FIRST M & F CORPORATION 
By KOSCIUSKO, Miss., April 18, 2013 /PRNewswire/ -- First M&F Corp. (NASDAQ: FMFC) reported a profit today for the first quarter ended March 31, 2013 of $2.598 million. Net income allocated to common shareholders was $2.020 million or $0.22 basic and diluted earnings per share compared to a profit of $1.139 million or $0.12 basic and diluted earnings per share for the first quarter of 2012. Hugh S. Potts, Jr., CEO and Chairman of the Board, commented, "This quarter is reflective of the established trends of previous quarters and the current state of the economy." Continuing further Potts said, "That is, our improving asset quality metrics, a trend started many quarters ago, and the stabilization of real estate values, has allowed meaningful reductions in credit-related expenses and the current profitable quarter."
Net Interest Income
Net interest income was down by 5.69% compared to the first quarter of 2012, with the net interest margin falling to 3.53% on a tax equivalent basis in the first quarter of 2013 as compared to 3.67% in the first quarter of 2012. The most significant contributor to the decrease in net interest income was the erosion in net interest spreads as the opportunities to re-price deposits waned even as earning asset yields continued downward. Mr. Potts commented, "Also reflective of current economic realities is the compression of the net interest margin arising from continued low rates, diminishing spreads and trends toward flat or modest loan growth."
The net interest margin for the fourth quarter of 2012 was 3.56% as compared to 3.73% for the third quarter of 2012 and 3.72% for the second quarter of 2012. Loans Held for Investment yields decreased to 5.28% in the first quarter of 2013 from 5.80% in the first quarter of 2012. Overall loan yields fell also from the fourth quarter of 2012 to the first quarter. Average total loans were $990.968 million for the first quarter of 2013 as compared to $1.008 billion for the fourth quarter of 2012 and $1.007 billion during the first quarter of 2012. Loans Held for Investment increased by $12.184 million in the first quarter of 2013 but fell by $11.854 million in the fourth quarter of 2012. Deposit costs decreased in the first quarter of 2013 from the fourth quarter of 2012, continuing a trend in declining deposit costs dating back to the fourth quarter of 2007 as costs have reflected the low-rate environment since then. Deposit costs were 0.55% in the first quarter of 2013 as compared to 0.85% in the first quarter of 2012. Deposits fell by $49.900 million, or 3.56% during the first quarter of 2013, primarily from one large depositor. Loans Held for Investment as a percentage of assets were 63.70% at March 31, 2013 as compared to 60.95% at March 31, 2012 and 60.90% at December 31, 2012. Loans grew by less than 1.00% since the first quarter of 2012 while deposits fell by 4.09%.
Non-interest Income
Non-interest income, excluding securities transactions, for the first quarter of 2013 increased by 17.72% compared to the first quarter of 2012, with deposit-related income down 3.50% and mortgage income, bolstered by a somewhat improving housing market and refinancings, up 127.69%. Insurance agency commissions were down slightly, by 1.09%. Mr. Potts commented, "Mortgage volumes and revenues have been a bright spot in the last few quarters. M&F Bank was successful in gearing up to take advantage of the opportunities presented."
Non-interest Expenses
Non-interest expenses were lower by 7.49% in the first quarter of 2013 as compared to the first quarter of 2012. Salaries and benefits expense decreased by 7.30%, mostly due to lower medical benefits costs, while the major contributor to the overall non-interest expense decrease was the 59.62% fall in foreclosed property expense as credit issues began to dissipate, as property values continued to stabilize and as new credit issues continued to wane. "M&F continues to manage its portfolio of Other Real Estate downward," said Mr. Potts, "as we're still dealing with the residual aftermath of the real estate collapse."
Credit Quality
Annualized net loan charge-offs as a percent of average loans for the first quarter of 2013 were 0.21% as compared to 0.47% for the same period in 2012. Non-accrual and 90-day past due loans as a percent of total loans were 0.75% at the end of the first quarter of 2013 as compared to 1.47% at the end of the 2012 quarter.
The allowance for loan losses as a percentage of loans was 1.85% at March 31, 2013 as compared to 1.64% at March 31, 2012. The provision for loan losses fell to $1.280 million in the first quarter of 2013 from $2.280 million in the first quarter of 2012. Mr. Potts commented, "The trend of decreasing credit-related expenses, primarily through lower provisions for loan losses, is the result of quarters and years of credit remediation and recovery by M&F associates. This gratifying pattern of improvement and contribution to earnings, though, will soon run its course and the Company will have to look to profitable asset growth and increased operating efficiencies to spur long-term earnings growth."
