First M&F revises earnings for second quarter

First M&F Corporation

Condensed Consolidated Statements of Condition (Unaudited)

(In thousands, except share data)

June 30

December 31

June 30

2013

2012

2012

Cash and due from banks

$           51,293

$           54,811

$           37,147

Interest bearing bank balances

133,333

94,313

20,708

Federal funds sold

10,000

10,000

6,750

Securities available for sale (cost of

  $275,550, $341,273 and $371,424)

273,553

348,562

377,670

Loans held for sale

2,614

21,014

22,291

Loans

967,013

975,473

982,596

Allowance for loan losses

19,431

17,492

15,310

     Net loans

947,582

957,981

967,286

Bank premises and equipment

36,438

37,264

37,529

Accrued interest receivable

4,777

5,683

6,060

Other real estate

19,721

25,970

31,077

Other intangible assets

3,946

4,159

4,373

Other assets

44,548

41,926

50,605

     Total assets

$      1,527,805

$       1,601,683

$       1,561,496

Non-interest bearing deposits

$         304,734

$          276,295

$          236,145

Interest bearing deposits

1,061,474

1,126,380

1,125,193

     Total deposits

1,366,208

1,402,675

1,361,338

Federal funds and repurchase agreements

1,994

3,720

3,224

Other borrowings

2,792

36,007

40,333

Junior subordinated debt

30,928

30,928

30,928

Accrued interest payable

482

661

844

Other liabilities

8,828

9,249

10,912

     Total liabilities

1,411,232

1,483,240

1,447,579

Preferred stock, 30,000 shares issued and outstanding

19,569

18,865

18,198

Common stock, 9,236,479, 9,230,799 and 9,172,098

     shares issued & outstanding

46,182

46,154

45,860

Additional paid-in capital

32,515

32,469

31,890

Nonvested restricted stock awards

405

244

836

Retained earnings

20,876

19,180

16,699

Accumulated other comprehensive income  (loss)

(2,974)

1,531

434

     Total equity

116,573

118,443

113,917

     Total liabilities & equity

$      1,527,805

$       1,601,683

$       1,561,496

First M&F Corporation and Subsidiary

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except share data)

Three Months Ended June 30

Six Months Ended June 30

2013

2012

2013

2012

Interest and fees on loans

$           12,652

$           13,741

$           25,350

$           27,899

Interest on loans held for sale

25

244

81

417

Taxable investments

1,338

1,563

2,569

3,053

Tax exempt investments

348

319

700

637

Federal funds sold

6

11

12

26

Interest bearing bank balances

40

28

98

79

     Total interest income

14,409

15,906

28,810

32,111

Interest on deposits

1,452

2,233

2,968

4,746

Interest on fed funds and repurchase agreements

2

5

6

11

Interest on other borrowings

329

437

700

888

Interest on subordinated debt

297

315

580

586

     Total interest expense

2,080

2,990

4,254

6,231

     Net interest income

12,329

12,916

24,556

25,880

Provision for possible loan losses

1,380

2,280

2,660

4,560

     Net interest income after loan loss

10,949

10,636

21,896

21,320

Service charges on deposits

2,437

2,548

4,808

5,005

Mortgage banking income

619

1,806

1,910

2,373

Agency commission income

880

848

1,700

1,677

Fiduciary and brokerage income

203

163

363

303

Other income

618

673

1,662

1,510

Loss on extinguishment of debt

(1,511)

-

(1,511)

-

Other-than-temporary impairment on securities, net of

$0, $4, $0, and $4 reclassified to  other

comprehensive income

(2,038)

(4)

(2,038)

(4)

Gains on AFS securities

1,378

1

1,394

592

     Total noninterest income

2,586

6,035

8,288

11,456

Salaries and employee benefits

6,377

6,737

12,739

13,600

Net occupancy expense

819

932

1,684

1,840

Equipment expenses

390

423

822

886

Software and processing expenses

555

346

911

708

FDIC insurance assessments

323

553

671

1,067

Foreclosed property expenses

2,051

1,282

2,639

2,738

Intangible asset amortization and impairment

107

106

213

213

Other expenses

3,042

3,940

6,924

7,253

     Total noninterest expense

13,664

14,319

26,603

28,305

     Net income before taxes

(129)

2,352

3,581

4,471

Income tax expense

(351)

