FIRST M & F CORPORATION 
By KOSCIUSKO, Miss., Jan. 25, 2013 /PRNewswire/ -- First M&F Corp. (NASDAQ: FMFC) today reported 2012 net income of $6.985 million as compared to a net income of $4.373 million for 2011, a 59.7% percent increase. Earnings allocated to common shareholders were $4.919 million, or $0.54 basic and diluted earnings per share, compared to earnings of $2.584 million, or $.28 basic and diluted earnings per share for 2011. "Our management team is gratified and proud to announce a 93% improvement in common earnings per share. From virtually every perspective the M&F Team has led the Company to a much improved performance," said Hugh S. Potts, Jr., Chairman and CEO.
Net income for the quarter ended December 31, 2012 was $1.290 million allocated to common shareholders, or $.14 basic and diluted earnings per share, compared to $.530 million, or $.05 basic and diluted earnings per share for the fourth quarter of 2011.
For the fourth quarter of 2012 the annualized return on assets was 0.46%, while return on common equity was 5.40%. Comparatively, the return on assets for the fourth quarter of 2011 was 0.25%, with a return on common equity of 2.27%. The return on assets for 2012 was 0.44%, while the return on common equity was 5.30%.
Mr. Potts continued, "At the risk of a noticeable repetition, we must report that our credit trends are continuing the improvement began during the depths of the current credit cycle. These trends in credit improvement are foundational to M&F's improved earnings." At year-end 2012 nonaccrual loans to total loans improved to 0.75% from 1.68% at the end of 2011.
Net Interest Income
Net interest income for the quarter was flat compared to the fourth quarter of 2011, with the net interest margin falling to 3.56% in the fourth quarter of 2012 as compared to 3.64% in the fourth quarter of 2011. The net interest margin for the third quarter of 2012 was 3.73% as compared to 3.72% for the second quarter of 2012 and 3.67% for the first quarter of 2012 as spreads began to narrow late in the year. Loan yields decreased to 5.37% in the fourth quarter of 2012 from 5.74% in the fourth quarter of 2011. Loan yields fell from the third quarter of 2012 to the fourth quarter. Average loans were $1.008 billion for the fourth quarter of 2012 showing virtually no change since the third quarter also averaged $1.007 billion and average loans were $1.014 billion during the fourth quarter of 2011. Loans held for investment fell by $11.854 million in the fourth quarter of 2012 and grew by $4.731 million in the third quarter as loan demand, though somewhat robust, was offset by pay-offs and competitive pressures.
Deposit costs fell in the fourth quarter of 2012 from the third quarter of 2012 and from the fourth quarter of 2011, as deposits were re-priced downward throughout 2012 in the current stable low-rate environment, continuing a trend beginning in the fourth quarter of 2007. Interest-bearing deposit costs were 0.66% in the fourth quarter of 2012 as compared to 1.01% in the fourth quarter of 2011. Deposits grew by $53.201 million during the fourth quarter of 2012. Management continues to emphasize and focus on core deposit growth by developing and promoting relationship-driven deposit gathering while de-emphasizing non-core deposit funding. Loans held for investment as a percentage of assets were 60.90% at December 31, 2012 as compared to 63.52% at December 31, 2011 and 63.57% at September 30, 2012.
Non-interest Income
Non-interest income, excluding securities transactions and other-than-temporary impairment on securities, for the fourth quarter of 2012 was up by 7.49% compared to the fourth quarter of 2011, with deposit-related income down by 2.08% and mortgage income up 154.69% on higher volumes. For the year, mortgage income was up 191.27%, as the department took advantage of growing refinancing trends and built a wholesale delivery channel to supplement retail efforts. Other income in the year ago quarter had been bolstered by gains realized on the sale of closed branches. Insurance agency commissions were up only 1.25%.
Non-interest income, excluding securities transactions and other-than-temporary impairment on securities, was up 14.58% for 2012 versus 2011. Over half of non-interest income is from deposit sources, which was virtually flat, only down 1.10% year over year. Deposit revenues continue to be supported by debit card fee income, which continue to grow and which increased by 11.17% in the fourth quarter of 2012 over the year-ago quarter, and overdraft fee income, which, however, decreased by 8.59% quarter over quarter.
