F & M Bank Corp. Announces Record Annual Earnings For 2021

TIMBERVILLE, VA / ACCESSWIRE / January 26, 2022 / F & M Bank Corp. (OTCQX:FMBM), parent company (the Company) of Farmers & Merchants Bank today reported net income available to common shareholders of $10.5 million and diluted earnings per common share of $3.12 for the year ending December 31, 2021.

Mark Hanna, President, commented “We are pleased with December 31, 2021 year to date earnings of $10.5 million. These results represent the most profitable year in our 114-year history. Our deposit growth of 68.3% over the last two years is significantly higher than our peers and indicative of our ability to create organic growth. We continue to focus strategically on improving our infrastructure and enhancing our digital experience as we expand our reach to acquire new banking relationships. Our greater scale, coupled with improvements in asset quality, position F&M for continued success.”

Selected financial highlights include:

  • Net income of $1.3 million for the quarter ended December 31, 2021, and $10.5 million year to date.
  • Total deposit increase of $50.0 million (4.85%) and $261.7 million (31.97%), respectively for the quarter and for the year.
  • Total loan increase of $13.6 million (2.11%) and $31.9 (5.09%) million, respectively for the quarter and for the year (excluding PPP loans).
  • Nonperforming assets decreased to 0.45% of total assets at the end of the quarter from 0.68% at year end 2020.
  • Past due loans still accruing decreased to 0.48% of loans held for investment at the end of the quarter from 1.07% at year end 2020 (excluding PPP loans).
  • Recovery of Provision for Loan Losses of $590,000 for the quarter and $2,821,000 year to date.
  • Allowance for loan losses of 1.16% of loans held for investment (1.18% excluding PPP loans).

Balance Sheet

The Company has experienced significant deposit growth during the year. This growth enabled the Company to expand the investment portfolio as well as make strategic reductions in its long-term debt.

The Company’s deposit growth has continued to exceed peer performance going back to 2019. The growth has been in noninterest bearing accounts ($33.3 million), interest bearing demand ($71.6 million) and savings and money market accounts ($163 million) with a decline in time deposits ($6.2 million). The Company continues to strategically focus on building primary banking relationships.

The investment portfolio has expanded to a balance of $413.2 million at the quarter ended December 31, 2021, which reflects growth of $295.3 million since December 31, 2020. The portfolio is a strong mix of U.S. Treasuries, Agencies, Municipals, Corporate bonds and other investments. The Company recognized $525,000 in security losses in fourth quarter of 2021, as lower yielding securities were sold and replaced with higher yielding securities to position the Company for future success.

The Company prepaid several long term FHLB borrowings to leverage our liquidity and reduce our cost of funds in future periods. These borrowings were paid down $11.3 million year to date and have a remaining balance of $10 million.

Loans held for investment; net of PPP have grown 5.09% since December 31, 2020. The Agriculture, C&I, CRE and dealer portfolios have experienced growth throughout the quarter and year to date, while the Company has seen a reduction in loan balances on 1-4 family residential secured loans during this low-rate environment.

Improvements in nonperforming loans and past due loans, as well as economic stability and improved underwriting have allowed the Company to reduce the Allowance for Loan Losses from 1.64% on December 31, 2020, to 1.18% on December 31, 2021, excluding PPP loans.

These strategies have positioned F&M for future growth in our current footprint as we continue to evaluate opportunities for expansion.

Income Statement

The 2021 earnings are driven by growth in net interest income, strong non-interest income due to our subsidiary organizations, improved asset quality and fees earned under the Paycheck Protection Program.

Net interest income reflects year over year growth. As yields on earning assets continue to decline the Company has been able to support net interest income with savings in interest expense and growth in the investment portfolio while seeking opportunities to leverage the growth in liquidity into higher yielding assets.

Margin compression has reduced the net interest margin from 3.61% on December 31, 2020, to 3.00% on December 31, 2021. To mitigate this compression, the Company has decreased its cost of funds by 24 basis points through rate adjustments, debt reduction and growth in noninterest bearing deposits.

Noninterest income of $11.8 million for the year was primarily driven by mortgage originations, growth in our wealth management division, and title division. These entities have performed well and are preparing to expand into additional areas within our Company footprint in the near future.

