| **United States**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **SECURITIES AND EXCHANGE COMMISSION**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Washington, D. C. 20549**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **FORM 10-Q**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (Mark One)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| [X] **QUARTERLY REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|        For the quarterly period ended September 30, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|        or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| [  ] **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        For the transition period from ___________ to ___________                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 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 incorporation or  organization)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | (I.R.S. Employer Identification No.) |
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|                    816 South Garden Street                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |
| Columbia, Tennessee                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 38402 - 1148 |
| (Address of principal executive offices)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | (Zip Code) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (931) 388-3145                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (Registrant's telephone number, including area code)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (Former name, former address and former fiscal year,  if changed since last report)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|       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 whether the registrant is an accelerated filer (as  defined in Rule 12b-2 of the Exchange Act).   Yes  __X__     No  _____                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|       Indicate the number of shares outstanding of each of the issuer's classes of  common stock, as of the latest practicable date.  5,840,000 shares as  of October 22, 2004                                                                                                                                                                                                                                                                                                                                                                                            |

----

**PART I - FINANCIAL INFORMATION**

** **

**Item 1. FinancialStatements.**

Thefollowing unaudited consolidated financial statements of the Registrant and itssubsidiary are included in this Report:

Consolidatedbalance sheets - September 30, 2004, and December 31, 2003.

Consolidatedstatements of income - For the three months and nine months ended September 30, 2004, and September 30, 2003.

Consolidatedstatements of cash flows - For the nine months ended September 30, 2004, and September 30, 2003.

Selectednotes to consolidated financial statements.

----

| **FIRST  FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY**                            |
|----------------------------------------------------------------------------------------|
| **CONSOLIDATED  BALANCE SHEETS**                                                       |
|                                                                                        | * * |  |  |  |  |
|                                                                                        | * * | ** ** | **September  30,** | ** ** | December  31, |
|                                                                                        | *(Dollars  in Thousands)* |  | **2004** |  | 2003 |
| ** **                                                                             |  |  | **(Unaudited)** | (1) |
| **ASSETS**                                                                             | Cash and due from banks | $ | **    45,119** | $ |      26,137 |
|                                                                                        | Interest-bearing deposits in banks | ** ** | **          298** |  |          297 |
|                                                                                        | Federal funds sold | ** ** | **   -** |  |      12,000 |
|                                                                                        |               Total cash and cash equivalents |  | **    45,417** |  |      38,434 |
|                                                                                        | Securities |  |  |  |  |
|                                                                                        |     Available for sale (amortized cost $239,538 |  | ** ** |  |  |
|                                                                                        |          and $243,038 respectively) |  | **  242,523** |  |    249,653 |
|                                                                                        |     Held to maturity (fair value $81,028 |  | ** ** |  |   |
|                                                                                        |          and $84,199 respectively) |  | **    76,810** |  |      79,138 |
|                                                                                        |               Total securities |  | **  319,333** |  |    328,791 |
|                                                                                        | Loans, net of deferred fees |  | **  443,231** |  |    424,504 |
|                                                                                        |     Allowance for possible loan losses |  | **    (8,752)** |  |     (10,123) |
|                                                                                        |               Net loans |  | **  434,479** |  |    414,381 |
|                                                                                        | Bank premises and equipment, at cost |  | ** ** |  |  |
|                                                                                        |          less allowance for depreciation |  | **    12,691** |  |      12,997 |
|                                                                                        | Core deposit and other intangibles |  | **    12,251** |  |      13,042 |
|                                                                                        | Other assets | ** ** | **    23,270** |  |      21,168 |
|                                                                                        |             TOTAL ASSETS | **$** | **847,441** | $ |    828,813 |
|                                                                                        |  | ** ** | ** ** |  | ** ** |
| LIABILITIES                                                                            | Deposits | ** ** | ** ** |  |  |
|                                                                                        |      Noninterest-bearing | $ | **  127,754** | $ |    112,334 |
|                                                                                        |      Interest-bearing (including certificates of  deposit |  | ** ** |  |  |
|                                                                                        |           over $100,000:  2004 - $82,690; 2003 -  $71,968) |  | **  592,208** |  |    604,099 |
|                                                                                        |             Total deposits |  | **  719,962** |  |    716,433 |
|                                                                                        | Federal funds purchased and securities sold |  | ** ** |  |  |
|                                                                                        |            under agreements to repurchase |  | **    15,241** |  |        1,820 |
|                                                                                        | Dividends payable |  | **   -** |  |        1,635 |
|                                                                                        | Other short term liabilities |  | **          623** |  |          648 |
|                                                                                        | Accounts payable and accrued liabilities |  | **      6,642** |  |        5,992 |
|                                                                                        |             TOTAL LIABILITIES | ** ** | **  742,468** |  |    726,528 |
|                                                                                        |  |  | ** ** |  |  |
| **SHAREHOLDERS'**                                                                      | Common stock - $10 par value, 8,000,000 shares |  |  |  |  |
| **EQUITY**                                                                             |         authorized;  issued and outstanding - |  | ** ** |  |  |
| ** **                                                                             |         5,840,000 |  | **    58,400** |  |      58,400 |
|                                                                                        | Additional paid-in capital |  | **      4,320** |  |        4,320 |
|                                                                                        | Retained earnings |  | **    40,428** |  |      35,498 |
|                                                                                        | Accumulated other comprehensive income |  | **      1,825** |  |        4,067 |
|                                                                                        |             TOTAL SHAREHOLDERS' EQUITY |  | **  104,973** |  |    102,285 |
|                                                                                        |  |  | ** ** |  | ** ** |
|                                                                                        |             TOTAL LIABILITIES AND |  | ** ** |  |  |
|                                                                                        |                 SHAREHOLDERS' EQUITY | **$** | **  847,441** | $ |    828,813 |
|                                                                                        |  |  |  |  |  |
|       (1)  Derived from audited financial  statements.   |  |  |  |  |
| The accompanying notes are an integral part of the  consolidated financial statements. | ** ** | ** ** |

