10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

☒ Quarterly report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2022.

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 000-13273

 F&M BANK CORP

Virginia	54-1280811
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

P. O. Box 1111

Timberville, Virginia 22853

(Address of Principal Executive Offices) (Zip Code)

(540) 896-8941

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files. Yes ☒ No ☐

                Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

State the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at May 6, 2022
Common Stock, par value ‑ $5	3,451,612 shares

F & M BANK CORP.

Index

		Page
Part I	Financial Information	3
Item 1.	Financial Statements	3
	Consolidated Balance Sheets – March 31, 2022 and December 31, 2021	3
	Consolidated Statements of Income – Three Months Ended March 31, 2022 and 2021	4
	Consolidated Statements of Comprehensive (Loss) Income – Three Months Ended March 31, 2022 and 2021	5
	Consolidated Statements of Changes in Stockholders’ Equity – Three Months Ended March 31, 2022 and 2021	6
	Consolidated Statements of Cash Flows – Three Months Ended March 31, 2022 and 2021	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.	Controls and Procedures	41
Part II	Other Information	41
Item 1.	Legal Proceedings	41
Item 1a.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	41
Signatures		42
Certifications

2

Part I Financial Information

Item 1 Financial Statements

F & M BANK CORP.

Consolidated Balance Sheets

(Dollars in thousands, except per share data)

	March 31,			December 31,
	2022			2021*
	(Unaudited)
Assets
Cash and due from banks	$	13,586		$	8,516
Money market funds and interest-bearing deposits in other banks		2,796			2,938
Federal funds sold		31,994			76,667
Cash and cash equivalents		48,376			88,121
Securities:
Held to maturity, at amortized cost – fair value of $125 in 2022 and 2021, respectively		125			125
Available for sale, at fair value		461,822			403,882
Other investments		9,142			9,210
Loans held for sale, at fair value		2,479			4,887
Loans held for investment, net of deferred fees and costs		659,560			662,421
Less: allowance for loan losses		(7,389	)		(7,748	)
Net loans held for investment		652,171			654,673
Bank premises and equipment, net		18,684			17,063
Bank premises held for sale		300			300
Interest receivable		3,345			3,117
Goodwill		3,082			3,082
Bank owned life insurance		23,042			22,878
Other assets		15,691			12,004
Total assets	$	1,238,259		$	1,219,342
Liabilities
Deposits:
Noninterest bearing	$	298,676		$	280,993
Interest bearing		813,619			799,302
Total deposits		1,112,295			1,080,295
Long-term debt		21,780			21,772
Other liabilities		16,199			16,819
Total liabilities		1,150,274			1,118,886
Commitments and contingencies
Stockholders’ Equity
Common stock, $5 par value, 6,000,000 shares authorized, 200,000 designated, 3,451,208 and 3,430,175 shares issued and outstanding (29,238 and 15,869 unvested restricted shares)		17,110			17,071
Additional paid in capital – common stock		10,240			10,127
Retained earnings		79,986			78,350
Accumulated other comprehensive loss		(19,351	)		(5,092	)
Total stockholders’ equity		87,985			100,456
Total liabilities and stockholders’ equity	$	1,238,259		$	1,219,342

*2021 derived from audited consolidated financial statements.

See Notes to Consolidated Financial Statements

3

F & M BANK CORP.

Consolidated Statements of Income

(Dollars in thousands)

(Unaudited)

	Three Months Ended
	March 31,
Interest and Dividend income	2022			2021
Interest and fees on loans held for investment	$	7,510		$	8,170
Interest and fees on loans held for sale		29			100
Interest from money market funds and federal funds sold		25			15
Interest on debt securities		1,497			461
Total interest and dividend income		9,061			8,746
Interest expense
Total interest on deposits		845			795
Interest from long-term debt		159			273
Total interest expense		1,004			1,068
Net interest income		8,057			7,678
(Recovery of) Loan Losses		(450	)		(725	)
Net Interest Income After (Recovery of) Loan Losses		8,507			8,403
Noninterest income
Service charges on deposit accounts		307			285
Investment services and insurance income, net		251			347
Mortgage banking income, net		742			1,672
Title insurance income		473			456
Income on bank owned life insurance		171			168
Low income housing partnership losses		(204	)		(215	)
ATM and check card fees		563			520
Other operating income		180			122
Total noninterest income		2,483			3,355
Noninterest expense
Salaries		3,637			3,296
Employee benefits		1,288			1,216
Occupancy expense		340			295
Equipment expense		286			277
FDIC insurance assessment		116			99
Advertising expense		178			136
Legal and professional fees		208			199
ATM and check card fees		298			257
Telecommunication and data processing expense		901			540
Directors fees		164			146
Bank franchise tax		174			173
Other operating expenses		960			1,052
Total noninterest expense		8,550			7,686
Income before income taxes		2,440			4,072
Income tax (benefit) expense		(88	)		271
Net Income	$	2,528		$	3,801
Dividends paid/accumulated on preferred stock		-			65
Net income available to common stockholders	$	2,528		$	3,736

Per Common Share Data
Net income – basic	$	0.74	$	1.17
Net income – diluted	$	0.74	$	1.11
Cash dividends on common stock	$	0.26	$	0.26
Weighted average common shares outstanding – basic		3,434,892		3,205,074
Weighted average common shares outstanding – diluted		3,434,892		3,433,192

See Notes to Consolidated Financial Statements

4

F & M BANK CORP.

Consolidated Statements of Comprehensive (Loss) Income

(Dollars in thousands)

(Unaudited)

	Three Months Ended March 31,
	2022			2021
Net Income	$	2,528		$	3,801
Other comprehensive loss:
Unrealized holding losses on available-for sale securities		(18,049	)		(1,411	)
Tax effect		3,790			297
Unrealized holding losses, net of tax		(14,259	)		(1,114	)
Total other comprehensive loss	$	(14,259	)	$	(1,114	)
Total comprehensive (loss) income	$	(11,731	)	$	2,687

See Notes to Consolidated Financial Statements

5

F & M BANK CORP.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Dollars in thousands)

(Unaudited)

Three Months Ended March 31, 2022 and 2021.

	Preferred Stock		Common Stock		Additional Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance, December 31, 2020	$	4,558	$	16,017	$	6,866	$	71,205		$	(3,017	)	$	95,629
Net income		-		-		-		3,801			-			3,801
Other comprehensive loss		-		-		-		-			(1,114	)		(1,114	)
Dividends on preferred stock ($.32 per share)		-		-		-		(65	)		-			(65	)
Dividends on common stock ($.26 per share)		-		-		-		(833	)		-			(833	)
Common stock issued (2,450 shares)		-		12		52		-			-			64
Common stock issued for Stock-based Compensation (1,332 shares)		-		7		29		-			-			36
Stock-based compensation expense		-		-		9		-			-			9
Balance, March 31, 2021	$	4,558	$	16,036	$	6,956	$	74,108		$	(4,131	)	$	97,527
Balance, December 31, 2021	$	-	$	17,071	$	10,127	$	78,350		$	(5,092	)	$	100,456
Net income		-		-		-		2,528			-			2,528
Other comprehensive loss		-		-		-		-			(14,259	)		(14,259	)
Dividends on common stock ($.26 per share)		-		-		-		(892	)		-			(892	)
Common stock issued (2,599 shares)		-		13		67		-			-			80
Common stock issued for Stock-based Compensation (5,065 shares)		-		26		29		-			-			55
Stock-based compensation expense		-		-		17		-			-			17
Balance, March 31, 2022	$	-	$	17,110	$	10,240	$	79,986		$	(19,351	)	$	87,985

See Notes to Consolidated Financial Statements

6

F & M BANK CORP.

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

	Three Months Ended March 31,
	2022			2021
Cash flows from operating activities
Net income	$	2,528		$	3,801
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		283			293
Amortization of intangibles		9			17
Amortization of securities		6,174			239
Proceeds from loans held for sale originated		39,724			63,032
Loans held for sale originated		(36,881	)		(56,331	)
Gain on sale of loans held for sale originated		(435	)		(1,606	)
(Recovery of) loan losses		(450	)		(725	)
(Increase) decrease in interest receivable		(228	)		323
(Increase) in deferred taxes		(189	)		(189	)
Decrease in taxes payable		-			159
(Increase) decrease in other assets		(12	)		1,433
(Decrease) in accrued expenses		(318	)		(842	)
Amortization of limited partnership investments		204			215
Income from life insurance investment		(171	)		(168	)
Stock-based compensation expense		17			9
Net cash provided by operating activities		10,255			9,660
Cash flows from investing activities
Purchase of investments available for sale and other investments		(85,163	)		(71,076	)
Proceeds from maturity of investments available for sale		3,000			4,623
(Purchase) of proceeds from the redemption of restricted stock, net		(136	)		395
Net decrease in loans held for investment		2,952			1,910
Net decrease in loans held for sale participations		-			37,661
Net purchase of property and equipment		(1,904	)		(181	)
Net cash (used in) investing activities		(81,251	)		(26,668	)
Cash flows from financing activities
Net change in deposits		32,000			44,170
Dividends paid in cash		(892	)		(898	)
Proceeds from issuance of common stock		135			100
Amortization of debt issuance costs		8			-
Repayments of long-term debt		-			(1,043	)
Net cash provided by financing activities		31,251			42,329
Net (decrease) increase in Cash and Cash Equivalents		(39,745	)		25,321
Cash and cash equivalents, beginning of period		88,121			78,408
Cash and cash equivalents, end of period	$	48,376		$	103,729
Supplemental Cash Flow information:
Cash paid for: Interest	$	1,244		$	1,263
Cash paid for: Taxes		-			-
Supplemental non-cash disclosures:
Change in unrealized (loss) on securities available for sale, net of tax	$	(14,259	)	$	(1,411	)

See Notes to Consolidated Financial Statements

7

Notes to the Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying unaudited consolidated financial statements include the accounts of Farmers & Merchants Bank, TEB Life Insurance Company, Farmers & Merchants Financial Services, Inc., VBS Mortgage, LLC (dba F&M Mortgage), and VSTitle, LLC and were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for the interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). Accordingly, these financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).

The accompanying unaudited consolidated financial statements include the accounts of the Company, the Bank and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations

The Company, through its subsidiary Farmers & Merchants Bank (the “Bank”), operates under a charter issued by the Commonwealth of Virginia and provides commercial banking services. As a state chartered bank, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions and the Federal Reserve Bank. The Bank provides services to customers primarily in the counties of Rockingham, Shenandoah, and Augusta, and the cities of Harrisonburg, Staunton, Waynesboro and Winchester in Virginia. Services are provided at thirteen branch offices and a Dealer Finance Division. The Company offers insurance, mortgage lending, title insurance and financial services through its subsidiaries, TEB Life Insurance Company, Farmers & Merchants Financial Services, Inc. (“FMFS”), F&M Mortgage, and VSTitle, LLC (“VST”).

Basis of Presentation

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and fair value. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for fair presentation of the results of operations in these financial statements, have been made.

Risk and Uncertainties

The coronavirus (“COVID-19”) pandemic spread rapidly across the world in the first quarter of 2020 and was declared a pandemic by the World Health Organization. The government and private sector responses to contain its spread began to significantly affect our business operations in March 2020 with branch lobby closings, operations and administrative staff working remotely and the use of virtual meetings. Branch lobbies were only open by appointment from March 2020 to April 12, 2021 and from January 18, 2022 to March 7, 2022. The full impact of COVID-19 and its length and duration remains uncertain at this time. The Company is closely monitoring the effects of the pandemic on our customers and loan portfolio. The risks and uncertainties resulting from the pandemic may adversely affect our future earnings, cash flows and financial condition, including among others, credit losses resulting from financial stress on borrowers, decreased demand for products and operational failures. In addition, significant assumptions, judgments, and estimates used in the preparation of our financial statements, including those associated with evaluations of goodwill for impairment, and allowance for loan losses, may be subject to adjustments in future periods due to the rapidly changing, uncertain and unprecedented nature of the pandemic.

8

Note 1. Summary of Significant Accounting Policies, continued

Reclassification

Certain reclassifications have been made to prior period amounts to conform to current period presentation. None of these reclassifications are considered material and have no impact on net income.

Earnings per Share

Accounting guidance specifies the computation, presentation and disclosure requirements for earnings per share (“EPS”) for entities with publicly held common stock or potential common stock such as options, warrants, convertible securities or contingent stock agreements if those securities trade in a public market. Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive common shares had been issued. The dilutive effect of conversion of preferred stock is reflected in the diluted earnings per common share calculation. All of the Company’s outstanding preferred stock was redeemed by the Company for cash or converted to common stock during the fourth quarter of 2021. Nonvested restricted shares are included in the computation of basic earnings per share as the holder is entitled to full shareholder benefits during the vesting period, including voting rights and sharing in nonforfeitable dividends.

Net income available to common stockholders represents consolidated net income adjusted for preferred dividends declared. The following table provides a reconciliation of net income to net income available to common stockholders for the periods presented (dollars in thousands):

	For the Three months ended		For the Three months ended
	March 31, 2022		March 31, 2021
Earnings available to common stockholders:
Net income	$	2,528	$	3,801
Preferred stock dividends		-		65
Net income available to common stockholders	$	2,528	$	3,736

The following table shows the effect of dilutive preferred stock conversion on the Company’s earnings per share for the periods indicated (dollars in thousands):

	Three months ended March 31, 2022						Three months ended March 31, 2021
	Income		Weighted Average Shares		Per Share Amounts		Income		Weighted Average Shares		Per Share Amounts
Basic EPS	$	2,528		3,434,892	$	0.74	$	3,736		3,205,074	$	1.17
Effect of Dilutive Securities:
Convertible Preferred Stock		-		-		-		65		228,118		(0.06	)
Diluted EPS	$	2,528		3,434,892	$	0.74	$	3,801		3,433,192	$	1.11

Note 2.   Investment Securities

Investment securities available for sale are carried in the consolidated balance sheets at their approximate fair value. Investment securities held to maturity are carried in the consolidated balance sheets at their amortized cost at March 31, 2022 and December 31, 2021 are as follows (dollars in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
March 31, 2022
U. S. Treasuries	$	125	$	-	$	-	$	125
December 31, 2021
U. S. Treasuries	$	125	$	-	$	-	$	125

9

Note 2. Investment Securities, continued

The amortized cost and fair value of securities available for sale are as follows (dollars in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2022
U. S. Government Treasuries	$	44,759	$	-	$	1,891	$	42,868
U. S. Government sponsored enterprises		163,460		-		4,920		158,540
Securities issued by States and political subdivisions in the U.S.		34,570		-		1,896		32,674
Mortgage-backed obligations of federal agencies		208,812		248		11,466		197,594
Corporate debt security		30,550		318		722		30,146
Total Securities Available for Sale	$	482,151	$	566	$	20,895	$	461,822
December 31, 2021
U. S. Government Treasuries	$	29,847	$	-	$	365	$	29,482
U. S. Government sponsored enterprises		134,466		-		752		133,714
Securities issued by States and political subdivisions of the U.S.		34,078		406		147		34,337
Mortgage-backed obligations of federal agencies		185,216		522		2,091		183,647
Corporate debt securities		22,555		372		225		22,702
Total Securities Available for Sale	$	406,162	$	1,300	$	3,580	$	403,882

The amortized cost and fair value of securities at March 31, 2022, by contractual maturity are shown below (dollars in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Securities Held to Maturity				Securities Available for Sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	125	$	125	$	4,835	$	4,797
Due after one year through five years		-		-		195,056		189,575
Due after five years		-		-		105,218		100,754
Due after ten years		-		-		177,042		166,696
Total	$	125	$	125	$	482,151	$	461,822

There were no sales of available for sale securities in the first quarter of 2022 or 2021. Securities held that are U.S. Agency, Treasury, Government Sponsored Entities and Agency MBS carry an implicit government guarantee and are not subject to other than temporary impairment evaluation. Other securities were reviewed for impairment. The securities issued by States and political subdivisions in the U.S. were in an unrealized loss position for less than 12 months. One bank subordinated debt offering was in a loss position for 12 consecutive months and totaled $489 thousand. The pricing services tend to not be exact on these offerings because of the marketability of the offering. The Company reviews the relevant ratios on each subordinated debt holding quarterly. Because management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions, no declines are currently deemed to be other than temporary.

10

Note 2. Investment Securities, continued

A summary of unrealized losses (in thousands) and the length of time in a continuous loss position, by security type of March 31, 2022 and December 31, 2021 were as follows:

	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2022
U. S. Government treasuries	$	28,752	$	1,074	$	9,088	$	817	$	37,840	$	1,891
U. S. Government sponsored enterprises		135,152		3,315		23,388		1,605		158,540		4,920
Securities issued by States and political subdivisions in the U.S.		32,674		1,896		-		-		32,674		1,896
Mortgage-backed obligations of federal agencies		129,236		8,898		31,274		2,568		160,510		11,466
Corporate debt security		15,339		711		489		11		15,828		722
Total	$	341,153	$	15,894	$	64,239	$	5,001	$	405,392	$	20,895

	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2021
U. S. Government treasuries	$	29,481	$	365	$	-	$	-	$	29,481	$	365
U. S. Government sponsored enterprises		93,714		752		-		-		93,714		752
Securities issued by State and political subdivisions in the U. S.		13,308		147		-		-		13,308		147
Mortgage-backed obligations of federal agencies		126,501		1,871		10,074		220		136,575		2,091
Corporate debt securities		8,825		225		-		-		8,825		225
Total	$	271,829	$	3,360	$	10,074	$	220	$	281,903	$	3,850

As of March 31, 2022, other investments consist of investments in thirteen low-income housing and historic equity partnerships (carrying basis of $6,558), stock in the Federal Home Loan Bank (carrying basis $994) and various other investments (carrying basis $1,590). The interests in low-income housing and historic equity partnerships have limited transferability and the interests in the other stocks are restricted as to sales. The fair values of these securities are estimated to approximate their carrying value as of March 31, 2022. At March 31, 2022, the Company was committed to invest an additional $961 in four low-income housing limited partnerships. These funds will be paid as requested by the general partner to complete the projects. This additional investment has been reflected in the above carrying basis and in other liabilities on the consolidated balance sheet. The Company does not have any pledged securities.

Note 3. Loans

Loans held for investment outstanding at March 31, 2022 and December 31, 2021 are summarized as follows (in thousands):

	2022			2021
Construction/Land Development	$	72,248		$	75,236
Farmland		65,503			66,344
Real Estate		138,620			139,552
Multi-Family		5,667			4,887
Commercial Real Estate		162,340			163,564
Home Equity – closed end		5,732			6,262
Home Equity – open end		45,415			44,247
Commercial & Industrial – Non-Real Estate		42,720			44,224
Consumer		7,529			8,036
Dealer Finance		111,237			107,346
Credit Cards		2,869			3,000
Gross loans		659,880			662,698
Less: Deferred loan fees, net of costs		(320	)		(277	)
Total	$	659,560		$	662,421

11

Note 3. Loans, continued

The Company has pledged loans held for investment as collateral for borrowings with the Federal Home Loan Bank of Atlanta totaling $163,070 and $163,326 as of March 31, 2022 and December 31, 2021, respectively. The Company maintains a blanket lien on certain loans in its residential real estate, commercial and home equity portfolios.

Loans held for sale, at fair value consists of loans originated by F&M Mortgage for sale in the secondary market. The volume of loans fluctuates due to changes in secondary market rates, which affects demand for mortgage loans. Loans held for sale as of March 31, 2022 and December 31, 2021 were $2,479 and $4,887, respectively.

The following is a summary of information pertaining to impaired loans (dollars in thousand):

	March 31, 2022						December 31, 2021
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment(1)		Balance		Allowance		Investment		Balance		Allowance
Impaired loans without a valuation allowance:
Construction/Land Development	$	637	$	637	$	-	$	645	$	645	$	-
Farmland		2,215		2,215		-		2,286		2,286		-
Real Estate		2,384		2,384		-		2,748		2,748		-
Multi-Family		-		-		-		-		-		-
Commercial Real Estate		11,032		11,032		-		8,494		8,494		-
Home Equity – closed end		-		-		-		147		147		-
Home Equity – open end		-		-		-		-		-		-
Commercial & Industrial – Non-Real Estate		-		-		-		-		-		-
Consumer		-		-		-		5		5		-
Credit cards		-		-		-		-		-		-
Dealer Finance		15		15		-		12		12		-
		16,283		16,283		-		14,337		14,337		-
Impaired loans with a valuation allowance
Construction/Land Development		-		-		-		-		-		-
Farmland		-		-		-		-		-		-
Real Estate		1,495		1,495		113		1,172		1,172		119
Multi-Family		-		-		-		-		-		-
Commercial Real Estate		3,243		3,243		456		6,004		6,004		603
Home Equity – closed end		-		-		-		-		-		-
Home Equity – open end		-		-		-		-		-		-
Commercial & Industrial – Non-Real Estate		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Credit cards		-		-		-		-		-		-
Dealer Finance		54		54		13		95		95		14
		4,792		4,792		582		7,271		7,271		736
Total impaired loans	$	21,075	$	21,075	$	582	$	21,608	$	21,608	$	736

¹The Recorded Investment is defined as the original principal balance less principal payments, charge-offs and nonaccrual payments applied to principal.

12

Note 3. Loans, continued

The following is a summary of the average investment and interest income recognized for impaired loans (dollars in thousands):

	March 31, 2022				December 31, 2021
	Average Recorded		Interest Income		Average Recorded		Interest Income
	Investment		Recognized		Investment		Recognized
Impaired loans without a valuation allowance:
Construction/Land Development	$	641	$	6	$	984	$	29
Farmland		2,251		70		1,760		126
Real Estate		2,566		33		4,575		155
Multi-Family		-		-		-		-
Commercial Real Estate		9,763		186		9,225		253
Home Equity – closed end		74		-		414		18
Home Equity – open end		-		-		-		-
Commercial & Industrial – Non-Real Estate		-		-		2		-
Consumer		3		-		1		-
Credit Cards		-		-		-		-
Dealer Finance		14		-		14		1
		15,312		295		16,975		582
Impaired loans with a valuation allowance:
Construction/Land Development	$	-	$	-	$	-	$	-
Farmland		-		-		420		-
Real Estate		1,334		16		1,399		45
Multi-Family		-		-		-		-
Commercial Real Estate		4,624		42		6,201		172
Home Equity – closed end		-		-		-		-
Home Equity – open end		-		-		-		-
Commercial & Industrial – Non-Real Estate		-		-		-		-
Consumer		-		-		-		-
Credit Card		-		-		-		-
Dealer Finance		75		1		112		9
		6,033		59		8,132		226
Total Impaired Loans	$	21,345	$	354	$	25,107	$	808

13

Note 3. Loans, continued

The following table presents the aging of the recorded investment of past due loans (dollars in thousands) as of March 31, 2022 and December 31, 2021:

March 31, 2022	30-59 Days Past due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current			Total Loan Receivable			Non-Accrual Loans		Recorded Investment >90 days & accruing
Construction/Land Development	$	31	$	55	$	-	$	86	$	72,162		$	72,248		$	86	$	-
Farmland		20		-		-		20		65,483			65,503			1,259		-
Real Estate		873		124		366		1,363		137,257			138,620			551		-
Multi-Family		-		-		-		-		5,667			5,667			-		-
Commercial Real Estate		244		-		108		352		161,988			162,340			2,798		-
Home Equity – closed end		106		-		-		106		5,626			5,732			-		-
Home Equity – open end		333		-		7		340		45,075			45,415			-		7
Commercial & Industrial – Non- Real Estate		28		-		77		105		42,615			42,720			35		41
Consumer		16		-		-		16		7,513			7,529			-		-
Dealer Finance		477		146		-		623		110,614			111,237			22		-
Credit Cards		14		2		6		22		2,847			2,869			-		6
Less: Deferred loan fees, net of costs		-		-		-		-		(320	)		(320	)		-		-
Total	$	2,142	$	327	$	564	$	3,033	$	656,527		$	659,560		$	4,751	$	54

December 31, 2021	30-59 Days Past due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current			Total Loan Receivable			Non-Accrual Loans		Recorded Investment >90 days & accruing
Construction/Land Development	$	360	$	41	$	38	$	439	$	74,797		$	75,236		$	302	$	-
Farmland		-		-		-		-		66,344			66,344			1,320		-
Real Estate		1,254		89		395		1,738		137,814			139,552			827		-
Multi-Family		-		-		-		-		4,887			4,887			-		-
Commercial Real Estate		-		-		108		108		163,456			163,564			2,975		-
Home Equity – closed end		53		-		-		53		6,209			6,262			-		-
Home Equity – open end		471		216		-		687		43,560			44,247			-		-
Commercial & Industrial – Non- Real Estate		35		1		43		79		44,145			44,224			-		43
Consumer		9		67		-		76		7,960			8,036			1		-
Dealer Finance		694		91		16		801		106,545			107,346			40		-
Credit Cards		16		-		-		16		2,984			3,000			-		-
Less: Deferred loan fees, net of costs		-		-		-		-		(277	)		(277	)		-		-
Total	$	2,892	$	505	$	600	$	3,997	$	658,424		$	662,421		$	5,465	$	43

On March 31, 2022 and December 31, 2021, other real estate owned did not include any foreclosed residential real estate. The Company has $366 thousand of consumer mortgages for which foreclosure was in process on March 31, 2022.

Nonaccrual loans on March 31, 2022 would have earned approximately $54 thousand in interest income for the quarter had they been accruing loans.

14

Note 4. Allowance for Loan Losses

A summary of changes in the allowance for loan losses (dollars in thousands) for March 31, 2022 and December 31, 2021 is as follows:

March 31, 2022	Beginning Balance		Charge-offs		Recoveries		Provision			Ending Balance		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Allowance for loan losses:
Construction/Land Development	$	977	$	-	$	-	$	(275	)	$	702	$	-	$	702
Farmland		448		-		-		4			452		-		452
Real Estate		1,162		-		-		2			1,164		113		1,051
Multi-Family		29		-		-		6			35		-		35
Commercial Real Estate		2,205		-		-		(112	)		2,093		456		1,637
Home Equity – closed end		41		-		-		(2	)		39		-		39
Home Equity – open end		407		-		129		(162	)		374		-		374
Commercial & Industrial – Non-Real Estate		288		1		30		(7	)		310		-		310
Consumer		520		21		11		13			523		-		523
Dealer Finance		1,601		204		152		85			1,634		13		1,621
Credit Cards		70		12		7		(2	)		63		-		63
Total	$	7,748	$	238	$	329	$	(450	)	$	7,389	$	582	$	6,807

December 31, 2021	Beginning Balance		Charge-offs		Recoveries		Provision			Ending Balance		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Allowance for loan losses:
Construction/Land Development	$	1,249	$	-	$	307	$	(579	)	$	977	$	-	$	977
Farmland		731		-		-		(283	)		448		-		448
Real Estate		1,624		-		76		(538	)		1,162		119		1,043
Multi-Family		54		-		-		(25	)		29		-		29
Commercial Real Estate		3,662		-		19		(1,476	)		2,205		603		1,602
Home Equity – closed end		55		-		-		(14	)		41		-		41
Home Equity – open end		463		-		13		(69	)		407		-		407
Commercial & Industrial – Non- Real Estate		363		40		37		(72	)		288		-		288
Consumer		521		33		24		8			520		-		520
Dealer Finance		1,674		1,038		754		211			1,601		14		1,587
Credit Cards		79		54		29		16			70		-		70
Total	$	10,475	$	1,165	$	1,259	$	(2,821	)	$	7,748	$	736	$	7,012

15

Note 4. Allowance for Loan Losses, continued

The following table presents the recorded investment in loans (dollars in thousands) based on impairment method as of March 31, 2022 and December 31, 2021:

March 31, 2022	Loan Receivable			Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Construction/Land Development	$	72,248		$	637	$	71,611
Farmland		65,503			2,215		63,288
Real Estate		138,620			3,879		134,741
Multi-Family		5,667			-		5,667
Commercial Real Estate		162,340			14,275		148,065
Home Equity – closed end		5,732			-		5,732
Home Equity –open end		45,415			-		45,415
Commercial & Industrial – Non-Real Estate		42,720			-		42,720
Consumer		7,529			-		7,529
Dealer Finance		111,237			69		111,168
Credit Cards		2,869			-		2,869
Gross loans		659,880			21,075		638,805
Less: Deferred loan fees, net of costs		(320	)		-		(320	)
Total	$	659,560		$	21,075	$	638,485

December 31, 2021	Loan Receivable			Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Construction/Land Development	$	75,236		$	645	$	74,591
Farmland		66,344			2,286		64,058
Real Estate		139,552			3,920		135,632
Multi-Family		4,887			-		4,887
Commercial Real Estate		163,564			14,498		149,066
Home Equity – closed end		6,262			147		6,115
Home Equity –open end		44,247			-		44,247
Commercial & Industrial – Non-Real Estate		44,224			-		44,224
Consumer		8,036			5		8,031
Dealer Finance		107,346			107		107,239
Credit Cards		3,000			-		3,000
Gross Loans		662,698			21,608		641,090
Less: Deferred loan fees, net of costs		(277	)		-		(277	)
Total	$	662,421		$	21,608	$	640,813

16

Note 4. Allowance for Loan Losses, continued

The following table shows the Company’s loan portfolio broken down by internal loan grade (dollars in thousands) as of March 31, 2022 and December 31, 2021:

March 31, 2022	Grade 1 Minimal Risk		Grade 2 Modest Risk		Grade 3 Average Risk		Grade 4 Acceptable Risk		Grade 5 Marginally Acceptable		Grade 6 Watch		Grade 7 Substandard		Grade 8 Doubtful		Total
Construction/Land Development	$	-	$	5	$	10,237	$	42,138	$	18,116	$	1,666	$	86	$	-	$	72,248
Farmland		56		284		6,541		42,425		13,409		1,529		1,259		-		65,503
Real Estate		-		893		29,446		64,516		28,028		11,129		4,608		-		138,620
Multi-Family		-		-		1,007		2,838		1,700		122		-		-		5,667
Commercial Real Estate		-		1,250		31,985		71,222		41,352		3,890		12,641		-		162,340
Home Equity – closed end		-		58		1,051		2,968		685		970		-		-		5,732
Home Equity – open end		-		1,336		17,138		22,957		2,278		1,484		222		-		45,415
Commercial & Industrial -Non-Real Estate		14		996		9,704		23,440		7,927		543		96		-		42,720
Consumer (excluding dealer)		18		276		3,420		3,598		149		68		-		-		7,529
Gross Loans	$	88	$	5,098	$	110,529	$	276,102	$	113,644	$	21,401	$	18,912	$	-	$	545,774
Less: Deferred loan fees, net of costs																		(320	)
Total																	$	545,454
											Credit Cards		Dealer Finance
Performing											$	2,863	$	111,215
Non-performing												6		22
Total											$	2,869	$	111,237

17

Note 4. Allowance for Loan Losses, continued

December 31, 2021	Grade 1 Minimal Risk		Grade 2 Modest Risk		Grade 3 Average Risk		Grade 4 Acceptable Risk		Grade 5 Marginally Acceptable		Grade 6 Watch		Grade 7 Substandard		Grade 8 Doubtful		Total
Construction/Land Development	$	-	$	6	$	9,952	$	43,861	$	19,457	$	1,658	$	302	$	-	$	75,236
Farmland		56		291		6,804		42,615		13,620		1,638		1,320		-		66,344
Real Estate		-		1,128		30,268		61,940		28,895		12,462		4,859		-		139,552
Multi-Family		-		-		1,021		2,586		1,154		126		-		-		4,887
Commercial Real Estate		-		2,124		36,308		72,414		35,444		4,428		12,846		-		163,564
Home Equity – closed end		-		61		1,268		3,103		762		1,068		-		-		6,262
Home Equity – open end		-		1,293		17,333		21,296		2,477		1,632		216		-		44,247
Commercial & Industrial - Non-Real Estate		-		1,001		7,562		21,527		13,538		533		63		-		44,224
Consumer (excluding dealer)		10		522		2,919		3,526		980		79		-		-		8,036
Gross loans	$	66	$	6,426	$	113,435	$	272,868	$	116,327	$	23,624	$	19,606	$	-	$	552,352
Less: Deferred loan fees, net of costs																		(277	)
Total																	$	552,075
											Credit Cards		Dealer Finance
Performing											$	3,000	$	107,330
Non-performing												-		16
Total											$	3,000	$	107,346

Description of internal loan grades:

Grade 1 – Minimal Risk: Excellent credit, superior asset quality, excellent debt capacity and coverage, and recognized management capabilities.

