##### Table of Contents



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, 2003

o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934


FOR THE TRANSITION PERIOD

FROM _______________ TO _______________

Commission File Number 2-90200

FIRST MCMINNVILLE CORPORATION

(Exact Name of Registrant As Specified in its Charter)


Tennessee
    
    62-1198119(State or Other Jurisdiction of
Incorporation or Organization)
    
    (IRS Employer Identification
Number)


200 East Main Street, McMinnville, TN 37110

(Address of Principal Executive Offices and Zip Code)


(931) 473-4402

(Registrants Telephone Number, Including Area Code)


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
    
    o


Indicate the number of shares outstanding of each of the issuers classes of
common stock as of the latest practicable date: November 12, 2003  1,043,818.

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

YES
    
    o
    
    NO
    
    x


1



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TABLE OF CONTENTS



|                                            |                                                                    |                                                   |  |  |  |  |  | 
|------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------------------- |  |  |  |  |  | 
|                                            | Item 1. Financial Statements                                      
|                                            |                                                                    | Consolidated Balance Sheets                      
|                                            |                                                                    | Consolidated Statements of Earnings              
|                                            |                                                                    | Consolidated Statements of Comprehensive Earnings
|                                            |                                                                    | Consolidated Statements of Cash Flows            
|                                            | Item 3. Quantitative and Qualitative Disclosures About Market Risk
|                                            | Item 4. Controls and Procedures                                   
|PART II. OTHER INFORMATION                 
|                                            | Item 1. LEGAL PROCEEDINGS                                         
|                                            | Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                 
|                                            | Item 3. DEFAULTS UPON SENIOR SECURITIES                           
|                                            | Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS     
|                                            | Item 5. OTHER INFORMATION                                         
|                                            | Item 6. EXHIBITS AND REPORTS ON FORM 8-K                          
|SIGNATURES                                 
|EX-31.1  SECTION 302 CFO CERTIFICATION     
|EX-31.2  SECTION 302 CFO CERTIFICATION     
|EX-32  SECTION 906 CEO AND CFO CERTIFICATON



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##### Table of Contents



PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsThe unaudited consolidated financial statements of the registrant and its wholly-owned subsidiary, First National
Bank of McMinnville (the Bank) and the Banks wholly-owned subsidiary, First Community Title & Escrow Company are as
follows:Consolidated Balance Sheets  September 30, 2003 and December 31, 2002.Consolidated Statements of Earnings  For the three months and nine months ended September 30, 2003 and 2002.Consolidated Statements of Comprehensive Earnings  For the three months and nine months ended September 30, 2003
and 2002.Consolidated Statements of Cash Flows  For the nine months ended September 30, 2003 and 2002.Item 2.
    
    Managements
Discussion and Analysis
of Financial Condition
and Results
of Operations.Item 3.
    
    Quantitative and
Qualitative Disclosures
about Market Risk.** Disclosures required by Item 3 are incorporated by
reference to Managements Discussion and Analysis of Financial
Condition and Results of Operations.Item 4.
    
    Controls and Procedures.PART II  OTHER INFORMATIONItem 1.
    
    Legal ProceedingsItem 2.
    
    Changes in Securities and Use of ProceedsItem 3.
    
    Defaults Upon Senior SecuritiesItem 4.
    
    Submission of Matters to a Vote of Security HoldersItem 5.
    
    Other InformationItem 6.
    
    Exhibits and Reports on Form 8-KSignatures


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FIRST MCMINNVILLE CORPORATION







Consolidated Balance Sheets

September 30, 2003 and December 31, 2002

(Unaudited)

September 30
    
    December 31,2003
    
    2002(In Thousands)AssetsLoans
    
    $
    146,929
    
    
    
    149,581Less: Allowance for loan losses
    
    
    (1,957
    )
    
    
    (1,908
    )Net loans
    
    
    144,972
    
    
    
    147,673Securities:Held to maturity, at cost (market value $59,938,000 and $52,968,000,
respectively)
    
    
    57,947
    
    
    
    50,956Available-for-sale, at market (amortized cost $86,084,000 and $73,215,000,
respectively)
    
    
    86,383
    
    
    
    74,442Federal funds sold
    
    
    11,200
    
    
    
    17,000Interest-bearing deposits in financial institutions
    
    
    95
    
    
    
    108Total earning assets
    
    
    300,957
    
    
    
    290,179Cash and due from banks
    
    
    6,421
    
    
    
    10,285Bank premises and equipment, net of accumulated depreciation
    
    
    2,195
    
    
    
    1,981Accrued interest receivable
    
    
    1,825
    
    
    
    1,856Deferred tax asset
    
    
    36
    
    
    
    Other real estate
    
    
    80
    
    
    
    Other assets
    
    
    375
    
    
    
    459Total assets
    
    $
    311,529
    
    
    
    304,760Liabilities and Stockholders EquityDeposits
    
    $
    230,231
    
    
    
    229,264Securities sold under repurchase agreements
    
    
    30,745
    
    
    
    25,994Deferred tax liability, net
    
    
    
    
    
    
    319Advances from Federal Home Loan Bank
    
    
    1,000
    
    
    
    1,000Accrued interest and other liabilities
    
    
    1,413
    
    
    
    2,785Total liabilities
    
    
    263,389
    
    
    
    259,362Stockholders equity:Common stock, no par value and $2.50 par value, respectively; authorized
5,000,000 shares issued 1,230,962 shares and 613,575 shares,
respectively reflects 2 for 1 stock split)
    
    
    3,660
    
    
    
    1,534Additional paid-in capital
    
    
    
    
    
    
    2,001Retained earnings
    
    
    48,339
    
    
    
    45,082Net unrealized gains on available-for-sale securities, net of income
taxes of $115,000 and $470,000, respectively
    
    
    184
    
    
    
    75752,183
    
    
    
    49,374Less cost of treasury stock of 187,144 shares and 92,826 shares, respectively
(reflects 2 for 1 stock split)
    
    
    (4,043
    )
    
    
    (3,976
    )Total stockholders equity
    
    
    48,140
    
    
    
    45,398Total liabilities and stockholders equity
    
    $
    311,529
    
    
    
    304,760


See accompanying notes to consolidated financial statements (unaudited).

