F&M Bank Corp.
2015 Annual Report
F&M Bank Corp.
DEAN WITHERS
PRESIDENT AND CEO
Dear Fellow
Shareholders
Year 2015 was our second year of record
earnings for F & M Bank Corp. Net income
totaled $8.417 million which was an
increase of $2.615 million (45%) over
year 2014. This increase was attributed
to a number of factors.
First, Loans Held for Investments slowed
some but still increased $25.852 million
to $544.054 million. Second, the Net
Interest Margin on these loan increased
to 4.43%. Third, Loans Held for Sale
averaged $36.286 million and ended
the year at $57.805 million. Fourth, we
were able to reduce our Provision for
Loan Losses to $300 thousand, down
from $2.250 million in 2014. The $300
thousand funding was during the first
quarter of 2015. As you can see it was a
great year for the Bank.
The Loan increase came primarily from
the continued success of our Indirect
Dealer Division and our Loan Produc-
tion Office in Augusta County. The
Indirect Dealer Division also was the
driver for the increase in the Net Interest
Margin. We were able to reduce our
Provision for Loan Losses through the
continued improvement in our Credit
Quality (Nonperforming Loans to Total
Assets dropped from 1.15% to .98%
and Charge offs dropped to .04% from
.33%). With continued improvement
in the economy, all of these factors
should improve further in the future.
We were also successful in improving
our total deposits, which increased
by $3.165 million to $494.670 million.
All of
accomplished
while keeping our Efficiency Ratio
below 60% at 58.96%. For more finan-
information, please review the
cial
enclosed 10K.
this was
Last year was also a year of expansion.
In the middle part of the year we
opened our first full service branch
in
the City of Staunton/Augusta
County market at North Augusta
Street on the north end of Staunton.
Also, at the end of the year we opened
our second branch in the Town of
Craigsville in the southwest part of
Augusta County. Both of these new
branches have been well received.
Very shortly we will be breaking
ground on a third branch which will
be located close to the corner of Route
250 and Lifecore Drive near Fishersville.
Our current Loan Production Office
will be incorporated into this new
branch along with our Augusta County
staff from VBS Mortgage.
We also continue to expand our suite
of products to meet the changing
needs of our customers. Some of our
new products are highlighted in this
Annual Report. I encourage everyone
to review these products and visit or
call one of our branches to discuss
them further. We have always, and
will continue, to stay ahead of the
curve on new technology for new
products and ways to help us operate
more efficiently.
As we have throughout our history
we continue to stay involved in our
communities by contributions
to
local charities, civic groups, fire
departments,
rescue squads, and
schools. We also are involved with
financial
school
system from elementary schools to
high schools.
in our
literacy
I am proud to be associated with
an organization that cares about its
communities, employees, directors
and shareholders. I hope that you
feel the same way as I do. I encourage
everyone to recommend us to all of
your friends, family, coworkers and
neighbors.
Thank you
F&M Bank Corp.
for being a part of
F&M BANK CORP. ANNUAL REPORT 2015
3
2015
Financial
Figures
F&M BANK CORP.
PEER*
*DATA FROM: UNIFORM BANK
PERFORMANCE REPORT - PEER GROUP 3
NET INCOME (AS A % OF AVERAGE ASSETS)
2013
2014
2015
.82%
.80%
1.00%
.87%
1.31%
1.04%
FMBM Moves to
Top-Tier Marketplace
NET INTEREST INCOME (AS A % OF AVERAGE ASSETS)
2013
2014
2015
3.77%
3.34%
4.01%
3.38%
4.11%
3.51%
OVERHEAD EXPENSE (AS A % OF AVERAGE ASSETS)
2013
2014
2015
2.61%
3.14%
2.71%
3.03%
2.79%
2.86%
NET LOAN LOSSES (AS A % OF LOANS HELD FOR INVESTMENT)
2013
2014
2015
.76%
.33%
.33%
.19%
.04%
.12%
ALLOWANCE FOR LOAN LOSSES (AS A % OF TOTAL LOANS)
2013
2014
2015
1.71%
1.61%
1.68%
1.42%
1.61%
1.37%
NON-PERFORMING LOANS + OREO (AS A % OF LOANS + OREO)
2013
2014
2015
3.16%
2.32%
2.01%
1.69%
1.58%
1.33%
F&M Bank Corp. was pleased to begin
trading on the OTCQX marketplace,
offered by the OTC (Open, Trans-
parent, Connected) Markets Group,
on May 6, 2015. The OTCQX is the
company’s top-tier marketplace serv-
ing public organizations that are not
listed on a major exchange.
