FIRST M & F CORPORATION 
By KOSCIUSKO, Miss., July 19, 2013 /PRNewswire/ -- First M&F Corp. (NASDAQ: FMFC) reported today a net profit for the quarter ended June 30, 2013 of $2.205 million. Net income for the quarter applicable to common stock was $1.698 million, or $0.18 basic and $0.17 diluted earnings per share, compared to the first quarter of 2013 earnings applicable to common of $2.101 million, or $.22 basic and diluted earnings per share and earnings of $1.282 million, or $.14 basic and diluted earnings per share for the second quarter of 2012.
Hugh Potts, Jr., Chairman and CEO commented, "Once again, the performance of M&F is on track with our plans and expectations. Credit metrics continue to improve and the margin battle intensifies. Expenses are under control although merger-related expenses are starting to be felt. These are important issues, especially with our upcoming merger with Renasant Bank to be completed in the third quarter. With that merger, combined with recent performance, the M&F team continues to deliver to our shareholders increasing value and quality in their investment."
Net Interest Income
Reported net interest income was down by 4.54% on lower volumes compared to the second quarter of 2012, with the net interest margin falling to 3.58% on a tax equivalent basis in the second quarter of 2013 as compared to 3.72% in the second quarter of 2012. The net interest margin for the first quarter of 2013 was 3.53% as compared to 3.56% for the fourth quarter of 2012 and 3.73% for the third quarter of 2012. Loan yields fell to 5.21% in the second quarter of 2013 from 5.61% in the second quarter of 2012. Loan yields fell slightly from the first quarter of 2013 to the second quarter as well. Average loans were $.978 billion for the second quarter of 2013 as compared to $.991 billion for the first quarter of 2013 and $1.004 billion during the second quarter of 2012. Loans held for investment fell by $20.6 million in the second quarter of 2013 but grew by $12.2 million in the first quarter.
Deposit costs decreased in the second quarter of 2013 from the first quarter of 2013 and from the second quarter of 2012, in response to the continuing low rate environment. Deposit costs were .54% in the second quarter of 2013 as compared to .78% in the second quarter of 2012. Deposits grew by $13.4 million during the second quarter of 2013 and have grown by $4.9 million since the second quarter of 2012.
Loans held for investment as a percentage of assets were 63.27% at June 30, 2013 as compared to 62.93% at June 30, 2012 and 60.90% at December 31, 2012. Loans fell by 1.59% since the second quarter of 2012 and deposits grew by .36%.
Non-interest Income
Non-interest income, excluding securities transactions and impairment of investments, for the second quarter of 2013 fell by 46.2% compared to the second quarter of 2012, with deposit-related revenue down by 4.36%. Insurance agency commissions were up 3.77% quarter over quarter. The major contributors to the decrease in non-interest income were reduced mortgage income and the prepayment penalty realized upon the early retirement of Federal Home Loan Bank advances offset somewhat by securities gains taken as the investment portfolio was restructured in preparation for the upcoming merger. Mortgage origination and sale volumes were influenced by a fall in refinancing, partly affected by the rise in rates and due to merger-related turnover in the mortgage department. Mortgage income for the quarter was down 65.7% versus the year ago quarter and down 52% compared to the first quarter.
Non-interest Expenses
Non-interest expenses were down overall 12.43% in the second quarter of 2013 as compared to the second quarter of 2012 largely due to volume-related decreases in mortgage expenses supplemented by lower foreclosed property expenses and lower salaries and employee benefits. These reductions were somewhat offset by merger-related expenses of $.458 million, for accounting, legal and information technology charges. Mr. Potts pointed out that, "After tax net merger-related charges represented about $.04 per share in net earnings for the quarter."
Credit Quality
Annualized net loan charge-offs as a percent of average loans for the second quarter of 2013 were .09% as compared to 1.26% for the same period in 2012. Net charge-offs totaled $.218 million for the quarter versus $3.054 million a year ago and $.503 million in the first quarter of 2013. Non-accrual and 90-day past due loans as a percent of total loans were .64% at the end of the second quarter of 2013 as compared to .79% at the end of the 2012 quarter. The allowance for loan losses as a percentage of loans was 2.01% at June 30, 2013 as compared to 1.56% at June 30, 2012. The provision for loan losses was lower by 39.5% versus the year ago quarter as credit quality continued to improve.
