UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended Commission File Number 0-13273
September 30, 1995
F & M BANK CORP.
Virginia 54-1280811
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Drawer F
Timberville, Virginia 22853
(540) 896-8941
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirement for the past 90 days. Yes ..X. No ....
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
Class Outstanding at September 30, 1995
Common Stock, par value - $5 814,288 shares
F & M BANK CORP.
INDEX
Page
PART I FINANCIAL INFORMATION 2
Item 1. Financial Statements
Consolidated Statements of Income - Nine Months
Ended September 30, 1995 and 1994 2
Consolidated Statements of Income - Three Months
Ended September 30, 1995 and 1994 3
Consolidated Balance Sheets - September 30, 1995
and December 31, 1994 4
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1995 and 1994 5
Consolidated Statements of Changes in Stockholders'
Equity - Nine Months Ended September 30, 1995 and 1994 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II OTHER INFORMATION 15
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibit and Reports on Form 8K 15
SIGNATURES 19
Page 2
Part I Financial Information
Item 1 Financial Statements
F & M BANK CORP.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars Except per Share Amounts)
Nine Months Ended
September 30,
1995 1994
Interest Income
Interest and fees on loans $ 6,141 $ 5,265
Interest on federal funds sold 73 50
Interest on interest bearing deposits 34 22
Interest and dividends on investment securities
Taxable 1,854 1,812
Nontaxable 40 102
Total Interest Income 8,142 7,251
Interest Expense
Interest on demand deposits 463 495
Interest on savings accounts 903 769
Interest on time deposits 1,721 1,291
Total interest on deposits 3,087 2,555
Interest on short-term debt 10 8
Interest on long-term debt 910 819
Total Interest Expense 4,007 3,382
Net Interest Income 4,135 3,869
Provision for Loan Losses 81 45
Net Interest Income after Provision
for Loan Losses 4,054 3,824
Noninterest Income
Service charges 175 165
Other 103 84
Security gains 579 450
Total Noninterest Income 857 699
Noninterest Expense
Salaries 1,086 989
Employee benefits 420 377
Occupancy expense 120 99
Equipment expense 161 149
FDIC insurance 105 167
Other 604 534
Total Noninterest Expense 2,496 2,315
Income before Income Taxes 2,415 2,208
Provision for Income Tax 715 646
Net Income $ 1,700 $ 1,562
Per Share Data
Net Income $ 2.09 $ 1.92
Cash Dividends $ .60 $ .55
Equivalent Shares Outstanding 814,288 814,288
The accompanying notes are an integral part of these statements.
Page 3
F & M BANK CORP.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars Except per Share Amounts)
Three Months Ended
September 30,
1995 1994
Interest Income
Interest and fees on loans $ 2,160 $ 1,788
Interest on federal funds sold 30 6
Interest on interest bearing deposits 15 2
Interest and dividends on investment securities
Taxable 647 628
Nontaxable 9 21
Total Interest Income 2,861 2,445
Interest Expense
Interest on demand deposits 153 167
Interest on savings accounts 307 262
Interest on time deposits 680 427
Total interest on deposits 1,140 856
Interest on short-term debt 5 4
Interest on long-term debt 318 299
Total Interest Expense 1,463 1,159
Net Interest Income 1,398 1,286
Provision for Loan Losses 41 15
Net Interest Income after Provision for Loan Losses 1,357 1,271
Noninterest Income
Service charges 56 60
Other 24 29
Security gains (losses) 251 (5)
Total Noninterest Income 331 84
Noninterest Expense
Salaries 365 341
Employee benefits 136 121
Occupancy expense 48 31
Equipment expense 61 43
FDIC insurance (refund) (6) 57
Other 181 172
Total Noninterest Expense 785 765
Income before Income Taxes 903 590
Provision for Income Tax 276 165
Net Income $ 627 $ 425
Per Share Data
Net Income $ .77 $ .52
Cash Dividends $ .20 $ .20
Equivalent Shares Outstanding 814,288 814,288
The accompanying notes are an integral part of these statements.
