F&M BANK CORP - Quarter Report: 2014 March (Form 10-Q)

fmbm_10q.htm

Financial Statements

F & M Bank Corp.

March 31, 2014

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2014.

o 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		(I.R.S. Employer
Incorporation or Organization)		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)

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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its website, if any, every Interactive Data File required to be submitted and posted 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 and post such files. Yes þ No o

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

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting Company	þ
(Do not check if a smaller reporting company)

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

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

Class		Outstandning at May 14, 2014
Common Stock, par value - $5		3,287,528 shares

F & M BANK CORP.

Index

Part I	Financial Information	4

Item 1.	Financial Statements

	Consolidated Statements of Income – Three Months Ended March 31, 2014 and 2013	4

	Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2014 and 2013	5

	Consolidated Balance Sheets – March 31, 2014 and December 31, 2013	6

	Consolidated Statements of Cash Flows – Three Months Ended March 31, 2014 and 2013	7

	Consolidated Statements of Changes in Stockholders’ Equity – Three Months Ended March 31, 2014 and 2013	8

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	34

Part II	Other Information	35

Item 1.	Legal Proceedings	35

Item 1a.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults Upon Senior Securities	35

Item 4.	Mine Safety Disclosures	35

Item 5.	Other Information	35

Item 6.	Exhibits	35

Signatures		36

Certifications		38

Part I Financial Information

Item 1 Financial Statements

F & M BANK CORP.

Consolidated Statements of Income

(In Thousands of Dollars Except per Share Amounts)

(Unaudited)

	Three Months Ended
	March 31,
Interest income	2014		2013
Interest and fees on loans held for investment	$	6,226	$	6,056
Interest and fees on loans held for sale		15		489
Interest on federal funds sold		12		10
Interest on interest bearing deposits		-		1
Interest on debt securities		38		43
Total interest income		6,291		6,599

Interest expense
Interest on demand deposits		167		189
Interest on savings accounts		28		50
Interest on time deposits over $100,000		158		207
Interest on other time deposits		304		427
Total interest on deposits		657		873
Interest on short-term debt		2		17
Interest on long-term debt		291		388
Total interest expense		950		1,278

Net interest income		5,341		5,321

Provision for loan losses		750		900
Net interest income after provision for loan losses		4,591		4,421

Noninterest income
Service charges		257		261
Insurance and other commissions		22		183
Other		381		324
Income on bank owned life insurance		116		126
Total noninterest income		776		894

Noninterest expense
Salaries		1,655		1,566
Employee benefits		520		576
Occupancy expense		160		160
Equipment expense		144		135
FDIC insurance assessment		180		202
Other		1,079		964
Total noninterest expense		3,738		3,603

Income before income taxes		1,629		1,712
Income tax expense		476		468
Consolidated net income		1,153		1,244
Net income - Noncontrolling interest (income) loss		30		(28	)
Net Income – F & M Bank Corp	$	1,183	$	1,216

Per share data
Net income (basic and dilutive)	$	.46	$	.49
Cash dividends	$	.17	$	.17
Weighted average shares outstanding		2,598,639		2,500,473

See notes to unaudited consolidated financial statements

F & M BANK CORP.

Consolidated Statements of Comprehensive Income

(In Thousands of Dollars)

(Unaudited)

	Three Months Ended
	March 31,
	2014			2013
Net Income:
Net Income – F & M Bank Corp	$	1,183		$	1,216
Net Income (loss) attributable to noncontrolling interest		(30	)		28
Total Net Income:		1,153			1,244

Unrealized holding gains (losses) on available-for-sale securities:		18			(21	)
Tax Expense (benefit)		6			(7	)
Unrealized holding gain (loss), net of tax		12			(14	)
Total other comprehensive income (loss)		12			(14	)

Comprehensive income	$	1,165		$	1,230

See notes to unaudited consolidated financial statements

F & M BANK CORP.

Consolidated Balance Sheets

(In Thousands of Dollars Except per Share Amounts)

	March 31,			December 31,
	2014			2013
	(Unaudited)			(Audited)
Assets
Cash and due from banks	$	7,189		$	5,835
Money market funds		842			708
Federal funds sold		27,988			2
Cash and cash equivalents		36,019			6,545
Securities:
Held to maturity – fair value of $106 in 2014 and 2013		106			106
Available for sale		11,241			30,266
Other investments		8,044			8,114
Loans held for sale		5,578			3,804
Loans held for investment		486,327			478,453
Less allowance for loan losses		(8,009	)		(8,184	)
Net loans held for investment		478,318			470,269

Other real estate owned		2,437			2,628
Bank premises and equipment, net		6,514			6,525
Interest receivable		1,513			1,498
Goodwill		2,670			2,670
Bank owned life insurance		12,236			12,122
Other assets		8,468			8,241
Total assets	$	573,144		$	552,788

Liabilities
Deposits:
Noninterest bearing	$	100,084		$	92,397
Interest bearing:
Demand		94,117			92,562
Money market accounts		25,560			24,894
Savings		58,280			58,292
Time deposits over $100,000		69,340			69,674
All other time deposits		124,163			126,330
Total deposits		471,544			464,149

Short-term debt		3,697			3,423
Accrued liabilities		9,344			9,384
Subordinated debt		10,191			10,191
Long-term debt		11,500			11,500
Total liabilities		506,276			498,647

Stockholders’ Equity
Common stock, $5 par value, 6,000,000 shares authorized,
3,287,470 and 2,511,735 shares issued and outstanding
in 2014 and 2013, respectively		16,437			12,559
Retained earnings		50,993			42,089
Noncontrolling interest		351			418
Accumulated other comprehensive loss		(913	)		(925	)
Total stockholders’ equity		66,868			54,141
Total liabilities and stockholders’ equity	$	573,144		$	552,788

See notes to unaudited consolidated financial statements

F & M BANK CORP.

