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, 1996
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, 1996
Common Stock, par value - $5 818,654 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, 1996 and 1995 2
Consolidated Statements of Income - Three Months
Ended September 30, 1996 and 1995 3
Consolidated Balance Sheets - September 30, 1996
and December 31, 1995 4
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1996 and 1995 5
Consolidated Statements of Changes in Stockholders'
Equity - Nine Months Ended September 30, 1996 and 1995 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 17
<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,
1996 1995
Interest Income
Interest and fees on loans $ 7,119 $ 6,141
Interest on federal funds sold 53 73
Interest on interest bearing deposits 12 34
Interest and dividends on investment securities
Taxable 2,098 1,854
Nontaxable 25 40
Total Interest Income 9,307 8,142
Interest Expense
Interest on demand deposits 389 463
Interest on savings accounts 835 903
Interest on time deposits 2,301 1,721
Total interest on deposits 3,525 3,087
Interest on short-term debt 79 10
Interest on long-term debt 935 910
Total Interest Expense 4,539 4,007
Net Interest Income 4,768 4,135
Provision for Loan Losses 115 81
Net Interest Income after Provision for Loan Losses 4,653 4,054
Noninterest Income
Service charges 185 175
Other 120 103
Security gains 176 579
Total Noninterest Income 481 857
Noninterest Expense
Salaries 1,102 1,086
Employee benefits 422 420
Occupancy expense 122 120
Equipment expense 197 161
FDIC insurance 17 105
Other 699 604
Total Noninterest Expense 2,559 2,496
Income before Income Taxes 2,575 2,415
Provision for Income Tax 764 715
Net Income $ 1,811 $ 1,700
Per Share Data
Net Income $ 2.22 $ 2.09
Cash Dividends $ .64 $ .60
Equivalent Shares Outstanding 816,375 814,288
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,
1996 1995
Interest Income
Interest and fees on loans $ 2,467 $ 2,160
Interest on federal funds sold 8 30
Interest on interest bearing deposits 2 15
Interest and dividends on investment securities
Taxable 681 647
Nontaxable 7 9
Total Interest Income 3,165 2,861
Interest Expense
Interest on demand deposits 122 153
Interest on savings accounts 265 307
Interest on time deposits 774 680
Total interest on deposits 1,161 1,140
Interest on short-term debt 38 5
Interest on long-term debt 302 318
Total Interest Expense 1,501 1,463
Net Interest Income 1,664 1,398
Provision for Loan Losses 65 41
Net Interest Income after Provision for Loan Losses 1,599 1,357
Noninterest Income
Service charges 64 56
Other 37 24
Security gains 7 251
Total Noninterest Income 108 331
Noninterest Expense
Salaries 370 365
Employee benefits 138 136
Occupancy expense 40 48
Equipment expense 65 61
FDIC insurance (refund) 1 (6)
Other 258 181
Total Noninterest Expense 872 785
Income before Income Taxes 835 903
Provision for Income Tax 244 276
Net Income $ 591 $ 627
Per Share Data
Net Income $ .72 $ .77
Cash Dividends $ .22 $ .20
Equivalent Shares Outstanding 818,654 814,288
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 1996 1995
Cash and due from banks $ 2,954 $ 3,716
Federal funds sold 1,635 1,787
Interest bearing deposits in banks 63 82
Securities held to maturity (note 2) 23,676 26,910
Securities available for sale (note 2) 19,238 17,316
Other investments 1,514 1,462
Loans, net of unearned discount (note 3) 108,794 97,964
Less allowance for loan losses (note 4) (922) (863)
Net Loans 107,872 97,101
Bank premises and equipment 2,012 1,983
Interest receivable 1,278 1,264
Other assets 671 680
Total Assets $ 160,913 $ 152,301
LIABILITIES
Deposits
Noninterest bearing demand $ 12,310 $ 10,941
Interest bearing
Demand 19,981 20,243
Savings deposits 28,555 30,234
Time deposits 59,109 52,243
Total Deposits 119,955 113,661
Short-term debt 3,153 838
Long-term debt 18,164 19,418
Accrued expenses 1,252 1,286
Total Liabilities 142,524 135,203
STOCKHOLDERS' EQUITY
Common stock, $5 par value, 818,654 shares at
September 30, 1996 and 814,288 shares at
December 31, 1995 issued and outstanding 4,093 4,071
Surplus 867 747
Retained earnings 12,946 11,658
Unrealized gain (loss) on securities
available for sale 483 622
Total Stockholders' Equity 18,389 17,098
Total Liabilities and Stockholders' Equity $ 160,913 $ 152,301
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,
1996 1995
Cash Flows from Operating Activities:
Net income $ 1,811 $ 1,700
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 174 141
Amortization of security premiums 88 112
