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, 2026

☐ 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, 2026, 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, 2026			December 31, 2025
		(unaudited)			(audited)
Assets
Cash and due from banks		$	57,386		$	19,581
Available for sale securities, amortized cost of $349,623 at March 31, 2026; $323,240 at December 31, 2025			323,543			298,116
Held to maturity securities, fair value of $75,003 at March 31, 2026; $82,435 at December 31, 2025			84,023			91,083
Less: Allowance for credit losses on held to maturity securities			31			31
Held to maturity securities, net			83,992			91,052
Other investments			350			350
Federal Home Loan Bank Stock, at cost			1,182			1,170
Loans			268,814			263,706
Less: Allowance for credit losses on loans and leases			3,100			2,939
Loans, net			265,714			260,767
Bank premises and equipment, net of accumulated depreciation			17,215			17,387
Accrued interest receivable			3,022			3,060
Cash surrender value of life insurance			22,692			22,546
Intangible asset			398			414
Other assets			12,766			12,678
Total assets		$	788,260		$	727,121
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand, non-interest bearing		$	187,743		$	172,909
Savings and demand, interest bearing			441,001			393,934
Time, $250,000 or more			12,153			13,591
Other time deposits			25,292			23,995
Total deposits			666,189			604,429
Advances from Federal Home Loan Bank			—			800
Employee and director benefit plans liabilities			19,887			19,881
Other liabilities			789			1,344
Total liabilities			686,865			626,454
Shareholders' Equity:
Common stock, $1 par value, 15,000,000 shares authorized, 4,617,466 shares issued and outstanding at March 31, 2026 and December 31, 2025			4,617			4,617
Surplus			65,780			65,780
Undivided profits			60,186			58,740
Accumulated other comprehensive loss			(29,188)			(28,470)
Total shareholders' equity			101,395			100,667
Total liabilities and shareholders' equity		$	788,260		$	727,121

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,
		2026			2025
Interest income:
Interest and fees on loans		$	4,209		$	3,396
Interest and dividends on securities:
U. S. Treasuries			934			1,351
Mortgage-backed securities			338			545
States and political subdivisions			917			981
Collateralized mortgage obligations			447			541
Other investments			12			7
Interest on balances due from depository institutions			754			738
Total interest income			7,611			7,559
Interest expense:
Deposits			1,838			1,891
Borrowings			6			—
Total interest expense			1,844			1,891
Net interest income			5,767			5,668
Reduction of credit losses			(8)			(5)
Net interest income after provision for credit losses			5,775			5,673
Non-interest income:
Trust department income and fees			640			626
Service charges on deposit accounts			764			770
Increase in cash surrender value of life insurance			129			120
Other income			248			187
Total non-interest income			1,781			1,703
Non-interest expense:
Salaries and employee benefits			2,665			2,716
Net occupancy			554			563
Equipment rentals, depreciation and maintenance			719			783
FDIC and state banking assessments			98			96
Data processing			302			314
ATM expense			371			291
Legal expense			66			64
Other expense			933			864
Total non-interest expense			5,708			5,691
Income before income taxes			1,848			1,685
Income tax expense			402			375
Net income		$	1,446		$	1,310
Basic and diluted earnings per share		$	0.31		$	0.28
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,
		2026			2025
Net income		$	1,446		$	1,310
Other comprehensive income (loss):
Net unrealized gain (loss) on available for sale securities, net of tax			(718)			3,144
Total other comprehensive income (loss)			(718)			3,144
Total comprehensive income (loss)		$	728		$	4,454

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, 2026 and March 31, 2025

(in thousands except share data) (unaudited)


								Accumulated
	Number of							Other
	Common	Common				Undivided		Comprehensive
	Shares	Stock		Surplus		Profits		Income (loss)		Total
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 (loss)									3,144		3,144
Balance, March 31, 2025	4,617,466	$	4,617	$	65,780	$	57,801	$	(33,743)	$	94,455
Balance, January 1, 2026	4,617,466	$	4,617	$	65,780	$	58,740	$	(28,470)	$	100,667
Net income							1,446				1,446
Other comprehensive income (loss)									(718)		(718)
Balance, March 31, 2026	4,617,466	$	4,617	$	65,780	$	60,186	$	(29,188)	$	101,395

Note: Balances as of January 1, 2026 and 2025 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,
		2026			2025
Cash flows from operating activities:
Net income		$	1,446		$	1,310
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			402			420
Provision for (reduction of) credit losses			(8)			(5)
Amortization of intangible asset			16			16
(Accretion) amortization of available for sale securities			(175)			(267)
Amortization (accretion) of held to maturity securities			75			92
Increase in cash surrender value of life insurance			(129)			(120)
Change in accrued interest receivable			38			208
Change in deferred tax			(45)			117
Change in other assets			188			366
Change in employee and director benefit plan liabilities and other liabilities			(541)			(946)
Net cash provided by operating activities			1,267			1,191
Cash flows from investing activities:
Proceeds from maturities of available for sale securities			32,704			16,537
Purchases of available for sale securities			(58,911)			(73,655)
Proceeds from maturities of held to maturity securities			6,985			10,476
Redemptions of Federal Home Loan Bank stock			(12)			(6)
Loans, net change			(4,947)			1,918
Acquisition of bank premises and equipment			(230)			(19)
Investment in cash surrender value of life insurance			(11)			(13)
Net cash (used) by investing activities			(24,422)			(44,762)
Cash flows from financing activities:
Demand and savings deposits, net change			61,901			35,505
Time deposits, net change			(141)			(4,244)
Borrowings from Federal Home Loan Bank			40,350			—
Repayments to Federal Home Loan Bank			(41,150)			—
Net cash provided by financing activities			60,960			31,261
Net increase (decrease) in cash and cash equivalents			37,805			(12,310)
Cash and cash equivalents, beginning of period			19,581			107,744
Cash and cash equivalents, end of period		$	57,386		$	95,434

See Notes to Consolidated Financial Statements.