599

761

1,111

     Net income

$               222

$             1,753

$             2,820

$            3,360

Earnings Per Common Share Calculations:

     Net income

$               222

$             1,753

$             2,820

$            3,360

Dividends and accretion on preferred stock

(507)

(471)

(1,004)

(934)

     Net income applicable to common stock

(285)

1,282

1,816

2,426

Earnings attributable to participating securities

(12)

56

69

61

     Net income allocated to common shareholders

$             1,226

$             1,747

$            2,365

Weighted average shares (basic)

9,234,452

9,164,576

9,232,963

9,160,526

Weighted average shares (diluted)

9,234,452

9,164,576

9,403,561

9,160,526

Basic earnings per share

$             (0.03)

$               0.14

$               0.19

$              0.26

Diluted earnings per share

$               0.14

$               0.19

$              0.26

First M&F Corporation

Financial Highlights

YTD Ended

YTD Ended

YTD Ended

YTD Ended

June 30

December 31

June 30

December 31

2013

2012

2012

2011

Performance Ratios:

Return on assets (annualized)

0.37%

0.44%

0.42%

0.27%

Return on equity (annualized)  (a)

4.73%

6.12%

6.06%

4.00%

Return on common equity (annualized)  (a)

3.63%

5.30%

5.21%

2.81%

Efficiency ratio (c)

79.88%

74.98%

74.94%

78.47%

Net interest margin (annualized, tax-equivalent)

3.55%

3.67%

3.69%

3.68%

Net charge-offs to average loans (annualized)

0.15%

0.61%

0.86%

1.05%

Nonaccrual loans to total loans

0.62%

0.75%

0.64%

1.68%

90 day accruing loans to total loans

0.02%

0.03%

0.15%

0.06%

QTD Ended

QTD Ended

QTD Ended

QTD Ended

June 30

March 31

December 31

September 30

2013

2013

2012

2012

Per Common Share (diluted):

Net income

$             (0.03)

$               0.22

$               0.14

$              0.14

Cash dividends paid

0.01

0.01

0.01

0.01

Book value

10.50

11.00

10.79

10.69

Closing stock price

15.81

14.15

6.98

7.42

Loan Portfolio Composition: (in thousands)

Commercial, financial and agricultural

$         145,411

$          150,125

$          153,550

$         155,890

Non-residential real estate

540,694

557,453

542,859

554,475

Residential real estate

206,490

203,260

200,992

197,629

Home equity loans

38,340

39,047

37,736

37,196

Consumer loans

36,078

37,772

40,336

42,137

   Total loans

$         967,013

$          987,657

$          975,473

$         987,327

Deposit Composition: (in thousands)

Noninterest-bearing deposits

$         304,734

$          252,453

$          276,295

$         233,684

NOW deposits

404,457

419,376

423,461

386,371

MMDA deposits

200,839

207,931

214,091

216,620

Savings deposits

119,583

119,728

118,123

117,404

Core certificates of deposit under $100,000

176,722

182,245

188,733

201,361

Core certificates of deposit $100,000 and over

148,734

159,913

165,979

177,084

Brokered certificates of deposit under $100,000

3,305

3,295

3,549

3,417

Brokered certificates of deposit $100,000 and over

7,834

7,834

12,444

13,533

   Total deposits

$      1,366,208

$       1,352,775

$       1,402,675

$      1,349,474

Nonperforming Assets: (in thousands)

Nonaccrual loans

$            6,036

$             7,277

$             7,444

$            6,219

Other real estate

19,721

24,820

25,970

28,002

Investment securities

679

604

733

644

   Total nonperforming assets

$          26,436

$           32,701

$           34,147

$          34,865

Accruing loans past due 90 days or more

$               186

$                268

$                321

$               408

Restructured loans (accruing)

$            6,209

$           21,657

$           21,800

$          16,784

Total nonaccrual loan to loans

0.62%

0.72%

0.75%

0.62%

Total nonperforming credit assets to loans and ORE

2.60%

3.12%

3.27%

3.29%

Total nonperforming assets to assets ratio

1.73%

2.11%

2.13%

2.24%

Allowance For Loan Loss Activity: (in thousands)

Beginning balance

$           18,269

$           17,492

$           16,656

$           15,310

Provision for loan loss

1,380

1,280

1,980

1,980

Charge-offs

(569)

(747)

(1,584)

(1,035)