As stated above, continued improvements in asset quality and economic conditions resulted in the ability to reduce the allowance for loan losses to 1.16% of loans held for investment (1.18% excluding PPP loans) which was accretive to income by $2.8 million year to date, and $590 thousand in the fourth quarter.

Fees recognized under the Paycheck Protection Program (see below) totaled $212,000 for the quarter and $2.10 million year to date.

This year the Company disposed of non-income producing properties creating a loss of $333,000 and renegotiated contracts with vendors resulting in one time increases in noninterest expense of $500,000 for 2021. These moves will better position the organization for the future.

Paycheck Protection Program

The Company processed 1,080 Paycheck Protection Program (“PPP”) & CARES Act loans during 2020 and 2021 totaling $87.1 million. Fees associated with these loans are amortized over the life of the loan or recognized fully when repaid or forgiven. The Company holds $7.9 million in PPP loans as of December 31, 2021 and expects to recognize approximately $225,000 in PPP fee income from these loans in 2022.

Preferred Stock Redemption

On September 1, 2021, the Company gave notice to preferred shareholders that it would redeem all Series A Preferred Stock on October 29, 2021. As a result of this announcement, 180,261 shares of the 205,327 shares of preferred stock converted to common shares and 25,066 shares were redeemed for cash.

Dividends Declaration

On January 21, 2022, our Board of Directors declared a fourth quarter dividend of $.26 per share to common shareholders. Based on our most recent trade price of $31.38 per share this constitutes a 3.31% yield on an annualized basis. The dividend will be paid on March 1, 2022, to shareholders of record as of February 14, 2022.”

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, and Augusta Counties, Virginia and the city of Winchester, VA. The Bank also provides additional services through a loan production office located in Penn Laird, VA, a loan production office in Winchester, VA and through its subsidiaries, F&M Mortgage and VSTitle, both of which are located in Harrisonburg, VA. Additional information may be found by contacting us on the internet at www.fmbankva.com or by calling (540) 896-1705.

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.

F & M Bank Corp.
Key Statistics

2021 2020
Net Income (000’s)
$ 1,380 $ 2,337 $ 3,220 $ 3,801 $ 10,738 $ 8,788
Net Income available to Common
$ 1,379 $ 2,272 $ 3,154 $ 3,736 $ 10,541 $ 8,525
Earnings per common share – basic
$ 0.39 $ 0.71 $ 0.98 $ 1.17 $ 3.25 $ 2.66
Earnings per common share – diluted
$ 0.40 $ 0.68 $ 0.93 $ 1.11 $ 3.12 $ 2.56
Return on Average Assets
0.46 % 0.81 % 1.22 % 1.56 % 0.98 % 0.92 %
Return on Average Equity
5.42 % 9.18 % 13.06 % 15.96 % 10.84 % 9.46 %
Dividend Payout Ratio excluding Special Dividend
66.67 % 36.62 % 26.53 % 22.22 % 32.00 % 39.10 %
Net Interest Margin
2.48 % 2.95 % 3.13 % 3.44 % 3.00 % 3.61 %
Yield on Average Earning Assets
3.15 % 3.35 % 3.56 % 3.92 % 3.41 % 4.27 %
Yield on Average Interest Bearing Liabilities
0.96 % 0.57 % 0.62 % 0.70 % 0.60 % 0.94 %
Net Interest Spread
2.19 % 2.78 % 2.94 % 3.22 % 2.81 % 3.33 %
Provision for Loan Losses (000’s)
$ (590 ) $ (235 ) $ (1,250 ) $ (725 ) $ (2,800 ) $ 3,300
Net Charge-offs/(recoveries)
$ 72 $ 61 $ (272 ) $ 45 $ (94 ) $ 1,215
Net Charge-offs/(recoveries) as a % of Loans
0.04 % 0.04 % -0.16 % 0.03 % -0.01 % 0.18 %
Non-Performing Loans (000’s)
$ 5,508 $ 5,430 $ 5,532 $ 5,783 $ 5,508 $ 6,537
Non-Performing Loans to Total Assets
0.45 % 0.46 % 0.50 % 0.57 % 0.45 % 0.68 %
Non-Performing Assets (000’s)
$ 5,508 $ 5,430 $ 5,532 $ 5,783 $ 5,508 $ 6,537
Non-Performing Assets to Assets
0.45 % 0.46 % 0.50 % 0.57 % 0.45 % 0.68 %
Efficiency Ratio
82.13 % 75.99 % 76.07 % 68.00 % 75.44 % 67.51 %
  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 investments portfolio and Other Real Estate Owned. 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.

