8-K
F&M BANK CORP (FMBM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 31, 2020
___________
F & M Bank Corp.
(Exact name of registrant as specified in its charter)
| Virginia | 000-13273 | 54-1280811 |
|---|---|---|
| (State or other<br>jurisdiction of<br>incorporation) | (Commission File<br>Number) | (IRS<br>Employer Identification<br>No.) |
| P.O. Box<br>1111Timberville, Virginia | 22853 | |
| --- | --- | |
| (Address of<br>principal executive offices) | (Zip<br>Code) |
Registrant’s telephone number, including area code: (540) 896-8941
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02.
Results
of Operations and Financial Condition.
On January 31, 2020, F & M Bank Corp. (the “Company”) issued a press release announcing results for the year ended December 31, 2019. A copy of the press release is attached as Exhibit 99.1.
The information in this Form 8-K, and the exhibit hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01.
Financial Statements and Exhibits.
(d)
Exhibits.
| Exhibit<br>No. | Description |
|---|---|
| 99.1 | Press<br>Release dated January 31, 2020 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| F & M Bank Corp. | ||
|---|---|---|
| Date:<br>January 31, 2020 | By: | /s/ Carrie<br>A. Comer |
| Carrie<br>A. Comer | ||
| Executive<br>Vice President and Chief Financial Officer |
EXHIBIT INDEX
| Exhibit<br>No. | Description |
|---|---|
| 99.1 | Press<br>Release dated January 31, 2020 |
Blueprint
Exhibit 99.1
F & M Bank Corp.---News and Financials
F & M BANK CORP. ANNOUNCES EARNINGS
| CONTACT: <br> Carrie Comer, EVP/Chief<br>Financial Officer | 540-896-8941 or ccomer@FMBankVA.com |
|---|
TIMBERVILLE, VA—January 31, 2020—F & M Bank Corp. (OTCQX: FMBM), parent company of Farmers & Merchants Bank, announces its financial results for the fourth quarter and year ended December 31, 2019.
Selected highlights for the quarter and year to date include:
●
Net income of $1.9 million and $4.6 million, respectively;
●
Non-performing assets decreased $2.43 million during the fourth quarter and $5.43 million year to date;
●
Net interest margin 3.81% and 4.33%. respectively;
●
Total deposits increased $23.3 million and $50.4 million, respectively for the quarter and year to date.
Mark Hanna, President, commented, “We are pleased to announce fourth quarter and year-to-date earnings of $1.9 million and $4.6 million, respectively. Although these results are lower than prior year, we made great progress in positioning F&M Bank for continued success by substantially reducing our Non-performing assets and growing Core deposit relationships. It is important to note that Fourth Quarter earnings were reduced by several non-recurring items related to dealer deferred cost amortization, pension costs and severance benefits. Our margin decreased as a result of lower loan balances due primarily to sales of indirect dealer loans which occurred during the second half of the year and unrecognized dealer loan costs. Our provision for loan losses increased in 2019 due to higher levels of substandard loans and identification of problem credits. We feel the allowance for loan losses reflects the current risk in our loan portfolio. As we push into 2020, we feel that we are well positioned to leverage our surplus liquidity with organic loan growth and continued improvement in reducing our funding costs.
Hanna continued, “During the fourth quarter we made significant progress in addressing our problem assets. Previously we had announced that two large loans were placed on non-accrual during the second quarter, resulting in our significant allowance for loan loss funding in the first half of the year. During the fourth quarter we were successful in collecting on one of these loans and we recognized a partial write-down on the other based on the appraised value and continued payment delinquency. As a result of these and other collection efforts our problem assets decreased from $17.3 million to $12.6 million.” Highlights of our financial performance are included below.
Restatement of 2018 Financial Statements: In November 2019, as a result of the sale of a portion of the Bank’s indirect dealer loan accounts, management discovered a system input error that prevented the deferred costs associated with dealer loans originated after a certain date from amortizing properly. This error in accounting resulted in a restatement of calendar year 2018 earnings of $261,728, net of tax and a correction of $248,090, net of tax for years prior to 2018 which is reflected as a reduction to retained earnings in the restated 2018 consolidated financial statements. The 2019 earnings properly reflect the amortization, which resulted in reduction of earnings of $184,890, net of tax.
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 fourteen 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, VBS Mortgage, LLC (DBA F&M Mortgage) and VSTitle, LLC 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.
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F&M Bank Corp.