PEOPLES FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2026 and 2025

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, 2026 and December 31, 2025 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 2025 Annual Report and Form 10-K.

CRITICAL ACCOUNTING POLICIES

The results of operations for the quarter and three months ended March 31, 2026, 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, 2025.

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, 2026 and December 31, 2025 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.

RECENT ACCOUNTING PRONOUNCEMENTS

There were no new accounting pronouncements issued or adopted during the three months ended March 31, 2026 that are expected to have a material impact on the Company’s consolidated financial statements.

Accounting Standards Update –In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2025-11 (“ASU 2025-11”), Interim Reporting (Topic 270): Narrow-Scope Improvements. ASU 2025-11 clarifies the applicability, form and content of interim financial statements and disclosures and improves the navigability of the interim reporting guidance in ASC 270. The amendments introduce a disclosure principle requiring entities to disclose events or changes occurring since the end of the most recent annual reporting period that have a material effect on the entity, and they consolidate interim disclosure requirements from other Topics into ASC 270. ASU 2025-11 is effective for public business entities for interim reporting periods within annual periods beginning after December 15, 2027, and for all other entities one year later. 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.

Accounting Standards Update –In November 2025, the Financial Accounting Standards Board issued Accounting Standards Update 2025-08 (“ASU 2025-08”), Purchased Loans (Topic 326). ASU 2025-08 updates the credit loss accounting model under Topic 326 by expanding the gross up approach—previously limited to Purchased Credit Deteriorated (PCD) assets—to a broader class of acquired loans called purchased seasoned loans (PSLs). Under the new guidance, entities recognize an allowance for expected credit losses at acquisition with a corresponding increase to the loan’s amortized cost basis, eliminating the prior requirement to record a Day 1 credit loss expense for non PCD loans. This change addresses long-standing stakeholder concerns that the old dual model framework was overly complex, subjective, and created inconsistent and economically counterintuitive outcomes, particularly because expected losses were already embedded in fair value at acquisition. ASU 2025-08 will be effective for interim and annual periods for fiscal years beginning after December 15, 2026. Early adoption is permitted for entities that have not yet issued their

financial statements. 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 operation.

2.	Earnings Per Share:

Per share data is based on the weighted average shares of common stock outstanding of 4,617,466 for the three months ended March 31, 2026 and 2025, respectively. The Company has no potentially dilutive shares.

3.	Statements of Cash Flows:

The Company has defined cash and cash equivalents as cash and due from banks. Cash and due from banks for the purposes of the Consolidated Statements of Cash Flows, include cash on hand, balances due from banks; which includes non-interest- and interest-bearing accounts, and federal funds sold, all of which mature within ninety days.

The Company paid $1,843,624 and $1,888,799 for the three months ended March 31, 2026 and 2025, respectively, for interest on deposits and borrowings. No federal or state income tax payments were made during the three months ended March 31, 2026 and 2025, respectively. No loans were transferred to other real estate during the three months ended March 31, 2026 and 2025.

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, 2026 and December 31, 2025. 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, 2025 and determined an allowance for credit loss of $31,000 was appropriate. No additional impairment was recorded as of March 31, 2026.

The amortized cost, fair value and allowance for credit losses related to securities at March 31, 2026 and December 31, 2025, are as follows (in thousands):


			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
March 31, 2026	Cost		Gains		Losses		Fair Value
Available for sale securities:
U.S. Treasuries	$	148,654		15	$	(4,132)	$	144,537
Mortgage-backed securities		41,858		147		(3,029)		38,976
Collateralized mortgage obligations		59,278		72		(3,628)		55,722
States and political subdivisions		99,833		—		(15,525)		84,308
Total available for sale securities	$	349,623	$	234	$	(26,314)	$	323,543


					Gross			Gross
		Amortized			Unrealized			Unrealized			Estimated
December 31, 2025		Cost			Gains			Losses			Fair Value
Available for sale securities:
U.S. Treasuries		$	119,363		$	74		$	(3,907)		$	115,530
Mortgage-backed securities			42,656			134			(2,958)			39,832
Collateralized mortgage obligations			61,282			25			(3,478)			57,829
States and political subdivisions			99,939			—			(15,014)			84,925
Total available for sale securities		$	323,240		$	233		$	(25,357)		$	298,116


			Gross		Gross				Allowance		Net
	Amortized		Unrealized		Unrealized		Estimated		for Credit		Carrying
March 31, 2026	Cost		Gains		Losses		Fair Value		Losses		Amount
Held to maturity securities:
U.S. Treasuries	$	9,992	$	—	$	(125)	$	9,867	$	—	$	9,992
States and political subdivisions		74,031		11		(8,906)		65,136		(31)		74,000
Total held to maturity securities	$	84,023	$	11	$	(9,031)	$	75,003	$	(31)	$	83,992


					Gross			Gross						Allowance			Net
		Amortized			Unrealized			Unrealized			Estimated			for Credit			Carrying
December 31, 2025		Cost			Gains			Losses			Fair Value			Losses			Amount
Held to maturity securities:
U.S. Treasuries		$	14,990		$	10		$	(104)		$	14,896		$	—		$	14,990
States and political subdivisions			76,093			11			(8,565)			67,539			(31)			76,062
Total held to maturity securities		$	91,083		$	21		$	(8,669)		$	82,435		$	(31)		$	91,052

The following table shows a rollforward of the allowance for credit losses on held-to-maturity securities for the three months ended March 31, 2026 and the year ended December 31, 2025 and the three months ended March 31, 2025 and the year ended December 31, 2024 (in thousands):



		State and political
		subdivisions
Balance, December 31, 2025		$	31
Provision for credit losses			—
Charge-offs of securities			—
Recoveries			—
Balance, March 31, 2026		$	31


		State and political
		subdivisions
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, 2026 and December 31, 2025, aggregated by credit quality indicators (in thousands):


	March 31, 2026		December 31, 2025
Aaa	$	—	$	—
Aa1/Aa2/Aa3		37,940		44,503
A1/A2		3,123		3,131
Baa1/Baa2		1,000		1,000
Not rated		41,960		42,449
Total	$	84,023	$	91,083

At March 31, 2026 and December 31, 2025, 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, 2026 and the year ended December 31, 2025.

