UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from ____________ to ____________.
Commission file number: 001-13253
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
THE PEOPLES BANK & TRUST COMPANY 401(K) PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
THE PEOPLES HOLDING COMPANY
209 Troy Street
Tupelo, MS 38802
FINANCIAL REPORT
THE PEOPLES BANK
AND TRUST COMPANY
401(k) PLAN
Tupelo, Mississippi
December 31, 2002
CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT ...................................... 3
FINANCIAL STATEMENTS:
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS ................. 4
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS ...... 5
NOTES TO FINANCIAL STATEMENTS ................................... 6
SUPPLEMENTAL SCHEDULES:
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR .. 10
SCHEDULE OF REPORTABLE TRANSACTIONS ............................. 11
INDEPENDENT AUDITORS' REPORT
To the Administrative Committee
The Peoples Bank and Trust Company
401(k) Plan
Tupelo, Mississippi
We have audited the accompanying statement of net assets available for
benefits of The Peoples Bank and Trust Company 401(k) Plan as of December 31,
2002 and 2001, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of The Peoples
Bank and Trust Company 401(k) Plan as of December 31, 2002 and 2001, and the
changes in its net assets available for benefits for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes at end of year, and reportable transactions,
together referred to as "supplemental information", are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. This supplemental
information is the responsibility of the Plan's management. The supplemental
information has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Nail McKinney Professional Association
April 23, 2003
3
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
THE PEOPLES BANK AND TRUST COMPANY
401(k) PLAN
December 31, 2002 and 2001
2002 2001
ASSETS ----------- -----------
INVESTMENTS AT FAIR VALUE (Note 5)
Mutual funds ................................ $ 4,505,811 $ 3,851,058
Common stock ................................ 1,941,982 1,566,136
Trust for U.S. Treasury Obligations ......... 9,001 32,423
Participant note receivable ................. 1,424 -
----------- -----------
Total investments .............................. 6,458,218 5,449,617
RECEIVABLES
Employer contribution ....................... 644,644 440,214
Dividends ................................... 13,446 11,247
----------- -----------
Total receivables .............................. 658,090 451,461
----------- -----------
Total assets ................................... 7,116,308 5,901,078
----------- -----------
LIABILITIES
Cash overdraft ................................. 1,182 -
Due to participants ............................ - 474
----------- -----------
Total liabilities .............................. 1,182 474
----------- -----------
Net assets available for benefits .............. $ 7,115,126 $ 5,900,604
=========== ===========
The notes to financial statements are an
integral part of these statements.
4
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
THE PEOPLES BANK AND TRUST COMPANY
401(k) PLAN
Years ended December 31, 2002 and 2001
2002 2001
----------- -----------
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation (depreciation) in fair
value of investments (Note 5) .......... $ (498,999) $ 533,399
Interest ................................. 4,154 4,398
Dividends ................................ 155,790 126,531
----------- -----------
(339,055) 664,328
Contributions
Employer ................................. 644,644 440,347
Participant deferrals .................... 1,217,956 891,413
----------- -----------
1,862,600 1,331,760
----------- -----------
Total additions ............................. 1,523,545 1,996,088
----------- -----------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants ............ 309,023 254,656
----------- -----------
Total deductions ............................ 309,023 254,656
----------- -----------
Net increase ................................ 1,214,522 1,741,432
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year ........................... 5,900,604 4,159,172
----------- -----------
End of year ................................. $ 7,115,126 $ 5,900,604
=========== ===========
The notes to financial statements are an
integral part of these statements.
5
NOTES TO FINANCIAL STATEMENTS
THE PEOPLES BANK AND TRUST COMPANY
401(k) PLAN
December 31, 2002
NOTE 1. DESCRIPTION OF PLAN
The following brief description of The Peoples Bank and Trust Company
401(k) Plan (Plan) is provided for general information purposes only.
Participants should refer to the Plan agreement for more complete information.
A. General. The Plan is a defined contribution plan covering substantially all
employees of The Peoples Bank and Trust Company. It is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
B. Contributions . Each year, participants may contribute up to 10% of pretax
annual compensation, as defined in the Plan. Participants may also
contribute amounts representing distributions from other qualified defined
benefit or contribution plans. The employer matches 100% of the employee's
salary deferral contribution up to four percent of the employee's
compensation. The employer may make a discretionary profit sharing
contribution. Contributions are subject to certain limitations.