Balance Sheet
Total assets at June 30, 2013 were $1.529 billion as compared to $1.602 billion at the end of 2012 and $1.561 billion at June 30, 2012. Total loans were $.967 billion compared to $.975 billion at the end of 2012 and $.983 billion at June 30, 2012. Deposits were $1.366 billion compared to $1.403 billion at the end of 2012 and $1.361 billion at June 30, 2012. Total capital was $117.278 million, or $10.58 in book value per common share, at June 30, 2013.
In summary Mr. Potts said, "First M&F had a good quarter and we'll be combining with Renasant on a high note. The decision to merge with Renasant, now approved by our shareholders, was driven by a prudent and thorough assessment of shareholder benefits. On our own, we were well on our way to achieving a return to growing value and high performance but shareholder patience, already taxed with the events of recent years, was a major factor in the decision."
In closing, Mr. Potts concluded, "As the current prices of First M&F and Renasant indicate, M&F shareholder value has largely been restored. Our shareholders can look to their investment in First M&F, and post-merger in Renasant, as an opportunity for even greater value and financial wherewithal. Looking back at M&F's long history, we can rest assured that there has been Divine guidance given to this company for 123 years. May the Lord continue to guide and bless us as we seek Him in humble reliance and trust. Thanks to our shareholders for the fellowship of shared objectives and a common destiny through this 123 year journey."
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)
June 30 December 31 June 30
2013 2012 2012
---- ---- ----
Cash and
due from
banks $49,568 $54,811 $37,147
Interest
bearing
bank
balances 133,333 94,313 20,708
Federal
funds
sold 10,000 10,000 6,750
Securities
available
for sale
(cost of
$277,588, $341,273 and $371,424) 273,553 348,562 377,670
Loans held
for sale 2,614 21,014 22,291
Loans 967,013 975,473 982,596
Allowance
for loan
losses 19,431 17,492 15,310
------ ------ ------
Net loans 947,582 957,981 967,286
Bank
premises
and
equipment 36,438 37,264 37,529
Accrued
interest
receivable 4,777 5,683 6,060
Other real
estate 22,571 25,970 31,077
Other
intangible
assets 3,946 4,159 4,373
Other
assets 44,128 41,926 50,605
------ ------ ------
Total
assets $1,528,510 $1,601,683 $1,561,496
========== ========== ==========
Non-
interest
bearing
deposits $304,734 $276,295 $236,145
Interest
bearing
deposits 1,061,474 1,126,380 1,125,193
--------- --------- ---------
Total
deposits 1,366,208 1,402,675 1,361,338
Federal
funds and
repurchase
agreements 1,994 3,720 3,224
Other
borrowings 2,792 36,007 40,333
Junior
subordinated
debt 30,928 30,928 30,928
Accrued
interest
payable 482 661 844
Other
liabilities 8,828 9,249 10,912
----- ----- ------
Total
liabilities 1,411,232 1,483,240 1,447,579
Preferred
stock,
30,000
shares
issued
and
outstanding 19,569 18,865 18,198
Common
stock,
9,236,479,
9,230,799
and
9,172,098
shares
issued &
outstanding 46,182 46,154 45,860
Additional
paid-in
capital 32,515 32,469 31,890
Nonvested
restricted
stock
awards 405 244 836
Retained
earnings 22,859 19,180 16,699
Accumulated
other
comprehensive
income
(loss) (4,252) 1,531 434
------ ----- ---
Total
equity 117,278 118,443 113,917
------- ------- -------
Total
liabilities
& equity $1,528,510 $1,601,683 $1,561,496
========== ========== ==========
First M&F Corporation and Subsidiary
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except share data)
Three Months Ended June
30 Six Months Ended June 30
2013 2012 2013 2012
---- ---- ---- ----
Interest and fees on
loans $12,652 $13,741 $25,350 $27,899
Interest on loans
held for sale 25 244 81 417
Taxable investments 1,338 1,563 2,569 3,053
Tax exempt
investments 348 319 700 637
