interest income (GAAP)
Net interest income - taxable equivalent	$	5,668	$	6,693
Taxable equivalent adjustment		68		70
Interest income reconciliation:	$	5,736	$	6,763

OVERVIEW

The Company is a community bank serving the financial and trust needs of its customers in our trade area, which is defined as those portions of Mississippi, Louisiana and Alabama which are within a fifty mile radius of the Waveland, Wiggins and Gautier branches, the bank subsidiary’s three most outlying locations. Maintaining a strong core deposit base and providing commercial and real estate lending in our trade area are the traditional focuses of the Company. Growth has largely been achieved through de novo branching activity, and it is expected that these strategies will continue to be emphasized in the future.

The Company reported net income of $1,310,000 for the first quarter of 2025 compared with net income of $2,415,000 for the first quarter of 2024. Results in 2024 included an increase in net income attributable to higher interest income on securities and loans along with higher interest income on overnight fed funds due to an increase in interest rates.

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 and is projected to make additional rate cuts in 2025.

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 reduction of the provision for credit losses of $(5,000) was recorded in the three months ended March 31, 2025 as compared with a net provision for credit losses of $0 for the three months ended March 31, 2024. The Company has worked diligently to address and reduce its non-performing assets. The Company’s nonaccrual loans totaled $441,000 and $418,000 at March 31, 2025 and December 31, 2024, 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 decreased $40,000 for the first quarter of 2025 as compared with 2024 results. Results for the first quarter of 2025 did not include a gain on sale of bank property of $42,000, which was included in the first quarter of 2024, along with lower other income of $6,000 offset somewhat by higher trust income of $8,000.

Non-interest expenses increased $301,000 for the quarter ended March 31, 2025, as compared with 2024 results. This net increase for the first quarter of 2025 was primarily the result of an increase in salary and employee benefits of $216,000 along with an increase in net occupancy, maintenance and ATM expense of $145,000 offset slightly by a decrease in bank assessment and legal expenses of $60,000.

Total assets at March 31, 2025 increased $34,764,000 as compared with December 31, 2024. Total deposits increased $31,261,000 as governmental entities’ balances increased due to tax collections. The increase in deposits was primarily

used to fund interest-bearing and non-interest bearing cash and the purchase of available for sale securities, which increased $61,574,000 with an offsetting decrease of $10,568,000 in held to maturity securities.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income, the amount by which interest income on loans, investments and other interest- earning assets exceeds interest expense on deposits and other borrowed funds, is the single largest component of the Company’s income. Management’s objective is to provide the largest possible amount of income while balancing interest rate, credit, liquidity and capital risk. Changes in the volume and mix of interest earning assets and interest-bearing liabilities combined with changes in market rates of interest directly affect net interest income.

Three Months Ended March 31, 2025 as Compared with Three Months Ended March 31, 2024

The Company’s average interest-earning assets decreased approximately $66,000,000, or 7.91%, from approximately $834,764,000 for the first quarter of 2024 to approximately $768,764,000 for the first quarter of 2025. The Company’s average balance sheet decreased primarily as average investments decreased approximately $57,405,000 along with a decrease in average loans of approximately $4,981,000 and average balances due from financial institutions of approximately $1,886,000 as compared with the first quarter of 2024. Average loans decreased as principal payments, maturities, and charge-offs on existing loans exceeded new loans.

The average yield on interest-earning assets decreased from 4.31% for the first quarter of 2024 to 3.97% for the first quarter of 2025. This decrease is due to a decrease in yields on investments, overnight fed funds, and loans in 2025.

Average interest-bearing liabilities decreased approximately $90,151,000 or 13.85%, from approximately $650,733,000 for the first quarter of 2024 to approximately $560,582,000 for the first quarter of 2025. Average savings and interest bearing DDA deposits decreased approximately $80,505,000 while time deposits increased approximately $20,175,000. 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. 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 quarter of 2025 was 1.35% as compared with 1.37% for the first quarter of 2024. The Federal Reserve had increased rates significantly throughout 2022 and 2023 which has caused the bank in 2024 and 2025 to experience a rising cost of funds to stay competitive with other local banks. The rising costs should ease some as rates start to decrease in 2025.

The Company’s net interest margin on a nontax-equivalent basis, which is net interest income as a percentage of average earning assets, was 2.95% for the three months ended March 31, 2025 as compared with 3.21% for the three months ended March 31, 2024.

The Company’s net interest margin on a tax-equivalent basis, which is net interest income as a percentage of average earning assets, was 2.98% for the first quarter of 2025 as compared with 3.24% for the first quarter of 2024.

