Peoples Financial Corporation Reports $1.31 Million Net Income in Q1 2025, Down from $2.42 Million

Peoples Financial Corporation reported a net income of $1.31 million for the first quarter of 2025, a decline from $2.42 million in the same period of 2024. This decrease is attributed to lower interest income and a reduction in non-interest income, which was partially offset by a decrease in interest expenses. Total interest income fell to $7.56 million from $8.93 million year-over-year, primarily due to a decrease in interest and fees on loans and lower yields on investments. The company's net interest income after provisions for credit losses was $5.67 million, down from $6.69 million in the prior year.

The company experienced a significant reduction in its average interest-earning assets, which decreased by approximately $66 million, or 7.91%, from the previous year. This decline was driven by a decrease in average investments and loans. The average yield on interest-earning assets also dropped from 4.31% to 3.97%. In contrast, average interest-bearing liabilities decreased by about $90 million, leading to a slight reduction in the average rate paid on these liabilities from 1.37% to 1.35%. The net interest margin on a tax-equivalent basis was 2.98%, down from 3.24% in the prior year.

In terms of operational developments, total assets increased by $34.76 million compared to December 31, 2024, primarily due to a $31.26 million rise in total deposits, which were bolstered by tax collections from governmental entities. The company’s loan portfolio saw a slight decrease, with total loans amounting to $231.65 million, down from $233.58 million at the end of 2024. Nonaccrual loans increased slightly to $441,000, indicating ongoing challenges in asset quality management.

Peoples Financial Corporation's non-interest income also saw a decline, dropping to $1.70 million from $1.74 million in the previous year, largely due to the absence of a gain on the sale of bank property that had contributed $42,000 to the prior year's figures. Non-interest expenses rose by $301,000, primarily driven by increased salaries and employee benefits, as well as higher occupancy and maintenance costs. The company did not declare any dividends during the quarter.

Looking ahead, the company remains focused on monitoring asset quality and managing credit risk, particularly in light of the Federal Reserve's interest rate adjustments. The management anticipates that the current economic environment may lead to further adjustments in interest rates, which could impact future earnings. The company is committed to maintaining a strong capital position, with a community bank leverage ratio of 13.32% as of March 31, 2025, well above the regulatory minimum.