KOSCIUSKO, Miss., July 18 /PRNewswire-FirstCall/ -- First M&F Corp. reported today that net income for the quarter ended June 30, 2007 was $3.535 million, or $.39 basic and diluted earnings per share, compared to $3.252 million, or $.36 basic and diluted earnings per share for the second quarter of 2006.
For the second quarter of 2007 the annualized return on assets was .92%, while return on equity was 10.69%. Comparatively, the return on assets for the second quarter of 2006 was .86%, with a return on equity of 10.78%.
"We are pleased to be able to announce an increase in earnings over 2006, consistent performance ratios, solid fundamentals and growth. These are all encouraging results for which we are thankful. Our mission and focus is to build the performance and value of FMFC over time with consistency. To have done this the first half of 2007 is positive, given the difficult economic environment", said Hugh Potts, Jr., Chairman and CEO. Potts added, "The flat yield curve, caution in the real estate market and modest economic growth make margin retention and balanced growth of earning assets and funding a challenge. We believe asset quality to be good and holding. Costs of operation are a concern, but manageable, and a healthy and patient focus upon execution is in order."
Mr. Potts further commented, "Our investment in new markets and the resultant pursuit of business opportunities remains viable. We are optimistic about the future growth, performance and value of FMFC. M&F is positioned to serve the present and future needs of our customers from a well situated base."
Net Interest Income
Reported net interest income was up by 2.1% compared to the second quarter of 2006, with the net interest margin decreasing to 4.00% on a tax equivalent basis in the second quarter of 2007 as compared to 4.05% in the second quarter of 2006. The significant contributor to the increase in net interest income was balance sheet growth offset by continuing erosion in spreads as funding rates increased more than asset yields. The net interest margin for the first quarter of 2007 was 3.94% as compared to 3.99% for the fourth quarter of 2006 and 4.04% for the third quarter of 2006. Loan yields increased to 7.90% in the second quarter of 2007 from 7.48% in the second quarter of 2006. Loan yields also increased slightly from the first quarter of 2007 to the second quarter as the prime rate remained at 8.25%. Loan yields have increased over the last eleven quarters in the higher rate environment. Average loans were $1.122 billion for the second quarter of 2007 as compared to $1.102 billion for the first quarter of 2007 and $1.065 billion during the second quarter of 2006. Loans increased by $38.329 million in the second quarter of 2007 and grew by $21.268 million in the first quarter. Deposit costs increased in the second quarter of 2007 from the first quarter of 2007 and from the second quarter of 2006, in response to the continuing higher rate environment and competitive pressures. Deposit costs were 3.53% in the second quarter of 2007 as compared to 2.96% in the second quarter of 2006. Deposits rose by $3.296 million during the second quarter of 2007. Management plans to continue to focus on core deposit growth for 2007 to offset the influence that rising rates may have on the cost of funds and the net interest margin. Loans as a percentage of assets were 72.38% at June 30, 2007 as compared to 70.44% at June 30, 2006 and 70.59% at December 31, 2006. Loans grew by 6.18% since the second quarter of 2006 while deposits grew by 0.62%.
Non-interest Income
Non-interest income, excluding securities transactions, for the second quarter of 2007 was flat compared to the second quarter of 2006, with deposit- related income down slightly and mortgage income, still a relatively small contributor, up by 84.54%. Insurance agency commissions were up by 3.49%.
A major part of non-interest income is from deposit sources. Deposit revenues continue to be supported by debit card fee income, which has increased by 19.87% in the second quarter of 2007 over 2006, while overdraft fee income fell by 3.35%.
Non-interest Expenses
Non-interest expenses were up by 1.38% in the second quarter of 2007 as compared to the second quarter of 2006. Salaries and benefits were up by 2.71%.
Credit Quality
Annualized net loan charge-offs as a percent of average loans for the second quarter of 2007 were .30% as compared to .13% for the same period in 2006. Non-accrual and 90-day past due loans as a percent of total loans were .55% at the end of the second quarter of 2007 as compared to .30% at the end of the 2006 quarter. The allowance for loan losses as a percentage of loans was 1.31% at June 30, 2007 as compared to 1.37% at June 30, 2006. The provision for loan losses decreased to $.630 million in the second quarter of 2007 from $1.004 million in the second quarter of 2006 due to stable loan quality and modest loan growth.
