First Farmers and Merchants Corporation Reports Third Quarter Net Income Up 12.7% to $5.5 Million
First Farmers and Merchants Corporation Reports Third Quarter Net Income Up 12.7% to $5.5 Million
Net Interest Margin expands to 3.71%
Annualized Loan Growth of 24.4%
COLUMBIA, Tenn.--(BUSINESS WIRE)--First Farmers and Merchants Corporation (OTCID: FFMH), the holding company for First Farmers and Merchants Bank, today announced its results for the third quarter of 2026, reflecting continued growth and profitability, including robust 24.4% annualized loan growth, a 12.7% increase in net income, and an eleventh consecutive quarter of net interest margin expansion.
“What stood out in our third quarter was the sheer execution and dedication of our banking teams across Tennessee,” stated Brian K. Williams, Chairman and Chief Executive Officer. “We’ve talked over the past couple of quarters about the depth of our commercial and business banking pipelines but seeing our lenders convert that into more than $62 million in net loan growth, while competing in one of the most competitive banking environments in the country, is a tremendous credit to their hard work. What makes me most proud of this performance is our team didn’t compromise pricing or credit discipline to get there. Quality volume, paired with steady earning-asset yields, fueled our eleventh consecutive quarter of margin expansion and generated record net interest income.”
Key highlights of First Farmers’ results for the third quarter of 2026 include:
- Net income increased 12.7% to $5.5 million, compared to $4.8 million for the year-earlier quarter. Net income per common share increased 14.0% to $1.38 from $1.21 in the third quarter of 2025. Net income decreased 4.0% from $5.7 million, or $1.44, per common share, reported in the second quarter of 2026, partially reflecting a higher provision for credit losses to support loan growth and the absence of $342,000 in non-recurring pre-tax gains realized in the prior quarter;
- Adjusted net income, which excludes special items, increased 13.0% to $5.5 million, or $1.38 per common share, compared with $4.8 million, or $1.21 per common share, for the year-earlier quarter. Third quarter adjusted net income increased 0.4% from $5.4 million, or $1.38 per common share, reported in the second quarter of 2026 (see “Non-GAAP Financial Measures”);
- Total loans increased $62.8 million from the second quarter of 2026, representing a 24.4% annualized growth rate, and increased $84.2 million, or 8.3%, compared to the third quarter of 2025, marking the Company’s strongest quarterly loan expansion;
- Core non-interest-bearing deposit balances increased 2.3% from the third quarter of 2025 and represented 30.2% of total deposits, with total deposit variances reflecting anticipated seasonal outflows in municipal accounts;
- Net interest income increased 14.9% to a record $15.7 million, compared to $13.7 million for the third quarter of 2025, and increased 2.9% from $15.3 million for the second quarter of 2026;
- Net interest margin expanded for the eleventh consecutive quarter to 3.71%, increasing 48 basis points year-over-year and 10 basis points from the second quarter of 2026, driving record net interest income;
- Wealth management and trust services achieved a record quarterly revenue level of $1.4 million, an increase of 13.9% from the third quarter of 2025;
- Book value per share increased 4.5% to $43.08 compared to $41.22 in the third quarter of 2025 and decreased 4.3% from $45.00 in the second quarter of 2026, reflecting the impact of market interest rate movements on unrealized losses in the investment portfolio; and
- The Board of Directors declared a regular quarterly cash dividend of $0.32 per share, marking the Company’s fifth consecutive year of annual dividend increases for shareholders.
“As we look ahead to the fourth quarter, our loan pipelines remain supportive across Middle and East Tennessee, though we are naturally managing the balance sheet with typical year-end seasonal payoffs in mind,” Williams added. “At the same time, our leadership team and Board of Directors are deeply engaged in planning the next phase of our long-term strategy for 2027 and beyond. The momentum we generated this quarter demonstrates what is possible when you build on a fortress balance sheet, stick to your relationship principles, and empower a remarkably strong team of bankers to execute.”
“Our earnings momentum is a direct result of our deliberate focus on balance sheet optimization,” said Jill A. Giles, Chief Financial Officer. “Over the past year, we have intentionally shifted our earning-asset composition by strategically deploying liquidity and investment cash flows into higher-yielding relationship loans. This disciplined approach drove our eleventh consecutive quarter of net interest margin expansion to 3.71%. On the funding side, our core non-interest-bearing deposits remain exceptionally stable, representing approximately 30% of total deposits. This core stability gave us the capacity to easily absorb the seasonal, forecasted municipal drawdowns that typically occur in the third quarter. Rather than trying to predict where interest rates might head, we manage the bank through continuous scenario testing, which keeps our balance sheet resilient and ready for any environment.”
“We are also seeing outstanding execution across our fee-based business lines, highlighted by a record quarter in our wealth management and trust division,” Giles added. “Our trust team continues to win new relationships and expand existing ones, driven heavily by their intentional focus on multigenerational wealth transfer strategies. We are leveraging this strong core earnings power to invest in the bank’s future, whether that is expanding our commercial presence in markets like Chattanooga, continuing to add top-tier production talent, or undertaking significant, customer-facing enhancements to our digital banking platforms.”
