F&M Bank Corp. Reports Year-End and Fourth Quarter 2023 Earnings and Quarterly Dividend

/in
 | 01/29/2024

TIMBERVILLE, VA / ACCESSWIRE / January 29, 2024 / F&M Bank Corp. (the “Company” or “F&M”), (OTCQX:FMBM), the parent company of Farmers & Merchants Bank (“F&M Bank” or the “Bank”) today reported results for the quarter and year ended December 31, 2023.

Net income was $457,000 or $0.13 per share for the quarter ended December 31, 2023, compared to $1.0 million or $0.29 per share for the linked quarter ended September 30, 2023, and compared to $1.7 million or $0.49 per share for the prior year quarter ended December 31, 2022. For the year ended December 31, 2023, net income was $2.8 million or $0.79 per share, which includes $1.8 million in after-tax, one-time expenses. These one-time expenses, which are intended to drive cost savings in future periods, include severance accruals for former bank officers that occurred in the first half of 2023 and expenses related to a voluntary early exit plan announced in the fourth quarter. By comparison, the Company earned $8.3 million or $2.41 per share in 2022.

At December 31, 2023, the Company had total assets of $1.29 billion, total loans of $822.1 million, and total deposits of $1.13 billion. This reflects growth of $78.5 million in total loans and $49.9 million in total deposits since the end of 2022. Our loan portfolio consists of a solid mix of loan types, which we believe provides a hedge against risks associated with concentrations in any particular type of loan.

“I believe in the years ahead-and even now-we can point to April 2023 as a new beginning for F&M,” said Mike Wilkerson, chief executive officer. “As a leadership team, we fully agreed then that our goal is to ensure the long-term good health and future of F&M Bank, or as we like to say, ‘the next 115 years.’ Every decision we make has, and will continue to, reflect this commitment.

“To that end, we developed and are executing a multi-year strategic plan focused on growing profitability and capital and managing asset growth and liquidity in a manner that should improve return on investment to our shareholders. A key part of this plan involved assessing our Company and all of its business lines, making changes designed to improve our organizational effectiveness, enhance opportunities to generate revenue, and control and reduce expenses. Progress is already being made, and that progress is reflected in this financial report.

“Our industry faced significant challenges over the past few years and will continue to face challenges, as it always has. Our goal is to be prepared to meet whatever challenges and the best way to be prepared is on a foundation of profitability. We have a great bank and serve a diverse and dynamic market in Virginia’s Shenandoah Valley. Along with everyone on our management team, I am excited about the future.”

FOURTH QUARTER INCOME STATEMENT REVIEW

Overview
Net income for fourth quarter 2023 was $457,000 or $0.13 per share, compared to $1.0 million or $0.29 per share for third quarter 2023, and $1.7 million or $0.49 per share for fourth quarter 2022. This quarter’s net income includes $1.1 million in after-tax severance expense related to a voluntary early retirement program.

Interest income for fourth quarter 2023, was $15.2 million, an increase of $585,000 over third quarter 2023 and $3.1 million over the prior year fourth quarter, due to higher loan volume and higher interest rates. Higher rates on interest bearing deposits, specifically money market accounts and time deposits, coupled with interest paid on short-term borrowings, increased the Bank’s interest expense to $7.0 million for fourth quarter 2023, up $408,000 from third quarter 2023 and up $3.7 million over fourth quarter 2022.

During fourth quarter 2023, the Bank recorded a $134,000 recovery of credit losses compared to provisions of $620,000 in third quarter 2023, and $716,000 in fourth quarter 2022. The recovery was the result of improvements in the economic, credit quality and collateral dependent qualitative factors across several segments of the loan portfolio. At December 31, 2023, the Allowance for Credit Losses (ACL) totaled $8.3 million or 1.01% of gross loans outstanding.

Net Interest Income
For fourth quarter 2023, net interest income totaled $8.1 million, an increase of $177,000 from third quarter 2023, as the $585,000 increase in interest income outpaced the $408,000 increase in interest expense. Interest income benefited from higher average loan balances and higher loan yields from new originations and adjustable rate loans. The increase in interest expense is due to higher average balances and, interest rates on interest-bearing deposits and short-term debt. The Bank’s net interest margin decreased by one basis point to 2.66% on a linked quarter basis.

Compared to fourth quarter 2022, net interest income declined by $583,000, and our net interest margin decreased by 38 basis points. Interest income and fees on loans were $3.2 million higher than the same quarter last year due to higher rates on adjustable rate loans and $78.5 million in loan growth since December 31, 2022. Interest expense grew by $3.7 million from the same quarter last year due to higher interest rates on deposits and rates paid on short term FHLB advances, as well as higher average balances on interest-bearing deposits and short-term debt. Since last December, we have seen a shift from noninterest bearing demand deposits to interest-bearing deposits, with noninterest bearing deposits declining by $29.3 million and interest-bearing deposits increasing by $79.2 million.

Noninterest Income
Noninterest income, which includes gains and losses, totaled $2.5 million for fourth quarter 2023, which was a decrease of $108,000 from third quarter 2023. During the fourth quarter, the Company received a $232,000 milestone gain from the 2022 sale of its partnership interest in Infinex. In addition, there was a $122,000 quarter-over-quarter increase in investment services and insurance income. Offsetting these increases were declines in mortgage banking income of $182,000 and title insurance income of $179,000.

Compared to fourth quarter 2022, noninterest income declined by $986,000 to $2.5 million. In fourth quarter 2022, the Company reported a $3.8 million gain from the sale of its partnership interest in Infinex and $2.8 million in losses from the sale of bonds. In fourth quarter 2023, there was a smaller milestone gain of $232,000 received related to the Infinex sale. The net effect of the change in gains and losses was a decrease of $701,000 in noninterest income. Other changes in noninterest income include a $48,000 increase in service charges on deposit accounts, $44,000 increase in investment services and insurance income, and a $26,000 increase in ATM and check card fees. There were decreases of $23,000 in mortgage banking income, $98,000 in title insurance income, and $185,000 in other operating income.

Noninterest Expenses
Noninterest expenses totaled $10.5 million for fourth quarter 2023, compared to $8.9 million in third quarter, an increase of $1.6 million on a linked-quarter basis, led by an increase in salary and employee benefits expenses. In fourth quarter, the Bank accrued $1.4 million in pre-tax expenses related to a voluntary early exit plan that impacted these expense categories. Also contributing to the increase in noninterest expense was an increase in legal and professional fees expense of $106,000, an increase in telecommunications and data processing expense of $98,000, and an increase in other operating expenses totaling $230,000. There was a decrease of $163,000 in equipment expense and smaller fluctuations in other expense categories that combined to increase $21,000 from last quarter.

Compared to the same quarter in 2022, noninterest expenses increased $941,000, driven by the aforementioned increase in salary expense. Other significant increases were $177,000 in FDIC insurance expense and $246,000 in other operating expenses. Offsetting these increases were declines of $117,000 in marketing expenses, $205,000 in legal and professional expenses and $118,000 in telecommunications and data processing expenses. There were smaller fluctuations in other expense categories that netted to a decrease of $83,000 from fourth quarter 2022.

YEAR-TO-DATE INCOME STATEMENT REVIEW

Overview
Net income for the year ended December 31, 2023, was $2.8 million or $0.79 per share, compared to $8.3 million or $2.41 per share for the same period in 2022. During 2023, there were severance accruals for two former bank officers and for the voluntary early retirement program totaling $1.8 million in after-tax, one-time expenses. Interest income for 2023 was $56.3 million, an increase of $14.2 million over 2022, due to growth in the loan portfolio and higher interest rates. Higher rates on interest bearing deposits, specifically money market accounts and time deposits, coupled with interest paid on short-term borrowings, increased the Bank’s interest expense to $24.7 million, up $17.4 million from the year ended December 31, 2022.

In 2023, the Bank recorded a $1.0 million provision for credit losses compared to $866,000 for the same period in 2022. A provision is a charge to earnings to reserve for expected potential future credit losses.

Net Interest Income
In 2022 and 2023, short term interest rates rose significantly due to eleven Federal Reserve interest rate hikes totaling 525 basis points. This directly impacted the Bank’s cost of deposits and short-term borrowings, while the longer-term rates used to price loans have not increased to the same extent. For the year 2023, net interest income totaled $31.7 million, a decrease of $3.2 million from 2022, as a $14.2 million increase in interest income was outpaced by a $17.4 million increase in interest expense. Comparing the two years, higher loan interest income boosted the earning asset yield by 126 basis points to 4.74% while the cost of funds increased by 184 basis points resulting in a decrease in net interest margin of 36 basis points to 2.67%.

Noninterest Income

Noninterest income, including gains and losses, totaled $10.2 million for the year ended December 31, 2023, which was a decrease of $1.1 million from the year ended December 31, 2022. The primary reasons for this decrease were reductions of $33,000 in service charges on deposit accounts, $1.1 million in mortgage banking income, and $244,000 in title insurance income. The declines in mortgage banking and title insurance income are due to the overall decrease in mortgage banking volume and a shift from loans being sold on the secondary market to portfolio adjustable rate mortgages (ARMs) and construction products. These decreases were partially offset by a $459,000 increase in income from BOLI resulting from a one-time gain received in the second quarter, an increase of $260,000 in investment services and insurance income, higher ATM and check card fees which grew by $174,000, and a $2,000 increase in other operating income. In 2022, there was a $2.9 million loss on the sale of investment securities compared to no loss in 2023. Also in 2022, the Company sold its partnership interest in Infinex, resulting in a $3.8 million gain in 2022 and a second smaller milestone gain of $232,000 in December 2023.

Noninterest Expenses
Noninterest expenses totaled $38.8 million in 2023, compared to $36.5 million in 2022, an increase of $2.2 million. A primary driver for this increase was the $2.3 million in pre-tax severance expenses related to the voluntary early exit plan accrued in the fourth quarter and severance accruals for two former executives earlier in 2023. These accruals contributed to the $1.9 million increase in salary expense to $18.9 million. Other significant year-over-year increases include higher equipment expense which increased $252,000, FDIC Insurance expense which increased $226,000, legal and professional fees which were $85,000 higher than last year, and higher other operating expenses, which were up $853,000. These higher expenses were partially offset by decreases in employee benefits expense and telecommunications and data processing expenses which were down $676,000 and $253,000, respectively, as well as smaller decreases in other expense categories.

BALANCE SHEET REVIEW

On December 31, 2023, assets totaled $1.29 billion, an increase of $48.7 million over December 31, 2022. Total loans increased by $78.5 million to $822.1 million, including increases of $45.5 million in 1-to-4 family adjustable rate mortgage loans, $13.5 million in dealer financing loans, $8.5 million in commercial construction loans, and $10.4 million in agricultural loans. Investment securities decreased by $24.0 million due to paydowns on U.S. Agency mortgage-backed securities and expected bond maturities that were partially offset by an improvement in the unrealized loss on the bond portfolio. During 2023, the unrealized loss declined by $10.0 million to $40.2 million from $51.2 million at December 31, 2022.

Total deposits on December 31, 2023, were $1.13 billion, an increase of $49.9 million from the end of 2022, as the Bank was able to attract deposits by offering higher rates on money market and time deposit accounts, and by opening insured cash sweep accounts for new and existing customers. The additional deposits allowed us to reduce Federal Home Loan Bank (FHLB) advances by $10.0 million. At December 31, 2023, 11.60% of the Bank’s total deposits were uninsured.

Shareholders’ equity increased by $7.5 million to $78.3 million due to $580,000 in shares issued, an improvement of $8.7 million in the accumulated other comprehensive loss associated with the unrealized loss on available for sale investment securities and $318,000 associated with the pension liability, and net income of $2.8 million. These increases were offset by a $1.2 million adjustment to retained earnings upon the adoption of the Current Expected Credit Loss (CECL) accounting standard on January 1, 2023, and dividends to shareholders of $3.6 million. Tangible book value per common share has increased to $21.551 from $19.551 at December 31, 2022. Tangible book value per common share is a non-GAAP financial measure. Further information can be found under the heading “Non-GAAP Financial Measures” and in the footnotes to the table accompanying this release.

