For additional information contact
Robert E. Krimmel
Chief Financial Officer
(931) 380-8257
FIRST FARMERS AND MERCHANTS CORPORATION REPORTS FIRST QUARTER NET INCOME OF $2.6 MILLION, OR $0.55 PER COMMON SHARE
COLUMBIA, Tenn. (April 19, 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 ending March 31, 2016.
Key highlights of First Farmers’ results for the first quarter of 2016 include:
Net income of $2.59 million or $0.55 per common share, up 14% from $2.27 million or $0.48 per common share for the previous quarter, but down from $2.62 million or $0.53 per common share for the year-earlier quarter;
Net income, excluding special items for each quarter, of $2.5 million or $0.54 per common share, up 17% from $2.2 million or $0.46 per common share for the previous quarter, and up 4% from $2.4 million or $0.49 per common share for the year-earlier quarter (see non-GAAP reconciliation);
Loan growth of $8 million or 1% from the previous quarter and $64 million or 10% compared with the year-earlier quarter;
Deposit growth of $38 million or 3% from the previous quarter and $78 million or 7% compared with the year-earlier quarter; and
An increase in nonperforming assets of $2.3 million compared with the previous quarter, but a decline of $659,000 or 13% compared with the year-earlier quarter.
Commenting on the results, T. Randy Stevens, Chairman and Chief Executive Officer of First Farmers, said “The first quarter earnings performance, after adjusting for special items, reflects solid momentum in earnings, earnings per share, and improved expense management for our Company.” Stevens continued, “Loan growth continued for the quarter but slowed from the pace of recent quarters; however, we continue to remain optimistic that our current pipeline is solid. Additionally, we continue to enjoy strong asset quality metrics which compare favorably to the industry.”
FFMH Reports First Quarter 2016 Results
April 19, 2016
Page 2
First Quarter 2016 Results of Operations
The $321,000 increase in reported quarterly earnings for the first quarter of 2016 compared with the previous quarter was primarily driven by a decrease in salaries and employee benefits expense of $740,000 from the previous quarter. Specifically, this decrease is largely the result of a decrease of $681,000 in employee health insurance expense from the previous quarter. The lower salaries and employee benefits expense was offset in part by a decrease in net interest income and a decline in service fees on deposit accounts. The $28,000 decrease in reported quarterly earnings for the first quarter of 2016 compared with the year-earlier quarter was primarily driven by improvement in net interest income. The improvement in net interest income was offset by a reported gain on sale of available-for-sale securities in the year earlier quarter, in addition to an increase of $197,000 in non-interest expense compared to the year-earlier quarter.
For the first quarter of 2016, First Farmers continued to achieve loan growth with an increase of $8 million or 1% from the previous quarter. Total deposits stood at $1.142 billion at the end of the first quarter of 2016, up $38 million or 3% from the previous quarter.
Asset Quality
Total nonperforming assets increased to $4.6 million, or 0.35% of total assets, compared to $2.3 million, or 0.18% of total assets, for the previous quarter, but declined from $5.2 million, or 0.43% of total assets, when compared to the year-earlier quarter. The increase in nonperforming assets as compared to the previous quarter was isolated to one commercial real estate loan. Net charge-offs to average loans were 0.01% for the first quarter of 2016 compared to net recoveries of 0.10% for the previous quarter and net recoveries of 0.01% for the year-earlier quarter. As a result of both loan growth and an increase in nonperforming loans, a $75,000 provision to the allowance for loan and lease losses was recorded during the first quarter of 2016. The allowance for loan and lease losses represented 1.18% of total loans outstanding as of March 31, 2016 compared to 1.18% for both the previous quarter and 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 March 31, 2016, First Farmers reported total assets of approximately $1.3 billion, total shareholders’ equity of approximately $124 million, and administered trust assets of $4.3 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.
FFMH Reports First Quarter 2016 Results
April 19, 2016
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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, 2015, 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 First Quarter 2016 Results
April 19, 2016
Page 4
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 |
| March 31, | | December 31, |
| 2016 | | 2015 | | 2015 |
Total noninterest income | $ | 2,626 | | $ | 2,885 | | $ | 2,877 |
Gain on sale of securities | | (11) | | | (270) | | | (129) |
Gain on foreclosed property | | - | | | (17) | | | (16) |
Gain on bank-owned life insurance | | (33) | | | - | | | - |
Adjusted noninterest income | | 2,582 | | | 2,598 | | | 2,732 |
Net income as reported | $ | 2,589 | | $ | 2,617 | | $ | 2,268 |
Total adjustments, net of tax1 | | (40) | | | (177) | | | (89) |
Adjusted net income | $ | 2,549 | | $ | 2,440 | | $ | 2,179 |
Basic earnings per share | $ | 0.55 | | $ | 0.53 | | $ | 0.48 |
Total adjustments, net of tax1 | | (0.01) | | | (0.04) | | | (0.02) |
Adjusted basic earnings per share | $ | 0.54 | | $ | 0.49 | | $ | 0.46 |
(1) The effective tax rate of 38.5% is used to determine net of tax amounts.