Grade 2 – Modest Risk: Borrower consistently generates sufficient cash flow to fund debt service, excellent credit, above average asset quality and liquidity.

Grade 3 – Average Risk: Borrower generates sufficient cash flow to fund debt service. Employment (or business) is stable with good future trends. Credit is very good.

Grade 4 – Acceptable Risk: Borrower’s cash flow is adequate to cover debt service; however, unusual expenses or capital expenses must be covered through additional long-term debt. Employment (or business) stability is reasonable, but future trends may exhibit slight weakness. Credit history is good. No unpaid judgments or collection items appearing on credit report.

Grade 5 – Marginally acceptable: Credit to borrowers who may exhibit declining earnings, may have leverage that is materially above industry averages, liquidity may be marginally acceptable. Employment or business stability may be weak or deteriorating. May be currently performing as agreed, but would be adversely affected by developing factors such as layoffs, illness, reduced hours or declining business prospects. Credit history shows weaknesses, past dues, paid or disputed collections and judgments, but does not include borrowers that are currently past due on obligations or with unpaid, undisputed judgments.

Grade 6 – Watch: Loans are currently protected, but are weak due to negative balance sheet or income statement trends. There may be a lack of effective control over collateral or the existence of documentation deficiencies. These loans have potential weaknesses that deserve management’s close attention. Other reasons supporting this classification include adverse economic or market conditions, pending litigation or any other material weakness. Existing loans that become 60 or more days past due are placed in this category pending a return to current status.

18

Note 4. Allowance for Loan Losses, continued

Grade 7 – Substandard: Loans having well-defined weaknesses where a payment default and or loss is possible, but not yet probable. Cash flow is inadequate to service the debt under the current payment, or terms, with prospects that the condition is permanent. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the borrower and there is the likelihood that collateral will have to be liquidated and/or guarantor(s) called upon to repay the debt. Generally, the loan is considered collectible as to both principal and interest, primarily because of collateral coverage, however, if the deficiencies are not corrected quickly; there is a probability of loss.

Grade 8 – Doubtful: The loan has all the characteristics of a substandard credit, but available information indicates it is unlikely the loan will be repaid in its entirety. Cash flow is insufficient to service the debt. It may be difficult to project the exact amount of loss, but the probability of some loss is great. Loans are to be placed on non-accrual status when any portion is classified doubtful.

Credit card and dealer finance loans are classified as performing or nonperforming. A loan is nonperforming when payments of principal and interest are past due 90 days or more.

Note 5. Employee Benefit Plan

The Bank has a qualified noncontributory defined benefit pension plan which covers substantially all of its full-time employees hired before April 1, 2012. The benefits are primarily based on years of service and earnings. The Company uses December 31^st as the measurement date for the defined benefit pension plan. The Bank does not expect to contribute to the pension plan in 2022.

The following is a summary of net periodic pension costs for the three month periods ended March 31, 2022 and 2021 (dollars in thousands):

	Three Months Ended
	March 31, 2022			March 31, 2021
Service cost	$	190		$	216
Interest cost		104			95
Expected return on plan assets		(195	)		(198	)
Amortization of net loss		58			72
Net periodic pension cost	$	157		$	185

Note 6. Fair Value

The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.

Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Accounting guidance for fair value excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The Company records fair value adjustments to certain assets and liabilities and determines fair value disclosures utilizing a definition of fair value of assets and liabilities that states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Additional considerations are involved to determine the fair value of financial assets in markets that are not active.

19

Note 6. Fair Value, continued

The Company uses a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The three levels of the fair value hierarchy based on these two types of inputs are as follows:

Level 1 –	Valuation is based on quoted prices in active markets for identical assets and liabilities.
Level 2 –	Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market.
Level 3 –	Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.

The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements:

Securities

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities would include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. The carrying value of restricted Federal Reserve Bank and Federal Home Loan Bank stock approximates fair value based upon the redemption provisions of each entity and is therefore excluded from the following table.

Loans Held for Sale

The Company uses the fair value accounting for its entire portfolio of originated loans held for sale in accordance with ASC 820 – Fair Value Measurement and Disclosures. Fair value of the Company’s originated loans held for sale through F&M Mortgage is based on observable market prices for similar instruments traded in the secondary mortgage loan markets in which the Company conducts business. The Company’s portfolio of loans held for sale through F&M Mortgage is classified as Level 2. Gains and losses on the sale of loans are recorded within mortgage banking income, net on the Consolidated Statements of Income.

Derivative assets – IRLCs

The Company recognizes IRLCs at fair value based on the price of the underlying loans obtained from an investor for loans that will be delivered on a best-efforts basis while taking into consideration the probability that the rate lock commitments will close. All of the Company’s IRLCs are classified as Level 2.

Derivative Asset/Liability – Forward Sale Commitments

The Company uses the fair value accounting for its forward sales commitments related to IRLCs and LHFS. Best efforts sales commitments are entered into for loans intended for sale in the secondary market at the time the borrower commitment is made. The best efforts commitments are valued using the committed price to the counter-party against the current market price of the interest rate lock commitment or mortgage loan held for sale. All the Company’s forward sale commitments are classified Level 2.

Derivative Asset/Liability – Indexed Certificate of Deposit

The Company’s derivatives, which are associated with the Indexed Certificate of Deposit (ICD) product once offered, are recorded at fair value based on third party vendor supplied information using discounted cash flow analysis from observable-market based inputs, which are considered Level 2 inputs. This product is no longer offered, however there are a few certificates of deposits that have not matured.

20

Note 6. Fair Value, continued

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 (dollars in thousands):

March 31, 2022	Total		Level 1		Level 2		Level 3
Assets:
Loans held for sale, F&M Mortgage	$	2,479	$	-	$	2,479	$	-
U. S. Treasury securities		42,868		-		42,868		-
U. S. Government sponsored enterprises		158,540		-		158,540		-
Securities issued by States and political subdivisions in the U. S.		32,674		-		32,674		-
Mortgage-backed obligations of federal agencies		197,594		-		197,594		-
Corporate debt securities		30,146		-		30,146		-
Forward Sales Commitments		637		-		637		-
Assets at Fair Value	$	464,938	$	-	$	464,938	$	-
Liabilities:
Derivatives - ICD	$	3	$	-	$	3	$	-
IRLC		262		-		262		-
Liabilities at Fair Value	$	265	$	-	$	265	$	-

December 31, 2021	Total		Level 1		Level 2		Level 3
Assets:
Loans held for sale, F&M Mortgage	$	4,887	$	-	$	4,887	$	-
IRLC		258		-		258		-
U. S. Treasury securities		29,482		-		29,482		-
U.S. Government sponsored enterprises		133,714		-		133,714		-
Securities issued by States and political subdivisions of the US		34,337		-		34,337		-
Mortgage-backed obligations of federal agencies		183,647		-		183,647		-
Corporate debt securities		22,702		-		22,702		-
Forward sales commitments		112		-		112		-
Assets at Fair Value	$	409,139	$	-	$	409,139	$	-
Liabilities:
Derivatives – ICD	$	3	$	-	$	3	$	-
Liabilities at Fair Value	$	3	$	-	$	3	$	-

Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets.

The following describes the valuation techniques used by the Company to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements:

Assets Held for Sale

Assets held for sale were transferred from bank premises at the lower of cost less accumulated depreciation or fair value at the date of transfer. The Company periodically evaluates the value of assets held for sale and records an impairment charge for any subsequent declines in fair value less selling costs. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the assets held for sale as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the asset held for sale as nonrecurring Level 3.

21

Note 6. Fair Value, continued

Impaired Loans

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due will not be collected according to the contractual terms of the loan agreement. Troubled debt restructurings are impaired loans. Impaired loans are measured at fair value on a nonrecurring basis. If an individually-evaluated impaired loan’s balance exceeds fair value, the amount is allocated to the allowance for loan losses. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the Consolidated Statements of Income.

The fair value of an impaired loan and measurement of associated loss is based on one of three methods: the observable market price of the loan, the present value of projected cash flows, or the fair value of the collateral. The observable market price of a loan is categorized as a Level 1 input. The present value of projected cash flows method results in a Level 3 categorization because the calculation relies on the Company’s judgment to determine projected cash flows, which are then discounted at the current rate of the loan, or the rate prior to modification if the loan is a troubled debt restructure.

Loans measured using the fair value of collateral method are categorized in Level 3. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. Most collateral is real estate. The Company bases collateral method fair valuation upon the “liquidation” value of independent appraisals or evaluations. The value of real estate collateral is determined by an independent appraisal utilizing an income or market valuation approach. The Company discounts appraised value by estimated selling costs to arrive at net fair value. Appraisals conducted by an independent, licensed appraiser outside of the Company as observable market data is categorized as Level 3. The value of business equipment is based upon an outside appraisal (Level 3) if deemed significant, or the net book value on the applicable business’ financial statements (Level 3) if not considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3).

As of March 31, 2022 and December 31, 2021, the fair value measurements for impaired loans with specific allocations were primarily based upon the fair value of the collateral.

The following table summarizes the Company’s financial assets that were measured at fair value on a nonrecurring basis during the period (dollars in thousands):

March 31, 2022	Total		Level 1		Level 2		Level 3
Real Estate	$	1,382	$	-	$	-	$	1,382
Commercial Real Estate		2,787		-		-		2,787
Dealer Finance		41		-		-		41
Impaired loans	$	4,210	$	-	$	-	$	4,210
Bank premises held for sale	$	300	$	-	$	-	$	300

December 31, 2021	Total		Level 1		Level 2		Level 3
Real Estate	$	1,053	$	-	$	-	$	1,053
Commercial Real Estate		5,401		-		-		5,401
Dealer Finance		81		-		-		81
Impaired loans	$	6,535	$	-	$	-	$	6,535
Bank premises held for sale	$	300	$	-	$	-	$	300

The following table presents information about Level 3 Fair Value Measurements for March 31, 2022 (dollars in thousands):

	Fair Value at March 31, 2022		Valuation Technique	Significant Unobservable Inputs	Range
Impaired Loans	$	4,210	Discounted appraised value	Discount for selling costs and marketability	14.00%-32.92% (Average 22.97%)

22

Note 6. Fair Value, continued

Impaired Loans, continued

The following table presents information about Level 3 Fair Value Measurements for December 31, 2021 (dollars in thousands):

	Fair Value at December 31, 2021		Valuation Technique	Significant Unobservable Inputs	Range
Impaired Loans	$	6,535	Discounted appraised value	Discount for selling costs and marketability	11.76%-28.00% (Average 17.31%)

Other Real Estate Owned

Certain assets such as other real estate owned (OREO) are measured at fair value less cost to sell. Valuation of other real estate owned is determined using current appraisals from independent parties, a Level 2 input. If current appraisals cannot be obtained prior to reporting dates, or if declines in value are identified after a recent appraisal is received, appraisal values are discounted, resulting in Level 3 estimates. If the Company markets the property with a realtor, estimated selling costs reduce the fair value, resulting in a valuation based on Level 3 inputs.

The Company markets other real estate owned and assets held for sale both independently and with local realtors. Properties marketed by realtors are discounted by selling costs. Properties that the Company markets independently are not discounted by selling costs.

The Company did not have any other real estate owned as of March 31, 2022 and December 31, 2021.

Note 7. Disclosures about Fair Value of Financial Instruments

The following presents the carrying amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments as of March 31, 2022 and December 31, 2021. Fair values for March 31, 2022 and December 31, 2021 are estimated under the exit price notion in accordance with the prospective adoption of ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.

The estimated fair values, and related carrying amounts (dollars in thousands), of the Company’s financial instruments are as follows (dollars in thousands):

			Fair Value Measurements at March 31, 2022 Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at March 31, 2022
Assets:
Cash and cash equivalents	$	48,376	$	48,376	$	-	$	-	$	48,376
Securities		461,947		-		461,947		-		461,947
Loans held for sale		2,479		-		2,479		-		2,479
Loans held for investment, net		659,560		-		-		646,369		646,369
Interest receivable		3,345		-		3,345		-		3,345
Bank owned life insurance		23,042		-		23,042		-		23,042
Forward sales commitments		637		-		637		-		637
Total	$	1,199,386	$	48,376	$	491,450	$	646,369	$	1,186,195
Liabilities:
Deposits	$	1,112,295	$	-	$	1,004,305	$	117,811	$	1,122,116
Long-term debt		21,780		-		-		22,105		22,105
IRLC		262		-		262		-		262
Interest payable		251		-		251		-		251
Total	$	1,134,588	$	-	$	1,004,818	$	139,916	$	1,144,734

23

Note 7. Disclosures about Fair Value of Financial Instruments, continued

			Fair Value Measurements at December 31, 2021 Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at December 31, 2021
Assets:
Cash and cash equivalents	$	88,121	$	88,121	$	-	$	-	$	88,121
Securities		404,007		-		404,007		-		404,007
Loans held for sale		4,887		-		4,887		-		4,887
IRLC		258		-		258		-		258
Loans held for investment, net		662,421		-		-		652,096		652,096
Interest receivable		3,117		-		3,117		-		3,117
Bank owned life insurance		22,878		-		22,878		-		22,878
Forward sales commitments		112		-		112		-		112
Total	$	1,185,801	$	88,121	$	435,259	$	652,096	$	1,175,476
Liabilities:
Deposits	$	1,080,295	$	-	$	968,604	$	123,718	$	1,092,322
Long-term debt		21,772		-		-		22,443		22,443
Interest payable		491		-		491		-		491
Total	$	1,102,558	$	-	$	969,095	$	146,161	$	1,115,256

Note 8. Troubled Debt Restructuring

In the determination of the allowance for loan losses, management considers troubled debt restructurings and subsequent defaults in these restructurings by adjusting the loan grades of such loans, which are considered in the qualitative factors within the allowance. Defaults resulting in charge-offs affect the historical loss experience ratios which are a component of the allowance for loan loss methodology. Additionally, specific reserves may be established on restructured loans which are evaluated individually for impairment.

During the three months ended March 31, 2022, there was one loan modification that was considered to be troubled debt restructurings. The modification was due to a revision to the amortization schedule.

Three months ended March 31, 2022 (dollars in thousands):
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real Estate		1	$	164	$	164

On March 31, 2022, there were no loans restructured in the previous 12 months in default or on nonaccrual status. A restructured loan is considered in default when it becomes 90 days past due.

During the three months ended March 31, 2021, there was one loan modification that was considered to be troubled debt restructurings. The modifications included a partial release of the collateral.

Three months ended March 31, 2021 (dollars in thousands):
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real Estate		1	$	110	$	110

On March 31, 2021, there were no loans restructured in the previous 12 months in default or on nonaccrual status. A restructured loan is considered in default when it becomes 90 days past due.

24

Note 9. Accumulated Other Comprehensive Loss

The balances in accumulated other comprehensive loss are shown in the following tables for March 31, 2022 and 2021 (dollars in thousands):

	Unrealized Securities Gains (Losses)			Adjustments Related to Pension Plan			Accumulated Other Comprehensive Loss
Balance at December 31, 2021	$	(1,801	)	$	(3,291	)	$	(5,092	)
Change in unrealized securities gains (losses), net of tax		(14,259	)		-			(14,259	)
Balance at March 31, 2022	$	(16,060	)	$	(3,291	)	$	(19,351	)

	Unrealized Securities Gains (Losses)			Adjustments Related to Pension Plan			Accumulated Other Comprehensive Loss
Balance at December 31, 2020	$	804		$	(3,821	)	$	(3,017	)
Change in unrealized securities gains (losses), net of tax		(1,114	)		-			(1,114	)
Balance at March 13, 2021	$	(310	)	$	(3,821	)	$	(4,131	)

There were no reclassifications adjustments reported on the consolidated statements of income during the three months ended March 31, 2022 or 2021.

Note 10. Business Segments

The Company utilizes its subsidiaries to provide multiple business segments including retail banking, mortgage banking, title insurance services, investment services and credit life and accident and health insurance products related to lending. Revenues from retail banking operations consist primarily of interest earned on loans and investment securities and service charges on deposit accounts. Mortgage banking operating revenues consist principally of gains on sales of loans in the secondary market, loan origination fee income and interest earned on mortgage loans held for sale. Revenues from title insurance services, investment services and insurance products consist of commissions on products provided.

The following tables represent revenues and expenses by segment for the three months ended March 31, 2022 and 2021 (dollars in thousands).

25

Note 10. Business Segments, continued

	Three Months Ended March 31, 2022
	F&M Bank			F&M Mortgage			TEB Life/FMFS		VS Title		Parent Only			Eliminations			F&M Bank Corp. Consolidated
Revenues:
Interest Income	$	9,037		$	29		$	8	$	-	$	-		$	(13	)	$	9,061
Service charges on deposits		307			-			-		-		-			-			307
Investment services and insurance income		-			-			253		-		-			(2	)		251
Mortgage banking income, net		-			742			-		-		-			-			742
Title insurance income		-			-			-		473		-			-			473
Other operating income		708			2			-		-		-			-			710
Total income (loss)		10,052			773			261		473		-			(15	)		11,544
Expenses:
Interest Expense		874			6			-		-		137			(13	)		1,004
(Recovery of) loan losses		(450	)		-			-		-		-			-			(450	)
Salary and benefit expense		3,947			573			104		301		-			-			4,925
Other operating expenses		3,328			214			21		83		(19	)		(2	)		3,625
Total expense		7,699			793			125		384		118			(15	)		9,104
Net income (loss) before taxes		2,353			(20	)		136		89		(118	)		-			2,440
Income tax expense (benefit)		386			-			31		-		(505	)		-			(88	)
Net Income attributable to F & M Bank Corp.	$	1,967		$	(20	)	$	105	$	89	$	387		$	-		$	2,528
Total Assets	$	1,242,957		$	9,012		$	8,532	$	2,967	$	99,890		$	(125,099	)	$	1,238,259
Goodwill	$	2,868		$	-		$	-	$	3	$	211		$	-		$	3,082

	Three months ended March 31, 2021
	F&M Bank			F&M Mortgage		TEB Life/FMFS		VS Title		Parent Only			Eliminations			F&M Bank Corp. Consolidated
Revenues:
Interest Income	$	8,716		$	72	$	30	$	-	$	-		$	(72	)	$	8,746
Service charges on deposits		285			-		-		-		-			-			285
Investment services and insurance income		-			-		348		-		-			(1	)		347
Mortgage banking income, net		-			1,672		-		-		-			-			1,672
Title insurance income		-			-		-		456		-			-			456
Other operating income (loss)		593			23		-		-		(21	)		-			595
Total income (loss)		9,594			1,767		378		456		(21	)		(73	)		12,101
Expenses:
Interest Expense		876			66		-		-		198			(72	)		1,068
(Recovery of) loan losses		(725	)		-		-		-		-			-			(725	)
Salary and benefit expense		3,514			615		97		286		-			-			4,512
Other operating expenses		2,834			233		6		82		20			(1	)		3,174
Total expense		6,499			914		103		368		218			(73	)		8,029
Net income (loss) before taxes		3,095			853		275		88		(239	)		-			4,072
Income tax expense (benefit)		521			-		57		-		(307	)		-			271
Net Income attributable to F & M Bank Corp.	$	2,574		$	853	$	218	$	88	$	68		$	-		$	3,801
Total Assets	$	1,016,023		$	14,340	$	8,519	$	2,559	$	109,474		$	(139,938	)	$	1,010,977
Goodwill	$	2,670		$	47	$	-	$	3	$	164		$	-		$	2,884

26

Note 11. Debt

Short-term Debt

The Company utilizes short-term debt such as Federal funds purchased and Federal Home Loan Bank of Atlanta (FHLB) short term borrowings to support the loans held for sale participation program and provide liquidity. Federal funds purchased are unsecured overnight borrowings from other financial institutions. FHLB short term debt, which is secured by the loan portfolio, can be a daily rate variable loan that acts as a line of credit or a fixed rate advance, depending on the need of the Company. There was no short-term debt at March 31, 2022 and December 31, 2021.                                               

Long-term Debt

The Company utilizes the FHLB advance program to fund loan growth and provide liquidity. The interest rates on long-term debt are fixed at the time of the advance; the weighted average interest rate was .81% at March 31, 2022 and at December 31, 2021. The balance of these obligations at March 31, 2022 and December 31, 2021 was $10,000. FHLB advances include a $10,000 letter of credit at FHLB that is pledged to the Commonwealth of Virginia to secure public funds.

On July 29, 2020, the Company sold and issued to certain institutional accredited investors $5,000 in aggregate principal amount of 5.75% fixed rated subordinated notes due July 31, 2027 (the “2027 Notes”) and $7,000 in aggregate principal amount of 6.00% fixed to floating rate subordinated notes due July 31, 2030 (the “2030 Notes”). The 2027 Notes will bear interest at 5.75% per annum, payable semi-annually in arrears. Beginning on July 31, 2022 through maturity, the 2027 Notes may be redeemed, at the Company’s option, on any scheduled interest payment date. The 2027 Notes will mature on July 31, 2027. The 2030 Notes will initially bear interest at 6.00% per annum, beginning July 29, 2020 to but excluding July 31, 2025, payable semi-annually in arrears. From and including July 31, 2025 through July 30, 2030, or up to an early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month SOFR plus 593 basis points, payable quarterly in arrears. Beginning on July 31, 2025 through maturity, the 2030 Notes may be redeemed, at the Company’s option, on any scheduled interest payment date. The 2030 Notes will mature on July 31, 2030. The subordinated notes, net of issuance costs totaled $11,780 at March 31, 2022.

Note 12. Revenue Recognition

Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. In addition, certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives, and certain credit card fees are also not in scope of the new guidance. Topic 606 is applicable to noninterest revenue streams such as deposit related fees, interchange fees, merchant income, and annuity and insurance commissions. Substantially all of the Company’s revenue is generated from contracts with customers. Noninterest revenue streams in-scope of Topic 606 are discussed below.

Service Charges on Deposit Accounts

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Investment Services and Insurance Income

Investment services and insurance income primarily consists of commissions received on mutual funds and other investment sales. Commissions from the sale of mutual funds and other investments are recognized on trade date, which is when the Company has satisfied its performance obligation.

Title Insurance Income

VSTitle provides title insurance and real estate settlement services. Revenue is recognized at the time the real estate transaction is completed.

27

Note 12. Revenue Recognition, continued

ATM and Check Card Fees

ATM and Check Card Fees are primarily comprised of debit and credit card income, ATM fees, merchant services income, and other service charges. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees.

Other

Other noninterest income consists of other recurring revenue streams such as safe deposit box rental fees, and other service charges. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation. Other service charges include revenue from processing wire transfers, online payment fees, cashier’s checks, mobile banking fees and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Gains/Losses on sale of OREO

The Company records a gain or loss from the sale of OREO when the control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. The Company recorded no losses on the sale of OREO property in the three months ended March 31, 2022 and 2021, which is presented on the consolidated income statement as a noninterest expense and therefore, not reflected in the table below.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three months ended March 31, 2022 and 2021 (dollars in thousands).

	Three Months Ended March 31,
	2022		2021
Noninterest Income
In-scope of Topic 606:
Service Charges on Deposits	$	307	$	285
Investment Services and Insurance Income		251		347
Title Insurance Income		473		456
ATM and check card fees		563		520
Other		157		63
Noninterest Income (in-scope of Topic 606)		1,751		1,671
Noninterest Income (out-of-scope of Topic 606)		732		1,684
Total Noninterest Income	$	2,483	$	3,355

Contract Balances

A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company’s noninterest revenue streams are largely based on transactional activity. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of March 31, 2022 and December 31, 2021, the Company did not have any significant contract balances.

28

Note 12. Revenue Recognition, continued

Contract Acquisition Costs

In connection with the adoption of Topic 606, an entity is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a customer if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less. Upon adoption of Topic 606, the Company did not capitalize any contract acquisition cost.

Note 13. Leases

The Company adopted ASU No. 2016-02 “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The Right-of-use assets and lease liabilities are included in other assets and other liabilities, respectively, in the Consolidated Balance Sheets.

Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.

The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

The following tables present information about the Company’s leases (dollars in thousands):

	March 31, 2022			March 31, 2021
Lease Liabilities	$	911		$	839
Right-of-use assets	$	889		$	814
Weighted average remaining lease term	3.17 years			3.89 years
Weighted average discount rate		3.05	%		3.50	%

	For the Three Months Ended March 31,
	2022		2021
Lease cost
Operating lease cost	$	153	$	26
Total lease cost	$	153	$	26
Cash paid for amounts included in the measurement of lease liabilities	$	181	$	31

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities is as follows (dollars in thousands):                                                                                                                 

	March 31, 2022
Nine months ending December 31, 2022	$	132
Twelve months ending December 31, 2023		135
Twelve months ending December 31, 2024		136
Twelve months ending December 31, 2025		98
Twelve months ending December 31, 2026		70
Thereafter		518
Total undiscounted cash flows	$	1,089
Discount		178
Lease liabilities	$	911

29

Note 14. Mortgage Banking and Derivatives

Loans Held for Sale

The Company, through the Bank’s mortgage banking subsidiary, F&M Mortgage Company, originates residential mortgage loans for sale in the secondary market. Residential mortgage loans held for sale are sold to the permanent investor with the mortgage servicing rights released. The Company uses fair value accounting for its entire portfolio of loans held for sale (LHFS) in accordance with ASC 820 – Fair Value Measurement and Disclosures. Fair value of the Company’s LHFS is based on observable market prices for the identical instruments traded in the secondary mortgage loan markets in which the Company conducts business total $2,479 as of March 31, 2022 of which $2,544 is related to unpaid principal. The Company’s portfolio of LHFS is classified as Level 2.

Interest Rate Lock Commitments and Forward Sales Commitments

The Company, through F&M Mortgage Company, enters into commitments to originate residential mortgage loans in which the interest rate on the loan is determined prior to funding, termed interest rate lock commitments (IRLCs). Such rate lock commitments on mortgage loans to be sold in the secondary market are considered to be derivatives. Upon entering into a commitment to originate a loan, the Company protects itself from changes in interest rates during the period prior to sale by requiring a firm purchase agreement from a permanent investor before a loan can be closed (forward sales commitment).

The Company locks in the loan and rate with an investor and commits to deliver the loan if settlement occurs on a best efforts basis, thus limiting interest rate risk. Certain additional risks exist if the investor fails to meet its purchase obligation; however, based on historical performance and the size and nature of the investors the Company does not expect them to fail to meet their obligation. The Company determines the fair value of the IRLCs based on the price of the underlying loans obtained from an investor for loans that will be delivered on a best efforts basis while taking into consideration the probability that the rate loan commitments will close.

The fair value of these derivative instruments is reported in “Other Liabilities” in the Consolidated Balance Sheet at March 31, 2022, and totaled $262, with a notional amount of $25,542 and total positions of 82. The fair value of the IRLCs at December 31, 2021 totaled $258, with a notional amount of $18,801 and total positions of 70. Changes in fair value are recorded as a component of “Mortgage banking income, net” in the Consolidated Income Statement for the period ended March 31, 2022. The Company’s IRLCs are classified as Level 2. At March 31, 2022 and December 31, 2021, each IRLC and all LHFS were subject to a forward sales commitment on a best efforts basis.

