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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 JUNE 30, 2004 [   ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIODFROM  TO
 Commission File Number 2-90200 FIRST MCMINNVILLE
CORPORATION   Tennessee
    
    62-1198119(State or Other Jurisdiction of
    
    (IRS Employer IdentificationIncorporation or Organization)
    
    Number)
 200 East Main Street,
McMinnville, TN 37110   (931) 473-4402   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X]     NO [   ] Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date. Common stock outstanding
1,044,139 shares at August 10, 2004 Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES [   ]     NO [X] 1




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FIRST MCMINNVILLE CORPORATION FORM 10-Q 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  June 30, 2004 and December 31, 2003.Consolidated Statements of Earnings  For the three months and six months
ended June 30, 2004 and 2003.Consolidated Statements of Comprehensive Earnings  For the three months
and six months ended June 30, 2004 and 2003.Consolidated Statements of Cash Flows  For the six months ended June 30,
2004 and 2003.Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures About Market Risk**
    
    Disclosures required by Item 3 are
incorporated in part 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.
    
    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-KSignaturesEX-31.1  SECTION 302 CEO CERTIFICATIONEX-31.2  SECTION 302 CFO CERTIFICATIONEX-32  SECTION 906 CEO & CFO CERTIFICATION
  2




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FIRST MCMINNVILLE CORPORATION 
 Consolidated Balance Sheets June 30, 2004 and December 31, 2003 (Unaudited) June 30,
    
    December 31,2004
    
    2003(In Thousands)AssetsLoans
    
    $
    149,628
    
    
    
    148,520Less: Allowance for loan losses
    
    
    (1,880
    )
    
    
    (1,909
    )Net loans
    
    
    147,748
    
    
    
    146,611Securities:Held to maturity, at cost (market value $56,089,000 and
$57,503,000, respectively)
    
    
    55,472
    
    
    
    55,379Available-for-sale, at market (amortized cost $86,135,000
and $83,234,000, respectively)
    
    
    84,606
    
    
    
    83,478Restricted equity securities
    
    
    1,278
    
    
    
    1,254Federal funds sold
    
    
    13,000
    
    
    
    6,000Interest bearing deposits in financial institutions
    
    
    40
    
    
    
    86Total earning assets
    
    
    302,144
    
    
    
    292,808Cash and due from banks
    
    
    6,498
    
    
    
    8,084Bank premises and equipment, net of accumulated depreciation
    
    
    1,934
    
    
    
    2,066Accrued interest receivable
    
    
    1,716
    
    
    
    1,803Deferred tax asset
    
    
    690
    
    
    
    10Other real estate
    
    
    102
    
    
    
    220Other assets
    
    
    357
    
    
    
    408Total Assets
    
    $
    313,441
    
    
    
    304,399Liabilities and Stockholders EquityDeposits
    
    $
    229,938
    
    
    
    224,221Securities sold under repurchase agreements
    
    
    32,851
    
    
    
    28,782Advances from Federal Home Loan Bank
    
    
    1,000
    
    
    
    1,000Accrued interest and other liabilities
    
    
    982
    
    
    
    2,436Total liabilities
    
    
    264,771
    
    
    
    256,439Stockholders equity:Common stock, no par value; authorized 5,000,000 shares, issued
1,232,507 shares and 1,231,022 shares, respectively
    
    
    3,705
    
    
    
    3,662Retained earnings
    
    
    50,002
    
    
    
    48,207Net unrealized gains (losses) on available-for-sale securities, net of
income taxes of $585,000 and $94,000, respectively
    
    
    (944
    )
    
    
    15152,763
    
    
    
    52,020Less cost of treasury stock of 188,199 shares and 187,489 shares,
respectively
    
    
    (4,093
    )
    
    
    (4,060
    )Total stockholders equity
    
    
    48,670
    
    
    
    47,960Total liabilities and stockholders equity
    
    $
    313,441
    
    
    
    304,399
 See accompanying notes to consolidated financial statements (unaudited). 3




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FIRST MCMINNVILLE CORPORATION 
 Consolidated Statements of Earnings Three Months and Six Months Ended June 30, 2004 and 2003 (Unaudited) Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003(Dollars In Thousands, Except Per Share Amounts)Interest income:Interest and fees on loans
    
    $
    2,438
    
    
    
    2,669
    
    
    $
    4,893
    
    
    
    5,365Interest and dividends on securities:Taxable securities
    
    
    864
    
    
    
