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First Farmers and Merchants Corporation Reports Record 2019 Net Income of $16.1 Million or $3.62 Per Common Share

January 27, 2020 GMT

COLUMBIA, Tenn.--(BUSINESS WIRE)--Jan 27, 2020--

First Farmers and Merchants Corporation (OTC Pink: FFMH), the holding company for First Farmers and Merchants Bank, today announced unaudited financial results for the quarter and year ending December 31, 2019.

Key highlights of First Farmers’ results for 2019 include:

Commenting on the results, T. Randy Stevens, Chairman and Chief Executive Officer of First Farmers, said, “We are very pleased to report record results for 2019 for both net income and adjusted net income, the latter of which excludes the sale of our White Bluff office during the first quarter 2019 and provides the best measure of our financial performance. The year ended with solid loan growth matched with strong credit metrics which meets our expectation of prudent lending. We also experienced increases in net interest income and a 31% rise in mortgage banking activities which contributed to a double digit increase in our net income. Our administered trust assets reached a record $5.4 billion as we celebrate 50 years of offering trust services to our clients. These outstanding results reflect solid execution of our operating plan, which focuses on building long-lasting relationships with our customers, and validate our confidence as we enter 2020.”

Brian K. Williams, President, added, “The operating environment in 2019 certainly presented a few challenges, and I am thankful for the focus of our bank team as First Farmers again delivered record performance. The achievement of record milestones for assets, loans, and deposits is a direct reflection of the commitment and talent of our outstanding team of bankers; and points to the foundation that has been laid to enable future earnings growth and shareholder returns. Underscoring our success last year was our team’s ability to manage our loan growth and adhere to strong credit discipline, which, as a result, led to expansion of our net interest margin at a time when many of our peers experienced margin contraction. Our Board remains committed to First Farmers’ community bank model, as evidenced by the Company’s repurchase of 72,000 shares in 2019 at an average price of $44.14 and the extension of our repurchase program to include up to 200,000 shares through 2020.”

2019 Results of Operations

Net income improved to a record $16.1 million, up $1.9 million, or 13%, from 2018. Propelling earnings for the year was the gain on the sale of the First Farmers White Bluff office of $2.0 million, net of tax, during the first quarter of 2019. Net interest income improved $729,000 as a result of $42 million of loan growth and an improved net interest margin for 2019. Credit trends continued to improve for 2019, which resulted in $360,000 of provision credit for loan and lease losses. Mortgage banking activities revenue increased to a record $1.1 million, up $265,000, or 31%, for 2019. The increase in non-interest expense for 2019 was due to higher salaries and employee benefits of $948,000 related to the investment in key additions to our bank team.

The $418,000 decrease in fourth quarter earnings compared with the linked quarter was driven by a decrease of $305,000 in provision credit and a decrease in non-interest income of $96,000. The decrease in non-interest income was primarily driven by a gain on the redemption of bank-owned life insurance of $150,000 during the third quarter of 2019.

First Farmers ended 2019 with $935 million of loans, a record for the Company, and recorded loan growth of $42 million, or 5% for the year. Total deposits reached a record $1.220 billion for 2019, an increase of $46 million, or 4% for the year. Loan and deposit growth was achieved even though 2019 began with First Farmers selling $4 million in loan balances and $29 million in deposits as it divested its White Bluff office.

Asset Quality

Total nonperforming assets decreased to $1.7 million, or 0.12% of total assets, down $1.0 million from the linked quarter and flat from the year-earlier quarter. The Company ended 2019 with no net charge‑offs to average loans or any other real estate repossessed. The allowance for loan and lease losses declined to 0.96% of total loans outstanding, driven by improving credit metrics, compared with 0.99% for the linked quarter and 1.04% for the year-earlier quarter.

Capital Management Initiatives

First Farmers repurchased 25,000 shares of common stock during the fourth quarter at an average price of $45.25 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, 2020.

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 22 offices in seven Middle Tennessee counties. As of December 31, 2019, First Farmers reported total assets of $1.4 billion, total shareholders’ equity of $144 million, and administered trust assets of $5.4 billion. For more information about First Farmers, visit us on the Web at www.myfirstfarmers.com under “Investor Relations.”