“The old bulletin board we were on
really didn’t have any true listing
requirements. Any stock could trade
there,”
said Chief Adminstrative
Officer Neil Hayslett. “QX does have
a minimum required trading price,
market capital, revenues. To traders
of stock, that shows a higher level of
financial strength.”
Companies on the QX marketplace
also must be audited, he said, some-
thing that wasn’t required for QB
stocks. QX has become the market-
place for dozens of regional and com-
munity banks across the U.S.; enough
that the company has created OTCQX
for Banks, an index to highlight those
companies and allow them to be
benchmarked against each other.
Hayslett said Bank executives also
talked with NASDAQ and NYSE MKT,
the former American Stock Exchange.
The move to QX, Hayslett said, should
increase the chance that
industry
market makers — companies or
people who quote buy and sale
prices for stocks — put in a bid or ask for
F&M stock, which should result in less
volatility in the stock price. Being part
of a market with stronger financial
requirements also is expected to give
investors more confidence to buy the
bank’s stock, raising interest in it.
“At the end of the day, we felt like OTC-
QX was still the best fit for us because
that’s where a lot of similarly sized
community banks are located,” said
Hayslett. “If we don’t have increased
volume or tightening of our bid ask
spreads, we could always look at mov-
ing to one of the other markets.”
VIRTUAL INVESTORS CONFERENCES
In June 2015 and February 2016 three
Bank executives, CEO and President
Dean Withers, Chief Administrative
Officer Neil Hayslett, and Chief
Financial Officer Carrie Comer, joined a
dozen other publicly traded banks for a
real-time virtual investors’ conference
hosted by the OTC Markets Group.
The Virtual Investors Conference is
regularly held to introduce public
companies to tens of thousands of
active and engaged individual investors.
View upcoming conferences at:
virtualinvestorconferences.com
F&M BANK CORP. NAMED TO
OTCQX® BEST 50 IN EARLY 2016
In early February 2016, the OTCQX®
Marketplace named F&M Bank Corp.
to its “Best 50” list, a ranking of the top
50 best performing U.S. and internation-
al companies traded on the OTCQX
market. The ranking
is calculated
based on an equal weighting of one-
year total return and average daily
dollar volume growth in the previous
calendar year. Companies in the 2016
OTCQX Best 50 were ranked based on
their performance in 2015.
Dean Withers, President and CEO,
commented,
“We are extremely
pleased to be named to the OTCQX
Best 50 list for our 2015 performance.
2015 marked record earnings for
F&M Bank Corp. for the second year
in a row, with our 2015 performance
being attributed to our very strong
net interest margin, growth in earning
assets and a reduction in the provision
for loan losses.”
The complete 2016 OTCQX Best 50
ranking report can be found at:
web.otcmarkets.com/otcqx-best-50
or by visiting www.fmbankva.com.
4
YOUR MONEY. YOUR COMMUNITY. YOUR BANK.
F&M BANK CORP. ANNUAL REPORT 2015
5
Focus on New
Communities
Looking Ahead
F&M Bank owns property near the new Sentara
RMH Hospital Facility in Harrisonburg and anticipates
opening a branch at this location by early 2017.
STAUNTON, VA
On June 15, 2015, F&M Bank opened
its 10th branch at 2813 N. Augusta
Street in Staunton.
Development of this branch was in
line with the Bank’s growth strategy
that resulted from a record year for
the Bank in 2014 and a record first
quarter in 2015. The growth came
following two capital raises; private
placement of FMBM common stock;
and a public offering of preferred
FMBM stock.