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FIRST MCMINNVILLE CORPORATION

Consolidated Statements of Earnings

Three Months Ended September 30, 2003 and 2002
and Nine Months Ended September 30, 2003 and 2002
(Unaudited)

Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2003
    
    2002
    
    2003
    
    2002(Dollars In Thousands, Except Per Share Amount)Interest income:Interest and fees on loans
    
    $
    2,511
    
    
    
    2,679
    
    
    
    7,767
    
    
    
    7,961Interest and dividends on securities:Taxable securities
    
    
    886
    
    
    
    1,061
    
    
    
    2,664
    
    
    
    3,605Tax exempt from Federal income taxes
    
    
    411
    
    
    
    402
    
    
    
    1,227
    
    
    
    1,292Interest on federal funds sold
    
    
    47
    
    
    
    86
    
    
    
    171
    
    
    
    173Interest on interest-bearing deposits in other banks and
other interest
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Total interest income
    
    
    3,855
    
    
    
    4,228
    
    
    
    11,830
    
    
    
    13,032Interest expense:Interest on negotiable order of withdrawal accounts
    
    
    53
    
    
    
    115
    
    
    
    204
    
    
    
    351Interest on money market demand and savings accounts
    
    
    109
    
    
    
    181
    
    
    
    363
    
    
    
    577Interest on certificates of deposit
    
    
    900
    
    
    
    1,127
    
    
    
    2,826
    
    
    
    3,499Interest on securities sold under repurchase agreements
and short term borrowings
    
    
    75
    
    
    
    89
    
    
    
    246
    
    
    
    306Interest on Federal funds purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10Interest on advances from Federal Home Loan Bank
    
    
    14
    
    
    
    13
    
    
    
    42
    
    
    
    41Total interest expense
    
    
    1,151
    
    
    
    1,525
    
    
    
    3,681
    
    
    
    4,784Net interest income
    
    
    2,704
    
    
    
    2,703
    
    
    
    8,149
    
    
    
    8,248Provision for loan losses
    
    
    
    
    
    
    46
    
    
    
    59
    
    
    
    135Net interest Income after provision for
loan losses
    
    
    2,704
    
    
    
    2,657
    
    
    
    8,090
    
    
    
    8,113Other income:Service charges on deposit accounts
    
    
    114
    
    
    
    124
    
    
    
    345
    
    
    
    353Other fees and commissions
    
    
    90
    
    
    
    86
    
    
    
    260
    
    
    
    275Commissions and fees on fiduciary activities
    
    
    14
    
    
    
    12
    
    
    
    29
    
    
    
    33Security gains related to available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    3Gain on sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    Other income
    
    
    6
    
    
    
    12
    
    
    
    20
    
    
    
    36Total other income
    
    
    224
    
    
    
    234
    
    
    
    688
    
    
    
    700Other expenses:Salaries and employee benefits
    
    
    800
    
    
    
    771
    
    
    
    2,257
    
    
    
    2,140Occupancy expenses, net
    
    
    48
    
    
    
    54
    
    
    
    159
    
    
    
    156Furniture and equipment expense
    
    
    13
    
    
    
    15
    
    
    
    40
    
    
    
    45Data processing expense
    
    
    59
    
    
    
    52
    
    
    
    156
    
    
    
    186FDIC insurance
    
    
    9
    
    
    
    9
    
    
    
    28
    
    
    
    28Other operating expenses
    
    
    273
    
    
    
    227
    
    
    
    774
    
    
    
    743Total other expenses
    
    
    1,202
    
    
    
    1,128
    
    
    
    3,414
    
    
    
    3,298Earnings before income taxes
    
    
    1,726
    
    
    
    1,763
    
    
    
    5,364
    
    
    
    5,515Income taxes
    
    
    537
    
    
    
    615
    
    
    
    1,690
    
    
    
    1,736Net earnings
    
    $
    1,189
    
    
    
    1,148
    
    
    
    3,674
    
    
    
    3,779Basic earnings per common share
    
    $
    1.14
    
    
    
    1.11
    
    
    
    3.52
    
    
    
    3.64Diluted earnings per common share
    
    $
    1.12
    
    
    
    1.09
    
    
    
    3.47
    
    
    
    3.59Dividends per share
    
    $
    
    
    
    
    
    
    
    
    .40
    
    
    
    .375


See accompanying notes to consolidated financial statements (unaudited).

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FIRST MCMINNVILLE CORPORATION

Consolidated Statements of Comprehensive Earnings

Three Months and Nine Months Ended September 30, 2003 and 2002

(Unaudited)

Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(In Thousands)2003
    
    2002
    
    2003
    
    2002Net earnings
    
    $
    1,189
    
    
    
    1,148
    
    
    
    3,674
    
    
    
    3,779Other comprehensive earnings (losses), net of tax:Unrealized gains (losses) on available-for-sale
securities arising during period, net of income
taxes of $361,000, $214,000, $354,000 and
$450,000, respectively
    
    
    (582
    )
    
    
    345
    
    
    
    (570
    )
    
    
    730Less: reclassification adjustment for gains included
in net earnings, net of taxes of $1,000 in 2003
and 2002
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (2
    )Other comprehensive earnings (loss)
    
    
    (582
    )
    
    
    345
    
    
    
    (573
    )
    
    
    728Comprehensive earnings
    
    $
    607
    
    
    
    1,493
    
    
    
    3,101
    
    
    
    4,507


See accompanying notes to consolidated financial statements (unaudited).

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FIRST MCMINNVILLE CORPORATIONConsolidated Statements of Cash Flows

Nine Months Ended September 30, 2003 and 2002

Increase (Decrease) in Cash and Cash Equivalents

2003
    
    2002(In Thousands)Cash flows from operating activities:Interest received
    
    $
    11,826
    
    
    
    13,232Fees and commissions received
    
    
    654
    
    
    
    697Interest paid
    
    
    (3,836
    )
    
    
    (5,124
    )Cash paid to suppliers and employees
    
    
    (2,988
    )
    
    
    (2,822
    )Income taxes paid
    
    
    (1,818
    )
    
    
    (1,863
    )Net cash provided by operating activities
    
    
    3,838
    
    
    
    4,120Cash flows from investing activities:Proceeds from maturities of held-to-maturity securities
    
    
    20,719
    
    
    
    31,844Proceeds from maturities of available-for-sale securities
    
    
    88,928
    
    
    
    47,670Proceeds from sales of available-for-sale securities
    
    
    
    
    
    
    758Purchase of available-for-sale securities
    
    
    (101,758
    )
    
    
    (52,110
    )Purchase of held-to-maturity securities
    
    
    (27,710
    )
    
    
    (14,382
    )Loans made to customers, net of repayments
    
    
    2,562
    
    
    
    (9,326
    )Purchase of premises and equipment
    
    
    (369
    )
    
    
    Proceeds from sale of premises and equipment
    
    
    30
    
    
    
    Decrease in interest bearing deposits in financial institutions
    
    
    13
    
    
    
