First M&F slashes quarterly net income by nearly $2M

KOSCIUSKO — First M&F Corp. has revised net income for the quarter ended June 30, 2013 to $222,000 from $2.205 million reported in the July 19 earnings announcement.

Earnings per share after preferred stock dividends were revised to a loss of $.03 basic and diluted per share from the previously reported net profit of $.18 basic and $.17 diluted per share.

Net income for the year was revised to $2.820 million or $.19 basic and diluted per share from the previously reported $4.803 million or $.40 basic and $.39 diluted per share.

As a result of a third quarter review of transactions and events, management determined it appropriate to record a loss on the sale of a foreclosed property and an other-than-temporary impairment of certain securities in the second quarter of 2013 rather than the third quarter. The foreclosed property sale resulted in a $1.125 million pre-tax loss. The other-than-temporary impairment, related to the company’s investments in certain collateralized debt obligations that were sold during the third quarter, resulted in a pre-tax charge of $2.038 million. The impairment charge effectively wrote the amortized cost basis of the securities down to their June 30 fair value of $1.070 million. The subsequent third quarter sale of the securities resulted in a gain of $375 thousand, resulting in net losses of $1.663 million on the securities for the year.

Hugh Potts Jr., chairman and CEO, said, “We are making these revisions after a detailed review of the accounting and reporting of certain transactions, identified in the third quarter but which had second quarter effects. We have made great strides in reducing our non-performing assets and improving the quality of our balance sheet, especially in light of our anticipated merger with Renasant. These transactions will not have a material impact on the combined company after the merger is completed. All indications are that the pending merger with Renasant will be completed during the third quarter.”

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