Balance Sheet
Total assets at March 31, 2013 were $1.551 billion as compared to $1.602 billion at the end of 2012 and $1.607 billion at March 31, 2012. Total Loans Held for Investment were $987.657 million compared to $975.473 million at the end of 2012 and $979.495 million at March 31, 2012. Deposits were $1.353 billion compared to $1.403 billion at the end of 2012 and $1.411 billion at March 31, 2012. Total capital was $120.771 million, while common equity was $101.558 million, or $11.00 in book value per share, at March 31, 2013.
Conclusion
Looking forward, Mr. Potts said, "The challenges ahead for First M&F are common to the banking sector as a whole: profitable growth in a low rate environment complicated by a still struggling economy, modest loan demand and narrowing spreads. The potential merger with Renasant, announced in February, should open up greater growth markets and opportunities with higher efficiencies, creating improved shareholder value. M&F associates look forward to the challenge and the change." In conclusion, Mr. Potts said, "While we await various approvals from regulators and shareholders, we have a patient, thankful and optimistic comfort in the Providential orchestration of the future of M&F, Renasant and the U.S.A. A thorough discussion of the merger will be forthcoming for shareholder enlightenment and decision. Meanwhile, M&F associates are committed to serving well, as always."
About First M&F Corporation
First M&F Corp., the parent of M&F Bank, is committed to proceed with its mission of making the mid-south better through the delivery of excellence in financial services to 26 communities in Mississippi, Alabama and Tennessee.
Caution Concerning Forward?Looking Statements
This document includes certain "forward?looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive, market and regulatory factors. More detailed information about those factors is contained in First M&F Corporation's filings with the Securities and Exchange Commission.
First M&F Corporation
Condensed Consolidated Statements of Condition (Unaudited)
(In thousands, except share data)
March 31 December 31 March 31
2013 2012 2012
---- ---- ----
Cash and due from banks $32,543 $54,811 $38,688
Interest bearing bank balances 31,590 94,313 51,900
Federal funds sold 10,000 10,000 25,000
Securities available for sale (cost of
$370,679, $341,273 and $361,199) 377,051 348,562 365,970
Loans held for sale 17,573 21,014 28,684
Loans 987,657 975,473 979,495
Allowance for loan losses 18,269 17,492 16,084
------ ------ ------
Net loans 969,388 957,981 963,411
Bank premises and equipment 36,871 37,264 37,831
Accrued interest receivable 5,863 5,683 6,098
Other real estate 24,820 25,970 34,636
Other intangible assets 4,053 4,159 4,479
Other assets 40,768 41,926 50,445
------ ------ ------
Total assets $1,550,520 $1,601,683 $1,607,142
========== ========== ==========
Non-interest bearing deposits $252,453 $276,295 $238,603
Interest bearing deposits 1,100,322 1,126,380 1,171,905
--------- --------- ---------
Total deposits 1,352,775 1,402,675 1,410,508
Federal funds and repurchase agreements 2,250 3,720 3,738
Other borrowings 34,877 36,007 41,673
Junior subordinated debt 30,928 30,928 30,928
Accrued interest payable 628 661 868
Other liabilities 8,291 9,249 8,072
----- ----- -----
Total liabilities 1,429,749 1,483,240 1,495,787
Preferred stock, 30,000 shares issued and outstanding 19,213 18,865 17,877
Common stock, 9,233,917, 9,230,799 and 9,162,721)
shares issued & outstanding 46,170 46,154 45,814
Additional paid-in capital 32,497 32,469 31,892
Nonvested restricted stock awards 325 244 700
Retained earnings 21,184 19,180 15,508
