FIRST M & F CORPORATION 
By KOSCIUSKO, Miss., April 19, 2012 /PRNewswire/ -- First M&F Corp. (NASDAQ: FMFC) reported a profit today for the first quarter ended March 31, 2012 of $1.607 million. Net income allocated to common shareholders was $1.139 million or $0.12 basic and diluted earnings per share compared to a profit of $515,000 or $0.06 basic and diluted earnings per share for the first quarter of 2011. Hugh S. Potts, Jr., CEO and Chairman of the Board, commented, "We believe the focus, patience and persistence of the M&F Team are now contributing to greatly improved performance with upside potential still available."
Net Interest Income
Net interest income was up slightly by 1.88% compared to the first quarter of 2011, with the net interest margin increasing to 3.67% on a tax equivalent basis in the first quarter of 2012 as compared to 3.59% in the first quarter of 2011. The most significant contributor to the increase in net interest income was the increase in net interest spread as deposits continued to be re-priced lower in the continuing low rate environment. Mr. Potts commented, "What was already a tough margin battle has intensified as rates remain low and loan growth, competitively, remains a challenge."
The net interest margin for the fourth quarter of 2011 was 3.64% as compared to 3.72% for the third quarter of 2011 and 3.75% for the second quarter of 2011. Loans Held for Investment yields decreased to 5.80% in the first quarter of 2012 from 5.92% in the first quarter of 2011. Overall loan yields held steady from the fourth quarter of 2011 to the first quarter. Average total loans were $1.007 billion for the first quarter of 2012 as compared to $1.014 billion for the fourth quarter of 2011 and $1.061 billion during the first quarter of 2011. Loans decreased by $16.845 million in the first quarter of 2012 and by $18.626 million in the fourth quarter of 2011. Deposit costs decreased in the first quarter of 2012 from the fourth quarter of 2011 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 0.85% in the first quarter of 2012 as compared to 1.31% in the first quarter of 2011. Deposits grew by $39.045 million, or 2.85% during the first quarter of 2012, primarily from public funds.
Management plans to continue to focus on core deposit growth for 2012 as a more stable funding base and to offset the influence that the low rate environment may have on the net interest margin. Loans as a percentage of assets were 60.95% at March 31, 2012 as compared to 65.40% at March 31, 2011 and 63.52% at December 31, 2011. Loans fell by 6.83% since the first quarter of 2011 while deposits grew by less than 1.00%.
Non-interest Income
Non-interest income, excluding securities transactions and other-than-temporary impairment on securities, for the first quarter of 2012 was up by 3.25% compared to the first quarter of 2011, with deposit-related income flat and mortgage income, still a relatively small contributor to non-interest income, up by 59.27%. Insurance agency commissions were down by 7.06%.
A major part of non-interest income is from deposit sources. Deposit revenues, continue to be supported by debit card fee income, which increased by 3.17% in the first quarter of 2012 over 2011.
Including securities gains and impairments, non-interest income was down 5.41% over the year ago quarter as securities gains taken were lower by 56.19%.
Non-interest Expenses
Non-interest expenses were lower by 5.57% in the first quarter of 2012 as compared to the first quarter of 2011. Salaries and benefits expense decreased by 1.34% while the major contributor to the overall non-interest expense decrease was the 38.12% fall in foreclosed property expense as credit issues began to culminate in foreclosure and disposal of other real estate and as property values stabilize and new credit issues wane.
Credit Quality
Annualized net loan charge-offs as a percent of average loans for the first quarter of 2012 were 0.47% as compared to 0.60% for the same period in 2011. Non-accrual and 90-day past due loans as a percent of total loans were 1.47% at the end of the first quarter of 2012 as compared to 3.58% at the end of the 2011 quarter.
The allowance for loan losses as a percentage of loans was 1.64% at March 31, 2012 as compared to 1.62% at March 31, 2011. The provision for loan losses fell to $2.280 million in the first quarter of 2012 from $2.580 million in the first quarter of 2011. Mr. Potts commented, "The two year trend of asset quality improvement adds yet another quarter. Problem loans decline and non-accrual loans, both new and old, decrease."
Balance Sheet
Total assets at March 31, 2012 were $1.607 billion as compared to $1.569 billion at the end of 2011 and $1.608 billion at March 31, 2011. Total loans held to maturity were $.979 billion compared to $.996 billion at the end of 2011 and $1.051 billion at March 31, 2011. Deposits were $1.411 billion compared to $1.371 billion at the end of 2011 and $1.400 billion at March 31, 2011. Total capital was $111.355 million, while common equity was $93.478 million or $10.20 in book value per share at March 31, 2012.
