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8-K - FIRST M&F CORP/MSv208890_8k.htm

 
First M&F Corp. Investor Information
CONTACT:
John G. Copeland
 
EVP & Chief Financial Officer
 
(662) 289-8594

January 24, 2011

FOR IMMEDIATE RELEASE

First M&F Corp. Reports Improved Earnings and Positive Credit Trends

KOSCIUSKO, Miss. – First M&F Corp. (NASDAQ:FMFC) today reported 2010 net income of $4.011 million as compared to a net loss of $59.799 million for 2009.  Earnings attributable to common shareholders were $15.071 million, or $1.66 basic and diluted earnings per share, compared to a loss of $60.655 million, or ($6.69) basic and diluted earnings per share for 2009.  Earnings attributable to common shareholders includes a $12.867 million gain on exchange of preferred stock recorded in the third quarter.  Excluding the gain on exchange, common earnings were $2.301 million, or $.25 basic and diluted earnings per share.

Net income for the quarter ended December 31, 2010 was $.267 million attributable to common shareholders, or $.03 basic and diluted earnings per share, compared to a loss of $27.488 million, or ($3.03) basic and diluted earnings per share for the fourth quarter of 2009.

For the fourth quarter of 2010 the annualized return on assets was 0.16%, while return on common equity was 1.16%. Comparatively, the return on assets for the fourth quarter of 2009 was a negative 6.46%, with a negative return on common equity of 105.37%. The return on assets for 2010 was 0.25%, while the return on common equity was 2.87%.

“The positive and encouraging trends begun in the first quarter of 2010 continued through year end,” said Hugh S. Potts, Jr., Chairman and Chief Executive Officer.  Mr. Potts continued, “Actions taken during 2009 bore fruit in 2010.  Virtually every credit related measure improved in 2010.  Losses by charge-offs on loans were reduced from $49 million to $17 million.  Non-accrual loans were reduced proportionally from 4.17% of loans to 3.11% and absolutely from $44.5 million to $33.1 million.  As expected, as non-accrual loans receded, Other Real Estate increased; however, in 2010, $16 million of ORE was sold at 105% of book.  The inflow of both Non-performing Loans and Other Real Estate is expected to further abate in 2011.”

 

 

Net Interest Income

Net interest income was up slightly compared to the fourth quarter of 2009, with the net interest margin increasing to 3.57% in the fourth quarter of 2010 as compared to 3.28% in the fourth quarter of 2009. The significant contributor to the increase in net interest income was the improvement in net interest spreads stemming from lower deposit costs. The net interest margin for the third quarter of 2010 was 3.60% as compared to 3.40% for the second quarter of 2010 and 3.16% for the first quarter of 2010 as the cost of funds trended downward all year. Loan yields decreased to 5.89% in the fourth quarter of 2010 from 6.04% in the fourth quarter of 2009. Loan yields were virtually flat from the third quarter of 2010 to the fourth quarter. Average loans were $1.048 billion for the fourth quarter of 2010 as compared to $1.052 billion for the third quarter of 2010 and $1.103 million during the fourth quarter of 2009. Loans grew by $13.133 million in the fourth quarter of 2010 and by $8.898 million in the third quarter.  Deposit costs fell in the fourth quarter of 2010 from the third quarter of 2010 and from the fourth quarter of 2009, as deposits were re-priced downward throughout 2010 in the current stable low-rate environment.  Deposit costs were 1.49% in the fourth quarter of 2010 as compared to 1.87% in the fourth quarter of 2009. Deposits grew by $53.532 million during the fourth quarter of 2010. Management continues to emphasize and focus on core deposit growth by developing and promoting relationship-driven deposit gathering while de-emphasizing non-core deposit funding. Loans as a percentage of assets were 66.10% at December 31, 2010 as compared to 63.64% at December 31, 2009 and 67.70% at September 30, 2010. With modest growth in the third and fourth quarters loans at year-end were up just slightly over the prior year while deposits fell by less than 1.00%.

Non-interest Income

Non-interest income, excluding securities transactions and other-than-temporary impairment on securities, for the fourth quarter of 2010 was down by 8.51% compared to the fourth quarter of 2009, with deposit-related income down by 10.29% and mortgage income up 11.14%.  Insurance agency commissions were up by almost 1.00%.