    69Proceeds from sale of other real estate
    
    
    
    
    
    
    193Net cash provided by (used in) investing activities
    
    
    (17,585
    )
    
    
    4,716Cash flows from financing activities:Net increase in non-interest bearing, savings and NOW
deposit accounts
    
    
    2,313
    
    
    
    6,511Net increase (decrease) in time deposits
    
    
    (1,346
    )
    
    
    8,338Increase in securities sold under repurchase agreement
    
    
    4,751
    
    
    
    76Decrease in Federal funds purchased
    
    
    
    
    
    
    (5,000
    )Dividends paid
    
    
    (1,693
    )
    
    
    (1,587
    )Payments to acquire treasury stock
    
    
    (68
    )
    
    
    (176
    )Proceeds from sales of common stock
    
    
    126
    
    
    
    22Proceeds from short-term borrowings
    
    
    
    
    
    
    30Repayment of short-term borrowings
    
    
    
    
    
    
    (30
    )Net cash provided by financing activities
    
    
    4,083
    
    
    
    8,184Net increase (decrease) in cash and cash equivalents
    
    
    (9,664
    )
    
    
    17,020Cash and cash equivalents at beginning of period
    
    
    27,285
    
    
    
    7,046Cash and cash equivalents at end of period
    
    $
    17,621
    
    
    
    24,066


See accompanying notes to consolidated financial statements (unaudited).

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FIRST MCMINNVILLE CORPORATION

Consolidated Statements of Cash Flows, Continued

Nine Months Ended September 30, 2003 and 2002

Increase (Decrease) in Cash and Cash Equivalents

(Unaudited)

2003
    
    2002(In Thousands)Reconciliation of net earnings to net cash provided by
operating activities:Net earnings
    
    $
    3,674
    
    
    
    3,779Adjustments to reconcile net earnings to net cash
provided by operating activities:Depreciation
    
    
    155
    
    
    
    149Provision for loan losses
    
    
    59
    
    
    
    135Security gains related to available-for-sale
    
    
    (4
    )
    
    
    (3
    )Gain on disposal of premises and equipment
    
    
    (30
    )
    
    
    Loss on sales of other real estate
    
    
    
    
    
    
    7FHLB dividend reinvestment
    
    
    (35
    )
    
    
    (29
    )Decrease in refundable income taxes
    
    
    73
    
    
    
    35Decrease in interest receivable
    
    
    31
    
    
    
    229Decrease in taxes payable
    
    
    (201
    )
    
    
    (162
    )Decrease in interest payable
    
    
    (155
    )
    
    
    (340
    )Decrease in other assets
    
    
    11
    
    
    
    8Increase in other liabilities
    
    
    260
    
    
    
    312Total adjustments
    
    
    164
    
    
    
    341Net cash provided by operating activities
    
    $
    3,838
    
    
    
    4,120Supplemental schedule of non-cash activities:Unrealized gain (loss) in value of securities available-for-sale,
net of income taxes of $355,000 and $450,000, respectively
    
    $
    (573
    )
    
    
    728Transfer of loans to other real estate
    
    $
    80
    
    
    
    100


See accompanying notes to consolidated financial statements (unaudited).

7Table of Contents

FIRST MCMINNVILLE CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

Basis of Presentation

The unaudited consolidated financial statements include the accounts of First
McMinnville Corporation (Company) and its wholly-owned subsidiary, The First
National Bank of McMinnville (Bank) and the Banks wholly-owned subsidiary,
First Community Title & Escrow Company.

The accompanying consolidated financial statements have been prepared, without
audit, in accordance with the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations.

In the opinion of management, the statements contain all adjustments and
disclosures necessary to summarize fairly the financial position of the Company
as of September 30, 2003 and December 31, 2002, the results of operations for
the nine months and three months ended September 30, 2003 and 2002,
comprehensive earnings for the nine months and three months ended September 30,
2003 and 2002 and changes in cash flows for the nine months ended September 30,
2003 and 2002. All significant intercompany transactions have been eliminated.
The interim consolidated financial statements should be read in conjunction
with the notes to the consolidated financial statements presented in the
Companys Annual Report on Form 10-K for the year ended December 31, 2002. The
results for interim periods are not necessarily indicative of results to be
expected for the complete fiscal year.

Stock Split and Elimination of Par Value

In December of 2002, the Companys Board of Directors declared a two-for-one
stock split. As a result, shareholders as of the record date received one
additional share for each share that they already owned. Accordingly, the
number of outstanding shares doubled from 520,794 to 1,041,588. In addition,
the Board authorized a charter amendment to eliminate par value, which was
deemed as unnecessary accounting convention. All share and option per share
amounts in this Report have been restated to reflect the stock split.

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FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED



|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations

The purpose of this discussion is to provide insight into the financial
condition and results of operations of the Registrant and its subsidiary. This
discussion should be read in conjunction with the consolidated financial
statements. Reference should also be made to the Companys Annual Report on
Form 10-K for the year ended December 31, 2002 for a more complete discussion
of factors that impact liquidity, capital and the results of operations.
Interim numbers are subject to customary year-end adjustments.

Forward-Looking Statements

Managements discussion of the Company, and managements analysis of the
Companys operations and prospects, and other matters, may include
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and other provisions of federal and state
securities laws. Although the Company believes that the assumptions underlying
such forward-looking statements contained in this Report are reasonable, any of
the assumptions could be inaccurate and, accordingly, there can be no assurance
that the forward-looking statements included herein will prove to be accurate.
The use of such words as expect, anticipate, project, assume, assumption,
forecast, and comparable terms should be understood by the reader to indicate
that the statement is forward-looking and thus subject to change in a manner
that can be unpredictable. Factors that could cause actual results to differ
from the results anticipated, but not guaranteed, in this Report, include
(without limitation) economic and social conditions, competition for loans,
mortgages, and other financial services and products, changes in interest
rates, unforeseen changes in liquidity, results of operations, and financial
conditions affecting the Companys customers, material unforeseen complications
related to addressing Year 2000 issues (both as to the Company and as to its
customers, vendors, consultants and governmental agencies), as well as other
risks that cannot be accurately quantified or completely identified. Many
factors affecting the Companys financial condition and profitability,
including changes in economic conditions, the volatility of interest rates,
political events and competition from other providers of financial services
simply cannot be predicted. Because these factors are unpredictable and beyond
the Companys control, earnings may fluctuate from period to period. The
purpose of this type of information (such as in Item 2, as well as other
portions of this Report) is to provide Form 10-Q readers with information
relevant to understanding and assessing the financial conditions and results of
operations of the Company, and not to predict the future or to guarantee
results. The Company is unable to predict the types of circumstances,
conditions, and factors that can cause anticipated results to change. Except
as may be expressly required by applicable law, the Bank does not
undertake  and specifically disclaims any plan or obligation  to publicly release the
result of any revisions that may be made to any forward-looking statements to
reflect actual events, changes, circumstances or results.