LIQUIDITY

The Company’s on-balance sheet asset liquidity includes cash and cash equivalents, unpledged investment securities, and loans held for sale, which totaled $178.0 million at December 31, 2023, down from $439.9 million at December 31, 2022. In 2023 the Bank pledged investment securities with a par value totaling $220.8 million to the Federal Reserve System’s Bank Term Funding Program (BTFP). In March 2023, the Board of Governors of the Federal Reserve System established the BTFP to provide any U.S. federally insured depository institution, including the Bank, with a line of credit equal to the par value of securities pledged to the BTFP. Advances from the BTFP may be requested by the Bank for up to one year until March 31, 2024. The Bank also pledged securities with a market value of $19.5 million to the Federal Reserve Discount Window. The Bank did not borrow from the BTFP or the Federal Reserve Discount Window during 2023.

In addition to the BTFP, the Bank has access to off-balance sheet liquidity through unsecured Federal funds lines totaling $90.0 million December 31, 2023, and December 31, 2022. The Bank also has a secured line of credit with the FHLB with available credit of $90.1 million and $39.1 million as of December 31, 2023, and December 31, 2022, respectively. The FHLB line of credit is secured by a blanket lien on qualifying loans in the residential, commercial, agricultural real estate, and home equity portfolios.

The Bank is scheduled to receive $93.7 million from bond paydowns and maturities by the end of 2024 which can be used to fund future loan growth and for other purposes.

LOAN PORTFOLIO

The Company’s loan portfolio is diversified with its two largest segments being residential mortgage loans originated through its subsidiary F&M Mortgage, and automobile loans originated by its dealer finance division.

Loan Category
 Balance as of December 31, 2023 (in thousands) Percentage of Total Portfolio
Residential mortgage loans
 $204,344 24.86 %
Automobile loans
 122,924 14.95 %
Non owner-occupied commercial real estate
 106,181 12.92 %
Owner-occupied commercial real estate
 92,362 11.23 %
Secured by farmland
 81,657 9.93 %
Commercial and industrial (includes Agriculture Loans)
 58,734 7.14 %
Home equity lines of credit
 45,749 5.57 %
Other construction and land development loans
 47,749 5.81 %
Residential construction loans
 30,488 3.71 %
Credit card and other consumer loans
 17,278 2.10 %
Multi-family
 8,203 1.00 %
Other loans
 6,423 0.78 %
Total
 $822,092 100.00 %

ASSET QUALITY AND ALLOWANCE FOR CREDIT LOSSES

Nonperforming loans (NPLs) as a percentage of total assets were 0.50% at December 31, 2023, compared to 0.18% at December 31, 2022. Net charge-offs as a percentage of average loans were 0.38% for the quarter ended December 31, 2023, up from 0.16% for fourth quarter 2022. For the year ended December 31, 2023, the net charge off percentage was 0.19%, up from 0.10% in 2022.

The Bank recorded a recovery of credit losses of $134,000 in fourth quarter 2023 and a provision for credit losses of $1.0 million for the year ended December 31, 2023. The recovery was the result of improvements in the economic, credit quality and collateral dependent qualitative factors across several segments of the loan portfolio. In fourth quarter 2022, there was a provision for credit losses of $716,000 and a total provision of $866,000 for 2022. The ACL was $8.3 million at December 31, 2023, up $385,000 from December 31, 2022. The ACL as a percentage of total loans was 1.01% at December 31, 2023, compared to 1.07% at December 31, 2022. The reserve for unfunded commitments was $690,000 at December 31, 2023.

DIVIDEND DECLARATION

On January 18, 2024, our Board of Directors declared a fourth quarter dividend of $0.26 per share to common shareholders. Based on our most recent trade price of $18.99 per share, this constitutes a 5.48% yield on an annualized basis. The dividend will be paid on February 29, 2024, to shareholders of record as of February 14, 2024.

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ABOUT US

F&M Bank Corp. is an independent, locally owned, financial holding company, offering a full range of financial services through our subsidiary, Farmers & Merchants Bank’s (F&M Bank) fourteen banking offices in Rockingham, Shenandoah, and Augusta counties, Virginia, and the cities of Winchester and Waynesboro, Virginia. The Company also owns F&M Mortgage, a mortgage lending subsidiary, and VSTitle, a title company subsidiary. Founded in 1908 as a community venture to serve the farmers and merchants of the Shenandoah Valley, where both the Company and the Bank are headquartered, F&M Bank remains more committed than ever to the success of the agricultural industry, small business ventures, and the nonprofit sector. The only publicly traded organization based in Rockingham County, the Company’s core values of enthusiasm, flexibility, responsiveness, community, and fun drive its corporate philanthropy, volunteerism, and local decision-making. With a strong suite of financial products and services, philanthropic efforts, and a team dedicated to serving, our responsibility is to provide a bright future right here where we all live, work, and play. Additional information may be found by visiting our website, fmbankva.com.

NON-GAAP FINANCIAL MEASURES

The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles (“GAAP”) and prevailing practices in the banking industry. However, management uses certain non-GAAP measures, including tangible common equity and tangible book value per share, to supplement the evaluation of the Company’s financial condition and performance. Management believes presentation of these non-GAAP financial measures provides useful supplemental information that is essential to a proper understanding of the Company’s operating results. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. A definition of GAAP to non-GAAP measures is included in the footnotes to table accompanying this release.

FORWARD-LOOKING STATEMENTS

This press release may contain “forward-looking statements” as defined by federal securities laws, which are subject to significant risks and uncertainties. These include statements regarding future plans, strategies, results, or expectations that are not historical facts, and are generally identified by the use of words such as “believe,” “expect,” “intend,” “anticipate,” “will,” “estimate,” “project” or similar expressions. These statements are based on estimates and assumptions, and our ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Our actual results could differ materially from those contemplated by these forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in local and national economies or market conditions; changes in interest rates; regulations and accounting principles; changes in policies or guidelines; loan demand and asset quality, including values of real estate and other collateral; deposit flow; the impact of competition from traditional or new sources; and the other factors detailed in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended December 31, 2022. Readers should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on such statements. We undertake no obligation to update these statements following the date of this press release.

FOR MORE INFORMATION, CONTACT
Lisa F. Campbell | EVP | Chief Financial Officer
540-896-1705
fmbankva.com
F&M Bank Corp.
Summary Consolidated Financial Data (unaudited)
Dollars in Thousands, except for per share data
Quarter to Date Year-to-Date
12/31/2023 9/30/2023(3) 6/30/2023 3/31/2023 12/31/2022(3) 9/30/2022(3) 6/30/2022(3) 3/31/2022(3) 12/31/2023 12/31/2022(3)
Condensed Balance Sheet
Cash and cash equivalents $23,717 $22,159 $36,505 $31,273 $34,953 $30,312 $17,254 $48,376 $23,717 $34,953
Investment securities 379,557 383,502 394,868 398,960 403,537 440,294 456,636 471,089 379,557 403,537
Loans held for sale 1,119 2,028 881 1,242 1,373 3,310 5,449 2,479 1,119 1,373
Gross loans 822,092 805,602 776,260 756,920 743,604 699,592 690,497 659,560 822,092 743,604
Allowance for credit losses (8,321) (9,166) (8,769) (8,546) (7,936) (7,513) (7,798) (7,389) (8,321) (7,936)
Goodwill 3,082 3,082 3,082 3,082 3,082 3,082 3,082 3,082 3,082 3,082
Other assets 73,350 75,212 75,543 69,944 67,289 67,572 66,432 61,062 73,350 67,289
Total Assets $1,294,596 $1,282,419 $1,278,370 $1,252,875 $1,245,902 $1,236,649 $1,231,552 $1,238,259 $1,294,596 $1,245,902
Noninterest bearing deposits $264,254 $277,219 $277,578 $284,060 $293,596 $300,394 $291,728 $298,676 $264,254 $293,596
Interest bearing deposits 868,982 856,691 859,534 821,175 789,781 817,000 808,482 813,619 868,982 789,781
Total Deposits 1,133,236 1,133,910 1,137,112 1,105,235 1,083,377 1,117,394 1,100,210 1,112,295 1,133,236 1,083,377
Short-term debt 60,000 60,000 47,000 55,000 70,000 30,000 30,000 – 60,000 70,000
Long-term debt 6,932 6,922 6,911 6,901 6,890 6,879 11,788 21,780 6,932 6,890
Other liabilities 16,105 14,567 15,153 13,104 14,843 16,699 17,604 16,199 16,105 14,843
Total Liabilities 1,216,273 1,215,399 1,206,176 1,180,240 1,175,110 1,170,972 1,159,602 1,150,274 1,216,273 1,175,110
Shareholders’ equity 78,323 67,020 72,194 72,635 70,792 65,677 71,950 87,985 78,323 70,792
Total Liabilities and Shareholders’ Equity $1,294,596 $1,282,419 $1,278,370 $1,252,875 $1,245,902 $1,236,649 $1,231,552 $1,238,259 $1,294,596 $1,245,902
Condensed Income Statement
Interest income and fees on loans $13,061 $12,525 $11,517 $10,854 $9,884 $8,881 $7,993 $7,510 $47,957 $34,268
Interest income and fees on loans held for sale 22 19 25 22 16 29 32 29 88 106
Income on cash and securities 2,074 2,028 2,082 2,097 2,157 2,102 1,984 1,522 8,281 7,765
Total Interest Income 15,157 14,572 13,624 12,973 12,057 11,012 10,009 9,061 56,326 42,139
Interest expense on deposits 6,108 5,811 5,216 4,042 2,675 1,378 837 845 21,177 5,735
Interest expense on short-term debt 812 702 523 992 556 158 46 – 3,029 760
Interest expense on long-term debt 116 115 116 112 122 345 124 159 459 750
Total Interest Expense 7,036 6,628 5,855 5,146 3,353 1,881 1,007 1,004 24,665 7,245
Net Interest Income 8,121 7,944 7,769 7,827 8,704 9,131 9,002 8,057 31,661 34,894
Provision for (recovery of) credit losses (134) 620 539 – 716 – 600 (450) 1,025 866
Noninterest Income 2,464 2,572 2,752 2,366 3,450 2,282 3,077 2,483 10,154 11,292
Noninterest Expense 10,482 8,922 10,172 9,189 9,541 8,872 9,559 8,550 38,765 36,522
Income tax expense (benefit) (220) (44) (431) (51) 200 237 131 (88) (746) 480
Net Income $457 $1,018 $241 $1,055 $1,697 $2,304 $1,789 $2,528 $2,771 $8,318
Per Share Data
Earnings per common share – basic $0.13 $0.29 $0.07 $0.30 $0.49 $0.67 $0.51 $0.74 $0.79 $2.41
Book Value per Share 22.47 19.43 20.75 20.86 20.48 19.02 21.01 29.42 22.47 20.48
Tangible Book Value per Share (1) 21.55 18.50 19.82 19.93 19.55 18.08 20.06 28.47 21.55 19.55
Key Performance Ratios
Return on Average Assets 0.14% 0.32% 0.08% 0.34% 0.54% 0.74% 0.58% 0.83% 0.22% 0.67%
Return on Average Equity 2.49% 5.80% 1.33% 5.97% 9.87% 13.28% 8.97% 12.91% 3.72% 8.53%
Noninterest Income / Average Assets 0.76% 0.80% 0.87% 0.77% 1.10% 0.73% 1.00% 0.81% 0.80% 0.92%
Noninterest Expense / Average Assets 3.23% 2.76% 3.22% 2.98% 3.05% 2.85% 3.10% 2.79% 3.05% 2.96%
Efficiency Ratio (2) 97.28% 82.60% 94.56% 88.10% 83.11% 75.62% 76.09% 78.68% 90.66% 78.30%
Net Interest Margin 2.66% 2.67% 2.66% 2.76% 3.04% 3.11% 3.13% 2.82% 2.67% 3.03%
Earning Asset Yield 4.96% 4.87% 4.65% 4.57% 4.21% 3.75% 3.48% 3.17% 4.74% 3.48%
Cost of Interest Bearing Liabilities 3.00% 2.87% 2.61% 2.40% 1.54% 0.87% 0.48% 0.49% 2.73% 0.62%
Cost of Funds 2.37% 2.26% 2.04% 1.83% 1.18% 0.66% 0.36% 0.38% 2.33% 0.49%
Net Interest Spread 1.96% 2.00% 2.04% 2.17% 2.67% 2.88% 3.00% 2.68% 2.01% 2.86%
Net Charge-offs $770 $193 $344 $166 $293 $285 $192 $(92) $1,473 $678
Net Charge-offs as a % of Avg Loans 0.38% 0.10% 0.18% 0.09% 0.16% 0.16% 0.12% -0.06% 0.19% 0.10%
Non-Performing Loans $6,469 $3,586 $1,997 $1,782 $2,262 $2,408 $1,906 $4,799 $6,469 $2,262
Non-Performing Loans to Total Assets 0.50% 0.28% 0.16% 0.14% 0.18% 0.19% 0.15% 0.39% 0.50% 0.18%
Non-Performing Assets $6,524 $3,586 $1,997 $1,782 $2,262 $2,408 $2,103 $4,799 $6,524 $2,262
Non-Performing Assets to Total Assets 0.50% 0.28% 0.16% 0.14% 0.18% 0.19% 0.17% 0.39% 0.50% 0.18%
ACL/ALLL as a % of Total Loans 1.01% 1.14% 1.13% 1.13% 1.07% 1.07% 1.13% 1.12% 1.01% 1.07%
Loans to Deposits 72.54% 71.05% 68.27% 68.48% 68.64% 62.61% 62.76% 59.30% 72.54% 68.64%
(1) Tangible book value per share is calculated by subtracting goodwill and other intangibles from total shareholders’ equity and dividing the result by the common shares outstanding. Tangible book value per share is a non-GAAP financial measure that management believes provides investors with important information that may be related to the valuation of common stock.
(2) The Efficiency Ratio equals noninterest expenses divided by the sum of tax equivalent net interest income and noninterest income. Noninterest income excludes gains (losses) on securities transactions and low-income housing partnership losses. Noninterest expense excludes amortization of intangibles.
(3) Certain reclassifications have been made in the 2022 financial information to conform to reporting for the 2023. These reclassifications are not considered material and had no impact on prior year’s net income, balance sheet or shareholders’ equity.

