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| 8-K - FIRST M&F CORP/MS | v207051_8k.htm |
First
M&F Corporation
December
31, 2010
Dear
Shareholder:
On the
eve of the end of 2010 and the arrival of 2011, reflection is not only called
for but is appropriate.
Your
4th
quarter dividend of $0.01 per share is being paid today. To review,
the dividend reduction after the 1st quarter
of 2009 was a capital preservation move justified by the losses incurred and
foreseen at the time. The capital preservation strategy is still
appropriate and in fact required in the terms of preferred stock
issued. As and when the effects of the credit cycle are behind us,
the economy improves, and earnings are sufficient to rebuild capital and replace
preferred, dividends will grow.
Compared
to 2009, 2010 has been a vast improvement. The company has returned
to profitability thru three quarters. Non-performing loans have been
recognized, repaired, charged down, charged off, and
repossessed. Other Real Estate has increased as non-accruals have
declined, a natural transition. We will sell approximately $15
million of ORE this year. These sales have been achieved in a real
estate market still in recession. While losses remain high by historical
standards, they are dwarfed by those of 2009.
The
Company’s pre-tax, pre-provision earnings remain positive. Capital
through retained earnings has grown modestly. Modest loan growth
occurred in the 3rd and
4th
quarters. The carrying costs of $30 million in trust preferred
capital and $30 million in TARP/CPP preferred stock, now TARP/CDCI, have been or
will be reduced by approximately $1.7 million per year.
The
economic recovery has been disappointing. There are glimmers of
indication that 2011 may surpass the very anemic pace of 2010. Our
course at M&F is not set relying on a materially improved economy in 2011;
however, such an improvement would accelerate our plans for improvement in the
quarters to come.
Our focus
is continued asset quality improvement, improved earnings, capital preservation
and growth, and return to more normal performance. A detailed discussion of the
4th
quarter of 2010 will follow in March.
We remain
grateful for your continued ownership in FMFC and look forward to navigating
into calmer seas in 201l.
Hugh
S. Potts, Jr.
Chairman/CEO