Solid quarter for First M&F as merger nears

PR Newswire

KOSCIUSKO, Miss., July 19, 2013 /PRNewswire/ -- First M&F Corp. (FMFC) reported today a net profit for the quarter ended June 30, 2013 of $2.205 million.  Net income for the quarter applicable to common stock was $1.698 million, or $0.18 basic and $0.17 diluted earnings per share, compared to the first quarter of 2013 earnings applicable to common of $2.101 million, or $.22 basic and diluted earnings per share and earnings of $1.282 million, or $.14 basic and diluted earnings per share for the second quarter of 2012. 

Hugh Potts, Jr., Chairman and CEO commented, "Once again, the performance of M&F is on track with our plans and expectations.  Credit metrics continue to improve and the margin battle intensifies.  Expenses are under control although merger-related expenses are starting to be felt.  These are important issues, especially with our upcoming merger with Renasant Bank to be completed in the third quarter.  With that merger, combined with recent performance, the M&F team continues to deliver to our shareholders increasing value and quality in their investment."

Net Interest Income

Reported net interest income was down by 4.54% on lower volumes compared to the second quarter of 2012, with the net interest margin falling to 3.58% on a tax equivalent basis in the second quarter of 2013 as compared to 3.72% in the second quarter of 2012.  The net interest margin for the first quarter of 2013 was 3.53% as compared to 3.56% for the fourth quarter of 2012 and 3.73% for the third quarter of 2012.  Loan yields fell to 5.21% in the second quarter of 2013 from 5.61% in the second quarter of 2012.  Loan yields fell slightly from the first quarter of 2013 to the second quarter as well. Average loans were $.978 billion for the second quarter of 2013 as compared to $.991 billion for the first quarter of 2013 and $1.004 billion during the second quarter of 2012. Loans held for investment fell by $20.6 million in the second quarter of 2013 but grew by $12.2 million in the first quarter.

Deposit costs decreased in the second quarter of 2013 from the first quarter of 2013 and from the second quarter of 2012, in response to the continuing low rate environment.  Deposit costs were .54% in the second quarter of 2013 as compared to .78% in the second quarter of 2012. Deposits grew by $13.4 million during the second quarter of 2013 and have grown by $4.9 million since the second quarter of 2012.

Loans held for investment as a percentage of assets were 63.27% at June 30, 2013 as compared to 62.93% at June 30, 2012 and 60.90% at December 31, 2012. Loans fell by 1.59% since the second quarter of 2012 and deposits grew by .36%.

Non-interest Income

Non-interest income, excluding securities transactions and impairment of investments, for the second quarter of 2013 fell by 46.2% compared to the second quarter of 2012, with deposit-related revenue down by 4.36%.  Insurance agency commissions were up 3.77% quarter over quarter.  The major contributors to the decrease in non-interest income were reduced mortgage income and the prepayment penalty realized upon the early retirement of Federal Home Loan Bank advances offset somewhat by securities gains taken as the investment portfolio was restructured in preparation for the upcoming merger.   Mortgage origination and sale volumes were influenced by a fall in refinancing, partly affected by the rise in rates and due to merger-related turnover in the mortgage department.  Mortgage income for the quarter was down 65.7% versus the year ago quarter and down 52% compared to the first quarter.   

Non-interest Expenses

Non-interest expenses were down overall 12.43% in the second quarter of 2013 as compared to the second quarter of 2012 largely due to volume-related decreases in mortgage expenses supplemented by lower foreclosed property expenses and lower salaries and employee benefits.  These reductions were somewhat offset by merger-related expenses of $.458 million, for accounting, legal and information technology charges.  Mr. Potts pointed out that, "After tax net merger-related charges represented about $.04 per share in net earnings for the quarter." 

Credit Quality

Annualized net loan charge-offs as a percent of average loans for the second quarter of 2013 were .09% as compared to 1.26% for the same period in 2012.  Net charge-offs totaled $.218 million for the quarter versus $3.054 million a year ago and $.503 million in the first quarter of 2013.  Non-accrual and 90-day past due loans as a percent of total loans were .64% at the end of the second quarter of 2013 as compared to .79% at the end of the 2012 quarter. The allowance for loan losses as a percentage of loans was 2.01% at June 30, 2013 as compared to 1.56% at June 30, 2012. The provision for loan losses was lower by 39.5% versus the year ago quarter as credit quality continued to improve.