Consolidated Statements of Cash Flows

(In Thousands of Dollars)

(Unaudited)

	Three Months Ended March 31,
	2014			2013
Cash flows from operating activities
Net income	$	1,183		$	1,216
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		148			150
Amortization of security premiums, net		24			9
Loans held for sale originated		(7,222	)		(21,708	)
Sale of loans held for sale originated		8,629			28,623
Provision for loan losses		750			900
(Increase) Decrease in interest receivable		(15	)		(4	)
(Increase) Decrease in other assets		(356	)		38
Increase (decrease) in accrued expenses		55			(363	)
Amortization of limited partnership investments		152			150
Income from life insurance investment		(116	)		(126	)
Gain on Other Real Estate Owned		(1	)		-
Net adjustments		2 048			7,669
Net cash provided by operating activities		3,231			8,885

Cash flows from investing activities
Purchase of investments available for sale		(4,108	)		(4,002	)
Proceeds from maturity of investments available for sale		23,009			3,539
Net (increase) decrease in loans held for investment		(9,009	)		(934	)
Net (increase) decrease in loans held for sale participations		(3,181	)		49,161
Proceeds from the sale of other real estate owned		401			331
Purchase of property and equipment		(137	)		(88	)
Net cash provided by investing activities		6,975			48,007

Cash flows from financing activities
Net change in demand and savings deposits		9,895			5,792
Net change in time deposits		(2,500	)		(609	)
Net change in short-term debt		274			(31,425	)
Cash dividends paid		(427	)		(425	)
Proceeds from issuance of common stock		12,026			26
Repayment of long-term debt		-			(5,429	)
Net cash provided by (used in) financing activities		19,268			(32,070	)

Net Increase in Cash and Cash Equivalents		29,474			24,822
Cash and cash equivalents, beginning of period		6,545			8,997
Cash and cash equivalents, end of period	$	36,019		$	33,819
Supplemental disclosure
Cash paid for:
Interest expense	$	981		$	1,237
Income taxes		-			-
Transfers from loans to Other Real Estate Owned		397			216
Noncash exchange of other real estate owned		(188	)		-

See notes to unaudited consolidated financial statements

F & M BANK CORP.

Consolidated Statements of Changes in Stockholders’ Equity

(In Thousands of Dollars)

(Unaudited)

	Three Months Ended
	March 31,
	2014			2013

Balance, beginning of period	$	54,141		$	49,384

Comprehensive income
Net income – F & M Bank Corp		1,183			1,216
Net income attributable to noncontrolling interest		(30	)		28
Net change in unrealized appreciation on securities available for sale, net of taxes		12			(14	)
Total comprehensive income		1,165			1,230

Minority Interest Capital Distributions		(37	)		(51	)
Issuance of common stock		12,026			26
Dividends declared		(427	)		(425	)
Balance, end of period	$	66,868		$	50,164

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 1. Accounting Principles

The consolidated financial statements include the accounts of F & M Bank Corp. and its subsidiaries (the “Company”). Significant intercompany accounts and transactions have been eliminated in consolidation.

The consolidated financial statements conform to accounting principles generally accepted in the United States of America and to general industry practices. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 2014 and the results of operations for the quarters ended March 31, 2014 and 2013. The notes included herein should be read in conjunction with the notes to financial statements included in the 2013 annual report to shareholders of F & M Bank Corp.

The Company does not expect the anticipated adoption of any newly issued accounting standards to have a material impact on future operations or financial position.

Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities and gains or losses on certain derivative contracts, are reported as a separate component of the equity section of the balance sheet. Such items, along with operating net income, are components of comprehensive income.

Subsequent Events

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

Loans

Loans are carried on the balance sheet net of any unearned interest and the allowance for loan losses. Interest income on loans is determined using the effective interest method on the daily amount of principal outstanding except where serious doubt exists as to collectability of the loan, in which case the accrual of income is discontinued.

Allowance for Loan Losses

The provision for loan losses charged to operations is an amount sufficient to bring the allowance for loan losses to an estimated balance that management considers adequate to absorb potential losses in the portfolio. Loans are charged against the allowance when management believes the collectability of the principal is unlikely. Recoveries of amounts previously charged-off are credited to the allowance. Management’s determination of the adequacy of the allowance is based on an evaluation of the composition of the loan portfolio, the value and adequacy of collateral, current economic conditions, historical loan loss experience, and other risk factors. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions, particularly those affecting real estate values. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 1. Accounting Principles, continued

Allowance for Loan Losses, continued

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Nonaccrual Loans

Loans are placed on nonaccrual status when they become ninety days or more past due, unless there is an expectation that the loan will either be brought current or paid in full in a reasonable period of time.

Note 2. Investment Securities

Investment securities available for sale are carried in the consolidated balance sheets at their approximate market value, amortized cost and unrealized gains and losses at March 31, 2014 and December 31, 2013 are reflected in the table below. The amortized costs of investment securities held to maturity are carried in the consolidated balance sheets and their approximate market values at March 31, 2014 and December 31, 2013 are as follows:

	2014				2013
			Market				Market
	Cost		Value		Cost		Value

Securities held to maturity
U. S. Treasury and agency obligations	$	106	$	106	$	106	$	106
Total	$	106	$	106	$	106	$	106

	March 31, 2014
			Unrealized				Market
	Cost		Gains		Losses		Value
Securities available for sale
Government sponsored enterprises	$	10,080	$	19	$	24	$	10,075
Mortgage-backed securities		1,161		5		-		1,166
Total	$	11,241	$	24	$	24	$	11,241

	December 31, 2013
			Unrealized				Market
	Cost		Gains		Losses		Value
Securities available for sale
Government sponsored enterprises	$	29,076	$	11	$	22	$	29,065
Mortgage-backed securities		1,209		-		8		1,201
Total	$	30,285	$	11	$	30	$	30,266

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 2. Investment Securities, continued

The amortized cost and fair value of securities at March 31, 2014, by contractual maturity are shown below. 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	$	106	$	106	$	2,002	$	1,999
Due after one year through five years		-		-		8,078		8,076
Due after five years		-		-		1,161		1,166
Total	$	106	$	106	$	11,241	$	11,241

There were no gains and losses on sales of securities in the first quarter of 2014 or 2013. There were also no securities with an Other than temporary impairment.

The fair value and gross unrealized losses for securities, segregated by the length of time that individual securities have been in a continuous gross unrealized loss position, at March 31, 2014 and December 31, 2013 were as follows (dollars in thousands):

	Less than 12 Months					More than 12 Months				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

March 31, 2014
Government sponsored Enterprises	$	5,985	$	(24	)	$	-	$	-	$	5,985	$	(24	)
Total	$	5,985	$	(24	)	$	-	$	-	$	5,985	$	(24	)

December 31, 2013
Government sponsored Enterprises	$	4,984	$	(22	)	$	-	$	-	$	4,984	$	(22	)
Mortgage backed obligations		1,191		(8	)		-		-		1,191		(8	)
Total	$	6,175	$	(30	)	$	-	$	-	$	6,175	$	(30	)

Other investments, which consist of stock of correspondent banks and investments in low income housing projects, decreased since December 31, 2013. This decrease is due to FHLB stock repurchases during the first quarter which were partially offset with an increase in the Federal Reserve Bank Stock holding requirement.

