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
June 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 June 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 - Six Months
Ended June 30, 1996 and 1995 2
Consolidated Statements of Income - Three Months
Ended June 30, 1996 and 1995 3
Consolidated Balance Sheets - June 30, 1996 and
December 31, 1995 4
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1996 and 1995 5
Consolidated Statements of Changes in Stockholders'
Equity - Six Months Ended June 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 19
Page
Part I Financial Information
Item 1 Financial Statements
F & M BANK CORP.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars)
Six Months Ended
June 30,
1996 1995
Interest Income
Interest and fees on loans $ 4,652 $ 3,981
Interest on federal funds sold 45 43
Interest on interest bearing deposits 10 19
Interest and dividends on investment securities
Taxable 1,417 1,207
Nontaxable 18 31
Total Interest Income 6,142 5,281
Interest Expense
Interest on demand accounts 267 310
Interest on savings deposits 570 596
Interest on time deposits 1,527 1,041
Total interest on deposits 2,364 1,947
Interest on short-term debt 41 5
Interest on long-term debt 633 592
Total Interest Expense 3,038 2,544
Net Interest Income 3,104 2,737
Provision for Loan Losses 50 40
Net Interest Income after Provision
for Loan Losses 3,054 2,697
Noninterest Income
Service charges 121 119
Other 83 79
Security gains 169 328
Total Noninterest Income 373 526
Noninterest Expense
Salaries 732 721
Employee benefits 284 284
Occupancy expense 82 72
Equipment expense 132 100
FDIC insurance 16 111
Other 441 423
Total Noninterest Expense 1,687 1,711
Income before Income Taxes 1,740 1,512
Provision for Income Taxes 520 439
Net Income $ 1,220 $ 1,073
Per Share Data
Net Income $ 1.50 $ 1.32
Cash Dividends $ .42 $ .40
Equivalent Shares Outstanding 815,224 814,288
The accompanying notes are an integral part of these statements.
Page
F & M BANK CORP.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars Except Per Share Amounts)
Three Months Ended
June 30,
1996 1995
Interest Income
Interest and fees on loans $ 2,357 $ 2,054
Interest on federal funds sold 17 37
Interest on time deposits 3 15
Interest and dividends on investment securities
Taxable 710 624
Nontaxable 9 14
Total Interest Income 3,096 2,744
Interest Expense
Interest on demand deposits 127 150
Interest on savings accounts 272 295
Interest on time deposits 768 590
Total interest on deposits 1,167 1,035
Interest on short-term debt 27 2
Interest on long-term debt 311 308
Total Interest Expense 1,505 1,345
Net Interest Income 1,591 1,399
Provision for Loan Losses 25 24
Net Interest Income after Provision
for Loan Losses 1,566 1,375
Noninterest Income
Service charges 63 59
Other 39 41
Security gains (losses) (3) 176
Total Noninterest Income 99 276
Noninterest Expense
Salaries 361 357
Employee benefits 140 144
Occupancy expense 41 40
Equipment expense 65 57
FDIC insurance 8 56
Other 218 219
Total Noninterest Expense 833 873
Income before Income Taxes 832 778
Provision for Income Tax 243 223
Net Income $ 589 $ 555
Per Share Data
Net Income $ .72 $ .68
Cash Dividends $ .22 $ .20
Equivalent Shares Outstanding 816,159 814,288
The accompanying notes are an integral part of these statements.
Page
F & M BANK CORP.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
June 30, December 31,
ASSETS 1996 1995
Cash and due from banks $ 3,235 $ 3,716
Federal funds sold 54 1,787
Interest bearing deposits in banks 114 82
Securities held to maturity (note 2) 24,724 26,910
Securities available for sale (note 2) 19,309 17,316
Other investments 1,429 1,462
Loans, net of unearned discount (note 3) 104,312 97,964
Less reserve for loan losses (note 4) (884) (863)
Net Loans 103,428 97,101
Bank premises and equipment 1,933 1,983
Interest receivable 1,281 1,264
Other assets 680 680
Total Assets $ 156,187 $ 152,301
LIABILITIES
Deposits
Noninterest bearing demand $ 12,216 $ 10,941
Interest bearing
Demand 19,181 20,243
Savings deposits 29,644 30,234
Time deposits 54,948 52,243
Total Deposits 115,989 113,661
Repurchase agreements outstanding 1,664
Other short-term debt 749 838
Long-term debt 18,799 19,418
Accrued expenses 1,109 1,286
Total Liabilities 138,310 135,203
STOCKHOLDERS' EQUITY
Common stock $5 par value, 818,654 shares
issued and outstanding 4,093 4,071
Surplus 867 747
Retained earnings 12,536 11,658
Unrealized gain (loss) on securities
available for sale 381 622
Total Stockholders' Equity 17,877 17,098
Total Liabilities and Stockholders' Equity $ 156,187 $ 152,301
The accompanying notes are an integral part of these statements.