Page 4
F & M BANK CORP.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
September 30, December 31,
ASSETS 1995 1994
Cash and due from banks $ 2,945 $ 2,921
Federal funds sold 580
Interest bearing deposits in banks 226 58
Securities held to maturity (note 3) 35,772 34,855
Securities available for sale (note 3) 9,871 9,137
Other investments 1,429 1,766
Loans, net of unearned discount (note 4) 94,195 81,362
Less allowance for loan losses (note 5) (788) (744)
Net Loans 93,407 80,618
Bank premises and equipment 2,009 1,560
Interest receivable 1,122 1,002
Other assets 550 732
Total Assets $ 147,911 $ 132,649
LIABILITIES
Deposits
Noninterest bearing demand $ 10,851 $ 10,299
Interest bearing
Demand 20,052 21,304
Savings deposits 29,506 29,308
Time deposits 49,542 37,843
Total Deposits 109,951 98,754
Short-term debt 646 533
Long-term debt 19,285 17,957
Accrued expenses 1,299 509
Total Liabilities 131,181 117,753
STOCKHOLDERS' EQUITY
Common stock, $5 par value, 814,288 shares
issued and outstanding 4,071 4,071
Surplus 747 747
Retained earnings 11,406 10,194
Unrealized gain (loss) on securities
available for sale 506 (116)
Total Stockholders' Equity 16,730 14,896
Total Liabilities and Stockholders' Equity $ 147,911 $ 132,649
The accompanying notes are an integral part of these statements.
Page 5
F & M BANK CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
Nine Months Ended
September 30,
1995 1994
Cash Flows from Operating Activities:
Net income $ 1,700 $ 1,562
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 141 132
Amortization of security premiums 112 153
Gain on security transactions (579) (450)
Provision for loan losses 81 45
Increase in interest receivable (120) (155)
Decrease in other assets 182 43
Increase in accrued expenses 480 123
Total Adjustments 297 (109)
Net Cash Provided by Operating Activities 1,997 1,453
Cash Flows from Investing Activities:
Proceeds from sales of investments
available for sale 2,281 729
Proceeds from maturity of investments
available for sale 3,986 1,535
Proceeds from maturity of investments
held to maturity 10,410 10,721
Proceeds from sale of investments
held to maturity 971
Purchase of investments available for sale (2,146) (1,205)
Purchase of investments held to maturity (15,585) (10,501)
Net change in federal funds sold (580)
Net increase in loans (12,870)
(5,934)
Purchase of property and equipment (590) (296)
Net Cash Used in Investing Activities (14,123) (4,951)
Cash Flows from Financing Activities:
Net increase (decrease) in deposits 11,197 (1,857)
Net increase in short-term borrowings 113 603
Additions to long-term borrowings 3,000 6,000
Repayment of long-term borrowings (1,672) (1,019)
Payment of dividends (488) (448)
Net Cash Provided by Financing Activities 12,150 3,279
Net Increase (Decrease) in Cash
and Cash Equivalents 24 (219)
Cash and Cash Equivalents at Beginning of Period 2,921 2,745
Cash and Cash Equivalents at End of Period $ 2,945 $ 2,526
Supplemental Disclosure
Cash paid for:
Interest expense $ 4,121 $ 3,397
Income taxes 638 667
The accompanying notes are an integral part of these statements.
Page 6
F & M BANK CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands of Dollars)
Nine Months Ended
September 30,
1995 1994
Balance, beginning of period $ 14,896 $ 13,634
Net income for period 1,700 1,562
Cash dividends (488) (448)
Cumulative effect of change in accounting for
securities available for sale (note 2) 757
Change in unrealized gain (loss) on securities
available for sale (note 2) 622 (566)
Balance, end of period $ 16,730 $ 14,939
The accompanying notes are an integral part of these statements.
Page 7
F & M BANK CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 ACCOUNTING PRINCIPLES:
The consolidated financial statements conform to generally
accepted accounting principles and to general industry practices.
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to
present fairly the financial position as of September 30, 1995,
and the results of operations for the three and nine month
periods ended September 30, 1995 and 1994. The notes included
herein should be read in conjunction with the notes to financial
statements included in the 1994 annual report to stockholders of
the F&M Bank Corp.