	2014		2013
Construction/Land Development	$	70,648	$	68,512
Farmland		12,532		13,197
Real Estate		155,774		154,628
Multi-Family		11,693		11,797
Commercial Real Estate		116,583		113,415
Home Equity – closed end		9,451		10,228
Home Equity – open end		47,187		47,358
Commercial & Industrial – Non-Real Estate		25,953		25,903
Consumer		8,847		10,163
Dealer Finance		25,253		20,572
Credit Cards		2,406		2,680
Total	$	486,327	$	478,453

Loans outstanding at March 31, 2014 and December 31, 2013 are summarized as follows:

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 3. Loans Held for Investment, continued

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

			Unpaid				Average		Interest
March 31, 2014	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
Impaired loans without a valuation allowance:
Construction/Land Development	$	6,898	$	6,898	$	-	$	5,781	$	29
Farmland		1,457		1,457		-		1,470		12
Real Estate		48		48		-		394		1
Multi-Family		-		-		-		-		-
Commercial Real Estate		1,457		1,457		-		799		23
Home Equity – closed end		308		308		-		283		6
Home Equity – open end		-		-		-		20		-
Commercial & Industrial – Non-Real Estate		279		279		-		116		4
Consumer		-		-		-		-		-
Credit cards		-		-		-		-		-
Dealer Finance		-		-		-		-		-
		10,447		10,447				8,865		75

Impaired loans with a valuation allowance
Construction/Land Development		11,408		10,738		1,604		10,510		55
Farmland		-		-		-		-		-
Real Estate		1,036		1,036		157		901		7
Multi-Family		-		-		-		-		-
Commercial Real Estate		1,047		1,047		214		1,168		2
Home Equity – closed end		180		180		22		340		8
Home Equity – open end		100		100		12		90		-
Commercial & Industrial – Non-Real Estate		-		-		-		141		-
Consumer		-		-		-		1		-
Credit cards		-		-		-		-		-
Dealer Finance		-		-		-		-		-
		13,771		13,101		2,009		13,151		72

Total impaired loans	$	24,218	$	23,548	$	2,009	$	20,014	$	147

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 3. Loans Held for Investment, continued

The Recorded Investment is defined as the principal balance less principal payments and charge-offs.

			Unpaid				Average		Interest
December 31, 2013	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
Impaired loans without a valuation allowance:
Construction/Land Development	$	3,960	$	4,543	$	-	$	5,750	$	153
Farmland		1,459		1,459		-		1,475		67
Real Estate		49		49		-		529		3
Multi-Family		-		-		-		-		-
Commercial Real Estate		851		851		-		616		56
Home Equity – closed end		308		308		-		284		25
Home Equity – open end		-		-		-		20		-
Commercial & Industrial – Non-Real Estate		242		242		-		64		12
Consumer		-		-		-		-		-
Credit cards		-		-		-		-		-
Dealer Finance		-		-		-		-		-
		6,869		7,452				8,738		316

Impaired loans with a valuation allowance
Construction/Land Development		8,291		9,716		1,560		10,855		175
Farmland		-		-		-		-		-
Real Estate		1,145		1,145		154		966		48
Multi-Family		-		-		-		-		-
Commercial Real Estate		818		1,118		282		1,171		4
Home Equity – closed end		180		180		17		409		3
Home Equity – open end		100		100		9		93		5
Commercial & Industrial – Non-Real Estate		-		-		-		141		-
Consumer		2		2		-		1		1
Credit cards		-		-		-		-		-
Dealer Finance		-		-		-		-		-
		10,536		12,261		2,022		13,636		236

Total impaired loans	$	17,405	$	19,713	$	2,022	$	22,374	$	552

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 4. Allowance for Loan Losses

A summary of the allowance for loan losses follows:

March 31, 2014 (in thousands)	Beginning Balance			Charge-offs		Recoveries		Provision			Ending Balance			Percentage of loans in each category to total			Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Allowance for loan losses:
Construction/Land Development	$	4,007		$	671	$	12	$	557		$	3,905			48.76	%	$	1,604	$	2,301
Farmland		(2	)		-		-		-			(2	)		(.03	%)		-		(2	)
Real Estate		400			-		-		(22	)		378			4.72	%		157		221
Multi-Family		-			-		-		-			-						-		-
Commercial Real Estate		777			-		11		(81	)		707			8.82	%		214		493
Home Equity – closed end		157			-		-		(10	)		147			1.84	%		22		125
Home Equity – open end		476			29		-		18			465			5.81	%		12		453
Commercial & Industrial – Non-Real Estate		1,464			242		17		187			1,426			17.80	%		-		1,426
Consumer		156			30		5		(3	)		128			1.60	%		-		128
Dealer Finance		628			-		-		121			749			9.36	%		-		749
Credit Cards		121			14		16		(17	)		106			1.32	%		-		106
Unallocated		-			-		-		-			-			-			-		-
Total	$	8,184		$	986	$	61	$	750		$	8,009			100	%	$	2,009	$	6,000

December 31, 2013 (in thousands)	Beginning Balance			Charge-offs		Recoveries		Provision			Ending Balance			Percentage of loans in each category to total			Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Allowance for loan losses:
Construction/Land Development	$	2,771		$	2,127	$	40	$	3,323		$	4,007			48.96	%	$	1,560	$	2,447
Farmland		(2	)		-		-		-			(2	)		(.03	%)		-		(2	)
Real Estate		924			173		-		(351	)		400			4.89	%		154		246
Multi-Family		(37	)		-		-		37			-			-			-		-
Commercial Real Estate		1,113			201		42		(177	)		777			9.49	%		282		495
Home Equity – closed end		360			159		-		(44	)		157			1.92	%		17		140
Home Equity – open end		659			68		29		(144	)		476			5.82	%		9		467
Commercial & Industrial – Non-Real Estate		2,113			986		127		210			1,464			17.89	%		-		1,464
Consumer		51			173		14		264			156			1.91	%		-		156
Dealer Finance		72			17		-		573			628			7.68	%		-		628
Credit Cards		130			121		28		84			121			1.48	%		-		121
Unallocated		-			-		-		-			-			-			-		-
Total	$	8,154		$	4,025	$	280	$	3,775		$	8,184			100	%	$	2,022	$	6,162

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 4. Allowance for Loan Losses, continued

Recorded Investment in Loan Receivables (in thousands)

March 31, 2014	Loan Receivable		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Construction/Land Development	$	70,648	$	18,306	$	52,342
Farmland		12,532		1,457		11,075
Real Estate		155,774		1,084		154,690
Multi-Family		11,693		-		11,693
Commercial Real Estate		116,583		2,504		114,079
Home Equity – closed end		9,451		488		8,963
Home Equity –open end		47,187		100		47,087
Commercial & Industrial – Non-Real Estate		25,953		279		25,674
Consumer		8,847		-		8,847
Dealer Finance		25,253		-		25,253
Credit Cards		2,406		-		2,406
	$	486,327	$	24,218	$	462,108
Total

