<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended June 30, 1995
Commission File Number 0-9424
FIRST M&F CORPORATION
---------------------
(Exact name of registrant as specified in its charter)
Mississippi 64-0636653
----------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification no.)
221 East Washington Street, Kosciusko, Mississippi 39090
-------------------------------------------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number: (601) 289-5121
No change
---------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Class Outstanding at July 31, 1995
----- ----------------------------
Common stock ($5.00 par value) 1,470,450 shares
<PAGE> 2
INDEX
FIRST M&F CORPORATION AND SUBSIDIARY
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
<S> <C>
Item 1. Financial Statements (unaudited)
Condensed consolidated statements of condition
June 30, 1995 and December 31, 1994 3
Condensed consolidated statements of income - Three months ended
June 30, 1995 and 1994, six months ended June 30, 1995 and 1994 4
Condensed consolidated statement of stockholder's equity - Six months
ended June 30, 1995 and 1994 5
Condensed consolidated statements of cash flows - Six months ended
June 30, 1995 and 1994 6
Item 2. Managements' Discussion and Analysis of Financial Condition
and Results of Operations 7-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11-12
SIGNATURE 13
</TABLE>
2
<PAGE> 3
================================================================================
PART I. FINANCIAL INFORMATION
FIRST M&F CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
================================================================================
<TABLE>
<CAPTION>
ASSETS June 30, December 31,
1995 1994
==============================
<S> <C> <C>
Cash and due from banks $22,777,459 $15,077,808
Interest bearing bank balances 6,561,291 406,234
Investment securities, market value of
$68,102,965 And $63,857,000 68,664,110 67,369,016
Securities available for sale 66,469,389 65,643,738
Federal funds sold 4,250,000 0
Loans 280,575,625 266,045,862
Unearned discount (13,409,106) (11,664,079)
Reserve for possible loan losses (3,614,702) (3,200,000)
------------------------------
Net loans 263,551,817 251,181,783
Bank premises and equipment 6,845,782 6,569,984
Accrued interest receivable 3,839,193 3,602,636
Other assets 5,071,084 6,061,681
------------------------------
$450,030,125 $415,912,880
=======================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non interest bearing $53,689,275 $48,301,348
Interest bearing 307,049,699 284,399,940
------------------------------
Total deposits 360,738,974 332,701,288
------------------------------
Securities sold under agreements to
repurchase and other short-term borrowings 44,963,742 44,822,025
Long term debt 3,512,302 5,231,695
Accrued interest payable 1,869,098 1,427,416
Other liabilities 1,667,850 1,215,487
------------------------------
Total liabilities 412,751,966 385,397,911
=======================================================================================
Stockholders' equity
Common stock of $5.00 par value. 5,000,000 shares
authorized, 1,472,328 issued (1995); 1,337,328 (1994) 7,361,640 6,686,640
Additional paid-in capital 11,328,316 8,493,316
Retained earnings 18,884,507 16,862,922
Market valuation for securities available for sale,
net of income taxes (247,476) (1,479,081)
------------------------------
37,326,987 30,563,797
Less treasury shares, 1,878 shares, at cost
for 1995 and 1994 (48,828) (48,828)
------------------------------
Net stockholders' equity 37,278,159 30,514,969
=======================================================================================
$450,030,125 $415,912,880
=======================================================================================
</TABLE>
Note: The balance sheet at December 31,1994 has been derived from the audited
financial statements at that date.