NOTE 2 CHANGE IN ACCOUNTING PRINCIPLE:
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standard No. 115, "Accounting For Certain
Investments in Debt and Equity Securities." The statement
requires that all investments in securities be classified as
either trading, available for sale or held to maturity. The
Company only invests in securities that are available for sale or
held to maturity. Those that are classified as available for
sale are carried on the balance sheet at their fair market value
and the unrecognized gain or loss is reflected as a component of
stockholders' equity. Such gains and losses are excluded from
earnings until realized. Those investments that are classified
as held to maturity are carried on the balance sheet at cost and
the gains or losses are recognized as income only when realized.
The adoption of this statement increased total stockholders'
equity by $757,000 as of January 1, 1994.
NOTE 3 INVESTMENT SECURITIES:
The amounts at which investment securities are carried in the
consolidated balance sheets and their approximate market values
at September 30, 1995 and December 31, 1994 follows:
1995 1994
Carrying Market Carrying Market
Value Value Value Value
Securities Held to Maturity
U. S. Treasury
and Agency
obligations $ 26,076 $ 26,006 $ 28,529 $ 27,318
State and
municipal 489 488 1,314 1,304
Other securities 9,207 9,275 5,012 5,010
Total $ 35,772 $ 35,769 $ 34,855 $ 33,632
Page 8
F & M BANK CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
NOTE 3 INVESTMENT SECURITIES (CONTINUED):
1995 1994
Market Market
Value Cost Value Cost
Securities Available for Sale
U. S. Treasury
and Agency
obligations $ 2,635 $ 2,642 $ 3,089 $ 3,281
Equity securities 7,236 6,413 6,048 6,035
Total $ 9,871 $ 9,055 $ 9,137 $ 9,316
NOTE 4 LOANS:
Loans outstanding are summarized as follows:
September 30, December 31,
1995 1994
Real Estate
Construction $ 3,344 $ 2,123
Mortgage 55,713 49,564
Commercial and agricultural 23,544 20,474
Installment 10,787 8,427
Credit cards 707 753
Other 100 21
Total $ 94,195 $ 81,362
NOTE 5 ALLOWANCE FOR LOAN LOSSES:
A summary of transactions in the allowance for loan losses
for the nine months ended September 30, 1995 and 1994, follows:
1995 1994
Balance, beginning of period $ 744 $ 700
Provisions charged to operating expenses 81 45
Loan recoveries 9 29
Loan charge-offs (46) (39)
Balance, end of period $ 788 $ 735
Page 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
The financial condition of F & M Bank Corp. remained strong in the
first nine months of 1995. Annualized growth in total assets was 15.34%
and annualized growth in deposits was 15.12%. The increase in capital of
12.31% for the first nine months was the result of retained operating
income ($1,212,000) and a significant increase in the unrealized gain on
securities available for sale ($622,000). The later increase was due to
overall market gains on equities held by the parent company and a recovery
in the market value of fixed rate investments as a result of lower overall
credit rates.
Results of Operations
Year to Date
The dollar amount of the tax equivalent, net interest income increased
6.18% in the first nine months of 1995 compared to the first nine months of
1994. An increase in the return on earning assets (.55%) was effectively
offset by an increase in the cost of funds (.60%). The increase in net
interest margin income is attributable to an increase in net earning assets
(i.e. volume increases) of 4.37%. A schedule of the net interest margin
for 1995 and 1994 is shown on page 13 as Table I.
Noninterest income increased 22.60% in the first nine months of 1995
compared to the first nine months of 1994. This was due primarily to an
increase in security gains to $579,000 in 1995 compared to $450,000 in
1994. Service charges on deposits increased slightly (6.06%) in 1995 due
to an increase in the deposit base. Other noninterest income increased due
to better results in the area of life and title insurance operations.
Overall noninterest expenses increased 7.82% in 1995 compared to 1994.
Noninterest expenses included an increase in salaries and employee benefits
of 10.25% and an increase in other noninterest expenses of 4.32%. In the
first quarter of 1995, the Company opened a new branch office in
Bridgewater, Virginia, and the start up expenses involved in this effort
accounted for a substantial portion of the increase in noninterest
expenses. In the second quarter, the Company installed new computer
software and this also contributed to the increase in noninterest expense.
