UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from -- to -- .
Commission file number 0-12638
F&M BANCORP
(Exact name of registrant as specified in its charter)
Maryland 52-1316473
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
110 Thomas Johnson Drive
Frederick, Maryland 21702
(Address of principal executive offices) (zip code)
301-694-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock $5 par value, 6,028,800 shares outstanding as of April 30, 1998
Exhibit index located on page 25.
<PAGE>
TABLE 6. CAPITAL RATIOS
<TABLE>
<CAPTION>
Risk-based Capital
- -----------------------------------------------------------------------------
Tier 1 Total Leverage
Capital Capital Ratio
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Actual 12.98% 14.12% 9.66%
Minimum 4.00% 8.00% 3.00%
- -----------------------------------------------------------------------------
Excess 8.98% 6.12% 6.66%
- -----------------------------------------------------------------------------
</TABLE>
Fair value adjustments to shareholders' equity for changes in the fair value
of securities classified as available-for-sale are excluded from the
calculation of these capital ratios in accordance with regulatory guidelines.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Market risk is defined as the future changes in market prices that increase or
decrease the value of financial instruments, i.e. cash, investments, loans,
deposits and debt. Included in market risk are interest rate risk, foreign
currency exchange rate risk, commodity price risk, and other relevant market
risks. Bancorp's primary source of market risk is interest rate risk. Market
risk sensitive financial instruments are entered into for purposes other than
trading.
Interest rate risk refers to the exposure of Bancorp's earnings and capital to
changes in interest rates. The magnitude of the effect of changes in market
rates depends on the extent and timing of such changes and on Bancorp's
ability to adjust. The ability to adjust is controlled by the time remaining
to maturity on fixed-rate obligations, the contractual ability to adjust rates
prior to maturity, competition, and customer actions.
There are several common sources of interest rate risk that must be
effectively managed if there is to be minimal impact on Bancorp's earnings and
capital. Repricing risk arises largely from timing differences in the pricing
of assets and liabilities. Reinvestment risk refers to the reinvestment of
cash flows from interest payments and maturing assets at lower rates. Basis
risk exists when different yield curves or pricing indices do not change at
precisely the same time or in the same magnitude such that assets and
liabilities with the same maturity are not all affected equally. Yield curve
risk refers to unequal movements in interest rates across a full range of
maturities.
In determining the appropriate level of interest rate risk, Bancorp considers
the impact on earnings and capital of the current outlook on interest rates,
potential changes in interest rates, regional economies, liquidity, business
strategies, and other factors. To effectively measure and manage interest rate
risk, traditional cumulative gap and simulation analysis are used to determine
the impact on net interest income and the market value of portfolio equity
<PAGE>
PART II - Other Information
Item 6 Exhibits and Reports on Form 8-K Page
(a) Exhibits
11 Statement Re: Computation of per share earnings 26
27 Financial Data Schedule 27
(b) No reports on Form 8-K were filed by the Corporation during the
quarter ended March 31, 1998.
Items 1 through 5 have been omitted since the item is either inapplicable or
the answer is negative.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
F&M BANCORP
--------------------------
(Registrant)
May 14, 1998 /s/ David L. Spilman
- ------------------ --------------------------
Date DAVID L. SPILMAN
TREASURER
Exhibit 11
Statement re: Computation of Per Share Earnings
Earnings per share ("EPS") is calculated on a Basic EPS and Diluted EPS basis.
Basic EPS excludes dilution and is computed by dividing income available to
common shareholders (the numerator) by the weighted-average number of common
shares outstanding (the denominator) during the period. Income available to
common shareholders is Net Income in the table below and as reported in
Bancorp's income statement. No adjustments were required to net income for any
EPS calculations.
Diluted EPS is calculated by adjusting the denominator for all dilutive
potential common shares that were outstanding during the period. Bancorp had
stock options outstanding during the periods presented below which had a
dilutive effect on EPS. Therefore, the number of additional common shares that
would have been outstanding if the options had been exercised is added to the
denominator to arrive at the dilutive number of shares.
<PAGE>
Exhibit 27
9 Financial Data Schedule for the First Quarter
[MULTIPLIER] 1000
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] MAR-31-1998
[CASH] 32,474
[INT-BEARING-DEPOSITS] 6,578
[FED-FUNDS-SOLD] 7,318
[TRADING-ASSETS] 0
[INVESTMENTS-HELD-FOR-SALE] 151,527
[INVESTMENTS-CARRYING] 92,007
[INVESTMENTS-MARKET] 93,825
[LOANS] 715,357
[ALLOWANCE] 9,645
[TOTAL-ASSETS] 1,063,702
[DEPOSITS] 840,467
[SHORT-TERM] 63,013
[LIABILITIES-OTHER] 11,129
[LONG-TERM] 45,538
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 30,117
[OTHER-SE] 73,438
[TOTAL-LIABILITIES-AND-EQUITY] 1,063,702
[INTEREST-LOAN] 15,621
[INTEREST-INVEST] 3,444
[INTEREST-OTHER] 104
[INTEREST-TOTAL] 19,242
[INTEREST-DEPOSIT] 7,119
[INTEREST-EXPENSE] 8,593
[INTEREST-INCOME-NET] 10,649
[LOAN-LOSSES] 525
[SECURITIES-GAINS] 14
[EXPENSE-OTHER] 8,770
[INCOME-PRETAX] 4,438
[INCOME-PRE-EXTRAORDINARY] 3,128
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 3,128
[EPS-PRIMARY] 0.52
[EPS-DILUTED] 0.51
[YIELD-ACTUAL] 4.63
[LOANS-NON] 5,159
[LOANS-PAST] 863
[LOANS-TROUBLED] 0
[LOANS-PROBLEM] 10,978
[ALLOWANCE-OPEN] 9,530
[CHARGE-OFFS] 1,054
[RECOVERIES] 644
[ALLOWANCE-CLOSE] 9,645
[ALLOWANCE-DOMESTIC] 8,600
[ALLOWANCE-FOREIGN] 0
[ALLOWANCE-UNALLOCATED] 1,045