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
================================================================================
PART I. FINANCIAL INFORMATION
FIRST M&F CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
==================================================================
June 30, 1995 June 30, 1994 June 30, 1995 June 30, 1994
==================================================================
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $6,435,080 $4,679,920 $12,481,683 $9,071,950
Interest on interest bearing bank balances 47,859 25,565 79,614 45,494
Taxable income on investment securities 1,509,558 1,504,589 2,896,593 2,975,752
Tax-exempt income on investment securities 444,837 435,116 902,506 818,407
Interest on Federal funds sold 158,159 60,993 275,242 111,681
------------------------------------------------------------------
Total interest income 8,595,493 6,706,183 16,635,638 13,023,284
------------------------------------------------------------------
Interest expense:
Interest on deposits 3,331,204 2,399,330 6,307,622 4,544,020
Interest on securities sold under agreements
to repurchase and other short-term borrowings 632,759 288,425 1,276,442 597,141
Interest on long term debt 52,700 48,132 109,894 96,433
------------------------------------------------------------------
Total interest expense 4,016,663 2,735,887 7,693,958 5,237,594
------------------------------------------------------------------
Net interest income 4,578,830 3,970,296 8,941,680 7,785,690
Provision for possible loan losses 279,718 240,685 604,016 525,988
------------------------------------------------------------------
Net interest income after
provision for possible loan losses 4,299,112 3,729,611 8,337,664 7,259,702
Other operating income:
Service charges on deposits 716,375 651,471 1,431,621 1,223,582
Credit insurance income 168,698 143,756 290,962 244,205
Gains on sales of investment securities 0 0 3,000 905
Gains on sales of available for sale investments 0 1,962 0 1,962
Other income 178,371 165,507 509,324 252,902
------------------------------------------------------------------
Total other operating income 1,063,444 962,696 2,234,907 1,723,556
------------------------------------------------------------------
Other operating expenses:
Salaries and employee benefits 1,620,821 1,444,518 3,131,458 2,813,743
Net occupancy expense 189,092 200,381 391,244 420,852
Equipment and data processing expenses 391,441 394,538 842,948 831,496
Regulatory insurance and fees 208,283 190,656 412,901 381,215
Other expenses 1,191,613 1,094,874 2,149,329 1,905,210
------------------------------------------------------------------
Total other operating expenses 3,601,250 3,324,967 6,927,880 6,352,516
------------------------------------------------------------------
Income before income taxes 1,761,306 1,367,340 3,644,691 2,630,742
Income taxes 364,929 330,884 892,180 632,003
======================================================================================================================
Net income $1,396,377 $1,036,456 $2,752,511 $1,998,739
======================================================================================================================
Earnings per share $0.99 $0.78 $2.00 $1.50
======================================================================================================================
</TABLE>
Note: The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
FIRST M&F CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL MARKET VALUE
COMMON PAID-IN RETAINED TREASURY ADJUSTMENTS
STOCK CAPITAL EARNINGS STOCK ON SECURITIES TOTAL
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
January 1, 1994 6,686,640 8,485,804 13,955,433 (41,316) 0 29,086,561
Net income 1,998,739 1,998,739
Cash dividends paid,
$0.25 per share (667,725) (667,725)
Purchase 2,804 shares of
treasury stock (71,502) (71,502)
Sell 2,804 shares of
treasury stock 6,573 64,929 71,502
Market valuation of
available for sale securities (662,466) (662,466)
--------- ---------- ---------- ------- ---------- ----------
June 30, 1994 6,686,640 8,492,377 15,286,447 (47,889) (662,466) 29,755,109
============================================================================================================================
January 1, 1995 6,686,640 8,493,316 16,862,922 (48,828) (1,479,081) 30,514,969
Net income 2,752,511 2,752,511
Sale of 135,000 shares of
Common Stock 675,000 2,835,000 3,510,000
Cash dividends paid,
$0.25 per share (730,926) (730,926)
Market valuation of
available for sale securities 1,231,605 1,231,605
--------- ---------- ---------- ------- ---------- ----------
June 30, 1995 7,361,640 11,328,316 18,884,507 (48,828) (247,476) 37,278,159
============================================================================================================================
</TABLE>
Note: The accompanying notes are an integral part of these financial
statements.
5
<PAGE> 6
================================================================================
PART I. FINANCIAL INFORMATION
FIRST M&F CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Six Months Ended
==============================
Cash Flows From Operating Activities: 1995 1994
==============================
<S> <C> <C>
Net income $2,752,511 $1,998,739
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 525,457 526,847
Provisions for possible loan losses 604,000 525,988
Increase in interest receivable (236,557) (494,791)
Net increase (decrease) in accounts payable 441,682 187,200
Other, net 1,442,960 20,699
------------------------------
Net cash provided by operating activities 5,530,053 2,764,682
------------------------------
Cash flows from investing activities:
Net decrease in interest bearing bank balances (6,155,057) 20,887
Purchases of investment securities (2,735,247) (21,182,210)
Sales and maturities of investment securities 1,440,153 10,736,864
Purchases of securities available for sale (7,430,248) (5,039,565)
Sales and maturities of securities available for sale 5,836,202 10,303,668
Net (increase) decrease in Federal Funds sold (4,250,000) (9,900,000)
Net increase in loans (12,974,034) (18,452,390)
Net increase in bank premises and equipment (801,255) (763,981)
Net cash received - Acquisition 4,740,793
------------------------------
Net cash used in investing activities (27,069,486) (29,535,934)
------------------------------
Cash flows from financing activities:
Net increase deposits 28,037,686 24,718,780
Net increase (decrease) in securities sold under agree-
ments to repurchase and other short-term borrowings 139,598 3,246,316
Net increase (decrease) in long term debt (1,717,274) (95,950)
Proceeds of Sale of Common Stock 3,510,000
Cash dividends (730,926) (666,725)
Treasury stock sales, net 0 0
------------------------------
Net cash provided by financing activities 29,239,084 27,202,421
------------------------------
Net increase in cash and due from banks 7,699,651 430,169
Cash and due from banks at January 1 15,077,808 15,203,929
=======================================================================================
Cash and due from banks at March 31 $22,777,459 $15,634,098
=======================================================================================
</TABLE>
Note: The accompanying notes are an integral part of these financial
statements.