----

|            |                                                                                                                                                                       |                                                                                                               |                                                                    |                                                                    |                                                     |                                                                |                                    |                                                   |                                          |                                                                |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------|--------------------------------------------------------------------|-----------------------------------------------------|----------------------------------------------------------------|------------------------------------|---------------------------------------------------|------------------------------------------|----------------------------------------------------------------|
|            | **FIRST  FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY**                                                                                                           |
|            | **CONSOLIDATED  STATEMENTS OF INCOME**                                                                                                                                |
|            | ** **                                                                                                                                                            |                                                                                                               |                                                                    | ** **                                                         | ** **                                          | ** **                                                     |                                    |                                                   |                                          |                                                                |
|            |                                                                                                                                                                       |                                                                                                               |                                                                    | ** **                                                         | ** **                                          | ** **                                                     |                                    | ** **                                        | ** **                               | ** **                                                     |
|            |                                                                                                                                                                       | *(Dollars In Thousands Except Per Share Data)*                                                                |                                                                    | Three  Months Ended                                                |                                                     | Nine  Months Ended                                             |
|            |                                                                                                                                                                       | *(Unaudited)*                                                                                                 | ** **                                                         | September  30,                                                     | ** **                                          | September  30,                                                 |
|            |                                                                                                                                                                       |                                                                                                               | ** **                                                         | **2004**                                                           | ** **                                          | 2003                                                           | ** **                         | **2004**                                          | ** **                               | 2003                                                           |
|            |                                                                                                                                                                       |                                                                                                               |                                                                    |                                                                    |                                                     |                                                                |                                    |                                                   |                                          |                                                                |
| ** ** | **INTEREST INCOME**                                                                                                                                                   | Interest and fees on loans                                                                                    | **$**                                                              | **   6,203**                                             | $                                                   |      7,054                                 | **$**                              | **18,078**                                        | $                                        |    22,080                                            |
|            |                                                                                                                                                                       | Income on investment securities                                                                               |                                                                    | ** **                                                         | ** **                                          |                                                                |                                    | ** **                                        | ** **                               |                                                                |
|            |                                                                                                                                                                       |      Taxable interest                                                                     |                                                                    | **   2,497**                                             | ** **                                          |      2,643                                 |                                    | **   7,871**                            | ** **                               |      8,286                                 |
|            |                                                                                                                                                                       |      Exempt from federal income tax                                                       |                                                                    | **      652**                             | ** **                                          |        644                       |                                    | **   1,908**                            | ** **                               |      2,106                                 |
|            |                                                                                                                                                                       |      Dividends                                                                            |                                                                    | **        30**                  | ** **                                          |          27            |                                    | **      185**            | ** **                               |        102                       |
|            |                                                                                                                                                                       |                                                                                                               |                                                                    | **   3,179**                                             | ** **                                          |      3,314                                 |                                    | **   9,964**                            | ** **                               |    10,494                                            |
|            |                                                                                                                                                                       | Other interest income                                                                                         |                                                                    | **          7**       | ** **                                          |          56            |                                    | **        63** | ** **                               |        185                       |
|            |                                                                                                                                                                       |     TOTAL INTEREST INCOME                                                                      |                                                                    | **   9,389**                                             | ** **                                          |    10,424                                            |                                    | **28,105**                                        | ** **                               |    32,759                                            |
|            |                                                                                                                                                                       |                                                                                                               |                                                                    |                                                                    | ** **                                          |                                                                |                                    |                                                   | ** **                               |                                                                |
| ** ** | **INTEREST EXPENSE**                                                                                                                                                  | Interest on deposits                                                                                          |                                                                    | **   2,054**                                             | ** **                                          |      2,670                                 |                                    | **   6,300**                            | ** **                               |      8,966                                 |
|            |                                                                                                                                                                       | Interest on other short term borrowings                                                                       | ** **                                                         | **        25**                  | ** **                                          |            3 | ** **                         | **        36** | ** **                               |          18            |
|            |                                                                                                                                                                       |       TOTAL INTEREST EXPENSE                                                         |                                                                    | **   2,079**                                             | ** **                                          |      2,673                                 |                                    | **   6,336**                            | ** **                               |      8,984                                 |
|            |                                                                                                                                                                       |                                                                                                               |                                                                    |                                                                    | ** **                                          |                                                                |                                    |                                                   | ** **                               |                                                                |
|            |                                                                                                                                                                       |             NET INTEREST INCOME                        |                                                                    | **   7,310**                                             | ** **                                          |      7,751                                 |                                    | **21,769**                                        | ** **                               |    23,775                                            |
|            |                                                                                                                                                                       | PROVISION FOR POSSIBLE LOAN LOSSES                                                                            | **           -** | ** **                                                         |          40 |                                                                | **     (677)** | ** **                                        |        800 |
|            |                                                                                                                                                                       |                                                                                                               |                                                                    |                                                                    |                                                     |                                                                |                                    |                                                   |                                          |                                                                |
|            |                                                                                                                                                                       |       NET INTEREST INCOME AFTER                                                      |                                                                    | ** **                                                         | ** **                                          | ** **                                                     |                                    | ** **                                        | ** **                               | ** **                                                     |
