Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries First Farmers and Merchants Corporation Reports Record 2022 Results By: First Farmers and Merchants Corporation via Business Wire January 23, 2023 at 07:00 AM EST Net Income Rises 16% to a Record $18.1 Million First Farmers and Merchants Corporation (OTC Pink: FFMH), the holding company for First Farmers and Merchants Bank, today announced double digit growth in net income for 2022, compared with 2021. Commenting on the results, Brian K. Williams, Chairman and Chief Executive Officer of First Farmers, said, “I am incredibly proud of our entire team who helped us achieve record results in 2022. Throughout the year, we maintained a laser focus on our core business lines while attracting new customers and deepening relationships with our existing customer base. This was highlighted by our loan growth reaching 9.1% during 2022 despite the rapid rise in interest rates, which is the highest pace in six years. “Technology enhancements in 2022 propelled our strategy for improving service levels for our customers and driving greater efficiency throughout the Company. Our focus on innovation will continue in 2023 with key initiatives including the introduction of a new loan origination system, new features for our digital banking platform, and enhancements to services provided to depositors and treasury management clients. “Alongside the record performance of 2022, the Board of Directors rewarded our shareholders in September with a 9.5% increase in the quarterly cash dividend and extended the share repurchase program through 2023. The fundamentals, which powered our results in 2022, remain in place as we enter 2023, and we are confident in First Farmers’ consistent, sustainable long-term performance for our shareholders,” concluded Williams. Key highlights of First Farmers’ results for 2022 include: Net income rose 15.6% to a record $18.1 million in 2022 compared with $15.6 million for 2021; Net income per common share increased 16.7% to a record $4.19 in 2022 from $3.59 in 2021; Adjusted net income, which excludes special items, rose 22.5% to $18.1 million in 2022, or $4.21 per common share, compared with $14.8 million, or $3.40 per common share, in 2021 (see “Non-GAAP Financial Measures” section); Net interest income after provision increased 6.6% to a record $48.0 million in 2022 from $45.3 million in 2021; Net loans grew 9.1% to $956.8 million from 2021; and Total non-interest expense fell 6.5% to $40.2 million from 2021 driving improved operating efficiency to 60.40% for the fourth quarter of 2022. Robert E. Krimmel, Chief Financial Officer, added, "Our record financial performance in 2022 was highlighted by continued progress in key metrics. We reported growth in our net interest margin, lower non-interest expenses, higher return on assets and an improved efficiency ratio. “Adjusted non-interest income declined because of mortgage banking activities as higher interest rates reduced demand for home purchases and mortgage refinancing. This was partially offset by higher trust services fee income driven by growth in new client accounts offsetting the impact of weak financial markets during the year. We are very pleased with our trust business which continues to provide a steady level of fee income, as customers choose a more customized service for wealth management. “We made progress during 2022 in reducing non-interest expense by 6.5% through disciplined cost controls. We also began to experience increased operating efficiencies resulting from our expanded digital and technology platforms, with continued progress expected in this area as we roll out the new digital loan platform in 2023. “First Farmers’ growth in revenues combined with lower non-interest expenses contributed to our improved fourth quarter efficiency ratio of 60.4%, compared with 66.6% for the same period last year. We are very pleased that these improvements were made through core earnings as well as our programs to streamline operations as we enhance customer service and access to our suite of banking products,” concluded Krimmel. Fourth Quarter 2022 Results of Operations Net income was $5.0 million in the fourth quarter of 2022, up $2.0 million, or 63.7%, from the year-earlier quarter. The improvement in earnings was due to one-time executive retirement benefit expenses of $1.5 million ($1.1 million net of tax) recognized during the fourth quarter of 2021, and growth in net-interest income of $953,000 for the fourth quarter of 2022 coupled with a decline in salaries and employee benefits of $676,000 in the quarter. Adjusted net income, which excludes special items, rose 24.8% to $5.0 million, up $1.0 million from the year-earlier quarter. Net interest income improved by $953,000 propelled by net interest margin growth of seven basis points supported by net loan growth of $79 million. Non-interest income decreased $368,000 and was driven primarily by a reduction in mortgage banking activities of $271,000 impacted by the Federal Reserve’s increase in interest rates, which rose 425 basis points during 2022. Non-interest expense was down by $2.0 million from the year-earlier quarter due primarily to lower salaries and employee benefits expense, including the $1.5 million one-time executive retirement benefit expenses from 2021. Net income for the fourth quarter of 2022 was up from the sequential third quarter by $224,000, or 4.7%. The improvement in earnings was due primarily to growth in net interest income of $235,000 coupled with a decline in non-interest expense of $156,000, improving the operating efficiency ratio to 60.40%. For the fourth quarter of 2022, the balance of securities available-for-sale declined $15 million from the sequential third quarter. Securities available-for-sale amortized cost decreased $26 million and was used to fund loan growth for the quarter. The unrealized loss adjustment for securities available-for-sale decreased by $9 million for the quarter as bond prices improved due to lower long-term market interest rates compared to the sequential quarter. For the fourth quarter of 2022, outstanding loan balances increased $15 million, or 1.6%, from the previous quarter to $957 million and increased $79 million, or 9.1%, from the year-earlier quarter. Loan growth for the quarter benefited from increases in commercial real estate of $9 million and commercial and industrial of $5 million. Total deposits declined by $34 million, or 1.9%, from the sequential third quarter to $1.799 billion, but rose by $7 million, or 0.4%, from the year-earlier quarter. The decline in total deposits during the fourth quarter of 2022 was driven largely by the continued migration of certain