The Staunton branch provides
F&M with the opportunity to serve
existing personal, commercial, and
courier customers, and offers a
stable, local banking solution to the
Augusta County communities.
The North Augusta Street branch is
staffed with universal employees,
cross-trained in the variety of Bank
services and products. The branch
features a 24/7 access ATM, increased
accessibility and convenience
for
its customers, and the full array of
financial services offered through
F&M Bank and its affiliates.
On July 22, 2015, the Greater Augusta
Regional Chamber of Commerce
hosted a Ribbon Cutting Ceremony
at the branch that was widely attended by
the Staunton community. In honor of
the grand opening, the branch gave
back to the community by donating
$1,000 to the Habitat for Humanity of
Staunton, Augusta and Waynesboro.
Within one month of opening, the
branch reached $1 million in deposits,
and word of F&M Bank’s success in
Staunton traveled through Augusta
County.
CRAIGSVILLE, VA
With a population of 1,000 and no
banking service, the town of Craigsville
reached out to F&M in early July to
discuss ATM options. Mayor Richard
Fox had been pushing for two years
to bring banking services back to
Craigsville, but after speaking with
13 different banks, the same answer
surfaced. The expense was too high,
and the town was too small.
Being a small community bank,
F&M seemed like a great fit for the
Craigsville community.
Dean Withers, President, and Neil
Hayslett, Chief Administrative Officer,
met with the mayor on July 6, 2015,
and decided the quickest solution for
citizens of Craigsville was to install a
mobile ATM. Residents of Craigsville
and the surrounding area would
no longer have to travel to conduct
bank business.
The decision was made, and the
mobile ATM would be placed at
Town Center.
On July 24, 2015, the ATM and
security system was installed. Just
three weeks after the decision to
go forward with the ATM, Farmers &
Merchants Bank delivered. On July
27, 2015, the mayor and town clerk
opened accounts for the town.
While 13 other banks dismissed
offers to place an ATM in Craigsville,
F&M staff pulled together as a team,
and in three weeks, the ATM was
installed and open for use. As time
passed, it became clear that financial
services were desperately needed in
Craigsville, and F&M Bank made the
decision to place permanent roots.
On December 14, 2015, F&M’s 11th
branch opened its doors, and for
the first time in two years, the town
of Craigsville was home to a bank.
Much like Staunton, the branch was
staffed with universal employees,
cross-trained in the variety of Bank
services and products. Residents of
the town warmly welcomed F&M,
and new accounts soon accumulated.
On January 14, 2016, the Greater
Augusta Regional Chamber of
Commerce held a Ribbon Cutting
and Business After Hours at the
new
location. Approximately 75
people enjoyed food, door prizes, and
networking with business leaders
from Staunton, Waynesboro and
Craigsville.
The support from the town and residents
of Craigsville was overwhelming,
and as a token of appreciation, the
branch donated $1,000 to the Craigs-
ville Food Bank. During the Business
After Hours ceremony, Food Bank
representatives were surprised with
the donation as emotions flooded
the branch.
FISHERSVILLE, VA
As F&M Bank expanded its presence
in Augusta County in 2015, more
growth is projected. The Bank plans
to break ground in the spring of 2016
on a lot in Fishersville and a multi-
use facility is scheduled to open lat-
er in the year. This branch will also
house loan officers and representa-
tives from our affiliate, VBS Mortgage.
The Fishersville Branch will be home
to a coffee bar and an outdoor
patio, efforts to increase customer
satisfaction and
level.
The outdoor space will also provide
extra room for events and public
gatherings.
comfort
Looking ahead, F&M Bank also owns
property near the new Sentara RMH
Hospital Facility
in Harrisonburg.
The land is ready to be developed
and a branch is expected to open by
early 2017.
6
YOUR MONEY. YOUR COMMUNITY. YOUR BANK.