The amortized cost and fair value of debt securities at March 31, 2026, (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. Mortgage-backed securities and collateralized mortgage obligations are excluded from the contractual categories because the timing of principal repayments is dependent on underlying borrower prepayment patterns, which can cause actual maturities to differ materially from stated contractual maturities. As a result, contractual maturity information is not meaningful for these securities.


	Amortized Cost		Fair Value
Available for sale securities:
Due in one year or less	$	69,011	$	68,954
Due after one year through five years		97,285		91,853
Due after five years through ten years		50,905		43,226
Due after ten years		31,286		24,812
Mortgage-backed securities		41,858		38,976
Collateralized mortgage obligations		59,278		55,722
Total	$	349,623	$	323,543
Held to maturity securities:
Due in one year or less	$	2,200	$	2,191
Due after one year through five years		39,052		37,506
Due after five years through ten years		29,428		25,519
Due after ten years		13,343		9,787
Total	$	84,023	$	75,003

Available for sale securities with gross unrealized losses at March 31, 2026 and December 31, 2025, 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, 2026:
U.S. Treasuries		$	63,904	$	100		$	70,619		4,032			134,523	$	4,132
Mortgage-backed securities			—		—			27,655		3,029			27,655		3,029
Collateralized mortgage obligations			3,724		27			35,788		3,601			39,512		3,628
States and political subdivisions			—		—			84,308		15,525			84,308		15,525
Total		$	67,628	$	127		$	218,370	$	26,187		$	285,998	$	26,314


		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, 2025:
U.S. Treasuries		$	4,987		$	2		$	70,701		$	3,905			75,688		$	3,907
Mortgage-backed securities			—			—			28,344			2,958			28,344			2,958
Collateralized mortgage obligations			12,182			29			34,811			3,449			46,993			3,478
States and political subdivisions			1,833			177			83,092			14,837			84,925			15,014
Total		$	19,002		$	208		$	216,948		$	25,149		$	235,950		$	25,357

At March 31, 2026, 19 of the 21 Treasuries, 39 of the 46 mortgage-backed securities, 19 of the 26 collateralized mortgage obligations and 75 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, 2026 and March 31, 2025.

Securities with a fair value of $337,660,216 and $262,193,802 at March 31, 2026 and December 31, 2025, 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, 2026 and December 31, 2025 is as follows (in thousands):


		March 31, 2026			December 31, 2025
Real estate, residential		$	88,460		$	86,980
Real estate, construction			29,836			24,990
Real estate, nonresidential			124,727			124,843
Commercial and industrial			15,373			17,077
Other			10,418			9,816
Total		$	268,814		$	263,706

The age analysis of the loan portfolio, segregated by class of loans, as of March 31, 2026, and December 31, 2025 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, 2026:
Real estate, residential		$	475		$	—		$	331		$	806		$	87,654		$	88,460		$	—
Real estate, construction			123			—			—			123			29,713			29,836			—
Real estate, nonresidential			322			4			—			326			124,401			124,727			—
Commercial and industrial			9			—			—			9			15,364			15,373			—
Other			33			—			—			33			10,385			10,418			—
Total		$	962		$	4		$	331		$	1,297		$	267,517		$	268,814		$	—
December 31, 2025:
Real estate, residential		$	398		$	274		$	17		$	689		$	86,291		$	86,980		$	—
Real estate, construction			115			—			—			115			24,875			24,990			—
Real estate, nonresidential			104			188			—			292			124,551			124,843			—
Commercial and industrial			—			385			13			398			16,679			17,077			—
Other			24			261			—			285			9,531			9,816			—
Total		$	641		$	1,108		$	30		$	1,779		$	261,927		$	263,706		$	—

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 disaggregate 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, 2026 and December 31, 2025 (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
		2026			2025			2024			2023			2022			Prior			Loans			Term Loans			Total
March 31, 2026:
Real Estate, Residential Loans:
A, B, or C		$	2,650		$	12,586		$	10,839		$	13,047		$	12,151		$	29,504		$	5,246		$	1,322		$	87,345
S			—			—			—			—			—			45			—			—			45
D			—			—			—			—			—			503			59			—			562
E			—			—			166			—			—			342			—			—			508
F			—			—			—			—			—			—			—			—			—
Total Real Estate Residential Loans		$	2,650		$	12,586		$	11,005		$	13,047		$	12,151		$	30,394		$	5,305		$	1,322		$	88,460

Real Estate, Construction Loans:
A, B, or C		$	1,354		$	1,288		$	2,539		$	420		$	1,252		$	5,044		$	17,809		$	—		$	29,706
S			—			—			—			—			—			—			—			—			—
D			—			—			—			—			—			130			—			—			130
E			—			—			—			—			—			—						—			—
F			—			—			—			—			—			—			—			—			—
Total Real Estate, Construction Loans		$	1,354		$	1,288		$	2,539		$	420		$	1,252		$	5,174		$	17,809		$	—		$	29,836

Real Estate,Nonresidential Loans:
A, B, or C		$	497		$	16,587		$	2,492		$	10,299		$	17,453		$	47,474		$	29,244		$	—		$	124,046
S			—			—			—			—			—			45			—			—			45
D			—			—			—			—			—			636			—			—			636
E			—			—			—			—			—			—			—			—			—
F			—			—			—			—			—			—			—			—			—
Total Real Estate, Nonresidential Loans		$	497		$	16,587		$	2,492		$	10,299		$	17,453		$	48,155		$	29,244		$	—		$	124,727

Commercial and industrial
A, B, or C		$	139		$	1,911		$	820		$	403		$	282		$	4,157		$	7,652		$	—		$	15,364
S			—			—			—			—			—			—			—			—			—
D			—			—			—			—			—			—			—			—			—
E			—			—			—			—			9			—			—			—			9
F			—			—			—			—			—			—			—			—			—
Total Commercial and Industrial Loans		$	139		$	1,911		$	820		$	403		$	291		$	4,157		$	7,652		$	—		$	15,373

