CONTACT:
John G. Copeland
EVP & Chief Financial Officer
(662) 289-8594

October 18, 2005

FOR IMMEDIATE RELEASE

First M&F Corp. reports third quarter 2005 earnings

KOSCIUSKO, Miss. - First M&F Corp. (NASDAQ: FMFC) reported today that net income for the quarter ended September 30, 2005 was $3.284 million, or $.73 basic and diluted earnings per share, compared to $2.781 million, or $.62 basic and $.61 diluted earnings per share for the third quarter of 2004.

"First M&F’s quarterly results again showed significant earnings per share improvement over the same period last year, improving by almost 20% quarter to quarter and by almost 19% on a year-to-date basis," said Hugh S. Potts, Jr., Chairman and CEO. "We’ve now put together three straight quarters of year over year improvement."

Net income for the first nine months of 2005 was $9.527 million, or $2.12 basic and $2.11 diluted per share, compared to $8.135 million, or $1.79 basic and $1.78 diluted per share for the first nine months of 2004.

For the third quarter of 2005 the annualized return on assets was 1.08%, while return on equity was 11.28%. Comparatively, the return on assets for the third quarter of 2004 was 1.00%, with a return on equity of 9.98%. The return on assets for the first nine months of 2005 was 1.06% while the return on equity was 11.03%.

Potts stated, "We continue to experience narrowing margins but healthy loan growth and increases in non-interest income, particularly deposit revenues, have allowed net interest income and net income to grow. First M&F is on the move in our Mississippi growth markets, DeSoto and Madison Counties, with new branches and our recently announced acquisitions, Bells Banking Company in Crockett County, Tennessee and First National Bank of Shelby County in Shelby County, Alabama should close in the first quarter of 2006."

Net Interest Income

Net interest income was up by 7.78% compared to the third quarter of 2004, with the net interest margin decreasing to 4.15% in the third quarter of 2005 from 4.24% in the third quarter of 2004. The net interest margin for the second quarter of 2005 was 4.17% as compared to 4.13% for the first quarter of 2005 and 4.25% for the fourth quarter of 2004. Loan yields increased to 6.74% in the third quarter of 2005 from 6.21% in the third quarter of 2004 while deposit costs increased to 2.31% from 1.62% for the same periods. Loans outstanding increased by 11.90% and deposits increased by 12.00% from September 30, 2004 to September 30, 2005. The primary factors in the improvement in net interest income were (1) strong loan demand resulting in growth in loans outstanding year-over-year, which improved interest revenues and (2) the growth in non-interest bearing deposits, which reduced the Company’s dependence on interest-bearing sources of funding. Earning asset yields were 6.38% for the third quarter of 2005, 6.18% for the second quarter of 2005 and 5.93% for the third quarter of 2004. Liability costs for the same periods were 2.57%, 2.33% and 1.98%. Management believes that yields and costs will increase as the Federal Reserve continues to raise short-term rates. Short-term Treasury rates increased by 181 basis points during the twelve months ending on September 30, 2005 while the prime rate increased from 4.75% at September 30, 2004 to 6.75% at September 30, 2005. However, loans still grew by 5.64% during the third quarter of 2005 and by 11.15% year-to-date as compared to 5.96% during the third quarter of 2004 and by 7.51% year-to-date during 2004. Management has focused and will continue to focus on core deposit growth for 2005 to offset the influence that rising rates and a flattening yield curve will have on the cost of funds. The spread between the 10-year Treasury yield and the 90-day Treasury yield has narrowed from 245 basis points (a basis point equals .01%) in September 2004 to 71 basis points in September 2005. Loans as a percentage of assets were 74.21% at September 30, 2005 as compared to 72.85% at December 31, 2004 and 72.88% at September 30, 2004.