Third Quarter 2026 Results of Operations
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For the three months ended |
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||||||||||
($ in thousands, except per share data) |
|
9/30/2026 |
|
6/30/2026 |
|
9/30/2025 |
|
3Q26 vs. 2Q26 |
|
3Q26 vs.3Q25 |
||||||||||||||||
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Change |
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% Change |
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Change |
|
% Change |
||||||
Interest income |
|
$ |
18,724 |
|
|
$ |
18,028 |
|
|
$ |
17,331 |
|
|
$ |
696 |
|
|
3.9 |
% |
|
$ |
1,393 |
|
|
8.0 |
% |
Interest expense |
|
|
3,032 |
|
|
|
2,778 |
|
|
|
3,674 |
|
|
|
254 |
|
|
9.1 |
% |
|
|
(642 |
) |
|
(17.5 |
%) |
Net interest income |
|
$ |
15,692 |
|
|
$ |
15,250 |
|
|
$ |
13,657 |
|
|
$ |
442 |
|
|
2.9 |
% |
|
$ |
2,035 |
|
|
14.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net interest income, FTE |
|
$ |
15,830 |
|
|
$ |
15,388 |
|
|
$ |
13,803 |
|
|
$ |
442 |
|
|
2.9 |
% |
|
$ |
2,027 |
|
|
14.7 |
% |
Net interest margin |
|
|
3.71 |
% |
|
|
3.61 |
% |
|
|
3.23 |
% |
|
|
+10 bps |
|
|
|
|
|
|
+48 bps |
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for credit losses |
|
|
395 |
|
|
$ |
120 |
|
|
$ |
- |
|
|
$ |
275 |
|
|
229.2 |
% |
|
$ |
395 |
|
|
NM |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
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Total non-interest income |
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$ |
3,550 |
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|
$ |
3,793 |
|
|
$ |
3,351 |
|
|
$ |
(243 |
) |
|
(6.4 |
%) |
|
$ |
199 |
|
|
5.9 |
% |
|
|
|
|
|
|
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|
|
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|
|
|
|
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Total non-interest expense |
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$ |
12,178 |
|
|
$ |
11,857 |
|
|
|
11,006 |
|
|
|
321 |
|
|
2.7 |
% |
|
$ |
1,172 |
|
|
10.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income for common shareholders |
|
$ |
5,455 |
|
|
$ |
5,682 |
|
|
$ |
4,842 |
|
|
$ |
(227 |
) |
|
(4.0 |
%) |
|
$ |
613 |
|
|
12.7 |
% |
Weighted average shares outstanding - basic |
|
|
3,948,397 |
|
|
|
3,955,554 |
|
|
|
3,994,144 |
|
|
|
(7,157 |
) |
|
(0.2 |
%) |
|
|
(45,747 |
) |
|
(1.1 |
%) |
Weighted average shares outstanding – diluted |
|
|
3,954,285 |
|
|
|
3,961,442 |
|
|
|
4,001,832 |
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|
|
(7,157 |
) |
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(0.2 |
%) |
|
|
(47,547 |
) |
|
(1.2 |
%) |
Basic earnings per share |
|
$ |
1.38 |
|
|
$ |
1.44 |
|
|
$ |
1.21 |
|
|
$ |
(0.06 |
) |
|
(4.2 |
%) |
|
$ |
0.17 |
|
|
14.0 |
% |
Diluted earnings per share |
|
$ |
1.38 |
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|
$ |
1.43 |
|
|
$ |
1.21 |
|
|
$ |
(0.05 |
) |
|
(3.5 |
%) |
|
$ |
0.17 |
|
|
14.0 |
% |
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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Adjusted net income(1) |
|
$ |
5,471 |
|
|
$ |
5,448 |
|
|
$ |
4,842 |
|
|
$ |
23 |
|
|
0.4 |
% |
|
$ |
629 |
|
|
13.0 |
% |
Adjusted basic earnings per share(1) |
|
$ |
1.38 |
|
|
$ |
1.38 |
|
|
$ |
1.21 |
|
|
$ |
- |
|
|
0.0 |
% |
|
$ |
0.17 |
|
|
14.0 |
% |
Adjusted diluted earnings per share(1) |
|
$ |
1.38 |
|
|
$ |
1.37 |
|
|
$ |
1.21 |
|
|
$ |
0.01 |
|
|
0.7 |
% |
|
$ |
0.17 |
|
|
14.0 |
% |
(1) See Non-GAAP Financial Measures |
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NM - Not meaningful |
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Net income for the third quarter of 2026 increased by $613,000, or 12.7%, compared to the same quarter of 2025. The increase was primarily driven by record net interest income, partially offset by higher provision for credit losses and increased non-interest expense. Net interest income increased 14.9% to a record $15.7 million and benefited from higher investment and loan yields despite average earning assets decreasing approximately $2.0 million. Continued repricing of higher-cost deposits and disciplined funding cost management also contributed to lower deposit interest expense. The Company’s net interest margin expanded for the eleventh consecutive quarter to 3.71%, an increase of 48 basis points from the prior-year period and 10 basis points from the second quarter of 2026. Margin expansion was primarily attributable to higher yields on new loans and investment securities combined with continued easing of deposit cost pressures.
Total non-interest income increased $199,000, or 5.9%, from the third quarter of 2025, primarily due to record wealth management and trust services revenue of $1.4 million, which increased $165,000, or 13.9%, from the prior-year quarter. Total non-interest expense increased $1.2 million, or 10.6%, primarily due to a $1.1 million increase in salaries and employee benefits expense, reflecting strategic additions of commercial and business banking lenders as well as performance-based incentives aligned with corporate earnings.
