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"The Board of Directors authorized the extension of our stock repurchase program with the addition of 200,000 shares for 2025," continued Williams. "In addition, we raised the cash dividend by 5.3% in 2024 and paid our 100th consecutive quarterly cash dividend during the year. We believe the increase in our cash dividend and renewal of our stock repurchase program highlights our Board’s confidence in the future of First Farmers."

Commenting on the results, Robert E. Krimmel, Chief Financial Officer of First Farmers, said, "Our strong earnings performance for the fourth quarter was driven by the improvement in net interest income and our net interest margin. Net interest income rose 20.9% to $12.1 million in the fourth quarter and our net interest margin was up 27 basis points from the third quarter and 61 basis points since the fourth quarter of last year. We also benefited from our strong liquidity position, reduced dependence on non-core funding and the payoff of the Federal Reserve Bank’s Bank Term Funding Program (BTFP) borrowings.

"We believe our balance sheet is positioned well to grow future earnings in this interest rate environment. Our improved efficiency ratio benefited from the growth in earnings and focus on expense controls.

"We enter 2025 with a strong capital position to continue our strategic growth initiatives. We expect to benefit from our continued investments in our digital platforms and operating software to improve our future operating efficiencies. We are also building out our mortgage operations and recently received approval to sell mortgage loans directly to Freddie Mac. We expect this will enhance our opportunities to grow non-interest income through mortgage loan sales and servicing in the future," concluded Krimmel.

Fourth Quarter 2024 Results of Operations

Net income increased to $4.9 million, up $1.2 million, or 33.2%, from the fourth quarter of 2023. Net income per share increased 36.4% to $1.20 for the fourth quarter of 2024 compared with $0.88 for the fourth quarter of 2023. The increase in earnings for the fourth quarter of 2024 resulted from growth in net interest income of $2.1 million driven by higher interest and fees on loans of $546,000, up 4.1%, and a decrease in total interest expense of $1.4 million.

Net interest income after provision increased for the fifth consecutive quarter to $12.4 million, up 20.9%, compared to the fourth quarter of 2023. Non-interest income declined by $291,000 due to a non-recurring gain on redemption of bank-owned life insurance recognized in the fourth quarter of 2023 coupled with a decline in other non-interest income of $80,000, offset in part by an increase in wealth management and trust services fee income of $139,000. Wealth management and trust services reported record revenue for the fourth quarter of the year, highlighting 55 years as a strong source of non-interest income for First Farmers. Non-interest expense grew 3.2% to $305,000 for the fourth quarter of 2024 driven by increases in software support and other computer expense of $100,000, data processing expense of $50,000, legal and professional fees of $43,000 and advertising and promotions of $72,000 compared to the fourth quarter of 2023.

Net income for the fourth quarter of 2024 was up from the sequential third quarter by $924,000, or 23.4%. The increase in earnings was primarily due to growth in net interest income of $788,000 driven by lower interest expense on borrowings, offset in part by lower interest and fees on loans. During the quarter, the net interest margin increased by 27 basis points supported mostly by lower total cost of interest-bearing liabilities due to a decline in average borrowings of $132 million, offset in part by a reduction in average loan balances of $27 million. The decline in average borrowings was mostly driven by the payoff of the Federal Reserve Bank’s BTFP borrowing during the fourth quarter of 2024. Provision for credit losses declined $285,000 for the fourth quarter of 2024 compared to the sequential third quarter driven by a $110,000 principal recovery from a previously charged-off loan coupled with lower loan and unfunded commitment balances. Non-interest income decreased $34,000 driven by a loss on equity securities of $36,000 coupled with a decline in gain on disposal of premises and equipment of $51,000, offset in part by increases in revenue for wealth management and trust services and investment services fee income. Non-interest expense remained flat with decreases in health insurance of $162,000 and recruitment and placement services of $71,000, offset by increases of $112,000 in advertising and promotions and $130,000 in other non-interest expense.

For the fourth quarter of 2024, total cash and cash equivalents decreased $24 million from the sequential third quarter and increased $21 million from the fourth quarter of 2023. The fair market value of available-for-sale securities decreased by $45 million from the sequential third quarter to $589 million, or 33.3% of total assets, and decreased $104 million from $693 million, or 37.0% of total assets, in the fourth quarter of 2023.

Outstanding loan balances decreased $32 million, or 3.1%, from the sequential third quarter to $999 million and decreased $20 million, or 2.0%, from the fourth quarter of 2023. The decrease in loan balances in the fourth quarter was due to commercial real estate loan payoffs and line of credit reductions coupled with the bank’s continued focus on a disciplined lending strategy to manage credit risks by limiting total loans in certain market segments while maintaining overall loan quality criteria. Total deposits were flat when compared to the sequential third quarter at $1.604 billion, and decreased $15 million, or 0.9%, from the fourth quarter of 2023. While total deposits remained flat compared to the sequential third quarter, core deposits grew $52 million, which was offset by reductions in brokered deposits of $46 million and non-core deposits of $11 million. The shift in balances from more expensive borrowings and brokered deposits to less expensive transaction account balances supported the decrease in interest expense of 22.6% in the fourth quarter of 2024. The reduction in total deposits compared to the fourth quarter of 2023 was primarily driven by decreases in brokered deposits of $70 million and a decline in municipal deposits of $18 million, offset in part by an increase in core deposits of $75 million.

