First Farmers and Merchants Corporation Reports Third Quarter Results
Net Income Rises
Book Value Increases
“We had a strong third quarter with our best earnings performance this year,” stated Brian K. Williams, Chairman and Chief Executive Officer of First Farmers. “Net income rose
“The Board of Directors recently increased our quarterly cash dividend by
“Additionally, robust risk management practices and well-managed concentration levels continue to deliver strong asset quality, as this quarter marked the lowest level of nonperforming assets in over a year.”
Key highlights of First Farmers’ results for the third quarter of 2024 include:
-
Net income rose
18.4% to from$4.0 million for the third quarter of 2023. Net income per common share increased$3.3 million 22.8% to from$0.97 in the third quarter of 2023. Net income increased$0.79 4.2% from , or$3.8 million , per common share, reported in the second quarter of 2024;$0.92 -
Adjusted net income, which excludes special items, increased
17.9% to , or$3.9 million per common share, compared with$0.97 , or$3.3 million per common share, for the third quarter of 2023. Third quarter adjusted net income improved$0.79 5.8% from , or$3.7 million per common share, reported in the second quarter of 2024 (see “Non-GAAP Financial Measures” section);$0.90 -
Net interest income increased
13.5% to from$11.4 million for the third quarter of 2023 and was up$10.0 million 3.7% from from the second quarter of 2024;$11.0 million -
Net interest margin improved for the third consecutive quarter to
2.55% ; -
Efficiency improved to
66.36% compared to69.17% from the third quarter of 2023 and67.36% from the second quarter of 2024; and -
Book value per share increased
50.6% to from$35.56 from the third quarter of 2023 and increased$23.61 15.9% from for the second quarter of 2024.$30.68
Robert E. Krimmel, Chief Financial Officer, added, “Our third quarter marked the third consecutive quarterly improvement in our net interest margin. We benefited from an increase in loan yields outpacing the increase in the total cost of interest-bearing liabilities. We are pleased with the stability of our core deposit base and took advantage of the lower interest rate environment to pay down Federal Reserve Bank Term Funding Program borrowings with lower cost brokered deposits. Our success in repositioning First Farmers’ balance sheet over the past year was a strong contributor to our third quarter’s earnings growth and will benefit the trajectory of earnings in the fourth quarter and beyond as rates decline.
“We remain focused on improving our operating efficiency while enhancing customer service and support. We posted our third consecutive improvement in our operating efficiency this year and believe we have further opportunities to enhance operations. We continue to upgrade our digital banking and lending technology platforms. We have also added new team members in mortgage operations and treasury management to expand our growth opportunities.
“First Farmers’ capital position remains strong and continues to benefit from lower market interest rates that are reducing the impact from the fair value adjustment of our investment portfolio. Our book value per share rose for the fourth consecutive quarter and was up