client balances to the Company’s Trust department, as customers selected an enhanced level of bank services. Total shareholders’ equity increased $12 million due to improvement in the unrealized loss adjustment to the available-for-sale securities portfolio that totaled $9 million, net of tax, for the fourth quarter 2022. Tangible book value per share improved 16.3% for the fourth quarter of 2022 compared to the sequential quarter but declined 40.8% compared to the year-earlier quarter. The improvement in the value of the available-for-sale securities portfolio was driven by a decline in long-term market interest rates. Total unrealized losses related to the available-for-sale investment portfolio decreased to $108 million compared to unrealized losses of $120 million for the third quarter of 2022, but rose from unrealized losses of $7 million from the year-earlier quarter. The fair market value of the Company’s available-for-sale securities portfolio is adjusted each quarter based on changes in interest rates. Twelve Months Results Net income rose 15.6% to a record $18.1 million, or $4.19 per share, for 2022 compared with $15.6 million, or $3.59 per share, for 2021. The increase in net income benefited from a 6.6% increase in net interest income after provision for loan losses to $48.3 million and a 6.5% decrease in non-interest expense to $40.2 million but was offset in part by a 15.7% decline in non-interest income that included a $1.8 million gain on the sale of Visa stock in 2021. Net interest income after provision for loan losses improved by $3.0 million propelled by growth in average interest earning assets of $146 million compared to 2021. During the year, asset quality improved leading to an increase in provision credit for loan and leases of $170,000. Non-interest income declined by 15.7% due to the $1.8 million sale of Visa stock last year along with a reduction in mortgage banking activities of $828,000 that was offset partially by growth in service fees on deposit accounts and trust services fee income. Service fees on deposit accounts were up 7.9% to $7.7 million and trust services fee income were up 2.8% to $4.2 million with new client accounts offsetting the decline in administered assets driven by weakness in the stock and bond markets compared to 2021. Non-interest expenses declined 6.5% in 2022 to $40.2 million compared with 2021. The decreases were due to lower salaries and employee benefits, including one-time executive retirement benefit expenses of $1.5 million recorded in 2021. Asset Quality Asset quality improved in 2022 as measured by a decline in nonperforming assets to $705,000. Nonperforming assets totaled 0.04% of total assets, down from $711,00 or 0.04% from the previous quarter and down from $1.2 million, or 0.06% of total assets, from the year-earlier quarter. Net recoveries to average loans were 0.01% for the fourth quarter of 2022 compared with net recoveries of 0.01% for the previous quarter and net recoveries of 0.00% for the year-earlier quarter. No provision for loan and lease losses was made during the fourth quarter of 2022. The allowance for loan and lease losses represented 0.97% of total loans outstanding for the fourth quarter of 2022 compared with 0.99% for the previous quarter and 1.08% for the year-earlier quarter. Capital Management Initiatives During the fourth quarter of 2022, First Farmers repurchased 21,033 shares of the Company’s common stock in the open market and privately negotiated transactions. The average price of the repurchased shares in the fourth quarter of 2022 was $30.49 per share. Stock repurchases increased 55% compared to the third quarter of 2022 and were up 107% compared to the year earlier quarter. First Farmers’ Board of Directors reauthorized the stock repurchase program of up to 200,000 shares through December 2023. 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, 2022, First Farmers reported total assets of approximately $1.9 billion, total shareholders’ equity of approximately $96.7 million, and administered trust assets of $5.7 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, gain on sale of Visa stock, gain on sale of premises and equipment, one-time executive retirement benefits, one-time digital conversion fees, 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, 2022 2021 2022 2022 2021 Total non-interest income $ 3,495 $ 3,863 $ 3,526 $ 14,147 $ 16,783 Loss (gain) on sale of securities 5 (254 ) - 5 (621 ) Gain on equity securities - - - (25 ) (239 ) Gain on sale of Visa stock - - - - (1,811 ) Gain on sale of premises and equipment - - - (91 ) - Adjusted non-interest income $ 3,500 $ 3,609 $ 3,526 $ 14,036 $ 14,112 Total non-interest expense $ 9,912 $ 11,953 $ 10,076 $ 40,168 $ 42,966 One-time executive retirement benefits - (1,553 ) - (1,553 ) One-time digital conversion fees - - - (207 ) - Adjusted non-interest expense $ 9,912 $ 10,400 $ 10,076 $ 39,961 $ 41,413 Net income as reported $ 5,027 $ 3,071 $ 4,803 $ 18,050 $ 15,619 Total adjustments, net of tax1 4 960 - 71 (826 ) Adjusted net income $ 5,031 $ 4,031 $ 4,803 $ 18,121 $ 14,793 Basic earnings per share $ 1.17 $ 0.71 $ 1.12 $ 4.19 $ 3.59 Total adjustments, net of tax1 - 0.22 - 0.02 (0.19 ) Adjusted basic earnings per share $ 1.17 $ 0.93 $ 1.12 $ 4.21 $ 3.40 (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) 2022 2021(1) ASSETS Cash and due from banks $ 27,193 $ 19,791 Interest-bearing deposits 1,754 75,065 Federal funds sold 57 8,374 Total cash and cash equivalents 29,004 103,230 Securities: Available-for-sale 810,591 876,987 Held-to-maturity (fair market value $14,162 and $15,932 as of the periods presented) 15,087 15,128 Equity securities 2,505 2,481 Loans held-for-sale - 2,197 Loans, net of deferred fees 966,167 886,891 Allowance for loan and lease losses (9,382 ) (9,605 ) Net loans 956,785 877,286 Bank premises and equipment, net 32,140 32,627 Bank-owned life insurance 35,829 35,354 Goodwill 9,018 9,018 Deferred tax asset 30,511 4,085 Other assets 20,819 14,345 TOTAL ASSETS $ 1,942,289 $ 1,972,738 LIABILITIES Deposits: Noninterest-bearing $ 534,474 $ 522,725 Interest-bearing 1,264,154 1,268,481 Total deposits 1,798,628 1,791,206 Accounts payable and accrued liabilities 21,996 22,901 FHLB borrowings 25,000 - TOTAL LIABILITIES 1,845,624 1,814,107 SHAREHOLDERS’ Common stock - $10 par value per share, 8,000,000 shares EQUITY authorized; 4,275,328 and 4,317,306 shares issued and outstanding as of the periods presented 42,753 43,173 Retained earnings 132,905 119,507 Accumulated other comprehensive loss (79,088 ) (4,144 ) Total shareholders’ equity attributable to First Farmers and Merchants Corporation 96,570 158,536 Noncontrolling interest - preferred stock of subsidiary 95 95 TOTAL SHAREHOLDERS’ EQUITY 96,665 158,631 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,942,289 $ 1,972,738 (1) Derived from audited financial statements as of December 31, 2021. 