The Company uses fair value accounting for its forward sales commitments related to IRLCs and LHFS under ASC 825-10-15-4(b). The fair value of forward sales commitments was reported in “Other Assets” in the Consolidated Balance Sheet at March 31, 2022 totaled $637, with a notional amount of $28,085 and total positions of $96. The fair value of forward sales commitments was reported in “Other Assets” in the Consolidated Balance Sheet at December 31, 2021 totaled $112, with a notional amount of $23,721 and total positions of 91.

Note 15. Stock-Based Compensation

The Company maintains the F & M Bank Corp. 2020 Stock Incentive Plan, which was designed to further the long-term stability and financial success of the Company by attracting and retaining personnel, including employees, directors, and consultants, through the use of stock and stock-based incentives. It was adopted by the Company’s Board, effective upon shareholder approval on May 2, 2020 and will expire on March 18, 2030. The plan provides for the granting of an option, restricted stock, restricted stock unit, stock appreciation right, or stock award to employees, directors, and consultants. It authorizes the issuance of up to 200,000 shares of the Company’s common stock.

The Company’s Stock Plan Committee administers the plan, identifies which participants will be granted awards, and determines the terms and conditions applicable to the awards. On March 7, 2022 the Company’s Stock Plan Committee awarded 17,763 shares with a fair value of $547,989 from this plan to selected employees. These shares vest 25% over each of the next four years. The Committee also awarded 1,145 shares with a fair value of $35,323 to directors that vested upon issuance. As of March 31, 2022, there was $837 thousand of unrecognized compensation cost related to nonvested restricted stock.

30

Note 15. Stock-Based Compensation, continued

The following table summarizes the status of the Company’s nonvested awards for the three months ended March 31, 2022 and 2021:

	Three Months Ended March 31,
	2022					2021
	Shares			Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Nonvested, beginning of period		15,869		$	26.78		-	$	-
Granted		17,763			30.85		16,140		26.75
Vested		(3,920	)		30.85		-		-
Forfeited		(474	)		29.10		-		-
Nonvested, end of period		29,238		$	29.20		16,140	$	26.75

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands)

F & M Bank Corp. (“Company”), incorporated in Virginia in 1983, is a financial holding company pursuant to section 3(a)(1) of the Bank Holding Company Act of 1956, which provides financial services through its wholly-owned subsidiary Farmers & Merchants Bank (“Bank”). TEB Life Insurance Company (“TEB”), Farmers & Merchants Financial Services (“FMFS”) and VBS Mortgage LLC (dba F&M Mortgage) are wholly owned subsidiaries of the Bank. F & M Bank Corp. held a majority ownership in VSTitle LLC (“VST”), with the remaining minority interest owned by F&M Mortgage, until the Company purchased F&M Mortgage’s minority interest in VST on January 3, 2022.

The Bank is a full-service commercial bank offering a wide range of banking and financial services through its thirteen branch offices as well as its loan production office located in Penn Laird, Virginia (which specializes in providing automobile financing through a network of automobile dealers). TEB reinsures credit life and accident and health insurance sold by the Bank in connection with its lending activities. FMFS provides brokerage services and property/casualty insurance to customers of the Bank. F&M Mortgage originates conventional and government sponsored mortgages through their offices in Harrisonburg, Fishersville, Woodstock, and Winchester, Virginia. VSTitle provides title insurance services through their offices in Harrisonburg, Fishersville, and Charlottesville, Virginia.

The Company’s primary trade area services customers in the counties of Rockingham, Shenandoah, and Augusta, and the cities of Harrisonburg, Staunton, Waynesboro and Winchester.

Management’s discussion and analysis is presented to assist the reader in understanding and evaluating the financial condition and results of operations of the Company. The analysis focuses on the consolidated financial statements, footnotes, and other financial data presented. The discussion highlights material changes from prior reporting periods and any identifiable trends which may affect the Company. Amounts have been rounded for presentation purposes. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements presented in Item 1, Part 1 of this Form 10-Q and in conjunction with the audited Consolidated Financial Statements included in the Company’s December 31, 2021 Form 10-K.

Forward-Looking Statements

Certain statements in this report may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” or other statements concerning opinions or judgment of the Company and its management about future events.

31

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands) (Continued)

Although the Company believes that its expectations with respect to certain forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of and changes in: changing uncertainties related to the COVID-19 pandemic, general economic conditions, the interest rate environment, legislative and regulatory requirements, competitive pressures, new products and delivery systems, inflation, changes in the stock and bond markets, technology, the financial strength of borrowers, consumer spending and savings habits, geopolitical conditions, and exposure to fraud, negligence, computer theft and cyber-crime.

We do not update any forward-looking statements that may be made from time to time by or on behalf of the Company.

Critical Accounting Policies

General

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The financial information contained within the statements is, to a significant extent, financial information that is based on measures of the financial effects of transactions and events that have already occurred. The Company’s financial position and results of operations are affected by management’s application of accounting policies, including estimates, assumptions and judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues, expenses and related disclosures. Different assumptions in the application of these policies could result in material changes in the Company’s consolidated financial position and/or results of operations.

In addition, GAAP itself may change from one previously acceptable method to another method. Although the economics of these transactions would be the same, the timing of events that would impact these transactions could change. Following is a summary of the Company’s significant accounting policies that are highly dependent on estimates, assumptions and judgments.

Allowance for Loan Losses

The allowance for loan losses is an estimate of the losses that may be sustained in the loan portfolio. The allowance is based on two basic principles of accounting: (i) ASC 450 “Contingencies”, which requires that losses be accrued when they are probable of occurring and estimable and (ii) ASC 310 “Receivables”, which requires that losses be accrued based on the differences between the value of collateral, present value of future cash flows or values that are observable in the secondary market and the loan balance. The Company’s allowance for loan losses is the accumulation of various components that are calculated based on independent methodologies. All components of the allowance represent an estimation performed pursuant to either ASC 450 or ASC 310. Management’s estimate of each ASC 450 component is based on certain observable data that management believes are most reflective of the underlying credit losses being estimated. This evaluation includes credit quality trends; collateral values; loan volumes; geographic, borrower and industry concentrations; seasoning of the dealer loan portfolio; maturity of lending staff; the findings of internal credit quality assessments, results from external bank regulatory examinations and third-party loan reviews. These factors, as well as historical losses and current economic and business conditions, are used in developing estimated loss factors used in the calculations.

Allowances for loans are determined by applying estimated loss factors to the portfolio based on management’s evaluation and “risk grading” of the loan portfolio. Specific allowances, if required are typically provided on all impaired loans in excess of a defined loan size threshold that are classified in the Substandard or Doubtful risk grades and on all troubled debt restructurings. The specific reserves are determined on a loan-by-loan basis based on management’s evaluation of the Company’s exposure for each credit, given the current payment status of the loan and the value of any underlying collateral.

32

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands) (Continued)

Critical Accounting Policies, continued

While management uses the best information available to establish the allowance for loan and lease losses, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the valuations or, if required by regulators, based upon information available to them at the time of their examinations. Such adjustments to original estimates, as necessary, are made in the period in which these factors and other relevant considerations indicate that loss levels may vary from previous estimates.

Fair Value

The estimate of fair value involves the use of (1) quoted prices for identical instruments traded in active markets, (2) quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques using significant assumptions that are observable in the market or (3) model-based techniques that use significant assumptions not observable in the market. When observable market prices and parameters are not fully available, management’s judgment is necessary to arrive at fair value including estimates of current market participant expectations of future cash flows, risk premiums, among other things. Additionally, significant judgment may be required to determine whether certain assets measured at fair value are classified within the fair value hierarchy as Level 2 or Level 3. The estimation process and the potential materiality of the amounts involved result in this item being identified as critical.

Pension Obligations

The accounting guidance for the measurement and recognition of obligations and expense related to pension plans generally applies the concept that the cost of benefits provided during retirement should be recognized over the employees’ active working life. Inherent in this concept is the requirement to use various actuarial assumptions to predict and measure costs and obligations many years prior to the settlement date. Major actuarial assumptions that require significant management judgment and have a material impact on the measurement of benefits expense and accumulated benefit obligation include discount rates, expected return on assets, mortality rates, and projected salary increases, among others. Changes in assumptions or judgments related to any of these variables could result in significant volatility in the Company’s financial condition and results of operations. As a result, accounting for the Company’s pension expense and obligation is considered a significant estimate. The estimation process and the potential materiality of the amounts involved result in this item being identified as critical.

COVID-19

The World Health Organization declared a global pandemic in the first quarter of 2020 due to the spread of the coronavirus (“COVID-19”) around the world. The Company was considered an essential business and implemented procedures to protect its employees, customers and the community and still serve their banking needs. Branch lobbies were closed in 2021 and again briefly from January 18, 2022 to March 7, 2022. During this time the Company utilized drive through windows and courier service to handle transactions, new accounts were opened electronically with limited in person contact for document signing and verification of identification, and lenders accepted applications by appointment with limited in person contact.

The SBA implemented the Paycheck Protection Program (“PPP”) to support small business operations with loans during the shutdown and into the following months. The Company worked diligently to support both our customers and noncustomers within our footprint with these loans, originating a total of 1,080 PPP loans totaling $87,061 and associated fees of $3,824 through the SBA program. As of March 31, 2022, there are 25 loans outstanding with a balance of $2,061 and unamortized fees of $56.

Based on the Company’s capital levels, current underwriting policies, low loan-to-deposit ratio, loan concentration diversification and rural operating environment, management believes that it is well positioned to support its customers and communities and to manage the economic risks and uncertainties associated with COVID-19 pandemic and remain adequately capitalized.

33

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands) (Continued)

Overview (Dollars in thousands)

Net income for the three months ended March 31, 2022 was $2,528 or $0.74 per share, compared to $3,801 or $1.17 in the same period in 2021, a decrease of 33.49%. During the three months ended March 31, 2022, noninterest income decreased 25.99% and noninterest expense increased 11.24% during the same period.

Results of Operations

As shown in Table I, the 2022 year to date tax equivalent net interest income increased $377 or 4.89% compared to the same period in 2021. The tax equivalent adjustment to net interest income totaled $27 for the first three months of 2022. The yield on earning assets decreased .75%, while the cost of funds decreased .21% compared to the same period in 2021.

The combination of the decrease in yield on assets and the decrease in cost of funds coupled with changes in balance sheet leverage resulted in the net interest margin decreasing to 2.82% for the three months ended March 31, 2022, a decrease of 62 basis points when compared to the same period in 2021. A schedule of the net interest margin for the three-month periods ended March 31, 2022 and 2021 can be found in Table I.

The following table provides detail on the components of tax equivalent net interest income (dollars in thousands):

GAAP Financial Measurements:	March 31, 2022		March 31, 2021
Interest Income – Loans	$	7,539	$	8,270
Interest Income - Securities and Other Interest-Earnings Assets		1,522		476
Interest Expense – Deposits		845		795
Interest Expense - Other Borrowings		159		273
Total Net Interest Income	$	8,057	$	7,678
Non-GAAP Financial Measurements:
Add: Tax Benefit on Tax-Exempt Interest Income – Loans & Securities		27		29
Total Tax Benefit on Tax-Exempt Interest Income		27		29
Tax-Equivalent Net Interest Income	$	8,084	$	7,707

The decrease in noninterest income of $872 for the three-month period March 31, 2022 compared to the same period in 2021 is due primarily to a decrease in mortgage banking income ($930) and in investment and insurance income ($96) due to a slowdown in refinance activity. This was offset by an increase in ATM and check card fees ($43) and other income ($58).

Noninterest expense for the three months ended March 31, 2022 increased $864 as compared to 2021. Expenses increased primarily in the areas of salaries and benefits ($413), occupancy expenses ($45), advertising ($42) and telecommunication and data processing expense ($361). Expansion into the Winchester and Waynesboro markets led to increased salary, benefits, and occupancy expenses. Advertising increased as a result of increased marketing efforts in markets where larger banks were leaving. Telecommunications and data processing increased due to a focus on infrastructure improvements, digital enhancements, and online capabilities.

Balance Sheet

Federal Funds Sold and Interest Bearing Bank Deposits

The Company’s subsidiary bank invests a portion of its excess liquidity in either federal funds sold or interest-bearing bank deposits. Federal funds sold offer daily liquidity and pay market rates of interest that at quarter end were benchmarked at 0.50% to 2.25% by the Federal Reserve. Actual rates received vary slightly based upon money supply and demand among banks. Interest bearing bank deposits are held either in money market accounts or as short-term certificates of deposits. The Company held $31,994 and $76,667 in federal funds sold at March 31, 2022 and December 31, 2021, respectively. Growth in excess funds has been due to strong deposit growth, and the decrease from December 31, 2021 to March 31, 2022 was due to the Company deploying these funds into the investment portfolio. Interest bearing bank deposits have decreased by $142 since year end from $2,938 to $2,796.

34

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands) (Continued)

Securities

The Company’s securities portfolio serves to assist the Company with asset liability management. With the growth in deposits, the Company has worked to strategically invest the excess funds into the investment portfolio. This has resulted in an increase in the investments available for sale of $57,940 since December 31, 2021.

The securities portfolio consists of investment securities commonly referred to as securities held to maturity and securities available for sale. Securities are classified as Held to Maturity investment securities when management has the intent and ability to hold the securities to maturity. Held 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, liquidity needs and other similar factors. Securities available for sale are recorded at fair value. Unrealized holding gains and losses on available for sale securities are excluded from earnings and reported (net of deferred income taxes) as a separate component of stockholders’ equity. The low-income housing projects included in other investments are held for the tax losses and credits that they provide.

As of March 31, 2022, the fair value of securities available for sale was below their cost by $20,329. The portfolio is made up of primarily treasuries, agencies and mortgage-backed obligations of federal agencies, as well as Securities issued by States and political subdivisions in the U.S. and Corporate debt securities. The average maturity is 5.14 years. Efforts to deploy excess funds in an uncertain rate environment has resulted in a mixture of maturities.

In reviewing investments as of March 31, 2022, there were no securities which met the definition for other than temporary impairment. Management continues to re-evaluate the portfolio for impairment on a quarterly basis.

Loan Portfolio

The Company operates primarily in the counties of Rockingham, Shenandoah, and Augusta, and the cities of Harrisonburg, Staunton, Waynesboro and Winchester in western Virginia. The local economy benefits from a variety of businesses including agri-business, manufacturing, service businesses and several universities and colleges. The Bank is an active residential mortgage and residential construction lender and generally makes commercial loans to small and mid-size businesses and farms within its primary service area. There are no loan concentrations as defined by regulatory guidelines.

Loans Held for Investment of $659,560 decreased $2,861 on March 31, 2022 compared to $662,421 at December 31, 2021. Net of PPP, loans grew $3,014 or 0.46% since December 31, 2021. Loan growth in the home equity – open end and dealer finance segments of the portfolio were offset by declines in construction, commercial real estate and PPP segments.

Loans Held for Sale totaled $2,479 on March 31, 2022, a decrease of $2,408 compared to $4,887 at December 31, 2021. At March 31, 2022 this balance was F&M mortgage loans, which are typically subject to seasonal fluctuations and refinance activity.

Nonperforming loans include nonaccrual loans and loans 90 days or more past due. Nonaccrual loans are loans on which interest accruals have been suspended or discontinued permanently. Nonperforming loans totaled $4,751 on March 31, 2022 compared to $5,465 at December 31, 2021. The decrease in nonperforming loans from year end is primarily due to one loan paying off, one loan moving to accrual status, and amortization. Although the potential exists for loan losses beyond what is currently provided for in the allowance for loan losses, management believes the Bank is generally well secured and continues to actively work with its customers to effect payment.

A summary of credit ratios for nonaccrual loans is as follows (in thousands):

	March 31, 2022			December 31, 2021
Allowance for loan losses	$	7,389		$	7,748
Nonaccrual loans	$	4,751		$	5,465
Total Loans	$	659,560		$	662,421
Allowance for loan losses to Total Loans		1.12	%		1.17	%
Nonaccrual Loans to Total Loans		0.72	%		0.83	%
Allowance for loan losses to Nonaccrual loans		155.53	%		141.77	%

35

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands) (Continued)

Allowance for Loan Losses

The allowance for loan losses provides for the risk that borrowers will be unable to repay their obligations. The risk associated with real estate and installment notes to individuals is based upon employment, the local and national economies and consumer confidence, and the value of the underlying collateral. 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.

Management evaluates the allowance for loan losses on a quarterly basis in light of national and local economic trends, changes in the nature and volume of the loan portfolio and trends in past due and criticized loans. Specific factors evaluated include loan review reports, past due reports, historical loan loss experience and changes in the financial strength of individual borrowers that have been included on the Bank’s watch list or schedule of classified loans.

In evaluating the portfolio, loans are segregated by segment with identified potential losses, pools of loans by type, with separate weighting for past dues and a general allowance based on a variety of criteria. Loans with identified potential losses include examiner and bank classified loans. Classified relationships in excess of $500,000 and loans identified as troubled debt restructurings are reviewed individually for impairment under ASC 310. A variety of factors are considered when reviewing these credits, including borrower cash flow, payment history, fair value of collateral, company management, industry, and economic factors. Loans that are not reviewed for impairment are categorized by call report code and an estimate is calculated based on actual loss experience over the last three years.

A general allowance for inherent losses has been established to reflect other unidentified losses within the portfolio. The general allowance is calculated using nine qualitative factors identified in the 2006 Interagency Policy Statement on the allowance for loan losses. The general allowance assists in managing recent changes in portfolio risk that may not be captured in individually impaired loans, or in the homogeneous pools based on loss histories. The Board approves the loan loss provision for each quarter based on this evaluation.

The allowance for loan losses of $7,389 at March 31, 2022 is equal to 1.12% of loans held for investment. This compares to an allowance of $7,748, or 1.17% at December 31, 2021.

Due to increasing interest rates, loan portfolio growth over the last 12 months, and deteriorating economic conditions, the qualitative reserve increased. This was offset by improvements in the unemployment rate, a decrease in historical loss rates and paydowns on individually impaired loans. The Company is monitoring the economic effects of increased inflation, building costs, and used car prices, as well as a rising interest rate environment. The Company continues to manage the classified, past due and non-performing loans, which are all at lower levels than December 31, 2021, Classified loans (internally rated substandard or watch) decreased from a total of $43,230 at December 31, 2021 to $40,313 at March 31, 2022, past due loans on accrual decreased from $3,226 at December 31, 2021 to $2,414 at March 31, 2022, and non-performing loans decreased from $5,508 at December 31, 2021 to $4,805 at March 31, 2022. Management is closely monitoring the effects of economic conditions on the loan portfolio and makes adjustments to specific reserves, the environmental factors and the provision for loan losses as necessary.

Deposits and Other Borrowings

The Company’s main source of funding is comprised of 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. Total deposits at March 31, 2022 have increased $32,000 since December 31, 2021. Noninterest bearing deposits increased $17,683 while interest bearing increased $14,317. The increase in deposits is due to a focus on deposit growth as an organization as well as excess funds that customers are holding due to the pandemic. The Bank participates in the CDARS (Certificate of Deposit Account Registry Service) and ICS (Insured Cash Sweep) programs. These programs, CDARS for certificates of deposit and ICS for demand and savings, allow the Bank to accept customer deposits in excess of FDIC limits and through reciprocal agreements with other network participating banks by offering FDIC insurance up to as much as $50 million in deposits. At March 31, 2022 and December 31, 2021 the Company had a total of $257 in CDARS accounts; and, $95,976 and $94,948 in ICS accounts, respectively.

36

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands) (Continued)

Short-term borrowings

The Company utilizes short-term debt such as Federal funds purchased and FHLB short term borrowings to provide liquidity. Federal funds purchased are unsecured overnight borrowings from other financial institutions. FHLB short term debt, which is secured by the loan portfolio, can be a daily rate variable loan that acts as a line of credit or a fixed rate advance, depending on the needs of the Company. With the growth in deposits and excess liquidity, the Company has not utilized the short-term debt facilities for 2021 or 2022.

Long-term borrowings

The Company’s subsidiary bank borrows funds on a fixed rate basis as needed. These borrowings are used to support the Bank’s lending program and allow the Bank to manage interest rate risk by laddering maturities and matching funding terms to the terms of various types in the loan portfolio. FHLB long term advances totaled $10,000 on March 31, 2022, and December 31, 2021.

On July 29, 2020, the Company sold and issued to certain institutional accredited investors $5,000 in aggregate principal amount of 5.75% fixed rated subordinated notes due July 31, 2027 (the “2027 Notes”) and $7,000 in aggregate principal amount of 6.00% fixed to floating rate subordinated notes due July 31, 2030 (the “2030 Notes”). The 2027 Notes will bear interest at 5.75% per annum, payable semi-annually in arrears. Beginning on July 31, 2022 through maturity, the 2027 Notes may be redeemed, at the Company’s option, on any scheduled interest payment date. The 2027 Notes will mature on July 31, 2027. The 2030 Notes will initially bear interest at 6.00% per annum, beginning July 29, 2020 to but excluding July 31, 2025, payable semi-annually in arrears. From and including July 31, 2025 through July 30, 2030, or up to an early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month SOFR plus 593 basis points, payable quarterly in arrears. Beginning on July 31, 2025 through maturity, the 2030 Notes may be redeemed, at the Company’s option, on any scheduled interest payment date. The 2030 Notes will mature on July 31, 2030. The subordinated notes, net of issuance costs totaled $11,780 at March 31, 2022.

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.

At March 31, 2022, the Bank had Common Equity Tier I capital of 13.72% of risked weighted assets, Tier I capital of 13.72% of risk weighted assets and combined Tier I and II capital of 14.70% of risk weighted assets. Regulatory minimums at this date were 4.5%, 6% and 8%, respectively. At December 31, 2021, the Bank had Common Equity Tier I capital of 13.95% of risk weighted assets, Tier I capital of 13.95% of risk weighted assets and combined Tier I and II capital of 15.00% of risk weighted assets. The Bank has maintained capital levels far above the minimum requirements. In the unlikely event that such capital levels are not met, regulatory agencies are empowered to require the Bank to raise additional capital and/or reallocate present capital.

In addition, the regulatory agencies have issued guidelines requiring the maintenance of a capital leverage ratio. The leverage ratio is computed by dividing Tier I capital by average total assets. The regulators have established a minimum of 4% for this ratio but can increase the minimum requirement based upon an institution’s overall financial condition. At March 31, 2022, the Bank reported a leverage ratio of 8.47%, compared to 8.62% at December 31, 2021. The Bank’s leverage ratio was substantially above the minimum. The Bank also reported a capital conservation buffer of 6.70% at March 31, 2022 and 7.00% at December 31, 2021. The capital conservation buffer is designed to strengthen an institution’s financial resilience during economic cycles. Financial institutions are required to maintain a minimum buffer as required by the Basel III final rules in order to avoid restrictions on capital distributions and other payments.

Liquidity

Liquidity is the ability to meet present and future financial obligations through either the sale or maturity of existing assets or the acquisition of additional funds through liability management. Liquid assets include cash, interest-bearing deposits with banks, federal funds sold, investments and loans maturing within one year. The Company’s ability to obtain deposits and purchase funds at favorable rates determines its liquidity exposure. As a result of the Company’s management of liquid assets and the ability to generate liquidity through liability funding, management believes that the Company maintains overall liquidity sufficient to satisfy its depositors’ requirements and meet its customers’ credit needs.

37

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands) (Continued)

Liquidity, continued

Additional sources of liquidity available to the Company include, but are not limited to, loan repayments, the ability to obtain deposits through the adjustment of interest rates and the purchasing of federal funds. To further meet its liquidity needs, the Company’s subsidiary bank also maintains a line of credit with its primary correspondent financial institution and with Pacific Coast Bankers Bank, Zions Bank, and FNBB. The Bank also has a line of credit with the Federal Home Loan Bank of Atlanta that allows for secured borrowings. Additionally, the Bank can utilize the Federal Reserve Discount Window.

Interest Rate Sensitivity

In conjunction with maintaining a satisfactory level of liquidity, management must also control the degree of interest rate risk assumed on the balance sheet. Managing this risk involves regular monitoring of interest sensitive assets relative to interest sensitive liabilities over specific time intervals. The Company monitors its interest rate sensitivity periodically and makes adjustments as needed. There are no off-balance sheet items that will impair future liquidity.

Effect of Newly Issued Accounting Standards

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The FASB has issued multiple updates to ASU 2016-13 as codified in Topic 326, including ASU’s 2019-04, 2019-05, 2019-10, 2019-11, 2020-02, and 2020-03. These ASU’s have provided for various minor technical corrections and improvements to the codification as well as other transition matters. Smaller reporting companies who file with the U.S. Securities and Exchange Commission (SEC) and all other entities who do not file with the SEC are required to apply the guidance for fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company is currently assessing the impact that ASU 2016-13 will have on its consolidated financial statements and has created a CECL model to run parallel for 2022. All data has been archived under the current model.

Effective November 25, 2019, the SEC adopted Staff Accounting Bulletin (SAB) 119. SAB 119 updated portions of SEC interpretative guidance to align with FASB ASC 326, “Financial Instruments – Credit Losses.” It covers topics including (1) measuring current expected credit losses; (2) development, governance, and documentation of a systematic methodology; (3) documenting the results of a systematic methodology; and (4) validating a systematic methodology.

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. Subsequently, in January 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2021-01 “Reference Rate Reform (Topic 848): Scope.” This ASU clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. An entity may elect to apply ASU No. 2021-01 on contract modifications that change the interest rate used for margining, discounting, or contract price alignment retrospectively as of any date from the beginning of the interim period that includes March 12, 2020, or prospectively to new modifications from any date within the interim period that includes or is subsequent to January 7, 2021, up to the date that financial statements are available to be issued. An entity may elect to apply ASU No. 2021-01 to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020, and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020.

38

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands) (Continued)

Effect of Newly Issued Accounting Standards, continued

The Company is preparing loan agreements, other than SWAP loans, to transition from LIBOR by the end of second quarter 2022. The SWAP loans have amended Rate Protection Agreements executed by the borrower in preparation to transition from LIBOR by the swap holder.

In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06 “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” The ASU simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted earnings per share (EPS) calculation in certain areas. In addition, the amendment updates the disclosure requirements for convertible instruments to increase the information transparency. For public business entities, excluding smaller reporting companies, the amendments in the ASU are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, the standard will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2020-06 to have a material impact on its consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity – Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force).” The ASU addresses how an issuer should account for modifications or an exchange of freestanding written call options classified as equity that is not within the scope of another Topic. Early adoption is permitted. ASU 2021-04 was effective for the Company on January 1, 2022. The adoption of ASU 2021-04 did not have a material impact on its consolidated financial statements.

Other accounting standards that have been issued by the FASB or other standards-setting bodies are not expected to have a material effect on the Company’s financial position, result of operations or cash flows.

Existence of Securities and Exchange Commission Web Site

The Securities and Exchange Commission maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission, including F & M Bank Corp. and the address is (http: //www.sec.gov).

39

TABLE I

F & M BANK CORP.

Net Interest Margin Analysis

(on a fully taxable equivalent basis)

(Dollar Amounts in Thousands)

	Three Months Ended March 31, 2022							Three Months Ended March 31, 2021
	Average Balance		Income/ Expense		Average Rates1			Average Balance		Income/ Expense		Average Rates1
Interest income
Loans held for investment2,3	$	656,099	$	7,522		4.65	%	$	673,744	$	8,196		4.93	%
Loans held for sale		3,683		29		3.19	%		13,221		94		2.88	%
Federal funds sold		64,813		24		0.15	%		87,157		15		0.07	%
Interest bearing deposits		2,845		1		0.14	%		884		-		0.11	%
Investments
Taxable		423,751		1,444		1.38	%		126,973		427		1.37	%
Partially taxable4		125		1		1.62	%		125		1		1.62	%
Tax exempt4		10,250		67		2.65	%		6,237		42		2.73	%
Total earning assets	$	1,161,566	$	9,088		3.17	%	$	908,341	$	8,775		3.92	%
Interest Expense
Demand deposits		188,344		103		0.22	%		114,699		44		0.16	%
Savings		492,458		503		0.41	%		347,332		351		0.41	%
Time deposits		122,471		239		0.79	%		129,142		400		1.26	%
Long-term debt		21,776		159		2.96	%		32,531		273		3.40	%
Total interest bearing liabilities	$	825,049	$	1,004		0.49	%	$	623,704	$	1,068		0.70	%
Tax equivalent net interest income			$	8,084						$	7,707
Net interest margin						2.82	%						3.44	%

____________

1	Annualized.
2	Interest income on loans includes loan fees.
3	Loans held for investment include nonaccrual loans.
4	Income tax rate of 21% was used to calculate the tax equivalent income on nontaxable and partially taxable investments and loans.
	Average balance information is reflective of historical cost and has not been adjusted for changes in market value annualized.

40

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not required

Item 4. Controls and Procedures

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, evaluated the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2022. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms. There were no significant changes in the Company’s internal controls over financial reporting that occurred during the quarter ended March 31, 2022 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

Part II Other Information

Item 1.	Legal Proceedings
	There are no material pending legal proceedings other than ordinary routine litigation incidental to its business, to which the Company is a party or of which the property of the Company is subject.
Item 1a.	Risk Factors	Not required
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	None
Item 3.	Defaults Upon Senior Securities	None
Item 4.	Mine Safety Disclosures	None
Item 5.	Other Information	None
Item 6.	Exhibits

(a)  Exhibits

4.1	Form of 2027 Subordinated Note (included as Exhibit 4.1 to the Current Report on Form 8-K filed July 31, 2020 and incorporated herein by reference).
4.2	Form of 2030 Subordinated Note (included as Exhibit 4.2 to the Current Report on Form 8-K filed July 31, 2020 and incorporated herein by reference).
10.1	Form of Subordinated Note Purchase Agreement (included as Exhibit 10.1 to the Current Report on Form 8-K filed July 31, 2020 and incorporated herein by reference).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) (filed herewith).
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) (filed herewith).
32	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
101	The following materials from F&M Bank Corp.’s Quarterly Report on Form 10-Q for the period ended March 31, 2022, formatted in Inline Extensible Business Reporting Language (iXBRL), include: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive (Loss) Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) related notes (filed herewith).
104	The cover page from F&M Bank Corp.’s Quarterly Report on Form 10-Q for the period ended March 31, 2022, formatted in Inline XBRL (included with Exhibit 101)

41

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 thereunto duly authorized.