Third Quarter 2024 Results of Operations
Net income increased to
Net income for the third quarter of 2024 was up from the sequential second quarter by
For the third quarter of 2024, total cash and cash equivalents increased
For the third quarter of 2024, total shareholders’ equity increased by
Nine Months Results
Net income available to common shareholders was
The decline in adjusted net income for the first nine months of 2024 was due to a decrease in net interest income of
Asset Quality
Nonperforming assets declined to
Capital Management Initiatives
During the third quarter of 2024, First Farmers repurchased 22,500 shares of the Company’s common stock in the open market and through 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 September 30, 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 not to 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 disposal 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 |
|
Nine Months Ended |
|||||||||||||||||
|
September 30, |
|
June 30, |
|
September 30, |
|||||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2024 |
|
2023 | |||||||||||
Total non-interest income |
$ |
3,428 |
|
|
$ |
3,497 |
|
|
$ |
3,523 |
|
|
$ |
10,434 |
|
|
$ |
9,514 |
|
|
Loss on sale of securities |
|
26 |
|
|
|
- |
|
|
|
- |
|
|
|
26 |
|
|
|
317 |
|
|
(Gain) loss on equity securities |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(91 |
) |
|
|
351 |
|
|
Gain on redemption of bank-owned life insurance |
|
- |
|
|
|
- |
|
|
|
(2 |
) |
|
|
(2 |
) |
|
|
- |
|
|
Gain on disposal of premises and equipment |
|
(51 |
) |
|
|
(3 |
) |
|
|
(98 |
) |
|
|
(149 |
) |
|
|
(7 |
) |
|
Adjusted non-interest income |
$ |
3,403 |
|
|
$ |
3,494 |
|
|
$ |
3,423 |
|
|
$ |
10,218 |
|
|
$ |
10,175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total non-interest expense |
$ |
9,974 |
|
|
$ |
9,487 |
|
|
$ |
9,780 |
|
|
$ |
29,607 |
|
|
$ |
28,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income as reported |
$ |
3,951 |
|
|
$ |
3,338 |
|
|
$ |
3,790 |
|
|
$ |
11,160 |
|
|
$ |
12,390 |
|
|
Total adjustments, net of tax1 |
|
(18 |
) |
|
|
(2 |
) |
|
|
(74 |
) |
|
|
(160 |
) |
|
|
490 |
|
|
Adjusted net income |
$ |
3,933 |
|
|
$ |
3,336 |
|
|
$ |
3,716 |
|
|
$ |
11,000 |
|
|
$ |
12,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic earnings per share |
$ |
0.97 |
|
|
$ |
0.79 |
|
|
$ |
0.92 |
|
|
$ |
2.70 |
|
|
$ |
2.92 |
|
|
Total adjustments, net of tax1 |
|
- |
|
|
|
- |
|
|
|
(0.02 |
) |
|
|
(0.04 |
) |
|
|
0.11 |
|
|
Adjusted basic earnings per share |
$ |
0.97 |
|
|
$ |
0.79 |
|
|
$ |
0.90 |
|
|
$ |
2.66 |
|
|
$ |
3.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Diluted earnings per share |
$ |
0.96 |
|
|
$ |
0.79 |
|
|
$ |
0.92 |
|
|
$ |
2.70 |
|
|
$ |
2.92 |
|
|
Total adjustments, net of tax1 |
|
- |
|
|
|
- |
|
|
|
(0.02 |
) |
|
|
(0.04 |
) |
|
|
0.11 |
|
|
Adjusted diluted earnings per share |
$ |
0.96 |
|
|
$ |
0.79 |
|
|
$ |
0.90 |
|
|
$ |
2.66 |
|
|
$ |
3.03 |
|
|
(1) The effective tax rate of |
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES |
||||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||||
|
|
|
|
(unaudited) |
|
|
||||
|
September 30, |
December 31, |
||||||||
|
|
(dollars in thousands, except per share data) |
|
2024 |
|
2023(1) |
||||