SOURCE: F&M Bank Corp

View the original press release on accesswire.com

F&M Bank to Host VBA Bank Day Student Scholarship Program in March

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F&M Bank is excited to partner again with the Virginia Bankers Association Education Foundation (VBA) to offer your seniors a unique scholarship opportunity on March 19, 2024 called Bank Day.

What is Bank Day?

The third Tuesday in March was declared Bank Day by the Virginia General Assembly in 1991.  Through this program, high school seniors learn about banking, financial services, career opportunities within the banking industry, and the vital role banks play in their communities.  From their experience, the students are required to write essays on their experiences. Thirteen scholarships will be awarded based on the essays.

Students will have access to a VBA-created Bank Day resource webpage during the month of March. This resource page will house relevant information that students will need to research to complete their essays for a chance to win college scholarships. F&M Bank will also be hosting students in-person, 9:00am-1:00pm on Tuesday, March 19, for an opportunity to learn more about our bank, the banking industry in Virginia, how we support our community, and financial career opportunities. More information about this gathering will be shared with students upon registration.

How much scholarship money is available?

A total of $26,000 will be awarded to twelve students across the Commonwealth.

  • Six honorable mention winners, each winning a $1,000 scholarship.
  • Six regional winners, each winning a $2,500 scholarship.
  • One of the regional winners will also be named the statewide winner, earning an extra $5,000 scholarship for a total of $7,500 in college scholarships!

How can your students participate?

To participate, students must be currently enrolled as seniors in a Virginia high school with cumulative GPAs of 3.0 or higher. Interested students must register online by March 3rd through the VBA using the following link: VBA Bank Day Scholarship Program – 2024 Student Registration Form (formpl.us).

Contact marketing@fmbankva.com for more information!

F&M Bank Corp. Reports Year-to-Date and Third Quarter 2023 Results and Quarterly Dividend

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F&M Bank Corp. Reports Year-to-Date and Third Quarter 2023 Results and Quarterly Dividend Press Release | 11/01/2023

F&M Bank grows loans and net income in the third quarter, focuses on future growth and opportunities

See associated, unaudited consolidated financial data for additional information

TIMBERVILLE, VA / ACCESSWIRE / November 1, 2023 / F&M Bank Corp. (the “Company” or “F&M”), (OTCQX:FMBM), the parent company of Farmers & Merchants Bank (“F&M Bank” or the “Bank”) today reported results for the third quarter and nine-month period ended September 30, 2023.

Net income was $1.0 million or $0.29 per share for the quarter ended September 30, 2023, compared to $241,000 or $0.07 per share for the linked quarter ended June 30, 2023, and compared to $2.3 million or $0.67 per share for the prior year quarter ended September 30, 2022. For the nine months ended September 30, 2023, net income was $2.3 million, which includes $810,000 in after-tax, one-time expenses, including severance accruals for former bank officers. By comparison, the Company earned $6.6 million for the same period in 2022.

At September 30, 2023, the Company had total assets of $1.28 billion, total loans of $805.6 million, and total deposits of $1.13 billion. This reflects growth of $62.0 million in total loans and $50.5 million in total deposits since the end of 2022. Our loan portfolio consists of a solid mix of loan types, which we believe provides a hedge against risks associated with a concentration in any particular type of loan.

Commenting on these results, CEO Mike Wilkerson said, “Our goal is to remain the bank for the Shenandoah Valley. Our focus is on earning and keeping customer relationships, growing core deposits through these relationships, and extending fairly priced loans that help our customers and the Valley grow and remain strong. Deposit growth is a critical aspect of lending. Deposits entrusted to us are reinvested right here through loans that meet the needs of individuals and businesses who are strengthening our communities and providing jobs to our citizens. Due to the current interest rate environment, these new loans and those with adjustable interest rates are intended to reposition our loan portfolio to one that produces a higher yield.

“From an economic standpoint, 2023 continues to challenge everyone. In spite of that, we believe F&M’s balance sheet is strong, our loan portfolio is diverse and sound, our deposit base is balanced, and we have ample liquidity. These are all key indicators of a strong bank. Our leadership team is pleased with the Bank’s growth in both deposits and loans, while maintaining pricing discipline and asset quality. We continuously assess all of our business lines and make strategic adjustments intended to optimize capital, liquidity, and assets to provide future earnings, with safety and soundness as our foundation.

“Our team members, who are all invested in the health and well-being of their families, friends, and neighbors in the Shenandoah Valley, provide great customer service, and serve our communities with their time, talents, and energy. They understand the meaning and the importance of the words ‘community bank.'”

THIRD QUARTER INCOME STATEMENT REVIEW

Overview
Net income for third quarter of 2023 was $1.0 million or $0.29 per share, compared to $241,000 or $0.07 per share for the second quarter 2023, and $2.3 million or $0.67 per share for third quarter 2022. Interest income for the three months ended September 30, 2023, was $14.6 million, an increase of $993,000 over second quarter 2023 and $3.6 million over the prior year third quarter, due to higher loan volume and higher interest rates. Higher rates on interest bearing deposits, specifically money market accounts and time deposits, coupled with interest paid on short-term borrowings, increased the Bank’s interest expense to $6.6 million for third quarter 2023, up $773,000 from second quarter 2023 and up $4.7 million over third quarter 2022.

During third quarter 2023, the Bank recorded a $620,000 provision for credit losses due to loan growth of $29.3 million and $193,000 in net charge-offs compared to a provision of $539,000 in second quarter 2023, and no provision for credit losses in third quarter 2022. At September 30, 2023, the Allowance for Credit Losses (ACL) totaled $9.2 million or 1.14% of gross loans outstanding.

Net Interest Income
For third quarter 2023, net interest income totaled $8.0 million, an increase of $220,000 from second quarter 2023, as a $993,000 increase in interest income outpaced a $773,000 increase in interest expense. Interest income benefited from higher average loan balances and higher loan yields from new originations and adjustable-rate loans. The increase in interest expense is due to higher average balances and interest rates on interest-bearing deposits and short-term debt. The Bank’s net interest margin increased by one basis point to 2.67% on a linked quarter basis.

Compared to third quarter 2022, net interest income declined by $1.1 million, and our net interest margin decreased by 41 basis points. Interest income and fees on loans were $3.6 million higher than the same quarter last year due to higher rates on adjustable-rate loans and the $106.0 million in loan growth since September 30, 2022. Interest expense grew by $4.7 million from the same quarter last year due to higher interest rates on deposits and rates paid on short term FHLB advances, as well as higher average balances on interest-bearing deposits and short-term debt. Since last September, we have seen a shift from noninterest bearing demand deposits to interest-bearing deposits with noninterest bearing deposits declining by $23.2 million and interest-bearing deposits increasing by $39.7 million.

Noninterest Income
Noninterest income totaled $2.5 million for third quarter 2023, which was a decrease of $225,000 from second quarter 2023. Last quarter, income from Bank Owned Life Insurance (BOLI) was $441,000 higher than normal due to gains. In third quarter 2023, BOLI income was $181,000, which represents a return to a more normal pace as compared to the second quarter. Increases in title insurance income of $67,000 and other operating income of $154,000 partially offset the decline in BOLI income.

Noninterest income increased $245,000 from the third quarter of 2022. Investment services and insurance income increased by $58,000, title insurance income increased by $68,000, ATM and check card fees were up $44,000 and other operating income was up $201,000, which offset a decline in mortgage banking income of $130,000.

Noninterest Expenses
Noninterest expenses totaled $8.9 million in third quarter 2023, compared to $10.2 million in second quarter, a decrease of $1.3 million led by a decrease of $809,000 in salary expense. In the second quarter, the Bank accrued a potential one-time severance payment to a former officer in the amount of $764,000. Without that accrual, salary expense would have been $4.3 million. Also contributing to the decrease in noninterest expenses is a decrease in employee benefits expense of $187,000, a decrease in equipment expense of $99,000, a decrease in legal and professional fees expense of $212,000, and a decrease in telecommunications and data processing expense of $117,000. There were some categories that increased over the prior quarter. Other operating expenses were up $41,000, ATM and check card expense was up $73,000, occupancy expense was up $54,000 and FDIC insurance expense was up $50,000.

Compared to the same quarter in 2022, noninterest expenses increased $50,000. The following noninterest expense categories were higher in the third quarter of 2023: occupancy expense was up $29,000; marketing expense was $66,000 higher; legal and professional fees were $32,000 higher, equipment expense was $63,000 higher, FDIC insurance expense was up $10,000, ATM and check card fees were up $28,000 and other operating expenses were up $352,000. These increases were offset by decreases in salary expense of $124,000, employee benefits expense of $277,000, OREO expense of $59,000 and telecommunications expenses of $68,000.

YEAR-TO-DATE INCOME STATEMENT REVIEW

Overview
Net income for the nine months ended September 30, 2023, was $2.3 million or $0.66 per share, compared to $6.6 million or $1.92 per share for the same period in 2022. During this period of 2023, there were severance accruals for two former bank officers which contributed $810,000 in after-tax, one-time expenses. Interest income for the first nine months of 2023 was $41.2 million, an increase of $11.1 million over the first nine months of 2022, due to growth in the loan portfolio and higher interest rates. Higher rates on interest bearing deposits, specifically money market accounts and time deposits, coupled with interest paid on short-term borrowings, increased the Bank’s interest expense to $17.6 million, up $13.7 million from the nine months ended September 30, 2022.

