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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-09424
FIRST M & F CORPORATION
(exact name of Registrant as specified in its charter)
MISSISSIPPI 64-0636653
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification Number )
221 East Washington Street, Kosciusko, Mississippi 39090
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (601) 289-5121
Securities registered pursuant to section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF CLASS WHICH REGISTERED
NONE NONE
Securities registered pursuant to section 12(g) of the Act:
Common Stock $5.00 par value
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 if
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 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 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. Yes( ) No ( )
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding at March 3, 1998
Common stock ( $5.00 par value ) 3,394,656 Shares
Based on bid price for shares on March 3, 1998, the aggregate market
value of the voting stock held by nonaffiliates of the Registrant was
$92,521,040.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference to Part I, II,
III and IV of the Form 10-K report: (1) Registrant's 1997 Annual Report
to Shareholders (containing selected and summary financial information) (Parts
II and IV), and (2) Registrant's Combined 1997 Annual Report and Proxy
Statement dated March 18, 1998, for Registrant's Annual Meeting of Shareholders
to be held April 8, 1998 (which contains Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition), (Parts II, III
and IV).
1 of 20
FIRST M & F CORPORATION
FORM 10-K
INDEX
Part I
Item 1. Business 3
Item 2. Properties 14
Item 3. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of
Security Holders 14
Part II
Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters 14
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 15
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 15
Part III
Item 10. Directors and Executive Officers of the
Registrant 15
Item 11. Executive Compensation 16
Item 12. Security Ownership of Certain Beneficial
Owners and Management 16
Item 13. Certain Relationships and Related Transactions 16
Part IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 16
SIGNATURES 18-19
EXHIBIT INDEX 20
2
FIRST M & F CORPORATION
FORM 10-K
PART I
ITEM 1. BUSINESS
GENERAL
First M & F Corporation ( Company ) is a one-bank holding company
chartered and organized under Mississippi laws in 1979. The Company engages
exclusively in the banking business through its wholly-owned subsidiary,
Merchants and Farmers Bank of Kosciusko (The Bank).
The Bank was chartered and organized under the laws of the State of
Mississippi in 1890, and accounts for substantially all of the total assets and
revenues of the Company. The Bank is the seventh largest bank in the state,
having total assets of approximately $580 million at December 31, 1997. The Bank
offers a complete range of commercial and consumer services through its main
office and two branches in Kosciusko and its branches in fourteen other markets
within central Mississippi. These markets include Ackerman, Bruce, Brandon,
Canton, Clinton, Durant, Lena, Madison, Oxford, Pearl, Philidelphia, Puckett,
Ridgeland, Starkville, Grenada and Weir, Mississippi.
The Bank has three wholly-owned subsidiary operations, M & F Financial
Services, Inc., which operates two finance company operations; First M & F
Insurance Company, Inc., a credit life insurance company; and Merchants and
Farmers Bank Securities Corporation, a real estate property management company.
The Company 's primary means of growth over the past several years has
been an aggressive lending program funded by exceptional deposit growth.
Additionally, the Company acquired the deposits of several locations from the
Resolution Trust Corporation in 1994. Effective with the close of business on
December 31, 1995, the Company also merged with Farmers and Merchants Bank of
Bruce, Mississippi. This merger involved the exchange of 450,000 shares of the
Company's common stock for all of the issued and outstanding shares of Farmers
and Merchant's Bank and has been accounted for as a pooling of interests.
Farmers and Merchants had total assets at December 31, 1995, of $32 million.
The banking system offers a variety of deposit, investment and credit
products to customers. The Bank provides these services to middle market and
professional businesses, ranging from payroll checking, business checking,
corporate savings and secured and unsecured lines of credit . Additional
services include direct deposit payroll, sweep accounts and letters of credit.
The Bank also offers credit card services to its customers, to include check
debit cards and automated teller machine cards through several networks. Trust
services are also offered in the Kosciusko main office.
