For additional information contact
Robert E. Krimmel
Chief Financial Officer
(931) 380-8257
FIRST FARMERS AND MERCHANTS CORPORATION REPORTS 2015
NET INCOME OF $10.3 MILLION, OR $2.13 PER COMMON SHARE
COLUMBIA, Tenn. (January 27, 2016) – First Farmers and Merchants Corporation (“First Farmers” or the “Company”), the holding company for First Farmers and Merchants Bank (the “Bank”), today announced unaudited financial results for the quarter and year ending December 31, 2015.
Key highlights of First Farmers’ results for the year ended 2015 include:
· Net income of $10.3 million or $2.13 per common share, up 1% from $10.2 million or $2.06 per common share in 2014;
· Net income, excluding special items for each year, of $10.0 million or $2.06 per common share, up 5% from $9.5 million or $1.92 per common share in 2014 (see non-GAAP reconciliation);
· Solid loan growth of $79 million or 12% from 2014;
· Deposit growth of $84 million or 8% from 2014; and
· A decline in nonperforming assets of $3.2 million or 59% from 2014.
Commenting on the results, T. Randy Stevens, Chairman and Chief Executive Officer of First Farmers, said “We are pleased to end 2015 with strong results from our operations, highlighted by double-digit year-over-year loan growth and continued improvement in credit quality measures. The 2015 earnings performance, after adjusting for special items, resulted in 5% year-over-year growth, and we believe First Farmers carries solid momentum into 2016 and remains well positioned for continued growth.” Stevens added, “We continue to focus on growing our franchise in Williamson County with our next banking office planned at Berry Farms. Reflecting continued confidence in the performance of the Company and commitment to long-term value for our shareholders, the Board of Directors extended our stock repurchase program for up to 200,000 shares during 2016.”
Fourth Quarter 2015 Results of Operations
Net income decreased $451,000 for the fourth quarter of 2015 compared with the previous quarter, primarily driven by an increase in health insurance expense of $476,000. The $389,000 decrease in reported quarterly earnings for the fourth quarter of 2015 compared with the year-earlier quarter included the effects of an increase in salaries and employee benefits including $416,000 of health insurance expense. The higher salary and employee benefits expense combined with higher legal and professional fees were offset in part by improved net interest income. For the fourth quarter of 2015, First Farmers continued to achieve loan growth with an increase of $4 million or 1% from the previous quarter. Total deposits stood at $1.104 billion at the end of the fourth quarter of 2015, up $43 million or 4% from the previous quarter.
FFMH Reports Fourth Quarter 2015 Results
January 27, 2016
Page 2
Capital Management Initiatives
During the fourth quarter of 2015, First Farmers repurchased approximately 40,000 shares of common stock at an average price of $29.00 per share under its stock repurchase program. First Farmers’ Board of Directors extended the stock repurchase program for up to 200,000 shares through December 31, 2016.
Asset Quality
Total nonperforming assets remained relatively steady at $2.3 million, or 0.18% of total assets, compared to $2.2 million, or 0.18% of total assets, for the previous quarter and declined from $5.5 million, or 0.47% of total assets, when compared to the year-earlier quarter. Net recoveries to average loans were 0.10% for the fourth quarter of 2015 compared to 0.12% for the previous quarter and net charge-offs of 0.10% for the year-earlier quarter. As a result of loan growth, a $30,000 provision to the allowance for loan and lease losses was recorded during the fourth quarter of 2015. The allowance for loan and lease losses represented 1.18% of total loans outstanding as of December 31, 2015 compared to 1.18% for the previous quarter and 1.22% for the year-earlier quarter.
About First Farmers and Merchants Corporation and First Farmers and Merchants Bank
First Farmers and Merchants Corporation is the holding company for First Farmers and Merchants Bank, a community bank serving the Middle Tennessee area through 19 banking locations in eight Middle Tennessee counties. As of December 31, 2015, First Farmers reported total assets of approximately $1.3 billion, total shareholders’ equity of approximately $118 million, and administered trust assets of $4.2 billion. For more information about First Farmers, visit First Farmers and Merchants Bank on the Web at www.myfirstfarmers.com under the “Our Story” and “Investor Relations” tab.