For the fourth quarter of 2024, total shareholders’ equity decreased by $7.3 million from the sequential third quarter to $137.7 million and increased $13.4 million from the fourth quarter of 2023. The decline in total shareholders’ equity from the sequential third quarter was primarily the result of an increase in the unrealized loss adjustment to the available-for-sale securities portfolio that totaled $9.9 million, net of tax, offset in part by growth in retained earnings of $2.9 million, net of stock repurchases and cash dividends. The increase in total shareholders’ equity from the fourth quarter of 2023 primarily resulted from a decrease in the unrealized loss adjustment to the available-for-sale securities portfolio that totaled $5.7 million, net of tax, and growth in retained earnings of $9.0 million, net of stock repurchases and cash dividends. The reduction in the fair value loss adjustment of the available-for-sale securities portfolio’s impact to shareholders’ equity was driven by a smaller securities portfolio and a decrease in market interest rates. The book value per share declined 4.2% from the sequential third quarter to $34.06 but increased 14.5% compared to the fourth quarter of 2023.

Twelve Months Results

Net income available to common shareholders was $16.0 million for 2024, which remained flat compared to $16.0 million in 2023. Net income per share increased 2.8% to $3.90 for 2024 compared with $3.80 for 2023. As compared to 2023, earnings for 2024 were driven by an increase in net interest income of $706,000 coupled with an increase in non-interest income of $629,000, offset by a decrease in provision credit for credit losses of $330,000 and higher non-interest expense of $1.0 million.

The increase in net interest income was driven by higher interest and fees on loans which were up 14.7% to $56.4 million and interest from federal funds sold which were up 239.4% to $1.6 million, offset in part by a 18.6% increase in interest on deposits of $17.0 million and 196.5% increase in interest expense on borrowings of $6.0 million. Provision for credit losses increased by $330,000 driven by a reduced provision credit of $160,000 recorded in 2024 compared to a provision credit of $490,000 recorded in 2023. The increase in non-interest income was driven by growth in wealth management and trust services revenue of $376,000, an increase in gain on equity securities of $438,000, a reduction to loss on sale of available-for-sale securities of $291,000, and an increase to gain on disposal of premises and equipment of $141,000, offset in part by declines in service fees on deposit accounts of $289,000 and gain on redemption of bank-owned life insurance of $329,000 compared to 2023. The increase in non-interest expense was due to increases in salaries expense of $313,00, employee health insurance expense of $399,000, data processing services expense of $242,000, and software support of $323,000 compared to 2023.

Asset Quality

Nonperforming assets increased to $1.3 million, or 0.08% of total assets, up from $852,000, or 0.05% of total assets, from the sequential third quarter but down from $1.4 million, or 0.08% of total assets, from the fourth quarter of 2023. Net recoveries to average loans were 0.01% for the fourth quarter of 2024 compared with charge-offs of 0.01% for the sequential quarter and net charge-offs of 0.00% for the fourth quarter of 2023. A provision credit of $285,000 was recorded to the allowance for credit losses during the fourth quarter of 2024 compared to provision for credit losses expense of less than $1,000 for the sequential third quarter and a provision credit for credit losses of $230,000 for the fourth quarter of 2023. The allowance for credit losses represented 0.80% of total loans outstanding for the fourth quarter of 2024 compared with 0.78% for the sequential third quarter and 0.75% for the fourth quarter of 2023. The provision credit of $285,000 was the result of a $110,000 principal recovery from a previously charged-off loan coupled with declines in loan and unfunded commitment balances in the fourth quarter of 2024. The allowance for credit losses for unfunded commitments declined to $520,000, or 0.20% of total unfunded commitments, for the fourth quarter of 2024 compared with 0.20% for the sequential third quarter and 0.28% for the fourth quarter of 2023. The allowance for credit losses for held-to-maturity ("HTM") securities represented 0.04% of total HTM securities for the fourth quarter of 2024 compared with 0.06% for the sequential third quarter and 0.06% for the fourth quarter of 2023.

Capital Management Initiatives

During the fourth quarter of 2024, First Farmers repurchased 32,500 shares of the Company’s common stock in the open market and through privately negotiated transactions at an average price of $34.68 per share, with prices ranging from $32.50 to $35.03 per share in accordance with the Company’s stock repurchase program. The fourth quarter of 2024 stock repurchases represented a 44.4% increase compared to the sequential third quarter. The Company repurchased 32,149 more shares in the fourth quarter of 2024 compared to the same period in 2023. First Farmers’ Board of Directors reauthorized the stock repurchase program of up to 200,000 shares through December 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 Middle Tennessee area through 22 offices in seven Middle Tennessee counties. As of December 31, 2024, First Farmers reported total assets of approximately $1.8 billion, total shareholders’ equity of approximately $138 million, and administered trust assets of $6.2 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 not to 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 and losses, gain on redemption of bank-owned life insurance, gain on disposal of premises and equipment, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250127011689/en/

Contacts

For additional information contact
Robert E. Krimmel
Chief Financial Officer
(931) 380-8257