united states district court - class...

Case: 4:13-cv-00040-MPM-JMV Doc #: 1 Filed: 03/05/13 1 of 23 PageID #: 1

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF MISSISSIPPI

GREENVILLE DIVISION

x SHERMAN H. ZENG, Individually and on : Civil Action No. [Insert] Behalf of All Others Similarly Situated,

Plaintiff, : DIRECT SHAREHOLDER CLASS ACTION COMPLAINT FOR BREACH

VS. : OF FIDUCIARY DUTIES

HUGH S. POTTS, JR., JEFFREY B. LACEY, MICHAEL L. NELSON, SCOTT M. WIGGERS, EDDIE J. BRIGGS, HOLLIS C. CHEEK, JON A. CROCKER, JAMES D. JURY TRIAL DEMANDED FRERER, K. MICHAEL HEIDELBERG, JOHN CLARK LOVE, III, OTHO E. PETTIT,: JR., SAMUEL B. POTTS, JULIE B. TAYLOR, LAWRENCE D. TERRELL, LAWRENCE D. "DENNY" TERRELL, JR., JAMES I. TIMS, RENASANT CORPORATION, RENASANT BANK, FIRST M&F CORPORATION, and MERCHANTS AND FARMERS BANK,

Defendants,

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Plaintiff Sherman H. Zeng ("Plaintiff'), by and through Plaintiffs attorneys, alleges as

follows:

INTRODUCTION

1. Plaintiff is a shareholder of First M&F Corporation ("FMFC" or the "Company")

common stock.

2. On February 7, 2013, FMFC announced that its board of directors entered into a

merger agreement with Renasant Corporation and Renasant Bank (collectively, "Renasant"), as well

as with Merchants and Farmers Bank ("Merchants"). The agreement allows Renasant to take over

both FMFC and Merchants. Under the agreement, FMFC will first merge with Renasant.

Following that, Merchants will then merge with Renasant.

3. In the merger between FMFC and Renasant, the agreement entitles the public

shareholders of FMFC the right to receive 0.6425 shares of Renasant common stock for each share

of FMFC common stock they own.

4. Herein, Plaintiff seeks equitable relief only. Specifically, Plaintiff seeks to enjoin the

proposed merger between FMFC and Renasant.

5. As more fully set forth herein, the proposed takeover of FMFC is the product of a

fundamentally unfair process undertaken by FMFC's board, which favors Renasant and is

detrimental to FMFC's shareholders. Plaintiff and the other FMFC shareholders face irreparable

harm as a result of the proposed takeover and have no adequate remedy at law. Herein, Plaintiff

properly alleges direct shareholder class action claims under Rule 23.

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JURISDICTION AND VENUE

6. This Court has original jurisdiction pursuant to 28 U.S.C. §1332(a). Plaintiff is a

citizen of a state different from Defendants. The matter in controversy, exclusive of interest and

costs, exceeds the sum or value of $75,000.

7. This Court has jurisdiction under 18 U.S.C. §77p(d)(1)because, inter alia, a) it is an

action based on Mississippi law, where FMFC, Merchants, Renasant Corporation and Renasant

Bank are incorporated, b) it is a class action that i) involves the sale of FMFC shares from FMFC

shareholders and, ii) involves recommendations and other communications with respect to the sale of

FMFC securities that concern the decisions of FMFC shareholders with respect to voting their

FMFC shares.

8. Venue is proper in this Court pursuant to 28 U.S.C. § 1391 in that many of the acts

and transactions giving rise to this action occurred in this District and because Defendants;

(a) are authorized to conduct business in this District and have intentionally

availed themselves of the laws and markets within this District through the promotion, marketing,

distribution and sale of their products in this District;

(b) conduct substantial business in this District; and

(c) are subject to personal jurisdiction in this District.

PARTIES

9. Plaintiff has held FMFC shares at all material times. Plaintiff is a citizen of the state

of Michigan.

10. Defendant FMFC is a Mississippi corporation with its principal place of business

located at 134 W. Washington St., Kosciusko, MS 39090. FMFC's stock is publicly traded on the

NASDAQ Stock Exchange under the ticker "FMFC." As of October 21, 2012, there were over 9

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million shares of FMFC common stock outstanding. These shares are held by hundreds, if not

thousands, of beneficial holders.