|            |                                                                                                                                                                       |            PROVISION FOR LOAN LOSSES                        |                                                                    | **   7,310**                                             | ** **                                          |      7,711                                 |                                    | **22,446**                                        | ** **                               |    22,975                                            |
|            |                                                                                                                                                                       |                                                                                                               |                                                                    |                                                                    | ** **                                          |                                                                |                                    |                                                   | ** **                               |                                                                |
| ** ** | **NONINTEREST  INCOME**                                                                                                                                          | Trust department income                                                                                       |                                                                    | **      522**                             | ** **                                          |        447                       |                                    | **   1,579**                            | ** **                               |      1,356                                 |
|            |                                                                                                                                                                       | Service fees on deposit accounts                                                                              |                                                                    | **   1,852**                                             | ** **                                          |      1,806                                 |                                    | **   5,433**                            | ** **                               |      5,394                                 |
|            |                                                                                                                                                                       | Other service fees, commissions, and fees                                                                     |                                                                    | **        92**                  | ** **                                          |        132                       |                                    | **      302**            | ** **                               |        362                       |
|            |                                                                                                                                                                       | Other operating income                                                                                        |                                                                    | **      202**                             | ** **                                          |        (48)                      |                                    | **      830**            | ** **                               |        101                       |
|            |                                                                                                                                                                       | Securities gains                                                                                              |                                                                    | **           -** | ** **                                          |            - |                                    | **      917**            | ** **                               |            - |
|            |                                                                                                                                                                       |       TOTAL NONINTEREST  INCOME                                                 |                                                                    | **   2,668**                                             | ** **                                          |      2,337                                 |                                    | **   9,061**                            | ** **                               |      7,213                                 |
|            |                                                                                                                                                                       |                                                                                                               |                                                                    | ** **                                                         | ** **                                          |                                                                |                                    | ** **                                        | ** **                               |                                                                |
| ** ** | **NONINTEREST  EXPENSES**                                                                                                                                        | Salaries and employee benefits                                                                                |                                                                    | **3,808**                                                          |                                                     |      3,913                                 |                                    | **11,849**                                        |                                          |    11,280                                            |
|            |                                                                                                                                                                       | Net occupancy expense                                                                                         |                                                                    | **      582**                             | ** **                                          |        602                       |                                    | **   1,700**                            | ** **                               |      1,629                                 |
|            |                                                                                                                                                                       | Furniture and equipment expense                                                                               | ** **                                                         | **      302**                             | ** **                                          |        301                       | ** **                         | **      962**            | ** **                               |      1,012                                 |
|            |                                                                                                                                                                       | Other operating expenses                                                                                      |                                                                    | **   2,515**                                             | ** **                                          |      2,521                                 | ** **                         | **   7,725**                            | ** **                               |      7,793                                 |
|            |                                                                                                                                                                       |       TOTAL NONINTEREST EXPENSES                                                     |                                                                    | **   7,207**                                             | ** **                                          |      7,337                                 |                                    | **22,236**                                        | ** **                               |    21,714                                            |
|            |                                                                                                                                                                       |            INCOME BEFORE PROVISION FOR                      |                                                                    |                                                                    |                                                     |                                                                |                                    |                                                   |                                          |
|            |                                                                                                                                                                       |                  INCOME TAXES |                                                                    | **   2,771**                                             | ** **                                          |      2,711                                 |                                    | **   9,271**                            | ** **                               |      8,474                                 |
|            |                                                                                                                                                                       | PROVISION FOR INCOME TAXES                                                                                    |                                                                    | **      859**                             |                                                     |        625                       |                                    | **   2,646**                            |                                          |      2,119                                 |
|            |                                                                                                                                                                       |                                                                                                               |                                                                    | ** **                                                         |                                                     |                                                                |                                    | ** **                                        |                                          |                                                                |
|            |                                                                                                                                                                       |                                                                                                               |                                                                    |                                                                    |                                                     |                                                                |                                    |                                                   |                                          |                                                                |
|            |                                                                                                                                                                       |               NET INCOME                     | **$**                                                              | **   1,912**                                             | $                                                   |      2,086                                 | **$**                              | **   6,625**                            | $                                        |      6,355                                 |
|            |                                                                                                                                                                       |                                                                                                               | ** **                                                         | ** **                                                         |                                                     |                                                                | ** **                         | ** **                                        |                                          |                                                                |
|            |                                                                                                                                                                       |                                                                                                               |                                                                    |                                                                    |                                                     |                                                                |                                    |                                                   |                                          |                                                                |
| ** ** | **EARNINGS PER SHARE   (1)**                                                                                                                                | Common stock                                                                                                  |                                                                    |                                                                    |                                                     |                                                                |                                    |                                                   |                                          |                                                                |
|            |                                                                                                                                                                       |       5,840,000 shares outstanding                                                   | **$**                                                              | **     0.33**                                  | $                                                   |       0.36                            | **$**                              | **     1.13**                 | $                                        |       1.09                            |
|            | (1)  Per share data  has been restated to give retroactive  effect to the two-for-one stock split effected as a stock dividend declared  on April 20, 2004. |
|            | The accompanying notes are an integral part of the  consolidated financial statements.                                                                                |                                                                                                               | ** **                                                         | ** **                                                         |                                                     |                                                                |                                    |                                                   |                                          |

