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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 MARK ONE
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006
 o
    
    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 2-90200
 FIRST MCMINNVILLE CORPORATION
  Tennessee
    
    62-1198119(State or Other Jurisdiction of
Incorporation or Organization)
    
    (IRS Employer Identification
Number)
  
   
   YES þ
    
    NO o
  o o þ
  YES o
    
    NO þ




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##### 



FIRST MCMINNVILLE CORPORATION
 FORM 10Q
 PART I: FINANCIAL INFORMATIONItem 1. Financial StatementsThe unaudited consolidated financial statements of the registrant and its wholly-owned subsidiary,
First National Bank of McMinnville (Bank) and the Banks wholly-owned subsidiary, First Community
Title & Escrow Company, are as follows:Consolidated Balance Sheets  March 31, 2006 and December 31, 2005.Consolidated Statements of Earnings  For the three months ended March 31, 2006 and 2005.Consolidated Statements of Comprehensive Earnings  For the three months ended March 31, 2006 and 2005.Consolidated Statements of Cash Flows  For the three months ended March 31, 2006 and 2005.Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market Risk**     Certain of the 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 ProceduresPART II: OTHER INFORMATIONItem 1. Legal ProceedingsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSignaturesEX-31.1  SECTION 302 CEO CERTIFICATIONEX-31.2  SECTION 302 CFO CERTIFICATIONEX-32.1  SECTION 906 CEO CERTFICATIONEXX-32.2  SECTION 906 CFO CERTIFICATION
  2




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FIRST MCMINNVILLE CORPORATION
 
 Consolidated Balance Sheets
 March 31, 2006 and December 31, 2005
 (Unaudited)
 March 31,
    
    
    December 31,2006
    
    
    2005(In Thousands)AssetsLoans, less allowance for possible loan losses of $1,826,000 and
$1,816,000, respectively
    
    $
    148,233
    
    
    
    151,750Securities:Held-to-maturity, at cost (market value  $56,774,000 and
$60,301,000, respectively)
    
    
    56,516
    
    
    
    59,956Available-for-sale, at market (amortized cost  $95,411,000
and $95,930,000, respectively)
    
    
    93,252
    
    
    
    93,892Total securities
    
    
    149,768
    
    
    
    153,848Federal funds sold
    
    
    4,500
    
    
    
    Interest-bearing deposits in financial institutions
    
    
    30
    
    
    
    45Restricted equity securities
    
    
    1,378
    
    
    
    1,359Total earning assets
    
    
    303,909
    
    
    
    307,002Cash and due from banks
    
    
    6,258
    
    
    
    5,649Premises and equipment, net
    
    
    1,848
    
    
    
    1,836Accrued interest receivable
    
    
    2,120
    
    
    
    1,890Deferred tax asset, net
    
    
    802
    
    
    
    756Foreclosed assets
    
    
    203
    
    
    
    203Other assets
    
    
    424
    
    
    
    445Total assets
    
    $
    315,564
    
    
    
    317,781Liabilities and Stockholders EquityDeposits
    
    $
    241,305
    
    
    
    239,088Securities sold under repurchase agreements
    
    
    19,182
    
    
    
    19,389Federal funds purchased
    
    
    
    
    
    
    4,300Advances from Federal Home Loan Bank
    
    
    1,000
    
    
    
    1,000Accrued interest and other liabilities
    
    
    1,962
    
    
    
    2,787Total liabilities
    
    
    263,449
    
    
    
    266,564Stockholders equity:Common stock, no par value; authorized 5,000,000 shares,
issued 1,237,435 and 1,235,935 shares respectively
    
    
    3,857
    
    
    
    3,804Retained earnings
    
    
    54,597
    
    
    
    53,620Net unrealized losses on available-for-sale securities, net of
income taxes of $827,000 and $780,000, respectively
    
    
    (1,333
    )
    
    
    (1,257
    )57,121
    
    
    
    56,167Less cost of treasury stock of 206,540 shares and 205,440 shares,
respectively
    
    
    (5,006
    )
    