F&M BANK CORP. ANNUAL REPORT 2015
7
Reaching
Our Consumers
Being a small, community bank,
F&M realizes the
importance of
helping local businesses thrive and
contributing positively to the local
economy. In development of its programs
in 2015, the Bank has continued
to promote the “go local” initiative
among
its retail and commercial
customers.
BUSINESS-TO-CONSUMER
KASASA
These
The Kasasa product
line was
launched in May 2015 to replace
Platinum Rewards.
free
accounts are rewards based, and
customers are able to choose how
to be rewarded; either through high
interest or cash back, if qualifications
are met each month. However, if
qualifications are not met, customers
are not penalized. Kasasa Products
give F&M Bank a competitive edge
in the market, by allowing a small
community bank the flexibility to
offer “big bank rewards.”
F&M BONUS REWARDS
the
Combined with
roll-out of
Kasasa, the Bonus Rewards Program
has been a huge success for F&M
Bank. Since the start of the program
in March 2013, over 1,100 accounts
have been opened. Employees
are bringing in new accounts, and
customers are also referring friends
and family members, and in return,
receiving points towards merchandise,
gift cards, travel, or the option to
donate rewards to charities in need.
BUSINESS-TO-BUSINESS
PERKS @WORK
BANKING ON BUSINESS
In
late 2015, F&M Bank part-
nered with its local news station
WHSV TV-3 to launch Banking on
Business, a new program designed
to highlight a different business
each week with on-air and online
advertising. The partnership with
local businesses by
TV-3 supports
drastically cutting their cost of adver-
tising, and it also allows the bank to
make new connections and reach
business owners in an entirely new
way. F&M Bank also provides the
on-air talent that is highly visible
throughout the segment’s air-time.
F&M CONNECT
the
ideas
Business
From
of
Development Officers,
the Bank
launched Connect, a customizable
business package, free of charge,
that is tailored for customers based
on their qualifying loan or deposit
balances.
We believe that business customers
should have access to just the right
mix of services to meet the needs
of the business, regardless of size or
include:
industry. Service options
remote deposit
cash
management, and our door-to-door
courier service.
capture,
While new banking products and
services were developed, F&M Bank
also re-vamped existing products to
make them more robust and desir-
able for business customers.
the Perks @Work
With
initiative,
the Bank has partnered with area
businesses to provide their employ-
ees local savings and discounts. If an
employer enrolls in the Perks @Work
program, its employees receive spe-
cial saving with participating area
merchants, plus unique banking
benefits at F&M Bank.
COMMUNITY INVOLVEMENT
F&M Bank is dedicated to giving back
to the communities that are served
by each of its 11 branches. During
the year, the Bank hosts a variety
of free events as a way to thank our
customers and show our appreci-
ation. Each branch hosts either a
Kid’s or Customer Appreciation Day,
as well as a Shred Day, where cus-
tomers are able to shred any sort of
private or personal documentation
at no charge. These events are all
well- attended and well-liked by our
customer base.
Financial literacy is also a strong
Financial literacy continues to be a
strong focus of F&M Bank. Through
our partnership with Everfi, over
900 high school students have been
reached with free financial education.
Elementary
also
students
partner-
taught
ship with Cemark, which provides
financial education through relatable
lessons at the students’ skill levels.
through
our
are
Adult financial education
is also
important and emphasized at F&M
Bank. The EverFi @Work program
was specifically designed for today’s
busy adult and focuses on the finan-
cial issues facing today’s consumer
from overdraft protection and insur-
ance, to mortgages, refinancing and
saving for college. Customers are able
to access this service free of charge.
F&M Bank has focused on growing
this program to reach more working
adults. With the expansion of the
Perks @Work program, free education
will also be offered to our business
customers and their employees.
While community involvement is pro-
moted within the Bank, employees
go above and beyond and volunteer
their time and resources when they are
off the clock.
F&M
Bank
was
honored
to
donate
card or checking account at any finan-
cial institution. The transaction can be
initiated on a PC via the internet, or on
a smart phone. All one needs to know
is either the person’s email address or
cell phone number.