Gain on security transactions (176) (579)
Provision for loan losses 115 81
Increase in interest receivable (14) (120)
Decrease in other assets 9 182
Increase in accrued expenses 185 480
Losses on limited partnership investments 29
Total Adjustments 410 297
Net Cash Provided by Operating Activities 2,221 1,997
Cash Flows from Investing Activities:
Proceeds from sales of investments
available for sale 1,945 2,281
Proceeds from maturity of investments
available for sale 901 3,986
Proceeds from sale of investments
held to maturity 971
Proceeds from maturity of investments
held to maturity 8,453 10,410
Purchase of investments available for sale (5,317) (2,146)
Purchase of investments held to maturity (4,879) (15,585)
Net decrease in interest bearing bank deposits 19
Net change in federal funds sold 152 (580)
Net increase in loans (10,886) (12,870)
Purchase of property and equipment (203) (590)
Net Cash Used in Investing Activities (9,815) (14,123)
Cash Flows from Financing Activities:
Net increase in deposits 6,294 11,197
Net increase in short-term borrowings 2,315 113
Additions to long-term borrowings 1,000 3,000
Repayment of long-term borrowings (2,254) (1,672)
Payment of dividends (523) (488)
Net Cash Provided by Financing Activities 6,832 12,150
Net Increase (Decrease) in Cash
and Cash Equivalents (762) 24
Cash and Cash Equivalents at Beginning of Period 3,716 2,921
Cash and Cash Equivalents at End of Period $ 2,954 $ 2,945
Supplemental Disclosure
Cash paid for:
Interest expense $ 4,606 $ 4,121
Income taxes 750 638
Noncash Transactions:
Subsequent to the year of accrual, the Company satisfied its stock bonus
plan liability by the issuance of 4,366 shares in 1996 at a value of
$142,000 for the 1995 liability.
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,
1996 1995
Balance, beginning of period $ 17,098 $ 14,896
Net income for period 1,811 1,700
Cash dividends (523) (488)
Common stock issued to fund accrued stock
bonus plan liability (4,366 shares) 142
Change in unrealized gain (loss) on securities
available for sale (139) 622
Balance, end of period $ 18,389 $ 16,730
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, 1996, and the results of operations for the three
and nine month periods ended September 30, 1996 and 1995. The
notes included herein should be read in conjunction with the
notes to financial statements included in the 1995 annual report
to stockholders of the F&M Bank Corp.
NOTE 2 INVESTMENT SECURITIES:
The amounts at which investment securities are carried in
the consolidated balance sheets and their approximate market
values at September 30, 1996 and December 31, 1995 follows:
1996 1995
Carrying Market Carrying Market
Value Value Value Value
Securities Held to Maturity
U. S. Treasury and
Agency obligations $ 14,907 $ 14,838 $ 18,280 $ 18,290
State and municipal 463 461 476 476
Other securities 3,383 3,414 4,523 4,620
Mortgage-backed
securities 4,923 4,862 3,631 3,662
Total $ 23,676 $ 23,575 $ 26,910 $ 27,048
1996 1995
Market Market
Value Cost Value Cost
Securities Available for Sale
U. S. Treasury and
Agency obligations $ 4,215 $ 4,225 $ 3,028 $ 2,999
Equity securities 6,895 6,067 7,318 6,429
Mortgage-backed
securities 1,967 1,978 2,864 2,859
Other 6,161 6,187 4,106 4,032
Total $ 19,238 $ 18,457 $ 17,316 $ 16,319
<PAGE> 8
F & M BANK CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
NOTE 3 LOANS:
Loans outstanding are summarized as follows:
September 30, December 31,
1996 1995
Real Estate
Construction $ 2,929 $ 2,540
Mortgage 67,336 58,771
Commercial and agricultural 25,320 25,018
Installment 12,215 10,807
Credit cards 717 807
Other 277 21
Total $ 108,794 $ 97,964
NOTE 4 ALLOWANCE FOR LOAN LOSSES:
A summary of transactions in the allowance for loan losses
for the nine months ended September 30, 1996 and 1995, follows:
1996 1995
Balance, beginning of period $ 863 $ 744
Provisions charged to operating expenses 115 81
Loan recoveries 14 9
Loan charge-offs (70) (46)
Balance, end of period $ 922 $ 788
<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 1996. Annualized growth in total assets was 7.54% and
annualized growth in deposits was 7.38%. Net income for the first nine
months of 1996 increased $111,000 or 6.53% compared to 1995. The increase
in capital of 7.55% for the first nine months was the result of retained
operating income ($1,288,000) and was achieved in spite of a $139,000 net
decline in unrealized gains on securities available for sale. This decline
was caused primarily by reduced market values of fixed rate investments as
a result of higher overall market rates.
