BILOXI, Miss., Jan. 20 /PRNewswire-FirstCall/ -- Peoples Financial Corporation (Nasdaq: PFBX), parent of The Peoples Bank, earned $1,820,000 in fourth quarter 2008 and $5,034,000 for the year ended December 31, 2008, announced Chevis C. Swetman, chairman and chief executive officer of the holding company and the bank.

Earnings per share were $.34 per average weighted share for the fourth quarter of 2008 and totaled $.94 per average weighted share for the full year. Earnings per share figures are based on average weighted shares outstanding of 5,342,470 for the 12 months ended December 31, 2008 and 5,489,861 for the 12 months ended December 31, 2007.

"Our bank returned to profitability in the fourth quarter of 2008, despite the worst paralysis of the capital markets in my lifetime or even since the Great Depression," said Swetman. "Our loan volume grew in the fourth quarter, although far more slowly than we would like. We have money to lend, and we are aggressively seeking business in a market largely driven by fear of the unknown and fear of the future," he added.

Fourth quarter income was 38% lower than earnings for the same period the year before. Full year net income was 54% lower, due mainly to non-cash charges recorded in the third quarter of 2008 for increased loan loss provision and loss on investment in preferred shares of Federal Home Loan Mortgage Company (FHLMC, commonly known as Freddie Mac).

In November, 2008, Peoples Financial announced it had declined to participate in the federal government's $700 billion rescue fund for financial institutions. "We have plenty of capital," said Swetman. "In fact, our primary capital as of the end of 2008 rose to 12.91%, despite the meltdown of the financial markets around us. Times like these validate the careful, conservative philosophy that our Board of Directors and senior management team have always followed in operating our bank," he added.

Founded in 1896, with $896 million in assets as of December 31, 2008, The Peoples Bank operates 16 branches along the Mississippi Gulf Coast in Hancock, Harrison, Jackson and Stone counties. In addition to a comprehensive range of retail and commercial banking services, the bank also operates a trust and investment services department that has provided customers with financial, estate and retirement planning services since 1936. The bank also operates a mortgage loan department providing residential loans for primary, secondary and multi-family homes up to four units.

The Peoples Bank is a wholly-owned subsidiary of Peoples Financial Corporation, listed on the NASDAQ Capital Market under the symbol PFBX. Additional information is available on the Internet at www.thepeoples.com.

This news release contains forward-looking statements and reflects industry conditions, company performance and financial results. These forward-looking statements are subject to a number of risk factors and uncertainties which could cause the Company's actual results and experience to differ from the anticipated results and expectation expressed in such forward-looking statements.


    PEOPLES FINANCIAL CORPORATION
    (Unaudited)
    (In thousands, except per share figures)

    EARNINGS SUMMARY
    ----------------

    Three Months Ended December 31,     2008        2007
    ----------------------------------------------------

    Net interest income               $6,837      $7,665
    Provision for loan losses            252          52
    Non-interest income                2,523       2,651
    Non-interest expense               6,829       6,370
    Income taxes                         459         964
    Net income                         1,820       2,930
    Earnings per share                  0.34        0.54

    Year Ended December 31,             2008        2007
    ----------------------------------------------------

    Net interest income              $28,339     $30,519
    Provision for loan losses          2,347      (1,045)
    Non-interest income                7,539       9,767
    Non-interest expense              26,520      25,263
    Income taxes                       1,977       5,042
    Net income                         5,034      11,026
    Earnings per share                  0.94        2.01


    PERFORMANCE RATIOS
    -------------------

    December 31,                        2008        2007
    ----------------------------------------------------

    Return on average assets            0.55%       1.15%
    Return on average equity            4.71%      10.77%
    Net interest margin                 3.58%       3.55%
    Efficiency ratio                      78%         61%


    BALANCE SHEET SUMMARY
    ---------------------

    December 31,                        2008        2007
    ----------------------------------------------------

    Total assets                    $896,408    $927,357
    Loans                            467,377     450,992
    Securities                       349,816     392,595
    Total deposits                   510,476     569,130
    Total federal funds purchased    226,609     231,225
    Shareholders' equity             107,966     106,542
    Book value per share               20.45       19.66
    Weighted average shares        5,342,470   5,489,861


    PERIOD END DATA
    ---------------

    December 31,                        2008        2007
    ----------------------------------------------------

    Allowance for loan losses as
     a percentage of loans              2.38%       2.08%
    Loans past due 90 days and
     still accruing                    2,340       1,234
    Nonaccrual loans                  15,553          45
    Primary capital                    12.91%      12.13%

SOURCE Peoples Financial Corporation