	F & M BANK CORP.
		/s/ Mark C. Hanna
		Mark C. Hanna
		President and Chief Executive Officer
		/s/ Carrie A. Comer
		Carrie A. Comer
		Executive Vice President and Chief Financial Officer
May 13, 2022

42

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(Chapter 63, Title 18 USC Section 1350 (A) and (B)

I, Mark C. Hanna, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of F & M Bank Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 13, 2022	/s/ Mark C. Hanna
	Mark C. Hanna
	President & Chief Executive Officer

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to F & M Bank Corp. and will be retained by F & M Bank Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(Chapter 63, Title 18 USC Section 1350 (A) and (B)

I, Carrie A. Comer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of F & M Bank Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 13, 2022	Carrie A. Comer
	Carrie A. Comer
	Executive Vice President & Chief Financial Officer

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to F & M Bank Corp. and will be retained by F & M Bank Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

EXHIBIT 32

CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER,

EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

Pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350)

The undersigned, as the President and Chief Executive Officer and Executive Vice President and Chief Financial Officer of F & M Bank Corp., respectively, certify that, to the best of each such individual’s knowledge and belief, the Quarterly Report on Form 10-Q for the period ended March 31, 2022, which accompanies this certification fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of F & M Bank Corp. at the dates and for the periods indicated. The foregoing certification is made pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose. The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.

	Company Name
		/s/ Mark C. Hanna
		Mark C. Hanna
		President and Chief Executive Officer
		/s/ Carrie A. Comer
		Carrie A. Comer
		Executive Vice President and Chief Financial Officer
May 13, 2022

XML

Cover - shares	3 Months Ended
	Mar. 31, 2022	May 06, 2022
Cover [Abstract]
Entity Registrant Name	F&M BANK CORP
Entity Central Index Key	0000740806
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Mar. 31, 2022
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2022
Entity Common Stock Shares Outstanding		3,451,612
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-13273
Entity Incorporation State Country Code	VA
Entity Tax Identification Number	54-1280811
Entity Interactive Data Current	Yes
Entity Address Address Line 1	P.O. Box 1111
Entity Address City Or Town	Timberville
Entity Address State Or Province	VA
Entity Address Postal Zip Code	22853
City Area Code	540
Local Phone Number	896-8941
Security 12b Title	Common Stock, par value ‑ $5

XML

Consolidated Balance Sheets - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Assets
Cash And Due From Banks	$ 13,586	$ 8,516
Money Market Funds And Interest-bearing Deposits In Other Banks	2,796	2,938
Federal Funds Sold	31,994	76,667
Cash And Cash Equivalents	48,376	88,121
Securities:
Held To Maturity, At Amortized Cost - Fair Value Of $125 In 2022 And 2021, Respectively	125	125
Available For Sale, At Fair Value	461,822	403,882
Other Investments	9,142	9,210
Loans Held For Sale, At Fair Value	2,479	4,887
Loans Held For Investment, Net Of Deferred Fees And Costs	659,560	662,421
Less: Allowance For Loan Losses	(7,389)	(7,748)
Net Loans Held For Investment	652,171	654,673
Bank Premises And Equipment, Net	18,684	17,063
Bank Premises Held For Sale	300	300
Interest Receivable	3,345	3,117
Goodwill	3,082	3,082
Bank Owned Life Insurance	23,042	22,878
Other Assets	15,691	12,004
Total Assets	1,238,259	1,219,342
Deposits:
Noninterest Bearing	298,676	280,993
Interest Bearing	813,619	799,302
Total Deposits	1,112,295	1,080,295
Long-term Debt	21,780	21,772
Other Liabilities	16,199	16,819
Total Liabilities	1,150,274	1,118,886
Stockholders' Equity
Common Stock, $5 Par Value, 6,000,000 Shares Authorized, 200,000 Designated, 3,451,208 And 3,430,175 Shares Issued And Outstanding (29,238 And 15,869 Unvested Restricted Shares)	17,110	17,071
Additional Paid In Capital - Common Stock	10,240	10,127
Retained Earnings	79,986	78,350
Accumulated Other Comprehensive Loss	(19,351)	(5,092)
Total Stockholders' Equity	87,985	100,456
Total Liabilities And Stockholders' Equity	$ 1,238,259	$ 1,219,342

XML

Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Consolidated Balance Sheets
Held To Maturity - Fair Value	$ 125,000	$ 125
Common Stock, Shares Par Value	$ 5	$ 5
Common Stock, Shares Authorized	6,000,000	6,000,000
Common Stock, Shares Designated	200,000	2,000,000
Common Stock, Shares Issued	3,451,208	3,430,175
Common Stock, Shares Outstanding	3,451,208	3,430,175
Unvested Restricted Shares	29,238	15,869

XML

Consolidated Statements of Income - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Consolidated Statements of Income
Interest And Fees On Loans Held For Investment	$ 7,510	$ 8,170
Interest And Fees On Loans Held For Sale	29	100
Interest From Money Market Funds And Federal Funds Sold	25	15
Interest On Debt Securities	1,497	461
Total Interest And Dividend Income	9,061	8,746
Interest Expense
Total Interest On Deposits	845	795
Interest From Long-term Debt	159	273
Total Interest Expense	1,004	1,068
Net Interest Income	8,057	7,678
(recovery Of) Loan Losses	(450)	(725)
Net Interest Income After (recovery Of) Loan Losses	8,507	8,403
Noninterest Income
Service Charges On Deposit Accounts	307	285
Investment Services And Insurance Income, Net	251	347
Mortgage Banking Income, Net	742	1,672
Title Insurance Income	473	456
Income On Bank Owned Life Insurance	171	168
Low Income Housing Partnership Losses	(204)	(215)
Atm And Check Card Fees	563	520
Other Operating Income	180	122
Total Noninterest Income	2,483	3,355
Noninterest Expense
Salaries	3,637	3,296
Employee Benefits	1,288	1,216
Occupancy Expense	340	295
Equipment Expense	286	277
Fdic Insurance Assessment	116	99
Advertising Expense	178	136
Legal And Professional Fees	208	199
Telecommunication And Data Processing Expense	901	540
Atm And Chek Card Fees	298	257
Directors Fees	164	146
Bank Franchise Tax	174	173
Other Operating Expenses	960	1,052
Total Noninterest Expense	8,550	7,686
Income Before Income Taxes	2,440	4,072
Income Tax (benefit) Expense	(88)	271
Net Income	2,528	3,801
Dividends Paid/accumulated On Preferred Stock	0	65
Net Income Available To Common Stockholders	$ 2,528	$ 3,736
Per Common Share Data
Net-income Basic	$ 0.74	$ 1.17
Net Income Diluted	0.74	1.11
Cash Dividend On Common Stock	$ 0.26	$ 0.26
Weighted Average Common Shares Outstanding - Basic	3,434,892	3,205,074
Weighted Average Common Shares Outstanding - Diluted	3,434,892	3,433,192

XML

Consolidated Statements of Comprehensive Income - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Consolidated Statements of Comprehensive Income
Net Income	$ 2,528	$ 3,801
Other Comprehensive Loss:
Unrealized Holding Losses On Available-for Sale Securities	18,049	1,411
Tax Effect	3,790	297
Unrealized Holding Losses, Net Of Tax	(14,259)	(1,114)
Total Other Comprehensive Loss	14,259	1,114
Total Comprehensive (loss) Income	$ (11,731)	$ 2,687

XML

Condensed Consolidated Statements of Changes in Stockholders Equity (Unaudited) - USD ($)	Total	Preferred Stock	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated other comprehensive loss
Balance, Amount at Dec. 31, 2020	$ 95,629	$ 4,558	$ 16,017	$ 6,866	$ 71,205	$ (3,017)
Net Income	3,801	0	0	0	3,801	0
Other Comprehensive Loss	(1,114)	0	0	0	0	(1,114)
Dividends On Preferred Stock ($.32 Per Share)	65	0	0	0	65	0
Dividends On Common Stock ($.26 Per Share)	(833)	0	0	0	(833)	0
Common Stock Issued (2,450 Shares)	64	0	12	52	0	0
Common Stock Issued For Stock-based Compensation (1,332 Shares)	36	0	7	29	0	0
Stock-based Compensation Expense	9	0	0	9	0	0
Dividends On Common Stock ($.26 Per Share)	833	0	0	0	833	0
Balance, Amount at Mar. 31, 2021	97,527	4,558	16,036	6,956	74,108	(4,131)
Balance, Amount at Dec. 31, 2021	100,456	0	17,071	10,127	78,350	(5,092)
Net Income	2,528	0	0	0	2,528	0
Other Comprehensive Loss	(14,259)	0	0	0	0	(14,259)
Dividends On Common Stock ($.26 Per Share)	(892)	0	0	0	(892)	0
Common Stock Issued (2,450 Shares)	80	0	13	67	0	0
Stock-based Compensation Expense	17	0	0	17	0	0
Dividends On Common Stock ($.26 Per Share)	892	0	0	0	892	0
Common Stock Issued For Stock-based Compensation (5,065 Shares)	55	0	26	29	0	0
Balance, Amount at Mar. 31, 2022	$ 87,985	$ 0	$ 17,110	$ 10,240	$ 79,986	$ (19,351)

XML

Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash Flows From Operating Activities
Net Income	$ 2,528	$ 3,801
Adjustments To Reconcile Net Income To Net Cash Provided By Operating Activities:
Depreciation And Amortization	283	293
Amortization Of Intangibles	9	17
Amortization Of Securities	6,174	239
Proceeds From Loans Held For Sale Originated	39,724	63,032
Loans Held For Sale Originated	(36,881)	(56,331)
Gain On Sale Of Loans Held For Sale Originated	(435)	(1,606)
(recovery Of) Loan Losses	(450)	(725)
(increase) Decrease In Interest Receivable	(228)	323
(increase) In Deferred Taxes	(189)	(189)
Decrease In Taxes Payable	0	159
(increase) Decrease In Other Assets	(12)	1,433
(decrease) In Accrued Expenses	(318)	(842)
Amortization Of Limited Partnership Investments	204	215
Income From Life Insurance Investment	(171)	(168)
Stock-based Compensation Expense	17	9
Net Cash Provided By Operating Activities	10,255	9,660
Cash Flows From Investing Activities
Purchase Of Investments Available For Sale And Other Investments	(85,163)	(71,076)
Proceeds From Maturity Of Investments Available For Sale	3,000	4,623
(purchase) Of Proceeds From The Redemption Of Restricted Stock, Net	(136)	(395)
Net Decrease In Loans Held For Investment	2,952	1,910
Net Decrease In Loans Held For Sale Participations		37,661
Net Purchase Of Property And Equipment	(1,904)	(181)
Net Cash (used In) Investing Activities	(81,251)	(26,668)
Cash Flows From Financing Activities
Net Change In Deposits	32,000	44,170
Dividends Paid In Cash	(892)	(898)
Proceeds From Issuance Of Common Stock	135	100
Amortization Of Debt Issuance Costs	8
Repayments Of Long-term Debt		(1,043)
Net Cash Provided By Financing Activities	31,251	42,329
Net (decrease) Increase In Cash And Cash Equivalents	(39,745)	25,321
Cash And Cash Equivalents, Beginning Of Period	88,121	78,408
Cash And Cash Equivalents, End Of Period	48,376	103,729
Supplemental Cash Flow Information:
Cash Paid For: Interest	1,244	1,263
Cash paid for: Taxes	0	0
Supplemental Non-cash Disclosures:
Change In Unrealized (loss) On Securities Available For Sale, Net Of Tax	$ (14,259)	$ (1,411)

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary Of Significant Accounting Policies

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying unaudited consolidated financial statements include the accounts of Farmers & Merchants Bank, TEB Life Insurance Company, Farmers & Merchants Financial Services, Inc., VBS Mortgage, LLC (dba F&M Mortgage), and VSTitle, LLC and were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for the interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). Accordingly, these financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).

The accompanying unaudited consolidated financial statements include the accounts of the Company, the Bank and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations

The Company, through its subsidiary Farmers & Merchants Bank (the “Bank”), operates under a charter issued by the Commonwealth of Virginia and provides commercial banking services. As a state chartered bank, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions and the Federal Reserve Bank. The Bank provides services to customers primarily in the counties of Rockingham, Shenandoah, and Augusta, and the cities of Harrisonburg, Staunton, Waynesboro and Winchester in Virginia. Services are provided at thirteen branch offices and a Dealer Finance Division. The Company offers insurance, mortgage lending, title insurance and financial services through its subsidiaries, TEB Life Insurance Company, Farmers & Merchants Financial Services, Inc. (“FMFS”), F&M Mortgage, and VSTitle, LLC (“VST”).

Basis of Presentation

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and fair value. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for fair presentation of the results of operations in these financial statements, have been made.

Risk and Uncertainties

The coronavirus (“COVID-19”) pandemic spread rapidly across the world in the first quarter of 2020 and was declared a pandemic by the World Health Organization. The government and private sector responses to contain its spread began to significantly affect our business operations in March 2020 with branch lobby closings, operations and administrative staff working remotely and the use of virtual meetings. Branch lobbies were only open by appointment from March 2020 to April 12, 2021 and from January 18, 2022 to March 7, 2022. The full impact of COVID-19 and its length and duration remains uncertain at this time. The Company is closely monitoring the effects of the pandemic on our customers and loan portfolio. The risks and uncertainties resulting from the pandemic may adversely affect our future earnings, cash flows and financial condition, including among others, credit losses resulting from financial stress on borrowers, decreased demand for products and operational failures. In addition, significant assumptions, judgments, and estimates used in the preparation of our financial statements, including those associated with evaluations of goodwill for impairment, and allowance for loan losses, may be subject to adjustments in future periods due to the rapidly changing, uncertain and unprecedented nature of the pandemic.

Note 1. Summary of Significant Accounting Policies, continued

Reclassification

Certain reclassifications have been made to prior period amounts to conform to current period presentation. None of these reclassifications are considered material and have no impact on net income.

Earnings per Share

Accounting guidance specifies the computation, presentation and disclosure requirements for earnings per share (“EPS”) for entities with publicly held common stock or potential common stock such as options, warrants, convertible securities or contingent stock agreements if those securities trade in a public market. Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive common shares had been issued. The dilutive effect of conversion of preferred stock is reflected in the diluted earnings per common share calculation. All of the Company’s outstanding preferred stock was redeemed by the Company for cash or converted to common stock during the fourth quarter of 2021. Nonvested restricted shares are included in the computation of basic earnings per share as the holder is entitled to full shareholder benefits during the vesting period, including voting rights and sharing in nonforfeitable dividends.

Net income available to common stockholders represents consolidated net income adjusted for preferred dividends declared. The following table provides a reconciliation of net income to net income available to common stockholders for the periods presented (dollars in thousands):

	For the Three months ended		For the Three months ended
	March 31, 2022		March 31, 2021
Earnings available to common stockholders:
Net income	$	2,528	$	3,801
Preferred stock dividends		-		65
Net income available to common stockholders	$	2,528	$	3,736

The following table shows the effect of dilutive preferred stock conversion on the Company’s earnings per share for the periods indicated (dollars in thousands):

	Three months ended March 31, 2022						Three months ended March 31, 2021
	Income		Weighted Average Shares		Per Share Amounts		Income		Weighted Average Shares		Per Share Amounts
Basic EPS	$	2,528		3,434,892	$	0.74	$	3,736		3,205,074	$	1.17
Effect of Dilutive Securities:
Convertible Preferred Stock		-		-		-		65		228,118		(0.06	)
Diluted EPS	$	2,528		3,434,892	$	0.74	$	3,801		3,433,192	$	1.11

XML

Investment securities

3 Months Ended

Mar. 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investment Securities

Note 2.   Investment Securities

Investment securities available for sale are carried in the consolidated balance sheets at their approximate fair value. Investment securities held to maturity are carried in the consolidated balance sheets at their amortized cost at March 31, 2022 and December 31, 2021 are as follows (dollars in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
March 31, 2022
U. S. Treasuries	$	125	$	-	$	-	$	125
December 31, 2021
U. S. Treasuries	$	125	$	-	$	-	$	125

Note 2. Investment Securities, continued

The amortized cost and fair value of securities available for sale are as follows (dollars in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2022
U. S. Government Treasuries	$	44,759	$	-	$	1,891	$	42,868
U. S. Government sponsored enterprises		163,460		-		4,920		158,540
Securities issued by States and political subdivisions in the U.S.		34,570		-		1,896		32,674
Mortgage-backed obligations of federal agencies		208,812		248		11,466		197,594
Corporate debt security		30,550		318		722		30,146
Total Securities Available for Sale	$	482,151	$	566	$	20,895	$	461,822
December 31, 2021
U. S. Government Treasuries	$	29,847	$	-	$	365	$	29,482
U. S. Government sponsored enterprises		134,466		-		752		133,714
Securities issued by States and political subdivisions of the U.S.		34,078		406		147		34,337
Mortgage-backed obligations of federal agencies		185,216		522		2,091		183,647
Corporate debt securities		22,555		372		225		22,702
Total Securities Available for Sale	$	406,162	$	1,300	$	3,580	$	403,882

The amortized cost and fair value of securities at March 31, 2022, by contractual maturity are shown below (dollars in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Securities Held to Maturity				Securities Available for Sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	125	$	125	$	4,835	$	4,797
Due after one year through five years		-		-		195,056		189,575
Due after five years		-		-		105,218		100,754
Due after ten years		-		-		177,042		166,696
Total	$	125	$	125	$	482,151	$	461,822

There were no sales of available for sale securities in the first quarter of 2022 or 2021. Securities held that are U.S. Agency, Treasury, Government Sponsored Entities and Agency MBS carry an implicit government guarantee and are not subject to other than temporary impairment evaluation. Other securities were reviewed for impairment. The securities issued by States and political subdivisions in the U.S. were in an unrealized loss position for less than 12 months. One bank subordinated debt offering was in a loss position for 12 consecutive months and totaled $489 thousand. The pricing services tend to not be exact on these offerings because of the marketability of the offering. The Company reviews the relevant ratios on each subordinated debt holding quarterly. Because management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions, no declines are currently deemed to be other than temporary.

Note 2. Investment Securities, continued

A summary of unrealized losses (in thousands) and the length of time in a continuous loss position, by security type of March 31, 2022 and December 31, 2021 were as follows:

	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2022
U. S. Government treasuries	$	28,752	$	1,074	$	9,088	$	817	$	37,840	$	1,891
U. S. Government sponsored enterprises		135,152		3,315		23,388		1,605		158,540		4,920
Securities issued by States and political subdivisions in the U.S.		32,674		1,896		-		-		32,674		1,896
Mortgage-backed obligations of federal agencies		129,236		8,898		31,274		2,568		160,510		11,466
Corporate debt security		15,339		711		489		11		15,828		722
Total	$	341,153	$	15,894	$	64,239	$	5,001	$	405,392	$	20,895

	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2021
U. S. Government treasuries	$	29,481	$	365	$	-	$	-	$	29,481	$	365
U. S. Government sponsored enterprises		93,714		752		-		-		93,714		752
Securities issued by State and political subdivisions in the U. S.		13,308		147		-		-		13,308		147
Mortgage-backed obligations of federal agencies		126,501		1,871		10,074		220		136,575		2,091
Corporate debt securities		8,825		225		-		-		8,825		225
Total	$	271,829	$	3,360	$	10,074	$	220	$	281,903	$	3,850

As of March 31, 2022, other investments consist of investments in thirteen low-income housing and historic equity partnerships (carrying basis of $6,558), stock in the Federal Home Loan Bank (carrying basis $994) and various other investments (carrying basis $1,590). The interests in low-income housing and historic equity partnerships have limited transferability and the interests in the other stocks are restricted as to sales. The fair values of these securities are estimated to approximate their carrying value as of March 31, 2022. At March 31, 2022, the Company was committed to invest an additional $961 in four low-income housing limited partnerships. These funds will be paid as requested by the general partner to complete the projects. This additional investment has been reflected in the above carrying basis and in other liabilities on the consolidated balance sheet. The Company does not have any pledged securities.

XML

Loans

3 Months Ended

Mar. 31, 2022

Loans

Loans

Note 3. Loans

Loans held for investment outstanding at March 31, 2022 and December 31, 2021 are summarized as follows (in thousands):

	2022			2021
Construction/Land Development	$	72,248		$	75,236
Farmland		65,503			66,344
Real Estate		138,620			139,552
Multi-Family		5,667			4,887
Commercial Real Estate		162,340			163,564
Home Equity – closed end		5,732			6,262
Home Equity – open end		45,415			44,247
Commercial & Industrial – Non-Real Estate		42,720			44,224
Consumer		7,529			8,036
Dealer Finance		111,237			107,346
Credit Cards		2,869			3,000
Gross loans		659,880			662,698
Less: Deferred loan fees, net of costs		(320	)		(277	)
Total	$	659,560		$	662,421

Note 3. Loans, continued

The Company has pledged loans held for investment as collateral for borrowings with the Federal Home Loan Bank of Atlanta totaling $163,070 and $163,326 as of March 31, 2022 and December 31, 2021, respectively. The Company maintains a blanket lien on certain loans in its residential real estate, commercial and home equity portfolios.

Loans held for sale, at fair value consists of loans originated by F&M Mortgage for sale in the secondary market. The volume of loans fluctuates due to changes in secondary market rates, which affects demand for mortgage loans. Loans held for sale as of March 31, 2022 and December 31, 2021 were $2,479 and $4,887, respectively.

The following is a summary of information pertaining to impaired loans (dollars in thousand):

	March 31, 2022						December 31, 2021
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment(1)		Balance		Allowance		Investment		Balance		Allowance
Impaired loans without a valuation allowance:
Construction/Land Development	$	637	$	637	$	-	$	645	$	645	$	-
Farmland		2,215		2,215		-		2,286		2,286		-
Real Estate		2,384		2,384		-		2,748		2,748		-
Multi-Family		-		-		-		-		-		-
Commercial Real Estate		11,032		11,032		-		8,494		8,494		-
Home Equity – closed end		-		-		-		147		147		-
Home Equity – open end		-		-		-		-		-		-
Commercial & Industrial – Non-Real Estate		-		-		-		-		-		-
Consumer		-		-		-		5		5		-
Credit cards		-		-		-		-		-		-
Dealer Finance		15		15		-		12		12		-
		16,283		16,283		-		14,337		14,337		-
Impaired loans with a valuation allowance
Construction/Land Development		-		-		-		-		-		-
Farmland		-		-		-		-		-		-
Real Estate		1,495		1,495		113		1,172		1,172		119
Multi-Family		-		-		-		-		-		-
Commercial Real Estate		3,243		3,243		456		6,004		6,004		603
Home Equity – closed end		-		-		-		-		-		-
Home Equity – open end		-		-		-		-		-		-
Commercial & Industrial – Non-Real Estate		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Credit cards		-		-		-		-		-		-
Dealer Finance		54		54		13		95		95		14
		4,792		4,792		582		7,271		7,271		736
Total impaired loans	$	21,075	$	21,075	$	582	$	21,608	$	21,608	$	736

¹The Recorded Investment is defined as the original principal balance less principal payments, charge-offs and nonaccrual payments applied to principal.

Note 3. Loans, continued

The following is a summary of the average investment and interest income recognized for impaired loans (dollars in thousands):

	March 31, 2022				December 31, 2021
	Average Recorded		Interest Income		Average Recorded		Interest Income
	Investment		Recognized		Investment		Recognized
Impaired loans without a valuation allowance:
Construction/Land Development	$	641	$	6	$	984	$	29
Farmland		2,251		70		1,760		126
Real Estate		2,566		33		4,575		155
Multi-Family		-		-		-		-
Commercial Real Estate		9,763		186		9,225		253
Home Equity – closed end		74		-		414		18
Home Equity – open end		-		-		-		-
Commercial & Industrial – Non-Real Estate		-		-		2		-
Consumer		3		-		1		-
Credit Cards		-		-		-		-
Dealer Finance		14		-		14		1
		15,312		295		16,975		582
Impaired loans with a valuation allowance:
Construction/Land Development	$	-	$	-	$	-	$	-
Farmland		-		-		420		-
Real Estate		1,334		16		1,399		45
Multi-Family		-		-		-		-
Commercial Real Estate		4,624		42		6,201		172
Home Equity – closed end		-		-		-		-
Home Equity – open end		-		-		-		-
Commercial & Industrial – Non-Real Estate		-		-		-		-
Consumer		-		-		-		-
Credit Card		-		-		-		-
Dealer Finance		75		1		112		9
		6,033		59		8,132		226
Total Impaired Loans	$	21,345	$	354	$	25,107	$	808

Note 3. Loans, continued

The following table presents the aging of the recorded investment of past due loans (dollars in thousands) as of March 31, 2022 and December 31, 2021:

March 31, 2022	30-59 Days Past due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current			Total Loan Receivable			Non-Accrual Loans		Recorded Investment >90 days & accruing
Construction/Land Development	$	31	$	55	$	-	$	86	$	72,162		$	72,248		$	86	$	-
Farmland		20		-		-		20		65,483			65,503			1,259		-
Real Estate		873		124		366		1,363		137,257			138,620			551		-
Multi-Family		-		-		-		-		5,667			5,667			-		-
Commercial Real Estate		244		-		108		352		161,988			162,340			2,798		-
Home Equity – closed end		106		-		-		106		5,626			5,732			-		-
Home Equity – open end		333		-		7		340		45,075			45,415			-		7
Commercial & Industrial – Non- Real Estate		28		-		77		105		42,615			42,720			35		41
Consumer		16		-		-		16		7,513			7,529			-		-
Dealer Finance		477		146		-		623		110,614			111,237			22		-
Credit Cards		14		2		6		22		2,847			2,869			-		6
Less: Deferred loan fees, net of costs		-		-		-		-		(320	)		(320	)		-		-
Total	$	2,142	$	327	$	564	$	3,033	$	656,527		$	659,560		$	4,751	$	54

December 31, 2021	30-59 Days Past due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current			Total Loan Receivable			Non-Accrual Loans		Recorded Investment >90 days & accruing
Construction/Land Development	$	360	$	41	$	38	$	439	$	74,797		$	75,236		$	302	$	-
Farmland		-		-		-		-		66,344			66,344			1,320		-
Real Estate		1,254		89		395		1,738		137,814			139,552			827		-
Multi-Family		-		-		-		-		4,887			4,887			-		-
Commercial Real Estate		-		-		108		108		163,456			163,564			2,975		-
Home Equity – closed end		53		-		-		53		6,209			6,262			-		-
Home Equity – open end		471		216		-		687		43,560			44,247			-		-
Commercial & Industrial – Non- Real Estate		35		1		43		79		44,145			44,224			-		43
Consumer		9		67		-		76		7,960			8,036			1		-
Dealer Finance		694		91		16		801		106,545			107,346			40		-
Credit Cards		16		-		-		16		2,984			3,000			-		-
Less: Deferred loan fees, net of costs		-		-		-		-		(277	)		(277	)		-		-
Total	$	2,892	$	505	$	600	$	3,997	$	658,424		$	662,421		$	5,465	$	43

On March 31, 2022 and December 31, 2021, other real estate owned did not include any foreclosed residential real estate. The Company has $366 thousand of consumer mortgages for which foreclosure was in process on March 31, 2022.

Nonaccrual loans on March 31, 2022 would have earned approximately $54 thousand in interest income for the quarter had they been accruing loans.