3
As of January 31, 1998, the Company and its subsidiary employed 259 full-time
equivalent employees.
COMPETITION
The Company competes generally with other banking institutions, savings
associations, credit unions, mortgage banking firms, consumer finance companies,
mutual funds, insurance companies, securities brokerage firms, and other finance
related institutions; many of which have greater resources than those available
to the Company. The competition is primarily related to areas of interest rates,
the availability and quality of services and products, and the pricing of those
services and products.
SUPERVISION AND REGULATION
The Company is a registered bank holding company under the Bank Holding
Act of 1956, as amended. As such, the Company is required to file an annual
report and such other information as the Board of Governors of the Federal
Reserve System may require. The Bank Holding Company Act generally prohibits the
Company from engaging in activities other than banking or managing or
controlling banks or other permissible subsidiaries or from acquiring or
obtaining direct or indirect control of any company engaged in activities not
closely related to banking. The Board of Governors has by regulation determined
that a number of activities are closely related to banking within the meaning of
the Act. In addition, the Company is subject to regulation by the State of
Mississippi under its laws of incorporation.
The Bank is subject to various requirements of federal and state
banking authorities including the Federal Deposit Insurance Corporation (FDIC)
and the Mississippi Department of Banking. Areas subject to regulation include
loans, reserves, investments, establishment of branches, loans to directors,
executive officers and their related interests, relationships with correspondent
banks, consumer and depositor protection, and others. In addition, state banks
such as the Bank are subject to state approval of the amount of earnings that
may be paid as dividends to shareholders.
In December 1991, the Federal Deposit Insurance Corporation Improvement
Act of 1991 (FDICIA) was enacted. This Act substantially revised the funding
provisions of the Federal Deposit Insurance Act and required regulators to take
prompt corrective action whenever financial institutions failed to meet minimum
capital requirements. Also the Act created restrictions on capital distributions
that would leave a depository institution undercapitalized.
In May 1993, the FDIC adopted the final rule implementing Section 112
of FDICIA. This regulation and new requirements mandated new audit and reporting
procedures, as well as required certain documentation on existing internal
controls. This regulation became effective for fiscal years ending after
December 31, 1992.
4
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Registrant including their positions with
the Registrant, their ages and their principal occupations for the last five
years are as follows:
Hugh S. Potts, Jr., 52, Director, Chairman of the Board and Chief
Executive Officer, First M & F Corporation and Merchants and Farmers
Bank, since 1994.
Vice Chairman, First M & F Corporation, prior to 1994
Scott M. Wiggers, 53, Director, President, First M & F Corporation and
Merchants and Farmers Bank of Kosciusko, since 1990.
STATISTICAL DISCLOSURES
The statistical disclosures for the Company are contained in Tables 1
through 13.
5
FIRST M & F CORPORATION
STATISTICAL DISCLOSURES
TABLE 1 - COMPARATIVE AVERAGE BALANCES - YIELDS AND RATES
The table below shows the average balances for all assets and liabilities for
the Company at each year-end for the past three years, the interest income or
expense associated with these assets and liabilities and the computed yields or
rates for each.