Non-interest income, excluding securities transactions and other-than-temporary impairment on securities, was down 8.23% for 2010 versus 2009.  Over half of non-interest income is from deposit sources, which was down 6.88% year over year. Deposit revenues continue to be supported by debit card fee income, which increased by 9.44% in 2010 over 2009, and overdraft fee income, which, however, decreased by 12.79% for the year. Commission revenues from traditional insurance products were down 1.86% year over year.

Non-interest income includes non-cash other-than-temporary impairment charges of $.403 million in 2010 and $.829 million in 2009 on pooled trust preferred securities held in the investment portfolio.  These charges reflect credit losses expected due to deferrals and defaults by issuing institutions and cash flow analyses.

 

 

Non-interest Expenses

Non-interest expenses excluding goodwill impairments and amortization were down by 19.31% in the fourth quarter of 2010 as compared to the fourth quarter of 2009.  Most of the decrease in expenses was due to lower foreclosed property expenses as credit quality improved and the pace of new problem credits and foreclosures slowed. Salaries and benefits for the quarter were virtually flat compared to the year-ago quarter.

Non-interest expenses excluding goodwill impairments and amortization fell by 12.25% for 2010 as compared to 2009.  Although most of the decrease was due to lower foreclosed property expenses, salaries and benefits, net occupancy expenses and other expenses were each down significantly in 2010 as cost savings measures and branch closure savings were fully realized.  The number of average full-time equivalent employees at the end of 2010 was 496 as compared to 496 at the end of the third quarter of 2010 and 517 at the end of 2009.

Credit Quality

Annualized net loan charge-offs as a percent of average loans for the fourth quarter of 2010 were 2.41% as compared to 8.87% for the same period in 2009. Non-accrual and 90-day past due loans as a percent of total loans were 3.20% at the end of 2010 as compared to 4.40% at the end of 2009. Annualized net charge-offs as a percentage of average loans for 2010 were 1.65% as compared to 4.50% for 2009. The allowance for loan losses as a percentage of loans was 1.50% at December 31, 2010 as compared to 2.25% at December 31, 2009. The provision for loan losses fell sharply in 2010 from $49.601 million in 2009 to $9.220 million in 2010.  The decrease in provisioning year over year reflected the slowed pace of new credit issues and the prior year significant deterioration in collateral values on collateral-dependent real estate loans.

Mr. Potts commented, “Income at the bank, holding company, and subsidiaries improved as the burden of credit issues receded.  Margins improved, loan volume grew slightly, cost control measures took full effect, and capital grew slightly, proportionately, and absolutely.”  Mr. Potts continued, “Our course, charted through the collapse of acquisition, construction and development credit, has proven to be proper.  Now we must accelerate our progress in income growth as credit issues further recede.”

Balance Sheet

Total assets fell by 3.55% in 2010, to $1.604 billion from $1.663 billion.  Total equity grew to $107.065 million, a 2.33% increase from 2009. Total loans were $1.060 billion compared to $1.058 billion at the end of 2009. Deposits were $1.375 billion compared to $1.388 billion at the end of 2009.  Book value per common share increased to $9.96 per share at the end of 2010, a 19.14% increase from 2009.

 

 

Growth

In the first quarter of 2009 the Company closed one branch in Shelby County, Tennessee.  In the fourth quarter of 2009, the Company closed four branches, one each in Starkville, Philadelphia and Southaven, Mississippi and one in Crestview, Florida.  In the first quarter of 2010 the Company closed two branches in Shelby County, Tennessee and one branch in Shelby County, Alabama.  These closures are designed to improve the Company’s efficiencies and cost structure without exiting any markets.