Accumulated other comprehensive income (loss) 1,382 1,531 (436)
----- ----- ----
Total equity 120,771 118,443 111,355
------- ------- -------
Total liabilities & equity $1,550,520 $1,601,683 $1,607,142
========== ========== ==========
First M&F Corporation and Subsidiary
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except share data)
Three Months Ended March 31
2013 2012
---- ----
Interest and fees on loans $12,698 $14,158
Interest on loans held for sale 56 173
Taxable investments 1,231 1,490
Tax exempt investments 352 318
Federal funds sold 6 15
Interest bearing bank balances 58 51
--- ---
Total interest income 14,401 16,205
Interest on deposits 1,516 2,513
Interest on fed funds and repurchase agreements 4 6
Interest on other borrowings 371 451
Interest on subordinated debt 283 271
--- ---
Total interest expense 2,174 3,241
Net interest income 12,227 12,964
Provision for possible loan losses 1,280 2,280
----- -----
Net interest income after loan loss 10,947 10,684
Service charges on deposits 2,371 2,457
Mortgage banking income 1,291 567
Agency commission income 820 829
Fiduciary and brokerage income 160 140
Other income 1,044 837
Gains on AFS securities 16 591
--- ---
Total noninterest income 5,702 5,421
Salaries and employee benefits 6,362 6,863
Net occupancy expense 865 908
Equipment expenses 432 463
Software and processing expenses 356 362
FDIC insurance assessments 348 514
Foreclosed property expenses 588 1,456
Intangible asset amortization and impairment 106 107
Other expenses 3,882 3,313
----- -----
Total noninterest expense 12,939 13,986
Net income before taxes 3,710 2,119
Income tax expense 1,112 512
----- ---
Net income $2,598 $1,607
====== ======
Earnings Per Common Share Calculations:
Net income $2,598 $1,607
Dividends and accretion on preferred stock (497) (463)
---- ----
Net income applicable to common stock 2,101 1,144
Earnings attributable to participating securities 81 5
Net income allocated to common shareholders $2,020 $1,139
====== ======
Weighted average shares (basic) 9,231,457 9,156,476
Weighted average shares (diluted) 9,345,384 9,156,476
Basic earnings per share $0.22 $0.12
Diluted earnings per share $0.22 $0.12
===== =====
First M&F Corporation
Financial Highlights
YTD Ended YTD Ended YTD Ended YTD Ended
March 31 December 31 March 31 December 31
2013 2012 2012 2011
---- ---- ---- ----
Performance Ratios:
Return on assets (annualized) 0.67% 0.44% 0.40% 0.27%
Return on equity (annualized) (a) 8.84% 6.12% 5.84% 4.00%
Return on common equity (annualized) (a) 8.51% 5.30% 4.95% 2.81%
Efficiency ratio (c) 71.25% 74.98% 75.18% 78.47%
Net interest margin (annualized, tax-equivalent) 3.53% 3.67% 3.67% 3.68%
Net charge-offs to average loans (annualized) 0.21% 0.61% 0.47% 1.05%
Nonaccrual loans to total loans 0.72% 0.75% 1.45% 1.68%
90 day accruing loans to total loans 0.03% 0.03% 0.02% 0.06%
QTD Ended QTD Ended QTD Ended QTD Ended
March 31 December 31 September 30 June 30
2013 2012 2012 2012
---- ---- ---- ----
Per Common Share (diluted):
Net income $0.22 $0.14 $0.14 $0.14
Cash dividends paid 0.01 0.01 0.01 0.01
Book value 11.00 10.79 10.69 10.44
Closing stock price 14.15 6.98 7.42 5.18
Loan Portfolio Composition: (in thousands)
Commercial, financial and agricultural $150,125 $153,550 $155,890 $147,773
Non-residential real estate 557,453 542,859 554,475 567,184
Residential real estate 203,260 200,992 197,629 189,927
Home equity loans 39,047 37,736 37,196 36,183
Consumer loans 37,772 40,336 42,137 41,529
------ ------ ------ ------
Total loans $987,657 $975,473 $987,327 $982,596
Deposit Composition: (in thousands)
Noninterest-bearing deposits $252,453 $276,295 $233,684 $236,145
