F & M Bank Corp. (FMBM-OTC: BB)

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September 30, 2011 Issue

The Most Powerful Name In Corporate News and Information


A Focus on Being a Good Partner for the Local Economy Has Lead to Trust and Success for F & M Bank Corp.

Company Profile:

F & M Bank Corp. is an independent, locally-owned, community bank holding company, offering a full range of financial services through its subsidiary bank, Farmers & Merchants Bank, with nine banking offices in Rockingham, Shenandoah and Page Counties, Virginia.

Dean W. Withers
President and CEO

CEO of the Bank since May 2004; Executive Vice President of the Bank from Jan. 2003 to May 2004; Vice President of the Bank from 1993 to 2003. Thirty-one years of banking experience including six years as President/CEO of Farmers & Merchants Bank. He graduated from James Madison University and Graduate School of Banking at LSU. He also serves as a director of VBS Mortgage. In October 2010, Mr. Withers was elected Chairman of the Virginia Association of Community Banks. During the past five years, he has served as a director in the Virginia Association of Community Banks, Virginia Bankers Association Benefits Corporation and Rockingham Memorial Hospital Foundation. Dean Withers’ education, experience and skills as President and CEO and former commercial lender benefit the Company through his understanding of bank operations, corporate governance and lending.

Regional – Mid-Atlantic Banks

F & M Bank Corp.
205 South Main Street
PO Box 1111
Timberville, VA 22853
Phone: 540-896-8941


Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published – September 30, 2011

CEOCFO: Mr. Withers, your mission statement says that Farmers and Merchants Bank is focused on being a strong independent community banking organization; what does that mean?

Mr. Withers: For us it means that we are heavily involved in our community. We take care of the businesses and people in our community. We contribute back to the community and each year we make charitable contributions somewhere around $60,000. In addition, we certainly encourage our employees to be involved in civic organizations and the school systems; just be a good partner for our local economy.

CEOCFO: Speaking of the local economy; would you tell us about the area that you serve and how it has fared over the last few years?

Mr. Withers: We are in the Shenandoah Valley of Virginia, which is the western part. Our hub is the Harrisonburg Virginia area, which is in Rockingham County. We service Rockingham, Shenandoah and Page. Harrisonburg has James Madison University along with Eastern Mennonite University and close by Bridge water College. They also have a pretty diverse industry base. The poultry industry is still pretty strong in Rockingham County, and has been for a lot of years. Merck is located here, Coors, RR Donnelley,  Rockingham Memorial Hospital, are our larger employers. The company over the last few years obviously has been affected by the recession, but we fared better than other areas. Our unemployment is somewhere around 6%, which all things considered is not too bad. Therefore, we have been a little bit sheltered from the major drops in real estate values and everything else that is going on with the country.

CEOCFO: How does F & M Bank Corp. break down between commercial and consumer, and would you like to see the mix changing?

Mr. Withers: We have been around since 1908, so a lot of years we were more retail oriented. In the last five to ten years we have become more of a commercial bank. We still have a large percentage our loans secured by real estate; some of that commercial real estate and some residential. Probably going forward we will still stay with our niche, which has become the mid-level small business customers. We will still take care of the retail side, so it is a very important part of our mix, but we have become more of a commercial bank.

CEOCFO: How does F & M Bank Corp. reach new customers?

Mr. Withers: That is a question I ask everyday. We have a fairly mature customer based depending on which branch. We have 9 branches, so you have to take care of the sixties and ups, who generally like to come in, sit down and see somebody across the desk and converse with them. We ask how their grandchildren are and all that good stuff. We have also tried to reach out to the younger generation, the Gen Ys and Xs. We are just ready to launch mobile banking and we have an internet site. I have two sons in their twenties and you have to more or less force them into a branch to conduct business. They want to do everything with their phones. Therefore, we are shifting our marketing focus to more web-based advertising, and really getting away from a more traditional radio and newspaper. That is a good question that I really do not have the answer to and I wish somebody would give me the magic formula to reach out. We do more on the internet and that sort of thing.

CEOCFO: Are there any other products or services you would like to add to the mix?

Mr. Withers: We are constantly looking at different products and services. I do not know if there are any new products. It is just refining what you have and making sure that those are accessible to the wide range of the age of customers that we have.

CEOCFO: Why should people be banking at Farmers & Merchants Bank?

Mr. Withers: We are community minded. We are still small enough and we have everything that the larger banks have, but we still do give that personal touch, again with mature people on a daily basis who come by as a social event, and also the others. We make local decisions, and our board of directors are local individuals. Decisions do not have to be made in Charlotte or somewhere else; they are all made here locally. As far as loan requests, we give quick turnaround and we know our customers. I think that is what people ultimately are looking for.