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 33 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)
   
December 31
   
December 31
 
   
2010
   
2009
 
Cash and due from banks
    45,099       42,446  
Interest bearing bank balances
    72,103       84,810  
Federal funds sold
    25,000       70,000  
Securities available for sale (cost of
               
$274,421 and $280,470)
    276,929       284,550  
Loans held for sale
    6,242       10,266  
                 
Loans
    1,060,146       1,058,340  
Allowance for loan losses
    16,025       24,014  
Net loans
    1,044,121       1,034,326  
                 
Bank premises and equipment
    40,696       42,919  
Accrued interest receivable
    6,380       7,598  
Other real estate
    31,125       23,578  
Goodwill
    0       0  
Other intangible assets
    5,013       5,439  
Other assets
    51,256       57,036  
Total assets
    1,603,964       1,662,968  
                 
Non-interest bearing deposits
    212,199       228,579  
Interest bearing deposits
    1,163,213       1,159,684  
Total deposits
    1,375,412       1,388,263  
                 
Federal funds and repurchase agreements
    33,481       8,642  
Other borrowings
    50,416       122,510  
Junior subordinated debt
    30,928       30,928  
Accrued interest payable
    1,470       2,933  
Other liabilities
    5,192       5,062  
Total liabilities
    1,496,899       1,558,338  
                 
Preferred stock, 30,000 shares issued and outstanding
    16,390       28,838  
Common stock, 9,106,803 and 9,069,346
               
shares issued & outstanding
    45,534       45,347  
Additional paid-in capital
    31,884       31,926  
Nonvested restricted stock awards
    784       734  
Retained earnings
    12,224       (2,595 )
Accumulated other comprehensive income
    249       379  
Total First M&F Corp equity
    107,065       104,629  
Noncontrolling interests in subsidiaries
    -       1  
Total equity
    107,065       104,630  
Total liabilities & equity
    1,603,964       1,662,968  
 
 

 

First M&F Corporation and Subsidiary
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except share data)
   
Three Months Ended December 31
   
Twelve Months Ended December 31
 
   
2010
   
2009
   
2010
   
2009
 
Interest and fees on loans
    15,463       16,635       62,070       66,782  
Interest on loans held for sale
    62       86       232       278  
Taxable investments
    1,676       2,213       7,616       9,531  
Tax exempt investments
    353       488       1,549       2,105  
Federal funds sold
    15       34       82       95  
Interest bearing bank balances
    34       30       143       42  
Total interest income
    17,603       19,486       71,692       78,833  
                                 
Interest on deposits
    4,177       5,452       18,809       23,701  
Interest on fed funds and repurchase agreements
    17       14       66       97  
Interest on other borrowings
    536       1,329       3,024       5,449  
Interest on subordinated debt
    505       504       1,992       1,992  
Total interest expense
    5,235       7,299       23,891       31,239  
                                 
Net interest income
    12,368       12,187       47,801       47,594  
Provision for possible loan losses
    2,280       15,761       9,220       49,601  
Net interest income after loan loss
    10,088       (3,574 )     38,581       (2,007 )
                                 
Service charges on deposits
    2,546       2,838       10,221       10,976  
Mortgage banking income
    439       395       1,581       1,823  
Agency commission income
    864       856       3,809       3,881  
Fiduciary and brokerage income
    120       117       526       489  
Other income
    448       622       2,532       3,174  
Other-than-temporary impairment on securities, net of $0, $1,490, $32 and $2,696 recognized in other comprehensive income
    -       (417 )     (403 )     (829 )
Gains on AFS securities
    539       14       2,255       456  
Total noninterest income
    4,956       4,425       20,521       19,970  
                                 
Salaries and employee benefits
    6,732       6,748       27,303       28,314  
Net occupancy expense
    968       1,306       3,937       4,614  
Equipment expenses
    523       682       2,382       2,877  
Software and processing expenses
    400       440       1,627       1,898  
FDIC insurance assessments
    768       711       3,261       3,276  
Foreclosed property expenses
    1,905       4,493       2,946       7,283  
Goodwill impairment
    -       16,772       -       32,572  
Intangible asset amortization and impairment
    107       107       427       1,688  
Other expenses
    3,225       3,617       12,607       13,350  
Total noninterest expense
    14,628       34,876       54,490       95,872  
                                 
Net income (loss) before taxes
    416       (34,025 )     4,612       (77,909 )
Income tax expense (benefit)
    (226 )     (6,715 )     602       (18,104 )
Net income (loss)
    642       (27,310 )     4,010       (59,805 )
Net income (loss) attributable to noncontrolling interests
    1       1       (1 )     (6 )
Net income (loss) attributable to First M&F Corp
    641       (27,311 )     4,011       (59,799 )
                                 