Page
F & M BANK CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
Six Months Ended
June 30,
1996 1995
Cash Flows from Operating Activities:
Net income $ 1,220 $ 1,073
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 116 86
Amortization of security premiums 60 74
Gain on security transactions (169) (328)
Provision for loan losses 50 40
Increase in interest receivable (17) (64)
Decrease in other assets 119
Increase (decrease) in accrued expenses 104 298
Losses on limited partnership investments 19
Total Adjustments 163 225
Net Cash Provided by Operating Activities 1,383 1,298
Cash Flows from Investing Activities:
Proceeds from sales of investments
available for sale 1,920 1,578
Proceeds from maturity of investments
available for sale 667 2,392
Proceeds from maturity of investments
held to maturity 6,893 8,185
Purchase of investments available for sale (4,771) (819)
Purchase of investments held to maturity (4,773) (9,157)
Net decrease (increase) in federal funds sold 1,733 (1,980)
Net increase in loans (6,377) (8,098)
Purchase of property and equipment (66) (479)
Net increase in interest bearing bank deposits (32)
Net Cash Used in Investing Activities (4,806) (8,378)
Cash Flows from Financing Activities:
Net increase in deposits 2,328 6,576
Increase in repurchase liabilities 1,664
Net decrease in other short-term borrowings (89) (66)
Additions to long-term borrowings 1,000 2,000
Repayment of long-term borrowings (1,619) (1,162)
Payment of dividends (342) (326)
Net Cash Provided by Financing Activities 2,942 7,022
Net Decrease in Cash and Cash Equivalents (481) (58)
Cash and Cash Equivalents, Beginning of Period 3,716 2,921
Cash and Cash Equivalents, End of Period $ 3,235 $ 2,863
Supplemental Disclosure
Cash paid for:
Interest expense $ 3,027 $ 2,630
Income taxes 545 395
Noncash Transaction
The Company satisfied the profit sharing liability as of December 31,
1995 by contributing 4,366 common shares to the Plan on May 22, 1996.
The accompanying notes are an integral part of these statements.
Page
F & M BANK CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands of Dollars)
Six Months Ended
June 30,
1996 1995
Balance, beginning of period $ 17,098 $ 14,896
Net income 1,220 1,073
Dividends declared (342) (326)
Common stock issued to fund accrued stock
bonus plan liability (4,366 shares) 142
Change in unrealized gain (loss) on
securities available for sale (241) 540
Balance, end of period $ 17,877 $ 16,183
The accompanying notes are an integral part of these statements.
Page
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 June
30, 1996 and the results of operations for the six month periods
ended June 30, 1996 and June 30, 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.
The Company does not expect the anticipated adoption of any
newly issued accounting standards to have a material impact on
future operations or financial position.