Balance Sheet
Total assets at June 30, 2007 were $1.585 billion as compared to $1.540 billion at the end of 2006 and $1.533 billion at June 30, 2006. Total loans were $1.147 billion compared to $1.087 billion at the end of 2006 and $1.080 billion at June 30, 2006. Deposits were $1.212 billion compared to $1.186 billion at the end of 2006 and $1.205 billion at June 30, 2006. Total capital was $132.601 million, or $ 14.63 in book value per share at June 30, 2007.
Growth
The Company opened a new branch in Madison, Mississippi in April 2006. The Company acquired Columbiana Bancshares, Inc. and its subsidiary, First National Bank of Shelby County (Alabama) in February 2006 and Crockett County Bancshares and its subsidiary, Bells Banking Company (Tennessee) in May 2006. Both banks were merged with M&F Bank at the time of closing. The Company issued $30 million in Trust Preferred securities in February, 2006 in connection with the Alabama merger. The Company also opened two new banking locations in the Memphis, Tennessee metropolitan area and converted an existing loan production office in the area to a full-service branch. In November 2006 the Company opened a full-service banking location in Crestview, Okaloosa County, Florida. In June 2007 the Company opened another full- service banking location in Cordova, Tennessee in the Memphis metro market.
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 31 communities in Mississippi, Alabama, Tennessee and Florida.
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
2007 2006 2006
Cash and due from banks 47,966 59,793 60,516
Interest bearing bank balances 19,390 3,690 7,689
Federal funds sold - - 11,100
Securities available for sale
(cost of $237,571, $263,238
and $244,788) 235,290 261,828 240,907
Loans held for sale 6,659 7,263 10,356
Loans 1,146,879 1,087,283 1,080,146
Allowance for loan losses 15,059 14,950 16,047
Net loans 1,131,820 1,072,333 1,064,099
Bank premises and equipment 42,920 41,128 38,973
Accrued interest receivable 12,499 12,590 10,940
Other real estate 3,652 3,135 4,870
Goodwill 32,572 32,572 33,958
Other intangible assets 7,807 8,113 5,058
Other assets 44,132 37,830 44,853
Total assets 1,584,707 1,540,275 1,533,319
Non-interest bearing deposits 187,604 180,273 197,328
Interest bearing deposits 1,024,556 1,005,709 1,007,390
Total deposits 1,212,160 1,185,982 1,204,718
Federal funds and repurchase
agreements 12,877 19,612 4,037
Other borrowings 186,762 166,400 160,877
Junior subordinated debt 30,928 30,928 30,928
Accrued interest payable 4,219 4,784 4,184
Other liabilities 5,141 4,503 8,075
Total liabilities 1,452,087 1,412,209 1,412,819
Noncontrolling interest in
subsidiaries 19 19 21
Common stock, 9,061,080,
9,046,226 and 9,020,926
shares issued & outstanding 45,305 45,231 45,105
Additional paid-in capital 30,389 30,315 29,745
Nonvested restricted stock awards 507 375 230
Retained earnings 59,412 54,707 49,681
Accumulated other comprehensive
income (3,012) (2,581) (4,282)
Total equity 132,601 128,047 120,479
Total liabilities &
equity 1,584,707 1,540,275 1,533,319
First M&F Corporation and Subsidiary
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except share data)
Three Months Ended Six Months Ended
June 30 June 30
2007 2006 2007 2006
