SECURITIES AND EXCHANGE COMMISSION
                        Washington, D. C. 20549


                               FORM 10-K
             Annual Report Pursuant to Section 13 or 15(d) of
               the Securities Exchange Act of 1934


                For the fiscal year ended December 31, 1995  
                      Commission file number 0-10972


                 First Farmers and Merchants Corporation              
        (Exact name of registrant as specified in its charter)

     Tennessee                                       62-1148660   
(State or other jurisdiction of             (I.R.S. Employer Identification
 incorporation or organization)                    No.)


 816 South Garden Street                         
  Columbia, Tennessee                               38402 - 1148    
(Address of principal executive offices)      				   (Zip Code)

                                                                
                            (615) 388-3145                                  
           (Registrant's telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
       	Title of each class			       Name of each exchange on which registered
           None                                  
                                                                

Securities registered pursuant to Section 12(g) of the Act:

                  Common Stock, par value $10.00 per share
                             (Title of Class)
	Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  	Yes   X     No      


Indicate by check mark if the disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.	  X  


The aggregate market value of the voting stock held by
non-affiliates of First Farmers and Merchants Corporation at
March 1, 1996, was none.


               APPLICABLE ONLY TO CORPORATE REGISTRANTS

	Indicate the number of shares outstanding of each of the
issuer's common stock, as of  March 1, 1996.   1,400,000  shares

               This filing contains   61    pages.

<PAGE>

DOCUMENTS INCORPORATED BY REFERENCE

(1)	Proxy Statement for 1995 Annual Stockholders Meeting of
April 16, 1996. -- Parts I and III

(2)	Annual Report to Stockholders for Year Ended December 31,
1995. -- Parts I and II

<PAGE>



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors

First Farmers and Merchants Corporation

Columbia, Tennessee


We have audited the accompanying consolidated balance sheets of
First Farmers and Merchants Corporation (the "Corporation") and
its wholly-owned subsidiary, First Farmers and Merchants
National Bank (the "Bank"), as of December 31, 1995 and 1994,
and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period
ended December 31, 1995.  These consolidated financial
statements are the responsibility of the Corporation's
management.  Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.


We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of First Farmers and Merchants Corporation
and Subsidiary as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31,
1995 in conformity with generally accepted accounting principles.


As discussed in Notes 1 and 2 to the consolidated financial
statements, effective January 1, 1994, the Corporation and the
Bank changed their method of accounting for investments in debt
and equity securities.  Also, as discussed in Notes 1 and 3,
effective January 1, 1995, the Corporation and the Bank adopted
the method of accounting for impaired loans prescribed in
Statement of Financial Accounting Standards No. 114, as amended
by No. 118.




Nashville, Tennessee
February 23, 1996








<PAGE>

PART I

Item 1.  Business.

A discussion of the general development of the business is
incorporated herein by reference to Notes to Consolidated
Financial Statements which are attached to and made a part of
Annual Report to Stockholders which is attached hereto as
Exhibit 13.


<TABLE>
              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                         CONSOLIDATED BALANCE SHEETS                             
                         DECEMBER 31, 1995 and 1994                           
<CAPTION>
ASSETS 		                                    1995   		             1994  

<S>                                          <C>                 <C>
Cash and due from banks 	                    $ 	31,281,706       $ 	26,735,526 
Securities 				
 Available for sale (amortized cost 
  $10,875,527 and $12,646,156 
  respectively) 		                              11,269,006 		       12,565,226 
 Held to maturity (fair value
  $128,829,961 and $138,892,331  
  respectively) 		                             127,662,682 		      143,061,031 
    Total securities - Note 2 		               138,931,688       		155,626,257 
Loans, net of unearned income - Note 3   	  	  291,930,311       		262,694,120 
 Allowance for possible loan losses
  - Note 4 		                                   (2,678,386)       		(2,342,290) 
    Net loans 		                               289,251,925 		      260,351,830 
Bank premises and equipment, at cost less
 allowance for depreciation and 
 amortization - Note 5   		                      6,397,936 		        6,193,080 
Other assets 		                                 11,171,993 		       11,887,492 
				
   TOTAL ASSETS 	                            $ 477,035,248 	     $	460,794,185 

LIABILITIES 				

Deposits 				
 Noninterest-bearing 	                       $ 	67,420,536 	     $ 	61,845,878 
 Interest-bearing (including  
 certificates of deposit over $100,000: 				
 1995 - $30,593,803; 1994 - $26,169,831) 	    	343,357,525 		      343,306,545 
    Total deposits 		                          410,778,061 		      405,152,423 
 Federal funds purchased 		                     10,000,000 		        7,000,000 
 Dividends payable 		                              630,000 		          574,000 
 Other short term liabilities 		                 1,955,000 		          600,000 
 Accounts payable and accrued liabilities 		     4,675,712 		        3,639,636 
				
    TOTAL LIABILITIES 		                       428,038,773         416,966,059 

COMMITMENTS AND CONTINGENCIES - Notes 7 and 9 				
STOCKHOLDERS' EQUITY 				
 Common stock - $10 par value, authorized 
  4,000,000 shares; 1,400,000 shares issued 
  and outstanding - Note 1                    		14,000,000 		       14,000,000 
 Retained earnings - Note 6 		                  34,760,389 	       	29,876,683 
 Net unrealized loss on available-for-sale 
  securities, net of tax 		                        236,086 		          (48,557) 
    TOTAL STOCKHOLDERS' EQUITY 		               48,996,475 		       43,828,126 

    TOTAL LIABILITIES AND STOCKHOLDERS' 
     EQUITY 	                                $	477,035,248 	     $ 460,794,185 
</TABLE>

<TABLE>
                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                 
                     YEARS ENDED DECEMBER 31, 1995, 1994, and 1993                   
<CAPTION>
                                                              						Net Unrealized 		
			   		                                                           	Gain (Loss) On 		
                                    		Common  		    Retained 		    Available-for-sale 		
                                    		Stock   	    	Earnings    	    	Securities   	   	   Total 

<S>                               <C>             <C>                <C>               <C>
BALANCE AT JANUARY 1, 1993 	      $ 	7,000,000 	  $	28,201,005   	   $  	- 	           $	35,201,005 
Net income for the year 		               - 		        5,256,252 		        - 		             5,256,252 
Cash dividends declared, 
 $.73 per share 		                       - 		       (1,022,000) 		       - 		            (1,022,000) 
Net unrealized loss on mutual 
 fund investment 		                      - 		          (27,684) 		       -		                (27,684) 
								
BALANCE AT DECEMBER 31, 1993 		      7,000,000 		   32,407,573 		        -		             39,407,573 
Cumulative effect of change in
 accounting principle (net of
 deferred income taxes of 
 $171,405)  - Note 1 		                  - 		           27,684		       229,424 		           257,108 
Two-for-one stock split - Note 1 		  7,000,000 		   (7,000,000) 		       -		                  - 
Net income for the year 		               - 		        5,561,426 		        - 		             5,561,426 
Cash dividends declared, $.80 
 per share 		                            - 		       (1,120,000) 		       -		             (1,120,000) 
Net unrealized loss on available-
 for-sale securities, net of tax 		      - 		            - 		         (277,981) 		         (277,981) 
								
BALANCE AT DECEMBER 31, 1994 		     14,000,000 		   29,876,683		       (48,557) 		       43,828,126 
Net income for the year 		               - 		        6,115,706 		        - 		             6,115,706 
Cash dividends declared, $.88 
 per share 		                            - 		       (1,232,000) 		       -		             (1,232,000) 
Net unrealized gain on available-
 for-sale securities, net of tax		       - 		            - 		          284,643 		           284,643 

BALANCE AT DECEMBER 31, 1995 	    $	14,000,000 	  $	34,760,389 	     $	236,086 	       $	48,996,475 

<FN>
<F1>
The accompanying notes are an integral part of the consolidated
financial statements. 								
</FN>
</TABLE>

<PAGE>
<TABLE>
                   FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                           CONSOLIDATED STATEMENTS OF INCOME                      
                     YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993                   
<CAPTION>
                                         		1995  		       1994  		       1993  

INTEREST INCOME 						
 <S>                                  <C>            <C>            <C>
 Interest and fees on loans 	         $	25,857,982  	$	21,130,914 	 $	19,518,742 

 Income on investment securities 						
  Taxable interest 		                    6,179,492 		   7,185,169 		   6,925,404 
  Exempt from federal income tax 		      2,156,813 		   2,184,666 		   1,857,168 
  Dividends 		                             177,790      		204,948       		72,054  
                                       		8,514,095 		   9,574,783 	   	8,854,626 

 Other interest income 	                  	121,492 		     111,841 		     347,287 

    TOTAL INTEREST INCOME 		            34,493,569 		  30,817,538		   28,720,655 

INTEREST EXPENSE  						
 Interest on deposits 		                15,247,875 		  12,770,618 		  11,998,235 
 Interest on other short term 
  borrowings 		                            174,370 		      93,286		       38,339 
						
    TOTAL INTEREST EXPENSE 		           15,422,245 		  12,863,904		   12,036,574 

    NET INTEREST INCOME 		              19,071,324 		  17,953,634		   16,684,081 

PROVISION FOR POSSIBLE LOAN
 LOSSES - Note 4 		                        670,000 		     660,000		      470,000 

    NET INTEREST INCOME AFTER 						
     PROVISION FOR LOAN LOSSES 		       18,401,324		   17,293,634 		  16,214,081 

NONINTEREST  INCOME 						
 Trust department income 		              1,251,642 		   1,249,359 		     863,952 
 Service fees on deposit accounts 		     2,697,332 		   2,317,992		    2,206,026 
 Other service fees, commissions,
  and fees 		                              300,407		      336,758 		     509,009 
 Other operating income 		                 322,634 		     319,466 		     315,108 
 Available for sale securities 
  gains (losses) 		                          1,182		     (243,690) 		     23,896 
						
    TOTAL NONINTEREST  INCOME 		         4,573,197 		   3,979,885		    3,917,991 

NONINTEREST  EXPENSES 						
 Salaries and employee benefits 		       6,620,827 		   6,247,706		    5,686,965 
 Net occupancy expense 		                1,279,434 		   1,190,678 		   1,070,971 
 Furniture and equipment expense 		      1,382,769 		   1,069,856		      889,848 
 Loss on other real estate 		               50,724 		       4,000 		     103,122 
 Other operating expenses 		             5,006,292 		   4,996,107		    4,903,949 

    TOTAL NONINTEREST EXPENSES 		       14,340,046		   13,508,347 		  12,654,855 
						
    INCOME BEFORE PROVISION FOR
     INCOME TAXES 		                     8,634,475 		   7,765,172		    7,477,217 

PROVISION FOR INCOME TAXES - Note 8 		   2,518,769 		   2,203,746		    2,220,965 

    NET INCOME  	                     $ 	6,115,706 	 $ 	5,561,426 	 $ 	5,256,252 

EARNINGS PER COMMON SHARE - Note 1 						
 (1,400,000 outstanding shares) 	     $ 	     4.37 	 $ 	     3.97 	 $ 	     3.75 

<FN>						
<F2>
The accompanying notes are an integral part of the consolidated
financial statements. 						
</FN>
</TABLE>

<PAGE>

<TABLE>
                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                      CONSOLIDATED STATEMENTS OF CASH FLOWS                           
                  YEARS ENDED DECEMBER 31, 1995, 1994, and 1993                   
<CAPTION>
		                                   1995     		      1994            		1993  

OPERATING ACTIVITIES 						

 <S>                            <C>              <C>               <C>
 Net income   	                 $ 	6,115,706 	   $ 	5,561,426     	$ 	5,256,252 
 Adjustments to reconcile net
  income to net cash provided
  by operating activities 						
  Excess (deficiency) of 
   provision for possible 						
   loan losses over net 
   charge offs 		                    336,096 	      	318,639	         	(230,083) 
  Provision for depreciation
   and amortization of 
   premises and equipment 		         645,816 		      589,045 		         591,486 
  Amortization of deposit 
   base intangibles 		               168,020		       168,020 		         168,020 
  Amortization of investment
   security premiums, net of
   accretion of discounts 		         641,104 		      678,968		          747,224 
  Increase in cash surrender
   value of life insurance
   contracts 	                      	(65,936) 		     (75,287) 		       (103,175) 
  Deferred income taxes 		          (233,403) 		    (163,907) 		         24,080 
  (Increase) decrease in 						
   Interest receivable  		          (255,109) 	    	(992,872) 	        	364,303 
   Other assets  	                  	912,162 		      344,572 		      (1,171,225) 
  Increase (decrease) in 						
   Interest payable 	               	577,137 		      222,605 		        (206,742) 
   Other liabilities 		              458,939 		      287,975 		          38,024 
						
    TOTAL ADJUSTMENTS 		           3,184,826 		    1,377,758		          221,912 

    NET CASH PROVIDED BY 
     OPERATING ACTIVITIES        		9,300,532 		    6,939,184 		       5,478,164 

INVESTING ACTIVITIES 						

 Proceeds from maturities, 
  calls, and sales of 
  available-for-sale
  securities 		                    7,306,453 		   25,152,051 		           - 
 Proceeds from maturities and
  calls of held-to-maturity
  securities 		                   18,848,992 		    5,092,000 		      30,497,983 
 Purchases of investment 
  securities 						
  Available-for-sale 		           (3,168,200) 		 (16,942,994) 		          - 
  Held-to-maturity 		             (6,459,372) 		 (19,495,987)		     (39,789,407) 
 Net increase in loans 		        (29,236,191) 	 	(18,778,658)     		(18,710,584) 
 Purchases of premises and
  equipment 		                      (850,672) 		    (418,586)		        (222,279) 
 Proceeds from redemption of
  annuities and life insur-
  ance contracts 						                                                 229,275 
 Purchase of single premium
  life insurance contracts 		          - 		            - 		            (730,000) 

    NET CASH USED BY 
     INVESTING ACTIVITIES      		(13,558,990) 		 (25,392,174) 		    (28,725,012) 

FINANCING ACTIVITIES 						

 Net increase in noninterest-
  bearing and interest-bearing
  deposits  		                     5,625,638      16,217,348	       	18,384,169 
 Net increase (decrease) in
  short term borrowings 		         4,355,000		     7,000,000 		         (77,537) 
 Cash dividends                 		(1,176,000) 	  	(1,071,000) 		       (966,000) 

    NET CASH PROVIDED BY
     FINANCING ACTIVITIES        		8,804,638 		   22,146,348 		      17,340,632 

    INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS        		4,546,180 		    3,693,358 		      (5,906,216) 

CASH AND CASH EQUIVALENTS 
 AT BEGINNING OF YEAR 		          26,735,526		    23,042,168 		      28,948,384 

CASH AND CASH EQUIVALENTS AT
 END OF YEAR 	                  $	31,281,706 	   $	26,735,526 	    $ 23,042,168 

<FN>
<F3>
The accompanying notes are an integral part of the consolidated
financial statements.
</FN>
</TABLE>

<PAGE>

              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

		First Farmers and Merchants Corporation (the Corporation) was
incorporated on March 31, 1982, as a Tennessee corporation.  On 
April 13, 1982, the Board of Directors of the Corporation
adopted a resolution to execute and deliver to the Board of
Governors of the Federal Reserve System an application pursuant
to Section 3(a)(1) of the Bank Holding Company Act of 1956, as
amended, for prior approval by the Board of action to be taken
by the Corporation which would result in its becoming a bank
holding company. 

 		As of December 31, 1995, the only subsidiary of the
Corporation was the Bank.  The Bank is a national banking
association which was organized in 1954 as a successor to a
state bank organized in 1909.  The Bank conducts a full-service
commercial banking business at its principal office at 816 South
Garden Street, Columbia, Tennessee and at thirteen (13)
branches:  High Street Branch, Northside Branch, Shady Brook
Mall Branch, Hatcher Lane Branch, and Campbell Plaza Branch in
Columbia; Mt. Pleasant Branch in Mt. Pleasant; Spring Hill
Branch in Spring Hill; Lawrenceburg Branch in Lawrenceburg;
Leoma Branch in Leoma; Loretto Branch in Loretto; Lewisburg
Branch in Lewisburg; Chapel Hill Branch in Chapel Hill; and
Centerville Branch in Centerville.  The Bank provides automatic
teller machine services in the Northfield Complex at the Saturn
location near Spring Hill, and in Columbia at the Tennessee Farm
Bureau and Columbia State Community College.

		The community service area of the Bank is comprised of Maury,
Lawrence, Marshall, Hickman, and adjacent counties.  Commercial
banking in the marketing area served by the Bank is highly
competitive.  Although the Bank is ranked as the largest bank in
the area, in terms of total deposits, the Bank faces substantial
competition from ten (10) other banks, three (3) savings and
loan associations, and several credit unions located in the
marketing area.

Accounting Policies

		The accounting principles followed and the methods of applying
those principles conform with generally accepted accounting
principles and to general practices in the banking industry. 
The significant policies are summarized as follows.

Principles of Consolidation

		The accompanying consolidated financial statements present the
accounts of the Corporation and its wholly-owned subsidiary, the
Bank.  Material intercompany accounts and transactions have been
eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

		The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.

Cash and Due From Banks

		Included in cash and due from banks are legally  reserved
amounts which are required to be maintained on an average basis
in the form of cash and balances due from the Federal Reserve
Bank and other banks.  Average reserve requirements for the year
ended December 31, 1995, amounted to approximately $8.3 million.

Cash Equivalents

		Cash equivalents include cash on hand, cash due from banks,
and federal funds sold.  Federal funds are sold for one-day
periods.

<PAGE>

          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Securities

		Effective January 1, 1994, the Bank adopted Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting
for Certain Investments in Debt and Equity Securities."  In
accordance with the Statement, prior period financial statements
have not been restated to reflect the change in accounting
principle.  The cumulative effect of  the adoption was an
increase in stockholders' equity  of $257,108 (net of $171,405
in deferred income taxes) to reflect the net unrealized gains on
securities classified as available-for-sale that were previously
classified as held-to-maturity.  SFAS 115 establishes standards
of accounting and reporting for investments in equity securities
that have readily determinable fair values and all debt
securities.  Under the Statement, all such investments are
classified in three categories and accounted for as follows: 

		Debt securities that the Bank has the positive intent and
ability to hold to maturity are classified as held-to-maturity
and reported at amortized cost with premiums and discounts
recognized in interest income using the interest method over the
period to maturity.

		Debt and equity securities that are bought and held
principally for the purpose of selling them in the near term are
classified as trading securities and reported at fair value,
with  unrealized gains and losses included in earnings.

		Debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified
as available-for-sale securities and reported at fair value,
with unrealized gains and losses, net of tax,  excluded from
earnings and reported as a separate component of stockholders'
equity.  Gains and losses realized on the sale of
available-for-sale securities are determined using the specific
identification method.

		Declines in the fair value of individual available-for-sale
and held-to-maturity securities below their cost that are other
than temporary result in write-downs of the individual
securities to their fair value.  The related write-downs are
included in earnings as realized losses.

		On November 15, 1995, the Financial Accounting Standards Board
issued a guide for implementation of SFAS 115 which allowed a
bank to reassess the appropriateness of the classification of
all securities held at that date and account for resulting
reclassifications as a transfer until December 31, 1995. 
Reclassification from the held-to-maturity category that
resulted from this one-time reassessment would not call into
question the intent of a bank to hold other debt securities to
maturity in the future.  The Bank did not reclassify any debt
securities as a result of this one-time reassessment.

Loans

		Effective January 1, 1995, the Bank adopted Statement of
Financial Accounting Standards No. 114 (SFAS 114, as amended by
SFAS 118), "Accounting by Creditors for Impairment of a Loan". 
The statement specifies how allowances for credit losses related
to certain loans should be determined and addresses the
accounting for certain loans that are restructured in a troubled
debt restructuring.  A loan is considered impaired when it is
probable that an institution will be unable to collect all
amounts due (principal and interest) according to the
contractual terms of the loan agreement.  The Bank evaluates
smaller balance homogeneous loans collectively for impairment. 
Loans secured by one to four family residential properties,
consumer installment loans, and line of credit loans are
considered smaller-balance homogeneous loans.

		Interest on loans is computed daily based on the principal
amount outstanding.  Loan origination fees and related direct
costs are deferred and recognized as an adjustment of yield on
the interest method.  Interest accruals are discontinued when,
in the opinion of management, it is not reasonable to expect
that such interest will be collected.  Consequently, interest
accruals are discontinued on loans that are ninety days
past-due.  All loans

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Loans (Continued)

in non-accrual status and loans in the two most severe Loan
Review classifications are specifically evaluated for
impairment.  Interest income on loans in non-accrual status is
recognized only to the extent of the excess of cash payments
received over principal payments due.

		When a loan is collateral dependent, impairment is measured
based on the observable market price or the fair value of the
collateral.  For other loans, the amount of impairment is
measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate. 
Positive changes in the net present value of an impaired loan
will in no event be used to increase the value of a loan above
the amount of the loan.

	Other Real Estate

		Other real estate, which is included in other assets,
represents real estate acquired through foreclosure and is
stated at the lower of cost or fair value minus estimated cost
to sell.  If, at the time of foreclosure, the fair value of the
real estate is less than the Bank's carrying value of the
related loan, a write-down is recognized through a charge to the
allowance for possible loan losses, and the fair value becomes
the new cost for subsequent accounting.  If the Bank later
determines that the cost of the property cannot be recovered
through sale or use, a write-down is recognized by a charge to
operations.  When the property is not in a condition suitable
for sale or use at the time of foreclosure, completion and
holding costs, including such items as real estate taxes,
maintenance and insurance, are capitalized up to the estimated
net realizable value of the property.  However, when the
property is in a condition for sale or use at the time of
foreclosure. or the property is already carried at its estimated
net realizable value, any subsequent holding costs are expensed.
 Legal fees and any other direct costs relating to foreclosures
are charged to operations when incurred.

		The Bank's recorded value for other real estate was
approximately $482,945 at December 31, 1995, and $544,540 at
December 31, 1994.  

Allowance for Possible Loan Losses

	The allowance for possible loan losses is established by
charges to operations based on the evaluation of the impairment
of loans by Loan Review, the Special Assets Committee, and the
Credit Administrator.  Impairments in loans are charged to the
allowance account in the period such determination is made. 
Recoveries on loans previously charged off are credited to the
allowance account in the period received.  The adequacy of the
allowance for possible loan losses is evaluated quarterly in
conjunction with loan review reports and evaluations that are
discussed in a meeting with loan officers and loan
administration.

Premises and Equipment

		Premises and equipment are stated at cost, less accumulated
depreciation and amortization.  The provision for depreciation
is computed principally on an accelerated cost recovery method
over the estimated useful lives of the assets, which range as
follows:  buildings - 15 to 50 years and equipment - 3-33 years.
 Costs of major additions and improvements are capitalized. 
Expenditures for maintenance and repairs are charged to
operations as incurred.  Gains or losses from the disposition of
property are reflected in operations, and the asset accounts and
related allowances for depreciation are reduced. 

Trust Department Income

		Trust department income is recognized on the accrual basis in
the applicable period earned.

<PAGE>

             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Stock Split

		During 1994, the Corporation amended its corporate charter to
increase the number of authorized shares of its common stock
from 2,000,000 to 4,000,000 shares and on April 12, 1994, the
Corporation's stockholders approved a two-for-one split effected
in the form of a 100% stock dividend distributed May 30, 1994,
to shareholders of record on April 12, 1994.  In accordance with
State corporate legal requirements, the transaction was recorded
by a transfer from retained earnings to common stock in the
amount of $7,000,000 ($10 for each additional share issued). 
All per share and share data in the accompanying consolidated
financial statements and footnotes have been restated to give
retroactive effect to the transaction.

Income Taxes

		The companies file a consolidated federal income tax return.  
They adopted Statement of Financial Accounting Standards No. 109
(SFAS 109), "Accounting For Income Taxes", effective January 1,
1993.  SFAS 109 requires an asset and liability approach to
financial accounting and reporting for income taxes.  Deferred
income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected
to affect taxable income.

		Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. 
Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred
tax assets and liabilities.  The cumulative effect, as of
January 1, 1993, of this change in the method of accounting for
income taxes was negligible.

Intangible Assets

	Deposit base intangibles identified in merger transactions are
amortized over 42 to 70 months on the straight-line method. 
Total amortization expense charged to operations amounted to: 
1995 - $168,020;  1994 - $168,020;  and  1993 - $168,020.

Fair Value of Financial Instruments

		Statement of Financial Accounting Standards No. 107 (SFAS
107), "Disclosures about Fair Value of Financial Instruments",
requires all entities to disclose the estimated fair value of
its financial instrument assets and liabilities.  For the Bank,
as for most financial institutions, almost all of its assets and
liabilities are considered financial instruments as defined in
SFAS 107.  Many of the Bank's financial instruments, however,
lack an available trading market as characterized by a willing
buyer and willing seller engaging in an unforced, unforeclosed
transaction.  Therefore, significant estimations and present
value calculations  were used by the Bank for the purposes of
this disclosure.

<PAGE>


            FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2 - INVESTMENT SECURITIES

		The following tables reflect the amortized value and fair
value of investment securities.

<TABLE>

<CAPTION>
                            		      Amortized 		                Gross Unrealized 		 		         Fair 	
	                                    	Value 		               Gain           	   Loss 		        Value 	

December 31, 1995 									

Available-for-sale securities 									

 <S>                              <C>                     <C>                  <C>           <C>
 U.S. Treasury 	                  $ 	5,064,421 	          $  	72,679 	         $   	- 	      $ 	5,137,100 	
 U.S. Government agencies 		         3,279,968 		             72,268 		             2,570		     3,349,666 	
 Other securities 		                 2,531,138 	             254,102 		             3,000 		    2,782,240 	
 	                                $	10,875,527 	          $ 	399,049 	         $   	5,570 	  $	11,269,006 	

Held-to-maturity securities 									

 U.S. Treasury                   	$	61,426,813 	          $ 	295,846 	         $  	59,359 	  $	61,663,300 	
 U.S. Government agencies 		        23,498,204 		            267,237 		            48,041		    23,717,400 	
 States and political subdivisions		42,415,025 		            934,439		            241,048 		   43,108,416 	
 Other securities 		                   322,640 		             18,205 		             - 		          340,845 	
                                 	$127,662,682 	          $1,515,727 	         $ 	348,448 	  $128,829,961 	

December 31, 1994 									
									
Available-for-sale securities 									
 U.S. Treasury 	                  $ 	7,094,657 	          $   	4,695 	         $  	50,352 	  $ 	7,049,000 	
 U.S. Government agencies 		         5,551,499 		              3,892 		            39,165		     5,516,226 	
	                                 $	12,646,156 	          $   	8,587           $  	89,517 	  $	12,565,226 	

Held-to-maturity securities 									
 U.S. Treasury 	                  $	71,997,419 	          $  	66,784 	         $1,862,503 	  $	70,201,700 	
 U.S. Government agencies 		        28,527,740 		             21,631 		         1,006,621		    27,542,750 	
 States and political subdivisions 	39,786,156 		            493,613		          1,804,009 		   38,475,760 	
 Other securities 		                 2,749,716 		              3,210 		            80,805 		    2,672,121 	
                                 	$143,061,031 	          $ 	585,238 	         $4,753,938 	  $138,892,331 	

</TABLE>

		Securities with an amortized value of $93,101,954 and
$81,583,779 at December 31, 1995 and 1994, respectively (fair
value: 1995 - $93,937,766; 1994 - $80,148,047), were pledged to
secure deposits and for other purposes as required or permitted
by law.  The fair value is established by an independent pricing
service as of the approximate dates indicated.  The differences
between the amortized value and fair value reflect current
interest rates and represent the potential gain (or loss) had
the portfolio been liquidated on that date.  Security gains (or
losses) are realized only in the event of dispositions prior to
maturity.  The fair values of all securities at December 31,
1995, either equaled or exceeded the cost of those securities,
or the decline in fair value is considered temporary.

		A schedule of net gains and losses realized on the disposition
of investment securities, and the related tax effects, is
presented in the following table.  All net gains realized in
1995 and net losses realized in 1994 resulted from sales of
securities which were classified as available-for-sale.

<TABLE>

<CAPTION>
            		                         1995       		1994        		1993  	

       <S>                         <C>           <C>           <C>
       Pre-tax gains (losses) 	    $   	1,182 	  $(243,690) 	  $ 	23,896 	
       Tax effect 		                     (473) 		   97,476 		     (9,558) 	
       After-tax gains (losses) 	   $  	  709 	  $(146,214) 	  $ 	14,338 	

</TABLE>
							
<PAGE>

         FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 - INVESTMENT SECURITIES (Continued)



		Proceeds from the maturity, call, or sale of
available-for-sale securities were $7,306,453, $25,152,051, and
$-0- during 1995, 1994, and 1993 respectively.  Proceeds from
the maturity or call of held-to-maturity securities were
$18,848,992, $5,092,000, and $30,497,983 during 1995, 1994, and
1993 respectively.  Gross gains of $1,182 and gross losses of
$-0- were realized on the dispositions in 1995.  Gross gains of
$-0- and gross losses of $243,690 were realized on the
dispositions in 1994.  Gross gains of $23,896 and gross losses
of $ -0- were realized on the dispositions in 1993.  At December
31, 1995, the Corporation did not hold investment securities of
any single issuer, other than obligations of the U.S. Treasury
and other U.S. Government agencies, whose aggregate book value
exceeded ten percent of stockholders' equity.

	 	The following table shows the amortized value, fair  value,
and weighted yields (for tax-exempt obligations on a fully
taxable basis assuming a 34% tax rate) of investment securities
at December 31, 1995, by contractual maturity.  Expected
maturities may differ from contractual maturities because
issuers may have the right to call or prepay obligations.

<TABLE>

<CAPTION>
                                             		Amortized 	       	Fair 	 	   Yield 	
                                                		Cost 	   	     Value 		    (Unaudited) 	
Available-for-sale securities 							
<S>                                          <C>              <C>              <C>
U.S. Treasury
 Within one year 	                           $ 	2,019,183 	   $ 	2,029,400 		   6.2% 	
 After one but within five years 		             3,045,238 		     3,107,700		    6.5% 	
U.S. Government agencies 							
 Within one year 		                             1,000,000 		     1,002,500 		   6.1% 	
 After one but within five years 		             1,996,231 		     2,066,000		    7.6% 	
 After ten years 		                               283,737 		       281,166 		   6.2% 	
Other securities 		                             2,531,138 		     2,782,240 		   8.9% 	
	                                            $	10,875,527 	   $	11,269,006 			

Held-to-maturity securities 							
U.S. Treasury 							
 Within one year 	                           $	39,167,894 	   $ 39,306,700 		   6.1% 	
 After one but within five years 		            22,258,919 		    22,356,600		    5.6% 	
U.S. Government agencies 							
 Within one year 		                            11,023,204 		    11,062,500 		   6.1% 	
 After one but within five years 		            12,475,000 		    12,654,900		    6.1% 	
 After five but within ten years 		                - 	 	            - 	 	        - 	 
States and political subdivisions 							
 Within one year 		                             3,244,962 		     3,296,024 		  10.0% 	
 After one but within five years 		            12,357,917 		    12,741,932		    8.7% 	
 After five but within ten years 		            23,148,235 		    23,191,943		    7.6% 	
 After ten years 		                             3,663,911 		     3,678,517 		   7.8% 	
Other securities 							
 After one but within five years 		               322,640 		       340,845 		   8.0% 	
	                                            $127,662,682 	   $128,629,961 			
</TABLE>

<PAGE>							

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  3 - LOANS

		A summary of loans outstanding by category follows. 

<TABLE>

<CAPTION>
  		                                                1995  		          1994  	
Loans secured by real estate 					
<S>                                            <C>               <C>
Loans secured by real estate
 Construction  and  land development   	       $ 	7,399,095 	    $ 	8,036,802 	
 Farmland 		                                      7,849,137 		      7,942,187 	
 Lines of credit 		                                 339,108         		240,976 	
 1-4 family residential property - first lien  	111,016,393     		100,548,761 	
 1-4 family residential property - junior lien   	7,177,285       		7,219,546 	
 Multifamily residential property 		              3,729,687 		      4,775,515 	
 Non farm, non residential property 		           44,224,353 		     41,734,848 	
    Subtotal 		                                 181,735,058 		    170,498,635 	

Commercial and  industrial loans 					
 Commercial  and  industrial 		                  51,758,675 		     44,870,150 	
 Taxable municipal loans 		                         270,000 		        300,000 	
 All other loans 		                                  88,239 		        187,405 	
    Subtotal 		                                  52,116,914 		     45,357,555 	

Tax exempt municipal loans 		                     1,485,071 		        748,116 	

Loans to individuals 					
 Agricultural production 		                       3,659,215 		      3,823,296 	
 Lines of credit 		                                 135,230 		        103,249 	
 Individuals for personal expenditures 	        	53,026,209      		42,341,597 	
 Purchase or carry securities 		                     - 		                 655 	
    Subtotal 		                                  56,820,654 		     46,268,797 	

Lease financing 		                                   - 		               1,408 	

                                              		292,157,697 		    262,874,511 	

Less: 					
 Net unamortized loan origination fees 		          (225,368) 		      (176,606)
 Unearned interest income 		                         (2,018) 		        (3,785) 	
 Allowance for possible loan losses 		           (2,678,386)		     (2,342,290) 	
					
	                                              $289,251,925 	    $260,351,830 	

</TABLE>
					
		A summary of loan maturities and the amounts of loans carrying
fixed and variable interest rates as of December 31, 1995,
follows.

<TABLE>

<CAPTION>
                                    	 	(In Thousands of Dollars) 
                             		Within 		     One to 		    After  		
		                            One Year 	  	Five Years 		 Five Years  		Total 

     <S>                      <C>           <C>          <C>         <C>
     Fixed rate loans 	       $ 	62,923 	   $ 	47,100 	  $ 	23,735   $	133,758 
     Variable rate loans 	     	113,389 	     	26,949 		    18,062 		  158,400 
								
 	                            $	176,312 	   $ 	74,049 	  $ 	41,797 	 $	292,158 

</TABLE>

	Loans having recorded investments of $5,856,000 at December 31,
1995, have been identified as impaired in accordance with the
provisions of SFAS 114.  The total allowance for possible loan
losses related to these loans was $456,000.  Interest received
on these loans during 1995 was $532,873.  Prior to adoption of
SFAS 114, non-performing loans were those which were accounted
for on a non-accrual basis.  Such loans had outstanding balances
of approximately  $2,611,000 at December 31, 1994.

<PAGE>
                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - LOANS  (Continued)

		Certain parties (principally directors and senior officers of
the Corporation or the Bank, including their affiliates,
families, and companies in which they hold ten percent or more
ownership) were customers of, and had loans and other
transactions with, the Bank in the ordinary course of business. 
An analysis of activity with respect to such loans for the years
ended December 31, 1995 and 1994, follows. 

<TABLE>

<CAPTION>
                                  		Balance at 								
                	                  	Beginning  				                 Amount      		Amount      Balance at 
                                 		 of Year 		      Additions 		  Collected 	  	Written Off 		End of Year 

 <S>                                <C>            <C>           <C>           <C>            <C>
      1995  										
 Aggregate of certain party loans 	 $ 6,494,271  	 $	7,020,665 	 $	5,908,932 	 $ 	  - 	       $ 7,606,004 

      1994  										
 Aggregate of certain party loans 	 $	6,563,577 	  $	5,081,776 	 $	5,151,082 	 $    - 	       $	6,494,271 

</TABLE>
										

		These totals exclude loans made in the ordinary course of
business to other companies with which neither the Corporation
nor the Bank has a relationship other than the association of
one of its directors in the capacity of officer or director. 
These loan transactions were made on substantially the same
terms as those prevailing at the time for comparable loans to
other persons.  They did not involve more than the normal risk
of collectiblity or present other unfavorable features.  No
related party loans were charged off in 1995 or 1994.

NOTE 4 - ALLOWANCE FOR POSSIBLE LOAN LOSSES

		Changes in the allowance for possible loan losses are as
follows:

<TABLE>

<CAPTION>
       		                                    1995   		     1994   		     1993  	

<S>                                      <C>           <C>           <C>
Balance at beginning of year 	           $	2,342,290 	 $	2,023,651 	 $	2,253,735 	
Provision charged to operating expenses    		670,000 		    660,000		     470,000 	
Loan losses: 							
 Loans charged off 		                       (555,957) 		  (422,831) 		  (847,535) 	
 Recoveries on loans previously  							
  charged off                              		222,053      		81,470     		147,451 	
							
Balance at end of year 	                 $	2,678,386 	 $	2,342,290 	 $	2,023,651 	

</TABLE>
							

		For federal income tax purposes, the allowance for possible
loan losses is maintained at the maximum allowable by the
Internal Revenue Code.

NOTE 5 - BANK PREMISES AND EQUIPMENT

		The components of premises and equipment are as follows:

<TABLE>

<CAPTION>
                                                1995               1994
        <S>                                 <C>                <C>
        Land 	                              $ 1,204,288 	      $	1,204,288 	
        Premises 		                           6,648,329 		       6,629,567 	
        Furniture and equipment 		            3,949,617 		       3,816,320 	
        Leasehold improvements 		               879,695 		         474,770 	
                                           		12,681,929 		      12,124,945 	
Less allowance for depreciation and
 amortization 		                             (6,283,993)		      (5,931,865) 	

	                                           $	6,397,936 	      $	6,193,080 	

</TABLE>

		Annual provisions for depreciation and amortization total
$645,816 for 1995, $589,045 for 1994, and $591,486 for 1993. 
Included in premises and equipment cost and allowance for
depreciation and amortization are certain fully depreciated
assets totaling $2,287,900 at December 31, 1995.


<PAGE>

        FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - LIMITATION ON SUBSIDIARY DIVIDENDS

		The approval of the Comptroller of the Currency is required
before the Bank's dividends in a given year may exceed the total
of its net profit (as defined) for the year combined with
retained net profits of the preceding two years.  As of December
31, 1995, additional dividends of approximately $13,500,000
could have been declared by the Bank to the Corporation without
regulatory agency approval.



NOTE 7 - LEASES



		Real property for four of the Bank's office locations and
certain equipment are leased under noncancelable operating
leases expiring at various times through 2000.  In most cases,
the leases provide for one or more renewal options of five to
ten years under the same or similar terms.  In addition, various
items of teller and office equipment are leased under cancelable
and noncancelable operating leases.  Total rental expense
incurred under all operating leases, including short-term leases
with terms of less than one month, amounted to $660,121,
$409,764, and $254,121 for equipment leases, and $111,649,
$97,966, and $82,030 for building leases, in 1995, 1994, and
1993, respectively.  Future minimum lease commitments as of
December 31, 1995, under all noncancelable operating leases with
initial terms of one year or more follow.

<TABLE>
     <S>                                          <C>
                    1996                        	 $ 	671,934 	
                  		1997  	              	           671,934 	
                  		1998  		                         636,511 	
                  		1999  		                           5,088 	
                  		2000  	 	                          5,088 	

     Total future minimum lease payments 	    		  $1,990,555 	

/TABLE>
					

NOTE 8 - FEDERAL AND STATE INCOME TAXES

		The provisions for income taxes consist of the following:


</TABLE>
<TABLE>

<CAPTION>
                                     		1995         		1994        		1993  	

<S>                                <C>            <C>            <C>
Current: 							
 Federal 	                         $ 2,166,566 	  $	1,831,848 	  $	1,754,003 	
 State 		                              585,606 		     503,433 		     442,882 	
    Total current 	                  2,752,172 		   2,335,281 		   2,196,885 	

Deferred: 							
 Federal 		                           (198,393) 		   (111,805) 		     20,468 	
 State 		                              (35,010) 		    (19,730) 		      3,612 	
    Total deferred                    (233,403) 		   (131,535) 		     24,080 	

  Total provision for 
    income taxes 	                 $ 2,518,769 	  $	2,203,746 	  $	2,220,965 	

</TABLE>
							
<PAGE>

                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - FEDERAL AND STATE INCOME TAXES (Continued)

		The deferred tax effects of principal temporary differences
are shown in the following table:

<TABLE>
<CAPTION>
                		                         1995  		      1994  		      1993  	

<S>                                   <C>           <C>           <C>
Allowance for possible loan losses 	  $ 	815,315 	  $ 	682,877 	  $ 	555,421 	
Installment loan reporting 		               - 		          - 		         6,865 	
Write-down of other real estate 		       177,120 		    159,120 		    157,520 	
Deferred compensation 		                 256,139 		    156,227 		     76,781 	
Direct lease financing 		                   - 		        36,452 		     35,736 	
Unrealized loss on AFS securities 		        - 		        32,372 		     18,457 	
Deferred loan fees 		                     44,051 		     24,546 		     76,907 	

  Deferred tax asset 		                1,292,625 		  1,091,594 		    927,687 	

Unrealized gain on AFS securities 		    (157,392) 		      - 		          - 	

  Deferred tax liability 		             (157,392)  		     - 		          -	

    Net deferred tax asset 	          $1,135,233    $1,091,594	   $ 	927,687 	

</TABLE>


		A reconciliation of total income taxes reported with the
amount of income taxes computed at the federal statutory rate
(34% each year) is shown below.  Total income taxes paid in
1995, 1994, and 1993 amounted to $2,756,442, $2,431,332 and
$2,564,887, respectively.

<TABLE>

<CAPTION>
        		                                        1995  		         1994  		         1993  	

<S>                                           <C>              <C>              <C>
Tax expense at statutory rate 	               $ 2,935,722 	    $ 2,640,158    	 $	2,542,254 	
Increase (decrease) in taxes resulting from: 							
 Tax-exempt interest 		                          (783,011) 		     (780,946) 		     (647,575) 	
 Nondeductible interest expense 		                 89,491 		        75,019 		        58,457 	
 Other nondeductible expenses 							
  (nontaxable income) - net 		                    (28,114) 		       (6,458)		       (19,962) 	
 State income taxes, net of federal 							
  tax benefit 		                                  363,393 		       319,244 		       292,263 	
 Dividend income exclusion 		                     (18,324) 		      (29,571) 		      (15,646) 	
 Other 		                                         (40,388) 		      (13,700) 		       11,174 	

Total provision for income taxes 	            $	2,518,769 	    $	2,203,746 	    $	2,220,965 	

Effective tax rate 		                               29.2% 		         28.4% 		         29.7% 	

</TABLE>
							

		A net deferred tax asset was included in other assets in the
accompanying consolidated balance sheet.  

NOTE 9 - COMMITMENTS

		The Bank is a party to financial instruments with
off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers.  These financial
instruments include commitments to extend credit and standby
letters of credit.  Those instruments involve, to varying
degrees, elements of credit risk in excess of the amount
recognized in the balance sheet.  The contract or notional
amounts of those instruments reflect the extent of involvement
the Bank has in those particular financial instruments.

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 NOTE 9 - COMMITMENTS (Continued)

		The total outstanding loan commitments and stand-by letters of
credit in the normal course of business at December 31, 1995,
were $21,739,000 and $1,699,000, respectively.  Loan commitments
are agreements to lend to a customer as long as there is not a
violation of any condition established in the contract.  Standby
letters of credit are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. 
Those guarantees are primarily issued to support public and
private borrowing arrangements, including commercial paper, bond
financing, and similar transactions.  The credit risk involved
in issuing letters of credit is essentially the same as that
involved in making a loan.

		The loan portfolio is well diversified with loans generally
secured by tangible personal property, real property, or stock. 
The loans are expected to be repaid from cash flow or proceeds
from the sale of selected assets of the borrowers.  Collateral
requirements for the loan portfolio are based on credit
evaluation of the customer.  It is management's opinion that
there is not a concentration of credit risk in the portfolio.


NOTE 10 - SUPPLEMENTARY CASH FLOW INFORMATION

		Interest paid on deposits and other borrowings during 1995,
1994, and 1993 amounted to $14,845,299, $12,641,299, and
$12,243,317, respectively.


NOTE 11 - EMPLOYEE BENEFIT PLANS

		The Bank contributes to a defined contribution, profit-sharing
plan covering employees who meet participation requirements. 
The amount of the contribution is discretionary as determined by
the Board of Directors up to the maximum deduction allowed for
federal income tax purposes.  Contributions to the plan, that
amounted to $633,459, $602,010, and $529,324, in 1995, 1994, and
1993, respectively, are included in salaries and employee
benefits expense. 

		In 1992, the Bank formalized a nonqualified salary
continuation plan for certain key officers.  In connection with
this plan, the value of the assets (1995 - $594,221; 1994 -
$580,088) used to fund the plan and the related liability (1995
- $482,272; 1994 - $400,606) were included in other assets and
other liabilities respectively.  Single premium universal life
insurance policies were purchased in 1993 to replace other
policies and annuities that were redeemed.  Insurance premiums
of $515,000 were paid during 1993, of which $285,725 (net of the
redemption proceeds) was capitalized.  Net non-cash income of
$14,133 in 1995 and  $22,448 in 1994 is also included in the
above asset values.  The principal cost of this plan will be
accrued over the anticipated remaining period of active
employment, based on the present value of the expected
retirement benefit.  Expense related to this plan was $106,666
in 1995, $98,925 in 1994, and $91,916 in 1993.

   The Bank also implemented a deferred compensation plan which
permitted directors, beginning in 1993, to defer their
director's fees and earn interest on the deferred amount.  A
liability increase and expense of $176,727 for 1995, $126,262
for 1994, and $125,036 for 1993 were recognized in the
accompanying financial statements.  In connection with this
plan, a single premium universal life insurance policy was
purchased on the life of each director who elected to
participate.  Insurance premiums of $1,425,000 were paid at the
end of 1992, of which $1,399,816 was capitalized to reflect the
cash surrender value at December 31, 1992.  Additional single
premium universal life insurance policies were purchased in 1993
for new participants.  Insurance premiums of $215,000 were paid
during 1993 and capitalized.  Net non-cash income of $51,803 in
1995 and $52,840 in 1994 is also included in the cash surrender
values of  $1,801,922 and $1,750,119 at December 31, 1995 and
1994, respectively.

		The Bank is beneficiary on the insurance policies that fund
the salary continuation plan and the deferred compensation plan.
 These policies have an aggregate face amount of $2,425,000.

<PAGE>

               FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - QUARTERLY RESULTS OF OPERATIONS (Unaudited)

		The following is a summary of the unaudited consolidated
quarterly results of operations.

<TABLE>
										
<CAPTION>

                               		First        Second     		  Third 		     Fourth 		
                              		Quarter     		Quarter 	     Quarter   	  	Quarter 		    Total 

        1995  										

<S>                          <C>           <C>           <C>           <C>           <C>
Interest income 	            $	8,244,228   $	8,640,769 	 $	8,720,212 	 $ 8,888,360 	 $34,493,569 
Interest expense 		            3,654,485 		  3,856,594 		  3,938,600 		  3,972,566		  15,422,245 

Net interest income 		         4,589,743 		  4,784,175 		  4,781,612		   4,915,794 		 19,071,324 
Provision for possible loan  										
 losses 		                       145,000 		    140,000 		    180,000 		    205,000 		    670,000 
Noninterest expenses, net of 										
 noninterest income 		         2,492,505 		  2,547,595 		  2,430,466		   2,296,283 		  9,766,849 
										
Income before income taxes 		  1,952,238 		  2,096,580 		  2,171,146		   2,414,511 		  8,634,475 
Income taxes 		                  512,448 		    589,977 		    680,609 		    735,735 		  2,518,769 

Net income 	                 $	1,439,790 	 $ 1,506,603 	 $	1,490,537 	 $	1,678,776 	 $ 6,115,706 

Earnings per common share 										
  (1,400,000 shares) 	       $ 	    1.03 	 $  	   1.08 	 $     	1.06 	 $    	 1.20 	 $ 	    4.37 

</TABLE>

<TABLE>
<CAPTION>
	                               	First 		      Second 		     Third 		    Fourth 		
                     		         Quarter 	     	Quarter     	Quarter  	   Quarter 		    Total 

1994  										

<S>                          <C>           <C>            <C>           <C>          <C>
Interest income 	            $	7,176,893   $	7,664,849    $	7,814,500 	 $	8,161,296  $30,817,538 
Interest expense 		            2,986,012 		  3,148,310 		   3,272,217 		  3,457,365	  12,863,904 

Net interest income 		         4,190,881 		  4,516,539 		   4,542,283		   4,703,931 		17,953,634 
Provision for possible loan  										
 losses 		                        60,000 		    255,000 		     225,000 		    120,000 		   660,000 
Noninterest expenses, net of 										
 noninterest income 		         2,260,734 		  2,254,027 		   2,490,717		   2,522,984 		 9,528,462 

Income before income taxes 		  1,870,147 		  2,007,512 		   1,826,566		   2,060,947 		 7,765,172 
Income taxes 		                  528,638 		    566,493 		     508,942 		    599,673 		 2,203,746 

Net income 	                 $	1,341,509 	 $	1,441,019 	  $ 1,317,624 	 $	1,461,274  $	5,561,426 

Earnings per common share 										
 (1,400,000 shares) 	        $ 	    0.96 	 $  	   1.03 	  $ 	    0.94 	 $ 	    1.04	 $ 	    3.97 

</TABLE>

NOTE 13 - SHAREHOLDERS' EQUITY

		The Corporation and the Bank are subject to federal regulatory
risk-adjusted capital adequacy standards.  Failure to meet
capital adequacy requirements can initiate certain mandatory,
and possibly additional discretionary, actions by regulators
that could have a direct material effect on the consolidated
financial statements of the Corporation and its subsidiary, the
Bank.  The regulations require the Bank to meet specific capital
adequacy guidelines that involve quantitative measures of
assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices.   As of
December 31, 1995, the Bank's calculated risk-adjusted capital
ratios exceeded the minimum standard for a "well capitalized"
bank.  The capital classification is also subject to qualitative
judgments by the regulators about components, risk weightings,
and other factors.  Management believes that the Corporation and
the Bank meet all capital requirements.

<PAGE>

             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - DEPOSITS

		The Bank does not have any foreign offices and all deposits
are serviced in its fourteen domestic offices.  The average
amounts of deposits and the average rates paid are summarized in
the following table.

<TABLE>

<CAPTION>
                                                      (Unaudited) 									
                                     		 	 	 	 	 	Year Ended December 31 		 	 	 	 	 	

                                          		1995       		   	 		1994      		 	 		  1993  		 	 	
                                							          (Dollars In Thousands) 									

<S>                                  <C>        <C>      <C>        <C>      <C>        <C>
Demand deposits 	                    $	56,730  		- 	% 	  $	55,557 	 	- 	% 	  $	48,697		  - 	% 	
NOW and money market accounts 		      149,016 		3.51 			  161,244 		3.25			   147,246 		3.16 		
Savings deposits 		                    34,629 		3.00 			   35,036 		2.87 			   31,216 		2.76
Time deposits of less than $100,000 		136,568 		5.30 			  126,523		 4.27 			  128,021 		4.26 		
Time deposits of $100,000 or more 		   32,524 		5.35 			   26,053		 4.32 			   23,602 		4.33 		

Total In Domestic Offices 	          $409,467 		3.72%   	$404,413		 3.66% 	  $378,782 		3.17% 	 

																
</TABLE>

		At December 31, time deposits of $100,000 or more had the
following maturities.

<TABLE>
<CAPTION>
                            	1995  	    	1994  		   1993  
                                  (Dollars In Thousands)

    <S>                   <C>         <C>        <C>
    Under 3 months 	      $	7,877 	   $	3,117 	  $	3,519 
    3 to 12 months 		      18,407 		   18,250 		  17,081 
    Over 12 months 		       4,310 		    4,803 		   4,505 

	                         $30,594 	   $26,170 	  $25,105 

</TABLE>
						

	NOTE 15 -  FAIR VALUES OF FINANCIAL INSTRUMENTS



		This summarizes the Corporation's disclosure of fair values of
financial instruments made in accordance with the requirements
of Statement of Financial Accounting Standards No. 107 (SFAS
107), "Disclosures about Fair Value of Financial Instruments".

<TABLE>

<CAPTION>
				                                          Dollars in Thousands 					
     		                             December 31, 1995 	  	 		  December 31, 1994 		 	
                               	 	Amortized     		Fair     	  	Amortized  	  	Fair 	
		                                  Value   	   	Value 	        	Value    		 Value 	

<S>                               <C>             <C>           <C>           <C>
Financial assets 									
  Cash and cash equivalents      	$ 	31,282 	     $ 	31,282 	   $ 	26,736	    $ 	26,736 	
  Securities held to maturity   	  	127,663  		     128,830  		   143,061		     138,892 	
  Securities available for sale   		 10,876  	 	     11,269 	  	   12,646		      12,565 	
  Loans, net 	                   	  289,252 	 	     298,076 		    260,352 		    268,870  	
  Accrued interest receivable 		      5,454 		        5,424 		      5,169		       5,169 	

Financial liabilities 									
  Deposits 		                       410,778 		      398,296 		    405,152 		    402,720 	
  Federal funds purchased 		         10,000 		       10,000 		      7,000 		      7,000 	
  Short term borrowings 		            1,955 		        1,955 		        600 		        600 	
  Accrued interest payable 		         3,034 		        3,034 		      2,457 		      2,457 	

</TABLE>

		Estimated fair values have been determined by the Bank using
the best available data.  Changes in assumptions or the
estimation methodologies used may have a material effect on the
estimated fair values included in this note.

<PAGE>


           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	NOTE 15 -  FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)


		Financial assets - Cash and cash equivalents are considered to
be carried at their fair value and have not been valued
differently than has been customary with historical cost
accounting.  Securities available-for-sale and securities
held-to-maturity are valued by an independent rating service and
are disclosed in detail in Note 2 above.  	A present value
discounted cash flow methodology was used to value the net loan
portfolio.  The discount rate used in these calculations was the
current rate at which new loans in the same classification for
regulatory reporting purposes would be made.  This rate was
adjusted for credit loss and assumed prepayment risk.   For
loans with floating interest rates it is presumed that estimated
fair values generally approximate the recorded book balances.

		Financial liabilities - Deposits with stated maturities have
been valued using a present value discounted cash flow with a
discount rate approximating the current market for similar
liabilities.  Financial instrument liabilities with no stated
maturities have an estimated fair value equal to both the amount
payable on demand and the recorded book balance.  For deposits
with floating interest rates it is presumed that estimated fair
values generally approximate the recorded book balances.  The
carrying amounts of federal funds purchased and other short term
borrowings are considered to approximate their fair values.

		  The Bank's remaining assets and liabilities which are not
considered financial instruments have not been valued
differently than has been customary with historical cost
accounting.  Management is concerned that reasonable
comparability between financial institutions may be distorted
due to the wide range of permitted valuation techniques and
numerous estimates which must be made given the absence of
active secondary markets for many of the financial instruments. 
This lack of uniform valuation methodologies also introduces a
greater degree of subjectivity to these estimated fair values. 

	 At December 31, 1995, the Bank had outstanding standby letters
of credit and commitments to extend credit.  These
off-balance-sheet financial instruments are generally
exercisable at the market rate prevailing at the date the
underlying transaction will be completed and, therefore, are
deemed to have no current fair value.  Please refer to Note 9.


NOTE 16 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
<TABLE>

<CAPTION>
                             Condensed Balance Sheets                                        
                            December 31, 1995 and 1994                                      
                            (In Thousands of Dollars)                                       
    					
                  Assets 		                               1995  		     1994  	

<S>                                                     <C>          <C>      
Cash 	                                                  $    	70 	   $    	65 	
Investment in bank subsidiary - at equity 		              48,517 		    43,310 	
Investment in credit life insurance company - at cost 		      50 		        50 	
Investment in other securities 		                             22 		        25 	
Dividends receivable from bank subsidiary 		                 630 		       574 	
Cash surrender value - life insurance 		                     467 		       453 	
    Total assets                                        $ 49,756 	   $	44,477 	

       Liabilities and Stockholders' Equity 					
Liabilities 					
 Payable to directors 	                                 $ 	  129 	   $    	75 	
 Dividends payable 		                                        630 		       574 	
   Total liabilities 		                                      759 		       649 	
Stockholders' equity 					
 Common stock - $10 par value, authorized 4,000,000 					
  shares, 1,400,000 shares issued and outstanding 		      14,000		     14,000 	
 Retained earnings 		                                     34,761 		    29,877 	
 Net unrealized gain (loss) on available-for-sale  					
  securities, net of tax 		                                  236 		      (49) 	
   Total stockholders' equity 		                          48,997 		    43,828 	
            Total liabilities and stockholders' equity  $ 49,756 	   $	44,477 	

</TABLE>
					
<PAGE>


                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 NOTE 16 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
(Continued)

<TABLE>
                          Condensed Statements of Income                                  
                     Years Ended December 31, 1995 and 1994                          
                             (In Thousands of Dollars)                                       
<CAPTION>
  				
                                            		     1995           		1994  
<S>                                             <C>              <C>
Operating income 				
  Dividends from bank subsidiary 	              $ 	1,232 	       $ 	1,120 
  Other dividend income 		                            22 		            61 
  Interest income 		                                   2 		             1 
  Other 		                                            27 		            30 

Operating expenses 		                                 87 		            60 

    Income before equity in undistributed net 				
     income of bank subsidiary 		                  1,196 		         1,152 

Equity in undistributed net income of bank
 subsidiary 		                                     4,920 		         4,409 

    Net Income 	                                $ 	6,116 	       $ 	5,561 

</TABLE>
				
<TABLE>
                      Condensed Statements of Cash Flows                              
                    Years Ended December 31, 1995 and 1994                          

                            (In Thousands of Dollars)                                       
  				
<CAPTION>
                                                         		1995          		1994  

<S>                                                     <C>             <C>
Operating activities 				
 Net income for the year 	                              $ 	6,116 	      $ 	5,561 
 Adjustments to reconcile net income to net cash 				
  provided by operating activities 				
   Equity in undistributed net income of bank
    subsidiary                                          		(4,920) 		      (4,409) 
   Increase in other assets 		                               (69) 		         (62) 
   Increase in payables 		                                    54 		           26 
				
     Total adjustments 		                                 (4,935) 		      (4,445) 

     Net cash provided by operating activities        		   1,181 		        1,116 

Net cash provided by (used in) investing activities 		 		
 Proceeds from sale or calls of investment securities 		      -	              18 
    Net cash provided by (used in) investing activities		     -       		      18 

Net cash used in financing activities 				
 Cash dividends paid 		                                    (1,176) 		     (1,071) 

    Increase (decrease) in cash 		                              5 		          63 

Cash at beginning of year 		                                   65 		           2 

Cash at end of year 	                                      $  	70 	       $  	65 

</TABLE>

<PAGE>


                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS 

GENERAL

	First Farmers and Merchants Corporation, a one-bank holding
company, was formed during 1982.  Its only subsidiary, First
Farmers and Merchants National Bank, is a community bank that
was established in 1909.  The resulting financial condition of
the Corporation should be evaluated in terms of the Bank's
operations within its service area.

	During 1995, First Farmers and Merchants National Bank
strengthened its presence in the four counties in middle
Tennessee that it serves.  Deposits in each of the four counties
either maintained the same levels or increased while loans in
all four counties increased.  To more efficiently provide
expanding services and offer the range of products that Bank
customers need and want, the Bank undertook a technology
conversion in the last quarter of 1994 involving data processing
and communication links between its fourteen offices.  The Bank
is positioned to provide quality services in diverse markets and
a dynamic interest rate environment.  Our customers are enjoying
the "Impact" of this change as new services such as combined,
laser printed statements; inquiring about balances, checks paid,
deposits made, and making transfers between accounts through
phone bank; extended banking hours; and a check card.  The check
card was introduced in the first quarter of 1995 and increased
in usage as the year progressed to approximately 35,000
transactions per month.

	The first of the following tables entitled DISTRIBUTION OF
ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY, INTEREST RATES
AND INTEREST DIFFERENTIAL, presents average daily balances,
interest income on a fully taxable equivalent basis and interest
expense, as well as the average rates earned and paid on the
major balance sheet items for the years 1995, 1994, and 1993.
The second table sets forth, for the periods indicated, a
summary of changes in interest earned and interest paid
resulting from changes in volume and changes in rates.  The
rate/volume variances are allocated between rate and volume
variances in proportion to the relationship of the absolute
dollar amounts of the change in each.

	These tables plus the following discussion and financial
information is presented to aid in understanding First Farmers
and Merchants' current financial position and results of
operations.  The emphasis of this discussion will be on the
years 1995, 1994, and 1993; however, financial information for
prior years will also be presented when appropriate.  This
discussion should be read in conjunction with the Consolidated
Financial Statements and the Notes to Consolidated Financial
Statements included elsewhere in this material.

FINANCIAL CONDITION 

	First Farmers and Merchants National Bank's financial condition
depends on the quality and nature of its assets, its liability
and capital structure, the market and economic conditions, and
the quality of its personnel.  The following paragraphs provide
a unique perspective on the internal structures of the
Corporation and the Bank that provide the strength in our
organization.

	The bank's average deposits grew during the last three years
reflecting  a 1.3% growth from 1994 to 1995, a 6.8% growth from
1993 to 1994, and a 10.4% growth from 1992 to 1993.  Average
transaction and limited transaction interest bearing accounts
grew during the prior two years but declined in 1995 as
investors took advantage of higher certificate of deposit rates.
 The average Chairman's Club, super negotiable orders of
withdrawal, insured money market deposits, and flexible
investment accounts decreased 7.6 % in 1995 compared to a  9.5%
increase in 1994 and a 28.6 % increase in 1993.  Average savings
deposits actually declined 1.2% in 1995 compared to a 12.2%
increase in 1994 and a 12.9% decrease in 1993.  Average
certificates of deposit increased  during 1995 with certificates
and other savings under $100,000 increasing 8.0% in 1995
compared to a 1.2% decline in 1994 and a 1.2.% decline in 1993. 
Certificates of deposit over $100,000 increased 24.8% in 1995
compared to a 10.4% increase in 1994 and a 17.1% decline in
1993.  


<PAGE>

                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                             AND RESULTS OF OPERATIONS 

TABLE 1 - Distribution of Assets, Liabilities, and Stockholders'
Equity, Interest Rates and Interest Differential

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31, 
                                                          	 	 	 	1995  	 	 	 	 
 
                                                  		 Average   		Rate / 				
                                                   		Balance 		  Yield 			 Interest 	

ASSETS 								
<S>                                                <C>           <C>       <C>            
 Interest earning assets 								
   Loans, net 	                                    $ 	276,166 		  9.38% 	  $	25,892 	* 
   Bank time deposits 		                                    2      - 	 		      - 	
   Available-for-sale securities (AFS) 	  	             8,092 		  6.59			       534 	
   Held-to-maturity securities (HTM) 		                93,676 		  6.03			     5,646 	
   U.S. Treasury and Government agency securities   		   - 	   	   -    	 		   - 	
   States and political subdivisions' securities  		   39,139		   8.06 			    3,156 	* 
   Other securities 		                                  2,452 		 11.29 			      277 	* 
   Federal funds sold 		                                2,076 		  5.83 			      121 	
     TOTAL EARNING ASSETS 		                          421,603 		  8.45 		  $	35,626 	

 Noninterest earning assets 								
   Cash and due from banks 		                          24,829 						
   Bank premises and equipment 		                       6,246 						
   Other assets 		                                     11,061 						
								
     TOTAL ASSETS 	                                $ 	463,739 						

LIABILITIES AND STOCKHOLDERS' EQUITY 								
 Interest bearing liabilities 								
   Time and savings deposits: 								
   NOW and money market accounts  	                $ 	148,993 		 3.51% 	  $ 	5,223 	
   Savings 		                                          34,627 		 3.00 			    1,040 	
   Time  		                                           136,605 		 5.30 			    7,245 	
   Time over $100,000 		                               32,522 		 5.35 			    1,740 	
    TOTAL INTEREST BEARING DEPOSITS 		                352,747 		 4.32			    15,248 	
   Federal funds purchased and repurchase 
    agreements		                                        2,415 		 5.92 			      143 	
   Other short-term debt 		                               565 		 5.49 			       31 	
    TOTAL INTEREST BEARING LIABILITIES 		             355,727 	 	4.34		   $	15,422 	

 Noninterest bearing liabilities
   Demand deposits 		                                  56,742 						
   Other liabilities 		                                 4,515 						
    TOTAL LIABILITIES 		                              416,984 						
 Stockholders' equity 		                               46,755 						
    TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY 	   $ 	463,739 						
<FN>								
<F4>
  Spread between combined rates earned and combined rates paid*		4.11% 			
</FN>
<FN>								
<F5>
  Net yield on interest-earning assets* 				                     4.79% 			
</FN>
<FN>
<F6>
  * Taxable equivalent basis. 								
</FN>
</TABLE>

<PAGE>

                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                               AND RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                     	 	 	       1994  	 	 	 	   	 	 	 	             	 1993  	 	 	 	 
                                             	     Average       Rate / 		                Average      Rate / 				
                                                  	Balance 		    Yield 			Interest 			   	Balance 		   Yield 			Interest 	
                                                                       	 (Dollars In Thousands) 															
ASSETS
<S>                                              <C>            <C>       <C>        <C>               <C>      <C>       <C>
 Interest earning assets
   Loans, net                                    $  247,791 		   8.54%    $	21,156 	*   $ 	233,608 		  8.37%    $	19,543 	* 
   Bank time deposits	                                 - 	 	      - 	 	 	     - 	 	 	 	      - 	 	      - 	 	 	     - 	
   Available-for sale-securities (AFS)               15,931 		   8.33 			    1,327 				      - 	 	      - 	 	 	     - 	
   Held-to-maturity securities (HTM)	               101,654 		   5.76 			    5,858 				      - 	 	      - 	 	 	     - 
   U.S. Treasury and Government agency securities	     - 	 	      - 	 	 	     - 				       106,201 		  6.50 			    6,904 	
   States and political subdivisions	                38,545 		   8.49 			    3,274 	* 			   29,634 		  8.62 			    2,553 	* 
   Other securities	                                  2,375 		  13.15 			      312 	* 			    6,164 		  5.34 			      329 	* 
   Federal funds sold	                                2,998 		   3.73 			      112 				      4,665 		  2.92 			      136 	
     TOTAL EARNING ASSETS 	                         409,294 		   7.83 		  $	32,039 			     380,272 		  7.75 		  $	29,465 	
																
 Noninterest earning assets
   Cash and due from banks	                          25,945 									                       23,406 						
   Bank Premises and equipment	                       6,350 									                        6,764 						
   Other assets	                                     10,364 									                       10,318 						

     TOTAL ASSETS                                $ 	451,953 								                    $  420,760 						

LIABILITIES AND STOCKHOLDERS' EQUITY
 Interest bearing liabilities
   Time and savings deposits:
   NOW and money market accounts                 $ 	161,244 		   3.25% 	 $ 	 5,239 			  $ 	147,246 		  3.16% 	  $ 	4,653 	
   Savings	                                          35,036 		   2.87  			   1,006 				     31,216 		  2.76 			      861 	
   Time	                                            126,523 		   4.27  			   5,400 				    128,021 		  4.26 			    5,459	
   Time over $100,000    	                           26,053 		   4.32  			   1,126 				     23,602 		  4.34 			    1,025 	
    TOTAL INTEREST BEARING DEPOSITS  	              348,856 		   3.66  			  12,771 				    330,085 		  3.63 			   11,998	
   Federal funds purchased and repurchase
    agreements 	                                      1,462 		   4.86 		        71 				        254 		  3.06 			        8 	
   Other short-term debt  	                             568 		   3.92 			       22 				        728 		  4.21 			       31 	
    TOTAL INTEREST BEARING LIABILITIES	             350,886 		   3.67 		  $	12,864 				    331,067 		  3.64 		  $	12,037 	
 Noninterest bearing liabilities																
   Demand deposits   	                               55,557 									                       48,697 						
   Other liabilities  	                               3,690 									                        3,542 						
    TOTAL LIABILITIES 	                             410,133 									                      383,306 						
 Stockholders' equity  	                             41,820 									                       37,454 						
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 	451,953 								                    $ 	420,760 						

<FN>
<F7>
Spread between combined rates earned and combined rates paid*		4.16% 		          						                4.11% 			
</FN>
<FN>
<F8>
Net yield on interest earning assets*			                       4.68% 								                          4.58% 			
</FN>
<FN>
<F9>
Taxable equivalent basis
</FN>
</TABLE>


<PAGE>

                    FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                  AND RESULTS OF OPERATIONS 


TABLE 2 - Distribution of Assets, Liabilities, and Stockholders'
Equity, Interest Rates and Interest Differential (Continued)

<TABLE>
<CAPTION>
										* 
                                                         					*  				               Total 
                                     		* 	   	 Taxable  		Nontaxable 	 	Federal 		Interest 
                                    		Net  		Investment 		Investment 	  	Funds 		  Earning 
(Dollars in Thousands) 		            Loans 		Securities 		Securities   		Sold	   	  Assets 

1995 compared to 1994: 										
<S>                                <C>       <C>            <C>        <C>        <C>
  Increase (decrease) due to: 										
    Volume 	                       $ 	2,423 	$ 	(1,103) 	   $ 	50 	    $ 	(34) 	  $ 	1,336 
    Rate 		                           2,313 		      63 		    (168) 		      43 		     2,251 

     NET INCREASE 										
      (DECREASE) 	                 $ 	4,736 	$ 	(1,040) 	   $(118) 	   $ 	  9 	   $	 3,587 

1994 compared to 1993: 										
  Increase (decrease) due to: 										
    Volume 	                       $ 	1,186 	$ 	   537 	    $	768 	    $ 	(49) 	  $ 	2,442 
    Rate 		                             427 		    (273) 		    (47) 		      25 		       132 

     NET INCREASE 										
      (DECREASE) 	                 $ 	1,613 	$ 	   264 	    $ 721 	    $ 	(24) 	  $	 2,574 
				                                            (A) 		        (A) 				

<FN>
<F10>
     * Taxable equivalent basis 
</FN>
<FN>
<F11>
   (A) U.S. Government, government agency, and corporate debt
securities plus equity securities in the available-for-sale and
held-to-maturiy categories are taxable investment securities.
Municipal debt securities are nontaxable and classified as 
held-to-maturity. 
</FN>
</TABLE>

	Average earning assets increased 3.0% in 1995 compared to an
7.6% increase in 1994 and a 9.7% increase in 1993.   As a
financial institution, the Bank's primary earning asset is
loans.  At December 31, 1995, average net loans represented 
65.5% of  average earning assets.  Total average net loans
increased during the last three years showing an 11.5% growth
from 1994 to 1995, a 6.1% growth from 1993 to 1994, and an 8.6%
growth from 1992 to 1993.  Average investments represented 34.0%
of average earning assets at December 31, 1995, and  decreased
9.6% in 1995 providing funds for the increasing loan growth. 
Investments  increased 11.6% in 1994, and increased 11.9% in
1993.  Average total assets increased during the last three
years as evidenced by a 2.6% growth from 1994 to 1995, a 7.4%
growth from 1993 to 1994, and a 10.3% growth from 1992 to 1993. 
Please refer to the color graphs at the end of this document
that illustrate this growth.

<PAGE>
<TABLE>
              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS 
<CAPTION>
                               	Now and 												                                            Total 		      * 	
                                	Money 			                   	     Time 		   Federal 		 Short 	Interest 		   Net 	
                               	Market  		Savings 	    	Time     		Over 		   Funds 		    Term 		Bearing		 Interest  
(Dollars in Thousands)	        Accounts 		Deposits  		Deposits 		$100,000 		Purchased 		 Debt		 Funds 		  Earnings 	

<S>                            <C>         <C>         <C>        <C>         <C>        <C>     <C>         <C>
1995 compared to 1994:
  Increase (decrease) due to:  																
    Volume                     $	(398) 	   $	(12) 	    $  430	    $  279 	    $ 	46 	    $  - 	  $ 	345 	    $ 	991 	
    Rate       	                  382 		      46 		     1,415      		335 		      26 		       9 		 2,213 		       38 	

     NET INCREASE
      (DECREASE)               $ 	(16)    	$ 	34    	  $1,845    	$ 	614 	    $ 	72 	    $ 	 9  	$2,558 	    $1,029 	

1994 compared to 1995:																
  Increase (decrease) due to:																
    Volume                     $ 	442 	    $	105 	     $  (64) 	  $ 	107 	    $ 	37 	    $ 	(7)  $ 	620 	    $1,822
    Rate  	                       144 		      40 		         5 		      (5) 		     26 		      (2) 	   208 		      (76) 	

     NET INCREASE																
      (DECREASE)               $ 	586 	    $	145 	     $ 	(59) 	  $ 	102 	    $ 	63 	    $ 	(9) 	$ 	828 	    $1,746
	
<FN>
<F12>
   * Taxable equivalent basis
</FN>																
</TABLE>


LIQUIDITY AND INTEREST  RATE  SENSITIVITY  MANAGEMENT

	The primary objective of asset/liability management at the Bank
is to achieve reasonable stability in net interest income
throughout interest rate cycles.  This objective is achieved by
monitoring the relationship of rate sensitive earning assets to
rate sensitive interest bearing liabilities (interest rate
sensitivity) which is the principal factor in determining the
effect that fluctuating interest rates will have on future net
interest income.  Rate sensitive earning assets and interest
bearing liabilities are those which can be repriced to current
market rates within a defined time period.  The following table,
Rate Sensitivity of Earning Assets and Interest Bearing
Liabilities, shows the Bank's rate sensitive position at
December 31, 1995, as measured by gap analysis (the difference
between the earning asset and interest bearing liability amounts
scheduled to be repriced to current market rates in subsequent
periods).