Balance Sheet

Total assets at June 30, 2013 were $1.529 billion as compared to $1.602 billion at the end of 2012 and $1.561 billion at June 30, 2012. Total loans were $.967 billion compared to $.975 billion at the end of 2012 and $.983 billion at June 30, 2012. Deposits were $1.366 billion compared to $1.403 billion at the end of 2012 and $1.361 billion at June 30, 2012. Total capital was $117.278 million, or $10.58 in book value per common share, at June 30, 2013.

In summary Mr. Potts said, "First M&F had a good quarter and we'll be combining with Renasant on a high note.  The decision to merge with Renasant, now approved by our shareholders, was driven by a prudent and thorough assessment of shareholder benefits. On our own, we were well on our way to achieving a return to growing value and high performance but shareholder patience, already taxed with the events of recent years, was a major factor in the decision." 

In closing, Mr. Potts concluded, "As the current prices of First M&F and Renasant indicate, M&F shareholder value has largely been restored.  Our shareholders can look to their investment in First M&F, and post-merger in Renasant, as an opportunity for even greater value and financial wherewithal.  Looking back at M&F's long history, we can rest assured that there has been Divine guidance given to this company for 123 years.  May the Lord continue to guide and bless us as we seek Him in humble reliance and trust.  Thanks to our shareholders for the fellowship of shared objectives and a common destiny through this 123 year journey."   

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)





June 30

December 31

June 30


2013

2012

2012

Cash and due from banks

$           49,568

$           54,811

$           37,147

Interest bearing bank balances

133,333

94,313

20,708

Federal funds sold

10,000

10,000

6,750

Securities available for sale (cost of




  $277,588, $341,273 and $371,424)

273,553

348,562

377,670

Loans held for sale

2,614

21,014

22,291





Loans

967,013

975,473

982,596

Allowance for loan losses

19,431

17,492

15,310

     Net loans

947,582

957,981

967,286





Bank premises and equipment

36,438

37,264

37,529

Accrued interest receivable

4,777

5,683

6,060

Other real estate

22,571

25,970

31,077

Other intangible assets

3,946

4,159

4,373

Other assets

44,128

41,926

50,605

     Total assets

$      1,528,510

$       1,601,683

$       1,561,496





Non-interest bearing deposits

$         304,734

$          276,295

$          236,145

Interest bearing deposits

1,061,474

1,126,380

1,125,193

     Total deposits

1,366,208

1,402,675

1,361,338





Federal funds and repurchase agreements

1,994

3,720

3,224

Other borrowings

2,792

36,007

40,333

Junior subordinated debt

30,928

30,928

30,928

Accrued interest payable

482

661

844

Other liabilities

8,828

9,249

10,912

     Total liabilities

1,411,232

1,483,240

1,447,579





Preferred stock, 30,000 shares issued and outstanding

19,569

18,865

18,198

Common stock, 9,236,479, 9,230,799 and 9,172,098




     shares issued & outstanding

46,182

46,154

45,860

Additional paid-in capital

32,515

32,469

31,890

Nonvested restricted stock awards

405

244

836

Retained earnings

22,859

19,180

16,699

Accumulated other comprehensive income  (loss)

(4,252)

1,531

434

     Total equity

117,278

118,443

113,917

     Total liabilities & equity

$      1,528,510

$       1,601,683

$       1,561,496





 

First M&F Corporation and Subsidiary


Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except share data)





Three Months Ended June 30

Six Months Ended June 30


2013

2012

2013

2012

Interest and fees on loans

$           12,652

$           13,741

$           25,350

$           27,899

Interest on loans held for sale

25

244

81

417

Taxable investments

1,338

1,563

2,569

3,053

Tax exempt investments

348

319

700

637

Federal funds sold

6

11

12

26

Interest bearing bank balances

40

28

98

79

     Total interest income

14,409

15,906

28,810

32,111






Interest on deposits

1,452

2,233

2,968

4,746

Interest on fed funds and repurchase agreements

2

5

6

11

Interest on other borrowings

329

437

700

888

Interest on subordinated debt

297

315

580

586

     Total interest expense

2,080

2,990

4,254

6,231






     Net interest income

12,329

12,916

24,556

25,880

Provision for possible loan losses

1,380

2,280

2,660

4,560

     Net interest income after loan loss

10,949

10,636

21,896

21,320






Service charges on deposits

2,437

2,548

4,808

5,005

Mortgage banking income

619

1,806

1,910

2,373

Agency commission income

880

848

1,700

1,677

Fiduciary and brokerage income

203

163

363

303

Other income

618

673

1,662

1,510

Loss on extinguishment of debt

(1,511)