----

| **FIRST  FARMERS AND MERCHANTS CORPORATION AND SUBSIDIARY                ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **CONSOLIDATED  STATEMENTS OF CASH  FLOWS                 **           |
|                                                                                                                                                             |  |  |  |  |  |
|                                                                                                                                                             | ** ** |  |  |  | ** ** |
|                                                                                                                                                             | *(Dollars  In Thousands)* |  | Nine  Months Ended |
|                                                                                                                                                             | *(Unaudited)* |  | September  30, |
|                                                                                                                                                             |  | ** ** | **2004** | ** ** | 2003 |
|                                                                                                                                                             |  | ** ** | ** ** | ** ** | ** ** |
| **OPERATING**                                                                                                                                               |    Net income | **$** | **       6,625** | $ |       6,355 |
| **ACTIVITIES**                                                                                                                                              |    Adjustments to reconcile net income to  net cash provided | ** ** |  |  |  |
| ** **                                                                                                                                                  |      by operating activities | ** ** |  |  |  |
|                                                                                                                                                             |        Excess  (deficiency) of provision for possible | ** ** | ** ** |  |  |
|                                                                                                                                                             |            loan losses over net charge offs | ** ** | **     (1,372)** |  |        (373) |
|                                                                                                                                                             |        Provision for  depreciation and amortization of | ** ** | ** ** |  |  |
|                                                                                                                                                             |            premises and equipment | ** ** | **          908** |  |         982 |
|                                                                                                                                                             |        Amortization of  deposit base intangibles | ** ** | **          792** |  |         960 |
|                                                                                                                                                             |        Amortization of  investment security premiums, | ** ** | ** ** |  |  |
|                                                                                                                                                             |            net of accretion of discounts | ** ** | **       2,095** |  |       1,935 |
|                                                                                                                                                             |        Securities  gains | ** ** | **        (917)** |  |             - |
|                                                                                                                                                             |        Increase in  cash surrender value of life insurance contracts | ** ** | **        (329)** |  |        (328) |
|                                                                                                                                                             |        (Increase)  decrease in | ** ** | ** ** |  |  |
|                                                                                                                                                             |                Deferred income  taxes | ** ** | **          376** |  |           25 |
|                                                                                                                                                             |                Interest  receivable | ** ** | **          360** |  |         759 |
|                                                                                                                                                             |                Other assets | ** ** | **        (852)** |  |         281 |
|                                                                                                                                                             |        Increase  (decrease) in | ** ** | ** ** |  |  |
|                                                                                                                                                             |            Interest payable | ** ** | **        (105)** |  |        (396) |
|                                                                                                                                                             |            Other liabilities | ** ** | **          755** |  |         413 |
|                                                                                                                                                             |                 Total Adjustments | ** ** | **       1,711** |  |       4,258 |
|                                                                                                                                                             |                 Net cash provided by operating activities | ** ** | **       8,336** |  |     10,613 |
|                                                                                                                                                             |  | ** ** | ** ** |  |  |
| **INVESTING**                                                                                                                                               |    Proceeds from maturities, calls, and  sales of |  |  |  |  |
| **ACTIVITIES**                                                                                                                                              |       available-for-sale  securities |  | **     29,956** |  |     36,581 |
|                                                                                                                                                             |    Proceeds from maturities and calls of  held-to-maturity securities | ** ** | **     18,872** |  |     21,655 |
|                                                                                                                                                             |    Purchases of investment securities | ** ** | ** ** |  |  |
|                                                                                                                                                             |       Available-for-sale | ** ** | **   (27,587)** |  | (71,963) |
|                                                                                                                                                             |       Held-to-maturity | ** ** | **   (16,609)** |  |             - |
|                                                                                                                                                             |    Net (increase) decrease in loans | ** ** | **   (18,726)** |  |     64,708 |
|                                                                                                                                                             |    Purchases of premises and equipment | ** ** | **        (602)** |  |        (723) |
|                                                                                                                                                             |    Purchase of single premium life  insurance contracts | ** ** | **        (253)** |  |        (190) |
|                                                                                                                                                             |                 Net cash provided by (used by) investing activities | ** ** | **   (14,949)** |  |     50,068 |
|                                                                                                                                                             |  | ** ** | ** ** |  |  |
| **FINANCING**                                                                                                                                               |    Net increase (decrease) in  noninterest-bearing and interest-bearing deposits | **       3,529** |  | (43,215) |
| **ACTIVITIES**                                                                                                                                              |    Net increase in short term borrowings | ** ** | **     13,396** |  |         182 |
|                                                                                                                                                             |    Cash dividends | ** ** | **     (3,329)** |  |     (3,183) |
|                                                                                                                                                             |                 Net cash provided by (used by) financing activities | ** ** | **     13,596** |  | (46,216) |
|                                                                                                                                                             |  | ** ** | ** ** |  |  |
|                                                                                                                                                             |                 Increase in cash and cash equivalents | ** ** | **       6,983** |  |     14,465 |
|                                                                                                                                                             |                 Cash and cash equivalents at beginning of period | ** ** | **     38,434** |  |     51,701 |
|                                                                                                                                                             |                 Cash and cash equivalents at end of period | **$** | **     45,417** | $ |     66,166 |
|       The accompanying  notes are an integral part of the consolidated financial statements.                                       | ** ** | ** ** | ** ** | ** ** |

** **

** **

**SELECTED NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS**

**NOTE 1 - OTHERINFORMATION**

The unaudited consolidated financial statements have beenprepared on a consistent basis and in accordance with the instructions to Form10-Q and do not include all of the information and notes required by generallyaccepted accounting principles for complete financial statements.  In theopinion of management, all adjustments considered necessary for a fairpresentation have been included.  These adjustments were of a normal,recurring nature and consistent with generally accepted accountingprinciples.  For further information, refer to the consolidated financialstatements and notes included in the Corporation's annual report on Form 10-Kfor the year ended December 31, 2003.

**NOTE 2 - STOCK DIVIDEND**

At the Annual Shareholders' Meeting on April 20, 2004, theCorporation announced a two-for-one stock split effected as a 100% stockdividend payable to shareholders of record as of April 20, 2004.  TheCorporation issued an additional share of common stock for each share of commonstock outstanding, which resulted in 5,840,000 shares of common stock issuedand outstanding at a par value of $10 per share.  The transaction wasrecorded as a transfer from retained earnings to common stock in the amount of$29,200,000 ($10 for each additional share issued).  All per share andshare data in the accompanying consolidated financial statements and footnoteshave been restated to give retroactive effect to this transaction.

