UK markets closed
  • FTSE 100

    6,630.52
    -20.36 (-0.31%)
     
  • FTSE 250

    20,961.31
    -334.92 (-1.57%)
     
  • AIM

    1,163.26
    -10.13 (-0.86%)
     
  • GBP/EUR

    1.1617
    +0.0020 (+0.17%)
     
  • GBP/USD

    1.3828
    -0.0066 (-0.47%)
     
  • BTC-GBP

    34,987.17
    +653.15 (+1.90%)
     
  • CMC Crypto 200

    982.93
    +39.75 (+4.21%)
     
  • S&P 500

    3,841.94
    +73.47 (+1.95%)
     
  • DOW

    31,496.30
    +572.16 (+1.85%)
     
  • CRUDE OIL

    66.28
    +2.45 (+3.84%)
     
  • GOLD FUTURES

    1,698.20
    -2.50 (-0.15%)
     
  • NIKKEI 225

    28,864.32
    -65.78 (-0.23%)
     
  • HANG SENG

    29,098.29
    -138.50 (-0.47%)
     
  • DAX

    13,920.69
    -135.65 (-0.97%)
     
  • CAC 40

    5,782.65
    -48.00 (-0.82%)
     

First Farmers and Merchants Corporation Reports 2020 Net Income of $14.2 Million, or $3.25 Per Common Share

·15-min read

First Farmers and Merchants Corporation (OTC Pink: FFMH), the holding company for First Farmers and Merchants Bank, today announced unaudited financial results for the quarter and year ending December 31, 2020.

Key highlights of First Farmers’ results for 2020 include:

  • Net income of $14.2 million, or $3.25 per common share, down 12% from $16.1 million, or $3.62 per common share for 2019;

  • Adjusted net income, which excludes special items, totaled $13.0 million, or $2.98 per common share, compared with $14.0 million, or $3.15 per common share for 2019 (see non-GAAP reconciliation);

  • Stock book value increased to $36.68, up $3.74, or 11%, from the prior year;

  • Mortgage banking activities revenue reached record $1.3 million, up 22% from $1.1 million for 2019; and

  • Total assets reached record $1.8 billion and total deposits reached record $1.6 billion, while administered trust assets surpassed record $5.9 billion.

Commenting on the results, T. Randy Stevens, Chairman and Chief Executive Officer of First Farmers, said, "We are pleased to report record levels of growth in 2020 including record total assets, total deposits and total administered trust assets which exceeded $5.9 billion. The sustained economic impact resulting from the COVD-19 pandemic led to decreases in our net income and adjusted net income for the fourth quarter and full year. However, we did experience stronger growth towards the latter part of the fourth quarter in our non-interest income, and we saw slight increases in our net interest income for both the fourth quarter and full year. Our continuing efforts to expand multiple revenue streams have been successful with growth in fee income from trust services and mortgage banking activities, the latter up a strong 25% and 22% for the fourth quarter and full year, respectively. Asset quality held up well throughout the year, and we are also pleased that most loans for which payments were deferred for borrowers in response to the global pandemic are back to current status. Additionally, we experienced net recoveries in our loan portfolio which is a tribute to our disciplined lending philosophy. We will continue to assist our customers and businesses in the geographies we serve with the newly announced round of the Small Business Administration Payroll Protection Program. In conclusion, continued diversification of our income streams, solid credit metrics and building long term relationships with our customers, affirms our confidence as we enter 2021."

Brian K. Williams, President, added, "The economic environment in 2020 presented unprecedented challenges, and I am thankful for the dedication and resilience of our bank team as First Farmers was able to achieve favorable financial performance while maintaining our commitment to serve our customers. The growth of our bank in 2020 alongside a steady focus on safety and soundness exemplifies First Farmers during times of economic stress. As we enter 2021, we are focused on improvement in our net interest margin as this extraordinarily low interest rate environment persists. Further, the investments we made in technology allowed us to transition to remote work early on in the pandemic and promoted our digital services to our customers. In fact, we expect to continue to accelerate the bank’s digital offering and capabilities during the coming year. We are also committed to realizing greater efficiency company-wide as a result of technology investments and process improvement. Despite the uncertainty which has defined 2020, our Board has remained committed to the delivery of meaningful value to our shareholders, as evidenced by the continued support of the cash dividend and extension of the stock repurchase program of up to 200,000 shares through 2021."