    
    (4,950
    )Total stockholders equity
    
    
    52,115
    
    
    
    51,217COMMITMENTS AND CONTINGENT LIABILITIESTotal liabilities and stockholders equity
    
    $
    315,564
    
    
    
    317,781
  3




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FIRST MCMINNVILLE CORPORATION
 
 Consolidated Statements of Earnings
 Three Months Ended March 31, 2006 and 2005
 (Unaudited)
 2006
    
    
    2005(In ThousandsExcept Per Share Amounts)Interest income:Interest and fees on loans
    
    $
    2,644
    
    
    
    2,403Interest and dividends on securities:Taxable securities
    
    
    1,109
    
    
    
    930Exempt from Federal income taxes
    
    
    353
    
    
    
    369Interest on federal funds sold
    
    
    14
    
    
    
    39Total interest income
    
    
    4,120
    
    
    
    3,741Interest expense:Interest on negotiable order of withdrawal accounts
    
    
    67
    
    
    
    53Interest on money market demand and savings accounts
    
    
    156
    
    
    
    110Interest on certificates of deposit
    
    
    1,332
    
    
    
    903Interest on securities sold under repurchase agreements and
short term borrowings
    
    
    114
    
    
    
    88Interest on advances from Federal Home Loan Bank
    
    
    14
    
    
    
    14Total interest expense
    
    
    1,683
    
    
    
    1,168Net interest income before provision for possible loan losses
    
    
    2,437
    
    
    
    2,573Provision for possible loan losses
    
    
    
    
    
    
    Net interest income after provision for possible loan losses
    
    
    2,437
    
    
    
    2,573Non-interest income:Service charges on deposit accounts
    
    
    99
    
    
    
    129Other fees and commissions
    
    
    40
    
    
    
    47Commissions and fees on fiduciary activities
    
    
    10
    
    
    
    10Securities gains
    
    
    
    
    
    
    4149
    
    
    
    190Non-interest expense:Salaries and employee benefits
    
    
    717
    
    
    
    716Occupancy expenses, net
    
    
    51
    
    
    
    56Furniture and equipment expense
    
    
    25
    
    
    
    30Data processing expense
    
    
    79
    
    
    
    75FDIC insurance
    
    
    8
    
    
    
    8Other operating expenses
    
    
    247
    
    
    
    2311,127
    
    
    
    1,116Earnings before income taxes
    
    
    1,459
    
    
    
    1,647Income taxes
    
    
    482
    
    
    
    510Net earnings
    
    $
    977
    
    
    
    1,137Basic earnings per common share
    
    $
    .95
    
    
    
    1.09Diluted earnings per common share
    
    $
    .93
    
    
    
    1.07Dividends per share
    
    $
    
    
    
    
    
  4




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FIRST MCMINNVILLE CORPORATION
 
 Consolidated Statements of Comprehensive Earnings
 Three Months Ended March 31, 2006 and 2005
 (Unaudited)
 2006
    
    
    2005(In Thousands)Net earnings
    
    $
    977
    
    
    
    1,137Other comprehensive earnings, net of tax:Unrealized gains (losses) on available-for-sale securities arising
during period, net of income taxes of $47,000 and
$459,000, respectively
    
    
    (76
    )
    
    
    (740
    )Reclassification adjustment for gains included in net
earnings, net of taxes of $2,000
    
    
    
    
    
    
    (3
    )Other comprehensive earnings loss
    
    
    (76
    )
    
    
    (743
    )Comprehensive earnings
    
    $
    901
    
    
    
    394
  5




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FIRST MCMINNVILLE CORPORATION
 
 Consolidated Statements of Cash Flows
 Three Months Ended March 31, 2006 and 2005
 Increase (Decrease) in Cash and Cash Equivalents
 (Unaudited)
 2006
    
    
    2005(In Thousands)Cash flows from operating activities:Interest received
    
    $
    3,815
    
    
    
    3,460Fees and commissions received
    
    
    149
    
    
    
    186Interest paid
    
    
    (1,525
    )
    