-

(1,511)

-

Other-than-temporary impairment on securities, net of





$0, $4, $0, and $4 reclassified to  other





comprehensive income

-

(4)

-

(4)

Gains on AFS securities

1,378

1

1,394

592

     Total noninterest income

4,624

6,035

10,326

11,456






Salaries and employee benefits

6,377

6,737

12,739

13,600

Net occupancy expense

819

932

1,684

1,840

Equipment expenses

390

423

822

886

Software and processing expenses

555

346

911

708

FDIC insurance assessments

323

553

671

1,067

Foreclosed property expenses

926

1,282

1,514

2,738

Intangible asset amortization and impairment

107

106

213

213

Other expenses

3,042

3,940

6,924

7,253

     Total noninterest expense

12,539

14,319

25,478

28,305






     Net income before taxes

3,034

2,352

6,744

4,471

Income tax expense

829

599

1,941

1,111

     Net income

$            2,205

$             1,753

$             4,803

$            3,360






Earnings Per Common Share Calculations:





     Net income

$            2,205

$             1,753

$             4,803

$            3,360

Dividends and accretion on preferred stock

(507)

(471)

(1,004)

(934)

     Net income applicable to common stock

1,698

1,282

3,799

2,426

Earnings attributable to participating securities

65

56

146

61

     Net income allocated to common shareholders

$            1,633

$             1,226

$             3,653

$            2,365






Weighted average shares (basic)

9,234,452

9,164,576

9,232,963

9,160,526

Weighted average shares (diluted)

9,445,769

9,164,576

9,403,561

9,160,526

Basic earnings per share

$              0.18

$               0.14

$               0.40

$              0.26

Diluted earnings per share

$              0.17

$               0.14

$               0.39

$              0.26











First M&F Corporation





Financial Highlights






YTD Ended

YTD Ended

YTD Ended

YTD Ended


June 30

December 31

June 30

December 31


2013

2012

2012

2011

Performance Ratios:





Return on assets (annualized)

0.62%

0.44%

0.42%

0.27%

Return on equity (annualized)  (a)

8.05%

6.12%

6.06%

4.00%

Return on common equity (annualized)  (a)

7.58%

5.30%

5.21%

2.81%

Efficiency ratio (c)

72.09%

74.98%

74.94%

78.47%

Net interest margin (annualized, tax-equivalent)

3.55%

3.67%

3.69%

3.68%

Net charge-offs to average loans (annualized)

0.15%

0.61%

0.86%

1.05%

Nonaccrual loans to total loans

0.62%

0.75%

0.64%

1.68%

90 day accruing loans to total loans

0.02%

0.03%

0.15%

0.06%












QTD Ended

QTD Ended

QTD Ended

QTD Ended


June 30

March 31

December 31

September 30


2013

2013

2012

2012

Per Common Share (diluted):





Net income

$              0.17

$               0.22

$               0.14

$              0.14

Cash dividends paid

0.01

0.01

0.01

0.01

Book value

10.58

11.00

10.79

10.69

Closing stock price

15.81

14.15

6.98

7.42






Loan Portfolio Composition: (in thousands)





Commercial, financial and agricultural

$         145,411

$          150,125

$          153,550

$         155,890

Non-residential real estate

540,694

557,453

542,859

554,475

Residential real estate

206,490

203,260

200,992

197,629

Home equity loans

38,340

39,047

37,736

37,196

Consumer loans

36,078

37,772

40,336

42,137

   Total loans

$         967,013

$          987,657

$          975,473

$         987,327






Deposit Composition: (in thousands)





Noninterest-bearing deposits

$         304,734

$          252,453

$          276,295

$         233,684

NOW deposits

404,457

419,376

423,461

386,371

MMDA deposits

200,839

207,931

214,091

216,620

Savings deposits

119,583

119,728

118,123

117,404

Core certificates of deposit under $100,000

176,722

182,245

188,733

201,361

Core certificates of deposit $100,000 and over

148,734

159,913

165,979

177,084

Brokered certificates of deposit under $100,000

3,305

3,295

3,549

3,417

Brokered certificates of deposit $100,000 and over

7,834

7,834

12,444

13,533

   Total deposits

$      1,366,208

$       1,352,775

$       1,402,675

$      1,349,474






Nonperforming Assets: (in thousands)





