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First M&F Revises Earnings, Writes Off Goodwill

KOSCIUSKO, Miss., Feb. 3 /PRNewswire-FirstCall/ -- First M&F Corp. (Nasdaq: FMFC) today revised its previously announced preliminary loss for 2009 of $44.048 million attributable to common shareholders, which included $17.047 million in intangible write off, or a negative ($4.86) basic and diluted earnings per share, to a loss of $60.655 million, which includes $33.819 million in intangible write off, or a negative ($6.69) basic and diluted earnings per share.  The revision came after the completion of testing of goodwill for impairment which resulted in the write off of the remaining $16.772 million balance of goodwill.  The fourth quarter impairment comes after a first quarter write off of $17.047 million in goodwill and other intangibles due to impairment for a total write down in 2009 of $33.819 million.  For the year, the Company's operating loss, net of the $33.819 million in impairments, was $27.658 million or negative ($3.05) basic and diluted earnings per share. This loss is compared to earnings of $.522 million, or $0.06 basic and diluted earnings per share for 2008.  The goodwill impairment is a non-cash charge to earnings, reducing goodwill and stated equity but has no effect on regulatory capital.  The Company remains well-capitalized.

Earnings for the fourth quarter ended December 31, 2009 were revised from a loss of $10.881 million, or negative ($1.20) basic and diluted earnings per share, to a loss of $27.488 million, or negative ($3.03) basic and diluted earnings per share after the goodwill write off.  The operating loss for the quarter, excluding the $16.772 million in goodwill write off, was $10.882 million or negative ($1.20) basic and diluted earnings per share.  This loss is compared to a loss of $4.300 million, or negative ($.47) basic and diluted earnings per share for the fourth quarter of 2008.  The fourth quarter loss was largely due to real estate loan impairments and write downs of other real estate.

The fourth quarter, 2009 fall in First M&F's stock price, the continuing stress on the Company's real estate loan portfolio and general economic conditions were all contributing indicators that goodwill might be impaired. The completion of a December 31 test did find goodwill impaired.  Mr. Hugh S. Potts, Jr., Chairman and CEO, commented, "As was the case in the first quarter, the write off of goodwill does not affect cash flow, liquidity or regulatory capital.  Neither the strength of the Company nor future prospects is affected at all.  The impairment is a non-cash charge but is in keeping with conservative financial principles."  Mr. Potts further commented, "Our capital is strong.  Our deposits and depositors remain secure.  Our outlook for the future is one of enthusiasm and steadfastness."  Mr. Potts concluded by saying, "2009 results reflect much progress in getting beyond our real estate-related credit issues and clearing intangible assets from the balance sheet, both of which make future prospects more positive."

About First M&F Corporation

First M&F Corp., the parent of M&F Bank, is committed to proceed with its mission of making the mid-south better through the delivery of excellence in financial services to 33 communities in Mississippi, Alabama, Tennessee and Florida.

Caution Concerning Forward Looking Statements

This document includes certain "forwardlooking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive, market and regulatory factors. More detailed information about those factors is contained in First M&F Corporation's filings with the Securities and Exchange Commission.

    
    
    First M&F Corporation                               
    Condensed Consolidated Statements of Condition (Unaudited) 
    (In thousands, except share data)                   
    
                                  December 31  December 31 
                                      2009         2008 
                                      ----         ---- 
    Cash and due from banks         42,446       47,738 
    Interest bearing bank balances  84,810        6,556 
    Federal funds sold              70,000        9,350 
    Securities available for sale 
     (cost of $280,470 and 
     $223,882)                     284,550      227,145 
    Loans held for sale             10,266        7,698 
                                                        
    Loans                        1,058,340    1,176,595 
    Allowance for loan losses       24,014       24,918 
                                    ------       ------ 
         Net loans               1,034,326    1,151,677 
                                                        
    Bank premises and equipment     42,919       44,642 
    Accrued interest receivable      7,598        9,832 
    Other real estate               23,578       11,061 
    Goodwill                             -       32,572 
    Other intangible assets          5,439        7,127 
    Other assets                    57,036       41,467 
                                    ------       ------ 
         Total assets            1,662,968    1,596,865 
                                                        
    Non-interest bearing                                
     deposits                      228,579      178,689 
    Interest bearing deposits    1,159,684    1,082,698 
                                 ---------    --------- 
         Total deposits          1,388,263    1,261,387 
                                                        
    Federal funds and                                   
     repurchase agreements           8,642        9,728 
    Other borrowings               122,510      151,547 
    Junior subordinated debt        30,928       30,928 
    Accrued interest payable         2,933        3,537 
    Other liabilities                5,062        3,770 
                                     -----        ----- 
         Total liabilities       1,558,338    1,460,897 
                                                        