December 31, 2013	Loan Receivable		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Construction/Land Development	$	68,512	$	14,259	$	54,253
Farmland		13,197		1,459		11,738
Real Estate		154,628		1,194		153,434
Multi-Family		11,797		-		11,797
Commercial Real Estate		113,415		1,969		111,446
Home Equity – closed end		10,228		488		9,740
Home Equity –open end		47,358		100		47,258
Commercial & Industrial – Non-Real Estate		25,903		242		25,661
Consumer		10,163		2		10,161
Dealer Finance		20,572				20,572
Credit Cards		2,680		-		2,680
	$	478,453	$	19,713	$	458,740
Total

Aging of Past Due Loans Receivable (in thousands) as of March 31, 2014

	30-59 Days Past due		60-89 Days Past Due		Greater than 90 Days (excluding non-accrual)		Non-Accrual Loans		Total Past Due		Current		Total Loan Receivable
March 31, 2014
Construction/Land Development	$	1,073	$	2,374	$	-	$	7,935	$	11,382	$	59,266	$	70,648
Farmland		98		-		-		-		98		12,434		12,532
Real Estate		4,337		646		-		1,291		6,274		149,500		155,774
Multi-Family		-		-		-		-		-		11,693		11,693
Commercial Real Estate		2,268		-		-		1,287		3,555		113,028		116,583
Home Equity – closed end		18		-		-		171		189		9,262		9,451
Home Equity – open end		609		25		10		119		763		46,424		47,187
Commercial & Industrial – Non- Real Estate		1,412		14		-		176		1,602		24,351		25,953
Consumer		153		54		4		-		211		8,636		8,847
Dealer Finance		304		78		58		-		440		24,813		25,253
Credit Cards		6		3		7		-		16		2,390		2,406
Total	$	10,278	$	3,194	$	79	$	10,979	$	24,530	$	461,797	$	486,327

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 4. Allowance for Loan Losses, continued

Aging of Past Due Loans Receivable (in thousands) as of December 31, 2013

	30-59 Days Past due		60-89 Days Past Due		Greater than 90 Days (excluding non-accrual)		Non-Accrual Loans		Total Past Due		Current		Total Loan Receivable
December 31, 2013
Construction/Land Development	$	167	$	735	$	-	$	8,556	$	9,458	$	59,054	$	68,512
Farmland		-		-		-		-		-		13,197		13,197
Real Estate		4,659		920		246		1,407		7,232		147,396		154,628
Multi-Family		107		-		-		-		107		11,690		11,797
Commercial Real Estate		858		-		-		1,474		2,332		111,083		113,415
Home Equity – closed end		122		79		10		180		391		9,837		10,228
Home Equity – open end		549		39		51		222		861		46,497		47,358
Commercial & Industrial – Non- Real Estate		148		20		4		416		588		25,315		25,903
Consumer		169		71		5		-		245		9,918		10,163
Dealer Finance		335		72		11		-		418		20,154		20,572
Credit Cards		21		3		-		-		24		2,656		2,680
Total	$	7,135	$	1,939	$	327	$	12,255	$	21,656	$	456,797	$	478,453

CREDIT QUALITY INDICATORS (in thousands)

AS OF MARCH 31, 2014

Corporate Credit Exposure

Credit Risk Profile by Creditworthiness Category

	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	$	-	$	-	$	5,734	$	25,374	$	11,206	$	1,257	$	27,077	$	-	$	70,648
Farmland		68		-		1,358		4,103		5,449		-		1,554		-		12,532
Real Estate		-		555		68,256		52,815		19,864		6,066		8,218		-		155,774
Multi-Family		-		649		4,382		2,041		4,621				-		-		11,693
Commercial Real Estate		-		1,554		23,899		56,142		20,577		12,241		2,170		-		116,583
Home Equity – closed end		-		-		4,483		3,064		1,418		246		240		-		9,451
Home Equity – open end		-		1,574		12,861		26,189		5,756		306		501		-		47,187
Commercial & Industrial (Non-Real Estate)		777		120		4,272		15,165		2,936		2,454		229		-		25,953
Total	$	845	$	4,452	$	125,245	$	184,893	$	71,827	$	22,570	$	39,989	$	-	$	449,821

Consumer Credit Exposure

Credit Risk Profile Based on Payment Activity

	Credit Cards		Consumer
Performing	$	2,399	$	34,038
Non performing		7		62
Total	$	2,406	$	34,100

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 4. Allowance for Loan Losses, continued

CREDIT QUALITY INDICATORS (in thousands)

AS OF DECEMBER 31, 2013

Corporate Credit Exposure

Credit Risk Profile by Creditworthiness Category

	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	$	-	$	-	$	3,166	$	25,657	$	11,116	$	2,946	$	25,627	$	-	$	68,512
Farmland		69		-		1,406		5,206		4,816		143		1,557		-		13,197
Real Estate		-		562		68,241		52,190		19,037		7,821		6,777		-		154,628
Multi-Family		-		668		4,442		2,275		4,412		-		-		-		11,797
Commercial Real Estate		-		1,897		18,062		55,350		21,677		13,406		3,023		-		113,415
Home Equity – closed end		-		-		4,574		3,117		1,870		281		386		-		10,228
Home Equity – open end		-		1,482		13,308		26,734		4,840		327		667		-		47,358
Commercial & Industrial (Non-Real Estate)		815		92		3,631		16,265		3,108		1,516		476		-		25,903
Total	$	884	$	4,701	$	116,830	$	186,794	$	70,876	$	26,440	$	38,513	$	-	$	445,038

Consumer Credit Exposure

Credit Risk Profile Based on Payment Activity

	Credit Cards		Consumer
Performing	$	2,680	$	30,719
Non performing		-		16
Total	$	2,680	$	30,735

Description of 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 by 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.

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 4. Allowance for Loan Losses, continued

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.

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.

Note 5. Employee Benefit Plan

The Bank has a qualified noncontributory defined benefit pension plan that covers substantially all of its employees. The benefits are primarily based on years of service and earnings. The Bank contributed $1,500,000 to the plan in the first quarter of 2014 and does not anticipate additional contributions for the 2014 plan year. The following is a summary of net periodic pension costs for the three-month periods ended March 31, 2014 and 2013.

	Three Months Ended
	March 31, 2014			March 31, 2013

Service cost	$	125,257		$	149,983
Interest cost		94,427			87,578
Expected return on plan assets		(174,563	)		(159,020	)
Amortization of net obligation at transition		-			-
Amortization of prior service cost		(3,809	)		(3,809	)
Amortization of net loss		9,028			50,796
Net periodic pension cost	$	50,340		$	125,528

Note 6. Fair Value

Accounting Standards Codification (ASC) 820, defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement

The following sections provide a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:

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.

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 6. Fair Value, continued

Impaired Loans: ASC 820 applies to loans measured for impairment using the practical expedients permitted by ASC 310 including impaired loans measured at an observable market price (if available), or at the fair value of the loan’s collateral (if the loan is collateral dependent). Fair value of the loan’s collateral, when the loan is dependent on collateral, is determined by appraisals or independent valuation which is then adjusted for the cost related to liquidation of the collateral.