Cautionary Note Regarding Forward Looking Statements

This news release may contain certain “forward-looking statements” that represent First Farmers’ expectations or beliefs concerning future events 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. Such forward-looking statements contained herein represent the current expectations, plans or forecast of First Farmers’ and are about matters that are inherently subject to risks and uncertainties. These statements are not guarantees of future results or performance and readers are cautioned to not place undue reliance on them, whether included in this news release or made elsewhere from time to time by First Farmers or on its behalf. First Farmers disclaims any obligation to update such forward-looking statements.

Non-GAAP Financial Measures

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. First Farmers management uses non-GAAP financial measures, including: (i) adjusted net income and (ii) adjusted basic earnings per share, in its analysis of the Company’s performance. These non-GAAP financial measures exclude the following from net income: securities gains and losses, gain on sale of White Bluff office, gain on bank owned life insurance, contingency accrual and the income tax effect of adjustments. Management believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company.

 

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,

 

2019

 

 

2018

 

 

2019

 

 

2019

 

 

2018

 

Total non-interest income

$

3,457

 

 

$

3,740

 

 

$

3,553

 

 

$

16,207

 

 

$

14,041

 

(Gain) loss on sale of securities

 

(15

)

 

 

211

 

 

 

(12

)

 

 

(27

)

 

 

211

 

Gain on sale of White Bluff office

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,700

)

 

 

-

 

Gain on bank-owned life insurance

 

-

 

 

 

(492

)

 

 

(150

)

 

 

(150

)

 

 

(542

)

Adjusted non-interest income

$

3,442

 

 

$

3,459

 

 

$

3,391

 

 

$

13,330

 

 

$

13,710

 

Contingency accrual

 

(1

)

 

 

-

 

 

 

(6

)

 

 

108

 

 

 

-

 

Net income as reported

$

3,477

 

 

$

3,572

 

 

$

3,895

 

 

$

16,056

 

 

$

14,197

 

Total adjustments, net of tax 1

 

(12

)

 

 

(336

)

 

 

(163

)

 

 

(2,085

)

 

 

(386

)

Adjusted net income

$

3,465

 

 

$

3,236

 

 

$

3,732

 

 

$

13,971

 

 

$

13,811

 

Earnings per share

$

0.79

 

 

$

0.80

 

 

$

0.88

 

 

$

3.62

 

 

$

3.17

 

Total adjustments, net of tax 1

 

-

 

 

 

(0.08

)

 

 

(0.04

)

 

 

(0.47

)

 

 

(0.09

)

Adjusted earnings per share

$

0.79

 

 

$

0.72

 

 

$

0.84

 

 

$

3.15

 

 

$

3.08

 

 

(1) The statutory blended tax rate of 26.1% is used to determine net of tax amounts.

 
 

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

(unaudited)

 

 

 

December 31,

December 31,

 

(dollars in thousands, except per share data)

 

2019

 

2018 (1)

ASSETS

Cash and due from banks

 

$

27,433

 

$

36,100

 

Interest-bearing deposits

 

6,712

 

4,173

 

Federal funds sold

 

-

 

246

 

Total cash and cash equivalents

 

34,145

 

40,519

 

Securities:

 

 

 

Available-for-sale

 

329,796

 

332,237

 

Held-to-maturity (fair market value $18,005 and $17,615 as of the periods presented)

 

17,606

 

18,644

 

Total securities

 

347,402

 

350,881

 

Loans, net of deferred fees

 

937,310

 

895,191

 

Allowance for loan and lease losses

 

(8,960

)

(9,282

)

Net loans

 

928,350

 

885,909

 

Bank premises and equipment, net

 

36,090

 

31,605

 

Bank-owned life insurance

 

32,198

 

31,960

 

Goodwill

 

9,018

 

9,018

 

Other assets

 

16,467

 

15,225

 

 

TOTAL ASSETS

 

$

1,403,670

 

 

$

1,365,117

 

LIABILITIES

Deposits:

 

Non-interest bearing

 

$

311,274

 

$

302,345

 

Interest bearing

 

908,967

 

872,325

 

Total deposits

 

1,220,241

 

1,174,670

 

Securities sold under agreements to repurchase

 

11,742

 

40,579

 

 

Federal Home Loan Bank borrowings

 

5,500

 

 

4,000

 

 

Accounts payable and accrued liabilities

 

21,799

 

 

15,885

 

 

TOTAL LIABILITIES

 