Compared to the second quarter of 2026, net income decreased $227,000, or 4.0%. The sequential comparison was impacted by a $275,000 increase in the provision for credit losses to support loan growth, as well as the absence of $342,000 in one-time net pre-tax gains realized in the prior quarter from a fair value adjustment on equity securities and fixed asset sales. However, adjusted net income increased $23,000, or 0.4%. Net interest income increased $442,000, or 2.9%, from the second quarter of 2026, reflecting continued earning asset yield expansion and a 10 basis-point increase in net interest margin. Non-interest expense increased $321,000, primarily due to a $473,000 increase in salaries and employee benefits expense.
Balance Sheet Trends
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For the three months ended |
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($ in thousands) |
|
9/30/2026 |
|
6/30/2026 |
|
9/30/2025 |
|
3Q26 vs. 2Q26 |
|
3Q26 vs. 3Q25 |
|||||||||||||
|
|
|
|
|
|
|
|
Change |
|
% Change |
|
Change |
|
% Change |
|||||||||
Total assets |
|
$ |
1,760,055 |
|
$ |
1,765,024 |
|
$ |
1,745,176 |
|
$ |
(4,969 |
) |
|
(0.3 |
%) |
|
$ |
14,879 |
|
|
0.9 |
% |
Total liabilities |
|
|
1,590,039 |
|
|
1,587,158 |
|
|
1,580,984 |
|
|
2,881 |
|
|
0.2 |
% |
|
|
9,055 |
|
|
0.6 |
% |
Total shareholders’ equity |
|
|
170,016 |
|
|
177,866 |
|
|
164,192 |
|
|
(7,850 |
) |
|
(4.4 |
%) |
|
|
5,824 |
|
|
3.5 |
% |
Securities |
|
|
535,297 |
|
|
581,779 |
|
|
580,555 |
|
|
(46,482 |
) |
|
(8.0 |
%) |
|
|
(45,258 |
) |
|
(7.8 |
%) |
Loans, net of deferred fees |
|
|
1,099,595 |
|
|
1,036,817 |
|
|
1,015,365 |
|
|
62,778 |
|
|
6.1 |
% |
|
|
84,230 |
|
|
8.3 |
% |
Deposits |
|
|
1,533,323 |
|
|
1,565,049 |
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|
1,558,329 |
|
|
(31,726 |
) |
|
(2.0 |
%) |
|
|
(25,006 |
) |
|
(1.6 |
%) |
Borrowings |
|
|
33,500 |
|
|
- |
|
|
- |
|
|
33,500 |
|
|
NM |
|
|
|
33,500 |
|
|
NM |
|
NM - Not meaningful |
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Investment securities decreased by $46.5 million, or 8.0%, from the second quarter of 2026 to $535.3 million and represented 30.4% of total assets at September 30, 2026. Compared to the third quarter of 2025, investment securities decreased $45.3 million, or 7.8%, from $580.6 million and represented 33.3% of total assets at that date. Outstanding loan balances increased $62.8 million during the quarter to $1.099 billion, reflecting a strong annualized growth rate of 24.4%. Compared to the third quarter of 2025, loans increased $84.2 million, or 8.3%. Loans represented 62.5% of total assets at September 30, 2026, compared to 58.7% at June 30, 2026, reflecting the intentional shift in earning-asset composition. The Company achieved strong loan growth during the quarter, representing its highest quarterly increase on record. Management remains encouraged by its lending pipeline, positioning it well for continued growth in future periods while actively managing for seasonal fourth-quarter payoffs.
Total deposits decreased $31.7 million, or 2.0%, from the second quarter of 2026 to $1.533 billion and decreased $25.0 million, or 1.6%, from the third quarter of 2025. The decrease in deposits compared to the second quarter of 2026 was primarily related to decreases in municipal deposits of $28.8 million, interest-bearing core deposits of $1.4 million, and other commercial deposits of $1.7 million. The decrease in municipal deposits represents anticipated seasonality prior to fourth-quarter tax collection cycles. The decrease in total deposits of $25.0 million compared to the third quarter of 2025 was driven by a decrease in municipal deposits of $20.4 million and interest-bearing core deposits of $25.8 million, offset by increases in core non-interest-bearing deposits of $10.6 million and other commercial deposits of $9.8 million.
The Company had outstanding borrowings of $33.5 million as of September 30, 2026, compared to no outstanding borrowings at the end of the second quarter of 2026 and third quarter of 2025. The borrowings were utilized to support strong loan growth during the quarter and maintain sufficient liquidity as the Company strategically repositioned the balance sheet through reductions in investment securities and seasonal fluctuations in deposit balances.
Total shareholders’ equity decreased by $7.9 million from the second quarter of 2026 to $170.0 million and increased $5.8 million from the third quarter of 2025. The decrease from the second quarter of 2026 was primarily attributable to an $11.7 million increase in accumulated other comprehensive loss, reflecting changes in the fair value of the available-for-sale securities portfolio, as well as dividends paid totaling $1.3 million and common stock repurchases of $362,000. These factors were partially offset by third-quarter net income of $5.5 million. Book value per share closed at $43.08, up 4.5% compared to $41.22 in the third quarter of 2025.