ASSETS |
|
Cash and due from banks |
|
$ |
26,299 |
|
$ |
22,654 |
|
|
Interest-bearing deposits |
|
44,770 |
|
2,689 |
|
|||||
Federal funds sold |
|
31 |
|
117 |
|
|||||
Total cash and cash equivalents |
|
71,100 |
|
25,460 |
|
|||||
Securities: |
|
|
|
|||||||
Available-for-sale |
|
633,734 |
|
692,763 |
|
|||||
Held-to-maturity (fair market value |
|
15,860 |
|
15,038 |
|
|||||
|
|
Equity securities |
|
2,214 |
|
|
2,123 |
|
||
Loans held-for-sale |
|
165 |
|
470 |
|
|||||
Loans, net of deferred fees |
|
1,031,098 |
|
1,018,866 |
|
|||||
Allowance for credit losses |
|
(8,049 |
) |
(7,666 |
) |
|||||
Net loans |
|
1,023,049 |
|
1,011,200 |
|
|||||
Bank premises and equipment, net |
|
29,362 |
|
30,208 |
|
|||||
Bank-owned life insurance |
|
36,491 |
|
34,602 |
|
|||||
Goodwill |
|
9,018 |
|
9,018 |
|
|||||
|
|
Deferred tax asset |
|
19,214 |
|
|
24,862 |
|
||
Other assets |
|
14,584 |
|
25,859 |
|
|||||
|
|
TOTAL ASSETS |
|
$ |
1,854,791 |
|
|
$ |
1,871,603 |
|
LIABILITIES |
|
Deposits: |
|
|
||||||
Noninterest-bearing |
|
$ |
463,688 |
|
$ |
463,858 |
|
|||
Interest-bearing |
|
1,139,984 |
|
1,154,706 |
|
|||||
Total deposits |
|
1,603,672 |
|
1,618,564 |
|
|||||
|
|
Accounts payable and accrued liabilities |
|
26,167 |
|
|
24,798 |
|
||
|
|
FRB Bank Term Funding Program borrowings |
|
80,000 |
|
|
104,000 |
|
||
|
|
TOTAL LIABILITIES |
|
1,709,839 |
|
|
1,747,362 |
|
||
|
|
|
|
|
|
|||||
SHAREHOLDERS’ EQUITY |
|
Common stock - |
|
40,716 |
|
|
41,741 |
|
||
|
|
Additional paid-in capital |
|
61 |
|
|
- |
|
||
Retained earnings |
|
149,297 |
|
143,249 |
|
|||||
Accumulated other comprehensive loss |
|
(45,217 |
) |
(60,844 |
) |
|||||
Total shareholders’ equity attributable to First Farmers and Merchants Corporation |
|
144,857 |
124,146 |
|
||||||
Noncontrolling interest - preferred stock of subsidiary |
|
95 |
|
95 |
|
|||||
TOTAL SHAREHOLDERS’ EQUITY |
|
144,952 |
|
124,241 |
|
|||||
|
|
|||||||||
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
1,854,791 |
|
|
$ |
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 |
|
Nine Months Ended |
||||||||||||||||
September 30, |
September 30, |
|||||||||||||||||
|
|
(dollars in thousands, except per share data) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
INTEREST AND |
Interest and fees on loans |
$ |
14,467 |
|
|
$ |
12,417 |
|
|
$ |
42,517 |
|
|
$ |
35,826 |
|
||
DIVIDEND |
Income on investment securities |
|
|
|
|
|||||||||||||
INCOME |
Taxable interest |
2,073 |
|
|
2,291 |
|
|
6,374 |
|
|
7,107 |
|
||||||
Exempt from federal income tax |
462 |
|
|
442 |
|
|
1,331 |
|
|
1,353 |
|
|||||||
Interest from federal funds sold and other |
548 |
|
|
90 |
|
|
1,084 |
|
|
375 |
|
|||||||
|
Total interest income |
17,550 |
|
|
15,240 |
|
|
51,306 |
|
|
44,661 |
|
||||||
INTEREST |
Interest on deposits |
4,325 |
|
|
4,568 |
|
|
12,625 |
|
|
9,308 |
|
||||||
EXPENSE |
Interest on borrowings |
1,870 |
|
|
669 |
|
|
5,763 |
|
|
1,041 |
|
||||||
Total interest expense |
6,195 |
|
|
5,237 |
|
|
18,388 |
|
|
10,349 |
|
|||||||
Net interest income |
11,355 |
|
|
10,003 |
|
|
32,918 |
|
|
34,312 |
|
|||||||
Provision (credit) for credit losses |
- |
|
|
- |
|
|
125 |
|
|
(260 |
) |
|||||||
|
Net interest income after provision |
11,355 |
|
|
10,003 |
|
|
32,793 |