The tables on the following pages analyze the changes in tax-equivalent net interest income for the three months ended March 31, 2025 and 2024.

Analysis of Average Balances, Interest Earned/Paid and Yield

(In Thousands)


	Three Months Ended March 31, 2025						Three Months Ended March 31, 2024
	Average Balance		Interest Earned/Paid		Rate		Average Balance		Interest Earned/Paid		Rate
Loans (2)(3)	$	231,549	$	3,396	5.87	%	$	236,530	$	3,562	6.02	%
Balances due from depository institutions		79,444		738	3.72	%		81,330		1,036	5.10	%
HTM:
Taxable		86,133		600	2.79	%		116,323		867	2.98	%
Non taxable (1)		31,433		242	3.08	%		33,776		254	3.01	%
AFS:
Taxable		335,938		2,617	3.12	%		360,730		3,220	3.57	%
Non taxable (1)		3,659		27	2.91	%		3,739		27	2.90	%
Other		608		7	4.61	%		2,336		33	5.65	%
Total	$	768,764	$	7,627	3.97	%	$	834,764	$	8,999	4.31	%

Savings & interest- bearing DDA	$	511,129	$	1,499	1.17	%	$	591,634	$	1,948	1.32	%
Time deposits		49,453		392	3.17	%		29,278		89	1.22	%
Borrowings under Term Funding Program		—		—	—	%		26,703		146	2.19	%
Borrowings from FHLB		—		—	—	%		3,118		53	6.80	%
Total	$	560,582	$	1,891	1.35	%	$	650,733	$	2,236	1.37	%

Net tax-equivalent spread					2.62	%					2.94	%
Net tax-equivalent margin on earning assets					2.98	%					3.24	%

(1)	All interest earned is reported on a taxable equivalent basis using a tax rate of 24.95% in 2025 and 2024. See disclosure of Non-GAAP financial measures on page 26 and 27.

(2)	Loan fees of $86 and $191 for 2025 and 2024, respectively, are included in these figures.

(3)	Includes nonaccrual loans.

Analysis of Changes in Interest Income and Interest Expense

(In Thousands)


	For the Three Months Ended
	March 31, 2025 compared with March 31, 2024
	Volume		Rate		Rate/Volume		Total
Interest earned on:
Loans	$	(75)	$	(93)	$	2	$	(166)
Balances due from
financial institutions		(25)		(280)		7		(298)
Held to maturity securities:
Taxable		(225)		(56)		15		(266)
Non taxable		(18)		5		—		(13)
Available for sale securities:
Taxable		(221)		(410)		28		(603)
Non taxable		(1)		—		1		—
Other		(24)		(8)		5		(27)
Total	$	(589)	$	(842)	$	58	$	(1,373)
Interest paid on:
Savings & interest-bearing DDA	$	(265)	$	(214)	$	29	$	(450)
Time deposits		62		143		99		304
Borrowings under Term Fund		(146)		(146)		146		(146)
Borrowings from FHLB		(53)		(53)		53		(53)
Total	$	(402)	$	(270)	$	327	$	(345)

Provision for Credit Losses

In the normal course of business, the Company assumes risk in extending credit to its customers. This credit risk is managed through compliance with the loan policy, which is approved by the Board of Directors. The policy establishes guidelines relating to underwriting standards, including but not limited to financial analysis, collateral valuation, lending limits, pricing considerations and loan grading. The Company’s Loan Review and Special Assets Departments play key roles in monitoring the loan portfolio and managing problem loans. New loans and, on a periodic basis, existing loans are reviewed to evaluate compliance with the loan policy. Loan delinquencies and deposit overdrafts are closely monitored in order to identify developing problems as early as possible. Lenders experienced in workout scenarios consult with loan officers and customers to address non-performing loans. A watch list of credits which pose a potential loss to the Company is prepared based on the loan grading system. This list forms the foundation of the Company’s allowance for credit loss computation.

Management relies on its guidelines and existing methodology to monitor the performance of its loan portfolio and identify and estimate potential losses based on the best available information. The potential effect of declines in real estate values and actual losses incurred by the Company were key factors in our analysis. Much of the Company’s loan portfolio is secured by real estate requiring careful consideration of real estate changes in value to properly monitor risk.

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. Factor 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 of (reduction of) credit losses of $(5,000) and a net provision for the allowance for credit losses of $0 for the first quarter of 2025 and 2024, respectively. No provision was needed for the allowance for credit losses on held to maturity securities for the first three months ended March 31, 2025 and March 31, 2024.