XML

Allowance for Loan Losses

3 Months Ended

Mar. 31, 2022

Allowance for Loan Losses

Allowance For Loan Losses

Note 4. Allowance for Loan Losses

A summary of changes in the allowance for loan losses (dollars in thousands) for March 31, 2022 and December 31, 2021 is as follows:

March 31, 2022	Beginning Balance		Charge-offs		Recoveries		Provision			Ending Balance		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Allowance for loan losses:
Construction/Land Development	$	977	$	-	$	-	$	(275	)	$	702	$	-	$	702
Farmland		448		-		-		4			452		-		452
Real Estate		1,162		-		-		2			1,164		113		1,051
Multi-Family		29		-		-		6			35		-		35
Commercial Real Estate		2,205		-		-		(112	)		2,093		456		1,637
Home Equity – closed end		41		-		-		(2	)		39		-		39
Home Equity – open end		407		-		129		(162	)		374		-		374
Commercial & Industrial – Non-Real Estate		288		1		30		(7	)		310		-		310
Consumer		520		21		11		13			523		-		523
Dealer Finance		1,601		204		152		85			1,634		13		1,621
Credit Cards		70		12		7		(2	)		63		-		63
Total	$	7,748	$	238	$	329	$	(450	)	$	7,389	$	582	$	6,807

December 31, 2021	Beginning Balance		Charge-offs		Recoveries		Provision			Ending Balance		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Allowance for loan losses:
Construction/Land Development	$	1,249	$	-	$	307	$	(579	)	$	977	$	-	$	977
Farmland		731		-		-		(283	)		448		-		448
Real Estate		1,624		-		76		(538	)		1,162		119		1,043
Multi-Family		54		-		-		(25	)		29		-		29
Commercial Real Estate		3,662		-		19		(1,476	)		2,205		603		1,602
Home Equity – closed end		55		-		-		(14	)		41		-		41
Home Equity – open end		463		-		13		(69	)		407		-		407
Commercial & Industrial – Non- Real Estate		363		40		37		(72	)		288		-		288
Consumer		521		33		24		8			520		-		520
Dealer Finance		1,674		1,038		754		211			1,601		14		1,587
Credit Cards		79		54		29		16			70		-		70
Total	$	10,475	$	1,165	$	1,259	$	(2,821	)	$	7,748	$	736	$	7,012

Note 4. Allowance for Loan Losses, continued

The following table presents the recorded investment in loans (dollars in thousands) based on impairment method as of March 31, 2022 and December 31, 2021:

March 31, 2022	Loan Receivable			Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Construction/Land Development	$	72,248		$	637	$	71,611
Farmland		65,503			2,215		63,288
Real Estate		138,620			3,879		134,741
Multi-Family		5,667			-		5,667
Commercial Real Estate		162,340			14,275		148,065
Home Equity – closed end		5,732			-		5,732
Home Equity –open end		45,415			-		45,415
Commercial & Industrial – Non-Real Estate		42,720			-		42,720
Consumer		7,529			-		7,529
Dealer Finance		111,237			69		111,168
Credit Cards		2,869			-		2,869
Gross loans		659,880			21,075		638,805
Less: Deferred loan fees, net of costs		(320	)		-		(320	)
Total	$	659,560		$	21,075	$	638,485

December 31, 2021	Loan Receivable			Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Construction/Land Development	$	75,236		$	645	$	74,591
Farmland		66,344			2,286		64,058
Real Estate		139,552			3,920		135,632
Multi-Family		4,887			-		4,887
Commercial Real Estate		163,564			14,498		149,066
Home Equity – closed end		6,262			147		6,115
Home Equity –open end		44,247			-		44,247
Commercial & Industrial – Non-Real Estate		44,224			-		44,224
Consumer		8,036			5		8,031
Dealer Finance		107,346			107		107,239
Credit Cards		3,000			-		3,000
Gross Loans		662,698			21,608		641,090
Less: Deferred loan fees, net of costs		(277	)		-		(277	)
Total	$	662,421		$	21,608	$	640,813

Note 4. Allowance for Loan Losses, continued

The following table shows the Company’s loan portfolio broken down by internal loan grade (dollars in thousands) as of March 31, 2022 and December 31, 2021:

March 31, 2022	Grade 1 Minimal Risk		Grade 2 Modest Risk		Grade 3 Average Risk		Grade 4 Acceptable Risk		Grade 5 Marginally Acceptable		Grade 6 Watch		Grade 7 Substandard		Grade 8 Doubtful		Total
Construction/Land Development	$	-	$	5	$	10,237	$	42,138	$	18,116	$	1,666	$	86	$	-	$	72,248
Farmland		56		284		6,541		42,425		13,409		1,529		1,259		-		65,503
Real Estate		-		893		29,446		64,516		28,028		11,129		4,608		-		138,620
Multi-Family		-		-		1,007		2,838		1,700		122		-		-		5,667
Commercial Real Estate		-		1,250		31,985		71,222		41,352		3,890		12,641		-		162,340
Home Equity – closed end		-		58		1,051		2,968		685		970		-		-		5,732
Home Equity – open end		-		1,336		17,138		22,957		2,278		1,484		222		-		45,415
Commercial & Industrial -Non-Real Estate		14		996		9,704		23,440		7,927		543		96		-		42,720
Consumer (excluding dealer)		18		276		3,420		3,598		149		68		-		-		7,529
Gross Loans	$	88	$	5,098	$	110,529	$	276,102	$	113,644	$	21,401	$	18,912	$	-	$	545,774
Less: Deferred loan fees, net of costs																		(320	)
Total																	$	545,454
											Credit Cards		Dealer Finance
Performing											$	2,863	$	111,215
Non-performing												6		22
Total											$	2,869	$	111,237

Note 4. Allowance for Loan Losses, continued

December 31, 2021	Grade 1 Minimal Risk		Grade 2 Modest Risk		Grade 3 Average Risk		Grade 4 Acceptable Risk		Grade 5 Marginally Acceptable		Grade 6 Watch		Grade 7 Substandard		Grade 8 Doubtful		Total
Construction/Land Development	$	-	$	6	$	9,952	$	43,861	$	19,457	$	1,658	$	302	$	-	$	75,236
Farmland		56		291		6,804		42,615		13,620		1,638		1,320		-		66,344
Real Estate		-		1,128		30,268		61,940		28,895		12,462		4,859		-		139,552
Multi-Family		-		-		1,021		2,586		1,154		126		-		-		4,887
Commercial Real Estate		-		2,124		36,308		72,414		35,444		4,428		12,846		-		163,564
Home Equity – closed end		-		61		1,268		3,103		762		1,068		-		-		6,262
Home Equity – open end		-		1,293		17,333		21,296		2,477		1,632		216		-		44,247
Commercial & Industrial - Non-Real Estate		-		1,001		7,562		21,527		13,538		533		63		-		44,224
Consumer (excluding dealer)		10		522		2,919		3,526		980		79		-		-		8,036
Gross loans	$	66	$	6,426	$	113,435	$	272,868	$	116,327	$	23,624	$	19,606	$	-	$	552,352
Less: Deferred loan fees, net of costs																		(277	)
Total																	$	552,075
											Credit Cards		Dealer Finance
Performing											$	3,000	$	107,330
Non-performing												-		16
Total											$	3,000	$	107,346

Description of internal loan grades:

Grade 1 – Minimal Risk: Excellent credit, superior asset quality, excellent debt capacity and coverage, and recognized management capabilities.

Grade 2 – Modest Risk: Borrower consistently generates sufficient cash flow to fund debt service, excellent credit, above average asset quality and liquidity.

Grade 3 – Average Risk: Borrower generates sufficient cash flow to fund debt service. Employment (or business) is stable with good future trends. Credit is very good.

Grade 4 – Acceptable Risk: Borrower’s cash flow is adequate to cover debt service; however, unusual expenses or capital expenses must be covered through additional long-term debt. Employment (or business) stability is reasonable, but future trends may exhibit slight weakness. Credit history is good. No unpaid judgments or collection items appearing on credit report.

Grade 5 – Marginally acceptable: Credit to borrowers who may exhibit declining earnings, may have leverage that is materially above industry averages, liquidity may be marginally acceptable. Employment or business stability may be weak or deteriorating. May be currently performing as agreed, but would be adversely affected by developing factors such as layoffs, illness, reduced hours or declining business prospects. Credit history shows weaknesses, past dues, paid or disputed collections and judgments, but does not include borrowers that are currently past due on obligations or with unpaid, undisputed judgments.

Grade 6 – Watch: Loans are currently protected, but are weak due to negative balance sheet or income statement trends. There may be a lack of effective control over collateral or the existence of documentation deficiencies. These loans have potential weaknesses that deserve management’s close attention. Other reasons supporting this classification include adverse economic or market conditions, pending litigation or any other material weakness. Existing loans that become 60 or more days past due are placed in this category pending a return to current status.

Note 4. Allowance for Loan Losses, continued

Grade 7 – Substandard: Loans having well-defined weaknesses where a payment default and or loss is possible, but not yet probable. Cash flow is inadequate to service the debt under the current payment, or terms, with prospects that the condition is permanent. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the borrower and there is the likelihood that collateral will have to be liquidated and/or guarantor(s) called upon to repay the debt. Generally, the loan is considered collectible as to both principal and interest, primarily because of collateral coverage, however, if the deficiencies are not corrected quickly; there is a probability of loss.

Grade 8 – Doubtful: The loan has all the characteristics of a substandard credit, but available information indicates it is unlikely the loan will be repaid in its entirety. Cash flow is insufficient to service the debt. It may be difficult to project the exact amount of loss, but the probability of some loss is great. Loans are to be placed on non-accrual status when any portion is classified doubtful.

Credit card and dealer finance loans are classified as performing or nonperforming. A loan is nonperforming when payments of principal and interest are past due 90 days or more.

XML

Employee Benefit Plan

3 Months Ended

Mar. 31, 2022

Employee Benefit Plan

Employee Benefit Plan

Note 5. Employee Benefit Plan

The Bank has a qualified noncontributory defined benefit pension plan which covers substantially all of its full-time employees hired before April 1, 2012. The benefits are primarily based on years of service and earnings. The Company uses December 31^st as the measurement date for the defined benefit pension plan. The Bank does not expect to contribute to the pension plan in 2022.

The following is a summary of net periodic pension costs for the three month periods ended March 31, 2022 and 2021 (dollars in thousands):

	Three Months Ended
	March 31, 2022			March 31, 2021
Service cost	$	190		$	216
Interest cost		104			95
Expected return on plan assets		(195	)		(198	)
Amortization of net loss		58			72
Net periodic pension cost	$	157		$	185

XML

Fair Value

3 Months Ended

Mar. 31, 2022

Allowance for Loan Losses

Fair Value

Note 6. Fair Value

The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.

Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Accounting guidance for fair value excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The Company records fair value adjustments to certain assets and liabilities and determines fair value disclosures utilizing a definition of fair value of assets and liabilities that states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Additional considerations are involved to determine the fair value of financial assets in markets that are not active.

Note 6. Fair Value, continued

The Company uses a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The three levels of the fair value hierarchy based on these two types of inputs are as follows:

Level 1 –	Valuation is based on quoted prices in active markets for identical assets and liabilities.
Level 2 –	Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market.
Level 3 –	Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.

The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements:

Securities

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities would include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. The carrying value of restricted Federal Reserve Bank and Federal Home Loan Bank stock approximates fair value based upon the redemption provisions of each entity and is therefore excluded from the following table.

Loans Held for Sale

The Company uses the fair value accounting for its entire portfolio of originated loans held for sale in accordance with ASC 820 – Fair Value Measurement and Disclosures. Fair value of the Company’s originated loans held for sale through F&M Mortgage is based on observable market prices for similar instruments traded in the secondary mortgage loan markets in which the Company conducts business. The Company’s portfolio of loans held for sale through F&M Mortgage is classified as Level 2. Gains and losses on the sale of loans are recorded within mortgage banking income, net on the Consolidated Statements of Income.

Derivative assets – IRLCs

The Company recognizes IRLCs at fair value based on the price of the underlying loans obtained from an investor for loans that will be delivered on a best-efforts basis while taking into consideration the probability that the rate lock commitments will close. All of the Company’s IRLCs are classified as Level 2.

Derivative Asset/Liability – Forward Sale Commitments

The Company uses the fair value accounting for its forward sales commitments related to IRLCs and LHFS. Best efforts sales commitments are entered into for loans intended for sale in the secondary market at the time the borrower commitment is made. The best efforts commitments are valued using the committed price to the counter-party against the current market price of the interest rate lock commitment or mortgage loan held for sale. All the Company’s forward sale commitments are classified Level 2.

Derivative Asset/Liability – Indexed Certificate of Deposit

The Company’s derivatives, which are associated with the Indexed Certificate of Deposit (ICD) product once offered, are recorded at fair value based on third party vendor supplied information using discounted cash flow analysis from observable-market based inputs, which are considered Level 2 inputs. This product is no longer offered, however there are a few certificates of deposits that have not matured.

Note 6. Fair Value, continued

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 (dollars in thousands):

March 31, 2022	Total		Level 1		Level 2		Level 3
Assets:
Loans held for sale, F&M Mortgage	$	2,479	$	-	$	2,479	$	-
U. S. Treasury securities		42,868		-		42,868		-
U. S. Government sponsored enterprises		158,540		-		158,540		-
Securities issued by States and political subdivisions in the U. S.		32,674		-		32,674		-
Mortgage-backed obligations of federal agencies		197,594		-		197,594		-
Corporate debt securities		30,146		-		30,146		-
Forward Sales Commitments		637		-		637		-
Assets at Fair Value	$	464,938	$	-	$	464,938	$	-
Liabilities:
Derivatives - ICD	$	3	$	-	$	3	$	-
IRLC		262		-		262		-
Liabilities at Fair Value	$	265	$	-	$	265	$	-

December 31, 2021	Total		Level 1		Level 2		Level 3
Assets:
Loans held for sale, F&M Mortgage	$	4,887	$	-	$	4,887	$	-
IRLC		258		-		258		-
U. S. Treasury securities		29,482		-		29,482		-
U.S. Government sponsored enterprises		133,714		-		133,714		-
Securities issued by States and political subdivisions of the US		34,337		-		34,337		-
Mortgage-backed obligations of federal agencies		183,647		-		183,647		-
Corporate debt securities		22,702		-		22,702		-
Forward sales commitments		112		-		112		-
Assets at Fair Value	$	409,139	$	-	$	409,139	$	-
Liabilities:
Derivatives – ICD	$	3	$	-	$	3	$	-
Liabilities at Fair Value	$	3	$	-	$	3	$	-

Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets.

The following describes the valuation techniques used by the Company to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements:

Assets Held for Sale

Assets held for sale were transferred from bank premises at the lower of cost less accumulated depreciation or fair value at the date of transfer. The Company periodically evaluates the value of assets held for sale and records an impairment charge for any subsequent declines in fair value less selling costs. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the assets held for sale as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the asset held for sale as nonrecurring Level 3.

Note 6. Fair Value, continued

Impaired Loans

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due will not be collected according to the contractual terms of the loan agreement. Troubled debt restructurings are impaired loans. Impaired loans are measured at fair value on a nonrecurring basis. If an individually-evaluated impaired loan’s balance exceeds fair value, the amount is allocated to the allowance for loan losses. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the Consolidated Statements of Income.

The fair value of an impaired loan and measurement of associated loss is based on one of three methods: the observable market price of the loan, the present value of projected cash flows, or the fair value of the collateral. The observable market price of a loan is categorized as a Level 1 input. The present value of projected cash flows method results in a Level 3 categorization because the calculation relies on the Company’s judgment to determine projected cash flows, which are then discounted at the current rate of the loan, or the rate prior to modification if the loan is a troubled debt restructure.

Loans measured using the fair value of collateral method are categorized in Level 3. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. Most collateral is real estate. The Company bases collateral method fair valuation upon the “liquidation” value of independent appraisals or evaluations. The value of real estate collateral is determined by an independent appraisal utilizing an income or market valuation approach. The Company discounts appraised value by estimated selling costs to arrive at net fair value. Appraisals conducted by an independent, licensed appraiser outside of the Company as observable market data is categorized as Level 3. The value of business equipment is based upon an outside appraisal (Level 3) if deemed significant, or the net book value on the applicable business’ financial statements (Level 3) if not considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3).

As of March 31, 2022 and December 31, 2021, the fair value measurements for impaired loans with specific allocations were primarily based upon the fair value of the collateral.

The following table summarizes the Company’s financial assets that were measured at fair value on a nonrecurring basis during the period (dollars in thousands):

March 31, 2022	Total		Level 1		Level 2		Level 3
Real Estate	$	1,382	$	-	$	-	$	1,382
Commercial Real Estate		2,787		-		-		2,787
Dealer Finance		41		-		-		41
Impaired loans	$	4,210	$	-	$	-	$	4,210
Bank premises held for sale	$	300	$	-	$	-	$	300

December 31, 2021	Total		Level 1		Level 2		Level 3
Real Estate	$	1,053	$	-	$	-	$	1,053
Commercial Real Estate		5,401		-		-		5,401
Dealer Finance		81		-		-		81
Impaired loans	$	6,535	$	-	$	-	$	6,535
Bank premises held for sale	$	300	$	-	$	-	$	300

The following table presents information about Level 3 Fair Value Measurements for March 31, 2022 (dollars in thousands):

	Fair Value at March 31, 2022		Valuation Technique	Significant Unobservable Inputs	Range
Impaired Loans	$	4,210	Discounted appraised value	Discount for selling costs and marketability	14.00%-32.92% (Average 22.97%)

Note 6. Fair Value, continued

Impaired Loans, continued

The following table presents information about Level 3 Fair Value Measurements for December 31, 2021 (dollars in thousands):

	Fair Value at December 31, 2021		Valuation Technique	Significant Unobservable Inputs	Range
Impaired Loans	$	6,535	Discounted appraised value	Discount for selling costs and marketability	11.76%-28.00% (Average 17.31%)

Other Real Estate Owned

Certain assets such as other real estate owned (OREO) are measured at fair value less cost to sell. Valuation of other real estate owned is determined using current appraisals from independent parties, a Level 2 input. If current appraisals cannot be obtained prior to reporting dates, or if declines in value are identified after a recent appraisal is received, appraisal values are discounted, resulting in Level 3 estimates. If the Company markets the property with a realtor, estimated selling costs reduce the fair value, resulting in a valuation based on Level 3 inputs.

The Company markets other real estate owned and assets held for sale both independently and with local realtors. Properties marketed by realtors are discounted by selling costs. Properties that the Company markets independently are not discounted by selling costs.

The Company did not have any other real estate owned as of March 31, 2022 and December 31, 2021.

XML

Disclosures about Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2022

Allowance for Loan Losses

Disclosures about Fair Value of Financial Instruments

Note 7. Disclosures about Fair Value of Financial Instruments

The following presents the carrying amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments as of March 31, 2022 and December 31, 2021. Fair values for March 31, 2022 and December 31, 2021 are estimated under the exit price notion in accordance with the prospective adoption of ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.

The estimated fair values, and related carrying amounts (dollars in thousands), of the Company’s financial instruments are as follows (dollars in thousands):

			Fair Value Measurements at March 31, 2022 Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at March 31, 2022
Assets:
Cash and cash equivalents	$	48,376	$	48,376	$	-	$	-	$	48,376
Securities		461,947		-		461,947		-		461,947
Loans held for sale		2,479		-		2,479		-		2,479
Loans held for investment, net		659,560		-		-		646,369		646,369
Interest receivable		3,345		-		3,345		-		3,345
Bank owned life insurance		23,042		-		23,042		-		23,042
Forward sales commitments		637		-		637		-		637
Total	$	1,199,386	$	48,376	$	491,450	$	646,369	$	1,186,195
Liabilities:
Deposits	$	1,112,295	$	-	$	1,004,305	$	117,811	$	1,122,116
Long-term debt		21,780		-		-		22,105		22,105
IRLC		262		-		262		-		262
Interest payable		251		-		251		-		251
Total	$	1,134,588	$	-	$	1,004,818	$	139,916	$	1,144,734

Note 7. Disclosures about Fair Value of Financial Instruments, continued

			Fair Value Measurements at December 31, 2021 Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at December 31, 2021
Assets:
Cash and cash equivalents	$	88,121	$	88,121	$	-	$	-	$	88,121
Securities		404,007		-		404,007		-		404,007
Loans held for sale		4,887		-		4,887		-		4,887
IRLC		258		-		258		-		258
Loans held for investment, net		662,421		-		-		652,096		652,096
Interest receivable		3,117		-		3,117		-		3,117
Bank owned life insurance		22,878		-		22,878		-		22,878
Forward sales commitments		112		-		112		-		112
Total	$	1,185,801	$	88,121	$	435,259	$	652,096	$	1,175,476
Liabilities:
Deposits	$	1,080,295	$	-	$	968,604	$	123,718	$	1,092,322
Long-term debt		21,772		-		-		22,443		22,443
Interest payable		491		-		491		-		491
Total	$	1,102,558	$	-	$	969,095	$	146,161	$	1,115,256

XML

Troubled Debt Restructuring

3 Months Ended

Mar. 31, 2022

Troubled Debt Restructuring

Troubled Debt Restructuring

Note 8. Troubled Debt Restructuring

In the determination of the allowance for loan losses, management considers troubled debt restructurings and subsequent defaults in these restructurings by adjusting the loan grades of such loans, which are considered in the qualitative factors within the allowance. Defaults resulting in charge-offs affect the historical loss experience ratios which are a component of the allowance for loan loss methodology. Additionally, specific reserves may be established on restructured loans which are evaluated individually for impairment.

During the three months ended March 31, 2022, there was one loan modification that was considered to be troubled debt restructurings. The modification was due to a revision to the amortization schedule.

Three months ended March 31, 2022 (dollars in thousands):
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real Estate		1	$	164	$	164

On March 31, 2022, there were no loans restructured in the previous 12 months in default or on nonaccrual status. A restructured loan is considered in default when it becomes 90 days past due.

During the three months ended March 31, 2021, there was one loan modification that was considered to be troubled debt restructurings. The modifications included a partial release of the collateral.

Three months ended March 31, 2021 (dollars in thousands):
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real Estate		1	$	110	$	110

On March 31, 2021, there were no loans restructured in the previous 12 months in default or on nonaccrual status. A restructured loan is considered in default when it becomes 90 days past due.

XML

Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2022

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Note 9. Accumulated Other Comprehensive Loss

The balances in accumulated other comprehensive loss are shown in the following tables for March 31, 2022 and 2021 (dollars in thousands):

	Unrealized Securities Gains (Losses)			Adjustments Related to Pension Plan			Accumulated Other Comprehensive Loss
Balance at December 31, 2021	$	(1,801	)	$	(3,291	)	$	(5,092	)
Change in unrealized securities gains (losses), net of tax		(14,259	)		-			(14,259	)
Balance at March 31, 2022	$	(16,060	)	$	(3,291	)	$	(19,351	)

	Unrealized Securities Gains (Losses)			Adjustments Related to Pension Plan			Accumulated Other Comprehensive Loss
Balance at December 31, 2020	$	804		$	(3,821	)	$	(3,017	)
Change in unrealized securities gains (losses), net of tax		(1,114	)		-			(1,114	)
Balance at March 13, 2021	$	(310	)	$	(3,821	)	$	(4,131	)

There were no reclassifications adjustments reported on the consolidated statements of income during the three months ended March 31, 2022 or 2021.

XML

Business Segments

3 Months Ended

Mar. 31, 2022

Business Segments

Business Segments

Note 10. Business Segments

The Company utilizes its subsidiaries to provide multiple business segments including retail banking, mortgage banking, title insurance services, investment services and credit life and accident and health insurance products related to lending. Revenues from retail banking operations consist primarily of interest earned on loans and investment securities and service charges on deposit accounts. Mortgage banking operating revenues consist principally of gains on sales of loans in the secondary market, loan origination fee income and interest earned on mortgage loans held for sale. Revenues from title insurance services, investment services and insurance products consist of commissions on products provided.

The following tables represent revenues and expenses by segment for the three months ended March 31, 2022 and 2021 (dollars in thousands).

	Three Months Ended March 31, 2022
	F&M Bank			F&M Mortgage			TEB Life/FMFS		VS Title		Parent Only			Eliminations			F&M Bank Corp. Consolidated
Revenues:
Interest Income	$	9,037		$	29		$	8	$	-	$	-		$	(13	)	$	9,061
Service charges on deposits		307			-			-		-		-			-			307
Investment services and insurance income		-			-			253		-		-			(2	)		251
Mortgage banking income, net		-			742			-		-		-			-			742
Title insurance income		-			-			-		473		-			-			473
Other operating income		708			2			-		-		-			-			710
Total income (loss)		10,052			773			261		473		-			(15	)		11,544
Expenses:
Interest Expense		874			6			-		-		137			(13	)		1,004
(Recovery of) loan losses		(450	)		-			-		-		-			-			(450	)
Salary and benefit expense		3,947			573			104		301		-			-			4,925
Other operating expenses		3,328			214			21		83		(19	)		(2	)		3,625
Total expense		7,699			793			125		384		118			(15	)		9,104
Net income (loss) before taxes		2,353			(20	)		136		89		(118	)		-			2,440
Income tax expense (benefit)		386			-			31		-		(505	)		-			(88	)
Net Income attributable to F & M Bank Corp.	$	1,967		$	(20	)	$	105	$	89	$	387		$	-		$	2,528
Total Assets	$	1,242,957		$	9,012		$	8,532	$	2,967	$	99,890		$	(125,099	)	$	1,238,259
Goodwill	$	2,868		$	-		$	-	$	3	$	211		$	-		$	3,082

	Three months ended March 31, 2021
	F&M Bank			F&M Mortgage		TEB Life/FMFS		VS Title		Parent Only			Eliminations			F&M Bank Corp. Consolidated
Revenues:
Interest Income	$	8,716		$	72	$	30	$	-	$	-		$	(72	)	$	8,746
Service charges on deposits		285			-		-		-		-			-			285
Investment services and insurance income		-			-		348		-		-			(1	)		347
Mortgage banking income, net		-			1,672		-		-		-			-			1,672
Title insurance income		-			-		-		456		-			-			456
Other operating income (loss)		593			23		-		-		(21	)		-			595
Total income (loss)		9,594			1,767		378		456		(21	)		(73	)		12,101
Expenses:
Interest Expense		876			66		-		-		198			(72	)		1,068
(Recovery of) loan losses		(725	)		-		-		-		-			-			(725	)
Salary and benefit expense		3,514			615		97		286		-			-			4,512
Other operating expenses		2,834			233		6		82		20			(1	)		3,174
Total expense		6,499			914		103		368		218			(73	)		8,029
Net income (loss) before taxes		3,095			853		275		88		(239	)		-			4,072
Income tax expense (benefit)		521			-		57		-		(307	)		-			271
Net Income attributable to F & M Bank Corp.	$	2,574		$	853	$	218	$	88	$	68		$	-		$	3,801
Total Assets	$	1,016,023		$	14,340	$	8,519	$	2,559	$	109,474		$	(139,938	)	$	1,010,977
Goodwill	$	2,670		$	47	$	-	$	3	$	164		$	-		$	2,884

XML

Debt

3 Months Ended

Mar. 31, 2022

Business Segments

Debt

Note 11. Debt

Short-term Debt

The Company utilizes short-term debt such as Federal funds purchased and Federal Home Loan Bank of Atlanta (FHLB) short term borrowings to support the loans held for sale participation program and provide liquidity. Federal funds purchased are unsecured overnight borrowings from other financial institutions. FHLB short term debt, which is secured by the loan portfolio, can be a daily rate variable loan that acts as a line of credit or a fixed rate advance, depending on the need of the Company. There was no short-term debt at March 31, 2022 and December 31, 2021.                                               

Long-term Debt

The Company utilizes the FHLB advance program to fund loan growth and provide liquidity. The interest rates on long-term debt are fixed at the time of the advance; the weighted average interest rate was .81% at March 31, 2022 and at December 31, 2021. The balance of these obligations at March 31, 2022 and December 31, 2021 was $10,000. FHLB advances include a $10,000 letter of credit at FHLB that is pledged to the Commonwealth of Virginia to secure public funds.

On July 29, 2020, the Company sold and issued to certain institutional accredited investors $5,000 in aggregate principal amount of 5.75% fixed rated subordinated notes due July 31, 2027 (the “2027 Notes”) and $7,000 in aggregate principal amount of 6.00% fixed to floating rate subordinated notes due July 31, 2030 (the “2030 Notes”). The 2027 Notes will bear interest at 5.75% per annum, payable semi-annually in arrears. Beginning on July 31, 2022 through maturity, the 2027 Notes may be redeemed, at the Company’s option, on any scheduled interest payment date. The 2027 Notes will mature on July 31, 2027. The 2030 Notes will initially bear interest at 6.00% per annum, beginning July 29, 2020 to but excluding July 31, 2025, payable semi-annually in arrears. From and including July 31, 2025 through July 30, 2030, or up to an early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month SOFR plus 593 basis points, payable quarterly in arrears. Beginning on July 31, 2025 through maturity, the 2030 Notes may be redeemed, at the Company’s option, on any scheduled interest payment date. The 2030 Notes will mature on July 31, 2030. The subordinated notes, net of issuance costs totaled $11,780 at March 31, 2022.

XML

Revenue Recognition

3 Months Ended

Mar. 31, 2022

Revenue Recognition

Revenue Recognition

Note 12. Revenue Recognition

Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. In addition, certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives, and certain credit card fees are also not in scope of the new guidance. Topic 606 is applicable to noninterest revenue streams such as deposit related fees, interchange fees, merchant income, and annuity and insurance commissions. Substantially all of the Company’s revenue is generated from contracts with customers. Noninterest revenue streams in-scope of Topic 606 are discussed below.

Service Charges on Deposit Accounts

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Investment Services and Insurance Income

Investment services and insurance income primarily consists of commissions received on mutual funds and other investment sales. Commissions from the sale of mutual funds and other investments are recognized on trade date, which is when the Company has satisfied its performance obligation.

Title Insurance Income

VSTitle provides title insurance and real estate settlement services. Revenue is recognized at the time the real estate transaction is completed.

Note 12. Revenue Recognition, continued

ATM and Check Card Fees

ATM and Check Card Fees are primarily comprised of debit and credit card income, ATM fees, merchant services income, and other service charges. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees.

Other

Other noninterest income consists of other recurring revenue streams such as safe deposit box rental fees, and other service charges. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation. Other service charges include revenue from processing wire transfers, online payment fees, cashier’s checks, mobile banking fees and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Gains/Losses on sale of OREO

The Company records a gain or loss from the sale of OREO when the control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. The Company recorded no losses on the sale of OREO property in the three months ended March 31, 2022 and 2021, which is presented on the consolidated income statement as a noninterest expense and therefore, not reflected in the table below.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three months ended March 31, 2022 and 2021 (dollars in thousands).

	Three Months Ended March 31,
	2022		2021
Noninterest Income
In-scope of Topic 606:
Service Charges on Deposits	$	307	$	285
Investment Services and Insurance Income		251		347
Title Insurance Income		473		456
ATM and check card fees		563		520
Other		157		63
Noninterest Income (in-scope of Topic 606)		1,751		1,671
Noninterest Income (out-of-scope of Topic 606)		732		1,684
Total Noninterest Income	$	2,483	$	3,355

Contract Balances

A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company’s noninterest revenue streams are largely based on transactional activity. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of March 31, 2022 and December 31, 2021, the Company did not have any significant contract balances.

Note 12. Revenue Recognition, continued

Contract Acquisition Costs

In connection with the adoption of Topic 606, an entity is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a customer if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less. Upon adoption of Topic 606, the Company did not capitalize any contract acquisition cost.