	As a policy, budgeted financial goals are monitored on a
monthly basis by the Asset/Liability Committee where the actual
dollar change in net interest income given different interest
rate movements is reviewed.  A dollar change in net interest
income for a twelve month period of less than 3% of net interest
income given a two hundred basis point shift in interest rates
is considered an adequately flexible position.  The net interest
margin, on a tax equivalent basis, at December 31, 1995,  1994,
and 1993 was 4.79%, 4.68%,  and 4.58% respectively.

<PAGE>

          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                        AND RESULTS OF OPERATIONS 

LIQUIDITY AND INTEREST  RATE  SENSITIVITY  MANAGEMENT (Continued)

TABLE - Rate Sensitivity of Earning Assets and Interest Bearing
Liabilities 										
<TABLE>
<CAPTION>
(Dollars in Thousands) 										
                                   		3 Months 		     3-6      	 	6-12  	 	  Over 1 		
As of December 31, 1995 		           or Less      		Months 	   	Months  	 	  Year  		      Total 
  <S>                                <C>          <C>          <C>          <C>          <C>
Earning assets 										
  Loans and leases, net of unearned 	$ 	64,615 	  $ 	43,285 	  $ 	72,506 	  $	111,525 	  $	291,931 
  Taxable investment securities 		      12,715 		    11,027 		    30,164		     42,611 		    96,517 
  Tax-exempt investment securities 		      986 		     1,200 		     1,060		     39,169 		    42,415 
										
      Total earning assets 		           78,316 		    55,512 		   103,730 		   193,305 	  $	430,863 

Interest-bearing liabilities 										
  NOW and money market accounts 		      35,739 	  		                          100,555    $	136,294 
  Savings 								                                                             34,133 		    34,133 
  Time 		                               42,682 		    34,082 		    46,903 		    18,671 		   142,338 
  Time over $100,000 		                  8,526 		     8,055 		     9,703 		     4,310 		    30,594 
  Other short-term debt 		              11,955 		 		 		 		                                  11,955 
										
      Total interest bearing 
        liabilities 		                  98,902 		    42,137 		    56,606		    157,669 	  $	355,314 

Noninterest bearing, net 								                                             (75,549) 		

Net asset/liability funding gap 		     (20,586) 		   13,375 		    47,124		    (39,913) 		

Cumulative net asset/liability 
  funding gap 	                      $ (20,586) 	 $ 	(7,211) 	 $ 	39,913	   $ 	  - 		

<FN>
<F13>
Available-for-sale and held-to-maturity securities were combined
in the taxable investment securities category for purposes of
this table.
</FN>
</TABLE>

CAPITAL RESOURCES, CAPITAL, AND DIVIDENDS

	Historically, internal growth has financed the capital needs of
the Bank.  At December 31, 1995, the Corporation had a ratio of
average capital to average assets of 10.08%.  This compares to a
ratio of average capital to average assets of 9.25% at December
31, 1994, and 8.9% at December 31, 1993.

	Cash dividends paid in 1995 were 10.0% more than those paid in
1994.  The dividend to net income ratio was 20%.  Additional
dividends of approximately $13.5 million to the Corporation
could have been declared by the subsidiary bank without
regulatory agency approval.  The Corporation plans to maintain
or increase the payout ratio while continuing to maintain a
capital to asset ratio reflecting financial strength and
adherence to regulatory guidelines.

	Regulatory risk-adjusted capital adequacy standards were
strengthened during 1992.  Equity capital (net of certain
adjustments for intangible assets and investments in
non-consolidated subsidiaries) and certain classes of preferred
stock are considered Tier 1 ("core") capital.  Tier 2 ("total")
capital consists of core capital plus subordinated debt, some
types of preferred stock, and varying amounts of the Allowance
for Possible Loan Losses.  The minimum standard for a "well
capitalized" bank is a risk-based core capital ratio of 6%, a
risk-based total capital ratio of 10%, and a core capital to
average total assets of 5%.

	As of December 31, 1995, the Bank's core and total risk-based
ratios were 16.8% and 17.7% respectively.  One year earlier, the
comparable ratios were 16.2% and 17.1%, respectively.  At year
end 1995, the Bank had a ratio of average core equity to total
average assets of 9.9%, up slightly from 9.0% at year end 1994.

<PAGE>


          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                          AND RESULTS OF OPERATIONS 

RESULTS OF OPERATIONS

Interest Income

	Total interest income increased 11.9% in 1995 compared to a
7.3% increase in 1994 and an decrease of .4% in 1993.  Interest
and fees earned on loans increased 22.4% in 1995 compared to an
8.3% increase in 1994 and a 1.4% decrease in  1993.  Interest
earned on investment securities and other investments decreased
10.9% in 1995 due to the decrease in volume compared to a 5.3%
increase in 1994 and a 1.9% increase in 1993.

Interest Expense

	Total interest expense increased 19.9% in 1995 compared to a
6.9% increase in 1994 and a 10.0% decrease in 1993.  The net
interest margin (tax equivalent net interest income divided by
average earning assets) increased in 1995 to 4.8% compared to
4.7% in 1994 and 4.6% in 1993 as indicated in the LIQUIDITY AND
INTEREST RATE SENSITIVITY MANAGEMENT section above.

	Net interest income on a fully taxable equivalent basis is
influenced primarily by changes in:  (1) the volume and mix of
earning assets and sources of funding; (2) market rates of
interest, and (3) income tax rates.  The impact of some of these
factors can be controlled by management policies and actions. 
External factors also can have a significant impact on changes
in net interest income from one period to another.  Some
examples of such factors are: (1) the strength of credit demands
by customers; (2) Federal Reserve Board monetary policy, and (3)
fiscal and debt management policies of the federal government,
including changes in tax laws. 


Noninterest Income and Expense

	Noninterest income increased 14.9% during 1995 versus a 1.6%
increase in 1994 and a 12.0% increase in 1993.  The new check
card generates fee income from the clearing agent for the
electronic transaction even though no service fee is charged to
Bank customers for its use.  This "Impact" of our new technology
contributed to the 16.4% increase in service fees for deposit
accounts in 1995.  Income from fiduciary services provided in
the Bank's Trust Department remained strong contributing 27.4%
of noninterest income.

	Noninterest expenses, excluding the provision for possible loan
losses, increased 6.2% in  1995 compared to a 5.4% increase in
1994 and a 9.3% increase in 1993.  Increased productivity
fostered by our technology improvements as the learning curve
diminished and cost control efforts contributed to this
improvement.  Included in this category is Federal Deposit
Insurance Corporation (FDIC) insurance premiums at the rate
established for "well capitalized" institutions.  This expense
was $499,709 in 1995 compared to $890,646 in 1994, a 43.9-%
reduction.  Please refer to the discussion in the CAPITAL
RESOURCES, CAPITAL, AND DIVIDENDS section above for more
information concerning the bank's capitalization.


Provision for Possible Loan Losses

	The provision for possible loan losses, representing amounts
charged against operating income, increased 1.5% in 1995
compared to a 40.4% increase in 1994 and a 44.1% decrease in
1993. Management regularly monitors the allowance for possible
losses and considers it to be adequate.  Please refer to Note 1
in the NOTES TO CONSOLIDATED FINANCIAL  STATEMENTS that are
included elsewhere in this material for further discussion of
the adequacy of the allowance.  The tables on the next page
summarize average loan balances and reconciliation of the
allowance for loan losses for each year.  Additions to the
allowance, which have been charged to operating expenses, are
also disclosed.

<PAGE>

              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS 

 Provision for Possible Loan Losses (Continued)

	The next tables present any risk elements in the loan portfolio
and include all loans management considers to be potential
problem loans.  Management does not believe that there is a
concentration of loans to a multiple number of borrowers engaged
in similar activities.
<TABLE>
<CAPTION>
                                                            		    				December 31 				
                                              		1995      		1994      	 	1993      	 	1992     	 	1991  
                                                     				    		(Dollars  In Thousands) 				
  
<S>                                          <C>         <C>          <C>          <C>          <C>
Average amount of loans outstanding 	        $	276,166   $	247,791 	  $	233,608 	  $	215,158 	  $	182,561 

Balance of allowance for possible loan 										
  losses at beginning of year 	              $  	2,342 	 $  	2,024 	  $  	2,254	   $ 	 1,917 	  $  	1,818 
Loans charged-off: 										
  Loans secured by real estate 		                   15 		      135 		       396 		       245		        329 
  Commercial and industrial loans 		               170 		       42 		       222 		       124		        192 
  Individuals 		                                   371 		      246 		       230 		       249 		       249 
      TOTAL  LOANS CHARGED OFF 		                  556 		      423 		       848 		       618		        770 
Recoveries of loans previously charged off: 										
   Loans secured by real estate 		                  97 		        9 		        56 		         3 		       - 
   Commercial and industrial loans 		               14 		       36 		        52 		        80 		        56 
   Individuals 		                                  111 		       36 		        40 		        32 		        33 
      TOTAL RECOVERIES 		                          222 		       81 		       148 		       115 		        89 
        NET  LOANS CHARGED-OFF 		                  334 		      342 		       700 		       503		        681 
Provision charged to operating expenses 		         670 		      660 		       470		        840 		       780 
       BALANCE OF ALLOWANCE FOR POSSIBLE 
        LOAN LOSSES AT END OF YEAR 	         $ 	 2,678 	 $ 	 2,342 	  $ 	 2,024 	  $  	2,254 	  $ 	 1,917 

Ratio of net charge-offs during the 										
  period to average loans outstanding 		         0.12% 		    0.14% 		     0.30%		      0.23% 		     0.37% 

</TABLE>
										

	Loans having recorded investments of $5.8 million at December
31, 1995, have been identified as impaired in accordance with
the provisions of SFAS 114.  They represent 2% of gross loans. 
Commercial loans comprised $.326 million of the total, with
loans secured by real estate accounting for $4.7 million and
installment loans $.800 million.  The gross interest income that
would have been recorded during 1995 if the loans had been
current in accordance with their original terms and had been
outstanding throughout the period or since origination, if held
for part of the period, was $365, $193, and $189 thousand for
the years ended December 31, 1995, 1994, and 1993 respectively. 
Impaired loans are charged-off once management has exhausted all
efforts to collect the loan.  Please refer to Note 1 and Note 3
in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS that are
included elsewhere in this material for more information on the
Bank's policy regarding loan impairment.

	Inherent in the business of providing financial services is the
risk involved in extending credit.  Management believes the
objective of a sound credit policy is to extend quality loans to
customers while reducing risk affecting shareholders' and
depositors' investments.  Risk reduction is achieved through
diversity of the loan portfolio as to type, borrower, and
industry concentration as well as sound credit policy guidelines
and procedures.  

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS 
<TABLE>

FIVE YEAR COMPARISON
<CAPTION>
      		                                    1995  	  	   1994        		1993         		1992        		 1991  
 
<S>                                     <C>           <C>           <C>            <C>            <C>
INTEREST INCOME 										
 Interest and fees on loans        	    $	25,857,982 	$	21,130,914 	$	19,518,742 	 $	19,791,548 	 $	19,571,295 
										
 Income on investment securities 										
   Taxable interest 		                     6,179,492   		7,012,626   		6,925,404		    6,898,114 		   5,218,446 
   Exempt from federal income tax 		       2,156,813 		  2,184,666   		1,857,168 		   1,825,869 		   1,828,738 
   Dividends 		                              177,790 		    204,948 		     72,054 		     110,874		      150,823 
										
                                         		8,514,095 		  9,402,240 		  8,854,626 		   8,834,857		    7,198,007 

 Other interest income 		                    121,492 		    284,384 		    347,287		      195,744 	      279,165 

    TOTAL INTEREST INCOME 		              34,493,569 		 30,817,538		  28,720,655 		  28,822,149 		  27,048,467 

INTEREST EXPENSE  										
  Interest on deposits 		                 15,247,875 		 12,770,618 		 11,998,235		   13,329,557 		  14,212,771 
  Interest on other short term  
   borrowings 		                             174,370 		     93,286		      38,339 		      47,449 		      63,994 
										
   TOTAL INTEREST EXPENSE 		              15,422,245 		 12,863,904		  12,036,574 		  13,377,006 		  14,276,765 

   NET INTEREST INCOME 		                 19,071,324 		 17,953,634  		16,684,081 		  15,445,143 		  12,771,702 

PROVISION FOR POSSIBLE LOAN LOSSES 		        670,000 		    660,000 		    470,000		      840,000 		     780,000 
   NET INTEREST INCOME AFTER 										
    PROVISION FOR LOAN LOSSES 		          18,401,324  		17,293,634 		 16,214,081 		  14,605,143 		  11,991,702 

NONINTEREST  INCOME 										
  Trust department income 		               1,251,642 		  1,249,359 		    863,952		      753,239 		     603,701 
  Service fees on deposit accounts 		      2,697,332 		  2,317,992		   2,206,026 		   2,123,096 		   1,893,355 
  Other service fees, commissions, 										
   and fees 		                               300,407 		    336,758 		    509,009 		     401,618		      237,755 
  Other operating income 		                  322,634 		    319,466 		    315,108		      191,363 		      91,440 
  Available for sale securities 										
   gains (losses) 		                           1,182 		   (243,690) 		    23,896		       28,434 		      15,862 

   TOTAL NONINTEREST  INCOME 		            4,573,197 		  3,979,885		   3,917,991 		   3,497,750 		   2,842,113 

NONINTEREST  EXPENSES 										
  Salaries and employee benefits 		        6,620,827 		  6,247,706		   5,686,965 		   5,283,086 		   4,407,072 
  Net occupancy expense 		                 1,279,434 		  1,190,678 		  1,070,971		      984,650 		     797,466 
  Furniture and equipment expense 		       1,382,769 		  1,069,856		     889,848 		     801,453 		     935,821 
  Loss on other real estate 		                50,724 		      4,000 		    103,122		      312,064 		      48,398 
  Other operating expenses 		              5,006,292 		  4,996,107		   4,903,949 		   4,460,696 		   3,572,881 
										
   TOTAL NONINTEREST EXPENSES 		          14,340,046		  13,508,347 		 12,654,855 		  11,841,949 		   9,761,638 

      INCOME BEFORE PROVISION 										
       FOR INCOME TAXES 		                 8,634,475		   7,765,172 		  7,477,217 		   6,260,944 		   5,072,177 

PROVISION FOR INCOME TAXES 		              2,518,769 		  2,203,746 		  2,220,965		    1,768,840 		   1,341,130 

        NET INCOME  	                   $ 	6,115,706 	$ 	5,561,426 	$ 	5,256,252 	 $ 	4,492,104 	 $ 	3,731,047 

EARNINGS PER COMMON SHARE  										
(1,400,000 outstanding shares) 	        $ 	     4.37 	$ 	     3.97 	$ 	     3.75	  $ 	     3.21 	 $ 	     2.67 

</TABLE>

<PAGE>

                    FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                    AND RESULTS OF OPERATIONS 

Net Income

	Net income was 10.0% higher in 1995 than in 1994, 5.8% higher
in 1994 than in 1993, and 17.0% higher in 1993 than in 1992.  As
indicated by the table, Comparative Data, the Corporation's
return on average assets was 1.32% in 1995, 1.23% in 1994, and
1.25% in 1993.  The return on equity remains strong at 13.95% in
1995, 14.11% in 1994, and 14.93% in 1993.

Net Interest Margin

	The bottom graph on the last page of this document illustrates
an increasing net interest margin  during the five years shown. 
As mentioned in the LIQUIDITY AND INTEREST RATE  SENSITIVITY 
MANAGEMENT section earlier, the Bank's Asset/Liability Committee
monitors interest rate sensitivity monthly.  Through the use of
simulation analysis to estimate future net interest income under
 varying interest rate conditions, the committee can  establish
pricing and maturity strategies to maintain that steady net
interest margin.  The simulation analysis uses the repricing
information indicated in the table, Rate Sensitivity of Earning
Assets and Interest Bearing Liabilities, and adjusts the current
balance sheet to reflect the impact of different interest rate
movements.

EFFECTS OF ECONOMY

	Current economic conditions have had a definite effect on the
reported financial condition and results of operation.  The
stock market closed out its worst performance and the bond
market experienced its largest calendar year decline in modern
history during 1994.  However, the market was much stronger
during 1995 experiencing considerable gains compared to 1994. 
Many Bank customers had used transaction and limited transaction
interest bearing accounts as holding vehicles to watch rate
movements during 1994 trying to determine the best time to lock
in a rate on a longer term product.  During 1995, many of these
customers decided that the time was right and transferred
investments to longer term certificate of deposits from
transaction and limited transaction interest bearing accounts. 
As Bank customers felt more comfortable with the economy, loan
demand increased strongly resulting in a shift of  Bank earning
assets from investment securities to higher yielding loans. 
Historically, noninterest bearing demand deposits and regular
savings accounts have provided a relatively fixed rate source of
funding for earning assets.  This was illustrated again in 1995
and 1994 as these fixed rate and noninterest bearing deposits
continued to provide a relatively stable cost from this funding
source.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE FINANCIAL
STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD

	The Financial Accounting Standards Board has issued two
standards that have not been adopted by the Bank but are
required to adopted after December 31, 1995.  The Statement of
Financial Accounting Standards No. 121 (SFAS 121), "Accounting
for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed Of" establishes guidance on when to
recognize and how to measure impairment losses on long-lived
assets and certain identifiable intangibles.  The statement also
offers guidance on how to value long-lived assets that
management has committed to a plan to dispose of the assets.  An
asset that an entity will hold and use should be reviewed for
impairment whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable.  In such
situations, an impairment loss is recognized if the sum of
undiscounted future cash flows expected to be generated by the
asset is less than the carrying amount of the asset. 
Measurement of the impairment loss, however, is based on the
fair value of the asset.  Management does not believe this
statement will have any material effect on future income.

	The second standard,  Statement of Financial Accounting
Standards No. 122 (SFAS 122), "Accounting for Certain Mortgage
Banking Activities" requires recognition of rights to service
mortgage loans for others as separate assets, regardless of how
the servicing rights are acquired.  This Statement prescribes  a
single procedure for the capitalization of those rights acquired
either through loan origination or through purchase transactions
where a mortgage banking enterprise buys the servicing rights. 
Mortgage servicing rights are to be assessed for impairment


<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS 

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE FINANCIAL
STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD (Continued)

based on their fair value.  Impairment is recognized through a
valuation allowance for each impaired group of mortgage
servicing rights.  Rights capitalized after adoption of this
statement should be grouped based on the risk characteristics of
the underlying loans.  Management does not believe this
statement will have any material effect on future income.

SHAREHOLDER  INFORMATION

	The 1,400,000 shares of common stock of First Farmers &
Merchants Corporation outstanding at December 31, 1995, had a
market value of $75.6 million and were held by 1,514
identifiable individuals located mostly in the market area.  A
small number of additional shareholders are not identified
individually since some bank nominees, including the bank's
Trust Department, are listed as single owners when, in fact,
these holdings represent large numbers of shareholders.  No
single shareholder's ownership exceeded five percent at year end.

	There is no established public trading market for the stock. 
The following table lists the high and low price of the
Corporation's common stock, as well as the semiannual dividend
paid per share, in each of the last three years.

<TABLE>

                                             SHAREHOLDER INFORMATION
<CAPTION>
                                               			Price Range of  				  Dividend 
                                                			Common Stock 	   	 		  Paid 
                                          			High       	 	Low 	        Per Share 

              <S>    <S>                  <C>            <C>            <C>
                    	First quarter 	      $	36.00 	      $	36.00 	      $ 	
                    	Second quarter 		      37.00        		37.00         		0.36 
              1993  	Third quarter 		       38.00 		       37.00 		
                    	Fourth quarter 		      38.00        		38.00         		0.37 

                                                                        $  0.73
 	 	 	 	 	 	 	 
                    	First quarter 	      $	40.00 	      $	36.00 	      $ 	
                    	Second quarter 		      42.00        		37.00 		        0.39 
              1994  	Third quarter 		       43.00 		       37.00 		
                    	Fourth quarter 		      45.00 		       38.00 		        0.41 

                                                                  						$ 	0.80  

                    	First quarter 	      $	45.00 	       $	45.00      	$ 	
                    	Second quarter 		      48.00 		        45.00 		       0.43 
              1995  	Third quarter 		       50.00 		        48.00 		
                    	Fourth quarter 		      54.00 		        50.00        		0.45 

                                                                  						$ 	0.88 
</TABLE>

<PAGE>							

                   FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                AND RESULTS OF OPERATIONS 

<TABLE>
                                      COMPARATIVE DATA 										
                                  (In Thousands of Dollars) 										

                             		1995     		1994      		1993      		1992     		 1991  

<S>                        <C>         <C>         <C>         <C>         <C>
AVERAGE ASSETS 	           $	463,739 	 $	451,953 	 $	420,760 	 $	381,379  	$	303,851 

AVERAGE LOANS (NET) 	      $	276,166 	 $	247,791 	 $	233,609  	$	215,158  	$ 182,561 

AVERAGE DEPOSITS 	         $	409,489 	 $	404,412 	 $	378,782 	 $	343,128	  $	268,495 

RETURN ON EQUITY 										
  AND ASSETS 										
 Return on average assets 		   1.32% 		    1.23% 		    1.25% 		    1.18%		     1.23% 

 Return on beginning equity 		13.95% 		   14.11% 		   14.93%    		14.21% 		   13.01% 
 Average equity to  										
    average assets 		         10.08% 		    9.25% 		    8.90% 		    8.76%		     9.94% 

COMMON DIVIDEND 										
  PAYOUT RATIO 										
 Earnings per share 	      $ 	  4.37 	  $ 	 3.97 	  $ 	 3.75 	  $ 	 3.21 	 $	   2.67 

 Cash dividends per share 	$ 	  0.88 	  $ 	 0.80   	$ 	 0.73 	  $  	0.64	  $ 	  0.58 

 Ratio 		                       20% 		      20% 		      19% 		      20% 		      22% 
</TABLE>
										
<TABLE>

                             NET INTEREST MARGIN
<CAPTION>
   	                          	1995  		    1994  		     1993  		    1992  		   1991  
                                             (In Thousands of Dollars) 								

<C>                        <C>          <C>          <C>         <C>        <C>
INTEREST INCOME 										
 (TAX EQUIVALENT)  	       $ 	35,626 	  $ 	32,039 	  $ 	29,465 	 $ 	29,564 	$ 	27,736 

INTEREST EXPENSE 		           15,422 		    12,864 		    12,037 		   13,377 		  14,277 


                          	$ 	20,204 	  $ 	19,175 	  $ 	17,428 	 $ 	16,187 	$ 	13,459 


NET INTEREST MARGIN* 		        4.79% 		     4.68% 		     4.58% 		    4.67% 		   4.84% 

<FN>
<F14>
*Net interest margin is net interest income (tax equivalent)
divided by average earnings assets.
</FN>
</TABLE>

	In summary, the graphs on the following page illustrate the
presentation in the preceding pages, a unique perspective on the
internal structures of the Corporation and the Bank.  Each
shareholder can be proud of this performance.  Our shareholders
are the real support of our organization.  Thank you for your
help and support.


Nine color graphs were included on the last page of this report.
One - The first graph used the information presented above in the Five
Year Comparison table to illustrate the growth in net income.
Two - The second graph used information from the Comparative Data on the
previous page to illustrate a return on average assets of 1.18% and above
for the last five years.
Three - The third graph used information from the Comparative Data on the
previous page to illustrate a return on beginning stockholders' equity 
over 13% for the last five years.
Four - The fourth graph used information from the Comparative Data on the 
previous page to illustrate earnings per share and cash dividends per share 
for the last five years.
Five - The fifth graph used information from the Consolidated Statements of
Stockholders' Equity to illustrate the growth in stockholders' equity for
the last five years.
Six - The sixth graph used information from the Consolidated Balance Sheets
to illustrate the growth in net loans for the last five years.
Seven - The seventh graph used information from the Consolidated Balance
Sheets to illustrate the growth in deposits for the last five years.
Eight - The eighth graph used information from the Consolidated Balance Sheets
to illustrate the growth in total assets for the last five years.
Nine - The nineth graph used information from the Five Year Comparison table
above to illustrate interest income, interest expense and net interest income
for the last five years. 

 

Employees

FFMC has no employees.  Its subsidiary, the Bank had
approximately two hundred (200) full time employees and
fifty-six (56) part time employees.  Six of the Bank's officers
also were officers of FFMC.  Employee benefit programs provided
by the Bank include a deferred profit sharing plan, an annual
profit sharing plan, a salary continuation plan, a deferred
compensation plan, training programs, group life and health
insurance and paid vacations.


Item 2.  Properties.

A discussion of the properties owned by the company is
incorporated herein by reference to Notes to Consolidated
Financial Statements which are attached to and made a part of
Annual Report to Stockholders which is attached hereto as
Exhibit 13.  Other real estate owned by the Bank as of December
31, 1995, included:  (1) a 16.88 acre truck stop located at the
Bucksnort exit of I-40 and (2) a one-tenth interest in one
hundred acres known as Town Center, located in the southern part
of the town of Spring Hill, in northern Maury County, Tennessee
on US 31 Highway.  The properties are not depreciated.


<TABLE>
              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                         CONSOLIDATED BALANCE SHEETS                             
                         DECEMBER 31, 1995 and 1994                           
<CAPTION>
ASSETS 		                                    1995   		             1994  

<S>                                          <C>                 <C>
Cash and due from banks 	                    $ 	31,281,706       $ 	26,735,526 
Securities 				
 Available for sale (amortized cost 
  $10,875,527 and $12,646,156 
  respectively) 		                              11,269,006 		       12,565,226 
 Held to maturity (fair value
  $128,829,961 and $138,892,331  
  respectively) 		                             127,662,682 		      143,061,031 
    Total securities - Note 2 		               138,931,688       		155,626,257 
Loans, net of unearned income - Note 3   	  	  291,930,311       		262,694,120 
 Allowance for possible loan losses
  - Note 4 		                                   (2,678,386)       		(2,342,290) 
    Net loans 		                               289,251,925 		      260,351,830 
Bank premises and equipment, at cost less
 allowance for depreciation and 
 amortization - Note 5   		                      6,397,936 		        6,193,080 
Other assets 		                                 11,171,993 		       11,887,492 
				
   TOTAL ASSETS 	                            $ 477,035,248 	     $	460,794,185 

LIABILITIES 				

Deposits 				
 Noninterest-bearing 	                       $ 	67,420,536 	     $ 	61,845,878 
 Interest-bearing (including  
 certificates of deposit over $100,000: 				
 1995 - $30,593,803; 1994 - $26,169,831) 	    	343,357,525 		      343,306,545 
    Total deposits 		                          410,778,061 		      405,152,423 
 Federal funds purchased 		                     10,000,000 		        7,000,000 
 Dividends payable 		                              630,000 		          574,000 
 Other short term liabilities 		                 1,955,000 		          600,000 
 Accounts payable and accrued liabilities 		     4,675,712 		        3,639,636 
				
    TOTAL LIABILITIES 		                       428,038,773         416,966,059 

COMMITMENTS AND CONTINGENCIES - Notes 7 and 9 				
STOCKHOLDERS' EQUITY 				
 Common stock - $10 par value, authorized 
  4,000,000 shares; 1,400,000 shares issued 
  and outstanding - Note 1                    		14,000,000 		       14,000,000 
 Retained earnings - Note 6 		                  34,760,389 	       	29,876,683 
 Net unrealized loss on available-for-sale 
  securities, net of tax 		                        236,086 		          (48,557) 
    TOTAL STOCKHOLDERS' EQUITY 		               48,996,475 		       43,828,126 

    TOTAL LIABILITIES AND STOCKHOLDERS' 
     EQUITY 	                                $	477,035,248 	     $ 460,794,185 
</TABLE>

<TABLE>
                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                 
                     YEARS ENDED DECEMBER 31, 1995, 1994, and 1993                   
<CAPTION>
                                                              						Net Unrealized 		
			   		                                                           	Gain (Loss) On 		
                                    		Common  		    Retained 		    Available-for-sale 		
                                    		Stock   	    	Earnings    	    	Securities   	   	   Total 

<S>                               <C>             <C>                <C>               <C>
BALANCE AT JANUARY 1, 1993 	      $ 	7,000,000 	  $	28,201,005   	   $  	- 	           $	35,201,005 
Net income for the year 		               - 		        5,256,252 		        - 		             5,256,252 
Cash dividends declared, 
 $.73 per share 		                       - 		       (1,022,000) 		       - 		            (1,022,000) 
Net unrealized loss on mutual 
 fund investment 		                      - 		          (27,684) 		       -		                (27,684) 
								
BALANCE AT DECEMBER 31, 1993 		      7,000,000 		   32,407,573 		        -		             39,407,573 
Cumulative effect of change in
 accounting principle (net of
 deferred income taxes of 
 $171,405)  - Note 1 		                  - 		           27,684		       229,424 		           257,108 
Two-for-one stock split - Note 1 		  7,000,000 		   (7,000,000) 		       -		                  - 
Net income for the year 		               - 		        5,561,426 		        - 		             5,561,426 
Cash dividends declared, $.80 
 per share 		                            - 		       (1,120,000) 		       -		             (1,120,000) 
Net unrealized loss on available-
 for-sale securities, net of tax 		      - 		            - 		         (277,981) 		         (277,981) 
								
BALANCE AT DECEMBER 31, 1994 		     14,000,000 		   29,876,683		       (48,557) 		       43,828,126 
Net income for the year 		               - 		        6,115,706 		        - 		             6,115,706 
Cash dividends declared, $.88 
 per share 		                            - 		       (1,232,000) 		       -		             (1,232,000) 
Net unrealized gain on available-
 for-sale securities, net of tax		       - 		            - 		          284,643 		           284,643 

BALANCE AT DECEMBER 31, 1995 	    $	14,000,000 	  $	34,760,389 	     $	236,086 	       $	48,996,475 

<FN>
<F1>
The accompanying notes are an integral part of the consolidated
financial statements. 								
</FN>
</TABLE>

<PAGE>
<TABLE>
                   FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                           CONSOLIDATED STATEMENTS OF INCOME                      
                     YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993                   
<CAPTION>
                                         		1995  		       1994  		       1993  

INTEREST INCOME 						
 <S>                                  <C>            <C>            <C>
 Interest and fees on loans 	         $	25,857,982  	$	21,130,914 	 $	19,518,742 

 Income on investment securities 						
  Taxable interest 		                    6,179,492 		   7,185,169 		   6,925,404 
  Exempt from federal income tax 		      2,156,813 		   2,184,666 		   1,857,168 
  Dividends 		                             177,790      		204,948       		72,054  
                                       		8,514,095 		   9,574,783 	   	8,854,626 

 Other interest income 	                  	121,492 		     111,841 		     347,287 

    TOTAL INTEREST INCOME 		            34,493,569 		  30,817,538		   28,720,655 

INTEREST EXPENSE  						
 Interest on deposits 		                15,247,875 		  12,770,618 		  11,998,235 
 Interest on other short term 
  borrowings 		                            174,370 		      93,286		       38,339 
						
    TOTAL INTEREST EXPENSE 		           15,422,245 		  12,863,904		   12,036,574 

    NET INTEREST INCOME 		              19,071,324 		  17,953,634		   16,684,081 

PROVISION FOR POSSIBLE LOAN
 LOSSES - Note 4 		                        670,000 		     660,000		      470,000 

    NET INTEREST INCOME AFTER 						
     PROVISION FOR LOAN LOSSES 		       18,401,324		   17,293,634 		  16,214,081 

NONINTEREST  INCOME 						
 Trust department income 		              1,251,642 		   1,249,359 		     863,952 
 Service fees on deposit accounts 		     2,697,332 		   2,317,992		    2,206,026 
 Other service fees, commissions,
  and fees 		                              300,407		      336,758 		     509,009 
 Other operating income 		                 322,634 		     319,466 		     315,108 
 Available for sale securities 
  gains (losses) 		                          1,182		     (243,690) 		     23,896 
						
    TOTAL NONINTEREST  INCOME 		         4,573,197 		   3,979,885		    3,917,991 

NONINTEREST  EXPENSES 						
 Salaries and employee benefits 		       6,620,827 		   6,247,706		    5,686,965 
 Net occupancy expense 		                1,279,434 		   1,190,678 		   1,070,971 
 Furniture and equipment expense 		      1,382,769 		   1,069,856		      889,848 
 Loss on other real estate 		               50,724 		       4,000 		     103,122 
 Other operating expenses 		             5,006,292 		   4,996,107		    4,903,949 

    TOTAL NONINTEREST EXPENSES 		       14,340,046		   13,508,347 		  12,654,855 
						
    INCOME BEFORE PROVISION FOR
     INCOME TAXES 		                     8,634,475 		   7,765,172		    7,477,217 

PROVISION FOR INCOME TAXES - Note 8 		   2,518,769 		   2,203,746		    2,220,965 

    NET INCOME  	                     $ 	6,115,706 	 $ 	5,561,426 	 $ 	5,256,252 

EARNINGS PER COMMON SHARE - Note 1 						
 (1,400,000 outstanding shares) 	     $ 	     4.37 	 $ 	     3.97 	 $ 	     3.75 

<FN>						
<F2>
The accompanying notes are an integral part of the consolidated
financial statements. 						
</FN>
</TABLE>

<PAGE>

<TABLE>
                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                      CONSOLIDATED STATEMENTS OF CASH FLOWS                           
                  YEARS ENDED DECEMBER 31, 1995, 1994, and 1993                   
<CAPTION>
		                                   1995     		      1994            		1993  

OPERATING ACTIVITIES 						

 <S>                            <C>              <C>               <C>
 Net income   	                 $ 	6,115,706 	   $ 	5,561,426     	$ 	5,256,252 
 Adjustments to reconcile net
  income to net cash provided
  by operating activities 						
  Excess (deficiency) of 
   provision for possible 						
   loan losses over net 
   charge offs 		                    336,096 	      	318,639	         	(230,083) 
  Provision for depreciation
   and amortization of 
   premises and equipment 		         645,816 		      589,045 		         591,486 
  Amortization of deposit 
   base intangibles 		               168,020		       168,020 		         168,020 
  Amortization of investment
   security premiums, net of
   accretion of discounts 		         641,104 		      678,968		          747,224 
  Increase in cash surrender
   value of life insurance
   contracts 	                      	(65,936) 		     (75,287) 		       (103,175) 
  Deferred income taxes 		          (233,403) 		    (163,907) 		         24,080 
  (Increase) decrease in 						
   Interest receivable  		          (255,109) 	    	(992,872) 	        	364,303 
   Other assets  	                  	912,162 		      344,572 		      (1,171,225) 
  Increase (decrease) in 						
   Interest payable 	               	577,137 		      222,605 		        (206,742) 
   Other liabilities 		              458,939 		      287,975 		          38,024 
						
    TOTAL ADJUSTMENTS 		           3,184,826 		    1,377,758		          221,912 

    NET CASH PROVIDED BY 
     OPERATING ACTIVITIES        		9,300,532 		    6,939,184 		       5,478,164 

INVESTING ACTIVITIES 						

 Proceeds from maturities, 
  calls, and sales of 
  available-for-sale
  securities 		                    7,306,453 		   25,152,051 		           - 
 Proceeds from maturities and
  calls of held-to-maturity
  securities 		                   18,848,992 		    5,092,000 		      30,497,983 
 Purchases of investment 
  securities 						
  Available-for-sale 		           (3,168,200) 		 (16,942,994) 		          - 
  Held-to-maturity 		             (6,459,372) 		 (19,495,987)		     (39,789,407) 
 Net increase in loans 		        (29,236,191) 	 	(18,778,658)     		(18,710,584) 
 Purchases of premises and
  equipment 		                      (850,672) 		    (418,586)		        (222,279) 
 Proceeds from redemption of
  annuities and life insur-
  ance contracts 						                                                 229,275 
 Purchase of single premium
  life insurance contracts 		          - 		            - 		            (730,000) 

    NET CASH USED BY 
     INVESTING ACTIVITIES      		(13,558,990) 		 (25,392,174) 		    (28,725,012) 

FINANCING ACTIVITIES 						

 Net increase in noninterest-
  bearing and interest-bearing
  deposits  		                     5,625,638      16,217,348	       	18,384,169 
 Net increase (decrease) in
  short term borrowings 		         4,355,000		     7,000,000 		         (77,537) 
 Cash dividends                 		(1,176,000) 	  	(1,071,000) 		       (966,000) 

    NET CASH PROVIDED BY
     FINANCING ACTIVITIES        		8,804,638 		   22,146,348 		      17,340,632 

    INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS        		4,546,180 		    3,693,358 		      (5,906,216) 

CASH AND CASH EQUIVALENTS 
 AT BEGINNING OF YEAR 		          26,735,526		    23,042,168 		      28,948,384 

CASH AND CASH EQUIVALENTS AT
 END OF YEAR 	                  $	31,281,706 	   $	26,735,526 	    $ 23,042,168 

<FN>
<F3>
The accompanying notes are an integral part of the consolidated
financial statements.
</FN>
</TABLE>

<PAGE>

              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

		First Farmers and Merchants Corporation (the Corporation) was
incorporated on March 31, 1982, as a Tennessee corporation.  On 
April 13, 1982, the Board of Directors of the Corporation
adopted a resolution to execute and deliver to the Board of
Governors of the Federal Reserve System an application pursuant
to Section 3(a)(1) of the Bank Holding Company Act of 1956, as
amended, for prior approval by the Board of action to be taken
by the Corporation which would result in its becoming a bank
holding company. 

 		As of December 31, 1995, the only subsidiary of the
Corporation was the Bank.  The Bank is a national banking
association which was organized in 1954 as a successor to a
state bank organized in 1909.  The Bank conducts a full-service
commercial banking business at its principal office at 816 South
Garden Street, Columbia, Tennessee and at thirteen (13)
branches:  High Street Branch, Northside Branch, Shady Brook
Mall Branch, Hatcher Lane Branch, and Campbell Plaza Branch in
Columbia; Mt. Pleasant Branch in Mt. Pleasant; Spring Hill
Branch in Spring Hill; Lawrenceburg Branch in Lawrenceburg;
Leoma Branch in Leoma; Loretto Branch in Loretto; Lewisburg
Branch in Lewisburg; Chapel Hill Branch in Chapel Hill; and
Centerville Branch in Centerville.  The Bank provides automatic
teller machine services in the Northfield Complex at the Saturn
location near Spring Hill, and in Columbia at the Tennessee Farm
Bureau and Columbia State Community College.

		The community service area of the Bank is comprised of Maury,
Lawrence, Marshall, Hickman, and adjacent counties.  Commercial
banking in the marketing area served by the Bank is highly
competitive.  Although the Bank is ranked as the largest bank in
the area, in terms of total deposits, the Bank faces substantial
competition from ten (10) other banks, three (3) savings and
loan associations, and several credit unions located in the
marketing area.

Accounting Policies

		The accounting principles followed and the methods of applying
those principles conform with generally accepted accounting
principles and to general practices in the banking industry. 
The significant policies are summarized as follows.

Principles of Consolidation

		The accompanying consolidated financial statements present the
accounts of the Corporation and its wholly-owned subsidiary, the
Bank.  Material intercompany accounts and transactions have been
eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

		The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.

Cash and Due From Banks

		Included in cash and due from banks are legally  reserved
amounts which are required to be maintained on an average basis
in the form of cash and balances due from the Federal Reserve
Bank and other banks.  Average reserve requirements for the year
ended December 31, 1995, amounted to approximately $8.3 million.

Cash Equivalents

		Cash equivalents include cash on hand, cash due from banks,
and federal funds sold.  Federal funds are sold for one-day
periods.

<PAGE>

          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Securities

		Effective January 1, 1994, the Bank adopted Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting
for Certain Investments in Debt and Equity Securities."  In
accordance with the Statement, prior period financial statements
have not been restated to reflect the change in accounting
principle.  The cumulative effect of  the adoption was an
increase in stockholders' equity  of $257,108 (net of $171,405
in deferred income taxes) to reflect the net unrealized gains on
securities classified as available-for-sale that were previously
classified as held-to-maturity.  SFAS 115 establishes standards
of accounting and reporting for investments in equity securities
that have readily determinable fair values and all debt
securities.  Under the Statement, all such investments are
classified in three categories and accounted for as follows: 

		Debt securities that the Bank has the positive intent and
ability to hold to maturity are classified as held-to-maturity
and reported at amortized cost with premiums and discounts
recognized in interest income using the interest method over the
period to maturity.

		Debt and equity securities that are bought and held
principally for the purpose of selling them in the near term are
classified as trading securities and reported at fair value,
with  unrealized gains and losses included in earnings.

		Debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified
as available-for-sale securities and reported at fair value,
with unrealized gains and losses, net of tax,  excluded from
earnings and reported as a separate component of stockholders'
equity.  Gains and losses realized on the sale of
available-for-sale securities are determined using the specific
identification method.

		Declines in the fair value of individual available-for-sale
and held-to-maturity securities below their cost that are other
than temporary result in write-downs of the individual
securities to their fair value.  The related write-downs are
included in earnings as realized losses.

		On November 15, 1995, the Financial Accounting Standards Board
issued a guide for implementation of SFAS 115 which allowed a
bank to reassess the appropriateness of the classification of
all securities held at that date and account for resulting
reclassifications as a transfer until December 31, 1995. 
Reclassification from the held-to-maturity category that
resulted from this one-time reassessment would not call into
question the intent of a bank to hold other debt securities to
maturity in the future.  The Bank did not reclassify any debt
securities as a result of this one-time reassessment.

Loans

		Effective January 1, 1995, the Bank adopted Statement of
Financial Accounting Standards No. 114 (SFAS 114, as amended by
SFAS 118), "Accounting by Creditors for Impairment of a Loan". 
The statement specifies how allowances for credit losses related
to certain loans should be determined and addresses the
accounting for certain loans that are restructured in a troubled
debt restructuring.  A loan is considered impaired when it is
probable that an institution will be unable to collect all
amounts due (principal and interest) according to the
contractual terms of the loan agreement.  The Bank evaluates
smaller balance homogeneous loans collectively for impairment. 
Loans secured by one to four family residential properties,
consumer installment loans, and line of credit loans are
considered smaller-balance homogeneous loans.

		Interest on loans is computed daily based on the principal
amount outstanding.  Loan origination fees and related direct
costs are deferred and recognized as an adjustment of yield on
the interest method.  Interest accruals are discontinued when,
in the opinion of management, it is not reasonable to expect
that such interest will be collected.  Consequently, interest
accruals are discontinued on loans that are ninety days
past-due.  All loans

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Loans (Continued)

in non-accrual status and loans in the two most severe Loan
Review classifications are specifically evaluated for
impairment.  Interest income on loans in non-accrual status is
recognized only to the extent of the excess of cash payments
received over principal payments due.

		When a loan is collateral dependent, impairment is measured
based on the observable market price or the fair value of the
collateral.  For other loans, the amount of impairment is
measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate. 
Positive changes in the net present value of an impaired loan
will in no event be used to increase the value of a loan above
the amount of the loan.

	Other Real Estate

		Other real estate, which is included in other assets,
represents real estate acquired through foreclosure and is
stated at the lower of cost or fair value minus estimated cost
to sell.  If, at the time of foreclosure, the fair value of the
real estate is less than the Bank's carrying value of the
related loan, a write-down is recognized through a charge to the
allowance for possible loan losses, and the fair value becomes
the new cost for subsequent accounting.  If the Bank later
determines that the cost of the property cannot be recovered
through sale or use, a write-down is recognized by a charge to
operations.  When the property is not in a condition suitable
for sale or use at the time of foreclosure, completion and
holding costs, including such items as real estate taxes,
maintenance and insurance, are capitalized up to the estimated
net realizable value of the property.  However, when the
property is in a condition for sale or use at the time of
foreclosure. or the property is already carried at its estimated
net realizable value, any subsequent holding costs are expensed.
 Legal fees and any other direct costs relating to foreclosures
are charged to operations when incurred.

		The Bank's recorded value for other real estate was
approximately $482,945 at December 31, 1995, and $544,540 at
December 31, 1994.  

Allowance for Possible Loan Losses

	The allowance for possible loan losses is established by
charges to operations based on the evaluation of the impairment
of loans by Loan Review, the Special Assets Committee, and the
Credit Administrator.  Impairments in loans are charged to the
allowance account in the period such determination is made. 
Recoveries on loans previously charged off are credited to the
allowance account in the period received.  The adequacy of the
allowance for possible loan losses is evaluated quarterly in
conjunction with loan review reports and evaluations that are
discussed in a meeting with loan officers and loan
administration.

Premises and Equipment

		Premises and equipment are stated at cost, less accumulated
depreciation and amortization.  The provision for depreciation
is computed principally on an accelerated cost recovery method
over the estimated useful lives of the assets, which range as
follows:  buildings - 15 to 50 years and equipment - 3-33 years.
 Costs of major additions and improvements are capitalized. 
Expenditures for maintenance and repairs are charged to
operations as incurred.  Gains or losses from the disposition of
property are reflected in operations, and the asset accounts and
related allowances for depreciation are reduced. 

Trust Department Income

		Trust department income is recognized on the accrual basis in
the applicable period earned.

<PAGE>

             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Stock Split

		During 1994, the Corporation amended its corporate charter to
increase the number of authorized shares of its common stock
from 2,000,000 to 4,000,000 shares and on April 12, 1994, the
Corporation's stockholders approved a two-for-one split effected
in the form of a 100% stock dividend distributed May 30, 1994,
to shareholders of record on April 12, 1994.  In accordance with
State corporate legal requirements, the transaction was recorded
by a transfer from retained earnings to common stock in the
amount of $7,000,000 ($10 for each additional share issued). 
All per share and share data in the accompanying consolidated
financial statements and footnotes have been restated to give
retroactive effect to the transaction.

Income Taxes

		The companies file a consolidated federal income tax return.  
They adopted Statement of Financial Accounting Standards No. 109
(SFAS 109), "Accounting For Income Taxes", effective January 1,
1993.  SFAS 109 requires an asset and liability approach to
financial accounting and reporting for income taxes.  Deferred
income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected
to affect taxable income.

		Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. 
Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred
tax assets and liabilities.  The cumulative effect, as of
January 1, 1993, of this change in the method of accounting for
income taxes was negligible.

Intangible Assets

	Deposit base intangibles identified in merger transactions are
amortized over 42 to 70 months on the straight-line method. 
Total amortization expense charged to operations amounted to: 
1995 - $168,020;  1994 - $168,020;  and  1993 - $168,020.

Fair Value of Financial Instruments

		Statement of Financial Accounting Standards No. 107 (SFAS
107), "Disclosures about Fair Value of Financial Instruments",
requires all entities to disclose the estimated fair value of
its financial instrument assets and liabilities.  For the Bank,
as for most financial institutions, almost all of its assets and
liabilities are considered financial instruments as defined in
SFAS 107.  Many of the Bank's financial instruments, however,
lack an available trading market as characterized by a willing
buyer and willing seller engaging in an unforced, unforeclosed
transaction.  Therefore, significant estimations and present
value calculations  were used by the Bank for the purposes of
this disclosure.

<PAGE>


            FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2 - INVESTMENT SECURITIES

		The following tables reflect the amortized value and fair
value of investment securities.

<TABLE>

<CAPTION>
                            		      Amortized 		                Gross Unrealized 		 		         Fair 	
	                                    	Value 		               Gain           	   Loss 		        Value 	

December 31, 1995 									

Available-for-sale securities 									

 <S>                              <C>                     <C>                  <C>           <C>
 U.S. Treasury 	                  $ 	5,064,421 	          $  	72,679 	         $   	- 	      $ 	5,137,100 	
 U.S. Government agencies 		         3,279,968 		             72,268 		             2,570		     3,349,666 	
 Other securities 		                 2,531,138 	             254,102 		             3,000 		    2,782,240 	
 	                                $	10,875,527 	          $ 	399,049 	         $   	5,570 	  $	11,269,006 	

Held-to-maturity securities 									

 U.S. Treasury                   	$	61,426,813 	          $ 	295,846 	         $  	59,359 	  $	61,663,300 	
 U.S. Government agencies 		        23,498,204 		            267,237 		            48,041		    23,717,400 	
 States and political subdivisions		42,415,025 		            934,439		            241,048 		   43,108,416 	
 Other securities 		                   322,640 		             18,205 		             - 		          340,845 	
                                 	$127,662,682 	          $1,515,727 	         $ 	348,448 	  $128,829,961 	

December 31, 1994 									
									
Available-for-sale securities 									
 U.S. Treasury 	                  $ 	7,094,657 	          $   	4,695 	         $  	50,352 	  $ 	7,049,000 	
 U.S. Government agencies 		         5,551,499 		              3,892 		            39,165		     5,516,226 	
	                                 $	12,646,156 	          $   	8,587           $  	89,517 	  $	12,565,226 	

Held-to-maturity securities 									
 U.S. Treasury 	                  $	71,997,419 	          $  	66,784 	         $1,862,503 	  $	70,201,700 	
 U.S. Government agencies 		        28,527,740 		             21,631 		         1,006,621		    27,542,750 	
 States and political subdivisions 	39,786,156 		            493,613		          1,804,009 		   38,475,760 	
 Other securities 		                 2,749,716 		              3,210 		            80,805 		    2,672,121 	
                                 	$143,061,031 	          $ 	585,238 	         $4,753,938 	  $138,892,331 	

</TABLE>

		Securities with an amortized value of $93,101,954 and
$81,583,779 at December 31, 1995 and 1994, respectively (fair
value: 1995 - $93,937,766; 1994 - $80,148,047), were pledged to
secure deposits and for other purposes as required or permitted
by law.  The fair value is established by an independent pricing
service as of the approximate dates indicated.  The differences
between the amortized value and fair value reflect current
interest rates and represent the potential gain (or loss) had
the portfolio been liquidated on that date.  Security gains (or
losses) are realized only in the event of dispositions prior to
maturity.  The fair values of all securities at December 31,
1995, either equaled or exceeded the cost of those securities,
or the decline in fair value is considered temporary.

		A schedule of net gains and losses realized on the disposition
of investment securities, and the related tax effects, is
presented in the following table.  All net gains realized in
1995 and net losses realized in 1994 resulted from sales of
securities which were classified as available-for-sale.

<TABLE>

<CAPTION>
            		                         1995       		1994        		1993  	

       <S>                         <C>           <C>           <C>
       Pre-tax gains (losses) 	    $   	1,182 	  $(243,690) 	  $ 	23,896 	
       Tax effect 		                     (473) 		   97,476 		     (9,558) 	
       After-tax gains (losses) 	   $  	  709 	  $(146,214) 	  $ 	14,338 	

</TABLE>
							
<PAGE>

         FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 - INVESTMENT SECURITIES (Continued)



		Proceeds from the maturity, call, or sale of
available-for-sale securities were $7,306,453, $25,152,051, and
$-0- during 1995, 1994, and 1993 respectively.  Proceeds from
the maturity or call of held-to-maturity securities were
$18,848,992, $5,092,000, and $30,497,983 during 1995, 1994, and
1993 respectively.  Gross gains of $1,182 and gross losses of
$-0- were realized on the dispositions in 1995.  Gross gains of
$-0- and gross losses of $243,690 were realized on the
dispositions in 1994.  Gross gains of $23,896 and gross losses
of $ -0- were realized on the dispositions in 1993.  At December
31, 1995, the Corporation did not hold investment securities of
any single issuer, other than obligations of the U.S. Treasury
and other U.S. Government agencies, whose aggregate book value
exceeded ten percent of stockholders' equity.

	 	The following table shows the amortized value, fair  value,
and weighted yields (for tax-exempt obligations on a fully
taxable basis assuming a 34% tax rate) of investment securities
at December 31, 1995, by contractual maturity.  Expected
maturities may differ from contractual maturities because
issuers may have the right to call or prepay obligations.

<TABLE>

<CAPTION>
                                             		Amortized 	       	Fair 	 	   Yield 	
                                                		Cost 	   	     Value 		    (Unaudited) 	
Available-for-sale securities 							
<S>                                          <C>              <C>              <C>
U.S. Treasury
 Within one year 	                           $ 	2,019,183 	   $ 	2,029,400 		   6.2% 	
 After one but within five years 		             3,045,238 		     3,107,700		    6.5% 	
U.S. Government agencies 							
 Within one year 		                             1,000,000 		     1,002,500 		   6.1% 	
 After one but within five years 		             1,996,231 		     2,066,000		    7.6% 	
 After ten years 		                               283,737 		       281,166 		   6.2% 	
Other securities 		                             2,531,138 		     2,782,240 		   8.9% 	
	                                            $	10,875,527 	   $	11,269,006 			

Held-to-maturity securities 							
U.S. Treasury 							
 Within one year 	                           $	39,167,894 	   $ 39,306,700 		   6.1% 	
 After one but within five years 		            22,258,919 		    22,356,600		    5.6% 	
U.S. Government agencies 							
 Within one year 		                            11,023,204 		    11,062,500 		   6.1% 	
 After one but within five years 		            12,475,000 		    12,654,900		    6.1% 	
 After five but within ten years 		                - 	 	            - 	 	        - 	 
States and political subdivisions 							
 Within one year 		                             3,244,962 		     3,296,024 		  10.0% 	
 After one but within five years 		            12,357,917 		    12,741,932		    8.7% 	
 After five but within ten years 		            23,148,235 		    23,191,943		    7.6% 	
 After ten years 		                             3,663,911 		     3,678,517 		   7.8% 	
Other securities 							
 After one but within five years 		               322,640 		       340,845 		   8.0% 	
	                                            $127,662,682 	   $128,629,961 			
</TABLE>

<PAGE>							

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  3 - LOANS

		A summary of loans outstanding by category follows. 

<TABLE>

<CAPTION>
  		                                                1995  		          1994  	
Loans secured by real estate 					
<S>                                            <C>               <C>
Loans secured by real estate
 Construction  and  land development   	       $ 	7,399,095 	    $ 	8,036,802 	
 Farmland 		                                      7,849,137 		      7,942,187 	
 Lines of credit 		                                 339,108         		240,976 	
 1-4 family residential property - first lien  	111,016,393     		100,548,761 	
 1-4 family residential property - junior lien   	7,177,285       		7,219,546 	
 Multifamily residential property 		              3,729,687 		      4,775,515 	
 Non farm, non residential property 		           44,224,353 		     41,734,848 	
    Subtotal 		                                 181,735,058 		    170,498,635 	

Commercial and  industrial loans 					
 Commercial  and  industrial 		                  51,758,675 		     44,870,150 	
 Taxable municipal loans 		                         270,000 		        300,000 	
 All other loans 		                                  88,239 		        187,405 	
    Subtotal 		                                  52,116,914 		     45,357,555 	

Tax exempt municipal loans 		                     1,485,071 		        748,116 	

Loans to individuals 					
 Agricultural production 		                       3,659,215 		      3,823,296 	
 Lines of credit 		                                 135,230 		        103,249 	
 Individuals for personal expenditures 	        	53,026,209      		42,341,597 	
 Purchase or carry securities 		                     - 		                 655 	
    Subtotal 		                                  56,820,654 		     46,268,797 	

Lease financing 		                                   - 		               1,408 	

                                              		292,157,697 		    262,874,511 	

Less: 					
 Net unamortized loan origination fees 		          (225,368) 		      (176,606)
 Unearned interest income 		                         (2,018) 		        (3,785) 	
 Allowance for possible loan losses 		           (2,678,386)		     (2,342,290) 	
					
	                                              $289,251,925 	    $260,351,830 	

</TABLE>
					
		A summary of loan maturities and the amounts of loans carrying
fixed and variable interest rates as of December 31, 1995,
follows.

<TABLE>

<CAPTION>
                                    	 	(In Thousands of Dollars) 
                             		Within 		     One to 		    After  		
		                            One Year 	  	Five Years 		 Five Years  		Total 

     <S>                      <C>           <C>          <C>         <C>
     Fixed rate loans 	       $ 	62,923 	   $ 	47,100 	  $ 	23,735   $	133,758 
     Variable rate loans 	     	113,389 	     	26,949 		    18,062 		  158,400 
								
 	                            $	176,312 	   $ 	74,049 	  $ 	41,797 	 $	292,158 

</TABLE>

	Loans having recorded investments of $5,856,000 at December 31,
1995, have been identified as impaired in accordance with the
provisions of SFAS 114.  The total allowance for possible loan
losses related to these loans was $456,000.  Interest received
on these loans during 1995 was $532,873.  Prior to adoption of
SFAS 114, non-performing loans were those which were accounted
for on a non-accrual basis.  Such loans had outstanding balances
of approximately  $2,611,000 at December 31, 1994.

<PAGE>
                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - LOANS  (Continued)

		Certain parties (principally directors and senior officers of
the Corporation or the Bank, including their affiliates,
families, and companies in which they hold ten percent or more
ownership) were customers of, and had loans and other
transactions with, the Bank in the ordinary course of business. 
An analysis of activity with respect to such loans for the years
ended December 31, 1995 and 1994, follows. 

<TABLE>

<CAPTION>
                                  		Balance at 								
                	                  	Beginning  				                 Amount      		Amount      Balance at 
                                 		 of Year 		      Additions 		  Collected 	  	Written Off 		End of Year 

 <S>                                <C>            <C>           <C>           <C>            <C>
      1995  										
 Aggregate of certain party loans 	 $ 6,494,271  	 $	7,020,665 	 $	5,908,932 	 $ 	  - 	       $ 7,606,004 

      1994  										
 Aggregate of certain party loans 	 $	6,563,577 	  $	5,081,776 	 $	5,151,082 	 $    - 	       $	6,494,271 

</TABLE>
										

		These totals exclude loans made in the ordinary course of
business to other companies with which neither the Corporation
nor the Bank has a relationship other than the association of
one of its directors in the capacity of officer or director. 
These loan transactions were made on substantially the same
terms as those prevailing at the time for comparable loans to
other persons.  They did not involve more than the normal risk
of collectiblity or present other unfavorable features.  No
related party loans were charged off in 1995 or 1994.

NOTE 4 - ALLOWANCE FOR POSSIBLE LOAN LOSSES

		Changes in the allowance for possible loan losses are as
follows:

<TABLE>

<CAPTION>
       		                                    1995   		     1994   		     1993  	

<S>                                      <C>           <C>           <C>
Balance at beginning of year 	           $	2,342,290 	 $	2,023,651 	 $	2,253,735 	
Provision charged to operating expenses    		670,000 		    660,000		     470,000 	
Loan losses: 							
 Loans charged off 		                       (555,957) 		  (422,831) 		  (847,535) 	
 Recoveries on loans previously  							
  charged off                              		222,053      		81,470     		147,451 	
							
Balance at end of year 	                 $	2,678,386 	 $	2,342,290 	 $	2,023,651 	

</TABLE>
							

		For federal income tax purposes, the allowance for possible
loan losses is maintained at the maximum allowable by the
Internal Revenue Code.

NOTE 5 - BANK PREMISES AND EQUIPMENT

		The components of premises and equipment are as follows:

<TABLE>

<CAPTION>
                                                1995               1994
        <S>                                 <C>                <C>
        Land 	                              $ 1,204,288 	      $	1,204,288 	
        Premises 		                           6,648,329 		       6,629,567 	
        Furniture and equipment 		            3,949,617 		       3,816,320 	
        Leasehold improvements 		               879,695 		         474,770 	
                                           		12,681,929 		      12,124,945 	
Less allowance for depreciation and
 amortization 		                             (6,283,993)		      (5,931,865) 	

	                                           $	6,397,936 	      $	6,193,080 	

</TABLE>

		Annual provisions for depreciation and amortization total
$645,816 for 1995, $589,045 for 1994, and $591,486 for 1993. 
Included in premises and equipment cost and allowance for
depreciation and amortization are certain fully depreciated
assets totaling $2,287,900 at December 31, 1995.


<PAGE>

        FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - LIMITATION ON SUBSIDIARY DIVIDENDS

		The approval of the Comptroller of the Currency is required
before the Bank's dividends in a given year may exceed the total
of its net profit (as defined) for the year combined with
retained net profits of the preceding two years.  As of December
31, 1995, additional dividends of approximately $13,500,000
could have been declared by the Bank to the Corporation without
regulatory agency approval.



NOTE 7 - LEASES



		Real property for four of the Bank's office locations and
certain equipment are leased under noncancelable operating
leases expiring at various times through 2000.  In most cases,
the leases provide for one or more renewal options of five to
ten years under the same or similar terms.  In addition, various
items of teller and office equipment are leased under cancelable
and noncancelable operating leases.  Total rental expense
incurred under all operating leases, including short-term leases
with terms of less than one month, amounted to $660,121,
$409,764, and $254,121 for equipment leases, and $111,649,
$97,966, and $82,030 for building leases, in 1995, 1994, and
1993, respectively.  Future minimum lease commitments as of
December 31, 1995, under all noncancelable operating leases with
initial terms of one year or more follow.

<TABLE>
     <S>                                          <C>
                    1996                        	 $ 	671,934 	
                  		1997  	              	           671,934 	
                  		1998  		                         636,511 	
                  		1999  		                           5,088 	
                  		2000  	 	                          5,088 	

     Total future minimum lease payments 	    		  $1,990,555 	

/TABLE>
					

NOTE 8 - FEDERAL AND STATE INCOME TAXES

		The provisions for income taxes consist of the following:


</TABLE>
<TABLE>

<CAPTION>
                                     		1995         		1994        		1993  	

<S>                                <C>            <C>            <C>
Current: 							
 Federal 	                         $ 2,166,566 	  $	1,831,848 	  $	1,754,003 	
 State 		                              585,606 		     503,433 		     442,882 	
    Total current 	                  2,752,172 		   2,335,281 		   2,196,885 	

Deferred: 							
 Federal 		                           (198,393) 		   (111,805) 		     20,468 	
 State 		                              (35,010) 		    (19,730) 		      3,612 	
    Total deferred                    (233,403) 		   (131,535) 		     24,080 	

  Total provision for 
    income taxes 	                 $ 2,518,769 	  $	2,203,746 	  $	2,220,965 	

</TABLE>
							
<PAGE>

                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - FEDERAL AND STATE INCOME TAXES (Continued)

		The deferred tax effects of principal temporary differences
are shown in the following table:

<TABLE>
<CAPTION>
                		                         1995  		      1994  		      1993  	

<S>                                   <C>           <C>           <C>
Allowance for possible loan losses 	  $ 	815,315 	  $ 	682,877 	  $ 	555,421 	
Installment loan reporting 		               - 		          - 		         6,865 	
Write-down of other real estate 		       177,120 		    159,120 		    157,520 	
Deferred compensation 		                 256,139 		    156,227 		     76,781 	
Direct lease financing 		                   - 		        36,452 		     35,736 	
Unrealized loss on AFS securities 		        - 		        32,372 		     18,457 	
Deferred loan fees 		                     44,051 		     24,546 		     76,907 	

  Deferred tax asset 		                1,292,625 		  1,091,594 		    927,687 	

Unrealized gain on AFS securities 		    (157,392) 		      - 		          - 	

  Deferred tax liability 		             (157,392)  		     - 		          -	

    Net deferred tax asset 	          $1,135,233    $1,091,594	   $ 	927,687 	

</TABLE>


		A reconciliation of total income taxes reported with the
amount of income taxes computed at the federal statutory rate
(34% each year) is shown below.  Total income taxes paid in
1995, 1994, and 1993 amounted to $2,756,442, $2,431,332 and
$2,564,887, respectively.

<TABLE>

<CAPTION>
        		                                        1995  		         1994  		         1993  	

<S>                                           <C>              <C>              <C>
Tax expense at statutory rate 	               $ 2,935,722 	    $ 2,640,158    	 $	2,542,254 	
Increase (decrease) in taxes resulting from: 							
 Tax-exempt interest 		                          (783,011) 		     (780,946) 		     (647,575) 	
 Nondeductible interest expense 		                 89,491 		        75,019 		        58,457 	
 Other nondeductible expenses 							
  (nontaxable income) - net 		                    (28,114) 		       (6,458)		       (19,962) 	
 State income taxes, net of federal 							
  tax benefit 		                                  363,393 		       319,244 		       292,263 	
 Dividend income exclusion 		                     (18,324) 		      (29,571) 		      (15,646) 	
 Other 		                                         (40,388) 		      (13,700) 		       11,174 	

Total provision for income taxes 	            $	2,518,769 	    $	2,203,746 	    $	2,220,965 	

Effective tax rate 		                               29.2% 		         28.4% 		         29.7% 	

</TABLE>
							

		A net deferred tax asset was included in other assets in the
accompanying consolidated balance sheet.  

NOTE 9 - COMMITMENTS

		The Bank is a party to financial instruments with
off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers.  These financial
instruments include commitments to extend credit and standby
letters of credit.  Those instruments involve, to varying
degrees, elements of credit risk in excess of the amount
recognized in the balance sheet.  The contract or notional
amounts of those instruments reflect the extent of involvement
the Bank has in those particular financial instruments.

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 NOTE 9 - COMMITMENTS (Continued)

		The total outstanding loan commitments and stand-by letters of
credit in the normal course of business at December 31, 1995,
were $21,739,000 and $1,699,000, respectively.  Loan commitments
are agreements to lend to a customer as long as there is not a
violation of any condition established in the contract.  Standby
letters of credit are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. 
Those guarantees are primarily issued to support public and
private borrowing arrangements, including commercial paper, bond
financing, and similar transactions.  The credit risk involved
in issuing letters of credit is essentially the same as that
involved in making a loan.

		The loan portfolio is well diversified with loans generally
secured by tangible personal property, real property, or stock. 
The loans are expected to be repaid from cash flow or proceeds
from the sale of selected assets of the borrowers.  Collateral
requirements for the loan portfolio are based on credit
evaluation of the customer.  It is management's opinion that
there is not a concentration of credit risk in the portfolio.


NOTE 10 - SUPPLEMENTARY CASH FLOW INFORMATION

		Interest paid on deposits and other borrowings during 1995,
1994, and 1993 amounted to $14,845,299, $12,641,299, and
$12,243,317, respectively.


NOTE 11 - EMPLOYEE BENEFIT PLANS

		The Bank contributes to a defined contribution, profit-sharing
plan covering employees who meet participation requirements. 
The amount of the contribution is discretionary as determined by
the Board of Directors up to the maximum deduction allowed for
federal income tax purposes.  Contributions to the plan, that
amounted to $633,459, $602,010, and $529,324, in 1995, 1994, and
1993, respectively, are included in salaries and employee
benefits expense. 

		In 1992, the Bank formalized a nonqualified salary
continuation plan for certain key officers.  In connection with
this plan, the value of the assets (1995 - $594,221; 1994 -
$580,088) used to fund the plan and the related liability (1995
- $482,272; 1994 - $400,606) were included in other assets and
other liabilities respectively.  Single premium universal life
insurance policies were purchased in 1993 to replace other
policies and annuities that were redeemed.  Insurance premiums
of $515,000 were paid during 1993, of which $285,725 (net of the
redemption proceeds) was capitalized.  Net non-cash income of
$14,133 in 1995 and  $22,448 in 1994 is also included in the
above asset values.  The principal cost of this plan will be
accrued over the anticipated remaining period of active
employment, based on the present value of the expected
retirement benefit.  Expense related to this plan was $106,666
in 1995, $98,925 in 1994, and $91,916 in 1993.

   The Bank also implemented a deferred compensation plan which
permitted directors, beginning in 1993, to defer their
director's fees and earn interest on the deferred amount.  A
liability increase and expense of $176,727 for 1995, $126,262
for 1994, and $125,036 for 1993 were recognized in the
accompanying financial statements.  In connection with this
plan, a single premium universal life insurance policy was
purchased on the life of each director who elected to
participate.  Insurance premiums of $1,425,000 were paid at the
end of 1992, of which $1,399,816 was capitalized to reflect the
cash surrender value at December 31, 1992.  Additional single
premium universal life insurance policies were purchased in 1993
for new participants.  Insurance premiums of $215,000 were paid
during 1993 and capitalized.  Net non-cash income of $51,803 in
1995 and $52,840 in 1994 is also included in the cash surrender
values of  $1,801,922 and $1,750,119 at December 31, 1995 and
1994, respectively.

		The Bank is beneficiary on the insurance policies that fund
the salary continuation plan and the deferred compensation plan.
 These policies have an aggregate face amount of $2,425,000.

<PAGE>

               FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - QUARTERLY RESULTS OF OPERATIONS (Unaudited)

		The following is a summary of the unaudited consolidated
quarterly results of operations.

<TABLE>
										
<CAPTION>

                               		First        Second     		  Third 		     Fourth 		
                              		Quarter     		Quarter 	     Quarter   	  	Quarter 		    Total 

        1995  										

<S>                          <C>           <C>           <C>           <C>           <C>
Interest income 	            $	8,244,228   $	8,640,769 	 $	8,720,212 	 $ 8,888,360 	 $34,493,569 
Interest expense 		            3,654,485 		  3,856,594 		  3,938,600 		  3,972,566		  15,422,245 

Net interest income 		         4,589,743 		  4,784,175 		  4,781,612		   4,915,794 		 19,071,324 
Provision for possible loan  										
 losses 		                       145,000 		    140,000 		    180,000 		    205,000 		    670,000 
Noninterest expenses, net of 										
 noninterest income 		         2,492,505 		  2,547,595 		  2,430,466		   2,296,283 		  9,766,849 
										
Income before income taxes 		  1,952,238 		  2,096,580 		  2,171,146		   2,414,511 		  8,634,475 
Income taxes 		                  512,448 		    589,977 		    680,609 		    735,735 		  2,518,769 

Net income 	                 $	1,439,790 	 $ 1,506,603 	 $	1,490,537 	 $	1,678,776 	 $ 6,115,706 

Earnings per common share 										
  (1,400,000 shares) 	       $ 	    1.03 	 $  	   1.08 	 $     	1.06 	 $    	 1.20 	 $ 	    4.37 

</TABLE>

<TABLE>
<CAPTION>
	                               	First 		      Second 		     Third 		    Fourth 		
                     		         Quarter 	     	Quarter     	Quarter  	   Quarter 		    Total 

1994  										

<S>                          <C>           <C>            <C>           <C>          <C>
Interest income 	            $	7,176,893   $	7,664,849    $	7,814,500 	 $	8,161,296  $30,817,538 
Interest expense 		            2,986,012 		  3,148,310 		   3,272,217 		  3,457,365	  12,863,904 

Net interest income 		         4,190,881 		  4,516,539 		   4,542,283		   4,703,931 		17,953,634 
Provision for possible loan  										
 losses 		                        60,000 		    255,000 		     225,000 		    120,000 		   660,000 
Noninterest expenses, net of 										
 noninterest income 		         2,260,734 		  2,254,027 		   2,490,717		   2,522,984 		 9,528,462 

Income before income taxes 		  1,870,147 		  2,007,512 		   1,826,566		   2,060,947 		 7,765,172 
Income taxes 		                  528,638 		    566,493 		     508,942 		    599,673 		 2,203,746 

Net income 	                 $	1,341,509 	 $	1,441,019 	  $ 1,317,624 	 $	1,461,274  $	5,561,426 

Earnings per common share 										
 (1,400,000 shares) 	        $ 	    0.96 	 $  	   1.03 	  $ 	    0.94 	 $ 	    1.04	 $ 	    3.97 

</TABLE>

NOTE 13 - SHAREHOLDERS' EQUITY

		The Corporation and the Bank are subject to federal regulatory
risk-adjusted capital adequacy standards.  Failure to meet
capital adequacy requirements can initiate certain mandatory,
and possibly additional discretionary, actions by regulators
that could have a direct material effect on the consolidated
financial statements of the Corporation and its subsidiary, the
Bank.  The regulations require the Bank to meet specific capital
adequacy guidelines that involve quantitative measures of
assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices.   As of
December 31, 1995, the Bank's calculated risk-adjusted capital
ratios exceeded the minimum standard for a "well capitalized"
bank.  The capital classification is also subject to qualitative
judgments by the regulators about components, risk weightings,
and other factors.  Management believes that the Corporation and
the Bank meet all capital requirements.

<PAGE>

             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - DEPOSITS

		The Bank does not have any foreign offices and all deposits
are serviced in its fourteen domestic offices.  The average
amounts of deposits and the average rates paid are summarized in
the following table.

<TABLE>

<CAPTION>
                                                      (Unaudited) 									
                                     		 	 	 	 	 	Year Ended December 31 		 	 	 	 	 	

                                          		1995       		   	 		1994      		 	 		  1993  		 	 	
                                							          (Dollars In Thousands) 									

<S>                                  <C>        <C>      <C>        <C>      <C>        <C>
Demand deposits 	                    $	56,730  		- 	% 	  $	55,557 	 	- 	% 	  $	48,697		  - 	% 	
NOW and money market accounts 		      149,016 		3.51 			  161,244 		3.25			   147,246 		3.16 		
Savings deposits 		                    34,629 		3.00 			   35,036 		2.87 			   31,216 		2.76
Time deposits of less than $100,000 		136,568 		5.30 			  126,523		 4.27 			  128,021 		4.26 		
Time deposits of $100,000 or more 		   32,524 		5.35 			   26,053		 4.32 			   23,602 		4.33 		

Total In Domestic Offices 	          $409,467 		3.72%   	$404,413		 3.66% 	  $378,782 		3.17% 	 

																
</TABLE>

		At December 31, time deposits of $100,000 or more had the
following maturities.

