First Farmers and Merchants Corporation Reports First Quarter Results
- Book value per share increased by 16% to $29.92.
- Net interest income showed sequential quarterly improvement.
- Non-interest income grew, while non-interest expenses decreased for the ninth consecutive quarter.
- Total loans decreased from the previous quarter but increased year-over-year.
- Net income decreased by 14.8% to $3.4 million.
- Adjusted net income declined by 23.9% to $3.4 million.
- Net-interest income decreased by 13.1%.
- Provision for credit losses expense increased to $65,000.
- Total non-performing assets declined by 32.84%.
- Capital management initiatives included stock repurchases.
- Net income decreased by 14.8%.
- Adjusted net income declined by 23.9%.
- Net-interest income decreased by 13.1%.
- Total loans decreased from the previous quarter.
- Provision for credit losses expense increased to $65,000.
Book Value Per Share Increases
Growth in Net Interest Income for Sequential Quarter
“First Farmers’ results for the first quarter were on track with our expectations,” stated Brian K. Williams, Chairman and Chief Executive Officer of First Farmers. “We are pleased to report that our growth in interest income accelerated and outpaced the growth in interest expense during the first quarter, contributing to our net interest margin improvement during the quarter. We also reported that non-interest income grew, and non-interest expenses were down for the ninth consecutive quarter-over-quarter reduction. We expect to report continued sequential quarterly improvement based upon growth in net interest margin and growth in earnings as we progress through the remainder of 2024. We maintain a positive outlook for 2024 given the strategic changes we have made to our balance sheet, continued loan demand and strong credit quality.”
Key highlights of First Farmers’ results for the first quarter of 2024 include:
-
Net income decreased
14.8% to from$3.4 million for the year-earlier quarter. Net income per common share decreased$4.0 million 12.6% to from$0.82 in the first quarter of 2023. Net income decreased$0.94 6.5% from , or$3.7 million , per common share, reported in the fourth quarter of 2023;$0.88 -
Adjusted net income, which excludes special items, declined
23.9% to , or$3.4 million per common share, compared with$0.80 , or$4.4 million per common share, for the year earlier quarter. First quarter adjusted net income improved$1.03 0.1% from , or$3.4 million per common share, reported in the fourth quarter of 2023 (see “Non-GAAP Financial Measures” section);$0.80 -
Total loans decreased
from the fourth quarter of 2023, but increased$1 million , or$46 million 4.7% , compared to the first quarter of 2023; -
Net-interest income decreased
13.1% to from$10.6 million for the first quarter of 2023 but was up$12.2 million 5.7% from for the fourth quarter of 2023;$10.0 million -
Provision for credit losses expense increased to
from$65,000 for the first quarter of 2023 and was up from a provision credit for credit losses of$0 for the fourth quarter of 2023;$230,000 -
Total non-performing assets declined
32.84% to from the fourth quarter of 2023; and$945,000 -
Book value per share increased
16.3% to from$29.92 in the first quarter of 2023 and increased$25.72 0.7% from for the fourth quarter of 2023.$29.74
“Last year was very challenging for the banking industry, and we took steps to protect our deposit base, improve long-term earnings through changes in our balance sheet structure and maintain our strong capital levels,” continued Williams. “The repositioning of our balance sheet contributed to the expansion of our net interest margin during the first quarter. The increase in our net interest margin, which was the first in over four quarters, resulted from a more stable interest rate environment, the shift in the mix of assets, and strong discipline in managing loan pricing and funding costs. We see these positive trends accelerating through the remainder of 2024 and contributing to growth in earnings.
“The impact of higher interest rates remained evident in the first quarter with weaker loan demand as borrowers became more cautious. We see our loan pipelines building as we move into the second quarter supported by the healthy regional economy. Our earning assets composition is consistently improving as maturing investments are used to fund loans at higher market interest rates, and we have established substantial flexibility in our deposit and funding mix. These moves are foundational and will benefit the company’s financial performance beyond 2024,” concluded Williams.