2020 Results of Operations

Net income for 2020 declined to $14.2, down $1.9 million, or 12%, from 2019. The reduction in earnings was primarily driven by the one-time gain on sale of the Company’s White Bluff office totaling $2.0 million, net of tax, in 2019. Net income, adjusted for special items, was $13.0 million, down $1.0 million, or 7%, from the prior year. Net interest income improved $1.1 million driven by growth in interest earning assets of $237.6 million offset in part by a decline in the net interest margin as a result of the decrease in market interest rates. As a result of the uncertainty related to the COVID-19 induced economic recession, we increased our provision for loan losses $1.1 million from 2019. Non-interest income, adjusted for special items (non-GAAP), was $13.2 million down $176,000, or 1%, driven by the reduction in service fees on deposit accounts as result of the economic recession. Non-interest expense was $40.3 million up $683,000, or 2%, driven by increases in employee health insurance of $588,000 and software support and other computer expense of $462,000 offset in part by a reduction in advertising and promotions expense of $375,000.

Net income for the fourth quarter was $3.3 million down $383,000, or 10%, compared with the linked quarter primarily driven by a decrease in net interest income of $85,000 and an increase in non-interest expense of $459,000. The increase in non-interest expense was due to higher salaries and employee benefits of $399,000 and higher advertising and promotions expense of $104,000, which was offset by a decrease in professional and legal fees of $36,000.

First Farmers ended 2020 with interest earning assets of $1.5 billion up $237.6 million, or 19.0%, propelling total assets to $1.8 billion, a record for the Company. Total loans reached $965 million, an increase of $27 million, or 3%, for the year. Small Business Administration Paycheck Protection Program ("SBA PPP") loans ended the year at $68.4 million following $17.6 million in loan redemptions recorded during the fourth quarter. Total deposits reached a record $1.6 billion for 2020, an increase of $388 million, or 32%, for the year.

Asset Quality

Total nonperforming assets were down to $1.6 million, or 0.09% of total assets, compared to the previous quarter and down $105,000, or 0.12% of total assets, from the year-earlier quarter. Net recoveries to average loans were 0.01% for the fourth quarter of 2020 compared with net recoveries of 0.01% for the previous quarter and net charge-offs of 0.00% the year-earlier quarter. No provision for loan and lease losses expense was recorded during the fourth quarter of 2020. The allowance for loan and lease losses represented 1.01% of total loans outstanding for the fourth quarter of 2020 compared with 0.98% for the previous quarter and 0.96% for the year-earlier quarter. The allowance for loan and lease losses for the fourth quarter of 2020 represented 1.08% of total loans outstanding, excluding SBA PPP loans. The growth in the allowance was impacted by an increase in allocations for uncertain economic conditions related to the COVID-19 pandemic offset in part by the Company’s continued low level of loan losses and non-performing assets coupled with underlying loan contraction when removing SBA PPP loans for the year.

Capital Management Initiatives

First Farmers did not purchase any shares during the fourth quarter under its stock repurchase program. First Farmers’ Board of Directors extended the stock repurchase program for up to 200,000 shares through December 31, 2021.

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 22 offices in seven Middle Tennessee counties. As of December 31, 2020, First Farmers reported total assets of approximately $1.8 billion, total shareholders’ equity of approximately $160 million, and administered trust assets of $5.9 billion. For more information about First Farmers, visit us on the Web at www.myfirstfarmers.com under "Investor Relations."

Cautionary Note Regarding Forward Looking Statements

This news release may contain certain "forward-looking statements" that represent First Farmers’ expectations or beliefs concerning future events 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. Such forward-looking statements contained herein represent the current expectations, plans or forecast of First Farmers’ and are about matters that are inherently subject to risks and uncertainties. These statements are not guarantees of future results or performance and readers are cautioned to not place undue reliance on them, whether included in this news release or made elsewhere from time to time by First Farmers or on its behalf. First Farmers disclaims any obligation to update such forward-looking statements.

Non-GAAP Financial Measures

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. First Farmers management uses non-GAAP financial measures, including: (i) adjusted net income and (ii) adjusted basic earnings per share, in its analysis of the Company’s performance. These non-GAAP financial measures exclude the following from net income: securities gains and losses, gain on sale of White Bluff office, gain on sale of fixed assets, gain on redemption of bank‑owned life insurance, contingency accrual and the income tax effect of adjustments. Management believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company.