XML

Leases

3 Months Ended

Mar. 31, 2022

Leases

Leases

Note 13. Leases

The Company adopted ASU No. 2016-02 “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The Right-of-use assets and lease liabilities are included in other assets and other liabilities, respectively, in the Consolidated Balance Sheets.

Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.

The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

The following tables present information about the Company’s leases (dollars in thousands):

	March 31, 2022			March 31, 2021
Lease Liabilities	$	911		$	839
Right-of-use assets	$	889		$	814
Weighted average remaining lease term	3.17 years			3.89 years
Weighted average discount rate		3.05	%		3.50	%

	For the Three Months Ended March 31,
	2022		2021
Lease cost
Operating lease cost	$	153	$	26
Total lease cost	$	153	$	26
Cash paid for amounts included in the measurement of lease liabilities	$	181	$	31

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities is as follows (dollars in thousands):                                                                                                                 

	March 31, 2022
Nine months ending December 31, 2022	$	132
Twelve months ending December 31, 2023		135
Twelve months ending December 31, 2024		136
Twelve months ending December 31, 2025		98
Twelve months ending December 31, 2026		70
Thereafter		518
Total undiscounted cash flows	$	1,089
Discount		178
Lease liabilities	$	911

XML

Mortgage Banking and Derivatives

3 Months Ended

Mar. 31, 2022

Leases

Mortgage Banking And Derrivatives

Note 14. Mortgage Banking and Derivatives

Loans Held for Sale

The Company, through the Bank’s mortgage banking subsidiary, F&M Mortgage Company, originates residential mortgage loans for sale in the secondary market. Residential mortgage loans held for sale are sold to the permanent investor with the mortgage servicing rights released. The Company uses fair value accounting for its entire portfolio of loans held for sale (LHFS) in accordance with ASC 820 – Fair Value Measurement and Disclosures. Fair value of the Company’s LHFS is based on observable market prices for the identical instruments traded in the secondary mortgage loan markets in which the Company conducts business total $2,479 as of March 31, 2022 of which $2,544 is related to unpaid principal. The Company’s portfolio of LHFS is classified as Level 2.

Interest Rate Lock Commitments and Forward Sales Commitments

The Company, through F&M Mortgage Company, enters into commitments to originate residential mortgage loans in which the interest rate on the loan is determined prior to funding, termed interest rate lock commitments (IRLCs). Such rate lock commitments on mortgage loans to be sold in the secondary market are considered to be derivatives. Upon entering into a commitment to originate a loan, the Company protects itself from changes in interest rates during the period prior to sale by requiring a firm purchase agreement from a permanent investor before a loan can be closed (forward sales commitment).

The Company locks in the loan and rate with an investor and commits to deliver the loan if settlement occurs on a best efforts basis, thus limiting interest rate risk. Certain additional risks exist if the investor fails to meet its purchase obligation; however, based on historical performance and the size and nature of the investors the Company does not expect them to fail to meet their obligation. The Company determines the fair value of the IRLCs based on the price of the underlying loans obtained from an investor for loans that will be delivered on a best efforts basis while taking into consideration the probability that the rate loan commitments will close.

The fair value of these derivative instruments is reported in “Other Liabilities” in the Consolidated Balance Sheet at March 31, 2022, and totaled $262, with a notional amount of $25,542 and total positions of 82. The fair value of the IRLCs at December 31, 2021 totaled $258, with a notional amount of $18,801 and total positions of 70. Changes in fair value are recorded as a component of “Mortgage banking income, net” in the Consolidated Income Statement for the period ended March 31, 2022. The Company’s IRLCs are classified as Level 2. At March 31, 2022 and December 31, 2021, each IRLC and all LHFS were subject to a forward sales commitment on a best efforts basis.

The Company uses fair value accounting for its forward sales commitments related to IRLCs and LHFS under ASC 825-10-15-4(b). The fair value of forward sales commitments was reported in “Other Assets” in the Consolidated Balance Sheet at March 31, 2022 totaled $637, with a notional amount of $28,085 and total positions of $96. The fair value of forward sales commitments was reported in “Other Assets” in the Consolidated Balance Sheet at December 31, 2021 totaled $112, with a notional amount of $23,721 and total positions of 91.

XML

Stock-Based Compensation

3 Months Ended

Mar. 31, 2022

Leases

Stock-based Compensation

Note 15. Stock-Based Compensation

The Company maintains the F & M Bank Corp. 2020 Stock Incentive Plan, which was designed to further the long-term stability and financial success of the Company by attracting and retaining personnel, including employees, directors, and consultants, through the use of stock and stock-based incentives. It was adopted by the Company’s Board, effective upon shareholder approval on May 2, 2020 and will expire on March 18, 2030. The plan provides for the granting of an option, restricted stock, restricted stock unit, stock appreciation right, or stock award to employees, directors, and consultants. It authorizes the issuance of up to 200,000 shares of the Company’s common stock.

The Company’s Stock Plan Committee administers the plan, identifies which participants will be granted awards, and determines the terms and conditions applicable to the awards. On March 7, 2022 the Company’s Stock Plan Committee awarded 17,763 shares with a fair value of $547,989 from this plan to selected employees. These shares vest 25% over each of the next four years. The Committee also awarded 1,145 shares with a fair value of $35,323 to directors that vested upon issuance. As of March 31, 2022, there was $837 thousand of unrecognized compensation cost related to nonvested restricted stock.

Note 15. Stock-Based Compensation, continued

The following table summarizes the status of the Company’s nonvested awards for the three months ended March 31, 2022 and 2021:

	Three Months Ended March 31,
	2022					2021
	Shares			Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Nonvested, beginning of period		15,869		$	26.78		-	$	-
Granted		17,763			30.85		16,140		26.75
Vested		(3,920	)		30.85		-		-
Forfeited		(474	)		29.10		-		-
Nonvested, end of period		29,238		$	29.20		16,140	$	26.75

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature Of Operations

The Company, through its subsidiary Farmers & Merchants Bank (the “Bank”), operates under a charter issued by the Commonwealth of Virginia and provides commercial banking services. As a state chartered bank, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions and the Federal Reserve Bank. The Bank provides services to customers primarily in the counties of Rockingham, Shenandoah, and Augusta, and the cities of Harrisonburg, Staunton, Waynesboro and Winchester in Virginia. Services are provided at thirteen branch offices and a Dealer Finance Division. The Company offers insurance, mortgage lending, title insurance and financial services through its subsidiaries, TEB Life Insurance Company, Farmers & Merchants Financial Services, Inc. (“FMFS”), F&M Mortgage, and VSTitle, LLC (“VST”).

Risk And Uncertainties

The coronavirus (“COVID-19”) pandemic spread rapidly across the world in the first quarter of 2020 and was declared a pandemic by the World Health Organization. The government and private sector responses to contain its spread began to significantly affect our business operations in March 2020 with branch lobby closings, operations and administrative staff working remotely and the use of virtual meetings. Branch lobbies were only open by appointment from March 2020 to April 12, 2021 and from January 18, 2022 to March 7, 2022. The full impact of COVID-19 and its length and duration remains uncertain at this time. The Company is closely monitoring the effects of the pandemic on our customers and loan portfolio. The risks and uncertainties resulting from the pandemic may adversely affect our future earnings, cash flows and financial condition, including among others, credit losses resulting from financial stress on borrowers, decreased demand for products and operational failures. In addition, significant assumptions, judgments, and estimates used in the preparation of our financial statements, including those associated with evaluations of goodwill for impairment, and allowance for loan losses, may be subject to adjustments in future periods due to the rapidly changing, uncertain and unprecedented nature of the pandemic.

Reclassification

Certain reclassifications have been made to prior period amounts to conform to current period presentation. None of these reclassifications are considered material and have no impact on net income.

Earnings Per Share

Accounting guidance specifies the computation, presentation and disclosure requirements for earnings per share (“EPS”) for entities with publicly held common stock or potential common stock such as options, warrants, convertible securities or contingent stock agreements if those securities trade in a public market. Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive common shares had been issued. The dilutive effect of conversion of preferred stock is reflected in the diluted earnings per common share calculation. All of the Company’s outstanding preferred stock was redeemed by the Company for cash or converted to common stock during the fourth quarter of 2021. Nonvested restricted shares are included in the computation of basic earnings per share as the holder is entitled to full shareholder benefits during the vesting period, including voting rights and sharing in nonforfeitable dividends.

Net income available to common stockholders represents consolidated net income adjusted for preferred dividends declared. The following table provides a reconciliation of net income to net income available to common stockholders for the periods presented (dollars in thousands):

	For the Three months ended		For the Three months ended
	March 31, 2022		March 31, 2021
Earnings available to common stockholders:
Net income	$	2,528	$	3,801
Preferred stock dividends		-		65
Net income available to common stockholders	$	2,528	$	3,736

The following table shows the effect of dilutive preferred stock conversion on the Company’s earnings per share for the periods indicated (dollars in thousands):

	Three months ended March 31, 2022						Three months ended March 31, 2021
	Income		Weighted Average Shares		Per Share Amounts		Income		Weighted Average Shares		Per Share Amounts
Basic EPS	$	2,528		3,434,892	$	0.74	$	3,736		3,205,074	$	1.17
Effect of Dilutive Securities:
Convertible Preferred Stock		-		-		-		65		228,118		(0.06	)
Diluted EPS	$	2,528		3,434,892	$	0.74	$	3,801		3,433,192	$	1.11

Principles Of Consolidation

The accompanying unaudited consolidated financial statements include the accounts of Farmers & Merchants Bank, TEB Life Insurance Company, Farmers & Merchants Financial Services, Inc., VBS Mortgage, LLC (dba F&M Mortgage), and VSTitle, LLC and were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for the interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). Accordingly, these financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).

The accompanying unaudited consolidated financial statements include the accounts of the Company, the Bank and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Basis Of Presentation

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and fair value. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for fair presentation of the results of operations in these financial statements, have been made.

XML

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule Of Effect Of Dilutive Preferred Stock Conversion

	For the Three months ended		For the Three months ended
	March 31, 2022		March 31, 2021
Earnings available to common stockholders:
Net income	$	2,528	$	3,801
Preferred stock dividends		-		65
Net income available to common stockholders	$	2,528	$	3,736

Schedule Of Earnings Per Share

	Three months ended March 31, 2022						Three months ended March 31, 2021
	Income		Weighted Average Shares		Per Share Amounts		Income		Weighted Average Shares		Per Share Amounts
Basic EPS	$	2,528		3,434,892	$	0.74	$	3,736		3,205,074	$	1.17
Effect of Dilutive Securities:
Convertible Preferred Stock		-		-		-		65		228,118		(0.06	)
Diluted EPS	$	2,528		3,434,892	$	0.74	$	3,801		3,433,192	$	1.11

XML

Investment Securities (Tables)

3 Months Ended

Mar. 31, 2022

Investment Securities (Tables)

Schedule Of Amortized Cost And Fair Value For Securities

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2022
U. S. Government Treasuries	$	44,759	$	-	$	1,891	$	42,868
U. S. Government sponsored enterprises		163,460		-		4,920		158,540
Securities issued by States and political subdivisions in the U.S.		34,570		-		1,896		32,674
Mortgage-backed obligations of federal agencies		208,812		248		11,466		197,594
Corporate debt security		30,550		318		722		30,146
Total Securities Available for Sale	$	482,151	$	566	$	20,895	$	461,822
December 31, 2021
U. S. Government Treasuries	$	29,847	$	-	$	365	$	29,482
U. S. Government sponsored enterprises		134,466		-		752		133,714
Securities issued by States and political subdivisions of the U.S.		34,078		406		147		34,337
Mortgage-backed obligations of federal agencies		185,216		522		2,091		183,647
Corporate debt securities		22,555		372		225		22,702
Total Securities Available for Sale	$	406,162	$	1,300	$	3,580	$	403,882

Schedule Of Amortized Cost And Fair Value Of Securities Current

	Securities Held to Maturity				Securities Available for Sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	125	$	125	$	4,835	$	4,797
Due after one year through five years		-		-		195,056		189,575
Due after five years		-		-		105,218		100,754
Due after ten years		-		-		177,042		166,696
Total	$	125	$	125	$	482,151	$	461,822

Schedule Amortized Cost And Fair Value Of Securities, Maturity

	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2021
U. S. Government treasuries	$	29,481	$	365	$	-	$	-	$	29,481	$	365
U. S. Government sponsored enterprises		93,714		752		-		-		93,714		752
Securities issued by State and political subdivisions in the U. S.		13,308		147		-		-		13,308		147
Mortgage-backed obligations of federal agencies		126,501		1,871		10,074		220		136,575		2,091
Corporate debt securities		8,825		225		-		-		8,825		225
Total	$	271,829	$	3,360	$	10,074	$	220	$	281,903	$	3,850

Schedule Of Unrealized Losses

	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2022
U. S. Government treasuries	$	28,752	$	1,074	$	9,088	$	817	$	37,840	$	1,891
U. S. Government sponsored enterprises		135,152		3,315		23,388		1,605		158,540		4,920
Securities issued by States and political subdivisions in the U.S.		32,674		1,896		-		-		32,674		1,896
Mortgage-backed obligations of federal agencies		129,236		8,898		31,274		2,568		160,510		11,466
Corporate debt security		15,339		711		489		11		15,828		722
Total	$	341,153	$	15,894	$	64,239	$	5,001	$	405,392	$	20,895

XML

Loans (Tables)

3 Months Ended

Mar. 31, 2022

Loans

Schedule Of Loans Outstanding

	2022			2021
Construction/Land Development	$	72,248		$	75,236
Farmland		65,503			66,344
Real Estate		138,620			139,552
Multi-Family		5,667			4,887
Commercial Real Estate		162,340			163,564
Home Equity – closed end		5,732			6,262
Home Equity – open end		45,415			44,247
Commercial & Industrial – Non-Real Estate		42,720			44,224
Consumer		7,529			8,036
Dealer Finance		111,237			107,346
Credit Cards		2,869			3,000
Gross loans		659,880			662,698
Less: Deferred loan fees, net of costs		(320	)		(277	)
Total	$	659,560		$	662,421

Summary Of Information Pertaining To Impaired Loans

	March 31, 2022						December 31, 2021
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment(1)		Balance		Allowance		Investment		Balance		Allowance
Impaired loans without a valuation allowance:
Construction/Land Development	$	637	$	637	$	-	$	645	$	645	$	-
Farmland		2,215		2,215		-		2,286		2,286		-
Real Estate		2,384		2,384		-		2,748		2,748		-
Multi-Family		-		-		-		-		-		-
Commercial Real Estate		11,032		11,032		-		8,494		8,494		-
Home Equity – closed end		-		-		-		147		147		-
Home Equity – open end		-		-		-		-		-		-
Commercial & Industrial – Non-Real Estate		-		-		-		-		-		-
Consumer		-		-		-		5		5		-
Credit cards		-		-		-		-		-		-
Dealer Finance		15		15		-		12		12		-
		16,283		16,283		-		14,337		14,337		-
Impaired loans with a valuation allowance
Construction/Land Development		-		-		-		-		-		-
Farmland		-		-		-		-		-		-
Real Estate		1,495		1,495		113		1,172		1,172		119
Multi-Family		-		-		-		-		-		-
Commercial Real Estate		3,243		3,243		456		6,004		6,004		603
Home Equity – closed end		-		-		-		-		-		-
Home Equity – open end		-		-		-		-		-		-
Commercial & Industrial – Non-Real Estate		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Credit cards		-		-		-		-		-		-
Dealer Finance		54		54		13		95		95		14
		4,792		4,792		582		7,271		7,271		736
Total impaired loans	$	21,075	$	21,075	$	582	$	21,608	$	21,608	$	736

Summary Of The Average Investment And Interest Income

	March 31, 2022				December 31, 2021
	Average Recorded		Interest Income		Average Recorded		Interest Income
	Investment		Recognized		Investment		Recognized
Impaired loans without a valuation allowance:
Construction/Land Development	$	641	$	6	$	984	$	29
Farmland		2,251		70		1,760		126
Real Estate		2,566		33		4,575		155
Multi-Family		-		-		-		-
Commercial Real Estate		9,763		186		9,225		253
Home Equity – closed end		74		-		414		18
Home Equity – open end		-		-		-		-
Commercial & Industrial – Non-Real Estate		-		-		2		-
Consumer		3		-		1		-
Credit Cards		-		-		-		-
Dealer Finance		14		-		14		1
		15,312		295		16,975		582
Impaired loans with a valuation allowance:
Construction/Land Development	$	-	$	-	$	-	$	-
Farmland		-		-		420		-
Real Estate		1,334		16		1,399		45
Multi-Family		-		-		-		-
Commercial Real Estate		4,624		42		6,201		172
Home Equity – closed end		-		-		-		-
Home Equity – open end		-		-		-		-
Commercial & Industrial – Non-Real Estate		-		-		-		-
Consumer		-		-		-		-
Credit Card		-		-		-		-
Dealer Finance		75		1		112		9
		6,033		59		8,132		226
Total Impaired Loans	$	21,345	$	354	$	25,107	$	808

Schedule Of Recorded Investment Of Past Due Loans

March 31, 2022	30-59 Days Past due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current			Total Loan Receivable			Non-Accrual Loans		Recorded Investment >90 days & accruing
Construction/Land Development	$	31	$	55	$	-	$	86	$	72,162		$	72,248		$	86	$	-
Farmland		20		-		-		20		65,483			65,503			1,259		-
Real Estate		873		124		366		1,363		137,257			138,620			551		-
Multi-Family		-		-		-		-		5,667			5,667			-		-
Commercial Real Estate		244		-		108		352		161,988			162,340			2,798		-
Home Equity – closed end		106		-		-		106		5,626			5,732			-		-
Home Equity – open end		333		-		7		340		45,075			45,415			-		7
Commercial & Industrial – Non- Real Estate		28		-		77		105		42,615			42,720			35		41
Consumer		16		-		-		16		7,513			7,529			-		-
Dealer Finance		477		146		-		623		110,614			111,237			22		-
Credit Cards		14		2		6		22		2,847			2,869			-		6
Less: Deferred loan fees, net of costs		-		-		-		-		(320	)		(320	)		-		-
Total	$	2,142	$	327	$	564	$	3,033	$	656,527		$	659,560		$	4,751	$	54

December 31, 2021	30-59 Days Past due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current			Total Loan Receivable			Non-Accrual Loans		Recorded Investment >90 days & accruing
Construction/Land Development	$	360	$	41	$	38	$	439	$	74,797		$	75,236		$	302	$	-
Farmland		-		-		-		-		66,344			66,344			1,320		-
Real Estate		1,254		89		395		1,738		137,814			139,552			827		-
Multi-Family		-		-		-		-		4,887			4,887			-		-
Commercial Real Estate		-		-		108		108		163,456			163,564			2,975		-
Home Equity – closed end		53		-		-		53		6,209			6,262			-		-
Home Equity – open end		471		216		-		687		43,560			44,247			-		-
Commercial & Industrial – Non- Real Estate		35		1		43		79		44,145			44,224			-		43
Consumer		9		67		-		76		7,960			8,036			1		-
Dealer Finance		694		91		16		801		106,545			107,346			40		-
Credit Cards		16		-		-		16		2,984			3,000			-		-
Less: Deferred loan fees, net of costs		-		-		-		-		(277	)		(277	)		-		-
Total	$	2,892	$	505	$	600	$	3,997	$	658,424		$	662,421		$	5,465	$	43

XML

Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2022

Allowance for Loan Losses (Tables)

Summary Loan Loss Allowance Transactions

March 31, 2022	Beginning Balance		Charge-offs		Recoveries		Provision			Ending Balance		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Allowance for loan losses:
Construction/Land Development	$	977	$	-	$	-	$	(275	)	$	702	$	-	$	702
Farmland		448		-		-		4			452		-		452
Real Estate		1,162		-		-		2			1,164		113		1,051
Multi-Family		29		-		-		6			35		-		35
Commercial Real Estate		2,205		-		-		(112	)		2,093		456		1,637
Home Equity – closed end		41		-		-		(2	)		39		-		39
Home Equity – open end		407		-		129		(162	)		374		-		374
Commercial & Industrial – Non-Real Estate		288		1		30		(7	)		310		-		310
Consumer		520		21		11		13			523		-		523
Dealer Finance		1,601		204		152		85			1,634		13		1,621
Credit Cards		70		12		7		(2	)		63		-		63
Total	$	7,748	$	238	$	329	$	(450	)	$	7,389	$	582	$	6,807

December 31, 2021	Beginning Balance		Charge-offs		Recoveries		Provision			Ending Balance		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Allowance for loan losses:
Construction/Land Development	$	1,249	$	-	$	307	$	(579	)	$	977	$	-	$	977
Farmland		731		-		-		(283	)		448		-		448
Real Estate		1,624		-		76		(538	)		1,162		119		1,043
Multi-Family		54		-		-		(25	)		29		-		29
Commercial Real Estate		3,662		-		19		(1,476	)		2,205		603		1,602
Home Equity – closed end		55		-		-		(14	)		41		-		41
Home Equity – open end		463		-		13		(69	)		407		-		407
Commercial & Industrial – Non- Real Estate		363		40		37		(72	)		288		-		288
Consumer		521		33		24		8			520		-		520
Dealer Finance		1,674		1,038		754		211			1,601		14		1,587
Credit Cards		79		54		29		16			70		-		70
Total	$	10,475	$	1,165	$	1,259	$	(2,821	)	$	7,748	$	736	$	7,012

Schedule Of Recorded Investment In Loans

March 31, 2022	Loan Receivable			Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Construction/Land Development	$	72,248		$	637	$	71,611
Farmland		65,503			2,215		63,288
Real Estate		138,620			3,879		134,741
Multi-Family		5,667			-		5,667
Commercial Real Estate		162,340			14,275		148,065
Home Equity – closed end		5,732			-		5,732
Home Equity –open end		45,415			-		45,415
Commercial & Industrial – Non-Real Estate		42,720			-		42,720
Consumer		7,529			-		7,529
Dealer Finance		111,237			69		111,168
Credit Cards		2,869			-		2,869
Gross loans		659,880			21,075		638,805
Less: Deferred loan fees, net of costs		(320	)		-		(320	)
Total	$	659,560		$	21,075	$	638,485

December 31, 2021	Loan Receivable			Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Construction/Land Development	$	75,236		$	645	$	74,591
Farmland		66,344			2,286		64,058
Real Estate		139,552			3,920		135,632
Multi-Family		4,887			-		4,887
Commercial Real Estate		163,564			14,498		149,066
Home Equity – closed end		6,262			147		6,115
Home Equity –open end		44,247			-		44,247
Commercial & Industrial – Non-Real Estate		44,224			-		44,224
Consumer		8,036			5		8,031
Dealer Finance		107,346			107		107,239
Credit Cards		3,000			-		3,000
Gross Loans		662,698			21,608		641,090
Less: Deferred loan fees, net of costs		(277	)		-		(277	)
Total	$	662,421		$	21,608	$	640,813

Schedule Of Loan Portfolio

March 31, 2022	Grade 1 Minimal Risk		Grade 2 Modest Risk		Grade 3 Average Risk		Grade 4 Acceptable Risk		Grade 5 Marginally Acceptable		Grade 6 Watch		Grade 7 Substandard		Grade 8 Doubtful		Total
Construction/Land Development	$	-	$	5	$	10,237	$	42,138	$	18,116	$	1,666	$	86	$	-	$	72,248
Farmland		56		284		6,541		42,425		13,409		1,529		1,259		-		65,503
Real Estate		-		893		29,446		64,516		28,028		11,129		4,608		-		138,620
Multi-Family		-		-		1,007		2,838		1,700		122		-		-		5,667
Commercial Real Estate		-		1,250		31,985		71,222		41,352		3,890		12,641		-		162,340
Home Equity – closed end		-		58		1,051		2,968		685		970		-		-		5,732
Home Equity – open end		-		1,336		17,138		22,957		2,278		1,484		222		-		45,415
Commercial & Industrial -Non-Real Estate		14		996		9,704		23,440		7,927		543		96		-		42,720
Consumer (excluding dealer)		18		276		3,420		3,598		149		68		-		-		7,529
Gross Loans	$	88	$	5,098	$	110,529	$	276,102	$	113,644	$	21,401	$	18,912	$	-	$	545,774
Less: Deferred loan fees, net of costs																		(320	)
Total																	$	545,454
											Credit Cards		Dealer Finance
Performing											$	2,863	$	111,215
Non-performing												6		22
Total											$	2,869	$	111,237

December 31, 2021	Grade 1 Minimal Risk		Grade 2 Modest Risk		Grade 3 Average Risk		Grade 4 Acceptable Risk		Grade 5 Marginally Acceptable		Grade 6 Watch		Grade 7 Substandard		Grade 8 Doubtful		Total
Construction/Land Development	$	-	$	6	$	9,952	$	43,861	$	19,457	$	1,658	$	302	$	-	$	75,236
Farmland		56		291		6,804		42,615		13,620		1,638		1,320		-		66,344
Real Estate		-		1,128		30,268		61,940		28,895		12,462		4,859		-		139,552
Multi-Family		-		-		1,021		2,586		1,154		126		-		-		4,887
Commercial Real Estate		-		2,124		36,308		72,414		35,444		4,428		12,846		-		163,564
Home Equity – closed end		-		61		1,268		3,103		762		1,068		-		-		6,262
Home Equity – open end		-		1,293		17,333		21,296		2,477		1,632		216		-		44,247
Commercial & Industrial - Non-Real Estate		-		1,001		7,562		21,527		13,538		533		63		-		44,224
Consumer (excluding dealer)		10		522		2,919		3,526		980		79		-		-		8,036
Gross loans	$	66	$	6,426	$	113,435	$	272,868	$	116,327	$	23,624	$	19,606	$	-	$	552,352
Less: Deferred loan fees, net of costs																		(277	)
Total																	$	552,075
											Credit Cards		Dealer Finance
Performing											$	3,000	$	107,330
Non-performing												-		16
Total											$	3,000	$	107,346

XML

Employee Benefit Plan (Tables)

3 Months Ended

Mar. 31, 2022

Employee Benefit Plan

Schedule Of Employee Benefit Plan

	Three Months Ended
	March 31, 2022			March 31, 2021
Service cost	$	190		$	216
Interest cost		104			95
Expected return on plan assets		(195	)		(198	)
Amortization of net loss		58			72
Net periodic pension cost	$	157		$	185

XML

Fair Value (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value (Tables)

Schedule Of Assets And Liabilities At Fair Value On Recurring Basis

March 31, 2022	Total		Level 1		Level 2		Level 3
Assets:
Loans held for sale, F&M Mortgage	$	2,479	$	-	$	2,479	$	-
U. S. Treasury securities		42,868		-		42,868		-
U. S. Government sponsored enterprises		158,540		-		158,540		-
Securities issued by States and political subdivisions in the U. S.		32,674		-		32,674		-
Mortgage-backed obligations of federal agencies		197,594		-		197,594		-
Corporate debt securities		30,146		-		30,146		-
Forward Sales Commitments		637		-		637		-
Assets at Fair Value	$	464,938	$	-	$	464,938	$	-
Liabilities:
Derivatives - ICD	$	3	$	-	$	3	$	-
IRLC		262		-		262		-
Liabilities at Fair Value	$	265	$	-	$	265	$	-

December 31, 2021	Total		Level 1		Level 2		Level 3
Assets:
Loans held for sale, F&M Mortgage	$	4,887	$	-	$	4,887	$	-
IRLC		258		-		258		-
U. S. Treasury securities		29,482		-		29,482		-
U.S. Government sponsored enterprises		133,714		-		133,714		-
Securities issued by States and political subdivisions of the US		34,337		-		34,337		-
Mortgage-backed obligations of federal agencies		183,647		-		183,647		-
Corporate debt securities		22,702		-		22,702		-
Forward sales commitments		112		-		112		-
Assets at Fair Value	$	409,139	$	-	$	409,139	$	-
Liabilities:
Derivatives – ICD	$	3	$	-	$	3	$	-
Liabilities at Fair Value	$	3	$	-	$	3	$	-

Summarizes Measured At Fair Value On A Nonrecurring Basis

March 31, 2022	Total		Level 1		Level 2		Level 3
Real Estate	$	1,382	$	-	$	-	$	1,382
Commercial Real Estate		2,787		-		-		2,787
Dealer Finance		41		-		-		41
Impaired loans	$	4,210	$	-	$	-	$	4,210
Bank premises held for sale	$	300	$	-	$	-	$	300

December 31, 2021	Total		Level 1		Level 2		Level 3
Real Estate	$	1,053	$	-	$	-	$	1,053
Commercial Real Estate		5,401		-		-		5,401
Dealer Finance		81		-		-		81
Impaired loans	$	6,535	$	-	$	-	$	6,535
Bank premises held for sale	$	300	$	-	$	-	$	300

Schedule Fair Value Measurements Level 3

	Fair Value at March 31, 2022		Valuation Technique	Significant Unobservable Inputs	Range
Impaired Loans	$	4,210	Discounted appraised value	Discount for selling costs and marketability	14.00%-32.92% (Average 22.97%)

Summary Of Other Real Estate Owned

	Fair Value at December 31, 2021		Valuation Technique	Significant Unobservable Inputs	Range
Impaired Loans	$	6,535	Discounted appraised value	Discount for selling costs and marketability	11.76%-28.00% (Average 17.31%)

XML

Disclosures About Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2022

Disclosures About Fair Value of Financial Instruments (Tables)