F & M Bank Corp.
Financial Highlights

For Twelve Months
Ended December 31,
Unaudited 2021 Audited 2020
Interest and Dividend Income
$ 35,576,485 $ 36,792,403
Interest Expense
4,301,238 5,728,482
Net Interest Income
31,275,247 31,063,921
Non-Interest Income
11,828,813 12,190,916
Provision for Loan Losses
(2,800,000 ) 3,300,000
Loss on sale of securities
Impairment of long lived assets
171,109 19,193
Other Non-Interest Expenses
33,147,451 29,938,920
Income Before Income Taxes
12,060,728 10,035,110
Provision for Income Taxes
1,323,015 1,141,742
Less Minority Interest (Income)/Loss
(105,193 )
Net Income
$ 10,737,713 $ 8,788,175
Dividend on preferred stock
196,344 262,642
Net Income available to common shareholders
$ 10,541,369 $ 8,525,533
Average Common Shares Outstanding
3,414,306 3,199,883
Net Income Per Common Share
3.09 2.66
Dividends Declared
1.04 1.04
December 31, 2021
December 31, 2020
Cash and Due from Banks
$ 8,579,007 $ 11,181,164
Interest Bearing Bank Deposits
2,874,772 1,243,519
Federal Funds Sold
76,667,000 65,983,000
Loans Held for Sale
4,886,534 58,753,055
Loans Held for Investment
662,421,694 661,328,888
Less Allowance for Loan Losses
(7,747,792 ) (10,474,960 )
Net Loans Held for Investment
654,673,903 650,853,928
413,216,778 117,897,486
Other Assets
58,443,571 61,018,331
Total Assets
$ 1,219,341,565 $ 966,930,483
$ 1,080,294,540 $ 818,581,503
Long Term Debt
21,772,052 33,201,631
Other Liabilities
16,819,462 19,517,664
Total Liabilities
1,118,886,054 871,300,798
Preferred Stock
Common Equity
100,455,511 91,071,387
Stockholders’ Equity
100,455,511 95,629,685
Total Liabilities and Stockholders’ Equity
$ 1,219,341,565 $ 966,930,483
Book Value Per Common Share
$ 29.42 $ 28.43
Tangible Book Value Per Common Share
$ 29.96 $ 28.42

Carrie Comer EVP/Chief Financial Officer
540-896-1705 or ccomer@fmbankva.com

SOURCE: F & M Bank Corp.

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F&M Bank Welcomes Director of Digital Banking, Charles Driest, to its Growing Team

F&M Bank’s leadership team welcomes Charles Driest as Senior Vice President & Director of Digital Banking. Mr. Driest joins F&M Bank most recently from Essex Bank and brings with him over 13 years of digital banking experience.

Mr. Driest commented, “I’m excited to contribute my experience and expertise to a talented banking team; we will deliver robust digital capabilities that provide our customers with a rich customer experience however they choose to engage with F&M Bank.”

In this role, Charles will support the company’s strategic growth initiatives, technology infrastructure, and digital banking services. F&M Bank’s President and CEO, Mark Hanna commented, “We are thrilled Charles has joined the F&M Bank family as we continue to grow and develop our digital banking offerings and technology infrastructures. He brings a wealth of experience to this position and will be integral to our growth moving forward.”
Charles earned a Master’s in Business Administration with a concentration in Finance from St. John’s University, Peter J Tobin College of Business. Charles is currently entering his final year of Virginia Bankers’ School of Bank Management held in Charlottesville, VA.

About F&M Bank

F&M Bank (FMBM) proudly remains the only publicly traded organization based in Rockingham County, VA, and serves the Shenandoah Valley with 13 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. F&M Bank has grown to $1.2 billion in assets and employs over 200 employees across the organization. Its conservative approach to finances and sound investments, along with excellent customer service, has made F&M Bank profitable and continues to pave the way for a bright future.