Earnings Per Common Share Calculations:
                               
Net income (loss) attributable to First M&F Corp
    641       (27,311 )     4,011       (59,799 )
Dividends and accretion on preferred stock
    (375 )     (436 )     (1,692 )     (1,464 )
Gain on exchange of preferred stock  (Note 1)
    0       -       12,867       -  
Net income (loss) applicable to common stock
    266       (27,747 )     15,186       (61,263 )
Earnings (loss) attributable to participating securities
    (1 )     (259 )     115       (608 )
Net income (loss) allocated to common shareholders
    267       (27,488 )     15,071       (60,655 )
                                 
Weighted average shares (basic)
    9,099,883       9,069,346       9,081,687       9,066,880  
Weighted average shares (diluted)
    9,099,883       9,069,346       9,081,687       9,066,880  
Basic earnings (loss) per share
  $ 0.03     $ (3.03 )   $ 1.66     $ (6.69 )
Diluted earnings (loss) per share
  $ 0.03     $ (3.03 )   $ 1.66     $ (6.69 )
 
 

 

First M&F Corporation
Financial Highlights
   
YTD Ended
   
YTD Ended
             
   
December 31
   
December 31
             
   
2010
   
2009
             
Performance Ratios:
                       
Return on assets (annualized)
    0.25 %     -3.63 %            
Return on equity (annualized)  (a)
    3.74 %     -42.97 %            
Return on common equity (annualized)  (a)
    2.87 %     -53.73 %            
Efficiency ratio
    78.47 %     89.87 %            
Net interest margin (annualized, tax-equivalent)
    3.43 %     3.29 %            
Net charge-offs to average loans (annualized)
    1.65 %     4.50 %            
Nonaccrual loans to total loans
    3.11 %     4.17 %            
90 day accruing loans to total loans
    0.09 %     0.23 %            
                             
   
QTD Ended
   
QTD Ended
   
QTD Ended
   
QTD Ended
 
   
December 31
   
September 30
   
June 30
   
March 31
 
   
2010
   
2010
   
2010
   
2010
 
Per Common Share (diluted):
                           
Net income (loss) (including $12,867 gain)
    0.03       1.49       0.09       0.05  
Net income (loss) (excluding $12,867 gain)
    0.03       0.08       0.09       0.05  
Cash dividends paid
    0.01       0.01       0.01       0.01  
Book value
    9.96       10.18       8.68       8.37  
Closing stock price
    3.74       3.38       3.86       3.15  
                                 
Loan Portfolio Composition: (in thousands)
                               
Commercial, financial and agricultural
    125,614       130,596       130,657       123,476  
Non-residential real estate
    646,731       626,747       615,571       626,025  
Residential real estate
    195,184       196,299       196,547       195,862  
Home equity loans
    40,305       40,523       41,254       43,043  
Consumer loans
    44,308       45,124       44,998       44,788  
Other loans
    8,004       7,724       9,088       9,235  
Total loans
    1,060,146       1,047,013       1,038,115       1,042,429  
                                 
Deposit Composition: (in thousands)
                               
Noninterest-bearing deposits
    227,759       220,556       227,825       217,683  
NOW deposits
    348,650       307,533       312,828       331,066  
MMDA deposits
    166,454       162,955       145,798       141,203  
Savings deposits
    114,769       117,175       114,426       113,367  
Core certificates of deposit under $100,000
    268,272       267,350       278,177       289,525  
Core certificates of deposit $100,000 and over
    234,500       228,543       245,182       262,335  
Brokered certificates of deposit under $100,000
    3,074       3,005       5,322       6,033  
Brokered certificates of deposit $100,000 and over
    11,934       14,762       14,253       12,786  
Total deposits
    1,375,412       1,321,879       1,343,811       1,373,998  
                                 
Nonperforming Assets: (in thousands)
                               
Nonaccrual loans
    33,127       37,082       35,603       42,148  
Other real estate
    31,125       38,631       31,231       31,460  
Investment securities
    698       596       660       795  
Total nonperforming assets
    64,950       76,309       67,494       74,403  
Accruing loans past due 90 days or more
    951       858       1,307       2,092  
Restructured loans (accruing)
    18,052       18,518       15,374       6,759  
Total nonaccrual loan to loans
    3.11 %     3.53 %     3.41 %     4.01 %
Total nonperforming credit assets to loans and ORE
    5.85 %     6.95 %     6.22 %     6.80 %
Total nonperforming assets to assets ratio
    4.05 %     4.93 %     4.30 %     4.58 %
                                 