Conclusion
"Among the many challenges presented by the lingering slack economy, the challenge of loan growth has become a 'front-burner' issue, said Mr. Potts. M&F is without doubt emerging from the effects of the credit cycle with little help from the real estate market and in spite of a general economic malaise." Potts continued, "Moving to a more normal, a more robust, economic recovery holds great up-side potential for not only M&F but the entire banking sector."
In conclusion Mr. Potts said, "Because we were so adversely affected by the events of 2008-2009, it could be easy to let the remarkable recovery we've achieved since January, 2010 result in losing sight of the work yet to be done. However, be assured that while the M&F Team may bask, somewhat, in the sunlight of accomplishment, they do so with humble recognition of the remaining clouds on the horizon and shadows of the hills yet to climb. We merely choose to rejoice in it all...accomplishments and challenges as well."
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 25 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
2012 2011 2011
---- ---- ----
Cash and due from banks $38,688 $39,976 $36,184
Interest bearing bank
balances 51,900 39,391 80,408
Federal funds sold 25,000 25,000 25,000
Securities available for sale (cost of
$361,199, $315,890 and $294,351) 365,970 320,774 296,242
Loans held for sale 28,684 26,073 2,586
Loans 979,495 996,340 1,051,261
Allowance for loan losses 16,084 14,953 17,043
------ ------ ------
Net loans 963,411 981,387 1,034,218
Bank premises and
equipment 37,831 37,989 40,531
Accrued interest
receivable 6,098 6,122 6,719
Other real estate 34,636 36,952 29,660
Other intangible assets 4,479 4,586 4,906
Other assets 50,445 50,401 51,046
------ ------ ------
Total assets $1,607,142 $1,568,651 $1,607,500
========== ========== ==========
Non-interest bearing
deposits $238,603 $231,718 $208,457
Interest bearing deposits 1,171,905 1,139,745 1,191,619
--------- --------- ---------
Total deposits 1,410,508 1,371,463 1,400,076
Federal funds and
repurchase agreements 3,738 4,398 14,561
Other borrowings 41,673 43,001 48,527
Junior subordinated debt 30,928 30,928 30,928
Accrued interest payable 868 1,023 1,367
Other liabilities 8,072 8,242 4,362
----- ----- -----
Total liabilities 1,495,787 1,459,055 1,499,821
Preferred stock, 30,000
shares issued and
outstanding 17,877 17,564 16,673
Common stock, 9,162,721, 9,154,936 and 9,115,770
shares issued &
outstanding 45,814 45,775 45,579
Additional paid-in capital 31,892 31,895 31,873
Nonvested restricted stock
awards 700 674 783
Retained earnings 15,508 14,456 12,651
Accumulated other
comprehensive income
(loss) (436) (768) 120
---- ---- ---
Total equity 111,355 109,596 107,679
------- ------- -------
Total liabilities & equity $1,607,142 $1,568,651 $1,607,500
========== ========== ==========
First M&F Corporation and Subsidiary
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except share data)
Three Months Ended March
31
2012 2011
---- ----
Interest and fees on loans $14,158 $15,375
Interest on loans held for
sale 173 41
Taxable investments 1,490 1,771
Tax exempt investments 318 314
Federal funds sold 15 16
Interest bearing bank
balances 51 52
--- ---
Total interest income 16,205 17,569
Interest on deposits 2,513 3,847
Interest on fed funds and
repurchase agreements 6 15
Interest on other
borrowings 451 524
Interest on subordinated
debt 271 458
--- ---
Total interest expense 3,241 4,844
Net interest income 12,964 12,725
Provision for possible
loan losses 2,280 2,580
----- -----
Net interest income after
loan loss 10,684 10,145
Service charges on
deposits 2,457 2,458
Mortgage banking income 567 356
Agency commission income 829 892
Fiduciary and brokerage
income 140 133
Other income 837 839
Other-than-temporary impairment on securities, net of
$0 and $55 reclassified from other
comprehensive income - (296)
Gains on AFS securities 591 1,349
--- -----
Total noninterest income 5,421 5,731
Salaries and employee
benefits 6,863 6,956
Net occupancy expense 908 989
Equipment expenses 463 465
Software and processing
expenses 362 399