Liquidity and Interest Rate Sensitivity Management

The concept of liquidity involves the ability of the Company and its
subsidiary to meet future cash flow requirements, particularly those of
customers who are either withdrawing funds from their accounts or borrowing to
meet their credit needs.

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FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED



|        |                                                                                                 
|------- | ------------------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued

Proper asset/liability management is designed to maintain stability in the
balance of interest-sensitive assets to interest-sensitive liabilities in order
to provide a stable growth in net interest margins. Earnings on
interest-sensitive assets such as loans tied to the prime rate of interest and
federal funds sold, may vary considerably from fixed rate assets such as
long-term investment securities and fixed rate loans. Interest-sensitive
liabilities such as large certificates of deposit and money market
certificates, generally require higher costs than fixed rate instruments such
as passbook savings.

The Company maintains a formal asset and liability management process to
quantify, monitor and control interest rate risk and to assist management in
maintaining stability in the net interest margin under varying interest rate
environments. The Company accomplishes this process through the development
and implementation of lending, funding and pricing strategies designed to
maximize net interest income under varying interest rate environments subject
to specific liquidity and interest rate risk guidelines.

Analysis of rate sensitivity and rate gap analysis are the primary tools
used to assess the direction and magnitude of changes in net interest income
resulting from changes in interest rates. Included in the analysis are cash
flows and maturities of financial instruments held for purposes other than
trading, changes in market conditions, loan volumns and pricing and deposit
volumn and mix. These assumptions are inherently uncertain, and, as a result,
interest income can not be precisely estimated nor can the impact of higher or
lower interest rates on net interest income be precisely predicted. Actual
results will differ due to timing, magnitude and frequency of interest rate
changes and changes in market conditions, and managements strategies, among
other factors.

Based on the results of the analysis as of September 30, 2003, the Company
would expect net interest income to decrease approximately $207,000 over a
twelve month period if rates increased 2%. Net interest income would be
expected to increase approximately $207,000 over a 12 month period should rates
decrease 2%. The rate sensitivity as of September 30, 2003 was
1.14 to 1.0
(0-91 days) and 1.07 to 1.0 (0-365 days). This asset/liability mismatch in
pricing is referred to as gap and is measured as rate sensitive assets
divided by rate sensitive liabilities for a defined time period. A gap of 1.0
means that assets and liabilities are perfectly matched as to pricing within a
specific time period and interest rate movements will not affect net interest
margin, assuming all other factors hold constant.

Banks, in general, must maintain large cash balances to meet day-to-day
cash flow requirements as well as maintaining required reserves for regulatory
agencies. The cash balances maintained are the primary source of liquidity.
Federal funds sold, which are basically overnight or short-term loans to other
banks that increase the other banks required reserves, are also a major source
of liquidity.

The Companys investment portfolio consists of earning assets that provide
interest income. For those securities classified as held-to-maturity the
Company has the ability and intention to hold these securities until maturity.
Securities classified as available for sale include securities intended to be
used as part of the Companys asset/liability strategy and/or securities that
may be sold in response to changes in interest rate, prepayment risk, the need
or desire to increase capital and similar economic factors. Securities
totaling approximately $1.3 million mature or reprice within the next twelve
months.

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FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED



|        |                                                                                                 
|------- | ------------------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations,
Continued

A secondary source of liquidity is the Banks loan portfolio. At
September 30, 2003 commercial, consumer and other loans of approximately $35.1
million and mortgage loans of approximately $10.6 million either will become
due or will be subject to rate adjustments within twelve months. Emphasis
continues to be placed on structuring adjustable rate loans.

As for liabilities, certificates of deposit of $100,000 or greater of
approximately $34.1 million will become due during the next twelve months. The
Banks deposit base increased approximately $967,000 during the nine months
ended September 30, 2003. Securities sold under repurchase agreements
increased approximately $4.8 million during the nine months ended September 30,
2003. The increase in securities sold under agreements to resell was
approximately $3.3 million during the quarter ended September 30, 2003. The
deposit base increased approximately $14.8 million during the nine months ended
September 30, 2002. Federal funds sold were $11.2 million at September 30,
2003 and $24 million at June 30, 2003. Federal funds sold were $17 million at
December 31, 2002. Advances from the Federal Home Loan Bank were $1,000,000 at
September 30, 2003, June 30, 2003 and December 31, 2002.

Historically, there has been no significant reduction in immediately
withdrawable accounts such as negotiable order of withdrawal accounts, money
market demand accounts, demand deposit and regular savings. Management
anticipates that there will be no significant withdrawals from these accounts
except as discussed in the preceding paragraph.

The Subsidiary Bank is limited by law, regulation and prudence as to the
amount of dividends that it can pay. At September 30, 2003, the Bank can
declare during the remainder of 2003 cash dividends in an aggregate amount not
to exceed approximately $7.8 million, exclusive of any 2003 net earnings,
without prior approval of the Comptroller of the Currency. However, most of
these funds will be retained for use in the Banks operations rather than being
paid out in dividends. It is anticipated that with present maturities, the
anticipated growth in deposit base, and the efforts of management in its
asset/liability management program, liquidity will not pose a problem in the
foreseeable future. At the present time there are no known trends or any known
commitments, demands, events or uncertainties that management believes will
result in or that are reasonably likely to result in the Companys liquidity
changing in any material way.

Capital Resources

A primary source of capital is internal growth through retained earnings.
The ratio of stockholders equity to total assets was 15.5% at September 30,
2003 and 14.9% at December 31, 2002. The increase in the ratio resulted
primarily from net earnings of $3,674,000 during the nine months ended
September 30, 2003. Total assets increased 2.2% during the nine months ended
September 30, 2003. The annualized rate of return on stockholders equity for
the first nine months of 2003 was 10.6% compared to 11.8% for the comparable
period in 2002. Principally because of the relatively high percentage of
equity capital, the return on equity is lower than the reported average for
many banks in the Banks peer group. Dividends of $417,000 and $389,000 or
$.40 and $.375 per share were declared in

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##### Table of Contents



FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED



|        |                                                                                                 
|------- | ------------------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations,
Continued

Capital Resources, Continued

the nine months ended September 30, 2003 and 2002, respectively. Cash
dividends will be increased in the remainder of 2003 over 2002 only in the
discretion of the Board of Directors and as profits permit. Dividends paid
during 2002 were $1.60 per share. No material changes in the mix or cost of
capital is anticipated in the foreseeable future. At the present time, there
are no material commitments for capital expenditures.