Key Statistics
| 2019 | 2018<br>(restated) | |||||
|---|---|---|---|---|---|---|
| Q4 | Q3 | Q2 | Q1 | YTD | YTD | |
| Net<br>Income (000's) | $1,879 | $(186) | $1,634 | $1,287 | $4,614 | $8,823 |
| Net<br>Income available to Common | $1,800 | $(265) | $1,556 | $1,208 | $4,299 | $8,410 |
| Earnings<br>per common share - basic | $0.57 | $(0.08) | $0.48 | $0.38 | $1.35 | $2.60 |
| Earnings<br>per common share - diluted | 1.33 | 2.45 | ||||
| Return<br>on Average Assets | 0.92% | -0.09% | 0.83% | 0.67% | 0.58% | 1.15% |
| Return<br>on Average Equity | 8.18% | -0.81% | 7.12% | 5.68% | 5.04% | 9.67% |
| Dividend<br>Payout Ratio excluding Special Dividend | 45.61% | -325.00% | 52.08% | 65.79% | 75.56% | 38.46% |
| Dividend<br>Payout Ratio with Special Dividend | 46.15% | |||||
| Net<br>Interest Margin | 3.81% | 4.39% | 4.47% | 4.67% | 4.33% | 4.65% |
| Yield<br>on Average Earning Assets | 4.77% | 5.35% | 5.42% | 5.54% | 5.27% | 5.35% |
| Yield<br>on Average Interest Bearing Liabilities | 1.33% | 1.34% | 1.33% | 1.21% | 1.30% | 1.02% |
| Net<br>Interest Spread | 3.44% | 4.01% | 4.09% | 4.33% | 3.97% | 4.33% |
| Provision<br>for Loan Losses (000's) | $605 | $3,750 | $1,600 | $1,450 | $7,405 | $2,930 |
| Net<br>Charge-offs | $1,198 | $817 | $483 | $1,757 | $4,255 | $3,735 |
| Net<br>Charge-offs as a % of Loans | 0.79% | 0.52% | 0.30% | 1.09% | 0.71% | 0.58% |
| Non-Performing<br>Loans (000's) | $5,728 | $7,978 | $11,688 | $10,587 | $5,728 | $10,205 |
| Non-Performing<br>Loans to Total Assets | 0.70% | 0.98% | 1.45% | 1.36% | 0.70% | 1.31% |
| Non-Performing<br>Assets (000's) | $7,217 | $9,649 | $13,657 | $12,761 | $7,217 | $12,648 |
| Non-Performing<br>Assets to Assets | 0.89% | 1.19% | 1.69% | 1.64% | 0.89% | 1.62% |
| Efficiency<br>Ratio | 74.97% | 67.63% | 65.32% | 67.15% | 68.73% | 66.04% |
(1)
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.
(2)
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 services 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 investment portfolio. 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.
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F&M Bank Corp.
Financial Highlights
| For Twelve<br>Months<br><br><br>Ended December<br>31, | ||
|---|---|---|
| INCOME<br>STATEMENT | Unaudited<br><br><br>2019 | 2018*<br><br><br>(restated) |
| Interest and<br>Dividend Income | $38,210,304 | $36,376,657 |
| Interest<br>Expense | 6,818,488 | 4,832,063 |
| Net Interest<br>Income | 31,391,816 | 31,544,594 |
| Non-Interest<br>Income | 9,919,954 | 8,003,003 |
| Provision for Loan<br>Losses | 7,405,000 | 2,930,000 |
| Other Non-Interest<br>Expenses | 29,392,237 | 26,743,762 |
| Income Before<br>Income Taxes | 4,514,533 | 9,873,835 |
| (Benefit of)<br>provision for Income Taxes | (229,340) | 1,040,596 |
| Less Minority<br>Interest income | 130,276 | 10,050 |
| Net<br>Income | $4,613,597 | $8,823,189 |
| Dividend on<br>preferred stock | 314,589 | 413,191 |
| Net Income<br>available to common shareholders | $4,299,008 | $8,409,998 |
| Average Common<br>Shares Outstanding | 3,189,288 | 3,238,177 |
| Net Income Per<br>Common Share – Basic | 1.35 | 2.60 |
| Net Income Per<br>Common Share – Diluted | 1.33 | 2.45 |
| Dividends<br>Declared | 1.02 | 1.20 |
| BALANCE<br>SHEET | Unaudited<br>December 31,<br>2019 | |
| --- | --- | |
| Cash and Due from<br>Banks | 8,118,889 | |
| Interest Bearing<br>Bank Deposits | 1,125,616 | |
| Federal Funds<br>Sold | 66,559,096 | |
| Loans<br>Held for Sale | 66,798,436 | |
| Loans<br>Held for Investment | 603,425,471 | |
| Less<br>Allowance for Loan Losses | (8,389,846) | |
| Net<br>Loans Held for Investment | 595,035,625 | |
| Securities | 18,015,488 | |
| Other<br>Assets | 58,324,549 | |
| Total<br>Assets | 813,977,699 | |
| Deposits | 641,709,480 | |
| Short Term<br>Debt | 10,000,000 | |
| Long Term<br>Debt | 53,200,675 | |
| Other<br>Liabilities | 17,387,561 | |
| Total<br>Liabilities | 722,297,716 | |
| Stockholders’<br>Equity | 91,679,983 | |
| Total<br>Liabilities and Stockholders’ Equity | 813,977,699 | |
| Book Value Per<br>Common Share | 27.14 | |
| Tangible Book Value<br>Per Common Share | 26.98 |
All values are in US Dollars.
*Derived from audited consolidated financial statements, as restated
| SOURCE: | F<br>& M Bank Corp. |
|---|---|
| CONTACT: | Carrie<br>Comer, EVP/Chief Financial Officer<br><br><br>540-896-8941<br>or ccomer@FMBankVA.com |
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