<TABLE>
<CAPTION>
                            	1995  	    	1994  		   1993  
                                  (Dollars In Thousands)

    <S>                   <C>         <C>        <C>
    Under 3 months 	      $	7,877 	   $	3,117 	  $	3,519 
    3 to 12 months 		      18,407 		   18,250 		  17,081 
    Over 12 months 		       4,310 		    4,803 		   4,505 

	                         $30,594 	   $26,170 	  $25,105 

</TABLE>
						

	NOTE 15 -  FAIR VALUES OF FINANCIAL INSTRUMENTS



		This summarizes the Corporation's disclosure of fair values of
financial instruments made in accordance with the requirements
of Statement of Financial Accounting Standards No. 107 (SFAS
107), "Disclosures about Fair Value of Financial Instruments".

<TABLE>

<CAPTION>
				                                          Dollars in Thousands 					
     		                             December 31, 1995 	  	 		  December 31, 1994 		 	
                               	 	Amortized     		Fair     	  	Amortized  	  	Fair 	
		                                  Value   	   	Value 	        	Value    		 Value 	

<S>                               <C>             <C>           <C>           <C>
Financial assets 									
  Cash and cash equivalents      	$ 	31,282 	     $ 	31,282 	   $ 	26,736	    $ 	26,736 	
  Securities held to maturity   	  	127,663  		     128,830  		   143,061		     138,892 	
  Securities available for sale   		 10,876  	 	     11,269 	  	   12,646		      12,565 	
  Loans, net 	                   	  289,252 	 	     298,076 		    260,352 		    268,870  	
  Accrued interest receivable 		      5,454 		        5,424 		      5,169		       5,169 	

Financial liabilities 									
  Deposits 		                       410,778 		      398,296 		    405,152 		    402,720 	
  Federal funds purchased 		         10,000 		       10,000 		      7,000 		      7,000 	
  Short term borrowings 		            1,955 		        1,955 		        600 		        600 	
  Accrued interest payable 		         3,034 		        3,034 		      2,457 		      2,457 	

</TABLE>

		Estimated fair values have been determined by the Bank using
the best available data.  Changes in assumptions or the
estimation methodologies used may have a material effect on the
estimated fair values included in this note.

<PAGE>


           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	NOTE 15 -  FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)


		Financial assets - Cash and cash equivalents are considered to
be carried at their fair value and have not been valued
differently than has been customary with historical cost
accounting.  Securities available-for-sale and securities
held-to-maturity are valued by an independent rating service and
are disclosed in detail in Note 2 above.  	A present value
discounted cash flow methodology was used to value the net loan
portfolio.  The discount rate used in these calculations was the
current rate at which new loans in the same classification for
regulatory reporting purposes would be made.  This rate was
adjusted for credit loss and assumed prepayment risk.   For
loans with floating interest rates it is presumed that estimated
fair values generally approximate the recorded book balances.

		Financial liabilities - Deposits with stated maturities have
been valued using a present value discounted cash flow with a
discount rate approximating the current market for similar
liabilities.  Financial instrument liabilities with no stated
maturities have an estimated fair value equal to both the amount
payable on demand and the recorded book balance.  For deposits
with floating interest rates it is presumed that estimated fair
values generally approximate the recorded book balances.  The
carrying amounts of federal funds purchased and other short term
borrowings are considered to approximate their fair values.

		  The Bank's remaining assets and liabilities which are not
considered financial instruments have not been valued
differently than has been customary with historical cost
accounting.  Management is concerned that reasonable
comparability between financial institutions may be distorted
due to the wide range of permitted valuation techniques and
numerous estimates which must be made given the absence of
active secondary markets for many of the financial instruments. 
This lack of uniform valuation methodologies also introduces a
greater degree of subjectivity to these estimated fair values. 

	 At December 31, 1995, the Bank had outstanding standby letters
of credit and commitments to extend credit.  These
off-balance-sheet financial instruments are generally
exercisable at the market rate prevailing at the date the
underlying transaction will be completed and, therefore, are
deemed to have no current fair value.  Please refer to Note 9.


NOTE 16 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
<TABLE>

<CAPTION>
                             Condensed Balance Sheets                                        
                            December 31, 1995 and 1994                                      
                            (In Thousands of Dollars)                                       
    					
                  Assets 		                               1995  		     1994  	

<S>                                                     <C>          <C>      
Cash 	                                                  $    	70 	   $    	65 	
Investment in bank subsidiary - at equity 		              48,517 		    43,310 	
Investment in credit life insurance company - at cost 		      50 		        50 	
Investment in other securities 		                             22 		        25 	
Dividends receivable from bank subsidiary 		                 630 		       574 	
Cash surrender value - life insurance 		                     467 		       453 	
    Total assets                                        $ 49,756 	   $	44,477 	

       Liabilities and Stockholders' Equity 					
Liabilities 					
 Payable to directors 	                                 $ 	  129 	   $    	75 	
 Dividends payable 		                                        630 		       574 	
   Total liabilities 		                                      759 		       649 	
Stockholders' equity 					
 Common stock - $10 par value, authorized 4,000,000 					
  shares, 1,400,000 shares issued and outstanding 		      14,000		     14,000 	
 Retained earnings 		                                     34,761 		    29,877 	
 Net unrealized gain (loss) on available-for-sale  					
  securities, net of tax 		                                  236 		      (49) 	
   Total stockholders' equity 		                          48,997 		    43,828 	
            Total liabilities and stockholders' equity  $ 49,756 	   $	44,477 	

</TABLE>
					
<PAGE>


                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 NOTE 16 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
(Continued)

<TABLE>
                          Condensed Statements of Income                                  
                     Years Ended December 31, 1995 and 1994                          
                             (In Thousands of Dollars)                                       
<CAPTION>
  				
                                            		     1995           		1994  
<S>                                             <C>              <C>
Operating income 				
  Dividends from bank subsidiary 	              $ 	1,232 	       $ 	1,120 
  Other dividend income 		                            22 		            61 
  Interest income 		                                   2 		             1 
  Other 		                                            27 		            30 

Operating expenses 		                                 87 		            60 

    Income before equity in undistributed net 				
     income of bank subsidiary 		                  1,196 		         1,152 

Equity in undistributed net income of bank
 subsidiary 		                                     4,920 		         4,409 

    Net Income 	                                $ 	6,116 	       $ 	5,561 

</TABLE>
				
<TABLE>
                      Condensed Statements of Cash Flows                              
                    Years Ended December 31, 1995 and 1994                          

                            (In Thousands of Dollars)                                       
  				
<CAPTION>
                                                         		1995          		1994  

<S>                                                     <C>             <C>
Operating activities 				
 Net income for the year 	                              $ 	6,116 	      $ 	5,561 
 Adjustments to reconcile net income to net cash 				
  provided by operating activities 				
   Equity in undistributed net income of bank
    subsidiary                                          		(4,920) 		      (4,409) 
   Increase in other assets 		                               (69) 		         (62) 
   Increase in payables 		                                    54 		           26 
				
     Total adjustments 		                                 (4,935) 		      (4,445) 

     Net cash provided by operating activities        		   1,181 		        1,116 

Net cash provided by (used in) investing activities 		 		
 Proceeds from sale or calls of investment securities 		      -	              18 
    Net cash provided by (used in) investing activities		     -       		      18 

Net cash used in financing activities 				
 Cash dividends paid 		                                    (1,176) 		     (1,071) 

    Increase (decrease) in cash 		                              5 		          63 

Cash at beginning of year 		                                   65 		           2 

Cash at end of year 	                                      $  	70 	       $  	65 

</TABLE>

<PAGE>


                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS 

GENERAL

	First Farmers and Merchants Corporation, a one-bank holding
company, was formed during 1982.  Its only subsidiary, First
Farmers and Merchants National Bank, is a community bank that
was established in 1909.  The resulting financial condition of
the Corporation should be evaluated in terms of the Bank's
operations within its service area.

	During 1995, First Farmers and Merchants National Bank
strengthened its presence in the four counties in middle
Tennessee that it serves.  Deposits in each of the four counties
either maintained the same levels or increased while loans in
all four counties increased.  To more efficiently provide
expanding services and offer the range of products that Bank
customers need and want, the Bank undertook a technology
conversion in the last quarter of 1994 involving data processing
and communication links between its fourteen offices.  The Bank
is positioned to provide quality services in diverse markets and
a dynamic interest rate environment.  Our customers are enjoying
the "Impact" of this change as new services such as combined,
laser printed statements; inquiring about balances, checks paid,
deposits made, and making transfers between accounts through
phone bank; extended banking hours; and a check card.  The check
card was introduced in the first quarter of 1995 and increased
in usage as the year progressed to approximately 35,000
transactions per month.

	The first of the following tables entitled DISTRIBUTION OF
ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY, INTEREST RATES
AND INTEREST DIFFERENTIAL, presents average daily balances,
interest income on a fully taxable equivalent basis and interest
expense, as well as the average rates earned and paid on the
major balance sheet items for the years 1995, 1994, and 1993.
The second table sets forth, for the periods indicated, a
summary of changes in interest earned and interest paid
resulting from changes in volume and changes in rates.  The
rate/volume variances are allocated between rate and volume
variances in proportion to the relationship of the absolute
dollar amounts of the change in each.

	These tables plus the following discussion and financial
information is presented to aid in understanding First Farmers
and Merchants' current financial position and results of
operations.  The emphasis of this discussion will be on the
years 1995, 1994, and 1993; however, financial information for
prior years will also be presented when appropriate.  This
discussion should be read in conjunction with the Consolidated
Financial Statements and the Notes to Consolidated Financial
Statements included elsewhere in this material.

FINANCIAL CONDITION 

	First Farmers and Merchants National Bank's financial condition
depends on the quality and nature of its assets, its liability
and capital structure, the market and economic conditions, and
the quality of its personnel.  The following paragraphs provide
a unique perspective on the internal structures of the
Corporation and the Bank that provide the strength in our
organization.

	The bank's average deposits grew during the last three years
reflecting  a 1.3% growth from 1994 to 1995, a 6.8% growth from
1993 to 1994, and a 10.4% growth from 1992 to 1993.  Average
transaction and limited transaction interest bearing accounts
grew during the prior two years but declined in 1995 as
investors took advantage of higher certificate of deposit rates.
 The average Chairman's Club, super negotiable orders of
withdrawal, insured money market deposits, and flexible
investment accounts decreased 7.6 % in 1995 compared to a  9.5%
increase in 1994 and a 28.6 % increase in 1993.  Average savings
deposits actually declined 1.2% in 1995 compared to a 12.2%
increase in 1994 and a 12.9% decrease in 1993.  Average
certificates of deposit increased  during 1995 with certificates
and other savings under $100,000 increasing 8.0% in 1995
compared to a 1.2% decline in 1994 and a 1.2.% decline in 1993. 
Certificates of deposit over $100,000 increased 24.8% in 1995
compared to a 10.4% increase in 1994 and a 17.1% decline in
1993.  


<PAGE>

                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                             AND RESULTS OF OPERATIONS 

TABLE 1 - Distribution of Assets, Liabilities, and Stockholders'
Equity, Interest Rates and Interest Differential

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31, 
                                                          	 	 	 	1995  	 	 	 	 
 
                                                  		 Average   		Rate / 				
                                                   		Balance 		  Yield 			 Interest 	

ASSETS 								
<S>                                                <C>           <C>       <C>            
 Interest earning assets 								
   Loans, net 	                                    $ 	276,166 		  9.38% 	  $	25,892 	* 
   Bank time deposits 		                                    2      - 	 		      - 	
   Available-for-sale securities (AFS) 	  	             8,092 		  6.59			       534 	
   Held-to-maturity securities (HTM) 		                93,676 		  6.03			     5,646 	
   U.S. Treasury and Government agency securities   		   - 	   	   -    	 		   - 	
   States and political subdivisions' securities  		   39,139		   8.06 			    3,156 	* 
   Other securities 		                                  2,452 		 11.29 			      277 	* 
   Federal funds sold 		                                2,076 		  5.83 			      121 	
     TOTAL EARNING ASSETS 		                          421,603 		  8.45 		  $	35,626 	

 Noninterest earning assets 								
   Cash and due from banks 		                          24,829 						
   Bank premises and equipment 		                       6,246 						
   Other assets 		                                     11,061 						
								
     TOTAL ASSETS 	                                $ 	463,739 						

LIABILITIES AND STOCKHOLDERS' EQUITY 								
 Interest bearing liabilities 								
   Time and savings deposits: 								
   NOW and money market accounts  	                $ 	148,993 		 3.51% 	  $ 	5,223 	
   Savings 		                                          34,627 		 3.00 			    1,040 	
   Time  		                                           136,605 		 5.30 			    7,245 	
   Time over $100,000 		                               32,522 		 5.35 			    1,740 	
    TOTAL INTEREST BEARING DEPOSITS 		                352,747 		 4.32			    15,248 	
   Federal funds purchased and repurchase 
    agreements		                                        2,415 		 5.92 			      143 	
   Other short-term debt 		                               565 		 5.49 			       31 	
    TOTAL INTEREST BEARING LIABILITIES 		             355,727 	 	4.34		   $	15,422 	

 Noninterest bearing liabilities
   Demand deposits 		                                  56,742 						
   Other liabilities 		                                 4,515 						
    TOTAL LIABILITIES 		                              416,984 						
 Stockholders' equity 		                               46,755 						
    TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY 	   $ 	463,739 						
<FN>								
<F4>
  Spread between combined rates earned and combined rates paid*		4.11% 			
</FN>
<FN>								
<F5>
  Net yield on interest-earning assets* 				                     4.79% 			
</FN>
<FN>
<F6>
  * Taxable equivalent basis. 								
</FN>
</TABLE>

<PAGE>

                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                               AND RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                     	 	 	       1994  	 	 	 	   	 	 	 	             	 1993  	 	 	 	 
                                             	     Average       Rate / 		                Average      Rate / 				
                                                  	Balance 		    Yield 			Interest 			   	Balance 		   Yield 			Interest 	
                                                                       	 (Dollars In Thousands) 															
ASSETS
<S>                                              <C>            <C>       <C>        <C>               <C>      <C>       <C>
 Interest earning assets
   Loans, net                                    $  247,791 		   8.54%    $	21,156 	*   $ 	233,608 		  8.37%    $	19,543 	* 
   Bank time deposits	                                 - 	 	      - 	 	 	     - 	 	 	 	      - 	 	      - 	 	 	     - 	
   Available-for sale-securities (AFS)               15,931 		   8.33 			    1,327 				      - 	 	      - 	 	 	     - 	
   Held-to-maturity securities (HTM)	               101,654 		   5.76 			    5,858 				      - 	 	      - 	 	 	     - 
   U.S. Treasury and Government agency securities	     - 	 	      - 	 	 	     - 				       106,201 		  6.50 			    6,904 	
   States and political subdivisions	                38,545 		   8.49 			    3,274 	* 			   29,634 		  8.62 			    2,553 	* 
   Other securities	                                  2,375 		  13.15 			      312 	* 			    6,164 		  5.34 			      329 	* 
   Federal funds sold	                                2,998 		   3.73 			      112 				      4,665 		  2.92 			      136 	
     TOTAL EARNING ASSETS 	                         409,294 		   7.83 		  $	32,039 			     380,272 		  7.75 		  $	29,465 	
																
 Noninterest earning assets
   Cash and due from banks	                          25,945 									                       23,406 						
   Bank Premises and equipment	                       6,350 									                        6,764 						
   Other assets	                                     10,364 									                       10,318 						

     TOTAL ASSETS                                $ 	451,953 								                    $  420,760 						

LIABILITIES AND STOCKHOLDERS' EQUITY
 Interest bearing liabilities
   Time and savings deposits:
   NOW and money market accounts                 $ 	161,244 		   3.25% 	 $ 	 5,239 			  $ 	147,246 		  3.16% 	  $ 	4,653 	
   Savings	                                          35,036 		   2.87  			   1,006 				     31,216 		  2.76 			      861 	
   Time	                                            126,523 		   4.27  			   5,400 				    128,021 		  4.26 			    5,459	
   Time over $100,000    	                           26,053 		   4.32  			   1,126 				     23,602 		  4.34 			    1,025 	
    TOTAL INTEREST BEARING DEPOSITS  	              348,856 		   3.66  			  12,771 				    330,085 		  3.63 			   11,998	
   Federal funds purchased and repurchase
    agreements 	                                      1,462 		   4.86 		        71 				        254 		  3.06 			        8 	
   Other short-term debt  	                             568 		   3.92 			       22 				        728 		  4.21 			       31 	
    TOTAL INTEREST BEARING LIABILITIES	             350,886 		   3.67 		  $	12,864 				    331,067 		  3.64 		  $	12,037 	
 Noninterest bearing liabilities																
   Demand deposits   	                               55,557 									                       48,697 						
   Other liabilities  	                               3,690 									                        3,542 						
    TOTAL LIABILITIES 	                             410,133 									                      383,306 						
 Stockholders' equity  	                             41,820 									                       37,454 						
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 	451,953 								                    $ 	420,760 						

<FN>
<F7>
Spread between combined rates earned and combined rates paid*		4.16% 		          						                4.11% 			
</FN>
<FN>
<F8>
Net yield on interest earning assets*			                       4.68% 								                          4.58% 			
</FN>
<FN>
<F9>
Taxable equivalent basis
</FN>
</TABLE>


<PAGE>

                    FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                  AND RESULTS OF OPERATIONS 


TABLE 2 - Distribution of Assets, Liabilities, and Stockholders'
Equity, Interest Rates and Interest Differential (Continued)

<TABLE>
<CAPTION>
										* 
                                                         					*  				               Total 
                                     		* 	   	 Taxable  		Nontaxable 	 	Federal 		Interest 
                                    		Net  		Investment 		Investment 	  	Funds 		  Earning 
(Dollars in Thousands) 		            Loans 		Securities 		Securities   		Sold	   	  Assets 

1995 compared to 1994: 										
<S>                                <C>       <C>            <C>        <C>        <C>
  Increase (decrease) due to: 										
    Volume 	                       $ 	2,423 	$ 	(1,103) 	   $ 	50 	    $ 	(34) 	  $ 	1,336 
    Rate 		                           2,313 		      63 		    (168) 		      43 		     2,251 

     NET INCREASE 										
      (DECREASE) 	                 $ 	4,736 	$ 	(1,040) 	   $(118) 	   $ 	  9 	   $	 3,587 

1994 compared to 1993: 										
  Increase (decrease) due to: 										
    Volume 	                       $ 	1,186 	$ 	   537 	    $	768 	    $ 	(49) 	  $ 	2,442 
    Rate 		                             427 		    (273) 		    (47) 		      25 		       132 

     NET INCREASE 										
      (DECREASE) 	                 $ 	1,613 	$ 	   264 	    $ 721 	    $ 	(24) 	  $	 2,574 
				                                            (A) 		        (A) 				

<FN>
<F10>
     * Taxable equivalent basis 
</FN>
<FN>
<F11>
   (A) U.S. Government, government agency, and corporate debt
securities plus equity securities in the available-for-sale and
held-to-maturiy categories are taxable investment securities.
Municipal debt securities are nontaxable and classified as 
held-to-maturity. 
</FN>
</TABLE>

	Average earning assets increased 3.0% in 1995 compared to an
7.6% increase in 1994 and a 9.7% increase in 1993.   As a
financial institution, the Bank's primary earning asset is
loans.  At December 31, 1995, average net loans represented 
65.5% of  average earning assets.  Total average net loans
increased during the last three years showing an 11.5% growth
from 1994 to 1995, a 6.1% growth from 1993 to 1994, and an 8.6%
growth from 1992 to 1993.  Average investments represented 34.0%
of average earning assets at December 31, 1995, and  decreased
9.6% in 1995 providing funds for the increasing loan growth. 
Investments  increased 11.6% in 1994, and increased 11.9% in
1993.  Average total assets increased during the last three
years as evidenced by a 2.6% growth from 1994 to 1995, a 7.4%
growth from 1993 to 1994, and a 10.3% growth from 1992 to 1993. 
Please refer to the color graphs at the end of this document
that illustrate this growth.

<PAGE>
<TABLE>
              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS 
<CAPTION>
                               	Now and 												                                            Total 		      * 	
                                	Money 			                   	     Time 		   Federal 		 Short 	Interest 		   Net 	
                               	Market  		Savings 	    	Time     		Over 		   Funds 		    Term 		Bearing		 Interest  
(Dollars in Thousands)	        Accounts 		Deposits  		Deposits 		$100,000 		Purchased 		 Debt		 Funds 		  Earnings 	

<S>                            <C>         <C>         <C>        <C>         <C>        <C>     <C>         <C>
1995 compared to 1994:
  Increase (decrease) due to:  																
    Volume                     $	(398) 	   $	(12) 	    $  430	    $  279 	    $ 	46 	    $  - 	  $ 	345 	    $ 	991 	
    Rate       	                  382 		      46 		     1,415      		335 		      26 		       9 		 2,213 		       38 	

     NET INCREASE
      (DECREASE)               $ 	(16)    	$ 	34    	  $1,845    	$ 	614 	    $ 	72 	    $ 	 9  	$2,558 	    $1,029 	

1994 compared to 1995:																
  Increase (decrease) due to:																
    Volume                     $ 	442 	    $	105 	     $  (64) 	  $ 	107 	    $ 	37 	    $ 	(7)  $ 	620 	    $1,822
    Rate  	                       144 		      40 		         5 		      (5) 		     26 		      (2) 	   208 		      (76) 	

     NET INCREASE																
      (DECREASE)               $ 	586 	    $	145 	     $ 	(59) 	  $ 	102 	    $ 	63 	    $ 	(9) 	$ 	828 	    $1,746
	
<FN>
<F12>
   * Taxable equivalent basis
</FN>																
</TABLE>


LIQUIDITY AND INTEREST  RATE  SENSITIVITY  MANAGEMENT

	The primary objective of asset/liability management at the Bank
is to achieve reasonable stability in net interest income
throughout interest rate cycles.  This objective is achieved by
monitoring the relationship of rate sensitive earning assets to
rate sensitive interest bearing liabilities (interest rate
sensitivity) which is the principal factor in determining the
effect that fluctuating interest rates will have on future net
interest income.  Rate sensitive earning assets and interest
bearing liabilities are those which can be repriced to current
market rates within a defined time period.  The following table,
Rate Sensitivity of Earning Assets and Interest Bearing
Liabilities, shows the Bank's rate sensitive position at
December 31, 1995, as measured by gap analysis (the difference
between the earning asset and interest bearing liability amounts
scheduled to be repriced to current market rates in subsequent
periods).

	As a policy, budgeted financial goals are monitored on a
monthly basis by the Asset/Liability Committee where the actual
dollar change in net interest income given different interest
rate movements is reviewed.  A dollar change in net interest
income for a twelve month period of less than 3% of net interest
income given a two hundred basis point shift in interest rates
is considered an adequately flexible position.  The net interest
margin, on a tax equivalent basis, at December 31, 1995,  1994,
and 1993 was 4.79%, 4.68%,  and 4.58% respectively.

<PAGE>

          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                        AND RESULTS OF OPERATIONS 

LIQUIDITY AND INTEREST  RATE  SENSITIVITY  MANAGEMENT (Continued)

TABLE - Rate Sensitivity of Earning Assets and Interest Bearing
Liabilities 										
<TABLE>
<CAPTION>
(Dollars in Thousands) 										
                                   		3 Months 		     3-6      	 	6-12  	 	  Over 1 		
As of December 31, 1995 		           or Less      		Months 	   	Months  	 	  Year  		      Total 
  <S>                                <C>          <C>          <C>          <C>          <C>
Earning assets 										
  Loans and leases, net of unearned 	$ 	64,615 	  $ 	43,285 	  $ 	72,506 	  $	111,525 	  $	291,931 
  Taxable investment securities 		      12,715 		    11,027 		    30,164		     42,611 		    96,517 
  Tax-exempt investment securities 		      986 		     1,200 		     1,060		     39,169 		    42,415 
										
      Total earning assets 		           78,316 		    55,512 		   103,730 		   193,305 	  $	430,863 

Interest-bearing liabilities 										
  NOW and money market accounts 		      35,739 	  		                          100,555    $	136,294 
  Savings 								                                                             34,133 		    34,133 
  Time 		                               42,682 		    34,082 		    46,903 		    18,671 		   142,338 
  Time over $100,000 		                  8,526 		     8,055 		     9,703 		     4,310 		    30,594 
  Other short-term debt 		              11,955 		 		 		 		                                  11,955 
										
      Total interest bearing 
        liabilities 		                  98,902 		    42,137 		    56,606		    157,669 	  $	355,314 

Noninterest bearing, net 								                                             (75,549) 		

Net asset/liability funding gap 		     (20,586) 		   13,375 		    47,124		    (39,913) 		

Cumulative net asset/liability 
  funding gap 	                      $ (20,586) 	 $ 	(7,211) 	 $ 	39,913	   $ 	  - 		

<FN>
<F13>
Available-for-sale and held-to-maturity securities were combined
in the taxable investment securities category for purposes of
this table.
</FN>
</TABLE>

CAPITAL RESOURCES, CAPITAL, AND DIVIDENDS

	Historically, internal growth has financed the capital needs of
the Bank.  At December 31, 1995, the Corporation had a ratio of
average capital to average assets of 10.08%.  This compares to a
ratio of average capital to average assets of 9.25% at December
31, 1994, and 8.9% at December 31, 1993.

	Cash dividends paid in 1995 were 10.0% more than those paid in
1994.  The dividend to net income ratio was 20%.  Additional
dividends of approximately $13.5 million to the Corporation
could have been declared by the subsidiary bank without
regulatory agency approval.  The Corporation plans to maintain
or increase the payout ratio while continuing to maintain a
capital to asset ratio reflecting financial strength and
adherence to regulatory guidelines.

	Regulatory risk-adjusted capital adequacy standards were
strengthened during 1992.  Equity capital (net of certain
adjustments for intangible assets and investments in
non-consolidated subsidiaries) and certain classes of preferred
stock are considered Tier 1 ("core") capital.  Tier 2 ("total")
capital consists of core capital plus subordinated debt, some
types of preferred stock, and varying amounts of the Allowance
for Possible Loan Losses.  The minimum standard for a "well
capitalized" bank is a risk-based core capital ratio of 6%, a
risk-based total capital ratio of 10%, and a core capital to
average total assets of 5%.

	As of December 31, 1995, the Bank's core and total risk-based
ratios were 16.8% and 17.7% respectively.  One year earlier, the
comparable ratios were 16.2% and 17.1%, respectively.  At year
end 1995, the Bank had a ratio of average core equity to total
average assets of 9.9%, up slightly from 9.0% at year end 1994.

<PAGE>


          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                          AND RESULTS OF OPERATIONS 

RESULTS OF OPERATIONS

Interest Income

	Total interest income increased 11.9% in 1995 compared to a
7.3% increase in 1994 and an decrease of .4% in 1993.  Interest
and fees earned on loans increased 22.4% in 1995 compared to an
8.3% increase in 1994 and a 1.4% decrease in  1993.  Interest
earned on investment securities and other investments decreased
10.9% in 1995 due to the decrease in volume compared to a 5.3%
increase in 1994 and a 1.9% increase in 1993.

Interest Expense

	Total interest expense increased 19.9% in 1995 compared to a
6.9% increase in 1994 and a 10.0% decrease in 1993.  The net
interest margin (tax equivalent net interest income divided by
average earning assets) increased in 1995 to 4.8% compared to
4.7% in 1994 and 4.6% in 1993 as indicated in the LIQUIDITY AND
INTEREST RATE SENSITIVITY MANAGEMENT section above.

	Net interest income on a fully taxable equivalent basis is
influenced primarily by changes in:  (1) the volume and mix of
earning assets and sources of funding; (2) market rates of
interest, and (3) income tax rates.  The impact of some of these
factors can be controlled by management policies and actions. 
External factors also can have a significant impact on changes
in net interest income from one period to another.  Some
examples of such factors are: (1) the strength of credit demands
by customers; (2) Federal Reserve Board monetary policy, and (3)
fiscal and debt management policies of the federal government,
including changes in tax laws. 


Noninterest Income and Expense

	Noninterest income increased 14.9% during 1995 versus a 1.6%
increase in 1994 and a 12.0% increase in 1993.  The new check
card generates fee income from the clearing agent for the
electronic transaction even though no service fee is charged to
Bank customers for its use.  This "Impact" of our new technology
contributed to the 16.4% increase in service fees for deposit
accounts in 1995.  Income from fiduciary services provided in
the Bank's Trust Department remained strong contributing 27.4%
of noninterest income.

	Noninterest expenses, excluding the provision for possible loan
losses, increased 6.2% in  1995 compared to a 5.4% increase in
1994 and a 9.3% increase in 1993.  Increased productivity
fostered by our technology improvements as the learning curve
diminished and cost control efforts contributed to this
improvement.  Included in this category is Federal Deposit
Insurance Corporation (FDIC) insurance premiums at the rate
established for "well capitalized" institutions.  This expense
was $499,709 in 1995 compared to $890,646 in 1994, a 43.9-%
reduction.  Please refer to the discussion in the CAPITAL
RESOURCES, CAPITAL, AND DIVIDENDS section above for more
information concerning the bank's capitalization.


Provision for Possible Loan Losses

	The provision for possible loan losses, representing amounts
charged against operating income, increased 1.5% in 1995
compared to a 40.4% increase in 1994 and a 44.1% decrease in
1993. Management regularly monitors the allowance for possible
losses and considers it to be adequate.  Please refer to Note 1
in the NOTES TO CONSOLIDATED FINANCIAL  STATEMENTS that are
included elsewhere in this material for further discussion of
the adequacy of the allowance.  The tables on the next page
summarize average loan balances and reconciliation of the
allowance for loan losses for each year.  Additions to the
allowance, which have been charged to operating expenses, are
also disclosed.

<PAGE>

              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS 

 Provision for Possible Loan Losses (Continued)

	The next tables present any risk elements in the loan portfolio
and include all loans management considers to be potential
problem loans.  Management does not believe that there is a
concentration of loans to a multiple number of borrowers engaged
in similar activities.
<TABLE>
<CAPTION>
                                                            		    				December 31 				
                                              		1995      		1994      	 	1993      	 	1992     	 	1991  
                                                     				    		(Dollars  In Thousands) 				
  
<S>                                          <C>         <C>          <C>          <C>          <C>
Average amount of loans outstanding 	        $	276,166   $	247,791 	  $	233,608 	  $	215,158 	  $	182,561 

Balance of allowance for possible loan 										
  losses at beginning of year 	              $  	2,342 	 $  	2,024 	  $  	2,254	   $ 	 1,917 	  $  	1,818 
Loans charged-off: 										
  Loans secured by real estate 		                   15 		      135 		       396 		       245		        329 
  Commercial and industrial loans 		               170 		       42 		       222 		       124		        192 
  Individuals 		                                   371 		      246 		       230 		       249 		       249 
      TOTAL  LOANS CHARGED OFF 		                  556 		      423 		       848 		       618		        770 
Recoveries of loans previously charged off: 										
   Loans secured by real estate 		                  97 		        9 		        56 		         3 		       - 
   Commercial and industrial loans 		               14 		       36 		        52 		        80 		        56 
   Individuals 		                                  111 		       36 		        40 		        32 		        33 
      TOTAL RECOVERIES 		                          222 		       81 		       148 		       115 		        89 
        NET  LOANS CHARGED-OFF 		                  334 		      342 		       700 		       503		        681 
Provision charged to operating expenses 		         670 		      660 		       470		        840 		       780 
       BALANCE OF ALLOWANCE FOR POSSIBLE 
        LOAN LOSSES AT END OF YEAR 	         $ 	 2,678 	 $ 	 2,342 	  $ 	 2,024 	  $  	2,254 	  $ 	 1,917 

Ratio of net charge-offs during the 										
  period to average loans outstanding 		         0.12% 		    0.14% 		     0.30%		      0.23% 		     0.37% 

</TABLE>
										

	Loans having recorded investments of $5.8 million at December
31, 1995, have been identified as impaired in accordance with
the provisions of SFAS 114.  They represent 2% of gross loans. 
Commercial loans comprised $.326 million of the total, with
loans secured by real estate accounting for $4.7 million and
installment loans $.800 million.  The gross interest income that
would have been recorded during 1995 if the loans had been
current in accordance with their original terms and had been
outstanding throughout the period or since origination, if held
for part of the period, was $365, $193, and $189 thousand for
the years ended December 31, 1995, 1994, and 1993 respectively. 
Impaired loans are charged-off once management has exhausted all
efforts to collect the loan.  Please refer to Note 1 and Note 3
in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS that are
included elsewhere in this material for more information on the
Bank's policy regarding loan impairment.

	Inherent in the business of providing financial services is the
risk involved in extending credit.  Management believes the
objective of a sound credit policy is to extend quality loans to
customers while reducing risk affecting shareholders' and
depositors' investments.  Risk reduction is achieved through
diversity of the loan portfolio as to type, borrower, and
industry concentration as well as sound credit policy guidelines
and procedures.  

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS 
<TABLE>

FIVE YEAR COMPARISON
<CAPTION>
      		                                    1995  	  	   1994        		1993         		1992        		 1991  
 
<S>                                     <C>           <C>           <C>            <C>            <C>
INTEREST INCOME 										
 Interest and fees on loans        	    $	25,857,982 	$	21,130,914 	$	19,518,742 	 $	19,791,548 	 $	19,571,295 
										
 Income on investment securities 										
   Taxable interest 		                     6,179,492   		7,012,626   		6,925,404		    6,898,114 		   5,218,446 
   Exempt from federal income tax 		       2,156,813 		  2,184,666   		1,857,168 		   1,825,869 		   1,828,738 
   Dividends 		                              177,790 		    204,948 		     72,054 		     110,874		      150,823 
										
                                         		8,514,095 		  9,402,240 		  8,854,626 		   8,834,857		    7,198,007 

 Other interest income 		                    121,492 		    284,384 		    347,287		      195,744 	      279,165 

    TOTAL INTEREST INCOME 		              34,493,569 		 30,817,538		  28,720,655 		  28,822,149 		  27,048,467 

INTEREST EXPENSE  										
  Interest on deposits 		                 15,247,875 		 12,770,618 		 11,998,235		   13,329,557 		  14,212,771 
  Interest on other short term  
   borrowings 		                             174,370 		     93,286		      38,339 		      47,449 		      63,994 
										
   TOTAL INTEREST EXPENSE 		              15,422,245 		 12,863,904		  12,036,574 		  13,377,006 		  14,276,765 

   NET INTEREST INCOME 		                 19,071,324 		 17,953,634  		16,684,081 		  15,445,143 		  12,771,702 

PROVISION FOR POSSIBLE LOAN LOSSES 		        670,000 		    660,000 		    470,000		      840,000 		     780,000 
   NET INTEREST INCOME AFTER 										
    PROVISION FOR LOAN LOSSES 		          18,401,324  		17,293,634 		 16,214,081 		  14,605,143 		  11,991,702 

NONINTEREST  INCOME 										
  Trust department income 		               1,251,642 		  1,249,359 		    863,952		      753,239 		     603,701 
  Service fees on deposit accounts 		      2,697,332 		  2,317,992		   2,206,026 		   2,123,096 		   1,893,355 
  Other service fees, commissions, 										
   and fees 		                               300,407 		    336,758 		    509,009 		     401,618		      237,755 
  Other operating income 		                  322,634 		    319,466 		    315,108		      191,363 		      91,440 
  Available for sale securities 										
   gains (losses) 		                           1,182 		   (243,690) 		    23,896		       28,434 		      15,862 

   TOTAL NONINTEREST  INCOME 		            4,573,197 		  3,979,885		   3,917,991 		   3,497,750 		   2,842,113 

NONINTEREST  EXPENSES 										
  Salaries and employee benefits 		        6,620,827 		  6,247,706		   5,686,965 		   5,283,086 		   4,407,072 
  Net occupancy expense 		                 1,279,434 		  1,190,678 		  1,070,971		      984,650 		     797,466 
  Furniture and equipment expense 		       1,382,769 		  1,069,856		     889,848 		     801,453 		     935,821 
  Loss on other real estate 		                50,724 		      4,000 		    103,122		      312,064 		      48,398 
  Other operating expenses 		              5,006,292 		  4,996,107		   4,903,949 		   4,460,696 		   3,572,881 
										
   TOTAL NONINTEREST EXPENSES 		          14,340,046		  13,508,347 		 12,654,855 		  11,841,949 		   9,761,638 

      INCOME BEFORE PROVISION 										
       FOR INCOME TAXES 		                 8,634,475		   7,765,172 		  7,477,217 		   6,260,944 		   5,072,177 

PROVISION FOR INCOME TAXES 		              2,518,769 		  2,203,746 		  2,220,965		    1,768,840 		   1,341,130 

        NET INCOME  	                   $ 	6,115,706 	$ 	5,561,426 	$ 	5,256,252 	 $ 	4,492,104 	 $ 	3,731,047 

EARNINGS PER COMMON SHARE  										
(1,400,000 outstanding shares) 	        $ 	     4.37 	$ 	     3.97 	$ 	     3.75	  $ 	     3.21 	 $ 	     2.67 

</TABLE>

<PAGE>

                    FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                    AND RESULTS OF OPERATIONS 

Net Income

	Net income was 10.0% higher in 1995 than in 1994, 5.8% higher
in 1994 than in 1993, and 17.0% higher in 1993 than in 1992.  As
indicated by the table, Comparative Data, the Corporation's
return on average assets was 1.32% in 1995, 1.23% in 1994, and
1.25% in 1993.  The return on equity remains strong at 13.95% in
1995, 14.11% in 1994, and 14.93% in 1993.

Net Interest Margin

	The bottom graph on the last page of this document illustrates
an increasing net interest margin  during the five years shown. 
As mentioned in the LIQUIDITY AND INTEREST RATE  SENSITIVITY 
MANAGEMENT section earlier, the Bank's Asset/Liability Committee
monitors interest rate sensitivity monthly.  Through the use of
simulation analysis to estimate future net interest income under
 varying interest rate conditions, the committee can  establish
pricing and maturity strategies to maintain that steady net
interest margin.  The simulation analysis uses the repricing
information indicated in the table, Rate Sensitivity of Earning
Assets and Interest Bearing Liabilities, and adjusts the current
balance sheet to reflect the impact of different interest rate
movements.

EFFECTS OF ECONOMY

	Current economic conditions have had a definite effect on the
reported financial condition and results of operation.  The
stock market closed out its worst performance and the bond
market experienced its largest calendar year decline in modern
history during 1994.  However, the market was much stronger
during 1995 experiencing considerable gains compared to 1994. 
Many Bank customers had used transaction and limited transaction
interest bearing accounts as holding vehicles to watch rate
movements during 1994 trying to determine the best time to lock
in a rate on a longer term product.  During 1995, many of these
customers decided that the time was right and transferred
investments to longer term certificate of deposits from
transaction and limited transaction interest bearing accounts. 
As Bank customers felt more comfortable with the economy, loan
demand increased strongly resulting in a shift of  Bank earning
assets from investment securities to higher yielding loans. 
Historically, noninterest bearing demand deposits and regular
savings accounts have provided a relatively fixed rate source of
funding for earning assets.  This was illustrated again in 1995
and 1994 as these fixed rate and noninterest bearing deposits
continued to provide a relatively stable cost from this funding
source.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE FINANCIAL
STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD

	The Financial Accounting Standards Board has issued two
standards that have not been adopted by the Bank but are
required to adopted after December 31, 1995.  The Statement of
Financial Accounting Standards No. 121 (SFAS 121), "Accounting
for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed Of" establishes guidance on when to
recognize and how to measure impairment losses on long-lived
assets and certain identifiable intangibles.  The statement also
offers guidance on how to value long-lived assets that
management has committed to a plan to dispose of the assets.  An
asset that an entity will hold and use should be reviewed for
impairment whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable.  In such
situations, an impairment loss is recognized if the sum of
undiscounted future cash flows expected to be generated by the
asset is less than the carrying amount of the asset. 
Measurement of the impairment loss, however, is based on the
fair value of the asset.  Management does not believe this
statement will have any material effect on future income.

	The second standard,  Statement of Financial Accounting
Standards No. 122 (SFAS 122), "Accounting for Certain Mortgage
Banking Activities" requires recognition of rights to service
mortgage loans for others as separate assets, regardless of how
the servicing rights are acquired.  This Statement prescribes  a
single procedure for the capitalization of those rights acquired
either through loan origination or through purchase transactions
where a mortgage banking enterprise buys the servicing rights. 
Mortgage servicing rights are to be assessed for impairment


<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS 

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE FINANCIAL
STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD (Continued)

based on their fair value.  Impairment is recognized through a
valuation allowance for each impaired group of mortgage
servicing rights.  Rights capitalized after adoption of this
statement should be grouped based on the risk characteristics of
the underlying loans.  Management does not believe this
statement will have any material effect on future income.

SHAREHOLDER  INFORMATION

	The 1,400,000 shares of common stock of First Farmers &
Merchants Corporation outstanding at December 31, 1995, had a
market value of $75.6 million and were held by 1,514
identifiable individuals located mostly in the market area.  A
small number of additional shareholders are not identified
individually since some bank nominees, including the bank's
Trust Department, are listed as single owners when, in fact,
these holdings represent large numbers of shareholders.  No
single shareholder's ownership exceeded five percent at year end.

	There is no established public trading market for the stock. 
The following table lists the high and low price of the
Corporation's common stock, as well as the semiannual dividend
paid per share, in each of the last three years.

<TABLE>

                                             SHAREHOLDER INFORMATION
<CAPTION>
                                               			Price Range of  				  Dividend 
                                                			Common Stock 	   	 		  Paid 
                                          			High       	 	Low 	        Per Share 

              <S>    <S>                  <C>            <C>            <C>
                    	First quarter 	      $	36.00 	      $	36.00 	      $ 	
                    	Second quarter 		      37.00        		37.00         		0.36 
              1993  	Third quarter 		       38.00 		       37.00 		
                    	Fourth quarter 		      38.00        		38.00         		0.37 

                                                                        $  0.73
 	 	 	 	 	 	 	 
                    	First quarter 	      $	40.00 	      $	36.00 	      $ 	
                    	Second quarter 		      42.00        		37.00 		        0.39 
              1994  	Third quarter 		       43.00 		       37.00 		
                    	Fourth quarter 		      45.00 		       38.00 		        0.41 

                                                                  						$ 	0.80  

                    	First quarter 	      $	45.00 	       $	45.00      	$ 	
                    	Second quarter 		      48.00 		        45.00 		       0.43 
              1995  	Third quarter 		       50.00 		        48.00 		
                    	Fourth quarter 		      54.00 		        50.00        		0.45 

                                                                  						$ 	0.88 
</TABLE>

<PAGE>							

                   FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                AND RESULTS OF OPERATIONS 

<TABLE>
                                      COMPARATIVE DATA 										
                                  (In Thousands of Dollars) 										

                             		1995     		1994      		1993      		1992     		 1991  

<S>                        <C>         <C>         <C>         <C>         <C>
AVERAGE ASSETS 	           $	463,739 	 $	451,953 	 $	420,760 	 $	381,379  	$	303,851 

AVERAGE LOANS (NET) 	      $	276,166 	 $	247,791 	 $	233,609  	$	215,158  	$ 182,561 

AVERAGE DEPOSITS 	         $	409,489 	 $	404,412 	 $	378,782 	 $	343,128	  $	268,495 

RETURN ON EQUITY 										
  AND ASSETS 										
 Return on average assets 		   1.32% 		    1.23% 		    1.25% 		    1.18%		     1.23% 

 Return on beginning equity 		13.95% 		   14.11% 		   14.93%    		14.21% 		   13.01% 
 Average equity to  										
    average assets 		         10.08% 		    9.25% 		    8.90% 		    8.76%		     9.94% 

COMMON DIVIDEND 										
  PAYOUT RATIO 										
 Earnings per share 	      $ 	  4.37 	  $ 	 3.97 	  $ 	 3.75 	  $ 	 3.21 	 $	   2.67 

 Cash dividends per share 	$ 	  0.88 	  $ 	 0.80   	$ 	 0.73 	  $  	0.64	  $ 	  0.58 

 Ratio 		                       20% 		      20% 		      19% 		      20% 		      22% 
</TABLE>
										
<TABLE>

                             NET INTEREST MARGIN
<CAPTION>
   	                          	1995  		    1994  		     1993  		    1992  		   1991  
                                             (In Thousands of Dollars) 								

<C>                        <C>          <C>          <C>         <C>        <C>
INTEREST INCOME 										
 (TAX EQUIVALENT)  	       $ 	35,626 	  $ 	32,039 	  $ 	29,465 	 $ 	29,564 	$ 	27,736 

INTEREST EXPENSE 		           15,422 		    12,864 		    12,037 		   13,377 		  14,277 


                          	$ 	20,204 	  $ 	19,175 	  $ 	17,428 	 $ 	16,187 	$ 	13,459 


NET INTEREST MARGIN* 		        4.79% 		     4.68% 		     4.58% 		    4.67% 		   4.84% 

<FN>
<F14>
*Net interest margin is net interest income (tax equivalent)
divided by average earnings assets.
</FN>
</TABLE>

	In summary, the graphs on the following page illustrate the
presentation in the preceding pages, a unique perspective on the
internal structures of the Corporation and the Bank.  Each
shareholder can be proud of this performance.  Our shareholders
are the real support of our organization.  Thank you for your
help and support.


Nine color graphs were included on the last page of this report.
One - The first graph used the information presented above in the Five
Year Comparison table to illustrate the growth in net income.
Two - The second graph used information from the Comparative Data on the
previous page to illustrate a return on average assets of 1.18% and above
for the last five years.
Three - The third graph used information from the Comparative Data on the
previous page to illustrate a return on beginning stockholders' equity 
over 13% for the last five years.
Four - The fourth graph used information from the Comparative Data on the 
previous page to illustrate earnings per share and cash dividends per share 
for the last five years.
Five - The fifth graph used information from the Consolidated Statements of
Stockholders' Equity to illustrate the growth in stockholders' equity for
the last five years.
Six - The sixth graph used information from the Consolidated Balance Sheets
to illustrate the growth in net loans for the last five years.
Seven - The seventh graph used information from the Consolidated Balance
Sheets to illustrate the growth in deposits for the last five years.
Eight - The eighth graph used information from the Consolidated Balance Sheets
to illustrate the growth in total assets for the last five years.
Nine - The nineth graph used information from the Five Year Comparison table
above to illustrate interest income, interest expense and net interest income
for the last five years. 


Item 3.  Legal Proceedings.

There are no material pending legal proceedings known to the
Board of Directors in which any director or executive officer or
principal shareholder of the Corporation and its subsidiary or
any business in which such persons are participants as a
material interest adverse to the Corporation and its subsidiary.


Item 4.  Submission of Matters to a Vote of Security Holders.

No matter was submitted to the security holders during the
fourth quarter of the fiscal year ended December 31, 1995.

<PAGE>

PART II

Item 5.  Market for the Registrant's Common Stock and Related
Security Holder Matters.

A discussion of the registrant's common stock and related
security holder matters is incorporated herein by reference to
Notes to Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of
Operations which are attached to and made a part of Annual
Report to Stockholders which is attached hereto as Exhibit 13.


<TABLE>
              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                         CONSOLIDATED BALANCE SHEETS                             
                         DECEMBER 31, 1995 and 1994                           
<CAPTION>
ASSETS 		                                    1995   		             1994  

<S>                                          <C>                 <C>
Cash and due from banks 	                    $ 	31,281,706       $ 	26,735,526 
Securities 				
 Available for sale (amortized cost 
  $10,875,527 and $12,646,156 
  respectively) 		                              11,269,006 		       12,565,226 
 Held to maturity (fair value
  $128,829,961 and $138,892,331  
  respectively) 		                             127,662,682 		      143,061,031 
    Total securities - Note 2 		               138,931,688       		155,626,257 
Loans, net of unearned income - Note 3   	  	  291,930,311       		262,694,120 
 Allowance for possible loan losses
  - Note 4 		                                   (2,678,386)       		(2,342,290) 
    Net loans 		                               289,251,925 		      260,351,830 
Bank premises and equipment, at cost less
 allowance for depreciation and 
 amortization - Note 5   		                      6,397,936 		        6,193,080 
Other assets 		                                 11,171,993 		       11,887,492 
				
   TOTAL ASSETS 	                            $ 477,035,248 	     $	460,794,185 

LIABILITIES 				

Deposits 				
 Noninterest-bearing 	                       $ 	67,420,536 	     $ 	61,845,878 
 Interest-bearing (including  
 certificates of deposit over $100,000: 				
 1995 - $30,593,803; 1994 - $26,169,831) 	    	343,357,525 		      343,306,545 
    Total deposits 		                          410,778,061 		      405,152,423 
 Federal funds purchased 		                     10,000,000 		        7,000,000 
 Dividends payable 		                              630,000 		          574,000 
 Other short term liabilities 		                 1,955,000 		          600,000 
 Accounts payable and accrued liabilities 		     4,675,712 		        3,639,636 
				
    TOTAL LIABILITIES 		                       428,038,773         416,966,059 

COMMITMENTS AND CONTINGENCIES - Notes 7 and 9 				
STOCKHOLDERS' EQUITY 				
 Common stock - $10 par value, authorized 
  4,000,000 shares; 1,400,000 shares issued 
  and outstanding - Note 1                    		14,000,000 		       14,000,000 
 Retained earnings - Note 6 		                  34,760,389 	       	29,876,683 
 Net unrealized loss on available-for-sale 
  securities, net of tax 		                        236,086 		          (48,557) 
    TOTAL STOCKHOLDERS' EQUITY 		               48,996,475 		       43,828,126 

    TOTAL LIABILITIES AND STOCKHOLDERS' 
     EQUITY 	                                $	477,035,248 	     $ 460,794,185 
</TABLE>

<TABLE>
                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                 
                     YEARS ENDED DECEMBER 31, 1995, 1994, and 1993                   
<CAPTION>
                                                              						Net Unrealized 		
			   		                                                           	Gain (Loss) On 		
                                    		Common  		    Retained 		    Available-for-sale 		
                                    		Stock   	    	Earnings    	    	Securities   	   	   Total 

<S>                               <C>             <C>                <C>               <C>
BALANCE AT JANUARY 1, 1993 	      $ 	7,000,000 	  $	28,201,005   	   $  	- 	           $	35,201,005 
Net income for the year 		               - 		        5,256,252 		        - 		             5,256,252 
Cash dividends declared, 
 $.73 per share 		                       - 		       (1,022,000) 		       - 		            (1,022,000) 
Net unrealized loss on mutual 
 fund investment 		                      - 		          (27,684) 		       -		                (27,684) 
								
BALANCE AT DECEMBER 31, 1993 		      7,000,000 		   32,407,573 		        -		             39,407,573 
Cumulative effect of change in
 accounting principle (net of
 deferred income taxes of 
 $171,405)  - Note 1 		                  - 		           27,684		       229,424 		           257,108 
Two-for-one stock split - Note 1 		  7,000,000 		   (7,000,000) 		       -		                  - 
Net income for the year 		               - 		        5,561,426 		        - 		             5,561,426 
Cash dividends declared, $.80 
 per share 		                            - 		       (1,120,000) 		       -		             (1,120,000) 
Net unrealized loss on available-
 for-sale securities, net of tax 		      - 		            - 		         (277,981) 		         (277,981) 
								
BALANCE AT DECEMBER 31, 1994 		     14,000,000 		   29,876,683		       (48,557) 		       43,828,126 
Net income for the year 		               - 		        6,115,706 		        - 		             6,115,706 
Cash dividends declared, $.88 
 per share 		                            - 		       (1,232,000) 		       -		             (1,232,000) 
Net unrealized gain on available-
 for-sale securities, net of tax		       - 		            - 		          284,643 		           284,643 

BALANCE AT DECEMBER 31, 1995 	    $	14,000,000 	  $	34,760,389 	     $	236,086 	       $	48,996,475 

<FN>
<F1>
The accompanying notes are an integral part of the consolidated
financial statements. 								
</FN>
</TABLE>

<PAGE>
<TABLE>
                   FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                           CONSOLIDATED STATEMENTS OF INCOME                      
                     YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993                   
<CAPTION>
                                         		1995  		       1994  		       1993  

INTEREST INCOME 						
 <S>                                  <C>            <C>            <C>
 Interest and fees on loans 	         $	25,857,982  	$	21,130,914 	 $	19,518,742 

 Income on investment securities 						
  Taxable interest 		                    6,179,492 		   7,185,169 		   6,925,404 
  Exempt from federal income tax 		      2,156,813 		   2,184,666 		   1,857,168 
  Dividends 		                             177,790      		204,948       		72,054  
                                       		8,514,095 		   9,574,783 	   	8,854,626 

 Other interest income 	                  	121,492 		     111,841 		     347,287 

    TOTAL INTEREST INCOME 		            34,493,569 		  30,817,538		   28,720,655 

INTEREST EXPENSE  						
 Interest on deposits 		                15,247,875 		  12,770,618 		  11,998,235 
 Interest on other short term 
  borrowings 		                            174,370 		      93,286		       38,339 
						
    TOTAL INTEREST EXPENSE 		           15,422,245 		  12,863,904		   12,036,574 

    NET INTEREST INCOME 		              19,071,324 		  17,953,634		   16,684,081 

PROVISION FOR POSSIBLE LOAN
 LOSSES - Note 4 		                        670,000 		     660,000		      470,000 

    NET INTEREST INCOME AFTER 						
     PROVISION FOR LOAN LOSSES 		       18,401,324		   17,293,634 		  16,214,081 

NONINTEREST  INCOME 						
 Trust department income 		              1,251,642 		   1,249,359 		     863,952 
 Service fees on deposit accounts 		     2,697,332 		   2,317,992		    2,206,026 
 Other service fees, commissions,
  and fees 		                              300,407		      336,758 		     509,009 
 Other operating income 		                 322,634 		     319,466 		     315,108 
 Available for sale securities 
  gains (losses) 		                          1,182		     (243,690) 		     23,896 
						
    TOTAL NONINTEREST  INCOME 		         4,573,197 		   3,979,885		    3,917,991 

NONINTEREST  EXPENSES 						
 Salaries and employee benefits 		       6,620,827 		   6,247,706		    5,686,965 
 Net occupancy expense 		                1,279,434 		   1,190,678 		   1,070,971 
 Furniture and equipment expense 		      1,382,769 		   1,069,856		      889,848 
 Loss on other real estate 		               50,724 		       4,000 		     103,122 
 Other operating expenses 		             5,006,292 		   4,996,107		    4,903,949 

    TOTAL NONINTEREST EXPENSES 		       14,340,046		   13,508,347 		  12,654,855 
						
    INCOME BEFORE PROVISION FOR
     INCOME TAXES 		                     8,634,475 		   7,765,172		    7,477,217 

PROVISION FOR INCOME TAXES - Note 8 		   2,518,769 		   2,203,746		    2,220,965 

    NET INCOME  	                     $ 	6,115,706 	 $ 	5,561,426 	 $ 	5,256,252 

EARNINGS PER COMMON SHARE - Note 1 						
 (1,400,000 outstanding shares) 	     $ 	     4.37 	 $ 	     3.97 	 $ 	     3.75 

<FN>						
<F2>
The accompanying notes are an integral part of the consolidated
financial statements. 						
</FN>
</TABLE>

<PAGE>

<TABLE>
                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                      CONSOLIDATED STATEMENTS OF CASH FLOWS                           
                  YEARS ENDED DECEMBER 31, 1995, 1994, and 1993                   
<CAPTION>
		                                   1995     		      1994            		1993  

OPERATING ACTIVITIES 						

 <S>                            <C>              <C>               <C>
 Net income   	                 $ 	6,115,706 	   $ 	5,561,426     	$ 	5,256,252 
 Adjustments to reconcile net
  income to net cash provided
  by operating activities 						
  Excess (deficiency) of 
   provision for possible 						
   loan losses over net 
   charge offs 		                    336,096 	      	318,639	         	(230,083) 
  Provision for depreciation
   and amortization of 
   premises and equipment 		         645,816 		      589,045 		         591,486 
  Amortization of deposit 
   base intangibles 		               168,020		       168,020 		         168,020 
  Amortization of investment
   security premiums, net of
   accretion of discounts 		         641,104 		      678,968		          747,224 
  Increase in cash surrender
   value of life insurance
   contracts 	                      	(65,936) 		     (75,287) 		       (103,175) 
  Deferred income taxes 		          (233,403) 		    (163,907) 		         24,080 
  (Increase) decrease in 						
   Interest receivable  		          (255,109) 	    	(992,872) 	        	364,303 
   Other assets  	                  	912,162 		      344,572 		      (1,171,225) 
  Increase (decrease) in 						
   Interest payable 	               	577,137 		      222,605 		        (206,742) 
   Other liabilities 		              458,939 		      287,975 		          38,024 
						
    TOTAL ADJUSTMENTS 		           3,184,826 		    1,377,758		          221,912 

    NET CASH PROVIDED BY 
     OPERATING ACTIVITIES        		9,300,532 		    6,939,184 		       5,478,164 

INVESTING ACTIVITIES 						

 Proceeds from maturities, 
  calls, and sales of 
  available-for-sale
  securities 		                    7,306,453 		   25,152,051 		           - 
 Proceeds from maturities and
  calls of held-to-maturity
  securities 		                   18,848,992 		    5,092,000 		      30,497,983 
 Purchases of investment 
  securities 						
  Available-for-sale 		           (3,168,200) 		 (16,942,994) 		          - 
  Held-to-maturity 		             (6,459,372) 		 (19,495,987)		     (39,789,407) 
 Net increase in loans 		        (29,236,191) 	 	(18,778,658)     		(18,710,584) 
 Purchases of premises and
  equipment 		                      (850,672) 		    (418,586)		        (222,279) 
 Proceeds from redemption of
  annuities and life insur-
  ance contracts 						                                                 229,275 
 Purchase of single premium
  life insurance contracts 		          - 		            - 		            (730,000) 

    NET CASH USED BY 
     INVESTING ACTIVITIES      		(13,558,990) 		 (25,392,174) 		    (28,725,012) 

FINANCING ACTIVITIES 						

 Net increase in noninterest-
  bearing and interest-bearing
  deposits  		                     5,625,638      16,217,348	       	18,384,169 
 Net increase (decrease) in
  short term borrowings 		         4,355,000		     7,000,000 		         (77,537) 
 Cash dividends                 		(1,176,000) 	  	(1,071,000) 		       (966,000) 

    NET CASH PROVIDED BY
     FINANCING ACTIVITIES        		8,804,638 		   22,146,348 		      17,340,632 

    INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS        		4,546,180 		    3,693,358 		      (5,906,216) 

CASH AND CASH EQUIVALENTS 
 AT BEGINNING OF YEAR 		          26,735,526		    23,042,168 		      28,948,384 

CASH AND CASH EQUIVALENTS AT
 END OF YEAR 	                  $	31,281,706 	   $	26,735,526 	    $ 23,042,168 

<FN>
<F3>
The accompanying notes are an integral part of the consolidated
financial statements.
</FN>
</TABLE>

<PAGE>

              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

		First Farmers and Merchants Corporation (the Corporation) was
incorporated on March 31, 1982, as a Tennessee corporation.  On 
April 13, 1982, the Board of Directors of the Corporation
adopted a resolution to execute and deliver to the Board of
Governors of the Federal Reserve System an application pursuant
to Section 3(a)(1) of the Bank Holding Company Act of 1956, as
amended, for prior approval by the Board of action to be taken
by the Corporation which would result in its becoming a bank
holding company. 

 		As of December 31, 1995, the only subsidiary of the
Corporation was the Bank.  The Bank is a national banking
association which was organized in 1954 as a successor to a
state bank organized in 1909.  The Bank conducts a full-service
commercial banking business at its principal office at 816 South
Garden Street, Columbia, Tennessee and at thirteen (13)
branches:  High Street Branch, Northside Branch, Shady Brook
Mall Branch, Hatcher Lane Branch, and Campbell Plaza Branch in
Columbia; Mt. Pleasant Branch in Mt. Pleasant; Spring Hill
Branch in Spring Hill; Lawrenceburg Branch in Lawrenceburg;
Leoma Branch in Leoma; Loretto Branch in Loretto; Lewisburg
Branch in Lewisburg; Chapel Hill Branch in Chapel Hill; and
Centerville Branch in Centerville.  The Bank provides automatic
teller machine services in the Northfield Complex at the Saturn
location near Spring Hill, and in Columbia at the Tennessee Farm
Bureau and Columbia State Community College.

		The community service area of the Bank is comprised of Maury,
Lawrence, Marshall, Hickman, and adjacent counties.  Commercial
banking in the marketing area served by the Bank is highly
competitive.  Although the Bank is ranked as the largest bank in
the area, in terms of total deposits, the Bank faces substantial
competition from ten (10) other banks, three (3) savings and
loan associations, and several credit unions located in the
marketing area.

Accounting Policies

		The accounting principles followed and the methods of applying
those principles conform with generally accepted accounting
principles and to general practices in the banking industry. 
The significant policies are summarized as follows.

Principles of Consolidation

		The accompanying consolidated financial statements present the
accounts of the Corporation and its wholly-owned subsidiary, the
Bank.  Material intercompany accounts and transactions have been
eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

		The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.

Cash and Due From Banks

		Included in cash and due from banks are legally  reserved
amounts which are required to be maintained on an average basis
in the form of cash and balances due from the Federal Reserve
Bank and other banks.  Average reserve requirements for the year
ended December 31, 1995, amounted to approximately $8.3 million.

Cash Equivalents

		Cash equivalents include cash on hand, cash due from banks,
and federal funds sold.  Federal funds are sold for one-day
periods.

<PAGE>

          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Securities

		Effective January 1, 1994, the Bank adopted Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting
for Certain Investments in Debt and Equity Securities."  In
accordance with the Statement, prior period financial statements
have not been restated to reflect the change in accounting
principle.  The cumulative effect of  the adoption was an
increase in stockholders' equity  of $257,108 (net of $171,405
in deferred income taxes) to reflect the net unrealized gains on
securities classified as available-for-sale that were previously
classified as held-to-maturity.  SFAS 115 establishes standards
of accounting and reporting for investments in equity securities
that have readily determinable fair values and all debt
securities.  Under the Statement, all such investments are
classified in three categories and accounted for as follows: 

		Debt securities that the Bank has the positive intent and
ability to hold to maturity are classified as held-to-maturity
and reported at amortized cost with premiums and discounts
recognized in interest income using the interest method over the
period to maturity.

		Debt and equity securities that are bought and held
principally for the purpose of selling them in the near term are
classified as trading securities and reported at fair value,
with  unrealized gains and losses included in earnings.

		Debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified
as available-for-sale securities and reported at fair value,
with unrealized gains and losses, net of tax,  excluded from
earnings and reported as a separate component of stockholders'
equity.  Gains and losses realized on the sale of
available-for-sale securities are determined using the specific
identification method.

		Declines in the fair value of individual available-for-sale
and held-to-maturity securities below their cost that are other
than temporary result in write-downs of the individual
securities to their fair value.  The related write-downs are
included in earnings as realized losses.

		On November 15, 1995, the Financial Accounting Standards Board
issued a guide for implementation of SFAS 115 which allowed a
bank to reassess the appropriateness of the classification of
all securities held at that date and account for resulting
reclassifications as a transfer until December 31, 1995. 
Reclassification from the held-to-maturity category that
resulted from this one-time reassessment would not call into
question the intent of a bank to hold other debt securities to
maturity in the future.  The Bank did not reclassify any debt
securities as a result of this one-time reassessment.

Loans

		Effective January 1, 1995, the Bank adopted Statement of
Financial Accounting Standards No. 114 (SFAS 114, as amended by
SFAS 118), "Accounting by Creditors for Impairment of a Loan". 
The statement specifies how allowances for credit losses related
to certain loans should be determined and addresses the
accounting for certain loans that are restructured in a troubled
debt restructuring.  A loan is considered impaired when it is
probable that an institution will be unable to collect all
amounts due (principal and interest) according to the
contractual terms of the loan agreement.  The Bank evaluates
smaller balance homogeneous loans collectively for impairment. 
Loans secured by one to four family residential properties,
consumer installment loans, and line of credit loans are
considered smaller-balance homogeneous loans.

		Interest on loans is computed daily based on the principal
amount outstanding.  Loan origination fees and related direct
costs are deferred and recognized as an adjustment of yield on
the interest method.  Interest accruals are discontinued when,
in the opinion of management, it is not reasonable to expect
that such interest will be collected.  Consequently, interest
accruals are discontinued on loans that are ninety days
past-due.  All loans

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Loans (Continued)

in non-accrual status and loans in the two most severe Loan
Review classifications are specifically evaluated for
impairment.  Interest income on loans in non-accrual status is
recognized only to the extent of the excess of cash payments
received over principal payments due.

		When a loan is collateral dependent, impairment is measured
based on the observable market price or the fair value of the
collateral.  For other loans, the amount of impairment is
measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate. 
Positive changes in the net present value of an impaired loan
will in no event be used to increase the value of a loan above
the amount of the loan.

	Other Real Estate

		Other real estate, which is included in other assets,
represents real estate acquired through foreclosure and is
stated at the lower of cost or fair value minus estimated cost
to sell.  If, at the time of foreclosure, the fair value of the
real estate is less than the Bank's carrying value of the
related loan, a write-down is recognized through a charge to the
allowance for possible loan losses, and the fair value becomes
the new cost for subsequent accounting.  If the Bank later
determines that the cost of the property cannot be recovered
through sale or use, a write-down is recognized by a charge to
operations.  When the property is not in a condition suitable
for sale or use at the time of foreclosure, completion and
holding costs, including such items as real estate taxes,
maintenance and insurance, are capitalized up to the estimated
net realizable value of the property.  However, when the
property is in a condition for sale or use at the time of
foreclosure. or the property is already carried at its estimated
net realizable value, any subsequent holding costs are expensed.
 Legal fees and any other direct costs relating to foreclosures
are charged to operations when incurred.

		The Bank's recorded value for other real estate was
approximately $482,945 at December 31, 1995, and $544,540 at
December 31, 1994.  

Allowance for Possible Loan Losses

	The allowance for possible loan losses is established by
charges to operations based on the evaluation of the impairment
of loans by Loan Review, the Special Assets Committee, and the
Credit Administrator.  Impairments in loans are charged to the
allowance account in the period such determination is made. 
Recoveries on loans previously charged off are credited to the
allowance account in the period received.  The adequacy of the
allowance for possible loan losses is evaluated quarterly in
conjunction with loan review reports and evaluations that are
discussed in a meeting with loan officers and loan
administration.

Premises and Equipment

		Premises and equipment are stated at cost, less accumulated
depreciation and amortization.  The provision for depreciation
is computed principally on an accelerated cost recovery method
over the estimated useful lives of the assets, which range as
follows:  buildings - 15 to 50 years and equipment - 3-33 years.
 Costs of major additions and improvements are capitalized. 
Expenditures for maintenance and repairs are charged to
operations as incurred.  Gains or losses from the disposition of
property are reflected in operations, and the asset accounts and
related allowances for depreciation are reduced. 

Trust Department Income

		Trust department income is recognized on the accrual basis in
the applicable period earned.

<PAGE>

             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Stock Split

		During 1994, the Corporation amended its corporate charter to
increase the number of authorized shares of its common stock
from 2,000,000 to 4,000,000 shares and on April 12, 1994, the
Corporation's stockholders approved a two-for-one split effected
in the form of a 100% stock dividend distributed May 30, 1994,
to shareholders of record on April 12, 1994.  In accordance with
State corporate legal requirements, the transaction was recorded
by a transfer from retained earnings to common stock in the
amount of $7,000,000 ($10 for each additional share issued). 
All per share and share data in the accompanying consolidated
financial statements and footnotes have been restated to give
retroactive effect to the transaction.

Income Taxes

		The companies file a consolidated federal income tax return.  
They adopted Statement of Financial Accounting Standards No. 109
(SFAS 109), "Accounting For Income Taxes", effective January 1,
1993.  SFAS 109 requires an asset and liability approach to
financial accounting and reporting for income taxes.  Deferred
income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected
to affect taxable income.

		Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. 
Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred
tax assets and liabilities.  The cumulative effect, as of
January 1, 1993, of this change in the method of accounting for
income taxes was negligible.

Intangible Assets

	Deposit base intangibles identified in merger transactions are
amortized over 42 to 70 months on the straight-line method. 
Total amortization expense charged to operations amounted to: 
1995 - $168,020;  1994 - $168,020;  and  1993 - $168,020.

Fair Value of Financial Instruments

		Statement of Financial Accounting Standards No. 107 (SFAS
107), "Disclosures about Fair Value of Financial Instruments",
requires all entities to disclose the estimated fair value of
its financial instrument assets and liabilities.  For the Bank,
as for most financial institutions, almost all of its assets and
liabilities are considered financial instruments as defined in
SFAS 107.  Many of the Bank's financial instruments, however,
lack an available trading market as characterized by a willing
buyer and willing seller engaging in an unforced, unforeclosed
transaction.  Therefore, significant estimations and present
value calculations  were used by the Bank for the purposes of
this disclosure.

<PAGE>


            FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2 - INVESTMENT SECURITIES

		The following tables reflect the amortized value and fair
value of investment securities.

<TABLE>

<CAPTION>
                            		      Amortized 		                Gross Unrealized 		 		         Fair 	
	                                    	Value 		               Gain           	   Loss 		        Value 	

December 31, 1995 									

Available-for-sale securities 									

 <S>                              <C>                     <C>                  <C>           <C>
 U.S. Treasury 	                  $ 	5,064,421 	          $  	72,679 	         $   	- 	      $ 	5,137,100 	
 U.S. Government agencies 		         3,279,968 		             72,268 		             2,570		     3,349,666 	
 Other securities 		                 2,531,138 	             254,102 		             3,000 		    2,782,240 	
 	                                $	10,875,527 	          $ 	399,049 	         $   	5,570 	  $	11,269,006 	

Held-to-maturity securities 									

 U.S. Treasury                   	$	61,426,813 	          $ 	295,846 	         $  	59,359 	  $	61,663,300 	
 U.S. Government agencies 		        23,498,204 		            267,237 		            48,041		    23,717,400 	
 States and political subdivisions		42,415,025 		            934,439		            241,048 		   43,108,416 	
 Other securities 		                   322,640 		             18,205 		             - 		          340,845 	
                                 	$127,662,682 	          $1,515,727 	         $ 	348,448 	  $128,829,961 	

December 31, 1994 									
									
Available-for-sale securities 									
 U.S. Treasury 	                  $ 	7,094,657 	          $   	4,695 	         $  	50,352 	  $ 	7,049,000 	
 U.S. Government agencies 		         5,551,499 		              3,892 		            39,165		     5,516,226 	
	                                 $	12,646,156 	          $   	8,587           $  	89,517 	  $	12,565,226 	

Held-to-maturity securities 									
 U.S. Treasury 	                  $	71,997,419 	          $  	66,784 	         $1,862,503 	  $	70,201,700 	
 U.S. Government agencies 		        28,527,740 		             21,631 		         1,006,621		    27,542,750 	
 States and political subdivisions 	39,786,156 		            493,613		          1,804,009 		   38,475,760 	
 Other securities 		                 2,749,716 		              3,210 		            80,805 		    2,672,121 	
                                 	$143,061,031 	          $ 	585,238 	         $4,753,938 	  $138,892,331 	

</TABLE>

		Securities with an amortized value of $93,101,954 and
$81,583,779 at December 31, 1995 and 1994, respectively (fair
value: 1995 - $93,937,766; 1994 - $80,148,047), were pledged to
secure deposits and for other purposes as required or permitted
by law.  The fair value is established by an independent pricing
service as of the approximate dates indicated.  The differences
between the amortized value and fair value reflect current
interest rates and represent the potential gain (or loss) had
the portfolio been liquidated on that date.  Security gains (or
losses) are realized only in the event of dispositions prior to
maturity.  The fair values of all securities at December 31,
1995, either equaled or exceeded the cost of those securities,
or the decline in fair value is considered temporary.

		A schedule of net gains and losses realized on the disposition
of investment securities, and the related tax effects, is
presented in the following table.  All net gains realized in
1995 and net losses realized in 1994 resulted from sales of
securities which were classified as available-for-sale.