11. Defendant Hugh S. Potts, Jr., ("Potts") is, and at all material times was, a director of

FMFC. Potts has been the Chairman of the Board and CEO of the Company since 1994.

12. Defendant Jeffrey B. Lacey ("Lacey") is, and at all material times was, a director of

FMFC.

13. Defendant Michael L. Nelson ("Nelson") is, and at all material times was, a director

of FMFC.

14. Defendant Scott M. Wiggers ("Wiggers") is, and at all material times was, a director

of FMFC.

15. Defendant Eddie J. Briggs ("Briggs") is, and at all material times was a director of

FMFC.

16. Defendant Hollis C. Cheek ("Cheek") is, and at all material times was, a director of

FMFC.

17. Defendant Jon A. Crocker ("Crocker") is, and at all material times was, a director of

FMFC.

18. Defendant James D. Frerer ("Frerer") is, and at all material times was, a director of

FMFC.

19. Defendant K. Michael Heidelberg ("Heidelberg") is, and at all material times was, a

director of FMFC.

20. Defendant John Clarke Love, III, ("Love") is, and at all material times was, a director

of FMFC.

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21. Defendant Otho E. Pettit, Jr., ("Pettit") is, and at all material times was, a director of

FMFC.

22. Defendant Samuel B. Potts ("Potts") is, and at all material times was, a director of

FMFC.

23. Defendant Julie B. Taylor ("Taylor") is, and at all material times was, a director of

FMFC.

24. Defendant Lawrence D. Terrell ("Terrell") is, and at all material times was, a director

of FMFC.

25. Defendant Lawrence D. "Denny" Terrell, Jr. ("Terrell, Jr.") is, and at all material

times was, a director of FMFC.

26. Defendant James I. Tims ("Tims") is, and at all material times was, a director of

FMFC.

27. FMFC's board members listed above are sometimes collectively referred to herein as

the "Individual Defendants."

28. Defendant Renasant Corporation is a Mississippi corporation with its principal place

of business located at 209 Troy Street, Tupelo, MS 38804-4827.

29. Defendant Renasant Bank is a Mississippi corporation with its principal place of

business located at 209 Troy Street, Tupelo, MS 38804-4827. Renasant Corporation is the parent of

Renasant Bank.

30. Defendant Merchants is a Mississippi corporation with its principal location at 134

W. Washington St. Kosciusko, MS 39090. FMFC owns 100% of the common stock of Merchants.

31. All of the defendants listed above are sometimes collectively referred to as the

"Defendants."

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THE INDIVIDUAL DEFENDANTS' FIDUCIARY DUTIES

32. Under applicable law, in any situation where the directors of a publicly traded

corporation undertake a transaction that will result in either: (i) a change in corporate control; or (ii)

a break up of the corporation's assets, the directors have an affirmative fiduciary obligation to obtain

the highest value reasonably available for the corporation's shareholders, and if such transaction will

result in a change of corporate control, the shareholders are entitled to receive a significant premium.

To diligently comply with these duties, the directors and/or officers may not take any action that:

(a) adversely affects the value provided to the corporation's shareholders;

(b) will discourage or inhibit alternative offers to purchase control of the

corporation or its assets;

(c) contractually prohibits themselves from complying with their fiduciary duties;

(d) will otherwise adversely affect their duty to search and secure the best value

reasonably available under the circumstances for the corporation's shareholders; and/or

(e) will provide the directors and/or officers with preferential treatment at the

expense of, or separate from, the public shareholders.

33. In accordance with their duties of loyalty and good faith, the Defendants, as directors

and/or officers of FMFC, are obligated under applicable law to refrain from:

(a) participating in any transaction where the directors' or officers' loyalties are

divided;

(b) participating in any transaction where the directors or officers receive, or are

entitled to receive, a personal financial benefit not equally shared by the public shareholders of the

corporation; and/or

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(c) unjustly enriching themselves at the expense or to the detriment of the public

shareholders.

34. Defendants are also obliged to honor their duty of candor to FMFC shareholders by,

inter alia, providing all material information to the shareholders regarding a scenario in which they

are asked to vote or tender their shares. This duty of candor ensures that shareholders have all

information that will enable them to make informed, rational and intelligent decisions about whether

to vote or tender their shares.