6
<PAGE> 7
FIRST M&F CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1995
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The condensed consolidated financial
statements of First M&F Corporation include the financial statements of
Merchants & Farmers Bank, a wholly owned subsidiary, and its wholly owned
subsidiaries, First M&F Insurance Co., State Financial Services, Family Budget
Service, M&F Financial Service and M&F Bank Securities Corporation. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
December 31, 1994.
NOTE 2: COMMON STOCK
On February 10, 1995, the Company issued a prospectus to shareholders of record
as of January 31, 1995, whereby, on a prorata basis, 135,000 shares of the
Company's common stock ($5.00 par value) were offered at a price of $26 per
share. The offering was terminated on May 10, 1995. Proceeds to the company
was $3,510,000 with all shares acquired. Approximately $30,000 was expended
by the Company in connection with the legal and accounting fees associated with
the offering.
As a result of these additional capital, stockholders' equity increased to
approximately 8.10% of total assets, compared to approximately 7.35%
previously.
7
<PAGE> 8
FIRST M&F CORPORATION AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net income for the three months ended June 30, 1995 was $1,356,134, a 34.7%
increase over the same period in 1994. Net income for the six months ended June
30, 2995 was $2,752,511, a 37.7% increase over the comparable period for 1994.
The following is a summary of the net change in several broad categories of
income and expense.
<TABLE>
<CAPTION>
Six Months Ended June 30
------------------------
1995 1994 $ Change % Change
---- ---- -------- --------
<S> <C> <C> <C> <C>
Net interest income $ 8,941,680 7,785,690 1,155,990 14.85%
Provision for loan loss 604,016 525,988 78,028 14.83%
Other operating income 2,234,907 1,723,556 511,351 29.68%
Other operating expense 6,927,880 6,352,516 575,365 9.06%
Net income before tax 3,644,691 2,630,742 1,013,949 38.55%
</TABLE>
Net interest income continues to reflect positive loan growth and increased
levels of investment income in a static short-term interest rate scenario.
Interest expense has not increased proportionally with interest income
primarily due to the short duration of the deposits. In late 1994, the Company
began to protect itself from the negative impact of possible rising interest
rates by promoting longer term deposit accounts, and shortening the duration of
investment securities. The provision for loan losses, some 14.8% higher than
the same period of 1994 is considered adequate to allow the allowance for
doubtful accounts to grow to a level sufficient to provide for the loan growth
occurring in 1994-1995.
Other operating income increased approximately 30.0% in 1995, primarily as a
result of a one-time recovery on a real estate loss from a prior year which
occurred in the first quarter. Service charges on deposit accounts increased
$143,000 during the first quarter over 1994 and $55,000 in the second quarter
versus prior year periods due to increased volumes. Insurance commission income
increased $22,000 in the first quarter and $25,000 in the second quarter as
compared to prior periods of 1994 due to the growth of premiums written.
Other operating expenses increased approximately 9% in 1995 as compared to 1994
with no major factor indicating change. Although expenses have stabilized,
management continues to emphasize the reduction of non-interest expense of the
company.
8
<PAGE> 9
FIRST M&F CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
FINANCIAL CONDITION
At June 30, 1995, loans, net of unearned discount. were $267,166,519, a 5.0%
increase over December 31, 1994, and a 21.7% increase over June 30, 1994.
Investment securities held to maturity and securities available for sale remain
constant as compared to December 31, 1994, at 1994 levels.
The following table shows the balances of earning assets and interest bearing
liabilities for June 30, 1995 and 1994, and for December 31, 1994 (in
thousands).