<TABLE>

<CAPTION>
            		                         1995       		1994        		1993  	

       <S>                         <C>           <C>           <C>
       Pre-tax gains (losses) 	    $   	1,182 	  $(243,690) 	  $ 	23,896 	
       Tax effect 		                     (473) 		   97,476 		     (9,558) 	
       After-tax gains (losses) 	   $  	  709 	  $(146,214) 	  $ 	14,338 	

</TABLE>
							
<PAGE>

         FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 - INVESTMENT SECURITIES (Continued)



		Proceeds from the maturity, call, or sale of
available-for-sale securities were $7,306,453, $25,152,051, and
$-0- during 1995, 1994, and 1993 respectively.  Proceeds from
the maturity or call of held-to-maturity securities were
$18,848,992, $5,092,000, and $30,497,983 during 1995, 1994, and
1993 respectively.  Gross gains of $1,182 and gross losses of
$-0- were realized on the dispositions in 1995.  Gross gains of
$-0- and gross losses of $243,690 were realized on the
dispositions in 1994.  Gross gains of $23,896 and gross losses
of $ -0- were realized on the dispositions in 1993.  At December
31, 1995, the Corporation did not hold investment securities of
any single issuer, other than obligations of the U.S. Treasury
and other U.S. Government agencies, whose aggregate book value
exceeded ten percent of stockholders' equity.

	 	The following table shows the amortized value, fair  value,
and weighted yields (for tax-exempt obligations on a fully
taxable basis assuming a 34% tax rate) of investment securities
at December 31, 1995, by contractual maturity.  Expected
maturities may differ from contractual maturities because
issuers may have the right to call or prepay obligations.

<TABLE>

<CAPTION>
                                             		Amortized 	       	Fair 	 	   Yield 	
                                                		Cost 	   	     Value 		    (Unaudited) 	
Available-for-sale securities 							
<S>                                          <C>              <C>              <C>
U.S. Treasury
 Within one year 	                           $ 	2,019,183 	   $ 	2,029,400 		   6.2% 	
 After one but within five years 		             3,045,238 		     3,107,700		    6.5% 	
U.S. Government agencies 							
 Within one year 		                             1,000,000 		     1,002,500 		   6.1% 	
 After one but within five years 		             1,996,231 		     2,066,000		    7.6% 	
 After ten years 		                               283,737 		       281,166 		   6.2% 	
Other securities 		                             2,531,138 		     2,782,240 		   8.9% 	
	                                            $	10,875,527 	   $	11,269,006 			

Held-to-maturity securities 							
U.S. Treasury 							
 Within one year 	                           $	39,167,894 	   $ 39,306,700 		   6.1% 	
 After one but within five years 		            22,258,919 		    22,356,600		    5.6% 	
U.S. Government agencies 							
 Within one year 		                            11,023,204 		    11,062,500 		   6.1% 	
 After one but within five years 		            12,475,000 		    12,654,900		    6.1% 	
 After five but within ten years 		                - 	 	            - 	 	        - 	 
States and political subdivisions 							
 Within one year 		                             3,244,962 		     3,296,024 		  10.0% 	
 After one but within five years 		            12,357,917 		    12,741,932		    8.7% 	
 After five but within ten years 		            23,148,235 		    23,191,943		    7.6% 	
 After ten years 		                             3,663,911 		     3,678,517 		   7.8% 	
Other securities 							
 After one but within five years 		               322,640 		       340,845 		   8.0% 	
	                                            $127,662,682 	   $128,629,961 			
</TABLE>

<PAGE>							

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  3 - LOANS

		A summary of loans outstanding by category follows. 

<TABLE>

<CAPTION>
  		                                                1995  		          1994  	
Loans secured by real estate 					
<S>                                            <C>               <C>
Loans secured by real estate
 Construction  and  land development   	       $ 	7,399,095 	    $ 	8,036,802 	
 Farmland 		                                      7,849,137 		      7,942,187 	
 Lines of credit 		                                 339,108         		240,976 	
 1-4 family residential property - first lien  	111,016,393     		100,548,761 	
 1-4 family residential property - junior lien   	7,177,285       		7,219,546 	
 Multifamily residential property 		              3,729,687 		      4,775,515 	
 Non farm, non residential property 		           44,224,353 		     41,734,848 	
    Subtotal 		                                 181,735,058 		    170,498,635 	

Commercial and  industrial loans 					
 Commercial  and  industrial 		                  51,758,675 		     44,870,150 	
 Taxable municipal loans 		                         270,000 		        300,000 	
 All other loans 		                                  88,239 		        187,405 	
    Subtotal 		                                  52,116,914 		     45,357,555 	

Tax exempt municipal loans 		                     1,485,071 		        748,116 	

Loans to individuals 					
 Agricultural production 		                       3,659,215 		      3,823,296 	
 Lines of credit 		                                 135,230 		        103,249 	
 Individuals for personal expenditures 	        	53,026,209      		42,341,597 	
 Purchase or carry securities 		                     - 		                 655 	
    Subtotal 		                                  56,820,654 		     46,268,797 	

Lease financing 		                                   - 		               1,408 	

                                              		292,157,697 		    262,874,511 	

Less: 					
 Net unamortized loan origination fees 		          (225,368) 		      (176,606)
 Unearned interest income 		                         (2,018) 		        (3,785) 	
 Allowance for possible loan losses 		           (2,678,386)		     (2,342,290) 	
					
	                                              $289,251,925 	    $260,351,830 	

</TABLE>
					
		A summary of loan maturities and the amounts of loans carrying
fixed and variable interest rates as of December 31, 1995,
follows.

<TABLE>

<CAPTION>
                                    	 	(In Thousands of Dollars) 
                             		Within 		     One to 		    After  		
		                            One Year 	  	Five Years 		 Five Years  		Total 

     <S>                      <C>           <C>          <C>         <C>
     Fixed rate loans 	       $ 	62,923 	   $ 	47,100 	  $ 	23,735   $	133,758 
     Variable rate loans 	     	113,389 	     	26,949 		    18,062 		  158,400 
								
 	                            $	176,312 	   $ 	74,049 	  $ 	41,797 	 $	292,158 

</TABLE>

	Loans having recorded investments of $5,856,000 at December 31,
1995, have been identified as impaired in accordance with the
provisions of SFAS 114.  The total allowance for possible loan
losses related to these loans was $456,000.  Interest received
on these loans during 1995 was $532,873.  Prior to adoption of
SFAS 114, non-performing loans were those which were accounted
for on a non-accrual basis.  Such loans had outstanding balances
of approximately  $2,611,000 at December 31, 1994.

<PAGE>
                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - LOANS  (Continued)

		Certain parties (principally directors and senior officers of
the Corporation or the Bank, including their affiliates,
families, and companies in which they hold ten percent or more
ownership) were customers of, and had loans and other
transactions with, the Bank in the ordinary course of business. 
An analysis of activity with respect to such loans for the years
ended December 31, 1995 and 1994, follows. 

<TABLE>

<CAPTION>
                                  		Balance at 								
                	                  	Beginning  				                 Amount      		Amount      Balance at 
                                 		 of Year 		      Additions 		  Collected 	  	Written Off 		End of Year 

 <S>                                <C>            <C>           <C>           <C>            <C>
      1995  										
 Aggregate of certain party loans 	 $ 6,494,271  	 $	7,020,665 	 $	5,908,932 	 $ 	  - 	       $ 7,606,004 

      1994  										
 Aggregate of certain party loans 	 $	6,563,577 	  $	5,081,776 	 $	5,151,082 	 $    - 	       $	6,494,271 

</TABLE>
										

		These totals exclude loans made in the ordinary course of
business to other companies with which neither the Corporation
nor the Bank has a relationship other than the association of
one of its directors in the capacity of officer or director. 
These loan transactions were made on substantially the same
terms as those prevailing at the time for comparable loans to
other persons.  They did not involve more than the normal risk
of collectiblity or present other unfavorable features.  No
related party loans were charged off in 1995 or 1994.

NOTE 4 - ALLOWANCE FOR POSSIBLE LOAN LOSSES

		Changes in the allowance for possible loan losses are as
follows:

<TABLE>

<CAPTION>
       		                                    1995   		     1994   		     1993  	

<S>                                      <C>           <C>           <C>
Balance at beginning of year 	           $	2,342,290 	 $	2,023,651 	 $	2,253,735 	
Provision charged to operating expenses    		670,000 		    660,000		     470,000 	
Loan losses: 							
 Loans charged off 		                       (555,957) 		  (422,831) 		  (847,535) 	
 Recoveries on loans previously  							
  charged off                              		222,053      		81,470     		147,451 	
							
Balance at end of year 	                 $	2,678,386 	 $	2,342,290 	 $	2,023,651 	

</TABLE>
							

		For federal income tax purposes, the allowance for possible
loan losses is maintained at the maximum allowable by the
Internal Revenue Code.

NOTE 5 - BANK PREMISES AND EQUIPMENT

		The components of premises and equipment are as follows:

<TABLE>

<CAPTION>
                                                1995               1994
        <S>                                 <C>                <C>
        Land 	                              $ 1,204,288 	      $	1,204,288 	
        Premises 		                           6,648,329 		       6,629,567 	
        Furniture and equipment 		            3,949,617 		       3,816,320 	
        Leasehold improvements 		               879,695 		         474,770 	
                                           		12,681,929 		      12,124,945 	
Less allowance for depreciation and
 amortization 		                             (6,283,993)		      (5,931,865) 	

	                                           $	6,397,936 	      $	6,193,080 	

</TABLE>

		Annual provisions for depreciation and amortization total
$645,816 for 1995, $589,045 for 1994, and $591,486 for 1993. 
Included in premises and equipment cost and allowance for
depreciation and amortization are certain fully depreciated
assets totaling $2,287,900 at December 31, 1995.


<PAGE>

        FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - LIMITATION ON SUBSIDIARY DIVIDENDS

		The approval of the Comptroller of the Currency is required
before the Bank's dividends in a given year may exceed the total
of its net profit (as defined) for the year combined with
retained net profits of the preceding two years.  As of December
31, 1995, additional dividends of approximately $13,500,000
could have been declared by the Bank to the Corporation without
regulatory agency approval.



NOTE 7 - LEASES



		Real property for four of the Bank's office locations and
certain equipment are leased under noncancelable operating
leases expiring at various times through 2000.  In most cases,
the leases provide for one or more renewal options of five to
ten years under the same or similar terms.  In addition, various
items of teller and office equipment are leased under cancelable
and noncancelable operating leases.  Total rental expense
incurred under all operating leases, including short-term leases
with terms of less than one month, amounted to $660,121,
$409,764, and $254,121 for equipment leases, and $111,649,
$97,966, and $82,030 for building leases, in 1995, 1994, and
1993, respectively.  Future minimum lease commitments as of
December 31, 1995, under all noncancelable operating leases with
initial terms of one year or more follow.

<TABLE>
     <S>                                          <C>
                    1996                        	 $ 	671,934 	
                  		1997  	              	           671,934 	
                  		1998  		                         636,511 	
                  		1999  		                           5,088 	
                  		2000  	 	                          5,088 	

     Total future minimum lease payments 	    		  $1,990,555 	

/TABLE>
					

NOTE 8 - FEDERAL AND STATE INCOME TAXES

		The provisions for income taxes consist of the following:


</TABLE>
<TABLE>

<CAPTION>
                                     		1995         		1994        		1993  	

<S>                                <C>            <C>            <C>
Current: 							
 Federal 	                         $ 2,166,566 	  $	1,831,848 	  $	1,754,003 	
 State 		                              585,606 		     503,433 		     442,882 	
    Total current 	                  2,752,172 		   2,335,281 		   2,196,885 	

Deferred: 							
 Federal 		                           (198,393) 		   (111,805) 		     20,468 	
 State 		                              (35,010) 		    (19,730) 		      3,612 	
    Total deferred                    (233,403) 		   (131,535) 		     24,080 	

  Total provision for 
    income taxes 	                 $ 2,518,769 	  $	2,203,746 	  $	2,220,965 	

</TABLE>
							
<PAGE>

                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - FEDERAL AND STATE INCOME TAXES (Continued)

		The deferred tax effects of principal temporary differences
are shown in the following table:

<TABLE>
<CAPTION>
                		                         1995  		      1994  		      1993  	

<S>                                   <C>           <C>           <C>
Allowance for possible loan losses 	  $ 	815,315 	  $ 	682,877 	  $ 	555,421 	
Installment loan reporting 		               - 		          - 		         6,865 	
Write-down of other real estate 		       177,120 		    159,120 		    157,520 	
Deferred compensation 		                 256,139 		    156,227 		     76,781 	
Direct lease financing 		                   - 		        36,452 		     35,736 	
Unrealized loss on AFS securities 		        - 		        32,372 		     18,457 	
Deferred loan fees 		                     44,051 		     24,546 		     76,907 	

  Deferred tax asset 		                1,292,625 		  1,091,594 		    927,687 	

Unrealized gain on AFS securities 		    (157,392) 		      - 		          - 	

  Deferred tax liability 		             (157,392)  		     - 		          -	

    Net deferred tax asset 	          $1,135,233    $1,091,594	   $ 	927,687 	

</TABLE>


		A reconciliation of total income taxes reported with the
amount of income taxes computed at the federal statutory rate
(34% each year) is shown below.  Total income taxes paid in
1995, 1994, and 1993 amounted to $2,756,442, $2,431,332 and
$2,564,887, respectively.

<TABLE>

<CAPTION>
        		                                        1995  		         1994  		         1993  	

<S>                                           <C>              <C>              <C>
Tax expense at statutory rate 	               $ 2,935,722 	    $ 2,640,158    	 $	2,542,254 	
Increase (decrease) in taxes resulting from: 							
 Tax-exempt interest 		                          (783,011) 		     (780,946) 		     (647,575) 	
 Nondeductible interest expense 		                 89,491 		        75,019 		        58,457 	
 Other nondeductible expenses 							
  (nontaxable income) - net 		                    (28,114) 		       (6,458)		       (19,962) 	
 State income taxes, net of federal 							
  tax benefit 		                                  363,393 		       319,244 		       292,263 	
 Dividend income exclusion 		                     (18,324) 		      (29,571) 		      (15,646) 	
 Other 		                                         (40,388) 		      (13,700) 		       11,174 	

Total provision for income taxes 	            $	2,518,769 	    $	2,203,746 	    $	2,220,965 	

Effective tax rate 		                               29.2% 		         28.4% 		         29.7% 	

</TABLE>
							

		A net deferred tax asset was included in other assets in the
accompanying consolidated balance sheet.  

NOTE 9 - COMMITMENTS

		The Bank is a party to financial instruments with
off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers.  These financial
instruments include commitments to extend credit and standby
letters of credit.  Those instruments involve, to varying
degrees, elements of credit risk in excess of the amount
recognized in the balance sheet.  The contract or notional
amounts of those instruments reflect the extent of involvement
the Bank has in those particular financial instruments.

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 NOTE 9 - COMMITMENTS (Continued)

		The total outstanding loan commitments and stand-by letters of
credit in the normal course of business at December 31, 1995,
were $21,739,000 and $1,699,000, respectively.  Loan commitments
are agreements to lend to a customer as long as there is not a
violation of any condition established in the contract.  Standby
letters of credit are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. 
Those guarantees are primarily issued to support public and
private borrowing arrangements, including commercial paper, bond
financing, and similar transactions.  The credit risk involved
in issuing letters of credit is essentially the same as that
involved in making a loan.

		The loan portfolio is well diversified with loans generally
secured by tangible personal property, real property, or stock. 
The loans are expected to be repaid from cash flow or proceeds
from the sale of selected assets of the borrowers.  Collateral
requirements for the loan portfolio are based on credit
evaluation of the customer.  It is management's opinion that
there is not a concentration of credit risk in the portfolio.


NOTE 10 - SUPPLEMENTARY CASH FLOW INFORMATION

		Interest paid on deposits and other borrowings during 1995,
1994, and 1993 amounted to $14,845,299, $12,641,299, and
$12,243,317, respectively.


NOTE 11 - EMPLOYEE BENEFIT PLANS

		The Bank contributes to a defined contribution, profit-sharing
plan covering employees who meet participation requirements. 
The amount of the contribution is discretionary as determined by
the Board of Directors up to the maximum deduction allowed for
federal income tax purposes.  Contributions to the plan, that
amounted to $633,459, $602,010, and $529,324, in 1995, 1994, and
1993, respectively, are included in salaries and employee
benefits expense. 

		In 1992, the Bank formalized a nonqualified salary
continuation plan for certain key officers.  In connection with
this plan, the value of the assets (1995 - $594,221; 1994 -
$580,088) used to fund the plan and the related liability (1995
- $482,272; 1994 - $400,606) were included in other assets and
other liabilities respectively.  Single premium universal life
insurance policies were purchased in 1993 to replace other
policies and annuities that were redeemed.  Insurance premiums
of $515,000 were paid during 1993, of which $285,725 (net of the
redemption proceeds) was capitalized.  Net non-cash income of
$14,133 in 1995 and  $22,448 in 1994 is also included in the
above asset values.  The principal cost of this plan will be
accrued over the anticipated remaining period of active
employment, based on the present value of the expected
retirement benefit.  Expense related to this plan was $106,666
in 1995, $98,925 in 1994, and $91,916 in 1993.

   The Bank also implemented a deferred compensation plan which
permitted directors, beginning in 1993, to defer their
director's fees and earn interest on the deferred amount.  A
liability increase and expense of $176,727 for 1995, $126,262
for 1994, and $125,036 for 1993 were recognized in the
accompanying financial statements.  In connection with this
plan, a single premium universal life insurance policy was
purchased on the life of each director who elected to
participate.  Insurance premiums of $1,425,000 were paid at the
end of 1992, of which $1,399,816 was capitalized to reflect the
cash surrender value at December 31, 1992.  Additional single
premium universal life insurance policies were purchased in 1993
for new participants.  Insurance premiums of $215,000 were paid
during 1993 and capitalized.  Net non-cash income of $51,803 in
1995 and $52,840 in 1994 is also included in the cash surrender
values of  $1,801,922 and $1,750,119 at December 31, 1995 and
1994, respectively.

		The Bank is beneficiary on the insurance policies that fund
the salary continuation plan and the deferred compensation plan.
 These policies have an aggregate face amount of $2,425,000.

<PAGE>

               FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - QUARTERLY RESULTS OF OPERATIONS (Unaudited)

		The following is a summary of the unaudited consolidated
quarterly results of operations.

<TABLE>
										
<CAPTION>

                               		First        Second     		  Third 		     Fourth 		
                              		Quarter     		Quarter 	     Quarter   	  	Quarter 		    Total 

        1995  										

<S>                          <C>           <C>           <C>           <C>           <C>
Interest income 	            $	8,244,228   $	8,640,769 	 $	8,720,212 	 $ 8,888,360 	 $34,493,569 
Interest expense 		            3,654,485 		  3,856,594 		  3,938,600 		  3,972,566		  15,422,245 

Net interest income 		         4,589,743 		  4,784,175 		  4,781,612		   4,915,794 		 19,071,324 
Provision for possible loan  										
 losses 		                       145,000 		    140,000 		    180,000 		    205,000 		    670,000 
Noninterest expenses, net of 										
 noninterest income 		         2,492,505 		  2,547,595 		  2,430,466		   2,296,283 		  9,766,849 
										
Income before income taxes 		  1,952,238 		  2,096,580 		  2,171,146		   2,414,511 		  8,634,475 
Income taxes 		                  512,448 		    589,977 		    680,609 		    735,735 		  2,518,769 

Net income 	                 $	1,439,790 	 $ 1,506,603 	 $	1,490,537 	 $	1,678,776 	 $ 6,115,706 

Earnings per common share 										
  (1,400,000 shares) 	       $ 	    1.03 	 $  	   1.08 	 $     	1.06 	 $    	 1.20 	 $ 	    4.37 

</TABLE>

<TABLE>
<CAPTION>
	                               	First 		      Second 		     Third 		    Fourth 		
                     		         Quarter 	     	Quarter     	Quarter  	   Quarter 		    Total 

1994  										

<S>                          <C>           <C>            <C>           <C>          <C>
Interest income 	            $	7,176,893   $	7,664,849    $	7,814,500 	 $	8,161,296  $30,817,538 
Interest expense 		            2,986,012 		  3,148,310 		   3,272,217 		  3,457,365	  12,863,904 

Net interest income 		         4,190,881 		  4,516,539 		   4,542,283		   4,703,931 		17,953,634 
Provision for possible loan  										
 losses 		                        60,000 		    255,000 		     225,000 		    120,000 		   660,000 
Noninterest expenses, net of 										
 noninterest income 		         2,260,734 		  2,254,027 		   2,490,717		   2,522,984 		 9,528,462 

Income before income taxes 		  1,870,147 		  2,007,512 		   1,826,566		   2,060,947 		 7,765,172 
Income taxes 		                  528,638 		    566,493 		     508,942 		    599,673 		 2,203,746 

Net income 	                 $	1,341,509 	 $	1,441,019 	  $ 1,317,624 	 $	1,461,274  $	5,561,426 

Earnings per common share 										
 (1,400,000 shares) 	        $ 	    0.96 	 $  	   1.03 	  $ 	    0.94 	 $ 	    1.04	 $ 	    3.97 

</TABLE>

NOTE 13 - SHAREHOLDERS' EQUITY

		The Corporation and the Bank are subject to federal regulatory
risk-adjusted capital adequacy standards.  Failure to meet
capital adequacy requirements can initiate certain mandatory,
and possibly additional discretionary, actions by regulators
that could have a direct material effect on the consolidated
financial statements of the Corporation and its subsidiary, the
Bank.  The regulations require the Bank to meet specific capital
adequacy guidelines that involve quantitative measures of
assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices.   As of
December 31, 1995, the Bank's calculated risk-adjusted capital
ratios exceeded the minimum standard for a "well capitalized"
bank.  The capital classification is also subject to qualitative
judgments by the regulators about components, risk weightings,
and other factors.  Management believes that the Corporation and
the Bank meet all capital requirements.

<PAGE>

             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - DEPOSITS

		The Bank does not have any foreign offices and all deposits
are serviced in its fourteen domestic offices.  The average
amounts of deposits and the average rates paid are summarized in
the following table.

<TABLE>

<CAPTION>
                                                      (Unaudited) 									
                                     		 	 	 	 	 	Year Ended December 31 		 	 	 	 	 	

                                          		1995       		   	 		1994      		 	 		  1993  		 	 	
                                							          (Dollars In Thousands) 									

<S>                                  <C>        <C>      <C>        <C>      <C>        <C>
Demand deposits 	                    $	56,730  		- 	% 	  $	55,557 	 	- 	% 	  $	48,697		  - 	% 	
NOW and money market accounts 		      149,016 		3.51 			  161,244 		3.25			   147,246 		3.16 		
Savings deposits 		                    34,629 		3.00 			   35,036 		2.87 			   31,216 		2.76
Time deposits of less than $100,000 		136,568 		5.30 			  126,523		 4.27 			  128,021 		4.26 		
Time deposits of $100,000 or more 		   32,524 		5.35 			   26,053		 4.32 			   23,602 		4.33 		

Total In Domestic Offices 	          $409,467 		3.72%   	$404,413		 3.66% 	  $378,782 		3.17% 	 

																
</TABLE>

		At December 31, time deposits of $100,000 or more had the
following maturities.

<TABLE>
<CAPTION>
                            	1995  	    	1994  		   1993  
                                  (Dollars In Thousands)

    <S>                   <C>         <C>        <C>
    Under 3 months 	      $	7,877 	   $	3,117 	  $	3,519 
    3 to 12 months 		      18,407 		   18,250 		  17,081 
    Over 12 months 		       4,310 		    4,803 		   4,505 

	                         $30,594 	   $26,170 	  $25,105 

</TABLE>
						

	NOTE 15 -  FAIR VALUES OF FINANCIAL INSTRUMENTS



		This summarizes the Corporation's disclosure of fair values of
financial instruments made in accordance with the requirements
of Statement of Financial Accounting Standards No. 107 (SFAS
107), "Disclosures about Fair Value of Financial Instruments".

<TABLE>

<CAPTION>
				                                          Dollars in Thousands 					
     		                             December 31, 1995 	  	 		  December 31, 1994 		 	
                               	 	Amortized     		Fair     	  	Amortized  	  	Fair 	
		                                  Value   	   	Value 	        	Value    		 Value 	

<S>                               <C>             <C>           <C>           <C>
Financial assets 									
  Cash and cash equivalents      	$ 	31,282 	     $ 	31,282 	   $ 	26,736	    $ 	26,736 	
  Securities held to maturity   	  	127,663  		     128,830  		   143,061		     138,892 	
  Securities available for sale   		 10,876  	 	     11,269 	  	   12,646		      12,565 	
  Loans, net 	                   	  289,252 	 	     298,076 		    260,352 		    268,870  	
  Accrued interest receivable 		      5,454 		        5,424 		      5,169		       5,169 	

Financial liabilities 									
  Deposits 		                       410,778 		      398,296 		    405,152 		    402,720 	
  Federal funds purchased 		         10,000 		       10,000 		      7,000 		      7,000 	
  Short term borrowings 		            1,955 		        1,955 		        600 		        600 	
  Accrued interest payable 		         3,034 		        3,034 		      2,457 		      2,457 	

</TABLE>

		Estimated fair values have been determined by the Bank using
the best available data.  Changes in assumptions or the
estimation methodologies used may have a material effect on the
estimated fair values included in this note.

<PAGE>


           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	NOTE 15 -  FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)


		Financial assets - Cash and cash equivalents are considered to
be carried at their fair value and have not been valued
differently than has been customary with historical cost
accounting.  Securities available-for-sale and securities
held-to-maturity are valued by an independent rating service and
are disclosed in detail in Note 2 above.  	A present value
discounted cash flow methodology was used to value the net loan
portfolio.  The discount rate used in these calculations was the
current rate at which new loans in the same classification for
regulatory reporting purposes would be made.  This rate was
adjusted for credit loss and assumed prepayment risk.   For
loans with floating interest rates it is presumed that estimated
fair values generally approximate the recorded book balances.

		Financial liabilities - Deposits with stated maturities have
been valued using a present value discounted cash flow with a
discount rate approximating the current market for similar
liabilities.  Financial instrument liabilities with no stated
maturities have an estimated fair value equal to both the amount
payable on demand and the recorded book balance.  For deposits
with floating interest rates it is presumed that estimated fair
values generally approximate the recorded book balances.  The
carrying amounts of federal funds purchased and other short term
borrowings are considered to approximate their fair values.

		  The Bank's remaining assets and liabilities which are not
considered financial instruments have not been valued
differently than has been customary with historical cost
accounting.  Management is concerned that reasonable
comparability between financial institutions may be distorted
due to the wide range of permitted valuation techniques and
numerous estimates which must be made given the absence of
active secondary markets for many of the financial instruments. 
This lack of uniform valuation methodologies also introduces a
greater degree of subjectivity to these estimated fair values. 

	 At December 31, 1995, the Bank had outstanding standby letters
of credit and commitments to extend credit.  These
off-balance-sheet financial instruments are generally
exercisable at the market rate prevailing at the date the
underlying transaction will be completed and, therefore, are
deemed to have no current fair value.  Please refer to Note 9.


NOTE 16 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
<TABLE>

<CAPTION>
                             Condensed Balance Sheets                                        
                            December 31, 1995 and 1994                                      
                            (In Thousands of Dollars)                                       
    					
                  Assets 		                               1995  		     1994  	

<S>                                                     <C>          <C>      
Cash 	                                                  $    	70 	   $    	65 	
Investment in bank subsidiary - at equity 		              48,517 		    43,310 	
Investment in credit life insurance company - at cost 		      50 		        50 	
Investment in other securities 		                             22 		        25 	
Dividends receivable from bank subsidiary 		                 630 		       574 	
Cash surrender value - life insurance 		                     467 		       453 	
    Total assets                                        $ 49,756 	   $	44,477 	

       Liabilities and Stockholders' Equity 					
Liabilities 					
 Payable to directors 	                                 $ 	  129 	   $    	75 	
 Dividends payable 		                                        630 		       574 	
   Total liabilities 		                                      759 		       649 	
Stockholders' equity 					
 Common stock - $10 par value, authorized 4,000,000 					
  shares, 1,400,000 shares issued and outstanding 		      14,000		     14,000 	
 Retained earnings 		                                     34,761 		    29,877 	
 Net unrealized gain (loss) on available-for-sale  					
  securities, net of tax 		                                  236 		      (49) 	
   Total stockholders' equity 		                          48,997 		    43,828 	
            Total liabilities and stockholders' equity  $ 49,756 	   $	44,477 	

</TABLE>
					
<PAGE>


                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 NOTE 16 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
(Continued)

<TABLE>
                          Condensed Statements of Income                                  
                     Years Ended December 31, 1995 and 1994                          
                             (In Thousands of Dollars)                                       
<CAPTION>
  				
                                            		     1995           		1994  
<S>                                             <C>              <C>
Operating income 				
  Dividends from bank subsidiary 	              $ 	1,232 	       $ 	1,120 
  Other dividend income 		                            22 		            61 
  Interest income 		                                   2 		             1 
  Other 		                                            27 		            30 

Operating expenses 		                                 87 		            60 

    Income before equity in undistributed net 				
     income of bank subsidiary 		                  1,196 		         1,152 

Equity in undistributed net income of bank
 subsidiary 		                                     4,920 		         4,409 

    Net Income 	                                $ 	6,116 	       $ 	5,561 

</TABLE>
				
<TABLE>
                      Condensed Statements of Cash Flows                              
                    Years Ended December 31, 1995 and 1994                          

                            (In Thousands of Dollars)                                       
  				
<CAPTION>
                                                         		1995          		1994  

<S>                                                     <C>             <C>
Operating activities 				
 Net income for the year 	                              $ 	6,116 	      $ 	5,561 
 Adjustments to reconcile net income to net cash 				
  provided by operating activities 				
   Equity in undistributed net income of bank
    subsidiary                                          		(4,920) 		      (4,409) 
   Increase in other assets 		                               (69) 		         (62) 
   Increase in payables 		                                    54 		           26 
				
     Total adjustments 		                                 (4,935) 		      (4,445) 

     Net cash provided by operating activities        		   1,181 		        1,116 

Net cash provided by (used in) investing activities 		 		
 Proceeds from sale or calls of investment securities 		      -	              18 
    Net cash provided by (used in) investing activities		     -       		      18 

Net cash used in financing activities 				
 Cash dividends paid 		                                    (1,176) 		     (1,071) 

    Increase (decrease) in cash 		                              5 		          63 

Cash at beginning of year 		                                   65 		           2 

Cash at end of year 	                                      $  	70 	       $  	65 

</TABLE>

<PAGE>


                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS 

GENERAL

	First Farmers and Merchants Corporation, a one-bank holding
company, was formed during 1982.  Its only subsidiary, First
Farmers and Merchants National Bank, is a community bank that
was established in 1909.  The resulting financial condition of
the Corporation should be evaluated in terms of the Bank's
operations within its service area.

	During 1995, First Farmers and Merchants National Bank
strengthened its presence in the four counties in middle
Tennessee that it serves.  Deposits in each of the four counties
either maintained the same levels or increased while loans in
all four counties increased.  To more efficiently provide
expanding services and offer the range of products that Bank
customers need and want, the Bank undertook a technology
conversion in the last quarter of 1994 involving data processing
and communication links between its fourteen offices.  The Bank
is positioned to provide quality services in diverse markets and
a dynamic interest rate environment.  Our customers are enjoying
the "Impact" of this change as new services such as combined,
laser printed statements; inquiring about balances, checks paid,
deposits made, and making transfers between accounts through
phone bank; extended banking hours; and a check card.  The check
card was introduced in the first quarter of 1995 and increased
in usage as the year progressed to approximately 35,000
transactions per month.

	The first of the following tables entitled DISTRIBUTION OF
ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY, INTEREST RATES
AND INTEREST DIFFERENTIAL, presents average daily balances,
interest income on a fully taxable equivalent basis and interest
expense, as well as the average rates earned and paid on the
major balance sheet items for the years 1995, 1994, and 1993.
The second table sets forth, for the periods indicated, a
summary of changes in interest earned and interest paid
resulting from changes in volume and changes in rates.  The
rate/volume variances are allocated between rate and volume
variances in proportion to the relationship of the absolute
dollar amounts of the change in each.

	These tables plus the following discussion and financial
information is presented to aid in understanding First Farmers
and Merchants' current financial position and results of
operations.  The emphasis of this discussion will be on the
years 1995, 1994, and 1993; however, financial information for
prior years will also be presented when appropriate.  This
discussion should be read in conjunction with the Consolidated
Financial Statements and the Notes to Consolidated Financial
Statements included elsewhere in this material.

FINANCIAL CONDITION 

	First Farmers and Merchants National Bank's financial condition
depends on the quality and nature of its assets, its liability
and capital structure, the market and economic conditions, and
the quality of its personnel.  The following paragraphs provide
a unique perspective on the internal structures of the
Corporation and the Bank that provide the strength in our
organization.

	The bank's average deposits grew during the last three years
reflecting  a 1.3% growth from 1994 to 1995, a 6.8% growth from
1993 to 1994, and a 10.4% growth from 1992 to 1993.  Average
transaction and limited transaction interest bearing accounts
grew during the prior two years but declined in 1995 as
investors took advantage of higher certificate of deposit rates.
 The average Chairman's Club, super negotiable orders of
withdrawal, insured money market deposits, and flexible
investment accounts decreased 7.6 % in 1995 compared to a  9.5%
increase in 1994 and a 28.6 % increase in 1993.  Average savings
deposits actually declined 1.2% in 1995 compared to a 12.2%
increase in 1994 and a 12.9% decrease in 1993.  Average
certificates of deposit increased  during 1995 with certificates
and other savings under $100,000 increasing 8.0% in 1995
compared to a 1.2% decline in 1994 and a 1.2.% decline in 1993. 
Certificates of deposit over $100,000 increased 24.8% in 1995
compared to a 10.4% increase in 1994 and a 17.1% decline in
1993.  


<PAGE>

                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                             AND RESULTS OF OPERATIONS 

TABLE 1 - Distribution of Assets, Liabilities, and Stockholders'
Equity, Interest Rates and Interest Differential

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31, 
                                                          	 	 	 	1995  	 	 	 	 
 
                                                  		 Average   		Rate / 				
                                                   		Balance 		  Yield 			 Interest 	

ASSETS 								
<S>                                                <C>           <C>       <C>            
 Interest earning assets 								
   Loans, net 	                                    $ 	276,166 		  9.38% 	  $	25,892 	* 
   Bank time deposits 		                                    2      - 	 		      - 	
   Available-for-sale securities (AFS) 	  	             8,092 		  6.59			       534 	
   Held-to-maturity securities (HTM) 		                93,676 		  6.03			     5,646 	
   U.S. Treasury and Government agency securities   		   - 	   	   -    	 		   - 	
   States and political subdivisions' securities  		   39,139		   8.06 			    3,156 	* 
   Other securities 		                                  2,452 		 11.29 			      277 	* 
   Federal funds sold 		                                2,076 		  5.83 			      121 	
     TOTAL EARNING ASSETS 		                          421,603 		  8.45 		  $	35,626 	

 Noninterest earning assets 								
   Cash and due from banks 		                          24,829 						
   Bank premises and equipment 		                       6,246 						
   Other assets 		                                     11,061 						
								
     TOTAL ASSETS 	                                $ 	463,739 						

LIABILITIES AND STOCKHOLDERS' EQUITY 								
 Interest bearing liabilities 								
   Time and savings deposits: 								
   NOW and money market accounts  	                $ 	148,993 		 3.51% 	  $ 	5,223 	
   Savings 		                                          34,627 		 3.00 			    1,040 	
   Time  		                                           136,605 		 5.30 			    7,245 	
   Time over $100,000 		                               32,522 		 5.35 			    1,740 	
    TOTAL INTEREST BEARING DEPOSITS 		                352,747 		 4.32			    15,248 	
   Federal funds purchased and repurchase 
    agreements		                                        2,415 		 5.92 			      143 	
   Other short-term debt 		                               565 		 5.49 			       31 	
    TOTAL INTEREST BEARING LIABILITIES 		             355,727 	 	4.34		   $	15,422 	

 Noninterest bearing liabilities
   Demand deposits 		                                  56,742 						
   Other liabilities 		                                 4,515 						
    TOTAL LIABILITIES 		                              416,984 						
 Stockholders' equity 		                               46,755 						
    TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY 	   $ 	463,739 						
<FN>								
<F4>
  Spread between combined rates earned and combined rates paid*		4.11% 			
</FN>
<FN>								
<F5>
  Net yield on interest-earning assets* 				                     4.79% 			
</FN>
<FN>
<F6>
  * Taxable equivalent basis. 								
</FN>
</TABLE>

<PAGE>

                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                               AND RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                     	 	 	       1994  	 	 	 	   	 	 	 	             	 1993  	 	 	 	 
                                             	     Average       Rate / 		                Average      Rate / 				
                                                  	Balance 		    Yield 			Interest 			   	Balance 		   Yield 			Interest 	
                                                                       	 (Dollars In Thousands) 															
ASSETS
<S>                                              <C>            <C>       <C>        <C>               <C>      <C>       <C>
 Interest earning assets
   Loans, net                                    $  247,791 		   8.54%    $	21,156 	*   $ 	233,608 		  8.37%    $	19,543 	* 
   Bank time deposits	                                 - 	 	      - 	 	 	     - 	 	 	 	      - 	 	      - 	 	 	     - 	
   Available-for sale-securities (AFS)               15,931 		   8.33 			    1,327 				      - 	 	      - 	 	 	     - 	
   Held-to-maturity securities (HTM)	               101,654 		   5.76 			    5,858 				      - 	 	      - 	 	 	     - 
   U.S. Treasury and Government agency securities	     - 	 	      - 	 	 	     - 				       106,201 		  6.50 			    6,904 	
   States and political subdivisions	                38,545 		   8.49 			    3,274 	* 			   29,634 		  8.62 			    2,553 	* 
   Other securities	                                  2,375 		  13.15 			      312 	* 			    6,164 		  5.34 			      329 	* 
   Federal funds sold	                                2,998 		   3.73 			      112 				      4,665 		  2.92 			      136 	
     TOTAL EARNING ASSETS 	                         409,294 		   7.83 		  $	32,039 			     380,272 		  7.75 		  $	29,465 	
																
 Noninterest earning assets
   Cash and due from banks	                          25,945 									                       23,406 						
   Bank Premises and equipment	                       6,350 									                        6,764 						
   Other assets	                                     10,364 									                       10,318 						

     TOTAL ASSETS                                $ 	451,953 								                    $  420,760 						

LIABILITIES AND STOCKHOLDERS' EQUITY
 Interest bearing liabilities
   Time and savings deposits:
   NOW and money market accounts                 $ 	161,244 		   3.25% 	 $ 	 5,239 			  $ 	147,246 		  3.16% 	  $ 	4,653 	
   Savings	                                          35,036 		   2.87  			   1,006 				     31,216 		  2.76 			      861 	
   Time	                                            126,523 		   4.27  			   5,400 				    128,021 		  4.26 			    5,459	
   Time over $100,000    	                           26,053 		   4.32  			   1,126 				     23,602 		  4.34 			    1,025 	
    TOTAL INTEREST BEARING DEPOSITS  	              348,856 		   3.66  			  12,771 				    330,085 		  3.63 			   11,998	
   Federal funds purchased and repurchase
    agreements 	                                      1,462 		   4.86 		        71 				        254 		  3.06 			        8 	
   Other short-term debt  	                             568 		   3.92 			       22 				        728 		  4.21 			       31 	
    TOTAL INTEREST BEARING LIABILITIES	             350,886 		   3.67 		  $	12,864 				    331,067 		  3.64 		  $	12,037 	
 Noninterest bearing liabilities																
   Demand deposits   	                               55,557 									                       48,697 						
   Other liabilities  	                               3,690 									                        3,542 						
    TOTAL LIABILITIES 	                             410,133 									                      383,306 						
 Stockholders' equity  	                             41,820 									                       37,454 						
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 	451,953 								                    $ 	420,760 						

<FN>
<F7>
Spread between combined rates earned and combined rates paid*		4.16% 		          						                4.11% 			
</FN>
<FN>
<F8>
Net yield on interest earning assets*			                       4.68% 								                          4.58% 			
</FN>
<FN>
<F9>
Taxable equivalent basis
</FN>
</TABLE>


<PAGE>

                    FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                  AND RESULTS OF OPERATIONS 


TABLE 2 - Distribution of Assets, Liabilities, and Stockholders'
Equity, Interest Rates and Interest Differential (Continued)

<TABLE>
<CAPTION>
										* 
                                                         					*  				               Total 
                                     		* 	   	 Taxable  		Nontaxable 	 	Federal 		Interest 
                                    		Net  		Investment 		Investment 	  	Funds 		  Earning 
(Dollars in Thousands) 		            Loans 		Securities 		Securities   		Sold	   	  Assets 

1995 compared to 1994: 										
<S>                                <C>       <C>            <C>        <C>        <C>
  Increase (decrease) due to: 										
    Volume 	                       $ 	2,423 	$ 	(1,103) 	   $ 	50 	    $ 	(34) 	  $ 	1,336 
    Rate 		                           2,313 		      63 		    (168) 		      43 		     2,251 

     NET INCREASE 										
      (DECREASE) 	                 $ 	4,736 	$ 	(1,040) 	   $(118) 	   $ 	  9 	   $	 3,587 

1994 compared to 1993: 										
  Increase (decrease) due to: 										
    Volume 	                       $ 	1,186 	$ 	   537 	    $	768 	    $ 	(49) 	  $ 	2,442 
    Rate 		                             427 		    (273) 		    (47) 		      25 		       132 

     NET INCREASE 										
      (DECREASE) 	                 $ 	1,613 	$ 	   264 	    $ 721 	    $ 	(24) 	  $	 2,574 
				                                            (A) 		        (A) 				

<FN>
<F10>
     * Taxable equivalent basis 
</FN>
<FN>
<F11>
   (A) U.S. Government, government agency, and corporate debt
securities plus equity securities in the available-for-sale and
held-to-maturiy categories are taxable investment securities.
Municipal debt securities are nontaxable and classified as 
held-to-maturity. 
</FN>
</TABLE>

	Average earning assets increased 3.0% in 1995 compared to an
7.6% increase in 1994 and a 9.7% increase in 1993.   As a
financial institution, the Bank's primary earning asset is
loans.  At December 31, 1995, average net loans represented 
65.5% of  average earning assets.  Total average net loans
increased during the last three years showing an 11.5% growth
from 1994 to 1995, a 6.1% growth from 1993 to 1994, and an 8.6%
growth from 1992 to 1993.  Average investments represented 34.0%
of average earning assets at December 31, 1995, and  decreased
9.6% in 1995 providing funds for the increasing loan growth. 
Investments  increased 11.6% in 1994, and increased 11.9% in
1993.  Average total assets increased during the last three
years as evidenced by a 2.6% growth from 1994 to 1995, a 7.4%
growth from 1993 to 1994, and a 10.3% growth from 1992 to 1993. 
Please refer to the color graphs at the end of this document
that illustrate this growth.

<PAGE>
<TABLE>
              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS 
<CAPTION>
                               	Now and 												                                            Total 		      * 	
                                	Money 			                   	     Time 		   Federal 		 Short 	Interest 		   Net 	
                               	Market  		Savings 	    	Time     		Over 		   Funds 		    Term 		Bearing		 Interest  
(Dollars in Thousands)	        Accounts 		Deposits  		Deposits 		$100,000 		Purchased 		 Debt		 Funds 		  Earnings 	

<S>                            <C>         <C>         <C>        <C>         <C>        <C>     <C>         <C>
1995 compared to 1994:
  Increase (decrease) due to:  																
    Volume                     $	(398) 	   $	(12) 	    $  430	    $  279 	    $ 	46 	    $  - 	  $ 	345 	    $ 	991 	
    Rate       	                  382 		      46 		     1,415      		335 		      26 		       9 		 2,213 		       38 	

     NET INCREASE
      (DECREASE)               $ 	(16)    	$ 	34    	  $1,845    	$ 	614 	    $ 	72 	    $ 	 9  	$2,558 	    $1,029 	

1994 compared to 1995:																
  Increase (decrease) due to:																
    Volume                     $ 	442 	    $	105 	     $  (64) 	  $ 	107 	    $ 	37 	    $ 	(7)  $ 	620 	    $1,822
    Rate  	                       144 		      40 		         5 		      (5) 		     26 		      (2) 	   208 		      (76) 	

     NET INCREASE																
      (DECREASE)               $ 	586 	    $	145 	     $ 	(59) 	  $ 	102 	    $ 	63 	    $ 	(9) 	$ 	828 	    $1,746
	
<FN>
<F12>
   * Taxable equivalent basis
</FN>																
</TABLE>


LIQUIDITY AND INTEREST  RATE  SENSITIVITY  MANAGEMENT

	The primary objective of asset/liability management at the Bank
is to achieve reasonable stability in net interest income
throughout interest rate cycles.  This objective is achieved by
monitoring the relationship of rate sensitive earning assets to
rate sensitive interest bearing liabilities (interest rate
sensitivity) which is the principal factor in determining the
effect that fluctuating interest rates will have on future net
interest income.  Rate sensitive earning assets and interest
bearing liabilities are those which can be repriced to current
market rates within a defined time period.  The following table,
Rate Sensitivity of Earning Assets and Interest Bearing
Liabilities, shows the Bank's rate sensitive position at
December 31, 1995, as measured by gap analysis (the difference
between the earning asset and interest bearing liability amounts
scheduled to be repriced to current market rates in subsequent
periods).

	As a policy, budgeted financial goals are monitored on a
monthly basis by the Asset/Liability Committee where the actual
dollar change in net interest income given different interest
rate movements is reviewed.  A dollar change in net interest
income for a twelve month period of less than 3% of net interest
income given a two hundred basis point shift in interest rates
is considered an adequately flexible position.  The net interest
margin, on a tax equivalent basis, at December 31, 1995,  1994,
and 1993 was 4.79%, 4.68%,  and 4.58% respectively.

<PAGE>

          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                        AND RESULTS OF OPERATIONS 

LIQUIDITY AND INTEREST  RATE  SENSITIVITY  MANAGEMENT (Continued)

TABLE - Rate Sensitivity of Earning Assets and Interest Bearing
Liabilities 										
<TABLE>
<CAPTION>
(Dollars in Thousands) 										
                                   		3 Months 		     3-6      	 	6-12  	 	  Over 1 		
As of December 31, 1995 		           or Less      		Months 	   	Months  	 	  Year  		      Total 
  <S>                                <C>          <C>          <C>          <C>          <C>
Earning assets 										
  Loans and leases, net of unearned 	$ 	64,615 	  $ 	43,285 	  $ 	72,506 	  $	111,525 	  $	291,931 
  Taxable investment securities 		      12,715 		    11,027 		    30,164		     42,611 		    96,517 
  Tax-exempt investment securities 		      986 		     1,200 		     1,060		     39,169 		    42,415 
										
      Total earning assets 		           78,316 		    55,512 		   103,730 		   193,305 	  $	430,863 

Interest-bearing liabilities 										
  NOW and money market accounts 		      35,739 	  		                          100,555    $	136,294 
  Savings 								                                                             34,133 		    34,133 
  Time 		                               42,682 		    34,082 		    46,903 		    18,671 		   142,338 
  Time over $100,000 		                  8,526 		     8,055 		     9,703 		     4,310 		    30,594 
  Other short-term debt 		              11,955 		 		 		 		                                  11,955 
										
      Total interest bearing 
        liabilities 		                  98,902 		    42,137 		    56,606		    157,669 	  $	355,314 

Noninterest bearing, net 								                                             (75,549) 		

Net asset/liability funding gap 		     (20,586) 		   13,375 		    47,124		    (39,913) 		

Cumulative net asset/liability 
  funding gap 	                      $ (20,586) 	 $ 	(7,211) 	 $ 	39,913	   $ 	  - 		

<FN>
<F13>
Available-for-sale and held-to-maturity securities were combined
in the taxable investment securities category for purposes of
this table.
</FN>
</TABLE>

CAPITAL RESOURCES, CAPITAL, AND DIVIDENDS

	Historically, internal growth has financed the capital needs of
the Bank.  At December 31, 1995, the Corporation had a ratio of
average capital to average assets of 10.08%.  This compares to a
ratio of average capital to average assets of 9.25% at December
31, 1994, and 8.9% at December 31, 1993.

	Cash dividends paid in 1995 were 10.0% more than those paid in
1994.  The dividend to net income ratio was 20%.  Additional
dividends of approximately $13.5 million to the Corporation
could have been declared by the subsidiary bank without
regulatory agency approval.  The Corporation plans to maintain
or increase the payout ratio while continuing to maintain a
capital to asset ratio reflecting financial strength and
adherence to regulatory guidelines.

	Regulatory risk-adjusted capital adequacy standards were
strengthened during 1992.  Equity capital (net of certain
adjustments for intangible assets and investments in
non-consolidated subsidiaries) and certain classes of preferred
stock are considered Tier 1 ("core") capital.  Tier 2 ("total")
capital consists of core capital plus subordinated debt, some
types of preferred stock, and varying amounts of the Allowance
for Possible Loan Losses.  The minimum standard for a "well
capitalized" bank is a risk-based core capital ratio of 6%, a
risk-based total capital ratio of 10%, and a core capital to
average total assets of 5%.

	As of December 31, 1995, the Bank's core and total risk-based
ratios were 16.8% and 17.7% respectively.  One year earlier, the
comparable ratios were 16.2% and 17.1%, respectively.  At year
end 1995, the Bank had a ratio of average core equity to total
average assets of 9.9%, up slightly from 9.0% at year end 1994.

<PAGE>


          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                          AND RESULTS OF OPERATIONS 

RESULTS OF OPERATIONS

Interest Income

	Total interest income increased 11.9% in 1995 compared to a
7.3% increase in 1994 and an decrease of .4% in 1993.  Interest
and fees earned on loans increased 22.4% in 1995 compared to an
8.3% increase in 1994 and a 1.4% decrease in  1993.  Interest
earned on investment securities and other investments decreased
10.9% in 1995 due to the decrease in volume compared to a 5.3%
increase in 1994 and a 1.9% increase in 1993.

Interest Expense

	Total interest expense increased 19.9% in 1995 compared to a
6.9% increase in 1994 and a 10.0% decrease in 1993.  The net
interest margin (tax equivalent net interest income divided by
average earning assets) increased in 1995 to 4.8% compared to
4.7% in 1994 and 4.6% in 1993 as indicated in the LIQUIDITY AND
INTEREST RATE SENSITIVITY MANAGEMENT section above.

	Net interest income on a fully taxable equivalent basis is
influenced primarily by changes in:  (1) the volume and mix of
earning assets and sources of funding; (2) market rates of
interest, and (3) income tax rates.  The impact of some of these
factors can be controlled by management policies and actions. 
External factors also can have a significant impact on changes
in net interest income from one period to another.  Some
examples of such factors are: (1) the strength of credit demands
by customers; (2) Federal Reserve Board monetary policy, and (3)
fiscal and debt management policies of the federal government,
including changes in tax laws. 


Noninterest Income and Expense

	Noninterest income increased 14.9% during 1995 versus a 1.6%
increase in 1994 and a 12.0% increase in 1993.  The new check
card generates fee income from the clearing agent for the
electronic transaction even though no service fee is charged to
Bank customers for its use.  This "Impact" of our new technology
contributed to the 16.4% increase in service fees for deposit
accounts in 1995.  Income from fiduciary services provided in
the Bank's Trust Department remained strong contributing 27.4%
of noninterest income.

	Noninterest expenses, excluding the provision for possible loan
losses, increased 6.2% in  1995 compared to a 5.4% increase in
1994 and a 9.3% increase in 1993.  Increased productivity
fostered by our technology improvements as the learning curve
diminished and cost control efforts contributed to this
improvement.  Included in this category is Federal Deposit
Insurance Corporation (FDIC) insurance premiums at the rate
established for "well capitalized" institutions.  This expense
was $499,709 in 1995 compared to $890,646 in 1994, a 43.9-%
reduction.  Please refer to the discussion in the CAPITAL
RESOURCES, CAPITAL, AND DIVIDENDS section above for more
information concerning the bank's capitalization.


Provision for Possible Loan Losses

	The provision for possible loan losses, representing amounts
charged against operating income, increased 1.5% in 1995
compared to a 40.4% increase in 1994 and a 44.1% decrease in
1993. Management regularly monitors the allowance for possible
losses and considers it to be adequate.  Please refer to Note 1
in the NOTES TO CONSOLIDATED FINANCIAL  STATEMENTS that are
included elsewhere in this material for further discussion of
the adequacy of the allowance.  The tables on the next page
summarize average loan balances and reconciliation of the
allowance for loan losses for each year.  Additions to the
allowance, which have been charged to operating expenses, are
also disclosed.

<PAGE>

              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS 

 Provision for Possible Loan Losses (Continued)

	The next tables present any risk elements in the loan portfolio
and include all loans management considers to be potential
problem loans.  Management does not believe that there is a
concentration of loans to a multiple number of borrowers engaged
in similar activities.
<TABLE>
<CAPTION>
                                                            		    				December 31 				
                                              		1995      		1994      	 	1993      	 	1992     	 	1991  
                                                     				    		(Dollars  In Thousands) 				
  
<S>                                          <C>         <C>          <C>          <C>          <C>
Average amount of loans outstanding 	        $	276,166   $	247,791 	  $	233,608 	  $	215,158 	  $	182,561 

Balance of allowance for possible loan 										
  losses at beginning of year 	              $  	2,342 	 $  	2,024 	  $  	2,254	   $ 	 1,917 	  $  	1,818 
Loans charged-off: 										
  Loans secured by real estate 		                   15 		      135 		       396 		       245		        329 
  Commercial and industrial loans 		               170 		       42 		       222 		       124		        192 
  Individuals 		                                   371 		      246 		       230 		       249 		       249 
      TOTAL  LOANS CHARGED OFF 		                  556 		      423 		       848 		       618		        770 
Recoveries of loans previously charged off: 										
   Loans secured by real estate 		                  97 		        9 		        56 		         3 		       - 
   Commercial and industrial loans 		               14 		       36 		        52 		        80 		        56 
   Individuals 		                                  111 		       36 		        40 		        32 		        33 
      TOTAL RECOVERIES 		                          222 		       81 		       148 		       115 		        89 
        NET  LOANS CHARGED-OFF 		                  334 		      342 		       700 		       503		        681 
Provision charged to operating expenses 		         670 		      660 		       470		        840 		       780 
       BALANCE OF ALLOWANCE FOR POSSIBLE 
        LOAN LOSSES AT END OF YEAR 	         $ 	 2,678 	 $ 	 2,342 	  $ 	 2,024 	  $  	2,254 	  $ 	 1,917 

Ratio of net charge-offs during the 										
  period to average loans outstanding 		         0.12% 		    0.14% 		     0.30%		      0.23% 		     0.37% 

</TABLE>
										

	Loans having recorded investments of $5.8 million at December
31, 1995, have been identified as impaired in accordance with
the provisions of SFAS 114.  They represent 2% of gross loans. 
Commercial loans comprised $.326 million of the total, with
loans secured by real estate accounting for $4.7 million and
installment loans $.800 million.  The gross interest income that
would have been recorded during 1995 if the loans had been
current in accordance with their original terms and had been
outstanding throughout the period or since origination, if held
for part of the period, was $365, $193, and $189 thousand for
the years ended December 31, 1995, 1994, and 1993 respectively. 
Impaired loans are charged-off once management has exhausted all
efforts to collect the loan.  Please refer to Note 1 and Note 3
in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS that are
included elsewhere in this material for more information on the
Bank's policy regarding loan impairment.

	Inherent in the business of providing financial services is the
risk involved in extending credit.  Management believes the
objective of a sound credit policy is to extend quality loans to
customers while reducing risk affecting shareholders' and
depositors' investments.  Risk reduction is achieved through
diversity of the loan portfolio as to type, borrower, and
industry concentration as well as sound credit policy guidelines
and procedures.  

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS 
<TABLE>

FIVE YEAR COMPARISON
<CAPTION>
      		                                    1995  	  	   1994        		1993         		1992        		 1991  
 
<S>                                     <C>           <C>           <C>            <C>            <C>
INTEREST INCOME 										
 Interest and fees on loans        	    $	25,857,982 	$	21,130,914 	$	19,518,742 	 $	19,791,548 	 $	19,571,295 
										
 Income on investment securities 										
   Taxable interest 		                     6,179,492   		7,012,626   		6,925,404		    6,898,114 		   5,218,446 
   Exempt from federal income tax 		       2,156,813 		  2,184,666   		1,857,168 		   1,825,869 		   1,828,738 
   Dividends 		                              177,790 		    204,948 		     72,054 		     110,874		      150,823 
										
                                         		8,514,095 		  9,402,240 		  8,854,626 		   8,834,857		    7,198,007 

 Other interest income 		                    121,492 		    284,384 		    347,287		      195,744 	      279,165 

    TOTAL INTEREST INCOME 		              34,493,569 		 30,817,538		  28,720,655 		  28,822,149 		  27,048,467 

INTEREST EXPENSE  										
  Interest on deposits 		                 15,247,875 		 12,770,618 		 11,998,235		   13,329,557 		  14,212,771 
  Interest on other short term  
   borrowings 		                             174,370 		     93,286		      38,339 		      47,449 		      63,994 
										
   TOTAL INTEREST EXPENSE 		              15,422,245 		 12,863,904		  12,036,574 		  13,377,006 		  14,276,765 

   NET INTEREST INCOME 		                 19,071,324 		 17,953,634  		16,684,081 		  15,445,143 		  12,771,702 

PROVISION FOR POSSIBLE LOAN LOSSES 		        670,000 		    660,000 		    470,000		      840,000 		     780,000 
   NET INTEREST INCOME AFTER 										
    PROVISION FOR LOAN LOSSES 		          18,401,324  		17,293,634 		 16,214,081 		  14,605,143 		  11,991,702 

NONINTEREST  INCOME 										
  Trust department income 		               1,251,642 		  1,249,359 		    863,952		      753,239 		     603,701 
  Service fees on deposit accounts 		      2,697,332 		  2,317,992		   2,206,026 		   2,123,096 		   1,893,355 
  Other service fees, commissions, 										
   and fees 		                               300,407 		    336,758 		    509,009 		     401,618		      237,755 
  Other operating income 		                  322,634 		    319,466 		    315,108		      191,363 		      91,440 
  Available for sale securities 										
   gains (losses) 		                           1,182 		   (243,690) 		    23,896		       28,434 		      15,862 

   TOTAL NONINTEREST  INCOME 		            4,573,197 		  3,979,885		   3,917,991 		   3,497,750 		   2,842,113 

NONINTEREST  EXPENSES 										
  Salaries and employee benefits 		        6,620,827 		  6,247,706		   5,686,965 		   5,283,086 		   4,407,072 
  Net occupancy expense 		                 1,279,434 		  1,190,678 		  1,070,971		      984,650 		     797,466 
  Furniture and equipment expense 		       1,382,769 		  1,069,856		     889,848 		     801,453 		     935,821 
  Loss on other real estate 		                50,724 		      4,000 		    103,122		      312,064 		      48,398 
  Other operating expenses 		              5,006,292 		  4,996,107		   4,903,949 		   4,460,696 		   3,572,881 
										
   TOTAL NONINTEREST EXPENSES 		          14,340,046		  13,508,347 		 12,654,855 		  11,841,949 		   9,761,638 

      INCOME BEFORE PROVISION 										
       FOR INCOME TAXES 		                 8,634,475		   7,765,172 		  7,477,217 		   6,260,944 		   5,072,177 

PROVISION FOR INCOME TAXES 		              2,518,769 		  2,203,746 		  2,220,965		    1,768,840 		   1,341,130 

        NET INCOME  	                   $ 	6,115,706 	$ 	5,561,426 	$ 	5,256,252 	 $ 	4,492,104 	 $ 	3,731,047 

EARNINGS PER COMMON SHARE  										
(1,400,000 outstanding shares) 	        $ 	     4.37 	$ 	     3.97 	$ 	     3.75	  $ 	     3.21 	 $ 	     2.67 

</TABLE>

<PAGE>

                    FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                    AND RESULTS OF OPERATIONS 

Net Income

	Net income was 10.0% higher in 1995 than in 1994, 5.8% higher
in 1994 than in 1993, and 17.0% higher in 1993 than in 1992.  As
indicated by the table, Comparative Data, the Corporation's
return on average assets was 1.32% in 1995, 1.23% in 1994, and
1.25% in 1993.  The return on equity remains strong at 13.95% in
1995, 14.11% in 1994, and 14.93% in 1993.

Net Interest Margin

	The bottom graph on the last page of this document illustrates
an increasing net interest margin  during the five years shown. 
As mentioned in the LIQUIDITY AND INTEREST RATE  SENSITIVITY 
MANAGEMENT section earlier, the Bank's Asset/Liability Committee
monitors interest rate sensitivity monthly.  Through the use of
simulation analysis to estimate future net interest income under
 varying interest rate conditions, the committee can  establish
pricing and maturity strategies to maintain that steady net
interest margin.  The simulation analysis uses the repricing
information indicated in the table, Rate Sensitivity of Earning
Assets and Interest Bearing Liabilities, and adjusts the current
balance sheet to reflect the impact of different interest rate
movements.

EFFECTS OF ECONOMY

	Current economic conditions have had a definite effect on the
reported financial condition and results of operation.  The
stock market closed out its worst performance and the bond
market experienced its largest calendar year decline in modern
history during 1994.  However, the market was much stronger
during 1995 experiencing considerable gains compared to 1994. 
Many Bank customers had used transaction and limited transaction
interest bearing accounts as holding vehicles to watch rate
movements during 1994 trying to determine the best time to lock
in a rate on a longer term product.  During 1995, many of these
customers decided that the time was right and transferred
investments to longer term certificate of deposits from
transaction and limited transaction interest bearing accounts. 
As Bank customers felt more comfortable with the economy, loan
demand increased strongly resulting in a shift of  Bank earning
assets from investment securities to higher yielding loans. 
Historically, noninterest bearing demand deposits and regular
savings accounts have provided a relatively fixed rate source of
funding for earning assets.  This was illustrated again in 1995
and 1994 as these fixed rate and noninterest bearing deposits
continued to provide a relatively stable cost from this funding
source.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE FINANCIAL
STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD

	The Financial Accounting Standards Board has issued two
standards that have not been adopted by the Bank but are
required to adopted after December 31, 1995.  The Statement of
Financial Accounting Standards No. 121 (SFAS 121), "Accounting
for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed Of" establishes guidance on when to
recognize and how to measure impairment losses on long-lived
assets and certain identifiable intangibles.  The statement also
offers guidance on how to value long-lived assets that
management has committed to a plan to dispose of the assets.  An
asset that an entity will hold and use should be reviewed for
impairment whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable.  In such
situations, an impairment loss is recognized if the sum of
undiscounted future cash flows expected to be generated by the
asset is less than the carrying amount of the asset. 
Measurement of the impairment loss, however, is based on the
fair value of the asset.  Management does not believe this
statement will have any material effect on future income.

	The second standard,  Statement of Financial Accounting
Standards No. 122 (SFAS 122), "Accounting for Certain Mortgage
Banking Activities" requires recognition of rights to service
mortgage loans for others as separate assets, regardless of how
the servicing rights are acquired.  This Statement prescribes  a
single procedure for the capitalization of those rights acquired
either through loan origination or through purchase transactions
where a mortgage banking enterprise buys the servicing rights. 
Mortgage servicing rights are to be assessed for impairment


<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS 

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE FINANCIAL
STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD (Continued)

based on their fair value.  Impairment is recognized through a
valuation allowance for each impaired group of mortgage
servicing rights.  Rights capitalized after adoption of this
statement should be grouped based on the risk characteristics of
the underlying loans.  Management does not believe this
statement will have any material effect on future income.

SHAREHOLDER  INFORMATION

	The 1,400,000 shares of common stock of First Farmers &
Merchants Corporation outstanding at December 31, 1995, had a
market value of $75.6 million and were held by 1,514
identifiable individuals located mostly in the market area.  A
small number of additional shareholders are not identified
individually since some bank nominees, including the bank's
Trust Department, are listed as single owners when, in fact,
these holdings represent large numbers of shareholders.  No
single shareholder's ownership exceeded five percent at year end.

	There is no established public trading market for the stock. 
The following table lists the high and low price of the
Corporation's common stock, as well as the semiannual dividend
paid per share, in each of the last three years.

<TABLE>

                                             SHAREHOLDER INFORMATION
<CAPTION>
                                               			Price Range of  				  Dividend 
                                                			Common Stock 	   	 		  Paid 
                                          			High       	 	Low 	        Per Share 

              <S>    <S>                  <C>            <C>            <C>
                    	First quarter 	      $	36.00 	      $	36.00 	      $ 	
                    	Second quarter 		      37.00        		37.00         		0.36 
              1993  	Third quarter 		       38.00 		       37.00 		
                    	Fourth quarter 		      38.00        		38.00         		0.37 

                                                                        $  0.73
 	 	 	 	 	 	 	 
                    	First quarter 	      $	40.00 	      $	36.00 	      $ 	
                    	Second quarter 		      42.00        		37.00 		        0.39 
              1994  	Third quarter 		       43.00 		       37.00 		
                    	Fourth quarter 		      45.00 		       38.00 		        0.41 

                                                                  						$ 	0.80  

                    	First quarter 	      $	45.00 	       $	45.00      	$ 	
                    	Second quarter 		      48.00 		        45.00 		       0.43 
              1995  	Third quarter 		       50.00 		        48.00 		
                    	Fourth quarter 		      54.00 		        50.00        		0.45 

                                                                  						$ 	0.88 
</TABLE>

<PAGE>							

                   FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                AND RESULTS OF OPERATIONS 

<TABLE>
                                      COMPARATIVE DATA 										
                                  (In Thousands of Dollars) 										

                             		1995     		1994      		1993      		1992     		 1991  

<S>                        <C>         <C>         <C>         <C>         <C>
AVERAGE ASSETS 	           $	463,739 	 $	451,953 	 $	420,760 	 $	381,379  	$	303,851 

AVERAGE LOANS (NET) 	      $	276,166 	 $	247,791 	 $	233,609  	$	215,158  	$ 182,561 

AVERAGE DEPOSITS 	         $	409,489 	 $	404,412 	 $	378,782 	 $	343,128	  $	268,495 

RETURN ON EQUITY 										
  AND ASSETS 										
 Return on average assets 		   1.32% 		    1.23% 		    1.25% 		    1.18%		     1.23% 

 Return on beginning equity 		13.95% 		   14.11% 		   14.93%    		14.21% 		   13.01% 
 Average equity to  										
    average assets 		         10.08% 		    9.25% 		    8.90% 		    8.76%		     9.94% 

COMMON DIVIDEND 										
  PAYOUT RATIO 										
 Earnings per share 	      $ 	  4.37 	  $ 	 3.97 	  $ 	 3.75 	  $ 	 3.21 	 $	   2.67 

 Cash dividends per share 	$ 	  0.88 	  $ 	 0.80   	$ 	 0.73 	  $  	0.64	  $ 	  0.58 

 Ratio 		                       20% 		      20% 		      19% 		      20% 		      22% 
</TABLE>
										
<TABLE>

                             NET INTEREST MARGIN
<CAPTION>
   	                          	1995  		    1994  		     1993  		    1992  		   1991  
                                             (In Thousands of Dollars) 								

<C>                        <C>          <C>          <C>         <C>        <C>
INTEREST INCOME 										
 (TAX EQUIVALENT)  	       $ 	35,626 	  $ 	32,039 	  $ 	29,465 	 $ 	29,564 	$ 	27,736 

INTEREST EXPENSE 		           15,422 		    12,864 		    12,037 		   13,377 		  14,277 


                          	$ 	20,204 	  $ 	19,175 	  $ 	17,428 	 $ 	16,187 	$ 	13,459 


NET INTEREST MARGIN* 		        4.79% 		     4.68% 		     4.58% 		    4.67% 		   4.84% 

<FN>
<F14>
*Net interest margin is net interest income (tax equivalent)
divided by average earnings assets.
</FN>
</TABLE>

	In summary, the graphs on the following page illustrate the
presentation in the preceding pages, a unique perspective on the
internal structures of the Corporation and the Bank.  Each
shareholder can be proud of this performance.  Our shareholders
are the real support of our organization.  Thank you for your
help and support.


Nine color graphs were included on the last page of this report.
One - The first graph used the information presented above in the Five
Year Comparison table to illustrate the growth in net income.
Two - The second graph used information from the Comparative Data on the
previous page to illustrate a return on average assets of 1.18% and above
for the last five years.
Three - The third graph used information from the Comparative Data on the
previous page to illustrate a return on beginning stockholders' equity 
over 13% for the last five years.
Four - The fourth graph used information from the Comparative Data on the 
previous page to illustrate earnings per share and cash dividends per share 
for the last five years.
Five - The fifth graph used information from the Consolidated Statements of
Stockholders' Equity to illustrate the growth in stockholders' equity for
the last five years.
Six - The sixth graph used information from the Consolidated Balance Sheets
to illustrate the growth in net loans for the last five years.
Seven - The seventh graph used information from the Consolidated Balance
Sheets to illustrate the growth in deposits for the last five years.
Eight - The eighth graph used information from the Consolidated Balance Sheets
to illustrate the growth in total assets for the last five years.
Nine - The nineth graph used information from the Five Year Comparison table
above to illustrate interest income, interest expense and net interest income
for the last five years. 


Item 6.  Selected Financial Data.

The selected financial data is incorporated herein by reference
to Consolidated Financial Statements, Notes to Consolidated
Financial Statements, and Management's Discussion and Analysis
of Financial Condition and Results of Operation which are
attached hereto as Exhibit 13.


