F & M Bank Corp. Announces Second Quarter Earnings

TIMBERVILLE, VA / ACCESSWIRE / August 2, 2019 / F & M Bank Corp. (OTCQX:FMBM), parent company of Farmers & Merchants Bank, announces its financial results for the second quarter ending June 30, 2019.

Selected highlights for the quarter include:

Net income of $1.63 million;
Net interest margin of 4.47% for the quarter and 4.57% YTD;
Net interest income increased $208,000;
Non-Interest Income increased $477,000 or 23.9% compared to the second quarter 2018;
Total deposits increased $7.6 million and $39.9 million, respectively for the quarter and for the trailing 12 months.

Mark Hanna, President, commented “Our second quarter earnings of $1.63 million is comparable to the same period last year and an increase of $347,000 versus the first quarter. We continue to enjoy strong pre-tax core operating earnings which increased in 2019 to $3.44 million versus $3.21 million in Q2 2018. Core operating earnings continue to be fueled by a strong net interest margin of 4.47%. The margin did decrease versus the first quarter due to a combination of non-accrual adjustments and an increase in short-term mortgage loans held for sale that offer lower yields than our longer-term loan portfolio. We are also particularly pleased with our increase in non-interest income, which reflects stronger results for both our mortgage and title company subsidiaries.”

Mr. Hanna continued, “Non-performing assets have increased $.9 million versus the first quarter 2019 but have decreased $3.1 million compared to second quarter 2018. During the second quarter we charged $1.6 million to the provision for loan losses. We continue to work through several long-term problem assets and the additional provisioning positions us to move these assets off our balance sheet later this year. The additional provision also captures revisions to our loan loss methodology designed to reflect risks within our loan portfolio resulting from the increase in our non-performing asset ratios in recent quarters.”

Mr. Hanna further stated, “We are excited to announce that our fourteenth branch located at 2782 Stuarts Draft Highway, Stuarts Draft, VA is slated to open later this month. As previously announced our board approved an increase in our quarterly dividend from $.25 to $.26. This dividend is payable on August 16th to shareholders of record as of August 2nd.”

Highlights of our financial performance are included below.

F & M Bank Corp. is an independent, locally-owned, financial holding company, offering a full range of financial services, through its subsidiary, Farmers & Merchants Bank’s thirteen banking offices in Rockingham, Shenandoah, Page and Augusta Counties, Virginia. The Bank also provides additional services through a loan production office located in Penn Laird, VA and through its subsidiaries, F&M Mortgage and VSTitle, both of which are located in Harrisonburg, VA. Additional information may be found by contacting us on the internet at www.fmbankva.com or by calling (540) 896-8941.

This press release may contain “forward-looking statements” as defined by federal securities laws, which may involve significant risks and uncertainties. These statements address issues that involve risks, uncertainties, estimates and assumptions made by management, and actual results could differ materially from the results contemplated by these forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in interest rates, general economic conditions, legislative and regulatory policies, and a variety of other matters. Other risk factors are detailed from time to time in our Securities and Exchange Commission filings. Readers should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on such statements. We undertake no obligation to update these statements following the date of this press release.

F & M Bank Corp.
Key Statistics

2019

2018

YTD

Net Income (000’s)

$
1,634

$
1,287

$
2,921

$
1,687

$
1,973

$
3,660

Net Income available to Common

$
1,556

$
1,208

$
2,764

$
1,583

$
1,870

$
3,453

Earnings per common share

$
0.48

$
0.38

$
0.86

$
0.49

$
0.57

$
1.06

Return on Average Assets

0.83
%

0.67
%

0.74
%

0.91
%

1.11
%

0.98
%

Return on Average Equity

7.12
%

5.68
%

6.40
%

7.38
%

8.75
%

8.06
%

Dividend Payout Ratio exc Special Dividend

52.08
%

65.79
%

58.14
%

51.37
%

43.53
%

47.10
%

Dividend Payout Ratio with Special Dividend

78.35
%

65.95
%

Net Interest Margin

4.47
%

4.67
%

4.57
%

4.64
%

4.78
%

4.73
%

Yield on Average Earning Assets

5.42
%

5.54
%

5.48
%

5.29
%

5.38
%

5.37
%

Yield on Average Interest Bearing Liabilities

1.33
%

1.21
%

1.26
%

0.94
%

0.87
%

0.91
%

Net Interest Spread

4.09
%

4.33
%

4.22
%

4.35
%

4.51
%

4.46
%

Provision for Loan Losses (000’s)