    869
    
    
    
    1,701
    
    
    
    1,778Exempt from Federal income taxes
    
    
    392
    
    
    
    417
    
    
    
    789
    
    
    
    816Interest on federal funds sold
    
    
    34
    
    
    
    65
    
    
    
    63
    
    
    
    124Interest on interest-bearing deposits in other banks and
other interest
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Total interest income
    
    
    3,728
    
    
    
    4,021
    
    
    
    7,446
    
    
    
    8,084Interest expense:Interest on negotiable order of withdrawal accounts
    
    
    56
    
    
    
    75
    
    
    
    106
    
    
    
    151Interest on money market demand and savings accounts
    
    
    89
    
    
    
    128
    
    
    
    177
    
    
    
    254Interest on certificates of deposit
    
    
    799
    
    
    
    940
    
    
    
    1,620
    
    
    
    1,926Interest on securities sold under repurchase agreements
and short term borrowings
    
    
    83
    
    
    
    83
    
    
    
    154
    
    
    
    171Interest on advances from Federal Home Loan Bank
    
    
    14
    
    
    
    14
    
    
    
    28
    
    
    
    28Total interest expense
    
    
    1,041
    
    
    
    1,240
    
    
    
    2,085
    
    
    
    2,530Net interest income
    
    
    2,687
    
    
    
    2,781
    
    
    
    5,361
    
    
    
    5,554Provision for loan losses
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    59Net interest income after provision for loan losses
    
    
    2,687
    
    
    
    2,766
    
    
    
    5,361
    
    
    
    5,495Other income:Service charges on deposit accounts
    
    
    114
    
    
    
    121
    
    
    
    224
    
    
    
    231Other fees and commissions
    
    
    34
    
    
    
    49
    
    
    
    74
    
    
    
    75Commissions and fees on fiduciary activities
    
    
    26
    
    
    
    9
    
    
    
    35
    
    
    
    15Securities gains
    
    
    
    
    
    
    4
    
    
    
    21
    
    
    
    4Gain on sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30174
    
    
    
    183
    
    
    
    354
    
    
    
    355Other expenses:Salaries and employee benefits
    
    
    845
    
    
    
    735
    
    
    
    1,593
    
    
    
    1,457Occupancy expenses, net
    
    
    50
    
    
    
    58
    
    
    
    101
    
    
    
    111Furniture and equipment expense
    
    
    33
    
    
    
    11
    
    
    
    53
    
    
    
    27Data processing expense
    
    
    84
    
    
    
    44
    
    
    
    149
    
    
    
    97FDIC insurance
    
    
    8
    
    
    
    10
    
    
    
    17
    
    
    
    19Other operating expenses
    
    
    277
    
    
    
    256
    
    
    
    526
    
    
    
    5011,297
    
    
    
    1,114
    
    
    
    2,439
    
    
    
    2,212Earnings before income taxes
    
    
    1,564
    
    
    
    1,835
    
    
    
    3,276
    
    
    
    3,638Income taxes
    
    
    505
    
    
    
    580
    
    
    
    1,032
    
    
    
    1,153Net earnings
    
    $
    1,059
    
    
    
    1,255
    
    
    $
    2,244
    
    
    
    2,485Basic earnings per common share
    
    $
    1.01
    
    
    
    1.20
    
    
    $
    2.15
    
    
    
    2.38Diluted earnings per common share
    
    $
    1.00
    
    
    
    1.18
    
    
    $
    2.12
    
    
    
    2.35Dividends per share
    
    $
    .43
    
    
    
    .40
    
    
    $
    .43
    
    
    
    .40
 See accompanying notes to consolidated financial statements (unaudited). 4




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FIRST MCMINNVILLE CORPORATION 
 Consolidated Statements of Comprehensive Earnings Three Months and Six Months Ended June 30, 2004 and 2003 (Unaudited) Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003(In Thousands)Net earnings
    
    $
    1,059
    
    
    
    1,255
    
    
    $
    2,244
    
    
    
    2,485Other comprehensive earnings (loss), net of tax:Unrealized gains (losses) on available-for-sale
securities arising during period, net of income
taxes of $866,000, $64,000, $671,000 and
$7,000, respectively
    
    
    (1,396
    )
    
    
    103
    
    
    
    (1,082
    )
    
    
    12Reclassification adjustment for gains included in
net earnings, net of taxes of $1,000, $8,000,
and $1,000
    
    
    