The Bank’s analysis includes evaluating the current values of collateral securing all nonaccrual loans. Nonaccrual loans totaled $441,000 and $418,000 with $42,000 and $0 in specific reserves on these loans as of March 31, 2025 and December 31, 2024, 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 1.28% at both March 31, 2025 and December 31, 2024. The Company believes that its allowance for credit losses is appropriate as of March 31, 2025.

The allowance for credit losses is an estimate, and as such, events may occur in the future which may affect its accuracy. The Company anticipates that it is possible that additional information will be gathered in future quarters on loan performance, which may require an adjustment to the allowance for credit losses. Management will continue to closely monitor its portfolio and take such action as it deems appropriate to accurately report its financial condition and results of operations.

Non-interest income

Three Months Ended March 31, 2025 as Compared with Three Months Ended March 31, 2024

Non-interest expense

Three Months Ended March 31, 2025 as Compared with Three Months Ended March 31, 2024

Income Taxes

Income tax expense for the three months ended March 31, 2025 and 2024 was $375,000 and $631,000, respectively. The effective tax rate for the three months ended March 31, 2025 and 2024 was 22% and 21%, respectively.

Quarter Ended March 31, 2025 as Compared with Quarter Ended September 30, 2024

The Company has recorded deferred and current income tax expenses in the first quarters of 2025 and 2024, respectively. Income tax expense decreased $256,000 for the first quarter of 2025 as compared with tax expense of $631,000 for the first quarter of 2024. This decrease was due to lower pretax income recorded for the first quarter of 2025 which was $1,361,000 less than the same period in 2024.

Cash and due from banks decreased $12,310,000 at March 31, 2025, compared with December 31, 2024. This decrease was due to an increase in total securities.

Available for sale securities increased $61,574,000 and held to maturity securities decreased $10,568,000, respectively at March 31, 2025 compared with December 31, 2024 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 decreased $1,931,000 at March 31, 2025 compared with December 31, 2024, as principal payments, maturities, and charge-offs on existing loans outpaced new loans.

Total deposits increased $31,261,000 at March 31, 2025, compared with December 31, 2024. 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.

SHAREHOLDERS’ EQUITY AND CAPITAL ADEQUACY

Strength, security and stability have been the hallmark of the Company since its founding in 1985 and of its bank subsidiary since its founding in 1896. A strong capital foundation is fundamental to the continuing prosperity of the Company and the security of its customers and shareholders.

As of December 31, 2024, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.

During the third quarter of 2023, the community bank leverage ratio (CBLR) framework was elected. The CBLR framework is an optional framework that is designed to reduce burden by removing the requirements for calculating and reporting risk-based capital ratios for qualifying community banking organizations that opt into the framework. The framework provides a simple measure of capital adequacy for qualifying community banking organizations, consistent with section 201 of the Economic Growth, Regulatory Relief and Consumer Protection Act.

Qualifying community banking organizations that elect to use the CBLR framework and that maintain a leverage ratio of greater than 9.00% are considered to have satisfied the risk-based and leverage capital requirements in the generally applicable capital rule. In addition, these institutions are considered to have met the well-capitalized ratio requirements for purposes of section 38 of the Federal Deposit Insurance Act.

The main components and requirements of the CBLR framework are as follows:

As of March 31, 2025 and December 31, 2024, the Bank’s community bank leverage ratio was 13.32% and 13.95%, respectively, both of which exceed the CBLR minimum of 9.00%.

Management continues to emphasize the importance of maintaining the appropriate capital levels of the Company and has established the goal of being “well-capitalized” by the banking regulatory authorities.

LIQUIDITY

Liquidity represents the Company’s ability to adequately provide funds to satisfy demands from depositors, borrowers and other commitments by either converting assets to cash or accessing new or existing sources of funds. Management monitors these funds requirements in such a manner as to satisfy these demands and provide the maximum earnings on its earning assets. The Company manages and monitors its liquidity position through a number of methods, including through the computation of liquidity risk targets and the preparation of various analyses of its funding sources and utilization of those sources on a monthly basis. The Company also uses proforma liquidity projections which are updated on a monthly basis in the management of its liquidity needs and also conducts periodic contingency testing on its liquidity plan.

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 March 31, 2025, the Company was able to borrow up to $9,698,756 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 $111,047,530 available under a line of credit with the Federal Home Loan Bank of Dallas with $111,047,530 available. The Company has additional contingency funding capacity with various other financial institutions in the amount of $30,500,000.