35. Plaintiff alleges herein that Defendants, separately and together, in connection with

the proposed takeover of FMFC by Renasant, are knowingly or recklessly violating their fiduciary

duties, including their duties of loyalty, good faith, and independence owed to Plaintiff and other

public shareholders of FMFC. Defendants stand on both sides of the transaction, are engaging in

self-dealing, are obtaining for themselves personal benefits, including personal financial benefits not

shared equally by Plaintiff or the Class. As a result of Defendants' self dealing and divided loyalties,

neither Plaintiff nor the Class will receive adequate or fair value for their FMFC common stock in

the proposed takeover by Renasant.

36. Because Defendants are knowingly or recklessly breaching their duties of loyalty,

good faith, candor and independence in connection with the proposed takeover of FMFC by

Renasant, the burden of proving the inherent or entire fairness of the proposed takeover, including all

aspects of its negotiation, structure, price and terms, is placed upon Defendants as a matter of law.

37. At times relevant hereto, Defendants were the agents of each of the other Defendants

and were at all times acting within the course and scope of such agency.

SUBSTANTIVE ALLEGATIONS

The Company is Poised for Success


38. FMFC is a bank holding company. The Company engages in the banking business

through its wholly owned subsidiary, Merchants, in the states of Mississippi, Tennessee, Alabama

and Florida. Merchants provides community banking services to individuals, small businesses, and

various community groups. Merchants' deposit products include checking accounts, savings

accounts, certificates of deposit, individual retirement accounts, time deposits, NOW and money

market deposits, and noninterest-bearing deposits. Merchants offers a range of commercial and

consumer services at its main office and two branches in Kosciusko and its branches within central

and north Mississippi, including Ackerman, Brandon, Bruce, Canton, Cleveland, Clinton, Durant,

Flowood, Grenada, Madison, Olive Branch, Oxford, Pearl, Philadelphia, Ridgeland, Southaven,

Starkville, and Tupelo. Merchants has banking locations in southwest Tennessee in Bells and

Cordova. Merchants has other banking locations in central Alabama in Chelsea, Columbiana,

Inverness and Pelham. Additionally, Merchants also has a banking location in Niceville, Florida.

39. FMFC has performed well for its shareholders, weathering the financial market's

various economic downturns':

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40. All indications are that FMFC is poised for continued growth. Analysts estimate that

FMFC will experience nearly a 90% earnings growth rate in fiscal year 2013, over a 50% earnings

growth rate in fiscal year 2014, and nearly a 10% earnings growth rate over the following five

years .2

41. The Company's third quarter 2012 earnings bears this out. In an October 19, 2012

release, the Company noted the positive upward trend and results:

Upward Earnings and Asset Quality trends continue for IF11FC1

KOSCIUSKO, Miss. - First M&F Corp. (NASDAQ: FMFC) reported today a net profit for the quarter ended September 30, 2012 of $ 1.794 million compared to $1.330 million at September 30, 2011. Net income for the quarter allocated to common shareholders was $1.264 million or $0.14 basic and diluted earnings per share, compared to September 30, 2011 net income of $.878 million and $.10 per share. Common net income for the quarter ended September 30, 2012 was $1.315 million or $0.14 per share versus the year-ago quarter common net income of $.882 million or $.10 basic and diluted earnings per share. Second quarter of 2012 earnings

(last visited Feb. 19, 2013).

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allocated to common shareholders were $1.226 million, or $.14 basic and diluted earnings per share.

Hugh Potts, Jr., Chairman and CEO commented, "Earnings per share in this third quarter are up 40% over the year ago quarter, with year over year earnings per share up 74%. Increased mortgage revenue has been a bright spot as well as lower credit costs. Our focus and persistence over the last several quarters are bearing the fruit of greatly improved credit metrics with our stock value responding very positively to the trends we've demonstrated."

42. Later, in December 2012, the Company provided share dividends to FMFC's

shareholders. In a letter to the shareholders, Defendant Potts again touted its positive upward trend

and results:

First M&F Corporation

December 31, 2012

Dear Shareholder:

2012 will be the best year for First M&F Corporation since 2007 from virtually every perspective. Payment of the $0.01 per share dividend will be made today, the 31st of December.

While the share price and dividend payout are not at 2007 levels, the price of FMFC has appreciated substantially from the $2.84 at December 31, 2011. Earnings per share allocated to common shareholders will increase materially from $0.28 in 2011 and continue a three year trend.