Other Real Estate Owned: Certain assets such as other real estate owned (OREO) are measured at the lower of carrying amount or fair value less cost to sell. We believe that the fair value component in its valuation follows the provisions of ASC 820.

Derivative Financial Instruments: The equity derivative contracts are purchased as part of our Indexed Certificate of Deposit (ICD) program and are an offset of an asset and liability. ICD values are measured on the S&P 500 Index.

For level 3 assets and liabilities measured at fair value on a recurring basis or non-recurring basis as of March 31, 2014 and December 31, 2013 and significant unobservable inputs used in the fair value measurements were as follows:

	Fair Value at March 31, 2014		Valuation Technique	Significant Unobservable Inputs	Range
Impaired Loans	$	11,762	Discounted appraised value	Discount for selling costs and age of appraisals		15%-55	%
Other Real Estate Owned	$	2,437	Discounted appraised value	Discount for selling costs and age of appraisals		15%-55	%

	Fair Value at December 31, 2013		Valuation Technique	Significant Unobservable Inputs	Range
Impaired Loans	$	10,239	Discounted appraised value	Discount for selling costs and age of appraisals		15%-55	%
Other Real Estate Owned	$	2,628	Discounted appraised value	Discount for selling costs and age of appraisals		15%-55	%

Note 6. Fair Value, continued

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis.

March 31, 2014	Total		Level 1		Level 2		Level 3
Government sponsored enterprises	$	10,075	$	-	$	10,075	$	-
Mortgage-backed obligations of federal agencies		1,166		-		1,166		-
Investment securities available for sale	$	11,241	$	-	$	11,241	$	-

Total assets at fair value	$	11,241	$	-	$	11,241	$	-

Total liabilities at fair value	$	-	$	-	$	-	$	-

Derivative financial instruments at fair value	$	30	$	-	$	30	$	-

December 31, 2013	Total		Level 1		Level 2		Level 3
Government sponsored enterprises	$	29,065	$	-	$	29,065	$	-
Mortgage-backed obligations of federal agencies		1,201		-		1,201		-
Investment securities available for sale		30,266		-		30,266		-

Total assets at fair value	$	30,266	$	-	$	30,266	$	-

Total liabilities at fair value	$	-	$	-	$	-	$	-

Derivative financial instruments at fair value	$	31	$	-	$	31	$	-

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 6. Fair Value, continued

Assets and Liabilities Recorded at Fair Value on a Non-recurring Basis

The table below presents the recorded amount of assets and liabilities measured at fair value on a non-recurring basis. The Company has determined that Other Real Estate Owned and Impaired Loans are Level 3.

March 31, 2014	Total		Level 1		Level 2		Level 3
Other Real Estate Owned	$	2,437		-		-	$	2,437
				-		-
Construction/Land Development		9,804		-		-		9,804
Farmland		-		-		-		-
Real Estate		879		-		-		879
Multi-Family		-		-		-		-
Commercial Real Estate		834		-		-		834
Home Equity – closed end		158		-		-		158
Home Equity – open end		87		-		-		87
Commercial & Industrial – Non-Real Estate		-		-		-		-
Consumer		-		-		-		-
Credit cards		-		-		-		-
Dealer Finance		-		-		-		-
Total Impaired loans		11,762		-		-		11,762

Total assets at fair value	$	14,199	$	-	$	-	$	14,199

Total liabilities at fair value	$	-	$	-	$	-	$	-

December 31, 2013	Total		Level 1		Level 2		Level 3
Other Real Estate Owned	$	2,628		-		-	$	2,628
				-		-
Construction/Land Development		8,156		-		-		8,156
Farmland		-		-		-		-
Real Estate		991		-		-		991
Multi-Family		-		-		-		-
Commercial Real Estate		836		-		-		836
Home Equity – closed end		163		-		-		163
Home Equity – open end		91		-		-		91
Commercial & Industrial – Non-Real Estate		-		-		-		-
Consumer		2		-		-		2
Credit cards		-		-		-		-
Dealer Finance		-		-		-		-
Total Impaired loans		10,239		-		-		10,239

Total assets at fair value	$	12,867		-	$	-		12,867

Total liabilities at fair value	$	-	$	-	$	-	$	-

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 7. Disclosures About Fair Value of Financial Instruments

ASC 825 “Financial Instruments” defines the fair value of a financial instrument as the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced liquidation or sale. As the majority of the Bank’s financial instruments lack an available trading market, significant estimates, assumptions and present value calculations are required to determine estimated fair value. 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, 2014 and December 31, 2013. This table excludes financial instruments for which the carrying amount approximates the fair value, which would be Level 1; inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. All financial instruments below are considered Level 2; inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

	March 31, 2014				December 31, 2013
	Estimated		Carrying		Estimated		Carrying
	Fair Value		Value		Fair Value		Value

Financial Assets
Loans	$	519,034	$	487,327	$	512,250	$	478,453

Financial Liabilities
Time deposits	$	210,592	$	193,503		197,729		196,004
Long-term debt	$	12,609	$	11,500		12,613		11,500

The carrying value of cash and cash equivalents, other investments, deposits with no stated maturities, short-term borrowings, and accrued interest approximate fair value. The fair value of securities was calculated using the most recent transaction price or a pricing model, which takes into consideration maturity, yields and quality. The remaining financial instruments were valued based on the present value of estimated future cash flows, discounted at various rates in effect for similar instruments entered into as of the end of each respective period shown above.

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 figure into the environmental factors associated with the allowance. Defaults resulting in charge-offs affect the historical loss experience ratios which are a component of the allowance calculation. Additionally, specific reserves may be established on restructured loans evaluated individually.

During the three months ended March 31, 2014, there were no loan modifications that were considered to be troubled debt restructurings. Modifications may have included rate adjustments, revisions to amortization schedules, suspension of principal payments for a temporary period, re-advancing funds to be applied as payments to bring the loan(s) current, or any combination thereof.

During the twelve months ended March 31, 2014, twelve loans (four borrowers) that had previously been restructured, were in default. A restructured loan is considered in default when it becomes 90 days past due.

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 8. Troubled Debt Restructuring, continued

	March 31, 2014
		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of Contracts	Recorded Investment		Recorded Investment
Troubled Debt Restructurings
Commercial	6	$	2,328	$	2,328
Real Estate	3		600		600
Home Equity	2		280		280
Credit Cards			-		-
Consumer			-		-
Total		$	3,208	$	3,208

During the three months ended, March 31, 2013, there were no loan modifications that were considered to be troubled debt restructurings. There were also no troubled debt restructurings from the previous twelve months that went into default in the first quarter of 2013. A restructured loan is considered in default when it becomes 90 days past due.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

F & M Bank Corp. (Company) incorporated in Virginia in 1983, is a one-bank 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) and Farmers & Merchants Financial Services (FMFS) are wholly-owned subsidiaries of the Bank. The Bank also holds a majority ownership in VBS Mortgage LLC (VBS).