NOW deposits 419,376 423,461 386,371 391,726
MMDA deposits 207,931 214,091 216,620 211,447
Savings deposits 119,728 118,123 117,404 116,598
Core certificates of deposit under $100,000 182,245 188,733 201,361 208,684
Core certificates of deposit $100,000 and over 159,913 165,979 177,084 178,926
Brokered certificates of deposit under $100,000 3,295 3,549 3,417 3,393
Brokered certificates of deposit $100,000 and over 7,834 12,444 13,533 14,419
----- ------ ------ ------
Total deposits $1,352,775 $1,402,675 $1,349,474 $1,361,338
Nonperforming Assets: (in thousands)
Nonaccrual loans $7,277 $7,444 $6,219 $6,443
Other real estate 24,820 25,970 28,002 31,077
Investment securities 604 733 644 639
--- --- --- ---
Total nonperforming assets $32,701 $34,147 $34,865 $38,159
Accruing loans past due 90 days or more $268 $321 $408 $1,537
Restructured loans (accruing) $21,657 $21,800 $16,784 $18,372
Total nonaccrual loan to loans 0.72% 0.75% 0.62% 0.64%
Total nonperforming credit assets to loans and ORE 3.12% 3.27% 3.29% 3.62%
Total nonperforming assets to assets ratio 2.11% 2.13% 2.24% 2.44%
Allowance For Loan Loss Activity: (in thousands)
Beginning balance $17,492 $16,656 $15,310 $16,084
Provision for loan loss 1,280 1,980 1,980 2,280
Charge-offs (747) (1,584) (1,035) (3,460)
Recoveries 244 440 401 406
--- --- --- ---
Ending balance $18,269 $17,492 $16,656 $15,310
First M&F Corporation
Financial Highlights
QTD Ended QTD Ended QTD Ended QTD Ended
March 31 December 31 September 30 June 30
2013 2012 2012 2012
---- ---- ---- ----
Condensed Income Statements: (in thousands)
Interest income $14,401 $15,186 $15,625 $15,906
Interest expense 2,174 2,545 2,753 2,990
----- ----- ----- -----
Net interest income 12,227 12,641 12,872 12,916
Provision for loan losses 1,280 1,980 1,980 2,280
Noninterest revenues 5,702 5,735 5,607 6,035
Noninterest expenses 12,939 13,913 14,060 14,319
------ ------ ------ ------
Net income before taxes 3,710 2,483 2,439 2,352
Income tax expense 1,112 652 645 599
----- --- --- ---
Net income $2,598 $1,831 $1,794 $1,753
Preferred dividends (497) (488) (479) (471)
---- ---- ---- ----
Net income applicable to common stock 2,101 1,343 1,315 1,282
Earnings attributable to participating securities 81 53 51 56
--- --- --- ---
Net income allocated to common shareholders $2,020 $1,290 $1,264 $1,226
Tax-equivalent net interest income $12,458 $12,859 $13,088 $13,134
Selected Average Balances: (in thousands)
Assets $1,570,994 $1,585,467 $1,546,416 $1,577,420
Loans held for investment 977,198 982,894 984,282 973,545
Earning assets 1,431,054 1,436,348 1,396,824 1,420,370
Deposits 1,369,784 1,381,667 1,343,559 1,379,716
Equity 119,209 117,529 115,544 112,466
Common equity 100,171 98,837 97,186 94,430
Selected Ratios:
Return on average assets (annualized) 0.67% 0.46% 0.46% 0.45%
Return on average equity (annualized) (a) 8.84% 6.19% 6.18% 6.27%
Return on average common equity (annualized) (a) 8.51% 5.40% 5.38% 5.46%
Average equity to average assets 7.59% 7.41% 7.47% 7.13%
Tangible equity to tangible assets (b) 7.55% 7.15% 7.28% 7.04%
Tangible common equity to tangible assets (b) 6.31% 5.97% 6.08% 5.87%
Net interest margin (annualized, tax-equivalent) 3.53% 3.56% 3.73% 3.72%
Efficiency ratio (c) 71.25% 74.83% 75.21% 74.70%
Net charge-offs to average loans (annualized) 0.21% 0.46% 0.26% 1.26%
Nonaccrual loans to total loans 0.72% 0.75% 0.62% 0.64%
90 day accruing loans to total loans 0.03% 0.03% 0.04% 0.15%
Price to book 1.29x 0.65x 0.69x 0.50x
Price to earnings 16.08x 12.46x 13.25x 9.25x
First M&F Corporation
Financial Highlights
Historical Earnings Trends: Earnings Earnings
Applicable to Allocated to
Common Common