Interest and fees on loans 22,065 19,823 43,284 37,583
Interest on loans held for sale 136 131 248 201
Taxable investments 2,367 2,216 4,851 4,010
Tax exempt investments 447 482 909 967
Federal funds sold 56 192 68 430
Interest bearing bank balances 54 67 97 125
Total interest income 25,125 22,911 49,457 43,316
Interest on deposits 8,848 7,320 17,519 13,167
Interest on fed funds and
repurchase agreements 149 53 337 169
Interest on other borrowings 2,114 1,795 4,084 3,547
Interest on subordinated debt 492 504 988 745
Total interest expense 11,603 9,672 22,928 17,628
Net interest income 13,522 13,239 26,529 25,688
Provision for possible loan
losses 630 1,004 1,260 1,957
Net interest income after
loan loss 12,892 12,235 25,269 23,731
Service charges on deposits 2,698 2,724 5,197 4,987
Mortgage banking income 358 194 774 425
Agency commission income 1,008 974 2,049 1,924
Fiduciary and brokerage income 150 171 287 329
Other income 647 799 2,111 1,543
Gains (losses) on AFS investments - (3) - (4)
Total noninterest income 4,861 4,859 10,418 9,204
Salaries and employee benefits 7,303 7,110 14,554 13,391
Net occupancy expense 902 847 1,769 1,558
Equipment expenses 918 783 1,815 1,521
Software and processing expenses 360 364 704 673
Intangible asset amortization 121 89 306 134
Other expenses 2,905 3,146 6,043 6,056
Total noninterest expense 12,509 12,339 25,191 23,333
Net income before taxes 5,244 4,755 10,496 9,602
Income taxes 1,702 1,502 3,393 3,074
Noncontrolling interest in
earnings (losses) of
subsidiaries, net of income
taxes of $4, $1, $8, and $4 7 1 14 7
Net income 3,535 3,252 7,089 6,521
Weighted average shares
(basic) 9,057,948 9,010,951 9,055,302 9,002,295
Weighted average shares
(diluted) 9,107,310 9,062,107 9,105,396 9,044,222
Basic earnings per share $0.39 $0.36 $0.78 $0.73
Diluted earnings per share $0.39 $0.36 $0.78 $0.72
Return on assets (annualized) 0.92% 0.86% 0.93% 0.91%
Return on equity (annualized) 10.69% 10.78% 10.93% 10.99%
Efficiency ratio 66.92% 67.02% 67.05% 65.69%
Net interest margin
(annualized, tax-equivalent) 4.00% 4.05% 3.97% 4.10%
Net charge-offs to average
loans (annualized) 0.30% 0.13% 0.21% 0.12%
Nonaccrual and 90 day accruing
loans to total loans 0.55% 0.30% 0.55% 0.30%
First M&F Corporation
Financial Highlights
QTD Ended QTD Ended QTD Ended QTD Ended
June 30 March 31 Dec. 31 Sept. 30
2007 2007 2006 2006
Per Common Share (diluted):
Net income 0.39 0.39 0.41 0.40
Cash dividends paid 0.13 0.13 0.13 0.13
Book value 14.63 14.46 14.15 13.81
Closing stock price 18.63 18.40 19.59 18.28
Loan Portfolio Composition:
(in thousands)
Commercial, financial and
agricultural 167,184 153,798 150,905 166,964
Non-residential real estate 672,764 644,816 621,841 606,293
Residential real estate 220,876 221,747 221,911 225,321
Home equity loans 37,374 37,496 40,136 40,509
Consumer loans 41,385 43,616 45,871 46,665
Other loans 7,296 7,077 6,619 6,051
Total loans 1,146,879 1,108,550 1,087,283 1,091,803
Deposit Composition: (in
thousands)
Noninterest-bearing deposits 187,604 188,116 180,273 191,180
NOW deposits 205,347 196,035 199,666 239,395
MMDA deposits 137,245 132,068 128,694 126,119
Savings deposits 102,376 99,549 94,815 96,001
Certificates of deposit under
$100,000 281,597 293,426 296,222 293,472