Allowance For Loan Loss Activity: (in thousands)
                               
Beginning balance
    20,077       18,301       21,115       24,014  
Provision for loan loss
    2,280       2,280       2,380       2,280  
Charge-offs
    (6,536 )     (1,485 )     (5,706 )     (5,928 )
Recoveries
    204       981       512       749  
Ending balance
    16,025       20,077       18,301       21,115  
 

 
First M&F Corporation
                               
Financial Highlights
                               
   
QTD Ended
   
QTD Ended
   
QTD Ended
   
QTD Ended
 
   
December 31
   
September 30
   
June 30
   
March 31
 
   
2010
   
2010
   
2010
   
2010
 
Condensed Income Statements: (in thousands)
                               
                                 
Interest income
    17,603       17,855       18,222       18,012  
Interest expense
    5,235       5,561       6,324       6,771  
Net interest income
    12,368       12,294       11,898       11,241  
Provision for loan losses
    2,280       2,280       2,380       2,280  
Noninterest revenues
    4,956       4,746       5,216       5,603  
Noninterest expenses
    14,628       13,111       13,342       13,409  
Net income (loss) before taxes
    416       1,649       1,392       1,155  
Income tax expense (benefit)
    (226 )     407       120       301  
Noncontrolling interest
    1       (3 )     0       1  
Net income (loss)
    641       1,245       1,272       853  
Preferred dividends
    (375 )     (441 )     (439 )     (437 )
Gain on exchange of preferred stock
    -       12,867       -       -  
Net income (loss) applicable to common stock
    266       13,671       833       416  
Earnings (loss) attributable to participating securities
    (1 )     106       7       3  
Net income (loss) allocated to common shareholders
    267       13,565       826       413  
                                 
Tax-equivalent net interest income
    12,624       12,563       12,180       11,554  
                                 
Selected Average Balances: (in thousands)
                               
Assets
    1,574,426       1,553,415       1,598,285       1,638,761  
Loans held for investment
    1,041,453       1,046,242       1,038,148       1,056,177  
Earning assets
    1,404,766       1,384,289       1,438,166       1,481,335  
Deposits
    1,341,738       1,331,624       1,362,362       1,379,510  
Equity
    109,110       108,535       105,381       105,584  
Common equity
    90,612       79,547       76,582       76,715  
                                 
Selected Ratios:
                               
Return on average assets (annualized)
    0.16 %     0.32 %     0.32 %     0.21 %
Return on average equity (annualized)  (a)
    2.33 %     4.55 %     4.84 %     3.28 %
Return on average common equity (annualized)  (a)
    1.16 %     4.01 %     4.37 %     2.20 %
Average equity to average assets
    6.93 %     6.99 %     6.59 %     6.44 %
Tangible equity to tangible assets  (b)
    6.38 %     6.72 %     6.56 %     6.15 %
Tangible common equity to tangible assets  (b)
    5.36 %     5.67 %     4.70 %     4.36 %
Net interest margin (annualized, tax-equivalent)
    3.57 %     3.60 %     3.40 %     3.16 %
Efficiency ratio
    83.22 %     75.75 %     76.69 %     78.16 %
Net charge-offs to average loans (annualized)
    2.41 %     0.19 %     2.01 %     1.99 %
Nonaccrual loans to total loans
    3.11 %     3.53 %     3.41 %     4.01 %
90 day accruing loans to total loans
    0.09 %     0.08 %     0.17 %     0.20 %
Price to book (x)
    0.38       0.33       0.44       0.38  
Price to earnings (x)
    31.17       10.56       10.72       15.75  
 
 

 

First M&F Corporation
Financial Highlights
 
Historical Earnings Trends:
       
Earnings
   
Earnings
       
         
Applicable to
   
Allocated to
       
         
Common
   
Common
       
   
Earnings
   
Stock
   
Shareholders
   
EPS
 
   
(in thousands)
   
(in thousands)
   
(in thousands)
   