DECEMBER 31ST
1997 1996 1995
---- ---- ----
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BAL INTEREST RATE BAL INTEREST RATE BAL INTEREST RATE
Average assets
- ------------------
Federal funds sold $ 10,782 $ 567 5.26 $ 12,839 $ 685 5.34% $ 9,846 $ 596 6.05%
Loans, net 349,684 34,279 9.80% 317,013 31,346 9.89% 275,422 27,310 9.92%
Bank balances 3,378 190 5.62% 3,934 205 5.21% 2,790 165 5.91%
Taxable securities 117,064 7,280 6.22% 120,356 7,394 6.14% 121,291 7,300 6.02%
Tax-exempt securities 41,941 3,215 7.67% 38,324 2,988 7.80% 40,472 3,221 7.96%
------------------------------------------------------------------------------------------------
Total int. earnings 522,849 45,531 8.71% 492,466 42,618 8.65% 449,821 38,592 8.58%
Noninterest assets 39,888 34,535 30,800
------------------------------------------------------------------------------------------------
Total average assets 562,737 45,531 8.09% 527,001 42,618 8.09% 480,621 38,592 8.03%
------------------------------------------------------------------------------------------------
Liabilities & capital
- ---------------------
DDA and savings 207,098 7,560 3.65% 175,383 6,140 3.50% 144,970 4,578 3.16%
Time deposits 237,123 12,889 5.44% 220,038 12,082 5.49% 191,290 10,186 5.32%
Short-term funds 64 4 6.25% 19,330 965 4.99% 45,850 2,551 5.56%
FHLB advances 3,628 240 6.62% 5,937 354 5.96% 3,482 195 5.60%
-----------------------------------------------------------------------------------------------
Total interest bearing 447,913 20,693 4.62% 420,688 19,541 4.65% 385,592 17,510 4.54%
Noninterest bearing
and capital 114,824 106,313 95,029
-----------------------------------------------------------------------------------------------
Total average
Liabilities & Capital 562,737 20,693 3.68% 527,001 19,541 3.71 480,621 17,510 3.64%
-----------------------------------------------------------------------------------------------
Net interest margin 24,838 4.75% 23,077 4.69% 21,082 4.69%
Less tax equiv adj
Investments 1,093 1,016 1,095
Loans 222 106 80
-----------------------------------------------------------------------------------------------
Net interest margin
Per annual report $ 23,523 $ 21,955 $ 19,907
------------------------------------------------------------------------------------------------
Nonaccruing loans have been included in the average loan balances and interest
collected prior to these loans being placed on nonaccrual has been included in
interest income. Yield and rates have been calculated on a fully tax equivalent
basis using a tax rate of 34% for all years.
6
FIRST M & F CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 2 - VOLUME AND YIELD/RATE VARIANCE ANALYSIS
The Volume and Yield/Rate Table shown below reflects the change from year to
year for each component of the net interest margin classified into those
occurring as a result of changes in volume and those resulting from yield/rate
changes. (Tax Equivalent Basis - $ in thousands)
1997 COMPARED TO 1996 1996 COMPARED TO 1995
INCREASE (DECREASE) DUE TO: INCREASE (DECREASE) DUE TO:
---------------------------------------------------------------
YIELD/ YIELD/
VOLUME RATE NET VOLUME RATE NET
---------------------------------------------------------------
Interest earned on:
Fed funds sold $ (110) $ (8) $ (118) $ 181 $ (92) $ 89
Loans, net 3,230 (297) 2,933 4,124 (88) 4,036
Bank balances (29) 14 (15) 68 (28) 40
Taxable securities (202) 88 (114) (56) 157 101
Tax-exempt securities 282 (55) 227 (171) (62) (233)
---------------------------------------------------------------
Total interest-earning assets 3,171 (258) 2,913 4,146 (113) 4,033
Interest paid on:
Demand deposits & savings 1,110 310 1,420 960 602 1,562
Time deposits 938 (131) 807 1,531 365 1,896
Short-term funds (962) 1 (961) (1,476) (103) (1,579)
FHLB advances (138) 24 (114) 138 21 159
---------------------------------------------------------------
Total interest-bearing liab 948 204 1,152 1,153 885 2,038
---------------------------------------------------------------
Change in net income on a
tax equivalent basis $ 2,223 $ (462) $ 1,761 $ 2,993 $ (998) $ 1,995
---------------------------------------------------------------
Tax-exempt income has been adjusted to a tax equivalent basis using a tax rate
of 34%. The balances of nonaccrual loans and related income recognized have been
included for purposes of these computations.