Cautionary Note Regarding Forward Looking Statements
Except for historical information contained herein, the matters included in this news release and other information in First Farmers’ filings with the Securities and Exchange Commission (the “SEC”) may contain certain “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the fact that they do not relate strictly to historical or current facts and often use words or phrases such as “opportunities,” “prospects,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “intends” or similar expressions. The forward-looking statements contained herein represent the current expectations, plans or forecasts of First Farmers’ future results and revenues. First Farmers intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of these safe harbor provisions. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often beyond First Farmers’ control. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements. Investors should not place undue reliance on any forward-looking statement and should consider the uncertainties and risks, discussed under Item 1A. “Risk Factors” of First Farmers’ Annual Report on Form 10-K for the year ending December 31, 2014, and in any of First Farmers subsequent filings with the SEC. Further information concerning First Farmers and its business, including additional factors that could materially affect First Farmers’ financial results, is included in its other filings with the SEC.
FFMH Reports Fourth Quarter 2015 Results
January 27, 2016
Page 3
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES PRESENTED IN EARNINGS RELEASE
(Dollars in thousands, except per share data)
| Three Months Ended | | Twelve Months Ended |
| December 31, | | September 30, | | December 31, |
| 2015 | | 2014 | | 2015 | | 2015 | | 2014 |
Total noninterest income | $ | 2,877 | | $ | 2,808 | | $ | 2,907 | | $ | 11,443 | | $ | 11,727 |
Gain on sale of securities | | (129) | | | (112) | | | (135) | | | (534) | | | (652) |
Gain on foreclosed property | | (16) | | | (45) | | | – | | | (33) | | | (516) |
Adjusted noninterest income | $ | 2,732 72 | | $ | 2,651 | | $ | 2,772 | | $ | 10,876 | | $ | 10,559 |
Net income as reported | $ | 2,268 | | $ | 2,657 | | $ | 2,719 | | $ | 10,306 | | $ | 10,242 |
Total adjustments, net of tax1 | | (89) | | | (97) | | | (83) | | | (349) | | | (718) |
Adjusted net income | $ | 2,179 | | $ | 2,560 | | $ | 2,636 | | $ | 9,957 | | $ | 9,524 |
Basic earnings per share | $ | 0.48 | | $ | 0.54 | | $ | 0.57 | | $ | 2.13 | | $ | 2.06 |
Total adjustments, net of tax1 | | (0.02) | | | (0.02) | | | (0.02) | | | (0.07) | | | (0.14) |
Adjusted basic earnings per share | $ | 0.46 | | $ | 0.52 | | $ | 0.55 | | $ | 2.06 | | $ | 1.92 |
(1) The effective tax rate of 38.5% is used to determine net of tax amounts.
FFMH Reports Fourth Quarter 2015 Results
January 27, 2016
Page 4
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | (Unaudited) | | |
| | | | December 31, | | December 31, |
| (dollars in thousands, except per share data) | | 2015 | | 2014 |
ASSETS | Cash and due from banks | | $ | 19,453 | | $ | 18,511 |
| | Interest-bearing deposits | | 18,299 | | 10,086 |
| | Federal funds sold | | 24,476 | | 1,700 |
| | Total cash and cash equivalents | | 62,228 | | 30,297 |
| | Securities: | | | | |
| | Available-for-sale | | 395,019 | | 397,886 |
| | Held-to-maturity (fair market value $4,089 and $22,263 | | | | |
| | as of December 31, 2015 and December 31, 2014, respectively) | | 4,059 | | 21,985 |
| | Total securities | | 399,078 | | 419,871 |
| | Loans, net of deferred fees | | 731,266 | | 652,052 |
| | Allowance for loan and lease losses | | (8,634) | | (7,934) |
| | Net loans | | 722,632 | | 644,118 |