Non-interest Expenses
Non-interest expenses were lower by 7.72% in the fourth quarter of 2012 as compared to the fourth quarter of 2011. Salaries and benefits for the quarter were lower by 7.42% compared to the year-ago quarter and both Occupancy and Equipment expenses were down as well, mostly reflecting the cost savings effects of Project McKinley. As Other Real Estate assets are disposed of and as the preponderance of properties are raw or subdivided land, and as appraised values somewhat stabilize, carrying costs and write downs trend downward. Quarter over quarter Foreclosed property expense declined 37.86% and year over year by 29.45%. Most of the increase in Other Expenses was due to volume-related mortgage expenses.
The number of full-time equivalent employees for the fourth quarter of 2012 averaged 463 as compared to 469 for the third quarter of 2012 and 482 for the fourth quarter of 2011.
Credit Quality
Annualized net loan charge-offs as a percent of average loans for the fourth quarter of 2012 were 0.46% as compared to 1.37% for the same period in 2011. Non-accrual and 90-day past due loans as a percent of total loans were 0.78% for the last quarter of 2012 as compared to 1.74% at the end of 2011. Annualized net charge-offs as a percentage of average loans for 2012 were 0.61% as compared to 1.05% for 2011. The allowance for loan losses as a percentage of loans was 1.79% at December 31, 2012 as compared to 1.50% at December 31, 2011. The provision for loan losses fell in 2012 from $9.720 million in 2011 to $8.520 million in 2012 as charge-offs, new nonaccruals and new loan impairments all continued to wane.
Balance Sheet
Total assets grew by 2.11% in 2012, to $1.602 billion from $1.569 billion. Total equity grew to $118.443 million, an 8.07% increase from 2011. Total loans held for investment were $.975 billion compared to $.996 billion at the end of 2011. Deposits were $1.403 billion compared to $1.371 billion at the end of 2011. Book value per common share increased to $10.79 per share at the end of 2012, a 7.36% increase from 2011.
Conclusion
Mr. Potts commented, "The heavy clouds and darkness of 2008 and 2009 have lifted as rays of less ominous circumstances break through. On the horizon remain the specter of regulation, international tension and an avalanche of government influence upon a very tenuous economy." In conclusion, Mr. Potts stated, "Credit quality has led M&F's earnings surge and will continue to contribute in the short and mid-term to improving earnings. Another bright spot has been our mortgage operation as originations, mostly from refinancing, have grown dramatically. We expect overall improved performance to continue in 2013."
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)
December 31 December 31
2012 2011
---- ----
Cash and due from
banks $54,811 $39,976
Interest bearing
bank balances 94,313 39,391
Federal funds
sold 10,000 25,000
Securities
available for
sale (cost of
$341,273 and $315,890) 348,562 320,774
Loans held for
sale 21,014 26,073
Loans 975,473 996,340
Allowance for
loan losses 17,492 14,953
------ ------
Net loans 957,981 981,387
Bank premises and
equipment 37,264 37,989
Accrued interest
receivable 5,683 6,122
Other real estate 25,970 36,952
Other intangible
assets 4,159 4,586
Other assets 41,926 50,401
------ ------
Total assets $1,601,683 $1,568,651
========== ==========
Non-interest
bearing deposits $276,295 $231,718
Interest bearing
deposits 1,126,380 1,139,745
--------- ---------
Total deposits 1,402,675 1,371,463
Federal funds and
repurchase
agreements 3,720 4,398
Other borrowings 36,007 43,001
Junior
subordinated
debt 30,928 30,928
Accrued interest
payable 661 1,023
Other liabilities 9,249 8,242
----- -----
Total liabilities 1,483,240 1,459,055
Preferred stock,
30,000 shares
issued and
outstanding 18,866 17,564
Common stock,
9,230,799 and
9,154,936
shares issued &
outstanding 46,154 45,775
Additional paid-
in capital 32,469 31,895
Nonvested