** **

** **

**Item 2.  Management's Discussion and Analysis ofFinancial Condition and Results of Operations.**

**FORWARD-LOOKING STATEMENTS**

Certainstatements contained in this report may not be based on historical facts andare "forward-looking statements" within the meaning of Section 27A ofthe Securities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended. These forward-looking statements may beidentified by, among other things, the use of forward-looking terminology suchas "believes," "expects," "may,""will," "pro forma" or "anticipates," or thenegatives of such terms.  We caution you not to place undue reliance onsuch forward-looking statements in this report because results could differ materiallyfrom those anticipated due to a variety of factors.  These factorsinclude, but are not limited to, changes in economic conditions; fluctuationsin prevailing interest rates and the effectiveness of our risk monitoringsystems; the ability of our borrowers to repay loans; adverse changes in our specialmention credits; our ability to sell available-for-sale securities to fundincreased loan demand; our ability to meet regulatory capital adequacyrequirements; our ability to meet liquidity needs from operating activities;the accuracy of assumptions in our rate risk analysis; our ability to recognizedeferred tax assets; our ability to maintain credit quality; our ability toprovide market competitive products and services; laws and regulationsaffecting financial institutions in general; and other factors generallyunderstood to affect the financial results of financial services companies. 

**EXECUTIVE OVERVIEW**

At September 30, 2004, theCorporation's consolidated total assets were $847 million, its consolidated netloans were $434 million, its consolidated total deposits were $720 million, andits total shareholders' equity was $105 million.  During recent quarters,the Bank had experienced a decline in loan demand as a result of a slow localeconomy, evidenced by the closing of manufacturing plants and light commercialand industrial activity, and Bank credit quality initiatives.  Loan demandimproved in the second quarter as local economic conditions strengthened and newloan products and marketing efforts were introduced.  The improvement inloan growth continued in the third quarter of 2004 with the loan portfolioincreasing 5.5%.  Contributing to the Bank's loan growth were a substantialslowing in the runoff experienced during the last two fiscal years and the firstquarter of 2004; an increased volume of direct loans booked, and a portfolio ofloans purchased from another bank.  Average total deposits for the ninemonths ended September 30, 2004 were 5.8% lower than average deposits at December 31, 2003, with 16.1% of thetotal being non-interest bearing.  Shareholders' equity increased 2.6%compared to shareholders' equity at December 31, 2003.

**MATERIAL CHANGES IN FINANCIAL CONDITION**

Average earning assets for thenine months ended September 30, 2004 were down 4.4% from average earning assetsat December 31, 2003.  Lower loan volume in the first quarter of 2004reduced the nine months results, but as loan volume improved in the second andthird quarters, overnight investment of excess funds declined.  AtSeptember 30, 2004, average net loans decreased 6.8% from December 31, 2003,which was lower than the decreasein average net loans of 11.7% at September 30, 2003 from December 31, 2002. Average overnight investments were down $14.9 million or 65.2% at September 30,2004 compared to December 31, 2003, which was attributable to the improved loanvolume.  Average investment securities at September 30, 2004 increased3.4% compared to the average at December 31, 2003.  Average total assetsof $825 million at September 30, 2004 decreased 4.8% compared to $867 millionat December 31, 2003.

** **

** Securities**

Available-for-salesecurities are an integral part of the asset/liability management process forthe Bank.  Accordingly, they represent an important source of liquidityavailable to fund loans and accommodate asset reallocation strategies dictatedby changes in Bank operating and tax plans, shifting yield spread relationshipsand changes in configuration of the yield curve.  At September 30, 2004,the Bank's investment securities portfolio had $242.5 millionavailable-for-sale securities and $76.8 million held-to-maturity securitiescompared to $249.7 million available-for-sale securities and $79.1 millionheld-to-maturity securities at December 31, 2003.  The $7.2 million, or2.9%, decrease in available-for-sale securities resulted from not replacingmaturing securities and a sale of securities to fund loans as the demandimproved.  The Bank is likely to sell additional available-for-salesecurities as funding for anticipated increased loan demand when needed. The $2.3 million, or 2.9%, decrease in the held-to-maturity securities resultedfrom normal maturities in the portfolio not being replaced.

**Loans**

Theloan portfolio is the largest component of earning assets for the Bank and,consequently, provides the highest amount of revenues for theCorporation.  The loan portfolio also contains, as a result of thepossibility of unexpected deterioration in the credit quality of borrowers, thehighest exposure to risk in the Bank's earning assets.  When analyzingpotential loans, management assesses both interest rate objectives and creditquality objectives in determining whether to make a given loan and theappropriate pricing for that loan.  The loan portfolio is well diversifiedwith loans generally secured by tangible personal property, real property orstock.  The loans are expected to be repaid from cash flow or proceedsfrom the sale of selected assets of the borrowers.  Collateralrequirements for the loan portfolio are based on the credit worthiness of eachborrower.  The analysis and review of asset quality by the Bank's creditadministration includes a formal review that evaluates the adequacy of theallowance for possible loan losses.  This review is updated monthly andevaluated more completely on a quarterly basis in conjunction with loan reviewreports and management asset quality reports that are discussed in meetingswith loan officers, loan administration and a Bank Board of Directors oversightcommittee.  This evaluation supported a reversal of specific allocationsin the allowance during the second quarter of 2004 as a result of theresolution of certain problem loans associated with those specificallocations.  Credit quality continued to improve during the third quarteras indicated by declines in the volume of loans with past due payments andpotential problem loans.  The allowance for possible loan and lease losseswas $8.8 million or 1.97% of gross loans at September 30, 2004.  Thiscompares to $10.1 million or 2.4% at December 31, 2003.  Net charge-offsfor the nine months ended September 30, 2004 were $695,000, an annualized netcharge-off ratio of 0.21% of gross loans.  This compares to net charge-offsfor the nine months ended September 30, 2003 of $1.1million, or an annualized net charge-off ratio of 0.36% of gross loans. This improvement is another result of credit quality improvements and effectiveprocedures for addressing problem loans.