Robert E. Krimmel, Chief Financial Officer, added, “Our programs to manage First Farmers’ balance sheet continued in the first quarter to improve our future profitability. Our investment portfolio is generating approximately
“We reinforced our balance sheet by utilizing the Federal Reserve’s Bank Term Funding Program (BTFP) to take advantage of the lower marginal borrowing costs. This accounted for a
“Our focus remains on maintaining our strong capital position as part of our prudent management of the bank and to provide funding to build shareholder value through stock repurchases and our cash dividend program. Our investments in new technology have contributed to more efficient operations as evidenced by the continued decline in non-interest expense. We expect to report improvements in our efficiency ratio due to our lower cost structure and growing revenue streams from loans and non-interest income. We believe these changes will support our trajectory to report improvement in earnings for 2024.”
First Quarter 2024 Results of Operations
Net income decreased to
Net income for the first quarter of 2024 was down from the sequential fourth quarter by
For the first quarter of 2024, available-for-sale securities decreased by
For the first quarter of 2024, total shareholders’ equity decreased by
Asset Quality
Nonperforming assets declined to
Capital Management Initiatives
During the first quarter of 2024, First Farmers repurchased 25,040 shares of the Company’s common stock in the open market and using privately negotiated transactions at an average price of
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 March 31, 2024, First Farmers reported total assets of approximately
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 redemption of bank-owned life insurance, gain on sale of premises and equipment, 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 |
||||||||||
|
March 31, |
|
December 31, 2023 |
||||||||
|
2024 |
|
2023 |
|
|||||||
Total non-interest income |
$ |
3,483 |
|
|
$ |
2,754 |
|
|
$ |
3,685 |
|
Loss on sale of securities |
|
- |
|
|
|
183 |
|
|
|
- |
|
(Gain) loss on equity securities |
|
(91 |
) |
|
|
351 |
|
|
|
31 |
|
Gain on redemption of bank-owned life insurance |
|
- |
|
|
|
- |
|
|
|
(331 |
) |
Gain on sale of premises and equipment |
|
- |
|
|
|
(4 |
) |
|
|
(1 |
) |
Adjusted non-interest income |
$ |
3,392 |
|
|
$ |
3,284 |
|
|
$ |
3,384 |
|
|
|
|
|
|
|
||||||
Total non-interest expense |
$ |
9,853 |
|
|
$ |
10,059 |
|
|
$ |
9,669 |
|
|
|
|
|
|
|
||||||
Net income as reported |
$ |
3,419 |
|
|
$ |
4,013 |
|
|
$ |
3,659 |
|
Total adjustments, net of tax1 |
|
(67 |
) |
|
|
392 |
|
|
|
(309 |
) |
Adjusted net income |
$ |
3,352 |
|
|
$ |
4,405 |
|
|
$ |
3,350 |
|
Basic earnings per share |
$ |
0.82 |
|
|
$ |
0.94 |
|
|
$ |
0.88 |
|
Total adjustments, net of tax1 |
|
(0.02 |
) |
|
|
0.09 |
|
|
|
(0.08 |
) |
Adjusted basic earnings per share |
$ |
0.80 |
|
|
$ |
1.03 |
|
|
$ |
0.80 |
(1) |
The effective tax rate of |