During the first nine months of 2023, the Bank recorded a $1.2 million provision for credit losses compared to $150,000 for the same period in 2022. A provision is a reserve for expected potential future credit losses.

Net Interest Income
Since September 30, 2022, short term interest rates have risen significantly due to six Federal Reserve interest rate hikes totaling 225 basis points. This has directly impacted the Bank’s costs for deposits and short-term borrowings, while the longer-term rates used to price loans have not increased to the same extent. In the first nine months of 2023, net interest income totaled $23.6 million, a decrease of $2.6 million from the first nine months of 2022, as an $11.1 million increase in interest income was outpaced by a $13.7 million increase in interest expense. Comparing the two periods, higher loan interest income boosted the earning asset yield by 120 basis points to 4.68% meanwhile the cost of funds increased by 155 basis points, resulting in a decrease in net interest margin of 35 basis points to 2.68%.

Noninterest Income
Noninterest income, including net losses on the sale of securities, totaled $7.6 million for the nine months ended September 30, 2023, which was a decrease of $294,000 from the same period in 2022. The primary reasons for this decrease were reductions of $81,000 in service charges on deposit accounts, $1.0 million in mortgage banking income and $146,000 in title insurance income. The declines in mortgage banking and title insurance income are due to the overall decrease in mortgage banking volume and a shift from loans being sold on the secondary market to portfolio adjustable-rate mortgages (ARMs) and construction products. These decreases were partially offset by a $460,000 increase in income from BOLI, an increase of $216,000 in investment services and insurance income, higher ATM and check card fees which grew by $148,000, and a $140,000 increase in other operating income. In the first nine months of 2022, there was a $97,000 loss on the sale of investment securities compared to no loss in the same period in 2023.

Noninterest Expenses
Noninterest expenses totaled $28.3 million in the first nine months of 2023, compared to $27.0 million in the same period of 2022, an increase of $1.3 million. A primary driver for this increase were the $1.0 million in severance accruals recorded in the first and second quarters of 2023. These accruals contributed to an $881,000 increase in salary expense to $13.6 million. Other year-over-year increases include higher equipment expense which increased $220,000, marketing expenses which were up $154,000, legal and professional fees which were $290,000 higher than last year and higher other operating expenses, up $751,000. These higher expenses were partially offset by decreases in employee benefits expense and telecommunications and data processing expenses which were down $668,000 and $279,000, respectively.

BALANCE SHEET REVIEW

On September 30, 2023, assets totaled $1.28 billion, an increase of $36.5 million over December 31, 2022. Total loans increased by $62.0 million to $805.6 million, including increases of $29.0 million in 1-to-4 family adjustable-rate mortgage loans, $15.6 million in dealer financing loans, $7.7 million in owner-occupied commercial real estate loans, and $6.7 million in agricultural loans. Investment securities decreased by $20.0 million due to paydowns on U.S. Agency mortgage-backed securities and expected bond maturities and an increase in the unrealized loss on the bond portfolio. During most of 2023, the unrealized loss had been improving but a recent increase in interest rates reversed that trend and the loss widened to $54.5 million at September 30, 2023, from $51.2 million at December 31, 2022. The Bank expects to receive cashflows totaling $113.1 million from bond paydowns and maturities by the end of 2024.

Total deposits on September 30, 2023, were $1.13 billion, an increase of $50.5 million from the end of 2022, as the Bank was able to attract deposits by offering higher rates on money market and time deposit accounts and opening insured cash sweep accounts for new and existing customers. The additional deposits allowed us to reduce Federal Home Loan Bank (FHLB) advances by $10.0 million. At September 30, 2023, 12.32% of the Bank’s total deposits were uninsured.

Shareholders’ equity decreased by $3.8 million to $67.0 million due to an increase of $2.6 million in accumulated other comprehensive loss associated with the unrealized loss on available for sale investment securities, and the $1.2 million adjustment to retained earnings upon the adoption of the Current Expected Credit Loss (CECL) accounting standard on January 1, 2023. These decreases were partially offset by year-to-date net income of $2.3 million. Tangible book value per common share has declined to $18.501 from $19.551 at December 31, 2022.

LIQUIDITY

The Company’s on-balance sheet asset liquidity includes cash and cash equivalents, unpledged investment securities and loans held for sale, which totaled $206.4 million at September 30, 2023, down from $439.9 million at December 31, 2022. The Bank has pledged investment securities with a par value as of September 30, 2023, totaling $222.5 million to the Federal Reserve System’s Bank Term Funding Program (BTFP). In March 2023, the Board of Governors of the Federal Reserve System established the BTFP to provide any U.S. federally insured depository institution, including the Bank, with a line of credit equal to the par value of securities pledged to the BTFP. Advances from the BTFP may be requested by the Bank for up to one year until March 31, 2024. The Bank has not borrowed from the BTFP during 2023.

1 Tangible book value per common share is a non-GAAP financial measure. Further information can be found under the heading “Non-GAAP Financial Measures” and in the reconciliation table accompanying this release.

In addition to the BTFP, the Bank has access to off-balance sheet liquidity through unsecured Federal funds lines totaling $90.0 million at September 30, 2023, and December 31, 2022. The Bank also has a secured line of credit with the FHLB with available credit of $95.9 million and $39.1 million as of September 30, 2023, and December 31, 2022, respectively. The FHLB line of credit is secured by a blanket lien on qualifying loans in the residential, commercial, agricultural real estate, and home equity portfolios.

The Bank is scheduled to receive $113.1 million from bond paydowns and maturities by the end of 2024 which can be used to fund future loan growth and for other purposes.

LOAN PORTFOLIO

The Company’s loan portfolio is diversified with its two largest segments being residential mortgage loans originated through its subsidiary F&M Mortgage, and automobile loans originated by its dealer finance division.

Loan Category Balance as of September 30,
2023 (in thousands)		 Percentage of Total
Portfolio
Residential mortgage loans $187,868 23.32%
Automobile loans 123,981 15.39%
Non owner occupied commercial real estate 102,216 12.69%
Owner occupied commercial real estate 91,836 11.40%
Secured by farmland 80,502 9.99%
Commercial and industrial (includes Agriculture Loans) 60,581 7.52%
Home equity lines of credit 46,351 5.75%
Other construction and land development loans 46,027 5.71%
Residential construction loans 34,320 4.26%
Credit card and other consumer loans 17,958 2.23%
Multifamily 8,257 1.03%
Other loans 5,705 0.71%
Total $805,602 100%

ASSET QUALITY AND ALLOWANCE FOR CREDIT LOSSES

Nonperforming loans (NPLs) as a percentage of total assets were 0.28% at September 30, 2023, compared to 0.18% at December 31, 2022, and 0.19% at September 30, 2022. Net charge-offs as a percentage of average loans were 0.10% for the quarter ended September 30, 2023, down from 0.16% for third quarter 2022. For the nine months ended September 30, 2023, the net charge off percentage was 0.12%, up slightly from 0.08% in the similar period in 2022.

Provision for credit losses was $620,000 for third quarter and $1.2 million for the nine-month period ended September 30, 2023. The provision for credit losses for the quarter was due to loan growth of $29.3 million and $193,000 in net charge-offs. In the third quarter of 2022, there was no provision for credit losses. The ACL was $9.2 million at September 30, 2023, up $1.2 million from December 31, 2022. The ACL as a percentage of total loans was 1.14% at September 30, 2023, compared to 1.07% at December 31, 2022. The reserve for unfunded commitments was $749,000 at September 30, 2023.

DIVIDEND DECLARATION

On October 19, 2023, our Board of Directors declared a third quarter dividend of $0.26 per share to common shareholders. Based on our most recent trade price of $17.24 per share, this constitutes a 6.03% yield on an annualized basis. The dividend will be paid on November 29, 2023, to shareholders of record as of November 14, 2023.

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ABOUT US

F&M Bank Corp. is an independent, locally owned, financial holding company, offering a full range of financial services through our subsidiary, Farmers & Merchants Bank’s (F&M Bank) thirteen banking offices in Rockingham, Shenandoah, and Augusta counties, Virginia, and the city of Winchester, Virginia. The Company also holds F&M Mortgage, a mortgage lending subsidiary, and VSTitle, our title company subsidiary. Founded in 1908 as a community venture to serve the farmers and merchants of the Shenandoah Valley, where both the Company and the Bank are headquartered, F&M Bank remains more committed than ever to the success of the agricultural industry, small business ventures, and the nonprofit sector. The only publicly traded organization based in Rockingham County, the Company’s core values of enthusiasm, flexibility, responsiveness, community, and fun drive its corporate philanthropy, volunteerism, and local decision-making. With a strong suite of financial products and services, philanthropic efforts, and a team dedicated to serving, our responsibility is to provide a bright future right here where we all live, work, and play. Additional information may be found by visiting our website, fmbankva.com.

NON-GAAP FINANCIAL MEASURES

The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles (“GAAP”) and prevailing practices in the banking industry. However, management uses certain non-GAAP measures, including tangible common equity and tangible book value per share, to supplement the evaluation of the Company’s financial condition and performance. Management believes presentation of these non-GAAP financial measures provides useful supplemental information that is essential to a proper understanding of the Company’s operating results. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. A reconciliation of GAAP to non-GAAP measures is included in the tables accompanying this release.

FORWARD-LOOKING STATEMENTS

This press release may contain “forward-looking statements” as defined by federal securities laws, which are subject to significant risks and uncertainties. These include statements regarding future plans, strategies, results, or expectations that are not historical facts, and are generally identified by the use of words such as “believe,” “expect,” “intend,” “anticipate,” “will,” “estimate,” “project” or similar expressions. These statements are based on estimates and assumptions, and our ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Our actual results could differ materially from those contemplated by these forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in local and national economies, or market conditions; changes in interest rates; regulations and accounting principles; changes in policies or guidelines; loan demand and asset quality, including values of real estate and other collateral; deposit flow; the impact of competition from traditional or new sources; and the other factors detailed in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended December 31, 2022. Readers should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on such statements. We undertake no obligation to update these statements following the date of this press release.