    
    
    
    (3
    )
    
    
    (13
    )
    
    
    (3
    )Other comprehensive earnings (loss)
    
    
    (1,396
    )
    
    
    100
    
    
    
    (1,095
    )
    
    
    9Comprehensive earnings (loss)
    
    $
    (337
    )
    
    
    1,355
    
    
    $
    1,149
    
    
    
    2,494
 See accompanying notes to consolidated financial statements (unaudited). 5




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FIRST MCMINNVILLE CORPORATION 
 Consolidated Statements of Cash Flows Six Months Ended June 30, 2004 and 2003 Increase (Decrease) in Cash and Cash Equivalents (Unaudited) 2004
    
    2003(In Thousands)Cash flows from operating activities:Interest received
    
    $
    7,509
    
    
    
    8,175Fees and commissions received
    
    
    333
    
    
    
    322Interest paid
    
    
    (2,315
    )
    
    
    (2,826
    )Cash paid to suppliers and employees
    
    
    (2,077
    )
    
    
    (1,938
    )Income taxes paid
    
    
    (1,055
    )
    
    
    (1,300
    )Net cash provided by operating activities
    
    
    2,395
    
    
    
    2,433Cash flows from investing activities:Proceeds from maturities of held-to-maturity securities
    
    
    3,928
    
    
    
    19,321Proceeds from maturities of available-for-sale securities
    
    
    23,808
    
    
    
    64,170Purchase of held-to-maturity securities
    
    
    (4,000
    )
    
    
    (16,532
    )Purchase of available-for-sale securities
    
    
    (26,710
    )
    
    
    (69,514
    )Loans to customers, net of repayments
    
    
    (1,049
    )
    
    
    Loan repayments, net of advances to customers
    
    
    
    
    
    
    1,882Decrease (increase) in interest bearing deposits in financial
institutions
    
    
    46
    
    
    
    (27
    )Proceeds from sale of other real estate
    
    
    24
    
    
    
    Purchase of bank equipment
    
    
    (18
    )
    
    
    (306
    )Proceeds from sale of bank equipment
    
    
    
    
    
    
    30Net cash used in investing activities
    
    
    (3,971
    )
    
    
    (976
    )Cash flows from financing activities:Net increase in non-interest bearing, savings and NOW
deposit accounts
    
    
    6,347
    
    
    
    2,096Net increase (decrease) in time deposits
    
    
    (630
    )
    
    
    1,202Increase (decrease) in securities sold under repurchase agreements
    
    
    4,069
    
    
    
    1,430Dividends paid
    
    
    (1,806
    )
    
    
    (1,693
    )Payments to acquire treasury stock
    
    
    (34
    )
    
    
    (19
    )Proceeds from sales of common stock
    
    
    44
    
    
    
    67Net cash provided by financing activities
    
    
    7,990
    
    
    
    3,083Net increase in cash and cash equivalents
    
    
    6,414
    
    
    
    4,540Cash and cash equivalents at beginning of period
    
    
    13,084
    
    
    
    27,285Cash and cash equivalents at end of period
    
    $
    19,498
    
    
    
    31,825
 See accompanying notes to consolidated financial statements (unaudited). 6




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FIRST MCMINNVILLE CORPORATION Consolidated Statements of Cash Flows, Continued Six Months Ended June 30, 2004 and 2003 Increase (Decrease) in Cash and Cash Equivalents (Unaudited) 2004
    
    2003(In Thousands)Reconciliation of net earnings to net cash provided by
operating activities:Net earnings
    
    $
    2,244
    
    
    
    2,485Adjustments to reconcile net earnings to net cash
provided by operating activities:Depreciation
    
    
    150
    
    
    
    103Provision for loan losses
    
    
    
    
    
    
    59Securities gains
    
    
    (21
    )
    
    
    (4
    )Loss on sale of other real estate
    
    
    6
    
    
    
    Gain on sale of equipment
    
    
    
    
    
    
    (30
    )FHLB dividend reinvestment
    
    
    (24
    )
    
    
    (24
    )Decrease (increase) in other assets, net
    
    
    52
    
    
    
    83Increase (decrease) in other liabilities
    
    
    131
    
    
    
    (58
    )Decrease in interest receivable
    
    
    87
    
    
    
    115Decrease in interest payable
    
    
    (230
    )
    
    
    (296
    )Total adjustments
    
    
    151
    
    
    