| | Bank premises and equipment, net | | 25,518 | | 25,773 |
| | Other real estate owned | | 62 | | 5 |
| | Bank owned life insurance | | 26,552 | | 26,176 |
| | Goodwill | | 9,018 | | 9,018 |
| | Deferred tax asset | | 4,716 | | 5,097 |
| | Other assets | | 10,506 | | 10,640 |
| TOTAL ASSETS | | $ | 1,260,310 | | $ | 1,170,995 |
LIABILITIES | Deposits: | | | | |
| | Noninterest-bearing | | $ | 239,226 | | $ | 204,358 |
| | Interest-bearing | | 864,575 | | 815,597 |
| | Total deposits | | 1,103,801 | | 1,019,955 |
| | Securities sold under agreements to repurchase | | 24,177 | | 22,834 |
| | Accounts payable and accrued liabilities | | 14,542 | | 13,622 |
| TOTAL LIABILITIES | | 1,142,520 | | 1,056,411 |
SHAREHOLDERS’ | Common stock - $10 par value per share, 8,000,000 shares | | | | |
EQUITY | authorized; 4,739,502 and 4,900,576 shares issued | | | | |
| | and outstanding as of December 31, 2015 and | | | | |
| | December 31, 2014, respectively | | 47,395 | | 49,006 |
| | Retained earnings | | 71,583 | | 67,609 |
| | Accumulated other comprehensive loss | | (1,283) | | (2,126) |
| | TOTAL SHAREHOLDERS’ EQUITY BEFORE NONCONTROLLING INTEREST - PREFERRED STOCK OF SUBSIDIARY | | 117,695 | | 114,489 |
| | Noncontrolling interest - preferred stock of subsidiary | | 95 | | 95 |
| | TOTAL SHAREHOLDERS’ EQUITY | | 117,790 | | 114,584 |
| | | | | | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 1,260,310 | | $ | 1,170,995 |
| | | |
| | | | | | | | | |
FFMH Reports Fourth Quarter 2015 Results
January 27, 2016
Page 5
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
| | | Three months ended December 31, | | Twelve months ended December 31, |
| (dollars in thousands, except per share data) | 2015 | | 2014 | | 2015 | | 2014 |
INTEREST AND | Interest and fees on loans | $ | 7,918 | | $ | 7,110 | | $ | 30,522 | | $ | 28,300 |
DIVIDEND | Income on investment securities | | | | | | | |
INCOME | Taxable interest | 1,328 | | 1,508 | | 5,713 | | 5,738 |
| | Exempt from federal income tax | 526 | | 606 | | 2,218 | | 2,473 |
| | Dividends | 69 | | 60 | | 229 | | 269 |
| Total interest income | 9,841 | | 9,284 | | 38,682 | | 36,780 |
INTEREST | Interest on deposits | 526 | | 560 | | 2,131 | | 2,358 |
EXPENSE | Interest on other borrowings | 21 | | 20 | | 94 | | 70 |
| | Total interest expense | 547 | | 580 | | 2,225 | | 2,428 |
| | Net interest income | 9,294 | | 8,704 | | 36,457 | | 34,352 |
| | Provision for loan and lease losses | 30 | | - | | 30 | | - |
| Net interest income after provision | 9,264 | | 8,704 | | 36,427 | | 34,352 |
NON-INTEREST | Gain on loans sold | 80 | | 114 | | 270 | | 294 |
INCOME | Trust department income | 619 | | 605 | | 2,530 | | 2,491 |
| Service fees on deposit accounts | 1,700 | | 1,625 | | 6,616 | | 6,470 |
| | Brokerage fees | 98 | | 85 | | 540 | | 410 |
| | Earnings on bank owned life insurance | 105 | | 105 | | 376 | | 398 |
| | Gain on sale of available-for-sale securities | 129 | | 112 | | 534 | | 652 |
| | Gain on foreclosed property | 16 | | 45 | | 33 | | 516 |
| | Other non-interest income | 130 | | 117 | | 544 | | 496 |
| Total non-interest income | 2,877 | | 2,808 | | 11,443 | | 11,727 |
NON-INTEREST | Salaries and employee benefits | 5,196 | | 4,177 | | 18,897 | | 17,557 |
EXPENSE | Net occupancy expense | 554 | | 579 | | 2,192 | | 2,032 |
| | Depreciation expense | 375 | | 381 | | 1,489 | | 1,441 |
| | Data processing expense | 628 | | 587 | | 2,506 | | 2,321 |
| | Legal and professional fees | 269 | | 213 | | 1,301 | | 860 |
| | Stationary and office supplies | 60 | | 75 | | 289 | | 304 |
| | Advertising and promotions | 260 | | 297 | | 1,163 | | 1,352 |
| | FDIC insurance premium expense | 161 | | 128 | | 587 | | 589 |