7
FIRST M & F CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 3 - SECURITIES AVAILABLE FOR SALE AND SECURITIES HELD TO MATURITY
The table below indicates amortized cost or carrying value of securities
available for sale and those held to maturity by type at year-end for each of
the last three years. ($ in thousands)
December 31,
------------------------------
1997 1996 1995
-------- -------- --------
Securities available for sale
U.S. Treasury $ 23,656 $ 21,682 $ 38,440
Government agencies 21,732 15,922 39,028
Obligations of states and political subdivisions 15,571 18,230 24,331
Other securities 48,044 30,610 26,391
------------------------------
Total securities available for sale $109,003 $ 86,444 $128,190
------------------------------
December 31,
------------------------------
1997 1996 1995
-------- -------- --------
Securities held to maturity
U.S. Treasury $ 1,050 $ 1,050 $ 1,051
Government agencies 11,018 13,980 14,152
Obligations of states and political subdivisions 33,623 24,235 18,321
Other securities 13,094 17,888 19,290
------------------------------
Total securities held to maturity $ 58,785 $ 57,153 $ 52,814
------------------------------
TABLE 4 - MATURITY DISTRIBUTION AND YIELDS OF SECURITIES AVAILABLE FOR SALE AND
SECURITIES HELD TO MATURITY
The following table details the maturities and weighted average yield for each
range of maturities of securities December 31, 1997. (tax equivalent yield - $
in thousands)
After One After Five
But Within But Within After
One Year Yield Five Year Yield Ten Years Yield Ten Years Yield
--------------------------------------------------------------------------------------------
Securities available for sale
U.S. Treasury $ 6,088 5.63% $ 17,567 6.22% $ 23,655
Government agencies 10,589 5.56% 9,641 6.23% $ 1,502 7.28% 21,732
Obligations of states and
political subdivisi ons 4,694 7.19% 8,071 7.86% 3,051 8.97% 15,816
Other securities 14,395 6.87% 23,068 6.75% 2,932 6.81% 7,405 6.73% 47,800
--------------------------------------------------------------------------------------------
Total $35,766 6.31% $ 58,347 6.65% $ 7,485 7.78% $7,405 6.73% $109,003
--------------------------------------------------------------------------------------------
Securities held to maturit
U.S. Treasury $ 1,050 6.08% $ 1,050
Government agencies 5,669 7.01% $ 3,637 6.92% $ 1,713 6.98% 11,019
Obligations of states and
political subdivisions 2,566 6.92% 16,806 7.11% 12,905 7.29% 1,245 9.09% 33,522
Other securities 3,140 6.76% 4,319 6.61% 4,139 6.14% 1,596 6.34% 13,194
--------------------------------------------------------------------------------------------
Total $12,425 6.84% $ 24,762 6.99% $18,757 7.01% $2,841 7.54% $ 58,785
--------------------------------------------------------------------------------------------
At December 31, 1997, the Company had securities issued by the State of
Mississippi and its political subdivisions and agencies with a carrying value of
$37,134 and a market value of $38,166.