The Virginia Homebuyer’s Guide to New Construction

Are you having trouble finding a home for sale that checks all your boxes? If your timeline and budget are not terribly strict, then opting for new construction can be beneficial in many ways. Building instead of buying is an especially attractive option when the market is hot. Spare yourself the scarce inventory and bidding wars. Read more about new home construction in Virginia to see if it’s right for you!

Why Choose New Construction Over Previously Existing Homes?

Deciding between new construction and a pre-existing home on the market comes down to what best fits your needs. Below are some initial thoughts to get you started:

Before we dive into the nitty-gritty, let’s look at the top benefits of choosing new construction:

  • New construction means the home will be up to the latest home standards of today.
  • Avoid the repairs and other issues that you would run into with an older home.
  • You will be less likely to have maintenance issues soon after moving in.
  • You won’t have to deal with outdated practices, such as the use of lead-based paint in the home.
  • Newly built homes tend to be more energy efficient as well, which can save you money due to newer windows, insulation, HVAC equipment, appliances.
  • The cost may be similar or even less than bidding on an existing home, while getting everything brand new and how you want it.

Cost of Building vs. Buying a Home in VA

For many prospective homeowners, budget and cost are a primary factor in making their decision. Continue reading to learn more about what prices you can expect for new construction vs. existing homes.

To pick up on the last point, let’s look at where the Virginia real estate market stands now with average prices for building vs. buying a home.


Buying a home in Virginia

  • The typical home value in Virginia is $345,592, according to Zillow.
  • Virginia REALTORS® predicts that home prices will continue to rise in 2022 but at a more modest pace.
  • The inventory shortage is expected to continue through 2022 and beyond.


Building a home in Virginia

  • The typical price range to build a house is $117,718-$449,113, according to HomeAdvisor.
  • The price of building a new home is partly based on the cost of materials and labor, which can fluctuate. However, you also have some control over the total cost based on the floor plan and finishes you choose.
  • The Shenandoah Valley offers plenty of open space to build a new home on, so you don’t have to worry as much about inventory shortages.


Building a New Home Step by Step

Wondering what goes into building a new home? Our list below can help you understand each step in the process.

Choose between a manufactured or modular home vs. “stick-built” new construction. F&M Mortgage offers construction loans for both types of new housing. Manufactured housing offers the same choices of floor plan and materials, but the home is built in a factory and assembled on-site. If you choose stick-built, you can expect the process to play out in the following sequence:

  • Interview builders and contractors to find the right one for you. Ask family and friends for recommendations and read online reviews. Contractors in Virginia should be licensed under the Department of Professional and Occupational Regulation (DPOR). The state also publishes some great guides for consumers, such as “What to Look For (and Look OUT For) In a Contractor”.
  • Obtain F&M Mortgage offers short-term construction or build loans that we will help you refinance into a permanent mortgage after the house is finished.
  • Find a land lot to build on. Unless buying into a planned subdivision, you’ll need to purchase a lot for your new home.
  • Prepare the construction site. Now, your builder will get ready to begin construction by getting permits, leveling the ground, installing a temporary foundation, and more.
  • Complete the initial framing and foundations. It’s exciting to watch the shape of your home go up.
  • Install rough plumbing, electrical work, and an HVAC system.
  • Put in drywall and interior fixtures and trim. This is a fun stage as you see the counters, flooring, cabinets, etc.
  • Finish with exterior fixtures, driveway, and flooring. Watch the rest of your home come together exactly as you envisioned.
  • Walkthrough the home with your contractor to make sure everything is finished as you wanted it to be. Once you get the certificate of occupancy, you can move in.


Choose a mortgage lender who is experienced with new construction!

Choosing the right lender for your home construction loan is just as important as finding a builder. A local partner like F&M Bank can help guide you in the right direction. When you apply for a construction loan from F&M Mortgage, you can expect a seamless and user-friendly construction loan process.

Our Approved Builder Modular Construction Loan Program minimizes your construction loan costs and offers low down payment options to qualified borrowers. F&M Mortgage and our parent company F&M Bank will handle both the permanent financing and the construction funding. We will work closely with your builder to help ensure a smooth process.

F&M Mortgage has been offering full-service home mortgages to the Shenandoah Valley and beyond since 1999. Along with parent company F&M Bank, our professional mortgage advisors have loan options and mortgages to meet your residential and commercial lending needs.

Contact F&M Mortgage to make an appointment with an experienced advisor and get started now!