Regulations of the Comptroller of the Currency establish required minimum
capital levels for the Bank. Under these regulations, national banks must
maintain certain capital levels as a percentage of average total assets
(leverage capital ratio) and as a percentage of total risk-based assets
(risk-based capital ratio). Under the risk-based requirements, various
categories of assets and commitments are assigned a percentage related to
credit risk ranging from 0% for assets backed by the full faith and credit of
the United States to 100% for loans other than residential real estate loans
and certain off-balance sheet commitments. Total capital is characterized as
either Tier 1 capital which includes common shareholders equity, noncumulative
perpetual preferred stock and a limited amount of cumulative perpetual
preferred  or Tier 2 capital which includes the allowance for loan losses up
to 1.25% of risk weighted assets, perpetual preferred stock, subordinated debt
and various other hybrid capital instruments, subject to various limits.
Goodwill is not includable in Tier 1 or Tier 2 capital. National banks must
maintain a Tier 1 capital to risk-based assets of at least 4.0%, a total
capital to risk-based assets ratio of at least 8.0% and a leverage capital
ratio defined as Tier 1 capital to average total assets of at least 4.0%. The
same ratios are also required in order for a national bank to be considered
adequately capitalized under the OCCs prompt corrective action
regulations, which impose certain operating restrictions on institutions which
are not adequately capitalized. As of September 30, 2003, the Bank has a Tier
1 risk-based ratio of 28.3%, a total capital to risk-based ratio of 29.5% and a
Tier 1 leverage ratio of 15.4%, and was thus in the well capitalized category
under the regulations.

The Federal Reserve Board imposes consolidated capital guidelines on bank
holding companies which have more than $150 million in consolidated assets.
These guidelines require bank holding companies to maintain consolidated
capital ratios which are essentially the same as the minimum capital levels
required for national banks. The Companys consolidated capital ratios were
substantially the same as those set forth above for the Bank, and exceeded the
minimums required under these Federal Reserve Board guidelines at September 30,
2003.

Stock Option Plan

In April, 1997, the stockholders of the Company approved the First
McMinnville Corporation 1997 Stock Option Plan (The Stock Option Plan). The
Stock Option Plan provides for the granting of stock options and authorizes the
issuance of common stock upon the exercise of such options for up to 115,000
(57,500 before 2 for 1 split) shares of common stock to directors and employees
of the Company.

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FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued

Stock Option Plan, Continued

Under the Stock Option Plan awards may be granted in the form of incentive
stock options or nonstatutory stock options, and are exercisable for up to ten
years following the date such option awards are granted. Exercise prices of
incentive stock options must be equal to or greater than 100% of the fair
market value of the common stock on the grant date.

SFAS No. 123, Accounting for Stock Based Compensation, as amended by
SFAS No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure, sets forth the method for recognition of cost of plans similar to
those of the Company. As is permitted, management has elected to continue
accounting for the plan under APB Opinion 25 and related Interpretations in
accounting for its plan. Accordingly, no compensation cost has been recognized
for the stock option plan. However, under SFAS No. 123, the Company is
required to make proforma disclosures as if cost had been recognized in
accordance with the pronouncement. Had compensation cost for the Companys
stock option plan been determined based on the fair value at the grant dates
for awards under the plan consistent with the method of SFAS No. 123, the
Companys net earnings and basic earnings per common share and diluted earnings
per common share for the three months and nine months ended September 30, 2003
and 2002, respectively, would have been reduced to the proforma amounts
indicated below:

Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(In Thousands)
    
    2003
    
    2002
    
    2003
    
    2002Net earnings:As Reported
    
    $
    1,189
    
    
    
    1,148
    
    
    
    3,674
    
    
    
    3,779Proforma
    
    $
    1,186
    
    
    
    1,145
    
    
    
    3,665
    
    
    
    3,769Basic earnings per common share:As Reported
    
    $
    1.14
    
    
    
    1.11
    
    
    
    3.52
    
    
    
    3.64Proforma
    
    $
    1.14
    
    
    
    1.10
    
    
    
    3.51
    
    
    
    3.63Diluted earnings per common share:As Reported
    
    $
    1.12
    
    
    
    1.09
    
    
    
    3.47
    
    
    
    3.59Proforma
    
    $
    1.12
    
    
    
    1.09
    
    
    
    3.47
    
    
    
    3.58


Accordingly, due to the initial phase-in period, the effects of applying
this statement for proforma disclosures are not likely to be representative of
the effects on reported net earnings for future years.

Results of Operations

Net earnings were $3,674,000 for the nine months ended September 30, 2003
as compared to $3,779,000 for the same period in 2002. Net earnings were
$1,189,000 for the quarter ended September 30, 2003 as compared to $1,148,000
during the same quarter in 2002.

As in most financial institutions, a major element in analyzing the
statement of earnings is net interest income which is the excess of interest
earned over interest paid. The net interest margin could be materially
affected during periods of volatility in interest rates.

13



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##### Table of Contents



FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued

Results of Operations, Continued

The Companys interest income, excluding tax equivalent adjustments,
decreased by $1,202,000 or 9.2% during the nine months ended September 30, 2003
as compared to the comparable period in 2002. Interest income for the quarter
ended September 30, 2003 decreased $373,000 or 8.8% when compared to the
quarter ended September 30, 2002 and $116,000 or 2.9% as compared to the second
quarter of 2003. The decrease for the third quarter of 2003 compared to the
same period in 2002 and compared to the quarter ended June 30, 2003 was
primarily attributable to a decrease in interest rates during the fourth
quarter of 2002 and during 2003. The ratio of average earning assets to total
average assets was 95.7% for the nine months ended September 30, 2003 as
compared to 96.1% for the same period in 2002.

Interest expense decreased by $1,103,000 for the nine months ended
September 30, 2003 or 23.1% as compared to the same period in 2002. Interest
expense for the quarter ended September 30, 2003 decreased $374,000 or 24.5% as
compared to the quarter ended September 30, 2002. Interest expense for the
quarter ended September 30, 2003 decreased $89,000 or 7.2% over the quarter
ended June 30, 2003. The decreases in interest expense can be attributable
primarily to decreases in interest rates over the past twelve months.