8
FIRST M & F CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 5 - COMPOSITION OF THE LOAN PORTFOLIO
The table below shows the carrying value of the loan portfolio at the end of
each year for the last five years. ($ in thousands)
December 31,
------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
Commercial, financial and agricultural $ 122,635 $113,909 $ 94,906 $ 89,316 $ 75,685
Real estate-construction 32,520 26,356 27,194 18,749 8,328
Real estate-mortgage 116,395 106,198 85,497 77,568 67,092
Consumer loans 88,623 98,638 84,134 76,174 56,950
Lease financing 19 137 271 247 492
-------------------------------------------------------
$ 360,192 $345,238 $292,002 $262,054 $208,547
-------------------------------------------------------
TABLE 6 - LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST
RATES
The table below shows the amounts of loans in several categories at December 31,
1997, along with the schedule of repayments of principal in the periods
indicated. ($ in thousands)
Maturing
-------------------------------------------------
Within One/Five After Five
One Year Years Years Total
-------------------------------------------------
Commercial and real estate $ 137,306 $ 103,378 $ 30,885 $ 271,569
Installment loans to individuals 20,709 65,314 2,600 88,623
-------------------------------------------------
$ 158,015 $ 168,692 $ 33,48 $ 360,192
--------------------------------------------------
The following table shows all loans due after one year according to their
sensitivity to changes in interest rates. ($ in thousands)
Maturing
-------------------------------
One/Five After Five
Years Years Total
-------------------------------
Above loans due after one year which have:
Predetermined interest rates $167,754 $ 33,184 $200,938
Floating interest rates 938 0 938
-------------------------------
Total $168,692 $ 33,184 $201,876
------------------------------
9
FIRST M & F CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 7 - NONPERFORMING ASSETS AND PAST DUE LOANS
The table below shows the Company's nonperforming assets and past due loans at
the end of each of the last five years. ($ in thousands)
December 31,
----------------------------------------------------
1997 1996 1995 1994 1993
----- ----- ---- ----- ----
Loans accounted for on a nonaccrual basis $ 328 $ 206 $ 84 $ 253 $ 519
Restructured loans 0 0 0 0 0
----------------------------------------------------
Total nonperforming loans 328 206 84 253 519
Other real estate owned 843 724 148 869 1,061
----------------------------------------------------
Total nonperforming assets 1,171 930 232 1,122 1,580
Accruing loans past due 90 days or more 1,149 968 707 394 788
----------------------------------------------------
Total nonperforming assets and loans $ 2,320 $ 1,898 $ 939 $1,516 $ 2,368
----------------------------------------------------
Interest which would have been accrued on nonaccrual loans had they been in
compliance with their original terms and conditions is immaterial.
At December 31, 1997, the Company did not have any concentration of loans
greater than ten percent of total loans except those shown in Table 5.
It is the Company's policy that interest not be accrued on any loan for which
payment in full of interest and principal is not expected, on any loan which is
seriously delinquent unless the obligation is both well secured and in the
process of collection, or on any loan that is maintained on a cash basis. At
December 31, 1997, the Company had no loans about which Management had serious
doubts as to their collectibility other than those disclosed above.
10
FIRST M & F CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 8 - ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
The table below summarizes the Company's loan loss experience for each of the
last five years. ($ in thousand)
Year Ended December 31,
----------------------------------------------------
1997 1996 1995 1994 1993
----------------------------------------------------
Amount of loan loss reserve at beginning of period $ 4,475 $ 4,250 $ 3,374 $ 2,866 $ 2,451
Adjustment for sale of finance company branch (77)
Loans charged off
Commercial, financial and agricultural (365) (235) (117) (22) (95)
Real estate (185) (174) (53) (124) (391)
Consumer (897) (738) (707) (478) (458)
----------------------------------------------------
Total (1,447) (1,147) (877) (624) (944)
----------------------------------------------------
Recoveries
Commercial, financial and agricultural 23 8 14 12 31
Real estate 23 14 106 40 44
Consumer 126 129 124 198 214
----------------------------------------------------
Total 169 151 244 250 289
Net charge offs (1,278) (996) (633) (374) (655)
Provision for loan losses charged to expense 2,050 1,221 1,509 882 1,070
----------------------------------------------------
Amount of loan loss reserve at end of period $ 5,170 $ 4,475 $ 4,250 $ 3,374 $ 2,866
----------------------------------------------------
The allowance for loan losses is established through a provision charged to
expense. Loans are charged against the allowance when Management believes that
the collection of the principal is unlikely. The allowance for loan losses is
maintained at a level which Management and the Board of Directors believe to be
adequate to absorb estimated losses inherent in the loan portfolio, and is
reviewed quarterly using specific criteria required by regulatory authority as
well as various analytical devices which incorporates historical loss
experience, trends and current economic conditions.
