The Federal Reserve Board has lifted a memorandum of understanding against First M&F (FMFC) in Kosciusko, Miss.

As part of the November 2009 agreement, the $1.5 billion-asset company was barred from paying dividends to shareholders or interest on trust-preferred securities without first securing Fed approval. First M&F had also agreed to refrain from paying dividends on preferred stock it issued to the Treasury Department in return for $30 million from the Troubled Asset Relief Program.

First M&F said in its latest quarterly filing with the Securities and Exchange Commission that the Fed had been approving dividend payments to the Treasury and shareholders, along with interest payments on its trust-preferred securities.

The company's third-quarter earnings rose 7% from a year earlier, to $479,000.

First M&F, which took steps in 2011 to operate more efficiently and to prepare for growth opportunities, had a Tier 1 leverage ratio of 8.81% at Sept. 30, compared to 8.01% a year earlier. Its total risk-based capital ratio was 12.76% at the end of the third quarter, compared to 12.08% a year earlier.

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