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) 2022 2021 2022 2021 INTEREST AND Interest and fees on loans $ 11,250 $ 9,600 $ 38,962 $ 38,491 DIVIDEND Income on investment securities INCOME Taxable interest 2,466 2,016 10,004 6,789 Exempt from federal income tax 500 521 2,025 2,169 Interest from federal funds sold and other 40 14 232 88 Total interest income 14,256 12,151 51,223 47,537 INTEREST Interest on deposits 1,142 400 2,829 2,380 EXPENSE Interest on other borrowings 410 - 410 1 Total interest expense 1,552 400 3,239 2,381 Net interest income 12,704 11,751 47,984 45,156 Provision credit for loan and lease losses - - (320 ) (150 ) Net interest income after provision 12,704 11,751 48,304 45,306 NON-INTEREST Mortgage banking activities 56 327 614 1,442 INCOME Trust services fee income 1,054 1,029 4,160 4,045 Service fees on deposit accounts 1,987 1,840 7,655 7,093 Investment services fee income 73 85 406 341 Earnings on bank-owned life insurance 119 165 475 554 (Loss) gain on sale of investments (5 ) 254 (5 ) 621 Gain on equity securities - - 25 - Gain on sale of premises and equipment - - 91 - Gain on sale of Visa stock - - - 1,811 Other non-interest income 211 163 726 876 Total non-interest income 3,495 3,863 14,147 16,783 NON-INTEREST Salaries and employee benefits 5,696 7,925 23,115 26,499 EXPENSE Net occupancy expense 486 623 2,202 2,699 Depreciation expense 421 526 1,786 2,033 Data processing expense 525 786 2,528 3,034 Software support and other computer expense 1,029 667 3,821 2,875 Legal and professional fees 284 220 1,007 794 Audits and exams expense 211 116 730 637 Advertising and promotions 277 244 1,074 1,004 FDIC insurance premium expense 149 171 677 636 Other non-interest expense 834 675 3,228 2,755 Total non-interest expense 9,912 11,953 40,168 42,966 Income before provision for income taxes 6,287 3,661 22,283 19,123 Provision for income taxes 1,252 582 4,217 3,488 Net income 5,035 3,079 18,066 15,635 Noncontrolling interest - dividends on preferred stock subsidiary 8 8 16 16 Net income available to common shareholders $ 5,027 $ 3,071 $ 18,050 $ 15,619 Weighted average shares outstanding 4,290,886 4,326,090 4,305,557 4,345,665 Earnings per share $ 1.17 $ 0.71 $ 4.19 $ 3.59 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, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Results of Operations: Interest income $ 14,256 $ 13,279 $ 12,198 $ 11,490 $ 12,151 Interest expense 1,552 810 505 372 400 Net interest income 12,704 12,469 11,693 11,118 11,751 Provision credit for loan and lease losses - - - (320 ) - Non-interest income 3,495 3,526 3,660 3,466 3,863 Non-interest expense and non-controlling interest – preferred stock of subsidiary 9,920 10,076 9,763 10,425 11,961 Income before income taxes 6,279 5,919 5,590 4,479 3,653 Income taxes 1,252 1,116 1,052 797 582 Net income for common shareholders $ 5,027 $ 4,803 $ 4,538 $ 3,682 $ 3,071 Per Share Data: Basic earnings per share $ 1.17 $ 1.12 $ 1.05 $ 0.85 $ 0.71 Weighted average shares outstanding per quarter 4,290,886 4,301,056 4,313,455 4,317,169 4,326,090 Financial Condition Data and Ratios: Total securities $ 828,183 $ 842,896 $ 902,742 $ 944,543 $ 894,596 Available-for-sale securities, fair market value $ 810,591 $ 825,293 $ 885,129 $ 926,944 $ 876,987 Available-for-sale securities, amortized cost $ 918,936 $ 944,987 $ 967,235 $ 983,958 $ 883,853 Loans, net of deferred fees $ 966,167 $ 951,279 $ 941,357 $ 891,108 $ 886,891 Allowance for loan and lease losses $ (9,382 ) $ (9,383 ) $ (9,386 ) $ (9,388 ) $ (9,605 ) Total assets $ 1,942,289 $ 1,941,415 $ 2,012,409 $ 2,144,206 $ 1,972,738 Total deposits $ 1,798,628 $ 1,833,041 $ 1,880,612 $ 1,998,175 $ 1,791,206 Net interest income, on a fully taxable-equivalent basis $ 12,943 $ 12,726 $ 11,956 $ 11,379 $ 12,013 Net interest margin 2.69 % 2.61 % 2.46 % 2.43 % 2.62 % Efficiency 60.40 % 62.15 % 62.94 % 68.83 % 66.57 % Asset Quality Data and Ratios: Total nonperforming assets $ 705 $ 711 $ 1,635 $ 1,002 $ 1,217 Nonperforming assets to total assets 0.04 % 0.04 % 0.08 % 0.05 % 0.06 % Allowance for loan and lease losses to total loans 0.97 % 0.99 % 1.00 % 1.05 % 1.08 % Net recoveries to average loans (annualized) (0.01 %) (0.01 %) (0.02 %) (0.05 )% 0.00 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230123005156/en/Contacts Robert E. Krimmel Chief Financial Officer (931) 380-8257 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
First Farmers and Merchants Corporation Reports Record 2022 Results By: First Farmers and Merchants Corporation via Business Wire January 23, 2023 at 07:00 AM EST Net Income Rises 16% to a Record $18.1 Million First Farmers and Merchants Corporation (OTC Pink: FFMH), the holding company for First Farmers and Merchants Bank, today announced double digit growth in net income for 2022, compared with 2021. Commenting on the results, Brian K. Williams, Chairman and Chief Executive Officer of First Farmers, said, “I am incredibly proud of our entire team who helped us achieve record results in 2022. Throughout the year, we maintained a laser focus on our core business lines while attracting new customers and deepening relationships with our existing customer base. This was highlighted by our loan growth reaching 9.1% during 2022 despite the rapid rise in interest rates, which is the highest pace in six years. “Technology enhancements in 2022 propelled our strategy for improving service levels for our customers and driving greater efficiency throughout the Company. Our focus on innovation will continue in 2023 with key initiatives including the introduction of a new loan origination system, new features for our digital banking platform, and enhancements to services provided to depositors and treasury management clients. “Alongside the record performance of 2022, the Board of Directors rewarded our shareholders in September with a 9.5% increase in the quarterly cash dividend and extended the share repurchase program through 2023. The fundamentals, which powered our results in 2022, remain in place as we enter 2023, and we are confident in First Farmers’ consistent, sustainable long-term performance for our shareholders,” concluded Williams. Key highlights of First Farmers’ results for 2022 include: Net income rose 15.6% to a record $18.1 million in 2022 compared with $15.6 million for 2021; Net income per common share increased 16.7% to a record $4.19 in 2022 from $3.59 in 2021; Adjusted net income, which excludes special items, rose 22.5% to $18.1 million in 