11
FIRST M & F CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 9 - ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
The table below is a summary of the allocation categories used by the Company
for its allowance for loan loss at December 31, 1997. These allocations are
determined by internal formulas based upon an analysis of the various types of
risk associated with the loan portfolio. ($ in thousands)
Allocation for pools of
risk-rated loans $ 4,186
Additional allocation for
risk-rated consumer loans 107
Discretionary-unallocated 877
---------
$ 5,170
---------
The Company maintains the allowance at a level considered by Management and the
Board of Directors to be sufficient to absorb potential losses. Loss percentages
were uniformly applied to the various pools of risk that exist within the loan
portfolio based upon accepted analysis procedures and current economic
conditions. Additional allocations were made for particular areas based upon
recommendations of lending and asset review personnel.
The remaining $877 is discretionary and serves as added protection in the event
that any of the above specific components are determined to be inadequate. Due
to the imprecision in most estimates, Management continues to take a prudent,
yet conservative approach to the evaluation of the adequacy of the allowance.
12
FIRST M & F CORPORATION
STATISTICAL DISCLOSURES (CONTINUED)
TABLE 10 - TIME DEPOSITS OF $100,000 OR MORE
The table below shows maturities of outstanding time deposits of $100,000 or
more at December 31, 1997. ($ in thousands)
Certificates
of deposits
Three months or less $ 17,051
Over three months through six months 4,797
Over six months through twelve month 14,552
Over twelve months 13,921
--------
Total $ 50,321
--------
TABLE 11 - SELECTED RATIOS
The following table reflects ratios for the Company for the last three years.
1997 1996 1995
-------- ------- -----
Return on average assets 1.41% 1.40% 1.30%
Return on average equity 15.28% 15.80% 15.79%
Dividend payout ratio 37.77% 34.40% 32.63%
Equity to assets ratio 9.20% 8.87% 8.24%
TABLE 12 - SHORT-TERM BORROWING
The table below presents certain information regarding the Company's short-term
borrowing for each of the last three years. ($ in thousands)
1997 1996 1995
------- -------- ---------
Outstanding at end of period $ 0 $ 70 48,294
Maximum outstanding at any month-end
during the period 0 51,236 58,482
Average outstanding during the period 66 19,576 46,785
Interest paid 4 939 2,551
Weighted average rate during each period 5.69% 4.80% 5.45%
13
ITEM 2. PROPERTIES
The Bank's main office, located at 221 East Jefferson Street, Kosciusko,
Mississippi, is a two story, brick building with drive-up facilities. The Bank
owns its main office building and nineteen of its branch facilities. The
remaining facilities are occupied under lease agreements, terms of which range
from month to month to five years. It is anticipated that all leases will be
renewed.
ITEM 3. LEGAL PROCEEDINGS
The Bank is involved in various legal matters and claims which are
being defended and handled in the ordinary course of business. None of these
matters are expected, in the opinion of Management, to have a material adverse
effect on the financial position or results of operations of the Bank or the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to the Company's shareholders during
the fourth quarter of 1997.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
At March 4, 1998, there were 565 shareholders of record of the
Company's common stock. Effective September 1, 1996, the Company's common stock
was listed with the National Association of Securities Dealers, Inc. Automated
Quotation National Market System (NASDAQ) and became subject to trading and
reporting over the counter with most securities dealers. Prior to the date of
registration with NASDAQ, the stock was traded on a limited basis and no
securities firm was acting as a market maker.
First Second Third Fourth
------- ------- ------- --------
Quarterly Closing Common
Stock Price Ranges and
Dividends Paid
1997:
High $ 28.00 $ 29.25 $ 30.00 $ 44.00
Low 25.00 26.50 27.50 30.50
Close 27.00 28.00 30.00 40.00
Dividend .20 .22 .22 .24
- -------------------------------------------------------------------
1996:
High $ 24.00 $ 26.00 $ 27.00 $ 29.00
Low 22.00 24.00 25.00 29.00
Close 24.00 25.00 26.00 29.00
Dividend .17 .19 .19 .20
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item can be found in the table captioned
"Selected Financial Data" in the Registrant's 1997 Annual Report to Shareholders
and is incorporated herein by reference. (page 14)
14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required by this item can be found in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in the Registrant's Combined 1997 Annual Report and Proxy Statement
to Shareholders dated March 18, 1998, and is incorporated herein by reference.