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS |
||||||||||
|
|
|
|
(unaudited) |
|
|
||||
|
March 31, |
December 31, |
||||||||
|
|
(dollars in thousands, except per share data) |
|
2024 |
|
2023(1) |
||||
ASSETS |
|
Cash and due from banks |
|
$ |
17,525 |
|
$ |
22,654 |
|
|
Interest-bearing deposits |
|
|
53,550 |
|
|
2,689 |
|
|||
Federal funds sold |
|
|
42 |
|
|
117 |
|
|||
Total cash and cash equivalents |
|
|
71,117 |
|
|
25,460 |
|
|||
Securities: |
|
|
|
|||||||
Available-for-sale |
|
|
669,552 |
|
|
692,763 |
|
|||
Held-to-maturity (fair market value |
|
|
15,029 |
|
|
15,038 |
|
|||
|
|
Equity securities |
|
|
2,214 |
|
|
|
2,123 |
|
Loans held-for-sale |
|
|
- |
|
|
470 |
|
|||
Loans, net of deferred fees |
|
|
1,017,677 |
|
|
1,018,866 |
|
|||
Allowance for credit losses |
|
|
(7,803 |
) |
|
(7,666 |
) |
|||
Net loans |
|
|
1,009,874 |
|
|
1,011,200 |
|
|||
Bank premises and equipment, net |
|
|
29,840 |
|
|
30,208 |
|
|||
Bank-owned life insurance |
|
|
34,761 |
|
|
34,602 |
|
|||
Goodwill |
|
|
9,018 |
|
|
9,018 |
|
|||
|
|
Deferred tax asset |
|
|
25,472 |
|
|
|
24,862 |
|
Other assets |
|
|
17,249 |
|
|
25,859 |
|
|||
|
|
TOTAL ASSETS |
|
$ |
1,884,126 |
|
|
$ |
1,871,603 |
|
LIABILITIES |
|
Deposits: |
|
|
||||||
Noninterest-bearing |
|
$ |
499,975 |
|
$ |
463,858 |
|
|||
Interest-bearing |
|
|
1,067,108 |
|
|
1,154,706 |
|
|||
Total deposits |
|
|
1,567,083 |
|
|
1,618,564 |
|
|||
|
|
Accounts payable and accrued liabilities |
|
|
24,818 |
|
|
|
24,798 |
|
|
|
FRB Bank Term Funding Program borrowings |
|
|
168,000 |
|
|
|
104,000 |
|
|
|
TOTAL LIABILITIES |
|
|
1,759,901 |
|
|
|
1,747,362 |
|
|
|
|
|
|
||||||
SHAREHOLDERS’ EQUITY |
|
Common stock - |
|
|
41,491 |
|
|
|
41,741 |
|
Retained earnings |
|
|
145,210 |
|
|
143,249 |
|
|||
Accumulated other comprehensive loss |
|
|
(62,571 |
) |
|
(60,844 |
) |
|||
Total shareholders’ equity attributable to First Farmers and Merchants Corporation |
|
|
|
|||||||
|
124,130 |
|
124,146 |
|
||||||
Noncontrolling interest - preferred stock of subsidiary |
|
|
95 |
|
|
95 |
|
|||
TOTAL SHAREHOLDERS’ EQUITY |
|
|
124,225 |
|
|
124,241 |
|
|||
|
|
|||||||||
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
1,884,126 |
|
|
$ |
1,871,603 |
|
(1) |
Derived from audited financial statements as of December 31, 2023. |
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) |
|||||||
Three Months Ended March 31, |
|||||||
|
(dollars in thousands, except per share data) |
2024 |
|
2023 |
|||
INTEREST AND |
Interest and fees on loans |
$ |
13,890 |
|
$ |
11,450 |
|
DIVIDEND |
Income on investment securities |
|
|||||
INCOME |
Taxable interest |
|
2,167 |
|
|
2,440 |
|
Exempt from federal income tax |
|
433 |
|
|
463 |
|
|
Interest from federal funds sold and other |
|
291 |
|
|
48 |
|
|
|
Total interest income |
|
16,781 |
|
|
14,401 |
|
INTEREST |
Interest on deposits |
|
4,324 |
|
|
1,822 |
|
EXPENSE |
Interest on other borrowings |
|
1,845 |
|
|
367 |
|
Total interest expense |