Consumer/Other Loans
A, B, or C		$	1,409		$	3,734		$	2,370		$	1,600		$	457		$	448		$	393		$	—		$	10,411
S			—			—			—			—			—			—			—			—			—
D			—			—			3			—			—			—			4			—			7
E			—			—			—			—			—			—			—			—			—
F			—			—			—			—			—			—			—			—			—
Total Consumer/Other Loans		$	1,409		$	3,734		$	2,373		$	1,600		$	457		$	448		$	397		$	—		$	10,418


		Term Loans																					Revolving
		Amortized Cost Basis by Origination Year																					Loans
																				Revolving			Converted to
		2025			2024			2023			2022			2021			Prior			Loans			Term Loans			Total
December 31, 2025:
Real Estate, Residential Loans:
A, B, or C		$	12,886		$	10,060		$	12,735		$	12,435		$	9,218		$	21,004		$	4,519		$	2,982		$	85,839
S			—			—			—			—			—			49			—			—			49
D			—			—			—			—			—			514			58			—			572
E			—			167			—			—			274			79			—			—			520
F			—			—			—			—			—			—			—			—			—
Total Real Estate Residential Loans		$	12,886		$	10,227		$	12,735		$	12,435		$	9,492		$	21,646		$	4,577		$	2,982		$	86,980

Real Estate, Construction Loans:
A, B, or C		$	1,395		$	2,662		$	319		$	1,309		$	1,770		$	3,382		$	13,903		$	—		$	24,740
S			—			—			—			—			—			—			—			—			—
D			—			—			117			—			—			133			—			—			250
E			—			—			—			—			—			—			—			—			—
F			—			—			—			—			—			—			—			—			—
Total Real Estate, Construction Loans		$	1,395		$	2,662		$	436		$	1,309		$	1,770		$	3,515		$	13,903		$	—		$	24,990

Real Estate,Nonresidential Loans:
A, B, or C		$	16,627		$	2,518		$	10,432		$	19,922		$	9,473		$	41,933		$	23,425		$	—		$	124,330
S			—			—			—			—			—			48			—			—			48
D			—			—			—			—			—			465			—			—			465
E			—			—			—			—			—			—			—			—			—
F			—			—			—			—			—			—			—			—			—
Total Real Estate, Nonresidential Loans		$	16,627		$	2,518		$	10,432		$	19,922		$	9,473		$	42,446		$	23,425		$	—		$	124,843

Commercial and industrial
A, B, or C		$	2,169		$	875		$	323		$	305		$	2		$	4,222		$	9,168		$	—		$	17,064
S			—			—			—			—			—			—			—			—			—
D			—			—			—			—			—			—			—			—			—
E			—			—			—			13			—			—			—			—			13
F			—			—			—			—			—			—			—			—			—
Total Commercial and Industrial Loans		$	2,169		$	875		$	323		$	318		$	2		$	4,222		$	9,168		$	—		$	17,077

Consumer/Other Loans
A, B, or C		$	4,102		$	2,557		$	1,780		$	502		$	236		$	249		$	383		$	—		$	9,809
S			—			—			—			—			—			—			—			—			—
D			—			3			—			—			—			—			4			—			7
E			—			—			—			—			—			—			—			—			—
F			—			—			—			—			—			—			—			—			—
Total Consumer/Other Loans		$	4,102		$	2,560		$	1,780		$	502		$	236		$	249		$	387		$	—		$	9,816

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



		March 31, 2026
		Nonaccrual Loans with			Nonaccrual Loans			Total Nonaccrual
		No Allowance			with an Allowance			Loans
Real estate, residential		$	344		$	164		$	508
Commercial and industrial			—			9			9
Total		$	344		$	173		$	517


		December 31, 2025
		Nonaccrual Loans with			Nonaccrual Loans			Total Nonaccrual
		No Allowance			with an Allowance			Loans
Real estate, residential		$	352		$	168		$	520
Commercial and industrial			—			13			13
Total		$	352		$	181		$	533

The Company recognized no interest income on nonaccrual loans during the three months ended March 31, 2026 or the year ended December 31, 2025.

The following table represents the accrued interest receivables written off by reversing interest income during the three months ended March 31, 2026 and the year ended December 31, 2025 (in thousands):


		March 31, 2026			December 31, 2025
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, 2026 and December 31, 2025 (in thousands):


		March 31, 2026		December 31, 2025
		Residential		Residential
		Properties		Properties
Real estate, residential		$	512	$	523
Commercial and industrial			9		13
Total loans		$	521	$	536

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, 2026 and December 31, 2025 (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
		2026			2025			2024			2023			2022			Prior			Loans			Term Loans			Total
March 31, 2026:
Real estate, residential		$	—		$	—		$	167		$	—		$	—		$	341		$	—		$	—		$	508
Real estate, construction			—			—			—			—			—			—			—			—			—
Real estate, nonresidential			—			—			—			—			—			—			—			—			—
Commercial and industrial			—			—			—			—			9			—			—			—			9
Consumer/Other			—			—			—			—			—			—			—			—			—
Total Loans on Nonaccrual		$	—		$	—		$	167		$	—		$	9		$	341		$	—		$	—		$	517


		Term Loans																					Revolving
		Amortized Cost Basis by Origination Year																					Loans
																				Revolving			Converted to
		2025			2024			2023			2022			2021			Prior			Loans			Term Loans			Total
December 31, 2025:
Real estate, residential		$	—		$	167		$	—		$	—		$	274		$	79		$	—		$	—		$	520
Real estate, construction			—			—			—			—			—			—			—			—			—
Real estate, nonresidential			—			—			—			—			—			—			—			—			—
Commercial and industrial			—			—			—			13			—			—			—			—			13
Consumer/Other			—			—			—			—			—			—			—			—			—
Total Loans on Nonaccrual		$	—		$	167		$	—		$	13		$	274		$	79		$	—		$	—		$	533

The Company had no loan modifications made to borrowers experiencing financial difficulty as of March 31, 2026 and of December 31, 2025.