1,259,282

 

 

1,235,134

 

SHAREHOLDERS’
EQUITY

Common stock - $10 par value per share, 8,000,000 shares authorized; 4,379,871 and 4,451,447 shares issued and outstanding as of the periods presented

 

43,799

 

44,514

 

 

Retained earnings

 

98,945

 

89,299

 

Accumulated other comprehensive income (loss)

 

1,549

 

(3,925

)

Total shareholders’ equity before noncontrolling interest – preferred stock of subsidiary

 

144,293

 

129,888

 

Noncontrolling interest - preferred stock of subsidiary

 

95

 

95

 

TOTAL SHAREHOLDERS’ EQUITY

 

144,388

 

129,983

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

1,403,670

 

 

$

1,365,117

 

 

 

 

 

 

 

 

 

(1) Derived from audited financial statements as of December 31, 2018.

 

 

 

 

 

 

 
 

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)

2019

 

2018

 

2019

 

2018

INTEREST AND

Interest and fees on loans

$

10,234

 

 

$

10,276

 

 

$

40,772

 

 

$

37,821

 

DIVIDEND

Income on investment securities

 

 

 

 

 

INCOME

Taxable interest

1,278

 

1,318

 

 

5,042

 

 

5,347

 

Exempt from federal income tax

520

 

 

602

 

 

2,143

 

 

2,508

 

Interest from federal funds sold and other

59

 

 

30

 

 

236

 

 

217

 

 

Total interest income

12,091

 

 

12,226

 

 

48,193

 

 

45,893

 

INTEREST

Interest on deposits

1,416

 

 

1,122

 

 

5,220

 

 

3,715

 

EXPENSE

Interest on other borrowings

31

 

 

204

 

 

523

 

 

457

 

Total interest expense

1,447

 

 

1,326

 

 

5,743

 

 

4,172

 

Net interest income

10,644

 

 

10,900

 

 

42,450

 

 

41,721

 

Provision (credit) for loan and lease losses

-

 

 

50

 

 

(360

)

 

50

 

 

Net interest income after provision

10,644

 

 

10,850

 

 

42,810

 

 

41,671

 

NON-INTEREST

Mortgage banking activities

334

 

 

228

 

 

1,114

 

 

849

 

INCOME

Trust services fee income

891

 

 

888

 

 

3,598

 

 

3,650

 

 

Service fees on deposit accounts

1,806

 

 

1,921

 

 

7,077

 

 

7,408

 

Investment services fee income

137

 

 

112

 

 

404

 

 

584

 

Earnings on bank-owned life insurance

115

 

 

115

 

 

461

 

 

487

 

Gain (loss) on sale of investments

15

 

 

(211

)

 

27

 

 

(211

)

 

Gain on bank-owned life insurance

-

 

 

492

 

 

150

 

 

542

 

 

Gain on sale of White Bluff office

-

 

 

-

 

 

2,700

 

 

-

 

Other non-interest income

159

 

 

195

 

 

676

 

 

732

 

 

Total non-interest income

3,457

 

 

3,740

 

 

16,207

 

 

14,041

 

NON-INTEREST

Salaries and employee benefits

6,125

 

 

6,499

 

 

23,710

 

 

22,762

 

EXPENSE

Net occupancy expense

588

 

 

782

 

 

2,518

 

 

2,929

 

Depreciation expense

509

 

 

379

 

 

2,056

 

 

1,514

 

Data processing expense

756

 

 

742

 

 

3,007

 

 

2,818

 

 

Software support and other computer expense

561

 

 

532

 

 

2,092

 

 

2,221

 

Legal and professional fees

244

 

 

247

 

 

1,001

 

 

1,102

 

Audits and exams expense

153

 

 

171

 

 

653

 

 

692

 

Advertising and promotions

285

 

 

426

 

 

1,269

 

 

1,223

 

Other non-interest expense

699

 

 

721

 

 

3,292

 

 

3,645

 

Total non-interest expense

9,920

 

 

10,499

 

 

39,598

 

 

38,906

 

Income before provision for income taxes

4,181

 

 

4,091

 

 

19,419

 

 

16,806

 

 

Provision for income taxes

696

 

 

511

 

 

3,347

 

 

2,593

 

Net income

3,485

 

 

3,580

 

 

16,072

 

 

14,213

 