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

The Company’s primary trade area services customers in Rockingham County, Shenandoah County, Page County and Augusta County.

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.

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.

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: 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, and consumer spending and savings habits.

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

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Critical Accounting Policies

General

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“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. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset or relieving a liability. The Company uses historical loss factors as one factor in determining the inherent loss that may be present in its loan portfolio. Actual losses could differ significantly from the historical factors that are used. The fair value of the investment portfolio is based on period end valuations but changes daily with the market. 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.

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. For further discussion refer to page 28 in the Management Discussion and Analysis.

Goodwill and Intangibles

ASC 805 “Business Combinations” and ASC 350 “Intangibles” require that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Additionally, it further clarifies the criteria for the initial recognition and measurement of intangible assets separate from goodwill. ASC 350 prescribes the accounting for goodwill and intangible assets subsequent to initial recognition. The provisions of ASC 350 discontinue the amortization of goodwill and intangible assets with indefinite lives. Instead, these assets will be subject to at least an annual impairment review and more frequently if certain impairment indicators are in evidence. ASC 350 also requires that reporting units be identified for the purpose of assessing potential future impairments of goodwill.

Securities Impairment

For a complete discussion of securities impairment see Note 2 of the Notes to Consolidated Financial Statements.

Overview

Net income for the three months ended March 31, 2014 was $1,183,000 or $.46 per share, compared to $1,216,000 or $.49 in the same period in 2013, a decrease of 2.71%. During the three months ended March 31, 2014, noninterest income decreased 13.20% and noninterest expense increased 3.75% during the same period. Net income from Bank operations adjusted for income or loss from Parent activities is as follows:

In thousands	2014		2013

Net Income from Bank Operations	$	1,136	$	1,207
Income or (loss) from Parent Company Activities		47		9
Net Income for the three months ended March 31	$	1,183	$	1,216

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Results of Operations

As shown in Table I on page 32, the 2014 year to date tax equivalent net interest income increased $15,000 or .28% compared to the same period in 2013. The tax equivalent adjustment to net interest income totaled $20,000 for the quarter. The yield on earning assets decreased .04%, while the cost of funds decreased .24% compared to the same period in 2013.

Year to date, the combination of the decrease in both yield on assets and the decrease in cost of funds coupled with changes in balance sheet leverage has resulted in the net interest margin increasing to 4.16%, an increase of .18% when compared to the same period in 2013. A schedule of the net interest margin for the three month periods ended March 31, 2014 and 2013 can be found in Table I on page 32.

The Interest Sensitivity Analysis contained in Table II on page 33 indicates the Company is in an asset sensitive position in the one year time horizon. As the notes to the table indicate, the data was based in part on assumptions as to when certain assets or liabilities would mature or reprice. Approximately 47.45% of rate sensitive assets and 40.27% of rate sensitive liabilities are subject to repricing within one year. Due to the relatively flat yield curve, management has continued to reduce deposit rates. Liquid assets have been used to pay off maturing long term FHLB borrowings, which when coupled with depositors reluctance to tie up funds at historically low rates has resulted in the decrease in the positive GAP position in the one year time period.

Noninterest income decreased $118,000 or 13.20% for the three month period ended March 31, 2014. The decrease is primarily due to a decrease in insurance and other commissions due to VBS Mortgage loss in 2014.

Noninterest expense increased $135,000 for the three month period ended March 31, 2014 as compared to 2013. Expense increased in the areas of data processing, legal and professional, supplies, travel and ATM expenses. As stated in the most recently available (December 31, 2013) Bank Holding Company Performance Report, the Company’s and peer’s (Holding Companies with Consolidated Assets of $500 million to $1billion) noninterest expenses averaged 2.60% and 2.92% of average assets, respectively. The Company’s operating costs have always compared favorably to the peer group due to an excellent asset to employee ratio and below average facilities costs.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

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% to .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. Combined balances in fed funds sold and interest bearing bank deposits have increased since year end due to the maturity of a short term investment held at year end.

Securities

The Company’s securities portfolio serves several purposes. Portions of the portfolio are held to assist the Company with liquidity, asset liability management and as security for certain public funds and repurchase agreements.

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 market 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.

As of March 31, 2014, the market value of securities available for sale remained relative flat compared to their cost. The portfolio is made up of primarily agency securities with an average portfolio life of just over one year. This short average life results in less portfolio volatility and positions the Bank to redeploy assets in response to rising rates. There are $1,999,000 of securities scheduled to mature in 2014. The Bank held a short term security at year end which matured resulting in the decrease balance at March 31, 2014.

In reviewing investments as of March 31, 2104, 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 in a predominately rural area that includes the counties of Rockingham, Page, Shenandoah and Augusta in the western portion of 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.

Lending is geographically diversified within the service area. The only concentration within the portfolio is in construction and development lending. Management and the Board of Directors review this concentration and other potential areas of concentration quarterly.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Loans Held for Investment of $486,327,000 increased $7.9 million at March 31, 2014 compared to December 31, 2013. The dealer finance portfolio increased $4.7 million, commercial real estate increased $3.1 million and construction and land development loans increased $2.1 million. These increases were offset by decreases in the home equity lending totaling $1.0 million and consumer loans totaling $1.3 million.

Loans Held for Sale totaled $5,578,000 at March 31, 2014, an increase of $1,774,000 compared to December 31, 2013. Secondary market loan originations are typically subject to seasonal declines in the first quarter of each calendar year. While in 2014 the portfolio has grown compared to December 31, 2013, the Company experienced a decline in this portfolio during 2013 due to the decline in the real estate refinancing market.

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 $11,058,000 at March 31, 2014 compared to $12,582,000 at December 31, 2013. Although the potential exists for loan losses, management believes the bank is generally well secured and continues to actively work with its customers to effect payment. As of March 31, 2014, the Company holds $2,437,000 of real estate which was acquired through foreclosure. This is a decrease of $191,000 compared to December 31, 2013.

The following is a summary of information pertaining to risk elements and nonperforming loans (in thousands):

	March 31, 2014			December 31, 2013

Nonaccrual Loans
Real Estate	$	9,226		$	9,963
Commercial		1,463			1,890
Home Equity		290			402
Other		-			-
		10,979			12,255

Loans past due 90 days or more (excluding nonaccrual)
Real Estate		-			246
Commercial		-			4
Home Equity		10			61
Other		69			16
		79			327

Total Nonperforming loans	$	11,058		$	12,582

Nonperforming loans as a percentage of loans held for investment		2.27	%		2.63	%

Net Charge Offs to total loans held for investment		.19	%		.78	%

Allowance for loan and lease losses to nonperforming loans		72.43	%		65.05	%

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (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. 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 internally generated 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 into loans with identified potential losses and pools of loans by type 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 taken into account when reviewing these credits including borrower cash flow, payment history, fair value of collateral, company management, the industry in which the borrower is involved and economic factors. Loan relationships that are determined to have no impairment are placed back into the appropriate loan pool and reviewed under ASC 450.

