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SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Annual Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2001

Commission file number 0-10972

Securities registered pursuant to Section 12(g) of the Act:

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X

The aggregate market value of the voting stock held by non-affiliates of First Farmers and Merchants Corporation at March 1, 2002, was $198,560,000.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstanding of each of the issuer's common stock, as of March 1, 2002. 2,920,000 shares

This filing contains 84 pages.

DOCUMENTS INCORPORATED BY REFERENCE

PART I

Item 1. Business.

A discussion of the general development of the business is incorporated herein by reference to Notes to Consolidated Financial Statements which are a part of the Annual Report to Stockholders which is included in this filing.

FFMC has no employees. Its subsidiary, the Bank had approximately two hundred seventy one (271) full time employees and sixty-four (64) part time employees. Five of the Bank's officers also were officers of FFMC. Employee benefit programs provided by the Bank include a deferred profit sharing plan, an annual profit sharing plan, a salary continuation plan, a deferred compensation plan, training programs, group life and health insurance and paid vacations.

Item 2. Properties.

A discussion of the properties owned by the company is incorporated herein by reference to Notes to Consolidated Financial Statements which are a part of the Annual Report to Stockholders which is included in this filing. Other real estate owned by the Bank as of December 31, 2001, included: (1) a one-tenth interest in approximately one hundred acres known as Town Center, located in the southern part of the town of Spring Hill, in northern Maury County, Tennessee on US Highway 31, (2) forty nine improved lots in a residential subdivision on Weakley Creek Road in Lawrenceburg, Lawrence County, Tennessee, and (3) a commercial property in the industrial park in Columbia, Maury County, Tennessee. The properties are not depreciated.

Item 3. Legal Proceedings.

There are no material pending legal proceedings known to the Board of Directors in which any director or executive officer or principal stockholder of the Corporation and the Bank or any business in which such persons are participants as a material interest adverse to the Corporation and its subsidiary.

Item 4. Submission of Matters to a Vote of Security Holders.

No matter was submitted to the security holders during the fourth quarter of the fiscal year ended December 31, 2001.

PART II

Item 5. Market for the Registrant's Common Stock and Related Security Holder Matters.

A discussion of the registrant's common stock and related security holder matters is incorporated herein by reference to Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations which are a part of the Annual Report to Stockholders which is included in this filing.

Item 6. Selected Financial Data.

The selected financial data is incorporated herein by reference to Consolidated Financial Statements, Notes to Consolidated Financial Statements, and Management's Discussion and Analysis of Financial Condition and Results of Operation which are a part of the Annual Report to Stockholders which is included in this filing.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Management's discussion and analysis of financial condition and results of operations is incorporated herein by reference to Management's Discussion and Analysis of Financial Condition and Results of Operations which are a part of the Annual Report to Stockholders which is included in this filing.

Item 8. Financial Statements and Supplementary Data.

Financial statements and supplementary data are incorporated herein by reference to Consolidated Financial Statements, Notes to Consolidated Financial Statements, and Management's Discussion and Analysis of Financial Condition and Results of Operation which are a part of the Annual Report to Stockholders which is included in this filing.

Item 9. Disagreements on Accounting and Financial Disclosure.

None.

PART III

Item 10. Directors and Executive Officers of the Registrant.

Reference is made to First Farmers and Merchants Corporation's definitive Proxy Statement (incorporated herein by reference) pursuant to Regulation 14 A, Solicitation of Proxies, which involves the election of Directors. The present terms of Directors and officers extend to April 16, 2002.

The following is a list as of March 1, 2002, showing the names and ages of all executive officers of First Farmers and Merchants Corporation ("FFMC"), the nature of any family relationships between them, and all positions and offices with the Corporation held by each of them:

Item 11. Executive Compensation and Transactions.

Reference is made to First Farmers and Merchants Corporation's definitive Proxy Statement (incorporated herein by reference) pursuant to Regulation 14 A, Solicitation of Proxies, which involves the election of Directors.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

Reference is made to First Farmers and Merchants Corporation's definitive Proxy Statement (incorporated herein by reference) pursuant to Regulation 14 A, Solicitation of Proxies, which involves the election of Directors.

Item 13. Certain Relationships and Related Transaction.

Reference is made to First Farmers and Merchants Corporation's definitive Proxy Statement (incorporated herein by reference) pursuant to Regulation 14 A, Solicitation of proxies, which involves the election of directors.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(iii) Audit Committee Charter

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Signatures -- continued

ANNUAL REPORT ON FORM 10-K

ITEM 14(a)(1) and (2) ITEM 14(d)

LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

YEAR ENDED DECEMBER 31, 2001

FIRST FARMERS AND MERCHANTS CORPORATION

COLUMBIA, TENNESSEE

FORM 10-K -- ITEM 14(a)(1) and (2)

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY

LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.