Tangible Book, all capital ratios, reserves and balance sheet strength are all improved.

Asset quality metrics have improved quarter by quarter for three years. Many metrics have returned to pre-recession levels.

Without a doubt, the performance of M&F Bank has vastly improved since 2009. There remains yet much to do, but it is gratifying to have come this far. A complete and detailed discussion and disclosure will be forthcoming with our earnings release on or about January 18 with the 10-K and proxy to follow in March. The brief narrative here will be expanded through those disclosures.

Looking ahead, another trend in addition to our improvement continues. That is, the U.S. economy creeps along. More regulations pour out of Washington. Fiscal policy is aimlessly mired in politics and fundamental policy differences. As long as interest rates remain low, as promised by the Fed, there will be ample performance challenges ahead.

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Thank you for being a loyal shareholder. Your M&F team is the best it has ever been. May the upcoming year 2013 be a better year as we focus on our task of building shareholder value with a reliance on and thankfulness for providential guidance.

Very Truly Yours,

Hugh S. Potts, Jr.

Chairman and CEO

43. Just weeks ago, the Company then issued its report for the fourth quarter and year end

for 2012. The results were excellent and underscored the equity value of FMFC's shares. In a

January 25, 2013 release regarding the results, the Company explained:

January 25, 2013

FOR IMMEDIATE RELEASE

First M&F Corp. earnings per share up 93%.

KOSCIIJ SKO, Miss. - First M&F Corp. (NASDAQ:FMFC) today reported 2012 net income of $6.985 million as compared to anet income of $4.373 million for 2011, a 59.7% percent increase. Earnings allocated to common shareholders were $4.919 million, or $0.54 basic and diluted earnings per share, compared to earnings of $2.584 million, or $.28 basic and diluted earnings per share for 2011. "Our management team is gratified and proud to announce a 93% improvement in common earnings per share. From virtually every perspective the M&F Team has led the Company to a much improved performance", said Hugh S. Potts, Jr., Chairman and CEO.

Net income for the quarter ended December 31, 2012 was $1.290 million allocated to common shareholders, or $.14 basic and diluted earnings per share, compared to $.530 million, or $.05 basic and diluted earnings per share for the fourth quarter of 2011.

For the fourth quarter of 2012 the annualized return on assets was 0.46%, while return on common equity was 5.40%. Comparatively, the return on assets for the fourth quarter of 2011 was 0.25%, with a return on common equity of 2.27%. The return on assets for 2012 was 0.44%, while the return on common equity was 5.30%.

Mr. Potts continued, "At the risk of a noticeable repetition, we must report that our credit trends are continuing the improvement began during the depths of the current credit cycle. These trends in credit improvement are foundational to M&F's improved earnings." At year-end 2012 nonaccrual loans to total loans improved to 0.75% from 1.68% at the end of 2011.

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The Proposed Takeover by Renasant

44. Despite FMFC's impressive performance and undeniable growth potential, on

February 7, 2013, the Defendants announced the proposed takeover by Renasant:

Renasant Corporation and First M&F Corporation Announce Definitive Merger Agreement

Company Release - 02/07/2013 08:00

TUPELO, Miss. and KOSCIUSKO, Miss., Feb. 7, 2013 /PRNewswire/ -- Renasant Corporation (NASDAQ: RNST) and First M&F Corporation (NASDAQ: FMFC) jointly announced today the signing of a definitive merger agreement pursuant to which Renasant Corporation ("Renasant" or "the Company") will acquire First M&F Corporation ("M&F"), a bank holding company headquartered in Kosciusko, Mississippi, and the parent of Merchants & Farmers Bank, a Mississippi banking corporation.

Upon completion of the transaction, the combined company will have approximately $5.8 billion in total assets and will rank as the 4th largest bank by deposits in Mississippi. The transaction will add $1.6 billion in assets, $1.4 billion in deposits and 36 full-service locations throughout Renasant's Mississippi, Alabama and Tennessee banking franchises. The merger will significantly increase the Company's deposit market share in the Birmingham and Memphis MSAs and the key Mississippi markets of Tupelo, Oxford and Starkville, and will provide entrance into the suburban markets surrounding Jackson, Mississippi. Additionally, the merger will provide a stable source of low-cost core deposits which will supplement and enhance Renasant's future growth activities. Finally, the merger will strengthen the Company's overall business lines by doubling its insurance operations and complementing its mortgage and wealth management divisions.