| | Other real estate expense | 2 | | - | | 3 | | 68 |
| | Other non-interest expense | 1,589 | | 1,539 | | 5,772 | | 5,741 |
| | Total non-interest expense | 9,094 | | 7,976 | | 34,199 | | 32,265 |
| | Income before provision for income taxes | 3,047 | | 3,536 | | 13,671 | | 13,814 |
| Provision for income taxes | 771 | | 871 | | 3,349 | | 3,556 |
| | Net income before noncontrolling interest - dividends on preferred stock of subsidiary | 2,276 | | 2,665 | | 10,322 | | 10,258 |
| | Noncontrolling interest - dividends on preferred stock subsidiary | 8 | | 8 | | 16 | | 16 |
| Net income for common shareholders | $ | 2,268 | | $ | 2,657 | | $ | 10,306 | | $ | 10,242 |
| | | | | | | | |
| | Weighted average shares outstanding | 4,771,648 | | 4,909,910 | | 4,832,217 | | 4,963,826 |
| Earnings per share | $ | 0.48 | | $ | 0.54 | | $ | 2.13 | | $ | 2.06 |
FFMH Reports Fourth Quarter 2015 Results
January 27, 2016
Page 6
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL HIGHLIGHTS
(unaudited)
| | For the three months ended |
(dollars in thousands, except per share data) | December 31, 2015 | | September 30, 2015 | | June 30, 2015 | | March 31, 2015 | | December 31, 2014 |
Results of Operations: | | | | | | | | | |
Interest income | $ | 9,841 | | $ | 9,817 | | $ | 9,720 | | $ | 9,303 | | $ | 9,284 |
Interest expense | 547 | | 556 | | 556 | | 565 | | 580 |
Net interest income | 9,294 | | 9,261 | | 9,164 | | 8,738 | | 8,704 |
Provision for possible loan losses, net | 30 | | - | | - | | - | | - |
Noninterest income | 2,877 | | 2,907 | | 2,774 | | 2,885 | | 2,808 |
Noninterest expense | 9,102 | | 8,524 | | 8,559 | | 8,030 | | 7,984 |
Income before income taxes | 3,039 | | 3,644 | | 3,379 | | 3,593 | | 3,528 |
Income taxes | 771 | | 925 | | 677 | | 976 | | 871 |
Net income for common shareholders | $ | 2,268 | | $ | 2,719 | | $ | 2,702 | | $ | 2,617 | | $ | 2,657 |
Per Share Data: | | | | | | | | | |
Basic earnings per share | $ | 0.48 | | $ | 0.57 | | $ | 0.56 | | $ | 0.53 | | $ | 0.54 |
Weighted average shares outstanding per quarter | 4,771,648 | | 4,808,352 | | 4,853,265 | | 4,897,245 | | 4,909,910 |
Financial Condition Data: | | | | | | | | | |
Total securities | $ | 399,078 | | $ | 406,576 | | $ | 427,874 | | $ | 440,314 | | $ | 419,871 |
Loans, net of deferred fees | 731,266 | | 727,535 | | 685,402 | | 675,015 | | 652,052 |
Allowance for loan and lease losses | (8,634) | | (8,585) | | (8,593) | | (7,944) | | (7,934) |
Total assets | 1,260,310 | | 1,230,896 | | 1,213,250 | | 1,219,287 | | 1,170,995 |
Total deposits | 1,103,801 | | 1,061,201 | | 1,056,717 | | 1,063,822 | | 1,019,955 |
Loan Balances by County: | | | | | | | | | |
Davidson | $ | 63,958 | | $ | 67,272 | | $ | 42,492 | | $ | 31,225 | | $ | 16,131 |
Dickson | 4,514 | | 4,647 | | 4,536 | | 4,539 | | 4,463 |
Giles | 55,554 | | 55,548 | | 56,928 | | 49,446 | | 48,458 |
Hickman | 28,912 | | 28,837 | | 28,819 | | 28,882 | | 29,109 |
Lawrence | 114,980 | | 113,522 | | 108,074 | | 108,924 | | 111,202 |
Marshall | 23,679 | | 23,787 | | 22,886 | | 22,396 | | 22,017 |
Maury | 320,734 | | 315,462 | | 315,600 | | 316,410 | | 308,987 |
Williamson | 118,935 | | 118,460 | | 106,067 | | 113,193 | | 111,685 |
| $ | 731,266 | | $ | 727,535 | | $ | 685,402 | | $ | 675,015 | | $ | 652,052 |
Asset Quality Data and Ratios: | | | | | | | | | |
Total nonperforming assets | $ | 2,259 | | $ | 2,218 | | $ | 2,493 | | $ | 5,229 | | $ | 5,483 |
Nonperforming assets to total assets | 0.18% | | 0.18% | | 0.21% | | 0.43% | | 0.47% |
Allowance for loan and lease losses to total loans | 1.18% | | 1.18% | | 1.25% | | 1.18% | | 1.22% |
Net (recoveries) charge-offs to average loans (annualized) | (0.10%) | | (0.12%) | | (0.19%) | | (0.01%) | | 0.10% |