    
    (1,061
    )Cash paid to suppliers and employees
    
    
    (1,056
    )
    
    
    (1,024
    )Income taxes paid
    
    
    (97
    )
    
    
    (145
    )Net cash provided by operating activities
    
    
    1,286
    
    
    
    1,416Cash flows from investing activities:Proceeds from maturities and calls of held-to-maturity securities
    
    
    3,515
    
    
    
    1,219Proceeds from maturities and calls of available-for-sale securities
    
    
    500
    
    
    
    3,820Purchase of held-to-maturity securities
    
    
    
    
    
    
    (2,000
    )Purchase of available-for-sale securities
    
    
    
    
    
    
    (3,500
    )Repayment of loans, net of advances to customers
    
    
    3,517
    
    
    
    2,276Decrease in interest bearing deposits in financial
institutions
    
    
    15
    
    
    
    3Purchases of premises and equipment
    
    
    (70
    )
    
    
    (6
    )Net cash provided by investing activities
    
    
    7,477
    
    
    
    1,812Cash flows from financing activities:Net increase (decrease) in non-interest bearing, savings
and NOW deposit accounts
    
    
    212
    
    
    
    (599
    )Net increase in time deposits
    
    
    2,005
    
    
    
    187Net decrease in securities sold under repurchase agreement
    
    
    (207
    )
    
    
    (2,244
    )Repayment of fed funds purchased
    
    
    (4,300
    )
    
    
    Dividends paid
    
    
    (1,360
    )
    
    
    (1,376
    )Proceeds from issuance of common stock
    
    
    52
    
    
    
    48Payments to acquire treasury stock
    
    
    (56
    )
    
    
    (40
    )Net cash provided by (used in) financing activities
    
    
    (3,654
    )
    
    
    (4,024
    )Net increase (decrease) in cash and cash equivalents
    
    
    5,109
    
    
    
    (796
    )Cash and cash equivalents at beginning of period
    
    
    5,649
    
    
    
    10,220Cash and cash equivalents at end of period
    
    $
    10,758
    
    
    
    9,424
  6




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FIRST MCMINNVILLE CORPORATION
 Consolidated Statements of Cash Flows, Continued
 Three Months Ended March 31, 2006 and 2005
 Increase (Decrease) in Cash and Cash Equivalents
 (Unaudited)
 2006
    
    
    2005(In Thousands)Reconciliation of net earnings to net cash provided by
operating activities:Net earnings
    
    $
    977
    
    
    
    1,137Adjustments to reconcile net earnings to net cash
provided by operating activities:Depreciation
    
    
    58
    
    
    
    76Amortization and accretion, net
    
    
    (56
    )
    
    
    (126
    )FHLB dividend reinvestment
    
    
    (19
    )
    
    
    (12
    )Securities gains
    
    
    
    
    
    
    (4
    )Decrease in other assets, net
    
    
    21
    
    
    
    23Increase (decrease) in other liabilities
    
    
    377
    
    
    
    (30
    )Increase in interest receivable
    
    
    (230
    )
    
    
    (143
    )Increase in interest payable
    
    
    158
    
    
    
    495Total adjustments
    
    
    309
    
    
    
    279Net cash provided by operating activities
    
    $
    1,286
    
    
    
    1,416Supplemental schedule of non-cash activities:Unrealized gain (loss) in value of securities available-for-sale,
net of income taxes of $47,000 and income taxes of
$457,000, respectively.
    
    $
    (76
    )
    
    
    (743
    )Other real estate transferred to loans
    
    $
    
    
    
    
    43
  7




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FIRST MCMINNVILLE CORPORATION
 Notes to Consolidated Financial Statements
 (Unaudited)
 Basis of Presentation
    8




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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
  Cautionary Note Concerning Forward-Looking Statements
  9




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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
 Liquidity and Interest Rate Sensitivity Management
       10




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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
 Liquidity and Interest Rate Sensitivity Management, Continued
      11




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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
 Capital Resources
     12




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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
       (In Thousands)March 31,
    