Managementhas developed a process to provide control over underwriting of loans and tomonitor the collectibility of loans.  This process includes education andtraining of lending personnel on the Bank's loan policies and procedures,credit analysts to support lenders in credit underwriting, timelyidentification of loans with adverse characteristics and control of correctiveactions, and objective monitoring of loan reviews.  A Special AssetsDepartment of the Bank identifies and monitors assets that needattention.  This process identified loans totaling $16.4 million, or 3.7%of the portfolio, at September 30, 2004 that were classified as special mentionloans.  This compares to loans totaling $10.8 million, 2.5% of theportfolio, so classified at December 31, 2003, and $4.7 million, 1.1% of theportfolio, so classified at September 30, 2003.  Special mention loans arein a transitional rating and, while swings in the volume are not unexpected,the Bank expects improvement in these credits and other special mention creditsas local market conditions continue to improve.  Loans totaling $10.9million, 2.5% of the portfolio, were classified as substandard at September 30,2004.  This compares to loans totaling $22.0 million, 5.2% of theportfolio, so classified at December 31, 2003 and $30.0 million, 6.9% of theportfolio, so classified at September 30, 2003.  Classified loanscontinued to improve in the third quarter of 2004.  Loans totaling $1.1million, 0.2% of the portfolio, were classified as doubtful at September 30,2004.  This compares to $1.9 million, 0.5% of the portfolio, so classifiedat December 31, 2003, and $1.5 million, 0.3% of the portfolio, so classified atSeptember 30, 2003.  Loans having recorded investments of $6.3 million,0.1% of the total portfolio, were identified as impaired at September 30, 2004compared to $11.9 million at December 31, 2003, and $14.2 million at September30, 2003.  These declines are a result of improved control overunderwriting of loans, early detection of developing problem loans, andeffective procedures for addressing problem loans.

There were write downs of other real estate associated withdeclines in real estate values subsequent to foreclosure and disposition of theproperties at less than their carrying value during the nine months endedSeptember 30, 2004 that were charged to current income.  The carryingvalue of other real estate is included in other assets on the balance sheet andrepresents real estate acquired through foreclosure, which is stated at thelower of cost or fair value minus cost to sell.  An allowance for otherreal estate owned is not maintained.  Any decreases or losses associatedwith the properties have been charged to current income.  Managementevaluates properties included in this category on a regular basis.  Thecarrying value for other real estate atSeptember 30, 2004, December 31, 2003, and September 30, 2003, totaled $0.97 million, $1.6 million, and $0.92 million,respectively.  The decrease during the nine months ended September 30,2004 is another result of effective procedures for addressing problem loans. The significant increase in the fourth quarter of 2003 was the foreclosure onone large property that was sold in the first quarter of 2004.

**Deposits**

           The Bank does not have any foreign offices and all deposits are serviced in itstwenty domestic offices.  The Bank's average deposits declined 5.8% duringthe nine months ended September 30, 2004 compared to a decline of 3.0% duringthe same period in 2003.  The primary reason for this decrease is a BankAsset/Liability Committee strategy to be less aggressive in bidding forshort-term large dollar certificates of deposit.  Average totalnoninterest-bearing deposits were 16.2% of total deposits at September 30,2004, contributing to the Bank's low cost of deposits.  This compares to14.2% at December 31, 2003 and 13.9% at September 30, 2003.  This steadyincrease in noninterest-bearing deposits reflects the strength of the Bank'score deposit base and improving local economic conditions.

** **

**RegulatoryRequirements for Capital**

TheCorporation and the Bank are subject to federal regulatory risk-adjustedcapital adequacy standards.  Failure to meet capital adequacy requirementscould result in certain mandatory and possibly additional discretionary actionsby regulators that could have an adverse material effect on the consolidatedfinancial statements of the Corporation and its subsidiary, the Bank.  Theregulations require the Bank to meet specific capital adequacy guidelines thatinvolve quantitative measures of assets, liabilities and certain off-balancesheet items as calculated under regulatory accounting practices.  Thecapital classification is also subject to qualitative judgments by theregulators about components, risk weightings and other factors.

           Quantitative measures established by regulation to ensure capital adequacyrequire the Corporation and the Bank to maintain minimum amounts and ratios ofTotal Capital and Tier I Capital to risk-weighted assets and of Tier I Capitalto average assets.   Equity capital (net of certain adjustments forintangible assets and investments in non-consolidated subsidiaries and certainclasses of preferred stock) are considered Tier 1 ("core") capital.  Tier 2("total") capital consists of core capital plus subordinated debt, some types ofpreferred stock and a defined percentage of the allowance for possible loanlosses.  At September 30, 2004, the Corporation's total risk-based and corecapital ratios were 19.6% and 18.4%, respectively.  The comparable ratioswere 18.7% and 17.5% at December 31, 2003.  At September 30, 2004, theBank's total risk-based and core capital ratios were 19.4% and 18.1%,respectively.  The comparable ratios were 18.5% and 17.2% at December 31,2003.  At September 30, 2004, the Corporation and the Bank had a ratio ofcore capital to average total assets of 11.2% and 11.1%, respectively, comparedto 10.3% and 10.2% at December 31, 2003.  Capital ratios for theCorporation and the Bank are different because of different dividend paymentsand additional assets held by the Corporation.  Management believes, at September 30, 2004, that theCorporation and the Bank met all capital adequacy requirements to which theyare subject.

**Liquidity and Capital****Resources**

           Most of the capital needs of the Bank have historically been financed withretained earnings and current deposit gathering, and the Corporation's primarysource of liquidity is dividends declared by the Bank.  The Corporationand the Bank do not have any long-term debt and do not have major plans forcapital expenditures in the near future.  The Corporation's averageshareholders' equity at September 30, 2004 was $103.4 million, a 0.7% increasefrom $102.7 million at December 31, 2003.  The approval of the Office of theComptroller of the Currency ("OCC") is required before the Bank's dividends ina given year may exceed the total of its net profit (as defined by the OCC) forthe year, combined with retained net profits of the preceding two years. At September 30, 2004, the Bank could have declared additional dividends ofapproximately $15.6 million, or $2.67 per share, without regulatory agencyapproval.  The Bank declared a $0.29 per share dividend, 0.11% of theallowable amount, in the second quarter of 2004.  Management believes thatthe Corporation's traditional sources of cash generated from the Bank'soperating activities are adequate to meet the Corporation's liquidity needs fornormal ongoing operations.