<TABLE>
<CAPTION>
06/30/95 12/31/94 06/30/94
----------- ----------- -----------
<S> <C> <C> <C>
Interest bearing bank balances $ 6,561 $ 406 $ 5,008
Investment securities 137,133 135,253 134,839
Federal funds sold 4,250 0 21,800
Net loans 263,552 251,181 216,548
----------- ----------- -----------
Total earning assets $ 411,496 $ 386,840 $ 378,195
----------- ----------- -----------
Interest bearing deposits $ 307,050 $ 284,399 $ 287,009
Short term borrowings 44,964 44,822 41,050
Long term debt 3,512 5,231 3,313
----------- ----------- -----------
Total interest bearing liabilities $ 355,526 $ 334,452 $ 331,372
----------- ----------- -----------
Net earning assets $ 55,970 $ 52,388 $ 46,823
----------- ----------- -----------
Earning assets/interest bearing
liabilities 115.7% 115.7% 114.1%
Net loans/earning assets 64.0% 64.9% 57.3%
Net earning assets/total assets 13.6% 9.3% 11.4%
</TABLE>
9
<PAGE> 10
Item 2. FIRST M&F CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
CAPITAL ADEQUACY
As discussed in Note 2 to the condensed consolidated financial statements, as a
result of the stock offering completed May 10, 1995, capital adequacy is in
excess of 8% (leverage ratio), which places the Company's capital at or over
peer bank levels. The Company, through normal banking relationship's, has
superior relationships with its correspondents and also is a member of the
Federal Home Loan Bank of Dallas. These relationships provide additional
funding levels should the need arise.
The Company has complied with all risk-based capital ratios as required by its
various regulators.
10
<PAGE> 11
FIRST M&F CORPORATION AND SUBSIDIARY
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No new legal proceedings occurred in the Second Quarter.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 11 - Statement Re computation of per share earnings
11
<PAGE> 12
FIRST M&F CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST M&F CORPORATION
(Registrant)
DATE: AUGUST 9, 1995 /s/ Hugh S. Potts, Jr.
--------------------------------------
Hugh S. Potts, Jr.
Chairman and Chief Executive Officer
DATE: AUGUST 9, 1995 /s/ Scott M. Wiggers
--------------------------------------
Scott M. Wiggers
President and Chief Accounting Officer
12
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
11 Computation of Income per Share
27 Financial Data Schedule
</TABLE>
<PAGE> 1
FIRST M&F CORPORATION AND SUBSIDIARY
EXHIBIT 11. COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
-------------------------- --------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Income $ 1,396,377 $ 1,036,450 $ 2,752,511 $ 1,998,739
Weighted Average Shares
Outstanding 1,411,750 1,335,450 1,374,230 1,335,450
Earnings Per Share $ 0.99 $ 0.78 $ 2.00 $ 1.50
----------- ----------- ----------- -----------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
UNAUDITED FINANCIAL STATEMENTS AT JUNE 30, 1995 FOR SUBMISSION IN FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 22,777
<INT-BEARING-DEPOSITS> 6,561
<FED-FUNDS-SOLD> 4,250
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 68,469
<INVESTMENTS-CARRYING> 68,664
<INVESTMENTS-MARKET> 68,103
<LOANS> 267,167
<ALLOWANCE> 3,615
<TOTAL-ASSETS> 450,030
<DEPOSITS> 360,739
<SHORT-TERM> 935
<LIABILITIES-OTHER> 3,537
<LONG-TERM> 3,512
<COMMON> 7,362
0
0
<OTHER-SE> 29,916
<TOTAL-LIABILITIES-AND-EQUITY> 450,030
<INTEREST-LOAN> 12,481
<INTEREST-INVEST> 3,799
<INTEREST-OTHER> 356
<INTEREST-TOTAL> 16,636
<INTEREST-DEPOSIT> 6,308
<INTEREST-EXPENSE> 7,694
<INTEREST-INCOME-NET> 8,942
<LOAN-LOSSES> 604
<SECURITIES-GAINS> 3
<EXPENSE-OTHER> 6,928
<INCOME-PRETAX> 3,645
<INCOME-PRE-EXTRAORDINARY> 3,645
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,753
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 2.00
<YIELD-ACTUAL> 7.34
<LOANS-NON> 230
<LOANS-PAST> 291
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,200
<CHARGE-OFFS> 333
<RECOVERIES> 144
<ALLOWANCE-CLOSE> 3,615
<ALLOWANCE-DOMESTIC> 3,615
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3,615
</TABLE>