    
    December 31,2006
    
    
    2005Commercial, financial & agricultural
    
    $
    24,210
    
    
    
    20,957Real estate  construction
    
    
    6,862
    
    
    
    10,154Real estate  mortgage
    
    
    116,141
    
    
    
    119,587Consumer
    
    
    2,846
    
    
    
    2,868$
    150,059
    
    
    
    153,566
  13




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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
      14




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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
    (In Thousands)March 31,
    
    December 31,2006
    
    2005Recorded investment
    
    $
    1,089
    
    
    
    1,055Allowance for loan losses
    
    $
    403
    
    
    
    370
    March 31, 2006
    
    
    December 31, 2005Past Due
    
    
    
    
    
    
    Past Due90 Days
    
    
    Non-Accrual
    
    
    90 Days
    
    
    Non-Accrual(In Thousands)
    
    
    (In Thousands)Real estate loans
    
    $
    352
    
    
    
    
    
    
    
    72
    
    
    
    Installment loans
    
    
    6
    
    
    
    
    
    
    
    22
    
    
    
    Commercial
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    $
    403
    
    
    
    
    
    
    
    94
    
    
    
    Renegotiated loans
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
 15




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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
  Three Months EndedMarch 31,2006
    
    
    2005(In Thousands)Balance, January 1, 2006 and 2005, respectively
    
    $
    1,816
    
    
    
    1,816Add (deduct):Losses charged to allowance
    
    
    
    
    
    
    Recoveries credited to allowance
    
    
    10
    
    
    
    18Provision for loan losses
    
    
    
    
    
    
    Balance, March 31, 2006 and 2005, respectively
    
    $
    1,826
    
    
    
    1,834
   16




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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
  March 31, 2006(In Thousands)SpecialTotal
    
    
    Mention
    
    
    Substandard
    
    
    DoubtfulCommercial, financial and
agricultural
    
    $
    6,493
    
    
    
    5,705
    
    
    
    788
    
    
    
    Real estate mortgage
    
    
    3,246
    
    
    
    214
    
    
    
    3,032
    
    
    
    Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    58
    
    
    
    
    
    
    
    58
    
    
    
    $
    9,797
    
    
    
    5,919
    
    
    
    3,878
    
    
    
    
 December 31, 2005(In Thousands)SpecialTotal
    
    
    Mention
    
    
    Substandard
    
    
    DoubtfulCommercial, financial and
agricultural
    
    $
    5,759
    
    
    
    4,844
    
    
    
    915
    
    
    
    Real estate mortgage
    
    
    3,319
    
    
    
    215
    
    
    
    3,104
    
    
    
    Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    83
    
    
    
    
    
    
    
    83
    
    
    
    $
    9,161
    
    
    
    5,059
    
    
    
    4,102
    
    
    
    
  17




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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
   March 31, 2006
    
    
    December 31, 2005Percent of
    
    
    
    
    
    
    Percent ofLoans In
    
    
    
    
    
    
    Loans InIn
    
    
    Each Category
    
    
    In
    
    
    Each CategoryThousands
    
    
    To Total Loans
    
    
    Thousands
    
    
    To Total LoansCommercial, financial and
agricultural
    
    $
    795
    
    
    
    16
    %
    
    $
    759
    
    
    
    14
    %Real estate construction
    
    
    17
    
    
    
    5
    
    
    
    25
    
    
    
    7Real estate mortgage
    
    
    966
    
    
    
    77
    
    
    
    982
    
    
    
    78Consumer
    
    
    48
    
    
    
    2
    
    
    
    50
    
    
    
    1$
    1,826
    
    
    
    100
    %
    
    $
    1,816
    
    
    
    100
    %
       18




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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
   (In Thousands, except share and per share amounts)
    
    2006
    
    
    2005Basic EPS Computation:Numerator  income available to common
shareholders
    
    $
    977
    
    
    
    1,137Denominator  weighted average number of
common shares outstanding
    
    
    1,030,876
    
    
    
    1,041,523Basic earnings per common share
    
    $
    .95
    
    
    