Regular day-to-day banking services
are also made simple with our mo-
bile banking app. With text banking,
a customer can check balances or
account history, or even transfer
funds between accounts. Customers
are also able to enroll in text alerts
where balance information is deliv-
ered through an automated text sent
daily. Even deposits can be made on
the go using mobile deposit capture!
feature
information as
To keep customer
secure as possible, the transition
to EMV Chip Cards began in 2015.
New Visa debit and credit cards
small micro-
a
that
chip embedded
in every card
began to be issued in early 2016.
The chip stores
information, per-
forms processing, and adds an addi-
tional layer of security for customer
protection. The
chip gener-
ates a unique code with each
counter-
transaction,
feiting
duplicating
transactions nearly impossible.
making
and
cards
Most,
if not all, employees are
involved in some sort of civic duty.
In 2015, 2,280 volunteers hours were
reported, and not all employees
choose to disclose their volunteerism.
Bank employees also have the
opportunity to donate to a different
charity on monthly basis. On Fridays,
to pay $5
employees are able
proceeds
to wear
donated
charities.
In 2015, over $11,000 was raised
through the Casual Friday for Charity
program.
denim with
to
local
TECHNOLOGY
Banking technology
is constantly
evolving, and at F&M Bank, we adapt
to meet the needs of our online
and mobile users. This past fall, we
launched Person-to-Person Payments
(P2P) and Apple Pay®, two convenient
ways for customers to make payments.
Apple Pay is a mobile payment and
digital wallet service by Apple Inc. that
lets users make payments using com-
patible devices. Customers are able to
pay for purchases with their F&M Bank
debit and credit cards at hundreds of
thousands of merchants accepting
contactless payments. Once the card
is loaded into Apple Pay, payments
can be made easily from the screen of
a phone.
Any customer with an F&M Bank
debit card can send money via P2P
Payments to anyone who has a debit
8
YOUR MONEY. YOUR COMMUNITY. YOUR BANK.
F&M BANK CORP. ANNUAL REPORT 2015
9
Thank You
For Your Service
New Director Appointed in 2015
In October, F&M appointed Ray Burkholder as a new
Director to represent Augusta County. Ray previously
served on the Bank’s Augusta County Advisory Board.
40 YEARS
Carolyn “CJ” Dove
Branch Manager, Timberville
25 YEARS
Donna O’Byrne
Investment Support, Crossroads
Betty Bare
Loan Operations, Timberville
20 YEARS
Alice Grow
Branch Specialist, Timberville
15 YEARS
Frances Foltz
Head Teller, Timberville
W. Brent Meadows
Collections Department, Elkton
Donna McKenzie
Proof Operator, Timberville
Chris Gunter
Branch Manager, Broadway
10 YEARS
Keith Deeds
Facilities
Dana Smith
Head Teller, Elkton
Al McDorman
Courier Service
Jonah Pence
Commercial Relationship Manager,
Crossroads
BRENDA L. SAYRE
ROBERT “BOB” MOORE
Brenda Sayre of F&M Bank’s Dealer
Finance Division retired in October
2015 after working in banking for
nearly 40 years.
Brenda held a great deal of
experience in the dealer finance
area and started working with
F&M in September 2012.
We appreciate Brenda’s time and
dedication to F&M and wish her
the very best!
Bob Moore of our Edinburg branch
retired in October 2015 after 18 years
in banking.
Bob started with F&M when the First
Union Branch was acquired. During
his tenure, Bob worked in various
roles including, teller, lender, loan
operations manager, and CSR.
Join us in wishing Bob the very best
in his retirement and new ventures!
OFFICERS
Dean W. Withers
President & CEO
Larry A. Caplinger
EVP/Chief Lending Officer
Secretary of the Board
Neil W. Hayslett
EVP/Chief Administrative Officer
Stephanie E. Shillingburg
EVP/Chief Retail Officer
Carrie A. Comer
SVP/Chief Financial Officer
Ralph C. Foltz, Jr.