Federal funds sold 6 11 12 26
Interest bearing
bank balances 40 28 98 79
--- --- --- ---
Total interest
income 14,409 15,906 28,810 32,111
Interest on deposits 1,452 2,233 2,968 4,746
Interest on fed
funds and
repurchase
agreements 2 5 6 11
Interest on other
borrowings 329 437 700 888
Interest on
subordinated debt 297 315 580 586
--- --- --- ---
Total interest
expense 2,080 2,990 4,254 6,231
Net interest income 12,329 12,916 24,556 25,880
Provision for
possible loan
losses 1,380 2,280 2,660 4,560
----- ----- ----- -----
Net interest income
after loan loss 10,949 10,636 21,896 21,320
Service charges on
deposits 2,437 2,548 4,808 5,005
Mortgage banking
income 619 1,806 1,910 2,373
Agency commission
income 880 848 1,700 1,677
Fiduciary and
brokerage income 203 163 363 303
Other income 618 673 1,662 1,510
Loss on
extinguishment of
debt (1,511) - (1,511) -
Other-than-temporary impairment on securities,
net of
$0, $4, $0, and $4 reclassified to other
comprehensive income - (4) - (4)
Gains on AFS
securities 1,378 1 1,394 592
----- --- ----- ---
Total noninterest
income 4,624 6,035 10,326 11,456
Salaries and
employee benefits 6,377 6,737 12,739 13,600
Net occupancy
expense 819 932 1,684 1,840
Equipment expenses 390 423 822 886
Software and
processing expenses 555 346 911 708
FDIC insurance
assessments 323 553 671 1,067
Foreclosed property
expenses 926 1,282 1,514 2,738
Intangible asset
amortization and
impairment 107 106 213 213
Other expenses 3,042 3,940 6,924 7,253
----- ----- ----- -----
Total noninterest
expense 12,539 14,319 25,478 28,305
Net income before
taxes 3,034 2,352 6,744 4,471
Income tax expense 829 599 1,941 1,111
--- --- ----- -----
Net income $2,205 $1,753 $4,803 $3,360
====== ====== ====== ======
Earnings Per Common Share Calculations:
Net income $2,205 $1,753 $4,803 $3,360
Dividends and
accretion on
preferred stock (507) (471) (1,004) (934)
---- ---- ------ ----
Net income
applicable to
common stock 1,698 1,282 3,799 2,426
Earnings
attributable to
participating
securities 65 56 146 61
Net income allocated
to common
shareholders $1,633 $1,226 $3,653 $2,365
====== ====== ====== ======
Weighted average
shares (basic) 9,234,452 9,164,576 9,232,963 9,160,526
Weighted average
shares (diluted) 9,445,769 9,164,576 9,403,561 9,160,526
Basic earnings per
share $0.18 $0.14 $0.40 $0.26
Diluted earnings per
share $0.17 $0.14 $0.39 $0.26
===== ===== ===== =====
First M&F Corporation
Financial Highlights
YTD Ended YTD Ended YTD Ended YTD Ended
June 30 December 31 June 30 December 31
2013 2012 2012 2011
---- ---- ---- ----
Performance Ratios:
Return on assets
(annualized) 0.62% 0.44% 0.42% 0.27%
Return on equity
(annualized) (a) 8.05% 6.12% 6.06% 4.00%
Return on common
equity (annualized)
(a) 7.58% 5.30% 5.21% 2.81%
Efficiency ratio (c) 72.09% 74.98% 74.94% 78.47%
Net interest margin
(annualized, tax-
equivalent) 3.55% 3.67% 3.69% 3.68%
Net charge-offs to
average loans
(annualized) 0.15% 0.61% 0.86% 1.05%
Nonaccrual loans to
total loans 0.62% 0.75% 0.64% 1.68%
90 day accruing
loans to total
loans 0.02% 0.03% 0.15% 0.06%
QTD Ended QTD Ended QTD Ended QTD Ended
June 30 March 31 December 31 September 30
2013 2013 2012 2012
---- ---- ---- ----
Per Common Share (diluted):
Net income $0.17 $0.22 $0.14 $0.14
Cash dividends paid 0.01 0.01 0.01 0.01
Book value 10.58 11.00 10.79 10.69
Closing stock price 15.81 14.15 6.98 7.42
Loan Portfolio Composition: (in thousands)
Commercial,
financial and
agricultural $145,411 $150,125 $153,550 $155,890
Non-residential
real estate 540,694 557,453 542,859 554,475
Residential real
estate 206,490 203,260 200,992 197,629
Home equity loans 38,340 39,047 37,736 37,196
Consumer loans 36,078 37,772 40,336 42,137
------ ------ ------ ------
Total loans $967,013 $987,657 $975,473 $987,327
Deposit Composition: (in thousands)