C. Participant Accounts. Each participant's account is credited with the
participant's contribution and allocations of the employer contribution and
plan earnings/losses. Each participant's account is also charged with an
allocation of administrative expenses, when applicable. Allocations are
based on participant earnings or account balances, as defined. The benefit
to which a participant is entitled is the benefit that can be provided from
the participant's vested account.
D. Vesting. Participants are immediately 100% vested in salary deferral
contribution and earnings allocated to those accounts. Vesting in matching
employer contributions and profit sharing contributions is based on a six
year graduated schedule. Forfeitures of non-vested employer match
contributions will reduce employer match contribution or reduce expenses of
the plan. Forfeitures of non-vested employer profit sharing contributions
will be allocated to other participants based on compensation.
E. Investment Options. Upon enrollment in the Plan, a participant may direct
contributions in any of six investment options.
- Peoples Holding Company Common Stock
- Money Market Obligation Trust
- Federated Index Trust
- Federated U.S. Government Securities Fund
- Vanguard/Wellington Fund, Inc.
- Vanguard/Wellesley Income Fund
6
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE 1. DESCRIPTION OF PLAN - (Continued)
F. Payment of Benefits. Upon termination of service with the employer, a
participant may elect to receive a lump-sum distribution of his or her
entire vested account balance.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Accounting . The financial statements of the Plan are prepared
under the accrual method of accounting.
B. Valuation of Investments. The Plan's investments are stated at market
value. If available, quoted market prices are used to value investments.
If quoted market prices are not available, the trustee estimates the fair
value of the asset.
C. Payment of Benefits. Benefits are recorded when paid.
D. Plan Termination. Although it has not expressed any intent to do so, the
Employer has the right to terminate the Plan at any time subject to the
provisions of ERISA.
E. Operating Expenses. The Plan sponsor absorbs all of the administrative
expenses of the Plan.
F. Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires the plan administrator to
make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results may differ from those estimates.
NOTE 3. PLAN TERMINATION
Although it has not expressed any intent to do so, The Peoples Bank and
Trust Company has the right at any time to terminate the Plan. In the event of
plan termination, all employees will become 100% vested in their accounts
NOTE 4. INCOME TAX STATUS
The Plan's most recent favorable determination letter received from the
Internal Revenue Service is dated February 12, 1998. The plan administrator
believes that the plan is designed and has been operated in compliance with the
applicable requirements of the Internal Revenue Code ( the "Code"). In April
2003, the plan sponsor amended and restated the plan to comply with recent tax
law requirements (commonly referred to as "GUST") and to make other plan design
changes. The amended and restated plan is in the form of a prototype plan
sponsored by Southeastern Employee Benefit Services, Inc. It consists of a basic
plan document and a nonstandardized adoption agreement. The prototype plan
sponsor received a favorable determination letter from the Internal Revenue
Service dated November 27, 2001 for the prototype plan. Recently, the plan
administrator submitted the amended and restated plan to the Internal Revenue
Service to request a favorable determination that the plan is qualified under
Sections 401 (a) and 401 (k) of the Code. The plan administrator believes that
the Plan is currently being operated in compliance with the applicable
requirements of the Code.
7
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE 5. INVESTMENTS
All of the Plan's investments are held by a bank-administered trust fund.
The following table presents the fair value of investments at December 31, 2002
and 2001.