SVP/Operations
Jeffrey L. Lam
SVP/Retail Loan Administrator
Edward A. Strunk
SVP/Commercial Loan Administrator
Joshua P. Hale
SVP/Business Development
Leader
VICE PRESIDENTS
ASSISTANT VICE PRESIDENTS
Deborah A. Andes
Anita C. Beckman
Gregory T. Berkshire
J.T. Bishop
Sylvia T. Bowman
Gary L. Davenport
Carolyn J. Dove
Melody (Ritchie) Emswiler
Sally H. Erickson
Aaron S. Green
Charles P. Harder
Henry E. Hawkins
Teresa D. Helmick
John E. Meyer
Kate S. Pascarella
Jonah J. Pence
Kitty H. Purcell
Robert R. Reedy, Jr.
Karen B. Rose
Kevin A. Russell
Cynthia A. Sherman
Gregory B. Spitler
Krista L. Suter
Matthew Beahm
Jacqueline D. Burner
Thomas L. Campbell
Kay T. Dean
Keith M. Deeds
Kathy L. Grubbs
Chris A. Gunter
Mary Ellen Harrison
Anthony W. Keyser
Glenna M. Lawhorn
Cathy M. Lindamood
Ryan A. May
W. Brent Meadows
Matthew Robinson
Sean D. Ryman
Natalie M. Strickler
Brenda Swartz
Barbara Bartley, Branch Officer
Sarah Berry, Branch Officer
Jonathan D. Lindsay, Branch Officer
DIRECTORS
Thomas L. Cline
Chairman of the Board,
F&M Bank Corp.
Dean W. Withers
President, Farmers & Merchants
Bank and F&M Bank Corp.
Larry A. Caplinger
EVP/Chief Lending Officer,
Farmers & Merchants Bank
John N. Crist
Partner, Hoover Penrod,
PLC-Attorneys
Ellen Fitzwater
Accounting Consultant and Partner,
F & R Leasing, LLC
Daniel J. Harshman
Manager, Town of Edinburg
Richard S. Myers
President, Dick Myers Chrysler-
Dodge-Jeep, Inc.
Michael W. Pugh
President, Old Dominion Realty, Inc.;
VP, Colonial Appraisal Service, Inc
Christopher S. Runion
President, Eddie Edwards Signs, Inc.
Ronald E. Wampler
Partner, Dove Ohio Farms, LLC and
WWTD Ohio Farms, LLC
Ray Burkholder
Owner, Balzer & Associates, Inc.
10
YOUR MONEY. YOUR COMMUNITY. YOUR BANK.
F&M BANK CORP. ANNUAL REPORT 2015
11
Branches
& Offices
BRANCHES
Bridgewater
100 Plaza Drive
540-828-6300
Broadway
126 North Timber Way
540-896-7071
Craigsville
125 West Craig Street
540-997-4162
Edinburg
120 South Main Street
540-984-4129
Elkton
127 West Rockingham Street
540-298-1251
Harrisonburg
80 Cross Keys Road
540-433-7575
1085 Port Republic Road
540-433-0112
Luray
700 East Main Street
540-743-1130
Staunton
2813 N. Augusta Street
540-213-8686
Timberville
205 South Main Street
540-896-8941
Woodstock
161 South Main Street
540-459-3707
LOAN OFFICES
VBS Mortgage
2040 Deyerle Avenue
Suite 102
Harrisonburg, VA
540-442-8583
NMLS# 275173
Dealer Finance Division
4759 Spotswood Trail
Penn Laird, VA
540-437-3480
Loan Production Office
1842 Jefferson Highway
Fishersville, VA
540-946-8160
FIND US ONLINE
www.fmbankva.com
/farmersandmerchantsbank
/farmers-&-merchants-bank-of-virginia
/fmbankva
/fmva
/fmbankva
INVESTOR INFORMATION
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Transfer Agent for F&M Bank Corp.
Stock (FMBM):
Broadridge Corporate
Issuer Solutions
P.O. Box 1342
Brentwood, NY 11717
P: 844-318-0135
F: 215-553-5402
E: shareholder@broadridge.com
W: http://shareholder.broadridge.com/
FMBM