The Federal Deposit Insurance Corporation (FDIC) met its target of
governmental prescribed funding in June 1995, and the Company received in
the third quarter a slight refund of previous overpayments. The new FDIC
rates for well capitalized institutions should reduce the Company's FDIC
insurance costs on an annual basis by over $200,000. Exclusive of
personnel and FDIC expenses, other noninterest expenses increased by 13.17%
in 1995 over 1994 operations, the major portion of this increase relating
to the new facilities opening in Bridgewater.
Quarter Ending September 30, 1995
Third quarter operations saw net income increase by 47.53% due
primarily to two factors. Security gains in the third quarter of 1995
totaled $251,000 compared to losses of $5,000 in the third quarter of 1994.
The Company had several securities which had met their target sales price
and it opted to sell these securities. Secondly, FDIC insurance costs
decreased $63,000 due to changes in the FDIC insurance rate effective June
1, 1995 and the refund resulting from this retroactive change. Other minor
changes include an increase in the provision for loan losses (necessitated
by higher levels of loans outstanding) and higher costs relating to
occupancy and equipment. The Company expects future noninterest expense
increases to mirror inflation as it does not foresee any major operating
expense increases in the immediate future.
Page 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Financial Condition
Securities
The Company's securities portfolio is held to assist the Company in
liquidity and asset liability management. The securities portfolio
consists of investment securities (commonly referred to as "securities held
to maturity") and securities available for sale. Securities are classified
as investment securities when management has the intent and ability to hold
the securities to maturity. Investment securities are carried at amortized
cost. Securities available for sale include securities that may be sold in
response to general market fluctuations, general liquidity needs and other
similar factors. Securities available for sale are recorded at market
value. Unrealized holding gains and losses of available for sale
securities are excluded from earnings and reported (net of deferred income
taxes) as a separate component of shareholders' equity. As of September
30, 1995, the market value of all securities available for sale exceeded
their amortized cost by $816,000 ($506,000 after the consideration of
income taxes). This excess is the result of increases in the value of
equity securities held by the parent which have shown substantial
appreciation in the first nine months of 1995. Management has
traditionally held debt securities (regardless of classification) until
maturity and thus it does not expect the minor fluctuations in the value of
the securities to have a direct impact on earnings.
Investments in debt securities increased in the first nine months of
1995 as deposit growth has been steady and some of this growth has been
directed to investments. The Company has invested in relatively short-term
maturities due to uncertainty in the direction of rates. This philosophy
allows for greater flexibility in an environment of rapidly changing rates
and has served the Company well over the years. The Company's available
for sale securities benefitted from increases in the stock market and
increases in the fixed rate investment market. The result was an after tax
increase in the unrealized gain on these securities of $622,000 for the
first nine months and $82,000 for the third quarter of 1995. Of the
investments in securities available for sale, 65% are invested in equities
which are dividend producing and subject to the dividend exclusion for
taxation purposes. The Company believes these investments render adequate
current returns and have the potential for future increases in value.
New investments in debt securities within the quarter continue to be in
maturities of short to intermediate terms in an effort to better match
interest rate sensitivity. At September 30, 1995, the Company had 22% of
its interest bearing investment in maturities of one year or less and 78%
in maturities exceeding one year. As of September 30, 1995, investments of
all types comprised 32% of total assets compared to 35% of total assets at
December 31, 1994.
Loan Portfolio
The Company operates in an agriculturally dominated area which includes
the counties of Rockingham, Page and Shenandoah in the western portion of
Virginia. The Company does not make a significant number of loans to
borrowers outside its primary service area. The Company is very active in
local residential construction mortgages. The commercial lending includes
small and medium sized businesses within its service area.
The principal economic risk associated with the loan portfolio is the
ability of its borrowers to repay. The risk associated with real estate
and installment notes to individuals is based upon employment, the local
and national economics and consumer confidence. All of these affect the
ability of borrowers to repay indebtedness. The risk associated with
commercial lending is based on the strength of the local and national
economies.