2002 2001
----------- -----------
Investments at fair value as determined
by quoted market price
Mutual funds:
Money Market Obligation Trust ............... $ 193,324 $ 151,529
Federated Index Trust ....................... 1,725,553 1,839,451
Federated U.S. Government Securities Index... 215,896 121,809
Vanguard / Wellington Fund Inc. ............. 1,469,155 1,346,267
Vanguard / Wellesley Income Fund ............ 901,883 392,002
Common stock:
Peoples Holding Company ..................... 1,941,982 1,566,136
Trust for U.S. Treasury Obligations ............ 9,001 32,423
Participant note receivable .................... 1,424 -
----------- -----------
$ 6,458,218 $ 5,449,617
=========== ===========
During 2002 and 2001, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
(depreciated) in value as follows:
2002 2001
----------- -----------
Appreciation (depreciation) in fair value
Mutual funds ................................... $ (667,325) $ (260,489)
Common stock ................................... 168,326 793,888
----------- -----------
$ (498,999) $ 533,399
=========== ===========
NOTE 6. INVESTMENT IN PEOPLES HOLDING COMPANY STOCK
The Plan's trust held investments in the bank's parent, The Peoples Holding
Company, as follows:
12/31/2002 12/31/2001
----------- -----------
Number of shares held ............................ 47,656 42,328
Market value of shares ........................... $ 1,941,982 $ 1,566,136
As a percentage of total market
value of plan assets .......................... 27.29% 26.54%
As a percentage of the outstanding common
shares of The Peoples Holding Company ......... 0.85% 0.74%
8
SUPPLEMENTAL SCHEDULES
9
SCHEDULE OF ASSETS HELD FOR INVESTMENT
PURPOSES AT END OF YEAR
THE PEOPLES BANK AND TRUST COMPANY
401(k) PLAN
Year ended December 31, 2002
(c) Description of investment
(b) Identity of issue, including maturity date,
borrower, lessor, rate of interest, collateral, (e) Current
(a) or similar party par, or maturity value (d) Cost Value
- ---- --------------------- --------------------------------- ------------- -------------
Trust for U.S.
Treasury Obligations Mutual Fund $ 9,001 $ 9,001
Money Market
Obligations Trust Mutual Fund 193,324 193,324
Federated Index Trust
Max-Cap. Inst. Mutual Fund 2,327,183 1,725,553
Federated U.S. Govt.
Securities Mutual Fund 212,126 215,896
Vanguard Wellington
Fund Mutual Fund 1,665,839 1,469,155
Vanguard Wellesley
Fund Mutual Fund 904,214 901,883
Peoples Holding
Company Common stock 1,402,759 1,941,982
Participant notes
receivable Notes receivable 1,424 1,424
------------- -------------
$ 6,715,870 $ 6,458,218
============= =============
10
SCHEDULE OF REPORTABLE TRANSACTIONS
THE PEOPLES BANK & TRUST COMPANY
401(k) PLAN
Year ended December 31, 2002
(b) Description of (h) Current
asset (include value of
(a) Identity of interest rate (f) Expense asset on (i) Net
of party and maturity in (c) Purchase (d) Selling (e) Lease incurred (g) Cost transaction gain or
involved case of a loan) Price Price rental w/transaction of asset date (loss)
- --------------- ------------------ ------------ ----------- --------- ------------- ------------ ----------- ----------
Trust for U.S. Mutual Fund $ 432,812 $ $ $ $ $ 432,812 $
Treasury Ob- Multiple Purchases
ligations
Trust for U.S. Mutual Fund 456,234 456,234 456,234
Treasury Ob- Multiple Sales
ligations
Federated Mutual Fund 694,536 694,536 694,536
Index Trust Multiple Purchases
Max-Cap
Inst.
Federated Mutual Fund 289,302 376,468 289,302 (87,166)
Index Trust Multiple Purchases
Max-Cap
Inst.
Vanguard Mutual Fund 493,436 493,436 493,436
Wellington Multiple Purchases
Fund
Vanguard Mutual Fund 553,374 553,374 553,374
Wellington Multiple Purchases
Fund
11
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this Annual Report on Form 11-K to be signed on its behalf by
the undersigned hereunto duly authorized.
THE PEOPLES BANK & TRUST
COMPANY 401(K) PLAN
Date: June 19, 2003 /s/ Hollis Ray Smith
--------------------------
Hollis Ray Smith
Senior Vice President
Human Resources Department
12
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference of our report dated April 23,
2003, covering the financial statements and supplemental schedule of The Peoples
Bank & Trust Company 401(k) Plan as of December 31, 2002, and 2001 and for the
years ended December 31, 2002 and 2001, included in this Form 11-K, into The
Peoples Bank & Trust Company 401(k) Plan Registration Statement on Form S-8
(File No. 333-104445).
/s/ Nail McKinney Professional Association
Tupelo, MS
June 19, 2003