2022, or $4.21 per common share, compared with $14.8 million, or $3.40 per common share, in 2021 (see “Non-GAAP Financial Measures” section); Net interest income after provision increased 6.6% to a record $48.0 million in 2022 from $45.3 million in 2021; Net loans grew 9.1% to $956.8 million from 2021; and Total non-interest expense fell 6.5% to $40.2 million from 2021 driving improved operating efficiency to 60.40% for the fourth quarter of 2022. Robert E. Krimmel, Chief Financial Officer, added, "Our record financial performance in 2022 was highlighted by continued progress in key metrics. We reported growth in our net interest margin, lower non-interest expenses, higher return on assets and an improved efficiency ratio. “Adjusted non-interest income declined because of mortgage banking activities as higher interest rates reduced demand for home purchases and mortgage refinancing. This was partially offset by higher trust services fee income driven by growth in new client accounts offsetting the impact of weak financial markets during the year. We are very pleased with our trust business which continues to provide a steady level of fee income, as customers choose a more customized service for wealth management. “We made progress during 2022 in reducing non-interest expense by 6.5% through disciplined cost controls. We also began to experience increased operating efficiencies resulting from our expanded digital and technology platforms, with continued progress expected in this area as we roll out the new digital loan platform in 2023. “First Farmers’ growth in revenues combined with lower non-interest expenses contributed to our improved fourth quarter efficiency ratio of 60.4%, compared with 66.6% for the same period last year. We are very pleased that these improvements were made through core earnings as well as our programs to streamline operations as we enhance customer service and access to our suite of banking products,” concluded Krimmel. Fourth Quarter 2022 Results of Operations Net income was $5.0 million in the fourth quarter of 2022, up $2.0 million, or 63.7%, from the year-earlier quarter. The improvement in earnings was due to one-time executive retirement benefit expenses of $1.5 million ($1.1 million net of tax) recognized during the fourth quarter of 2021, and growth in net-interest income of $953,000 for the fourth quarter of 2022 coupled with a decline in salaries and employee benefits of $676,000 in the quarter. Adjusted net income, which excludes special items, rose 24.8% to $5.0 million, up $1.0 million from the year-earlier quarter. Net interest income improved by $953,000 propelled by net interest margin growth of seven basis points supported by net loan growth of $79 million. Non-interest income decreased $368,000 and was driven primarily by a reduction in mortgage banking activities of $271,000 impacted by the Federal Reserve’s increase in interest rates, which rose 425 basis points during 2022. Non-interest expense was down by $2.0 million from the year-earlier quarter due primarily to lower salaries and employee benefits expense, including the $1.5 million one-time executive retirement benefit expenses from 2021. Net income for the fourth quarter of 2022 was up from the sequential third quarter by $224,000, or 4.7%. The improvement in earnings was due primarily to growth in net interest income of $235,000 coupled with a decline in non-interest expense of $156,000, improving the operating efficiency ratio to 60.40%. For the fourth quarter of 2022, the balance of securities available-for-sale declined $15 million from the sequential third quarter. Securities available-for-sale amortized cost decreased $26 million and was used to fund loan growth for the quarter. The unrealized loss adjustment for securities available-for-sale decreased by $9 million for the quarter as bond prices improved due to lower long-term market interest rates compared to the sequential quarter. For the fourth quarter of 2022, outstanding loan balances increased $15 million, or 1.6%, from the previous quarter to $957 million and increased $79 million, or 9.1%, from the year-earlier quarter. Loan growth for the quarter benefited from increases in commercial real estate of $9 million and commercial and industrial of $5 million. Total deposits declined by $34 million, or 1.9%, from the sequential third quarter to $1.799 billion, but rose by $7 million, or 0.4%, from the year-earlier quarter. The decline in total deposits during the fourth quarter of 2022 was driven largely by the continued migration of certain client balances to the Company’s Trust department, as customers selected an enhanced level of bank services. Total shareholders’ equity increased $12 million due to improvement in the unrealized loss adjustment to the available-for-sale securities portfolio that totaled $9 million, net of tax, for the fourth quarter 2022. Tangible book value per share improved 16.3% for the fourth quarter of 2022 compared to the sequential quarter but declined 40.8% compared to the year-earlier quarter. The improvement in the value of the available-for-sale securities portfolio was driven by a decline in long-term market interest rates. Total unrealized losses related to the available-for-sale investment portfolio decreased to $108 million compared to unrealized losses of $120 million for the third quarter of 2022, but rose from unrealized losses of $7 million from the year-earlier quarter. The fair market value of the Company’s available-for-sale securities portfolio is adjusted each quarter based on changes in interest rates. Twelve Months Results Net income rose 15.6% to a record $18.1 million, or $4.19 per share, for 2022 compared with $15.6 million, or $3.59 per share, for 2021. The increase in net income benefited from a 6.6% increase in net interest income after provision for loan losses to $48.3 million and a 6.5% decrease in non-interest expense to $40.2 million but was offset in part by a 15.7% decline in non-interest income that included a $1.8 million gain on the sale of Visa stock in 2021. Net interest income after provision for loan losses improved by $3.0 million propelled by growth in average interest earning assets of $146 million compared to 2021. During the year, asset quality improved leading to an increase in provision credit for loan and leases of $170,000. Non-interest income declined by 15.7% due to the $1.8 million sale of Visa stock last year along with a reduction in mortgage banking activities of $828,000 that was offset partially by growth in service fees on deposit accounts and trust services fee income. Service fees on deposit accounts were up 7.9% to $7.7 million and trust services fee income were