(pages 40-45) In June, 1997, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards Nos 130 and 131 regarding the
reporting of comprehensive income and disclosures about segments of business
enterprises. The Company will be required to adopt both standards during
1998, however, such will not have a material impact on the consolidated
financial statements.
During 1997, and continuing into the next few years is the discussion
of the year 2000 and the technical issues relating to computer software. The
Company primarily uses third-party vendors for its mainframe software banking
applications. The vendor has been 2000 compliant since 1995. The Company
continues to monitor and study its relationships with all vendors and majors
customers. The cost of assuring year 2000 compliance will not be material to
financial statements of the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Registrant and the
accompanying notes to the financial statements along with the report of the
independent public accountants are contained in the Registrant's Combined 1997
Annual Report and Proxy Statement to Shareholders dated March 18, 1998, and are
incorporated herein by reference. (Pages 14-39) The Selected Quarterly
Financial Data is contained in the Registrant's 1997 Annual Report to
Shareholders (Page 16) under the caption "Quarterly Financial Trends."
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There has been no change in accountants within the two year
period ended December 31, 1997.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information on the directors of the Registrant can be found on pages 5
- - 7, "Election of Directors," and page 9, "Director Compensation," contained in
the Combined 1997 Annual Report and Proxy Statement to Shareholders dated
March 18, 1998, and is incorporated herein by reference. Information on the
Registrant's executive officers is included on pages 8-9, "Executive
Compensation," in the Combined 1997 Annual Report and Proxy Statement and in
Part I, Item 1 Business, page 5 of this Annual Report on Form 10-K.
15
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item can be found on pages 8-9, "Executive
Compensation," and page 9, "Director Compensation," of the Combined 1997 Annual
Report and Proxy Statement dated March 18, 1998, and is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information regarding security ownership of certain beneficial owners
and Management can be found on page 7, "Beneficial Ownership Reporting
Compliance," and page 7, "Principal Shareholder," in the Combined 1997
Annual Report and Proxy Statement to Shareholders dated March 18, 1998, and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions
can be found on page 12 under the caption "Transactions with Management," in the
Combined 1997 Annual Report and Proxy Statement to Shareholders dated March 18,
1998, and is incorporated herein by reference.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
A-1. Financial Statements
The report of Shearer, Taylor & Co., P. A., independent auditors, and the
following consolidated financial statements of First M & F Corporation and
Subsidiary are included in the Registrant's Combined 1997 Annual Report and
Proxy Statement to Shareholders, dated March 18, 1998, and are
incorporated into Part II, Item 8, herein by reference.
Report of Independent Certified Public Accountants PAGE 14
Consolidated Statements of Condition as of December 31, 1997, and 1996
PAGE 15
Consolidated Statements of Income for the Years ended
December 31, 1997, 1996, and 1995 PAGE 16
Consolidated Statements of Stockholders' Equity for the Years ended
December 31, 1997, 1996, and 1995 PAGE 17
Consolidated Statements of Cash Flows for the Years ended
December 31, 1997, 1996, and 1995 PAGE 18
Notes to the Consolidated Financial Statements PAGE 20
The Selected Financial Data and the Selected Quarterly Financial Data
are included in the Registrant's 1997 Annual Report to
Shareholders on pages 14 and 16, respectively
16
A-2. Financial Statement Schedules
The schedules to the consolidated financial statements set forth by
Article 9 of Regulation S-X are not required under the related instructions or
are inapplicable and therefore have been omitted.
A-3. Exhibits
The exhibits listed in the Exhibit Index are filed herewith or
incorporated herein by reference.