Recoveries

351

244

440

401

Ending balance

$           19,431

$           18,269

$           17,492

$           16,656

First M&F Corporation

Financial Highlights

QTD Ended

QTD Ended

QTD Ended

QTD Ended

June 30

March 31

December 31

September 30

2013

2013

2012

2012

Condensed Income Statements: (in thousands)

Interest income

$           14,409

$           14,401

$           15,186

$           15,625

Interest expense

2,080

2,174

2,545

2,753

   Net interest income

12,329

12,227

12,641

12,872

Provision for loan losses

1,380

1,280

1,980

1,980

Noninterest revenues

2,586

5,702

5,735

5,607

Noninterest expenses

13,664

12,939

13,913

14,060

   Net income before taxes

(129)

3,710

2,483

2,439

Income tax expense

(351)

1,112

652

645

   Net income

$               222

$             2,598

$             1,831

$            1,794

Preferred dividends

(507)

(497)

(488)

(479)

   Net income applicable to common stock

(285)

2,101

1,343

1,315

Earnings attributable to participating securities

(12)

81

53

51

   Net income allocated to common shareholders

$              (273)

$             2,020

$             1,290

$            1,264

Tax-equivalent net interest income

$           12,557

$           12,458

$           12,859

$           13,088

Selected Average Balances: (in thousands)

Assets

$      1,543,020

$       1,570,994

$       1,585,467

$      1,546,416

Loans held for investment

973,160

977,198

982,894

984,282

Earning assets

1,408,023

1,431,054

1,436,348

1,396,824

Deposits

1,345,703

1,369,784

1,381,667

1,343,559

Equity

121,328

119,209

117,529

115,544

Common equity

101,940

100,171

98,837

97,186

Selected Ratios:

Return on average assets (annualized)

0.06%

0.67%

0.46%

0.46%

Return on average equity (annualized)  (a)

0.73%

8.84%

6.19%

6.18%

Return on average common equity (annualized)  (a)

-1.12%

8.51%

5.40%

5.38%

Average equity to average assets

7.86%

7.59%

7.41%

7.47%

Tangible equity to tangible assets  (b)

7.39%

7.55%

7.15%

7.28%

Tangible common equity to tangible assets  (b)

6.11%

6.31%

5.97%

6.08%

Net interest margin (annualized, tax-equivalent)

3.58%

3.53%

3.56%

3.73%

Efficiency ratio (c)

90.24%

71.25%

74.83%

75.21%

Net charge-offs to average loans (annualized)

0.09%

0.21%

0.46%

0.26%

Nonaccrual loans to total loans

0.62%

0.72%

0.75%

0.62%

90 day accruing loans to total loans

0.02%

0.03%

0.03%

0.04%

Price to book

1.51x

1.29x

0.65x

0.69x

Price to earnings

N/A

16.08x

12.46x

13.25x

First M&F Corporation

Financial Highlights

Historical Earnings Trends:

Earnings

Earnings

Applicable to

Allocated to

Common

Common

Earnings

Stock

Shareholders

EPS

(in thousands)

(in thousands)

(in thousands)

(diluted)

2Q 2013

$               222

$               (285)

$               (273)

$             (0.03)

1Q 2013

2,598

2,101

2,020

0.22

4Q 2012

1,831

1,343

1,290

0.14

3Q 2012

1,794

1,315

1,264

0.14

2Q 2012

1,753

1,282

1,226

0.14

1Q 2012

1,607

1,144

1,139

0.12

4Q 2011

987

533

530

0.05

3Q 2011

1,330

882

878

0.10

2Q 2011

1,106

666

661

0.07

Revenue Statistics:

Non-interest

Non-interest

Revenues

Revenues to

Revenues to

Per FTE

Ttl. Revenues

Avg. Assets

(thousands)

(percent)

(percent)

2Q 2013

$              35.6

17.07%

0.67%

1Q 2013

40.4

31.40%

1.47%

4Q 2012

40.2

30.85%

1.44%

3Q 2012

39.9

29.99%

1.44%

2Q 2012

41.1

31.48%

1.54%

1Q 2012

40.5

29.14%

1.36%

4Q 2011

39.0

31.48%

1.50%

3Q 2011

36.6

27.96%

1.30%

2Q 2011

36.6

25.88%

1.18%

Expense Statistics:

Non-interest

Expense to

Efficiency

Avg. Assets

Ratio

(percent)