(diluted)
 
4Q 2010
    642       266       267       0.03  
3Q 2010
    1,242       13,671       13,565       1.49  
2Q 2010
    1,272       833       826       0.09  
1Q 2010
    854       416       413       0.05  
4Q 2009
    (27,311 )     (27,747 )     (27,488 )     (3.03 )
3Q 2009
    (136 )     (571 )     (580 )     (0.06 )
2Q 2009
    (5,111 )     (5,550 )     (5,498 )     (0.61 )
1Q 2009
    (27,241 )     (27,395 )     (27,089 )     (2.99 )
4Q 2008
    (4,357 )     (4,357 )     (4,300 )     (0.47 )
3Q 2008
    2,210       2,210       2,183       0.24  
2Q 2008
    (466 )     (466 )     (458 )     (0.05 )
                                 
Revenue Statistics:
         
Non-interest
   
Non-interest
         
   
Revenues
   
Revenues to
   
Revenues to
         
   
Per FTE
   
Ttl. Revenues
   
Avg. Assets
         
   
(thousands)
   
(percent)
   
(percent)
         
4Q 2010
    35.4       28.19 %     1.25 %        
3Q 2010
    34.9       27.42 %     1.21 %        
2Q 2010
    35.1       29.98 %     1.31 %        
1Q 2010
    34.4       32.66 %     1.39 %        
4Q 2009
    32.8       26.09 %     1.05 %        
3Q 2009
    34.4       29.81 %     1.30 %        
2Q 2009
    31.2       29.92 %     1.24 %        
1Q 2009
    32.3       29.81 %     1.28 %        
4Q 2008
    32.8       26.90 %     1.19 %        
3Q 2008
    34.4       29.16 %     1.37 %        
2Q 2008
    33.4       28.13 %     1.31 %        
                                 
Expense Statistics:
 
Non-interest
                         
   
Expense to
   
Efficiency
                 
   
Avg. Assets
   
Ratio
                 
   
(percent)
   
(percent) (c)
                 
4Q 2010
    3.69 %     83.22 %                
3Q 2010
    3.35 %     75.75 %                
2Q 2010
    3.35 %     76.69 %                
1Q 2010
    3.32 %     78.16 %                
4Q 2009
    8.25 %     106.73 %                
3Q 2009
    3.41 %     78.34 %                
2Q 2009
    3.94 %     95.10 %                
1Q 2009
    7.65 %     80.41 %                
4Q 2008
    3.52 %     79.29 %                
3Q 2008
    3.29 %     69.93 %                
2Q 2008
    3.34 %     71.85 %                
 
 

 
 
First M&F Corporation
Average Balance Sheets/Yields and Costs (tax-equivalent)
(In thousands with yields and costs annualized)
   
QTD December 2010
   
QTD December 2009
 
   
Average
         
Average
       
   
Balance
   
Yield/Cost
   
Balance
   
Yield/Cost
 
Interest bearing bank balances
    65,302       0.21 %     59,852       0.20 %
Federal funds sold
    25,000       0.25 %     65,479       0.20 %
Taxable investments (amortized cost)
    228,935       2.91 %     237,842       3.69 %
Tax-exempt investments (amortized cost)
    37,525       5.95 %     52,275       5.91 %
Loans held for sale
    6,551       3.75 %     9,229       3.71 %
Loans held for investment
    1,041,453       5.91 %     1,093,694       6.06 %
Total earning assets
    1,404,766       5.04 %     1,518,371       5.18 %
Non-earning assets
    169,660               158,133          
Total average assets
    1,574,426               1,676,504          
                                 
NOW
    319,309       1.02 %     296,806       1.18 %
MMDA
    167,154       1.14 %     169,439       1.14 %
Savings
    115,806       1.26 %     112,482       1.36 %
Certificates of Deposit
    512,012       1.95 %     576,285       2.54 %
Short-term borrowings
    34,194       0.20 %     10,036       0.56 %
Other borrowings
    80,946       5.10 %     163,422       4.45 %
Total interest bearing liabilities
    1,229,421       1.69 %     1,328,470       2.18 %
Non-interest bearing deposits
    227,457               206,037          
Non-interest bearing liabilities
    8,438               8,757          
Preferred equity
    18,498               28,768          
Common equity
    90,612               104,472          
Total average liabilities and equity
    1,574,426               1,676,504          
Net interest spread
            3.35 %             3.00 %
Effect of non-interest bearing deposits
            0.26 %             0.29 %
Effect of leverage
            -0.04 %             -0.01 %
Net interest margin, tax-equivalent
            3.57 %             3.28 %
Less tax equivalent adjustment:
                               