B. Reports on Form 8-K
None
17
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.
FIRST M & F CORPORATION
BY: /S/ HUGH S. POTTS, JR. BY: /S/ SCOTT M. WIGGERS
------------------------------ ------------------------
HUGH S. POTTS, JR SCOTT M. WIGGERS
CHAIRMAN OF THE BOARD AND PRESIDENT
CHIEF EXECUTIVE OFFICER
DATE: MARCH 17, 1998 DATE: MARCH 17, 1998
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated:
DATE: March 17, 1998 BY: /S/ Hugh S. Potts, Jr.
--------------------------------
HUGH S. POTTS, JR., DIRECTOR
DATE: March 17, 1998 BY: /S/ Scott M. Wiggers
--------------------------------
SCOTT M. WIGGERS, DIRECTOR
DATE: March 17, 1998 BY: /S/ Fred A. Bell, Jr.
--------------------------------
FRED A. BELL, JR., DIRECTOR
DATE: March 17, 1998 BY: /S/ Jon A. Crocker
--------------------------------
JON A. CROCKER, DIRECTOR
DATE: March 17, 1998 BY: /S/ Charles T. England
--------------------------------
CHARLES T. ENGLAND, DIRECTOR
DATE: March 17, 1998 BY: /S/ Toxey Hall, III
--------------------------------
TOXEY HALL III, DIRECTOR
DATE: March 17, 1998 BY: /S/ Barbara K. Hammond
--------------------------------
BARBARA K. HAMMOND, DIRECTOR
DATE: March 17, 1998 BY: /S/ J. Marlin Ivey
--------------------------------
J. MARLIN IVEY, DIRECTOR
DATE: March 17, 1998 BY: /S/ Joe Ivey
--------------------------------
JOE IVEY, DIRECTOR
DATE: March 17, 1998 BY: /S/ R. Dale McBride
--------------------------------
R. DALE McBRIDE, DIRECTOR
DATE: March 17, 1998 BY: /S/ Susan P. McCaffery
--------------------------------
SUSAN P. McCAFFERY, DIRECTOR
DATE: March 17, 1998 BY: /S/ William M. Myers
--------------------------------
WILLIAM M. MYERS, DIRECTOR
DATE: March 17, 1998 BY: /S/ Otho E. Petit, Jr.
--------------------------------
OTHO E. PETIT, JR., DIRECTOR
DATE: March 17, 1998 BY: /S/ Charles W. Ritter, Jr.
--------------------------------
CHARLES W. RITTER, JR., DIRECTOR
DATE: March 17, 1998 BY: /S/ W.C. Shoemaker
--------------------------------
W. C. SHOEMAKER, DIRECTOR
DATE: March 17, 1998 BY: /S/ Edward G. Woodard
--------------------------------
EDWARD G. WOODARD, DIRECTOR
19
EXHIBIT INDEX
2 Agreement and Plan of Reorganization dated September 1, 1995 among
First M&F Corporation, Merchants & Farmers Bank and Farmers & Merchants Bank
filed as Exhibit 2 to the Registrant's Form S-4, Registration Number 33-63919,
dated November 2, 1995 incorporated herein by reference.
3(A) Articles of Incorporation, as amended. Filed as Exhibit 3 to the
Company's Form S-1(File no. 33-08751) September 15, 1986, incorporated herein by
reference.
3(B) Bylaws, as amended. Filed as Exhibit 3-b to the Company's Form S-1
(File no. 33-08751) September 15, 1986, incorporated herein by reference.
13.1 Only pages 14 and 16 of the Registrant's Annual Report to
Shareholders expressly incorporated by reference herein are included in
this exhibit and, therefore, are filed as a part of this report of Form 10-K.
13.2 First M&F Corporation's Combined 1997 Annual Report and Proxy
Statement dated March 18, 1998.
27 Financial Data Schedule. All other exhibits are omitted as they are
inapplicable or not required by the related instructions.
20