For additional information contact

Robert E. Krimmel

Chief Financial Officer

(931) 380-8257

FIRST FARMERS AND MERCHANTS CORPORATION REPORTS 2015

NET INCOME OF $10.3 MILLION, OR $2.13 PER COMMON SHARE

COLUMBIA, Tenn. (January 27, 2016) – First Farmers and Merchants Corporation (“First Farmers” or the “Company”), the holding company for First Farmers and Merchants Bank (the “Bank”), today announced unaudited financial results for the quarter and year ending December 31, 2015.

Key highlights of First Farmers’ results for the year ended 2015 include:

·         Net income of $10.3 million or $2.13 per common share, up 1% from $10.2 million or $2.06 per common share in 2014;

·         Net income, excluding special items for each year, of $10.0 million or $2.06 per common share, up 5% from $9.5 million or $1.92 per common share in 2014 (see non-GAAP reconciliation);

·         Solid loan growth of $79 million or 12% from 2014;

·         Deposit growth of $84 million or 8% from 2014; and

·         A decline in nonperforming assets of $3.2 million or 59% from 2014.

Commenting on the results, T. Randy Stevens, Chairman and Chief Executive Officer of First Farmers, said “We are pleased to end 2015 with strong results from our operations, highlighted by double-digit year-over-year loan growth and continued improvement in credit quality measures. The 2015 earnings performance, after adjusting for special items, resulted in 5% year-over-year growth, and we believe First Farmers carries solid momentum into 2016 and remains well positioned for continued growth.” Stevens added, “We continue to focus on growing our franchise in Williamson County with our next banking office planned at Berry Farms.  Reflecting continued confidence in the performance of the Company and commitment to long-term value for our shareholders, the Board of Directors extended our stock repurchase program for up to 200,000 shares during 2016.”

Fourth Quarter 2015 Results of Operations

Net income decreased $451,000 for the fourth quarter of 2015 compared with the previous quarter, primarily driven by an increase in health insurance expense of $476,000.  The $389,000 decrease in reported quarterly earnings for the fourth quarter of 2015 compared with the year-earlier quarter included the effects of an increase in salaries and employee benefits including $416,000 of health insurance expense.  The higher salary and employee benefits expense combined with higher legal and professional fees were offset in part by improved net interest income.  For the fourth quarter of 2015, First Farmers continued to achieve loan growth with an increase of $4 million or 1% from the previous quarter.  Total deposits stood at $1.104 billion at the end of the fourth quarter of 2015, up $43 million or 4% from the previous quarter.

Capital Management Initiatives

During the fourth quarter of 2015, First Farmers repurchased approximately 40,000 shares of common stock at an average price of $29.00 per share under its stock repurchase program.  First Farmers’ Board of Directors extended the stock repurchase program for up to 200,000 shares through December 31, 2016.

Asset Quality

Total nonperforming assets remained relatively steady at $2.3 million, or 0.18% of total assets, compared to $2.2 million, or 0.18% of total assets, for the previous quarter and declined from $5.5 million, or 0.47% of total assets, when compared to the year-earlier quarter.  Net recoveries to average loans were 0.10% for the fourth quarter of 2015 compared to 0.12% for the previous quarter and net charge-offs of 0.10% for the year-earlier quarter.  As a result of loan growth, a $30,000 provision to the allowance for loan and lease losses was recorded during the fourth quarter of 2015.  The allowance for loan and lease losses represented 1.18% of total loans outstanding as of December 31, 2015 compared to 1.18% for the previous quarter and 1.22% for the year-earlier quarter.

About First Farmers and Merchants Corporation and First Farmers and Merchants Bank

First Farmers and Merchants Corporation is the holding company for First Farmers and Merchants Bank, a community bank serving the Middle Tennessee area through 19 banking locations in eight Middle Tennessee counties.  As of December 31, 2015, First Farmers reported total assets of approximately $1.3 billion, total shareholders’ equity of approximately $118 million, and administered trust assets of $4.2 billion.  For more information about First Farmers, visit First Farmers and Merchants Bank on the Web at www.myfirstfarmers.com under the “Our Story” and “Investor Relations” tab.

Cautionary Note Regarding Forward Looking Statements

Except for historical information contained herein, the matters included in this news release and other information in First Farmers’ filings with the Securities and Exchange Commission (the “SEC”) may contain certain “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These statements can be identified by the fact that they do not relate strictly to historical or current facts and often use words or phrases such as “opportunities,” “prospects,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “intends” or similar expressions.  The forward-looking statements contained herein represent the current expectations, plans or forecasts of First Farmers’ future results and revenues.  First Farmers intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of these safe harbor provisions.  These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often beyond First Farmers’ control.  Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements.  Investors should not place undue reliance on any forward-looking statement and should consider the uncertainties and risks, discussed under Item 1A. “Risk Factors” of First Farmers’ Annual Report on Form 10-K for the year ending December 31, 2014, and in any of First Farmers subsequent filings with the SEC.  Further information concerning First Farmers and its business, including additional factors that could materially affect First Farmers’ financial results, is included in its other filings with the SEC.

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NON-GAAP MEASURES PRESENTED IN EARNINGS RELEASE

(Dollars in thousands, except per share data)

(1)     The effective tax rate of 38.5% is used to determine net of tax amounts.

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL HIGHLIGHTS

(unaudited)

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