The Company maintains a well-capitalized balance sheet which includes strong capital and liquidity. The Bank provides a full range of banking, financial and trust services in our local markets. The majority of the Bank’s deposits are fully FDIC insured and the Company evaluates on an ongoing and continuous basis it’s financial health by preparing for various moderate to severe economic scenarios.

Determining liquidity adequacy requires an ongoing analysis of the Company’s current and expected liquidity position, including historical funding obligations and anticipated funding needs, as well as an understanding of retention prospects for all bank deposits. In particular, consideration is given to public funds and other large depositors for potential runoffs due to expected uses or other withdrawals from bank accounts.

The Company also uses other sources of funds, including borrowings from the FHLB. The Company generally anticipates relying on deposits, purchases of federal funds and borrowings from the Federal Reserve Bank of Atlanta and FHLB for its liquidity needs in 2025.

The Board of Directors requires management to implement and administer appropriate internal controls commensurate with the 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.

Item 4: Controls and Procedures

As of March 31, 2025, an evaluation was performed under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective to ensure that the information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the three month period ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1: Legal Proceedings

The Bank is involved in various legal matters and claims which are being defended and handled in the ordinary course of business. None of these matters are expected, in the opinion of Management, to have a material adverse effect upon the financial position or results of operations of the Company. However, on June 30, 2023, Stilwell Activist Investments, L.P., issued a letter to the Company and each of the directors of the Company demanding that they immediately commence litigation on behalf of the Company for an alleged breach by the Company’s Board of Directors of its fiduciary duties in allegedly failing to properly oversee and supervise Chevis and Tanner Swetman’s management of the Company. At its July 2023 meeting, the Board of Directors of the Company established a Special Litigation Committee made up of the independent directors to investigate the allegations made in the letter. Rather than wait for the Special Litigation Committee to conclude its inquiry, Stilwell Activist Investments, L.P., filed on September 29, 2023, a Complaint against the Company and Directors Chevis Swetman, Padrick D. Dennis, Jeffrey H. O’Keefe, Paige Reed Riley, Ronald Barnes, and George Sliman, III, making the same allegations that appear in the demand letter. The Court stayed the lawsuit pending the Special Litigation Committee’s inquiry. The Special Litigation Committee concluded that pursuing the claims is not in the Company’s best interest, and on March 22, 2024, the Company filed a motion to dismiss. The motion to dismiss was heard by the Court on October 17, 2024, and denied, allowing limited discovery as to the reasonableness of the Special Litigation Committee’s inquiry.

The plaintiff, Stilwell Activist Investments, L.P., is a shareholder of record of the Company and is controlled by Joseph Stilwell, an individual who beneficially owns 14.41% of the issued and outstanding common stock of the Company according to a revised definitive proxy statement filed by Mr. Stilwell and his related entities with the SEC on March 21, 2025, in connection with a proxy contest conducted by Mr. Stilwell at the Company’s 2025 annual meeting. Mr. Stilwell and his related entities, including Stilwell Activist Investments, L.P., have nominated an individual for election to the Board of Directors of the Company at its last five annual meetings, but each individual nominated was not elected to the Board of Directors of the Company.

Item 5: Other Information

During the fiscal quarter ended March 31, 2025, none of the Company’s directors or executive officers informed the Company of the adoption, modification, or termination of any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement.

Item 6 - Exhibits


Exhibit 31.1:		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002
Exhibit 31.2:		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002
Exhibit 32.1:		Certification of Chief Executive Officer Pursuant to 18 U.S.C. ss. 1350
Exhibit 32.2:		Certification of Chief Financial Officer Pursuant to 18 U.S.C. ss. 1350
Exhibit 101		The following materials from the Company’s quarterly report on Form 10-Q for the three months ended March 31, 2025, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Statements of Condition at March 31, 2025 and December 31, 2024, (ii) Consolidated Statements of Operations for three months ended March 31, 2025 and March 31, 2024, (iii) Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2025 and March 31, 2024, (iv) Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2025 and March 31, 2024, (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and March 31, 2024 and (vi) Notes to the Unaudited Consolidated Financial Statements for the three months ended March 31, 2025 and March 31, 2024.
Exhibit 104		Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirement of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	PEOPLES FINANCIAL CORPORATION
	(Registrant)


	Date:	May 13, 2025


	By:	/s/ Chevis C. Swetman
		Chevis C. Swetman
		Chairman, President and Chief Executive Officer
		(principal executive officer)

	Date:	May 13, 2025


	By:	/s/ Leslie B. Fulton
		Leslie B. Fulton
		Chief Financial Officer and Controller
		(principal financial and accounting officer)