The following consolidated financial statements of First Farmers and Merchants Corporation and Subsidiary, included in the annual report of the registrant to its security holders for the year ended December 31, 2001, are incorporated by reference in Item 8:

The following financial statement schedules of First Farmers and Merchants Corporation and Subsidiary are included in Item 14(d):

None

All other schedules to the consolidated financial statements required by Article 9 of Regulation S-X and all other schedules to the financial statements of the registrant required by Article 5 of Regulation S-X are not required under the related instructions or are inapplicable and therefore, have been omitted.

EXHIBIT INDEX

FIRST FARMERS AND MERCHANTS CORPORATION

(iii) Audit Committee Charter

(13) Annual Report to Stockholders

FIRST FARMERS AND MERCHANTS CORPORATION

The Board of Directors of First Farmers and Merchants National Bank ("FF&M") establishes an Audit/Compliance/CRA Committee ("committee") with authority, responsibility and specific duties as described below.

The committee shall be comprised of a minimum of three outside directors who are independent of management and are free of any relationship that, in the opinion of the Board of Directors ("the Board"), would interfere with their exercise of independent judgment as a committee member. The determination of independence will be made in accordance with the provisions of Section 36 of FDICIA and any other requirements as may be promulgated from time to time by those regulatory agencies or other authorities applicable to the governance of FF&M.

The members of the committee shall be financially literate either at the time of appointment to the committee, or within a reasonable period of time thereafter. At least one member of the committee should have accounting or related financial management expertise.

One of the members shall be appointed committee chairman by the chairman of the Board.

The Audit Committee has a major responsibility to provide assistance to the Board in fulfilling their fiduciary responsibility to the shareholders and investment community related to accounting and reporting practices; the quality and integrity of financial reports; and the quality and effective administration of loan portfolios.

The committee is to be the Board's principal agent in ensuring the independence of the corporation's outside external auditors and internal auditors, the integrity of management, and the adequacy of disclosures to stockholders. It is the intention of the Board to adhere to the Securities and Exchange Commission's ("SEC") rule regarding Audit Committee Disclosure that became effective January 31, 2000.

The Audit Committee is also responsible for overseeing that management has established and maintained processes to assure that an adequate system of internal controls is in place and functioning as designed within FF&M. In addition, the committee will oversee that management has established and maintained processes to assure compliance with all applicable laws, regulations and corporate policies. In so doing, the Audit Committee will be responsible for handling relations with the outside external auditing firm, and the Internal Audit and Loan Review functions.

The committee will ensure that its members receive an appropriate degree of education and training in order to maintain an adequate level of expertise necessary to discharge their responsibilities on an ongoing basis.

The Audit Committee may be requested by the Board to investigate any activity of FF&M, and all employees are directed to cooperate as requested by members of the committee. The committee is empowered to retain persons having special competence as necessary to assist the committee in fulfilling its responsibility.

The committee views the outside independent auditors, Internal Audit and Loan Review as important resources. To this end, the Audit Committee should concur in the appointment or removal of the independent auditors, the Internal Auditors and the Loan Review. However, the opportunity for the independent auditors and Internal Auditors to meet with the entire Board of Directors as needed is not to be restricted.

To the extent necessary to fulfill its primary responsibilities, the committee will also communicate with the corporate legal counsel, the Accounting Department, Credit Administration, and others, as it deems necessary.

The Audit Committee shall meet as often as deemed necessary in order to fulfill its responsibilities, but not less than quarterly.

In addition to the members of the Audit Committee, the chairman of the Audit Committee may request members of management, the internal auditors and representatives of the independent auditors be present at meetings of the committee, as deemed appropriate.

In carrying out their responsibilities, the committee's agenda and procedures should remain flexible in order that it can best react to changing conditions and environment and to assure the Board and Shareholders that the accounting and reporting practices of FF&M and subsidiaries are in accordance with all requirements and are of the highest quality.

The committee's agenda on an annual basis will include the following:

1. Provide an open avenue of communication between the outside auditors, the Internal Auditors, and the Board of Directors.
2. Confirm and assure the independence of the outside and internal auditors.
3. Review coordination of audit efforts between the outside and internal auditors to assure completeness of coverage, reduction of redundant efforts, and the effective use of audit resources.
4. Meet periodically with the outside and internal auditors and Manager of Loan Review without members of management present.
5. Review and approve the scope and general extent of the audit examination performed by the external auditors, including their engagement letter. The auditors' fees are to be arranged by management and annually summarized for committee review and approval.
6. Review any other services rendered by the external audit firm for FF&M.
7. Review with the external auditors the adequacy and effectiveness of internal auditing, control of the organization, recommendations for improvement in control, and any difficulties encountered.
8. Arrange for the independent external auditors to review the following items with the Audit Committee:

1. FF&M's annual report to shareholders and Forms 10K and 10Q, including the financial statements, and financial statement and supplemental disclosures required by generally accepted accounting principles and the SEC.
2. Significant transactions, if any, not a normal part of FF&M's operations.
3. Changes (pending or proposed), if any, during the year in FF&M's accounting principles or their application.
4. Significant adjustments, if any, not a normal part of FF&M's operations.
5. The independent auditors should be instructed to communicate with the chairman of the Audit Committee if there is a probability that a pending quarterly review report, if any, will be other than standard.