6.	Allowance for Credit Losses:

The following tables show activity in the allowance for credit losses by portfolio class for the three and three months ended March 31, 2026 and 2025 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 ended March 31, 2026 and 2025, and the balances of loans, individually and collectively evaluated for impairment, as of March 31, 2026 and 2025, are as follows (in thousands):


	Real Estate,			Real Estate,			Real Estate,			Commercial
	Residential			Construction			Nonresidential			and Industrial			Other			Total
Three months ended March 31, 2026
Allowance for credit losses
Beginning balance	$	759		$	183		$	1,729		$	108		$	160		$	2,939
Charge-offs		(1)			—			—			—			(56)			(57)
Recoveries		15			9			155			—			39			218
Net provision for credit losses		54			46			(145)			7			38			—
Ending Balance	$	827		$	238		$	1,739		$	115		$	181		$	3,100
Reserve for unfunded lending commitments
Beginning balance	$	2		$	9		$	12		$	15		$	22		$	60
Provision for losses on unfunded commitments		1			(1)			(1)			(3)			(4)			(8)
Ending balance-reserve for unfunded commitments	$	3		$	8		$	11		$	12		$	18		$	52
Total allowance for credit losses	$	830		$	246		$	1,750		$	127		$	199		$	3,152
Allowance for credit losses
Individually evaluated	$	80		$	—		$	—		$	9		$	7		$	96
Collectively evaluated		747			238			1,739			106			174			3,004
Total allowance for credit losses:	$	827		$	238		$	1,739		$	115		$	181		$	3,100
Reserve for unfunded lending commitments
Individually evaluated	$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated		3			8			11			12			18			52
Reserve for unfunded lending commitments:		3			8			11			12			18			52
Total allowance for credit losses, March 31, 2026	$	830		$	246		$	1,750		$	127		$	199		$	3,152
Loans, Quarter ended March 31, 2026
Individually evaluated	$	1,070		$	130		$	636		$	9		$	7		$	1,852
Collectively evaluated		87,390			29,706			124,091			15,364			10,411			266,962
Total loans, March 31, 2026	$	88,460		$	29,836		$	124,727		$	15,373		$	10,418		$	268,814


	Real Estate,			Real Estate,			Real Estate,			Commercial
	Residential			Construction			Nonresidential			and Industrial			Other			Total
Three months 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

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, 2026 and March 31, 2025 (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
	2026		2025		2024		2023		2022		Prior		Loans		Term Loans		Total
March 31, 2026:
Real estate, residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
A,B, or C		—		—		—		—		—		—		—		—		—
S		—		—		—		—		—		—		—		—		—
D		—		—		—		—		—		—		—		—		—
E		—		—		—		—		—		1		—		—		1
F		—		—		—		—		—		—		—		—		—
Total Real estate, nonresidential loans	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	—	$	1
Consumer/Other
A,B, or C	$	55	$	1	$	—	$	—	$	—	$	—	$	—	$	—	$	56
S		—		—		—		—		—		—		—		—		—
D		—		—		—		—		—		—		—		—		—
E		—		—		—		—		—		—		—		—		—
F		—		—		—		—		—		—		—		—		—
Total Consumer/Other Loans	$	55	$	1	$	—	$	—	$	—	$	—	$	—	$	—	$	56
Total Gross Loan Chargeoffs:	$	55	$	1	$	—	$	—	$	—	$	1	$	—	$	—	$	57


	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

7.	Shareholders’ Equity:

There were no dividends declared during the three month periods ended March 31, 2026 and March 31, 2025.

The components of accumulated other comprehensive income, net of tax, as of March 31, 2026 and December 31, 2025, are as follows:


	March 31, 2026		December 31, 2025
Beginning balance accumulated other comprehensive (loss) income	$	(28,470)	$	(36,887)
Net unrealized gain (loss) on available for sale securities, net of tax		(718)		9,077
(Loss) gain from unfunded post-retirement benefit obligation, net of tax		—		(660)
Ending balance accumulated other comprehensive (loss)income	$	(29,188)	$	(28,470)

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 securities are reported at their estimated fair value 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 for automatic renewal at current interest rates unless the bank plans to purposely reduce time deposit balances as they mature. 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, 2026 and December 31, 2025, were as follows (in thousands):


				Fair Value Measurements Using
	Total			Level 1			Level 2			Level 3
March 31, 2026:
U.S. Treasuries	$	144,537		$	—		$	144,537		$	—
Mortgage-backed securities		38,976			—			38,976			—
Collateralized mortgage obligations		55,722			—			55,722			—
States and political subdivisions		84,308			—			84,308			—
Total	$	323,543		$	—		$	323,543		$	—

December 31, 2025:
U.S. Treasuries	$	115,530		$	—		$	115,530		$	—
Mortgage-backed securities		39,832			—			39,832			—
Collateralized mortgage obligations		57,829			—			57,829			—
States and political subdivisions		84,925			—			84,925			—
Total	$	298,116		$	—		$	298,116		$	—

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, 2026 and December 31, 2025 were as follows (in thousands):

Fair Value Measurements Using

Total

Level 1

Level 2

Level 3

March 31, 2026

—

December 31, 2025

—

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, 2026		December 31, 2025
Balance, beginning of year	$	—	$	9
Loans transferred to ORE		—		266
Sales		—		(266)
Write-downs		—		—
Chargeoffs		—		(9)
Balance, end of year	$	—	$	—

The carrying value and estimated fair value of financial instruments, by level within the fair value hierarchy, at March 31, 2026 and December 31, 2025 are as follows (in thousands):