Asset Quality
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For the three months ended |
|
|
|
|
|
|
|
|
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($ in thousands) |
|
9/30/2026 |
|
6/30/2026 |
|
9/30/2025 |
|
3Q26 vs. 2Q26 |
|
3Q26 vs. 3Q25 |
||||||||||||||
|
|
|
|
|
|
|
|
Change |
|
% Change |
|
Change |
|
% Change |
||||||||||
Allowance for credit losses to total loans |
|
0.77 |
% |
|
|
0.79 |
% |
|
|
0.80 |
% |
|
-2 bps |
|
|
|
-3 bps |
|
|
|||||
Provision for credit losses |
$ |
395 |
|
|
$ |
120 |
|
|
$ |
- |
|
|
$ |
275 |
|
229.2 |
% |
|
$ |
395 |
|
NM |
|
|
Net charge-offs to average loans, annualized |
|
0.00 |
% |
|
|
0.01 |
% |
|
|
0.01 |
% |
|
-1 bp |
|
|
|
-1 bp |
|
|
|||||
Total non-performing loans to total loans |
|
0.18 |
% |
|
|
0.12 |
% |
|
|
0.13 |
% |
|
6 bps |
|
|
|
5 bps |
|
|
|||||
Total non-performing loans |
|
$ |
1,929 |
|
|
$ |
1,271 |
|
|
$ |
1,291 |
|
|
$ |
658 |
|
51.8 |
% |
|
$ |
638 |
|
49.4 |
% |
Total non-performing assets |
|
$ |
1,929 |
|
|
$ |
1,441 |
|
|
$ |
1,513 |
|
|
$ |
488 |
|
33.9 |
% |
|
$ |
416 |
|
27.5 |
% |
NM - Not meaningful |
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The Company’s asset quality metrics remained strong and stable during the quarter, reflecting its continued prudent approach to credit risk management and comparing favorably to peer group averages. Non-performing loans totaled $1.9 million, or 0.18% of total loans, at September 30, 2026, compared to $1.3 million, or 0.12% of total loans, at June 30, 2026, and $1.3 million, or 0.13% of total loans, at September 30, 2025. The sequential increase was isolated to a single residential mortgage relationship placed on non-accrual status during the quarter, which is well-collateralized and for which no principal loss is anticipated.
Annualized net charge-offs to average loans were 0.00% for the third quarter of 2026, compared with 0.01% for both the second quarter of 2026 and the third quarter of 2025.
The Company recorded a $265,000 provision for credit losses for loans during the third quarter of 2026, primarily reflecting continued loan growth during the period. The allowance for credit losses represented 0.77% of total loans at September 30, 2026, compared with 0.79% at June 30, 2026, and 0.80% at September 30, 2025.
The allowance for credit losses on unfunded commitments totaled $855,000, or 0.30% of total unfunded commitments, at September 30, 2026, compared with $725,000, or 0.26% of total unfunded commitments, at June 30, 2026, and $580,000, or 0.22% of total unfunded commitments, at September 30, 2025. The Company recorded $130,000 provision for credit losses related to unfunded commitments during the third quarter of 2026.
Capital Management Initiatives
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|
For the three months ended |
|
|
|
|
|
|
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|
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($ in thousands, except per share data) |
9/30/2026 |
|
6/30/2026 |
|
9/30/2025 |
|
3Q26 vs. 2Q26 |
|
3Q26 vs. 3Q25 |
|||||||||||||||||
|
|
|
|
|
|
|
Change |
|
% Change |
|
Change |
|
% Change |
|||||||||||||
Tangible common stockholders’ equity to tangible assets |
|
9.19 |
% |
|
|
9.61 |
% |
|
|
8.93 |
% |
|
-42 bps |
|
|
|
+26 bps |
|
|
|||||||
Leverage capital ratio |
|
|
11.50 |
% |
|
|
11.19 |
% |
|
|
10.68 |
% |
|
+31 bps |
|
|
|
+82 bps |
|
|
||||||
Tier 1 capital ratio |
|
|
17.06 |
% |
|
|
17.56 |
% |
|
|
17.15 |
% |
|
-50 bps |
|
|
|
-9 bps |
|
|
||||||
Total Risk-based capital ratio |
|
|
17.83 |
% |
|
|
18.33 |
% |
|
|
17.92 |
% |
|
-50 bps |
|
|
|
-9 bps |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total shares repurchased |
|
|
6,122 |
|
|
|
10,246 |
|
|
|
16,690 |
|
|
|
(4,124 |
) |
|
(40.2 |
%) |
|
|
(10,568 |
) |
|
(63.3 |
%) |
Average repurchase price per share |
|
$ |
59.19 |
|
|
$ |
49.64 |
|
|
$ |
42.82 |
|
|
$ |
9.55 |
|
|
19.2 |
% |
|
$ |
16.37 |
|
|
38.2 |
% |
First Farmers’ capital ratios remained strong during the quarter and continue to exceed regulatory well-capitalized minimums. At September 30, 2026, the Company reported a Tier 1 capital ratio of 17.0%, a Total Risk-Based capital ratio of 17.8%, and a leverage ratio of 11.5%. The Company’s capital position provides substantial capacity to support continued balance sheet growth while maintaining its commitment to shareholder returns through cash dividends and stock repurchases. Reflecting continued capital strength and earnings momentum, the Board of Directors approved a quarterly cash dividend of $0.32 per share, representing an increase of 10.3% and the Company’s fifth consecutive year of annual dividend increases.