9. Inquire of the independent auditors whether there have been any disagreements with management, which if not satisfactorily resolved, would have caused them to modify their report on FF&M's financial statements.

10. Ascertain that the outside auditors understand that:

1. The Audit Committee is the outside auditors' client;
1. The outside auditors are required to provide a timely analysis of current financial reporting issues and practices;
1. The outside auditors are required to discuss their qualitative judgments about the appropriateness, not just the acceptability, of accounting principles and the degree of aggressiveness or conservativeness of principles and estimates.

0. Evaluate the cooperation received by the outside auditors during their audit examination, including their access to all requested records, data and information.

0. Elicit the comments of management regarding the responsiveness of the outside auditors to FF&M's needs.

0. Review and approve the annual audit plan, including their engagement letter, prepared by the Internal Auditors.

0. Review and approve the status of completion of and significant changes to the Internal Audit annual plan and budget.

0. Evaluate internal accounting control through a review of reports prepared by the Internal Auditors that describe control weaknesses, and determine that appropriate corrective action is being taken by management.

0. Review the Internal Auditors' compliance with the Institute of Internal Auditor's Standards for the Professional Practice of Internal Accounting.

0. Review the organizational structure and qualifications of the Internal Auditors.

0. Review and approve the loan review policy and operating plan of the Loan Review function.

0. Review and approve the status of completion of and significant changes to the Loan Review plan and budget.

0. Evaluate asset quality and credit administration through a review of reports prepared by the Loan Review function that evaluate asset quality, the adequacy of allowance for loan losses, and management of the loan portfolios of FF&M.

0. Review all reports of examination issued by FF&M's regulators.

0. Make or cause to be made, all necessary inquiries of management and the independent auditors concerning established standards of corporate conduct and performance, and deviations therefrom. Legal matters, regulatory and legal requirements and issues, and insurance concerns, which could significantly impact the financial statements, should also be reported.

0. Discuss with FF&M's management the scope and quality of internal accounting and financial reporting controls in effect.

0. Review with FF&M's management, internal auditors and independent auditors, FF&M's policies and procedures to reasonably ensure the adequacy of internal accounting and financial reporting controls.

25. Inquire of management, the outside auditors and internal audit about significant risks or exposures and assess steps management has taken to minimize risks.

26. Apprise the Board of significant developments in the course of performing the above duties.

27. Prepare a written report that describes the Audit Committee's composition and responsibilities and how they were discharged.

28. Review, update and approve the Audit Committee charter annually.

29. Recommend to the Board any appropriate extensions or changes in the duties of the committee.

Minutes of each meeting shall be prepared with copies to be provided to members of the committee and made available to management, the independent auditors, Internal Auditors and regulatory examiners.

The chairman of the Audit Committee shall make a report to the Board on the results of each meeting of the Audit Committee.

FIRST FARMERS AND MERCHANTS CORPORATION

AND RESULTS OF OPERATIONS

First Farmers and Merchants Corporation (the Corporation) was incorporated on March 31, 1982, as a Tennessee corporation. As of December 31, 2001, the only subsidiary of the Corporation was First Farmers and Merchants National Bank (the Bank). The Bank owns one hundred percent of F & M West, a Nevada subsidiary that provides advisory service for management of the Bank's investment portfolio. The Bank is a national banking association which was organized in 1954 as a successor to a state bank organized in 1909. Its principal office is at 816 South Garden Street, Columbia, Maury County, Tennessee. Other offices in Maury County are Mt. Pleasant, Spring Hill, and additional offices in Columbia at High Street, Hatcher Lane, Northside, Shady Brook Mall, and Campbell Plaza. Offices in Lawrence County include Lawrenceburg, Crockett in Lawrenceburg, Leoma, and Loretto. Offices in Marshall County include Lewisburg, Ellington, Downtown Lewisburg, Lewisburg West, and Chapel Hill. Offices in Hickman County inc lude Centerville and East Hickman. In Dickson County, there is an office in White Bluff. The Bank provides only automatic teller machine services in the Northfield Complex at the Saturn location near Spring Hill, and in Columbia at the Tennessee Farm Bureau, Columbia State Community College, and Maury Regional Hospital. The financial condition of the Corporation should be evaluated in terms of the Bank's operations within its service area.