"We are excited for the opportunity to expand our reach within every Renasant region, double our insurance operations, and enhance our mortgage and wealth management divisions. This merger creates a stronger Renasant franchise that allows for not only new market entries and additional branch locations within our legacy markets, but provides the realization of significant cost savings through strategic branch consolidations and future earnings growth by combining two strongly competitive community banking institutions," said Renasant Chairman, President and Chief Executive Officer, E. Robinson McGraw. "M&F is a community bank with an operating philosophy centered on fast, simple and local service with a banking culture similar to our own. We believe that this partnership between these two strong, likeminded community banks will greatly benefit both Renasant's and M&F's current and future clients with our combined locations, services and product offerings."

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According to the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies, M&F common shareholders will receive 0.6425 shares of Renasant common stock for each share of M&F common stock, and the merger is expected to qualify as a tax-free reorganization for M&F shareholders. Based on Renasant's 10-day average closing price of$ 19.22 per share as of February 4, 2013, the aggregate common stock consideration is approximately $118.8 million or 119% of tangible book value per share. Under the proposed terms, the transaction is expected to be accretive to Renasant's 2013 estimated earnings per share with the estimated tangible book value dilution being earned back within 2.5 years.

Commenting on the transaction, Hugh S. Potts, Jr., Chairman and Chief Executive Officer of First M&F Corporation said, "The combination of M&F and Renasant, two banks with deep roots philosophically and physically, will create a much stronger competitor throughout our various markets. Our capacity and commitment to both personal and technological convenience will be materially enhanced by offering our clients all the products and services of a much larger financial services institution with the high degree of service found in a local community bank. The talents and efforts of both Renasant and M&F Bank families will now extend into a future filled with a sense of grateful history, tradition, optimism, and great promise."

The acquisition is expected to close during the third quarter of2013 and is subject to Renasant and M&F shareholder approval, regulatory approval, and other conditions set forth in the merger agreement. Pursuant to the terms of the merger agreement, M&F Bank will merge with and into Renasant Bank immediately after the merger of M&F with and into Renasant.

45. The proposed takeover is the product of a fundamentally flawed process that is

designed to ensure the acquisition of FMFC by Renasant on terms preferential to Renasant and

FMFC's board members but detrimental to FMFC's shareholders.

46. For instance, the merger agreement contains several deal protection devices that

preclude topping bidders from offering more consideration to FMFC's shareholders. FMFC must

pay Renasant a $5.8 million termination fee if a topping bidder were to successfully offer more

consideration than Renasant, which fee would be absorbed by the topping bidder. This fee thus

increases the price a topping bidder would have to pay. But a topping bidder would be sufficiently

deterred from even bidding in the first place. The merger agreement precludes FMFC from

soliciting topping bidders. Thus a topping bidder would have to emerge on its own. If a topping

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bidder were to emerge and make a play for FMFC, FMFC is required to provide Renasant with the

information underlying the topping bidder's proposal within 48-hours. Given the highly-competitive

nature of the industry, these rapid information rights serve to dissuade a topping bidder as it will

have to reveal business strategies and interests to Renasant without any recourse or risk to Renasant.

The merger agreement then provides Renasant with 10 day matching rights that Renasant can use to

draw out a bidding process. This dissuades potential topping bidders because of, inter alia, the cost

of the time the topping bidder will spend during the matching rights process, which process the

topping bidder has no guarantee of winning.

47. Indeed, in light of FMFC's recent financial performance, these deal protection

measures will cause FMFC to be sold beneath true value. FMFC's stock has been trading above

$13.00 per share over the past five days and the implied value per share that will be realized by

FMFC's shareholders is only $12.35 per share. The process FMFC's board employed is obviously

unfair when comparing the consideration offered by Renasant to FMFCs current trading price.

48. This is not surprising considering the fact that FMFC was not put up for an auction.

Indeed, FMFC's board rejected a market check out of favoritism to Renasant, as Defendant Hugh S.