During the third quarter of 2026, First Farmers repurchased 6,122 shares of common stock in open market and privately negotiated transactions at an average price of $59.19 per share, with purchase prices ranging from $59.03 to $59.50 per share, under the Company’s stock repurchase program. Third quarter repurchase activity declined 40.2% from the second quarter of 2026 and 63.3% from the third quarter of 2025, reflecting management’s balanced approach to capital deployment amid strong loan growth. Authorization to repurchase approximately 169,333 shares remains available under the current program, which is scheduled to expire in December 2026 unless extended or completed earlier.
Nine Months Results
|
|
For the nine months ended |
|
|
|
|
||||||
($ in thousands, except per share data) |
|
9/30/2026 |
|
9/30/2025 |
|
YTD 2026 vs. YTD 2025 |
||||||
|
|
|
|
|
|
Change |
|
% Change |
||||
Net interest income |
|
$ |
45,711 |
|
$ |
39,358 |
|
$ |
6,353 |
|
16.1 |
% |
Provision for credit losses |
|
|
574 |
|
|
325 |
|
|
249 |
|
76.6 |
% |
Non-interest income |
|
|
10,640 |
|
|
10,488 |
|
|
152 |
|
1.4 |
% |
Non-interest expense |
|
|
35,286 |
|
|
32,491 |
|
|
2,795 |
|
8.6 |
% |
Net income |
|
|
16,599 |
|
|
13,928 |
|
|
2,671 |
|
19.2 |
% |
Basic earnings per share |
|
|
4.19 |
|
|
3.46 |
|
|
0.72 |
|
20.8 |
% |
Adjusted net income(1) |
|
|
16,401 |
|
|
13,392 |
|
|
3,009 |
|
22.5 |
% |
Adjusted basic earnings per share(1) |
|
|
4.14 |
|
|
3.33 |
|
|
0.81 |
|
24.3 |
% |
(1) See Non-GAAP Financial Measures |
||||||||||||
For the nine months ending September 30, 2026, First Farmers reported net income of $16.6 million, or $4.19 per share, compared with $13.9 million, or $3.46 per share, for the same period of 2025. Net income increased $2.7 million, or 19.2%, while earnings per share increased 20.8%, reflecting continued expansion of net interest income and disciplined balance sheet management. Net interest income increased $6.4 million, or 16.1%, driven primarily by a 42 basis-point increase in investment yields and an 18 basis-point increase in loan yields. In addition, net interest income benefited from lower funding costs as deposit expenses declined.
Non-interest income increased modestly by $152,000, or 1.4%, from the first nine months of 2025. Non-interest expense increased $2.8 million, or 8.6%, reflecting strategic investments in personnel and technology to support future growth. The increase was primarily driven by higher salaries and benefits expense of $2.2 million and software support expense of $447,000.
Adjusted net income, which excludes special items, increased 22.5% to $16.4 million, or $4.14 per share, compared with $13.4 million, or $3.33 per share, for the first nine months of 2025.
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 Tennessee area through 21 locations in seven counties and one production office in Chattanooga. As of September 30, 2026, First Farmers reported total assets of approximately $1.8 billion, total shareholders’ equity of approximately $170 million, and administered trust assets of $6.9 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: gain on sale of premises and equipment, securities gains and losses, gain on redemption of bank-owned life insurance, and write-down of other real estate owned 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 |
|||||||||||||||||
($ in thousands, except per share data) |
|||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||
|
September 30, |
|
June 30, |
|
September 30, |
||||||||||||
|
2026 |
|
2025 |
|
2026 |
|
2026 |
|
2025 |
||||||||
Total non-interest income |
$ |
3,550 |
|
$ |
3,351 |
|
$ |
3,793 |
|
|
$ |
10,640 |
|
|
$ |
10,488 |
|
Gain on sale of premises and equipment |
|
- |
|
|
- |
|
|
(226 |
) |
|
|
(226 |
) |
|
|
(225 |
) |
Gain on equity securities |
|
- |
|
|
- |
|
|
(116 |
) |
|
|
(116 |
) |
|
|
(111 |
) |