F&M Bank Corp.
Summary Consolidated Financial Data (unaudited)
Dollars in Thousands, except for per share data
Quarter to Date Year-to-Date
9/30/2023 6/30/2023 (3) 3/31/2023 (3) 12/31/2022 (3) 9/30/2022 (3) 9/30/2023 9/30/2022 (3)
Condensed Balance Sheet
Cash and cash equivalents
 $ 22,159 $ 36,505 $ 31,273 $ 34,953 $ 30,312 $ 22,159 $ 30,312
Investment securities
 383,502 394,868 398,960 403,537 440,294 383,502 440,294
Loans held for sale
 2,028 881 1,242 1,373 3,310 2,028 3,310
Gross loans
 805,602 776,260 756,920 743,604 699,592 805,602 699,592
Allowance for credit losses
 (9,166 ) (8,769 ) (8,546 ) (7,936 ) (7,513 ) (9,166 ) (7,513 )
Goodwill
 3,082 3,082 3,082 3,082 3,082 3,082 3,082
Other assets
 75,212 75,543 69,944 67,289 67,572 75,212 67,572
Total Assets
 $ 1,282,419 $ 1,278,370 $ 1,252,875 $ 1,245,902 $ 1,236,649 $ 1,282,419 $ 1,236,649
Noninterest bearing deposits
 $ 277,219 $ 277,578 $ 284,060 $ 293,596 $ 300,394 $ 277,219 $ 300,394
Interest bearing deposits
 856,691 859,534 821,175 789,781 817,000 856,691 817,000
Total Deposits
 1,133,910 1,137,112 1,105,235 1,083,377 1,117,394 1,133,910 1,117,394
Short-term debt
 60,000 47,000 55,000 70,000 30,000 60,000 30,000
Long-term debt
 6,922 6,911 6,901 6,890 6,879 6,922 6,879
Other liabilities
 14,567 15,153 13,104 14,843 16,699 14,567 16,699
Total Liabilities
 1,215,399 1,206,176 1,180,240 1,175,110 1,170,972 1,215,399 1,170,972
Shareholders’ equity
 67,020 72,194 72,635 70,792 65,677 67,020 65,677
Total Liabilities and Shareholders’ Equity
 $ 1,282,419 $ 1,278,370 $ 1,252,875 $ 1,245,902 $ 1,236,649 $ 1,282,419 $ 1,236,649
Condensed Income Statement
Interest income and fees on loans
 $ 12,525 $ 11,517 $ 10,854 $ 9,884 $ 8,881 $ 34,896 $ 24,384
Interest income and fees on loans held for sale
 19 25 22 16 29 66 90
Income on cash and securities
 2,073 2,082 2,097 2,202 2,102 6,252 5,608
Total Interest Income
 14,617 13,624 12,973 12,102 11,012 41,214 30,082
Interest expense on deposits
 5,811 5,216 4,042 2,675 1,378 15,069 3,060
Interest expense on short-term debt
 702 523 992 556 158 2,217 204
Interest expense on long-term debt
 115 116 112 122 345 343 628
Total Interest Expense
 6,628 5,855 5,146 3,353 1,881 17,629 3,892
Net Interest Income
 7,989 7,769 7,827 8,749 9,131 23,585 26,190
Provision for credit losses
 620 539 – 716 – 1,159 150
Noninterest Income
 2,527 2,752 2,366 2,297 2,282 7,645 7,939
Noninterest Expense
 8,922 10,172 9,189 9,463 8,872 28,283 26,981
Net gains (losses) on sale of securities
 – – – 1,030 – – (97 )
Income tax expense (benefit)
 (44 ) (431 ) (51 ) 200 237 (526 ) 280
Net Income
 $ 1,018 $ 241 $ 1,055 $ 1,697 $ 2,304 $ 2,314 $ 6,621
Per Share Data
Earnings per common share – basic
 $ 0.29 $ 0.07 $ 0.30 $ 0.49 $ 0.67 $ 0.66 $ 1.92
Book Value per Share
 19.43 20.75 20.86 20.50 19.02 19.43 19.02
Tangible Book Value per Share (1)
 18.50 19.82 19.93 19.55 18.08 18.50 18.08
Key Performance Ratios
Return on Average Assets
 0.32 % 0.08 % 0.34 % 0.54 % 0.74 % 0.25 % 1.08 %
Return on Average Equity
 5.58 % 1.33 % 5.97 % 9.86 % 13.28 % 4.33 % 13.68 %
Noninterest Income / Average Assets
 0.80 % 0.88 % 0.77 % 0.73 % 0.73 % 0.81 % 1.30 %
Noninterest Expense / Average Assets
 2.82 % 3.27 % 3.00 % 3.02 % 2.85 % 3.01 % 4.41 %
Efficiency Ratio (2)
 83.16 % 94.56 % 88.10 % 83.89 % 73.87 % 88.54 % 76.73 %
Net Interest Margin
 2.67 % 2.66 % 2.76 % 3.04 % 3.11 % 2.68 % 3.03 %
Earning Asset Yield
 4.87 % 4.65 % 4.57 % 4.21 % 3.75 % 4.68 % 3.48 %
Cost of Interest Bearing Liabilities
 2.87 % 2.61 % 2.40 % 1.54 % 0.87 % 2.63 % 0.62 %
Cost of Funds
 2.26 % 2.04 % 1.83 % 1.20 % 0.66 % 2.04 % 0.49 %
Net Interest Spread
 2.00 % 2.04 % 2.17 % 2.67 % 2.88 % 2.05 % 2.86 %
Net Charge-offs as a % of Avg Loans
 0.10 % 0.27 % 0.09 % 0.16 % 0.16 % 0.12 % 0.08 %
Non-Performing Loans to Total Assets
 0.28 % 0.16 % 0.14 % 0.18 % 0.19 % 0.28 % 0.19 %
Non-Performing Assets to Total Assets
 0.28 % 0.16 % 0.14 % 0.18 % 0.19 % 0.28 % 0.19 %
ACL/ALLL as a % of Total Loans
 1.14 % 1.13 % 1.13 % 1.07 % 1.07 % 1.14 % 1.07 %
Loans to Deposits
 71.05 % 68.27 % 68.48 % 68.64 % 62.61 % 71.05 % 62.61 %
(1) Tangible book value per share is calculated by subtracting goodwill and other intangibles from total shareholders’ equity and dividing the result by the common shares outstanding. Tangible book value per share is a non-GAAP financial measure that management believes provides investors with important information that may be related to the valuation of common stock.
(2) The Efficiency Ratio equals noninterest expenses divided by the sum of tax equivalent net interest income and noninterest income. Noninterest income excludes gains (losses) on securities transactions and low-income housing partnership losses. Noninterest expense excludes amortization of intangibles.
(3) Certain reclassifications have been made in the prior period financial information to conform to reporting for the third quarter 2023. These reclassifications are not considered material and had no impact on prior year’s net income, balance sheet or shareholders’ equity.

FOR MORE INFORMATION, CONTACT
Lisa F. Campbell | EVP | Chief Financial Officer
540-896-1705
fmbankva.com

SOURCE: F&M Bank Corp.

View source version on accesswire.com:
https://www.accesswire.com/798575/fm-bank-corp-reports-year-to-date-and-third-quarter-2023-results-and-quarterly-dividend

F&M Bank Executive Vice President Takes the Helm as President of Virginia Mortgage Bankers Association

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FOR IMMEDIATE RELEASE: Timberville, VA –  F&M Bank Executive Vice President Takes the Helm as President of Virginia Mortgage Bankers Association – F&M Bank is excited to announce that Kevin Russell, Executive Vice President and President of F&M Mortgage, F&M Financial Services, and Title, has been appointed as the President of the Virginia Mortgage Bankers Association (VMBA) for the 2023-2024 year.

 

The VMBA is a prestigious trade association comprising mortgage bankers and affiliated industry associates. The association is dedicated to preserving and improving the mortgage lending system, advocating for the industry’s highest standards of ethics and professionalism.

 

Kevin Russell’s appointment as President of the VMBA is a testament to his exceptional leadership skills and extensive experience in the financial sector. With over 20 years of service in the industry, Kevin has consistently demonstrated his commitment to assisting individuals in achieving their dreams of homeownership.

 

A proud graduate of VA Tech and resident of Rockingham County, Kevin Russell understands the local market dynamics and the unique challenges faced by homebuyers in Virginia. His deep-rooted connections within the community and profound industry knowledge make him the perfect candidate to lead the VMBA and champion the interests of mortgage professionals across the state.

 

In his new role, Kevin Russell will leverage his expertise to drive innovation, foster collaboration, and advocate for policies that promote responsible lending practices and improve homeownership in Virginia. His unwavering dedication to ensuring a smooth, transparent mortgage lending process aligns perfectly with the VMBA’s mission.

 

“I am honored and excited to serve as President of the Virginia Mortgage Bankers Association,” said Kevin Russell. “I look forward to working closely with my fellow professionals to strengthen the mortgage lending industry in Virginia, promote statewide participation, and support initiatives that make homeownership more accessible to all.”

 

F&M Bank congratulates Kevin Russell on this well-deserved appointment and is confident that the VMBA will continue to flourish under his leadership and make significant contributions to the mortgage lending industry.

mortgage advisors at VMBA conference

(Pictured from left to right: Jon Ischinger, Tina Lantz, Terri Bradley, Kevin Russell, Veronica Amato, and Tonja Showalter)

For more information, please contact:

Jake Mowry

VP, Marketing Manager

jmowry@fmbankva.com

 

About F&M Bank:

F&M Bank Corp. is an independent, locally owned, financial holding company, offering a full range of financial services through our subsidiary, Farmers & Merchants Bank’s (F&M Bank) thirteen banking offices in Rockingham, Shenandoah, and Augusta counties, Virginia, and the city of Winchester, Virginia. The Company also holds F&M Mortgage, a mortgage lending subsidiary, and VSTitle, our title company subsidiary. Founded in 1908 as a community venture to serve the farmers and merchants of the Shenandoah Valley, where both the Company and the Bank are headquartered, F&M Bank remains more committed than ever to the success of the agricultural industry, small business ventures, and the nonprofit sector. The only publicly traded organization based in Rockingham County, the Company’s core values of enthusiasm, flexibility, responsiveness, community, and fun drive its corporate philanthropy, volunteerism, and local decision-making. With a robust suite of financial products and services, philanthropic efforts, and a team dedicated to serving, our responsibility is to provide a bright future right here where we all live, work, and play. Additional information may be found by visiting our website, fmbankva.com.

INFINEX INVESTMENTS, INC

 

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F&M BANK CORP. REPORTS SECOND QUARTER 2023 RESULTS AND DIVIDEND

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F&M BANK CORP. REPORTS SECOND QUARTER 2023 RESULTS AND DIVIDEND

F&M Bank grows loans and deposits in the second quarter, focuses on future growth and opportunities.

 

Timberville, VA / July 27, 2023 . . . F&M Bank Corp. (the “Company” or “F&M”), (OTCQX: FMBM), the parent company of Farmers & Merchants Bank (“F&M Bank” or the “Bank”) today reported results for the second quarter and six-month period ended June 30, 2023.

Net income was $241,000 or $0.07 per share for the quarter ended June 30, 2023, compared to $1.1 million or $0.30 per share for the linked quarter ended March 31, 2023, and compared to $1.8 million or $0.51 per share for the prior year quarter ended June 30, 2022. For the six months ended June 30, 2023, net income was $1.3 million, which includes $810,000 in after-tax, one-time expenses, including severance accruals for former bank officers. By comparison, the Company earned $4.3 million for the same period in 2022.

At June 30, 2023, the Company had total assets of $1.28 billion, total loans of $776.3 million, and total deposits of $1.14 billion, compared to June 30, 2022 total assets of $1.23 billion, total loans of $690.5 million, and total deposits of $1.10 billion. This reflects growth of $32.7 million in total loans and $53.7 million in total deposits since the end of 2022.

“The first six months of 2023 were eventful for the banking industry and for F&M,” said CEO Mike Wilkerson. “The continued Federal Reserve interest rate increases have impacted interest rates on both deposits and loans, resulting in a narrowing of our Bank’s net interest margin. Additionally, the financial services industry dealt with bank failures in the first quarter, however measures were enacted to maintain the stability of the industry and the confidence of the American people, including the establishment of the Federal Reserve’s Bank Term Funding Program.

“During this same time, we shared our leadership change with you” Wilkerson continued. “As I was named chief executive officer and Barton Black was named president. Even with a backdrop of industry events and other changes, F&M continued to grow loans, deposits, and total assets. I am pleased to announce that earlier this month, the Board of Directors approved a $0.26 quarterly dividend that will be distributed to shareholders in August.

“In addition, we opened our second location in Winchester, Virginia, paving the way for future growth in this market. I give credit to our outstanding team for their dedication, continued hard work and achievement. F&M has served the Shenandoah Valley for 115 years, and our people believe we can still serve individuals, families, and businesses in the Valley for another 115 years.

“This Saturday, July 29th, we will hold our Annual Meeting of Shareholders, and all F&M Bank Corp. shareholders are invited to attend,” Wilkerson concluded. “This meeting represents our first in-person meeting since 2019. We are pleased to restart this time-honored tradition of meeting face-to-face with those who have invested in us. We look forward to seeing everyone and to updating them on F&M and our plans.”

SECOND QUARTER INCOME STATEMENT REVIEW

Overview
Net income for second quarter of 2023 was $241,000 or $0.07 per share, compared to $1.1 million or $0.30 per share for the linked quarter ended March 31, 2023, and $1.8 million or $0.51 per share for second quarter 2022. Interest income for the three months ended June 30, 2023, was $13.6 million, an increase of $651,000 over first quarter 2023 and $3.6 million over the prior year second quarter, due to higher loan volume and higher interest rates. Higher rates on interest bearing deposits, specifically money market accounts and time deposits, coupled with interest paid on short-term borrowings, increased the Bank’s interest expense to $5.9 million for second quarter 2023, up $709,000 from first quarter 2023 and up $4.8 million over second quarter 2022.