    Preferred stock, 30,000                             
     shares issued and                                  
     outstanding                    28,838            - 
    Common stock, 9,069,346 and 
     9,063,346 shares issued &                                
     outstanding                    45,347       45,317 
    Additional paid-in capital      31,926       30,447 
    Nonvested restricted                                
     stock awards                      734          780 
    Retained earnings               (2,595)      60,133 
    Accumulated other                                   
     comprehensive income              379         (727)
                                       ---         ---- 
         Total First M&F Corp                           
          equity                   104,629      135,950 
    Noncontrolling interests                            
     in subsidiaries                     1           18 
                                       ---          --- 
         Total equity              104,630      135,968 
                                   -------      ------- 
         Total liabilities &                            
          equity                 1,662,968    1,596,865 
    
    
    
    First M&F Corporation and Subsidiary                                    
    Condensed Consolidated Statements of Income (Unaudited)                 
    (In thousands, except share data)                                       
    
                                   Three Months Ended     Twelve Months Ended 
                                       December 31             December 31    
                                   2009          2008       2009       2008 
                                   ----          ----       ----       ---- 
    Interest and fees on loans   16,635        19,327     66,782     81,487 
    Interest on loans held                                                  
     for sale                        86            58        278        299 
    Taxable investments           2,213         2,130      9,531      9,023 
    Tax exempt investments          488           557      2,105      2,164 
    Federal funds sold               34            38         95        182 
    Interest bearing bank                                                   
     balances                        30            13         42        133 
                                     --            --         --        --- 
         Total interest income   19,486        22,123     78,833     93,288 
                                                                            
    Interest on deposits          5,452         7,119     23,701     32,255 
    Interest on fed funds and 
     repurchase agreements           14            68         97        327 
    Interest on other borrowings  1,329         1,682      5,449      6,717 
    Interest on subordinated debt   504           505      1,992      1,993 
                                    ---           ---      -----      ----- 
         Total interest expense   7,299         9,374     31,239     41,292 
                                                                            
                                 ------        ------     ------     ------ 
         Net interest income     12,187        12,749     47,594     51,996 
    Provision for possible                                                  
     loan losses                 15,761        10,684     49,601     19,734 
                                 ------        ------     ------     ------ 
         Net interest income   
          (expense) after                                                   
          loan loss              (3,574)        2,065     (2,007)    32,262 
                                                                            
    Service charges on deposits   2,838         2,927     10,976     11,692 
    Mortgage banking income         395           188      1,823      1,202 
    Agency commission income        856           934      3,881      4,125 
    Fiduciary and brokerage income  117           132        489        585 
    Other income                    622           650      3,174      3,521 
    Other-than-temporary                                                    
     impairment on securities, 
     net of $1,503 and $2,715     
     charged to other                                                       
     comprehensive income          (417)            -       (829)         - 
    Gains on AFS                                                            
     securities                      14             1        456          6 
                                    ---           ---        ---        --- 
         Total noninterest                                                  
          income                  4,425         4,832     19,970     21,131 
                                                                            
    Salaries and employee                                                   
     benefits                     6,748         6,761     28,314     28,954 
    Net occupancy expense         1,306         1,095      4,614      4,210 
    Equipment expenses              682           923      2,877      3,594 
    Software and processing 
     expenses                       440           597      1,898      2,072 
    FDIC insurance assessments      711           325      3,276        575 
    Foreclosed property expenses  4,493         1,106      7,283      1,913 
    Goodwill impairment          16,772             -     32,572          - 
    Intangible asset                                                        
     amortization and impairment    107           121      1,688        485 
    Other expenses                3,617         3,313     13,350     12,481 
                                  -----         -----     ------     ------ 
         Total noninterest                                                  
          expense                34,876        14,241     95,872     54,284 
                                                                            
                                -------        ------    -------       ---- 
         Net income (loss)                                                  
          before taxes          (34,025)       (7,344)   (77,909)      (891)
    Income tax expense                                                      
     (benefit)                   (6,715)       (2,991)   (18,104)    (1,436)
                                 ------        ------    -------     ------ 
         Net income (loss)      (27,310)       (4,353)   (59,805)       545 
    Net income (loss)                                                       
     attributable to                                                        
     noncontrolling interests         1             4         (6)        19 
                                    ---           ---        ---        --- 
         Net income (loss)                                                  
          attributable to                                                   
          First M&F Corp        (27,311)       (4,357)   (59,799)       526 
                                =======        ======    =======        === 
                                                                            
                                                                            
    Earnings Per Common                                                     
     Share Calculations:                                                    
         Net income (loss)                                                  
          attributable to                                                   
          First M&F Corp        (27,311)       (4,357)   (59,799)       526 
    Dividends and accretion on 
     preferred stock                436             -      1,464          - 
                                    ---           ---      -----        --- 
         Net income (loss)                                                  
          applicable to                                                     
          common stock          (27,747)       (4,357)   (61,263)       526 
    Earnings (loss)                                                         
     attributable to                                                        
     participating securities      (259)          (57)      (608)         4 
                                   ----           ---       ----        --- 
         Net income (loss)    
          allocated to common 
          shareholders          (27,488)       (4,300)   (60,655)       522 
                                =======        ======    =======        === 
                                                                            