Noninterest Revenues

Noninterest revenues, excluding securities transactions, increased by 15.79% for the third quarter of 2005 over the third quarter of 2004. Deposit revenues increased by 19.98% over the third quarter of 2004, with overdraft charges providing the majority of the growth. Mortgage revenues were flat as compared to the third quarter of 2004 as 30-year mortgage rates increased by approximately 35 basis points during the third quarter of 2005. Agency commissions were down by $54 thousand related to decreased annuity sales, and showed a small increase in property, casualty, life and health revenues for the third quarter of 2005 as compared to 2004. Other income for the third quarter of 2005 included $142 thousand in gains on sales of loans.

Noninterest Expenses

Noninterest expenses increased by 4.63% for the third quarter of 2005 as compared to the same period in 2004. Salaries and benefits were up by 11.19% and occupancy expenses were up by 13.74% as the Company continued to expand in number of locations and staff. Expansion efforts since the end of the third quarter of 2004 included a full-service branch opened in Olive Branch in November 2004, a full-service office opened in Jackson in December 2004 and a full-service branch opened in Southaven in September 2005. The number of full-time equivalent employees increased from 461 at September 30, 2004 to 477 at September 30, 2005.

Credit Quality

Annualized net loan charge-offs as a percent of average loans for the third quarter of 2005 were .28% as compared to .05% for the comparable period in 2004. Annualized net loan charge-offs as a percent of average loans were .26% for the first nine months of 2005 as compared to .45% for the same period in 2004. Non-accrual and 90-day past due loans as a percent of total loans were .22% at September 30, 2005 as compared to .47% at the end of 2004. The allowance for loan losses as a percentage of loans was 1.34% at September 30, 2005 as compared to 1.40% at December 31, 2004 and 1.49% at September 30, 2004.

Balance Sheet

Total assets at September 30, 2005 were $1.247 billion as compared to $1.143 billion at the end of 2004 and $1.135 billion at September 30, 2004. Total loans were $925.283 million compared to $832.486 million at the end of 2004 and $826.859 million at September 30, 2004. Deposits were $950.149 million compared to $877.264 million at the end of 2004 and $848.384 million at September 30, 2004. Total capital was $116.185 million or $ 25.86 in book value per share at September 30, 2005.

Capital

The Company did not repurchase any shares of common stock during the third quarter of 2005, repurchased 10,000 shares during the second quarter of 2005 at an average price of $34.74 and purchased 10,000 shares during the first quarter of 2005 at an average price of $33.23 per share. Capital was increased in the third quarter of 2005 by stock option exercises of 2,000 shares at an average price of $26.60, in the second quarter of 2005 by stock option exercises of 1,500 shares at an average price of $26.45 per share and in the first quarter of 2005 by stock option exercises of 2,500 shares at an average price of $26.60 per share. The current repurchase program allows purchases of up to 10,000 shares per month through May 2006. Average capital as a percentage of average assets was 9.59% for the third quarter of 2005 as compared to 10.07% for the third quarter of 2004.

Stock-Based Compensation

On July 1, 2005 the Company adopted FASB Statement No. 123R, Share-Based Payment. The Company is using the modified prospective method of transition and recognized $5 thousand of compensation expense related to stock options that it would not have recognized under the intrinsic value method. The Company also recognized $31 thousand of compensation expense related to restricted stock awards that were granted in August 2005.

Pending Acquisitions

On October 12, 2005 the Company announced the signing of definitive agreements to acquire Columbiana Bancshares of Columbiana, Alabama and Crockett County Bancshares of Bells, Tennessee. Columbiana Bancshares is the parent of the First National Bank of Shelby County which has total assets of approximately $191 million. Crockett County Bancshares is the parent of Bells Banking Company which has approximately $32 million in assets. The acquisitions will both be made for cash and are expected to close during the first quarter of 2006.

About First M&F Corporation

First M&F Corp., the parent of M&F Bank, is committed to proceed with its mission of making the mid-south better by exceeding expectations everyday in 22 communities in Mississippi and Tennessee.

Caution Concerning Forward Looking Statements

This document includes certain "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive, market and regulatory factors. More detailed information about those factors is contained in First M&F Corporation's filings with the Securities and Exchange Commission.

• First M&F Corporation Condensed Consolidated Statements of Condition (Unaudited)

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