<TABLE>
              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                         CONSOLIDATED BALANCE SHEETS                             
                         DECEMBER 31, 1995 and 1994                           
<CAPTION>
ASSETS 		                                    1995   		             1994  

<S>                                          <C>                 <C>
Cash and due from banks 	                    $ 	31,281,706       $ 	26,735,526 
Securities 				
 Available for sale (amortized cost 
  $10,875,527 and $12,646,156 
  respectively) 		                              11,269,006 		       12,565,226 
 Held to maturity (fair value
  $128,829,961 and $138,892,331  
  respectively) 		                             127,662,682 		      143,061,031 
    Total securities - Note 2 		               138,931,688       		155,626,257 
Loans, net of unearned income - Note 3   	  	  291,930,311       		262,694,120 
 Allowance for possible loan losses
  - Note 4 		                                   (2,678,386)       		(2,342,290) 
    Net loans 		                               289,251,925 		      260,351,830 
Bank premises and equipment, at cost less
 allowance for depreciation and 
 amortization - Note 5   		                      6,397,936 		        6,193,080 
Other assets 		                                 11,171,993 		       11,887,492 
				
   TOTAL ASSETS 	                            $ 477,035,248 	     $	460,794,185 

LIABILITIES 				

Deposits 				
 Noninterest-bearing 	                       $ 	67,420,536 	     $ 	61,845,878 
 Interest-bearing (including  
 certificates of deposit over $100,000: 				
 1995 - $30,593,803; 1994 - $26,169,831) 	    	343,357,525 		      343,306,545 
    Total deposits 		                          410,778,061 		      405,152,423 
 Federal funds purchased 		                     10,000,000 		        7,000,000 
 Dividends payable 		                              630,000 		          574,000 
 Other short term liabilities 		                 1,955,000 		          600,000 
 Accounts payable and accrued liabilities 		     4,675,712 		        3,639,636 
				
    TOTAL LIABILITIES 		                       428,038,773         416,966,059 

COMMITMENTS AND CONTINGENCIES - Notes 7 and 9 				
STOCKHOLDERS' EQUITY 				
 Common stock - $10 par value, authorized 
  4,000,000 shares; 1,400,000 shares issued 
  and outstanding - Note 1                    		14,000,000 		       14,000,000 
 Retained earnings - Note 6 		                  34,760,389 	       	29,876,683 
 Net unrealized loss on available-for-sale 
  securities, net of tax 		                        236,086 		          (48,557) 
    TOTAL STOCKHOLDERS' EQUITY 		               48,996,475 		       43,828,126 

    TOTAL LIABILITIES AND STOCKHOLDERS' 
     EQUITY 	                                $	477,035,248 	     $ 460,794,185 
</TABLE>

<TABLE>
                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                 
                     YEARS ENDED DECEMBER 31, 1995, 1994, and 1993                   
<CAPTION>
                                                              						Net Unrealized 		
			   		                                                           	Gain (Loss) On 		
                                    		Common  		    Retained 		    Available-for-sale 		
                                    		Stock   	    	Earnings    	    	Securities   	   	   Total 

<S>                               <C>             <C>                <C>               <C>
BALANCE AT JANUARY 1, 1993 	      $ 	7,000,000 	  $	28,201,005   	   $  	- 	           $	35,201,005 
Net income for the year 		               - 		        5,256,252 		        - 		             5,256,252 
Cash dividends declared, 
 $.73 per share 		                       - 		       (1,022,000) 		       - 		            (1,022,000) 
Net unrealized loss on mutual 
 fund investment 		                      - 		          (27,684) 		       -		                (27,684) 
								
BALANCE AT DECEMBER 31, 1993 		      7,000,000 		   32,407,573 		        -		             39,407,573 
Cumulative effect of change in
 accounting principle (net of
 deferred income taxes of 
 $171,405)  - Note 1 		                  - 		           27,684		       229,424 		           257,108 
Two-for-one stock split - Note 1 		  7,000,000 		   (7,000,000) 		       -		                  - 
Net income for the year 		               - 		        5,561,426 		        - 		             5,561,426 
Cash dividends declared, $.80 
 per share 		                            - 		       (1,120,000) 		       -		             (1,120,000) 
Net unrealized loss on available-
 for-sale securities, net of tax 		      - 		            - 		         (277,981) 		         (277,981) 
								
BALANCE AT DECEMBER 31, 1994 		     14,000,000 		   29,876,683		       (48,557) 		       43,828,126 
Net income for the year 		               - 		        6,115,706 		        - 		             6,115,706 
Cash dividends declared, $.88 
 per share 		                            - 		       (1,232,000) 		       -		             (1,232,000) 
Net unrealized gain on available-
 for-sale securities, net of tax		       - 		            - 		          284,643 		           284,643 

BALANCE AT DECEMBER 31, 1995 	    $	14,000,000 	  $	34,760,389 	     $	236,086 	       $	48,996,475 

<FN>
<F1>
The accompanying notes are an integral part of the consolidated
financial statements. 								
</FN>
</TABLE>

<PAGE>
<TABLE>
                   FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                           CONSOLIDATED STATEMENTS OF INCOME                      
                     YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993                   
<CAPTION>
                                         		1995  		       1994  		       1993  

INTEREST INCOME 						
 <S>                                  <C>            <C>            <C>
 Interest and fees on loans 	         $	25,857,982  	$	21,130,914 	 $	19,518,742 

 Income on investment securities 						
  Taxable interest 		                    6,179,492 		   7,185,169 		   6,925,404 
  Exempt from federal income tax 		      2,156,813 		   2,184,666 		   1,857,168 
  Dividends 		                             177,790      		204,948       		72,054  
                                       		8,514,095 		   9,574,783 	   	8,854,626 

 Other interest income 	                  	121,492 		     111,841 		     347,287 

    TOTAL INTEREST INCOME 		            34,493,569 		  30,817,538		   28,720,655 

INTEREST EXPENSE  						
 Interest on deposits 		                15,247,875 		  12,770,618 		  11,998,235 
 Interest on other short term 
  borrowings 		                            174,370 		      93,286		       38,339 
						
    TOTAL INTEREST EXPENSE 		           15,422,245 		  12,863,904		   12,036,574 

    NET INTEREST INCOME 		              19,071,324 		  17,953,634		   16,684,081 

PROVISION FOR POSSIBLE LOAN
 LOSSES - Note 4 		                        670,000 		     660,000		      470,000 

    NET INTEREST INCOME AFTER 						
     PROVISION FOR LOAN LOSSES 		       18,401,324		   17,293,634 		  16,214,081 

NONINTEREST  INCOME 						
 Trust department income 		              1,251,642 		   1,249,359 		     863,952 
 Service fees on deposit accounts 		     2,697,332 		   2,317,992		    2,206,026 
 Other service fees, commissions,
  and fees 		                              300,407		      336,758 		     509,009 
 Other operating income 		                 322,634 		     319,466 		     315,108 
 Available for sale securities 
  gains (losses) 		                          1,182		     (243,690) 		     23,896 
						
    TOTAL NONINTEREST  INCOME 		         4,573,197 		   3,979,885		    3,917,991 

NONINTEREST  EXPENSES 						
 Salaries and employee benefits 		       6,620,827 		   6,247,706		    5,686,965 
 Net occupancy expense 		                1,279,434 		   1,190,678 		   1,070,971 
 Furniture and equipment expense 		      1,382,769 		   1,069,856		      889,848 
 Loss on other real estate 		               50,724 		       4,000 		     103,122 
 Other operating expenses 		             5,006,292 		   4,996,107		    4,903,949 

    TOTAL NONINTEREST EXPENSES 		       14,340,046		   13,508,347 		  12,654,855 
						
    INCOME BEFORE PROVISION FOR
     INCOME TAXES 		                     8,634,475 		   7,765,172		    7,477,217 

PROVISION FOR INCOME TAXES - Note 8 		   2,518,769 		   2,203,746		    2,220,965 

    NET INCOME  	                     $ 	6,115,706 	 $ 	5,561,426 	 $ 	5,256,252 

EARNINGS PER COMMON SHARE - Note 1 						
 (1,400,000 outstanding shares) 	     $ 	     4.37 	 $ 	     3.97 	 $ 	     3.75 

<FN>						
<F2>
The accompanying notes are an integral part of the consolidated
financial statements. 						
</FN>
</TABLE>

<PAGE>

<TABLE>
                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                      CONSOLIDATED STATEMENTS OF CASH FLOWS                           
                  YEARS ENDED DECEMBER 31, 1995, 1994, and 1993                   
<CAPTION>
		                                   1995     		      1994            		1993  

OPERATING ACTIVITIES 						

 <S>                            <C>              <C>               <C>
 Net income   	                 $ 	6,115,706 	   $ 	5,561,426     	$ 	5,256,252 
 Adjustments to reconcile net
  income to net cash provided
  by operating activities 						
  Excess (deficiency) of 
   provision for possible 						
   loan losses over net 
   charge offs 		                    336,096 	      	318,639	         	(230,083) 
  Provision for depreciation
   and amortization of 
   premises and equipment 		         645,816 		      589,045 		         591,486 
  Amortization of deposit 
   base intangibles 		               168,020		       168,020 		         168,020 
  Amortization of investment
   security premiums, net of
   accretion of discounts 		         641,104 		      678,968		          747,224 
  Increase in cash surrender
   value of life insurance
   contracts 	                      	(65,936) 		     (75,287) 		       (103,175) 
  Deferred income taxes 		          (233,403) 		    (163,907) 		         24,080 
  (Increase) decrease in 						
   Interest receivable  		          (255,109) 	    	(992,872) 	        	364,303 
   Other assets  	                  	912,162 		      344,572 		      (1,171,225) 
  Increase (decrease) in 						
   Interest payable 	               	577,137 		      222,605 		        (206,742) 
   Other liabilities 		              458,939 		      287,975 		          38,024 
						
    TOTAL ADJUSTMENTS 		           3,184,826 		    1,377,758		          221,912 

    NET CASH PROVIDED BY 
     OPERATING ACTIVITIES        		9,300,532 		    6,939,184 		       5,478,164 

INVESTING ACTIVITIES 						

 Proceeds from maturities, 
  calls, and sales of 
  available-for-sale
  securities 		                    7,306,453 		   25,152,051 		           - 
 Proceeds from maturities and
  calls of held-to-maturity
  securities 		                   18,848,992 		    5,092,000 		      30,497,983 
 Purchases of investment 
  securities 						
  Available-for-sale 		           (3,168,200) 		 (16,942,994) 		          - 
  Held-to-maturity 		             (6,459,372) 		 (19,495,987)		     (39,789,407) 
 Net increase in loans 		        (29,236,191) 	 	(18,778,658)     		(18,710,584) 
 Purchases of premises and
  equipment 		                      (850,672) 		    (418,586)		        (222,279) 
 Proceeds from redemption of
  annuities and life insur-
  ance contracts 						                                                 229,275 
 Purchase of single premium
  life insurance contracts 		          - 		            - 		            (730,000) 

    NET CASH USED BY 
     INVESTING ACTIVITIES      		(13,558,990) 		 (25,392,174) 		    (28,725,012) 

FINANCING ACTIVITIES 						

 Net increase in noninterest-
  bearing and interest-bearing
  deposits  		                     5,625,638      16,217,348	       	18,384,169 
 Net increase (decrease) in
  short term borrowings 		         4,355,000		     7,000,000 		         (77,537) 
 Cash dividends                 		(1,176,000) 	  	(1,071,000) 		       (966,000) 

    NET CASH PROVIDED BY
     FINANCING ACTIVITIES        		8,804,638 		   22,146,348 		      17,340,632 

    INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS        		4,546,180 		    3,693,358 		      (5,906,216) 

CASH AND CASH EQUIVALENTS 
 AT BEGINNING OF YEAR 		          26,735,526		    23,042,168 		      28,948,384 

CASH AND CASH EQUIVALENTS AT
 END OF YEAR 	                  $	31,281,706 	   $	26,735,526 	    $ 23,042,168 

<FN>
<F3>
The accompanying notes are an integral part of the consolidated
financial statements.
</FN>
</TABLE>

<PAGE>

              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

		First Farmers and Merchants Corporation (the Corporation) was
incorporated on March 31, 1982, as a Tennessee corporation.  On 
April 13, 1982, the Board of Directors of the Corporation
adopted a resolution to execute and deliver to the Board of
Governors of the Federal Reserve System an application pursuant
to Section 3(a)(1) of the Bank Holding Company Act of 1956, as
amended, for prior approval by the Board of action to be taken
by the Corporation which would result in its becoming a bank
holding company. 

 		As of December 31, 1995, the only subsidiary of the
Corporation was the Bank.  The Bank is a national banking
association which was organized in 1954 as a successor to a
state bank organized in 1909.  The Bank conducts a full-service
commercial banking business at its principal office at 816 South
Garden Street, Columbia, Tennessee and at thirteen (13)
branches:  High Street Branch, Northside Branch, Shady Brook
Mall Branch, Hatcher Lane Branch, and Campbell Plaza Branch in
Columbia; Mt. Pleasant Branch in Mt. Pleasant; Spring Hill
Branch in Spring Hill; Lawrenceburg Branch in Lawrenceburg;
Leoma Branch in Leoma; Loretto Branch in Loretto; Lewisburg
Branch in Lewisburg; Chapel Hill Branch in Chapel Hill; and
Centerville Branch in Centerville.  The Bank provides automatic
teller machine services in the Northfield Complex at the Saturn
location near Spring Hill, and in Columbia at the Tennessee Farm
Bureau and Columbia State Community College.

		The community service area of the Bank is comprised of Maury,
Lawrence, Marshall, Hickman, and adjacent counties.  Commercial
banking in the marketing area served by the Bank is highly
competitive.  Although the Bank is ranked as the largest bank in
the area, in terms of total deposits, the Bank faces substantial
competition from ten (10) other banks, three (3) savings and
loan associations, and several credit unions located in the
marketing area.

Accounting Policies

		The accounting principles followed and the methods of applying
those principles conform with generally accepted accounting
principles and to general practices in the banking industry. 
The significant policies are summarized as follows.

Principles of Consolidation

		The accompanying consolidated financial statements present the
accounts of the Corporation and its wholly-owned subsidiary, the
Bank.  Material intercompany accounts and transactions have been
eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

		The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.

Cash and Due From Banks

		Included in cash and due from banks are legally  reserved
amounts which are required to be maintained on an average basis
in the form of cash and balances due from the Federal Reserve
Bank and other banks.  Average reserve requirements for the year
ended December 31, 1995, amounted to approximately $8.3 million.

Cash Equivalents

		Cash equivalents include cash on hand, cash due from banks,
and federal funds sold.  Federal funds are sold for one-day
periods.

<PAGE>

          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Securities

		Effective January 1, 1994, the Bank adopted Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting
for Certain Investments in Debt and Equity Securities."  In
accordance with the Statement, prior period financial statements
have not been restated to reflect the change in accounting
principle.  The cumulative effect of  the adoption was an
increase in stockholders' equity  of $257,108 (net of $171,405
in deferred income taxes) to reflect the net unrealized gains on
securities classified as available-for-sale that were previously
classified as held-to-maturity.  SFAS 115 establishes standards
of accounting and reporting for investments in equity securities
that have readily determinable fair values and all debt
securities.  Under the Statement, all such investments are
classified in three categories and accounted for as follows: 

		Debt securities that the Bank has the positive intent and
ability to hold to maturity are classified as held-to-maturity
and reported at amortized cost with premiums and discounts
recognized in interest income using the interest method over the
period to maturity.

		Debt and equity securities that are bought and held
principally for the purpose of selling them in the near term are
classified as trading securities and reported at fair value,
with  unrealized gains and losses included in earnings.

		Debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified
as available-for-sale securities and reported at fair value,
with unrealized gains and losses, net of tax,  excluded from
earnings and reported as a separate component of stockholders'
equity.  Gains and losses realized on the sale of
available-for-sale securities are determined using the specific
identification method.

		Declines in the fair value of individual available-for-sale
and held-to-maturity securities below their cost that are other
than temporary result in write-downs of the individual
securities to their fair value.  The related write-downs are
included in earnings as realized losses.

		On November 15, 1995, the Financial Accounting Standards Board
issued a guide for implementation of SFAS 115 which allowed a
bank to reassess the appropriateness of the classification of
all securities held at that date and account for resulting
reclassifications as a transfer until December 31, 1995. 
Reclassification from the held-to-maturity category that
resulted from this one-time reassessment would not call into
question the intent of a bank to hold other debt securities to
maturity in the future.  The Bank did not reclassify any debt
securities as a result of this one-time reassessment.

Loans

		Effective January 1, 1995, the Bank adopted Statement of
Financial Accounting Standards No. 114 (SFAS 114, as amended by
SFAS 118), "Accounting by Creditors for Impairment of a Loan". 
The statement specifies how allowances for credit losses related
to certain loans should be determined and addresses the
accounting for certain loans that are restructured in a troubled
debt restructuring.  A loan is considered impaired when it is
probable that an institution will be unable to collect all
amounts due (principal and interest) according to the
contractual terms of the loan agreement.  The Bank evaluates
smaller balance homogeneous loans collectively for impairment. 
Loans secured by one to four family residential properties,
consumer installment loans, and line of credit loans are
considered smaller-balance homogeneous loans.

		Interest on loans is computed daily based on the principal
amount outstanding.  Loan origination fees and related direct
costs are deferred and recognized as an adjustment of yield on
the interest method.  Interest accruals are discontinued when,
in the opinion of management, it is not reasonable to expect
that such interest will be collected.  Consequently, interest
accruals are discontinued on loans that are ninety days
past-due.  All loans

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Loans (Continued)

in non-accrual status and loans in the two most severe Loan
Review classifications are specifically evaluated for
impairment.  Interest income on loans in non-accrual status is
recognized only to the extent of the excess of cash payments
received over principal payments due.

		When a loan is collateral dependent, impairment is measured
based on the observable market price or the fair value of the
collateral.  For other loans, the amount of impairment is
measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate. 
Positive changes in the net present value of an impaired loan
will in no event be used to increase the value of a loan above
the amount of the loan.

	Other Real Estate

		Other real estate, which is included in other assets,
represents real estate acquired through foreclosure and is
stated at the lower of cost or fair value minus estimated cost
to sell.  If, at the time of foreclosure, the fair value of the
real estate is less than the Bank's carrying value of the
related loan, a write-down is recognized through a charge to the
allowance for possible loan losses, and the fair value becomes
the new cost for subsequent accounting.  If the Bank later
determines that the cost of the property cannot be recovered
through sale or use, a write-down is recognized by a charge to
operations.  When the property is not in a condition suitable
for sale or use at the time of foreclosure, completion and
holding costs, including such items as real estate taxes,
maintenance and insurance, are capitalized up to the estimated
net realizable value of the property.  However, when the
property is in a condition for sale or use at the time of
foreclosure. or the property is already carried at its estimated
net realizable value, any subsequent holding costs are expensed.
 Legal fees and any other direct costs relating to foreclosures
are charged to operations when incurred.

		The Bank's recorded value for other real estate was
approximately $482,945 at December 31, 1995, and $544,540 at
December 31, 1994.  

Allowance for Possible Loan Losses

	The allowance for possible loan losses is established by
charges to operations based on the evaluation of the impairment
of loans by Loan Review, the Special Assets Committee, and the
Credit Administrator.  Impairments in loans are charged to the
allowance account in the period such determination is made. 
Recoveries on loans previously charged off are credited to the
allowance account in the period received.  The adequacy of the
allowance for possible loan losses is evaluated quarterly in
conjunction with loan review reports and evaluations that are
discussed in a meeting with loan officers and loan
administration.

Premises and Equipment

		Premises and equipment are stated at cost, less accumulated
depreciation and amortization.  The provision for depreciation
is computed principally on an accelerated cost recovery method
over the estimated useful lives of the assets, which range as
follows:  buildings - 15 to 50 years and equipment - 3-33 years.
 Costs of major additions and improvements are capitalized. 
Expenditures for maintenance and repairs are charged to
operations as incurred.  Gains or losses from the disposition of
property are reflected in operations, and the asset accounts and
related allowances for depreciation are reduced. 

Trust Department Income

		Trust department income is recognized on the accrual basis in
the applicable period earned.

<PAGE>

             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Stock Split

		During 1994, the Corporation amended its corporate charter to
increase the number of authorized shares of its common stock
from 2,000,000 to 4,000,000 shares and on April 12, 1994, the
Corporation's stockholders approved a two-for-one split effected
in the form of a 100% stock dividend distributed May 30, 1994,
to shareholders of record on April 12, 1994.  In accordance with
State corporate legal requirements, the transaction was recorded
by a transfer from retained earnings to common stock in the
amount of $7,000,000 ($10 for each additional share issued). 
All per share and share data in the accompanying consolidated
financial statements and footnotes have been restated to give
retroactive effect to the transaction.

Income Taxes

		The companies file a consolidated federal income tax return.  
They adopted Statement of Financial Accounting Standards No. 109
(SFAS 109), "Accounting For Income Taxes", effective January 1,
1993.  SFAS 109 requires an asset and liability approach to
financial accounting and reporting for income taxes.  Deferred
income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected
to affect taxable income.

		Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. 
Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred
tax assets and liabilities.  The cumulative effect, as of
January 1, 1993, of this change in the method of accounting for
income taxes was negligible.

Intangible Assets

	Deposit base intangibles identified in merger transactions are
amortized over 42 to 70 months on the straight-line method. 
Total amortization expense charged to operations amounted to: 
1995 - $168,020;  1994 - $168,020;  and  1993 - $168,020.

Fair Value of Financial Instruments

		Statement of Financial Accounting Standards No. 107 (SFAS
107), "Disclosures about Fair Value of Financial Instruments",
requires all entities to disclose the estimated fair value of
its financial instrument assets and liabilities.  For the Bank,
as for most financial institutions, almost all of its assets and
liabilities are considered financial instruments as defined in
SFAS 107.  Many of the Bank's financial instruments, however,
lack an available trading market as characterized by a willing
buyer and willing seller engaging in an unforced, unforeclosed
transaction.  Therefore, significant estimations and present
value calculations  were used by the Bank for the purposes of
this disclosure.

<PAGE>


            FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2 - INVESTMENT SECURITIES

		The following tables reflect the amortized value and fair
value of investment securities.

<TABLE>

<CAPTION>
                            		      Amortized 		                Gross Unrealized 		 		         Fair 	
	                                    	Value 		               Gain           	   Loss 		        Value 	

December 31, 1995 									

Available-for-sale securities 									

 <S>                              <C>                     <C>                  <C>           <C>
 U.S. Treasury 	                  $ 	5,064,421 	          $  	72,679 	         $   	- 	      $ 	5,137,100 	
 U.S. Government agencies 		         3,279,968 		             72,268 		             2,570		     3,349,666 	
 Other securities 		                 2,531,138 	             254,102 		             3,000 		    2,782,240 	
 	                                $	10,875,527 	          $ 	399,049 	         $   	5,570 	  $	11,269,006 	

Held-to-maturity securities 									

 U.S. Treasury                   	$	61,426,813 	          $ 	295,846 	         $  	59,359 	  $	61,663,300 	
 U.S. Government agencies 		        23,498,204 		            267,237 		            48,041		    23,717,400 	
 States and political subdivisions		42,415,025 		            934,439		            241,048 		   43,108,416 	
 Other securities 		                   322,640 		             18,205 		             - 		          340,845 	
                                 	$127,662,682 	          $1,515,727 	         $ 	348,448 	  $128,829,961 	

December 31, 1994 									
									
Available-for-sale securities 									
 U.S. Treasury 	                  $ 	7,094,657 	          $   	4,695 	         $  	50,352 	  $ 	7,049,000 	
 U.S. Government agencies 		         5,551,499 		              3,892 		            39,165		     5,516,226 	
	                                 $	12,646,156 	          $   	8,587           $  	89,517 	  $	12,565,226 	

Held-to-maturity securities 									
 U.S. Treasury 	                  $	71,997,419 	          $  	66,784 	         $1,862,503 	  $	70,201,700 	
 U.S. Government agencies 		        28,527,740 		             21,631 		         1,006,621		    27,542,750 	
 States and political subdivisions 	39,786,156 		            493,613		          1,804,009 		   38,475,760 	
 Other securities 		                 2,749,716 		              3,210 		            80,805 		    2,672,121 	
                                 	$143,061,031 	          $ 	585,238 	         $4,753,938 	  $138,892,331 	

</TABLE>

		Securities with an amortized value of $93,101,954 and
$81,583,779 at December 31, 1995 and 1994, respectively (fair
value: 1995 - $93,937,766; 1994 - $80,148,047), were pledged to
secure deposits and for other purposes as required or permitted
by law.  The fair value is established by an independent pricing
service as of the approximate dates indicated.  The differences
between the amortized value and fair value reflect current
interest rates and represent the potential gain (or loss) had
the portfolio been liquidated on that date.  Security gains (or
losses) are realized only in the event of dispositions prior to
maturity.  The fair values of all securities at December 31,
1995, either equaled or exceeded the cost of those securities,
or the decline in fair value is considered temporary.

		A schedule of net gains and losses realized on the disposition
of investment securities, and the related tax effects, is
presented in the following table.  All net gains realized in
1995 and net losses realized in 1994 resulted from sales of
securities which were classified as available-for-sale.

<TABLE>

<CAPTION>
            		                         1995       		1994        		1993  	

       <S>                         <C>           <C>           <C>
       Pre-tax gains (losses) 	    $   	1,182 	  $(243,690) 	  $ 	23,896 	
       Tax effect 		                     (473) 		   97,476 		     (9,558) 	
       After-tax gains (losses) 	   $  	  709 	  $(146,214) 	  $ 	14,338 	

</TABLE>
							
<PAGE>

         FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 - INVESTMENT SECURITIES (Continued)



		Proceeds from the maturity, call, or sale of
available-for-sale securities were $7,306,453, $25,152,051, and
$-0- during 1995, 1994, and 1993 respectively.  Proceeds from
the maturity or call of held-to-maturity securities were
$18,848,992, $5,092,000, and $30,497,983 during 1995, 1994, and
1993 respectively.  Gross gains of $1,182 and gross losses of
$-0- were realized on the dispositions in 1995.  Gross gains of
$-0- and gross losses of $243,690 were realized on the
dispositions in 1994.  Gross gains of $23,896 and gross losses
of $ -0- were realized on the dispositions in 1993.  At December
31, 1995, the Corporation did not hold investment securities of
any single issuer, other than obligations of the U.S. Treasury
and other U.S. Government agencies, whose aggregate book value
exceeded ten percent of stockholders' equity.

	 	The following table shows the amortized value, fair  value,
and weighted yields (for tax-exempt obligations on a fully
taxable basis assuming a 34% tax rate) of investment securities
at December 31, 1995, by contractual maturity.  Expected
maturities may differ from contractual maturities because
issuers may have the right to call or prepay obligations.

<TABLE>

<CAPTION>
                                             		Amortized 	       	Fair 	 	   Yield 	
                                                		Cost 	   	     Value 		    (Unaudited) 	
Available-for-sale securities 							
<S>                                          <C>              <C>              <C>
U.S. Treasury
 Within one year 	                           $ 	2,019,183 	   $ 	2,029,400 		   6.2% 	
 After one but within five years 		             3,045,238 		     3,107,700		    6.5% 	
U.S. Government agencies 							
 Within one year 		                             1,000,000 		     1,002,500 		   6.1% 	
 After one but within five years 		             1,996,231 		     2,066,000		    7.6% 	
 After ten years 		                               283,737 		       281,166 		   6.2% 	
Other securities 		                             2,531,138 		     2,782,240 		   8.9% 	
	                                            $	10,875,527 	   $	11,269,006 			

Held-to-maturity securities 							
U.S. Treasury 							
 Within one year 	                           $	39,167,894 	   $ 39,306,700 		   6.1% 	
 After one but within five years 		            22,258,919 		    22,356,600		    5.6% 	
U.S. Government agencies 							
 Within one year 		                            11,023,204 		    11,062,500 		   6.1% 	
 After one but within five years 		            12,475,000 		    12,654,900		    6.1% 	
 After five but within ten years 		                - 	 	            - 	 	        - 	 
States and political subdivisions 							
 Within one year 		                             3,244,962 		     3,296,024 		  10.0% 	
 After one but within five years 		            12,357,917 		    12,741,932		    8.7% 	
 After five but within ten years 		            23,148,235 		    23,191,943		    7.6% 	
 After ten years 		                             3,663,911 		     3,678,517 		   7.8% 	
Other securities 							
 After one but within five years 		               322,640 		       340,845 		   8.0% 	
	                                            $127,662,682 	   $128,629,961 			
</TABLE>

<PAGE>							

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  3 - LOANS

		A summary of loans outstanding by category follows. 

<TABLE>

<CAPTION>
  		                                                1995  		          1994  	
Loans secured by real estate 					
<S>                                            <C>               <C>
Loans secured by real estate
 Construction  and  land development   	       $ 	7,399,095 	    $ 	8,036,802 	
 Farmland 		                                      7,849,137 		      7,942,187 	
 Lines of credit 		                                 339,108         		240,976 	
 1-4 family residential property - first lien  	111,016,393     		100,548,761 	
 1-4 family residential property - junior lien   	7,177,285       		7,219,546 	
 Multifamily residential property 		              3,729,687 		      4,775,515 	
 Non farm, non residential property 		           44,224,353 		     41,734,848 	
    Subtotal 		                                 181,735,058 		    170,498,635 	

Commercial and  industrial loans 					
 Commercial  and  industrial 		                  51,758,675 		     44,870,150 	
 Taxable municipal loans 		                         270,000 		        300,000 	
 All other loans 		                                  88,239 		        187,405 	
    Subtotal 		                                  52,116,914 		     45,357,555 	

Tax exempt municipal loans 		                     1,485,071 		        748,116 	

Loans to individuals 					
 Agricultural production 		                       3,659,215 		      3,823,296 	
 Lines of credit 		                                 135,230 		        103,249 	
 Individuals for personal expenditures 	        	53,026,209      		42,341,597 	
 Purchase or carry securities 		                     - 		                 655 	
    Subtotal 		                                  56,820,654 		     46,268,797 	

Lease financing 		                                   - 		               1,408 	

                                              		292,157,697 		    262,874,511 	

Less: 					
 Net unamortized loan origination fees 		          (225,368) 		      (176,606)
 Unearned interest income 		                         (2,018) 		        (3,785) 	
 Allowance for possible loan losses 		           (2,678,386)		     (2,342,290) 	
					
	                                              $289,251,925 	    $260,351,830 	

</TABLE>
					
		A summary of loan maturities and the amounts of loans carrying
fixed and variable interest rates as of December 31, 1995,
follows.

<TABLE>

<CAPTION>
                                    	 	(In Thousands of Dollars) 
                             		Within 		     One to 		    After  		
		                            One Year 	  	Five Years 		 Five Years  		Total 

     <S>                      <C>           <C>          <C>         <C>
     Fixed rate loans 	       $ 	62,923 	   $ 	47,100 	  $ 	23,735   $	133,758 
     Variable rate loans 	     	113,389 	     	26,949 		    18,062 		  158,400 
								
 	                            $	176,312 	   $ 	74,049 	  $ 	41,797 	 $	292,158 

</TABLE>

	Loans having recorded investments of $5,856,000 at December 31,
1995, have been identified as impaired in accordance with the
provisions of SFAS 114.  The total allowance for possible loan
losses related to these loans was $456,000.  Interest received
on these loans during 1995 was $532,873.  Prior to adoption of
SFAS 114, non-performing loans were those which were accounted
for on a non-accrual basis.  Such loans had outstanding balances
of approximately  $2,611,000 at December 31, 1994.

<PAGE>
                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - LOANS  (Continued)

		Certain parties (principally directors and senior officers of
the Corporation or the Bank, including their affiliates,
families, and companies in which they hold ten percent or more
ownership) were customers of, and had loans and other
transactions with, the Bank in the ordinary course of business. 
An analysis of activity with respect to such loans for the years
ended December 31, 1995 and 1994, follows. 

<TABLE>

<CAPTION>
                                  		Balance at 								
                	                  	Beginning  				                 Amount      		Amount      Balance at 
                                 		 of Year 		      Additions 		  Collected 	  	Written Off 		End of Year 

 <S>                                <C>            <C>           <C>           <C>            <C>
      1995  										
 Aggregate of certain party loans 	 $ 6,494,271  	 $	7,020,665 	 $	5,908,932 	 $ 	  - 	       $ 7,606,004 

      1994  										
 Aggregate of certain party loans 	 $	6,563,577 	  $	5,081,776 	 $	5,151,082 	 $    - 	       $	6,494,271 

</TABLE>
										

		These totals exclude loans made in the ordinary course of
business to other companies with which neither the Corporation
nor the Bank has a relationship other than the association of
one of its directors in the capacity of officer or director. 
These loan transactions were made on substantially the same
terms as those prevailing at the time for comparable loans to
other persons.  They did not involve more than the normal risk
of collectiblity or present other unfavorable features.  No
related party loans were charged off in 1995 or 1994.

NOTE 4 - ALLOWANCE FOR POSSIBLE LOAN LOSSES

		Changes in the allowance for possible loan losses are as
follows:

<TABLE>

<CAPTION>
       		                                    1995   		     1994   		     1993  	

<S>                                      <C>           <C>           <C>
Balance at beginning of year 	           $	2,342,290 	 $	2,023,651 	 $	2,253,735 	
Provision charged to operating expenses    		670,000 		    660,000		     470,000 	
Loan losses: 							
 Loans charged off 		                       (555,957) 		  (422,831) 		  (847,535) 	
 Recoveries on loans previously  							
  charged off                              		222,053      		81,470     		147,451 	
							
Balance at end of year 	                 $	2,678,386 	 $	2,342,290 	 $	2,023,651 	

</TABLE>
							

		For federal income tax purposes, the allowance for possible
loan losses is maintained at the maximum allowable by the
Internal Revenue Code.

NOTE 5 - BANK PREMISES AND EQUIPMENT

		The components of premises and equipment are as follows:

<TABLE>

<CAPTION>
                                                1995               1994
        <S>                                 <C>                <C>
        Land 	                              $ 1,204,288 	      $	1,204,288 	
        Premises 		                           6,648,329 		       6,629,567 	
        Furniture and equipment 		            3,949,617 		       3,816,320 	
        Leasehold improvements 		               879,695 		         474,770 	
                                           		12,681,929 		      12,124,945 	
Less allowance for depreciation and
 amortization 		                             (6,283,993)		      (5,931,865) 	

	                                           $	6,397,936 	      $	6,193,080 	

</TABLE>

		Annual provisions for depreciation and amortization total
$645,816 for 1995, $589,045 for 1994, and $591,486 for 1993. 
Included in premises and equipment cost and allowance for
depreciation and amortization are certain fully depreciated
assets totaling $2,287,900 at December 31, 1995.


<PAGE>

        FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - LIMITATION ON SUBSIDIARY DIVIDENDS

		The approval of the Comptroller of the Currency is required
before the Bank's dividends in a given year may exceed the total
of its net profit (as defined) for the year combined with
retained net profits of the preceding two years.  As of December
31, 1995, additional dividends of approximately $13,500,000
could have been declared by the Bank to the Corporation without
regulatory agency approval.



NOTE 7 - LEASES



		Real property for four of the Bank's office locations and
certain equipment are leased under noncancelable operating
leases expiring at various times through 2000.  In most cases,
the leases provide for one or more renewal options of five to
ten years under the same or similar terms.  In addition, various
items of teller and office equipment are leased under cancelable
and noncancelable operating leases.  Total rental expense
incurred under all operating leases, including short-term leases
with terms of less than one month, amounted to $660,121,
$409,764, and $254,121 for equipment leases, and $111,649,
$97,966, and $82,030 for building leases, in 1995, 1994, and
1993, respectively.  Future minimum lease commitments as of
December 31, 1995, under all noncancelable operating leases with
initial terms of one year or more follow.

<TABLE>
     <S>                                          <C>
                    1996                        	 $ 	671,934 	
                  		1997  	              	           671,934 	
                  		1998  		                         636,511 	
                  		1999  		                           5,088 	
                  		2000  	 	                          5,088 	

     Total future minimum lease payments 	    		  $1,990,555 	

/TABLE>
					

NOTE 8 - FEDERAL AND STATE INCOME TAXES

		The provisions for income taxes consist of the following:


</TABLE>
<TABLE>

<CAPTION>
                                     		1995         		1994        		1993  	

<S>                                <C>            <C>            <C>
Current: 							
 Federal 	                         $ 2,166,566 	  $	1,831,848 	  $	1,754,003 	
 State 		                              585,606 		     503,433 		     442,882 	
    Total current 	                  2,752,172 		   2,335,281 		   2,196,885 	

Deferred: 							
 Federal 		                           (198,393) 		   (111,805) 		     20,468 	
 State 		                              (35,010) 		    (19,730) 		      3,612 	
    Total deferred                    (233,403) 		   (131,535) 		     24,080 	

  Total provision for 
    income taxes 	                 $ 2,518,769 	  $	2,203,746 	  $	2,220,965 	

</TABLE>
							
<PAGE>

                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - FEDERAL AND STATE INCOME TAXES (Continued)

		The deferred tax effects of principal temporary differences
are shown in the following table:

<TABLE>
<CAPTION>
                		                         1995  		      1994  		      1993  	

<S>                                   <C>           <C>           <C>
Allowance for possible loan losses 	  $ 	815,315 	  $ 	682,877 	  $ 	555,421 	
Installment loan reporting 		               - 		          - 		         6,865 	
Write-down of other real estate 		       177,120 		    159,120 		    157,520 	
Deferred compensation 		                 256,139 		    156,227 		     76,781 	
Direct lease financing 		                   - 		        36,452 		     35,736 	
Unrealized loss on AFS securities 		        - 		        32,372 		     18,457 	
Deferred loan fees 		                     44,051 		     24,546 		     76,907 	

  Deferred tax asset 		                1,292,625 		  1,091,594 		    927,687 	

Unrealized gain on AFS securities 		    (157,392) 		      - 		          - 	

  Deferred tax liability 		             (157,392)  		     - 		          -	

    Net deferred tax asset 	          $1,135,233    $1,091,594	   $ 	927,687 	

</TABLE>


		A reconciliation of total income taxes reported with the
amount of income taxes computed at the federal statutory rate
(34% each year) is shown below.  Total income taxes paid in
1995, 1994, and 1993 amounted to $2,756,442, $2,431,332 and
$2,564,887, respectively.

<TABLE>

<CAPTION>
        		                                        1995  		         1994  		         1993  	

<S>                                           <C>              <C>              <C>
Tax expense at statutory rate 	               $ 2,935,722 	    $ 2,640,158    	 $	2,542,254 	
Increase (decrease) in taxes resulting from: 							
 Tax-exempt interest 		                          (783,011) 		     (780,946) 		     (647,575) 	
 Nondeductible interest expense 		                 89,491 		        75,019 		        58,457 	
 Other nondeductible expenses 							
  (nontaxable income) - net 		                    (28,114) 		       (6,458)		       (19,962) 	
 State income taxes, net of federal 							
  tax benefit 		                                  363,393 		       319,244 		       292,263 	
 Dividend income exclusion 		                     (18,324) 		      (29,571) 		      (15,646) 	
 Other 		                                         (40,388) 		      (13,700) 		       11,174 	

Total provision for income taxes 	            $	2,518,769 	    $	2,203,746 	    $	2,220,965 	

Effective tax rate 		                               29.2% 		         28.4% 		         29.7% 	

</TABLE>
							

		A net deferred tax asset was included in other assets in the
accompanying consolidated balance sheet.  

NOTE 9 - COMMITMENTS

		The Bank is a party to financial instruments with
off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers.  These financial
instruments include commitments to extend credit and standby
letters of credit.  Those instruments involve, to varying
degrees, elements of credit risk in excess of the amount
recognized in the balance sheet.  The contract or notional
amounts of those instruments reflect the extent of involvement
the Bank has in those particular financial instruments.

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 NOTE 9 - COMMITMENTS (Continued)

		The total outstanding loan commitments and stand-by letters of
credit in the normal course of business at December 31, 1995,
were $21,739,000 and $1,699,000, respectively.  Loan commitments
are agreements to lend to a customer as long as there is not a
violation of any condition established in the contract.  Standby
letters of credit are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. 
Those guarantees are primarily issued to support public and
private borrowing arrangements, including commercial paper, bond
financing, and similar transactions.  The credit risk involved
in issuing letters of credit is essentially the same as that
involved in making a loan.

		The loan portfolio is well diversified with loans generally
secured by tangible personal property, real property, or stock. 
The loans are expected to be repaid from cash flow or proceeds
from the sale of selected assets of the borrowers.  Collateral
requirements for the loan portfolio are based on credit
evaluation of the customer.  It is management's opinion that
there is not a concentration of credit risk in the portfolio.


NOTE 10 - SUPPLEMENTARY CASH FLOW INFORMATION

		Interest paid on deposits and other borrowings during 1995,
1994, and 1993 amounted to $14,845,299, $12,641,299, and
$12,243,317, respectively.


NOTE 11 - EMPLOYEE BENEFIT PLANS

		The Bank contributes to a defined contribution, profit-sharing
plan covering employees who meet participation requirements. 
The amount of the contribution is discretionary as determined by
the Board of Directors up to the maximum deduction allowed for
federal income tax purposes.  Contributions to the plan, that
amounted to $633,459, $602,010, and $529,324, in 1995, 1994, and
1993, respectively, are included in salaries and employee
benefits expense. 

		In 1992, the Bank formalized a nonqualified salary
continuation plan for certain key officers.  In connection with
this plan, the value of the assets (1995 - $594,221; 1994 -
$580,088) used to fund the plan and the related liability (1995
- $482,272; 1994 - $400,606) were included in other assets and
other liabilities respectively.  Single premium universal life
insurance policies were purchased in 1993 to replace other
policies and annuities that were redeemed.  Insurance premiums
of $515,000 were paid during 1993, of which $285,725 (net of the
redemption proceeds) was capitalized.  Net non-cash income of
$14,133 in 1995 and  $22,448 in 1994 is also included in the
above asset values.  The principal cost of this plan will be
accrued over the anticipated remaining period of active
employment, based on the present value of the expected
retirement benefit.  Expense related to this plan was $106,666
in 1995, $98,925 in 1994, and $91,916 in 1993.

   The Bank also implemented a deferred compensation plan which
permitted directors, beginning in 1993, to defer their
director's fees and earn interest on the deferred amount.  A
liability increase and expense of $176,727 for 1995, $126,262
for 1994, and $125,036 for 1993 were recognized in the
accompanying financial statements.  In connection with this
plan, a single premium universal life insurance policy was
purchased on the life of each director who elected to
participate.  Insurance premiums of $1,425,000 were paid at the
end of 1992, of which $1,399,816 was capitalized to reflect the
cash surrender value at December 31, 1992.  Additional single
premium universal life insurance policies were purchased in 1993
for new participants.  Insurance premiums of $215,000 were paid
during 1993 and capitalized.  Net non-cash income of $51,803 in
1995 and $52,840 in 1994 is also included in the cash surrender
values of  $1,801,922 and $1,750,119 at December 31, 1995 and
1994, respectively.

		The Bank is beneficiary on the insurance policies that fund
the salary continuation plan and the deferred compensation plan.
 These policies have an aggregate face amount of $2,425,000.

<PAGE>

               FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - QUARTERLY RESULTS OF OPERATIONS (Unaudited)

		The following is a summary of the unaudited consolidated
quarterly results of operations.

<TABLE>
										
<CAPTION>

                               		First        Second     		  Third 		     Fourth 		
                              		Quarter     		Quarter 	     Quarter   	  	Quarter 		    Total 

        1995  										

<S>                          <C>           <C>           <C>           <C>           <C>
Interest income 	            $	8,244,228   $	8,640,769 	 $	8,720,212 	 $ 8,888,360 	 $34,493,569 
Interest expense 		            3,654,485 		  3,856,594 		  3,938,600 		  3,972,566		  15,422,245 

Net interest income 		         4,589,743 		  4,784,175 		  4,781,612		   4,915,794 		 19,071,324 
Provision for possible loan  										
 losses 		                       145,000 		    140,000 		    180,000 		    205,000 		    670,000 
Noninterest expenses, net of 										
 noninterest income 		         2,492,505 		  2,547,595 		  2,430,466		   2,296,283 		  9,766,849 
										
Income before income taxes 		  1,952,238 		  2,096,580 		  2,171,146		   2,414,511 		  8,634,475 
Income taxes 		                  512,448 		    589,977 		    680,609 		    735,735 		  2,518,769 

Net income 	                 $	1,439,790 	 $ 1,506,603 	 $	1,490,537 	 $	1,678,776 	 $ 6,115,706 

Earnings per common share 										
  (1,400,000 shares) 	       $ 	    1.03 	 $  	   1.08 	 $     	1.06 	 $    	 1.20 	 $ 	    4.37 

</TABLE>

<TABLE>
<CAPTION>
	                               	First 		      Second 		     Third 		    Fourth 		
                     		         Quarter 	     	Quarter     	Quarter  	   Quarter 		    Total 

1994  										

<S>                          <C>           <C>            <C>           <C>          <C>
Interest income 	            $	7,176,893   $	7,664,849    $	7,814,500 	 $	8,161,296  $30,817,538 
Interest expense 		            2,986,012 		  3,148,310 		   3,272,217 		  3,457,365	  12,863,904 

Net interest income 		         4,190,881 		  4,516,539 		   4,542,283		   4,703,931 		17,953,634 
Provision for possible loan  										
 losses 		                        60,000 		    255,000 		     225,000 		    120,000 		   660,000 
Noninterest expenses, net of 										
 noninterest income 		         2,260,734 		  2,254,027 		   2,490,717		   2,522,984 		 9,528,462 

Income before income taxes 		  1,870,147 		  2,007,512 		   1,826,566		   2,060,947 		 7,765,172 
Income taxes 		                  528,638 		    566,493 		     508,942 		    599,673 		 2,203,746 

Net income 	                 $	1,341,509 	 $	1,441,019 	  $ 1,317,624 	 $	1,461,274  $	5,561,426 

Earnings per common share 										
 (1,400,000 shares) 	        $ 	    0.96 	 $  	   1.03 	  $ 	    0.94 	 $ 	    1.04	 $ 	    3.97 

</TABLE>

NOTE 13 - SHAREHOLDERS' EQUITY

		The Corporation and the Bank are subject to federal regulatory
risk-adjusted capital adequacy standards.  Failure to meet
capital adequacy requirements can initiate certain mandatory,
and possibly additional discretionary, actions by regulators
that could have a direct material effect on the consolidated
financial statements of the Corporation and its subsidiary, the
Bank.  The regulations require the Bank to meet specific capital
adequacy guidelines that involve quantitative measures of
assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices.   As of
December 31, 1995, the Bank's calculated risk-adjusted capital
ratios exceeded the minimum standard for a "well capitalized"
bank.  The capital classification is also subject to qualitative
judgments by the regulators about components, risk weightings,
and other factors.  Management believes that the Corporation and
the Bank meet all capital requirements.

<PAGE>

             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - DEPOSITS

		The Bank does not have any foreign offices and all deposits
are serviced in its fourteen domestic offices.  The average
amounts of deposits and the average rates paid are summarized in
the following table.

<TABLE>

<CAPTION>
                                                      (Unaudited) 									
                                     		 	 	 	 	 	Year Ended December 31 		 	 	 	 	 	

                                          		1995       		   	 		1994      		 	 		  1993  		 	 	
                                							          (Dollars In Thousands) 									

<S>                                  <C>        <C>      <C>        <C>      <C>        <C>
Demand deposits 	                    $	56,730  		- 	% 	  $	55,557 	 	- 	% 	  $	48,697		  - 	% 	
NOW and money market accounts 		      149,016 		3.51 			  161,244 		3.25			   147,246 		3.16 		
Savings deposits 		                    34,629 		3.00 			   35,036 		2.87 			   31,216 		2.76
Time deposits of less than $100,000 		136,568 		5.30 			  126,523		 4.27 			  128,021 		4.26 		
Time deposits of $100,000 or more 		   32,524 		5.35 			   26,053		 4.32 			   23,602 		4.33 		

Total In Domestic Offices 	          $409,467 		3.72%   	$404,413		 3.66% 	  $378,782 		3.17% 	 

																
</TABLE>

		At December 31, time deposits of $100,000 or more had the
following maturities.

<TABLE>
<CAPTION>
                            	1995  	    	1994  		   1993  
                                  (Dollars In Thousands)

    <S>                   <C>         <C>        <C>
    Under 3 months 	      $	7,877 	   $	3,117 	  $	3,519 
    3 to 12 months 		      18,407 		   18,250 		  17,081 
    Over 12 months 		       4,310 		    4,803 		   4,505 

	                         $30,594 	   $26,170 	  $25,105 

</TABLE>
						

	NOTE 15 -  FAIR VALUES OF FINANCIAL INSTRUMENTS



		This summarizes the Corporation's disclosure of fair values of
financial instruments made in accordance with the requirements
of Statement of Financial Accounting Standards No. 107 (SFAS
107), "Disclosures about Fair Value of Financial Instruments".

<TABLE>

<CAPTION>
				                                          Dollars in Thousands 					
     		                             December 31, 1995 	  	 		  December 31, 1994 		 	
                               	 	Amortized     		Fair     	  	Amortized  	  	Fair 	
		                                  Value   	   	Value 	        	Value    		 Value 	

<S>                               <C>             <C>           <C>           <C>
Financial assets 									
  Cash and cash equivalents      	$ 	31,282 	     $ 	31,282 	   $ 	26,736	    $ 	26,736 	
  Securities held to maturity   	  	127,663  		     128,830  		   143,061		     138,892 	
  Securities available for sale   		 10,876  	 	     11,269 	  	   12,646		      12,565 	
  Loans, net 	                   	  289,252 	 	     298,076 		    260,352 		    268,870  	
  Accrued interest receivable 		      5,454 		        5,424 		      5,169		       5,169 	

Financial liabilities 									
  Deposits 		                       410,778 		      398,296 		    405,152 		    402,720 	
  Federal funds purchased 		         10,000 		       10,000 		      7,000 		      7,000 	
  Short term borrowings 		            1,955 		        1,955 		        600 		        600 	
  Accrued interest payable 		         3,034 		        3,034 		      2,457 		      2,457 	

</TABLE>

		Estimated fair values have been determined by the Bank using
the best available data.  Changes in assumptions or the
estimation methodologies used may have a material effect on the
estimated fair values included in this note.

<PAGE>


           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	NOTE 15 -  FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)


		Financial assets - Cash and cash equivalents are considered to
be carried at their fair value and have not been valued
differently than has been customary with historical cost
accounting.  Securities available-for-sale and securities
held-to-maturity are valued by an independent rating service and
are disclosed in detail in Note 2 above.  	A present value
discounted cash flow methodology was used to value the net loan
portfolio.  The discount rate used in these calculations was the
current rate at which new loans in the same classification for
regulatory reporting purposes would be made.  This rate was
adjusted for credit loss and assumed prepayment risk.   For
loans with floating interest rates it is presumed that estimated
fair values generally approximate the recorded book balances.

		Financial liabilities - Deposits with stated maturities have
been valued using a present value discounted cash flow with a
discount rate approximating the current market for similar
liabilities.  Financial instrument liabilities with no stated
maturities have an estimated fair value equal to both the amount
payable on demand and the recorded book balance.  For deposits
with floating interest rates it is presumed that estimated fair
values generally approximate the recorded book balances.  The
carrying amounts of federal funds purchased and other short term
borrowings are considered to approximate their fair values.

		  The Bank's remaining assets and liabilities which are not
considered financial instruments have not been valued
differently than has been customary with historical cost
accounting.  Management is concerned that reasonable
comparability between financial institutions may be distorted
due to the wide range of permitted valuation techniques and
numerous estimates which must be made given the absence of
active secondary markets for many of the financial instruments. 
This lack of uniform valuation methodologies also introduces a
greater degree of subjectivity to these estimated fair values. 

	 At December 31, 1995, the Bank had outstanding standby letters
of credit and commitments to extend credit.  These
off-balance-sheet financial instruments are generally
exercisable at the market rate prevailing at the date the
underlying transaction will be completed and, therefore, are
deemed to have no current fair value.  Please refer to Note 9.


NOTE 16 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
<TABLE>

<CAPTION>
                             Condensed Balance Sheets                                        
                            December 31, 1995 and 1994                                      
                            (In Thousands of Dollars)                                       
    					
                  Assets 		                               1995  		     1994  	

<S>                                                     <C>          <C>      
Cash 	                                                  $    	70 	   $    	65 	
Investment in bank subsidiary - at equity 		              48,517 		    43,310 	
Investment in credit life insurance company - at cost 		      50 		        50 	
Investment in other securities 		                             22 		        25 	
Dividends receivable from bank subsidiary 		                 630 		       574 	
Cash surrender value - life insurance 		                     467 		       453 	
    Total assets                                        $ 49,756 	   $	44,477 	

       Liabilities and Stockholders' Equity 					
Liabilities 					
 Payable to directors 	                                 $ 	  129 	   $    	75 	
 Dividends payable 		                                        630 		       574 	
   Total liabilities 		                                      759 		       649 	
Stockholders' equity 					
 Common stock - $10 par value, authorized 4,000,000 					
  shares, 1,400,000 shares issued and outstanding 		      14,000		     14,000 	
 Retained earnings 		                                     34,761 		    29,877 	
 Net unrealized gain (loss) on available-for-sale  					
  securities, net of tax 		                                  236 		      (49) 	
   Total stockholders' equity 		                          48,997 		    43,828 	
            Total liabilities and stockholders' equity  $ 49,756 	   $	44,477 	

</TABLE>
					
<PAGE>


                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 NOTE 16 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
(Continued)

<TABLE>
                          Condensed Statements of Income                                  
                     Years Ended December 31, 1995 and 1994                          
                             (In Thousands of Dollars)                                       
<CAPTION>
  				
                                            		     1995           		1994  
<S>                                             <C>              <C>
Operating income 				
  Dividends from bank subsidiary 	              $ 	1,232 	       $ 	1,120 
  Other dividend income 		                            22 		            61 
  Interest income 		                                   2 		             1 
  Other 		                                            27 		            30 

Operating expenses 		                                 87 		            60 

    Income before equity in undistributed net 				
     income of bank subsidiary 		                  1,196 		         1,152 

Equity in undistributed net income of bank
 subsidiary 		                                     4,920 		         4,409 

    Net Income 	                                $ 	6,116 	       $ 	5,561 

</TABLE>
				
<TABLE>
                      Condensed Statements of Cash Flows                              
                    Years Ended December 31, 1995 and 1994                          

                            (In Thousands of Dollars)                                       
  				
<CAPTION>
                                                         		1995          		1994  

<S>                                                     <C>             <C>
Operating activities 				
 Net income for the year 	                              $ 	6,116 	      $ 	5,561 
 Adjustments to reconcile net income to net cash 				
  provided by operating activities 				
   Equity in undistributed net income of bank
    subsidiary                                          		(4,920) 		      (4,409) 
   Increase in other assets 		                               (69) 		         (62) 
   Increase in payables 		                                    54 		           26 
				
     Total adjustments 		                                 (4,935) 		      (4,445) 

     Net cash provided by operating activities        		   1,181 		        1,116 

Net cash provided by (used in) investing activities 		 		
 Proceeds from sale or calls of investment securities 		      -	              18 
    Net cash provided by (used in) investing activities		     -       		      18 

Net cash used in financing activities 				
 Cash dividends paid 		                                    (1,176) 		     (1,071) 

    Increase (decrease) in cash 		                              5 		          63 

Cash at beginning of year 		                                   65 		           2 

Cash at end of year 	                                      $  	70 	       $  	65 

</TABLE>

<PAGE>


                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS 

GENERAL

	First Farmers and Merchants Corporation, a one-bank holding
company, was formed during 1982.  Its only subsidiary, First
Farmers and Merchants National Bank, is a community bank that
was established in 1909.  The resulting financial condition of
the Corporation should be evaluated in terms of the Bank's
operations within its service area.

	During 1995, First Farmers and Merchants National Bank
strengthened its presence in the four counties in middle
Tennessee that it serves.  Deposits in each of the four counties
either maintained the same levels or increased while loans in
all four counties increased.  To more efficiently provide
expanding services and offer the range of products that Bank
customers need and want, the Bank undertook a technology
conversion in the last quarter of 1994 involving data processing
and communication links between its fourteen offices.  The Bank
is positioned to provide quality services in diverse markets and
a dynamic interest rate environment.  Our customers are enjoying
the "Impact" of this change as new services such as combined,
laser printed statements; inquiring about balances, checks paid,
deposits made, and making transfers between accounts through
phone bank; extended banking hours; and a check card.  The check
card was introduced in the first quarter of 1995 and increased
in usage as the year progressed to approximately 35,000
transactions per month.

	The first of the following tables entitled DISTRIBUTION OF
ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY, INTEREST RATES
AND INTEREST DIFFERENTIAL, presents average daily balances,
interest income on a fully taxable equivalent basis and interest
expense, as well as the average rates earned and paid on the
major balance sheet items for the years 1995, 1994, and 1993.
The second table sets forth, for the periods indicated, a
summary of changes in interest earned and interest paid
resulting from changes in volume and changes in rates.  The
rate/volume variances are allocated between rate and volume
variances in proportion to the relationship of the absolute
dollar amounts of the change in each.

	These tables plus the following discussion and financial
information is presented to aid in understanding First Farmers
and Merchants' current financial position and results of
operations.  The emphasis of this discussion will be on the
years 1995, 1994, and 1993; however, financial information for
prior years will also be presented when appropriate.  This
discussion should be read in conjunction with the Consolidated
Financial Statements and the Notes to Consolidated Financial
Statements included elsewhere in this material.

FINANCIAL CONDITION 

	First Farmers and Merchants National Bank's financial condition
depends on the quality and nature of its assets, its liability
and capital structure, the market and economic conditions, and
the quality of its personnel.  The following paragraphs provide
a unique perspective on the internal structures of the
Corporation and the Bank that provide the strength in our
organization.

	The bank's average deposits grew during the last three years
reflecting  a 1.3% growth from 1994 to 1995, a 6.8% growth from
1993 to 1994, and a 10.4% growth from 1992 to 1993.  Average
transaction and limited transaction interest bearing accounts
grew during the prior two years but declined in 1995 as
investors took advantage of higher certificate of deposit rates.
 The average Chairman's Club, super negotiable orders of
withdrawal, insured money market deposits, and flexible
investment accounts decreased 7.6 % in 1995 compared to a  9.5%
increase in 1994 and a 28.6 % increase in 1993.  Average savings
deposits actually declined 1.2% in 1995 compared to a 12.2%
increase in 1994 and a 12.9% decrease in 1993.  Average
certificates of deposit increased  during 1995 with certificates
and other savings under $100,000 increasing 8.0% in 1995
compared to a 1.2% decline in 1994 and a 1.2.% decline in 1993. 
Certificates of deposit over $100,000 increased 24.8% in 1995
compared to a 10.4% increase in 1994 and a 17.1% decline in
1993.  


<PAGE>

                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                             AND RESULTS OF OPERATIONS 

TABLE 1 - Distribution of Assets, Liabilities, and Stockholders'
Equity, Interest Rates and Interest Differential

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31, 
                                                          	 	 	 	1995  	 	 	 	 
 
                                                  		 Average   		Rate / 				
                                                   		Balance 		  Yield 			 Interest 	

ASSETS 								
<S>                                                <C>           <C>       <C>            
 Interest earning assets 								
   Loans, net 	                                    $ 	276,166 		  9.38% 	  $	25,892 	* 
   Bank time deposits 		                                    2      - 	 		      - 	
   Available-for-sale securities (AFS) 	  	             8,092 		  6.59			       534 	
   Held-to-maturity securities (HTM) 		                93,676 		  6.03			     5,646 	
   U.S. Treasury and Government agency securities   		   - 	   	   -    	 		   - 	
   States and political subdivisions' securities  		   39,139		   8.06 			    3,156 	* 
   Other securities 		                                  2,452 		 11.29 			      277 	* 
   Federal funds sold 		                                2,076 		  5.83 			      121 	
     TOTAL EARNING ASSETS 		                          421,603 		  8.45 		  $	35,626 	

 Noninterest earning assets 								
   Cash and due from banks 		                          24,829 						
   Bank premises and equipment 		                       6,246 						
   Other assets 		                                     11,061 						
								
     TOTAL ASSETS 	                                $ 	463,739 						

LIABILITIES AND STOCKHOLDERS' EQUITY 								
 Interest bearing liabilities 								
   Time and savings deposits: 								
   NOW and money market accounts  	                $ 	148,993 		 3.51% 	  $ 	5,223 	
   Savings 		                                          34,627 		 3.00 			    1,040 	
   Time  		                                           136,605 		 5.30 			    7,245 	
   Time over $100,000 		                               32,522 		 5.35 			    1,740 	
    TOTAL INTEREST BEARING DEPOSITS 		                352,747 		 4.32			    15,248 	
   Federal funds purchased and repurchase 
    agreements		                                        2,415 		 5.92 			      143 	
   Other short-term debt 		                               565 		 5.49 			       31 	
    TOTAL INTEREST BEARING LIABILITIES 		             355,727 	 	4.34		   $	15,422 	

 Noninterest bearing liabilities
   Demand deposits 		                                  56,742 						
   Other liabilities 		                                 4,515 						
    TOTAL LIABILITIES 		                              416,984 						
 Stockholders' equity 		                               46,755 						
    TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY 	   $ 	463,739 						
<FN>								
<F4>
  Spread between combined rates earned and combined rates paid*		4.11% 			
</FN>
<FN>								
<F5>
  Net yield on interest-earning assets* 				                     4.79% 			
</FN>
<FN>
<F6>
  * Taxable equivalent basis. 								
</FN>
</TABLE>

<PAGE>

                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                               AND RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                     	 	 	       1994  	 	 	 	   	 	 	 	             	 1993  	 	 	 	 
                                             	     Average       Rate / 		                Average      Rate / 				
                                                  	Balance 		    Yield 			Interest 			   	Balance 		   Yield 			Interest 	
                                                                       	 (Dollars In Thousands) 															
ASSETS
<S>                                              <C>            <C>       <C>        <C>               <C>      <C>       <C>
 Interest earning assets
   Loans, net                                    $  247,791 		   8.54%    $	21,156 	*   $ 	233,608 		  8.37%    $	19,543 	* 
   Bank time deposits	                                 - 	 	      - 	 	 	     - 	 	 	 	      - 	 	      - 	 	 	     - 	
   Available-for sale-securities (AFS)               15,931 		   8.33 			    1,327 				      - 	 	      - 	 	 	     - 	
   Held-to-maturity securities (HTM)	               101,654 		   5.76 			    5,858 				      - 	 	      - 	 	 	     - 
   U.S. Treasury and Government agency securities	     - 	 	      - 	 	 	     - 				       106,201 		  6.50 			    6,904 	
   States and political subdivisions	                38,545 		   8.49 			    3,274 	* 			   29,634 		  8.62 			    2,553 	* 
   Other securities	                                  2,375 		  13.15 			      312 	* 			    6,164 		  5.34 			      329 	* 
   Federal funds sold	                                2,998 		   3.73 			      112 				      4,665 		  2.92 			      136 	
     TOTAL EARNING ASSETS 	                         409,294 		   7.83 		  $	32,039 			     380,272 		  7.75 		  $	29,465 	
																
 Noninterest earning assets
   Cash and due from banks	                          25,945 									                       23,406 						
   Bank Premises and equipment	                       6,350 									                        6,764 						
   Other assets	                                     10,364 									                       10,318 						

     TOTAL ASSETS                                $ 	451,953 								                    $  420,760 						

LIABILITIES AND STOCKHOLDERS' EQUITY
 Interest bearing liabilities
   Time and savings deposits:
   NOW and money market accounts                 $ 	161,244 		   3.25% 	 $ 	 5,239 			  $ 	147,246 		  3.16% 	  $ 	4,653 	
   Savings	                                          35,036 		   2.87  			   1,006 				     31,216 		  2.76 			      861 	
   Time	                                            126,523 		   4.27  			   5,400 				    128,021 		  4.26 			    5,459	
   Time over $100,000    	                           26,053 		   4.32  			   1,126 				     23,602 		  4.34 			    1,025 	
    TOTAL INTEREST BEARING DEPOSITS  	              348,856 		   3.66  			  12,771 				    330,085 		  3.63 			   11,998	
   Federal funds purchased and repurchase
    agreements 	                                      1,462 		   4.86 		        71 				        254 		  3.06 			        8 	
   Other short-term debt  	                             568 		   3.92 			       22 				        728 		  4.21 			       31 	
    TOTAL INTEREST BEARING LIABILITIES	             350,886 		   3.67 		  $	12,864 				    331,067 		  3.64 		  $	12,037 	
 Noninterest bearing liabilities																
   Demand deposits   	                               55,557 									                       48,697 						
   Other liabilities  	                               3,690 									                        3,542 						
    TOTAL LIABILITIES 	                             410,133 									                      383,306 						
 Stockholders' equity  	                             41,820 									                       37,454 						
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 	451,953 								                    $ 	420,760 						

<FN>
<F7>
Spread between combined rates earned and combined rates paid*		4.16% 		          						                4.11% 			
</FN>
<FN>
<F8>
Net yield on interest earning assets*			                       4.68% 								                          4.58% 			
</FN>
<FN>
<F9>
Taxable equivalent basis
</FN>
</TABLE>


<PAGE>

                    FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                  AND RESULTS OF OPERATIONS 


TABLE 2 - Distribution of Assets, Liabilities, and Stockholders'
Equity, Interest Rates and Interest Differential (Continued)

<TABLE>
<CAPTION>
										* 
                                                         					*  				               Total 
                                     		* 	   	 Taxable  		Nontaxable 	 	Federal 		Interest 
                                    		Net  		Investment 		Investment 	  	Funds 		  Earning 
(Dollars in Thousands) 		            Loans 		Securities 		Securities   		Sold	   	  Assets 

1995 compared to 1994: 										
<S>                                <C>       <C>            <C>        <C>        <C>
  Increase (decrease) due to: 										
    Volume 	                       $ 	2,423 	$ 	(1,103) 	   $ 	50 	    $ 	(34) 	  $ 	1,336 
    Rate 		                           2,313 		      63 		    (168) 		      43 		     2,251 

     NET INCREASE 										
      (DECREASE) 	                 $ 	4,736 	$ 	(1,040) 	   $(118) 	   $ 	  9 	   $	 3,587 

1994 compared to 1993: 										
  Increase (decrease) due to: 										
    Volume 	                       $ 	1,186 	$ 	   537 	    $	768 	    $ 	(49) 	  $ 	2,442 
    Rate 		                             427 		    (273) 		    (47) 		      25 		       132 

     NET INCREASE 										
      (DECREASE) 	                 $ 	1,613 	$ 	   264 	    $ 721 	    $ 	(24) 	  $	 2,574 
				                                            (A) 		        (A) 				

<FN>
<F10>
     * Taxable equivalent basis 
</FN>
<FN>
<F11>
   (A) U.S. Government, government agency, and corporate debt
securities plus equity securities in the available-for-sale and
held-to-maturiy categories are taxable investment securities.
Municipal debt securities are nontaxable and classified as 
held-to-maturity. 
</FN>
</TABLE>

	Average earning assets increased 3.0% in 1995 compared to an
7.6% increase in 1994 and a 9.7% increase in 1993.   As a
financial institution, the Bank's primary earning asset is
loans.  At December 31, 1995, average net loans represented 
65.5% of  average earning assets.  Total average net loans
increased during the last three years showing an 11.5% growth
from 1994 to 1995, a 6.1% growth from 1993 to 1994, and an 8.6%
growth from 1992 to 1993.  Average investments represented 34.0%
of average earning assets at December 31, 1995, and  decreased
9.6% in 1995 providing funds for the increasing loan growth. 
Investments  increased 11.6% in 1994, and increased 11.9% in
1993.  Average total assets increased during the last three
years as evidenced by a 2.6% growth from 1994 to 1995, a 7.4%
growth from 1993 to 1994, and a 10.3% growth from 1992 to 1993. 
Please refer to the color graphs at the end of this document
that illustrate this growth.

<PAGE>
<TABLE>
              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS 
<CAPTION>
                               	Now and 												                                            Total 		      * 	
                                	Money 			                   	     Time 		   Federal 		 Short 	Interest 		   Net 	
                               	Market  		Savings 	    	Time     		Over 		   Funds 		    Term 		Bearing		 Interest  
(Dollars in Thousands)	        Accounts 		Deposits  		Deposits 		$100,000 		Purchased 		 Debt		 Funds 		  Earnings 	

<S>                            <C>         <C>         <C>        <C>         <C>        <C>     <C>         <C>
1995 compared to 1994:
  Increase (decrease) due to:  																
    Volume                     $	(398) 	   $	(12) 	    $  430	    $  279 	    $ 	46 	    $  - 	  $ 	345 	    $ 	991 	
    Rate       	                  382 		      46 		     1,415      		335 		      26 		       9 		 2,213 		       38 	

     NET INCREASE
      (DECREASE)               $ 	(16)    	$ 	34    	  $1,845    	$ 	614 	    $ 	72 	    $ 	 9  	$2,558 	    $1,029 	

1994 compared to 1995:																
  Increase (decrease) due to:																
    Volume                     $ 	442 	    $	105 	     $  (64) 	  $ 	107 	    $ 	37 	    $ 	(7)  $ 	620 	    $1,822
    Rate  	                       144 		      40 		         5 		      (5) 		     26 		      (2) 	   208 		      (76) 	

     NET INCREASE																
      (DECREASE)               $ 	586 	    $	145 	     $ 	(59) 	  $ 	102 	    $ 	63 	    $ 	(9) 	$ 	828 	    $1,746
	
<FN>
<F12>
   * Taxable equivalent basis
</FN>																
</TABLE>


LIQUIDITY AND INTEREST  RATE  SENSITIVITY  MANAGEMENT

	The primary objective of asset/liability management at the Bank
is to achieve reasonable stability in net interest income
throughout interest rate cycles.  This objective is achieved by
monitoring the relationship of rate sensitive earning assets to
rate sensitive interest bearing liabilities (interest rate
sensitivity) which is the principal factor in determining the
effect that fluctuating interest rates will have on future net
interest income.  Rate sensitive earning assets and interest
bearing liabilities are those which can be repriced to current
market rates within a defined time period.  The following table,
Rate Sensitivity of Earning Assets and Interest Bearing
Liabilities, shows the Bank's rate sensitive position at
December 31, 1995, as measured by gap analysis (the difference
between the earning asset and interest bearing liability amounts
scheduled to be repriced to current market rates in subsequent
periods).

	As a policy, budgeted financial goals are monitored on a
monthly basis by the Asset/Liability Committee where the actual
dollar change in net interest income given different interest
rate movements is reviewed.  A dollar change in net interest
income for a twelve month period of less than 3% of net interest
income given a two hundred basis point shift in interest rates
is considered an adequately flexible position.  The net interest
margin, on a tax equivalent basis, at December 31, 1995,  1994,
and 1993 was 4.79%, 4.68%,  and 4.58% respectively.

<PAGE>

          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                        AND RESULTS OF OPERATIONS 

LIQUIDITY AND INTEREST  RATE  SENSITIVITY  MANAGEMENT (Continued)

TABLE - Rate Sensitivity of Earning Assets and Interest Bearing
Liabilities 										
<TABLE>
<CAPTION>
(Dollars in Thousands) 										
                                   		3 Months 		     3-6      	 	6-12  	 	  Over 1 		
As of December 31, 1995 		           or Less      		Months 	   	Months  	 	  Year  		      Total 
  <S>                                <C>          <C>          <C>          <C>          <C>
Earning assets 										
  Loans and leases, net of unearned 	$ 	64,615 	  $ 	43,285 	  $ 	72,506 	  $	111,525 	  $	291,931 
  Taxable investment securities 		      12,715 		    11,027 		    30,164		     42,611 		    96,517 
  Tax-exempt investment securities 		      986 		     1,200 		     1,060		     39,169 		    42,415 
										
      Total earning assets 		           78,316 		    55,512 		   103,730 		   193,305 	  $	430,863 

Interest-bearing liabilities 										
  NOW and money market accounts 		      35,739 	  		                          100,555    $	136,294 
  Savings 								                                                             34,133 		    34,133 
  Time 		                               42,682 		    34,082 		    46,903 		    18,671 		   142,338 
  Time over $100,000 		                  8,526 		     8,055 		     9,703 		     4,310 		    30,594 
  Other short-term debt 		              11,955 		 		 		 		                                  11,955 
										
      Total interest bearing 
        liabilities 		                  98,902 		    42,137 		    56,606		    157,669 	  $	355,314 

Noninterest bearing, net 								                                             (75,549) 		

Net asset/liability funding gap 		     (20,586) 		   13,375 		    47,124		    (39,913) 		

Cumulative net asset/liability 
  funding gap 	                      $ (20,586) 	 $ 	(7,211) 	 $ 	39,913	   $ 	  - 		

<FN>
<F13>
Available-for-sale and held-to-maturity securities were combined
in the taxable investment securities category for purposes of
this table.
</FN>
</TABLE>

CAPITAL RESOURCES, CAPITAL, AND DIVIDENDS

	Historically, internal growth has financed the capital needs of
the Bank.  At December 31, 1995, the Corporation had a ratio of
average capital to average assets of 10.08%.  This compares to a
ratio of average capital to average assets of 9.25% at December
31, 1994, and 8.9% at December 31, 1993.

	Cash dividends paid in 1995 were 10.0% more than those paid in
1994.  The dividend to net income ratio was 20%.  Additional
dividends of approximately $13.5 million to the Corporation
could have been declared by the subsidiary bank without
regulatory agency approval.  The Corporation plans to maintain
or increase the payout ratio while continuing to maintain a
capital to asset ratio reflecting financial strength and
adherence to regulatory guidelines.

	Regulatory risk-adjusted capital adequacy standards were
strengthened during 1992.  Equity capital (net of certain
adjustments for intangible assets and investments in
non-consolidated subsidiaries) and certain classes of preferred
stock are considered Tier 1 ("core") capital.  Tier 2 ("total")
capital consists of core capital plus subordinated debt, some
types of preferred stock, and varying amounts of the Allowance
for Possible Loan Losses.  The minimum standard for a "well
capitalized" bank is a risk-based core capital ratio of 6%, a
risk-based total capital ratio of 10%, and a core capital to
average total assets of 5%.

	As of December 31, 1995, the Bank's core and total risk-based
ratios were 16.8% and 17.7% respectively.  One year earlier, the
comparable ratios were 16.2% and 17.1%, respectively.  At year
end 1995, the Bank had a ratio of average core equity to total
average assets of 9.9%, up slightly from 9.0% at year end 1994.

<PAGE>


          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                          AND RESULTS OF OPERATIONS 

RESULTS OF OPERATIONS

Interest Income

	Total interest income increased 11.9% in 1995 compared to a
7.3% increase in 1994 and an decrease of .4% in 1993.  Interest
and fees earned on loans increased 22.4% in 1995 compared to an
8.3% increase in 1994 and a 1.4% decrease in  1993.  Interest
earned on investment securities and other investments decreased
10.9% in 1995 due to the decrease in volume compared to a 5.3%
increase in 1994 and a 1.9% increase in 1993.

Interest Expense

	Total interest expense increased 19.9% in 1995 compared to a
6.9% increase in 1994 and a 10.0% decrease in 1993.  The net
interest margin (tax equivalent net interest income divided by
average earning assets) increased in 1995 to 4.8% compared to
4.7% in 1994 and 4.6% in 1993 as indicated in the LIQUIDITY AND
INTEREST RATE SENSITIVITY MANAGEMENT section above.

	Net interest income on a fully taxable equivalent basis is
influenced primarily by changes in:  (1) the volume and mix of
earning assets and sources of funding; (2) market rates of
interest, and (3) income tax rates.  The impact of some of these
factors can be controlled by management policies and actions. 
External factors also can have a significant impact on changes
in net interest income from one period to another.  Some
examples of such factors are: (1) the strength of credit demands
by customers; (2) Federal Reserve Board monetary policy, and (3)
fiscal and debt management policies of the federal government,
including changes in tax laws. 


Noninterest Income and Expense

	Noninterest income increased 14.9% during 1995 versus a 1.6%
increase in 1994 and a 12.0% increase in 1993.  The new check
card generates fee income from the clearing agent for the
electronic transaction even though no service fee is charged to
Bank customers for its use.  This "Impact" of our new technology
contributed to the 16.4% increase in service fees for deposit
accounts in 1995.  Income from fiduciary services provided in
the Bank's Trust Department remained strong contributing 27.4%
of noninterest income.

	Noninterest expenses, excluding the provision for possible loan
losses, increased 6.2% in  1995 compared to a 5.4% increase in
1994 and a 9.3% increase in 1993.  Increased productivity
fostered by our technology improvements as the learning curve
diminished and cost control efforts contributed to this
improvement.  Included in this category is Federal Deposit
Insurance Corporation (FDIC) insurance premiums at the rate
established for "well capitalized" institutions.  This expense
was $499,709 in 1995 compared to $890,646 in 1994, a 43.9-%
reduction.  Please refer to the discussion in the CAPITAL
RESOURCES, CAPITAL, AND DIVIDENDS section above for more
information concerning the bank's capitalization.