Noninterest-bearing
deposits $304,734 $252,453 $276,295 $233,684
NOW deposits 404,457 419,376 423,461 386,371
MMDA deposits 200,839 207,931 214,091 216,620
Savings deposits 119,583 119,728 118,123 117,404
Core certificates of
deposit under
$100,000 176,722 182,245 188,733 201,361
Core certificates of
deposit $100,000
and over 148,734 159,913 165,979 177,084
Brokered
certificates of
deposit under
$100,000 3,305 3,295 3,549 3,417
Brokered
certificates of
deposit $100,000
and over 7,834 7,834 12,444 13,533
----- ----- ------ ------
Total deposits $1,366,208 $1,352,775 $1,402,675 $1,349,474
Nonperforming Assets: (in thousands)
Nonaccrual loans $6,036 $7,277 $7,444 $6,219
Other real estate 22,571 24,820 25,970 28,002
Investment
securities 679 604 733 644
--- --- --- ---
Total nonperforming
assets $29,286 $32,701 $34,147 $34,865
Accruing loans past
due 90 days or more $186 $268 $321 $408
Restructured loans
(accruing) $6,209 $21,657 $21,800 $16,784
Total nonaccrual
loan to loans 0.62% 0.72% 0.75% 0.62%
Total nonperforming
credit assets to
loans and ORE 2.88% 3.12% 3.27% 3.29%
Total nonperforming
assets to assets
ratio 1.92% 2.11% 2.13% 2.24%
Allowance For Loan Loss Activity: (in thousands)
Beginning balance $18,269 $17,492 $16,656 $15,310
Provision for loan
loss 1,380 1,280 1,980 1,980
Charge-offs (569) (747) (1,584) (1,035)
Recoveries 351 244 440 401
--- --- --- ---
Ending balance $19,431 $18,269 $17,492 $16,656
First M&F Corporation
Financial Highlights
QTD Ended QTD Ended QTD Ended QTD Ended
June 30 March 31 December 31 September 30
2013 2013 2012 2012
---- ---- ---- ----
Condensed Income Statements: (in thousands)
Interest income $14,409 $14,401 $15,186 $15,625
Interest expense 2,080 2,174 2,545 2,753
----- ----- ----- -----
Net interest income 12,329 12,227 12,641 12,872
Provision for loan
losses 1,380 1,280 1,980 1,980
Noninterest revenues 4,624 5,702 5,735 5,607
Noninterest expenses 12,539 12,939 13,913 14,060
------ ------ ------ ------
Net income before
taxes 3,034 3,710 2,483 2,439
Income tax expense 829 1,112 652 645
--- ----- --- ---
Net income $2,205 $2,598 $1,831 $1,794
Preferred dividends (507) (497) (488) (479)
---- ---- ---- ----
Net income
applicable to
common stock 1,698 2,101 1,343 1,315
Earnings
attributable to
participating
securities 65 81 53 51
--- --- --- ---
Net income allocated
to common
shareholders $1,633 $2,020 $1,290 $1,264
Tax-equivalent net
interest income $12,557 $12,458 $12,859 $13,088
Selected Average Balances: (in thousands)
Assets $1,543,020 $1,570,994 $1,585,467 $1,546,416
Loans held for
investment 973,160 977,198 982,894 984,282
Earning assets 1,408,023 1,431,054 1,436,348 1,396,824
Deposits 1,345,703 1,369,784 1,381,667 1,343,559
Equity 121,328 119,209 117,529 115,544
Common equity 101,940 100,171 98,837 97,186
Selected Ratios:
Return on average
assets (annualized) 0.57% 0.67% 0.46% 0.46%
Return on average
equity (annualized)
(a) 7.29% 8.84% 6.19% 6.18%
Return on average
common equity
(annualized) (a) 6.68% 8.51% 5.40% 5.38%
Average equity to
average assets 7.86% 7.59% 7.41% 7.47%
Tangible equity to
tangible assets
(b) 7.43% 7.55% 7.15% 7.28%
Tangible common
equity to tangible
assets (b) 6.15% 6.31% 5.97% 6.08%
Net interest margin
(annualized, tax-
equivalent) 3.58% 3.53% 3.56% 3.73%
Efficiency ratio (c) 72.99% 71.25% 74.83% 75.21%
Net charge-offs to
average loans
(annualized) 0.09% 0.21% 0.46% 0.26%
Nonaccrual loans to
total loans 0.62% 0.72% 0.75% 0.62%
90 day accruing
loans to total
loans 0.02% 0.03% 0.03% 0.04%
Price to book 1.49x 1.29x 0.65x 0.69x
Price to earnings 23.25x 16.08x 12.46x 13.25x
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)
------------- ------------- ------------- --------
2Q
2013 $2,205 $1,698 $1,633 $0.17
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
Revenue
