First M&F Reveals Q1 Numbers

April 18, 2004

Mississippi-based First M&F Corp.’s net income for the quarter ended March 31, 2004 was $2,600,914, or $.57 basic and diluted earnings per share, compared to $2,653,589, or $.57 basic and diluted earnings per share for the first quarter of 2003.

Net interest income was up by 7.53% compared to the first quarter of 2003, with the net interest margin increasing to 4.24% in 2004 as compared to 4.12% in the first quarter of 2003. The net interest margin for the fourth quarter of 2004 was 4.44% as compared to 4.47% for the third quarter and 4.26% for the second quarter. A prime rate reduction of .25% in June of 2003 precipitated a decrease in loan yields to 6.31% in the first quarter of 2004 from 6.87% in the first quarter of 2003.

However, declining short-term interest rates continued to reduce the cost of funds as deposit costs fell from 2.10% in the first quarter of 2003 to 1.53% in the first quarter of 2004. Loans as a percentage of assets were 71.30% at March 31, 2004 as compared to 65.92% at March 31, 2003 and 72.46% at the end of 2003. Loan growth was flat in the first quarter of 2004. However, the company experienced solid first quarter loan growth in the Desoto, Lee and Lafayette county markets.

Non-interest revenues, excluding securities transactions, for 2004 were up by 16.43% compared to 2003, with deposit-related income up by 3.47%, mortgage income up by 16.28%, insurance agency commissions up by 2.75% and fiduciary and brokerage income more than doubling.

Profit sharing revenues in the insurance agencies, included in other income, were up by $170 thousand in the first quarter of 2004 as compared to 2003 due to very favorable claims experience in 2003. Mortgage income is expected to slow if interest rates begin moving up. Fiduciary and brokerage revenues should do well and benefit many customers this year as expertise has been added in these areas. Corporate treasury management services began being offered in late 2003, and should show steady growth in 2004.

First M&F Corp., the parent of M&F Bank, provides financial services to 23 communities in Mississippi and Tennessee.

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