    (52
    )Net cash provided by operating activities
    
    $
    2,395
    
    
    
    2,433Supplemental schedule of non-cash activities:Unrealized gain (loss) in value of securities available-for-sale,
net of income taxes of $679,000 and $6,000, respectively
    
    $
    (1,095
    )
    
    
    19Non-cash transfers from loans to other real estate
    
    $
    332
    
    
    
    80Other real estate transferred to loans
    
    $
    420
    
    
    
    
 See accompanying notes to consolidated financial statements (unaudited). 7




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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 or Registrant) and its wholly-owned
subsidiary, 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, pursuant to 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 June 30, 2004 and December 31, 2003, and the results of operations for
the three months and six months ended June 30, 2004 and 2003, comprehensive
earnings for the three months and six months ended June 30, 2004 and 2003 and
changes in cash flows for the six months ended June 30, 2004 and 2003. 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, 2003. The results for
interim periods are not necessarily indicative of results to be expected for
the complete fiscal year. 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 The purpose of this discussion is to provide insight into the financial
condition and results of operations of the Company 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, 2003 for a more complete discussion
of factors that affect liquidity, capital and the results of operations. 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, 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, 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 condition 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. The Company undertakes
no obligation to publish revised forward-looking statements to reflect the
occurrence of changes or of unanticipated events, 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. Proper asset/liability management is designed to maintain stability in the
balance of interest-sensitive assets to interest-sensitive liabilities in order
to provide stability 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 involve higher
costs than fixed rate instruments such as passbook savings. 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 The Company maintains a formal asset and liability management process that
is designed 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.
(Please refer to Item 3 of this Part I for additional information). 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 volumes and pricing and deposit
volume and mix. These assumptions are inherently uncertain, and, as a result,
net 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 June 30, 2004, the Company
would expect net interest income to decrease approximately $952,000 over a
twelve month period if rates decreased 2%. Net interest income would be
expected to increase approximately $288,000 over a 12 month period should rates
increase 2%. The rate sensitivity as of June 30, 2004 was 1 to 1.39 (0-91
days) and 1.13 to 1 (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 $5.4 million mature or reprice within the next twelve
months. A secondary source of liquidity is the Banks loan portfolio. At June 30,
2004 commercial, consumer and other loans of approximately $38.5 million and
loans secured by first liens on 1-4 family residential properties of
approximately $10.4 million either will become due or will be subject to rate
adjustments within twelve months. 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 As for liabilities, certificates of deposit of $100,000 or greater of
approximately $37.3 million will become due during the next twelve months. The
Banks deposit base increased approximately $5.7 million during the six months
ended June 30, 2004. Securities sold under repurchase agreements increased
$4,069,000 during the six months ended June 30, 2004. The deposit base
increased approximately $4.2 million during the second quarter of 2004.
Securities sold under repurchase agreements increased $3,662,000 during the
second three months of 2004. Federal funds sold were $13,000,000 at June 30,
2004 and $6,000,000 at December 31, 2003. Advances from the Federal Home Loan
Bank were $1,000,000 at June 30, 2004 and at December 31, 2003. 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 does
not expect that there will be significant withdrawals from these accounts in
the future that are inconsistent with past experience. The Bank is limited by law, regulation and prudence as to the amount of
dividends that it can pay. At June 30, 2004, the Bank could, under the most
restrictive of these regulatory limits, declare during the remainder of 2004
cash dividends in an aggregate amount not to exceed approximately $8.5 million,
exclusive of any 2004 net earnings, without prior approval of the Comptroller
of the Currency. However, most of these funds will be retained for use in the
Companys operations rather than being paid out in dividends. It is
anticipated that with present maturities, the expected 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 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 (excluding the unrealized
gain or loss on available-for-sale securities) was 15.8% at June 30, 2004 and
15.7% at December 31, 2003. Total assets increased approximately $9 million
during the six months ended June 30, 2004. The annualized rate of return on
average stockholders equity (excluding the unrealized gain or loss on
available-for-sale securities) for the first six months of 2004 was 9.4%
compared to 11.0% for the comparable period in 2003. 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 $449,000 and $417,000 or $.43 and $.40 per share were declared in the six
months ended June 30, 2004 and 2003, respectively. Cash dividends will be
increased in the remainder of 2004 over 2003 only in the discretion of the
Board of Directors and as profits permit. Dividends paid during 2003 were
$1.70 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. 11