restricted stock
awards 244 674
Retained earnings 19,179 14,456
Accumulated other
comprehensive
income (loss) 1,531 (768)
----- ----
Total equity 118,443 109,596
------- -------
Total liabilities
& equity $1,601,683 $1,568,651
========== ==========
First M&F Corporation and Subsidiary
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except share data)
Three Months Ended December 31 Twelve Months Ended December 31
2012 2011 2012 2011
---- ---- ---- ----
Interest and fees on loans $13,409 $14,482 $55,005 $60,201
Interest on loans held for sale 188 154 767 275
Taxable investments 1,208 1,297 5,682 6,745
Tax exempt investments 330 318 1,292 1,252
Federal funds sold 4 16 30 63
Interest bearing bank balances 47 38 146 179
--- --- --- ---
Total interest income 15,186 16,305 62,922 68,715
Interest on deposits 1,849 2,897 8,627 13,501
Interest on fed funds and repurchase agreements 5 6 21 36
Interest on other borrowings 393 467 1,704 1,979
Interest on subordinated debt 298 292 1,177 1,335
--- --- ----- -----
Total interest expense 2,545 3,662 11,529 16,851
Net interest income 12,641 12,643 51,393 51,864
Provision for possible loan losses 1,980 2,280 8,520 9,720
----- ----- ----- -----
Net interest income after loan loss 10,661 10,363 42,873 42,144
Service charges on deposits 2,586 2,641 10,180 10,293
Mortgage banking income 1,574 618 5,304 1,821
Agency commission income 808 798 3,486 3,636
Fiduciary and brokerage income 170 153 587 584
Other income 605 1,133 2,713 3,102
Other-than-temporary impairment on securities, net of
$0, $49, $21 and $263 reclassified to/from other
comprehensive income - (50) (29) (631)
Gains (losses) on AFS securities (8) 619 557 2,769
--- --- --- -----
Total noninterest income 5,735 5,912 22,798 21,574
Salaries and employee benefits 6,387 6,899 26,887 28,469
Net occupancy expense 797 1,003 3,554 3,935
Equipment expenses 418 479 1,726 1,871
Software and processing expenses 366 378 1,428 1,540
FDIC insurance assessments 511 530 1,911 2,426
Foreclosed property expenses 1,272 2,047 5,186 7,351
Intangible asset amortization and impairment 107 107 427 427
Other expenses 4,055 3,634 15,159 12,315
----- ----- ------ ------
Total noninterest expense 13,913 15,077 56,278 58,334
Net income before taxes 2,483 1,198 9,393 5,384
Income tax expense 652 211 2,408 1,011
--- --- ----- -----
Net income $1,831 $987 $6,985 $4,373
====== ==== ====== ======
Earnings Per Common Share Calculations:
Net income $1,831 $987 $6,985 $4,373
Dividends and accretion on preferred stock (488) (454) (1,901) (1,774)
---- ---- ------ ------
Net income applicable to common stock 1,343 533 5,084 2,599
Earnings attributable to participating securities 53 3 165 15
Net income allocated to common shareholders $1,290 $530 $4,919 $2,584
====== ==== ====== ======
Weighted average shares (basic) 9,216,746 9,145,108 9,181,012 9,126,605
Weighted average shares (diluted) 9,218,990 9,145,108 9,182,034 9,126,605
Basic earnings per share $0.14 $0.05 $0.54 $0.28
Diluted earnings per share $0.14 $0.05 $0.54 $0.28
===== ===== ===== =====
First M&F Corporation
Financial Highlights
YTD Ended YTD Ended
December 31 December 31
2012 2011
---- ----
Performance Ratios:
Return on assets (annualized) 0.44% 0.27%
Return on equity (annualized) (a) 6.12% 4.00%
Return on common equity (annualized) (a) 5.30% 2.81%
Efficiency ratio (c) 74.98% 78.47%
Net interest margin (annualized, tax-equivalent) 3.67% 3.68%
Net charge-offs to average loans (annualized) 0.61% 1.05%
Nonaccrual loans to total loans 0.75% 1.68%
90 day accruing loans to total loans 0.03% 0.06%
QTD Ended QTD Ended QTD Ended QTD Ended
December 31 September 30 June 30 March 31
2012 2012 2012 2012
---- ---- ---- ----
Per Common Share (diluted):
Net income $0.14 $0.14 $0.14 $0.12
Cash dividends paid 0.01 0.01 0.01 0.01
Book value 10.79 10.69 10.44 10.20
Closing stock price 6.98 7.42 5.18 4.80
Loan Portfolio Composition: (in thousands)
Commercial, financial and agricultural $153,549 $155,890 $147,773 $144,319