Results of Operations
Year to Date
The dollar amount of the tax equivalent, net interest margin
increased 14.86% ($636,000) in the first nine months of 1996 compared to
the first nine months of 1995. An increase in the return on earning assets
(.20%) net of an increase in the cost of funds (.02%) accounted for
$180,000 of the increase in the net interest margin. The remaining
increase was thus attributable to the relationship of the increase in
earning assets relative to interest bearing liabilities (i.e. volume
increase). A schedule of the net interest margin for 1996 and 1995 is
shown on page 13 as Table I.
Noninterest income decreased 43.87% in the first nine months of 1996
compared to the first nine months of 1995. This was due primarily to a
decrease in security gains to $176,000 in 1996 compared to $579,000 in
1995. Service charges on deposits increased slightly (5.71%) in 1996 due
to an increase in the deposit base. Other noninterest income increased due
to loan fees, trustee fees and commissions relating to checkbook charges
and merchant credit card fees.
Overall noninterest expenses increased 2.52% in 1996 compared to
1995. Noninterest expenses included an increase in salaries and employee
benefits of 1.19%. The overall increase in noninterest expenses was
impacted by an $88,000 decrease in FDIC insurance premiums. All other
noninterest expenses increased 15.02%. During the third quarter, the
Company upgraded its computer processing capabilities which resulted in
additional equipment expense and additional maintenance charges from a
variety of software vendors. The remaining increase is a result of asset
growth and expanded branch operations.
Quarter Ending September 30, 1996
Third quarter net income decreased 5.74% compared to the same quarter
of 1995. Factors contributing to this decrease include a reduction in
security gains from $251,000 in 1995 to $7,000 in 1996 and a $77,000
increase in other noninterest expenses. The increase in other noninterest
expenses is due to the aforementioned computer upgrade and increased
professional and consulting fees.
<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, 1996, the market value of all securities available for sale exceeded
their amortized cost by $781,000 ($483,000 after the consideration of
income taxes). This excess is the result of unrecognized gains in the
value of equity securities held by the parent. 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 securities decreased slightly during the first nine
months of 1996. The loan growth through nine months has continued to be
strong and has been partially funded by maturities of securities held to
maturity. During 1996, the Company has invested in longer term debt
securities, primarily U.S. Agency obligations, to take advantage of higher
overall credit rates. Of the investments in securities available for sale,
36% 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. As of September 30, 1996, investments of all
types comprised 27.61% of total assets compared to 30.00% of total assets
at December 31, 1995.
Loan Portfolio
The Company operates in an agriculturally dominated area which
includes the counties of Rockingham, Page, Shenandoah and Augusta 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 economies 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. A large percentage of agricultural loans are made to poultry
growers. Poultry production in the Company's trade area showed moderate
growth in 1995, however, 1996 income for the industry will be far below
historical amounts due to higher grain prices, an oversupply of meat of all
types and a poultry embargo implemented by Russia during a portion of the
year.
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Loan Portfolio (Continued)
The first nine months of 1996 saw continued strong loan demand as
loans grew at an annualized rate of 14.74%. 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
maturities of debt securities. Overall, management has been quite pleased
with the loan program and believes that loan growth will continue
throughout 1996 and into 1997 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 $1,175,000 at September 30, 1996 compared to $380,000 at
December 31, 1995. Approximately two thirds of the increase in past due
loans is related to two loan customers. One large commercial customer
accounts for $410,000 of the past due total. Management is actively
working with this borrower in order to facilitate repayment and to avoid
foreclosure. An additional $135,000 in loans to one borrower will be paid
off from the settlement of the borrower's estate. The Company had no
nonaccrual or restructured loans at September 30, 1996.