            The Bank maintains a formal asset and liability management process to controlinterest rate risk and assist management in maintaining reasonable stability inthe gross interest margin as a result of changes in the level of interest ratesand/or the spread relationships among interest rates.  The Bank uses anearnings simulation model to evaluate the impact of different interest ratescenarios on the gross margin.  Each month, the Asset/Liability Committeeof the Bank monitors the relationship of rate sensitive earning assets to ratesensitive interest bearing liabilities (interest rate sensitivity), which isthe principal factor used by the Bank's management in determining the effectthat fluctuating interest rates will have on future net interest income. Rate sensitive earning assets and interest bearing liabilities are financialinstruments that can be repriced to current market rates within a defined timeperiod.  A negative dollar change in net interest income for atwelve-month period of less than 4.5% ofnet interest income for any three hundred basis point shift in interest ratesis considered an acceptable rate risk position.  The rate risk analysisfor the twelve-month period beginning October 1, 2004 and ending September 30,2005 showed a worst-case potential change to net interest income of a negative1.7%, or a decline in net interest income of $532,000 based on facts currentlyavailable to management of the Bank.

**Critical Accounting Policies**

Theaccounting principles the Bank follows and the methods of applying theseprinciples conform with accounting principles generally accepted in the UnitedStates of America and with general practices within the banking industry. In connection with the application of those principles, Bank management hasmade judgments and estimates which, in the case of the determination of theallowance for loan losses ("ALLL") and the recognition of deferredincome tax assets, have been critical to the determination of the Bank'sfinancial position, results of operations and cash flows.  During the ninemonths ended September 30, 2004, there was no significant change in theCorporation's critical accounting policies and no significant change in theapplication of critical accounting policies as presented in the Corporation'sAnnual Report on Form 10-K for the year ended December 31, 2003.

**Allowance for Loan Losses**

          Management assesses the adequacy of the ALLL prior to the end of each month andprepares a more formal review each quarter to assess the risk in the Bank'sloan portfolio.  This assessment includes procedures to estimate theallowance and test the adequacy and appropriateness of the resultingbalance.  The ALLL represents calculated amounts for specificallyidentified credit exposure and exposures readily predictable by historical or comparativeexperience.  Even though this calculation considers specific credits, theentire allowance is available to absorb any credit losses.  There were nochanges in methodology or developments in this calculation process during thethird quarter of 2004

**Deferred Income Tax Assets**

Deferredincome tax assets consist mainly of the tax effect of excess provisions forloan losses over actual losses incurred and deferred compensation. Management believes that it is more likely than not that these assets will berealized in future years.  During the second quarter of 2004, the taxeffect of excess provisions for loan losses over actual losses incurreddeclined as specific allocations associated with the resolution of certainproblem loans, discussed above, were reversed.  The tax effect ofunrealized gains on available-for-sale securities decreased as the market valueof investment securities was less than the market value at December 31,2003.  This decline reduced the deferred income tax liability associated withsuch gains and net deferred income tax assets increased.  There were notany material changes in deferred income tax assets in the third quarter of 2004.

**Off-Balance Sheet Arrangements**

           TheBank is a party to financial instruments with off-balance sheet risk in thenormal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and stand-byletters of credit.  Those instruments involve, to varying degrees,elements of credit risk in excess of the amount recognized in the balancesheet.  The contract or notional amounts of those instruments reflect theextent of involvement the Bank has in those financial instruments.  Thetotal outstanding loan commitments and stand-by letters of credit in the normalcourse of business at September 30, 2004 were $69 million and $5 million,respectively, and at December 31, 2003 were $64 million and $7 million,respectively.  Loan commitments are agreements to lend to a customerprovided there is not a violation of any condition established in thecontract.  Stand-by letters of credit are conditional commitments issuedby the Bank to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowingarrangements, including commercial paper, bond financing and similartransactions.  The credit risk involved in issuing letters of credit isessentially the same as that involved in making a loan.  At September 30, 2004 and December 31, 2003, the Corporation and the Bank didnot have any off-balance sheet arrangements other than commitments to extendcredit and stand-by letters of credit discussed earlier.

**MATERIAL CHANGES IN RESULTS OF OPERATIONS**

            Totalinterest income of $28.1 million for the nine months ended September 30, 2004,was 14.2% lower than the total interest income of $32.8 million for the ninemonths ended September 30, 2003.  Interest and fees earned on loans andinvestments are the components of total interest income.  Interest andfees earned on loans decreased 18.1%, from $22 million to $18 million, duringthe nine months ended September 30, 2004 as compared to the same period of 2003as a result of the decrease in the volume of average loans during the ninemonths ended September 30, 2004, and lower interest rates on new loans.  Interest earned on investmentsecurities and other investments decreased 6.1% during the nine months endedSeptember 30, 2004 compared to the same period of 2003 as a result of lowerinterest yields on new purchases replacing higher yields on matauringsecurities.  

           Total interest expense of $6.3 million for the nine months ended September 30,2004 decreased 29.5%, $2.6 million, compared to $9.0 million for the ninemonths ended September 30, 2003 as a result of the decrease in the volume ofaverage deposits and reduced interest rates.  Asa policy, budgeted financial goals are monitored on a monthly basis by theBank's Asset/Liability Committee, which reviews the actual dollar change in netinterest income given different interest rate movements.

           Net interest income of the Corporation on a fully taxable equivalent basis isinfluenced primarily by changes in:

(1)               the volume and mix of earning assets andsources of funding;

(2)               market rates of interest; and 

(3)               income tax rates.