During second quarter 2023, the Bank recorded a $539,000 provision for credit losses due to loan growth of $14.8 million and $344,000 in net charge-offs compared to no provision in first quarter of 2023, and a provision for loan losses of $600,000 recorded in second quarter 2022. At June 30, 2023, the Allowance for Credit Losses (ACL) totaled $8.8 million or 1.13% of gross loans outstanding.

Net Interest Income
For second quarter 2023, net interest income totaled $7.8 million, a decrease of $58,000 from first quarter 2023, as a $651,000 increase in interest income was outpaced by a $709,000 increase in interest expense due to higher funding rates, as well as higher average balances for short-term debt. As a result, the Bank’s net interest margin decreased by ten basis points to 2.66% on a linked quarter basis.

Compared to second quarter 2022, net interest income declined by $1.2 million, and our net interest margin decreased by 0.47%. Interest income and fees on loans were $3.5 million higher and income from cash and securities was $98,000 higher due to higher rates on variable rate loans, the $85.8 million in loan growth since, June 30, 2022, and higher investment average balances due to purchases in 2021 and early 2022.

Noninterest Income
Noninterest income totaled $2.8 million for second quarter 2023, which was an increase of $386,000 from the linked first quarter 2023. The increase is attributable to higher income from Bank Owned Life Insurance (BOLI) which was $443,000 higher than last quarter due to a gain of $370,000. Other increases in non-interest income from the prior quarter include increases in service charges on deposit accounts of $50,000, title insurance income of $129,000 and ATM and check card fees of $45,000. These increases offset declines in investment services and insurance income of $152,000 and other operating income of $130,000.

Noninterest income, including net losses on the sale of securities, declined $325,000 from the second quarter of 2022, primarily due to a reduction of $696,000 in mortgage banking income. There were fewer mortgage loans sold on the secondary market due to an overall decrease in volume and, a shift in production from the 30-year fixed rate product to variable rate products which were retained in the Bank’s loan portfolio and will provide future interest income. There was also a decrease in investment services and insurance income of $98,000. Income from BOLI was $449,000 higher, which helped offset these decreases. In the second quarter 2022, there was a $97,000 loss on the sale of investment securities compared to none in second quarter 2023.

Noninterest Expenses
Noninterest expenses totaled $10.2 million in second quarter 2023, compared to $9.2 million in first quarter 2023, an increase of $983,000. During the quarter, the Bank accrued a potential one-time severance payment to a former officer in the amount of $764,000, compared to a separate severance accrual of $261,000 in the first quarter. The additional accrual resulted in an increase in salary expense. Overall, salary expense increased $677,000 to $5.0 million. Other increases from the first quarter to the second include higher equipment expense, up $131,000, due to the installation of new ATMs across the Bank’s footprint, and higher legal and professional fees, which were up $167,000 over first quarter 2023. These increases were partially mitigated by lower data processing expenses, which declined $228,000 as a result of the renegotiation of our contract with our core system provider.

Compared to the same quarter in 2022, noninterest expenses increased $613,000. The year-over-year increases were spread over several categories of noninterest expenses including salary expense which was $300,000 higher, legal and professional fees which increased by $210,000, and equipment expense which was up $127,000. There were also categories that declined, including employee benefits which were $146,000 lower due to a decrease in pension expense and data processing expense, which was $206,000 lower than second quarter 2022.

YEAR-TO-DATE INCOME STATEMENT REVIEW

Overview
Net income for the six months ended June 30, 2023, was $1.3 million or $0.37 per share, compared to $4.3 million or $1.25 per share for the same period in 2022. During this period of 2023, there were severance accruals for two former bank officers which contributed $1.0 million in one-time expenses. Interest income for the first half of 2023 was $26.6 million, an increase of $7.5 million over the first six months of 2022, due to growth in the loan portfolio and higher interest rates. Higher rates on interest bearing deposits, specifically money market accounts and time deposits, coupled with interest paid on short-term borrowings, increased the Bank’s interest expense to $11.0 million, up $9.0 million from the six months ended June 30, 2022.

During the first six months of 2023, the Bank recorded a $539,000 provision for credit losses compared to $150,000 for the same period in 2022.

Net Interest Income
Since June 30, 2022, short term interest rates have risen significantly due to seven Federal Reserve interest rate hikes totaling 350 basis points. This has directly impacted the Bank’s costs for deposits and short-term borrowings, while the longer-term rates used to price loans have not increased to the same extent. In the first half of 2023, net interest income totaled $15.6 million, a decrease of $1.5 million from 2022, as a $7.5 million increase in interest income was outpaced by a $9.0 million increase in interest expense. Comparing the two periods, higher loan interest income boosted the earning asset yield by 127 basis points to 4.58% and the Company’s cost of funds increased by 152 basis points, resulting in a decrease in net interest margin of 27 basis points to 2.69%.

Noninterest Income
Noninterest income, including net losses on the sale of securities, totaled $5.1 million for the six months ended June 30, 2023, which was a decrease of $442,000 from the same period in 2022. The primary reason for this decrease in noninterest income was a reduction of $898,000 in mortgage banking income and $214,000 in title insurance income due to the overall decline in mortgage banking volume. These decreases were partially offset by an increase in income from BOLI which was $457,000 higher and ATM and check card fees which grew by $104,000 from 2022 to 2023. Also in the first half of 2022, there was a $97,000 loss on the sale of investment securities compared to no loss in 2023.

Noninterest Expenses
Noninterest expenses totaled $19.4 million in the first six months of 2023, compared to $18.1 million in the same period of 2022, an increase of $1.3 million. The increase includes $1.0 million in severance accruals which increased salary expense by $1.0 million to $9.4 million. Other year-over-year increases include higher equipment expense, up $157,000, due to the installation of new ATMs across the Bank’s footprint and higher legal and professional fees which were $258,000 higher than last quarter. These increases were partially offset by lower employee benefits expense, which was $391,000 lower due to a decrease in pension expense, and data processing expenses which declined $400,000.

BALANCE SHEET REVIEW

On June 30, 2023, assets totaled $1.28 billion, an increase of $32.5 million over December 31, 2022. Total loans increased by $32.7 million to $776.3 million, including increases of $15.3 million in 1-to-4 family variable rate mortgage loans and $12.4 million in dealer financing loans. Investment securities decreased by $8.7 million due to paydowns on U.S. Agency mortgage-backed securities and expected bond maturities. During the first half of the year, the unrealized loss on the bond portfolio improved by $3.5 million, improving the Company’s tangible common equity ratio (1) from 5.13% at December 31, 2022, to 5.38% at June 30, 2023.

Total deposits on June 30, 2023, were $1.14 billion, an increase of $53.7 million from the end of 2022, as the Bank was able to attract deposits by offering higher rates on money market and time deposit accounts and opening insured cash sweep accounts for new and existing customers. The additional deposits allowed us to reduce Federal Home Loan Bank (FHLB) advances by $23.0 million. At June 30, 2023, 12.37% of the Bank’s total deposits were uninsured.

Shareholders’ equity increased by $1.4 million to $72.2 million due to improvement in accumulated other comprehensive loss associated with the unrealized loss on available for sale investment securities of $2.7 million and net income of $1.3 million, partially offset by the $1.2 million adjustment upon the adoption of the Current Expected Credit Loss (CECL) accounting standard on January 1, 2023. Tangible book value per common share improved to $19.82 from $19.56 at December 31, 2022.

LIQUIDITY

The Company’s on-balance sheet asset liquidity includes cash and cash equivalents, unpledged investment securities and loans held for sale, which totaled $223.8 million at June 30, 2023, down from $439.9 million at December 31, 2022. During the second quarter, the Bank pledged investment securities with a book value totaling $225.4 million to the Federal Reserve System’s Bank Term Funding Program (BTFP). In March 2023, the Board of Governors of the Federal Reserve System established the BTFP to provide any U.S. federally insured depository institution, including the Bank, with a line of credit equal to the par value of securities pledged to the BTFP. Advances from the BTFP may be requested by the Bank for up to one year until March 31, 2024. The Bank has not borrowed from the BTFP during 2023.

In addition, the Bank has access to off-balance sheet liquidity through unsecured Federal funds lines totaling $75.0 million at June 30, 2023, and $90.0 million at December 31, 2022. The Bank also has a secured line of credit with the FHLB with available credit of $112.1 million and $39.1 million as of June 30, 2023, and December 31, 2022, respectively. The FHLB line of credit is secured by a blanket lien on qualifying loans in the residential, commercial, agricultural real estate, and home equity portfolios.

ASSET QUALITY AND ALLOWANCE FOR CREDIT LOSSES

Nonperforming loans (NPLs) as a percentage of total assets were 0.16% at June 30, 2023, slightly lower than the 0.18% at December 31, 2022, and slightly higher than 0.12% at June 30, 2022. Net charge-offs as a percentage of average loans were 0.27% for quarter-end June 2023, compared to 0.15% for second quarter 2022. For the six months ended June 30, 2023, the net charge off percentage was 0.18%, down from 0.20% in the similar period in 2022.

Provision for credit losses was $539,000 for second quarter and the same for the six-month period ended June 30, 2023 since there was no provision in the first quarter of 2023. The provision for credit losses for the quarter was due to loan growth of $14.8 million and $344,000 in net charge-offs. In 2022, there was a provision of $600,000 for second quarter and a recovery of $450,000 recorded in the first quarter. The ACL was $8.8 million at June 30, 2023, up $833,000 from December 31, 2022. The ACL as a percentage of total loans was 1.13% at June 30, 2023. The ACL was 1.07% of total loans outstanding at December 31, 2022 and 1.13% at June 30, 2022. The reserve for unfunded commitments was $720,000 at June 30, 2023.

DIVIDEND DECLARATION

On July 21, 2023, our Board of Directors declared a second quarter dividend of $0.26 per share to common shareholders. Based on our most recent trade price of $22.50 per share, this constitutes a 4.62% yield on an annualized basis. The dividend will be paid on August 29, 2023, to shareholders of record as of August 14, 2023.

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ABOUT US

F&M Bank Corp. is an independent, locally owned, financial holding company, offering a full range of financial services through our subsidiary, Farmers & Merchants Bank’s (F&M Bank) thirteen banking offices in Rockingham, Shenandoah, and Augusta counties, Virginia, and the city of Winchester, Virginia. The Company also holds F&M Mortgage, a mortgage lending subsidiary, and VSTitle, our title company subsidiary. Founded in 1908 as a community venture to serve the farmers and merchants of the Shenandoah Valley, where both the Company and the Bank are headquartered, F&M Bank remains more committed than ever to the success of the agricultural industry, small business ventures, and the nonprofit sector. The only publicly traded organization based in Rockingham County, the Company’s core values of enthusiasm, flexibility, responsiveness, community, and fun drive its corporate philanthropy, volunteerism, and local decision-making. With a strong suite of financial products and services, philanthropic efforts, and a team dedicated to serving, our responsibility is to provide a bright future right here where we all live, work, and play. Additional information may be found by visiting our website, fmbankva.com.

FORWARD-LOOKING STATEMENTS

This press release may contain “forward-looking statements” as defined by federal securities laws, which are subject to significant risks and uncertainties. These include statements regarding future plans, strategies, results, or expectations that are not historical facts, and are generally identified by the use of words such as “believe,” “expect,” “intend,” “anticipate,” “will,” “estimate,” “project” or similar expressions. These statements are based on estimates and assumptions, and our ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Our actual results could differ materially from those contemplated by these forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in local and national economies, or market conditions; changes in interest rates; regulations and accounting principles; changes in policies or guidelines; loan demand and asset quality, including values of real estate and other collateral; deposit flow; the impact of competition from traditional or new sources; and the other factors detailed in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended December 31, 2022. Readers should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on such statements. We undertake no obligation to update these statements following the date of this press release.