(percent)  (c)

2Q 2013

3.55%

90.24%

1Q 2013

3.34%

71.25%

4Q 2012

3.49%

74.83%

3Q 2012

3.62%

75.21%

2Q 2012

3.65%

74.70%

1Q 2012

3.50%

75.18%

4Q 2011

3.82%

80.29%

3Q 2011

3.52%

75.76%

2Q 2011

3.59%

78.56%

First M&F Corporation

Average Balance Sheets/Yields and Costs (tax-equivalent)

(In thousands with yields and costs annualized)

QTD June 2013

QTD June 2012

Average

Average

Balance

Yield/Cost

Balance

Yield/Cost

Interest bearing bank balances

$           61,978

0.26%

$           30,923

0.37%

Federal funds sold

10,000

0.25%

15,082

0.27%

Taxable investments (amortized cost)

313,887

1.71%

333,794

1.88%

Tax-exempt investments (amortized cost)

44,109

5.04%

36,610

5.59%

Loans held for sale

4,889

2.08%

30,416

3.22%

Loans held for investment

973,160

5.22%

973,545

5.69%

   Total earning assets

1,408,023

4.17%

1,420,370

4.57%

Non-earning assets

134,997

157,050

   Total average assets

$      1,543,020

$       1,577,420

NOW

$         411,929

0.23%

$          404,958

0.43%

MMDA

200,444

0.18%

217,533

0.37%

Savings

120,227

0.76%

121,778

0.95%

Certificates of Deposit

345,147

1.04%

402,703

1.31%

Short-term borrowings

2,862

0.20%

2,974

0.62%

Other borrowings

62,062

4.05%

71,771

4.21%

   Total interest bearing liabilities

1,142,671

0.73%

1,221,717

0.98%

Non-interest bearing deposits

267,956

232,744

Non-interest bearing liabilities

11,065

10,493

Preferred equity

19,388

18,036

Common equity

101,940

94,430

   Total average liabilities and equity

$      1,543,020

$       1,577,420

Net interest spread

3.44%

3.59%

Effect of non-interest bearing deposits

0.14%

0.16%

Effect of leverage

0.00%

-0.03%

   Net interest margin, tax-equivalent

3.58%

3.72%

Less tax equivalent adjustment:

   Investments

0.06%

0.05%

   Loans

0.01%

0.01%

Reported book net interest margin

3.51%

3.66%

First M&F Corporation

Average Balance Sheets/Yields and Costs (tax-equivalent)

(In thousands with yields and costs annualized)

YTD June 2013

YTD June 2012

Average

Average

Balance

Yield/Cost

Balance

Yield/Cost

Interest bearing bank balances

$           69,212

0.29%

$           55,067

0.29%

Federal funds sold

10,000

0.25%

20,041

0.26%

Taxable investments (amortized cost)

311,642

1.66%

316,708

1.94%

Tax-exempt investments (amortized cost)

44,148

5.10%

35,790

5.71%

Loans held for sale

9,305

1.76%

26,573

3.15%

Loans held for investment

975,168

5.25%

978,672

5.74%

   Total earning assets

1,419,475

4.16%

1,432,851

4.57%

Non-earning assets

137,455

159,365

   Total average assets

$      1,556,930

$       1,592,216

NOW

$         417,417

0.23%

$          412,108

0.45%

MMDA

206,242

0.18%

222,067

0.45%

Savings

119,477

0.78%

121,307

0.97%

Certificates of Deposit

353,048

1.06%

409,895

1.35%

Short-term borrowings

4,093

0.27%

4,014

0.53%

Other borrowings

64,107

4.03%

72,439

4.09%

   Total interest bearing liabilities

1,164,384

0.74%

1,241,830

1.01%

Non-interest bearing deposits

261,493

229,177

Non-interest bearing liabilities

10,779

9,603

Preferred equity

19,214

17,878

Common equity

101,060

93,728

   Total average liabilities and equity

$      1,556,930

$       1,592,216

Net interest spread

3.42%

3.56%

Effect of non-interest bearing deposits

0.14%

0.16%

Effect of leverage

-0.01%

-0.03%

   Net interest margin, tax-equivalent

3.55%

3.69%

Less tax equivalent adjustment:

   Investments

0.06%

0.05%

   Loans

0.01%

0.01%

Reported book net interest margin

3.49%

3.63%