Provision for Possible Loan Losses

	The provision for possible loan losses, representing amounts
charged against operating income, increased 1.5% in 1995
compared to a 40.4% increase in 1994 and a 44.1% decrease in
1993. Management regularly monitors the allowance for possible
losses and considers it to be adequate.  Please refer to Note 1
in the NOTES TO CONSOLIDATED FINANCIAL  STATEMENTS that are
included elsewhere in this material for further discussion of
the adequacy of the allowance.  The tables on the next page
summarize average loan balances and reconciliation of the
allowance for loan losses for each year.  Additions to the
allowance, which have been charged to operating expenses, are
also disclosed.

<PAGE>

              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS 

 Provision for Possible Loan Losses (Continued)

	The next tables present any risk elements in the loan portfolio
and include all loans management considers to be potential
problem loans.  Management does not believe that there is a
concentration of loans to a multiple number of borrowers engaged
in similar activities.
<TABLE>
<CAPTION>
                                                            		    				December 31 				
                                              		1995      		1994      	 	1993      	 	1992     	 	1991  
                                                     				    		(Dollars  In Thousands) 				
  
<S>                                          <C>         <C>          <C>          <C>          <C>
Average amount of loans outstanding 	        $	276,166   $	247,791 	  $	233,608 	  $	215,158 	  $	182,561 

Balance of allowance for possible loan 										
  losses at beginning of year 	              $  	2,342 	 $  	2,024 	  $  	2,254	   $ 	 1,917 	  $  	1,818 
Loans charged-off: 										
  Loans secured by real estate 		                   15 		      135 		       396 		       245		        329 
  Commercial and industrial loans 		               170 		       42 		       222 		       124		        192 
  Individuals 		                                   371 		      246 		       230 		       249 		       249 
      TOTAL  LOANS CHARGED OFF 		                  556 		      423 		       848 		       618		        770 
Recoveries of loans previously charged off: 										
   Loans secured by real estate 		                  97 		        9 		        56 		         3 		       - 
   Commercial and industrial loans 		               14 		       36 		        52 		        80 		        56 
   Individuals 		                                  111 		       36 		        40 		        32 		        33 
      TOTAL RECOVERIES 		                          222 		       81 		       148 		       115 		        89 
        NET  LOANS CHARGED-OFF 		                  334 		      342 		       700 		       503		        681 
Provision charged to operating expenses 		         670 		      660 		       470		        840 		       780 
       BALANCE OF ALLOWANCE FOR POSSIBLE 
        LOAN LOSSES AT END OF YEAR 	         $ 	 2,678 	 $ 	 2,342 	  $ 	 2,024 	  $  	2,254 	  $ 	 1,917 

Ratio of net charge-offs during the 										
  period to average loans outstanding 		         0.12% 		    0.14% 		     0.30%		      0.23% 		     0.37% 

</TABLE>
										

	Loans having recorded investments of $5.8 million at December
31, 1995, have been identified as impaired in accordance with
the provisions of SFAS 114.  They represent 2% of gross loans. 
Commercial loans comprised $.326 million of the total, with
loans secured by real estate accounting for $4.7 million and
installment loans $.800 million.  The gross interest income that
would have been recorded during 1995 if the loans had been
current in accordance with their original terms and had been
outstanding throughout the period or since origination, if held
for part of the period, was $365, $193, and $189 thousand for
the years ended December 31, 1995, 1994, and 1993 respectively. 
Impaired loans are charged-off once management has exhausted all
efforts to collect the loan.  Please refer to Note 1 and Note 3
in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS that are
included elsewhere in this material for more information on the
Bank's policy regarding loan impairment.

	Inherent in the business of providing financial services is the
risk involved in extending credit.  Management believes the
objective of a sound credit policy is to extend quality loans to
customers while reducing risk affecting shareholders' and
depositors' investments.  Risk reduction is achieved through
diversity of the loan portfolio as to type, borrower, and
industry concentration as well as sound credit policy guidelines
and procedures.  

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS 
<TABLE>

FIVE YEAR COMPARISON
<CAPTION>
      		                                    1995  	  	   1994        		1993         		1992        		 1991  
 
<S>                                     <C>           <C>           <C>            <C>            <C>
INTEREST INCOME 										
 Interest and fees on loans        	    $	25,857,982 	$	21,130,914 	$	19,518,742 	 $	19,791,548 	 $	19,571,295 
										
 Income on investment securities 										
   Taxable interest 		                     6,179,492   		7,012,626   		6,925,404		    6,898,114 		   5,218,446 
   Exempt from federal income tax 		       2,156,813 		  2,184,666   		1,857,168 		   1,825,869 		   1,828,738 
   Dividends 		                              177,790 		    204,948 		     72,054 		     110,874		      150,823 
										
                                         		8,514,095 		  9,402,240 		  8,854,626 		   8,834,857		    7,198,007 

 Other interest income 		                    121,492 		    284,384 		    347,287		      195,744 	      279,165 

    TOTAL INTEREST INCOME 		              34,493,569 		 30,817,538		  28,720,655 		  28,822,149 		  27,048,467 

INTEREST EXPENSE  										
  Interest on deposits 		                 15,247,875 		 12,770,618 		 11,998,235		   13,329,557 		  14,212,771 
  Interest on other short term  
   borrowings 		                             174,370 		     93,286		      38,339 		      47,449 		      63,994 
										
   TOTAL INTEREST EXPENSE 		              15,422,245 		 12,863,904		  12,036,574 		  13,377,006 		  14,276,765 

   NET INTEREST INCOME 		                 19,071,324 		 17,953,634  		16,684,081 		  15,445,143 		  12,771,702 

PROVISION FOR POSSIBLE LOAN LOSSES 		        670,000 		    660,000 		    470,000		      840,000 		     780,000 
   NET INTEREST INCOME AFTER 										
    PROVISION FOR LOAN LOSSES 		          18,401,324  		17,293,634 		 16,214,081 		  14,605,143 		  11,991,702 

NONINTEREST  INCOME 										
  Trust department income 		               1,251,642 		  1,249,359 		    863,952		      753,239 		     603,701 
  Service fees on deposit accounts 		      2,697,332 		  2,317,992		   2,206,026 		   2,123,096 		   1,893,355 
  Other service fees, commissions, 										
   and fees 		                               300,407 		    336,758 		    509,009 		     401,618		      237,755 
  Other operating income 		                  322,634 		    319,466 		    315,108		      191,363 		      91,440 
  Available for sale securities 										
   gains (losses) 		                           1,182 		   (243,690) 		    23,896		       28,434 		      15,862 

   TOTAL NONINTEREST  INCOME 		            4,573,197 		  3,979,885		   3,917,991 		   3,497,750 		   2,842,113 

NONINTEREST  EXPENSES 										
  Salaries and employee benefits 		        6,620,827 		  6,247,706		   5,686,965 		   5,283,086 		   4,407,072 
  Net occupancy expense 		                 1,279,434 		  1,190,678 		  1,070,971		      984,650 		     797,466 
  Furniture and equipment expense 		       1,382,769 		  1,069,856		     889,848 		     801,453 		     935,821 
  Loss on other real estate 		                50,724 		      4,000 		    103,122		      312,064 		      48,398 
  Other operating expenses 		              5,006,292 		  4,996,107		   4,903,949 		   4,460,696 		   3,572,881 
										
   TOTAL NONINTEREST EXPENSES 		          14,340,046		  13,508,347 		 12,654,855 		  11,841,949 		   9,761,638 

      INCOME BEFORE PROVISION 										
       FOR INCOME TAXES 		                 8,634,475		   7,765,172 		  7,477,217 		   6,260,944 		   5,072,177 

PROVISION FOR INCOME TAXES 		              2,518,769 		  2,203,746 		  2,220,965		    1,768,840 		   1,341,130 

        NET INCOME  	                   $ 	6,115,706 	$ 	5,561,426 	$ 	5,256,252 	 $ 	4,492,104 	 $ 	3,731,047 

EARNINGS PER COMMON SHARE  										
(1,400,000 outstanding shares) 	        $ 	     4.37 	$ 	     3.97 	$ 	     3.75	  $ 	     3.21 	 $ 	     2.67 

</TABLE>

<PAGE>

                    FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                    AND RESULTS OF OPERATIONS 

Net Income

	Net income was 10.0% higher in 1995 than in 1994, 5.8% higher
in 1994 than in 1993, and 17.0% higher in 1993 than in 1992.  As
indicated by the table, Comparative Data, the Corporation's
return on average assets was 1.32% in 1995, 1.23% in 1994, and
1.25% in 1993.  The return on equity remains strong at 13.95% in
1995, 14.11% in 1994, and 14.93% in 1993.

Net Interest Margin

	The bottom graph on the last page of this document illustrates
an increasing net interest margin  during the five years shown. 
As mentioned in the LIQUIDITY AND INTEREST RATE  SENSITIVITY 
MANAGEMENT section earlier, the Bank's Asset/Liability Committee
monitors interest rate sensitivity monthly.  Through the use of
simulation analysis to estimate future net interest income under
 varying interest rate conditions, the committee can  establish
pricing and maturity strategies to maintain that steady net
interest margin.  The simulation analysis uses the repricing
information indicated in the table, Rate Sensitivity of Earning
Assets and Interest Bearing Liabilities, and adjusts the current
balance sheet to reflect the impact of different interest rate
movements.

EFFECTS OF ECONOMY

	Current economic conditions have had a definite effect on the
reported financial condition and results of operation.  The
stock market closed out its worst performance and the bond
market experienced its largest calendar year decline in modern
history during 1994.  However, the market was much stronger
during 1995 experiencing considerable gains compared to 1994. 
Many Bank customers had used transaction and limited transaction
interest bearing accounts as holding vehicles to watch rate
movements during 1994 trying to determine the best time to lock
in a rate on a longer term product.  During 1995, many of these
customers decided that the time was right and transferred
investments to longer term certificate of deposits from
transaction and limited transaction interest bearing accounts. 
As Bank customers felt more comfortable with the economy, loan
demand increased strongly resulting in a shift of  Bank earning
assets from investment securities to higher yielding loans. 
Historically, noninterest bearing demand deposits and regular
savings accounts have provided a relatively fixed rate source of
funding for earning assets.  This was illustrated again in 1995
and 1994 as these fixed rate and noninterest bearing deposits
continued to provide a relatively stable cost from this funding
source.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE FINANCIAL
STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD

	The Financial Accounting Standards Board has issued two
standards that have not been adopted by the Bank but are
required to adopted after December 31, 1995.  The Statement of
Financial Accounting Standards No. 121 (SFAS 121), "Accounting
for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed Of" establishes guidance on when to
recognize and how to measure impairment losses on long-lived
assets and certain identifiable intangibles.  The statement also
offers guidance on how to value long-lived assets that
management has committed to a plan to dispose of the assets.  An
asset that an entity will hold and use should be reviewed for
impairment whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable.  In such
situations, an impairment loss is recognized if the sum of
undiscounted future cash flows expected to be generated by the
asset is less than the carrying amount of the asset. 
Measurement of the impairment loss, however, is based on the
fair value of the asset.  Management does not believe this
statement will have any material effect on future income.

	The second standard,  Statement of Financial Accounting
Standards No. 122 (SFAS 122), "Accounting for Certain Mortgage
Banking Activities" requires recognition of rights to service
mortgage loans for others as separate assets, regardless of how
the servicing rights are acquired.  This Statement prescribes  a
single procedure for the capitalization of those rights acquired
either through loan origination or through purchase transactions
where a mortgage banking enterprise buys the servicing rights. 
Mortgage servicing rights are to be assessed for impairment


<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS 

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE FINANCIAL
STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD (Continued)

based on their fair value.  Impairment is recognized through a
valuation allowance for each impaired group of mortgage
servicing rights.  Rights capitalized after adoption of this
statement should be grouped based on the risk characteristics of
the underlying loans.  Management does not believe this
statement will have any material effect on future income.

SHAREHOLDER  INFORMATION

	The 1,400,000 shares of common stock of First Farmers &
Merchants Corporation outstanding at December 31, 1995, had a
market value of $75.6 million and were held by 1,514
identifiable individuals located mostly in the market area.  A
small number of additional shareholders are not identified
individually since some bank nominees, including the bank's
Trust Department, are listed as single owners when, in fact,
these holdings represent large numbers of shareholders.  No
single shareholder's ownership exceeded five percent at year end.

	There is no established public trading market for the stock. 
The following table lists the high and low price of the
Corporation's common stock, as well as the semiannual dividend
paid per share, in each of the last three years.

<TABLE>

                                             SHAREHOLDER INFORMATION
<CAPTION>
                                               			Price Range of  				  Dividend 
                                                			Common Stock 	   	 		  Paid 
                                          			High       	 	Low 	        Per Share 

              <S>    <S>                  <C>            <C>            <C>
                    	First quarter 	      $	36.00 	      $	36.00 	      $ 	
                    	Second quarter 		      37.00        		37.00         		0.36 
              1993  	Third quarter 		       38.00 		       37.00 		
                    	Fourth quarter 		      38.00        		38.00         		0.37 

                                                                        $  0.73
 	 	 	 	 	 	 	 
                    	First quarter 	      $	40.00 	      $	36.00 	      $ 	
                    	Second quarter 		      42.00        		37.00 		        0.39 
              1994  	Third quarter 		       43.00 		       37.00 		
                    	Fourth quarter 		      45.00 		       38.00 		        0.41 

                                                                  						$ 	0.80  

                    	First quarter 	      $	45.00 	       $	45.00      	$ 	
                    	Second quarter 		      48.00 		        45.00 		       0.43 
              1995  	Third quarter 		       50.00 		        48.00 		
                    	Fourth quarter 		      54.00 		        50.00        		0.45 

                                                                  						$ 	0.88 
</TABLE>

<PAGE>							

                   FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                AND RESULTS OF OPERATIONS 

<TABLE>
                                      COMPARATIVE DATA 										
                                  (In Thousands of Dollars) 										

                             		1995     		1994      		1993      		1992     		 1991  

<S>                        <C>         <C>         <C>         <C>         <C>
AVERAGE ASSETS 	           $	463,739 	 $	451,953 	 $	420,760 	 $	381,379  	$	303,851 

AVERAGE LOANS (NET) 	      $	276,166 	 $	247,791 	 $	233,609  	$	215,158  	$ 182,561 

AVERAGE DEPOSITS 	         $	409,489 	 $	404,412 	 $	378,782 	 $	343,128	  $	268,495 

RETURN ON EQUITY 										
  AND ASSETS 										
 Return on average assets 		   1.32% 		    1.23% 		    1.25% 		    1.18%		     1.23% 

 Return on beginning equity 		13.95% 		   14.11% 		   14.93%    		14.21% 		   13.01% 
 Average equity to  										
    average assets 		         10.08% 		    9.25% 		    8.90% 		    8.76%		     9.94% 

COMMON DIVIDEND 										
  PAYOUT RATIO 										
 Earnings per share 	      $ 	  4.37 	  $ 	 3.97 	  $ 	 3.75 	  $ 	 3.21 	 $	   2.67 

 Cash dividends per share 	$ 	  0.88 	  $ 	 0.80   	$ 	 0.73 	  $  	0.64	  $ 	  0.58 

 Ratio 		                       20% 		      20% 		      19% 		      20% 		      22% 
</TABLE>
										
<TABLE>

                             NET INTEREST MARGIN
<CAPTION>
   	                          	1995  		    1994  		     1993  		    1992  		   1991  
                                             (In Thousands of Dollars) 								

<C>                        <C>          <C>          <C>         <C>        <C>
INTEREST INCOME 										
 (TAX EQUIVALENT)  	       $ 	35,626 	  $ 	32,039 	  $ 	29,465 	 $ 	29,564 	$ 	27,736 

INTEREST EXPENSE 		           15,422 		    12,864 		    12,037 		   13,377 		  14,277 


                          	$ 	20,204 	  $ 	19,175 	  $ 	17,428 	 $ 	16,187 	$ 	13,459 


NET INTEREST MARGIN* 		        4.79% 		     4.68% 		     4.58% 		    4.67% 		   4.84% 

<FN>
<F14>
*Net interest margin is net interest income (tax equivalent)
divided by average earnings assets.
</FN>
</TABLE>

	In summary, the graphs on the following page illustrate the
presentation in the preceding pages, a unique perspective on the
internal structures of the Corporation and the Bank.  Each
shareholder can be proud of this performance.  Our shareholders
are the real support of our organization.  Thank you for your
help and support.


Nine color graphs were included on the last page of this report.
One - The first graph used the information presented above in the Five
Year Comparison table to illustrate the growth in net income.
Two - The second graph used information from the Comparative Data on the
previous page to illustrate a return on average assets of 1.18% and above
for the last five years.
Three - The third graph used information from the Comparative Data on the
previous page to illustrate a return on beginning stockholders' equity 
over 13% for the last five years.
Four - The fourth graph used information from the Comparative Data on the 
previous page to illustrate earnings per share and cash dividends per share 
for the last five years.
Five - The fifth graph used information from the Consolidated Statements of
Stockholders' Equity to illustrate the growth in stockholders' equity for
the last five years.
Six - The sixth graph used information from the Consolidated Balance Sheets
to illustrate the growth in net loans for the last five years.
Seven - The seventh graph used information from the Consolidated Balance
Sheets to illustrate the growth in deposits for the last five years.
Eight - The eighth graph used information from the Consolidated Balance Sheets
to illustrate the growth in total assets for the last five years.
Nine - The nineth graph used information from the Five Year Comparison table
above to illustrate interest income, interest expense and net interest income
for the last five years. 


Item 7.  Management's Discussion and Analysis of Financial
Condition and Results of Operations.

Management's discussion and analysis of financial condition and
results of operations is incorporated herein by reference to
Management's Discussion and Analysis of Financial Condition and
Results of Operations which are attached to and made a part of
Annual Report to Stockholders which is attached hereto as
Exhibit 13.


<TABLE>
              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                         CONSOLIDATED BALANCE SHEETS                             
                         DECEMBER 31, 1995 and 1994                           
<CAPTION>
ASSETS 		                                    1995   		             1994  

<S>                                          <C>                 <C>
Cash and due from banks 	                    $ 	31,281,706       $ 	26,735,526 
Securities 				
 Available for sale (amortized cost 
  $10,875,527 and $12,646,156 
  respectively) 		                              11,269,006 		       12,565,226 
 Held to maturity (fair value
  $128,829,961 and $138,892,331  
  respectively) 		                             127,662,682 		      143,061,031 
    Total securities - Note 2 		               138,931,688       		155,626,257 
Loans, net of unearned income - Note 3   	  	  291,930,311       		262,694,120 
 Allowance for possible loan losses
  - Note 4 		                                   (2,678,386)       		(2,342,290) 
    Net loans 		                               289,251,925 		      260,351,830 
Bank premises and equipment, at cost less
 allowance for depreciation and 
 amortization - Note 5   		                      6,397,936 		        6,193,080 
Other assets 		                                 11,171,993 		       11,887,492 
				
   TOTAL ASSETS 	                            $ 477,035,248 	     $	460,794,185 

LIABILITIES 				

Deposits 				
 Noninterest-bearing 	                       $ 	67,420,536 	     $ 	61,845,878 
 Interest-bearing (including  
 certificates of deposit over $100,000: 				
 1995 - $30,593,803; 1994 - $26,169,831) 	    	343,357,525 		      343,306,545 
    Total deposits 		                          410,778,061 		      405,152,423 
 Federal funds purchased 		                     10,000,000 		        7,000,000 
 Dividends payable 		                              630,000 		          574,000 
 Other short term liabilities 		                 1,955,000 		          600,000 
 Accounts payable and accrued liabilities 		     4,675,712 		        3,639,636 
				
    TOTAL LIABILITIES 		                       428,038,773         416,966,059 

COMMITMENTS AND CONTINGENCIES - Notes 7 and 9 				
STOCKHOLDERS' EQUITY 				
 Common stock - $10 par value, authorized 
  4,000,000 shares; 1,400,000 shares issued 
  and outstanding - Note 1                    		14,000,000 		       14,000,000 
 Retained earnings - Note 6 		                  34,760,389 	       	29,876,683 
 Net unrealized loss on available-for-sale 
  securities, net of tax 		                        236,086 		          (48,557) 
    TOTAL STOCKHOLDERS' EQUITY 		               48,996,475 		       43,828,126 

    TOTAL LIABILITIES AND STOCKHOLDERS' 
     EQUITY 	                                $	477,035,248 	     $ 460,794,185 
</TABLE>

<TABLE>
                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                 
                     YEARS ENDED DECEMBER 31, 1995, 1994, and 1993                   
<CAPTION>
                                                              						Net Unrealized 		
			   		                                                           	Gain (Loss) On 		
                                    		Common  		    Retained 		    Available-for-sale 		
                                    		Stock   	    	Earnings    	    	Securities   	   	   Total 

<S>                               <C>             <C>                <C>               <C>
BALANCE AT JANUARY 1, 1993 	      $ 	7,000,000 	  $	28,201,005   	   $  	- 	           $	35,201,005 
Net income for the year 		               - 		        5,256,252 		        - 		             5,256,252 
Cash dividends declared, 
 $.73 per share 		                       - 		       (1,022,000) 		       - 		            (1,022,000) 
Net unrealized loss on mutual 
 fund investment 		                      - 		          (27,684) 		       -		                (27,684) 
								
BALANCE AT DECEMBER 31, 1993 		      7,000,000 		   32,407,573 		        -		             39,407,573 
Cumulative effect of change in
 accounting principle (net of
 deferred income taxes of 
 $171,405)  - Note 1 		                  - 		           27,684		       229,424 		           257,108 
Two-for-one stock split - Note 1 		  7,000,000 		   (7,000,000) 		       -		                  - 
Net income for the year 		               - 		        5,561,426 		        - 		             5,561,426 
Cash dividends declared, $.80 
 per share 		                            - 		       (1,120,000) 		       -		             (1,120,000) 
Net unrealized loss on available-
 for-sale securities, net of tax 		      - 		            - 		         (277,981) 		         (277,981) 
								
BALANCE AT DECEMBER 31, 1994 		     14,000,000 		   29,876,683		       (48,557) 		       43,828,126 
Net income for the year 		               - 		        6,115,706 		        - 		             6,115,706 
Cash dividends declared, $.88 
 per share 		                            - 		       (1,232,000) 		       -		             (1,232,000) 
Net unrealized gain on available-
 for-sale securities, net of tax		       - 		            - 		          284,643 		           284,643 

BALANCE AT DECEMBER 31, 1995 	    $	14,000,000 	  $	34,760,389 	     $	236,086 	       $	48,996,475 

<FN>
<F1>
The accompanying notes are an integral part of the consolidated
financial statements. 								
</FN>
</TABLE>

<PAGE>
<TABLE>
                   FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                           CONSOLIDATED STATEMENTS OF INCOME                      
                     YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993                   
<CAPTION>
                                         		1995  		       1994  		       1993  

INTEREST INCOME 						
 <S>                                  <C>            <C>            <C>
 Interest and fees on loans 	         $	25,857,982  	$	21,130,914 	 $	19,518,742 

 Income on investment securities 						
  Taxable interest 		                    6,179,492 		   7,185,169 		   6,925,404 
  Exempt from federal income tax 		      2,156,813 		   2,184,666 		   1,857,168 
  Dividends 		                             177,790      		204,948       		72,054  
                                       		8,514,095 		   9,574,783 	   	8,854,626 

 Other interest income 	                  	121,492 		     111,841 		     347,287 

    TOTAL INTEREST INCOME 		            34,493,569 		  30,817,538		   28,720,655 

INTEREST EXPENSE  						
 Interest on deposits 		                15,247,875 		  12,770,618 		  11,998,235 
 Interest on other short term 
  borrowings 		                            174,370 		      93,286		       38,339 
						
    TOTAL INTEREST EXPENSE 		           15,422,245 		  12,863,904		   12,036,574 

    NET INTEREST INCOME 		              19,071,324 		  17,953,634		   16,684,081 

PROVISION FOR POSSIBLE LOAN
 LOSSES - Note 4 		                        670,000 		     660,000		      470,000 

    NET INTEREST INCOME AFTER 						
     PROVISION FOR LOAN LOSSES 		       18,401,324		   17,293,634 		  16,214,081 

NONINTEREST  INCOME 						
 Trust department income 		              1,251,642 		   1,249,359 		     863,952 
 Service fees on deposit accounts 		     2,697,332 		   2,317,992		    2,206,026 
 Other service fees, commissions,
  and fees 		                              300,407		      336,758 		     509,009 
 Other operating income 		                 322,634 		     319,466 		     315,108 
 Available for sale securities 
  gains (losses) 		                          1,182		     (243,690) 		     23,896 
						
    TOTAL NONINTEREST  INCOME 		         4,573,197 		   3,979,885		    3,917,991 

NONINTEREST  EXPENSES 						
 Salaries and employee benefits 		       6,620,827 		   6,247,706		    5,686,965 
 Net occupancy expense 		                1,279,434 		   1,190,678 		   1,070,971 
 Furniture and equipment expense 		      1,382,769 		   1,069,856		      889,848 
 Loss on other real estate 		               50,724 		       4,000 		     103,122 
 Other operating expenses 		             5,006,292 		   4,996,107		    4,903,949 

    TOTAL NONINTEREST EXPENSES 		       14,340,046		   13,508,347 		  12,654,855 
						
    INCOME BEFORE PROVISION FOR
     INCOME TAXES 		                     8,634,475 		   7,765,172		    7,477,217 

PROVISION FOR INCOME TAXES - Note 8 		   2,518,769 		   2,203,746		    2,220,965 

    NET INCOME  	                     $ 	6,115,706 	 $ 	5,561,426 	 $ 	5,256,252 

EARNINGS PER COMMON SHARE - Note 1 						
 (1,400,000 outstanding shares) 	     $ 	     4.37 	 $ 	     3.97 	 $ 	     3.75 

<FN>						
<F2>
The accompanying notes are an integral part of the consolidated
financial statements. 						
</FN>
</TABLE>

<PAGE>

<TABLE>
                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                      CONSOLIDATED STATEMENTS OF CASH FLOWS                           
                  YEARS ENDED DECEMBER 31, 1995, 1994, and 1993                   
<CAPTION>
		                                   1995     		      1994            		1993  

OPERATING ACTIVITIES 						

 <S>                            <C>              <C>               <C>
 Net income   	                 $ 	6,115,706 	   $ 	5,561,426     	$ 	5,256,252 
 Adjustments to reconcile net
  income to net cash provided
  by operating activities 						
  Excess (deficiency) of 
   provision for possible 						
   loan losses over net 
   charge offs 		                    336,096 	      	318,639	         	(230,083) 
  Provision for depreciation
   and amortization of 
   premises and equipment 		         645,816 		      589,045 		         591,486 
  Amortization of deposit 
   base intangibles 		               168,020		       168,020 		         168,020 
  Amortization of investment
   security premiums, net of
   accretion of discounts 		         641,104 		      678,968		          747,224 
  Increase in cash surrender
   value of life insurance
   contracts 	                      	(65,936) 		     (75,287) 		       (103,175) 
  Deferred income taxes 		          (233,403) 		    (163,907) 		         24,080 
  (Increase) decrease in 						
   Interest receivable  		          (255,109) 	    	(992,872) 	        	364,303 
   Other assets  	                  	912,162 		      344,572 		      (1,171,225) 
  Increase (decrease) in 						
   Interest payable 	               	577,137 		      222,605 		        (206,742) 
   Other liabilities 		              458,939 		      287,975 		          38,024 
						
    TOTAL ADJUSTMENTS 		           3,184,826 		    1,377,758		          221,912 

    NET CASH PROVIDED BY 
     OPERATING ACTIVITIES        		9,300,532 		    6,939,184 		       5,478,164 

INVESTING ACTIVITIES 						

 Proceeds from maturities, 
  calls, and sales of 
  available-for-sale
  securities 		                    7,306,453 		   25,152,051 		           - 
 Proceeds from maturities and
  calls of held-to-maturity
  securities 		                   18,848,992 		    5,092,000 		      30,497,983 
 Purchases of investment 
  securities 						
  Available-for-sale 		           (3,168,200) 		 (16,942,994) 		          - 
  Held-to-maturity 		             (6,459,372) 		 (19,495,987)		     (39,789,407) 
 Net increase in loans 		        (29,236,191) 	 	(18,778,658)     		(18,710,584) 
 Purchases of premises and
  equipment 		                      (850,672) 		    (418,586)		        (222,279) 
 Proceeds from redemption of
  annuities and life insur-
  ance contracts 						                                                 229,275 
 Purchase of single premium
  life insurance contracts 		          - 		            - 		            (730,000) 

    NET CASH USED BY 
     INVESTING ACTIVITIES      		(13,558,990) 		 (25,392,174) 		    (28,725,012) 

FINANCING ACTIVITIES 						

 Net increase in noninterest-
  bearing and interest-bearing
  deposits  		                     5,625,638      16,217,348	       	18,384,169 
 Net increase (decrease) in
  short term borrowings 		         4,355,000		     7,000,000 		         (77,537) 
 Cash dividends                 		(1,176,000) 	  	(1,071,000) 		       (966,000) 

    NET CASH PROVIDED BY
     FINANCING ACTIVITIES        		8,804,638 		   22,146,348 		      17,340,632 

    INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS        		4,546,180 		    3,693,358 		      (5,906,216) 

CASH AND CASH EQUIVALENTS 
 AT BEGINNING OF YEAR 		          26,735,526		    23,042,168 		      28,948,384 

CASH AND CASH EQUIVALENTS AT
 END OF YEAR 	                  $	31,281,706 	   $	26,735,526 	    $ 23,042,168 

<FN>
<F3>
The accompanying notes are an integral part of the consolidated
financial statements.
</FN>
</TABLE>

<PAGE>

              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

		First Farmers and Merchants Corporation (the Corporation) was
incorporated on March 31, 1982, as a Tennessee corporation.  On 
April 13, 1982, the Board of Directors of the Corporation
adopted a resolution to execute and deliver to the Board of
Governors of the Federal Reserve System an application pursuant
to Section 3(a)(1) of the Bank Holding Company Act of 1956, as
amended, for prior approval by the Board of action to be taken
by the Corporation which would result in its becoming a bank
holding company. 

 		As of December 31, 1995, the only subsidiary of the
Corporation was the Bank.  The Bank is a national banking
association which was organized in 1954 as a successor to a
state bank organized in 1909.  The Bank conducts a full-service
commercial banking business at its principal office at 816 South
Garden Street, Columbia, Tennessee and at thirteen (13)
branches:  High Street Branch, Northside Branch, Shady Brook
Mall Branch, Hatcher Lane Branch, and Campbell Plaza Branch in
Columbia; Mt. Pleasant Branch in Mt. Pleasant; Spring Hill
Branch in Spring Hill; Lawrenceburg Branch in Lawrenceburg;
Leoma Branch in Leoma; Loretto Branch in Loretto; Lewisburg
Branch in Lewisburg; Chapel Hill Branch in Chapel Hill; and
Centerville Branch in Centerville.  The Bank provides automatic
teller machine services in the Northfield Complex at the Saturn
location near Spring Hill, and in Columbia at the Tennessee Farm
Bureau and Columbia State Community College.

		The community service area of the Bank is comprised of Maury,
Lawrence, Marshall, Hickman, and adjacent counties.  Commercial
banking in the marketing area served by the Bank is highly
competitive.  Although the Bank is ranked as the largest bank in
the area, in terms of total deposits, the Bank faces substantial
competition from ten (10) other banks, three (3) savings and
loan associations, and several credit unions located in the
marketing area.

Accounting Policies

		The accounting principles followed and the methods of applying
those principles conform with generally accepted accounting
principles and to general practices in the banking industry. 
The significant policies are summarized as follows.

Principles of Consolidation

		The accompanying consolidated financial statements present the
accounts of the Corporation and its wholly-owned subsidiary, the
Bank.  Material intercompany accounts and transactions have been
eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

		The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.

Cash and Due From Banks

		Included in cash and due from banks are legally  reserved
amounts which are required to be maintained on an average basis
in the form of cash and balances due from the Federal Reserve
Bank and other banks.  Average reserve requirements for the year
ended December 31, 1995, amounted to approximately $8.3 million.

Cash Equivalents

		Cash equivalents include cash on hand, cash due from banks,
and federal funds sold.  Federal funds are sold for one-day
periods.

<PAGE>

          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Securities

		Effective January 1, 1994, the Bank adopted Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting
for Certain Investments in Debt and Equity Securities."  In
accordance with the Statement, prior period financial statements
have not been restated to reflect the change in accounting
principle.  The cumulative effect of  the adoption was an
increase in stockholders' equity  of $257,108 (net of $171,405
in deferred income taxes) to reflect the net unrealized gains on
securities classified as available-for-sale that were previously
classified as held-to-maturity.  SFAS 115 establishes standards
of accounting and reporting for investments in equity securities
that have readily determinable fair values and all debt
securities.  Under the Statement, all such investments are
classified in three categories and accounted for as follows: 

		Debt securities that the Bank has the positive intent and
ability to hold to maturity are classified as held-to-maturity
and reported at amortized cost with premiums and discounts
recognized in interest income using the interest method over the
period to maturity.

		Debt and equity securities that are bought and held
principally for the purpose of selling them in the near term are
classified as trading securities and reported at fair value,
with  unrealized gains and losses included in earnings.

		Debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified
as available-for-sale securities and reported at fair value,
with unrealized gains and losses, net of tax,  excluded from
earnings and reported as a separate component of stockholders'
equity.  Gains and losses realized on the sale of
available-for-sale securities are determined using the specific
identification method.

		Declines in the fair value of individual available-for-sale
and held-to-maturity securities below their cost that are other
than temporary result in write-downs of the individual
securities to their fair value.  The related write-downs are
included in earnings as realized losses.

		On November 15, 1995, the Financial Accounting Standards Board
issued a guide for implementation of SFAS 115 which allowed a
bank to reassess the appropriateness of the classification of
all securities held at that date and account for resulting
reclassifications as a transfer until December 31, 1995. 
Reclassification from the held-to-maturity category that
resulted from this one-time reassessment would not call into
question the intent of a bank to hold other debt securities to
maturity in the future.  The Bank did not reclassify any debt
securities as a result of this one-time reassessment.

Loans

		Effective January 1, 1995, the Bank adopted Statement of
Financial Accounting Standards No. 114 (SFAS 114, as amended by
SFAS 118), "Accounting by Creditors for Impairment of a Loan". 
The statement specifies how allowances for credit losses related
to certain loans should be determined and addresses the
accounting for certain loans that are restructured in a troubled
debt restructuring.  A loan is considered impaired when it is
probable that an institution will be unable to collect all
amounts due (principal and interest) according to the
contractual terms of the loan agreement.  The Bank evaluates
smaller balance homogeneous loans collectively for impairment. 
Loans secured by one to four family residential properties,
consumer installment loans, and line of credit loans are
considered smaller-balance homogeneous loans.

		Interest on loans is computed daily based on the principal
amount outstanding.  Loan origination fees and related direct
costs are deferred and recognized as an adjustment of yield on
the interest method.  Interest accruals are discontinued when,
in the opinion of management, it is not reasonable to expect
that such interest will be collected.  Consequently, interest
accruals are discontinued on loans that are ninety days
past-due.  All loans

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Loans (Continued)

in non-accrual status and loans in the two most severe Loan
Review classifications are specifically evaluated for
impairment.  Interest income on loans in non-accrual status is
recognized only to the extent of the excess of cash payments
received over principal payments due.

		When a loan is collateral dependent, impairment is measured
based on the observable market price or the fair value of the
collateral.  For other loans, the amount of impairment is
measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate. 
Positive changes in the net present value of an impaired loan
will in no event be used to increase the value of a loan above
the amount of the loan.

	Other Real Estate

		Other real estate, which is included in other assets,
represents real estate acquired through foreclosure and is
stated at the lower of cost or fair value minus estimated cost
to sell.  If, at the time of foreclosure, the fair value of the
real estate is less than the Bank's carrying value of the
related loan, a write-down is recognized through a charge to the
allowance for possible loan losses, and the fair value becomes
the new cost for subsequent accounting.  If the Bank later
determines that the cost of the property cannot be recovered
through sale or use, a write-down is recognized by a charge to
operations.  When the property is not in a condition suitable
for sale or use at the time of foreclosure, completion and
holding costs, including such items as real estate taxes,
maintenance and insurance, are capitalized up to the estimated
net realizable value of the property.  However, when the
property is in a condition for sale or use at the time of
foreclosure. or the property is already carried at its estimated
net realizable value, any subsequent holding costs are expensed.
 Legal fees and any other direct costs relating to foreclosures
are charged to operations when incurred.

		The Bank's recorded value for other real estate was
approximately $482,945 at December 31, 1995, and $544,540 at
December 31, 1994.  

Allowance for Possible Loan Losses

	The allowance for possible loan losses is established by
charges to operations based on the evaluation of the impairment
of loans by Loan Review, the Special Assets Committee, and the
Credit Administrator.  Impairments in loans are charged to the
allowance account in the period such determination is made. 
Recoveries on loans previously charged off are credited to the
allowance account in the period received.  The adequacy of the
allowance for possible loan losses is evaluated quarterly in
conjunction with loan review reports and evaluations that are
discussed in a meeting with loan officers and loan
administration.

Premises and Equipment

		Premises and equipment are stated at cost, less accumulated
depreciation and amortization.  The provision for depreciation
is computed principally on an accelerated cost recovery method
over the estimated useful lives of the assets, which range as
follows:  buildings - 15 to 50 years and equipment - 3-33 years.
 Costs of major additions and improvements are capitalized. 
Expenditures for maintenance and repairs are charged to
operations as incurred.  Gains or losses from the disposition of
property are reflected in operations, and the asset accounts and
related allowances for depreciation are reduced. 

Trust Department Income

		Trust department income is recognized on the accrual basis in
the applicable period earned.

<PAGE>

             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Stock Split

		During 1994, the Corporation amended its corporate charter to
increase the number of authorized shares of its common stock
from 2,000,000 to 4,000,000 shares and on April 12, 1994, the
Corporation's stockholders approved a two-for-one split effected
in the form of a 100% stock dividend distributed May 30, 1994,
to shareholders of record on April 12, 1994.  In accordance with
State corporate legal requirements, the transaction was recorded
by a transfer from retained earnings to common stock in the
amount of $7,000,000 ($10 for each additional share issued). 
All per share and share data in the accompanying consolidated
financial statements and footnotes have been restated to give
retroactive effect to the transaction.

Income Taxes

		The companies file a consolidated federal income tax return.  
They adopted Statement of Financial Accounting Standards No. 109
(SFAS 109), "Accounting For Income Taxes", effective January 1,
1993.  SFAS 109 requires an asset and liability approach to
financial accounting and reporting for income taxes.  Deferred
income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected
to affect taxable income.

		Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. 
Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred
tax assets and liabilities.  The cumulative effect, as of
January 1, 1993, of this change in the method of accounting for
income taxes was negligible.

Intangible Assets

	Deposit base intangibles identified in merger transactions are
amortized over 42 to 70 months on the straight-line method. 
Total amortization expense charged to operations amounted to: 
1995 - $168,020;  1994 - $168,020;  and  1993 - $168,020.

Fair Value of Financial Instruments

		Statement of Financial Accounting Standards No. 107 (SFAS
107), "Disclosures about Fair Value of Financial Instruments",
requires all entities to disclose the estimated fair value of
its financial instrument assets and liabilities.  For the Bank,
as for most financial institutions, almost all of its assets and
liabilities are considered financial instruments as defined in
SFAS 107.  Many of the Bank's financial instruments, however,
lack an available trading market as characterized by a willing
buyer and willing seller engaging in an unforced, unforeclosed
transaction.  Therefore, significant estimations and present
value calculations  were used by the Bank for the purposes of
this disclosure.

<PAGE>


            FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2 - INVESTMENT SECURITIES

		The following tables reflect the amortized value and fair
value of investment securities.

<TABLE>

<CAPTION>
                            		      Amortized 		                Gross Unrealized 		 		         Fair 	
	                                    	Value 		               Gain           	   Loss 		        Value 	

December 31, 1995 									

Available-for-sale securities 									

 <S>                              <C>                     <C>                  <C>           <C>
 U.S. Treasury 	                  $ 	5,064,421 	          $  	72,679 	         $   	- 	      $ 	5,137,100 	
 U.S. Government agencies 		         3,279,968 		             72,268 		             2,570		     3,349,666 	
 Other securities 		                 2,531,138 	             254,102 		             3,000 		    2,782,240 	
 	                                $	10,875,527 	          $ 	399,049 	         $   	5,570 	  $	11,269,006 	

Held-to-maturity securities 									

 U.S. Treasury                   	$	61,426,813 	          $ 	295,846 	         $  	59,359 	  $	61,663,300 	
 U.S. Government agencies 		        23,498,204 		            267,237 		            48,041		    23,717,400 	
 States and political subdivisions		42,415,025 		            934,439		            241,048 		   43,108,416 	
 Other securities 		                   322,640 		             18,205 		             - 		          340,845 	
                                 	$127,662,682 	          $1,515,727 	         $ 	348,448 	  $128,829,961 	

December 31, 1994 									
									
Available-for-sale securities 									
 U.S. Treasury 	                  $ 	7,094,657 	          $   	4,695 	         $  	50,352 	  $ 	7,049,000 	
 U.S. Government agencies 		         5,551,499 		              3,892 		            39,165		     5,516,226 	
	                                 $	12,646,156 	          $   	8,587           $  	89,517 	  $	12,565,226 	

Held-to-maturity securities 									
 U.S. Treasury 	                  $	71,997,419 	          $  	66,784 	         $1,862,503 	  $	70,201,700 	
 U.S. Government agencies 		        28,527,740 		             21,631 		         1,006,621		    27,542,750 	
 States and political subdivisions 	39,786,156 		            493,613		          1,804,009 		   38,475,760 	
 Other securities 		                 2,749,716 		              3,210 		            80,805 		    2,672,121 	
                                 	$143,061,031 	          $ 	585,238 	         $4,753,938 	  $138,892,331 	

</TABLE>

		Securities with an amortized value of $93,101,954 and
$81,583,779 at December 31, 1995 and 1994, respectively (fair
value: 1995 - $93,937,766; 1994 - $80,148,047), were pledged to
secure deposits and for other purposes as required or permitted
by law.  The fair value is established by an independent pricing
service as of the approximate dates indicated.  The differences
between the amortized value and fair value reflect current
interest rates and represent the potential gain (or loss) had
the portfolio been liquidated on that date.  Security gains (or
losses) are realized only in the event of dispositions prior to
maturity.  The fair values of all securities at December 31,
1995, either equaled or exceeded the cost of those securities,
or the decline in fair value is considered temporary.

		A schedule of net gains and losses realized on the disposition
of investment securities, and the related tax effects, is
presented in the following table.  All net gains realized in
1995 and net losses realized in 1994 resulted from sales of
securities which were classified as available-for-sale.

<TABLE>

<CAPTION>
            		                         1995       		1994        		1993  	

       <S>                         <C>           <C>           <C>
       Pre-tax gains (losses) 	    $   	1,182 	  $(243,690) 	  $ 	23,896 	
       Tax effect 		                     (473) 		   97,476 		     (9,558) 	
       After-tax gains (losses) 	   $  	  709 	  $(146,214) 	  $ 	14,338 	

</TABLE>
							
<PAGE>

         FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 - INVESTMENT SECURITIES (Continued)



		Proceeds from the maturity, call, or sale of
available-for-sale securities were $7,306,453, $25,152,051, and
$-0- during 1995, 1994, and 1993 respectively.  Proceeds from
the maturity or call of held-to-maturity securities were
$18,848,992, $5,092,000, and $30,497,983 during 1995, 1994, and
1993 respectively.  Gross gains of $1,182 and gross losses of
$-0- were realized on the dispositions in 1995.  Gross gains of
$-0- and gross losses of $243,690 were realized on the
dispositions in 1994.  Gross gains of $23,896 and gross losses
of $ -0- were realized on the dispositions in 1993.  At December
31, 1995, the Corporation did not hold investment securities of
any single issuer, other than obligations of the U.S. Treasury
and other U.S. Government agencies, whose aggregate book value
exceeded ten percent of stockholders' equity.

	 	The following table shows the amortized value, fair  value,
and weighted yields (for tax-exempt obligations on a fully
taxable basis assuming a 34% tax rate) of investment securities
at December 31, 1995, by contractual maturity.  Expected
maturities may differ from contractual maturities because
issuers may have the right to call or prepay obligations.

<TABLE>

<CAPTION>
                                             		Amortized 	       	Fair 	 	   Yield 	
                                                		Cost 	   	     Value 		    (Unaudited) 	
Available-for-sale securities 							
<S>                                          <C>              <C>              <C>
U.S. Treasury
 Within one year 	                           $ 	2,019,183 	   $ 	2,029,400 		   6.2% 	
 After one but within five years 		             3,045,238 		     3,107,700		    6.5% 	
U.S. Government agencies 							
 Within one year 		                             1,000,000 		     1,002,500 		   6.1% 	
 After one but within five years 		             1,996,231 		     2,066,000		    7.6% 	
 After ten years 		                               283,737 		       281,166 		   6.2% 	
Other securities 		                             2,531,138 		     2,782,240 		   8.9% 	
	                                            $	10,875,527 	   $	11,269,006 			

Held-to-maturity securities 							
U.S. Treasury 							
 Within one year 	                           $	39,167,894 	   $ 39,306,700 		   6.1% 	
 After one but within five years 		            22,258,919 		    22,356,600		    5.6% 	
U.S. Government agencies 							
 Within one year 		                            11,023,204 		    11,062,500 		   6.1% 	
 After one but within five years 		            12,475,000 		    12,654,900		    6.1% 	
 After five but within ten years 		                - 	 	            - 	 	        - 	 
States and political subdivisions 							
 Within one year 		                             3,244,962 		     3,296,024 		  10.0% 	
 After one but within five years 		            12,357,917 		    12,741,932		    8.7% 	
 After five but within ten years 		            23,148,235 		    23,191,943		    7.6% 	
 After ten years 		                             3,663,911 		     3,678,517 		   7.8% 	
Other securities 							
 After one but within five years 		               322,640 		       340,845 		   8.0% 	
	                                            $127,662,682 	   $128,629,961 			
</TABLE>

<PAGE>							

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  3 - LOANS

		A summary of loans outstanding by category follows. 

<TABLE>

<CAPTION>
  		                                                1995  		          1994  	
Loans secured by real estate 					
<S>                                            <C>               <C>
Loans secured by real estate
 Construction  and  land development   	       $ 	7,399,095 	    $ 	8,036,802 	
 Farmland 		                                      7,849,137 		      7,942,187 	
 Lines of credit 		                                 339,108         		240,976 	
 1-4 family residential property - first lien  	111,016,393     		100,548,761 	
 1-4 family residential property - junior lien   	7,177,285       		7,219,546 	
 Multifamily residential property 		              3,729,687 		      4,775,515 	
 Non farm, non residential property 		           44,224,353 		     41,734,848 	
    Subtotal 		                                 181,735,058 		    170,498,635 	

Commercial and  industrial loans 					
 Commercial  and  industrial 		                  51,758,675 		     44,870,150 	
 Taxable municipal loans 		                         270,000 		        300,000 	
 All other loans 		                                  88,239 		        187,405 	
    Subtotal 		                                  52,116,914 		     45,357,555 	

Tax exempt municipal loans 		                     1,485,071 		        748,116 	

Loans to individuals 					
 Agricultural production 		                       3,659,215 		      3,823,296 	
 Lines of credit 		                                 135,230 		        103,249 	
 Individuals for personal expenditures 	        	53,026,209      		42,341,597 	
 Purchase or carry securities 		                     - 		                 655 	
    Subtotal 		                                  56,820,654 		     46,268,797 	

Lease financing 		                                   - 		               1,408 	

                                              		292,157,697 		    262,874,511 	

Less: 					
 Net unamortized loan origination fees 		          (225,368) 		      (176,606)
 Unearned interest income 		                         (2,018) 		        (3,785) 	
 Allowance for possible loan losses 		           (2,678,386)		     (2,342,290) 	
					
	                                              $289,251,925 	    $260,351,830 	

</TABLE>
					
		A summary of loan maturities and the amounts of loans carrying
fixed and variable interest rates as of December 31, 1995,
follows.

<TABLE>

<CAPTION>
                                    	 	(In Thousands of Dollars) 
                             		Within 		     One to 		    After  		
		                            One Year 	  	Five Years 		 Five Years  		Total 

     <S>                      <C>           <C>          <C>         <C>
     Fixed rate loans 	       $ 	62,923 	   $ 	47,100 	  $ 	23,735   $	133,758 
     Variable rate loans 	     	113,389 	     	26,949 		    18,062 		  158,400 
								
 	                            $	176,312 	   $ 	74,049 	  $ 	41,797 	 $	292,158 

</TABLE>

	Loans having recorded investments of $5,856,000 at December 31,
1995, have been identified as impaired in accordance with the
provisions of SFAS 114.  The total allowance for possible loan
losses related to these loans was $456,000.  Interest received
on these loans during 1995 was $532,873.  Prior to adoption of
SFAS 114, non-performing loans were those which were accounted
for on a non-accrual basis.  Such loans had outstanding balances
of approximately  $2,611,000 at December 31, 1994.

<PAGE>
                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - LOANS  (Continued)

		Certain parties (principally directors and senior officers of
the Corporation or the Bank, including their affiliates,
families, and companies in which they hold ten percent or more
ownership) were customers of, and had loans and other
transactions with, the Bank in the ordinary course of business. 
An analysis of activity with respect to such loans for the years
ended December 31, 1995 and 1994, follows. 

<TABLE>

<CAPTION>
                                  		Balance at 								
                	                  	Beginning  				                 Amount      		Amount      Balance at 
                                 		 of Year 		      Additions 		  Collected 	  	Written Off 		End of Year 

 <S>                                <C>            <C>           <C>           <C>            <C>
      1995  										
 Aggregate of certain party loans 	 $ 6,494,271  	 $	7,020,665 	 $	5,908,932 	 $ 	  - 	       $ 7,606,004 

      1994  										
 Aggregate of certain party loans 	 $	6,563,577 	  $	5,081,776 	 $	5,151,082 	 $    - 	       $	6,494,271 

</TABLE>
										

		These totals exclude loans made in the ordinary course of
business to other companies with which neither the Corporation
nor the Bank has a relationship other than the association of
one of its directors in the capacity of officer or director. 
These loan transactions were made on substantially the same
terms as those prevailing at the time for comparable loans to
other persons.  They did not involve more than the normal risk
of collectiblity or present other unfavorable features.  No
related party loans were charged off in 1995 or 1994.

NOTE 4 - ALLOWANCE FOR POSSIBLE LOAN LOSSES

		Changes in the allowance for possible loan losses are as
follows:

<TABLE>

<CAPTION>
       		                                    1995   		     1994   		     1993  	

<S>                                      <C>           <C>           <C>
Balance at beginning of year 	           $	2,342,290 	 $	2,023,651 	 $	2,253,735 	
Provision charged to operating expenses    		670,000 		    660,000		     470,000 	
Loan losses: 							
 Loans charged off 		                       (555,957) 		  (422,831) 		  (847,535) 	
 Recoveries on loans previously  							
  charged off                              		222,053      		81,470     		147,451 	
							
Balance at end of year 	                 $	2,678,386 	 $	2,342,290 	 $	2,023,651 	

</TABLE>
							

		For federal income tax purposes, the allowance for possible
loan losses is maintained at the maximum allowable by the
Internal Revenue Code.

NOTE 5 - BANK PREMISES AND EQUIPMENT

		The components of premises and equipment are as follows:

<TABLE>

<CAPTION>
                                                1995               1994
        <S>                                 <C>                <C>
        Land 	                              $ 1,204,288 	      $	1,204,288 	
        Premises 		                           6,648,329 		       6,629,567 	
        Furniture and equipment 		            3,949,617 		       3,816,320 	
        Leasehold improvements 		               879,695 		         474,770 	
                                           		12,681,929 		      12,124,945 	
Less allowance for depreciation and
 amortization 		                             (6,283,993)		      (5,931,865) 	

	                                           $	6,397,936 	      $	6,193,080 	

</TABLE>

		Annual provisions for depreciation and amortization total
$645,816 for 1995, $589,045 for 1994, and $591,486 for 1993. 
Included in premises and equipment cost and allowance for
depreciation and amortization are certain fully depreciated
assets totaling $2,287,900 at December 31, 1995.


<PAGE>

        FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - LIMITATION ON SUBSIDIARY DIVIDENDS

		The approval of the Comptroller of the Currency is required
before the Bank's dividends in a given year may exceed the total
of its net profit (as defined) for the year combined with
retained net profits of the preceding two years.  As of December
31, 1995, additional dividends of approximately $13,500,000
could have been declared by the Bank to the Corporation without
regulatory agency approval.



NOTE 7 - LEASES



		Real property for four of the Bank's office locations and
certain equipment are leased under noncancelable operating
leases expiring at various times through 2000.  In most cases,
the leases provide for one or more renewal options of five to
ten years under the same or similar terms.  In addition, various
items of teller and office equipment are leased under cancelable
and noncancelable operating leases.  Total rental expense
incurred under all operating leases, including short-term leases
with terms of less than one month, amounted to $660,121,
$409,764, and $254,121 for equipment leases, and $111,649,
$97,966, and $82,030 for building leases, in 1995, 1994, and
1993, respectively.  Future minimum lease commitments as of
December 31, 1995, under all noncancelable operating leases with
initial terms of one year or more follow.

<TABLE>
     <S>                                          <C>
                    1996                        	 $ 	671,934 	
                  		1997  	              	           671,934 	
                  		1998  		                         636,511 	
                  		1999  		                           5,088 	
                  		2000  	 	                          5,088 	

     Total future minimum lease payments 	    		  $1,990,555 	

/TABLE>
					

NOTE 8 - FEDERAL AND STATE INCOME TAXES

		The provisions for income taxes consist of the following:


</TABLE>
<TABLE>

<CAPTION>
                                     		1995         		1994        		1993  	

<S>                                <C>            <C>            <C>
Current: 							
 Federal 	                         $ 2,166,566 	  $	1,831,848 	  $	1,754,003 	
 State 		                              585,606 		     503,433 		     442,882 	
    Total current 	                  2,752,172 		   2,335,281 		   2,196,885 	

Deferred: 							
 Federal 		                           (198,393) 		   (111,805) 		     20,468 	
 State 		                              (35,010) 		    (19,730) 		      3,612 	
    Total deferred                    (233,403) 		   (131,535) 		     24,080 	

  Total provision for 
    income taxes 	                 $ 2,518,769 	  $	2,203,746 	  $	2,220,965 	

</TABLE>
							
<PAGE>

                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - FEDERAL AND STATE INCOME TAXES (Continued)

		The deferred tax effects of principal temporary differences
are shown in the following table:

<TABLE>
<CAPTION>
                		                         1995  		      1994  		      1993  	

<S>                                   <C>           <C>           <C>
Allowance for possible loan losses 	  $ 	815,315 	  $ 	682,877 	  $ 	555,421 	
Installment loan reporting 		               - 		          - 		         6,865 	
Write-down of other real estate 		       177,120 		    159,120 		    157,520 	
Deferred compensation 		                 256,139 		    156,227 		     76,781 	
Direct lease financing 		                   - 		        36,452 		     35,736 	
Unrealized loss on AFS securities 		        - 		        32,372 		     18,457 	
Deferred loan fees 		                     44,051 		     24,546 		     76,907 	

  Deferred tax asset 		                1,292,625 		  1,091,594 		    927,687 	

Unrealized gain on AFS securities 		    (157,392) 		      - 		          - 	

  Deferred tax liability 		             (157,392)  		     - 		          -	

    Net deferred tax asset 	          $1,135,233    $1,091,594	   $ 	927,687 	

</TABLE>


		A reconciliation of total income taxes reported with the
amount of income taxes computed at the federal statutory rate
(34% each year) is shown below.  Total income taxes paid in
1995, 1994, and 1993 amounted to $2,756,442, $2,431,332 and
$2,564,887, respectively.

<TABLE>

<CAPTION>
        		                                        1995  		         1994  		         1993  	

<S>                                           <C>              <C>              <C>
Tax expense at statutory rate 	               $ 2,935,722 	    $ 2,640,158    	 $	2,542,254 	
Increase (decrease) in taxes resulting from: 							
 Tax-exempt interest 		                          (783,011) 		     (780,946) 		     (647,575) 	
 Nondeductible interest expense 		                 89,491 		        75,019 		        58,457 	
 Other nondeductible expenses 							
  (nontaxable income) - net 		                    (28,114) 		       (6,458)		       (19,962) 	
 State income taxes, net of federal 							
  tax benefit 		                                  363,393 		       319,244 		       292,263 	
 Dividend income exclusion 		                     (18,324) 		      (29,571) 		      (15,646) 	
 Other 		                                         (40,388) 		      (13,700) 		       11,174 	

Total provision for income taxes 	            $	2,518,769 	    $	2,203,746 	    $	2,220,965 	

Effective tax rate 		                               29.2% 		         28.4% 		         29.7% 	

</TABLE>
							

		A net deferred tax asset was included in other assets in the
accompanying consolidated balance sheet.  

NOTE 9 - COMMITMENTS

		The Bank is a party to financial instruments with
off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers.  These financial
instruments include commitments to extend credit and standby
letters of credit.  Those instruments involve, to varying
degrees, elements of credit risk in excess of the amount
recognized in the balance sheet.  The contract or notional
amounts of those instruments reflect the extent of involvement
the Bank has in those particular financial instruments.

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 NOTE 9 - COMMITMENTS (Continued)

		The total outstanding loan commitments and stand-by letters of
credit in the normal course of business at December 31, 1995,
were $21,739,000 and $1,699,000, respectively.  Loan commitments
are agreements to lend to a customer as long as there is not a
violation of any condition established in the contract.  Standby
letters of credit are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. 
Those guarantees are primarily issued to support public and
private borrowing arrangements, including commercial paper, bond
financing, and similar transactions.  The credit risk involved
in issuing letters of credit is essentially the same as that
involved in making a loan.

		The loan portfolio is well diversified with loans generally
secured by tangible personal property, real property, or stock. 
The loans are expected to be repaid from cash flow or proceeds
from the sale of selected assets of the borrowers.  Collateral
requirements for the loan portfolio are based on credit
evaluation of the customer.  It is management's opinion that
there is not a concentration of credit risk in the portfolio.


NOTE 10 - SUPPLEMENTARY CASH FLOW INFORMATION

		Interest paid on deposits and other borrowings during 1995,
1994, and 1993 amounted to $14,845,299, $12,641,299, and
$12,243,317, respectively.


NOTE 11 - EMPLOYEE BENEFIT PLANS

		The Bank contributes to a defined contribution, profit-sharing
plan covering employees who meet participation requirements. 
The amount of the contribution is discretionary as determined by
the Board of Directors up to the maximum deduction allowed for
federal income tax purposes.  Contributions to the plan, that
amounted to $633,459, $602,010, and $529,324, in 1995, 1994, and
1993, respectively, are included in salaries and employee
benefits expense. 

		In 1992, the Bank formalized a nonqualified salary
continuation plan for certain key officers.  In connection with
this plan, the value of the assets (1995 - $594,221; 1994 -
$580,088) used to fund the plan and the related liability (1995
- $482,272; 1994 - $400,606) were included in other assets and
other liabilities respectively.  Single premium universal life
insurance policies were purchased in 1993 to replace other
policies and annuities that were redeemed.  Insurance premiums
of $515,000 were paid during 1993, of which $285,725 (net of the
redemption proceeds) was capitalized.  Net non-cash income of
$14,133 in 1995 and  $22,448 in 1994 is also included in the
above asset values.  The principal cost of this plan will be
accrued over the anticipated remaining period of active
employment, based on the present value of the expected
retirement benefit.  Expense related to this plan was $106,666
in 1995, $98,925 in 1994, and $91,916 in 1993.

   The Bank also implemented a deferred compensation plan which
permitted directors, beginning in 1993, to defer their
director's fees and earn interest on the deferred amount.  A
liability increase and expense of $176,727 for 1995, $126,262
for 1994, and $125,036 for 1993 were recognized in the
accompanying financial statements.  In connection with this
plan, a single premium universal life insurance policy was
purchased on the life of each director who elected to
participate.  Insurance premiums of $1,425,000 were paid at the
end of 1992, of which $1,399,816 was capitalized to reflect the
cash surrender value at December 31, 1992.  Additional single
premium universal life insurance policies were purchased in 1993
for new participants.  Insurance premiums of $215,000 were paid
during 1993 and capitalized.  Net non-cash income of $51,803 in
1995 and $52,840 in 1994 is also included in the cash surrender
values of  $1,801,922 and $1,750,119 at December 31, 1995 and
1994, respectively.

		The Bank is beneficiary on the insurance policies that fund
the salary continuation plan and the deferred compensation plan.
 These policies have an aggregate face amount of $2,425,000.

<PAGE>

               FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - QUARTERLY RESULTS OF OPERATIONS (Unaudited)

		The following is a summary of the unaudited consolidated
quarterly results of operations.

<TABLE>
										
<CAPTION>

                               		First        Second     		  Third 		     Fourth 		
                              		Quarter     		Quarter 	     Quarter   	  	Quarter 		    Total 

        1995  										

<S>                          <C>           <C>           <C>           <C>           <C>
Interest income 	            $	8,244,228   $	8,640,769 	 $	8,720,212 	 $ 8,888,360 	 $34,493,569 
Interest expense 		            3,654,485 		  3,856,594 		  3,938,600 		  3,972,566		  15,422,245 

Net interest income 		         4,589,743 		  4,784,175 		  4,781,612		   4,915,794 		 19,071,324 
Provision for possible loan  										
 losses 		                       145,000 		    140,000 		    180,000 		    205,000 		    670,000 
Noninterest expenses, net of 										
 noninterest income 		         2,492,505 		  2,547,595 		  2,430,466		   2,296,283 		  9,766,849 
										
Income before income taxes 		  1,952,238 		  2,096,580 		  2,171,146		   2,414,511 		  8,634,475 
Income taxes 		                  512,448 		    589,977 		    680,609 		    735,735 		  2,518,769 

Net income 	                 $	1,439,790 	 $ 1,506,603 	 $	1,490,537 	 $	1,678,776 	 $ 6,115,706 

Earnings per common share 										
  (1,400,000 shares) 	       $ 	    1.03 	 $  	   1.08 	 $     	1.06 	 $    	 1.20 	 $ 	    4.37 

</TABLE>

<TABLE>
<CAPTION>
	                               	First 		      Second 		     Third 		    Fourth 		
                     		         Quarter 	     	Quarter     	Quarter  	   Quarter 		    Total 

1994  										

<S>                          <C>           <C>            <C>           <C>          <C>
Interest income 	            $	7,176,893   $	7,664,849    $	7,814,500 	 $	8,161,296  $30,817,538 
Interest expense 		            2,986,012 		  3,148,310 		   3,272,217 		  3,457,365	  12,863,904 

Net interest income 		         4,190,881 		  4,516,539 		   4,542,283		   4,703,931 		17,953,634 
Provision for possible loan  										
 losses 		                        60,000 		    255,000 		     225,000 		    120,000 		   660,000 
Noninterest expenses, net of 										
 noninterest income 		         2,260,734 		  2,254,027 		   2,490,717		   2,522,984 		 9,528,462 

Income before income taxes 		  1,870,147 		  2,007,512 		   1,826,566		   2,060,947 		 7,765,172 
Income taxes 		                  528,638 		    566,493 		     508,942 		    599,673 		 2,203,746 

Net income 	                 $	1,341,509 	 $	1,441,019 	  $ 1,317,624 	 $	1,461,274  $	5,561,426 

Earnings per common share 										
 (1,400,000 shares) 	        $ 	    0.96 	 $  	   1.03 	  $ 	    0.94 	 $ 	    1.04	 $ 	    3.97 

</TABLE>

NOTE 13 - SHAREHOLDERS' EQUITY

		The Corporation and the Bank are subject to federal regulatory
risk-adjusted capital adequacy standards.  Failure to meet
capital adequacy requirements can initiate certain mandatory,
and possibly additional discretionary, actions by regulators
that could have a direct material effect on the consolidated
financial statements of the Corporation and its subsidiary, the
Bank.  The regulations require the Bank to meet specific capital
adequacy guidelines that involve quantitative measures of
assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices.   As of
December 31, 1995, the Bank's calculated risk-adjusted capital
ratios exceeded the minimum standard for a "well capitalized"
bank.  The capital classification is also subject to qualitative
judgments by the regulators about components, risk weightings,
and other factors.  Management believes that the Corporation and
the Bank meet all capital requirements.

<PAGE>

             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - DEPOSITS

		The Bank does not have any foreign offices and all deposits
are serviced in its fourteen domestic offices.  The average
amounts of deposits and the average rates paid are summarized in
the following table.

<TABLE>

<CAPTION>
                                                      (Unaudited) 									
                                     		 	 	 	 	 	Year Ended December 31 		 	 	 	 	 	

                                          		1995       		   	 		1994      		 	 		  1993  		 	 	
                                							          (Dollars In Thousands) 									

<S>                                  <C>        <C>      <C>        <C>      <C>        <C>
Demand deposits 	                    $	56,730  		- 	% 	  $	55,557 	 	- 	% 	  $	48,697		  - 	% 	
NOW and money market accounts 		      149,016 		3.51 			  161,244 		3.25			   147,246 		3.16 		
Savings deposits 		                    34,629 		3.00 			   35,036 		2.87 			   31,216 		2.76
Time deposits of less than $100,000 		136,568 		5.30 			  126,523		 4.27 			  128,021 		4.26 		
Time deposits of $100,000 or more 		   32,524 		5.35 			   26,053		 4.32 			   23,602 		4.33 		

Total In Domestic Offices 	          $409,467 		3.72%   	$404,413		 3.66% 	  $378,782 		3.17% 	 

																
</TABLE>

		At December 31, time deposits of $100,000 or more had the
following maturities.

<TABLE>
<CAPTION>
                            	1995  	    	1994  		   1993  
                                  (Dollars In Thousands)

    <S>                   <C>         <C>        <C>
    Under 3 months 	      $	7,877 	   $	3,117 	  $	3,519 
    3 to 12 months 		      18,407 		   18,250 		  17,081 
    Over 12 months 		       4,310 		    4,803 		   4,505 

	                         $30,594 	   $26,170 	  $25,105 

</TABLE>
						

	NOTE 15 -  FAIR VALUES OF FINANCIAL INSTRUMENTS



		This summarizes the Corporation's disclosure of fair values of
financial instruments made in accordance with the requirements
of Statement of Financial Accounting Standards No. 107 (SFAS
107), "Disclosures about Fair Value of Financial Instruments".

<TABLE>

<CAPTION>
				                                          Dollars in Thousands 					
     		                             December 31, 1995 	  	 		  December 31, 1994 		 	
                               	 	Amortized     		Fair     	  	Amortized  	  	Fair 	
		                                  Value   	   	Value 	        	Value    		 Value 	

<S>                               <C>             <C>           <C>           <C>
Financial assets 									
  Cash and cash equivalents      	$ 	31,282 	     $ 	31,282 	   $ 	26,736	    $ 	26,736 	
  Securities held to maturity   	  	127,663  		     128,830  		   143,061		     138,892 	
  Securities available for sale   		 10,876  	 	     11,269 	  	   12,646		      12,565 	
  Loans, net 	                   	  289,252 	 	     298,076 		    260,352 		    268,870  	
  Accrued interest receivable 		      5,454 		        5,424 		      5,169		       5,169 	

Financial liabilities 									
  Deposits 		                       410,778 		      398,296 		    405,152 		    402,720 	
  Federal funds purchased 		         10,000 		       10,000 		      7,000 		      7,000 	
  Short term borrowings 		            1,955 		        1,955 		        600 		        600 	
  Accrued interest payable 		         3,034 		        3,034 		      2,457 		      2,457 	

</TABLE>

		Estimated fair values have been determined by the Bank using
the best available data.  Changes in assumptions or the
estimation methodologies used may have a material effect on the
estimated fair values included in this note.

<PAGE>


           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	NOTE 15 -  FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)


		Financial assets - Cash and cash equivalents are considered to
be carried at their fair value and have not been valued
differently than has been customary with historical cost
accounting.  Securities available-for-sale and securities
held-to-maturity are valued by an independent rating service and
are disclosed in detail in Note 2 above.  	A present value
discounted cash flow methodology was used to value the net loan
portfolio.  The discount rate used in these calculations was the
current rate at which new loans in the same classification for
regulatory reporting purposes would be made.  This rate was
adjusted for credit loss and assumed prepayment risk.   For
loans with floating interest rates it is presumed that estimated
fair values generally approximate the recorded book balances.

		Financial liabilities - Deposits with stated maturities have
been valued using a present value discounted cash flow with a
discount rate approximating the current market for similar
liabilities.  Financial instrument liabilities with no stated
maturities have an estimated fair value equal to both the amount
payable on demand and the recorded book balance.  For deposits
with floating interest rates it is presumed that estimated fair
values generally approximate the recorded book balances.  The
carrying amounts of federal funds purchased and other short term
borrowings are considered to approximate their fair values.

		  The Bank's remaining assets and liabilities which are not
considered financial instruments have not been valued
differently than has been customary with historical cost
accounting.  Management is concerned that reasonable
comparability between financial institutions may be distorted
due to the wide range of permitted valuation techniques and
numerous estimates which must be made given the absence of
active secondary markets for many of the financial instruments. 
This lack of uniform valuation methodologies also introduces a
greater degree of subjectivity to these estimated fair values. 

	 At December 31, 1995, the Bank had outstanding standby letters
of credit and commitments to extend credit.  These
off-balance-sheet financial instruments are generally
exercisable at the market rate prevailing at the date the
underlying transaction will be completed and, therefore, are
deemed to have no current fair value.  Please refer to Note 9.


NOTE 16 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
<TABLE>

<CAPTION>
                             Condensed Balance Sheets                                        
                            December 31, 1995 and 1994                                      
                            (In Thousands of Dollars)                                       
    					
                  Assets 		                               1995  		     1994  	

<S>                                                     <C>          <C>      
Cash 	                                                  $    	70 	   $    	65 	
Investment in bank subsidiary - at equity 		              48,517 		    43,310 	
Investment in credit life insurance company - at cost 		      50 		        50 	
Investment in other securities 		                             22 		        25 	
Dividends receivable from bank subsidiary 		                 630 		       574 	
Cash surrender value - life insurance 		                     467 		       453 	
    Total assets                                        $ 49,756 	   $	44,477 	

       Liabilities and Stockholders' Equity 					
Liabilities 					
 Payable to directors 	                                 $ 	  129 	   $    	75 	
 Dividends payable 		                                        630 		       574 	
   Total liabilities 		                                      759 		       649 	
Stockholders' equity 					
 Common stock - $10 par value, authorized 4,000,000 					
  shares, 1,400,000 shares issued and outstanding 		      14,000		     14,000 	
 Retained earnings 		                                     34,761 		    29,877 	
 Net unrealized gain (loss) on available-for-sale  					
  securities, net of tax 		                                  236 		      (49) 	
   Total stockholders' equity 		                          48,997 		    43,828 	
            Total liabilities and stockholders' equity  $ 49,756 	   $	44,477 	

</TABLE>
					
<PAGE>


                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 NOTE 16 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
(Continued)

<TABLE>
                          Condensed Statements of Income                                  
                     Years Ended December 31, 1995 and 1994                          
                             (In Thousands of Dollars)                                       
<CAPTION>
  				
                                            		     1995           		1994  
<S>                                             <C>              <C>
Operating income 				
  Dividends from bank subsidiary 	              $ 	1,232 	       $ 	1,120 
  Other dividend income 		                            22 		            61 
  Interest income 		                                   2 		             1 
  Other 		                                            27 		            30 

Operating expenses 		                                 87 		            60 

    Income before equity in undistributed net 				
     income of bank subsidiary 		                  1,196 		         1,152 

Equity in undistributed net income of bank
 subsidiary 		                                     4,920 		         4,409 

    Net Income 	                                $ 	6,116 	       $ 	5,561 

</TABLE>
				
<TABLE>
                      Condensed Statements of Cash Flows                              
                    Years Ended December 31, 1995 and 1994                          

                            (In Thousands of Dollars)                                       
  				
<CAPTION>
                                                         		1995          		1994  

<S>                                                     <C>             <C>
Operating activities 				
 Net income for the year 	                              $ 	6,116 	      $ 	5,561 
 Adjustments to reconcile net income to net cash 				
  provided by operating activities 				
   Equity in undistributed net income of bank
    subsidiary                                          		(4,920) 		      (4,409) 
   Increase in other assets 		                               (69) 		         (62) 
   Increase in payables 		                                    54 		           26 
				
     Total adjustments 		                                 (4,935) 		      (4,445) 

     Net cash provided by operating activities        		   1,181 		        1,116 

Net cash provided by (used in) investing activities 		 		
 Proceeds from sale or calls of investment securities 		      -	              18 
    Net cash provided by (used in) investing activities		     -       		      18 

Net cash used in financing activities 				
 Cash dividends paid 		                                    (1,176) 		     (1,071) 

    Increase (decrease) in cash 		                              5 		          63 

Cash at beginning of year 		                                   65 		           2 

Cash at end of year 	                                      $  	70 	       $  	65 

</TABLE>

<PAGE>


                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS 

GENERAL

	First Farmers and Merchants Corporation, a one-bank holding
company, was formed during 1982.  Its only subsidiary, First
Farmers and Merchants National Bank, is a community bank that
was established in 1909.  The resulting financial condition of
the Corporation should be evaluated in terms of the Bank's
operations within its service area.