Statistics: Non-interest Non-interest
Revenues Revenues to Revenues to
Per FTE Ttl. Revenues Avg. Assets
(thousands) (percent) (percent)
---------- -------- --------
2Q
2013 $40.3 26.91% 1.20%
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%
Expense
Statistics: Non-interest
Expense to Efficiency
Avg. Assets Ratio
(percent) (percent) (c)
-------- -------------
2Q
2013 3.26% 72.99%
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%
First M&F Corporation
Average Balance Sheets/Yields and Costs (tax-equivalent)
(In thousands with yields and costs annualized) QTD June 2013 QTD June 2012
------------- -------------
Average Average
Balance Yield/Cost Balance Yield/Cost
------- ---------- ------- ----------
Interest bearing bank balances $61,978 0.26% $30,923 0.37%
Federal funds sold 10,000 0.25% 15,082 0.27%
Taxable investments (amortized cost) 313,887 1.71% 333,794 1.88%
Tax-exempt investments (amortized cost) 44,109 5.04% 36,610 5.59%
Loans held for sale 4,889 2.08% 30,416 3.22%
Loans held for investment 973,160 5.22% 973,545 5.69%
------- ---- ------- ----
Total earning assets 1,408,023 4.17% 1,420,370 4.57%
Non-earning assets 134,997 157,050
------- -------
Total average assets $1,543,020 $1,577,420
NOW $411,929 0.23% $404,958 0.43%
MMDA 200,444 0.18% 217,533 0.37%
Savings 120,227 0.76% 121,778 0.95%
Certificates of Deposit 345,147 1.04% 402,703 1.31%
Short-term borrowings 2,862 0.20% 2,974 0.62%
Other borrowings 62,062 4.05% 71,771 4.21%
------ ---- ------ ----
Total interest bearing liabilities 1,142,671 0.73% 1,221,717 0.98%
Non-interest bearing deposits 267,956 232,744
Non-interest bearing liabilities 11,065 10,493
Preferred equity 19,388 18,036
Common equity 101,940 94,430
------- ------
Total average liabilities and equity $1,543,020 $1,577,420
Net interest spread 3.44% 3.59%
Effect of non-interest bearing deposits 0.14% 0.16%
Effect of leverage 0.00% -0.03%
---- -----
Net interest margin, tax-equivalent 3.58% 3.72%
Less tax equivalent adjustment:
Investments 0.06% 0.05%
Loans 0.01% 0.01%
---- ----
Reported book net interest margin 3.51% 3.66%
First M&F Corporation
Average Balance Sheets/Yields and Costs (tax-equivalent)
(In thousands with yields and costs annualized) YTD June 2013 YTD June 2012
------------- -------------
Average Average
Balance Yield/Cost Balance Yield/Cost
------- ---------- ------- ----------
Interest bearing bank balances $69,212 0.29% $55,067 0.29%
Federal funds sold 10,000 0.25% 20,041 0.26%
Taxable investments (amortized cost) 311,642 1.66% 316,708 1.94%
Tax-exempt investments (amortized cost) 44,148 5.10% 35,790 5.71%
Loans held for sale 9,305 1.76% 26,573 3.15%
Loans held for investment 975,168 5.25% 978,672 5.74%
------- ---- ------- ----
Total earning assets 1,419,475 4.16% 1,432,851 4.57%
Non-earning assets 137,455 159,365
------- -------
Total average assets $1,556,930 $1,592,216
NOW $417,417 0.23% $412,108 0.45%
MMDA 206,242 0.18% 222,067 0.45%
Savings 119,477 0.78% 121,307 0.97%
Certificates of Deposit 353,048 1.06% 409,895 1.35%
Short-term borrowings 4,093 0.27% 4,014 0.53%
Other borrowings 64,107 4.03% 72,439 4.09%
------ ---- ------ ----
Total interest bearing liabilities 1,164,384 0.74% 1,241,830 1.01%
Non-interest bearing deposits 261,493 229,177
Non-interest bearing liabilities 10,779 9,603
Preferred equity 19,214 17,878
Common equity 101,060 93,728
------- ------
Total average liabilities and equity $1,556,930 $1,592,216
Net interest spread 3.42% 3.56%
Effect of non-interest bearing deposits 0.14% 0.16%
Effect of leverage -0.01% -0.03%
----- -----
Net interest margin, tax-equivalent 3.55% 3.69%
Less tax equivalent adjustment:
Investments 0.06% 0.05%
Loans 0.01% 0.01%
---- ----
Reported book net interest margin 3.49% 3.63%
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SOURCE First M&F Corporation