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NON-GAAP MEASURES PRESENTED IN EARNINGS RELEASE

(Dollars in thousands, except per share data)

Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 31,

2020

2019

2020

2020

2019

Total non-interest income

$

3,412

$

3,457

$

3,396

$

14,447

$

16,207

Gain on sale of securities

-

(15

)

-

(129

)

(27

)

Gain on equity securities

-

-

-

(242

)

-

Gain on sale of White Bluff office

-

-

-

-

(2,700

)

Gain on sale of fixed assets

-

-

-

(102

)

-

Gain on redemption of bank-owned life insurance

-

-

-

(820

)

(150

)

Adjusted non-interest income

$

3,412

$

3,442

$

3,396

$

13,154

$

13,330

Contingency accrual

-

(1

)

-

-

108

Net income as reported

$

3,297

$

3,477

$

3,680

$

14,194

$

16,056

Total adjustments, net of tax1

-

(12

)

-

(1,170

)

(2,085

)

Adjusted net income

$

3,297

$

3,465

$

3,680

$

13,024

$

13,971

Basic earnings per share

$

0.76

$

0.79

$

0.84

$

3.25

$

3.62

Total adjustments, net of tax1

-

-

-

(0.27

)

(0.47

)

Adjusted basic earnings per share

$

0.76

$

0.79

$

0.84

$

2.98

$

3.15

(1) The effective tax rate of 26.1% is used to determine net of tax amounts.

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

December 31,

December 31,

(dollars in thousands, except per share data)

2020

2019(1)

ASSETS

Cash and due from banks

$

29,126

$

26,614

Interest-bearing deposits

105,470

6,712

Federal funds sold

3,774

819

Total cash and cash equivalents

138,370

34,145

Securities:

Available-for-sale

594,649

329,796

Held-to-maturity (fair market value $18,195 and $18,005

as of the periods presented)

17,259

17,606

Equity securities

2,242

2,000

Loans held-for-sale

3,679

2,540

Loans, net of deferred fees

964,695

934,770

Allowance for loan and lease losses

(9,715

)

(8,960

)

Net loans

954,980

925,810

Bank premises and equipment, net

34,421

35,762

Bank-owned life insurance

34,016

32,198

Goodwill

9,018

9,018

Other assets

13,113

14,795

TOTAL ASSETS

$

1,801,747

$

1,403,670

LIABILITIES

Deposits:

Noninterest-bearing

$

427,073

$

311,274

Interest-bearing

1,181,101

908,967

Total deposits

1,608,174

1,220,241

Securities sold under agreements to repurchase

11,691

11,742

Federal Home Loan Bank borrowings

-

5,500

Accounts payable and other liabilities

21,888

21,799

TOTAL LIABILITIES

1,641,753

1,259,282

SHAREHOLDERS’

Common stock - $10 par value per share, 8,000,000 shares

EQUITY

authorized; 4,359,738 and 4,379,871 shares issued

and outstanding as of the periods presented

43,597

43,799

Retained earnings

108,761

98,945

Accumulated other comprehensive income

7,541

1,549

Total shareholders’ equity attributable to First Farmers and Merchants Corporation

159,899

144,293

Noncontrolling interest - preferred stock of subsidiary

95

95

TOTAL SHAREHOLDERS’ EQUITY

159,994

144,388

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,801,747

$

1,403,670

(1) Derived from audited financial statements as of December 31, 2019.

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

Three Months Ended

December 31,

Twelve Months Ended

December 31,

(dollars in thousands, except per share data)

2020

2019

2020

2019

INTEREST AND

Interest and fees on loans

$

10,078

$

10,234

$

40,316

$

40,772

DIVIDEND

Income on investment securities

INCOME

Taxable interest

1,130

1,278

4,852

5,042

Exempt from federal income tax

480

520

1,985

2,143

Interest from federal funds sold and other

36

59

170

236

Total interest income

11,724

12,091

47,323

48,193

INTEREST

Interest on deposits

847

1,416

3,750

5,220

EXPENSE

Interest on other borrowings

8

31

44

523

Total interest expense

855

1,447

3,794

5,743

Net interest income

10,869

10,644

43,529

42,450

Provision (provision credit) for loan and lease losses

-

-

700

(360

)