FFMH Reports First Quarter 2016 Results
April 19, 2016
Page 5
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | (Unaudited) | | |
| | | | March 31, | | December 31, |
| (dollars in thousands, except per share data) | | 2016 | | 2015 |
ASSETS | Cash and due from banks | | $ | 17,741 | | $ | 19,453 |
| | Interest-bearing deposits | | 67,761 | | 18,299 |
| | Federal funds sold | | 16,559 | | 24,476 |
| | Total cash and cash equivalents | | 102,034 | | 62,228 |
| | Securities: | | | | |
| | Available-for-sale | | 388,959 | | 395,019 |
| | Held-to-maturity (fair market value $7,712 and $4,089 | | | | |
| | as of March 31, 2016 and December 31, 2015, respectively) | | 7,599 | | 4,059 |
| | Total securities | | 396,558 | | 399,078 |
| | Loans, net of deferred fees | | 739,388 | | 731,266 |
| | Allowance for loan and lease losses | | (8,689) | | (8,634) |
| | Net loans | | 730,699 | | 722,632 |
| | Bank premises and equipment, net | | 25,399 | | 25,518 |
| | Other real estate owned | | 94 | | 62 |
| | Bank-owned life insurance | | 26,310 | | 26,552 |
| | Goodwill | | 9,018 | | 9,018 |
| | Other assets | | 13,281 | | 15,222 |
| TOTAL ASSETS | | $ | 1,303,393 | | $ | 1,260,310 |
LIABILITIES | Deposits: | | | | |
| | Noninterest-bearing | | $ | 240,222 | | $ | 239,226 |
| | Interest-bearing | | 901,645 | | 864,575 |
| | Total deposits | | 1,141,867 | | 1,103,801 |
| | Securities sold under agreements to repurchase | | 24,997 | | 24,177 |
| | Accounts payable and accrued liabilities | | 12,056 | | 14,542 |
| TOTAL LIABILITIES | | 1,178,920 | | 1,142,520 |
SHAREHOLDERS’ | Common stock - $10 par value per share, 8,000,000 shares | | | | |
EQUITY | authorized; 4,739,502 shares issued and outstanding | | | | |
| as of March 31, 2016 and December 31, 2015 | | 47,395 | | 47,395 |
| | Retained earnings | | 74,172 | | 71,583 |
| | Accumulated other comprehensive income (loss) | | 2,811 | | (1,283) |
| | TOTAL SHAREHOLDERS’ EQUITY BEFORE
NONCONTROLLING INTEREST - PREFERRED STOCK OF
SUBSIDIARY | | 124,378 | | 117,695 |
| | Noncontrolling interest - preferred stock of subsidiary | | 95 | | 95 |
| | TOTAL SHAREHOLDERS’ EQUITY | | 124,473 | | 117,790 |
| | | | | | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 1,303,393 | | $ | 1,260,310 |
| | | |
| | | | | | | | | |
FFMH Reports First Quarter 2016 Results
April 19, 2016
Page 6
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
| | | Three Months Ended March 31, |
| (dollars in thousands, except per share data) | 2016 | | 2015 |
INTEREST AND | Interest and fees on loans | $ | 7,684 | | $ | 7,168 |
DIVIDEND | Income on investment securities | | | |
INCOME | Taxable interest | 1,307 | | 1,471 |
| | Exempt from federal income tax | 544 | | 609 |
| | Dividends | 130 | | 55 |
| Total interest income | 9,665 | | 9,303 |
INTEREST | Interest on deposits | 537 | | 542 |
EXPENSE | Interest on other borrowings | 21 | | 23 |
| | Total interest expense | 558 | | 565 |
| | Net interest income | 9,107 | | 8,738 |
| | Provision for loan and lease losses | 75 | | - |
| Net interest income after provision | 9,032 | | 8,738 |
NON-INTEREST | Gain on loans sold | 38 | | 33 |
INCOME | Trust department income | 676 | | 652 |
| Service fees on deposit accounts | 1,582 | | 1,560 |
| | Brokerage fees | 102 | | 145 |
| | Earnings on bank-owned life insurance | 48 | | 73 |
| | Gain on sale of available-for-sale securities | 11 | | 270 |