up 2.8% to $4.2 million with new client accounts offsetting the decline in administered assets driven by weakness in the stock and bond markets compared to 2021. Non-interest expenses declined 6.5% in 2022 to $40.2 million compared with 2021. The decreases were due to lower salaries and employee benefits, including one-time executive retirement benefit expenses of $1.5 million recorded in 2021. Asset Quality Asset quality improved in 2022 as measured by a decline in nonperforming assets to $705,000. Nonperforming assets totaled 0.04% of total assets, down from $711,00 or 0.04% from the previous quarter and down from $1.2 million, or 0.06% of total assets, from the year-earlier quarter. Net recoveries to average loans were 0.01% for the fourth quarter of 2022 compared with net recoveries of 0.01% for the previous quarter and net recoveries of 0.00% for the year-earlier quarter. No provision for loan and lease losses was made during the fourth quarter of 2022. The allowance for loan and lease losses represented 0.97% of total loans outstanding for the fourth quarter of 2022 compared with 0.99% for the previous quarter and 1.08% for the year-earlier quarter. Capital Management Initiatives During the fourth quarter of 2022, First Farmers repurchased 21,033 shares of the Company’s common stock in the open market and privately negotiated transactions. The average price of the repurchased shares in the fourth quarter of 2022 was $30.49 per share. Stock repurchases increased 55% compared to the third quarter of 2022 and were up 107% compared to the year earlier quarter. First Farmers’ Board of Directors reauthorized the stock repurchase program of up to 200,000 shares through December 2023. 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, 2022, First Farmers reported total assets of approximately $1.9 billion, total shareholders’ equity of approximately $96.7 million, and administered trust assets of $5.7 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, gain on sale of Visa stock, gain on sale of premises and equipment, one-time executive retirement benefits, one-time digital conversion fees, 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, 2022 2021 2022 2022 2021 Total non-interest income $ 3,495 $ 3,863 $ 3,526 $ 14,147 $ 16,783 Loss (gain) on sale of securities 5 (254 ) - 5 (621 ) Gain on equity securities - - - (25 ) (239 ) Gain on sale of Visa stock - - - - (1,811 ) Gain on sale of premises and equipment - - - (91 ) - Adjusted non-interest income $ 3,500 $ 3,609 $ 3,526 $ 14,036 $ 14,112 Total non-interest expense $ 9,912 $ 11,953 $ 10,076 $ 40,168 $ 42,966 One-time executive retirement benefits - (1,553 ) - (1,553 ) One-time digital conversion fees - - - (207 ) - Adjusted non-interest expense $ 9,912 $ 10,400 $ 10,076 $ 39,961 $ 41,413 Net income as reported $ 5,027 $ 3,071 $ 4,803 $ 18,050 $ 15,619 Total adjustments, net of tax1 4 960 - 71 (826 ) Adjusted net income $ 5,031 $ 4,031 $ 4,803 $ 18,121 $ 14,793 Basic earnings per share $ 1.17 $ 0.71 $ 1.12 $ 4.19 $ 3.59 Total adjustments, net of tax1 - 0.22 - 0.02 (0.19 ) Adjusted basic earnings per share $ 1.17 $ 0.93 $ 1.12 $ 4.21 $ 3.40 (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) 2022 2021(1) ASSETS Cash and due from banks $ 27,193 $ 19,791 Interest-bearing deposits 1,754 75,065 Federal funds sold 57 8,374 Total cash and cash equivalents 29,004 103,230 Securities: Available-for-sale 810,591 876,987 Held-to-maturity (fair market value $14,162 and $15,932 as of the periods presented) 15,087 15,128 Equity securities 2,505 2,481 Loans held-for-sale - 2,197 Loans, net of deferred fees 966,167 886,891 Allowance for loan and lease losses (9,382 ) (9,605 ) Net loans 956,785 877,286 Bank premises and equipment, net 32,140 32,627 Bank-owned life insurance 35,829 35,354 Goodwill 9,018 9,018 Deferred tax asset 30,511 4,085 Other assets 20,819 14,345 TOTAL ASSETS $ 1,942,289 $ 1,972,738 LIABILITIES Deposits: Noninterest-bearing $ 534,474 $ 522,725 Interest-bearing 1,264,154 1,268,481 Total deposits 1,798,628 1,791,206 Accounts payable and accrued liabilities 21,996 22,901 FHLB borrowings 25,000 - TOTAL LIABILITIES 1,845,624 1,814,107 SHAREHOLDERS’ Common stock - $10 par value per share, 8,000,000 shares EQUITY authorized; 4,275,328 and 4,317,306 shares issued and outstanding as of the periods presented 42,753 43,173 Retained earnings 132,905 119,507 Accumulated other comprehensive loss (79,088 ) (4,144 ) Total shareholders’ equity attributable to First Farmers and Merchants Corporation 96,570 158,536 Noncontrolling interest - preferred stock of subsidiary 95 95 TOTAL SHAREHOLDERS’ EQUITY 96,665 158,631 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,942,289 $ 1,972,738 (1) Derived from audited financial statements as of December 31, 2021. 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) 2022 2021 2022 2021 INTEREST AND Interest and fees on loans $ 11,250 $ 9,600 $ 38,962 $ 38,491 DIVIDEND Income on investment securities INCOME Taxable interest 2,466 2,016 10,004 6,789 Exempt from federal income tax 500 521 2,025 2,169 Interest from federal funds sold and other 40 14 232 88 Total interest income 14,256 12,151 51,223 47,537 INTEREST Interest on deposits 1,142 400 2,829 2,380 EXPENSE Interest on other borrowings 410 - 410 1 Total interest expense 1,552 400 3,239 2,381 Net interest income 12,704 11,751 47,984 45,156 Provision credit for loan and lease losses - - (320 ) (150 ) Net interest income after provision 12,704 11,751 48,304 45,306 NON-INTEREST Mortgage banking activities 56 327 614 1,442 INCOME Trust services fee income 1,054 1,029 4,160 4,045 Service fees on deposit accounts 1,987 1,840 7,655 7,093 Investment services fee income 73 85 406 341 Earnings on bank-owned life insurance 119 165 475 554 (Loss) gain on sale of investments (5 ) 254 (5 ) 621 Gain on equity securities - - 25 - Gain on sale of premises and equipment - - 91 - Gain on sale of Visa stock - - - 1,811 Other non-interest income 211 163 726 876 Total non-interest income 3,495 3,863 14,147 16,783 NON-INTEREST Salaries and employee benefits 5,696 7,925 23,115 26,499 EXPENSE Net occupancy expense 486 623 2,202 2,699 Depreciation expense 421 526 1,786 2,033 Data processing expense 525 786 2,528 3,034 Software support and other computer expense 1,029 667 3,821 2,875 Legal and professional fees 284 220 1,007 794 Audits and exams expense 211 116 730 637 Advertising and promotions 277 244 1,074 1,004 FDIC insurance premium expense 149 171 677 636 Other non-interest expense 834 675 3,228 2,755 Total non-interest expense 9,912 11,953 40,168 42,966 Income before provision for income taxes 6,287 3,661 22,283 19,123 Provision for income taxes 1,252 582 4,217 3,488 Net income 5,035 