Gain on redemption of bank-owned life insurance |
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
(288 |
) |
Write-down of other real estate owned |
$ |
22 |
|
|
- |
|
|
25 |
|
|
|
74 |
|
|
|
- |
|
Adjusted non-interest income |
$ |
3,572 |
|
$ |
3,351 |
|
$ |
3,476 |
|
|
$ |
10,372 |
|
|
$ |
9,864 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total non-interest expense |
$ |
12,178 |
|
$ |
11,006 |
|
$ |
11,857 |
|
|
$ |
35,286 |
|
|
$ |
32,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net income as reported |
$ |
5,455 |
|
$ |
4,842 |
|
$ |
5,682 |
|
|
$ |
16,599 |
|
|
$ |
13,928 |
|
Total adjustments, net of tax1 |
|
16 |
|
|
- |
|
|
(234 |
) |
|
|
(198 |
) |
|
|
(536 |
) |
Adjusted net income |
$ |
5,471 |
|
$ |
4,842 |
|
$ |
5,448 |
|
|
$ |
16,401 |
|
|
$ |
13,392 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Basic earnings per share |
$ |
1.38 |
|
$ |
1.21 |
|
$ |
1.44 |
|
|
$ |
4.19 |
|
|
$ |
3.46 |
|
Total adjustments, net of tax1 |
|
- |
|
|
- |
|
|
(0.06 |
) |
|
|
(0.05 |
) |
|
|
(0.13 |
) |
Adjusted basic earnings per share |
$ |
1.38 |
|
$ |
1.21 |
|
$ |
1.38 |
|
|
$ |
4.14 |
|
|
$ |
3.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Diluted earnings per share |
$ |
1.38 |
|
$ |
1.21 |
|
$ |
1.43 |
|
|
$ |
4.19 |
|
|
$ |
3.46 |
|
Total adjustments, net of tax1 |
|
- |
|
|
- |
|
|
(0.06 |
) |
|
|
(0.05 |
) |
|
|
(0.13 |
) |
Adjusted diluted earnings per share |
$ |
1.38 |
|
$ |
1.21 |
|
$ |
1.37 |
|
|
$ |
4.14 |
|
|
$ |
3.33 |
|
| (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) |
|
|
|||||
|
September 30, |
|
December 31, |
|||||||
|
($ in thousands, except per share data) |
|
2026 |
|
2025(1) |
|||||
ASSETS |
Cash and due from banks |
|
$ |
18,902 |
|
$ |
22,903 |
|
||
Interest-bearing deposits |
|
|
4,442 |
|
|
79,477 |
|
|||
Federal funds sold |
|
|
96 |
|
|
80 |
|
|||
Total cash and cash equivalents |
|
|
23,440 |
|
|
102,460 |
|
|||
Securities: |
|
|
|
|||||||
Available-for-sale |
|
|
509,941 |
|
|
556,275 |
|
|||
Held-to-maturity (fair market value $21,105 and $23,383) |
|
|
22,927 |
|
|
23,678 |
|
|||
|
Equity securities |
|
|
2,429 |
|
|
|
2,314 |
|
|
|
Loans held-for-sale |
|
|
- |
|
|
|
887 |
|
|
Loans, net of deferred fees |
|
|
1,099,595 |
|
|
1,005,688 |
|
|||
Allowance for credit losses |
|
|
(8,415 |
) |
|
(8,037 |
) |
|||
Net loans |
|
|
1,091,180 |
|
|
997,651 |
|
|||
Bank premises and equipment, net |
|
|
26,364 |
|
|
28,803 |
|
|||
Bank-owned life insurance |
|
|
38,394 |
|
|
36,129 |
|
|||
Goodwill |
|
|
9,018 |
|
|
9,018 |
|
|||
|
Deferred tax asset |
|
|
19,047 |
|
|
|
14,691 |
|
|
Other assets |
|
|
17,315 |
|
|
16,067 |
|
|||
|
TOTAL ASSETS |
|
$ |
1,760,055 |
|
|
$ |
1,787,973 |
|
|
LIABILITIES |
Deposits: |
|
|
|||||||
Non-interest-bearing |
|
$ |
482,585 |
|
$ |
484,552 |
|
|||
Interest-bearing |
|
|
1,050,738 |
|
|
1,108,707 |
|
|||
Total deposits |
|
|
1,533,323 |
|
|
1,593,259 |
|
|||
|
Accounts payable and accrued liabilities |
|
|
23,216 |
|
|
|
23,091 |
|
|
|
FHLB and other borrowings |
|
|
33,500 |
|
|
|
- |
|
|
|
TOTAL LIABILITIES |
|
|
1,590,039 |
|
|
|
1,616,350 |
|
|
SHAREHOLDERS’ EQUITY |
Common stock - $10 par value per share, 8,000,000 shares authorized; 3,944,689 and 3,972,865 shares issued and outstanding as of the periods presented |
|
|
39,447 |
|
|
|
39,729 |
|
|
Retained earnings |
|
|
176,018 |
|
|
164,267 |
|
|||
|
Additional paid-in-capital |
|
|
201 |
|
|
|
156 |
|
|
Accumulated other comprehensive loss |
|
|
(45,745 |
) |
|
(32,624 |
) |
|||
Total shareholders’ equity attributable to First Farmers and Merchants Corporation |
169,921 |
|
171,528 |
|||||||
Noncontrolling interest - preferred stock of subsidiary |
|
|
95 |
|
|
95 |
|
|||
TOTAL SHAREHOLDERS’ EQUITY |
|
|
170,016 |
|
|
171,623 |
|
|||
|
|
|||||||||
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
1,760,055 |
|
|
$ |
1,787,973 |
|
|
|
|
|||||||||
