FOR IMMEDIATE RELEASE

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Investor Relations
228-435-8208
investorrelations@thepeoples.com

PEOPLES FINANCIAL CORPORATION SECOND QUARTER INCOME INCREASES 85% OVER FIRST QUARTER

Loan loss continues to decline from year-ago levels

BILOXI, MS (July 27, 2011)—Peoples Financial Corporation (NASDAQ Capital Market: PFBX), parent of The Peoples Bank, recorded second quarter earnings of $809,000, an increase of 85% over the first quarter of 2011, announced Chevis C. Swetman, Chairman and Chief Executive Officer of the holding company and the bank.

Earnings per weighted average share for second quarter of 2011 rose to $.16, compared to $.09 per weighted average share in the first quarter of 2011. Earnings per share figures are based on weighted average shares outstanding of 5,136,918 for the three months ended March 31, 2011 and June 30, 2011.

The provision for loan losses in the latest quarter declined to $546,000 compared to $641,000 in the first quarter of this year and $1,585,000 in the second quarter of 2010. The latest provision was the lowest since first quarter of 2009, when the capital markets bottomed.

“We are not yet seeing much of an increase in loan demand in our region, but the overall economy here is becoming more stable though still fragile,” said Swetman.  “Our loan loss provisions have declined measurably, as we continue to cleanse our balance sheet of problem credits,” he added.

Loans past due 90 days declined 84% from the same quarter last year, improving from $7,595,000 to $1,195,000 in second quarter, 2011. 

The bank’s primary capital ratio increased to 13.94% at the end of the second quarter of 2011, compared to 13.07% at the end the same period in 2010. That is the highest level of capital since 2004.

Founded in 1896, with $821 million in assets as of June 30, 2011, The Peoples Bank operates 16 branches along the Mississippi Gulf Coast in Hancock, Harrison, Jackson and Stone counties. In addition to a comprehensive range of retail and commercial banking services, the bank also operates a trust and investment services department that has provided customers with financial, estate and retirement planning services since 1936. 

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

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