Credit Quality drives quarterly earnings improvement for First M&F

      Credit Quality drives quarterly earnings improvement for First M&F

PR Newswire

KOSCIUSKO, Miss., April 18, 2013

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  31,590         94,313         51,900
balances
Federal funds sold     10,000         10,000         25,000
Securities available
for sale (cost of
 $370,679, $341,273   377,051        348,562        365,970
and $361,199)
Loans held for sale    17,573         21,014         28,684
Loans                  987,657        975,473        979,495
Allowance for loan     18,269         17,492         16,084
losses
 Net loans         969,388        957,981        963,411
Bank premises and      36,871         37,264         37,831
equipment
Accrued interest       5,863          5,683          6,098
receivable
Other real estate      24,820         25,970         34,636
Other intangible       4,053          4,159          4,479
assets
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       1,100,322      1,126,380      1,171,905
deposits
 Total deposits    1,352,775      1,402,675      1,410,508
Federal funds and      2,250          3,720          3,738
repurchase agreements
Other borrowings       34,877         36,007         41,673
Junior subordinated    30,928         30,928         30,928
debt
Accrued interest       628            661            868
payable
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   19,213         18,865         17,877
and outstanding
Common stock,
9,233,917, 9,230,799
and 9,162,721)
 shares issued &   46,170         46,154         45,814
outstanding
Additional paid-in     32,497         32,469         31,892
capital
Nonvested restricted   325            244            700
stock awards
Retained earnings      21,184         19,180         15,508
Accumulated other
comprehensive income  1,382          1,531          (436)
(loss)
 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 56             173
for sale
Taxable investments    1,231          1,490
Tax exempt investments 352            318
Federal funds sold     6              15
Interest bearing bank  58             51
balances
 Total interest    14,401         16,205
income
Interest on deposits   1,516          2,513
Interest on fed funds
and repurchase         4              6
agreements
Interest on other      371            451
borrowings
Interest on            283            271
subordinated debt
 Total interest    2,174          3,241
expense
 Net interest      12,227         12,964
income
Provision for possible 1,280          2,280
loan losses
 Net interest      10,947         10,684
income after loan loss
Service charges on     2,371          2,457
deposits
Mortgage banking       1,291          567
income
Agency commission      820            829
income
Fiduciary and          160            140
brokerage income
Other income           1,044          837
Gains on AFS           16             591
securities
 Total noninterest 5,702          5,421
income
Salaries and employee  6,362          6,863
benefits
Net occupancy expense  865            908
Equipment expenses     432            463
Software and           356            362
processing expenses
FDIC insurance         348            514
assessments
Foreclosed property    588            1,456
expenses
Intangible asset
amortization and       106            107
impairment
Other expenses         3,882          3,313
 Total noninterest 12,939         13,986
expense
 Net income before 3,710          2,119
taxes
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 (497)          (463)
stock
 Net income
applicable to common   2,101          1,144
stock
Earnings attributable
to participating       81             5
securities
 Net income        $         $      
allocated to common    2,020         1,139
shareholders
Weighted average       9,231,457      9,156,476
shares (basic)
Weighted average       9,345,384      9,156,476
shares (diluted)
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       0.67%          0.44%          0.40%         0.27%
(annualized)
Return on equity       8.84%          6.12%          5.84%         4.00%
(annualized) (a)
Return on common
equity (annualized)   8.51%          5.30%          4.95%         2.81%
(a)
Efficiency ratio (c)   71.25%         74.98%         75.18%        78.47%
Net interest margin
(annualized,           3.53%          3.67%          3.67%         3.68%
tax-equivalent)
Net charge-offs to
average loans          0.21%          0.61%          0.47%         1.05%
(annualized)
Nonaccrual loans to    0.72%          0.75%          1.45%         1.68%
total loans
90 day accruing loans  0.03%          0.03%          0.02%         0.06%
to total loans
                       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   557,453        542,859        554,475       567,184
estate
Residential real       203,260        200,992        197,629       189,927
estate
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   182,245        188,733        201,361       208,684
deposit under $100,000
Core certificates of
deposit $100,000 and   159,913        165,979        177,084       178,926
over
Brokered certificates
of deposit under       3,295          3,549          3,417         3,393
$100,000
Brokered certificates
of deposit $100,000    7,834          12,444         13,533        14,419
and over
 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  0.72%          0.75%          0.62%         0.64%