Non-residential real estate 542,860 554,475 567,184 568,811
Residential real estate 200,992 197,629 189,927 188,891
Home equity loans 37,736 37,196 36,183 36,098
Consumer loans 40,336 42,137 41,529 41,376
------ ------ ------ ------
Total loans $975,473 $987,327 $982,596 $979,495
Deposit Composition: (in thousands)
Noninterest-bearing deposits $276,295 $233,684 $236,145 $238,603
NOW deposits 423,461 386,371 391,726 421,249
MMDA deposits 214,091 216,620 211,447 222,016
Savings deposits 118,123 117,404 116,598 121,872
Core certificates of deposit under $100,000 188,733 201,361 208,684 213,944
Core certificates of deposit $100,000 and over 165,979 177,084 178,926 176,761
Brokered certificates of deposit under $100,000 3,549 3,417 3,393 3,234
Brokered certificates of deposit $100,000 and over 12,444 13,533 14,419 12,829
------ ------ ------ ------
Total deposits $1,402,675 $1,349,474 $1,361,338 $1,410,508
Nonperforming Assets: (in thousands)
Nonaccrual loans $7,444 $6,219 $6,443 $14,604
Other real estate 25,970 28,002 31,077 34,636
Investment securities 733 644 639 646
--- --- --- ---
Total nonperforming assets $34,147 $34,865 $38,159 $49,886
Accruing loans past due 90 days or more $321 $408 $1,537 $245
Restructured loans (accruing) $21,800 $16,784 $18,372 $19,077
Total nonaccrual loan to loans 0.75% 0.62% 0.64% 1.45%
Total nonperforming credit assets to loans and ORE 3.27% 3.29% 3.62% 4.72%
Total nonperforming assets to assets ratio 2.13% 2.24% 2.44% 3.10%
Allowance For Loan Loss Activity: (in thousands)
Beginning balance $16,656 $15,310 $16,084 $14,953
Provision for loan loss 1,980 1,980 2,280 2,280
Charge-offs (1,584) (1,035) (3,460) (2,061)
Recoveries 440 401 406 912
--- --- --- ---
Ending balance $17,492 $16,656 $15,310 $16,084
First M&F Corporation
Financial Highlights
QTD Ended QTD Ended QTD Ended QTD Ended
December 31 September 30 June 30 March 31
2012 2012 2012 2012
---- ---- ---- ----
Condensed Income Statements: (in thousands)
Interest income $15,186 $15,625 $15,906 $16,205
Interest expense 2,545 2,753 2,990 3,241
----- ----- ----- -----
Net interest income 12,641 12,872 12,916 12,964
Provision for loan losses 1,980 1,980 2,280 2,280
Noninterest revenues 5,735 5,607 6,035 5,421
Noninterest expenses 13,913 14,060 14,319 13,986
------ ------ ------ ------
Net income before taxes 2,483 2,439 2,352 2,119
Income tax expense 652 645 599 512
--- --- --- ---
Net income $1,831 $1,794 $1,753 $1,607
Preferred dividends (488) (479) (471) (463)
---- ---- ---- ----
Net income applicable to common stock 1,343 1,315 1,282 1,144
Earnings attributable to participating securities 53 51 56 5
--- --- --- ---
Net income allocated to common shareholders $1,290 $1,264 $1,226 $1,139
Tax-equivalent net interest income $12,859 $13,088 $13,134 $13,181
Selected Average Balances: (in thousands)
Assets $1,585,467 $1,546,416 $1,577,420 $1,607,013
Loans held for investment 982,894 984,282 973,545 983,800
Earning assets 1,436,348 1,396,824 1,420,370 1,445,332
Deposits 1,381,667 1,343,559 1,379,716 1,409,393
Equity 117,529 115,544 112,466 110,745
Common equity 98,837 97,186 94,430 93,025
Selected Ratios:
Return on average assets (annualized) 0.46% 0.46% 0.45% 0.40%
Return on average equity (annualized) (a) 6.19% 6.18% 6.27% 5.84%
Return on average common equity (annualized) (a) 5.40% 5.38% 5.46% 4.95%
Average equity to average assets 7.41% 7.47% 7.13% 6.89%
Tangible equity to tangible assets (b) 7.15% 7.28% 7.04% 6.67%
Tangible common equity to tangible assets (b) 5.97% 6.08% 5.87% 5.55%
Net interest margin (annualized, tax-equivalent) 3.56% 3.73% 3.72% 3.67%
Efficiency ratio (c) 74.83% 75.21% 74.70% 75.18%
Net charge-offs to average loans (annualized) 0.46% 0.26% 1.26% 0.47%
Nonaccrual loans to total loans 0.75% 0.62% 0.64% 1.45%
90 day accruing loans to total loans 0.03% 0.04% 0.15% 0.02%
Price to book 0.65x 0.69x 0.50x 0.47x
Price to earnings 12.46x 13.25x 9.25x 10.00x
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)