Page 11
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Loan Portfolio (Continued)
The first nine months saw an unusually strong loan demand as loans grew
at an annualized rate of 21.03%. The Bank has made a conscious effort to
increase lending locally as loans represent the best return available in
the present credit markets. Funding of the new loans was made possible by
increases in time deposits, retained income from operations and increased
long-term debt outstanding. Overall, management has been quite pleased
with the loan program and believes that loan growth will continue
throughout 1995 and into 1996 although at a slower pace.
Nonperforming loans include nonaccrual loans, loans 90 days or more
past due and restructured loans. Nonaccrual loans are loans on which
interest accruals have been suspended or discontinued permanently.
Restructured loans are loans which have changed the original interest rate
or repayment terms due to financial hardship. Loans 90 days or more past
due totaled $256,000 at September 30, 1995 compared to $787,000 at December
31, 1994. The Company had no nonaccrual or restructured loans at September
30, 1995.
The Company did not have any loans that were considered impaired under
Statement of Financial Accounting Standards No. 114 and No. 118. The
Company does not foresee a material impact on operations as a result of
these statements.
Allowance for Loan Losses
Management evaluates the loan portfolio in light of national and local
economic changes, changes in the nature and value of the portfolio and
industry standards. The Company's loan classification system, which rates
existing loans, provides the basis for adjusting the allowance for loan
loss. Management reviews these classification totals, along with
internally generated loan review reports, past due reports, historical loan
loss experience and individual borrower's financial health to determine the
necessary amount to be provided in the allowance for loan losses.
Management evaluates nonperforming loans relative to their collateral value
and makes the appropriate adjustments to the allowance for loan losses when
needed. Management believes, based on its review, that the Company has an
adequate allowance to absorb any losses in the loan portfolio.
The gross amount of charge-offs for nine months ended September 30,
1995, was $46,000 compared to $39,000 for the nine months ended September
30, 1994. The allowance for loan losses was $788,000 at September 30, 1995
representing .84% of period ending loans outstanding. The provision for
loan losses for the nine months ended September 30, 1995 was $81,000
compared to $45,000 for the same period in 1994. The increased provision
reflects a lower rate of recoveries in 1995 and an increasing level of
loans outstanding.
Deposits and Long-Term Debt
The Company's main source of funds is customer deposits received from
individuals, governmental entities and businesses located within the
Company's service area. Deposit accounts include demand deposits, savings,
money market and certificates of deposit.
Deposit growth was negligible in the first quarter of 1995 but improved
substantially in the second and third quarters of this year. The
Bridgewater branch was opened in April of this year and in conjunction with
this opening the Bank had a very successful new deposit campaign. The
majority of the deposit increases have been time deposits as the Bank was
desirous of attracting deposits with longer maturities.
Page 12
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Deposits and Long Term Debt (Continued)
Borrowings from the Federal Home Loan Bank of Atlanta (FHLB) continue
to be an important mechanism in funding real estate loan growth in the
area. The Bank borrows funds on a fixed rate basis and uses these
borrowings to fund loans on a fixed rate basis with repayments over a
fifteen year term. As an alternative, borrowers may opt for a twenty year
repayment term of which the first ten years have a fixed rate. This program
allows the Bank to match the maturity of its fixed rate real estate portfolio
with the maturity of its debt and thus reduce its exposure to interest rate
changes. Year-to-date borrowings total $3,000,000 in 1995 compared to
repayments of $1,672,000 in this year.
Capital
The Company seeks to maintain a strong capital base to expand
facilities, promote public confidence, support current operations and grow
at a manageable level. As of September 30, 1995, the Company's total risk
based capital ratio was 18.39%, far above the regulatory minimum of 8.00%.
The ratio of total capital to total assets was 11.31% at September 30, 1995
which exceeds that of the Company's peers. Earnings have been satisfactory
to allow an increase in dividends in 1995 over those levels experienced in
1994 and management has no reason to believe this increased level of
dividends will not continue.
Liquidity
Liquidity is the ability to meet present and future obligations through
the management of maturing assets or use of additional liabilities.
Federal funds sold, loans and investments maturing within one year are the
primary source of liquid assets. Management feels its ability to manage
assets and liabilities will maintain the overall liquidity sufficient to
meet customers' needs on a continuing basis.