| | Gain on foreclosed property | - | | 17 |
| Gain on bank-owned life insurance | 33 | | - |
| | Other non-interest income | 136 | | 135 |
| Total non-interest income | 2,626 | | 2,885 |
NON-INTEREST | Salaries and employee benefits | 4,456 | | 4,641 |
EXPENSE | Net occupancy expense | 648 | | 521 |
| | Depreciation expense | 364 | | 372 |
| | Data processing expense | 654 | | 601 |
| | Legal and professional fees | 340 | | 351 |
| | Stationary and office supplies | 82 | | 86 |
| | Advertising and promotions | 170 | | 282 |
| | FDIC insurance premium expense | 158 | | 150 |
| | Other non-interest expense | 1,355 | | 1,026 |
| | Total non-interest expense | 8,227 | | 8,030 |
| | Income before provision for income taxes | 3,431 | | 3,593 |
| Provision for income taxes | 842 | | 976 |
| | Net income before noncontrolling interest -
dividends on preferred stock of subsidiary | 2,589 | | 2,617 |
| | Noncontrolling interest - dividends on preferred
stock subsidiary | - | | - |
| Net income for common shareholders | $ | 2,589 | | $ | 2,617 |
| | | | |
| | Weighted average shares outstanding | 4,739,502 | | 4,897,245 |
| Earnings per share | $ | 0.55 | | $ | 0.53 |
FFMH Reports First Quarter 2016 Results
April 19, 2016
Page 7
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL HIGHLIGHTS
(unaudited)
| | For the Three Months Ended |
(dollars in thousands, except per share data) | March 31, 2016 | | December 31, 2015 | | September 30, 2015 | | June 30, 2015 | | March 31, 2015 |
Results of Operations: | | | | | | | | | |
Interest income | $ | 9,665 | | $ | 9,841 | | $ | 9,817 | | $ | 9,720 | | | $ | 9,303 |
Interest expense | 558 | | 547 | | 556 | | 556 | | 565 |
Net interest income | 9,107 | | 9,294 | | 9,261 | | 9,164 | | 8,738 |
Provision for possible loan losses, net | 75 | | 30 | | - | | - | | - |
Noninterest income | 2,626 | | 2,877 | | 2,907 | | 2,774 | | 2,885 |
Noninterest expense | 8,227 | | 9,102 | | 8,524 | | 8,559 | | 8,030 |
Income before income taxes | 3,431 | | 3,039 | | 3,644 | | 3,379 | | 3,593 |
Income taxes | 842 | | 771 | | 925 | | 677 | | 976 |
Net income for common shareholders | $ | 2,589 | | $ | 2,268 | | $ | 2,719 | | $ | 2,702 | | $ | 2,617 |
Per Share Data: | | | | | | | | | |
Basic earnings per share | $ | 0.55 | | $ | 0.48 | | $ | 0.57 | | $ | 0.56 | | $ | 0.53 |
Weighted average shares outstanding per quarter | 4,739,502 | | 4,771,648 | | 4,808,352 | | 4,853,265 | | 4,897,245 |
Financial Condition Data: | | | | | | | | | |
Total securities | $ | 396,427 | | $ | 399,078 | | $ | 406,576 | | $ | 427,874 | | $ | 440,314 |
Loans, net of deferred fees | 739,388 | | 731,266 | | 727,535 | | 685,402 | | 675,015 |
Allowance for loan and lease losses | (8,689) | | (8,634) | | (8,585) | | (8,593) | | (7,944) |
Total assets | 1,303,393 | | 1,260,310 | | 1,230,896 | | 1,213,250 | | 1,219,287 |
Total deposits | 1,141,867 | | 1,103,801 | | 1,061,201 | | 1,056,717 | | 1,063,822 |
Asset Quality Data and Ratios: | | | | | | | | | |
Total nonperforming assets | $ | 4,570 | | $ | 2,259 | | $ | 2,218 | | $ | 2,493 | | $ | 5,229 |
Nonperforming assets to total assets | 0.35% | | 0.18% | | 0.18% | | 0.21% | | 0.43% |
Allowance for loan and lease losses to total loans | 1.18% | | 1.18% | | 1.18% | | 1.25% | | 1.18% |
Net charge-offs (recoveries) to average loans (annualized) | 0.01% | | (0.10%) | | (0.12%) | | (0.19%) | | (0.01%) |
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