Net interest income after provision

10,869

10,644

42,829

42,810

NON-INTEREST

Mortgage banking activities

419

334

1,362

1,114

INCOME

Trust services fee income

931

894

3,643

3,598

Service fees on deposit accounts

1,696

1,806

6,617

7,077

Investment services fee income

79

137

371

404

Earnings on bank-owned life insurance

136

115

551

461

Gain on sale of investments

-

15

129

27

Gain on redemption of bank-owned life

insurance

-

-

820

150

Gain on sale of White Bluff office

-

-

-

2,700

Other non-interest income

151

159

954

676

Total non-interest income

3,412

3,457

14,447

16,207

NON-INTEREST

Salaries and employee benefits

6,237

6,125

24,229

23,710

EXPENSE

Net occupancy expense

572

588

2,478

2,518

Depreciation expense

514

509

2,074

2,056

Data processing expense

770

756

3,132

3,007

Software support and other computer expense

664

561

2,554

2,092

Legal and professional fees

245

244

927

1,001

Audits and exams expense

194

153

726

653

Advertising and promotions

302

285

894

1,269

Other non-interest expense

795

699

3,267

3,292

Total non-interest expense

10,293

9,920

40,281

39,598

Income before provision for income taxes

3,988

4,181

16,995

19,419

Provision for income taxes

683

696

2,785

3,347

Net income

3,305

3,485

14,210

16,072

Noncontrolling interest - dividends on preferred stock subsidiary

8

8

16

16

Net income available to common shareholders

$

3,297

$

3,477

$

14,194

$

16,056

Weighted average shares outstanding

4,359,738

4,400,940

4,363,539

4,429,952

Earnings per share

$

0.76

$

0.79

$

3.25

$

3.62

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL HIGHLIGHTS

(unaudited)

For the Three Months Ended

(dollars in thousands, except per share data)

December 31,
2020

September 30,
2020

June 30, 2020

March 31,
2020

December 31,
2019

Results of Operations:

Interest income

$

11,724

$

11,763

$

11,761

$

12,075

$

12,091

Interest expense

855

809

835

1,295

1,447

Net interest income

10,869

10,954

10,926

10,780

10,644

Provision for loan and lease losses

-

-

185

515

-

Non-interest income

3,412

3,396

3,735

3,904

3,457

Non-interest expense and non-controlling interest – preferred stock of subsidiary

10,301

9,842

9,636

10,518

9,928

Income before income taxes

3,980

4,508

4,840

3,651

4,173

Income taxes

683

828

823

451

696

Net income for common shareholders

$

3,297

$

3,680

$

4,017

$

3,200

$

3,477

Per Share Data:

Basic earnings per share

$

0.76

$

0.84

$

0.92

$

0.73

$

0.79

Weighted average shares outstanding per quarter

4,359,738

4,359,738

4,359,738

4,375,025

4,400,940

Financial Condition Data and Ratios:

Total securities

$

614,150

$

492,781

$

392,305

$

339,359

$

349,402

Loans, net of deferred fees

$

964,695

$

993,187

$

993,710

$

952,491

$

934,770

Allowance for loan and lease losses

$

(9,715

)

$

(9,712

)

$

(9,695

)

$

(9,485

)

$

(8,960

)

Total assets

$

1,801,747

$

1,717,941

$

1,608,659

$

1,437,929

$

1,403,670

Total deposits

$

1,608,174

$

1,526,143

$

1,416,343

$

1,256,319

$

1,220,241

Book value per share

$

36.68

$

36.18

$

35.61

$

34.56

$

32.94

Net interest income, on a fully taxable-equivalent basis

$

11,115

$

11,204

$

11,187

$

11,059

$

10,926

Net interest margin

2.69

%

2.87

%

3.08

%

3.42

%

3.41

%

Asset Quality Data and Ratios:

Total nonperforming assets

$

1,560

$

1,616

$

1,698

$

1,610

$

1,665

Nonperforming assets to total assets

0.09

%

0.09

%

0.11

%

0.11

%

0.12

%

Allowance for loan and lease losses to total loans

1.01

%

0.98

%

0.98

%

1.00

%

0.96

%

Net (recoveries) charge-offs to average loans (annualized)

(0.01

%)

(0.01

%)

(0.01

%)

0.00

%

0.00

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210125005088/en/

Contacts

Robert E. Krimmel
Chief Financial Officer
(931) 380-8257