	During 1995, First Farmers and Merchants National Bank
strengthened its presence in the four counties in middle
Tennessee that it serves.  Deposits in each of the four counties
either maintained the same levels or increased while loans in
all four counties increased.  To more efficiently provide
expanding services and offer the range of products that Bank
customers need and want, the Bank undertook a technology
conversion in the last quarter of 1994 involving data processing
and communication links between its fourteen offices.  The Bank
is positioned to provide quality services in diverse markets and
a dynamic interest rate environment.  Our customers are enjoying
the "Impact" of this change as new services such as combined,
laser printed statements; inquiring about balances, checks paid,
deposits made, and making transfers between accounts through
phone bank; extended banking hours; and a check card.  The check
card was introduced in the first quarter of 1995 and increased
in usage as the year progressed to approximately 35,000
transactions per month.

	The first of the following tables entitled DISTRIBUTION OF
ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY, INTEREST RATES
AND INTEREST DIFFERENTIAL, presents average daily balances,
interest income on a fully taxable equivalent basis and interest
expense, as well as the average rates earned and paid on the
major balance sheet items for the years 1995, 1994, and 1993.
The second table sets forth, for the periods indicated, a
summary of changes in interest earned and interest paid
resulting from changes in volume and changes in rates.  The
rate/volume variances are allocated between rate and volume
variances in proportion to the relationship of the absolute
dollar amounts of the change in each.

	These tables plus the following discussion and financial
information is presented to aid in understanding First Farmers
and Merchants' current financial position and results of
operations.  The emphasis of this discussion will be on the
years 1995, 1994, and 1993; however, financial information for
prior years will also be presented when appropriate.  This
discussion should be read in conjunction with the Consolidated
Financial Statements and the Notes to Consolidated Financial
Statements included elsewhere in this material.

FINANCIAL CONDITION 

	First Farmers and Merchants National Bank's financial condition
depends on the quality and nature of its assets, its liability
and capital structure, the market and economic conditions, and
the quality of its personnel.  The following paragraphs provide
a unique perspective on the internal structures of the
Corporation and the Bank that provide the strength in our
organization.

	The bank's average deposits grew during the last three years
reflecting  a 1.3% growth from 1994 to 1995, a 6.8% growth from
1993 to 1994, and a 10.4% growth from 1992 to 1993.  Average
transaction and limited transaction interest bearing accounts
grew during the prior two years but declined in 1995 as
investors took advantage of higher certificate of deposit rates.
 The average Chairman's Club, super negotiable orders of
withdrawal, insured money market deposits, and flexible
investment accounts decreased 7.6 % in 1995 compared to a  9.5%
increase in 1994 and a 28.6 % increase in 1993.  Average savings
deposits actually declined 1.2% in 1995 compared to a 12.2%
increase in 1994 and a 12.9% decrease in 1993.  Average
certificates of deposit increased  during 1995 with certificates
and other savings under $100,000 increasing 8.0% in 1995
compared to a 1.2% decline in 1994 and a 1.2.% decline in 1993. 
Certificates of deposit over $100,000 increased 24.8% in 1995
compared to a 10.4% increase in 1994 and a 17.1% decline in
1993.  


<PAGE>

                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                             AND RESULTS OF OPERATIONS 

TABLE 1 - Distribution of Assets, Liabilities, and Stockholders'
Equity, Interest Rates and Interest Differential

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31, 
                                                          	 	 	 	1995  	 	 	 	 
 
                                                  		 Average   		Rate / 				
                                                   		Balance 		  Yield 			 Interest 	

ASSETS 								
<S>                                                <C>           <C>       <C>            
 Interest earning assets 								
   Loans, net 	                                    $ 	276,166 		  9.38% 	  $	25,892 	* 
   Bank time deposits 		                                    2      - 	 		      - 	
   Available-for-sale securities (AFS) 	  	             8,092 		  6.59			       534 	
   Held-to-maturity securities (HTM) 		                93,676 		  6.03			     5,646 	
   U.S. Treasury and Government agency securities   		   - 	   	   -    	 		   - 	
   States and political subdivisions' securities  		   39,139		   8.06 			    3,156 	* 
   Other securities 		                                  2,452 		 11.29 			      277 	* 
   Federal funds sold 		                                2,076 		  5.83 			      121 	
     TOTAL EARNING ASSETS 		                          421,603 		  8.45 		  $	35,626 	

 Noninterest earning assets 								
   Cash and due from banks 		                          24,829 						
   Bank premises and equipment 		                       6,246 						
   Other assets 		                                     11,061 						
								
     TOTAL ASSETS 	                                $ 	463,739 						

LIABILITIES AND STOCKHOLDERS' EQUITY 								
 Interest bearing liabilities 								
   Time and savings deposits: 								
   NOW and money market accounts  	                $ 	148,993 		 3.51% 	  $ 	5,223 	
   Savings 		                                          34,627 		 3.00 			    1,040 	
   Time  		                                           136,605 		 5.30 			    7,245 	
   Time over $100,000 		                               32,522 		 5.35 			    1,740 	
    TOTAL INTEREST BEARING DEPOSITS 		                352,747 		 4.32			    15,248 	
   Federal funds purchased and repurchase 
    agreements		                                        2,415 		 5.92 			      143 	
   Other short-term debt 		                               565 		 5.49 			       31 	
    TOTAL INTEREST BEARING LIABILITIES 		             355,727 	 	4.34		   $	15,422 	

 Noninterest bearing liabilities
   Demand deposits 		                                  56,742 						
   Other liabilities 		                                 4,515 						
    TOTAL LIABILITIES 		                              416,984 						
 Stockholders' equity 		                               46,755 						
    TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY 	   $ 	463,739 						
<FN>								
<F4>
  Spread between combined rates earned and combined rates paid*		4.11% 			
</FN>
<FN>								
<F5>
  Net yield on interest-earning assets* 				                     4.79% 			
</FN>
<FN>
<F6>
  * Taxable equivalent basis. 								
</FN>
</TABLE>

<PAGE>

                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                               AND RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                     	 	 	       1994  	 	 	 	   	 	 	 	             	 1993  	 	 	 	 
                                             	     Average       Rate / 		                Average      Rate / 				
                                                  	Balance 		    Yield 			Interest 			   	Balance 		   Yield 			Interest 	
                                                                       	 (Dollars In Thousands) 															
ASSETS
<S>                                              <C>            <C>       <C>        <C>               <C>      <C>       <C>
 Interest earning assets
   Loans, net                                    $  247,791 		   8.54%    $	21,156 	*   $ 	233,608 		  8.37%    $	19,543 	* 
   Bank time deposits	                                 - 	 	      - 	 	 	     - 	 	 	 	      - 	 	      - 	 	 	     - 	
   Available-for sale-securities (AFS)               15,931 		   8.33 			    1,327 				      - 	 	      - 	 	 	     - 	
   Held-to-maturity securities (HTM)	               101,654 		   5.76 			    5,858 				      - 	 	      - 	 	 	     - 
   U.S. Treasury and Government agency securities	     - 	 	      - 	 	 	     - 				       106,201 		  6.50 			    6,904 	
   States and political subdivisions	                38,545 		   8.49 			    3,274 	* 			   29,634 		  8.62 			    2,553 	* 
   Other securities	                                  2,375 		  13.15 			      312 	* 			    6,164 		  5.34 			      329 	* 
   Federal funds sold	                                2,998 		   3.73 			      112 				      4,665 		  2.92 			      136 	
     TOTAL EARNING ASSETS 	                         409,294 		   7.83 		  $	32,039 			     380,272 		  7.75 		  $	29,465 	
																
 Noninterest earning assets
   Cash and due from banks	                          25,945 									                       23,406 						
   Bank Premises and equipment	                       6,350 									                        6,764 						
   Other assets	                                     10,364 									                       10,318 						

     TOTAL ASSETS                                $ 	451,953 								                    $  420,760 						

LIABILITIES AND STOCKHOLDERS' EQUITY
 Interest bearing liabilities
   Time and savings deposits:
   NOW and money market accounts                 $ 	161,244 		   3.25% 	 $ 	 5,239 			  $ 	147,246 		  3.16% 	  $ 	4,653 	
   Savings	                                          35,036 		   2.87  			   1,006 				     31,216 		  2.76 			      861 	
   Time	                                            126,523 		   4.27  			   5,400 				    128,021 		  4.26 			    5,459	
   Time over $100,000    	                           26,053 		   4.32  			   1,126 				     23,602 		  4.34 			    1,025 	
    TOTAL INTEREST BEARING DEPOSITS  	              348,856 		   3.66  			  12,771 				    330,085 		  3.63 			   11,998	
   Federal funds purchased and repurchase
    agreements 	                                      1,462 		   4.86 		        71 				        254 		  3.06 			        8 	
   Other short-term debt  	                             568 		   3.92 			       22 				        728 		  4.21 			       31 	
    TOTAL INTEREST BEARING LIABILITIES	             350,886 		   3.67 		  $	12,864 				    331,067 		  3.64 		  $	12,037 	
 Noninterest bearing liabilities																
   Demand deposits   	                               55,557 									                       48,697 						
   Other liabilities  	                               3,690 									                        3,542 						
    TOTAL LIABILITIES 	                             410,133 									                      383,306 						
 Stockholders' equity  	                             41,820 									                       37,454 						
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 	451,953 								                    $ 	420,760 						

<FN>
<F7>
Spread between combined rates earned and combined rates paid*		4.16% 		          						                4.11% 			
</FN>
<FN>
<F8>
Net yield on interest earning assets*			                       4.68% 								                          4.58% 			
</FN>
<FN>
<F9>
Taxable equivalent basis
</FN>
</TABLE>


<PAGE>

                    FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                  AND RESULTS OF OPERATIONS 


TABLE 2 - Distribution of Assets, Liabilities, and Stockholders'
Equity, Interest Rates and Interest Differential (Continued)

<TABLE>
<CAPTION>
										* 
                                                         					*  				               Total 
                                     		* 	   	 Taxable  		Nontaxable 	 	Federal 		Interest 
                                    		Net  		Investment 		Investment 	  	Funds 		  Earning 
(Dollars in Thousands) 		            Loans 		Securities 		Securities   		Sold	   	  Assets 

1995 compared to 1994: 										
<S>                                <C>       <C>            <C>        <C>        <C>
  Increase (decrease) due to: 										
    Volume 	                       $ 	2,423 	$ 	(1,103) 	   $ 	50 	    $ 	(34) 	  $ 	1,336 
    Rate 		                           2,313 		      63 		    (168) 		      43 		     2,251 

     NET INCREASE 										
      (DECREASE) 	                 $ 	4,736 	$ 	(1,040) 	   $(118) 	   $ 	  9 	   $	 3,587 

1994 compared to 1993: 										
  Increase (decrease) due to: 										
    Volume 	                       $ 	1,186 	$ 	   537 	    $	768 	    $ 	(49) 	  $ 	2,442 
    Rate 		                             427 		    (273) 		    (47) 		      25 		       132 

     NET INCREASE 										
      (DECREASE) 	                 $ 	1,613 	$ 	   264 	    $ 721 	    $ 	(24) 	  $	 2,574 
				                                            (A) 		        (A) 				

<FN>
<F10>
     * Taxable equivalent basis 
</FN>
<FN>
<F11>
   (A) U.S. Government, government agency, and corporate debt
securities plus equity securities in the available-for-sale and
held-to-maturiy categories are taxable investment securities.
Municipal debt securities are nontaxable and classified as 
held-to-maturity. 
</FN>
</TABLE>

	Average earning assets increased 3.0% in 1995 compared to an
7.6% increase in 1994 and a 9.7% increase in 1993.   As a
financial institution, the Bank's primary earning asset is
loans.  At December 31, 1995, average net loans represented 
65.5% of  average earning assets.  Total average net loans
increased during the last three years showing an 11.5% growth
from 1994 to 1995, a 6.1% growth from 1993 to 1994, and an 8.6%
growth from 1992 to 1993.  Average investments represented 34.0%
of average earning assets at December 31, 1995, and  decreased
9.6% in 1995 providing funds for the increasing loan growth. 
Investments  increased 11.6% in 1994, and increased 11.9% in
1993.  Average total assets increased during the last three
years as evidenced by a 2.6% growth from 1994 to 1995, a 7.4%
growth from 1993 to 1994, and a 10.3% growth from 1992 to 1993. 
Please refer to the color graphs at the end of this document
that illustrate this growth.

<PAGE>
<TABLE>
              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS 
<CAPTION>
                               	Now and 												                                            Total 		      * 	
                                	Money 			                   	     Time 		   Federal 		 Short 	Interest 		   Net 	
                               	Market  		Savings 	    	Time     		Over 		   Funds 		    Term 		Bearing		 Interest  
(Dollars in Thousands)	        Accounts 		Deposits  		Deposits 		$100,000 		Purchased 		 Debt		 Funds 		  Earnings 	

<S>                            <C>         <C>         <C>        <C>         <C>        <C>     <C>         <C>
1995 compared to 1994:
  Increase (decrease) due to:  																
    Volume                     $	(398) 	   $	(12) 	    $  430	    $  279 	    $ 	46 	    $  - 	  $ 	345 	    $ 	991 	
    Rate       	                  382 		      46 		     1,415      		335 		      26 		       9 		 2,213 		       38 	

     NET INCREASE
      (DECREASE)               $ 	(16)    	$ 	34    	  $1,845    	$ 	614 	    $ 	72 	    $ 	 9  	$2,558 	    $1,029 	

1994 compared to 1995:																
  Increase (decrease) due to:																
    Volume                     $ 	442 	    $	105 	     $  (64) 	  $ 	107 	    $ 	37 	    $ 	(7)  $ 	620 	    $1,822
    Rate  	                       144 		      40 		         5 		      (5) 		     26 		      (2) 	   208 		      (76) 	

     NET INCREASE																
      (DECREASE)               $ 	586 	    $	145 	     $ 	(59) 	  $ 	102 	    $ 	63 	    $ 	(9) 	$ 	828 	    $1,746
	
<FN>
<F12>
   * Taxable equivalent basis
</FN>																
</TABLE>


LIQUIDITY AND INTEREST  RATE  SENSITIVITY  MANAGEMENT

	The primary objective of asset/liability management at the Bank
is to achieve reasonable stability in net interest income
throughout interest rate cycles.  This objective is achieved by
monitoring the relationship of rate sensitive earning assets to
rate sensitive interest bearing liabilities (interest rate
sensitivity) which is the principal factor in determining the
effect that fluctuating interest rates will have on future net
interest income.  Rate sensitive earning assets and interest
bearing liabilities are those which can be repriced to current
market rates within a defined time period.  The following table,
Rate Sensitivity of Earning Assets and Interest Bearing
Liabilities, shows the Bank's rate sensitive position at
December 31, 1995, as measured by gap analysis (the difference
between the earning asset and interest bearing liability amounts
scheduled to be repriced to current market rates in subsequent
periods).

	As a policy, budgeted financial goals are monitored on a
monthly basis by the Asset/Liability Committee where the actual
dollar change in net interest income given different interest
rate movements is reviewed.  A dollar change in net interest
income for a twelve month period of less than 3% of net interest
income given a two hundred basis point shift in interest rates
is considered an adequately flexible position.  The net interest
margin, on a tax equivalent basis, at December 31, 1995,  1994,
and 1993 was 4.79%, 4.68%,  and 4.58% respectively.

<PAGE>

          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                        AND RESULTS OF OPERATIONS 

LIQUIDITY AND INTEREST  RATE  SENSITIVITY  MANAGEMENT (Continued)

TABLE - Rate Sensitivity of Earning Assets and Interest Bearing
Liabilities 										
<TABLE>
<CAPTION>
(Dollars in Thousands) 										
                                   		3 Months 		     3-6      	 	6-12  	 	  Over 1 		
As of December 31, 1995 		           or Less      		Months 	   	Months  	 	  Year  		      Total 
  <S>                                <C>          <C>          <C>          <C>          <C>
Earning assets 										
  Loans and leases, net of unearned 	$ 	64,615 	  $ 	43,285 	  $ 	72,506 	  $	111,525 	  $	291,931 
  Taxable investment securities 		      12,715 		    11,027 		    30,164		     42,611 		    96,517 
  Tax-exempt investment securities 		      986 		     1,200 		     1,060		     39,169 		    42,415 
										
      Total earning assets 		           78,316 		    55,512 		   103,730 		   193,305 	  $	430,863 

Interest-bearing liabilities 										
  NOW and money market accounts 		      35,739 	  		                          100,555    $	136,294 
  Savings 								                                                             34,133 		    34,133 
  Time 		                               42,682 		    34,082 		    46,903 		    18,671 		   142,338 
  Time over $100,000 		                  8,526 		     8,055 		     9,703 		     4,310 		    30,594 
  Other short-term debt 		              11,955 		 		 		 		                                  11,955 
										
      Total interest bearing 
        liabilities 		                  98,902 		    42,137 		    56,606		    157,669 	  $	355,314 

Noninterest bearing, net 								                                             (75,549) 		

Net asset/liability funding gap 		     (20,586) 		   13,375 		    47,124		    (39,913) 		

Cumulative net asset/liability 
  funding gap 	                      $ (20,586) 	 $ 	(7,211) 	 $ 	39,913	   $ 	  - 		

<FN>
<F13>
Available-for-sale and held-to-maturity securities were combined
in the taxable investment securities category for purposes of
this table.
</FN>
</TABLE>

CAPITAL RESOURCES, CAPITAL, AND DIVIDENDS

	Historically, internal growth has financed the capital needs of
the Bank.  At December 31, 1995, the Corporation had a ratio of
average capital to average assets of 10.08%.  This compares to a
ratio of average capital to average assets of 9.25% at December
31, 1994, and 8.9% at December 31, 1993.

	Cash dividends paid in 1995 were 10.0% more than those paid in
1994.  The dividend to net income ratio was 20%.  Additional
dividends of approximately $13.5 million to the Corporation
could have been declared by the subsidiary bank without
regulatory agency approval.  The Corporation plans to maintain
or increase the payout ratio while continuing to maintain a
capital to asset ratio reflecting financial strength and
adherence to regulatory guidelines.

	Regulatory risk-adjusted capital adequacy standards were
strengthened during 1992.  Equity capital (net of certain
adjustments for intangible assets and investments in
non-consolidated subsidiaries) and certain classes of preferred
stock are considered Tier 1 ("core") capital.  Tier 2 ("total")
capital consists of core capital plus subordinated debt, some
types of preferred stock, and varying amounts of the Allowance
for Possible Loan Losses.  The minimum standard for a "well
capitalized" bank is a risk-based core capital ratio of 6%, a
risk-based total capital ratio of 10%, and a core capital to
average total assets of 5%.

	As of December 31, 1995, the Bank's core and total risk-based
ratios were 16.8% and 17.7% respectively.  One year earlier, the
comparable ratios were 16.2% and 17.1%, respectively.  At year
end 1995, the Bank had a ratio of average core equity to total
average assets of 9.9%, up slightly from 9.0% at year end 1994.

<PAGE>


          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                          AND RESULTS OF OPERATIONS 

RESULTS OF OPERATIONS

Interest Income

	Total interest income increased 11.9% in 1995 compared to a
7.3% increase in 1994 and an decrease of .4% in 1993.  Interest
and fees earned on loans increased 22.4% in 1995 compared to an
8.3% increase in 1994 and a 1.4% decrease in  1993.  Interest
earned on investment securities and other investments decreased
10.9% in 1995 due to the decrease in volume compared to a 5.3%
increase in 1994 and a 1.9% increase in 1993.

Interest Expense

	Total interest expense increased 19.9% in 1995 compared to a
6.9% increase in 1994 and a 10.0% decrease in 1993.  The net
interest margin (tax equivalent net interest income divided by
average earning assets) increased in 1995 to 4.8% compared to
4.7% in 1994 and 4.6% in 1993 as indicated in the LIQUIDITY AND
INTEREST RATE SENSITIVITY MANAGEMENT section above.

	Net interest income on a fully taxable equivalent basis is
influenced primarily by changes in:  (1) the volume and mix of
earning assets and sources of funding; (2) market rates of
interest, and (3) income tax rates.  The impact of some of these
factors can be controlled by management policies and actions. 
External factors also can have a significant impact on changes
in net interest income from one period to another.  Some
examples of such factors are: (1) the strength of credit demands
by customers; (2) Federal Reserve Board monetary policy, and (3)
fiscal and debt management policies of the federal government,
including changes in tax laws. 


Noninterest Income and Expense

	Noninterest income increased 14.9% during 1995 versus a 1.6%
increase in 1994 and a 12.0% increase in 1993.  The new check
card generates fee income from the clearing agent for the
electronic transaction even though no service fee is charged to
Bank customers for its use.  This "Impact" of our new technology
contributed to the 16.4% increase in service fees for deposit
accounts in 1995.  Income from fiduciary services provided in
the Bank's Trust Department remained strong contributing 27.4%
of noninterest income.

	Noninterest expenses, excluding the provision for possible loan
losses, increased 6.2% in  1995 compared to a 5.4% increase in
1994 and a 9.3% increase in 1993.  Increased productivity
fostered by our technology improvements as the learning curve
diminished and cost control efforts contributed to this
improvement.  Included in this category is Federal Deposit
Insurance Corporation (FDIC) insurance premiums at the rate
established for "well capitalized" institutions.  This expense
was $499,709 in 1995 compared to $890,646 in 1994, a 43.9-%
reduction.  Please refer to the discussion in the CAPITAL
RESOURCES, CAPITAL, AND DIVIDENDS section above for more
information concerning the bank's capitalization.


Provision for Possible Loan Losses

	The provision for possible loan losses, representing amounts
charged against operating income, increased 1.5% in 1995
compared to a 40.4% increase in 1994 and a 44.1% decrease in
1993. Management regularly monitors the allowance for possible
losses and considers it to be adequate.  Please refer to Note 1
in the NOTES TO CONSOLIDATED FINANCIAL  STATEMENTS that are
included elsewhere in this material for further discussion of
the adequacy of the allowance.  The tables on the next page
summarize average loan balances and reconciliation of the
allowance for loan losses for each year.  Additions to the
allowance, which have been charged to operating expenses, are
also disclosed.

<PAGE>

              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS 

 Provision for Possible Loan Losses (Continued)

	The next tables present any risk elements in the loan portfolio
and include all loans management considers to be potential
problem loans.  Management does not believe that there is a
concentration of loans to a multiple number of borrowers engaged
in similar activities.
<TABLE>
<CAPTION>
                                                            		    				December 31 				
                                              		1995      		1994      	 	1993      	 	1992     	 	1991  
                                                     				    		(Dollars  In Thousands) 				
  
<S>                                          <C>         <C>          <C>          <C>          <C>
Average amount of loans outstanding 	        $	276,166   $	247,791 	  $	233,608 	  $	215,158 	  $	182,561 

Balance of allowance for possible loan 										
  losses at beginning of year 	              $  	2,342 	 $  	2,024 	  $  	2,254	   $ 	 1,917 	  $  	1,818 
Loans charged-off: 										
  Loans secured by real estate 		                   15 		      135 		       396 		       245		        329 
  Commercial and industrial loans 		               170 		       42 		       222 		       124		        192 
  Individuals 		                                   371 		      246 		       230 		       249 		       249 
      TOTAL  LOANS CHARGED OFF 		                  556 		      423 		       848 		       618		        770 
Recoveries of loans previously charged off: 										
   Loans secured by real estate 		                  97 		        9 		        56 		         3 		       - 
   Commercial and industrial loans 		               14 		       36 		        52 		        80 		        56 
   Individuals 		                                  111 		       36 		        40 		        32 		        33 
      TOTAL RECOVERIES 		                          222 		       81 		       148 		       115 		        89 
        NET  LOANS CHARGED-OFF 		                  334 		      342 		       700 		       503		        681 
Provision charged to operating expenses 		         670 		      660 		       470		        840 		       780 
       BALANCE OF ALLOWANCE FOR POSSIBLE 
        LOAN LOSSES AT END OF YEAR 	         $ 	 2,678 	 $ 	 2,342 	  $ 	 2,024 	  $  	2,254 	  $ 	 1,917 

Ratio of net charge-offs during the 										
  period to average loans outstanding 		         0.12% 		    0.14% 		     0.30%		      0.23% 		     0.37% 

</TABLE>
										

	Loans having recorded investments of $5.8 million at December
31, 1995, have been identified as impaired in accordance with
the provisions of SFAS 114.  They represent 2% of gross loans. 
Commercial loans comprised $.326 million of the total, with
loans secured by real estate accounting for $4.7 million and
installment loans $.800 million.  The gross interest income that
would have been recorded during 1995 if the loans had been
current in accordance with their original terms and had been
outstanding throughout the period or since origination, if held
for part of the period, was $365, $193, and $189 thousand for
the years ended December 31, 1995, 1994, and 1993 respectively. 
Impaired loans are charged-off once management has exhausted all
efforts to collect the loan.  Please refer to Note 1 and Note 3
in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS that are
included elsewhere in this material for more information on the
Bank's policy regarding loan impairment.

	Inherent in the business of providing financial services is the
risk involved in extending credit.  Management believes the
objective of a sound credit policy is to extend quality loans to
customers while reducing risk affecting shareholders' and
depositors' investments.  Risk reduction is achieved through
diversity of the loan portfolio as to type, borrower, and
industry concentration as well as sound credit policy guidelines
and procedures.  

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS 
<TABLE>

FIVE YEAR COMPARISON
<CAPTION>
      		                                    1995  	  	   1994        		1993         		1992        		 1991  
 
<S>                                     <C>           <C>           <C>            <C>            <C>
INTEREST INCOME 										
 Interest and fees on loans        	    $	25,857,982 	$	21,130,914 	$	19,518,742 	 $	19,791,548 	 $	19,571,295 
										
 Income on investment securities 										
   Taxable interest 		                     6,179,492   		7,012,626   		6,925,404		    6,898,114 		   5,218,446 
   Exempt from federal income tax 		       2,156,813 		  2,184,666   		1,857,168 		   1,825,869 		   1,828,738 
   Dividends 		                              177,790 		    204,948 		     72,054 		     110,874		      150,823 
										
                                         		8,514,095 		  9,402,240 		  8,854,626 		   8,834,857		    7,198,007 

 Other interest income 		                    121,492 		    284,384 		    347,287		      195,744 	      279,165 

    TOTAL INTEREST INCOME 		              34,493,569 		 30,817,538		  28,720,655 		  28,822,149 		  27,048,467 

INTEREST EXPENSE  										
  Interest on deposits 		                 15,247,875 		 12,770,618 		 11,998,235		   13,329,557 		  14,212,771 
  Interest on other short term  
   borrowings 		                             174,370 		     93,286		      38,339 		      47,449 		      63,994 
										
   TOTAL INTEREST EXPENSE 		              15,422,245 		 12,863,904		  12,036,574 		  13,377,006 		  14,276,765 

   NET INTEREST INCOME 		                 19,071,324 		 17,953,634  		16,684,081 		  15,445,143 		  12,771,702 

PROVISION FOR POSSIBLE LOAN LOSSES 		        670,000 		    660,000 		    470,000		      840,000 		     780,000 
   NET INTEREST INCOME AFTER 										
    PROVISION FOR LOAN LOSSES 		          18,401,324  		17,293,634 		 16,214,081 		  14,605,143 		  11,991,702 

NONINTEREST  INCOME 										
  Trust department income 		               1,251,642 		  1,249,359 		    863,952		      753,239 		     603,701 
  Service fees on deposit accounts 		      2,697,332 		  2,317,992		   2,206,026 		   2,123,096 		   1,893,355 
  Other service fees, commissions, 										
   and fees 		                               300,407 		    336,758 		    509,009 		     401,618		      237,755 
  Other operating income 		                  322,634 		    319,466 		    315,108		      191,363 		      91,440 
  Available for sale securities 										
   gains (losses) 		                           1,182 		   (243,690) 		    23,896		       28,434 		      15,862 

   TOTAL NONINTEREST  INCOME 		            4,573,197 		  3,979,885		   3,917,991 		   3,497,750 		   2,842,113 

NONINTEREST  EXPENSES 										
  Salaries and employee benefits 		        6,620,827 		  6,247,706		   5,686,965 		   5,283,086 		   4,407,072 
  Net occupancy expense 		                 1,279,434 		  1,190,678 		  1,070,971		      984,650 		     797,466 
  Furniture and equipment expense 		       1,382,769 		  1,069,856		     889,848 		     801,453 		     935,821 
  Loss on other real estate 		                50,724 		      4,000 		    103,122		      312,064 		      48,398 
  Other operating expenses 		              5,006,292 		  4,996,107		   4,903,949 		   4,460,696 		   3,572,881 
										
   TOTAL NONINTEREST EXPENSES 		          14,340,046		  13,508,347 		 12,654,855 		  11,841,949 		   9,761,638 

      INCOME BEFORE PROVISION 										
       FOR INCOME TAXES 		                 8,634,475		   7,765,172 		  7,477,217 		   6,260,944 		   5,072,177 

PROVISION FOR INCOME TAXES 		              2,518,769 		  2,203,746 		  2,220,965		    1,768,840 		   1,341,130 

        NET INCOME  	                   $ 	6,115,706 	$ 	5,561,426 	$ 	5,256,252 	 $ 	4,492,104 	 $ 	3,731,047 

EARNINGS PER COMMON SHARE  										
(1,400,000 outstanding shares) 	        $ 	     4.37 	$ 	     3.97 	$ 	     3.75	  $ 	     3.21 	 $ 	     2.67 

</TABLE>

<PAGE>

                    FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                    AND RESULTS OF OPERATIONS 

Net Income

	Net income was 10.0% higher in 1995 than in 1994, 5.8% higher
in 1994 than in 1993, and 17.0% higher in 1993 than in 1992.  As
indicated by the table, Comparative Data, the Corporation's
return on average assets was 1.32% in 1995, 1.23% in 1994, and
1.25% in 1993.  The return on equity remains strong at 13.95% in
1995, 14.11% in 1994, and 14.93% in 1993.

Net Interest Margin

	The bottom graph on the last page of this document illustrates
an increasing net interest margin  during the five years shown. 
As mentioned in the LIQUIDITY AND INTEREST RATE  SENSITIVITY 
MANAGEMENT section earlier, the Bank's Asset/Liability Committee
monitors interest rate sensitivity monthly.  Through the use of
simulation analysis to estimate future net interest income under
 varying interest rate conditions, the committee can  establish
pricing and maturity strategies to maintain that steady net
interest margin.  The simulation analysis uses the repricing
information indicated in the table, Rate Sensitivity of Earning
Assets and Interest Bearing Liabilities, and adjusts the current
balance sheet to reflect the impact of different interest rate
movements.

EFFECTS OF ECONOMY

	Current economic conditions have had a definite effect on the
reported financial condition and results of operation.  The
stock market closed out its worst performance and the bond
market experienced its largest calendar year decline in modern
history during 1994.  However, the market was much stronger
during 1995 experiencing considerable gains compared to 1994. 
Many Bank customers had used transaction and limited transaction
interest bearing accounts as holding vehicles to watch rate
movements during 1994 trying to determine the best time to lock
in a rate on a longer term product.  During 1995, many of these
customers decided that the time was right and transferred
investments to longer term certificate of deposits from
transaction and limited transaction interest bearing accounts. 
As Bank customers felt more comfortable with the economy, loan
demand increased strongly resulting in a shift of  Bank earning
assets from investment securities to higher yielding loans. 
Historically, noninterest bearing demand deposits and regular
savings accounts have provided a relatively fixed rate source of
funding for earning assets.  This was illustrated again in 1995
and 1994 as these fixed rate and noninterest bearing deposits
continued to provide a relatively stable cost from this funding
source.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE FINANCIAL
STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD

	The Financial Accounting Standards Board has issued two
standards that have not been adopted by the Bank but are
required to adopted after December 31, 1995.  The Statement of
Financial Accounting Standards No. 121 (SFAS 121), "Accounting
for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed Of" establishes guidance on when to
recognize and how to measure impairment losses on long-lived
assets and certain identifiable intangibles.  The statement also
offers guidance on how to value long-lived assets that
management has committed to a plan to dispose of the assets.  An
asset that an entity will hold and use should be reviewed for
impairment whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable.  In such
situations, an impairment loss is recognized if the sum of
undiscounted future cash flows expected to be generated by the
asset is less than the carrying amount of the asset. 
Measurement of the impairment loss, however, is based on the
fair value of the asset.  Management does not believe this
statement will have any material effect on future income.

	The second standard,  Statement of Financial Accounting
Standards No. 122 (SFAS 122), "Accounting for Certain Mortgage
Banking Activities" requires recognition of rights to service
mortgage loans for others as separate assets, regardless of how
the servicing rights are acquired.  This Statement prescribes  a
single procedure for the capitalization of those rights acquired
either through loan origination or through purchase transactions
where a mortgage banking enterprise buys the servicing rights. 
Mortgage servicing rights are to be assessed for impairment


<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS 

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE FINANCIAL
STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD (Continued)

based on their fair value.  Impairment is recognized through a
valuation allowance for each impaired group of mortgage
servicing rights.  Rights capitalized after adoption of this
statement should be grouped based on the risk characteristics of
the underlying loans.  Management does not believe this
statement will have any material effect on future income.

SHAREHOLDER  INFORMATION

	The 1,400,000 shares of common stock of First Farmers &
Merchants Corporation outstanding at December 31, 1995, had a
market value of $75.6 million and were held by 1,514
identifiable individuals located mostly in the market area.  A
small number of additional shareholders are not identified
individually since some bank nominees, including the bank's
Trust Department, are listed as single owners when, in fact,
these holdings represent large numbers of shareholders.  No
single shareholder's ownership exceeded five percent at year end.

	There is no established public trading market for the stock. 
The following table lists the high and low price of the
Corporation's common stock, as well as the semiannual dividend
paid per share, in each of the last three years.

<TABLE>

                                             SHAREHOLDER INFORMATION
<CAPTION>
                                               			Price Range of  				  Dividend 
                                                			Common Stock 	   	 		  Paid 
                                          			High       	 	Low 	        Per Share 

              <S>    <S>                  <C>            <C>            <C>
                    	First quarter 	      $	36.00 	      $	36.00 	      $ 	
                    	Second quarter 		      37.00        		37.00         		0.36 
              1993  	Third quarter 		       38.00 		       37.00 		
                    	Fourth quarter 		      38.00        		38.00         		0.37 

                                                                        $  0.73
 	 	 	 	 	 	 	 
                    	First quarter 	      $	40.00 	      $	36.00 	      $ 	
                    	Second quarter 		      42.00        		37.00 		        0.39 
              1994  	Third quarter 		       43.00 		       37.00 		
                    	Fourth quarter 		      45.00 		       38.00 		        0.41 

                                                                  						$ 	0.80  

                    	First quarter 	      $	45.00 	       $	45.00      	$ 	
                    	Second quarter 		      48.00 		        45.00 		       0.43 
              1995  	Third quarter 		       50.00 		        48.00 		
                    	Fourth quarter 		      54.00 		        50.00        		0.45 

                                                                  						$ 	0.88 
</TABLE>

<PAGE>							

                   FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                AND RESULTS OF OPERATIONS 

<TABLE>
                                      COMPARATIVE DATA 										
                                  (In Thousands of Dollars) 										

                             		1995     		1994      		1993      		1992     		 1991  

<S>                        <C>         <C>         <C>         <C>         <C>
AVERAGE ASSETS 	           $	463,739 	 $	451,953 	 $	420,760 	 $	381,379  	$	303,851 

AVERAGE LOANS (NET) 	      $	276,166 	 $	247,791 	 $	233,609  	$	215,158  	$ 182,561 

AVERAGE DEPOSITS 	         $	409,489 	 $	404,412 	 $	378,782 	 $	343,128	  $	268,495 

RETURN ON EQUITY 										
  AND ASSETS 										
 Return on average assets 		   1.32% 		    1.23% 		    1.25% 		    1.18%		     1.23% 

 Return on beginning equity 		13.95% 		   14.11% 		   14.93%    		14.21% 		   13.01% 
 Average equity to  										
    average assets 		         10.08% 		    9.25% 		    8.90% 		    8.76%		     9.94% 

COMMON DIVIDEND 										
  PAYOUT RATIO 										
 Earnings per share 	      $ 	  4.37 	  $ 	 3.97 	  $ 	 3.75 	  $ 	 3.21 	 $	   2.67 

 Cash dividends per share 	$ 	  0.88 	  $ 	 0.80   	$ 	 0.73 	  $  	0.64	  $ 	  0.58 

 Ratio 		                       20% 		      20% 		      19% 		      20% 		      22% 
</TABLE>
										
<TABLE>

                             NET INTEREST MARGIN
<CAPTION>
   	                          	1995  		    1994  		     1993  		    1992  		   1991  
                                             (In Thousands of Dollars) 								

<C>                        <C>          <C>          <C>         <C>        <C>
INTEREST INCOME 										
 (TAX EQUIVALENT)  	       $ 	35,626 	  $ 	32,039 	  $ 	29,465 	 $ 	29,564 	$ 	27,736 

INTEREST EXPENSE 		           15,422 		    12,864 		    12,037 		   13,377 		  14,277 


                          	$ 	20,204 	  $ 	19,175 	  $ 	17,428 	 $ 	16,187 	$ 	13,459 


NET INTEREST MARGIN* 		        4.79% 		     4.68% 		     4.58% 		    4.67% 		   4.84% 

<FN>
<F14>
*Net interest margin is net interest income (tax equivalent)
divided by average earnings assets.
</FN>
</TABLE>

	In summary, the graphs on the following page illustrate the
presentation in the preceding pages, a unique perspective on the
internal structures of the Corporation and the Bank.  Each
shareholder can be proud of this performance.  Our shareholders
are the real support of our organization.  Thank you for your
help and support.


Nine color graphs were included on the last page of this report.
One - The first graph used the information presented above in the Five
Year Comparison table to illustrate the growth in net income.
Two - The second graph used information from the Comparative Data on the
previous page to illustrate a return on average assets of 1.18% and above
for the last five years.
Three - The third graph used information from the Comparative Data on the
previous page to illustrate a return on beginning stockholders' equity 
over 13% for the last five years.
Four - The fourth graph used information from the Comparative Data on the 
previous page to illustrate earnings per share and cash dividends per share 
for the last five years.
Five - The fifth graph used information from the Consolidated Statements of
Stockholders' Equity to illustrate the growth in stockholders' equity for
the last five years.
Six - The sixth graph used information from the Consolidated Balance Sheets
to illustrate the growth in net loans for the last five years.
Seven - The seventh graph used information from the Consolidated Balance
Sheets to illustrate the growth in deposits for the last five years.
Eight - The eighth graph used information from the Consolidated Balance Sheets
to illustrate the growth in total assets for the last five years.
Nine - The nineth graph used information from the Five Year Comparison table
above to illustrate interest income, interest expense and net interest income
for the last five years. 


Item 8.  Financial Statements and Supplementary Data.

Financial statements and supplementary data are incorporated
herein by reference to Consolidated Financial Statements, Notes
to Consolidated Financial Statements, and Management's
Discussion and Analysis of Financial Condition and Results of
Operation which are attached hereto as Exhibit 13.


<TABLE>
              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                         CONSOLIDATED BALANCE SHEETS                             
                         DECEMBER 31, 1995 and 1994                           
<CAPTION>
ASSETS 		                                    1995   		             1994  

<S>                                          <C>                 <C>
Cash and due from banks 	                    $ 	31,281,706       $ 	26,735,526 
Securities 				
 Available for sale (amortized cost 
  $10,875,527 and $12,646,156 
  respectively) 		                              11,269,006 		       12,565,226 
 Held to maturity (fair value
  $128,829,961 and $138,892,331  
  respectively) 		                             127,662,682 		      143,061,031 
    Total securities - Note 2 		               138,931,688       		155,626,257 
Loans, net of unearned income - Note 3   	  	  291,930,311       		262,694,120 
 Allowance for possible loan losses
  - Note 4 		                                   (2,678,386)       		(2,342,290) 
    Net loans 		                               289,251,925 		      260,351,830 
Bank premises and equipment, at cost less
 allowance for depreciation and 
 amortization - Note 5   		                      6,397,936 		        6,193,080 
Other assets 		                                 11,171,993 		       11,887,492 
				
   TOTAL ASSETS 	                            $ 477,035,248 	     $	460,794,185 

LIABILITIES 				

Deposits 				
 Noninterest-bearing 	                       $ 	67,420,536 	     $ 	61,845,878 
 Interest-bearing (including  
 certificates of deposit over $100,000: 				
 1995 - $30,593,803; 1994 - $26,169,831) 	    	343,357,525 		      343,306,545 
    Total deposits 		                          410,778,061 		      405,152,423 
 Federal funds purchased 		                     10,000,000 		        7,000,000 
 Dividends payable 		                              630,000 		          574,000 
 Other short term liabilities 		                 1,955,000 		          600,000 
 Accounts payable and accrued liabilities 		     4,675,712 		        3,639,636 
				
    TOTAL LIABILITIES 		                       428,038,773         416,966,059 

COMMITMENTS AND CONTINGENCIES - Notes 7 and 9 				
STOCKHOLDERS' EQUITY 				
 Common stock - $10 par value, authorized 
  4,000,000 shares; 1,400,000 shares issued 
  and outstanding - Note 1                    		14,000,000 		       14,000,000 
 Retained earnings - Note 6 		                  34,760,389 	       	29,876,683 
 Net unrealized loss on available-for-sale 
  securities, net of tax 		                        236,086 		          (48,557) 
    TOTAL STOCKHOLDERS' EQUITY 		               48,996,475 		       43,828,126 

    TOTAL LIABILITIES AND STOCKHOLDERS' 
     EQUITY 	                                $	477,035,248 	     $ 460,794,185 
</TABLE>

<TABLE>
                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                 
                     YEARS ENDED DECEMBER 31, 1995, 1994, and 1993                   
<CAPTION>
                                                              						Net Unrealized 		
			   		                                                           	Gain (Loss) On 		
                                    		Common  		    Retained 		    Available-for-sale 		
                                    		Stock   	    	Earnings    	    	Securities   	   	   Total 

<S>                               <C>             <C>                <C>               <C>
BALANCE AT JANUARY 1, 1993 	      $ 	7,000,000 	  $	28,201,005   	   $  	- 	           $	35,201,005 
Net income for the year 		               - 		        5,256,252 		        - 		             5,256,252 
Cash dividends declared, 
 $.73 per share 		                       - 		       (1,022,000) 		       - 		            (1,022,000) 
Net unrealized loss on mutual 
 fund investment 		                      - 		          (27,684) 		       -		                (27,684) 
								
BALANCE AT DECEMBER 31, 1993 		      7,000,000 		   32,407,573 		        -		             39,407,573 
Cumulative effect of change in
 accounting principle (net of
 deferred income taxes of 
 $171,405)  - Note 1 		                  - 		           27,684		       229,424 		           257,108 
Two-for-one stock split - Note 1 		  7,000,000 		   (7,000,000) 		       -		                  - 
Net income for the year 		               - 		        5,561,426 		        - 		             5,561,426 
Cash dividends declared, $.80 
 per share 		                            - 		       (1,120,000) 		       -		             (1,120,000) 
Net unrealized loss on available-
 for-sale securities, net of tax 		      - 		            - 		         (277,981) 		         (277,981) 
								
BALANCE AT DECEMBER 31, 1994 		     14,000,000 		   29,876,683		       (48,557) 		       43,828,126 
Net income for the year 		               - 		        6,115,706 		        - 		             6,115,706 
Cash dividends declared, $.88 
 per share 		                            - 		       (1,232,000) 		       -		             (1,232,000) 
Net unrealized gain on available-
 for-sale securities, net of tax		       - 		            - 		          284,643 		           284,643 

BALANCE AT DECEMBER 31, 1995 	    $	14,000,000 	  $	34,760,389 	     $	236,086 	       $	48,996,475 

<FN>
<F1>
The accompanying notes are an integral part of the consolidated
financial statements. 								
</FN>
</TABLE>

<PAGE>
<TABLE>
                   FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                           CONSOLIDATED STATEMENTS OF INCOME                      
                     YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993                   
<CAPTION>
                                         		1995  		       1994  		       1993  

INTEREST INCOME 						
 <S>                                  <C>            <C>            <C>
 Interest and fees on loans 	         $	25,857,982  	$	21,130,914 	 $	19,518,742 

 Income on investment securities 						
  Taxable interest 		                    6,179,492 		   7,185,169 		   6,925,404 
  Exempt from federal income tax 		      2,156,813 		   2,184,666 		   1,857,168 
  Dividends 		                             177,790      		204,948       		72,054  
                                       		8,514,095 		   9,574,783 	   	8,854,626 

 Other interest income 	                  	121,492 		     111,841 		     347,287 

    TOTAL INTEREST INCOME 		            34,493,569 		  30,817,538		   28,720,655 

INTEREST EXPENSE  						
 Interest on deposits 		                15,247,875 		  12,770,618 		  11,998,235 
 Interest on other short term 
  borrowings 		                            174,370 		      93,286		       38,339 
						
    TOTAL INTEREST EXPENSE 		           15,422,245 		  12,863,904		   12,036,574 

    NET INTEREST INCOME 		              19,071,324 		  17,953,634		   16,684,081 

PROVISION FOR POSSIBLE LOAN
 LOSSES - Note 4 		                        670,000 		     660,000		      470,000 

    NET INTEREST INCOME AFTER 						
     PROVISION FOR LOAN LOSSES 		       18,401,324		   17,293,634 		  16,214,081 

NONINTEREST  INCOME 						
 Trust department income 		              1,251,642 		   1,249,359 		     863,952 
 Service fees on deposit accounts 		     2,697,332 		   2,317,992		    2,206,026 
 Other service fees, commissions,
  and fees 		                              300,407		      336,758 		     509,009 
 Other operating income 		                 322,634 		     319,466 		     315,108 
 Available for sale securities 
  gains (losses) 		                          1,182		     (243,690) 		     23,896 
						
    TOTAL NONINTEREST  INCOME 		         4,573,197 		   3,979,885		    3,917,991 

NONINTEREST  EXPENSES 						
 Salaries and employee benefits 		       6,620,827 		   6,247,706		    5,686,965 
 Net occupancy expense 		                1,279,434 		   1,190,678 		   1,070,971 
 Furniture and equipment expense 		      1,382,769 		   1,069,856		      889,848 
 Loss on other real estate 		               50,724 		       4,000 		     103,122 
 Other operating expenses 		             5,006,292 		   4,996,107		    4,903,949 

    TOTAL NONINTEREST EXPENSES 		       14,340,046		   13,508,347 		  12,654,855 
						
    INCOME BEFORE PROVISION FOR
     INCOME TAXES 		                     8,634,475 		   7,765,172		    7,477,217 

PROVISION FOR INCOME TAXES - Note 8 		   2,518,769 		   2,203,746		    2,220,965 

    NET INCOME  	                     $ 	6,115,706 	 $ 	5,561,426 	 $ 	5,256,252 

EARNINGS PER COMMON SHARE - Note 1 						
 (1,400,000 outstanding shares) 	     $ 	     4.37 	 $ 	     3.97 	 $ 	     3.75 

<FN>						
<F2>
The accompanying notes are an integral part of the consolidated
financial statements. 						
</FN>
</TABLE>

<PAGE>

<TABLE>
                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY          
                      CONSOLIDATED STATEMENTS OF CASH FLOWS                           
                  YEARS ENDED DECEMBER 31, 1995, 1994, and 1993                   
<CAPTION>
		                                   1995     		      1994            		1993  

OPERATING ACTIVITIES 						

 <S>                            <C>              <C>               <C>
 Net income   	                 $ 	6,115,706 	   $ 	5,561,426     	$ 	5,256,252 
 Adjustments to reconcile net
  income to net cash provided
  by operating activities 						
  Excess (deficiency) of 
   provision for possible 						
   loan losses over net 
   charge offs 		                    336,096 	      	318,639	         	(230,083) 
  Provision for depreciation
   and amortization of 
   premises and equipment 		         645,816 		      589,045 		         591,486 
  Amortization of deposit 
   base intangibles 		               168,020		       168,020 		         168,020 
  Amortization of investment
   security premiums, net of
   accretion of discounts 		         641,104 		      678,968		          747,224 
  Increase in cash surrender
   value of life insurance
   contracts 	                      	(65,936) 		     (75,287) 		       (103,175) 
  Deferred income taxes 		          (233,403) 		    (163,907) 		         24,080 
  (Increase) decrease in 						
   Interest receivable  		          (255,109) 	    	(992,872) 	        	364,303 
   Other assets  	                  	912,162 		      344,572 		      (1,171,225) 
  Increase (decrease) in 						
   Interest payable 	               	577,137 		      222,605 		        (206,742) 
   Other liabilities 		              458,939 		      287,975 		          38,024 
						
    TOTAL ADJUSTMENTS 		           3,184,826 		    1,377,758		          221,912 

    NET CASH PROVIDED BY 
     OPERATING ACTIVITIES        		9,300,532 		    6,939,184 		       5,478,164 

INVESTING ACTIVITIES 						

 Proceeds from maturities, 
  calls, and sales of 
  available-for-sale
  securities 		                    7,306,453 		   25,152,051 		           - 
 Proceeds from maturities and
  calls of held-to-maturity
  securities 		                   18,848,992 		    5,092,000 		      30,497,983 
 Purchases of investment 
  securities 						
  Available-for-sale 		           (3,168,200) 		 (16,942,994) 		          - 
  Held-to-maturity 		             (6,459,372) 		 (19,495,987)		     (39,789,407) 
 Net increase in loans 		        (29,236,191) 	 	(18,778,658)     		(18,710,584) 
 Purchases of premises and
  equipment 		                      (850,672) 		    (418,586)		        (222,279) 
 Proceeds from redemption of
  annuities and life insur-
  ance contracts 						                                                 229,275 
 Purchase of single premium
  life insurance contracts 		          - 		            - 		            (730,000) 

    NET CASH USED BY 
     INVESTING ACTIVITIES      		(13,558,990) 		 (25,392,174) 		    (28,725,012) 

FINANCING ACTIVITIES 						

 Net increase in noninterest-
  bearing and interest-bearing
  deposits  		                     5,625,638      16,217,348	       	18,384,169 
 Net increase (decrease) in
  short term borrowings 		         4,355,000		     7,000,000 		         (77,537) 
 Cash dividends                 		(1,176,000) 	  	(1,071,000) 		       (966,000) 

    NET CASH PROVIDED BY
     FINANCING ACTIVITIES        		8,804,638 		   22,146,348 		      17,340,632 

    INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS        		4,546,180 		    3,693,358 		      (5,906,216) 

CASH AND CASH EQUIVALENTS 
 AT BEGINNING OF YEAR 		          26,735,526		    23,042,168 		      28,948,384 

CASH AND CASH EQUIVALENTS AT
 END OF YEAR 	                  $	31,281,706 	   $	26,735,526 	    $ 23,042,168 

<FN>
<F3>
The accompanying notes are an integral part of the consolidated
financial statements.
</FN>
</TABLE>

<PAGE>

              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

		First Farmers and Merchants Corporation (the Corporation) was
incorporated on March 31, 1982, as a Tennessee corporation.  On 
April 13, 1982, the Board of Directors of the Corporation
adopted a resolution to execute and deliver to the Board of
Governors of the Federal Reserve System an application pursuant
to Section 3(a)(1) of the Bank Holding Company Act of 1956, as
amended, for prior approval by the Board of action to be taken
by the Corporation which would result in its becoming a bank
holding company. 

 		As of December 31, 1995, the only subsidiary of the
Corporation was the Bank.  The Bank is a national banking
association which was organized in 1954 as a successor to a
state bank organized in 1909.  The Bank conducts a full-service
commercial banking business at its principal office at 816 South
Garden Street, Columbia, Tennessee and at thirteen (13)
branches:  High Street Branch, Northside Branch, Shady Brook
Mall Branch, Hatcher Lane Branch, and Campbell Plaza Branch in
Columbia; Mt. Pleasant Branch in Mt. Pleasant; Spring Hill
Branch in Spring Hill; Lawrenceburg Branch in Lawrenceburg;
Leoma Branch in Leoma; Loretto Branch in Loretto; Lewisburg
Branch in Lewisburg; Chapel Hill Branch in Chapel Hill; and
Centerville Branch in Centerville.  The Bank provides automatic
teller machine services in the Northfield Complex at the Saturn
location near Spring Hill, and in Columbia at the Tennessee Farm
Bureau and Columbia State Community College.

		The community service area of the Bank is comprised of Maury,
Lawrence, Marshall, Hickman, and adjacent counties.  Commercial
banking in the marketing area served by the Bank is highly
competitive.  Although the Bank is ranked as the largest bank in
the area, in terms of total deposits, the Bank faces substantial
competition from ten (10) other banks, three (3) savings and
loan associations, and several credit unions located in the
marketing area.

Accounting Policies

		The accounting principles followed and the methods of applying
those principles conform with generally accepted accounting
principles and to general practices in the banking industry. 
The significant policies are summarized as follows.

Principles of Consolidation

		The accompanying consolidated financial statements present the
accounts of the Corporation and its wholly-owned subsidiary, the
Bank.  Material intercompany accounts and transactions have been
eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

		The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.

Cash and Due From Banks

		Included in cash and due from banks are legally  reserved
amounts which are required to be maintained on an average basis
in the form of cash and balances due from the Federal Reserve
Bank and other banks.  Average reserve requirements for the year
ended December 31, 1995, amounted to approximately $8.3 million.

Cash Equivalents

		Cash equivalents include cash on hand, cash due from banks,
and federal funds sold.  Federal funds are sold for one-day
periods.

<PAGE>

          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Securities

		Effective January 1, 1994, the Bank adopted Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting
for Certain Investments in Debt and Equity Securities."  In
accordance with the Statement, prior period financial statements
have not been restated to reflect the change in accounting
principle.  The cumulative effect of  the adoption was an
increase in stockholders' equity  of $257,108 (net of $171,405
in deferred income taxes) to reflect the net unrealized gains on
securities classified as available-for-sale that were previously
classified as held-to-maturity.  SFAS 115 establishes standards
of accounting and reporting for investments in equity securities
that have readily determinable fair values and all debt
securities.  Under the Statement, all such investments are
classified in three categories and accounted for as follows: 

		Debt securities that the Bank has the positive intent and
ability to hold to maturity are classified as held-to-maturity
and reported at amortized cost with premiums and discounts
recognized in interest income using the interest method over the
period to maturity.

		Debt and equity securities that are bought and held
principally for the purpose of selling them in the near term are
classified as trading securities and reported at fair value,
with  unrealized gains and losses included in earnings.

		Debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified
as available-for-sale securities and reported at fair value,
with unrealized gains and losses, net of tax,  excluded from
earnings and reported as a separate component of stockholders'
equity.  Gains and losses realized on the sale of
available-for-sale securities are determined using the specific
identification method.

		Declines in the fair value of individual available-for-sale
and held-to-maturity securities below their cost that are other
than temporary result in write-downs of the individual
securities to their fair value.  The related write-downs are
included in earnings as realized losses.

		On November 15, 1995, the Financial Accounting Standards Board
issued a guide for implementation of SFAS 115 which allowed a
bank to reassess the appropriateness of the classification of
all securities held at that date and account for resulting
reclassifications as a transfer until December 31, 1995. 
Reclassification from the held-to-maturity category that
resulted from this one-time reassessment would not call into
question the intent of a bank to hold other debt securities to
maturity in the future.  The Bank did not reclassify any debt
securities as a result of this one-time reassessment.

Loans

		Effective January 1, 1995, the Bank adopted Statement of
Financial Accounting Standards No. 114 (SFAS 114, as amended by
SFAS 118), "Accounting by Creditors for Impairment of a Loan". 
The statement specifies how allowances for credit losses related
to certain loans should be determined and addresses the
accounting for certain loans that are restructured in a troubled
debt restructuring.  A loan is considered impaired when it is
probable that an institution will be unable to collect all
amounts due (principal and interest) according to the
contractual terms of the loan agreement.  The Bank evaluates
smaller balance homogeneous loans collectively for impairment. 
Loans secured by one to four family residential properties,
consumer installment loans, and line of credit loans are
considered smaller-balance homogeneous loans.

		Interest on loans is computed daily based on the principal
amount outstanding.  Loan origination fees and related direct
costs are deferred and recognized as an adjustment of yield on
the interest method.  Interest accruals are discontinued when,
in the opinion of management, it is not reasonable to expect
that such interest will be collected.  Consequently, interest
accruals are discontinued on loans that are ninety days
past-due.  All loans

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Loans (Continued)

in non-accrual status and loans in the two most severe Loan
Review classifications are specifically evaluated for
impairment.  Interest income on loans in non-accrual status is
recognized only to the extent of the excess of cash payments
received over principal payments due.

		When a loan is collateral dependent, impairment is measured
based on the observable market price or the fair value of the
collateral.  For other loans, the amount of impairment is
measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate. 
Positive changes in the net present value of an impaired loan
will in no event be used to increase the value of a loan above
the amount of the loan.

	Other Real Estate

		Other real estate, which is included in other assets,
represents real estate acquired through foreclosure and is
stated at the lower of cost or fair value minus estimated cost
to sell.  If, at the time of foreclosure, the fair value of the
real estate is less than the Bank's carrying value of the
related loan, a write-down is recognized through a charge to the
allowance for possible loan losses, and the fair value becomes
the new cost for subsequent accounting.  If the Bank later
determines that the cost of the property cannot be recovered
through sale or use, a write-down is recognized by a charge to
operations.  When the property is not in a condition suitable
for sale or use at the time of foreclosure, completion and
holding costs, including such items as real estate taxes,
maintenance and insurance, are capitalized up to the estimated
net realizable value of the property.  However, when the
property is in a condition for sale or use at the time of
foreclosure. or the property is already carried at its estimated
net realizable value, any subsequent holding costs are expensed.
 Legal fees and any other direct costs relating to foreclosures
are charged to operations when incurred.

		The Bank's recorded value for other real estate was
approximately $482,945 at December 31, 1995, and $544,540 at
December 31, 1994.  

Allowance for Possible Loan Losses

	The allowance for possible loan losses is established by
charges to operations based on the evaluation of the impairment
of loans by Loan Review, the Special Assets Committee, and the
Credit Administrator.  Impairments in loans are charged to the
allowance account in the period such determination is made. 
Recoveries on loans previously charged off are credited to the
allowance account in the period received.  The adequacy of the
allowance for possible loan losses is evaluated quarterly in
conjunction with loan review reports and evaluations that are
discussed in a meeting with loan officers and loan
administration.

Premises and Equipment

		Premises and equipment are stated at cost, less accumulated
depreciation and amortization.  The provision for depreciation
is computed principally on an accelerated cost recovery method
over the estimated useful lives of the assets, which range as
follows:  buildings - 15 to 50 years and equipment - 3-33 years.
 Costs of major additions and improvements are capitalized. 
Expenditures for maintenance and repairs are charged to
operations as incurred.  Gains or losses from the disposition of
property are reflected in operations, and the asset accounts and
related allowances for depreciation are reduced. 

Trust Department Income

		Trust department income is recognized on the accrual basis in
the applicable period earned.

<PAGE>

             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Stock Split

		During 1994, the Corporation amended its corporate charter to
increase the number of authorized shares of its common stock
from 2,000,000 to 4,000,000 shares and on April 12, 1994, the
Corporation's stockholders approved a two-for-one split effected
in the form of a 100% stock dividend distributed May 30, 1994,
to shareholders of record on April 12, 1994.  In accordance with
State corporate legal requirements, the transaction was recorded
by a transfer from retained earnings to common stock in the
amount of $7,000,000 ($10 for each additional share issued). 
All per share and share data in the accompanying consolidated
financial statements and footnotes have been restated to give
retroactive effect to the transaction.

Income Taxes

		The companies file a consolidated federal income tax return.  
They adopted Statement of Financial Accounting Standards No. 109
(SFAS 109), "Accounting For Income Taxes", effective January 1,
1993.  SFAS 109 requires an asset and liability approach to
financial accounting and reporting for income taxes.  Deferred
income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected
to affect taxable income.

		Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. 
Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred
tax assets and liabilities.  The cumulative effect, as of
January 1, 1993, of this change in the method of accounting for
income taxes was negligible.

Intangible Assets

	Deposit base intangibles identified in merger transactions are
amortized over 42 to 70 months on the straight-line method. 
Total amortization expense charged to operations amounted to: 
1995 - $168,020;  1994 - $168,020;  and  1993 - $168,020.

Fair Value of Financial Instruments

		Statement of Financial Accounting Standards No. 107 (SFAS
107), "Disclosures about Fair Value of Financial Instruments",
requires all entities to disclose the estimated fair value of
its financial instrument assets and liabilities.  For the Bank,
as for most financial institutions, almost all of its assets and
liabilities are considered financial instruments as defined in
SFAS 107.  Many of the Bank's financial instruments, however,
lack an available trading market as characterized by a willing
buyer and willing seller engaging in an unforced, unforeclosed
transaction.  Therefore, significant estimations and present
value calculations  were used by the Bank for the purposes of
this disclosure.

<PAGE>


            FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2 - INVESTMENT SECURITIES

		The following tables reflect the amortized value and fair
value of investment securities.

<TABLE>

<CAPTION>
                            		      Amortized 		                Gross Unrealized 		 		         Fair 	
	                                    	Value 		               Gain           	   Loss 		        Value 	

December 31, 1995 									

Available-for-sale securities 									

 <S>                              <C>                     <C>                  <C>           <C>
 U.S. Treasury 	                  $ 	5,064,421 	          $  	72,679 	         $   	- 	      $ 	5,137,100 	
 U.S. Government agencies 		         3,279,968 		             72,268 		             2,570		     3,349,666 	
 Other securities 		                 2,531,138 	             254,102 		             3,000 		    2,782,240 	
 	                                $	10,875,527 	          $ 	399,049 	         $   	5,570 	  $	11,269,006 	

Held-to-maturity securities 									

 U.S. Treasury                   	$	61,426,813 	          $ 	295,846 	         $  	59,359 	  $	61,663,300 	
 U.S. Government agencies 		        23,498,204 		            267,237 		            48,041		    23,717,400 	
 States and political subdivisions		42,415,025 		            934,439		            241,048 		   43,108,416 	
 Other securities 		                   322,640 		             18,205 		             - 		          340,845 	
                                 	$127,662,682 	          $1,515,727 	         $ 	348,448 	  $128,829,961 	

December 31, 1994 									
									
Available-for-sale securities 									
 U.S. Treasury 	                  $ 	7,094,657 	          $   	4,695 	         $  	50,352 	  $ 	7,049,000 	
 U.S. Government agencies 		         5,551,499 		              3,892 		            39,165		     5,516,226 	
	                                 $	12,646,156 	          $   	8,587           $  	89,517 	  $	12,565,226 	

Held-to-maturity securities 									
 U.S. Treasury 	                  $	71,997,419 	          $  	66,784 	         $1,862,503 	  $	70,201,700 	
 U.S. Government agencies 		        28,527,740 		             21,631 		         1,006,621		    27,542,750 	
 States and political subdivisions 	39,786,156 		            493,613		          1,804,009 		   38,475,760 	
 Other securities 		                 2,749,716 		              3,210 		            80,805 		    2,672,121 	
                                 	$143,061,031 	          $ 	585,238 	         $4,753,938 	  $138,892,331 	

</TABLE>

		Securities with an amortized value of $93,101,954 and
$81,583,779 at December 31, 1995 and 1994, respectively (fair
value: 1995 - $93,937,766; 1994 - $80,148,047), were pledged to
secure deposits and for other purposes as required or permitted
by law.  The fair value is established by an independent pricing
service as of the approximate dates indicated.  The differences
between the amortized value and fair value reflect current
interest rates and represent the potential gain (or loss) had
the portfolio been liquidated on that date.  Security gains (or
losses) are realized only in the event of dispositions prior to
maturity.  The fair values of all securities at December 31,
1995, either equaled or exceeded the cost of those securities,
or the decline in fair value is considered temporary.

		A schedule of net gains and losses realized on the disposition
of investment securities, and the related tax effects, is
presented in the following table.  All net gains realized in
1995 and net losses realized in 1994 resulted from sales of
securities which were classified as available-for-sale.

<TABLE>

<CAPTION>
            		                         1995       		1994        		1993  	

       <S>                         <C>           <C>           <C>
       Pre-tax gains (losses) 	    $   	1,182 	  $(243,690) 	  $ 	23,896 	
       Tax effect 		                     (473) 		   97,476 		     (9,558) 	
       After-tax gains (losses) 	   $  	  709 	  $(146,214) 	  $ 	14,338 	

</TABLE>
							
<PAGE>

         FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  2 - INVESTMENT SECURITIES (Continued)



		Proceeds from the maturity, call, or sale of
available-for-sale securities were $7,306,453, $25,152,051, and
$-0- during 1995, 1994, and 1993 respectively.  Proceeds from
the maturity or call of held-to-maturity securities were
$18,848,992, $5,092,000, and $30,497,983 during 1995, 1994, and
1993 respectively.  Gross gains of $1,182 and gross losses of
$-0- were realized on the dispositions in 1995.  Gross gains of
$-0- and gross losses of $243,690 were realized on the
dispositions in 1994.  Gross gains of $23,896 and gross losses
of $ -0- were realized on the dispositions in 1993.  At December
31, 1995, the Corporation did not hold investment securities of
any single issuer, other than obligations of the U.S. Treasury
and other U.S. Government agencies, whose aggregate book value
exceeded ten percent of stockholders' equity.

	 	The following table shows the amortized value, fair  value,
and weighted yields (for tax-exempt obligations on a fully
taxable basis assuming a 34% tax rate) of investment securities
at December 31, 1995, by contractual maturity.  Expected
maturities may differ from contractual maturities because
issuers may have the right to call or prepay obligations.

<TABLE>

<CAPTION>
                                             		Amortized 	       	Fair 	 	   Yield 	
                                                		Cost 	   	     Value 		    (Unaudited) 	
Available-for-sale securities 							
<S>                                          <C>              <C>              <C>
U.S. Treasury
 Within one year 	                           $ 	2,019,183 	   $ 	2,029,400 		   6.2% 	
 After one but within five years 		             3,045,238 		     3,107,700		    6.5% 	
U.S. Government agencies 							
 Within one year 		                             1,000,000 		     1,002,500 		   6.1% 	
 After one but within five years 		             1,996,231 		     2,066,000		    7.6% 	
 After ten years 		                               283,737 		       281,166 		   6.2% 	
Other securities 		                             2,531,138 		     2,782,240 		   8.9% 	
	                                            $	10,875,527 	   $	11,269,006 			

Held-to-maturity securities 							
U.S. Treasury 							
 Within one year 	                           $	39,167,894 	   $ 39,306,700 		   6.1% 	
 After one but within five years 		            22,258,919 		    22,356,600		    5.6% 	
U.S. Government agencies 							
 Within one year 		                            11,023,204 		    11,062,500 		   6.1% 	
 After one but within five years 		            12,475,000 		    12,654,900		    6.1% 	
 After five but within ten years 		                - 	 	            - 	 	        - 	 
States and political subdivisions 							
 Within one year 		                             3,244,962 		     3,296,024 		  10.0% 	
 After one but within five years 		            12,357,917 		    12,741,932		    8.7% 	
 After five but within ten years 		            23,148,235 		    23,191,943		    7.6% 	
 After ten years 		                             3,663,911 		     3,678,517 		   7.8% 	
Other securities 							
 After one but within five years 		               322,640 		       340,845 		   8.0% 	
	                                            $127,662,682 	   $128,629,961 			
</TABLE>

<PAGE>							

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  3 - LOANS

		A summary of loans outstanding by category follows. 

<TABLE>

<CAPTION>
  		                                                1995  		          1994  	
Loans secured by real estate 					
<S>                                            <C>               <C>
Loans secured by real estate
 Construction  and  land development   	       $ 	7,399,095 	    $ 	8,036,802 	
 Farmland 		                                      7,849,137 		      7,942,187 	
 Lines of credit 		                                 339,108         		240,976 	
 1-4 family residential property - first lien  	111,016,393     		100,548,761 	
 1-4 family residential property - junior lien   	7,177,285       		7,219,546 	
 Multifamily residential property 		              3,729,687 		      4,775,515 	
 Non farm, non residential property 		           44,224,353 		     41,734,848 	
    Subtotal 		                                 181,735,058 		    170,498,635 	

Commercial and  industrial loans 					
 Commercial  and  industrial 		                  51,758,675 		     44,870,150 	
 Taxable municipal loans 		                         270,000 		        300,000 	
 All other loans 		                                  88,239 		        187,405 	
    Subtotal 		                                  52,116,914 		     45,357,555 	

Tax exempt municipal loans 		                     1,485,071 		        748,116 	

Loans to individuals 					
 Agricultural production 		                       3,659,215 		      3,823,296 	
 Lines of credit 		                                 135,230 		        103,249 	
 Individuals for personal expenditures 	        	53,026,209      		42,341,597 	
 Purchase or carry securities 		                     - 		                 655 	
    Subtotal 		                                  56,820,654 		     46,268,797 	

Lease financing 		                                   - 		               1,408 	

                                              		292,157,697 		    262,874,511 	

Less: 					
 Net unamortized loan origination fees 		          (225,368) 		      (176,606)
 Unearned interest income 		                         (2,018) 		        (3,785) 	
 Allowance for possible loan losses 		           (2,678,386)		     (2,342,290) 	
					
	                                              $289,251,925 	    $260,351,830 	

</TABLE>
					
		A summary of loan maturities and the amounts of loans carrying
fixed and variable interest rates as of December 31, 1995,
follows.

<TABLE>

<CAPTION>
                                    	 	(In Thousands of Dollars) 
                             		Within 		     One to 		    After  		
		                            One Year 	  	Five Years 		 Five Years  		Total 

     <S>                      <C>           <C>          <C>         <C>
     Fixed rate loans 	       $ 	62,923 	   $ 	47,100 	  $ 	23,735   $	133,758 
     Variable rate loans 	     	113,389 	     	26,949 		    18,062 		  158,400 
								
 	                            $	176,312 	   $ 	74,049 	  $ 	41,797 	 $	292,158 

</TABLE>

	Loans having recorded investments of $5,856,000 at December 31,
1995, have been identified as impaired in accordance with the
provisions of SFAS 114.  The total allowance for possible loan
losses related to these loans was $456,000.  Interest received
on these loans during 1995 was $532,873.  Prior to adoption of
SFAS 114, non-performing loans were those which were accounted
for on a non-accrual basis.  Such loans had outstanding balances
of approximately  $2,611,000 at December 31, 1994.

<PAGE>
                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - LOANS  (Continued)

		Certain parties (principally directors and senior officers of
the Corporation or the Bank, including their affiliates,
families, and companies in which they hold ten percent or more
ownership) were customers of, and had loans and other
transactions with, the Bank in the ordinary course of business. 
An analysis of activity with respect to such loans for the years
ended December 31, 1995 and 1994, follows. 

<TABLE>

<CAPTION>
                                  		Balance at 								
                	                  	Beginning  				                 Amount      		Amount      Balance at 
                                 		 of Year 		      Additions 		  Collected 	  	Written Off 		End of Year 

 <S>                                <C>            <C>           <C>           <C>            <C>
      1995  										
 Aggregate of certain party loans 	 $ 6,494,271  	 $	7,020,665 	 $	5,908,932 	 $ 	  - 	       $ 7,606,004 

      1994  										
 Aggregate of certain party loans 	 $	6,563,577 	  $	5,081,776 	 $	5,151,082 	 $    - 	       $	6,494,271 

</TABLE>
										

		These totals exclude loans made in the ordinary course of
business to other companies with which neither the Corporation
nor the Bank has a relationship other than the association of
one of its directors in the capacity of officer or director. 
These loan transactions were made on substantially the same
terms as those prevailing at the time for comparable loans to
other persons.  They did not involve more than the normal risk
of collectiblity or present other unfavorable features.  No
related party loans were charged off in 1995 or 1994.

NOTE 4 - ALLOWANCE FOR POSSIBLE LOAN LOSSES

		Changes in the allowance for possible loan losses are as
follows:

<TABLE>

<CAPTION>
       		                                    1995   		     1994   		     1993  	

<S>                                      <C>           <C>           <C>
Balance at beginning of year 	           $	2,342,290 	 $	2,023,651 	 $	2,253,735 	
Provision charged to operating expenses    		670,000 		    660,000		     470,000 	
Loan losses: 							
 Loans charged off 		                       (555,957) 		  (422,831) 		  (847,535) 	
 Recoveries on loans previously  							
  charged off                              		222,053      		81,470     		147,451 	
							
Balance at end of year 	                 $	2,678,386 	 $	2,342,290 	 $	2,023,651 	

</TABLE>
							

		For federal income tax purposes, the allowance for possible
loan losses is maintained at the maximum allowable by the
Internal Revenue Code.

