First Farmers and Merchants Corporation (Ticker: FFMH), the holding company for First Farmers and Merchants Bank, announced unaudited financial results for the quarter ending June 30, 2017.
Key highlights of First Farmers’ results for the second quarter of 2017 include:
- Net income of $2.8 million or $0.63 per common share, up 19% from $2.4 million or $0.52 per common share for the previous quarter and up 11% from $2.5 million or $0.55 per common share for the year-earlier quarter;
- Net income, excluding special items for each quarter, of $2.8 million or $0.63 per common share, up 19% from $2.4 million or $0.52 per common share for the previous quarter and up 17% from $2.4 million or $0.52 per common share for the year-earlier quarter;
- Loan growth of $17 million or 2% from the previous quarter and $74 million or 9% compared with the year-earlier quarter;
- Deposit growth of $39 million or 3% compared with the year-earlier quarter; and
- A decline in nonperforming assets of $450,000 compared with the previous quarter and a decrease of $1.3 million compared with the year-earlier quarter.
Commenting on the results, T. Randy Stevens, Chairman and Chief Executive Officer of First Farmers, said “We are pleased to end the second quarter of 2017 with strong financial performance driven by broad-based contributions across all our lines of business. We also focused our efforts during the quarter on delivering improvement in non-interest income coupled with a favorable decline in non-interest expense.” Stevens continued, “During the second quarter we experienced solid loan growth that was accompanied by improvement in our asset quality, and our investments in new offices and team members continue to pay dividends.”
Second Quarter 2017 Results of Operations
The improvement in second quarter of 2017 earnings of $456,000 compared with the previous quarter was driven by growth in interest earnings assets and an increase in non-interest income coupled with a decrease in non-interest expense. Both loan growth of $17 million and recent interest rate increases resulted in the $260,000 increase in reported net interest income and improvement in margins for the second quarter of 2017 compared to the previous quarter. The positive increase in non-interest income was driven by an increase in service fees on deposit accounts of $173,000 and an increase in mortgage banking activities of $70,000. The decrease in non-interest expense primarily resulted from a decrease of approximately $356,000 in employee health insurance expense. The $290,000 increase in reported quarterly earnings for the second quarter of 2017 compared with the year-earlier quarter resulted from the increase in net interest income after provision expense of $1.1 million, which was offset by an increase in non-interest expense of $740,000.
For the second quarter of 2017, First Farmers achieved solid loan growth with an increase of $17 million or 2% from the previous quarter and $74 million or 9% from the year-earlier quarter. Interest income is expected to improve as a result of the loan growth achieved during the second quarter of 2017. Total deposits stood at $1.185 billion at the end of the second quarter of 2017, down $29 million from the previous quarter but up $39 million or 3% from the year-earlier quarter.
Asset Quality
Total nonperforming assets decreased to $2.9 million, or 0.21% of total assets, compared to $3.3 million, or 0.24% of total assets, for the previous quarter and declined from $4.2 million, or 0.32% of total assets, when compared to the year-earlier quarter. Net charge-offs to average loans were 0.02% for the second quarter of 2017 compared to net recoveries of 0.01% for the previous quarter and net charge-offs of 0.01% for the year-earlier quarter. As a result of the decline in non-performing assets, no provision for loan and lease losses expense was recorded during the second quarter of 2017. The allowance for loan and lease losses represented 1.08% of total loans outstanding for the second quarter of 2017 compared to 1.11% for the previous quarter and 1.16% for the year-earlier quarter.
Capital Management Initiatives
First Farmers repurchased 10,000 shares of common stock, during the second quarter, at an average price of $38.20 per share under its stock repurchase program. Authorization to repurchase approximately 177,000 shares remains under the current program, which is set to expire in December 2017, 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 21 offices in eight Middle Tennessee counties. As of June 30, 2017, First Farmers reported total assets of approximately $1.4 billion, total shareholders’ equity of approximately $121.9 million, and administered trust assets of $4.6 billion. For more information about First Farmers, visit us on the Web at www.myfirstfarmers.com under “Investor Relations.”