The foregoing resulted in net interest income of $8,149,000 for the nine
months ended September 30, 2003, a decrease of $99,000 or 1.2% compared to the
prior year period. Net interest income for the quarter ended September 30,
2003 increased $1,000 as compared to the third quarter of 2002. Net interest
income for the quarter ended September 30, 2003 decreased $27,000 or 1.0% as
compared to the quarter ended June 30, 2003.

The following schedule details the loans of the Company at September 30,
2003 and December 31, 2002:

September 30,
    
    December 31,2003
    
    2002(In Thousands)Commercial, financial and agricultural
    
    $
    43,943
    
    
    
    44,451Real estate  construction
    
    
    5,922
    
    
    
    5,674Real estate  mortgage
    
    
    94,200
    
    
    
    96,960Consumer
    
    
    2,864
    
    
    
    2,496$
    146,929
    
    
    
    149,581


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FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued

Results of Operations, Continued

The provision for loan losses was $59,000 and $135,000 for the first nine
months of 2003 and 2002, respectively. There was no provision for loan losses
during the quarter ended September 30, 2003. The provision was $46,000 for the
quarter ended September 30, 2002. The provision for loan losses is based on
past loan experience and other factors which, in managements judgment, deserve
current recognition in estimating possible loan losses. Such factors include
past loan loss experience, growth and composition of the loan portfolio, review
of specific loan problems, the relationship of the allowance for loan losses to
outstanding loans, and current economic conditions that may affect the
borrowers ability to repay. Management has in place a system that is designed
to identify and to monitor loan problems on a timely basis. This is not an
exact science. From time to time unscheduled developments, including
requirements of bank regulatory agencies, may require additional contributions
to the reserve.

The Company accounts for impaired loans under the provisions of Statement
of Financial Accounting Standards (SFAS) No. 114, Accounting by Creditors
for Impairment of a Loan and SFAS No. 118, Accounting by Creditors for
Impairment of a Loan  Income Recognition and Disclosures. These
pronouncements apply to impaired loans except for large groups of
smaller-balance homogeneous loans that are collectively evaluated for
impairment including credit card, residential mortgage, and consumer
installment loans.

A loan is deemed to be impaired when it is probable that the Company will
be unable to collect the scheduled payments of principal and interest due under
the contractual terms of the loan agreement. Impaired loans are measured at
the present value of expected future cash flows discounted at the loans
effective interest rate, at the loans observable market price, or the fair
value of the collateral if the loan is collateral dependent. If the measure of
the impaired loan is less than the recorded investment in the loan, the Company
shall recognize an impairment by creating a valuation allowance with a
corresponding charge to the provision for loan losses or by adjusting an
existing valuation allowance for the impaired loan with a corresponding charge
or credit to the provision for loan losses.

The Companys first mortgage single family residential and consumer loans
which total approximately $59,715,000 and $2,864,000, respectively at September
30, 2003, are divided into various groups of smaller-balance homogeneous loans
that are collectively evaluated for impairment and thus are not subject to the
provisions of SFAS Nos. 114 and 118. Substantially all other loans of the
Company are evaluated for impairment under the provisions of SFAS Nos. 114 and
118.

The Company considers all loans on nonaccrual status to be impaired.
Loans are placed on nonaccrual status when doubt as to timely collection of
principal or interest exists, or when principal or interest is past due 90 days
or more unless such loans are well-secured and in the process of collection.
Delays or shortfalls in loan payments are evaluated with various other factors
to determine if a loan should be considered to be impaired. Generally,
delinquencies under 90 days are considered insignificant unless certain other
factors are present which indicate impairment is probable. The decision to
place a loan on nonaccrual status is also based on an evaluation of the
borrowers financial condition, collateral, liquidation value, and other
factors that affect the borrowers ability to pay.

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FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued

Results of Operations, Continued

Generally, at the time a loan is placed on nonaccrual status, all interest
accrued on the loan in the current fiscal year is reversed from income, and all
interest accrued and uncollected from the prior year is charged off against the
allowance for loan losses. Thereafter, interest on nonaccrual loans is
recognized as interest income only to the extent that cash is received and
future collection of principal is not in doubt. If the collectibility of
outstanding principal is doubtful, such interest received is applied as a
reduction of principal. A nonaccrual loan may be restored to accruing status
when principal and interest are no longer past due and unpaid and future
collection of principal and interest on a timely basis is not in doubt. At
September 30, 2003 and 2002, the Company had no loans on nonaccrual status and
there were no nonaccrual loans outstanding at any time during the two nine
month periods then ended.

Loans not on nonaccrual status are classified as impaired in certain cases
where there is inadequate protection by the current net worth and financial
capacity of the borrower or of the collateral pledged, if any. In those cases,
such loans have a well-defined weakness or weaknesses that jeopardize the
liquidation of the debt, and if such deficiencies are not corrected, there is a
probability that the Company will sustain some loss. In such cases, interest
income continues to accrue as long as the loan does not meet the Companys
criteria for nonaccrual status.

Generally, the Company also classifies as impaired any loans the terms of
which have been modified in a troubled debt restructuring after January 1,
1995. Interest is accrued on such loans that continue to meet the modified
terms of their loan agreements. At September 30, 2003, the Company had one
loan totaling $639,000 that has had the terms restructured.

The Companys charge-off policy for impaired loans is similar to its
charge-off policy for all loans in that loans are charged-off in the month when
they are considered uncollectible.

Impaired loans and related allowance for loan loss amounts at September
30, 2003 and December 31, 2002 were as follows:

September 30,
    
    December 31,2003
    
    2002Recorded
    
    Recorded(In Thousands)
    
    Investment
    
    InvestmentRecorded investment
    
    $
    2,845
    
    
    $
    1,740Allowance for loan losses
    
    $
    581
    
    
    $
    533


The allowance for loan loss related to impaired loans was measured based
upon the estimated fair value of related collateral. The estimation of
collateral fair value is not an exact science and involves subjective
judgments which are not guaranteed.

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FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued

Results of Operations, Continued

The average recorded investment in impaired loans for the nine months
ended September 30, 2003 and 2002 was $3,697,000 and $1,928,000, respectively.
The related amount of interest income recognized on the accrual method for the
period that such loans were impaired was approximately $215,000 and $119,000
for 2003 and 2002, respectively.