3,079 18,066 15,635 Noncontrolling interest - dividends on preferred stock subsidiary 8 8 16 16 Net income available to common shareholders $ 5,027 $ 3,071 $ 18,050 $ 15,619 Weighted average shares outstanding 4,290,886 4,326,090 4,305,557 4,345,665 Earnings per share $ 1.17 $ 0.71 $ 4.19 $ 3.59 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, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Results of Operations: Interest income $ 14,256 $ 13,279 $ 12,198 $ 11,490 $ 12,151 Interest expense 1,552 810 505 372 400 Net interest income 12,704 12,469 11,693 11,118 11,751 Provision credit for loan and lease losses - - - (320 ) - Non-interest income 3,495 3,526 3,660 3,466 3,863 Non-interest expense and non-controlling interest – preferred stock of subsidiary 9,920 10,076 9,763 10,425 11,961 Income before income taxes 6,279 5,919 5,590 4,479 3,653 Income taxes 1,252 1,116 1,052 797 582 Net income for common shareholders $ 5,027 $ 4,803 $ 4,538 $ 3,682 $ 3,071 Per Share Data: Basic earnings per share $ 1.17 $ 1.12 $ 1.05 $ 0.85 $ 0.71 Weighted average shares outstanding per quarter 4,290,886 4,301,056 4,313,455 4,317,169 4,326,090 Financial Condition Data and Ratios: Total securities $ 828,183 $ 842,896 $ 902,742 $ 944,543 $ 894,596 Available-for-sale securities, fair market value $ 810,591 $ 825,293 $ 885,129 $ 926,944 $ 876,987 Available-for-sale securities, amortized cost $ 918,936 $ 944,987 $ 967,235 $ 983,958 $ 883,853 Loans, net of deferred fees $ 966,167 $ 951,279 $ 941,357 $ 891,108 $ 886,891 Allowance for loan and lease losses $ (9,382 ) $ (9,383 ) $ (9,386 ) $ (9,388 ) $ (9,605 ) Total assets $ 1,942,289 $ 1,941,415 $ 2,012,409 $ 2,144,206 $ 1,972,738 Total deposits $ 1,798,628 $ 1,833,041 $ 1,880,612 $ 1,998,175 $ 1,791,206 Net interest income, on a fully taxable-equivalent basis $ 12,943 $ 12,726 $ 11,956 $ 11,379 $ 12,013 Net interest margin 2.69 % 2.61 % 2.46 % 2.43 % 2.62 % Efficiency 60.40 % 62.15 % 62.94 % 68.83 % 66.57 % Asset Quality Data and Ratios: Total nonperforming assets $ 705 $ 711 $ 1,635 $ 1,002 $ 1,217 Nonperforming assets to total assets 0.04 % 0.04 % 0.08 % 0.05 % 0.06 % Allowance for loan and lease losses to total loans 0.97 % 0.99 % 1.00 % 1.05 % 1.08 % Net recoveries to average loans (annualized) (0.01 %) (0.01 %) (0.02 %) (0.05 )% 0.00 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230123005156/en/Contacts Robert E. Krimmel Chief Financial Officer (931) 380-8257
First Farmers and Merchants Corporation (OTC Pink: FFMH), the holding company for First Farmers and Merchants Bank, today announced double digit growth in net income for 2022, compared with 2021. Commenting on the results, Brian K. Williams, Chairman and Chief Executive Officer of First Farmers, said, “I am incredibly proud of our entire team who helped us achieve record results in 2022. Throughout the year, we maintained a laser focus on our core business lines while attracting new customers and deepening relationships with our existing customer base. This was highlighted by our loan growth reaching 9.1% during 2022 despite the rapid rise in interest rates, which is the highest pace in six years. “Technology enhancements in 2022 propelled our strategy for improving service levels for our customers and driving greater efficiency throughout the Company. Our focus on innovation will continue in 2023 with key initiatives including the introduction of a new loan origination system, new features for our digital banking platform, and enhancements to services provided to depositors and treasury management clients. “Alongside the record performance of 2022, the Board of Directors rewarded our shareholders in September with a 9.5% increase in the quarterly cash dividend and extended the share repurchase program through 2023. The fundamentals, which powered our results in 2022, remain in place as we enter 2023, and we are confident in First Farmers’ consistent, sustainable long-term performance for our shareholders,” concluded Williams. Key highlights of First Farmers’ results for 2022 include: Net income rose 15.6% to a record $18.1 million in 2022 compared with $15.6 million for 2021; Net income per common share increased 16.7% to a record $4.19 in 2022 from $3.59 in 2021; Adjusted net income, which excludes special items, rose 22.5% to $18.1 million in 2022, or $4.21 per common share, compared with $14.8 million, or $3.40 per common share, in 2021 (see “Non-GAAP Financial Measures” section); Net interest income after provision increased 6.6% to a record $48.0 million in 2022 from $45.3 million in 2021; Net loans grew 9.1% to $956.8 million from 2021; and Total non-interest expense fell 6.5% to $40.2 million from 2021 driving improved operating efficiency to 60.40% for the fourth quarter of 2022. Robert E. Krimmel, Chief Financial Officer, added, "Our record financial performance in 2022 was highlighted by continued progress in key metrics. We reported growth in our net interest margin, lower non-interest expenses, higher return on assets and an improved efficiency ratio. “Adjusted non-interest income declined because of mortgage banking activities as higher interest rates reduced demand for home purchases and mortgage refinancing. This was partially offset by higher trust services fee income driven by growth in new client accounts offsetting the impact of weak financial markets during the year. We are very pleased with our trust business which continues to provide a steady level of fee income, as customers choose a more customized service for wealth management. “We made progress during 2022 in reducing non-interest expense by 6.5% through disciplined cost controls. We also began to experience increased operating efficiencies resulting from our expanded digital and technology platforms, with continued progress expected in this area as we roll out the new digital loan platform in 2023. “First Farmers’ growth in revenues combined with lower non-interest expenses contributed to our improved fourth quarter efficiency ratio of 60.4%, compared with 66.6% for the same period last year. We are very pleased that these improvements were made through core earnings as well as our programs to streamline operations as we enhance customer service and access to our suite of banking products,” concluded Krimmel. Fourth Quarter 2022 Results of Operations Net income was $5.0 million in the fourth quarter of 2022, up $2.0 million, or 63.7%, from the year-earlier quarter. The improvement in earnings was due to one-time executive retirement benefit expenses of $1.5 million ($1.1 million net of tax) recognized during the fourth quarter of 2021, and growth in net-interest income of $953,000 for the fourth quarter of 2022 coupled with a decline