|
6,169 |
|
|
2,189 |
|
|
Net interest income |
|
10,612 |
|
|
12,212 |
|
|
Provision for credit losses |
|
65 |
|
|
- |
|
|
|
Net interest income after provision |
|
10,547 |
|
|
12,212 |
|
NON-INTEREST |
Mortgage banking activities |
|
59 |
|
|
40 |
|
INCOME |
Wealth management and trust fee income |
|
1,157 |
|
|
1,084 |
|
|
Service fees on deposit accounts |
|
1,684 |
|
|
1,731 |
|
Investment services fee income |
|
101 |
|
|
105 |
|
|
Earnings on bank owned life insurance |
|
158 |
|
|
116 |
|
|
|
Loss on sale of AFS securities |
|
- |
|
|
(183 |
) |
|
Gain (loss) on equity securities |
|
91 |
|
|
(351 |
) |
Other non-interest income |
|
233 |
|
|
212 |
|
|
|
Total non-interest income |
|
3,483 |
|
|
2,754 |
|
NON-INTEREST |
Salaries and employee benefits |
|
5,623 |
|
|
5,672 |
|
EXPENSE |
Net occupancy expense |
|
599 |
|
|
689 |
|
Depreciation expense |
|
406 |
|
|
412 |
|
|
Data processing expense |
|
563 |
|
|
490 |
|
|
|
Software support and other computer expense |
|
1,095 |
|
|
1,038 |
|
Legal and professional fees |
|
220 |
|
|
271 |
|
|
|
Audit and exam expenses |
|
187 |
|
|
186 |
|
|
Advertising and promotions |
|
200 |
|
|
245 |
|
FDIC insurance premium expense |
|
218 |
|
|
267 |
|
|
Other non-interest expense |
|
742 |
|
|
789 |
|
|
Total non-interest expense |
|
9,853 |
|
|
10,059 |
|
|
Income before provision for income taxes |
|
4,177 |
|
|
4,907 |
|
|
|
Provision for income taxes |
|
758 |
|
|
894 |
|
Net income before non-controlling interest - dividends on preferred stock of subsidiary |
|
3,419 |
|
|
4,013 |
|
|
Non-controlling interest - dividends on preferred stock subsidiary |
- |
|
|
- |
|
||
|
Net income for common shareholders |
$ |
3,419 |
|
$ |
4,013 |
|
|
|
|
|
|
|||
Weighted average shares outstanding |
|
4,166,834 |
|
|
4,273,571 |
|
|
|
Earnings per share |
$ |
0.82 |
|
$ |
0.94 |
|
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited) |
|||||||||||||||||||
For the Three Months Ended |
|||||||||||||||||||
(dollars in thousands, except per share data) |
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
||||||||||
Results of Operations: |
|
|
|
|
|
|
|
|
|
||||||||||
Interest income |
$ |
16,781 |
|
|
$ |
16,091 |
|
|
$ |
15,240 |
|
|
$ |
15,020 |
|
|
$ |
14,401 |
|
Interest expense |
|
6,169 |
|
|
|
6,048 |
|
|
|
5,237 |
|
|
|
2,923 |
|
|
|
2,189 |
|
Net interest income |
|
10,612 |
|
|
|
10,043 |
|
|
|
10,003 |
|
|
|
12,097 |
|
|
|
12,212 |
|
Provision (credit) for credit losses |
|
65 |
|
|
|
(230 |
) |
|
|
- |
|
|
|
(260 |
) |
|
|
- |
|
Non-interest income |
|
3,483 |
|
|
|
3,685 |
|
|
|
3,497 |
|
|
|
3,262 |
|
|
|
2,754 |
|
Non-interest expense and non-controlling interest – preferred stock of subsidiary |
|
9,861 |
|
|
|
9,677 |
|
|
|
9,487 |
|
|
|
9,369 |
|
|
|
10,059 |
|
Income before income taxes |
|
4,169 |
|
|
|
4,281 |
|
|
|
4,013 |
|
|
|
6,250 |
|
|
|
4,907 |
|
Income taxes |
|
758 |
|
|
|
622 |
|
|
|
675 |
|
|
|
1,211 |
|
|
|
894 |
|
Net income for common shareholders |