	Carrying			Fair Value Measurements Using
	Amount			Level 1			Level 2			Level 3			Total
March 31, 2026:
Financial Assets:
Cash and due from banks	$	57,386		$	57,386		$	—		$	—		$	57,386
Available for sale securities		323,543			—			323,543			—			323,543
Held to maturity securities, net		83,992			—			75,003			—			75,003
Loans, net		265,714			—			—			265,053			265,053
Financial Liabilities:
Deposits:
Non-interest bearing		187,743			187,743			—			—			187,743
Interest bearing		441,001			—			—			403,926			403,926
Time deposits		37,445			—			—			36,987			36,987


	Carrying		Fair Value Measurements Using
	Amount		Level 1		Level 2		Level 3		Total
December 31, 2025:
Financial Assets:
Cash and due from banks	$	19,581	$	19,581	$	—	$	—	$	19,581
Available for sale securities		298,116		—		298,116		—		298,116
Held to maturity securities, net		91,052		—		82,435		—		82,435
Loans, net		260,767		—		—		259,500		259,500
Financial Liabilities:
Deposits:
Non-interest bearing		172,909		172,909		—		—		172,909
Interest bearing		393,934		—		—		358,151		358,151
Time deposits		37,586		—		—		37,128		37,128
Borrowings from Federal Home Loan Bank		800		—		800		—		800

9.	Income Taxes:

Deferred taxes (or deferred charges) as of March 31, 2026 and December 31, 2025, included in other assets, were as follows (in thousands):


	March 31, 2026			December 31, 2025
Deferred tax assets:
Allowance for credit losses	$	825		$	783
Employee benefit plans' liabilities		4,020			4,028
Unrealized loss on available for sale securities, charged from equity		6,507			6,268
Loss on credit impairment of securities		423			423
Earned retiree health benefits plan liability		1,172			1,172
General business and AMT credits		17			17
State income tax net operating loss carryforward		705			771
Other		132			126
Valuation allowance		(423)			(423)
Deferred tax assets		13,378			13,165
Deferred tax liabilities:
Unearned retiree health benefits plan asset		240			240
Bank premises and equipment		1,812			1,883
Deferred tax liabilities		2,052			2,123
Net deferred taxes	$	11,326		$	11,042

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


	Three Months Ended March 31,
	2026		2025
Current:
Federal	$	447	$	258
State		—		—
Total current		447		258
Deferred:
Federal		(125)		46
State		80		71
Change in valuation allowance		—		—
Total deferred		(45)		117
Totals	$	402	$	375

Income taxes amounted to less than the amounts computed by applying the U.S. Federal income tax rate of 21.0% for 2026 and 2025 to income before income taxes and State income tax rate of 3.95% for 2026 and 2025. The reasons for these differences are shown below (in thousands):


	Three Months Ended March 31,
	2026				2025
	Tax		Rate		Tax		Rate
Taxes computed at statutory rate	$	388	21	%	$	354	21	%
Increase (decrease) resulting from:
State income tax expense, net of federal effect		64	3			57	3
Tax -exempt interest income		(38)	(2)			(42)	(3)
Income from BOLI		(27)	(1)			(25)	(1)
Tefra disallowance		15	1			14	1
Federal tax credits		-	-			(2)	(0)
Other		-	-			19	1
Other changes in valuation allowance		-	-			-	-

Total income tax (benefit) expense	$	402	22	%	$	375	22	%

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.

During the three months ended March 31, 2026, the Company recorded current and deferred income tax expense (benefit) of $447,000 and ($45,000), respectively or a net income tax expense of $402,000 and an effective rate of 22%. During the three months ended March 31, 2025, the Company recorded current and deferred income tax expense of $258,000 and $117,000, respectively or a net income tax expense of $375,000 and an effective rate of 22%. The Company paid no federal or state income tax payments during the three months ended March 31, 2026 and March 31, 2025.

A valuation allowance is recognized against deferred tax assets when, based on the consideration of all available positive and negative evidence using a more likely than not criteria, it is determined that all or a portion of these tax benefits may not be realized. This assessment requires consideration of all sources of taxable income available to realize the deferred tax asset including taxable income in prior carry-back years, future reversals of existing temporary differences, tax planning strategies and future taxable income exclusive of reversing temporary differences and carryforwards.

As of March 31, 2026, the net deferred tax asset was $11,326,000. As of December 31, 2025 the net deferred tax asset was $11,042,000.

The Company has reviewed its income tax positions and specifically considered the recognition and measurement requirements of the benefits recorded in its financial statements for tax positions taken or expected to be taken in its tax returns. The Company currently has no unrecognized tax benefits that, if recognized, would favorably affect the income tax rate in future periods.

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, 2025. 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, 2025.

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”) did not issue any new accounting standard or updates during the three months ended March 31, 2026. The Company does not expect that the updates discussed in the Notes will have a material impact on its financial position, results of operations or cash flows. Further disclosure is included in Note 1.

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.

Cash and Due from Banks

For purposes of the Consolidated Statements of Cash Flows, cash and cash equivalents include cash on hand, balances due from banks; which includes non-interest and interest bearing accounts, and federal funds sold, all of which mature within ninety days.

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, 2026 and 2025 is included in the table below (in thousands).

RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES


		Three Months Ended March 31,
		2026			2025
Interest income
Interest income - (GAAP)		$	7,611		$	7,559
Taxable equivalent adjustment			60			68
Tax equivalent interest income:		$	7,671		$	7,627

Net interest income
Net interest income - (GAAP)		$	5,767		$	5,668
Taxable equivalent adjustment			60			68
Net tax equivalent interest income:		$	5,827		$	5,736

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 $1,446,000 for the first quarter of 2026 compared with net income of $1,310,000 for the first quarter of 2025. Results in 2026 included an increase in net income attributable to higher interest income and fees on loans and a lower cost of funds compared to 2025.

Managing the net interest margin is a key component of the Company’s earnings strategy. Concerns about inflation and its potential impact on the economy and individual households are among the issues being considered by the Federal Reserve. Raising the federal funds rate had been a strategy pursued in 2023 to address this issue. The Federal Reserve raised interest rates a total of 100 basis points during 2023 in an effort to promote maximum employment, keep prices stable and have moderate long-term interest rates. Due to a weakening labor market the Federal Reserve has changed its course of action and reduced interest rates by 100 basis points during 2024 and 75 basis points in 2025 and is projected to make additional rate cuts in 2026. During the first quarter of 2026, the Federal Reserve did not reduce the federal funds rate. The Federal Open Market Committee opted to hold rates steady amid ongoing inflation concerns and economic uncertainty.