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AND RESULTS OF OPERATIONS

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AND RESULTS OF OPERATIONS

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(Taxable Equivalent Basis - In Thousands)

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The bank's average deposits grew during the last three years reflecting a 22.3% during 2001, 79% of this growth is related to the acquisition. Deposit liabilities of $148 million were assumed in the transaction. Deposits experienced a 6.1% growth from 1999 to 2000, and an 8.5% growth from 1998 to 1999. Interest rates declined sharply in 2001. Some customers moved money to interest-bearing transaction accounts until rates settled down. Interest-bearing transaction accounts increased 6.8% during 2001 compared to a 1.2% increase in 2000 and a 2.8% increase during 1999. Time deposits under $100,000 increased 26.4% during 2001. Time deposits over $100,000 increased 71.0% in 2001. This large increase is related to the acquisition. Average savings deposits increased over 11.0% during 2001. Savings deposits have been strong historically providing a core, low cost, source of funding. However, the acquisition contributed to this increase. The Bank's noninterest-bearing deposits have remained consistently strong and were 14.2% of average total deposits in 2001, 14.0% in 2000, and 14.3% in 1999. This strong core of noninterest-bearing funds contributed to the maintenance of the low cost of funds for the periods.

AND RESULTS OF OPERATIONS

The Bank uses a formal asset and liability management process to ensure adequate liquidity and control interest rate risk. The goal of liquidity management is to provide adequate funds to meet loan demand and any potential unexpected deposit withdrawals. This goal is accomplished by consistent core deposit growth, holding adequate liquid assets in the form of securities, and maintaining unused capacity to borrow funds. The objective of interest rate risk management is maintaining reasonable stability in the gross interest margin as a result of changes in the level of interest rates and/or the spread relationships among interest rates.

AND RESULTS OF OPERATIONS

______________________________________________________________________________________ Available-for-sale and held-to-maturity securities were combined in the taxable securities category for purposes of this table.

As with most commercial banking institutions, the loan portfolio is the largest component of earning assets and consequently provides the highest amount of revenues. The loan portfolio also contains, as a result of credit quality, the highest exposure to risk. When analyzing potential loans, management assesses both interest rate objectives and credit quality objectives in determining whether to make a given loan and the appropriate pricing for that loan. The Bank maintains a diversified portfolio in order to spread its risk and reduce its exposure to economic downturns which may occur in different segments of the economy or in particular industries. The composition of the loan portfolio is disclosed in detail in Note 3 in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

AND RESULTS OF OPERATIONS

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The Bank has a Credit Administrator who is responsible for assisting loan officers in structuring new loans, reviewing problem loans, monitoring their status from period to period, and assisting in their resolution. This review process also includes semiannual reviews by an outside party to assess the quality of the loan portfolio independently. Management has concluded that this independent review has served to strengthen underwriting practices. The Credit Administrator's analysis and review also includes a formal review that is prepared quarterly to assess the risk in the loan portfolio and to determine the adequacy of the allowance for loan losses. This review supported management's assertion that the allowance was adequate at December 31, 2001.

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AND RESULTS OF OPERATIONS

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Historically, internal growth has financed the capital needs of the Bank. At December 31, 2001, the Corporation had a ratio of tier 1 capital to average assets of 9.17%. This compares to a ratio of tier 1 capital to average assets of 12.09% at December 31, 2000, and 11.43% at December 31, 1999. The current ratio is lower because identifiable intangibles related to the acquisition reduced capital as average total assets increased.

As of December 31, 2001, the Corporation's ratios of Tier I capital to risk-weighted assets and total capital to risk-weighted assets were 14.3% and 15.6% respectively. At December 31, 2000, the comparable ratios were 20.6% and 21.3%, respectively. Please refer to Note 10 in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for more information on the capital strength of the Corporation and the Bank.

A bar graph at the bottom of this page, in the materials sent to our stockholders, illustrates the average equity of the Corporation for the last eight years. The following table is the data illustrated by this graph in thousands of dollars.

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Total interest income increased 17.5% in 2001. Interest and fees earned on loans increased 24.9% in 2001 accounting for 71.9% of tax equivalent gross interest income. Interest earned on securities and other investments increased 1.8% in 2001 making up the balance of gross interest income. Total interest income increased 10.3% in 2000 and 2.9% in 1999.

AND RESULTS OF OPERATIONS

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A pie chart is included at this point in the materials sent to our stockholders illustrating the composition of noninterest income in 2001 and the percentage each category is of the total. The following table is the data illustrated by this graph in thousands of dollars.

Noninterest income increased 26.4% during 2001 due mostly to income from service fees on deposit relationships strengthened by new products. Noninterest income increased 10.3% in 2000 and decreased 4.9% in 1999.

AND RESULTS OF OPERATIONS

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