Potts, Jr., explained during a February 7, 2013 investor conference call:

MR. HABERMAN (Haberman Management Corp.): Good morning, gentlemen. Congratulations. A quick question for Mr. Potts. Was this an auction? I was wondering if you could give us a little color on the whole thing came about. And did you put the company out, you know, in terms of the bidding book? Or if you could shed some light on that that would be great.

MR. POTTS: It was an unsolicited call from an old friend, and during the course of the conversation and the refinement of the negotiations there was the assistance of a banker to measure the deal against other comparable transactions. So we felt that not only the match of the cultures and the personal acquaintance with the company but the financial metrics were sufficient for us to make the decision. But it was not an auction.

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49. In fact, Renasant itself has touted how detrimental the proposed takeover will be to

FMFC's shareholders in a recent investor presentation. For instance, Renasant provided the

following highlights in that presentation:

Summary Highlights Strategically advantageous

• Acquisition of 12(H- year old bank- with quality core customer base

• In-market transaction consistent with our acquisition philosophy

• Creates the 4th largest bank by pro forma deposit market share in Nfississippi

• Enhances fee revenue businesses of insurance, mortgage, and wealth management

• Complementary cultures and strong ties to community

• Strong, stable deposits and earnings generation complement de novo and out-of-state market expansion activities

Financially attractive • Immediate1v accreve to EPS. doub1e-6 EPS accretion projected hi 2014

• Tangible book value earn back in approximately 2i years

• LRR. approximately 20%

• Realization of significant expense synergies (25% of nonterest expense)

• Pro forma capital ratios above "well capita1zed" guideines

Low risk opportunity • Extensive due diligence process completed • Comprehensive rrfrw of loan and OREO portfoIs

* Citative crct rik

50. On a February 7, 2013 investor conference call, E. Robinson McGraw, the Chairman

and CEO of Renasant, further noted how beneficial the takeover would be in that the

[M] erger will strengthen the company's overall business lines by doubling its insurance operations and complementing its mortgage and wealth management divisions.

We are excited for the opportunity to expand our reach within every Renasant region, double our insurance operations, and enhance our mortgage and wealth management divisions. This merger creates a stronger Renasant franchise that allows not only new market entries and additional branch locations within our legacy markets but provides the realization of significant cost savings through strategic branch and back-office consolidations and future earnings growth by combining two strongly competitive community banking institutions.

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The M&F merger is a strategic event that will enhance our franchise, and with our successful track record in our Tennessee, Alabama, and Georgia mergers, we have a consistent transition process that will help to mitigate integration risk during this merger. The merger is expected to accelerate Renasant' s long-term earnings growth rates, provide us with new experienced banking team members and quality bank branches, along with the opportunity to provide Renasant's broad array of banking and insurance products to M&F's current client base.

51. Unless enjoined by this Court, the Defendants will continue to breach and/or aid the

breaches of fiduciary duties owed to Plaintiff and FMFC shareholders. Plaintiff and FMFC's

shareholders are damaged and injured by the proposed takeover of FMFC by Renasant but have no

adequate remedy at law.

CLASS ACTION ALLEGATIONS

52. Plaintiff brings this action on Plaintiff's own behalf and as a class action on behalf of

all holders of FMFC common stock who are being and will be harmed by the Defendants' actions

described below (the "Class"). Excluded from the Class are Defendants herein and any person, firm,

trust, corporation, or other entity related to or affiliated with any Defendants.

53. This action is properly maintainable as a class action under Rule 23.

54. The Class is so numerous that joinder of all members is impracticable.

55. There are questions of law and fact which are common to the Class and which

predominate over questions affecting any individual Class member. The common questions include,

inter alia, the following:

(a) whether the Individual Defendants have breached their fiduciary duties of

undivided loyalty, independence or due care with respect to Plaintiff and the other members of the

Class in connection with the proposed takeover of FMFC by Renasant;

(b) whether the Individual Defendants have breached their fiduciary duty to

secure and obtain the best price reasonable under the circumstances for the benefit of Plaintiff and

the other members of the Class in connection with the proposed takeover of FMFC by Renasant;

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(c) whether the Individual Defendants have breached any of their other fiduciary

duties to Plaintiff and the other members of the Class in connection with the proposed takeover of

FMFC by Renasant, including the duties of good faith, diligence, honesty and fair dealing;

(d) whether the Individual Defendants, in bad faith and for improper motives,

have impeded or erected barriers to discourage other strategic alternatives including offers from

interested parties for the Company or its assets;

(e) whether Plaintiff and the other members of the Class would be irreparably

harmed were the transactions complained of herein consummated; and

(f) whether Merchants and Renasant are aiding and abetting the wrongful acts of

the Individual Defendants.