Earnings Stock Shareholders EPS
(in thousands) (in thousands) (in thousands) (diluted)
------------- ------------- ------------- --------
1Q 2013 $2,598 $2,101 $2,020 $0.22
4Q 2012 1,831 1,343 1,290 0.14
3Q 2012 1,794 1,315 1,264 0.14
2Q 2012 1,753 1,282 1,226 0.14
1Q 2012 1,607 1,144 1,139 0.12
4Q 2011 987 533 530 0.05
3Q 2011 1,330 882 878 0.10
2Q 2011 1,106 666 661 0.07
1Q 2011 950 518 515 0.06
Revenue Statistics: Non-interest Non-interest
Revenues Revenues to Revenues to
Per FTE Ttl. Revenues Avg. Assets
(thousands) (percent) (percent)
---------- -------- --------
1Q 2013 $40.4 31.40% 1.47%
4Q 2012 40.2 30.85% 1.44%
3Q 2012 39.9 29.99% 1.44%
2Q 2012 41.1 31.48% 1.54%
1Q 2012 40.5 29.14% 1.36%
4Q 2011 39.0 31.48% 1.50%
3Q 2011 36.6 27.96% 1.30%
2Q 2011 36.6 25.88% 1.18%
1Q 2011 37.9 30.67% 1.43%
Expense Statistics: Non-interest
Expense to Efficiency
Avg. Assets Ratio
(percent) (percent) (c)
-------- -------------
1Q 2013 3.34% 71.25%
4Q 2012 3.49% 74.83%
3Q 2012 3.62% 75.21%
2Q 2012 3.65% 74.70%
1Q 2012 3.50% 75.18%
4Q 2011 3.82% 80.29%
3Q 2011 3.52% 75.76%
2Q 2011 3.59% 78.56%
1Q 2011 3.70% 79.26%
First M&F Corporation
Average Balance Sheets/Yields and Costs (tax-equivalent)
(In thousands with yields and costs annualized) QTD March 2013 QTD March 2012
-------------- --------------
Average Average
Balance Yield/Cost Balance Yield/Cost
------- ---------- ------- ----------
Interest bearing bank balances $76,526 0.31% $79,212 0.26%
Federal funds sold 10,000 0.24% 25,000 0.25%
Taxable investments (amortized cost) 309,373 1.61% 299,622 2.00%
Tax-exempt investments (amortized cost) 44,187 5.16% 34,969 5.83%
Loans held for sale 13,770 1.65% 22,729 3.06%
Loans held for investment 977,198 5.28% 983,800 5.80%
------- ---- ------- ----
Total earning assets 1,431,054 4.15% 1,445,332 4.57%
Non-earning assets 139,940 161,681
------- -------
Total average assets $1,570,994 $1,607,013
NOW $422,966 0.22% $419,260 0.46%
MMDA 212,106 0.18% 226,602 0.52%
Savings 118,719 0.80% 120,835 0.99%
Certificates of Deposit 361,037 1.08% 417,086 1.39%
Short-term borrowings 5,337 0.31% 5,054 0.48%
Other borrowings 66,173 4.01% 73,107 3.97%
------ ---- ------ ----
Total interest bearing liabilities 1,186,338 0.74% 1,261,944 1.03%
Non-interest bearing deposits 254,957 225,610
Non-interest bearing liabilities 10,490 8,714
Preferred equity 19,038 17,720
Common equity 100,171 93,025
------- ------
Total average liabilities and equity $1,570,994 $1,607,013
Net interest spread 3.41% 3.54%
Effect of non-interest bearing deposits 0.13% 0.16%
Effect of leverage -0.01% -0.03%
----- -----
Net interest margin, tax-equivalent 3.53% 3.67%
Less tax equivalent adjustment:
Investments 0.05% 0.05%
Loans 0.01% 0.01%
---- ----
Reported book net interest margin 3.47% 3.61%
First M&F Corporation
Notes to Financial Schedules
(a) Return on equity is calculated as: (Net income attributable to First M&F Corp) divided by (Total equity)
Return on common equity is calculated as: (Net income attributable to First M&F Corp minus preferred dividends) divided by
(Total First M&F Corp equity minus preferred stock)
(b) Tangible equity to tangible assets is calculated as: (Total equity minus goodwill and other intangible assets) divided by
(Total assets minus goodwill and other intangible assets)
Tangible common equity to tangible assets is calculated as: (Total First M&F Corp equity minus preferred stock minus
goodwill and other intangible assets) divided by (Total assets minus goodwill and other intangible assets)
(c) Efficiency ratio is calculated as: (Noninterest expense) divided by (Tax-equivalent net interest income plus
noninterest revenues)
SOURCE First M&F Corp.