Monitoring asset quality, estimating potential losses in our loan portfolio, unfunded lending commitments and held to maturity debt securities and addressing non-performing loans continue to be a major focus of the Company. A net provision reduction for credit losses of ($8,000) was recorded in the quarter ended March 31, 2026 and ($5,000) for the quarter ended March 31, 2025. The Company has worked diligently to address and reduce its non-performing assets. The Company’s nonaccrual loans totaled $517,000 and $533,000 at March 31, 2026 and December 31, 2025, respectively.

Most of these loans are collateral-dependent, and the Company has rigorously evaluated the value of its collateral to determine potential losses.

Non-interest income increased $78,000 for the first quarter of 2026 as compared with 2025 results. Results for the first quarter of 2026 included the sale of miscellaneous assets of $57,000, an increase in trust income and fees of $14,000 and an increase in cash surrender value of life insurance of $9,000.

Non-interest expenses increased $17,000 for the first quarter ended March 31, 2026, as compared with 2025 results. This net increase for the first quarter of 2026 was primarily the result of an increase in ATM and debit card expense of $80,000 and miscellaneous expense of $69,000 mostly offset by lower maintenance expense of $64,000 and lower salary and benefit expense of $51,000.

Total assets at March 31, 2026, increased $61,139,000 as compared with December 31, 2025. Total deposits increased $61,760,000 as governmental entities’ balances increased due to tax collections in several public fund accounts. The increase in deposits caused an increase in cash and due from banks of $37,805,000 and increased new purchases of available for sale 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.

Quarter Ended March 31, 2026 as Compared with Quarter Ended March 31, 2025

The Company’s average interest-earning assets decreased approximately $21,218,000, or 2.76%, from approximately $768,764,000 for the first quarter of 2025 to approximately $747,546,000 for the first quarter of 2026. The Company’s average balance sheet decreased primarily as average investments decreased approximately $56,601,000 which was somewhat offset by an increase in average loans of approximately $34,495,000 as compared with the first quarter of 2025. Average loans increased as new loans exceeded principal payments, maturities, and charge-offs.

The average yield on interest-earning assets increased from 3.97% for the first quarter of 2025 to 4.10% for the first quarter of 2026. This increase is due to an increase in volume and yields on average loans, and overnight fed funds in 2026.

Average interest-bearing liabilities decreased approximately $26,110,000 or 4.66%, from approximately $560,582,000 for the first quarter of 2025 to approximately $534,472,000 for the first quarter of 2026. Average savings and interest bearing DDA deposits decreased approximately $14,914,000 and time deposits decreased approximately $11,868,000. This decrease was mostly caused by the allocation of public fund tax deposits that increase as taxes are collected and slowly allocate out of the deposit accounts through the end of each year along with the loss of several public fund accounts. Although average deposits 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 2026 was 1.38%, compared with 1.35% for the first quarter of 2025. Although the Federal Reserve implemented several rate cuts during 2025, the cumulative effect of significant rate increases during 2022 and 2023 continued to impact the Bank’s cost of funds in 2025 and into 2026 as the Bank priced deposits competitively within its local market. As market interest rates trend downward, management expects funding cost pressures to moderate during 2026.

The Company’s net interest margin on a nontax-equivalent basis, which is net interest income as a percentage of average earning assets, was 3.09% for the first quarter of 2026 as compared with 2.95% for the first quarter of 2025.

The Company’s net interest margin on a tax-equivalent basis, which is net interest income as a percentage of average earning assets, was 3.12% for the first quarter of 2026 as compared with 2.98% for the first quarter of 2025.

The tables on the following pages analyze the changes in tax-equivalent net interest income for the three months ended March 31, 2026 and March 31, 2025.

Analysis of Average Balances, Interest Earned/Paid and Yield

(In Thousands)


	Quarter Ended March 31, 2026						Quarter Ended March 31, 2025
	Average Balance		Interest Earned/Paid		Rate		Average Balance		Interest Earned/Paid		Rate
Loans (2)(3)	$	266,044	$	4,209	6.33	%	$	231,549	$	3,396	5.87	%
Balances due from financial institutions		79,770		754	3.78	%		79,444		738	3.72	%
HTM:
Taxable		60,321		386	2.56	%		86,133		600	2.79	%
Non taxable (1)		28,268		217	3.07	%		31,433		242	3.08	%
AFS:
Taxable		308,419		2,069	2.68	%		335,938		2,617	3.12	%
Non taxable (1)		3,554		24	2.65	%		3,659		27	2.91	%
Other		1,170		12	4.10	%		608		7	4.61	%
Total	$	747,546	$	7,671	4.10	%	$	768,764	$	7,627	3.97	%

Savings & interest-bearing DDA	$	496,215	$	1,623	1.31	%	$	511,129	$	1,499	1.17	%
Time deposits		37,585		215	2.29	%		49,453		392	3.17	%
Other Borrowings and Borrowings under Term Funding Program		—		—	—	%		—		—	—	%
Borrowings from FHLB		672		6	3.80	%		—		—	—	%
Total	$	534,472	$	1,844	1.38	%	$	560,582	$	1,891	1.35	%

Net tax-equivalent spread					2.72	%					2.62	%
Net tax-equivalent margin on earning assets					3.12	%					2.98	%

(1)	All interest earned is reported on a taxable equivalent basis using a tax rate of 24.95% in 2026 and 2025. See disclosure of Non-GAAP financial measures on page 28.

(2)	Loan fees of $203 and $100 for 2026 and 2025, respectively, are included in these figures.

(3)	Includes nonaccrual loans.