NOTE 2 INVESTMENT SECURITIES:
The amounts at which investment securities are carried in
the consolidated balance sheets and their approximate market
values at June 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 $ 15,392 $ 15,291 $ 18,280 $ 18,290
State and municipal 705 702 476 476
Other securities 3,429 3,464 4,523 4,620
Mortgaged-backed
securities 5,198 5,126 3,631 3,662
Total $ 24,724 $ 24,583 $ 26,910 $ 27,048
1996 1995
Market Market
Value Cost Value Cost
Securities Available for Sale
U. S. Treasury and
Agency obligations $ 4,228 $ 4,226 $ 3,028 $ 2,999
Equity securities 6,760 6,084 7,318 6,429
Mortgage-backed
securities 2,162 2,185 2,864 2,859
Other securities 6,159 6,197 4,106 4,032
Total $ 19,309 $ 18,692 $ 17,316 $ 16,319
Page
F & M BANK CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 LOANS:
Loans outstanding are summarized as follows:
June 30, December 31,
1996 1995
Real Estate
Construction $ 2,443 $ 2,540
Mortgage 65,011 58,771
Commercial and agricultural 24,362 25,018
Installment 11,727 10,807
Credit cards 695 807
Other 74 21
Total $ 104,312 $ 97,964
NOTE 4 ALLOWANCE FOR LOAN LOSSES:
A summary of transactions in the allowance for loan losses
for the six months ended June 30, 1996 and 1995 follows:
1996 1995
Balance, beginning of period $ 863 $ 744
Provisions charged to operating expenses 50 40
Loan recoveries 6 3
Loan charge-offs (35) (35)
Balance, End of Period $ 884 $ 752
Page
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 throughout
the first six months of 1996. Annualized growth in total assets for the
first six months was 5.10% and annualized growth in deposits for this time
period was 4.10%. Net income for the first six months of 1996 increased
$147,000 or 13.70% compared to 1995. The increase in capital of 4.56% is
attributed to earnings retained from operations for the period. This
increase in capital was achieved in spite of a $241,000 net decline in the
unrealized gains on securities available for sale.
Results of Operations - Six Months Ending June 30, 1996
The dollar amount of the tax equivalent, net interest margin increased
12.86% in the first six months of 1996 compared to the first six months of
1995. An increase in the cost of funds of .19% was effectively offset by
an increase in the return on earning assets of .15%. The increase in net
interest margin income is thus attributable to an increase in net earning
assets (i.e. volume increase) of 13.88%. A schedule of the net interest
margin for 1996 and 1995 is shown on page 13 or Table I.
Noninterest income decreased 29.09% in the first six months of 1996
compared to the first six months of 1995. The fall in other income is
attributed to a decline in security gains from $328,000 in 1995 to $169,000
in 1996. Minor increases in service charges and other fees were the result
of an increase in the deposit base and total assets.
Noninterest expense decreased 1.40% in 1996 compared to 1995. This
decline was mainly the result of a decrease of $95,000 in FDIC insurance
premiums. The FDIC premiums were virtually eliminated in June, 1995 as the
agency's trust fund met its congressionally mandated reserve requirements
by that date. All other noninterest expenses increased 4.44% due to asset
growth and expanded branch operations.
Result of Operations - Quarter Ending June 30, 1996
Net income for the quarter ending June 30, 1996 increased 6.13% over
earnings in the same quarter of 1995. Net interest income increased due to
increases in the levels of earning assets and stability in the spread
between the cost of funds and the return on invested funds. The Company's
net yield on earning assets has remained consistent over the last twelve
months and is expected to remain so in the near future. The Company saw a
decline in security gains of $179,000 in 1996 as gains of $176,000 were
recognized in 1995 compared with a loss of $3,000 in 1996. Partially
offsetting this decline was a reduction in the FDIC insurance expense from
$56,000 in 1995 to $8,000 in 1996. The reduction was the result of changes
in the FDIC cost of coverage. Other noninterest income and expenses
increased only slightly within 1996 due to asset growth and inflation. The
Company's overhead costs are low relative to its peer group and it is not
anticipated that this will change in the near future.
Page
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
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 June 30,
1996, the market value of all securities available for sale exceeded their
amortized cost by $618,000 ($381,000 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 in the first six months
of 1996. Loan growth was excellent the first six months of 1996 and
maturities of securities held to maturity were directed to loan growth.
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. Of the investments in securities available
for sale, 34% are invested in equities which are dividend producing and
subject to the dividend exclusion for taxation purposes. The Company
believes these investments render adequate returns and have the potential
for future increases in value.
Loan Portfolio
The Company operates in an agriculturally dominated area which
incudes 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 substantially 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 a period of sustained high grain prices.
Page
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Loan Portfolio (Continued)
The first six months of 1996 saw continued strong loan demand as
loans grew at an annualized rate of 12.96%. Funding of the increased loan
volume was made possible by growth in time deposits and retained income
from operations. Overall, management has been quite pleased with the loan
program and believes that loan growth will continue throughout 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 $479,000 at June 30, 1996 compared to $380,000 at December 31,
1995. The Company had no nonaccrual or restructured loans at June 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 classifications totals, along with
internally generated loan review reports, past due reports, historical loan
loss experience and individual borrowers financial health to determine the
necessary amount to be provided in the allowance for loan losses.