Loans that are not impaired are categorized by call report code and an estimate is calculated based on actual loss experience over the last two years. Dealer finance loans utilize a five year loss history. The Company will monitor the net losses for this division and adjust based on how the portfolio performs since the department was established in 2012. A general allowance for inherent losses has been established to reflect other unidentified losses within the portfolio. The general allowance is calculated using eight environmental factors (loan growth, unemployment, past due/criticized loans, interest rates, changes in underwriting practices, local real estate industry conditions, and experience of lending staff) with a range for worst and best case. 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 two year loss histories. The Board approves the loan loss provision for each quarter based on this evaluation. An effort is made to keep the actual allowance at or above the midpoint of the range established by the evaluation process.

The allowance for loan losses of $8,009,000 at March 31, 2014 is equal to 1.65% of loans held for investment. This compares to an allowance of $8,184,000 (1.71%) at December 31, 2013. Based on the evaluation of the loan portfolio described above, management has funded the allowance a total of $750,000 in the first three months of 2014. Net charge-offs year to date totaled $925,000.

The overall level of the allowance has been increasing for several years and now approximates the national peer group average. Based on historical losses, delinquency rates, collateral values of delinquent loans and a thorough review of the loan portfolio, management is of the opinion that the allowance for loan losses fairly states the estimated losses in the current portfolio.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

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 have increased $7,395,000 since December 31, 2013. Time deposits decreased $2,501,000 during this period while demand deposits and savings deposits increased $9,896,000. The decrease in certificates of deposits is a result of a decrease in core time deposits. The increase in demand deposits and savings deposits is a result of new account growth during the year. The Bank also participates in the CDARS program. CDARS (Certificate of Deposit Account Registry Service) is a program that allows 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. The CDARS program also allows the Bank to purchase funds through its One-Way Buy program. At quarter end the Bank had a total of $12.8 million in CDARS funding, which is an increase of $1.5 million over December 31, 2013.

Short-term debt

Short-term debt consists of federal funds purchased, daily rate credit obtained from the Federal Home Loan Bank (FHLB), short-term fixed rate FHLB borrowings and commercial repurchase agreements (repos). Commercial customers deposit operating funds into their checking account and by mutual agreement with the bank their excess funds are swept daily into the repurchase accounts. These accounts are not considered deposits and are not insured by the FDIC. The Bank pledges securities held in its investment portfolio as collateral for these short-term loans. Federal funds purchased are overnight borrowings obtained from the Bank’s primary correspondent bank to manage short-term liquidity needs. Borrowings from the FHLB have been used to finance loans held for sale and also to finance the increase in short-term residential and commercial construction loans. As of March 31, 2014 there were no FHLB short-term borrowings and commercial repurchase agreements totaled $3,697,000 compared to $3,423,000 at December 31, 2013.

Long-term debt

Borrowings from the FHLB continue to be an important source of funding. The Company’s subsidiary bank borrows funds on a fixed rate basis. These borrowings are used to fund loan growth and also assist the Bank in matching the maturity of its fixed rate real estate loan portfolio with the maturity of its debt and thus reduce its exposure to interest rate changes. There were no scheduled repayments or additional borrowings through March 31, 2014.

In August 2009, the Company began issuing subordinated debt agreements with local investors with terms of 7 to 10 years. Interest rates are fixed on the notes for the full term but vary by maturity. Rates range from 7.0% on the 7 year note to 8.05% on the 10 year note. As of March 31, 2014 and December 31, 2013 the balance outstanding was $10,191,000.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Capital

The Company successfully completed a private placement of common stock in March 2014. In the private placement the Company sold 774,231 shares of common stock for net proceeds of $12 million. The resulting increase in equity improved the Companies risked based capital and leverage ratios by 2.64% and 2.16%, respectively. The Company intends to use the proceeds for general corporate purposes, including organic growth, new market expansion and possible future acquisitions. The Company has filed a registration statement with respect to a potential public offering of up to $10 million of mandatorily convertible preferred stock.

The Company seeks to maintain a strong capital base to expand facilities, promote public confidence, support current operations and grow at a manageable level. As of March 31, 2014, the Company's total risk based capital and leverage ratios were 17.88% and 11.63%, respectively, increasing over year end from 15.37% and 9.37%, respectively. For the same period, Bank-only total risk based capital and leverage ratios were 17.47% and 11.29%, respectively, increasing over year end from 15.43% and 9.41%, respectively. For both the Company and the Bank these ratios are in excess of regulatory minimums to be considered “well capitalized”.

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. Liquidity increased significantly in the first quarter as a short term investments made at year end matured. This along with the decrease in Loans Held for Sale during 2013 and the sale of common stock during the first quarter have all contributed to the liquidity. 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.

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. The Bank also has a line of credit with the Federal Home Loan Bank of Atlanta that allows for secured borrowings.

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.

As of March 31, 2014, the Company had a cumulative Gap Rate Sensitivity Ratio of 17.42% for the one year repricing period. This generally indicates that earnings would increase in an increasing interest rate environment as assets reprice more quickly than liabilities. However, in actual practice, this may not be the case as balance sheet leverage, funding needs and competitive factors within the market could dictate the need to raise deposit rates more quickly. Management constantly monitors the Company’s interest rate risk and has decided the current position is acceptable for a well-capitalized community bank.

A summary of asset and liability repricing opportunities is shown in Table II, on page 33.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Effect of Newly Issued Accounting Standards

In January 2014, the FASB amended the Investments—Equity Method and Joint Ventures topic of the Codification to address accounting for investments in qualified affordable housing projects. If certain conditions are met, the amendments permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects by amortizing the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizing the net investment performance in the income statement as a component of income tax expense (benefit). If those conditions are not met, the investment should be accounted for as an equity method investment or a cost method investment in accordance with existing accounting guidance. The amendments will be effective for the Company for interim and annual reporting periods beginning after December 15, 2014 and should be applied retrospectively for all periods presented. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements

In January 2014, the FASB amended the Receivables—Troubled Debt Restructurings by Creditors subtopic of the Codification to address the reclassification of consumer mortgage loans collateralized by residential real estate upon foreclosure. The amendments clarify the criteria for concluding that an in substance repossession or foreclosure has occurred, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan. The amendments also outline interim and annual disclosure requirements. The amendments will be effective for the Company for interim and annual reporting periods beginning after December 15, 2014. Companies are allowed to use either a modified retrospective transition method or a prospective transition method when adopting this update. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its 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).