Analysis of Changes in Interest Income and Interest Expense

(In Thousands)


	For the Quarter Ended
	March 31, 2026 compared with March 31, 2025
	Volume			Rate			Rate/Volume			Total
Interest earned on:
Loans	$	506		$	267		$	40		$	813
Balances due from financial institutions		3			13			—			16
Held to maturity securities:
Taxable		(180)			(49)			15			(214)
Non taxable		(24)			(1)			—			(25)
Available for sale securities:
Taxable		(214)			(364)			30			(548)
Non taxable		(1)			(2)			—			(3)
Other		6			(1)			—			5
Total	$	96		$	(137)		$	85		$	44
Interest paid on:
Savings & interest-bearing DDA	$	(44)		$	173		$	(5)		$	124
Time deposits		(94)			(109)			26			(177)
Borrowings under Term Fund		—			—			—			—
Borrowings from FHLB		—			—			6			6
Total	$	(138)		$	64		$	27		$	(47)

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. Factors impacting the provision include loan portfolio growth, changes in the quality and composition of the loan portfolio, the level of nonperforming loans, delinquency and charge-off trends, the level of unfunded commitments and current economic conditions.

The Bank’s on-going, systematic evaluation resulted in the Bank recording a net provision of (reduction of) credit losses of ($8,000) and ($5,000) for the first quarter of 2026 and 2025, respectively.

The Bank’s analysis includes evaluating the current values of collateral securing all nonaccrual loans. Nonaccrual loans totaled $517,000 and $533,000 with $89,000 and $100,000 in specific reserves on these loans as of March 31, 2026 and

December 31, 2025, respectively. The specific reserves allocated to nonaccrual loans are relatively low as collateral values appear sufficient to cover credit losses, or the loan balances have been charged down to their realizable value.

The allowance for credit losses as a percentage of loans was 1.15% and 1.11% at March 31, 2026 and December 31, 2025. Although the Company experienced loan growth in the first quarter of 2026 there was no additional credit loss provision required due to a recovery of a previously charged off loan in the amount of $150,000. The Company believes that its allowance for credit losses is appropriate as of March 31, 2026.

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, 2026 as Compared with Three Months Ended March 31, 2025

Non-interest expense

Three Months Ended March 31, 2026 as Compared with Three Months Ended March 31, 2025

Income Taxes

Quarter Ended March 31, 2026 as Compared with Quarter Ended March 31, 2025

The Company has recorded deferred and current income tax expenses in the first quarters of 2026 and 2025, respectively. Income tax expense increased $27,000 for the first quarter of 2026 as compared with tax expense of $375,000 for the first quarter of 2025. This increase was due to higher pretax income recorded for the first quarter of 2026 which was $163,000 less than the same period in 2025. The effective tax rate for quarter ended March 31, 2026 and 2025 was 22%, respectively.

Financial Condition

Cash and due from banks increased $37,805,000 at March 31, 2026, compared with December 31, 2025. This increase was due to a significant increase in total deposits.

Available for sale securities increased $25,427,000 and held to maturity securities decreased $7,060,000, respectively at March 31, 2026 compared with December 31, 2025 as the Company decreased its held to maturity securities and increased its available for sale investment purchases. As securities mature the proceeds are used to pay down borrowings first and then reinvest in available for sale securities and loans.

Gross loans increased $5,108,000 at March 31, 2026 compared with December 31, 2025, as new loans outpaced principal payments, maturities, and charge-offs.

Total deposits increased $61,760,000 at March 31, 2026, compared with December 31, 2025. Typically, significant increases or decreases in total deposits and/or significant fluctuations among the different types of deposits from quarter to quarter are anticipated by Management as customers in the casino industry and county and municipal entities reallocate their resources periodically. Deposits from county and municipal entities increase significantly during the first quarter of each year based on property tax collections and are slowly allocated out of the tax collection accounts over the course of the year.

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, 2025, 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.

Currently, 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. Effective July 1, 2026, the required leverage ratio under the CBLR will be reduced from 9.00% to 8.00% pursuant to a final rule jointly issued by the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System on April 26, 2026.

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

As of March 31, 2026 and December 31, 2025, the Bank’s community bank leverage ratio was 14.15% and 15.76%, respectively, both of which exceed the current CBLR minimum of 9.00% and the future CBLR minimum of 8.00% effective July 1, 2026.

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, 2026, the Company was able to borrow up to $7,263,636 from the Federal Reserve Bank Discount Window Primary Credit

Program. The borrowing limit is based on the amount of collateral pledged, with certain loans from the Bank’s portfolio serving as collateral. The Company has $127,421,217 available under a line of credit with the Federal Home Loan Bank of Dallas with $127,421,217 available. The Company has additional contingency funding capacity with various other financial institutions in the amount of $28,000,000.

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 its 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. Management considers fluctuations in public fund and municipal deposit balances, including seasonal runoff following first quarter tax collections, to represent a known trend that could affect the Company’s liquidity profile. Management continues to actively monitor deposit concentrations and available contingency funding sources to mitigate potential liquidity risks.

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 2026.

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, 2026, 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, 2026, 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.

Additionally, 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 three 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 15.99% 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 9, 2026, in connection with a proxy contest conducted by Mr. Stilwell at the Company’s 2026 annual meeting. Including the nomination made by Mr. Stilwell for the 2026 Annual Meeting held on April 22, 2026, Mr. Stilwell and his related entities have nominated an individual for election to the Board of Directors of the Company at its last six annual meetings, but each individual nominated was not elected to the Board of Directors of the Company.

Item 5: Other Information

During the three months ended March 31, 2026, 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, 2026, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Statements of Condition at March 31, 2026 and December 31, 2025, (ii) Consolidated Statements of Operations for three months ended March 31, 2026 and March 31, 2025, (iii) Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2026 and March 31, 2025, (iv) Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2026 and March 31, 2025, (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and March 31, 2025 and (vi) Notes to the Unaudited Consolidated Financial Statements for the three months ended March 31, 2026 and March 31, 2025.
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 12, 2026


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

	Date:	May 12, 2026


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