to loans
Total nonperforming
credit assets to loans 3.12%          3.27%          3.29%         3.62%
and ORE
Total nonperforming    2.11%          2.13%          2.24%         2.44%
assets to assets ratio
Allowance For Loan
Loss Activity: (in
thousands)
Beginning balance      $         $         $        $     
                       17,492         16,656         15,310        16,084
Provision for loan     1,280          1,980          1,980         2,280
loss
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     1,280          1,980          1,980         2,280
losses
Noninterest revenues   5,702          5,735          5,607         6,035
Noninterest expenses   12,939         13,913         14,060        14,319
 Net income before   3,710          2,483          2,439         2,352
taxes
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   2,101          1,343          1,315         1,282
stock
Earnings attributable
to participating       81             53             51            56
securities
 Net income          $         $        $       $     
allocated to common    2,020         1,290          1,264         1,226
shareholders
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         977,198        982,894        984,282       973,545
investment
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      0.67%          0.46%          0.46%         0.45%
assets (annualized)
Return on average
equity (annualized)   8.84%          6.19%          6.18%         6.27%
(a)
Return on average
common equity          8.51%          5.40%          5.38%         5.46%
(annualized) (a)
Average equity to      7.59%          7.41%          7.47%         7.13%
average assets
Tangible equity to     7.55%          7.15%          7.28%         7.04%
tangible assets (b)
Tangible common equity
to tangible assets    6.31%          5.97%          6.08%         5.87%
(b)
Net interest margin
(annualized,           3.53%          3.56%          3.73%         3.72%
tax-equivalent)
Efficiency ratio (c)   71.25%         74.83%         75.21%        74.70%
Net charge-offs to
average loans          0.21%          0.46%          0.26%         1.26%
(annualized)
Nonaccrual loans to    0.72%          0.75%          0.62%         0.64%
total loans
90 day accruing loans  0.03%          0.03%          0.04%         0.15%
to total loans
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                   Earnings       Earnings
Trends:
                                      Applicable to  Allocated to
                                      Common         Common
                       Earnings       Stock          Shareholders  EPS
                       (in thousands) (in thousands) (in           (diluted)
                                                     thousands)
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                $        31.40%         1.47%
                       40.4
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       QTD March 2013                QTD March 2012
annualized)
                       Average                       Average
                       Balance        Yield/Cost     Balance       Yield/Cost
Interest bearing bank  $         0.31%          $        0.26%
balances               76,526                        79,212
Federal funds sold     10,000         0.24%          25,000        0.25%
Taxable investments    309,373        1.61%          299,622       2.00%
(amortized cost)
Tax-exempt investments 44,187         5.16%          34,969        5.83%
(amortized cost)
Loans held for sale    13,770         1.65%          22,729        3.06%
Loans held for         977,198        5.28%          983,800       5.80%
investment
 Total earning       1,431,054      4.15%          1,445,332     4.57%
assets
Non-earning assets     139,940                       161,681
 Total average       $                           $   
assets                 1,570,994                    1,607,013
NOW                    $          0.22%          $         0.46%
                       422,966                       419,260
MMDA                   212,106        0.18%          226,602       0.52%
Savings                118,719        0.80%          120,835       0.99%
Certificates of        361,037        1.08%          417,086       1.39%
Deposit
Short-term borrowings  5,337          0.31%          5,054         0.48%
Other borrowings       66,173         4.01%          73,107        3.97%
 Total interest      1,186,338      0.74%          1,261,944     1.03%
bearing liabilities
Non-interest bearing   254,957                       225,610
deposits
Non-interest bearing   10,490                        8,714
liabilities
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                0.13%                        0.16%
bearing deposits
Effect of leverage                    -0.01%                       -0.03%
 Net interest                       3.53%                        3.67%
margin, tax-equivalent
Less tax equivalent
adjustment:
 Investments                        0.05%                        0.05%
 Loans                              0.01%                        0.01%
Reported book net                     3.47%                        3.61%
interest margin
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.

Contact: First M&F Corp. Investor Information, John G. Copeland, EVP & Chief
Financial Officer, (662) 289-8594
 
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