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

October 20, 2004

FOR IMMEDIATE RELEASE

First M&F Corp. reports third quarter 2004 earnings

KOSCIUSKO, Miss.- First M&F Corp. (NASDAQ: FMFC) reported today that net income for the quarter ended September 30, 2004 was $2.781 million, or $.62 basic and $.61 diluted earnings per share, compared to $2.791 million, or $.61 basic and $.60 diluted earnings per share for the third quarter of 2003 and $2.753 million, or $.60 basic and diluted earnings per share for the second quarter of 2004.

Net income for the first nine months of 2004 was $8.135 million, or $1.79 basic and $1.78 diluted earnings per share, compared to $8.083 million, or $1.75 basic and $1.74 diluted earnings per share for the same period in 2003.

For the third quarter of 2004 the annualized return on assets was 1.00%, while return on equity was 9.98%. Comparatively, the return on assets for the third quarter of 2003 was 1.05%, with a return on equity of 10.06%. The return on assets for the second quarter of 2004 was 1.01%, while the return on equity was 9.87%.

"I am again pleased to report solid earnings per share for the third quarter of 2004, slightly ahead of 2003 results," said Hugh S. Potts, Jr., Chairman and CEO. "Consistently good asset quality, including lower net loan losses and lower past due loans, continues a trend from last quarter. Third quarter loan growth has been impressive and bodes well for continued improvement in earnings. During the third quarter we opened our 36th branch and first in the city of Jackson. We are excited about expanding community banking into our state capital. We also will open our third new bank this year in Olive Branch in November. First M&F looks forward to a profitable and service-oriented fourth quarter."

Net interest income was down by .62% compared to the third quarter of 2003, with the net interest margin decreasing to 4.24% in the third quarter of 2004 as compared to 4.47% in the third quarter of 2003. The net interest margin for the second quarter of 2004 was 4.19% as compared to 4.24% for the first quarter of 2004 and 4.44% for the fourth quarter of 2003. Loan yields decreased to 6.21% in the third quarter of 2004 from 6.52% in the third quarter of 2003. Loan yields remained relatively flat from the second quarter of 2004 to the third quarter. The prime rate on loans increased to 4.75% by the end of the third quarter of 2004 after starting the year at 4.00%. Management believes that loan yields will increase in the higher rate environment. Average loans were $810.659 million for the third quarter of 2004 as compared to $752.778 million for the third quarter of 2003. Loan growth was strong in the third quarter of 2004 after a sluggish first half. Loans grew by 1.01% in the second quarter of 2004 and by 6.05% in the third quarter. The Bank had a successful loan campaign tied to its Gridiron season ticket promotion during the summer and will follow up in the fourth quarter with a consumer loan campaign. Deposit costs increased in the third quarter of 2004 from the second quarter, although they were still lower than in the third quarter of 2003. Deposit costs were 1.62% in the third quarter of 2004 as compared to 1.70% in the third quarter of 2003. Deposits, which are typically more interest rate sensitive than loans, have shown upward pricing pressure as interest rates have increased during the second and third quarters of 2004. Management will continue to focus on achieving budgeted core deposit growth to offset the influence that rising rates will have on the cost of funds. Loans as a percentage of assets were 74.02% at September 30, 2004 as compared to 72.45% at September 30, 2003 and 72.46% at the end of 2003. Loans grew by 7.48% during the first nine months of 2004, while deposits grew by 3.43%.

Non-interest revenues, excluding securities transactions, for the third quarter of 2004 were up by 1.89% compared to the third quarter of 2003, with deposit-related income up by 4.16%, mortgage income down by 53.24%, and insurance agency commissions up by 13.85%. Deposit revenue increases have been driven by debit card fee income, which has doubled since the third quarter of 2003. Deposit service charges and insufficient funds charges have decreased as volumes of chargeable items have decreased during 2004. The decrease in mortgage revenues was expected as rising interest rates slowed origination volumes. Agency commission growth was driven by annuity sales as annuity commissions increased by over 400% from the third quarter of 2003 to the third quarter of 2004. Commissions from traditional insurance agency products increased by 3.31% from the third quarter of 2003 to the third quarter of 2004.

Non-interest expenses, excluding intangible asset amortization and the effect of noncontrolling interests, were up by 4.05% in the third quarter of 2004 as compared to the third quarter of 2003. Salaries and benefits were up by 8.13%, due primarily to the expansion of retail and lending staff and other fee generating positions. The negative noncontrolling joint venture expense for the first nine months of 2004 is the Company’s joint venture partner’s one-half interest from second quarter net losses in an accounts receivable factoring joint venture due to increased loan loss accruals and direct write-offs of uncollectible assets. The venture experienced a $2.0 million loan charge-off and accompanying $1.5 million loan loss accrual during the first quarter of 2004. The second quarter losses were the result of changes in credit policy in the venture, increasing its allowance for loan losses to reflect probable losses. However, no net charge-offs were recognized in the venture during the second or third quarters.

Annualized net loan charge-offs as a percent of average loans for the third quarter of 2004 were .05% as compared to .20% for the same period in 2003. Non-accrual and 90-day past due loans as a percent of total loans were .75% at the end of the third quarter of 2004 as compared to .77% at the end of 2003, and .81% at the end of the third quarter of 2003. Annualized net charge-offs as a percentage of average loans for the first nine months of 2004 were .45% as compared to .39% for the same period in 2003. The allowance for loan losses as a percentage of loans was 1.47% at September 30, 2004 as compared to 1.39% at December 31, 2003 and 1.42% at September 30, 2003.

Total assets at September 30, 2004 were $1.134 billion as compared to $1.078 billion at the end of 2003 and $1.072 billion at September 30, 2003. Total loans were $839.644 million compared to $781.321 million at the end of 2003 and $776.667 million at September 30, 2003. Deposits were $848.384 million compared to $820.226 million at the end of 2003 and $808.651 million at September 30, 2003. Total capital was $112.140 million, or $ 24.81 in book value per share at September 30, 2004.

The Company repurchased 25,000 shares of its common stock during the third quarter of 2004 at an average price of $32.77, repurchased 20,000 shares at an average price of $33.87 during the second quarter and repurchased 36,500 shares at an average price of $35.70 during the first quarter. Capital was increased by stock option exercises of 34,321 shares at an average price of $26.60 during the first quarter of 2004 and 2,000 shares at an average price of $27.92 during the third quarter. The Company began a new repurchase program in May designed to repurchase up to 120,000 shares through April, 2005.

The Company opened a new branch in Flowood, a city in Rankin County, in February of 2004. The Company opened a new branch in Jackson in a rented location in September of 2004. The Company has plans for further expansion in DeSoto County and Madison County in 2004. The Company completed a significant upgrade to its electronic banking systems during the second quarter and enhanced its retail platform system in the third quarter of 2004. The Company closed its limited-service branch in Lena on October 4, 2004, and also has made plans to close an additional branch in Weir.

First M&F Corp., the parent of M&F Bank, is committed to proceed with its mission of making the mid-south better through the delivery of excellence in financial services to 23 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

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