Certificates of deposit
$100,000 and over 269,890 265,826 251,291 227,941
Brokered certificates of
deposit 28,101 33,844 35,021 30,170
Total deposits 1,212,160 1,208,864 1,185,982 1,204,278
Nonperforming Assets: (in
thousands)
Nonaccrual loans 5,886 4,019 3,557 2,949
Accruing loans past due 90
days or more 455 254 376 621
Total nonperforming loans 6,341 4,273 3,933 3,570
Other real estate 3,652 2,270 3,135 4,090
Total nonperforming assets 9,993 6,543 7,068 7,660
Total nonperforming assets to
assets ratio 0.63% 0.42% 0.46% 0.50%
Allowance For Loan Loss
Activity: (in thousands)
Beginning balance 15,276 14,950 16,094 16,047
Acquisitions - - - -
Provision for loan loss 630 630 121 954
Charge-offs (984) (935) (1,675) (1,103)
Recoveries 137 631 410 196
Ending balance 15,059 15,276 14,950 16,094
First M&F Corporation
Financial Highlights
QTD Ended QTD Ended QTD Ended QTD Ended
June 30 March 31 Dec. 31 Sept. 30
2007 2007 2006 2006
Condensed Income Statements:
(in thousands)
Interest income 25,125 24,332 24,434 23,754
Interest expense 11,603 11,325 11,112 10,416
Net interest income 13,522 13,007 13,322 13,338
Provision for loan losses 630 630 121 954
Noninterest revenues 4,861 5,557 5,238 5,412
Noninterest expenses 12,509 12,682 12,904 12,394
Net income before taxes 5,244 5,252 5,535 5,402
Income taxes 1,702 1,691 1,796 1,734
Noncontrolling interest 7 7 - 3
Net income 3,535 3,554 3,739 3,665
Tax-equivalent net interest
income 13,831 13,323 13,641 13,662
Selected Average Balances: (in
thousands)
Assets 1,546,058 1,540,916 1,522,204 1,506,955
Loans held for investment 1,122,129 1,101,879 1,083,648 1,083,451
Earning assets 1,386,464 1,372,001 1,357,687 1,341,569
Deposits 1,187,020 1,194,302 1,176,121 1,178,793
Equity 132,636 128,975 126,694 123,017
Selected Ratios:
Return on average assets
(annualized) 0.92% 0.94% 0.97% 0.96%
Return on average equity
(annualized) 10.69% 11.18% 11.71% 11.82%
Average equity to average assets 8.58% 8.37% 8.32% 8.16%
Net interest margin
(annualized, tax-equivalent) 4.00% 3.94% 3.99% 4.04%
Efficiency ratio 66.92% 67.17% 68.25% 65.09%
Net charge-offs to average
loans (annualized) 0.30% 0.11% 0.46% 0.33%
Nonaccrual and 90 day accruing
loans to total loans 0.55% 0.38% 0.36% 0.33%
Price to book (x) 1.27 1.27 1.38 1.32
Price to earnings (x) 11.94 11.79 11.95 11.42
Historical Earnings Trends: EPS
(in thousands) (diluted)
2Q 2007 3,535 0.39
1Q 2007 3,554 0.39
4Q 2006 3,739 0.41
3Q 2006 3,665 0.40
2Q 2006 3,251 0.36
1Q 2006 3,270 0.36
4Q 2005 3,065 0.34
3Q 2005 3,284 0.37
2Q 2005 3,045 0.34
1Q 2005 3,198 0.35
4Q 2004 2,640 0.29
Revenue Statistics: Non- Non-
interest interest
Revenues Revenues Contribu-
Revenues to Ttl. to Avg. ion
Per FTE Revenues Assets Margin
(thousands) (percent) (percent) (percent)
2Q 2007 33.3 26.01% 1.26% 60.93%
1Q 2007 33.4 29.43% 1.44% 61.60%
4Q 2006 33.4 27.86% 1.37% 62.39%
3Q 2006 33.9 28.26% 1.42% 62.79%
2Q 2006 33.2 26.39% 1.29% 61.39%
1Q 2006 33.4 25.40% 1.25% 63.27%
4Q 2005 33.3 24.29% 1.22% 62.09%
3Q 2005 33.5 28.33% 1.47% 62.48%
2Q 2005 33.0 26.50% 1.36% 63.82%
1Q 2005 32.7 27.32% 1.43% 65.43%
4Q 2004 32.2 25.09% 1.28% 63.01%
Expense Statistics: Non-interest
Expense to Efficiency
Avg. Assets Ratio
(percent) percent)
2Q 2007 3.25% 66.92%
1Q 2007 3.29% 67.17%
4Q 2006 3.36% 68.25%