The following schedule details selected information as to non-performing
loans of the Company at September 30, 2003:

September 30, 2003
    
    December 31, 2002Past Due
    
    
    
    
    
    Past Due90 Days
    
    Non-Accrual
    
    90 Days
    
    Non-Accrual(In Thousands)
    
    (In Thousands)Real estate mortgage
    
    $
    430
    
    
    
    
    
    
    $
    57
    
    
    
    Real estate  construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Installment loans
    
    
    7
    
    
    
    
    
    
    
    12
    
    
    
    Commercial
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    $
    485
    
    
    
    
    
    
    $
    69
    
    
    
    Renegotiated loans
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    


Transactions in the allowance for loan losses were as follows:

Nine Months EndedSeptember 30,2003
    
    2002Balance, January 1, 2003 and 2002,
respectively
    
    $
    1,908
    
    
    
    1,804Add (deduct):Losses charged to allowance
    
    
    (27
    )
    
    
    (127
    )Recoveries credited to allowance
    
    
    17
    
    
    
    41Provision for loan losses
    
    
    59
    
    
    
    135Balance, September 30, 2003 and 2002,
respectively
    
    $
    1,957
    
    
    
    1,853


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FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued

Results of Operations, Continued

The following table presents total internally graded loans as of September
30, 2003 and December 31, 2002:

September 30, 2003(In Thousands)
    
    SpecialTotal
    
    Mention
    
    Substandard
    
    DoubtfulCommercial, financial and
agricultural
    
    $
    6,594
    
    
    
    2,921
    
    
    
    3,673
    
    
    
    Real estate mortgage
    
    
    2,922
    
    
    
    
    
    
    
    2,885
    
    
    
    37Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    138
    
    
    
    
    
    
    
    138
    
    
    
    $
    9,654
    
    
    
    2,921
    
    
    
    6,696
    
    
    
    37


December 31, 2002(In Thousands)
    
    SpecialTotal
    
    Mention
    
    Substandard
    
    DoubtfulCommercial, financial and
agricultural
    
    $
    7,930
    
    
    
    6,141
    
    
    
    1,756
    
    
    
    33Real estate mortgage
    
    
    2,063
    
    
    
    481
    
    
    
    1,582
    
    
    
    Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    150
    
    
    
    8
    
    
    
    142
    
    
    
    $
    10,143
    
    
    
    6,630
    
    
    
    3,480
    
    
    
    33


The increase in the internally graded loans is concentrated in three loans
that were downgraded during the nine months ended September 30, 2003. All of
the loans are performing and management believes there is adequate collateral
on each loan. The loans were downgraded due to anticipated decreases in these
customers projected cash flows primarily due to a slowing down economy. Two
of the loans are secured by commercial and residential rental property and one
loan is secured by property on which a restaurant is located.

Residential real estate loans that are graded substandard totaling
$2,885,000 and $1,582,000 at September 30, 2003 and December 31, 2002,
respectively, consist of approximately forty individual loans that have been
graded accordingly due to bankruptcies, inadequate cash flows and
delinquencies. No material losses on these loans is anticipated by management.

The collateral values, based on estimates received by management, securing
the above internally graded loans total approximately $18,254,000 ($3,972,000
related to real property and $14,282,000 related to commercial and other
loans). Such loans are listed as classified when information obtained about
possible credit problems of the borrower has prompted management to question
the ability of the borrower to comply with the agreed repayment terms. The
loan classifications do not represent or result from trends or uncertainties
which management expects will materially and adversely affect future operating
results, liquidity or capital resources.

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FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued

Results of Operations, Continued

The Company maintains an allowance for loan losses which management
believes is adequate to absorb loses inherent in the loan portfolio. A formal
review is prepared bi-monthly by the Loan Review Committee to assess the risk
in the portfolio and to determine the adequacy of the allowance for loan
losses. The review includes analysis of historical performance, the level of
non-performing and adversely rated loans, specific analysis of certain problem
loans, loan activity since the previous assessment, reports prepared by the
Loan Review Committee, consideration of current economic conditions, and other
pertinent information. The level of the allowance to net loans outstanding
will vary depending on the overall results of this bi-monthly assessment. The
review is presented to and subsequently approved by the Board of Directors.

The following detail provides a breakdown of the allocation of the
allowance for possible loans losses:

September 30, 2003
    
    December 31, 2002Percent of
    
    
    
    
    
    Percent ofLoans In
    
    
    
    
    
    Loans InIn
    
    Each Category
    
    In
    
    Each CategoryThousands
    
    To Total Loans
    
    Thousands
    
    To Total LoansCommercial, financial and
agricultural
    
    $
    1,351
    
    
    
    30
    %
    
    $
    1,426
    
    
    
    30
    %Real estate construction
    
    
    15
    
    
    
    4
    
    
    
    14
    
    
    
    4Real estate mortgage
    
    
    536
    
    
    
    64
    
    
    
    419
    
    
    
    65Consumer
    
    
    55
    
    
    
    2
    
    
    
    49
    
    
    
    1$
    1,957
    
    
    
    100
    %
    
    $
    1,908
    
    
    
    100
    %


There were no material amounts of other interest-bearing assets
(interest-bearing deposits with other banks, municipal bonds, etc.) at
September 30, 2003 which would be required to be disclosed as past due,
non-accrual, restructured or potential problem loans, if such interest-bearing
assets were loans.

Non-interest income, exclusive of security gains, was $684,000 for the
nine months ended September 30, 2003 as compared to $697,000 in 2003. There
was a decrease during the quarter ended September 30, 2003 of $10,000 or 4.3%
as compared to the comparable quarter in 2002. Non-interest income for the
nine months ended September 30, 2003 included a gain on sale of fixed assets of
$30,000 which related to the sale of proof machines which the subsidiary bank
had replaced. There were decreases in credit life premiums $8,500, document
preparation fees $8,200 and appraisal fees $23,000. Commissions and service
charges are monitored continually to seek maximum return based on costs and
competition.

Securities gains during the nine months ended September 30, 2003 and 2002,
respectively, amounted to $4,000 and $3,000. These gains related to
transactions in the available-for-sale category. These gains were incurred
primarily in conjunction with managements strategy to restructure the
investment portfolio to improve the quality of the portfolio, to improve
maturity distribution and to maintain a flexible position to react to market
conditions.

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FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued

Results of Operations, Continued

Non-interest expense was $3,414,000 and $3,298,000 for the nine months
ended September 30, 2003 and 2002, respectively. Non-interest expense was
$1,202,000 and $1,128,000 for each quarter ended September 30, 2003 and 2002,
respectively. This increase for the nine month period was due primarily to an
increase of $117,000 in salaries and employee benefits.

Management is not aware of any current recommendations by the regulatory
authorities which, if implemented, would have a material adverse effect on the
Companys liquidity, capital resources or operations.