------------- ------------- ------------- --------
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
4Q 2010 641 266 267 0.03
Revenue
Statistics: Non-interest Non-interest
Revenues Revenues to Revenues to
Per FTE Ttl. Revenues Avg. Assets
(thousands) (percent) (percent)
---------- -------- --------
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%
4Q 2010 35.4 28.19% 1.25%
Expense
Statistics: Non-interest
Expense to Efficiency
Avg. Assets Ratio
(percent) (percent) (c)
-------- -------------
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%
4Q 2010 3.69% 83.22%
First M&F
Corporation
Average Balance Sheets/Yields and Costs (tax-
equivalent)
(In thousands
with yields
and costs
annualized) QTD December 2012 QTD December 2011
----------------- -----------------
Average Average
Balance Yield/Cost Balance Yield/Cost
------- ---------- ------- ----------
Interest
bearing bank
balances $80,925 0.23% $44,653 0.33%
Federal funds
sold 5,707 0.26% 25,000 0.25%
Taxable
investments
(amortized
cost) 303,164 1.59% 283,986 1.81%
Tax-exempt
investments
(amortized
cost) 38,464 5.45% 33,923 5.94%
Loans held for
sale 25,194 2.98% 20,517 2.98%
Loans held for
investment 982,894 5.44% 993,869 5.79%
------- ---- ------- ----
Total earning
assets 1,436,348 4.27% 1,401,948 4.68%
Non-earning
assets 149,119 162,583
------- -------
Total average
assets $1,585,467 $1,564,531
NOW $392,825 0.34% $369,789 0.47%
MMDA 220,774 0.24% 186,898 0.62%
Savings 118,852 0.89% 118,833 1.05%
Certificates of
Deposit 383,291 1.16% 459,182 1.60%
Short-term
borrowings 3,447 0.57% 4,809 0.53%
Other
borrowings 67,996 4.05% 74,431 4.04%
------ ---- ------ ----
Total interest
bearing
liabilities 1,187,185 0.85% 1,213,942 1.20%
Non-interest
bearing
deposits 265,925 231,926
Non-interest
bearing
liabilities 14,828 8,180
Preferred
equity 18,692 17,406
Common equity 98,837 93,077
------ ------
Total average
liabilities
and equity $1,585,467 $1,564,531
Net interest
spread 3.42% 3.48%
Effect of non-
interest
bearing
deposits 0.16% 0.19%
Effect of
leverage -0.02% -0.03%
----- -----
Net interest
margin, tax-
equivalent 3.56% 3.64%
Less tax
equivalent
adjustment:
Investments 0.05% 0.05%
Loans 0.01% 0.01%
---- ----
Reported book
net interest
margin 3.50% 3.58%
First M&F
Corporation
Average Balance Sheets/Yields and Costs (tax-
equivalent)
(In thousands
with yields
and costs
annualized) YTD December 2012 YTD December 2011
----------------- -----------------
Average Average
Balance Yield/Cost Balance Yield/Cost
------- ---------- ------- ----------
Interest
bearing bank
balances $54,808 0.27% $70,998 0.25%
Federal funds
sold 11,566 0.26% 25,000 0.25%
Taxable
investments
(amortized
cost) 314,889 1.80% 265,446 2.54%
Tax-exempt
investments
(amortized
cost) 37,004 5.57% 33,390 5.98%
Loans held for
sale 25,264 3.04% 8,566 3.21%
Loans held for
investment 981,143 5.62% 1,032,137 5.85%
------- ---- --------- ----
Total earning
assets 1,424,674 4.48% 1,435,537 4.85%
Non-earning
assets 154,333 158,747
------- -------
Total average
assets $1,579,007 $1,594,284
NOW $400,215 0.40% $389,052 0.63%
MMDA 218,041 0.35% 172,978 0.72%
Savings 119,741 0.95% 117,686 1.12%
Certificates of
Deposit 401,097 1.27% 489,199 1.73%
Short-term
borrowings 4,017 0.53% 10,855 0.33%
Other
borrowings 70,818 4.07% 76,923 4.31%
------ ---- ------ ----
Total interest
bearing
liabilities 1,213,929 0.95% 1,256,693 1.34%
Non-interest
bearing
deposits 239,402 220,369
Non-interest
bearing
liabilities 11,592 7,852
Preferred
equity 18,203 16,967
Common equity 95,881 92,403
------ ------
Total average
liabilities
and equity $1,579,007 $1,594,284
Net interest
spread 3.53% 3.51%
Effect of non-
interest
bearing
deposits 0.16% 0.20%
Effect of
leverage -0.02% -0.03%
----- -----
Net interest
margin, tax-
equivalent 3.67% 3.68%
Less tax
equivalent
adjustment:
Investments 0.05% 0.05%
Loans 0.01% 0.02%
---- ----
Reported book
net interest
margin 3.61% 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.