Nonaccrual loans

$            6,036

$             7,277

$             7,444

$             6,219

Other real estate

22,571

24,820

25,970

28,002

Investment securities

679

604

733

644

   Total nonperforming assets

$           29,286

$           32,701

$           34,147

$           34,865

Accruing loans past due 90 days or more

$               186

$                268

$                321

$                408

Restructured loans (accruing)

$            6,209

$           21,657

$           21,800

$           16,784

Total nonaccrual loan to loans

0.62%

0.72%

0.75%

0.62%

Total nonperforming credit assets to loans and ORE

2.88%

3.12%

3.27%

3.29%

Total nonperforming assets to assets ratio

1.92%

2.11%

2.13%

2.24%






Allowance For Loan Loss Activity: (in thousands)





Beginning balance

$           18,269

$           17,492

$           16,656

$           15,310

Provision for loan loss

1,380

1,280

1,980

1,980

Charge-offs

(569)

(747)

(1,584)

(1,035)

Recoveries

351

244

440

401

Ending balance

$           19,431

$           18,269

$           17,492

$           16,656











First M&F Corporation





Financial Highlights






QTD Ended

QTD Ended

QTD Ended

QTD Ended


June 30

March 31

December 31

September 30


2013

2013

2012

2012

Condensed Income Statements: (in thousands)










Interest income

$           14,409

$           14,401

$           15,186

$           15,625

Interest expense

2,080

2,174

2,545

2,753

   Net interest income

12,329

12,227

12,641

12,872

Provision for loan losses

1,380

1,280

1,980

1,980

Noninterest revenues

4,624

5,702

5,735

5,607

Noninterest expenses

12,539

12,939

13,913

14,060

   Net income before taxes

3,034

3,710

2,483

2,439

Income tax expense

829

1,112

652

645

   Net income

$            2,205

$             2,598

$             1,831

$            1,794

Preferred dividends

(507)

(497)

(488)

(479)

   Net income applicable to common stock

1,698

2,101

1,343

1,315

Earnings attributable to participating securities

65

81

53

51

   Net income allocated to common shareholders

$            1,633

$             2,020

$             1,290

$            1,264






Tax-equivalent net interest income

$           12,557

$           12,458

$           12,859

$           13,088






Selected Average Balances: (in thousands)





Assets

$      1,543,020

$       1,570,994

$       1,585,467

$      1,546,416

Loans held for investment

973,160

977,198

982,894

984,282

Earning assets

1,408,023

1,431,054

1,436,348

1,396,824

Deposits

1,345,703

1,369,784

1,381,667

1,343,559

Equity

121,328

119,209

117,529

115,544

Common equity

101,940

100,171

98,837

97,186






Selected Ratios:





Return on average assets (annualized)

0.57%

0.67%

0.46%

0.46%

Return on average equity (annualized)  (a)

7.29%

8.84%

6.19%

6.18%

Return on average common equity (annualized)  (a)

6.68%

8.51%

5.40%

5.38%

Average equity to average assets

7.86%

7.59%

7.41%

7.47%

Tangible equity to tangible assets  (b)

7.43%

7.55%

7.15%

7.28%

Tangible common equity to tangible assets  (b)

6.15%

6.31%

5.97%

6.08%

Net interest margin (annualized, tax-equivalent)

3.58%

3.53%

3.56%

3.73%

Efficiency ratio (c)

72.99%

71.25%

74.83%

75.21%

Net charge-offs to average loans (annualized)

0.09%

0.21%

0.46%

0.26%

Nonaccrual loans to total loans

0.62%

0.72%

0.75%

0.62%

90 day accruing loans to total loans

0.02%

0.03%

0.03%

0.04%

Price to book

1.49x

1.29x

0.65x

0.69x

Price to earnings

23.25x

16.08x

12.46x

13.25x






 

 

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)

2Q 2013

$            2,205

$             1,698

$             1,633

$              0.17

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
















Revenue Statistics:


Non-interest

Non-interest



Revenues

Revenues to

Revenues to



Per FTE

Ttl. Revenues

Avg. Assets



(thousands)