CEOCFO: What is the competitive landscape for Farmers & Merchants Bank?

Mr. Withers: It is very competitive. In our area, we have all the larger banks, such as Bank of America, SunTrust, BB&T and Wells Fargo-Wachovia, which is in their transition locally. We also have a fair mix of smaller community banks like us. It is a very competitive market, but we stay within our niche of what we know and do very well.

CEOCFO: Most people know what the differences are between the major banks and community banks, but when you look at the various community banks in your area, why should people be coming to Farmers & Merchants Bank?
Mr. Withers: When you get into the tough times we have been in the last couple of years, and even before that, historically our past dues have been higher than our peers, but our charge-offs have been less. That is because when you get in those tough times we are willing to do whatever we can to work with the customer and get them through if there is a light at the end of the tunnel. If there is no light then we would have to take a different approach. That is a little bit different than some of the other community banks. We are going to try to get them through those tough times. When times are really good you don’t think about those things, so when we get things turned around here hopefully our customers will remember that and tell their friends and family.

CEOCFO: Has there been much change in your strategy and outlook in the last few years?

Mr. Withers: We have tightened our underwriting standards a little bit. We always historically were pretty conservative in our underwriting. For example, with home equities, a lot of large banks and some others were doing 100% of the value, but we stuck to our 80% through the years, which has helped us through the tough times. Also we have changed our underwriting a little bit, especially on  the commercial side. That probably will not change in the future. If you get into ten years of good times you tend to forget, but I do not think we have loosened up any as we come out of this recession.

CEOCFO: What is the financial picture for F & M Bank Corp. today?

Mr. Withers: Our financial picture has been affected by the last few years’ recession, but each year we have not shown a loss. Last year we had a net income of about $3.7 million, and so far this year our earnings are just under $2 million. Therefore, we project earnings this year about $4.5 million. Barring something unforeseen, we will probably hit that or come very close. That is not where we want to be, but it gets us back to earnings of a few years back. We have grown, so we need to get back to traditionally, a whole lot better earnings than what we have had. However, all things considered our non-performing loans so far this year have dropped down; we are at about $12.4 million as of the end of June. At the end of December 2010, we were $15.8 million, so we have been able to work through some of those loans. There are always new problems that pop up that kind of replace some you worked down, so you do not want to get too excited about that, but so far this year past dues are down and non-performing loans are down.

CEOCFO: Do you see the need for additional branches at some point?

Mr. Withers: We are always looking for new opportunities. Our strategic plan includes looking at new locations, but we want to be smart about it. If we go to a new locations we want to make sure it will work for us, as there are no guarantees. We probably will not look at more new branches; but more with expanding our market share with the branches that we have, although we probably will do more on what I call an internet branch to where you can reach out to a larger group of customers with less cost per year going forward. What we find is that people are migrating over to that. It gets back to how do you market to people, what a branch should look like ten years from now and I have no idea.

CEOCFO: What does F & M Bank Corp. look for in its people?

Mr. Withers: We want knowledgeable people, but they can learn banking. We are not a hard-sell organization, but we realize we have to cross-sell. Therefore, we have to have people who are engaging with customers and willing to ask the probing questions and try to get more of their wallet so to speak. We have a lot of small accounts that are quite honestly not very profitable, so we stress to our staff that they need to cross-sell. They are not selling customers something they do not need. Everybody has financial needs, we just want to get these taken care of here rather than down the street.

CEOCFO: Why should potential investors pay attention to F & M Bank Corp. today?

Mr. Withers: We have proven the last few years that we have the ability to adjust and remain profitable. We reduced our dividend a few years ago, but we have been able to maintain a good dividend return. Unfortunately, a couple years back our stock price was considerably higher than where it is now, but at their current price of just under $15 and our dividend return as well as the potential, going forward we are in position to take advantage of an expanding economy when it comes.

CEOCFO: In closing, what should people remember most about Farmers & Merchants Bank?

Mr. Withers: We have been around since 1908 through the good times and the bad times and we have shown the ability to adjust. We are going to stay within our niche and not become something that we are not. Our goal is not to be the biggest bank in the world, but our goal is to be a highly profitable bank.


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We are in the Shenandoah Valley of Virginia, which is the western part. Our hub is the Harrisonburg Virginia area, which is in Rockingham County. We service Rockingham, Shenandoah and Page… The company over the last few years obviously has been affected by the recession, but we fared better than other areas. Our unemployment is somewhere around 6%, which all things considered is not too bad. Therefore, we have been a little bit sheltered from the major drops in real estate values and everything else that is going on with the country. - Dean W. Withers



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