Noncontrolling interest - dividends on preferred stock subsidiary

8

 

 

8

 

 

16

 

 

16

 

 

Net income available to common shareholders

$

3,477

 

 

$

3,572

 

 

$

16,056

 

 

$

14,197

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

4,400,940

 

 

4,461,790

 

 

4,429,952

 

 

4,477,947

 

 

Earnings per share

$

0.79

 

 

$

0.80

 

 

$

3.62

 

 

$

3.17

 

  
 

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,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

Results of Operations:

 

 

 

 

 

 

 

 

 

Interest income

$

12,091

 

 

$

12,205

 

 

$

12,059

 

 

$

11,838

 

 

$

12,226

 

Interest expense

1,447

 

 

1,546

 

 

1,381

 

 

1,369

 

 

1,326

 

Net interest income

10,644

 

 

10,659

 

 

10,678

 

 

10,469

 

 

10,900

 

(Provision credit) provision for loan and lease losses

-

 

 

(305

)

 

(55

)

 

-

 

 

50

 

Non-interest income

3,457

 

 

3,553

 

 

3,410

 

 

5,787

 

 

3,740

 

Non-interest expense and non-controlling interest – preferred stock of subsidiary

9,928

 

 

9,902

 

 

10,194

 

 

9,590

 

 

10,507

 

Income before income taxes

4,173

 

 

4,615

 

 

3,949

 

 

6,666

 

 

4,083

 

Income taxes

696

 

 

720

 

 

611

 

 

1,320

 

 

511

 

Net income for common shareholders

$

3,477

 

 

$

3,895

 

 

$

3,338

 

 

$

5,346

 

 

$

3,572

 

Per Share Data:

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.79

 

 

$

0.88

 

 

$

0.75

 

 

$

1.20

 

 

$

0.80

 

Weighted average shares outstanding per quarter

4,400,940

 

 

4,426,166

 

 

4,442,627

 

 

4,450,901

 

 

4,461,790

 

Financial Condition Data and Ratios:

 

 

 

 

 

 

 

 

 

Total securities

$

347,402

 

 

$

347,373

 

 

$

341,956

 

 

$

341,241

 

 

$

350,881

 

Loans, net of deferred fees

$

937,310

 

 

$

901,560

 

 

$

890,556

 

 

$

891,487

 

 

$

895,191

 

Allowance for loan and lease losses

$

(8,960

)

 

$

(8,937

)

 

$

(9,227

)

 

$

(9,278

)

 

$

(9,282

)

Total assets

$

1,403,670

 

 

$

1,368,606

 

 

$

1,369,290

 

 

$

1,346,492

 

 

$

1,365,117

 

Total deposits

$

1,220,241

 

 

$

1,178,308

 

 

$

1,140,513

 

 

$

1,154,809

 

 

$

1,174,670

 

Net interest income, on a fully taxable-equivalent basis

$

10,926

 

 

$

10,945

 

 

$

10,974

 

 

$

10,773

 

 

$

11,218

 

Net interest margin

3.41

%

 

3.48

%

 

3.55

%

 

3.52

%

 

3.54

%

 

 

 

 

 

 

 

 

 

 

Asset Quality Data and Ratios:

 

 

 

 

 

 

 

 

 

Total nonperforming assets

$

1,665

 

 

$

2,593

 

 

$

1,616

 

 

$

1,610

 

 

$

1,674

 

Nonperforming assets to total assets

0.12

%

 

0.19

%

 

0.12

%

 

0.12

%

 

0.12

%

Allowance for loan and lease losses to total loans

0.96

%

 

1.00

%

 

1.04

%

 

1.04

%

 

1.04

%

Net charge-offs (recoveries) to average loans (annualized)

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

(0.01

%)

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20200127005104/en/

CONTACT: Robert E. Krimmel

Chief Financial Officer

(931) 380-8257

KEYWORD: UNITED STATES NORTH AMERICA TENNESSEE

INDUSTRY KEYWORD: BANKING OTHER PROFESSIONAL SERVICES PROFESSIONAL SERVICES FINANCE

SOURCE: First Farmers and Merchants Corporation

Copyright Business Wire 2020.

PUB: 01/27/2020 07:00 AM/DISC: 01/27/2020 07:01 AM

http://www.businesswire.com/news/home/20200127005104/en