FDIC insurance assessments 514 774
Foreclosed property
expenses 1,456 2,353
Intangible asset
amortization and
impairment 107 107
Other expenses 3,313 2,768
----- -----
Total noninterest expense 13,986 14,811
Net income before taxes 2,119 1,065
Income tax expense 512 115
--- ---
Net income $1,607 $950
====== ====
Earnings Per Common Share Calculations:
Net income $1,607 $950
Dividends and accretion on
preferred stock (463) (432)
---- ----
Net income applicable to
common stock 1,144 518
Earnings attributable to
participating securities 5 3
Net income allocated to
common shareholders $1,139 $515
====== ====
Weighted average shares
(basic) 9,156,476 9,109,095
Weighted average shares
(diluted) 9,156,476 9,109,095
Basic earnings per share $0.12 $0.06
Diluted earnings per share $0.12 $0.06
===== =====
First M&F Corporation
Financial Highlights
YTD Ended YTD Ended YTD Ended YTD Ended
March 31 December 31 March 31 December 31
2012 2011 2011 2010
---- ---- ---- ----
Performance Ratios:
Return on assets
(annualized) 0.40% 0.27% 0.24% 0.25%
Return on equity
(annualized) (a) 5.84% 4.00% 3.58% 3.74%
Return on common equity
(annualized) (a) 4.95% 2.81% 2.31% 2.87%
Efficiency ratio (c) 75.18% 78.47% 79.26% 78.47%
Net interest margin
(annualized, tax-
equivalent) 3.67% 3.68% 3.59% 3.43%
Net charge-offs to
average loans
(annualized) 0.47% 1.05% 0.60% 1.65%
Nonaccrual loans to total
loans 1.45% 1.68% 3.55% 3.11%
90 day accruing loans to
total loans 0.02% 0.06% 0.03% 0.09%
QTD Ended QTD Ended QTD Ended QTD Ended
March 31 December 31 September 30 June 30
2012 2011 2011 2011
---- ---- ---- ----
Per Common Share (diluted):
Net income $0.12 $0.05 $0.10 $0.07
Cash dividends paid 0.01 0.01 0.01 0.01
Book value 10.20 10.05 10.23 10.19
Closing stock price 4.80 2.84 3.16 3.78
Loan Portfolio Composition: (in thousands)
Commercial, financial and
agricultural $144,319 $155,330 $143,133 $152,063
Non-residential real
estate 568,811 574,505 603,904 621,546
Residential real estate 188,891 186,815 185,564 187,932
Home equity loans 36,098 37,024 38,320 38,891
Consumer loans 41,376 42,666 44,045 44,163
------ ------ ------ ------
Total loans $979,495 $996,340 $1,014,966 $1,044,595
Deposit Composition: (in thousands)
Noninterest-bearing
deposits $238,603 $231,718 $222,042 $243,626
NOW deposits 421,249 390,256 378,409 397,281
MMDA deposits 222,016 197,849 179,138 174,127
Savings deposits 121,872 119,693 118,814 117,830
Core certificates of
deposit under $100,000 213,944 227,867 250,130 255,847
Core certificates of
deposit $100,000 and over 176,761 187,513 216,655 217,540
Brokered certificates of
deposit under $100,000 3,234 3,539 4,686 4,611
Brokered certificates of
deposit $100,000 and over 12,829 13,028 13,985 13,637
------ ------ ------ ------
Total deposits $1,410,508 $1,371,463 $1,383,859 $1,424,499
Nonperforming Assets: (in thousands)
Nonaccrual loans $14,604 $17,177 $26,622 $32,800
Other real estate 34,636 36,952 32,722 30,650
Investment securities 646 599 509 693
--- --- --- ---
Total nonperforming assets $49,886 $54,728 $59,853 $64,143
Accruing loans past due 90
days or more $245 $602 $252 $784
Restructured loans
(accruing) $19,077 $19,662 $19,712 $22,989
Total nonaccrual loan to
loans 1.45% 1.68% 2.59% 3.13%
Total nonperforming credit
assets to loans and ORE 4.72% 5.11% 5.60% 5.89%
Total nonperforming assets
to assets ratio 3.10% 3.49% 3.77% 3.95%
Allowance For Loan Loss Activity: (in thousands)
Beginning balance $14,953 $16,111 $18,805 $17,043
Provision for loan loss 2,280 2,280 2,580 2,280
Charge-offs (2,061) (4,001) (5,419) (1,442)
Recoveries 912 563 145 924
--- --- --- ---
Ending balance $16,084 $14,953 $16,111 $18,805
First M&F Corporation
Financial Highlights
QTD Ended QTD Ended QTD Ended QTD Ended
March 31 December 31 September 30 June 30
2012 2011 2011 2011
---- ---- ---- ----
Condensed Income Statements: (in thousands)
Interest income $16,205 $16,305 $17,239 $17,602
Interest expense 3,241 3,662 4,014 4,331
----- ----- ----- -----
Net interest income 12,964 12,643 13,225 13,271
Provision for loan losses 2,280 2,280 2,580 2,280
Noninterest revenues 5,421 5,912 5,219 4,712
