(Converse, IN) First Farmers Financial Corp., parent company of First Farmers Bank & Trust Co., today reported net income of $3.5 million for the first quarter of 2015, a decrease of $0.4 million, or 10.1% versus $3.9 million for the first quarter of 2014. Earnings per share decreased 10.8% to $0.99 vs. $1.11 while return on average equity for the first quarter was 12.5%. The healthy return on average equity in the current quarter was a continuation from recent years. As recently reported by The American Banker, the Company’s return on average equity between 2012 and 2014 earned it the 4th place ranking nationally among the Top 200 Publicly Traded Community Banks with assets under $2 billion. Total assets ended the quarter at $1.3 billion, an increase of 6.5% from March 31, 2014.
As of March 31, 2015, portfolio loans had increased 4.4% to $958.5 million from March 31, 2014 as loan demand in new and existing markets remained steady. “We have been encouraged by improvements in many of the local economies of North Central Indiana and Eastern Illinois which we serve. We understand the important role community banks play in supporting these rural and semi-rural communities as the industry consolidates and we have found that local commercial enterprises, agribusinesses and individuals value the responsiveness and community ties of First Farmers’ lenders. We feel this is one of the key factors to our success in recent years,” commented Gene Miles, President and Chief Executive Officer.
Deposit balances increased 6.1% to $1.08 billion between March 31, 2014 and March 31, 2015 as the Company acquired offices with $120.9 million in deposits during the fourth quarter of 2014 in Cass, Clay, Grant, Sullivan and Vigo counties in Indiana. Another factor contributing to deposit growth was the fourth quarter 2014 introduction of Harvest Rewards Checking, a product that gives depositors the opportunity to earn a favorable APY in this period of ultra-low interest rates. Not reflected yet in the March 31, 2015 deposit figures, First Farmers completed the acquisition of another five branch offices in Vermilion and Edgar Counties, Illinois with total deposits of approximately $148 million. This transaction closed on April 18, 2015 and will be reflected in second quarter results.
While assets, loans and liabilities increased between March 31, 2014 and March 31, 2015, earnings declined slightly for the respective quarters due primarily to lower net interest margins, increased operating costs and costs associated with strategic initiatives, including business combination transaction costs. Net interest margin compression continued to limit revenue growth as a lower loan to asset ratio and falling asset yields contributed to a 0.18% decline in tax equivalent net interest margin to 3.73% in the 2015 quarter. The provision for loan losses of $0.5 million remained unchanged between March quarters. Operating non-interest income increased 22.9% to $2.6 million in the 2015 quarter on improvements in mortgage banking activities, debit card usage and service charge revenues. Operating expenses increased 19.0% to $8.9 million for the three months ended March 31, 2015 as strategic initiatives and the broader branch network lifted personnel, occupancy, information technology and legal and advisory costs higher.
First Farmers Financial Corp. is the financial holding company for First Farmers Bank & Trust Co., one of nation’s largest agricultural banks with branch offices in Cass, Clay, Grant, Hamilton, Howard, Huntington, Johnson, Madison, Miami, Tipton, Vermillion, Vigo and Wabash counties in Indiana and Coles, Edgar and Vermilion counties in Illinois.