Schedule Of Carrying Value And Estimated Fair Value For Financial Instruments

			Fair Value Measurements at March 31, 2022 Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at March 31, 2022
Assets:
Cash and cash equivalents	$	48,376	$	48,376	$	-	$	-	$	48,376
Securities		461,947		-		461,947		-		461,947
Loans held for sale		2,479		-		2,479		-		2,479
Loans held for investment, net		659,560		-		-		646,369		646,369
Interest receivable		3,345		-		3,345		-		3,345
Bank owned life insurance		23,042		-		23,042		-		23,042
Forward sales commitments		637		-		637		-		637
Total	$	1,199,386	$	48,376	$	491,450	$	646,369	$	1,186,195
Liabilities:
Deposits	$	1,112,295	$	-	$	1,004,305	$	117,811	$	1,122,116
Long-term debt		21,780		-		-		22,105		22,105
IRLC		262		-		262		-		262
Interest payable		251		-		251		-		251
Total	$	1,134,588	$	-	$	1,004,818	$	139,916	$	1,144,734

			Fair Value Measurements at December 31, 2021 Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at December 31, 2021
Assets:
Cash and cash equivalents	$	88,121	$	88,121	$	-	$	-	$	88,121
Securities		404,007		-		404,007		-		404,007
Loans held for sale		4,887		-		4,887		-		4,887
IRLC		258		-		258		-		258
Loans held for investment, net		662,421		-		-		652,096		652,096
Interest receivable		3,117		-		3,117		-		3,117
Bank owned life insurance		22,878		-		22,878		-		22,878
Forward sales commitments		112		-		112		-		112
Total	$	1,185,801	$	88,121	$	435,259	$	652,096	$	1,175,476
Liabilities:
Deposits	$	1,080,295	$	-	$	968,604	$	123,718	$	1,092,322
Long-term debt		21,772		-		-		22,443		22,443
Interest payable		491		-		491		-		491
Total	$	1,102,558	$	-	$	969,095	$	146,161	$	1,115,256

XML

Troubled Debt Restructuring (Tables)

3 Months Ended

Mar. 31, 2022

Troubled Debt Restructuring (Tables)

Schedule Of Loan Restructured

Three months ended March 31, 2022 (dollars in thousands):
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real Estate		1	$	164	$	164

Three months ended March 31, 2021 (dollars in thousands):
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real Estate		1	$	110	$	110

XML

Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2022

Accumulated Other Comprehensive Loss

Schedule Of Accumulated Other Comprehensive Loss

	Unrealized Securities Gains (Losses)			Adjustments Related to Pension Plan			Accumulated Other Comprehensive Loss
Balance at December 31, 2021	$	(1,801	)	$	(3,291	)	$	(5,092	)
Change in unrealized securities gains (losses), net of tax		(14,259	)		-			(14,259	)
Balance at March 31, 2022	$	(16,060	)	$	(3,291	)	$	(19,351	)

	Unrealized Securities Gains (Losses)			Adjustments Related to Pension Plan			Accumulated Other Comprehensive Loss
Balance at December 31, 2020	$	804		$	(3,821	)	$	(3,017	)
Change in unrealized securities gains (losses), net of tax		(1,114	)		-			(1,114	)
Balance at March 13, 2021	$	(310	)	$	(3,821	)	$	(4,131	)

XML

Business Segments (Tables)

3 Months Ended

Mar. 31, 2022

Business Segments

Schedule Of Business Segments

	Three Months Ended March 31, 2022
	F&M Bank			F&M Mortgage			TEB Life/FMFS		VS Title		Parent Only			Eliminations			F&M Bank Corp. Consolidated
Revenues:
Interest Income	$	9,037		$	29		$	8	$	-	$	-		$	(13	)	$	9,061
Service charges on deposits		307			-			-		-		-			-			307
Investment services and insurance income		-			-			253		-		-			(2	)		251
Mortgage banking income, net		-			742			-		-		-			-			742
Title insurance income		-			-			-		473		-			-			473
Other operating income		708			2			-		-		-			-			710
Total income (loss)		10,052			773			261		473		-			(15	)		11,544
Expenses:
Interest Expense		874			6			-		-		137			(13	)		1,004
(Recovery of) loan losses		(450	)		-			-		-		-			-			(450	)
Salary and benefit expense		3,947			573			104		301		-			-			4,925
Other operating expenses		3,328			214			21		83		(19	)		(2	)		3,625
Total expense		7,699			793			125		384		118			(15	)		9,104
Net income (loss) before taxes		2,353			(20	)		136		89		(118	)		-			2,440
Income tax expense (benefit)		386			-			31		-		(505	)		-			(88	)
Net Income attributable to F & M Bank Corp.	$	1,967		$	(20	)	$	105	$	89	$	387		$	-		$	2,528
Total Assets	$	1,242,957		$	9,012		$	8,532	$	2,967	$	99,890		$	(125,099	)	$	1,238,259
Goodwill	$	2,868		$	-		$	-	$	3	$	211		$	-		$	3,082

	Three months ended March 31, 2021
	F&M Bank			F&M Mortgage		TEB Life/FMFS		VS Title		Parent Only			Eliminations			F&M Bank Corp. Consolidated
Revenues:
Interest Income	$	8,716		$	72	$	30	$	-	$	-		$	(72	)	$	8,746
Service charges on deposits		285			-		-		-		-			-			285
Investment services and insurance income		-			-		348		-		-			(1	)		347
Mortgage banking income, net		-			1,672		-		-		-			-			1,672
Title insurance income		-			-		-		456		-			-			456
Other operating income (loss)		593			23		-		-		(21	)		-			595
Total income (loss)		9,594			1,767		378		456		(21	)		(73	)		12,101
Expenses:
Interest Expense		876			66		-		-		198			(72	)		1,068
(Recovery of) loan losses		(725	)		-		-		-		-			-			(725	)
Salary and benefit expense		3,514			615		97		286		-			-			4,512
Other operating expenses		2,834			233		6		82		20			(1	)		3,174
Total expense		6,499			914		103		368		218			(73	)		8,029
Net income (loss) before taxes		3,095			853		275		88		(239	)		-			4,072
Income tax expense (benefit)		521			-		57		-		(307	)		-			271
Net Income attributable to F & M Bank Corp.	$	2,574		$	853	$	218	$	88	$	68		$	-		$	3,801
Total Assets	$	1,016,023		$	14,340	$	8,519	$	2,559	$	109,474		$	(139,938	)	$	1,010,977
Goodwill	$	2,670		$	47	$	-	$	3	$	164		$	-		$	2,884

XML

Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2022

Revenue Recognition

Summary Of Noninterest Income, Segregated By Revenue Streams

	Three Months Ended March 31,
	2022		2021
Noninterest Income
In-scope of Topic 606:
Service Charges on Deposits	$	307	$	285
Investment Services and Insurance Income		251		347
Title Insurance Income		473		456
ATM and check card fees		563		520
Other		157		63
Noninterest Income (in-scope of Topic 606)		1,751		1,671
Noninterest Income (out-of-scope of Topic 606)		732		1,684
Total Noninterest Income	$	2,483	$	3,355

XML

Leases (Tables)

3 Months Ended

Mar. 31, 2022

Leases

Schedule Of Leases

	March 31, 2022			March 31, 2021
Lease Liabilities	$	911		$	839
Right-of-use assets	$	889		$	814
Weighted average remaining lease term	3.17 years			3.89 years
Weighted average discount rate		3.05	%		3.50	%

	For the Three Months Ended March 31,
	2022		2021
Lease cost
Operating lease cost	$	153	$	26
Total lease cost	$	153	$	26
Cash paid for amounts included in the measurement of lease liabilities	$	181	$	31

Schedule Of Operating Lease Liabilities And Reconciliation

	March 31, 2022
Nine months ending December 31, 2022	$	132
Twelve months ending December 31, 2023		135
Twelve months ending December 31, 2024		136
Twelve months ending December 31, 2025		98
Twelve months ending December 31, 2026		70
Thereafter		518
Total undiscounted cash flows	$	1,089
Discount		178
Lease liabilities	$	911

XML

Stock-Based Compensation, continued (Table)

3 Months Ended

Mar. 31, 2022

Leases

Stock Based Compensation Continued (table)

	Three Months Ended March 31,
	2022					2021
	Shares			Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Nonvested, beginning of period		15,869		$	26.78		-	$	-
Granted		17,763			30.85		16,140		26.75
Vested		(3,920	)		30.85		-		-
Forfeited		(474	)		29.10		-		-
Nonvested, end of period		29,238		$	29.20		16,140	$	26.75

XML

Summary of Significant Accounting Policies (Details 1) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Net Income	$ 2,528,000	$ 3,801,000
Preferred Stock Dividends	0	65
Net Income Available To Common Stockholders	$ 2,528,000	$ 3,736,000

XML

Summary of Significant Accounting Policies (Details 2) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basic Eps, Income	$ 2,528,000	$ 3,736,000
Effect Of Dilutive Securities Convertible Preferred Stock, Income	0	65,000
Diluted Eps, Income	$ 2,528,000	$ 3,801,000
Basic Eps, Shares	3,434,892	3,205,074
Effect Of Dilutive Securities Convertible Preferred Stock, Shares	0	228,118
Diluted Eps, Share	3,434,892	3,433,192
Basic Eps, Per Shares	$ 0.74	$ 1.17
Effect Of Dilutive Securities Convertible Preferred Stock, Per Shares	0.0	(0.06)
Diluted Eps, Per Shares	$ 0.74	$ 1.11

XML

Investment Securities (Details) - Treasury and agency obligations - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Amortized Cost	$ 125,000	$ 125,000
Unrealized Gains	0	0
Unrealized Losses	0	0
Fair Value	$ 125,000	$ 125,000

XML

Investment Securities (Details 1) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Fair Value	$ 461,822	$ 403,882
Amortized Cost	482,151,000	406,162,000
Gross Unrealized Gains	566,000	1,300,000
Gross Unrealized Losses	20,895,000	3,580,000
U S Treasuries [Member]
Fair Value	42,868,000	29,482,000
Amortized Cost	44,759,000	29,847,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	1,891,000	365,000
U. S. Government Sponsored Enterprises [Member]
Fair Value	158,540,000	133,714,000
Amortized Cost	163,460,000	134,466,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	4,920,000	752,000
Securities issued by States and political subdivisions in the U.S. [Member]
Fair Value	32,674,000	34,337,000
Amortized Cost	34,570,000	34,078,000
Gross Unrealized Gains	0	406,000
Gross Unrealized Losses	1,896,000	147,000
Mortgage-backed obligations of federal agencies [Member]
Fair Value	197,594,000	183,647,000
Amortized Cost	208,812,000	185,216,000
Gross Unrealized Gains	248,000	522,000
Gross Unrealized Losses	11,466,000	2,091,000
Corporate debt security [Member]
Fair Value	30,146,000	22,702,000
Amortized Cost	30,550,000	22,555,000
Gross Unrealized Gains	318,000	372,000
Gross Unrealized Losses	$ 722,000	$ 225,000

XML

Investment Securities (Details 2) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Total, Amortized Cost	$ 125	$ 125
Securities Held to Maturity [Member]
Due In One Year Or Less, Amortized Cost	125,000
Due In One Year Or Less, Fair Value	125,000
Due After One Year Through Five Years, Amortized Cost	0
Due After One Year Through Five Years, Fair Value	0
Due After Five Years Through Ten Years, Amortized Cost	0
Due After Five Years Through Ten Years, Fair Value	0
Due After Ten Years, Amortized Cost	0
Due After Ten Years, Fair Value	0
Total, Amortized Cost	125,000
Total Fair Value	125,000
Securities Available for Sale [Member]
Due In One Year Or Less, Amortized Cost	4,835,000
Due In One Year Or Less, Fair Value	4,797,000
Due After One Year Through Five Years, Amortized Cost	195,056,000
Due After One Year Through Five Years, Fair Value	189,575,000
Due After Five Years Through Ten Years, Amortized Cost	105,218,000
Due After Five Years Through Ten Years, Fair Value	100,754,000
Due After Ten Years, Amortized Cost	177,042,000
Due After Ten Years, Fair Value	166,696,000
Total, Amortized Cost	482,151,000
Total Fair Value	$ 461,822,000

XML

Investment Securities (Details 3) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Fair Value Less Than 12 Months	$ 341,153,000	$ 271,829,000
Unrealized Losses Less Than 12 Months	15,894,000	3,360,000
Fair Value More Than 12 Months	64,239,000	10,074,000
Unrealized Losses More Than 12 Months	5,001,000	220,000
Fair Value Total	405,392,000	281,903,000
Unrealized Losses Total	20,895,000	3,850,000
U S Treasuries [Member]
Fair Value Less Than 12 Months	28,752,000	29,481,000
Unrealized Losses Less Than 12 Months	1,074,000	365,000
Fair Value More Than 12 Months	9,088,000	0
Unrealized Losses More Than 12 Months	817,000	0
Fair Value Total	37,840,000	29,481,000
Unrealized Losses Total	1,891,000	365,000
U. S. Government Sponsored Enterprises [Member]
Fair Value Less Than 12 Months	135,152,000	93,714,000
Unrealized Losses Less Than 12 Months	3,315,000	752,000
Fair Value More Than 12 Months	23,388,000	0
Unrealized Losses More Than 12 Months	1,605,000	0
Fair Value Total	158,540,000	93,714,000
Unrealized Losses Total	4,920	752
Securities issued by States and political subdivisions in the U.S. [Member]
Fair Value Less Than 12 Months	32,674,000	13,308,000
Unrealized Losses Less Than 12 Months	1,896,000	147,000
Fair Value More Than 12 Months	0	0
Unrealized Losses More Than 12 Months	0	0
Fair Value Total	32,674,000	13,308,000
Unrealized Losses Total	1,896,000	147,000
Mortgage-backed obligations of federal agencies [Member]
Fair Value Less Than 12 Months	129,236,000	126,501,000
Unrealized Losses Less Than 12 Months	8,898,000	1,871,000
Fair Value More Than 12 Months	31,274,000	10,074,000
Unrealized Losses More Than 12 Months	2,568,000	220,000
Fair Value Total	160,510,000	136,575,000
Unrealized Losses Total	11,466,000	2,091,000
Corporate debt security [Member]
Fair Value Less Than 12 Months	15,339,000	8,825,000
Unrealized Losses Less Than 12 Months	711,000	225,000
Fair Value More Than 12 Months	489,000	0
Unrealized Losses More Than 12 Months	11,000	0
Fair Value Total	15,828,000	8,825,000
Unrealized Losses Total	$ 722,000	$ 225,000

XML

Investment Securities (Details Narrative) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Subordinated Debt	$ 489,000
Other Investments	9,142	$ 9,210
Twenty Low-Income housing [Member]
Other Investments	6,558,000
Federal Home Loan Bank [Member]
Other Investments	1,590,000
Stock	994,000
Fifteen low-income housing limited partnerships [Member]
Other Investments	$ 961,000

XML

Loans (Details) - USD ($)	Mar. 31, 2022	Mar. 31, 2021
Gross Loans	$ 659,880,000	$ 662,698,000
Less: Deferred Loan Fess, Net Of Costs	320,000	277
Loans Outstanding	659,560,000	662,421,000
Commercial Real Estate [Member]
Loans Outstanding	162,340,000	163,564,000
Multi-Family [Member]
Loans Outstanding	5,667,000	4,887,000
Real Estate Loan [Member]
Loans Outstanding	138,620,000	139,552,000
Credit Cards [Member]
Loans Outstanding	2,869,000	3,000,000
Construction/Land Development [Member]
Loans Outstanding	72,248,000	75,236,000
Farmland [Member]
Loans Outstanding	65,503,000	66,344,000
Home Equity - Closed End [Member]
Loans Outstanding	5,732,000	6,262,000
Home Equity - Open End [Member]
Loans Outstanding	45,415,000	44,247,000
Commercial & Industrial - Non- Real Estate [Member]
Loans Outstanding	42,720,000	44,224,000
Consumer [Member]
Loans Outstanding	7,529,000	8,036,000
Dealers Finance [Member]
Loans Outstanding	$ 111,237,000	$ 107,346,000

XML

Loans (Details 1) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Impaired loans without a valuation allowance [Member]
Related Allowance	$ 0	$ 0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Impaired loans without a valuation allowance [Member] | Commercial Real Estate [Member]
Related Allowance	0	0
Unpaid Principal Balance	11,032,000	8,494,000
Recorded Investment	11,032,000	8,494,000
Impaired loans without a valuation allowance [Member] | Multi-Family [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Impaired loans without a valuation allowance [Member] | Real Estate Loan [Member]
Related Allowance	0	0
Unpaid Principal Balance	2,384,000	2,748,000
Recorded Investment	2,384,000	2,748,000
Impaired loans without a valuation allowance [Member] | Credit Cards [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Impaired loans With a valuation allowance [Member]
Related Allowance	582,000	736,000
Unpaid Principal Balance	4,792,000	7,271,000
Recorded Investment	4,792,000	7,271,000
Impaired loans With a valuation allowance [Member] | Commercial Real Estate [Member]
Related Allowance	456,000	603,000
Unpaid Principal Balance	3,243,000	6,004,000
Recorded Investment	3,243,000	6,004,000
Impaired loans With a valuation allowance [Member] | Multi-Family [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Impaired loans With a valuation allowance [Member] | Real Estate Loan [Member]
Related Allowance	113,000	119,000
Unpaid Principal Balance	1,495,000	1,172,000
Recorded Investment	1,495,000	1,172,000
Impaired loans With a valuation allowance [Member] | Credit Cards [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Construction/Land Development [Member] | Impaired loans without a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	637,000	645,000
Recorded Investment	637,000	645,000
Construction/Land Development [Member] | Impaired loans With a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Farmland [Member] | Impaired loans without a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	2,215,000	2,286,000
Recorded Investment	2,215,000	2,286,000
Home Equity - Close End [Member] | Impaired loans without a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	147,000
Recorded Investment	0	147,000
Home Equity - Close End [Member] | Impaired loans With a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Home Equity Open End [Member] | Impaired loans without a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Home Equity Open End [Member] | Impaired loans With a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Commercial & Industrial (Non-Real Estate) | Impaired loans without a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Consumer [Member] | Impaired loans without a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	5,000
Recorded Investment	0	5,000
Dealers Finance [Member] | Impaired loans without a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	15,000	12,000
Recorded Investment	15,000	12,000
Dealers Finance [Member] | Impaired loans With a valuation allowance [Member]
Related Allowance	13,000	14,000
Unpaid Principal Balance	54,000	95,000
Recorded Investment	54,000	95,000
Farmland [Member] | Impaired loans With a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Commercial & Industrial - Non- Real Estate [Member] | Impaired loans With a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Consumer [Member] | Impaired loans With a valuation allowance [Member]
Related Allowance	0	0
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Total impaired loans [Member]
Unpaid Principal Balance	21,075,000	21,608,000
Recorded Investment	21,075,000	21,608,000
Related Allowance	$ 582,000	$ 736,000

XML

Loans (Details 2) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Impaired loans without a valuation allowance [Member]
Interest Income Recognized	$ 295,000	$ 582,000
Average Recorded Investment	15,312,000	16,975,000
Impaired loans without a valuation allowance [Member] | Commercial Real Estate [Member]
Interest Income Recognized	186,000	253,000
Average Recorded Investment	9,763,000	9,225,000
Impaired loans without a valuation allowance [Member] | Multi-Family [Member]
Interest Income Recognized	0	0
Average Recorded Investment	0	0
Impaired loans without a valuation allowance [Member] | Real Estate Loan [Member]
Interest Income Recognized	33,000	155,000
Average Recorded Investment	2,566,000	4,575,000
Impaired loans without a valuation allowance [Member] | Credit Cards [Member]
Interest Income Recognized	0	0
Average Recorded Investment	0	0
Impaired loans With a valuation allowance [Member]
Interest Income Recognized	59,000	226,000
Average Recorded Investment	6,033,000	8,132,000
Impaired loans With a valuation allowance [Member] | Commercial Real Estate [Member]
Interest Income Recognized	42,000	172,000
Average Recorded Investment	4,624,000	6,201,000
Impaired loans With a valuation allowance [Member] | Multi-Family [Member]
Interest Income Recognized	0	0
Average Recorded Investment	0	0
Impaired loans With a valuation allowance [Member] | Real Estate Loan [Member]
Interest Income Recognized	16,000	45,000
Average Recorded Investment	1,334,000	1,399,000
Impaired loans With a valuation allowance [Member] | Credit Cards [Member]
Interest Income Recognized	0	0
Average Recorded Investment	0	0
Construction/Land Development [Member] | Impaired loans without a valuation allowance [Member]
Interest Income Recognized	6,000	29,000
Average Recorded Investment	641,000	984,000
Construction/Land Development [Member] | Impaired loans With a valuation allowance [Member]
Interest Income Recognized	0	0
Average Recorded Investment	0	0
Farmland [Member] | Impaired loans without a valuation allowance [Member]
Interest Income Recognized	70,000	126,000
Average Recorded Investment	2,251,000	1,760,000
Home Equity - Close End [Member] | Impaired loans without a valuation allowance [Member]
Interest Income Recognized	0	18,000
Average Recorded Investment	74,000	414,000
Home Equity - Close End [Member] | Impaired loans With a valuation allowance [Member]
Interest Income Recognized	0	0
Average Recorded Investment	0	0
Home Equity Open End [Member] | Impaired loans without a valuation allowance [Member]
Interest Income Recognized	0	0
Average Recorded Investment	0	0
Home Equity Open End [Member] | Impaired loans With a valuation allowance [Member]
Interest Income Recognized	0	0
Average Recorded Investment	0	0
Commercial & Industrial (Non-Real Estate) | Impaired loans without a valuation allowance [Member]
Interest Income Recognized	0	0
Average Recorded Investment	0	2,000
Consumer [Member] | Impaired loans without a valuation allowance [Member]
Interest Income Recognized	0	0
Average Recorded Investment	3,000	1,000
Dealers Finance [Member] | Impaired loans without a valuation allowance [Member]
Interest Income Recognized	0	1,000
Average Recorded Investment	14,000	14,000
Dealers Finance [Member] | Impaired loans With a valuation allowance [Member]
Interest Income Recognized	1,000	9,000
Average Recorded Investment	75,000	112,000
Farmland [Member] | Impaired loans With a valuation allowance [Member]
Interest Income Recognized	0	0
Average Recorded Investment	0	420,000
Commercial & Industrial - Non- Real Estate [Member] | Impaired loans With a valuation allowance [Member]
Interest Income Recognized	0	0
Average Recorded Investment	0	0
Consumer [Member] | Impaired loans With a valuation allowance [Member]
Interest Income Recognized	0	0
Average Recorded Investment	0	0
Total impaired loans [Member]
Interest Income Recognized	354,000	808,000
Average Recorded Investment	$ 21,345,000	$ 25,107,000

XML

Loans (Details 3) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Less: Deferred Aoan Fees, Net Of Costs, 30-59 Days Past Due	$ 0	$ 0
Less: Deferred Aoan Fees, Net Of Costs, 60-89 Days Past Due	0	0
Less: Deferred Aoan Fees, Net Of Costs, Greater Than 90 Days	0	0
Less: Deferred Aoan Fees, Net Of Costs, Total Past Due	0	0
Less: Deferred Aoan Fees, Net Of Costs, Non Accruel Loans	(320)	(277)
Less: Deferred Aoan Fees, Net Of Costs, Recorded Investment Greater Than 90 Days And Accruing	(320)	(277)
Less: Deferred Aoan Fees, Net Of Costs, Current	0	0
Less: Deferred Loan Fees, Net Of Costs, Total Loan Receivable	0	0
Commercial Real Estate [Member]
30-59 Days Past Due	244,000	0
60-89 Days Past Due	0	0
Greater Than 90 Days	108,000	108,000
Total Past Due	352,000	108,000
Current	161,988,000	163,456,000
Total Loan Receivable	162,340,000	163,564,000
Non-accrual Loans	2,798,000	2,975,000
Recorded Investment >90 Days & Accruing	0	0
Multi-Family [Member]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
Greater Than 90 Days	0	0
Total Past Due	0	0
Current	5,667,000	4,887,000
Total Loan Receivable	5,667,000	4,887,000
Non-accrual Loans	0	0
Recorded Investment >90 Days & Accruing	0	0
Real Estate Loan [Member]
30-59 Days Past Due	873,000	1,254,000
60-89 Days Past Due	124,000	89,000
Greater Than 90 Days	366,000	395,000
Total Past Due	1,738,000	1,738,000
Current	137,257,000	137,814,000
Total Loan Receivable	138,620,000	139,552,000
Non-accrual Loans	551,000	827,000
Recorded Investment >90 Days & Accruing	0	0
Credit Cards [Member]
30-59 Days Past Due	14,000	16,000
60-89 Days Past Due	2,000	0
Greater Than 90 Days	6,000	0
Total Past Due	22,000	16,000
Current	2,847,000	2,984,000
Total Loan Receivable	2,869,000	3,000,000
Non-accrual Loans	0	0
Recorded Investment >90 Days & Accruing	6,000	0
Construction/Land Development [Member]
30-59 Days Past Due	31,000	360,000
60-89 Days Past Due	55,000	41,000
Greater Than 90 Days	0	38,000
Total Past Due	86,000	439,000
Current	72,162,000	74,797,000
Total Loan Receivable	72,248,000	75,236,000
Non-accrual Loans	86,000	302,000
Recorded Investment >90 Days & Accruing	0	0
Farmland [Member]
30-59 Days Past Due	20,000	0
60-89 Days Past Due	0	0
Greater Than 90 Days	0	0
Total Past Due	20,000	0
Current	65,483,000	66,344,000
Total Loan Receivable	65,503,000	66,344,000
Non-accrual Loans	1,259,000	1,320,000
Recorded Investment >90 Days & Accruing	0	0
Commercial & Industrial - Non- Real Estate [Member]
30-59 Days Past Due	28,000	35,000
60-89 Days Past Due	0	1,000
Greater Than 90 Days	77,000	43,000
Total Past Due	105,000	79,000
Current	42,615,000	44,145,000
Total Loan Receivable	42,720,000	44,224,000
Non-accrual Loans	35,000	0
Recorded Investment >90 Days & Accruing	41,000	43,000
Consumer [Member]
30-59 Days Past Due	16,000	9,000
60-89 Days Past Due	0	67,000
Greater Than 90 Days	0	0
Total Past Due	16,000	76,000
Current	7,513,000	7,960,000
Total Loan Receivable	7,529,000	8,036,000
Non-accrual Loans	0	1,000
Recorded Investment >90 Days & Accruing	0	0
Dealers Finance [Member]
30-59 Days Past Due	477,000	694,000
60-89 Days Past Due	146,000	91,000
Greater Than 90 Days	0	16,000
Total Past Due	623,000	801,000
Current	110,614,000	106,545,000
Total Loan Receivable	111,237,000	107,346,000
Non-accrual Loans	22,000	40,000
Recorded Investment >90 Days & Accruing	0	0
Home Equity - Close End [Member]
30-59 Days Past Due	106,000	53,000
60-89 Days Past Due	0	0
Greater Than 90 Days	0	0
Total Past Due	106,000	53,000
Current	5,626,000	6,209,000
Total Loan Receivable	5,732,000	6,262,000
Non-accrual Loans	0	0
Recorded Investment >90 Days & Accruing	0	0
Home Equity Open End [Member]
30-59 Days Past Due	333,000	471,000
60-89 Days Past Due	0	216,000
Greater Than 90 Days	7,000	0
Total Past Due	340,000	687,000
Current	45,075,000	43,560,000
Total Loan Receivable	45,415,000	44,247,000
Non-accrual Loans	0	0
Recorded Investment >90 Days & Accruing	$ 7,000	$ 0

XML

Loans (Details Narrative) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Loans Held For Sale	$ 2,479,000	$ 4,887,000
Pledged Loans	163,070,000	$ 163,326,000
CARES Act [Member]
Deferral Loan, Amount	366,000
Interest Income	$ 54,000

XML

Allowance for Loan Losses (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Total [Member]
Beginning Balance	$ 7,748,000	$ 10,475,000
Charge-offs	238,000	1,165,000
Recoveries	329,000	1,259,000
Provision For Loan Losses	(450,000)	(2,821,000)
Ending Balance	7,389,000	7,748,000
Individually Evaluated For Impairment	582,000	736,000
Collectively Evaluated For Impairment	6,807,000	7,012,000
Commercial Real Estate [Member]
Beginning Balance	2,205,000	3,662,000
Charge-offs	0	0
Recoveries	0	19,000
Provision For Loan Losses	(112,000)	1,476,000
Ending Balance	2,093,000	2,205,000
Individually Evaluated For Impairment	456,000	603,000
Collectively Evaluated For Impairment	1,637,000	1,602,000
Multi-Family [Member]
Beginning Balance	29,000	54,000
Charge-offs	0	0
Recoveries	0	0
Provision For Loan Losses	6,000	(25,000)
Ending Balance	35,000	29,000
Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	35,000	29,000
Real Estates [Member]
Beginning Balance	1,162,000	1,624,000
Charge-offs	0	0
Recoveries	0	76,000
Provision For Loan Losses	2,000	(538,000)
Ending Balance	1,164	1,162,000
Individually Evaluated For Impairment	113,000	119,000
Collectively Evaluated For Impairment	1,051,000	1,043,000
Credit Cards [Member]
Beginning Balance	70,000	79,000
Charge-offs	12,000	54,000
Recoveries	7,000	29,000
Provision For Loan Losses	(2,000)	16,000
Ending Balance	63,000	70,000
Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	63,000	70,000
Construction/Land Development [Member]
Beginning Balance	977,000	1,249,000
Charge-offs	0	0
Recoveries	0	307
Provision For Loan Losses	(275,000)	(579,000)
Ending Balance	702,000	977,000
Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	702,000	977,000
Farmland [Member]
Beginning Balance	448,000	731,000
Charge-offs	0	0
Recoveries	0	0
Provision For Loan Losses	4,000	(283,000)
Ending Balance	452,000	448,000
Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	452,000	448,000
Consumer [Member]
Beginning Balance	520,000	521,000
Charge-offs	21,000	33,000
Recoveries	11,000	24,000
Provision For Loan Losses	13,000	8,000
Ending Balance	523,000	520,000
Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	523,000	520,000
Dealers Finance [Member]
Beginning Balance	1,601,000	1,674,000
Charge-offs	204,000	1,038,000
Recoveries	152,000	754,000
Provision For Loan Losses	85,000	211,000
Ending Balance	1,634,000	1,601,000
Individually Evaluated For Impairment	13,000	14,000
Collectively Evaluated For Impairment	1,621,000	1,587,000
Home Equity - Close End [Member]
Beginning Balance	411,000	55,000
Charge-offs	0	0
Recoveries	0	0
Provision For Loan Losses	(2,000)	(14,000)
Ending Balance	39,000	41,000
Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	39,000	41,000
Home Equity Open End [Member]
Beginning Balance	407,000	463,000
Charge-offs	0	0
Recoveries	129,000	13,000
Provision For Loan Losses	(162,000)	(69,000)
Ending Balance	374,000	407,000
Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	374,000	407,000
Commercial & Industrial (Non-Real Estate)
Beginning Balance	288,000	363,000
Charge-offs	1	40,000
Recoveries	30,000	37,000
Provision For Loan Losses	(7,000)	(72,000)
Ending Balance	310,000	288,000
Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	$ 310,000	$ 288,000