(percent)

(percent)


2Q 2013

$              40.3

26.91%

1.20%


1Q 2013

40.4

31.40%

1.47%


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%

















Expense Statistics:

Non-interest





Expense to

Efficiency




Avg. Assets

Ratio




(percent)

(percent)  (c)



2Q 2013

3.26%

72.99%



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%








 

 

First M&F Corporation

Average Balance Sheets/Yields and Costs (tax-equivalent)

(In thousands with yields and costs annualized)

QTD June 2013

QTD June 2012


Average


Average



Balance

Yield/Cost

Balance

Yield/Cost

Interest bearing bank balances

$           61,978

0.26%

$           30,923

0.37%

Federal funds sold

10,000

0.25%

15,082

0.27%

Taxable investments (amortized cost)

313,887

1.71%

333,794

1.88%

Tax-exempt investments (amortized cost)

44,109

5.04%

36,610

5.59%

Loans held for sale

4,889

2.08%

30,416

3.22%

Loans held for investment

973,160

5.22%

973,545

5.69%

   Total earning assets

1,408,023

4.17%

1,420,370

4.57%

Non-earning assets

134,997


157,050


   Total average assets

$      1,543,020


$       1,577,420







NOW

$         411,929

0.23%

$          404,958

0.43%

MMDA

200,444

0.18%

217,533

0.37%

Savings

120,227

0.76%

121,778

0.95%

Certificates of Deposit

345,147

1.04%

402,703

1.31%

Short-term borrowings

2,862

0.20%

2,974

0.62%

Other borrowings

62,062

4.05%

71,771

4.21%

   Total interest bearing liabilities

1,142,671

0.73%

1,221,717

0.98%

Non-interest bearing deposits

267,956


232,744


Non-interest bearing liabilities

11,065


10,493


Preferred equity

19,388


18,036


Common equity

101,940


94,430


   Total average liabilities and equity

$      1,543,020


$       1,577,420


Net interest spread


3.44%


3.59%

Effect of non-interest bearing deposits


0.14%


0.16%

Effect of leverage


0.00%


-0.03%

   Net interest margin, tax-equivalent


3.58%


3.72%

Less tax equivalent adjustment:





   Investments


0.06%


0.05%

   Loans


0.01%


0.01%

Reported book net interest margin


3.51%


3.66%






 

 

First M&F Corporation





Average Balance Sheets/Yields and Costs (tax-equivalent)




(In thousands with yields and costs annualized)

YTD June 2013

YTD June 2012


Average


Average



Balance

Yield/Cost

Balance

Yield/Cost

Interest bearing bank balances

$           69,212

0.29%

$           55,067

0.29%

Federal funds sold

10,000

0.25%

20,041

0.26%

Taxable investments (amortized cost)

311,642

1.66%

316,708

1.94%

Tax-exempt investments (amortized cost)

44,148

5.10%

35,790

5.71%

Loans held for sale

9,305

1.76%

26,573

3.15%

Loans held for investment

975,168

5.25%

978,672

5.74%

   Total earning assets

1,419,475

4.16%

1,432,851

4.57%

Non-earning assets

137,455


159,365


   Total average assets

$      1,556,930


$       1,592,216







NOW

$         417,417

0.23%

$          412,108

0.45%

MMDA

206,242

0.18%

222,067

0.45%

Savings

119,477

0.78%

121,307

0.97%

Certificates of Deposit

353,048

1.06%

409,895

1.35%

Short-term borrowings

4,093

0.27%

4,014

0.53%

Other borrowings

64,107

4.03%

72,439

4.09%

   Total interest bearing liabilities

1,164,384

0.74%

1,241,830

1.01%

Non-interest bearing deposits

261,493


229,177


Non-interest bearing liabilities

10,779


9,603


Preferred equity

19,214


17,878


Common equity

101,060


93,728


   Total average liabilities and equity

$      1,556,930


$       1,592,216


Net interest spread


3.42%


3.56%

Effect of non-interest bearing deposits


0.14%


0.16%

Effect of leverage


-0.01%


-0.03%

   Net interest margin, tax-equivalent


3.55%


3.69%

Less tax equivalent adjustment:





   Investments


0.06%


0.05%

   Loans


0.01%


0.01%

Reported book net interest margin


3.49%


3.63%






 

 

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)








 

 

View Comments