COLUMBIA, Tenn. (April 22, 2019) – 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 ending March 31, 2019.
Key highlights of First Farmers’ results for the first quarter of 2019 include:
- Net income of $5.3 million or $1.20 per common share, up 71% from $3.1 million or $0.70 per common share for the year-earlier quarter and up 50% from $3.6 million or $0.80 per common share for the previous quarter;
- Adjusted net income, which excludes special items, totaled $3.4 million or $0.75 per common share, compared with $3.1 million or $0.70 per common share for the year-earlier quarter and $3.2 million or $0.72 per common share for the previous quarter (see non-GAAP reconciliation);
- Recorded a one-time gain on the sale of the Company’s White Bluff office totaling $2.0 million, net of tax; and
- Non-interest income of $5.8 million, up 71% from $3.4 million for the year-earlier quarter and up 55% from $3.7 million for the previous quarter.
Commenting on the results, T. Randy Stevens, Chairman and Chief Executive Officer of First Farmers, said, ” We are pleased to begin the new year with strong financial performance, highlighted by record first quarter earnings, significant margin expansion and increases in our loan portfolio and deposit base – all compared with the year-earlier quarter. Notably, even excluding non-operational items, net income increased solidly over the first quarter of 2018. Considering the sound fundamentals driving our business, the economic vibrancy of the markets we serve, and the opportunities we continue to see ahead as we pursue long-term growth, we remain confident about the coming year and our ability to continue to reward our shareholders for their loyalty.”
Brian K. Williams, President, added, “While there are many accomplishments that stand out in First Farmers’ quarterly results, we are particularly pleased with the excellent credit quality that continues to define both our loan portfolio and our lending philosophy. Nonperforming assets declined to just 0.12% of total assets from 0.20% in the year-earlier quarter and remained level on a sequential quarter basis. Importantly, these improvements occurred against the backdrop of a year-over-year increase in net interest margin, which further underscores our efforts to maintain a disciplined approach to the way we build our business. After all, we are not just adding loans to a portfolio, we are building relationships that we expect will grow and prosper for years to come.”
First Quarter 2019 Results of Operations
The $2.2 million increase in reported quarterly earnings for the first quarter of 2019 compared with the year-earlier quarter was primarily driven by the one-time gain on sale of the Company’s White Bluff office totaling $2.0 million, net of tax. Adjusted net income, which excludes this gain and other special items, increased $222,000 compared with the year-earlier quarter. The increase in adjusted net income was the result of improvement in net interest income of $535,000, offset in part by a decrease in non-interest income of $290,000. The improvement in net interest income was bolstered by the growth in net interest margin of 20 basis points as loan yields increased at a faster pace than deposit costs.
The improvement in first quarter of 2019 earnings of $1.7 million compared with the previous quarter was driven by the aforementioned one-time gain on sale of an office totaling $2.0 million, net of tax. Adjusted net income in the first quarter of 2019, which excludes this gain and other special items, increased $115,000 compared with the previous quarter. The increase in adjusted net income primarily reflected a decline in non-interest expense of $909,000 offset by decreases in net interest income of $431,000 and non-interest income of $372,000. The decrease in non-interest expense for the quarter includes a reduction of $957,000 in salaries and employee benefits expense primarily due to a decrease in employee health insurance expense. Net interest margin declined to 3.51% compared with 3.54% for the previous quarter.
For the first quarter of 2019, the outstanding loan balances increased $28 million from the year-earlier quarter and decreased $4 million from the previous quarter. Total deposits stood at $1.154 billion at the end of the first quarter of 2019, down $49 million from the year-earlier quarter and $20 million from the previous quarter. The outstanding loan balances and total deposits were affected by the sale of $4 million of loans and $29 million of deposits in connection with the sale of the White Bluff office during the first quarter. Excluding the impact of the sale of the White Bluff office, outstanding loan balances were steady compared with the previous quarter, while total deposits increased $9 million during the first quarter of 2019.
Asset Quality
Total nonperforming assets declined to $1.6 million, or 0.12% of total assets, from $2.7 million, or 0.20% of total assets, in the year-earlier quarter and decreased from $1.7 million, or 0.12% of total assets, for the previous quarter. Net charge offs to average loans were 0.00% for the first quarter of 2019 compared to net recoveries of 0.02% for the year-earlier quarter and net recoveries of 0.01% for the previous quarter. As a result of the improvement in the quality of the loan portfolio coupled with a modest decline in loan balances, no provision for loan and lease losses was recorded during the first quarter of 2019. The allowance for loan and lease losses represented 1.04% of total loans outstanding for the first quarter of 2019 compared with 1.06% for the year-earlier quarter and 1.04% for the previous quarter.
Capital Management Initiatives
During the first quarter, First Farmers repurchased 6,000 shares of common stock at an average price of $42.75 per share under its stock repurchase program. Authorization to repurchase approximately 194,000 shares remains under the current program, which is set to expire in December 2019, unless extended or otherwise completed.
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, 2019, First Farmers reported total assets of approximately $1.3 billion, total shareholders’ equity of approximately $137 million, and administered trust assets of $5.1 billion. For more information about First Farmers, visit us on the Web at www.myfirstfarmers.com under “Investor Relations.”