XML

Allowance for Loan Losses (Details 1) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Gross loans [Member]
Loan Receivable	$ 659,880,000	$ 662,698,000
Loan Individually Evaluated For Impairment	21,075,000	21,608,000
Collectively Evaluated For Impairment	638,805,000	641,090,000
Real Estates [Member]
Loan Receivable	138,620,000	139,552,000
Loan Individually Evaluated For Impairment	3,879,000	3,920,000
Collectively Evaluated For Impairment	134,741,000	135,632,000
Credit Card [Member]
Loan Receivable	2,869,000	3,000,000
Loan Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	2,869,000	3,000,000
Total [Member]
Loan Receivable	659,560,000	662,421,000
Loan Individually Evaluated For Impairment	21,075	21,608,000
Collectively Evaluated For Impairment	638,485,000	640,813,000
Less: Deferred loan fees, net of costs [Member]
Loan Receivable	320,000	277,000
Loan Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	320,000	277,000
Commercial Real Estate [Member]
Loan Receivable	162,340,000	163,564,000
Loan Individually Evaluated For Impairment	14,275,000	14,498,000
Collectively Evaluated For Impairment	148,065,000	149,066,000
Multi-Family [Member]
Loan Receivable	5,667,000	4,887,000
Loan Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	5,667,000	4,887,000
Construction/Land Development [Member]
Loan Receivable	72,248,000	75,236,000
Loan Individually Evaluated For Impairment	637,000	645,000
Collectively Evaluated For Impairment	71,611,000	74,591,000
Farmland [Member]
Loan Receivable	65,503,000	66,344,000
Loan Individually Evaluated For Impairment	2,215,000	2,286,000
Collectively Evaluated For Impairment	63,288	64,058,000
Consumer [Member]
Loan Receivable	7,529,000	8,036,000
Loan Individually Evaluated For Impairment	0	5,000
Collectively Evaluated For Impairment	7,529,000	8,031,000
Dealers Finance [Member]
Loan Receivable	111,237,000	107,346,000
Loan Individually Evaluated For Impairment	69,000	107,000
Collectively Evaluated For Impairment	111,168,000	107,239,000
Home Equity - Close End [Member]
Loan Receivable	5,732,000	6,262,000
Loan Individually Evaluated For Impairment	0	147,000
Collectively Evaluated For Impairment	5,732,000	6,115,000
Home Equity Open End [Member]
Loan Receivable	45,415,000	44,247,000
Loan Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	45,415,000	44,247,000
Commercial & Industrial (Non-Real Estate)
Loan Receivable	42,720,000	44,224,000
Loan Individually Evaluated For Impairment	0	0
Collectively Evaluated For Impairment	$ 42,720,000	$ 44,224,000

XML

Allowance for Loan Losses (Details 2) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Gross loans [Member]
Grade 1 Minimal Risk	$ 88,000	$ 66,000
Grade 2 Modest Risk	5,098,000	6,426,000
Grade 3 Average Risk	110,529,000	113,435,000
Grade 4 Acceptable Risk	276,102,000	272,868,000
Grade 5 Marginally Acceptable	113,644,000	116,327,000
Grade 6 Watch	21,401,000	23,624,000
Grade 7 Substandard	18,912,000	19,606,000
Total	545,774	552,352
Grade 8 Doubtful	0	0
Commercial Real Estate [Member]
Grade 1 Minimal Risk	0	0
Grade 2 Modest Risk	1,250,000	2,124,000
Grade 3 Average Risk	31,985,000	36,308,000
Grade 4 Acceptable Risk	71,222,000	72,414,000
Grade 5 Marginally Acceptable	41,352,000	35,444,000
Grade 6 Watch	3,890,000	4,428,000
Grade 7 Substandard	12,641,000	12,846,000
Total	162,340,000	163,564,000
Grade 8 Doubtful Account	0	0
Multi-Family [Member]
Grade 1 Minimal Risk	0	0
Grade 2 Modest Risk	0	0
Grade 3 Average Risk	1,007,000	1,021,000
Grade 4 Acceptable Risk	2,838,000	2,586,000
Grade 5 Marginally Acceptable	1,700,000	1,154,000
Grade 6 Watch	122,000	0
Grade 7 Substandard	0	0
Total	5,667,000	4,887,000
Grade 8 Doubtful	0	0
Credit Card [Member]
Total	2,869,000	3,000,000
Non-performing	6	0
Performing	2,863,000	3,000,000
Real Estate [Member]
Grade 1 Minimal Risk	0	0
Grade 2 Modest Risk	893,000	1,128,000
Grade 3 Average Risk	29,446,000	30,268,000
Grade 4 Acceptable Risk	64,516,000	61,940,000
Grade 5 Marginally Acceptable	28,028,000	28,895,000
Grade 6 Watch	11,129,000	12,462,000
Grade 7 Substandard	4,608,000	4,859,000
Total	138,620,000	139,552,000
Grade 8 Doubtful	0	0
Less: Deferred loan fees, net of costs [Member]
Grade 1 Minimal Risk	0
Grade 2 Modest Risk	0
Grade 3 Average Risk	0
Grade 4 Acceptable Risk	0
Grade 5 Marginally Acceptable	0
Grade 6 Watch	0
Grade 7 Substandard	0
Total	(320,000)	(277,000)
Grade 8 Doubtful	0
Construction/Land Development [Member]
Grade 1 Minimal Risk	0	0
Grade 2 Modest Risk	5,000	6,000
Grade 3 Average Risk	10,237,000	9,952,000
Grade 4 Acceptable Risk	42,138,000	83,861,000
Grade 5 Marginally Acceptable	18,116,000	19,457,000
Grade 6 Watch	1,666,000	1,658,000
Grade 7 Substandard	86,000	302,000
Total	72,248,000	75,236,000
Grade 8 Doubtful	0	0
Farmland [Member]
Grade 1 Minimal Risk	56,000	56,000
Grade 2 Modest Risk	284,000	291,000
Grade 3 Average Risk	6,541,000	6,804,000
Grade 4 Acceptable Risk	42,425,000	42,615,000
Grade 5 Marginally Acceptable	13,409,000	13,620,000
Grade 6 Watch	1,529,000	1,638,000
Grade 7 Substandard	1,259,000	1,320,000
Total	65,503,000	66,344,000
Grade 8 Doubtful	0	0
Consumer [Member]
Grade 1 Minimal Risk	18	10
Grade 2 Modest Risk	276,000	522,000
Grade 3 Average Risk	3,420,000	2,919,000
Grade 4 Acceptable Risk	3,598,000	3,526,000
Grade 5 Marginally Acceptable	149,000	980,000
Grade 6 Watch	68,000	79,000
Grade 7 Substandard	0	0
Total	7,529,000	8,036,000
Grade 8 Doubtful	0	0
Dealers Finance [Member]
Total	111,237	107,346
Non-performing	22,000	16,000
Performing	111,215,000	107,330,000
Home Equity - Close End [Member]
Grade 1 Minimal Risk	0	0
Grade 2 Modest Risk	58,000	61,000
Grade 3 Average Risk	1,051,000	1,268,000
Grade 4 Acceptable Risk	2,968,000	3,103,000
Grade 5 Marginally Acceptable	685,000	762,000
Grade 6 Watch	970,000	1,068,000
Grade 7 Substandard	0	0
Total	5,732,000	6,262,000
Grade 8 Doubtful	0	0
Home Equity Open End [Member]
Grade 1 Minimal Risk	0	0
Grade 2 Modest Risk	1,336,000	1,293,000
Grade 3 Average Risk	17,138,000	17,333,000
Grade 4 Acceptable Risk	22,957,000	21,296,000
Grade 5 Marginally Acceptable	2,278,000	2,477,000
Grade 6 Watch	1,484,000	1,632,000
Grade 7 Substandard	222,000	216,000
Total	45,415,000	44,247,000
Grade 8 Doubtful	0	0
Commercial & Industrial (Non-Real Estate)
Grade 1 Minimal Risk	14,000	0
Grade 2 Modest Risk	996,000	1,001,000
Grade 3 Average Risk	9,704,000	7,562,000
Grade 4 Acceptable Risk	23,440,000	21,527,000
Grade 5 Marginally Acceptable	7,927,000	13,538,000
Grade 6 Watch	543,000	533,000
Grade 7 Substandard	96,000	63,000
Total	42,720,000	44,224,000
Grade 8 Doubtful	0	0
Total [Member]
Grade 1 Minimal Risk	0
Grade 2 Modest Risk	0
Grade 3 Average Risk	0
Grade 4 Acceptable Risk	0
Grade 5 Marginally Acceptable	0
Grade 6 Watch	0
Grade 7 Substandard	0
Grade 8 Doubtful	0
Total	$ 545,454,000	$ 552,075,000

XML

Employee Benefit Plan (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Employee Benefit Plan
Service Cost	$ 190,000	$ 216
Interest Cost	104,000	95,000
Expected Return On Plan Assets	(195,000)	(198,000)
Amortization Of Net Loss	58,000	72,000
Net Periodic Pension Cost	$ 157,000	$ 185,000

XML

Fair Value (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Loans Held For Sale	$ 2,479,000	$ 4,887,000
U. S. Treasury Securities	42,868	29,482
U. S. Government Sponsored Enterprises	158,540,000	133,714,000
Securities Issued By States And Political Subdivisions In The U. S.	32,674,000	34,337,000
Mortgage-backed Obligations Of Federal Agencies	197,594,000	183,647,000
Corporate Debt Securities	30,146,000	22,702,000
Assets At Fair Value	464,938	409,139,000
Derivatives Icd	3,000	3,000
Irlc	262,000
Forward Sales Commitments	637,000	112,000
Total Fair Value Of Liabilities	265,000	3,000
Fair Value Inputs Level 1
Loans Held For Sale	0	0
U. S. Treasury Securities	0	0
U. S. Government Sponsored Enterprises	0	0
Securities Issued By States And Political Subdivisions In The U. S.	0	0
Mortgage-backed Obligations Of Federal Agencies	0
Irlc	0	0
Fair Value Inputs Level 2
Loans Held For Sale	2,479,000	4,887,000
U. S. Treasury Securities	42,868,000	29,482,000
U. S. Government Sponsored Enterprises	158,540,000	133,714,000
Securities Issued By States And Political Subdivisions In The U. S.	32,674,000	34,337,000
Mortgage-backed Obligations Of Federal Agencies	197,594,000	183,647,000
Corporate Debt Securities	30,146,000	22,702,000
Assets At Fair Value	464,938	409,139,000
Derivatives Icd	3,000	3,000
Irlc	262,000	258,000
Forward Sales Commitments	637,000	112,000
Total Fair Value Of Liabilities	265,000	3,000
Fair Value Inputs Level 3
Loans Held For Sale	0	0
U. S. Treasury Securities	0	0
U. S. Government Sponsored Enterprises	0	0
Securities Issued By States And Political Subdivisions In The U. S.	0	0
Mortgage-backed Obligations Of Federal Agencies	0
Irlc	$ 0	$ 0

XML

Fair Value (Details 1) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Dealers Finance [Member]
Impaired Loans	$ 41,000	$ 81,000
Bank premises [Member]
Impaired Loans	300,000	300,000
Commercial Real Estate [Member]
Impaired Loan	2,787,000	5,401,000
Fair Value Inputs Level 1
Impaired Loans	0	0
Fair Value Inputs Level 1 | Dealers Finance [Member]
Impaired Loans	0	0
Fair Value Inputs Level 1 | Bank premises [Member]
Impaired Loans	0	0
Fair Value Inputs Level 1 | Commercial Real Estate [Member]
Impaired Loans	0	0
Fair Value Inputs Level 2
Impaired Loans	0	0
Fair Value Inputs Level 2 | Dealers Finance [Member]
Impaired Loans	0	0
Fair Value Inputs Level 2 | Bank premises [Member]
Impaired Loans	0	0
Fair Value Inputs Level 2 | Commercial Real Estate [Member]
Impaired Loans	0	0
Fair Value Inputs Level 3
Impaired Loans	4,210,000	6,535,000
Fair Value Inputs Level 3 | Dealers Finance [Member]
Impaired Loans	41,000	81,000
Fair Value Inputs Level 3 | Impaired loans [Member]
Impaired Loans	4,210,000	6,535,000
Fair Value Inputs Level 3 | Bank premises [Member]
Impaired Loans	300,000	300,000
Fair Value Inputs Level 3 | Commercial Real Estate [Member]
Impaired Loans	2,787,000	5,401,000
Real Estate [Member]
Impaired Loans	1,382,000	1,053,000
Real Estate [Member] | Fair Value Inputs Level 1
Impaired Loans	0	0
Real Estate [Member] | Fair Value Inputs Level 2
Impaired Loans	0	0
Real Estate [Member] | Fair Value Inputs Level 3
Impaired Loans	$ 1,382,000	$ 1,053,000

XML

Fair Value (Details 2) - Fair Value Inputs Level 3 - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Valuation Technique Other Real Estate Owned	Discounted appraised value	Discounted appraised value
Significant Unobservable Inputs Lmpaired Loans	Discount for selling costs and marketability	Discount for selling costs and marketability
Impaired Loans	$ 4,210	$ 6,535
Minimum [Member]
Range Impaired Loans	14.00%	11.76%
Maximum [Member]
Range Impaired Loans	32.92%	28.00%

XML

Disclosures About Fair Value of Financial Instruments (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Cash And Cash Equivalents, Carrying Amount	$ 48,376	$ 88,121	$ 103,729	$ 78,408
Securities, Carrying Amount	461,947,000	404,007
Loans Held For Sale, Carrying Amount	2,479,000	4,887
Loans Held For Investment, Net, Carrying Amount	659,560,000	662,421
Interest Receivable, Carrying Amount	3,345	3,117
Bank Owned Life Insurance, Carrying Amount	23,042	22,878
Forward Sales Commitments, Carrying Amount	637,000	112
Total Assets, Carrying Amount	1,199,386,000	1,185,801
Deposits, Carrying Amount	1,112,295,000	1,080,295
Long-term Debt, Carrying Amount	21,780,000	21,772
Irlc, Carrying Amount	262,000	258
Interest Payable, Carrying Amount	251,000	491
Total Liabilities, Carrying Amount	1,134,588,000	1,102,558
Loans Held For Sale, Fair Value	2,479,000	4,887,000
Fair Value Inputs Level 2
Forward Sales Commitments, Carrying Amount	637,000	112
Irlc, Carrying Amount	262,000	258
Cash And Cash Equivalents, Fair Value	0	0
Securities, Fair Value	461,947,000	404,007
Loans Held For Sale, Fair Value	2,479,000	4,887
Loans Held For Investment, Net, Fair Value	0	0
Interest Receivable, Fair Value	3,345,000	3,117
Bank Owned Life Insurance, Fair Value	23,042,000	22,878
Total Assets, Fair Value	491,450,000	435,259
Deposits, Fair Value	1,004,305,000	968,604
Long-term Debt, Fair Value	0	0
Interest Payable, Fair Value	251,000	491
Total Liabilities, Fair Value	1,004,818,000	969,095
Fair Value Inputs Level 3
Cash And Cash Equivalents, Fair Value	0	0
Securities, Fair Value	0	0
Loans Held For Sale, Fair Value	0	0
Loans Held For Investment, Net, Fair Value	646,369,000	652,096
Interest Receivable, Fair Value	0	0
Bank Owned Life Insurance, Fair Value	0	0
Total Assets, Fair Value	646,369,000	652,096
Deposits, Fair Value	117,811,000	123,718
Long-term Debt, Fair Value	22,105	22,443
Interest Payable, Fair Value	0	0
Total Liabilities, Fair Value	139,916,000	146,161
Fair Value Inputs Level 1
Cash And Cash Equivalents, Fair Value	48,376,000	88,121
Securities, Fair Value	0	0
Loans Held For Sale, Fair Value	0	0
Loans Held For Investment, Net, Fair Value	0	0
Interest Receivable, Fair Value	0	0
Bank Owned Life Insurance, Fair Value	0	0
Total Assets, Fair Value	48,376,000	88,121
Deposits, Fair Value	0	0
Long-term Debt, Fair Value	0	0
Interest Payable, Fair Value	0	0
Total Liabilities, Fair Value	0	0
Fair Value [Member]
Forward Sales Commitments, Carrying Amount	637,000	112
Irlc, Carrying Amount	262,000	258
Cash And Cash Equivalents, Fair Value	48,376,000	88,121
Securities, Fair Value	461,947,000	404,007
Loans Held For Sale, Fair Value	2,479,000	4,887
Loans Held For Investment, Net, Fair Value	646,369,000	652,096
Interest Receivable, Fair Value	3,345,000	3,117
Bank Owned Life Insurance, Fair Value	23,042,000	22,878
Total Assets, Fair Value	1,186,195,000	1,175,476
Deposits, Fair Value	1,122,116,000	1,092,322
Long-term Debt, Fair Value	22,105,000	22,443
Interest Payable, Fair Value	251,000	491
Total Liabilities, Fair Value	$ 1,144,734	$ 1,115,256,000

XML

Troubled Debt Restructuring (Details) - Real Estate [Member] $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) integer	Mar. 31, 2021 USD ($) integer
Number Of Contracts | integer	1	1
Pre-modification Outstanding Recorded Investment	$ 164	$ 110
Post-modification Outstanding Recorded Investment	$ 164	$ 110

XML

Accumulated Other Comprehensive Loss (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Beginning Balance	$ (5,092)
Ending Balance	(19,351)
Unrealized Securities Gains (Losses) [Member]
Beginning Balance	(1,801,000)	$ 804,000
Change In Unrealized Securities Gains (losses), Net Of Tax	(14,259,000)	(1,114,000)
Ending Balance	(16,060,000)	(310,000)
Adjustments Related to Pension Plan [Member]
Beginning Balance	(3,291,000)	(3,821,000)
Change In Unrealized Securities Gains (losses), Net Of Tax	0	0
Ending Balance	(3,291,000)	(3,821,000)
Accumulated Other Comprehensive Loss [Member]
Beginning Balance	(5,092,000)	(3,017,000)
Change In Unrealized Securities Gains (losses), Net Of Tax	(14,259,000)	(1,114,000)
Ending Balance	$ (19,351,000)	$ (4,131,000)

XML

Business Segments (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Total Interest And Dividend Income	$ 9,061	$ 8,746
Service Charges On Deposits	307	285
Mortgage Banking Income, Net	742	1,672
Title Insurance Income	473	456
Interest Expense	1,004	1,068
Income Tax Expense (benefit)	(88)	271
Net Income Attributable To F & M Bank Corp.	2,528	3,801
Goodwill	3,082		$ 3,082
Total Assets	1,238,259		$ 1,219,342
F&M Bank Member
Total Interest And Dividend Income	9,037,000	8,716,000
Service Charges On Deposits	307,000	285,000
Investment Services And Insurance Income	0	0
Mortgage Banking Income, Net	0	0
Title Insurance Income	0	0
Other Operating Income	708,000	593,000
Total Income	10,052,000	9,594,000
Interest Expense	874,000	876,000
Provision For Loan Losses	(450,000)	(725,000)
Salary And Benefit Expense	3,947,000	3,514,000
Other Operating Expenses	3,328,000	2,834,000
Total Expense	7,699,000	6,499,000
Income (loss) Before Taxes	2,353,000	3,095,000
Income Tax Expense (benefit)	386,000	521,000
Net Income Attributable To F & M Bank Corp.	1,967,000	2,574,000
Goodwill	2,868,000	2,670,000
Total Assets	1,242,957,000	1,016,023,000
F&M Mortgage
Total Interest And Dividend Income	29,000	72,000
Service Charges On Deposits	0	0
Investment Services And Insurance Income	0	0
Mortgage Banking Income, Net	742,000	1,672,000
Title Insurance Income	0	0
Other Operating Income	2,000	23,000
Total Income	773,000	1,767,000
Interest Expense	6,000	66,000
Provision For Loan Losses	0	0
Salary And Benefit Expense	573,000	615,000
Other Operating Expenses	214,000	233,000
Total Expense	793,000	914,000
Income (loss) Before Taxes	(20,000)	853,000
Income Tax Expense (benefit)	0	0
Net Income Attributable To F & M Bank Corp.	(20,000)	853,000
Goodwill	0	47,000
Total Assets	9,012,000	14,340,000
TEB Life/FMFS
Total Interest And Dividend Income	8,000	30,000
Service Charges On Deposits	0	0
Investment Services And Insurance Income	253,000	348,000
Mortgage Banking Income, Net	0	0
Title Insurance Income	0	0
Other Operating Income	0	0
Total Income	261,000	378,000
Interest Expense	0	0
Provision For Loan Losses	0	0
Salary And Benefit Expense	104,000	97,000
Other Operating Expenses	21,000	6,000
Total Expense	125,000	103,000
Income (loss) Before Taxes	136,000	275,000
Income Tax Expense (benefit)	31,000	57,000
Net Income Attributable To F & M Bank Corp.	105,000	218,000
Goodwill	0	0
Total Assets	8,532,000	8,519,000
VS Title
Total Interest And Dividend Income	0	0
Service Charges On Deposits	0	0
Investment Services And Insurance Income	0	0
Mortgage Banking Income, Net	0	0
Title Insurance Income	473,000	456,000
Other Operating Income	0	0
Total Income	473,000	456,000
Interest Expense	0	0
Provision For Loan Losses	0	0
Salary And Benefit Expense	301,000	286,000
Other Operating Expenses	83,000	82,000
Total Expense	384,000	368,000
Income (loss) Before Taxes	89,000	88,000
Income Tax Expense (benefit)	0	0
Net Income Attributable To F & M Bank Corp.	89,000	88,000
Goodwill	3,000	3,000
Total Assets	2,967,000	2,559,000
Parent Only
Total Interest And Dividend Income	0	0
Service Charges On Deposits	0	0
Investment Services And Insurance Income	0	0
Mortgage Banking Income, Net	0	0
Title Insurance Income	0	0
Other Operating Income	0	21
Total Income	0	(21)
Interest Expense	137,000	198
Provision For Loan Losses	0	0
Salary And Benefit Expense	0	0
Other Operating Expenses	(19,000)	20,000
Total Expense	118,000	218,000
Income (loss) Before Taxes	(118,000)	(239,000)
Income Tax Expense (benefit)	(505,000)	(307,000)
Net Income Attributable To F & M Bank Corp.	387,000	68,000
Goodwill	211,000	164,000
Total Assets	99,890,000	109,474,000
Eliminations
Total Interest And Dividend Income	13,000	72,000
Service Charges On Deposits	0	0
Investment Services And Insurance Income	(2,000)	(1,000)
Mortgage Banking Income, Net	0	0
Title Insurance Income	0	0
Other Operating Income	0	0
Total Income	(15,000)	(73,000)
Interest Expense	13,000	72,000
Provision For Loan Losses	0	0
Salary And Benefit Expense	0	0
Other Operating Expenses	(2,000)	(1,000)
Total Expense	(15,000)	(73,000)
Income (loss) Before Taxes	0	0
Income Tax Expense (benefit)	0	0
Net Income Attributable To F & M Bank Corp.	0	0
Goodwill	0	0
Total Assets	125,099,000	139,938,000
F&M Bank Corp Consolidated
Total Interest And Dividend Income	9,061,000	8,746,000
Service Charges On Deposits	307,000	285,000
Investment Services And Insurance Income	251,000	347,000
Mortgage Banking Income, Net	742,000	1,672,000
Title Insurance Income	473,000	456,000
Other Operating Income	710,000	595,000
Total Income	11,544,000	12,101,000
Interest Expense	1,004,000	1,068,000
Provision For Loan Losses	(450,000)	(725,000)
Salary And Benefit Expense	4,925,000	4,512,000
Other Operating Expenses	3,625,000	3,174,000
Total Expense	9,104,000	8,029,000
Income (loss) Before Taxes	2,440,000	4,072,000
Income Tax Expense (benefit)	(88,000)	271,000
Net Income Attributable To F & M Bank Corp.	2,528,000	3,801,000
Goodwill	3,082,000	2,884,000
Total Assets	$ 1,238,259,000	$ 1,010,977,000

XML

Debt (Details Narrative) - USD ($)	1 Months Ended
	Jul. 29, 2020	Mar. 31, 2022	Dec. 31, 2021
Balance Of Obligations		$ 10,000,000	$ 10,000,000
Subordinated Notes, Net Of Issuance Costs		$ 11,780,000
Weighted Average Cost		0.81%	0.81%
FHLB short term
Letter Of Credit		$ 10,000,000
2027 Notes [Member] | Accredited Investor [Member]
Interest Rate	5.75%
Interest Rate Description	The 2027 Notes will bear interest at 5.75% per annum, payable semi-annually in arrears. Beginning on July 31, 2022 through maturity, the 2027 Notes may be redeemed, at the Company’s option, on any scheduled interest payment date. The 2027 Notes will mature on July 31, 2027.
Maturity Date	July 31, 2027.
Principal Amount	$ 5,000,000
2030 Notes [Member] | Accredited Investor [Member]
Interest Rate	6.00%
Interest Rate Description	The 2030 Notes will initially bear interest at 6.00% per annum, beginning July 29, 2020 to but excluding July 31, 2025, payable semi-annually in arrears.
Maturity Date	July 31, 2030
Principal Amount	$ 7,000,000

XML

Revenue Recognition (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Total Noninterest Income	$ 2,483	$ 3,355
Service Charges on Deposits
Total Noninterest Income	307,000	285,000
Investment Services and Insurance Income
Total Noninterest Income	251,000	347,000
Title Insurance Income
Total Noninterest Income	473,000	456,000
ATM and check card fees
Total Noninterest Income	563,000	520,000
Other
Total Noninterest Income	157,000	63,000
Noninterest Income (in-scope of Topic 606)
Total Noninterest Income	1,751,000	1,671,000
Noninterest Income (out-of-scope of Topic 606)
Total Noninterest Income	$ 732,000	$ 1,684,000

XML

Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Leases
Lease Liabilities	$ 911	$ 839
Right-of-use Assets	$ 889	$ 814
Weighted Average Remaining Lease Term	3 years 2 months 1 day	3 years 10 months 20 days
Weighted Average Discount Rate	3.05%	3.50%
Operating Lease Cost	$ 153	$ 26
Total Lease Cost	153	26
Cash Paid For Amounts Included In The Measurement Of Lease Liabilities	$ 181	$ 31

XML

Leases (Details 1) $ in Thousands	Mar. 31, 2022 USD ($)
Leases
Nine Months Ending December 31, 2022	$ 132
Twelve Months Ending December 31, 2023	135
Twelve Months Ending December 31, 2024	136
Twelve Months Ending December 31, 2025	98
Twelve Months Ending December 31, 2026	70
Thereafter	518
Total Undiscounted Cash Flows	1,089
Discount	178
Lease Liabilities	$ 911

XML

Mortgage Banking and Derivatives (Details Narrative)	3 Months Ended	12 Months Ended
	Mar. 31, 2022 USD ($) integer	Dec. 31, 2021 USD ($) integer
Total Amount Of Conducted Business	$ 2,479
Total Amount Of Conducted Business Unpaid	2,544
Other Assets [Member]
Notional Debt Amount	$ 25,542,000	$ 18,801,000
Total Notional Positions | integer	82	70
Fair Value Of Derivative Instruments	$ 262,000	$ 258,000
Other Liability [Member]
Total Notional Positions | integer	96	91
Fair Value Of Forward Sales	$ 637,000	$ 112,000
Notional Amount	$ 28,085,000	$ 23,721,000

XML

StockBased Compensation (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Unrecognized Compensation Cost Related To Nonvested Restricted Stock	$ 837
Common Stock Shares Authorizes	6,000,000	6,000,000
Directors [Member]
Stock Plan Committee Awarded Shares Issued	1,145
Employee Service Fair Value			$ 35,323
March 5, 2021 [Member]
Stock Plan Committee Awarded Shares Issued	17,763
Employee Service Fair Value			$ 547,989
Description Of Vest Shares	These shares vest 25% over each of the next four years.
Stock Incentive Plan [Member]
Common Stock Shares Authorizes	200,000
Expire Date	March 18, 2030

XML

StockBased Compensation (Details 3) - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
StockBased Compensation (Details 3)
Nonvested At Beginning	15,869	0
Granted	17,763	16,140
Vested	(3,920)	0
Forfeited	(474)	0
Nonvested At Ending	29,238	16,140
Date Fair Value Per Share, Nonvested At Beginning	$ 26.78	$ 0
Date Fair Value Per Share, Granted	30.85	26.75
Date Fair Value Per Share, Vested	30.85	0
Date Fair Value Per Share, Forfeited	29.10	0
Date Fair Value Per Share, Nonvested At Ending	$ 29.20	$ 26.75