Management evaluated 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 net amount of loan charge-offs for the first six months of 1996
was $29,000 compared to $32,000 in the first six months ended June 30,
1995. The allowance for loan losses was $884,000 at June 30, 1996
representing .85% of period ending loans outstanding. The provision for
loan losses for the first six months of 1996 was $50,000 compared to
$40,000 for the same period in 1995. The increase reflects an increasing
volume 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 six months of 1996 with an
annualized growth rate of 4.10%. 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
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
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 make fixed rate loans with a fifteen year repayment term. As
an alternative, borrowers may opt for a twenty year repayment term in which
only 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 totaled $1,000,000 in 1996 compared to repayments
of $1,619,000 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 June 30, 1996, the Company's total risk based
capital ratio was 18.02% which is far above the regulatory minimum of
8.00%. The ratio of total capital to total assets was 11.45% at June 30,
1996 and this exceeds the level of the Company's peer group. Earnings have
been satisfactory to allow an increase in dividends in 1996 over those
levels experienced in 1995. Management anticipates maintaining these
capital levels throughout 1996 and into the foreseeable future.
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 customer 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
allow 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 demand.
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 pace 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 or Table II.
Page
Table 1
<TABLE>
F & M BANK CORP.
NET INTEREST MARGIN ANALYSIS
(Dollar Amounts in Thousands)
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1996 June 30, 1995
Average Income/ Rates Average Income/ Rates
Balance Expense Balance Expense
<S> <C> <C> <C> <C> <C> <C>
Rate Related Income
Loans 1 $ 100,923 $ 4,657 9.23% $ 85,252 $ 3,987 9.35%
Federal funds sold 1,687 45 5.33% 1,461 43 5.89%
Bank deposits 358 10 5.59% 582 19 6.53%
Investments
Taxable 38,600 1,203 6.23% 35,541 998 5.62%
Partially taxable 1 6,830 301 8.81% 6,869 294 8.56%
Tax exempt 1 705 25 7.09% 1,227 41 6.68%
Total Earning Assets 149,103 6,241 8.37% 130,932 5,382 8.22%
Interest Expense
Demand deposits 20,046 267 2.66% 20,423 310 3.04%
Savings 30,208 570 3.77% 28,782 596 4.14%
Time deposits 54,418 1,527 5.61% 41,683 1,041 4.99%
Repurchase agreement 1,087 26 4.78%
Other short-term debt 453 15 6.62% 238 5 4.20%
Long-term debt 19,553 633 6.47% 18,436 592 6.42%
Total Interest Bearing
Liabilities 125,765 3,038 4.83% 109,562 2,544 4.64%
Net Interest Margin 1 $ 3,203 $ 2,838
Net Yield on Interest
Earning Assets 1 4.30% 4.34%
<F1>
1 On a taxable equivalent basis assuming a 34% tax rate.
</TABLE>
Page
Table 1 (Continued)
<TABLE>
F & M BANK CORP.
NET INTEREST MARGIN ANALYSIS
(Dollar Amounts in Thousands)
<CAPTION>
Three Months Ended Three Months Ended
June 30, 1996 June 30, 1995
Average Income/ Rates Average Income/ Rates
Balance Expense Balance Expense
<S> <C> <C> <C> <C> <C> <C>
Rate Related Income
Loans 1 $ 102,448 $ 2,359 9.21% $ 87,359 $ 2,057 9.42%
Federal funds sold 1,314 17 5.18% 2,502 37 5.92%
Bank deposits 202 3 5.94% 945 15 6.35%
Investments
Taxable 38,569 602 6.24% 34,836 515 5.91%
Partially taxable 1 6,858 152 8.87% 6,912 155 8.97%
Tax exempt 1 710 13 7.32% 1,158 19 6.56%
Total Earning Assets 150,101 3,146 8.38% 133,712 2,798 8.37%
Interest Expense
Demand deposits 19,792 127 2.57% 19,740 150 3.04%
Savings 29,807 272 3.65% 28,345 295 4.16%
Time deposits 55,120 768 5.57% 44,776 590 5.27%
Repurchase agreement 1,647 20 4.86%
Other short-term debt 593 7 4.72% 201 2 3.98%
Long-term debt 19,130 311 6.50% 18,927 308 6.51%
Total Interest Bearing
Liabilities 126,089 1,505 4.77% 111,989 1,345 4.80%
Net Interest Margin 1 $ 1,641 $ 1,453
Net Yield on Interest
Earning Assets 1 4.37% 4.35%
<F2>
1 On a taxable equivalent basis assuming a 34% tax rate.
</TABLE>
Page
Table II
<TABLE>
F & M BANK CORP.