TABLE I

F & M BANK CORP.

Net Interest Margin Analysis

(on a fully taxable equivalent basis)

(Dollar Amounts in Thousands)

	Three Months Ended							Three Months Ended
	March 31, 2014							March 31, 2013
Average			Income/		Average					Income/		Average
	Balance2,4		Expense		Rates			Balance2,4		Expense		Rates
Interest income
Loans held for investment1,2	$	482,444	$	6,245		5.25	%	$	467,240	$	6,238		5.41	%
Loans held for sale		1,663		15		3.66	%		42,362		330		3.16	%
Federal funds sold		24,126		13		.22	%		20,144		10		.20	%
Interest bearing deposits		694		-		-			1,690		2		.48	%
Investments
Taxable 3		13,302		38		1.13	%		12,463		43		1.40	%
Partially taxable		106		-		-			107		0		-
Total earning assets	$	522,335	$	6,311		4.90	%	$	544,006	$	6,623		4.94	%
Interest Expense
Demand deposits		119,567		167		.57	%		122,253		189		.63	%
Savings		56,211		28		.20	%		49,942		50		.41	%
Time deposits		198,932		462		.94	%		204,426		634		1.26	%
Short-term debt		3,540		2		.23	%		13,679		17		.50	%
Long-term debt		21,691		291		5.44	%		42,929		388		3.67	%
Total interest bearing liabilities	$	399,941	$	950		.96	%	$	433,229	$	1,278		1.20	%

Tax equivalent net interest income 1			$	5,361						$	5,345

Net interest margin						4.16	%						3.98	%

1 Interest income on loans includes loan fees.

2 Loans held for investment include nonaccrual loans.

3 An incremental income tax rate of 34% was used to calculate the tax equivalent income on nontaxable and partially taxable investments and loans.

4 Average balance information is reflective of historical cost and has not been adjusted for changes in market value annualized.

TABLE II

F & M BANK CORP.

Interest Sensitivity Analysis

March 31, 2014

(In Thousands of Dollars)

The following table presents the Company’s interest sensitivity.

	0 – 3			4 – 12			1 – 5			Over 5			Not
	Months			Months			Years			Years			Classified			Total

Uses of funds
Loans
Commercial	$	35,362		$	26,014		$	101,002		$	1,752		$	-		$	164,130
Installment		3,783			987			22,166			7,164			-			34,100
Real estate loans for investments		103,538			43,890			130,813			7,450			-			285,691
Loans held for sale		5,578			-			-			-			-			5,578
Credit cards		2,406			-			-			-			-			2,406
Federal funds sold		27,988			-			-			-			-			27,988
Interest bearing bank deposits		842			-			-			-			-			842
Investment securities		1,999			106			4,090			5,152			-			11,347
Total	$	181,496		$	70,997		$	258,071		$	21,518		$	-		$	532,082

Sources of funds
Interest bearing demand deposits	$	-		$	31,604		$	69,251		$	18,823		$	-		$	119,678
Savings deposits		-			11,656			34,968			11,656			-			58,280
Certificates of deposit $100,000 and over		12,167			22,613			34,560			-			-			69,340
Other certificates of deposit		14,308			52,259			57,596			-			-			124,163
Short-term borrowings		3,697			-			-			-			-			3,697
Long-term borrowings		4,000			7,500			6,481			3,710			-			21,691
Total	$	34,172		$	125,632		$	202,856		$	34,189		$	-		$	396,849

Discrete Gap	$	147,324		$	(54,635	)	$	55,215		$	(12,671	)	$	-		$	135,233

Cumulative Gap	$	147,324		$	92,689		$	147,904		$	135,233		$	135,233

Ratio of Cumulative Gap to Total Earning Assets		27.69	%		17.42	%		27.80	%		25.42	%		25.42	%

Table II reflects the earlier of the maturity or repricing dates for various assets and liabilities as of March 31, 2014. In preparing the above table, no assumptions were made with respect to loan prepayments. Loan principal payments are included in the earliest period in which the loan matures or can reprice. Principal payments on installment loans scheduled prior to maturity are included in the period of maturity or repricing. Proceeds from the redemption of investments and deposits are included in the period of maturity. Estimated maturities of deposits, which have no stated maturity dates, were derived from guidance contained in FDICIA 305.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As a result of the enactment of the Sarbanes-Oxley Act of 2002, issuers such as F & M Bank Corp. that file periodic reports under the Securities Exchange Act of 1934 (the "Act") are required to include in those reports certain information concerning the issuer's controls and procedures for complying with the disclosure requirements of the federal securities laws. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports it files or submits under the Act, is recorded , processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

. As required, we will evaluate the effectiveness of these disclosure controls and procedures on a quarterly basis, and most recently did so as of the end of the period covered by this report.

The Company’s Chief Executive Officer and Chief Financial Officer, based on their evaluation as of the end of the period covered by this quarterly report of the Company’s disclosure controls and procedures (as defined in Rule 13(a)-15(e) of the Act), have concluded that the Company’s disclosure controls and procedures are effective for purposes of Rule 13(a)-15(b).

Changes in Internal Controls

. The findings of the internal auditor are presented to management of the Bank and to the Audit Committee of the Company. During the period covered by this report, there were no changes to the internal controls over financial reporting of the Company that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls 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 –

There have been no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

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

Exhibit No.		Description

10.1		Form of Securities Purchase Agreement, dated March 20, 2014, by and among F & M Bank Corp. and the purchases thereto, incorporated herein by reference from Exhibit 10.1 to F&M Bank Corp.’s current report on Form 8-K filed March 21, 2014.

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 Sabanes-Oxley Act of 2002 (filed herewith).

101		The following materials from F&M Bank Corp.’s Quarterly Report on Form 1Q-K for the period ended March 31, 2014, formatted in Extensible Business Reporting Language (XBRL), include: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) related notes (filed herewith).

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.

Date	By:	/s/ Dean W. Withers
		Dean W. Withers
		President and Chief Executive Officer

		/s/ Carrie A. Comer
		Carrie A. Comer
		Senior Vice President and Chief Financial Officer

May 14, 2014

Exhibit Index:

Exhibit No.		Description

10.1		Form of Securities Purchase Agreement, dated March 20, 2014, by and among F & M Bank Corp. and the purchases thereto, incorporated herein by reference from Exhibit 10.1 to F&M Bank Corp.’s current report on Form 8-K filed March 21, 2014.

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 Sabanes-Oxley Act of 2002 (filed herewith).

101		The following materials from F&M Bank Corp.’s Quarterly Report on Form 1Q-K for the period ended March 31, 2014, formatted in Extensible Business Reporting Language (XBRL), include: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) related notes (filed herewith).