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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 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 total risk based 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 total 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 for
the most recent quarter 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. At June 30,
2004 the Bank has a Tier 1 risk-based ratio of 29.1%, a total capital to
risk-based ratio of 30.2% and a Tier 1 leverage ratio of 15.8%, and thus falls
within the well capitalized category under the regulations. The Federal Reserve Board imposes consolidated capital guidelines on bank
holding companies (such as the Company) 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. Results of Operations Net earnings were $2,244,000 for the six months ended June 30, 2004 as
compared to $2,485,000 for the same period in 2003. Net earnings were
$1,059,000 for the quarter ended June 30, 2004 as compared to $1,255,000 during
the same quarter in 2003. 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. 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, Continued The Companys interest income, excluding tax equivalent adjustments,
decreased by $638,000 or 7.9% during the six months ended June 30, 2004 as
compared to a decrease of $720,000 or 8.2% during the six months ended June 30,
2003 as compared to the same period in 2002. Interest income for the quarter
ended June 30, 2004 decreased $293,000 or 7.3% over the quarter ended June 30,
2003, and increased $10,000 or .3% from the first quarter of 2004. The
decreases in 2004 and 2003 were primarily attributable to previous decreases in
interest rates. The ratio of average earning assets to total average assets
was 97.0% for the six months ended June 30, 2004 and 95.1% for the same period
in 2003. Interest expense decreased by $445,000 for the six months ended June 30,
2004 or 17.6% compared to the same period in 2003. Interest expense for the
quarter ended June 30, 2004 decreased $199,000 or 16.0% as compared to the
quarter ended June 30, 2003. Interest expense for the quarter ended June 30,
2004 decreased $3,000 or .3% compared to the first quarter of 2004. The
decrease in interest expense for the six months ended June 30, 2004 as compared
to the same period in 2003 can be primarily attributable to the previous
decreases in interest rates as noted above. The foregoing resulted in net interest income of $5,361,000 for the six
months ended June 30, 2004, a decrease of $193,000 or 3.5% compared to the
prior year period. Net interest income for the quarter ended June 30, 2004
decreased $94,000 or 3.4% over the second quarter of 2003 while there was an
increase of $13,000 or .5% over the first quarter in 2004. The following schedule details the loans of the Company at June 30, 2004
and December 31, 2003: June 30,
    
    December 31,2004
    
    2003(In Thousands)Commercial, financial and agricultural
    
    $
    47,828
    
    
    
    44,988Real estate  construction
    
    
    4,730
    
    
    
    5,630Real estate  mortgage
    
    
    94,361
    
    
    
    95,097Consumer
    
    
    2,709
    
    
    
    2,805$
    149,628
    
    
    
    148,520
 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. 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 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 lending contract. 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 $59,795,000 and $2,709,000, respectively at June 30,
2004, 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 nonaccrual loans evaluated under the provisions
of SFAS Nos. 114 and 118 to be impaired. Loans are placed on nonaccrual status
when doubt as to timely collection of principal or interest exists, or when any
required payment of 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 is 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, in the judgment of
management, affect the borrowers ability to pay. 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. There
were no loans on nonaccrual status at June 30, 2004 and 2003 nor at anytime
during the six month periods then ended. Therefore, all interest income during
these periods was recognized on the accrual basis. 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 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 June 30, 2004, the Company had one loan
totaling $456,000 that had been restructured. This loan was in compliance with
the modified terms. 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 June 30,
2004 and December 31, 2003 were as follows: June 30, 2004
    
    December 31, 2003Recorded
    
    Recorded(In Thousands)
    
    Investment
    
    InvestmentRecorded investment
    
    $
    2,048
    
    
    $
    2,808Allowance for loan losses
    
    $
    279
    
    
    $
    530
 The allowance for loan loss related to impaired loans was measured based
upon the estimated fair value of related collateral. The average recorded investment in impaired loans for the six months ended
June 30, 2004 and 2003 was $2,291,000 and $1,525,000, respectively. The
related amount of interest income recognized on the accrual method for the
period that such loans were impaired was approximately $76,000 and $64,000 for
2004 and 2003, respectively. 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 The following schedule details selected information as to non-performing
loans of the Company at June 30, 2004 and December 31, 2003: June 30, 2004
    
    December 31, 2003Past Due
    
    
    
    
    
    Past Due90 Days
    
    Non-Accrual
    
    90 Days
    
    Non-AccrualIn Thousands
    
    In ThousandsReal estate loans
    
    $
    209
    
    
    