As a secondary source of funds, the Company's subsidiary bank maintains
lines of credit with correspondent financial institutions that allows it to
borrow funds on an overnight basis. In the past, these lines have been
utilized sparingly as bank deposits have been more than sufficient to fund
loan demands. The Company does not foresee any change in this philosophy
in the near future.
Interest Rate Sensitivity
Management of liquidity involves controlling the degree of interest
rate risk the Company is willing to accept. Interest rate risk is the risk
that interest sensitive liabilities will reprice at a faster rate than
interest sensitive assets. The Company estimates that the point at which
its cumulative repricing opportunities for assets and liabilities are equal
is about five years.
A summary of asset and liability repricing opportunities is shown on
page 14 as Table II.
Page 13
TABLE I
<TABLE>
F & M BANK CORP.
NET INTEREST MARGIN ANALYSIS
(Dollar Amounts in Thousands)
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1995 September 30, 1994
Average Income/ Rates Average Income/ Rates
Balance Expense Balance Expense
<S> <C> <C> <C> <C> <C> <C>
Rate Related Income
Loans 1 $ 87,506 $ 6,149 9.37% $ 77,112 $ 5,274 9.12%
Federal funds sold 1,675 73 5.81% 1,910 50 3.49%
Bank certificates 748 34 6.06% 689 22 4.26%
Investments
Taxable 35,514 1,547 5.80% 39,433 1,528 5.17%
Partially
taxable 1 6,980 431 8.23% 6,315 400 8.45%
Tax exempt 1 1,061 53 6.66% 2,433 139 7.62%
Total Earning Assets 133,484 8,287 8.28% 127,892 7,413 7.73%
Interest Expense
Demand deposits 20,353 463 3.03% 21,852 495 3.02%
Savings 28,757 903 4.19% 29,605 769 3.46%
Time deposits 43,935 1,721 5.22% 39,223 1,291 4.39%
Short-term debt 275 10 4.85% 316 8 3.38%
Long-term debt 18,754 910 6.47% 17,173 819 6.36%
Total Interest Bearing
Liabilities 112,074 4,007 4.77% 108,169 3,382 4.17%
Net Interest Margin 1 $ 4,280 $ 4,031
Net Yield on Interest
Earning Assets 1 4.28% 4.20%
1 On a taxable equivalent basis assuming a 34% tax rate.
</TABLE>
Page 13 (Continued)
TABLE 1 (Continued)
<TABLE>
F & M BANK CORP.
NET INTEREST MARGIN ANALYSIS
(Dollar Amounts in Thousands)
<CAPTION>
Three Months Ended Three Months Ended
September 30, 1995 September 30, 1994
Average Income/ Rates Average Income/ Rates
Balance Expense Balance Expense
<S> <C> <C> <C> <C> <C> <C>
Rate Related Income
Loans 1 $ 91,464 $ 2,162 9.46% $ 79,679 $ 1,791 8.99%
Federal funds sold 2,095 30 5.73% 571 6 4.20%
Bank certificates 1,073 15 5.59% 120 2 6.67%
Investments
Taxable 36,656 549 5.99% 39,481 526 5.33%
Partially
taxable 1 7,199 137 7.61% 6,720 140 8.33%
Tax exempt 1 734 12 6.54% 1,663 29 6.98%
Total Earning Assets 139,221 2,905 8.35% 128,234 2,494 7.78%
Interest Expense
Demand deposits 20,216 153 3.03% 21,853 167 3.06%
Savings 28,710 307 4.28% 28,530 262 3.67%
Time deposits 48,368 680 5.62% 38,854 427 4.40%
Short-term debt 348 5 5.75% 365 4 4.38%
Long-term debt 19,379 318 6.56% 18,603 299 6.43%
Total Interest Bearing
Liabilities 117,021 1,463 5.00% 108,205 1,159 4.28%
Net Interest Margin 1 $ 1,442 $ 1,335
Net Yield on Interest
Earning Assets 1 4.14% 4.16%
1 On a taxable equivalent basis assuming a 34% tax rate.
</TABLE>
Page 14
TABLE II
<TABLE>
F & M BANK CORP.