NOTE 5 - BANK PREMISES AND EQUIPMENT

		The components of premises and equipment are as follows:

<TABLE>

<CAPTION>
                                                1995               1994
        <S>                                 <C>                <C>
        Land 	                              $ 1,204,288 	      $	1,204,288 	
        Premises 		                           6,648,329 		       6,629,567 	
        Furniture and equipment 		            3,949,617 		       3,816,320 	
        Leasehold improvements 		               879,695 		         474,770 	
                                           		12,681,929 		      12,124,945 	
Less allowance for depreciation and
 amortization 		                             (6,283,993)		      (5,931,865) 	

	                                           $	6,397,936 	      $	6,193,080 	

</TABLE>

		Annual provisions for depreciation and amortization total
$645,816 for 1995, $589,045 for 1994, and $591,486 for 1993. 
Included in premises and equipment cost and allowance for
depreciation and amortization are certain fully depreciated
assets totaling $2,287,900 at December 31, 1995.


<PAGE>

        FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - LIMITATION ON SUBSIDIARY DIVIDENDS

		The approval of the Comptroller of the Currency is required
before the Bank's dividends in a given year may exceed the total
of its net profit (as defined) for the year combined with
retained net profits of the preceding two years.  As of December
31, 1995, additional dividends of approximately $13,500,000
could have been declared by the Bank to the Corporation without
regulatory agency approval.



NOTE 7 - LEASES



		Real property for four of the Bank's office locations and
certain equipment are leased under noncancelable operating
leases expiring at various times through 2000.  In most cases,
the leases provide for one or more renewal options of five to
ten years under the same or similar terms.  In addition, various
items of teller and office equipment are leased under cancelable
and noncancelable operating leases.  Total rental expense
incurred under all operating leases, including short-term leases
with terms of less than one month, amounted to $660,121,
$409,764, and $254,121 for equipment leases, and $111,649,
$97,966, and $82,030 for building leases, in 1995, 1994, and
1993, respectively.  Future minimum lease commitments as of
December 31, 1995, under all noncancelable operating leases with
initial terms of one year or more follow.

<TABLE>
     <S>                                          <C>
                    1996                        	 $ 	671,934 	
                  		1997  	              	           671,934 	
                  		1998  		                         636,511 	
                  		1999  		                           5,088 	
                  		2000  	 	                          5,088 	

     Total future minimum lease payments 	    		  $1,990,555 	

/TABLE>
					

NOTE 8 - FEDERAL AND STATE INCOME TAXES

		The provisions for income taxes consist of the following:


</TABLE>
<TABLE>

<CAPTION>
                                     		1995         		1994        		1993  	

<S>                                <C>            <C>            <C>
Current: 							
 Federal 	                         $ 2,166,566 	  $	1,831,848 	  $	1,754,003 	
 State 		                              585,606 		     503,433 		     442,882 	
    Total current 	                  2,752,172 		   2,335,281 		   2,196,885 	

Deferred: 							
 Federal 		                           (198,393) 		   (111,805) 		     20,468 	
 State 		                              (35,010) 		    (19,730) 		      3,612 	
    Total deferred                    (233,403) 		   (131,535) 		     24,080 	

  Total provision for 
    income taxes 	                 $ 2,518,769 	  $	2,203,746 	  $	2,220,965 	

</TABLE>
							
<PAGE>

                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - FEDERAL AND STATE INCOME TAXES (Continued)

		The deferred tax effects of principal temporary differences
are shown in the following table:

<TABLE>
<CAPTION>
                		                         1995  		      1994  		      1993  	

<S>                                   <C>           <C>           <C>
Allowance for possible loan losses 	  $ 	815,315 	  $ 	682,877 	  $ 	555,421 	
Installment loan reporting 		               - 		          - 		         6,865 	
Write-down of other real estate 		       177,120 		    159,120 		    157,520 	
Deferred compensation 		                 256,139 		    156,227 		     76,781 	
Direct lease financing 		                   - 		        36,452 		     35,736 	
Unrealized loss on AFS securities 		        - 		        32,372 		     18,457 	
Deferred loan fees 		                     44,051 		     24,546 		     76,907 	

  Deferred tax asset 		                1,292,625 		  1,091,594 		    927,687 	

Unrealized gain on AFS securities 		    (157,392) 		      - 		          - 	

  Deferred tax liability 		             (157,392)  		     - 		          -	

    Net deferred tax asset 	          $1,135,233    $1,091,594	   $ 	927,687 	

</TABLE>


		A reconciliation of total income taxes reported with the
amount of income taxes computed at the federal statutory rate
(34% each year) is shown below.  Total income taxes paid in
1995, 1994, and 1993 amounted to $2,756,442, $2,431,332 and
$2,564,887, respectively.

<TABLE>

<CAPTION>
        		                                        1995  		         1994  		         1993  	

<S>                                           <C>              <C>              <C>
Tax expense at statutory rate 	               $ 2,935,722 	    $ 2,640,158    	 $	2,542,254 	
Increase (decrease) in taxes resulting from: 							
 Tax-exempt interest 		                          (783,011) 		     (780,946) 		     (647,575) 	
 Nondeductible interest expense 		                 89,491 		        75,019 		        58,457 	
 Other nondeductible expenses 							
  (nontaxable income) - net 		                    (28,114) 		       (6,458)		       (19,962) 	
 State income taxes, net of federal 							
  tax benefit 		                                  363,393 		       319,244 		       292,263 	
 Dividend income exclusion 		                     (18,324) 		      (29,571) 		      (15,646) 	
 Other 		                                         (40,388) 		      (13,700) 		       11,174 	

Total provision for income taxes 	            $	2,518,769 	    $	2,203,746 	    $	2,220,965 	

Effective tax rate 		                               29.2% 		         28.4% 		         29.7% 	

</TABLE>
							

		A net deferred tax asset was included in other assets in the
accompanying consolidated balance sheet.  

NOTE 9 - COMMITMENTS

		The Bank is a party to financial instruments with
off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers.  These financial
instruments include commitments to extend credit and standby
letters of credit.  Those instruments involve, to varying
degrees, elements of credit risk in excess of the amount
recognized in the balance sheet.  The contract or notional
amounts of those instruments reflect the extent of involvement
the Bank has in those particular financial instruments.

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 NOTE 9 - COMMITMENTS (Continued)

		The total outstanding loan commitments and stand-by letters of
credit in the normal course of business at December 31, 1995,
were $21,739,000 and $1,699,000, respectively.  Loan commitments
are agreements to lend to a customer as long as there is not a
violation of any condition established in the contract.  Standby
letters of credit are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. 
Those guarantees are primarily issued to support public and
private borrowing arrangements, including commercial paper, bond
financing, and similar transactions.  The credit risk involved
in issuing letters of credit is essentially the same as that
involved in making a loan.

		The loan portfolio is well diversified with loans generally
secured by tangible personal property, real property, or stock. 
The loans are expected to be repaid from cash flow or proceeds
from the sale of selected assets of the borrowers.  Collateral
requirements for the loan portfolio are based on credit
evaluation of the customer.  It is management's opinion that
there is not a concentration of credit risk in the portfolio.


NOTE 10 - SUPPLEMENTARY CASH FLOW INFORMATION

		Interest paid on deposits and other borrowings during 1995,
1994, and 1993 amounted to $14,845,299, $12,641,299, and
$12,243,317, respectively.


NOTE 11 - EMPLOYEE BENEFIT PLANS

		The Bank contributes to a defined contribution, profit-sharing
plan covering employees who meet participation requirements. 
The amount of the contribution is discretionary as determined by
the Board of Directors up to the maximum deduction allowed for
federal income tax purposes.  Contributions to the plan, that
amounted to $633,459, $602,010, and $529,324, in 1995, 1994, and
1993, respectively, are included in salaries and employee
benefits expense. 

		In 1992, the Bank formalized a nonqualified salary
continuation plan for certain key officers.  In connection with
this plan, the value of the assets (1995 - $594,221; 1994 -
$580,088) used to fund the plan and the related liability (1995
- $482,272; 1994 - $400,606) were included in other assets and
other liabilities respectively.  Single premium universal life
insurance policies were purchased in 1993 to replace other
policies and annuities that were redeemed.  Insurance premiums
of $515,000 were paid during 1993, of which $285,725 (net of the
redemption proceeds) was capitalized.  Net non-cash income of
$14,133 in 1995 and  $22,448 in 1994 is also included in the
above asset values.  The principal cost of this plan will be
accrued over the anticipated remaining period of active
employment, based on the present value of the expected
retirement benefit.  Expense related to this plan was $106,666
in 1995, $98,925 in 1994, and $91,916 in 1993.

   The Bank also implemented a deferred compensation plan which
permitted directors, beginning in 1993, to defer their
director's fees and earn interest on the deferred amount.  A
liability increase and expense of $176,727 for 1995, $126,262
for 1994, and $125,036 for 1993 were recognized in the
accompanying financial statements.  In connection with this
plan, a single premium universal life insurance policy was
purchased on the life of each director who elected to
participate.  Insurance premiums of $1,425,000 were paid at the
end of 1992, of which $1,399,816 was capitalized to reflect the
cash surrender value at December 31, 1992.  Additional single
premium universal life insurance policies were purchased in 1993
for new participants.  Insurance premiums of $215,000 were paid
during 1993 and capitalized.  Net non-cash income of $51,803 in
1995 and $52,840 in 1994 is also included in the cash surrender
values of  $1,801,922 and $1,750,119 at December 31, 1995 and
1994, respectively.

		The Bank is beneficiary on the insurance policies that fund
the salary continuation plan and the deferred compensation plan.
 These policies have an aggregate face amount of $2,425,000.

<PAGE>

               FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - QUARTERLY RESULTS OF OPERATIONS (Unaudited)

		The following is a summary of the unaudited consolidated
quarterly results of operations.

<TABLE>
										
<CAPTION>

                               		First        Second     		  Third 		     Fourth 		
                              		Quarter     		Quarter 	     Quarter   	  	Quarter 		    Total 

        1995  										

<S>                          <C>           <C>           <C>           <C>           <C>
Interest income 	            $	8,244,228   $	8,640,769 	 $	8,720,212 	 $ 8,888,360 	 $34,493,569 
Interest expense 		            3,654,485 		  3,856,594 		  3,938,600 		  3,972,566		  15,422,245 

Net interest income 		         4,589,743 		  4,784,175 		  4,781,612		   4,915,794 		 19,071,324 
Provision for possible loan  										
 losses 		                       145,000 		    140,000 		    180,000 		    205,000 		    670,000 
Noninterest expenses, net of 										
 noninterest income 		         2,492,505 		  2,547,595 		  2,430,466		   2,296,283 		  9,766,849 
										
Income before income taxes 		  1,952,238 		  2,096,580 		  2,171,146		   2,414,511 		  8,634,475 
Income taxes 		                  512,448 		    589,977 		    680,609 		    735,735 		  2,518,769 

Net income 	                 $	1,439,790 	 $ 1,506,603 	 $	1,490,537 	 $	1,678,776 	 $ 6,115,706 

Earnings per common share 										
  (1,400,000 shares) 	       $ 	    1.03 	 $  	   1.08 	 $     	1.06 	 $    	 1.20 	 $ 	    4.37 

</TABLE>

<TABLE>
<CAPTION>
	                               	First 		      Second 		     Third 		    Fourth 		
                     		         Quarter 	     	Quarter     	Quarter  	   Quarter 		    Total 

1994  										

<S>                          <C>           <C>            <C>           <C>          <C>
Interest income 	            $	7,176,893   $	7,664,849    $	7,814,500 	 $	8,161,296  $30,817,538 
Interest expense 		            2,986,012 		  3,148,310 		   3,272,217 		  3,457,365	  12,863,904 

Net interest income 		         4,190,881 		  4,516,539 		   4,542,283		   4,703,931 		17,953,634 
Provision for possible loan  										
 losses 		                        60,000 		    255,000 		     225,000 		    120,000 		   660,000 
Noninterest expenses, net of 										
 noninterest income 		         2,260,734 		  2,254,027 		   2,490,717		   2,522,984 		 9,528,462 

Income before income taxes 		  1,870,147 		  2,007,512 		   1,826,566		   2,060,947 		 7,765,172 
Income taxes 		                  528,638 		    566,493 		     508,942 		    599,673 		 2,203,746 

Net income 	                 $	1,341,509 	 $	1,441,019 	  $ 1,317,624 	 $	1,461,274  $	5,561,426 

Earnings per common share 										
 (1,400,000 shares) 	        $ 	    0.96 	 $  	   1.03 	  $ 	    0.94 	 $ 	    1.04	 $ 	    3.97 

</TABLE>

NOTE 13 - SHAREHOLDERS' EQUITY

		The Corporation and the Bank are subject to federal regulatory
risk-adjusted capital adequacy standards.  Failure to meet
capital adequacy requirements can initiate certain mandatory,
and possibly additional discretionary, actions by regulators
that could have a direct material effect on the consolidated
financial statements of the Corporation and its subsidiary, the
Bank.  The regulations require the Bank to meet specific capital
adequacy guidelines that involve quantitative measures of
assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices.   As of
December 31, 1995, the Bank's calculated risk-adjusted capital
ratios exceeded the minimum standard for a "well capitalized"
bank.  The capital classification is also subject to qualitative
judgments by the regulators about components, risk weightings,
and other factors.  Management believes that the Corporation and
the Bank meet all capital requirements.

<PAGE>

             FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - DEPOSITS

		The Bank does not have any foreign offices and all deposits
are serviced in its fourteen domestic offices.  The average
amounts of deposits and the average rates paid are summarized in
the following table.

<TABLE>

<CAPTION>
                                                      (Unaudited) 									
                                     		 	 	 	 	 	Year Ended December 31 		 	 	 	 	 	

                                          		1995       		   	 		1994      		 	 		  1993  		 	 	
                                							          (Dollars In Thousands) 									

<S>                                  <C>        <C>      <C>        <C>      <C>        <C>
Demand deposits 	                    $	56,730  		- 	% 	  $	55,557 	 	- 	% 	  $	48,697		  - 	% 	
NOW and money market accounts 		      149,016 		3.51 			  161,244 		3.25			   147,246 		3.16 		
Savings deposits 		                    34,629 		3.00 			   35,036 		2.87 			   31,216 		2.76
Time deposits of less than $100,000 		136,568 		5.30 			  126,523		 4.27 			  128,021 		4.26 		
Time deposits of $100,000 or more 		   32,524 		5.35 			   26,053		 4.32 			   23,602 		4.33 		

Total In Domestic Offices 	          $409,467 		3.72%   	$404,413		 3.66% 	  $378,782 		3.17% 	 

																
</TABLE>

		At December 31, time deposits of $100,000 or more had the
following maturities.

<TABLE>
<CAPTION>
                            	1995  	    	1994  		   1993  
                                  (Dollars In Thousands)

    <S>                   <C>         <C>        <C>
    Under 3 months 	      $	7,877 	   $	3,117 	  $	3,519 
    3 to 12 months 		      18,407 		   18,250 		  17,081 
    Over 12 months 		       4,310 		    4,803 		   4,505 

	                         $30,594 	   $26,170 	  $25,105 

</TABLE>
						

	NOTE 15 -  FAIR VALUES OF FINANCIAL INSTRUMENTS



		This summarizes the Corporation's disclosure of fair values of
financial instruments made in accordance with the requirements
of Statement of Financial Accounting Standards No. 107 (SFAS
107), "Disclosures about Fair Value of Financial Instruments".

<TABLE>

<CAPTION>
				                                          Dollars in Thousands 					
     		                             December 31, 1995 	  	 		  December 31, 1994 		 	
                               	 	Amortized     		Fair     	  	Amortized  	  	Fair 	
		                                  Value   	   	Value 	        	Value    		 Value 	

<S>                               <C>             <C>           <C>           <C>
Financial assets 									
  Cash and cash equivalents      	$ 	31,282 	     $ 	31,282 	   $ 	26,736	    $ 	26,736 	
  Securities held to maturity   	  	127,663  		     128,830  		   143,061		     138,892 	
  Securities available for sale   		 10,876  	 	     11,269 	  	   12,646		      12,565 	
  Loans, net 	                   	  289,252 	 	     298,076 		    260,352 		    268,870  	
  Accrued interest receivable 		      5,454 		        5,424 		      5,169		       5,169 	

Financial liabilities 									
  Deposits 		                       410,778 		      398,296 		    405,152 		    402,720 	
  Federal funds purchased 		         10,000 		       10,000 		      7,000 		      7,000 	
  Short term borrowings 		            1,955 		        1,955 		        600 		        600 	
  Accrued interest payable 		         3,034 		        3,034 		      2,457 		      2,457 	

</TABLE>

		Estimated fair values have been determined by the Bank using
the best available data.  Changes in assumptions or the
estimation methodologies used may have a material effect on the
estimated fair values included in this note.

<PAGE>


           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	NOTE 15 -  FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)


		Financial assets - Cash and cash equivalents are considered to
be carried at their fair value and have not been valued
differently than has been customary with historical cost
accounting.  Securities available-for-sale and securities
held-to-maturity are valued by an independent rating service and
are disclosed in detail in Note 2 above.  	A present value
discounted cash flow methodology was used to value the net loan
portfolio.  The discount rate used in these calculations was the
current rate at which new loans in the same classification for
regulatory reporting purposes would be made.  This rate was
adjusted for credit loss and assumed prepayment risk.   For
loans with floating interest rates it is presumed that estimated
fair values generally approximate the recorded book balances.

		Financial liabilities - Deposits with stated maturities have
been valued using a present value discounted cash flow with a
discount rate approximating the current market for similar
liabilities.  Financial instrument liabilities with no stated
maturities have an estimated fair value equal to both the amount
payable on demand and the recorded book balance.  For deposits
with floating interest rates it is presumed that estimated fair
values generally approximate the recorded book balances.  The
carrying amounts of federal funds purchased and other short term
borrowings are considered to approximate their fair values.

		  The Bank's remaining assets and liabilities which are not
considered financial instruments have not been valued
differently than has been customary with historical cost
accounting.  Management is concerned that reasonable
comparability between financial institutions may be distorted
due to the wide range of permitted valuation techniques and
numerous estimates which must be made given the absence of
active secondary markets for many of the financial instruments. 
This lack of uniform valuation methodologies also introduces a
greater degree of subjectivity to these estimated fair values. 

	 At December 31, 1995, the Bank had outstanding standby letters
of credit and commitments to extend credit.  These
off-balance-sheet financial instruments are generally
exercisable at the market rate prevailing at the date the
underlying transaction will be completed and, therefore, are
deemed to have no current fair value.  Please refer to Note 9.


NOTE 16 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
<TABLE>

<CAPTION>
                             Condensed Balance Sheets                                        
                            December 31, 1995 and 1994                                      
                            (In Thousands of Dollars)                                       
    					
                  Assets 		                               1995  		     1994  	

<S>                                                     <C>          <C>      
Cash 	                                                  $    	70 	   $    	65 	
Investment in bank subsidiary - at equity 		              48,517 		    43,310 	
Investment in credit life insurance company - at cost 		      50 		        50 	
Investment in other securities 		                             22 		        25 	
Dividends receivable from bank subsidiary 		                 630 		       574 	
Cash surrender value - life insurance 		                     467 		       453 	
    Total assets                                        $ 49,756 	   $	44,477 	

       Liabilities and Stockholders' Equity 					
Liabilities 					
 Payable to directors 	                                 $ 	  129 	   $    	75 	
 Dividends payable 		                                        630 		       574 	
   Total liabilities 		                                      759 		       649 	
Stockholders' equity 					
 Common stock - $10 par value, authorized 4,000,000 					
  shares, 1,400,000 shares issued and outstanding 		      14,000		     14,000 	
 Retained earnings 		                                     34,761 		    29,877 	
 Net unrealized gain (loss) on available-for-sale  					
  securities, net of tax 		                                  236 		      (49) 	
   Total stockholders' equity 		                          48,997 		    43,828 	
            Total liabilities and stockholders' equity  $ 49,756 	   $	44,477 	

</TABLE>
					
<PAGE>


                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 NOTE 16 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
(Continued)

<TABLE>
                          Condensed Statements of Income                                  
                     Years Ended December 31, 1995 and 1994                          
                             (In Thousands of Dollars)                                       
<CAPTION>
  				
                                            		     1995           		1994  
<S>                                             <C>              <C>
Operating income 				
  Dividends from bank subsidiary 	              $ 	1,232 	       $ 	1,120 
  Other dividend income 		                            22 		            61 
  Interest income 		                                   2 		             1 
  Other 		                                            27 		            30 

Operating expenses 		                                 87 		            60 

    Income before equity in undistributed net 				
     income of bank subsidiary 		                  1,196 		         1,152 

Equity in undistributed net income of bank
 subsidiary 		                                     4,920 		         4,409 

    Net Income 	                                $ 	6,116 	       $ 	5,561 

</TABLE>
				
<TABLE>
                      Condensed Statements of Cash Flows                              
                    Years Ended December 31, 1995 and 1994                          

                            (In Thousands of Dollars)                                       
  				
<CAPTION>
                                                         		1995          		1994  

<S>                                                     <C>             <C>
Operating activities 				
 Net income for the year 	                              $ 	6,116 	      $ 	5,561 
 Adjustments to reconcile net income to net cash 				
  provided by operating activities 				
   Equity in undistributed net income of bank
    subsidiary                                          		(4,920) 		      (4,409) 
   Increase in other assets 		                               (69) 		         (62) 
   Increase in payables 		                                    54 		           26 
				
     Total adjustments 		                                 (4,935) 		      (4,445) 

     Net cash provided by operating activities        		   1,181 		        1,116 

Net cash provided by (used in) investing activities 		 		
 Proceeds from sale or calls of investment securities 		      -	              18 
    Net cash provided by (used in) investing activities		     -       		      18 

Net cash used in financing activities 				
 Cash dividends paid 		                                    (1,176) 		     (1,071) 

    Increase (decrease) in cash 		                              5 		          63 

Cash at beginning of year 		                                   65 		           2 

Cash at end of year 	                                      $  	70 	       $  	65 

</TABLE>

<PAGE>


                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS 

GENERAL

	First Farmers and Merchants Corporation, a one-bank holding
company, was formed during 1982.  Its only subsidiary, First
Farmers and Merchants National Bank, is a community bank that
was established in 1909.  The resulting financial condition of
the Corporation should be evaluated in terms of the Bank's
operations within its service area.

	During 1995, First Farmers and Merchants National Bank
strengthened its presence in the four counties in middle
Tennessee that it serves.  Deposits in each of the four counties
either maintained the same levels or increased while loans in
all four counties increased.  To more efficiently provide
expanding services and offer the range of products that Bank
customers need and want, the Bank undertook a technology
conversion in the last quarter of 1994 involving data processing
and communication links between its fourteen offices.  The Bank
is positioned to provide quality services in diverse markets and
a dynamic interest rate environment.  Our customers are enjoying
the "Impact" of this change as new services such as combined,
laser printed statements; inquiring about balances, checks paid,
deposits made, and making transfers between accounts through
phone bank; extended banking hours; and a check card.  The check
card was introduced in the first quarter of 1995 and increased
in usage as the year progressed to approximately 35,000
transactions per month.

	The first of the following tables entitled DISTRIBUTION OF
ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY, INTEREST RATES
AND INTEREST DIFFERENTIAL, presents average daily balances,
interest income on a fully taxable equivalent basis and interest
expense, as well as the average rates earned and paid on the
major balance sheet items for the years 1995, 1994, and 1993.
The second table sets forth, for the periods indicated, a
summary of changes in interest earned and interest paid
resulting from changes in volume and changes in rates.  The
rate/volume variances are allocated between rate and volume
variances in proportion to the relationship of the absolute
dollar amounts of the change in each.

	These tables plus the following discussion and financial
information is presented to aid in understanding First Farmers
and Merchants' current financial position and results of
operations.  The emphasis of this discussion will be on the
years 1995, 1994, and 1993; however, financial information for
prior years will also be presented when appropriate.  This
discussion should be read in conjunction with the Consolidated
Financial Statements and the Notes to Consolidated Financial
Statements included elsewhere in this material.

FINANCIAL CONDITION 

	First Farmers and Merchants National Bank's financial condition
depends on the quality and nature of its assets, its liability
and capital structure, the market and economic conditions, and
the quality of its personnel.  The following paragraphs provide
a unique perspective on the internal structures of the
Corporation and the Bank that provide the strength in our
organization.

	The bank's average deposits grew during the last three years
reflecting  a 1.3% growth from 1994 to 1995, a 6.8% growth from
1993 to 1994, and a 10.4% growth from 1992 to 1993.  Average
transaction and limited transaction interest bearing accounts
grew during the prior two years but declined in 1995 as
investors took advantage of higher certificate of deposit rates.
 The average Chairman's Club, super negotiable orders of
withdrawal, insured money market deposits, and flexible
investment accounts decreased 7.6 % in 1995 compared to a  9.5%
increase in 1994 and a 28.6 % increase in 1993.  Average savings
deposits actually declined 1.2% in 1995 compared to a 12.2%
increase in 1994 and a 12.9% decrease in 1993.  Average
certificates of deposit increased  during 1995 with certificates
and other savings under $100,000 increasing 8.0% in 1995
compared to a 1.2% decline in 1994 and a 1.2.% decline in 1993. 
Certificates of deposit over $100,000 increased 24.8% in 1995
compared to a 10.4% increase in 1994 and a 17.1% decline in
1993.  


<PAGE>

                 FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                             AND RESULTS OF OPERATIONS 

TABLE 1 - Distribution of Assets, Liabilities, and Stockholders'
Equity, Interest Rates and Interest Differential

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31, 
                                                          	 	 	 	1995  	 	 	 	 
 
                                                  		 Average   		Rate / 				
                                                   		Balance 		  Yield 			 Interest 	

ASSETS 								
<S>                                                <C>           <C>       <C>            
 Interest earning assets 								
   Loans, net 	                                    $ 	276,166 		  9.38% 	  $	25,892 	* 
   Bank time deposits 		                                    2      - 	 		      - 	
   Available-for-sale securities (AFS) 	  	             8,092 		  6.59			       534 	
   Held-to-maturity securities (HTM) 		                93,676 		  6.03			     5,646 	
   U.S. Treasury and Government agency securities   		   - 	   	   -    	 		   - 	
   States and political subdivisions' securities  		   39,139		   8.06 			    3,156 	* 
   Other securities 		                                  2,452 		 11.29 			      277 	* 
   Federal funds sold 		                                2,076 		  5.83 			      121 	
     TOTAL EARNING ASSETS 		                          421,603 		  8.45 		  $	35,626 	

 Noninterest earning assets 								
   Cash and due from banks 		                          24,829 						
   Bank premises and equipment 		                       6,246 						
   Other assets 		                                     11,061 						
								
     TOTAL ASSETS 	                                $ 	463,739 						

LIABILITIES AND STOCKHOLDERS' EQUITY 								
 Interest bearing liabilities 								
   Time and savings deposits: 								
   NOW and money market accounts  	                $ 	148,993 		 3.51% 	  $ 	5,223 	
   Savings 		                                          34,627 		 3.00 			    1,040 	
   Time  		                                           136,605 		 5.30 			    7,245 	
   Time over $100,000 		                               32,522 		 5.35 			    1,740 	
    TOTAL INTEREST BEARING DEPOSITS 		                352,747 		 4.32			    15,248 	
   Federal funds purchased and repurchase 
    agreements		                                        2,415 		 5.92 			      143 	
   Other short-term debt 		                               565 		 5.49 			       31 	
    TOTAL INTEREST BEARING LIABILITIES 		             355,727 	 	4.34		   $	15,422 	

 Noninterest bearing liabilities
   Demand deposits 		                                  56,742 						
   Other liabilities 		                                 4,515 						
    TOTAL LIABILITIES 		                              416,984 						
 Stockholders' equity 		                               46,755 						
    TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY 	   $ 	463,739 						
<FN>								
<F4>
  Spread between combined rates earned and combined rates paid*		4.11% 			
</FN>
<FN>								
<F5>
  Net yield on interest-earning assets* 				                     4.79% 			
</FN>
<FN>
<F6>
  * Taxable equivalent basis. 								
</FN>
</TABLE>

<PAGE>

                FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                               AND RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                     	 	 	       1994  	 	 	 	   	 	 	 	             	 1993  	 	 	 	 
                                             	     Average       Rate / 		                Average      Rate / 				
                                                  	Balance 		    Yield 			Interest 			   	Balance 		   Yield 			Interest 	
                                                                       	 (Dollars In Thousands) 															
ASSETS
<S>                                              <C>            <C>       <C>        <C>               <C>      <C>       <C>
 Interest earning assets
   Loans, net                                    $  247,791 		   8.54%    $	21,156 	*   $ 	233,608 		  8.37%    $	19,543 	* 
   Bank time deposits	                                 - 	 	      - 	 	 	     - 	 	 	 	      - 	 	      - 	 	 	     - 	
   Available-for sale-securities (AFS)               15,931 		   8.33 			    1,327 				      - 	 	      - 	 	 	     - 	
   Held-to-maturity securities (HTM)	               101,654 		   5.76 			    5,858 				      - 	 	      - 	 	 	     - 
   U.S. Treasury and Government agency securities	     - 	 	      - 	 	 	     - 				       106,201 		  6.50 			    6,904 	
   States and political subdivisions	                38,545 		   8.49 			    3,274 	* 			   29,634 		  8.62 			    2,553 	* 
   Other securities	                                  2,375 		  13.15 			      312 	* 			    6,164 		  5.34 			      329 	* 
   Federal funds sold	                                2,998 		   3.73 			      112 				      4,665 		  2.92 			      136 	
     TOTAL EARNING ASSETS 	                         409,294 		   7.83 		  $	32,039 			     380,272 		  7.75 		  $	29,465 	
																
 Noninterest earning assets
   Cash and due from banks	                          25,945 									                       23,406 						
   Bank Premises and equipment	                       6,350 									                        6,764 						
   Other assets	                                     10,364 									                       10,318 						

     TOTAL ASSETS                                $ 	451,953 								                    $  420,760 						

LIABILITIES AND STOCKHOLDERS' EQUITY
 Interest bearing liabilities
   Time and savings deposits:
   NOW and money market accounts                 $ 	161,244 		   3.25% 	 $ 	 5,239 			  $ 	147,246 		  3.16% 	  $ 	4,653 	
   Savings	                                          35,036 		   2.87  			   1,006 				     31,216 		  2.76 			      861 	
   Time	                                            126,523 		   4.27  			   5,400 				    128,021 		  4.26 			    5,459	
   Time over $100,000    	                           26,053 		   4.32  			   1,126 				     23,602 		  4.34 			    1,025 	
    TOTAL INTEREST BEARING DEPOSITS  	              348,856 		   3.66  			  12,771 				    330,085 		  3.63 			   11,998	
   Federal funds purchased and repurchase
    agreements 	                                      1,462 		   4.86 		        71 				        254 		  3.06 			        8 	
   Other short-term debt  	                             568 		   3.92 			       22 				        728 		  4.21 			       31 	
    TOTAL INTEREST BEARING LIABILITIES	             350,886 		   3.67 		  $	12,864 				    331,067 		  3.64 		  $	12,037 	
 Noninterest bearing liabilities																
   Demand deposits   	                               55,557 									                       48,697 						
   Other liabilities  	                               3,690 									                        3,542 						
    TOTAL LIABILITIES 	                             410,133 									                      383,306 						
 Stockholders' equity  	                             41,820 									                       37,454 						
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 	451,953 								                    $ 	420,760 						

<FN>
<F7>
Spread between combined rates earned and combined rates paid*		4.16% 		          						                4.11% 			
</FN>
<FN>
<F8>
Net yield on interest earning assets*			                       4.68% 								                          4.58% 			
</FN>
<FN>
<F9>
Taxable equivalent basis
</FN>
</TABLE>


<PAGE>

                    FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                  AND RESULTS OF OPERATIONS 


TABLE 2 - Distribution of Assets, Liabilities, and Stockholders'
Equity, Interest Rates and Interest Differential (Continued)

<TABLE>
<CAPTION>
										* 
                                                         					*  				               Total 
                                     		* 	   	 Taxable  		Nontaxable 	 	Federal 		Interest 
                                    		Net  		Investment 		Investment 	  	Funds 		  Earning 
(Dollars in Thousands) 		            Loans 		Securities 		Securities   		Sold	   	  Assets 

1995 compared to 1994: 										
<S>                                <C>       <C>            <C>        <C>        <C>
  Increase (decrease) due to: 										
    Volume 	                       $ 	2,423 	$ 	(1,103) 	   $ 	50 	    $ 	(34) 	  $ 	1,336 
    Rate 		                           2,313 		      63 		    (168) 		      43 		     2,251 

     NET INCREASE 										
      (DECREASE) 	                 $ 	4,736 	$ 	(1,040) 	   $(118) 	   $ 	  9 	   $	 3,587 

1994 compared to 1993: 										
  Increase (decrease) due to: 										
    Volume 	                       $ 	1,186 	$ 	   537 	    $	768 	    $ 	(49) 	  $ 	2,442 
    Rate 		                             427 		    (273) 		    (47) 		      25 		       132 

     NET INCREASE 										
      (DECREASE) 	                 $ 	1,613 	$ 	   264 	    $ 721 	    $ 	(24) 	  $	 2,574 
				                                            (A) 		        (A) 				

<FN>
<F10>
     * Taxable equivalent basis 
</FN>
<FN>
<F11>
   (A) U.S. Government, government agency, and corporate debt
securities plus equity securities in the available-for-sale and
held-to-maturiy categories are taxable investment securities.
Municipal debt securities are nontaxable and classified as 
held-to-maturity. 
</FN>
</TABLE>

	Average earning assets increased 3.0% in 1995 compared to an
7.6% increase in 1994 and a 9.7% increase in 1993.   As a
financial institution, the Bank's primary earning asset is
loans.  At December 31, 1995, average net loans represented 
65.5% of  average earning assets.  Total average net loans
increased during the last three years showing an 11.5% growth
from 1994 to 1995, a 6.1% growth from 1993 to 1994, and an 8.6%
growth from 1992 to 1993.  Average investments represented 34.0%
of average earning assets at December 31, 1995, and  decreased
9.6% in 1995 providing funds for the increasing loan growth. 
Investments  increased 11.6% in 1994, and increased 11.9% in
1993.  Average total assets increased during the last three
years as evidenced by a 2.6% growth from 1994 to 1995, a 7.4%
growth from 1993 to 1994, and a 10.3% growth from 1992 to 1993. 
Please refer to the color graphs at the end of this document
that illustrate this growth.

<PAGE>
<TABLE>
              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS 
<CAPTION>
                               	Now and 												                                            Total 		      * 	
                                	Money 			                   	     Time 		   Federal 		 Short 	Interest 		   Net 	
                               	Market  		Savings 	    	Time     		Over 		   Funds 		    Term 		Bearing		 Interest  
(Dollars in Thousands)	        Accounts 		Deposits  		Deposits 		$100,000 		Purchased 		 Debt		 Funds 		  Earnings 	

<S>                            <C>         <C>         <C>        <C>         <C>        <C>     <C>         <C>
1995 compared to 1994:
  Increase (decrease) due to:  																
    Volume                     $	(398) 	   $	(12) 	    $  430	    $  279 	    $ 	46 	    $  - 	  $ 	345 	    $ 	991 	
    Rate       	                  382 		      46 		     1,415      		335 		      26 		       9 		 2,213 		       38 	

     NET INCREASE
      (DECREASE)               $ 	(16)    	$ 	34    	  $1,845    	$ 	614 	    $ 	72 	    $ 	 9  	$2,558 	    $1,029 	

1994 compared to 1995:																
  Increase (decrease) due to:																
    Volume                     $ 	442 	    $	105 	     $  (64) 	  $ 	107 	    $ 	37 	    $ 	(7)  $ 	620 	    $1,822
    Rate  	                       144 		      40 		         5 		      (5) 		     26 		      (2) 	   208 		      (76) 	

     NET INCREASE																
      (DECREASE)               $ 	586 	    $	145 	     $ 	(59) 	  $ 	102 	    $ 	63 	    $ 	(9) 	$ 	828 	    $1,746
	
<FN>
<F12>
   * Taxable equivalent basis
</FN>																
</TABLE>


LIQUIDITY AND INTEREST  RATE  SENSITIVITY  MANAGEMENT

	The primary objective of asset/liability management at the Bank
is to achieve reasonable stability in net interest income
throughout interest rate cycles.  This objective is achieved by
monitoring the relationship of rate sensitive earning assets to
rate sensitive interest bearing liabilities (interest rate
sensitivity) which is the principal factor in determining the
effect that fluctuating interest rates will have on future net
interest income.  Rate sensitive earning assets and interest
bearing liabilities are those which can be repriced to current
market rates within a defined time period.  The following table,
Rate Sensitivity of Earning Assets and Interest Bearing
Liabilities, shows the Bank's rate sensitive position at
December 31, 1995, as measured by gap analysis (the difference
between the earning asset and interest bearing liability amounts
scheduled to be repriced to current market rates in subsequent
periods).

	As a policy, budgeted financial goals are monitored on a
monthly basis by the Asset/Liability Committee where the actual
dollar change in net interest income given different interest
rate movements is reviewed.  A dollar change in net interest
income for a twelve month period of less than 3% of net interest
income given a two hundred basis point shift in interest rates
is considered an adequately flexible position.  The net interest
margin, on a tax equivalent basis, at December 31, 1995,  1994,
and 1993 was 4.79%, 4.68%,  and 4.58% respectively.

<PAGE>

          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                        AND RESULTS OF OPERATIONS 

LIQUIDITY AND INTEREST  RATE  SENSITIVITY  MANAGEMENT (Continued)

TABLE - Rate Sensitivity of Earning Assets and Interest Bearing
Liabilities 										
<TABLE>
<CAPTION>
(Dollars in Thousands) 										
                                   		3 Months 		     3-6      	 	6-12  	 	  Over 1 		
As of December 31, 1995 		           or Less      		Months 	   	Months  	 	  Year  		      Total 
  <S>                                <C>          <C>          <C>          <C>          <C>
Earning assets 										
  Loans and leases, net of unearned 	$ 	64,615 	  $ 	43,285 	  $ 	72,506 	  $	111,525 	  $	291,931 
  Taxable investment securities 		      12,715 		    11,027 		    30,164		     42,611 		    96,517 
  Tax-exempt investment securities 		      986 		     1,200 		     1,060		     39,169 		    42,415 
										
      Total earning assets 		           78,316 		    55,512 		   103,730 		   193,305 	  $	430,863 

Interest-bearing liabilities 										
  NOW and money market accounts 		      35,739 	  		                          100,555    $	136,294 
  Savings 								                                                             34,133 		    34,133 
  Time 		                               42,682 		    34,082 		    46,903 		    18,671 		   142,338 
  Time over $100,000 		                  8,526 		     8,055 		     9,703 		     4,310 		    30,594 
  Other short-term debt 		              11,955 		 		 		 		                                  11,955 
										
      Total interest bearing 
        liabilities 		                  98,902 		    42,137 		    56,606		    157,669 	  $	355,314 

Noninterest bearing, net 								                                             (75,549) 		

Net asset/liability funding gap 		     (20,586) 		   13,375 		    47,124		    (39,913) 		

Cumulative net asset/liability 
  funding gap 	                      $ (20,586) 	 $ 	(7,211) 	 $ 	39,913	   $ 	  - 		

<FN>
<F13>
Available-for-sale and held-to-maturity securities were combined
in the taxable investment securities category for purposes of
this table.
</FN>
</TABLE>

CAPITAL RESOURCES, CAPITAL, AND DIVIDENDS

	Historically, internal growth has financed the capital needs of
the Bank.  At December 31, 1995, the Corporation had a ratio of
average capital to average assets of 10.08%.  This compares to a
ratio of average capital to average assets of 9.25% at December
31, 1994, and 8.9% at December 31, 1993.

	Cash dividends paid in 1995 were 10.0% more than those paid in
1994.  The dividend to net income ratio was 20%.  Additional
dividends of approximately $13.5 million to the Corporation
could have been declared by the subsidiary bank without
regulatory agency approval.  The Corporation plans to maintain
or increase the payout ratio while continuing to maintain a
capital to asset ratio reflecting financial strength and
adherence to regulatory guidelines.

	Regulatory risk-adjusted capital adequacy standards were
strengthened during 1992.  Equity capital (net of certain
adjustments for intangible assets and investments in
non-consolidated subsidiaries) and certain classes of preferred
stock are considered Tier 1 ("core") capital.  Tier 2 ("total")
capital consists of core capital plus subordinated debt, some
types of preferred stock, and varying amounts of the Allowance
for Possible Loan Losses.  The minimum standard for a "well
capitalized" bank is a risk-based core capital ratio of 6%, a
risk-based total capital ratio of 10%, and a core capital to
average total assets of 5%.

	As of December 31, 1995, the Bank's core and total risk-based
ratios were 16.8% and 17.7% respectively.  One year earlier, the
comparable ratios were 16.2% and 17.1%, respectively.  At year
end 1995, the Bank had a ratio of average core equity to total
average assets of 9.9%, up slightly from 9.0% at year end 1994.

<PAGE>


          FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                          AND RESULTS OF OPERATIONS 

RESULTS OF OPERATIONS

Interest Income

	Total interest income increased 11.9% in 1995 compared to a
7.3% increase in 1994 and an decrease of .4% in 1993.  Interest
and fees earned on loans increased 22.4% in 1995 compared to an
8.3% increase in 1994 and a 1.4% decrease in  1993.  Interest
earned on investment securities and other investments decreased
10.9% in 1995 due to the decrease in volume compared to a 5.3%
increase in 1994 and a 1.9% increase in 1993.

Interest Expense

	Total interest expense increased 19.9% in 1995 compared to a
6.9% increase in 1994 and a 10.0% decrease in 1993.  The net
interest margin (tax equivalent net interest income divided by
average earning assets) increased in 1995 to 4.8% compared to
4.7% in 1994 and 4.6% in 1993 as indicated in the LIQUIDITY AND
INTEREST RATE SENSITIVITY MANAGEMENT section above.

	Net interest income on a fully taxable equivalent basis is
influenced primarily by changes in:  (1) the volume and mix of
earning assets and sources of funding; (2) market rates of
interest, and (3) income tax rates.  The impact of some of these
factors can be controlled by management policies and actions. 
External factors also can have a significant impact on changes
in net interest income from one period to another.  Some
examples of such factors are: (1) the strength of credit demands
by customers; (2) Federal Reserve Board monetary policy, and (3)
fiscal and debt management policies of the federal government,
including changes in tax laws. 


Noninterest Income and Expense

	Noninterest income increased 14.9% during 1995 versus a 1.6%
increase in 1994 and a 12.0% increase in 1993.  The new check
card generates fee income from the clearing agent for the
electronic transaction even though no service fee is charged to
Bank customers for its use.  This "Impact" of our new technology
contributed to the 16.4% increase in service fees for deposit
accounts in 1995.  Income from fiduciary services provided in
the Bank's Trust Department remained strong contributing 27.4%
of noninterest income.

	Noninterest expenses, excluding the provision for possible loan
losses, increased 6.2% in  1995 compared to a 5.4% increase in
1994 and a 9.3% increase in 1993.  Increased productivity
fostered by our technology improvements as the learning curve
diminished and cost control efforts contributed to this
improvement.  Included in this category is Federal Deposit
Insurance Corporation (FDIC) insurance premiums at the rate
established for "well capitalized" institutions.  This expense
was $499,709 in 1995 compared to $890,646 in 1994, a 43.9-%
reduction.  Please refer to the discussion in the CAPITAL
RESOURCES, CAPITAL, AND DIVIDENDS section above for more
information concerning the bank's capitalization.


Provision for Possible Loan Losses

	The provision for possible loan losses, representing amounts
charged against operating income, increased 1.5% in 1995
compared to a 40.4% increase in 1994 and a 44.1% decrease in
1993. Management regularly monitors the allowance for possible
losses and considers it to be adequate.  Please refer to Note 1
in the NOTES TO CONSOLIDATED FINANCIAL  STATEMENTS that are
included elsewhere in this material for further discussion of
the adequacy of the allowance.  The tables on the next page
summarize average loan balances and reconciliation of the
allowance for loan losses for each year.  Additions to the
allowance, which have been charged to operating expenses, are
also disclosed.

<PAGE>

              FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                         AND RESULTS OF OPERATIONS 

 Provision for Possible Loan Losses (Continued)

	The next tables present any risk elements in the loan portfolio
and include all loans management considers to be potential
problem loans.  Management does not believe that there is a
concentration of loans to a multiple number of borrowers engaged
in similar activities.
<TABLE>
<CAPTION>
                                                            		    				December 31 				
                                              		1995      		1994      	 	1993      	 	1992     	 	1991  
                                                     				    		(Dollars  In Thousands) 				
  
<S>                                          <C>         <C>          <C>          <C>          <C>
Average amount of loans outstanding 	        $	276,166   $	247,791 	  $	233,608 	  $	215,158 	  $	182,561 

Balance of allowance for possible loan 										
  losses at beginning of year 	              $  	2,342 	 $  	2,024 	  $  	2,254	   $ 	 1,917 	  $  	1,818 
Loans charged-off: 										
  Loans secured by real estate 		                   15 		      135 		       396 		       245		        329 
  Commercial and industrial loans 		               170 		       42 		       222 		       124		        192 
  Individuals 		                                   371 		      246 		       230 		       249 		       249 
      TOTAL  LOANS CHARGED OFF 		                  556 		      423 		       848 		       618		        770 
Recoveries of loans previously charged off: 										
   Loans secured by real estate 		                  97 		        9 		        56 		         3 		       - 
   Commercial and industrial loans 		               14 		       36 		        52 		        80 		        56 
   Individuals 		                                  111 		       36 		        40 		        32 		        33 
      TOTAL RECOVERIES 		                          222 		       81 		       148 		       115 		        89 
        NET  LOANS CHARGED-OFF 		                  334 		      342 		       700 		       503		        681 
Provision charged to operating expenses 		         670 		      660 		       470		        840 		       780 
       BALANCE OF ALLOWANCE FOR POSSIBLE 
        LOAN LOSSES AT END OF YEAR 	         $ 	 2,678 	 $ 	 2,342 	  $ 	 2,024 	  $  	2,254 	  $ 	 1,917 

Ratio of net charge-offs during the 										
  period to average loans outstanding 		         0.12% 		    0.14% 		     0.30%		      0.23% 		     0.37% 

</TABLE>
										

	Loans having recorded investments of $5.8 million at December
31, 1995, have been identified as impaired in accordance with
the provisions of SFAS 114.  They represent 2% of gross loans. 
Commercial loans comprised $.326 million of the total, with
loans secured by real estate accounting for $4.7 million and
installment loans $.800 million.  The gross interest income that
would have been recorded during 1995 if the loans had been
current in accordance with their original terms and had been
outstanding throughout the period or since origination, if held
for part of the period, was $365, $193, and $189 thousand for
the years ended December 31, 1995, 1994, and 1993 respectively. 
Impaired loans are charged-off once management has exhausted all
efforts to collect the loan.  Please refer to Note 1 and Note 3
in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS that are
included elsewhere in this material for more information on the
Bank's policy regarding loan impairment.

	Inherent in the business of providing financial services is the
risk involved in extending credit.  Management believes the
objective of a sound credit policy is to extend quality loans to
customers while reducing risk affecting shareholders' and
depositors' investments.  Risk reduction is achieved through
diversity of the loan portfolio as to type, borrower, and
industry concentration as well as sound credit policy guidelines
and procedures.  

<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS 
<TABLE>

FIVE YEAR COMPARISON
<CAPTION>
      		                                    1995  	  	   1994        		1993         		1992        		 1991  
 
<S>                                     <C>           <C>           <C>            <C>            <C>
INTEREST INCOME 										
 Interest and fees on loans        	    $	25,857,982 	$	21,130,914 	$	19,518,742 	 $	19,791,548 	 $	19,571,295 
										
 Income on investment securities 										
   Taxable interest 		                     6,179,492   		7,012,626   		6,925,404		    6,898,114 		   5,218,446 
   Exempt from federal income tax 		       2,156,813 		  2,184,666   		1,857,168 		   1,825,869 		   1,828,738 
   Dividends 		                              177,790 		    204,948 		     72,054 		     110,874		      150,823 
										
                                         		8,514,095 		  9,402,240 		  8,854,626 		   8,834,857		    7,198,007 

 Other interest income 		                    121,492 		    284,384 		    347,287		      195,744 	      279,165 

    TOTAL INTEREST INCOME 		              34,493,569 		 30,817,538		  28,720,655 		  28,822,149 		  27,048,467 

INTEREST EXPENSE  										
  Interest on deposits 		                 15,247,875 		 12,770,618 		 11,998,235		   13,329,557 		  14,212,771 
  Interest on other short term  
   borrowings 		                             174,370 		     93,286		      38,339 		      47,449 		      63,994 
										
   TOTAL INTEREST EXPENSE 		              15,422,245 		 12,863,904		  12,036,574 		  13,377,006 		  14,276,765 

   NET INTEREST INCOME 		                 19,071,324 		 17,953,634  		16,684,081 		  15,445,143 		  12,771,702 

PROVISION FOR POSSIBLE LOAN LOSSES 		        670,000 		    660,000 		    470,000		      840,000 		     780,000 
   NET INTEREST INCOME AFTER 										
    PROVISION FOR LOAN LOSSES 		          18,401,324  		17,293,634 		 16,214,081 		  14,605,143 		  11,991,702 

NONINTEREST  INCOME 										
  Trust department income 		               1,251,642 		  1,249,359 		    863,952		      753,239 		     603,701 
  Service fees on deposit accounts 		      2,697,332 		  2,317,992		   2,206,026 		   2,123,096 		   1,893,355 
  Other service fees, commissions, 										
   and fees 		                               300,407 		    336,758 		    509,009 		     401,618		      237,755 
  Other operating income 		                  322,634 		    319,466 		    315,108		      191,363 		      91,440 
  Available for sale securities 										
   gains (losses) 		                           1,182 		   (243,690) 		    23,896		       28,434 		      15,862 

   TOTAL NONINTEREST  INCOME 		            4,573,197 		  3,979,885		   3,917,991 		   3,497,750 		   2,842,113 

NONINTEREST  EXPENSES 										
  Salaries and employee benefits 		        6,620,827 		  6,247,706		   5,686,965 		   5,283,086 		   4,407,072 
  Net occupancy expense 		                 1,279,434 		  1,190,678 		  1,070,971		      984,650 		     797,466 
  Furniture and equipment expense 		       1,382,769 		  1,069,856		     889,848 		     801,453 		     935,821 
  Loss on other real estate 		                50,724 		      4,000 		    103,122		      312,064 		      48,398 
  Other operating expenses 		              5,006,292 		  4,996,107		   4,903,949 		   4,460,696 		   3,572,881 
										
   TOTAL NONINTEREST EXPENSES 		          14,340,046		  13,508,347 		 12,654,855 		  11,841,949 		   9,761,638 

      INCOME BEFORE PROVISION 										
       FOR INCOME TAXES 		                 8,634,475		   7,765,172 		  7,477,217 		   6,260,944 		   5,072,177 

PROVISION FOR INCOME TAXES 		              2,518,769 		  2,203,746 		  2,220,965		    1,768,840 		   1,341,130 

        NET INCOME  	                   $ 	6,115,706 	$ 	5,561,426 	$ 	5,256,252 	 $ 	4,492,104 	 $ 	3,731,047 

EARNINGS PER COMMON SHARE  										
(1,400,000 outstanding shares) 	        $ 	     4.37 	$ 	     3.97 	$ 	     3.75	  $ 	     3.21 	 $ 	     2.67 

</TABLE>

<PAGE>

                    FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                    AND RESULTS OF OPERATIONS 

Net Income

	Net income was 10.0% higher in 1995 than in 1994, 5.8% higher
in 1994 than in 1993, and 17.0% higher in 1993 than in 1992.  As
indicated by the table, Comparative Data, the Corporation's
return on average assets was 1.32% in 1995, 1.23% in 1994, and
1.25% in 1993.  The return on equity remains strong at 13.95% in
1995, 14.11% in 1994, and 14.93% in 1993.

Net Interest Margin

	The bottom graph on the last page of this document illustrates
an increasing net interest margin  during the five years shown. 
As mentioned in the LIQUIDITY AND INTEREST RATE  SENSITIVITY 
MANAGEMENT section earlier, the Bank's Asset/Liability Committee
monitors interest rate sensitivity monthly.  Through the use of
simulation analysis to estimate future net interest income under
 varying interest rate conditions, the committee can  establish
pricing and maturity strategies to maintain that steady net
interest margin.  The simulation analysis uses the repricing
information indicated in the table, Rate Sensitivity of Earning
Assets and Interest Bearing Liabilities, and adjusts the current
balance sheet to reflect the impact of different interest rate
movements.

EFFECTS OF ECONOMY

	Current economic conditions have had a definite effect on the
reported financial condition and results of operation.  The
stock market closed out its worst performance and the bond
market experienced its largest calendar year decline in modern
history during 1994.  However, the market was much stronger
during 1995 experiencing considerable gains compared to 1994. 
Many Bank customers had used transaction and limited transaction
interest bearing accounts as holding vehicles to watch rate
movements during 1994 trying to determine the best time to lock
in a rate on a longer term product.  During 1995, many of these
customers decided that the time was right and transferred
investments to longer term certificate of deposits from
transaction and limited transaction interest bearing accounts. 
As Bank customers felt more comfortable with the economy, loan
demand increased strongly resulting in a shift of  Bank earning
assets from investment securities to higher yielding loans. 
Historically, noninterest bearing demand deposits and regular
savings accounts have provided a relatively fixed rate source of
funding for earning assets.  This was illustrated again in 1995
and 1994 as these fixed rate and noninterest bearing deposits
continued to provide a relatively stable cost from this funding
source.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE FINANCIAL
STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD

	The Financial Accounting Standards Board has issued two
standards that have not been adopted by the Bank but are
required to adopted after December 31, 1995.  The Statement of
Financial Accounting Standards No. 121 (SFAS 121), "Accounting
for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed Of" establishes guidance on when to
recognize and how to measure impairment losses on long-lived
assets and certain identifiable intangibles.  The statement also
offers guidance on how to value long-lived assets that
management has committed to a plan to dispose of the assets.  An
asset that an entity will hold and use should be reviewed for
impairment whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable.  In such
situations, an impairment loss is recognized if the sum of
undiscounted future cash flows expected to be generated by the
asset is less than the carrying amount of the asset. 
Measurement of the impairment loss, however, is based on the
fair value of the asset.  Management does not believe this
statement will have any material effect on future income.

	The second standard,  Statement of Financial Accounting
Standards No. 122 (SFAS 122), "Accounting for Certain Mortgage
Banking Activities" requires recognition of rights to service
mortgage loans for others as separate assets, regardless of how
the servicing rights are acquired.  This Statement prescribes  a
single procedure for the capitalization of those rights acquired
either through loan origination or through purchase transactions
where a mortgage banking enterprise buys the servicing rights. 
Mortgage servicing rights are to be assessed for impairment


<PAGE>

           FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                       AND RESULTS OF OPERATIONS 

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE FINANCIAL
STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD (Continued)

based on their fair value.  Impairment is recognized through a
valuation allowance for each impaired group of mortgage
servicing rights.  Rights capitalized after adoption of this
statement should be grouped based on the risk characteristics of
the underlying loans.  Management does not believe this
statement will have any material effect on future income.

SHAREHOLDER  INFORMATION

	The 1,400,000 shares of common stock of First Farmers &
Merchants Corporation outstanding at December 31, 1995, had a
market value of $75.6 million and were held by 1,514
identifiable individuals located mostly in the market area.  A
small number of additional shareholders are not identified
individually since some bank nominees, including the bank's
Trust Department, are listed as single owners when, in fact,
these holdings represent large numbers of shareholders.  No
single shareholder's ownership exceeded five percent at year end.

	There is no established public trading market for the stock. 
The following table lists the high and low price of the
Corporation's common stock, as well as the semiannual dividend
paid per share, in each of the last three years.

<TABLE>

                                             SHAREHOLDER INFORMATION
<CAPTION>
                                               			Price Range of  				  Dividend 
                                                			Common Stock 	   	 		  Paid 
                                          			High       	 	Low 	        Per Share 

              <S>    <S>                  <C>            <C>            <C>
                    	First quarter 	      $	36.00 	      $	36.00 	      $ 	
                    	Second quarter 		      37.00        		37.00         		0.36 
              1993  	Third quarter 		       38.00 		       37.00 		
                    	Fourth quarter 		      38.00        		38.00         		0.37 

                                                                        $  0.73
 	 	 	 	 	 	 	 
                    	First quarter 	      $	40.00 	      $	36.00 	      $ 	
                    	Second quarter 		      42.00        		37.00 		        0.39 
              1994  	Third quarter 		       43.00 		       37.00 		
                    	Fourth quarter 		      45.00 		       38.00 		        0.41 

                                                                  						$ 	0.80  

                    	First quarter 	      $	45.00 	       $	45.00      	$ 	
                    	Second quarter 		      48.00 		        45.00 		       0.43 
              1995  	Third quarter 		       50.00 		        48.00 		
                    	Fourth quarter 		      54.00 		        50.00        		0.45 

                                                                  						$ 	0.88 
</TABLE>

<PAGE>							

                   FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                AND RESULTS OF OPERATIONS 

<TABLE>
                                      COMPARATIVE DATA 										
                                  (In Thousands of Dollars) 										

                             		1995     		1994      		1993      		1992     		 1991  

<S>                        <C>         <C>         <C>         <C>         <C>
AVERAGE ASSETS 	           $	463,739 	 $	451,953 	 $	420,760 	 $	381,379  	$	303,851 

AVERAGE LOANS (NET) 	      $	276,166 	 $	247,791 	 $	233,609  	$	215,158  	$ 182,561 

AVERAGE DEPOSITS 	         $	409,489 	 $	404,412 	 $	378,782 	 $	343,128	  $	268,495 

RETURN ON EQUITY 										
  AND ASSETS 										
 Return on average assets 		   1.32% 		    1.23% 		    1.25% 		    1.18%		     1.23% 

 Return on beginning equity 		13.95% 		   14.11% 		   14.93%    		14.21% 		   13.01% 
 Average equity to  										
    average assets 		         10.08% 		    9.25% 		    8.90% 		    8.76%		     9.94% 

COMMON DIVIDEND 										
  PAYOUT RATIO 										
 Earnings per share 	      $ 	  4.37 	  $ 	 3.97 	  $ 	 3.75 	  $ 	 3.21 	 $	   2.67 

 Cash dividends per share 	$ 	  0.88 	  $ 	 0.80   	$ 	 0.73 	  $  	0.64	  $ 	  0.58 

 Ratio 		                       20% 		      20% 		      19% 		      20% 		      22% 
</TABLE>
										
<TABLE>

                             NET INTEREST MARGIN
<CAPTION>
   	                          	1995  		    1994  		     1993  		    1992  		   1991  
                                             (In Thousands of Dollars) 								

<C>                        <C>          <C>          <C>         <C>        <C>
INTEREST INCOME 										
 (TAX EQUIVALENT)  	       $ 	35,626 	  $ 	32,039 	  $ 	29,465 	 $ 	29,564 	$ 	27,736 

INTEREST EXPENSE 		           15,422 		    12,864 		    12,037 		   13,377 		  14,277 


                          	$ 	20,204 	  $ 	19,175 	  $ 	17,428 	 $ 	16,187 	$ 	13,459 


NET INTEREST MARGIN* 		        4.79% 		     4.68% 		     4.58% 		    4.67% 		   4.84% 

<FN>
<F14>
*Net interest margin is net interest income (tax equivalent)
divided by average earnings assets.
</FN>
</TABLE>

	In summary, the graphs on the following page illustrate the
presentation in the preceding pages, a unique perspective on the
internal structures of the Corporation and the Bank.  Each
shareholder can be proud of this performance.  Our shareholders
are the real support of our organization.  Thank you for your
help and support.


Nine color graphs were included on the last page of this report.
One - The first graph used the information presented above in the Five
Year Comparison table to illustrate the growth in net income.
Two - The second graph used information from the Comparative Data on the
previous page to illustrate a return on average assets of 1.18% and above
for the last five years.
Three - The third graph used information from the Comparative Data on the
previous page to illustrate a return on beginning stockholders' equity 
over 13% for the last five years.
Four - The fourth graph used information from the Comparative Data on the 
previous page to illustrate earnings per share and cash dividends per share 
for the last five years.
Five - The fifth graph used information from the Consolidated Statements of
Stockholders' Equity to illustrate the growth in stockholders' equity for
the last five years.
Six - The sixth graph used information from the Consolidated Balance Sheets
to illustrate the growth in net loans for the last five years.
Seven - The seventh graph used information from the Consolidated Balance
Sheets to illustrate the growth in deposits for the last five years.
Eight - The eighth graph used information from the Consolidated Balance Sheets
to illustrate the growth in total assets for the last five years.
Nine - The nineth graph used information from the Five Year Comparison table
above to illustrate interest income, interest expense and net interest income
for the last five years. 


<PAGE>

Item 9.  Disagreements on Accounting and Financial Disclosure.

None.


PART III

Item 10.  Directors and Executive Officers of the Registrant.

Reference is made to First Farmers and Merchants Corporation's
definitive Proxy Statement (Incorporated herein by reference)
pursuant to Regulation 14 A, Solicitation of Proxies, which
involves the election of Directors.  The present terms of
Directors and officers extend to April 16, 1996.

<PAGE>

Executive Officers of Registrant

The following is a list as of March 1, 1996, showing the names
and ages of all executive officers of First Farmers and
Merchants Corporation ("FFMC"), the nature of any family
relationships between them, and all positions and offices with
the Corporation held by each of them:

<TABLE>

<CAPTION>
				                                          Family	          	Positions and
         Name		                  Age  	    Relationship		       Offices Held

<S>                              <C>           <C>              <C>
Virgil H. Moore, Jr.		           70		          None	            Senior Chairman of the Board of Directors
                                                                of FFMC and the Bank.  Employed in 1954
                                                                as Assistant to President.  Named 
                                                                Vice President in 1955.  Named
                                                                Vice President and Cashier in 1956. 
                                                                Promoted to First Vice President in 1958. 
                                                                Elected Director in 1959 and President in 
                                                                1965. Elected Chairman and Chief Executive
                                                                Officer of the Bank, August 1980. Elected
                                                                Chairman of the Board of FFMC April,
                                                                1982.  Relinquished position as Chief
                                                                Executive Officer of the Bank on December
                                                                31, 1990.  Relinquished position as an officer
                                                                of the Bank on December 31, 1992.  Retired 
                                                                as Chairman of the Board of Directors 
                                                                of the Bank on December 31. 1995.  Elected
                                                                Senior Chairman of the Board of Directors of
                                                                the Bank effective December 31, 1995.

Waymon L. Hickman		              61		          None	            President and Chief Executive Officer of 
                                                                FFMC.  Chairman and Chief Executive 
                                                                Officer of the Bank.  Employed in 1958.
                                                                Named Assistant Cashier in 1959.  Named
                                                                Assistant Vice President in 1961, and 
                                                                promoted to Vice President in 1962.  
                                                                Elected Director in 1967 and First 
                                                                Vice President and Trust Officer in 1969.
                                                                Promoted in 1973 to Executive
                                                                Vice President and Senior Trust Officer. 
                                                                Elected President of Bank and Chief
                                                                Administrative Officer in August 1980. 
                                                                Elected President of FFMC in April, 1982. 
                                                                Elected Chief Executive officer of the Bank 
                                                                in December, 1990.  Elected Chairman of the
                                                                Board of Directors of the Bank effective 
                                                                December 31, 1995.
</TABLE>
<PAGE>

Executive Officers of Registrant-Continued
<TABLE>

<CAPTION>
                                        				  Family           	Positions and
         Name		                  Age	      Relationship		       Offices Held

<S>                              <C>           <C>              <C>
Thomas Randall Stevens	          44		          None	            President and Chief Operating Officer and 
                                                                Director of the Bank.  Director and Vice
                                                                President of FFMC.  Employed in 1973.  
                                                                Promoted to Commercial Bank Officer in
                                                                1974.  Promoted to Assistant Vice President
                                                                in 1976. Promoted to Vice President in 
                                                                1979.  Became Vice President and Trust 
                                                                Officer in 1982.  Promoted to First Vice
                                                                President in 1984.  Promoted to Executive 
                                                                Vice President and Chief Administrative 
                                                                Officer in 1990.  Elected as Director of the
                                                                Bank in 1991 and Director and Vice
                                                                President of FFMC in 1991.  Elected 
                                                                President and Chief Operating Officer of the 
                                                                Bank effective December 31, 1995.

O'Neill D. Moore		               64		          None	            Senior Executive Vice President of Bank and
                                                                Secretary to the Board of Directors of
                                                                FFMC and the Bank.  Employed in 1955.
                                                                Named Assistant Cashier in 1957, 
                                                                and Cashier in 1958.  Elected Secretary to the 
                                                                Board of Directors of the Bank in 1959.  In  
                                                                1967 promoted to Vice President and
                                                                Cashier.  Promoted to Senior Vice President
                                                                in 1973.  Elected Secretary of FFMC in
                                                                1982.  Elected Senior Executive
                                                                Vice President of Bank effective December 
                                                                31, 1995.

David I. Wise		                  64		          None	            Senior Executive Vice President, Loan
                                                                Review Officer, Security Officer and 
                                                                Director of the Bank and FFMC.  Employed 
                                                                in 1957.  Named Assistant Cashier in 1957. 
                                                                Promoted to Assistant Vice President in
                                                                1961.  Elected Director of the Bank in 1968.
                                                                Promoted to Senior Vice President in 1973.
                                                                Elected Director and Vice President of 
                                                                FFMC in April, 1982.  Named Compliance 
                                                                Officer of the Bank in 1987.  Named Loan 
                                                                Review Officer of the Bank in 1993.  Elected
                                                                Senior Executive Vice President of Bank
                                                                effective December 31, 1995.
</TABLE>

<PAGE>

Executive Officers of Registrant-Continued

<TABLE>

<CAPTION>
				                                          Family		          Positions and
         Name		                  Age	      Relationship		       Offices Held

<S>                              <C>           <C>              <C>
Edward A. Cox		                  73		          None	            Senior Vice President and Director of
                                                                Planning and Training of the Bank and Vice 
                                                                President of FFMC.  Employed in 1982.  In 
                                                                1989 promoted to Vice President of Bank.
                                                                Elected Assistant Secretary of FFMC in 
                                                                March 1987. Promoted to Senior Vice 
                                                                President of the Bank in December, 1990.
                                                                Elected Vice President of FFMC in 1991.


Patricia N. McClanahan	          51		          None	            Senior Vice President and Controller/
                                                                Cashier of the Bank and Treasurer of FFMC.
                                                                Employed in 1980.  Promoted to Internal 
                                                                Bank Auditor in 1981.  Promoted to Bank 
                                                                Controller in 1984.  Promoted to Bank 
                                                                Controller and Cashier in 1987.  Promoted 
                                                                to Bank Vice President and 
                                                                Controller/Cashier in 1989.  Promoted to 
                                                                Bank Senior Vice President and 
                                                                Controller/Cashier in 1990.  Elected as 
                                                                Treasurer of FFMC in 1991.

</TABLE>



Item 11.  Executive Compensation and Transactions.

Reference is made to First Farmers and Merchants Corporation's
definitive Proxy Statement (incorporated herein by reference)
pursuant to Regulation 14 A, Solicitation of Proxies, which
involves the election of Directors.

Item 12.  Security Ownership of Certain Beneficial Owners and
Management.

Reference is made to First Farmers and Merchants Corporation's
definitive Proxy Statement (incorporated herein by reference)
pursuant to Regulation 14 A, Solicitation of Proxies, which
involves the election of Directors.

Item 13.  Certain Relationships and Related Transaction.

Reference is made to First Farmers and Merchants Corporation's
definitive Proxy Statement (incorporated herein by reference)
pursuant to Regulation 14 A, Solicitation of proxies, which
involves the election of directors.

<PAGE>

Item 14.  Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.*

	(a)	(1) and (2) - The response to this portion of Item 14 is
submitted as a separate section of this report.

		(3) - The following exhibits are filed herewith:

			(13) Annual report to stockholders

	(d)	Financial Statement Schedules - The response to this
portion of Item 14 is submitted as a separate section of this
report.

By-laws remain the same as those included in the Form 10-K
submitted for the fiscal year ended December 31, 1990.  In
addition, a Form 8-K was completed and submitted separately
regarding a purchase that was consummated January 24, 1992.

<PAGE>


Signatures



Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



FIRST FARMERS AND MERCHANTS CORPORATION





BY	  /s/ Waymon L. Hickman               
             
			  Waymon L. Hickman,

   		President and Chief Executive Officer

(Chairman of the Board and Chief Executive Officer of the Bank)


Date	   March 26, 1996                
                    


Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.





/s / Thomas Randall Stevens                   
         
Thomas Randall Stevens, Vice President

(President and Chief Operating Officer of the Bank)


Date	  March 26, 1996                
                    


/s / Patricia N. McClanahan                 
          
Patricia N. McClanahan, Treasurer

(Principal Accounting Officer)


Date	 March 26, 1996                
                    




<PAGE>


Signatures



Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



FIRST FARMERS AND MERCHANTS CORPORATION



 /s/ Kenneth A. Abercrombie                  /s/ Sam D. Kennedy

 Kenneth A. Abercrombie, Director		          Sam D. Kennedy, Director

 Date  March 26, 1996                       	Date  March 26, 1996  


/s/ James L. Bailey, Jr.                     /s/ Tillman Knox     

James L. Bailey, Jr., Dir	                   Tillman Knox, Director

Date  March 26, 1996                   	     Date  March 26, 1996 


/s/ Harlan D. Bowsher               	        /s/ Joe E. Lancaster   

Harlan D. Bowsher, Director		                Joe E. Lancaster, Director

Date  March 26, 1996                        	Date  March 26, 1996   


/s/ H. Terry Cook, Jr.                  	    /s/ Virgil H. Moore, Jr.

H. Terry Cook, Jr., Director		               Virgil H. Moore, Jr., Director

Date March 26, 1996                         	Date  March 26, 1996      


/s/ W. J. Davis, Jr.                         /s/ Thomas Randall Stevens

W. J. Davis, Jr., Director	                  Thomas Randall Stevens, Director

Date March 26, 1996                         	Date  March 26, 1996        


/s/ Tom Napier Gordon                    	   /s/ Dan C. Wheeler              

Tom Napier Gordon, Director		                Dan C. Wheeler, Director

Date  March 26, 1996                        	Date   March 26, 1996            


/s/ Edwin W. Halliday                      	 /s/ David I. Wise              

Edwin W. Halliday, Director		                David I. Wise, Director

Date  March 26, 1996                        	Date  March 26, 1996  


/s/ Waymon L. Hickman           	            /s/ W. Donald Wright             

Waymon L. Hickman, Director                		W. Donald Wright, Director

Date  March 26, 1996                        	Date  March 26, 1996           




<PAGE>

                           ANNUAL REPORT ON FORM 10-K
                
                        ITEM 14(a)(1) and (2)ITEM 14(d)

         LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.

                          YEAR ENDED DECEMBER 31, 1995

                     FIRST FARMERS AND MERCHANTS CORPORATION

                               COLUMBIA, TENNESSEE

<PAGE>

FORM 10-K -- ITEM 14(a)(1) and (2)

FIRST FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY

LIST OF FINANACIAL STATEMENS AND FINANACIAL STATEMENT SCHEDULES.


The following consolidated financial statements of First Farmers
and Merchants Corporation and Subsidiary, included in the annual
report of the registrant to its security holders for the year
ended December 31, 1995, are incorporated by reference in Item 8:


	Consolidated balance sheets -- December 31, 1995 and 1994

	Consolidated statements of income -- Years ended December 31,
 1995, 1994, and 1993

	Consolidated statements of cash flows -- Years ended December 31,
 1995, 1994, and 1993

	Notes to consolidated financial statements -- December 31, 1995

The following financial statement schedules of First Farmers and
Merchants Corporation and subsidiary are included in Item 14(d):

	None

All other schedules to the consolidated financial statements
required by Article 9 of Regulation S-X and all other schedules
to the financial statements of the registrant required by
Article 5 of Regulation S-X are not required under the related
instructions or are inapplicable and therefore, have been
omitted.

<PAGE>



                                 EXHIBIT INDEX


                   FIRST FARMERS AND MERCHANTS CORPORATION


        Exhibit Number				                Title or Description

           	(13)				                Annual Report to  Stockholders

<PAGE>










                                    EXHIBIT 13

                          ANNUAL REPORT TO STOCKHOLDERS

                     FIRST FARMERS AND MERCHANTS CORPORATION

<PAGE>




This is a draft of the annual report to the Securities and
Exchange Commission (SEC), Form 10-K, as of December 31, 1993. 
This page of manual signatures is required to be filed with one
copy of this report.  Page 10 in the draft will be filed with
the other copies sent to the SEC and the Federal Reserve Bank. 
Thank you for your help in completing this reporting requirement.