(1) Derived from audited financial statements as of December 31, 2025. |
||||||||||
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES |
|||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME |
|||||||||||||||
(unaudited) |
|||||||||||||||
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|||||||||||||
|
(dollars in thousands, except per share data) |
2026 |
|
2025 |
|
2026 |
|
2025 |
|||||||
INTEREST |
Interest and fees on loans |
$ |
15,528 |
|
|
$ |
14,289 |
|
$ |
43,995 |
|
|
$ |
41,557 |
|
AND |
Income on investment securities |
|
|
|
|
||||||||||
DIVIDEND |
Taxable interest |
2,716 |
|
|
2,094 |
|
7,986 |
|
|
6,366 |
|||||
INCOME |
Exempt from federal income tax |
407 |
|
|
422 |
|
1,249 |
|
|
1,272 |
|||||
Interest from federal funds sold and other |
73 |
|
|
526 |
|
1,090 |
|
|
1,045 |
||||||
|
Total interest income |
18,724 |
|
|
17,331 |
|
54,320 |
|
|
50,240 |
|||||
INTEREST |
Interest on deposits |
2,777 |
|
|
3,674 |
|
8,354 |
|
|
10,775 |
|||||
EXPENSE |
Interest on other borrowings |
255 |
|
|
- |
|
255 |
|
|
107 |
|||||
Total interest expense |
3,032 |
|
|
3,674 |
|
8,609 |
|
|
10,882 |
||||||
Net interest income |
15,692 |
|
|
13,657 |
|
45,711 |
|
|
39,358 |
||||||
Provision for credit losses |
395 |
|
|
- |
|
574 |
|
|
325 |
||||||
|
Net interest income after provision |
15,297 |
|
|
13,657 |
|
45,137 |
|
|
39,033 |
|||||
NON-INTEREST |
Mortgage banking activities |
87 |
|
|
56 |
|
274 |
|
|
90 |
|||||
INCOME |
Wealth management and trust services fees |
1,355 |
|
|
1,190 |
|
3,941 |
|
|
3,536 |
|||||
|
Service fees on deposit accounts |
1,598 |
|
|
1,621 |
|
4,721 |
|
|
4,765 |
|||||
Investment services fee income |
121 |
|
|
117 |
|
322 |
|
|
360 |
||||||
Earnings on bank-owned life insurance |
177 |
|
|
166 |
|
507 |
|
|
509 |
||||||
|
Gain on sale of premises and equipment |
- |
|
|
- |
|
226 |
|
|
225 |
|||||
|
Gain on equity securities |
- |
|
|
- |
|
116 |
|
|
111 |
|||||
|
Gain on redemption of bank-owned life insurance |
- |
|
|
- |
|
- |
|
|
288 |
|||||
|
Write-down of other real estate owned |
(22 |
) |
|
- |
|
(74 |
) |
|
- |
|||||
Other non-interest income |
234 |
|
|
201 |
|
607 |
|
|
604 |
||||||
|
Total non-interest income |
3,550 |
|
|
3,351 |
|
10,640 |
|
|
10,488 |
|||||
NON-INTEREST |
Salaries and employee benefits |
7,487 |
|
|
6,379 |
|
21,008 |
|
|
18,821 |
|||||
EXPENSE |
Net occupancy expense |
612 |
|
|
755 |
|
1,898 |
|
|
1,961 |
|||||
Depreciation expense |
454 |
|
|
407 |
|
1,326 |
|
|
1,228 |
||||||
Data processing expense |
612 |
|
|
642 |
|
1,803 |
|
|
1,873 |
||||||
|
Software support and other computer expense |
1,376 |
|
|
1,238 |
|
4,157 |
|
|
3,710 |
|||||
Legal and professional fees |
231 |
|
|
264 |
|
837 |
|
|
797 |
||||||
Audits and exams expense |
166 |
|
|
198 |
|
492 |
|
|
582 |
||||||
Advertising and promotions |
280 |
|
|
193 |
|
804 |
|
|
640 |
||||||
FDIC insurance premium expense |
202 |
|
|
198 |
|
608 |
|
|
601 |
||||||
Other non-interest expense |
758 |
|
|
732 |
|
2,345 |
|
|
2,270 |
||||||
Total non-interest expense |
12,178 |
|
|
11,006 |
|
35,278 |
|
|
32,483 |
||||||
Income before provision for income taxes |
6,669 |
|
|
6,002 |
|
20,499 |
|
|
17,038 |
||||||
|
Provision for income taxes |
1,214 |
|
|
1,160 |
|
3,892 |
|
|
3,102 |
|||||
Net income |
5,455 |
|
|
4,842 |
|
16,607 |
|
|
13,936 |
||||||
Noncontrolling interest - dividends on preferred stock subsidiary |
- |
|
|
- |
|
8 |
|
|
8 |
||||||
|
Net income available to common shareholders |
$ |
5,455 |
|
|
$ |
4,842 |
|
$ |
16,599 |
|
|
$ |
13,928 |
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average shares outstanding - basic |
3,948,397 |
|
|
3,994,144 |
|
3,958,615 |
|
|
4,019,648 |
||||||
|
Weighted average shares outstanding - diluted |
3,954,285 |
|
|
4,001,832 |
|
3,964,503 |
|
|
4,027,336 |
|||||
|
Earnings per share |
$ |
1.38 |
|
|
$ |
1.21 |
|
$ |
4.19 |
|
|
$ |
3.46 |
|
|