Investments
            0.06 %             0.08 %
Loans
            0.02 %             0.02 %
Reported book net interest margin
            3.49 %             3.18 %
 
 

 

First M&F Corporation
Average Balance Sheets/Yields and Costs (tax-equivalent)
(In thousands with yields and costs annualized)
   
YTD December 2010
   
YTD December 2009
 
   
Average
         
Average
       
   
Balance
   
Yield/Cost
   
Balance
   
Yield/Cost
 
Interest bearing bank balances
    60,894       0.24 %     25,151       0.17 %
Federal funds sold
    35,642       0.23 %     43,871       0.22 %
Taxable investments (amortized cost)
    236,046       3.23 %     234,942       4.06 %
Tax-exempt investments (amortized cost)
    41,347       5.97 %     56,021       5.99 %
Loans held for sale
    7,416       3.13 %     8,120       3.42 %
Loans held for investment
    1,045,467       5.96 %     1,122,308       5.97 %
Total earning assets
    1,426,812       5.11 %     1,490,413       5.39 %
Non-earning assets
    164,130               154,747          
Total average assets
    1,590,942               1,645,160          
                                 
NOW
    321,036       1.05 %     280,484       1.28 %
MMDA
    151,974       1.12 %     167,425       1.34 %
Savings
    114,358       1.28 %     113,397       1.48 %
Certificates of Deposit
    544,192       2.26 %     569,623       2.84 %
Short-term borrowings
    19,112       0.35 %     10,448       0.93 %
Other borrowings
    102,112       4.91 %     165,548       4.49 %
Total interest bearing liabilities
    1,252,784       1.91 %     1,306,925       2.39 %
Non-interest bearing deposits
    222,083               190,541          
Non-interest bearing liabilities
    8,909               8,538          
Preferred equity
    26,300               25,141          
Common equity
    80,866               114,015          
Total average liabilities and equity
    1,590,942               1,645,160          
Net interest spread
            3.20 %             3.00 %
Effect of non-interest bearing deposits
            0.29 %             0.30 %
Effect of leverage
            -0.06 %             -0.01 %
Net interest margin, tax-equivalent
            3.43 %             3.29 %
Less tax equivalent adjustment:
                               
Investments
            0.06 %             0.08 %
Loans
            0.02 %             0.02 %
Reported book net interest margin
            3.35 %             3.19 %
 

 
First M&F Corporation
Notes to Financial Schedules

(a) 
Return on equity is calculated as: (Net income attributable to First M&F Corp) divided by (Total equity)

Return on common equity is calculated as: (Net income attributable to First M&F Corp minus preferred dividends) divided by (Total First M&F Corp equity minus preferred stock)

(b) 
Tangible equity to tangible assets is calculated as: (Total equity minus goodwill and other intangible assets) divided by (Total assets minus goodwill and other intangible assets)

Tangible common equity to tangible assets is calculated as: (Total First M&F Corp equity minus preferred stock minus goodwill and other intangible assets) divided by (Total assets minus goodwill and other intangible assets)

(c) 
Efficiency ratio is calculated as: (Noninterest expense) divided by (Tax-equivalent net interest income plus noninterest revenues)

Note 1: On September 29, 2010 the Company issued 30,000 shares of Class B, Series CD, par value $1,000 preferred stock to the U.S. Treasury to acquire its 30,000 shares outstanding of Class B, Series A, par value $1,000 preferred stock. The Series CD preferred stock issued has a dividend rate of 2.00%. The estimated fair value of the Series CD preferred stock as of September 29, 2010 was $16,159,000. The Series A preferred stock carried a dividend rate of 5.00% and had a book value of $29,026,000 as of September 29, 2010. The acquisition of the Series A shares in exchange for the Series CD shares resulted in a gain of $12,867,000 which was recorded as a credit to retained earnings.