    Weighted average                                                        
     shares (basic)           9,069,346     9,061,862  9,066,880  9,061,730 
    Weighted average                                                        
     shares (diluted)         9,069,346     9,061,862  9,066,880  9,062,384 
    Basic earnings (loss)                                                   
     per share                   ($3.03)       ($0.47)    ($6.69)     $0.06 
    Diluted earnings                                                        
     (loss) per share            ($3.03)       ($0.47)    ($6.69)     $0.06 
                                 ======        ======     ======      ===== 
                                                                            
    
    
    First M&F Corporation                                                   
    Financial Highlights                                                    
                               QTD Ended     QTD Ended   QTD Ended  QTD Ended 
                              December 31   September 30  June 30    March 31 
                                  2009          2009        2009       2009 
                                  ----          ----        ----       ---- 
    Condensed Income Statements: 
     (in thousands) 
                                                                            
    Interest income              19,486        19,926      19,160     20,261 
    Interest expense              7,299         7,628       7,895      8,417 
                                  -----         -----       -----      ----- 
       Net interest income       12,187        12,298      11,265     11,844 
    Provision for loan losses    15,761         4,805       9,195     19,840 
    Noninterest revenues          4,425         5,381       4,976      5,188 
    Noninterest expenses         34,876        14,140      15,815     31,041 
                                 ------        ------      ------     ------ 
       Net income (loss)                                                     
        before taxes            (34,025)       (1,266)     (8,769)   (33,849)
    Income tax expense (benefit) (6,715)       (1,137)     (3,660)    (6,592)
    Noncontrolling interest           1             7           2        (16)
                                    ---           ---         ---        --- 
       Net income (loss)        (27,311)         (136)     (5,111)   (27,241)
    Preferred dividends             436           435         439        154 
                                    ---           ---         ---        --- 
       Net income (loss)                                                     
        applicable to                                                        
        common stock            (27,747)         (571)     (5,550)   (27,395)
    Earnings (loss)                                                          
     attributable to                                                         
     participating                                                           
     securities                    (259)            9         (52)      (306)
                                   ----           ---         ---       ---- 
       Net income (loss) 
        allocated to common 
        shareholders            (27,488)         (580)     (5,498)   (27,089)
                                                                             
    Tax-equivalent net                                                       
     interest income             12,537        12,670      11,654     12,216 
                                                                             
    Earnings Excluding Effects 
     of Intangible Asset 
     Write Offs: (in thousands) 
                                                                             
       Net income (loss)        (27,311)         (136)     (5,111)   (27,241)
    Goodwill impairments         16,772             -           -     15,800 
    Other intangible asset 
     impairments, net of taxes        -             -           -        781 
    Intangible asset amortization 
     that would have been incurred 
     given no impairment 
     write-offs, net of tax          (9)           (9)         (9)         - 
                                    ---           ---         ---        --- 
       Adjusted net income                                                   
        (loss)                  (10,548)         (145)     (5,120)   (10,660)
    Preferred dividends             436           435         439        154 
                                    ---           ---         ---        --- 
       Net income (loss)                                                     
        applicable to                                                        
        common stock            (10,984)         (580)     (5,559)   (10,814)
    Earnings (loss)                                                          
     attributable to                                                         
     participating                                                           
     securities                    (102)            2         (57)      (122)
                                   ----           ---         ---       ---- 
       Net income (loss) 
        allocated to common  
        shareholders            (10,882)         (582)     (5,502)   (10,692)
                                                                             
    Weighted average shares 
     (basic and diluted)      9,069,346     9,069,346   9,065,390  9,063,346 
    Earnings (loss) per                                                     
     share (basic and                                                       
     diluted)                     (1.20)        (0.06)      (0.61)     (1.18)
    
    
    
    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) 
                 --------------  --------------  --------------  --------- 
    4Q 2009             (27,311)        (27,747)        (27,488)     (3.03)
    3Q 2009                (136)           (571)           (580)     (0.06)
    2Q 2009              (5,111)         (5,550)         (5,498)     (0.61)
    1Q 2009             (27,241)        (27,395)        (27,089)     (2.99)
    4Q 2008              (4,357)         (4,357)         (4,300)     (0.47)
    3Q 2008               2,210           2,210           2,183       0.24 
    2Q 2008                (466)           (466)           (458)     (0.05)
    1Q 2008               3,139           3,139           3,097       0.34 
    4Q 2007               3,561           3,561           3,517       0.38 
    3Q 2007               3,808           3,808           3,760       0.42 
    2Q 2007               3,535           3,535           3,492       0.38 

SOURCE First M&F Corp.

Copyright 2009 PR Newswire. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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