56. Plaintiff's claims are typical of the claims of the other members of the Class and

Plaintiff does not have any interests adverse to the Class.

57. Plaintiff is an adequate representative of the Class, has retained competent counsel

experienced in litigation of this nature and will fairly and adequately protect the interests of the

Class.

58. The prosecution of separate actions by individual members of the Class would create

a risk of inconsistent or varying adjudications with respect to individual members of the Class which

would establish incompatible standards of conduct for the party opposing the Class.

59. Plaintiff anticipates that there will be no difficulty in the management of this

litigation. A class action is superior to other available methods for the fair and efficient adjudication

of this controversy.

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60. Defendants have acted on grounds generally applicable to the Class with respect to

the matters complained of herein, thereby making appropriate the relief sought herein with respect to

the Class as a whole.

CAUSES OF ACTION

COUNT I

Against the Individual Defendants for Breach of Fiduciary Duties

61. Plaintiff repeats and realleges each allegation set forth herein.

62. The Individual Defendants have knowingly and recklessly and in bad faith violated

fiduciary duties of care, loyalty, good faith and independence owed to the public shareholders of

FMFC and have acted to put the interests of Renasant ahead of the interests of FMFC shareholders.

63. By the acts, transactions and courses of conduct alleged herein, Defendants,

individually and acting as a part of a common plan, knowingly or recklessly and in bad faith are

attempting to unfairly deprive Plaintiff and other members of the Class of the true value of their

investment in FMFC.

64. As demonstrated by the allegations above, the defendants knowingly or recklessly

failed to exercise the care required, and breached their duties of loyalty, good faith and independence

owed to the shareholders of FMFC because, among other reasons, they failed to:

(a) fully inform themselves of the market value of FMFC before entering into the

merger agreement;

(b) act in the best interests of the public shareholders of FMFC common stock;

(c) maximize shareholder value;

(d) obtain the best financial and other terms when the Company's independent

existence will be materially altered by the proposed takeover of FMFC by Renasant; and


(e) act in accordance with their fundamental duties of good faith, due care and

loyalty.

65. By reason of the foregoing acts, practices and course of conduct, the Individual

Defendants have knowingly or recklessly and in bad faith failed to exercise ordinary care and

diligence in the exercise of their fiduciary obligations toward Plaintiff and the other members of the

Class.

66. Unless enjoined by this Court, the Individual Defendants will continue to knowingly

or recklessly and in bad faith breach their fiduciary duties owed to Plaintiff and the Class, and may

consummate the proposed takeover of FMFC by Renasant which will exclude the Class from the

maximized value they are entitled to all to the irreparable harm of the Class.

67. As a result of the Individual Defendants' unlawful actions, Plaintiff and the other

members of the Class will be irreparably harmed in that they will not receive the real value of their

equity ownership of the Company.

68. Plaintiff and the members of the Class have an inadequate remedy at law. Only

through the exercise of this Court's equitable powers can Plaintiff and the Class be fully protected

from the immediate and irreparable injury which the Individual Defendants' actions threaten to

inflict.

69. Plaintiff seeks to obtain a non-pecuniary benefit for the Class in the form of

injunctive relief against the Individual Defendants. Plaintiff's counsel are entitled to recover their

reasonable attorneys' fees and expenses as a result of the conference of a non-pecuniary benefit on

behalf of the Class, and will seek an award of such fees and expenses at the appropriate time.

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COUNT II

Against FMFC, Renasant and Merchants for Aiding & Abetting the Individual Defendants' Breach of Fiduciary Duties

70. Plaintiff repeats and realleges each allegation set forth herein.

71. Defendants FMFC, Merchants and Renasant are sued herein as aiders and abettors of

the breaches of fiduciary duties outlined above by the Individual Defendants.

72. The Individual Defendants breached their fiduciary duties of good faith, loyalty, and

due care to the FMFC shareholders by failing to:

(a) fully inform themselves of the market value of FMFC before entering into the

merger agreement;

(b) act in the best interests of the public shareholders of FMFC common stock;

(c) maximize shareholder value;

(d) obtain the best financial and other terms when the Company's independent

existence will be materially altered by the proposed takeover of FMFC by Renasant; and

(e) act in accordance with their fundamental duties of good faith, due care and

loyalty.

