F & M Bank Corp.

What they do

F&M Bank Corp. owns 100% of Farmers & Merchants Bank, a Virginia state-chartered bank chartered in 1908, and VSTitle, LLC. The Bank offers commercial and individual demand and time deposits, commercial and individual loans, residential mortgages, a large indirect auto loan portfolio, internet and mobile banking, drive-in banking, ATMs, and courier service. VST provides title insurance to customers and the Bank, and the Bank originates conventional and government agency mortgages for sale in the secondary market. The Warrenton branch opened in January 2026 and is led by commercial, business, and agricultural customers.

Revenue drivers

• Net interest income — The largest earnings driver, generated from the spread on a $925.3 million loans-held-for-investment portfolio and $1.26 billion deposit base, with net interest income of $12.33 million in Q2 2026.
• Residential mortgage and indirect auto lending — The Bank originates conventional and government agency mortgages for sale in the secondary market and holds a large portfolio of residential mortgages and indirect auto loans.
• Fee and subsidiary income — Title insurance through VSTitle, LLC and mortgage banking activity supplement net interest income; the Company also realized a one-time pre-tax gain of $4.8 million in April 2026 from the sale of Richmond-based Bearing Insurance.

Recent performance

Second quarter 2026 net income was $5.37 million, or $1.50 per diluted share, up $2.40 million or 81.05% from $2.97 million, or $0.83 per diluted share, in Q2 2025. Net interest margin expanded to 3.79% from 3.56% in Q1 2026 and 3.48% in Q2 2025, with net interest income of $12.33 million up 17.15% year over year. Return on average assets was 1.54% and return on average equity was 19.54%. For the six months ended June 30, 2026, net income was $8.59 million, or $2.41 per diluted share, versus $5.42 million, or $1.53 per diluted share, a year earlier. Q2 2026 included a $4.8 million pre-tax gain on the Bearing Insurance sale and a $3.5 million pre-tax loss on a bond portfolio restructuring that sold $29.8 million of AFS securities yielding 1.66% and purchased $29.4 million yielding 4.92%.

Strategy

Management says it is executing a strategic plan to grow organically in its existing footprint and to reach targeted growth markets that align with its culture and core values. The Bank entered Warrenton in January 2026 and, after receiving Virginia Bureau of Financial Institutions approval in Q2 2026, expects to open an office in the Blackwell Building in September once renovations are complete. The Company restructured its bond portfolio in Q2 2026, selling $29.8 million of low-yielding AFS securities and reinvesting $29.4 million at roughly 4.92%, to improve earnings power. It also exited its Richmond-based insurance interest through the April 2026 sale of Bearing Insurance and continues to invest in strategic initiatives while emphasizing safe and sound, sustainable profitability.

Risks

• Credit risk in lending portfolio — The principal risk in each loan segment is borrower creditworthiness, which can be affected by employment levels, real estate values, and economic conditions in the Shenandoah Valley markets.
• Interest rate and margin sensitivity — Net interest income depends on rates affecting deposits, loans, and the investment portfolio, and the Q2 2026 bond restructuring reflects sensitivity to the yield earned on securities.
• Intense competition — The Bank competes with large national and regional institutions, other community banks, credit unions, consumer finance companies, mortgage companies, marketplace lenders, and financial technology firms.
• Operational and cybersecurity exposure — The Company identifies potential exposure to fraud, negligence, computer theft, and cyber-crime, and manages these through an FFIEC-based cybersecurity program integrated into enterprise risk management.

Outlook

Management said it expects to open the Blackwell Building office in Warrenton in September 2026 once renovations are complete, following recent regulatory approval. The Company characterized its second quarter and first half of 2026 as strong, with results from operations improving even excluding the non-recurring Bearing gain and bond restructuring. Management stated it will continue growing with a focus on safely and soundly creating sufficient, sustainable profit to remain strong and resilient for customers.