in salaries and employee benefits of $676,000 in the quarter. Adjusted net income, which excludes special items, rose 24.8% to $5.0 million, up $1.0 million from the year-earlier quarter. Net interest income improved by $953,000 propelled by net interest margin growth of seven basis points supported by net loan growth of $79 million. Non-interest income decreased $368,000 and was driven primarily by a reduction in mortgage banking activities of $271,000 impacted by the Federal Reserve’s increase in interest rates, which rose 425 basis points during 2022. Non-interest expense was down by $2.0 million from the year-earlier quarter due primarily to lower salaries and employee benefits expense, including the $1.5 million one-time executive retirement benefit expenses from 2021. Net income for the fourth quarter of 2022 was up from the sequential third quarter by $224,000, or 4.7%. The improvement in earnings was due primarily to growth in net interest income of $235,000 coupled with a decline in non-interest expense of $156,000, improving the operating efficiency ratio to 60.40%. For the fourth quarter of 2022, the balance of securities available-for-sale declined $15 million from the sequential third quarter. Securities available-for-sale amortized cost decreased $26 million and was used to fund loan growth for the quarter. The unrealized loss adjustment for securities available-for-sale decreased by $9 million for the quarter as bond prices improved due to lower long-term market interest rates compared to the sequential quarter. For the fourth quarter of 2022, outstanding loan balances increased $15 million, or 1.6%, from the previous quarter to $957 million and increased $79 million, or 9.1%, from the year-earlier quarter. Loan growth for the quarter benefited from increases in commercial real estate of $9 million and commercial and industrial of $5 million. Total deposits declined by $34 million, or 1.9%, from the sequential third quarter to $1.799 billion, but rose by $7 million, or 0.4%, from the year-earlier quarter. The decline in total deposits during the fourth quarter of 2022 was driven largely by the continued migration of certain client balances to the Company’s Trust department, as customers selected an enhanced level of bank services. Total shareholders’ equity increased $12 million due to improvement in the unrealized loss adjustment to the available-for-sale securities portfolio that totaled $9 million, net of tax, for the fourth quarter 2022. Tangible book value per share improved 16.3% for the fourth quarter of 2022 compared to the sequential quarter but declined 40.8% compared to the year-earlier quarter. The improvement in the value of the available-for-sale securities portfolio was driven by a decline in long-term market interest rates. Total unrealized losses related to the available-for-sale investment portfolio decreased to $108 million compared to unrealized losses of $120 million for the third quarter of 2022, but rose from unrealized losses of $7 million from the year-earlier quarter. The fair market value of the Company’s available-for-sale securities portfolio is adjusted each quarter based on changes in interest rates. Twelve Months Results Net income rose 15.6% to a record $18.1 million, or $4.19 per share, for 2022 compared with $15.6 million, or $3.59 per share, for 2021. The increase in net income benefited from a 6.6% increase in net interest income after provision for loan losses to $48.3 million and a 6.5% decrease in non-interest expense to $40.2 million but was offset in part by a 15.7% decline in non-interest income that included a $1.8 million gain on the sale of Visa stock in 2021. Net interest income after provision for loan losses improved by $3.0 million propelled by growth in average interest earning assets of $146 million compared to 2021. During the year, asset quality improved leading to an increase in provision credit for loan and leases of $170,000. Non-interest income declined by 15.7% due to the $1.8 million sale of Visa stock last year along with a reduction in mortgage banking activities of $828,000 that was offset partially by growth in service fees on deposit accounts and trust services fee income. Service fees on deposit accounts were up 7.9% to $7.7 million and trust services fee income were up 2.8% to $4.2 million with new client accounts offsetting the decline in administered assets driven by weakness in the stock and bond markets compared to 2021. Non-interest expenses declined 6.5% in 2022 to $40.2 million compared with 2021. The decreases were due to lower salaries and employee benefits, including one-time executive retirement benefit expenses of $1.5 million recorded in 2021. Asset Quality Asset quality improved in 2022 as measured by a decline in nonperforming assets to $705,000. Nonperforming assets totaled 0.04% of total assets, down from $711,00 or 0.04% from the previous quarter and down from $1.2 million, or 0.06% of total assets, from the year-earlier quarter. Net recoveries to average loans were 0.01% for the fourth quarter of 2022 compared with net recoveries of 0.01% for the previous quarter and net recoveries of 0.00% for the year-earlier quarter. No provision for loan and lease losses was made during the fourth quarter of 2022. The allowance for loan and lease losses represented 0.97% of total loans outstanding for the fourth quarter of 2022 compared with 0.99% for the previous quarter and 1.08% for the year-earlier quarter. Capital Management Initiatives During the fourth quarter of 2022, First Farmers repurchased 21,033 shares of the Company’s common stock in the open market and privately negotiated transactions. The average price of the repurchased shares in the fourth quarter of 2022 was $30.49 per share. Stock repurchases increased 55% compared to the third quarter of 2022 and were up 107% compared to the year earlier quarter. First Farmers’ Board of Directors reauthorized the stock repurchase program of up to 200,000 shares through December 2023. 