Diluted earnings per share |
$ |
1.38 |
|
|
$ |
1.21 |
|
$ |
4.19 |
|
|
$ |
3.46 |
|
FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARIES |
|||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS |
|||||||||||||||||||
(unaudited) |
|||||||||||||||||||
For the three months ended |
|||||||||||||||||||
($ in thousands, except per share data) |
9/30/2026 |
|
6/30/2026 |
|
3/31/2026 |
|
12/31/2025 |
|
9/30/2025 |
||||||||||
Results of Operations: |
|
|
|
|
|
|
|
|
|
||||||||||
Interest income |
$ |
18,724 |
|
|
$ |
18,028 |
|
|
$ |
17,569 |
|
|
$ |
17,569 |
|
|
$ |
17,331 |
|
Interest expense |
3,032 |
|
|
2,778 |
|
|
2,799 |
|
|
3,325 |
|
|
3,674 |
|
|||||
Net interest income |
15,692 |
|
|
15,250 |
|
|
14,770 |
|
|
14,244 |
|
|
13,657 |
|
|||||
Provision for credit losses |
395 |
|
|
120 |
|
|
60 |
|
|
- |
|
|
- |
|
|||||
Non-interest income |
3,550 |
|
|
3,793 |
|
|
3,297 |
|
|
3,473 |
|
|
3,351 |
|
|||||
Non-interest expense and non-controlling interest – preferred stock of subsidiary |
12,178 |
|
|
11,857 |
|
|
11,251 |
|
|
11,975 |
|
|
11,006 |
|
|||||
Income before income taxes |
6,669 |
|
|
7,066 |
|
|
6,756 |
|
|
5,742 |
|
|
6,002 |
|
|||||
Income taxes |
1,214 |
|
|
1,384 |
|
|
1,294 |
|
|
1,049 |
|
|
1,160 |
|
|||||
Net income for common shareholders |
$ |
5,455 |
|
|
$ |
5,682 |
|
|
$ |
5,462 |
|
|
$ |
4,693 |
|
|
$ |
4,842 |
|
Per Share Data: |
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share |
$ |
1.38 |
|
|
$ |
1.44 |
|
|
$ |
1.38 |
|
|
$ |
1.18 |
|
|
$ |
1.21 |
|
Diluted earnings per share |
$ |
1.38 |
|
|
$ |
1.43 |
|
|
$ |
1.37 |
|
|
$ |
1.18 |
|
|
$ |
1.21 |
|
Book value per share |
$ |
43.08 |
|
|
$ |
45.00 |
|
|
$ |
43.85 |
|
|
$ |
43.17 |
|
|
$ |
41.22 |
|
Weighted average shares outstanding per quarter - basic |
3,948,397 |
|
|
3,955,554 |
|
|
3,972,154 |
|
|
3,976,190 |
|
|
3,994,144 |
|
|||||
Weighted average shares outstanding per quarter - diluted |
3,954,285 |
|
|
3,961,442 |
|
|
3,978,224 |
|
|
3,983,535 |
|
|
4,001,832 |
|
|||||
Financial Condition Data and Ratios: |
|
|
|
|
|
|
|
|
|
||||||||||
Total securities |
$ |
535,297 |
|
|
$ |
581,779 |
|
|
$ |
603,287 |
|
|
$ |
582,267 |
|
|
$ |
580,555 |
|
Available-for-sale securities, fair market value |
$ |
509,941 |
|
|
$ |
556,040 |
|
|
$ |
578,222 |
|
|
$ |
556,275 |
|
|
$ |
554,123 |
|
Available-for-sale securities, amortized cost |
$ |
572,447 |
|
|
$ |
602,761 |
|
|
$ |
625,103 |
|
|
$ |
601,126 |
|
|
$ |
604,742 |
|
Loans, net of deferred fees |
$ |
1,099,595 |
|
|
$ |
1,036,817 |
|
|
$ |
1,012,674 |
|
|
$ |
1,005,688 |
|
|
$ |
1,015,365 |
|
Allowance for credit losses |
$ |
(8,415 |
) |
|
$ |
(8,150 |
) |
|
$ |
(8,025 |
) |
|
$ |
(8,037 |
) |
|
$ |
(8,160 |
) |
Total assets |
$ |
1,760,055 |
|
|
$ |
1,765,024 |
|
|
$ |
1,796,452 |
|
|
$ |
1,787,973 |
|
|
$ |
1,745,176 |
|
Total deposits |
$ |
1,533,323 |
|
|
$ |
1,565,049 |
|
|
$ |
1,601,309 |
|
|
$ |
1,593,259 |
|
|
$ |
1,558,329 |
|
Net interest income, on a fully taxable-equivalent basis |
$ |
15,830 |
|
|
$ |
15,388 |
|
|
$ |
14,916 |
|
|
$ |
14,382 |
|
|
$ |
13,803 |
|
Net interest margin |
3.71 |
% |
|
3.61 |
% |
|
3.54 |
% |
|
3.37 |
% |
|
3.23 |
% |
|||||
Efficiency |
64.42 |
% |
|
63.10 |
% |
|
61.64 |
% |
|
66.74 |
% |
|
63.73 |
% |
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Asset Quality Data and Ratios: |
|
|
|
|
|
|
|
|
|
||||||||||
Total non-performing assets |
$ |
1,929 |
|
|
$ |
1,441 |
|
|
$ |
1,527 |
|
|
$ |
1,795 |
|
|
$ |
1,513 |
|
Non-performing assets to total assets |
0.11 |
% |
|
0.08 |
% |
|
0.09 |
% |
|
0.10 |
% |
|
0.09 |
% |
|||||
Allowance for credit losses to total loans |
0.77 |
% |
|
0.79 |
% |
|
0.79 |
% |
|
0.80 |
% |
|
0.80 |
% |
|||||
Net charge-offs to average loans (annualized) |
0.00 |
% |
|
0.01 |
% |
|
0.01 |
% |
|
0.01 |
% |
|
0.01 |
% |
|||||
Contacts
For additional information contact
Jill A. Giles
Chief Financial Officer
(931) 380-8284