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 amount of net charge-offs for nine months ended September 30,
1996, was $56,000 compared to $37,000 for the nine months ended September
30, 1995. The allowance for loan losses was $922,000 at September 30, 1996
representing .85% of period ending loans outstanding. The provision for
loan losses for the nine months ended September 30, 1996 was $115,000
compared to $81,000 for the same period in 1995. The increase reflects an
increasing level of loans outstanding and is not a reflection of changes in
the loan portfolio.
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 good in the
first nine months of 1996 with an annualized growth rate of 7.38%. This
increase can be attributed to the deposit growth at the Bridgewater office
which was opened in April 1995 and to rates that exceed the local
competition in almost every category. In 1996, the Company began offering
repurchase agreements (a/k/a "repos") to customers desiring such
investments. Repos are designed for companies and individuals desiring a
higher rate of return than traditional deposit accounts and who will accept
the risk of not being covered by FDIC insurance.
<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 $1,000,000 in 1996
compared to repayments of $2,254,000 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, 1996, the Company's total risk
based capital ratio was 17.69%, far above the regulatory minimum of 8.00%.
The ratio of total capital to total assets was 11.43% at September 30, 1996
which exceeds that of the Company's peers. Earnings have been satisfactory
to allow an increase in dividends in 1996 over those levels experienced in
1995 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.
Existence of Securities and Exchange Commission Web Site
The Securities and Exchange Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission,
including F & M Bank Corp. and the address is (http: //www.sec.gov).
<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, 1996 September 30, 1995
Average Income/ Rates Average Income/ Rates
Balance Expense Balance Expense
<S> <C> <C> <C> <C> <C> <C>
Rate Related Income
Loans 1 $102,600 $ 7,127 9.26% $ 87,506 $ 6,149 9.37%
Federal funds sold 1,335 53 5.29% 1,675 73 5.81%
Bank deposits 284 12 5.63% 748 34 6.06%
Investments
Taxable 37,019 1,776 6.40% 35,514 1,547 5.80%
Partially
taxable 1 6,835 453 8.84% 6,980 431 8.23%
Tax exempt 1 637 34 7.12% 1,061 53 6.66%
Total Earning Assets 148,710 9,455 8.48% 133,484 8,287 8.28%
Interest Expense
Demand deposits 19,929 389 2.60% 20,353 463 3.03%
Savings 29,927 835 3.72% 28,757 903 4.19%
Time deposits 55,166 2,301 5.56% 43,935 1,721 5.22%
Repurchase agreements 1,466 53 4.82%
Short-term debt 581 26 5.97% 275 10 4.85%
Long-term debt 19,161 935 6.51% 18,754 910 6.47%
Total Interest Bearing
Liabilities 126,230 4,539 4.79% 112,074 4,007 4.77%
Net Interest Margin 1 $ 4,916 $ 4,280
Net Yield on Interest
Earning Assets 1 4.41% 4.28%
1 On a taxable equivalent basis assuming a 34% tax rate.
</TABLE>
TABLE I (Continued)
<TABLE>
F & M BANK CORP.