The impact of some of thesefactors can be controlled by management policies and actions.  Externalfactors also can have a significant impact on changes in net interest incomefrom one period to another.  Some examples of such factors are:

(1)               the strength of credit demands bycustomers;

(2)               Federal Reserve Board monetary policy;and

(3)               fiscal and debt management policies ofthe federal government, including changes in tax laws.

The net interest margin, ona tax equivalent basis, at September 30, 2004, December 31, 2003, and September30, 2003 was 4.07%, 4.21%, and 4.26%, respectively.

           There was a $677,000 reversal of specific allocations in the allowance for loanand lease losses during the nine months ended September 30, 2004 as a result ofthe resolution of certain loans associated with the specific allowances. This compares to an addition of $800,000 to the allowance during the ninemonths ended September 30, 2003.  While the Bank's credit quality hasimproved, continued efforts to achieve certain targeted credit quality goalsare ongoing.  These continued efforts, coupled with continued economicuncertainity, supported the current level of the allowance at September 30,2004.

           Noninterest income, not including a gain on the sale of available-for-salesecurities of $917,000 and a gain on the sale of assets of $519,000, increased5.7% from $7.6 million for the nine months ended September 30, 2004 compared to$7.2 million for the nine months ended September 30, 2003.  This increaseresulted from:

(1)    Income from fiduciaryservices provided in the Bank's trust department which was up 16.5% compared tothe nine months ended September 30, 2003 and represented approximately 20.7% ofnoninterest income; and

(2)    Servicefees, approximately 71% of noninterest income, which increased 0.7% compared tothe nine months ended September 30, 2003.

Noninterestexpenses, excluding the provision for possible loan losses, were $22.2 million, or 2.4% more in the nine months ended September 30, 2004 than $21.7 millionin the nine months ended September 30, 2003.  Salaries and benefitsexpense was up $569 thousand or 5.1% in this period as a result of an increasednumber of employees and standard increases in salaries.

Netincome for the nine months ended September 30, 2004 was $6.6 million comparedto $6.4 million for the nine months ended September 30, 2003.  Thisyielded $1.13 earnings per share for the nine months ended September 30, 2004and $0.33 earnings per share for the third quarter of 2004, compared to $1.09earnings per share for the nine months ended September 30, 2003 and $0.36 pershare for the third quarter of 2003.

TheCorporation and the Bank do not have any long-term debt or other material contractualobligations, with the exception of certain operating leases.  There hasnot been a change in these operating leases.

**Item 3.  Quantitative and Qualitative DisclosuresAbout Market Risk.**

During the nine months ended September 30, 2004, there were no materialchanges in quantitative and qualitative disclosures about market risk fromthose presented in the Corporation's Annual Report on Form 10-K for the yearended December 31, 2003. 

**Item 4. Controls and Procedures.**

(a) Evaluation ofDisclosure Controls and Procedures.  The Corporation carried out anevaluation, under the supervision and with the participation of management,including the Corporation's Chief Executive Officer and Chief FinancialOfficer, of the effectiveness of the design and operation of the Corporation'sdisclosure controls and procedures as of the end of the period covered by thisreport pursuant to Exchange Act Rule 13a-15.  Based upon that evaluation,the Chief Executive Officer and Chief Financial Officer concluded that theCorporation's disclosure controls and procedures were effective in ensuringthat information required to be disclosed by the Corporation (including theCorporation's consolidated subsidiaries) in reports that the Corporation filesor submits under the Securities Exchange Act of 1934, as amended, is recorded,processed, summarized and reported in a timely manner.

(b) Changes in InternalControl Over Financial Reporting.  There has been no change in theCorporation's internal control over financial reporting that occurred duringthe quarter ending September 30, 2004 that has materially affected, or isreasonably likely to materially affect, the Corporation's internal control overfinancial reporting.

 

 

**PART II - OTHER INFORMATION**

**Item 6.  Exhibits.**

(a)List of Exhibits:

EXHIBIT

NUMBER         DESCRIPTION

 

3.1       Charter. (a)

3.2       Articles of Amendment to Charter. (a)

3.3       By-laws. (a)

3.4       Amendment to By-laws. (b)

4.1      Form of Specimen Stock Certificate. (a)

31.1     Certification of the Chief Executive Officer of First Farmers and MerchantsCorporation Pursuant to Rule 13a-14(1) of the Securities Exchange Act of 1934,as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of2002.

31.2     Certification of the Chief Financial Officer of First Farmers and MerchantsCorporation Pursuant to Rule 13a-14(1) of the Securities Exchange Act of 1934,as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of2002.

32.1     Certification of the Chief Executive Officer and Chief Financial Officer ofFirst Farmers and Merchants Corporation Pursuant to 18 U.S.C. Section 1350, asAdopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

(a)          Incorporatedby reference from the First Farmers and Merchants Corporation Amendment No. 1to the Annual Report on Form 10-K/A for the year ended December 31, 2003, FileNumber 0-10972, as filed with the Securities and Exchange Commission on May 7,2004.

(b)       Incorporated by reference from the First Farmers and Merchants CorporationQuarterly Report on Form 10-Q for the quarter ended March 31, 2004, File Number0-10972. 

SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, theregistrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

|                                                                                                                                                                                                                                                                    | FIRST FARMERS AND MERCHANTS CORPORATION |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|
|                                                                                                                                                                                                                                                                    | (Registrant)                            |
|                                                                                                                                                                                                                                                                    |                                         |  |
| Date  October 29,  2004                                                                                                                                                                                               | By                                      | /s/ T. Randy Stevens |
|                                                                                     |                                         | T. Randy Stevens, President/Chief Executive Officer |
|                                                                                                                                                                                                                                                                    |                                         |  |
| Date  October 29,  2004                                                                                                                                                                                | By                                      | /s/ Patricia N. McClanahan |
|                                                  |                                         | Patricia N. McClanahan, Treasurer/Chief Financial  Officer |

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