3Q 2006 3.26% 65.09%
2Q 2006 3.28% 67.02%
1Q 2006 3.17% 64.26%
4Q 2005 3.29% 65.20%
3Q 2005 3.24% 62.46%
2Q 2005 3.23% 63.12%
1Q 2005 3.18% 60.94%
4Q 2004 3.36% 65.80%
Contribution Margin:
(Tax-equivalent net interest income + noninterest
revenues - salaries and benefits)
divided by
(Tax-equivalent net interest income + noninterest
revenues)
Efficiency Ratio:
Noninterest expense
divided by
(Tax-equivalent net interest income + noninterest
revenues)
First M&F Corporation
Average Balance Sheets/Yields and Costs
(tax-equivalent)
(In thousands with yields and
costs annualized) QTD June 2007 QTD June 2006
Average Yield/ Average Yield/
Balance Cost Balance Cost
Interest bearing bank balances 4,726 4.61% 7,577 3.55%
Federal funds sold 6,247 3.59% 16,007 4.80%
Taxable investments (amortized
cost) 197,922 4.80% 193,769 4.59%
Tax-exempt investments
(amortized cost) 45,654 6.26% 50,140 6.15%
Loans held for sale 9,786 5.59% 8,646 6.06%
Loans held for investment 1,122,129 7.90% 1,064,858 7.48%
Total earning assets 1,386,464 7.36% 1,340,997 6.95%
Non-earning assets 159,594 169,852
Total average assets 1,546,058 1,510,849
NOW 190,049 1.35% 231,908 1.66%
MMDA 136,525 2.52% 129,239 1.77%
Savings 99,997 2.75% 97,403 2.09%
Certificates of Deposit 578,631 4.62% 534,911 3.96%
Short-term borrowings 12,069 4.98% 5,323 4.06%
Other borrowings 204,199 5.12% 188,941 4.88%
Total interest bearing
liabilities 1,221,470 3.81% 1,187,725 3.27%
Non-interest bearing deposits 181,819 191,212
Non-interest bearing liabilities 10,133 10,989
Capital 132,636 120,923
Total average liabilities and
equity 1,546,058 1,510,849
Net interest spread 3.55% 3.68%
Effect of non-interest bearing
deposits 0.49% 0.45%
Effect of leverage -0.04% -0.08%
Net interest margin, tax-equivalent 4.00% 4.05%
Less tax equivalent adjustment:
Investments 0.08% 0.08%
Loans 0.01% 0.01%
Reported book net interest margin 3.91% 3.96%
(In thousands with yields and costs
annualized) YTD June 2007 YTD June 2006
Average Yield/ Average Yield/
Balance Cost Balance Cost
Interest bearing bank balances 4,213 4.64% 7,618 3.32%
Federal funds sold 3,576 3.83% 20,293 4.28%
Taxable investments (amortized cost) 203,571 4.81% 177,333 4.56%
Tax-exempt investments (amortized
cost) 46,599 6.27% 49,792 6.24%
Loans held for sale 9,254 5.41% 8,529 4.74%
Loans held for investment 1,112,060 7.86% 1,029,806 7.37%
Total earning assets 1,379,273 7.32% 1,293,371 6.85%
Non-earning assets 164,228 155,536
Total average assets 1,543,501 1,448,907
NOW 197,780 1.37% 226,037 1.58%
MMDA 131,938 2.42% 126,969 1.67%
Savings 98,478 2.69% 93,820 2.06%
Certificates of Deposit 582,546 4.60% 497,722 3.80%
Short-term borrowings 13,302 5.12% 7,250 4.71%
Other borrowings 199,183 5.13% 182,833 4.73%
Total interest bearing
liabilities 1,223,227 3.78% 1,134,631 3.13%
Non-interest bearing deposits 179,900 184,358
Non-interest bearing liabilities 9,558 10,240
Capital 130,816 119,678
Total average liabilities and
equity 1,543,501 1,448,907
Net interest spread 3.54% 3.72%
Effect of non-interest bearing
deposits 0.48% 0.44%
Effect of leverage -0.05% -0.06%
Net interest margin, tax-
equivalent 3.97% 4.10%
Less tax equivalent adjustment:
Investments 0.08% 0.08%
Loans 0.01% 0.01%
Reported book net interest margin 3.88% 4.01%