The following is a summary of components comprising basic and diluted
earnings per share (EPS) for the three and nine months ended September 30, 2003
and 2002:

Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(In Thousands, except share amounts)
    
    2003
    
    2002
    
    2003
    
    2002Basic EPS Computation:Numerator  income available to common
shareholders
    
    $
    1,189
    
    
    
    1,148
    
    
    
    3,674
    
    
    
    3,779Denominator  weighted average number
of common shares outstanding
    
    
    1,043,623
    
    
    
    1,037,946
    
    
    
    1,042,944
    
    
    
    1,039,558Basic earnings per common share
    
    $
    1.14
    
    
    
    1.11
    
    
    
    3.52
    
    
    
    3.64Diluted EPS Computation:Numerator
    
    $
    1,189
    
    
    
    1,148
    
    
    
    3,674
    
    
    
    3,779Denominator:Weighted average number of common
shares outstanding
    
    
    1,043,623
    
    
    
    1,037,946
    
    
    
    1,042,944
    
    
    
    1,039,558Dilutive effect of stock options
    
    
    14,324
    
    
    
    13,292
    
    
    
    14,324
    
    
    
    13,2921,057,947
    
    
    
    1,051,238
    
    
    
    1,057,268
    
    
    
    1,052,850Diluted earnings per common share
    
    $
    1.12
    
    
    
    1.09
    
    
    
    3.47
    
    
    
    3.59


Impact of Inflation

The primary impact which inflation has on the results of the Companys
operations is evidenced by its effects on interest rates. Interest rates tend
to reflect, in part, the financial markets expectations of the level of
inflation and, therefore, will generally rise or fall as the level of expected
inflation fluctuates. To the extent interest rates paid on deposits and other
sources of funds rise or fall at a faster rate than the interest income earned
on funds, loans or invested, net interest income will vary. Inflation also
affects non-interest expenses as goods and services are purchased, although
this has not appeared to have a significant effect on net earnings. If the
inflation rate stays flat or increases slightly, the effect on profits is not
expected to be significant.

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FIRST MCMINNVILLE CORPORATION

FORM 10-Q, CONTINUED




Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Companys primary component of market risk is interest rate
volatility. Fluctuations in interest rates will ultimately impact both the
level of income and expense recorded on a large portion of the Companys assets
and liabilities, and the market value of all interest-earning assets and
interest-bearing liabilities, other than those which possess a short term to
maturity such as Federal funds sold or purchased and loans, securities and
deposits. Based upon the nature of the Companys current operations, the
Company is not subject to foreign currency exchange or commodity price risk.

Interest rate risk (sensitivity) management focuses on the earnings risk
associated with changing interest rates. Management seeks to maintain
profitability in both immediate and long term earnings through funds
management/interest rate risk management. The Companys rate sensitivity
position has an important impact on earnings. Senior management of the Company
meets monthly to analyze the rate sensitivity position. Such meetings are
intended to focus on the spread between the cost of funds and interest yields
generated primarily through loans and investments.

There are no material changes in reported market risks during the nine
months ended September 30, 2003 known to management. Please refer to Item 2 of
Part I of this report for additional information related to market and other
risks.




Item 4. Controls and Procedures

Within 90 days prior to the date of filing of this report, we carried out
an evaluation, under the supervision and with the participation of our Chief
Executive Officer and the Chief Financial Officer, of the design and operation
of our disclosure controls and procedures. Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective for gathering, analyzing and disclosing
the information that we are required to disclose in the reports we file under
the Securities Exchange Act of 1934, within the time periods specified in the
SECs rules and forms. Our Chief Executive Officer and Chief Financial Officer
also concluded that our disclosure controls and procedures are effective in
timely alerting them to material information relating to our Company required
to be included in our periodic SEC filings. In connection with the new rules,
we are in the process of further reviewing and documenting our disclosure
controls and procedures, including our internal controls and procedures for
financial reporting, and may from time to time make changes designed to enhance
their effectiveness and to ensure that our systems evolve with our business.

There have been no significant changes in our internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of this evaluation.

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##### Table of Contents






PART II. OTHER INFORMATION




Item 1. LEGAL PROCEEDINGS

None




Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS



| | (a) |  | Not Applicable
| | --- |  | --------------



| | (b) |  | Not Applicable
| | --- |  | --------------



| | (c) |  | Shares of the Companys common stock were issued to
Directors and/or Employees pursuant to the Companys Stock Option
Plan as follows:
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------

Number of SharesDate of Sale
    
    of Common Stock Sold
    
    Price Per ShareAugust 5, 2003
    
    
    1,000
    
    
    $
    43.67September 5, 2003
    
    
    500
    
    
    $
    29.08September 23, 2003
    
    
    20
    
    
    $
    29.08


The aggregate proceeds of the shares sold were $58,791.60.

There were no underwriters and no underwriting discounts or
commissions. All sales were for cash.

The Company believes that an exemption from registration of these
shares was available to the Company in that the issuance thereof
did not constitute a public offering of securities within the
meaning of the Securities Act of 1933, as amended.

The securities sold are not convertible.

The proceeds of the sales are being used by the Company for
general corporate purposes.



| | (d) |  | The only restrictions on working capital and/or dividends are those
reported in Part I.
| | --- |  | ---------------------------------------------------------------------------------------




Item 3. DEFAULTS UPON SENIOR SECURITIES



| | (a) |  | None.
| | --- |  | -----



| | (b) |  | Not applicable.
| | --- |  | ---------------

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##### Table of Contents



PART II. OTHER INFORMATION, CONTINUED




Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS



|(a) |  | None
|--- |  | ----



|(b) |  | Not Applicable
|--- |  | --------------



|(c) |  | Not Applicable
|--- |  | --------------



|(d) |  | Not Applicable
|--- |  | --------------




Item 5. OTHER INFORMATION

None.




Item 6. EXHIBITS AND REPORTS ON FORM 8-K



|(a)(1) |  | Exhibits 31.1 and 31.2 consist of Rule 13a-14(a)/15d-14(a) certifications.
|------ |  | --------------------------------------------------------------------------



|(2) |  | Exhibit 32 consists of Section 1350 certifications.
|--- |  | ---------------------------------------------------



|(b) |  | No reports on Form 8-K have been filed during the quarter
for which this Report is filed.
|--- |  | -----------------------------------------------------------------------------------------

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SIGNATURES

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

FIRST MCMINNVILLE CORPORATION(Registrant)DATE:
    
    November 12, 2003
    
    /s/ Charles C. JacobsCharles C. Jacobs
Chairman and Chief Executive OfficerDATE:
    
    November 12, 2003
    
    /s/ Kenny D. NealKenny D. Neal
Chief Financial and Accounting Officer


24