Noninterest expenses 13,986 15,077 14,143 14,303
------ ------ ------ ------
Net income before taxes 2,119 1,198 1,721 1,400
Income tax expense 512 211 391 294
--- --- --- ---
Net income $1,607 $987 $1,330 $1,106
Preferred dividends (463) (454) (448) (440)
---- ---- ---- ----
Net income applicable to
common stock 1,144 533 882 666
Earnings attributable to
participating securities 5 3 4 5
--- --- --- ---
Net income allocated to
common shareholders $1,139 $530 $878 $661
Tax-equivalent net
interest income $13,181 $12,866 $13,449 $13,495
Selected Average Balances: (in thousands)
Assets $1,607,013 $1,564,531 $1,592,030 $1,598,871
Loans held for investment 983,800 993,869 1,028,372 1,050,136
Earning assets 1,445,332 1,401,948 1,433,189 1,444,677
Deposits 1,409,393 1,366,628 1,390,834 1,396,331
Equity 110,745 110,483 110,412 108,911
Common equity 93,025 93,077 93,307 92,096
Selected Ratios:
Return on average assets
(annualized) 0.40% 0.25% 0.33% 0.28%
Return on average equity
(annualized) (a) 5.84% 3.54% 4.78% 4.07%
Return on average common
equity (annualized) (a) 4.95% 2.27% 3.76% 2.90%
Average equity to average
assets 6.89% 7.06% 6.94% 6.81%
Tangible equity to
tangible assets (b) 6.67% 6.71% 6.71% 6.50%
Tangible common equity to
tangible assets (b) 5.55% 5.59% 5.61% 5.46%
Net interest margin
(annualized, tax-
equivalent) 3.67% 3.64% 3.72% 3.75%
Efficiency ratio (c) 75.18% 80.29% 75.76% 78.56%
Net charge-offs to
average loans
(annualized) 0.47% 1.37% 2.03% 0.20%
Nonaccrual loans to total
loans 1.45% 1.68% 2.59% 3.13%
90 day accruing loans to
total loans 0.02% 0.06% 0.02% 0.07%
Price to book 0.47x 0.28x 0.31x 0.37x
Price to earnings 10.00x 14.20x 7.90x 13.50x
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 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
3Q 2010 1,245 13,671 13,565 1.49
2Q 2010 1,272 833 826 0.09
1Q 2010 853 416 413 0.05
Revenue Statistics: Non-interest Non-interest
Revenues Revenues to Revenues to
Per FTE Ttl. Revenues Avg. Assets
(thousands) (percent) (percent)
---------- -------- --------
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%
3Q 2010 34.9 27.42% 1.21%
2Q 2010 35.1 29.98% 1.31%
1Q 2010 34.4 32.66% 1.39%
Expense Statistics:
Non-interest
Expense to Efficiency
Avg. Assets Ratio
(percent) (percent) (c)
-------- -------------
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%
3Q 2010 3.35% 75.75%
2Q 2010 3.35% 76.69%
1Q 2010 3.32% 78.16%
First M&F Corporation
Average Balance Sheets/Yields and Costs (tax-equivalent)
(In thousands with yields and costs annualized)
QTD March 2012 QTD March 2011
-------------- --------------
Average Average
Balance Yield/Cost Balance Yield/Cost
------- ---------- ------- ----------
Interest bearing bank
balances $79,212 0.26% $93,864 0.22%
Federal funds sold 25,000 0.25% 25,000 0.25%
Taxable investments
(amortized cost) 299,622 2.00% 249,061 2.88%
Tax-exempt investments
(amortized cost) 34,969 5.83% 33,939 5.98%
Loans held for sale 22,729 3.06% 4,265 3.85%
Loans held for investment 983,800 5.80% 1,056,903 5.92%
------- ---- --------- ----
Total earning assets 1,445,332 4.57% 1,463,032 4.93%
Non-earning assets 161,681 159,331
------- -------
Total average assets $1,607,013 $1,622,363
NOW $419,260 0.46% $402,801 0.81%
MMDA 226,602 0.52% 161,581 0.85%
Savings 120,835 0.99% 115,815 1.21%
Certificates of Deposit 417,086 1.39% 514,184 1.86%
Short-term borrowings 5,054 0.48% 23,917 0.25%
Other borrowings 73,107 3.97% 80,261 4.97%
------ ---- ------ ----
Total interest bearing
liabilities 1,261,944 1.03% 1,298,559 1.51%
Non-interest bearing
deposits 225,610 209,352
Non-interest bearing
liabilities 8,714 6,819
Preferred equity 17,720 16,531
Common equity 93,025 91,102
------ ------
Total average liabilities
and equity $1,607,013 $1,622,363
Net interest spread 3.54% 3.42%
Effect of non-interest bearing deposits 0.16% 0.21%
Effect of leverage -0.03% -0.04%
----- -----
Net interest margin, tax-equivalent 3.67% 3.59%
Less tax equivalent adjustment:
Investments 0.05% 0.05%
Loans 0.01% 0.01%
---- ----
Reported book net interest margin 3.61% 3.53%
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.