 

FOR MORE INFORMATION, CONTACT
Lisa F. Campbell | EVP | Chief Financial Officer
540-896-1705
fmbankva.com

F&M BANK: DRIVING DIGITAL WHILE STAYING PERSONAL

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F&M Bank’s Chief Experience Officer, Charles Driest, talks about striking the right balance between digital innovation and a personal customer approach

 

Charles Driest is the newly-appointed Chief Experience Officer at Farmers & Merchants (F&M) Bank. A graduate of George Mason University in Virginia, and later St. John’s University in New York, he began his banking career shortly after returning to Virginia from New York in 2007. 

Before this, Driest’s early career saw him employed by the Grocery Manufacturers Association (MGA), and, later, at the American think-tank, Brookings Institution. It was here he was struck with inspiration to retrain in finance by a former manager, Roberta Cohen. 

Driest says: “She said if I didn’t go back to school she would fire me. This was probably my biggest inspiration. It amazes me that her voice is always in the back of my head, and when she told me that, it was about two decades ago.”

fintech magazine interview

F&M Banks’s new Chief Experience Officer hasn’t exactly been short of inspiration, either: “I’ve been really lucky because I’ve had a lot of influencers in my career, with bosses and managers who have pushed me to take on new risks that perhaps I didn’t feel I was ready for, but gave me a great opportunity to learn.”

Beginning his banking career after reeducating in New York and returning to Virginia, Driest was again inspired to follow a digital path in his career. “One of the first CEOs I worked for taught me a valuable lesson; it’s how I got into the digital side of the banking business.

“At the time we didn’t have a good grasp of our digital spending at the organisation. My CEO asked me to break down the numbers to explain to executive management where the money was going. So I sifted through 12 months of invoices and began asking operational questions: where’s our money going? How do we better manage this? 

“This is when I found out the business had these operational holes, while we didn’t have the right insights into the capabilities available to us that we were using. So my CEO said: ‘You found the problems, go fix them’. This is what got me into digital banking, furthering my career by putting me into a situation I wouldn’t necessarily have been comfortable in initially.”

This valuable experience in digital banking saw Driest become F&M Bank’s Director of Digital Banking sometime after, a role he had for “14 to 15 months” before being promoted to F&M Bank’s Chief Experience Officer. 

Despite his brief time in the role so far, Driest says: “Taking on three new reports has been a lot of fun. I really enjoy the personnel management aspect of things. I like watching the development of people. From my perspective, I really like to see the process of a team getting onto one page, because it has a powerful multiplying effect. The pace of work speeds up when everybody is in sync.”

Achieving synchronisation for the now is key to driving growth in the future, according to Driest, who has deep excitement for the future of banking as the proliferation of fintechs continues, believing community banking will endure despite the growth of technology.

He concludes: “I’ve seen some of the biggest developments in banking over the years, and I feel even with all the fintechs out there, I think ultimately, community banking will survive. If there’s one thing banks are very good with, it’s about integrating technology that is focused on the customer. 

“For anyone that talks about the speed of fintech growth, fundamentally, it still relies on people, and people don’t change habits that quickly. The arc of change and the pace of change will always be constrained by people at the end of the day. So, as long as you’re making good decisions and always looking ahead by two to three years at a time – it doesn’t matter what type of bank you are – you’ll probably end up in a good place.”

F&M Bank has been featured in the July issue of FinTech Magazine

In this exclusive interview, Charles Driest, Chief Experience Officer, discussed striking the right balance between digital innovation and a personal customer approach.

 “The future is technology and people, that’s what is going to win the day – not one or the other”

Driest fintech interview

   

BizClik’s FinTech portfolio connects banking, financial services, payments, technology & consulting brands and their most senior executives with the latest FinTech trends, industry insight, and influential FinTech, InsurTech & Crypto projects as the world embraces CX, Business Transformation and Digital Ecosystems. FinTech Magazine and its entire portfolio is now an established and trusted voice on all things FinTech, engaging with a highly targeted audience of 113,000 global executives. We provide key industry players with the perfect platform to showcase their brands, develop content syndication plans, webinars, white papers, demand generation as well as a global set of events (In-Person & Virtual).

 

BizClik is a UK-based media company with a global portfolio of leading industry, business and lifestyle digital communities. 

 

BizClik’s portfolio includes Technology & AI, Finance & Insurance, Manufacturing & Supply Chain, Energy & Mining, Construction, Healthcare, Mobile & Data Centres and EV. For further information, please visit https://www.bizclikmedia.com/

You can read the report in the latest issue of FinTech Magazine by clicking HERE

 

About F&M Bank
F&M Bank Corp. (OTCQX: FMBM) proudly remains the only publicly traded organization based in Rockingham County, VA, and since 1908, has served the Shenandoah Valley through its banking subsidiary F&M Bank, with full-service branches and a wide variety of financial services, including home loans through F&M Mortgage, and real estate settlement services and title insurance through VSTitle. Both individuals and businesses find the organization’s local decision-making and up-to-date technology provide the kind of responsive, knowledgeable, and reliable service that only a progressive community bank can. F&M Bank has grown to $1 billion in assets with more than 175 full- and part-time employees. Its conservative approach to finances, sound investments, and excellent customer service have made F&M Bank profitable and continues to pave the way for a bright future.

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Pork For The Pantry Continues Annual Donation in Augusta County

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Pork For The Pantry Continues Annual Donation in Augusta County

FOR IMMEDIATE RELEASE
Dayton, Virginia – Pork For The Pantry continues to support Augusta County 4-H & FFA Youth Livestock programs and local food pantries with an additional donation of fresh pork products being on Thursday, June 15.

Pork For The Pantry is a local partnership started by Eddie Edward Signs and Rockingham Cooperative whose mission is to support the hard work of the local 4-H and FFA members who personally raise local market animals for sale and to donate high-quality meat products to local food pantries that will benefit those less fortunate in the Shenandoah Valley community.

In May of 2023 Pork For The Pantry partners Rockingham Cooperative, Delegate Chris Runion, Farmers & Merchants Bank and Augusta Petroleum Cooperative committed to each purchasing a hog at the Augusta Market Animal Show & Sale event, directly from 4-H & FFA youth livestock exhibitors. This pork has been processed into sausage and pork chops and will be donated in the morning on Thursday, June 15th sat the Verona Community Food Pantry (Dick Huff Lane, Verona) to be distributed throughout Augusta County to areas of greatest need.

“Our Pork for the Pantry program continues to grow and we’re excited to add Augusta Petroleum to our list of partners in Augusta County this year. It’s refreshing knowing so many locally connected business are supporting our local residents that might be in need.”
– Adam Ford, Marketing Manager at Rockingham Cooperative & Pork For The Pantry volunteer

Pork For The Pantry partnered with over 20 local businesses and community organizations in since its inception in 2016, donating over $15,000 to support 4-H & FFA members in Rockingham, Augusta, & Highland Counties in their projects, which contributed to over 6,000 lbs of fresh pork product that was distributed to area food pantries in the communities the pork was raised.

Throughout its history the program has proudly sent fresh pork products to those in need in the Harrisonburg, Rockingham, Augusta and Highland communities through partnerships with food pantries in those areas. More information can be found at www.porkforthepantry.org.

Press release provided by the Rockingham Cooperative.

F&M Bank, Wealth Management, Ag & Mortgage Named Shenandoah Valley’s Best

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On June 1, several F&M Bank associates spent a beautiful afternoon at Bluestone Vineyard celebrating with several hundred other businesses nominated for Shenandoah Valley’s Best, an annual contest organized by Harrisonburg Radio Group. The program showcases and celebrates the businesses, people, and places the Shenandoah Valley loves most — as voted by listeners.

We wish to thank our incredible community for voting for us in the 2023 Shenandoah Valley Best contest. We’re honored to have brought home Gold for Best Bank and Best Wealth Management Firm, and Silver for Best Ag Lender and Best #Mortgage Lender.

Check out this year’s contest and prior year’s winners at https://www.shenandoahvalleybest.com/categories/2023

Pictured above (left to right): Terri Bradley, Barton Black, Kevin Russell, Katherine Preston, Charles Driest, Kate Bray, Mike Wilkerson, Lista Campbell, Holly Thorne, Matt Robinson.

 

F&M Bank Corp. Reports First Quarter 2023 Results and Dividend

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Company Release – 4/28/2023 6:27 PM ET

F&M Bank grows deposits in the first quarter, focuses on the future.

See associated, unaudited financials for additional information.

TIMBERVILLE, VA / ACCESSWIRE / April 28, 2023 / F&M Bank Corp. (the “Company), (OTCQX:FMBM), the parent company of Farmers & Merchants Bank (“F&M Bank” or the “Bank”) today reported first quarter results for 2023.

Net income was $1.1 million or $0.30 per share for the quarter ended March 31, 2023, compared to $1.7 million or $0.49 per share for the linked quarter ended December 31, 2022, and compared to $2.5 million or $0.74 per share for the prior year quarter ended March 31, 2022.

At March 31, 2023, the Company had total assets of $1.25 billion, total loans of $756.9 million, and total deposits of $1.11 billion, compared to March 31, 2022 total assets of $1.24 million, total loans of $659.6 million, and total deposits of $1.11 billion.

“First quarter 2023 was an interesting one for the banking industry, as a whole,” said Mike Wilkerson, CEO of the Company and the Bank. “During this uncertain time, F&M Bank demonstrated the strength that comes from our traditional community banking model, solid core deposit base and nearly 115-year history in the Shenandoah Valley. In fact, our deposits grew during the quarter, a testament to our relationships in the communities we serve and our employees’ proactive outreach efforts to our customers.”

Just after first quarter 2023 ended, as Wilkerson was named CEO, Barton Black was named president of the Company and the Bank.

Wilkerson said, “Barton and I, along with everyone at F&M, are excited about the direction and the future of the Bank and know there will be much to share in the coming year. Already, we completed the system-wide installation of our smart ATMs during the first quarter and re-established our contract with Jack Henry, our core system provider, for their Silverlake platform, adding new service offerings in the process. We believe that our customers and the Bank will reap the benefits of these two technological accomplishments as we move forward.

“F&M Bank is fortunate to operate in the thriving communities of the Shenandoah Valley and have a stellar team of experienced leaders and exceptional employees. It’s a winning combination. While there is a lot to do, we are at work already, and will continue to be so.”

FIRST QUARTER INCOME STATEMENT REVIEW

Overview

Net income for the first quarter of 2023 was $1.1 million or $0.30 per share, compared to $1.7 million or $0.49 per share for the linked quarter ended December 31, 2022, and $2.5 million or $0.74 per share for first quarter 2022. Interest income for the three months ended March 31, 2023, increased $872,000 over fourth quarter 2022 and $3.9 million over the prior year first quarter, due to higher loan volume and higher interest rates. Higher rates on interest bearing deposits, specifically money market accounts, coupled with interest paid on short-term borrowings, increased the Bank’s interest expense to $5.1 million for first quarter, up $1.8 million from fourth quarter 2022 and up $4.1 million over first quarter 2022.

During first quarter 2023, there was no provision for loan losses while a provision of $716,000 was recorded in the fourth quarter of 2022, and a recovery of loan losses of $450,000 recorded in first quarter 2022. Effective January 1, 2023, the Company adopted ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326)” which changed the methodology used in the calculation of allowance for loan losses from the incurred loss method to the current expected credit loss model (“CECL”). As a result of the adoption, the Company recorded a one-time adjustment to increase the allowance for credit losses (“ACL”) of $777,000 and established a reserve for unfunded commitments of $749,000. The accounting standard requires the one-time adoption adjustment to be offset against retained earnings and any future adjustments to be charged to provision expense. At March 31, 2023, the ACL totaled $8.5 million or 1.13% of gross loans.

Net Interest Income

For first quarter 2023, net interest income totaled $7.8 million, a decrease of $921,000 from fourth quarter 2022, as a $872,000 increase in interest income was outpaced by a $1.8 million increase in interest expense due to higher funding rates, plus higher short-term debt average balances. As a result, the Bank’s net interest margin decreased by 28 basis points to 2.76%.