    
    
    
    
    289
    
    
    
    Installment loans
    
    
    3
    
    
    
    
    
    
    
    23
    
    
    
    Commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    212
    
    
    
    
    
    
    
    312
    
    
    
    Renegotiated loans
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
 Transactions in the allowance for loan losses were as follows: Six Months EndedJune 30,2004
    
    2003(In Thousands)Balance, January 1, 2004 and 2003, respectively
    
    $
    1,909
    
    
    
    1,908Add (deduct):Losses charged to allowance
    
    
    (56
    )
    
    
    (27
    )Recoveries credited to allowance
    
    
    27
    
    
    
    12Provision for loan losses
    
    
    
    
    
    
    59Balance, June 30, 2004 and 2003, respectively
    
    $
    1,880
    
    
    
    1,952
 The provision for loan losses was $59,000 for the first six months of
2003. There was no provision for loan losses for the first six months of 2004.
The provision for loan losses is based on past loan experience and other
factors which, in managements subjective 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. This is not an exact science. Management has in place a system that
is designed to identify and monitor problems on a timely basis, of course no
system is either infallible or perfect. Management believes the allowance for
possible loan losses at June 30, 2004 to be adequate. 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 The Company maintains an allowance for loan losses which management
believes is adequate to absorb losses 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 subject to approval by the Board of Directors. The following table presents total internally graded loans as of June 30,
2004 and December 31, 2003: June 30, 2004(In Thousands)
    
    SpecialTotal
    
    Mention
    
    Substandard
    
    DoubtfulCommercial, financial and
agricultural
    
    $
    5,138
    
    
    
    3,312
    
    
    
    1,826
    
    
    
    Real estate mortgage
    
    
    2,484
    
    
    
    
    
    
    
    2,424
    
    
    
    60Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    124
    
    
    
    
    
    
    
    124
    
    
    
    $
    7,746
    
    
    
    3,312
    
    
    
    4,374
    
    
    
    60
 December 31, 2003(In Thousands)
    
    SpecialTotal
    
    Mention
    
    Substandard
    
    DoubtfulCommercial, financial and
agricultural
    
    $
    6,189
    
    
    
    2,586
    
    
    
    3,603
    
    
    
    Real estate mortgage
    
    
    2,636
    
    
    
    
    
    
    
    2,636
    
    
    
    Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    142
    
    
    
    
    
    
    
    142
    
    
    
    $
    8,967
    
    
    
    2,586
    
    
    
    6,381
    
    
    
    
 The collateral values, based on estimates received by management,
collateralizing the above internally graded loans total approximately
$15,130,000, ($2,870,000 related to real estate loans and $12,260,000 related
to commercial and other loans). Such loans are listed as classified when
information obtained about possible credit problems related to the borrower has
prompted management to question the ability of the borrower to comply with the
repayment terms of the loan agreement. 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. 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 Residential real estate loans that are graded substandard totaling
$2,424,000 and $2,636,000 at June 30, 2004 and December 31, 2003, respectively,
consist of thirty-nine and thirty-eight individual loans, respectively, that
have been graded accordingly due to bankruptcies, inadequate cash flows and/or
delinquencies. No material losses on these loans is anticipated by management.
Management is unable to predict the impact, if any, of recent industrial plant
closings in Warren County, Tennessee. The following detail provides a breakdown of the allocation of the
allowance for possible loan losses: June 30, 2004
    
    December 31, 2003Percent of
    
    
    
    
    
    Percent ofLoans In
    
    
    
    
    
    Loans InIn
    
    Each Category
    
    In
    
    Each CategoryThousands
    
    To Total Loans
    
    Thousands
    
    To Total LoansCommercial, financial and
agricultural
    
    $
    1,040
    
    
    
    32
    %
    
    $
    1,274
    
    
    
    30
    %Real estate construction
    
    
    12
    
    
    
    3
    
    
    
    14
    
    
    
    4Real estate mortgage
    
    
    777
    
    
    
    63
    
    
    
    567
    
    
    
    64Consumer
    
    
    51
    
    
    
    2
    
    
    
    54
    
    
    
    2$
    1,880
    
    
    
    100
    %
    
    $
    1,909
    
    
    
