F&M Bank Doles Out $1.1 Million to Community

The federal tax-cut legislation Republicans passed in December will save F&M Corp. (OTCQX: FMBM) a lot of money, and its board of directors has decided to share some of that windfall with the three important parts of its operation — the community, its employees and its shareholders.

Daily News Record, Vic Bradshaw 

The federal tax-cut legislation Republicans passed in December will save F&M Corp. (OTCQX: FMBM) a lot of money, and its board of directors has decided to share some of that windfall with the three important parts of its operation — the community, its employees and its shareholders.

Neil Hayslett, executive vice president and chief administrative officer of the Timberville company, said the bank is sharing its wealth by creating funds to issue grants to nonprofits in the three communities it serves, issuing employee bonuses and providing a one-time special dividend for shareholders.

He said the total amount allocated through the three initiatives is about $1.1 million, a number linked to the bank’s 110th anniversary.

“We’re sharing,” he said, “with our communities, our shareholders and our employees.”

The announcements, made Monday at a companywide event held at Harrisonburg First Church of the Nazarene, are the first touted publicly by a local company as being linked to savings from the Tax Cuts and Jobs Act.

F&M will provide $150,000 to start donor-advised funds through The Community Foundation of Harrisonburg and Rockingham County and $50,000 each to start funds with the Shenandoah Community Foundation, which serves Shenandoah County, and the Community Foundation of the Central Blue Ridge, which covers Augusta County, Staunton and Waynesboro, among other localities.

Hayslett said F&M will make requests for gifts from the fund to be made to various community organizations. The company plans to make annual contributions to the fund.

“Hopefully there will be more that goes in than goes out,” he said, “so that, over time, we’re building something of an endowment.”

Saving $1.6M To $1.7M

F&M’s funds, Hayslett said, will operate in addition to the charitable donations the company makes to community groups.

“This was meant to supplement, not supplant,” he said. “If there is a large capital campaign for some project, we have set aside some money to participate at a level in excess of what we normally would.”

Bank officials will make decisions on allocations from the fund, said Hayslett.

For years, he said, F&M’s leaders have considered establishing a separate foundation for the company. But they decided a setting up a fund through the community foundations would accomplish the same goal with far less cost and legal work.

“This was the perfect opportunity to leverage these foundations that exist in these localities,” said Hayslett. “They specialize in handling these grants efficiently and properly, so that makes it a little easier for us.

F&M’s board approved the initiative several weeks ago, he said, but the bank waited until its annual all-employee gathering when banks were closed for Presidents’ Day to announce it along with the bonus and dividend plans.

Hayslett said F&M will pay bonuses to all non-executive staff members. Those who work less than 30 hours a week will receive $750, while those working 30 or more will receive $1,100 — another nod to the company’s anniversary.

“It’s our 110th year,” he told the employees Monday, “and we’re going to throw on an extra zero.”

F&M is the parent company of Farmers & Merchants Bank, VBS Mortgage and VSTitle. The bonus program covers employees of all three companies,

“Certainly our success all these years as a community bank is based on our staff,” said Hayslett. “They’re professional, they’re friendly and they’re truly part of the communities they serve.”

The bonus payouts will total more than $200,000, he said.

Finally, F&M will provide its shareholders a special dividend of 20 cents a share over and above its regularly quarterly dividends. The dividend is payable on March 14 to shareholder of record as of Feb. 28.

F&M Corp. has approximately 3.2 million shares outstanding, Hayslett said, so the dividend is expected to cost $650,000.

Much of that money will wind up in local pockets, as he estimated that 70 percent of F&M’s stock is held by area residents. Employees will benefit, too, because about 6 percent of the stock is held by the Employee Stock Ownership Plan. The ESOP is the company’s largest shareholder.

The company has been expanding steadily in recent years, and Hayslett said it has the capital necessary to fund its growth plans. Based on last year’s performance, F&M would expect to save $1.6 million to $1.7 million annually because of the tax cut.

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F&M Bank Corp Announces 4th Quarter 2017 and Year End Earnings

F & M Bank Corp. (OTCQX: FMBM), parent company of Farmers & Merchants Bank, announces its financial results for the fourth quarter and year ending December 31, 2017.

F & M Bank Corp. (OTCQX: FMBM), parent company of Farmers & Merchants Bank, announces its financial results for the fourth quarter and year ending December 31, 2017.

Selected highlights for the quarter and year to date include:

  • Net income of $1.8 million and $9.0 million, respectively;
  • Net income excluding tax law change of $2.6 million and $9.8 million, respectively;
  • Net interest margin of 4.53%;
  • Loans held for investment increased $25.3 million YTD;
  • Return on Average Assets of 1.21% YTD.

Mark Hanna, President, commented “We are pleased to announce fourth quarter and year to date earnings of $1.787 million and $9.010 million, respectively. These results included the one-time deferred tax asset adjustment of $811,000 as a result of the tax law passed in late 2017.  Prior to this adjustment the quarter and year end results would have been an increase over the same period in 2016 by 3.18% and 2.65%, respectively. In addition, return on average assets would have been 1.32% without the one-time deferred tax adjustment.  Loan demand continues to be strong with the growth in loans held for investment totaling $25.3 million year to date.  Deposit growth also accelerated in the second half of 2017 with the year to date increase now totaling $32.1 million.  Our net interest margin at 4.53% has been stable over the last several quarters and continues to drive our results.”

Hanna continued, “During 2017, we opened our thirteenth branch in Fishersville, Virginia and relocated a smaller branch in Harrisonburg, VA to a larger location in Rockingham County.  These branches will supplement the growth of our southern market and enhance visibility in the Harrisonburg/Rockingham County market.”  Highlights of our financial performance are included below.

F & M Bank Corp. is an independent, locally-owned, financial holding company, offering a full range of financial services, through its subsidiary, Farmers & Merchants Bank’s thirteen banking offices in Rockingham, Shenandoah, Page and Augusta Counties, Virginia. The Bank also provides additional services through a loan production office located in Penn Laird, VA and through its subsidiaries, VBS Mortgage and VS Title located in Harrisonburg, VA.  Additional information may be found by contacting us on the internet at www.fmbankva.com or by calling (540) 896-8941.

This press release may contain “forward-looking statements” as defined by federal securities laws, which may involve significant risks and uncertainties. These statements address issues that involve risks, uncertainties, estimates and assumptions made by management, and actual results could differ materially from the results 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: interest rates, general economic conditions, legislative and regulatory policies, and a variety of other matters. Other risk factors are detailed from time to time in our Securities and Exchange Commission filings. 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.

(1) The net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets. Tax equivalent interest income is calculated by grossing up interest income for the amounts that are nontaxable (i.e. municipal securities and loan income) then subtracting interest expense. The tax rate utilized is 21%. The Company’s net interest margin is a common measure used by the financial service industry to determine how profitable earning assets are funded. Because the Company earns nontaxable interest income from municipal loans and securities, net interest income for the ratio is calculated on a tax equivalent basis as described above.

(2) The efficiency ratio is not a measurement under accounting principles generally accepted in the United States. The efficiency ratio is a common measure used by the financial service industry to determine operating efficiency. It is calculated by dividing non-interest expense by the sum of tax equivalent net interest income and non-interest income excluding gains and losses on the investment portfolio. The Company calculates this ratio in order to evaluate how efficiently it utilizes its operating structure to create income. An increase in the ratio from period to period indicates the Company is losing a greater percentage of its income to expenses.

SOURCE: F & M Bank Corp.

CONTACT: Neil Hayslett, EVP/Chief Administrative Officer, 540-896-8941 or NHayslett@FMBankVA.com

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