INTEREST SENSITIVITY ANALYSIS
JUNE 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 $ 15,332 $ 1,980 $ 5,888 $ 858 $ 378 $ $ 24,436
Installment 42 674 10,896 115 11,727
Real estate 4,296 6,653 35,910 9,866 10,729 67,454
Credit cards 695 695
Interest bearing
bank deposits 114 114
Investment securities 2,719 6,302 22,416 5,837 8,188 45,462
Federal funds sold 54 54
Total 23,252 15,609 75,110 16,676 11,107 8,188 149,942
Sources of Funds
Interest bearing
deposits 19,181 19,181
Regular savings 29,644 29,644
Certificates of
deposit $100,000
and over 866 2,702 2,002 5,570
Other certificates
of deposit 12,789 16,058 20,531 49,378
Repurchase agreement 1,664 1,664
Other short-term
borrowings 749 749
Long-term debt 706 2,228 11,277 4,588 18,799
Total 65,599 20,988 33,810 4,588 124,985
Discrete Gap (42,347) (5,379) 41,300 12,088 11,107 8,188 24,957
Cumulative Gap (42,347) (47,726) (6,426) 5,662 16,769 24,957
Ratio of Cumulative
Assets to Cumulative
Liabilities 35.4% 44.9% 94.7% 104.5% 113.4% N/A
<F3>
Table II reflects the earlier of the maturity on repricing dates for various assets and liabilities
at June 30, 1996. In preparing the above table no assumptions are made with respect to loan
prepayments or deposit runoffs. Loan principal payments are included in the earliest period in
which the loan matures or can be repriced. Principal payments on installment loans scheduled prior
to maturity are included in the period of maturity or repricing. Proceeds from the redemption of
investments and deposits are included in the period of maturity.
</TABLE>
Page
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 - On April 13, 1996, the
stockholders held their annual
meeting. The following item
was approved by the
shareholders by the required
majority:
1) Election of the Board of
Directors as proposed in
the proxy material
without any additions or
exception.
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 June 30, 1996.
Page
EXHIBIT INDEX
Exhibit
Index Page Number
27 Financial Data Schedule for the quarter ending
June 30, 1996 17
Page
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, JR.
Ralph C. Foltz, Jr.
Controller and Chief Accounting Officer
Date August 12, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,235
<INT-BEARING-DEPOSITS> 114
<FED-FUNDS-SOLD> 54
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 19,309
<INVESTMENTS-CARRYING> 24,724
<INVESTMENTS-MARKET> 24,583
<LOANS> 104,312
<ALLOWANCE> (884)
<TOTAL-ASSETS> 156,187
<DEPOSITS> 115,989
<SHORT-TERM> 2,413
<LIABILITIES-OTHER> 1,109
<LONG-TERM> 18,799
0
0
<COMMON> 4,093
<OTHER-SE> 13,784
<TOTAL-LIABILITIES-AND-EQUITY> 156,187
<INTEREST-LOAN> 4,652
<INTEREST-INVEST> 1,435
<INTEREST-OTHER> 55
<INTEREST-TOTAL> 6,142
<INTEREST-DEPOSIT> 2,364
<INTEREST-EXPENSE> 3,038
<INTEREST-INCOME-NET> 3,104
<LOAN-LOSSES> 50
<SECURITIES-GAINS> 169
<EXPENSE-OTHER> 1,687
<INCOME-PRETAX> 1,740
<INCOME-PRE-EXTRAORDINARY> 1,220
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,220
<EPS-PRIMARY> 1.50
<EPS-DILUTED> 1.50
<YIELD-ACTUAL> 4.30
<LOANS-NON> 0
<LOANS-PAST> 479
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 863
<CHARGE-OFFS> 35
<RECOVERIES> 6
<ALLOWANCE-CLOSE> 884
<ALLOWANCE-DOMESTIC> 884
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