    100
    %
 There were no material amounts of other interest-bearing assets
(interest-bearing deposits with other banks, municipal bonds, etc.) at June 30,
2004 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, excluding securities gains and a gain on sale of
fixed assets of $30,000 relating to the sale of proof machines in 2003, was
$333,000 for the six months ended June 30, 2004 as compared to $321,000 for the
same period in 2003. The increase was primarily due to increases in fees on
fiduciary activities. Securities gains were $21,000 and $4,000 during the six month period ended
June 30, 2004 and 2003, respectively. The gains in 2004 and 2003 relate
primarily to calls of securities prior to their scheduled maturity. Non-interest expense increased $227,000 or 10.3% during the first six
months of 2004 as compared to the same period in 2003. Salaries and employee
benefits increased $136,000 or 9.3%, while data processing expense increased
$52,000 or 53.6%. Data processing expenses in 2004 increased primarily due to
increased software maintenance. Management is not aware of any current recommendations by the regulatory
authorities which, if implemented, would have a material effect on the
Companys liquidity, capital resources or operations. 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 The computation of basic earnings per share is based on the weighted
average number of common shares outstanding during the period. The computation
of diluted earnings per share for the Company begins with the basic earnings
per share plus the effect of common shares contingently issuable form stock
options. The following is a summary of components comprising basic and diluted
earnings per share (EPS) for the three and six months ended June 30, 2004 and
2003: Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(In Thousands, except share amounts)
    
    2004
    
    2003
    
    2004
    
    2003Basic EPS Computation:Numerator - income available to common
shareholders
    
    $
    1,059
    
    
    
    1,255
    
    
    
    2,244
    
    
    
    2,485Denominator - weighted average number
of common shares outstanding
    
    
    1,044,318
    
    
    
    1,043,484
    
    
    
    1,043,864
    
    
    
    1,042,598Basic earnings per common share
    
    $
    1.01
    
    
    
    1.20
    
    
    
    2.15
    
    
    
    2.38Diluted EPS Computation:Numerator
    
    $
    1,059
    
    
    
    1,255
    
    
    
    2,244
    
    
    
    2,485Denominator:Weighted average number of common
shares outstanding
    
    
    1,044,318
    
    
    
    1,043,484
    
    
    
    1,043,864
    
    
    
    1,042,598Dilutive effect of stock options
    
    
    16,732
    
    
    
    13,295
    
    
    
    16,732
    
    
    
    13,2951,061,050
    
    
    
    1,056,779
    
    
    
    1,060,596
    
    
    
    1,055,893Diluted earnings per common share
    
    $
    1.00
    
    
    
    1.18
    
    
    
    2.12
    
    
    
    2.35
 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
shares of common stock to directors and employees of the Company. 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. 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 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 six months ended June 30, 2004 and
2003, respectively, would have been reduced to the proforma amounts indicated
below: Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(In Thousands)
    
    2004
    
    2003
    
    2004
    
    2003Net earnings:As Reported
    
    $
    1,059
    
    
    
    1,255
    
    
    
    2,244
    
    
    
    2,485Proforma
    
    $
    1,057
    
    
    
    1,252
    
    
    
    2,239
    
    
    
    2,479Basic earnings per common share:As Reported
    
    $
    1.01
    
    
    
    1.20
    
    
    
    2.15
    
    
    
    2.38Proforma
    
    $
    1.01
    
    
    
    1.22
    
    
    
    2.14
    
    
    
    2.38Diluted earnings per common share:As Reported
    
    $
    1.00
    
    
    
    1.18
    
    
    
    2.12
    
    
    
    2.35Proforma
    
    $
    1.00
    
    
    
    1.19
    
    
    
    2.11
    
    
    
    2.35
 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. The Financial Accounting Standards Board has proposed a pronouncement that
requires all companies to recognize compensation expense related to the
issuance of stock options. However, implementation of this pronouncement has
been delayed through Congressional action. The ultimate outcome remains
unknown until Congress reaches a consensus on how to account for stock options.
If the Company is required to expense stock options it will have a negative
impact on earnings, the effect of which is not yet determinable. 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 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 had a significant effect on net earnings in recent years. If the
inflation rate stays flat or increases slightly, the effect on profits is not
expected to be significant. 
 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 affect 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 as discussed in Item 2. Based upon the nature of the Companys
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. These meetings focus
on the spread between the cost of funds and interest yields generated primarily
through loans and investments. Managing interest rate risk is a very subjective exercise based on a wide
variety of factors. This activity is based significantly on managements
subjective beliefs about future events (such as actions of the Federal Reserve
Board and the conduct of competitors) and is never guaranteed. There have been no material changes in reported market risks during the
six months ended June 30, 2004. Please refer to Item 2 of Part 1 of this
Report for additional information related to market and other risks. 21