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, 2022, First Farmers reported total assets of approximately $1.9 billion, total shareholders’ equity of approximately $96.7 million, and administered trust assets of $5.7 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, gain on sale of Visa stock, gain on sale of premises and equipment, one-time executive retirement benefits, one-time digital conversion fees, 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, 2022 2021 2022 2022 2021 Total non-interest income $ 3,495 $ 3,863 $ 3,526 $ 14,147 $ 16,783 Loss (gain) on sale of securities 5 (254 ) - 5 (621 ) Gain on equity securities - - - (25 ) (239 ) Gain on sale of Visa stock - - - - (1,811 ) Gain on sale of premises and equipment - - - (91 ) - Adjusted non-interest income $ 3,500 $ 3,609 $ 3,526 $ 14,036 $ 14,112 Total non-interest expense $ 9,912 $ 11,953 $ 10,076 $ 40,168 $ 42,966 One-time executive retirement benefits - (1,553 ) - (1,553 ) One-time digital conversion fees - - - (207 ) - Adjusted non-interest expense $ 9,912 $ 10,400 $ 10,076 $ 39,961 $ 41,413 Net income as reported $ 5,027 $ 3,071 $ 4,803 $ 18,050 $ 15,619 Total adjustments, net of tax1 4 960 - 71 (826 ) Adjusted net income $ 5,031 $ 4,031 $ 4,803 $ 18,121 $ 14,793 Basic earnings per share $ 1.17 $ 0.71 $ 1.12 $ 4.19 $ 3.59 Total adjustments, net of tax1 - 0.22 - 0.02 (0.19 ) Adjusted basic earnings per share $ 1.17 $ 0.93 $ 1.12 $ 4.21 $ 3.40 (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) 2022 2021(1) ASSETS Cash and due from banks $ 27,193 $ 19,791 Interest-bearing deposits 1,754 75,065 Federal funds sold 57 8,374 Total cash and cash equivalents 29,004 103,230 Securities: Available-for-sale 810,591 876,987 Held-to-maturity (fair market value $14,162 and $15,932 as of the periods presented) 15,087 15,128 Equity securities 2,505 2,481 Loans held-for-sale - 2,197 Loans, net of deferred fees 966,167 886,891 Allowance for loan and lease losses (9,382 ) (9,605 ) Net loans 956,785 877,286 Bank premises and equipment, net 32,140 32,627 Bank-owned life insurance 35,829 35,354 Goodwill 9,018 9,018 Deferred tax asset 30,511 4,085 Other assets 20,819 14,345 TOTAL ASSETS $ 1,942,289 $ 1,972,738 LIABILITIES Deposits: Noninterest-bearing $ 534,474 $ 522,725 Interest-bearing 1,264,154 1,268,481 Total deposits 1,798,628 1,791,206 Accounts payable and accrued liabilities 21,996 22,901 FHLB borrowings 25,000 - TOTAL LIABILITIES 1,845,624 1,814,107 SHAREHOLDERS’ Common stock - $10 par value per share, 8,000,000 shares EQUITY authorized; 4,275,328 and 4,317,306 shares issued and outstanding as of the periods presented 42,753 43,173 Retained earnings 132,905 119,507 Accumulated other comprehensive loss (79,088 ) (4,144 ) Total shareholders’ equity attributable to First Farmers and Merchants Corporation 96,570 158,536 Noncontrolling interest - preferred stock of subsidiary 95 95 TOTAL SHAREHOLDERS’ EQUITY 96,665 158,631 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,942,289 $ 1,972,738 (1) Derived from audited financial statements as of December 31, 2021. 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) 2022 2021 2022 2021 INTEREST AND Interest and fees on loans $ 11,250 $ 9,600 $ 38,962 $ 38,491 DIVIDEND Income on investment securities INCOME Taxable interest 2,466 2,016 10,004 6,789 Exempt from federal income tax 500 521 2,025 2,169 Interest from federal funds sold and other 40 14 232 88 Total interest income 14,256 12,151 51,223 47,537 INTEREST Interest on deposits 1,142 400 2,829 2,380 EXPENSE Interest on other borrowings 410 - 410 1 Total interest expense 1,552 400 3,239 2,381 Net interest income 12,704 11,751 47,984 45,156 Provision credit for loan and lease losses - - (320 ) (150 ) Net interest income after provision 12,704 11,751 48,304 45,306 NON-INTEREST Mortgage banking activities 56 327 614 1,442 INCOME Trust services fee income 1,054 1,029 4,160 4,045 Service fees on deposit accounts 1,987 1,840 7,655 7,093 Investment services fee income 73 85 406 341 Earnings on bank-owned life insurance 119 165 475 554 (Loss) gain on sale of investments (5 ) 254 (5 ) 621 Gain on equity securities - - 25 - Gain on sale of premises and equipment - - 91 - Gain on sale of Visa stock - - - 1,811 Other non-interest income 211 163 726 876 Total non-interest income 3,495 3,863 14,147 16,783 NON-INTEREST Salaries and employee benefits 5,696 7,925 23,115 26,499 EXPENSE Net occupancy expense 486 623 2,202 2,699 Depreciation expense 421 526 1,786 2,033 Data processing expense 525 786 2,528 3,034 Software support and other computer expense 1,029 667 3,821 2,875 Legal and professional fees 284 220 1,007 794 Audits and exams expense 211 116 730 637 Advertising and promotions 277 244 1,074 1,004 FDIC insurance premium expense 149 171 677 636 Other non-interest expense 834 675 3,228 2,755 Total non-interest expense 9,912 11,953 40,168 42,966 Income before provision for income taxes 6,287 3,661 22,283 19,123 Provision for income taxes 1,252 582 4,217 3,488 Net income 5,035 3,079 18,066 15,635 Noncontrolling interest - dividends on preferred stock subsidiary 8 8 16 16 Net income available to common shareholders $ 5,027 $ 3,071 $ 18,050 $ 15,619 Weighted average shares outstanding 4,290,886 4,326,090 4,305,557 4,345,665 Earnings per share $ 1.17 $ 0.71 $ 4.19 $ 3.59 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, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Results of Operations: Interest income $ 14,256 $ 13,279 $ 12,198 $ 11,490 $ 12,151 Interest expense 1,552 810 505 372 400 Net interest income 12,704 12,469 11,693 11,118 11,751 Provision credit for loan and lease losses - - - (320 ) - Non-interest income 3,495 3,526 3,660 3,466 3,863 Non-interest expense and non-controlling interest – preferred stock of subsidiary 9,920 10,076 9,763 10,425 11,961 Income before income taxes 6,279 5,919 5,590 4,479 3,653 Income taxes 1,252 1,116 1,052 797 582 Net income for common shareholders $ 5,027 $ 4,803 $ 4,538 $ 3,682 $ 3,071 Per Share Data: Basic earnings per share $ 1.17 $ 1.12 $ 1.05 $ 0.85 $ 0.71 Weighted average shares outstanding per quarter 4,290,886 4,301,056 4,313,455 4,317,169 4,326,090 Financial Condition Data and Ratios: Total securities $ 828,183 $ 842,896 $ 902,742 $ 944,543 $ 894,596 Available-for-sale securities, fair market value $ 810,591 $ 825,293 $ 885,129 $ 926,944 $ 876,987 Available-for-sale securities, amortized cost $ 918,936 $ 944,987 $ 967,235 $ 983,958 $ 883,853 Loans, net of deferred fees $ 966,167 $ 951,279 $ 941,357 $ 891,108 $ 886,891 Allowance for loan and lease losses $ (9,382 ) $ (9,383 ) $ (9,386 ) $ (9,388 ) $ (9,605 ) Total assets $ 1,942,289 $ 1,941,415 $ 2,012,409 $ 2,144,206 $ 1,972,738 Total deposits $ 1,798,628 $ 1,833,041 $ 1,880,612 $ 1,998,175 $ 1,791,206 Net interest income, on a fully taxable-equivalent basis $ 12,943 $ 12,726 $ 11,956 $ 11,379 $ 12,013 Net interest margin 2.69 % 2.61 % 2.46 % 2.43 % 2.62 % Efficiency 60.40 % 62.15 % 62.94 % 68.83 % 66.57 % Asset Quality Data and Ratios: Total nonperforming assets $ 705 $ 711 $ 1,635 $ 1,002 $ 1,217 Nonperforming assets to total assets 0.04 % 0.04 % 0.08 % 0.05 % 0.06 % Allowance for loan and lease losses to total loans 0.97 % 0.99 % 1.00 % 1.05 % 1.08 % Net recoveries to average loans (annualized) (0.01 %) (0.01 %) (0.02 %) (0.05 )% 0.00 % View source version on businesswire.com: https://www.businesswire.com/news/home/20230123005156/en/