|
|
34,572 |
|
||||||
NON-INTEREST |
Mortgage banking activities |
45 |
|
|
26 |
|
|
122 |
|
|
101 |
|
||||||
INCOME |
Wealth management and trust services fees |
1,180 |
|
|
1,103 |
|
|
3,504 |
|
|
3,267 |
|
||||||
|
Service fees on deposit accounts |
1,715 |
|
|
1,817 |
|
|
5,170 |
|
|
5,389 |
|
||||||
Investment services fee income |
77 |
|
|
90 |
|
|
292 |
|
|
279 |
|
|||||||
Earnings on bank-owned life insurance |
177 |
|
|
158 |
|
|
489 |
|
|
402 |
|
|||||||
Loss on sale of available-for-sale securities |
(26 |
) |
|
- |
|
|
(26 |
) |
|
(317 |
) |
|||||||
|
Gain on disposal of premises and equipment |
51 |
|
|
3 |
|
|
149 |
|
|
7 |
|
||||||
|
Gain (loss) on equity securities |
- |
|
|
- |
|
|
91 |
|
|
(351 |
) |
||||||
Other non-interest income |
209 |
|
|
300 |
|
|
643 |
|
|
737 |
|
|||||||
|
Total non-interest income |
3,428 |
|
|
3,497 |
|
|
10,434 |
|
|
9,514 |
|
||||||
NON-INTEREST |
Salaries and employee benefits |
5,689 |
|
|
5,288 |
|
|
16,911 |
|
|
16,245 |
|
||||||
EXPENSE |
Net occupancy expense |
599 |
|
|
632 |
|
|
1,759 |
|
|
1,943 |
|
||||||
Depreciation expense |
410 |
|
|
407 |
|
|
1,221 |
|
|
1,229 |
|
|||||||
Data processing expense |
583 |
|
|
536 |
|
|
1,727 |
|
|
1,535 |
|
|||||||
|
Software support and other computer expense |
1,173 |
|
|
1,086 |
|
|
3,379 |
|
|
3,156 |
|
||||||
Legal and professional fees |
180 |
|
|
202 |
|
|
588 |
|
|
643 |
|
|||||||
Audits and exams expense |
173 |
|
|
158 |
|
|
532 |
|
|
525 |
|
|||||||
Advertising and promotions |
212 |
|
|
255 |
|
|
622 |
|
|
749 |
|
|||||||
FDIC insurance premium expense |
255 |
|
|
188 |
|
|
695 |
|
|
681 |
|
|||||||
Other non-interest expense |
700 |
|
|
735 |
|
|
2,173 |
|
|
2,202 |
|
|||||||
Total non-interest expense |
9,974 |
|
|
9,487 |
|
|
29,607 |
|
|
28,908 |
|
|||||||
Income before provision for income taxes |
4,809 |
|
|
4,013 |
|
|
13,620 |
|
|
15,178 |
|
|||||||
|
Provision for income taxes |
858 |
|
|
675 |
|
|
2,452 |
|
|
2,780 |
|
||||||
Net income |
3,951 |
|
|
3,338 |
|
|
11,168 |
|
|
12,398 |
|
|||||||
Noncontrolling interest - dividends on preferred stock subsidiary |
- |
|
|
- |
|
|
8 |
|
|
8 |
|
|||||||
|
Net income available to common shareholders |
$ |
3,951 |
|
|
$ |
3,338 |
|
|
$ |
11,160 |
|
|
$ |
12,390 |
|
||
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average shares outstanding - basic |
4,087,043 |
|
|
4,206,805 |
|
|
4,126,960 |
|
|
4,246,412 |
|
|||||||
|
Weighted average shares outstanding - diluted |
4,099,707 |
|
|
4,206,805 |
|
|
4,139,624 |
|
|
4,246,412 |
|
||||||
|
Earnings per share |
$ |
0.97 |
|
|
$ |
0.79 |
|
|
$ |
2.70 |
|
|
$ |
2.92 |
|
||
|
Diluted earnings per share |
$ |
0.96 |
|
$ |
0.79 |
$ |
2.70 |
|
$ |
2.92 |
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS |
||||||||||||||||||||
(unaudited) |
||||||||||||||||||||
For the Three Months Ended |
||||||||||||||||||||
(dollars in thousands, except per share data) |
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|||||||||||
Results of Operations: |
|
|
|
|
|
|
|
|
|
|||||||||||
Interest income |
$ |
17,550 |
|
|
$ |
16,975 |
|
|
$ |
16,781 |
|
|
$ |
16,091 |
|
|
$ |
15,240 |
|
|
Interest expense |
6,195 |
|
|
6,024 |
|
|
6,169 |
|
|
6,048 |
|
|
5,237 |
|
||||||
Net interest income |
11,355 |
|
|
10,951 |
|
|