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FIRST MCMINNVILLE CORPORATION FORM 10-Q, CONTINUED 
 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. 22




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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: Date of Sale
    
    Number of Shares of Common Stock Sold
    
    Price Per ShareFebruary 20, 2004
    
    
    15
    
    
    $
    29.08April 14, 2004
    
    
    1,470
    
    
    $
    29.08
  The aggregate proceeds of the shares sold were $43,183.80.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 Item 2 of Part I.(e)
    
    The Issuer repurchased 370 of its common shares in the second quarter of
this fiscal year, which ended June 30, 2004. (c)
    
    (d)Total Number
    
    Maximumof Shares
    
    Number (orPeriod Covered
    
    
    
    
    
    
    
    
    
    (or Units)
    
    Approximateby this Report -
    
    (a)
    
    
    
    
    
    Purchased as
    
    Dollar Value)Second Fiscal
    
    Total Number
    
    (b)
    
    Part of Publicly
    
    of SharesQuarter of 2004
    
    of Shares
    
    Average Price
    
    Announced
    
    (or Units)(April 1
    
    (or Units)
    
    Paid Per
    
    Plans
    
    that May Yetthrough June 30)
    
    Purchased
    
    Share (or Unit)
    
    or Programs
    
    Be PurchasedApril 1 - 30
    
    
    10
    *
    
    $
    47.41
    
    
    
    *
    
    
    
    *May 1 - 31
    
    
    300
    *
    
    
    47.75
    
    
    
    *
    
    
    
    *June 1 - 30
    
    
    60
    *
    
    
    48.14
    
    
    
    *
    
    
    
    *Total
    
    
    370
    *
    
    $
    47.80
    
    
    
    *
    
    
    
    *
  *
    
    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 purchases. 23




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##### Table of Contents



PART II. OTHER INFORMATION, CONTINUED 
 Item 3. DEFAULTS UPON SENIOR SECURITIES  (a)
    
    None(b)
    
    Not Applicable 
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  (a)
    
    The annual meeting of stockholders was held April 13, 2004.(b)
    
    The following persons were elected at the annual meeting of stockholders on
April 13, 2004:  John Gregory Brock, Arthur J. Dyer, Rufus W. Gonder, George Boles
Greene,
and Robert W. Jones.  (c)
    
    (1) Each of the above directors were elected by the following tabulation: Numberof Shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    BrokerVoting
    
    For
    
    Against
    
    Withheld
    
    Non-VotesJohn Gregory Brock
    
    
    617,119
    
    
    
    617,119
    
    
    
    
    
    
    
    
    
    
    
    Arthur J. Dyer
    
    
    617,119
    
    
    
    617,119
    
    
    
    
    
    
    
    
    
    
    
    Rufus W. Gonder
    
    
    617,119
    
    
    
    617,119
    
    
    
    
    
    
    
    
    
    
    
    George Boles Greene
    
    
    617,119
    
    
    
    616,719
    
    
    
    
    
    
    
    400
    
    
    
    Robert W. Jones
    
    
    617,119
    
    
    
    617,119
    
    
    
    
    
    
    
    
    
    
    
    
 The terms of office of the following directors were continued after the
meeting:  Dean I. Gillespie, Charles C. Jacobs, C. Levoy Knowles, J. Douglas
Milner, John J. Savage, Jr. and Carl M. Stanley(2)
    
    The ratification of the Audit Committees selection of
Maggart & Associates, P.C. as independent auditors for the Company
for the year ending December 31, 2004 was as follows: Number of
    
    
    
    
    
    
    
    
    
    
    
    
    
    BrokerShares Voting
    
    For
    
    Against
    
    Withheld
    
    Non-Votes617,119
    
    
    616,719
    
    
    
    
    
    
    
    400
    
    
    
    
  (d)
    
    Not Applicable. 
 Item 5. OTHER INFORMATION  (a)
    
    None(b)
    
    Not Applicable 24




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PART II. OTHER INFORMATION, CONTINUED 
 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. 25




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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: August 10, 2004
    
    /s/ Charles C. JacobsCharles C. JacobsChairman and Chief Executive OfficerDATE: August 10, 2004
    
    /s/ Kenny D. NealKenny D. NealChief Financial and Accounting Officer
 26