$ |
3,411 |
|
|
$ |
3,659 |
|
|
$ |
3,338 |
|
|
$ |
5,039 |
|
|
$ |
4,013 |
|
Per Share Data: |
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share |
$ |
0.82 |
|
|
$ |
0.88 |
|
|
$ |
0.79 |
|
|
$ |
1.19 |
|
|
$ |
0.94 |
|
Book value per share |
$ |
29.92 |
|
|
$ |
29.74 |
|
|
$ |
23.61 |
|
|
$ |
25.54 |
|
|
$ |
25.72 |
|
Weighted average shares outstanding per quarter |
|
4,166,834 |
|
|
|
4,174,283 |
|
|
|
4,206,805 |
|
|
|
4,244,359 |
|
|
|
4,273,571 |
|
Financial Condition Data and Ratios: |
|
|
|
|
|
|
|
|
|
||||||||||
Total securities |
$ |
686,795 |
|
|
$ |
709,924 |
|
|
$ |
713,707 |
|
|
$ |
762,175 |
|
|
$ |
803,652 |
|
Available-for-sale securities, fair market value |
$ |
669,552 |
|
|
$ |
692,763 |
|
|
$ |
696,505 |
|
|
$ |
744,963 |
|
|
$ |
786,430 |
|
Available-for-sale securities, amortized cost |
$ |
755,162 |
|
|
$ |
776,078 |
|
|
$ |
810,959 |
|
|
$ |
845,712 |
|
|
$ |
880,890 |
|
Loans, net of deferred fees |
$ |
1,017,677 |
|
|
$ |
1,018,866 |
|
|
$ |
1,004,066 |
|
|
$ |
964,822 |
|
|
$ |
972,093 |
|
Allowance for credit losses |
$ |
(7,803 |
) |
|
$ |
(7,666 |
) |
|
$ |
(7,871 |
) |
|
$ |
(8,200 |
) |
|
$ |
(8,497 |
) |
Total assets |
$ |
1,884,126 |
|
|
$ |
1,871,603 |
|
|
$ |
1,868,540 |
|
|
$ |
1,878,675 |
|
|
$ |
1,913,481 |
|
Total deposits |
$ |
1,567,083 |
|
|
$ |
1,618,564 |
|
|
$ |
1,674,673 |
|
|
$ |
1,657,587 |
|
|
$ |
1,776,987 |
|
Net interest income, on a fully taxable-equivalent basis |
$ |
10,834 |
|
|
$ |
10,268 |
|
|
$ |
10,223 |
|
|
$ |
12,298 |
|
|
$ |
12,456 |
|
Net interest margin |
|
2.39 |
% |
|
|
2.21 |
% |
|
|
2.22 |
% |
|
|
2.64 |
% |
|
|
2.67 |
% |
Efficiency |
|
69.72 |
% |
|
|
62.84 |
% |
|
|
69.17 |
% |
|
|
58.04 |
% |
|
|
64.05 |
% |
|
|
|
|
|
|
|
|
|
|
||||||||||
Asset Quality Data and Ratios: |
|
|
|
|
|
|
|
|
|
||||||||||
Total nonperforming assets |
$ |
945 |
|
|
$ |
1,407 |
|
|
$ |
3,109 |
|
|
$ |
803 |
|
|
$ |
873 |
|
Nonperforming assets to total assets |
|
0.05 |
% |
|
|
0.08 |
% |
|
|
0.17 |
% |
|
|
0.04 |
% |
|
|
0.05 |
% |
Allowance for credit losses to total loans(1) |
|
0.77 |
% |
|
|
0.75 |
% |
|
|
0.78 |
% |
|
|
0.85 |
% |
|
|
0.87 |
% |
Net charge-offs (recoveries) to average loans (annualized) |
|
0.00 |
% |
|
|
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View source version on businesswire.com: https://www.businesswire.com/news/home/20240422215139/en/
Robert E. Krimmel
Chief Financial Officer
(931) 380-8257
Source: First Farmers and Merchants Corporation
FAQ
What was the percentage increase in book value per share for First Farmers and Merchants in the first quarter of 2024?
How did net interest income change for First Farmers and Merchants in the first quarter of 2024 compared to the first quarter of 2023?
What was the provision for credit losses expense in the first quarter of 2024 for First Farmers and Merchants ?
What was the change in total loans for First Farmers and Merchants in the first quarter of 2024 compared to the first quarter of 2023?