NET INTEREST MARGIN ANALYSIS
(Dollar Amounts in Thousands)
<CAPTION>
Three Months Ended Three Months Ended
September 30, 1996 September 30, 1995
Average Income/ Rates Average Income/ Rates
Balance Expense Balance Expense
<S> <C> <C> <C> <C> <C> <C>
Rate Related Income
Loans 1 $106,397 $ 2,470 9.29% $ 91,464 $ 2,162 9.46%
Federal funds sold 640 8 5.00% 2,095 30 5.73%
Bank deposits 139 2 5.76% 1,073 15 5.59%
Investments
Taxable 36,008 573 6.37% 36,656 549 5.99%
Partially
taxable 1 6,844 152 8.88% 7,199 137 7.61%
Tax exempt 1 501 9 7.19% 734 12 6.54%
Total Earning Assets 150,529 3,214 8.54% 139,221 2,905 8.35%
Interest Expense
Demand deposits 19,698 122 2.48% 20,216 153 3.03%
Savings 28,948 265 3.66% 28,710 307 4.28%
Time deposits 56,647 774 5.47% 48,368 680 5.62%
Repurchase agreements 2,240 27 4.82%
Short-term debt 807 11 5.45% 348 5 5.75%
Long-term debt 18,387 302 6.57% 19,379 318 6.56%
Total Interest Bearing
Liabilities 126,727 1,501 4.74% 117,021 1,463 5.00%
Net Interest Margin 1 $ 1,713 $ 1,442
Net Yield on Interest
Earning Assets 1 4.55% 4.14%
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, 1996
(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 $ 16,387 $ 1,768 $ 6,225 $ 844 $ 373 $ $ 25,597
Installment 41 701 11,344 129 12,215
Real estate 5,948 6,053 37,925 8,897 11,442 70,265
Credit cards 717 717
Interest bearing
bank deposits 63 63
Investment
securities 4,727 6,887 18,711 3,618 3,076 7,409 44,428
Federal funds sold 1,635 1,635
Total 29,518 15,409 74,205 13,488 14,891 7,409 154,920
Sources of Funds
Interest bearing
deposits 19,981 19,981
Regular savings 28,555 28,555
Certificates of
deposit $100,000
and over 317 2,727 3,104 6,148
Other certificates
of deposit 7,784 19,563 25,614 52,961
Repurchase
agreements 2,449 2,449
Short-term
borrowings 704 704
Long-term
borrowings 892 2,160 11,054 4,058 18,164
Total 60,682 24,450 39,772 4,058 128,962
Discrete Gap (31,164) (9,041) 34,433 9,430 14,891 7,409 25,958
Cumulative Gap (31,164) (40,205) (5,772) 3,658 18,549 25,958
Ratio of Cumulative
Assets to Cumulative
Liabilities 48.6% 52.8% 95.4% 102.8% 114.4% N/A
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 - Not Applicable
Item 5. Other Information - Not Applicable
Item 6. Exhibits and Reports on 8-K
(a) Exhibits
3 i Articles of Incorporation of F & M Bank Corp. are
incorporated by reference to Exhibits to F & M Bank
Corp.'s Form S14 filed February 17, 1984.
3 ii Bylaws of F & M Bank Corp. are incorporated by
reference to Exhibits to F & M Bank Corp.'s Form S14
filed February 17, 1984.
21 Subsidiaries of the small business issuers are
incorporated by reference to Exhibits to F & M Bank
Corp.'s 1995 Form 10-KSB filed March 26, 1996.
27 Financial Data Schedule attached.
(b) Reports on Form 8-K
The Corporation did not file any reports on Form 8-K for the
quarter ending September 30, 1996.
<Page 16>
EXHIBIT INDEX
Exhibit
Index Page Number
27 Financial Data Schedule for the quarter ending
September 30, 1996 18
<PAGE> 17
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.
JULIAN D. FISHER
Julian D. Fisher
President and Principal Financial Officer
RALPH C. FOLTZ
Ralph C. Foltz
Controller and Chief Accounting Officer
Date November 13, 1996
<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-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,954
<INT-BEARING-DEPOSITS> 63
<FED-FUNDS-SOLD> 1,635
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 19,238
<INVESTMENTS-CARRYING> 23,676
<INVESTMENTS-MARKET> 23,575
<LOANS> 108,794
<ALLOWANCE> (922)
<TOTAL-ASSETS> 160,913
<DEPOSITS> 119,955
<SHORT-TERM> 3,153
<LIABILITIES-OTHER> 1,252
<LONG-TERM> 18,164
0
0
<COMMON> 4,093
<OTHER-SE> 14,296
<TOTAL-LIABILITIES-AND-EQUITY> 160,913
<INTEREST-LOAN> 7,119
<INTEREST-INVEST> 2,123
<INTEREST-OTHER> 65
<INTEREST-TOTAL> 9,307
<INTEREST-DEPOSIT> 3,525
<INTEREST-EXPENSE> 4,539
<INTEREST-INCOME-NET> 4,768
<LOAN-LOSSES> 115
<SECURITIES-GAINS> 176
<EXPENSE-OTHER> 2,559
<INCOME-PRETAX> 2,575
<INCOME-PRE-EXTRAORDINARY> 1,811
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,811
<EPS-PRIMARY> 2.22
<EPS-DILUTED> 2.22
<YIELD-ACTUAL> 4.41
<LOANS-NON> 0
<LOANS-PAST> 1,175
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 863
<CHARGE-OFFS> 70
<RECOVERIES> 14
<ALLOWANCE-CLOSE> 922
<ALLOWANCE-DOMESTIC> 922
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