73. Such breaches of fiduciary duties could not and would not have occurred but for the

conduct of Defendants FMFC, Merchants and Renasant, which, therefore, aided and abetted such

breaches via entering into the merger agreement.

74. Defendants FMFC, Merchants and Renasant had knowledge that they were aiding and

abetting the Individual Defendants' breach of their fiduciary duties to the FMFC's shareholders.

75. Defendants FMFC, Merchants and Renasant rendered substantial assistance to the

Individual Defendants in their breach of their fiduciary duties to the FMFC's shareholders.

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76. As a result of FMFC's, Merchants' and Renasant's conduct of aiding and abetting the

Individual Defendants' breaches of fiduciary duties, Plaintiff and the other members of the Class

have been and will be damaged in that they have been and will be prevented from obtaining a fair

price for their shares.

77. Unless the actions of FMFC, Merchants and Renasant are enjoined by the Court, they

will continue to aid and abet the Individual Defendants' breach of their fiduciary duties owed to

Plaintiff and the members of the Class, and will aid and abet a process that inhibits the maximization

of shareholder value and the disclosure of material information.

78. Plaintiff and the other members of the Class have no adequate remedy at law.

79. Plaintiff seeks to obtain a non-pecuniary benefit for the Class in the form of

injunctive relief against defendants FMFC, Merchants and Renasant. Plaintiff's counsel are entitled

to recover their reasonable attorneys' fees and expenses as a result of the conference of a non-

pecuniary benefit on behalf of the Class, and will seek an award of such fees and expenses at the

appropriate time.

JURY TRIAL DEMAND

Plaintiff hereby demands trial by jury on all issues so triable

PRAYER FOR RELIEF

WHEREFORE, Plaintiff demands injunctive relief, in Plaintiff's favor and in favor of the

Class and against the Defendants as follows:

A. Declaring that this action is properly maintainable as a class action;

B. Declaring and decreeing that the merger agreement for the takeover of FMFC was

entered into in breach of the fiduciary duties of the Defendants and is therefore unlawful and

unenforceable;

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C. Enjoining the Defendants, their agents, counsel, employees and all persons acting

in concert with them from finalizing and consummating the proposed takeover of FMFC by

Renasant, unless and until the Company adopts and implements a procedure or process to i)

obtain the highest possible value for shareholders, and ii) provide all material disclosures to

shareholders with which they are able to make informed decisions about whether to tender or

vote their shares in favor of the proposed takeover of FMFC by Renasant;

D. Directing the Individual Defendants to exercise their fiduciary duties to obtain a

transaction, which is in the best interests of FMFC shareholders until the process for the sale or

auction of the Company is completed and the highest possible value is obtained;

E. Rescinding, to the extent already implemented, the merger agreement or any of

the terms thereof;

F. Implementation of a constructive trust, in favor of Plaintiff, upon any benefits

improperly received by the defendants as a result of their wrongful conduct;

G. Awarding Plaintiff the costs and disbursements of this action, including

reasonable attorneys' and experts' fees; and

H. Granting such other and further equitable relief s this Court may deem just and

proper.

DATED: March 4, 2013 s/ ad Pigott kAD PIGOTT, Mississippi Bar No. 4350

CLIFF JOHNSON

PIGOTT & JOHNSON, P.A. 775 N. Congress Street Jackson, Mississippi 39202 (601) 354-2121 (601) 354-7854 (fax)

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Of Counsel:

ROBBINS GELLER RUDMAN & DOWD LLP

RANDALL J. BARON DAVID T. WISSBROECKER 655 West Broadway, Suite 1900 San Diego, CA 92101 Telephone: 619/231-1058 619/231-7423 (fax)

ROBBINS GELLER RUDMAN & DOWD LLP

STUART A. DAVIDSON CULLIN A. O'BRIEN MARK J. DEARMAN CHRISTOPHER MARTINS 120 East Palmetto Park Road, Suite 500 Boca Raton, FL 33432 Telephone: 561/750-3000 561/750-3364 (fax)

Counsel for Plaintiff and the Class

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