$
1,600

$
1,450

$
3,050

$
1,350

$
680

$
2,250

Net Charge-offs

$
483

$
1,757

$
2,240

$
660

$
309

$
1,709

Net Charge-offs as a % of Loans

0.30
%

1.09
%

0.70
%

0.42
%

0.20
%

0.54
%

Non-Performing Loans (000’s)

$
11,688

$
10,587

$
11,688

$
14,977

$
7,730

$
14,977

Non-Performing Loans to Total Assets

1.45
%

1.36
%

1.45
%

1.94
%

1.06
%

1.94
%

Non-Performing Assets (000’s)

$
13,657

$
12,761

$
13,657

$
17,011

$
9,758

$
10,482

Non-Performing Assets to Assets

1.69
%

1.64
%

1.69
%

2.21
%

1.34
%

1.36
%

Efficiency Ratio

65.32
%

67.15
%

66.20
%

66.11
%

66.52
%

66.31
%

The net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets. Tax equivalent interest income is calculated by grossing up interest income for the amounts that are nontaxable (i.e. municipal securities and loan income) then subtracting interest expense. The tax rate utilized is 21%. The Company’s net interest margin is a common measure used by the financial service industry to determine how profitable earning assets are funded. Because the Company earns nontaxable interest income from municipal loans and securities, net interest income for the ratio is calculated on a tax equivalent basis as described above.
The efficiency ratio is not a measurement under accounting principles generally accepted in the United States. The efficiency ratio is a common measure used by the financial service industry to determine operating efficiency. It is calculated by dividing non-interest expense by the sum of tax equivalent net interest income and non-interest income excluding gains and losses on the investments portfolio and Other Real Estate Owned. The Company calculates this ratio in order to evaluate how efficiently it utilizes its operating structure to create income. An increase in the ratio from period to period indicates the Company is losing a greater percentage of its income to expenses.

F & M Bank Corp.
Financial Highlights

For Six Months

Ended June 30,

INCOME STATEMENT

Unaudited

2019

Unaudited

2018

Interest and Dividend Income

$
19,313,133

$
17,704,577

Interest Expense

3,224,392

2,093,930

Net Interest Income

16,088,741

15,610,647

Non-Interest Income

4,265,082

3,731,640

Provision for Loan Losses

3,050,000

2,030,000

Other Non-Interest Expenses

14,121,689

13,109,715

Income Before Income Taxes

3,182,134

4,202,572

Provision for Income Taxes

232,317

537,915

Less Minority Interest (income)/loss

(28,589)

(4,832)

Net Income

$
2,921,228

$
3,659,825

Dividend on preferred stock

157,373

206,646

Net Income available to common shareholders

$
2,763,855

$
3,453,179

Average Common Shares Outstanding

3,200,119

3,253,007

Net Income Per Common Share

.86

1.06

Dividends Declared

.50

.70

BALANCE SHEET

Unaudited

June 30, 2019

Unaudited

June 30, 2018

Cash and Due from Banks

$
8,075,243

$
9,734,887

Interest Bearing Bank Deposits

768,029

1,565,043

Federal Funds Sold

5,937,000

2,064,000

Loans Held for Sale

78,405,674

49,820,520

Loans Held for Investment

636,407,632

634,122,196

Less Allowance for Loan Losses

(6,050,257)

(7,105,287)

Net Loans Held for Investment

630,357,375

627,016,909

Securities

23,524,719

23,156,192

Other Assets

59,880,840

57,310,216

Total Assets

$
806,948,880

$
770,667,767

Deposits

$
608,470,178

$
568,565,909

Short Term Debt

40,000,000

46,000,000

Long Term Debt

47,916,889

47,434,221

Other Liabilities

18,487,049

16,903,229

Total Liabilities

714,874,116

678,903,359

Preferred Stock

5,591,623

7,487,873

Common Equity

86,483,141

84,276,535

Stockholders’ Equity

92,074,764

91,764,408

Total Liabilities and Stockholders’ Equity

$
806,948,880

$
770,667,767

Book Value Per Common Share

$
27.18

$
25.99

Tangible Book Value Per Common Share

$
27.23

$
26.15

CONTACT:

Neil Hayslett
EVP/Chief Operating Officer
540-896-8941
NHayslett@FMBankVA.com

SOURCE: F & M Bank Corp.

ReleaseID: 554376

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