    1.09Diluted EPS Computation:Numerator
    
    $
    977
    
    
    
    1,137Denominator:Weighted average number of common shares
outstanding
    
    
    1,030,876
    
    
    
    1,041,523Dilutive effect of stock options
    
    
    19,346
    
    
    
    18,2961,050,222
    
    
    
    1,059,819Diluted earnings per common share
    
    $
    .93
    
    
    
    1.07
 Stock Option Plan
   19




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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
   Quarter EndedMarch 31,(In Thousands except per share amounts)
    
    2005Net earnings:As Reported
    
    
    1,137Proforma
    
    
    1,133Basic earnings per common share:As Reported
    
    
    1.09Proforma
    
    
    1.09Diluted earnings per common share:As Reported
    
    
    1.07Proforma
    
    
    1.07
 20




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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
 Impact of Inflation
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
     
 21




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FIRST MCMINNVILLE CORPORATION
 FORM 10-Q, CONTINUED
 
 Item 4.
    
    Controls and Procedures
    22




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PART II. OTHER INFORMATION
 
 Item 1.
    
    LEGAL PROCEEDINGS
  
 Item 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 (a)
    
    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 Shares ofDate of Sale
    
    Common Stock Sold
    
    Price Per ShareJanuary 19, 2006
    
    1,500
    
    $34.93
      (b)
    
    Not Applicable.
 23




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PART II. OTHER INFORMATION, CONTINUED
 Item 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS, CONTINUED
 (c)
    
    The Issuer repurchased 1,100 of its common shares in the first quarter
of this fiscal year, which ended March 31, 2006.
 (c)
    
    (d)Total Number
    
    Maximumof Shares
    
    Number (orPeriod Covered
    
    
    
    
    
    
    
    
    
    (or Units)
    
    Approximateby this Report -
    
    (a)
    
    
    
    
    
    
    Purchased as
    
    Dollar Value)First Fiscal
    
    Total Number
    
    
    (b)
    
    
    Part of Publicly
    
    of SharesQuarter of 2006
    
    of Shares
    
    
    Average Price
    
    
    Announced
    
    (or Units)(January 1
    
    (or Units)
    
    
    Paid Per
    
    
    Plans
    
    that May Yetthrough March 31)
    
    Purchased
    
    
    Share (or Unit)
    
    
    or Programs
    
    Be PurchasedJanuary 1 - 31
    
    
    1,100
    *
    
    $
    50.45
    
    
    *
    
    *February 1 - 28
    
    
    
    *
    
    
    
    
    
    *
    
    *March 1 - 31
    
    
    
    *
    
    
    
    
    
    *
    
    *Total
    
    
    1,100
    *
    
    $
    50.45
    
    
    *
    
    *
 
 *
    
    The Issuer purchases shares of its stock from time to time in order to provide some liquidity in the
stock. The Issuer does not solicit such purchases. There is no preset number of shares that the Issuer
will purchase and no plan or program of repurchases. Because there is no established public trading
market, the Issuer has historically acted as the purchaser of last resort to provide some liquidity in
the shares, paying book value, as calculated by it, for shares based on the book value as of the
immediately preceding month end (unaudited). The Issuer does not encourage such sales to it and does not
compete in any manner in effecting such purchases.  
 Item 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  (b)
    
    Not applicable.
 
 Item 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 (a)
    
    None.(b)
    
    Not applicable.(c)
    
    Not applicable.(d)
    
    Not applicable.
 24




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##### Table of Contents



PART II. OTHER INFORMATION, CONTINUED
 
 Item 5.
    
    OTHER INFORMATION
 (a)
    
    None.(b)
    
    Not Applicable.
 
 Item 6.
    
    EXHIBITS
   25




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##### Table of Contents



SIGNATURES
  FIRST MCMINNVILLE CORPORATION 
(Registrant)DATE:             May 12, 2006
    /s/   Charles C. JacobsCharles C. JacobsChairman and Chief Executive OfficerDATE:             May 12, 2006
    /s/   Kenny D. NealKenny D. NealChief Financial and Accounting Officer 26