10,612 |
|
|
10,043 |
|
|
10,003 |
|
||||||
Provision (credit) for credit losses |
- |
|
|
60 |
|
|
65 |
|
|
(230 |
) |
|
- |
|
||||||
Non-interest income |
3,428 |
|
|
3,523 |
|
|
3,483 |
|
|
3,685 |
|
|
3,497 |
|
||||||
Non-interest expense and non-controlling interest – preferred stock of subsidiary |
9,974 |
|
|
9,788 |
|
|
9,853 |
|
|
9,677 |
|
|
9,487 |
|
||||||
Income before income taxes |
4,809 |
|
|
4,626 |
|
|
4,177 |
|
|
4,281 |
|
|
4,013 |
|
||||||
Income taxes |
858 |
|
|
836 |
|
|
758 |
|
|
622 |
|
|
675 |
|
||||||
Net income for common shareholders |
$ |
3,951 |
|
|
$ |
3,790 |
|
|
$ |
3,419 |
|
|
$ |
3,659 |
|
|
$ |
3,338 |
|
|
Per Share Data: |
|
|
|
|
|
|
|
|
|
|||||||||||
Basic earnings per share |
$ |
0.97 |
|
|
$ |
0.92 |
|
|
$ |
0.82 |
|
|
$ |
0.88 |
|
|
$ |
0.79 |
|
|
Diluted earnings per share |
$ |
0.96 |
|
|
$ |
0.92 |
|
|
$ |
0.82 |
|
|
$ |
0.88 |
|
|
$ |
0.79 |
|
|
Book value per share |
$ |
35.56 |
|
|
$ |
30.68 |
|
|
$ |
29.92 |
|
|
$ |
29.74 |
|
|
$ |
23.61 |
|
|
Weighted average shares outstanding per quarter - basic |
4,087,043 |
|
|
4,127,442 |
|
|
4,166,834 |
|
|
4,174,283 |
|
|
4,206,805 |
|
||||||
Weighted average shares outstanding per quarter - diluted |
4,099,707 |
|
|
4,140,106 |
|
|
4,177,909 |
|
|
4,175,998 |
|
|
4,206,805 |
|
||||||
Financial Condition Data and Ratios: |
|
|
|
|
|
|
|
|
|
|||||||||||
Total securities |
$ |
651,808 |
|
|
$ |
662,834 |
|
|
$ |
686,795 |
|
|
$ |
709,924 |
|
|
$ |
713,707 |
|
|
Available-for-sale securities, fair market value |
$ |
633,734 |
|
|
$ |
644,451 |
|
|
$ |
669,552 |
|
|
$ |
692,763 |
|
|
$ |
696,505 |
|
|
Available-for-sale securities, amortized cost |
$ |
695,808 |
|
|
$ |
729,602 |
|
|
$ |
755,162 |
|
|
$ |
776,078 |
|
|
$ |
810,959 |
|
|
Loans, net of deferred fees |
$ |
1,031,098 |
|
|
$ |
1,053,814 |
|
|
$ |
1,017,677 |
|
|
$ |
1,018,866 |
|
|
$ |
1,004,066 |
|
|
Allowance for credit losses |
$ |
(8,049 |
) |
|
$ |
(8,064 |
) |
|
$ |
(7,803 |
) |
|
$ |
(7,666 |
) |
|
$ |
(7,871 |
) |
|
Total assets |
$ |
1,854,791 |
|
|
$ |
1,854,337 |
|
|
$ |
1,884,126 |
|
|
$ |
1,871,603 |
|
|
$ |
1,868,540 |
|
|
Total deposits |
$ |
1,603,672 |
|
|
$ |
1,524,077 |
|
|
$ |
1,567,083 |
|
|
$ |
1,618,564 |
|
|
$ |
1,674,673 |
|
|
Net interest income, on a fully taxable-equivalent basis |
$ |
11,612 |
|
|
$ |
11,188 |
|
|
$ |
10,834 |
|
|
$ |
10,268 |
|
|
$ |
10,223 |
|
|
Net interest margin |
2.55 |
% |
|
2.48 |
% |
|
2.39 |
% |
|
2.21 |
% |
|
2.22 |
% |
||||||
Efficiency |
66.36 |
% |
|
67.37 |
% |
|
69.72 |
% |
|
67.56 |
% |
|
69.17 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Asset Quality Data and Ratios: |
|
|
|
|
|
|
|
|
|
|||||||||||
Total nonperforming assets |
$ |
852 |
|
|
$ |
863 |
|
|
$ |
945 |
|
|
$ |
1,407 |
|
|
$ |
3,109 |
|
|
Nonperforming assets to total assets |
0.05 |
% |
|
0.05 |
% |
|
0.05 |
% |
|
0.08 |
% |
|
0.17 |
% |
||||||
Allowance for credit losses to total loans |
0.78 |
% |
|
0.77 |
% |
|
0.77 |
% |
|
0.75 |
% |
|
0.78 |
% |
||||||
Net charge-offs to average loans (annualized) |
0.01 |
% |
|
0.00 |
% |
|
0.00 |
% |
|
0.00 |
% |
|
0.00 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241028486821/en/
Robert E. Krimmel
Chief Financial Officer
(931) 380-8257
Source: First Farmers and Merchants Corporation