INTEREST SENSITIVITY ANALYSIS
September 30, 1995
(In Thousands of Dollars)
<CAPTION>
0 - 3 4 - 12 1 - 5 5 -10 Over 10 Not
Months Months Years Years Years Classified Total
<S> <C> <C> <C> <C> <C> <C> <C>
Uses of Funds
Loans:
Commercial $ 13,896 $ 1,921 $ 6,661 $ 832 $ 330 $ $ 23,640
Installment 40 646 9,973 75 10,734
Real estate 4,874 4,793 30,996 8,117 10,334 59,114
Credit cards 707 707
Interest bearing
bank deposits 226 226
Investment securities 5,114 5,174 22,604 4,650 865 8,665 47,072
Federal funds sold 580 580
Total 25,437 12,534 70,234 13,674 11,529 8,665 142,073
Sources of Funds
Interest bearing
deposits 20,052 20,052
Regular savings 29,506 29,506
Certificates of deposit
$100,000 and over 444 2,942 1,439 4,825
Other certificates
of deposit 6,199 23,861 14,657 44,717
Short-term borrowings 646 646
Long-term borrowings 724 1,986 10,913 5,662 19,285
Total 57,571 28,789 27,009 5,662 119,031
Discrete Gap (32,134) (16,255) 43,225 8,012 11,529 8,665 23,042
Cumulative Gap (32,134) (48,389) (5,164) 2,848 14,377 23,042 23,042
Ratio of Cumulative
Assets to Cumulative
Liabilities 44.18% 43.97% 95.44% 102.39% 112.08% 119.36
Maturities of real estate and installment loans are shown in call report format which recognizes all
collections in the period of the loan's maturity. Such assumptions will most likely not equal
actual principal repayments.
</TABLE>
Page 15
Part II Other Information
Item 1. Legal Proceedings - Not Applicable
Item 2. Changes in Securities - Not Applicable
Item 3. Defaults Upon Senior Securities - Not Applicable
Item 4. Submission of Matters to a Vote
of Security Holders - Not Applicable
Item 5. Other Information - Not Applicable
Item 6. Exhibits and Reports on 8-K - (a) Exhibits
Exhibit 27 Financial Data
Schedule for the quarter
ending September 30, 1995.
(b) Reports on Form 8-K filed
during the nine months
ended September 30, 1995.
None
Page 16
EXHIBIT INDEX
Exhibit
Index Page Number
27 Financial Data Schedule for the quarter ending
September 30, 1995 17
Page 19
Signature
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 BANK CORP.
DAN B. TODD
Dan B. Todd
Chairman of the Board and Principal
Financial Officer
RALPH C. FOLTZ
Ralph C. Foltz
Controller and Chief Accounting Officer
Date November 8, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from F&M Bank
Corp. Form 10QSB and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,945
<INT-BEARING-DEPOSITS> 226
<FED-FUNDS-SOLD> 580
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9,871
<INVESTMENTS-CARRYING> 37,201
<INVESTMENTS-MARKET> 37,198
<LOANS> 94,195
<ALLOWANCE> (788)
<TOTAL-ASSETS> 147,911
<DEPOSITS> 109,951
<SHORT-TERM> 646
<LIABILITIES-OTHER> 1,299
<LONG-TERM> 19,285
<COMMON> 4,071
0
0
<OTHER-SE> 12,659
<TOTAL-LIABILITIES-AND-EQUITY> 147,911
<INTEREST-LOAN> 6,141
<INTEREST-INVEST> 1,894
<INTEREST-OTHER> 107
<INTEREST-TOTAL> 8,142
<INTEREST-DEPOSIT> 3,087
<INTEREST-EXPENSE> 4,007
<INTEREST-INCOME-NET> 4,135
<LOAN-LOSSES> 81
<SECURITIES-GAINS> 579
<EXPENSE-OTHER> 2,496
<INCOME-PRETAX> 2,415
<INCOME-PRE-EXTRAORDINARY> 1,700
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,700
<EPS-PRIMARY> 2.09
<EPS-DILUTED> 2.09
<YIELD-ACTUAL> 4.28
<LOANS-NON> 0
<LOANS-PAST> 256
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 744
<CHARGE-OFFS> 46
<RECOVERIES> 9
<ALLOWANCE-CLOSE> 788
<ALLOWANCE-DOMESTIC> 788
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