Compared to first quarter 2022, net interest income declined by $229,000 and our net interest margin decreased by 0.06%. Interest income and fees on loans were $3.3 million higher and income from cash and securities was $576,000 higher due to higher rates on variable rate loans, the $97.4 million in loan growth in 2022, and higher investment average balances due to purchases in 2021 and early 2022.

Noninterest Income

Noninterest income totaled $1.9 million for first quarter 2023, which was an increase of $47,000 from the linked fourth quarter 2022 and a decrease of $599,000 from the first three months of 2022. The primary reason for the decrease in noninterest income from 2022 was a reduction of $509,000 in mortgage banking income. There were fewer mortgage loans sold on the secondary market due to an overall decrease in volume and, a shift in production from the 30-year fixed rate product to variable rate products which were retained in the Bank’s loan portfolio and will provide future interest income. The overall decline in mortgage banking activity also negatively impacted VSTitle income which declined by $225,000 from the first quarter of 2022 to the same quarter in 2023. These decreases were partially offset by increases of $82,000 in investment and insurance income and $64,000 in ATM and debit card interchange income.

Noninterest Expense

Noninterest expenses totaled $8.7 million in first quarter 2023, compared to $9.0 million in fourth quarter 2022 and $8.6 million in the first quarter of 2022. The year-over-year increases were spread over several categories of noninterest expenses including salary and employee benefits expense, professional fees, and data processing fees. The increase in salary expense included a one-time severance accrual.

FIRST QUARTER BALANCE SHEET REVIEW

On March 31, 2023, assets totaled $1.25 billion, an increase of $7.0 million over December 31, 2022. Total loans increased by $13.3 million during the quarter to $756.9 million, including increases of $7.6 million in 1-to-4 family variable rate mortgage loans and $6.1 million in dealer financing loans.

Investment securities decreased by $4.6 million due to paydowns on U.S. Agency mortgage-backed securities and the maturity of a $3.825 million municipal security. During the quarter, the unrealized loss on the bond portfolio improved by $3.4 million, improving the Company’s tangible common equity ratio from 5.13% at December 31, 2022, to 5.26% at March 31, 2023.

Total deposits on March 31, 2023, were $1.11 billion, an increase of $21.9 million from the end of 2022, as the Bank was able to attract deposits by offering higher rates on money market and time deposit accounts and opening insured cash sweep (“ICS”) accounts for new and existing customers. The additional deposits allowed us to reduce Federal Home Loan Bank (“FHLB”) advances by $15.0 million. At March 31, 2023, 11.45% of the Company’s total deposits were uninsured deposits.

Stockholders’ equity increased by $1.8 million during the quarter to $72.6 million due to improvement in accumulated other comprehensive income associated with the unrealized loss on available for sale investment securities of $2.4 million and net income of $1.1 million, partially offset by the $1.5 million adjustment upon the adoption of CECL. Tangible book value per common share improved to $19.93 from $19.56 at December 31, 2022.

Liquidity

The Company’s on-balance sheet liquidity includes cash and cash equivalents, unpledged investment securities and loans held for sale, which totaled $431.5 million at March 31, 2023, down slightly from $439.9 million at December 31, 2022.

The Company also has access to off-balance sheet liquidity through unsecured Federal funds lines totaling $75.0 million at March 31, 2023, and $90.0 million at December 31, 2022. The Bank also has a secured line of credit from with the Federal Home Loan Bank (“FHLB”) with available credit of $91.1 million and $39.1 million as of March 31, 2023, and December 31, 2022, respectively. The FHLB line of credit is secured by a blanket lien on qualifying loans in the residential, commercial, agricultural real estate, and home equity portfolios.

In March 2023, the Board of Governors of the Federal Reserve System established the Bank Term Funding Program (“BTFP”) to provide any U.S. federally insured depository institution, including the Bank, with a line of credit equal to the par value of securities pledged to the BTFP. Advances from the BTFP may be requested by the Bank for up to one year until March 31, 2024. The Bank did not pledge securities to, or borrow from, the BTFP during first quarter 2023.

Asset Quality and Allowance for Credit Losses

Nonperforming assets (“NPAs”) as a percentage of total assets was 0.14% at March 31, 2023, slightly lower than the 0.18% at December 31, 2022, and lower than 0.39% at March 31, 2022. Net charge-offs for the quarter totaled $167,000, down $126,000 over the linked fourth quarter 2022 and up $259,000 over first quarter 2022.

The ACL was $8.5 million at March 31, 2023, up $610,000 from December 31, 2022, and $1.2 million higher than March 31, 2022. The ACL as a percentage of total loans was 1.13%, higher than the 1.07% reported at December 31, 2022, and the 1.12% at March 31, 2022. The increase in the ACL is due to the adoption of CECL on January 1, 2023.

Dividend Declaration

On April 26, 2023, our Board of Directors declared a first quarter dividend of $0.26 per share to common stockholders. Based on our most recent trade price of $21.90 per share, this constitutes a 4.75% yield on an annualized basis. The dividend will be paid on May 30, 2023, to stockholders of record as of May 15, 2023.

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ABOUT US

F&M Bank Corp. is an independent, locally owned, financial holding company, offering a full range of financial services through our subsidiary, Farmers & Merchants Bank’s (F&M Bank) thirteen banking offices in Rockingham, Shenandoah, and Augusta counties, Virginia, and the city of Winchester, Virginia. The Company also holds F&M Mortgage, a mortgage lending subsidiary, and VSTitle, our title company subsidiary. Founded in 1908 as a community venture to serve the farmers and merchants of the Shenandoah Valley, where both the Company and the Bank are headquartered, F&M Bank remains more committed than ever to the success of the agricultural industry, small business ventures, and the nonprofit sector. The only publicly traded organization based in Rockingham County, the Company’s core values of enthusiasm, flexibility, responsiveness, community, and fun drive its corporate philanthropy, volunteerism, and local decision-making. With a strong suite of financial products and services, philanthropic efforts totaling over $300,000 annually, and a team dedicated to serving, our responsibility is to provide a bright future right here where we all live, work, and play. Additional information may be found by visiting our website, fmbankva.com .

FOR MORE INFORMATION, CONTACT

Lisa F. Campbell | EVP | Chief Financial Officer
540-896-1705
fmbankva.com

FORWARD-LOOKING STATEMENTS

This press release may contain “forward-looking statements” as defined by federal securities laws, which are subject to significant risks and uncertainties. These include statements regarding future plans, strategies, results, or expectations that are not historical facts, and are generally identified by the use of words such as “believe,” “expect,” “intend,” “anticipate,” “will,” “estimate,” “project” or similar expressions. These statements are based on estimates and assumptions, and our ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Our actual results could differ materially from those contemplated by these forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in local and national economies, or market conditions; changes in interest rates; regulations and accounting principles; changes in policies or guidelines; loan demand and asset quality, including values of real estate and other collateral; deposit flow; the impact of competition from traditional or new sources; and the other factors detailed in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended December 31, 2022. Readers should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on such statements. We undertake no obligation to update these statements following the date of this press release.

F&M Bank Corp.
Quarterly Consolidated Financial Information (Unaudited)
2022
Q1 Q4 Q3 Q2 Q1
Condensed Balance Sheet
Cash and cash equivalents
 $ 31,273 $ 34,953 $ 30,312 $ 17,254 $ 48,376
Investment securities
 398,960 403,537 440,294 456,636 471,089
Loans held for sale
 1,242 1,373 3,310 5,449 2,479
Gross loans
 756,920 743,604 699,592 690,497 659,560
Allowance for credit losses
 (8,546) (7,936) (7,513) (7,798) (7,389)
Goodwill
 3,082 3,082 3,082 3,082 3,082
Other assets
 69,944 67,289 67,572 66,432 61,062
Total Assets
 $ 1,252,875 $ 1,245,902 $ 1,236,649 $ 1,231,552 $ 1,238,259
Noninterest bearing deposits
 $ 284,060 $ 293,596 $ 300,394 $ 291,728 $ 298,676
Interest bearing deposits
 821,175 789,781 817,000 808,482 813,619
Total Deposits
 1,105,235 1,083,377 1,117,394 1,100,210 1,112,295
Short-term debt
 55,000 70,000 30,000 30,000 –
Long-term debt
 6,901 6,890 6,879 11,788 21,780
Other liabilities
 13,104 14,843 16,699 17,604 16,199
Total Liabilities
 1,180,240 1,175,110 1,170,972 1,159,602 1,150,274
Stockholders’ equity
 72,635 70,792 65,677 71,950 87,985
Total Liabilities and Stockholders’ Equity
 $ 1,252,875 $ 1,245,902 $ 1,236,649 $ 1,231,552 $ 1,238,259
Condensed Income Statement
Interest income and fees on loans
 $ 10,854 $ 9,884 $ 8,881 $ 7,993 $ 7,510
Interest income and fees on loans held for sale
 22 16 29 32 29
Income on cash and securities
 2,098 2,202 2,102 1,984 1,522
Total Interest Income
 12,974 12,102 11,012 10,009 9,061
Interest expense on deposits
 4,042 2,675 1,378 837 845
Interest expense on short-term debt
 992 556 158 46 –
Interest expense on long-term debt
 112 122 345 124 159
Total Interest Expense
 5,146 3,353 1,881 1,007 1,004
Net Interest Income
 7,828 8,749 9,131 9,002 8,057
Provision for (recovery of) credit losses
 – 716 – 600 (450)
Noninterest Income
 1,884 1,837 2,013 2,368 2,483
Noninterest Expense
 8,708 9,003 8,603 8,753 8,550
Net gains (losses) on sale of securities
 – 1,030 – (97) –
Income tax expense (benefit)
 (51) 200 237 131 (88)
Net Income
 $ 1,055 $ 1,697 $ 2,304 $ 1,789 $ 2,528
Per Share Data
Earnings per common share – basic
 $ 0.30 $ 0.49 $ 0.67 $ 0.51 $ 0.74
Book Value per Share
 20.86 20.50 18.68 21.01 29.42
Tangile Book Value per Share
 19.93 19.56 17.83 20.06 28.47
Key Performance Ratios
Return on Average Assets
 0.34% 0.54% 0.74% 0.58% 0.83%
Return on Average Equity
 5.97% 9.86% 13.28% 8.97% 10.88%
Noninterest Income / Average Assets
 0.64% 0.92% 0.65% 0.74% 0.82%
Noninterest Expense / Average Assets
 2.84% 2.88% 2.77% 2.84% 2.82%
Efficiency Ratio
 89.66% 78.32% 78.96% 75.73% 78.68%
Net Interest Margin
 2.76% 3.04% 3.11% 3.15% 2.82%
Earning Asset Yield
 4.57% 4.21% 3.75% 3.50% 3.17%
Cost of Interest Bearing Liabilities
 2.40% 1.54% 0.87% 0.48% 0.49%
Cost of Funds
 1.83% 1.20% 0.49% 0.38% 0.38%
Net Interest Spread
 2.17% 2.67% 2.88% 3.02% 2.68%
Provision for Loan Losses
 $ – $ 716 $ – $ 600 $ (450)
Net Charge-offs
 $ 167 $ 293 $ 285 $ 192 $ (92)
Net Charge-offs as a % of Loans
 0.02% 0.04% 0.04% 0.03% -0.01%
Non-Performing Loans
 $ 1,782 $ 2,262 $ 2,408 $ 1,906 $ 4,799
Non-Performing Loans to Total Assets
 0.14% 0.18% 0.19% 0.15% 0.39%
Non-Performing Assets
 $ 1,782 $ 2,262 $ 2,408 $ 2,103 $ 4,799
Non-Performing Assets to Assets
 0.14% 0.18% 0.19% 0.17% 0.39%
ALLL as a % of Total Loans
 1.13% 1.07% 1.07% 1.13% 1.12%
Loans to Deposits
 68.48% 68.64% 62.61% 62.76% 59.30%

SOURCE: F&M Bank Corp

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